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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _____________
Commission file number 0-22686
------------------------------------
PALATIN TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 95-4078884
(State of incorporation or organization) (I.R.S. Employer Identification No.)
214 CARNEGIE CENTER - SUITE 100
PRINCETON, NEW JERSEY 08540
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 520-1911
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
Check whether the Registrant (1) 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. |X|
As of November 13, 1996, 11,538,641 shares of the Registrant's common stock,
par value $.01 per share, were outstanding.
Documents incorporated by reference: None.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
PALATIN TECHNOLOGIES, INC.
Table of Contents
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS -- As of September 30, 1996 (unaudited)
and June 30, 1996. . . . . . . . . . . . . . . . . . . Page 3
STATEMENT OF OPERATIONS (unaudited) -- For the Three
Months Ended September 30, 1995 and September 30, 1996
and the Period from January 28, 1986 (Commencement of
Operations) through September 30, 1996 . . . . . . . . Page 4
STATEMENT OF CASH FLOWS (unaudited) -- For the
Three Months Ended September 30, 1995 and September 30,
1996 and the Period From January 28, 1986 (Commencement
of Operations) through September 30, 1996. . . . . . . Page 5
Notes to Financial Statements. . . . . . . . . . . . . . Page 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . Page 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . Page 12
Item 2. Change in Securities.. . . . . . . . . . . . . . . . Page 12
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . Page 12
Item 4. Submission of Matters to a Vote of Security Holders. Page 12
Item 5. Other Information. . . . . . . . . . . . . . . . . . Page 12
Item 6. Exhibits and Reports on Form 8-K.. . . . . . . . . . Page 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PALATIN TECHNOLOGIES, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1996 June 30, 1996
--------------------- ---------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 4,313,235 $ 6,791,300
Accounts receivable 19,288 4,574
Prepaid expenses and other 88,644 66,430
-------------- --------------
Total current assets 4,421,167 6,862,304
Equipment, net of accumulated depreciation of $195,564 and $183,535
as of September 30, 1996 and June 30, 1996, respectively 137,935 96,354
Intangibles, net of accumulated amortization of $94,555 and
$91,366 as of September 30, 1996 and June 30, 1996, respectively 91,094 82,547
-------------- --------------
$ 4,650,196 $ 7,041,205
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 244,548 $ 214,424
Accrued compensation owed to employees 78,084 78,084
Accrued expenses 483,453 655,197
Current portion of long-term financing, including accrued interest
of $150,960 and $38,912 as of September 30, 1996 and June 30, 1996,
respectively 526,780 311,695
Senior bridge notes, including related party transaction of $110,000
as of June 30, 1996 -- 1,100,000
------------ ------------
Total current liabilities 1,332,865 2,359,400
Long-term financing, including accrued interest of $169,868
and $273,339 as of September 30, 1996 and June 30, 1996, respectively 1,461,111 1,727,619
Notes payable to stockholders, including accrued interest of
$37,979 and $35,979 as of September 30, 1996 and June 30, 1996,
respectively 117,979 115,979
------------ ------------
2,911,955 4,202,998
------------ ------------
Stockholders' equity:
Preferred stock, $.01 and 2,000,000 shares authorized, as of
September 30, 1996 and June 30, 1996, no shares issued -- --
Common stock, $.01 and 25,000,000 shares authorized, as of September
30, 1996 and June 30, 1996; and 11,538,641 and 11,538,777 issued as
of September 30, 1996 and June 30, 1996, respectively 115,386 115,388
Treasury stock, 1,229 shares (1,667) (1,667)
Additional paid-in capital 10,804,145 10,804,394
Common stock earned but not issued 130,695 53,030
Deficit accumulated during development stage (9,310,318) (8,132,938)
------------ ------------
1,738,241 2,838,207
------------ ------------
$ 4,650,196 $ 7,041,205
============ ============
The accompanying notes to consolidated financial statements are an integral part of these balance sheets.
</TABLE>
Page 3
<PAGE>
PALATIN TECHNOLOGIES, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Inception
(January 28, 1996)
Three Months Ended September 30, through
1996 1995 June 30, 1996
----------------- ---------------- ----------------
<S> <C> <C> <C>
REVENUES:
Grants and contracts $ -- $ -- $ 2,860,512
License fees and royalties -- -- 334,296
Sales 22,184 4,893 318,917
----------------- ---------------- ----------------
Total revenues 22,184 4,893 3,513,725
----------------- ---------------- ----------------
EXPENSES:
Research and development 687,952 128,737 5,084,360
General and administrative 454,465 330,406 5,357,426
----------------- ---------------- ----------------
Total expenses 1,142,417 459,143 10,441,786
----------------- ---------------- ----------------
OTHER INCOME (EXPENSES):
Other income 72,124 -- 143,504
Interest expense (129,271) (76,099) (1,172,457)
Placement agent commissions and
fees on debt offering -- -- (168,970)
Merger costs -- -- (475,000)
Restructuring charge -- -- (450,000)
Net intangibles write down -- -- (259,334)
----------------- ---------------- ----------------
Total other income (expenses) (57,147) (76,099) (2,382,257)
----------------- ---------------- ----------------
NET LOSS $ (1,177,380) $ (530,349) $ (9,310,318)
================= ================ ================
Weighted average number of common
shares outstanding 11,537,548 1,275,661 1,359,022
================= ================ ================
Net loss per common share $ (0.10) $ (0.42) $ (6.85)
================= ================ ================
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
Page 4
<PAGE>
<TABLE>
PALATIN TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
(unaudited)
<CAPTION>
Three Months Ended September 30, Inception
---------------------------- (January 28,1986)
1996 1995 through
------------ ------------ September 30, 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,177,380) $ (530,349) $ (9,310,318)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 15,218 31,561 323,792
Interest expense on related-party debt 2,000 2,000 55,387
Accrued interest on long-term financing 86,242 90,593 882,280
Accrued interest on short-term financing (100,000) 6,543 --
Intangibles and equipment write down -- -- 278,318
Equity and notes payable issued for expenses -- -- 296,047
Settlement with consultant -- -- (28,731)
Changes in certain operating assets and liabilities:
Accounts receivable (14,714) 130 (19,288)
Prepaid expenses and other (22,214) (27,235) (88,644)
Intangibles (11,736) 11,262 (439,073)
Accounts payable 30,124 (125,221) 243,648
Accrued compensation owed to employees -- 3,450 94,632
Accrued expenses (171,744) 26,558 512,184
------------- ------------- ------------
Net cash used for operating activities (1,364,204) (510,708) (7,199,766)
------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (53,610) (4,992) (388,840)
------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable, related party -- -- 302,000
Payments on notes payable, related party -- (302,000) 2,000
Proceeds from senior bridge notes payable -- 1,000,000 1,850,000
Payments on senior bridge notes (1,000,000) -- (1,850,000)
Proceeds from notes payable and
long-term financing -- -- 1,951,327
Payments on notes payable and
long-term financing (60,000) (15,000) (250,061)
Proceeds from paid-in capital from common
stock warrants -- -- 100,000
Proceeds from common stock, stock option
issuances and preferred stock, net -- -- 10,102,492
Purchase of treasury stock and fractional shares (250) -- (1,917)
------------- ------------- ------------
Net cash provided by financing activities (1,060,250) 683,000 12,205,841
------------- ------------- ------------
NET INCREASE (DECREASE) IN CASH (2,478,064) 167,300 4,617,135
CASH, beginning of period 6,791,300 46,768 --
------------- ------------- ------------
CASH, end of period $ 4,313,236 $ 214,068 $ 4,617,135
============= ============ ============
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
Page 5
<PAGE>
PALATIN TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (Unaudited)
For the Three Months Ended September 30, 1996 and 1995
(1) Nature of Business
Through its wholly-owned subsidiary RhoMed Incorporated ("RhoMed"),
Palatin Technologies, Inc. (the "Company") is a development-stage biopharma-
ceutical company dedicated to developing and commercializing products and
technologies for diagnostic imaging, cancer therapy and ethical drug
development utilizing peptide, monoclonal antibody and radiopharmaceutical
technologies. The Company was incorporated under the laws of the State of
Delaware on November 21, 1986. Since June 25, 1996, the effective date of
the merger (the "Merger") of a wholly-owned subsidiary of the Company with
and into RhoMed, all outstanding shares of RhoMed equity securities were
exchanged for the Company's common stock, $.01par value per share (the
"Common Stock"). The business of RhoMed represents the on-going business of
the Company.
