<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-Q
(MARK ONE)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1997
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
[ ] EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM ______ TO______
COMMISSION FILE NUMBER: 0-26520
NEOPROBE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-1080091
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
425 METRO PLACE NORTH, SUITE 300, DUBLIN, OHIO 43017
(Address of principal executive offices)
614-793-7500
(Issuer's telephone number, including area code)
Indicate by check whether the registrant: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- --------
22,767,856 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE (Number of
shares of issuer's common equity outstanding as of the close of business on
November 10, 1997)
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEOPROBE CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
-------------------- --------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 30,168,412 $ 18,303,378
Available-for-sale securities 19,748,819 12,120,125
Accounts receivable 1,240,474 1,084,728
Inventory 216,272 306,156
Prepaid expenses and other current assets 2,289,546 2,412,399
-------------- ----------------
Total current assets 53,663,523 34,226,786
-------------- ----------------
Note receivable 1,500,000 1,500,000
Property and equipment at cost:
Equipment, net of accumulated depreciation 4,916,650 6,469,983
Construction in progress 1,531,711 3,579,930
-------------- ----------------
6,448,361 10,049,913
Intangible assets, net of accumulated amortization 2,130,335 2,242,684
Other assets 130,949 137,340
-------------- ----------------
Total assets $ 63,873,168 $ 48,156,723
============== ================
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
2
<PAGE> 3
NEOPROBE CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------------ -------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,404,655 $ 1,978,527
Accrued expenses 2,951,430 3,616,496
Deferred revenue 2,000,000 2,000,000
Notes payable to finance company 155,091 0
Capital lease obligation, current 76,161 97,265
------------ ------------
Total current liabilities 7,587,337 7,692,288
------------ ------------
Long term debt 1,000,687 1,709,522
Capital lease obligation 8,096 248,119
------------ ------------
Total liabilities 8,596,120 9,649,929
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred Stock; $.001 par value; 5,000,000 shares
authorized at December 31, 1996 and September 30,
1997; none outstanding (500,000 shares
designated as Series A, $.001 par value, at
September 30, 1997; none outstanding)
Common stock; $.001 par value; 50,000,000 shares
authorized; 22,586,527 and 22,766,856 shares issued
and outstanding at December 31, 1996 and
September 30, 1997, respectively 22,587 22,767
Additional paid in capital 119,293,862 120,044,061
Deficit accumulated during development stage (64,116,003) (81,489,912)
Unrealized gain on available-for-sale securities (29,859) (14,646)
Cumulative foreign currency translation adjustment 106,461 (55,476)
-------------- --------------
Total stockholders' equity 55,277,048 38,506,794
-------------- --------------
Total liabilities and stockholders' equity $ 63,873,168 $ 48,156,723
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 4
NEOPROBE CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NOVEMBER 16,
1983
THREE MONTHS ENDED NINE MONTHS ENDED (INCEPTION)
SEPTEMBER 30, SEPTEMBER 30, TO SEPTEMBER 30,
----------------------------------- --------------------------------- ---------------
1996 1997 1996 1997 1997
--------------- --------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net sales $ 232,269 $ 1,274,786 $ 588,085 $ 3,451,631 7,510,628
Cost of goods sold 102,039 295,514 332,013 988,423 3,116,720
----------- ----------- ------------ ------------ ------------
Gross profit 130,230 979,272 256,072 2,463,208 4,393,908
----------- ----------- ------------ ------------ ------------
Operating expenses:
Research and development 4,595,523 4,149,621 10,921,903 13,334,609 58,233,943
Marketing and selling 416,488 977,961 760,582 2,790,308 4,246,896
General and administrative 1,960,155 1,543,060 4,377,540 5,170,029 29,471,362
----------- ----------- ------------ ------------ ------------
Total operating expenses 6,972,166 6,670,642 16,060,025 21,294,946 91,952,201
----------- ----------- ------------ ------------ ------------
Loss from operations (6,841,936) (5,691,370) (15,803,953) (18,831,738) (87,558,293)
----------- ----------- ------------ ------------ ------------
Other income (expense):
Interest income 658,797 338,072 1,462,120 1,545,737 5,311,122
Interest expense (26,644) (4,959) (47,931) (14,807) (520,847)
