SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-13634
MACROCHEM CORPORATION
---------------------
(Exact name of registrant as
specified in its charter)
DELAWARE 04-2744744
- -------------------------------- ---------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization Identification Number)
110 HARTWELL AVENUE, LEXINGTON, MASSACHUSETTS 02173
---------------------------------------------------
(Address of principal executive offices, Zip Code)
(781) 862-4003
--------------
(Registrant's telephone number, including area code)
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
--- ---
As of September 30, 1997, there were 16,338,375 shares of Common Stock,
$.01 par value per share, of the Registrant outstanding.
<PAGE>
MACROCHEM CORPORATION
INDEX
PAGE NUMBER
-----------
PART I Financial Information
Item 1 Unaudited Financial Statements
Balance Sheets
September 30, 1997 and December 31, 1996 3-4
Statements of Operations
Three Months and Nine Months Ended
September 30, 1997 and 1996 5
Statements of Cash Flows
Nine Months Ended
September 30, 1997 and 1996 6-7
Notes to Unaudited Financial Statements 8-9
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II Other Information
Item 6 Exhibits and Reports on Form 8-K 12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
MACROCHEM CORPORATION
UNAUDITED BALANCE SHEETS
ASSETS
------
September 30, December 31,
1997 1996
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $6,292,321 $7,329,881
Marketable securities 21,824
Accounts receivable 43,977
Prepaid expenses and other
current assets 175,830 100,033
--------- ---------
TOTAL CURRENT ASSETS 6,468,151 7,495,715
--------- ---------
PROPERTY AND EQUIPMENT,
net of accumulated depreciation: 1997-
$555,023; 1996-$472,651 287,461 345,343
--------- ---------
OTHER ASSETS:
Patents, net of accumulated amortization:
1997-$56,261; 1996-$46,933 254,355 218,232
Deposits 4,460 4,460
--------- ---------
TOTAL ASSETS $7,014,427 $8,063,750
========= =========
(Continued)
<PAGE>
MACROCHEM CORPORATION
UNAUDITED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 30, December 31,
1997 1996
------------ ------------
CURRENT LIABILITIES:
Current portion of capitalized
lease obligations $ 23,504 $ 38,630
Accounts payable and accrued expenses 271,780 281,769
Accrued compensation 47,050 47,050
Deferred rent 1,014
Deferred income 34,850 ---
----------- -----------
TOTAL CURRENT LIABILITIES 377,184 368,463
----------- -----------
CAPITALIZED LEASE OBLIGATIONS,
net of current portion 4,813 18,408
----------- -----------
TOTAL LIABILITIES 381,997 386,871
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock --- ---
Common stock, $.01 par value;
authorized 60,000,000 shares;
issued and outstanding, 16,338,375
shares and 15,601,274 shares
at September 30, 1997 and
December 31, 1996, respectively. 163,384 156,013
Additional paid-in capital 27,616,108 25,839,675
Unearned compensation (215,634) (222,674)
Accumulated deficit ( 20,931,428) ( 18,096,135)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 6,632,430 7,676,879
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 7,014,427 $ 8,063,750
=========== ===========
The accompanying notes are an integral part of these unaudited financial
statements.
