-----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, VRJ9nMXog76VlIIFYDDirnagg7EoqWA5/g4f1T8W4jPtcCWarSQHeNXin1ffrwSU 9zHt9Kb8US1vwBTmDH/RCA== /in/edgar/work/0000950137-00-004367/0000950137-00-004367.txt : 20001016 0000950137-00-004367.hdr.sgml : 20001016 ACCESSION NUMBER: 0000950137-00-004367 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000831 FILED AS OF DATE: 20001013 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHFIELD LABORATORIES INC /DE/ CENTRAL INDEX KEY: 0000920947 STANDARD INDUSTRIAL CLASSIFICATION: [2836 ] IRS NUMBER: 363378733 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24050 FILM NUMBER: 739853 BUSINESS ADDRESS: STREET 1: 1560 SHERMAN AVE STREET 2: SUITE 1000 CITY: EVANSTON STATE: IL ZIP: 60201-4800 BUSINESS PHONE: 8478643500 MAIL ADDRESS: STREET 1: 1560 SHERMAN AVE STE 1000 STREET 2: 37TH FLOOR CITY: EVANSTON STATE: IL ZIP: 60201-4800 10-Q 1 c57809e10-q.txt QUARTERLY REPORT 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED AUGUST 31, 2000 OR [ ] TRANSITION REPORT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ----------- ------------ COMMISSION FILE NUMBER 0-24050 NORTHFIELD LABORATORIES INC. (Exact name of registrant as specified in its charter) DELAWARE 36-3378733 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 1560 SHERMAN AVENUE, SUITE 1000, EVANSTON, ILLINOIS 60201-4800 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (847) 864-3500 FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT: NOT APPLICABLE 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 --- --- APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY A COURT. YES NO --- --- AS OF AUGUST 31, 2000, REGISTRANT HAD 14,242,375 SHARES OF COMMON STOCK OUTSTANDING ================================================================================ 2 Part I. Financial Information NORTHFIELD LABORATORIES INC. (a company in the development stage) Financial Statements August 31, 2000 (See accompanying Review Report of KPMG LLP) 3 INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors Northfield Laboratories Inc.: We have reviewed the balance sheet of Northfield Laboratories Inc. (a company in the development stage) as of August 31, 2000, and the related statements of operations and cash flows for the three-month periods ended August 31, 2000 and 1999 and for the period from June 19, 1985 (inception) through August 31, 2000. We have also reviewed the statements of shareholders' equity (deficit) for the three-month period ended August 31, 2000 and for the period from June 19, 1985 (inception) through August 31, 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of Northfield Laboratories Inc. as of May 31, 2000, and the related statements of operations, shareholders' equity (deficit), and cash flows for the year then ended and for the period from June 19, 1985 (inception) through May 31, 2000 (not presented herein); and in our report dated June 29, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of May 31, 2000 and in the accompanying statement of shareholders' equity (deficit) is fairly stated, in all material respects, in relation to the statement from which it has been derived. /s/ KPMG LLP October 2, 2000 4 NORTHFIELD LABORATORIES INC. (a company in the development stage) Balance Sheets August 31, 2000 (unaudited) and May 31, 2000
August 31, May 31, 2000 2000 -------------- ------------- ASSETS Current assets: Cash $ 11,757,965 15,154,295 Short-term marketable securities 23,765,120 23,129,324 Prepaid expenses 336,185 409,270 Other current assets 663,374 505,572 -------------- ------------- Total current assets 36,522,644 39,198,461 Property, plant, and equipment, net 2,514,647 2,455,701 Other assets 123,280 74,333 -------------- ------------- $ 39,160,571 41,728,495 ============== ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 967,677 1,061,367 Accrued expenses 209,721 174,009 Accrued compensation and benefits 252,040 250,570 -------------- ------------- Total current liabilities 1,429,438 1,485,946 Other liabilities 154,221 147,717 -------------- ------------- Total liabilities 1,583,659 1,633,663 -------------- ------------- Shareholders' equity: Preferred stock, $.01 par value. Authorized 5,000,000 shares; none issued and outstanding -- -- Common stock, $.01 par value. Authorized 30,000,000 shares; issued and outstanding 14,242,375 shares at August 31, 2000 and May 31, 2000, respectively 142,424 142,424 Additional paid-in capital 117,276,051 117,276,051 Deficit accumulated during the development stage (79,841,563) (77,323,643) -------------- ------------- Total shareholders' equity 37,576,912 40,094,832 --------------- ------------- $ 39,160,571 41,728,495 =============== =============
