3
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, 2003
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 28, 2004
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Financial Statements:
Report of Independent Registered Public Accounting Firm.........................................................3
Statements of Net Assets Available for Benefits as of December 31, 2003 and 2002................................4
Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2003 and 2002.......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 Registered Public Accounting Firm
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, 2003 and 2002, 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 the standards of the Public Company
Accounting Oversight Board (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, 2003
and 2002, and the changes in its net assets available for benefits for the years
then ended, in conformity with U.S. generally accepted accounting principles.
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, 2003 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 25, 2004
Miravant Medical Technologies
401(k)-Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 31,
2003 2002
------------------ ------------------
Assets:
Employer contribution receivable.......................................... $ 15,070 $ 27,140
Participant contribution receivable....................................... -- 1,550
Investments, at fair value:
Short-term investments................................................. 2,330 990
Miravant Medical Technologies common stock............................. 150,560 66,790
------------------ ------------------
Total assets................................................................. 167,960 96,470
Liabilities:
Benefits payable........................................................... -- 860
------------------ ------------------
Net assets available for benefits............................................ $ 167,960 $ 95,610
================== ==================
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,
2003 2002
------------------ ----------------
Additions (deductions) to net assets attributed to:
Participant contributions.........................................$ 14,770 $ 24,820
Employer matching contributions......................................15,070 22,840
Investment income (loss):
Interest income........................................................10 20
Net realized and unrealized appreciation
(depreciation) in fair value of common
stock investments...........................................44,260 (421,250)
Benefit payments to participants.....................................(1,760) (9,210)
------------------ ----------------
Net increase (decrease).................................................72,350 (382,780)
Net assets available for benefits:
Beginning of the year................................................95,610 478,390
------------------ ----------------
End of the year...................................................$ 167,960 $ 95,610
================== ================
See accompanying notes.
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Notes to Financial Statements
December 31, 2003
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, 2003 and 2002, the Board of
Directors directed the Company to match 100% of the amounts contributed by
the participants. The amounts contributed by the Company during 2003 and
2002 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. There were no forfeitures for the year ended December
31, 2003 and the forfeitures reallocated for the year ended December 31,
2002 was $621.
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 preparations in conformity with U.S. generally accepted accounting
principles 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 $1.28 and $0.91 as of December 31, 2003 and 2002,
respectively, were used to value shares of the Company's Common Stock. The
market share price of the Company's Common Stock was $1.89 as of June 21,
2004. 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 June 3, 2002, 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
total participant contributions as of and for the year ended December 31,
2003 by $2,746. The financial statements differ from participant
contributions receivable per the Form 5500 as of December 31, 2002 by
$1,200, and total participant contributions for the year then ended by
$770. In addition, the financial statements differ from employer
contributions receivable per the Form 5500 as of December 31, 2002, by
$1,550, and total employer contributions for the year then ended by $4,050.
There were no differences for the year ended December 31, 2003.
7. Financial Condition of Plan Sponsor
The Plan Sponsor has suffered losses from operations and had an accumulated
deficit of $197.0 million as of December 31, 2003 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 associated with the regulatory review process for the
New Drug Application, or an NDA, that was submitted, pre-commercialization
expenses for SnET2, 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
scaled-back efforts in research and development and the preclinical studies
and clinical trials of our products. These efforts, along with the cost of
following up on our submitted NDA, obtaining requisite regulatory approval,
and commencing pre-commercialization activities prior to receiving
regulatory approval, 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 our product in order to achieve a level of revenues adequate to support
the Company's cost structure. In April 2004, the Company entered into a
$10.3 million Securities Purchase Agreement, or the 2004 Equity Agreement,
with a group of institutional investors. In February 2004, the Company
entered into a $2.0 million Unsecured Convertible Debenture Purchase
Agreement, or the February 2004 Debt Agreement, with certain accredited
investors, or the February 2004 Lenders, which provided proceeds of $2.0
million. In August 2003, the Company entered into a Convertible Debt and
Warrant Purchase Agreement, or the 2003 Debt Agreement, with a group of
private accredited investors, or the 2003 Lenders, pursuant to which the
Company issued securities to the Lenders in exchange for gross proceeds of
$6.0 million. In addition, in December 2002, the Company entered into a
$12.0 million Convertible Debt and Warrant Agreement, or 2002 Debt
Agreement, with a group of private accredited investors, or the 2002
Lenders. As of May 10, 2004, the Company had borrowed $6.3 million under
the 2002 Debt Agreement and there will be no further borrowings under the
2002 Debt Agreement. The Company 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, 2004. If additional funding is not available when
required, the Company's executive management believes that as long as the
Company's debt is not accelerated, then the Company has the ability to
conserve cash required for operations through December 31, 2004 and into
the first quarter of 2005. If the additional funding is not available or
only a portion thereof is available, the Company believes that it will have
cash required for operations beyond December 31, 2004 by the delay or
reduction in scope of one or more of our research and development programs
and adjusting, deferring or reducing salaries of employees and by reducing
operating facilities and overhead expenditures. There can be no assurance
that the Company will be successful in obtaining additional financing or
that financing will be available on favorable terms.
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 Stock held by participants of the Plan.
The market share price of the Company's Common Stock was $1.89 as of June
21, 2004.
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)*
December 31, 2003
Identity of Issue Description of Asset Cost Current Value
- ------------------------------------------ ------------------------------------ ---------------- -----------------
Miravant Medical Technologies** Common
Stock 117,626 shares $ 572,760 $ 150,560
Arrowhead Trust Incorporated** Short-term investments $ 2,330 $ 2,330
* 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.
** Party-In-Interest
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Schedule H, Line 4j - Schedule of Reportable Transactions*
Year Ended December 31, 2003
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
$42,695 $ -- $ 42,695 $ 42,695 $ --
$ -- $ 18,360 $ 28,034 $ 18,360 $(9,674)
Arrowhead Trust Short-term investments
Incorporated**
$ 18,582 $ -- $ 18,582 $ 18,582 $ --
$ -- $ 17,280 $ 17,280 $ 17,280 $ --
* Transactions in excess of five percent of the current value of the Plan's
assets as of January 1, 2003 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 Registered Public Accounting Firm