UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
April 30, 2001 0-11088
For the quarterly period ended Commission file number
ALFACELL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2369085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Belleville Avenue, Bloomfield, New Jersey 07003
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (973) 748-8082
NOT APPLICABLE
(Former name, former address, and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant has (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
The number of shares of common stock, $.001 par value, outstanding as of
June 11, 2001 was 18,942,246 shares.
ALFACELL CORPORATION
(A Development Stage Company)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
April 30, 2001 and July 31, 2000
April 30,
2001 July 31,
(Unaudited) 2000
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 359,767 $ 257,445
Other assets 38,704 28,617
------------ ------------
Total current assets 398,471 286,062
Property and equipment, net of accumulated depreciation and amortization
of $1,063,346 at April 30, 2001 and $1,006,808 at July 31, 2000 85,631 142,170
Other assets 59,867 59,867
------------ ------------
Total assets $ 543,969 $ 488,099
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Current portion of long-term debt $ 7,100 $ 7,074
Note payable - convertible debt - related party, less debt discount 218,670 --
Note payable - convertible debt - unrelated party, less debt discount 54,668 --
Accounts payable 349,265 170,788
Accrued expenses 474,261 411,846
------------ ------------
Total current liabilities 1,103,964 589,708
Long-term debt, less current portion 25,896 30,251
------------ ------------
Total liabilities 1,129,860 619,959
------------ ------------
Commitments and contingencies Stockholders' equity (deficiency):
Preferred stock, $.001 par value
Authorized and unissued, 1,000,000 shares at April 30, 2001
and July 31, 2000 -- --
Common stock $.001 par value
Authorized 40,000,000 shares at April 30, 2001 and July 31,
2000; Issued and outstanding 18,942,246 shares at April 30,
2001 and 18,431,559 shares at July 31, 2000 18,942 18,431
Capital in excess of par value 57,382,825 56,526,288
Common stock to be issued, 222,222 shares at April 30, 2001 200,000 --
Deficit accumulated during development stage (58,187,658) (56,676,579)
------------ ------------
Total stockholders' equity (deficiency) (585,891) (131,860)
------------ ------------
Total liabilities and stockholders' equity (deficiency) $ 543,969 $ 488,099
============ ============
See accompanying notes to financial statements.
- 2 -
ALFACELL CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Three months and nine months ended April 30, 2001 and 2000,
and the Period from August 24, 1981
(Date of Inception) to April 30, 2001
(Unaudited)
August 24, 1981
Three Months Ended Nine Months Ended (Date of Inception)
April 30, April 30, to
2001 2000 2001 2000 April 30, 2001
------------ ------------ ------------ ------------ --------------
REVENUE:
Sales $ -- $ -- $ -- $ -- $ 553,489
Investment income 1,450 12,986 8,219 39,206 1,367,383
Other income -- -- -- -- 60,103
------------ ------------ ------------ ------------ ------------
TOTAL REVENUE 1,450 12,986 8,219 39,206 1,980,975
------------ ------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of sales -- -- -- -- 336,495
Research and development 526,716 602,807 1,404,552 1,767,128 37,372,909
General and administrative 193,788 137,497 519,240 443,479 20,678,888
Interest:
Related parties 32,110 -- 32,110 -- 1,066,070
Others 11,023 872 14,791 2,600 1,921,520
------------ ------------ ------------ ------------ ------------
TOTAL COSTS AND EXPENSES 763,637 741,176 1,970,693 2,213,207 61,375,882
------------ ------------ ------------ ------------ ------------
NET LOSS BEFORE
STATE TAX BENEFIT $ (762,187) $ (728,190) $ (1,962,474) $ (2,174,001) $(59,394,907)
STATE TAX BENEFIT -- -- 451,395 755,854 1,207,249
------------ ------------ ------------ ------------ ------------
NET LOSS $ (762,187) $ (728,190) $ (1,511,079) $ (1,418,147) $(58,187,658)
============ ============ ============ ============ ============
Loss per basic and diluted
common share $ (.04) $ (.04) $ (.08) $ (.08) $ (6.99)
============ ============ ============ ============ ============
Weighted average number of shares
outstanding 18,911,660 18,116,726 18,802,114 17,603,454 8,320,015
============ ============ ============ ============ ============
See accompanying notes to financial statements.
