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Fiscal Year Ended September 30, 1998 High Low First Quarter....................................... $11.6880 $ 7.7500 Second Quarter...................................... $ 9.8130 $ 5.5000 Third Quarter ...................................... $ 8.3750 $ 4.5000 Fourth Quarter ..................................... $ 6.7500 $ 3.0000 Fiscal Year Ended September 30, 1999 First Quarter...................................... $ 9.1880 $ 3.6250 Second Quarter...................................... $14.3750 $ 6.9380 Third Quarter ...................................... $11.5000 $ 6.4380 Fourth Quarter ..................................... $12.5000 $ 5.6250 Fiscal Year Ended September 30, 2000 First Quarter....................................... $19.6250 $ 6.0310 Second Quarter...................................... $86.5000 $15.3130 Third Quarter ...................................... $61.0000 $20.0000 Fourth Quarter ..................................... $62.5000 $28.5630 Fiscal Year Ended September 30, 2001 First Quarter (through December 1, 2000)............ $37.8125 $33.5000 The reported closing sale price of EMCORE's common stock on December 1, 2000 was $35.3125 per share. |
Results of Operations The following table sets forth the condensed consolidated Statement of Operations data of EMCORE expressed as a percentage of total revenues for the fiscal years ended September 30, 1998, 1999 and 2000: Statement of Operations Data: Fiscal Years Ended September 30, 1998 1999 2000 Revenues.................................... 100.0% 100.0% 100.0% Cost of revenues............................ 56.4% 56.8% 58.7% ---------------------------------- Gross profit.............................. 43.6% 43.2% 41.3% Operating expenses: Selling, general and administrative....... 32.2% 24.7% 21.0% Goodwill amortization..................... 8.3% 7.5% 4.2% Research and development: Recurring............................... 37.7% 35.5% 31.3% One-time acquired in-process............ 44.6% - - ---------------------------------- Total operating expenses.............. 122.8% 67.7% 56.5% ---------------------------------- Operating loss........................... (79.2%) (24.5%) (15.2%) Stated interest expense (income), net.... 2.2% 1.5% (4.3%) Imputed warrant interest expense......... 1.4% 1.9% 0.8% Equity in net loss of unconsolidated affiliates............................. 0.4% 8.6% 12.7% ---------------------------------- Total other expenses................. 4.0% 12.0% 9.2% ---------------------------------- Loss before extraordinary item.............. (83.2%) (36.6%) (24.4%) Extraordinary item.......................... - 2.3% - ---------------------------------- Net loss.................................... (83.2%) (38.9%) (24.4%) ================================== Comparison of Fiscal Years Ended September 30, 1999 and 2000 Revenues. |
Financial Statements and Supplementary Data EMCORE CORPORATION CONSOLIDATED BALANCE SHEETS As of September 30, 1999 and 2000 (in thousands, except share data) ASSETS 1999 2000 Current assets: Cash and cash equivalents............................... $ 7,165 $50,849 Marketable securities................................... - 50,896 Accounts receivable, net of allowance for doubtful accounts of $563 and $1,065 at September 30, 1999 and 2000, respectively................................ 11,423 18,240 Accounts receivable - related parties................... 2,480 2,334 Inventories, net........................................ 13,990 30,724 Prepaid expenses and other current assets............... 389 1,829 --------------------- Total current assets.................................. 35,447 154,872 Property, plant and equipment, net........................ 46,282 69,701 Goodwill, net............................................. 5,126 734 Investments in unconsolidated affiliates.................. 9,496 17,015 Other assets, net......................................... 3,260 1,580 --------------------- Total assets........................................... $99,611 $243,902 ===================== LIABILITIES and SHAREHOLDERS' EQUITY Current liabilities: Accounts payable........................................ $ 5,359 $ 16,512 Accrued expenses........................................ 4,173 6,083 Advanced billings....................................... 4,350 20,278 Capitalized lease obligation - current.................. 713 72 Other current liabilities............................... 162 340 --------------------- Total current liabilities............................. 14,757 43,285 Convertible subordinated debenture........................ 7,800 - Capitalized lease obligation, net of current portion...... 141 75 Other liabilities......................................... 1,097 1,220 --------------------- Total liabilities..................................... 23,795 44,580 --------------------- Commitments and contingencies Mandatorily redeemable convertible preferred stock, 1,030,000 shares issued and outstanding at September 30, 1999...................................... 14,193 - Shareholders' equity: Preferred stock, $0.0001 par, 5,882,353 shares authorized.............................................. - - Common stock, no par value, 100,000,000 shares authorized, 26,707,614 shares issued and outstanding at September 30, 1999; 33,974,698 shares issued and 33,968,426 outstanding at September 30, 2000...................................... 152,426 314,780 Accumulated deficit....................................... (83,256) (108,864) Notes receivable.......................................... (7,547) (6,355) Treasury stock............................................ - (239) --------------------- Total shareholders' equity.............................. 61,623 199,322 --------------------- Total shareholders' equity and mandatorily redeemable preferred stock............................ 75,816 199,322 --------------------- Total liabilities, shareholders' equity and mandatorily redeemable preferred stock................ $ 99,611 $243,902 ===================== The accompanying notes are an integral part of these consolidated financial statements. |
EMCORE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended September 30, 1998, 1999 and 2000 (in thousands, except per share data) 1998 1999 2000 Revenues: Systems-related............................... $ 26,324 $44,477 $65,788 Materials-related............................. 17,436 13,864 38,718 ----------------------------- Total revenues.............................. 43,760 58,341 104,506 Cost of revenues: Systems-related............................... 15,942 26,522 37,775 Materials-related............................. 8,734 6,636 23,526 ----------------------------- Total cost of revenues...................... 24,676 33,158 61,301 ----------------------------- Gross profit.............................. 19,084 25,183 43,205 Operating expenses: Selling, general and administrative........... 14,082 14,433 21,993 Goodwill amortization......................... 3,638 4,393 4,392 Research and development - recurring.......... 16,495 20,713 32,689 Research and development - one time acquired in-process, non-cash............... 19,516 - - ----------------------------- Total operating expenses.................... 53,731 39,539 59,074 ----------------------------- Operating loss............................ (34,647) (14,356) (15,869) Other (income) expense: Interest income............................... (448) (751) (4,834) Interest expense.............................. 1,421 1,617 342 Imputed warrant interest expense, non-cash.... 601 1,136 843 Equity in net loss of unconsolidated affiliates.................................. 198 4,997 13,265 ----------------------------- Total other expenses........................ 1,772 6,999 9,616 Loss before extraordinary item.................. (36,419) (21,355) (25,485) Extraordinary item - loss on early extinguishment of debt...................... - 1,334 - ----------------------------- Net loss........................................ $(36,419) $(22,689) $(25,485) ============================- Per share data: Weighted average basic and diluted shares outstanding used in per share data calculations.................................. 17,550 21,180 31,156 ----------------------------- Loss per basic and diluted share before extraordinary item............................ $ (2.08) $ (1.03) $ (0.82) ============================= Net loss per basic and diluted share............ $ (2.08) $ (1.09) $ (0.82) ============================= The accompanying notes are an integral part of these consolidated financial statements. |
EMCORE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended September 30, 1998, 1999 and 2000 (in thousands) 1998 1999 2000 Cash flows from operating activities: Net loss................................. $(36,419) $(22,689) $(25,485) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Acquired in-process research and development, non-cash.................. 19,516 - - Depreciation and amortization.......... 8,767 11,575 14,955 Provision for doubtful accounts........ 1,118 390 780 Provision for inventory valuation...... 120 40 313 Deferred gain on sale to unconsol- idated affiliate....................... - 1,259 301 Non-cash charges on warrant issuances.. 601 1,136 843 Extraordinary loss on early extinguishment of debt................. - 1,335 - Equity in net loss of unconsolidated affiliates............................. 198 4,997 13,265 Compensatory stock issuance............ 351 436 566 Change in assets and liabilities: Accounts receivable - trade............ 2 (4,375) (7,597) Accounts receivable - related parties................................ 2,000 (1,980) 146 Inventories............................ (5,243) (1,585) (17,047) Prepaid expenses and other current assets................................. (64) (140) (1,440) Other assets........................... (624) (69) (983) Accounts payable....................... 7,950 (6,664) 11,153 Accrued expenses....................... (970) (24) 1,910 Advanced billings...................... 1,182 1,170 15,928 Unearned service revenue............... (72) (53) - ---------------------------------- Total adjustments........................ 34,832 7,448 33,093 ---------------------------------- Net cash and cash equivalents (used for) provided by operating activities.. (1,587) (15,241) 7,608 Cash flows from investing activities: Purchase of property, plant, and equipment.............................. (22,132) (17,110) (33,755) Acquisition, cash acquired............. 193 - - Investments in marketable securi- ties, net.............................. - - (50,896) Investments in unconsolidated affiliates............................. (490) (14,203) (19,949) (Funding) payments of restricted cash................................... 250 62 - ---------------------------------- Net cash and cash equivalents used for investing activities............... (22,179) (31,251) (104,600) Cash flows from financing activities: Proceeds from public stock offering, net of issuance cost of $8,500......... - - 127,500 Proceeds from preferred stock offering, net of issuance cost of $500................................... - 21,200 - Proceeds from public stock offer- ing, net of issuance cost of $5,000................................. - 52,000 - Proceeds under convertible subordi- nated debenture........................ - 7,800 - Proceeds (payments) under bank loans.................................. 17,950 (17,950) - Proceeds (payments) under notes payable - related party................ 7,000 (7,000) - Payments on demand note facility and subordinated debt.................. - (8,563) - Proceeds from exercise of stock purchase warrants...................... 23 2,164 10,874 Proceeds from exercise of stock options................................ 83 376 2,197 Payments on capital lease obliga- tions.................................. (487) (573) (715) Purchase of treasury stock............. - - (239) Dividends paid on preferred stock...... - (253) (133) Proceeds from shareholders' notes receivable............................. - - 1,192 ---------------------------------- Net cash and cash equivalents provided by financing activities....... 24,569 49,201 140,676 ---------------------------------- Net increase in cash and cash equivalents............................ 803 2,709 43,684 Cash and cash equivalents, beginning of year................................ 3,653 4,456 7,165 ---------------------------------- Cash and cash equivalents, end of year................................... $ 4,456 $ 7,165 $ 50,849 Supplemental disclosures of cash flow information: Cash paid for interest................. $ 1,347 $ 1,739 $ 351 Non-cash Investing and Financing Activities: Common stock issued on the exercise of warrants in exchange for subordi- nated notes............................ 72 - 7,800 Issuance of common stock on the exercise of warrants in exchange for notes receivable....................... 7,458 - - Issuance of common stock, common stock purchase options and warrants in connection with the acquisition of MicroOptical Devices, Inc........... 32,329 - - Conversion of mandatorily redeem- able convertible preferred stock to common stock........................... - 7,280 14,420 Reference is made to Note 8 - Debt Facilities - for disclosure relating to certain non-cash warrant issuance. |
Property, Plant and Equipment Major classes of property and equipment are summarized below: (in thousands) As of September 30, 1999 2000 Land $ 1,029 $ 1,502 Building 9,179 16,427 Equipment 41,225 56,216 Furniture and fixtures 4,880 7,373 Leasehold improvements 10,764 17,472 Property and equipment under capital lease 2,164 2,171 ----------------------- 69,241 101,161 Less: accumulated depreciation and amortization (22,959) (31,460) ----------------------- Total $46,282 $69,701 ======================= At September 30, 2000, minimum future lease payments due under the capital leases are as follows: (in thousands) Period ending: September 30, 2001 $95 September 30, 2002 43 September 30, 2003 17 September 30, 2004 7 September 30, 2005 1 --------- Total minimum lease payments 163 Less: amount representing interest (imputed interest rate of 14.4%) (16) --------- Net minimum lease payments 147 Less: current portion 72 --------- Long-term portion $75 ========= Depreciation on owned property and equipment amounted to approximately $4.7 million, $6.6 million and $8.0 million for the years ended September 30, 1998, 1999 and 2000, respectively. |
Information about reported segment gross profit is as follows: (in thousands) 1998 1999 2000 Revenues: Systems-related........................ $26,324 $44,477 $65,788 Materials-related...................... 17,436 13,864 38,718 ------------------------------- Total revenues....................... 43,760 58,341 104,506 Cost of sales: Systems-related......................... 15,942 26,522 37,775 Materials-related....................... 8,734 6,636 23,526 ------------------------------- Total cost of sales................... 24,676 33,158 61,301 ------------------------------- Gross profit: Systems-related......................... 10,382 17,955 28,013 Materials-related....................... 8,702 7,228 15,192 ------------------------------- Total gross profit.................... $19,084 $25,183 $43,205 ------------------------------- Gross margin: Systems-related......................... 39.4% 40.4% 42.6% Materials-related....................... 49.9% 52.1% 39.2% ------------------------------- Total gross margin.................... 43.6% 43.2% 41.3% ------------------------------- EMCORE has generated a significant portion of its sales to customers outside the United States. |
Exhibits, Financial Statement Schedules, and Reports on Form 8-K 14(a)(1) Financial Statements Page Reference Included in Part II, Item 8 of this report: Consolidated Balance Sheets as of September 30, 1999 and 2000 Consolidated Statements of Operations for the years ended September 30, 1998, 1999 and 2000 Consolidated Statements of Shareholders' Equity for the years ended September 30, 1998, 1999 and 2000 Consolidated Statements of Cash Flows for the years ended September 30, 1998, 1999 and 2000 Notes to Financial Statements Independent Auditors' Report 14(a)(2) Financial Statement Schedule Located immediately following the signature page of this report: Schedule I - UNIROYAL OPTOELECTRONICS, LLC - Financial Statements as of October 1, 2000 and September 26, 1999, for the Fiscal Years Ended October 1, 2000 and September 26, 1999, for the Period February 20, 1998 (date of incorporation) to September 27, 1998 and for the Period February 20, 1998 (date of incorporation) to October 1, 2000 and Independent Auditors' Report Schedule II - Valuation and qualifying accounts and reserves Other schedules have been omitted since they are either not required or not applicable. |
