UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 2 TO FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
Commission file number: 0-21428
TELOR OPHTHALMIC PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3464527
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
790 Turnpike Street, Suite 202, North Andover, Massachusetts 01845
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 681-1062
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.0001 Par Value Per Share
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant (without admitting that any person whose shares
are not included in such calculation is an affiliate) as of May 9, 1996, was
$2,263,036, based on the last sale price as reported by The Nasdaq Stock Market.
As of May 9, 1996, the registrant had 786,002 shares of common stock
outstanding.
Page 1 of 29 Pages
Exhibit Index on Pages 24-27
<PAGE>
This Form 10-K/A Amendment No. 2 on the Form 10-K of Telor Ophthalmic
Pharmaceuticals, Inc. (the "Company") filed for the fiscal year ended December
31, 1995, amends and restates in its entirety the information required by Item 8
of Part II and Item 14 of Part IV in accordance with comments from the
Securities and Exchange Commission received on April 26, 1996 and May 9, 1996,
relating to the Company's Preliminary Proxy Materials and Revised Preliminary
Proxy Materials in connection with a Special Meeting of the Stockholders of the
Company. In addition, a new Exhibit 23, Consent of Accountants, has been
included.
2
<PAGE>
PART II
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements listed in Item 14(a)(1) are included in this
report in Pages F-1 through F-16.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES & REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements:
Report of Independent Public Accountants Page F-1
Balance Sheets at December 31, 1994 and 1995 Page F-2
Statements of Operations for the years ended Page F-3
December 31, 1993, 1994, 1995 and the
period from April 19, 1988 (inception)
through December 31, 1995
Statement of Stockholders' Equity (Deficit) Pages F-4 to F-5
for the period from April 19, 1988
(inception) through December 31, 1995
Statements of Cash Flows for the years ended Page F-6
December 31, 1993, 1994 and 1995, and
the period from April 19, 1988
(inception) through December 31, 1995
Notes to Financial Statements Pages F-7 to F-16
(2) Exhibits:
The following documents are filed as Exhibits hereto:
<TABLE>
<S> <C>
3.1 -- Restated Certificate of Incorporation of the Registrant
3.2 -- By-Laws of the Registrant
4.1 -- Article 4 of the Registrant's Restated Certificate of Incorporation
4.2 -- Form of Common Stock Certificate
4.3 -- Restated By-Laws of the Registrant
10.1 -- License Agreement between the Registrant and The Bowman Gray
School of Medicine of Wake Forest University, dated July 13, 1992
10.2 -- Termination of License Agreement between the Registrant and The
Bowman Gray School of Medicine of Wake Forest University, dated
January 20, 1995
10.3 -- License Agreement between the Registrant and Massachusetts Eye and
Ear Infirmary, dated December 20, 1989, as amended by letter
agreement, dated March 12, 1993
10.4 -- License Agreement between the Registrant and the University of
Alicante, Spain, dated January 1, 1994
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
10.5 -- Research Agreement between the Registrant and the University of
Alicante, Spain, dated January 1, 1994
10.6 -- Extension to Research Agreement between the Registrant and the
University of Alicante, Spain, dated December 14, 1994
10.7 -- Commercial Lease Agreement between the Registrant and Cummings
Properties Management, dated December 21, 1990, as amended
February 5, 1991 and February 28, 1992
10.8 -- Commercial Lease Agreement between the Registrant and Cummings
Properties Management, dated June 1, 1993
10.9 -- Amendment to Commercial Lease Agreement between the Registrant
and Cummings Properties Management, dated November 9, 1993
10.10 -- Commercial Lease Agreement between the Registrant and WRC
Properties, dated July 12, 1994
10.11 -- Telor Ophthalmic Pharmaceuticals, Inc. 1988 Stock Plan, as amended++
10.12 -- Telor Ophthalmic Pharmaceuticals, Inc. 1993 Stock Plan, as amended++
10.13 -- Telor Ophthalmic Pharmaceuticals, Inc. Employee Stock Purchase
Plan++
10.14 -- Series C Convertible Preferred Stock Purchase Agreement among the
Registrant and certain purchasers and certain prior investors, dated
April 27, 1992
10.15 -- Amendment to Series C Convertible Preferred Stock Purchase
Agreement and Waiver among the Registrant and certain purchasers
and certain prior investors, dated March 5, 1993
10.16 -- First Amended and Restate Voting Agreement, among the Registrant,
Stephen J. Riggi and Arthur H. Neufeld, and certain investors, dated
April 27, 1992
10.17 -- Consent to Termination of First Amended and Restated Voting
Agreement, dated March 25, 1993
10.18 -- Registration Rights Agreement between the Registrant and certain
investors, dated November 16, 1988, as amended February 5, 1990,
June 22, 1990 and October 31, 1990
10.19 -- Amendment No. 4 to Registration Rights Agreement between the
Registrant and certain investors, dated April 27, 1992
10.20 -- Registration Rights Agreement among the Registrant and Stephen J.
Riggi and Arthur H. Neufeld, dated October 31, 1990, as amended
April 27, 1992
10.21 -- Stock Restriction Agreement among the Registrant, Arthur H. Neufeld
and certain investors, dated November 16, 1988, as amended
December 5, 1989, October 31, 1990 and April 27, 1992
10.22 -- Amendment No. 4 to Stock Restriction Agreement among the
Registrant, Arthur H. Neufeld and certain investors, dated March 5,
1993
10.23 -- Amendment to Stock Option Agreements between the Registrant and
Arthur H.Neufeld, dated May 9, 1995
10.24 -- Registrar, Transfer Agency and Service Agreement for Corporate
Equity Issues between the Registrant and State Street Bank and Trust
Company, dated May 18, 1993
10.25 -- Consulting Agreement between the Registrant and John K. Herdklotz
dated November 14, 1994++
10.26 -- Extension to Consulting Agreement between the Registrant and John K.
Herdklotz dated June 30, 1995++
10.27 -- Employment Agreement between the Registrant and Arthur H. Neufeld,
dated October 26, 1992++
10.28 -- Employment Agreement between the Registrant and Michael R.N.
Thomas, dated May 6, 1991++
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
10.29 -- Employment Agreement between the Registrant and Frederick H.
