FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the period ended March 31, 2003
Commission File Number: 001-12033
Nymox Pharmaceutical Corporation
9900 Cavendish Blvd., St. Laurent, QC, Canada, H4M 2V2
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
--- ---
Indicate by check mark if the registrant is submitting Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(l): ___
Indicate by check mark if the registrant is submitting Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ___
Indicate by check mark whether by furnishing the information contained in
this Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
82-______________
[NYMOX LOGO]
CORPORATE PROFILE
Nymox Pharmaceutical Corporation is a biotechnology company with three unique
proprietary products on the market, and a significant R&D pipeline of products
in development. Nymox is a leader in the research and development of products
for the diagnosis and treatment of Alzheimer's disease, an affliction of more
than 15 million people around the world. Nymox developed and is currently
offering its AlzheimAlert(TM) test, a CLIA certified reference laboratory
urinary test that is the world's only accurate, non-invasive aid in the
diagnosis of Alzheimer's disease. Nymox also developed and markets NicAlert(TM)
and NicoMeter(TM), tests that use urine or saliva to detect use of and exposure
to tobacco products. In October 2002, NicAlert(TM) received clearance from the
U.S. Food and Drug Administration (FDA). Nymox also is developing treatments
aimed at the causes of Alzheimer's disease. One program targets spherons, which
Nymox researchers believe are a source of the senile plaques found in the brains
of patients with Alzheimer's disease. Another distinct program targets the brain
protein (neural thread protein) detected by its AlzheimAlert(TM) test and
implicated in widespread brain cell death seen in Alzheimer's disease. In 2002,
Nymox was issued an important U.S. patent for the use of statin drugs for the
treatment and prevention of Alzheimer's disease. Nymox is developing new
antibacterial agents for the treatment of urinary tract and other bacterial
infections in humans and for the treatment of E. coli O157:H7 contamination in
meat and other food and drink products. Nymox is developing NX-1207, a novel
treatment for benign prostatic hyperplasia. The Company filed an Investigational
New Drug application with the FDA in 2002, and has begun the Phase I stage U.S.
clinical testing of NX-1207 in humans. Nymox also has several other drug
candidates and diagnostic technologies in development.
Message to Shareholders
-----------------------
Nymox is pleased to present its results for the first quarter of 2003.
Nymox offers a proprietary product called AlzheimAlert(TM), which is a state of
the art urine test designed to aid physicians in the diagnosis of Alzheimer's
disease. AlzheimAlert(TM) is Nymox's unique patented urinary test for neural
thread protein, a key protein involved in the Alzheimer's disease process. We
are in the early stages of making the tests available to doctors throughout the
U.S. through a medical field force of over 60 medical representatives. The test
costs $295 and is performed by the company's clinical reference laboratory in
New Jersey.
On January 28, Nymox announced that it had successfully developed a new kit for
its AlzheimAlert(TM) test. The new kit is designed for export to foreign
markets. Nymox will provide its AlzheimAlert(TM) kit in selected jurisdictions.
The kit will retail for $140 per individual test and each kit will contain
multiple tests.
1
On March 19, Nymox announced that it has several new products in its diagnostic
platform pipeline. Based on new successful development milestones, the Company
will be targeting these new product entities for commercial development. Nymox
and its subsidiaries have developed a patented platform for point-of-care
testing. The new products use proprietary Nymox technology involving
single-step, quantitative immunoassays that do not require sample preparation
and do not require any equipment for their routine use.