See accompanying independent accountants' review report. 5 NORTHFIELD LABORATORIES INC. (a company in the development stage) Statements of Operations Three months ended August 31, 2000 and 1999 and for the period from June 19, 1985 (inception) through August 31, 2000
CUMULATIVE THREE MONTHS ENDED FROM AUGUST 31, JUNE 19, 1985 ------------------------------ THROUGH 2000 1999 AUGUST 31, 2000 -------------- -------------- ------------------ (UNAUDITED) (UNAUDITED) (UNAUDITED) Revenues - license income $ -- -- 3,000,000 Costs and expenses: Research and development 2,237,582 2,124,203 71,377,995 General and administrative 869,876 484,800 32,341,089 -------------- -------------- ------------------ 3,107,458 2,609,003 103,719,084 -------------- -------------- ------------------ Other income and expense: Interest income 589,538 569,862 20,960,755 Interest expense -- -- (83,234) -------------- -------------- ------------------ 589,538 569,862 20,877,521 -------------- -------------- ------------------ Net loss $ (2,517,920) (2,039,141) (79,841,563) ============== ============== ================== Net loss per basic share $ (0.18) (0.14) (8.81) ============== ============== ================== Shares used in calculation of per share data 14,242,375 14,239,875 9,058,180 ============== ============== ==================
See accompanying independent accountants' review report. 6 NORTHFIELD LABORATORIES INC. (a company in the development stage) Statements of Shareholders' Equity (Deficit) Three months ended August 31, 2000 and for the period from June 19, 1985 (inception) through August 31, 2000
SERIES A CONVERTIBLE PREFERRED STOCK COMMON STOCK PREFERRED STOCK --------------------- ---------------------- ----------------------- NUMBER AGGREGATE NUMBER AGGREGATE NUMBER AGGREGATE OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES AMOUNT --------- --------- ---------- --------- --------- ---------- Issuance of common stock on August 27, 1985 -- $ -- 3,500,000 $ 35,000 -- $ -- Issuance of Series A convertible preferred stock at $4.00 per share on August 27, 1985 (net of costs of issuance of $79,150) -- -- -- -- 250,000 250,000 Net loss -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1986 -- -- 3,500,000 35,000 250,000 250,000 Net loss -- -- -- -- -- -- Deferred compensation relating to grant of stock options -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1987 -- -- 3,500,000 35,000 250,000 250,000 Issuance of Series B convertible preferred stock at $35.68 per share on August 14, 1987 (net of costs of issuance of $75,450) -- -- -- -- -- -- Net loss -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1988 -- -- 3,500,000 35,000 250,000 250,000 Issuance of common stock at $24.21 per share on June 7, 1988 (net of costs of issuance of $246,000) -- -- 413,020 4,130 -- -- Conversion of Series A convertible preferred stock to common stock on June 7, 1988 -- -- 1,250,000 12,500 (250,000) 250,000) Conversion of Series B convertible preferred stock to common stock on June 7, 1988 -- -- 1,003,165 10,032 -- -- Exercise of stock options at $2.00 per share -- -- 47,115 471 -- -- Issuance of common stock at $28.49 per share on March 6, 1989 (net of costs of issuance of $21,395) -- -- 175,525 1,755 -- -- Issuance of common stock at $28.49 per share on March 30, 1989 (net of costs of issuance of $10,697) -- -- 87,760 878 -- -- Sale of options at $28.29 per share to purchase common stock at $.20 per share on March 30, 1989 (net of costs of issuance of $4,162) -- -- -- -- -- -- Net loss -- -- -- -- -- -- Deferred