<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission file number 000-22383
TRANSCEND THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3174575
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
738 Main Street, Waltham, MA 02451
(Address of principal executive offices)
(617) 374-1200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of Class)
Indicate by check 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 if disclosure of delinquent filers pursuant to item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting common equity held by non-
affiliates of the Company, based upon the average of the high and low prices of
Common Stock reported on the Nasdaq National Market for February 11, 1999, was
approximately $3 million.
As of March 12, 1999, 5,922,036 shares of the Company's Common Stock were
issued and outstanding.
================================================================================
<PAGE>
EXPLANATORY NOTE
This Form 10-K/A is being filed by Transcend Therapeutics for purposes of
refiling this Item 8, in which the word "possible" in the eleventh line of Note
3 of Notes to Financial Statements is hereby changed to "probable."
Item 8. Financial Statements and Supplementary Data
TRANSCEND THERAPEUTICS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors...................................... 3
Balance Sheets...................................................... 4
Statements of Operations............................................ 5
Statements of Redeemable Preferred Stock and Stockholder's
Equity............................................................. 6
Statements of Cash Flows............................................ 10
Notes to Financial Statements....................................... 11
</TABLE>
2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Transcend Therapeutics, Inc.
We have audited the accompanying balance sheets of Transcend Therapeutics,
Inc. (a company in the development stage)(the Company) as of December 31, 1998
and 1997, and the related statements of operations, redeemable preferred stock
and stockholders' equity, and cash flows for each of the three years in the
period ended December 31, 1998 and the period January 1, 1993 (commencement of
operations) to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Transcend Therapeutics, Inc.
(a company in the development stage) at December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998 and the period January 1, 1993 (commencement of
operations) to December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
March 4, 1999
3
<PAGE>
TRANSCENT THERAPEUTICS, INC.
(A Company in the Development Stage)
BALANCE SHEETS
(in thousands, except par value and shares)
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1997
------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 2,643 $ 10,989
Funds held in escrow....................................... 7,010 --
Restricted cash............................................ -- 5,805
Prepaid expenses and other current assets.................. 69 161
Other assets............................................... 26 25
------- --------
Total current assets......................................... 9,748 16,980
Property and equipment, net.................................. -- 111
Patents and licenses, net.................................... -- 335
------- --------
Total Assets................................................. $ 9,748 $ 17,426
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................. $ 38 $ 293
Accrued expenses............................................. 941 1,367
------- --------
Total current liabilities.................................... 979 1,660
Stockholders' equity:
Common Stock, par value $0.01, 25,000,000 shares
authorized, 5,917,026 and 5,758,649 shares issued and
outstanding at December 31, 1998 and 1997, respectively... 59 58
Additional paid-in capital................................. 38,083 38,395
Deferred compensation...................................... (264) (707)
Deficit accumulated during the development stage........... (29,109) (21,980)
------- --------
Total stockholders' equity................................... 8,769 15,766
------- --------
Total liabilities and stockholders' equity................... $ 9,748 $ 17,426
======= ========
</TABLE>
See accompanying notes.
4
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Period
January 1, 1993
Years ended December (commencement of
31, operations) to
-------------------------- December 31,
1998 1997 1996 1998
------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Research and development contract
revenues and license fees........ $ -- $ 5,000 $ -- $ 11,095
Operating expenses:
Research and development........ 3,439 4,510 1,968 19,780
General adminstration........... 4,038 3,339 1,834 13,596
Loss on impairment and
disposition of assets......... 365 -- -- 365
------- ------- ------- --------
Total operating expenses.......... 7,842 7,849 3,802 33,741
Other income (expense):
Interest income................. 713 588 30 1,581
Interest expense................ -- -- (355) (532)
------- ------- ------- --------
713 588 (325) 1,049
------- ------- ------- --------
Net loss.......................... $(7,129) $(2,261) $(4,127) $(21,597)
======= ======= ======= ========
Accretion of redeemable noncon-
vertible preferred stock......... -- (178) (5,080)
------- -------
Net loss to common stockholders... $(7,129) $(2,439) $(9,207)
======= ======= =======
Net loss per share--basic and di-
luted............................ $ (1.23) $ (0.75) $(11.94)
======= ======= =======
Weighted average shares oustand-
ing.............................. 5,777 3,267 771
======= ======= =======
</TABLE>
See accompanying notes.
5
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Series A Series B Series C Redeemable
Convertible Preferred Convertible Preferred Convertible Preferred Nonconvertible
Preferred Stock Preferred Stock Preferred Stock Preferred Stock
---------------------- --------------------- ---------------------- ----------------------
Number of Number of Number of Number of
Shares Amount Shares Amount Shares Amount Shares Amount
--------- ----------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
Common Stock,
December 1992
($.01/share)....
Net loss........
--------- ----------- --------- --------- --------- --------- --------- -----------
Balance at
December 31,
1993............
April 1994:
Issuance of
Series A
Redeemable
Convertible
Preferred Stock
(1.00/shares)...
Issuance of
Redeemable
Nonconvertible
Preferred Stock
for technology
($1,000/share).. 6,500,000 $ 6,500,000 9,000 $ 489,124
Issuance of
Common Stock for
technology and
payment of
expenses
($.50/share)....
Issuance of
Series A
Preferred Stock
Warrants
($.01/share)....
