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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Nucryst Pharmaceuticals - Common Shares (MM) | NASDAQ:NCST | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.77 | 0 | 01:00:00 |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Alberta, Canada
(State or other jurisdiction of incorporation or organization) |
Not Applicable
(I.R.S. Employer Identification No.) |
|
101 College Road East, Princeton, NJ
(Address of principal executive offices) |
08540
(Zip Code) |
Yes
þ
|
No o |
Yes
o
|
No o |
Large accelerated filer
o
|
Accelerated filer o | |
|
||
Non-accelerated filer
o
(Do not check if smaller reporting company)
|
Smaller reporting company þ |
Yes
o
|
No þ |
Class | Outstanding at May 1, 2009 | |
Common Shares | 18,323,865 shares |
Part I | Financial Information | |||
|
||||
|
Item 1. | Financial Statements (unaudited) | ||
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||||
|
Condensed Consolidated Balance Sheets at March 31, 2009 and December 31, 2008 | |||
|
||||
|
Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008 | |||
|
||||
|
Condensed Consolidated Statements of Cash Flow for the three months ended March 31, 2009 and 2008 | |||
|
||||
|
Condensed Consolidated Statements of Shareholders Equity for the three months ended March 31, 2009 | |||
|
||||
|
Notes to Interim Condensed Consolidated Financial Statements | |||
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||||
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Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations | ||
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Item 4T. | Controls and Procedures | ||
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Part II | Other Information | |||
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Item 1. | Legal Proceedings | ||
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Item 1A. | Risk Factors | ||
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Item 4. | Submission of Matters to a Vote of Security Holders | ||
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Item 6. | Exhibits |
ITEM 1. | FINANCIAL STATEMENTS (UNAUDITED) |
March 31, 2009 | December 31, 2008 | |||||||
|
||||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash and cash equivalents
|
$ | 8,412 | $ | 23,388 | ||||
Accounts receivable (note 10)
|
4,210 | 5,062 | ||||||
Inventories (note 4)
|
3,173 | 2,887 | ||||||
Prepaid expenses
|
355 | 414 | ||||||
Total
current assets
|
16,150 | 31,751 | ||||||
Restricted cash
|
| 145 | ||||||
Capital assets net
|
8,822 | 9,379 | ||||||
Intangible assets net (note 5)
|
479 | 525 | ||||||
Total assets
|
$ | 25,451 | $ | 41,800 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY
|
||||||||
Current
|
||||||||
Accounts payable and accrued liabilities
|
$ | 2,886 | $ | 2,859 | ||||
Deferred lease inducement
|
87 | 90 | ||||||
Total
current
liabilities
|
2,973 | 2,949 | ||||||
Long term deferred lease inducement
|
459 | 495 | ||||||
Total
liabilities
|
3,432 | 3,444 | ||||||
Guarantees (note 9)
|
||||||||
Shareholders equity
|
||||||||
Common shares no par value, unlimited shares authorized: issued and outstanding 18,323,865 and 18,320,531
shares at
March 31, 2009 and December 31, 2008, respectively (note 7)
|
68,133 | 82,776 | ||||||
Additional paid-in capital
|
2,229 | 2,178 | ||||||
Accumulated other comprehensive loss
|
(6,197 | ) | (5,528 | ) | ||||
Accumulated deficit
|
(42,146 | ) | (41,070 | ) | ||||
Total shareholders equity
|
22,019 | 38,356 | ||||||
Total
liabilities and shareholders equity
|
$ | 25,451 | $ | 41,800 | ||||
3
Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
Revenue
|
||||||||
Wound care product revenue
|
$ | 4,149 | $ | 5,189 | ||||
Costs
|
||||||||
Manufacturing
|
2,233 | 4,100 | ||||||
Research and development
|
749 | 1,487 | ||||||
General and administrative
|
2,628 | 2,488 | ||||||
|
||||||||
Loss from operations
|
(1,461 | ) | (2,886 | ) | ||||
|
||||||||
Foreign exchange gains
|
383 | 638 | ||||||
Interest income
|
2 | 70 | ||||||
Loss before income taxes
|
(1,076 | ) | (2,178 | ) | ||||
Current income tax expense
|
| 2 | ||||||
Net loss
|
$ | (1,076 | ) | $ | (2,180 | ) | ||
Loss per common share (note 8)
