<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-25544
PDT, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 77-0222872
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7408 Hollister Avenue, Santa Barbara, California 93117
- --------------------------------------------------------------------------------
(Address of principal executive offices, including zip code)
(805) 685-9880
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(Registrant's telephone number, including area code)
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.
CLASS OUTSTANDING AT APRIL 30, 1997
----- -----------------------------
Common Stock, $.01 par value 12,435,385
<PAGE>
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
PAGE
----
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets as of March 31, 1997 and
December 31, 1996 ................................... 3
Consolidated statements of operations for the three
months ended March 31, 1997 and 1996 ................ 4
Consolidated statements of cash flows for the three
months ended March 31, 1997 and 1996 ................ 5
Notes to consolidated financial statements ............ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ................. 7
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ...................... 11
SIGNATURES ............................................ 12
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PDT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 25,916,000 $ 31,498,000
Investments in short term marketable securities .................. 20,567,000 20,600,000
Accounts receivable .............................................. 2,399,000 2,179,000
Prepaid expenses and other current assets ........................ 791,000 390,000
------------- -------------
Total current assets ................................................ 49,673,000 54,667,000
Property, plant & equipment:
Vehicles ......................................................... 28,000 28,000
Furniture and fixtures ........................................... 944,000 943,000
Equipment ........................................................ 2,589,000 2,444,000
Leasehold improvements ........................................... 1,048,000 1,072,000
Capital lease equipment .......................................... 184,000 184,000
------------- -------------
4,793,000 4,671,000
Accumulated depreciation and amortization ........................ 2,014,000 1,806,000
------------- -------------
2,779,000 2,865,000
Investment in affiliate ............................................. 1,768,000 2,000,000
Patents and other assets ............................................ 408,000 354,000
============= =============
Total assets ........................................................ $ 54,628,000 $ 59,886,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................. $ 2,217,000 $ 2,716,000
Accrued payroll and expenses ..................................... 482,000 352,000
Current portion of long term obligations ......................... 28,000 42,000
Current portion of capital lease obligations ..................... 39,000 38,000
------------- -------------
Total current liabilities ........................................... 2,766,000 3,148,000
Capital lease obligations, less current portion ..................... 9,000 21,000
Shareholders' equity:
Common stock, 50,000,000 shares authorized; 12,396,835 and
12,337,876 shares issued and outstanding at March 31, 1997 and
December 31, 1996, respectively ................................. 109,247,000 108,974,000
Deferred compensation ............................................ (1,312,000) (1,612,000)
Accumulated deficit .............................................. (56,082,000) (50,645,000)
------------- -------------
Total shareholders' equity .......................................... 51,853,000 56,717,000
============= =============
Total liabilities and shareholders' equity .......................... $ 54,628,000 $ 59,886,000
============= =============
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PDT, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
1997 1996
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<S> <C> <C>
Revenues:
Product sales ................................ $ -- $ 1,000
Grants, licensing and royalty income ......... 291,000 628,000
------------ -----------
291,000 629,000
Costs and expenses:
Cost of goods sold ........................... -- 2,000
Research and development ..................... 3,866,000 4,666,000
Selling, general and administrative .......... 2,264,000 2,838,000
Loss in investment in affiliate .............. 232,000 --
------------ -----------
Total costs and expenses ........................ 6,362,000 7,506,000
Loss from operations ............................ (6,071,000) (6,877,000)
Interest income (expense):
Interest income .............................. 636,000 83,000
Interest expense ............................. (2,000) (8,000)
------------ ------------
Total interest income (expense) ................. 634,000 75,000
Net loss ........................................ $ (5,437,000) $(6,802,000)
============= ============
Net loss per share .............................. $ (0.44) $ (0.65)
============= ============
Shares used in computing net loss per share ..... 12,371,238 10,424,420
============= ============
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
PDT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
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<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ...................................................... $ (5,437,000) $ (6,802,000)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation and amortization .............................. 212,000 96,000
