FORM 10-K/A
(AMENDMENT NO. 1)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1996 Commission file number 000-19495
................................................................................
EMBREX, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1469825
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1035 SWABIA COURT, DURHAM, NORTH CAROLINA 27703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (919) 941-5185
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE PER SHARE (AND RIGHTS ATTACHED THERETO)
(Title of class)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
As of March 21, 1997 (the most recent practicable date), the aggregate
market value of the voting stock held by non-affiliates was $53.6 million.
As of March 21, 1997 (the most recent practicable date), there were
8,095,590 shares of the registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED
Proxy Statement with respect to the Part III
Annual Meeting of Shareholders to be
held on May 15, 1997, to be filed with
the Securities and Exchange Commission
ITEM 3. LEGAL PROCEEDINGS
In September 1996, Embrex filed a patent infringement suit in the
United States District Court for the Eastern District of North Carolina against
Service Engineering Corporation, a Maryland corporation, and Edward G. Bounds,
Jr., a Maryland resident and officer of Service Engineering Corporation. The
suit alleged that each of the defendants' development of an in ovo injection
device, designed to compete with Embrex's patented INOVOJECT(R) injection
method, infringes at least one claim of the U.S. patent No. 4,458,630
exclusively licensed to Embrex for the in ovo injection of vaccines into an
avian embryo (the "Sharma Patent"). Further, Embrex claims that the defendants
have violated the terms of a Consent Judgment and Settlement Agreement entered
into with Embrex in November 1995 in which prior litigation was concluded with
Service Engineering and Bounds agreeing not to engage in future activities
violating the Sharma Patent. Embrex sought injunctive relief to prevent
infringement of the Sharma Patent as well as monetary damages. In
November 1996, Service Engineering Corporation and Edward G. Bounds responded to
Embrex's patent infringement suit by asserting various affirmative defenses and
denying the substantive allegations in Embrex's complaint.
In November 1996, Embrex filed a patent infringement suit in the United
States District Court for the Eastern District of North Carolina against IGI,
Inc., a Delaware corporation. The suit alleged that IGI, through its activities
with Service Engineering Corporation and Edward G. Bounds, Jr., an officer of
Service Engineering Corporation, is engaging in activities that constitute
infringement of the Sharma Patent. Embrex sought injunctive relief to prevent
infringement of the Sharma Patent as well as monetary damages. In January 1997,
IGI, Inc. responded to Embrex's patent infringement suit by asserting various
affirmative defenses, including allegations of invalidity of the patent license,
and denying the substantive allegations in Embrex's complaint.
In March 1997, Service Engineering Corporation, a Maryland corporation,
and Edward G. Bounds, Jr., a Maryland resident and an officer of Service
Engineering Corporation, filed suit against the United States Department of
Agriculture, Daniel R. Glickman, Secretary, in the United States District Court
for the District of Maryland with respect to its grant to Embrex of an
exclusive license for the Sharma Patent. The complaint alleges that the USDA
did not adequately comply with statutory and regulatory requirements in making
the grant to Embrex of an exclusive license to the Sharma Patent, the revision
of the exclusive license in 1991 and the revision of the exclusive license in
1994, which extended the period of exclusivity, originally set to terminate on
December 31, 1996, through the patent expiration date. Plaintiffs allege that in
December 1996 (after Embrex had instituted the above referenced action for
patent infringement and breach of contract), the Plaintiffs requested the USDA
to grant them a license of the Sharma Patent. The Plaintiffs allege that the
USDA refused to do so because the USDA said that the license was not available
and that the Plaintiffs had no basis for relief. Plaintiffs also allege that
the USDA wrongfully consented to Embrex's bringing suit against the Plaintiffs.
Plaintiffs are seeking to have the court set aside the extension of the
exclusive license, the USDA's grant of permission for Embrex to sue Service
Engineering Corporation, Edward G. Bounds, Jr and IGI, Inc. for patent
infringement, the USDA's refusal to grant to Service Engineering Corporation a
non-exclusive license to the Sharma Patent and the USDA's refusal to act
favorably upon Service Engineering Corporation's appeal from the refusal to
grant it a non-exclusive license. In addition, plaintiffs seek to have the court
issue an order requiring the USDA, prior to granting any exclusive license under
the Sharma Patent, including by extending the term of a pre-existing exclusive
license, to observe the procedures set forth under laws and regulations
governing the grant of licenses to patents owned by the USDA, and to remand the
matter to the USDA to take action in accordance with the order. Plaintiffs also
seek attorneys fees and costs from the USDA. See "Risk Factors" filed as Exhibit
99 to this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
EMBREX, INC.
By: /s/ Randall L. Marcuson
Date: April 14, 1997 Randall L. Marcuson
President and Chief
Executive Officer