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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934. FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998.
Commission file number 333-43529
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LJL BIOSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0360183
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) Number)
404 TASMAN DRIVE 94089
SUNNYVALE, CA
(Address of principal (Zip Code)
executive offices)
(408) 541-8787
(Registrant's telephone number, including area code)
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 No X
---- ----
As of April 1, 1998, 10,296,133 shares of the Registrant's Common Stock,
$0.001 par value, were issued and outstanding.
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LJL BIOSYSTEMS, INC.
INDEX
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Balance Sheets As of March 31, 1998 and December 31, 1997 . . . . . . . . . . . 3
Condensed Statements of Operations for the Three Months Ended March 31, 1998 and 1997 . . . 4
Condensed Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997 . . 5
Notes to Condensed Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 2. Changes in Securities and Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 4. Submission of Matters to a Vote of Securities Holders. . . . . . . . . . . . . . . . . . . 25
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-2-
PART I.
ITEM 1. CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
LJL BIOSYSTEMS, INC
CONDENSED BALANCE SHEETS
(UNAUDITED)
MARCH 31, DECEMBER 31,
1998 1997
----------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 8,886,000 $ 5,525,000
Short-term investments 6,978,000 -
Accounts receivable 186,000 59,000
Inventories 553,000 283,000
Other current assets 67,000 484,000
----------------------------------
Total current assets 16,670,000 6,351,000
Property and equipment, net 514,000 442,000
-----------------------------------
$ 17,184,000 $ 6,793,000
-----------------------------------
-----------------------------------
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 678,000 $ 681,000
Accrued expenses 514,000 360,000
Customer deposits 180,000 153,000
Current portion of long-term debt - 46,000
-----------------------------------
Total current liabilities 1,372,000 1,240,000
Long-term debt, net of current portion - 40,000
-----------------------------------
Mandatorily redeemable convertible preferred
stock; redemption value $21,543,000 - 9,308,000
-----------------------------------
Stockholders' (deficit) equity:
Common stock 10,000 5,000
Additional paid-in capital 22,586,000 705,000
Deferred stock compensation (746,000) (755,000)
Accumulated deficit (6,038,000) (3,750,000)
-----------------------------------
Total stockholders' (deficit) equity 15,812,000 (3,795,000)
-----------------------------------
$ 17,184,000 $ 6,793,000
-----------------------------------
-----------------------------------
-3-
LJL BIOSYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1998 1997
---------------------------------
REVENUES:
Product sales $ 320,000 $ 2,362,000
Development agreements - 214,000
---------------------------------
Total revenues 320,000 2,576,000
---------------------------------
COSTS AND OPERATING EXPENSES:
Product sales 289,000 1,137,000
Research and development 1,417,000 530,000
Selling, general and administrative 716,000 464,000
---------------------------------
Total costs and operating expenses 2,422,000 2,131,000
---------------------------------
Income (loss) from operations (2,102,000) 445,000
Interest income, net 68,000 26,000
---------------------------------
Income (loss) before provision for income taxes (2,034,000) 471,000
Provision for income taxes - 10,000
---------------------------------
Net income (loss) (2,034,000) 461,000
Accretion of mandatorily redeemable
convertible preferred stock redemption value (254,000) -
---------------------------------
Net income (loss) available to common stockholders $ (2,288,000) $461,000
---------------------------------
---------------------------------
Net income (loss) per share available to common
stockholders:
Basic $ (0.39) $ 0.10
Diluted $ (0.39) $ 0.10
Proforma $ (0.23) $ -
Shares used in computation of net income (loss)
per share available to common stockholders:
Basic 5,815,952 4,500,500
Diluted 5,815,952 4,823,069
Proforma 8,672,915
-4-
LJL BIOSYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1998 1997
-----------------------------------
Cash flows from operating activities:
Net income (loss) $ (2,034,000) $ 461,000
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation and amortization 58,000 23,000
Stock compensation expense 43,000 -
Changes in assets and liabilities:
Accounts receivable (127,000) (194,000)
Inventories (270,000) 276,000
Other current assets 417,000 (2,000)
Accounts payable (3,000) (8,000)
Accrued expenses 154,000 78,000
Customer deposits 27,000 (1,033,000)
-----------------------------------
Net cash used in operating activities (1,735,000) (399,000)
-----------------------------------
Cash flows used in investing activities for the
Purchase of property and equipment (130,000) (54,000)
Purchase of short-term investments (6,978,000) -
-----------------------------------
Net cash used in investing activities (7,108,000) (54,000)
-----------------------------------
Cash flows from financing activities:
Repayment of long-term debt (86,000) (7,000)
Proceeds from issuance of common stock,net 12,290,000 -
-----------------------------------
Net cash provided by (used in) financing
activities 12,204,000 (7,000)
-----------------------------------
Net increase (decrease) in cash and cash
equivalents 3,361,000 (460,000)
Cash and cash equivalents at beginning of period 5,525,000 1,166,000
-----------------------------------
Cash and cash equivalents at end of period $ 8,886,000 $ 706,000
-----------------------------------
-----------------------------------
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING
ACTIVITIES:
Issuance of common stock upon conversion of
mandatorily redeemable convertible
preferred stock $ 9,562,000 $ -
-5-
LJL BIOSYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
In the opinion of LJL BioSystems, Inc. (the "Company"), the accompanying
unaudited financial data contain all adjustments, consisting only of normal
recurring adjustments, which the Company considers necessary to present fairly
the financial information included therein. This Quarterly Report on Form 10-Q
should be read in conjunction with the audited financial statements and notes
thereto included in the Prospectus constituting part of Form S-1 dated March 13,
1998 as filed with the Securities and Exchange Commission. The interim results
presented herein are not necessarily indicative of the results of operations
that may be expected for the full fiscal year ending December 31, 1998, or any
other future period.
