===========================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Quarterly Period Ended: June 30, 1997
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 0-19410
HemaSure Inc.
(Exact name of registrant as specified in its charter)
Delaware 04-3216862
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
140 Locke Drive, Marlborough, Massachusetts 01752
(Address of principal executive offices)
(Zip Code)
(508) 485-6850
(Registrant's telephone number, including area code)
N/A
-----------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
_
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, par value $.01 per share 8,127,602
-------------------------------------- ---------
Class Outstanding at August 8, 1997
<PAGE>
HemaSure Inc.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the Three and Six Month Periods Ended
June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for the Periods Ended June 30, 1997 and
1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 9
Part II -- OTHER INFORMATION 12
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
2
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
HemaSure Inc.
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
( In thousands ) June 30, December 31,
1997 1996
------------------- ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,522 $ 5,527
Marketable securities 9,580 11,369
Accounts receivable 306 283
Inventories 289 376
Net Assets of Discontinued Business 150 500
Prepaid expenses 29 208
---------- -----------
Total current assets 11,876 18,263
Property and equipment, net 2,087 2,245
Other assets 64 52
----------- -----------
Total assets $ 14,027 $ 20,560
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 423 $ 1,612
Accrued restructuring expenses 1,050 -
Accrued expenses 1,625 1,573
Note payable - current portion 28 -
Capital lease obligations-current portion 242 234
---------- -----------
Total current liabilities 3,368 3,419
Capital lease obligations 438 525
Note payable 103 -
Convertible subordinated note payable 8,687 8,687
---------- -----------
Total liabilities 12,596 12,631
---------- -----------
Stockholders' equity:
Common stock 81 81
Additional paid-in capital 60,738 60,702
Unearned compensation (299) (398)
Unrealized holding loss of available for sale marketable securities (2) (3)
Accumulated deficit (59,087) (52,453)
---------- -----------
Total stockholders' equity 1,431 7,929
---------- -----------
Total liabilities and stockholders' equity $ 14,027 $ 20,560
========== ===========
</TABLE>
The accompanying notes are an integral part
of the financial statements.
3
<PAGE>
HemaSure Inc.
Consolidated Statements of Operations
For The Three- and Six-Month Periods Ended
June 30, 1997 and 1996
( Unaudited )
<TABLE>
<CAPTION>
Three-month periods Six-month periods
( In thousands, except per share amounts ) ended June 30, ended June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 517 $ 14 $ 1,068 $ 37
Product sales to related parties - - - 13
Collaborative research and development - 8 - 54
-------- -------- ---------- --------
Total revenues 517 22 1,068 104
-------- -------- ---------- --------
Costs and expenses:
Cost of products sold 847 644 1,879 1,034
Cost of products sold to related parties - - - 13
Cost of collaborative research and development - 6 - 41
Research & development 876 1,501 1,761 3,043
Selling, general and administrative 1,200 1,798 2,613 3,014
Restructuring charge 1,121 - 1,121 -
-------- -------- ---------- --------
Total costs and expenses 4,044 3,949 7,374 7,145
Loss from operations (3,527) (3,927) (6,306) (7,041)
Interest income 160 463 341 1,064
Interest expense (377) (24) (668) (41)
Other income (expense) - - (1) -
-------- -------- ---------- --------
Net loss from continuing operations (3,744) (3,488) (6,634) (6,018)
-------- -------- ---------- --------
Discontinued operations:
Loss from operations of discontinued business - (653) - (653)
Net Loss $ (3,744) $ (4,141) $ (6,634) $ (6,671)
======== ======== ========== ========
Net loss per share:
Net loss from continuing operations $ (0.46) $ (0.43) $ (0.82) $ (0.75)
Loss from operations of discontinued business - (0.08) - (0.08)
-------- -------- ---------- --------
Net loss per share $ (0.46) $ (0.51) $ (0.82) $ (0.83)
======== ======== ========== ========
Weighted average number of common and
common equivalent shares outstanding 8,124 8,063 8,119 8,052
</TABLE>
The accompanying notes are an integral part
of the financial statements.
4
<PAGE>
HemaSure Inc.