(CONCLUDED)
<PAGE>
MACROCHEM CORPORATION
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
1997 1996 1997 1996
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Research contracts $ --- $ --- $ 50,000 $ 82,905
Product sales and royalty income --- 2,904 650 2,904
----------- ---------- ---------- ----------
TOTAL REVENUES --- 2,904 50,650 85,809
----------- ---------- ---------- ----------
OPERATING EXPENSES:
Marketing, general and administrative 621,310 302,467 1,501,218 1,547,145
Research and development 465,748 383,664 1,634,269 1,293,373
Consulting fees with related parties 12,000 3,000 18,000 15,000
----------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 1,099,058 689,131 3,153,487 2,855,518
----------- ---------- ---------- ----------
LOSS FROM OPERATIONS ( 1,099,058) ( 686,227) ( 3,102,837) ( 2,769,709)
----------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest income 81,950 67,486 273,368 263,991
Interest expense ( 1,679) ( 1,196) ( 5,824) ( 9,568)
---------- ---------- ---------- ----------
TOTAL OTHER INCOME 80,271 66,290 267,544 254,423
---------- ---------- ---------- ----------
NET LOSS $( 1,018,787) $( 619,937) $( 2,835,293) $( 2,515,286)
========== ========== ========== ==========
NET LOSS PER SHARE $( 0.06) $( .04) $( 0.18) $( 0.17)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 16,258,298 15,522,218 16,015,447 15,134,688
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
<PAGE>
MACROCHEM CORPORATION
UNAUDITED STATEMENTS OF CASH FLOWS
For the nine months ended
September 30,
1997 1996
----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,835,293) $(2,515,286)
--------- ---------
Adjustments to reconcile net loss
to net cash used by operating
activities:
Depreciation and amortization 92,800 78,642
Stock-based compensation 402,507 492,079
Net book value of disposed equipment 1,900 ---
Amortization of discounts on
marketable securities ( 176) ( 62,336)
Increase (decrease) in cash from:
Accounts receivable 43,977 ---
Prepaid expenses and other current
assets ( 75,797) 8,441
Accounts payable and accrued expenses ( 9,989) ( 37,887)
Accrued compensation --- ( 50,000)
Deferred rent ( 1,014) ( 4,446)
Deferred income 34,850 ---
--------- ---------
Total adjustments 489,058 424,493
--------- ---------
Net cash used by operating activities (2,346,235) (2,090,793)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities --- (6,478,487)
Proceeds from maturities of
marketable securities 22,000 5,205,000
Expenditures for property and equipment ( 27,490) ( 97,765)
Additions to patents ( 45,451) ( 38,179)
--------- ---------
Net cash used for investing activities ( 50,941) (1,409,431)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases ( 28,721) ( 25,759)
Proceeds from issuance of common stock 410 ---
Proceeds from exercise of common stock options 238,627 424,157
Proceeds from exercise of common stock warrants 624,300 2,170,064
Proceeds from exercise of unit purchase options 525,000 2,581,250
--------- ---------
Net cash provided by financing activities 1,359,616 5,149,712
--------- ---------
(Continued)
<PAGE>
MACROCHEM CORPORATION
UNAUDITED STATEMENTS OF CASH FLOWS (CONTINUED)
For the nine months ended September 30,
1997 1996
------------ -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $(1,037,560) $1,649,488
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 7,329,881 3,591,779
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 6,292,321 $5,241,267
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
During the nine months ended September 30, 1997 and 1996, cash paid for interest
was $3,830 and $9,568, respectively.
The Company did not pay any income taxes during those periods.
The accompanying notes are an integral part of these unaudited financial
statements.
(Concluded)
<PAGE>
MACROCHEM CORPORATION
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) As permitted by the rules of the Securities and Exchange Commission (the
"Commission") applicable to quarterly reports on Form 10-Q, these notes are
condensed and do not contain all disclosures required by generally accepted
accounting principles. Reference should be made to the financial statements
and related notes included in the Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1996.
In the opinion of management of the Company, the accompanying unaudited
financial statements reflect all adjustments which were of a normal
recurring nature necessary for a fair presentation of the Company's
financial position, results of operations and cash flows for the three and
nine months ended September 30, 1997 and 1996.
The results disclosed in the Statement of Operations for the three and nine
months ended September 30, 1997 are not necessarily indicative of the
results to be expected for the full year.
(2) During 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 addresses the financial accounting and
reporting standards for stock or other equity-based compensation
arrangements.
The Company has elected to continue to use the intrinsic value based method
to account for employee stock option plans and provide disclosures based on
the fair value method in the notes to the annual financial statements as
permitted by SFAS No. 123.
Stock or other equity based compensation for non-employees must be
accounted for under the fair value based method as required by SFAS No.
123. Under this method, the equity based instrument is valued at either the
fair value of the consideration received or equity instrument issued on the
date of grant. The resulting compensation cost is recognized and charged to
operations over the service period, which is usually the vesting period.
In the nine months ended September 30, 1997, the Company recorded unearned
compensation of $395,467 net of forfeitures of $268,868. The unearned
compensation will be amortized over the remaining service period of the
stock-based compensation arrangements. Of the $395,467, $286,071 related to
the issuance of common stock and $109,396 related to the grant of stock
options to consultants.
For the nine months ended September 30, 1997 and 1996, stock-based
compensation expense of $402,507 and $492,079, respectively, was amortized
and charged to operations. For the three months ended September 30, 1997
and 1996, stock based compensation expense of $289,263 and $54,908
respectively, was amortized and charged to operations. Included in
marketing, general and administrative expenses for the three months and
nine months ended September 30, 1997 is stock-based compensation of
$151,313 related to the issuance of 25,000 common shares. In addition,
16,000 common shares were issued during the quarter ended June 30, 1997 at
fair market value of $100,000 in consideration of financial services.