On February 20, Nymox announced that a new study had shown excellent results for
Nymox's NicAlert(TM) device for measurement of tobacco product exposure. The
study results were presented at the Society for Research on Nicotine and Tobacco
9th Annual meeting in New Orleans. This trial was undertaken at Virginia
Commonwealth University in Richmond, Virginia, where the lead investigator was
Dr. Thomas Eissenberg. In the new study NicAlert(TM) was tested in individuals
who were at various stages of smoking abstinence. NicAlert(TM) was shown to
reliably detect the progressive lowering of tobacco exposure during tobacco
abstinence. Dr. Eissenberg, Associate Professor of Psychology, Institute for
Drug and Alcohol Studies, said, "Cotinine is a major metabolite of nicotine
found in smokers' blood, saliva and urine. The NicAlert(TM) test that we used in
this study was easy-to-use, sensitive, and inexpensive. Furthermore,
NicAlert(TM) was most valuable for correctly identifying current smokers and in
this study, and showed sensitivity of 98.3%."
On March 7, Nymox announced positive trial results for its NicAlert(TM) product.
Clinical trials from multi-center trials have shown that NicAlert(TM) is useful
in detecting second-hand smoke exposure, as well as measuring the effects of
smoking and tobacco product use in urine. The new trials showed that with
increasing ETS, there were greater numbers of subjects testing positive with
NicAlert(TM). 91% of nonsmoking subjects with smokers at home and significant
tobacco product exposure tested positive in the trial.
On January 22, Nymox announced that the importance of its patent rights for
statin use in Alzheimer's disease had been bolstered by new published medical
studies. Nymox holds U.S. patent rights for the use of statin drugs for the
treatment and prevention of Alzheimer's disease. Statins are the class of drugs
used for lowering cholesterol, with worldwide sales of $16 billion. A new study
published in the January issue of the Archives of Neurology (Arch Neurol Jan
2003; 60:29-35) found that a genetic trait which impairs the removal of
cholesterol from the brain increased the risk of Alzheimer's disease and led to
increased levels of some of the biochemical hallmarks of the disease. Another
epidemiological study found that elevated total cholesterol levels in midlife
increase the risk of Alzheimer's disease (Ann Intern Med 2002; 137:149-55). A
third published study found that favorable cholesterol levels in the very
elderly are strongly associated with improved mental abilities (J Gerontol A
Biol Sci Med Sci 2002; 57:M712-5).
2
On February 18, Nymox announced that it has begun Phase I safety studies for
NX-1207, the Company's investigational new drug for benign prostatic hyperplasia
(BPH). The safety studies will be carried out at different sites in the U.S., in
men with BPH.
On February 11, Nymox announced that it will sponsor the Fourth Manhattan
Alzheimer's Disease Conference in New York City on May 27, 2003. The Fourth
Manhattan Conference will take place at the Waldorf Astoria Hotel and will
feature presentations from a world class assembly of speakers and panelists.
We wish to thank our over 4,000 shareholders for their strong support. Nymox has
made significant progress in its major milestones, and we look forward to the
important challenges ahead.
/s/ Paul Averback, MD
---------------------
Paul Averback MD
President
May 14, 2003
3
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in US dollars)
The following discussion should be read in conjunction with the consolidated
financial statements of the Company.
Overview
The business activities of the Company since inception have been devoted
principally to research and development. Accordingly, the Company has had
limited revenues from sales and has not been profitable to date. We refer to the
Corporate Profile for a discussion of the Company's research and development
projects and its product pipeline.
Critical Accounting Policies
----------------------------
In December 2001, the Securities and Exchange Commission ("SEC") released
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies".
According to the SEC release, accounting policies are among the "most critical"
if they are, in management's view, most important to the portrayal of the
company's financial condition and most demanding on their calls for judgement.
Our accounting policies are described in the notes to our consolidated financial
statements. We consider the following policies to be the most critical in
understanding the judgements that are involved in preparing our financial
statements and the matters that could impact our results of operations,
financial condition and cash flows.
Revenue Recognition
-------------------
The Corporation applies guidance from SAB 101 (Staff Accounting Bulletin 101)
issued by the Securities and Exchange Commission in the recognition of revenue.