Other (17,282) (54,519) 213,882 (73,101) 1,278,106
----------- ----------- ------------ ------------ ------------
Total other income 614,871 278,594 1,628,071 1,457,829 6,068,381
----------- ----------- ------------ ------------ ------------
Net loss $(6,227,065) $(5,412,776) $(14,175,882) $(17,373,909) $(81,489,912)
=========== =========== ============ ============ ============
Net loss per share of common stock $ (0.31) $ (0.24) $ (0.74) $ (0.76)
=========== =========== ============ ============
Shares used in computing
net loss per share 20,052,371 22,766,834 19,073,230 22,723,007
=========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 5
NEOPROBE CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NOVEMBER 16,
1983
NINE MONTHS ENDED (INCEPTION)
SEPTEMBER 30, TO SEPTEMBER 30,
1996 1997 1997
------------------ ------------------- -------------------
<S> <C> <C> <C>
Net cash used in operating activities $ (9,311,480) $(16,496,677) $ (71,157,792)
Cash flows from investing activities:
Purchases of available-for-sale securities (41,872,229) (9,915,474) (104,588,890)
Proceeds from sales of available-for-sale securities 27,559,047 1,828,927 47,818,579
Maturities of available-for-sale securities 6,982,000 15,739,201 44,703,943
Purchase of property and equipment (2,168,361) (4,090,456) (10,609,373)
Other (62,872) (127,815) (966,974)
------------ ------------ -------------
Net cash (used in) provided by investing activities (9,562,415) 3,434,383 (23,642,715)
------------ ------------ -------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 35,250,767 750,381 102,569,302
Proceeds from bank loan 1,012,915 708,835 1,709,522
Other (316,357) (250,797) 8,848,172
------------ ------------ -------------
Net cash provided by financing activities 35,947,325 1,208,419 113,126,996
------------ ------------ -------------
Effect of exchange rate changes on cash (11,538) (11,159) (23,111)
------------ ------------ -------------
Net increase (decrease) in cash and cash equivalents 17,061,892 (11,865,034) 18,303,378
Cash and cash equivalents at beginning of period 10,032,973 30,168,412 0
------------ ------------ -------------
Cash and cash equivalents at end of period $ 27,094,865 $ 18,303,378 $ 18,303,378
============ ============ =============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE> 6
NEOPROBE CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The information presented for September 30, 1996 and 1997, and for the
periods then ended is unaudited, but includes all adjustments (which
consist only of normal recurring adjustments) which the management of
Neoprobe Corporation (the "Company") believes to be necessary for the
fair presentation of results for the periods presented. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The results for
the interim period are not necessarily indicative of results to be
expected for the year. The financial statements should be read in
conjunction with the Company's audited financial statements for the
year ended December 31, 1996, which were included as part of the
Company's Annual Report on Form 10-KSB/A (file no. 0-26520). Certain
1996 amounts have been reclassified to conform with the 1997
presentation.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS No. 128")
"Earnings Per Share". SFAS No. 128 revises the method for computing and
format for presentation of earnings per share for entities with
publicly held common stock. This Statement supersedes APB Opinion No.
15 and is effective for financial statements issued for periods ending
after December 15, 1997. Management of the Company intends to adopt
SFAS No. 128 in connection with the issuance of financial statements
for the year ended December 31, 1997; however, management does not
believe adoption will have any material impact on the financial
condition or results of operations of the Company.
The Company is a development stage enterprise engaged in the
development and commercialization of technologies for the diagnosis and
treatment of cancers. There can be no assurance that the Company will
be able to commercialize its proposed products. There can also be no
assurance that adequate financing will be available when needed or on
terms attractive to the Company.
2. INVENTORY
The components of inventory are as follows
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
---- ----
<S> <C> <C>
Materials and component parts $ 51,264 $111,978
Work-in-process 94,389 73,122
Finished goods 70,619 121,056
-------- --------
$216,272 $306,156
======== ========
</TABLE>
3. LONG-TERM DEBT
Neoprobe (Israel) Ltd. ("Neoprobe (Israel)"), a subsidiary of the
Company, is in the process of constructing a radiolabeling facility
near Dimona, Israel, for use in future operations of the Company.
