FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
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 1-10615
EMISPHERE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3306985
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
765 Old Saw Mill River Rd. 10591
Tarrytown, New York (Zip Code)
(Address of principal
executive offices)
(914) 347-2220
(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 files by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for at least the past 90 days. Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's common stock, $.01 par value,
outstanding as of December 10, 1998 was: 10,981,694
EMISPHERE TECHNOLOGIES, INC.
TABLE OF CONTENTS
October 31, 1998
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
----
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statement of Stockholders' Equity 5
Condensed Statements of Cash Flows 6
Notes to Condensed Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
Part II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
2
EMISPHERE TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
July 31, October 31,
1998 1998
Assets: ------------ ------------
Current assets:
Cash and cash equivalents $21,358,308 $18,079,989
Marketable securities 13,469,733 13,406,832
Receivable due from Ebbisham 7,710,056 5,043,935
Prepaid expenses and other current assets 729,587 698,111
------------ ------------
Total current assets 43,267,684 37,228,867
Equipment and leasehold improvements, at cost,
net of accumulated depreciation and amortization 9,619,856 10,859,765
Deferred finance cost, net of accumulated
amortization of $67,500 and $135,000,
respectively 742,500 675,000
Other assets 59,970 59,970
------------ ------------
Total assets $53,690,010 $48,823,602
============ ============
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 724,848 $ 720,754
Accrued compensation 266,000 266,000
Accrued professional fees 203,000 134,098
Accrued interest expense 168,750 337,500
Accrued expenses 364,483 114,059
Deferred revenue 625,000
Senior convertible notes, current portion 3,500,000 3,500,000
Investment deficiency in Ebbisham Ltd. 6,583,670 2,744,438
------------ ------------
Total current liabilities 11,810,751 8,441,849
Senior convertible notes 10,000,000 10,000,000
Deferred lease liability 598,111 1,824,544
------------ ------------
Total liabilities 22,408,862 20,266,393
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000
shares authorized, none issued and outstanding
Common stock, $.01 par value; 20,000,000 shares
authorized; 11,037,238 shares issued
(10,993,738 outstanding) at July 31, 1998;
11,064,258 shares issued (11,020,758
outstanding) at October 31, 1998 110,372 110,643
Additional paid-in capital 88,481,742 88,635,029
Accumulated deficit (57,123,403) (60,103,749)
Accumulated other comprehensive income 5,250 108,099
------------ ------------
31,473,961 28,750,022
Less, common stock held in treasury, at cost;
43,500 shares (192,813) (192,813)
------------ ------------
Total stockholders' equity 31,281,148 28,557,209
------------ ------------
Total liabilities and
stockholders' equity $53,690,010 $48,823,602
============ ============
See accompanying notes to financial statements. The July 31, 1998 Condensed
Balance Sheet data was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.
3
EMISPHERE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months
ended October 31,
------------------------------
1997 1998
------------ ------------
Revenues:
Contract research revenues $ 1,715,660 $ 3,579,061
------------ ------------
Costs and expenses:
Research and development 2,666,518 4,299,353
Loss in Ebbisham Ltd. 914,084 1,160,768
General and administrative 963,196 1,360,193
------------ ------------
Total operating expenses 4,543,798 6,820,314
------------ ------------
Operating loss (2,828,138) (3,241,253)
Other income and expenses:
Investment income 485,882 481,990
Interest expense (236,250)
Rental income 15,167
------------ ------------
485,882 260,907
------------ ------------
Net loss $(2,342,256) $(2,980,346)
============ ============
Net loss per share, basic and diluted $ (0.22) $ (0.27)
======== ========
See accompanying notes to the financial statements
4
EMISPHERE TECHNOLOGIES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
For the three months ended October 31, 1998
Accumulated
Other Common Stock
Common Stock Additional Compre- Held In Treasury Compre-
-------------------- Paid-in Accumulated hensive ------------------ hensive
Shares Amount Capital Deficit Income Shares Amount Total Loss
---------- -------- ----------- ------------- ----------- ------ ---------- ------------ ------------
Balance,
July 31, 1998 11,037,238 $110,372 $88,481,742 $(57,123,403) $ 5,250 43,500 $(192,813) $31,281,148
Sale of common stock
under employee stock
purchase plans and
exercise of options 27,020 271 153,287 153,558
Change in net
unrealized gain
(loss) on marketable 102,849 102,849 $ 102,849
securities
Net (loss) (2,980,346) (2,980,346) (2,980,346)
---------- -------- ----------- ------------- ----------- ------ ---------- ------------ ------------
Balance,
October 31, 1998 11,064,258 $110,643 $88,635,029 $(60,103,749) $108,099 43,500 $(192,813) $28,557,209 $(2,877,497)
See accompanying notes to financial statements
5
EMISPHERE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Increase (Decrease) in Cash and Cash Equivalents
For the three months
ended October 31,
--------------------------
1997 1998
Cash flows from operating activities ------------ ------------
Net loss $(2,342,256) $(2,980,346)
------------ ------------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Loss in Ebbisham Ltd. 914,084 1,160,768
Depreciation 117,423 361,066
Amortization of (premium) discount on
marketable securities (1,524) 20,773
Amortization of deferred financing costs 67,500
Increase in deferred lease liability 101,767 1,226,433
Change in assets and liabilities:
(Increase) decrease in receivable due (1,090,661) 2,666,121
from Ebbisham Ltd.