Garber, dated June 5, 1992++
10.30 -- Employment Agreement between the Registrant and Bobby R. Owen,
dated March 8, 1994++
10.31 -- Executive Employment Severance Agreement between the Registrant
and Stephen J. Riggi, dated February 27, 1995++
10.32 -- Executive Employment Severance Agreement between the Registrant
and Arthur H. Neufeld, dated October 17, 1995
10.33 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Stephen J. Riggi, dated November 21, 1989++
10.34 -- Consultant Non-Disclosure and Developments Agreement between the
Registrant and Arthur H. Neufeld, dated November 16, 1988++
10.35 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Michael R.N. Thomas, dated May 6, 1991++
10.36 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Frederick H. Garber, dated June 5, 1992++
10.37 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Bobby R. Owen, dated March 8, 1994++
10.38 -- Consultant Non-Disclosure Agreement between the Registrant and
John K. Herdklotz, dated November 14, 1994++
10.39 -- Disability Income Policy between Stephen J. Riggi and New England
Mutual Life Insurance Company, issued January 3, 1991++
10.40 -- Disability Income Policy between Arthur H. Neufeld and New England
Mutual Life Insurance Company, issued February 1, 1992++
10.41 -- Disability Income Policy between Michael R.N. Thomas and New
England Mutual Life Insurance Company, issued August 1, 1991++
10.42 -- Disability Income Policy between Frederick H. Garber and New
England Mutual Life Insurance Company, issued August 14, 1992++
10.43 -- Disability Income Policy between Walter P. Rahn II and New England
Mutual Life Insurance Company, issued September 9, 1992++
10.44 -- Employee Non-Competition Agreement between the Registrant and
Stephen J. Riggi, Ph.D., dated November 21, 1989++
10.45 -- Employee Non-Competition Agreement between the Registrant and
Arthur H. Neufeld, Ph.D., dated November 16, 1988++
10.46 -- Employee Non-Competition Agreement between the Registrant and
Michael R.N. Thomas, dated May 6, 1991++
10.47 -- Employee Non-Competition Agreement between the Registrant and
Frederick H. Garber, dated June 5, 1992++
10.48 -- Employee Non-Competition Agreement between the Registrant and
Walter P. Rahn II, dated May 29, 1992++
10.49 -- Employee Non-Competition Agreement between the Registrant and
Bobby R. Owen, dated March 8, 1994++
10.50 -- Agreement and Plan of Merger between Telor Ophthalmic
Pharmaceuticals, Inc. and Occupational Health + Rehabilitation Inc
11 -- Statement Regarding: Computation of Net Loss per Common and
Common Equivalent Share
23 -- Consent of Independent Public Accountants
27 -- Financial Data Schedule
</TABLE>
++ The symbol "++" after an exhibit description
indicates that the exhibit is a management contract
or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K pursuant to
Item 14(c).
5
<PAGE>
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K on December 7,
1995 regarding its December 7, 1995 press release.
That press release announced that the Company had
entered into a letter of intent to merge with
Occupational Health + Rehabilitation Inc, an
early-stage company that develops, owns and operates
multi-disciplinary, outpatient health care centers
for the prevention, treatment and management of
work-related injuries and illnesses.
6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Telor Ophthalmic Pharmaceuticals, Inc.:
We have audited the accompanying balance sheets of Telor Ophthalmic
Pharmaceuticals, Inc. (a Delaware corporation in the development stage) as of
December 31, 1994 and 1995, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
1993, 1994 and 1995 and for the period from April 19, 1988 (inception) through
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Telor Ophthalmic
Pharmaceuticals, Inc. as of December 31, 1994 and 1995, and the results of its
operations and its cash flows for the years ended December 31, 1993, 1994, and
1995 and for the period from April 19, 1988 (inception) through December 31,
1995, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
January 17, 1996 (except for the matters
disclosed in Notes 6 and 9, for which the
dates are May 15, 1996 and February 23, 1996,
respectively.)
7
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC.
( A Development Stage Company)
<TABLE>
<CAPTION>
BALANCE SHEETS
ASSETS
December 31, December 31,
1994 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,144,691 $ 3,304,984
Short-term investments 7,800,486 1,986,893
Interest and other receivables 125,865 62,673
Prepaid expenses and deposits 168,143 149,144
------------ ------------
Total current assets 11,239,185 5,503,694
------------ ------------
Property and equipment, at cost:
Laboratory equipment 783,203 3,213
Computer equipment 204,880 64,641
Furniture and fixtures 207,354 72,437
Leasehold improvements 720,505 719,792
Leasehold improvements under capital lease 600,000 600,000
------------ ------------
2,515,942 1,460,083
Less --- accumulated depreciation and amortization 477,224 1,436,720
------------ ------------
2,038,718 23,363
------------ ------------
Restricted cash 400,000 360,000
============ ============
$ 13,677,903 $ 5,887,057
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 31,
1994 1995
------------ ------------
Current liabilities:
Accounts payable $ 139,876 30,696
Accrued expenses 929,068 714,226
Current maturities of capital lease obligations 41,061 42,884
------------ ------------
Total current liabilities 1,110,005 787,806
------------ ------------
Commitments (Note 6)
Obligations under capital leases, less current maturities 567,822 513,064
Stockholders' equity:
Common stock, $.001 par value; Authorized -- 25,000,000 shares;
Issued and outstanding -- 764,943 shares at December 31, 1994
and 785,512 at December 31, 1995 765 786
Additional paid-in capital 35,721,665 35,652,462
Deferred compensation (209,805) --
Deficit accumulated during the development stage (23,512,549) (31,067,061)
------------ ------------
Total stockholders' equity 12,000,076 4,586,187
============ ============
$ 13,677,903 $ 5,887,057
============ ============
</TABLE>
The accompanying notes are and integral part of these financial statements.
