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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2005
 
Commission File No. 000-24972
 
INKINE PHARMACEUTICAL COMPANY, INC.
(Exact name of Registrant as specified in its charter)
 
New York
 
13-3754005
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
1787 Sentry Parkway West
Building 18, Suite 440
Blue Bell, PA 19422
(Address of principal executive offices)
 
215-283-6850
(Registrant’s telephone number)
 
          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 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      No   
 
          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes      No   
 
          At May 5, 2005, the registrant had outstanding 49,111,055 shares of common stock, par value $.0001 per share.
 
 
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INKINE PHARMACEUTICAL COMPANY, INC.
 
INDEX
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
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PART I -- FINANCIAL INFORMATION
 
Item 1.  Financial Statements
 
INKINE PHARMACEUTICAL COMPANY, INC.
 
BALANCE SHEETS
 
(in thousands, except share and per share amounts)
 
 
 
March 31, 2005
 
December 31, 2004
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
ASSETS
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
6,369
 
$
7,859
 
Short term investments
 
 
4,193
 
 
5,194
 
Accounts receivable
 
 
4,196
 
 
2,264
 
Inventory
 
 
1,905
 
 
1,445
 
Prepaid expenses and other current assets
 
 
589
 
 
255
 
 
 
 
 
Total current assets
 
 
17,252
 
 
17,017
 
               
Fixed assets
 
 
296
 
 
311
 
Deposits
 
 
26
 
 
56
 
 
 
 
 
Total assets
 
$
17,574
 
$
17,384
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable
 
$
1,274
 
$
1,766
 
Accrued expenses
 
 
1,502
 
 
1,250
 
 
 
 
 
Total current liabilities
 
 
2,776
 
 
3,016
 
               
Shareholders’ equity:
 
 
 
 
 
 
 
Preferred stock, $0.0001 par value; authorized 5,000,000 shares; none issued and outstanding
 
 
—
 
 
—
 
Common stock, $0.0001 par value; authorized 75,000,000shares; issued 49,124,882 and 49,098,882 shares, respectively
 
 
5
 
 
5
 
Less common stock held in treasury (16,515 shares)
 
 
(37
)
 
(37
)
Additional paid-in capital
 
 
83,956
 
 
83,899
 
Deferred compensation
 
 
(615
)
 
(673
)
Unrealized loss on investments
 
 
(5
)
 
(6
)
Accumulated deficit
 
 
(68,506
)
 
(68,820
)
 
 
 
 
Total shareholders’ equity
 
 
14,798
 
 
14,368
 
 
 
 
 
Total liabilities and shareholders’ equity
 
$
17,574
 
$
17,384
 
 
 
 
 
 
See accompanying notes to unaudited financial statements.
 
3
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INKINE PHARMACEUTICAL COMPANY, INC.
 
STATEMENTS OF OPERATIONS
(unaudited)
 
(in thousands, except per share amounts)
 
 
 
Three-Months Ended March 31,
 
 
 
 
 
 
2005
 
2004
 
 
 
 
 
Product revenue
 
$
5,218
 
$
4,350
 
Other revenue
 
 
818
 
 
283
 
 
 
 
 
Revenue
 
 
6,036
 
 
4,633
 
               
Cost of goods sold
 
 
(848
)
 
(491
)
 
 
 
 
Gross profit
 
 
5,188
 
 
4,142
 
               
Cost and expenses:
 
 
 
 
 
 
 
Research and development
 
 
1,769
 
 
922
 
Sales and marketing
 
 
2,288
 
 
1,949
 
General and administrative
 
 
877
 
 
785
 
Withdrawn public offering and litigation
 
 
—
 
 
567
 
 
 
 
 
Operating expenses
 
 
4,934
 
 
4,223
 
 
 
 
 
Income (loss) from operations
 
 
254
 
 
(81
)
               
Interest income
 
 
60
 
 
10
 
Interest expense
 
 
—
 
 
(7
)
 
 
 
 
Net income (loss)
 
$
314
 
$
(78
)
 
 
 
 
Earnings per share - Basic and diluted
 
$
0.01
 
$
0.00
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
 
 
49,095
 
 
48,547
 
Diluted
 
 
53,459
 
 
48,547
 
 
See accompanying notes to unaudited financial statements.
 
4
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INKINE PHARMACEUTICAL COMPANY, INC.
 
STATEMENTS OF CASH FLOWS
(unaudited)
 
(in thousands)
 
 
 
Three-Months Ended March 31,
 
 
 
 
 
 
2005
 
2004
 
 
 
 
 
Operating activities:
 
 
 
 
 
 
 
Net income (loss)
 
$
314
 
$
(78
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
 
 
 
 
 
Depreciation
 
 
31
 
 
33
 
Amortization of deferred compensation
 
 
58
 
 
8
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
(Increase) in accounts receivable
 
 
(1,932
)
 
(1,358
)
(Increase) in inventory
 
 
(460
)
 
(700
)
(Increase) decrease in prepaid expenses and other assets
 
 
(304
)
 
188
 
Increase (decrease) in accounts payable and accrued expenses
 
 
(240
)
 
833
 
 
 
 
 
Net cash used in operating activities
 
 
(2,533
)
 
(1,074
)
               
Investing activities:
 
 
 
 
 
 
 
Purchase of short-term investments
 
 
(1,999
)
 
—  
 
Proceeds from maturities and sale of investments
 
 
3,000
 
 
—  
 
Capital expenditures
 
 
(16
)
 
(302
)
 
 
 
 
Net cash provided by (used in) investing activities
 
 
985
 
 
(302
)
               
Financing activities:
 
 
 
 
 
 
 
Proceeds from exercise of options and warrants - net of expenses
 
 
58
 
 
178
 
Repayments, net of borrowings on line of credit
 
 
—
 
 
1,000
 
 
 
 
 
Net cash provided by financing activities
 
 
58