<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1995
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: 0-14803
SYNTRO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3114681
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
9669 Lackman Road, Lenexa, Kansas 66219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 888-8876
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 the number of shares outstanding each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class March 31, 1995
----- --------------
Common Stock 11,397,184
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
1
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SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31,
1995 September 30,
(UNAUDITED) 1994
-------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,500,177 $ 780,069
Short-term investments 4,367,995 5,259,539
Receivables - trade 281,714 422,552
Receivables - contracts and licenses 216,817 --
Inventories (Note 1) 759,537 839,519
Prepaid expenses and other 232,114 274,579
------------ ------------
Total current assets 7,358,354 7,576,258
LONG-TERM INVESTMENTS, AT COST 223,239 1,048,286
PROPERTY AND EQUIPMENT, NET 3,443,971 3,502,366
PATENTS AND LICENSES, NET 1,570,659 1,323,440
INVESTMENTS AND OTHER ASSETS 171,325 64,931
------------ ------------
$ 12,767,548 $ 13,515,281
============ ============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31,
1995 September 30,
(UNAUDITED) 1994
-------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 209,316 $ 175,870
Accrued compensation 220,315 200,352
Accrued royalties 122,413 137,784
Accrued rent 138,355 132,749
Other accrued expenses 256,327 399,881
Research contract and other advances 23,096 270,023
------------ ------------
Total current liabilities 969,822 1,316,659
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 25,000,000
shares authorized; 11,397,184 shares
and 11,386,084 shares issued at
March 31, 1995 and September 30,
1994, respectively 113,972 113,861
Preferred stock, $1.00 par value;
225,000 shares authorized; no shares
issued in 1995 and 1994 -- --
Additional paid-in capital 33,020,686 33,012,472
Accumulated deficit (21,336,932) (20,927,711)
------------ ------------
Total stockholders' equity 11,797,726 12,198,622
------------ ------------
$ 12,767,548 $ 13,515,281
============ ============
</TABLE>
2
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SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------------ ----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Net product sales $ 836,354 $ 827,338 $1,418,141 $1,561,989
Collaborative research and contract
services 752,085 862,044 1,447,262 1,651,692
License and distribution fees 200,000 -- 200,000 --
Interest and other income 117,062 99,171 239,265 220,755
----------- ---------- ---------- ----------
Total revenues 1,905,501 1,788,553 3,304,668 3,434,436
COSTS AND EXPENSES:
Cost of goods sold 475,187 460,215 792,535 845,003
Research and development costs 867,877 865,716 1,712,129 1,557,012
Selling, general and administrative
expenses 625,280 579,415 1,265,929 1,131,218
----------- --------- ---------- ----------
Total costs and expenses 1,968,344 1,905,346 3,770,593 3,533,233
----------- ---------- ---------- ----------
LOSS BEFORE EQUITY IN INCOME
OR LOSS OF SYNTRO ZEON (62,843) (116,793) (465,925) (98,797)
Equity in income (loss) of Syntro Zeon (11,616) (653) 56,704 (4,425)
----------- ------------ ------------ -----------
NET LOSS $ (74,459) $ (117,446) $ (409,221) $ (103,222)
========== ========== =========== ==========
NET LOSS PER SHARE $(.01) $(.01) $(.04) $(.01)
Shares used in computing loss per
share, including common stock
equivalents 11,397,184 11,382,415 11,392,559 11,380,665
========== ========== ========== ==========
</TABLE>
3
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SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
Common Common Additional
Stock Stock Paid-In Accumulated Treasury
Shares Par Value Capital Deficit Stock Total
------------ --------- ----------- ------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1994 11,386,084 $113,861 $33,012,472 $(20,927,711) -- $12,198,622
Exercise of stock options
(unaudited) 11,100 111 8,214 -- -- 8,325
Net loss for the period
(unaudited) -- -- -- (409,221) -- (409,221)
---------- -------- ----------- ------------ ----- -----------
Balance at March 31, 1995
(unaudited) 11,397,184 $113,972 $33,020,686 $(21,336,932) -- $11,797,726
