-----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, DIYhpXKj6p8qxK90icxKzd8GW1PA+P0wKF0dc5y8Lt99ndMzIOgOwCyHJLLm+wzN zbpk5FRIGGA8TLZBd3KxEQ== 0000950123-96-004203.txt : 19960812 0000950123-96-004203.hdr.sgml : 19960812 ACCESSION NUMBER: 0000950123-96-004203 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: I STAT CORPORATION /DE/ CENTRAL INDEX KEY: 0000882365 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 222542664 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19841 FILM NUMBER: 96606952 BUSINESS ADDRESS: STREET 1: 303A COLLEGE RD EAST CITY: PRINCETON STATE: NJ ZIP: 08540 BUSINESS PHONE: 6092439300 MAIL ADDRESS: STREET 1: 303 COLLEGE ROAD EAST CITY: PRINCETON STATE: NJ ZIP: 08540 10-Q 1 FORM 10-Q FOR P/E-6/30/96 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended June 30, 1996 Commission File Number 0-19841 ------- i-STAT Corporation - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-2542664 - ------------------------------- ----------------------- (State or other jurisdiction of (IRS employer incorporation or organization) Identification No.) 303 College Road East, Princeton, New Jersey 08540 - --------------------------------------------------------------------------- (Address of principal executive offices) (609) 243-9300 - --------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 The number of shares outstanding of each of the Issuer's classes of common stock as of the latest practicable date. Class July 31,1996 - ------------------------------- ------------ Common Stock, $ .15 par value 11,187,392 2 i-STAT CORPORATION TABLE OF CONTENTS
PAGE NUMBER ------ PART I. FINANCIAL INFORMATION ITEM 1 - Financial Statements Consolidated Condensed Statements of Operations for the three months and six months ended June 30, 1996 and 1995 ..................... 3 Consolidated Condensed Balance Sheets as of June 30, 1996 and December 31, 1995............................... 4 Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 1996 and 1995 .................................... 5 Notes to Consolidated Condensed Financial Statements ...................... 6 ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations .......................... 7-9 PART II. OTHER INFORMATION ITEM 1 - Legal Proceedings................................................. 10 ITEM 2 - Changes in Securities............................................. N/A ITEM 3 - Defaults upon Senior Securities................................... N/A ITEM 4 - Submission of Matters to a Vote of Security Holders........................................... 10 ITEM 5 - Other Information................................................. N/A ITEM 6 - Exhibits and Reports on Form 8-K.................................. 11 SIGNATURES ....................................................................... 12
3 i-STAT CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, -------------------------------- --------------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net sales $ 6,740 $ 5,125 $ 13,151 $ 8,484 Cost of sales (6,636) (5,663) (12,435) (10,764) ------------ ------------ ------------ ------------ Gross profit (loss) 104 (538) 716 (2,280) ------------ ------------ ------------ ------------ Operating expenses: Research and development 1,364 1,433 2,684 2,653 General and administrative 1,559 1,141 2,661 2,384 Sales and marketing 2,838 2,896 5,915 5,383 ------------ ------------ ------------ ------------ Total operating expenses 5,761 5,470 11,260 10,420 ------------ ------------ ------------ ------------ Operating loss (5,657) (6,008) (10,544) (12,700) ------------ ------------ ------------ ------------ Other income (expenses), net 555 (433) 1,155 (272) ------------ ------------ ------------ ------------ Net loss ($ 5,102) ($ 6,441) ($ 9,389) ($ 12,972) ============ ============ ============ ============ Net loss per share ($ 0.38) ($ 0.58) ($ 0.71) ($ 1.18) ============ ============ ============ ============ Shares used in computing net loss per share 13,324,591 11,041,186 13,304,716 11,027,978 ============ ============ ============ ============
The accompanying notes are an integral part of these consolidated condensed financial statements. 3 4 i-STAT CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA) (unaudited)
June 30, December 31, 1996 1995 --------- ------------ ASSETS Current assets: Cash and cash equivalents .............................................. $ 38,575 $ 47,494 Short-term investments ................................................. -- 2,025 Accounts receivable, net ............................................... 3,495 4,053 Inventories ............................................................ 8,547 9,003 Prepaid expenses and other current assets .............................. 663 688 --------- --------- Total current assets ......................................... 51,280 63,263 Plant and equipment, net of accumulated depreciation of $11,061 and $9,758 ............... 10,631 9,163 Other assets ............................................................................. 1,533 1,624 --------- --------- Total assets ................................................. $ 63,444 $ 74,050 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ....................................................... $ 1,288 $ 1,554 Accrued expenses ....................................................... 2,741 2,527 Deferred revenue, current .............................................. 