(3) In March 1997, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards No. 128, "Earnings Per Share", which is
effective for fiscal 1997. SFAS No. 128 requires the Company to restate
amounts previously reported as earnings per share to comply with the
requirements of SFAS No. 128. The Company has determined that the adoption
of SFAS No. 128 will have no effect on previously reported earnings per
share since the results would be anti-dilutive.
(4) In February 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure", which is effective for fiscal 1997.
SFAS No. 129 establishes the standard for disclosing information about an
entity's capital structure. The implementation of SFAS No. 129 is not
expected to have a material effect on the Company's financial statements.
(5) In June 1997, the FASB issued FAS No. 130, "Reporting Comprehensive
Income", and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", both of which will be effective for the Company in
fiscal year 1999. SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general purpose financial statements.
SFAS No. 131 establishes standards for the way that public business
enterprises report selected information about operating segments. SFAS No.
131 also establishes standards for related disclosures about products and
services, geographic areas, and major customers. The implementation of SFAS
No. 130 and SFAS No. 131 is not expected to have a material effect on the
Company's financial statements.
(6) The Company granted 201,000 common stock options under the 1994 Equity
Incentive Plan during the nine months ended September 30, 1997. During this
same period, 70,000 options under the 1984 Non-Qualified Stock Option Plan,
24,000 options under the 1984 Incentive Stock Option Plan and 32,001
options under the 1994 Equity Incentive Plan were exercised. In addition,
during this period, 86,000 options under the 1994 Equity Incentive Plan
were forfeited and 10,000 options expired. All options were issued with an
exercise price at least equal to the fair market value of the underlying
common stock determined on the date of grant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
GENERAL
MacroChem Corporation's primary business is the development and
commercialization of transdermal drug delivery compounds and systems designed to
promote the delivery of drugs from the surface of the skin into the skin or into
the bloodstream. The Company currently derives no significant revenue from
product sales, royalties or license fees. The Company plans to develop specific
SEPA(R) formulations for use with proprietary and non-proprietary drugs
manufactured by pharmaceutical companies, and to commercialize these products
through the formation of partnerships, strategic alliances and license
agreements with those companies. In order to attract strategic partners, the
Company is conducting clinical testing of certain SEPA-enhanced drugs.
The Company's results of operations vary significantly from year to year
and quarter to quarter, and depend, among other factors, on the signing of new
licenses and product development agreements, the timing of revenues recognized
pursuant to license agreements, the achievement of milestones by licensees and
the progress of clinical trials conducted by the licensees and the Company. The
timing of the Company's revenues may not match the timing of the Company's
associated product development expenses. To date, research and development
expenses have generally exceeded revenue in any particular period and/or fiscal
year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1996
During the three months ended September 30, 1997, the Company had no
revenues as compared to $2,904 revenues during the same period in 1996. The 1996
revenue was derived from royalty income.
Marketing, general and administrative expenses increased approximately
$328,000 (108%) over the comparable 1996 period. This increase resulted
primarily from increased stock-based compensation expense in 1997 of
approximately $219,000 and increased patent related and general legal expenses
approximating $80,000.
Research and development expenses in the 1997 period increased
approximately $82,000 (21%) over the comparable 1996 period due primarily to an
increased effort in the management and execution of the ongoing clinical trials,
increased stock-based compensation and overall increased research costs.
Other income increased approximately $14,000, resulting primarily from
increased rates of return on investments.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Total revenues for the nine months ended June 30, 1997 were approximately
$51,000 compared to approximately $86,000 for the same period in 1996. These
revenues are primarily due to completed research contracts.
Marketing, general and administrative expenses decreased slightly by
approximately $43,000 (2%). This decrease was due primarily to a stock-based
compensation expense reduction of approximately $121,000 offset by increased
general legal expenses of approximately $94,000.
Research and development costs increased approximately $309,000 (26%) for
the first nine months of 1997 compared to the same period in 1996. This increase
was due primarily to an increased effort in the management and execution of the
ongoing clinical trials and overall increased research costs.
Other income increased by approximately $13,000 (5%) due primarily to
increased rates of return on investments.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the primary source of funding for the Company's operations
has been the private and public sale of its securities, and to a lesser extent,
the licensing of its proprietary technology, government grants and research
contracts.
The Company's working capital was reduced approximately $1 million from
December 31, 1996 to September 30, 1997. Net cash used by operations of
approximately $2.3 million was partially offset by proceeds received upon the
exercise of common stock options, warrants and unit purchase options of
approximately $1.4 million.