========== ======== =========== ============ ===== ===========
Balance at September 30, 1993 11,378,814 $113,788 $33,007,195 $(20,652,552) -- $12,468,431
Exercise of stock options
(unaudited) 7,270 73 5,277 -- -- 5,350
Net loss for the period
(unaudited) -- -- -- (103,222) -- (103,222)
---------- -------- ------------ ------------ ----- -----------
Balance at March 31, 1994
(unaudited) 11,386,084 $113,861 $33,012,472 $(20,755,774) -- $12,370,559
========== ======== =========== ============ ===== ===========
</TABLE>
4
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SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended March 31,
---------------------------------------
1995 1994
------------ ----------
<S> <C> <C>
Net cash flows provided by (used for) operating activities:
Net loss $ (409,221) $ (103,222)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 176,796 168,447
Amortization of premium 30,708 65,884
Gain on sale of PPT stock -- (14,126)
Net gain on disposal of fixed assets (1,994) --
Equity in profit (loss) of Syntro Zeon (56,704) 4,425
Changes in assets and liabilities:
Receivables - trade 140,838 (458,819)
Receivables - research contracts (216,817) --
Inventory 79,982 (128,474)
Prepaid expenses and other 42,465 (117,082)
Accounts payable 33,446 (52,848)
Accrued liabilities (133,356) 35,485
Research contract and other advances (246,927) (393,067)
----------- ----------
Net cash used for operating activities (560,784) (993,397)
Cash flows provided by financing activities:
Stock options 8,325 5,350
------------ ----------
Net cash provided by financing activities 8,325 5,350
Cash flows provided by (used for) investing activities:
Short-term investments sold 3,704,457 3,363,116
Short-term investments purchased (1,795,202) (1,303,539)
Long-term investments purchased (223,370) (1,089,504)
Property and equipment acquired (95,537) (121,771)
Proceeds from sales of property and equipment 3,470 --
Additions to patents and licenses (271,144) (138,599)
Changes in other assets, net (50,107) (950)
Sale of investment in PPT -- 314,441
-------------- ----------
Net cash provided by investing activities 1,272,567 1,023,194
----------- ----------
Net increase in cash and cash equivalents 720,108 35,147
Cash and cash equivalents at beginning of period 780,069 529,479
----------- ----------
Cash and cash equivalents at end of period $1,500,177 $ 564,626
========== ==========
</TABLE>
5
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SYNTRO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the six month
period ended March 31, 1995 are not necessarily indicative of the results that
may be expected for the year ended September 30, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
September 30, 1994.
Note 1 - Inventories:
Inventories are stated at the lower of cost or market, cost being determined
using the first-in, first-out (FIFO) method. The components of inventory are
as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
------------ -------------
<S> <C> <C>
Raw material $145,565 $133,992
Work-in-process 246,812 399,536
Finished goods 367,160 305,991
-------- --------
$759,537 $839,519
======== ========
</TABLE>
6
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
Syntro Corporation (which, together with its wholly-owned subsidiaries, is
referred to herein as "Syntro" or the "Company") is engaged in biotechnology
research and in the development, manufacture and commercialization of
innovative vaccines for the animal health market. The Company uses its
proprietary technology and expertise in the genetic engineering of viruses to
address disease problems caused by infectious agents, particularly those that
have proven resistant to conventional technology. The Company's product
development programs currently address diseases of five major animal species:
swine, cattle, poultry, horses and cats. During fiscal 1994, having expanded
its portfolio of genetic engineering technology, and encouraged by the
regulatory approval of its first viral vector vaccine, Syntro resumed
exploration of the utility of its technology for human health applications.
The Company's line of swine pseudorabies vaccines and its broad distribution
network have enabled it to establish a leading share of the highly competitive
U.S. market for these products. The Company's first commercial product,
PRV/Marker(R), was introduced in 1988 and quickly became a commercial success.