3,311 -- --------- --------- Total current liabilities .................................... 7,340 4,081 Deferred revenue, non-current ............................................................ 1,585 6,375 --------- --------- Total liabilities ............................................ 8,925 10,456 --------- --------- Stockholders' equity: Preferred Stock, $.10 par value, shares authorized 7,000,000: Series A Junior Participating Preferred Stock, $.10 par value, shares authorized 1,500,000; none issued at June 30, 1996 and December 31, 1995 .................................... -- -- Series B Preferred Stock, $.10 par value, shares authorized 2,138,702; 2,138,702 shares issued at June 30, 1996 and December 31, 1995 .................................... 214 214 Common Stock, $.15 par value, shares authorized 25,000,000; shares issued 11,186,634 at June 30, 1996 and 11,123,698 at December 31, 1995 ............................................ 1,678 1,669 Additional paid-in capital ............................................. 186,146 188,698 Other, net ............................................................. (286) (3,143) Accumulated deficit .................................................... (133,233) (123,844) --------- --------- Total stockholders' equity ................................... 54,519 63,594 --------- --------- Total liabilities and stockholders' equity ................... $ 63,444 $ 74,050 ========= =========
The accompanying notes are an integral part of these consolidated condensed financial statements. 4 5 i-STAT CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS) (unaudited)
Six Months Ended June 30, ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss ......................................................... ($9,389) ($12,972) Adjustments to reconcile net loss to net cash used in operating activities ............................................. (68) 747 Change in assets and liabilities ................................. 1,137 (2,094) -------- -------- Net cash used in operating activities ............. (8,320) (14,319) -------- -------- Cash flows from investing activities: Purchase of investments .......................................... -- (7,447) Sale of investments .............................................. 2,025 24,927 Purchase of equipment ............................................ (2,790) (1,439) Other ............................................................ (81) (90) -------- -------- Net cash provided by (used in) investing activities (846) 15,951 -------- -------- Cash flows from financing activities: Proceeds from sale of Common Stock ............................... 364 135 Purchase of Treasury Stock ....................................... (2) -- -------- -------- Net cash provided by financing activities ......... 362 135 -------- -------- Effect of currency exchange rate changes on cash .................... (115) (12) -------- -------- Net decrease in cash and cash equivalents ........................... (8,919) 1,755 Cash and cash equivalents at beginning of period .................... 47,494 4,719 -------- -------- Cash and cash equivalents at end of period .......................... $ 38,575 $ 6,474 ======== ========
The accompanying notes are an integral part of these consolidated condensed financial statements. 5 6 i-STAT CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) 1. BASIS OF PRESENTATION The information presented as of June 30, 1996 and 1995, and for the periods then ended, is unaudited, but includes all adjustments (consisting only of normal recurring accruals) which the management of i-STAT Corporation (the "Company") believes to be necessary for the fair presentation of results for the periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the year. The year end consolidated condensed balance sheet data was derived from the audited financial statements, but does not include all disclosures required by generally accepted accounting principles. These condensed financial statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 1995 which were included as part of the Company's Annual Report on Form 10-K, File No. 0-19841. 2. NET LOSS PER SHARE Net loss per share is calculated using the weighted average number of common shares and preferred shares outstanding for all periods presented. Preferred shares have been included in the calculation since their date of issuance as they are convertible into common on a 1:1 basis and have substantially the same characteristics as common stock. Options and warrants outstanding are not included in the calculation as they are anti-dilutive. 3. INVENTORIES Inventories consist of the following:
June 30, 1996 December 31, 1995 ------------- ----------------- Raw materials $ 2,555,000 $3,113,000 Work in process 1,429,000 1,146,000 Finished goods 4,563,000 4,744,000 ----------- ---------- $ 8,547,000 $9,003,000 =========== ==========
