<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File
March 29, 1997 number 0-21667
PHOTOELECTRON CORPORATION
- - --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
MASSACHUSETTS 04-3035323
- - --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5 FORBES ROAD, LEXINGTON, MASSACHUSETTS 02173
- - --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip code)
(617) 861-2069
- - --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
____________________
Check Whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
------- ------
____________________
6,863,160 shares of Common Stock, $.01 par value, were outstanding as of May 12,
1997.
<PAGE>
PHOTOELECTRON CORPORATION
- - --------------------------------------------------------------------------------
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 29, 1997
TABLE OF CONTENTS
- - --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION Page
Item 1 Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS AT MARCH 29,
1997 AND DECEMBER 28, 1996
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE THREE MONTHS ENDED MARCH 29, 1997 AND
MARCH 30, 1996
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE THREE MONTHS ENDED MARCH 29, 1997 AND
MARCH 30, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
-----------------
Item 6 Exhibits and Reports on Form 8-K
- - --------------------------------------------------------------------------------
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<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
PHOTOELECTRON CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 29, 1997
(Unaudited) December 28, 1996
-------------- ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................................. $ 18,490,465 $ 2,537,023
Inventories............................................................ 223,865 323,714
Prepaid Expenses....................................................... 427,941 992,412
Other current assets................................................... 226,625 28,871
-------------- ------------
Total current assets.............................................. 19,368,896 3,882,020
PROPERTY AND EQUIPMENT:
Computer equipment..................................................... 410,520 311,295
Lab and production equipment........................................... 459,308 438,025
Clinical site equipment................................................ 651,579 656,395
Furniture and fixtures................................................. 108,846 97,164
Leasehold improvements................................................. 713,910 630,273
-------------- ------------
2,344,164 2,133,152
Less-Accumulated depreciation and amortization......................... 1,031,100 898,127
-------------- ------------
1,313,064 1,235,025
-------------- ------------
Total assets...................................................... $ 20,681,960 $ 5,117,045
============== ============
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable....................................................... $ 148,598 $ 307,795
Accrued expenses....................................................... 125,882 247,880
Accrued payroll and benefits........................................... 63,776 32,204
Current portion of convertible subordinated notes...................... 460,230 454,230
-------------- ------------
Total current liabilities......................................... 798,486 1,042,109
-------------- ------------
LONG-TERM DEBT:
Convertible subordinated notes and other advances, net of current
portion............................................................... 1,613,247 1,589,147
-------------- ------------
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value-
Authorized - 7,500,000 shares
Issued and outstanding - none and 2,892,312 at March 29, 1997 and
December 28, 1996, respectively........................................
--- 28,923
Common Stock, $0.01 par value -
Authorized - 15,000,000 shares
Issued and outstanding - 6,863,160 and 1,597,910 at March 29, 1997
and December 28, 1996, respectively.................................... 68,632 15,979
Capital in excess of par value - common stock.............................. 36,710,527 2,679,724
Capital in excess of par value - preferred stock........................... --- 17,202,463
Subscription receivable.................................................... (44,082) (57,931)
Deficit accumulated during development stage.............................. (18,464,849) (17,383,369)
-------------- ------------
Total shareholders'equity......................................... 18,270,228 2,485,789
-------------- ------------
Total liabilities and shareholders' equity........................ $ 20,681,960 $ 5,117,045
============== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
PHOTOELECTRON CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
March 29, March 30,
1997 1996
------------ -----------
<S> <C> <C>
(Unaudited)
Revenues $ 362,849 --
Cost of Goods Sold 182,898 --
Gross Margin 179,951 --
Operating Expenses
Research and development expenses.................................. 973,393 717,393
General and administrative expenses................................ 419,903 241,357
------------ -----------
Total operating expenses...................................... 1,393,296 958,750
------------ -----------
Operating loss................................................ (1,393,296) (958,750)
------------ -----------
Interest income........................................................ 161,966 28,744
Interest expense....................................................... (30,100) (30,100)
------------ -----------