- 3 -
ALFACELL CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Nine months ended April 30, 2001 and 2000,
and the Period from August 24, 1981
(Date of Inception) to April 30, 2001
(Unaudited)
August 24, 1981
Nine Months Ended (Date of Inception)
April 30, to
2001 2000 April 30, 2001
----------- ---------- -----------
Cash flows from operating activities:
Net loss $(1,511,079) (1,418,147) (58,187,658)
Adjustments to reconcile net loss to
net cash used in operating activities:
Gain on sale of marketable securities -- -- (25,963)
Depreciation and amortization 56,538 71,227 1,474,381
Loss on disposal of property and equipment -- -- 18,926
Noncash operating expenses 168,360 112,459 5,687,744
Amortization of deferred compensation -- -- 11,442,000
Amortization of organization costs -- -- 4,590
Changes in assets and liabilities:
Increase in other current assets (10,087) (19,145) (98,571)
Decrease in other assets -- -- 36,184
Increase in interest payable, related party -- -- 744,539
Increase in accounts payable 188,507 152,690 645,375
Increase in accrued payroll and expenses, related party -- -- 2,348,145
Increase (decrease) in accrued expenses 62,415 (35,810) 1,015,774
----------- ---------- -----------
Net cash used in operating activities (1,045,346) (1,136,726) (34,894,534)
----------- ---------- -----------
Cash flows from investing activities:
Purchase of marketable equity securities -- -- (290,420)
Proceeds from sale of marketable equity
securities -- -- 316,383
Purchase of property and equipment -- -- (1,406,836)
Patent costs -- -- (97,841)
----------- ---------- -----------
Net cash used in investing activities -- -- (1,478,714)
----------- ---------- -----------
See accompanying notes to financial statements. (continued)
- 4 -
ALFACELL CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS, Continued
Nine months ended April 30, 2001 and 2000,
and the Period from August 24, 1981
(Date of Inception) to April 30, 2001
(Unaudited)
August 24, 1981
Nine Months Ended (Date of Inception)
April 30, to
2001 2000 April 30, 2001
----------- ---------- ----------
Cash flows from financing activities:
Proceeds from short-term borrowings $ -- -- 849,500
Payment of short-term borrowings -- -- (623,500)
Increase in loans payable - related party, net -- -- 2,628,868
Proceeds from bank debt and other long-
term debt, net of deferred debt costs -- -- 2,452,460
Reduction of bank debt and long-term debt (4,329) (6,263) (2,933,572)
Proceeds from issuance of common stock, net 501,274 613,653 27,855,013
Proceeds from exercise of stock options and warrants, net 83,730 41,337 5,590,253
Proceeds from issuance of convertible debentures -- -- 347,000
Proceeds from issuance of convertible debt - related party 297,000 -- 297,000
Proceeds from issuance of convertible debt - unrelated party 69,993 -- 69,993
Proceeds from common stock to be issued 200,000 -- 200,000
----------- ---------- ----------
Net cash provided by financing activities 1,147,668 648,727 36,733,015
----------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 102,322 (487,999) 359,767
Cash and cash equivalents at beginning of period 257,445 1,383,133 --
----------- ---------- ----------
Cash and cash equivalents at end of period $ 359,767 895,134 359,767
=========== ========== ==========
Supplemental disclosure of cash flow information - interest paid $ 6,763 2,600 1,660,476
=========== ========== ==========
Noncash financing activities:
Issuance of convertible subordinated debenture for loan
payable to officer $ -- -- 2,725,000
=========== ========== ==========
Issuance of common stock upon the conversion of
convertible subordinated debentures, related party $ -- -- 2,945,000
=========== ========== ==========
Conversion of short-term borrowings to common stock $ -- -- 226,000
=========== ========== ==========
Conversion of accrued interest, payroll and expenses by
related parties to stock options $ -- -- 3,194,969
=========== ========== ==========
Repurchase of stock options from related party $ -- -- (198,417)
=========== ========== ==========
Conversion of accrued interest to stock options $ -- -- 142,441
=========== ========== ==========
Conversion of accounts payable to common stock $ 10,030 92,184 296,200