Deloitte and Touche LLP Certified Public Accountants Tampa, Florida December 5, 2000 UNIROYAL OPTOELECTRONICS, LLC (A Development Stage Company) BALANCE SHEETS (In thousands) October 1, September 26, 2000 1999 ASSETS Current assets: Cash and cash equivalents $ 470 $ 456 Trade accounts receivable 91 12 Inventories (Note 3) 2,028 448 Prepaid expenses and other current assets 304 90 Due from affiliate (Note 8) 1,233 - --------- --------- Total current assets 4,126 1,006 Property, plant and equipment - net (Note 4) 30,748 21,434 Deposits 29 34 --------- --------- TOTAL ASSETS $ 34,903 $ 22,474 ========= ========= LIABILITIES AND MEMBERS' EQUITY Current liabilities: Current obligations under capital leases (Note 5) $ 3,807 $ 3,345 Trade accounts payable 2,479 1,026 Accrued expenses: Compensation and benefits 241 244 Due to affiliate (Note 8) - 1,345 Other 135 52 --------- --------- Total current liabilities 6,662 6,012 Long-term obligations under capital leases (Note 5) 13,322 14,839 --------- --------- Total liabilities 19,984 20,851 --------- --------- Commitments and contingencies (Note 7) Members' equity (Note 6): Capital contributions 35,956 6,500 Deficit accumulated during the development stage (21,037) (4,877) --------- --------- Total members' equity 14,919 1,623 --------- --------- TOTAL LIABILITIES AND MEMBERS' EQUITY $ 34,903 $ 22,474 ========= ========= See notes to financial statements. |
PROPERTY AND EQUIPMENT Major classes of property and equipment are summarized below: (in thousands) As of September 30, ----------------------- 1998 1999 -------- -------- Land $ 1,029 $ 1,029 Building 7,493 9,179 Equipment 28,367 41,225 Furniture and fixtures 3,256 4,880 Leasehold improvements 9,948 10,764 Equipment, furniture and fixtures and leasehold improvement under capital lease 2,043 2,164 -------- -------- 52,136 69,241 Less: accumulated depreciation and amortization (15,926) (22,959) -------- -------- Total $ 36,210 $ 46,282 ======== ======== At September 30, 1999, minimum future lease payments due under the capital leases are as follows: (IN THOUSANDS) Period ending: September 30, 2000 $776 September 30, 2001 82 September 30, 2002 41 September 30, 2003 15 September 30, 2004 5 --------- Total minimum lease payments 919 Less: amount representing interest (imputed interest rate of 14.4%) (65) --------- Net minimum lease payments 854 Less: current portion 713 --------- Long-term portion $141 ========= The provisions for depreciation and amortization expense on owned property and equipment amounted to approximately $3.1 million, $4.7 million and $6.6 million for the years ended September 30, 1997, 1998 and 1999, respectively. |
PROPERTY, PLANT AND EQUIPMENT Major classes of property and equipment are summarized below: As of September 30, ------------------------------------ 1997 1998 ----------------- ----------------- Land $ -- $ 1,028,902 Building -- 7,493,385 Equipment 19,190,770 28,367,324 Furniture and fixtures 2,300,146 3,255,680 Leasehold improvements 6,085,256 9,948,121 Fixed assets under capital leases 98,623 2,042,728 ----------------- ----------------- 27,674,795 52,136,140 Less: accumulated depreciation and amortization (10,876,962) (15,926,309) ----------------- ----------------- Total $ 16,797,833 $ 36,209,831 ================= ================= At September 30, 1998, minimum future lease payments due under the capital leases are as follows: Period ending September 30, 1999 $ 796,648 2000 741,345 2001 62,478 2002 25,336 2003 and thereafter -- ----------------- Total minimum lease payments 1,625,807 Less: amount representing interest (average rate of (198,254) 9.8%) ----------------- Net minimum lease payments 1,427,553 Less: current portion (673,036) ----------------- Long-term portion $ 754,517 ================= The provisions for depreciation and amortization expense on owned property and equipment amounted to approximately $1,743,000, $3,148,000 and $4,683,000 for the years ended September 30, 1996, 1997 and 1998, respectively. |
Had the Company elected to recognize compensation expense for stock options based on the fair value at the grant dates of awards, net loss and net loss per share would have been as follows: Years ended September 30, -------------------------- 1997 1998 ---------- ----------- Net loss before extraordinary item As reported $5,333,772 $43,480,796 Pro forma $5,441,274 $44,099,847 Net loss per basic and diluted share before extraordinary item As reported $(1.14) $(4.95) Pro forma $(1.17) $(5.03) Net loss As reported $5,619,367 $43,480,796 Pro forma $5,726,869 $44,099,847 Net loss per basic and diluted share As reported $(1.20) $(4.95) Pro forma $(1.23) $(5.03) The weighted average fair value of the Company's stock options was calculated using Black-Scholes with the following weighted-average assumptions used for grants: No dividend yield; expected volatility of 0% prior to the Company's initial public offering and 60% thereafter; a risk-free interest rate of 6.04% and 5.57% for fiscal years 1997 and 1998, respectively, expected lives of 5 years. |
Factors that might cause such a difference include, but are not limited to, statements about future financial performance of the Company and MODE and the effect of the acquisition on the Company's business; continued acceptance of the Company's MOCVD technologies, as well as the market success of VCSEL technologies; the Company's ability to achieve and implement the planned enhancements of products and services on a timely and cost-effective basis and customer acceptance of those product introductions; product obsolescence due to advances in technology and shifts in market demand; competition and resulting price pressures; business conditions; economic and stock market conditions, particularly in the U.S., Europe and Japan, and their impact on sales of the Company's products and services; risks associated with foreign operations, including currency and political risks; and such other risk factors as may have been or may be included from time to time in the Company's reports filed with the Securities and Exchange Commission. |
PROPERTY AND EQUIPMENT Major classes of property and equipment are summarized below: As of September 30, ------------------------------------- 1996 1997 ------------------ ------------------ Equipment $11,748,577 $19,190,770 Equipment under capital lease - 98,623 Furniture and fixtures 1,650,488 2,300,146 Leasehold improvements 2,147,034 6,085,256 ------------------ ------------------ 15,546,099 27,674,795 Less: accumulated depreciation and amortization (7,749,267) (10,876,962) ------------------ ------------------ Total $7,796,832 $16,797,833 ================== ================== At September 30, 1997, minimum future lease payments due under the capital leases are as follows: Period ending September 30, 1998 $27,480 1999 27,480 2000 27,480 2001 27,480 2002 and thereafter 18,320 ------------------ Total minimum lease payments 128,240 Less: amount representing interest (imputed interest rate of 14.4%) (35,340) ------------------ Net minimum lease payments 92,900 Less: current portion (15,030) ------------------ Long-term portion $ 77,870 ================== The provisions for depreciation and amortization amounted to approximately $829,000, $1,743,000 and $3,148,000 for the years ended September 30, 1995, 1996 and 1997, respectively. |
Thus, effective as of January 1, 2019, the Company and the Bank were required to maintain this additional capital conservation buffer of 2.5% of CET1, resulting in the following minimum capital ratios: •4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%; •6.0% Tier I capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier I capital ratio of at least 8.5%; •8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%; and •4.0% Tier I leverage ratio In addition to the minimum capital requirements described above, the regulatory framework for prompt corrective action also contains specific capital guidelines for a bank’s classification as “well capitalized.” The current specific guidelines are as follows: •CET1 Capital Ratio of at least 6.50%; •Tier I Capital Ratio of at least 8.00%; •Total Capital Ratio of at least 10.00%; and a •Leverage Ratio of at least 5.00%. |
Our acquisition activities could involve a number of additional risks, some of which are described in more detail elsewhere in this report and include: •the possibility that expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; •incurring the time and expense associated with identifying and evaluating potential acquisitions and merger partners and negotiating potential transactions, resulting in management’s attention being diverted from the operation of our existing business; •using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or assets; •incurring the time and expense required to integrate the operations and personnel of the combined businesses; •the possibility that we will be unable to successfully implement integration strategies, due to challenges associated with integrating complex systems, technology, banking centers, and other assets of the acquired bank in a manner that minimizes any adverse effect on customers, suppliers, employees, and other constituencies; •the possibility of regulatory approval for the acquisition being delayed, impeded, restrictively conditioned or denied due to existing or new regulatory issues surrounding the Company, the target institution or the proposed combined entity as a result of, among other things, issues related to AML and BSA compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, or CRA requirements, and the possibility that any such issues associated with the target institution, which we may or may not be aware of at the time of the acquisition, could impact the combined entity after completion of the acquisition; •the possibility that the acquisition may not be timely completed, if at all; •creating an adverse short-term effect on our results of operations; and •losing key employees and customers as a result of an acquisition that is poorly received. |
The Paycheck Protection Program Flexibility Act of 2020” (“PPPF Act”) was enacted in June 2020 and modified the PPP as follows: (i) established a minimum maturity of five years for all loans made after the enactment of the PPPF Act and permits an extension of the maturity of existing loans to five years if the borrower and lender agree; (ii) extended the “covered period” of the CARES Act from June 30, 2020, to December 31, 2020; (iii) extended the eight-week “covered period” for expenditures that qualify for forgiveness to the earlier of 24 weeks following loan origination or December 31, 2020; (iv) extended the deferral period for payment of principal, interest and fees to the date on which the forgiveness amount is remitted to the lender by the SBA; (v) changed requirements such that the borrower must use at least 60% (down from 75%) of the proceeds of the loan for payroll costs, and up to 40% (up from 25%), for other permitted purposes, as a condition to obtaining forgiveness of the loan; (vi) delayed from June 30, 2020 to December 31, 2020 the date by which employees must be rehired to avoid a reduction in the amount of forgiveness of a loan, and creates a “rehiring safe harbor” that allows businesses to remain eligible for loan forgiveness if they make a good faith attempt to rehire employees or hire similarly qualified employees, but are unable to do so, or are able to document an inability to return to pre-COVID-19 levels of business activity due to compliance with social distancing measures; and (vii) allows borrowers to receive both loan forgiveness under the PPP and the payroll tax deferral permitted under the CARES Act, rather than having to choose which of the two would be more advantageous. |
_____________________________ (1)The counties comprising each region are as follows: Eastern North Carolina Region - New Hanover, Brunswick, Duplin, Dare, Beaufort, Pitt, Onslow, Carteret Triangle North Carolina Region - Moore, Lee, Harnett, Chatham, Wake Triad North Carolina Region Montgomery, Randolph, Davidson, Rockingham, Guilford, Stanly, Forsyth, Alamance Charlotte North Carolina Region - Iredell, Cabarrus, Rowan, Mecklenburg Southern Piedmont North Carolina Region - Richmond, Scotland, Robeson, Bladen, Columbus, Cumberland Western North Carolina Region - Buncombe, Henderson, Madison, McDowell, Transylvania South Carolina Region - Chesterfield, Dillon, Florence Former Virginia Region - Wythe, Washington, Montgomery, Roanoke The "Other" line item includes loans originated on a national basis through the Company’s SBA Lending Division and through the Company's Credit Card Division (1)On September 22, 2016, all FDIC loss-share agreements were terminated, and accordingly, assets previously covered under those agreements became non-covered on that date. |
Thus, effective as of January 1, 2019, the Company and the Bank were required to maintain this additional capital conservation buffer of 2.5% of CET1, resulting in the following minimum capital ratios: • 4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%; • 6.0% Tier I capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier I capital ratio of at least 8.5%; • 8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%; and • 4.0% Tier I leverage ratio In addition to the minimum capital requirements described above, the regulatory framework for prompt corrective action also contains specific capital guidelines for a bank’s classification as “well capitalized.” The current specific guidelines are as follows: • CET1 Capital Ratio of at least 6.50%; • Tier I Capital Ratio of at least 8.00%; • Total Capital Ratio of at least 10.00%; and a • Leverage Ratio of at least 5.00%. |
Our acquisition activities could involve a number of additional risks, some of which are described in more detail elsewhere in this report and include: • the possibility that expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; • incurring the time and expense associated with identifying and evaluating potential acquisitions and merger partners and negotiating potential transactions, resulting in management’s attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or assets; • incurring the time and expense required to integrate the operations and personnel of the combined businesses; • the possibility that we will be unable to successfully implement integration strategies, due to challenges associated with integrating complex systems, technology, banking centers, and other assets of the acquired bank in a manner that minimizes any adverse effect on customers, suppliers, employees, and other constituencies; • the possibility of regulatory approval for the acquisition being delayed, impeded, restrictively conditioned or denied due to existing or new regulatory issues surrounding the Company, the target institution or the proposed combined entity as a result of, among other things, issues related to AML and Bank Secrecy Act compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, or CRA requirements, and the possibility that any such issues associated with the target institution, which we may or may not be aware of at the time of the acquisition, could impact the combined entity after completion of the acquisition; • the possibility that the acquisition may not be timely completed, if at all; • creating an adverse short-term effect on our results of operations; and • losing key employees and customers as a result of an acquisition that is poorly received. |
_____________________________ (1) The counties comprising each region are as follows: Eastern North Carolina Region - New Hanover, Brunswick, Duplin, Dare, Beaufort, Pitt, Onslow, Carteret Triangle North Carolina Region - Moore, Lee, Harnett, Chatham, Wake Triad North Carolina Region Montgomery, Randolph, Davidson, Rockingham, Guilford, Stanly, Forsyth, Alamance Charlotte North Carolina Region - Iredell, Cabarrus, Rowan, Mecklenburg Southern Piedmont North Carolina Region - Richmond, Scotland, Robeson, Bladen, Columbus, Cumberland Western North Carolina Region - Buncombe, Henderson, Madison, McDowell, Transylvania South Carolina Region - Chesterfield, Dillon, Florence Former Virginia Region - Wythe, Washington, Montgomery, Roanoke Other includes loans originated on a national basis through the Company’s SBA Lending Division and through the Company's Credit Card Division _____________________ (1) During 2016, all FDIC loss share agreements were terminated, and accordingly, there were no covered loans at December 31, 2019, 2018, 2017 and 2016. |
Thus, effective as of January 1, 2019, the Company and the Bank are required to maintain this additional capital conservation buffer of 2.5% of CET1, resulting in the following minimum capital ratios: ·4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%; ·6.0% Tier I capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier I capital ratio of at least 8.5%; ·8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%; and ·4.0% Tier I leverage ratio In addition to the minimum capital requirements described above, the regulatory framework for prompt corrective action also contains specific capital guidelines for a bank’s classification as “well capitalized.” The current specific guidelines are as follows: ·CET1 Capital Ratio of at least 6.50%; ·Tier I Capital Ratio of at least 8.00%; ·Total Capital Ratio of at least 10.00%; and a ·Leverage Ratio of at least 5.00%. |