compensation relating to grant of stock options -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1989 -- -- 6,476,585 64,766 -- -- Net loss -- -- -- -- -- -- Deferred compensation relating to grant of stock options -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1990 -- -- 6,476,585 64,766 -- -- Net loss -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1991 -- -- 6,476,585 64,766 -- -- Exercise of stock warrants at $5.60 per share -- -- 90,000 900 -- -- Net loss -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1992 -- -- 6,566,585 65,666 -- -- Exercise of stock warrants at $7.14 per share -- -- 15,000 150 -- -- Issuance of common stock at $15.19 per share on April 19, 1993 (net of costs of issuance of $20,724) -- -- 374,370 3,744 -- -- Net loss -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- --------- ---------- --------- --------- ---------- Balance at May 31, 1993 -- $ -- 6,955,955 $ 69,560 -- $ -- --------- --------- ---------- --------- --------- ----------
(Continued) 7
SERIES B CONVERTIBLE DEFICIT TOTAL PREFERRED STOCK ACCUMULATED SHARE- ----------------------- ADDITIONAL DURING THE HOLDERS' NUMBER AGGREGATE PAID-IN DEVELOPMENT DEFERRED EQUITY OF SHARES AMOUNT CAPITAL STAGE COMPENSATION (DEFICIT) ---------- ---------- ---------- ------------- ------------ -------- Issuance of common stock on August 27, 1985 -- $ -- (28,000) -- -- 7,000 Issuance of Series A convertible preferred stock at $4.00 per share on August 27, 1985 (net of costs of issuance of $79,150) -- -- 670,850 -- -- 920,850 Net loss -- -- -- (607,688) -- (607,688) ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1986 -- -- 642,850 (607,688) -- 320,162 Net loss -- -- -- (2,429,953) -- (2,429,953) Deferred compensation relating to grant of stock options -- -- 2,340,000 -- (2,340,000) -- Amortization of deferred compensation -- -- -- -- 720,000 720,000 ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1987 -- -- 2,982,850 (3,037,641) (1,620,000) (1,389,791) Issuance of Series B convertible preferred stock at $35.68 per share on August 14, 1987 (net of costs of issuance of $75,450) 200,633 200,633 6,882,502 -- -- 7,083,135 Net loss -- -- -- (3,057,254) -- (3,057,254) Amortization of deferred compensation -- -- -- -- 566,136 566,136 ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1988 200,633 200,633 9,865,352 (6,094,895) (1,053,864) 3,202,226 Issuance of common stock at $24.21 per share on June 7, 1988 (net of costs of issuance of $246,000) -- -- 9,749,870 -- -- 9,754,000 Conversion of Series A convertible preferred stock to common stock on June 7, 1988 -- -- 237,500 -- -- -- Conversion of Series B convertible preferred stock to common stock on June 7, 1988 (200,633) (200,633) 190,601 -- -- -- Exercise of stock options at $2.00 per share -- -- 93,759 -- -- 94,230 Issuance of common stock at $28.49 per share on March 6, 1989 (net of costs of issuance of $21,395) -- -- 4,976,855 -- -- 4,978,610 Issuance of common stock at $28.49 per share on March 30, 1989 (net of costs of issuance of $10,697) -- -- 2,488,356 -- -- 2,489,234 Sale of options at $28.29 per share to purchase common stock at $.20 per share on March 30, 1989 (net of costs of issuance of $4,162) -- -- 7,443,118 -- -- 7,443,118 Net loss -- -- -- (791,206) -- (791,206) Deferred compensation relating to grant of stock options -- -- 683,040 -- (683,040) -- Amortization of deferred compensation -- -- -- -- 800,729 800,729 ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1989 -- -- 35,728,451 (6,886,101) (936,175) 27,970,941 Net loss -- -- -- (3,490,394) -- (3,490,394) Deferred compensation relating to grant of stock options -- -- 699,163 -- (699,163) -- Amortization of deferred compensation -- -- -- -- 546,278 546,278 ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1990 -- -- 36,427,614 (10,376,495) (1,089,060) 25,026,825 Net loss -- -- -- (5,579,872) -- (5,579,872) Amortization of deferred compensation -- -- -- -- 435,296 435,296 ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1991 -- -- 36,427,614 (15,956,367) (653,764) 19,882,249 Exercise of stock warrants at $5.60 per share -- -- 503,100 -- -- 504,000 Net loss -- -- -- (7,006,495) -- (7,006,495) Amortization of deferred compensation -- -- -- -- 254,025 254,025 ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1992 -- -- 36,930,714 (22,962,862) (399,739) 13,633,779 Exercise of stock warrants at $7.14 per share -- -- 106,890 -- -- 107,040 Issuance of common stock at $15.19 per share on April 19, 1993 (net of costs of issuance of $20,724) -- -- 5,663,710 -- -- 5,667,454 Net loss -- -- -- (8,066,609) -- (8,066,609) Amortization of deferred compensation -- -- -- -- 254,025 254,025 ----------- ----------- ---------- ----------- ----------- ----------- Balance at May 31, 1993 -- $ -- 42,701,314 (31,029,471) (145,714) 11,595,689 ----------- ----------- ---------- ----------- ----------- -----------
(Continued) 8 NORTHFIELD LABORATORIES INC. (a company in the development stage) Statements of Shareholders' Equity (Deficit), continued Three months ended August 31, 2000 and for the period from June 19, 1985 (inception) through August 31, 2000
SERIES A CONVERTIBLE PREFERRED STOCK COMMON STOCK PREFERRED STOCK --------------------- ----------------------- ----------------------- NUMBER AGGREGATE NUMBER AGGREGATE NUMBER AGGREGATE OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES AMOUNT --------- ---------- ---------- --------- --------- --------- Net loss -- $ -- -- $ -- $ -- $ -- Issuance of common stock at $6.50 per share on May 26, 1994 (net of costs of issuance of $2,061,149) -- -- 2,500,000 25,000 -- -- Cancellation of stock options -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- --------- Balance at May 31, 1994 -- -- 9,455,955 94,560 -- -- Net loss -- -- -- -- -- -- Issuance of common stock at $6.50 per share on June 20, 1994 (net of issuance costs of $172,500) -- -- 375,000 3,750 -- -- Exercise of stock options at $7.14 per share -- -- 10,000 100 -- -- Exercise of stock options at $2.00 per share -- -- 187,570 1,875 -- -- Cancellation of stock options -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- --------- Balance at May 31, 1995 -- -- 10,028,525 100,285 -- -- Net loss -- -- -- -- -- -- Issuance of common stock at $17.75 per share on August 9, 1995 (net of issuance costs of $3,565,125) -- -- 2,925,000 29,250 -- -- Issuance of common stock at $17.75 per share on September 11, 1995 (net of issuance costs of $423,238) -- -- 438,750 4,388 -- -- Exercise of stock options at $2.00 per share -- -- 182,380 1,824 -- -- Exercise of stock options at $6.38 per share -- -- 1,500 15 -- -- Exercise of stock options at $7.14 per share -- -- 10,000 100 -- -- Cancellation of stock options -- -- -- -- -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- --------- Balance at May 31, 1996 -- -- 13,586,155 135,862 -- -- Net loss -- -- -- -- -- -- Exercise of stock options at $0.20 per share -- -- 263,285 2,633 -- -- Exercise of stock options at $2.00 per share -- -- 232,935 2,329 -- -- Exercise of stock options at $7.14 per share -- -- 10,000 100 -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- --------- Balance at May 31, 1997 -- -- 14,092,375 140,924 -- -- Net loss -- -- -- -- -- -- Exercise of stock options at $7.14 per share -- -- 5,000 50 -- -- Amortization of deferred compensation -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- --------- Balance at May 31, 1998 -- -- 14,097,375 140,974 -- -- Net loss -- -- -- -- -- -- Non-cash compensation -- -- -- -- -- -- Exercise of stock options at $7.14 per share -- -- 17,500 175 -- -- Exercise of stock warrants at $8.00 per share -- -- 125,000 1,250 -- -- --------- ---------- ---------- ---------- --------- --------- Balance at May 31, 1999 -- -- 14,239,875 142,399 -- -- Net loss -- -- -- -- -- -- Non-cash compensation -- -- -- -- -- -- Exercise of stock options at $13.38 per share -- -- 2,500 25 -- -- --------- ---------- ---------- ---------- --------- --------- Balance at May 31, 2000 -- -- 14,242,375 142,424 -- -- Net loss (unaudited) -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- --------- Balance at August 31, 2000 -- $ -- 14,242,375 $ 142,424 -- $ -- ========= ========== ========== ========== ========= =========