A second generation vaccine introduced in September 1991, PRV/Marker Gold(R),
allowed the Company to capture a major share of its market segment. The
Company subsequently has introduced other swine pseudorabies vaccines to meet
the specialized needs of various market niches. In October 1993, the Company
expanded its swine vaccine business beyond the PRV/Marker line with the
introduction of MaxiVac(R)-FLU, the first vaccine approved by the U.S.
Department of Agriculture ("USDA") for prevention of swine influenza.
The Company's technological advances and its ability to advance a product
through the stages of research and development, regulatory approval,
manufacturing and marketing have attracted collaborative relationships with
major national and multinational companies. For example, a collaborative
program with Nippon Zeon Co., Ltd. ("Nippon Zeon") resulted in the development
and USDA approval of the first commercially available viral vector vaccine,
VectorVax(R) FP-N. This vaccine, which contains a genetically designed vector
virus that protects poultry against two widespread diseases, was the first
Category III* vaccine to be approved by the USDA. It is being commercialized
by Syntro Zeon, L.C. ("Syntro Zeon"), a limited liability company formed by the
Company and Nippon Zeon of America. VectorVax FP-N is to be marketed in the
U.S., Canada, Mexico and the Caribbean by Hoechst-Roussel Agri-Vet Company
("Hoechst-Roussel").
The Company has a number of other strategic partnerships intended to accelerate
the development and/or commercialization of products. Collaborations with
Hoechst-Roussel and/or Hoechst Veterinar GmbH ("Hoechst Veterinar") provide
resources for the development and future marketing of additional viral vector
vaccines for poultry, cattle and horses. A distribution arrangement with Bayer
AG is intended to facilitate registration and distribution of PRV/Marker Gold
in Europe. A license agreement with Hoechst Veterinar recently led to the
first marketing approval in a European
__________________________________
*Category I, II and III are USDA designations for products developed
through the use of recombinant DNA technology. Category III includes viral
vector vaccines, the most technologically advanced recombinant vaccines.
7
<PAGE> 9
country for a product developed by the Company -- the authorization of its
IBR/Marker(R)-KV cattle vaccine for marketing in Germany.
RESULTS OF OPERATIONS
Three months ended March 31, 1995 and March 31, 1994
Revenues for the quarter ended March 31, 1995 were $1,906,000, an increase of
7% over the second quarter of fiscal 1994. Revenues for the second quarter of
fiscal 1995 included the recognition of $200,000 in licensing fees.
Sales were up slightly from those of the second quarter of fiscal 1994.
Management believes the Company has established and is maintaining a
significant share of the U.S. market for its swine pseudorabies vaccines which,
as a result of the success of various state eradication programs, no longer is
growing. The Company expects to experience quarterly sales fluctuations until
the sale or contract manufacture of new products begins to make a significant
contribution to product revenues.
Cost of goods sold as a percentage of sales for the three-month period ended
March 31, 1995 was 57%, compared to 56% for the second quarter of the prior
fiscal year. A favorable product and distribution mix largely offset the
impact of increased inventory reserves.
Collaborative research revenues were $752,000 in the second quarter of fiscal
1995, approximately 13% below those of the second quarter of fiscal 1994. This
expected decrease was related largely to the progression of several
collaborative projects from the research phase into later development and
registration phases. (See "Prospective.")
Research and development expenditures were $868,000 in the second quarter of
fiscal 1995, approximately level with those of the second quarter of fiscal
1994. Management believes research and development expenses will remain
relatively stable for the remainder of the year. Any significant increase
likely will be the result of increased reimbursable expenses incurred on behalf
of collaborative partners.
Interest and other income rose $18,000 over the comparable quarter of fiscal
1994, largely as a result of higher investment interest rates.
Selling, general and administrative expenses increased 8% for the quarter ended
March 31, 1995, compared to the same quarter of the prior fiscal year. This
increase was attributable to professional services, including legal defense
costs and investor relations activities.
The net loss for the second quarter of fiscal 1995 was $74,000, compared to a
net loss of $117,000 for the second quarter of fiscal 1994.
