-----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, SK+UtvHAjS/WWXsDdvvhjaOp69q5KbV7ukONLtL3yrLN0xdL2qym8TovMIXGhWKZ C0CFd5XGgx9eSFyAipv29Q== 0001017062-96-000527.txt : 19961118 0001017062-96-000527.hdr.sgml : 19961118 ACCESSION NUMBER: 0001017062-96-000527 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNBIOTICS CORP CENTRAL INDEX KEY: 0000719483 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 953737816 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11303 FILM NUMBER: 96662815 BUSINESS ADDRESS: STREET 1: 11011 VIA FRONTERA CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 6194513771 10QSB 1 QUARTERLY REPORT 9/30/96 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________ FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 OR [_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-11303 SYNBIOTICS CORPORATION (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER) CALIFORNIA 95-3737816 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11011 VIA FRONTERA SAN DIEGO, CALIFORNIA 92127 (Address of principal executive offices) (Zip Code) ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 451-3771 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [_] As of November 7, 1996, 7,351,925 shares of Common Stock were outstanding. Transitional Small Business Disclosure Format: Yes [_] No [X] ================================================================================ SYNBIOTICS CORPORATION INDEX
PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Statement of Operations - Three and nine months ended September 30, 1996 and 1995 2 Condensed Balance Sheet - September 30, 1996 and December 31, 1995 3 Condensed Statement of Cash Flows - Nine months ended September 30, 1996 and 1995 4 Notes to Condensed Financial Statements 5 Item 2. Management's Discussion and Analysis or Plan of Operation 6 PART II - OTHER INFORMATION Item 1. Legal Proceedings 7 Item 2. Changes in Securities 7 Item 3. Defaults Upon Senior Securities 8 Item 4. Submission of Matters to a Vote of Security Holders 8 Item 5. Other Information 8 Item 6. Exhibits and Reports on Form 8-K 8
-1- PART I. FINANCIAL INFORMATION ----------------------------- ITEM 1. FINANCIAL STATEMENTS -------------------- SYNBIOTICS CORPORATION CONDENSED STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------- ------------------------------ 1996 1995 1996 1995 ---------- ---------- ----------- ----------- Revenues: Product sales $3,747,000 $2,284,000 $14,598,000 $10,921,000 License fees and other 77,000 92,000 307,000 239,000 Interest 77,000 17,000 132,000 35,000 ---------- ---------- ----------- ----------- 3,901,000 2,393,000 15,037,000 11,195,000 ---------- ---------- ----------- ----------- Cost and expenses: Cost of sales 2,285,000 1,651,000 7,620,000 6,138,000 Research and development 261,000 274,000 721,000 692,000 Selling and marketing 961,000 965,000 3,320,000 3,324,000 General and administrative 794,000 377,000 1,649,000 1,090,000 ---------- ---------- ----------- ----------- 4,301,000 3,267,000 13,310,000 11,244,000 ---------- ---------- ----------- ----------- Income (loss) before gain on sale of securities available for sale and gain on disposition of investment in affiliated company (400,000) (874,000) 1,727,000 (49,000) Gain on sale of securities available for sale 1,159,000 Gain on disposition of investment in affiliate 931,000 ---------- ---------- ----------- ----------- Income (loss) before income taxes (400,000) (874,000) 2,886,000 882,000 Provision (benefit) for income taxes (5,000) (20,000) 113,000 2,000 ---------- ---------- ----------- ----------- Net income (loss) $ (395,000) $ (854,000) $ 2,773,000 $ 880,000 ========== ========== =========== =========== Net income (loss) per share $ (.07) $ (.15) $ .46 $ .15 ========== ========== =========== =========== Weighted average shares outstanding 6,000,000 5,809,000 6,013,000 5,827,000 ========== ========== =========== ===========
Net income (loss) per share was computed based upon the weighted average number of shares outstanding, including common stock equivalents. See accompanying notes to condensed financial statements. -2- ITEM 1. FINANCIAL STATEMENTS (CONTINUED) -------------------- SYNBIOTICS CORPORATION CONDENSED BALANCE SHEET - --------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, 1996 1995 ------------ ------------ (unaudited) (audited) ASSETS Current assets: Cash and equivalents $ 1,889,000 $ 1,017,000 Securities available for sale 3,940,000 Accounts receivable 2,063,000 1,430,000 Inventories 5,097,000 3,439,000 Other current assets 767,000 578,000 ------------ ------------ Total current assets 13,756,000 6,464,000 Property and equipment, net 702,000 879,000 Securities available for sale 2,533,000 Other assets 1,658,000 1,582,000 ------------ ------------ $ 16,116,000 $ 11,458,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 2,127,000 $ 1,613,000 Other current liabilities 659,000 697,000 ------------ ------------ Total current liabilities 2,786,000 2,310,000 ------------ ------------ Shareholders' equity: Common stock, no par value, 24,800,000 shares authorized, 6,001,000 and 5,816,000 shares issued and outstanding at September 30, 1996 and December 31, 1995, respectively 29,725,000 29,351,000 Unrealized holding losses from securities available for sale (1,035,000) Accumulated deficit (16,395,000) (19,168,000) ------------ ------------ Total shareholders' equity 13,330,000 9,148,000 ------------ ------------ $ 16,116,000 $ 11,458,000 ============ ============
See accompanying notes to condensed financial statements. -3- ITEM 1. FINANCIAL STATEMENTS (CONTINUED) -------------------- SYNBIOTICS CORPORATION CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) - --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, ----------------------- 1996 1995 ----------- ---------- Cash flows from operating activities: Net income (loss) $ 2,773,000 $ 880,000 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization 599,000 761,000 Inventory reserve 243,000 Gain on sale of securities available for sale (1,159,000) Gain on disposition of investment in affiliate (931,000) Changes in assets and liabilities: Accounts receivable (633,000) 595,000 Inventories (1,658,000) (208,000) Other assets (192,000) 243,000 Accounts payable and accrued expenses 514,000 (494,000) Other liabilities (38,000) 2,000 ----------- ---------- Net cash provided by operating activities 206,000 1,091,000 ----------- ---------- Cash flows from investing activities: Acquisition of property and equipment (96,000) (125,000) Investment in securities available for sale (3,940,000) Proceeds from sale of securities available for sale 4,727,000 ----------- ---------- Net cash provided by (used for) investing activities 691,000 (125,000) ----------- ---------- Cash flows from financing activities: Proceeds from issuance of common stock, net (25,000) 23,000 ----------- ---------- Net cash (used for) provided by financing activities (25,000) 23,000 ----------- ---------- Net increase in cash and equivalents 872,000 989,000 Cash and equivalents - beginning of year 1,017,000 447,000 ----------- ---------- Cash and equivalents - end of period $ 1,889,000 $1,436,000 =========== ==========
