<PAGE> 1
UNITED STATES
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): May 3, 1999
GERON CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-20859 75-2287752
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
230 Constitution Drive, Menlo Park, CA 94025
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 473-7700
--------------------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE> 2
The Registrant hereby amends the following item of its Current Report on
Form 8-K filed with the Securities and Exchange Commission on May 18, 1999. The
Registrant is amending Item 7 to include pro-forma financial statements as well
as an independent auditor's consent from Arthur Andersen with respect to the
audited financial statements of the business acquired by the Registrant.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Audited financial statements of Roslin for the period from
October 1, 1997 (date of incorporation) until February 28, 1999 are attached
below and filed with this report. Also attached and filed with this report is a
report of the directors of Roslin for the period from incorporation until
February 28, 1999, and an auditors' report from Arthur Andersen.
Directors Report
The directors present their report on the affairs of the company, together with
the accounts and auditors' report, for the period from incorporation to 28
February 1999.
Business review
The company was incorporated on 1 October 1997 and commenced trading on 7 April
1998.
The company's purpose is to develop and exploit nuclear-transfer and molecular
targeting technology to develop farm-animals and human-cells as a source of
bio-medical products including but not limited to, organs, cells and tissues for
human transplantation, blood and blood fractions and antibodies.
Results and dividends
<TABLE>
<CAPTION>
L 000s
<S> <C>
Loss for the financial period 2,351
-------
Retained loss at 28 February 1999 2,351
=======
</TABLE>
The directors do not recommend payment of a dividend.
Directors and their interests
The directors who served during the period, together with their interests in the
share capital of the company, are as shown below:
<TABLE>
<CAPTION>
Number of ordinary shares
of L 1 each
--------------------------
<S> <C> <C>
Ian Biggs (appointed 11/1/99) --
Simon Best (appointed 1/6/98) 10,000
Dr John Brown (appointed 11/5/98) 2,000
Professor Grahame Bulfield (appointed 7/4/98) --
Professor Anthony Clark (appointed 7/4/98, resigned 1/6/98) 8,000
Ian Kent (appointed 11/5/98) 4,000
Professor Ian Wilmut (appointed 7/4/98) 12,000
Kenneth McCracken (appointed 1/10/97, resigned 7/4/98) --
</TABLE>
Details of directors share options are disclosed in note 11.
2
<PAGE> 3
Directors' responsibilities
Company law requires directors to prepare accounts for each financial year which
give a true and fair view of the state of affairs of the company and of its
profit or loss for that period. In preparing those accounts, the directors are
required to:
- - select suitable accounting policies and then apply them consistently;
- - make judgements and estimates that are reasonable and prudent;
- - state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the accounts; and
- - prepare the accounts on the going concern basis unless it is inappropriate
to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the accounts comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Year 2000 compliance
The directors have performed an assessment of the potential impact of the Year
2000, including obtaining assurances from key suppliers. The directors believe
that the company is Year 2000 compliant.
By order of the Board,
Roslin Institute (Edinburgh)
Roslin
Midlothian
EH25 9PS
/s/ Ian Biggs
Ian Biggs
Director
15 April 1999
3
<PAGE> 4
Auditors' report
To the Directors of Roslin Bio-Med Limited:
We have audited the accounts on pages 4 to 16 which have been prepared under the
historical cost convention and the accounting policies set out in note 1.
Respective responsibilities of directors and auditors
As discussed on page 2 the accounts are the responsibility of the directors. It
is our responsibility to form an independent opinion, based on our audit, on
those accounts and to report our opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the accounts and of whether the accounting
policies are appropriate to the circumstances of the company, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the accounts.
Opinion
In our opinion the accounts give a true and fair view of the state of affairs of
the company at 28 February 1999 and of its loss and cash flows for the period
then ended and have been properly prepared in accordance with the provisions of
the Companies Act 1985.