The Company has generally derived its revenue from product sales, research
contracts, license fees and interest. Revenue from product sales is recognized
when the product or service has been delivered or obligations as defined in the
agreement are performed. Revenue from research contracts is recognized at the
time research activities are performed under the agreement. Revenue from license
fees, royalties and milestone payments is recognized upon the fulfillment of all
obligations under the terms of the related agreement. These agreements may
include upfront payments to be received by the Corporation. Upfront payments are
recognized as revenue on a systematic basis over the period that the related
services or obligations as defined in the agreement are performed. Interest is
recognized on an accrual basis. Deferred revenue presented in the balance sheet
represents amounts billed to and received from customers in advance of revenue
recognition.
4
The Company currently markets AlzheimAlert(TM) as a service provided by our CLIA
certified reference laboratory in New Jersey. Physicians send urine samples
taken from their patients to our laboratory where the AlzheimAlert(TM) test is
performed. The results are then reported back to the physicians. We recognize
the revenues when the test has been performed. The Company sometimes enters into
bulk sales of its diagnostic products to customers under which it has a future
obligation to perform related testing services at its laboratory. Although the
Company receives non-refundable upfront payments under these agreements, revenue
is recognized in the period that the Company fulfils its obligation or over the
term of the arrangement. For research contracts and licensing revenues, the
Company usually enters into an agreement specifying the terms and obligations of
the parties. Revenues from these sources are only recognized when there are no
longer any obligations to be performed by the Company under the terms of the
agreement.
Valuation of Capital Assets
---------------------------
The Company reviews the unamortized balance of property and equipment,
intellectual property rights and patents on an annual basis and recognizes any
impairment in carrying value when it is identified. Factors we consider
important, which could trigger an impairment review include:
o Significant changes in the manner of our use of the acquired assets or the
strategy for our overall business; and
o Significant negative industry or economic trends.
No impairment losses were recognized for the periods ended March 31, 2003, 2002
and 2001.
Valuation of Future Income Tax Assets
-------------------------------------
Management judgement is required in determining the valuation allowance recorded
against net future tax assets. We have recorded a valuation allowance of $7.8
million as of December 31, 2002, due to uncertainties related to our ability to
utilize some of our future tax assets, primarily consisting of net operating
losses carried forward and other unclaimed deductions, before they expire. In
assessing the realizability of future tax assets, management considers whether
it is more likely than not that some portion or all of the future tax assets
will not be realized. The ultimate realization of future tax assets is dependent
upon the generation of future taxable income and tax planning strategies. The
generation of future taxable income is dependent on the successful
commercialization of its products and technologies.
5
Results of Operations
Revenues
--------
Revenues from sales amounted to $33,544 for the three months ended March 31,
2003, compared with $62,305 for the same period in 2002 due to lower revenues
recognized for AlzheimAlert in 2003 (see Deferred Revenue $55,930).
Research and Development
------------------------
Research and development expenditures remained relatively constant at $528,563
for the three months ended March 31, 2003, compared with $534,890 for the same
period in 2002. During the first three months of 2003, research tax credits
amounted to $3,558 compared to $5,881 for the same period in 2002.
Marketing Expenses
------------------
Marketing expenditures decreased to $47,757 for the three months ended March 31,
2003, in comparison to expenditures of $84,482 for the same period in 2002. The
decrease is attributable to reduced costs relating to marketing agreements.
Administrative Expenses
-----------------------
General and administrative expenses increased to $263,253 for the three months
ended March 31, 2003, compared with $196,248 for the same period in 2002, due to
higher professional fees for regulatory and legal work.
Foreign Exchange
----------------
The Company incurs expenses in the local currency of the countries in which it
operates, which include the United States and Canada. Approximately 75% of 2003
expenses (75% in 2002) were in U.S. dollars. Foreign exchange fluctuations had
no meaningful impact on the Company's results in 2003 or 2002.
Inflation
---------
The Company does not believe that inflation has had a significant impact on its
results of operations.
Long-Term Commitments
---------------------
Nymox has no financial obligations of significance other than long-term lease
commitments for its premises in the United States and Canada of $14,583 per
month and ongoing research funding payments to a U.S. medical facility totaling
$416,500 over the next two years.
