UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-K/A
AMENDMENT NO. 1 TO THE ANNUAL REPORT PUSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Year Ended June 30, 1999
Commission File No. 1-14004
XENOMETRIX, INC.
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(Exact name of registrant as specified in its charter)
Delaware 04-3166089
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2425 North 55th Street, Boulder, Colorado 80301-5700
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(Address of principal executive offices)
(Zip Code)
(303) 447-1773
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(Registrant's telephone number)
Securities registered under Section 12(g) of the Act:
Common Stock, $0.001 par value
Warrants to purchase Common Stock
---------------------------------
(Title of Class)
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 X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A. ( )
The aggregate market value of Xenometrix' voting stock held as of September
28, 1999 by nonaffiliates was $760,793.
2,950,247 shares of Common Stock were outstanding on September 28, 1999.
Transitional small business disclosure format. Yes No X
--- ---
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the
directors AND executive officers of the Company as of September 28, 1999:
<TABLE>
<CAPTION>
Name Age Principal Occupation / Position Held with the Company
- ---- --- -----------------------------------------------------
<S> <C> <C>
Stephen J. Sullivan 52 Corporate Senior Vice President and President of Clinical
Development and Support Services, Covance, Inc./ Chairman of the
Board, Director, Secretary
Walter M. Lovenberg, Ph.D. (3) 65 Chief Executive Officer, Helicon Therapeutics, Inc./Director
John K.A. Prendergast, Ph.D. (1)(2)(3) 45 President and Chief Executive Officer of Summercloud Bay,
Inc./Director
Randal P. Schumacher (2) 48 Chairman of Jefferson Government Relations, LLC/Director
Pauline Gee, Ph.D. 44 President, Chief Scientific Officer
</TABLE>
- ------------------
(1) Member of the Compensation and Benefits Committee
(2) Member of the Audit Committee
(3) Member of the Nominating Committee
Mr. Sullivan has served as the non-executive Chairman of the Board of
Directors and Secretary since February 1999. He also served as President and
Chief Executive Officer of Xenometrix from January 1997 until February 1999. He
has been the Corporate Senior Vice President and President of Clinical
Development and Support Services at Covance, Inc since June 1999. From 1987 to
1997 he held a number of positions with Abbott Laboratories, including
Divisional Vice President of Worldwide Marketing For Diagnostics, Divisional
Vice President and General Manager, Diagnostic Assay Sector and General Manager
of the Infectious, Disease, Immunology and Microbiology business units. He
received his B.S. in Education and Political Science from the University of
Dayton in 1969 and his M.B.A. in Marketing and Finance from Rutgers University
in 1976.
Dr. Lovenberg joined the Xenometrix Board in July 1993. He is presently the
Chief Executive Officer at Helicon Therapeutics, Inc. He served as Executive
Vice President of Marion Merrell Dow Inc. and President of the Merrell Dow
Research Institute from 1989 to 1993 and Vice President of the Merrell Dow
Research Institute from 1986 to 1989. For over two decades, Dr. Lovenberg held
various positions with the National Institutes of Health. Dr. Lovenberg received
his B.S. in Agriculture and his M.S. in Agricultural Biochemistry from Rutgers
University, and his Ph.D. in Biochemistry from George Washington University. He
has also been President of Lovenberg Associates, Inc. since 1993. He currently
serves on the Board of Directors of OSI Pharmaceuticals, Inc., Cytolclonal
Pharmaceuticals, Inc., Inflazyme Pharmaceuticals, Ltd., and Helicon
Therapeutics, Inc.
Dr. Prendergast is a co-founder of the Company and has served as a Director
since its inception. He is currently President and Chief Executive Officer of
SummerCloud Bay, Inc., a biotechnology consulting firm. He was a Managing
Director of Paramount Capital Investments LLC and The Castle Group, Ltd. from
1991 to 1997. Dr. Prendergast is a cofounder of a number of publicly traded
biotechnology companies and currently serves on the Boards of Directors of Avax
Technologies, Inc., Avigen, Inc., Ingenex, Inc. and Palatin Technologies, Inc..