As a result of the Merger, RhoMed became a wholly-owned subsidiary
of the Company, with the holders of RhoMed preferred stock and RhoMed common
stock (including the holders of "RhoMed Derivative Securities" as hereafter
defined) receiving an aggregate of approximately 96% interest in the equity
securities of the Company on a fully-diluted basis. Additionally, all
warrants and options to purchase common stock of RhoMed outstanding
immediately prior to the Merger (the "RhoMed Derivative Securities"),
including without limitation, any rights underlying RhoMed's qualified or
nonqualified stock option plans, were automatically converted into rights
upon exercise to receive the Company's Common Stock in the same manner in
which the shares of RhoMed common stock were converted. Since the former
stockholders of RhoMed retained more than a 50% controlling interest in the
surviving company (Palatin Technologies, Inc.), the Merger was accounted for
as a reverse merger. The historical financial statements prior to June 25,
1996, are those of RhoMed, except that the net loss per common share has been
stated on an as if converted basis.
Since its inception, RhoMed has devoted substantially all of its
efforts and resources to the research and development of its technology.
RhoMed has experienced operating losses in each year since its inception and,
as of September 30, 1996, the Company, including its wholly-owned subsidiary
RhoMed, had a deficit accumulated during the development stage of $9,310,318.
The Company expects to incur additional operating losses over the next
several years and expects cumulative losses to increase as the Company's
research and development and clinical testing efforts continue and expand.
The ultimate completion of the Company's development projects is contingent
upon a number of factors, including the successful completion of technology
and product development, obtaining required regulatory approvals and
additional financing and, ultimately, successfully commercializing its
products and achieving profitable operations.
Page 6
<PAGE>
(2) Basis of Presentation
The accompanying financial statements have been prepared by the
Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). Certain information
and footnote disclosure normally included in the Company's audited annual
financial statements has been condensed or omitted in the Company's interim
financial statements. In the opinion of the Company, these financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position of the
Company as of September 30, 1996 and June 30, 1996, and the results of
operations and its cash flows for the three months ended September 30, 1996
and 1995, and for the period from inception (January 28, 1986) to September
30, 1996. The results of operations for the interim period may not
necessarily be indicative of the results of operations expected for the full
year, although the Company expects to incur a significant loss for the fiscal
year ended June 30, 1997.
The accompanying financial statements and the related notes should
be read in conjunction with the Company's audited financial statements for
the ten months ended June 30, 1996 and the fiscal years ended August 31, 1995
and 1994 filed with the Company's Form 10-KSB for the transition period from
September 1, 1995 to June 30, 1996.
(3) Summary of Significant Accounting Policies:
Research and Development Costs -- The costs of research and
development activities are expensed as incurred.
Net Loss per Common Share -- Net loss per common share is calculated
based upon the weighted average number of shares of Common Stock, on an as if
converted basis, outstanding during each period. All options and warrants
were excluded in the calculation of weighted average shares outstanding since
their inclusion would have had in the aggregate, an anti-dilutive effect.
Use of Estimates -- The preparation of consolidated financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(4) Senior Bridge Notes:
Class A Offering -- On July 28, 1995, the Board of Directors of
RhoMed authorized an offering of up to 40 units at $25,000 per unit, with
each unit consisting of a $25,000 face amount Senior Bridge Note and a Class
A Warrant to purchase 75,000 shares of RhoMed common stock (equivalent to
13,285 shares of Common Stock) at an exercise price of $.01 per share (the
"Class A Offering"). The Senior Bridge Notes sold in the Class A Offering
(the "Senior Bridge Notes") bore interest at 1% per month, and were payable,
with accrued interest, one year from the date of issuance. All of the 40
Page 7
<PAGE>
Class A Offering units were purchased with proceeds prior to commissions and
expenses of $1,000,000. In August and September of 1996, the Senior Bridge
Notes sold in the Class A Offering were repaid in full, totaling $1,000,000
of principal and $120,000 of accrued interest.
(5) Equipment:
Equipment consists of the following at September 30, 1996 and June
30, 1996:
September 30,1996 June 30,1996
----------------- ------------
Office equipment $ 250,214 $ 202,960
Laboratory equipment 83,285 76,929
------- -------
Equipment at cost 333,499 279,889
Less: Accumulated depreciation 195,564 183,535
------- -------
$ 137,935 $ 96,354
======= =======
(6) Commitments and Contingencies:
Leases -- The Company leases certain of its facilities and equipment
under noncancellable operating leases. In October 1996, the lease on the
facility in Albuquerque, New Mexico was extended from December 31, 1996 until
August 31, 1997. Minimum future lease payments at September 30, 1996, are
approximately $69,000 for the remaining nine months of fiscal year 1997, and
approximately $12,000 to $21,000 per year thereafter until fiscal year 2001.
Certain leases have been personally guaranteed by one or more former officers
of RhoMed.
Merger Costs -- In conjunction with the Merger, costs of $475,000
have been charged to operations for the ten months ended June 30, 1996, and
accrued expenses include $22,260 of this amount as of September 30, 1996.
Restructuring Charge -- In conjunction with the Company's decision
to consolidate and relocate its research and development facilities and
executive offices in the New Jersey area, the Company established a
restructuring charge of $450,000. The restructuring charge represents mainly
severance costs, facility closing expenses and recruiting fees. Included in
accrued expenses at September 30, 1996, is $147,645 of this restructuring
charge.
Page 8
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
The following discussion and analysis should be read in conjunction
with the consolidated financial statements and notes thereto filed as part of
this Form 10-QSB. Unless otherwise indicated herein, all references to the
Company include Palatin Technologies, Inc. and its wholly owned
subsidiary, RhoMed.
The Company's business is subject to significant risks, including
the uncertainties associated with product development of pharmaceutical
products and enforcing patents important to the Company's business. The
Company expects to incur substantial operating losses over the next several
years due to continuing expenses associated with its research and development
programs, including pre-clinical testing, clinical trials and manufacturing.
Operating losses may also fluctuate from quarter to quarter as a result of
differences in the timing of expenses incurred.
Since June 25, 1996, the effective date of the Merger of a
wholly-owned subsidiary of the Company with and into RhoMed, all outstanding
shares of RhoMed equity securities were exchanged for the Company's Common
Stock, $.01par value per share (the "Common Stock"). The business of RhoMed
represents the on-going business of the Company.
As a result of the Merger, RhoMed became a wholly-owned subsidiary
of the Company, with the holders of RhoMed preferred stock and RhoMed common
stock (including the holders of RhoMed Derivative Securities) receiving an
aggregate of approximately 96% interest in the equity securities of the
Company on a fully-diluted basis. Additionally, all warrants and options to
purchase Common Stock of RhoMed outstanding immediately prior to the Merger,
including without limitation, any rights underlying RhoMed's qualified or
nonqualified stock option plans, were automatically converted into rights
upon exercise to receive the Company's Common Stock in the same manner in
which the shares of RhoMed common stock were converted. Since the former
stockholders of RhoMed retained more than a 50% controlling interest in the
surviving company (Palatin Technologies, Inc.), the Merger was accounted for
as a reverse merger. The historical financial statements prior to June 25,
1996, are those of RhoMed, except that the net loss per common share has been
stated on an as if converted basis.
Results of Operations
Three Month Period Ended September 30, 1996 Compared to Three Month
Period Ended September 30, 1995. Sales of RhoChek, the sole product sold by
the Company, increased $17,291 to $22,184 in the current three month period
from $4,893 in the prior three month period. Due to insufficient sales, the
Page 9
<PAGE>
Company expects to discontinue the manufacture and sale of its RhoChek
product in fiscal year 1997.
Research and development expenses increased to $687,952 for the
three months ended September 30, 1996, from $128,737 for the three months
ended September 30, 1995. The majority of the increase is attributable to an
expansion in the scale of Company's research and development operations,
particularly the Company's Leu-Tech project on an infection and inflammation
imaging product, including increased expenses on manufacturing scale-up,
consulting and clinical trials as well as increased expenses on the MIDAS
metallopeptide technology. The Company expects research and development
expenses to increase in coming quarters as the Company expands manufacturing
and initiates clinical trials on the Leu-Tech project and significantly
expands the efforts to develop the MIDAS metallopeptide technology.
General and administrative expenses increased to $454,465 in the
current three month period from $330,406 for the three months ended September
30, 1995. The majority of the increase is due to the hiring of certain key
executives; the leasing of general and administrative offices in New Jersey;
and increased travel and consulting expenses. General and administrative
expenses are expected to remain approximately at current levels through the
remainder of fiscal year 1997.
