Form 20-F x
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Form 40-F o |
Yes o
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No x |
Page
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Part
I – FINANCIAL INFORMATION
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Item 1. Condensed
Consolidated Financial Statements (unaudited)
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2
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3
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4
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5
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6
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7
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10
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PART
II – OTHER INFORMATION
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12
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12
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15
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Three
months ended June 30,
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||||||||
2009
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2010
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|||||||
Revenue:
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||||||||
License
and research revenue
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$ | 4,341 | $ | 3,305 | ||||
Product
sales and services
|
2,529 | 1,860 | ||||||
Other
revenues
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2,705 | 2,350 | ||||||
Total
revenue
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9,575 | 7,515 | ||||||
Costs
and expenses:
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||||||||
Cost
of goods and services sold
|
(1,891 | ) | (1,585 | ) | ||||
Research
and development
|
(8,014 | ) | (7,861 | ) | ||||
Selling,
general and administrative
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(3,287 | ) | (2,797 | ) | ||||
Total
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(13,192 | ) | (12,243 | ) | ||||
Loss
from operations
|
(3,617 | ) | (4,728 | ) | ||||
Interest
income net
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139 | 105 | ||||||
Foreign
exchange gain (loss)
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(74 | ) | 201 | |||||
Other
income
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2 | 85 | ||||||
Loss
before income taxes
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(3,550 | ) | (4,337 | ) | ||||
Income
tax benefit (expense)*
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- | 47 | ||||||
Net
loss
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$ | (3,550 | ) | $ | (4,290 | ) | ||
Loss
per share
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||||||||
Basic
loss per ordinary share
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$ | (0.15 | ) | $ | (0.18 | ) | ||
Diluted
loss per share
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$ | (0.15 | ) | $ | (0.18 | ) | ||
Weighted
average number of shares outstanding (in thousands) :
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||||||||
Basic
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24,220 | 24,408 | ||||||
Diluted
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24,220 | 24,408 | ||||||
*
Research tax credit reclassified in operational expenses for
2009
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Six months
ended June 30,
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||||||||
2009
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2010
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|||||||
Revenue:
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||||||||
License
and research revenue
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$ | 11,430 | $ | 6,746 | ||||
Product
sales and services
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4,951 | 4,165 | ||||||
Other
revenues
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5,248 | 4,691 | ||||||
Total
revenue
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21,629 | 15,602 | ||||||
Costs
and expenses:
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||||||||
Cost
of goods and services sold
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(3,941 | ) | (3,510 | ) | ||||
Research
and development
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(13,933 | ) | (15,122 | ) | ||||
Selling,
general and administrative
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(6,233 | ) | (5,728 | ) | ||||
Total
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(24,107 | ) | (24,360 | ) | ||||
Loss
from operations
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(2,478 | ) | (8,758 | ) | ||||
Interest
income net
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257 | 217 | ||||||
Foreign
exchange gain (loss)
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(148 | ) | 215 | |||||
Other
income
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9 | 88 | ||||||
Loss
before income taxes
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(2,360 | ) | (8,238 | ) | ||||
Income
tax benefit (expense)*
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- | (76 | ) | |||||
Net
loss
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$ | (2,360 | ) | $ | (8,314 | ) | ||
Loss
per share
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||||||||
Basic
loss per ordinary share
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$ | (0.10 | ) | $ | (0.34 | ) | ||
Diluted
loss per share
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$ | (0.10 | ) | $ | (0.34 | ) | ||
Weighted
average number of shares outstanding (in thousands) :
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||||||||
Basic
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24,213 | 24,375 | ||||||
Diluted
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24,213 | 24,375 | ||||||
*
Research tax credit reclassified in operational expenses for
2009
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ASSETS
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December
31,
2009
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June
30,
2010