Construction of the facility is being partially financed under an
investment program approved by the state of Israel's Finance
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<PAGE> 7
Committee (the "Committee"). During the third quarter of 1997, the
Company was notified that the Committee had approved a $5.2 million
increase in the approved investment, bringing the total approved
investment to $9.9 million. Under the approved program, Neoprobe
(Israel) is entitled to government grants and government loan
guarantees equal to a percentage of the total loan taken for the
construction and operation of the facility. Amounts received under the
agreement are collateralized by certain property obtained through the
use of proceeds received. As of September 30, 1997, Neoprobe (Israel)
has received $1.7 million and $690,000 in the form of loans and grants,
respectively.
4. STOCK OPTIONS
In February 1997, the Board granted options to certain directors,
officers, and employees of the Company under the Neoprobe Corporation
Incentive Stock Option and Restricted Stock Purchase Plan (the "Plan")
for 325,200 shares of common stock, exercisable at $13.38 per share,
vesting over a period of three years. Currently, the Company has 2.2
million options outstanding under two stock option plans, and 1.3
million options have vested as of September 30, 1997.
5. AGREEMENTS
In September 1996, the Company executed a License and Distributorship
Agreement ("Agreement") with the United States Surgical Corporation
("USSC"). Effective October 17, 1997, the Company and USSC agreed to
terminate the Agreement, as amended. In connection with the
termination, the Company agreed to pay USSC net commissions on orders
received prior to the effective date of the termination and to continue
to warranty and service devices sold under the terms of the Agreement.
The parties agreed that as of the effective date of the termination,
the total financial obligation owed to USSC by the Company was
approximately $74,000. The parties have also agreed to discharge and
release each other from all remaining claims, demands, and obligations
relating to the Agreement, including license fees.
6. CONTINGENCIES
The Company is subject to legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not
materially affect the financial position of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management Discussion and Analysis of Financial Condition
and Results of Operations and other parts of this Report contain
forward-looking statements that involve risks and uncertainties. The Company's
actual results in 1997 and future periods may differ significantly from the
prospects discussed in the forward-looking statements.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations primarily through
private and public offerings of its equity securities, from which it has raised
gross proceeds of $120 million. The Company has devoted substantially all of its
efforts and resources to research and clinical development of innovative systems
for the intraoperative diagnosis and treatment of cancers. The RIGS system
integrates radiolabeled targeting agents and a radiation detection instrument.
The Company must obtain regulatory approval to market its products before
commercial revenue can be generated. During 1996, the Company submitted to the
European regulatory agencies and to the FDA applications to request permits to
begin marketing and selling the Company's RIGS products for the detection of
metastatic colorectal cancer.
7
<PAGE> 8
During the fourth quarter of 1996, the Company received notification from its
Korean marketing partner that it had received an approved license to distribute
RIGScan CR49 in South Korea.
The Company is studying the safety and efficacy of RIGS products for the
detection of other solid tumor cancer types, and the safety and efficacy of
certain cancer therapy products (RIGS/ACT) based on its activated cellular
therapy technology. In addition, the Company has funded an initial Phase I study
using technology owned by Cira Technologies, Inc. ("Cira"). The purpose of the
study is to determine the safety and feasibility of using activated cellular
therapy to help boost the immune system of patients with HIV/AIDS. Patient
enrollment for this study was completed during the first quarter of 1997. The
Company has an option to acquire an exclusive global license for the application
of Cira's technology to HIV/AIDS and certain other viral diseases. The Company
also began funding a similar study in a related viral field during the third
quarter of 1997. There can be no assurance that the Company's products will be
approved for marketing by the FDA or any foreign government agency, or that any
such products will be successfully introduced or achieve market acceptance.