See accompanying notes to condensed financial statements. -4- ITEM 1. FINANCIAL STATEMENTS (CONTINUED) -------------------- SYNBIOTICS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - INTERIM FINANCIAL STATEMENTS: The accompanying balance sheet as of September 30, 1996 and the statements of operations and of cash flows for the nine month periods ended September 30, 1996 and 1995 have been prepared by Synbiotics Corporation (the Company) and have not been audited. These financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial position, results of operations and cash flows for all periods presented. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB filed for the year ended December 31, 1995. Interim operating results are not necessarily indicative of operating results for the full year. NOTE 2 - SECURITIES AVAILABLE FOR SALE: Included in current assets are securities available for sale which consist primarily of short-term commercial paper and U.S. Government Treasury securities. NOTE 3 - INVENTORIES: Inventories consist of the following:
SEPTEMBER 30, DECEMBER 31, 1996 1995 ------------- ------------ Raw materials $1,764,000 $ 665,000 Work in process 4,000 633,000 Finished goods 3,329,000 2,141,000 ---------- ---------- $5,097,000 $3,439,000 ========== ==========
-5- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION --------------------------------------------------------- RESULTS OF OPERATIONS Total revenue for the third quarter of 1996 increased by $1,508,000 or 63% over the quarter ended September 30, 1995, and increased for the nine months ended September 30, 1996 by $3,842,000 or 34% over the nine months ended September 30, 1995. The increases are primarily due to an increase in product sales of $1,463,000 or 64% during the third quarter of 1996, and an increase in product sales of $3,667,000 or 34% during the nine months ended September 30, 1996, respectively. The increase in product sales during the third quarter of 1996 comprises an increase in diagnostic sales of $238,000 or 11% and a $1,226,000 or 161% increase in the sales of vaccines. The increased diagnostic sales are primarily due to increased average selling prices and the introduction of Assure/(R)//Parvo, for the detection of canine parvovirus, and ICT GOLD/TM/ FeLV, the Company's new feline leukemia diagnostic. The increased average selling prices of the Company's existing diagnostic products resulted from a general price increase during the third quarter of 1996, as well as the non- recurrence of promotional pricing which was in effect during the third quarter of 1995. Vaccine sales increased due to sales to private label partners and increased international and domestic shipments of bulk feline leukemia vaccine. The nine months ended September 30, 1996 saw an increase in diagnostic sales of $1,701,000 or 23% and a $1,976,000 or 52% increase in vaccine sales, both explained by the respective factors discussed above, as well as the introduction of the Company's DiroCHEK TF/(R)/ canine heartworm diagnostic product, in January 1996, to regain unit sales and price points eroded in 1995 due to a major competitor's improved microwell canine heartworm product. Also, in 1996 the Company was able to market its ICT GOLD/TM/ HW canine heartworm diagnostic for the full nine months (the product was introduced in March 1995). The cost of sales as a percentage of product revenue decreased to 61% during the third quarter of 1996 as compared to 72% for the quarter ended September 30, 1995. The improvement is due to the increase in average selling prices discussed above and the non-recurrence of a $243,000 write-off of vaccine inventory during the third quarter of 1995. These factors were partially offset by extra costs in connection with the 1996 transition of vaccine manufacturing from one third party to another and by the increased domestic shipments of bulk feline leukemia vaccine to Rhone Merieux, Inc. (located in Athens, Georgia) during the third quarter of 1996. The Company has contracted to sell bulk vaccine to Rhone Merieux, Inc. at cost because the Company receives a royalty on Rhone Merieux, Inc.'s resulting product sales in the United States. By contrast, the Company's international sales of bulk feline leukemia vaccine to Rhone-Merieux of France are at a profit, not at cost. Cost of sales as a percentage of product revenue would have been 57% and 66% during the quarters ended September 30, 1996 and 1995, respectively, if the zero margin bulk sales and inventory write-off were not taken into consideration. The cost of sales as a percentage of product revenue decreased to 52% for the nine months ended September 30, 1996 as compared to 56% for the nine months ended September 30, 1995. The improvement is primarily due to factors similar to those discussed in the quarterly comparison. Research and development expenses and selling and marketing expenses fluctuated insignificantly during the third quarter of 1996 and during the nine months ended September 30, 1996. Each declined, during the 1996 periods, as a percentage of sales. General and administrative expenses during the third quarter of 1996 increased by $417,000 or 111% over the quarter ended September 30, 1995, and increased during the nine months ended September 30, 1996 by $559,000 or 51% over the nine months ended September 30, 1995. The increases are due to the retirement of the Company's President on July 31, 1996, the addition of a new Chief Executive Officer in May 1996 and an increase in certain patent-related legal expenses. -6- The Company's business is seasonal, and is concentrated within the canine heartworm selling season, which falls mainly in the quarters ending March 31 and June 30 of each year. Sales and results from operations in the quarters ending September 30 and December 31 of each year are expected to be less favorable than in the heartworm selling season. In October 1996, the Company was notified by two of its important distributors that they had terminated their distribution agreements with the Company. While the Company believes that its remaining distributors will be able to absorb the business of these two distributors, it is not known how long such absorption will take. As a result, the loss of these two distributors may have a significant impact on the Company's fourth quarter 1996 sales. On February 27, 1996 and February 28, 1996, the Company sold a total of 614,000 shares of Texas Biotechnology Corporation ("TBC") common stock on the American Stock Exchange at an average selling price of $3.573 per share. As a result of the transactions, the Company recognized a gain of $385,00 during the first quarter of 1996. As a result of the sale of the shares, the Company's ownership of TBC was reduced to approximately 3%. During the period April 25, 1996 to May 2, 1996, the Company sold its remaining 614,000 shares of TBC common stock on the American Stock Exchange at an average selling price of $4.205 per share. As a result of