Arthur Andersen
Chartered Accountants and Registered Auditors
/s/ Arthur Andersen
18 Charlotte Square
Edinburgh
EH2 4DF
15 April 1999
4
<PAGE> 5
Profit and loss account
For the period ended 28 February 1999
<TABLE>
<CAPTION>
Notes 1999
17 months
L 000s
<S> <C> <C>
TURNOVER 4
Cost of sales --
------
GROSS PROFIT 4
Net operating expenses 2 (2,434)
------
OPERATING LOSS (2,430)
Interest income 3 79
------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 4 (2,351)
Tax on loss on ordinary activities 6 -
------
RETAINED LOSS FOR THE FINANCIAL PERIOD 12 (2,351)
======
</TABLE>
A statement of movements on reserves is given in note 12.
The current period results have been derived wholly from continuing operations.
The loss for the period equates to the historical cost loss for the period.
There are no recognised gains or losses in the period other than the loss for
the period.
The accompanying notes are an integral part of this profit and loss account.
5
<PAGE> 6
Balance sheet
28 February 1999
<TABLE>
<CAPTION>
Notes 1999
L 000s
<S> <C> <C>
FIXED ASSETS
Intangible assets 7 1,090
Tangible assets 8 70
------
1,160
------
CURRENT ASSETS
Debtors 9 100
Cash at bank and in hand 1,926
------
2,026
CREDITORS: Amounts falling due within one year 10 (723)
------
NET CURRENT ASSETS 1,303
------
TOTAL ASSETS LESS CURRENT LIABILITIES 2,463
------
NET ASSETS 2,463
======
CAPITAL AND RESERVES
Called-up share capital 11 383
Share premium account 12 4,431
Profit and loss account 12 (2,351)
------
TOTAL CAPITAL EMPLOYED 13 2,463
======
SHAREHOLDERS' FUNDS
Equity interests 11 2,460
Non-equity interests 11 3
------
2,463
======
</TABLE>
Signed on behalf of the Board
/s/ Ian Biggs
Ian Biggs
Director
15 April 1999
The accompanying notes are an integral part of this balance sheet.
6
<PAGE> 7
Cash flow statement
For the period ended 28 February 1999
<TABLE>
<CAPTION>
Notes 1999
L 000s
<S> <C> <C>
Net cash outflow from operating activities 16a) (1,693)
Returns on investments and servicing of finance 16b) 79
Capital expenditure 16c) (74)
------
(1,688)
Financing 16d) 3,614
------
INCREASE IN CASH IN THE PERIOD 1,926
======
</TABLE>
The accompanying notes are an integral part of this cash flow statement.
7
<PAGE> 8
Notes to accounts
1 Accounting policies
A summary of the principal accounting policies, all of which have been applied
consistently throughout the period is set out below.
a) Basis of accounting
The accounts are prepared under the historical cost convention and in accordance
with applicable accounting standards.
b) Intangible fixed assets
Licences acquired from third parties are stated at cost, net of amortisation and
provision for impairment. Licences are amortised over the minimum term of the
licence agreement.
c) Tangible fixed assets
Fixed assets are shown at original historical cost, net of depreciation and any
provision for impairment.
Depreciation is provided at rates calculated to write off the cost or valuation,
less estimated residual value, of each asset over its expected useful life as
follows:
<TABLE>
<S> <C>
Lab equipment 5 years straight line
Computer equipment 5 years straight line
</TABLE>
d) Taxation
Corporation tax payable is provided on taxable profits at the current rate.
Provision is made for deferred taxation using the liability method, to take
account of all timing differences except those which, in the opinion of the
directors, will probably not reverse.
e) Turnover
Turnover represents net invoiced sales to customers excluding VAT.
f) Research and development
Research expenditure is written off as incurred. Development expenditure is also
written off, except where the directors are satisfied as to the technical,
commercial and financial viability of individual projects. In such cases, the
identifiable expenditure is deferred and amortised over the period during which
the company is expected to benefit.
8
<PAGE> 9
Notes to accounts (continued)
2 Net operating expenses
<TABLE>
<CAPTION>
1999
17 months
L 000s
<S> <C>
Administrative expenses 1,255
Research expenditure 1,179
------
2,434
======
</TABLE>
<TABLE>
3 Interest income
1999
17 months
L 000s
<S> <C>
Interest receivable 79
======
</TABLE>
4 Loss on ordinary activities before taxation
Loss on ordinary activities before taxation is stated after charging:
<TABLE>
<CAPTION>
1999
17 months
L 000s
<S> <C>
Depreciation and amounts written off
- - tangible fixed assets 9
Amortisation of licences 110
Auditors' remuneration 8
Staff costs (note 5) 232
====
</TABLE>
IN ADDITION TO THE AUDITORS' REMUNERATION SHOWN ABOVE THE COMPANY PAID L 6,500
FOR OTHER SERVICES PROVIDED BY THE AUDITORS.