Six months ended March 31, 1995 and March 31, 1994
Revenues for the six months ended March 31, 1995 were $3,305,000, representing
a 4% decrease from the same period of the previous fiscal year. An increase in
licensing fees significantly offset decreases in product sales and
collaborative research revenues.
8
<PAGE> 10
Product sales were $1,418,000 during the six-month period ended March 31, 1995,
approximately 9% below those of the comparable period of fiscal 1994. In the
first quarter of 1995, sales of the Company's swine vaccines suffered from weak
economic conditions in the pork production industry. Sales recovered during
the second quarter, though sales of the Company's swine pseudorabies vaccines
did not return to the levels of the prior fiscal year. During the second
quarter of fiscal 1995, sales of the Company's MaxiVac-FLU vaccine also made a
significant contribution to product revenues.
Cost of goods sold as a percentage of sales for the six-month period ending
March 31, 1995 was 56%, compared to 54% for the comparable period of the
previous year. This increase was the result primarily of increased inventory
reserves.
Collaborative research revenues were $1,447,000 during the first six months of
fiscal 1995, approximately 12% below those of the comparable period of fiscal
1994. This expected decrease was related largely to the progression of several
collaborative projects from research and animal testing phases into later
development and registration phases. (See "Prospective.")
Research and development expenditures were $1,712,000 during the six-month
period ended March 31, 1995, a 10% increase over the comparable period of
fiscal 1995. The largest contributors to this increase were direct expenses
incurred on behalf of, and reimbursed by, collaborative partners. The costs of
operating the Company's research and development laboratories also increased
over the comparable period. Management does not anticipate that these
operating costs will increase significantly. However, the direct reimbursable
expenses incurred on behalf of collaborative partners may continue to fluctuate
from quarter to quarter.
Interest and other income rose $19,000 over the comparable six-month period of
fiscal 1994, the result of higher investment interest rates.
Selling, general and administrative expenses increased 12% for the six-month
period ended March 31, 1995, compared to the same period the previous year.
This increase was attributable to professional services, including legal
defense costs and investor relations activities.
The net loss for the six-month period ended March 31, 1995 was $409,000,
compared to a net loss of $103,000 for the comparable period of fiscal 1994.
CAPITAL RESOURCES AND LIQUIDITY
At March 31, 1995, Syntro had cash, cash equivalents, short-term investments
and long-term investments of $6,091,000, a decrease of $996,000 since September
30, 1994. In addition to the Company's net loss for the six-month period, its
principal uses of cash included a $271,000 investment in additions to patents,
a $247,000 decrease in research contract advances, a $100,000 investment in
Syntro Zeon, L.C. and a $95,000 investment in capital expenditures. Contract
receivables increased as the Company recognized $200,000 in licensing fees.
Capital expenditures for plant and equipment amounted to $95,000 during the
first six months of fiscal 1995, largely related to limited internal
modifications that the Company made to its manufacturing facility to obtain a
European Good Manufacturing Practice (GMP) certificate. The modifications were
completed during the second quarter of fiscal 1995. The Company has made no
material commitments for additional capital expenditures, though it intends to
continue to invest
9
<PAGE> 11
in capital additions to its research, development, manufacturing and
administrative areas in order to maintain the quality of its operation.
The Company's cash, cash equivalents, short-term investments and long-term
investments are expected to be sufficient to meet the currently foreseeable
liquidity needs of the Company. Anticipated capital requirements may change
depending on numerous factors. These factors include the progress of the
Company's research and development activities, the resources the Company
devotes to self-funded programs and advanced technologies, the ability of the
Company to achieve research and development objectives under its collaborative
agreements, the ability of the Company to replace research contract revenues as
collaborative research programs mature, and any costs required to enforce the
rights to use and to defend the Company's technology and products.