Amortization of deferred compensation ...................... 282,000 3,723,000
Changes in operating assets and liabilities:
Accounts receivable ..................................... (220,000) (375,000)
Inventories ............................................. -- (10,000)
Prepaid expenses and other assets ....................... (459,000) (502,000)
Accounts payable and accrued payroll and expenses ....... (369,000) 55,000
----------- -------------
Net cash used in operating activities ......................... (5,991,000) (3,815,000)
INVESTING ACTIVITIES:
Purchases of marketable securities ............................ (17,067,000) --
Sales of marketable securities ................................ 17,100,000 --
Investment in affiliate ....................................... 232,000 --
Purchases of property, plant, and equipment ................... (122,000) (161,000)
------------ -------------
Net cash used in investing activities ......................... 143,000 (161,000)
FINANCING ACTIVITIES:
Proceeds from issuance of Common Stock, less issuance costs ... 291,000 561,000
Payments of capital lease obligations ......................... (11,000) (8,000)
Payments of long term obligations ............................. (14,000) (13,000)
------------ -------------
Net cash provided by financing activities ..................... 266,000 540,000
Net decrease in cash and cash equivalents ..................... (5,582,000) (3,436,000)
Cash and cash equivalents at beginning of period .............. 31,498,000 8,886,000
------------ -------------
Cash and cash equivalents at end of period .................... $ 25,916,000 $ 5,450,000
============= =============
SUPPLEMENTAL DISCLOSURES:
State taxes paid .............................................. $ 55,000 $ 2,000
============= =============
Interest paid ................................................. $ 3,000 $ 8,000
============= =============
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
PDT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The information contained herein has been prepared in accordance with Rule
10-01 of Regulation S-X. The information at March 31, 1997, and for the
three month periods ended March 31, 1997 and 1996, is unaudited. In the
opinion of management, the information reflects all adjustments necessary
to make the results of operations for the interim periods a fair statement
of such operations. All such adjustments are of a normal recurring nature.
Interim results are not necessarily indicative of results for a full year.
For a presentation including all disclosures required by generally
accepted accounting principles, these financial statements should be read
in conjunction with the audited consolidated financial statements for the
year ended December 31, 1996 included in the PDT, Inc. Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
2. PER SHARE DATA
Net loss per share is computed using the weighted average number of shares
outstanding during the periods, as adjusted pursuant to the rules of the
Securities and Exchange Commission for certain matters for which
adjustments would not be required to be presented under APB Opinion 15,
for the periods prior to the Company's public offerings.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto. This Quarterly Report on
Form 10-Q may be deemed to include forward looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that involve risk and uncertainty, including financial,
clinical, business environment and trend projections. Although PDT, Inc. (the
"Company") believes that its expectations are based on reasonable assumptions,
it can give no assurance that its goals will be achieved. The important factors
that could cause actual results to differ materially from those in the forward
looking statements herein include, without limitation, the early stage of
development of both the Company and its products, the timing and uncertainty of
results of both research and regulatory processes, the extensive government
regulation applicable to the Company's business, the unproven safety and
efficacy of the Company's drug and device products, the Company's significant
additional financing requirements, the uncertainty of future capital funding,
the highly competitive environment of the international pharmaceuticals and
medical device industries and the presence of a number of competitors with
significantly greater financial, technical and other resources and extensive
operating histories, the Company's potential exposure to product liability or
recall, uncertainties relating to patents and other intellectual property,
including whether the Company will obtain sufficient protection or competitive
advantage therefrom, and the Company's dependence upon a limited number of key
personnel and consultants and its significant reliance upon its collaborative
partners for achieving its goals, and other factors detailed in the Company's
report on Form 10-K for the year ended December 31, 1996.
GENERAL
Since its inception, the Company has been principally engaged in the
research and development of drugs and medical device products for use in
photodynamic therapy. The Company has been unprofitable since its founding and
has incurred a cumulative net loss of approximately $56.1 million as of March
31, 1997. The Company expects to continue to incur substantial and increasing
operating losses for the next several years due to continued and increased
spending on research and development programs, the funding of preclinical and
clinical testing and regulatory activities and the costs of manufacturing and
administrative activities.