6
Results of Operations
---------------------
Net losses for the three month period ended March 31, 2003 were $928,490, or
$0.04 per share, compared to $883,017, or $0.04 per share, for the same period
in 2002. The weighted average number of common shares outstanding for the three
months ending March 31, 2003 were 23,205,916 compared to 22,380,572 for the same
period in 2002.
Financial Position
Liquidity and Capital Resources
-------------------------------
As of March 31, 2003, cash totaled $699,806 and receivables including tax
credits totaled $129,146. In January 2003, the Corporation signed a common stock
private purchase agreement whereby the investor is committed to purchase up to
$5 million of the Corporation's common shares over a twenty-four month period
commencing January 2003. As at March 31, 2003, two drawings have been made under
this purchase agreement, for total proceeds of $1,400,000. Specifically, on
January 30, 2003, 107,382 common shares were issued at a price of $3.725 per
share. On March 3, 2003, 245,098 common shares were issued at a price of $4.08
per share. The Company can draw down a further $3,600,000 over 21 months under
the agreement. The Company intends to access financing under this agreement when
appropriate to fund its research and development. The Company believes that
funds from operations as well as from existing financing agreements will be
sufficient to meet the Company's cash requirements for the next twelve months.
This message contains certain "forward-looking statements" as defined in the
United States Private Securities Litigation Reform Act of 1995 that involve a
number of risks and uncertainties. There can be no assurance that such
statements will prove to be accurate and the actual results and future events
could differ materially from management's current expectations. Such factors are
detailed from time to time in Nymox's filings with the Securities and Exchange
Commission and other regulatory authorities.
7
Consolidated Financial Statements of
(Unaudited)
NYMOX PHARMACEUTICAL
CORPORATION
Three-month periods ended March 31, 2003, 2002 and 2001
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Financial Statements
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
Financial Statements
Consolidated Balance Sheets........................................... 1
Consolidated Statements of Operations................................. 2
Consolidated Statements of Deficit.................................... 3
Consolidated Statements of Cash Flows................................. 4
Notes to Consolidated Financial Statements............................ 5
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Balance Sheets
(Unaudited)
March 31, 2003, with comparative figures as at December 31, 2002
(in US dollars)
------------------------------------------------------------------------------------------
March 31, December 31,
2003 2002
------------------------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash $ 699,806 $ 660,629
Accounts receivable 78,423 101,364
Research tax credits receivable 50,723 47,165
Inventories 63,945 53,208
Prepaid expenses and deposits 17,500 17,500
------------------------------------------------------------------------------------------
910,397 879,866
Long-term receivables 70,000 70,000
Property and equipment 176,031 185,293
Patents and intellectual property 3,154,176 3,223,498
------------------------------------------------------------------------------------------
$ 4,310,604 $ 4,358,657
------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 545,311 $ 870,925
Notes payable 222,436 544,872
Deferred revenue 55,930 55,930
------------------------------------------------------------------------------------------
823,677 1,471,727
Non-controlling interest 800,000 800,000
Shareholders' equity:
Share capital (note 2) 30,013,600 28,407,600
Warrants and options 336,438 336,438
Additional paid-in capital 85,200 85,200
Deficit (27,748,311) (26,742,308)
------------------------------------------------------------------------------------------
2,686,927 2,086,930
Contingencies (note 6)
------------------------------------------------------------------------------------------
$ 4,310,604 $ 4,358,657
------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
-1-
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------------------------------------------------
2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------
Revenue:
Sales $ 33,544 $ 62,305 $ 61,297
Interest 483 2,632 6,743
--------------------------------------------------------------------------------------------------------------------------
34,027 64,937 68,040
Expenses:
Research and development 528,563 534,890 323,784
Less investment tax credits (3,558) (5,881) (1,360)
--------------------------------------------------------------------------------------------------------------------------
525,005 529,009 322,424
General and administrative 263,253 196,248 152,134