Interest income was $72,124 for the three months ended September 30,
1996 compared with no interest income for the comparable period in 1995. The
interest income is primarily the result of interest on net proceeds from
Common Stock offerings of approximately $9,000,000 in June of 1996. Interest
expense increased from $76,099 to $129,271 in the three month periods ended
September 30, 1995 and 1996, respectively. Interest expense as of September
30, 1996, is comprised of (I) interest on long-term financing provided by
Aberlyn Holding Company, principal and accrued interest which totaled
$1,987,891, (ii) interest on notes payable to shareholders, the principal
amount of which is $80,000, and (iii) interest on Senior Bridge Notes which
were repaid in full in the quarter. Interest expense is expected to decrease
in coming quarters as a result of the repayment by the Company of the Senior
Bridge Notes, the principal amount of which was $1,000,000.
Net loss increased to $1,177,380 in the three months ended September
30, 1996, as compared to $530,349 in the prior three month period. Net loss
per share was effected by the substantial increase in the weighted average
shares outstanding from 1,275,661 in the period ending September 30, 1995 and
11,537,548 in the period ending September 30, 1996. The increase in the
shares outstanding is primarily the result of issuance of 7,664,844 shares in
connection with the sale of Common Stock in June 1996.
Liquidity and Capital Resources
Since its inception, the Company has incurred net operating losses
and, as of September 30, 1996, had an accumulated deficit of $9,310,318. The
Company has financed its net operating losses through September 30, 1996 by a
series of debt and equity financings. At September 30, 1996, the Company's
cash position amounted to $4,313,236.
Page 10
<PAGE>
For the three months ended September 30, 1996, the net decrease in
cash amounted to $2,478,064. Cash used for operating activities was
$1,364,204, net cash used for investing activities was $53,610 and cash used
by financing activities was $1,060,250, mainly comprised of the $1,000,000
principal repayment of the Senior Bridge Notes. The current portion of
long-term debt maturing in fiscal year 1997 is $251,695.
The Company intends to relocate its research and development
facility from Albuquerque, New Mexico to the Princeton, New Jersey area
during fiscal year 1997. The Company will incur significant costs to build
and equip research and development laboratory space and is currently in
negotiations regarding a lease of a research and development facility in New
Jersey.
The Company's future capital requirements depend on numerous factors
which cannot be quantified, including continued progress in its research and
development activities, progress with pre-clinical studies and clinical
trials, prosecuting and enforcing patent claims, technological and market
developments, the ability of the Company to establish product development
arrangements, the cost of manufacturing scale-up, effective marketing
activities and arrangements, and licensing or acquisition activity.
The Company will seek to obtain additional funds through equity or
debt financing, collaborative or other arrangements with corporate partners
and others, and from other sources in the second or third quarter of fiscal
1997. The Company anticipates that these additional funds, if obtained,
along with the current cash position will be sufficient to meet its debt
obligations and fund its operations through fiscal year 1997. There can be
no assurance that the Company will consummate any equity financing on
acceptable terms or at all and if the Company does not consummate such
financing, the Company's current cash position may not be sufficient to meets
its debt obligations and fund operations through fiscal year 1997. If
adequate additional funds are not available, the Company may be required to
delay, scale back or eliminate certain of its research, drug discovery or
development activities or certain other aspects of its business. If adequate
funds are not available, the Company's business will be materially and
adversely affected.
The Company has been seeking and expects to continue to seek to
license or acquire certain products and technologies. If the Company is
successful in acquiring a product or technology, substantial funds may be
required for such acquisition and subsequent development or
commercialization. To date, the Company has not completed an acquisition and
there can be no assurance that any acquisition will be consummated in the
future.
The Company anticipates incurring additional losses over at least
the next several years, and such losses are expected to increase as the
Company expands its research and development activities relating to its MIDAS
metallopeptide technology and its radiolabeling technology. To achieve
profitability, the Company, alone or with others, must successfully develop
and commercialize its technologies and products, conduct pre-clinical studies
and clinical trials, obtain required regulatory approvals and successfully
manufacture, introduce and market such technologies and products. The time
required to reach profitability is highly uncertain, and there can be no
Page 11
<PAGE>
assurance that the Company will be able to achieve profitability on a
sustained basis, if at all.
Page 12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Change in Securities.
On July 19, 1996, the Company filed an amendment to its
Certificate of Incorporation (the "Charter Amendment"), which (1) effected
the change of name of the Company from Interfilm, Inc. to Palatin
Technologies, Inc., (2) increased the total number of authorized shares of
the Company's Common Stock from 10,000,000 to 25,000,000 and (3) effected a
1-for-10 reverse split of the Common Stock.
As a result of the Merger and the Charter Amendment, each
share of RhoMed preferred stock was converted into .46695404349 shares of
Common Stock, and each share of RhoMed Common Stock was converted
into .184332593 shares of Common Stock.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.24 Lease between Adelante Development Center, Inc. and Palatin
Technologies, Inc. dated October 10, 1996.
27.1 Financial Data Schedule.
(b) Reports of Form 8-K
Three reports on Form 8-K were filed during the quarter for which
this report is filed:
(I) A report on Form 8-K was filed as of July 10, 1996, with a
date of report of June 25, 1996, and reported on Item 1, Changes in
Control of Registrant and Item 4, Change inRegistrant's Certifying
Accountant. Financial statements of RhoMed Incorporated
(unaudited) for the nine-month periods ended May 31, 1996 and 1995
and of RhoMed Incorporated (audited) for the years ended August 31,
1995, 1994 and 1993, were filed with the report.
(ii) A report on Form 8-K/A was filed as of July 23, 1996, with
a date of report of June 25, 1996, and reported on Item 4, Change in
Registrant's Certifying Accountant.
(iii) A report on Form 8-K was filed as of August 9, 1996, with a
date of report of July 19, 1996, and reported on Item 5, Other
Events and Item 8, Change in Fiscal Year.
Page 13
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Palatin Technologies, Inc.
(Registrant)
Date: November 13, 1996 /s/ Edward J.Quilty
-------------------
Edward J. Quilty
Chairman of the Board,President
and Chief Executive Officer
Date: November 13, 1996 /s/ John J. McDonough
---------------------
John J. McDonough
Vice President and Chief Financial
Officer (Principal Financial and
Accouunting Officer)
Page 14
=========================================
LEASE
THIS INDENTURE, made this tenth day of October, 1996, by and
between Adelante Development Center, Inc., a New Mexico nonprofit
corporation hereinafter, whether singular or plural, masculine,
feminine, or neuter, designated as "Lessor," which expression
shall include Lessor's heirs, personal representatives, assigns,
and successors in interest, and Palatin Technologies, Inc., a
Delaware corporation, hereinafter, whether singular or plural,
masculine, feminine, or neuter, designated as "Lessee," which
expression shall include all Lessees, jointly and severally, and
shall include Lessee's heirs, personal representatives, assigns,
and successors in interest,
WITNESSETH:
I. DEMISE OF PREMISES. Lessor, for and in consideration of the
covenants and agreements herein contained to be kept and
performed by Lessee, Lessee's heirs, personal representatives,
assigns, and successors in interest, and upon the terms and
conditions herein contained, does hereby let, lease, and demise
to Lessee the following-described premises situated in
Albuquerque in the County of Bernalillo, State of New Mexico, to
wit: the building and lot at 4255 and 4261 Balloon Park Road,
Northeast, as modified effective March 1, 1997, as set forth in
the attached Addendum to Lease dated the same date as this Lease.
II. TERM OF LEASE. The term of this Lease shall be for a period
of eight (8) months, beginning on the first day of January 1997,
and ending on the 31st day of August, 1997.
III. RENT. Lessee, for and in consideration of this Lease and the
demise of the said premises by Lessor to Lessee, hereby agrees
and covenants with Lessor to pay as rent for the said premises,
without notice or demand, the sum of thirty-six thousand four
hundred thirty-five and sixty/100 Dollars ($36,435.60) in the
following manner, to wit:
$4,554.45 per month payable on the first of every month without
demand or offset. In the event that Lessor does not receive the
rent due on or before the fifteenth (15th) day of the month in
which it is due, Lessee will pay an additional two percent 2%
late charge on the overdue balance.
All of the rent shall be paid by Lessee to Lessor or Lessor's
order in lawful money of the United States at 4906A Jefferson,
N.E., Albuquerque, NM 87109, attention Accounts Receivable or at
such other place as Lessor may designate from time to time for
this purpose.
