UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended December 31, 2002
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number: 0-25544
---------------
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Miravant Medical Technologies
336 Bollay Drive, Santa Barbara, California 93117
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Miravant
Medical Technologies as Plan Administrator has duly caused this annual report to
be signed on its behalf by the undersigned thereunto duly authorized.
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
By: /s/ John M. Philpott
--------------------------
John M. Philpott
Chief Financial Officer
Dated: June 27, 2003
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Financial Statements:
Report of Independent Auditors..................................................................................3
Statements of Net Assets Available for Benefits as of December 31, 2002 and 2001................................4
Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2002 and 2001.......5
Notes to Financial Statements...................................................................................6
Supplemental Schedules:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)..................................................10
Schedule H, Line 4j - Schedule of Reportable Transactions.......................................................11
Report of Independent Auditors
Plan Administrator
Miravant Medical Technologies
401(k)-Employee Stock Ownership Plan
We have audited the accompanying statements of net assets available for benefits
of the Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan as of
December 31, 2002 and 2001, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Miravant
Medical Technologies 401(k)-Employee Stock Ownership Plan at December 31, 2002
and 2001, and the changes in its net assets available for benefits for the years
then ended, in conformity with accounting principles generally accepted in the
United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
(held at end of year) as of December 31, 2002 and reportable transactions for
the year then ended, are presented for purposes of additional analysis and are
not a required part of the financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, are fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
Woodland Hills, California
June 19, 2003
Miravant Medical Technologies
401(k)-Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 31,
2002 2001
------------------ ------------------
Assets:
Employer contribution receivable.......................................... $ 27,140 $ 17,190
Participant contribution receivable....................................... 1,550 4,600
Investments, at fair value:
Short-term investments................................................. 990 1,360
Miravant Medical Technologies common stock............................. 66,790 455,240
------------------ ------------------
Total assets................................................................. $ 96,470 $ 478,390
================== ==================
Liabilities:
Benefits payable.......................................................... $ 860 $ --
Net assets available for benefits............................................ $ 95,610 $ 478,390
================== ==================
See accompanying notes.
Miravant Medical Technologies
401(k)-Employee Stock Ownership Plan
Statements of Changes in Net Assets Available for Benefits
Year ended December 31,
2002 2001
------------------ ----------------
Additions (deductions) to net assets attributed to:
Participant contributions............................... $ 24,820 $ 93,040
Employer matching contributions......................... 22,840 92,320
Investment income (loss):
Interest income....................................... 20 80
Net realized and unrealized (depreciation)
appreciation in fair value of common stock
investments.......................................... (421,250) 27,770
Benefit payments to participants....................... (9,210) (1,010)
Administrative expenses................................ -- (50)
------------------ ----------------
Net (decrease) increase................................... (382,780) 212,150
Net assets available for benefits:
Beginning of the year.................................. 478,390 266,240
------------------ ----------------
End of the year........................................ $ 95,610 $ 478,390
================== ================
See accompanying notes.
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Notes to Financial Statements
December 31, 2002
1. Plan Description
The Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan (the
"Plan") was established to assist eligible employees of Miravant Medical
Technologies (the "Company") to acquire and accumulate shares of common
stock of the Company through payroll deductions. The following plan
description provides only summary information; reference should be made to
the Plan document for more complete information.
Substantially all employees of the Company having at least three months of
employment with the Company (as defined in the Plan document) are eligible
to participate in the Plan. The Plan provides that participants may elect
to contribute from 1% to 6% of their compensation up to the maximum limits
permitted by the Internal Revenue Code (the "Code"). The Code also places
limits on the total amount which can be added to any employee's accounts
for a given year which apply in aggregate to all retirement plans sponsored
by the Company.
Under the provisions of the Plan, participant contributions are invested by
the trustee in the Company's common stock no later than the close of the
third business day following the receipt of the participants' contributions
from the Company. Upon receipt of the participant contributions, but prior
to the investment in the Company's common stock, the funds are temporarily
invested by the trustee in short-term investments or U.S. Treasury
obligations.
Participants in the Plan become eligible for a discretionary Company
matching contribution immediately upon enrolling in the Plan. All matching
contributions are invested in the Company's common stock and the matching
contribution percentage for each plan year is determined by the Company's
Board of Directors prior to the start of the Plan year. The Company's
matching contributions are calculated on a quarterly basis, and
periodically made to the Plan and may be in the form of cash, shares of the
Company's common stock, any other assets or any combination thereof. The
employer's matching contribution in the form of common stock is determined
by using the closing market price on the last business day of each quarter.
