UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Commission file No. 0-30641
L.A.M. PHARMACEUTICAL CORP.
---------------------------
(Exact name of registrant as specified in its charter)
Delaware Applied for
------------------- -------------------------
(State of incorporation) (I.R.S. Employer Identification Number)
800 Sheppard Avenue West,
Commercial Unit 1
North York,, Ontario, Canada M3H 6B4 (address of
principal executive offices) (Zip Code)
(416) 633-3004
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the proceeding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
As of June 30, 2000, the Company had 10,392,500 issued and outstanding shares of
common stock.
L.A.M. PHARMACEUTICAL CORP.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
CONSOLIDATED BALANCE SHEETS
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Independent Accountants' Report on Interim Financial Data F - 2
Balance Sheets at June 30, 2000 (Unaudited) and December 31, 1999 F - 3
Statements of Changes in Stockholders' Deficit for the Period
From the Date Of Inception (February 1, 1994) Through
June 30, 2000 (Unaudited) F - 4 to F - 5
Statements of Operations for the Three Months and Six Months
Ended June 30, 2000 and 1999 (Unaudited) and for the Period
From the Date of Inception (February 1, 1994)
Through June 30, 2000 (Unaudited) F - 6
Statements of Cash Flows for the Three Months and Six months
Ended June 30, 2000 and 1999 (Unaudited) and for the Perio
From the Date of Inception (February 1, 1994)
Through June 30, 2000 (Unaudited) F - 7
Notes to Financial Statements F - 8
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
and Shareholders
L.A.M. Pharmaceutical, Corp.
Miami, Florida
We have reviewed the accompanying balance sheet of L.A.M. Pharmaceutical,
Corp. (a Development Stage Company) as of June 30, 2000 and the related
statements of operations, changes in stockholders' deficit and cash flows for
the three months and six months ended June 30, 2000 and 1999 and for the period
from the date of inception (February 1, 1994) through June 30, 2000, in
accordance with standards established by the American Institute of Certified
Public Accountants. All information included in these financial statements is
the representation of the Company's management.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to the financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheets as of December 31, 1999 and 1998, and the related
statements of operations, changes in stockholders' deficit and cash flows for
the years then ended, and for the period from the date of inception (February 1,
1994)) through December 31, 1999 (presented elsewhere herein); and in our report
dated March 15, 2000, we expressed an unqualified opinion on those financial
statements.
Rotenberg & Company, LLP
Rochester, New York
August 9, 2000
L.A.M. PHARMACEUTICAL CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
BALANCE SHEETS
(Unaudited)
June 30, December 31,
2000 1999
- --------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and Cash Equivalents $ 292,406 $ 558,710
Cash Held by Broker - Debentures 362,768 465,000
Note Receivable - Debentures 50,000 50,000
Accounts Receivable 75,000 75,000
Inventory - Raw Materials 25,000 --
Investment in Affiliate -- --
Prepaid Expenses 7,917 --
- -----------------------------------------------------------------------------
Total Current Assets 813,091 1,148,710
Property and Equipment - Net of
Accumulated Depreciation 14,814 4,922
Other Assets
Patents and Trademarks - Net of
Accumulated Amortization 279,226 232,417
- --------------------------------------------------------------------------------
Total Assets $1,107,131 $ 1,386,049
================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable and Accrued Expenses $ 269,230 $ 111,627
Convertible Debentures 1,527,000 1,252,000
- --------------------------------------------------------------------------
Total Current Liabilities 1,796,230 1,363,627
Non-Current Liabilities
Due to Stockholders 1,266,837 1,390,837
Deferred Royalty Revenue 207,360 207,360
- --------------------------------------------------------------------------
Total Liabilities 3,270,827 2,961,824
Stockholders' Deficit
Common Stock - $.0001 Par;
50,000,000 Shares
Authorized; 10,392,500
and 10,332,500 Shares
Issued and Outstanding
as of June 30, 2000 and
December 31,2000,
Respectively 1,039 1,039
Additional Paid in Capital 3,713,669 3,384,823
Deficit Accumulated During Development Stage (5,878,004) (4,961,637)
Total Stockholders' Deficit (2,163,296) (1,575,775)
- ---------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit $ 1,107,131 $ 1,386,049
==========================================================================
The accompanying notes are an integral part of this financial statement.