4. COMMITMENTS AND CONTINGENCIES The Company is a defendant in a case entitled Nova Biomedical Corporation, Plaintiff v. i-STAT Corporation, Defendant. The Complaint, which was filed in the United States District Court for the District of Massachusetts on June 27, 1995, alleges infringement by i-STAT of Nova's U.S. Patent No. 4,686,479. The Plaintiff seeks unspecified damages and that the damages be trebled. Nova also is asking for attorneys' fees and prejudgement interest. The case currently is in the pre-trial discovery stage. Management intends to contest the case vigorously and does not believe that it has infringed the Nova patent. The Company has obtained an opinion from recognized patent counsel to the effect that no infringement has occurred. However, if the plaintiff should totally prevail in this matter, it could have a material impact on the financial position, results of operations and cash flows of the Company. The Company has asserted counterclaims under the antitrust laws alleging that Nova commenced the action knowing that the patent was not infringed and that it had reason to believe that the patent was invalid and unenforceable. The Company is a defendant in a class action complaint entitled Susan Kaufman, on behalf of herself and all others similarly situated, Plaintiff, v. i-STAT Corporation, William P. Moffitt, Lionel N. Sterling, Imants R. Lauks and Matthias Plum, Jr. The class action was brought by Susan Kaufman on her behalf and on behalf of all purchasers of the Company's Common Stock between May 9, 1995 and March 19, 1996. The complaint, which was filed in the Superior Court of New Jersey in Mercer County on June 19, 1996, alleges New Jersey common law "fraud on the market" in connection with certain sales of i-STAT stock by the Company's chief executive officer, chief technology officer and two outside directors during a nine-month period. The plaintiffs seek unspecified compensatory damages, interest and payment of all costs and expenses incurred in connection with the class action. Management believes the complaint is without merit and intends to vigorously contest it. However, if the plaintiff should totally prevail in this matter, it could have a material impact on the financial position, results of operations and cash flows of the Company. 6 7 i-STAT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company develops, manufactures and markets medical diagnostic products for blood analysis that provide health care professionals with immediate and accurate critical diagnostic information at the point of patient care. The Company markets and distributes its products in the United States and Canada principally through its own direct sales and marketing organization, in Japan through Japanese marketing partners and in South America through selected distribution channels. In February 1996, the Hewlett Packard Company ("HP") began marketing and distributing the Company's products in certain countries in Europe through its distribution arrangements with the Company. In April 1996, the Company and HP entered into a marketing agreement pursuant to which HP and the Company have begun to jointly market the Company's products into the critical care departments of hospitals in the United States which meet certain criteria. The Company is actively planning market introduction into other foreign markets, including but not limited to, through its arrangements with HP. During the Company's first two quarters of 1996, international sales as a component of total sales increased substantially due primarily to the introduction of the Company's blood gas product in Japan, increases in the unit transfer prices specified in the Company's contracts with its Japanese partners, increased deferred revenue, and changes in the Company's U.S. marketing strategy discussed below. This is not necessarily indicative of a trend. Sales to its Japanese marketing partners represent the only significant component of the Company's international sales during the first six months of 1996. This management's discussion and analysis of financial condition and results of operations contains both historical financial information and forward looking statements. The Company operates in a high technology, emerging market environment that involves significant risks and uncertainties which may cause actual results to vary from such forward looking statements and to vary significantly from reporting period to reporting period. These risks include, among others, competition from existing manufacturers and marketers of blood analysis products who have greater resources than the Company, the uncertainty of new product development initiatives, difficulties in tranferring new technology to the manufacturing stage, market resistance to new products, domestic and international regulatory constraints, uncertainties of international trade and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1996 The Company generated revenues of approximately $6.7 million and $5.1 million for the quarters ended June 30, 1996 and 1995, respectively, including international revenues of $2.2 million and $0.9 million, respectively. The $1.6 million (31.5%) increase in revenues was primarily due to: 1) increased shipment volume and higher average selling prices per unit of the Company's cartridges and analyzers primarily as a result of both higher cartridge consumption by existing hospital customers and the addition of new hospital customers in the U.S. and internationally, and 2) recognition of an additional $0.5 million of deferred revenue, due to a change of accounting estimate in 1996, from the Company's Japanese marketing partners. The Company has experienced a slight increase in average price per cartridge in 1996 due to changes in cartridge mix. The near term rate of growth of sales revenues may be reduced by the Company's recent marketing focus on potential large scale adopters of the i-STAT System. Such customers tend to require a longer sales cycle as the marketing focus with respect to such customers is on having these customers