NOTE 2 - INVENTORIES:
MARCH 31, DECEMBER 31,
1998 1997
---- ----
Raw materials $ 368,000 $ 278,000
Work-in-process 180,000 -
Finished goods 5,000 5,000
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$ 553,000 $ 283,000
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NOTE 3 - INITIAL PUBLIC OFFERING:
On March 13,1998, the Company completed its initial public offering ("IPO")
of 2,000,000 shares of Common Stock at $7.00 per share, with the Company
receiving proceeds, net of underwriting commissions and associated costs, of
$12.2 million. In April 1998, the Company sold an additional 88,000 shares of
common stock in connection with the exercise of an over-allotment option granted
to the underwriters and received proceeds, net of underwriting commissions and
associated costs, of approximately $573,000. Upon the closing of the IPO all
the outstanding shares of Mandatorily Redeemable Convertible Preferred Stock
(the "Preferred Stock") converted into an equal number of shares of Common
Stock.
-6-
NOTE 4 - BASIC AND DILUTED NET INCOME (LOSS) PER SHARE AVAILABLE TO COMMON
STOCKHOLDERS:
The Company adopted SFAS No. 128, "Earnings per Share", during the fiscal
year ended December 31, 1997 and retroactively restated all prior periods. Basic
earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of common and potential common shares
outstanding during the period. Potential common shares consist of the
incremental common shares issuable upon conversion of outstanding convertible
preferred stock (using the if-converted method) and shares issuable upon the
exercise of stock options and warrants (using the treasury stock method).
Potential common shares are excluded from the computation if their effect is
anti-dilutive, as was the case for the quarter ended March 31, 1998. For the
quarter ended March 31, 1998, net (loss) available to common stockholders
includes $254,000 to reflect accretion of the Preferred Stock redemption value.
THREE MONTHS ENDED MARCH 31,
1998 1997
----------------------------
Basic
Net income (loss) $ (2,034,000) $ 461,000
Accretion of manditorily redeemable
convertible preferred stock redemption
value (254,000)
Net income (loss) available to common ----------------------------
shareholders $ (2,288,000) $ 461,000
----------------------------
----------------------------
Weighted average common shares outstanding 5,815,952 4,500,500
----------------------------
----------------------------
Basic net income (loss) per share $ (0.39) $ 0.10
----------------------------
Diluted
Net income (loss) $ (2,034,000) $ 461,000
Accretion of manditorily redeemable
convertible preferred stock redemption
value (254,000)
----------------------------
Net income (loss) available to common
shareholders $ (2,288,000) $ 461,000
----------------------------
Weighted average common shares outstanding 5,815,952 4,500,500
Dilutive Options 322,569
----------------------------
Total shares 5,815,952 4,823,069
----------------------------
Diluted net income (loss) per share $ (0.39) $ 0.10
----------------------------
-7-
NOTE 5 - PRO FORMA NET INCOME (LOSS) PER SHARE:
Pro forma net (loss) per share for the quarter ended March 31, 1998 was
calculated using the weighted average number of common shares outstanding during
the period adjusted for the assumed conversion as of January 1, 1998 of all
outstanding shares of Preferred Stock into 3,621,503 shares of common stock.
There is no comparable pro forma calculation for the quarter ended March 31,
1997 due to the fact that the Preferred Stock was not issued until June 1997.
THREE MONTHS ENDED MARCH 31,
1998 1997
----------------------------
----------------------------
Net income (loss) $ (2,034,000)
----------------------------
Weighted average common shares outstanding 5,815,952
Assumed conversion of preferred stock 3,621,503
Less preferred stock included in weighted
average common share calculation (764,540)
---------------------------
Total shares 8,672,915
---------------------------
---------------------------
Proforma net income (loss) per share $ (0.23)
---------------------------
NOTE 6 - COMPREHENSIVE INCOME:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (SFAS No. 130), "Reporting Comprehensive
Income." SFAS 130 establishes standards for the reporting of comprehensive
income and its components in interim and annual financial statements of the
Company beginning in fiscal 1999. Comprehensive income, as defined, includes all
changes in equity (net assets) during a period from non-owner sources.
Reclassification of financial statements for earlier periods for comparative
purposes is required. Adoption by the Company in fiscal 1999 is not expected to
have a significant effect on the Company's financial statements.
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE DISCUSSION BELOW CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT ARE BASED
ON THE BELIEFS OF THE COMPANY'S MANAGEMENT, AS WELL AS ASSUMPTIONS MADE BY, AND
INFORMATION CURRENTLY AVAILABLE TO, THE COMPANY'S MANAGEMENT. THE COMPANY'S
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD DIFFER MATERIALLY FROM THOSE
EXPRESSED IN, OR IMPLIED BY, ANY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY
ASSUMES NO OBLIGATION TO UPDATE SUCH FORWARD-LOOKING STATEMENTS. SEE "RISK
FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS, AMONG OTHERS, WHICH COULD CAUSE OR
CONTRIBUTE TO SUCH MATERIAL DIFFERENCES. THE FOLLOWING PRESENTATION OF
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S FINANCIAL STATEMENTS
AND NOTES THERETO AND OTHER FINANCIAL INFORMATION INCLUDED THEREIN.
OVERVIEW
From inception in 1988 through 1991, the Company derived its revenues from
the development of clinical diagnostics and research instruments for customers.
Beginning in 1992, the Company began manufacturing and shipping these clinical
diagnostics and research instruments to customers either for their internal use
or for resale on an OEM basis.
In the second half of 1996, the Company implemented a new strategic
business model aimed at developing products for the emerging high throughput
screening market of the accelerated drug discovery market by leveraging its
existing technology platform and product development and manufacturing expertise
into this new market. In connection with this change in strategy, the Company
shifted its focus from developing and manufacturing original equipment
manufacturing ("OEM") clinical diagnostics and research products to developing,
manufacturing and marketing its own products for high throughput screening. As
part of its shift in focus, the Company has de-emphasized its OEM development
activities and has phased out production of all but one of its OEM instruments.