|
||||||||
Net loss basic and diluted
|
$ | (0.06 | ) | $ | (0.12 | ) | ||
|
||||||||
Weighted average number of common shares
outstanding:
|
||||||||
basic
|
18,321,864 | 18,370,092 | ||||||
diluted
|
18,321,864 | 18,370,092 | ||||||
4
Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
Operating activities
|
||||||||
Net loss
|
$ | (1,076 | ) | $ | (2,180 | ) | ||
Items not affecting cash
|
||||||||
Depreciation and amortization
|
362 | 429 | ||||||
Stock-based compensation expense
|
64 | 217 | ||||||
Amortized lease inducement
|
(22 | ) | (27 | ) | ||||
Changes in non cash working capital
|
||||||||
Accounts receivable
|
779 | 7,254 | ||||||
Inventories
|
(372 | ) | 905 | |||||
Prepaid expenses
|
52 | (78 | ) | |||||
Accounts payable and accrued liabilities
|
94 | 49 | ||||||
Cash (used in) provided from operating
activities
|
(119 | ) | 6,569 | |||||
Investing activities
|
||||||||
Restricted cash
|
145 | (1 | ) | |||||
Capital expenditures
|
(34 | ) | (705 | ) | ||||
Intangible assets
|
(4 | ) | (8 | ) | ||||
Cash (used in) provided from used in
investing activities
|
107 | (714 | ) | |||||
Financing activities
|
||||||||
Return of
capital to shareholders (note 7)
|
(14,656 | ) | | |||||
Cash provided from financing activities
|
(14,656 | ) | | |||||
Effect of exchange rate changes on cash
and cash equivalents
|
(308 | ) | (469 | ) | ||||
Net (decrease) increase in cash and cash
equivalents
|
(14,976 | ) | 5,386 | |||||
Cash and cash equivalents at beginning of
period
|
23,388 | 17,841 | ||||||
Cash and cash equivalents at end of period
|
$ | 8,412 | $ | 23,227 | ||||
Cash and cash equivalents is comprised of:
|
||||||||
Cash
|
$ | 3,777 | $ | 13,923 | ||||
Cash equivalents
|
4,635 | 9,304 | ||||||
|
||||||||
Supplemental disclosure of cash flow information:
|
||||||||
Non-cash capital asset additions
included in accounts payable and
accrued liabilities at end of period
|
$ | | $ | 6 | ||||
|
||||||||
Cash paid for income taxes
|
| 142 | ||||||
5
Common Shares | Accumulated | |||||||||||||||||||||||||||
Additional | Other | Total | Total | |||||||||||||||||||||||||
Stated | Paid-in | Comprehensive | Accumulated | Comprehensive | Shareholders | |||||||||||||||||||||||
Number | Amount | Capital | Loss | Deficit | Loss | Equity | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||
December 31, 2008
|
18,320,531 | $ | 82,776 | $ | 2,178 | $ | (5,528 | ) | $ | (41,070 | ) | $ | 38,356 | |||||||||||||||
|
||||||||||||||||||||||||||||
Issuance of common
shares for restricted share units
|
3,334 | 13 | (13 | ) | | | $ | | | |||||||||||||||||||
|
||||||||||||||||||||||||||||
Stock-based compensation
|
| | 64 | | | | 64 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Return of capital to
shareholders
|
(14,656 | ) | | | | | (14,656 | ) | ||||||||||||||||||||
|
||||||||||||||||||||||||||||
Foreign currency
translation adjustments
|
| | | (669 | ) | | (669 | ) | (669 | ) | ||||||||||||||||||
|
||||||||||||||||||||||||||||
Net loss
|
| | | | (1,076 | ) | (1,076 | ) | (1,076 | ) | ||||||||||||||||||
March 31 ,2009
|
18,323,865 | $ | 68,133 | $ | 2,229 | $ | (6,197 | ) | $ | (42,146 | ) | $ | (1,745 | ) | $ | 22,019 | ||||||||||||
6
1 | DESCRIPTION OF BUSINESS | |
NUCRYST Pharmaceuticals Corp. (the Corporation) was incorporated on December 18, 1997 by articles of incorporation under the Business Corporations Act (Alberta) as a wholly owned subsidiary of The Westaim Corporation (the Parent). On December 29, 2005, the Corporation completed an initial public offering for the sale of 4,500,000 common shares. Following the initial public offering, the Parent continues to own a controlling interest in the Corporation. | ||
The Corporation develops, manufactures and commercializes innovative medical products that fight infection and inflammation based on its noble metal nanocrystalline technology. The Corporation produces nanocrystalline silver as a coating for wound care products under the trademark SILCRYST TM and as a powder, that the Corporation refers to as NPI 32101, for use in medical devices and as an active pharmaceutical ingredient. | ||