Interest (expense) income, net......................................... 131,866 (1,356)
------------ -----------
Net loss............................................................... $(1,081,480) (960,106)
============ ===========
Net loss per common and common equivalent share........................ $ (0.22) $ (0.59)
============ ===========
Weighted average common and common equivalent shares outstanding....... 4,947,741 1,616,660
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
PHOTOELECTRON CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 29, March 30,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................................... $ (1,081,480) $ (960,106)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation and amortization............................................... 132,973 100,307
Noncash interest converted to subordinated notes............................ 30,100 30,100
Changes in current accounts -
Inventories................................................................. 99,849 15,695
Prepaid expenses............................................................ 91,465 3,295
Other current assets........................................................ (197,754) 32,400
Accounts payable............................................................ (159,197) (92,236)
Accrued expenses............................................................ (90,427) (7,740)
------------ ------------
Net cash used in operating activities....................................... (1,174,471) (878,285)
------------ ------------
Cash flows from investing activities:
Purchases of equipment and leasehold improvements........................... (211,013) (124,706)
Net cash used in investing activities....................................... (211,013) (124,706)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock...................................... 17,338,926 --
Net cash provided by financing activities................................... 17,338,926 --
------------ ------------
Increase (decrease) in cash and cash equivalents............................... 15,953,442 (1,002,991)
------------ ------------
Cash and cash equivalents, beginning of period.................................. 2,537,023 7,191,268
------------ ------------
Cash and cash equivalents, end of period........................................ $18,490,465 $ 6,188,277
============ ============
Cash flows from noncash financing activities:
Conversion of preferred stock to common stock............................... $ 17,231,386
============
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
PHOTOELECTRON CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED RESULTS - The interim unaudited consolidated financial statements
contained herein have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
management's opinion, the unaudited information includes all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
of the financial position, results of operations, and cash flows for the
periods presented. The results of operations for the interim periods shown
on this report are not necessarily indicative of the results expected for the
full year. The interim financial statements should be read in conjunction
with the financial statements and notes for the year ended December 28, 1996
included in the Company's Form 10K filing with the Securities and Exchange
Commission.
2. INITIAL PUBLIC OFFERING - During January and February of 1997, the Company
completed its initial public offering of 2,275,000 shares of Common Stock,
including an exercise of the overallotment option. The total proceeds
received by the Company were approximately $17,087,000, after deducting
underwriting discounts and commissions and other expenses.
3. LOSS PER SHARE - Weighted average common and common equivalent shares
outstanding include the weighted average common shares outstanding for the
period and for all periods include the effect of the assumed conversion of
Series C Preferred Stock issued within one year prior to the Company's
initial public offering.
4. NEW ACCOUNTING PRONOUNCEMENT - In March of 1997, the Financial Accounting
Standards Board issued SFAS 128, "Earnings per Share." SFAS 128 requires the
replacement of primary loss per share with basic loss per share, but
continues the requirement to present diluted loss per share. It is effective
for fiscal years ending after December 15, 1997. The Company does not expect
it to have a material effect on previously reported loss per share amounts,
as the only common equivalent shares included in the determination of those
amounts are those included pursuant to certain Securities and Exchange
Commission requirements which remain unchanged.
5. REVENUE RECOGNITION - The Company recognizes revenue upon shipment of its
products or acceptance by the customer, as appropriate. The Company provides
a reserve for its estimate of warranty costs at the time of revenue
recognition.
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<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
Certain statements contained in this Quarterly Report on Form 10-Q,
including, without limitation, statements containing the words "expects,"
"anticipates," "believes" and words of similar import, constitute "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward looking statements are subject to various
risks and uncertainties, including those referred to in the Company's
Registration Statement on Form S-1 (Reg. No. 333-14541) and in the Company's
Form 10-K for the fiscal year ending December 28, 1996, that could cause actual
future results and events to differ materially from those currently anticipated.