L.A.M. PHARMACEUTICAL CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period From the Date of Inception (February 1, 1994) Through
June 30, 2000
- --------------------------------------------------------------------------------
Deficit
Accumulated
Additional During Total
Common Paid-In Development Stockholders
Shares Stock Capital Stage Equity/(Deficit)
Inception - February 1, 1994 -- $ -- $ -- $ -- $ --
Capital Contribution -
Services Rendered -- -- 22,799 -- 22,799
Capital Contribution -
Laboratory Equipment -- -- 24,245 -- 24,245
Net Loss -- -- -- (356,393) (356,393)
- -------------------------------------------------------------------------------------------
Balance - December 31, 1994 -- -- 47,044 (356,393) (309,349)
Capital Contribution -
Services Rendered -- -- 172,020 -- 172,020
Net Loss -- -- -- (522,095) (522,095)
- -------------------------------------------------------------------------------------------
Balance - December 31, 1995 -- -- 219,064 (878,488) (659,424)
Capital Contribution -
Services Rendered -- -- 185,495 -- 185,495
Capital Contribution -
Leasehold Improvements -- -- 9,775 -- 9,775
Capital Contribution -
Interest Expense -- -- 49,738 -- 49,738
Capital Contribution in Cash -- -- 51,001 -- 51,001
Net Loss -- -- -- (643,733) (643,733)
- -----------------------------------------------------------------------------------------
Balance December 31, 1996 -- $ -- $ 515,073 $(1,522,221) $(1,007,148)
- -----------------------------------------------------------------------------------------
Capital Contribution -
Services Rendered -- -- 377,072 -- 377,072
Capital Contribution -
Interest Expense -- -- 99,477 -- 99,477
Capital Contribution in Cash -- -- 111,199 -- 111,199
Distribution -- -- (30,000) -- (30,000)
Net Loss -- -- -- (499,626) (499,626)
- ------------------------------------------------------------------------------------------
-continued -
The accompanying notes are an integral part of this financial statement.
L.A.M. PHARMACEUTICAL CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period From the Date of Inception (February 1, 1994) Through June 30,
2000 - Continued
Deficit
Accumulated
Additional During Total
Common Paid-In Development Stockholders
Shares Stock Capital Stage Equity/(Deficit)
- ------------------------------------------------------------------------------------------------
Balance - December 31, 1997 -- -- 1,072,821 (2,021,847) (949,026)
Recapitalization as L.A.M.
Pharmaceutical, Corp. 6,000,000 600 (600) -- --
Capital Contribution -
Interest Expense -- -- 103,579 -- 103,579
Issuance of Common Stock
for Cash 4,332,500 433 378,352 -- 378,785
Distribution -- -- (38,660) -- (38,660)
Net Loss Restated -- -- -- (458,807) (458,807)
- -----------------------------------------------------------------------------------------------
Balance - December 31, 1998 -
Restated 10,332,500 1,033 1,515,492 (2,480,654) (964,129)
Capital Contribution -
Interest Expense -- -- 107,681 -- 107,681
Issuance of Common Stock
for Cash 60,000 6 59,994 -- 60,000
Stock Options and Awards
Granted, Compensation for
Services Rendered -- -- 449,656 -- 449,656
Conversion Premium on
Convertible Debentures -- -- 1,252,000 -- 1,252,000
Net Loss - Restated -- -- -- (2,480,983) (2,480,983)
- -----------------------------------------------------------------------------------------------
Balance - December 31, 1999 -
Restated 10,392,500 1,039 3,384,823 (4,961,637) (1,575,775)
Capital Contribution -
Interest Expense -- -- 26,923 -- 26,923
Conversion Premium on
Convertible Debentures -- -- 265,000 -- 265,000
Net Loss for the Period -
(Unaudited) - Restated -- -- -- (724,566) (724,566)
- -----------------------------------------------------------------------------------------------
Balance - March 31, 2000 -
Restated 10,392,500 1,039 3,676,746 (5,686,203) (2,008,418)
Capital Contribution -
Interest Expense -- -- 26,923 -- 26,923
Conversion Premium on
Convertible Debentures -- -- 10,000 -- 10,000
Net Loss for the Period -
(Unaudited) -- -- -- (191,801) (191,801)
- ----------------------------------------------------------------------------------------------
Balance - June 30, 2000
(Unaudited) 10,392,500 1,039 $3,713,669 $ (5,878,004) $(2,163,296)
===============================================================================================
The accompanying notes are an integral part of this financial statement.
