Form 8-K for PROTEIN POLYMER TECHNOLOGIES, INC., filed on May 1, 1998
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTION, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 1998
PROTEIN POLYMER TECHNOLOGIES, INC.
(Exact name of Registrat as specified in its charter)
Delaware 0-19724 33-0311631
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
10655 Sorrento Valley Road, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (619) 558-6064
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This Report contains ___ sequentially numbered pages. The Exhibit Index is at
page ___.
Item 5. Other Events
On April 24, 1998 Protein Polymer Technologies, Inc. (the "Company"),
(NASDAQ - PPTI) closed on a private placement with a small group of
institutional and accredited investors of initially 39,312.50 shares of the
Company's Series E Convertible Preferred Stock ("Series E Stock") and warrants
to purchase an aggregate of 2,358,750 shares of common stock. The Series E Stock
was priced at $100 per share, and the Company received approximately $3.93
million, less approximately $191,000 in estimated expenses.
Each share of Series E Stock is convertible at any time at the election of
the holder into 80 shares of common stock at a conversion price of $1.25 per
share, subject to certain antidilution adjustments. No underwriters were engaged
by the Company in connection with such issuance and, accordingly, no
underwriting discounts were paid. The offering is exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act"), and met the requirements of Rule 506 of Regulation D promulgated under
the Securities Act. The Company has agreed to register the shares of common
stock underlying the Series E Stock and the warrants with the Securities and
Exchange Commission within 90 to 120 days after the closing. The Company has
agreed to use its best efforts to nominate for election a person selected by the
holders of the Series E Stock to its Board of Directors.
Each share of Series E Stock also received two common stock warrants. One
warrant is exercisable at any time for 40 shares of common stock at an exercise
price of $2.50 per share, and expires approximately 18 months after the close of
the offering; the other warrant is exercisable at any time for 20 shares of
common stock at an exercise price of $5.00 per share, and expires approximately
36 months after the close of the offering. In addition, an 18 month warrant to
acquire 200,000 common shares exercisable at $2.50 per share and a 36 month
warrant to acquire 100,000 common shares exercisable at $5.00 per share has been
issued as a finder and document review fee paid to a lead investor.
In connection with the above private placement, the Company issued 26,420
shares of its Series F Convertible Preferred Stock in exchange for the same
number of shares of outstanding Series D Convertible Preferred Stock. The
Company's Series F Convertible Preferred Stock is equivalent to the Company's
Series E Stock with regard to liquidation preferences. All other terms of the
Company's Series F Convertible Preferred Stock remain the same as the Company's
Series D Convertible Preferred Stock.
2
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
Pursuant to the conditions imposed by Nasdaq regarding the granting of
their exception to the shareholder approval requirement in connection with the
Company's private placement of Series E Convertible Preferred Stock, the Company
is hereby providing the following unaudited pro forma condensed balance sheets
as of March 31, 1998. The unaudited pro forma condensed balance sheets give
effect to the Series E Convertible Preferred Stock private placement which
closed on April 24, 1998. The sole effect of the private placement to the
unaudited pro forma condensed statements of operations consisted of interest
income totaling $4,762; such statements have been omitted as they are considered
immaterial for the purposes of this Form 8-K.
The unaudited pro forma condensed balance sheets have been prepared by the
management of the Company based upon the unaudited financial results as of March
31, 1998, and were prepared in a manner consistent with the audited annual
financial statements as of December 31, 1997. The unaudited pro forma condensed
balance sheets should be read in conjunction with the historical financial
statements and notes thereto, and the narrative sections and notes included
herein or incorporated by reference. The pro forma unaudited condensed balance
sheets are not necessarily indicative of what the actual financial results would
have been had the transactions occurred on or before March 31, 1998, nor are
they necessarily indicative of the results to be expected for the year ended
December 31, 1998.
3
Protein Polymer Technologies, Inc.