The Corporations revenue is comprised of wound care product revenue, which includes manufacturing cost reimbursement on the sale of the Corporations wound care products to Smith & Nephew plc (Smith & Nephew) and royalties on the further sale of those products by Smith & Nephew to third parties, as well as milestone payments earned upon the achievement of specified Smith & Nephew sales thresholds or regulatory events. All of the Corporations revenues since May 2001 have been derived from sales of the Corporations wound care products to Smith & Nephew, royalties on the further sale of those products and milestone payments from Smith & Nephew. | ||
2 | BASIS OF PRESENTATION | |
The unaudited interim condensed consolidated financial statements of the Corporation have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). They do not include all information and notes required by GAAP in the preparation of annual consolidated financial statements. The accounting policies used in the preparation of the unaudited interim condensed consolidated financial statements are the same as those described in the Corporations audited consolidated financial statements prepared in accordance with GAAP for the year ended December 31, 2008. | ||
The Corporation makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Estimates are used when accounting for items and matters such as the useful lives of capital assets and intangible assets, inventory valuation, deferred tax asset valuation, uncertain tax positions, financial instrument valuation, revenue recognition and the fair value of stock-based compensation. | ||
The Corporation believes all adjustments necessary for a fair statement of the results for the periods presented have been made and all such adjustments were of a normal recurring nature. The financial results for the three months ended March 31, 2009 are not necessarily indicative of financial results for the full year. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Corporations annual consolidated financial statements for the year ended December 31, 2008. | ||
These condensed consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiary, NUCRYST Pharmaceuticals Inc., which was incorporated on November 20, 1997 under the laws of the state of Delaware. All intercompany balances and transactions have been eliminated during consolidation. |
7
3 | SIGNIFICANT ACCOUNTING PRINCIPLES | |
Accumulated other comprehensive loss | ||
Comprehensive loss is comprised of net loss and other comprehensive loss. Other comprehensive loss consists of foreign currency translation adjustments for the period, that arise from the conversion of the Canadian dollar functional currency consolidated financial statements to the U.S. dollar reporting currency consolidated financial statements. Accumulated other comprehensive loss of $6,197 and $5,528 at March 31, 2009 and 2008, respectively, consists of foreign currency translation adjustments. | ||
Recently adopted and pending accounting pronouncements | ||
SFAS 157-2 | ||
In February 2008, the FASB issued FSP SFAS 157-2, which delayed the effective date of SFAS No. 157, Fair Value Measurement for all non-recurring fair value measurements of nonfinancial assets and nonfinancial liabilities until the fiscal year beginning after November 15, 2008. The Corporation adopted the provisions of SFAS 157 as it relates to reporting units and indefinite-lived intangible assets measured at fair value for the purposes of goodwill and intangible asset impairment testing as of January 1, 2009. The adoption of SFAS 157 did not have a material impact on the Corporations consolidated financial position or results of operations. | ||
SFAS 157-4 | ||
In April 2009, the FASB issued Statement No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. SFAS 157-4 provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased and guidance for identifying circumstances that indicate a transaction is not orderly. This pronouncement is effective for the periods ending after June 15, 2009. The Corporation is currently assessing the impact SFAS 157-4 will have on its results of operations and consolidated financial position. | ||
SFAS 161 | ||