See accompanying independent accountants' review report. (Continued) 9
SERIES B CONVERTIBLE DEFICIT TOTAL PREFERRED STOCK ACCUMULATED SHARE- ---------------------- ADDITIONAL DURING THE HOLDERS' NUMBER AGGREGATE PAID-IN DEVELOPMENT DEFERRED EQUITY OF SHARES AMOUNT CAPITAL STAGE COMPENSATION (DEFICIT) ---------- ---------- ---------- ----------- ------------ ---------- Net loss -- $ -- -- (7,363,810) -- (7,363,810) Issuance of common stock at $6.50 per share on May 26, 1994 (net of costs of issuance of $2,061,149) -- -- 14,163,851 -- -- 14,188,851 Cancellation of stock options -- -- (85,400) -- 85,400 -- Amortization of deferred compensation -- -- -- -- 267 267 --------- --------- ------------ ------------ ---------- ------------ Balance at May 31, 1994 -- -- 56,779,765 (38,393,281) (60,047) 18,420,997 Net loss -- -- -- (7,439,013) -- (7,439,013) Issuance of common stock at $6.50 per share on June 20, 1994 (net of issuance costs of $172,500) -- -- 2,261,250 -- -- 2,265,000 Exercise of stock options at $7.14 per share -- -- 71,300 -- -- 71,400 Exercise of stock options at $2.00 per share -- -- 373,264 -- -- 375,139 Cancellation of stock options -- -- (106,750) -- 106,750 -- Amortization of deferred compensation -- -- -- -- (67,892) (67,892) --------- --------- ------------ ------------ ---------- ------------ Balance at May 31, 1995 -- -- 59,378,829 (45,832,294) (21,189) 13,625,631 Net loss -- -- -- (4,778,875) -- (4,778,875) Issuance of common stock at $17.75 per share on August 9, 1995 (net of issuance costs of $3,565,125) -- -- 48,324,374 -- -- 48,353,624 Issuance of common stock at $17.75 per share on September 11, 1995 (net of issuance costs of $423,238) -- -- 7,360,187 -- -- 7,364,575 Exercise of stock options at $2.00 per share -- -- 362,937 -- -- 364,761 Exercise of stock options at $6.38 per share -- -- 9,555 -- -- 9,570 Exercise of stock options at $7.14 per share -- -- 71,300 -- -- 71,400 Cancellation of stock options -- -- (80,062) -- 80,062 -- Amortization of deferred compensation -- -- -- -- (62,726) (62,726) --------- --------- ------------ ------------ ---------- ------------ Balance at May 31, 1996 -- -- 115,427,120 (50,611,169) (3,853) 64,947,960 Net loss -- -- -- (4,245,693) -- (4,245,693) Exercise of stock options at $0.20 per share -- -- 50,025 -- -- 52,658 Exercise of stock options at $2.00 per share -- -- 463,540 -- -- 465,869 Exercise of stock options at $7.14 per share -- -- 71,300 -- -- 71,400 Amortization of deferred compensation -- -- -- -- 2,569 2,569 --------- --------- ------------ ------------ ---------- ------------ Balance at May 31, 1997 -- -- 116,011,985 (54,856,862) (1,284) 61,294,763 Net loss -- -- -- (5,883,378) -- (5,883,378) Exercise of stock options at $7.14 per share -- -- 35,650 -- -- 35,700 Amortization of deferred compensation -- -- -- -- 1,284 1,284 --------- --------- ------------ ------------ ---------- ------------ Balance at May 31, 1998 -- -- 116,047,635 (60,740,240) -- 55,448,369 Net loss -- -- -- (7,416,333) -- (7,416,333) Non-cash compensation -- -- 14,354 -- -- 14,354 Exercise of stock options at $7.14 per share -- -- 124,775 -- -- 124,950 Exercise of stock warrants at $8.00 per share -- -- 998,750 -- -- 1,000,000 --------- --------- ------------ ------------ ---------- ------------ Balance at May 31, 1999 -- -- 117,185,514 (68,156,573) -- 49,171,340 Net loss -- -- -- (9,167,070) -- (9,167,070) Non-cash compensation -- -- 57,112 -- -- 57,112 Exercise of stock options at $13.38 per share -- -- 33,425 -- -- 33,450 --------- --------- ------------ ------------ ---------- ------------ Balance at May 31, 2000 -- -- 117,276,051 (77,323,643) -- 40,094,832 Net loss (unaudited) -- -- -- (2,517,920) -- (2,517,920) --------- --------- ------------ ------------ ---------- ------------ Balance at August 31, 2000 (unaudited) -- $ -- 117,276,051 (79,841,563) -- 37,576,912 ========= ========= ============ ============ ========== ============
(Continued) 10 NORTHFIELD LABORATORIES INC. (a company in the development stage) Statements of Cash Flows Three months ended August 31, 2000 and 1999 and for the period from June 19, 1985 (inception) through August 31, 2000