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||||||
Current
assets:
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Cash
and cash equivalents
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$ | 8,716 | $ | 3,570 | ||||
Marketable
securities
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35,352 | 30,155 | ||||||
Accounts
receivable
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8,675 | 6,186 | ||||||
Inventory
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1,072 | 932 | ||||||
Research
and development tax credit receivable short term
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9,400 | 2,116 | ||||||
Prepaid
expenses and other current assets
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3,626 | 4,264 | ||||||
Total
current assets
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66,841 | 47,223 | ||||||
Property
and equipment, net
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24,759 | 20,438 | ||||||
Other
assets:
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||||||||
Research
and development tax credit receivable long term
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2,484 | 2,648 | ||||||
Other
long-term assets
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212 | 171 | ||||||
Total
other assets
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2,696 | 2,819 | ||||||
Total
assets
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$ | 94,296 | $ | 70,480 |
LIABILITIES
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Current
liabilities:
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Current
portion of long-term debt
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862 | 734 | ||||||
Current
portion of capital lease obligations
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33 | 30 | ||||||
Accounts
payable
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6,366 | 5,262 | ||||||
Current
portion of deferred revenue
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3,862 | 3,050 | ||||||
Advances
from customers
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851 | 691 | ||||||
Accrued
expenses
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6,318 | 4,994 | ||||||
Other
current liabilities
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4,604 | 3,717 | ||||||
Total
current liabilities
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22,896 | 18,478 | ||||||
Long-term
debt, less current portion
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2,944 | 2,815 | ||||||
Capital
lease obligations, less current portion
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66 | 40 | ||||||
Deferred
revenue, less current portion
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6,033 | 3,946 | ||||||
Other
long-term liabilities
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17,494 | 12,837 | ||||||
Total
long-term liabilities
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26,537 | 19,638 | ||||||
Commitments
and contingencies:
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- | - | ||||||
Shareholders'
equity:
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||||||||
Ordinary
shares: 24,342,600 issued and outstanding at December 31, 2009 and
24,422,600 at June 30, 2010 (shares authorised 29,450,340) at nominal
value of 0.122 euro
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3,540 | 3,553 | ||||||
Additional
paid-in capital
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198,498 | 200,577 | ||||||
Accumulated
deficit
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(171,644 | ) | (179,958 | ) | ||||
Accumulated
other comprehensive income (loss)
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14,469 | 8,192 | ||||||
Total
shareholders' equity
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44,863 | 32,364 | ||||||
Total
liabilities and shareholders' equity
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$ | 94,296 | $ | 70,480 |
Six
months ended June 30,
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||||||||
2009
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2010
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|||||||
Cash
flows from operating activities:
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||||||||
Net
income (loss)
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$ | (2,360 | ) | $ | (8,314 | ) | ||
Adjustments
to reconcile net income (loss)
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||||||||
to
net cash provided by (used in) operating activities:
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Depreciation
of property and equipment
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2,964 | 2,383 | ||||||
Gains
on sales of marketable securities
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(85 | ) | (41 | ) | ||||
Grants
recognized in other income and income from operations
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(782 | ) | (715 | ) | ||||
Stock
compensation expense
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2,837 | 1,606 | ||||||
Increase
(decrease) in cash from:
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||||||||
Accounts
receivable
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(1,386 | ) | 1,322 | |||||
Inventory
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(685 | ) | (5 | ) | ||||
Prepaid
expenses and other current assets
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(416 | ) | (689 | ) | ||||
Research
and development tax credit receivable
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7,512 | 5,692 | ||||||
Accounts
payable
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(1,345 | ) | 224 | |||||
Deferred
revenue
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5,409 | (1,560 | ) | |||||
Accrued
expenses
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556 | (467 | ) | |||||
Other
current liabilities
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950 | (195 | ) | |||||
Other
long-term assets and liabilities
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(1,279 | ) | (422 | ) | ||||
Net
cash provided by (used in) operating activities
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11,890 | (1,181 | ) | |||||
Cash