the transactions, the Company recognized a gain of $774,000 during the second quarter of 1996. The net proceeds received from the sales, which totalled $4,727,000, will be used primarily for working capital requirements and to fund business opportunities such as acquisitions. On June 30, 1995, the Company received 573,000 shares of TBC common stock resulting from the satisfaction of a certain contingency on May 31, 1995 related to the acquisition of ImmunoPharmaceutics, Inc. ("IPI") by TBC in July 1994. The Company had been a major shareholder of IPI, and in 1994 had recognized a $2,036,000 gain on the transaction for financial reporting purposes. In the second quarter of 1995, the Company recognized an additional gain for financial reporting purposes in the amount of $931,000. FINANCIAL CONDITION Management believes that the Company's present capital resources, which included working capital of $10,970,000 at September 30, 1996, are sufficient to meet its current working capital needs and also the working capital needs associated with the acquisition of International Canine Genetics, Inc. ("ICG") (see Part II, Item 5). ICG has had operating losses to date and the Company expects that business's losses to continue through at least 1997. Included in working capital at September 30, 1996 is inventory in the amount of $5,097,000 as compared to $3,439,000 at December 31, 1995. The increase is due to the building of inventory in order to meet anticipated demand for the upcoming canine heartworm season, as well as inventory for the Company's OTC biological products which did not exist at December 31, 1995. PART II. OTHER INFORMATION --------------------------- ITEM 1. LEGAL PROCEEDINGS ----------------- No material developments. ITEM 2. CHANGES IN SECURITIES --------------------- None. -7- ITEM 3. DEFAULTS UPON SENIOR SECURITIES ------------------------------- None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- None. ITEM 5. OTHER INFORMATION ----------------- On October 25, 1996 the Company acquired substantially all of the assets of International Canine Genetics, Inc. ("ICG") pursuant to a purchase agreement dated July 23, 1996 and amended September 7, 1996. The consideration paid to ICG was $1.00 plus 1,113,205 shares of Synbiotics Common Stock valued at $4,689,000 (based upon the average closing price of Synbiotics' Common Stock, for the period October 18, 1996 through October 24, 1996, which was $4.2125 per share). The Company also assumed approximately $238,000 of outstanding ICG liabilities which were due and payable as of the closing date. In addition, all of ICG's outstanding warrants and stock options were made exercisable for an adjusted number of shares of Synbiotics Common Stock. Prior to the acquisition, S.R. One, Limited, ICG's largest shareholder, purchased 237,389 shares of newly issued Synbiotics Common Stock for $1,000,000 (based upon the average closing price of Synbiotics' Common Stock, for the period October 18, 1996 through October 24, 1996, which was $4.2125 per share). ICG, based in Malvern, PA, is a publicly held company which, until the acquisition, manufactured and marketed canine reproduction diagnostic products and services, PennHIP(R) (a diagnostic test for canine hip dysplasia), nutritional supplements and a line of coat and skin care products to breeders and owners of purebred dogs and their veterinarians. Recently, ICG began marketing the first at-home diagnostic ovulation test for dogs in the U.S. and announced a sponsored research agreement with New York University, New Jersey Medical School and Cornell University for the co-development of a diagnostic product for early canine pregnancy detection. All of the assets acquired by Synbiotics were used and will continue to be used to operate the activities described above. Paul A. Rosinack, ICG's former President and CEO, became Vice President and General Manager, Animal Health of Synbiotics. On October 24, 1996, Brenda D. Gavin, D.V.M., a Vice President of S.R. One, Limited, was elected a Director of the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K --------------------------------
(a) Exhibits -------- 2.2 Purchase Agreement dated July 23, 1996 by and among the Registrant, International Canine Genetics, Inc. and S.R. One, Limited/(2)/. 2.3 Amendment to Purchase Agreement dated September 7, 1996 by and among the Registrant, International Canine Genetics, Inc. and S.R. One, Limited/(3)/.
-8-
10.36.2 Amendment to FeLV Distribution Agreement between the Registrant and Bio-Trends International, Inc., dated as of August 22, 1996/(1)/. 10.38.1 Addendum to Distribution Agreement between the Registrant and Rhone-Merieux, dated April 11, 1996/(1)/. 10.38.2 Second Addendum to Distribution Agreement between the Registrant and Rhone-Merieux, dated August 27, 1996. 10.41.1 Addendum to Agreement between the Registrant and Rhone Merieux, Inc., dated August 22, 1996/(1)/. 11.1 Computation of Earnings (Loss) Per Share. 27 Financial Data Schedule (for electronic filing purposes only).
- ----------------------------- (1) Certain confidential portions of this exhibit have been omitted by means of blacking out the text (the "Mark"). This exhibit has been filed separately with the Secretary of the Commission without the Mark pursuant to the Company's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (2) Incorporated by reference to Exhibit 2.2 to the Registrant's Registration Statement on Form S-4, as amended, Registration No. 333-10343, dated September 16, 1996. (3) Incorporated by reference to Exhibit 2.3 to the Registrant's Registration Statement on Form S-4, as amended, Registration No. 333-10343, dated September 16, 1996. (b) Reports on Form 8-K ------------------- None. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SYNBIOTICS CORPORATION Date: November 13, 1996 /s/ MICHAEL K. GREEN ----------------------------- Michael K. Green Vice President of Finance and Chief Financial Officer (signing both as a duly authorized officer and as principal financial officer) -9- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. EXHIBITS TO FORM 10-QSB UNDER SECURITIES EXCHANGE ACT OF 1934 SYNBIOTICS CORPORATION EXHIBIT INDEX
Exhibit No. Exhibit - ----------- ------- 2.2 Purchase Agreement dated July 23, 1996 by and among the Registrant, International Canine Genetics, Inc. and S.R. One, Limited/(2)/. 2.3 Amendment to Purchase Agreement dated September 7, 1996 by and among the Registrant, International Canine Genetics, Inc. and S.R. One, Limited/(3)/. 10.36.2 Amendment to FeLV Distribution Agreement between the Registrant and Bio-Trends International, Inc., dated as of August 22, 1996/(1)/. 10.38.1 Addendum to Distribution Agreement between the Registrant and Rhone-Merieux, dated April 11, 1996/(1)/. 10.38.2 Second Addendum to Distribution Agreement between the Registrant and Rhone-Merieux, dated August 27, 1996. 10.41.1 Addendum to Agreement between the Registrant and Rhone Merieux, Inc., dated August 22, 1996/(1)/. 11.1 Computation of Earnings (Loss) Per Share. 27 Financial Data Schedule (for electronic filing purposes only).
