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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

For the quarterly period ended March 31, 2004

Commission file number: 000-25571

AXONYX INC.
(Exact name of registrant as specified in its charter)

Nevada
(State or Other Jurisdiction of Incorporation) 		86-0883978
(IRS Employer Identification No.)

500 Seventh Avenue, 10th Floor, New York, New York
(Address of Principal Executive Offices) 		10018
(Zip Code)

Registrant’s telephone number, including area code (212) 645-7704

Indicate by a 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 |X| No |_|

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

As of May 13, 2004, there were 51,233,773 shares of the registrant’s common stock outstanding.


AXONYX INC.

INDEX

PART I.     FINANCIAL INFORMATION          
                 
Item 1.     Condensed Consolidated Financial Statements          
                 
      Condensed Consolidated Balance Sheets as of March 31, 2004 (unaudited)          
      and December 31, 2003       1  
                 
      Condensed Consolidated Statements of Operations (unaudited) for the three          
      months ended March 31, 2004 and 2003       2  
                 
      Condensed Consolidated Statements of Changes in Stockholders’ Equity          
      (unaudited) for the three months ended March 31, 2004       3  
                 
      Condensed Consolidated Statements of Cash Flows (unaudited) for the three          
      months ended March 31, 2004 and 2003       4  
                 
      Notes to Condensed Consolidated Financial Statements       5  
                 
Item 2.     Management’s Discussion and Analysis of Financial Condition and          
      Results of Operations       9  
                 
Item 3.     Quantitative and Qualitative Disclosures About Market Risk       16  
                 
Item 4.     Controls and Procedures       17  
                 
PART II.     OTHER INFORMATION       18  
                 
Item 6.     Exhibits and Reports on Form 8-K       18  
                 
      Signatures       20  


PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

AXONYX INC.

Condensed Consolidated Balance Sheets

  March 31,
2004
  December 31,
2003
 
  (unaudited)      
ASSETS            
     
Current Assets:    
     Cash and cash equivalents     $ 80,640,000   $ 28,780,000  
     Accounts receivable       291,000        
     Inventories       270,000        
     Other current assets       369,000     —  
 
 
 
     
               Total current assets       81,570,000     28,780,000  
     
     Equipment, net       58,000     24,000  
     
     Technology for developed products, net       7,432,000        
     Patents and patents pending, net       816,000        
     Security deposit       18,000     11,000  
 
 
 
     
      $ 89,894,000   $ 28,815,000  
 
 
 
     
LIABILITIES    
Current liabilities:    
     Accounts payable     $ 2,941,000   $ 1,284,000  
     Accrued expenses       1,266,000     880,000  
     Note payable       160,000     —  
     Convertible bridge loans       119,000     —  
 
 
 
          Total liabilities       4,486,000     2,164,000  
     
Minority interest in subsidiary       404,000        
     
STOCKHOLDERS’ EQUITY    
Preferred stock - $.001 par value, 15,000,000 shares authorized; none issued    
Common Stock - $.001 par value, 75,000,000 shares authorized; 47,978,540 and    
     33,919,948 shares issued and outstanding in 2004 and 2003 respectively.       48,000     34,000  
Additional paid-in capital       124,917,000     60,345,000  
Unearned compensation - stock options       (242,000 )   —  
Accumulated deficit       (39,719,000 )   (33,728,000 )
 
 
 
     
               Total stockholders’ equity       85,004,000     26,651,000  
 
 
 
     
               Total liabilities and stockholders’ equity     $ 89,894,000   $ 28,815,000  
 
 
 

See notes to condensed consolidated financial statements.

1


AXONYX INC.

Condensed Consolidated Statements of Operations
(unaudited)

  Three months ended
March 31,
 
  2004
  2003
 
Revenue     $ 478,000        
Cost of revenue       266,000        
 
     
Gross profit       212,000        
     
Costs and expenses:    
     Research and development       4,053,000   $ 1,027,000  
     Sales, general and administrative       2,371,000     573,000  
 
 
 
        6,424,000     1,600,000  
 
 
 
     
Loss from operations       (6,212,000 )   (1,600,000 )
     
Other income (expense)    
     Interest income       185,000     22,000  
     Foreign exchange       (71,000 )   3,000  
     Financing fees       (136,000 )      
     Interest expense       (12,000 )   —  
 
 
 
Net loss before minority interest in subsidiary       (6,246,000 )   (1,575,000 )
     
Minority interest in loss of subsidiary       255,000     —  
 
 
 
     
Net loss     $ (5,991,000 ) $ (1,575,000 )
 
 
 
     
Net loss per common share     $ (0.13 ) $ (0.07 )
 
 
 
     
Weighted average shares-basic and diluted       45,160,000     23,746,000  

See notes to condensed consolidated financial statements.

2


AXONYX INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)

  Common Stock
      Unearned  
  Number
of
Shares
  Amount
  Additional
Paid-in
Capital
  Compensation
Stock
Options
  Accumulated
Deficit
  Total
Stockholders’
Equity
 
Balance - December 31, 2003       33,919,948   $ 34,000   $ 60,345,000   $ —   $ (33,728,000 ) $ 26,651,000  
     
Issuance of common stock and warrants - net                                        
     of expenses       9,650,183     10,000     46,384,000                 46,394,000  
     
Issuance of common stock for the acquisition of    
     53% of Oxis International Inc.       1,618,061     1,000     8,193,000                 8,194,000  
     
Issuance of common stock options and warrants                                        
     for consulting services                   710,000                 710,000  
     
Issuance of common stock for consulting services       25,000           197,000                 197,000  
     
Issuance of common stock options                   387,000     (387,000 )         —  
     
Exercise of common stock warrants and options       2,765,348     3,000     8,701,000                 8,704,000  
     
Amortization                         145,000           145,000  
     
Net loss       —     —     —     —     (5,991,000 )   (5,991,000 )
 
 
 
 
 
 
 
     
Balance - - March 31, 2004       47,978,540   $ 48,000   $ 124,917,000   $ (242,000 ) $ (39,719,000 ) $ 85,004,000  
 
 
 
 
 
 
 

See notes to condensed consolidated financial statements.

3


AXONYX INC.

Condensed Consolidated Statements of Cash Flows
(unaudited)

  Three months ended
March 31, 		 
  2004
  2003
 
Cash flows from operating activities:            
     Net Loss     $ (5,991,000 ) $ (1,575,000 )
     Adjustments to reconcile net loss to cash used in    
         operating activities:    
               Depreciation and amortization       165,000     4,000  
               Minority interest in net loss of subsidiary       (255,000 )      
               Compensation related to common stock issued for services       210,000     56,000  
               Compensation related to options and warrants issued for services       855,000     49,000  
               Changes in:    
                    Accounts receivable       (24,000 )      
                    Inventory       25,000        
                    Other current assets