Accretion of
Redeemable
Nonconvertible
Preferred
Stock........... 1,110,816
Net loss........
--------- ----------- --------- --------- --------- --------- --------- -----------
Balance at
December 31,
1994............ 6,500,000 6,500,000 9,000 1,599,940
Cancellation of
Cornell's common
shares..........
Extinguishment
of Series A
Preferred
Warrants........
Conversion of
options to
common shares...
Accretion of
Redeemable
Nonconvertible
Preferred
Stock........... 1,481,088
Net loss........
--------- ----------- --------- --------- --------- --------- --------- -----------
Balance at
December 31,
1995............ 6,500,000 6,500,000 9,000 3,081,028
Issuance of
Series A
Redeemable
Convertible
Preferred Stock
in January
1996............ 130,000 130,000
Issuance of
Series A
Redeemable
Convertible
Preferred Stock
in lieu of
interest in
January, May and
September 1996
($1.00/share).. 496,437 496,437
Issuance of
Series B
Redeemable
Convertible
Preferred Stock
in lieu of
interest in
September 1996
($1.50/share)... 24,109 $ 36,164
Conversion of
Senior Secured
Convertible Note
to Series B
Redeemable
Convertible
Preferred Stock
in September
1996
($1.00/share)... 666,666 999,999
Conversion of
Redeemable
Convertible
Senior Secured
Convertible Note
to Series A
Redeemable
Convertible
Preferred Stock
in September
1996
($1.00/share)... 2,000,000 2,000,000
Accretion of
Redeemable
Nonconvertible
Preferred
Stock........... 999,734
<CAPTION>
Common Stock
----------------------
Number of
Shares Amount
--------- -----------
<S> <C> <C>
Issuance of
Common Stock,
December 1992
($.01/share).... 44,109 $ 441
Net loss........
--------- -----------
Balance at
December 31,
1993............ 44,109 441
April 1994:
Issuance of
Series A
Redeemable
Convertible
Preferred Stock
($1.00/share)....
Issuance of
Redeemable
Nonconvertible
Preferred Stock
for technology
($1,000/share)..
Issuance of
Common Stock for
technology and
payment of
expenses
($.50/share).... 715,025 7,150
Issuance of
Series A
Preferred Stock
warrants
($.01/share)....
Accretion of
Redeemable
Nonconvertible
Preferred
Stock...........
Net loss........
--------- -----------
Balance at
December 31,
1994............ 759,134 7,591
Cancellation of
Cornell's common
shares.......... (7,025) (70)
Extinguishment
of Series A
Preferred
Warrants........
Conversion of
options to
common shares... 11,197 112
Accretion of
Redeemable
Nonconvertible
Preferred
Stock...........
Net loss........
--------- -----------
Balance at
December 31,
1995............ 763,306 7,633
Issuance of
Series A
Redeemable
Convertible
Preferred Stock
in January
1996............
Issuance of
Series A
Redeemable
Convertible
Preferred Stock
in lieu of
interest in
January, May and
September 1996
($1.00/share)...
Issuance of
Series B
Redeemable
Convertible
Preferred Stock
in lieu of
interest in
September 1996
($1.50/share)...
Conversion of
Senior Secured
Convertible Note
to Series B
Redeemable
Convertible
Preferred stock
in September
1996
($1.50/share)...
Conversion of
Redeemable
Convertible
Senior Secured
Convertible Note
to Series A
Redeemable
Convertible
Preferred Stock
in September
1996
($1.00/share)...
Accretion of
Redeemable
Nonconvertible
Preferred
Stock...........
</TABLE>
6
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(Continued)
<TABLE>
<CAPTION>
Series A Series B Series C Redeemable
Convertible Preferred Convertible Preferred Convertible Preferred Nonconvertible
Preferred Stock Preferred Stock Preferred Stock Preferred Stock
---------------------- ----------------------- ----------------------- ---------------------
Number of Number of Number of Number of
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ---------- ----------------------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
Series C
Redeemable
Convertible
Preferred Stock
in September
1996
($2.35/share)... 851,064 $ 2,000,000
Conversion of
Redeemable
Nonconvertible
Preferred Stock
to Series C
Redeemable
Convertible
Preferred Stock
in September
1996
($2.35/share)... 3,404,255 8,000,000 (9,000) (4,080,762)
Conversion of
Series A
Redeemable
Convertible
Warrants to
Series A
Preferred Stock
in September
1996
($.02/share).... 789,893 13,750
Exercise of
stock options...
Grant of stock
options.........
Amortization of
deferred
compensation
expense.........
Net loss........
---------- ---------- --------- ----------- ---------- ----------- -------- ----------
Balance at
December 31,
1996............ 9,916,330 9,140,187 690,775 1,036,163 4,255,319 10,000,000 -- --
---------- ---------- --------- ----------- ---------- ----------- -------- ----------
Exercise of
stock options...
Issuance of
Redeemable
Nonconvertible
Preferred Stock
and Common Stock
warrants........ 103,900 861,000
Accretion of
Redeemable
Nonconvertible
Preferred
Stock........... 178,000
Sale of
Registered
Common Stock in
IPO.............
Conversion of
Series
Redeemable
Convertible
Preferred Stock
and Redeemable
Nonconvertible
Preferred Stock
into Common
Stock at IPO.... (9,916,330) (9,140,187) (690,775) (1,036,163) (4,255,319) (10,000,000) (103,900) (1,039,000)
Amortization of
deferred
compensation....