- --------------------------- (1) Certain confidential portions of this exhibit have been omitted by means of blacking out the text (the "Mark"). This exhibit has been filed separately with the Secretary of the Commission without the Mark pursuant to the Company's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (2) Incorporated by reference to Exhibit 2.2 to the Registrant's Registration Statement on Form S-4, as amended, Registration No. 333-10343, dated September 16, 1996. (3) Incorporated by reference to Exhibit 2.3 to the Registrant's Registration Statement on Form S-4, as amended, Registration No. 333-10343, dated September 16, 1996. EX-10.36.2 2 AMENDMENT TO FELV DISTRO AGREEMENT EXHIBIT 10.36.2 --------------- AMENDMENT TO FeLV DISTRIBUTION AGREEMENT This "Amendment" is entered into by Synbiotics Corporation, a California corporation ("Synbiotics") and Bio-Trends International, Inc., a California corporation ("BTI") as of August 22, 1996. The parties hereby agree to amend the Distribution Agreement dated February 7, 1990 between Synbiotics and BTI (the "FeLV Agreement") as follows. 1. The FeLV Agreement is hereby amended to give Synbiotics a non-exclusive ------------- right to distribute the FeLV Product in South America subject to the terms of the FELV Distribution Agreement. 2. Section 9.1 of the FeLV Agreement is hereby amended to read: "This Agreement shall terminate on December 31, 2004." The maximum continuation period contemplated in Section 9.4 of the FeLV Agreement is extended to December 31, 2004. 3. Synbiotics agrees to provide BTI with all current and future agreements with respect to FeLV vaccine (or any other vaccine in which FeLV constitutes a fraction), but only if the agreement contains specific terms and or performance criteria relating to the FeLV vaccine, as opposed to Synbiotics generic contracts for distribution of its entire product line. Should Synbiotics contemplate entering into any such agreement with any third party, it shall provide BTI, in advance and in confidence, the documents and terms of such contemplated agreement insofar as it pertains, in any way, to the FeLV Product or to the sales and/or marketing thereof by Synbiotics or any third party. BTI may consult with Synbiotics with regard to any contemplated agreement, but the decision whether or not to enter into the agreement (and on which terms) shall belong exclusively to Synbiotics, in its sole and absolute discretion. This provision shall in no way relieve or excuse Synbiotics from fulfilling its obligation to use its reasonable best efforts to sell the FeLV vaccine. 4. With regard to section 1.3 of the FeLV Agreement, the parties agree Commonwealth Serum Laboratories is an appropriate candidate with whom to commence discussions as the designated FeLV vaccine manufacturer/seller for Australia and New Zealand. Final approval of this company as such will be subject to the mutual acceptance of the terms of such a manufacturing/sales agreement by both BTI and Synbiotics. 5. For purposes of Section 8.1 of the FeLV Agreement relating to insurance, indemnification, defense and hold harmless, all doses of the FeLV Product sold in the over-the-counter market ("OTC Products") shall be deemed Products covered by such Section. In addition, Synbiotics shall, with respect to such OTC Products, indemnify, defend and hold harmless BTI from and against all claims, actions, damages, expenses and awards resulting from any actual or alleged "packaging related incidents", such as a child injuring himself or another with a needle or contracting an infection or disease as a result thereof. Further examples shall include situations that may occur as a result of a "veterinary non-professional" administering the vaccines. 6. BTI is in the process of upgrading its facilities to meet UK (MAFF facility standards) and OMP facility standards as required by the EU (hereafter "EU Standards"). In the event BTI is hereafter "unable" to manufacture the FeLV Product in accordance with EU Standards, or at such earlier time as BTI has received final notice from the applicable EU facility licensing authorities that its facility does not and will not, even after modifications or - ----------------------- [*] Certain confidential portions of this Exhibit were omitted by means of blackout of the text (the "Mark"). This Exhibit has been filed separately with the Secretary of the Commission without the Mark pursuant to the Company's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. -1- corrections, meet EU Standards, BTI shall begin and diligently continue information and technology transfer to RMI-Lyon who will then act as the "third party manufacturer" of the FeLV Product for sales solely within the EU Market, provided satisfactory terms can be reached with RMI-Lyon at such time. In the event RMI-Lyon is utilized as a third party manufacturer, BTI and Synbiotics shall equally divide the gross profits from all RMI-Lyon manufactured doses of FeLV in accordance with the examples set forth in Section 7 hereof. For purposes of this section, BTI only shall be considered "unable" to manufacture the FeLV vaccine in accordance with EU Standards if BTI is prevented by the appropriate EU authorities from continuing to supply the FeLV Product to the EU market in the ordinary course of business. In the event, at the time compliance for EU Standards is required, BTI is "unable" to manufacture the FeLV Product to EU Standards and satisfactory terms cannot be reach with RMI-Lyon to act as the third patty manufacturer, BTI shall begin and diligently continue an information and technology transfer to such other third party manufacturer as Synbiotics and BTI may mutually agree. For purposes of this Amendment the term "third party manufacturer" shall mean the party responsible to supply the FeLV Product, either in bulk or finished form, to both Synbiotics' distributors and RMI-Lyon. BTI shall be responsible for controlling the technology transfer, as well as negotiating the term of manufacturer, and all additional provisions with respect to the manufacture of the Product, except that Synbiotics and BTI must jointly agree to a mutually acceptable contract manufacturing price from the "third party manufacturer". BTI shall initially be responsible to pay all costs associated with the technology transfer, however, BTI shall be entitled to full reimbursement for any and all such costs BTI reasonably and actually incurs, prior to the division of any profits pursuant to Section 7 hereof; provided that Synbiotics and BTI shall agree in advance as to the approximate dollar level of such expenditures. Except as BTI may otherwise agree with the "third party manufacturer", BTI shall have the absolute right, at any time and from time to time, to designate a replacement third party manufacturer, or commence manufacturing