-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O3/U3LZaOX1KkbuBgwy+YES66SetGsE/qFv9xdIhonvaSqzPxwk9hRdU2yGdl2pM eYxeyibAGU1+80XSUFB1RA== 0000891618-99-002942.txt : 19990630 0000891618-99-002942.hdr.sgml : 19990630 ACCESSION NUMBER: 0000891618-99-002942 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990503 ITEM INFORMATION: FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GERON CORPORATION CENTRAL INDEX KEY: 0000886744 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 752287752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-20859 FILM NUMBER: 99655692 BUSINESS ADDRESS: STREET 1: 230 CONSTITUTION DRIVE CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6504737700 MAIL ADDRESS: STREET 1: 200 CONSTITUTION DRIVE CITY: MENLO PARK STATE: CA ZIP: 94025 8-K/A 1 FORM 8-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 3, 1999 GERON CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-20859 75-2287752 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 230 Constitution Drive, Menlo Park, CA 94025 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (650) 473-7700 -------------------------- N/A - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 1 2 The Registrant hereby amends the following item of its Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 1999 and as amended on May 21, 1999. The Registrant is amending Item 7 to include additional disclosure from Arthur Andersen with respect to the Auditing Standards issued by the Auditing Practices Board in the United Kingdom. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Business Acquired. Audited financial statements of Roslin for the period from October 1, 1997 (date of incorporation) until February 28, 1999 are attached below and filed with this report. Also attached and filed with this report is a report of the directors of Roslin for the period from incorporation until February 28, 1999, and an auditors' report from Arthur Andersen. Directors Report The directors present their report on the affairs of the company, together with the accounts and auditors' report, for the period from incorporation to 28 February 1999. Business review The company was incorporated on 1 October 1997 and commenced trading on 7 April 1998. The company's purpose is to develop and exploit nuclear-transfer and molecular targeting technology to develop farm-animals and human-cells as a source of bio-medical products including but not limited to, organs, cells and tissues for human transplantation, blood and blood fractions and antibodies. Results and dividends
L 000s Loss for the financial period 2,351 ------- Retained loss at 28 February 1999 2,351 =======
The directors do not recommend payment of a dividend. Directors and their interests The directors who served during the period, together with their interests in the share capital of the company, are as shown below:
Number of ordinary shares of L 1 each -------------------------- Ian Biggs (appointed 11/1/99) -- Simon Best (appointed 1/6/98) 10,000 Dr John Brown (appointed 11/5/98) 2,000 Professor Grahame Bulfield (appointed 7/4/98) -- Professor Anthony Clark (appointed 7/4/98, resigned 1/6/98) 8,000 Ian Kent (appointed 11/5/98) 4,000 Professor Ian Wilmut (appointed 7/4/98) 12,000 Kenneth McCracken (appointed 1/10/97, resigned 7/4/98) --
Details of directors share options are disclosed in note 11. 2 3 Directors' responsibilities Company law requires directors to prepare accounts for each financial year which give a true and fair view of the state of affairs of the company and of its profit or loss for that period. In preparing those accounts, the directors are required to: - - select suitable accounting policies and then apply them consistently; - - make judgements and estimates that are reasonable and prudent; - - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts; and - - prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the accounts comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Year 2000 compliance The directors have performed an assessment of the potential impact of the Year 2000, including obtaining assurances from key suppliers. The directors believe that the company is Year 2000 compliant. By order of the Board, Roslin Institute (Edinburgh) Roslin Midlothian EH25 9PS /s/ Ian Biggs Ian Biggs Director 15 April 1999 3 4 Auditors' report To the Directors of Roslin Bio-Med Limited: We have audited the accounts on pages 4 to 16 which have been prepared under the historical cost convention and the accounting policies set out in note 1. Respective responsibilities of directors and auditors As discussed on page 2 the accounts are the responsibility of the directors. It is our responsibility to form an independent opinion, based on our audit, on those accounts and to report our opinion to you. Basis of opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts and of whether the accounting policies are appropriate to the circumstances of the company, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts. Opinion In our opinion the accounts give a true and fair view of the state of affairs of the company at 28 February 1999 and of its loss and cash flows for the period then ended and have been properly prepared in accordance with the provisions of the Companies Act 1985. Arthur Andersen Chartered Accountants and Registered Auditors /s/ Arthur Andersen 18 Charlotte Square Edinburgh EH2 4DF 15 April 1999 4 5 Profit and loss account For the period ended 28 February 1999