8
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
April 19, 1988
(Inception)
Through
Year Ended December 31, December 31,
1993 1994 1995 1995
====================================================================================================================================
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
Operating expenses:
Research and development 5,501,014 7,047,130 3,732,162 21,524,516
General and administrative 1,452,416 1,732,386 2,206,071 8,165,742
Marketing 317,884 193,268 -- 730,879
Restructuring charges -- 609,000 2,000,000 2,609,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 7,271,314 9,581,784 7,938,233 33,030,137
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income, net 469,963 621,747 383,721 1,963,076
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss $(6,801,351) $(8,960,037) $(7,554,512) $(31,067,061)
====================================================================================================================================
Net loss per common share $ (10.34) $ (11.74) $ (9.67)
====================================================================================================================================
Weighted average number of
common shares outstanding 657,577 763,349 780,886
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Convertible Preferred Stock
--------------------------------------------------------------------------------------
Series A Series B Series C
--------------------------- -------------------------- ---------------------------
Number $.001 Number $.001 Number $.001
of Shares Par Value of Shares Par Value of Shares Par Value
------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INITIAL SALE OF COMMON STOCK -- $ -- -- $ -- -- $ --
Sale of Series A preferred stock,
net of issuance costs of $12,764 1,875,000 1,875 -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, March 31, 1989 1,875,000 1,875 -- -- -- --
Sale of common stock -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, March 31, 1990 1,875,000 1,875 -- -- -- --
Sale of Series B preferred stock,
net of issuance costs of $156,524 -- -- 8,594,568 8,595 -- --
Sale of common stock -- -- -- -- -- --
Exercise of stock options -- -- -- -- -- --
Repurchase of common stock -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, March 31, 1991 1,875,000 1,875 8,594,568 8,595 -- --
Exercise of stock options -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1991 1,875,000 1,875 8,594,568 8,595 -- --
Sale of Series C preferred stock,
net of issuance costs of $78,105 -- -- -- -- 8,800,000 8,800
Exercise of stock options -- -- -- -- -- --
Deferred compensation related to
stock option grants -- -- -- -- -- --
Amortization of deferred compensation -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1992 1,875,000 1,875 8,594,568 8,595 8,800,000 8,800
Initial Public Offering of common stock,
net of issuance costs of $2,380,000 -- -- -- -- -- --
Conversion of Series A, Series B and
Series C preferred stock to shares of
common stock (1,875,000) (1,875) (8,594,568) (8,595) (8,800,000) (8,800)
Exercise of stock options -- -- -- -- -- --
Termination of stock option grants -- -- -- -- -- --
Amortization of deferred compensation -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1993 -- $ -- -- $ -- -- $ --
<CAPTION>
Common Stock Accumulated Total
--------------------------- Additional Deferred During the Stockholders'
Number $.001 Paid-in Compen- Development Equity
of Shares Par Value Capital sation Stage (Deficit)
------------ ------------ ------------ ----------- ------------ ------------
INITIAL SALE OF COMMON STOCK 25,000 $ 25 $ 1,225 $ -- $ -- $ 1,250
Sale of Series A preferred stock,
net of issuance costs of $12,764 -- -- 735,361 -- -- 737,236
Net loss -- -- -- -- (127,509) (127,509)
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, March 31, 1989 25,000 25 736,586 -- (127,509) 610,977
Sale of common stock 2,000 2 4,998 -- -- 5,000
Net loss -- -- -- -- (795,747) (795,747)
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, March 31, 1990 27,000 27 741,584 -- (923,256) (179,770)
Sale of Series B preferred stock,
net of issuance costs of $156,524 -- -- 4,991,622 -- -- 5,000,217
Sale of common stock 65,408 65 163,456 -- -- 163,521
Exercise of stock options 400 -- 1,000 -- -- 1,000
Repurchase of common stock (4,514) (4) (222) -- -- (226)
Net loss -- -- -- -- (1,132,376) (1,132,376)
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, March 31, 1991 88,294 88 5,897,440 -- (2,055,632) 3,852,366
Exercise of stock options 500 1 1,249 -- -- 1,250
Net loss -- -- -- -- (1,767,931) (1,767,931)
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1991 88,794 89 5,898,689 -- (3,823,563) 2,085,685
Sale of Series C preferred stock,
net of issuance costs of $78,105 -- -- 8,713,095 -- -- 8,721,895
Exercise of stock options 570 -- 1,425 -- -- 1,425
Deferred compensation related to
stock option grants -- -- 512,000 (512,000) -- --
Amortization of deferred compensation -- -- -- 55,000 -- 55,000
Net loss -- -- -- -- (3,927,598) (3,927,598)
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1992 89,364 89 15,125,209 (457,000) (7,751,161) 6,936,407
Initial Public Offering of common stock,
net of issuance costs of $2,380,000 287,500 288 20,619,712 -- -- 20,620,000
Conversion of Series A, Series B and
Series C preferred stock to shares of
common stock 385,391 386 18,884 -- -- --
Exercise of stock options 387 -- 1,706 -- -- 1,706
Termination of stock option grants -- -- (34,749) 34,749 -- --
Amortization of deferred compensation -- -- -- 78,123 -- 78,123
Net loss -- -- -- -- (6,801,351) (6,801,351)
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1993 762,642 $ 763 $ 35,730,762 $ (344,128) $(14,552,512) $ 20,834,885
10
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC.
(A Development Stage Company)
<CAPTION>
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Convertible Preferred Stock
--------------------------------------------------------------------------------------
Series A Series B Series C
--------------------------- -------------------------- ---------------------------
Number $.001 Number $.001 Number $.001
of Shares Par Value of Shares Par Value of Shares Par Value
------------ ------------ ------------ ----------- ------------ ------------
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1993 -- $ -- -- $ -- -- $ --
Exercise of stock options -- -- -- -- -- --
Termination of stock option grants -- -- -- -- -- --
Amortization of deferred compensation -- -- -- -- -- --
Employee Stock Purchase Plan -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1994 -- -- -- -- -- --
Exercise of stock options -- -- -- -- -- --
Termination of stock option grants -- -- -- -- -- --
Amortization of deferred compensation -- -- -- -- -- --
Employee Stock Purchase Plan -- -- -- -- -- --
Cancellation of fractional shares related
to November 1995 reverse split -- -- -- -- -- --
Net loss -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1995 -- $ -- -- $ -- -- $ --
============ ============ ============ =========== ============ ============
<CAPTION>
Common Stock Accumulated Total
--------------------------- Additional Deferred During the Stockholders'
Number $.001 Paid-in Compen- Development Equity
of Shares Par Value Capital sation Stage (Deficit)
------------ ------------ ------------ ----------- ------------ ------------
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1993 762,642 $ 763 $ 35,730,762 $ (344,128) $(14,552,512) $ 20,834,885
Exercise of stock options 525 1 5,751 -- -- 5,752
Termination of stock option grants -- -- (48,080) 48,080 -- --
Amortization of deferred compensation -- -- -- 86,243 -- 86,243
Employee Stock Purchase Plan 1,776 1 33,232 -- -- 33,233
Net loss -- -- -- -- (8,960,037) (8,960,037)
------------ ------------ ------------ ----------- ------------ ------------
BALANCE, December 31, 1994 764,943 765 35,721,665 (209,805) (23,512,549) 12,000,076
Exercise of stock options 19,498 20 58,070 -- -- 58,090
Termination of stock option grants -- -- (138,159) 138,159 -- --
Amortization of deferred compensation -- -- -- 71,646 -- 71,646
Employee Stock Purchase Plan 1,089 1 10,886 -- -- 10,887
Cancellation of fractional shares related
to November 1995 reverse split (18) -- -- -- -- --
Net loss -- -- -- -- (7,554,512) (7,554,512)
============ ============ ============ =========== ============ ============
BALANCE, December 31, 1995 785,512 $ 786 $ 35,652,462 $ -- $(31,067,061) $ 4,586,187
