-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R6SRpclXRBB+es4nFTEMB1fjeWmxOnBTSlm53naqfNtznfYe1rpB/t+cFnm+bKHL 7RFVB+Zoy7D31Q3Sle3g5g== 0000950115-99-001098.txt : 19990816 0000950115-99-001098.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950115-99-001098 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEOSE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000877902 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 133549286 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27718 FILM NUMBER: 99687726 BUSINESS ADDRESS: STREET 1: 102 WITMER RD CITY: HORSHAM STATE: PA ZIP: 19044 BUSINESS PHONE: 2154415890 MAIL ADDRESS: STREET 1: 102 WITMER ROAD CITY: HORSHAM STATE: PA ZIP: 19044 10-Q 1 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 JUNE 30, 1999. 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: 0-27718 NEOSE TECHNOLOGIES, INC. ------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-3549286 --------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 102 Witmer Road Horsham, Pennsylvania 19044 ----------------------------------------- ----------- (Address of principal executive offices) (Zip Code) (215) 441-5890 ---------------------------------------------------------- (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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 11,420,676 shares of common stock, $.01 par value, were outstanding as of July 31, 1999. NEOSE TECHNOLOGIES, INC. (A DEVELOPMENT-STAGE COMPANY) INDEX
Page ---- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Balance Sheets (unaudited) at December 31, 1998 and June 30, 1999...........................3 Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 1998 and 1999, and for the period from inception through June 30, 1999........................4 Consolidated Statements of Cash Flows (unaudited) for the three and six months ended June 30, 1998 and 1999, and for the period from inception through June 30, 1999........................5 Notes to Unaudited Consolidated Financial Statements.....................................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................................................................8 Item 3. Quantitative and Qualitative Disclosure About Market Risk...............................................12 PART II. OTHER INFORMATION: Item 2. Changes in Securities and Use of Proceeds...............................................................12 Item 4. Submission of Maters to a Vote of Security Holders......................................................13 Item 6. Exhibits and Reports on Form 8-K........................................................................13 SIGNATURES ......................................................................................................14
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NEOSE TECHNOLOGIES, INC. (a development-stage company) CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except per share amounts)
December 31, June 30, ASSETS 1998 1999 --------- --------- Current assets: Cash and cash equivalents $ 9,484 $ 14,001 Marketable securities 22,539 24,874 Restricted funds 468 1,775 Prepaid expenses and other current assets 235 211 --------- --------- Total current assets 32,726 40,861 Property and equipment, net 13,539 13,178 Acquired technology (See Note 3) -- 3,197 --------- --------- Total assets $ 46,265 $ 57,236 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 617 $ 1,006 Accounts payable 45 115 Accrued expenses 1,290 1,698 --------- --------- Total current liabilities 1,952 2,819 Long-term debt 8,300 7,300 --------- --------- Total liabilities 10,252 10,119 --------- --------- Stockholders' equity: Preferred stock, $.01 par value, 5,000 shares authorized, none issued -- -- Common stock, $.01 par value, 30,000 shares authorized; 9,589 and 11,411 shares issued and outstanding 96 114 Additional paid-in capital 82,400 100,873 Deferred compensation (211) (820) Unrealized gains on marketable securities 222 308 Deficit accumulated during the development-stage (46,494) (53,358) --------- --------- Total stockholders' equity 36,013 47,117 --------- --------- Total liabilities and stockholders' equity $ 46,265 $ 57,236 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 3 NEOSE TECHNOLOGIES, INC. (a development-stage company) CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts)