CUMULATIVE THREE MONTHS ENDED FROM AUGUST 31, JUNE 19, 1985 --------------------------- THROUGH 2000 1999 AUGUST 31, 2000 ------------ ------------- ----------------- (UNAUDITED) (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Net loss $(2,517,920) (2,039,141) (79,841,563) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 125,253 87,138 14,773,882 Non-cash compensation -- 21,531 3,552,723 Loss on sale of equipment -- -- 66,359 Changes in assets and liabilities: Prepaid expenses 73,085 69,465 (545,396) Other current assets (157,802) (74,692) (2,559,625) Other assets (49,200) -- (42,247) Accounts payable (93,690) (213,335) 967,677 Accrued expenses 35,712 24,841 209,721 Accrued compensation and benefits 1,470 14,400 252,040 Other liabilities 6,504 6,662 154,221 ------------ ------------- --------------- Net cash used in operating activities (2,576,588) (2,103,131) (63,012,208) ------------ ------------- --------------- Cash flows from investing activities: Purchase of property, plant, equipment, and capitalized engineering costs (183,946) (269,601) (17,224,748) Proceeds from matured marketable securities 5,049,200 3,549,200 360,439,181 Proceeds from sale of marketable securities -- -- 7,141,656 Purchase of marketable securities (5,684,996) (5,000,292) (391,345,958) Proceeds from sale of equipment -- -- 1,863,023 ------------ ------------- ----------------- Net cash used in investing activities (819,742) (1,720,693) (39,126,846) ------------ ------------- ----------------- Cash flows from financing activities: Proceeds from issuance of common stock -- -- 103,521,928 Payment of common stock issuance costs -- -- (5,072,012) Proceeds from issuance of preferred stock -- -- 6,644,953 Proceeds from sale of stock options to purchase common shares -- -- 7,443,118 Proceeds from issuance of notes payable -- -- 1,500,000 Repayment of notes payable -- -- (140,968) ------------ ------------- --------------- Net cash provided by financing activities -- -- 113,897,019 ------------ ------------- --------------- Net increase (decrease) in cash (3,396,330) (3,823,824) 11,757,965 Cash at beginning of period 15,154,295 25,855,668 -- ------------ ------------- --------------- Cash at end of period $11,757,965 22,031,844 11,757,965 ============ ============= ===============
See accompanying independent accountants' review report. 11 NORTHFIELD LABORATORIES INC. (a company in the development stage) Notes to Financial Statements August 31, 2000 (1) BASIS OF PRESENTATION The interim financial statements presented are unaudited but, in the opinion of management, have been prepared in conformity with accounting principles generally accepted in the United States of America applied on a basis consistent with those of the annual financial statements. Such interim financial statements reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The results of operations for the interim period presented are not necessarily indicative of the results to be expected for the year ending May 31, 2001. The interim financial statements should be read in connection with the audited financial statements for the year ended May 31, 2000. (2) COMPUTATION OF NET LOSS PER SHARE Basic earnings per share is based on the weighted average number of shares outstanding and excludes the dilutive effect of unexercised common stock equivalents. Diluted earnings per share is based on the weighted average number of shares outstanding and includes the dilutive effect of unexercised common stock equivalents. Because the Company reported a net loss for all periods presented, basic and diluted per share amounts are the same. 