Consolidated Statements of Cash Flows
( Unaudited )
<TABLE>
<CAPTION>
(In thousands) Six-month periods
ended June 30,
-----------------------
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,634) $ (6,671)
Adjustments to reconcile net loss to net cash
used in operating activities
Discontinued business 653
Depreciation and amortization 394 366
Accretion of marketable securities discount (15) (14)
Changes in operating assets and liabilities:
Net assets of discontinued business 350 -
Accounts receivable (23) (4)
Inventories 87 (103)
Prepaid expenses 179 (38)
Accounts payable and accrued expenses (87) (279)
--------- ---------
Net cash used in continuing operations (5,749) (6,090)
Net cash used in discontinued business - (2,320)
Net cash used in operating activities (5,749) (8,410)
--------- ---------
Cash flows from investing activities:
Purchase of available-for-sale marketable securities (54,837) (114,300)
Maturities of available-for-sale marketable securities 56,641 131,127
Unrealized holding loss of available-for-sale marketable securities 1 2
Additions to property and equipment (99) (918)
Acquisition of business net of cash acquired - (4,092)
Decrease in other assets (12) 45
--------- ---------
Net cash provided from investing activities 1,694 11,864
Cash flows from financing activities:
Proceeds from issuance of common stock 36 226
Borrowing from notes payable arrangements 140 -
Repayments of notes payable (9) -
Repayments of capital lease obligations (117) (112)
--------- ---------
Net cash provided from financing activities 50 114
--------- ---------
Net increase (decrease) in cash (4,005) 3,568
Cash and cash equivalents at beginning of period 5,527 23,028
--------- ---------
Cash and cash equivalents at end of period $ 1,522 $ 26,596
========= =========
</TABLE>
The accompanying notes are an integral part
of the financial statements.
5
<PAGE>
HemaSure Inc.
Notes To Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying financial statements are unaudited and have been
prepared on a basis substantially consistent with the audited financial
statements.
Certain information and footnote disclosures normally included in the
Company's annual statements have been condensed or omitted. The
consolidated interim financial statements, in the opinion of
management, reflect all adjustments (including normal recurring
accruals) necessary for a fair statement of the results for the interim
periods ended June 30, 1997 and 1996.
The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the fiscal
year. These interim financial statements should be read in conjunction
with the audited financial statements for the year ended December 31,
1996, which are contained in the Company's Form 10K (File No.
000-23776), filed with the Securities and Exchange Commission on March
31, 1997.
2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
<S> <C> <C>
Raw Materials $ 68 $ 240
Work in progress 149 122
Finished goods 72 14
-------- --------
$ 289 $ 376
======== ========
3. Property and Equipment
Property and equipment consists of the following:
June 30, 1997 December 31, 1996
Property and equipment $ 3,746 $ 3,618
Less accumulated depreciation and amortization (1,716) (1,421)
--------- ---------
2,030 2,197
Construction in progress 57 48
--------- ---------
$ 2,087 $ 2,245
======== ========
</TABLE>
6
<PAGE>
4. Note payable
In March 1997, the Company exercised its right, under the lease
arrangement of its Marlborough Massachusetts facility, to have a
portion of its leasehold improvements financed and received $140,000 in
connection with this arrangement. This amount will be repaid in 60
equal monthly installments at a rate of 12% per annum.
5. Convertible subordinated note payable
In January 1997, the Company entered into a Restructuring Agreement of
the debt related to its acquisition of Novo Nordisk's plasma products
unit. Pursuant to the Restructuring Agreement, approximately
$23,000,000 of indebtedness owed to Novo Nordisk was restructured by
way of issuance by HemaSure to Novo Nordisk of a 12% convertible
subordinated promissory note in the principal amount of $11,700,000,
which is due and payable on December 31, 2001, with interest payable
quarterly (provided that up to $3,000,000 may be forgiven in certain
circumstances). Approximately $8,500,000 of the reduction of such
indebtedness was forgiven. The remainder of the reduction represents a
net amount due from Novo Nordisk to HemaSure related to various service
arrangements between the two companies. The amount included in the
balance sheet at June 30, 1997 and December 31, 1996 includes the
effect of the Restructuring Agreement net of the $3,000,000 contingency
amount to reflect the most probable result of the Company's decision to
exit the plasma business. All amounts outstanding under such note are
convertible by either party, commencing January 1998, into shares of
common stock, par value $.01 per share of HemaSure at a conversion
price equal to $10.50 per share
6. Net loss per share
The net loss per share is based on the weighted average number of
common and common equivalent shares outstanding during the period.
Common equivalent shares are not included in the per share calculation
where the effect of their inclusion would be antidilutive.
7. Litigation
The Company is a defendant in two lawsuits brought by Pall Corporation
("Pall"). In complaints filed in February 1996 and November 1996, Pall
alleged that HemaSure's manufacture, use and/or sale of the LeukoNet
product infringes upon three patents held by pall.