=========== ========== ==========
Conversion of notes payable, bank and accrued interest to
long-term debt $ -- -- 1,699,072
=========== ========== ==========
Conversion of loans and interest payable, related party and
accrued payroll and expenses, related parties to long-term
accrued payroll and other, related party $ -- -- 1,863,514
=========== ========== ==========
Issuance of common stock upon the conversion of convertible
subordinated debentures, other $ -- -- 127,000
=========== ========== ==========
Issuance of common stock for services rendered $ -- -- 2,460
=========== ========== ==========
See accompanying notes to financial statements.
- 5 -
ALFACELL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the Company's financial position as of April 30,
2001 and the results of operations for the three and nine month periods ended
April 30, 2001 and 2000 and the period from August 24, 1981 (date of inception)
to April 30, 2001. The results of operations for the nine months ended April 30,
2001 are not necessarily indicative of the results to be expected for the full
year.
The Company is a development stage company as defined in the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No. 7.
The Company is devoting substantially all of its present efforts to establishing
a new business. Its planned principal operations have not commenced and,
accordingly, no significant revenue has been derived therefrom.
Effective August 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, or SFAS 130, Reporting Comprehensive Income. SFAS
130 establishes new rules for the reporting and display of comprehensive income
and its components. The net loss of $1,511,000 and $1,418,000, recorded for the
nine months ended April 30, 2001 and 2000, respectively, is equal to the
comprehensive loss for those periods.
The Company has reported net losses since its inception. Also, the Company
has limited liquid resources. The report of the Company's independent auditors
on the Company's July 31, 2000 financial statements included an explanatory
paragraph which states that the Company's recurring losses, working capital
deficit and limited liquid resources raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements at July 31,
2000 or April 30, 2001 do not include any adjustments that might result from the
outcome of this uncertainty.
The Company's continued operations will depend on its ability to raise
additional funds through various potential sources such as equity and debt
financing, collaborative agreements, strategic alliances, sale of tax benefits,
revenues from the commercial sale of ONCONASE(R) and
- 6 -
ALFACELL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, continued
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION, continued
its ability to realize the full potential of its technology and its drug
candidates. Such additional funds may not become available as needed or be
available on acceptable terms. To date, a significant portion of the Company's
financing has been through private placements of common stock and warrants, the
issuance of common stock for stock options and warrants exercised and for
services rendered, debt financing and financing provided by the Company's Chief
Executive Officer. Additionally, the Company has raised capital through the sale
of its tax benefits. The Company believes that its cash and cash equivalents as
of April 30, 2001 will be sufficient to meet its anticipated cash needs through
fiscal year ending July 31, 2001. However, until the Company's operations
generate significant revenues, the Company will continue to fund its operations
from cash on hand and through the sources of capital previously described.
2. EARNINGS (LOSS) PER COMMON SHARE
"Basic" earnings (loss) per common share equals net income (loss) divided
by weighted average common shares outstanding during the period. "Diluted"
earnings (loss) per common share equals net income divided by the sum of
weighted average common shares outstanding during the period plus common stock
equivalents. The Company's Basic and Diluted per share amounts are the same
since the assumed exercise of stock options and warrants are all anti- dilutive.