(Increase) decrease in prepaid expenses (21,852) 31,476
and other current assets
Increase in deferred revenue 625,000
Decrease in accounts payable and accrued
expenses (27,186) (160,506)
Increase in accrued interest payable 168,750
Increase in investment in Ebbisham Ltd. (5,000,000)
------------ ------------
Total adjustments (7,949) 1,167,381
------------ ------------
Net cash used in operating activities (2,350,205) (1,812,965)
------------ ------------
Cash flows from investing activities:
Capital expenditures (308,348) (1,763,889)
Purchase of marketable securities (3,555,577) (855,023)
Proceeds from sales of marketable securities 2,146,365 1,000,000
------------ ------------
Net cash used in investing activities (1,717,560) (1,618,912)
------------ ------------
Cash flows from financing activities:
Proceeds from exercise of options and employee
stock purchases 223,262 153,558
------------ ------------
Net cash provided by financing activities 223,262 153,558
------------ ------------
Net decrease in cash and cash equivalents (3,844,503) (3,278,319)
Cash and cash equivalents, beginning of period 22,398,967 21,358,308
------------ ------------
Cash and cash equivalents, end of period $18,554,464 $18,079,989
============ ============
Supplemental disclosure of non-cash investing
and financing activity:
Capital expenditure in accounts payable $ 101,000
===========
See accompanying notes to financial statements
6
EMISPHERE TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Interim Financial Statements:
The interim Condensed Statements of Operations and Condensed Statements of
Cash Flows for the three months ended October 31, 1997 and 1998, the
Statement of Stockholders' Equity for the three months ended October 31,
1998 and the Condensed Balance Sheets as of July 31, and October 31, 1998,
of Emisphere Technologies, Inc. (the "Company"), have been prepared in
accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all information and
disclosures necessary for a presentation of the Company's financial
position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of management,
these financial statements reflect all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for
such periods. The results of operations for any interim period are not
necessarily indicative of the results for the full year. These financial
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for
the fiscal year ended July 31, 1998.
2. Ebbisham Limited:
During October 1996, Ebbisham Limited, the equally owned joint venture
formed by the Company and Elan Corporation plc ("Ebbisham"), commenced
operations. The Company accounts for its investment in Ebbisham in
accordance with the equity method of accounting. Since Ebbisham's
inception (September 1996), the Company has contributed capital to
Ebbisham of approximately $5,010,000.
Contract revenue from Ebbisham, with respect to services provided by the
Company to Ebbisham, is recognized as the related services are rendered.
Such revenue for the three months ended October 31, 1998 and 1997 totaled
approximately $2,302,000 and $1,091,000, respectively.