On October 14, 1996 in connection with the first action concerning U.S.
Patent No. 5,451,321, the Company filed for summary judgment of
noninfringement. Pall filed a cross motion for summary judgment of
infringement at the same time. The parties are awaiting the Court's
decision.
With respect to the second action concerning U.S. Patent Nos. 4,340,479
(the "`479 patent") and 4,952,572 (the "572 patent"), the Company has
answered the complaint stating that it does not infringe any claim of
the asserted patents. Further, the Company has counterclaimed for
declaratory judgment of invalidity, noninfringement and
unenforceability of the `572 patent, and a declaratory judgment of
noninfringement of the `479 patent, as a result of a license.
The Company believes, based on advice of its patent counsel, that a
properly informed court should conclude the manufacture, use and/or
sale by the Company or its customers of the present LeukoNet product
does not infringe any valid enforceable claim of the three Pall
patents. However, there can be no assurance that the Company will
prevail in the pending litigations, and
7
<PAGE>
an adverse outcome in a patent infringement action would have a
material adverse effect on the Company's future business and
operations.
On November 1, 1996, the Company filed a complaint in the Supreme
Court, State of New York, County of New York, against Pharmacia &
Upjohn, Inc. and Pharmacia AB ("P&U"). In its complaint, the Company
seeks to receive damages arising out of the alleged breach by P&U of an
agreement to sell to the Company P&U's plasma pharmaceutical business
located in Stockholm, Sweden. The complaint seeks compensatory,
consequential and punitive damages. There can be no assurance that the
Company will prevail in this litigation or, if the Company does so
prevail, as to the amount of damages, if any, that will be awarded or
that the Company may collect.
8. Restructuring charge
In April 1997, the Company, primarily as a result of exiting the
plasma business, determined to focus management resources on its core
business of blood filtration technologies. In connection therewith,
four officers were relieved of their duties. The Company incurred a
one time charge of $1,121,000 in the second quarter 1997 for severance
and related charges in connection with this action.
9. Other
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130). SFAS 130 requires the reporting and
display, in a full set of general purpose financial statements, of all
items that are required to be recognized under accounting standards as
components of comprehensive income. SFAS 130 is effective for
statements issued for periods ending after December 15, 1997 and
reclassification of financial statements for earlier periods for
comparative purposes is required. The adoption of SFAS 130 will have
an immaterial impact on the Company's financial statements.
8
<PAGE>
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
which involve certain risks and uncertainties. The Company's actual results or
outcomes may differ materially from those anticipated. The forward-looking
statements relate to various aspects of the Company's pending lawsuit against
P&U; the sale or other disposition of the Company's plasma fractionation
business in Denmark; the Company's consideration of pursuing public or private
equity and/or debt financing; and the defense of the Company's pending or future
patent litigation. Each forward-looking statement that the Company believes is
material is accompanied by a cautionary statement or statements identifying
important factors that could cause actual results to differ materially from
those described in the forward-looking statement. The cautionary statements are
set forth following the forward-looking statement, and/or elsewhere in this Form
10-Q and the Company's other documents filed with the Securities and Exchange
Commission, whether or not such documents are incorporated herein by reference.
In assessing the forward-looking statements contained in this Form 10-Q, readers
are urged to read carefully all cautionary statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
Overview
HemaSure was established in December 1993 as a wholly-owned subsidiary of
Sepracor Inc. ("Sepracor"). Prior to that date, its business was conducted as
part of Sepracor's bioprocessing division. Effective as of January 1, 1994, in
exchange for 3,000,000 shares of Common Stock, Sepracor transferred to HemaSure
its technology relating to the manufacture, use and sale of medical devices.
The Company is utilizing its proprietary filtration technologies to develop
products to increase the safety of donated blood and to improve certain blood
transfusion procedures. The Company's products are designed for use in blood
centers and hospital blood banks worldwide. From inception through fiscal 1995,
HemaSure has sold non-blood related filter products primarily to Sepracor, a
related party, for use in chemical processing applications. As the Company
continues to focus its efforts in the medical device sector, it does not expect
sales of its non-blood related products to continue in any material respect. The
Company's collaborative research and development efforts have been with the U.S.
Department of the Army for blood filtration related practices.
The Company is subject to risks common to companies in the medical technology
industry, including, but not limited to, development by the Company or its
competitors of new technological innovations, dependence on key personnel,
protection of proprietary technology and compliance with regulations of the
United States Food and Drug Administration (the "FDA").