Notes 1999 17 months L 000s TURNOVER 4 Cost of sales -- ------ GROSS PROFIT 4 Net operating expenses 2 (2,434) ------ OPERATING LOSS (2,430) Interest income 3 79 ------ LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 4 (2,351) Tax on loss on ordinary activities 6 - ------ RETAINED LOSS FOR THE FINANCIAL PERIOD 12 (2,351) ======
A statement of movements on reserves is given in note 12. The current period results have been derived wholly from continuing operations. The loss for the period equates to the historical cost loss for the period. There are no recognised gains or losses in the period other than the loss for the period. The accompanying notes are an integral part of this profit and loss account. 5 6 Balance sheet 28 February 1999
Notes 1999 L 000s FIXED ASSETS Intangible assets 7 1,090 Tangible assets 8 70 ------ 1,160 ------ CURRENT ASSETS Debtors 9 100 Cash at bank and in hand 1,926 ------ 2,026 CREDITORS: Amounts falling due within one year 10 (723) ------ NET CURRENT ASSETS 1,303 ------ TOTAL ASSETS LESS CURRENT LIABILITIES 2,463 ------ NET ASSETS 2,463 ====== CAPITAL AND RESERVES Called-up share capital 11 383 Share premium account 12 4,431 Profit and loss account 12 (2,351) ------ TOTAL CAPITAL EMPLOYED 13 2,463 ====== SHAREHOLDERS' FUNDS Equity interests 11 2,460 Non-equity interests 11 3 ------ 2,463 ======
Signed on behalf of the Board /s/ Ian Biggs Ian Biggs Director 15 April 1999 The accompanying notes are an integral part of this balance sheet. 6 7 Cash flow statement For the period ended 28 February 1999
Notes 1999 L 000s Net cash outflow from operating activities 16a) (1,693) Returns on investments and servicing of finance 16b) 79 Capital expenditure 16c) (74) ------ (1,688) Financing 16d) 3,614 ------ INCREASE IN CASH IN THE PERIOD 1,926 ======
The accompanying notes are an integral part of this cash flow statement. 7 8 Notes to accounts 1 Accounting policies A summary of the principal accounting policies, all of which have been applied consistently throughout the period is set out below. a) Basis of accounting The accounts are prepared under the historical cost convention and in accordance with applicable accounting standards. b) Intangible fixed assets Licences acquired from third parties are stated at cost, net of amortisation and provision for impairment. Licences are amortised over the minimum term of the licence agreement. c) Tangible fixed assets Fixed assets are shown at original historical cost, net of depreciation and any provision for impairment. Depreciation is provided at rates calculated to write off the cost or valuation, less estimated residual value, of each asset over its expected useful life as follows: Lab equipment 5 years straight line Computer equipment 5 years straight line
d) Taxation Corporation tax payable is provided on taxable profits at the current rate. Provision is made for deferred taxation using the liability method, to take account of all timing differences except those which, in the opinion of the directors, will probably not reverse. e) Turnover Turnover represents net invoiced sales to customers excluding VAT. f) Research and development Research expenditure is written off as incurred. Development expenditure is also written off, except where the directors are satisfied as to the technical, commercial and financial viability of individual projects. In such cases, the identifiable expenditure is deferred and amortised over the period during which the company is expected to benefit. 8 9 Notes to accounts (continued) 2 Net operating expenses
1999 17 months L 000s Administrative expenses 1,255 Research expenditure 1,179 ------ 2,434 ======
3 Interest income 1999 17 months L 000s Interest receivable 79 ======
4 Loss on ordinary activities before taxation Loss on ordinary activities before taxation is stated after charging:
1999 17 months L 000s Depreciation and amounts written off - - tangible fixed assets 9 Amortisation of licences 110 Auditors' remuneration 8 Staff costs (note 5) 232 ====
IN ADDITION TO THE AUDITORS' REMUNERATION SHOWN ABOVE THE COMPANY PAID L 6,500 FOR OTHER SERVICES PROVIDED BY THE AUDITORS. 5 Staff costs Particulars of employees (including executive directors) are as shown below.