IV. USE OF PREMISES. Lessee, for and in consideration of this
Lease and the demise of the said premises by Lessor to Lessee,
hereby agrees and covenants with Lessor to use and occupy the
said premises for the purpose of maintaining Lessee's current
bio-medical research business and related items and for no other
purpose without first obtaining the written consent of Lessor
therefor; the Lessee shall not use or occupy or permit the
demised premises to be used or occupied, or do or permit anything
to be done in or on the demised premises, in a manner which will
make void or voidable any insurance then in force with respect
thereto, or which will make it impossible to obtain fire or other
insurance required to be furnished hereunder, or which will cause
or be likely to cause structural damage to the demised premises
or any portion thereof, or which will constitute a public or
private nuisance. Further, the Lessee shall not use or occupy or
permit the demised premises to be used or occupied for any
business, purpose, or use deemed disreputable or extra-hazardous,
or for any purpose or in any manner which is in violation of any
present or future municipal, state and federal ordinances, laws,
rules and regulations.
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<PAGE>
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V. CONDITION OF PREMISES AND REPAIRS. Lessee, for and in
consideration of this Lease and the demise of the said premises,
hereby agrees and covenants with Lessor that Lessee has examined
the said premises prior to the execution hereof, knows the
condition thereof, and acknowledges that Lessee has received the
said demised premises in good order and condition, and that no
representation or warranty as to the condition or repair of the
said premises has been made by Lessor, and, at the expiration of
the term of this Lease, or any renewal or extension thereof,
Lessee will yield up peaceably the said premises to Lessor in as
good order and condition as when the same were entered upon by
Lessee, loss by fire or inevitable accident, damage by the
elements, and reasonable use and wear expected; that Lessee will
keep, at Lessee's own expense, the said premises in good order
and repair during the term of this Lease, or any extension or
renewal thereof, and will repair and replace promptly, at
Lessee's own expense, any and all damage, including, but not
limited to, damage to roof, walls, floors and foundations,
heating and cooling units, plumbing, glass, sidewalks, and all
other appurtenances, that may occur from time to time; that
Lessee hereby waives any and all right to have such repairs or
replacements made by Lessor or at Lessor's expense; and that, if
Lessee fails to make such repairs and replacements promptly, or,
if such repairs and replacements have not been made within
fifteen (15) days after the occurence of damage, Lessor may, at
Lessor's option, make such repairs and replacements, and Lessee
hereby agrees and covenants to repay the cost thereof to Lessor
on demand.
VI. LIABILITY OF LESSOR. Lessee, for and in consideration of this
Lease and the demise of the said premises, hereby agrees and
covenants with Lessor that Lessor shall not be liable for any
damage to persons or property arising from any cause whatsoever,
which shall occur in any manner in or about the said premises,
and Lessee hereby agrees to indemnify and save harmless Lessor
form any and all claims and liability for damage to persons or
property arising from any cause whatsoever, which shall occur in
any manner in or about the said premises. Further, Lessee hereby
agrees and covenants with Lessor that Lessor shall not be liable
for any damage to the said demised premises, or to any part
thereof, or to any property or effects therein or thereon, caused
by leakage from the roof of said premises or by bursting,
leakage, or overflowing of any waste pipes, water pipes, tanks
drains, or stationary washstands, or by reason of any damage
whatsoever caused by water from any source whatsoever, and Lessee
hereby agrees and covenants to indemnify and save harmless Lessor
from any and all claims and liability for any damage to the said
demised premises, or to any part thereof, or to any property or
effects therein or thereon. VII. REQUIREMENTS OF PUBLIC AUTHORITY
Lessee, for and in consideration of this Lease and the demise of
the said premises, hereby agrees and covenants with Lessor that
during the term of this Lease, lessee shall, at its own cost and
expense, promptly observe and comply with all present and future
municipal, state, and federal ordinances, laws, rules, and
regulations affecting the demised premises or appurtenances
thereto, or any part thereof, whether the same are in force and
effect at the time of the commencement of the term of this Lease
or may in the future be passed, enacted, or directed, and lessee
shall pay all costs, expenses, liabilities, losses, damages,
fines, penalties, claims, and demands, including reasonable
attorney's fees, that may in any manner arise out of or be
imposed because of the failure of Lessee to comply with the
covenants and agreements of this paragraph VII. Further, Lessee
hereby agrees and covenants with Lessor that if Lessee fails to
comply promptly with any present or future municipal, state, and
federal ordinances, laws, rules, and regulations, or fails to
comply by such time that compliance may be required by law,
Lessor may, at Lessor's option, take such actions as may be
necessary to comply with all present and future municipal, state,
and federal ordinances, laws, rules, and regulations, and Lessee
hereby agrees and covenants to repay the cost incurred by Lessor
in taking such action to Lessor on demand.
VIII. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS. Lessee, for and
in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that Lessee
shall not make, or suffer or permit to be made, any alterations,
additions, or improvements whatsoever in or about the said
demised premises without first obtaining the written consent of
Lessor therefor; provided, however, that such consent, if given,
shall be subject to the express condition that any and all
alterations, additions, and improvements shall be done at
Lessee's own expense and in accordance and compliance with all
applicable municipal, state, and federal ordinances, laws, rules,
and regulations, and that Lessee hereby covenants and agrees with
Lessor that in doing and performing such work Lessee shall do and
perform the same at Lessee's own expense, in conformity and
compliance with all applicable municipal, state, and federal
ordinances, laws, rules, and regulations, and that no liens of
mechanics, materialmen, laborers, architects, artisans,
contractors, sub-contractors, or any other lien of any kind
whatsoever shall be created against or imposed upon the said
demised premises, or any part thereof, and that Lessee shall
indemnify and save harmless Lessor from any and all liability and
claims for damages of every kind and nature which might be made,
or from judgments rendered against Lessor or against said demised
premises on account of or arising out of such alterations,
additions, or improvements.
<PAGE>
IX. OWNERSHIP OF ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
Lessee, for and in consideration of this Lease and the demise of
the said premises, hereby agrees and covenants with Lessor that
any and all alterations, additions, and improvements, except
signs, shelving, movable furniture and equipment not affixed to
the roof, walls, or floors, made at Lessee's own expense after
having first obtained the written consent of Lessor therefor, in
accordance with the provisions contained in Paragraph VII hereof,
whether or not attached to the roof, walls, floors, foundations,
or the premises in any manner whatsoever, shall immediately merge
and become a permanent part of the realty, and any and all
interest of the Lessee therein shall immediately vest in Lessor,
and all such alterations, additions, and improvements shall
remain on the said premises and shall not be removed by Lessee at
the termination of this Lease. The signs, shelving, moveable
furniture and equipment not affixed to the roof, walls, or
floors, shall be removed by Lessee at Lessee's expense on or
before the termination of the Lease, and Lessee shall repair any
damage caused thereby at Lessee's own expense, such that the
premises shall be in as good order and condition as when the same
were entered upon by Lessee.
X. ASSIGNMENT AND SUBLETTING. Lessee, for and in consideration of
this Lease and the demise of the said premises, hereby agrees and
covenants with Lessor that neither Lesser nor Lessee's heirs,
personal representatives, assigns, or successors in interest
shall assign this Lease or sublet the said demised premises, in
whole or in part, without first obtaining the written consent of
Lessor therefor: that no assignment of this Lease or any
subletting of the said demised premises, in whole or in part,
shall be valid, except by and with the written consent of Lessor
first obtained; that the consent of Lessor to any such assignment
or subletting shall not operate to discharge Lessee or Lessee's
heirs, personal representatives, assigns, or successors in
interest from their liability upon the agreements and covenants
of this Lease, and Lessee, Lessee's personal representatives,
assigns, and successors in interest shall remain liable for the
full and complete performance of all of the terms, conditions,
covenants, and agreements herein contained as principals and not
as guarantors or sureties, to the same extent as though no
assignment or sublease had been made; that any consent of Lessor
to any such assignment or subletting shall not operate as a
consent to further assignment or subletting or as a waiver of
this covenant and agreement against assignment and subletting;
and that following any such assignment or subletting, the
assignee and/or sublettee shall be bound by all of the terms,
conditions, covenants, and agreements herein contained including
the covenant against assignment and subletting.
XI. UTILITY AND OTHER CHARGES. Lessee, for and in consideration
of this Lease and the demise of the said premises, hereby agrees
and covenants with Lessor to pay promptly all utility and other
charges of whatsoever kind and nature, including charges for
electrical, gas, garbage, sewage, telephone, and other services,
which may be incurred in connection with Lessee's use of the said
premises, and to indemnify and save harmless Lessor therefrom.