Net loss........
---------- ---------- --------- ----------- ---------- ----------- -------- ----------
Balance at
December 31,
1997............ -- -- -- -- -- -- -- --
---------- ---------- --------- ----------- ---------- ----------- -------- ----------
Exercise of
stock options...
Stock option
grants..........
Amortization of
deferred
compensation....
Forfeiture of
compensatory
stock options...
Net loss........
---------- ---------- --------- ----------- ---------- ----------- -------- ----------
Balance at
December 31,
1998............ -- $ -- -- $ -- -- $ -- -- $ --
========== ========== ========= =========== ========== =========== ======== ==========
<CAPTION>
Common Stock
------------------
Number of
Shares Amount
---------- -------
<S> <C> <C>
Issuance of
Series C
Redeemable
Convertible
Preferred Stock
in September
1996
($2.35/share)...
Conversion of
Redeemable
Nonconvertible
Preferred Stock
to Series C
Redeemable
Convertible
Preferred Stock
in September
1996
($2.35/share)...
Conversion of
Series A
Redeemable
Convertible
Warrants to
Series A
Preferred Stock
in September
1996
($.02/share)....
Exercise of
stock options... 16,075 160
Grant of stock
options.........
Amortization of
deferred
compensation
expense.........
Net loss........
---------- -------
Balance at
December 31,
1996............ 779,381 7,793
---------- -------
Exercise of
stock options... 57,099 571
Issuance of
Redeemable
Nonconvertible
Preferred Stock
and Common Stock
warrants........
Accretion of
Redeemable
Nonconvertible
Preferred
Stock...........
Sale of
Registered
Common Stock in
IPO............. 1,800,000 18,000
Conversion of
Series
Redeemable
Convertible
Preferred Stock
and Redeemable
Nonconvertible
Preferred Stock
into Common
Stock at IPO.... 3,122,167 31,222
Amortization of
deferred
compensation....
Net loss........
---------- -------
Balance at
December 31,
1997............ 5,758,647 57,586
---------- -------
Exercise of
stock options... 158,379 --
Stock option
grants..........
Amortization of
deferred
compensation....
Forfeiture of
compensatory
stock options...
Net loss........
---------- -------
Balance at
December 31,
1998............ 5,917,026 $59,917
========== =======
</TABLE>
7
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(Continued)
<TABLE>
<CAPTION>
Series A Preferred Cumulative Deficit
Stock Warrants Accretion on Accumulated Treasury Stock
------------------- Additional Redeemable During ----------------
Number of Paid-in Nonconvertible Deferred Development Number of
Warrants Amount Capital Preferred Stock Compensation Stage Shares Amount
--------- -------- ---------- --------------- ------------ ----------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common
Stock, December 1992
($.01/share)............ $ (436)
Purchase of Treasury
Stock................... $ (28,274) 4,959 $(2)
Net loss................
--------- -------- ---------- ----------- ---- ----------- ----- ---
(436) (28,274)
Balance at December 31,
1993.................... 4,959 (2)
April 1994:
Issuance of Common Stock
from treasury for
services................ 4,959 2
Issuance of Series A
Redeemable Convertible
Preferred Stock
($1.00/share)...........
Issuance of Redeemable
Nonconvertible Preferred
Stock for technology
($1,000/share)..........
Issuance of Common Stock
for technology and
payment of expenses
($.50/share)............ 350,363
Issuance of Series A
Preferred Stock Warrants
($.01/share)............ 1,625,000 $ 16,250
Accretion of Redeemable
Nonconvertible Preferred
Stock................... $(1,110,816)
Net loss................ (3,602,892)
--------- -------- ---------- ----------- ---- ----------- ----- ---
Balance at December 31,
1994.................... 1,625,000 16,250 349,927 (1,110,816) (3,631,166)
Cancellation of
Cornell's common
shares.................. (3,442)
Extinguishment of Series
A Preferred Warrants.... (250,000) (2,500) 2,500
Conversion of options to
common shares........... 5,486
Accretion of Redeemable
Nonconvertible Preferred
Stock................... (1,481,088)
Net loss................ (4,449,987)
--------- -------- ---------- ----------- ---- ---------- ----- ---
Balance at December 31,
1995.................... 1,375,000 13,750 354,471 (2,591,904) (8,081,153) -- --
Issuance of Series A
Redeemable Convertible
Preferred Stock in
January 1996............
Issuance of Series A
Redeemable Convertible
Preferred Stock in lieu
of interest in January,
May and September 1996
($1.00/share)...........
Issuance of Series B
Redeemable Convertible
Preferred Stock in lieu
of interest in September
1996 ($1.50/share)......
Conversion of Senior
Secured Convertible Note
to Series B Redeemable
Convertible Preferred
Stock in September 1996
($1.50/share)...........
Conversion of Redeemable
Convertible Senior
Secured Convertible Note
to Series A Redeemable
Convertible Preferred
Stock in September 1996
($1.00/share)...........
Accretion of Redeemable
Nonconvertible Preferred
Stock................... (999,734)
</TABLE>
8
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(Continued)
<TABLE>
<CAPTION>
Series A Preferred Cumulative Deficit
Stock Warrants Accretion on Accumulated Treasury Stock
------------------- Additional Redeemable During ----------------
Number of Paid-in Nonconvertible Deferred Development Number of
Warrants Amount Capital Preferred Stock Compensation Stage Shares Amount
---------- ------- ------------ --------------- ------------ ------------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Series C
Redeemable Convertible
Preferred Stock in
September 1996
($2.35/share)...........