Three and six months ended June 30, 1997 and 1996
Revenues were $517,000 for the quarter ended June 30, 1997 compared to $22,000
in the same period in 1996. Revenues in the second quarter 1997 represent sales
of the Company's LeukoNet system, 85% of which were sales to the American Red
Cross. Revenues in the second quarter 1996 include collaborative research and
development revenues of $8,000 related to the Company's SBIR grant.
Revenues were $1,068,000 for the first six months of 1997 compared to $104,000
for the first six months of 1996. Revenues for the six month period ended June
30, 1997 represent sales of the Company's LeukoNet system, 81% of which were
sales to the American Red Cross. Revenues for the six month period ended June
30, 1996 include product sales to Sepracor of $13,000 and collaborative research
and development revenues of $54,000 related to the Company's SBIR grant.
Total cost of products sold exceeded total product sales in all periods
primarily due to the high costs associated with low-volume production.
Research and development expenses were $876,000 in the second quarter of 1997
compared to $1,501,000 in the second quarter of 1996, and were $1,761,000 in the
six months ended June 30, 1997 compared to $3,043,000 in the six months ended
June 30, 1996. The decrease in both the three and six month periods is primarily
attributable to a lower level of spending associated with the Company's
SteriPath Blood Pathogen Inactivation System, which program was suspended in May
1997.
Selling, general and administrative expenses were $1,200,000 in the three months
ended June 30, 1997 compared to $1,798,000 in the three months ended June 30,
1996, and were $2,613,000 in the first six months of 1997 compared to $3,014,000
in the first six months of 1996. The Company incurred costs in
9
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both the three- and six-month periods ended June 30, 1996 that did not recur in
the same three- and six-month periods of 1997 resulting in the decrease for
these periods. These non-recurring costs include marketing efforts completed in
1996 associated with the introduction of the Company's LeukoNet System and costs
related to efforts to expand the Company's business beyond medical devices.
Sales and marketing costs may increase in future periods from current levels as
the Company continues its efforts to expand sales of its blood filtration
products.
In the three-month period ended June 30, 1997, the Company recorded a one time
charge of $1,121,000 for severance and related charges in connection with
executive management departures in connection with HemaSure's decision to
focus on its core filtration business.
Interest income for both the three and six months ended June 30, 1997 decreased
compared to the three and six months ended June 30, 1996 due to lower average
cash and marketable securities balances available for investment. Interest
expense for both the three and six month periods ended June 30, 1997 increased
compared to the same periods in 1996 related to a convertible subordinated note
payable which was not in existence during the first half 1996.
Liquidity and Capital Resources
The net decrease in cash and cash equivalents for the six months ended June 30,
1997 was $4,005,000. This decrease is attributable primarily to net cash used in
operating activities of $5,749,000 offset in part by net cash provided from
investing activities of $1,694,000 and to a lesser extent net cash provided from
financing activities of $50,000.
Net cash used in operating activities is primarily attributable to the net loss
of $6,634,000 offset in part by depreciation and amortization of $394,000 and
the receipt of $350,000 related to the net assets of discontinued business. Net
cash provided from investing activities relates to available-for-sale marketable
securities investing activities of $1,804,000 offset in part by additions to
property and equipment of $99,000.
In June 1994, the Company executed an agreement with a third party to license
certain technology. The Company agreed to pay to the third party, pursuant to
the terms of the agreement, license fees of $1,200,000 payable in four equal
annual installments, and royalties for commercial sale of any product
incorporating this technology. Through June 30, 1997 the Company paid $900,000
under this agreement. Pursuant to the terms of this agreement, the final payment
of $300,000 was made in July 1997.
In January 1997, the Company entered into a Restructuring Agreement of the debt
related to its acquisition of Novo Nordisk's plasma products unit. Pursuant to
the Restructuring Agreement, approximately $23,000,000 of indebtedness owed to
Novo Nordisk was restructured by way of issuance by HemaSure to Novo Nordisk of
a 12% convertible subordinated promissory note in the principal amount of
$11,700,000, which is due and payable on December 31, 2001, with interest
payable quarterly (provided that up to $3,000,000 may be forgiven in certain
circumstances). Approximately $8,500,000 of the reduction of such indebtedness
was forgiven. The remainder of the reduction represents a net amount due from
Novo Nordisk to HemaSure related to various service arrangements between the two
companies. The amount included in the balance sheet at March 31,1997 and
December 31, 1996 includes the effect of the Restructuring Agreement net of the
$3,000,000 contingency amount to reflect the most probable result of the
Company's decision to exit the plasma business. All amounts outstanding under
such note are convertible by either party, commencing January 1998, into shares
of common stock, par value $.01 per share of HemaSure at a conversion price
equal to $10.50 per share
In April 1997, the Company, primarily as a result of exiting the plasma
business, determined to focus management resources on its core business of
blood filtration technologies. In connection therewith, four officers
10
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were relieved of their duties. John F. McGuire was named President and CEO and
Timothy J. Barberich was named Chairman of the Board. In connection therewith,
the Company incurred a one time charge of $1,121,000 in the second quarter 1997
related to these actions. The Company paid $71,000 of this obligation in the
second quarter 1997.