1999 17 months L 000s Employee costs during the period amounted to: Wages and salaries 212 Social security costs 20 ---- 232 ====
9 10 Notes to accounts (continued) 5 Staff costs (continued) The average monthly number of persons employed by the company during the period was as follows:
1999 Number Administrative 5 ======== Directors' remuneration Remuneration The remuneration of the directors was as follows: 1999 17 months L 000s Emoluments 199 ========
Pensions No director was a member of a pension scheme. 6 Tax on loss on ordinary activities No tax charge arose in the period due to trading losses. 7 Intangible fixed assets
Licenses Total L 000s L 000s COST Beginning of period -- -- Additions 1,200 1,200 -------- ------ End of period 1,200 1,200 ======== ====== AMORTISATION Beginning of period - - Charge 110 110 -------- ------ End of period 110 110 ======== ====== NET BOOK VALUE Beginning of period - - ======== ====== End of period 1,090 1,090 ======== ======
10 11 Notes to accounts (continued) 8 Tangible fixed assets Lab Computer equipment equipment Total L 000s L 000s L 000s COST OR VALUATION Beginning of period -- -- -- Additions 63 16 79 --------- --------- ------ End of period 63 16 79 ========= ========= ====== DEPRECIATION Beginning of period -- -- - Charge 8 1 9 --------- --------- ------ End of period 8 1 9 ========= ========= ====== NET BOOK VALUE Beginning of period -- -- -- ========= ========= ====== End of period 55 15 70 ========= ========= ======
9 Debtors The following are included in the net book value of debtors:
1999 L 000s Amounts falling due within one year: Prepayments and accrued income 5 VAT 95 ------ 100 ======
10 Creditors: Amounts falling due within one year The following amounts are included in creditors falling due within one year:
1999 L 000s Trade creditors 218 Social security and PAYE 19 Other creditors 486 ------ 723 ======
11 12 Notes to accounts (continued) 11 Called-up share capital
Issued, called-up and fully Authorised paid 1999 1999 Number L Equity shares: `A' ordinary shares of L 1 172,000 172,000 `B' ordinary shares of L 1 248,000 188,000 `C' ordinary shares of L 1 20,000 20,000 --------- -------- Total equity share capital 440,000 380,000 --------- -------- Non-equity share capital `D' ordinary shares of L 0.01 688,000 3,440 --------- -------- Total non-equity share capital 688,000 3,440 --------- -------- Total share capital 1,128,000 383,440 ========= ========
During the period the following shares were allotted:
Date Shares Number Consideration Share premium L 000s L 000s 7 April 1998 `A' ordinary 172,000 1,200 1,028 7 April 1998 `B' ordinary 172,000 -- 1,028 7 April 1998 `C' ordinary 20,000 20 -- 17 December 1998 `D' ordinary 344,000 2,400 2,397 23 October 1998 `B' ordinary 16,000 64 48
Details of the consideration for the `B' ordinary shares issued on 7 April 1998 are set out in note 18 a) Income All classes of ordinary shares, other than `D' ordinary shares, rank equally for dividends. `D' ordinary shares are not entitled to a dividend. b) Redemption The company may redeem the `D' ordinary shares at any time in return for the payment of an aggregate sum of L 1 to the registered holder. 12 13 Notes to accounts (continued) 11 Called-up share capital (continued) c) Capital On the return of assets on liquidation or capital reduction, the repayment of capital shall be in the following order: First, in paying to the holders of the `A' ordinary shares, an amount per share equal to the aggregate amount subscribed for all the issued `A' ordinary shares and `D' ordinary shares together with a sum equal to any arrears or accruals of the dividends on the `A' ordinary shares calculated to the date of the return on capital; Second, in paying to the holders of the `B' and `C' ordinary shares the sum per share paid on each `A' ordinary share together with a sum equal to any arrears or accruals of the dividends on the ordinary shares calculated to the date of the return of capital; and The balance of such assets shall be distributed amongst the holders of the equity shares in proportion to the amounts paid up or credited as paid up on the equity shares held by them respectively; and After the equity shareholders have received L 1,000 per share the holders of the `D' ordinary shares will receive L 0.01 per share. d) Voting Equity shares will carry one vote per share. `D' ordinary shares have no voting rights. e) Share options Options have been granted to subscribe for `B' ordinary shares of the company as follows:
Option At 1 Granted At 28 exercise October 1999 price 1997 February Simon Best L 4 -- 10,000 10,000 Ian Biggs L 8 -- 5,000 5,000 John Brown L 4 -- 5,000 5,000 Ian Kent L 4 -- 10,000 10,000 ======== ====== ======= ========
One quarter of the options granted to Messrs. Best, Brown and Kent are exercisable immediately, with a further quarter becoming exercisable on each subsequent anniversary of the date the options were granted until such time as all options are exercisable. The options granted to Mr Biggs are exercisable from January 2000. In addition, options may also be exercised in advance of any transaction involving the sale of the company or its assets. 13 14 Notes to accounts (continued) 12 Reserves Of total reserves shown in the balance sheet, the following amounts are regarded as distributable or otherwise:
1999 L 000s Distributable - - profit and loss account (2,351) Non-distributable - - share premium account 4,431 ------ Total reserves 2,080 ======
The movement in the period was as follows:
Share Profit and premium loss account Total account L 000s L 000s L 000s Beginning of period -- -- -- Retained loss for the period -- (2,351) (2,351) Share issues 4,431 -- 4,431 ------ ------ ------ End of period 4,431 (2,351) 2,080 ====== ====== ======
13 Reconciliation of movements in shareholders' funds
1999 L 000s Loss for the financial period (2,351) New share capital subscribed 4,814 Opening shareholders' funds -- ------ Closing shareholders' funds 2,463 ======
14 15 Notes to accounts (continued) 14 Guarantees and other financial commitments Capital commitments At the end of the period, capital commitments were:
1999 L 000s Contracted for but not provided for -- ======
15 Related party transactions The company undertook transactions, all of which were on an arms length basis, and had balances outstanding at 28 February 1999 with related parties as shown below:
Purchases Creditors Sales Debtors RELATED PARTY L 000s L 000s L 000s L 000s Roslin Institute 1,456 344 -- -- 3i plc 108 29 -- -- ===== ===== ===== =====
Roslin Institute and 3i plc related parties by virtue of their significant shareholdings in the company. Transactions with Roslin Institute relate to the recharge of costs in respect of facilities and other services provided by Roslin Institute. Transactions with 3i relate to set up and monitoring fees and the recharge of legal fees incurred by 3i. 16 Cash flow statement a) Reconciliation of operating loss to net cash outflow from operating activities
1999 L 000s Operating loss (2,430) Depreciation charges 9 Amortisation charges 110 Increase in debtors (100) Increase in creditors 718 ------ NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,693) ======
b) Returns on investments and servicing of finance
1999 L 000s Interest received 79 ---- NET CASH INFLOW 79 ====
15 16 Notes to accounts (continued) 16 Cash flow statement (continued) c) Capital expenditure
1999 L 000s Purchase of tangible fixed assets (74) ---- NET CASH OUTFLOW (74) ====
d) Financing
1999 L 000s Issue of share capital 3,684 Expenses paid in connection with share issues (70) ------ NET CASH INFLOW 3,614 ======
17 Analysis and reconciliation of net funds
At 1 Other At 28 October Cash non-cash February 1997 flow charges 1999 L 000s L 000s L 000s L 000s Cash in bank and in hand -- 1,926 -- 1,926 ===== ===== ===== =====
1999 L 000s Increase in cash in the period 1,926 ----- Movement in net funds in period 1,926 Net funds at 1 October 1997 -- ----- Net funds at 28 February 1999 . 1,926 =====