L.A.M. PHARMACEUTICAL CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 2000 and 1999 and for the
Period From the Date of Inception (February 1, 1994) Through June 30, 2000
Date of Inception
(Unaudited) (Unaudited) (Unaudited) (February 1, 1994)
Six Months Ended Six Months Ended Quarter Ended June 30, Through
June 30, 2000 June 30, 1999 2000 1999 June 30, 2000
- ----------------------------------------------------------------------------------------------------------------
Total Revenue $ -- $ -- $ -- $ -- $ 200,000
- ----------------------------------------------------------------------------------------------------------------
Expenses
Research and Development 163,969 58,287 22,904 14,062 1,874,768
General and Administrative 357,545 130,790 101,048 60,170 1,952,837
Interest Expense 120,376 53,846 60,188 26,923 493,795
Conversion Premium 275,000 -- 10,000 -- 1,527,000
Depreciation and Amortization 13,122 3,090 8,577 1,545 40,271
- ------------------------------------------------------------------------------------------------------------
Total Expenses 930,012 246,013 202,717 102,700 5,888,671
- ------------------------------------------------------------------------------------------------------------
Income From Operations (930,012) (246,013) (202,717) (102,700) (5,688,671)
- ------------------------------------------------------------------------------------------------------------
Other Income (Expense)
Interest Income 13,663 4,569 10,916 3,446 18,027
loss on Investment in Affiliate -- -- -- -- (207,360)
- ------------------------------------------------------------------------------------------------------------
Total Other Income (Expense) 13,663 4,569 10,916 3,446 (189,333)
- ------------------------------------------------------------------------------------------------------------
Net Loss $ (916,349) $(241,444) $ (191,801) $ (99,254) $(5,878,004)
- ------------------------------------------------------------------------------------------------------------
Loss Per Common Share - Basic
and Diluted $ (0.09) $ (0.02) $ (0.02) $ (0.01) $ (0.42)
- ------------------------------------------------------------------------------------------------------------
Weighted Average Number
of Common Shares
Outstanding 10,392,500 10,392,500 10,392,500 10,047,917
- ------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this financial statement.