the Product itself for either or both the EU or the UK markets when BTI's facilities become at least conditionally licensed, provided no significant interruption in Product manufacture or supply results from any such change. Notwithstanding any of the foregoing provisions, BTI shall have the absolute right to continue to manufacture and supply the FeLV Product for any and all non --- EU or UK portions of the "Territory" as defined in the FeLV Distribution - ------------------------------------ agreement. Notwithstanding the foregoing, BTI shall also have the right to continue to manufacture and supply FeLV Product to all EU portions of the Territory provided ------------------ ------------- it is not prohibited from doing so by EU regulatory authorities. BTI will continue to enjoy its rights under 7.2 of the current FeLV Distribution agreement with respect to ownership of product licenses in foreign countries. In certain instances, as in the EU, where a product license is a combination of the "product technology and know-how" contained in a product dossier (owned in this case by BTI), and initiated in each country through payment of fees to obtain a "Marketing Acknowledgment" (in this case by Synbiotics or its distributors), BTI and Synbiotics will be jointly named as the holders of any such Marketing Acknowledgments or other form of product licenses. 7. EU Profit Sharing. In the event a "third party manufacturer" is utilized to manufacture and Supply the FeLV Product to the EU and/or UK markets, Synbiotics agrees to pay BTI, with respect to all product purchased by Synbiotics from such "third party manufacturer", [*] incurred by Synbiotics, calculated in accordance with the following example (Note: the numbers quoted below are meant only as examples to assist in demonstrating the profit sharing formula): -2- [*] 8. Synbiotics agrees at all times set forth in this Section 8, to place firm orders to purchase at least [*] of calendar 1994 doses per year of FeLV vaccine purchased from BTI [*] on a rolling four-quarter annual basis. This minimum purchase order requirement shall in no way excuse or relieve Synbiotics from its obligation to utilize its best efforts to sell the FeLV vaccine. The first three-month period upon which Synbiotics' purchase orders shall be tested for compliance with this minimum purchase order requirement shall be the earlier of (a) the three-month period beginning January 1, 2000; (b) the three- month period beginning the first day of the tenth month following notice by either party of termination of the Agreement dated January 1, 1992 between Synbiotics and RMI-Athens; or (c) the first day of the month following RMI- Athens commencing to sell or distribute any FeLV vaccine other than BTI's. Synbiotics and BTI agree to utilize a rolling four-quarter annual basis (a minimum of [*] doses during the quarter being tested and the three previous quarters) to evaluate Synbiotics' compliance with the minimum purchase order requirements. Once testing of Synbiotics' minimum purchase order begins, if Synbiotics' FeLV purchase orders during any four-quarter period are below the required minimum, Synbiotics shall be in default unless it cures such shortfall within the calendar month immediately following such four-quarter period (the "Cure Period"). In order to cure any default, Synbiotics must pay BTI sufficient funds for and place a firm order to purchase enough FeLV vaccine during the Cure Period to meet the shortfall in its minimum dose requirements (a "Cure Purchase"). Each Cure Purchase of FeLV doses by Synbiotics shall, for testing future minimum purchase order compliance, be deemed to have occurred during the previous quarter, in which the shortfall necessitating the Cure Purchase occurred, and shall not be counted as a purchase order for FeLV doses in the following quarter when the purchase order is actually placed. If at any time Synbiotics fails to timely cure any default, Synbiotics' rights to promote, use and sell the FeLV Product under the FeLV Agreement shall automatically become non-exclusive for the remainder of the term of the FeLV Agreement, as extended by this Amendment. Failure by Synbiotics to meet the minimum purchase order requirements under this section will not give rise to any liability of Synbiotics to purchase the shortfall from BTI. -3- 9. From and after the date of this Amendment, the prices at which Synbiotics agrees to purchase and BTI agrees to sell FeLV vaccine shall, except as otherwise modified, adjusted or determined pursuant to this Section 9, be as follows: (a) BTI shall sell Bulk FeLV vaccine to Synbiotics, for delivery to a Synbiotics designated manufacturer, currently Diamond Annual Health, for use solely in manufacturing OTC FeLV vaccine on behalf of Synbiotics, at a transfer price of [*] per dose, plus reimbursement to BTI for any "quality control" costs reasonably and actually incurred by BTI with respect thereto, and otherwise on the terms and conditions set forth in the FeLV Agreement. (b) BTI shall sell bulk FeLV vaccine to Synbiotics, for delivery to RMI- Athens, at a transfer price of [*] per dose through December 31, 1997, and at [*] per dose from January 1, 1998 through December 31, 2004. Other terms and conditions shall be as set forth in the FeLV Agreement. (c) BTI shall sell bulk FeLV vaccine to Synbiotics, for delivery to RMI- Lyon at a transfer price of [*] per dose until such time as BTI has the capability and is appropriately licensed to produce the FeLV Product in accordance with EU Standards. At all times after BTI has the capability and is appropriately licensed to produce the FeLV vaccine in accordance with EU Standards, BTI shall sell bulk FeLV vaccine, manufactured to EU Standards, to Synbiotics for delivery to RMI-Lyon, at a transfer price of [*] per dose. Other terms and conditions shall be as set forth in the FeLV Agreement. (d) Except as otherwise specifically set forth in the FeLV Agreement and this Amendment, the transfer price at which BTI shall sell FeLV vaccine to Synbiotics, for delivery to any distributor shall, especially for doses of FeLV vaccine produced for sale outside the United States, shall be determined based upon the provisions set forth in this Section 9(d) and the per dose prices shown in the following chart:
Finished Goods Bulk- FeLV Single and Multi Dose ----------------------------------------------------------- FeLV Product purchased from BTI [*] per dose, Mutually agreed to be negotiated for sale or delivery in "EU Similar F.O.B.West in good faith by the parties, if Countries" Sacramento necessary, at a later date. ----------------------------------------------------------- FeLV Product purchased from BTI [*] per dose, In accordance with the for sale or delivery in "Non-EU F.O.B.West prevailing Similar Countries" Sacramento U.S. finished goods prices set forth in Article 5 of the FeLV Agreement. ------------------------------------------------------------