Three months Six months Period from ended June 30, ended June 30, inception ------------------------- ------------------------- (January 17, 1989) 1998 1999 1998 1999 to June 30, 1999 -------- -------- -------- -------- ---------------- Revenue from collaborative agreements $ 254 $ -- $ 265 $ 125 $ 6,470 -------- -------- -------- -------- -------- Operating expenses: Research and development 2,137 2,720 4,852 5,191 46,095 General and administrative 1,024 1,192 1,739 2,195 18,908 -------- -------- -------- -------- -------- Total operating expenses 3,161 3,912 6,591 7,386 65,003 -------- -------- -------- -------- -------- Operating loss (2,907) (3,912) (6,326) (7,261) (58,533) Interest income 522 222 1,093 606 7,599 Interest expense (140) (102) (278) (209) (2,424) -------- -------- -------- -------- -------- Net loss $ (2,525) $ (3,792) $ (5,511) $ (6,864) $(53,358) ======== ======== ======== ======== ======== Basic and diluted net loss per share $ (0.26) $ (0.38) $ (0.58) $ (0.69) ======== ======== ======== ======== Basic and diluted weighted-average shares outstanding 9,543 9,975 9,537 9,918 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 4 NEOSE TECHNOLOGIES, INC. (a development-stage company) CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
Six months ended Period from June 30, inception --------------------------- (January 17, 1989) 1998 1999 to June 30, 1999 ---------- --------- ---------------- Cash flows from operating activities: Net loss $ (5,511) $ (6,864) $ (53,358) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 788 1,101 6,306 Common stock issued for non-cash and other charges -- -- 35 Changes in operating assets and liabilities: Restricted funds 288 (1,307) (1,704) Prepaid expenses and other (362) 24 (211) Accounts payable (80) 70 115 Accrued expenses (802) 408 1,016 --------- --------- --------- Net cash used in operating activities (5,679) (6,568) (47,801) --------- --------- --------- Cash flows from investing activities: Purchases of property and equipment (477) (445) (16,969) Proceeds from sale-leaseback of equipment -- -- 1,382 Purchases of marketable securities (992) (31,484) (82,607) Proceeds from sales of marketable securities 988 6,906 9,491 Proceeds from maturities of and other changes in marketable securities -- 22,329 48,550 Purchase of acquired technology -- (3,300) (3,300) --------- --------- --------- Net cash provided by (used in) investing activities (481) (5,994) (43,453) --------- --------- --------- Cash flows from financing activities: Proceeds from issuance of debt -- -- 11,955 Repayment of debt (741) (611) (4,946) Proceeds from issuance of preferred stock, net -- -- 29,497 Proceeds from issuance of common stock, net 87 17,496 18,201 Proceeds from public offerings, net -- -- 49,466 Proceeds from exercise of stock options and warrants 39 194 1,154 Dividends paid -- -- (72) --------- --------- --------- Net cash provided by (used in) financing activities (615) 17,079 105,255 --------- --------- --------- Net increase (decrease) in cash and cash equivalents (6,775) 4,517 14,001 Cash and cash equivalents, beginning of period 17,098 9,484 -- --------- --------- --------- Cash and cash equivalents, end of period $ 10,323 $ 14,001 $ 14,001 ========= ========= ========= Supplemental disclosure of cash flow information: Cash paid for interest $ 296 $ 214 $ 2,323 ========= ========= ========= Non-cash financing activities: Issuance of common stock for dividends $ -- $ -- $ 90 ========= ========= ========= Issuance of common stock to employees in lieu of cash compensation $ -- $ -- $ 44 ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 5 NEOSE TECHNOLOGIES, INC. (a development-stage company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. BASIS OF PRESENTATION We have used generally accepted accounting principles for interim financial information to prepare unaudited consolidated financial statements: o As of June 30, 1999; o For the three and six months ended June 30, 1998 and 1999; and o For the period from inception (January 17, 1989) to June 30, 1999. Our consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In our opinion, the unaudited information includes all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. You should not base your estimate of our results of operations for 1999 solely on our results of operations for the three and six months ended June 30, 1999. You should read these consolidated financial statements in combination with: o The other Notes in this section; o "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing in the following section; and o The Consolidated Financial Statements, including the notes to the Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 1998. 2. SALE OF COMMON STOCK On June 29, 1999, we completed a $14.25 million private placement of common stock. We sold 1.5 million shares of common stock to a selected group of institutional and individual investors at a price of $9.50 per share, the closing bid price of the stock on June 17, 1999. After payment of finder's fees and expenses, our net proceeds from the private placement were approximately $13.4 million. 