<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 15, 2000
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ECOGEN INC.
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(Exact name of registrant as specified in its charter)
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<CAPTION>
<S> <C> <C>
Delaware 1-9579 22-2487948
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(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number Identification No.)
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2000 Cabot Boulevard West, Langhorne, Pennsylvania 19047
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (215) 757-1590
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<PAGE>
FORM 8-K/A
This Form 8-K/A amends the Current Report on Form 8-K of Ecogen Inc.,
previously filed with the Securities and Exchange Commission on March 1, 2000,
to file the financial statements and pro forma financial information required by
Item 7 of Form 8-K.
Item 2. Acquisition or Disposition of Assets
------------------------------------
As previously reported, on February 15, 2000, Ecogen Inc. (the "Company")
completed its acquisition of certain assets of the sprayable Bt bioinsecticide
business of Mycogen Corporation ("Mycogen"), an affiliate of Dow AgroSciences
LLP. The Company issued to Mycogen 1,351,351 shares (the "Shares") of its common
stock valued at $3,041,000 upon the closing of the transaction.
The transaction included the purchase of Mycogen's Bt bioinsecticides,
product registration and data citation rights, trademarks, product inventories
and a license to certain proprietary genes and strains for use in sprayable
bioinsecticides. Prior to the closing, the Company acquired approximately
$391,000 of Mycogen's inventory of sprayable Bt products, under a distribution
agreement effective January 1, 2000. The Company paid $280,000 in cash for such
inventory purchases and the balance was settled with the issuance of shares at
closing. Principal products acquired include: MVP(R) for control of lepidopteran
pests in vines and vegetables, MVP(R) for control of lepidopteran pests in
trees, nuts, vines and row crops and Mattch(TM) for control of lepidopteran
pests in vegetables. The Company and Dow AgroSciences LLC also entered into a
five-year supply agreement and the companies have agreed to enter into
distribution agreements granting exclusive rights to Dow AgroSciences to sell
the acquired products in Mexico, New Zealand and Australia.
Under the terms of the agreement, Mycogen has agreed to hold the Shares for
a three-year period, except in the event of certain change in control
transactions. Mycogen was granted certain demand and piggyback registration
rights with respect to the Shares. In addition, to the extent the Company issues
additional securities at any time prior to February 15, 2003, Mycogen has the
right of first refusal to purchase securities of the Company so as to maintain
its ownership percentage in the Company. Mycogen also has been granted certain
market price protection rights at the time that Mycogen sells the Shares, which
may result in the issuance of additional shares, which may not exceed 20% of the
Company's outstanding shares without stockholder approval.
The transaction will be accounted for as a purchase and, accordingly, the
total purchase price for the assets of $3,426,000, including out-of-pocket
expenses, will be allocated based upon their fair value at the date of
acquisition. The assets acquired include inventory and identifiable intangible
assets including a license to certain genes and strains, product registration
rights and trademarks. The agreement also provides that the Company has no
obligation for past or future royalties under a 1998 settlement agreement with
Mycogen on a patent infringement dispute. Under purchase accounting, part of the
purchase price has been allocated to other assets for the fully paid up royalty
and any amounts previously accrued under the settlement agreement have been
eliminated in purchase accounting.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements of Businesses Acquired
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Filed herewith as a part of this report are the following financial statements
for the Bt Biopesticide Business of Mycogen Corporation: (i) audited statement
of assets sold as of December 31, 1999; and (ii) audited statement of direct
revenue and direct expenses for the year ended December 31, 1999, and the report
of Deloitte & Touche LLP, independent auditors, thereon, together with the notes
thereto.
(b) Pro Forma Financial Information
-------------------------------
The following unaudited pro forma condensed consolidated financial statements
are attached hereto:
. Unaudited pro forma condensed consolidated statements of operations for the
three-month period ended January 31, 2000 and the year ended October 31,
1999 and notes thereto
. Unaudited pro forma condensed consolidated balance sheet as of January 31,
2000 and notes thereto
(c) Exhibits
23.1 Consent of Deloitte & Touche LLP
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The BT Biopesticides Business of Mycogen Corporation
Statement of Assets Sold as of December 31, 1999 and the
Statement of Direct Revenues and Direct Expenses for the Year
Ended December 31, 1999 and Independent Auditors' Report
4
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The BT Biopesticides Business of Mycogen Corporation
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statement of Assets Sold as of December 31, 1999 2
Statement of Direct Revenues and Direct Expenses for the
Year Ended December 31, 1999 3
Notes to Financial Statements 4-5
5
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Management of Mycogen Corporation:
We have audited the accompanying statement of assets sold as of December 31,
1999, and the related statement of direct revenues and direct expenses for the
year then ended (collectively, the "Statements") for the BT Biopesticides
Business of Mycogen Corporation (the "Business"). These Statements are the
responsibility of the Business' management. Our responsibility is to express an
opinion on these Statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the Statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the Statements.