The Company believes based on its current operating plan that in addition
to its available cash balances, it will need additional financing in order to
fund the Company's operations beyond the second quarter 1998. Possible sources
of capital include settlement of the Company's lawsuit against P&U, sale of the
Company's plasma fractionation business in Denmark and public or private equity
and/or debt financing, all of which the Company is currently considering and/or
pursuing. There can be no assurance, however, that any of such events will occur
or that the Company will realize any material amount of capital therefrom. The
Company's cash requirements may vary materially from those now anticipated
because of factors such as successful development of new or improved products,
results of product testing, approval process at the FDA and similar foreign
agencies, commercial acceptance of new products, patent developments and the
introduction of competitive products by the Company's competitors.
11
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a defendant in two lawsuits brought by Pall Corporation
("Pall"). In complaints filed in February 1996 and November 1996, Pall
alleged that HemaSure's manufacture, use and/or sale of the LeukoNet
product infringes upon three patents held by pall.
On October 14, 1996 in connection with the first action concerning U.S.
Patent No. 5,451,321, the Company filed for summary judgment of
noninfringement. Pall filed a cross motion for summary judgment of
infringement at the same time. The parties are awaiting the Court's
decision.
With respect to the second action concerning U.S. Patent Nos. 4,340,479
(the "`479 patent") and 4,952,572 (the "`572 patent"), the Company has
answered the complaint stating that it does not infringe any claim of
the asserted patents. Further, the Company has counterclaimed for
declaratory judgment of invalidity, noninfringement and
unenforceability of the `572 patent, and a declaratory judgment of
noninfringement of the `479 patent, as a result of a license.
The Company believes, based on advice of its patent counsel, that a
properly informed court should conclude the manufacture, use and/or
sale by the Company or its customers of the present LeukoNet product
does not infringe any valid enforceable claim of the three Pall
patents. However, there can be no assurance that the Company will
prevail in the pending litigations, and an adverse outcome in a patent
infringement action would have a material adverse effect on the
Company's future business and operations.
On November 1, 1996, the Company filed a complaint in the Supreme
Court, State of New York, County of New York, against Pharmacia &
Upjohn, Inc. and Pharmacia AB ("P&U"). In its complaint, the Company
seeks to receive damages arising out of the alleged breach by P&U of an
agreement to sell to the Company P&U's plasma pharmaceutical business
located in Stockholm, Sweden. The complaint seeks compensatory,
consequential and punitive damages. There can be no assurance that the
Company will prevail in this litigation or, if the Company does so
prevail, as to the amount of damages, if any, that will be awarded or
that the Company may collect.
Items 2- 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of matters to a Vote of Security Holders.
At the Company's Annual Meeting of Stockholders held on May 15, 1997, the
following proposals were adopted by the vote specified below.
Proposal For Withheld
1. Election of Directors
Timothy J. Barberich 7,633,090 33,855
John F. McGuire 7,633,090 33,855
Rolf S. Stutz 7,633,090 33,855
David S. Barlow 7,633,090 33,855
John T. Kimbell 7,633,090 33,855
12
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<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes (1)
--- ------- ------- -------------------
<S> <C> <C> <C> <C>
2. Amendments to the Company's
1995 Employee Stock Purchase Plan
7,257,232 60,933 12,095 336,685
</TABLE>
(1) Votes counted for purposes of determining whether a quorum is present for
the meeting but indicates that the broker or other holder was not authorized by
the beneficial owner to cast a vote on certain proposals but was authorized to
cast (and did cast) a vote on at least one other proposal.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
10.1 HemaSure Inc. 1995 Employee Stock Purchase Plan
(as amended)
27.1 Financial Data Schedule
b) Reports on Form 8-K
None.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HemaSure Inc.