5 Staff costs
Particulars of employees (including executive directors) are as shown below.
<TABLE>
<CAPTION>
1999
17 months
L 000s
<S> <C>
Employee costs during the period amounted to:
Wages and salaries 212
Social security costs 20
----
232
====
</TABLE>
9
<PAGE> 10
Notes to accounts (continued)
5 Staff costs (continued)
The average monthly number of persons employed by the company during the period
was as follows:
<TABLE>
<CAPTION>
1999
Number
<S> <C>
Administrative 5
========
Directors' remuneration
Remuneration
The remuneration of the directors was as follows:
1999
17 months
L 000s
Emoluments 199
========
</TABLE>
Pensions
No director was a member of a pension scheme.
6 Tax on loss on ordinary activities
No tax charge arose in the period due to trading losses.
7 Intangible fixed assets
<TABLE>
<CAPTION>
Licenses Total
L 000s L 000s
<S> <C> <C>
COST
Beginning of period -- --
Additions 1,200 1,200
-------- ------
End of period 1,200 1,200
======== ======
AMORTISATION
Beginning of period - -
Charge 110 110
-------- ------
End of period 110 110
======== ======
NET BOOK VALUE
Beginning of period - -
======== ======
End of period 1,090 1,090
======== ======
</TABLE>
10
<PAGE> 11
Notes to accounts (continued)
<TABLE>
8 Tangible fixed assets
Lab Computer
equipment equipment Total
L 000s L 000s L 000s
<S> <C> <C> <C>
COST OR VALUATION
Beginning of period -- -- --
Additions 63 16 79
--------- --------- ------
End of period 63 16 79
========= ========= ======
DEPRECIATION
Beginning of period -- -- -
Charge 8 1 9
--------- --------- ------
End of period 8 1 9
========= ========= ======
NET BOOK VALUE
Beginning of period -- -- --
========= ========= ======
End of period 55 15 70
========= ========= ======
</TABLE>
9 Debtors
The following are included in the net book value of debtors:
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Amounts falling due within one year:
Prepayments and accrued income 5
VAT 95
------
100
======
</TABLE>
10 Creditors: Amounts falling due within one year
The following amounts are included in creditors falling due within one year:
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Trade creditors 218
Social security and PAYE 19
Other creditors 486
------
723
======
</TABLE>
11
<PAGE> 12
Notes to accounts (continued)
11 Called-up share capital
<TABLE>
<CAPTION>
Issued,
called-up
and fully
Authorised paid
1999 1999
Number L
<S> <C> <C>
Equity shares:
`A' ordinary shares of L 1 172,000 172,000
`B' ordinary shares of L 1 248,000 188,000
`C' ordinary shares of L 1 20,000 20,000
--------- --------
Total equity share capital 440,000 380,000
--------- --------
Non-equity share capital
`D' ordinary shares of L 0.01 688,000 3,440
--------- --------
Total non-equity share capital 688,000 3,440
--------- --------
Total share capital 1,128,000 383,440
========= ========
</TABLE>
During the period the following shares were allotted:
<TABLE>
<CAPTION>
Date Shares Number Consideration Share premium
L 000s L 000s
<S> <C> <C> <C> <C>
7 April 1998 `A' ordinary 172,000 1,200 1,028
7 April 1998 `B' ordinary 172,000 -- 1,028
7 April 1998 `C' ordinary 20,000 20 --
17 December 1998 `D' ordinary 344,000 2,400 2,397
23 October 1998 `B' ordinary 16,000 64 48
</TABLE>
Details of the consideration for the `B' ordinary shares issued on 7 April 1998
are set out in note 18
a) Income
All classes of ordinary shares, other than `D' ordinary shares, rank equally for
dividends.
`D' ordinary shares are not entitled to a dividend.
b) Redemption
The company may redeem the `D' ordinary shares at any time in return for the
payment of an aggregate sum of L 1 to the registered holder.
