UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 30, 2010
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number: 0-23280
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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94-3049219
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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2000 Powell Street, Suite 800, Emeryville, California
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94608
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(Address of principal executive office)
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(Zip Code)
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(510) 595-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 par value
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Securities registered pursuant to Section 12(g) of the act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes
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No
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Indicate by check mark whether the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
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No
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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
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No
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Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
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No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes
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No
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The aggregate market value of the voting stock held by non-affiliates of the registrant based
upon the closing price of the Common Stock as quoted on the Pink Sheets on December 31, 2009 was
approximately $1.4 million. Shares of Common Stock held by each executive officer and director and
by each person or group who owns 10% or more of the outstanding Common Stock at December 31, 2009
have been excluded. Exclusion of such shares should not be construed to indicate that any such
person possesses the power, direct or indirect, to direct
or cause the direction of the management or policies of the registrant or that such person is
controlled by or under common control with the registrant.
On September 28, 2010 there were 27,019,805 shares of the registrant’s common stock
outstanding.
PART I
ITEM 1. BUSINESS
This report contains forward-looking statements. These forward-looking statements are based on
our current expectations about the status of our dissolution and our business. In some cases, these
statements may be identified by terminology such as “anticipates,” “believes,” “continue,”
“estimates,” “expects,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” or the negative
of such terms and other comparable terminology. These statements involve known and unknown risks
and uncertainties that may cause our dissolution payments, cash available to common stockholders,
financial results, performance or achievements to be materially different from those expressed or
implied by the forward-looking statements. Factors that may cause or contribute to such differences
include, among others, those discussed in this report under Item 1A.—“Risk Factors.” Except as may
be required by law, we do not intend to update any forward-looking statement to reflect events
after the date of this report. “We,” “us,” “NTI” and the “Company” as used in this report refer to
Neurobiological Technologies, Inc., a Delaware corporation in dissolution, and, as applicable, our
subsidiary, NTI-Empire, Inc.
Overview
We were previously focused on developing investigational drugs to treat human diseases. On
October 27, 2009, our stockholders approved the dissolution of the Company pursuant to a plan of
complete liquidation and dissolution earlier approved by our board of directors on August 27, 2009
(the “Plan of Dissolution”). On November 4, 2009, we redeemed all of the outstanding shares of our
Series A Preferred Stock for $0.50 per share, the original issue price of the Series A Preferred
Stock and its liquidation preference. Thereafter, following payments of extraordinary dividends of
$0.75 and $0.18 per share of common stock on November 18, 2009 and December 9, 2009, respectively,
on December 17, 2009 we filed a certificate of dissolution with the Secretary of State of the State
of Delaware (the “Certificate of Dissolution”) and completed the voluntary delisting of our common
stock from the Nasdaq Capital Market. On December 17, 2009, we also closed our stock transfer books
and discontinued recording transfers of our common stock.
As a corporation in dissolution, we are not allowed to carry on any business except for the
purpose of winding down the business and affairs of the Company. We are in the process of
discharging any remaining liabilities under dissolution procedures provided for under the General
Corporation Law of the State of Delaware (the “DGCL”). We intend to make at least one additional
liquidating distribution to our stockholders at the conclusion of this process, although the amount
and timing cannot presently be determined. In accordance with the DGCL, our corporate existence
will continue until at least three years from the date we filed the Certificate of Dissolution, or
December 17, 2012.
Liquidation Basis of Accounting
Following the filing of the Certificate of Dissolution with the State of Delaware on December
17, 2009, we began reporting on a liquidation basis of accounting instead of a going concern basis
of accounting. Under the liquidation basis of accounting, the Statement of Net Assets (Liquidation
Basis) and Statement of Changes in Net Assets (Liquidation Basis) are the principal financial
statements presented. In these statements, our assets are stated at their estimated net realizable
value, which is the amount of cash into which the assets are ultimately expected to be converted,
less any conversion costs. Liabilities are reported at their estimated settlement amount, which is
the amount of cash expected to be paid to liquidate the obligation, including any direct costs of
the liquidation. Additionally, we have established a reserve for all estimated future general and
administrative expenses and other costs expected to be incurred while we are in dissolution, which
under the DGCL is expected to be at least three years. The reserve for these estimated expenses
primarily includes accruals including personnel costs for administrative work, facilities
including previously unaccrued future lease and other obligations, professional services, legal
and accounting costs, corporate expenses (insurance, directors’ fees and statutory fees) and
estimated expenses to establish a trust or another facility to preserve our continuing interest in
XERECEPT
®
, which is an investigational drug being developed by another party. These estimates will
be periodically reviewed and adjusted as appropriate. There can be no assurance that these
estimated values will ultimately be realized.
We currently retain an economic interest in an investigational drug called XERECEPT
®
, which
is a synthetic preparation of Corticotropin-Releasing Factor, a natural human peptide. XERECEPT
®
is being developed by Celtic Pharma as a treatment for swelling around brain tumors and other
cancer indications. We are entitled to receive payments if Celtic successfully develops and
commercializes XERECEPT, including up to $7.5 million in milestone payments upon regulatory
approvals in key areas of the world, payments of 22% on profit margins in the United States and
graduated royalties of 15-20% on sales elsewhere in the world, or, if Celtic sells its rights to
XERECEPT, 13-22% of the net proceeds that are received by Celtic Pharma in the transaction. As we
do not exercise any control over Celtic’s development of XERECEPT and the
information we receive from Celtic is limited, we are unable to estimate if or when we will
receive any payments related to the development of XERECEPT.
3
Employees
As of June 30, 2010, we had no full or part-time employees. We use consultants that are paid
on an hourly basis to continue the process of winding down our operations.
Available Information
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,
and all amendments to these reports are electronically filed with or furnished to the Securities
and Exchange Commission, or SEC. These reports may be obtained directly from the SEC’s website,
www.sec.gov
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ITEM 1A. RISK FACTORS
Risks Related to the Wind-down of our Business and Affairs
If the amount of our contingency reserve is insufficient to satisfy the aggregate amount of our
liabilities and other obligations, each stockholder may be liable to our creditors for the amount
of liquidating distributions received by such stockholder under the Plan of Dissolution, which
could also have adverse tax consequences.
Our corporate existence will continue until at least December 17, 2012, three years from the date
we filed the Certificate of Dissolution. However, as a corporation in dissolution, we are not
allowed to carry on any business except for the purpose of winding down the business and affairs
of the Company. After we filed the Certificate of Dissolution, we commenced the elective
dissolution process, under Sections 280 and 281(a) of the General Corporation Law of the State of
Delaware, or DGCL, which involves providing notice of our dissolution to potential claimants and
paying or making reasonable provision to pay all claims and obligations, including all contingent,
conditional or unmatured contractual or statutory claims, known to us. We may also obtain and
maintain insurance coverage or establish and set aside a reasonable amount of cash or other assets
as a contingency reserve to satisfy claims against and obligations of the Company. In the event
that the amount of the contingency reserve, insurance and other measures calculated to provide for
the satisfaction of liabilities and claims are insufficient to satisfy the aggregate amount
ultimately found payable in respect of our liabilities and claims against us, each stockholder
could be held liable for amounts due to creditors up to the amounts distributed to such
stockholder under the Plan of Dissolution. In such event, a stockholder could be required to
return any amounts received as distributions pursuant to the Plan of Dissolution. Moreover, for
U.S. federal income tax purposes, payments made by a stockholder in satisfaction of our
liabilities not covered by the cash or other assets in our contingency reserve or otherwise
satisfied through insurance or other reasonable means generally would produce a capital loss for
such stockholder in the year the liabilities are paid. The deductibility of any such capital loss
generally would be subject to limitations under the Internal Revenue Code of 1986, as amended.
Final liquidating distributions to our stockholders could be delayed or reduced or may never be
made.
Any final liquidating distributions we make to our stockholders could be delayed, depending on
many factors, including, without limitation:
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if a creditor or other third party seeks an injunction against the making of distributions to
our stockholders on the ground that the amounts to be distributed are needed to provide for the
satisfaction of our liabilities or other obligations;
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if we become a party to lawsuits or other claims asserted by or against us, including any claims
or litigation arising in connection with our decision to liquidate and dissolve, payments to
suppliers or other vendors or claims from patients in our clinical trials;
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if we are unable to liquidate our remaining auction rate security, or ARS, or if such
liquidation takes longer than expected;
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if we are unable to resolve claims with creditors or other third parties, or if such resolutions
take longer than expected; or
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the elective dissolution process is not completed in a timely manner due to all of the steps
required to complete such a process, including any potential delay in the Delaware Court of
Chancery, which could delay final approval of our petition.
4
Any of the foregoing could delay or substantially diminish the amount available for distribution
to our stockholders. In addition, under the DGCL, claims and demands may be asserted against us at
any time before December 17, 2012. Accordingly, we may retain funds to obtain and maintain insurance coverage or establish and set
aside a reasonable amount of cash or other assets as a contingency reserve to satisfy claims
against and obligations of the Company that may arise during that three-year period. As a result
of these factors, we may retain for distribution at a later date, some or all of the estimated
amounts that we expect to distribute to our stockholders. At the conclusion of the process for
dissolution, there may not be any remaining cash available for distribution to stockholders.
We may not be able to settle all of our obligations to creditors.
Our estimate of the final distributions to our stockholders takes into account all of our known
obligations and our best estimate of the amount reasonably required to satisfy other estimated
obligations. As part of the dissolution process, we will attempt to settle all obligations with
our creditors. We cannot assure you that we will be able to settle all of these obligations or
that they can be settled for the amounts we have estimated for purposes of calculating the likely
distribution to stockholders.
Although the time-period for known creditors to submit claims to us under Sections 280 and 281(a)
of the DGCL ended on May 8, 2010, there may be additional unknown creditors that have yet to
submit a valid claim. If we are unable to reach agreement with a creditor submitting such a claim,
that creditor may bring a lawsuit against us. Amounts required to settle obligations or defend
lawsuits in excess of the estimated amounts will result in distributions to stockholders that are
smaller than those that we presently estimate or may eliminate distributions entirely.
We have no control over the development and commercialization of XERECEPT
®
, which we have sold to
Celtic Pharma, and as a result, we are dependent upon Celtic Pharma to obtain any value from this
product candidate.
In November 2005, we completed the sale of all our rights and assets related to XERECEPT to two
newly-formed subsidiaries of Celtic Pharma. Under our agreement with the Celtic Pharma
subsidiaries, we are eligible to receive milestone payments upon the achievement of certain
regulatory objectives, and if XERECEPT is approved for commercial sale we are eligible to receive
payments on profit margins of XERECEPT in the United States and royalties on sales elsewhere in
the world. However, because Celtic Pharma has assumed control of the clinical development of
XERECEPT throughout the world, our ability to receive these payments depends on Celtic Pharma.
Celtic Pharma controls the execution of clinical trials and will direct the final regulatory
approval process and commercialization, if the product is approved. If Celtic Pharma is unable to
successfully develop and market XERECEPT, we will not receive any development milestone payments
or any royalty or profit-sharing payments, which would reduce the potential for future
distributions to our stockholders.
The approval of XERECEPT
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, the only investigational drug in which we retain any interest, by the
FDA or other regulatory authorities is uncertain and will involve the commitment of substantial
time and resources.
In June 2009, Celtic Pharma announced the results of its Phase 3 clinical trial of XERECEPT,
showing that XERECEPT enabled decreases in steroid usage and steroid-associated side effects in
both acute and long-term treatment of patients with edema associated with either primary or
metastatic brain tumors. However, the clinical trial did not demonstrate statistical significance
for its primary endpoint, a composite of steroid reduction, neurological examination results and
functional impairment, which could hinder the future development of XERECEPT.
In April 2010, Celtic Pharma announced the initiation of Phase 1/2 clinical trials of XERECEPT in
pediatric patients suffering from primary, recurrent or metastatic brain tumors, as well as the
results from several preclinical studies of XERECEPT
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in established models for breast, colon and
brain tumors. These are very early studies and significant further development efforts and time
will be required before any potential value would likely be realized.
As part of the regulatory approval process, a drug sponsor must conduct preclinical research and
clinical trials for each product candidate sufficient to demonstrate its safety and efficacy to
the satisfaction of the FDA in the United States and other regulatory agencies in the countries
where the product candidate will be marketed, if approved. The number of preclinical studies and
clinical trials that will be required varies depending on the product, the disease or condition
for which the product is in development and the regulations applicable to any particular product.
The regulatory process typically also includes a review of the manufacturing process to ensure
compliance with applicable regulations and standards, including the FDA’s current Good
Manufacturing Practice, or cGMP, regulations. The FDA can delay, limit or decline to grant
approval for many reasons, including their determination that a product candidate is not safe or
effective or their determination that the manufacturing processes or facilities do not meet
specified requirements, among others. The denial of approval, or any delay or limitation on
approval, of XERECEPT would substantially harm our ability to receive future payments tied to the
success of XERECEPT.
5
Even if XERECEPT
®
is approved for commercialization, it may not be successfully commercialized or
generate meaningful product revenues for us.
If XERECEPT is approved for commercialization and commercialized by Celtic Pharma, we would be
entitled to receive payments from Celtic Pharma based on the approvals as well as royalty and/or
profit sharing payments. For us to receive these payments, Celtic Pharma would need to either
market the drug directly, which would require them to recruit and train a direct sales force, or
enter into a collaborative arrangement with a larger biotechnology or pharmaceutical company with
an existing sales force to sell, market and distribute the product. Although we are entitled to a
percentage of the proceeds received by Celtic Pharma if Celtic Pharma licenses or sells its
interest in XERECEPT, we do not have any control or influence over Celtic Pharma’s
commercialization decision. Any commercialization arrangement that Celtic Pharma ultimately enters
into might not result in generating any meaningful product royalties or other payments to us.
Celtic Pharma may not be successful in selling its rights to XERECEPT.
Celtic Pharma has previously announced that it has retained an investment bank to assist with the
sale of the worldwide commercial rights to XERECEPT. If Celtic Pharma sells or sublicenses its
rights to XERECEPT to another entity, we are entitled to receive 13 to 22% of the net proceeds
that are received by Celtic Pharma in lieu of the milestones and royalties that are payable in the
event Celtic Pharma markets the drug directly. Celtic Pharma may not be successful in selling
XERECEPT, in which case Celtic Pharma might decide not to continue with further development.
Further, even if Celtic Pharma does sell XERECEPT, it is likely that some or all of the
consideration it receives would be contingent upon the future development or successful
commercialization of the drug, which would substantially delay any payments that we would receive.
Risks Related to Our Financial Condition
The auction rate security we hold in our portfolio trades infrequently, its value has been
estimated, and we may have to sell it at a loss
.
As of June 30, 2010, our investments included a single remaining interest-bearing ARS for which we
paid a total of $700,000, and are carrying at an estimated value of $588,000. The ARS investment
is intended to provide liquidity via an auction process that resets the applicable interest rates
at predetermined calendar intervals, allowing investors to either roll over their holdings or
obtain immediate liquidity by selling such investments at par. Since February 2008, the auctions
for our ARS have failed to settle on their respective settlement dates. Consequently, the
investment is not currently liquid and we are not able to access these funds until a future
auction is successful, the investments are called by the issuer, or we find a buyer outside the
auction process. The maturity date for the ARS is not until 2031 and we are unlikely to be able to
hold the ARS investment to maturity. The value of this security has been estimated, and its actual
value upon sale may be less than we have estimated. We may experience a further loss on sale of
the ARS, reducing the capital available to distribute to stockholders.
Risks Related to Our Common Stock
Our common stock stopped trading on the Nasdaq Capital Market on December 17, 2009, and we closed
our stock transfer books as of this date, each of which will make it difficult for stockholders to
trade their shares.