Unaudited Pro Forma Condensed Balance Sheets
As of March 31, 1998
ACTUAL PRO FORMA PRO FORMA
(UNAUDITED) ADJUSTMENTS ACTUAL
-----------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 268,155 $3,936,012 $ 4,204,167
Other current assets 37,718 - 37,718
----------- ---------- -----------
Total current assets 305,873 3,936,012 4,241,885
Equipment and leasehold
improvements, net 701,948 - 701,948
Other assets 186,176 - 186,176
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$ 1,193,997 $3,936,012 $ 5,130,009
=========================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 545,609 $ 111,250 $ 656,859
Other current liabilities 181,453 - 181,453
Current portion capital lease
obligations 85,411 - 85,411
-----------------------------------------
Total current liabilities 812,473 111,250 923,723
Long-term portion capital lease
obligations 161,810 - 161,810
Stockholders' equity:
Convertible preferred stock,
$.01 par value 2,667,403 3,740,000 6,407,403
Common stock, $.01 par value,
10,429,094 shares issued
and outstanding 104,292 640 104,932
Additional paid-in capital 22,789,513 79,360 22,868,873
Deficit accumulated during
development stage (25,341,494) 4,762 (25,336,732)
------------------------------------------
Total stockholders' equity 219,714 3,824,762 4,044,476
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$ 1,193,997 $3,936,012 $ 5,130,009
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See accompanying notes to Pro Forma Condensed Financial Statements.
4
Protein Polymer Technologies, Inc.
Notes to Pro Forma Condensed Financial Statements
As of March 31, 1998
(Unaudited)
The unaudited pro forma condensed balance sheets reflect the impact of the
initial private placement of the Company's Series E Convertible Preferred Stock
as if it occurred on or before March 31, 1998. The pro forma adjustments as
presented are based on the transactional information that follows. Any
additional equity investments that may occur are not reflected in these
statements.
Unaudited Pro Forma Condensed Balance Sheet Adjustments
(a) Cash received consists of approximately $3.93 million in equity from
the sale of Series E Convertible Preferred Stock to a small group of
institutional and accredited individual investors, before estimated expenses of
approximately $191,000. Included in these expenses was an estimated $80,000 in
compensation paid in the form of 64,000 shares of the Company's common stock.
(b) Interest income of $4,762 was earned on the funds held in escrow until
the required Nasdaq ten day notification period to existing stockholders ended
on April 24, 1998.
(c) As a part of the transaction a holder of 27,317 shares of the Company's
Series D Convertible Preferred Stockholders exchanged 26,420 of its shares into
Series F Convertible Preferred Stock.
5
Item 7. Financial Statements and Exhibits (continued).
(c) Exhibits.
Exhibit
Number Description of Document
-------- -----------------------
99.1 Press Release of the Registrant dated April 14, 1998.
99.2 Press Release of the Registrant dated April 28, 1998.
6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PROTEIN POLYMER TECHNOLOGIES, INC.
Date: April 30, 1998 By: /s/ Aron P. Stern
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Aron P. Stern
Vice President Finance &
Administration and Chief
Financial Officer
7
INDEX TO EXHIBITS
Exhibit Page
Number Description of Document Number
--------- ----------------------- ------
99.1 Press Release of the Registrant 9 - 11
dated April 14, 1998.
99.2 Press Release of the Registrant dated 12 - 13
April 28, 1998.
8
[LETTERHEAD OF PROTEIN POLYMER]
FOR IMMEDIATE RELEASE
CONTACTS:
Aron Stern
Vice President, Finance
Gwen Como
Director, Investor Relations
(619) 558-6064
PROTEIN POLYMER REPORTS 1997 FINANCIAL RESULTS
AND TERMS OF A NEW PREFERRED STOCK OFFERING
SAN DIEGO, April 14, 1998 -- Protein Polymer Technologies, Inc. (NASDAQ-
PPTI), reports today its financial results for 1997 and for the fourth quarter
ended December 31, 1997. In addition, the Company has reached agreement with a
small group of accredited and institutional investors on the terms of a private
placement of its Series E Convertible Preferred Stock, pending the required
NASDAQ ten day notification to shareholders. PPTI expects to receive
approximately $3.3 million at the initial closing which the Company believes
will occur on or about April 24, 1998. Such securities, if issued, may not be
offered or sold in the United States absent registration with the Securities and
Exchange Commission (SEC), or through an exemption from such registration.