Conversion of Redeemable
Nonconvertible Preferred
Stock to Series C
Redeemable Convertible
Preferred Stock in
September 1996
($2.35/share)........... (3,591,638) (7,510,876)
Conversion of Series A
Redeemable Convertible
Warrants to Series A
Preferred Stock in
September 1996
($.02/share)............ (1,375,000) (13,750) 7,877
Exercise of stock
options................. $(1,091,500)
Grant of stock options.. 1,091,500 113,689
Amortization of deferred
compensation expense....
Net loss................ (4,126,930)
---------- ------- ------------ ----------- ----------- ------------ ----- -----
Balance at December 31,
1996.................... -- -- 1,453,848 -- (977,802) (19,718,959) -- --
---------- ------- ------------ ----------- ----------- ------------ ----- -----
Exercise of stock
options................. 31,710
Issuance of Redeemable
Nonconvertible Preferred
Stock and Common Stock
warrants................ 3,346 (3,346)
Accretion of Redeemable
Nonconvertible Preferred
Stock................... (178,000)
Sale of Registered
Common Stock in IPO..... 15,722,000
Conversion of Series
Redeemable Convertible
Preferred Stock and
Redeemable
Nonconvertible Preferred
Stock into Common Stock
at IPO.................. 21,184,127 178,000
Amortization of deferred
compensation............ 273,897
Net loss................ (2,260,679)
---------- ------- ------------ ----------- ----------- ------------ ----- -----
Balance at December 31,
1997.................... -- -- 38,395,031 -- (707,251) (21,979,636) -- --
---------- ------- ------------ ----------- ----------- ------------ ----- -----
Exercise of stock
options................. 80,232
Grant of stock options.. 34,878
Amortization of deferred
compensation............ 238,369
Forfeiture of
compensatory stock
options................. (427,457) 204,823
Net loss................ (7,128,836)
---------- ------- ------------ ----------- ----------- ------------ ----- -----
Balance at December 31,
1998.................... -- $ -- $(38,082,684) -- $ (264,059) $(29,108,472) -- $ --
========== ======= ============ =========== =========== ============ ===== =====
</TABLE>
See accompanying notes.
9
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Period
January 1, 1993
(commencement of
December 31, operations) to
------------------------- December 31,
1998 1997 1996 1998
------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Operating activities:
Net loss........................... $(7,129) $(2,261) $(4,127) $(21,598)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation....................... 42 25 13 101
Amortization....................... 50 54 54 253
Issuance of Preferred Stock in lieu
of interest payments.............. -- -- 533 533
Amortization of deferred
compensation expense.............. 238 274 114 626
Forfeiture of compensatory
stock options..................... (222) -- -- (222)
Non-cash severance expense......... 8 -- -- 8
Loss on disposition of property and
equipment......................... 79 -- -- 84
Impairment of intangible
assets............................ 286 -- -- 286
Expenses incurred with related
party that were settled with the
issuance of Common Stock.......... -- -- -- 304
Change in operating assets and
liabilities:
Restricted cash.................... 5,805 (5,805) -- --
Funds held in escrow............... (7,010) -- -- (7,010)
Prepaid expenses and other current
assets............................ 92 (121) (1) (69)
Other assets....................... (1) 16 13 (22)
Accounts payable, deferred offering
costs and accrued expenses........ (646) 1,036 146 940
Interest payable to related party.. -- -- (178) --
------- ------- ------- --------
Net cash used in operating
activities........................ (8,408) (6,782) (3,433) (25,786)
Investing activities:
Purchase of property and
equipment......................... (52) (90) (8) (229)
Proceeds from sale of equipment.... 34 -- 1 36
------- ------- ------- --------
Net cash used in investing
activities........................ (18) (90) (7) (193)
Financing activities:
Proceeds from issuance of debt..... -- -- 1,000 3,170
Payment on note payable to related
party............................. -- -- -- (170)
Offering costs..................... -- (590) (335) (924)
Issuance of Series A Preferred
Stock Warrants.................... -- -- -- 16
Issuance of Series A Redeemable
Convertible Preferred Stock....... -- -- 130 6,630
Issuance of Series C Redeemable
Convertible Preferred Stock....... -- -- 2,000 2,000
Issuance of Redeemable Non-
Convertible Preferred Stock....... -- 1,039 -- 1,039
Issuance of Common Stock........... -- 16,740 -- 16,740
Proceeds from exercise of stock
options........................... 80 32 8 123
Purchase of treasury stock......... -- -- -- (2)
------- ------- ------- --------
Net cash provided by financing
activities........................ 80 17,221 2,803 28,622
------- ------- ------- --------
Increase (decrease) in cash and
cash equivalents.................. (8,346) 10,349 (637) 2,643
Cash and cash-equivalents at
beginning of period............... 10,989 640 1,277 --
------- ------- ------- --------
Cash and cash-equivalents at end of
period............................ $2,643 $10,989 $ 640 $ 2,643
======= ======= ======= ========
Supplemental Disclosures for Non-
Cash Activities:
Non-Cash Financing Transactions....