Marketing 47,757 84,482 77,978
Cost of sales 23,074 19,601 23,353
Depreciation and amortization 97,686 94,414 94,882
Interest and bank charges 5,742 24,200 1,535
--------------------------------------------------------------------------------------------------------------------------
962,517 947,954 672,306
--------------------------------------------------------------------------------------------------------------------------
Net loss $ (928,490) $ (883,017) $ (604,266)
--------------------------------------------------------------------------------------------------------------------------
Loss per share (basic and diluted) (note 3) $ (0.04) $ (0.04) $ (0.03)
--------------------------------------------------------------------------------------------------------------------------
Weighted average number of common
shares outstanding:
Basic 23,205,916 22,380,572 21,526,601
Plus impact of stock options and warrants 183,093 236,490 3,286
--------------------------------------------------------------------------------------------------------------------------
Diluted 23,389,009 22,617,062 21,529,887
--------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
-2-
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Deficit
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------------------------------------------------
2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------
Deficit, beginning of period $ (26,742,308) $ (23,153,447) $ (19,982,999)
Net loss (928,490) (883,017) (604,266)
Share issue costs (77,513) (15,000) (52,094)
--------------------------------------------------------------------------------------------------------------------------
Deficit, end of period $ (27,748,311) $ (24,051,464) $ (20,639,359)
--------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
-3-
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------------------------------------------------
2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (928,490) $ (883,017) $ (604,266)
Adjustments for:
Depreciation and amortization 97,686 94,414 94,882
Write-down of deferred share issue
costs - 35,398 -
Net change in operating assets and liabilities (316,968) 201,804 (148,421)
--------------------------------------------------------------------------------------------------------------------------
(1,147,772) (551,401) (657,805)
Cash flows from financing activities:
Proceeds from issuance of share capital 1,606,000 1,119,000 739,273
Share issue costs (77,513) (15,000) (42,991)
Repayment of notes payable (322,437) - -
--------------------------------------------------------------------------------------------------------------------------
1,206,050 1,104,000 696,282
Cash flows from investing activities:
Additions to property and equipment,
patents and intellectual property (19,101) (98,036) (54,442)
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 39,177 454,563 (15,965)
Cash, beginning of period 660,629 488,987 565,711
--------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 699,806 $ 943,550 $ 549,746
--------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure to statements of cash flows:
(a) Interest paid $ 5,742 $ 2,278 $ 1,535
(b) Non-cash transaction:
Acquisition of Serex, Inc. by
issuance of common shares - 3,098 -
Amortization of deferred share issue
costs charged to deficit - - 9,103
--------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
-4-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
Nymox Pharmaceutical Corporation (the "Corporation"), incorporated under
the Canada Business Corporations Act, including its subsidiaries, Nymox
Corporation, a Delaware Corporation, and Serex Inc. of New Jersey, is a
biopharmaceutical corporation which specializes in the research and
development of products for the diagnosis and treatment of Alzheimer's
disease. The Corporation is currently marketing AlzheimAlert(TM), a urinary
test that aids physicians in the diagnosis of Alzheimer's disease. The
Corporation also markets NicAlert(TM) and NicoMeter(TM), tests that use
urine or saliva to detect use of tobacco products. The Corporation is
developing therapeutics for the treatment of Alzheimer's disease, new
treatments for benign prostate hyperplasia, and new anti-bacterial agents
for the treatment of urinary tract and other bacterial infections in
humans, including a treatment for E-coli 0157:H7 bacterial contamination in
meat and other food and drink products.
Since 1989, the Corporation's activities and resources have been primarily
focused on developing certain pharmaceutical technologies. The Corporation
is subject to a number of risks, including the successful development and
marketing of its technologies. In order to achieve its business plan and
the realization of its assets and liabilities in the normal course of
operations, the Corporation anticipates the need to raise additional
capital and/or achieve sales and other revenue generating activities.
