-----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, QRuJjwA+fl4FrYKt2KeX5F0OOB6ZbxWvn15daYM4k7cCh4z/1BoedZpBp6ZPt15l MVfRDmd7xsXv6Z8FgH4tSg== 0000950116-96-001328.txt : 19961118 0000950116-96-001328.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950116-96-001328 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEAN DIESEL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000949428 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-CHEMICALS & ALLIED PRODUCTS [5160] IRS NUMBER: 061393453 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27432 FILM NUMBER: 96666202 BUSINESS ADDRESS: STREET 1: 300 ATLANTIC ST CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2034259830 10-Q 1 FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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: 0-27432 ------------ CLEAN DIESEL TECHNOLOGIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 06-1393453 - ------------------------ ------------------- (State of Incorporation) (I.R.S. Employer Identification No.) Clean Diesel Technologies, Inc. 300 Atlantic Street - Suite 702 Stamford, CT 06901-3522 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (203) 327-7050 --------------------------------------------------- (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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of November 14, 1996, there were outstanding 2,500,000 shares of Common Stock, par value $0.05 per share, of the registrant. =========================================================================== CLEAN DIESEL TECHNOLOGIES, INC. (A Development Stage Company) Form 10-Q for the Quarter Ended September 30, 1996 INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Balance Sheets as of September 30, 1996 1 and December 31, 1995 Statements of Operations for the Three and 2 Nine Months Ended September 30, 1996 and 1995 and for the Period from January 1, 1992 through September 30, 1996 Statements of Cash Flows for the Nine 3 Months Ended September 30, 1996 and 1995 and for the Period from January 1, 1992 through September 30, 1996 Notes to Financial Statements 4 Item 2. Management's Discussion and Analysis of 6 Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings 8 Item 2. Changes in Securities 8 Item 3. Defaults upon Senior Securities 8 Item 4. Submission of Matters to a Vote of Security Holders 8 Item 5. Other Information 8 Item 6. Exhibits and Reports on Form 8-K 8 SIGNATURES Part I - FINANCIAL INFORMATION Item 1. Financial Statements CLEAN DIESEL TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS
September 30, December 31, 1996 1995 -------------- ---------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 4,335,000 $ 6,848,000 Short-term investments 2,000,000 -- Inventories 106,000 15,000 Stock subscription receivable -- 2,018,000 Other current assets 131,000 1,000 ------------ ------------ Total current assets 6,572,000 8,882,000 Other assets 79,000 -- ------------ ------------ Total assets $ 6,651,000 $ 8,882,000 ============ ============ Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $ 530,000 $ 421,000 Due to Fuel-Tech N.V. 68,000 -- Demand loan payable to Fuel-Tech N.V. 745,000 66,000 ------------ ------------ Total current liabilities 1,343,000 487,000 Loan payable to Fuel-Tech N.V. -- 745,000 Stockholders' equity: Preferred stock, par value $.05 per share, authorized 100,000 shares, no shares issued and outstanding -- -- Common stock, par value $.05 per share, authorized 5,000,000 shares, issued and outstanding 2,500,000 shares 125,000 125,000 Additional paid-in capital 11,125,000 11,125,000 Deficit accumulated during the development stage (5,942,000) (3,600,000) ------------ ------------ Total stockholders' equity 5,308,000 7,650,000 ------------ ------------ Total liabilities and stockholders' equity $ 6,651,000 $ 8,882,000 ============ ============
See notes to financial statements. -1- CLEAN DIESEL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended Period from September 30 September 30 January 1, 1992 ----------------------- ------------------------- through 1996 1995 1996 1995 September 30, 1996 ---------- --------- ----------- -------------- ------------------ Costs and expenses: General and administrative $ 447,000 $ 189,000 $1,398,000 $ 606,000 $2,867,000 Research and development 496,000 256,000 1,072,000 491,000 2,657,000 Patent filing and maintenance 41,000 43,000 131,000 117,000 609,000 --------- --------- ---------- ----------- ---------- Loss from operations 984,000 488,000 2,601,000 1,214,000 6,133,000 Interest (income) expense, net ( 72,000) 39,000 (259,000) 33,000 (191,000) --------- --------- ---------- ----------- ---------- Net loss during development stage $ 912,000 $ 527,000 $2,342,000 $1,247,000 $5,942,000 ========= ========= ========== ========== ========== Net loss per common share $ 0.36 $ 0.21 $ 0.94 $ 0.49 N/A ========= ========= ========== ========== ========== Weighted average number of common shares outstanding 2,500,000 2,566,346 2,500,000 2,566,346 N/A ========= ========= ========== ========== ==========
See notes to financial statements. -2- CLEAN DIESEL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS (Unaudited)