Conversion of Senior Secured
Convertible Notes to Series B
Redeemable Convertible Preferred
Stock............................. $ 1,000
Conversion of Senior Secured
Convertible Notes to Series A
Redeemable Convertible Preferred
Stock............................. $ 2,000
Conversion of Series A Redeemable
Convertible Stock Warrants to
Series A Preferred Stock.......... $ 14
</TABLE>
See accompanying notes.
10
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
1. Basis of Presentation
Company
Transcend Therapeutics, Inc. (the "Company") was incorporated on December
23, 1992, and began operations in January 1993. The Company is a development-
stage enterprise, as defined in Statement of Financial Accounting Standards No.
7, and has been devoting its efforts to developing novel pharmaceuticals for
the treatment of diseases caused by oxidative stress and resultant tissue
damage, with a particular therapeutic focus on critical care. The Company had
begun a Phase III clinical trial of its lead product candidate, Procysteine, to
determine its safety and efficacy in the treatment of acute respiratory
distress syndrome ("ARDS"). In 1998, the Company suspended the trial following
a recommendation of an independent Safety Monitoring Board. The Safety
Monitoring Board had determined, following a review of preliminary mortality
data, that the incidence of all-cause mortality in patients receiving
Procysteine was higher than the incidence in patients receiving a placebo.
Subsequent to this recommendation, the Company ceased all of its developmental
activities, and focused its efforts on securing an acquisition candidate. In
December 1998, the Company agreed to be acquired by KeraVision, Inc.
("KeraVision").
2. Significant Accounting Policies
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
Restricted Cash and Funds Held in Escrow
Pursuant to the Development and License Agreement (the "BI Agreement") with
Boehringer Ingelheim, GmbH ("BI") signed in February 1997, the Company was
restricted as to the manner in which it can use certain proceeds the Company
received from BI. According to the BI Agreement, the Company must use the
BI license fee of $5,000,000 and an equity investment from BI of $5,000,000
(received in the Company's initial public offering) exclusively for ARDS
development expenses. Through December 31, 1998, the Company has incurred $9.4
million of ARDS development expenses under the BI Agreement. On March 3, 1999,
the Company and BI decided to terminate the BI Agreement by mutual consent. The
parties released each other from any and all obligation under the BI Agreement
and BI acknowledged the Company's sole ownership of any remaining restricted
funds from the license fee and equity investment from BI. Consequently, none of
the Company's cash is restricted exclusively for ARDS development expenses at
December 31, 1998.
Pursuant to the pending merger agreement with KeraVision, the Company placed
$7 million in an escrow account with a third-party escrow agent on December 22,
1998. Since Transcend alone may terminate the merger only in certain limited
conditions, the Company recorded the $7 million, plus accrued interest thereon,
as escrow cash at December 31, 1998.
Cash and Cash Equivalents
The Company considers all investments with an original maturity of three
months or less on their acquisition date to be cash equivalents.
11
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Property and Equipment
Property and equipment are stated at cost. Depreciation has been provided
using the straight-line method over the estimated useful lives of five years
for all assets. During 1998, the Company recognized a loss on the disposal of
its property and equipment (see Note 3).
The cost and accumulated depreciation of property and equipment at December
31 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- --------
<S> <C> <C>
Property and equipment..................................... $-- $165,600
Less accumulated depreciation.............................. -- 54,992
---- --------
Property and equipment, net................................ $-- $110,608
==== ========
</TABLE>
Intangible Assets
Acquired patents and licenses are recorded at cost and have been amortized
using the straight-line method over the estimated useful lives of the related
assets, subject to the maximum legal life of the patents and licenses. The
costs of internally generated patents or patent applications are expensed in
the period incurred as research and development expenses. During 1998, the
Company recognized an impairment charge on its intangible assets (see Note 3).
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash equivalents,
accounts payable and accrued expenses. Fair value of issued equity instruments
is based upon negotiated prices and includes cash and the fair value of other
consideration received.
Revenue Recognition
Research and development contract revenues and license fees are recognized
as earned and represent, in 1993, reimbursement of the Company's expenditures
pursuant to the terms of an agreement with Clintec Nutrition Company
("Clintec") whereby the Company was reimbursed $6,095,000 for expenditures it
incurred. In 1997, the Company recognized as revenue a non-refundable
$5,000,000 license fee received from BI in exchange for which the Company
granted BI exclusive rights to various patents related to intravenous
Procysteine.
Stock-Based Compensation
The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees ("APB 25") in accounting for its
stock-based compensation plans. The Company has adopted the disclosure
provisions only of Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation ("FAS 123").
Net Loss Per Share
Net loss per share is presented in accordance with the provisions of
Statement of Financial Accounting Standards No. 128, Earnings Per Share. Basic
net loss per share is computed based on the weighted average number of shares
of common stock outstanding. Diluted net loss per share does not differ from
basic net loss per share since potential common shares to be issued upon
exercise of stock options are anti-dilutive for the periods presented.