3. ACQUISITION OF INTELLECTUAL PROPERTY FROM CYTEL On March 26, 1999, we acquired the carbohydrate manufacturing patents, licenses, and other intellectual property of Cytel Corporation's Glytec business unit. We paid $3.5 million in cash to Cytel and an additional $1.5 million in cash into escrow, the release of which is conditioned on Cytel's satisfaction of certain matters relating to the acquired patents and licenses. We may be required to pay Cytel up to an additional $1.6 million in cash, contingent on potential payments and revenues realized by us from certain future corporate collaborations. We have capitalized $3.3 million of the amount paid to Cytel as developed technology, which is classified on our Consolidated Balance Sheet as Acquired Technology. The remaining $200,000 was paid to Cytel from an escrow account funded by us in 1998. This amount was expensed to our Consolidated Statement of Operations in 6 1998. We have recorded the $1.5 million placed into escrow as Restricted Funds on our Consolidated Balance Sheet. The Acquired Technology balance will be amortized to our Consolidated Statement of Operations over eight years, which we estimate to be the useful life of the technology. During the six months ended June 30, 1999, we recorded amortization expense of $103,000 relating to the acquired technology. 4. AGREEMENT WITH JOHNSON & JOHNSON In 1997, we entered into a joint development agreement with McNeil Specialty Products Company, a subsidiary of Johnson & Johnson, for the joint development of novel technologies for the efficient large-scale manufacture of a particular class of complex carbohydrates for a number of human healthcare applications. In January 1999, the joint development agreement was extended and expanded, and Johnson & Johnson Development Corporation, another subsidiary of Johnson & Johnson, made a $4 million investment in our common stock. Under the joint development agreement, we jointly contemplate building and operating a manufacturing facility capable of producing at least one commercially promising complex carbohydrate by early 2000. Either party may terminate the agreement upon sixty days prior notice. 5. NET LOSS PER SHARE Basic and diluted net loss per share are presented in conformity with Statement of Financial Accounting Standards No. 128, "Earnings per Share." Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution from the exercise or conversion of securities into common stock. For the three and six months ended June 30, 1998 and 1999, the effects of the exercise of outstanding stock options and warrants were antidilutive; accordingly, they were excluded from the calculation of diluted earnings per share. 6. COMPREHENSIVE LOSS Our comprehensive loss for the six months ended June 30, 1998 and 1999 was $5,511,000 and $6,778,000, respectively. Comprehensive loss is comprised of net loss and other comprehensive income or loss. Currently, our only source of other comprehensive income or loss is unrealized gains and losses on our marketable securities that are classified as available-for-sale. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The statements in this Form 10-Q and the Exhibits that are not facts are forward-looking statements. Forward-looking statements involve predictions. Our actual results, performance, or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Potential risks and uncertainties that could affect our actual results, performance, or achievements include statements that address, among other things, increase of losses, success, and profitability of the business, necessity to sell additional securities, liquidity, and availability of additional funding sources, development, and commercialization of our products, continuation of collaboration with important business partners, dependence on licensors, protection of intellectual property in foreign countries, ability to obtain regulatory approvals for our products, development of commercial-scale manufacturing facilities and development of marketing and sales experience. These statements may be found in the "Risk Factors" in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 1998, and general financial, economic, regulatory, and political conditions affecting the biotechnology industry in general. In addition, forward-looking statements that address the Year 2000 issue can be found in our Year 2000 disclosure. Given these uncertainties, you should not base your decision to invest in our common stock on any forward-looking statements. In addition, we do not have any obligation or intent to update any of these risk factors or forward-looking statements to reflect future events or developments. You should read this section in combination with the Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 1998, included in our Annual Report on Form 10-K and in our 1998 Annual Report to Stockholders. OVERVIEW