flows from investing activities:
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Purchases
of property and equipment
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(975 | ) | (2,110 | ) | ||||
Purchase
of marketable securities
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(85,358 | ) | (53,939 | ) | ||||
Proceeds
from sales of marketable securities
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59,320 | 53,830 | ||||||
Net
cash provided by (used in) investing activities
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(27,013 | ) | (2,219 | ) | ||||
Cash
flows from financing activities:
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||||||||
Prceeds
from loans or conditional grants
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- | 318 | ||||||
reimbursment
of loans or conditional grants
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(3,998 | ) | (1,879 | ) | ||||
Principal
payments on capital lease obligations
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(52 | ) | (15 | ) | ||||
Cash
proceeds from issuance of ordinary shares and warrants
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29 | 402 | ||||||
Net
cash provided by (used in) financing activities
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(4,021 | ) | (1,174 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
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(672 | ) | (572 | ) | ||||
Net
increase (decrease) in cash and cash equivalents
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(19,816 | ) | (5,146 | ) | ||||
Cash
and cash equivalents, beginning of period
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27,021 | 8,716 | ||||||
Cash
and cash equivalents, end of period
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$ | 7,205 | $ | 3,570 |
Ordinary Shares
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Additional Paid-in | Accumulated | Accumulated Other Comprehen-sive Income | Shareholders' | ||||||||||||||||||||
Shares
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Amount
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Capital
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Deficit
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(Loss)
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Equity
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|||||||||||||||||||
Balance
at January 1, 2010
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24,342,600 | $ | 3,540 | $ | 198,498 | $ | (171,644 | ) | $ | 14,469 | $ | 44,863 | ||||||||||||
Issuance
of ordinary shares on exercise of stock -options
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40,000 | 7 | 396 | 403 | ||||||||||||||||||||
Issuance
of ordinary shares on vesting of free shares
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40,000 | 6 | (6 | ) | - | |||||||||||||||||||
Stock-based
compensation expense
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1,689 | 1,689 | ||||||||||||||||||||||
Net
loss
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(8,314 | ) | (8,314 | ) | ||||||||||||||||||||
Foreign
currency translation adjustment
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(6,277 | ) | (6,277 | ) | ||||||||||||||||||||
Comprehensive
loss
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$ | (14,591 | ) | |||||||||||||||||||||
Balance
at June 30, 2010
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24,422,600 | $ | 3,553 | $ | 200,577 | $ | (179,958 | ) | $ | 8,192 | $ | 32,364 |
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5.
STOCK COMPENSATION EXPENSE
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Three
months ended
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Six
months ended
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|||||||||||||||
(in
thousands except per share data)
|
June
30, 2009
|
June
30, 2010
|
June
30, 2009
|
June
30, 2010
|
||||||||||||
Net
income (loss)
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(3,550 | ) | (4,290 | ) | (2,360 | ) | (8,314 | ) | ||||||||
Net
income (loss) per share
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||||||||||||||||
Basic
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$ | (0.15 | ) | $ | (0.18 | ) | $ | (0.10 | ) | $ | (0.34 | ) | ||||
Diluted
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$ | (0.15 | ) | $ | (0.18 | ) | $ | (0.10 | ) | $ | (0.34 | ) | ||||
Number
of shares used for computing
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||||||||||||||||
Basic
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24,220 | 24,408 | 24,213 | 24,375 | ||||||||||||
Diluted
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24,220 | 24,408 | 24,213 | 24,375 | ||||||||||||
Stock-based
compensation (FAS123R)
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||||||||||||||||
Cost
of products and services sold
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54 | 29 | 111 | 64 | ||||||||||||
Research and
development
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602 | 267 | 1,226 | 581 | ||||||||||||
Selling,
general and administrative
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805 | 436 | 1,500 | 961 | ||||||||||||
Total
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1,461 | 732 | 2,837 | 1,606 | ||||||||||||
Net
income (loss) before stock-based compensation
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(2,089 | ) | (3,558 | ) | 477 | (6,708 | ) | |||||||||
Net
income (loss) before stock-based compensation per share
|
||||||||||||||||
Basic
|
$ | (0.09 | ) | $ | (0.15 | ) | $ | 0.02 | $ | (0.28 | ) | |||||
Diluted
|
$ | (0.09 | ) | $ | (0.15 | ) | $ | 0.02 | $ | (0.28 | ) |
-
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a
cash outflow from financing activities ($1.9 million), related to the
reimbursement to OSEO for the advance OSEO provided secured against the
R&D tax credit from 2006, and
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-
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a cash inflow from
operating activities ($2.3 million), corresponding to the R&D credit
tax from 2006 paid by the tax authorities (and a corresponding
decrease in the amount of the R&D tax credit
receivable).
