-----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, OaSRtndFSPRxUH8+K1eHTIH+3EVTUbKRO2ZW/8DWkT78AK5jbCymshKpLlITW+jc voN06FUUYt7D+A1zCdUhfw== 0000810084-98-000015.txt : 19980123 0000810084-98-000015.hdr.sgml : 19980123 ACCESSION NUMBER: 0000810084-98-000015 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19980122 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOJECT MEDICAL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000810084 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 931099680 STATE OF INCORPORATION: OR FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-15360 FILM NUMBER: 98510609 BUSINESS ADDRESS: STREET 1: 7620 S W BRIDGEPORT RD CITY: PORTLAND STATE: OR ZIP: 97224 BUSINESS PHONE: 5036397221 MAIL ADDRESS: STREET 1: 7620 S W BRIDGEPORT ROAD CITY: PORTLAND STATE: OR ZIP: 97224 FORMER COMPANY: FORMER CONFORMED NAME: BIOJECT MEDICAL SYSTEMS LTD DATE OF NAME CHANGE: 19920703 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ FORM 10-K/A AMENDMENT NO. 3 (Mark one) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended March 31, 1997 OR [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to ________ Commission File No. 0-15360 BIOJECT MEDICAL TECHNOLOGIES INC. (Exact name of registrant as specified in its charter) Oregon 93-1099680 (State of other jurisdiction of (I.R.S. identification no.) employer incorporation or organization) 7620 SW Bridgeport Road Portland, Oregon 97224 (Address of principal executive offices) (Zip code) (503) 639-7221 (Registrant's telephone number, including areas code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Title of Class Common Stock, no par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] State the aggregate market value of voting stock held by non-affiliates of the registrant, as of May 31, 1997: $17,660,800 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of May 31, 1997: Common Stock, no par value, 19,540,413 shares. Documents Incorporated by Reference: Portions of the registrant's definitive Proxy Statement for the 1997 Annual Shareholders' Meeting are incorporated by reference into Part III Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Operating losses have resulted in an accumulated deficit of approximately $34.3 million as of March 31, 1997. In fiscal 1995 and 1996, the Company incurred significantly increased costs associated with the production and sale of the Biojector 2000 system, including sales and marketing efforts, manufacturing ramp-up and inventory build-up. The Company has been working on a product cost reduction program which commenced phase-in during fiscal 1996 and results from the initial phase of which were reflected in fiscal 1997 operating performance. The Company's ability to achieve and sustain profitability will depend in part upon customer acceptance of the Biojector 2000 system, sustained product performance, implementing additional product cost reductions and attaining revenues sufficient to support profitable operations. In August 1994, Bioject signed an agreement with Health Management, Inc. (HMI), granting HMI exclusive rights to purchase Bioject's Needle-Free Injection Management System (trademark), the Biojector 2000, for use in the home healthcare market. In return for HMI's commitment to purchase a minimum of 8,000 Biojector units over the ensuing two years, the Company granted volume pricing discounts to HMI. During the term of the contract, the selling price of Biojectors to HMI exceeded their standard cost. During fiscal 1995 and 1996, the Company sold approximately 2,100 and 4,300 Biojectors to HMI for total sales revenue including syringes of $1.1 million and $2.2 million, respectively. HMI did not place the great majority of these Biojectors with patients pending completion of negotiations with pharmaceutical companies for certain pricing concessions for medication to be administered with the Biojectors. In January 1996 HMI requested that Bioject suspend shipments to HMI. In February 1996, the Company learned from HMI's press releases that HMI expected to default under its loans, to take significant write-offs for accounts receivable and inventories, planned operational consolidations, and would restate certain prior period financial statements. In fiscal 1997, although not obligated to do so, the Company agreed to repurchase certain of the HMI inventories, including up to 6,000 Biojector units, for cash and forgiveness of accounts receivable totalling $660,000. The repurchase of these inventories was at a substantial discount to the original selling price to HMI. In March 1994, the Company entered into an agreement with Schering AG, Germany, for the development of a self-injection device for delivery of Betaseron(R) to multiple sclerosis patients. During fiscal 1995, the Company developed a proof-of-concept prototype and demonstrated this prototype to Schering. The Company and Schering finalized product specifications. The Company also commenced development of the preproduction clinical prototype. During fiscal 1996, the Company delivered the preproduction clinical prototypes to Schering and worked on finalizing the production prototype design. During fiscal 1997, the Company entered into a supply agreement with Schering AG and commenced activities related to full production of the self injector. Schering loaned the Company a total of $1.6 million to purchase molds and tooling for production of the product. In January 1997, the Company received notice that its contract with Schering AG would be cancelled. Under provisions of the contract, Schering AG had the option of canceling the agreement if the FDA required extensive clinical studies beyond an originally planned safety study. Schering AG received a review letter from the FDA which would have required Schering to conduct additional material clinical studies in order to use non-traditional delivery mechanisms with its Betaseron(R) product. Under terms of the contract, Schering was required to convert its $1.6 million note due from Bioject into approximately 460,000 shares of Bioject common stock at a conversion price of $3.50 per share. In addition, $106,000 of accrued interest was converted into approximately 27,000 shares of Bioject common stock at a conversion price of $3.50 per share. Approximately 487,000 shares of Bioject stock are held by Schering AG. In addition, Schering is obligated to pay Bioject for the cost of product ordered through the date of cancellation of the contract. In January 1995, the Company signed a joint development agreement with Hoffmann-La Roche to develop proprietary drug delivery systems for Roche products. The agreement provides for Bioject to develop, manufacture and sell Biojector needle-free drug delivery systems designed to Roche specifications. In return, Bioject has granted Roche exclusive worldwide rights to distribute these systems and their components for use with certain Roche products. Hoffmann-La Roche Inc. is the United States affiliate of the multinational group of companies headed by Roche Holding of Basel, Switzerland, one of the world's leading research-intensive healthcare companies. As of 1995 fiscal year end, the Company had commenced design of a prototype device and had agreed with Roche on product specifications. During fiscal 1996, the Company developed and delivered to Roche preproduction prototypes for testing and developed the clinical preproduction prototypes which were delivered to Roche in April 1996. As of March 31, 1997, the Company and