The Company's revenues primarily reflect income earned from licensing
agreements, contracts, grants and device product sales. Product sales represent
limited sales of photodynamic therapy devices (e.g., light producing devices and
light delivery and measurement devices), sold both domestically and
internationally, to researchers and an OEM distributor. To date, the Company has
received no revenue from the sale of drug products, and the Company is not
permitted to engage in commercial sales of drugs or devices until such time, if
ever, as the Company receives requisite regulatory approvals. As a result, the
Company does not expect to record significant product sales until such approvals
are received.
Until it commercializes its product(s), the Company expects revenues to
continue to be attributed to licensing agreements, contracts, grants and device
product sales for research use. The Company anticipates that future revenues and
results of operations may continue to fluctuate significantly depending on,
among other factors, the timing and outcome of applications for regulatory
approvals, the Company's ability to successfully manufacture, market and
distribute its drug products and device products and/or the establishment of
collaborative arrangements for the manufacturing, marketing and distribution of
some of its products. The Company anticipates its operating activities will
result in substantial net losses for several more years.
The Company is conducting Phase II/III clinical trials for three
indications in the oncology area; has initiated a Phase I/II clinical trial in
ophthalmology, is preparing to initiate additional Phase I/II clinical trials in
the urology, oncology and dermatology areas; and is conducting preclinical
studies in oncology, ophthalmology, urology, dermatology, gynecology and
cardiology.
The Company has awarded stock options that vest upon the achievement of
certain milestones. Under Accounting Principles Board Opinion No. 25, such
options are accounted for as variable stock options. As such, until the
milestone is achieved (but only after it is determined to be probable), deferred
compensation is recorded in an amount equal to the difference between the fair
market value of the Common Stock on the date of determination less the option
exercise price and is adjusted from period to period to reflect changes in the
market value of the Common Stock. Deferred compensation, as it relates to a
particular milestone, is amortized over the period between when achievement of
the milestone becomes probable and when the milestone is estimated to be
achieved. Amortization of deferred compensation could result in significant
additional stock compensation expense being recorded in future periods based on
the market value of the Common Stock from period to period.
Effective June 21, 1996, the Compensation Committee of the Board of
Directors adjusted the future vesting periods of the variable stock options
covering 400,000 shares of Common Stock. These variable stock options were
adjusted to change the vesting periods to specific dates as opposed to the
original vesting periods which were based upon the achievement of milestones; no
change was made to the exercise prices of these variable stock options. This
change in the vesting periods provides for the options to be accounted for as
non-variable options and therefore alleviates the impact of deferred
compensation expense fluctuating in future periods based on the changes in the
per share market value period to period. As of March 31, 1997, options covering
227,500 shares with an exercise price of $34.75 per share have vested and
100,000 shares are expected to vest during the remainder of 1997. The remaining
unvested shares will vest in the years 1998 through 2000.
RESULTS OF OPERATIONS
The following table provides a summary of the Company's revenues for the
three months ended March 31, 1997 and 1996:
-----------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
CONSOLIDATED REVENUES 1997 1996
-----------------------------------------------------------
Product sales............. $ -- $ 1,000
Grants and contracts...... -- 256,000
Royalties................. 66,000 --
License................... 225,000 372,000
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Total revenue............. $ 291,000 $ 629,000
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REVENUES. For the three months ended March 31, 1997, revenues decreased
to $291,000 from $629,000 for the three months ended March 31, 1996. The
decrease in revenues relates primarily to a reduction in grant income which
decreased from $256,000 for the three months ended March 31, 1996 to no grant
income for the three months ended March 31, 1997. Additionally, license income
decreased to $225,000 for the three months ended March 31, 1997 compared to
$372,000 for the same period of the prior year which related to the billing for
the reimbursement of clinical costs in conjunction with the license agreement
entered into in July 1995 with Pharmacia & Upjohn, Inc. ("Pharmacia & Upjohn").