Readers are cautioned not to place undue reliance on these forward looking
statements.
The Company is engaged in the design, development and commercialization of
the Photon Radiosurgery System ("PRS"), a proprietary, therapeutic device for
the treatment of cancerous tumors through the application of radiation directly
into a tumor. The Company does not anticipate receiving any significant revenue
from the sale of its products at least until the middle of 1998. The Company has
an accumulated deficit totaling approximately $18.5 million since its inception
and expects to continue to incur losses until such time as its commercialization
efforts yield offsetting revenues. The Company anticipates that its research and
development, general and administrative and manufacturing expenses will
significantly increase during 1997 as it pursues the commercialization of the
PRS.
Before medical devices such as the PRS can be marketed in the U.S.,
approval by the U.S. Food and Drug Administration ("FDA") is required. Phase II
clinical trials for the treatment of metastatic brain tumors are currently being
performed. Based on the results obtained in these ongoing Phase II trials, on
December 11, 1996 the Company submitted a Section 510(k) application to the FDA
seeking clearance to commercialize the current model of the PRS for treatment of
metastatic brain tumors. If the Company receives such Section 510(k) clearance,
the Company will request the FDA to extend such clearance to the version of the
PRS now under development (the "PRS 400 Model"), which the Company expects will
be the first version of the PRS to be made commercially available. Locally
approved clinical trials for the treatment of brain tumors are also being
performed at sites in Europe and Japan. The Company currently anticipates that
clinical trials to determine the safety of the PRS for treatment of breast
cancer will begin in the United Kingdom in 1997. Based upon those trials, the
Company will submit an application to the FDA to begin human clinical trials in
the U.S. The possibility of treating topical tumors of the skin and mouth with
the PRS is also being explored. A program has begun at a U.S. hospital which the
Company expects to lead to human clinical trials with the PRS in treating
Kaposi's sarcomas and other skin malignancies. Upon obtaining all necessary
regulatory approvals, the Company intends to begin commercial sales of the PRS.
The Company will consider the use of the PRS for other potential applications on
an ongoing
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<PAGE>
basis. In order to support such commercialization, the Company will experience
significant working capital and other financing needs.
If all regulatory clearances are obtained, the Company intends to market
and distribute its products through a combination of collaborative relationships
and in-house sales and marketing resources. The Company has developed and will
continue to develop strategic alliances with companies that have established
distribution channels in domestic and international markets. As part of the
manufacturing process, the Company intends to sub-contract the fabrication of
most of its electrical and mechanical components. The Company is actively
pursuing full functional compliance with ISO 9001 and the FDA's GMP standards
that govern quality assurance, personnel training, process control, customer
service, design control, supply management and facility and equipment
maintenance.
On February 4, 1997, the Company completed an initial public offering of
2,000,000 shares of its Common Stock at a price of $8.50 per share. Pursuant to
an option to purchase additional shares of Common Stock to cover over-
allotments, Needham & Company, Inc. and Dain Bosworth Incorporated (the
"Representatives") purchased an additional 275,000 shares of Common Stock on
March 4, 1997. The net proceeds of the offering will be used to (i) increase
the Company's research of cancer treatment applications; (ii) continue to expand
clinical trials for the PRS; (iii) obtain regulatory approvals for the PRS; (iv)
enhance manufacturing and marketing capabilities and (v) provide working
capital, as well as for general corporate purposes.
RESULTS OF OPERATIONS
The Company recorded the sale of one PRS in the three months ended March
29, 1997 to Toshiba Medical Company ("Toshiba") for use in Japanese clinical
trials. The Company and Toshiba have entered into agreements relating to
clinical trials in Japan, and to future product distribution arrangements in
that country. The Company recorded revenues in the amount of $362,849 with cost
of goods sold of $182, 898. The gross margin on these sales was $179,951.
Research and development expenses increased by $236,000 from $717,393 in
the first three months of 1996 to $953,393 in the first three months of 1997.