Our acquisition activities could involve a number of additional risks, some of which are described in more detail elsewhere in this report and include: · the possibility that expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; · incurring the time and expense associated with identifying and evaluating potential acquisitions and merger partners and negotiating potential transactions, resulting in management’s attention being diverted from the operation of our existing business; · using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or assets; · incurring the time and expense required to integrate the operations and personnel of the combined businesses; · the possibility that we will be unable to successfully implement integration strategies, due to challenges associated with integrating complex systems, technology, banking centers, and other assets of the acquired bank in a manner that minimizes any adverse effect on customers, suppliers, employees, and other constituencies; · the possibility of regulatory approval for the acquisition being delayed, impeded, restrictively conditioned or denied due to existing or new regulatory issues surrounding the Company, the target institution or the proposed combined entity as a result of, among other things, issues related to AML and Bank Secrecy Act compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, or CRA requirements, and the possibility that any such issues associated with the target institution, which we may or may not be aware of at the time of the acquisition, could impact the combined entity after completion of the acquisition; · the possibility that the acquisition may not be timely completed, if at all; · creating an adverse short-term effect on our results of operations; and · losing key employees and customers as a result of an acquisition that is poorly received. |
Table 12a Nonperforming Assets by Geographical Region _____________________________ (1) The counties comprising each region are as follows: Eastern North Carolina Region - New Hanover, Brunswick, Duplin, Dare, Beaufort, Pitt, Onslow, Carteret Triangle North Carolina Region - Moore, Lee, Harnett, Chatham, Wake Triad North Carolina Region - Montgomery, Randolph, Davidson, Rockingham, Guilford, Stanly, Forsyth, Alamance Charlotte North Carolina Region - Iredell, Cabarrus, Rowan, Mecklenburg Southern Piedmont North Carolina Region - Richmond, Scotland, Robeson, Bladen, Columbus, Cumberland Western North Carolina Region - Buncombe, Henderson, Madison, McDowell, Transylvania South Carolina Region - Chesterfield, Dillon, Florence Former Virginia Region - Wythe, Washington, Montgomery, Roanoke Other includes loans originated on a national basis through the Company’s SBA Lending Division Table 13 Allocation of the Allowance for Loan Losses _____________________ (1)During 2016, all FDIC loss share agreements were terminated, and accordingly, there were no covered loans at December 31, 2018, 2017 and 2016. |
Our acquisition activities could involve a number of additional risks, some of which are described in more detail elsewhere in this report and include: · the possibility that expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; · incurring the time and expense associated with identifying and evaluating potential acquisitions and merger partners and negotiating potential transactions, resulting in management’s attention being diverted from the operation of our existing business; · using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or assets; · incurring the time and expense required to integrate the operations and personnel of the combined businesses; · the possibility that we will be unable to successfully implement integration strategies, due to challenges associated with integrating complex systems, technology, banking centers, and other assets of the acquired bank in a manner that minimizes any adverse effect on customers, suppliers, employees, and other constituencies; · the possibility of regulatory approval for the acquisition being delayed, impeded, restrictively conditioned or denied due to existing or new regulatory issues surrounding the Company, the target institution or the proposed combined entity as a result of, among other things, issues related to anti-money laundering/Bank Secrecy Act compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, or the Community Reinvestment Act, and the possibility that any such issues associated with the target institution, which we may or may not be aware of at the time of the acquisition, could impact the combined entity after completion of the acquisition; · the possibility that the acquisition may not be timely completed, if at all; · creating an adverse short-term effect on our results of operations; and · losing key employees and customers as a result of an acquisition that is poorly received. |
Thus, when fully phased-in on January 1, 2019, the Company and the Bank will be required to maintain this additional capital conservation buffer of 2.5% of CET1, resulting in the following minimum capital ratios: ·4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%; ·6.0% Tier I capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier I capital ratio of at least 8.5%; ·8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%; and ·4.0% Tier I leverage ratio In addition to the minimum capital requirements described above, the regulatory framework for prompt corrective action also contains specific capital guidelines for a bank’s classification as “well capitalized.” The current specific guidelines are as follows: ·CET1 Capital Ratio of at least 6.50%; ·Tier I Capital Ratio of at least 8.00%; ·Total Capital Ratio of at least 10.00%; and a ·Leverage Ratio of at least 5.00% If a bank falls below “well capitalized” status in any of these three ratios, it must ask for FDIC permission to originate or renew brokered deposits. |
Table 12a Nonperforming Assets by Geographical Region _____________________________ (1) The counties comprising each region are as follows: Eastern North Carolina Region - New Hanover, Brunswick, Duplin, Dare, Beaufort, Pitt, Onslow, Carteret Triangle North Carolina Region - Moore, Lee, Harnett, Chatham, Wake Triad North Carolina Region - Montgomery, Randolph, Davidson, Rockingham, Guilford, Stanly, Forsyth, Alamance Southern Piedmont North Carolina Region - Anson, Richmond, Scotland, Robeson, Bladen, Columbus, Cumberland Western North Carolina Region - Buncombe, Henderson, Madison, McDowell, Transylvania South Carolina Region - Chesterfield, Dillon, Florence Former Virginia Region - Wythe, Washington, Montgomery, Roanoke Charlotte North Carolina Region - Iredell, Cabarrus, Rowan, Mecklenburg Other includes loans originated on a national basis through the Company’s SBA Lending Division Table 13 Allocation of the Allowance for Loan Losses (1) During 2016, all FDIC loss share agreements were terminated, and accordingly, there were no covered loans at December 31, 2017 and 2016. |
Our acquisition activities could involve a number of additional risks, some of which are described in more detail elsewhere in this report and include: · the possibility that expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; · incurring the time and expense associated with identifying and evaluating potential acquisitions and merger partners and negotiating potential transactions, resulting in management’s attention being diverted from the operation of our existing business; · using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or assets; · incurring the time and expense required to integrate the operations and personnel of the combined businesses; · the possibility that we will be unable to successfully implement integration strategies, due to challenges associated with integrating complex systems, technology, banking centers, and other assets of the acquired bank in a manner that minimizes any adverse effect on customers, suppliers, employees, and other constituencies; · the possibility of regulatory approval for the acquisition being delayed, impeded, restrictively conditioned or denied due to existing or new regulatory issues surrounding the Company, the target institution or the proposed combined entity as a result of, among other things, issues related to anti-money laundering/Bank Secrecy Act compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, or the Community Reinvestment Act, and the possibility that any such issues associated with the target institution, which we may or may not be aware of at the time of the acquisition, could impact the combined entity after completion of the acquisition; · the possibility that the acquisition may not be timely completed, if at all; · creating an adverse short-term effect on our results of operations; and · losing key employees and customers as a result of an acquisition that is poorly received. |
Thus, when fully phased-in on January 1, 2019, the Company and the Bank will be required to maintain this additional capital conservation buffer of 2.5% of CET1, resulting in the following minimum capital ratios: ·4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%; ·6.0% Tier I capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier I capital ratio of at least 8.5%; ·8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%; and ·4.0% Tier I leverage ratio In addition to the minimum capital requirements described above, the regulatory framework for prompt corrective action also contains specific capital guidelines for a bank’s classification as “well capitalized.” The current specific guidelines are as follows - ·CET1 Capital Ratio of at least 6.50%; ·Tier I Capital Ratio of at least 8.00%; ·Total Capital Ratio of at least 10.00%; and a ·Leverage Ratio of at least 5.00% If a bank falls below “well capitalized” status in any of these three ratios, it must ask for FDIC permission to originate or renew brokered deposits. |
Thus, when fully phased-in on January 1, 2019, the Company and the Bank will be required to maintain this additional capital conservation buffer of 2.5% of CET1, resulting in the following minimum capital ratios: ·4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%; ·6.0% Tier I capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier I capital ratio of at least 8.5%; ·8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%; and ·4.0% Tier I leverage ratio In addition to the minimum capital requirements described above, the regulatory framework for prompt corrective action also contains specific capital guidelines for a bank’s classification as “well capitalized.” The specific guidelines as of January 1, 2015 are as follows - ·Common Equity Tier I Capital Ratio of at least 6.50%; ·Tier I Capital Ratio of at least 8.00%; ·Total Capital Ratio of at least 10.00%; and a ·Leverage Ratio of at least 5.00% If a bank falls below “well capitalized” status in any of these three ratios, it must ask for FDIC permission to originate or renew brokered deposits. |
Table 12a Nonperforming Assets by Geographical Region (1) The counties comprising each region are as follows: Eastern North Carolina Region - New Hanover, Brunswick, Duplin, Dare, Beaufort, Pitt, Onslow, Carteret Triangle North Carolina Region - Moore, Lee, Harnett, Chatham, Wake Triad North Carolina Region - Montgomery, Randolph, Davidson, Rockingham, Guilford, Stanly Charlotte North Carolina Region - Iredell, Cabarrus, Mecklenburg, Rowan Southern Piedmont North Carolina Region - Anson, Richmond, Scotland, Robeson, Bladen, Columbus, Cumberland Western North Carolina Region - Buncombe South Carolina Region - Chesterfield, Dillon, Florence Virginia Region - Wythe, Washington, Montgomery, Roanoke Table 13 Allocation of the Allowance for Loan Losses Table 13a Allocation of the Allowance for Loan Losses - Covered versus Non-covered Table 14 Loan Loss and Recovery Experience (1) In the table above, for the period ended December 31, 2012, loan charge-offs include $37.8 million in charge-offs related to loans that the Company held for sale as of year-end (and subsequently sold in January 2013). |
Table 12a Nonperforming Assets by Geographical Region (1)The counties comprising each region are as follows: Eastern North Carolina Region - New Hanover, Brunswick, Duplin, Dare, Beaufort, Pitt, Onslow, Carteret Triangle North Carolina Region - Moore, Lee, Harnett, Chatham, Wake Triad North Carolina Region - Montgomery, Randolph, Davidson, Rockingham, Guilford, Stanly Charlotte North Carolina Region - Iredell, Cabarrus, Rowan Southern Piedmont North Carolina Region - Anson, Richmond, Scotland, Robeson, Bladen, Columbus, Cumberland Western North Carolina Region - Buncombe South Carolina Region - Chesterfield, Dillon, Florence Virginia Region - Wythe, Washington, Montgomery, Roanoke Table 13 Allocation of the Allowance for Loan Losses Table 13a Allocation of the Allowance for Loan Losses - Covered versus Non-covered Table 14 Loan Loss and Recovery Experience (1)In the table above, for the period ended December 31, 2012, loan charge-offs include $37.8 million in charge-offs related to loans that the Company held for sale as of year-end (and subsequently sold in January 2013). |
The Company’s equity grants for 2012 were the issuance of 1) 9,559 shares of long-term restricted stock to certain senior executives on February 23, 2012, at a fair market value of $10.96 per share, which was the closing price of the Company’s common stock on that date, 2) 25,452 shares of common stock to non-employee directors on June 1, 2012 (1,818 shares per director), at a fair market value of $8.86 per share, which was the closing price of the Company’s common stock on that date, 3) 40,000 shares of restricted stock to the chief executive officer on August 28, 2012, at a fair market value of $9.76 per share, which was the closing price of the Company’s common stock on that date, and 4) 75,000 stock options to the chief executive officer on August 28, 2012, at a fair value of $3.65 per share on the date of the grant using the Black-Scholes option pricing model with the following assumptions: The Company recorded total stock-based compensation expense of $270,000, $222,000 and $311,000 for the years ended December 31, 2014, 2013, and 2012, respectively. |
Table 12a Nonperforming Assets by Geographical Region (1) The counties comprising each region are as follows: Eastern North Carolina Region - New Hanover, Brunswick, Duplin, Dare, Beaufort, Onslow, Carteret, Tyrrell Triangle North Carolina Region - Moore, Lee, Harnett, Chatham, Wake Triad North Carolina Region - Montgomery, Randolph, Davidson, Rockingham, Guilford, Stanly Charlotte North Carolina Region - Iredell, Cabarrus, Rowan, Mecklenburg Southern Piedmont North Carolina Region - Anson, Richmond, Scotland, Robeson, Bladen, Columbus Western North Carolina Region - Buncombe South Carolina Region - Chesterfield, Dillon, Florence, Horry Virginia Region - Wythe, Washington, Montgomery, Pulaski, Roanoke Table 13 Allocation of the Allowance for Loan Losses Table 13a Allocation of the Allowance for Loan Losses - Covered versus Non-covered Table 14 Loan Loss and Recovery Experience (1)In the table above, for the period ended December 31, 2012, loan charge-offs include $37.8 million in charge-offs related to loans that the Company held for sale as of year-end (and subsequently sold in January 2013). |
The Company’s equity grants for 2012 were the issuance of 1) 9,559 shares of long-term restricted stock to certain senior executives on February 23, 2012, at a fair market value of $10.96 per share, which was the closing price of the Company’s common stock on that date, 2) 25,452 shares of common stock to non-employee directors on June 1, 2012 (1,818 shares per director), at a fair market value of $8.86 per share, which was the closing price of the Company’s common stock on that date, 3) 40,000 shares of restricted stock to the chief executive officer on August 28, 2012, at a fair market value of $9.76 per share, which was the closing price of the Company’s common stock on that date, and 4) 75,000 stock options to the chief executive officer on August 28, 2012, at a fair value of $3.65 per share on the date of the grant using the Black-Scholes option pricing model with the following assumptions: The Company recorded total stock-based compensation expense of $222,000, $311,000 and $905,000 for the years ended December 31, 2013, 2012, and 2011, respectively. |