============ ============ ============ =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
11
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
April 19, 1988
Year ended Year ended Year ended (Inception) Through
December 31, December 31, December 31, December 31
1993 1994 1995 1995
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (6,801,351) $(8,960,037) $(7,554,512) $(31,067,061)
Adjustments to reconcile net loss to net
cash used in operating activities ---
Depreciation and amortization 128,981 259,348 220,826 698,050
Loss on sale of property and equipment -- -- 209,232 209,232
Writedown of property and equipment to
net realizable value -- -- 1,386,216 1,386,216
Amortization of deferred compensation 78,123 86,243 71,646 291,012
Changes in assets and liabilities ---
Interest and other receivables (123,525) (2,340) 63,192 (62,673)
Prepaid expenses and deposits (253,760) 133,881 18,999 (149,144)
Accounts payable (31,915) (88,590) (109,180) 30,696
Accrued expenses 258,192 322,994 (214,842) 714,226
------------ ----------- ----------- ------------
Net cash used in operating activities (6,745,255) (8,248,501) (5,908,423) (27,949,446)
------------ ----------- ----------- ------------
Cash flows from investing activities:
Purchases of property and equipment (244,984) (1,118,552) (11,863) (1,913,963)
Proceeds from sale of property and equipment -- -- 210,944 210,944
Purchases of short-term investments (17,061,204) (10,945,177) (1,946,893) (29,953,274)
Proceeds from sale of short-term investments 2,000,000 17,805,895 7,800,486 27,606,381
Decrease in other assets 18,800 -- -- --
------------ ----------- ----------- ------------
Net cash (used in) provided by
investing activities (15,287,388) 5,742,166 6,052,674 (4,049,912)
------------ ----------- ----------- ------------
Cash flows from financing activities:
Payments on capital lease obligations -- (4,959) (52,935) (57,894)
Net proceeds from sale of preferred stock -- -- -- 14,459,348
Net proceeds from sale of common stock 20,620,000 -- -- 20,789,771
Net proceeds from exercise of stock options 1,706 5,752 58,090 69,223
Net proceeds from employee stock purchase plan -- 33,233 10,887 44,120
Repurchase of common stock -- -- -- (226)
------------ ----------- ----------- ------------
Net cash provided by financing activities 20,621,706 34,026 16,042 35,304,342
------------ ----------- ----------- ------------
Net (decrease) increase in cash and cash equivalents (1,410,937) (2,472,309) 160,293 3,304,984
Cash and cash equivalents, beginning of period 7,027,937 5,617,000 3,144,691 --
------------ ----------- ----------- ------------
Cash and cash equivalents, end of period $ 5,617,000 $ 3,144,691 $ 3,304,984 $ 3,304,984
============ =========== =========== ============
Cash paid for interest $ -- $ 9,503 $ 54,337 $ 63,840
============ =========== =========== ============
Supplement disclosures of noncash transactions:
Leasehold improvements under capital lease -- 600,000 -- 600,000
Equipment acquired (disposed of) under capital lease -- 13,842 (13,842) --
============ =========== =========== ============
$ -- $ 613,842 $ (13,842) $ 600,000
============ =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(1) Operations
Telor Ophthalmic Pharmaceuticals, Inc. ("Telor" or the "Company") was
incorporated on April 19, 1988. The Company obtained its initial financing
and commenced operations on November 17, 1988. Since inception, the Company
has devoted substantially all of its efforts in research and development of
products for use in ophthalmic surgery and age-related diseases of the eye,
and towards raising capital.
On August 9, 1995, Telor announced that its preliminary analysis of Phase
III clinical trials of its lead product candidate, XARANO(TM), indicated
that the trials did not support continuation of the XARANO development
program. Separately, the Company also announced positive results of its
Phase I/II trial of a compound to reduce surgical miosis, a problem
associated with cataract surgery. On August 30, 1995, the Company announced
a restructuring with a workforce reduction designed to substantially reduce
Telor's rate of cash use for operations. The Company also announced its
intention to find and evaluate business opportunities, potentially
including identifying a merger candidate, seeking corporate partners to
support the clinical program for surgical miosis, or exploring a new
business direction. During the fourth quarter of 1995, the Company
substantially curtailed its research and development activities.
On December 7, 1995, the Company announced it had entered into a letter of
intent to merge with Occupational Health + Rehabilitation Inc. Occupational
Health + Rehabilitation Inc, an early stage company, develops, owns and
operates multi-disciplinary outpatient health care centers for the
prevention, treatment and management of work-related injuries and
illnesses. On February 23, 1996, the Company announced it had entered into
an Agreement and Plan of Merger to merge the two companies.
Effective November 30, 1995, the Company retained one employee, and both
the Acting Chief Executive Officer and certain former employees continue to
serve the Company on a consulting basis. Ongoing expenses consist mainly of
those associated with the prospective merger, with the Company's leased
facility in Wilmington, MA, for which the Company is actively seeking to
obtain a sublessee or replacement lessee, and with certain expenses
associated with being a public company.
(2) Summary of Significant Accounting Policies
The accompanying financial statements reflect the application of certain
significant accounting policies, as discussed below and elsewhere in the
notes to financial statements. The preparation of the accompanying
financial statements required the use of certain estimates by management in
determining the Company's assets, liabilities, revenues and expenses. The
estimated fair value of the Company's financial instruments, which include
cash equivalents, accounts receivable and long-term debt, approximates
their carrying value.
(a) Depreciation and Amortization
The Company provides for depreciation and amortization using the
straight-line method by charges to operations in amounts estimated to
allocate the cost of the assets over their estimated useful lives as
follows:
13
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(2) Summary of Significant Accounting Policies (Continued)
(a) Depreciation and Amortization (Continued)
Estimated
Asset Classification Useful Life
-------------------- -----------
Laboratory equipment 7 years
Computer equipment 3 years
Furniture and fixtures 5 years
Leasehold improvements Life of lease
As part of the restructuring announced August 30, 1995, the Company
wrote down its fixed assets to net realizable value. Leasehold
improvements have been written down to zero, as the Company is
currently seeking to sublease its facility and does not expect to
recover any portion of the cost of its leasehold improvements.
Substantially all of the fixed assets, other than leasehold
improvements, have been sold.
(b) Research and Development Expenses
The Company historically charged research and development expenses to
operations as incurred. The Company has curtailed its research and
development activities.
(c) Income Taxes
During 1993, the Company adopted the accounting and disclosure rules
of Statement of Financial Accounting Standards (SFAS) No.109,
Accounting for Income Taxes. The adoption of this Statement did not
have a material effect on the Company's financial position or results
of operations.
At December 31, 1995, the Company had net operating loss carryforwards
for financial reporting and tax purposes of approximately $31,067,000
and $30,344,000 respectively, and research and development tax credit
carryforwards of approximately $735,000. These carryforwards are
available for the reduction of future federal taxable income and
income taxes, if any, through 2010. The principal differences between
financial reporting and income tax carryforwards are the result of
capitalizing research and development expenses for tax purposes. The
carryforwards are subject to review and possible adjustment by the
Internal Revenue Service. In addition, the Internal Revenue Code
contains provisions that may limit the net operating loss and tax
credit carryforwards available to be used in any given year upon the
occurrence of certain events, including a significant change in
ownership of the Company.