12
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Income Taxes
The Company provides for income taxes under Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ("SFAS 109"). Under
SFAS 109, the liability method is used in accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
3. Restructuring
In the third quarter of fiscal 1998, the Company recorded a restructuring
charge of approximately $520,000, which is included in general and
administrative expenses. The charge related entirely to employee termination
costs resulting from an employee reduction plan (the "Reduction Plan") approved
in September 1998, in which ten employees and the Company's Chief Executive
Officer were notified of their fixed benefit termination arrangement. In total,
fifteen employees are subject to the Reduction Plan, which is expected to be
complete in early 1999. In the fourth quarter of 1998, the remaining four
employees were notified of their specific benefit arrangements. Approximately
$490,000 in termination charges were accrued in the fourth quarter to cover
those arrangements, including a probable commitment of up to approximately
$400,000 in termination and bonus related benefits that are variable based on
the Company's ability to find an acquisition partner. At December 31, 1998,
approximately $578,000 of restructuring charges remained in accrued expenses.
In the fourth quarter of 1998, following a clinical hold order by the
Federal Drug Administration on human clinical testing of oral Procysteine for
the treatment of amyotrophic lateral sclerosis, management ceased all
development activities related to Procysteine and determined that the Company's
patents and licenses related to Procysteine had declined in value. Management
assessed the fair value of the patents and licenses, and concluded that there
would be no future cash flows from these assets. Accordingly, the Company
recognized an impairment loss of approximately $286,000, which represented the
carrying value of the patents and licenses at the time of the assessment. In
the third and fourth quarters of 1998, the Company recognized an aggregate
impairment loss of $79,000 related to a write-down of property and equipment. A
decision was made by management to dispose of all of the Company's property and
equipment as a result of the Company's change in operational objectives
discussed in Note 1. As a result, the projected future cash flows from the
property and equipment were less than the carrying value of the assets, and an
impairment loss was recognized to record the property and equipment at its fair
value. As of December 31, 1998, the Company has disposed of all of its property
and equipment.
The recognition of these impairment losses was in accordance with the
provisions of Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed
Of.
13
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
4. Accrued Liabilities
Accrued expenses consist of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
-------- ----------
<S> <C> <C>
Accrued clinical costs............................... $ 90,000 $1,172,000
Accrued vacation..................................... 31,000 82,000
Accrued termination costs............................ 578,000 --
Accrued exit costs................................... 67,000 --
Accrued transaction costs............................ 75,000 --
Accrued other........................................ 100,000 113,000
-------- ----------
Total accrued expenses............................... $941,000 $1,367,000
======== ==========
</TABLE>
5. Senior Secured Convertible Notes
On September 13, 1995, the Company sold Series A Notes in the aggregate
principal amount of $2,000,000 to certain institutional investors. On May 29,
1996, the Company issued Series B Convertible Notes in the aggregate principal
amount of $1,000,000 to certain institutional investors. The Series A Notes
were convertible into shares of Series A Convertible Preferred Stock at one
share per $5.00 of principal outstanding. The Series B Notes were convertible
into shares of Series B Preferred stock at one share per $7.50 of principal
outstanding.
Prior to conversion, each note was to mature on January 15, 1997, bearing
interest of 30% per annum, payable every four months beginning January 13,
1996. Interest payments were made in the form of Series A and B Convertible
Preferred Stock. All principal and accrued interest were converted into shares
of Series A and B Convertible Preferred Stock upon the closing of the issuance
of the Series C Convertible Preferred Stock as described in Note 7.
14
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. Income Taxes
As of December 31, 1998, the Company has net operating loss carryforwards of
approximately $19,365,000. These loss carryforwards are available to reduce
future federal and state income taxes payable to the extent permitted under the
Internal Revenue Code, and expire in varying amounts through 2018.
Deferred income taxes reflect the net tax effect of temporary differences
between carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company believes
that, based on a number of factors, including the Company's net losses incurred
since its inception, the available objective evidence creates sufficient
uncertainty regarding the realization of the deferred tax assets such that a
full valuation allowance has been recorded. The Company has the following
deferred tax assets at December 31:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss............................... $7,700,000 $4,500,000
Deferred compensation............................ 300,000 155,000
Other accruals................................... 20,000 41,000
R&D tax credit................................... 540,000 2,550,000
---------- ----------
Total deferred tax assets......................... 8,560,000 7,246,000
Valuation allowance............................... (8,560,000) (7,246,000)
---------- ----------
Deferred income taxes, net........................ $ -0- $ -0-
========== ==========
</TABLE>
7. Stockholders' Equity
Common Stock
On April 5, 1994, the Company acquired a direct license from Cornell
Research Foundation ("Cornell") to the Procysteine and related technologies for
the issue of 35,025 shares of Common Stock. In accordance with the same
agreement, the Company issued 680,000 shares of Common Stock to Clintec as part
consideration for the acquisition of the Procysteine and related technologies.
The technology has been recorded at the Common Stock's fair value of $.50 per
share at the time of the transaction.
In relation to the acquisition of Covered Technology from Clintec on April
5, 1994, Clintec agreed to forgive and forever discharge the Company from any
obligation to repay an outstanding amount due for expenses incurred of $304,446
due to Clintec. The Company recorded this amount as a contribution to capital
during 1994.
In August 1996, the Company's Board of Directors approved a one-for-five
reverse stock split of its Common Stock. There was a delay in filing the
necessary amendments to the Company's charter and the split was not effective
until February 1997. All common share and per share amounts have been adjusted
retroactively to reflect the stock split.
In July 1997, the Company completed its initial public offering of 1,800,000
shares of Common Stock. In connection with the completion of the offering, the
Company converted all of its outstanding shares of
15
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Series A, B and C Convertible Preferred Stock and Redeemable Non-Convertible
Preferred Stock to an aggregate of 3,122,167 shares of Common Stock.