Period from Nine Months Ended January 1, 1992 September 30 through 1996 1995 September 30, 1996 ------------- ---------------- ------------------ Operating activities Net loss $(2,342,000) $(1,247,000) $(5,942,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 7,000 -- 7,000 Changes in operating assets and liabilities: Inventories (91,000) (14,000) (106,000) Other current assets (130,000) (302,000) (131,000) Accounts payable and accrued expenses 109,000 180,000 530,000 Other assets (19,000) -- (19,000) Due to Fuel-Tech N.V. 2,000 -- 2,000 ---------- ------------ ----------- Net cash used in operating activities (2,464,000) (1,383,000) (5,659,000) ---------- ------------ ----------- Financing activities Proceeds from Rights Offering, net 2,018,000 -- 11,156,000 Expenses of Rights Offering -- -- (425,000) Repayment of expenses of Rights Offering paid by Fuel-Tech N.V. -- -- (200,000) Issuance of common stock to parent -- -- 250,000 Net parent company investment -- -- 469,000 Proceeds of loan from Fuel-Tech N.V. -- 951,000 2,874,000 Repayment of loan to Fuel-Tech N.V. -- -- (2,063,000) ---------- ------------ ----------- Net cash provided from financing activities 2,018,000 951,000 12,061,000 ---------- ------------ ----------- Investing activities Purchase of short-term investments (2,000,000) -- (2,000,000) Purchase of fixed assets (67,000) -- (67,000) ---------- ------------ ----------- Net cash used in investing activity (2,067,000) -- (2,067,000) Net increase (decrease) in cash and cash equivalents (2,513,000) (432,000) 4,335,000 Cash and cash equivalents at beginning of period 6,848,000 513,000 -- ---------- ------------ ----------- Cash and cash equivalents at end of period $4,335,000 $ 81,000 $ 4,335,000 ========== ============ ===========
See notes to financial statements. -3- CLEAN DIESEL TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (Unaudited) Note 1. Basis of Presentation The accompanying unaudited, condensed, consolidated 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 Rule 10-01 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 considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three and nine month periods ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. Clean Diesel Technologies, Inc. ("CDTI" or the "Company") was incorporated in the State of Delaware on January 19, 1994 as a wholly-owned subsidiary of Fuel-Tech N.V. ("Fuel Tech"). Predecessor financial information included in the accompanying financial statements for the period January 1, 1992 through January 18, 1994 reflects the Company's operations prior to incorporation, at which time it was accounted for as part of Fuel Tech. As more fully discussed in Note 2, effective December 12, 1995, Fuel Tech completed a Rights Offering of the Company's common shares. At December 12, 1995, following the Rights Offering, Fuel Tech held a 27.6% interest in the Company's common shares. The Company is a development stage enterprise and its efforts from January 1, 1992 through September 30, 1996 have been devoted to the research and development of a platinum fuel catalyst ("PFC") for internal combustion engines and NOx reduction systems for diesel engines, licensed to the Company by Fuel Tech. There were no material activities related to the Company's business prior to 1992. The Company's PFC process will require additional research and development testing to determine its commercial viability. The Company's management believes that the Company has adequate capital to fund its operations through December 31, 1997 but that additional financing will be required in the future to commercialize its technologies. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. In 1995 and 1996 net loss per common share is based on the average number of shares of common stock outstanding during each period. Common equivalent shares are not included in the per share calculations where the effect of their inclusion would be antidilutive, except that, in accordance with Securities and Exchange Commission requirements, common and common equivalent shares issued during the 12-month period prior to the filing of a proposed initial public offering and extending through December 12, 1995 (effective date of the Rights Offering), have been included in the calculation as if they were outstanding for all periods, using the treasury stock method and the initial public offering price of $6.50 per share. -4- The demand loan payable to Fuel Tech of $745,000 bears interest at 8% per annum. Fuel Tech has agreed, however, not to demand repayment of this loan during 1996. Under the Management and Services Agreement with Fuel Tech, which the Company renegotiated for months beginning with June, 1996, the Company is to reimburse Fuel Tech for management, services and administrative expenses it incurs on behalf of the Company, plus a management fee equal to 3% or 10% of such charges, depending on the nature of the charge incurred. Prior to June, 1996, the management fee was equal to 10% of all such charges. In the first nine months of 1996, approximately $1,012,000 of such expenses were incurred. Note 2. Rights Offering of the Company's Common Shares On December 12, 1995, Fuel