However, the Company expects to continue to manufacture products under its
agreement with Ventana Medical Systems, Inc. ("Ventana") through 1998 and
possibly beyond. As a result, revenues from development agreements have declined
significantly, and revenues from OEM product sales are expected to materially
decline in future periods.
RESULTS OF OPERATIONS
REVENUES. Total revenues decreased by $2.3 million, from $2.6 million for
the quarter ended March 31, 1997 to $0.3 million for the quarter ended March 31,
1998. Revenues recognized under development agreements for OEM products,
decreased from $0.2 million during the quarter ended March 31, 1997 to $0
during the quarter ended March 31, 1998, due to the Company's decision in 1996
to focus its future efforts on internal development of a proprietary HTS product
platform and not to pursue additional development or manufacturing agreements
for OEM products. Revenues from OEM product sales decreased by $2.1 million,
from $2.4 million during the quarter ended March 31, 1997 to $0.3 million for
the quarter
-9-
ended March 31, 1998, due to the Company's increasing focus on the HTS market
and the phasing out of the Luminometer (a microplate reader), the Q2000 (a
clinical analyzer) and the microplate heater products. As of March 31, 1998,
the Horizon (a clinical specimen processor), manufactured under an agreement
with Ventana, was the only OEM product still being manufactured. Although the
Company expects to continue to manufacture Horizon through 1998 and possibly
beyond under its agreement with Ventana, OEM product sales are expected to
continue to substantially decline in future periods. In addition, the Company
does not expect revenues from development agreements in future periods.
COST OF PRODUCT SALES. Cost of product sales decreased from $1.1 million
for the quarter ended March 31, 1997 to $300,000 for the quarter ended
March 31, 1998, due to decreased unit sales of the Luminometer, Q2000 and
microplate heater products. Gross profit, as a percentage of product sales,
decreased from 52% during the quarter ended March 31, 1997 to 10% for the
quarter ended March 31, 1998, primarily as a result of decreased absorption of
manufacturing overhead resulting from reduced unit sales. The Company expects
that per unit cost of sales will remain roughly constant or increase and gross
profit to continue at a low percentage of product sales in future periods, as
unit sales of OEM products continue to decrease, resulting in decreased
absorption of manufacturing overhead. In addition, cost of product sales of
Analyst is expected to be high for at least several years as a result of low
absorption of manufacturing overhead resulting from low production volume.
RESEARCH AND DEVELOPMENT. Research and development expense increased from
$0.5 million for the quarter ended March 31, 1997 to $1.4 million for the
quarter ended March 31, 1998. This increase was primarily due to increased costs
associated with the development of the Company's HTS product platform, partially
offset by a decrease in the level of research and development expenses incurred
in connection with development agreements for OEM customers. The Company expects
research and development expenditures to increase significantly in future
periods to support the development of its HTS products.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
costs increased from $0.5 million for the quarter ended March 31, 1997 to
$0.7 million for the quarter ended March 31, 1998. This increase was primarily
due to increases in marketing and sales expenses associated with the addition of
sales and marketing personnel and HTS product marketing expenses and other
increases in general and administrative expenses. The Company expects selling,
general and administrative expenses to increase substantially in future periods
due to the increased marketing and selling resources necessary to promote the
Company's HTS products, as well as additional administrative costs associated
with being a public company.
-10-
INTEREST AND OTHER INCOME, NET. Net interest and other income increased
from $28,000 for the quarter ended March 31, 1997 to $78,000 for the quarter
ended March 31, 1998. This increase was primarily due to interest earned on
higher levels of invested cash, cash equivalents and short-term investments.
INCOME TAXES
Prior to June 1997, the Company had been taxed as an S corporation for
federal and state income tax purposes. Under the Internal Revenue Code
provisions regarding S corporations, the Company had not been subject to federal
income taxes but had been subject to state income taxes at a reduced rate. As an
S corporation, the Company's stockholders paid taxes on their share of the
Company's taxable income in their individual tax returns. In June 1997, in
connection with the Company's Preferred Stock financing, the Company became
subject to the C corporation provisions of the Internal Revenue Code pursuant to
which the Company's earnings are taxed for federal and state income tax purposes
at the corporate level. Through June 1997, the Company's profits were
distributed to the Company's stockholders through a combination of compensation,
which was treated as expense in the Statement of Operations, and dividends.
Future distributions are not expected. No provision for income taxes has been
recognized for the quarter ended March 31, 1998, as the Company incurred net
operating losses for income tax purposes and has no carryback potential.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had cash, cash equivalents and short-term
investments of $15.9 million and an accumulated deficit of $6.0 million. The
Company completed its initial public offering of Common Stock in March 1998,
raising approximately $12.2 million of cash, net of underwriting discounts and
associated costs. Prior to that, the Company satisfied its liquidity needs
primarily through cash flows generated from operations, private sales of
Preferred Stock, and to a lesser extent, from bank loans for equipment purchases
and loans from stockholders.
Net cash used in operating activities totaled $1.7 million and $0.4 million
during the quarters ended March 31, 1998 and March 31, 1997 respectively. The
increase in net cash used in operating activities is primarily due to the
Company's net loss during the quarter ended March 31, 1998 compared to net
income earned during the quarter ended March 31, 1997.
Cash used in investing activities totaled $7.1 million and $0.1 million
during the quarters ended March 31, 1998 and March 31, 1997 respectively. The
increase in cash used in investing activities is primarily due to the
Company's investment of $7.0 million in short-term, investment grade,
interest-bearing financial instruments. These financial instruments, like all
fixed income instruments, are subject to interest rate risk and will fall in
value if market interest rates increase. The Company attempts to limit this
exposure by investing in short-term investments.
-11-
In February 1998, the Company entered into an equipment financing agreement
that provides a $1.3 million line of credit that can be used to finance
purchases of equipment, computers and software necessary to support the
Company's HTS development effort and additions to the marketing, sales and
administrative infrastructure. As of March 31, 1998, the Company had not drawn
down against this line of credit.
