(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 0-23280

NEUROBIOLOGICAL TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)

Delaware

94-3049219

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

3260 Blume Drive, Suite 500

Richmond, California 94806

(Address of principal executive offices)

(510) 262-1730

(Registrant’s telephone number, including area code)

Yes   x

No   o

Yes   x

No   o

PART I.

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS (Unaudited)

3

Condensed Balance Sheets - - March 31, 2003 and June 30, 2002

3

Condensed Statements of Operations - - Three and nine months ended March 31, 2003 and
2002; Period from August 27, 1987 (inception) through March 31, 2003

4

Condensed Statements of Cash Flows - - Nine months ended March 31, 2003 and 2002;
Period from August 27, 1987 (inception) through March 31, 2003

5

Notes to Condensed Financial Statements - - March 31, 2003

6

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

9

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

14

ITEM 4.

CONTROLS AND PROCEDURES

14

PART II.

OTHER INFORMATION

15

ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

15

SIGNATURES

15

CERTIFICATIONS

16

March 31,
2003

June 30,
2002

(Unaudited)

(Note 1)

ASSETS

Current assets:

Cash and cash equivalents

$

1,262,754

$

277,062

Short-term investments

3,352,437

5,417,434

Interest receivable

24,699

155,896

Prepaid expenses and other

295,332

244,534

Total current assets

4,935,222

6,094,926

Long-term investments

500,069

1,564,598

Property and equipment, net

11,532

5,456

$

5,446,823

$

7,664,980

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

600,176

$

1,052,277

Total current liabilities

600,176

1,052,277

Stockholders’ equity:

Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, 1,168,000 and 1,372,000 Series A shares issued and outstanding at March 31, 2003 and June 30, 2002, respectively

584,000

686,000

Common stock, $.001 par value, 35,000,000 shares authorized, 18,179,839 and 17,783,571 shares outstanding at March 31, 2003 and June 30, 2002, respectively

44,181,537

43,876,705

Deferred compensation

(95,813

)

(136,876

)

Deficit accumulated during development stage

(39,846,254

)

(37,830,056

)

Accumulated other comprehensive income

23,177

16,930

Total stockholders’ equity

4,846,647

6,612,703

$

5,446,823

$

7,664,980

Three months ended
March 31,

Nine months ended
March 31,

Period from
August 27, 1987
(inception)
through
March 31, 2003

2003

2002

2003

2002

REVENUES

License income

$

281,230

$

—  

$

1,687,460

$

—  

$

8,568,710

Grant

—  

—  

—  

—  

149,444

Total revenue

281,230

—  

1,687,460

—  

8,718,154

EXPENSES

Research and development

434,675

504,153

2,020,199

1,120,347

32,192,042

General and administrative

623,550

657,028

1,799,765

1,685,962

19,769,649

Total expenses

1,058,225

1,161,181

3,819,964

2,806,309

51,961,691

Operating loss

(776,995

)

(1,161,181

)

(2,132,504

)

(2,806,309

)

(43,243,537

)

Interest income

30,072

72,011

116,306

281,746

3,397,283

Loss before income tax benefit

(746,923

)

(1,089,170

)

(2,016,198

)

(2,524,563

)

(39,846,254

)

Income tax benefit

—  

41,831

—  

41,831

—  

NET LOSS

$

(746,923

)

$

(1,047,339

)

$

(2,016,198

)

$

(2,482,732

)

$

(39,846,254

)

BASIC AND DILUTED NET LOSS PER SHARE

$

(0.04

)

$

(0.06

)

$

(0.11

)

$

(0.14

)

Shares used in basic and diluted net loss per share calculation

17,984,938

17,565,498

17,846,434

17,529,837

Nine months ended
March 31,

Period from
August 27,1987
(inception)
through
March 31, 2003

2003

2002

OPERATING ACTIVITIES:

Net loss

$

(2,016,198

)

$

(2,482,732

)

$

(39,846,254

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

7,256

17,523

697,325

Gain on sale of property and equipment

—  

—  

(1,500

)

Amortization of deferred stock compensation

41,063

41,063

177,937

Issuance of common stock, options and warrants for license rights and services

—  

—  

209,975

Changes in assets and liabilities:

Interest receivable

131,197

17,895

(24,699

)

Prepaid expenses and other current assets

(50,798

)

74,494

(295,332

)

Accounts payable and accrued expenses

(452,101

)

(59,432

)

600,176

Net cash used in operating activities

(2,339,581

)

(2,391,189

)

(38,482,372

)

INVESTING ACTIVITIES:

Purchase of investments

(6,719,831

)

(1,939,538

)

(54,775,485

)

Maturity of investments

9,855,604

1,700,000

50,946,156

Purchases of property and equipment, net

(13,332

)

—  

(425,795

)

Proceeds from sale of property & equipment

—  

—  

1,500

Additions to patents and licenses

—  

—  

(283,062

)

Net cash provided by (used in) investing activities

3,122,441

(239,538

)

(4,536,686

)

FINANCING ACTIVITIES:

Payment of note payable

—  

—  

(200,000

)

Proceeds from short-term borrowings

—  

—  

435,000

Issuance of common stock, net

289,782

91,000

35,975,680

Repurchase of common stock

(86,950

)

—