UNITED STATES
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, 2003
OR
| ¨ | 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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
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: 19,250,117 shares outstanding as of January 31, 2004.
NEUROBIOLOGICAL TECHNOLOGIES, INC.
FORM 10-Q
2
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
CONDENSED BALANCE SHEETS
| December 31, 2003 |
June 30, 2003 |
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| (unaudited) | (Note 1) | |||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 806,803 | $ | 66,138 | ||||
| Short-term investments |
1,811,532 | 4,336,127 | ||||||
| Interest receivable |
18,778 | 50,339 | ||||||
| Prepaid expenses and other |
144,035 | 350,533 | ||||||
| Total current assets |
2,781,148 | 4,803,137 | ||||||
| Property and equipment, net |
6,335 | 10,073 | ||||||
| TOTAL ASSETS |
$ | 2,787,483 | $ | 4,813,210 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ | 367,469 | $ | 565,595 | ||||
| Total current liabilities |
367,469 | 565,595 | ||||||
| Stockholders’ equity: |
||||||||
| Convertible Series A Preferred stock, $.001 par value, 5,000,000 shares authorized, 2,332,000 issued in series, 754,000 and 1,154,000 outstanding at December 31, 2003 and June 30, 2003, respectively |
377,000 | 577,000 | ||||||
| Common stock, $.001 par value, 35,000,000 shares authorized, 19,230,117 and 18,755,553 outstanding at December 31, 2003 and June 30, 2003, respectively |
44,546,646 | 44,259,534 | ||||||
| Deferred compensation |
(54,751 | ) | (82,126 | ) | ||||
| Deficit accumulated during development stage |
(42,448,688 | ) | (40,516,524 | ) | ||||
| Accumulated other comprehensive income |
(193 | ) | 9,731 | |||||
| Total stockholders’ equity |
2,420,014 | 4,247,615 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 2,787,483 | $ | 4,813,210 | ||||
See accompanying notes.
3
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 |
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| 2003 |
2002 |
2003 |
2002 |
December 31, 2003 |
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| REVENUES |
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| License |
$ | 281,230 | $ | — | $ | 281,230 | $ | 1,406,230 | $ | 9,131,170 | ||||||||||
| Royalty |
18,659 | — | 28,443 | — | 39,392 | |||||||||||||||
| Grant |
— | — | — | — | 149,444 | |||||||||||||||
| Total revenue |
299,889 | — | 309,673 | 1,406,230 | 9,320,006 | |||||||||||||||
| EXPENSES |
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| Research and development |
513,365 | 678,765 | 841,290 | 1,585,524 | 33,330,111 | |||||||||||||||
| General and administrative |
854,842 | 687,604 | 1,431,080 | 1,176,215 | 21,893,935 | |||||||||||||||
| Total expenses |
1,368,207 | 1,366,369 | 2,272,370 | 2,761,739 | 55,224,046 | |||||||||||||||
| Operating loss |
(1,068,318 | ) | (1,366,369 | ) | (1,962,697 | ) | (1,355,509 | ) | (45,904,040 | ) | ||||||||||
| Interest income |
9,270 | 40,991 | 30,533 | 86,234 | 3,455,351 | |||||||||||||||
| NET LOSS |
$ | (1,059,048 | ) | $ | (1,325,378 | ) | $ | (1,932,164 | ) | $ | (1,269,275 | ) | $ | (42,448,689 | ) | |||||
| BASIC AND DILUTED NET LOSS PER SHARE |
$ | (0.06 | ) | $ | (0.07 | ) | $ | (0.10 | ) | $ | (0.07 | ) | ||||||||
| Shares used in basic and diluted net loss per share calculation |
19,206,054 | 17,772,633 | 19,019,739 | 17,777,460 | ||||||||||||||||
See accompanying notes.
4
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 |
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| 2003 |
2002 |
December 31, 2003 |
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| OPERATING ACTIVITIES: |
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| Net loss |
$ | (1,932,164 | ) | $ | (1,269,275 | ) | $ | (42,448,688 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Depreciation and amortization |
3,272 | 4,931 | 702,056 | |||||||||
| (Gain) loss on sale of property and equipment |
2,849 | — | 1,349 | |||||||||
| Amortization of deferred stock compensation |
27,375 | 27,375 | 218,999 | |||||||||
| Issuance of common stock, options and warrants for license rights and services |
28,200 | — | 238,175 | |||||||||
| Changes in assets and liabilities: |
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| Interest receivable |
31,561 | 81,427 | (18,778 | ) | ||||||||
| Prepaid expenses and other current assets |
206,498 | 104,588 | (144,035 | ) | ||||||||
| Accounts payable and accrued expenses |
(198,126 | ) | (339,586 | ) | 367,469 | |||||||
| Net cash used in operating activities |
(1,830,535 | ) | (1,390,540 | ) | (41,083,453 | ) | ||||||
| INVESTING ACTIVITIES: |
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| Purchase of investments |
(2,919,837 | ) | (3,599,081 | ) | (57,695,322 | ) | ||||||
| Maturity of investments |
5,434,507 | 5,517,733 | 55,883,596 | |||||||||
| Purchases of property and equipment, net |
(2,383 | ) | (6,217 | ) | (428,178 | ) | ||||||
| Proceeds from sale of property & equipment |
— | — | 1,500 | |||||||||
| Additions to patents and licenses |
— | — | (283,062 | ) | ||||||||
| Net cash provided by (used in) investing activities |
2,512,287 | 1,912,435 | (2,521,466 | ) | ||||||||
| FINANCING ACTIVITIES: |
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| Payment of note payable |
— | — | (200,000 | ) | ||||||||
| Proceeds from short-term borrowings |
— | — | 435,000 | |||||||||
| Issuance of common stock, net |
58,913 | 81,760 | 36,105,590 | |||||||||
| Repurchase of common stock |
— | (86,950 | ) | (86,950 | ) | |||||||
| Issuance of preferred stock, net |
— | — | 8,158,082 | |||||||||
| Net cash (used in) provided by financing activities |
58,913 | (5,190 | ) | 44,411,722 | ||||||||
| Increase (decrease) in cash and cash equivalents |
740,665 | 516,705 | 806,803 | |||||||||
| Cash and equivalents at beginning of period |
66,138 | 277,062 | — | |||||||||
| Cash and equivalents at end of period |
$ | 806,803 | $ | 793,767 | $ | 806,803 | ||||||
| SUPPLEMENTAL DISCLOSURES: |
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| Conversion of short-term borrowings to Series A preferred stock |
$ | — | $ | — | $ | 235,000 | ||||||
| Conversion of preferred stock to common stock |
$ | 200,000 | $ | — | $ | 8,016,082 | ||||||
| Deferred stock compensation related to options granted |
$ | — | $ | — | $ | 273,750 | ||||||
See accompanying notes.
5
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2003
NOTE 1-BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and six-month periods ended December 31, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ended June 30, 2004.
The balance sheet at June 30, 2003 has been derived from the audited financials at that date but does not include all the information and notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2003.
BASIC AND DILUTED