Selected financial data of Ebbisham as of October 31, 1998 and for the
three months ended October 31, 1997 and 1998 is as follows:
October 31, 1998
Balance Sheet Data ----------------
Cash $ 4,222,000
Accounts payable $ 5,211,000
Subordinated debt $ 14,500,000
Stockholders' deficit $(15,489,000)
Three Months Ended
------------------------------
October 31, October 31,
1997 1998
Statement of Operations Data ------------ ------------
Total Revenue $ 26,000 $ 30,000
Total Expenses (1,406,000) (2,351,000)
Net Loss $(1,380,000) $(2,321,000)
7
3. Net Loss Per Share:
The Company's basic net loss per share amounts have been computed by
dividing net loss by the weighted average number of Common Shares
outstanding. For the three months ended October 31, 1998, and 1997, the
Company reported net losses and, therefore, no common stock equivalents
were included in the computation of diluted net loss per share since such
inclusion would have been antidilutive. The calculations of basic and
diluted net loss per share are as follows:
Net Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------- ---------
Three months ended
October 31, 1998-
basic and diluted $(2,980,346) 11,004,808 $(0.27)
============ ========== =======
Three months ended
October 31, 1997-
basic and diluted $(2,342,256) 10,695,469 $(0.22)
============ ========== =======
Options and shares of common stock issuable upon conversion of Notes and
related accrued interest which have been excluded from the diluted per
share amount because their effect would have been antidilutive, include
the following:
1997 1998
--------------------- ---------------------
Weighted Weighted
average average
exercise exercise
Number price Number price
--------- -------- -------- --------
Options with
exercise prices
below the average
fair market value
of the Company's
common stock
for the respective
period 4,213,262 $10.74 316,588 $4.18
Options with
exercise prices
above the average
fair market value
of the Company's
common stock
for the respective
period 87,400 $21.56 3,978,199 $11.14
Notes and
accrued interest 1,033,750
4. Adoption of Statement of Financial Accounting Standards No. 130
The Company has adopted Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income ("SFAS No. 130"). Comprehensive loss
represents the change in net assets of a business enterprise during a
period from transactions and other events and circumstances from non-owner
sources. Comprehensive loss of the Company includes net loss adjusted for
the change in net unrealized gain or loss on marketable securities. The
net effect of income taxes on comprehensive loss is immaterial. The
disclosures required by SFAS No. 130 for the three months ended October
31, 1998 have been included in the Statement of Stockholders' Equity. For
the three months ended October 31, 1998, and 1997, the components of
comprehensive loss were:
1997 1998
------------ ------------
Net Loss $(2,342,256) $(2,980,346)
Change in net unrealized gain
on marketable securities (1,534) 102,849
Total comprehensive loss $(2,343,790) $(2,877,497)
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements under the caption "Management's Discussion and
Analysis of Financial Conditions and Results of Operations" and elsewhere in
this report on Form 10-Q constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance,
or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: uncertainties related to future
test results and viability of the Company's product candidates, which are in
the early stages of development; the need to obtain regulatory approval for the
Company's product candidates; the Company's dependence on partnerships with
pharmaceutical companies to develop, manufacture and commercialize products
using the Company's drug delivery technologies; the Company's dependence on the
success of its joint venture with Elan Corporation plc ("Elan") for the
development and commercialization of an oral heparin and low molecular weight
heparin product, its strategic alliance with Eli Lilly and Company ("Lilly")
for the development and commercialization of certain of Lilly's therapeutic
proteins and its research collaboration with Novartis Pharma AG to investigate
the Company's technology for oral delivery of two selected Novartis compounds;
the risk of technological obsolescence and risks associated with the Company's
highly competitive industry; the Company's dependence on others to manufacture
the Company's chemical compounds; the risk of product liability and policy
limits of product liability insurance; potential liability for human clinical
trials; the Company's dependence on key personnel; the quality, judgment and
strategic decisions of management and other personnel; uncertain availability
of third-party reimbursement for commercial medical products; and general
business and economic conditions; and other factors referenced in the Company's
report on Form 10-K for the fiscal year ended July 31, 1998.
General
Emisphere is a drug delivery company focused on the discovery and
application of proprietary synthetic chemical compounds that enable the oral
delivery of therapeutic macromolecules and other compounds that are not
currently deliverable by oral means. Since its inception in 1986, the Company
has devoted substantially all of its efforts and resources to research and
development conducted on its own behalf and through collaborations with
corporate partners and academic research institutions. The Company has no
product sales to date. The major sources of the Company's working capital has
been proceeds from its initial public offering in 1989, a second public
offering in 1993, a third public offering in 1997, private equity financing,
issuance to an affiliate of Elan Corporation plc of stock and warrants in 1995
and subsequent exercise of the warrants in April 1998, reimbursement of
expenses and other payments from corporate partners, the registered sale of one
million shares of common stock to two institutional investors in 1996, the
issuance on May 1, 1998 of three year, $13,500,000 aggregate principal, 5%
senior convertible notes, and income earned on the investment of available
funds. The Company's operations are not significantly affected by inflation or
seasonality.
Results of Operations
The Company has since its inception generated significant losses from
operations. The Company does not expect to achieve profitability in the
foreseeable future. Profitability will ultimately depend on the Company's
ability to develop its lead products in conjunction with Ebbisham, Lilly, and
Novartis, or to develop other products in conjunction with other partners.
There can be no assurance that the development will be completed or if
completed, any regulatory agency will approve the final product. Even if final
products are developed and approved, there is no assurance that sales will be
sufficient to achieve profitability. If development of such products is not
achieved or approval not granted, the Company's prospects will be materially
affected.