XII. LESSOR'S RIGHT OF ENTRY AND TO MAKE ALTERATIONS, ADDITIONS,
AND IMPROVEMENTS. Leasee, for and in consideration of this Lease
and the demise of the said premises, hereby agrees and covenants
with Lessor that Lessor shall have the right at any time, upon
reasonable notice to Lessee, to enter upon the said premises to
inspect the same and to make any and all improvements,
alterations, and additions of any kind whatsover upon the said
premises, providing such improvements, alterations, and additions
are reasonably necessary or convenient to the use to which the
said premises are being put at the time, but at no time shall
Lessor be compelled or required to make any improvements,
alterations, or additions.
XIII. TAXES, OTHER ASSESSMENTS, AND INSURANCE. Lessee and Lessor
hereby covenant and agree that all taxes and special and general
assessments of whatsover kind and nature, extraordinary as well
as ordinary, which have been or may be levied upon the said
demised premises and upon any alterations, additions, and
improvements thereon, shall be paid by Lessee at the time when
the same become due and payable, and that all taxes and special
and general assessments of whatsoever kind and nature,
extraordinary as well as ordinary, which have been or may be
levied upon the personal property located upon the said demised
premises shall be paid by Lessee at the time when the same shall
become due and payable. Lessee, for and in consideration of this
Lease and the demise of the said premises, hereby agrees and
covenants with Lessor to carry and maintain in full force and
effect during the term of this Lease, and any extension or
renewal thereof, at Lessee's expense, public liability insurance
covering bodily injury and property damage liability, in a form
and with an insurance company acceptable to Lessor, with limits
of coverage of not less than $1,000,000 for each person and
$1,000,000 in the aggregate for bodily injury or death liability
for each accident, and $1,000,000 for property damage liability
for each accident, for the benefit of both Lessor and Lessee as
protection against all liability claims arising from the
premises. Lessee hereby agrees and
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<PAGE>
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covenants with Lessor to deliver a copy of the
insurance as soon thereafter as practicable, and to give Lessor
not less than ten (10) days' written notice informing Lessor of
the expiration of any such policy. Fire and extended coverage
insurance upon all buildings, alterations, and improvements upon
the said premises shall be provided for as follows: Lessee will
provide, and fire and extended coverage insurance upon all of the
contents and other personal property situated upon the said
premises shall be provided for as follows Lessee will provide.
It is understood and agreed by and between the parties that a
copy of each policy of fire and extended coverage insurance shall
be provided to the parties hereto at the beginning of the term of
this Lease, or as soon thereafter as practicable, and that the
party who is responsible for paying the premiums on each policy
of fire and extended coverage insurance shall give the other
party not less than ten (10) days' written notice informing the
other party of the expiration of any such policy.
XIV. HOLDING OVER. Lessee, for and in consideration of this Lease
and the demise of the said premises, agrees and covenants with
Lessors that no holding over by Lessee after the expiration of
this Lease, or any renewal or extension thereof, whether with or
without the consent of Lessor, shall operate to extend or renew
this Lease, and that any such holding over shall be construed as
a tenancy from month to month at the monthly rental which shall
have been payable at the time immediately prior to when such
holding over shall have commenced, and such tenancy shall be
subject to all the terms, conditions, covenants, and agreements
of this Lease.
XV. BANKRUPTCY AND CONDEMNATION. Lessee, for and in consideration
of this Lease and the demise of the said premises, hereby agrees
and covenants with Lessor that should Lessee make an assignment
for the benefit of creditors or should be adjudged a bankrupt,
either by voluntary or involuntary proceedings, or if otherwise a
receiver or trustee should be appointed by any court of competent
jurisdiction for Lessee because of any insolvency, or any
execution, attachment, replevin, or other court order should be
issued against the Lessee or any of Lessee's property, whereby
the demised premises or any building or buildings, or
alterations, additions, or improvements thereon, shall be taken
or occupied or attempted to be taken or occupied by someone other
than the Lessee, the occurrence of any such event shall be deemed
a breach of this Lease, and, in such event, Lessor shall have the
option to forthwith terminate this Lease to re-enter the said
demised premises and take possession thereof, whereupon Lessee
shall quit and surrender peaceably the said demised premises to
Lessor. In no event shall this Lease be deemed an asset of lessee
after the assignment for the benefit of creditors, the
adjudication in bankruptcy, the appointment of a receiver or
trustee, or the issuance of a Writ of Execution, a Writ of
Attachment, a Writ of Replevin, or other court order against
Lessee or Lessee's property whereby the demised premises or any
building or buildings, or alterations, additions, or improvements
thereon, shall be taken or occupied or attempted to be taken or
occupied by someone other than the Lessee. Further, Lessee hereby
covenants and agrees with Lessor that in the event the said
demised premises, or any part thereof, shall be taken for any
public or quasi-public use under any statute or by right of
eminent domain, this Lease shall automatically terminate, as to
the part so taken, as of the date possession shall have been
taken, and the rent reserved shall be adjusted so that Lessee
shall be required to pay for the remainder of the term that
portion of the rent reserved in the proportion that the said
demised premises remaining after the taking for public or
quasi-public use bears to the whole of the said demised premises before
the taking for public or quasi-public use. All damages and
payments resulting from the taking for public or quasi-public use
of the said demised premises shall accrue to and belong to
Lessor, and Lessee shall have no right to any part thereof.
XVI. DESTRUCTION. Lessee, for and in consideration of this Lease
and the demise of the said premises, agrees and covenants with
Lessor that if at any time during the term of this Lease, or any
extension or renewal thereof, the said demised premises shall be
totally or partially destroyed by fire, flood, earthquake, or
other calamity, then Lessor shall have the option to rebuild or
repair the building or buildings, and any alterations, additions,
or improvements on the demised premises, in as good condition as
they were immediately prior to such calamity; provided, however,
that such rebuilding or repair shall be commenced within a period
of thirty days after notice in writing to Lessor of such
destruction or damage. In such case, a just and proportionate
part of the rental herein specified shall be abated until such
demised premises shall have been rebuilt and repaired. In case,
however, Lessor shall within thirty days following notice in
writing to him of such damage elect not to rebuild or repair said
premises, Lessor shall so notify Lessee and, thereupon, this
Lease shall terminate and become null and void. Moreover, in no
event, shall Lessor have any duty or obligation to rebuild or
repair any signs, shelving, moveable furniture, equipment not
affixed to the roof, walls, or floors as a permanent part of the
realty, or any other personal property owned or leased by the
Lessee and used to carry out the purpose for which Lessee is
leasing the demised premises.
XVII. SIGNS. Lessor and Lessee covenant and agree that Lessee may
at Lessee's own expense erect and maintain a sign or signs to
carry out the purpose for which Lessee is leasing the said
demised premises; provided, however, the location, type and
design of all exterior signs shall be first approved in writing
by Lessor. Upon the expiration of this Lease, or any renewal or
extension thereof, Lessee shall remove such sign or signs and
shall repair any damage to the premises caused thereby at
Lessee's own expense. Further, at any time within thirty days
prior to the termination of this Lease, or any renewal or
extension thereof, Lessor shall have the right to place upon any
part of said demised premises any "For Rent" or "For Lease" signs
that Lessor may select.
<PAGE>
XVII. TERMINATION AND REMEDIES. It is expressly understood and
agreed between the parties hereto, that if the rent above
reserved, or any part thereof, shall be in arrears or unpaid on
the day of payment thereon the same ought to be paid as
aforesaid, or if default shall be made in any of the covenants or
agreements herein contained to be kept by Lessee, Lessee's heirs,
personal representatives, assigns, and successors in interest, it
shall and may be lawful for the Lessor, Lessor's heirs, personal
representatives, agents, attorneys, assigns, or successors in
interest, at Lessor's election, to declare said term ended and to
re-enter the said premises, or any part thereof, either with or
without process of law, and to expel, remove, and put out the
Lessee, or any other person or persons occupying the demised
premises, using such force as may be necessary in so doing, and
to repossess and enjoy the same premises again as in its first
and former state, and to distrain for any rent that may be due
thereon any property belonging to Lessee, whether or not the same
be exempt from execution and distress by law, and Lessee in that
case hereby waives any and all legal rights which Lessee now has
or may have, to hold or retain any such property under any
exemption laws now or hereafter in force in the State of New
Mexico, or in any other way. It is the intent of the parties
hereto to hereby recognize in Lessor, Lessor's heirs, personal
representatives, assigns, or successors in interest, a valid
first lien as provided by the laws of New Mexico, upon any and
all goods, chattels, and other property belonging to Lessee and
located in said premises, as security for the payment of said
rent and fulfillment of the faithful performance of the
agreements, covenants, terms, and conditions hereof as herein
provided, anything hereinbefore mentioned to the contrary
notwithstanding. And if at any time said term shall be ended at
such election of Lessor, Lessor's heirs, pesonal representatives,
assigns, or successors in interest, as aforesaid, or in any other
way, Lessee, Lessee's heirs, personal representatives, assigns,
or successors in interest, do hereby covenant and agree to
surrender and deliver up the above-described premises and
property peaceably to Lessor, Lessor's heirs, personal
representatives, assigns, or successors in interest, immediately
upon the termination of said term as aforesaid, and if Lessee
shall remain in possession of the same ten (10) days after notice
of such default, or after the termination of the Lease in any of
the ways above named, Lessee shall be deemed guilty of a forcible
detainer of said premises under the laws of New Mexico and shall
be subject to all the conditions and provisions above named, and
shall also be subject to eviction and removal forcible or
otherwise, with or without process of law as above stated.