12
<PAGE> 13
Notes to accounts (continued)
11 Called-up share capital (continued)
c) Capital
On the return of assets on liquidation or capital reduction, the repayment of
capital shall be in the following order:
First, in paying to the holders of the `A' ordinary shares, an amount per share
equal to the aggregate amount subscribed for all the issued `A' ordinary shares
and `D' ordinary shares together with a sum equal to any arrears or accruals of
the dividends on the `A' ordinary shares calculated to the date of the return on
capital;
Second, in paying to the holders of the `B' and `C' ordinary shares the sum per
share paid on each `A' ordinary share together with a sum equal to any arrears
or accruals of the dividends on the ordinary shares calculated to the date of
the return of capital; and
The balance of such assets shall be distributed amongst the holders of the
equity shares in proportion to the amounts paid up or credited as paid up on the
equity shares held by them respectively; and
After the equity shareholders have received L 1,000 per share the holders of
the `D' ordinary shares will receive L 0.01 per share.
d) Voting
Equity shares will carry one vote per share. `D' ordinary shares have no voting
rights.
e) Share options
Options have been granted to subscribe for `B' ordinary shares of the company as
follows:
<TABLE>
<CAPTION>
Option At 1 Granted At 28
exercise October 1999
price 1997 February
<S> <C> <C> <C> <C>
Simon Best L 4 -- 10,000 10,000
Ian Biggs L 8 -- 5,000 5,000
John Brown L 4 -- 5,000 5,000
Ian Kent L 4 -- 10,000 10,000
======== ====== ======= ========
</TABLE>
One quarter of the options granted to Messrs. Best, Brown and Kent are
exercisable immediately, with a further quarter becoming exercisable on each
subsequent anniversary of the date the options were granted until such time as
all options are exercisable.
The options granted to Mr Biggs are exercisable from January 2000.
In addition, options may also be exercised in advance of any transaction
involving the sale of the company or its assets.
13
<PAGE> 14
Notes to accounts (continued)
12 Reserves
Of total reserves shown in the balance sheet, the following amounts are regarded
as distributable or otherwise:
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Distributable
- - profit and loss account (2,351)
Non-distributable
- - share premium account 4,431
------
Total reserves 2,080
======
</TABLE>
The movement in the period was as follows:
<TABLE>
<CAPTION>
Share Profit and
premium loss account Total
account L 000s L 000s L 000s
<S> <C> <C> <C>
Beginning of period -- -- --
Retained loss for the period -- (2,351) (2,351)
Share issues 4,431 -- 4,431
------ ------ ------
End of period 4,431 (2,351) 2,080
====== ====== ======
</TABLE>
13 Reconciliation of movements in shareholders' funds
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Loss for the financial period (2,351)
New share capital subscribed 4,814
Opening shareholders' funds --
------
Closing shareholders' funds 2,463
======
</TABLE>
14
<PAGE> 15
Notes to accounts (continued)
14 Guarantees and other financial commitments
Capital commitments
At the end of the period, capital commitments were:
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Contracted for but not provided for --
======
</TABLE>
15 Related party transactions
The company undertook transactions, all of which were on an arms length basis,
and had balances outstanding at 28 February 1999 with related parties as shown
below:
<TABLE>
<CAPTION>
Purchases Creditors Sales Debtors
RELATED PARTY L 000s L 000s L 000s L 000s
<S> <C> <C> <C> <C>
Roslin Institute 1,456 344 -- --
3i plc 108 29 -- --
===== ===== ===== =====
</TABLE>
Roslin Institute and 3i plc related parties by virtue of their significant
shareholdings in the company. Transactions with Roslin Institute relate to the
recharge of costs in respect of facilities and other services provided by Roslin
Institute. Transactions with 3i relate to set up and monitoring fees and the
recharge of legal fees incurred by 3i.