The amount of options and warrants excluded from the calculation was 5,604,599
and 6,180,945 at April 30, 2001 and 2000, respectively.
3. NOTE PAYABLE - CONVERTIBLE DEBT
In April 2001, the Company entered into a convertible note payable with
certain related and unrelated parties in the aggregate amount of $366,993. The
note is due within ninety (90) days unless the lenders elect to exercise an
option to convert the note into Alfacell common stock, par value $.001 per
share, at a conversion price of $0.90 per share (the estimated fair market value
of the stock on the loan date). In addition, upon conversion, the lender would
receive a three-year warrant for each share of converted Alfacell common stock
at an exercise price of $2.50 per share that will expire on July 7, 2004. The
estimated value of the warrant has been treated as a debt discount which will
accrete as interest expense over the ninety day note term.
- 7 -
ALFACELL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, continued
(Unaudited)
4. CAPITAL STOCK
In August 2000, the Company issued 11,800 shares of common stock for
payment of services rendered. The fair value of the common stock in the amount
of $10,030 was charged to operations.
In August and September 2000, the Company sold an aggregate of 333,332
shares of common stock to private investors at a price of $1.50 per share
resulting in net proceeds of $501,000 to the Company. In addition, the private
investors were granted five-year warrants to purchase an aggregate of 166,666
shares of common stock at a per share exercise price of $3.00.
In September 2000, the Company issued 40,000 shares of common stock upon
the exercise of stock options by a related party resulting in gross proceeds of
$16,100 to the Company.
In January 2001, the Company issued 70,000 shares of common stock upon the
exercise of stock options by related parties resulting in gross proceeds of
$30,500 to the Company.
In March 2001, the Company issued 55,555 shares of common stock upon the
exercise of stock options by a related party resulting in gross proceeds of
$37,100 to the Company.
In April 2001, the Company issued 50,000 five-year stock options to a
director as payment for non-board related services over the past 18 months.
These options vested immediately and have an exercise price of $0.90 per share.
The Company recorded general and administrative expense of $31,600 which was the
fair market value of the options on the date of issuance. In addition, the
director will receive a contingent award of 50,000 shares of the Company's
common stock should the Company complete a strategic partnership or receive an
investment from the prospective partner or one of its affiliates.
In April 2001, the Company sold 222,222 shares of common stock to a private
investor at a price of $0.90 per share resulting in gross proceeds of $200,000
to the Company. In addition, the private investor was granted three-year
warrants to purchase an aggregate of 222,222 shares of common stock at a per
share exercise price of $2.50 that will expire on July 7, 2004. The stock
certificate for the shares will be issued in June 2001.
5. SALE OF NET OPERATING LOSSES
New Jersey has enacted legislation permitting certain corporations located
in New Jersey to sell state tax loss carryforwards and state research and
development credits or tax benefits. For the state fiscal year 2001 (July 1,
2000 to June 30, 2001), the Company has $1,774,000 total available tax benefits
of which $602,000 was allocated to be sold between July 1, 2000 and June 30,
2001. In December 2000, the Company received $451,000 from the sale of its
allocated tax benefits which was recognized as a tax benefit for the quarter
ended October 31, 2000. The Company will attempt to sell the remaining balance
of its tax benefits in the amount of approximately $1,172,000 between July 1,
2001 and June 30, 2002, subject to all existing laws of the State of New Jersey.
However, there is no assurance that the Company will be able to find a buyer for
its tax benefits or that such funds will be available in a timely manner.
- 8 -
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Information contained herein contains, in addition to historical
information, forward- looking statements that involve risks and uncertainties.
