-----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, Ww0bFB8p86xigZETIFaD3ljM5/Hh8Ft6p1NvjWehqEgqqHajNUsykdwKYQpHElPx AyWC6YJpvg8Sx2KdKzZ5DQ== 0000912057-96-026528.txt : 19961118 0000912057-96-026528.hdr.sgml : 19961118 ACCESSION NUMBER: 0000912057-96-026528 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIMA LABS INC CENTRAL INDEX KEY: 0000833298 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 411569769 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24424 FILM NUMBER: 96665925 BUSINESS ADDRESS: STREET 1: 10000 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-9361 BUSINESS PHONE: 6129478700 MAIL ADDRESS: STREET 1: 10000 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-9361 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 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 Number 0-24424 CIMA LABS INC. (Exact name of registrant as specified in its charter) Delaware 41-1569769 - --------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 10000 Valley View Road, Eden Prairie, Minnesota 55344-9361 (Address of principal executive offices including zip code) (612) 947-8700 (Registrant's telephone number, including area code) ------------------------------------------------------ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock $.01 par value 9,411,589 shares --------------------------- -------------------------------- (Class) (Outstanding at November 1, 1996) CIMA LABS INC. TABLE OF CONTENTS PAGE NUMBER ---------- COVER PAGE 1 TABLE OF CONTENTS 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Condensed Balance Sheets as of September 30, 1996 and December 31, 1995 3 Condensed Statements of Operations for the three- and nine-month periods ended September 30, 1996 and 1995 and the period from December 12, 1986 (inception) to September 30, 1996 4 Condensed Statements of Cash Flows for the nine-month periods ended September 30, 1996 and 1995 and the period from December 12, 1986 (inception) to September 30, 1996 5 Notes to Condensed Financial Statements 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 7 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. 11 ITEM 2. CHANGES IN SECURITIES. 11 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 11 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 11 ITEM 5. OTHER INFORMATION. 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 12 SIGNATURE 13 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CIMA LABS INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED BALANCE SHEETS (UNAUDITED)
September 30, December 31, 1996 1995 ------------- ------------ (Note) ASSETS Current assets: Cash and cash equivalents $ 11,934,051 $3,558,743 Accounts receivable 439,732 212,971 Inventories -- Note B 349,783 324,610 Prepaid expenses 112,252 287,279 ------------- ------------ Total current assets 12,835,818 4,383,603 Property, plant and equipment 13,466,102 13,061,836 Less accumulated depreciation (2,839,166) (2,479,688) ------------- ------------ Other assets: 10,626,936 10,582,148 Lease deposits 290,651 290,650 Patents and trademarks, net of amortization 261,308 262,244 ------------- ------------ 551,959 552,894 ------------- ------------ Total assets $ 24,014,713 $15,518,645 ------------- ------------ ------------- ------------ Liabilities and stockholders' equity Current liabilities: Accounts payable $ 143,292 $291,868 Accrued expenses 988,936 695,127 Advance royalties 250,000 250,000 ------------- ------------ Total current liabilities 1,382,228 1,236,995 Commitments and contingencies Stockholders' equity Convertible Preferred Stock, $.01 par value: Authorized shares - 5,000,000; issued and outstanding shares - none Common Stock, $.01 par value: 94,111 78,201 Authorized shares - 20,000,000; issued and outstanding shares - [ 9,411,171] - September 30, 1996; 7,821,974 - December 31, 1995 Additional paid-in capital 56,584,670 43,462,921 Deficit accumulated during the development stage (34,046,296) (29,259,472) ------------- ------------ Total stockholders' equity 22,632,485 14,281,650 ------------- ------------ Total liabilities and stockholders' equity $ 24,014,713 $15,518,645 ------------- ------------ ------------- ------------
Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed financial statements. 3 CIMA LABS INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended Period from September 30, September 30, December 12, 1986 -------------------------- ---------------------- (Inception) to September 30, 1996 1995 1996 1995 1996 ------------- ----------- ----------- ----------- ---------------- Revenues: Net sales $ 0 $ 0 $ 0 $ 151,074 $ 13,750,884 Research, development and licensing revenues 504,425 200,761 1,171,560 447,569 5,046,291 ----------- ----------- ----------- ----------- ---------------- Total Revenues 504,425 200,761 1,171,560 598,643 18,797,175 Costs and Expenses: Cost of goods sold 0 0 0 240,038 17,831,415 Research and product development 1,228,632 1,119,694 3,903,428 5,348,044 19,023,719 Selling, general and administrative 782,544 717,058 2,363,303 2,665,027 17,098,337 ----------- ----------- ----------- ----------- ---------------- Total costs and expenses 2,011,176 1,836,752 6,266,731 8,253,109 53,953,471 ----------- ----------- ----------- ----------- ---------------- Other income (expense): Interest income, net 200,096 80,160 367,574 378,355 989,440 Other income (expense) (1,876) 3,244 (4,700) 12,207 269,068 ----------- ----------- ----------- ----------- ---------------- Total other income 198,220 83,404 362,874 390,562 1,258,508 ----------- ----------- ----------- ----------- ---------------- Net loss and deficit accumulated during the development stage $(1,308,531) $(1,552,587) $(4,732,297) $(7,263,904) $(33,897,788) ----------- ----------- ----------- ----------- ---------------- ----------- ----------- ----------- ----------- ---------------- Net loss per share: Primary $(.14) $(.20) $(.55) $(.96) $ (12.23) Full diluted $(.14) $(.20) $(.55) $(.96) $ (8.22) Weighted average number of shares outstanding: Primary 9,405,846 7,687,551 8,633,939 7,599,329 2,772,537 Fully diluted 9,405,846 7,687,551 8,633,939 7,599,329 4,124,224
4 CIMA LABS INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, Period from December 12, ---------------------- 1986 (Inception) to 1996 1995 September 30, 1996 ------------- ----------- ------------------------ OPERATING ACTIVITIES Net Loss $ (4,732,297) $ (7,263,904) $(33,897,788) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 442,374 437,097 3,856,598 Preferred Stock issued for accrued interest 0 0 141,448 Gain on sale of property, plant and equipment 0 (396,816) (53,270) Changes in operating assets and liabilities: Account receivable (226,761) 233,534 (439,732) Inventories (25,173) (18,237) (349,783) Other current assets 175,028 34,979 (112,251) Accounts payable (148,575) (530,038) 143,288 Accrued expenses 293,809 (250,146) 988,936 Advance royalties 0 0 250,000 ------------- ----------- ------------------------ Net cash used in operating activities (4,221,595) (7,753,531) (29,472,554) Investing activities: Purchase of and deposits on property, plant and equipment (404,268) (983,163) (14,550,328) Purchase of short-term investments 0 (6,819,276) (18,547,140) Proceeds from sale of property, plant and equipment 0 0 471,883 Proceeds from maturities of short-term investments 0 16,500,000 18,547,140 Patents and trademarks (81,959) (49,185) (593,702) ------------- ----------- ------------------------ Net cash provided by (used in) investing activities (486,227) 8,648,376 (14,672,147) Financing activities: Proceeds from issuance of stock: Common Stock 13,083,130 651,238 30,829,882 Preferred Stock 0 0 25,458,690 Borrowing under line of credit 0 0 0 Payment on line of credit 0 0 0 Lease financing of equipment 0 0 2,441,650 Security deposits on leases 0 0 (290,651) Proceeds from issuance of notes payable and warrants 0 0 1,923,951 Payments on notes payable 0 0 (1,823,700) Payments on capital leases 0 0 (2,441,650) Organization costs 0 0 (19,420) ------------- ----------- ------------------------ Net cash provided by financing activities 13,083,130 651,238 56,078,752 ------------- ----------- ------------------------ Increases (decreases) in cash equivalents 8,375,308 1,546,083 11,934,051 Cash and cash equivalents at beginning of period 3,558,743 2,912,150 - ------------- ----------- ------------------------ Cash and cash equivalents at end of period 11,934,051 4,458,233 11,934,051 ------------- ----------- ------------------------ Supplemental schedule of noncash investing and financing activities: Note payable exchanged for issuance $ 1,517,500 Common Stock issued for note receivable 50,000