Hoffmann-LaRoche were finalizing their submission to obtain regulatory approval to market the product. Hoffmann- LaRoche was also gathering marketing information in order to sign a supply agreement. In February 1995, Hoffmann-La Roche paid a one-time licensing fee totalling $500,000 and the agreement provides that it will pay specified product development fees on an agreed upon schedule of which $900,000 was paid in fiscal 1996 and $250,000 was paid in fiscal 1997. Throughout fiscal 1994 and 1995, the Company's manufacturing processes were primarily manual. These processes did not permit the Company to produce its products at costs which would allow it to operate profitably. During fiscal 1996, the Company implemented a plan to increase manufacturing capacity and refine production methods to meet anticipated future demand and to reduce product costs. For the Biojector 2000, cost reduction efforts included converting from a two piece to a one piece housing, converting to continuous process manufacturing and implementing volume purchasing programs from suppliers. For the Biojector syringes, these efforts included increasing supplier mold capacity and automating final assembly and packaging. During fiscal 1997, the Company's manufacturing activities focused on retesting the devices repurchased from HMI to ensure their continuing compliance with new product standards and elective upgrade of certain of these units to current version configuration. Manufacturing also focused on finalizing product engineering and on planning for, designing and bringing up the new self injector device and syringe manufacturing lines in advance of product launch. The Company's revenues to date have not been sufficient to cover operating expenses. However, the Company believes that if its products achieve market acceptance and the volume of sales increases, and its product costs are reduced, its costs of goods as a percentage of sales will decrease and eventually the Company will generate net income. See "Forward Looking Statements" and "Business - Risk Factors." The level of sales required to generate net income will be affected by a number of factors including the pricing of the Company's products, its ability to attain efficiencies that can be attained through volume and automated manufacturing, and the impact of inflation on the Company's manufacturing and other operating costs. There can be no assurance that the Company will be able to successfully implement its manufacturing cost reduction program or sell its products at prices or in volumes sufficient to achieve profitability or offset increases in its costs should they occur. Revenues and results of operations have fluctuated and can be expected to continue to fluctuate significantly from quarter to quarter and from year to year. Various factors may affect quarterly and yearly operating results including (i) length of time to close product sales, (ii) customer budget cycles, (iii) implementation of cost reduction measures, (iv) uncertainties and changes in purchasing due to third party payor policies and proposals relating to national healthcare reform, (v) timing and amount of payments under technology development agreements and (vi) timing of new product introductions by the Company and its competition. In the future, the Company may incur a non-cash charge to compensation expense in connection with the issuance of 100,000 shares of Common Stock to the Company's Chief Executive Officer. Under terms of his employment agreement, the Company's Chairman will receive 100,000 shares of common stock when the Company first achieves two consecutive quarters of positive earnings per share. Upon issuance of such shares the Company will record a non-cash charge to compensation at the fair market value of the stock on the last day of the quarter in which the shares are earned. During the next fiscal year, the Company will continue to focus its efforts on expanding sales, reducing the cost of its products, developing a 1.5 ml. injector for Hoffmann-La Roche, pursuing additional alliances with pharmaceutical companies and conserving its fiscal resources. The Company does not expect to report net income from operations in fiscal 1998. See "Forward Looking Statements" and "Risk Factors." RESULTS OF OPERATIONS Product sales increased from $1.5 million in fiscal 1995 to $3.1 million in fiscal 1996 and declined to $1.3 in fiscal 1997. Sales in fiscal 1995 consisted of $1.1 million of sales to Health Management Inc., and the remainder to hospitals, large clinics, individual physician offices and certain selected distributors. Sales in fiscal 1996 consisted of $2.3 million of sales to HMI with the remainder primarily to public health and flu immunization clinics. Sales in fiscal 1997, consisted of $1.1 million of sales to public health and flu immunization clinics with the balance to a strategic partner. License and technology fees varied from $1.4 million in fiscal 1995 to $1.2 million in fiscal 1996 and $966,000 in fiscal 1997. The fiscal 1995 fees included a one-time $500,000 licensing fee for access to the Company's technology received from Schering and a similar one-time $500,000 licensing fee received from Hoffmann-La Roche with the balance of the fiscal 1995 fees consisting of product development revenues recognized in connection with the Schering agreement. The fiscal 1996 and 1997 fees consisted principally of product development revenues recognized for work performed under the Schering and Hoffmann-La Roche agreements. Manufacturing expense consists of the costs of product sold and manufacturing overhead expense related to excess manufacturing capacity. The total of these costs varied from $3.4 million in fiscal 1995 to $5.2 million in fiscal 1996 and $2.2 million in fiscal 1997 due in part to changes in sales and, therefore, to changes in the total costs of product sold. The increase from 1995 to 1996 also reflects increased regulatory and quality assurance staff to support the higher level of manufacturing and increased depreciation expense associated with automated assembly equipment installed during fiscal 1996. The decrease in expense from fiscal 1996 to 1997 reflects reductions in materials and labor for injectors and syringes and reductions in fixed and variable manufacturing overhead expense. Fixed manufacturing overhead totalled $1.3 million, $1.9 million and $1.5 million in fiscal 1995, 1996 and 1997, respectively. Research and development expense increased slightly from to $1.4 million in fiscal 1995 to $1.5 million in fiscal 1996 and then decreased to $1.3 million in fiscal 1997. Fiscal 1995 expenditures related to work associated with development of the Schering device and to initial work on the Hoffmann-La Roche device. Fiscal 1996 expenditures related entirely to work performed under the Schering and Hoffmann-La Roche agreements. Fiscal 1997 expenditures related to final design and transfer to manufacturing of the Schering device and additional development work on the Hoffmann-LaRoche system. Costs vary from year to year depending on product activity. Selling, general and administrative expense totalled $4.2 million, $3.2 million and $3.2 million in fiscal 1995, 1996 and 1997, respectively. Fiscal 1995 included expenses incurred in connection with the chief executive officer transition totalling approximately $780,000 (or $0.06 per share) and to higher levels of legal, insurance, bad debt and certain promotional expenses. The decrease in fiscal 1996 resulted from