In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 requires additional disclosures about the objectives of using derivative instruments, the method by which the derivative instruments and related hedged items are accounted for under FASB Statement No.133 and its related interpretations, and the effect of derivative instruments and related hedged items on financial position, financial performance and cash flows. SFAS 161 also requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. SFAS 161 is effective for fiscal years beginning after November 15, 2008. The adoption of SFAS 161 did not have a material impact on the Corporations consolidated financial position or results of operations. | ||
EITF 07-1 | ||
In September 2007, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 07-1 Collaborative Arrangements (EITF 07-1). EITF 07-1 addresses the accounting for arrangements in which two companies work together to achieve a commercial objective, without forming a separate legal entity. The nature and purpose of a companys collaborative arrangements are required to be disclosed, along with the accounting policies applied and the classification and amounts for significant financial activities related to the arrangements. EITF 07-1 is effective for fiscal years beginning after December 15, 2008. The adoption of EITF 07-1 did not have a material impact on the Corporations consolidated financial position or results of operations. | ||
FASB Business Combinations | ||
The FASB completed the second phase of its business combinations project, to date the most significant convergence effort with the International Accounting Standards Board (IASB), and issued the following two accounting standards: |
i. | Statement No. 141(R), Business Combination; and | ||
ii. | Statement No. 160, Non-controlling Interests in Consolidated Financial Statements an amendment of ARB No. 51. |
These statements change the way companies account for business combinations and non-controlling interests (minority interests in current U.S. GAAP). Compared with their predecessors, Statements 141(R) and 160 will require: |
| More assets acquired and liabilities assumed to be measured at fair value as of the acquisition date; |
8
3 | SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) |
| Liabilities related to contingent consideration to be re-measured at fair value in each subsequent reporting period; | ||
| An acquirer in pre-acquisition periods to expense all acquisition related costs; and | ||
| Non-controlling interests in subsidiaries initially to be measured at fair value and classified as a separate component of equity. |
Statements 141(R) and 160 should both be applied prospectively for fiscal years beginning on or after December 15, 2008. However, Statement 160 requires entities to apply the presentation and disclosure requirements retrospectively (e.g., by reclassifying non-controlling interests to appear in equity) to comparative financial statements if presented. Both standards prohibit early adoption. The adoption of these standards did not have a material impact on the Corporations consolidated financial position or results of operations. | ||
SFAS 141R-1 | ||
In April 2009, the FASB issued Statement No. 141R-1, Accounting for Assets and Liabilities Assumed in a Business Combination That Arise from Contingencies (SFAS 141R-1). SFAS 141R-1 amends and clarifies SFAS 141R to address application issues regarding initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in business combinations. SFAS 141R-1 is effective for assets or liabilities arising from contingences in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of SFAS 141R-1 did not have a material impact on the Corporations consolidated financial position or results of operations. | ||
FSP SFAS 107-1 and Accounting Principles Board (APB) 28-1 | ||
In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, which amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments in interim as well as annual financial statements. FSP SFAS 107-1 and APB 28-1 is effective for interim and fiscal periods beginning after June 15, 2009. Because FSP SFAS 107-1 and APB 28-1 applies only to financial statement disclosures, the Corporations adoption of this standard is not expected to have a material impact on the Corporations consolidated financial position or results of operations. | ||
4 | INVENTORIES |