Tech completed a Rights Offering to its existing shareholders of 72.4% of the Company's common shares, retaining 27.6% of the common shares outstanding. Approximately 1.8 million Company shares were purchased in the offering, which raised net proceeds of approximately $10.5 million, all of which was contributed by Fuel Tech to the Company. In December 1995, after the offering was completed, the Company paid Fuel Tech approximately $2.3 million, which represented the repayment of certain loans made to the Company ($2.1 million), as well as certain expenses of the Rights Offering paid by Fuel Tech ($200,000). On December 26, 1995 the Company's common stock commenced trading on the National Association of Securities Dealers Quotation System ("NASDAQ") under the symbol "CDTI". Note 3. Short-Term Investments In June, 1996, the Company purchased a discount note of the United States Federal Home Loan Bank. The note matures in June, 1997, and has a yield to maturity of 5.84%. The Company intends to hold this investment until its maturity. Note 4. Inventories Inventories are stated at cost and consist of finished product. Note 5. Warrants to Purchase Common Shares Pursuant to a financial consulting agreement with an investment banker, the investment banker has the right to purchase warrants covering 50,000 of the Company's common shares, with an exercise price of $6.50 per share, which represented an 18% premium over market price on the date of issue. The warrants expire on March 1, 2001. Note 6. Sales/Marketing Agreement In September, 1996, the Company entered into a supply agreement with Holt Lloyd International Ltd. ("Holt") of the United Kingdom exclusively to sell quantities of the Company's PFC for use with Holt's fuel additives in the aftertreatment of fuel for both new and used diesel engines in vehicles. The agreement covers territories worldwide except for North, Central and South America. The term of this agreement is ten years with the possibility of a term extension. The exclusivity of the agreement is determined by the attainment (or reasonable effort towards the attainment) of predetermined minimum performance levels for each territory on a calendar basis. The Company's PFC is expected to be test marketed by Holt in Europe in the fourth quarter of 1996, with commercial sales to commence in the first quarter of 1997. -5- CLEAN DIESEL TECHNOLOGIES, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Statements in this Form 10-Q which are not historical facts, so-called "forward-looking statements," are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission. See Item 1 "Risk Factors of the Business" and also Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Form 10-K for the year ended December 31, 1995. Results of Operations General and administrative expenses increased to $447,000 in the third quarter of 1996 from $189,000 in the third quarter of 1995, and to $1,398,000 in the first nine months of 1996 from $606,000 in the first nine months of 1995. The increase was due to expenses associated with the Company establishing its offices, the recruitment and hiring of additional staff, and increased management and administrative costs provided by Fuel Tech pursuant to a management and services agreement. In the first six months of 1996, a greater portion of Fuel Tech management's time was spent on the Company's business activities, which included research programs, establishing relationships with potential marketing partners, and hiring staff. Research and development expenses for the third quarter and first nine months of 1996 increased to $496,000 and $1,072,000, respectively from $256,000 and $491,000 in the third quarter and first nine months of 1995, respectively. In the 1996 periods, the Company performed significant testing on light-duty and heavy-duty engines using the Company's PFC alone and with a catalytic oxidizer. These test programs were conducted in conjunction with potential marketing partners. In addition, the Company hired two senior technical employees. The Company initiated several joint development and demonstration programs of the Company's PFC with diesel particulate filters. These programs are targeted at both existing vehicles and new engines required to meet stringent emission limits in the U.S. and abroad beginning in the year 2000. Under the Cooperative Development and Marketing Agreement signed with Holt, a leading supplier of automotive aftermarket products in Europe and Asia, the Company has initiated an evaluation of its PFC in gasoline engines. If performance objectives are met, Holt will have rights to market this product in the automotive aftermarket under the Platinum Plus(R) brand name in regions outside of North, Central and South America. Under its Memorandum of Understanding with Nalco Fuel Tech ("NFT"), the Company has initiated several joint development programs in the area of NOx emission reductions from diesel engines. In conjunction with NFT, the Company is developing LOE-NOx(TM) diesel emulsion systems and urea-based selective catalytic reduction (SCR) systems. These technologies are expected to be applicable to both stationary and transport diesel engines. -6- Under