planned reductions in overhead personnel. Sales and marketing expenses comprise slightly more than 50% of selling, general and administrative expenses in fiscal 1996 and 1997. Other income consists of earnings on available cash balances. Other income varied as a result of changes in cash balances and interest rates from year to year. LIQUIDITY AND CAPITAL RESOURCES Since its inception in 1985, the Company has financed its operations, working capital needs and capital expenditures primarily from private placements of securities, exercises of stock options, proceeds received from its initial public offering in 1986, proceeds received from a public offering of Common Stock in November 1993, licensing and technology revenues and more recently from sales of products. Net proceeds received upon issuance of securities from inception through March 31, 1997 totalled approximately $40.0 million. The Company has no long-term debt. Cash, cash equivalents and marketable securities totalled $4.1 million at March 31, 1996 and $2.1 million at March 31, 1997, which represented a decrease of $2.0 million from 1996 to 1997. The decrease resulted from operating losses and capital expenditures offset in part by net proceeds from a private placement of common stock and warrants in December 1996 and of long-term debt borrowing from Schering including accrued interest which was converted into 487,390 shares of common stock in February 1997. In June 1997, the Company completed private placement of its common stock and warrants totalling $750,000. Inventories increased from $1.3 million at March 31, 1996 to $1.7 million at March 31, 1997 due to the build-up of inventories to support anticipated future product sales and the repurchase of inventories from HMI. The Company has fixed commitments for facilities rent and equipment leases which total approximately $260,000 for fiscal 1998. The Company expended approximately $1.6 million for capital equipment in fiscal 1997. Substantially all of these expenditures related to ramp-up of manufacturing for the Schering product launch. These assets continue to be carried at their cost on the Company's balance sheet because the product is suitable for other home injection applications which the Company is pursuing. The Company expects to expend approximately $50,000 on non-manufacturing capital equipment additions in fiscal 1998. The Company believes that its current cash position and cash received from a private placement of common stock and warrants in June 1997, combined with revenues and other cash receipts will not be adequate to fund the Company's operations through the end of fiscal 1998. The Company has identified a number of potential financing sources and is pursuing them aggressively. See "Forward Looking Statements." Even if the Company is successful in raising additional financing unforeseen costs and expenses or lower than anticipated cash receipts from product sales or research and development activities could accelerate or increase the financing requirements. The Company has been successful in raising additional financing in the past and believes that sufficient funds will be available to fund future operations. See "Forward Looking Statements." However, there can be no assurance that the Company's efforts will be successful, and there can be no assurance that such financing will be available on terms which are not significantly dilutive to existing shareholders. Failure to obtain needed additional capital on terms acceptable to the Company, or at all, would significantly restrict the Company's operations and ability to continue product development and growth and materially adversely affect the Company's business. The Company has no banking line of credit or other established source of borrowing. The Company's independent accountants have qualified their opinion with respect to their audit of the Company's 1997 consolidated financial statements as the result of doubts concerning the Company's ability to continue as a going concern in the absence of additional financing. Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS TO FINANCIAL STATEMENTS Report of Independent Public Accountants Consolidated Balance Sheets at March 31, 1997 and 1996 Consolidated Statements of Operations for the years ended March 31, 1997, 1996 and 1995 Consolidated Statements of Shareholders' Equity for the years ended March 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the years ended March 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements Supplementary Data (none required) REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Bioject Medical Technologies Inc: We have audited the accompanying consolidated balance sheets of Bioject Medical Technologies Inc. (an Oregon corporation) and subsidiaries as of March 31, 1997 and 1996, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended March 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bioject Medical Technologies Inc. and subsidiaries, as of March 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1997, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and, at March 31, 1997, has an accumulated deficit of $34.3 million that raises substantial doubt about the Company's ability to continue as a going concern. Management's plan in regards to these matters is also described in Note 1. The financial statements do not include any adjustments relating to recoverability and classification of asset carrying amounts that might result should the Company be unable to continue as a going concern. /S/ ARTHUR ANDERSEN LLP Portland, Oregon May 2, 1997 (except with respect to the matter discussed in Note 7 for which the date is June 18, 1997) BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, 1997 1996 ____________ __________ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,116,478 $ 3,098,251 Securities available for sale - 993,056 Accounts receivable, net of allowance for doubtful accounts of $27,500 and $55,000, respectively 311,856 424,859 Inventories 1,706,456 1,255,945 Other current assets 45,222 45,714 ____________ ___________ Total current assets 4,180,012 5,817,825 ____________ ___________ PROPERTY AND EQUIPMENT, at cost: Machinery and equipment 1,897,174 1,428,001 Production molds 1,798,630 777,353 Furniture and fixtures 176,897 163,116 Leasehold improvements 80,447 73,854 Capitalized Interest 106,228 - ____________ ___________ 4,059,376 2,442,324 Less - accumulated depreciation (1,462,338) (1,048,638) ____________ ___________ 2,597,038 1,393,686 ____________ ___________ OTHER ASSETS 310,981 307,105 ____________ ___________ $ 7,088,031 $ 7,518,616 ============ =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 659,973 $ 550,174 Accrued payroll 213,130 158,225 Other accrued liabilities 199,384 216,924 Deferred revenue 250,000 566,000 ____________ ___________ Total current liabilities 1,322,487 1,491,323 ____________ ___________ COMMITMENTS (Note 5) - - SHAREHOLDERS' EQUITY: Preferred stock, no par, 10,000,000 shares authorized; no shares issued and outstanding - - Common stock, no par, 100,000,000 shares authorized; issued and outstanding 19,540,413 and 15,585,232 shares at March 31, 1997 and 1996, respectively 40,035,736 36,001,158 Accumulated deficit (34,270,192) (29,973,865) ____________ ___________ Total shareholders' equity 5,765,544 6,027,293 ____________ ___________ $ 7,088,031 $ 7,518,616 ============ =========== The accompanying notes are an integral part of these consolidated financial statements.