Further, it is covenanted and agreed by and between the parties
hereto that at any time after any such termination, the Lessor
may relet the demised premises, or any part thereof, in the name
of the Lessor or otherwise, for such term and on such conditions
as the Lessor, in Lessor's sole and absolute discretion, may
determine, and may collect and receive the rent therefor.
Moreover, in the event Lessor relets the demised premises, or any
part thereof, it is explicitly understood and agreed by and
between the parties hereto that the term may be greater of lesser
than the period which would otherwise have constituted the
balance of the term of this Lease, and the conditions may include
free rent or other concessions which may be reasonably required
to induce another party to lease the demised premises.
Notwithstanding anything herein to the contrary, the Lessor shall
have no obligation hereunder to relet the demised premises, or
any part thereof, and shall in no way be responsible or liable
for any failure to collect any rent due upon such reletting. It
is also covenanted and agreed by and between the parties hereto
that no such termination of this Lease shall relieve the Lessee
of its liabilities and obligations under this Lease, and such
liabilities and obligations shall survive any such termination.
In the event of any such termination, whether or not the demised
premises, or any part thereof, shall have been relet, the total
remaining balance of the rent which would be due and payable for
the remainder of the term of this Lease, if this Lease were still
in effect, less the net proceeds of any reletting effected
pursuant to the Lessor's sole discretion, after deducting from
the net proceeds all of the Lessor's expenses in connection with
such reletting, including, without limitation, all repossession
costs, brokerage commissions, legal expenses, reasonable
attorney's fees, alteration costs, and expenses of preparation
for such reletting, shall become immediately due and payable, as
and for liquidated damages of the Lessee's default. Nothing
herein contained, however, shall limit or prejudice the right of
Lessor to prove for and obtain as liquidated damages by reason of
such termination, an amount equal to the maximum allowed by
statute or rule of law in effect at the time when, and governing
the proceedings in which, such damages are to be proved, whether
or not such amount be greater than, equal to, or less than, the
amount of the difference referred to above, and whether or not
such amount shall be immediately or otherwise due and payable.
Further, it is covenanted and agreed to by and between the
parties hereto, that in addition to other remedies provided for
in this Lease, the Lessor shall be entitled to restraint by
injunction of the violation, or attempted or threatened
violation, of any agreement or covenant of this Lease, or to a
decree specifically compelling performance of any such agreement
or covenant. The Lessee, the Lessee's heirs, personal
representatives, assigns, and successors in interest, hereby
expressly waives, so far as permitted by law, the service of any
notice of intention to re-enter provided for in any statute, or
of the institution of legal proceedings to that end. Lessee, the
Lessee's heirs, personal representatives, assigns, and successors
in interest, also
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<PAGE>
================================
hereby expressly waives any right of redemption
or re-entry or repossession or to restore the operation of this
Lease in case the Lessee shall be dispossessed by a judgment or
by warrant of any court or judge or in case of re-entry or
repossession by the Lessor. It is further covenanted and agreed
by and between the parties hereto, that the Lessee shall pay and
discharge all costs, reasonable attorney's fees, and expenses
incurred by Lessor, Lessor's heirs, personal representatives,
assigns, or successors in interest, in enforcing the covenants of
this Lease, or incurred by Lessor in pursuing any or all remedies
which are or may be available hereunder or allowed at law or in
equity, or incurred by Lessor in connection with reletting the
demised premises.
XIX. LESSOR'S REMEDIES ARE CUMULATIVE. The specified remedies to
which the Lessor may resort under the terms of this Lease are
cumulative and and are not intended to be exclusive of any other
remedies or means of redress to which the Lessor may be lawfully
entitled in case of any breach or threatened breach by the Lessee
of any of the agreements and covenants herein contained.
XX. WAIVERS. Lessee, for and in consideration of this Lease and
the demise of the said premises, agrees and covenants with Lessor
that the delay or omission in the enforcement of any of the
agreements and covenants herein contained, or in the exercise of
any of Lessor's rights hereunder, shall not affect the duty of
the Lessee to thereafter faithfully fulfill and perform all of
the agreements and covenants herein contained, and that the
failure, neglect, or omission of Lessor to terminate this Lease
for any one or more breaches of any agreements and covenants
hereof, shall not be deemed a consent by Lessor of such breach
and shall not impede, impair, estop, bar or prevent Lessor from
thereafter terminating this Lease, either for such violation, or
for prior or subsequent violations of any covenant or agreement
hereof.
XXI. BINDING ON HEIRS, PERSONAL REPRESENTATIVES, ASSIGNS, AND
SUCCESSORS IN INTEREST. It is understood and agreed by and
between the parties hereto that the agreements, covenants, terms,
conditions, provisions, and undertakings in this Lease, or in any
extension or renewal thereof, shall extend to and be binding upon
the heirs, personal representatives, assigns, and successors in
interest of the respective parties hereto, as if they were in
every case named and expressed, and shall be construed as
covenants running with the land; and wherever reference is made
to either of the parties hereto, it shall be held to and include
and apply also to the heirs, personal representatives,
successors, and assigns of such party, as if in each and every
case so expressed.
XXII. ADDRESSES FOR NOTICES. Any and all notices required or
permitted to be given hereunder shall be considered to have been
given if in writing and delivered to the respective party
designated below upon the date of such personal delivery, or upon
a date three (3) days following the mailing of any such notice by
certified or registered mail, return receipt requested, addressed
to the respective party at the respective address set forth
below, or at such other address as either party may furnish the
other for this purpose by written notification delivered or
mailed to the other as herein provided: NOTICES TO LESSOR:
NOTICES TO LESSEE:
XXIII. DECLARATION OF CONTRACTUAL LIABILITY. If there is more
than one party Lessee, the covenants and agreements of the Lessee
shall be joint and several obligations of each such party.
XXIV. GRAMMATICAL USAGE. In construing this Lease, feminine or
neuter pronouns shall be substituted for those masculine in form
and vice versa, and plural terms shall be substituted for
singular and singular for plural in any place in which the
context so requires.
XXV. COVENANT TO EXECUTE ADDITIONAL INSTRUMENTS. The parties
hereto hereby agree to execute and deliver any instruments in
writing necessary to carry out any agreement, covenant, term,
condition, or assurance in this Lease whenever an occasion shall
arise and request for such instrument shall be made.
XXVI. SEVERABILITY. If any provision of this Lease, or any
application thereof, shall be declared invalid or unenforceable
by any court of competent jurisdiction, the remainder of this
Lease, and any other application of such provision, shall
continue in full force and effect.
XXVII. CAPTIONS. The section headings are for convenience of
reference only and shall not otherwise affect the meaning hereof.
XXVIII. GOVERNING LAW. The Lease shall be governed by and
construed in accordance with the laws of the State of New Mexico.
XXIX. AMENDMENTS. It is understood and agreed by and between the
parties hereto that this Lease shall not be altered, changed, or
amended except by instrument in writing executed by the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands the day and year first above written.
Adelante Development
Center, Inc.
- - ------------------------------------
By: /s/ Mike Kivitz
Palatin Technologies, Inc.
- - ----------------------------------------
By: /s/ Charles L. Putnam
- - ------------------------------------
- - ------------------------------------
name:
name:
Charles L. Putnam
- - -----------------------------------------------------------
title: Exec. Dir. title: Exec. VP
ACKNOWLEDGEMENTS
A. For a natural person acting in his own right.
STATE OF NEW MEXICO COUNTY OF Bernalillo----}ss.