On December 17, 2009, we closed our stock transfer books after we filed the Certificate of
Dissolution. We are now prohibited from recording transfers of record ownership of our common
stock, and stock certificates evidencing the shares of our common stock are no longer assignable
or transferable on our books. Trading of our common stock was halted on the Nasdaq Capital Market
as of the beginning of business on December 17, 2009, and trading of our common stock is now
conducted in the Pink Sheets, an electronic bulletin board established for unlisted securities.
Such trading has reduced the market liquidity of our common stock. As a result, an investor will
find it more difficult to dispose of, or obtain accurate quotations for the price of, our common
stock.
The market price of our common stock has been, and is likely to continue to be, highly volatile.
As we are no longer an operating company, the only value underlying the trading price of our common
stock is the right to receive further distributions, if any, as part of the liquidation process.
Because of the difficulty in estimating the amount and timing of the liquidating distributions and
due to the other risk factors discussed, our common stock is likely to continue to be subject to
significant volatility and may trade above or below the amount of any future liquidating
distribution that may be made.
6
FORWARD-LOOKING STATEMENTS
This report, including the sections entitled “Risk Factors,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” and “Business,” contains
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E
of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may, in some cases, use
words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,”
“would,” “could,” “potentially,” “will,” or “may,” or other words that convey uncertainty of future
events or outcomes to identify these forward-looking statements. Forward-looking statements in this
report may include statements about:
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the development and commercialization or sale of XERECEPT by Celtic Pharma;
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projections of expenditures and liabilities, as well as of cash or
other assets available for distribution to stockholders;
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our ability to successfully liquidate our remaining ARS and other
assets of the Company for distribution to the stockholders; and
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any statements regarding future cash levels, future costs and/or net assets in liquidation.
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There are a number of important factors that could cause actual results to differ materially
from the results anticipated by these forward-looking statements. These factors include those that
we discuss in this report under the caption “Risk Factors.” You should read these factors and the
other cautionary statements made in this report as being applicable to all related forward-looking
statements wherever they appear in this report. If one or more of these factors materialize, or if
any underlying assumptions prove incorrect, our actual results, performance or achievements may
vary materially from any future results, performance or achievements expressed or implied by these
forward-looking statements. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required
by law.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our principal executive offices are located in an approximately 10,000 square foot facility in
Emeryville, California that is occupied under an operating lease expiring on November 30, 2010.
Most of our facility has been empty since we filed for dissolution, and we believe that, if we need
office space after expiration of our existing lease, we would readily be able to find suitable
space.
ITEM 3. LEGAL PROCEEDINGS
While we are not currently a party to any material pending legal proceedings, from time to
time we are named as a party to lawsuits in the normal course of our business.
ITEM 4. (REMOVED AND RESERVED)
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Our common stock was traded on the Nasdaq Capital Market under the symbol “NTII” through the
close of business on December 16, 2009. Beginning with the opening of business on December 17,
2009, we closed our stock transfer books and voluntarily delisted from the Nasdaq Capital Market.
Although we no longer allow transfers among stockholders of record, “street-name” stockholders, or
those that hold there shares in a brokerage account, generally can still trade their stock in the
Pink Sheets, where our common stock is listed under the symbol “NTII”, but certain quotation
systems require the symbol to be entered as “NTII.PK” The following table sets forth the high and
low reported intraday sale prices of our common stock during the past two fiscal years as reported
by the Nasdaq Capital Market or as listed in the Pink Sheets.
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Fiscal Year 2010
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High
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Low
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Fourth Quarter
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$
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0.09
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$
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0.07
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Third Quarter
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$
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0.15
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$
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0.07
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Second
Quarter (December 17 — 31, 2009) on Pink Sheets
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$
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0.14
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$
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0.05
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Second Quarter (October 1 — December 16, 2009) on Nasdaq
Capital Market
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$
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0.97
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$
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0.11
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First Quarter
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$
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1.05
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$
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0.62
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7
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Fiscal Year 2009
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High
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Low
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Fourth Quarter
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$
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0.94
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$
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0.65
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Third Quarter
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$
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0.72
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$
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0.30
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Second Quarter
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$
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0.97
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$
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0.19
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First Quarter
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$
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1.67
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$
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0.57
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As
of September 28, 2010, there were approximately 200 holders of record of our common stock
and a total of 27,019,805 shares of common stock outstanding. The number of holders of record does
not include holders in “street name” which comprise the majority of our stockholders. Following
stockholder approval of our plan of dissolution, we paid extraordinary dividends of $0.75 and $0.18
per share on November 18, 2009 and December 9, 2009, respectively. We plan to pay an additional
extraordinary dividend and/or liquidating distribution to stockholders following completion of the
dissolution process, liquidation of all assets and payment of substantially all of our liabilities,
although the amount and timing of this dividend or distribution has not yet been determined, and it
may never be paid if liabilities exceed present estimates.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We are a company that previously focused on developing investigational drugs to treat human
diseases. On October 27, 2009, our stockholders approved the dissolution of the Company pursuant to
a plan of complete liquidation and dissolution earlier approved by our board of directors on August
27, 2009 (the “Plan of Dissolution”). On November 4, 2009, we redeemed all of the outstanding
shares of our Series A Preferred Stock for $0.50 per share, the original issue price of the Series
A Preferred Stock which was also its liquidation preference. Thereafter, following payments of
extraordinary dividends of $0.75 and $0.18 per share of common stock on November 18, 2009 and
December 9, 2009, respectively, on December 17, 2009 we filed a certificate of dissolution with the
Secretary of State of the State of Delaware (the “Certificate of Dissolution”) and completed the
voluntary delisting of our common stock from the Nasdaq Capital Market. Also on December 17, 2009,
we closed our stock transfer books and discontinued recording transfers of our common stock. We are
in the process of discharging any remaining liabilities under dissolution procedures provided for
under the DGCL. We intend to make at least one additional liquidating distribution to our
stockholders at the conclusion of this process, although the amount and timing cannot presently be
determined.
Liquidation Basis of Accounting
Following the filing of the Certificate of Dissolution with the State of Delaware on December
17, 2009, we began reporting on a liquidation basis of accounting instead of a going concern basis
of accounting. Under the liquidation basis of accounting, the Statement of Net Assets (Liquidation
Basis) and Statement of Changes in Net Assets (Liquidation Basis) are the principal financial
statements presented. In these statements, our assets are stated at their estimated net realizable
value, which is the amount of cash into which the assets are ultimately expected to be converted,
less any conversion costs. Liabilities are reported at their estimated settlement amount, which is
the amount of cash expected to be paid to liquidate the obligation, including any direct costs of
the liquidation. Additionally, we have established a reserve for all estimated future general and
administrative expenses and other costs expected to be incurred while we are in dissolution, which
under the DGCL is expected to be at least three years. The reserve for these estimated expenses
primarily includes accruals such as personnel costs for administrative work, facilities including
previously unaccrued future lease and other obligations, professional services, legal and
accounting costs, corporate expenses (insurance, directors’ fees and statutory fees) and estimated
expenses to establish a trust or other facility to preserve our continuing economic interest in
XERECEPT
®
, which is an investigational drug being developed by another party. The estimated future
costs are reviewed at least quarterly and adjusted as appropriate. There can be no assurance that
these estimated values will ultimately be realized.
8
Critical Accounting Policies
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires us to make judgments, assumptions and estimates that affect the amounts
reported and the disclosures made. Actual results could differ
materially from those estimates. The following are critical accounting policies and estimates that
we believe are the most important and/or subjective items used in determining our net assets in
liquidation, changes in these net assets, as well as the results of operations presented in the
consolidated financial statements.
Liquidation Accounting and Estimates Involved in Determining Accrued Liquidation Expenses
Following the filing of the Certificate of Dissolution with the State of Delaware on December 17,
2009, we began reporting on a liquidation basis of accounting instead of a going concern basis of
accounting. Under the liquidation basis of accounting, the Statement of Net Assets (Liquidation
Basis) and Statement of Changes in Net Assets (Liquidation Basis) are the principal financial
statements presented. In these statements, our assets are stated at their estimated net realizable
value, which is the amount of cash into which the assets are ultimately expected to be converted,
less any conversion costs. Liabilities are reported at their estimated settlement amount, which is
the amount of cash expected to be paid to liquidate the obligation, including any direct costs of
the liquidation. Additionally, we have established a reserve for all estimated future general and
administrative expenses and other costs expected to be incurred while we are in dissolution, which
under the DGCL is expected to be at least three years.
Because future costs to be incurred during the dissolution period are currently not known with any
degree of certainty, we have estimated these future costs in our statement of net assets. Our
estimate includes personnel costs for administrative work, facilities including lease and other
obligations, professional services expected to be used, legal and accounting costs, corporate
expenses (such as insurance, directors’ fees and statutory fees) and estimated expenses to
establish a trust or other facility to preserve our continuing interest in XERECEPT
®
, which is an
investigational drug being developed by another party. These estimates are reviewed at least
quarterly and adjusted as appropriate. Estimates for future levels of costs are highly subjective,
and as an example of this subjectivity, as of June 30, 2010 we decreased the estimate by $239,000
from the level established on December 17, 2009. This is comprised of both a “reduction in the
estimated settlement amount of liabilities” and a “reduction in income taxes payable”. In the
future, the estimated realizable value of assets and liabilities may decrease or increase, so
stockholders should be aware of the risks that their dissolution payments, if any, may be less than
estimated in the consolidated statement of net assets (liquidation basis).
Estimates Involved in Determining Fair Value of Investments
We estimate the fair value of our investments in Auction Rate Securities, or ARS, based on models
of discounted cash flow and assumptions regarding future interest rates. The Company’s investments
in ARS were initially structured to provide liquidity via an auction process that reset the
applicable interest rate at predetermined calendar intervals. Beginning in February 2008, failed
auctions occurred throughout the ARS market, and since then all auctions for our ARS have been
unsuccessful. While the credit rating of these securities remains high and the ARS are paying
interest according to their terms, as a result of the potentially long maturity and lack of
liquidity for ARS, we have recorded impairment charges to reflect our judgment that the decline in
value is other-than-temporary. Models estimating the value of ARS are complex and require estimates
that can significantly change their value.
Revenue recognition
During the period prior to our filing for dissolution, revenue from nonrefundable up-front fees
where we continue involvement through a service agreement or other obligation was initially
classified as “deferred revenue,” a liability on our consolidated balance sheet. We subsequently
amortized the deferred revenue into “collaboration service revenue” in the consolidated statement
of operations over the period of our service obligations. Technology and collaboration service
revenue was recognized according to the terms of the contractual agreements to which we were a
party, when our performance requirements were fulfilled, the amount was fixed and determinable, and
collection was reasonably assured. Revenue from license fees with non-cancelable, non-refundable
terms and no future performance obligations was recognized when collection was assured. Milestone
payments were recognized when we fulfilled development milestones and collection was assured.
Revenue from services performed for other parties was recorded during the period in which the
expenses were incurred.
Royalty revenue was generally recorded when payments were received, which often was one to two
quarters after the period in which the products sales occurred, because there was no information
available to us on the product sales until the time we receive the royalty payment.
Revenue arrangements with multiple components were divided into separate units of accounting if
certain criteria were met, including whether the delivered component had stand-alone value to the
customer, and whether there was objective reliable evidence of the fair value of the undelivered
items. Consideration received was allocated among the separate units of accounting based on their
relative fair values, and the applicable revenue recognition criteria were identified and applied
to each of the units.
9
Recent Accounting Pronouncements
We do not believe there are any recent accounting pronouncements that are likely to be material to
the presentation or amounts we report in our financial statements under the liquidation basis of
accounting.
CHANGES IN ESTIMATED NET REALIZABLE VALUE OF ASSETS AND LIABILITIES
Upon adoption of the liquidation basis of accounting following our filing the Certificate of
Dissolution, we wrote-off all assets to a net book value of zero because of our belief that no
value would be recovered from the sale of the assets. Included in the write-off of assets were
prepaid and other expenses of $493,000, which included prepaid insurance for policies that did not
provide for refunds for unused portion of the premiums and policies for coverage over the
dissolution period. In addition, our unsold property and equipment, such as desks and computers,
were determined to have no value to other parties. Also, upon adoption of the liquidation basis of
accounting, we accrued the estimated costs expected to be incurred during the dissolution period,
which under DGCL must be a minimum of three years of corporate existence. Therefore, we accrued
estimated costs for this three-year period, including personnel costs for administrative work,
facilities including previously unaccrued future lease and other contractual obligations,
professional services and legal costs, directors’ fees, statutory fees and estimated future
expenses to establish a facility (such as a trust) to preserve our continuing economic interest in
XERECEPT
®
, which is an investigational drug being developed by another party.
We periodically review and re-evaluate the estimates of future expenses through the liquidation
process. Following the May 8, 2010 termination of the period for creditors to submit certain
claims to the Company and a review of actual dissolution expenses from December 18, 2009 through
June 30, 2010, the Company has recorded a reduction of $186,000 in the estimated settlement amount
of liabilities and has recorded this as an increase in the estimated net assets available to
common stockholders. In addition, the Company has recorded a reduction of $53,000 in its estimated
income taxes payable.
RESULTS OF OPERATIONS
After filing the Certificate of Dissolution, we adopted the liquidation basis of accounting and
accordingly do not present a statement of operations for the period subsequent to the filing.
Therefore, a discussion regarding the results of operations is not applicable for periods after
December 17, 2009. Please refer to the discussion under “Changes in Estimated Net Realizable Value
of Assets and Liabilities” immediately above for the discussion of changes subsequent to December
17, 2009.
Revenues
Prior to filing the certificate of dissolution, we recorded revenues of approximately $6.0 million
for the 170-day period ended December 17, 2009, primarily from receipt of one-time payments
following the termination of a contractual agreement between NTI and Merz Pharmaceuticals GmbH, or
Merz. We recorded the entire amount received as revenue because we have no further obligations to
Merz. There were no other material sources of revenue during the period that ended on December 17,
2009.
During the fiscal year ended June 30, 2009, we recorded royalty revenue of $7.1 million compared
to $8.3 million for the fiscal year ended June 30, 2008. Royalties were lower in the fiscal year
ended June 30, 2009 because of scheduled reductions in the royalty rate we were entitled to
receive following a 2008 amendment to the Merz agreement. During the fiscal year ended June 30,
2009, we recorded technology sale and collaboration services revenue of $19.3 million compared to
$6.5 million for the fiscal year ended June 30, 2008. The increase in revenue of $12.8 million in
fiscal 2009 was primarily due to the termination of an agreement under which we were obligated to
provide services to Celtic. When the service agreement was terminated in fiscal 2009 we no longer
had any contractual service obligations remaining, therefore we recognized the remaining
unamortized deferred revenue (previously reported as a liability on the balance sheet) as revenue
in the statement of operations.
Research and Development Expenses
During the 170-day period ended December 17, 2009 we did not record any research and development
expenses because we terminated our research and development programs prior to the beginning of the
fiscal year. For a portion of the year ended June 30, 2009 we were engaged in the development of
an investigational new drug to treat acute ischemic stroke, and we recorded research and
development expenses of $17.6 million. These fiscal 2009 research and development expenses
included costs for conducting our clinical trial and manufacturing of the investigational drug
during the first half of the fiscal year, as well as costs to close down the clinical trial and
close the dedicated manufacturing facility for the drug during the second half of the fiscal year,
as well as employee termination costs for those that had been working on the program. The fiscal
2009 costs of $17.6 million were lower than the research and development expenses of $24.6 million
in fiscal 2008
because the drug development program was terminated approximately mid-way through fiscal 2009, and
lower expenses as a result of the shorter duration of the stroke drug program in 2009 more than
offset the incremental expenses incurred during 2009 to close down the program.