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Since Northfield's incorporation in 1985, we have devoted substantially all of our efforts and resources to the research, development and clinical testing of our potential product, PolyHeme(TM). We have incurred operating losses during each year of our operations since inception and expect to incur substantial additional operating losses for the next several years. From Northfield's inception through August 31, 2000, we have incurred operating losses totaling $79,841,000. Our success will depend on several factors, including our ability to obtain Food & Drug Administration regulatory approval of PolyHeme and our manufacturing facilities, obtain sufficient quantities of blood to manufacture PolyHeme in commercial quantities, manufacture and distribute PolyHeme in a cost-effective manner, and enforce our patent positions. We have experienced significant delays in the development and clinical testing of PolyHeme. We cannot ensure that we will be able to achieve these goals or that we will be able to realize product revenues or profitability on a sustained basis or at all. We anticipate that research and development expenses will increase during the foreseeable future. These expected increases are attributable to anticipated future clinical trials, monitoring and reporting the results of these trials and continuing process development associated with improving our manufacturing capacity to permit commercial-scale production of PolyHeme. We expect that general and administrative expenses will increase over the foreseeable future due to the contested proxy for the election of directors and increased expenses relating to the expansion of our organization in support of 13 anticipated commercial operations. RESULTS OF OPERATIONS We reported no revenues for either of the three-month periods ended August 31, 2000 or 1999. From Northfield's inception through August 31, 2000, we have reported total revenues of $3,000,000, all of which were derived from licensing fees. OPERATING EXPENSES Operating expenses for our first fiscal quarter ended August 31, 2000 totaled $3,107,000, an increase of $498,000 from the $2,609,000 reported in the first quarter of fiscal 2000. Measured on a percentage basis, total expenses in the first quarter of fiscal 2001 increased by 19.1%. This increase was primarily due to increased costs associated with legal and professional services, our clinical trials and expansion of our manufacturing organization. Research and development expenses for our first quarter of fiscal 2001 totaled $2,238,000, an increase of $114,000, or 5.4%, from the $2,124,000, reported in the first quarter of fiscal 2000. The majority of the increase in research and development expenses resulted from increased salaries for the manufacturing staff which were granted in order for the Corporation to remain competitive along with the expansion of our manufacturing organization. We anticipate that research and development expenses will increase significantly in the 14 foreseeable future. Additional costs are being planned for multi-center clinical trials, third party clinical monitoring, biostatistical analysis, report preparation and continued expansion of our manufacturing organization. General and administrative expenses in the first quarter of fiscal 2001 totaled $870,000 compared to expenses of $485,000 in the first quarter of 2000, representing an increase of $385,000, or 79%. The increase is the result of higher costs for legal and professional services utilized in the contested proxy for the election of directors. We continue to prioritize research and development over general and administrative expenses. We expect the level of general and administrative expenses to be less than the $870,000 incurred in the first fiscal quarter for next several quarters due to the non-recurring nature of the 1st quarter additional proxy costs. INTEREST INCOME Interest income in the first quarter of fiscal 2001 totaled $590,000, or a $20,000 increase from the $579,000 in interest income reported in the first quarter of fiscal 2000. Higher interest rates in fiscal 2001 more than offset lower available investment balances, which accounted for the increase. 