The Company’s equity grants for 2012 were the issuance of 1) 9,559 shares of long-term restricted stock to certain senior executives on February 23, 2012, at a fair market value of $10.96 per share, which was the closing price of the Company’s common stock on that date, 2) 25,452 shares of common stock to non-employee directors on June 1, 2012 (1,818 shares per director), at a fair market value of $8.86 per share, which was the closing price of the Company’s common stock on that date, 3) 40,000 shares of restricted stock to the chief executive officer on August 28, 2012, at a fair market value of $9.76 per share, which was the closing price of the Company’s common stock on that date, and 4) 75,000 stock options to the chief executive officer on August 28, 2012, at a fair value of $3.65 per share on the date of the grant using the Black-Scholes option pricing model with the following assumptions: The Company’s equity grants for the year ended December 31, 2011 were the issuance of 1) 7,259 shares of long-term restricted stock to certain senior executives on February 24, 2011, at a fair market value of $14.54 per share, which was the closing price of the Company’s common stock on that date, and 2) 21,210 shares of common stock to non-employee directors on June 1, 2011 (1,414 shares per director), at a fair market value of $11.39 per share, which was the closing price of the Company’s common stock on that date. |
The investment category benchmarks as of December 31, 2011 are as follows: Investment Category Investment Category Benchmark Range of Acceptable Deviation from Investment Category Benchmark Fixed income investments Cash/money market account Citigroup Treasury Bill Index - 3 month 0-50 basis points US government bond fund Barclays Intermediate Government Bond Index 0-200 basis points US corporate bond fund Barclays Aggregate Index 0-200 basis points US corporate high yield bond fund Barclays High Yield Index 0-200 basis points Equity investments Large cap value fund Russell 1000 Value Index 0-300 basis points Large cap growth fund Russell 1000 Growth Index 0-300 basis points Mid cap equity fund Russell Mid Cap Index 0-300 basis points Small cap growth fund Russell 2000 Growth Index 0-300 basis points Foreign equity fund MSCI EAFE Index 0-300 basis points Company stock Russell 2000 Index 0-300 basis points Each of the investment fund’s average annualized return over a three-year period should be within the range of acceptable deviation from the benchmarked index shown above. |
Of the $640,000 in expense that was recorded in 2010, approximately $299,000 related to the June 17, 2008 grants to 19 senior officers and is classified as “personnel expense” on the Consolidated Statements of Income, approximately $99,000 related to the December 11, 2009 equity grant (also classified as “personnel expense”), and the remaining $242,000 relates to the June 1, 2010 director grants and is classified as “other operating expenses.” Of the $449,000 in expense that was recorded in 2009, approximately $299,000 related to the June 17, 2008 grants to 19 senior officers and is classified as “personnel expense” on the Consolidated Statements of Income, while $150,000 relates to the June 1, 2009 director grants and is classified as “other operating expenses.” Substantially all of the expense recorded in 2008 relates to the June 1 director grants and is classified as “other operating expenses.” Stock-based compensation expense is reflected as an adjustment to cash flows from operating activities on the Company’s Consolidated Statement of Cash Flows. |
Uwharrie Carolina RBC Insurance Community Centura Assets acquired Group Bank Branches Total - ----------------------------- --------- --------- --------- --------- (in millions) Cash $ -- 7.0 62.4 69.4 Securities -- 13.1 -- 13.1 Loans, gross -- 47.7 24.8 72.5 Allowance for loan losses -- (0.8) (0.3) (1.1) Premises and equipment -- 0.8 1.0 1.8 Other -- 2.5 0.2 2.7 --------- --------- --------- --------- Total assets acquired -- 70.3 88.1 158.4 --------- --------- --------- --------- Liabilities assumed - ----------------------------- Deposits -- 58.9 102.0 160.9 Borrowings -- 2.1 -- 2.1 Other -- 0.6 0.3 0.9 --------- --------- --------- --------- Total liabilities assumed -- 61.6 102.3 163.9 --------- --------- --------- --------- Value of cash paid and/or stock issued to stock-holders of acquiree 0.5 18.9 n/a 19.4 --------- --------- --------- --------- Intangible assets recorded $ 0.5 10.2 14.2 24.9 ========= ========= ========= ========= There are many factors that the Company considers when evaluating how much to offer for potential acquisition candidates - in the form of a purchase price comprised of cash and/or stock for a whole company purchase or a deposit premium in a branch purchase. |
================================================================================ - -------------------------------------------------------------------------------- Table 9 Securities Portfolio Maturity Schedule - -------------------------------------------------------------------------------- As of December 31, ------------------------------ ------------------------------ Book Fair Book Value Value Yield (1) -------- -------- -------- Securities available for sale: U.S. Government agencies Due within one year $ 2,300 2,268 3.10% Due after one but within five years 37,285 36,579 3.95% Due after five but within ten years 5,673 5,634 5.02% -------- -------- -------- Total 45,258 44,481 4.05% -------- -------- -------- Mortgage-backed securities Due within one year 1,498 1,468 4.21% Due after one but within five years 36,549 35,651 4.25% Due after five but within ten years 10,290 9,946 4.72% Due after ten years 898 863 5.07% -------- -------- -------- Total 49,235 47,928 4.36% -------- -------- -------- Corporate debt securities Due after five but within ten years 2,990 3,011 6.85% Due after ten years 10,939 11,901 7.74% -------- -------- -------- Total 13,929 14,912 7.55% -------- -------- -------- Equity securities 6,240 6,292 4.60% -------- -------- -------- Total securities available for sale Due within one year 3,798 3,736 3.54% Due after one but within five years 73,834 72,230 4.10% Due after five but within ten years 18,953 18,591 5.15% Due after ten years 11,837 12,764 7.54% Equity securities 6,240 6,292 4.60% -------- -------- -------- Total $114,662 113,613 4.64% ======== ======== ======== Securities held to maturity: State and local governments Due within one year $ 1,323 1,325 5.99% Due after one but within five years 6,712 6,799 7.30% Due after five but within ten years 3,061 3,121 7.34% Due after ten years 286 286 6.01% -------- -------- -------- Total 11,382 11,531 7.14% -------- -------- -------- Other Due after one but within five years 2,790 2,790 0.13% -------- -------- -------- Total 2,790 2,790 0.13% -------- -------- -------- Total securities held to maturity Due within one year 1,323 1,325 5.99% Due after one but within five years 9,502 9,589 5.20% Due after five but within ten years 3,061 3,121 7.34% Due after ten years 286 286 6.01% -------- -------- -------- Total $ 14,172 14,321 5.76% ======== ======== ======== (1) Yields on tax-exempt investments have been adjusted to a taxable equivalent basis using a 39% tax rate. |
The Pension Plan's accumulated benefit obligation is also presented: The following table reconciles the beginning and ending balances of the Pension Plan's assets: (In thousands) 2005 2004 2003 -------- -------- -------- Plan assets at beginning of year $ 9,907 8,498 5,126 Actual return on plan assets 361 816 1,387 Employer contributions 1,419 650 2,045 Benefits paid (84) (57) (60) -------- -------- -------- Plan assets at end of year $ 11,603 9,907 8,498 ======== ======== ======== The following table presents information regarding the funded status of the Pension Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2005 2004 ------- ------- Funded status $(4,490) (2,538) Unrecognized net actuarial loss 5,955 3,764 Unrecognized prior service cost 132 249 Unrecognized transition obligation 45 47 ------- ------- Prepaid pension cost $ 1,642 1,522 ======= ======= Net pension cost for the Pension Plan included the following components for the years ended December 31, 2005, 2004 and 2003: (In thousands) 2005 2004 2003 ------- ------- ------- Service cost - benefits earned during the period $ 1,137 955 690 Interest cost on projected benefit obligation 766 642 527 Expected return on plan assets (947) (759) (507) Net amortization and deferral 344 307 301 ------- ------- ------- Net periodic pension cost $ 1,300 1,145 1,011 ======= ======= ======= The following table is an estimate of the benefits that will be paid in accordance with the Pension Plan during the indicated time periods: Estimated (In thousands) benefit payments ---------- Year ending December 31, 2006 $ 200 Year ending December 31, 2007 214 Year ending December 31, 2008 257 Year ending December 31, 2009 278 Year ending December 31, 2010 323 Years ending December 31, 2011-2015 3,659 Supplemental Executive Retirement Plan. |
The following table reconciles the beginning and ending balances of the SERP Plan's benefit obligation, as computed by the Company's independent actuarial consultants: (In thousands) 2005 2004 2003 ------ ------ ------ Projected benefit obligation at beginning of year $2,553 1,631 1,248 Service cost 247 242 105 Interest cost 154 128 88 Actuarial loss 269 329 179 Effect of amendments -- 223 11 Benefits paid -- -- -- ------ ------ ------ Projected benefit obligation at end of year $3,223 2,553 1,631 ====== ====== ====== Accumulated benefit obligation at end of year $2,556 2,119 1,391 ====== ====== ====== The following table presents information regarding the funded status of the SERP Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2005 2004 ------- ------- Funded status $(3,223) (2,553) Unrecognized net actuarial loss 1,079 862 Unrecognized prior service cost 237 273 Additional minimum liability (701) (422) ------- ------- Accrued pension cost $(2,608) (1,840) ======= ======= Net pension cost for the SERP Plan included the following components for the years ended December 31, 2005, 2004 and 2003: (In thousands) 2005 2004 2003 ------ ------ ------ Service cost - benefits earned during the period $ 247 242 105 Interest cost on projected benefit obligation 154 128 88 Net amortization and deferral 88 80 45 ------ ------ ------ Net periodic pension cost $ 489 450 238 ====== ====== ====== The following table is an estimate of the benefits that will be paid in accordance with the SERP Plan during the indicated time periods: (In thousands) Estimated benefit payments -------- Year ending December 31, 2006 $ 164 Year ending December 31, 2007 156 Year ending December 31, 2008 148 Year ending December 31, 2009 140 Year ending December 31, 2010 159 Years ending December 31, 2011-2015 1,268 The following assumptions were used in determining the actuarial information for the Pension Plan and the SERP Plan for the years ended December 31, 2005, 2004 and 2003: For the years ended December 31, 2004 and 2003, the Company determined the year end discount rate based on discussions with the Company's third-party actuarial consultant, giving weight to the year end Moody's corporate Aa rate and its change during the year, and the expected cash flows associated with the Company's retirement payment obligations. |
The following table sets forth a summary of the activity of the Company's outstanding options since December 31, 2002: Options Exercisable Options Outstanding at Year End -------------------- -------------------- Weighted- Weighted- Average Average Number of Exercise Number of Exercise Shares Price Shares Price -------- -------- -------- -------- Balance at December 31, 2002 850,023 $ 10.69 702,123 $ 9.81 Granted 76,500 16.35 Assumed in corporate acquisition 78,000 4.17 Exercised (226,764) 6.38 Forfeited -- -- Expired -- -- Balance at December 31, 2003 777,759 11.85 626,583 11.05 Granted 183,230 21.35 Exercised (181,663) 7.83 Forfeited (600) 15.32 Expired -- -- Balance at December 31, 2004 778,726 15.01 668,260 14.88 Granted 34,000 22.11 Exercised (65,844) 11.41 Forfeited -- -- Expired -- -- Balance at December 31, 2005 746,882 15.75 678,883 15.69 The following table summarizes information about the stock options outstanding at December 31, 2005: Options Outstanding Options Exercisable --------------------------------------- --------------------- Weighted- Weighted- Weighted- Number Average Average Number Average Range of Outstanding Remaining Exercise Exercisable Exercise Exercise Prices at 12/31/05 Contractual Life Price at 12/31/05 Price --------------- ------------ ---------------- ---------- ------------ --------- $4.00 to $7.99 38,699 1.0 $ 6.94 38,699 $ 6.94 $8.00 to $11.99 168,651 3.3 10.87 168,651 10.87 $12.00 to $15.99 251,052 5.4 15.08 192,927 14.95 $16.00 to $19.99 96,750 7.0 17.62 96,750 17.62 $20.00 to $22.00 191,730 8.4 21.77 181,856 21.77 ----------- ----------- 746,882 5.7 $15.75 678,883 $15.69 =========== =========== Note 15. |
Executive Officers ------------------ /s/ James H. Garner ------------------- James H. Garner President, Chief Executive Officer and Treasurer /s/ Anna G. Hollers /s/ Eric P. Credle - ------------------- ------------------ Anna G. Hollers Eric P. Credle Executive Vice President Senior Vice President Secretary Chief Financial Officer March 7, 2006 (Principal Accounting Officer) March 7, 2006 Board of Directors ------------------ /s/ David L. Burns /s/ William E. Samuels - ------------------ ---------------------- David L. Burns William E. Samuels Chairman of the Board Vice-Chairman of the Board Director Director March 7, 2006 March 7, 2006 /s/ Jack D. Briggs /s/ George R. Perkins, Jr. - ------------------ -------------------------- Jack D. Briggs George R. Perkins, Jr. Director Director March 7, 2006 March 7, 2006 /s/ R. Walton Brown /s/ Thomas F. Phillips - ------------------- ---------------------- R. Walton Brown Thomas F. Phillips Director Director March 7, 2006 March 7, 2006 /s/ H. David Bruton /s/ Edward T. Taws, Jr. - ------------------- ----------------------- H. David Bruton Edward T. Taws, Jr. Director Director March 7, 2006 March 7, 2006 /s/ John F. Burns /s/ Frederick L. Taylor II - ----------------- -------------------------- John F. Burns Frederick L. Taylor II Director Director March 7, 2006 March 7, 2006 /s/ Mary Clara Capel /s/ Virginia C. Thomasson ------------------- ------------------------- Mary Clara Capel Virginia C. Thomasson Director Director March 7, 2006 March 7, 2006 /s/ Goldie H. Wallace-Gainey /s/ A. Jordan Washburn - ---------------------------- ---------------------- Goldie H. Wallace-Gainey A. Jordan Washburn Director Director March 7, 2006 March 7, 2006 /s/ James H. Garner /s/ Dennis A. Wicker ------------------ -------------------- James H. Garner Dennis A. Wicker Director Director March 7, 2006 March 7, 2006 /s/ James G. Hudson, Jr. /s/ John C. Willis - ------------------------ ------------------ James G. Hudson, Jr. John C. Willis Director Director March 7, 2006 March 7, 2006 |
- -------------------------------------------------------------------------------- Table 4 Noninterest Income - -------------------------------------------------------------------------------- Year Ended December 31, -------------------------------- (In thousands) 2004 2003 2002 -------- -------- -------- Service charges on deposit accounts $ 9,064 7,938 6,856 Other service charges, commissions, and fees 3,361 2,710 2,336 Fees from presold mortgages 969 2,327 1,713 Commissions from sales of insurance and financial products 1,406 1,304 738 Data processing fees 416 333 303 -------- -------- -------- Total core noninterest income 15,216 14,612 11,946 Loan sale gains 2 2 11 Securities gains, net 299 218 25 Other gains (losses), net 347 86 (14) -------- -------- -------- Total $ 15,864 14,918 11,968 ======== ======== ======== - ------------------------------------------------------------------------------- Table 5 Noninterest Expenses - ------------------------------------------------------------------------------- Year Ended December 31, ---------------------------------- (In thousands) 2004 2003 2002 -------- -------- -------- Salaries $ 20,116 17,756 15,079 Employee benefits 5,488 4,381 3,388 -------- -------- -------- Total personnel expense 25,604 22,137 18,467 Occupancy expense 2,754 2,366 2,077 Equipment related expenses 2,956 2,555 2,128 Amortization of intangible assets 378 224 31 Stationery and supplies 1,523 1,498 1,445 Telephone 1,345 1,229 932 Non-credit losses 187 198 97 Other operating expenses 8,970 7,757 7,124 -------- -------- -------- Total $ 43,717 37,964 32,301 ======== ======== ======== - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 6 Income Taxes - -------------------------------------------------------------------------------- (In thousands) 2004 2003 2002 -------- -------- -------- Current - Federal $ 10,407 9,578 8,964 - State 228 614 464 Deferred - Federal (192) 425 (146) - State (25) -- -- -------- -------- -------- Total $ 10,418 10,617 9,282 ======== ======== ======== Effective tax rate 34.1% 35.3% 35.0% ======== ======== ======== - -------------------------------------------------------------------------------- (1) Yields on tax-exempt investments have been adjusted to a taxable equivalent basis using a 35% tax rate. |