We believe that our audit provides a reasonable basis for our opinion.
The assets and operations covered by the Statements were a part of Mycogen
Corporation and had no separate legal status. As described in Notes 1 & 2 to
the Statements, the Statements have been prepared from Dow AgroSciences LLC's
consolidated financial records and allocations of certain costs and expenses
have been made. These allocations are not necessarily indicative of the costs
and expenses that would have been incurred by the BT Biopesticides Business of
Mycogen Corporation on a stand-alone basis or if such business had been owned by
another party.
In our opinion, the Statements present fairly, in all material respects, the
assets sold as of December 31, 1999, and the direct revenues and direct expenses
of the BT Biopesticides Business of Mycogen Corporation for the year then ended,
in conformity with accounting principles generally accepted in the United
States.
Deloite & Touche LLP
Indianapolis, Indiana
January 28, 2000
6
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THE BT BIOPESTICIDES BUSINESS OF
MYCOGEN CORPORATION
STATEMENT OF ASSETS SOLD
AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS
INVENTORY $616,774
INTANGIBLE ASSETS -
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TOTAL ASSETS $616,774
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See accompanying notes to financial statements.
7
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THE BT BIOPESTICIDES BUSINESS OF
MYCOGEN CORPORATION
STATEMENT OF DIRECT REVENUES AND DIRECT EXPENSES FOR THE YEAR
ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
DIRECT REVENUE - Net Trade Revenues $3,732,001
COST OF PRODUCTS SOLD 2,288,442
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GROSS MARGIN 1,443,569
DIRECT SELLING, ADMINISTRATIVE AND OTHER 204,546
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EXCESS OF DIRECT REVENUES OVER DIRECT EXPENSES $1,239,023
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See accompanying notes to financial statements.
8
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THE BT BIOPESTICIDES BUSINESS OF
MYCOGEN CORPORATION
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
On December 21, 1999, Ecogen, Inc., ("Ecogen") signed a letter of intent (the
"Agreement") to acquire the sprayable BT Biopesticides business of Mycogen
Corporation (the "Company"). Pursuant to the Agreement, the Company will
sell to Ecogen inventory, trademarks, registrations and other assets relating
to such business, and Ecogen will accept a license in certain of the
Company's proprietary BT strains and assume such rights, and obligations for
supporting the registrations and trademarks, from the Company. The license
does not include any ownership rights to the CellCap technology or the
manufacturing process utilized in the production of the products. Also
pursuant to the Agreement, both the Company and Ecogen will enter into
separate agreements under which (i) the Company will agree to toll
manufacture certain technical BT insecticides and end-use products for
Ecogen, and (ii) Ecogen will agree to supply the Company with certain BT
insecticides and end-use products for distribution in specified geographic
areas.
The Company did not account for the BT Biopesticides Business (the
"Business") as a separate entity within the corporate consolidated systems.
Accordingly, the information included in the accompanying statements has been
obtained from the Company's consolidated financial records. The statement of
direct revenues and direct expenses includes allocations of the Company's
selling, administrative, and other expenses as discussed in Note 2. The
Company's management believes the allocations are reasonable; however, these
allocated expenses are not necessarily indicative of the costs and expenses
that would have been incurred by the Business on a stand-alone basis or if
such Business had been owned by another party, since certain administrative
and other activities are provided to the Business that are not included as
costs or expenses in the accompanying statements as discussed in Note 2.
2. SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATED FINANCIAL RECORDS - Consolidated financial records means the
combined financial records of the Company and its subsidiaries and Dow
AgroSciences LLC and its subsidiaries.