15 NET LOSS The net loss for the first quarter ended August 31, 2000 was $2,518,000, or $.18 per basic share, compared to a net loss of $2,039,000, or $.14 per basic share, for the first quarter ended August 31, 1999. The increase in the loss per basic share is primarily the result of the higher use of legal and professional services and the higher costs of our manufacturing organization. LIQUIDITY AND CAPITAL RESOURCES From Northfield's inception through August 31, 2000, we have used cash in operating activities and for the purchase of property, plant, equipment and engineering services in the amount of $80,232,000. For the three-month periods ended August 31, 2000 and 1999, these cash expenditures totaled $2,761,000, and $2,373,000, respectively. The increased cash outlay for the first quarter of fiscal 2001 compared to the comparable prior year period reflects an increased level of General Administrative expense. We have financed our research and development and other activities to date primarily through the public and private sale of equity securities and, to a more limited extent, through the license of product rights. As of August 31, 2000, we had cash and marketable securities totaling $35,523,000. 16 We believe our existing capital resources will be adequate to satisfy our operating capital requirements and maintain our existing pilot manufacturing plant and office facilities for approximately the next 24-36 months. Thereafter, we are likely to require substantial additional capital to continue our operations. We are currently unable to fund the construction of a large-scale greenfield manufacturing facility, which is estimated to cost approximately $45 million, without raising substantial additional capital. Currently, we have manufacturing capacity of approximately 10,000 units. Initial engineering on the leased space adjacent to the existing manufacturing facility is completed. This engineering indicates an additional capacity of 50-60,000 units could be developed in approximately 16-18 months at a cost of $18-20 million. Northfield has not yet committed to the buildout. The Corporation views the smaller facility as financially prudent yet large enough for commercial viability. We may enter into collaborative arrangements with strategic partners which could provide us with additional funding or absorb expenses we would otherwise be required to pay. We have engaged in discussions with a number of potential strategic partners. These discussions are at various stages and we cannot ensure that any of these arrangements will be consummated. Our capital requirements may vary materially from those now anticipated because of the results of our clinical testing of PolyHeme, the establishment of relationships with strategic partners, changes in the scale, timing or cost of our commercial manufacturing facility, competitive and technological advances, the FDA regulatory process, changes in our marketing and distribution strategy and other factors. 17 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 10-Q EXHIBIT 15 - Letter RE: Unaudited Interim Financial Information EXHIBIT 27 - Financial Data Schedule (b) None. 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on October 11, 2000. NORTHFIELD LABORATORIES INC. By /s/ RICHARD E. DEWOSKIN --------------------------------------- Richard E. DeWoskin Chairman of the Board and Chief Executive Officer By /s/ JACK J. KOGUT --------------------------------------- Jack J. Kogut Secretary and Treasurer (principal financial officer and principal accounting officer) EX-15 2 c57809ex15.txt LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION 1 EXHIBIT 15 ACKNOWLEDGMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REGARDING INDEPENDENT AUDITORS' REVIEW REPORT The Board of Directors Northfield Laboratories Inc.: With respect to registration statements of Form S-8 of Northfield Laboratories Inc., we acknowledge our awareness of the use therein of our report dated October 2, 2000 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of sections 7 and 11 of the Act. /s/ KPMG Chicago, Illinois October 11, 2000 EX-27 3 c57809ex27.txt FINANCIAL DATA SCHEDULE
5 1 3-MOS MAY-31-2001 JUN-01-2000 AUG-31-2000 11,757,965 23,765,120 0 0 0 36,522,644 14,152,753 11,638,106 39,160,571 1,429,438 0 0 0 142,424 37,434,488 39,160,571 0 0 0 0 0 0 0 (2,517,920) 0 (2,517,920) 0 0 0 (2,517,920) (.18) (.18)
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