(Registrant)
Date: August 14, 1997 by:/s/John F. McGuire
John F. McGuire
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 1997 by:/s/James B. Murphy
James B. Murphy
Senior Vice President Finance and Administration
(Principal Financial Officer)
14
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EXHIBIT INDEX
Exhibit No. Description
10.1 HemaSure Inc. 1995 Employee Stock Purchase Plan
(as amended)
27.1 Financial Data Schedule
<PAGE>
Exhibit 10.1
HEMASURE INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED)
The purpose of this Plan is to provide eligible employees of
HemaSure Inc. (the "Company") and certain of its subsidiaries with opportunities
to purchase shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), of the Company. One Hundred Thousand (100,000) shares of Common
Stock in the aggregate have been approved for this purpose.
1. Administration. The Plan will be administered by the
Company's Board of Directors (the "Board") or by a Committee appointed by the
Board (the "Committee") . The Board or the Committee has authority to make rules
and regulations for the administration of the Plan and its interpretation and
decisions with regard thereto shall be final and conclusive.
2. Eligibility. Participation in the Plan will neither be
permitted nor denied contrary to the requirements of Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations promulgated
thereunder. All employees of the Company, including Directors who are employees,
and all employees of any subsidiary of the Company (as defined in Section 424(f)
of the Code) designated by the Board or the Committee from time to time (a
"Designated Subsidiary"), are eligible to participate in any one or more of the
offerings of options (as defined in Section 9) to purchase Common Stock under
the Plan provided that:
(a) they are regularly employed by the Company or a
Designated Subsidiary for more than 20 hours a week and for
more than five months in a calendar year; and
(b) they are employees of the Company or a
Designated Subsidiary on the first day of the applicable Plan
Period (as defined below).
No employee may be granted an option hereunder if such
employee, immediately after the option is granted, owns 5% or more of the total
combined voting power or value of the stock of the Company or any subsidiary.
For purposes of the preceding sentence, the attribution rules of Section 424(d)
of the Code shall apply in determining the stock ownership of an employee, and
all stock which the employee has a contractual right to purchase shall be
treated as stock owned by the employee.
3. Offerings. The Company will make one or more offerings
("Offerings") to employees to purchase stock under this Plan. Offerings will
begin each June 1 and December 1, or the first business day thereafter (the
"Offering Commencement Dates"). Each Offering
<PAGE>
Commencement Date will begin a six (6) month period (a "Plan Period") during
which payroll deductions will be made and held for the Purchase of Common Stock
at the end of the Plan Period. The Board or the Committee may, at its
discretion, choose a different Plan Period of twelve (12) months or less for
subsequent Offerings. Offerings under this Plan will include:
June 1, 1995 to November 30, 1995
December 1, 1995 to May 31, 1996
June 1, 1996 to November 30, 1996
December 1, 1996 to May 31, 1997
June 1, 1997 to November 30, 1997
December 1, 1997 to May 31, 1998
June 1, 1998 to November 30, 1998
December 1, 1998 to May 31, 1999
4. Participation. An employee eligible on the Offering
Commencement Date of any Offering may participate in such offering by completing
and forwarding a payroll deduction authorization form to the employee's
appropriate payroll office at least 30 days prior to the applicable Offering
Commencement Date. The form will authorize a regular payroll deduction from the
Compensation received by the employee during the Plan Period. Unless an employee
files a new form or withdraws from the Plan, his deductions and purchases will
continue at the same rate for future Offerings under the Plan as long as the
Plan remains in effect. The term "Compensation" means the amount of money
reportable on the employee's Federal Income Tax Withholding Statement, excluding
overtime, incentive or bonus awards, allowances and reimbursements for expenses
such as relocation allowances for travel expenses, income or gains on the
exercise of Company stock options and similar items, whether or not shown on the
employee's Federal Income Tax Withholding Statement.
5. Deductions. The Company will maintain payroll deduction
accounts for 11 participating employees. Payroll-deductions may be at the rate
of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% of Compensation with any change in
compensation during the Plan Period to result in an automatic corresponding
change in the dollar amount withheld.
No employee may be granted an Option (as defined in Section 9)
which permits his rights to purchase Common Stock under this Plan and any other
stock purchase plan of the Company and its subsidiaries, to accrue at a rate
which exceeds $25,000 of the fair market value of such Common Stock (determined
at the Offering Commencement Date of the Plan Period) for each calendar year in
which the option is outstanding at any time.
6. Deduction Changes. An employee may decrease or discontinue
his payroll deduction once during any Plan Period, by filing a new payroll
deduction authorization form. However, an employee may not increase his payroll
deduction during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
2
<PAGE>
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. Interest. Interest will not be paid on any employee
accounts, except to the extent that the Board or the Committee, in its sole
discretion, elects to credit employee accounts with interest at such per annum
rate as it may from time to time determine.