This change reflects significant increases in activity in the Company's clinical
trial efforts, responding to FDA queries regarding the pending 510(k)
application, and breast research and development program. The principal costs
in research and development were the continuing progress to complete the
engineering development of the PRS 400 Model. Other factors contributing to the
increase in research and development expenses were discussions with physicians
in the United Kingdom to formulate the breast research and trial protocol, and
developing accessory equipment for the trials.
General and administrative expenses increased by $178,546 from $241,357 in
the first three months of 1996 to $419,903 in the first six months of 1997. The
increase
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<PAGE>
reported is attributable to a growth in personnel from 25 to 32 employees and
related costs. Additional increases are a function of legal and professional
fees associated with the Company becoming a trading member of NASDAQ.
Interest income increased by $133,222 from $28,744 in the first three
months of 1996 to $161,966 in the first three months of 1997. The increase
resulted from the investment of the proceeds of the Company's initial public
offering.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the Company's initial public offering, the Company financed its
operations through the issuance of convertible debt and Preferred and Common
Stock in a series of private placements totaling approximately $20.8 million.
On February 4, 1997, the Company completed an initial public offering of
2,000,000 shares of Common Stock at a price of $8.50 per share. Pursuant to an
option to purchase additional shares of Common Stock, the Representatives
purchased an additional 275,000 shares of Common Stock on March 4, 1997. See "-
- - --Overview". As a result of the initial public offering, the Company received
net proceeds of approximately $17.1 million after deducting underwriting
discounts and commissions and other expenses.
Consolidated working capital was $18.6 million at March 29, 1997, compared
with $2.8 million at December 28, 1996. Included in working capital are cash
and cash equivalents of $18.5 million at March 29, 1997, compared with $2.5
million at December 28, 1996. The increase in working capital and cash is a
result of the initial public offering of the Company's Common Stock. During the
three months ended March 29, 1997, $0.9 million of cash was used for operating
activities.
The Company used $211,012 of cash in the three months ended March 29, 1997
for fixed assets and leasehold improvements.
The Company maintains medical product liability insurance policies with
respect to its clinical trials which the Company believes contain reasonable
deductibles and other ordinary and customary provisions. The Company believes
that these policies cover such risks in such amounts as are reasonable and
prudent under the circumstances, and the Company does not anticipate that claims
under these policies, if any, will have a material adverse impact on the
Company's liquidity or capital resources. Prior to commercial sale of its
products, the Company will be required to obtain product liability insurance
covering the commercial use of its products.
The Company is currently involved in settlement discussion with a physician
and his employer. The Company understands that such physician believes that he
made certain contributions concerning use of the PRS to treat bladder cancer,
and that such physician believes that he is entitled to compensation for those
claimed contributions. The Company understands that such physician's employer
believes that it is entitled to a percentage interest in any amounts paid to
such physician. The position of the
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<PAGE>
Company's management is that the Company is not using any proprietary
information of such physician in any device currently under development or being
sold by it. No formal legal proceedings were initiated and the Company believes
it has reached an agreement in principle with the parties as to settlement of
the matter. The Company's management also believes that the outcome of this
matter will not have a material effect on the Company's financial position or
results of operations.
The Company's capital requirements may change depending upon the progress
of the Company's research and development activities, progress of the clinical
trials, progress on new applications for treatment with the PRS and costs
involved with procuring and defending patents.
The Company's business plan calls for various applications of the PRS,
including the treatment of metastatic brain tumors, primary brain tumors, and
tumors in the breast, prostate, bladder and skin. The Company expects that the
capital requirements to complete the commercialization of the PRS to treat
metastatic brain tumors will require approximately $6.5 million from the net
proceeds of the Company's initial public offering. Such proceeds are needed to
complete the Section 510(k) clearance, ISO 9001 approval, purchase of capital
equipment for assembly and manufacturing of components for the PRS and to
support a sales and marketing structure. At this point, the Company is not able
to estimate the capital requirements of commercializing all applications of the
PRS.