Uwharrie Carolina RBC Insurance Community Centura Assets acquired Group Bank Branches Total - ------------------------------- ---------- --------- ---------- --------- (in millions) Cash $ -- 7.0 62.4 69.4 Securities -- 13.1 -- 13.1 Loans, gross -- 47.7 24.8 72.5 Allowance for loan losses -- (0.8) (0.3) (1.1) Premises and equipment -- 0.8 1.0 1.8 Other -- 2.5 0.2 2.7 ----- ----- ----- ----- Total assets acquired -- 70.3 88.1 158.4 ----- ----- ----- ----- Liabilities assumed - ------------------------------- Deposits -- 58.9 102.0 160.9 Borrowings -- 2.1 -- 2.1 Other -- 0.6 0.3 0.9 ----- ----- ----- ----- Total liabilities assumed -- 61.6 102.3 163.9 ----- ----- ----- ----- Value of cash paid and/or stock issued to stock-holders of acquiree 0.5 18.9 n/a 19.4 ----- ----- ----- ----- Intangible assets recorded $ 0.5 10.2 14.2 24.9 ===== ===== ===== ===== The Company completed one acquisition in 2002 as follows: (a) On October 4, 2002, the Company completed the purchase of a branch of RBC Centura located in Broadway, North Carolina. |
The Pension Plan's accumulated benefit obligation is also presented: The following table reconciles the beginning and ending balances of the Pension Plan's assets: (In thousands) 2004 2003 2002 ------- ------ ------ Plan assets at beginning of year $ 8,498 5,126 4,893 Actual return on plan assets 816 1,387 (610) Employer contributions 650 2,045 880 Benefits paid (57) (60) (37) ------- ------ ------ Plan assets at end of year $ 9,907 8,498 5,126 ======= ====== ====== The following table presents information regarding the funded status of the Pension Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2004 2003 -------- -------- Funded status $ (2,538) (1,394) Unrecognized net actuarial loss 3,764 2,997 Unrecognized prior service cost 249 366 Unrecognized transition obligation 47 49 -------- -------- Prepaid pension cost $ 1,522 2,018 ======== ======== Net pension cost for the Pension Plan included the following components for the years ended December 31, 2004, 2003 and 2002: The following table is an estimate of the benefits that will be paid in accordance with the Pension Plan during the indicated time periods: (In thousands) Estimated benefit payments -------- Year ending December 31, 2005 $ 145 Year ending December 31, 2006 181 Year ending December 31, 2007 195 Year ending December 31, 2008 238 Year ending December 31, 2009 262 Years ending December 31, 2010-2014 2,884 Supplemental Executive Retirement Plan. |
The following table reconciles the beginning and ending balances of the SERP Plan's benefit obligation, as computed by the Company's independent actuarial consultants: The following table presents information regarding the funded status of the SERP Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2004 2003 -------- -------- Funded status $ (2,553) (1,631) Unrecognized net actuarial loss 862 578 Unrecognized prior service cost 273 84 Additional minimum liability (422) (385) -------- -------- Accrued pension cost $ (1,840) (1,354) ======== ======== Net pension cost for the SERP Plan included the following components for the years ended December 31, 2004, 2003 and 2002: The following table is an estimate of the benefits that will be paid in accordance with the SERP Plan during the indicated time periods: (In thousands) Estimated benefit payments -------- Year ending December 31, 2005 $ 121 Year ending December 31, 2006 139 Year ending December 31, 2007 132 Year ending December 31, 2008 126 Year ending December 31, 2009 118 Years ending December 31, 2010-2014 1,075 The following assumptions were used in determining the actuarial information for the Pension Plan and the SERP Plan for the years ended December 31, 2004, 2003 and 2002: Included in intangible assets at December 31, 2004 and 2003 is $84,000 and $93,000, respectively, that has been recognized in connection with the accrual of the additional minimum liability for the SERP Plan. |
Condensed Parent Company Information Condensed financial data for First Bancorp (parent company only) follows: CONDENSED BALANCE SHEETS As of December 31, ---------------------- (In thousands) 2004 2003 -------- -------- Assets Cash on deposit with bank subsidiary $ 5,935 20,794 Investment in wholly-owned subsidiaries, at equity 184,316 162,224 Land 7 7 Other assets 2,170 1,056 -------- -------- Total assets $192,428 184,081 ======== ======= Liabilities and shareholders' equity Borrowings $ 41,239 40,000 Other liabilities 2,711 2,225 -------- -------- Total liabilities 43,950 42,225 Shareholders' equity 148,478 141,856 -------- -------- Total liabilities and shareholders' equity $192,428 184,081 ======== ======== Report of Independent Registered Public Accounting Firm ------------------------------------------------------- The Board of Directors and Shareholders First Bancorp: We have audited the accompanying consolidated balance sheets of First Bancorp and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2004. |
Executive Officers ------------------ /s/ James H. Garner ------------------- James H. Garner President, Chief Executive Officer and Treasurer /s/ Anna G. Hollers /s/ Eric P. Credle - ------------------- ------------------ Anna G. Hollers Eric P. Credle Executive Vice President Senior Vice President Secretary Chief Financial Officer March 8, 2005 (Principal Accounting Officer) March 8, 2005 Board of Directors ------------------ /s/ David L. Burns /s/ William E. Samuels - ------------------ ---------------------- David L. Burns William E. Samuels Chairman of the Board Vice-Chairman of the Board Director Director March 8, 2005 March 8, 2005 /s/ Jack D. Briggs /s/ George R. Perkins, Jr. - ------------------ -------------------------- Jack D. Briggs George R. Perkins, Jr. Director Director March 8, 2005 March 8, 2005 /s/ R. Walton Brown /s/ Thomas F. Phillips - ------------------- ---------------------- R. Walton Brown Thomas F. Phillips Director Director March 8, 2005 March 8, 2005 /s/ H. David Bruton /s/ Edward T. Taws, Jr. - ------------------- ----------------------- H. David Bruton Edward T. Taws, Jr. Director Director March 8, 2005 March 8, 2005 /s/ John F. Burns /s/ Frederick H. Taylor - ----------------- ----------------------- John F. Burns Frederick H. Taylor Director Director March 8, 2005 March 8, 2005 /s/ Jesse S. Capel /s/ Virginia C. Thomasson - ------------------ ------------------------- Jesse S. Capel Virginia C. Thomasson Director Director March 8, 2005 March 8, 2005 /s/ Goldie H. Wallace-Gainey /s/ A. Jordan Washburn - ---------------------------- ---------------------- Goldie H. Wallace-Gainey A. Jordan Washburn Director Director March 8, 2005 March 8, 2005 /s/ James H. Garner /s/ Dennis A. Wicker ------------------ -------------------- James H. Garner Dennis A. Wicker Director Director March 8, 2005 March 8, 2005 /s/ James G. Hudson, Jr. /s/ John C. Willis - ------------------------ ------------------ James G. Hudson, Jr. John C. Willis Director Director March 8, 2005 March 8, 2005 |
The following table reconciles the beginning and ending balances of the Pension Plan's benefit obligation, as computed by the Company's independent actuarial consultants: (In thousands) 2001 2000 1999 ---- ---- ---- Benefit obligation at beginning of year $ 4,704 3,879 4,052 Service cost 357 260 282 Interest cost 375 324 277 Actuarial loss (gain) 709 392 (609) Benefits paid (63) (151) (123) ------- ----- ----- Benefit obligation at end of year $ 6,082 4,704 3,879 ======= ===== ===== The following table reconciles the beginning and ending balances of the Pension Plan's assets: (In thousands) 2001 2000 1999 ---- ---- ---- Plan assets at beginning of year $ 4,005 4,479 3,582 Actual return on plan assets (49) (323) 804 Employer contributions 1,000 -- 216 Benefits paid (63) (151) (123) ------- ----- ----- Plan assets at end of year $ 4,893 4,005 4,479 ======= ===== ===== The following table presents information regarding the funded status of the Pension Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2001 2000 ---- ---- Funded status $(1,189) (699) Unrecognized net actuarial loss 1,405 260 Unrecognized prior service cost 439 544 Unrecognized transition obligation 53 55 ------- ---- Prepaid pension cost $ 708 160 ======= ==== Net pension cost for the Pension Plan included the following components for the years ended December 31, 2001, 2000 and 1999: (In thousands) 2001 2000 1999 ---- ---- ---- Service cost - benefits earned during the period $ 357 260 282 Interest cost on projected benefit obligation 375 324 277 Expected return on plan assets (387) (417) (340) Net amortization and deferral 107 105 111 ----- ---- ---- Net periodic pension cost $ 452 272 330 ===== ==== ==== Supplemental Executive Retirement Plan. |
The following table reconciles the beginning and ending balances of the SERP Plan's benefit obligation, as computed by the Company's independent actuarial consultants: (In thousands) 2001 2000 1999 ---- ---- ---- Benefit obligation at beginning of year $ 765 508 442 Service cost 52 25 30 Interest cost 67 52 33 Actuarial loss 190 196 19 Benefits paid (4) (16) (16) ------- ---- ---- Benefit obligation at end of year $ 1,070 765 508 ======= ==== ==== The following table presents information regarding the funded status of the SERP Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2001 2000 ---- ---- Funded status $(1,070) (765) Unrecognized net actuarial loss 302 122 Unrecognized prior service cost 217 253 Adjustment for minimum liability 28 (118) ------- ---- Accrued pension cost $ (523) (508) ======= ==== Net pension cost for the SERP Plan included the following components for the years ended December 31, 2001, 2000 and 1999: (In thousands) 2001 2000 1999 ---- ---- ---- Service cost - benefits earned during the period $ 52 25 30 Interest cost on projected benefit obligation 67 52 33 Net amortization and deferral 48 39 37 ---- ---- ---- Net periodic pension cost $167 116 100 ==== ==== ==== The following assumptions were used in determining the actuarial information for the Retirement Plan and the SERP Plan for the years ended December 31, 2001, 2000 and 1999: Included in intangible assets at December 31, 2001 and 2000 is $253,000 and $138,000, respectively, that has been recognized in connection with the accrual of the additional minimum liability for the SERP Plan. |
Executive Officers ------------------ /s/ James H. Garner ------------------- James H. Garner President, Chief Executive Officer and Treasurer /s/ Anna G. Hollers /s/ Eric P. Credle ------------------- ------------------ Anna G. Hollers Eric P. Credle Executive Vice President Senior Vice President Secretary Chief Financial Officer March 12, 2002 (Principal Accounting Officer) March 12, 2002 Board of Directors ------------------ /s/ Jesse S. Capel /s/ William E. Samuels ----------------- ---------------------- Jesse S. Capel William E. Samuels Chairman of the Board Vice-Chairman of the Board Director Director March 12, 2002 March 12, 2002 /s/ Jack D. Briggs /s/ Thomas F. Phillips ------------------ ---------------------- Jack D. Briggs Thomas F. Phillips Director Director March 12, 2002 March 12, 2002 /s/ H. David Bruton /s/ Edward T. Taws ------------------- ------------------ H. David Bruton Edward T. Taws Director Director March 12, 2002 March 12, 2002 /s/ David L. Burns /s/ Frederick H. Taylor ------------------ ----------------------- David L. Burns Frederick H. Taylor Director Director March 12, 2002 March 12, 2002 /s/ John F. Burns /s/ Virginia C. Thomasson ----------------- ------------------------- John F. Burns Virginia C. Thomasson Director Director March 12, 2002 March 12, 2002 /s/ Felton J. Capel /s/ Goldie H. Wallace ------------------ --------------------- Felton J. Capel Goldie H. Wallace Director Director March 12, 2002 March 12, 2002 /s/ James H. Garner /s/ A. Jordan Washburn ------------------ ---------------------- James H. Garner A. Jordan Washburn Director Director March 12, 2002 March 12, 2002 /s/ Frank G. Hardister /s/ Dennis A. Wicker --------------------- -------------------- Frank G. Hardister Dennis A. Wicker Director Director March 12, 2002 March 12, 2002 /s/ James G. Hudson /s/ John C. Willis ------------------- ------------------ James G. Hudson John C. Willis Director Director March 12, 2002 March 12, 2002 /s/ George R. Perkins --------------------- George R. Perkins Director March 12, 2002 EXHIBIT CROSS REFERENCE INDEX Exhibit Page(s) ------- ------- 3.a.i Copy of Articles of Incorporation of the Registrant * 3.a.ii Copy of the amendment to Articles of Incorporation * 3.a.iii Copy of the amendment to Articles of Incorporation - adding a new Article Ten * 3.a.iv Copy of the amendment to Article IV of the Articles of Incorporation * 3.b Copy of the Bylaws of the Registrant 88-107 4 Form of common Stock Certificate * 10.a Data processing Agreement by and between Bank of Montgomery (First Bank) and Montgomery Data Services, Inc. * 10.b First Bank Salary and Incentive Plan, as amended * 10.c Indemnification Agreement between the Company and its Directors and Officers * 10.d First Bancorp Senior Management Supplemental Executive Retirement Plan 108-130 10.e First Bancorp Senior Management Split-Dollar Life Insurance Agreements between the Company and the Executive Officers 131-135 10.f First Bancorp 1994 Stock Option Plan 136-146 10.g Employment Agreement between the Company and James H. Garner * 10.h Employment Agreement between the Company and Anna G. Hollers * 10.i Employment Agreement between the Company and Teresa C. Nixon * 10.j Employment Agreement between the Company and Eric P. Credle * 10.k Employment Agreement between the Company and David G. Grigg * 10.l Purchase and Assumption Agreement with Bank of Davie * 10.m Purchase and Assumption Agreement with First Union National Bank * 10.n Employment Agreement between the Company and John F. Burns * 10.o Definitive Merger Agreement with Century Bancorp, Inc. * 10.p Employment Agreement between the Company and James G. Hudson, Jr. 147-153 21 List of Subsidiaries of Registrant 154 23.a Consent of Independent Auditors 155 * Incorporated herein by reference. |