re-engineer or replace their "stat" lab departments with the i-STAT System, as compared to other potential customers who may be using the i-STAT System as a supplement to their existing laboratory arrangements. The Company experienced a gross profit of $0.1 million in the quarter ended June 30, 1996 compared with a gross loss of $0.5 million in the quarter ended June 30, 1995. To the extent that sales volume increases, the Company expects its gross profit to improve as manufacturing costs (including direct labor and a large component of overhead) are spread over a larger number of product units. However, gross profit as a percentage of sales declined from approximately 9.5% ($0.6 million) on sales of $6.4 million in the first quarter of 1996 to approximately 1.5% ($0.1 million) on sales of $6.7 million in the second quarter of 1996, primarily as a result of 7 8 certain cartridge production issues which the Company believes have since been resolved and lower sales volume of analyzers in the second quarter of 1996. The reduction in analyzer sales in the second quarter of 1996 versus the first quarter of 1996 primarily reflects a reduction in international sales of analyzers, partially offset by an increase in analyzer sales in the U.S. The first quarter of 1996 benefited from initial stocking orders from HP for its European operations. The Company incurred research and development costs (percentage of sales) of approximately $1.4 million (20.2%) and $1.4 million (28.0%) for the quarters ended June 30, 1996 and 1995, respectively, consisting of costs associated with the personnel, material, equipment and facilities necessary for conducting new product development. The Company incurred general and administrative expenses (percentage of sales) of approximately $1.6 million (23.1%) and $1.1 million (22.3%) for the quarters ended June 30, 1996 and 1995, respectively. General and administrative expenses consisted primarily of salaries and benefits of personnel, office costs, professional fees and other costs necessary to support the Company's infrastructure. The increase primarily reflects the Company's increased need for management personnel and other services to support its continuing growth, and legal fees and expenses associated with the defense of the Nova patent infringement action. The Company incurred sales and marketing expenses (percentage of sales) of approximately $2.8 million (42.1%) and $2.9 million (56.5%) for the quarters ended June 30, 1996 and 1995, respectively, consisting primarily of salaries, benefits, travel, and other expenditures for sales representatives, product literature, market research, clinical studies and other infrastructure costs. The increase in other income (expense), net, to $0.6 million for the three months ended June 30, 1996 from a loss of ($0.4) million for the three months ended June 30, 1995, in part reflects additional interest income earned on significantly higher cash, cash equivalents and short-term investment balances in 1996. The Company also recorded a charge against other income (expense), net, of $0.4 million in the quarter ended June 30, 1995, relating to the implementation of stockholder protection measures and a proposed offering of securities that was terminated. Interest income is expected to decline in the near future as cash and cash equivalent balances decline. SIX MONTHS ENDED JUNE 30, 1996 The Company generated revenues of approximately $13.2 million and $8.5 million for the six months ended June 30, 1996 and 1995, including international revenues of $4.7 million and $1.5 million, respectively. The $4.7 million (55.0%) increase in revenues was primarily due to: 1) higher average selling prices per unit of the Company's cartridges, and increased shipment volume primarily as a result of both higher cartridge consumption by existing hospital customers and the addition of new hospital customers in the U.S. and internationally, and 2) recognition of an additional $1.1 million of deferred revenue, due to a change in accounting estimate in 1996, from the Company's Japanese marketing partners. The manufacturing costs associated with product sales for the six months ended June 30, 1996 and 1995 were approximately $12.4 million and $10.8 million, respectively. This resulted in a gross loss of $2.3 million in the 1995 period because sales volume was not sufficient to absorb the overhead and labor costs inherent in the Company's manufacturing process, compared with a gross profit of $0.7 million in the 1996 period. To the extent that sales volume increases, the Company expects its gross profit to improve as manufacturing costs (including direct labor and a large component of overhead) are spread over a larger number of product units. The increase in manufacturing costs from 1995 to 1996 was primarily attributable to the increase in materials, personnel and equipment necessary to support the volume of product being produced and the anticipated requirements throughout the remainder of 1996. The Company incurred research and development costs (percentage of sales) of approximately $2.7 million (20.4%) and $2.7 million (31.3%) for the six months ended June 30, 1996 and 1995, respectively. The Company incurred general and administrative expenses (percentage of sales) of approximately $2.7 million (20.2%) and $2.4 million (28.1%) for the six months ended June 30, 1996 and 1995, respectively. General and administrative expenses consisted primarily of salaries and