Management believes that funds from operations as well as existing
financing facilities will be sufficient to meet the Corporation's
requirements for the next year.
The Corporation is listed on the NASDAQ Stock Market.
1. Basis of presentation:
(a) Interim financial statements:
The consolidated financial statements of the Corporation have been
prepared under Canadian generally accepted accounting principles. The
unaudited consolidated balance sheet as at March 31, 2003 and the
unaudited consolidated statements of operations, deficit and cash flows
for the three-month periods ended March 31, 2003, 2002 and 2001 reflect
all adjustments which are, in the opinion of management, necessary to a
fair statement of the results of the interim periods presented. The
results for any quarter are not necessarily indicative of the results
for the full year. The interim consolidated financial statements follow
the same accounting policies and methods of their application as
described in note 2 of the annual consolidated financial statements for
the year ended December 31, 2002. The interim consolidated financial
statements do not include all disclosures required for annual financial
statements and should be read in conjunction with the most recent
annual consolidated financial statements of the Corporation as at and
for the year ended December 31, 2002.
-5-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
1. Basis of presentation (continued):
(b) New accounting standards:
(i) Guarantees:
On January 1, 2003, the Corporation adopted the new
recommendations of the Canadian Institute of Chartered
Accountants ("CICA"), Accounting Guideline 14, Disclosure of
Guarantees which clarifies disclosure requirements for certain
guarantees. The guideline does not provide guidance on the
measurement and recognition of a guarantor's liability for
obligations under guarantees. The guideline defines a guarantee
to be a contract (including an indemnity) that contingently
requires the Corporation to make payments to a third party based
on (i) changes in an underlying interest rate, foreign exchange
rate, equity or commodity instrument, index or other variable,
that is related to an asset, a liability or an equity security of
the counterparty, (ii) failure of another party to perform under
an obligating agreement or (iii) failure of another party to pay
its indebtedness when due.
The adoption of this standard did not have an impact on the
Corporation's financial statements.
-6-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
1. Basis of presentation (continued):
(b) New accounting standards (continued):
(ii) Long-lived assets:
In December 2002, the CICA issued Handbook Section 3063,
Impairment or Disposal of Long-lived Assets and revised Section
3475, Disposal of Long-lived Assets and Discontinued Operations.
Together, these two Sections supersede the write-down and disposal
provisions of Section 3061, Property, Plant and Equipment as well
as Section 3475, Discontinued Operations. Section 3063 amends
existing guidance on long-lived asset impairment measurement and
establishes standards for the recognition, measurement and
disclosure of the impairment of long-lived assets held for use by
the Corporation. It requires that an impairment loss be recognized
when the carrying amount of an asset to be held and used exceeds
the sum of the undiscounted cash flows expected from its use and
disposal; the impairment recognized is measured as the amount by
which the carrying amount of the asset exceeds its fair value.
Section 3475 provides a single accounting model for long-lived
assets to be disposed of by sale. Section 3475 provides specified
criteria for classifying an asset as held-for-sale to be measured
at the lower of their carrying amounts or fair value, less costs
to sell. Section 3475 also broadens the scope of businesses that
qualify for reporting as discontinued operations to include any
disposals of a component of an entity, which comprises operations
and cash flows that can be clearly distinguished from the rest of
the Corporation, and changes the timing of recognizing losses on
such operations. The new standards contained in Section 3063 on
the impairment of long-lived assets held for use are applicable
for years beginning on or after April 1, 2003; however, early
application is permitted. The revised standards contained in
Section 3475 on disposal of long-lived assets and discontinued
operations are applicable to disposal activities initiated by the
Corporation's commitment to a plan on or after May 1, 2003;
however, early application is permitted. The Corporation does not
expect that the adoption of these standards will have a material
effect on its financial statements.