- -------------------------------------------------------------------------------- Table 4 Noninterest Income - -------------------------------------------------------------------------------- Year Ended December 31, --------------------------- (In thousands) 2000 1999 1998 -------- -------- ------- Service charges on deposit accounts $ 3,118 2,993 2,728 Other service charges, commissions, and fees 1,852 1,616 1,298 Fees from presold mortgages 453 685 696 Commissions from sales of credit insurance 306 264 240 Data processing fees 117 50 5 -------- -------- ------- Total core noninterest income 5,846 5,608 4,967 Loan sale gains - 34 227 Securities gains (losses), net (1,919) 20 29 Branch sale gain 808 - - Other gains (losses), net (6) (15) (5) -------- -------- ------- Total $ 4,729 5,647 5,218 ======== ======== ======= - -------------------------------------------------------------------------------- Table 5 Noninterest Expenses - -------------------------------------------------------------------------------- Year Ended December 31, (In thousands) 2000 1999 1998 -------- ------- ------- Salaries $ 10,138 9,241 8,385 Employee benefits 2,543 2,468 2,292 -------- ------- ------- Total personnel expense 12,681 11,709 10,677 Net occupancy expense 1,507 1,417 1,201 Equipment related expenses 1,353 1,186 954 Amortization of intangible assets 632 636 655 Stationery and supplies 1,174 893 827 Telephone 600 516 481 Non-credit losses 60 34 205 Merger expenses 3,188 - - Other operating expenses 5,546 5,361 4,665 -------- ------- ------- Total $ 26,741 21,752 19,665 ======== ======= ======= - -------------------------------------------------------------------------------- Table 6 Income Taxes - -------------------------------------------------------------------------------- (In thousands) 2000 1999 1998 ----------- ---------- ---------- Current - Federal $ 6,108 6,035 5,221 - State 174 382 719 Deferred - Federal (546) (183) 192 ----------- ---------- ---------- Total $ 5,736 6,234 6,132 =========== ========== ========== Effective tax rate 38.0% 34.5% 35.8% =========== ========== ========== - -------------------------------------------------------------------------------- Table 7 Distribution of Assets and Liabilities - -------------------------------------------------------------------------------- As of December 31, -------------------------------- 2000 1999 1998 -------- -------- --------- Assets Interest-earning assets Net loans 81% 72% 72% Securities available for sale 8 13 14 Securities held for maturity 5 6 4 Short term investments 1 3 3 -------- -------- --------- Total interest-earning assets 95 94 93 Noninterest-earning assets Cash and due from banks 2 3 3 Premises and equipment 2 1 2 Other assets 1 2 2 -------- -------- --------- Total assets 100% 100% 100% ======== ======== ========= Liabilities and shareholders' equity Demand deposits - noninterest bearing 8% 7% 8% Savings, NOW, and money market deposits 28 29 31 Time deposits of $100,000 or more 15 13 12 Other time deposits 33 31 33 -------- -------- --------- Total deposits 84 80 84 Borrowings 3 7 1 Accrued expenses and other liabilities 1 1 1 -------- -------- --------- Total liabilities 88 88 86 Shareholders' equity 12 12 14 -------- -------- --------- Total liabilities and shareholders' equity 100% 100% 100% ======== ======== ========= - -------------------------------------------------------------------------------- Table 8 Securities Portfolio Composition - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 9 Securities Portfolio Maturity Schedule - -------------------------------------------------------------------------------- (1) Yields on tax-exempt investments have been adjusted to a taxable equivalent basis using a 34% tax rate. |
- -------------------------------------------------------------------------------- Table 12 Nonperforming Assets - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 13 Allocation of the Allowance for Loan Losses - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 14 Loan Loss and Recovery Experience - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 15 Average Deposits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 16 Maturities of Time Deposits of $100,000 or More - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 17 Interest Rate Sensitivity Analysis - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 18 Market Risk Sensitive Instruments - -------------------------------------------------------------------------------- (1) Tax-exempt securities are reflected at a tax-equivalent basis using a 34% tax rate. |
The following table reconciles the beginning and ending balances of the Pension Plan's benefit obligation, as computed by the Company's independent actuarial consultants: (In thousands) 2000 1999 1998 ------- ------- ------- Benefit obligation at beginning of year $ 3,879 4,052 3,254 Service cost 260 282 201 Interest cost 324 277 235 Actuarial loss (gain) 392 (609) 473 Benefits paid (151) (123) (111) ------- ------- ------- Benefit obligation at end of year $ 4,704 3,879 4,052 ======== ======= ======= The following table reconciles the beginning and ending balances of the Pension Plan's assets: (In thousands) 2000 1999 1998 ------- ------- ------- Plan assets at beginning of year $ 4,479 3,582 2,994 Actual return on plan assets (323) 804 504 Employer contributions - 216 195 Benefits paid (151) (123) (111) ------- ------- ------- Plan assets at end of year $ 4,005 4,479 3,582 ======== ======= ======= The following table presents information regarding the funded status of the Pension Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2000 1999 -------- ------- Funded status $ (699) 600 Unrecognized net actuarial (gain) loss 260 (875) Unrecognized prior service cost 544 650 Unrecognized transition obligation 55 57 -------- ------- Prepaid pension cost $ 160 432 ======= === Net pension cost for the Pension Plan included the following components for the years ended December 31, 2000, 1999 and 1998: (In thousands) 2000 1999 1998 ------ ------ ------ Service cost - benefits earned during the period $ 260 282 201 Interest cost on projected benefit obligation 324 277 235 Expected return on plan assets (417) (340) (239) Net amortization and deferral 105 111 107 ------ ------ ------ Net periodic pension cost $ 272 330 304 ====== ====== ====== Supplemental Executive Retirement Plan. |
The following table reconciles the beginning and ending balances of the SERP Plan's benefit obligation, as computed by the Company's independent actuarial consultants: (In thousands) 2000 1999 1998 -------- ---------- --------- Benefit obligation at beginning of year $ 508 442 347 Effects of change in census information - - 34 Service cost 25 30 12 Interest cost 52 33 27 Actuarial loss 196 19 22 Benefits paid (16) (16) - -------- ---------- --------- Benefit obligation at end of year $ 765 508 442 ======== ========== ========= The following table presents information regarding the funded status of the SERP Plan, the amounts not recognized in the consolidated balance sheets, and the amounts recognized in the consolidated balance sheets: (In thousands) 2000 1999 ---------- --------- Funded status $ (765) (508) Unrecognized net actuarial (gain)/loss 122 (71) Unrecognized prior service cost 253 290 Adjustment for minimum liability (118) (111) ---------- --------- Accrued pension cost $ (508) (400) ========== ========= Net pension cost for the SERP Plan included the following components for the years ended December 31, 2000, 1999 and 1998: The following assumptions were used in determining the actuarial information for the Retirement Plan and the SERP Plan for the years ended December 31, 2000, 1999 and 1998: Included in intangible assets at December 31, 2000 and 1999 is approximately $138,000 that has been recognized in connection with the accrual of the additional minimum liability for the SERP Plan. |
Rabe, Jr. Director Director February 20, 2001 February 20, 2001 /s/ John F. Burns /s/ Edward T. Taws - ----------------- ------------------ John F. Burns Edward T. Taws Director Director February 20, 2001 February 20, 2001 /s/ Felton J. Capel /s/ Frederick H. Taylor ------------------ ----------------------- Felton J. Capel Frederick H. Taylor Director Director February 20, 2001 February 20, 2001 /s/ Jesse S. Capel /s/ Virginia C. Thomasson ----------------- ------------------------- Jesse S. Capel Virginia C. Thomasson Director Director February 20, 2001 February 20, 2001 /s/ James H. Garner /s/ Goldie H. Wallace ------------------ --------------------- James H. Garner Goldie H. Wallace Director Director February 20, 2001 February 20, 2001 /s/ Frank G. Hardister /s/ A. Jordan Washburn --------------------- ---------------------- Frank G. Hardister A. Jordan Washburn Director Director February 20, 2001 February 20, 2001 /s/ George R. Perkins /s/ John C. Willis - --------------------- ------------------ George R. Perkins John C. Willis Director Director February 20, 2001 February 20, 2001 EXHIBIT CROSS REFERENCE INDEX * Incorporated herein by reference. |
Executive Officers /s/ James H. Garner ------------------- James H. Garner President, Chief Executive Officer and Treasurer /s/ Anna G. Hollers /s/ Eric P. Credle ------------------- ------------------ Anna G. Hollers Eric P. Credle Executive Vice President Senior Vice President Executive Secretary Chief Financial Officer March 21, 2000 March 21, 2000 Board of Directors /s/ Jack D. Briggs /s/ Edward T. Taws ------------------ ------------------ Jack D. Briggs Edward T. Taws Chairman of the Board Director Director March 21, 2000 March 21, 2000 /s/ David L. Burns /s/ Frederick H. Taylor ------------------ ----------------------- David L. Burns Frederick H. Taylor Director Director March 21, 2000 March 21, 2000 /s/ Jesse S. Capel /s/ Goldie H. Wallace ----------------- --------------------- Jesse S. Capel Goldie H. Wallace Director Director March 21, 2000 March 21, 2000 /s/ George R. Perkins /s/ A. Jordan Washburn --------------------- ---------------------- George R. Perkins A. Jordan Washburn Director Director March 21, 2000 March 21, 2000 /s/ G.T. |
Copy of the amendment to the Bylaws replacing Section 3.04 of Article 3 76 3.b.iii Copy of the amendment to the Bylaws amending Section 3.19 of Article Three 77 10.a Data processing Agreement by and between Bank of Montgomery (First Bank) and Montgomery Data Services, Inc. * 10.b First Bank Salary and Incentive Plan, as amended * 10.c First Bancorp Savings Plus and Profit Sharing Plan (401(k) savings incentive plan and trust), as amended * 10.d Directors and Officers Liability Insurance Policy of First Bancorp * 10.e Indemnification Agreement between the Company and its Directors and Officers * 10.f First Bancorp Employees' Pension Plan * 10.g First Bancorp Senior Management Supplemental Executive Retirement Plan * 10.h First Bancorp Senior Management Split-Dollar Life Insurance Agreements between the Company and the Executive Officers * 10.i First Bancorp 1994 Stock Option Plan * 10.j Severance Agreement between the Company and Patrick A. Meisky * 10.k Amendment to the First Bancorp Savings Plus and Profit Sharing Plan * 10.l Employment Agreement between the Company and James H. Garner * 10.m Employment Agreement between the Company and Anna G. Hollers * 10.n Employment Agreement between the Company and Teresa C. Nixon * 10.o First Amendment to the First Bancorp Supplemental Executive Retirement Plan * 10.p Employment Agreement between the Company and Eric P. Credle * 10.q Amendments 1 and 2 to the Company's 1994 Stock Option Plan * 10.r Employment Agreement between the Company and David G. Grigg 78 10.s Definitive merger agreement with First Savings Bancorp, Inc. * 21 List of Subsidiaries of Registrant * 23.a Consent of Independent Auditors of Registrant, KPMG LLP 83 27 Financial Data Schedule pursuant to Article 9 of Regulation S-X 84 * Incorporated herein by reference. |
Executive Officers ------------------ /s/ James H. Garner ------------------- James H. Garner President, Chief Executive Officer and Treasurer /s/ Anna G. Hollers /s/ Eric P. Credle ------------------- ------------------ Anna G. Hollers Eric P. Credle Executive Vice President Senior Vice President Executive Secretary Chief Financial Officer March 16, 1999 March 16, 1999 Board of Directors ------------------ /s/ Jack D. Briggs /s/ Edward T. Taws ------------------ ------------------ Jack D. Briggs Edward T. Taws Chairman of the Board Director Director March 16, 1999 March 16, 1999 /s/ David L. Burns /s/ Frederick H. Taylor ------------------ ----------------------- David L. Burns Frederick H. Taylor Director Director March 16, 1999 March 16, 1999 /s/ Jesse S. Capel /s/ Goldie H. Wallace ------------------ --------------------- Jesse S. Capel Goldie H. Wallace Director Director March 16, 1999 March 16, 1999 /s/ George R. Perkins /s/ A. Jordan Washburn --------------------- ---------------------- George R. Perkins A. Jordan Washburn Director Director March 16, 1999 March 16, 1999 /s/ G.T. |
Executive Officers /s/ James H. Garner ------------------ James H. Garner President, Chief Executive Officer and Treasurer /s/ Anna G. Hollers /s/ Eric P. Credle ------------------- ------------------ Anna G. Hollers Eric P. Credle Executive Vice President Vice President Executive Secretary Chief Financial Officer March 17, 1998 March 17, 1998 Board of Directors /s/ Jack D. Briggs /s/ Edward T. Taws ------------------ ------------------ Jack D. Briggs Edward T. Taws Chairman of the Board Director Director March 17, 1998 March 17, 1998 /s/ David L. Burns /s/ Frederick H. Taylor ------------------ ----------------------- David L. Burns Frederick H. Taylor Director Director March 17, 1998 March 17, 1998 /s/ Jesse S. Capel /s/ Goldie H. Wallace ------------------ --------------------- Jesse S. Capel Goldie H. Wallace Director Director March 17, 1998 March 17, 1998 /s/ George R. Perkins /s/ A. Jordan Washburn --------------------- ---------------------- George R. Perkins A. Jordan Washburn Director Director March 17, 1998 March 17, 1998 /s/ G.T. |
Rabe, Jr. John C. Willis Director Director March 17, 1998 March 17, 1998 /s/ John J. Russell ------------------- John J. Russell Director March 17, 1998 EXHIBIT CROSS REFERENCE INDEX Exhibit 3.a.i Copy of Articles of Incorporation of the Registrant * 3.a.ii Copy of the amendment to Articles of Incorporation 3.b.i Copy of the Bylaws of the Registrant * 10.a Data processing Agreement by and between Bank of Montgomery (First Bank) and Montgomery Data Services, Inc. * 10.b First Bank Salary and Incentive Plan, as amended * 10.c First Bancorp Savings Plus and Profit Sharing Plan (401(k) savings incentive plan and trust), as amended * 10.d Directors and Officers Liability Insurance Policy of First Bancorp * 10.e Indemnification Agreement between the Company and its Directors and Officers * 10.f First Bancorp Employees' Pension Plan * 10.g First Bancorp Senior Management Supplemental Executive Retirement Plan * 10.h First Bancorp Senior Management Split-Dollar Life Insurance Agreements between the Company and the Executive Officers * 10.i First Bancorp 1994 Stock Option Plan * 10.j Severance Agreement between the Company and James A. Gunter * 10.k Severance Agreement between the Company and Patrick A. Meisky * 10.l Amendment to the First Bancorp Savings Plus and Profit Sharing Plan (401(k) savings incentive plan and trust) * 10.m Amendment to the First Bancorp Savings Plus and Profit Sharing Plan * 10. n Purchase and Assumption Agreement between First Union National Bank and First Bank * 21 List of Subsidiaries of Registrant * 23.1 Consent of Independent Auditors of Registrant, KPMG Peat Marwick LLP 27 Financial Data Schedule pursuant to Article 9 of Regulation S-X * Incorporated herein by reference. |
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ● our ability to obtain additional funding to develop our product candidates; ● our ability to repay existing debt in accordance with its terms; ● delays in the commencement, enrollment and timing of clinical trials; ● the success of our product candidates through all phases of clinical development; ● any delays in regulatory review and approval of product candidates in clinical development; ● our ability to obtain and maintain regulatory approval for our product candidates in the U.S. and foreign jurisdictions; ● potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ● our dependence on third-party contract manufacturing organizations to supply or manufacture our products; ● our dependence on contract research organizations to conduct our clinical trials; ● our ability to establish or maintain collaborations, licensing or other arrangements; ● market acceptance of our product candidates; ● our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ● competition from existing products or new products that may emerge; ● the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ● our ability to discover and develop additional product candidates; ● our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ● our ability to attract and retain key personnel to manage our business effectively; ● our ability to build our finance infrastructure and improve our accounting systems and controls; ● potential product liability claims; ● potential liabilities associated with hazardous materials; and ● our ability to obtain and maintain adequate insurance policies. |
If any of our product candidates cause serious adverse events or undesirable side effects: ● regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; ● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ● we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ● we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ● we may be required to limit the patients who can receive the product; ● we may be subject to limitations on how we promote the product; ● sales of the product may decrease significantly; ● regulatory authorities may require us to take our approved product off the market; ● we may be subject to litigation or product liability claims; and ● our reputation may suffer. |