Dr. Prendergast received his M.Sc. and Ph.D. from the University of New South
Wales, Sydney, Australia, and his C.S.S. in Administration and Management from
Harvard University.
Mr. Schumacher has been a Director since March 1996. He is Chairman of
Jefferson Government Relations, LLC, Washington, D.C., a consulting firm
providing its clients with corporate counseling, legislative and regulatory
representation, and facilities consultation. From 1979 to 1989 he was Director
of Health, Safety and Chemical Regulations for the Chemical Manufacturers
Association. From 1977 to 1979 he worked for Eastman Kodak Company, assisting in
both corporate and facility health, safety and environmental programs. He
received his M.S. in toxicology from the University of Rochester and a law
degree from The Catholic University of America. He was appointed to the board
<PAGE>
pursuant to the Underwriting Agreement between the Company and Barington Capital
Group, L.P. ("Barington"), dated October 17, 1995 related to the Company's
initial public offering.
Dr. Gee joined Xenometrix in January 1994 as Associate Lab Director, was
promoted to Director of Research and Development in May 1994, and became Vice
President of Research and Development in July 1995. She was promoted to
President and Chief Scientific Officer in February of 1999. From 1989 to 1993,
she was a Biochemistry Specialist in the Department of Molecular and Cellular
Biology at the University of California, Berkeley. From 1987 to 1989, she worked
with Dr. Philip Hanawalt as a Visiting Scholar in the Department of Biological
Sciences, Stanford University. She received her Ph.D. in Neurobiology and Free
Radical Chemistry from Simon Fraser University, B.C. Canada and a B.Sc. in
Marine Biology and Human Physiology.
Board Committees and Meetings
During the year ended June 30, 1999 the Board of Directors held eight
meetings. The Board has an Audit Committee, a Compensation and Benefits
Committee and a Nominating Committee. The Audit Committee held one meeting, the
Compensation and Benefits Committee held one meeting and the Nominating
Committee held no meetings during the year ended June 1999.
The Audit Committee meets with the Company's independent accountants to
review the results of the annual audit and discuss the financial statements,
recommends to the Board the independent accountants to be retained and receives
and considers the independent accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of two non-employee
directors: Dr. Prendergast and Mr. Schumacher.
The Compensation and Benefits Committee makes recommendations concerning
salaries and incentive compensation, awards stock options to employees and
consultants under the Company's stock option plans and otherwise determines
compensation levels and performs such other functions regarding compensation as
the Board may delegate. The Compensation and Benefits Committee is currently
composed of one non-employee director: Dr. Prendergast.
The Nominating Committee makes recommendations concerning the size and
composition of the Company's Board. No procedure has been established for the
consideration of nominees recommended by stockholders. The Nominating Committee
is currently composed of Drs. Lovenberg and Prendergast.
During the year ended June 30, 1999, each Director attended 75% or more of
the aggregate of the meetings of the Board and of the committees on which he
served held during the period for which he was a Director or committee member,
respectively.
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's Directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, Directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 1998, all Section
16(a) filing requirements applicable to its officers, Directors and greater than
ten percent beneficial owners were complied with.
2
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
Compensation of Directors
Each non-employee director of the Company receives stock option grants
under the Directors' Plan. Only non-employee directors of the Company or
affiliates of such directors (as defined in the Internal Revenue Code) are
eligible to receive options under the Directors' Plan. Options granted under the
Directors' Plan do not qualify as incentive stock options under the Code. A one
time compensation of $10,000 was awarded in fiscal year ended June 1998,
but is subject to further review and adjustment by the Compensation Committee
and will not be paid until the Board determines that sufficient funds are
available.
Each non-employee director receives (i) a grant of an option to purchase
10,000 shares of Common Stock on the date such person is first elected or
appointed as a director, and (ii) an annual grant of additional stock options to
purchase a minimum of 10,000 shares of Common Stock per year. The options
generally vest 20% on the date of grant and 20% per year at the end of each of
the next four years. In addition, each director is entitled to be reimbursed for
all reasonable travel expenses to attend meetings.
