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, 1998
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: July 14, 1999
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, 1998 and 1997................................4
Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1998..................5
Notes to Financial Statements...................................................................................6
Supplemental Schedules:
Item 27 (a) - Schedule of Assets Held for Investment Purposes..................................................10
Item 27 (d) - 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, 1998 and 1997 and the related statement of changes in net assets
available for benefits for the year ended December 31, 1998. 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 generally accepted auditing
standards. 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 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, 1998
and 1997, and the changes in its net assets available for benefits for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998 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. The supplemental schedules have been subjected to the auditing procedures
applied in our audit 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
---------------------
ERNST & YOUNG LLP
Woodland Hills, CA
July 9, 1999
Miravant Medical Technologies
401(k)-Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
December 31,
1998 1997
---- ----
Assets:
Employer contribution receivable.......................................... $ 23,500 $ 6,880
Participant contribution receivable....................................... 3,660 2,130
Investments, At Fair Value:
Short-term investments.................................................... 1,450 1,870
Miravant Medical Technologies common stock at fair value (at a
cost of $111,560 and $32,670 for the years ended December 31,
1998 and 1997, respectively)........................................... 71,840 28,840
------------------ ------------------
Total assets................................................................. 100,450 39,720
Liabilities:
Unsettled trade........................................................... 1,360 1,930
------------------ ------------------
Total liabilities............................................................ 1,360 1,930
Net assets available for benefits............................................ $ 99,090 $ 37,790
================== ==================
See accompanying notes.
Miravant Medical Technologies
401(k)-Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 1998
Additions to net assets attributed to:
Participant contributions..................................................... $ 70,470
Employer matching contributions............................................... 35,060
Investment income(loss):
Interest income............................................................. 30
Net realized and unrealized depreciation in fair value of investments....... (37,510)
------------------
Total additions................................................................. 68,050
Deductions to net assets attributed to:
Benefit payments to participants............................................. 6,630
Administrative expenses...................................................... 120
------------------
Total deductions................................................................ 6,750
Net increase.................................................................... 61,300
Net assets available for benefits:
Beginning of the year........................................................ 37,790
------------------
End of the year.............................................................. $ 99,090
==================
See accompanying notes.
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Notes to Financial Statements
December 31, 1998
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 made on a quarterly basis, 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 year ended December 31, 1998 the
Board of Directors directed the Company to contribute half of the amounts
contributed by the participants. The amounts contributed by the Company
during 1998 were made in the form of the Company's common stock and cash.
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 the following: a) retirement (on or after the
age of 59 1/2), b) permanent disability, c) death, or d) after a designated
time period according to the following vesting schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than two years 0%
Two years 10%
Three years 30%
Four years 60%
Five or more years 100%
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 provision whereby if a participant leaves the Company and is rehired
before being separated from service for five years, the forfeited portion
of the participants account will be restored. The forfeitures reallocated
for the year ended December 31, 1998 were $3,702.
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 by 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
Stock Purchase Plan Committee, 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 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 contributions from the
Company.
Investment Valuation
The Plan's investments are stated at fair value. The closing market share
price as of December 31 is used to value shares of the Company's common
stock.
Plan Expenses
Substantially all of the plan expenses are paid for by the Company.
3. Income Tax Status
The Plan has applied for but has not yet received a determination letter
from the Internal Revenue Service stating that the Plan is qualified under
Section 401(a) of the Code. However, the Plan Administrator believes that
the Plan is qualified and, therefore, the related trust is exempt from
taxation.
4. Administrative Expenses
Certain administrative functions are performed by officers or employees of
the Company. No officers or employees receive compensation from the Plan.
Substantially all expenses associated with 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
Amounts allocated to withdrawn participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior
to year end but not yet paid. As such, Net Assets Available for Benefits of
the financial statements differ from Net Assets Available for Benefits per
the Form 5500 by $4,170 due to the amounts allocated to withdrawn
participants. There were no such differences at December 31, 1997. In
addition, benefits paid per the financial statements differ from benefits
paid per the Form 5500 by $4,170 due to the amounts allocated to withdrawn
participants.
7. Year 2000 Issue (Unaudited)
The record keeping and trustee function of the Plan are performed by a
third-party service provider. In addition, the Company's payroll function
which supplies data in support of these functions is also performed by a
third-party service provider. These service providers have been actively
addressing the impact of the Year 2000 issue on their ability to continue
to provide their services to the Plan and are implementing any corrective
actions necessary to insure that their systems will function properly with
respect to dates in the Year 2000, and, thereafter. The Company does not
believe, based on indications from these third-party service providers,
that the Year 2000 issue will pose significant operational or record
keeping problems for the Plan.
Miravant Medical Technologies 401(k)-Employee Stock Ownership Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes*
December 31, 1998
Current
Identity of Issue Description of Asset Cost Value
- ------------------------------------------ ------------------------------------ ---------------- -----------------
Miravant Medical Technologies** Common Stock (5,580 shares) $ 111,560 $ 71,840
* 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
Item 27(d)-Schedule of Reportable Transactions*
Year Ended December 31, 1998
Current Value of
Identity of Party Purchase Selling Cost of Asset on Net Gain/(Loss)
Involved Description of Assets Price Price Asset Transaction Date
- ------------------------ ---------------------------- -------------- ----------- ----------- ------------------ --------------
Miravant Medical
Technologies** Common Stock
(Purchased 4,971 shares) $80,660 -- $ 80,660 $80,660 --
(Sold 60 shares) -- $ 2,730 $ 4,350 $ 2,730 ($ 1,620)
Sanwa Bank** Short-term investments
$ 79,890 -- $ 79,890 $ 79,890 --
-- $ 80,310 $ 80,310 $ 80,310 --
* Transactions in excess of five percent of the current value of the Plan's
assets as of January 1, 1998 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
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-34953) pertaining to the Miravant Medical Technologies
401(k)-Employee Stock Ownership Plan of our report dated July 9, 1999, with
respect to the financial statements and schedules of the Miravant Medical
Technologies 401(k)-Employee Stock Ownership Plan included in this Annual Report
(Form 11-K) for the year ended December 31, 1998.
/s/ ERNST & YOUNG LLP
----------------------
ERNST & YOUNG LLP
Woodland Hills, California
July 13, 1999