benefits of personnel, office costs, professional fees, and other costs necessary to support the Company's infrastructure. The year-to-year increase reflects the 8 9 Company's increased need for management personnel and other services to support its continuing growth, and legal fees and expenses associated with the defense of the Nova patent infringement action. The Company incurred sales and marketing expenses (percentage of sales) of approximately $5.9 million (45.0%) and $5.4 million (63.4%) for the six months ended June 30, 1996 and 1995, respectively, consisting primarily of salaries, benefits, travel and other expenditures for sales representatives, product literature, market research, clinical studies and other sales infrastructure costs. The dollar increase from 1995 to 1996 is attributable to increased marketing activities, and the hiring of management and other marketing personnel necessary to support the Company's planned growth in product sales. The change in other income (expense), net, to $1.2 million for the six months ended June 30, 1996 from ($0.3) million for the six months ended June 30, 1995, in part reflects additional interest income earned on significantly higher cash, cash equivalents and short-term investment balances in 1996. The Company also recorded a charge against other income (expense), net, of $0.4 million in the six months ended June 30, 1995 relating to the implementation of stockholder protection measures and a proposed offering of securities that was terminated. Interest income is expected to decline in the near future as cash and cash equivalent balances decline. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1996, the Company had cash and cash equivalents of approximately $38.6 million, a decline of $8.9 million from the December 31, 1995 balance of approximately $47.5 million, primarily reflecting cash used in operating activities for the six months ended June 30, 1996. The Company expects its existing funds to continue to decline until its revenues are sufficient to support its growth, but to be sufficient to meet its obligations and its liquidity and capital requirements for the near term. The Company regularly monitors capital raising alternatives in order to take advantage of opportunities to supplement its current working capital upon favorable terms, including joint ventures, strategic corporate partnerships or other alliances and the sale of equity and/or debt securities. The Company's need, if any, to raise additional funds to meet its working capital and capital requirements will depend upon numerous factors, including the results of its product marketing and sales activities, its new product development efforts, manufacturing efficiencies and competitive conditions. The change in other, net, under stockholders' equity from ($3.1) million at December 31, 1995 to ($0.3) million at June 30, 1996 primarily reflects: 1) the change of estimate in respect to the Strategic Milestone Stock Award Program of $2.3 million, and 2) treasury stock of $0.7 million which was retired in the first quarter of 1996. During the first quarter of 1996 the Company achieved its first milestone under its Strategic Milestone Stock Award Program. In connection with the achievement of this milestone, an aggregate amount of $33,000 will be recognized as a non-cash compensation expense over a 27 month period. This represents a reduction of approximately $2.3 million from amounts previously estimated as of December 31, 1995. The difference relates to changes in the price of the Company's Common Stock since the milestone first appeared likely to be achieved. 9 10 i-STAT CORPORATION PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Reference is made to the Company's Annual Report on Form 10-K for the year ended December 31, 1995, and Note 4 to the Notes to Consolidated Condensed Financial Statements herein, for a description of legal proceedings entitled Nova Biomedical Corporation, Plaintiff v. i-STAT Corporation, Defendant. The Company is a defendant in a class action complaint entitled Susan Kaufman, on behalf of herself and all others similarly situated, Plaintiff, v. i-STAT Corporation, William P. Moffitt, Lionel N. Sterling, Imants R. Lauks and Matthias Plum, Jr. The class action was brought by Susan Kaufman on her behalf and on behalf of all purchasers of the Company's Common Stock between May 9, 1995 and March 19, 1996. The complaint, which was filed in the Superior Court of New Jersey in Mercer County on June 19, 1996, alleges New Jersey common law "fraud on the market" in connection with certain sales of i-STAT stock by the Company's chief executive officer, chief technology officer and two outside directors during a nine-month period. The plaintiffs seek unspecified compensatory damages, interest and payment of all costs and expenses incurred in connection with the class action. Management believes the complaint is without merit and intends to vigorously contest it. However, if the plaintiff should totally prevail in this matter, it could have a material impact on the financial position, results of operations and cash flows of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Stockholders on June 12, 1996, at which time two matters were submitted to a vote of stockholders. A description of the matters voted upon and a voting tabulation for each matter is as follows: I. Election of nine members to the Board of Directors, each to serve until the next annual meeting.