In June 1997, the Company entered into a development, license and sales
agreement with FluorRx under which it obtained worldwide rights to certain
patented assay technologies. Future minimum royalty payments due through 2002
under the agreement would amount to approximately $1.0 million. The source of
funds for these royalty payments is expected to be the sales proceeds from the
sale of HTS products developed by LJL pursuant to the agreement.
The Company may be required to raise substantial additional capital over
a period of several years in order to develop and commercialize its products.
The Company's future capital requirements will depend on numerous factors,
including the costs associated with developing and commercializing its
products, developing a direct marketing and sales force, maintaining
existing, or entering into future licensing and distribution agreements,
protecting intellectual property rights, entering the reagents and assay kits
business, expanding facilities and consummating possible future acquisitions
of technologies, products or businesses. The Company believes that its cash,
cash equivalents and short-term investments, combined with cash to be
generated from operations, will be sufficient to fund operations for the next
twelve to eighteen months. The Company may consume available resources more
rapidly than currently anticipated, resulting in the need for additional
funding. The Company may be required to raise additional capital through a
variety of sources, including the public equity market, private equity
financings, collaborative arrangements, and public or private debt. There can
be no assurance that additional capital will be available on favorable terms,
if at all. If adequate funds are not available, the Company may be required
to significantly reduce or refocus its operations or to obtain funds through
arrangements that may require the Company to relinquish rights to certain of
its products, technologies or potential markets, which could have a material
adverse effect on the Company's business, financial condition and results of
operations. To the extent that additional capital is raised through the sale
of equity, the issuance of such securities would result in ownership dilution
to the Company's existing stockholders.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
The Company desires to take advantage of the "Safe Harbor" provisions of
the Private Securities Litigation Reform Act of 1995 and of Section 21E and Rule
3b-6 under the Securities Exchange Act of 1934. Specifically, the Company
wishes to alert readers that the following important factors, as well as other
factors including, without limitation, those described elsewhere in this Report,
could in the future affect, and in the past have affected, the Company's actual
results and could cause the Company's results for future periods to differ
materially from those
-12-
expressed in any forward-looking statements made by or on behalf of the
Company. The Company assumes no obligation to update such forward-looking
statements.
NEW BUSINESS STRATEGY; NEW AND UNDEFINED MARKET FOR HIGH THROUGHPUT SCREENING
PRODUCTS
In the second half of 1996, the Company implemented a new strategic
business model to develop products for the HTS market. In connection with
this change in strategy, the Company shifted its focus from developing and
manufacturing clinical diagnostic and research products on an original
equipment manufacturing ("OEM") basis to developing, manufacturing and
marketing products for the HTS market. As a result, the Company's historical
operating and financial performance is not indicative of future financial and
business results. The Company incurred operating losses for the quarter ended
March 31, 1998 as a result of its change in business strategy and expects
that operating losses will increase substantially in future quarters due to a
significant decline in revenues and a substantial increase in expenditures to
develop and commercialize the Company's HTS products. The Company anticipates
that it will continue to incur losses for at least the next several years.
The Company has only recently begun commercial shipments of its first HTS
instrument, Analyst. Accordingly, the Company is subject to the risks
inherent in the operation of a new business, such as the failure to develop
an effective sales, marketing and distribution channel, failure to achieve
market acceptance and demand for its HTS products, failure to implement
commercial scale-up of developed HTS products, if any, and failure to attract
and retain key personnel. Furthermore, the HTS market is new and undefined,
and the use of HTS by pharmaceutical and biotechnology companies is limited.
Demand for the Company's HTS products will depend upon the extent to which
pharmaceutical and biotechnology companies adopt HTS as a drug discovery
tool. If HTS does not become a widely used method in drug discovery, demand
for the Company's products will not develop as the Company currently expects
or at all. The lack of demand for the Company's HTS products would have a
material adverse effect on the Company's business, financial condition and
results of operations.
EARLY STAGE OF INSTRUMENTATION DEVELOPMENT
The Company's success will depend on its ability to develop and
commercialize its HTS instruments. The Company has only recently begun
commercial shipments of it's first HTS instrument, ANALYST. The Company has not
previously developed or commercialized products for the HTS market. Much of the
instrumentation and software expected to be incorporated into the Company's HTS
products has not previously been used in HTS applications. The successful
implementation and operation of the Company's HTS products will be a complex
process requiring the integration of advanced robotics, microfluidics, automated
storage and retrieval systems, fluorescence detector technologies and software
and information systems. Even if ANALYST appears to be promising at an early
stage of development or at commercial launch, it may not achieve market
acceptance. In addition, ANALYST may be difficult or uneconomical to produce,
fail to achieve expected performance levels, have a price level that is
unacceptable in the industry or be precluded from commercialization
-13-
by the proprietary rights of others. There can be no assurance that the
Company will be able to successfully develop, manufacture and market ANALYST
or any other HTS products on a timely basis, achieve anticipated performance
levels or throughputs, gain industry acceptance of the Company's products or
develop a profitable business. The failure to achieve any of these objectives
would have a material adverse effect on the Company's business, financial
condition and results of operations.
RISKS ASSOCIATED WITH THE DEVELOPMENT AND COMMERCIALIZATION OF REAGENTS AND
ASSAY KITS
The Company expects that a substantial portion of its revenues will be
derived from the sale of reagents and assay kits. The Company has no experience
in the development, manufacture or marketing of reagents or assay kits. The
Company intends to license assay technologies from third parties and to develop
reagents and assay kits internally. There can be no assurance that the Company
will succeed in licensing any additional assay technologies on acceptable terms,
if at all, or that it will successfully commercialize any reagents that it
licenses. In addition, the Company is internally developing reagents and assay
kits, but has no previous experience in this area. There can be no assurance
that the Company will successfully develop reagents or assay kits internally or
that, if developed, such reagents and assay kits will achieve market acceptance.