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended March 31, 1997 1996 1995 _______________________________________ REVENUES: Net sales of products $ 1,269,882 $ 3,059,018 $1,479,948 Licensing/technology fees 965,500 1,150,000 1,444,000 ___________ __________ __________ 2,235,382 4,209,018 2,923,948 ___________ __________ __________ EXPENSES: Manufacturing 2,184,050 5,195,914 3,394,089 Research and development 1,275,580 1,486,607 1,427,861 Selling, general and administrative 3,177,228 3,168,618 4,186,549 Other (income) expense (105,149) (211,049) (428,402) ___________ ___________ __________ 6,531,709 9,640,090 8,580,097 ___________ ___________ __________ LOSS BEFORE TAXES (4,296,327) (5,431,072) (5,656,149) PROVISION FOR INCOME TAXES - - - ___________ ___________ ___________ NET LOSS $(4,296,327) $(5,431,072) $(5,656,149) =========== =========== =========== NET LOSS PER SHARE $ (0.26) $ (0.39) $ (0.43) ============ =========== =========== SHARES USED IN PER SHARE CALCULATION 16,705,274 14,074,349 13,167,301 ============ =========== =========== The accompanying notes are an integral part of these consolidated financial statements
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY COMMON STOCK ________________________ Accumulated Shares Amount Deficit Total __________ ___________ ____________ ___________ BALANCES, MARCH 31, 1994 13,158,074 $32,263,783 $(18,886,644) $13,377,139 Issuance of common stock in exchange for services 101,000 243,312 - 243,312 Net loss - - (5,656,149) (5,656,149) __________ __________ ____________ ___________ BALANCES, MARCH 31, 1995 13,259,074 32,507,095 (24,542,793) 7,964,302 Issuance of common stock in exchange for services 23,149 39,962 - 39,962 Issuance of common stock under a private placement in November and December 1995 2,303,009 3,454,101 - 3,454,101 Net loss - - (5,431,072) (5,431,072) __________ ___________ ____________ ___________ BALANCES, MARCH 31, 1996 15,585,232 36,001,158 (29,973,865) 6,027,293 Issuance of common stock in exchange for services 33,298 159,350 - 159,350 Issuance of common stock under a private placement in December 1996 3,434,493 2,163,000 - 2,163,000 Issuance of stock to Schering AG in exchange for debt 487,390 1,712,228 - 1,712,228 Net loss - - (4,296,327) (4,296,327) __________ ___________ _____________ ___________ BALANCES, MARCH 31, 1997 19,540,413 $40,035,736 $(34,270,192) $5,765,544 ========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended March 31, 1997 1996 1995 ____________________________________________ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(4,296,327) $(5,431,072) $(5,656,149) Adjustments to net loss: Depreciation and amortization 443,700 520,714 247,183 Contributed capital for services 159,350 39,962 243,312 Net changes in assets and liabilities: Accounts receivable 113,003 305,864 (561,616) Inventories (450,511) (147,237) (144,982) Other current assets 492 6,435 (6,773) Accounts payable 109,799 (257,704) 593,498 Accrued payroll 54,905 (92,512) 52,436 Other accrued liabilities (17,540) (102,080) 273,305 Deferred revenue (316,000) 410,000 156,000 __________ ___________ ___________ Net Cash Used in Operating Activities (4,199,129) (4,747,630) (4,803,786) __________ ___________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES: Securities purchased - (1,977,856) (6,951,390) Securities sold 993,056 4,974,268 9,795,130 Property and equipment (1,617,052) (597,100) (956,487) Other assets (33,876) (64,916) (65,723) __________ ___________ ___________ Net Cash Provided By (Used In) Investing Activities (657,872) 2,334,396 1,821,530 __________ ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES: Cash proceeds from common stock 2,163,000 3,454,101 - Borrowing from long-term debt subsequently converted to common stock 1,712,228 - - __________ ___________ ___________ Net Cash Provided by Financing Activities 3,875,228 3,454,101 - __________ ___________ ___________ CASH AND CASH EQUIVALENTS: Net increase (decrease) in cash and cash equivalents (981,773) 1,040,867 (2,982,256) Cash and cash equivalents at beginning of year 3,098,251 2,057,384 5,039,640 __________ ___________ ___________ Cash and cash equivalents at end of year $2,116,478 $3,098,251 $2,057,384 ========== =========== ==========
The accompanying notes are an integral part of these consolidated financial statements. BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. THE COMPANY: The consolidated financial statements of Bioject Medical Technologies Inc. and its subsidiaries (the "Company"), include the accounts of Bioject Medical Technologies Inc. ("BMT") and its wholly owned subsidiary, Bioject Inc. ("BI"). All significant intercompany transactions have been eliminated. BMT was incorporated on December 17, 1992 under the laws of the State of Oregon for the purpose of acquiring all of the outstanding common shares of Bioject Medical Systems, Ltd. ("BMSL") in exchange for an equivalent number of common shares of BMT stock under a plan of U.S. reincorporation approved by the Company's shareholders on November 20, 1992. BMSL was incorporated on February 14, 1985, under the laws of British Columbia, and terminated in July 1996. BI was incorporated on February 8, 1985, under the laws of the State of Oregon. The Company commenced operations in 1985 for the purpose of developing, manufacturing and distributing a new drug delivery system. Since its formation, the Company has been engaged principally in organizational, financing, research and development, and marketing activities. In the last quarter of fiscal 1993, the Company launched U.S. distribution of its Biojector 2000(R) system primarily to the hospital and large clinic market. The Company's products and manufacturing operations are subject to extensive government regulation, both in the U.S. and abroad. In the U.S., the development, manufacture, marketing and promotion of medical devices is regulated by the Food and Drug Administration ("FDA") under the Federal Food, Drug, and Cosmetic Act ("FFDCA"). In 1987, the Company received clearance from the FDA under Section 510(k) of the FFDCA to market a hand- held CO2-powered jet injection system. In June 1994, the Company received clearance from the FDA under 510(k) to market a version of its Biojector 2000 system in a configuration targeted at high volume injection applications. In October 1996, the Company received 510(k) clearance for a non-needle disposable vial access device. In March 1997, the Company received a 510(k) clearance from the FDA to market a version of its Biojector 2000 with certain additional features. Since its inception the Company