All statements, other than statements of historical fact, regarding our
financial position, potential, business strategy, plans and objectives for
future operations are "forward-looking statements." These statements are
commonly identified by the use of forward-looking terms and phrases as
"anticipates," "believes," "estimates," "expects," "intends," "may," "seeks,"
"should," or "will' or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. We cannot assure that the
future results covered by these forward-looking statements will be achieved. The
matters set forth in Exhibit 99.1 hereto constitute cautionary statements
identifying important factors with respect to these forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
vary significantly from the future results indicated in these forward-looking
statements. Other factors could also cause actual results to differ
significantly from the future results indicated in these forward-looking
statements.
Results of Operations
Three and nine month periods ended April 30, 2001 and 2000
Revenues. We are a development stage company as defined in the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No. 7.
We are devoting substantially all of our present efforts to establishing a new
business and developing new drug products. Our planned principal operations of
marketing and/or licensing of new drugs have not commenced and, accordingly, we
have not derived any significant revenue from these operations. We focus most of
our productive and financial resources on the development of ONCONASE(R) and as
such we have not had any sales in the nine months ended April 30, 2001 and 2000.
Investment income for the nine months ended April 30, 2001 was $8,000 compared
to $39,000 for the same period last year, a decrease of $31,000. This decrease
was due to lower balances of cash and cash equivalents.
Research and Development. Research and development expense for the three
months ended April 30, 2001 was $527,000 compared to $603,000 for the same
period last year, a decrease of $76,000 or 13%. This decrease was primarily due
to a 65% decrease in expenses in preparation for a Pre-NDA meeting with the FDA
and a 13% decrease in costs in support of on- going Phase III clinical trials
for ONCONASE(R) for malignant mesothelioma. These decreases were offset by an
11% increase in personnel costs and a 147% increase in expenses associated with
new patent and trademark applications for ONCONASE(R).
Research and development expense for the nine months ended April 30, 2001
was $1,404,000 compared to $1,767,000 for the same period last year, a decrease
of $363,000 or
- 9 -
21%. This decrease was primarily due to a 57% decrease in expenses in
preparation for a Pre- NDA meeting with the FDA, a 38% decrease in costs in
support of on-going Phase III clinical trials for ONCONASE(R) for malignant
mesothelioma and a 19% decrease in expenses associated with new patent and
trademark applications for ONCONASE(R). These decreases were offset by a 4%
increase in personnel costs.
General and Administrative. General and administrative expense for the
three months ended April 30, 2001 was $194,000 compared to $137,000 for the same
period last year, an increase of $57,000 or 42%. This increase was primarily due
to a $32,000 increase in non-cash expense relating to stock options issued for
consulting services, a $12,000 increase in costs related to public relations
activities and a 20% increase in personnel costs.
General and administrative expense for the nine months ended April 30, 2001
was $519,000 compared to $443,000 for the same period last year, an increase of
$76,000 or 17%. This increase was primarily due to a $27,000 increase in costs
related to public relations activities, a 16% increase in personnel costs and a
38% increase in non-cash expense relating to stock options issued for consulting
services.
Interest expense for the three months ended April 30, 2001 was $43,000
compared to $1,000 for the same period last year, an increase of $42,000. The
increase was primarily due to the interest expense on the convertible note and
its attached warrants, by both related and unrelated parties. The interest
expense was based on the value of the warrants using the Black-Scholes pricing
model, amortized on a straight-line basis over the ninety day life of the note.
Interest expense for the nine months ended April 30, 2001 was $47,000
compared to $3,000 for the same period last year, an increase of $44,000. The
increase was due to the interest expense on the convertible note and its
attached warrants, by both related and unrelated parties. The interest expense
was based on the value of the warrants using the Black-Scholes pricing model,
amortized on a straight-line basis over the ninety day life of the note.
Income Taxes. New Jersey has enacted legislation permitting certain
corporations located in New Jersey to sell state tax loss carryforwards and
state research and development credits or tax benefits. For the state fiscal
year 2001 (July 1, 2000 to June 30, 2001), our company has $1,774,000 total
available tax benefits of which $602,000 was allocated to be sold between July
1, 2000 and June 30, 2001. In December 2000, we received $451,000 from the sale
of the allocated tax benefits which was recognized as a tax benefit for the
quarter ended October 31, 2000. We will attempt to sell the remaining balance of
our tax benefits in the amount of approximately $1,172,000 between July 1, 2001
and June 30, 2002, subject to all existing laws of the State of New Jersey.