16 Cash flow statement
a) Reconciliation of operating loss to net cash outflow from
operating activities
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Operating loss (2,430)
Depreciation charges 9
Amortisation charges 110
Increase in debtors (100)
Increase in creditors 718
------
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,693)
======
</TABLE>
b) Returns on investments and servicing of finance
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Interest received 79
----
NET CASH INFLOW 79
====
</TABLE>
15
<PAGE> 16
Notes to accounts (continued)
16 Cash flow statement (continued)
c) Capital expenditure
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Purchase of tangible fixed assets (74)
----
NET CASH OUTFLOW (74)
====
</TABLE>
d) Financing
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Issue of share capital 3,684
Expenses paid in connection with share issues (70)
------
NET CASH INFLOW 3,614
======
</TABLE>
17 Analysis and reconciliation of net funds
<TABLE>
<CAPTION>
At 1 Other At 28
October Cash non-cash February
1997 flow charges 1999
L 000s L 000s L 000s L 000s
<S> <C> <C> <C> <C>
Cash in bank and in hand -- 1,926 -- 1,926
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
1999
L 000s
<S> <C>
Increase in cash in the period 1,926
-----
Movement in net funds in period 1,926
Net funds at 1 October 1997 --
-----
Net funds at 28 February 1999 . 1,926
=====
</TABLE>
18 Major non-cash transactions
During the period the company issued 172,000 `B' ordinary shares of L 1 to
Roslin Institute in return for certain licences. Details of the licences
acquired are provided in note 7. The cost attributed to the licences is
L 1,200,000.
16
<PAGE> 17
Notes to accounts (continued)
19 Going concern
As at 28 February 1999, the company has L 1,926,000 of cash.
On the basis of current activity and the directors' current projections this
cash balance will be exhausted towards the end of 1999. The company has entered
into a funding arrangement with 3i that will result in a further L 2,400,000
being available for drawdown subject to the company attaining certain scientific
milestones.
The directors believe that progress towards these milestones is satisfactory
and, accordingly, further funds will be available which will allow the company
to remain a going concern for the foreseeable future. There are also a number of
other commercial opportunities open to the company. For these reasons, the
directors continue to adopt the going concern basis in preparing the accounts.
The accounts do not include any adjustments that would result if the directors
were unable to secure the additional funds referred to above.
17
<PAGE> 18
(b) Unaudited Pro Forma Condensed Combined Financial Information.
The following unaudited pro forma condensed combined financial
statements for Geron Corporation give effect to the acquisition of
Roslin Bio-Med Ltd. ("Roslin Bio-Med"), a private research company in
Scotland. The historical financial information for Roslin Bio-Med were
expressed in British pounds sterling (BPS) and prepared in accordance
with accounting principles generally accepted in the United Kingdom
("U.K. GAAP"). There were no significant differences in accounting
treatment in the Roslin Bio-Med financial information between U.K. GAAP
and those accounting principles generally accepted in the United States
("U.S. GAAP"). The Roslin Bio-Med financial information has been
translated into U.S. dollars using the exchange rate of 1.6 which equals
the exchange rate as of February 28, 1999. This materially approximated
the average exchange rate for the periods presented.
On May 3, 1999, we completed a transaction to acquire all of the
outstanding shares of Roslin Bio-Med. In connection with the merger, we
issued 1,891,371 shares of our common stock to the former Roslin Bio-Med
shareholders in exchange for Roslin Bio-Med's outstanding shares, and
reserved 208,629 shares of our common stock for issuance upon exercise
of fully vested options we assumed in connection with the Roslin Bio-Med
merger. As a result of the acquisition, in addition to the net tangible
assets acquired, we have obtained basic research for nuclear transfer
technology and have entered into a research agreement to fund future
research at the Roslin Institute (the "Institute") over the next six
years.
The unaudited pro forma condensed combined statement of
operations data for the year ended December 31, 1998 set forth below
gives effect to the acquisition as if it occurred on January 1, 1998.
The unaudited pro forma condensed combined statement of operations data
for the three months ended March 31, 1999 set forth below gives effect
to the acquisition as if it occurred on January 1, 1999. The unaudited
pro forma condensed balance sheets as of December 31, 1998 and March 31,
1999, set forth below gives effect to the acquisition of Roslin Bio-Med
as if it occurred on December 31, 1998 and March 31, 1999, respectively.