has incurred operating losses and at March 31, 1997 has an accumulated deficit of approximately $34.3 million. The Company's revenues to date have been derived primarily from licensing and technology fees and more recently from sales of the Biojector 2000 system and Biojector syringes to public health clinics and flu immunization programs. Future revenues will depend upon acceptance and use by healthcare providers of the Company's jet injection technology. Uncertainties over government regulation and competition in the healthcare industry may impact healthcare provider expenditures and third party payer reimbursements and, accordingly, the Company cannot predict what impact, if any, subsequent healthcare reforms might have on its business. The Company's ability to achieve and sustain profitability will depend in part upon the customer acceptance of the Biojector 2000 system, sustained product performance, implementing additional product cost reductions and attaining revenues sufficient to support profitable operations. The Company's revenues to date have not been sufficient to cover operating expenses. However, the Company believes that if its products achieve market acceptance and the volume of sales increase, and its product costs are reduced, its cost of goods as a percentage of sales will decrease and eventually the Company will generate net income. The level of sales required to generate net income will be affected by a number of factors including the pricing of the Company's products, its ability to attain efficiencies that can be attained through volume and automated manufacturing, and the impact of inflation on the Company's manufacturing and other operating costs. There can be no assurance that the Company will be able to successfully implement its manufacturing cost reduction program or sell its products at prices or in volumes sufficient to achieve profitability or offset increase in its costs should they occur. The Company believes that its current cash position and cash received from a private placement of common stock and warrants in June 1997 (see note 7), combined with revenues and other cash receipts will not be adequate to fund the Company's operations through the end of fiscal 1998. The Company has identified a number of potential financing sources and is pursuing them aggressively. Even if the Company is successful in raising additional financing unforeseen costs and expenses or lower than anticipated cash receipts from product sales or research and development activities could accelerate or increase the financing requirements. The Company has been successful in raising additional financing in the past and believes that sufficient funds will be available to fund future operations. However, there can be no assurance that the Company's efforts will be successful, and there can be no assurance that such financing will be available on terms which are not significantly dilutive to existing shareholders. Failure to obtain needed additional capital on terms acceptable to the Company, or at all, would significantly restrict the Company's operations and ability to continue product development and growth and materially adversely affect the Company's business. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts that might result should the Company be unable to continue as a going concern. 2. ACCOUNTING POLICIES: CASH EQUIVALENTS The Company considers cash equivalents to consist of short-term, highly liquid investments with an original maturity of less than three months. SECURITIES AVAILABLE FOR SALE The Company accounts for its investments in marketable securities in accordance with Financial Accounting Standards Board Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS 115). Under provisions of SFAS 115, the Company is required to classify and account for its security investments as trading securities, securities available for sale or securities held to maturity depending on the Company's intent to hold or trade the securities at time of purchase. As of March 31, 1997 and 1996, all securities held by the Company consisting entirely of short-term debt instruments were available for sale and, accordingly, are stated on the balance sheet at their fair market values which approximate cost. Realized gains or losses are determined on the specific identification method and are reflected in the accompanying financial statements. There were no significant realized gains or losses for fiscal 1997, 1996 and 1995. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined in a manner which approximates the first-in, first-out (FIFO) method. Costs utilized for inventory valuation purposes include labor, materials and manufacturing overhead. Net inventories consist of the following: March 31, 1997 1996 __________ __________ Raw Materials $ 815,868 $ 697,694 Work in Process 9,763 12,467 Finished Goods 880,825 545,784 __________ __________ $1,706,456 $1,255,945 ========== ========== PROPERTY AND EQUIPMENT For financial statement purposes, depreciation expense on property and equipment is computed on the straight-line method using the following lives: Furniture and Fixtures............................5 years Machinery and Equipment...........................7 years Computer Equipment................................3 years Production Molds..................................5 years Leasehold improvements are amortized on the straight-line method over the shorter of the remaining terms of the lease or the estimated useful lives of the assets. Included in machinery and equipment and production molds are molds, tooling and production fixtures constructed by the Company under a supply agreement with Schering AG for the manufacture and sale of a needle-free self-injection system. The construction of these assets commenced in May and June 1996 and continued until January 1997 when they were ready for their intended use. Schering loaned the Company $1.6 million to fund acquisition of the assets, and therefore, in accordance with SFAS 34, the Company has capitalized $106,000 of interest incurred on this debt. OTHER ASSETS Other assets include costs incurred for the application of patents, net of amortization on a straight-line basis over 17 years. Accumulated amortization totalled $144,713 and $114,713 at March 31, 1997 and 1996, respectively. Amortization expense for the years ended March 31, 1997, 1996 and 1995 totalled $30,000, $20,000 and $31,000 respectively. ACCOUNTING FOR LONG-LIVED ASSETS In March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of"(SFAS 121), which requires the Company to review for impairment of