-7-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
2. Share capital:
Share capital transactions during the period were as follows:
-----------------------------------------------------------------------------------------------
Number Dollars
-----------------------------------------------------------------------------------------------
Balance, December 31, 2002 23,020,954 $ 28,407,600
Issued for cash pursuant to common stock private
purchase agreement 352,480 1,400,000
Issued for cash pursuant to the exercise of warrants 100,000 206,000
-----------------------------------------------------------------------------------------------
Balance, March 31, 2003 23,473,434 $ 30,013,600
-----------------------------------------------------------------------------------------------
Common stock private purchase agreement:
---------------------------------------
In January 2003, the Corporation entered into a Common Stock Private
Purchase Agreement with an investment company (the "Purchaser") that
establishes the terms and conditions for the purchase of common shares by
the Purchaser. In general, the Corporation can, at its discretion, require
the Purchaser to purchase up to $5 million of common shares over a
twenty-four month period based on notices given by the Corporation.
The number of shares to be issued in connection with each notice shall be
equal to the amount specified in the notice divided by 97% of the average
price of the Corporation's common shares for the five days preceding the
giving of the notice. The maximum amount of each notice is $500,000 and the
minimum amount is $150,000. The Corporation may terminate the agreement
before the 24-month term if it has issued at least $3 million of common
shares under the agreement.
In the first quarter, the Corporation issued 352,480 common shares to the
Purchaser for aggregate proceeds of $1,400,000 under this agreement. At
March 31, 2003, the Corporation can require the Purchaser to purchase up to
$3,600,000 of common shares over the remaining 21 months of the agreement.
Exercise of warrants:
--------------------
In February 2003, the Corporation also issued 100,000 common shares
pursuant to the exercise of Series K warrants and received proceeds of
$206,000.
-8-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
3. Stock-based compensation:
If the fair value-based accounting method had been used to measure and
account for stock-based compensation costs relating to exempt options
issued to employees in the periods ended March 31, 2003 and 2002, the net
earnings and related earnings per share figures would be as follows:
-----------------------------------------------------------------------------------------
2003 2002
-----------------------------------------------------------------------------------------
Reported net loss $ (928,490) $ (883,017)
Pro forma adjustments to compensation expense - -
-----------------------------------------------------------------------------------------
Pro forma net loss $ (928,490) $ (883,017)
-----------------------------------------------------------------------------------------
Pro forma loss per share (basic and diluted) $ (0.04) $ (0.04)
-----------------------------------------------------------------------------------------
No options were granted by the Corporation since the date of application of
CICA Handbook Section 3870, Stock-based Compensation, January 1, 2002.
4. Canadian/US Reporting Differences:
(a) Consolidated statements of earnings:
The reconciliation of earnings reported in accordance with Canadian
GAAP with U.S. GAAP is as follows:
------------------------------------------------------------------------------------------------------
2003 2002 2001
------------------------------------------------------------------------------------------------------
Net loss, Canadian GAAP $ (928,490) $ (883,017) $ (604,266)
Adjustments:
Amortization of patents (i) 2,353 2,353 2,353
Stock-based compensation - options
granted to non-employees (ii) (10,285) (10,285) (15,310)
------------------------------------------------------------------------------------------------------
(7,932) (7,932) (12,957)
------------------------------------------------------------------------------------------------------
Net loss, U.S. GAAP $ (936,422) $ (890,949) $ (617,223)
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Loss per share, U.S. GAAP $ (0.04) $ (0.04) $ (0.03)
------------------------------------------------------------------------------------------------------
-9-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
4. Canadian/US Reporting Differences (continued):
(a) Consolidated statements of earnings (continued):
The weighted average number of common shares outstanding for purposes
of determining basic and diluted loss per share are the same amounts
disclosed for Canadian GAAP purposes.