The acquisition of Roslin Bio-Med will be accounted for using the
purchase method of accounting. The accompanying unaudited condensed
combined financial information reflects the preliminary allocation of
the purchase price and gives effect to the assumption and adjustments
set forth in the accompanying Notes to Unaudited Pro Forma Condensed
Combined Financial Information. The purchase price has been allocated
among the acquired basic research in the form of a license to the
nuclear transfer technology which has no alternative future use, the
research agreement with the Institute and the net tangible assets
acquired. The value of the basic research for the nuclear transfer
technology of approximately $25.1 million has been reflected as research
and development expense and the value of the research agreement of
approximately $17.2 million has been capitalized as a deferred asset in
the accompanying unaudited pro forma condensed combined financial
information.
18
<PAGE> 19
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (1)
AS OF DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
ROSLIN
BIO-MED GERON
FEBRUARY 28, DECEMBER 31, PRO FORMA
1999 1999 ADJUSTMENTS COMBINED
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash $ 3,082 $ 16,360 $ -- $ 19,442
Short term investments -- 8,109 -- 8,109
Interest and other receivables 152 661 -- 813
Other current assets 8 685 -- 693
--------- --------- --------- ---------
Total current assets 3,242 25,815 -- 29,057
Long-term investments -- 15,954 -- 15,954
Property and equipment, net 112 2,336 -- 2,448
Intangible assets 1,744 -- (1,744)(2) --
Deferred costs - research 17,187(3) 17,187
agreement
Deposits and other -- 351 -- 351
--------- --------- --------- ---------
Total assets $ 5,098 $ 44,456 $ 15,443 $ 64,997
========= ========= ========= =========
Current liabilities:
Accounts payable $ 349 $ 1,184 $ 2,932(2) $ 4,465
Accrued liabilities 808 1,220 2,864(3) 4,892
Deferred revenue -- 244 -- 244
Current portion of lease -- 906 -- 906
liability
--------- --------- --------- ---------
Total current liabilities 1,157 3,554 5,796 10,507
Noncurrent portion of lease -- 1,300 -- 1,300
Other noncurrent liabilities -- -- 14,323(3) 14,323
Convertible debentures -- 6,801 -- 6,801
Redeemable convertible
preferred stock -- 3,610 -- 3,610
Stockholders' Equity
Common Stock 613 13 2(2) 15
(613)(2)
Additional paid-in-capital 7,090 88,055 22,163(2) 112,440
2,222(2)
(7,090)(2)
Accumulated deficit (3,762) (57,520) 3,762(2) (82,642)
(25,122)(2)(3)
Other stockholders' equity -- (1,357) (1,357)
--------- --------- --------- ---------
Total stockholders' equity 3,941 29,191 (4,676) 28,456
--------- --------- --------- ---------
Total liabilities and
stockholders' equity $ 5,098 $ 44,456 $ 15,443 $ 64,997
========= ========= ========= =========
</TABLE>
19
<PAGE> 20
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ROSLIN
BIO-MED GERON
FOR THE FOR THE
YEAR ENDED YEAR ENDED PRO
FEBRUARY 28, DECEMBER 31, FORMA
1999 1998 ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 6 $ 6,797 $ -- $ 6,803
Operating expenses
Research and development 2,008 15,619 2,864(4) 20,491
General and administrative 1,886 3,769 -- 5,655
------------ ------------ ------------ ------------
Total operating expenses 3,894 19,388 2,864 26,146
------------ ------------ ------------ ------------
Loss from operations (3,888) (12,591) (2,864) (19,343)
Interest and other income 126 2,666 -- 2,792
Interest and other expense -- (907) -- (907)
------------ ------------ ------------ ------------
Net loss (3,762) (10,832) (2,864) (17,458)
Accretion of redemption value of
redeemable convertible preferred stock -- (578) -- (578)
------------ ------------ ------------ ------------
Net loss applicable for common
stockholders $ (3,762) $ (11,410) $ (2,864) $ (18,036)(5)
============ ============ ============ ============
Basic and diluted net loss per share $ (1.00) $ (1.35)(5)
============ ============
Shares used in computed basic and
diluted net loss per share 11,439,084 1,891,371 13,330,455(5)
============ ============ ============
</TABLE>
20
<PAGE> 21
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (1)
AS OF MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ROSLIN
BIO-MED GERON PRO
FEBRUARY 28, MARCH 31, FORMA
1999 1999 ADJUSTMENTS COMBINED