REVENUE RECOGNITION - Revenue from the sale of products is recognized at the
time products are shipped. Sales returns are recorded as an offset to sales
at the time credit is issued.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying disclosures. Although these estimates are based
on management's best knowledge of current events and actions the Company may
undertake in the future, actual results ultimately may differ from the
estimates.
INVENTORY - Inventory is valued at the lower of cost or market. Cost is
determined using the first -in , first - out (FIFO) method.
INTANGIBLE ASSETS - Intangible assets sold include trademarks, records and
registrations of the business and have no recorded historical cost.
9
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COST OF PRODUCTS SOLD - Cost of product sold includes allocations of certain
costs, including warehousing, utilities, insurance, and employee costs.
These costs are allocated between the Business and other products produced by
the Company based primarily on planned sales of the Business' products versus
other planned product sales of the Company.
DIRECT SELLING, ADMINISTRATIVE, & OTHER - Certain direct selling and
marketing, administrative, and other direct expenses, including research and
development ("R&D"), are specifically identifiable and others are allocated
to the Business based primarily on estimates of actual time and effort spent,
net outside sales and number of employees. Such allocated expenses represent
those charges that are attributable to the Business and primarily include the
Company's related expenses such as selling, and other general administrative
expenses. Certain administrative and other expenses are allocated to the
Business by the Company that are not directly attributable or specifically
identifiable to the Business and, therefore, are expenses excluded from
direct selling, administrative, and other expenses in the accompanying
statement of direct revenues and direct expenses. Such expenses primarily
include the Company's corporate expenses such as human resources, executive
compensation, management information systems, finance and accounting, R&D,
and general corporate expenses.
* * * * * *
10
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following presents certain unaudited pro forma condensed consolidated
financial information of Ecogen Inc. for the periods as indicated. The unaudited
pro forma condensed consolidated financial information gives effect to the
acquisition of the Bt Biopesticide Business of Mycogen Corporation which
occurred on February 15, 2000 as if such transaction had occurred on November 1,
1998 for purposes of the unaudited pro forma condensed consolidated statements
of operations for the year ended October 31, 1999 and the three-month period
ended January 31, 2000, and on January 31, 2000 for purposes of the unaudited
pro forma condensed consolidated balance sheet as of January 31, 2000. The pro
forma financial information was prepared using the assumptions described below
and in the related notes thereto.
The unaudited pro forma condensed consolidated financial information reflects
pro forma adjustments that are based upon available information and certain
assumptions that we believe are reasonable. The pro forma financial information
does not purport to represent our results of operations or financial position
that would have resulted had the transactions to which pro forma effect is given
been consummated as of the dates or for the periods indicated. In preparing the
pro forma financial information, we believe we have utilized reasonable methods
to conform the basis of presentation. The pro forma financial statements have
not been adjusted for certain improvements in gross margins that we may realize
in connection with the integration of the Bt Biopesticide Business of Mycogen
Corporation.
For purposes of the unaudited pro forma condensed consolidated statements of
operations, our historical consolidated statement of operations for the year
ended October 31, 1999 was combined with the Bt Biopesticide Business of Mycogen
Corporation's historical statement of operations for the fiscal year ended
December 31, 1999. In addition, our historical consolidated statement of
operations for the three-month period ended January 31, 2000 was combined with
the Bt Biopesticide Business of Mycogen Corporation's historical statement of
operations for the three-month period ended January 31, 2000.
The unaudited pro forma consolidated condensed financial statements and
accompanying notes should be read in conjunction with the historical financial
statements of Ecogen Inc. as reported in its annual report on Form 10-K for the
fiscal year ended October 31, 1999 and its quarterly report on Form 10-Q for the
three months ended January 31, 2000, and the historical financial statements of
the Bt Biopesticide Business of Mycogen Corporation included herein.
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Overview of Acquisition
- -----------------------
We acquired the assets of the Bt Biopesticide Business of Mycogen Corporation as
of February 15, 2000. We accounted for this acquisition using the purchase
method of accounting. The consideration and allocation of the purchase price are
summarized below (dollars in thousands):
Purchase Price Consideration:
Cash..................................................... $ 285
Common stock............................................. 3,041
Accrued expenses, certain legal, accounting and other
acquisition costs........................................ 100
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$3,426
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Allocation of Purchase Price:
Inventory................................................ $ 926 *
Other assets............................................. 565
Accrued liabilities...................................... 123
Intangible assets (1) ................................... 1,812
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$3,426
======
* Of which 379,000 was received prior to January 31, 2000.