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
Copies of the following Exhibits are furnished with this report.
Additional Exhibits are incorporated herein by reference as reflected in the
Exhibit Index.
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<S> <C>
11.1 Computation of net loss per share.
27. Financial Data Schedule.
</TABLE>
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<PAGE>
(B) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
PHOTOELECTRON CORPORATION
/s/ Peter E. Oettinger
By:______________________________
Peter E. Oettinger
Vice President, Chief Operating
Officer
/s/ Gerald J. Bojas
By:______________________________
Gerald J. Bojas
Chief Financial Officer
Dated: May 12, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE EXHIBIT NO. DESCRIPTION
- - ---- ----------- ------------
<S> <C> <C>
*3.1 Articles of Organization of the Company, as amended.
*3.2 Forms of Articles of Amendment of the Company.
*3.3 By-Laws of the Company, as amended.
*4.1 Specimen Certificate representing the Company's Common Stock.
*4.2 Subordinated Convertible Note Purchase Agreement among the Company,
Thermo Electron Corporation and Photoelectron Investments Corporation
of Liberia dated as of May 22, 1990, and Exhibits thereto.
*4.3 Amendment and Waiver of Subordinated Convertible Note Purchase Agreement
among the Company, Thermo Electron Corporation and Photoelectron
Investments Corporation of Liberia dated as of August 1, 1996, and
Exhibits thereto.
*4.4 Amended and Restated 8% Subordinated Note Due 1997 from the Company to
Thermo Electron Corporation in the principal amount
of $125,000 dated as of August 1, 1996.
*4.5 Amended and Restated 8% Subordinated Note Due 1997 from the Company to
Peter M. Nomikos in the principal amount of $175,000 dated as of August
1, 1996.
*4.6 Amended and Restated Convertible Note Purchase Agreement originally dated
as of July 11, 1991, among the Company, PYC Corporation (formerly
known as Photoelectron Investments Corporation of Liberia) and Peter M.
Nomikos, and Exhibits thereto.
*4.7 8% Subordinated Convertible Note Due 1998 from the Company to Peter M.
Nomikos in the principal amount of $500,000 dated as of August 8, 1996.
*4.8 Convertible Note and Warrant Purchase Agreement between the Company and
Peter M. Nomikos dated as of May 13, 1992, and Exhibits thereto.
*4.9 Amendment and Waiver of Convertible Note and Warrant Purchase Agreement
dated as of May 13, 1992 between the Company and Peter M. Nomikos, dated
as of August 1, 1996 and Exhibits thereto.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
*4.10 Amended and Restated 8% Subordinated Convertible Note Due on Demand
from the Company to Peter M. Nomikos in the principal amount of $705,000
dated as of August 1, 1996.
*10.1 Lease Agreement dated June 12, 1996 between Lexington Development
Company Trust and the Company.
*10.2 Cash or Deferred Profit Sharing Plan and Trust dated April 1, 1995,
as amended, of the Company.
*10.3 Employee Stock Purchase Plan of the Company and form of Subscription
Agreement.
*10.4 1989 Employee Stock Option Plan of the Company and forms of Stock Option
Agreements.
*10.5 1996 Equity Incentive Plan of the Company.
*10.6 Form of Stock Purchase Warrant issued to certain security holders of the
Company and Schedule of Substantially Identical Documents from Exhibits.
*10.7 Stock Option Agreements variously dated between certain directors and
officers of the Company and the Company.
*10.8 Form of Subscription Agreement between the Company and purchasers of
Series B Preferred Stock.
*10.9 Form of Subscription Agreement between the Company and purchasers of
Series C Preferred Stock.
*10.10 Series B Subscription Agreement dated 1994 between the Company and Thermo
Electron Corporation.
*10.11 Series C Subscription Agreement dated December 16, 1995 between the Company
and Toshiba Medical Systems Co., Ltd.