9
The ability of the Company to reduce its operating losses in the near term
will be dependent upon, among other things, its ability to attract new
pharmaceutical and other companies who are willing to provide funding to the
Company for a portion of the Company's research and development with respect to
specific projects. While the Company is constantly engaged in discussions with
pharmaceutical and other companies, there can be no assurance that the Company
will enter into any additional agreements or that the agreements will provide
research and development revenues to the Company.
Three Months Ended October 31, 1998 vs. Three Months Ended October 31, 1997:
For the three months ended October 31, 1998, the Company recognized
$3,579,000 of contract research revenue compared to $1,716,000 of contract
research revenues for the three months ended October 31, 1997. The majority of
contract research revenue for the three months ended October 31, 1998 consisted
of revenues from Ebbisham Ltd. of $2,300,000 and research funding payments from
Lilly and Novartis. For the three months ended October 31, 1997, contract
revenue consisted of revenues from Ebbisham Ltd. of $1,091,000 and a payment
from Lilly.
Total operating expenses for the fiscal quarter ended October 31 1998,
increased by approximately $2,277,000 or 50%, as compared to the fiscal
quarter ended October 31, 1997. The details of this increase are as follows:
Research and development costs increased by approximately $1,633,000, or
61%, in the fiscal quarter ended October 31, 1998, as compared to the fiscal
quarter ended October 31, 1997. This increase is mainly attributable to
increased personnel and laboratory supply costs in connection with the
collaborations with Lilly, Novartis and the ongoing clinical trials work for
heparin. The Company also experienced an increase in funding of outside
consultants and universities engaged to conduct studies to help advance the
Company's scientific research efforts, perform services related to the
manufacturing of the Company's carriers, and consult on the Company's ongoing
clinical studies with heparin. The Company also experienced an increase in
rent and operating expense in connection with a new lease for laboratory
space. The Company believes that this level of research and development
spending will continue for the foreseeable future and may increase if
operations are expanded.
The loss in Ebbisham Ltd. increased by approximately $247,000, or 27%, in
the fiscal quarter ended October 31, 1998, as compared to the fiscal quarter
ended October 31, 1997. This increase is attributable to increased cost
associated with the ongoing clinical development of heparin. The costs
associated with Ebbisham may increase substantially depending upon the agreed
timing and scope of future research and development efforts.
General and administrative expenses increased by approximately $397,000,
or 41%, in the fiscal quarter ended October 31, 1998, as compared to the fiscal
quarter ended October 31, 1997. This increase is primarily the result an
increase in personnel and related expenses associated with an increase in
administrative staff positions, of costs associated with the ongoing computer
consulting to improve the Company's information system and rent and operating
expense in connection with a new lease for office space. This was partially
offset by a decrease in legal and professional fees paid in connection with the
application and issuance of patents on the Company's technology.
As a result of these factors, the Company's operating loss for the quarter
ended October 31, 1998 increased by $413,000, or 15%, as compared to the
quarter ended October 31, 1997. The Company does not expect to generate an
operating profit, and may possibly generate larger losses, in the foreseeable
future.
The Company's other income and expenses for the quarter ended October 31,
1998 decreased by $225,000, or 46%, from the quarter October 31, 1997. The
decrease is primarily the result of interest expense which the Company accrued
on $13,500,000, 5% senior convertible notes due May 1, 2001and amortization of
deferred financing costs incurred in obtaining the notes.
Based on the above, the Company sustained a net loss for the first quarter
of fiscal 1999 of $2,980,000, a 27% increase over the 1998 fiscal first quarter
loss of $2,342,000.
Liquidity and Capital Resources
As of October 31, 1998 the Company had working capital of approximately
$28,787,000. Total cash, cash equivalents and marketable securities were
approximately $31,487,000, a decrease of $3,341,000 compared to the Company's
position at July 31, 1998. The decrease in the Company's cash, cash
equivalents and marketable securities was primarily due to cash used to fund
capital expenditures of $1.8 million and first quarter 1999 operations of $1.8
million. The decrease was partially offset by proceeds from the exercise of
options.
10
The Company expects to continue to incur substantial research and
development expenses associated with the development of the Company's oral drug
delivery system. As a result of the ongoing research and development efforts
of the Company, management believes that the Company will continue to incur
operating losses and that, potentially, such losses could increase. The
Company expects to need substantial resources to continue its research and
development efforts. In addition, the Company is obligated to fund one-half of
Ebbisham's future cash needs upon the venture's request. The Company
anticipates that its share of the funding requirements will be $10,000,000 over
the next twelve months. In August 1998, the Company loaned Ebbisham Ltd.