18 Major non-cash transactions During the period the company issued 172,000 `B' ordinary shares of L 1 to Roslin Institute in return for certain licences. Details of the licences acquired are provided in note 7. The cost attributed to the licences is L 1,200,000. 16 17 Notes to accounts (continued) 19 Going concern As at 28 February 1999, the company has L 1,926,000 of cash. On the basis of current activity and the directors' current projections this cash balance will be exhausted towards the end of 1999. The company has entered into a funding arrangement with 3i that will result in a further L 2,400,000 being available for drawdown subject to the company attaining certain scientific milestones. The directors believe that progress towards these milestones is satisfactory and, accordingly, further funds will be available which will allow the company to remain a going concern for the foreseeable future. There are also a number of other commercial opportunities open to the company. For these reasons, the directors continue to adopt the going concern basis in preparing the accounts. The accounts do not include any adjustments that would result if the directors were unable to secure the additional funds referred to above. 17 18 ARTHUR ANDERSEN Geron Corporation _____________________ 230 Constitution Drive 18 Charlotte Square Menlo Park Edinburgh EH2 4DF CA 94025 0131 225 4554 Telephone USA 0131 226 3948 Facsimile Our audit of the financial statements of Roslin Bio-Med Limited for the period ended 28 February 1999 was conducted in accordance with Auditing Standards issued by the Auditing Practices Board in the United Kingdom. These standards are substantially consistent with generally accepted auditing standards in the United States. /s/ Arthur Andersen Arthur Andersen Edinburgh, Scotland 24 June 1999 18 19 (b) Unaudited Pro Forma Condensed Combined Financial Information. The following unaudited pro forma condensed combined financial statements for Geron Corporation give effect to the acquisition of Roslin Bio-Med Ltd. ("Roslin Bio-Med"), a private research company in Scotland. The historical financial information for Roslin Bio-Med were expressed in British pounds sterling (BPS) and prepared in accordance with accounting principles generally accepted in the United Kingdom ("U.K. GAAP"). There were no significant differences in accounting treatment in the Roslin Bio-Med financial information between U.K. GAAP and those accounting principles generally accepted in the United States ("U.S. GAAP"). The Roslin Bio-Med financial information has been translated into U.S. dollars using the exchange rate of 1.6 which equals the exchange rate as of February 28, 1999. This materially approximated the average exchange rate for the periods presented. On May 3, 1999, we completed a transaction to acquire all of the outstanding shares of Roslin Bio-Med. In connection with the merger, we issued 1,891,371 shares of our common stock to the former Roslin Bio-Med shareholders in exchange for Roslin Bio-Med's outstanding shares, and reserved 208,629 shares of our common stock for issuance upon exercise of fully vested options we assumed in connection with the Roslin Bio-Med merger. As a result of the acquisition, in addition to the net tangible assets acquired, we have obtained basic research for nuclear transfer technology and have entered into a research agreement to fund future research at the Roslin Institute (the "Institute") over the next six years. The unaudited pro forma condensed combined statement of operations data for the year ended December 31, 1998 set forth below gives effect to the acquisition as if it occurred on January 1, 1998. The unaudited pro forma condensed combined statement of operations data for the three months ended March 31, 1999 set forth below gives effect to the acquisition as if it occurred on January 1, 1999. The unaudited pro forma condensed balance sheets as of December 31, 1998 and March 31, 1999, set forth below gives effect to the acquisition of Roslin Bio-Med as if it occurred on December 31, 1998 and March 31, 1999, respectively. The acquisition of Roslin Bio-Med will be accounted for using the purchase method of accounting. The accompanying unaudited condensed combined financial information reflects the preliminary allocation of the purchase price and gives effect to the assumption and adjustments set forth in the accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information. The purchase price has been allocated among the acquired basic research in the form of a license to the nuclear transfer technology which has no alternative future use, the research agreement with the Institute and the net tangible assets acquired. The value of the basic research for the nuclear transfer technology of approximately $25.1 million has been reflected as research and development expense and the value of the research agreement of approximately $17.2 million has been capitalized as a deferred asset in the accompanying unaudited pro forma condensed combined financial information. 19 20 UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (1) AS OF DECEMBER 31, 1998 (IN THOUSANDS)