The market price of our securities, like that of many other research and development public pharmaceutical and biotechnology companies, has been highly volatile and the price of our common stock and warrants may be volatile in the future due to a wide variety of factors, including: ● announcements by us or others of results of pre-clinical testing and clinical trials; ● announcements of technological innovations, more important bio-threats or new commercial therapeutic products by us, our collaborative partners or our present or potential competitors; ● failure of our common stock or warrants to continue to be listed or quoted on a national exchange or market system, such as The Nasdaq Stock Market (“NASDAQ”) or NYSE Amex LLC; ● our quarterly operating results and performance; ● developments or disputes concerning patents or other proprietary rights; ● acquisitions; ● litigation and government proceedings; ● adverse legislation; ● changes in government regulations; ● our available working capital; ● economic and other external factors; ● general market conditions. |
We plan to submit additional contract and grant applications for further support of our programs with various funding agencies; ● We have continued to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expect to continue to do so for the foreseeable future; ● We will continue to pursue Net Operating Loss (“NOL”) sales in the state of New Jersey pursuant to its Technology Business Tax Certificate Transfer Program if the program is available; ● We plan to pursue potential partnerships for pipeline programs; however, there can be no assurances that we can consummate such transactions; ● We have up to $10.0 million remaining available from the loan and security agreement with Pontifax Medison Finance as of March 30, 2021, which includes an immediately available $5 million line of credit and a $5 million late withdrawal loan that is contingent upon the initial filing of the NDA for CTCL; ● We have up to $2.1 million remaining from the FBR Sales Agreement as of March 30, 2021 under the prospectus supplement updated August 28, 2020; and ● We may seek additional capital in the private and/or public equity markets, pursue government contracts and grants as well as business development activities, to continue our operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships. |
Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ● our ability to obtain additional funding to develop our product candidates; ● delays in the commencement, enrollment and timing of clinical trials; ● the success of our product candidates through all phases of clinical development; ● any delays in regulatory review and approval of product candidates in clinical development; ● our ability to obtain and maintain regulatory approval for our product candidates in the U.S. and foreign jurisdictions; ● potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ● our dependence on third-party contract manufacturing organizations to supply or manufacture our products; ● our dependence on contract research organizations to conduct our clinical trials; ● our ability to establish or maintain collaborations, licensing or other arrangements; ● market acceptance of our product candidates; ● our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ● competition from existing products or new products that may emerge; ● the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ● our ability to discover and develop additional product candidates; ● our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ● our ability to attract and retain key personnel to manage our business effectively; ● our ability to build our finance infrastructure and improve our accounting systems and controls; ● potential product liability claims; ● potential liabilities associated with hazardous materials; and ● our ability to obtain and maintain adequate insurance policies. |
If any of our product candidates cause serious adverse events or undesirable side effects: ● regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; ● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ● we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ● we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ● we may be required to limit the patients who can receive the product; ● we may be subject to limitations on how we promote the product; ● sales of the product may decrease significantly; ● regulatory authorities may require us to take our approved product off the market; ● we may be subject to litigation or product liability claims; and ● our reputation may suffer. |
The market price of our securities, like that of many other research and development public pharmaceutical and biotechnology companies, has been highly volatile and the price of our common stock and warrants may be volatile in the future due to a wide variety of factors, including: ● announcements by us or others of results of pre-clinical testing and clinical trials; ● announcements of technological innovations, more important bio-threats or new commercial therapeutic products by us, our collaborative partners or our present or potential competitors; ● failure of our common stock or warrants to continue to be listed or quoted on a national exchange or market system, such as The Nasdaq Stock Market (“NASDAQ”) or NYSE Amex LLC; ● our quarterly operating results and performance; ● developments or disputes concerning patents or other proprietary rights; ● acquisitions; ● litigation and government proceedings; ● adverse legislation; ● changes in government regulations; ● our available working capital; ● economic and other external factors; ● general market conditions. |
Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ●pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; ●provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors; and ●provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
With the government contract from the National Institute of Allergy and Infectious Diseases (“NIAID”), we will attempt to advance the development of RiVax® to protect against exposure to ricin toxin.. An outline of our business strategy follows: ●Following positive interim analysis, complete enrollment and report final results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Continue enrollment of the pivotal Phase 3 clinical trial of SGX942 for the treatment of oral mucositis in head and neck cancer; ●Continue development of RiVax® in combination with our ThermoVax® technology to develop a new heat stable vaccine in biodefense with NIAID funding support; ●Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ●Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies; and ●Acquire or in-license new clinical-stage compounds for development. |
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ●our ability to obtain additional funding to develop our product candidates; ●delays in the commencement, enrollment and timing of clinical trials; ●the success of our product candidates through all phases of clinical development; ●any delays in regulatory review and approval of product candidates in clinical development; ●our ability to obtain and maintain regulatory approval for our product candidates in the United States and foreign jurisdictions; ●potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ●our dependence on third-party contract manufacturing organizations to supply or manufacture our products; ●our dependence on contract research organizations to conduct our clinical trials; ●our ability to establish or maintain collaborations, licensing or other arrangements; ●market acceptance of our product candidates; ●our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ●competition from existing products or new products that may emerge; ●the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ●our ability to discover and develop additional product candidates; ●our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ●our ability to attract and retain key personnel to manage our business effectively; ●our ability to build our finance infrastructure and improve our accounting systems and controls; ●potential product liability claims; ●potential liabilities associated with hazardous materials; and ●our ability to obtain and maintain adequate insurance policies. |
If any of our product candidates cause serious adverse events or undesirable side effects: ●regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; ●regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ●we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ●we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ●we may be required to limit the patients who can receive the product; ●we may be subject to limitations on how we promote the product; ●sales of the product may decrease significantly; ●regulatory authorities may require us to take our approved product off the market; ●we may be subject to litigation or product liability claims; and ●our reputation may suffer. |
The market price of our securities, like that of many other research and development public pharmaceutical and biotechnology companies, has been highly volatile and the price of our common stock and warrants may be volatile in the future due to a wide variety of factors, including: ●announcements by us or others of results of pre-clinical testing and clinical trials; ●announcements of technological innovations, more important bio-threats or new commercial therapeutic products by us, our collaborative partners or our present or potential competitors; ●failure of our common stock or warrants to continue to be listed or quoted on a national exchange or market system, such as The Nasdaq Stock Market (“NASDAQ”) or NYSE Amex LLC; ●our quarterly operating results and performance; ●developments or disputes concerning patents or other proprietary rights; ●acquisitions; ●litigation and government proceedings; ●adverse legislation; ●changes in government regulations; ●our available working capital; ●economic and other external factors; ●general market conditions. |
An outline of our business strategy follows: ●Following positive interim analysis, complete enrollment and report final results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Continue enrollment of the pivotal Phase 3 clinical trial of SGX942 for the treatment of oral mucositis in head and neck cancer; ●Continue development of RiVax® in combination with our ThermoVax® technology to develop a new heat stable vaccine in biodefense with NIAID funding support; ●Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ●Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies; and ●Acquire or in-license new clinical-stage compounds for development.. Our Product Candidates in Development The following tables summarize our product candidates under development: BioTherapeutic Product Candidates Vaccine Thermostability Platform** BioDefense Products** **Contingent upon continued government contract/grant funding or other funding source. |
Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ·pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ·provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
An outline of our business strategy follows: ●Complete enrollment and report preliminary results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Continue site initiation and enrollment of the pivotal Phase 3 trial of SGX942 for the treatment of oral mucositis in head and neck cancer patients; ●Continue development of RiVax® in combination with our ThermoVax® technology, to develop a new heat stable vaccine in biodefense with NIAID funding support; ●Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS contingent upon government funding support; ●Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ●Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies; and ●Acquire or in-license new clinical-stage compounds for development. |
Our Product Candidates in Development The following tables summarize our product candidates under development: BioTherapeutic Product Candidates Soligenix Product Candidate Therapeutic Indication Stage of Development SGX301 Cutaneous T-Cell Lymphoma Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 clinical trial initiated in December 2015, with an interim analysis anticipated in the second half of 2018 and final results expected in the first half of 2019 SGX942 Oral Mucositis in Head and Neck Cancer Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety also reported; Phase 3 clinical trial initiated July 2017, with interim analysis anticipated in the first half of 2019 and final results expected in the second half of 2019 SGX203** Pediatric Crohn’s Disease Phase 1/2 clinical trial completed; efficacy data, pharmacokinetic (PK)/pharmacodynamic (PD) profile and safety profile demonstrated; Phase 3 clinical trial planned for the second half of 2018, contingent upon additional funding and/or partnership SGX201** Acute Radiation Enteritis Phase 1/2 clinical trial completed; safety profile and preliminary efficacy demonstrated Vaccine Thermostability Platform** Soligenix Product Candidate Indication Stage of Development ThermoVax® Thermostability of aluminum adjuvanted vaccines Pre-clinical BioDefense Products** Soligenix Product Candidate Indication Stage of Development RiVax® Vaccine against Ricin Toxin Poisoning Phase 1a and 1b trials completed, safety and neutralizing antibodies for protection demonstrated; Phase 1/2 trial planned for the first half of 2018 OrbeShield® Therapeutic against GI ARS Pre-clinical SGX943 Therapeutic Emerging Infectious Disease Pre-clinical ** Contingent upon continued government contract/grant funding or other funding source. |
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ● our ability to obtain additional funding to develop our product candidates; ● delays in the commencement, enrollment and timing of clinical trials; ● the success of our product candidates through all phases of clinical development; ● any delays in regulatory review and approval of product candidates in clinical development; ● our ability to obtain and maintain regulatory approval for our product candidates in the United States and foreign jurisdictions; ● potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ● our dependence on third-party contract manufacturing organizations to supply or manufacture our products; ● our dependence on contract research organizations to conduct our clinical trials; ● our ability to establish or maintain collaborations, licensing or other arrangements; ● market acceptance of our product candidates; ● our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ● competition from existing products or new products that may emerge; ● the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ● our ability to discover and develop additional product candidates; ● our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ● our ability to attract and retain key personnel to manage our business effectively; ● our ability to build our finance infrastructure and improve our accounting systems and controls; ● potential product liability claims; ● potential liabilities associated with hazardous materials; and ● our ability to obtain and maintain adequate insurance policies. |
If any of our product candidates cause serious adverse events or undesirable side effects: ● regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; ● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ● we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ● we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ● we may be required to limit the patients who can receive the product; ● we may be subject to limitations on how we promote the product; ● sales of the product may decrease significantly; ● regulatory authorities may require us to take our approved product off the market; ● we may be subject to litigation or product liability claims; and ● our reputation may suffer. |
An outline of our business strategy follows: ● Complete enrollment and report preliminary results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ● Continue site initiation and enrollment of the pivotal Phase 3 trial of SGX942 for the treatment of oral mucositis in head and neck cancer patients; ● Continue development of RiVax® in combination with our ThermoVax® technology to develop a new heat stable vaccine in biodefense with NIAID funding support; ● Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS contingent upon government funding support; ● Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ● Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies; and ● Acquire or in-license new clinical-stage compounds for development. |
Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ●pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ●provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ●provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