Until such time as the Company obtains agreements with third-party
licensees or partners to provide funding for the Company's anticipated business
activities or the Company is able to obtain funds through the private or public
sale of its securities, the Company's working capital will be utilized to fund
its activities.
Capital expenditures and additional patent development costs for the nine
months ended September 30, 1997 aggregated approximately $73,000. The Company
expects additional capital expenditures and patent development costs for the
remainder of the year to aggregate approximately $138,000.
The Company's long term capital requirements will depend upon numerous
factors including the progress of the Company's research and development
programs; the resources that the Company devotes to clinical testing of SEPA
enhanced compounds, proprietary manufacturing methods and advanced technologies;
the ability of the Company to enter into additional licensing arrangements or
other strategic alliances; the ability of the Company to manufacture products
under those arrangements and the demand for its products or the products of its
licensees or strategic partners if and when approved for sale by regulatory
authorities. In any event, substantial additional funds will be required before
the Company is able to generate revenues sufficient to support its long term
operations. There is no assurance that the Company will be able to obtain such
additional funds on favorable terms, if at all. The Company's inability to raise
sufficient funds could require it to delay, scale back or eliminate certain
research and development programs.
The Company believes that its existing cash and cash equivalents will be
sufficient to meet its operating expenses and capital expenditure requirements
for at least the next twelve months. The Company's cash requirements may vary
materially from those now planned because of changes in focus and direction of
the Company's research and development programs, competitive and technical
advances, patent developments or other developments. It is not believed that
inflation will have any significant effect on the results of the Company's
operations.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS IN THIS REPORT AND IN
FORWARD-LOOKING STATEMENTS MADE FROM TIME TO TIME BY THE COMPANY ON THE BASIS OF
MANAGEMENT'S THEN-CURRENT EXPECTATIONS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO THE FOLLOWING: THE COMPANY'S HISTORY
OF OPERATING LOSSES AND NEED FOR CONTINUED WORKING CAPITAL; TECHNOLOGICAL
UNCERTAINTY RELATING TO TRANSDERMAL DRUG DELIVERY SYSTEMS AND THE EARLY STAGE OF
DEVELOPMENT OF THE COMPANY'S PROPOSED PRODUCTS; THE COMPANY'S NEED FOR
SIGNIFICANT PRODUCT DEVELOPMENT EFFORTS AND ADDITIONAL FINANCING; UNCERTAINTIES
RELATED TO CLINICAL TRIALS OF THE COMPANY'S PROPOSED PRODUCTS; THE COMPANY'S
DEPENDENCE ON THIRD PARTIES FOR COMMERCIALIZATION; NO ASSURANCE OF LICENSE
ARRANGEMENTS; THE LACK OF SUCCESS OF THE COMPANY'S PRIOR DEVELOPMENT EFFORTS;
UNCERTAINTIES RELATING TO GOVERNMENT REGULATION AND REGULATORY APPROVALS; THE
COMPANY'S DEPENDENCE ON THIRD PARTIES FOR THE FDA APPLICATION PROCESS; THE
COMPANY'S LACK OF EXPERIENCED MARKETING PERSONNEL AND DEPENDENCE ON THIRD
PARTIES FOR MARKETING AND DISTRIBUTION; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING; THE COMPANY'S RELIANCE ON KEY EMPLOYEES, THE LIMITED
PERSONNEL OF THE COMPANY AND ITS DEPENDENCE ON ACCESS TO SCIENTIFIC TALENT;
UNCERTAINTIES RELATING TO COMPETITION, PATENTS AND PROPRIETARY TECHNOLOGY;
UNCERTAINTIES RELATING TO RISKS OF PRODUCT LIABILITY CLAIMS, LACK OF PRODUCT
LIABILITY INSURANCE, AND EXPENSE AND DIFFICULTY OF OBTAINING ADEQUATE INSURANCE
COVERAGE; UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; AND OTHER
FACTORS. ADDITIONAL INFORMATION ON THESE AND OTHER FACTORS WHICH COULD AFFECT
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE ARE INCLUDED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, AS AMENDED, FOR THE YEAR ENDED DECEMBER 31, 1996 AND, IN
PARTICULAR, THE SECTION ENTITLED "RISK FACTORS".