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
Raw materials
|
$ | 2,060 | $ | 2,226 | ||||
Materials in process
|
883 | 316 | ||||||
Finished product
|
230 | 345 | ||||||
Total
|
$ | 3,173 | $ | 2,887 | ||||
5 | INTANGIBLE ASSETS |
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
Patents
|
$ | 2,107 | $ | 2,165 | ||||
Less accumulated amortization
|
(1,628 | ) | (1,640 | ) | ||||
Total
|
$ | 479 | $ | 525 | ||||
Amortization related to intangible assets was $34 and $51 for the three months ended March 31, 2009 and 2008. |
9
Estimated future amortization expense of intangible assets at March 31, 2009 is as follows: |
2009 (remaining 9 months)
|
$ | 102 | ||
2010
|
118 | |||
2011
|
90 | |||
2012
|
66 | |||
2013
|
51 | |||
Thereafter
|
52 | |||
Total
|
$ | 479 | ||
6 | INCOME TAXES | |
The Corporation adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48 an interpretation of FASB Statement No. 109, Accounting for Income Taxes.) on January 1, 2007. During the year ended December 31, 2008, changes in the amount of the Corporations unrecognized tax benefits were related to tax positions of 2008 and prior years. | ||
The additions were mostly offset by reductions, resulting in unrecognized tax benefits of $0.2 million at December 31, 2008. Additions and reductions of unrecognized tax benefits for the three months ended March 31, 2009 were not material and were in respect of tax positions of the current period. | ||
The Corporation files federal and provincial income tax returns in Canada and its U.S. subsidiary files federal and state income tax returns in the U.S. The Corporation is generally no longer subject to income tax examinations by Canadian and U.S. tax authorities for years before 2001. The Canada Revenue Agency (CRA) commenced an examination of the Corporations Canadian income tax returns for 2001 and 2002 in the second quarter of 2005. The Corporation has been working with the CRA to resolve the audit matters under review. Resolution of the audit matters under review may apply to taxation years beyond 2002. Any reassessments to be issued by the CRA, on an aggregate basis, could result in a material effect on the Corporations consolidated financial statements, although at this time, the potential impact cannot be reasonably estimated by the Corporation. | ||
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2008 and March 31, 2009, the Corporations deferred tax assets were offset by a valuation allowance. Management will continue to provide a full valuation allowance until it determines that it is more likely than not that the deferred tax assets will be realized. | ||
7 | SHARE CAPITAL | |
At a special meeting of the Corporations shareholders held on February 12, 2009, the shareholders passed a special resolution to reduce stated capital of the common shares of the Corporation for the purpose of distributing $0.80 cash per common share to shareholders of the Corporation as of the record date February 17, 2009. The Corporation distributed an aggregate of $14,656 to shareholders on February 25, 2009. | ||
Stock-based compensation plans | ||
The Corporation maintains an equity incentive plan (the Plan) for employees under which stock options, stock appreciation rights and restricted share units (RSUs) may be granted. In May 2008, the Corporation amended the Plan to increase the maximum number of common shares reserved for issuance under the Plan from 2,200,000 common shares to an amount that is equal to 15% of the issued and outstanding common shares of the Corporation. As of March 31, 2009, 15% of issued and outstanding shares represented 2,748,580 shares and 1,867,318 of this amount were available for grant under the Corporations stock-based compensation plans as of March 31, 2009. | ||
The exercise price of each stock option and RSU is set at an amount not less than the market value of the common shares of the Corporation at the time of grant. Stock options generally vest evenly over a three-year period. Certain option grants are subject to immediate vesting as to one-third of the grant, with the remaining two-thirds of the options vesting evenly over a two-year period. All stock options expire ten years from the date of grant. RSUs generally vest evenly over a period between two and three years. Awards that expire or are forfeited generally become available for issuance under the plan. |
