NEUROBIOLOGICAL TECHNOLOGIES INC /CA/ - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2002

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes x

No o

Indicate by check mark whether the registrant is an accelerated filter (as defined in Rule 12b-2 of the Exchange Act).

Yes x

No o

Indicate the number of shares outstanding of each of the issuer’s classes of the common stock, as of the latest practical date:

Common Stock, $.001 Par Value: 17,971,116 shares outstanding as of January 31, 2003.

NEUROBIOLOGICAL TECHNOLOGIES, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	3

	Condensed Balance Sheets - - December 31, 2002 and June 30, 2002	3

	Condensed Statements of Operations - - Three and six months ended December 31, 2002 and 2001; Period from August 27, 1987 (inception) through December 31, 2002	4

	Condensed Statements of Cash Flows - - Six months ended December 31, 2002 and 2001; Period from August 27, 1987 (inception) through December 31, 2002	5

	Notes to Condensed Financial Statements	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	8

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13

ITEM 4.	CONTROLS AND PROCEDURES	13

PART II.	OTHER INFORMATION	14

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS	14

ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K	14

SIGNATURES		14

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)

CONDENSED BALANCE SHEETS

			December 31, 2002			June 30, 2002

			(unaudited)			(Note 1)
ASSETS
Current assets:
	Cash and cash equivalents		$	793,767		$	277,062
	Short-term investments			5,069,627			5,417,434
	Interest receivable			74,469			155,896
	Prepaid expenses and other			139,946			244,534

		Total current assets		6,077,809			6,094,926
Long-term investments				—			1,564,598
Property and equipment, net				6,742			5,456

			$	6,084,551		$	7,664,980

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued expenses		$	712,691		$	1,052,277

		Total current liabilities		712,691			1,052,277
Stockholders’ equity:
	Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, 1,372,000 Series A shares issued and outstanding at December 31, 2002 and June 30, 2002			686,000			686,000
	Common stock, $.001 par value, 35,000,000 shares authorized, 17,809,141 and 17,783,571 outstanding at December 31, 2002 and June 30, 2002, respectively			43,871,515			43,876,705
	Deferred compensation			(109,501	)		(136,876	)
	Deficit accumulated during development stage			(39,099,331	)		(37,830,056	)
	Accumulated other comprehensive income			23,177			16,930

Total stockholders’ equity				5,371,860			6,612,703

			$	6,084,551		$	7,664,980

See accompanying notes.

NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)

CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

					Three months ended December 31,						Six months ended December 31,						Period from August 27, 1987 (inception) through December 31, 2002

					2002			2001			2002			2001

REVENUES
		License income			$	—		$	—		$	1,406,230		$	—		$	8,287,480
		Grant				—			—			—			—			149,444

				Total revenue		—			—			1,406,230			—			8,436,924
EXPENSES
		Research and development				678,765			360,633			1,585,524			616,194			31,757,367
	General and administrative					687,604			529,244			1,176,215			1,028,934			19,146,099

			Total expenses			1,366,369			889,877			2,761,739			1,645,128			50,903,466

Operating loss						(1,366,369	)		(889,877	)		(1,355,509	)		(1,645,128	)		(42,466,542	)
Interest income						40,991			93,038			86,234			209,735			3,367,211

NET LOSS					$	(1,325,378	)	$	(796,839	)	$	(1,269,275	)	$	(1,435,393	)	$	(39,099,331	)

BASIC AND DILUTED NET LOSS PER SHARE					$	(0.07	)	$	(0.05	)	$	(0.07	)	$	(0.08	)

Shares used in basic and diluted net loss per share calculation						17,772,633			17,508,339			17,777,460			17,506,020

See accompanying notes.

NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)

CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

			Six months ended December 31,						Period from August 27, 1987 (inception) through December 31, 2002

			2002			2001

OPERATING ACTIVITIES:
Net loss			$	(1,269,275	)	$	(1,435,393	)	$	(39,099,331	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			4,931			11,682			695,000
	Gain on sale of property and equipment			—			—			(1,500	)
	Amortization of deferred stock compensation			27,375			27,375			164,249
	Issuance of common stock, options and warrants for license rights and services			—			—			209,975
	Changes in assets and liabilities:
		Interest receivable		81,427			(30,902	)		(74,469	)
		Prepaid expenses and other current assets		104,588			132,734			(139,946	)
		Accounts payable and accrued expenses		(339,586	)		(325,276	)		712,691

Net cash used in operating activities				(1,390,540	)		(1,619,780	)		(37,533,331	)
INVESTING ACTIVITIES:
Purchase of investments				(3,599,081	)		(9,681,046	)		(51,654,735	)
Maturity of investments				5,517,733			9,350,875			46,608,285
Purchases of property and equipment, net				(6,217	)		—			(418,680	)
Proceeds from sale of property & equipment				—			—			1,500
Additions to patents and licenses				—			—			(283,062	)

	Net cash provided by (used in) investing activities			1,912,435			(330,171	)		(5,746,692	)
FINANCING ACTIVITIES:
Payment of note payable				—			—			(200,000	)
Proceeds from short-term borrowings				—			—			435,000
Issuance of common stock, net				81,760			71,001			35,767,658
Repurchase of common stock				(86,950	)		—			(86,950	)
Issuance of preferred stock, net				—			—			8,158,082

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