(b) Consolidated shareholders' equity:
The reconciliation of shareholders' equity reported in accordance with
Canadian GAAP with U.S. GAAP is as follows:
------------------------------------------------------------------------------------------------------
2003 2002 2001
------------------------------------------------------------------------------------------------------
Shareholders' equity, Canadian GAAP $ 2,686,927 $ 2,868,829 $ 3,343,855
Adjustments:
Amortization of patents (i) (126,772) (136,182) (145,593)
Stock-based compensation - options
granted to non-employees (ii):
Cumulative compensation
expense (1,312,008) (1,270,868) (1,220,853)
Additional paid-in capital 1,364,571 1,323,431 1,273,416
Change in reporting currency (iii) (62,672) (62,672) (62,672)
------------------------------------------------------------------------------------------------------
(136,881) (146,291) (155,702)
------------------------------------------------------------------------------------------------------
Shareholders' equity, U.S. GAAP $ 2,550,046 $ 2,722,538 $ 3,188,153
------------------------------------------------------------------------------------------------------
(i) In accordance with APB Opinion 17, Intangible Assets, the patents are
amortized using the straight-line method over the legal life of the
patents from the date the patent was secured. For Canadian GAAP purposes,
the patents are amortized commencing in the year of commercial production
of the developed products.
(ii) In accordance with FAS 123, Accounting for Stock-Based Compensation,
compensation related to the stock options granted to non-employees prior
to January 1, 2002 has been recorded in the accounts based on the fair
value of the stock options at the grant date.
(iii) The Corporation adopted the US dollar as its reporting currency effective
January 1, 2000. For Canadian GAAP purposes, the financial information for
prior periods has been translated into US dollars at the December 31, 1999
exchange rate. For United States GAAP reporting purposes, assets and
liabilities for periods prior to January 1, 2000 have been translated into
US dollars at the ending exchange rate for the respective period and the
statement of operations at the average exchange rate for the respective
period.
-10-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
5. Segment disclosures:
Geographic segment information is as follows:
--------------------------------------------------------------------------------------------------------
United
Canada States
--------------------------------------------------------------------------------------------------------
Revenues:
2003 $ 2,636 $ 31,391
2002 2,632 62,305
2001 6,923 61,117
Net loss:
2003 (663,034) (265,456)
2002 (662,960) (220,057)
2001 (447,364) (156,902)
Property and equipment, patents and intellectual property:
March 31, 2003 3,029,068 301,138
December 31, 2002 (audited) 3,102,806 305,985
Total assets:
March 31, 2003 3,568,949 741,655
December 31, 2002 (audited) 3,791,072 562,786
--------------------------------------------------------------------------------------------------------
6. Contingencies:
Litigation:
----------
In December 2000, an investment company served the Corporation with a
Statement of Claim filed with the Ontario Superior Court of Justice
claiming to be entitled to the issuance of 388,797 additional shares in
accordance with repricing provisions contained in a private placement that
was finalized in March 2000 and to damages of $4 million for lost
opportunity to sell these shares. The Corporation believes that the
company's interpretation of the repricing provisions in the March 2000
agreement is incorrect and intends to defend the action vigorously.
Accordingly, no provision related to this matter has been recorded in these
financial statements.
-11-
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Three-month periods ended March 31, 2003, 2002 and 2001
(in US dollars)
--------------------------------------------------------------------------------
6. Contingencies (continued):
Demand for arbitration:
----------------------
In March 2002, a former employee filed a demand for arbitration with the
American Arbitration Association concerning the termination of her
employment with the Corporation. The employee is claiming damages of up to
$498,000 plus attorney's fees and costs, based upon alleged violations of
New Jersey law and breach of an employment agreement. Subsequently, in
October 2002, the former employee filed a complaint in the New Jersey
Superior Court concerning the termination of her employment with the
Corporation. The complaint claims unspecified damages. The Corporation
believes these claims are without merit and intends to defend the matter
vigorously.
-12-
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.
NYMOX PHARMACEUTICAL CORPORATION
(Registrant)
By: /s/ Paul Averback
----------------------------------
Paul Averback
President and Chief Executive Officer
Date: May 14, 2003