The Company currently intends to outsource the manufacture of reagents and
assays kits. There can be no assurance that the Company will be able to enter
into agreements with third parties for the manufacture of reagents and assay
kits on terms commercially favorable to the Company or at all. In addition, the
Company intends to sell reagents and assay kits to purchasers of HTS
instruments, including ANALYST. There can be no assurance that sales of ANALYST
will be sufficient to support this strategy. A failure to achieve commercial
acceptance of its reagents and assay kits would have a material adverse effect
on the Company's business, financial condition and results of operations.
DEPENDENCE ON NEW PRODUCTS; RAPID TECHNOLOGICAL CHANGE
The pharmaceutical and biotechnology instrumentation and reagents market is
characterized by rapid technological change and frequent new product
introductions. The Company's future success will depend on its ability to
enhance its current and planned HTS products and to develop and introduce, on a
timely basis, new products that address the evolving needs of its customers
including its higher-density, ultra high throughput analyzer and microplates and
its fluorescence-based reagents and assay kits. The Company does not anticipate
that prototypes for these ultra high throughput products will be available for
several years, if at all. Production of an ultra high throughput analyzer and
associated microplates, fluorescence-based reagents and assay kits will present
significant development and manufacturing challenges. The Company may experience
difficulties that could delay or prevent the successful development,
introduction and marketing of its new products or its product enhancements. Any
failure to develop and introduce products in a timely manner in response to
changing market demands or customer requirements could have a material adverse
effect on the Company's business, financial condition and results of operations.
-14-
LACK OF SALES AND MARKETING EXPERIENCE
The Company has limited experience in direct marketing, sales or
distribution. The Company's future profitability will depend on its ability to
further develop a direct sales force to sell its HTS products to pharmaceutical
and biotechnology companies. The Company's products are technical in nature and
the Company therefore believes it is necessary to develop a direct sales force
consisting of people with scientific backgrounds and expertise. Competition for
such employees is intense. There can be no assurance that the Company will be
able to attract and retain qualified salespeople or that the Company will be
able to build an efficient and effective sales and marketing organization.
Failure to attract or retain qualified salespeople or to build such a sales and
marketing organization would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company intends to market its HTS products in certain international
markets through distributors. The Company does not currently have distributors
in any international markets, and there can be no assurance that the Company
will be able to engage qualified distributors. Such distributors, if engaged,
may fail to satisfy financial or contractual obligations to the Company, fail to
adequately market the Company's products, cease operations with little or no
notice to the Company or offer, design, manufacture or promote competing product
lines. The failure to develop and maintain effective distribution channels could
have a material adverse effect on the Company's business, financial condition
and results of operations.
COMPETITION
The market for HTS products is highly competitive. The Company expects that
competition will increase significantly as more biotechnology and pharmaceutical
companies adopt high throughput screening instruments as a drug discovery tool
and as new companies enter the market with advanced technologies and products.
The Company will compete in many areas, including high throughput screening
instruments, assay development and reagent sales. The Company competes with
companies which directly market HTS products. In addition, pharmaceutical and
biotechnology companies, academic institutions, governmental agencies and other
research organizations are conducting research and developing products in
various areas which compete with the Company's technology platform, either on
their own or in collaboration with others. Many of these competitors have
greater financial, operational and sales and marketing resources, and more
experience in research and development, than the Company. Further, certain
companies offer screening services on a contract or collaborative basis, and
these services could eliminate the need for a potential customer to purchase the
Company's products. The Company's technological approaches may be rendered
obsolete or uneconomical by advances in existing technological approaches or the
development of different approaches by one or more of the Company's current or
-15-
future competitors. Many of these competitors have greater financial and
personnel resources, and more experience in research and development, sales
and marketing and other areas than the Company.
CONCENTRATION OF HTS MARKET
The market for HTS products is highly concentrated, with approximately 50
large pharmaceutical companies operating a substantial portion of the Company's
targeted drug discovery laboratories. Accordingly, the Company expects a
relatively small number of customers will account for a substantial portion of
its revenues. The Company will face risks associated with a highly concentrated
customer base when and if it begins to sell its HTS products, including the
failure to establish or maintain relationships within a limited customer pool,
or substantial financial difficulties or decreased capital spending by its
customers, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. Further, the Company
faces the risk that customers will negotiate price discounts or other
unfavorable terms, which could have a material adverse effect on the Company's
business, financial condition and results of operations.
LENGTHY SALES CYCLE
The sale of HTS products typically involves a significant technical
evaluation and commitment of capital by customers. Accordingly, the sales cycle
associated with the Company's HTS products is expected to be lengthy and subject
to a number of significant risks, including customers' budgetary constraints and
internal acceptance reviews, that are beyond the Company's control. Due to this
lengthy and unpredictable sales cycle, the Company's operating results could
fluctuate significantly from quarter to quarter.
MANUFACTURING RISK
The Company has never manufactured HTS products in commercial quantities.
The Company may encounter difficulties in scaling up production of its HTS
products relating to, among other things, quality control and assurance,
component supply and availability of qualified personnel. There can be no
assurance that, even if successfully developed and introduced to market, any of
the Company's products can be manufactured in sufficient quantities while
meeting quality control standards or at acceptable cost. Difficulties
encountered by the Company in manufacturing scale-up could have a material
adverse effect on its business, financial condition and results of operations.
-16-
MANAGEMENT OF GROWTH
The Company's success will depend on the expansion of its operations and
the effective management of growth, which will place a significant strain on the
Company's management, operational and financial resources. To manage such
growth, the Company must expand its facilities, augment its operational,
financial and management systems and hire and train additional qualified
personnel. The Company's failure to manage growth effectively would have a
material adverse effect on the Company's business, financial condition and
results of operations.