However, we cannot assure you that we will be able to find a buyer for our tax
benefits or that such funds will be available in a timely manner.
Net Loss. We have incurred net losses during each year since our inception.
The net loss for the three months ended April 30, 2001 was $762,000 as compared
to a net loss of $728,000 for the same period last year, an increase of $34,000
or 5%. The net loss for the nine months ended April
- 10 -
30, 2001 was $1,511,000 as compared to $1,418,000 for the same period last year,
an increase of $93,000 or 7%. The cumulative loss from the date of inception,
August 24, 1981 to April 30, 2001, amounted to $58,188,000. Such losses are
attributable to the fact that we are still in the development stage and
accordingly have not derived sufficient revenues from operations to offset the
development stage expenses.
Liquidity and Capital Resources
We have financed our operations since inception primarily through equity
and debt financing, research product sales and interest income. During the nine
months ended April 30, 2001, we had a net increase in cash and cash equivalents
of $103,000, which resulted primarily from net cash provided by financing
activities of $1,148,000, primarily from the private placement of common stock
and warrants, proceeds from the issuance of convertible note and proceeds from
the exercise of stock options, offset by net cash used in operating activities
of $1,045,000. Total cash resources as of April 30, 2001 were $360,000 compared
to $257,000 at July 31, 2000.
Our current liabilities as of April 30, 2001 were $1,104,000 compared to
$590,000 at July 31, 2000, an increase of $514,000. The increase was primarily
due to the short-term convertible note payable by both related and unrelated
parties and due to an increase in accounts payable.
Our continued operations will depend on our ability to raise additional
funds through various potential sources such as equity and debt financing,
collaborative agreements, strategic alliances, sale of tax benefits, revenues
from the commercial sale of ONCONASE(R) and our ability to realize the full
potential of our technology and our drug candidates. Such additional funds may
not become available as we need them or be available on acceptable terms. To
date, a significant portion of our financing has been through private placements
of common stock and warrants, the issuance of common stock for stock options and
warrants exercised and for services rendered, debt financing and financing
provided by our Chief Executive Officer. Additionally, we have raised capital
through the sale of our tax benefits. We believe that our cash and cash
equivalents as of April 30, 2001 will be sufficient to meet our anticipated cash
needs through fiscal year ending July 31, 2001. However, until our operations
generate significant revenues, we will continue to fund operations from cash on
hand and through the sources of capital previously described. The report of our
independent auditors on our July 31, 2000 financial statements included an
explanatory paragraph which states that our recurring losses, working capital
deficit and limited liquid resources raise substantial doubt about our ability
to continue as a going concern. Our financial statements at July 31, 2000 and
April 30, 2001 do not include any adjustments that might result from the outcome
of this uncertainty.
We will continue to incur costs in conjunction with our U.S. and foreign
registrations for marketing approval of ONCONASE(R). We are currently in
discussions with several potential strategic alliance partners, including major
international companies, to further the development and marketing of ONCONASE(R)
and other related products in our pipeline. However, we cannot assure you that
any such alliances will materialize. We intend to seek marketing approvals for
- 11 -
ONCONASE(R) for the treatment of malignant mesothelioma in foreign territories.
In February 2001, we received an Orphan Medicinal Product Designation for
ONCONASE(R) with the European Agency for the Evaluation of Medicinal Products,
or EMEA. Currently, we are in discussion with a number of European regulatory
agencies on the proposed registration requirements for the malignant
mesothelioma indication. Simultaneously, we are in the process of expanding our
clinical program in Europe (initially, Germany and Italy). However, we cannot
assure you that marketing approval for ONCONASE(R) as a treatment for malignant
mesothelioma will be granted.