10
General and Administrative Expenses
General and administrative expenses were approximately $1.5 million for the 170-day period from
July 1, 2009 through December 17, 2009, representing costs associated with the preparation for the
wind-down of the Company’s operations during this period. Costs for the fiscal year ending June
30, 2009 included general and administrative expenses associated with an operating entity, and
aggregated $5.1 million, a decrease of $1.8 million from fiscal 2008, when general and
administrative expenses totaled $6.9 million. General and administrative expenses decreased in
fiscal 2009 compared to fiscal 2008 due to a lower number of administrative employees and
termination of various consulting services previously used.
Impairment Charge for Property and Equipment
During the 170-day period ended December 17, 2009, we recorded an impairment charge of $34,000 on
property and equipment remaining in our office prior to its closure. During the fiscal year ended
June 30, 2009 we recorded an impairment charge of $193,000 for specialized equipment used in the
manufacture of our investigational drug Viprinex. There were no comparable charges during the
fiscal year ended June 30, 2008.
Interest Income
Interest income decreased during the 170-day period ended December 17, 2009 compared to the fiscal
year ended June 30, 2009 due to the shorter duration of the reporting period and lower average
cash and investment account balances. Interest income decreased in the fiscal year ended June 30,
2009 compared to the fiscal year ended June 30, 2008 due to both lower average cash and investment
account balances and lower interest rates.
Realized Gain on Sale of Long-term Investments
During the 170-day period ended December 17, 2009 we recorded gains of $0.2 million on sales of
investments, which was comparable to the gains reported for the fiscal year ended June 30, 2009.
Gains (or losses) on sales of investments will vary based on the opportunities to sell individual
investment securities. During the fiscal year ended June 30, 2008 the Company did not record any
gains or losses on sales of long-term investments.
Impairment charge for decrease in fair value of investments
No impairment charge was recorded for the 170-day period ended December 17, 2009 as we did not
conclude that any of our investment securities experienced an other-than-temporary decline in
value. During the fiscal years ended June 30, 2009 and 2008, we recorded charges of $1.0 million
and $1.8 million, respectively, for the decrease in value of our investments in ARS. Because
auctions failed to settle for the ARS held in our investment portfolio, we believed the value of
these investments had been impaired and accordingly recorded the charges based on models of
discounted cash flows. Further charges were recorded in fiscal 2009 in addition to the charges in
fiscal 2008 due to further deterioration of the credit markets in fiscal 2009. Following various
sales of ARS previously held in our portfolio, as of June 30, 2010, we continued to hold one ARS
valued at $588,000.
Interest Expense
Interest expense for the fiscal year ended June 30, 2008 relates to charges incurred for a bridge
financing transaction for which there was no comparable transaction in the 170-day period ended
December 17, 2009 or the fiscal year ended June 30, 2009.
Non-cash gain (loss) on change in fair value of warrants
Based on declines in our stock price and a decrease in our estimate for stock price volatility
during the 170-day period ended December 17, 2009, we recorded a non-cash gain based on the
decrease in the estimated fair value of warrants issued during an earlier financing transaction.
During the fiscal year ended June 30, 2009, we recorded a non-cash loss due to an increase in the
fair value of the warrants, which was largely driven by an increase in our stock price volatility,
related to the announcement, as well as anticipation of the announcement, of our clinical trial
results. During the fiscal year ended June 30, 2008 we recorded a non-cash gain based on the
decrease in the fair value of the warrants, which was largely the result of a decrease in the
price of our common stock.
11
Provision for income taxes
During the 170-day period ended December 17, 2009 we recorded a provision for income taxes of
$53,000 comprised of $16,000 for federal alternative minimum tax (“AMT”), due to certain
limitations on the utilization of prior years net operating loss carryforwards to offset current
year alternative taxable income, and $37,000 for California state income taxes, due to temporary
provisions enacted in California that prevent utilization of certain net operating loss
carryforwards and research and development tax credit carryforwards. We did not record a provision
for income taxes for either of the years ended June 30, 2009 or 2008 due to the earlier
accumulation of net operating loss carryforwards and our ability to utilize these losses to offset
taxable income, or due to losses reported in the reporting periods.
LIQUIDITY AND CAPITAL RESOURCES
We assess liquidity primarily by the cash which we believe is necessary to fund the wind-down of
our operations and our remaining contractual obligations, as well as to allow for reasonable
contingencies identified in the dissolution process. Short-term investments are also considered if
there is a high assurance of our ability to convert them into cash. Investments such as our ARS,
for which we do not believe there is a high assurance of our ability to readily convert to cash,
are not considered for this liquidity analysis. Based on our liquidity assessments, and following
stockholder approval of our Plan of Dissolution, on October 27, 2009, our board of directors
declared an extraordinary dividend of $0.75 per share, which was paid to our common stockholders
on November 18, 2009. On November 19, 2009, following the sale of most of our remaining ARS, our
board of directors declared an additional extraordinary dividend of $0.18 per share, which was
paid to our common stockholders on December 9, 2009. These two payments aggregated $0.93 per
share, or approximately $25.1 million.
Following completion of the process specified under the DGCL to allow potential claims to be
submitted to the Company and resolved, we intend to distribute any remaining cash to our
stockholders, although we have not determined the timing for this distribution. The currently
estimated amount of the cash expected to be available at the conclusion of the liquidation process
is approximately $1.5 million, and is represented in the financial statements by the “net assets
in liquidation available to common stockholders” as of June 30, 2010. In order for this amount to
be ultimately distributed to our stockholders, claims would need to come in at or below our
current estimates and costs of the dissolution process would need to come in at or below our
current estimates. If either claims or costs are higher, stockholders would receive less, and it
is possible that there could be no further distributions other than those which have already been
made.
In addition, the “net assets in liquidation available to common stockholders” includes $588,000
which we estimate we can recover from the sale of our remaining ARS, and if this amount is not
recoverable as we estimate, there will be less cash available for our common stockholders.
Off-Balance
Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our consolidated financial condition,
changes in our consolidated financial condition, expenses, consolidated results of operations,
liquidity, capital expenditures or capital resources.
Contractual Obligations
Our noncancelable contractual obligations currently aggregate $85,000 and are all due before
November 30, 2010. These are accrued in the consolidated statement of net assets (liquidation
basis). Noncancelable contractual obligations do not include services which we will require as we
go through the dissolution process, which are also included in our reserve for estimated costs
during the liquidation period.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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Page
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14
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Audited Financial Statements
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15
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16
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17
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18
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19
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20
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21
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All schedules are omitted because they are not required or the required information is
included in the consolidated financial statements or notes thereto.
13
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Neurobiological Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Neurobiological Technologies,
Inc. as of June 30, 2009, the related consolidated statements of operations, stockholders’ equity
(deficit) and cash flows for each of the two fiscal years in the period ended June 30, 2009, and
the consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the
period from July 1, 2009 through December 17, 2009. In addition, we have audited the consolidated
statement of net assets in liquidation as of June 30, 2010, and the related consolidated statements
of changes in net assets in liquidation for the period from December 18, 2009 through June 30,
2010. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. We were not engaged to perform an audit of the Company’s internal control over
financial reporting. Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
As described in Note 1 to the consolidated financial statements, the stockholders of
Neurobiological Technologies, Inc. approved a plan of liquidation and dissolution on October 27,
2009, and the Company filed a certificate of dissolution on December 17, 2009. As a result, the
Company has changed its basis of accounting for periods subsequent to December 17, 2009 from the
going concern basis to a liquidation basis.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Neurobiological Technologies, Inc. at
June 30, 2009, the consolidated results of its operations and its cash flows for each of the two
fiscal years in the period ended June 30, 2009 and for the period from July 1, 2009 to December 17,
2009, its consolidated net assets in liquidation as of June 30, 2010, and the consolidated changes
in its net assets in liquidation for the period from December 18, 2009 to June 30, 2010, in
conformity with U.S. generally accepted accounting principles applied on the bases described in the
preceding paragraph.
/s/ Odenberg, Ullakko, Muranishi & Co. LLP
San Francisco, California
September 27, 2010
14
NEUROBIOLOGICAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF NET ASSETS (LIQUIDATION BASIS)
(in thousands)
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June 30, 2010
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ASSETS
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Cash and cash equivalents
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$
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1,842
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Short-term investments
|
|
|
738
|
|
|
|
|
|
|
|
|
|
|
|
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Total assets
|
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2,580
|
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LIABILITIES AND NET ASSETS
|
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Accounts payable
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|
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5
|
|
|
Accrued employee severance
|
|
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68
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|
|
Reserve for estimated costs during the liquidation period
|
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967
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total liabilities
|
|
|
1,040
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net assets in liquidation available to common stockholders
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$
|
1,540
|
|
|
|
|
|
|
See accompanying notes.
15
NEUROBIOLOGICAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (LIQUIDATION BASIS)
(in thousands)
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December 18, 2009
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to
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June 30, 2010
|
|
|
|
|
|
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|
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Stockholders’ equity as of December 17, 2009
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$
|
3,322
|
|
|
Effects of adopting the liquidation basis of accounting:
|
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|
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Initial adjustment of assets to estimated net realizable value
|
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(521
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)
|
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Initial adjustment of liabilities to estimated settlement amounts
|
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(1,500
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)
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|
|
|
|
|
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Net assets on liquidation basis as of December 18, 2009
|
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1,301
|
|
|
|
|
|
|
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Changes in estimated net realizable value of assets and liabilities
|
|
|
|
|
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Reduction in estimated settlement amount of liabilities
|
|
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186
|
|
|
Reduction in income taxes payable
|
|
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53
|
|
|
|
|
|
|
|
|
|
|
|
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Net assets on liquidation basis available to common stockholders as
of June 30, 2010
|
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$
|
1,540
|
|
|
|
|
|
|
See accompanying notes.
16
NEUROBIOLOGICAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
(GOING CONCERN BASIS)
(in thousands, except per share amounts)
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|
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|
|
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|
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June 30, 2009
|
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ASSETS
|
|
|
|
|
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Current assets:
|
|
|
|
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|
Cash and cash equivalents
|
|
$
|
8,230
|
|
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Short-term investments
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|
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15,819
|
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Accounts receivable
|
|
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184
|
|
|
Prepaid expenses and other current assets
|
|
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305
|
|
|
|
|
|
|
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Total current assets
|
|
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24,538
|
|
|
|
|
|
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Deposits
|
|
|
52
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|
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Property and equipment, net
|
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70
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total assets
|
|
$
|
24,660
|
|
|
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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|
|
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Accounts payable
|
|
$
|
21
|
|
|
Accrued professional expenses
|
|
|
493
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|
|
Other accrued liabilities
|
|
|
306
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|
|
Warrant liability
|
|
|
295
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|
|
|
|
|
|
|
Total liabilities
|
|
|
1,115
|
|
|
|
|
|
|
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|
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Commitments and contingencies
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|
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|
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Stockholders’ equity:
|
|
|
|
|
|
Preferred stock, $0.001 par value, 5,000
shares authorized; 3,000 authorized
shares designated as Series A
convertible preferred stock, 2,332
shares issued, 494 shares outstanding,
with aggregate liquidation preference of
$247
|
|
|
247
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|
|
Common stock, $0.001 par value, 50,000
shares authorized, 26,930 shares issued
and outstanding
|
|
|
27
|
|
|
Additional paid-in capital
|
|
|
145,739
|
|
|
Accumulated deficit
|
|
|
(122,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
23,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
24,660
|
|
|
|
|
|
|
See accompanying notes.
17
NEUROBIOLOGICAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170-Day Period
|
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
|
|
December 17,
|
|
|
Fiscal Year Ended June 30,
|
|
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalty
|
|
$
|
6,019
|
|
|
$
|
7,065
|
|
|
$
|
8,253
|
|
|
Technology sale and collaboration services
|
|
|
7
|
|
|
|
19,285
|
|
|
|
6,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
6,026
|
|
|
|
26,350
|
|
|
|
14,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
—
|
|
|
|
17,584
|
|
|
|
24,581
|
|
|
General and administrative
|
|
|
1,541
|
|
|
|
5,082
|
|
|
|
6,876
|
|
|
Loss on impairment of property and equipment
|
|
|
34
|
|
|
|
193
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
1,575
|
|
|
|
22,859
|
|
|
|
31,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
4,451
|
|
|
|
3,491
|
|
|
|
(16,697
|
)
|
|
Interest income
|
|
|
44
|
|
|
|
748
|
|
|
|
1,254
|
|
|
Realized gain on sale of long-term investments
|
|
|
206
|
|
|
|
152
|
|
|
|
—
|
|
|
Impairment charge for decrease in fair value of investments
|
|
|
—
|
|
|
|
(1,013
|
)
|
|
|
(1,778
|
)
|
|
Interest expense, including non-cash amortization of $2,336
discount on notes in 2008
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,479
|
)
|
|
Non-cash gain (loss) on change in fair value of warrants
|
|
|
295
|
|
|
|
(255
|
)
|
|
|
3,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for income taxes
|
|
|
4,996
|
|
|
|
3,123
|
|
|
|
(16,322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision) for income taxes
|
|
|
(53
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
4,943
|
|
|
$
|
3,123
|
|
|
$
|
(16,322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per share
|
|
$
|
0.18
|
|
|
$
|
0.12
|
|
|
$
|
(0.84
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in basic net income (loss) per share calculation
|
|
|
26,955
|
|
|
|
26,926
|
|
|
|
19,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in diluted net income (loss) per share calculation
|
|
|
26,969
|
|
|
|
26,946
|
|
|
|
19,437
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
18
NEUROBIOLOGICAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(GOING CONCERN BASIS)
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
|
Series A
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
Other
|
|
|
Stockholders’
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Equity
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Income (Loss)
|
|
|
(Deficit)
|
|
|
|
|
Balances at June 30, 2007
|
|
|
494
|
|
|
$
|
247
|
|
|
|
4,691
|
|
|
$
|
5
|
|
|
$
|
86,930
|
|
|
$
|
(109,269
|
)
|
|
$
|
(6
|
)
|
|
$
|
(22,093
|
)
|
|
Issuance of common stock under
employee stock purchase plan
|
|
|
—
|
|
|
|
—
|
|
|
|
22
|
|
|
|
—
|
|
|
|
42
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42
|
|
|
Issuance of common stock at deemed
price of $5.95 per share in bridge
financing transaction, net of
issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
393
|
|
|
|
—
|
|
|
|
2,326
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,326
|
|
|
Issuance of common stock at $2.75
per share in public offering, net
of issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
21,818
|
|
|
|
22
|
|
|
|
54,809
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54,831
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,006
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(16,322
|
)
|
|
|
—
|
|
|
|
(16,322
|
)
|
|
Unrealized gain on securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
496
|
|
|
|
496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(15,826
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at June 30, 2008
|
|
|
494
|
|
|
|
247
|
|
|
|
26,924
|
|
|
|
27
|
|
|
|
145,113
|
|
|
|
(125,591
|
)
|
|
|
490
|
|
|
|
20,286
|
|
|
Issuance of common stock under
employee stock purchase plan
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
625
|
|
|
|
—
|
|
|
|
—
|
|
|
|
625
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,123
|
|
|
|
—
|
|
|
|
3,123
|
|
|
Unrealized loss on securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(490
|
)
|
|
|
(490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at June 30, 2009
|
|
|
494
|
|
|
|
247
|
|
|
|
26,930
|
|
|
|
27
|
|
|
|
145,739
|
|
|
|
(122,468
|
)
|
|
|
—
|
|
|
|
23,545
|
|
|
Issuance of common stock upon
exercise of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
90
|
|
|
|
—
|
|
|
|
59
|
|
|
|
—
|
|
|
|
—
|
|
|
|
59
|
|
|
Redemption of Convertible Series A
Preferred Stock
|
|
|
(494
|
)
|
|
|
(247
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(247
|
)
|
|
Payment of extraordinary dividends
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(25,128
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(25,128
|
)
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150
|
|
|
Net income / comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,943
|
|
|
|
—
|
|
|
|
4,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 17, 2009
|
|
|
—
|
|
|
$
|
—
|
|
|
|
27,020
|
|
|
$
|
27
|
|
|
$
|
120,820
|
|
|
$
|
(117,525
|
)
|
|
$
|
—
|
|
|
$
|
3,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
19
NEUROBIOLOGICAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170-Day Period
|
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
|
|
December 17,
|
|
|
Fiscal Year Ended June 30,
|
|
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
4,943
|
|
|
$
|
3,123
|
|
|
$
|
(16,322
|
)
|
|
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
8
|
|
|
|
132
|
|
|
|
205
|
|
|
Stock-based compensation expense
|
|
|
150
|
|
|
|
625
|
|
|
|
1,006
|
|
|
Gain on sale of investments
|
|
|
(206
|
)
|
|
|
(152
|
)
|
|
|
—
|
|
|
Loss on impairment of investments
|
|
|
—
|
|
|
|
1,013
|
|
|
|
1,778
|
|
|
Loss on impairment of property and equipment
|
|
|
34
|
|
|
|
193
|
|
|
|
—
|
|
|
Amortization of note discount
|
|
|
—
|
|
|
|
—
|
|
|
|
2,336
|
|
|
Non-cash loss (gain) on change in fair value of warrants
|
|
|
(295
|
)
|
|
|
255
|
|
|
|
(3,378
|
)
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(126
|
)
|
|
|
415
|
|
|
|
(169
|
)
|
|
Prepaid expenses and other current assets
|
|
|
(135
|
)
|
|
|
8
|
|
|
|
582
|
|
|
Accounts payable and accrued expenses
|
|
|
353
|
|
|
|
(3,249
|
)
|
|
|
(1,235
|
)
|
|
Income taxes payable
|
|
|
53
|
|
|
|
—
|
|
|
|
—
|
|
|
Deferred revenue
|
|
|
—
|
|
|
|
(18,792
|
)
|
|
|
(5,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
4,779
|
|
|
|
(16,429
|
)
|
|
|
(20,697
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of investments
|
|
|
(11,088
|
)
|
|
|
(42,078
|
)
|
|
|
(22,918
|
)
|
|
Sales and maturities of investments
|
|
|
26,270
|
|
|
|
38,797
|
|
|
|
11,166
|
|
|
Purchases of property and equipment
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
15,182
|
|
|
|
(3,283
|
)
|
|
|
(11,763
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from stock options and employee stock purchase
|
|
|
59
|
|
|
|
1
|
|
|
|
42
|
|
|
Redemption of Series A Preferred Stock
|
|
|
(247
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Payment of extraordinary dividends
|
|
|
(25,128
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of common stock and warrants, net of issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
54,831
|
|
|
Issuance of common stock and notes in bridge financing
transaction, net of issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
5,990
|
|
|
Repayment of notes issued in bridge financing transaction
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(25,316
|
)
|
|
|
1
|
|
|
|
54,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(5,355
|
)
|
|
|
(19,711
|
)
|
|
|
22,403
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
8,230
|
|
|
|
27,941
|
|
|
|
5,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,875
|
|
|
$
|
8,230
|
|
|
$
|
27,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
143
|
|
|
Cash paid for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
See accompanying notes.