DEPENDENCE UPON KEY PERSONNEL; NEED TO HIRE ADDITIONAL QUALIFIED PERSONNEL
The Company's success will depend to a significant degree upon the
continued services of key management, technical, and scientific personnel,
including Lev J. Leytes, the Company's Chairman of the Board of Directors,
President and Chief Executive Officer. In addition, the Company's success will
depend on its ability to attract and retain other highly skilled personnel.
Competition for qualified personnel is intense, and the process of hiring such
qualified personnel is often lengthy. There can be no assurance that the Company
can recruit such personnel on a timely basis, if at all. The Company's
management and other employees may voluntarily terminate their employment with
the Company at any time. The loss of the services of key personnel, or the
inability to attract and retain additional qualified personnel, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
DEPENDENCE ON SUPPLIERS AND CONTRACT MANUFACTURERS
Certain components used in the Company's HTS instruments are currently
purchased from a single or a limited number of outside sources. The reliance on
a sole or limited number of suppliers could result in time delays associated
with redesigning a product due to a failure to obtain a single source component,
an inability to obtain an adequate supply of required components and reduced
control over pricing, quality and timely delivery. The Company does not maintain
long-term agreements with any of its suppliers, and therefore the supply of a
particular component could be terminated at any time without penalty to the
supplier. Any interruption in supply of single source components could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company intends to rely on contract manufacturers,
some of which may be single-source vendors, for the development, manufacture and
supply of certain of its reagents and assay kits. There can be no assurance the
Company will be able to enter into such manufacturing contracts on commercially
reasonable terms, if at all, or that the Company's current or future contract
manufacturers will meet the Company's requirements for quality, quantity or
timeliness. If the supply of any such instrumentation components, reagents or
assay kits is interrupted, components, reagents and assay kits from alternative
suppliers and contract
-17-
manufacturers may not be available in sufficient volumes within required
timeframes, if at all, to meet the Company's production needs.
ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE PROFITABILITY
As of March 31, 1998, the Company had an accumulated deficit of
approximately $6.0 million. To date, the Company has not yet generated any
revenue from its HTS products, and the Company's expansion of its operations and
continued development of its HTS products will require a substantial increase in
marketing and sales and research and development expenditures for at least the
next several years. As a result, the Company expects to incur substantial
operating losses for the next several years. The Company's profitability will
depend on its ability to successfully develop and commercialize its HTS
products. Accordingly, the extent of future losses and the time required to
achieve profitability, if achieved at all, is highly uncertain. Moreover, if
profitability is achieved, the level of such profitability cannot be predicted
and may vary significantly from quarter to quarter.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company may be required to raise substantial additional capital over a
period of several years in order to develop and commercialize its products. The
Company's future capital requirements will depend on numerous factors, including
the costs associated with developing and commercializing its products,
developing a direct marketing and sales force, maintaining existing, or entering
into future, licensing and distribution agreements, protecting intellectual
property rights, entering the reagents and assay kits business, expanding
facilities and consummating possible future acquisitions of technologies,
products or businesses. The Company may consume available resources more rapidly
than currently anticipated, resulting in the need for additional funding. The
Company may be required to raise additional capital through a variety of
sources, including the public equity market, private equity financings,
collaborative arrangements, and public or private debt. There can be no
assurance that additional capital will be available on favorable terms, if at
all. If adequate funds are not available, the Company may be required to
significantly reduce or refocus its operations or to obtain funds through
arrangements that may require the Company to relinquish rights to certain of its
products, technologies or potential markets, which would have a material adverse
effect on the Company's business, financial condition and results of operations.
To the extent that additional capital is raised through the sale of equity, the
issuance of such securities would result in ownership dilution to the Company's
existing stockholders.
RISK OF INTERNATIONAL SALES AND OPERATIONS
The Company expects that international sales will account for a significant
portion of the Company's total revenues. International sales and operations are
subject to a number of risks, including the imposition of government
-18-
controls, export license requirements, restrictions on the export of critical
technology, political and economic instability or conflicts, trade
restrictions, changes in tariffs and taxes, difficulties in staffing and
managing international operations, problems in establishing or managing
distributor relationships and general economic conditions. In addition, as
the Company expands its international operations, it may be required to
invoice its sales in local currencies. Consequently, fluctuations in the
value of foreign currencies relative to the U.S. dollar may adversely affect
the Company's business, financial condition and results of operations.
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OF TECHNOLOGIES AND BUSINESSES
The Company may acquire certain technologies, products or businesses to
broaden the scope of its existing and planned product lines and technologies.
Such acquisitions would expose the Company to the risks associated with the
assimilation of new technologies, operations, sites and personnel, the diversion
of resources from the Company's existing business and technologies, the
inability to generate revenues to offset associated acquisition costs, the
maintenance of uniform standards, controls, and procedures and the impairment of
relationships with employees and customers as a result of any integration of new
management personnel. Acquisitions may also result in the issuance of dilutive
equity securities, the incurrence or assumption of debt or additional expenses
associated with amortization of acquired intangible assets or potential
businesses. The Company's failure to successfully address such risks could have
a material adverse effect on the Company's business, financial condition and
results of operations.
INTELLECTUAL PROPERTY RISKS
The Company's success will depend in part on its ability to obtain patents,
maintain trade secret protection and operate without infringing the proprietary
rights of others. The Company has three U.S. patents. The Company has filed four
U.S. patent applications and seven provisional patent applications, all of which
are currently pending. To supplement its proprietary technology, the Company has
licensed ten patents from FluorRx, Inc. ("FluorRx") pursuant to a June 1997
agreement. Under this license, the Company obtained certain worldwide rights
relating to FluorRx's FLARe technology. Certain of these rights have been
licensed on an exclusive basis. Certain other rights have been licensed on a
non-exclusive basis, and therefore could be or are licensed to third parties. In
accordance with such agreement, the Company pays one-time fees as well as
royalties based on sales of its products that incorporate this technology. The
license may be terminated in the event of a material breach by the Company.