Number of Votes --------------------------------------------------------------------------------------- Name of Nominee For Against/Withheld Abstentions Broker Non-Votes - --------------------------------------------------------------------------------------------------------------- J. Robert Buchanan, M.D. 11,572,262 39,345 N/A N/A - --------------------------------------------------------------------------------------------------------------- Curtis J. Crawford 11,572,477 39,130 N/A N/A - --------------------------------------------------------------------------------------------------------------- James A. Cyrier 11,572,277 39,330 N/A N/A - --------------------------------------------------------------------------------------------------------------- Richard Hodgson 11,572,062 39,545 N/A N/A - --------------------------------------------------------------------------------------------------------------- Imants R. Lauks 11,572,477 39,130 N/A N/A - --------------------------------------------------------------------------------------------------------------- William P. Moffitt 11,572,077 39,530 N/A N/A - --------------------------------------------------------------------------------------------------------------- Robert W. O'Leary 11,572,277 39,330 N/A N/A - --------------------------------------------------------------------------------------------------------------- Matthias Plum, Jr. 11,572,277 39,330 N/A N/A - --------------------------------------------------------------------------------------------------------------- Lionel N. Sterling 11,572,477 39,130 N/A N/A ===============================================================================================================
II. Ratification of the appointment of Coopers & Lybrand L.L.P. as independent accountants to audit the Company's books and accounts for the year 1996.
Number of Votes - -------------------------------------------------------------------------------------- For Against/Withheld Abstentions Broker Non-Votes - -------------------------------------------------------------------------------------- 11,573,184 16,457 21,966 N/A ======================================================================================
10 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 Restated Certificate of Incorporation * 3.2 By-Laws ** 3.3 Certificate of Designation, Preferences and Rights of Series A Preferred Stock ** 3.4 Certificate of Designation, Preferences and Rights of Series B Preferred Stock ** 4.1 Stockholder Protection Agreement, dated as of June 26, 1995, between i-STAT Corporation and First Union National Bank (formerly First Fidelity Bank, National Association) ** 10.34 Employment Offer Letter - Roger J. Mason, dated June 6, 1996 27 Financial Data Schedule (b) Reports on form 8-K During the quarter for which this Report on Form 10-Q is filed, no reports on Form 8-K were filed. * These items are hereby incorporated by reference from the exhibits to the Company's Form S-8/S-3 Registration Statement (File No. 33-48889) and are made a part of this Report. ** These items are hereby incorporated by reference from the exhibits to the Company's Current Report on Form 8-K, dated July 10, 1995 and amended on September 11, 1995, and are made a part of this Report. 11 12 i-STAT CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: August 9, 1996 i-STAT CORPORATION (Registrant) BY: /s/William P. Moffitt ------------------------------ William P. Moffitt President and Chief Executive Officer (Principal Executive Officer) BY: /s/Roger J. Mason ------------------------------- Roger J. Mason Vice President of Finance, Treasurer and Chief Financial Officer (Principal Financial Officer) 12 13 EXHIBIT INDEX Exhibit No. Description - ------- ----------- 3.1 Restated Certificate of Incorporation * 3.2 By-Laws ** 3.3 Certificate of Designation, Preferences and Rights of Series A Preferred Stock ** 3.4 Certificate of Designation, Preferences and Rights of Series B Preferred Stock ** 4.1 Stockholder Protection Agreement, dated as of June 26, 1995, between i-STAT Corporation and First Union National Bank (formerly First Fidelity Bank, National Association) ** 10.34 Employment Offer Letter - Roger J. Mason, dated June 6, 1996 27 Financial Data Schedule * These items are hereby incorporated by reference from the exhibits to the Company's Form S-8/S-3 Registration Statement (File No. 33-48889) and are made a part of this Report. ** These items are hereby incorporated by reference from the exhibits to the Company's Current Report on Form 8-K, dated July 10, 1995 and amended on September 11, 1995, and are made a part of this Report. EX-10.34 2 EMPLOYMENT OFFER LETTER 1 EXHIBIT 10.34 May 29, 1996 Mr. Roger J. Mason 5 Empress Drive Holmdel, NJ 07733 Dear Roger: On behalf of the management