U.S. EPA additive registration requirements, the Company may have to initiate additional long-term engine testing as required of all fuel and fuel additive manufacturers in the U.S. Additionally, the Company is undergoing European chemical registration for its PFC. The Company anticipates expenditures of up to $400,000 on these registration programs over the next eight months. Patent filing and maintenance expenses were $41,000 and $131,000 in the third quarter and first nine months of 1996, respectively, and $43,000 and $117,000 in the third quarter and first nine months of 1995, respectively. The increase in the first nine months of 1996 was due in part to the preparation and filing of new patent applications in the first quarter of 1996, both in the United States and overseas. Additionally, several patents issued in the third quarter of 1996, and the Company will be required to pay annual maintenance fees on these issued patents. Interest income, net, increased to $72,000 and $259,000 in the third quarter and first nine months of 1996, respectively from ($39,000) and ($33,000) in the third quarter and first nine months of 1995, respectively. The increase was due to interest earned on cash balances resulting from the proceeds of the Rights Offering. Liquidity and Sources of Capital The Company is a development stage company and has incurred losses since inception aggregating $5,942,000 at September 30, 1996. The Company expects to incur losses through the foreseeable future as it further pursues its research and development efforts. In December 1995, the Company raised approximately $10.5 million, net of offering expenses and broker dealer commissions of approximately $1.3 million, through a Rights Offering of its shares by Fuel Tech. Approximately $2 million of this amount was received in January, 1996. Total cash and cash equivalents were $4.3 million and $6.8 million at September 30, 1996 and December 31, 1995, respectively. The decrease in cash was principally due to cash used to fund the Company's loss in the first nine months of 1996. Additionally, approximately $2 million of proceeds from the Rights Offering was received in January, 1996; and, in June, 1996, the Company purchased a $2 million note of a United States Federal Government agency, maturing in June, 1997. The note is classified as a short-term investment in the accompanying balance sheet at September 30, 1996. Working capital at September 30, 1996 was approximately $5.2 million, a decrease of approximately $3.2 million from December 31, 1995. The decrease was the result of working capital used to fund the Company's operations in the first nine months of 1996 and the classification as "current" of a $0.7 million loan payable to Fuel-Tech N.V. previously classified as "long-term". During the third quarter of 1996, the Company hired senior technical personnel and, as of February 1, 1996, leased space for its offices. Additionally, the Company has budgeted increased spending in the remainder of 1996 and 1997 on research and development programs over 1995 and the first nine months of 1996. Some of these programs are expected to be jointly funded by other companies. The Company believes that it has sufficient cash balances to fund its requirements through 1997. The Company will require, however, additional financing in the future, and expects to meet its future cash needs through private placements, a public offering, technology licenses and/or the establishment of a credit facility with a financing institution. There is, however, no guarantee that the Company will be able to raise such capital on terms satisfactory to the Company. -7- Part II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults on 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 10(h) - Management and Services Agreement between Registrant and Fuel Tech, Inc. as of June 1, 1996 b. Reports on Form 8-K None -8- CLEAN DIESEL TECHNOLOGIES, INC. 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. CLEAN DIESEL TECHNOLOGIES, INC. Date: November 14, 1996 By: /s/Jeremy D. Peter-Hoblyn ------------------------- Jeremy D. Peter-Hoblyn President and Chief Executive Officer Date: November 14, 1996 By: /s/Scott M. Schecter -------------------- Scott M. Schecter Vice President and Chief Financial Officer EX-10 2 EXHIBIT 10(H) Exhibit 10(h) Conformed Copy MANAGEMENT AND SERVICES AGREEMENT JUNE 1, 1996 AGREEMENT as of the 1st day of June, 1996 between Clean Diesel Technologies, Inc., a Delaware Corporation ("CDT"), Fuel Tech, Inc., a Massachusetts corporation ("FTI"), each with a place of business at 300 Atlantic Street, Stamford, Connecticut, 06901 U.S.A., Fuel-Tech N.V., a Netherlands Antilles limited liability company ("FTNV") with a place of business at Castorweg 22-24, Curacao, N.A., and Fuel Tech Europe Limited, an English company ("FTE") with a place of business at 28a Cadogan Sq., London, SW1 OJH, U.K. CDT is an affiliate and FTI and FTE are wholly-owned subsidiaries of FTNV and each of these parties is desirous of utilizing certain services and resources of the other and agreeing the terms and conditions for compensation for the same. NOW THEREFORE, the parties agree as follows: 1. Reimbursement. The parties shall reimburse one another as provided on Schedule A attached hereto and made a part hereof and as such Schedule A may be amended from time to time. 2. Cost. Cost shall be the invoice cost of goods and services including all taxes (except VAT claimed by the party seeking reimbursement) and other additional items. The cost of services provided by employees of the parties shall be calculated on an hourly basis by dividing the sum of the annual wages and benefits of an employee by 2,080 hours. Benefits shall include any employer paid item on account of such employment, such as social security, whether or not received by the employee. 