The Company anticipates recording license income for the reimbursement of
clinical costs throughout 1997 and beyond. Although, the level of such income
may fluctuate in the future depending on the amount of clinical costs incurred.
In 1996 and continuing through 1997, the Company decreased its custom device
order activities so as to direct its resources toward device production in
support of its clinical trials and drug product development, which resulted in
decreased device product sales.
COST OF GOODS SOLD. Cost of goods sold for the three months ended March 31,
1997 decreased to $0 from $2,000 for the three months ended March 31, 1996.
These amounts are reflective of the Company's decrease in custom device order
activity due to its decision to allocate its manufacturing resources to
supporting its preclinical and clinical testing. The Company expects gross
margins to be insignificant until the Company commences commercial sales of its
products.
RESEARCH AND DEVELOPMENT. The Company's research and development
expenses for the three months ended March 31, 1997 decreased to $3.9 million
from $4.7 million for the three months ended March 31, 1996. The decrease in
expense for the three months ended March 31, 1997 compared to the same period in
1996 was primarily due to a decrease in stock compensation expense associated
with variable stock options that vested upon the achievement of certain
milestones. During the quarter ended March 31, 1996, the Company recorded stock
compensation expense of $1.6 million with respect to such variable stock
options. Subsequently, in June 1996, the Compensation Committee of the Board of
Directors adjusted the future vesting periods of variable stock options that had
not already vested due to the achievement of the related milestone, to change
the vesting periods to specific dates which provided for the options to be
accounted for as non-variable options. As a result, the Company recorded stock
compensation expense of $14,000 associated with these variable stock options
during the quarter ended March 31, 1997. After adjusting for the $1.6 million of
stock compensation expense for the quarter ended March 31, 1996, research and
development expenses increased for the quarter ended March 31, 1997 compared to
the same period in 1996 primarily from increases in (i) costs associated with
the research and development of new devices, drugs and formulations, (ii) costs
associated with the purchase of raw materials and supplies for the production of
clinical devices and drug product for use in clinical trials and (iii) payroll
costs due to the growth of research and development personnel. The Company
anticipates future research and development expenses to increase as the Company
expands its research and development programs which include the increased hiring
of personnel and continued expansion of preclinical and clinical testing. See
"--General."
SELLING, GENERAL AND ADMINISTRATIVE. The Company's selling, general and
administrative expenses for the three months ended March 31, 1997 decreased to
$2.3 million from $2.8 million for the three months ended March 31, 1996. The
decrease in expense for the three months ended March 31, 1997 compared to the
same period in 1996 was primarily due to a reduction in stock compensation
expense associated with variable stock options that vested upon the achievement
of certain milestones. The Company recorded stock compensation expense of $1.6
million with respect to such options for the quarter ended March 31, 1996 and
recorded no stock compensation expense for the same period in 1997. After
adjusting for the $1.6 million of stock compensation expense for the quarter
ended March 31, 1996, selling, general and administrative expenses for the
quarter ended March 31, 1997 compared to the same period in 1996 increased due
to increases in (i) costs associated with professional services received from
public and media relations, financial and investor consultants and attorneys,
and (ii) payroll and facility costs due to the addition of administrative and
corporate personnel. The Company expects future selling, general and
administrative expenses to continue to grow as a result of the increased support
required for research and development activities, continuing corporate
development and professional services, compensation expense associated with
stock options and financial consultants and general corporate matters as well as
the other factors described above. See "--General" and "--Research and
Development."
LOSS IN INVESTMENT IN AFFILIATE. For the three months ended March 31,
1997, the Company recorded as expense $232,000 in connection with its investment
in Ramus Medical Technologies in December 1996. The amount recorded represents
the full amount of the affiliate's loss for the quarter ended March 31, 1997.
The affiliate's losses from operations are expected to be ongoing throughout
1997 and beyond, and the level of such losses are expected to fluctuate
depending on research and development activities and preclinical and clinical
trial progress.