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
3.(a) Certificate of Incorporation as amended
11. Statement of Earnings Per Share
27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
MACROCHEM CORPORATION
---------------------
(Registrant)
November 14, 1997 /S/ ALVIN J. KARLOFF
--------------------
Alvin J. Karloff
Chief Executive Officer and
Principal Financial Officer
CERTIFICATE OF INCORPORATION
OF
MACROCHEM CORPORATION
*****
1. The name of the Corporation is MacroChem Corporation.
2. The address of its registered office in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is the Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is sixty-six million (66,000,000) shares, 60,000,000 of which
shall be Common Stock, of the par value of One Cent ($.01) per share; 6,000,000
of which shall be Preferred Stock, of the par value of One Cent ($.01) per
share, 500,000 of which shall be designated as "Series A Convertible Preferred
Stock", of the par value of One Cent ($.01), amounting in the aggregate to Six
Hundred Sixty Thousand and 00/100 Dollars ($660,000.00).
Additional designations and powers, preferences and rights and
qualifications, limitations or restrictions thereof of the shares of stock shall
be determined by the Board of Directors of the Corporation from time to time.
5. The name and mailing address of the Corporation's incorporator is
George A. Stevens, 110 Hartwell Avenue, Lexington, Massachusetts 02173.
6. The names and addresses of the following are to serve as the
directors until the first annual meeting of the stockholders or until his
successor are elected and qualified:
Alvin J. Karloff George A. Stevens
13 Clara Road 55 Fifar Lane
Framingham, MA 01701 Lexington, MA 02173
Carlos M. Samour D. Raymond Taylor
254 Ocean Avenue Docugraphix, Inc.
Newport, RI 02840 1601 Saratoga Sunnyvale Road
Cupertino, CA 95014
7. The Corporation is to have perpetual existence.
8. In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
To make, alter or repeal the bylaws of the Corporation,
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. The bylaws may provide that in the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such agent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the bylaws of the Corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease, or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
bylaws of the Corporation; and, unless the resolution or bylaws expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute, to
sell, lease or exchange all or substantially all of the property and assets of
the Corporation, including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property, including shares of stock in, and/or other
securities of, any other Corporation or Corporations, as its board of directors
shall deem expedient and for the best interests of the Corporation.
9. To the maximum extent permitted by Section 102(b)(7) of the General
Corporation Law of Delaware, a director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of any fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
10. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement to any
reorganization of this Corporation as consequences of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
11. Meetings of the stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
12. The Corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
THE UNDERSIGNED, being the incorporator named hereinbefore, for the
purposes of forming a Corporation pursuant to the General Corporation Law of the
State of Delaware, does make this certificate, hereby declaring and certifying
that this is his act and deed and the facts herein stated are true, and
accordingly, has hereunto set his hand this 14th day of May, 1992.
/S/ GEORGE A. STEVENS
---------------------
George A. Stevens
COMMONWEALTH OF MASSACHUSETTS)
)ss.:
COUNTY OF MIDDLESEX )
BE IT REMEMBERED that on this 14th day of May, 1992, personally came before
me, a Notary Public for the Commonwealth of Massachusetts, George A. Stevens,
the party to the foregoing Certificate of Incorporation, known to me personally
to be such, and acknowledged the said certificate to be his act and deed and
that the facts stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
/S/ JANE M. DAVENPORT
----------------------
Notary Public
My commission expires on 03/04/94
MACROCHEM CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
PRIMARY EARNINGS PER SHARE WERE CALCULATED AS FOLLOWS:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
Total income used for primary
earnings per share $( 1,019) $( 620) $( 2,835) $( 2,515)
====== ====== ====== ======
Weighted average number of
common shares outstanding 16,258 15,522 16,015 15,135
====== ====== ====== ======
Primary earnings per share $( 0.06) $( 0.04) $( 0.18) $( 0.17)
====== ====== ====== ======
Note: Fully diluted earnings per share are not presented since the results
would be anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's balance sheet, statement of operations, statement of stockholders'
equity and statement of cash flows and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000743884
<NAME> MacroChem Corporation
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Sep-30-1997
<EXCHANGE-RATE> 1
<CASH> $6,292,321
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,468,151
<PP&E> 842,484
<DEPRECIATION> 555,023
<TOTAL-ASSETS> 7,014,427
<CURRENT-LIABILITIES> 377,184
<BONDS> 4,813
0
0
<COMMON> 163,384
<OTHER-SE> 6,469,046
<TOTAL-LIABILITY-AND-EQUITY> 7,014,427
<SALES> 650
<TOTAL-REVENUES> 50,650
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,824
<INCOME-PRETAX> (2,835,293)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $(2,835,293)
<EPS-PRIMARY> $(.18)
<EPS-DILUTED> $(.18)
</TABLE>