*10.12 Form of Registration Rights Agreement between the Company
and holders of Series C Preferred Stock.
*10.13 Registration Rights Agreement dated December 22, 1995 between the
Company and Toshiba Medical Systems Co., Ltd.
*10.14 Technology Cross License Agreement dated as of January 4, 1989 between
the Company and Thermo Electron Corporation.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
*10.15 International Distributor Sales and Service Agreement dated December 13,
1995, as amended, between the Company and Toshiba Medical Systems Co., Ltd.
*10.16 Agreement dated as of February 1, 1991, as amended, between the Company
and the General Hospital Corporation.
*10.17 Clinical Trial Agreement dated as of August 1, 1992, as amended, between
the General Hospital Corporation, Nicholas T. Zervas, M.D. and the
Company.
*10.18 Investigational Treatment Agreement dated as of September 1, 1994 between
the General Hospital Corporation, Rees G. Cosgrove, M.D. and the Company.
*10.19 Clinical Research Agreement dated as of April 1, 1995, as amended, between
the Brigham and Women's Hospital Corporation, Peter Black, M.D. and
the Company.
*10.20 Clinical Trial Agreement dated as of January 1, 1995 between the Tokyo
Women's Medical College, Kintomo Takakura, M.D. and the Company.
*10.21 Clinical Trial Agreement dated December 13, 1995, as amended, between the
Company and Toshiba Medical Systems Co., Ltd.
*10.22 Clinical Research Agreement dated as of November 1, 1995 between The Royal
Free Hampstead (NHS), Felix Senanayake, M.D. and the Company.
*10.23 Form of Lock-Up Letter with certain security holders of the Company.
*10.24 Forms of Medical Advisory Board Agreements between the Company and
members of its Medical Advisory Board.
11.1 Computation of net loss per share.
*21.1 Subsidiaries of the Company.
*24.1 Power of Attorney (included in signature page to this Form 10-K).
27. Financial Data Schedule.
</TABLE>
_______________
*Filed as same numbered exhibit to the Company's Registration Statement on Form
S-1 (Reg. No. 333-14541) and incorporated herein by reference.
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<PAGE>
Exhibit 11.1
Photoelectron Corporation and Subsidiary
(a Development Stage Company)
Statement of Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended:
30-Mar -96 29-Mar-97
<S> <C> <C>
Computation of Primary
Net Loss Per Share: ($960,106) ($1,081,480)
Net Loss
Shares:
Weighted average shares outstanding 1,583,554 4,937,074
Shares issuable from the assumed
conversion of Series C Preferred Stock
issued within one year of the Company's
initial public offering 33,106 10,667
Weighted average common and common _________ _________
equivalent shares outstanding: 1,616,660 4,947,741
Primary Net Loss Per Share: ($0.59) ($0.22)
Computation of Fully Diluted
Net Loss Per Share: ($960,106) ($1,081,480)
Net Loss
Shares:
Weighted average shares outstanding 1,583,554 4,937,074
Shares issuable from the assumed
conversion of Series C Preferred Stock
issued within one year of the Company's
initial public offering 33,106 10,667
Weighted average common and common _________ _________
equivalent shares outstanding: 1,616,660 4,947,741
Fully Diluted Net Loss Per Share: ($0.59) ($0.22)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
PHOTOELECTRON'S QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
<CASH> 18,490,465
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 223,865
<CURRENT-ASSETS> 19,368,896
<PP&E> 2,344,164
<DEPRECIATION> 1,031,100
<TOTAL-ASSETS> 20,681,960
<CURRENT-LIABILITIES> 798,486
<BONDS> 1,613,247
0
0
<COMMON> 68,632
<OTHER-SE> 18,201,596
<TOTAL-LIABILITY-AND-EQUITY> 20,681,960
<SALES> 362,849
<TOTAL-REVENUES> 362,849
<CGS> 182,898
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 717,393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,100
<INCOME-PRETAX> (1,081,480)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,081,480)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,081,480)
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