The Company has reserved 51,950 shares of Common Stock for issuance upon
exercise of Common Stock warrants, and 833,145 shares of Common Stock for
issuance upon exercise of stock options granted under the 1994 Equity Incentive
Plan.
Common Stock Warrants
On October 28, 1994, as additional consideration for the execution of the
lease on the Company's office space, the Company issued Common Stock warrants
to its lessor to purchase 5,000 shares of Common Stock, exercisable through
October 28, 1999, at $5.00 per share. These warrants were canceled in 1998 in
connection with the termination of the Company's office lease (see Note 9).
At December 31, 1998, the Company has Common Stock warrants outstanding to
purchase 51,950 shares of Common Stock, exercisable through March 3, 2002, at
$10.00 per share to certain affiliated parties.
Preferred Stock
The Company's Board of Directors is authorized to issue up to 5,000,000
additional shares of Preferred Stock in one or more series, without further
stockholder approval. Each such series of Preferred Stock would have such
number of shares, designations, preferences, voting powers, qualifications and
special and relative rights or privileges that the Board of Directors may from
time to time determine, which may include, among others, dividend rights,
voting rights, redemption and sinking fund provisions, liquidation preferences
and conversion rights. Mandatory redeemable preferred stock is recorded upon
issuance at fair value, net of issuance costs, and periodically accreted to
redemption value using the interest method.
Series A Redeemable Convertible Preferred Stock
During 1994, the Company sold 6,500,000 shares of Series A Redeemable
Convertible Preferred Stock ("Series A Stock") for $6,500,000. The Series A
Stock was converted into 1,983,255 shares of Common Stock upon the closing of
the Company's Initial Public Offering in July 1997.
Series B and C Redeemable Convertible Preferred Stock
On September 3, 1996, the Company sold an aggregate of 851,064 shares of its
Series C Convertible Preferred Stock to a group of investors for $2.0 million.
As part of the same transaction, the sole holder (Clintec) of 9,000 shares of
the Company's Redeemable Non-convertible Preferred Stock exchanged such shares
for 3,404,255 shares of Series C Convertible Preferred Stock. In addition, $3.1
million in aggregate principal amount of, and interest on, the Series A Notes
and Series B Notes were converted into an aggregate of 2,098,631 shares of
Series A Convertible Preferred Stock and 690,775 shares of Series B Convertible
Preferred Stock. The notes were scheduled to mature on January 15, 1997,
bearing interest of 30% per annum.
The Series B and C Preferred Stock were converted into 138,155 and 896,861
shares of Common Stock, respectively, of the Company upon the closing of the
initial public offering in July 1997.
Series A Redeemable Convertible Preferred Warrant Shares
In conjunction with the issuance of the Series A Redeemable Convertible
Preferred Stock, the Company sold 1,625,000 warrants to purchase Series A
Redeemable Convertible Preferred Stock at a price per share
16
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
equal to the lesser of (i) the per share purchase price of the securities
issued in the next financing round or (ii) $5.00. During 1995, 250,000 warrant
shares were canceled by the Company in accordance with the terms and conditions
stipulated in the April 4, 1994 Series A Preferred Stock Purchase Warrants
agreement, as a result of not participating in the private placement offering
in September 1995.
In connection with the issuance of the Series C Convertible Preferred Stock,
the holders of the Series A Preferred Stock warrants (Series A warrants)
elected to surrender the Series A warrants and receive Series A
Convertible Preferred Stock equivalent to the difference between the deemed
fair market value of the Series C Preferred Stock ($2.35 per share) and the
exercise price of the Series A warrants ($1.00 per share) multiplied by the
outstanding Series A warrants (1,375,000). The resulting aggregate fair market
value of the Series A Preferred Stock warrants received converted into 789,983
shares of Series A Convertible Preferred Stock and were issued upon the net
exercise of such warrants.
All of the outstanding shares of Series A, B and C Convertible Preferred
Stock were converted into Common Stock upon the closing of the Company's
initial public offering in July 1997.
Redeemable Nonconvertible Preferred Stock
The Company had issued 9,000 shares of Redeemable Nonconvertible Preferred
Stock to Clintec as part consideration for the acquisition of the Procysteine
and related technologies at its fair value of approximately $500,000 on April
5, 1994. The Redeemable Nonconvertible Preferred Stock was redeemable, upon
certain conditions at the option of the holder, at a price of $1,000 per share
plus any unpaid dividends which accrued at a rate of $70 per share per annum.
The Redeemable Nonconvertible Preferred Stock had a liquidation preference
over Common Stock of $1,000 per share, plus any accrued, but unpaid, dividends.
As part of the September 3, 1996 financing transaction, the holders exchanged
the Nonconvertible Preferred Stock for 3,404,255 of Series C Preferred Stock
valued at $8 million by the Company. The Company recorded the difference of
approximately $4 million between the carrying value of the Redeemable Non-
convertible Preferred Stock and the value of the Series C Preferred Stock
issued in exchange thereof as a charge to accumulated deficit and an adjustment
to net loss to common stockholders in 1996.
In February 1997, the Company issued 1,039,000 shares of Redeemable Non-
convertible Preferred Stock and warrants to purchase 51,950 shares of Common
Stock. The shares of Redeemable Nonconvertible Preferred Stock were exchanged
for 103,896 shares of Common Stock upon the closing of the initial public
offering in July 1997.