ROSLIN BIO-MED GERON FEBRUARY 28, DECEMBER 31, PRO FORMA 1999 1998 ADJUSTMENTS COMBINED --------- --------- --------- --------- Cash $ 3,082 $ 16,360 $ -- $ 19,442 Short term investments -- 8,109 -- 8,109 Interest and other receivables 152 661 -- 813 Other current assets 8 685 -- 693 --------- --------- --------- --------- Total current assets 3,242 25,815 -- 29,057 Long-term investments -- 15,954 -- 15,954 Property and equipment, net 112 2,336 -- 2,448 Intangible assets 1,744 -- (1,744)(2) -- Deferred costs - research 17,187(3) 17,187 agreement Deposits and other -- 351 -- 351 --------- --------- --------- --------- Total assets $ 5,098 $ 44,456 $ 15,443 $ 64,997 ========= ========= ========= ========= Current liabilities: Accounts payable $ 349 $ 1,184 $ 2,932(2) $ 4,465 Accrued liabilities 808 1,220 2,864(3) 4,892 Deferred revenue -- 244 -- 244 Current portion of lease -- 906 -- 906 liability --------- --------- --------- --------- Total current liabilities 1,157 3,554 5,796 10,507 Noncurrent portion of lease -- 1,300 -- 1,300 Other noncurrent liabilities -- -- 14,323(3) 14,323 Convertible debentures -- 6,801 -- 6,801 Redeemable convertible preferred stock -- 3,610 -- 3,610 Stockholders' Equity Common Stock 613 13 2(2) 15 (613)(2) Additional paid-in-capital 7,090 88,055 22,163(2) 112,440 2,222(2) (7,090)(2) Accumulated deficit (3,762) (57,520) 3,762(2) (82,642) (25,122)(2)(3) Other stockholders' equity -- (1,357) (1,357) --------- --------- --------- --------- Total stockholders' equity 3,941 29,191 (4,676) 28,456 --------- --------- --------- --------- Total liabilities and stockholders' equity $ 5,098 $ 44,456 $ 15,443 $ 64,997 ========= ========= ========= =========
20 21 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (1) FOR THE YEAR ENDED DECEMBER 31, 1998 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ROSLIN BIO-MED GERON FOR THE FOR THE YEAR ENDED YEAR ENDED PRO FEBRUARY 28, DECEMBER 31, FORMA 1999 1998 ADJUSTMENTS COMBINED ------------ ------------ ------------ ------------ Revenues $ 6 $ 6,797 $ -- $ 6,803 Operating expenses Research and development 2,008 15,619 2,864(4) 20,491 General and administrative 1,886 3,769 -- 5,655 ------------ ------------ ------------ ------------ Total operating expenses 3,894 19,388 2,864 26,146 ------------ ------------ ------------ ------------ Loss from operations (3,888) (12,591) (2,864) (19,343) Interest and other income 126 2,666 -- 2,792 Interest and other expense -- (907) -- (907) ------------ ------------ ------------ ------------ Net loss (3,762) (10,832) (2,864) (17,458) Accretion of redemption value of redeemable convertible preferred stock -- (578) -- (578) ------------ ------------ ------------ ------------ Net loss applicable for common stockholders $ (3,762) $ (11,410) $ (2,864) $ (18,036)(5) ============ ============ ============ ============ Basic and diluted net loss per share $ (1.00) $ (1.35)(5) ============ ============ Shares used in computed basic and diluted net loss per share 11,439,084 1,891,371 13,330,455(5) ============ ============ ============
21 22 UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (1) AS OF MARCH 31, 1999 (IN THOUSANDS)