Capital requirements also may be affected by the length of time required to
gain regulatory approvals, the market's acceptance of the Company's new
products, the level of investment required by new product introductions in
inventories and accounts receivable, the ability of the Company to distribute
its products through favorable trade channels, and the demand for and
competition against the Company's products. Furthermore, additional capital
may be either provided or required as the result of new opportunities for the
Company to accelerate the expansion of its product lines and markets through
additional strategic alliances or acquisitions of products and technologies or
as the result of future changes in the Company's strategic plan.
PROSPECTIVE
The Company owns beneficially a 50% interest in the capital, profits, losses
and distributions of Syntro Zeon, L.C. ("Syntro Zeon"), a Kansas limited
liability company. Syntro Zeon was formed by Syntro and Nippon Zeon of
America, Inc. to market viral vector poultry vaccines developed through the
Company's collaborative program with Nippon Zeon Co., Ltd. Syntro currently
anticipates that Syntro Zeon will generate revenues in the form of royalties
and licensing fees. Syntro also expects to generate additional revenues from
the contract manufacture of VectorVax(R) FP-N. Because product manufactured in
connection with the USDA licensing of VectorVax FP-N will be used in the
vaccine's market introduction, the Company believes contract manufacturing
revenues from Syntro Zeon will not contribute significantly to total revenues
during fiscal 1995.
As new animal health products whose development or registration has been funded
by collaborative partners receive regulatory approval, revenues from
collaborative research contracts related to such products will decline. The
Company's intent when entering into such contracts is to replace these revenues
or to generate greater revenues with product sales, contract manufacturing
revenues or royalties related to the approved products. If collaborative
research contract revenue reductions are not offset by revenues from such
sources or by contract revenues from collaborative partners for new programs,
and if expenses are not reduced commensurately, the Company could experience
additional losses.
In connection with the exploration of additional uses for its proprietary
technology outside of the veterinary vaccine field, the Company has increased
self-funded investment in research and development since the beginning of
fiscal 1994. The Company intends to seek alliances with one or more corporate
partners who would support the research and development of additional
genetically engineered products. The Company intends to carefully control its
investment in this area until such collaborations are formed, limiting its
expenditures on independent efforts to early exploration, feasibility studies
and the development of project proposals.
10
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable at March 31, 1995
ITEM 2. CHANGE IN SECURITIES
Not applicable at March 31, 1995
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable at March 31, 1995
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the stockholders of the registrant was held on
February 7, 1995. At the meeting the following nominees were elected
as directors:
Stephen E. O'Neil 9,124,419 votes
Dr. J. Donald Todd 9,127,319 votes
Russell T. Stern, Jr. 9,123,969 votes
Dr. James L. Bittle 9,125,469 votes
H. Lowell Thomas 9,109,719 votes
Mr. O'Neil subsequently resigned from the Board of
Directors to devote more time to other business activities. Also at
the meeting the stockholders approved the Syntro Corporation 1994
Stock Option Plan by a vote of 3,792,889 shares for and 1,160,687
shares against, with 154,498 shares abstaining and 4,344,568 broker
non-votes (shares not considered present and entitled to vote with
respect to the 1994 Stock Option Plan).
ITEM 5. OTHER INFORMATION
Not applicable at March 31, 1995
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 10.1 Amendment No. 1 to Executive Employment Agreement dated
as of April 1, 1995 between the Company and Judson D.
Todd.
Exhibit 10.2 Standard form Executive Employment Agreement and
accompanying schedules.
Exhibit 11 Earnings Per Share Calculation
Exhibit 27 Financial Data Schedule
Not applicable at March 31, 1995
11
<PAGE> 13
SIGNATURE
Pursuant to the requirements 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.
SYNTRO CORPORATION
Date: ______________________ _________________________________________
Susan H. Strobel
Chief Financial Officer
12
<PAGE> 1
Exhibit 10.1
AMENDMENT NO. 1
TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 TO EXECUTIVE EMPLOYMENT AGREEMENT is made and entered
into as of the first day of April, 1995 to amend that certain Executive
Employment Agreement effective as of the first day of October, 1992 by and
between SYNTRO CORPORATION, a Delaware corporation ("Syntro"), and JUDSON D.