8. Withdrawal of Funds. An employee may at any time prior to
the close of business on the last business day in a Plan Period and for any
reason permanently draw out the balance accumulated in the employee's account
and thereby withdraw from participation in an Offering. Partial withdrawals are
not permitted. The employee may not begin participation again during the
remainder of the Plan Period. The employee may participate in any subsequent
Offering in accordance with terms and conditions established by the Board or the
Committee.
9. Purchase of Shares. On the Offering Commencement Date of
each Plan Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter
provided for, such number of whole shares of Common Stock of the Company
reserved for the purposes of the Plan as does not exceed the number of shares
determined by dividing 6% of such employee's annualized Compensation for the
immediately prior six-month period by the price determined in accordance with
the formula set forth in the following paragraph but using the closing price on
the Offering Commencement Date of such Plan Period.
The purchase price for each share purchased will be 85% of the
closing price of the Common Stock on (i) the first business day of such Plan
Period or (ii) the Exercise Date, whichever closing price shall be less. Such
closing price shall be (a) the closing price on any national securities exchange
on which the Common Stock is listed, (b) the closing price of the Common Stock
on the Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
The Wall Street Journal. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of clauses (a) and (b) above shall be
the reported price for the next preceding day on which sales were made.
Each employee who continues to be a participant in the Plan on
the Exercise Date shall be deemed to have exercised his option at the Option
Price on such date and shall be deemed to have purchased from the Company the
number of full shares of Common Stock reserved for the purpose of the Plan that
his accumulated payroll deductions on such date will pay for pursuant to the
formula set forth above (but not in excess of the maximum number determined in
the manner set forth above).
Any balance remaining in an employee's payroll deduction
account at the end of a Plan Period will be automatically refunded to the
employee, except that any balance which is less
3
<PAGE>
than the purchase price of one share of Common Stock will be carried forward
into the employee's payroll deduction account for the following Offering, unless
the employee elects not to participate in the following Offering under the Plan,
in which case the balance in the employee's account shall be refunded.
10. Issuance of Certificates. Certificates representing shares
of Common Stock purchased under the Plan may be issued only in the name of the
employee, in the name of the employee and another person of legal age as joint
tenants with rights of survivorship, or (in the Company's sole discretion) in
the street name of a brokerage firm, bank or other nominee holder designated by
the employee.
11. Rights on Retirement, Death or Termination of Employment.
In the event of a participating employee's termination of employment prior to
the last business day of a Plan Period, no payroll deduction shall be taken from
any pay due and owing to an employee and the balance in the employee's account
shall be paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Company may, in
its discretion, designate. If, prior to the last business day of the Plan
Period, the Designated Subsidiary by which an employee is employed shall cease
to be a subsidiary of the Company, or if the employee is transferred to a
subsidiary of the Company that is not a Designated Subsidiary, the employee
shall be deemed to have terminated employment for the purposes of this Plan.
12. Optionees Not Stockholders. Neither the granting of an
Option to an employee nor the deductions from his pay shall constitute such
employee a stockholder of the shares of Common Stock covered by an Option under
this Plan until such shares have been purchased by and issued to him.
13. Rights Not Transferable. Rights under this Plan are
not transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during the employee's lifetime
only by the employee.
14. Application of Funds. All funds received or held by
the Company under this Plan may be combined with other corporate funds and may
be used for any corporate purpose.
15. Adjustment in Case of Changes Affecting Common Stock. In
the event of a subdivision of outstanding shares of Common Stock, or the payment
of a dividend in Common Stock, the number of shares approved for this Plan, and
the share limitation set forth in Section 9, shall be increased proportionately,
and such other adjustment shall be made as may be deemed equitable by the Board
or the Committee. In the event of any other change affecting the
4
<PAGE>
Common Stock such adjustment shall be made as may be deemed equitable by the
Board or the Committee to give proper effect to such event.
16. Merger. If the Company shall at any time merge or
consolidate with another corporation and the holders of the capital stock of the
Company immediately prior to such merger or consolidation continue to hold at
least 80% by voting power of the capital stock of the surviving corporation
("Continuity of Control"), the holder of each Option then outstanding will
thereafter be entitled to receive at the next Exercise Date upon the exercise of
such Option for each share as to which such Option shall be exercised the
securities or property which a holder of one share of the Common Stock was
entitled to receive at the time of such merger, and the Committee shall take
such steps in connection with such merger as the Committee shall deem necessary
to assure that the provisions of Paragraph 15 shall thereafter be applicable, as
nearly as reasonably may be, in relation to the said securities or property as
to which such holder of such Option might thereafter be entitled to receive
thereunder.