INTEREST INCOME. For the three months ended March 31, 1997, interest
income increased to $636,000 compared to interest income of $83,000 for the
three months ended March 31, 1996. The increase in interest income resulted from
the investment of proceeds received from the Company's secondary public offering
in April 1996.
The Company does not believe that inflation has had a material impact
on its results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Since inception through March 31, 1997, the Company has accumulated a
deficit of approximately $56.1 million and expects to continue to incur
substantial and increasing operating losses for the next several years. The
Company has financed its operations primarily through private placements of
common and preferred stock, private placements of convertible notes and short
term notes, its initial public offering, Pharmacia & Upjohn's purchase of Common
Stock and a secondary public offering. As of March 31, 1997, the Company had
received proceeds from the sale of equity securities and convertible notes of
approximately $110.7 million. In addition, the Company has financed a
substantial portion of its leasehold improvements and certain equipment through
capital lease obligations, a leasehold improvement loan and a bank line of
credit. The Company has available a $1.0 million bank line of credit which has a
variable rate of interest based on the bank's lending rate (7.25% as of March
31, 1997), which expires on January 31, 1998, and is collateralized by the
Company's cash balances. The credit agreement subjects the Company to certain
customary restrictions, including a prohibition on the payment of dividends. The
Company presently has no outstanding borrowings under the bank line of credit.
In connection with the licensing agreement with Pharmacia & Upjohn, the
Company has recorded as license income the reimbursement of clinical costs of
$225,000 for the three months ended March 31, 1997. The Company anticipates
recording license income for the reimbursement of clinical costs throughout the
remainder of 1997 and beyond. Although, the level of such income may fluctuate
in the future depending on the amount of clinical costs incurred.
For the first three months of 1997, the Company required cash for
operations of approximately $6.0 million compared to $3.8 million for the same
period in 1996. The increase in cash used in operations was primarily due to an
increase in operating activities associated with the continued expansion of
preclinical and clinical testing, the increase in research and development
programs, personnel and the increase in general corporate activities. For the
first three months of 1997, the Company received net cash from its financing
activities of approximately $266,000 as compared to $540,000 for the same period
in 1996.
The Company invested a total of $122,000 in property, plant and
equipment during the first three months of 1997 compared to $161,000 during the
same period in 1996. During 1996, the Company entered into two new lease
agreements for additional facilities. The addition of these new facilities
increased the Company's equipment costs due to the expansion of its laboratories
and office space and the purchase of equipment for this new space. The Company
expects to continue to purchase significant property and equipment during 1997
and beyond as the Company expands its preclinical, clinical and research and
development activities and continues its laboratory and office construction in
its new facilities. Since inception, the Company has entered into capital lease
agreements for approximately $184,000 of equipment, consisting primarily of
laboratory equipment. The Company expects to continue to lease equipment from
time to time as needed.
The Company's capital requirements will depend on numerous factors,
including the progress and magnitude of the Company's research and development
programs and preclinical testing and clinical trials, the time involved in
obtaining regulatory approvals, the cost involved in filing and maintaining
patent claims, technological advances, competitor and market conditions, the
ability of the Company to establish and maintain collaborative arrangements, the
cost of manufacturing scale-up and the cost and effectiveness of
commercialization activities and arrangements.
The Company may require substantial funding to continue its research
and development activities, preclinical and clinical testing and manufacturing,
marketing, sales, distribution and administrative activities. The Company has
raised funds in the past through the public or private sale of securities, and
may contemplate raising funds in the future through public or private
financings, collaborative arrangements or from other sources. The success of
such efforts will depend in large part upon continuing developments in the
Company's preclinical and clinical testing. The Company continues to explore
and, as appropriate, enter into discussions with other companies regarding the
potential for equity investment, collaborative arrangements, license agreements
or development or other funding programs with the Company in exchange for
manufacturing, marketing, distribution or other rights to products developed by
the Company. However, there can be no assurance that discussions with other
companies will result in any investments, collaborative arrangements, agreements
or funding, or that the necessary additional financing through debt or equity
financing will be available to the Company on acceptable terms, if at all.