The parties hereby acknowledge the chart set forth above is intended to serve as a guideline for determining FeLV Transfer Prices for distributors other than Diamond, RMI-Athens and RMI-Lyon whose Transfer Prices are described above in Sections 9(a), (b) and (c), respectively. For purposes of this Section, the term "EU Similar Countries" shall mean countries whose regulatory authorities require the FeLV vaccine to be manufactured in substantial conformance with EU Standards. In contrast, the term "Non-EU Similar Countries" shall mean countries whose regulatory authorities require the FeLV vaccine to be manufactured in substantial conformance with or below the USDA Standards existing as of the date of this Amendment. The parties anticipate that most countries are likely to adopt a regulatory standard somewhere between the EU Standards and the current USDA Standards and, thus, have established the Transfer Prices reflected above as the current high and low ranges for FeLV Transfer Prices. Further, the parties intend to establish -4- Transfer Prices for each country within the range of [*] to [*] per dose for Bulk FeLV vaccine (and using the prevailing U.S. finished goods dose prices as the low range prices for finished goods), based upon whether the country's regulatory standards more closely resemble EU Standards or current USDA Standards, and what, if any, additional elements of difficulty, cost or expense will be encountered in manufacturing, controlling, validating and, if applicable, filling and labeling the FeLV Product in conformance with such country's regulatory standards. As to the Transfer Price for each such country, the parties agree, in good faith, to meet, discuss and reach a mutually acceptable Transfer Price based upon the range set forth herein, depending upon the country's regulatory environment. The parties acknowledge that many uncertainties exist as to the cost of and potential product returns relating to bottling and labeling the FeLV Product, particularly in countries where it has been historically difficult to import biological products, such as Japan. In order to substantially reduce or eliminate these uncertainties, the parties agree, whenever possible and contractually acceptable to Synbiotics, to sell Bulk FeLV vaccine in such markets as opposed to finished goods. Notwithstanding any other provisions of the FeLV Agreement or this Amendment, future bulk and finished vaccine pricing from BTI to RMI-Athens, RMI-Lyon, Diamond Animal Health (for OTC), Synbiotics and any other distributor of the FeLV Product, shall be adjusted to good faith by the parties, as necessary to take into account (1) changes in consumer price levels And/or purchasing power, (2) any improvements to the product, and (3) increases in the cost of producing the FeLV Product particularly those due to requirements imposed by regulatory entities or introduction of the FeLV Product into new markets. 10. The parties agree that for purposes of Section 1.1 of the FeLV Agreement, "improvements" shall include such modifications as additions of new strains of whole killed FeLV virus; additions of adjuvants or immuno-enhancers to the whole killed FeLV vaccine Product; changes in growth media or other production techniques to improve stability or purity of the whole killed FeLV vaccine Product; freeze drying of Product; changes in concentration of the FeLV virus; and other similar type changes. Some improvements will require another negotiated transfer price. It is further agreed that "improvements" shall not include FeLV antigens that are reduced to recombinant vaccines; modified live FeLV vaccines; oral/nasal preparations or FeLV vaccine; gene deleted DNA or RNA vaccines; and any genetically altered or other futuristic types of FeLV virus vaccines. Finally, It is confirmed that, unless Synbiotics' right to promote, use and sell the FeLV Product becomes non-exclusive, BTI will not have the right to sell the conventional whole killed FeLV vaccine Product in combination vaccines without the express written consent of Synbiotics. 11. The [*] loan by Synbiotics to BTI referred to in Section 10.2 of the PRC Agreement shall be repaid as follows: effective upon signing this Agreement, and notwithstanding anything in this Amendment or the FeLV Agreement or the PRC agreement to the contrary, Synbiotics shall retain, from the purchase price Synbiotics would otherwise pay BTI for purchases of FeLV vaccine, the sum of [*] per dose of FeLV vaccine purchased from BTI by Synbiotics. Such [*] per dose sum retained by Synbiotics shall be applied against and reduce the outstanding principal balance of the loan until fully repaid, This [*] per dose loan repayment procedure shall not apply to any FeLV vaccine sold by BTI to Synbiotics for delivery to RMI-Athens for which Synbiotics must pay in full. The [*] per dose purchase price retention by Synbiotics shall immediately cease at such time as the loan has been paid in full. 12. Except as expressly amended by this Agreement, the FeLV Agreement will remain unchanged and in full force and effect. -5- IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first written above. SYNBIOTICS CORPORATION, BIO-TRENDS INTERNATIONAL, INC., a California corporation a California corporation By: /s/ KENNETH M. COHEN By: /s/ CHARLES J. YORK -------------------- ------------------- Title: President and Chief Title: President and Chief Executive Officer Executive Officer -6- EX-10.38.1 3 ADDENDUM TO DISTRO AGREEMENT EXHIBIT 10.38.1 --------------- ADDENDUM To DISTRIBUTION AGREEMENT The Distribution Agreement between RHONE MERIEUX, France ("RM") SYNBIOTICS CORPORATION ("SYNBIOTICS"), dated July 10, 1990 "Agreement"), is amended as follows: 1. The scheduled expiration date of the Agreement is amended to be December 31, 1999 with the understanding that both parties are willing in good faith to discuss extending this agreement through December 31, 2004. 2. RM shall have the non-exclusive right to distribute SYNBIOTICS' VacSYN/FeLV vaccine in South Africa. 3. SYNBIOTICS is guaranteed the purchase of minimum doses, pursuant to (S)7.2 of the Agreement (as hereunder amended) only in markets exclusive to RM. Current markets exclusive to RM are (i) France (for the duration of the Agreement) and (ii) the United Kingdom (for three (3) years post-licensure of VacSYN/FeLV/TM/. All other markets are non-exclusive. For non exclusive markets, SYNBIOTICS and RM will, three months before the beginning of each year, after significant consultation, set sales goals (quantities, average transfer price, ...), on a global basis. If RM reaches these global sales goals, a [*] rebate on net sales occurring in each country will be due to RM within sixty (60) days of the end of each calendar year in which the Agreement is in effect. 