See notes to condensed financial statements. 5 CIMA LABS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. NOTE B - INVENTORIES September 30, December 31, 1996 1995 ------------- ------------- Raw materials $ 349,783 $ 324,610 Work in process -- -- Finished products -- -- ------------- ------------- $ 349,783 $ 324,610 NOTE C - INITIAL PUBLIC OFFERING The Company completed its initial public offering ("IPO") of its Common Stock in August 1994. Outstanding shares of Series A, B, C, D and E Preferred Stock were automatically converted on a one-for-one basis to shares of Common Stock on the closing date of August 4, 1994. NOTE D - LOSS PER SHARE The primary loss per share is based on the weighted average Common shares outstanding during the period. The fully diluted loss per share assumes the conversion of the preferred shares to common shares as of the beginning of the period, or from the date of issuance if later. The loss per share for periods prior to August 4, 1994, the closing date of the IPO, also gives effect to the requirements of Staff Accounting Bulletin No. 83 (SAB 83). 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION AS WELL AS THOSE DISCUSSED IN THE COMPANY'S PROSPECTUS, DATED MAY 10, 1996, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. GENERAL CIMA LABS INC. ("CIMA" or the "Company") was founded in 1986 to develop effervescent drug delivery technologies and focused initially on contract manufacturing of liquid effervescents. CIMA continues to be a development stage company. CIMA's business focus has evolved over the last several years with the development and patenting of OraSolv-Registered Trademark-, an oral dosage form which incorporate microencapsulated drug ingredients into a tablet that dissolves quickly in the mouth without chewing or water and which effectively masks the taste of the medication being delivered. In 1993, following issuance of the U.S. patent covering OraSolv-Registered Trademark-, the Company began to emphasize and focus on the development of OraSolv-Registered Trademark- products and currently focuses primarily on such products. At September 30, 1996, the Company had accumulated net losses of approximately $34,046,000. The Company's revenues have been from product sales using the Company's AutoLution-Registered Trademark- (a liquid effervescent) technology, license fees paid by corporate partners in consideration of the transfer of rights under collaboration agreements, and research and development fees paid by corporate partners to fund the Company's research and development efforts for products developed under such agreements. To date, such revenues have been derived primarily from manufacturing agreements with third parties for liquid effervescent and other products, and to a lesser extent from research and development fees and licensing arrangements, the latter generated primarily in the last five years. In 1996, there have not been any revenues from manufacturing liquid effervescent products. This is a result of the Company's decision to discontinue manufacturing those products and focus on developing its OraSolv-Registered Trademark- technology. The last revenues for manufacturing liquid effervescent products were recognized in 1995. In addition to revenues from such manufacturing, research and development and licensing, the Company has funded operations from private sales of equity securities, realizing net proceeds of approximately $25,963,000. In July 1994 the Company completed an initial public offering of shares of its Common Stock realizing net proceeds of approximately $16,379,000, and in May 1996 completed an additional public offering of its Common Stock realizing net proceeds of approximately $12,145,000. The Company expects that losses will continue at least through 1997. Research and development expenses and general and administrative expenses are expected to remain relatively stable as the majority of the necessary personnel for these functions have already been hired. As CIMA prepares for the commercialization of its OraSolv-Registered Trademark- technology, it is expected that additional manufacturing personnel will be added, and that operating expenses will increase prior to a product launch by one of CIMA's corporate partners. 7 The Company's ability to generate revenues is dependent upon its ability to enter into and be successful in collaborative arrangements with pharmaceutical and other healthcare companies for the development and manufacture of OraSolv- Registered Trademark- products to be marketed by these corporate partners. The Company is highly dependent upon the efforts of the corporate partners to successfully market OraSolv-Registered Trademark- products. Although the Company believes these partners will have an economic motivation to market these products vigorously, the amount and timing of resources to be devoted to marketing are not within the control of the Company. These partners independently could make material marketing and other commercialization decisions which could adversely affect the Company's future revenues. Moreover, certain of the Company's products are seasonal in nature and the Company's revenues could vary materially from quarter to quarter depending on which of such products, if any, are then being marketed. Since the Company's initial public offering in 1994, the Company has put in place a substantially new management team. This new management team was responsible for the build out and validation of the Company's Eden Prairie manufacturing facility. RESULTS OF OPERATIONS THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 The Company's results of operations for the three- and nine-month periods ended September 30, 1996 reflect increased emphasis on development of OraSolv- Registered Trademark- products. Product sales declined to zero product sales in the first nine months of 1996 from $0 and $151,074 in the three- and nine-month periods ended September 30, 1995 respectively, as the Company ceased to manufacture liquid effervescent and other products. The Company does not intend to manufacture liquid effervescent products in the future. Research and development fees and licensing revenues were $200,761 and $447,569 for the three- and nine-month periods ended September 30, 1995, respectively, compared to $504,425 and $1,171,560, respectively, in the comparable periods of 1996. These increased research and development fees and licensing revenues reflect the progress of license option and development agreements with multinational pharmaceutical companies that provide for licensing fees, milestone payments, royalties and manufacturing fees. Research and development fees and licensing revenues will tend to fluctuate on a quarter to quarter basis. Cost of goods sold decreased to zero in the first nine months of 1996 from $0 and $240,038 in the three- and nine-month periods ended September 30, 1995, respectively. Costs of goods sold are not expected to increase until such time as the Company begins commercial production and sales of OraSolv-Registered Trademark- products. Research and product development expenses increased from $1,119,694 in the three months ending September 30, 1995, to $1,228,632 for the same period ending September 30, 1996. This increase is due to additional expenditures for development work for our corporate partners. Research and product development decreased from $5,348,044 to $3,903,428 for the nine month period ending September 30, 1995, compared to September 30, 1996. The decrease was the result of a product development/optimization charge in the first half of 1995 of approximately $1,659,000, of which approximately $591,000 was taken in the second quarter of 1995, from an independent consultant for improving product taste and packaging of OraSolv-Registered Trademark- products. Selling, general and administrative expenses decreased due to downsizing from $2,665,027 in the nine-month period ended September 30, 1995, to $2,363,303 in the nine-month period ended September 30, 1996. Selling, general and administrative expenses increased from $717,058 for the three month period ending September 30, 1995, to $782,544 for the three month period ending September 30, 1996, due to expenses related to hiring the Chief Financial Officer, and consumer testing of OraSolv-Registered Trademark-. Net interest income is dependent upon the cash position of the Company. Net interest income shows a slight decrease from $378,355 to $367,504 for the nine month periods ending September 30, 1995, and 1996, respectively, but shows an increase from $80,160 to $200,096 for the three month periods ending September 30, 1995, and 1996, respectively. Other income (expense) decreased from $3,244 and $12,207 in the three- and nine-month periods ended September 30, 1995, respectively, to $(1,876) and $(4,700) in the three-and nine-month periods ended September 30, 1996, respectively. 