its long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. In certain situations, an impairment loss would be recognized. SFAS 121 became effective for the Company's year ended March 31, 1997. The Company has studied the implications of SFAS 121 and, based on its evaluation, does not believe that an adjustment to the carrying value of its long-lived assets is necessary. REVENUE RECOGNITION FOR PRODUCT SALES The Company records revenue from sales of its products upon shipment. In fiscal 1997, 1996 and 1995, sales to one customer accounted for 17%, 75% and 74% of net sales of products, respectively. At March 31, 1997, 62% of accounts receivable were accounted for by one customer. RESEARCH AND DEVELOPMENT AND LICENSING/TECHNOLOGY REVENUES Licensing fees are recognized as revenue when due and payable. All licensing fee arrangements for the Company have been on a non-refundable basis and impose no future performance requirements or other obligations on the Company. Product development revenue is deferred upon receipt and is recognized as revenue as qualifying expenditures are incurred. Expenditures for research and development are charged to expense as incurred. In March 1994, the Company entered into a joint development agreement with Schering AG, a major pharmaceutical manufacturer, for the development of an application specific self injection system. Under terms of the agreement, the Company received a $500,000 licensing fee in April 1994 and has received partial funding of product development expenses on an agreed schedule. In fiscal 1995, the Company received a total of $1.1 million from the pharmaceutical company, composed of $500,000 in licensing fees which were recognized as revenue during fiscal 1995 and $600,000 of Phase I product development revenues, $444,000 of which were recognized as revenue in fiscal 1995. In fiscal 1996, the Company received an additional $660,000 and a total of $751,000 was recognized as revenue. In fiscal 1997, the Company received a final product development payments totalling $349,500 and recognized revenue of $414,500. During fiscal 1997, the Company entered into a supply agreement with Schering AG and commenced activities related to full production of the self injector. Schering loaned the Company a total of $1.6 million to purchase molds and tooling for production of the product. In January 1997, the Company received notice that its contract with Schering AG would be cancelled. Under provisions of the contract, Schering AG had the option of canceling the agreement if the FDA required extensive clinical studies beyond an originally planned safety study. Schering AG received a review letter from the FDA which would have required Schering to conduct additional material clinical studies in order to use non-traditional delivery mechanisms with its Betaseron(R) product. Under terms of the contract, Schering was required to convert its $1.6 million note due from Bioject into approximately 460,000 shares of Bioject common stock at a conversion price of $3.50 per share. In addition, $106,000 of accrued interest was converted into approximately 27,000 shares of Bioject common stock at a conversion price of $3.50 per share. Schering is obligated to pay Bioject for the cost of product ordered through the date of cancellation of the contract. In January 1995, the Company entered into a joint development agreement with Hoffmann-La Roche, a major pharmaceutical manufacturer, for the development of application specific products. The Company received a licensing fee totalling $500,000 which was recognized as revenue in fiscal 1995. The Company is also receiving specified product development fees on an agreed upon schedule. In fiscal 1996, the Company received $900,000, of which $399,000 was recognized as revenue. In fiscal 1997, the Company received $250,000 in product development fees and recognized revenue of $501,000. INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting For Income Taxes (SFAS 109). Under the liability method specified by SFAS 109, the deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates for the years in which the taxes are expected to be paid. At March 31, 1997, the Company had total deferred tax assets of approximately $13.0 million, consisting principally of available net operating loss carryforwards. No benefit for these operating losses has been reflected in the accompanying financial statements as they do not satisfy the recognition criteria set forth in SFAS 109. Total deferred tax liabilities were insignificant as of March 31, 1997. As of March 31, 1997, BMT has net operating loss carryforwards of approximately $799,000 available to reduce future federal taxable income, which expire in 2008 through 2012. BI has net operating loss carryforwards of approximately $34 million available to reduce future federal taxable income, which expire in 2001 through 2012. Approximately $3.0 million of BI's carryforwards were generated as a result of deductions related to exercises of stock options. When utilized, this portion of BI's carryforwards, as tax effected, will be accounted for as a direct increase to contributed capital rather than as a reduction of that year's provision for income taxes. The principal differences between net operating loss carryforwards for tax purposes and the accumulated deficit result from capitalization of certain start-up costs and deductions related to the exercise of stock options for income tax purposes. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NET LOSS PER SHARE Net loss per share is computed based on the weighted average number of common shares outstanding during the period. The effects of common stock equivalents have not been included in the calculation as they would be anti- dilutive. 3. 401(K) RETIREMENT BENEFIT PLAN: The Company has a 401(k) Retirement Benefit Plan for its employees. All employees subject to certain age and length of service requirements are eligible to participate. The plan permits certain voluntary employee contributions to be excluded from the employees' current taxable income under provisions of the Internal Revenue Code Section 401(k) and regulations thereunder. Effective January 1, 1996, the Company amended the plan to provide for voluntary employer matches of employee contributions up to 6% of salary and for discretionary profit sharing contributions to all employees. Such employer matches and contributions may be in either cash or Company common stock. For calendar 1996, the Company agreed to match 25% of employee contributions up to 6% of salary with Company stock. For calendar 1997, the Company has agreed to match 37.5% of employee contributions up to 6% of salary with Company stock. In fiscal 1997 and 1996, the Company recorded an expense of $25,000 and $4,800, respectively, related to voluntary employer matches under the 401(k) Plan. The Board of Directors has reserved up to 100,000 shares of common stock for these voluntary employer matches of which 31,630 shares have been committed through March 31, 1997. 