10
7 | SHARE CAPITAL (Continued) | |
Total stock-based compensation expense recognized under SFAS 123(R) for the three months ended March 31, 2009 and 2008 was $64 and $217, respectively, and was included in general and administrative expense. | ||
A summary of the status of the Corporations stock option plan as at March 31, 2009 and 2008 and changes during the three months ended on those dates is presented below: |
Number of Options | Weighted Average Exercise Price | |||||||||||||||
For the three months ended March 31 | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Balance at beginning of
period
|
1,596,199 | 1,405,638 | $ | 2.85 | $ | 3.82 | ||||||||||
Granted
|
100,000 | 160,000 | 0.38 | 2.00 | ||||||||||||
Forfeited
|
(836,269 | ) | (90,085 | ) | 2.52 | 3.81 | ||||||||||
Balance at end of period
|
859,930 | 1,475,553 | $ | 2.88 | $ | 3.73 | ||||||||||
The weighted average remaining contractual life of options outstanding at March 31, 2009 was 8.27 years. | ||
The fair value of each stock-based award is estimated on the date of grant using the Black-Scholes option pricing model and the assumptions are noted in the table below. The amounts computed according to the Black-Scholes pricing model may not be indicative of the actual values realized upon the exercise of the options by the holders. The fair value and vesting period of certain options with variable vesting provisions were estimated on the date of grant using an alternative pricing model. The weighted average fair value of options granted in the three months ended March 31, 2009 and 2008 was $0.31 and $1.62, respectively. As of March 31, 2009, total compensation cost related to unvested stock options not yet recognized was $383. This amount is expected to be recognized over the next 36 months on a weighted-average basis. | ||
The expected volatility used in the stock option valuation is the Corporations estimate for the future volatility of the stock price based on a review of the historical volatility. The dividend yield reflects the Corporations intention to not pay cash dividends in the foreseeable future. The expected life is based on observed historical exercise patterns of the Corporation. Groups of directors and employees that have different historical exercise patterns are being considered separately for valuation purposes. The risk free interest rate is based on the yield of a U.S. Government zero-coupon issue with a remaining life approximately equal to the expected term of the option. |
Three months ended March 31 | ||||||||
Stock options | 2009 | 2008 | ||||||
Expected volatility
|
93% | 93% | ||||||
Dividend yield
|
| | ||||||
Expected life
|
7 years | 7 years | ||||||
Risk free rate
|
2.24% | 4.63% | ||||||
There were no RSUs granted during the three months ended March 31, 2009 and 2008. A summary of the Corporations unvested RSUs as of March 31, 2009 and 2008 and changes during the three months ended on those dates is presented below: |
Weighted Average Grant | ||||||||||||||||
Number of RSUs | Date Fair Value | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Balance at beginning of period
|
27,999 | 39,200 | $ | 1.98 | $ | 3.02 | ||||||||||
Exercised
|
(3,334 | ) | (5,901 | ) | 4.08 | 4.08 | ||||||||||
Forfeited
|
(3,333 | ) | | 2.00 | | |||||||||||
Balance at end of period
|
21,332 | 33,299 | $ | 1.64 | $ | 2.84 | ||||||||||
11
8 | LOSS PER SHARE | |
In calculating loss per share under the treasury stock method, the numerator remains unchanged from the basic loss per share calculation as the assumed exercise of the Corporations stock options does not result in an adjustment to income. | ||
The impact of all dilutive securities on loss per share is anti-dilutive for the three months ended March 31, 2009 and 2008, including all outstanding options and RSUs. Therefore, these options and RSUs were not included in the computation of diluted net loss per share. | ||
9 | GUARANTEES | |
The Corporation has not provided for product warranty obligations as products presently sold to the Corporations customer carry a limited short term warranty and the Corporations claims experience has been negligible. | ||