20
NEUROBIOLOGICAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands, except per share amounts, percentages and years)
Note 1. Description of Business and Summary of Significant Accounting Policies
Business Description and Basis of Presentation
Neurobiological Technologies, Inc. (“NTI” or the “Company”) is a company that previously
focused on developing investigational drugs to treat human diseases. On October 27, 2009, the
Company’s stockholders approved the dissolution of the Company pursuant to a plan of complete
liquidation and dissolution earlier approved by the Company’s board of directors on August 27, 2009
(the “Plan of Dissolution”). On November 4, 2009, the Company redeemed all of the outstanding
shares of its Series A Preferred Stock for $0.50 per share, the original issue price of the Series
A Preferred Stock and its liquidation preference. Thereafter, following payments of extraordinary
dividends of $0.75 and $0.18 per share of common stock on November 18, 2009 and December 9, 2009,
respectively, on December 17, 2009 the Company filed a certificate of dissolution with the
Secretary of State of the State of Delaware (the “Certificate of Dissolution”) and completed the
voluntary delisting of its common stock from the Nasdaq Capital Market. On December 17, 2009, the
Company also closed its stock transfer books and discontinued recording transfers of its common
stock. The Company is in the process of discharging any remaining liabilities under dissolution
procedures provided for under the General Corporation Law of the State of Delaware (the “DGCL”).
The Company intends to make at least one additional liquidating distribution to its stockholders at
the conclusion of this process, although the amount and timing cannot presently be determined.
Liquidation Basis of Accounting
Following the filing of the Certificate of Dissolution with the State of Delaware on December
17, 2009, the Company began reporting on a liquidation basis of accounting instead of a going
concern basis of accounting. Under the liquidation basis of accounting, the Statement of Net
Assets (Liquidation Basis) and Statement of Changes in Net Assets (Liquidation Basis) are the
principal financial statements presented. In these statements, the assets are stated at their
estimated net realizable value, which is the amount of cash into which an asset is ultimately
expected to be converted, less any conversion costs. Liabilities are reported at their estimated
settlement amount, which is the amount of cash expected to be paid to liquidate the obligation,
including any direct costs of the liquidation. Additionally, the Company has established a reserve
for all estimated future general and administrative expenses and other costs expected to be
incurred while the Company is in dissolution, which under the DGCL is expected to be at least
three years from December 2009. The reserve for these estimated expenses primarily includes
accruals including personnel costs for administrative work, facilities including previously
unaccrued future lease and other obligations, professional services and legal costs, corporate
expenses (insurance, directors’ fees and statutory fees) and estimated expenses to establish a
facility to preserve the Company’s continuing interest in XERECEPT
®
, which is an investigational
drug being developed by another party. These estimates will be periodically reviewed and adjusted
as appropriate. There can be no assurance that these estimated values will ultimately be realized.
The valuation of assets at their net realizable value and liabilities at their anticipated
settlement amounts represent estimates, based on present facts and circumstances, of the net
realizable value of the assets and the costs associated with carrying out the Plan of Dissolution.
The actual values and costs associated with carrying out the Plan of Dissolution may differ from
amounts reflected in the financial statements because of the inherent uncertainty in estimating
future events. These differences may be material. In particular, the estimates of costs will vary
with the length of time necessary to complete the liquidation process and resolve potential
claims, some of which may not have been submitted to the Company at this time. Accordingly, it is
not possible to predict the timing or aggregate amount which will ultimately be distributed to
stockholders and no assurance can be given that the distributions will equal or exceed the
estimate presented in the accompanying Statement of Net Assets (Liquidation Basis).
Upon transition to the liquidation basis of accounting, the Company recorded the following
adjustments to reduce assets to net realizable value:
|
|
|
|
|
|
|
Initial Adjustment to Reduce Assets to Estimated Net Realizable Value
|
|
Amount
|
|
|
Write-down of prepaid and other current assets
|
|
$
|
493
|
|
|
Write-down of property and equipment
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
521
|
|
|
|
|
|
|
The adjustments of assets were the result of these assets not having a realizable value upon
liquidation of the Company.
21
The Company was required to make significant estimates and exercise judgment in determining
the accrued costs of liquidation at December 17, 2009. The accrued costs of liquidation were
recorded as an adjustment to increase liabilities to their estimated settlement amount.
The transition from the going concern basis to the liquidation basis of accounting required
management to make significant estimates and judgments. Upon transition to the liquidation basis
of accounting, the Company accrued the following costs expected to be incurred in liquidation:
|
|
|
|
|
|
|
Accrued Costs of Liquidation
|
|
Amount
|
|
|
Outside services and wind-down expenses
|
|
$
|
1,213
|
|
|
Contractual commitments
|
|
|
287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,500
|
|
|
|
|
|
|
Subsequent to the initial recording of estimated outside services and wind-down expenses as of
December 17, 2009, and following the termination of the creditor-notification process under the
DGCL on May 8, 2010, the Company re-evaluated its accrued liabilities and reduced its estimated
liabilities by $186,000, which has been recorded in the consolidated statement of changes in net
assets (liquidation basis) as a reduction in the estimated settlement amount of liabilities.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual amounts may differ from these estimates.
Cash Equivalents and Investments
The Company’s investments include securities of the U.S. government and its agencies,
municipalities, corporations and auction rate securities. All securities which are highly liquid
and purchased with original maturities of 90 days or less are recorded as cash equivalents.
Securities which the Company does not intend to hold to maturity are generally classified as
available-for-sale securities, and carried at estimated fair value, based on available market
information, with unrealized gains and losses reported as a component of accumulated other
comprehensive income or loss in stockholders’ equity. A decline in the market value of a security
below its cost that is deemed to be other than temporary is charged to earnings, and results in the
establishment of a new cost basis for the security. In determining whether an impairment is other
than temporary, the Company evaluates, among other factors, general market conditions, the
financial condition of the investee, the duration and extent to which fair value is less than cost,
and whether the Company’s intends to sell the debt securities before recovering their cost.
Realized gains or losses, amortization of premiums, accretion of discounts and earned interest are
included in interest and other income. The cost of securities when sold is based upon specific
identification.
Concentration of Credit and Other Risks and Uncertainties
Financial instruments which potentially subject the Company to concentration of credit risk
consist primarily of cash, cash equivalents and investments. The Company’s cash and cash
equivalents are generally invested in deposit accounts, money market accounts, commercial paper,
and government and corporate debt securities. A deposit account balance may exceed the amount
covered by insurance for loss.
Fair Value of Financial Instruments
The carrying value of financial instruments, including cash and cash equivalents, accounts
payable and accrued liabilities, is representative of their respective fair values due to their
short maturities. Investments in available-for-sale securities are carried at fair value.
Property and Equipment
Under the liquidation method of accounting, property and equipment are stated at the estimated
value the Company is expected to recover from the assets. Under the going concern method of
accounting, property and equipment were stated at cost, less accumulated depreciation and
amortization. Depreciation was calculated on a straight-line basis over the estimated useful lives
of the respective assets, generally two to seven years. Amortization of leasehold improvements was
calculated on a straight-line basis over the shorter of the useful life of the asset or the
remaining lease term.
22
Impairment of Long-Lived Assets
Under the going concern method of accounting, the Company reviewed long-lived assets,
primarily its property and equipment, for impairment whenever events or changes in business
circumstances indicated that the carrying amount of the assets may not be fully recoverable. An
impairment loss was recognized when future estimated cash flows expected to result from the use of
the asset, and its eventual disposition, were less than the carrying amount of the asset. The
impairment loss was based on the excess of the carrying value over its respective fair value.
Warrants Issued in Connection with Equity Financings
Under the going concern method of accounting, the Company generally accounted for warrants
issued in connection with equity financings as a component of equity, unless there was a
possibility that the Company may have to settle warrants in cash. For the warrants issued with
possibility of cash settlement, the Company recorded the fair value of the issued warrants as a
liability at each balance sheet date and recorded changes in the estimated fair value as a non-cash
gain or loss in the consolidated statement of operations.
Revenue Recognition
Prior to the Company’s filing the Certificate of Dissolution, revenues were recognized
according to the terms of contractual agreements, when the Company’s performance requirements were
fulfilled, the amount was fixed and determinable, and collection was reasonably assured. Revenue
from license fees with non-cancelable, non-refundable terms and no future performance obligations
was recognized when collection was assured. Milestone payments were recognized when the Company had
fulfilled development milestones and collection was assured. Revenue from services performed for
other parties was recorded during the period in which the expenses were incurred.
Royalty revenue was recorded when payments were received since the Company was unable to
estimate the amount of royalties as they are earned.
Revenue arrangements with multiple components were divided into separate units of accounting
if certain criteria were met, including whether the delivered component had stand-alone value to
the customer, and whether there was objective reliable evidence of the fair value of the
undelivered items. Consideration received was allocated among the separate units of accounting
based on their relative fair values, and the applicable revenue recognition criteria were
identified and applied to each of the units.
Research and Development Expenses
During the period in which the Company reported its results in a statement of operations, the
Company’s research and development costs were expensed as incurred. Research and development
included clinical trial costs, development and manufacturing costs for investigational drugs,
payments to clinical and contract research organizations, compensation expenses for drug
development personnel, consulting and advisor costs, preclinical studies and other costs related to
development of its product candidates.
Stock-Based Compensation
During the period when the Company had stock-based compensation programs, stock options
granted to employees were accounted for using an estimate of the fair value of the stock option on
the date it was granted. The estimated fair value on the grant date was recognized into the
consolidated statement of operations on a straight-line basis over the vesting period of the
underlying stock option.
Comprehensive Income (Loss)
Under the going concern method of accounting, components of other comprehensive income
(loss), including unrealized gains and losses on available for sale investments, were included as
part of total comprehensive income (loss). For all operating periods presented, comprehensive
income (loss) has been included in the consolidated statements of stockholders’ equity.
Operating Leases
Under the going concern method of accounting, the Company recognized rental expense on a
straight-line basis over the term of each operating lease.
23
Net Income (Loss) per Share
Under the going concern method of accounting, basic net income or loss per common share was
calculated using the weighted-average number of shares of common stock outstanding during each
period. Diluted net income per common share was calculated based on the weighted-average number of
shares of our common stock outstanding as well as other potentially dilutive securities outstanding
during the period, using the treasury stock method. For the period from July 1, 2009 through
December 17, 2009, dilutive securities included options to purchase 90,000 shares of common stock.
Because their effect would have been anti-dilutive, dilutive securities excluded options to
purchase 747,000 shares of common stock, warrants to purchase 544,000 shares of common stock and
the conversion of convertible preferred stock into 71,000 shares of common stock. For the year
ended June 30, 2009, dilutive securities included options to purchase 20,000 shares of common
stock. Because their effect would have been anti-dilutive, for the year ended June 30, 2009,
dilutive securities excluded options to purchase 817,000 shares of common stock, warrants to
purchase 544,000 shares of common stock and the conversion of convertible preferred stock into
71,000 shares of common stock. For the year ended June 30, 2008, the net loss position of the
Company resulted in basic and diluted net loss per share being the same. The computation of diluted
net loss per share for the fiscal year ended June 30, 2008 excluded the potentially dilutive impact
of options to purchase 1,909,000 shares of common stock, warrants to purchase 544,000 shares of
common stock, and the conversion of convertible preferred stock into 71,000 shares of common stock.
Income Taxes
Under the going concern method of accounting, the Company used the liability method of
accounting for income taxes, and determined deferred tax assets and liabilities based on
differences between the financial reporting and the tax reporting basis of assets and liabilities.
The Company measured these assets and liabilities using enacted tax rates and laws that were
scheduled to be in effect when the differences were expected to reverse. Because the realization of
deferred tax assets was dependent upon future earnings, if any, and the Company’s future earnings
were uncertain, all of the Company’s net deferred tax assets were fully offset by a valuation
allowance at each financial reporting date. The Company recognized interest and penalties accrued
on any unrecognized tax benefits as a component of income tax expense.
Recent Accounting Pronouncements
Under the liquidation basis of accounting, the Company does not expect any recent accounting
pronouncements to impact the Consolidated Statement of Net Assets (Liquidation Basis).