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash $ 3,082 $ 8,379 $ -- $ 11,461
Short term investments -- 12,073 -- 12,073
Interest and other receivables 152 781 -- 933
Other current assets 8 572 -- 580
--------- --------- --------- ---------
Total current assets 3,242 21,805 -- 25,047
Long-term investments -- 16,375 -- 16,375
Property and equipment, net 112 3,552 -- 3,664
Intangible assets 1,744 -- (1,744)(2) --
Deferred asset - research funding 17,187(3) 17,187
agreement
Deposits and other -- 566 -- 566
--------- --------- --------- ---------
Total assets $ 5,098 $ 42,298 $ 15,443 $ 62,839
========= ========= ========= =========
Current liabilities:
Accounts payable $ 349 $ 1,560 $ 2,932(2) $ 4,841
Accrued liabilities 808 1,241 2,864(3) 4,913
Deferred revenue -- -- -- --
Current portion of lease liability -- 1,037 -- 1,037
--------- --------- --------- ---------
Total current liabilities 1,157 3,838 5,796 10,791
Noncurrent portion of lease -- 1,870 -- 1,870
Other noncurrent liabilities -- -- 14,323(3) 14,323
Convertible debentures -- 6,861 -- 6,861
Redeemable convertible
preferred stock -- 3,661 -- 3,661
Stockholders' Equity
Common Stock 613 14 2(2) 16
(613)(2)
Additional paid-in-capital 7,090 88,259 22,163(2) 112,644
2,222(2)
(7,090)(2)
Accumulated deficit (3,762) (60,914) 3,762(2) (86,036)
(25,122)(2)(3)
Other stockholders' equity -- (1,291) (1,291)
--------- --------- --------- ---------
Total stockholders' equity 3,941 26,068 (4,676) 25,333
--------- --------- --------- ---------
Total liabilities and
stockholders' equity $ 5,098 $ 42,298 $ 15,443 $ 62,839
========= ========= ========= =========
</TABLE>
21
<PAGE> 22
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (1)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ROSLIN
BIO-MED GERON
FOR THE FOR THE
THREE THREE
MONTHS ENDED MONTHS ENDED PRO
FEBRUARY 28, MARCH 31, FORMA
2/28/99 1999 ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 3 $ 1,495 $ -- $ 1,498
Operating expenses
Research and development 675 4,425 716(4) 5,816
General and administrative 838 943 -- 1,781
------------ ------------ ------------ ------------
Total operating expenses 1,513 5,368 716 7,597
------------ ------------ ------------ ------------
Loss from operations (1,510) (3,873) (716) (6,099)
Interest and other income 62 676 -- 738
Interest and other expense -- (146) -- (146)
------------ ------------ ------------ ------------
Net loss (1,448) (3,343) (716) (5,507)
Accretion of redemption value of
redeemable convertible preferred stock -- (51) -- (51)
------------ ------------ ------------ ------------
Net loss applicable for common
stockholders $ (1,448) $ (3,394) $ (716) $ (5,558)(5)
============ ============ ============ ============
Basic and diluted net loss per share $ (0.25) $ (0.36)(5)
============ ============
Shares used in computed basic and
diluted net loss per share 13,663,948 1,891,371 15,555,319(5)
============ ============ ============
</TABLE>
22
<PAGE> 23
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION
Pro forma adjustments for the unaudited pro forma condensed combined balance
sheets as of December 31, 1998 and March 31, 1999 and for the unaudited pro
forma condensed combined statements of operations for the year ended December
31, 1998 and the three months ended March 31, 1999 are as follows:
(1) As Roslin Bio-Med's fiscal year is within 90 days of Geron's fiscal year
end, the two different periods have been combined for purposes of
preparing the unaudited pro forma condensed combined balance sheets and
statements of operations.
(2) Represents:
(a) issuance of 1,891,371 shares of Geron common stock in exchange for
the outstanding shares of Roslin Bio-Med pursuant to the merger
agreement, excluding common shares reserved for issuance upon
exercise of fully vested options assumed, at a per share value of
$11.72 (based upon the average of Geron common stock closing prices
for the five trading days immediately preceding and following the
May 4, 1999 announcement of the merger) in exchange for the net
tangible assets of Roslin and basic research for the nuclear
transfer technology;
(b) fair value assigned of $2.2 million to assumed fully vested stock
options of Roslin Bio-Med as part of the total purchase price; and
(c) acquisition costs of $2.9 million incurred in conjunction with the
merger.