ROSLIN BIO-MED GERON PRO FEBRUARY 28, MARCH 31, FORMA 1999 1999 ADJUSTMENTS COMBINED --------- --------- --------- --------- Cash $ 3,082 $ 8,379 $ -- $ 11,461 Short term investments -- 12,073 -- 12,073 Interest and other receivables 152 781 -- 933 Other current assets 8 572 -- 580 --------- --------- --------- --------- Total current assets 3,242 21,805 -- 25,047 Long-term investments -- 16,375 -- 16,375 Property and equipment, net 112 3,552 -- 3,664 Intangible assets 1,744 -- (1,744)(2) -- Deferred asset - research funding 17,187(3) 17,187 agreement Deposits and other -- 566 -- 566 --------- --------- --------- --------- Total assets $ 5,098 $ 42,298 $ 15,443 $ 62,839 ========= ========= ========= ========= Current liabilities: Accounts payable $ 349 $ 1,560 $ 2,932(2) $ 4,841 Accrued liabilities 808 1,241 2,864(3) 4,913 Deferred revenue -- -- -- -- Current portion of lease liability -- 1,037 -- 1,037 --------- --------- --------- --------- Total current liabilities 1,157 3,838 5,796 10,791 Noncurrent portion of lease -- 1,870 -- 1,870 Other noncurrent liabilities -- -- 14,323(3) 14,323 Convertible debentures -- 6,861 -- 6,861 Redeemable convertible preferred stock -- 3,661 -- 3,661 Stockholders' Equity Common Stock 613 14 2(2) 16 (613)(2) Additional paid-in-capital 7,090 88,259 22,163(2) 112,644 2,222(2) (7,090)(2) Accumulated deficit (3,762) (60,914) 3,762(2) (86,036) (25,122)(2)(3) Other stockholders' equity -- (1,291) (1,291) --------- --------- --------- --------- Total stockholders' equity 3,941 26,068 (4,676) 25,333 --------- --------- --------- --------- Total liabilities and stockholders' equity $ 5,098 $ 42,298 $ 15,443 $ 62,839 ========= ========= ========= =========
22 23 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (1) FOR THE THREE MONTHS ENDED MARCH 31, 1999 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ROSLIN BIO-MED GERON FOR THE FOR THE THREE THREE MONTHS ENDED MONTHS ENDED PRO FEBRUARY 28, MARCH 31, FORMA 2/28/99 1999 ADJUSTMENTS COMBINED ------------ ------------ ------------ ------------ Revenues $ 3 $ 1,495 $ -- $ 1,498 Operating expenses Research and development 675 4,425 716(4) 5,816 General and administrative 838 943 -- 1,781 ------------ ------------ ------------ ------------ Total operating expenses 1,513 5,368 716 7,597 ------------ ------------ ------------ ------------ Loss from operations (1,510) (3,873) (716) (6,099) Interest and other income 62 676 -- 738 Interest and other expense -- (146) -- (146) ------------ ------------ ------------ ------------ Net loss (1,448) (3,343) (716) (5,507) Accretion of redemption value of redeemable convertible preferred stock -- (51) -- (51) ------------ ------------ ------------ ------------ Net loss applicable for common stockholders $ (1,448) $ (3,394) $ (716) $ (5,558)(5) ============ ============ ============ ============ Basic and diluted net loss per share $ (0.25) $ (0.36)(5) ============ ============ Shares used in computed basic and diluted net loss per share 13,663,948 1,891,371 15,555,319(5) ============ ============ ============
23 24 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Pro forma adjustments for the unaudited pro forma condensed combined balance sheets as of December 31, 1998 and March 31, 1999 and for the unaudited pro forma condensed combined statements of operations for the year ended December 31, 1998 and the three months ended March 31, 1999 are as follows: (1) As Roslin Bio-Med's fiscal year is within 90 days of Geron's fiscal year end, the two different periods have been combined for purposes of preparing the unaudited pro forma condensed combined balance sheets and statements of operations. (2) Represents: (a) issuance of 1,891,371 shares of Geron common stock in exchange for the outstanding shares of Roslin Bio-Med pursuant to the merger agreement, excluding common shares reserved for issuance upon exercise of fully vested options assumed, at a per share value of $11.72 (based upon the average of Geron common stock closing prices for the five trading days immediately preceding and following the May 4, 1999 announcement of the merger) in exchange for the net tangible assets of Roslin and basic research for the nuclear transfer technology; (b) fair value assigned of $2.2 million to assumed fully vested stock options of Roslin Bio-Med as part of the total purchase price; and (c) acquisition costs of $2.9 million incurred in conjunction with the merger. (3) Reflects the preliminary allocation of the purchase price. The preliminary allocation has resulted in deferred costs of research funding of approximately $17.2 million