Furthermore, FluorRx may elect to convert the exclusive rights into
non-exclusive rights in the event the Company fails to make certain minimum
royalty payments. If the license were terminated by FluorRx due to a material
breach of the license by the Company, the Company would lose the right to
incorporate FLARe technology into its HTS products. In such event, the Company
would be required to exclude FLARe technology from the Company's existing and
future products and either license or develop internally alternative
technologies. There can be no assurance that the Company would be able to
license alternative technologies on
-19-
commercially reasonable terms, or at all, or that the Company would be
capable of developing internally such technologies. Furthermore, there can be
no assurance that other companies may not independently develop technology
with functionality similar or superior to the FLARe technology that does not
or is claimed not to infringe the FLARe patents, or that otherwise
circumvents the technology licensed to the Company.
The Company is aware of third party patents that contain issued claims that
may cover certain aspects of the Company's reagent technologies. There can be no
assurance that the Company would not be required to license any such patents to
produce certain reagents, assay kits and related products or that such licenses
would be available on commercially reasonable terms, if at all. Any action
against the Company claiming damages and seeking to enjoin commercial activities
relating to the affected technologies could subject the Company to potential
liability for damages. The Company could incur substantial costs in defending
patent infringement claims, obtaining patent licenses, engaging in interference
and opposition proceedings or other challenges to its patent rights or
intellectual property rights made by third parties, or in bringing such
proceedings or enforcing any patent rights against third parties. The Company's
inability to obtain necessary licenses or its involvement in proceedings
concerning patent rights could have a material adverse effect on the business,
financial condition and results of operations of the Company.
The patent positions of bioanalytical product companies, including the
Company, are uncertain and involve complex legal and factual questions. In
addition, the coverage claimed in a patent application can be significantly
reduced before the patent is issued. Consequently, there can be no assurance
that the patent applications of the Company or its licensor will result in
patents being issued or that any issued patents will provide protection against
competitive technologies or will be held valid if challenged or circumvented.
Others may independently develop products similar to those of the Company or
design around or otherwise circumvent patents issued to the Company. In the
event that any relevant claims of third-party patents are upheld as valid and
enforceable, the Company could be prevented from practicing the subject matter
claimed in such patents, or would be required to obtain licenses from the patent
owners of each of such patents or to redesign its products or processes to avoid
infringement. There can be no assurance that such licenses would be available
or, if available, would be on terms acceptable to the Company or that the
Company would be successful in any attempt to redesign its products or processes
to avoid infringement. If the Company does not obtain necessary licenses, it
could be subject to litigation and encounter delays in product introductions
while it attempts to design around such patents. Alternatively, the development,
manufacture or sale of such products could be prevented. Litigation would result
in significant cost to the Company as well as diversion of management time.
Adverse determinations in any such proceedings could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company also relies on trade secret and copyright law, and employee and
third-party nondisclosure agreements to protect its intellectual property rights
in its products and technology. There can be no assurance that these agreements
and measures will provide meaningful protection of the Company's trade secrets,
copyrights, know-how, or
-20-
other proprietary information in the event of any unauthorized use,
misappropriation or disclosure or that others will not independently develop
substantially equivalent proprietary technologies. Litigation to protect the
Company's trade secrets or copyrights would result in significant cost to the
Company as well as diversion of management time. Adverse determinations in
any such proceedings or unauthorized disclosure of the Company's trade
secrets could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the laws of
certain foreign countries do not protect the Company's intellectual property
rights to the same extent as do the laws of the United States. There can be
no assurance that the Company will be able to protect its intellectual
property in these markets.
GOVERNMENT REGULATION
While the Company believes that none of the Company's HTS products will be
regulated as medical devices or otherwise subject to FDA regulation, the
Company's clinical diagnostics products, including Luminometer, Q2000, Horizon
and a microplate heater, are subject to FDA regulation as medical devices, as
well as similar foreign regulation. The process of obtaining and maintaining
required regulatory clearances and approvals and otherwise remaining in
regulatory compliance in the United States and certain other countries is
lengthy, expensive and uncertain. Although the Company has phased out production
of Luminometer, Q2000 and the microplate heater, the Company will continue to
manufacture Horizon on an OEM basis. Horizon is used in research and clinical
laboratories to perform IN VITRO diagnostic ("IVD") tests, which are exempt from
investigational device exemption ("IDE") requirements, including the need to
obtain the FDA's prior approval, provided that, among other things, the testing
is noninvasive, the product is not used as a diagnostic procedure without
confirmation by another medically established test or procedure, and
distribution controls are established to assure that IVDs distributed for
research are used only for those purposes. To the Company's knowledge, its OEM
customers have met these conditions. There can be no assurance that the FDA
would agree that the OEM customers' distribution of the Company's clinical
diagnostic products meet and have met the requirements for IDE exemption.
Failure by the Company, its OEM customers or the recipients of the Company's
clinical diagnostic products to comply with the IDE exemption requirements could
result in enforcement action by the FDA, which could adversely affect the
Company's or its OEM customers' ability to gain marketing clearance or approval
of these products or could result in the recall of previously distributed
products.
Applicable law requires that LJL comply with the FDA's current GMP
regulations for the manufacture of its clinical diagnostics products, Q2000,
Luminometer, Horizon and the microplate heater. The FDA monitors compliance with
its GMP regulations by subjecting medical product manufacturers to periodic FDA
inspections of their manufacturing facilities. The FDA has recently revised the
GMP regulations. The new Quality System Regulation imposes design controls and
makes other significant changes in the requirements applicable to manufacturers.
LJL is also subject to other regulatory requirements, and may need to submit
reports to the FDA including adverse event reporting. Failure to comply with GMP
regulations or other applicable legal requirements can lead to, among other
things, warning letters, seizure of violative
-21-
products, suspension of manufacturing, government injunctions and potential
civil or criminal liability on the part of the Company and the responsible
officers and employees. In addition, the government may halt or restrict
continued sale of such instruments. Any such actions could have a material,
adverse effect on the business, financial condition and results of operations
of the Company.