Note 2. Investments
Available-for-sale securities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Type of security and term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S government and agency obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturing within one year
|
|
$
|
150
|
|
|
$
|
150
|
|
|
$
|
10,292
|
|
|
$
|
10,292
|
|
|
Auction rate securities (“ARS”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturing in December 2031
|
|
|
575
|
*
|
|
|
588
|
|
|
|
5,527
|
*
|
|
|
5,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments
|
|
$
|
725
|
|
|
$
|
738
|
|
|
$
|
15,819
|
|
|
$
|
15,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Cost represents purchase price less impairment charge of $125,000 and $1,973,000 on
securities still held at June 30, 2010 and 2009, respectively.
|
The Company’s investments in ARS were structured to provide liquidity via an auction process
that reset the applicable interest rate at predetermined calendar intervals. Beginning in February
2008, auctions failed throughout the ARS market, and since then all auctions for NTI’s ARS have
been unsuccessful. While the credit rating of these securities remains high and the ARS are paying
interest according to their terms, as a result of the potentially long maturity and lack of
liquidity for ARS, the Company believes the value of the ARS in NTI’s portfolio has been impaired.
During the fiscal years ended June 30, 2009 and 2008, the Company recorded other than temporary
impairment charges of $1,013,000 and $1,778,000, respectively, in its realized losses, based on
models of discounted future cash flows and assumptions regarding interest rates. All other
unrealized gains and losses were immaterial at June 30, 2010 and 2009.
Custody of the Company’s investments is held by Fidelity Investments.
24
3. Fair Value of Financial Instruments
The following table provides the fair value measurements of our financial assets
according to a hierarchy based on three levels of input objectivity as defined in ASC
820, Fair Value Measurements and Disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
|
|
Value as of
|
|
|
Fair Value Measurements at June 30, 2010
|
|
|
|
|
June 30,
|
|
|
Using Inputs from
|
|
|
|
|
2010
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Cash and cash equivalents
|
|
$
|
1,842
|
|
|
$
|
1,342
|
|
|
$
|
500
|
|
|
$
|
—
|
|
|
U.S government and agency obligations
|
|
|
150
|
|
|
|
—
|
|
|
|
150
|
|
|
|
—
|
|
|
Auction rate securities
|
|
|
588
|
|
|
|
—
|
|
|
|
—
|
|
|
|
588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,580
|
|
|
$
|
1,342
|
|
|
$
|
650
|
|
|
$
|
588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
|
|
Value as of
|
|
|
Fair Value Measurements at June 30, 2009
|
|
|
|
|
June 30,
|
|
|
Using Inputs from
|
|
|
|
|
2009
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Cash and cash equivalents
|
|
$
|
8,230
|
|
|
$
|
8,230
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S government and agency obligations
|
|
|
10,292
|
|
|
|
—
|
|
|
|
10,292
|
|
|
|
—
|
|
|
Auction rate securities
|
|
|
5,527
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
24,049
|
|
|
$
|
8,230
|
|
|
$
|
10,292
|
|
|
$
|
5,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 inputs in the table above are quoted prices in active markets for identical
assets or liabilities. Level 2 inputs are quoted prices in active markets for similar
assets and liabilities, quoted prices in markets that are not active, or other inputs
that are observable for the asset or liability. Level 3 inputs are based on management’s
own assumptions used to measure the fair value of assets and liabilities, which are
supported by little or no market activity. Level 1 and Level 2 inputs are considered
observable, while Level 3 inputs are considered unobservable. A financial asset or
liability’s classification within the hierarchy is determined based on the lowest level
input that is significant to the fair value measurement. The input levels and the
methodology used for valuing securities are not necessarily an indication of the credit
risk associated with the securities.
Fair values are based on quoted market prices, where available. These fair values
are obtained primarily from third party pricing services, which generally use Level 1 or
Level 2 inputs for the determination of fair value in accordance with ASC 820. Third
party pricing services normally derive the security prices through recently reported
trades for identical or similar securities making adjustments through the reporting date
based upon available market observable information. For securities not actively traded,
the third party pricing services may use quoted market prices of comparable instruments
or discounted cash flow analyses, incorporating inputs that are currently observable in
the markets for similar securities. Inputs that are often used in the valuation
methodologies include, but are not limited to, benchmark yields, broker quotes, credit
spreads, default rates and prepayment speed. The Company performs a review of the
prices received from third parties to determine whether the prices are reasonable
estimates of fair value and are classified in accordance with the ASC 820 fair value
hierarchy. The Company’s analysis included, as needed, a comparison of pricing
services’ valuations to other pricing services’ valuations for the identical security.
The Company’s investments in ARS are generally classified within Level 3 because there are
no active markets for the ARS and the Company is unable to obtain independent valuations from
market sources. However, they will be classified as Level 2 if they represent ARS with reliable
observable inputs, such as recent sales for the same or similar CUSIPs. Level 3 ARS were valued
using discounted cash flow models, and certain inputs to the cash flow model are unobservable in
the market. The changes in level 3 assets measured at fair value for the fiscal year ended June
30, 2009 were as follows:
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
$
|
11,850
|
|
|
Unrealized losses included in other comprehensive loss
|
|
|
—
|
|
|
Sales of securities
|
|
|
(5,310
|
)
|
|
Impairment charge recognized in net loss
|
|
|
(1,013
|
)
|
|
|
|
|
|
|
Balance at June 30, 2009
|
|
$
|
5,527
|
|
|
|
|
|
|
25
The changes in Level 3 assets measured at fair value for the period from July 1, 2009
through December 17, 2009 were as follows:
|
|
|
|
|
|
|
Balance at June 30, 2009
|
|
$
|
5,527
|
|
|
Unrealized gains included in other comprehensive income
|
|
|
—
|
|
|
Sales of securities
|
|
|
(4,685
|
)
|
|
Transfer to Level 2 assets
|
|
|
—
|
|
|
|
|
|
|
|
Balance at December 17, 2009
|
|
$
|
842
|
|
|
|
|
|
|
The changes in Level 3 assets measured at fair value for the period from December 18, 2009
through June 30, 2010 were as follows:
|
|
|
|
|
|
|
Balance at December 18, 2009
|
|
$
|
842
|
|
|
Unrealized gains
|
|
|
—
|
|
|
Sales of securities
|
|
|
(254
|
)
|
|
Transfer to Level 2 assets
|
|
|
—
|
|
|
|
|
|
|
|
Balance at June 30, 2010
|
|
$
|
588
|
|
|
|
|
|
|
The balance of Level 3 securities at June 30, 2010 represents one student loan ARS,
CUSIP 69847RAA0, issued by Panhandle Plains Student Fin. Corp., with a maturity date of
December 1, 2031 and a par value of $700,000.
Note 4. Property and Equipment, Net
Property and equipment consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Manufacturing equipment
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Furniture, fixtures and leasehold improvements
|
|
|
—
|
|
|
|
274
|
|
|
Machinery and equipment
|
|
|
—
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
467
|
|
|
Less accumulated depreciation and amortization
|
|
|
(—
|
)
|
|
|
(397
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
70
|
|
|
|
|
|
|
|
|
|
Upon adoption of the liquidation basis of accounting on December 17, 2009, the Company
wrote-off its property and equipment that previously had a net book value of $28,000 as management
did not believe the amount was likely to be recoverable in liquidation.
Note 5. Warrant Liability
Under the going-concern basis of accounting, the fair value of warrants issued by the Company
in connection with an April 2007 sale of common stock was estimated based on a Black-Scholes option
pricing model. Changes in the fair value of the warrants were included in the statement of
operations. Key inputs and assumptions used to value the warrants were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 17, 2009
|
|
|
June 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share exercise price of warrants
|
|
$
|
16.80
|
|
|
$
|
16.80
|
|
|
Market price of common stock
|
|
$
|
0.11
|
|
|
$
|
0.68
|
|
|
Volatility of common stock
|
|
|
1.00
|
|
|
|
2.96
|
|
|
Term of warrants (in years)
|
|
|
2.25
|
|
|
|
2.75
|
|
|
Risk-free interest rate
|
|
|
1.25
|
%
|
|
|
1.25
|
%
|
|
Dividend rate
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share value of warrants based on above inputs
|
|
$
|
—
|
|
|
$
|
0.64
|
|
Based on the large difference between the warrant exercise price and the Company’s stock price
on December 17, 2009, the warrants had no value at the time of filing the Certificate of
Dissolution. Under the liquidation basis of accounting, the Company does not believe the warrants
will be exercised and accordingly has not assigned any value for their settlement.
26
Note 6. Commitments and Contingencies
The Company has one remaining operating lease with an initial commitment of over 12 months.
This lease, for the Company’s principal executive office in Emeryville, California, expires in
November 2010 and future minimum lease payments aggregate $85,000, all of which is due in the
fiscal year ending June 30, 2011. Under the liquidation basis of accounting, the full amount of
future lease payments is currently accrued in the reserve for estimated costs during the
liquidation period.
Total lease expense for the 170-day period ended December 17, 2009 was $144,000. Included in
the adjustments upon adoption of the liquidation basis of accounting were additional committed
lease costs of $198,000 (which includes the above-noted committed term after June 30, 2010). Total
lease expense for the fiscal years ended June 30, 2009 and 2008 was $366,000 and $340,000,
respectively.
As permitted under Delaware law and in accordance with its Bylaws, NTI indemnifies its
officers and directors for certain expenses incurred from legal or other proceedings that arose as
a result of the director or officer’s service to the Company. There is no limitation on the term of
the indemnification and the maximum amount of potential future indemnification is unlimited. The
Company has a director and officer insurance policy that limits NTI’s exposure and may enable the
Company to recover a portion of any future amounts paid. The Company believes the fair value of
these indemnification agreements is minimal, and, accordingly, has not recorded any liabilities for
these agreements as of June 30, 2010.
The Company also provided indemnifications of varying scope to clinical research organizations
and investigators against claims made by third parties arising from the use of its products and
processes in clinical trials. To date, costs related to these indemnification provisions have been
immaterial. The Company also has previously established liability insurance policies that may limit
exposure under the terms of the policies. The Company believes the fair value of its
indemnification agreements is minimal and, accordingly, has not recorded any liabilities for these
agreements as of June 30, 2010. The Company is unable to estimate the maximum potential impact of
these indemnification provisions on its future results of operations.
From time to time, NTI may be involved in claims and other legal matters arising in the
ordinary course of business. Management is not currently aware of any matters that it believes are
likely to have a material adverse effect on the consolidated financial position, results of
operations or cash flows of the Company.
Note 7. Stockholders’ Equity
Series A Convertible Preferred Stock
On November 4, 2009, the Company redeemed all outstanding shares of Series A Convertible
Preferred Stock for its issue price and aggregate liquidation preference of $247,000. On October
27, 2009, by a vote of both the preferred and common stockholders, the terms of the Series A
Convertible Preferred Stock were amended to allow for redemption. Prior to the redemption, each
share of Series A preferred Stock was convertible, at the holder’s option, into one-seventh of a
share of common stock. While outstanding, the holders of preferred stock were entitled to the
number of votes equal to the number of shares of common stock into which their preferred stock was
convertible. Each share of Series A convertible preferred stock had a liquidation preference of
$0.50 per share plus any declared but unpaid dividends. No dividends were ever declared on the
Series A Convertible Preferred Stock.
Common Stock Transactions
On November 2, 2007, the Company issued 21,818,000 shares of common stock in an underwritten
offering at a price of $2.75 per share, for gross proceeds of $60.0 million. After underwriting
commissions and expenses, net proceeds were $54.8 million.
On September 12, 2007, the Company entered into a debt and equity financing agreement under
which the Company issued senior secured promissory notes with a principal amount of $6.0 million
and 393,000 shares of common stock. The gross proceeds of $6.0 million were allocated to the
promissory notes and common stock based on their relative fair values. The amount allocated to the
common stock, $2,336,000, was recorded as a discount to the notes and amortized to interest expense
using the effective interest method over the term of the notes, which were repaid in November 2007.
The notes provided for interest at 15% per annum. The effective annual interest rate on the notes
was 326% based on the stated interest rate, the amount of the note discount, and the term of the
notes.
27
Securities Convertible into Common Stock
At June 30, 2009, the only securities convertible into the Company’s common stock were 461,000
warrants expiring in April 2012, with an exercise price of $16.80 per share.
Note 8. Stock-based compensation
On December 17, 2009, the Company terminated its two stock-based compensation plans, the 2003
Equity Incentive Plan (the “Equity Plan”) and the 2003 Employee Stock Purchase Plan (the “ESPP”).
The Equity Plan provided for the issuance of stock options and stock awards to employees,
officers, directors and consultants. Under the Equity Plan, options were granted with an exercise
price equal to or higher than the market price of the underlying common stock on the date of the
grant, had terms of up to 10 years and became exercisable over vesting periods of up to four years.
Due to the termination of the Equity Plan, as of June 30, 2010 no stock options are outstanding, no
shares are available for the future grant of stock options, and no shares of common stock are
reserved for future issuance under stock options.
The ESPP permitted eligible employees to purchase common stock through payroll deductions
during defined six month accumulation periods. The price at which the stock is purchased was equal
to the lower of 85% of the fair value of the stock on the last trading day before the commencement
of the applicable offering period or 85% of the fair value of the common stock on the last trading
day of the accumulation period. Following the termination of the ESPP, as of June 30, 2010 no
shares of common stock are reserved for issuance under the ESPP.
Prior to the termination of the equity compensation plans, the fair value of each option award
was estimated on the date of grant using a Black-Scholes option valuation model. This valuation
model used required various input assumptions, including volatility of the common stock and the
expected option term. Expected volatility for the Company’s common stock was based on historical
volatility of the Company’s common stock for the expected term of the option granted. The expected
term of options was generally based on the average of the stock option vesting period and the stock
option term. The risk free interest rate was based on the U.S. Treasury yield curve in effect at
the time of grant. The expected dividend yield was zero for all options granted. The Company’s
forfeiture assumptions were based on historical data. The following table shows the assumptions
that were used to determine the estimated fair value of the options granted under the Company’s
stock-based compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period ended
|
|
4 year vesting
|
|
|
4 year vesting
|
|
|
3 year vesting
|
|
|
1 year vesting
|
|
|
December 17, 2009:
|
|
7 year term
|
|
|
10 year term
|
|
|
7 year term
|
|
|
10 year term
|
|
|
No stock options granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected volatility
|
|
|
—
|
|
|
|
0.67
|
|
|
|
—
|
|
|
|
0.80
|
|
|
Expected term (in years)
|
|
|
—
|
|
|
|
6.25
|
|
|
|
—
|
|
|
|
5.50
|
|
|
Risk-free interest rate
|
|
|
—
|
|
|
|
2.8
|
%
|
|
|
—
|
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected volatility
|
|
|
0.75
|
|
|
|
0.90
|
|
|
|
0.80
|
|
|
|
0.82
|
|
|
Expected term (in years)
|
|
|
4.75
|
|
|
|
6.25
|
|
|
|
4.50
|
|
|
|
5.75
|
|
|
Risk-free interest rate
|
|
|
3.4
|
%
|
|
|
2.9
|
%
|
|
|
4.7
|
%
|
|
|
3.5
|
%
|
The weighted-average fair value of options granted during fiscal years 2009 and 2008 was $0.90
and $1.29 per share, respectively. Total stock-based compensation expense recognized in the
statement of operations was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170-Day Period
|
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
|
|
December 17,
|
|
|
Fiscal Year Ended June 30,
|
|
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
—
|
|
|
$
|
252
|
|
|
$
|
283
|
|
|
General and administrative
|
|
|
150
|
|
|
|
373
|
|
|
|
723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
150
|
|
|
$
|
625
|
|
|
$
|
1,006
|
|
|
|
|
|
|
|
|
|
|
|
|
28
The Company did not record any income tax benefits for stock-based compensation arrangements
as the Company had cumulative operating losses, for which a valuation allowance was established.