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·
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we
depend on a few customers for the majority of our revenues, and the loss
of any one of these customers could reduce our revenues
significantly;
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·
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our
revenues depend on pharmaceutical and biotechnology companies successfully
developing products that incorporate our drug delivery
technologies;
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·
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although
products that incorporate our drug delivery technologies may appear
promising at their early stages of development and in clinical trials,
none of these potential products may reach the commercial market for a
number of reasons;
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·
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we
must invest substantial sums in research and development in order to
remain competitive, and we may not fully recover these
investments;
|
·
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we
depend upon a single site to manufacture our products, and any
interruption of operations could have a material adverse effect on our
business;
|
·
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we
depend on a limited number of suppliers for certain raw materials used in
our products, and any failure to deliver sufficient supplies could
interrupt our production process and could have a material adverse affect
on our business;
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·
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we
depend on key personnel to execute our business plan; if we
cannot attract and retain key personnel, we may not be able to
successfully implement our business
plan;
|
·
|
if
our competitors develop and market drug delivery technologies or related
products that are more effective than ours, or obtain regulatory approval
and market such technology or products before we do, our commercial
opportunity will be diminished or
eliminated;
|
·
|
if
we cannot keep pace with the rapid technological change in our industry,
we may lose business, and our drug delivery systems could become obsolete
or noncompetitive;
|
·
|
if
we cannot adequately protect our technology and proprietary information,
we may be unable to sustain a competitive
advantage;
|
·
|
our
products and technologies may not gain market
acceptance;
|
·
|
if
we or our collaborative partners are required to obtain licenses from
third parties, our revenues and royalties on any commercialized products
could be reduced;
|
·
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if
our third party collaborative partners face generic competition for their
products, our revenues and royalties from such products may be adversely
affected;
|
·
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healthcare
reform and restrictions on reimbursements may limit our financial
returns;
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·
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ongoing
current credit and financial market conditions may exacerbate certain
risks affecting our business;
|
·
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fluctuations
in foreign currency exchange rates may cause fluctuations in our financial
results;
|
·
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products
that incorporate our drug delivery technologies are subject to regulatory
approval; if our pharmaceutical and biotechnology company
partners do not obtain such approvals, or if such approvals are delayed,
our revenues may be adversely
affected;
|
·
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commercial
products incorporating our technologies are subject to continuing
regulation, and we and our pharmaceutical and biotechnology company
partners may be subject to adverse consequences if we or they fail to
comply with applicable regulations;
|
·
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regulatory
reforms may adversely affect our ability to sell our products
profitably;
|
·
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certain
companies to which we have licensed our technology are subject to