3. Directors' Fees; Executive Services. With respect to persons who are directors of both CDT and FTNV, but who are executives or officers of only one of such companies, directors fees, if any, shall be paid by each company as per the current remuneration schedule of the entity concerned, but such fees shall be paid to the company of which the director is an executive or officer unless waived by such company. Where such a director performs services (not involving directors meetings or travel and preparation therefor) for a company of which he is not an executive, the director's employer company shall be paid $1,000 per day for such services. Additionally, where an executive of one company who is not a director provides services for another company and provision for such services shall not have been made on Schedule A, a cost reimbursement shall be made to the company providing the services based on the principles set out in Section 2 above. Management and Services Agreement as of June 1, 1996, p. 2. 4. Term; Renewal; Renegotiation. This agreement shall remain in effect indefinitely unless on or before May 15 in any year CDT or FTNV shall notify the other in writing of the cancellation thereof. This agreement may be amended from time to time with the approval of the Board of Directors of CDT or FTNV, provided, however that amendments, including amendments to Schedule A, in any period of twelve months not aggregating $5,000 in anticipated charges to a party may be executed by the Controller or any Vice President or Managing Director of any party without reference to the Board of Directors. 5. Governing Law; Arbitration. This agreement shall be governed by the internal substantive laws of the State of Connecticut, U.S.A. All questions of the interpretation of this agreement or any claims or disputes hereunder shall be determined by the binding written agreement of the Chief Executive Officers of CDT and FTNV, and, if there shall be no such agreement after 60 days from notice of a written request therefor by CDT or FTNV, then such questions shall be determined by final, binding arbitration under the then commercial rules of the American Arbitration Association in the City of Stamford, Connecticut before a single, neutral arbitrator who shall be a certified public accountant. Any award in such arbitration may be entered in and enforced by any court having jurisdiction. 6. Notices. Notices hereunder shall be made when transmitted or delivered, if sent by hand or facsimile transmission and acknowledged; otherwise, notices shall be deemed made five (5) days after being sent, if sent by first class mail, postage prepaid. IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the date first above written. Fuel-Tech N.V. Fuel Tech Europe Limited By: /s/ P.A. van Sambeek-Ronde By: /s/ J.A. de Havilland --------------------------- ---------------------------- P. A. van Sambeek-Ronde J.A. de Havilland Managing Director Managing Director Clean Diesel Technologies, Inc. Fuel Tech, Inc. By: /s/ J.D. Peter-Hoblyn By:/s/ S.M. Schecter --------------------------- ---------------------------- J.D. Peter-Hoblyn S.M. Schecter President Vice President Schedule A to Management and Services Agreement as of June 1, 1996* 1. CDT shall reimburse the following companies as provided below: Company Item Surcharge - ------- ---- --------- FTI 20% of Office Rent** 3% 50% of Salary & Benefits- General Counsel 3% 50% of Salary & Benefits- Chief Financial Officer 10% Cost of Incidental Office Supplies as used 3% Cost of Controller's Time as used 10% FTNV 100% of Salary & Benefits CEO 3% 1/3 General Office Expense 10% 100% of Direct Charges 0% FTE 100% Salary & Benefits London Secretary 10% 100% Health Benefits CEO 3% 1/3 General Office Expense 10% * From 1/1/96 through 7/31/96 all CDT employees were seconded under FTI's payroll and FTI was reimbursed by CDT for salary and benefits plus a 10% surcharge. This procedure ceased as of 8/1/96 with the advent of CDT's own payroll. ** Effective 8/1/96. EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS 9-MOS DEC-31-1996 DEC-31-1996 JUL-01-1996 JAN-01-1996 SEP-30-1996 SEP-30-1996 4,335,000 4,335,000 2,000,000 2,000,000 0 0 0 0 106,000 106,000 6,572,000 6,572,000 0 0 0 0 6,651,000 6,651,000 1,343,000 1,343,000 0 0 0 0 0 0 125,000 125,000 5,183,000 5,183,000 6,651,000 6,651,000 0 0 0 0 0 0 0 0 984,000 2,601,000 0 0 0 0 (912,000) (2,342,000) 0 0 0 0 0 0 0 0 0 0 (912,000) (2,342,000) ($0.36) ($0.94) 0 0
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