A summary of stock option activity for the period prior to the cancellation of the Equity Plan
on December 17, 2009 and for the fiscal years ended June 30, 2009 and 2008, is summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
Options Available
|
|
|
|
|
|
|
Average Exercise
|
|
|
|
|
for Future Grant
|
|
|
Number of Shares
|
|
|
Price
|
|
|
Balance at June 30, 2007
|
|
|
107
|
|
|
|
426
|
|
|
$
|
21.84
|
|
|
Options authorized
|
|
|
3,200
|
|
|
|
—
|
|
|
|
|
|
|
Options granted
|
|
|
(1,417
|
)
|
|
|
1,417
|
|
|
$
|
2.36
|
|
|
Options granted outside of plan
|
|
|
—
|
|
|
|
150
|
|
|
$
|
2.47
|
|
|
Options canceled and expired
|
|
|
36
|
|
|
|
(84
|
)
|
|
$
|
18.39
|
|
|
Options exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
|
1,926
|
|
|
|
1,909
|
|
|
$
|
6.04
|
|
|
Options granted
|
|
|
(201
|
)
|
|
|
201
|
|
|
$
|
0.90
|
|
|
Options canceled and expired
|
|
|
1,197
|
|
|
|
(1,273
|
)
|
|
$
|
4.66
|
|
|
Options exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2009
|
|
|
2,922
|
|
|
|
837
|
|
|
$
|
6.91
|
|
|
Options granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Options canceled and expired
|
|
|
(2,922
|
)
|
|
|
(747
|
)
|
|
$
|
7.66
|
|
|
Options exercised
|
|
|
—
|
|
|
|
(90
|
)
|
|
$
|
0.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 17, 2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were 465,000 and 442,000 options exercisable at June 30, 2009 and 2008, respectively.
Note 9. Impairment Charge
The Company recognized an impairment loss of $193,000 during the fiscal year ended June 30,
2009 related to specialized property and equipment used for snake venom purification. Determination
of the impairment loss for the equipment was made following the Company’s decision to terminate its
Viprinex drug development program, which used snake venom from the Malayan pit viper as the active
pharmaceutical ingredient.
Note 10. Collaboration Agreements
In July 2004, the Company acquired Empire Pharmaceuticals, Inc. (“Empire”) to obtain the
rights to Viprinex, which Empire had licensed from Abbott Laboratories (“Abbott’). Under the terms
of the license agreement, NTI had an obligation to use commercially reasonable efforts to develop
Viprinex for the treatment of acute ischemic stroke. Following the failure of Viprinex to meet
specified efficacy criteria at an interim analysis and NTI’s determination not to develop Viprinex
further, NTI returned the Viprinex development and commercialization rights to Abbott. During the
170-day period ended December 17, 2009 and the fiscal years ended June 30, 2009 and 2008, no
payments were made to Abbott under the license.
In April 1998, the Company entered into a license and cooperation agreement with Children’s
Medical Center Corp. (“CMCC”) and Merz + Co. GmbH & Co. (“Merz”) covering certain uses of
memantine, an approved drug for the treatment of Alzheimer’s disease. Merz in turn has licensed
certain memantine rights to Forest Laboratories, Inc., H. Lundbeck A/S and Daiichi Suntory Pharma
Co., Ltd., who are marketing the drug in different territories. Under terms of the agreement, as
amended in February 2008, the Company received royalties from Merz on the sales of memantine in the
United States, and through September 30, 2007 also received royalties from sales of memantine for
Alzheimer’s disease in Europe. Beginning July 1, 2008, a staged reduction in royalty rates for
product sales in the United States commenced. Merz had the right to terminate the license agreement
upon six months notice, but not before a notice date of July 1, 2009. In August 2009, the license
was terminated with respect to NTI, and Merz agreed to make a final one-time payment of
approximately $6.0 million to NTI. During the 170-day period ended December 17, 2009, the Company
recognized revenue of $6.0 million under the
license and cooperation agreement with CMCC and Merz. During the fiscal years ended June 30,
2009 and 2008, the Company recognized royalty revenue of $7.1 million and $8.3 million,
respectively.
29
In November 2005, the Company sold its worldwide rights and assets related to XERECEPT, an
investigational drug for brain edema associated with cerebral tumors, to two subsidiaries of Celtic
Pharma Holdings, L.P. (“Celtic”). Under the terms of the sale, the Company received $33 million in
non-refundable upfront payments from Celtic. The Company is also entitled to receive payments upon
the achievement of certain regulatory objectives and to receive profit-sharing payments or
royalties if the product is approved and commercialized by Celtic. In connection with the XERECEPT
sales agreement, the Company entered into a collaboration and services agreement under which the
Company provided on-going services to Celtic in exchange for reimbursement of the direct expenses
incurred. The Company and Celtic terminated the collaboration and services agreement effective June
30, 2009. NTI recognized the costs incurred for the collaboration and services agreement in its
operating expenses, and recognized the reimbursements from Celtic as revenue when the expenses were
incurred. The Company recognized the $33 million in up-front payments as revenue on a straight-line
basis over the term the Company was obligated to provide on-going services to Celtic (which was a
six year period prior to the June 2009 termination). When the collaboration and services agreement
was terminated in June 2009, the Company recognized the remaining deferred revenue as revenue in
the statement of operations since NTI had no further performance obligations. During the 170-day
period ended December 17, 2009, the Company recognized $7,000 as revenue for Celtic’s reimbursement
of NTI’s expenses associated with the development of XERECEPT. During the fiscal years ended June
30, 2009 and 2008, the Company recognized $0.5 million and $1.0 million, respectively, as revenue
for Celtic’s reimbursement of NTI’s expenses associated with the development of XERECEPT. During
the fiscal years ended June 30, 2009 and 2008, the Company also recognized $18.8 million and $5.5
million, respectively, as revenue from the non-refundable up-front payments received in fiscal year
2006.
In November 2007, the Company entered into a research collaboration and license agreement with
the Buck Institute for Age Research (“Buck”) to develop pre-clinical proteins for the treatment of
Huntington’s disease (“HD”). In February 2008, the Company entered into a research collaboration
and license agreement with Buck to develop pre-clinical proteins for the treatment of Alzheimer’s
disease (“AD”). Under the terms of the agreements, the Company received a license to various patent
rights for the use of specified proteins to treat HD and AD and agreed to make certain payments to
Buck. During the fiscal year ended June 30, 2009, the Company and Buck terminated the HD and AD
agreements. During the fiscal years ended June 30, 2009 and 2008, the Company recorded expenses of
$0.9 million and $1.4 million, respectively, for the Buck collaborations.
Note 11. Income Taxes
The income tax provision for the 170-day period ended December 17, 2009 was $53,000, comprised
of:
•
$16,000 for federal alternative minimum tax (“AMT”), due to certain limitations on the
utilization of prior years net operating loss carryforwards to offset current year alternative
taxable income and
•
$37,000 for California state income taxes, due to temporary provisions enacted in
California that limit utilization of net operating loss carryforwards and research and development
tax credit carryforwards.
Subsequent to December 17, 2009, the Internal Revenue Service (“IRS”) issued new guidance
regarding recent application of net operating loss carryforwards in alternative minimum tax
situations, and the Company was able to reduce its estimated federal tax payable to zero on the
liquidation basis of accounting. Estimated California taxes payable were also reduced to zero.
There was no provision for income taxes for the year ended June 30, 2009 because the Company’s
net operating losses, which had previously been reserved through a valuation allowance, offset
taxable income.
There was no provision for income taxes for the fiscal year ended June 30, 2008 because the
Company incurred operating losses.
Deferred tax assets reflect the net tax effects of net operating loss and tax credit
carryforwards and temporary differences between the carrying amounts of assets for financial
reporting purposes and the amounts used for income tax purposes. Significant components of the
Company’s deferred tax assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Net operating losses
|
|
$
|
21,318
|
|
|
$
|
21,155
|
|
|
Accrued liabilities
|
|
|
217
|
|
|
|
1,193
|
|
|
Stock compensation
|
|
|
417
|
|
|
|
353
|
|
|
Research and other credits
|
|
|
56
|
|
|
|
94
|
|
|
Other
|
|
|
26
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
22,034
|
|
|
|
22,817
|
|
|
Valuation allowance
|
|
|
(22,034
|
)
|
|
|
(22,817
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
30
Realization of the deferred tax assets is dependent upon future earnings, if any, the timing
and amount of which are uncertain, particularly due to the Company’s filing for dissolution.
Accordingly, the Company’s net deferred tax assets have been fully offset by a valuation allowance.
During the fiscal years ended June 30, 2010 and 2009, the valuation allowance decreased by $783,000
and $1,864,000, respectively. During the fiscal year ended June 30, 2008, the valuation allowance
increased by $797,000.
As of June 30, 2010, the Company had net operating loss (“NOL”) carryforwards for federal
income tax purposes of approximately $55 million, which will expire in fiscal years 2013 through
2029. As of June 30, 2010, the Company also had NOL carryforwards for state income tax purposes in
California of approximately $37 million, which will expire in fiscal years 2013 through 2029. The
Internal Revenue Code (the “Code”) provides limitations on the use of NOL carryforwards and R&D
credit carryforwards when the Company’s ownership changes, as defined in the Code. The Company has
determined that an ownership change occurred on November 2, 2007, which will result in the
expiration of certain NOL carryforwards and R&D tax credits before they can be used. The NOL and
R&D credits available to the Company have been reduced to reflect the limitations provided in the
Code. In addition, federal and state NOLs totaling approximately $40 million and $25 million,
respectively, at June 30, 2010 are subject to annual limitations as a result of ownership changes.
Future ownership changes, if any, may result in additional annual limitations of NOL carryforwards
and R&D credit carryforwards.
A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective
income tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170 Day
|
|
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
|
|
December 17,
|
|
|
Fiscal Year ended June 30,
|
|
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
Tax expense (benefit) at federal statutory rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
(35.0
|
)%
|
|
Effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State tax expense (benefit), net
|
|
|
5.5
|
|
|
|
5.0
|
|
|
|
(5.3
|
)
|
|
Utilization of capital loss carryforwards
|
|
|
(25.6
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Share-based compensation expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
1.9
|
|
|
Warrant loss (gain)
|
|
|
2.6
|
|
|
|
2.9
|
|
|
|
(7.2
|
)
|
|
Reduction in valuation allowance
|
|
|
(12.3
|
)
|
|
|
(59.7
|
)
|
|
|
—
|
|
|
Research and development tax credits
|
|
|
(4.3
|
)
|
|
|
16.8
|
|
|
|
—
|
|
|
Impact of alternative minimum tax
|
|
|
0.2
|
|
|
|
—
|
|
|
|
—
|
|
|
Losses not benefited
|
|
|
—
|
|
|
|
—
|
|
|
|
45.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for income taxes
|
|
|
1.1
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
On July 1, 2007, the Company adopted FIN 48,
Accounting for Uncertainty in Taxes
. Upon
adoption, the Company reversed certain fully reserved deferred tax assets for uncertain tax
benefits related to R&D credits totaling $660,000 and the related valuation allowance. The
following is a tabular reconciliation of the total amount of
unrecognized tax benefits through the
fiscal year ended June 30, 2010:
|
|
|
|
|
|
|
Balance at July 1, 2008
|
|
$
|
660
|
|
|
Increase (decrease) for current period tax positions
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
June 30, 2009
|
|
|
660
|
|
|
Increase (decrease) for current period tax positions
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
June 30, 2010
|
|
$
|
660
|
|
|
|
|
|
|
31
The Company does not currently expect any significant changes to the unrecognized tax benefits
within 12 months of June 30, 2010. As of June 30, 2010, the Company’s U.S. federal income tax
returns remain subject to examination by tax authorities for fiscal years 1991 through 2010, and
its state income tax returns remain subject to examination for fiscal years 1999 through 2010.
Note 12.
401(k)
Savings Plan
The Company maintained a defined-contribution savings plan under Section 401(k) of the
Internal Revenue Code (the “Savings Plan”) until it was terminated in December 2009. Prior to its
termination, the Savings Plan covered substantially all full-time employees. Participants in the
Savings Plan could defer a portion of their pretax earnings, up to the limits established by the
Internal Revenue Service, and were fully vested in their salary deferrals at all times. The Company
matched the first $500 of each employee’s contributions, vested this matching contribution over 2
years, and recorded these matching contributions as expense. The Company made no matching
contributions for the 170-day period from July 1, 2009 through December 17, 2009. The Company’s
matching contributions to the plan were $8,000 and $15,000 for the fiscal years ended June 30, 2009
and 2008.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal
executive officer and principal accounting officer, we conducted an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report
(the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal
accounting officer concluded as of the Evaluation Date that our disclosure controls and procedures
were effective such that the material information required to be included in our SEC reports is
recorded, processed, summarized and reported within the time periods specified in SEC rules and
forms relating to us, including our consolidated subsidiary, and was made known to them by others
within those entities, particularly during the period when this report was being prepared.
There were no changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the Evaluation Date.
Management’s Report on Internal Control over Financial Reporting
We are responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act). Under the supervision
and with the participation of our management, including our principal executive officer and chief
financial officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in
Internal Controls — Integrated Framework
issued by
the Committee of Sponsoring Organizations of the Treadway Commission, and the related guidance
provided in
Internal Control Over Financial Reporting — Guidance for Smaller Public Companies
also
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Our internal control over financial reporting is a process designed to provide reasonable
assurance regarding the preparation and fair presentation of financial statements for external
purposes in accordance with generally accepted accounting principles. Internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
32
Based on our evaluation under the framework in
Internal Controls — Integrated Framework
, our
management concluded that our internal control over financial reporting was effective as of June
30, 2010.
This annual report does not include an attestation report of our independent registered public
accounting firm regarding internal control over financial reporting. Our internal control over
financial reporting is not subject to attestation by our independent registered public accounting
firm due to our filing status as a smaller reporting company.
ITEM 9B. OTHER INFORMATION
In our fiscal fourth quarter which ended June 30, 2010, we had no events that were required to
be reported on
Form 8-K
.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the members of our Board of Directors, the year each director
was first elected a director, the age of each director and the positions with the Company currently
held by each director.
|
|
|
|
|
|
|
|
|
Nominee or Director’s Name and Year
|
|
|
|
|
|
First Became a Director
|
|
Age
|
|
Position(s) with the Company
|
|
William A. Fletcher (2007)
|
|
|
63
|
|
|
Director
|
|
Matthew M. Loar (2009)
|
|
|
47
|
|
|
Acting Chief Executive and Financial Officer
|
|
John B. Stuppin (1988)
|
|
|
77
|
|
|
Director
|
William A. Fletcher
has served as a director of the Company since February 2007. Mr. Fletcher
also served as Acting Chief Executive Officer from January 2009 through December 2009. Mr. Fletcher
was Chairman of Teva Pharmaceuticals North America from December 2004 until September 2010. Prior
to being appointed Chairman, he was President and Chief Executive Officer of Teva’s North American
activities, where he started employment in 1985. Mr. Fletcher served as Vice President, Sales and
Marketing of the Pennsylvania-based Lemmon Company (1980 to 1983) and then as President (1983-1985)
following the company’s acquisition by Teva and WR Grace. Prior to 1980, Mr. Fletcher was Business
Development Manager and International Marketing Manager of Synthelabo, a pharmaceutical subsidiary
of L’Oreal in Paris. From 1970 to 1977 he served in various international sales and marketing
positions for Hoffman-LaRoche. Mr. Fletcher graduated in International Marketing from Woolwich
Polytechnic, London (now Greenwich University) in 1969.