4. SHAREHOLDERS' EQUITY: PREFERRED STOCK The Company has authorized 10 million shares of preferred stock, without par value, to be issued from time to time with such designations and preferences and other special rights and qualifications, limitations and restrictions thereon, as permitted by law and as fixed from time to time by resolution of the Board of Directors. As of March 31, 1997, no preferred shares had been issued by the Company. COMMON STOCK Holders of common stock are entitled to one vote for each share held of record on all matters to be voted on by shareholders. No shares have been issued subject to assessment, and there are no preemptive or conversion rights and no provision for redemption, purchase or cancellation, surrender or sinking or purchase funds. Holders of common stock are not entitled to cumulate their shares in the election of directors. A total of 100,000 shares of common stock have been reserved by the Board of Directors for issuance to 401(k) plan participants (see note 3) of which 31,630 shares have been issued through March 31, 1997. ESCROWED SHARES As a result of the Company's initial public offering on the Vancouver Stock Exchange, 1.5 million shares of the Company had been held in escrow pursuant to an Escrow Agreement dated May 30, 1986, among the Company, WAM Partnership and the escrow agent, Montreal Trust Company. WAM Partnership was owned by Carl E. Wilcox, former Chairman and C.E.O., and J. Thomas Morrow, former Director, and managed by Mr. Wilcox. Both Mr. Wilcox and Mr. Morrow are founders of the Company. The Escrow Agreement provided that these escrowed shares would be released from escrow based on a cash flow formula or, alternatively, the shares could be released by making application and obtaining consent of the Superintendent of Brokers of British Columbia based on demonstrating company value. Under the escrow agreement, any shares not released by July 14, 1996 would be cancelled. In connection with Mr. Wilcox's resignation as chairman and chief executive officer of the Company (see Note 6), the Board of Directors granted Mr. Wilcox a special power of attorney to exclusively perform all acts necessary to obtain extension of the escrow and/or release of the WAM Partnership escrow shares. On June 3, 1996, the British Columbia Securities Commission informed the Company that its Executive Director (formerly the Superintendent of Brokers) consented to the release of all shares originally held in escrow. This means that the 1.5 million shares of common stock which had been held under this escrow arrangement are now held by the owners of the shares without risk of cancellation and may be sold. Upon release, approximately 150,000 of these shares were considered to have been contributed back to the Company and reissued to certain former employees in consideration for past services rendered on behalf of the Company. The Company recorded the shares as contributed capital with a corresponding non-cash charge to compensation expense at the fair market value of the stock on the date of issuance. Accordingly, a non-cash charge of $120,000 was recorded in the financial statements in the first quarter of fiscal 1997. STOCK OPTIONS Options may be granted to directors, officers and employees of the Company by the Board of Directors under terms of the Bioject Medical Technologies Inc. 1992 Stock Incentive Plan (the "Plan"), which was approved by the Company's shareholders on November 20, 1992 and adopted by the Board effective December 17, 1992. Under the terms of the Plan, eligible employees may receive statutory and nonstatutory stock options, stock bonuses and stock appreciation rights for purchase of shares of the Company's common stock at prices and vesting as determined by a committee of the Board. Except for options whose terms were extended, options granted under a prior plan maintain their previous option price, vesting and expiration dates. As amended in fiscal 1995, a total of up to 3,000,000 shares of the Company's common stock including options outstanding at the date of initial shareholder approval of the Plan may be granted under the Plan. Options outstanding at March 31, 1997 expire through March 31, 2005. In October 1995, the Financial Accounting Standards Board issued Statement No. 123, Accounting for Stock-Based Compensation (SFAS 123), which establishes a fair value-based method of accounting for stock-based compensation plans and requires additional disclosures for those companies that elect not to adopt the new method of accounting. The Company has elected to continue to account for stock options under APB Opinion No. 25, Accounting for Stock Issued to Employees. However, as prescribed by SFAS 123 the Company has computed, for pro forma disclosure purposes, the value of all options granted during fiscal year 1997 and 1996 using the Black-Scholes option-pricing model, using the following weighted average assumptions for grants in 1997 and 1996: Risk-free interest rate 6% Expected dividend yield 0% Expected life 1.5 years Expected volatility 47% The total value of options granted during 1997 and 1996 would be amortized on a pro forma basis over the vesting period of the options. Options generally vest equally over three years. If the Company had accounted for these plans in accordance with SFAS 123, the Company's net loss and net loss per share would have increased as reflected in the following pro forma amounts (in thousands of $): Year ended March 31, 1997 1996 ______ ______ Net loss: As reported $(4,296) $(5,431) Pro forma (4,480) (5,541) Net loss per share: As reported (0.26) (0.39) Pro forma (0.27) (0.39) The above determination of proforma expense has been calculated consistent with SFAS 123 which does not take into consideration limitations on exercisability and transferability imposed by the Company's Stock Incentive Plan. Further, the valuation model is heavily weighted to stock price volatility, even with a declining stock price, which tends to increase calculated value. The actual value, if any, and, therefore, imputed proforma expense will vary based on the exercise date and the market price of the related common stock when sold.