(1) Intangible assets include the following components (dollars in
thousands):
Product registrations..................................... $1,610
Trademarks................................................ 202
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$1,812
======
Ecogen has taken a number of steps to improve the gross margins of the products
since the Company began distribution of the products in the Bt Biopesticide
Business of Mycogen Corporation including modifications to sales incentive
programs and raising sales prices starting February 1, 2000.
We believe that our integration efforts will improve the gross margins of the Bt
Biopesticide Business of Mycogen Corporation. No adjustments for either the
modification of the incentive programs or the price increases have been
reflected in these pro forma statements of operations.
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ECOGEN INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended January 31, 2000
Historical
--------------------------------
Bt Biopesticide
Business of
Mycogen Pro Forma Pro Forma
Ecogen Inc. Corporation Adjustments Consolidated
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<S> <C> <C> <C> <C>
Revenues:
Product sales, net $1,099,500 $774,961 $1,874,461
- ------------------------------------------------------------------------- ---------------- -------------- -------------------
Total revenues 1,099,500 774,961 - 1,874,461
- ------------------------------------------------------------------------- ---------------- -------------- -------------------
Costs and expenses:
Cost of products sold 906,530 642,920 104,452 (1) 1,653,902
Research and development 441,904 441,904
Selling, general and administrative 1,210,037 51,137 62,695 (2) 1,323,869
- ------------------------------------------------------------------------- ---------------- -------------- -------------------
Total costs and expenses 2,558,471 694,057 167,147 3,419,675
- ------------------------------------------------------------------------- ---------------- -------------- -------------------
Operating loss (1,458,971) 80,904 (167,147) (1,545,214)
Other income (expense):
Interest expense, net (146,247) (146,247)
Other income 54,351 54,351
- ------------------------------------------------------------------------- ---------------- -------------- -------------------
Total other expense, net (91,896) - - (91,896)
- ------------------------------------------------------------------------- ---------------- -------------- -------------------
Net loss (1,550,867) 80,904 (167,147) (1,637,110)
Dividends on preferred stock including assumed
incremental yield of $63,219 in 2000 155,177 155,177
- ------------------------------------------------------------------------- ---------------- -------------- -------------------
Net loss allocable to common stockholders ($1,706,044) ($1,792,287)
========================================================================= ================ ============== ===================
Basic and diluted net loss per common share ($0.17) ($0.16)
========================================================================= ================ ============== ===================
Weighted average number of common shares outstanding 10,045,000 11,396,000
========================================================================= ================ ============== ===================
(1) Adjustments to cost of product sold for the price Ecogen will pay for product under the supply agreement with Dow AgroSciences
LLC.
(2) Adjustments to amortization expense for the intangible assets acquired. Intangible assets are being amortized on a straight-
line basis over their estimated useful lives which is seven to ten years.
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<CAPTION>
ECOGEN INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended October 31, 1999
Historical
--------------------------------
Bt Biopesticide
Business of
Mycogen Pro Forma Pro Forma
Ecogen Inc. Corporation Adjustments Consolidated
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Revenues:
Product sales, net $6,566,022 $3,732,011 $10,298,033
Research contract revenue 676,277 676,277
- ------------------------------------------------------------------- --------------- ----------- -------------
Total revenues 7,242,299 3,732,011 - 10,974,310
- ------------------------------------------------------------------- --------------- ----------- -------------
Costs and expenses:
Cost of products sold 5,975,954 2,288,442 827,023 (1) 9,091,419
Research and development 2,636,893 2,636,893
Selling, general and administrative 6,832,761 204,546 250,781 (2) 7,288,088
- ------------------------------------------------------------------- --------------- ----------- -------------
Total costs and expenses 15,445,608 2,492,988 1,077,804 19,016,400
- ------------------------------------------------------------------- --------------- ----------- -------------
Operating income (loss) (8,203,309) 1,239,023 (1,077,804) (8,042,090)
Other income (expense):
Interest expense, net (522,894) (522,894)
Other income 114,932 114,932
- ------------------------------------------------------------------- --------------- ----------- -------------
Total other expense, net (407,962) - - (407,962)
- ------------------------------------------------------------------- --------------- ----------- -------------
Net income (loss) (8,611,271) 1,239,023 (1,077,804) (8,450,052)
Dividends on preferred stock including assumed
incremental yield of $786,444 in 1999 1,142,180 1,142,180
- ------------------------------------------------------------------- --------------- ----------- -------------
Net loss allocable to common stockholders ($9,753,451) ($9,592,232)
=================================================================== =============== =========== =============
Basic and diluted net loss per common share ($1.05) ($0.91)
=================================================================== =============== =========== =============
Weighted average number of common shares outstanding 9,248,000 10,599,000
=================================================================== =============== =========== =============
(1) Adjustments to cost of product sold for the price Ecogen will pay for product under the supply agreement with Dow AgroSciences
LLC.