L.A.M. PHARMACEUTICAL CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2000 and 1999 and for the Period From the Date
of Inception (February 1, 1994) Through June 30, 2000
Date of Inception
(Unaudited) (Unaudited) (Unaudited) (February 1, 1994)
Six Months Ended Six Months Ended Quarter Ended June 30, Through
June 30, 2000 June 30, 1999 2000 1999 June 30, 2000
- ----------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net Loss $ (916,349) $ (241,444) $(191,801) $(99,254) $(5,878,004)
Adjustments to Reconcile Net Loss to
Net Cash Flows From Operating Activities:
Depreciation and Amortization 13,122 3,090 8,597 1,545 55,942
Capital Contributions:
Services including Stock Options -- -- -- -- 1,207,042
Interest Expense 87,111 53,846 26,923 26,293 414,321
Conversion Premium on Debenture 275,000 -- 10,000 -- 1,527,000
Loss on Investment in Affiliate -- -- -- -- 207,360
Changes in Assets and Liabilities:
Accounts Receivable -- -- -- -- (75,000)
Inventory - Raw Materials (25,000) -- (25,000) -- (25,000)
Prepaid Expenses (7,917) -- 22,083 -- (7,917)
Accounts Payable and Accrued
Expenses 124,338 107,213 121,594 51,012 269,230
Due to Stockholders (124,000) -- (124,000) -- 1,266,837
Other -- 1,820 (467) 3,689 8
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Flows from Operating
Activities (573,695) (75,475) (152,071) (16,715) (1,038,181)
- ---------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Equipment (14,942) -- (1,738) -- (20,028)
Patents and Trademarks (54,899) -- -- (71,859) (295,942)
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Flows from Investing
Activities (69,841) -- (1,738) (71,859) (315,970)
- ---------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Cash Capital Contributions -- -- -- -- 162,200
Proceeds from Issuance of Common Stock -- -- -- -- 438,785
Proceeds from Convertible
Debentures 275,000 (125,000) 10,000 -- 1,477,000
Distributions to Stockholders -- -- -- -- (68,660)
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Flows from Financing
Activities 275,000 (125,000) 10,000 -- 2,009,325
- ---------------------------------------------------------------------------------------------------------------------
Net Increase in Cash and Cash
Equivalents (368,536) (200,475) (143,809) (88,574) 655,174
Cash and Cash Equivalents - Beginning
of Period 1,023,710 410,577 798,983 298,676 --
- --------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents - End
of Period 655,174 210,102 $ 655,174 $ 210,102 $ 655,174
- ---------------------------------------------------------------------------------------------------------------------
NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of Common Stock in Exchange
for Property and Equipment $ -- $ -- $ 34,020
Investment in Affiliate $ 207,360
Deferred Revenue $ 207,360
- ---------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this financial statement.
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note A - Basis of Presentation
The condensed financial statements of L.A.M. Pharmaceutical, Corp. (the
"Company") included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in
conjunction with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. These condensed financial
statements should be read in conjunction with the annual audited
financial statements and the notes thereto included elsewhere herein in
the Company's registration statement on Form 10SB.
The accompanying unaudited interim financial statements reflect all
adjustments of a normal and recurring nature which are, in the opinion
of management, necessary to present fairly the financial position,
results of operations and cash flows of the Company for the interim
periods presented. The results of operations for these periods are not
necessarily comparable to, or indicative of, results of any other
interim period of for the calendar year taken as a whole. Factors that
affect the comparability of financial data from year to year and for
comparable interim periods include non-recurring expenses associated
with the Company's registration with the Securities and Exchange
Commission and costs incurred to raise capital and acquisitions of
patents and trademarks.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-QSB contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Such statements are only predictions and the actual
events or results may differ materially from the actual results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below as well as those discussed in other
filings made by the Company with the Securities and Exchange Commission,
including the Company's Registration Statement on Form-10SB.
Results of Operations
Three months ended June 30, 2000 compared with the three months ended June 30,
1999
Expenses
Research and Development
Research and development expenses were $22,904 for the three months ended
June 30, 2000 as compared to $14,062 for the three months ended June 30, 1999.
The increase was attributable to the timing of clinical studies conducted during
the first quarter of 2000.
General and Administrative
General and administrative costs increased by $40,878 from $60,170 for the
three months ended June 30, 1999 to $101,048 for the three months ended June 30,
2000. The increase in general and administrative costs was attributable to the
Company's efforts in raising capital, restructuring its business activities, and
registering the Company's common stock.
Interest Expense
Interest expense for the three months ended June 30, 2000 increased by
$33,265 to $60,188 as compared with $26,923 for the three months ended June 30,
1999. The increase represents the interest accrued for the quarter on the
convertible debentures that were issued during the second half of 1999 and the
first quarter of 2000.
Depreciation and Amortization
Depreciation and amortization increased by $7,032 from $1,545 for the
three months ended June 30, 1999 to $8,577 for the three months ended March 31,
2000. The increase was due primarily to the amortization of patents and
trademarks acquired during 1999.