Neose, a development-stage company, is developing synthetic processes to manufacture oligosaccharides, or complex carbohydrates. We are using these manufacturing processes to discover, develop, and commercialize complex carbohydrates for pharmaceutical, nutritional, and consumer uses. Due to their structural complexity, oligosaccharides are difficult and expensive to produce. Accordingly their commercial development has been significantly limited. We believe our proprietary technologies enable the rapid and cost-efficient enzymatic production of naturally occurring oligosaccharides. We have not generated any material revenues from operations, except for interest income and revenues from collaborative agreements, including our agreements with Abbott Laboratories. Under our agreements, Abbott has the exclusive right to use our technology to manufacture and commercialize, for nutritional purposes only, any complex carbohydrate naturally found in breast milk. We have received approximately $11.2 million in contract payments, license fees, milestone payments, and equity investments from Abbott. Under our agreements, we will receive further payments from Abbott only if Abbott commercializes a product manufactured using our technology. We have incurred increasingly large losses each year. As of June 30, 1999, we had an accumulated deficit of approximately $53.4 million. We expect increased losses over at least the next several years as we expand research and development efforts, conduct additional clinical trials, expand manufacturing scale-up activities, and begin sales and marketing activities. 8 We have not yet commercialized any products or technologies. We do not know if or when we will generate significant revenues from the commercialization of our products or technologies. Before we can commercialize any of our products or technologies, we must overcome many hurdles. Even if we commercialize one or more of our products or technologies, we may not become profitable. RESULTS OF OPERATIONS Revenues Revenues from collaborative agreements for the three and six months ended June 30, 1999, were $0 and $125,000, respectively, compared to $254,000 and $265,000, respectively, for the corresponding periods in 1998. The decreases were primarily attributable to decreased non-recurring revenues received under our agreement with Bristol-Myers Squibb Company. Operating Expenses Research and development expenses for the three and six months ended June 30, 1999, were $2,720,000 and $5,191,000, respectively, compared to $2,137,000 and $4,852,000, respectively, for the corresponding periods in 1998. The increases were primarily attributable to increased expenses associated with funding of outside research and the acquisition of intellectual property from Cytel Corporation. Specifically, we incurred expenses to retain certain former Cytel employees, and we began amortizing the purchase price of the intellectual property during the second quarter of 1999. General and administrative expenses for the three and six months ended June 30, 1999, were $1,192,000 and $2,195,000, respectively, compared to $1,024,000 and $1,739,000, respectively, for the corresponding periods in 1998. The increases were primarily attributable to increased patent and general legal expenses associated with the acquisition of intellectual property from Cytel Corporation. Interest Income and Expense Interest income for the three and six months ended June 30, 1999, was $222,000 and $606,000, respectively, compared to $522,000 and $1,093,000, respectively, for the corresponding periods in 1998. The decreases were due to lower average cash and marketable securities balances during the 1999 periods. Interest expense for the three and six months ended June 30, 1999, was $102,000 and $209,000, respectively, compared to $140,000 and $278,000, respectively, for the corresponding periods in 1998. The differences were due to lower average loan balances outstanding during the 1999 periods. Net Loss We incurred net losses of $3,792,000 and $6,864,000, or $0.38 and $0.69 per share, for the three and six months ended June 30, 1999, respectively, compared to $2,525,000 and $5,511,000, or $0.26 and $0.58 per share, respectively, for the corresponding periods in 1998. 