In the normal course of operations, the Corporation may provide indemnification in standard contractual terms to counterparties in transactions such as purchase and sale agreements, service agreements, director/officer contracts and leasing transactions. These indemnification agreements may require the Corporation to compensate the counterparties for costs incurred as a result of various events, such as litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The terms of these indemnification agreements will vary based upon the agreement, which prevents the Corporation from making a reasonable estimate of the maximum potential amount that it could be required to pay to counterparties. Historically, the Corporation has not made any payments under such arrangements and no amounts have been accrued in these condensed consolidated financial statements with respect to these indemnification guarantees. | ||
10 | SEGMENTED INFORMATION | |
The Corporation operates in one reportable segment consisting of the manufacturing, research, development and commercialization of medical products based on its proprietary noble metal nanocrystalline technology. The Corporation currently manufactures wound care products and all the Corporations revenues are earned through long-term agreements with Smith & Nephew. The Corporation exports the manufactured wound care products directly to Smith & Nephew for resale in international markets. |
a) | Assets by geographic segment |
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
Canada
|
$ | 22,958 | $ | 29,436 | ||||
United States
|
2,493 | 12,364 | ||||||
|
$ | 25,451 | $ | 41,800 | ||||
b) | Capital assets and intangible assets by geographic segment |
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
Canada
|
$ | 9,247 | $ | 9,871 | ||||
United States
|
54 | 33 | ||||||
|
$ | 9,301 | $ | 9,904 | ||||
All of the Corporations revenues in the three months ended March 31, 2009 and 2008 were earned through long-term agreements with Smith & Nephew for the sale and marketing of the Corporations wound care products manufactured exclusively for Smith & Nephew. The agreements expire in 2026. |
12
ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
13
14
15
Quarter Ended March 31 | ||||||||
(in thousands) | ||||||||
2009 | 2008 | |||||||
Total Revenue
|
$ | 4,149 | $ | 5,189 | ||||
Manufacturing Costs
|
2,233 | 4,100 | ||||||
|
||||||||
Gross Margin
|
$ | 1,916 | $ | 1,089 | ||||
Gross Margin Percent
|
46% | 21% |
16
17
Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
1 year | 1-3 years | 3-5 years | 5 years | Total | ||||||||||||||||
|
||||||||||||||||||||
Consolidated Obligations and Commitments |
(in millions)
|
|||||||||||||||||||
|
||||||||||||||||||||
Facilities operating leases
|
$ | 0.7 | $ | 1.4 | $ | 1.4 | $ | 1.4 | $ | 4.9 | ||||||||||
Contractual Obligations
(1)
|
4.6 | | | | 4.6 | |||||||||||||||
Purchase Obligations
|
0.9 | | | | 0.9 | |||||||||||||||
|
||||||||||||||||||||
Total obligations and commitments
|
$ | 6.2 | $ | 1.4 | $ | 1.4 | $ | 1.4 | $ | 10.4 | ||||||||||
(1) | This commitment relates primarily to our obligation under our supply agreement to pay Smith & Nephew a manufacturing cost rebate in the amount of $4.5 million in 2009. |
18
19
ITEM 4T. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
20
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
Votes For | Against | Withheld | ||
15,076,602 | 131,612 | 6,438 |
ITEM 6. | EXHIBITS |
(a) | The following exhibits are filed as part of this quarterly report on Form 10-Q. |
Exhibit | ||||
Number | Exhibit | |||
|
||||
10.62 |
2009 Annual Employee Incentive Program (filed herewith)
|
|||
|
||||
10.63 |
Confidential Separation Agreement and General Release between
Thomas E. Gardner and NUCRYST Pharmaceuticals Inc. is incorporated
by reference to Exhibit 99.1 of the Companys Current Report on
Form 8-K filed on February 18, 2009.
|
|||
|
||||
10.64 |
Form of Employment Agreement between the NUCRYST Pharmaceuticals
Inc. and David B. Holtz made effective January 19, 2009 is
incorporated by reference to Exhibit 99.1 of the Companys Current
Report on Form 8-K filed on March 31, 2009.