for the research agreement between Geron and the Institute. These deferred costs will be expensed over six years as the related research costs are incurred. The liability under the research agreement has been classified under current and noncurrent liabilities. The value of the basic research for the nuclear transfer technology is estimated at approximately $25.1 million. Because this technology is basic research with no alternative future use and is not expected to result in commercial products for several years, if ever, the value will be charged to Research and Development Expense on the date of acquisition. In accordance with S-X Regulations, this write-off has not been reflected in the unaudited combined pro forma statements of operations. The total estimated purchase price for Roslin Bio-Med acquisition has been allocated on a preliminary basis to assets and liabilities based on management's best estimates of their fair value. This allocation is subject to change pending a final analysis of the value of the assets acquired and liabilities assumed. The impact of such changes could be material. (4) Represents the expense related to the research agreement referred to in note 3 above. (5) Pro forma net loss reflects the impact of the adjustments above. Basic and diluted net loss per share (pro forma) is computed using the weighted-average number of shares of common stock outstanding after the issuance of Geron common stock to acquire the outstanding shares of Roslin Bio-Med. Pro forma basic and diluted net loss per share includes the weighted average shares described above. Dilutive options and warrants and shares related to the convertible debentures are excluded from the computation during loss periods, as their effect is antidilutive. 24 25
(c) Exhibits. 2.1+* Sale and Purchase Agreement dated May 3, 1999, among the Company and each of the shareholders of Roslin. 2.2* Escrow Agreement dated May 3, 1999, among the Company, a committee acting for and on behalf of the Warrantors, and U.S. Bank Trust National Association. 4.1* Registration Rights Agreement dated May 3, 1999, among the Company and each of the shareholders of Roslin. 10.42+* Research and License Agreement dated May 3, 1999, among the Company, Roslin and the Institute. 10.43+* License Agreement dated April 30, 1999, among the Company, Roslin and the Institute. 23.1 Consent of Arthur Andersen, Independent Auditors.
- -------- + Confidential Treatment Requested * Previously Filed 25 26 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GERON CORPORATION (Registrant) Dated: June 29, 1999 By: /s/ David L. Greenwood -------------------------------------- David L. Greenwood Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) 26 27 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------ ----------- 2.1+* Sale and Purchase Agreement dated May 3, 1999, among the Company and each of the shareholders of Roslin. 2.2* Escrow Agreement dated May 3, 1999, among the Company, a committee acting for and on behalf of the Warrantors, and U.S. Bank Trust National Association. 4.1* Registration Rights Agreement dated May 3, 1999, among the Company and each of the shareholders of Roslin. 10.42+* Research and License Agreement dated May 3, 1999, among the Company, Roslin and the Institute. 10.43+* License Agreement dated April 30, 1999, among the Company, Roslin and the Institute. 23.1 Consent of Arthur Andersen, Independent Auditors.
- -------- + Confidential Treatment Requested * Previously Filed EX-23.1 2 CONSENT OF ARTHUR ANDERSEN 1 CONSENT OF ARTHUR ANDERSEN, INDEPENDENT AUDITORS OF ROSLIN BIO-MED LIMITED To Geron Corporation As independent auditors of Roslin Bio-Med Limited at 28 February 1999, we hereby consent to the incorporation in this Form 8-K of our report on Roslin Bio-Med Limited dated 15 April 1999 included in Registration Statement File No. 0-20859. It should be noted that we have not audited any financial statements of the Company subsequent to 28 February 1999 or performed any audit procedures subsequent to the date of our report. /s/ Arthur Andersen -------------------------- ARTHUR ANDERSEN Edinburgh, Scotland 29 June 1999 -----END PRIVACY-ENHANCED MESSAGE-----