9 LIQUIDITY AND CAPITAL RESOURCES We have incurred increasingly large losses each year since our inception. As of June 30, 1999, we had a deficit accumulated during the development stage of approximately $53.4 million. We have financed our operations through private and public offerings of our securities and revenues from our collaborative agreements. We had $38.9 million in cash and marketable securities as of June 30, 1999, compared to $32.0 million in cash and marketable securities as of December 31, 1998. This increase was primarily attributable to our completion of two private placements of common stock totalling $18.25 million. The increase was partly offset by the use of funds for the acquisition of intellectual property from Cytel Corporation and for our continuing operating activities. On March 26, 1999, we acquired the carbohydrate manufacturing patents, licenses, and other intellectual property of Cytel Corporation's Glytec business unit. We paid $3.5 million in cash to Cytel and an additional $1.5 million in cash into escrow, the release of which is conditioned on Cytel's satisfaction of certain matters relating to the acquired patents and licenses. We may be required to pay Cytel up to an additional $1.6 million in cash, contingent on potential payments and revenues realized by us from certain future corporate collaborations. We have capitalized $3.3 million of the amount paid to Cytel as developed technology, which is classified on our Consolidated Balance Sheet as Acquired Technology. The remaining $200,000 was paid to Cytel from an escrow account funded by us in 1998. This amount was expensed to our Consolidated Statement of Operations in 1998. We have recorded the $1.5 million placed into escrow as Restricted Funds on our Consolidated Balance Sheet. The Acquired Technology balance will be amortized to our Consolidated Statement of Operations over eight years, which we estimate to be the useful life of the technology. During the six months ended June 30, 1999, we recorded amortization expense of $103,000 relating to the Acquired Technology. In 1997, we issued, through the Montgomery County (Pennsylvania) Industrial Development Authority, $9.4 million of taxable and tax-exempt bonds. The bonds were issued to finance the purchase of our previously leased building and the construction of a pilot-scale manufacturing facility within our building. The bonds are supported by a AA-rated letter of credit, and a reimbursement agreement between our bank and the letter of credit issuer. The interest rate on the bonds will vary weekly, depending on market rates for AA-rated taxable and tax-exempt obligations, respectively. As of June 30, 1999, the effective, blended interest rate was 6.5% per annum, including letter-of-credit and other fees. To provide credit support for this arrangement, we have given a first mortgage on the land, building, improvements, and certain machinery and equipment to our bank. In addition, we have agreed to maintain at least $20 million of cash and short-term investments. If we fail to comply with this covenant, we are required to deposit with the lender cash collateral up to, but not more than, the unpaid balance of the loan, which as of June 30, 1999 was $8.3 million. If the technology development program with Johnson & Johnson is successful, the parties will have to reach agreement upon the structure and financing of a large-scale manufacturing facility. During the six months ended June 30, 1999, we purchased approximately $445,000 of property, equipment, and building improvements. 10 We expect that our existing cash and short-term investments will be adequate to fund our operations through mid-2001; however, changes in our collaborative relationships or our business, whether or not initiated by us, may cause us to deplete our cash and short-term investments sooner than the above estimate. The timing and amount of our future capital requirements and the adequacy of available funds will depend on many factors, including: o If or when any products covered by our existing collaborative agreements are commercialized; o The progress of our research and development activities, including our pharmaceutical discovery and development programs; o The safety and efficacy of our products in preclinical studies and clinical trials; o The costs involved in preparing, filing, prosecuting, maintaining, and enforcing patent claims and other intellectual property rights; o Competing technological and market developments; o Changes in our existing collaborative relationships; o Our ability to establish additional collaborative agreements; o The cost of manufacturing scale-up; and o Developing effective marketing activities and arrangements. We may need to sell additional stock, borrow additional money, or enter into new collaborative agreements both to fund operations until we become profitable and to make capital investments. The timing and amount of our future capital requirements will depend on many factors including those discussed above. If we raise money by selling additional stock or borrowing additional money, the terms may not be favorable and may be dilutive to our stockholders. A debt financing may contain restrictive covenants, and, if we default, may provide the lender with rights to some or all of our assets. We may not be able to raise