(3) Reflects the preliminary allocation of the purchase price. The
preliminary allocation has resulted in deferred costs of research
funding of approximately $17.2 million for the research agreement
between Geron and the Institute. These deferred costs will be expensed
over six years as the related research costs are incurred. The liability
under the research agreement has been classified under current and
noncurrent liabilities.
The value of the basic research for the nuclear transfer technology is
estimated at approximately $25.1 million. Because this technology is
basic research with no alternative future use and is not expected to
result in commercial products for several years, if ever, the value
will be charged to Research and Development Expense on the date of
acquisition. In accordance with S-X Regulations, this write-off has not
been reflected in the unaudited combined pro forma statements of
operations.
The total estimated purchase price for Roslin Bio-Med acquisition has
been allocated on a preliminary basis to assets and liabilities based
on management's best estimates of their fair value. This allocation is
subject to change pending a final analysis of the value of the assets
acquired and liabilities assumed. The impact of such changes could be
material.
(4) Represents the expense related to the research agreement referred to in
note 3 above.
(5) Pro forma net loss reflects the impact of the adjustments above. Basic
and diluted net loss per share (pro forma) is computed using the
weighted-average number of shares of common stock outstanding after the
issuance of Geron common stock to acquire the outstanding shares of
Roslin Bio-Med. Pro forma basic and diluted net loss per share includes
the weighted average shares described above. Dilutive options and
warrants and shares related to the convertible debentures are excluded
from the computation during loss periods, as their effect is
antidilutive.
23
<PAGE> 24
<TABLE>
<CAPTION>
(c) Exhibits.
<S> <C>
2.1+* Sale and Purchase Agreement dated May 3, 1999, among the
Company and each of the shareholders of Roslin.
2.2* Escrow Agreement dated May 3, 1999, among the Company, a committee
acting for and on behalf of the Warrantors, and U.S. Bank Trust
National Association.
4.1* Registration Rights Agreement dated May 3, 1999, among the
Company and each of the shareholders of Roslin.
10.42+* Research and License Agreement dated May 3, 1999, among
the Company, Roslin and the Institute.
10.43+* License Agreement dated May 3, 1999, among the Company,
Roslin and the Institute.
23.1 Consent of Arthur Andersen, Independent Auditors.
</TABLE>
- --------
+ Confidential Treatment Requested
* Previously Filed
24
<PAGE> 25
SIGNATURES
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.
GERON CORPORATION
(Registrant)
Dated: May 21, 1999 By: /s/ David L. Greenwood
--------------------------------------
David L. Greenwood
Chief Financial Officer, Treasurer and
Secretary (Principal Financial and
Accounting Officer)
25
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.1+* Sale and Purchase Agreement dated May 3, 1999, among the Company
and each of the shareholders of Roslin.
2.2* Escrow Agreement dated May 3, 1999, among the Company, a committee
acting for and on behalf of the Warrantors, and U.S. Bank Trust
National Association.
4.1* Registration Rights Agreement dated May 3, 1999, among the Company
and each of the shareholders of Roslin.
10.42+* Research and License Agreement dated May 3, 1999, among the
Company, Roslin and the Institute.
10.43+* License Agreement dated May 3, 1999, among the Company, Roslin and
the Institute.
23.1 Consent of Arthur Andersen, Independent Auditors.
</TABLE>
- --------
+ Confidential Treatment Requested
* Previously Filed
<PAGE> 1
CONSENT OF ARTHUR ANDERSEN, INDEPENDENT AUDITORS OF ROSLIN BIO-MED LIMITED
To Geron Corporation
As independent auditors of Roslin Bio-Med Limited at 28 February 1999, we hereby
consent to the incorporation in this Form 8-K of our report on Roslin Bio-Med
Limited dated 15 April 1999 included in Registration Statement File No. 0-20859.
It should be noted that we have not audited any financial statements of the
Company subsequent to 28 February 1999 or performed any audit procedures
subsequent to the date of our report.
/s/ Arthur Andersen
--------------------------
ARTHUR ANDERSEN
Edinburgh, Scotland
21 May 1999