The merger discussed in Note 9 is considered a significant change in
ownership, and as a result, substantially all of the Company's net
operation loss carryforwards will not be available to offset any
future income.
14
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(2) Summary of Significant Accounting Policies (Continued)
(c) Income Taxes (Continued)
The components of the Company's income tax accounts are approximately
as follows:
December 31, 1995
-----------------
Temporary differences $ 135,000
Net operating loss carryforwards 12,178,000
Credit carryforwards 735,000
------------
13,048,000
------------
Valuation allowance (13,048,000)
$ --
============
A valuation allowance has been provided as it is probable that the
Company will not realize the deferred tax asset.
(d) Net Loss per Common Share
In connection with the Company's May 1993 initial public offering,
1,926,956 shares of preferred stock were converted into 385,391 shares
of common stock (as adjusted for the November 1995 1-for-10 reverse
stock split; see note 5a). Net loss per common share is based on the
weighted average number of common shares outstanding, giving effect to
the conversion of preferred stock as of the issuance date. Pursuant to
the requirements of the Securities and Exchange Commission, common and
preferred stock issued by the Company during the 12 months immediately
preceding the initial public offering, plus shares of common stock
which became issuable during the same period pursuant to the grant of
common stock options, have been included in the calculation of
weighted average number of common shares outstanding for the year
ended December 31, 1993 computed in accordance with the treasury stock
method.
(e) Postretirement Benefits
The Company has no obligations for postretirement benefits under SFAS
No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, since it does not currently offer such benefits.
(3) Cash, Cash Equivalents, Short-Term Investments and Restricted Cash
(a) Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. As of
December 31, 1994 and 1995, cash and cash equivalents consist of money
market accounts and bank certificates of deposit.
15
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(3) Cash, Cash Equivalents, Short-Term Investments and Restricted Cash
(Continued)
(b) Short term Investments
Short term investments are securities with original maturities greater
than three months but less than one year. During 1994, the Company
adopted SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities. Accordingly, the Company's investments are
classified as held to maturity (recorded at amortized cost) and
available for sale (recorded at fair market value) as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------
1994 1995
---------------------------- ------------------------
Amortized Amortized
Cost Market Cost Market
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Short-term investments:
Available for sale
Commercial Paper $ 2,939,008 $ 2,989,564 $ -- $ --
Held to maturity
U.S. Treasury Bills 4,861,478 4,901,024 1,946,893 1,993,494
Certificates of Deposit -- -- 40,000 40,952
----------- ----------- ----------- ----------
Total $ 7,800,486 $ 7,890,588 $ 1,986,893 $2,034,446
=========== =========== =========== ==========
</TABLE>
The adoption of this statement did not have a material effect on the
Company's financial position or results of operations for the year
ended December 31, 1994.
(c) Restricted Cash
The Company issued two $200,000 letters of credit in 1994 for a
one-year term to the lessor of its facility in Wilmington, MA in
connection with its lease of said facility (see note 7), and renewed
those letters of credit for a one-year term in June, 1995. Under the
terms of the lease, the Company is committed to maintain the letters
of credit, but may reduce the amount of each by $20,000 annually,
beginning on October 14, 1995. At December 31, 1995, the Company was
required to maintain these letters of credit in an amount totaling
$360,000.
The Company has two $200,000 certificates of deposit with the bank
that issued said letters of credit in security thereof. At December
31, 1994, the Company reported the two $200,000 certificates of
deposit, a total of $400,000, as restricted cash. At December 31,
1995, the Company reported $360,000 of this, the amount securing the
required amount of the letters of credit, as restricted cash.
16
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(4) Accrued Expenses
Accrued expenses consist of the following:
December 31,
---------------------------
1994 1995
---------- ----------
Payroll and payroll related $ 83,696 $ --
Employee severance 216,136 80,013
Restructuring charge (see note 8) 250,000 275,547
Research and development 34,100 --
Professional fees 94,144 256,601
Leasehold improvements 195,736 --
Other 55,256 102,065
---------- ----------
$ 929,068 $ 714,226
========== ==========
(5) Stockholders' Equity
(a) Reverse Stock Splits
During March and April 1993, the Company's Board of Directors and
Stockholders, respectively, approved a 1-for-5 reverse stock split of
the common stock. During September and November 1995, the Company's
Board of Directors and Stockholders, respectively, approved a 1-for-10
reverse stock split of the common stock. Accordingly, all share and
per share amounts of common stock for all periods presented have been
retroactively adjusted to reflect these reverse stock splits.
(b) Initial Public Offering
The Company completed its initial public offering through the sale, on
May 18, 1993 and June 10, 1993, of a total of 287,500 shares of common
stock at a per share price of $80.00 (as adjusted for the November
1995 1-for-10 reverse stock split; see note 5a). Net proceeds of the
offering were $20,620,000 after selling commissions and other
expenses. In connection with the initial public offering, all series
of preferred stock were automatically converted into 385,391 shares of
common stock.
(c) Employee Stock Purchase Plan
During 1993, the Company's Board of Directors and Stockholders
approved the Employee Stock Purchase Plan, pursuant to which the
Company may issue up to 10,000 shares of common stock to participating
employees, as defined. Under this plan, shares of the Company's common
stock may be purchased at the end of a six-month period at the lesser
of 85% of the fair market value on the date of grant or date of
exercise. As of December 31, 1995, 2,865 shares had been issued under
this plan, and no employees were participating in the plan.
17
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(5) Stockholders' Equity (Continued)
(d) 1988 Stock Plan and 1993 Stock Plan
Pursuant to the 1988 Stock Plan, the Company may grant incentive stock
options, non-qualified stock options and common stock purchase rights.
The Company has reserved 48,453 shares of common stock for issuance
under this plan (as adjusted for the November, 1995 1-for-10 reverse
stock split; see note 5a).