4. The second paragraph of (S)1.2 of the Agreement shall be amended in its entirety to read as follows: "Under the condition that SYNBIOTICS is unsuccessful in developing an FIV and/or FIP combination vaccine, RM rejects its right of first refusal as identified above, RM may combine these antigens with VacSYN/FeLV/TM/. If RM chooses to market these combination antigens with other than SYNBIOTICS' FIV and/or FIP antigen, then SYNBIOTICS would be free to market its combination product with other marketing partners in the Territory. RM has the right to develop its own FeLV products to be used in a RM combination product for the Territory subject to Section 6.3 of this Agreement. RM has the right at its option to combine any of its feline antigens with the VacSYN/FeLV/TM/ product for the Territory." 5. Section 6.3 of the Agreement shall be amended in its entirety to read as follows: "6.3 RM has the right to develop its own FeLV products to be used in a RM combination product in each exclusive Territory and in a RM monovalent or combination product in each non-exclusive Territory. RM will provide SYNBIOTICS three (3) year's notice of its intent to use its own FeLV. Regardless of development of its own product RM will continue to promote and sell the SYNBIOTICS's VacSYN/FeLV/TM/ product in the Territory. If and when RM use a combination product, RM's rights in any Territory then considered exclusive shall become non- exclusive upon the date of the relevant product registration." - ------------------- [*] Certain confidential portions of this Exhibit were omitted by means of blackout of the text (the "Mark"). This Exhibit has been filed separately with the Secretary of the Commission without the Mark pursuant to the Company's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. -1- 6. Section 6.5 of the Agreement shall be amended in its entirety to read as follows: "6.5 At the termination of the Agreement or when RM withdraws from a market, SYNBIOTICS will own all the regulatory licensure rights and RM will assist SYNBIOTICS to the extent required to have these regulation licenses issued in SYNBIOTICS' name. However, RM shall in no case be obliged to conduct any additional works in order to complete or amend the available registration dossiers." 7. a) The first paragraph of section 7.2 of the Agreement is amended as follows: "7.2. For the exclusive markets, RM will guarantee the purchase from SYNBIOTICS of the following minimum doses of the Product:
Sales Period Nr of Doses Transfer Price ------------ ----------- -------------- For November 1996 to 31 December 1997: [*] [*] per dose For each following calendar year: [*] to be discussed and agreed 3 months before the beginning of the relevant year.
The agreed prices could be renegotiated at any time in case of important changes in the economical conditions and competition situation in the markets." b) The second paragraph of Section 7.2 of the Agreement (from "The third twelve months ... to ... doses from year two") is deleted and replaced by: "The hereabove minimum guaranteed quantities will be renegotiated in good faith to reflect lost sales due to a competitive combination product entering the market and RM does not have a combination product provided internally, or by SYNBIOTICS. In addition, if due to no fault of RM, the product has not received United Kingdom approval, and/or if any registration or approval is cancelled or suspended in any exclusive market, the guaranteed minimum purchases, and/or the whole Agreement if necessary, will be renegotiated in good faith to reflect the new situation so created." 8. All capitalized terms shall have the same meaning as set forth in the Agreement, unless otherwise defined herein. 9. All the section of this addendum shall become effective upon the end of the present contractual term, on October 24, 1996, except section 2 hereabove which is effective immediately upon the date of signature of this Addendum. 10. Except as expressly amended by this Addendum, the Agreement remains unchanged and in full force and effect. This Addendum may be executed in any number of counterparts, each of which when so delivered shall be deemed an original, but all such counterparts shall constitute one and the same instrument. -2- IN WITNESS WHEREOF, the parties have executed and delivered this Addendum in San Diego, California on April 11, 1996. RHONE MERIEUX, FRANCE By: /s/ GUY MAHLER ------------------------ Title: SYNBIOTICS CORPORATION By: /s/ ROBERT L. WIDERKEHR ------------------------ Title: President and Chief Executive Officer -3- EX-10.38.2 4 SECOND ADDENDUM TO DISTRO AGREEMENT EXHIBIT 10.38.2 --------------- SECOND ADDENDUM TO DISTRIBUTION AGREEMENT The Distribution Agreement between Rhone Merieux, France ("RM") and Synbiotics Corporation ("Synbiotics"), dated July 10, 1990 (the "Agreement"), as amended by that certain Addendum to Distribution Agreement, dated April 11, 1996 (the "First Addendum") is hereby further amended as follows: 1. As contemplated in paragraph 1 of the First Addendum, effective upon the date upon which both Synbiotics and Bio-Trends International, a California corporation ("BTI"), have each executed that certain Amendment to FeLV Distribution Agreement, which extend the distribution agreement between Synbiotics and BTI for BTI's FeLV vaccine through December 31, 2004, Synbiotics and RM agree to extend the Agreement, as modified by the First Addendum, between RM and Synbiotics through December 31, 2004, subject to all the other terms and conditions set forth therein. Except as otherwise expressly provided in this Second Addendum, the Agreement, as modified by the First Addendum, will remain unchanged and in full force and effect. IN WITNESS WHEREOF, the parties have executed and delivered this Second Addendum to Distribution Agreement in San Diego, California, as of this 27th day of August, 1996. RHONE MERIEUX, FRANCE By: /s/ GUY MAHLER -------------------- Title: SYNBIOTICS CORPORATION, a California corporation By: /s/ KENNETH M. COHEN ---------------------- Title: President and Chief Executive Officer -1- EX-10.41.1 5 ADDENDUM TO AGREEMENT EXHIBIT 10.41.1 --------------- ADDENDUM TO AGREEMENT The Agreement between Rhone Merieux, Inc. ("RMI") and Synbiotics ("Synbiotics") dated January 1, 1992 (the "Agreement"), is amended as follows: 1.0 Effective immediately, Synbiotics shall have rights to market FeLV R,C,P (live) and CHL combination vaccine (see Section 1.2.1 of the Agreement) as provided by RMI in the United States, Canada and Mexico. Synbiotics shall not market thin vaccine directly to veterinarians or to or through other biological manufacturers. Synbiotics will not indicate to any third party that any of its products are of Rhone Merieux origin. 