Management’s business strategy can be outlined as follows: ● Complete enrollment and report preliminary results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ● Continue site initiation and enrollment of the pivotal Phase 3 trial of SGX942 for the treatment of oral mucositis in head and neck cancer patients; ● Continue development of RiVax® in combination with our ThermoVax® technology to develop a new heat stable vaccine in biodefense with NIAID funding support; ● Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS contingent upon government funding support; ● Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ● Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies; and ● Acquire or in-license new clinical-stage compounds for development. |
An outline of our business strategy follows: ●Complete enrollment and report preliminary results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Obtain agreement from the United States Food and Drug Administration (the “FDA”) on a pivotal Phase 3 protocol of SGX942 for the treatment of oral mucositis in head and neck cancer patients and initiate the trial; ●Initiate a pivotal Phase 3 clinical trial of SGX203 for the treatment of pediatric Crohn’s disease; ●Continue development of RiVax™ in combination with our ThermoVax® technology, to develop new heat stable vaccines in biodefense with NIAID funding support; ●Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS contingent upon government funding support; ●Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ●Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies; and ●Acquire or in-license new clinical-stage compounds for development. |
Our Product Candidates in Development The following tables summarize our product candidates under development: BioTherapeutic Product Candidates Soligenix Product Candidate Therapeutic Indication Stage of Development SGX301 Cutaneous T-Cell Lymphoma Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 clinical trial initiated in the second half of 2015, with data expected in the second half of 2017 SGX942 Oral Mucositis in Head and Neck Cancer Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety reported in 2016; seek to obtain FDA agreement on the Phase 3 protocol and initiate the trial in the first half of 2017, with data expected in the second half of 2018 SGX203** Pediatric Crohn’s disease Phase 1/2 clinical trial completed June 2013, efficacy data, pharmacokinetic (PK)/pharmacodynamic (PD) profile and safety profile demonstrated; Phase 3 clinical trial planned for the second half of 2017, with data expected in the second half of 2019 SGX201** Acute Radiation Enteritis Phase 1/2 clinical trial complete; safety profile and preliminary efficacy demonstrated Vaccine Thermostability Platform** Soligenix Product Candidate Indication Stage of Development ThermoVax® Thermostability of aluminum adjuvanted vaccines Pre-clinical BioDefense Products** Soligenix Product Candidate Indication Stage of Development RiVax™ Vaccine against Ricin Toxin Poisoning Phase 1b trial complete, safety and neutralizing antibodies for protection demonstrated; Phase 1/2 trial planned for the first half of 2018 OrbeShield® Therapeutic against GI ARS Pre-clinical SGX943 Melioidosis Pre-clinical ** Contingent upon continued government contract/grant funding or other funding source. |
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ●our ability to obtain additional funding to develop our product candidates; ●delays in the commencement, enrollment and timing of clinical trials; ●the success of our product candidates through all phases of clinical development; ●any delays in regulatory review and approval of product candidates in clinical development; ●our ability to obtain and maintain regulatory approval for our product candidates in the United States and foreign jurisdictions; ●potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ●our dependence on third-party contract manufacturing organizations to supply or manufacture our products; ●our dependence on contract research organizations to conduct our clinical trials; ●our ability to establish or maintain collaborations, licensing or other arrangements; ●market acceptance of our product candidates; ●our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ●competition from existing products or new products that may emerge; ●the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ●our ability to discover and develop additional product candidates; ●our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ●our ability to attract and retain key personnel to manage our business effectively; ●our ability to build our finance infrastructure and improve our accounting systems and controls; ●potential product liability claims; ●potential liabilities associated with hazardous materials; and ●our ability to obtain and maintain adequate insurance policies. |
If any of our product candidates cause serious adverse events or undesirable side effects: ●regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; ●regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ●we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ●we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ●we may be required to limit the patients who can receive the product; ●we may be subject to limitations on how we promote the product; ●sales of the product may decrease significantly; ●regulatory authorities may require us to take our approved product off the market; ●we may be subject to litigation or product liability claims; and ●our reputation may suffer. |
An outline of our business strategy follows: ●Complete enrollment and report preliminary results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Obtain agreement from the United States Food and Drug Administration (the “FDA”) on a pivotal Phase 3 protocol of SGX942 for the treatment of oral mucositis in head and neck cancer patients and initiate the trial; ●Initiate a pivotal Phase 3 clinical trial of SGX203 for the treatment of pediatric Crohn’s disease; ●Continue development of RiVax™ in combination with our ThermoVax® technology to develop new heat stable vaccines in biodefense with NIAID funding support; ●Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS contingent upon government funding support; ●Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ●Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies; and ●Acquire or in-license new clinical-stage compounds for development. |
Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ●pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ●provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ●provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
The Schedule 13D indicates that (a) Mr. Cavazza has sole voting and dispositive power with respect to (i) 5,954 shares held by Mr. Paolo Cavazza and (ii) 16,415 shares of common stock and warrants to purchase 8,781 shares held by SINAF SA, and (b) Mr. Cavazza, Sigma-Tau Finanziaria S.p.A., Sigma-Tau International S.A., Sigma-Tau America S.A. and Sigma-Tau Pharmaceuticals, Inc. have shared voting and dispositive power with respect to 271,140 shares of common stock and warrants to purchase 35,707 shares of common stock exercisable within 60 days of the date of March 17, 2017 held by Sigma-Tau Pharmaceuticals, Inc. Sigma-Tau Pharmaceuticals, Inc. is a direct wholly-owned subsidiary of Sigma-Tau America S.A., which is a direct wholly-owned subsidiary of Sigma-Tau International S.A., which is a direct wholly-owned subsidiary of Sigma-Tau Finanziaria S.p.A. Mr. Paolo Cavazza directly and indirectly owns 38% of Sigma-Tau Finanziaria S.p.A. SINAF SA is an indirect wholly owned subsidiary of Aptafin S.p.A., which is owned by Mr. Paolo Cavazza and members of his family. |
Management’s business strategy can be outlined as follows: ●Complete enrollment and report preliminary results in the pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Obtain agreement from the FDA on a pivotal Phase 3 protocol of SGX942 for the treatment of oral mucositis in head and neck cancer patients and initiate the trial; ●Initiate a pivotal Phase 3 clinical trial of SGX203 for the treatment of pediatric Crohn’s disease; ●Continue development of RiVax™ in combination with the Company’s ThermoVax® technology, to develop new heat stable vaccines in biodefense with NIAID support; ●Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS contingent upon government funding support; ●Continue to apply for and secure additional government funding for each of the Company’s BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ●Pursue business development opportunities for the Company’s pipeline programs, as well as explore merger/acquisition strategies; and ●Acquire or in-license new clinical-stage compounds for development. |
The following items represent transactions in the Company’s common stock for the year ended December 31, 2015: ●In February 2015, the Company issued 70,179 shares of common stock in connection with the exercise of stock warrants; ●In March 2015, the Company issued 48,200 shares of common stock in connection with the exercise of stock warrants; ●In March 2015, the Company issued 15,301 shares of common stock pursuant to the Lincoln Park facility; ●In April 2015, the Company issued 35,679 shares of common stock in connection with the exercise of stock warrants; ●In April 2015, the Company issued 812 shares of common stock in connection with the exercise of stock options; ●In May 2015, the Company issued 7,636 shares of common stock pursuant to the Lincoln Park facility; ●In June 2015, the Company issued 38,425 shares of common stock pursuant to the Lincoln Park facility; ●In June 2015, the Company issued 19,871 shares of common stock in connection with the exercise of stock warrants; ●In July 2015, the Company issued 714 shares of common stock in connection with the exercise of stock warrants; ●In September 2015, the Company issued 60,954 shares of common stock pursuant to an Equity Line Purchase Agreement; ●In September 2015, the Company issued 2,500 shares of common stock in connection with the exercise of stock options; ●In October 2015, the Company issued 15,184 shares of common stock pursuant to the Lincoln Park facility; ●In November 2015, the Company issued 7,589 shares of common stock pursuant to the Lincoln Park facility; ●In December 2015, the Company issued 393,623 shares of common stock pursuant to an Equity Line Purchase Agreement; ●In nine separate transactions, the Company issued 16,628 fully vested shares of common stock as partial consideration for services performed Equity Line Purchase Agreement On July 29, 2015, the Company entered into the Equity Line Purchase Agreements and registration rights agreements with accredited institutional investors, Kodiak Capital Group, LLC (“Kodiak Capital”), Kingsbrook Opportunities Master Fund LP (“Kingsbrook”) and River North Equity, LLC (“River North” and, together with Kodiak Capital and Kingsbrook, the “Investors”). |
Stock Option Plans and Warrants to Purchase Common Stock Stock Option Plans The Amended and Restated 2005 Equity Incentive Plan was replaced by the 2015 Equity Incentive Plan (“2015 Plan”), approved in June 2015, with 300,000 shares available under the 2015 Plan, and is divided into four separate equity programs: 1)the Discretionary Option Grant Program, under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of common stock, 2)the Salary Investment Option Grant Program, under which eligible employees may elect to have a portion of their base salary invested each year in options to purchase shares of common stock, 3)the Automatic Option Grant Program, under which eligible nonemployee Board members will automatically receive options at periodic intervals to purchase shares of common stock, and 4)the Director Fee Option Grant Program, under which non-employee Board members may elect to have all, or any portion, of their annual retainer fee otherwise payable in cash applied to a special option grant. |
An outline for our business strategy follows: ●Complete enrollment and report preliminary results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Initiate a Phase 3 clinical trial of SGX203, for the treatment of pediatric Crohn’s disease; ●Continue to collect the long-term follow-up safety data from the SGX942 Phase 2 proof-of-concept study in the treatment of oral mucositis in head and neck cancer patients and publish the findings from this study; ●Obtain FDA agreement on a pivotal Phase 2b/3 protocol of SGX942 in the treatment of oral mucositis in head and neck cancer patients; ●Continue development of RiVax™ in combination with our ThermoVax® technology, to develop new heat stable vaccines in biodefense and infectious diseases with the potential to collaborate and/or partner with other companies in these areas; ●Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS; ●Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ●Acquire or in-license new clinical-stage compounds for development; and ●Explore other business development and merger/acquisition strategies. |
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ●our ability to obtain additional funding to develop our product candidates; ●delays in the commencement, enrollment and timing of clinical trials; ●the success of our product candidates through all phases of clinical development; ●any delays in regulatory review and approval of product candidates in clinical development; ●our ability to obtain and maintain regulatory approval for our product candidates in the United States and foreign jurisdictions; ●potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ●our dependence on third-party contract manufacturing organizations (“CMOs”) to supply or manufacture our products; ●our dependence on contract research organizations to conduct our clinical trials; ●our ability to establish or maintain collaborations, licensing or other arrangements; ●market acceptance of our product candidates; ●our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ●competition from existing products or new products that may emerge; ●the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ●our ability to discover and develop additional product candidates; ●our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ●our ability to attract and retain key personnel to manage our business effectively; ●our ability to build our finance infrastructure and improve our accounting systems and controls; ●potential product liability claims; ●potential liabilities associated with hazardous materials; and ●our ability to obtain and maintain adequate insurance policies. |
If any of our product candidates cause serious adverse events or undesirable side effects: ●regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; ●regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ●we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ●we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ●we may be required to limit the patients who can receive the product; ●we may be subject to limitations on how we promote the product; ●sales of the product may decrease significantly; ●regulatory authorities may require us to take our approved product off the market; ●we may be subject to litigation or product liability claims; and ●our reputation may suffer. |
An outline for our business strategy follows: ●Complete enrollment and report preliminary results in our pivotal Phase 3 clinical trial of SGX301 for the treatment of CTCL; ●Initiate a Phase 3 clinical trial of SGX203, for the treatment of pediatric Crohn’s disease; ●Continue to collect the long-term follow-up safety data from the SGX942 Phase 2 proof-of-concept study in the treatment of oral mucositis in head and neck cancer patients and publish the findings from the SGX942 Phase 2 proof-of-concept study in the treatment of oral mucositis in head and neck cancer patients; ●Obtain FDA agreement on a pivotal Phase 2b/3 protocol of SGX942 in the treatment of oral mucositis in head and neck cancer patients; ●Continue development of RiVax™ in combination with our ThermoVax® technology, to develop new heat stable vaccines in biodefense and infectious diseases with the potential to collaborate and/or partner with other companies in these areas; ● Advance the preclinical and manufacturing development of OrbeShield® as a biodefense medical countermeasure for the treatment of GI ARS; ● Continue to apply for and secure additional government funding for each of our BioTherapeutics and Vaccines/BioDefense programs through grants, contracts and/or procurements; ● Acquire or in-license new clinical-stage compounds for development; and ● Explore other business development and merger/acquisition strategies. |
Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ●pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ●provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ●provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
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