team and associates of i-STAT Corporation, it is my pleasure to offer you the senior management position of Vice President of Finance, Treasurer & Chief Financial Officer. Reporting to me, this position is responsible for the financial functions of SEC and internal financial reporting, accounting, treasury, credit and collections and investor relations and financial planning. Equally important, as a key member of the senior management team, you will be instrumental in building i-STAT into a profitable, expanding business while planning longer term strategy for diversification and continued growth. As you may be aware, under Delaware law, the Board of Directors is empowered to elect you to the position of Chief Financial Officer and it is anticipated that this will occur with your commencement of employment. The specifics of the offer are as follows: 1. BASE SALARY: $225,000 per year. Our pay cycles are on the 15th and last days of each month. Your salary will be reviewed on an annual basis with adjustments determined by the Compensation Committee of the Board of Directors upon recommendation from the Chief Executive Officer. 2. SIGN-ON BONUS: In recognition of the cost of termination of your current employment and as an incentive to accept our offer, a sign-on bonus of $30,000 will be paid to you as soon as practicable after your first day of employment. 3. ANNUAL INCENTIVE COMPENSATION PROGRAM: The Board of Directors has established guidelines for rewarding, through cash bonuses and stock options, certain management level employees of the company for achievement of established business objectives (both quantitative and qualitative). In the case of our senior management team, both the objectives and the level of awards are reviewed and approved by the Board. Achievement of the objectives will result in a cash bonus from 0% to 20% of your salary during the operating year, with a "target" of 10%. The Program also includes the potential for a stock option award (fair market value) ranging from 0 to 15,000 shares depending upon performance levels, with a target of 12,000 shares. The options become exercisable on a three-year schedule according to the following formula: 50% 1st anniversary of the award 25% 2nd anniversary of the award 25% 3rd anniversary of the award 2 Mr. Roger J. Mason May 29, 1996 Page 2 Both the cash bonus and stock award will be prorated to take into account the date of commencement of your employment. Quantitative objectives for 1996 are achievement of our budgeted revenues, gross margin, operating income and cash flow targets. Qualitative objectives are the continued building of our management team (in which you, of course, figure prominently), managing our alliance with Hewlett-Packard, and completion of a new, Board-approved Strategic Plan. You should be aware that, with the assistance of KPMG Peat Marwick compensation consultants, who in 1992 helped us design both this Program and our company-wide compensation structure, we are taking a fresh look at both this Program and the company-wide structure to be sure that they remain consistent with our progress to date and our strategic plan. As a member of our senior management team, you will have input on these issues. 4. INITIAL STOCK OPTION INCENTIVE: As additional incentive for you to join i-STAT, on your start date the company will make a stock option grant to you for 65,000 shares at fair market value. These options will vest at the rate of 20% on each anniversary of the award for five successive anniversaries. 5. BENEFITS: You will be entitled to participate in the company's benefit programs available to senior management. This includes health and dental programs, long term disability coverage, life insurance, paid vacation and a 401(k) program. The details of each of these programs can be further reviewed for you by our Director of Human Resources. 6. RELOCATION: Per our conversation, it is not immediately clear whether you will need to relocate your family closer to the Princeton, NJ office. We will leave this matter open for further consideration. If it should become advisable for you to relocate, the company will reimburse you for reasonable and customary expenses associated with your move, in accordance with the company's relocation policy. 7. EXPENSES: All reasonable expenses incurred in the fulfillment of your assigned responsibilities will be reimbursed by the company in accordance with our established policy. 