During the last fiscal year, the Company granted options covering 70,000
shares to the non-employee directors of the Company, at a weighted average
exercise price per share of $0.20, which was equal to the fair market value on
the date of each grant (based on the closing sales price reported on the NASDAQ
Over The Counter Bulletin Board). As of June 30, 1999, 10,500 options had been
exercised under the Directors' Plan. See "1993 Non-Employee Directors' Stock
Option Plan."
Compensation of Executive Officers
The following table sets forth, for the fiscal year ended June 1999, 1998
and 1997, certain compensation, including salary, bonuses, stock options and
certain other compensation, awarded or paid to, or earned by the Company's
President and Chief Scientific Officer at June 1999 (the "Named Executive
Officer"). Mr. Sullivan was President and Chief Executive Officer for the first
seven months of the fiscal year ended 1999.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
------------------- -----------------------------
Securities All Other
Fiscal Salary Bonus Underlying Compensation
Name and Principal Position Year ($) ($) (1) Options (#) ($)
- --------------------------- ------ ------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Pauline Gee, Ph.D. 1999 111,154 - 117,434 561 (2)
1998 93,165 13,348 77,434 700 (2)
President, Chief Scientific 1997 85,576 21,500 59,796 163 (2)
Officer
Stephen J. Sullivan 1999 (3) 139,749 - 200,816(4) 17,522 (5)
Chairman, Director and 1998 241,735 31,283 233,316 11,922 (6)
Secretary 1997 110,602 33,750 232,540 6,756 (7)
</TABLE>
- ----------------
(1) Bonuses earned in the fiscal year ended June 30, 1998 are subject to
further review and adjustment by the Board of Directors and will not be
paid until the Board determines that sufficient funds are available.
(2) Represents expenses related to Company matching contributions to the
Xenometrix 401-k Plan.
(3) Represents compensation to Mr. Sullivan as President and Chief Executive
Officer from June 1998 to January 1999 of the fiscal year ended June 1999.
(4) Mr. Sullivan was granted 22,500 options in fiscal year ended June 1999,
however his cumulative grant was reduced by 55,000 options when he resigned
as President and Chief Executive Officer.
(5) Includes $16,413 of living expenses, job relocation expenses, and expenses
reimbursed by the Company for travel between Lake Forest, Illinois and
Boulder, Colorado, pursuant to his employment agreement, and $1,109 of
expenses related to Company matching contributions to the Xenometrix 401-k
Plan for approximately seven months in fiscal year 1999.
(6) Includes $9,764 of living expenses and expenses reimbursed by the Company
for travel between Lake Forest, Illinois and Boulder, Colorado, pursuant to
his employment agreement, and $2,158 of expenses related to Company
matching contributions to the Xenometrix 401-k Plan.
3
<PAGE>
(7) Includes $6,384 of temporary living expenses and expenses for travel
between Lake Forest, Illinois and Boulder, Colorado, pursuant to his
employment agreement, and $372 of expenses related to Company matching
contributions to the Xenometrix 401-k Plan.
Option Grants for Executives Officers in Fiscal 1999
The following table sets forth for the Named Executive Officer certain
information regarding options granted for the year ended June 30, 1999:
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Grant Underlying Granted in Fiscal Exercise Expiration
Name Date Option Grants 1999 (1) Price Date
---- ---- ------------- -------- ----- ----
<S> <C> <C> <C> <C> <C>
Pauline Gee (1) 4/26/99 40,000 40.0% 0.21875 4/25/09
Stephen J. Sullivan (2) 7/22/98 17,633 17.6% 0.18750 7/21/08
- ----------
(1) A total of 100,000 options were granted to employees during the year ended
June 30, 1999.
(2) 22,500 options were granted when Mr. Sullivan was President and CEO, but
were reduced to 17,633 options when he resigned to become a non-executive
Chairman of the Board of Directors.