This instrument was acknowledged before me on October 9, 1996, by
Mike Kivitz
- - ------------------------------------------------------
[NAME(S) OF PERSON(S)]
/s/ Karyn Manna
NOTARY PUBLIC
My commission expires:
(Seal)
E. For a corporation or incorporated association:
STATE OF NEW MEXICO COUNTY OF BERNALILLO
This instrument was acknowledged before me on October 9th, 1996 by
Michael Kivitiz, Executive Director of Adelante Development
- - ---------------------------------------------------------
(NAME OF OFFICER) (TITLE OF OFFICER) (NAME OF CORPORATION
ACKNOWLEDGING) ------- a ------------------------Center, Inc., a
New Mexico nonprofit corporation, on behalf of the corporation.
- - ----------------------------------
(STATE OF INCORPORATION)
/s/ Karyn Manna
NOTARY PUBLIC
My commission expires:
7/7/97 (seal)
=================================================================
<PAGE>
LEASE BETWEEN ADELANTE DEVELOPMENT CENTER, INC. AND PALATIN
TECHNOLOGIES, INC.
ACKNOWLEDGEMENTS, continued
STATE OF New Jersey )
) ss.
COUNTY OF Mercer )
The foregoing instrument was acknowledged before me on
October 10th, 1996,
by Charles L. Putnam , Executive Vice President
----------------- ------------------------
(name of officer) (title of officer)
of Palatin Technologies, Inc., a Delaware corporation, on behalf
of the corporation.
Janet R. Schneider
-----------------------
Notary Public
My Commission Expires:
______________________________
(Seal) Janet R. Schneider
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES JULY 31, 2000
<PAGE>
ADDENDUM TO LEASE
Adelante Development Center, Inc., a New Mexico non-profit corporation
("Lessor") and Palatin Technologies, Inc., a Delaware corporation ("Lessee"),
agree to add the following provisions to the Lease dated October 10, 1996 the
("Lease") between Lessor and Lessee:
1. Modification of Demise of Premises. On March 1, 1997, the
description of the premises in Section I of the Lease (the "Original
Premises") will be modified to read as follows (the "Modified Premises"):
those portions of the building at 4255 and 4261 Balloon Park Road NE
designated as:
A. lab area
B. offices along the west wall
which are outlined in red and labeled on the floor plan attached as
Exhibit A to this Addendum.
2. Vacated Premises. Before March 1, 1997, Lessee will vacate those
portions (the "Vacated Premises") of the Original Premises not included in the
Modified Premises. At midnight on February 28, 1997, the Lease term will
expire with respect to the Vacated Premises. Lessee's obligation under
Section V of the Lease to yield up the Vacated Premises peaceably and in good
order and condition will be the same as Lessee's obligation to yield up the
Original Premises peaceably and in good order and condition. Except as
required under the terms of this Addendum, Lessee will have no further
obligation under Section V of the Lease to maintain the Vacated Premises.
During the period of February 24, 1997 to March 1, 1997, Lessee will vacate
those portions of the Vacated Premises not required for Lessee's operations
and allow Lessor full access to the Vacated Premises in order for Lessor to
commence moving into the Vacated Premises before March 1, 1997.
3. Application of Lease to Modified Premises. Except as otherwise
specifically stated in this Addendum, after February 28, 1997, each reference
in the Lease to "premises" or "demised premises" will apply to the Modified
Premises, and not to the Original Premises or the Vacated Premises.
<PAGE>
4. Common Walls. Walls dividing the Modified Premises from the Vacated
Premises will be common walls. Red outlining on Exhibits A and B of this
Addendum lies outside the outlined premises for graphical clarity only, and
does not indicate control of common walls. Neither Lessor nor Lessee will
alter any common wall in a manner which affects the other's use of the
Modified Premises or Vacated Premises without the written consent of the
other.
5. Shared Premises. After February 28, 1997, Lessee will have equal
access with Lessor or any Other Tenant (as defined in paragraph 9 below) to
the portions of the Vacated Premises described as follows (the "Shared
Premises"):
those portions of the building at 4255 and 4261 Balloon Park Road NE
designated as:
C. large conference room
D. kitchen
E. common rest rooms
F. shower room
G. common hallways
H. computer network patch panel and hub cabinet
which are outlined in red and labeled on the floor plan attached as
Exhibit B to this Addendum.
Lessee will leave in place all of Lessee's furniture, equipment and appliances
currently used in the Shared Premises and listed on Exhibit C to this
Addendum. At the end of the term of the Lease, Lessee may remove from the
Shared Premises the items listed on Exhibit C. In the event that Lessor or
Lessee or their respective employees wish to use any portion of the Shared
Premises in a manner and/or at a time which excludes the other or interferes
with the other's ability freely to enjoy the use of the Shared Premises, then
upon the request of Lessee or the agent or employee of Lessee designated to
arrange such use and named in writing to Lessor (the "Lessee's
Representative"), Jim Bullard or any other agent or employee of Lessor named
in writing to Lessee for this purpose (the "Lessor's Representative"), will
promptly determine the use of the Shared Premises.
<PAGE>
6. Shared Services and Equipment. After February 28, 1997, Lessor and
Lessee will share in the use and maintenance, and the costs of maintenance, of
the following services and equipment, as set forth below:
A. Mail and Courier Deliveries. Lessor and Lessee may both use
the street address number "4261" on Balloon Park Road, Northeast. Lessor's
Representative will designate a person or persons responsible for receiving
and distributing all mail and those courier packages whose addressees are not
immediately known to the employee or agent receiving the delivery. Lessee's
Representative will provide Lessor's Representative with a list of names of
potential addressees of mail and courier packages intended for Lessee and
Lessee's employees and agents. Lessee's Representative will designate to
Lessor's Representative the physical location to which the person or persons
designated by Lessor's Representative should deliver all mail and courier
packages addressed to Lessee or Lessee's employees or agents, if not delivered
to the addressee personally. Lessor and Lessee will each instruct their
respective employees and agents not to discard, return or refuse delivery of
any mail or courier package unless both Lessor's Representative and Lessee's
Representative concur that the item was delivered in error, in which case
Lessor's Representative will determine the disposition of the item.
B. Alarm Service, Assignment of Codes, Keys and Access to
Premises. Lessor agrees to maintain, or allow Lessee to maintain, the current
or an equivalent quality building alarm system, and to assume, or allow Lessee
to continue, Lessee's service contract with Protection Service Industries,
L.P. or replace it with an equivalent service contract (together, the "Alarm
System"). During the term of the Lease, Lessee will pay the entire cost of
maintaining and servicing the current Alarm System, and up to $60 per month to
maintain a replacement for the Alarm System. If Lessor replaces the current
Alarm System, choice of the replacement Alarm System will be subject to the
approval of Lessee's Representative. Lessee may, at Lessee's expense, modify
the current Alarm System to provide a zone or zones coded separately from the
rest of the Original Premises for the portion of the Modified Premises
designated as the "lab area" on Exhibit A (the "Lab Area").
Lessor's Representative will be responsible for assigning all
alarm codes and distributing all keys. Lessor's Representative will assign
alarm codes and distribute keys to those of Lessee's employees and agents whom
Lessee's Representative designates in writing to Lessor's Representative.
Except as may otherwise be required as a condition of Lessee's license to
handle radioactive or other hazardous materials, Lessee's Representative will
provide to Lessor's Representative the combinations to all combination door
locks in the Lab Area. Lessor's Representative will hold all alarm codes and
combinations in confidence, and will keep all duplicate and master keys to the
Modified Premises secure from use by persons other than those whom Lessee's
Representative designates in writing to Lessor's Representative. Lessor's
Representative may, at his or her discretion, release alarm codes and/or keys
to the Modified Premises to other persons in emergency situations and at the
instruction of law enforcement or emergency service personnel. Except in
emergency situations, Lessor and Lessor's agents or employees will enter the
Modified Premises only as permitted under Section XII of the Lease.
<PAGE>
C. Security Service. Lessee may, at Lessee's expense, maintain
the current or similar security service and may continue Lessee's service
contract with Akal Security, Inc. or replace it with a similar service
contract (together, the "Security Service").
D. Landscaping Maintenance. Lessor agrees to maintain, or allow
Lessee to maintain, the current or equivalent quality of landscaping of the
lot on which the Original Premises are located, and to assume, or allow Lessee
to continue, Lessee's service contract with Evergreen Lawn Care or replace it
with an equivalent service contract (together, the "Landscaping"). After
February 28, 1997, during the term of the Lease, Lessor and Lessee will share
equally the cost of maintaining the Landscaping (other than the cost of water,
of which Lessee will pay a percentage as set forth in subparagraph 7C below).