8 LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations to date primarily through private and public sales of its equity securities and revenues from manufacturing agreements. Through September 30, 1996, CIMA had received net offering proceeds from such private and public sales of approximately $54,500,000 and had net sales from manufacturing agreements of approximately $13,800,000. Among other things, these funds were used to purchase approximately $14,550,000 of capital equipment, including approximately $7,500,000 in the last two quarters of 1994 in connection with completing the Company's new Eden Prairie manufacturing facility. In July 1994 the Company completed an initial public offering of shares of its Common Stock, realizing net proceeds of approximately $16,400,000, and in May 1996 the Company completed another public offering of shares of its Common Stock, realizing net proceeds of approximately $12,145,000. The funds raised in CIMA's initial public offering have been used to build out the manufacturing facility, purchase and validate the appropriate production equipment, complete the research and development facilities and purchase the necessary equipment for that facility. The Company expects to use the funds raised in its May 1996 public offering primarily to begin commercial production in its new manufacturing facility and to fund research and development (including preclinical and clinical testing) for the application of the OraSolv- Registered Trademark- technology to pharmaceutical products, and that the balance of such funds will be used for working capital and other general corporate purposes. The Company's long-term capital requirements will depend upon numerous factors, including the status of the Company's collaborative arrangements, the progress of the Company's research and development programs and receipt of revenues from sales of the Company's products. Cash and cash equivalents, were approximately $11,934,000 at September 30, 1996. The Company believes that its currently available funds, excluding any license fees that may be received in the future, will meet its needs at least through the second quarter of 1997. There can be no assurance that, prior to such time the Company will not need to raise additional funds through public or private financings, including equity financing which may be dilutive to stockholders. There can be no assurance that the Company will be able to raise additional funds if its capital resources are exhausted, or that funds will be available on terms attractive to the Company. The Company has not generated taxable income through September 1996. At December 31, 1995, the net operating losses available to offset future taxable income were approximately $29,664,000. Because the Company has experienced ownership changes, pursuant to Internal Revenue Code regulations, future utilization of the operating loss carryforwards will be limited in any one fiscal year. The carryforwards expire beginning in 2001. As a result of the annual limitation, a portion of these carryforwards may expire before ultimately becoming available to reduce potential federal income tax liabilities. BUSINESS RISKS The Company is a development stage company and must be evaluated in light of the uncertainties and complications present for any such company and, in particular, a company in the pharmaceutical industry. The Company has accumulated aggregate net losses from inception in December 1986 through September 30, 1996 of approximately $34,046,000. Losses have resulted principally from costs incurred in research and development of the Company's technologies and from general and administrative costs. These costs have exceeded the Company's revenues, which have been derived primarily from the manufacturing of AutoLution-Registered Trademark- (a liquid effervescent) and other non-OraSolv-Registered Trademark- products under agreements with third parties. The Company no longer manufactures such products and no longer derives revenues from their manufacture. The Company expects to continue to incur quarterly losses at least through 1997. Many of the Company's expenditures to date have been non-recurring costs for plant, equipment and product optimization and validation. There can be no assurance, however, that the Company will ever generate substantial revenues or achieve profitability. The Company may need to raise additional funds to operate prior to the end of the first half of 1997 and will need to raise such funds prior to the end of 1997, and is subject to the risks inherent in raising such additional funds. See "-Liquidity and Capital Resources." In addition, the Company is dependent upon its ability to enter into and perform under collaborative arrangements with pharmaceutical companies for the development and commercialization of its products. See "-General." The success of the Company and of its business strategy is also dependent in large part on the ability of the Company to attract and retain key management and operating personnel. Such individuals are in high demand and are often subject to competing offers. In particular, the Company's success will depend, in part, on its ability to attract and retain the services of its executive officers and scientific and technical personnel. The loss of the services of one or more members of management or key employees 9 or the inability to hire additional personnel as needed or replace personnel who have left the Company may have a material adverse affect on the Company. To date no commercial sales of OraSolv-Registered Trademark- products have been made, and the Company has not derived any revenues from sales of OraSolv- Registered Trademark- products. Further, the Company does not expect to derive any such revenues until at least 1997. The Company has not yet manufactured OraSolv-Registered Trademark- products in commercial quantities. To achieve desired levels of production, the Company will be required to increase substantially its manufacturing capabilities. There can be no assurance that manufacturing can be scaled-up in a timely manner to allow production in sufficient quantities to meet the needs of the Company's corporate partners. The foregoing risks reflect the Company's stage of development and the nature of the Company's industry and products. Also inherent in the Company's stage of development is a range of additional risks, including competition, uncertainties regarding the effects of health care reform on the pharmaceutical industry, including pressures exerted on the prices charged for pharmaceutical products, uncertainties regarding protection of patents and proprietary rights, uncertainties relating to government regulation and risks associated with having only one manufacturing line at the sole manufacturing facility. 10 CIMA LABS INC. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None ITEM 2. CHANGES IN SECURITIES. None ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None ITEM 5. OTHER INFORMATION. None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS Item Description ----- ------------ 10.11 Equity Incentive Plan, as amended and restated. 10.12 1994 Directors' Stock Option Plan, as amended and restated. 10.29 Offer letter between the Company and Keith P. Salenger dated August 8, 1996. 11.1 Statement re Computation of Net Loss Per Share 27 Financial Data Schedule - ------------------------ (b) REPORTS ON FORM 8-K The Company filed no reports on Form 8-K during the quarter ended September 30, 1996. 11 CIMA LABS INC. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized. CIMA LABS INC. Date: November 14, 1996 By: /s/ John M. Siebert ----------------- --------------------------------- John M. Siebert President and Chief Executive Officer Date: November 14, 1996 By: /s/ Keith P. Salenger ----------------- --------------------------------- Keith P. Salenger Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) 12 EXHIBIT INDEX NO. OF EXHIBIT DESCRIPTION - -------------- ------------ 10.11 Equity Incentive Plan, as amended and restated. 10.12 1994 Directors' Stock Option Plan, as amended and restated. 10.29 Offer letter between the Company and Keith P. Salenger dated August 8, 1996. 11.1 Statement re Computation of Net Loss Per Share 27 Financial Data Schedule - ------------------------- 13 EX-10.11 2 EXHIBIT 10.11 CIMA LABS INC. EQUITY INCENTIVE PLAN AMENDED AND RESTATED MARCH 25, 1996 FURTHER AMENDED, EFFECTIVE SEPTEMBER 24, 1996 INTRODUCTION. In 1987, the Board of Directors adopted the CIMA LABS, INC. Stock Option and Stock Award Plan, which was later amended and restated. On March 25, 1996, the Board of Directors adopted a subsequent amendment and restatement and retitled this the Equity Incentive Plan. 1. PURPOSES. (a) The purpose of the Plan is to provide a means by which selected Employees and Directors of and Consultants to the Company, and its Affiliates, may be given an opportunity to benefit from increases in value of the stock of the Company through the granting of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to purchase restricted stock, and (v) stock appreciation rights, all as defined below. (b) The Company, by means of the Plan, seeks to retain the services of persons who are now Employees or Directors of or Consultants to the Company or its Affiliates, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. (c) The Company intends that the Stock Awards issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof, including Incentive Stock Options and Nonstatutory Stock Options, (ii) stock bonuses or rights to purchase restricted stock granted pursuant to Section 7 hereof, or (iii) stock appreciation rights granted pursuant to Section 8 hereof. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued pursuant to Section 6, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option. 2. DEFINITIONS. (a) "AFFILIATE" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code. (b) "BOARD" means the Board of Directors of the Company. (c) "CODE" means the Internal Revenue Code of 1986, as amended. 1 (d) "COMMITTEE" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan. (e) "COMPANY" means CIMA LABS INC., a Delaware corporation. (f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT" means a right granted pursuant to subsection 8(b)(2) of the Plan. (g) "CONSULTANT" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services, provided that the term "Consultant" shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors. (h) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the employment or relationship as a Director or Consultant is not interrupted or terminated. The Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Board or chief executive officer of the Company, including sick leave, military leave, or any other personal leave; or (ii) transfers between locations of the Company or between the Company, Affiliates or their successors. (i) "COVERED EMPLOYEE" means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code. (j) "DIRECTOR" means a member of the Board. (k) "EMPLOYEE" means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (m) "FAIR MARKET VALUE" means, as of any date, the value of the common stock of the Company determined as follows: (1) If the common stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market, the Fair Market Value of a share of common stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in common stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable; 2 (2) If the common stock is quoted on the Nasdaq Stock Market (but not on the National Market thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of common stock shall be the mean between the bid and asked prices for the common stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable; (3) In the absence of an established market for the common stock, the Fair Market Value shall be determined in good faith by the Board. (n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (o) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT" means a right granted pursuant to subsection 8(b)(3) of the Plan. (p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act of 1933 ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. (q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option. (r) "OFFICER" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (s) "OPTION" means a stock option granted pursuant to the Plan. (t) "OPTION AGREEMENT" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. (u) "OPTIONEE" means an Employee, Director or Consultant who holds an outstanding Option. 3 (v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time, and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code. (w) "PLAN" means this CIMA LABS INC. Equity Incentive Plan. (x) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect with respect to the Company when discretion is being exercised with respect to the Plan. (y) "STOCK APPRECIATION RIGHT" means any of the various types of rights which may be granted under Section 8 of the Plan. (z) "STOCK AWARD" means any right granted under the Plan, including any Option, any stock bonus, any right to purchase restricted stock, and any Stock Appreciation Right. (aa) "STOCK AWARD AGREEMENT" means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. (ab) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a right granted pursuant to subsection 8(b)(1) of the Plan. 3. ADMINISTRATION. (a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as provided in subsection 3(c). (b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (1) To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock, a Stock Appreciation Right, or a combination of the foregoing; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive stock pursuant to a Stock Award; whether a person shall be permitted to receive stock upon exercise of an Independent Stock Appreciation Right; and the number of shares with respect to which a Stock Award shall be granted to each such person. 4 (2) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (3) To amend the Plan or a Stock Award as provided in Section 13. (4) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan. (c) The Board may delegate administration of the Plan to a committee composed of not fewer than two (2) members (the "Committee"), all of the members of which Committee may be, in the discretion of the Board, Non-Employee Directors and/or Outside Directors. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee of two (2) or more Outside Directors any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. Notwithstanding anything in this Section 3 to the contrary, at any time the Board or the Committee may delegate to a committee of one or more members of the Board the authority to grant Stock Awards to eligible persons who (1) are not then subject to Section 16 of the Exchange Act and/or (2) are either (i) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Stock Award, or (ii) not persons with respect to whom the Company wishes to avoid the application of Section 162(m) of the Code. 4. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of Section 12 relating to adjustments upon changes in stock, the stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate Two Million (2,000,000) shares of the Company's common stock. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. Shares subject to Stock Appreciation Rights exercised in accordance with Section 8 of the Plan shall not be available for subsequent issuance under the Plan. (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 5 5. ELIGIBILITY. (a) Incentive Stock Options and Stock Appreciation Rights appurtenant thereto may be granted only to Employees. Stock Awards other than Incentive Stock Options and Stock Appreciation Rights appurtenant thereto may be granted only to Employees, Directors or Consultants. (b) No person shall be eligible for the grant of an Incentive Stock Option or an award to purchase restricted stock if, at the time of grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates unless the exercise price of such Incentive Stock Option is at least one hundred ten percent (110%) of the Fair Market Value of such stock at the date of grant and the Incentive Stock Option is not exercisable after the expiration of five (5) years from the date of grant. (c) Subject to the provisions of Section 12 relating to adjustments upon changes in stock, no person shall be eligible to be granted Options and Stock Appreciation Rights covering more than five hundred thousand (500,000) shares of the Company's common stock in any three (3) calendar year period. 