Each share of Series E Convertible Preferred Stock is priced at $100 per
share, and the total offering of up to 55,000 shares of Preferred Stock
provides for multiple closings between now and the middle of May. Each share can
be converted at anytime by the holder into common stock at a price of $1.25 per
share. Each share of Preferred Stock also receives two common stock warrants.
One warrant, exercisable for 18 months, allows the holder to acquire 40 shares
of PPTI common stock at a price of $2.50, and the other warrant, exercisable for
36 months, allows the holder to acquire 20 shares of common stock at a price of
$5.00 per share. The Company has agreed to use its best efforts to register the
underlying common stock with SEC within 120 days following closing.
1997 Financial Results. In 1997, PPTI had a net loss applicable to common
----------------------
shareholders of $4,887,000 ($.52 a share), versus a net loss of $3,356,000 ($.51
a share) for the comparable period a year ago. For the quarter, the Company had
a net loss applicable to common shareholders of $1,316,000 ($.13 a share),
versus a net loss of $946,000 ($.13 a share) for the comparable period a year
ago. The net loss and loss per share include accumulated and distributed
dividends related to the Company's preferred stock. As of December 31, 1997 PPTI
had cash, cash equivalents and short term investments of $1,300,000.
PROTEIN POLYMER TECHNOLOGIES, INC. Q4 AND YEAR END 1997 RESULTS
PAGE 2 OF 3
Contract revenues, interest and product income totaled $174,000 for the
fourth quarter, compared to $235,000 for the same period last year, the decrease
being due to reduced contract revenues. For the year, these revenues totaled
$723,000, compared to $756,000 for the same period last year. Operating expenses
for the quarter were $1,419,000, as compared to $1,058,000 for the same period
in 1996. Total year operating expenses totaled $5,177,000, compared to
$3,620,000 for the same period last year. The increase in both periods is due
primarily to increased research and development efforts and implementation of
the U.S. Food & Drug Administration's (FDA's) Good Laboratory Practice (GLP)
regulations.
For both the fourth quarter and year end periods, the Company continued
research and development efforts in its surgical adhesives and sealants program,
and expanded its program in hydrogel-based polymers targeted for use in
cosmetic, plastic and reconstructive, and urological soft tissue augmentation
procedures. In addition, the Company completed implementation of GLP regulations
in preparation for preclinical and clinical studies intended for FDA review.
Protein Polymer Technologies, Inc., a San Diego-based biotechnology
company, has developed a protein-based technology platform that allows the
creation of new biomaterials which target multiple applications in biomedical
markets. The different classes of biocompatible polymers developed by PPTI have
been genetically engineered to enable cell growth, promote the regeneration of
tissue, bond to synthetic surfaces and resorb into tissue at controlled rates.
Targeted applications include tissue adhesives and sealants, tissue
augmentation, wound healing, and drug delivery vehicles.
This press release may contain forward-looking statements that are based on
management's expectations. Actual results could differ materially from those
expressed here; further, the Company is not obligated to comment specifically on
those differences. Risks associated with the Company's activities include
raising adequate capital to continue operations, scientific and product
development uncertainties, competitive products and approaches, continuing
collaborative partnership interest and funding, regulatory testing and
approvals, and manufacturing scale-up. The reader is encouraged to refer to the
Company's 1997 Annual Report and 10-KSB, and recent filings with the Securities
and Exchange Commission, copies of which are available from the Company, to
further ascertain the risks associated with the above statements.
PPTI's press releases are on the internet at www.ppti.com or on PR
Newswire's Company News On Call at http://www.prnewswire.com and can be received
via Fax on Demand at (800)758-5804 extension 721876.
(Financial Data Follows)
PROTEIN POLYMER TECHNOLOGIES, INC. Q4 AND YEAR END 1997 RESULTS
PAGE 3 OF 3
PROTEIN POLYMER TECHNOLOGIES, INC.
CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
SUMMARY OF OPERATIONS
---------------------
Contract revenue $ 135,000 $ 200,000 $ 459,510 $ 610,000
Interest income 23,646 22,054 186,531 87,317
Product and other income 15,173 12,770 76,917 58,434
------------- ------------- ------------- -------------
Total revenues 173,819 234,824 722,958 755,751
Total expenses 1,419,040 1,057,502 5,176,891 3,620,183
------------- ------------- ------------- -------------
Net loss $ (1,245,221) $ (822,678) $ (4,453,933) $ (2,864,432)
Undeclared and/or paid accumulated
dividends on Preferred Stock 71,113 123,639 432,682 491,867
------------- ------------- ------------- -------------
Net loss applicable to common
shareholders $ (1,316,334) $ (946,317) $ (4,886,615) $ (3,356,299)
============= ============= ============= =============
Loss per share $ (0.13) $ (0.13) $ (0.52) $ (0.51)
============= ============= ============= =============
Weighted average shares used
in computing loss per share 10,419,613 7,215,021 9,487,165 6,638,814
============= ============= ============= =============
AS OF AS OF
DEC. 31, 1997 DEC. 31, 1996
--------------- ---------------
BALANCE SHEET INFORMATION (audited)
-------------------------
Cash, cash equivalents and
short-term investments $ 1,299,838 $ 1,260,399
Working capital 697,020 840,196
Total assets 2,347,887 1,746,581
Total capital invested 25,549,644 20,456,360
Accumulated deficit (24,083,511) (19,207,237)
* * *
FOR IMMEDIATE RELEASE
[LETTERHEAD OF PROTEIN POLYMER]
PROTEIN POLYMER ANNOUNCES $3.9 MILLION PRIVATE PLACEMENT
SAN DIEGO, April 28, 1998 -- Protein Polymer Technologies, Inc. (NASDAQ-PPTI),
said that it has raised approximately $3.9 million from a small group of
accredited and institutional investors through an initial closing of a private
placement of convertible preferred stock and warrants. The Company previously
announced agreement on the terms of the offering pending the Nasdaq-required ten
day notification of shareholders.
As previously reported, PPTI's Series E Convertible Preferred Stock was
priced at $100 per share, and 39,312 shares were sold in this closing. Each
share can be converted at any time by the holder into common stock at a price of
$1.25 per share. Each share of Preferred Stock also receives two common stock
warrants. One warrant, exercisable for 18 months, allows the holder to acquire
40 shares of PPTI common stock at a price of $2.50, and the other warrant,
exercisable for 36 months, allows the holder to acquire 20 shares of common
stock at a price of $5.00 per share. Such securities may not be offered or sold
in the United States absent registration with the Securities and Exchange
Commission (SEC), or through an exemption from such registration. The Company
has agreed to use its best efforts to register the underlying common stock with
the SEC within 120 days following closing.
Protein Polymer Technologies, Inc., a San Diego-based biotechnology company,
has developed a protein-based technology platform that allows the creation of
new biomaterials which target multiple applications in biomedical markets. The
different classes of biocompatible polymers developed by PPTI have been
genetically engineered to enable cell growth, promote the regeneration of
tissue, bond to synthetic surfaces and resorb into tissue controlled rates.
Targeted
Protein Polymer Announces $3.9 Million Private Placement
Page 2 of 2
4/28/98
applications include tissue adhesives and sealants, tissue augmentation, wound
healing, and drug delivery vehicles.
This press release may contain forward-looking statements that are based on
management's expectations. Actual results could differ materially from those
expressed here; further, the Company is not obligated to comment specifically on
those differences. Risks associated with the Company's activities include
raising adequate capital to continue operations, scientific and product
development uncertainties, competitive products and approaches, continuing
collaborative partnership interest and funding, regulatory testing and
approvals, and manufacturing scale-up. The reader is encouraged to refer to the
Company's 1997 Annual Report and 10-KSB, and recent filings with the Securities
and Exchange Commission, copies of which are available from the Company, to
further ascertain the risks associated with the above statements.
PPTI's press releases are on the internet at www.ppti.com or on PR Newswire's
Company News On Call at http://www.prnewswire.com and can be received via Fax on
Demand at (800) 758-5804 extension 721876.