During 1993, the Company's Board of Directors and Stockholders
approved the 1993 Stock Plan pursuant to which the Company may grant
incentive and non-qualified options to purchase up to 140,000 shares
of the Company's common stock (as adjusted for the November, 1995
1-for-10 reverse stock split; see note 5a)
The following table summarizes option activity under both plans:
<TABLE>
<CAPTION>
Number of Exercise
shares Price
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at December 31, 1992 46,224 $ 2.50 - 50.00
Granted 19,115 50.00 - 85.00
Exercised (387) 2.50 - 12.50
Terminated (2,579) 2.50 - 80.00
-------------------------------------------------------------------------------
Outstanding at December 31, 1993 62,373 2.50 - 85.00
Granted 25,871 17.50 - 80.00
Exercised (525) 2.50 - 12.50
Terminated (14,556) 2.50 - 80.00
-------------------------------------------------------------------------------
Outstanding at December 31, 1994 73,163 $ 2.50 - 85.00
Granted 20,270 8.75 - 15.00
Exercised (19,498) 2.50
Terminated (26,535) 2.50 - 80.00
Outstanding at December 31, 1995 47,400 $ 2.50 - 85.00
Exercisable at December 31, 1995 27,923 $ 2.50 - 85.00
===============================================================================
</TABLE>
During 1992, the Company recorded deferred compensation of $512,000,
which represented the excess of the fair market value per share on the
option grant date as estimated for financial reporting purposes, over
the exercise price of certain options granted under the 1988 Stock
Plan. The Company's Board of Directors granted such stock options at
per share exercise prices which it believed to be at or above the fair
market value of the underlying common stock at the time of grant. In
light of the initial public offering of the Company's common stock,
the Company utilized per share market
18
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(5) Stockholders' Equity (Continued)
(d) 1988 Stock Plan and 1993 Stock Plan (Continued)
prices in excess of such exercise prices in computing deferred
compensation for financial reporting purposes. During 1993, 1994 and
1995, the Company reversed $34,749, $48,080 and $138,159,
respectively, of the deferred compensation relating to options
forfeited by terminated employees, and included compensation expense
in the results of operations $78,123, $86,243 and $71,646,
respectively, related to the amortization of deferred compensation. At
December 31, 1995, all of the deferred compensation had been either
amortized or reversed.
On January 31, 1995, the Company offered all then current employees
the opportunity to forfeit certain outstanding options in exchange for
new grants of options, exercisable for an equal number of shares, at
an exercise price per share of $8.75, equal to the closing stock price
on January 31, 1995 (as adjusted for the November, 1995 1-for-10
reverse stock split; see note 5a). Options for 18,926 shares were
exchanged. As of January 17, 1996, none of these options had been
exercised, and options for 2,609 shares were outstanding, with the
balance forfeited by terminated employees. These outstanding options
expire on or before November 29, 1996.
(6) Commitments and Contingencies
(a) Capital and Operating Leases
In July, 1994, the Company entered into a lease agreement that
terminates October 31, 2004 for a facility in Wilmington,
Massachusetts. The Company has the right to terminate the lease after
five years and payment of a fee of approximately $60,000. The Company
also has the right to extend the lease for an additional five years,
subject to certain conditions.
In connection with the facility lease, the Landlord has financed
$600,000 of leasehold improvements at 9% per annum, which the Company
has accounted for as a capital lease. The capital lease is payable in
monthly payments of principal and interest of $7,601 through October
31, 2004. If the Company terminates the lease at the end of five
years, the unpaid balance is due on the lease termination date. The
Company was required to have a total of $400,000 in secured letters of
credit at the initiation of the lease and must maintain these letters
of credit for the term of the lease, subject to a 10% reduction
annually at the Company's option. The cash that secures the required
amount of the letters of credit has been classified as restricted cash
in the accompanying balance sheet.
The Company is actively seeking to obtain one or more sublessees for
its facility in Wilmington, MA, or to terminate the lease by securing
one or more replacement lessees. The Company currently anticipates
that a lease with one sublessee will be signed on or about May 15,
1996, subject to obtaining written consent to the sublease from the
landlord. The Company is currently conducting no operations at the
Wilmington facility, but is responsible for its share of operating
costs of the facility, including taxes, insurance, maintenance and,
subject to certain limitations, repairs.
The Company also leases certain office equipment under an operating
lease.
19
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(6) Commitments and Contingencies (Continued)
(a) Capital and Operating Leases(Continued)
The future minimum lease payments under these leases are as follows:
Operating Capital
Lease Lease
----- -----
1996 194,464 91,207
1997 193,140 91,207
1998 191,250 91,207
1999 195,500 91,207
2000 216,750 91,207
Thereafter 830,875 353,417
------- -------
$1,821,979 $ 809,452
==========
Less amount representing interest 253,504
---------
Present value of minimum lease payments $ 555,948
Less current maturities 42,884
---------
$ 513,064
=========
Rent expense totaled approximately $143,000, $193,000 and $286,000 for
the years ended December 31, 1993, 1994 and 1995, respectively.
(b) Commitments
In March 1996, the Company's employee received a payment equivalent to
six months' salary at his then current salary rate, notice pay
equivalent to two week salary, and accrued vacation. In addition, the
Company will maintain the employee's medical, life and disability
insurance coverage for six months, subject to certain conditions.
(7) 401(k) Plan
During 1992, the Company adopted an employee benefit plan under Section
401(k) of the Internal Revenue Code. The plan allows employees to make
contributions up to a specified percentage of their compensation. Under the
plan, the Company may elect to match a portion of the employees'
contribution up to a defined maximum. To date, the Company has made no
contributions to the plan. The Company has committed to continue the plan
until the earlier of September 30, 1996 or when all former employees
voluntarily transfer or withdraw their funds from the plan.
20
<PAGE>
TELOR OPHTHALMIC PHARMACEUTICALS, INC. (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - (Continued)
(8) Restructuring and Asset Valuation Charges
The Company's statement of operations for the year ended December 31, 1994,
includes a $609,000 or $.80 per share, charge to provide for costs
associated with the termination in November 1994, of the Tekron program.
The restructuring charge included approximately $359,000 of severance
payments for the reduction of the workforce in November 1994, and $250,000
of other reserves, chiefly related to the Company's corporate headquarters.
The Company's financial statements included reserves related to this
restructuring of $466,000 and zero for the years ended December 31, 1994
and December 31, 1995, respectively.
The Company's statement of operations for the year ended December 31, 1995,
includes a $2,000,000 or $2.56 per share, charge to provide for costs
associated with the termination in August, 1995, of the Xarano program. The
restructuring charge included approximately $640,000 of severance payments
for the reduction of the workforce from August through November 1995, and
$1,360,000 related to the writedown of fixed assets, including leasehold
improvements, to net realizable value and to anticipated costs associated
with obtaining a sublessee or replacement lessee for the Company's leased
facility in Wilmington, MA. The Company's financial statements for the year
ended December 31, 1995 included reserves related to this restructuring of
$356,000.
(9) Subsequent Event - Merger
On February 23, 1996, Telor announced that it had entered into an Agreement
and Plan of Merger to merge with Occupational Health + Rehabilitation Inc
("OH+R"). OH+R, an early stage company, develops, owns and operates
multi-disciplinary, outpatient health care centers for the prevention,
treatment and management of work-related injuries and illnesses. The
companies had announced in December, 1995 that they had entered into a
letter of intent to merge.