6. OPTION PROVISIONS. Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: (a) TERM. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted. (b) PRICE. The exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted; the exercise price of each Nonstatutory Stock Option shall be determined by the Board. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than that set forth in the preceding sentence or determined by the Board if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. (c) CONSIDERATION. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or the Committee, at the time of the grant of the Option, (A) by delivery to the Company of other common stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) 6 with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the Board. In the case of any deferred payment arrangement, interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. (d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person. A Nonstatutory Stock Option shall not be transferable, except by the Optionee upon such terms and conditions as are set forth in the Option Agreement for such Nonstatutory Stock Option, as the Board or the Committee shall determine in its discretion. Notwithstanding the foregoing, the person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option. (e) VESTING. The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised. (f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. An Optionee's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionee's Continuous Status as an Employee, Director, or Consultant (other than upon the Optionee's death or disability) would result in liability under 7 Section 16(b) of the Exchange Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the last date on which such exercise would result in such liability under Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionee's Continuous Status as an Employee, Director or Consultant (other than upon the Optionee's death or disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the first paragraph of this subsection 6(f), or (ii) the expiration of a period of three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant during which the exercise of the Option would not be in violation of such registration requirements. (g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (h) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or within a period specified in the Option after the termination of, the Optionee's Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (i) RE-LOAD OPTIONS. Without in any way limiting the authority of the Board or Committee to make or not to make grants of Options hereunder, the Board or Committee shall have the authority (but not an obligation) to include as part of any Option Agreement a provision entitling the Optionee to a further Option (a "Re-Load Option") in the event the Optionee 8 exercises the Option evidenced by the Option agreement, in whole or in part, by surrendering other shares of Common Stock in accordance with this Plan and the terms and conditions of the Option Agreement. Any such Re-Load Option (i) shall be for a number of shares equal to the number of shares surrendered as part or all of the exercise price of such Option; (ii) shall have an expiration date which is the same as the expiration date of the Option the exercise of which gave rise to such Re-Load Option; and (iii) shall have an exercise price which is equal to one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Re-Load Option on the date of exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option which is an Incentive Stock Option and which is granted to a 10% stockholder (as described in subsection 5(b)), shall have an exercise price which is equal to one hundred ten percent (110%) of the Fair Market Value of the stock subject to the Re-Load Option on the date of exercise of the original Option and shall have a term which is no longer than five (5) years. Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory Stock Option, as the Board or Committee may designate at the time of the grant of the original Option; PROVIDED, HOWEVER, that the designation of any Re-Load Option as an Incentive Stock Option shall be subject to the one hundred thousand dollar ($100,000) annual limitation on exercisability of Incentive Stock Options described in subsection 12(d) of the Plan and in Section 422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall be subject to the availability of sufficient shares under subsection 4(a) and the limits on the grant of options under subsection 5(c) and shall be subject to such other terms and conditions as the Board or Committee may determine which are not inconsistent with the express provisions of the Plan regarding the terms of Options. 7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK. Each stock bonus or restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board or the Committee shall deem appropriate. The terms and conditions of stock bonus or restricted stock purchase agreements may change from time to time, and the terms and conditions of separate agreements need not be identical, but each stock bonus or restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions as appropriate: (a) PURCHASE PRICE. The purchase price under each restricted stock purchase agreement shall be such amount as the Board or Committee shall determine and designate in such agreement. Notwithstanding the foregoing, the Board or the Committee may determine that eligible participants in the Plan may be awarded stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit. (b) TRANSFERABILITY. No rights under a stock bonus or restricted stock purchase agreement shall be transferable except by will or the laws of descent and distribution so long as stock awarded under such agreement remains subject to the terms of the agreement, except as specifically provided in the applicable stock bonus or restricted stock purchase agreement. 9 (c) CONSIDERATION. The purchase price of stock acquired pursuant to a restricted stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board or the Committee, according to a deferred payment or other arrangement with the person to whom the stock is sold; or (iii) in any other form of legal consideration that may be acceptable to the Board or the Committee in its discretion. Notwithstanding the foregoing, the Board or the Committee to which administration of the Plan has been delegated may award stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit. (d) VESTING. Shares of stock sold or awarded under the Plan may, but need not, be subject to a repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board or the Committee. (e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT. In the event a Participant's Continuous Status as an Employee, Director or Consultant terminates, the Company may repurchase or otherwise reacquire, subject to the limitations described in subsection 7(d), any or all of the shares of stock held by that person which have not vested as of the date of termination under the terms of the stock bonus or restricted stock purchase agreement between the Company and such person. 