TODD, a resident of Leawood, Kansas (the "Executive").
WITNESSETH
WHEREAS, the Executive has been serving as President and Chief Executive
Officer of Syntro and as an officer of SyntroVet Incorporated ("SyntroVet"), a
wholly-owned subsidiary of Syntro, under that certain Executive Employment
Agreement effective as of the first day of October, 1992 (the "1992
Agreement"); and
WHEREAS, the term of the 1992 Agreement is scheduled to expire on September
30, 1995; and
WHEREAS, Syntro desires to extend the term of the 1992 Agreement and thereby
continue the services of the Executive, and the Executive is willing to extend
the term of the 1992 Agreement and continue his services to Syntro and
SyntroVet through and including September 30, 1996 on the terms and conditions
of the 1992 Agreement; and
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
A. Section 2 of the 1992 Agreement is hereby amended to change the reference to
President of SyntroVet to Chairman of SyntroVet.
B. Section 3 of the 1992 Agreement is hereby amended to change the reference to
September 30, 1995 to September 30, 1996.
C. The 1992 Agreement, as amended hereby, shall continue unchanged and in full
force and effect.
IN WITNESS WHEREOF, this Amendment No. 1 to Executive Employment Agreement is
effective as of the day and year first above written.
SYNTRO CORPORATION EXECUTIVE
9669 Lackman Road
Lenexa, Kansas 66219
By: /s/ Russell T. Stern, Jr. /s/ Judson D. Todd
------------------------------- ----------------------
Chairman of the Board Judson D. Todd
13920 Kenneth Road
Leawood, Kansas 66224
<PAGE> 1
Exhibit 10.2 Standard form Executive Employment Agreement and acompanying
schedules.
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective as of the 21st day of February,
1995, between SYNTRO CORPORATION, a Delaware corporation ("Syntro"), and
William J. Davies, a resident of Leawood, Kansas (the "Executive").
WITNESSETH:
WHEREAS, the Executive has been serving as an officer of Syntro and, in
certain instances, of SyntroVet Incorporated ("SyntroVet"), a wholly-owned
subsidiary of Syntro (collectively the "Offices"), which are listed on Schedule
A attached hereto and incorporated herein by this reference;
WHEREAS, the Board of Directors of Syntro has determined that the retention
of the executive staff of Syntro is important to the continued long-term
viability of Syntro; and
WHEREAS, Syntro desires to continue the services of the Executive in the
Offices, and the Executive is willing to continue in the Offices on the terms
and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
1. DEFINITION OF SYNTRO. For the purposes of this Agreement, unless the
context otherwise requires, all reference to Syntro herein shall include both
Syntro and SyntroVet.
2. ENGAGEMENT. Syntro hereby continues the engagement of the Executive in
the Offices, and the Executive hereby accepts said engagement upon the terms
and conditions hereinafter set forth.
3. TERM. Subject to the provisions for termination hereinafter set forth,
the term of this Agreement began as of the date first above written, and shall
expire on the expiration dated indicated on Schedule A.
4. COMPENSATION.
(a) SALARY. As base compensation for the services to be rendered
hereunder, Syntro shall pay the Executive the annual salary set forth on
Schedule A, payable in equal semi-monthly installments (payable on the 15th
and the last day of each month). Said salary may be increased by Syntro to
take into account the nature of the contributions to Syntro by the Executive
and any other factors that may be deemed relevant by the Compensation
Committee of the Board of Directors of Syntro (the "Compensation Committee").