Matching cash contributions are invested by the trustee in the Company's
common stock within three business days of receipt of the cash
contribution. For the years ended December 31, 2002 and 2001, the Board of
Directors directed the Company to match 100% of the amounts contributed by
the participants. The amounts contributed by the Company during 2002 and
2001 were made in the form of the Company's common stock.
Participants become fully vested in the portion of the Company's matching
contributions allocated to their accounts if they are employed by the
Company after a designated time period according to the following vesting
schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 years 0%
Two years 10%
Three years 30%
Four years 60%
Five or more years 100%
Additionally, participants become fully vested in the portion of the
Company's matching contributions allocated to their accounts if they are
employed by the Company immediately prior to retirement (on or after the
age of 59 1/2), permanent disability or death.
If a participant leaves the Company prior to retirement, the portion of his
or her matching account which is not vested will be forfeited. Forfeitures
are divided among the accounts of the remaining participants in accordance
with specific conditions defined in the Plan. The Plan also contains a
rehire and reinstatement provision, for which the terms and conditions are
defined in the Plan. The forfeitures reallocated for the years ended
December 31, 2002 and 2001 were $621 and $1,436, respectively.
Common stock, plus cash for any partial share credited to a participant's
account, will be generally distributed to the participant (or the
participant's designated beneficiary or estate) in full, within certain
limitations and restrictions as provided in the Plan document, no later
than 60 days after the end of the Plan year during which a participant
becomes eligible for a distribution due to permanent disability, death,
retirement or termination of employment. Prior to termination of
employment, shares can be distributed to a participant upon attaining age
59 1/2 while still an employee or for emergencies at the discretion of the
Plan Administrator, as provided in the Plan document.
The Plan's assets, which consist principally of the Company's common stock,
are held in safekeeping for custodial purposes by an independent trustee.
Contributions are managed by the trustee, which invests cash received and
interest, and makes distributions to participants. Certain administrative
functions are performed by officers or employees of the Company. No such
officer or employee receives compensation from the Plan.
The Company currently expects to continue the Plan indefinitely and to
continue to make contributions under the Plan. However, there is no
contractual commitment requiring the Company to continue to make these
contributions to the Plan. The Company's Board of Directors has the right
to alter or terminate the Plan at any time and for any reason, subject to
the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). In the event of Plan termination, participants will become 100
percent vested in their accounts.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of
accounting.
Estimates and Assumptions
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and the accompanying notes. Actual results could
differ from those estimates and such differences may be material to the
financial statements.
Participant Contributions
Contributions are recorded when the Company makes payroll deductions from
the Plan participants.
Participant Withdrawals
Participant withdrawals and payments made to terminated participants are
recorded on the date distributions are made.
Stock Purchases
Stock purchases are made by the Plan's trustee by the close of the third
business day following receipt of the participant or cash matching
contributions from the Company.
Investment Valuation
The Plan's investments are stated at fair value. The closing market share
price, which was $0.91 and $9.61 as of December 31, 2002 and 2001,
respectively, were used to value shares of the Company's common stock. The
market share price of the Company's common stock was $1.00 as of June 19,
2003. See Note 7 for further details on the Company's financial condition.
3. Income Tax Status
The Plan received a determination letter from the Internal Revenue Service
dated September 15, 1999, stating that the Plan is qualified, in form,
under Section 401(a) of the Code and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan
administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan
qualifies and the related trust is tax exempt. Subsequent amendments have
been structured to, and are intended to, maintain the Plan's tax qualified
status.
4. Administrative Expenses
Certain administrative functions are performed by officers or employees of
the Company. No officer or employee receives compensation from the Plan.
Substantially all expenses associated with the establishment, operation and
administration of the Plan are paid by the Company.
5. Party-In-Interest Transactions
The Company and the trustee are parties-in-interest with respect to the
Plan under the provisions of ERISA. The records of the Plan indicate no
party-in-interest transactions which are prohibited by ERISA Section 406
and for which no statutory or administrative exemption exists.
6. Differences Between Financial Statements and Form 5500
The Form 5500 does not reflect amounts contributed to the Plan by
participants or by the employer for the final pay period of each year as a
result of timing of payroll. As such, the financial statements differ from
participant contributions receivable per the Form 5500 as of December 31,
2002 and 2001 by $1,200 and $4,600, respectively, and total participant
contributions for the years then ended by $770 and $394, respectively. In
addition, the financial statements differ from employer contributions
receivable per the Form 5500 as of December 31, 2002 and 2001, by $1,550
and $4,600, respectively, and total employer contributions for the years
then ended by $4,050 and $(1,052), respectively.