New Jersey has enacted legislation permitting certain corporations located
in New Jersey to sell state tax loss carryforwards and state research and
development credits or tax benefits. For the state fiscal year 2001 (July 1,
2000 to June 30, 2001), our company has $1,774,000 total available tax benefits
of which $602,000 was allocated to be sold between July 1, 2000 and June 30,
2001. In December 2000, we received $451,000 from the sale of the allocated tax
benefits which was recognized as a tax benefit for the quarter ended October 31,
2000. We will attempt to sell the remaining balance of our tax benefits in the
amount of approximately $1,172,000 between July 1, 2001 and June 30, 2002,
subject to all existing laws of the State of New Jersey. However, we cannot
assure you that we will be able to find a buyer for our tax benefits or that
such funds will be available in a timely manner.
Our common stock was delisted from The Nasdaq SmallCap Market effective at
the close of business April 27, 1999 for failing to meet the minimum bid price
requirements set forth in the NASD Marketplace Rules. As of April 28, 1999, our
common stock trades on the OTC Bulletin Board under the symbol "ACEL". Delisting
of our common stock from Nasdaq could have a material adverse effect on our
ability to raise additional capital, our stockholders' liquidity and the price
of our common stock.
The market price of our common stock is volatile, and the price of the
stock could be dramatically affected one way or another depending on numerous
factors. The market price of our common stock could also be materially affected
by the marketing approval or lack of approval of ONCONASE(R).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
PART II. OTHER INFORMATION
Item 2. (c) Recent Sales of Unregistered Securities
In March 2001, we issued 55,555 shares of common stock upon the exercise of
stock options by a related party resulting in gross proceeds of $37,100, in a
transaction consummated as a private sale pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
- 12 -
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K).
Exhibit No. or
Exhibit Incorporation
No. Item Title by Reference
------- ---------- --------------
3.1 Certificate of Incorporation *
3.2 By-Laws *
3.3 Amendment to Certificate of Incorporation #
3.4 Amendment to Certificate of Incorporation +++
4.1 Form of Convertible Debenture **
10.1 Form of Stock and Warrant Purchase Agreements used in private
placements completed April 1996 and June 1996 ##
10.2 Lease Agreement - 225 Belleville Avenue, Bloomfield, New
Jersey ###
10.3 Form of Stock Purchase Agreement and Certificate used in
connection with various private placements ***
10.4 Form of Stock and Warrant Purchase Agreement and Warrant
Agreement used in Private Placement completed on March 21,
1994 ***
10.5 The Company's 1993 Stock Option Plan and Form of Option
Agreement *****
10.6 Debt Conversion Agreement dated March 30, 1994 with Kuslima
Shogen ****
10.7 Accrued Salary Conversion Agreement dated March 30, 1994
with Kuslima Shogen ****
10.8 Accrued Salary Conversion Agreement dated March 30, 1994
with Stanislaw Mikulski ****
10.9 Debt Conversion Agreement dated March 30, 1994 with John
Schierloh ****
10.10 Option Agreement dated March 30, 1994 with Kuslima Shogen ****
10.11 Option Agreement dated March 30, 1994 with Kuslima Shogen ****
10.12 Amendment No. 1 dated June 20, 1994 to Option Agreement
dated March 30, 1994 with Kuslima Shogen ****
10.13 Form of Amendment No. 1 dated June 20, 1994 to Option
Agreement dated March 30, 1994 with Kuslima Shogen *****
10.14 Form of Amendment No. 1 dated June 20, 1994 to Option
Agreement dated March 30, 1994 with Stanislaw Mikulski *****
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Exhibit No. or
Exhibit Incorporation
No. Item Title by Reference
------- ---------- --------------
10.15 Form of Stock and Warrant Purchase Agreement and Warrant
Agreement used in Private Placement completed on September
13, 1994 +
10.16 Form of Subscription Agreements and Warrant Agreement used
in Private Placements closed in October 1994 and September
1995 #
10.17 Common Stock Purchase Agreement by and between the
Company and Digital Creations, Inc. dated March 3, 1997 ###
10.18 1997 Stock Option Plan ###
10.19 Separation Agreement with Michael C. Lowe dated as of
October 9, 1997 ++
10.20 Form of Subscription Agreement and Warrant Agreement used
in Private Placement completed on February 20, 1998 +++
10.21 Form of Warrant Agreement issued to the Placement Agent in
connection with the Private Placement completed on February
20, 1998 +++
10.22 Placement Agent Agreement dated December 15, 1997 +++
10.23 Separation Agreement with Gail Fraser dated August 31, 1999 ++++
10.24 Form of Subscription Agreement and Warrant Agreement used
in the August and September 2000 Private Placement +++++
99.1 Factors to Consider in Connection with Forward-Looking ####
Statements
* Previously filed as exhibit to the Company's Registration Statement on
Form S-18 (File No. 2-79975-NY) and incorporated herein by reference
thereto.