Matthew M. Loar
was designated Acting Chief Executive and Financial Officer in February 2010
and has served as director since December 2009. He previously served as Vice President and Chief
Financial Officer of the Company from April 2008 to December 2009, when Mr. Loar’s employment with
the Company was terminated following the Company’s filing for dissolution. Mr. Loar is licensed in
California as a certified public accountant and has over 20 years of financial management
experience. Mr. Loar joined the Company from Osteologix, Inc., where he served as Chief Financial
Officer from September 2006 to April 2008. Prior to his tenure at Osteologix, Mr. Loar was Chief
Financial Officer of Genelabs Technologies, Inc. beginning in 2001. Prior to being appointed CFO at
Genelabs, Mr. Loar was Vice President, Finance and Controller for approximately six years. Earlier,
Mr. Loar held finance positions with an international manufacturing company and was audit manager
with a major public accounting firm. Mr. Loar holds a B.A. degree from the University of
California, Berkeley.
John B. Stuppin
is a founder of the Company and has served as a director of the Company since
September 1988. From September 1987 until October 1990, Mr. Stuppin served as President of the
Company, from November 1990 to August 1993 as co-chairman of the Board of Directors, from October
1990 until September 1991 as Executive Vice President, and from April 1991 until July 1994 as
Treasurer. He also served as the acting Chief Financial Officer of the Company from the Company’s
inception through December 1993 and served as a part-time employee of the Company in a business
development capacity from December 1990 to December 2005. Mr. Stuppin is an investment banker and a
venture capitalist. He has over 40 years’ experience in the start up and management of companies
active in emerging technologies and has been the president of a manufacturing company. He is
chairman of the board of Energy Focus, Inc. Mr. Stuppin holds an A.B. degree from Columbia
University.
33
During the fiscal year ended June 30, 2010, our Board of Directors held ten meetings. Each
director attended at least 75% of the meetings of the Board of Directors and meetings of the
committees of which he was a member in our last fiscal year.
Board Committees
Prior to filing of the Certificate of Dissolution on December 17, 2009, the Board had the
following standing committees:
|
|
•
|
|
Audit Committee,
which oversaw the accounting and financial reporting processes of
the Company and audits of our financial statements,
|
|
|
•
|
|
Compensation Committee,
which assisted the Board of Directors with respect to
compensation for our executive officers and independent directors, and administered
our equity-based compensation plans, and
|
|
|
•
|
|
Nominating and Corporate Governance Committee,
which had the responsibility to
identify, evaluate and recommend individuals for election as directors at each annual
or special meeting of the stockholders, oversee the evaluation of the Board’s
performance, develop and recommend to the Board of Directors corporate governance
guidelines, and provide oversight with respect to corporate governance and ethical
conduct.
|
These functions, to the extent applicable, have been assumed directly by the Board since the
filing of the Certificate of Dissolution and cessation of our business and operations.
EXECUTIVE OFFICERS
Matthew M. Loar is our only current executive officer, and his title and background
information is located above.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics (“
Code of Conduct
”) that applies to all
of our directors, officers and employees. You may also request a printed copy of the Code of
Conduct, without charge, by writing us at 2000 Powell Street, Suite 800, Emeryville, California
94608, Attn: Investor Relations. In the event of an amendment to, or a waiver from, any provision
of the Code of Conduct that applies to any director or executive officer, we will publicly disclose
any such amendment or waiver to the extent required by applicable law or regulations.
Corporate Governance Guidelines
Our Nominating and Corporate Governance Committee has adopted Corporate Governance Guidelines
(“
Guidelines
”) to assist our Board of Directors in exercising its responsibilities. You may request
a printed copy of the Guidelines, without charge, by writing us at 2000 Powell Street, Suite 800,
Emeryville, California 94608, Attn: Investor Relations.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and
directors, and persons who own more than 10% of a registered class of our equity securities to file
reports of beneficial ownership and changes in beneficial ownership with the SEC. Executive
officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us
with copies of all reports filed under Section 16(a). To the Company’s knowledge, based on
information provided to the Company, all executive officers, directors and greater than 10%
stockholders were in compliance with all applicable Section 16(a) filing requirements in fiscal
2010.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation paid, awarded or earned for services rendered
during fiscal 2010 by our Acting Chief Executive and Financial Officer and our former Acting Chief
Executive Officer (all executive officers who held the position of principal executive officer and
the only executive officers whose salary and bonus for fiscal 2010 exceeded $100,000). We refer to
these two executive officers as our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
Name and Principal Position(s)
|
|
Year
|
|
|
Salary
|
|
|
Compensation
(1)
|
|
|
Awards
(2)
|
|
|
Compensation
(3)
|
|
|
Total
|
|
|
Matthew M. Loar
(4)
|
|
|
2010
|
|
|
|
88,473
|
|
|
|
77,000
|
|
|
|
—
|
|
|
|
180,300
|
|
|
|
345,773
|
|
|
Acting Chief Executive
|
|
|
2009
|
|
|
|
279,167
|
|
|
|
56,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
335,167
|
|
|
and Financial Officer
|
|
|
2008
|
|
|
|
68,750
|
|
|
|
17,188
|
|
|
|
423,540
|
|
|
|
25,000
|
|
|
|
534,478
|
|
|
(starting February 12,
2010), Formerly Vice
President and Chief
Financial Officer
(through December 17,
2009)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William A. Fletcher
(5)
|
|
|
2010
|
|
|
|
—
|
|
|
|
35,000
|
|
|
|
—
|
|
|
|
118,975
|
|
|
|
153,975
|
|
|
Former Acting Chief
|
|
|
2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,591
|
|
|
|
165,000
|
|
|
|
171,591
|
|
|
Executive Officer
(through December 17,
2009)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
|
(1)
|
|
Non-equity incentive payments for the fiscal year ended
June 30, 2010 included $35,000 awarded by our Board of
Directors to each of Mr. Loar and Mr. Fletcher for their
services in connection with the winding down of the
business and operations of the Company and preparing for
its liquidation, and $42,000 to Mr. Loar under an employee
retention plan. Non-equity incentive payments for the
fiscal year ended June 30, 2009 were paid to Mr. Loar under
an employee retention plan. The Company awarded non-equity
incentive plan amounts related to fiscal 2008 performance
in September 2008.
|
|
|
|
(2)
|
|
Option Award amounts reflect the aggregate grant date fair
value of stock options using the Black-Scholes option
pricing model for option awards granted during the
respective fiscal year, computed in accordance with ASC
718, Compensation-Stock Compensation, excluding the effect of
estimated forfeitures. No stock option or
other equity awards were granted during the fiscal year
ended June 30, 2010. The values of the option awards for
the fiscal year ended June 30, 2009 for Mr. Fletcher and
for the fiscal year ended June 30, 2008 for Mr. Loar have
been revised from our previous proxy disclosures to reflect
their grant date fair value in accordance with revised SEC
disclosure requirements that have been implemented since the previous
filings were made. Stock options were granted with an exercise
price equal to the fair value of the stock on the grant
date, or $0.65 for Mr. Fletcher’s fiscal 2009 award and
$2.47 for Mr. Loar’s fiscal 2008 award. For the purposes of
establishing the values of the stock options on the grant
date, the stock option pricing model assumed a dividend
yield of zero, risk-free interest rates of 2.6% to 4.7%,
volatility factors of 67% to 90%, and an expected life of
the options of 4
3
/
4
to 6
1
/
4
years.
|
|
|
|
(3)
|
|
All other compensation for Mr. Loar during the fiscal year
ended June 30, 2010 represents six months of severance pay,
which aggregated $140,000, consulting fees of $30,300 and
Board of Director fees of $10,000. For the year ended June
30, 2008, the amount represents a bonus paid upon his
commencement of employment.
|
|
|
|
|
|
All other compensation for Mr. Fletcher represents fees
earned as member of our Board of Directors and for board
committee service, including fees of $25,000 per month for
service as Acting Chief Executive Officer from January 30,
2009 through August 31, 2009, and $12,500 per month from
September 1, 2009 through December 17, 2009, in addition to
his regular board fees of $7,500 per quarter through
December 17, 2009. After December 17, 2009, board fees were
reduced to $5,000 per quarter. Mr. Fletcher also received a
fee of $10,000 in January 2009 related to his service as a
member of a special committee established by the Board of
Directors to assist management with selected strategic and
operational issues while the position of Chief Executive
Officer remained vacant.
|
|
|
|
(4)
|
|
Mr. Loar was designated Acting Chief Executive and
Financial Officer on February 12, 2010, and serves in that
capacity as part-time consultant to the Company. He served
as Vice President and Chief Financial officer from April 1,
2008 to December 17, 2009.
|
|
|
|
(5)
|
|
Mr. Fletcher served as Acting Chief Executive Officer from
January 30, 2009 to December 17, 2009. He served in that
capacity as part-time consultant to the Company.
|
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding equity awards as of June 30, 2010.
Option Exercises
The following table shows all stock options exercised by named executive officers, directors
and former directors during the fiscal year ended June 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
Name
|
|
Exercise
|
|
|
on Exercise
(1)
|
|
|
William A. Fletcher
|
|
|
15,000
|
|
|
$
|
3,900
|
|
|
Abraham E. Cohen
|
|
|
15,000
|
|
|
|
4,500
|
|
|
Theodore L. Eliot, Jr.
|
|
|
15,000
|
|
|
|
3,900
|
|
|
F. Van Kasper
|
|
|
15,000
|
|
|
|
3,900
|
|
|
Abraham D. Sofaer
|
|
|
15,000
|
|
|
|
3,900
|
|
|
John B. Stuppin
|
|
|
15,000
|
|
|
|
3,900
|
|
|
|
|
|
|
(1)
|
|
Value realized on exercise represents the difference
between the closing stock market price of NTI common stock
on the date of exercise and the stock option exercise
price. All stock options exercised during the fiscal year
ended June 30, 2010 had an exercise price of $0.65 per
share. Mr. Cohen exercised his options on November 6, 2009
when the closing stock price was $0.95 per share. All other
stock option exercises occurred on October 27, 2009, when
the closing stock market price was $0.91 per share.
|
35
Pension Benefits
We do not have a defined benefit plan. Our named executive officers did not participate in, or
otherwise receive any special benefits under, any pension or retirement plan sponsored by us during
fiscal 2010.
Nonqualified Deferred Compensation
During fiscal 2010, our named executive officers did not contribute to, or earn any amounts
with respect to, any defined contribution or other plan sponsored by us that provides for the
deferral of compensation on a basis that is not tax-qualified.
Potential Payments upon Termination or Change in Control
None of our executive officers or directors are eligible for any payments upon a change in
control of the Company.
Director Compensation
NTI’s current directors are each paid cash compensation of $5,000 per calendar quarter.
Prior to December 17, 2009, NTI’s non-employee directors were paid according to the following
schedule:
Chairman of the Board of Directors, $10,000 per quarter;
Chairman of the audit committee, $8,750 per quarter;
Other board members, $7,500 per quarter.
Abraham E. Cohen, Theodore L. Eliot, Jr., F. Van Kasper and Abraham D, Sofaer resigned from
the Board of Directors on December 17, 2009, effective upon the filing of the Certificate of
Dissolution.
The following table shows for fiscal 2010 certain summary information with respect to the
compensation of all of the Company’s directors who are not Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
|
Option Awards
(1)
|
|
|
Total
|
|
|
Abraham E. Cohen
|
|
$
|
18,478
|
|
|
|
—
|
|
|
$
|
18,478
|
|
|
Theodore L. Eliot, Jr.
|
|
|
13,859
|
|
|
|
—
|
|
|
|
13,859
|
|
|
F. Van Kasper
|
|
|
16,168
|
|
|
|
—
|
|
|
|
16,168
|
|
|
Abraham D. Sofaer
|
|
|
13,859
|
|
|
|
—
|
|
|
|
13,859
|
|
|
John B. Stuppin
|
|
|
28,120
|
|
|
|
—
|
|
|
|
28,120
|
|
|
|
|
|
|
(1)
|
|
No option awards were granted to our directors during the
fiscal year ended June 20, 2010. All outstanding and
unexercised options were terminated on December 17, 2009
upon the filing of the Certificate of Dissolution.
|
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The following table sets forth information regarding beneficial ownership of our common stock
as of June 30, 2010 based on information available to us and filings with the SEC by:
|
|
•
|
|
each of our directors;
|
|
|
|
|
•
|
|
each of our “named executive officers” as defined under the Executive Compensation caption below;
|
|
|
|
|
•
|
|
all of our current directors and executive officers as a group; and
|
|
|
|
|
•
|
|
each person or group of affiliated persons known by us to be the
beneficial owner of more than 5% of our common stock.
|
36
Beneficial ownership and percentage ownership are determined in accordance with the rules of
the SEC and include voting or investment power with respect to shares of stock. This information
does not necessarily indicate beneficial ownership for any other purpose. Shares with right to
acquire within 60 days represents warrants with an exercise price of $16.80 per share, which the
Company does not expect to ever be exercised.
Unless otherwise indicated and subject to applicable community property laws, to our
knowledge, each stockholder named in the following table possesses sole voting and investment power
over their shares of common stock, except for those jointly owned with that person’s spouse.
Percentage of beneficial ownership of common stock is based on 27,019,805 shares of common stock
outstanding as of June 30, 2010. Unless otherwise noted below, the address of each person listed on
the table is c/o Neurobiological Technologies, Inc., 2000 Powell Street, Suite 800, Emeryville,
California 94608.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
with Right
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
to Acquire
|
|
|
Total
|
|
|
Percentage
|
|
|
|
|
Stock
|
|
|
within 60
|
|
|
Beneficial
|
|
|
of Common
|
|
|
Name and Address
|
|
Owned
|
|
|
days
|
|
|
Ownership
|
|
|
Stock
|
|
|
|
|
MAK Capital One
(1)
590 Madison Avenue, 9
th
Floor
New York, NY 10022
|
|
|
5,220,057
|
|
|
|
72,856
|
|
|
|
5,292,913
|
|
|
|
19.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highland Capital Management, L.P.
(2)
Two Galleria Tower
13455 Noel Road, Suite 800
Dallas, Texas 75240
|
|
|
4,737,479
|
|
|
|
—
|
|
|
|
4,737,479
|
|
|
|
17.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Firefly Value Partners, LP
(3)
551 Fifth Avenue, 36
th
Floor
New York, NY 10176
|
|
|
4,613,222
|
|
|
|
—
|
|
|
|
4,613,222
|
|
|
|
17.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millennium Technology Ventures
(4)
747 Third Avenue, 38th Floor
New York, New York 10017
|
|
|
1,969,880
|
|
|
|
—
|
|
|
|
1,969,880
|
|
|
|
7.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John B. Stuppin
|
|
|
183,876
|
|
|
|
—
|
|
|
|
183,876
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William A. Fletcher
|
|
|
83,600
|
|
|
|
—
|
|
|
|
83,600
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew M. Loar
|
|
|
25,000
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All current executive officers and directors as a group
(3 persons)
|
|
|
292,476
|
|
|
|
—
|
|
|
|
292,476
|
|
|
|
1.1
|
%
|
|
|
|
|
|
*
|
|
Less than one percent.
|
|
|
|
(1)
|
|
Shares of common stock owned are based on information
contained in a Schedule 13G/A filed November 18, 2008 by
MAK Capital One LLC (“MAK Capital”), Michael A. Kaufman
(“Kaufman”), MAK Capital Fund LP (“MAK Fund”), Paloma
International LP (“Paloma”) and S. Donald Sussman
(“Sussman”) According to the Schedule 13G/A, (i) MAK
Capital beneficially owned 5,220,057 shares of common
stock; (ii) Kaufman beneficially owned 5,220,057 shares of
common stock; (iii) MAK Fund beneficially owned 3,627,192
shares of common stock; (iv) Paloma beneficially owned
1,592,865 shares of common stock; and (iv) Sussman
beneficially owned 1,592,865 shares of common stock as of
November 14, 2008. MAK Capital, Kaufman and MAK Fund have
shared power to direct the vote and disposition of the
3,627,192 shares of common stock owned by MAK Fund. Paloma,
Sussman, MAK Capital and Kaufman have shared power to
direct the vote and disposition of the 1,592,865 shares of
common stock owned by Paloma. Paloma owns its shares
through a subsidiary, Sunrise Partners Limited Partnership.