8. STOCK APPRECIATION RIGHTS. (a) The Board or Committee shall have full power and authority, exercisable in its sole discretion, to grant Stock Appreciation Rights under the Plan to Employees or Directors of or Consultants to, the Company or its Affiliates. To exercise any outstanding Stock Appreciation Right, the holder must provide written notice of exercise to the Company in compliance with the provisions of the Stock Award Agreement evidencing such right. Except as provided in subsection 5(c), no limitation shall exist on the aggregate amount of cash payments the Company may make under the Plan in connection with the exercise of a Stock Appreciation Rights. (b) Three types of Stock Appreciation Rights shall be authorized for issuance under the Plan: (1) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation Rights will be granted appurtenant to an Option, and shall, except as specifically set forth in this Section 8, be subject to the same terms and conditions applicable to the particular Option grant to which it pertains. Tandem Stock Appreciation Rights will require the holder to elect between the exercise of the underlying Option for shares of stock and the surrender, in whole or in part, of such Option for an appreciation distribution. The appreciation distribution payable on the exercised Tandem Right shall be in cash (or, if so provided, in an equivalent number of shares of stock based on Fair Market Value on the date of the Option surrender) in an amount up to the excess of (A) the Fair Market Value (on the date of the Option surrender) of the number of shares of stock covered by that portion of the surrendered Option in which the Optionee is vested over (B) the aggregate exercise price payable for such vested shares. 10 (2) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights will be granted appurtenant to an Option and may apply to all or any portion of the shares of stock subject to the underlying Option and shall, except as specifically set forth in this Section 8, be subject to the same terms and conditions applicable to the particular Option grant to which it pertains. A Concurrent Right shall be exercised automatically at the same time the underlying Option is exercised with respect to the particular shares of stock to which the Concurrent Right pertains. The appreciation distribution payable on an exercised Concurrent Right shall be in cash (or, if so provided, in an equivalent number of shares of stock based on Fair Market Value on the date of the exercise of the Concurrent Right) in an amount equal to such portion as shall be determined by the Board or the Committee at the time of the grant of the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Concurrent Right) of the vested shares of stock purchased under the underlying Option which have Concurrent Rights appurtenant to them over (B) the aggregate exercise price paid for such shares. (3) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights will be granted independently of any Option and shall, except as specifically set forth in this Section 8, be subject to the same terms and conditions applicable to Nonstatutory Stock Options as set forth in Section 6. They shall be denominated in share equivalents. The appreciation distribution payable on the exercised Independent Right shall be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Independent Right) of a number of shares of Company stock equal to the number of share equivalents in which the holder is vested under such Independent Right, and with respect to which the holder is exercising the Independent Right on such date, over (B) the aggregate Fair Market Value (on the date of the grant of the Independent Right) of such number of shares of Company stock. The appreciation distribution payable on the exercised Independent Right shall be in cash or, if so provided, in an equivalent number of shares of stock based on Fair Market Value on the date of the exercise of the Independent Right. 9. COVENANTS OF THE COMPANY. (a) During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of stock required to satisfy such Stock Awards. (b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the Stock Award; provided, however, that this undertaking shall not require the Company to register under the Securities Act of 1933, as amended (the "Securities Act") either the Plan, any Stock Award or any stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Stock Awards unless and until such authority is obtained. 11 10. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant to Stock Awards shall constitute general funds of the Company. 11. MISCELLANEOUS. (a) The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest pursuant to subsection 6(e), 7(d) or 8(b), notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest. (b) Neither an Employee, Director or Consultant nor any person to whom a Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Stock Award unless and until such person has satisfied all requirements for exercise of the Stock Award pursuant to its terms. (c) Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Employee, Director, Consultant or other holder of Stock Awards any right to continue in the employ of the Company or any Affiliate (or to continue acting as a Director or Consultant) or shall affect the right of the Company or any Affiliate to terminate the employment of any Employee with or without cause the right of the Company's Board of Directors and/or the Company's shareholders to remove any Director pursuant to the terms of the Company's By-Laws and the provisions of the Delaware General Corporation Law, or the right to terminate the relationship of any Consultant pursuant to the terms of such Consultant's agreement with the Company or Affiliate. (d) To the extent that the aggregate Fair Market Value (determined at the time of grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under all plans of the Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options. (e) The Company may require any person to whom a Stock Award is granted, or any person to whom a Stock Award is transferred pursuant to subsection 6(d), 7(b) or 8(b), as a condition of exercising or acquiring stock under any Stock Award, (1) to give written assurances satisfactory to the Company as to such person's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Stock Award for such person's own account and not with any present intention of selling or otherwise distributing the 12 stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise or acquisition of stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock. (f) To the extent provided by the terms of a Stock Award Agreement, the person to whom a Stock Award is granted may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of stock under a Stock Award by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise or acquisition of stock under the Stock Award; or (3) delivering to the Company owned and unencumbered shares of the common stock of the Company. 12. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the stock subject to the Plan, or subject to any Stock Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the type(s) and maximum number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to any person during any three (3) calendar year period pursuant to subsection 5(c), and the outstanding Stock Awards will be appropriately adjusted in the type(s) and number of securities and price per share of stock subject to such outstanding Stock Awards. Such adjustments shall be made by the Board or the Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company".) (b) In the event of: (1) a dissolution, liquidation or sale of substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated 13 under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors, then to the extent permitted by applicable law: (i) any surviving or acquiring corporation or an Affiliate of such surviving or acquiring corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar Stock Awards (including a stock award resulting in the acquisition of the same consideration paid to the stockholders in the transaction described in this subsection 12(b)) for those outstanding under the Plan, or (ii) such Stock Awards shall continue in full force and effect. In the event any surviving or acquiring corporation or its Affiliates refuse to assume or continue such Stock Awards, or to substitute similar Stock Awards for those outstanding under the Plan, then, with respect to Stock Awards held by persons then performing services as Employees, Directors or Consultants, the time during which such Stock Awards may be exercised shall be accelerated and the Stock Awards terminated if not exercised after such acceleration and at or prior to such event. 