Other Income
Other income, which was comprised only of interest income, was $10,916 for
the three months ended June 30, 2000 as compared with $3,446 for the three
months ended June 30, 1999. The increase was attributed to the increase in
invested cash as a result of the debentures that were issued during the later
half of 1999 and the first quarter of 2000.
Six months ended June 30, 2000 compared with the six months ended June 30, 1999
Expenses
Research and Development
Research and development expenses increased by $105,682 from $58,287 for
the six months ended June 30, 1999 to $163,969 for the six months ended June 30,
2000. The increase was attributable to the increased activities as a result of
the cash available from issuance of the debentures in the later half of 1999 and
first quarter 2000.
General and Administrative Costs
General and administrative costs increased by $226,755 from $130,790 for
the six months ended June 30, 1999 to $357,545 for the six months ended June 30,
2000. The increase in general and administrative costs was attributable to the
Company's efforts in raising capital, restructuring its business activities, and
registering the Company's common stock.
Interest Expense
Interest expense for the six months ended June 30, 2000 increased by
$66,530 to $120,376 as compared with $53,846 for the six months ended June 30,
1999. The increase represents the interest accrued for the six month period on
the convertible debentures that were issued during the second half of 1999 and
the first quarter of 2000.
Depreciation and Amortization
Depreciation and amortization increased by $10,052 from $3,090 for the six
months ended June 30, 1999 to $13,142 for the six months ended June 30, 2000.
The increase was due primarily to the amortization of patents and trademarks
acquired during 1999.
Other Income
Other income, which was comprised only of interest income, was $13,663 for
the six months ended June 30, 2000 as compared with $4,569 for the six months
ended June 30, 1999. The increase was attributed to the increase in invested
cash as a result of the convertible debentures that were issued during the later
half of 1999 and the first quarter of 2000.
Liquidity and Sources of Capital
During the six months ended June 30, 2000 the Company's operations used
approximately $574,000 in cash and the Company spent approximately $70,000 on
patent and trademark applications and purchases of equipment. Cash required for
operations during the six months ended June 30, 2000 was generated through sales
of convertible notes of $275,000. The Company's primary source of liquidity at
June 30, 2000 was $655,174 in cash accounts.
During the remainder of fiscal year 2000, the Company expects that it will
spend between $110,000 and $150,000 on research, development, and clinical
studies. As of June 30, 2000 the Company had working capital of approximately
$577,000 (exclusive of the convertible debentures that are expected to be
converted to equity and liabilities due to shareholders of the Company). The
Company plans to use its existing financial resources as well as the proceeds
from the sale of its common stock to fund its capital requirements during this
period. The Company does not have any commitments from any third party to
provide any capital to the Company. It should be noted that substantial funds
may be needed for more extensive research and clinical studies which may be
necessary before the Company will be able to sell any of its products on a
commercial basis.
Other than funding its research and development activities and operating
losses, the Company does not have any material capital commitments.
All of the Company's products are in the development stage. As a result,
the Company has not generated any revenues from the sale of its products.
Revenues since its inception has been limited to payments received from Ixora
for expense reimbursements and interest income on invested cash balances.
Due to the lack of any significant revenues, the Company has relied upon
proceeds realized from the public and private sale of its common stock and
convertible notes to meet its funding requirements. Funds raised by the Company
have been expended primarily in connection with research and development,
clinical studies and administrative costs. Since the Company does not anticipate
realizing revenues until such time as it begins the commercial sale of its
products or enters into licensing arrangements regarding these products (which
could take a number of years), the Company will be required, through the sale of
securities, debt financing or other arrangements, to fund its operations.
However, there can be no assurance that such financing will be available or be
available on favorable terms.
Since its inception in 1994 the Company has incurred losses of
$(5,878,004). The Company expects to incur additional losses for the foreseeable
future, and the Company's losses could increase as research and development
efforts progress.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter ending
June 30, 2000.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized
L.A.M. PHARMACEUTICAL CORP.
By: /s/ Alan Drizen
Alan Drizen, Chief Executive Officer
Date: August 16, 2000