The transaction is structured as a merger of OH+R into Telor. Upon the
merger, the stockholders of OH+R will receive shares of Telor's common
stock and holders of options or warrants for shares of OH+R capital stock
will hold options and warrants exercisable for Telor common stock.
Immediately following the merger, the OH+R stockholders, together with its
option and warrant holders, will hold or have the right to purchase an
aggregate of 50% of the shares of common stock of Telor and the Telor
stockholders, together with its option holders, will hold or have the right
to purchase an aggregate of 50% of the shares of common stock of Telor.
The transaction is expected to be consummated in April of 1996. Upon
closing of the merger, the company's primary business will be the business
of OH+R and Telor will change its name to Occupational Health +
Rehabilitation Inc.
21
<PAGE>
The merger is considered a significant change in ownership, and as a
result, substantially all of the net operating loss carryforwards of the
Company will not be available to offset any future income. See Note 2(c).
The following table presents selected financial information assuming that
the Company and OH+R had combined at the beginning of 1995.
Amount in thousands
-------------------
Pro forma net revenues ................................. $ 6,024
Pro forma net loss ..................................... $ (9,311)
Pro forma net loss per share ........................... $ (6.48)
Pro forma weighted average common
and common equivalent shares ........................... 1,440
Pro forma total assets ................................. $ 10,136
The pro forma results are not necessarily indicative of either actual
results of operations that would have occurred had the acquisition been
made at the beginning of 1995 or future results.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on May 24, 1996.
TELOR OPHTHALMIC PHARMACEUTICALS, INC.
By: /s/ JOHN K. HERDKLOTZ, Ph.D.
-----------------------------------------
John K. Herdklotz, Ph.D., Acting President
and Chief Executive Officer and Chairman
of the Board
23
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C>
3.1 -- Restated Certificate of Incorporation of the Registrant*(a) (filed as
Exhibit 3)
3.2 -- By-Laws of the Registrant*(a) (filed as Exhibit 4)
4.1 -- Article 4 of the Registrant's Restated Certificate of Incorporation*(a)
(see Article 4
of document filed as Exhibit (3))
4.2 -- Form of Common Stock Certificate*(b)(filed as Exhibit 4.2)
4.3 -- Restated By-Laws of the Registrant*(a) (filed as Exhibit (4))
10.1 -- License Agreement between the Registrant and The Bowman Gray
School of Medicine of Wake Forest University, dated July 13, 1992*(b)
(filed as Exhibit 10.1)+++
10.2 -- Termination of License Agreement between the Registrant and
The Bowman Gray School of Medicine of Wake Forest University, dated
January 20, 1995*(k) (filed as Exhibit 10.2)
10.3 -- License Agreement between the Registrant and Massachusetts Eye and Ear
Infirmary, dated December 20, 1989, as amended by letter agreement, dated
March 12, 1993*(b) (filed as Exhibit 10.2)+++
10.4 -- License Agreement between the Registrant and the University of Alicante,
Spain, dated January 1, 1994*(g) (filed as Exhibit 10.3)+++
10.5 -- Research Agreement between the Registrant and the University of Alicante,
Spain, dated January 1, 1994*(g) (filed as Exhibit 10.4)+++
10.6 -- Extension to Research Agreement between the Registrant and the University of
Alicante, Spain, dated December 14, 1994*(j) (filed as Exhibit 10.5)
10.7 -- Commercial Lease Agreement between the Registrant and Cummings Properties
Management, dated December 21, 1990, as amended February 5, 1991 and
February 28, 1992*(b) (filed as Exhibit 10.3)
10.8 -- Commercial Lease Agreement between the Registrant and Cummings Properties
Management, dated June 1, 1993*(e) (filed as Exhibit 10.4)
10.9 -- Amendment to Commercial Lease Agreement between the Registrant and
Cummings Properties Management, dated November 9, 1993*(g) (filed as
Exhibit 10.6b)
10.10 -- Commercial Lease Agreement between the Registrant and WRC Properties,
dated July 12, 1994*(i) (filed as Exhibit 10.7)
10.11 -- Telor Ophthalmic Pharmaceuticals, Inc. 1988 Stock Plan, as amended*(f)
(filed as Exhibit 10.1)
10.12 -- Telor Ophthalmic Pharmaceuticals, Inc. 1993 Stock Plan, as amended*(l)
(filed as Exhibit 10.12)
10.13 -- Telor Ophthalmic Pharmaceuticals, Inc. Employee Stock Purchase Plan*(b)
(filed as Exhibit 10.6)
10.14 -- Series C Convertible Preferred Stock Purchase Agreement among the
Registrant and certain purchasers and certain prior investors, dated
April 27, 1992*(b) (filed as Exhibit 10.7)
10.15 -- Amendment to Series C Convertible Preferred Stock Purchase Agreement
and Waiver among the Registrant and certain purchasers and certain prior
investors, dated March 5, 1993*(d) (filed as Exhibit 10.7(a))
10.16 -- First Amended and Restate Voting Agreement, among the Registrant,
Stephen J. Riggi and Arthur H. Neufeld, and certain investors, dated
April 27, 1992*(b) (filed as Exhibit 10.8)
10.17 -- Consent to Termination of First Amended and Restated Voting Agreement,
dated March 25, 1993*(d) (filed as Exhibit 10.8(a))
10.18 -- Registration Rights Agreement between the Registrant and
certain investors, dated November 16, 1988, as amended
February 5, 1990, June 22, 1990 and October 31, 1990*(b)
(filed as Exhibit 10.9)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C>
10.19 -- Amendment No. 4 to Registration Rights Agreement between the
Registrant and certain investors, dated April 27, 1992*(d) (filed as
Exhibit 10.9(a))
10.20 -- Registration Rights Agreement among the Registrant and Stephen J.