8. Stock Option Plan
In 1994, the Company adopted its 1994 Equity Incentive Plan (the "Plan"), as
amended in 1998. The Plan authorizes the Board of Directors to grant stock
options to purchase up to an aggregate of 1,075,891 shares of Common Stock.
Stock options granted under the Plan may qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code. The price at which shares may
be purchased with an option shall be specified by the Board at the date the
option is granted, but in the case of an incentive stock option, shall not be
less than the fair market value on the date of grant. The duration of any
option shall be specified by the Board, but no option designated as an
incentive stock option may be exercised beyond ten years from the date of
grant. Options granted under the Plan vest ratably over two to four years
beginning after one year of service.
During fiscal year 1996, the Company recorded an increase to additional-
paid-in capital and a corresponding charge to deferred compensation to
recognize the aggregate difference between the deemed fair market value for
17
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
accounting purposes of the stock options at the date of grant and the option
exercise price. The deferred compensation is being amortized over the option
vesting period. During the year ended December 31, 1998, the Company reversed
compensation expense related to the amortization of deferred compensation as a
result of forfeited stock options. In addition, during the year ended December
31, 1998, the Company settled a $30,000 liability with third party vendor
through the issuance of stock options. The fair value of the stock options, as
calculated using the Black-Scholes pricing model, resulted in additional
expense of $4,877 during 1998. If the proposed merger between the Company and
KeraVision is consummated, all of the stock options and warrants of the Company
outstanding at the time of the merger will be canceled.
The following table presents the activity of the Plan for the years ended
December 31:
<TABLE>
<CAPTION>
1998 1997
------------------ -----------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding options at beginning of
year.................................... 639,424 $5.25 370,324 $1.19
Granted.................................. 7,000 0.70 353,568 8.45
Exercised................................ (158,377) 0.52 (57,099) 0.54
Terminated............................... (329,004) 7.67 (27,369) 0.99
-------- ----- ------- -----
Options outstanding at end of year....... 159,043 $4.74 639,424 $5.25
======== ===== ======= =====
Exercisable at end of year............... 111,430 $3.38 221,519 $1.06
-------- -------
Available for grant at end of year....... 674,102 52,098
======== =======
Weighted average fair value per share of
options granted during the year......... $4.93 $2.93
===== =====
</TABLE>
The weighted average remaining contractual life of options outstanding at
December 31, 1998 is 6.4 years.
Pro forma information is required by SFAS 123, and has been determined as
if the Company has accounted for employee stock options under the fair value
method. The pro forma net loss to common stockholders for the years ended
December 31, 1998, 1997 and 1996 was approximately $(7,451,000), $(2,600,000)
and $(9,300,000), respectively. The pro forma net loss per share-basic and
diluted to Common stockholders for the years ended December 31, 1998, 1997 and
1996 was $(1.25), $(0.80) and $(12.06), respectively. For purposes of pro
forma disclosures, the estimated fair value of the options is amortized to
expense over the option vesting period, and is net of the amount recorded for
amortization of deferred compensation expense by the Company.
The fair value of options at the date of grant was estimated using the
Black-Scholes option pricing model with an estimated weighted-average life of
three to six years from the date of grant, assuming a risk free interest rate
of 5% to 7% and a volatility factor of .23 on the expected market price of the
Company's common stock. At this time management does not expect to pay any
dividends to stockholders during the vesting period of the options, and
therefore, has excluded such assumption from determining fair value of the
options.
The effects on 1998, 1997 and 1996 pro forma net loss of expensing the
estimated fair value of stock options are not necessarily representative of
the effects on reporting the results of operations for future years as the
periods presented include only one, two and three years of option grants under
the Plan.
18
<PAGE>
TRANSCEND THERAPEUTICS, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
9. Commitments and Contingencies
The Company leases office space and other equipment under various
noncancelable operating leases. Rent expense recognized under these leases
amounted to approximately $233,000, $203,000 and $199,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.
The Company's office lease was scheduled to expire in fiscal 1999. However,
in November 1998, the Company and its lessor terminated the office lease
effective on December 31, 1998. At December 31, 1998, the Company is no longer
obligated to pay any amounts under its terminated office lease.
At December 31, 1998, the Company has recognized a liability of
approximately $67,000 to settle its commitment with respect to certain
equipment operating leases. The Company has no other future minimum lease
payments under noncancelable lease agreements.
The Company must pay KeraVision a $500,000 termination fee if the merger
agreement is terminated by KeraVision for cause.
10. Defined Contribution Plan
The Company had a defined contribution 401 (k) plan (the "Defined
Contribution Plan"), which covered substantially all employees. The Defined
Contribution Plan permitted participants to make contributions from 1% to 15%
of their compensation. In addition, the Company could have contributed to the
Defined Contribution Plan at its discretion. The Company made no contributions
to the Defined Contribution Plan during the years ended December 31, 1998, 1997
and 1996, respectively. The Company terminated the Defined Contribution Plan
effective November 30, 1998 and all funds were dispersed to the employees in
accordance with Internal Revenue Service guidelines governing defined
contribution plan terminations.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this amendment to annual report on Form
10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized.
TRANSCEND THERAPEUTICS, INC.
/s/ B. Nicholas Harvey
---------------------------------
B. Nicholas Harvey
President, and interim Chief Executive
Officer
Date: April 30, 1999