Aggregate Option Exercises in Fiscal 1999 and Fiscal Year End Option Values for
Executive Officers
The following table sets forth for the Named Executive Officer the shares
acquired and the value realized on each exercise of stock options during the
year ended June 30, 1999 and the fiscal year end number and value of unexercised
options:
Shares Value of Unexercised
Acquired on In-the-Money Options at
Value Number of Unexercised June 30, 1999($) (1)
Options at June 30, 1999 (#)
--------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Pauline Gee -- -- 30,926 86,508 $198 $1,646
Stephen J. Sullivan -- -- 96,875 103,941 $155 $1,415
</TABLE>
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(1) Based on the fair market value of the Common Stock as of June 30, 1999 of
$0.25 per share minus the exercise price of "in-the-money" unexercised
options, multiplied by the number of shares represented by such options
Employment Agreements
Xenometrix has an employment agreement with its President and Chief
Scientific Officer, Pauline Gee. This agreement is expected to cover the period
from December 17, 1998 through December 17, 1999, and provides for minimum
annual salary during the year which is comparable with the current annual
salary, participation in an annual cash bonus plan based on the achievement of
criteria to be established by the Board and participation in the Company's group
health, life insurance and disability insurance plans. Upon resignation of Mr.
Sullivan as President and Chief Executive Officer to become the non-executive
Chairman, the Board reduced his 255,816 options by 55,000 but retained the
original vesting schedule from the original date that the options were granted.
These options continue to vest until Mr. Sullivan is no longer Chairman of the
Board. In the fiscal year ended June 30, 1999, the Company paid Mr. Sullivan
$4,500 under a consulting agreement. Mr Sullivan received no other compensation
upon his resignation from President and Chief Executive Officer.
4
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of September 28, 1999 by: (i) each nominee for
director; (ii) the executive officers named in the Summary Compensation Table;
(iii) all executive officers and directors of the Company as a group; and (iv)
all those known by the Company to be beneficial owners of more than five percent
of its Common Stock.
<TABLE>
<CAPTION>
Number of
Shares Percent
Beneficially Beneficially
Name of Beneficial Owner Owned Owned (1)(2)
- ------------------------ ------------ ------------
<S> <C> <C>
Lindsay A. Rosenwald, M.D. (3)........................ 666,691 19.2%
787 Seventh Avenue
New York, NY 10019
Invesco Trust Company (4)............................. 357,390 12.1%
7800 East Union Avenue, Suite 800
Denver, CO 80237
Barington Capital Group, L.P. (5)..................... 220,000 6.9%
888 Seventh Avenue, 17th Floor
New York, NY 10019
Stephen J. Sullivan (6).............................. 104,263 3.4%
John K.A. Prendergast, Ph.D. (7)...................... 44,750 1.5%
Walter M. Lovenberg, Ph.D. (8)........................ 17,250 0.6%
Randal P. Schumacher (9).............................. 16,125 0.5%
Pauline Gee, Ph.D. (10) .............................. 44,570 1.5%
All executive officers and directors as a group 227,958 7.2%
(5 persons) (11).................................
</TABLE>
- ----------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options or warrants currently exercisable or exercisable within sixty
(60) days of September 28, 1999 are deemed outstanding for computing the
percentage of the person or entity holding such securities but are not
outstanding for computing the percentage of any other person or entity.
Except as indicated by footnote, and subject to community property laws
where applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) Percentage of beneficial ownership is based on 2,950,247 shares of Common
Stock outstanding as of September 28, 1999.
(3) Includes 12,000 shares and warrants exercisable for 180,333 shares held by
the Aries Domestic Fund L.P. and 22,000 shares and warrants exercisable for
349,662 shares held by the Aries Fund, a Cayman Islands Trust. Dr.
Rosenwald is the Chairman of Paramount Capital Asset Management, LLC, the
General Partner of the Aries Domestic Fund L.P., and investment advisor to
the Aries Fund, a Cayman Islands Trust. Dr. Rosenwald disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest, if
any. Does not included an aggregate of 65,858 shares owned by Dr.
Rosenwald's spouse and trusts for the benefit of his children, of which Dr.