Further, there can be no assurance that any arrangements resulting from these
discussions will successfully reduce the Company's funding requirements. If
additional funding is not available to the Company when needed, the Company will
be required to scale back its research and development programs, preclinical and
clinical testing and administrative activities and the Company's business and
financial results and condition would be materially adversely affected.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See Exhibit Index on page 13.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
PDT, INC.
Date: May 14, 1997 By: /S/ JOHN M. PHILPOTT
--------------------
John M. Philpott
Chief Financial Officer and Controller
(on behalf of the Company and as
Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
INCORPORATING
EXHIBIT REFERENCE
NUMBER DESCRIPTION (IF APPLICABLE)
- ------ ----------- ---------------
<S> <C> <C>
3.1 Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant [C][3.11]
filed with the Delaware Secretary of State on July 24, 1995.
3.2 Restated Certificate of Incorporation of the Registrant filed with the Delaware Secretary [B][3.1]
of State on December 14, 1994.
3.3 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.2]
the Delaware Secretary of State on March 17, 1994.
3.4 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.3]
the Delaware Secretary of State on October 7, 1992.
3.5 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.4]
the Delaware Secretary of State on November 21, 1991.
3.6 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.5]
the Delaware Secretary of State on September 27, 1991.
3.7 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.6]
the Delaware Secretary of State on December 20, 1989.
3.8 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.7]
the Delaware Secretary of State on August 11, 1989.
3.9 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.8]
the Delaware Secretary of State on July 13, 1989.
3.10 Certificate of Incorporation of the Registrant filed with the Delaware Secretary of State [A][3.9]
on June 16, 1989.
3.11 Amended and Restated Bylaws of the Registrant. [D][3.11]
4.1 Specimen Certificate of Common Stock. [B][4.1]
4.2 Form of Convertible Promissory Note. [A][4.3]
4.3 Form of Indenture. [A][4.4]
4.4 Special Registration Rights Undertaking. [A][4.5]
4.5 Undertaking Agreement dated August 31, 1994. [A][4.6]
4.6 Letter Agreement dated March 10, 1994. [A][4.7]
4.7 Form of $10,000,000 Common Stock and Warrants Offering Investment Agreement.
[A][4.8]
10.1 Amendment No. 5 to Employment Agreement dated as of January 1, 1997 between the Registrant
and Gary S. Kledzik.*
10.2 Amendment No. 10 to Employment Agreement dated as of January 1, 1997 between the
Registrant and David E. Mai.*
10.3 Amendment No. 3 to Employment Agreement dated as of January 1, 1997 between Registrant and
Daniel R. Doiron.*
10.4 Amendment No. 2 to Employment Agreement dated as of January 1, 1997 between Registrant and
John M. Philpott.*
11.1 Statement regarding computation of net loss per share.
27.1 Financial Data Schedule.
- -------------------
[A] Incorporated by reference from the exhibit referred to in brackets contained in the Registrant's Registration
Statement on Form S-1 (File No. 33-87138).
[B] Incorporated by reference from the exhibit referred to in brackets contained in Amendment No. 2 to the
Registrant's Registration Statement on Form S-1 (File No. 33-87138).
[C] Incorporated by reference from the exhibit referred to in brackets contained in the Registrant's Form 10-Q
for the quarter ended June 30, 1995, as amended on Form 10-Q/A dated December 6, 1995 (File No. 0-25544).
[D] Incorporated by reference from the exhibit referred to in brackets contained in the Registrant's Form 10-Q
for the quarter ended September 30, 1996 (File No. 0-25544).
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 5
TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 5 TO EMPLOYMENT AGREEMENT (the "Amendment") is made and
entered into at Santa Barbara, California, on the date hereinafter set forth by
and between GARY S. KLEDZIK, PH.D. (hereinafter referred to as the "Employee")
and PDT, INC., a Delaware Corporation (hereinafter referred to as the
"Employer").