Improvements in the Landscaping which Lessor undertakes will be at Lessor's
expense.
E. HVAC Systems. Lessor agrees to maintain, or allow Lessee to
maintain, the current or equivalent quality of heating, ventilation and air
conditioning systems of the Original Premises (the "HVAC Systems"). After
February 28, 1997, during the term of the Lease, Lessor and Lessee will share
equally the cost of maintaining the HVAC Systems. Improvements in the HVAC
Systems which Lessor undertakes will be at Lessor's expense.
F. Kitchen Appliances. Lessor agrees to maintain, or allow
Lessee to maintain, the current or equivalent quality of refrigerator,
dishwasher, range, microwave oven, toaster oven, coffee maker and soft drink
dispenser, and to assume, or allow Lessee to continue, Lessee's service
contract for the soft drink dispenser with Coca-Cola, Dr. Pepper of
Albuquerque or replace it with an equivalent service contract (together, the
"Kitchen Appliances"), in the portion of the Shared Premises labeled as the
"kitchen" on Exhibit B. After February 28, 1997, during the term of the
Lease, Lessor and Lessee will share equally the cost of maintaining the
Kitchen Appliances. Improvements in the Kitchen Appliances which Lessor
undertakes will be at Lessor's expense.
H. Cleaning Service. Lessor agrees to maintain, or allow Lessee
to maintain, the current or equivalent quality of cleaning service, and to
assume, or allow Lessee to continue, Lessee's service contract with Perea's
Janitorial or replace it with an equivalent service contract (together, the
"Cleaning Service") for the entire Original Premises. After February 28,
1997, during the term of the Lease, Lessee will pay 64% (based on the
percentage of floor space which the Modified Premises plus one half of the
Shared Premises represent out of the total floor space of the Original
Premises) and Lessor will pay 36% of the cost of the Cleaning Service.
Improvements in the Cleaning Service which Lessor undertakes will be at
Lessor's expense.
<PAGE>
7. Utilities. After February 28, 1997, during the term of the Lease,
Lessor and Lessee will share in the use and costs of the following utilities,
as set forth below:
A. Telephone. Before March 1, 1997, Lessee will, at Lessee's
expense, modify the telephone service in the Original Premises and install any
additional equipment necessary to provide that, as of March 1, 1997, Lessee
and Lessor can each operate their own separate telephone systems, with at
least the number of dial tones available to Lessor which Lessor designates to
Lessee in writing before January 1, 1997. Except as necessary to provide the
modifications specified in the preceding sentence, Lessee will leave Lessee's
telephone equipment in place in the Vacated Premises for Lessor's use as a
separate telephone system, and upon termination of the Lease, Lessee will
donate to Lessor all of Lessee's telephone equipment which Lessee had
installed in the Original Premises before March 1, 1997. After February 28,
1997, during the term of the Lease, Lessor and Lessee will each pay their own
separate telephone bills, pay separately for maintenance of their own separate
telephone systems, and enter into separate service contracts for telephone
service and maintenance, except that Lessor and Lessee will share equally the
expense of required maintenance of telephone lines up to the point at which
their systems separate.
B. Electricity and Actions Affecting Electric Service. During
the term of the Lease, Lessee will continue to pay the entire cost of
electricity for the Original Premises and of maintenance of the electric
service lines in place on March 1, 1997. Improvements in electrical service
which Lessor undertakes will be at Lessor's expense. If Lessor undertakes any
change in electrical service, or any other action, which to Lessor's knowledge
will result in a cut-off of the supply of electricity to the Modified
Premises, Lessor will give Lessee's Representative at least two days' notice
of the expected cut-off. Any activity which Lessor expects to cause a cut-off
lasting more than two hours will be subject to the approval of Lessee's
Representative.
C. Natural Gas and Water. After February 28, 1997, during the
term of the Lease, Lessee will pay 64% and Lessor will pay 36% of the cost of
natural gas and water, sewer and refuse services, and of maintenance of the
natural gas and water and sewer service lines in place on March 1, 1997.
Improvements in natural gas or water, sewer and refuse services which Lessor
undertakes will be at Lessor's expense.
8. Parking. After February 28, 1997, during the term of the Lease,
Lessee will have exclusive use of the twelve (12) parking spaces currently
marked with paint lines immediately to the north of the Modified Premises, and
Lessor will have exclusive use of all other parking spaces. Service vehicles
and invitees of Lessor or Lessee may use any unoccupied parking spaces which
are not specifically marked as reserved. Failure at any time by either Lessor
or Lessee to enforce the exclusive use of designated parking spaces will not
constitute a waiver of the right of either subsequently to enforce exclusive
use.
<PAGE>
9. Other Tenants. Lessor will perform Lessor's duties under this
Addendum as long as Lessor occupies any portion of the Vacated Premises, or
while the Vacated Premises are vacant. In the event that Lessor leases all or
any portion of the Vacated Premises to another party (an "Other Tenant"), then
Lessor will either continue to perform Lessor's duties under this Addendum, or
delegate to an Other Tenant those of Lessor's duties which Lessor does not
continue to perform, by means of a written lease agreement with the Other
Tenant. Lessor will require that any Other Tenant will abide by the
provisions of this Addendum regarding access to and use of the Shared
Premises.
10. Rent. The rent stated in the Lease will not change upon
modification of the demise of the premises as set forth in paragraph 1 above.
11. Donation of furniture and equipment Upon the expiration of the
term of the Lease, Lessee will donate to Lessor the furniture and equipment
listed in Exhibit D of this Addendum. At Lessee's request, Lessor will
provide Lessee a written receipt acknowledging Lessee's donation of these
items.
12. Condition Precedent. The Lease and this Addendum will become
effective only if and when Lessor acquires title to the Original Premises and
the lot on which the Original Premises are located.
13. Miscellaneous. This Addendum represents the entire agreement of
the parties with respect to its subject matter, may be modified only in
writing signed by both parties, is binding on the parties, their successors
and assigns, and is governed by the laws of the State of New Mexico. Any term
not otherwise defined in this Addendum has the meaning of that term as defined
or used in the Lease. The word "current," as used in this Addendum, means as
of the date of this Addendum as set forth below.
Dated as of : October __, 1996.
LESSOR:
Adelante Development Center, Inc.
By s/ Michael Kivitz
Its Exec. Dir.
<PAGE>
LESSEE:
Palatin Technologies, Inc.
By s/ Charles L. Putnam
Its Exec. VP
<PAGE>
ACKNOWLEDGEMENTS
STATE OF NEW MEXICO )
) ss.
COUNTY OF BERNALILLO )
The foregoing instrument was acknowledged before me on October 9th,
1996,
by Michael Kivitz , Executive Director of
-------------- ------------------
(name of officer) (title of officer)
Adelante Development Center, Inc., a New Mexico nonprofit corporation, on
behalf of the corporation.
/s/ Karyn Manna
----------------
Notary Public
My Commission Expires:
7/7/97
- - ---------------------
(Seal)
ACKNOWLEDGMENTS CONTINUED ON FOLLOWING PAGE
<PAGE>
ACKNOWLEDGEMENTS, continued
STATE OF New Jersey )
) ss.
COUNTY OF Mercer )
The foregoing instrument was acknowledged before me on October 10, 1996,
by Charles L. Putnam , Executive VicePresident of
----------------- -----------------------
(name of officer) (title of officer)
Palatin Technologies, Inc., a Delaware corporation, on behalf of the
corporation..
/s/ Janet R. Schneider
-----------------------
Notary Public
My Commission Expires:
______________________________
(Seal) Janet R. Schneider
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES JULY 31, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the three month period ended September 30, 1996 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,313,235
<SECURITIES> 0
<RECEIVABLES> 19,288
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,421,167
<PP&E> 333,499
<DEPRECIATION> 195,564
<TOTAL-ASSETS> 4,650,196
<CURRENT-LIABILITIES> 1,332,865
<BONDS> 1,579,090
0
0
<COMMON> 115,386
<OTHER-SE> 1,622,855
<TOTAL-LIABILITY-AND-EQUITY> 4,650,196
<SALES> 22,184
<TOTAL-REVENUES> 22,184
<CGS> 0
<TOTAL-COSTS> 1,142,417
<OTHER-EXPENSES> 57,147
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,177,380)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,177,380)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