$5,000,000 to cover past costs incurred by Ebbisham Ltd. The Company expects
the research funding received from Lilly and Novartis to approximate the costs
to be incurred by the Company in connection with the development of each of the
Company's projects. Under present operating assumptions, the Company expects
that cash, cash equivalents and marketable securities will be adequate to meet
its liquidity and capital requirements through fiscal 2000. Thereafter, the
Company would need to seek additional funds, primarily in the public and
private equity markets and, to the extent necessary and available, through debt
financing. The Company has no firm agreements with respect to any additional
financing and there can be no assurance that the Company would be able to
obtain adequate funds on acceptable terms. If adequate funds were not
available, the Company would be required to delay, scale back, or eliminate
one or more of its research and development programs, or obtain funds, if
available, through arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies,
product candidates, or products that the Company would not otherwise
relinquish. The Company does not maintain any credit lines with financial
institutions.
Year 2000 Compliance
The "Year 2000" problem relates to many currently installed computers,
software, and other equipment that relies on embedded technology (collectively,
"Business systems"). These Business systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, in less than two
years, Business systems used by many companies, in a very wide variety of
applications, will experience operating difficulties unless they are modified,
upgraded, or replaced to adequately process information involving, related to
or dependent upon the century change. If a Business system used by the Company
or a third party dealing with the Company fails because of the inability of the
Business system to properly read a 21st century date, the results could have a
material adverse effect on the Company.
The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 Business systems failures and has established a
team to address Year 2000 risk. The team is reviewing the Company's internal
infrastructure and believes that it has identified substantially all of the
major Business systems used in connection with its internal operations. The
Company has commenced the process of identifying and correcting the major
Business systems that may need to be modified, upgraded, or replaced, and
expects to complete this process, along with remedial actions before the end of
fiscal 1999. Costs incurred to date to correct Year 2000 problems have been
immaterial. The Company estimates the total cost to complete any required
modifications, upgrades, or replacements of affected Business systems will not
have a material impact on the Company's business or results of operations.
This estimate is being monitored and will be revised, if necessary, as
additional information becomes available.
The Company also recognizes the risk that suppliers of products, services,
and collaborators with whom the Company transacts business on a worldwide basis
may not comply with Year 2000 requirements. The Company has initiated formal
communications with significant suppliers and collaborators to determine the
extent to which the Company is vulnerable if these third parties fail to
remediate their own Year 2000 issues. The review is ongoing and the Company is
unable to determine, at this time, the probability that any material supplier
or collaborator will not be able to correct any Year 2000 problem in a timely
manner. In the event any such third parties cannot provide the Company with
products, services, or continue the collaborations with the Company, the
Company's results of operations could be materially adversely affected.
Based on the above, the Company has yet to develop a comprehensive
contingency plan with respect to the Year 2000 problem. The Company will
continue to monitor its own Business systems and, to the extent possible,
evaluate the Business systems of its third party suppliers and collaborators to
ensure progress on this critical matter. However, if the Company identifies
significant risk related to the Year 2000 compliance or progress deviates from
anticipated timelines, the Company will develop contingency plans as deemed
necessary at that time.
THE DISCUSSION OF THE COMPANY'S EFFORTS, ESTIMATES, AND CONCLUSIONS HEREIN
CONTAIN FORWARD-LOOKING STATEMENTS AND ARE BASED ON MANAGEMENT'S BEST ESTIMATES
OF FUTURE EVENTS. THE COMPANY?S ABILITY TO ACHIEVE YEAR 2000 COMPLIANCE AND THE
LEVEL OF INCREMENTAL COSTS ASSOCIATED THEREWITH, COULD BE ADVERSELY IMPACTED
BY, AMONG OTHER THINGS, THE AVAILABILITY AND COST OF MODIFICATIONS, OUR ABILITY
TO DISCOVER AND CORRECT THE POTENTIAL YEAR 2000 PROBLEM, AND UNANTICIPATED
PROBLEMS IDENTIFIED IN THE ONGOING COMPLIANCE REVIEW.
11
Part II. OTHER INFORMATION
(a) Reports on Form 8-K
During the period covered by this report, the registrant filed a Current
Report on Form 8-K dated October 1, 1998 reporting Item 4 Change in
Registrant's Certifying Accountants and including no financial statements.
SIGNATURE
Pursuant to the requirement 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.
Emisphere Technologies, Inc.
Dated: December 15, 1998 by /s/ Joseph D. Poveromo
----------------------------
Joseph D. Poveromo, C.P.A.
Controller (Principal Financial
and Accounting Officer)
12