For the period from inception to September 30, 1997, the Company has incurred
cumulative net losses of $81.5 million. Currently, the Company has approval
for commercial sale of a RIGS product in Korea, and has filed its request for a
marketing permit in the U.S. and Europe for the detection of metastatic
colorectal cancer. The Company has incurred, and will continue to incur,
substantial expenditures for research and development activities related to
bringing its products to the commercial market. The Company intends to devote
significant additional funds to clinical testing, manufacturing validation, and
other activities required for regulatory review and commercialization of RIGS
products. The amount of funds and length of time required to complete such
testing will depend upon the outcome of regulatory reviews. The regulatory
bodies may require more testing than is anticipated by the Company. There can
be no assurance that the Company's RIGS products will be approved for marketing
by the FDA or any foreign government agency, or that any such products will be
successfully introduced or achieve market acceptance.
As of September 30, 1997, the Company has cash, cash equivalents, and
available-for-sale securities of $30.4 million. In April 1996, the Company sold
1,750,000 shares of common stock at a price of $18.50 per share in a secondary
offering, and received proceeds net of underwriting discounts of $30.5 million.
In November 1992 and December 1993, the Company issued a total of 2,330,000
Class E Redeemable Common Stock Purchase Warrants ("Class E Warrants") which
expired on November 12, 1996. During 1996, the Company received proceeds from
the exercise of Class E Warrants of $15.0 million. In September 1996, the
Company executed a License and Distributorship Agreement ("Agreement") with the
United States Surgical Corporation ("USSC"). Upon execution of the Agreement,
the Company received a $2 million license payment from USSC. On October 17,
1997, the Company and USSC agreed to terminate the Agreement effective
immediately. The parties agreed that upon the effective date of the termination
agreement, the total financial obligation owed to USSC by the Company was
approximately $74,000. The parties have also agreed to discharge and release
each other from all remaining claims, demands, and obligations relating to the
Agreement, including license fees.
The Company anticipates that 1997 research and development expenses will
continue to increase over 1996 levels and selling, general and administrative
expenses will increase significantly over 1996 expenditures. A significant
portion of the increased selling, general and administrative expenses will be
associated with marketing activities in preparation for the commercial launch of
the first RIGS product. In addition, the Company anticipates selling expenses
directly associated with selling RIGScan CR49 and Neoprobe radiation detection
instruments will increase proportionately with sales, particularly in the second
half of 1997. The Company cannot predict when marketing approvals will be
received. However, when the Company receives permission from the regulatory
authorities to begin marketing its products and begins generating revenue from
the sale of its products, additional costs for marketing and distribution will
be incurred. During 1997, in addition to product launch activities, the Company
will continue to focus on improving manufacturing processes for the production
of RIGS products and developing other RIGScan products. The Company also
anticipates opening clinical trials for additional applications of RIGScan CR49.
During the first three quarters of 1997, the Company has expended $16.5 million
to finance operating activities. The Company currently anticipates that a total
of $22.0 million in cash will be used to finance operating activities during
1997. The Company has executed various agreements with third parties that
supplement the technical and business capabilities of the Company. The Company
is generally
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<PAGE> 9
obligated to such parties to pay royalties or commissions upon commercial sale
of the related product. The Company's estimate of its allocation of cash
resources is based on the current state of its business operations, its
business plan, and current industry and economic conditions, and is subject to
revisions due to a variety of factors including without limitation, additional
expenses related to marketing and distribution, regulatory licensing and
research and development, and to reallocation among categories and to new
categories. The Company may need to supplement its funding sources from time to
time.
Neoprobe Europe AB ("Neoprobe Europe") is a wholly-owned subsidiary of the
Company, located in Lund, Sweden, where it operates a manufacturing and
purification facility. The Company intends to use the production capability of
Neoprobe Europe to prepare the CC49 monoclonal antibody produced by
Bio-Intermediair BV for final radiolabeling. The Company advanced Neoprobe
Europe funds during the first three quarters of 1997 to cover capital
expenditures of $450,000 and operating expenses of $1.0 million. The Company
anticipates advancing $500,000 during the fourth quarter of 1997 to cover
operating and capital expenditures.