** Previously filed as exhibits to the Company's Annual Report on Form 10-K
for the year ended July 31, 1993 and incorporated herein by reference
thereto.
*** Previously filed as exhibits to the Company's Quarterly Report on Form
10-QSB for the quarter ended January 31, 1994 and incorporated herein by
reference thereto.
**** Previously filed as exhibits to the Company's Quarterly Report on Form
10-QSB for the quarter ended April 30, 1994 and incorporated herein by
reference thereto.
***** Previously filed as exhibits to the Company's Registration Statement
Form SB-2 (File No. 33-76950) and incorporated herein by reference
thereto.
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+ Previously filed as exhibits to the Company's Registration Statement on
Form SB-2 (File No. 33-83072) and incorporated herein by reference
thereto.
++ Previously filed as exhibits to the Company's Quarterly Report on Form
10-Q for the quarter ended October 31, 1997 and incorporated herein by
reference thereto.
+++ Previously filed as exhibits to the Company's Quarterly Report on Form
10-Q for the quarter ended January 31, 1998 and incorporated herein by
reference thereto.
++++ Previously filed as exhibits to the Company's Annual Report on Form 10-K
for the year ended July 31, 1999 and incorporated herein by reference
thereto.
+++++ Previously filed as exhibits to the Company's Quarterly Report on Form
10-Q for the quarter ended October 31, 2000 and incorporated herein by
reference thereto.
# Previously filed as exhibits to the Company's Annual Report on Form
10-KSB for the year ended July 31, 1995 and incorporated herein by
reference thereto.
## Previously filed as exhibits to the Company's Registration Statement on
Form SB-2 (File No. 333-11575) and incorporated herein by reference
thereto.
### Previously filed as exhibits to the Company's Quarterly Report on Form
10-QSB for the quarter ended April 30, 1997 and incorporated herein by
reference thereto.
#### Filed herewith.
(b) Reports on Form 8-K.
On May 21, 2001, we filed a report on Form 8-K stating that the Board of
Directors extended the expiration date of warrants to purchase an aggregate of
1,168,575 shares of common stock issued in the 1998 private placement, from May
19, 2001 to August 17, 2001. In addition, we also extended the expiration date
of 114,708 warrants to purchase units consisting of (i) an aggregate of 229,416
shares of common stock and (ii) warrants to purchase an aggregate of 116,208
shares of common stock issued to the placement agent in the 1998 private
placement from May 19, 2001 to August 17, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALFACELL CORPORATION
(Registrant)
June 14, 2001 /s/ KUSLIMA SHOGEN
-------------------------------------
Kuslima Shogen, Chief Executive
Officer, Acting Chief Financial
Officer (Principal Executive Officer,
Principal Accounting Officer) and
Chairman of the Board
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