2.0 Effective 17 August 1995 as per letter agreement, RMI shall have rights to market Synbiotics' FeLV vaccine (monovalent) in Canada, either direct or through RMI distributors. This marketing right shall be co-exclusive, with only Synbiotics retaining the right to appoint one distributor (but no more than one distributor) to market FeLV vaccine (monovalent) in Canada (direct or through subdistributors). The marketing rights granted to RMI in this Section 2 shall apply only to finished, final FeLV (monovalent) products manufactured by RMI from bulk FeLV supplied by Synbiotics. No royalty shall be due from RMI to Synbiotics on sales of FeLV vaccine (monovalent) in Canada. 3.0 The scheduled expiration date of the Agreement is amended to be December 31, 2004. 4.0 Section 2.2.1 of the Agreement shall be amended in its entirety to read as follows: 2.2.1 "RMI's annual requirement of bulk, tested, completed FeLV Product ("FeLV"), at a purchase price of [*] per one dose equivalent (defined as 1.2 ml) through December 31, 1997 and at a purchase price of [*] from January 1, 1998 until the expiration or earlier termination of the Agreement. Notwithstanding the foregoing, Synbiotics shall have the right to increase the prices set forth herein: (i) in the event that the United States Animal and Plant Health Inspection Service officially requires Synbiotics to upgrade its manufacturing facilities, but no such price increase may occur prior to 31 December 1999 and if such increase is necessary, the price of FeLV shall not exceed [*]/one dose equivalent; or (ii) Synbiotics reasonably determines that a price increase shall be restricted to a case where the annual inflation rate at the end of a given calendar year exceeds ten (10%) percent according to the U.S. Producer Price Index. The parties will agree to meet in such a case and mutually agree upon the future price of the FeLV; or (iii) Synbiotics reasonably determines that an improvement has resulted in an increase in value provided, however, the price of FeLV shall not exceed [*] per one dose equivalent." 5.0 Synbiotics shall pay a royalty to RMI on all net sales by Synbiotics of all Products containing RMI Components equal to [*] percent of net sales during the remainder of this Agreement. - ----------------------- [*] Certain confidential portions of this Exhibit were omitted by means of blackout of the text (the "Mark"). This Exhibit has been filed separately with the Secretary of the Commission without the Mark pursuant to the Company's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. -1- 6.0 Section 3.3.2 of the Agreement shall be amended in its entirety to read as follows: 3.3.2 RMI shall pay a royalty to Synbiotics on Synbiotics origin FeLV net sales by RMI as follows:
a. FeLV Monovalent (USA Only) Royalty Rates -------------------------- ------------- 1 Sept. 95 - 31 Oct. 95 [*] 1 Nov. 95 - 31 Oct. 96 [*] 1 Nov. 96 - 31 Oct. 97 [*] 1 Nov. 97 - 31 Dec. 99 [*] 1 Jan. 2000 - 31 Dec. 2004 [*]
b. FeLV Combinations (USA/CANADA/MEXICO) Royalty Rates ------------------------------------- ------------- 1 Sept. 95 - 31 Oct. 95 [*] 1 Nov. 95 - 31 Oct. 96 [*] 1 Nov. 96 - 31 Oct. 97 [*] 1 Nov. 97 - 31 Dec. 99 [*] 1 Jan. 2000 - 31 Dec. 2004 [*]
7.0 All capitalized terms shall have the same meaning as set forth in the Agreement, unless other wise defined. 8.0 Effective January 1, 1997 upon providing Synbiotics with twelve (12) months prior written notice, RMI shall have the right to market in the territory, FeLV mono and combination vaccines (other than Synbiotics origin). RMI's right to sell Synbiotics' FeLV mono and combination vaccines shall become nonexclusive nine (9) months after such written notice. When non-exclusive, RMI will purchase FeLV at a price no higher than the price offered to any other party. The reciprocal shall be true for RMI's origin R-C-P-CHL filled containers (see Section 2.1.1 of the Agreement). 9.0 Except as expressly amended by this Addendum, the Agreement remains unchanged and in full force and effect. This Addendum may be executed in any number of counterparts each of which when so delivered shall be deemed an original, but all such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed and delivered this Addendum in Athens, Georgia 22 August 1996. SYNBIOTICS CORPORATION RHONE MERIEUX, INC. By: /s/ KENNETH M. COHEN By: /s/ DON HILDEBRAND ------------------------- ----------------------- Title: President and Chief Title: President Executive Officer Print Name: Kenneth M. Cohen Print Name: Don Hildebrand Date: August 22, 1996 Date: August 22, 1996 -2- EX-11.1 6 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11.1 ------------ SYNBIOTICS CORPORATION COMPUTATION OF EARNINGS (LOSS) PER SHARE - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- -------------------------- 1996 1995 1996 1995 ----------- ----------- ---------- ------------ PRIMARY EARNINGS (LOSS) PER SHARE: Net income (loss) per statement of operations $ (395,000) $ (854,000) $2,773,000 $ 880,000 =========== =========== ========== ============ Weighted average number of shares outstanding 6,000,000 5,809,000 6,013,000 5,827,000 =========== =========== ========== ============ Primary earnings (loss) per share $ (.07) $ (.15) $ .46 $ .15 =========== =========== ========== ============ FULLY DILUTED EARNINGS (LOSS) PER SHARE:/(1)/ Net income (loss) per statement of operations $ (395,000) $ (854,000) $2,773,000 $ 880,000 =========== =========== ========== ============ Reconciliation of weighted average number of shares per primary computation above, to amount used for fully diluted computation: Weighted average number of shares outstanding, per primary computation 6,000,000 5,809,000 6,013,000 5,827,000 Add-effect of outstanding options (as determined by the application of the treasury method) 153,000 54,000 26,000 7,000 ----------- ----------- ---------- ------------ Weighted average number of shares, as adjusted 6,153,000 5,863,000 6,039,000 5,834,000 =========== =========== ========== ============ Fully diluted earnings (loss) per share $ (.06) $ (.15) $ .46 $ .15 =========== =========== ========== ============
- ----------------------------------- /(1)/ This computation is submitted, for the three months ended September 30, 1996 and 1995, in accordance with Regulation S-B Item 601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-dilutive result. -1- EX-27 7 FINANCIAL DATA SCHEDULE, ARTICLE 5
5 THE CONDENSED BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND THE RELATED STATEMENTS OF OPERAIONS AND OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 INCLUDED IN THIS FORM 10-QSB. 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1,889 3,940 2,110 47 5,097 13,756 4,478 3,776 16,116 2,786 0 0 0 29,725 (16,395) 16,116 14,598 15,037 7,620 7,620 5,690 0 0 1,727 113 2,773 0 0 0 2,773 .46 .46
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