<PAGE> 1
Exhibit 10.2.1
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
_______________________
Offices at Syntro: Vice President, Finance & Administration;
Chief Financial Officer; Treasurer
Initial Annual Salary: $98,800.00
No. of Business Days
of Vacation Time Per
Calendar Year: 15
Effective Date of
Vacation Accrual: January 1, 1995
Expiration Date of
Agreement: February 20, 1997
Executive's Facility: Syntro Headquarters; Lenexa, KS
11
<PAGE> 1
Exhibit 10.2.2
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
_______________________
Offices at Syntro: Vice President, Research
Initial Annual Salary: $96,000.00
No. of Business Days
of Vacation Time Per
Calendar Year: 20
Effective Date of
Vacation Accrual: January 1, 1995
Expiration Date of
Agreement: February 20, 1997
Executive's Facility: Syntro Research Laboratories; San Diego, CA
12
<PAGE> 1
Exhibit 10.2.3
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
_______________________
Offices at Syntro: Assistant Vice President, Finance &
Administration; Chief Accounting Officer; Secretary
Offices at SyntroVet: Vice President, Finance & Administration; Treasurer
and Secretary
Initial Annual Salary: $81,600.00 reduced by 25% (to $61,200.00) for 25%
reduced hours per work week
No. of Business Days
of Vacation Time Per
Calendar Year: 20
Effective Date of
Vacation Accrual: January 1, 1995
Expiration Date of
Agreement: February 20, 1997
Executive's Facility: Syntro Headquarters; Lenexa, KS
13
<PAGE> 1
Exhibit 10.2.4
SCHEDULE A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
SYNTRO CORPORATION AND
_______________________
Offices at SyntroVet: Vice President, Product Development and Regulatory
Affairs
Initial Annual Salary: $99,300.00
No. of Business Days
of Vacation Time Per
Calendar Year: 20
Effective Date of
Vacation Accrual: January 1, 1995
Expiration Date of
Agreement: February 20, 1997
Executive's Facility: Syntro Headquarters; Lenexa, KS
14
<PAGE> 1
EXHIBIT 11.1
SYNTRO CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATION
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
MARCH 31, MARCH 31,
--------------------------- ----------------------------
1995 1994 1995 1994
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY
-------
Net loss $ (74,459) $ (117,446) $ (409,221) $ (103,222)
============ =========== ============ ===========
Weighted average number of common
shares outstanding during the period 11,397,184 11,382,415 11,392,559 11,380,665
Add - common equivalent shares
(determined using the "treasury
stock method") representing shares
issuable upon exercise of stock
options -- -- -- --
------------ ----------- ------------ ----------
Weighted average number of shares
used in calculation of primary
loss per share 11,397,184 11,382,415 11,392,559 11,380,665
============ =========== ============ ===========
Primary loss per common share $(.01) $(.01) $(.04) $(.01)
============ =========== ============ ===========
FULLY DILUTED
-------------
Net loss $ (74,459) $ (117,446) $ (409,221) $ (103,222)
============ ============ ============ ============
Weighted average number of shares used
in calculating primary income per
common share 11,397,184 11,382,415 11,392,559 11,380,665
Add incremental shares representing:
Shares issuable upon exercise of stock
options included in primary
calculation above -- -- -- --
Shares issuable upon exercise of stock
options based on period end market
price -- -- -- --
------------ ------------ ------------ ------------
Weighted average number of shares
used in calculation of fully diluted
loss per share 11,397,184 11,382,415 11,392,559 11,380,665
=========== =========== =========== ===========
Fully diluted loss per common share $(.01) $(.01) $(.04) $(.01)
=========== =========== =========== ===========
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 1,500,177
<SECURITIES> 4,591,234
<RECEIVABLES> 498,531
<ALLOWANCES> 0
<INVENTORY> 759,537
<CURRENT-ASSETS> 7,358,354
<PP&E> 6,778,668
<DEPRECIATION> 3,334,697
<TOTAL-ASSETS> 12,767,548
<CURRENT-LIABILITIES> 969,822
<BONDS> 0
<COMMON> 113,972
0
0
<OTHER-SE> 11,683,754
<TOTAL-LIABILITY-AND-EQUITY> 12,767,548
<SALES> 1,418,141
<TOTAL-REVENUES> 3,304,668
<CGS> 792,535
<TOTAL-COSTS> 2,504,664
<OTHER-EXPENSES> 1,265,929
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (409,221)
<INCOME-TAX> 0
<INCOME-CONTINUING> (409,221)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (409,221)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