|
|||
|
||||
10.65 |
Form of Stock Award Agreement between NUCRYST Pharmaceuticals
Corp. and David B. Holtz effective March 27, 2009 is incorporated
by reference to Exhibit 99.2 of the Companys Current Report on
Form 8-K filed on March 31, 2009.
|
|||
|
||||
10.66 |
Form of Amending Agreement between NUCRYST Pharmaceuticals Corp.
and David B. Holtz effective May 8, 2008 is incorporated by
reference to Exhibit 99.3 of the Companys Current Report on Form
8-K filed on March 31, 2009.
|
|||
|
||||
10.67 |
Form of Letter Agreement between NUCRYST Pharmaceuticals Corp. and
David B. Holtz is incorporated by reference to Exhibit 99.4 of the
Companys Current Report on Form 8-K filed on March 31, 2009
|
|||
|
||||
10.68 |
Form of Letter Agreement between NUCRYST Pharmaceuticals Corp. and
David McDowell is incorporated by reference to Exhibit 99.5 of the
Companys Current Report on Form 8-K filed on March 31, 2009
|
|||
|
||||
10.69 |
Form of Letter Agreement between NUCRYST Pharmaceuticals Corp. and
Carol L. Amelio is incorporated by reference to Exhibit 99.6 of
the Companys Current Report on Form 8-K filed on March 31, 2009.
|
|||
|
||||
31.1 |
Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|||
|
||||
32.1 |
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
21
NUCRYST Pharmaceuticals Corp. |
||||
By: | /s/ David B. Holtz | |||
David B. Holtz | ||||
Interim President and Chief Executive Officer
Chief Financial Officer (and as principal financial officer) |
||||
22
Exhibit | ||||
Number | Exhibit | |||
|
||||
10.62 |
2009 Annual Employee Incentive Program (filed herewith)
|
|||
|
||||
10.63 |
Confidential Separation Agreement and General Release between
Thomas E. Gardner and NUCRYST Pharmaceuticals Inc. is incorporated
by reference to Exhibit 99.1 of the Companys Current Report on
Form 8-K filed on February 18, 2009.
|
|||
|
||||
10.64 |
Form of Employment Agreement between the NUCRYST Pharmaceuticals
Inc. and David B. Holtz made effective January 19, 2009 is
incorporated by reference to Exhibit 99.1 of the Companys Current
Report on Form 8-K filed on March 31, 2009.
|
|||
|
||||
10.65 |
Form of Stock Award Agreement between NUCRYST Pharmaceuticals
Corp. and David B. Holtz effective March 27, 2009 is incorporated
by reference to Exhibit 99.2 of the Companys Current Report on
Form 8-K filed on March 31, 2009.
|
|||
|
||||
10.66 |
Form of Amending Agreement between NUCRYST Pharmaceuticals Corp.
and David B. Holtz effective May 8, 2008 is incorporated by
reference to Exhibit 99.3 of the Companys Current Report on Form
8-K filed on March 31, 2009.
|
|||
|
||||
10.67 |
Form of Letter Agreement between NUCRYST Pharmaceuticals Corp. and
David B. Holtz is incorporated by reference to Exhibit 99.4 of the
Companys Current Report on Form 8-K filed on March 31, 2009
|
|||
|
||||
10.68 |
Form of Letter Agreement between NUCRYST Pharmaceuticals Corp. and
David McDowell is incorporated by reference to Exhibit 99.5 of the
Companys Current Report on Form 8-K filed on March 31, 2009
|
|||
|
||||
10.69 |
Form of Letter Agreement between NUCRYST Pharmaceuticals Corp. and
Carol L. Amelio is incorporated by reference to Exhibit 99.6 of
the Companys Current Report on Form 8-K filed on March 31, 2009.
|
|||
|
||||
31.1 |
Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|||
|
||||
32.1 |
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
23
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