13. AMENDMENT OF THE PLAN AND STOCK AWARDS. (a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 12 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company within twelve (12) months before or after the adoption of the amendment, where the amendment will: (i) Increase the number of shares reserved for Stock Awards under the Plan; (ii) Modify the requirements as to eligibility for participation in the Plan (to the extent such modification requires stockholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code); or (iii) Modify the Plan in any other way if such modification requires stockholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code or to comply with the requirements of Rule 16b-3. (b) The Board may in its sole discretion submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations promulgated thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. (c) It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees, Directors or Consultants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 14 (d) Rights and obligations under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing. (e) The Board at any time, and from time to time, may amend the terms of any one or more Stock Award; provided, however, that the rights and obligations under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing. 14. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on May 31, 2004, which shall be within ten (10) years from the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated. (b) Rights and obligations under any Stock Award granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except with the consent of the person to whom the Stock Award was granted. 15. EFFECTIVE DATE OF PLAN. The Plan shall become effective as determined by the Board, but no Stock Awards granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. 15 EX-10.12 3 EXHIBIT 10.12 CIMA LABS INC. 1994 DIRECTORS' STOCK OPTION PLAN AMENDED EFFECTIVE SEPTEMBER 24, 1996 SECTION 1. PURPOSE. This plan shall be known as the "CIMA LABS INC. 1994 Directors' Stock Option Plan" and is hereinafter referred to as the "Plan." The purpose of the Plan is to promote the interests of CIMA LABS INC., a Delaware corporation (the "Company"), by enhancing its ability to attract and retain the services of experienced and knowledgeable independent directors and by providing additional incentive for these directors to increase their interest in the Company's long-term success and progress. SECTION 2. ADMINISTRATION. (a) The Plan shall be administered by the Board of Directors of the Company (the "Board") unless and until the Board delegates such administration to a committee (the "Committee") of two or more non-employee directors appointed by the Board. For this purpose, "non-employee director" means a director who either (i) is not a current employee or officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act of 1933 (Regulation S-K)), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a non-employee director for purposes of Rule 16b-3. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. (b) Grants of stock options under the Plan and the amount and nature of the awards to be granted shall be automatic as described in Section 6. However, all questions of interpretation of the Plan or of any options issued under it shall be determined by the Board or the Committee and such determination shall be final and binding upon all persons having an interest in the Plan. SECTION 3. PARTICIPATION IN THE PLAN. Each director of the Company shall be eligible to participate in the Plan unless such director is an employee of the Company or any subsidiary of the Company. 1 SECTION 4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 hereof, the stock to be subject to options under the Plan shall be authorized by unissued shares of the Company's common stock, par value $.01 per share (the "Common Stock"). Subject to adjustment as provided in Section 11 hereof, the maximum number of shares with respect to which options may be exercised under this Plan shall be 350,000 shares. If an option under the Plan expires, or for any reason is terminated, any shares that have not been purchased upon exercise of the option prior to the expiration or termination date shall again be available for options thereafter granted during the term of the Plan. SECTION 5. NON-QUALIFIED STOCK OPTIONS. All options granted under the Plan shall be non-qualified stock options that do not qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). SECTION 6. TERMS AND CONDITIONS OF OPTIONS. Each option granted under this Plan shall be evidenced by a written agreement in such form as the Committee shall from time to time approve, which agreements shall comply with and be subject to the following terms and conditions: 6.1 ONE-TIME OPTION GRANT. An option to purchase 20,000 shares of Common Stock shall be granted automatically on the later of the closing of the first public offering of the Common Stock registered under the Securities Act of 1933, as amended, or the first business day immediately following the date the eligible director is first elected to the Board of Directors of the Company. 6.2 ANNUAL OPTION GRANTS. An option to purchase 7,500 shares of Common Stock shall be granted automatically on the first business day immediately following each annual meeting of the Company's stockholders (the "Annual Option Grant Date") held during the term of the Plan, beginning with the first annual meeting of stockholders held after the Plan becomes effective pursuant to Section 12 hereof, to each eligible director in office on such Annual Option Grant Date. 6.3 OPTIONS NON-TRANSFERABLE. No option granted under the Plan shall be transferable by the optionee except (i) by will or by the laws of descent and distribution as provided in Section 6.6 hereof, or (ii) upon such terms and conditions as are expressly set forth in the agreement documenting the grant of such option; the option shall be exercisable during the lifetime of the optionee only by the optionee (or by his or her legal guardian or legal representative) or such transferee. Notwithstanding the foregoing, the optionee may, by delivering written notice to the Company in a form satisfactory to the Company, designate a third party who, in the event of the death of the optionee, shall thereafter be entitled to exercise the option. 2 6.4 PERIOD OF OPTIONS. Options shall terminate upon the expiration of 10 years from the date on which they were granted. 6.5 EXERCISE OF OPTIONS. (a) Options granted under Section 6.1 hereof shall vest and become exercisable as to 50% of the shares covered by the option on the twelve month anniversary of the date of grant and as to 100% of such shares on the twenty-four month anniversary of the date of grant. Options granted under Section 6.2 hereof shall vest and become exercisable as to 100% of the shares covered by the option six months subsequent to the date of grant. Options that are vested and exercisable will be exercisable at any time or from time to time during the term of the option. An unvested portion of any option shall only vest so long as the eligible director remains a director on the date such portion vests. (b) The exercise of any option granted hereunder shall only be effective at such time as counsel to the Company shall have determined that the issuance and delivery of Common Stock pursuant to such exercise will not violate any federal or state securities or other laws. An optionee desiring to exercise an option may be required by the Company, as a condition of the effectiveness of any exercise of an option granted hereunder, to agree in writing that all Common Stock to be acquired pursuant to such exercise shall be held for his or her own account without a view to any distribution thereof, that the certificates for such shares shall bear an appropriate legend to that effect and that such shares will not be transferred or disposed of except in compliance with applicable federal and state securities laws. (c) An optionee electing to exercise an option shall give written notice to the Company of such election and of the number of shares subject to such exercise. The full purchase price of such shares shall be tendered with such notice of exercise. Payment shall be made to the Company in cash (including check, bank draft or money order) or in such other form of consideration as the Committee shall approve. 6.6 EFFECT OF DEATH. If the optionee shall die prior to the time the option is fully exercised, such option may be exercised at any time within one year after his or her death by the personal representatives or administrators of the optionee or by any person or persons to whom the option is transferred by will or the applicable laws of descent and distribution, to the extent of the full number of shares the optionee was entitled to purchase under the option on the date of death and subject to the condition that no option shall be exercisable after the expiration of the term of the option. SECTION 7. OPTION EXERCISE PRICE. The option exercise price per share for the shares covered by each option shall be equal to the "fair market value" of a share of Common Stock as of the date on which the option is granted, as determined pursuant to Section 9 hereof. 