WHEREAS:
A. The Employer and the Employee are parties to an Employment Agreement
effective as of DECEMBER 31, 1989, and Amendments No. 1 through 4 thereto (the
"Employment Agreement").
B. The parties hereto wish to amend the Employment Agreement in certain
respects.
NOW, THEREFORE, in consideration of the premises, promises and
representations hereinafter contained, it is agreed as follows:
1. Effective DECEMBER 9, 1996, the expiration dates of the Options listed
on Exhibit B attached hereto are amended to be ten (10) years from the date of
grant, or upon termination of employment, which ever occurs first.
2. Effective JANUARY 1, 1997, the section entitled
EMPLOYEE COMPENSATION on Exhibit A to the Employment Agreement is hereby amended
to read as follows:
EMPLOYEE COMPENSATION
TWO HUNDRED THOUSAND DOLLARS ($200,000) PER ANNUM.
3. In all other respects, the Employment Agreement is hereby ratified,
confirmed and approved in its entirety.
SIGNATURES ON NEXT PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
this 13th day of January, 1997.
EMPLOYER:
PDT, INC.
a Delaware Corporation By:
S/ DAVID E. MAI
---------------
David E. Mai
President
EMPLOYEE:
/S/ GARY S. KLEDZIK, PH.D.
--------------------------------------
Gary S. Kledzik, Ph.D.
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 10
TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 10 TO EMPLOYMENT AGREEMENT (the "Amendment") is made and
entered into at Santa Barbara, California, on the date hereinafter set forth by
and between DAVID E. MAI (hereinafter referred to as the "Employee") and PDT,
INC., a Delaware Corporation (hereinafter referred to as the "Employer").
WHEREAS:
A. The Employer and the Employee are parties to an Employment Agreement
effective as of FEBRUARY 1, 1991, and Amendments No. 1 through 9 thereto (the
"Employment Agreement").
B. The parties hereto wish to amend the Employment Agreement in certain
respects.
NOW, THEREFORE, in consideration of the premises, promises and
representations hereinafter contained, it is agreed as follows:
1. Effective DECEMBER 9, 1996, the expiration dates of the Options listed
on Exhibit B attached hereto are amended to be ten (10) years from the date of
grant, or upon termination of employment, which ever occurs first.
2. Effective JANUARY 1, 1997, the section entitled EMPLOYEE COMPENSATION on
Exhibit A to the Employment Agreement is hereby amended to read as follows:
EMPLOYEE COMPENSATION
ONE HUNDRED SEVENTY EIGHT THOUSAND TWO HUNDRED DOLLARS ($178,200) PER
ANNUM.
3. In all other respects, the Employment Agreement is hereby ratified,
confirmed and approved in its entirety.
SIGNATURES ON NEXT PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on this
13th day of January, 1997.
EMPLOYER:
PDT, INC.
a Delaware Corporation
By: /S/ GARY S. KLEDZIK, PH.D.
-------------------------------
Gary S. Kledzik, Ph.D.
C.E.O. and Chairman
EMPLOYEE:
/S/ DAVID E. MAI
----------------
David E. Mai
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 3
TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT (the "Amendment") is made and
entered into at Santa Barbara, California, on the date hereinafter set forth by
and between DANIEL R. DOIRON, PH.D. (hereinafter referred to as the "Employee")
and PDT SYSTEMS, INC., a California Corporation (hereinafter referred to as the
"Employer").
WHEREAS:
A. The Employer and the Employee are parties to an Employment Agreement
effective as of AUGUST 1, 1992, and Amendments No. 1 and 2 thereto (the
"Employment Agreement").
B. The parties hereto wish to amend the Employment Agreement in certain
respects.
NOW, THEREFORE, in consideration of the premises, promises and
representations hereinafter contained, it is agreed as follows:
1. Effective DECEMBER 9, 1996, the expiration dates of the Options listed
on Exhibit B attached hereto are amended to be ten (10) years from the date of
grant, or upon termination of employment, which ever occurs first.