Rosenwald disclaims beneficial ownership. Does not include an aggregate of
39,254 shares owned by Dr. Rosenwald's relatives and an investment firm
controlled by his father in law of which Dr. Rosenwald disclaims beneficial
ownership.
(4) Includes 232,207 shares owned by The Global Health Sciences Fund and
125,183 shares owned by Invesco Strategic Portfolios, Inc.--Health Sciences
Portfolio, for which Invesco Trust Company acts as investment adviser or
sub adviser, and therefore shares investment and voting power.
(5) Includes options and warrants to purchase 220,000 shares exercisable within
sixty (60) days.
(6) Includes options to purchase 102,763 shares exercisable within sixty (60)
days.
(7) Includes options to purchase 17,250 shares exercisable within sixty (60)
days.
(8) Includes options to purchase 17,250 shares exercisable within sixty (60)
days.
(9) Includes options to purchase 16,125 shares exercisable within sixty (60)
days.
(10) Includes options to purchase 44,170 shares exercisable within sixty (60)
days.
(11) Includes options to purchase 198,558 shares exercisable within sixty (60)
days.
5
<PAGE>
ITEM 12. CERTAIN TRANSACTIONS
Under the policies of Harvard University and the University of California
at Berkeley, faculty members who are named inventors on a patent assigned to the
University are entitled to receive a portion of royalties received by the
University for the licensing of such patents. Dr. Gee is a named inventor on
certain patents licensed by the University of California at Berkeley to the
Company, and accordingly will be entitled to share in any royalties received by
that University from the Company.
Between June 20, 1997 and January 12, 1998, the Company entered into a
Senior Line of Credit Agreement (the "Agreement") with the Aries Domestic Fund
L.P. (the "Fund") and the Aries Fund, a Cayman Islands Trust (the "Trust"). Dr.
Lindsay Rosenwald, a former director of the Company, is the Chairman of
Paramount Capital Asset Management, LLC, the investment advisor to the Fund and
the General Partner of the Trust. The Agreement provided for a line of credit
for up to $1,500,000 and Xenometrix issued senior promissory notes (the "Notes")
in the total amount of $1,500,000 to serve as bridge financing. The Company
repaid the Notes in full in September 1999, thereby removing any security
interests against the assets of the Company. In connection with the issuance of
these Notes, the Xenometrix granted warrants to purchase 499,995 shares of
common stock. The Note holders agreed, that in the event that the Company or
substantially all of its assets is acquired by a third party at a price per
share that is greater than the exercise price of the warrants ($0.125), to
surrender the warrants at the closing of such a transaction in exchange for
either cash or freely tradable common stock of the third party in an aggregate
amount equal to the difference between the acquisition price per share and the
exercise price per share of the warrants, multiplied by the total number of
warrants held by the Note holders.
Management believes the terms of the foregoing transactions were fair to
the Company. All future transactions with affiliates will be subject to the
approval of the Company's disinterested directors and are therefore expected to
be on terms believed by such directors to be no less favorable to the Company
than those available from unaffiliated third parties.
6
<PAGE>
SIGNATURES
Pursuant to Section 13 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 on the 27th day of October, 1999.
XENOMETRIX, INC.
By: /s/ Pauline Gee
-----------------------------------
October 27, 1999 Pauline Gee, Ph.D.
President, Chief Scientific Officer
Pursuant to the Exchange Act, this Report has been signed on behalf of
Xenometrix and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
*/s/Stephen J.Sullivan
- ----------------------------------
Stephen J. Sullivan Chairman, Secretary, October 27, 1999
Director
*/s/Walter M. Lovenberg
- ----------------------------------
Walter M. Lovenberg, Ph.D. Director October 27, 1999
*/s/John K.A. Prendergast
- ----------------------------------
John K. A. Prendergast, Ph.D. Director October 27, 1999
*/s/Randal P. Schumacher
- ----------------------------------
Randal P. Schumacher Director October 27, 1999
*By /s/ Pauline Gee
- ----------------------------------
Pauline Gee, Ph.D.
Attorney-in-fact
7