Stock holdings were unchanged based on a Schedule 13F filed
May 17, 2010 by MAK Capital.
|
37
|
|
|
|
|
(2)
|
|
Based on information contained in a Schedule 13G/A filed
February 17, 2009 by Highland Capital Management, L.P.
(“Highland”), Strand Advisors, Inc. (“Strand”) and James
Dondero (“Dondero”). According to the Schedule 13G/A, (i)
Highland beneficially owned 4,737,479 shares of common
stock; (ii) Strand beneficially owned 4,737,479 shares of
common stock; and (iii) Dondero beneficially owned
4,737,479 shares of common stock as of December 31, 2008.
Highland Capital principally serves as an investment
adviser and/or manager to other persons; Highland Capital
may be deemed to beneficially own shares owned and/or held
by and/or for the account of and/or benefit of other
persons. Strand serves as the general partner of Highland
Capital; Strand may be deemed to beneficially own shares
owned and/or held by and/or for the account of and/or
benefit of Highland Capital. Dondero is the President and a
director of Strand; Dondero may be deemed to beneficially
own shares owned and/or held by and/or for the account of
and/or benefit of Strand. Stock holdings were unchanged
based on a Schedule 13F filed May 17, 2010 by Highland.
|
|
|
|
(3)
|
|
Based on information contained in a Form 4 filed June 9,
2010 by Firefly Value Partners, LP (“Firefly”). According
to the Form 4, FVP Mater Fund L.P. beneficially owned
2,618,424 shares of common stock and FVP US-Q, LP
beneficially owned 1,994,798 shares of common stock.
|
|
|
|
(4)
|
|
Based on information contained in a Schedule 13D filed
January 23, 2009 by Daniel Burstein and Samuel L. Schwerin
on behalf of Millennium Technology Value Partners RCM LP.
According to the Schedule 13D, Daniel Burstein and Samuel
L. Schwerin each beneficially owned 1,969,880 shares of
common stock, including 991,259 shares of common stock
directly owned by Millennium RCM LP and 978,621 shares
owned directly by Millennium LP.
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Director Independence
As of June 30, 2010, the Board consisted of William A. Fletcher, Matthew M. Loar and John B.
Stuppin. The Board has determined that Mr. Stuppin is an independent director as defined by the
rules of The Nasdaq Stock Market.
Related Party Transaction Review and Approval
We have entered into indemnification agreements with each of our directors for the
indemnification of them to the fullest extent permitted by law. The indemnification agreements also
allow advancement of expenses to the directors.
Our Board of Directors has adopted policies and procedures for the review and approval of
related party transactions and reviews and approves the material terms of any proposed related
party transactions.
Pursuant to our Code of Business Conduct and Ethics, each of our executive officers, directors
and employees must disclose transactions involving actual or apparent conflicts of interests, such
as related party transactions, to the Acting Chief Executive Officer. In order to avoid such
conflicts, our executive officers, directors and employees may not receive any payments,
compensation or gifts, other than gifts of nominal value, from any entity that does business or
seeks to do business with us. Furthermore, our executive officers, directors and employees may not
use property or information belonging to us or their position with us for improper personal gain.
In determining whether to approve or ratify a related-party transaction, the Board of
Directors may consider, among other factors it deems appropriate, the potential benefits to us, the
impact on a director’s or nominee’s independence or an executive officer’s relationship with or
service to us, whether the related party transaction is on terms no less favorable than terms
generally available to an unaffiliated third party under the same or similar circumstances and the
extent of the related party’s interest in the transaction. In deciding to approve a transaction,
the Board of Directors may, in its sole discretion, impose such conditions as it deems appropriate
on us or the related party in connection with its approval of any transaction. Any transactions
involving the compensation of executive officers are also to be reviewed and approved by the Board
of Directors. If a related-party transaction will be ongoing, the Board may establish guidelines to
be followed in our ongoing dealings with the related party. Thereafter, the Board, on at least an
annual basis, will review and assess ongoing relationships with the related party to see that they
are in compliance with the committee’s guidelines and that the related-party transaction remains
appropriate.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Our Board of Directors has selected Odenberg, Ullakko, Muranishi & Co. LLP (“
OUM
”) as our
independent registered public accounting firm for the fiscal year ending June 30, 2010.
38
Audit Fees
The following is a summary of the fees billed to the Company by OUM for professional services:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Audit Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consists of fees billed
or to be billed for
professional services
rendered for the audit
of the Company’s
financial statements
for the respective
fiscal years, reviews
of the interim
financial statements
included in the
Company’s quarterly
reports and reviews,
consents and comfort
letters relating to
registration
statements.
|
|
$
|
122,437
|
|
|
$
|
194,447
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consists of fees billed
for tax planning,
assistance with the
preparation of tax
returns and advice on
other tax-related
matters rendered during
the respective fiscal
years. Fees for fiscal
2009 include analysis
of tax loss limitations
related to historical
ownership changes that
result in limitations
on annual utilization
of tax loss
carryforwards.
|
|
|
21,800
|
|
|
|
35,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total All Fees:
|
|
$
|
144,237
|
|
|
$
|
229,497
|
|
|
|
|
|
|
|
|
|
There were no audit-related fees or other fees billed by OUM in addition to the fees noted in the
schedule above. The Board of Directors reviews audit and non-audit services performed by our
independent registered public accounting firm, as well as the fees charged for such services. In
its review of non-audit service fees, the Board of Directors considers, among other things, the
possible impact of the performance of such services on our independent registered accounting firms’
independence. All audit-related fees, tax fees and other fees are pre-approved by the the Board of
Directors.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
Financial Statements and Schedules:
Financial statements as of June 30, 2010 and 2009, and for the three years ended June 30,
2010, are included in Item 8. All schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(b)
Exhibits:
The following exhibits are incorporated by reference or filed as part of this report.
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
|
|
No.
|
|
Description
|
|
Form
|
|
Date of Filing
|
|
Filed Herewith
|
|
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation.
|
|
S-3
|
|
2/25/2005
|
|
|
|
|
3(i).1
|
|
|
Certificate of Amendment to Amended and Restated
Certificate of Incorporation.
|
|
10-Q
|
|
2/10/2006
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bylaws of Neurobiological
Technologies, Inc.
|
|
8-K
|
|
6/20/2007
|
|
|
|
|
4.1
|
|
|
Form of Common Stock Certificate.
|
|
10-K
|
|
9/16/2008
|
|
|
|
|
4.4
|
|
|
Form of Common Stock Warrant issued to certain
institutional investors as a component of the
units in a private placement transaction on April
4, 2007.
|
|
8-K
|
|
4/2/2007
|
|
|
|
|
10.1
|
|
|
Form of Indemnity Agreement between the Company
and its directors and officers. *
|
|
10-K
|
|
9/16/2008
|
|
|
|
|
10.2
|
|
|
Office Lease Agreement, dated April 22, 2005, by
and between CA-Emeryville Properties Limited
Partnership and the Company.
|
|
10-Q
|
|
5/10/2005
|
|
|
|
|
10.3
|
|
|
Termination Agreement, dated as of May 4, 2009,
by and between the Company and Nordmark
Arzneimittel GmbH & Co. KG.
|
|
10-Q
|
|
5/8/2009
|
|
|
|
|
10.4
|
|
|
Agreement to Terminate the License and
Cooperation Agreement, effective as of July 31,
2009, with Respect to Neurobiological
Technologies, Inc., by and between Merz
Pharmaceuticals GmbH and the Company.
|
|
10-K
|
|
8/31/2009
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
|
|
No.
|
|
Description
|
|
Form
|
|
Date of Filing
|
|
Filed Herewith
|
|
|
10.5
|
|
|
Termination Agreement to Master Clinical Services
Agreement, effective as of May 29, 2009, by and
between the Company and ICON Clinical Research
Limited
|
|
8-K
|
|
6/2/2009
|
|
|
|
|
10.6
|
|
|
Asset Purchase Agreement, dated September 19,
2005, by and between the Company, Neutron ROW
Ltd. and Neutron Ltd.
|
|
10-Q
|
|
11/9/2005
|
|
|
|
|
10.7
|
|
|
Amendment and Addendum to Collaboration and
Services Agreement, dated June 23, 2009, by and
between Neutron Ltd., Celtic Pharma Development
Services America, Inc. and the Company.
|
|
8-K
|
|
6/26/2009
|
|
|
|
|
10.8
|
|
|
Collaboration and License Agreement, entered into
as of November 29, 2007, by and between Buck
Institute for Age Research and the Company for
the fibroblast growth factor-2. +
|
|
10-Q
|
|
5/12/2008
|
|
|
|
|
10.9
|
|
|
Collaboration and License Agreement, entered into
as of February 29, 2008, by and between Buck
Institute for Age Research and the Company for
the Netrin-1 protein. +
|
|
10-Q
|
|
5/12/2008
|
|
|
|
|
10.10
|
|
|
Termination Agreement to Collaboration and
License Agreements, entered into as of June 12,
2009, by and between Buck Institute for Age
Research and the Company.
|
|
8-K
|
|
6/15/2009
|
|
|
|
|
10.11
|
|
|
Employment Offer Letter, dated March 18, 2008, by
and between the Company and Matthew M. Loar. *
|
|
8-K
|
|
4/3/2008
|
|
|
|
|
21.1
|
|
|
Subsidiary of the Company.
|
|
|
|
|
|
x
|
|
|
24.1
|
|
|
Powers of Attorney. (Contained on Signature Page)
|
|
|
|
|
|
x
|
|
|
31.1
|
|
|
Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
x
|
|
|
32.1
|
|
|
Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
x
|
|
|
|
|
|
+
|
|
Confidential treatment has been granted with respect to portions of
this exhibit pursuant to an application requesting confidential
treatment under Rule 24b-2 of the Exchange Act. A complete copy of
this exhibit, including the redacted terms, has been separately filed
with the Securities and Exchange Commission.
|
|
|
|
*
|
|
This exhibit is a management contract or compensatory plan or arrangement.
|
40
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
|
|
|
|
|
|
Neurobiological Technologies, Inc.
|
|
|
|
By:
|
/s/
Matthew M. Loar
|
|
|
Dated: September 28, 2010
|
|
Matthew M. Loar
|
|
|
|
|
Acting Chief Executive and Financial Officer
|
|
POWERS OF ATTORNEY AND SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Matthew M. Loar as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this report, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
|
|
|
|
|
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Signature
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|
Title
|
|
Date
|
|
|
|
|
|
|
/s/
William A. Fletcher
William A. Fletcher
|
|
Director
|
|
September 28, 2010
|
|
|
|
|
|
|
/s/
Matthew M. Loar
Matthew M. Loar
|
|
Acting Chief Executive and Financial Officer
(Principal Executive, Financial and Accounting Officer)
|
|
September 28, 2010
|
|
|
|
|
|
|
/s/ JOHN B. STUPPIN
John B. Stuppin
|
|
Director
|
|
September 28, 2010
|
41
EXHIBIT INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
|
|
No.
|
|
Description
|
|
Form
|
|
Date of Filing
|
|
Filed Herewith
|
|
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation.
|
|
S-3
|
|
2/25/2005
|
|
|
|
|
3(i).1
|
|
|
Certificate of Amendment to Amended and Restated
Certificate of Incorporation.
|
|
10-Q
|
|
2/10/2006
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bylaws of Neurobiological
Technologies, Inc.
|
|
8-K
|
|
6/20/2007
|
|
|
|
|
4.1
|
|
|
Form of Common Stock Certificate.
|
|
10-K
|
|
9/16/2008
|
|
|
|
|
4.4
|
|
|
Form of Common Stock Warrant issued to certain
institutional investors as a component of the
units in a private placement transaction on April
4, 2007.
|
|
8-K
|
|
4/2/2007
|
|
|
|
|
10.1
|
|
|
Form of Indemnity Agreement between the Company
and its directors and officers. *
|
|
10-K
|
|
9/16/2008
|
|
|
|
|
10.2
|
|
|
Office Lease Agreement, dated April 22, 2005, by
and between CA-Emeryville Properties Limited
Partnership and the Company.
|
|
10-Q
|
|
5/10/2005
|
|
|
|
|
10.3
|
|
|
Termination Agreement, dated as of May 4, 2009,
by and between the Company and Nordmark
Arzneimittel GmbH & Co. KG.
|
|
10-Q
|
|
5/8/2009
|
|
|
|
|
10.4
|
|
|
Agreement to Terminate the License and
Cooperation Agreement, effective as of July 31,
2009, with Respect to Neurobiological
Technologies, Inc., by and between Merz
Pharmaceuticals GmbH and the Company.
|
|
10-K
|
|
8/31/2009
|
|
|
|
|
10.5
|
|
|
Termination Agreement to Master Clinical Services
Agreement, effective as of May 29, 2009, by and
between the Company and ICON Clinical Research
Limited
|
|
8-K
|
|
6/2/2009
|
|
|
|
|
10.6
|
|
|
Asset Purchase Agreement, dated September 19,
2005, by and between the Company, Neutron ROW
Ltd. and Neutron Ltd.
|
|
10-Q
|
|
11/9/2005
|
|
|
|
|
10.7
|
|
|
Amendment and Addendum to Collaboration and
Services Agreement, dated June 23, 2009, by and
between Neutron Ltd., Celtic Pharma Development
Services America, Inc. and the Company.
|
|
8-K
|
|
6/26/2009
|
|
|
|
|
10.8
|
|
|
Collaboration and License Agreement, entered into
as of November 29, 2007, by and between Buck
Institute for Age Research and the Company for
the fibroblast growth factor-2. +
|
|
10-Q
|
|
5/12/2008
|
|
|
|
|
10.9
|
|
|
Collaboration and License Agreement, entered into
as of February 29, 2008, by and between Buck
Institute for Age Research and the Company for
the Netrin-1 protein. +
|
|
10-Q
|
|
5/12/2008
|
|
|
|
|
10.10
|
|
|
Termination Agreement to Collaboration and
License Agreements, entered into as of June 12,
2009, by and between Buck Institute for Age
Research and the Company.
|
|
8-K
|
|
6/15/2009
|
|
|
|
|
10.11
|
|
|
Employment Offer Letter, dated March 18, 2008, by
and between the Company and Matthew M. Loar. *
|
|
8-K
|
|
4/3/2008
|
|
|
|
|
21.1
|
|
|
Subsidiary of the Company.
|
|
|
|
|
|
x
|
|
|
24.1
|
|
|
Powers of Attorney. (Contained on Signature Page)
|
|
|
|
|
|
x
|
|
|
31.1
|
|
|
Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
x
|
|
|
32.1
|
|
|
Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
x
|
|
|
|
|
|
+
|
|
Confidential treatment has been granted with respect to portions of
this exhibit pursuant to an application requesting confidential
treatment under Rule 24b-2 of the Exchange Act. A complete copy of
this exhibit, including the redacted terms, has been separately filed
with the Securities and Exchange Commission.
|
|
|
|
*
|
|
This exhibit is a management contract or compensatory plan or arrangement.
|
42
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