extensive regulation by the FDA and other regulatory authorities, their
failure to meet strict regulatory requirements could adversely affect our
business;
|
·
|
we
may face product liability claims related to participation in clinical
trials or the use or misuse of our products or products that incorporate
our technologies;
|
·
|
third
parties have claimed, and may claim in the future, that our technologies,
or the products in which they are used, infringe on their rights and we
may incur significant costs resolving these
claims;
|
·
|
if
we use biological and hazardous materials in a manner that causes injury,
we may be liable for significant
damages;
|
·
|
our
share price has been volatile and may continue to be
volatile;
|
·
|
because
we have a limited operating history, investors in our shares may have
difficulty evaluating our
prospects;
|
·
|
if
we are not profitable in the future, the value of our shares may
fall;
|
·
|
we
may require additional financing, which may not be available on favorable
terms or at all, particularly in light of the slow global economic
recovery and its negative effect on the capital markets, and
which may result in dilution of our shareholders’ equity
interest;
|
·
|
our
operating results may fluctuate, which may adversely affect our share
price;
|
·
|
we
are subject to different corporate disclosure standards that may limit the
information available to holders of our
ADSs;
|
·
|
we
currently do not intend to pay dividends, and cannot assure shareholders
that we will make dividend payments in the
future;
|
·
|
judgments
of United States courts, including those predicated on the civil liability
provisions of the federal securities laws of the United States, may not be
enforceable in French courts;
|
·
|
holders
of ADSs have fewer rights than shareholders and have to act through the
Depositary to exercise those
rights;
|
·
|
preferential
subscription rights may not be available for United States persons;
and
|
·
|
our
largest shareholders own a significant percentage of the share capital and
voting rights of the Company;
|
Proposal
|
Votes For
|
Votes
Against/Abstain
|
Broker
Non-Votes
|
Approval
of Statutory Accounts for year ended December 31, 2009.
|
24,084,811
|
108,319
|
0
|
Allocation
of results to retained earnings.
|
23,827,646
|
365,484
|
0
|
Renewal
of Mr. Elie Vannier as Director.
|
24,019,680
|
173,450
|
0
|
Renewal
of Mr. Frederic Lemoine as Director.
|
23,894,060
|
299,070
|
0
|
Renewal
of Mr. Lodewijk J.R. De Vink as Director.
|
24,054,281
|
138,849
|
0
|
Renewal
of Mr. John L. Vogelstein as Director.
|
24,061,053
|
132,077
|
0
|
Renewal
of Mr. Francis JT Fildes as Director.
|
24,067,511
|
125,619
|
0
|
Renewal
of Mr. Stephen H. Willard as Director.
|
24,047,691
|
145,439
|
0
|
Determination
of the annual amount of Directors’ attendance fees.
|
23,739,370
|
453,760
|
0
|
Approval
of agreements referred to in article L. 225-38 et seq. of the
Commercial Code
|
22,353,036
|
1,840,094
|
0
|
Authorization
to be granted to the Board of Directors for allocation of seven hundred
and fifty thousand (750,000) stock options and taking note of the
resulting capital increases.
|
21,285,369
|
2,907,761
|
0
|
Authorization
to be granted to the Board of Directors with a view to allocation of two
hundred thousand (200,000) shares at no cost (“free shares”) and taking
note of the resulting capital increases.
|
21,259,759
|
2,933,371
|
0
|
Authorization
to be granted to the Board of Directors for issue of a maximum number of
two hundred and fifty thousand (250,000) stock warrants (BSA) reserved for
a category of persons consisting of the company’s directors who are
neither authorized agents nor employees of the company, but including the
Chairman of the Board of Directors; authorization to be granted to the
Board of Directors for carrying out the resulting capital
increases.
|
20,921,184
|
3,271,946
|
0
|
Authorization
to be granted to the Board of Directors for increasing the share capital
by issues of shares reserved for the members of a company saving plan
established in application of Articles L.3332-18 et seq. of the Labour
Code.
|
849,529
|
23,343,601
|
0
|
Powers
for formalities.
|
24,044,426
|
148,704
|
0
|
Flamel Technologies, S.A. | |||
Dated:
13 October, 2010
|
By:
|
/s/ Stephen H. Willard | |
Stephen
H. Willard
|
|||
Chief
Executive Officer
|
|||