In 1994, the Company formed Neoprobe (Israel) to construct and operate a
radiolabeling facility for the Company's targeting agents. The Company owns 95
percent of Neoprobe (Israel), with Rotem Industries Ltd., the private arm of
the Israeli atomic energy authority ("Rotem") owning the balance and managing
the facility. Construction of a facility is underway near Dimona, Israel and is
being financed through an investment program approved by the state of Israel's
Finance Committee ("the Committee"). During the third quarter of 1997, the
Company was notified that the Committee had approved an increase in the
approved investment of $5.2 million, bringing the total approved investment to
$9.9 million. Under the approved program, Neoprobe (Israel) is entitled to
government grants and government loan guarantees equal to a percentage of the
total loan taken for the construction and operation of the facility. Amounts
received under the agreement are collateralized by certain property obtained
through the use of proceeds received. As of September 30, 1997, Neoprobe
(Israel) had received $1.7 million and $690,000 in the form of loans and
grants, respectively. On August 10, 1995, the Company and Neoprobe (Israel)
raised $1.1 million for Neoprobe (Israel) through the issuance of convertible
debentures. During 1996, all of these convertible debentures were converted
into 200,000 shares of Common Stock of Neoprobe Corporation. Costs associated
with construction of the facility and operations at Neoprobe (Israel) during
1997 have been financed primarily through funds advanced by the Company and
with government grants and loans guaranteed by the Israeli government. During
the first three quarters of 1997, Neoprobe (Israel) expended $3.3 million on
capital expenses and $600,000 on operating activities. The Company anticipates
Neoprobe (Israel) will have $1.9 million of capital expenditures and $120,000
of operating expenditures during the fourth quarter of 1997.
At December 31, 1996, the Company had net operating loss carryforwards of $55.6
million to offset future taxable income through 2011. Additionally, the Company
has tax credit carryforwards of $1.9 million available to reduce future income
tax liability through 2011. Under Section 382 of the Internal Revenue Code of
1986, as amended, use of prior net operating loss carryforwards is limited
after an ownership change. As a result of ownership changes which occurred in
March 1989 and in September 1994, the Company's net operating tax loss
carryforwards and tax credit carryforwards are subject to the limitations
described by Section 382.
RESULTS OF OPERATIONS
Since inception, the Company has dedicated substantially all of its resources
to research and development of its RIGS system for the interoperative diagnosis
and treatment of cancer. Until the appropriate regulatory approvals are
received, the Company is limited in its ability to generate revenue. Although
the Company's Neoprobe 1000 and Neoprobe 1500 systems have received regulatory
clearance, the Company does not anticipate generating positive cash flow from
sales of the Neoprobe 1000 or 1500 systems alone. During the first three
quarters of 1997, the Company generated sales of
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<PAGE> 10
Neoprobe 1000 systems of $3.3 million. Sales of the Neoprobe 1500 are expected
to start during the fourth quarter of 1997.
Since acquiring Neoprobe Europe in December 1993 for the purpose of
manufacturing RIGScan products, Neoprobe Europe has continued to generate
revenue from the sale of its serology products. Neoprobe Europe generated
sales of serology products of $130,000 during the first three quarters of 1997.
The Company currently plans to sell Neoprobe Europe's serology business and
develop production capacity at Neoprobe Europe for future RIGScan products. As
a result, the Company anticipates that revenue generated from sale of serology
products will continue to decline in 1997 and subsequent periods.
Three months ended September 30, 1997 and 1996. Total net sales for the three
months ended September 30, 1997 were $1.3 million, compared to net sales of
$232,000 during the same period in 1996. The increase is attributed to the
increased level of sales of the Neoprobe 1000 Portable Radioisotope Detector
system during the third quarter of 1997. Net sales during the third quarters
of both years related primarily to sales of the Neoprobe 1000; however, net
sales included sales for the third quarter of 1996 of $76,000 related to sales
of serology products by Neoprobe Europe. Interest income for the three months
ended September 30, 1997 was $338,000 compared to $659,000 for the same period
in 1996. The decrease was due to a lower average level of invested funds
during the third quarter of 1997 than the third quarter of 1996.