money when we need it. If we are unable to obtain adequate funds when needed: o We may delay or eliminate our research and development activities, or other aspects of our business; o We may have to license or sell our technologies on unfavorable terms; or o We may have to reduce or cease operations. YEAR 2000 ISSUE The Year 2000 issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. In other words, date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in system failures or miscalculations causing disruptions of operations, including an inability to process transactions and information, operate certain laboratory and manufacturing equipment, order raw materials, or engage in similar normal business activities. We do not believe we have a material exposure to the Year 2000 issue for our information and non-information technology systems. We have reviewed these existing systems and they either 11 correctly define the Year 2000 or are expected to be replaced before Year 2000 issues will arise. Each of our major vendors has informed us that they are taking appropriate steps to remediate their own Year 2000 issues. Our business, financial condition, and results of operations may be materially and adversely affected if our major vendors fail to remediate their own Year 2000 issues. We have not yet developed any contingency plans to address situations that may result if our operations are affected by Year 2000 issues that are not remediated. Our historical costs directly related to Year 2000 issue evaluation, remediation, and validation have been immaterial as our systems have been on a normal replacement schedule with only immaterial opportunity costs of personnel to ensure new systems and third parties are Year 2000 compliant. We estimate that the future expenses and capital expenditures necessary to complete our Year 2000 evaluation, remediation, and validation of all systems will not exceed $200,000. We are currently assessing the extent to which we would be vulnerable to our vendors' failure to remediate any Year 2000 issues on a timely basis. We plan to develop contingency plans if necessary during 1999. We have not deferred any systems projects as a result of our efforts to evaluate, remediate, and validate our systems for the Year 2000 issue. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK We do not hold any investments in market risk sensitive instruments. Accordingly, we believe that we are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments. PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. On June 29, 1999, we completed a private placement of 1,500,000 shares of common stock to selected institutional and individual accredited investors for gross proceeds of $14.25 million. After payment of finder's fees and expenses, our net proceeds from the private placement were approximately $13.4 million. The shares were issued pursuant to an exemption from registration in accordance with Regulation D under the Securities Act of 1933. On January 13, 1999, we issued 286,097 shares of common stock to Johnson & Johnson Development Corporation for $4 million. The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE. A. Our Annual Meeting of Stockholders was held on June 15, 1999. B. The motions before stockholders were: 1. To elect seven Directors.
Votes Votes Votes Broker Name of Director For Against Withheld Abstentions Nonvotes ---------------- --------- ------- -------- ----------- -------- Stephen A. Roth, Ph.D. 8,270,009 -- 353,610 -- -- P. Sherrill Neff 8,270,009 -- 353,610 -- -- William F. Hamilton, Ph.D. 8,270,009 -- 353,610 -- -- Douglas J. MacMaster, Jr. 8,270,009 -- 353,610 -- -- Lindsay A. Rosenwald, M.D. 8,270,009 -- 353,610 -- -- Lowell E. Sears 8,270,009 -- 353,610 -- -- Jerry A. Weisbach, Ph.D. 8,270,009 -- 353,610 -- --
2. To approve and adopt our Amended and Restated 1995 Stock Option/Stock Issuance Plan to, among other things, increase the number of shares authorized for issuance under the plan and increase the number of shares that are automatically issuable each year to each non-employee director under the plan. Votes For 6,484,846 Votes Against 2,007,155 Votes Withheld -- Abstentions 882 Broker Nonvotes -- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) List of Exhibits: 27 Financial Data Schedule. (b) Reports on Form 8-K. None. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEOSE TECHNOLOGIES, INC. Date: August 13, 1999 By: /s/ P. Sherrill Neff -------------------------- P. Sherrill Neff President and Chief Financial Officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1999 JUN-30-1999 14,001 24,874 0 0 0 40,861 18,455 5,277 57,236 2,819 7,300 0 0 114 47,003 57,236 0 125 0 0 7,386 0 209 (6,864) 0 (6,864) 0 0 0 (6,864) (.69) (.69)
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