In order to export its clinical diagnostics instruments, the Company
maintains International Organization for Standardization ("ISO") 9001
certification and applies the CE mark to certain products that are exported,
which subjects LJL's operations to periodic surveillance audits. While the
Company believes it is currently in compliance with GMP regulations and ISO
standards, there can be no assurance that the Company's operations will be found
to comply with GMP regulations, ISO standards or other applicable legal
requirements in the future or that the Company will not be required to incur
substantial costs to maintain its compliance with existing or future
manufacturing regulations, standards or other requirements. Any such
noncompliance or increased cost of compliance could have a material adverse
effect on the Company's business, results of operations and financial condition.
LJL also is subject to numerous federal, state and local laws relating to
safe working conditions, manufacturing practices, environmental protection,
storage, use and disposal of hazardous or potentially hazardous substances. Any
material failure to comply with such laws could require the Company to incur
significant costs and would have a material, adverse effect upon the Company's
ability to do business. Changes in existing requirements or adoption of new
requirements or policies relating to government regulations could materially and
adversely affect the ability of LJL to comply with such requirements.
FUTURE FLUCTUATIONS IN OPERATING RESULTS
The Company's future operating results are likely to fluctuate
substantially from quarter to quarter. The degree of fluctuation will depend on
a number of factors, including the timing and level of sales, the mix of
products sold through direct sales channels and third party distributors, and
any change in the product mix among the Company's planned product lines. Such
fluctuations could have a material adverse effect on its business, financial
condition and results of operations. Because a significant portion of the
Company's business is expected to be derived from orders placed by a limited
number of large customers, variations in the timing of such orders could cause
significant fluctuations in the Company's operating results. Other factors that
may result in fluctuations in operating results include industry acceptance of
HTS as a drug discovery tool, market acceptance of the Company's products, the
timing of new product announcements and the introduction of new products and new
technologies by the Company or its competitors, delays in research and
development of new products, increased research and development expenses,
increased marketing and sales expenses associated with the implementation of the
Company's direct marketing of its products, availability and cost of component
parts from its suppliers, competitive pricing pressures, and developments with
respect to regulatory matters. In connection with future
-22-
introductions of new products, the Company may be required to establish or
increase reserves or record charges for inventory obsolescence in connection
with unsold inventory, if any, of older generations of products.
The Company's expenditures for research and development, selling and
marketing, and general and administrative functions are based in part on future
revenue projections. The Company may be unable to adjust spending in a timely
manner in response to any unanticipated declines in revenues, which may have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company may be required to reduce prices in response
to competitive pressures or other factors or increase spending to pursue new
market opportunities. Any decline in average selling prices of a product which
is not offset by a reduction in product costs or by sales of other products with
higher gross margins would decrease the Company's overall gross profit and
adversely affect the Company's business, financial condition and results of
operations. In addition, the Company's operating results may vary from the
expectations of public market analysts and investors, and, as a result, the
price of the Common Stock would be materially and adversely affected.
-23-
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
The Company is not currently involved in any material legal proceedings.
Item 2. Changes in Securities and Use of Proceeds
In connection with its initial public offering in 1998, the
Company filed a Registration Statement on Form S-1, SEC File No.
333-43529 (the "REGISTRATION STATEMENT"), which was declared effective
by the Commission on March 12, 1998. Pursuant to the Registration
Statement, the Company registered 2,300,000 shares of its Common
Stock, $0.001 par value per share, for its own account, of which
2,000,000 shares were sold in the Company's initial public offering
and an additional 88,000 shares were sold in April 1998 when the
underwriters exercised their over-allotment option. The offering
commenced on March 13, 1998 and did not terminate until the 2,088,000
shares had been sold. The aggregate offering price of the registered
shares was $16,100,000 and the aggregate offering price of the amount
sold was $14,616,000. The managing underwriters of the offering were
NationsBanc Montgomery Securities LLC, Hambrecht & Quist LLC, and
Volpe Brown Whelan & Company LLC.
From March 12, 1998 to March 31, 1998, the Company incurred the
following expenses in connection with the offering:
Underwriting discounts and commissions $ 784,000
Other expenses 973,600
----------
Total Expenses $1,757,600
All of such expenses were direct or indirect payments to others.
The net offering proceeds to the Company through March 31, 1998,
after deducting the total expenses above were $12,242,400. From March
12, 1998 to March 31, 1998, the Company used such net offering
proceeds, in direct or indirect payments to others, as follows:
Manufacturing, sales, marketing and administrative
infrastructure $ 116,000
Research and development activities 233,000
Repayment of indebtedness 86,000
Purchase and installation of machinery and equipment 22,000
Temporary investments (short-term, investment grade,
interest-bearing financial instruments) 6,978,000
-----------
Total $ 7,435,000
Each of these amounts is a reasonable estimate of the application
of the net offering proceeds. This use of proceeds does not represent
a material change in the use of proceeds described in the prospectus
of the Registration Statement.
Item 3. Defaults Upon Senior Securities
Not applicable
-24-
Item 4. Submission of Matters to a Vote of Securities Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
a: Exhibits
Exhibit 10.11 Lease between Company and Coptech West
Exhibit 27.1 - Financial Data Schedule
b: Reports on Form 8-K - There were no reports on Form 8-K filed
during the quarter ended March 31, 1998.
-25-
SIGNATURES
PURSUANT TO THE REQUIREMENTS 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.
LJL BIOSYSTEMS, INC.
DATE: MAY 13, 1998 BY: /S/ ROBERT T. BEGGS
----------------------------
ROBERT T. BEGGS, VICE PRESIDENT OF
FINANCE AND ADMINISTRATION (DULY
AUTHORIZED AND PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
-26-
INDEX TO EXHIBITS
EXHIBIT PAGE
------- ----
10.11 Lease between Company and Coptech West . . . . . . . . 28
27.1 Financial Data Schedule . . . . . . . . . . . . . . . 56
-27-