2. Effective JANUARY 1, 1997, the section entitled EMPLOYEE COMPENSATION on
Exhibit A to the Employment Agreement is hereby amended to read as follows:
EMPLOYEE COMPENSATION
ONE HUNDRED FIFTY EIGHT THOUSAND FOUR HUNDRED DOLLARS ($158,400) PER ANNUM.
3. In all other respects, the Employment Agreement is hereby ratified,
confirmed and approved in its entirety.
SIGNATURES ON NEXT PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on this
10th day of January, 1997.
EMPLOYER:
PDT SYSTEMS, INC.
a California Corporation
By: /S/ GARY S. KLEDZIK, PH.D.
------------------------------
Gary S. Kledzik, Ph.D.
Chairman
EMPLOYEE:
/S/ DANIEL R. DOIRON, PH.D.
---------------------------
Daniel R. Doiron, Ph.D.
<PAGE>
EXHIBIT 10.4
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (the "Amendment") is made
and entered into at Santa Barbara, California, on the date hereinafter set forth
by and between JOHN M. PHILPOTT (hereinafter referred to as the "Employee") and
PDT, INC., a Delaware Corporation (hereinafter referred to as the "Employer").
WHEREAS:
A. The Employer and the Employee are parties to an Employment Agreement
effective as of MARCH 20, 1995, and Amendment No. 1 thereto (the "Employment
Agreement").
B. The parties hereto wish to amend the Employment Agreement in certain
respects.
NOW, THEREFORE, in consideration of the premises, promises and
representations hereinafter contained, it is agreed as follows:
1. Effective DECEMBER 9, 1996, the expiration dates of the Options listed
on Exhibit B attached hereto are amended to be ten (10) years from the date of
grant, or upon termination of employment, which ever occurs first.
2. Effective JANUARY 1, 1997, the section entitled EMPLOYEE COMPENSATION on
Exhibit A to the Employment Agreement is hereby amended to read as follows:
EMPLOYEE COMPENSATION
ONE HUNDRED EIGHT THOUSAND ONE HUNDRED TWENTY DOLLARS ($108,120) PER ANNUM.
3. In all other respects, the Employment Agreement is hereby ratified,
confirmed and approved in its entirety.
SIGNATUARES ON NEXT PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
this 10th day of January, 1997.
EMPLOYER:
PDT, INC.
a Delaware Corporation
By: /S/ GARY S. KLEDZIK, PH.D.
------------------------------
Gary S. Kledzik, Ph.D.
C.E.O. and Chairman
EMPLOYEE:
/S/ JOHN M. PHILPOTT
--------------------
John M. Philpott
<PAGE>
EXHIBIT 11.1
PDT, INC.
COMPUTATION OF NET LOSS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31,
1997 1996
-------------- -------------
<S> <C> <C>
PRIMARY
Net loss .......................................... $ (5,437,000) $ (6,771,000)
============== =============
Weighted average common shares outstanding ........ 12,371,238 10,424,420
============== =============
Net loss per share ................................ $ (0.44) $ (0.65)
============== =============
FULLY DILUTED
Net loss .......................................... $ (5,437,000) $ (6,771,000)
============== =============
Weighted average common shares outstanding ........ 12,371,238 10,424,420
============== =============
Net loss per share ................................ $ (0.44) $ (0.65)
============== =============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND IN
THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDING MARCH 31, 1997 , AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Mar-31-1997
<CASH> 25,916
<SECURITIES> 20,567
<RECEIVABLES> 2,399
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 49,673
<PP&E> 4,793
<DEPRECIATION> (2,014)
<TOTAL-ASSETS> 54,628
<CURRENT-LIABILITIES> 2,766
<BONDS> 9
0
0
<COMMON> 109,247
<OTHER-SE> (57,394)
<TOTAL-LIABILITY-AND-EQUITY> 54,628
<SALES> 0
<TOTAL-REVENUES> 291
<CGS> 3,866
<TOTAL-COSTS> 6,362
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (5,437)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,437)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,437)
<EPS-PRIMARY> (0.44)
<EPS-DILUTED> (0.44)
</TABLE>