In the event of a merger or consolidation of the Company with
or into another corporation which does not involve Continuity of Control, or of
a sale of all or substantially all of the assets of the Company while
unexercised Options remain outstanding under the Plan, (a) subject to the
provisions of clauses (b) and (c), after the effective date of such transaction,
each holder of an outstanding Option shall be entitled, upon exercise of such
Option, to receive in lieu of shares of Common Stock, shares of such stock or
other securities as the holders of shares of Common Stock received pursuant to
the terms of such transaction; or (b) all outstanding Options may be cancelled
by the Board or the Committee as of a date prior to the effective date of any
such transaction and all payroll deductions shall be paid out to the
participating employees; or (c) all outstanding options may be cancelled by the
Board or the Committee as of the effective date of any such transaction,
provided that notice of such cancellation shall be given to each holder of an
Option, and each holder of an Option shall have the right to exercise such
option in full based on payroll deductions then credited to his account as of a
date determined by the Board or the Committee, which date shall not be less than
ten (10) days preceding the effective date of such transaction.
17. Amendment of the Plan. The Board may at any time, and from
time to time, amend this Plan in any respect, except that (a) if the approval of
any such amendment by the shareholders of the Company is required by Section 423
of the Code, such amendment shall not be effected without such approval, and (b)
in no event may any amendment be made which would cause the Plan to fail to
comply with Section 423 of the Code.
18. Insufficient Shares. In the event that the total number of
shares of Common Stock specified in elections to be purchased under any offering
plus the number of shares purchased under previous Offerings under this Plan
exceeds the maximum number of shares issuable under this Plan, the Board or the
Committee will allot the shares then available on a pro rata basis.
5
<PAGE>
19. Termination of the Plan. This Plan may be terminated at
any time by the Board. Upon termination of this Plan all amounts in the
accounts of participating employees shall be promptly refunded.
20. Governmental Regulations. The Company's obligation to sell
and deliver Common Stock under this Plan is subject to listing on a national
stock exchange or quotation on the Nasdaq National Market and the approval of
all governmental authorities required in connection with the authorization,
issuance or sale of such stock.
The Plan shall be governed by Delaware law except to the
extent that such law is preempted by federal law.
The Plan is intended to constitute a "Stock Purchase Plan"
within the meaning of Rule 16b-3(b)(5) promulgated under the Securities Exchange
Act of 1934.
21. Issuance of Shares. Shares may be issued upon exercise of
an Option fromauthorized but unissued Common Stock, from shares held in the
treasury of the Company, or from any other proper source.
22. Notification upon Sale of Shares. Each employee agrees, by
entering the Plan, to promptly give the Company notice of any disposition of
shares purchased under the Plan where such disposition occurs within two years
after the date of grant of the Option pursuant to which such shares were
purchased.
23. Effective Date and Approval of Shareholders. The Plan
initially took effect upon the closing of the Company's initial public offering
of Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended, subject to approval by the shareholders of
the Company as then required by Rule 16b-3 under the Exchange Act and by Section
423 of the Code, which approval occurred within twelve months of the adoption of
the Plan by the Board. The Plan was first amended by action of the Board of
Directors on April 16, 1997 subject to approval by the shareholders of the
Company.
Originally adopted by the Board of Directors
on March 16, 1995 and approved by the
shareholders on May 17, 1995. The amended Plan
was adopted by the Board of Directors on April 16,
1997 and approved by the shareholders on May 15,
1997.
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF HEMASURE INC. FOR THE THREE MONTHS
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,522
<SECURITIES> 9,580
<RECEIVABLES> 306
<ALLOWANCES> 0
<INVENTORY> 289
<CURRENT-ASSETS> 11,876
<PP&E> 3,803
<DEPRECIATION> 1,716
<TOTAL-ASSETS> 14,027
<CURRENT-LIABILITIES> 3,368
<BONDS> 0
<COMMON> 81
0
0
<OTHER-SE> 1,350
<TOTAL-LIABILITY-AND-EQUITY> 14,027
<SALES> 1,068
<TOTAL-REVENUES> 1,068
<CGS> 1,879
<TOTAL-COSTS> 1,879
<OTHER-EXPENSES> 5,495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,634)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,634)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,634)
<EPS-PRIMARY> (0.82)
<EPS-DILUTED> 0
</TABLE>