8. TERMS OF EMPLOYMENT; SEVERANCE: Your employment with i-STAT is considered to be "at will" and either you or the company may terminate your employment at any time, with or without cause for any reason whatsoever. Except for "Due Cause" (as defined in the addendum to this letter), should your employment be terminated by the company, the company will be obligated to continue to pay your salary and company paid health and dental benefits contributions for a term of up to nine months, on a month-by-month basis, if you have not found employment or commenced self-employment. In 3 Mr. Roger J. Mason May 29, 1996 Page 3 addition, the company will reimburse you the expenses of a qualified outplacement service of your choosing in an amount not to exceed $30,000. Your continuing salary payments under this provision shall be reduced to the extent you receive, during the said nine-month period, any payments under the company's disability insurance coverage. For the purposes of the foregoing provisions, your employment shall be deemed to have been terminated if (a) without your consent, (i) your principal place of employment shall have been changed to a location more than 60 miles from Princeton, New Jersey or (ii) a substantial reduction shall have occurred in your title, office, compensation, duties, responsibilities and/or reporting relationship; or (b) a "Change in Control" shall have occurred as defined in the Company's 1985 Stock Option Plan, as amended. In the event of your constructive termination pursuant to this paragraph, you shall be entitled to receive, in addition to your salary continuation and other benefits delineated in the next preceding paragraph, any bonus earned prior to your termination, prorated to the date of termination. 9. CONFIDENTIALITY AND NON-COMPETE AGREEMENT: A condition of your employment is that you sign and abide by the company's "Confidentiality and Non-Compete Agreement". Two copies of this agreement are enclosed for your signature. 10. STOCK OPTIONS IN THIS OFFER: All stock options referenced in this offer will be non-statutory stock options subject to the provisions of our 1985 Stock Option Plan (as amended) and evidenced by a stock option agreement in customary form. All shares underlying options granted under the Plan are registered for resale with the SEC and therefore freely saleable by you after purchase, subject to SEC-mandated volume restrictions applicable to company "affiliates", among which you are likely to be counted due to your position as Chief Financial Officer. A copy of the Plan , the SEC-mandated Plan Document, and the stock option agreement form which describes the terms and conditions generally applicable to options granted under the Plan are enclosed. As set forth in Section 16 of the Plan, all options are subject to "Change in Control" provisions which require acceleration of vesting schedules upon the occurrence of certain events affecting i-STAT's status as an independent entity. 11. START DATE: It is anticipated that your start date with the company will be July 1, 1996. 12. ENTIRE AGREEMENT: Together with the Confidentiality Agreement referred to in paragraph 9, this letter encompasses all of the terms applicable to your offer of employment by i-STAT. 4 Mr. Roger J. Mason May 29, 1996 Page 4 Roger, we at i-STAT are truly excited about the opportunity to have you join us. Everyone who has met you was most impressed. We believe we have the opportunity to make a profound effect upon the quality and cost of health care delivery and build i-STAT into a highly successful, profitable company, but we need people like you to make our goals come true. Please accept our offer by signing below on or before June 10, 1996. If there are any questions I can answer for you, please call me at your earliest convenience. I look forward to working with you. Sincerely, William P. Moffitt President and Chief Executive Officer ACCEPTED: /s/ Roger J. Mason June 6, 1996 - ------------------ ------------ Roger J. Mason Date 5 ADDENDUM TO ROGER MASON EMPLOYMENT OFFER LETTER DATED MAY 29, 1996 "Due Cause" means (a) the commitment by R. Mason of a willful serious act, such as embezzlement, against i-STAT intended to enrich himself at the expense of i-STAT; (b) the conviction of R. Mason for a felony involving moral turpitude; (c) R. Mason's willful and gross neglect of his employment duties; (d) R. Mason's intentional failure to observe specific directives or policies of i-STAT's Board of Directors which are consistent with R. Mason's position, duties and responsibilities at i-STAT (which failure is likely to have an adverse impact upon i-STAT's business, financial condition, results of operations, prospects or reputation); or (e) any breach by R. Mason of any of the terms and conditions of the Confidentiality and Non-Competition Agreement between himself and i-STAT. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 38,575 0 3,731 (236) 8,547 51,280 21,692 (11,061) 63,444 7,340 0 0 214 1,678 52,627 63,444 13,151 13,151 12,435 12,435 0 263 0 (9,389) 0 0 0 0 0 (9,389) (.71) 0
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