3 SECTION 8. TIME FOR GRANTING OPTIONS. Unless the Plan shall have been discontinued as provided in Section 13 hereof, the Plan shall terminate upon the expiration of 10 years from the date upon which it takes effect as provided in Section 12 hereof. No option may be granted after such termination, but termination of the Plan shall not, without the consent of the optionee, alter or impair any rights or obligations under any option theretofore granted. SECTION 9. FAIR MARKET VALUE OF COMMON STOCK. For the purposes of the Plan, the fair market value of the Common Stock on a given date shall be the closing price of the Common Stock as reported on the Nasdaq National Market, if the Common Stock is then being quoted on the Nasdaq National Market. If on the date as of which the fair market value is being determined the Common Stock is not publicly traded, the Committee shall make a good faith attempt to determine such fair market value and, in connection therewith, shall take such actions and consider such factors as it deems necessary or advisable. SECTION 10. LIMITATION OF RIGHTS. 10.1 NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the granting of an option nor any other action taken pursuant to the Plan, shall constitute, or be evidence of, any agreement or understanding, express or implied, that the Company will retain a director for any period of time, or at any particular rate of compensation. 10.2 NO STOCKHOLDER RIGHTS FOR OPTIONS. An optionee shall have no rights as a stockholder with respect to the shares covered by options under the date of issuance to such optionee of a stock certificate therefor, and no adjustment will be made for cash dividends or other rights for which the record date is prior to the date such certificate is issued. SECTION 11. ADJUSTMENTS TO COMMON STOCK. If there shall be any change in the Common Stock through merger, consolidation, reorganization, recapitalization, stock dividend (of whatever amount), stock split, or other change in the corporate structure, appropriate adjustments in the Plan and outstanding options shall be made. In the event of any such changes, adjustments shall include, where appropriate, changes in the aggregate number of shares subject to the Plan, the number of shares subject to outstanding options and the option exercise prices thereof in order to prevent dilution or enlargement of option rights. SECTION 12. EFFECTIVE DATE OF THE PLAN. The Plan shall be approved by the affirmative vote of the holders of a majority of the outstanding shares present in person or by proxy and voted at a duly held meeting of 4 stockholders of the Company and shall thereafter become effective upon the closing of the first public offering of the Common Stock registered under the Securities Act of 1933, as amended. SECTION 13. AMENDMENT OF THE PLAN. The Board may suspend or discontinue the Plan or revise or amend it in any respect whatsoever; provided, however that without approval of the stockholders of the Company, no revision or amendment shall be made that (a) absent such stockholder approval, would cause Rule 16b-3, as promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation thereto, to become unavailable with respect to the Plan, or (b) requires the approval of the Company's stockholders under any rules or regulations of the National Association of Securities Dealers, Inc. that are applicable to the Company. The Board shall not impair any option theretofore granted under the Plan without the consent of the holder of the option. SECTION 14. GOVERNING LAW. The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware and construed accordingly. 5 EX-10.29 4 EXHIBIT 10.29 [CIMA Labs Inc. Letterhead] August 6, 1996 Keith P. Salenger 112 Ridge View Lane Doylestown, PA 18901 Dear Keith: It is a pleasure to offer you the position of Chief Financial Officer and Vice President at CIMA Labs. You will report directly to me. The details of your offer is as follows: 1. Base Salary: $5,384.62 per pay period (bi-weekly) which is the equivalent of $140,000 annually. 2. Executive Bonus: Eligible to receive up to 40% of your salary as additional compensation based on the company performance meeting objectives and your performance meeting objectives. 3. Executive Severance: If within your first year of employment you are terminated without cause by the company, you will receive six months salary. 4. Stock Options: 40,000 shares of stock at an option price of $X.XXX per share subject to standard employee stock option requirements. The option price will be determined on the date the Stock Option Committee approves the action already agreed by the Board of Directors. 5. Vacation: You will receive 4 weeks of vacation on an annual basis. 6. Moving Expenses: Relocation to the Minneapolis/St. Paul area according to the enclosed CIMA Moving Policy. In addition, you will receive a one time moving bonus of $25,000.00. As an exception to the Moving Policy, we will reimburse you for temporary living expenses for three months and will reimburse you for flights home every other weekend. You will also be reimbursed for two house-hunting trips. This offer is contingent upon passing a physical we choose or agree to and upon completion of a drug testing. CIMA is a drug free environment. Enclosed is a copy of the Summary of Company Provided Benefits and Medical and Dental Employee Benefit Costs. I am also providing you with a pack of information outlining the Medica Medical Insurance and the Guardian Dental/Life/AD&D/LTD Insurance. -2- Also enclosed is a copy of the CIMA Labs Inc. Employment Agreement for your signature. Keith, we are very excited to have you join CIMA Labs. We believe we have some difficult challenges in front of us which you can help. I look forward to hearing your acceptance within the next week. Please sign and date in the space provided and fax back to me at 612-947-8770. Sincerely, /s/ John M. Siebert John M. Siebert, Ph.D. JMS:mmr Enclosures cc: Michele Roepke SIGNED ACCEPTANCE: /s/ Keith P. Salenger August 8, 1996 - ----------------------------------------------------------- Keith P. Salenger Date EX-11.1 5 EXHIBIT 11.1 STATEMENT REGARDING COMP OF NET LOSS Exhibit 11.1 - Statement Re: Computation of Net Loss Per Share
Period from Three Months Ended Nine Months Ended December 12, September 30, September 30, 1986 ( Inception) -------------------------- ------------------------- to September 30, 1996 1995 1996 1995 1996 ----------- ------------ ------------ ---------- ---------------- Primary: Average shares outstanding 9,405,846 7,687,551 8,633,939 7,599,329 2,327,092 Net effect of dilutive stock options -- based on the treasury stock method using average 445,445 market price (See Note A Below) --------------- Totals 2,772,537 Net loss $(1,308,531) $(1,552,587) $(4,732,297) $(7,263,904) $(33,897,788) Per share amount $(.14) $(.20) $(.55) $(.96) $ (12.23) --------------- --------------- Fully diluted: Average shares outstanding 9,405,846 7,687,551 8,633,939 7,599,329 3,678,779 Net effect of dilutive stock options -- based on the treasury stock method using average market price or the ending market price if higher (See Note A Below) 445,445 --------------- Totals 9,405,846 7,687,551 8,633,939 7,599,329 4,124,224 --------------- --------------- Net loss $(1,308,531) $(1,552,587) $(4,732,297) $(7,263,904) $(33,897,788) --------------- --------------- Per share amount $(.14) $(.20) $(.55) $(.96) $ (8.22) --------------- ---------------
NOTE A: Represents shares required by the provisions of Staff Accounting Bulletin No. 83 for "cheap stock" issued prior to the Company's initial public offering in August 1994. 14 EX-27 6 EXHIBIT 27 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS AND STATEMENTS OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 11,934,051 0 439,732 0 349,783 12,835,818 13,466,102 (2,839,166) 24,014,713 1,382,228 0 0 0 94,111 22,538,373 24,014,713 0 1,171,560 0 6,266,731 0 0 362,874 0 0 0 0 0 0 (4,732,297) (.55) (.55)
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