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:  0-27718

NEOSE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

13-3549286

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

102 Witmer Road

Horsham, Pennsylvania

19044

(Address of principal executive offices)

(Zip Code)

(215) 315-9000

(Registrant’s telephone number, including area code)

Yes   x

No   o

Yes   x

No   o

Page

PART I.

FINANCIAL INFORMATION:

Item 1.

Financial Statements (unaudited)

Balance Sheets at December 31, 2002 and March 31, 2003

3

Statements of Operations for the three months ended March 31, 2002 and 2003, and for the period from inception through March 31, 2003

4

Statements of Cash Flows for the three months ended March 31, 2002 and 2003, and for the period from inception through March 31, 2003

5

Notes to Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

9

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

15

Item 4.

Controls and Procedures

16

PART II.

OTHER INFORMATION:

Item 6.

Exhibits and Reports on Form 8-K

17

SIGNATURES

18

December 31, 2002

March 31, 2003

Assets

Current assets:

Cash and cash equivalents

$

31,088

$

32,072

Marketable securities

9,952

18,276

Restricted funds

977

1,279

Prepaid expenses and other current assets

558

1,446

Total current assets

42,575

53,073

Property and equipment, net

36,508

35,856

Acquired intellectual property, net

2,507

2,358

Other assets

1,502

2,384

Total assets

$

83,092

$

93,671

Liabilities and Stockholders’ Equity

Current liabilities:

Current portion of long-term debt

$

1,851

$

2,678

Accounts payable

1,127

871

Accrued compensation

1,339

1,190

Accrued expenses

1,880

1,590

Deferred revenue

320

320

Total current liabilities

6,517

6,649

Long-term debt

5,560

7,572

Other liabilities

330

751

Total liabilities

12,407

14,972

Stockholders’ equity:

Preferred stock, $.01 par value, 5,000 shares authorized, none issued

—  

—  

Common stock, $.01 par value, 30,000 shares authorized; 14,330 and 17,214 shares issued; 14,324 and 17,208 shares outstanding

143

172

Additional paid-in capital

178,945

195,320

Treasury stock, 6 shares at cost

(175

)

(175

)

Deferred compensation

(170

)

(140

)

Deficit accumulated during the development-stage

(108,058

)

(116,478

)

Total stockholders’ equity

70,685

78,699

Total liabilities and stockholders’ equity

$

83,092

$

93,671

Three months
ended March 31,

Period from
inception
(January 17, 1989)
to March 31, 2003

2002

2003

Revenue from collaborative agreements

$

771

$

70

$

17,516

Operating expenses:

Research and development

5,835

5,619

105,295

Marketing, general and administrative

2,920

3,005

52,079

Total operating expenses

8,755

8,624

157,374

Operating loss

(7,984

)

(8,554

)

(139,858

)

Other income

—  

—  

7,773

Interest income

389

170

18,948

Interest expense

—  

(37

)

(3,342

)

Net loss

$

(7,595

)

$

(8,421

)

$

(116,479

)

Basic and diluted net loss per share

$

(0.54

)

$

(0.53

)

Weighted-average shares outstanding used in computing basic and diluted net loss per share

14,120

15,801

Three months ended
March 31,

Period from
inception
(January 17, 1989)
to March 31, 2003

2002

2003

Cash flows from operating activities:

Net loss

$

(7,595

)

$

(8,421

)

$

(116,479

)

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

Depreciation and amortization

665

1,048

14,157

Non-cash compensation

1,560

—  

4,773

Common stock issued for non-cash and other charges

—  

—  

35

Changes in operating assets and liabilities:

Prepaid expenses and other current and non-current assets

203

(888

)

(1,698

)

Accounts payable

(41

)

(256

)

871

Accrued compensation

301

(612

)

771

Accrued expenses

(1,984

)

(249

)

1,529

Deferred revenue

(104

)

—  

320

Other liabilities

—  

2

332

Net cash used in operating activities

(6,995

)

(9,376

)

(95,389

)

Cash flows from investing activities:

Purchases of property and equipment

(3,995

)

(353

)

(47,461

)

Proceeds from sale-leaseback of equipment

—  

—  

1,382

Purchases of marketable securities

—  

(18,259

)

(402,997

)

Proceeds from sales of marketable securities

—  

—  

11,467

Proceeds from maturities of and other changes in marketable securities

—  

10,000

373,860

Purchase of acquired technology

—  

—  

(4,550

)

Investment in equity securities

—  

—  

(1,250

)

Net cash used in investing activities

(3,995

)

(8,612

)

(69,549

)

Cash flows from financing activities:

Proceeds from issuance of debt

—  

2,954

17,170

Repayment of debt

—  

(115

)

(8,267

)

Restricted cash related to debt

(278

)

(302

)

(1,208

)

Proceeds from issuance of preferred stock, net

—  

—  

29,497

Proceeds from issuance of common stock, net

—  

16,435

153,659

Proceeds from exercise of stock options and warrants

798

—  

6,406

Acquisition of treasury stock

—  

—