(2) Adjustments to amortization expense for the intangible assets acquired. Intangible assets are being amortized on a straight-
line basis over their estimated useful lives which is seven to ten years.
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Unaudited Pro Forma Condensed Consolidated Balance Sheet
January 31, 2000
Historical
-------------------------------
Bt Biopesticide Eliminations &
Assets Business of Pro Forma
Mycogen Purchase Pro Forma
Ecogen Inc. Corporation Adjustments Concolidated
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Current assets:
Cash $15,377 $15,377
Trade receivables, net 1,767,694 1,767,694
Inventory, net 5,372,613 616,774 (69,774) (1) 5,919,613
Prepaid expenses and other current assets 460,058 460,058
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 7,615,742 616,774 (69,774) 8,162,742
Plant and equipment, net 2,231,291 2,231,291
Other assets, net 815,095 565,000 (2) 1,380,095
Intangible assets - 1,812,000 (3) 1,812,000
- ------------------------------------------------------------------------------------------------------------------------
$10,662,128 $616,774 $2,307,226 $13,586,128
=======================================================================================================================
Liabilities and Stockholders' Equity (Deficit)
- ------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt 2,639,375 2,639,375
Accounts payable and accrued expenses 4,248,668 (123,000) (4) 4,125,668
- ------------------------------------------------------------------------------------------------------------------------
Total current liabilities 6,888,043 - (123,000) 6,765,043
Long-term debt 1,148,613 1,148,613
Long-term deferred revenue 1,482,569 1,482,569
Minority interest in subsidiary 1,533,854 1,533,854
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 11,053,079 - (123,000) 10,930,079
- ------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity (deficit) (390,951) 616,774 2,430,226 (5) 2,656,049
- ------------------------------------------------------------------------------------------------------------------------
$10,662,128 $616,774 $2,307,226 $13,586,128
========================================================================================================================
(1) To eliminate $616,774 of inventory recorded on the Bt Biopesticide Business of Mycogen Corporation Statement of Assets Sold at
December 31, 1999, and record the actual value on inventory purchased by Ecogen subsequent to January 31, 2000.
(2) To record a fully paid up royalty under a 1998 settlement agreement with Mycogen on a patent infringement dispute.
(3) To record acquired identifiable intangible assets.
(4) To accrue certain legal accounting, and other acquisition costs totalling $100,000 and eliminate $223,000 of accrued royalties
under a 1998 settlement agreement with Mycogen on a patent infringement dispute.
(5) To record the 1,351,351 shares of Ecogen common stock issued for the purchase of the Bt Biopesticide Business of Mycogen
Corporation and eliminate $616,7774 of Mycogen Corporation equity in the assets sold.
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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 hereunto duly authorized.
ECOGEN INC.
By: /s/ James P. Reilly, Jr.
_____________________________________________
Name: James P. Reilly, Jr.
Title: Chairman and Chief Executive Officer
Date: May 1, 2000
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Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-23767 on Form S-8/S-3, Registration Statement No. 33-39687, No. 33-50478 and
No. 33-70538 on Form S-8 and Registration Statement No. 33-78510, No. 33-45975,
No. 33-48020, No. 33-71854, No. 333-58535 and 333-32654 on Form S-3 of Ecogen
Inc. of our report dated January 28, 2000, on our audit of the financial
statements of the BT Biopesticides Business of Mycogen Corporation, appearing in
this current report on Form 8-K/A of Ecogen Inc. dated February 15, 2000.
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
April 28, 2000