Stock option activity is summarized as follows: Exercise Shares Price Amount _________ ____________ __________ Balances March 31, 1994 1,068,625 $3.20 - 5.00 $4,424,252 Options granted 1,427,250 2.60 - 4.75 5,387,632 Options exercised - - - Options canceled or expired (952,225) 3.00 - 5.00 (3,904,917) _________ ____________ ___________ Balances March 31, 1995 1,543,650 2.60 - 5.00 5,906,967 Options granted 1,316,439 1.25 - 4.50 3,129,177 Options exercised - - - Options canceled or expired (1,161,150) 2.34 - 5.00 (4,302,332) __________ ____________ ___________ Balances March 31, 1996 1,698,939 1.25 - 4.50 4,733,812 Options granted 705,525 1.00 - 1.30 830,006 Options exercised - Options canceled or expired (472,906) 1.00 - 4.00 (809,880) __________ ____________ ___________ Balances March 31, 1997 1,931,558 $1.00 - 4.50 $4,753,938 ========== ============ ===========
The following table sets forth as of March 31, 1997 the number of shares outstanding, exercise price, weighted average remaining contractual life, weighted average exercise price, number of exercisable shares and weighted average exercise price of exercisable options by groups of similar price and grant date: OPTIONS OUTSTANDING OPTIONS EXERCISABLE Exercise Outstanding Weighted Average Weighted Exercisable Weighted Price shares Remaining Average Options Average at 3/31/97 Contractual Exercise Exercise Life(Years) Price Price - ------ ----------- ----------- -------- ---------- -------- $1.00- 1.25 690,125 4.37 $1.17 476,688 $1.23 1.26 - 2.50 338,933 5.01 1.57 181,999 1.75 2.51 - 3.75 380,000 6.60 3.07 305,000 2.97 3.76 - 4.88 522,500 4.29 4.08 322,500 4.16
As of March 31, 1997, current officers and employees of the Company held approximately 1.0 million stock options, under the original terms of their issuance included above. Subsequent to year end, the Stock Option Committee of the Board of Directors approved a plan whereby employees may elect to reprice their outstanding options to an exercise price of $.75 per share subject to a 25% reduction in outstanding option shares and a deferral of exercisability until April 3, 1998.
WARRANTS All warrants described below have been issued in connection with private equity placements by the Company and were immediately exercisable upon issuance. Warrant activity is summarized as follows: Exercise Shares Price Amount _________ ____________ __________ Balances March 31, 1994 60,000 $ 4.50 $ 270,000 Warrants exercised - - - Warrants canceled or expired (60,000) 4.50 (270,000) _________ ____________ __________ Balances March 31, 1995 - - - Warrants issued expiring Nov. 2000 1,864,343 1.97 - 2.00 3,724,401 Warrants issued expiring Feb. 1998 575,752 2.00 1,151,505 Warrants exercised - - - Warrants canceled or expired - - - _________ ____________ __________ Balances March 31, 1996 2,440,095 1.97 - 2.00 4,875,906 Warrants issued expiring Dec. 2001 3,590,490 .82 - 1.00 3,562,413 Warrants exercised - - - Warrants canceled or expired - - - _________ ____________ __________ Balances March 31, 1997 6,030,585 $ .82 - 2.00 $8,438,319 ========== ============ ==========
5. COMMITMENTS: BI has operating leases for its manufacturing, sales and administrative facilities and warehouse facilities with options to renew for an additional five-year term upon expiration. BI also leases office equipment under operating leases for periods up to five years. At March 31, 1997, future minimum payments under noncancellable operating leases with terms in excess of one year are as follows: Year Ending March 31, Facilities Equipment __________ _________ 1998 $212,000 $45,000 1999 219,000 24,000 2000 220,000 4,000 2001 235,000 3,000 2002 236,000 - 118,000 - Thereafter Lease expense for the years ended March 31, 1997, 1996 and 1995 totalled $283,000,$221,000, and $214,000, respectively. 6. RELATED PARTY TRANSACTIONS: On January 12, 1995, the Board of Directors announced the resignation of the Company's Chairman and Chief Executive Officer, Carl E. Wilcox. In consideration for Mr. Wilcox's long service to the Company, the Board granted Mr. Wilcox 100,000 shares of common stock valued at $241,000 and cash compensation totalling $247,000. The Board agreed to pay Mr. Wilcox $20,000 per year for two years under a covenant not-to-compete. The Board also vested 200,000 previously granted option shares at $4.00 per share and extended the expiration date to January 14, 1998. The Board granted Mr. Wilcox a special power of attorney to exclusively perform all acts necessary to obtain extension and/or release of the WAM Partnership escrow shares. In addition, the Board agreed to pay up to $10,000 of costs associated with such extension and/or release. On June 3, 1996, the British Columbia Securities Commission informed the Company that release of the escrow shares had been granted (see Note 4). The value of the severance agreement totalling $488,000 was recorded as general and administrative expense in the accompanying financial statements in fiscal 1995. 7. SUBSEQUENT EVENT: On June 18, 1997, the Company completed a private placement of units (one unit consisting of one share of common stock and one-half warrant for purchase of common stock at $.71 per share)for total proceeds of $750,000. The Company has committed to register the $1.7 million shares and, if possible, the common shares underlying the 872,000 warrants issued in the private placement on a Form S-3 registration statement within 20 days of close of the transaction. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Bioject Medical Technologies Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized: BIOJECT MEDICAL TECHNOLOGIES INC. (Registrant) January 22, 1998 By: /S/ PEGGY J. MILLER Peggy J. Miller Vice President, Chief Financial Officer and Secretary/Treasurer INDEX TO EXHIBITS Exhibit Number Exhibit Description _______ __________________________________________________________ 4.3* Bioject Medical Technologies, Inc. 1992 Stock Incentive Plan, as amended through July 25, 1996. 10.36* Form of Series "F" Common Stock Purchase Warrant. 10.37* Form of Series "G" Common Stock Purchase Warrant. 10.38* Form of Registration Rights Agreement between Bioject Medical Technologies Inc. and the participants in the 1997 private placement. 23.2 Consent of Independent Public Accountants 27.1* Financial Data Schedule *Previously filed with 10-K on July 1, 1997 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K into the Company's previously filed Registration Statements on Form S-3, File Nos. 333-80679, 333-18933, 333-30955 and 333-39421, and Registration Statements on Form S-8, File Nos. 33-94400, 33-56454, 333-42156 and 333-37017. /S/ ARTHUR ANDERSEN LLP Portland, Oregon January 21, 1998 -----END PRIVACY-ENHANCED MESSAGE-----