7. Financial Condition of Plan Sponsor
The Plan Sponsor has suffered losses from operations and had an accumulated
deficit of $189.5 million as of December 31, 2002, and expects to continue
to incur substantial, and possibly increasing, operating losses for the
next few years due to continued spending on research and development
programs, the cost of preparing and filing a New Drug Application, or NDA,
and related follow-up expenses, the funding of preclinical studies,
clinical trials and regulatory activities and the costs of manufacturing
and administrative activities. The Company also expects these operating
losses to fluctuate due to its ability to fund the research and development
programs as well as the operating expenses of the Company. The Company is
continuing its efforts in research and development and the preclinical
studies and clinical trials of its products. These efforts, and obtaining
requisite regulatory approval, prior to commercialization, will require
substantial expenditures. Once requisite regulatory approval has been
obtained, if at all, substantial additional financing will be required for
the manufacture, marketing and distribution of its product in order to
achieve a level of revenues adequate to support the Company's cost
structure. In December 2002, the Company entered into a $12.0 million
Convertible Debt and Warrant Purchase Agreement, or Debt Agreement, with a
group of private accredited investors, or the Lenders, that provided the
Company the availability to borrow up to $1.0 million per month through
November 2003, subject to certain limitations. The monthly borrowing
request can be limited if certain requirements are not met or are not
satisfactory to the Lenders. As of May 31, 2003, the Company had borrowed
$6.0 million under the Debt Agreement. Executive management of the Company
believes that if the remaining $6.0 million remains available to it under
the Debt Agreement that it has sufficient resources to fund the current
required expenditures through December 31, 2003 (unaudited). In addition,
executive management also believes it can raise additional funding to
support operations through corporate collaborations or partnerships,
licensing of SnET2 or new products and additional equity or debt financings
prior to December 31, 2003, especially due to the Company's announcement
that it intends to file a New Drug Application, or NDA, in 2003. However,
there can be no assurance that the Company will receive the remaining $6.0
million under the Debt Agreement, if certain requirements are not met or
are not satisfactory to the Lenders, and there is no guarantee that the
Company will be successful in obtaining additional financing or that
financing will be available on favorable terms. If additional funding is
not available when required, management believes it has the ability to
conserve cash required for operations through December 31, 2003 (unaudited)
by the delay or reduction in scope of one or more of its research and
development programs and adjusting, deferring or reducing salaries of
employees and by reducing operating facilities and overhead expenditures to
conserve cash to be used in operations.
The Plan Sponsor's ability to continue as a going concern directly effects
its ability to make matching contributions to the Plan and directly affects
the value of the Company's common shares held by participants of the Plan.
The market share price of the Company's common stock was $1.00 as of June
19, 2003.
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)*
December 31, 2002
Identity of Issue Description of Asset Cost Current Value
- ------------------------------------------ ------------------------------------ ---------------- -----------------
Miravant Medical Technologies Common
Stock** 73,397 shares $ 553,620 $ 66,790
Arrowhead Trust Incorporated** Short-term investments $ 990 $ 990
* Under ERISA, an asset held for investment purposes is any asset held by the
Plan on the last day of the Plan's fiscal year or acquired at any time
during the Plan's fiscal year and disposed of at any time before the last
day of the Plan's fiscal year, with certain exceptions.
** Party-In-Interest
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Schedule H, Line 4j - Schedule of Reportable Transactions*
Year Ended December 31, 2002
Current Value of
Identity of Party Purchase Selling Cost of Asset on Net Gain/(Loss)
Involved Description of Asset Price Price Asset Transaction Date
- ------------------------ ---------------------------- -------------- ----------- ----------- ------------------ --------------
Miravant Medical
Technologies** Common Stock $ 41,117 $ -- $ 41,117 $ 41,117 $ --
$ -- $ 7,406 $ 27,556 $ 7,406 $ (20,150)
Arrowhead Trust Short-term investments
Incorporated** $ 30,856 $ -- $ 30,856 $ 30,856 $ --
$ -- $ 31,225 $ 31,225 $ 31,225 $ --
* Transactions in excess of five percent of the current value of the Plan's
assets as of January 1, 2002 as defined in Section 2520.103-6 of the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under ERISA.
** Party-In-Interest
INDEX TO EXHIBITS
Exhibit Incorporating Reference
Number Description (If Applicable)
- ------ ----------- ---------------
23.1 Consent of Independent Auditors
99.1 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.