Riggi and Arthur H. Neufeld, dated October 31, 1990, as amended
April 27, 1992*(b) (filed as Exhibit 10.10)
10.21 -- Stock Restriction Agreement among the Registrant, Arthur H. Neufeld
and certain investors, dated November 16, 1988, as amended
December 5, 1989, October 31, 1990 and April 27, 1992*(b)
(filed as Exhibit 10.11)
10.22 -- Amendment No. 4 to Stock Restriction Agreement among the Registrant,
Arthur H. Neufeld and certain investors, dated March 5, 1993*(d)
(filed as Exhibit 10.11(a))
10.23 -- Amendment to Stock Option Agreements between the Registrant and
Arthur H.Neufeld, dated May 9, 1995*(l) (filed as Exhibit 10.23)
10.24 -- Registrar, Transfer Agency and Service Agreement for Corporate
Equity Issues between the Registrant and State Street Bank and Trust
Company, dated May 18, 1993*(e) (filed as Exhibit 10.17)
10.25 -- Consulting Agreement between the Registrant and John K. Herdklotz
dated November 14, 1994*(j) (filed as Exhibit 10.23)
10.26 -- Extension to Consulting Agreement between the Registrant and
John K. Herdklotz dated June 30, 1995*(l) (filed as Exhibit 10.26)
10.27 -- Employment Agreement between the Registrant and Arthur H. Neufeld,
dated October 26, 1992*(b) (filed as Exhibit 10.14)
10.28 -- Employment Agreement between the Registrant and Michael R.N. Thomas,
dated May 6, 1991*(b) (filed as Exhibit 10.15)
10.29 -- Employment Agreement between the Registrant and Frederick H. Garber,
dated June 5, 1992*(b) (filed as Exhibit 10.16)
10.30 -- Employment Agreement between the Registrant and Bobby R. Owen, dated
March 8, 1994*(h) (filed as Exhibit 10.24)
10.31 -- Executive Employment Severance Agreement between the Registrant and
Stephen J. Riggi, dated February 27, 1995*(j) (filed as Exhibit 10.28)
10.32 -- Executive Employment Severance Agreement between the Registrant and
Arthur H. Neufeld, dated October 17, 1995(m) (filed as Exhibit 10.32)
10.33 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Stephen J. Riggi, dated November 21, 1989*(b) (filed as
Exhibit 10.18)
10.34 -- Consultant Non-Disclosure and Developments Agreement between the
Registrant and Arthur H. Neufeld, dated November 16, 1988*(b) (filed as
Exhibit 10.19)
10.35 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Michael R.N. Thomas, dated May 6, 1991*(b) (filed as
Exhibit 10.20)
10.36 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Frederick H. Garber, dated June 5, 1992*(b) (filed as
Exhibit 10.21)
10.37 -- Employee Non-Disclosure and Developments Agreement between the
Registrant and Bobby R. Owen, dated March 8, 1994*(h) (filed as
Exhibit 10.29)
10.38 -- Consultant Non-Disclosure Agreement between the Registrant
and John K. Herdklotz, dated November 14, 1994*(l) (filed as
Exhibit 10.37)
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
10.39 -- Disability Income Policy between Stephen J. Riggi
and New England Mutual Life Insurance Company, issued January 3,
1991*(b) (filed as Exhibit 10.24)
10.40 -- Disability Income Policy between Arthur H. Neufeld and
New England Mutual Life Insurance Company, issued February 1, 1992*(b)
(filed as Exhibit 10.25)
10.41 -- Disability Income Policy between Michael R.N. Thomas and
New England Mutual Life Insurance Company, issued August 1, 1991*(b)
(filed as Exhibit 10.26)
10.42 -- Disability Income Policy between Frederick H. Garber and New England
Mutual Life Insurance Company, issued August 14, 1992*(b)
(filed as Exhibit 10.27)
10.43 -- Disability Income Policy between Walter P. Rahn II and New England
Mutual Life Insurance Company, issued September 9, 1992*(b) (filed
as Exhibit 10.29)
10.44 -- Employee Non-Competition Agreement between the Registrant and
Stephen J. Riggi, Ph.D., dated November 21, 1989*(d) (filed as
Exhibit 10.30)
10.45 -- Employee Non-Competition Agreement between the Registrant and
Arthur H. Neufeld,
Ph.D., dated November 16, 1988*(d) (filed as Exhibit 10.31)
10.46 -- Employee Non-Competition Agreement between the Registrant and
Michael R.N. Thomas, dated May 6, 1991*(d) (filed as Exhibit 10.32)
10.47 -- Employee Non-Competition Agreement between the Registrant and
Frederick H. Garber, dated June 5, 1992(d) (filed as Exhibit 10.33)
10.48 -- Employee Non-Competition Agreement between the Registrant and
Walter P. Rahn II, dated May 29, 1992*(d) (filed as Exhibit 10.35)
10.49 -- Employee Non-Competition Agreement between the Registrant and
Bobby R. Owen, dated March 8, 1994*(h) (filed as Exhibit 10.40)
10.50 -- Agreement and Plan of Merger between Telor Ophthalmic Pharmaceuticals,
Inc. and Occupational Health + Rehabilitation Inc*(n)(filed as Exhibit 10.50)
11 -- Statement Regarding: Computation of Net Loss per Common and
Common Equivalent Share*(n)(filed as Exhibit 11)
23 -- Consent of Independent Public Accountants 28
27 -- Financial Data Schedule 29
</TABLE>
* All exhibit descriptions followed by an asterisk (*) refer to exhibits
previously filed with the Securities and Exchange Commission as
exhibits to, and are hereby incorporated by reference from, the
document to which the letter in parentheses corresponds, as set forth
below:
(a) Registrant's Form 8-A/A, Amendment No. 1 to Registrant's
Registration Statement on Form 8-A, File No. 0-21428
(b) Registrant's Registration Statement on Form S-1, as amended,
Registration No. 33-60030
(c) Registrant's Report on Form 10-Q for the period ended
March 31, 1993, File No. 0-21428
(d) Registrant's Report on Form 10-Q for the period ended
June 30, 1993, File No. 0-21428
(e) Registrant's Report on Form 10-Q for the period ended
September 30, 1993, file No. 0-21428
(f) Registrant's Registration Statement on From S-8, filed
with the Securities and Exchange
Commission on November 9, 1993, File No. 33-71462
(g) Registrant's Report on Form 10-K/A for the year ended
December 31, 1993, File No. 0-21428
(h) Registrant's Report on Form 10-Q for the period ended
March 31, 1994, File No. 0-21428
(i) Registrant's Report on Form 10-Q for the period ended
June 30, 1994, file No. 0-21428
(j) Registrant's Report on Form 10-K for the period ended
December 31, 1994, File No. 0-21428
(k) Registrant's Report on Form 10-Q for the period ended
March 31, 1995, File No. 0-21428
(l) Registrant's Report on Form 10-Q for the period ended
June 30, 1995, File No. 0-21428
26
<PAGE>
(m) Registrant's Report on Form 10-Q for the period ended
September 30, 1995, File No. 0-21428
(n) Registrant's Report on Form 10-K for the period ended
December 31, 1995, File No. 0-21428
Where a document is incorporated by reference from a previous filing, the
Exhibit number of that document in that previous filing is indicated in
parenthesis after the incorporation by reference code.
+++ Three daggers (+++) following an exhibit description indicates that portions
of the document described have been granted confidential treatment by the
Securities and Exchange Commission.
27
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report in this Form 10-K, into the Company's previously filed Registration
Statement File No. 33-71462.
Arthur Andersen LLP
Boston, Massachusetts
May 23, 1996
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