Research and development expenses decreased to $4.1 million for the third
quarter of 1997 from $4.6 million for the same period in 1996. Contributing to
the net decrease in expenses between years was $781,000 of non-cash
compensation related to the vesting of stock options recorded in the third
quarter of 1996 while 1997 included no such similar expenses. Clinical trials
expenses also decreased from 1996 but were offset by increases in instrument
design development costs and wage and contracted service costs related to the
Company's therapy business.
Marketing and selling expenses increased to $978,000 during the third quarter
of 1997 from $416,000 for the same period in 1996. The increase was a result
of commissions earned by the Company's marketing partner associated with sales
of the Neoprobe 1000 system, additional staff, and RIGScan CR49 pre-launch
activities.
General and administrative expenses decreased to $1.5 million during the third
quarter of 1997 from $2.0 million during the same period of 1996. The
decrease was related to $781,000 of non-cash compensation related to the
vesting of stock options recorded in the third quarter of 1996 while 1997
included no such similar expenses. This decrease was offset by the hiring of
additional staff, and increased costs for rent, equipment leases, and taxes.
Nine months ended September 30, 1997 and 1996. Total net sales for the nine
months ended September 30, 1997 were $3.5 million, compared to net sales of
$588,000 for the same period in 1996. The increase is due to the increased
level of sales of the Neoprobe 1000 system during the first three quarters of
1997. Net sales during the first three quarters of 1997 and 1996 related
primarily to the sale of the Neoprobe 1000; however, sales during the first
three quarters of 1997 and 1996 included sales of serology products by Neoprobe
Europe of $130,000 and $368,000, respectively. Interest income was $1.5
million for the nine months ended September 30, 1997 and 1996 due to a similar
average level of invested funds during the related periods in 1997 and 1996.
Research and development expenses increased to $13.3 million in the first
three quarters of 1997 from $10.9 million in the first three quarters of 1996.
The expenses increased as a result of additional contracted services and wages
and benefits. Contracted services increased primarily from instrument design
development efforts, as well as ongoing process and validation efforts related
to the commercialization of RIGScan CR49. Wages and benefits reflected a net
increase due to compensation related to new personnel which was partially offset
by a decrease in non-cash compensation related to the vesting of stock options.
Clinical trial expenses have decreased over the prior year as
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clinical activity related to RIGScan CR49 has declined following application to
regulatory bodies for marketing approval.
Marketing and selling expenses increased to $2.8 million in the first three
quarters of 1997 from $761,000 during the first three quarters of 1996. The
increase was primarily a result of commissions earned by the Company's
marketing partner from sales of the Neoprobe 1000 system, additional staff, and
RIGScan CR49 pre-launch activities.
General and administrative expenses increased to $5.2 million in the first
three quarters of 1997 from $4.4 million during the same period in 1996. The
increase was a result of hiring additional staff, and increased costs for rent,
equipment leases and taxes.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) LIST OF EXHIBITS
3. ARTICLES OF INCORPORATION AND BY-LAWS
Exhibit 3.1
Complete Restated Certificate of Incorporation of Neoprobe Corporation, as
corrected February 18, 1994 and as amended June 27, 1994, July 25, 1995 and June
3, 1996 (incorporated by reference to Exhibit 99.2 to the Registrant's Current
Report on Form 8-K dated June 20, 1996; Commission File No. 0-26520).
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Exhibit 3.2
Amended and Restated By-Laws dated July 21, 1993 as amended July 18, 1995 and
May 30, 1996 (incorporated by reference to Exhibit 99.4 to the Registrant's
Current Report on Form 8-K dated June 20, 1996; Commission File No. 0-26520).
4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
Exhibit 4.1
See Articles FOUR, FIVE, SIX and SEVEN of the Restated Certificate of
Incorporation of the Registrant (see Exhibit 3.1).
Exhibit 4.2
See Articles II and VI and Section 2 of Article III and Section 4 of Article
VII of the Amended and Restated By-Laws of the Registrant (see Exhibit 3.2).
Exhibit 4.3
Rights Agreement dated as of July 18, 1995 between the Registrant and
Continental Stock Transfer & Trust Company (incorporated by reference to
Exhibit 1 of the registration statement on Form 8-A; Commission File No.
0-26520).
11. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Exhibit 11.1
Computation of Net Loss Per Share.
27. FINANCIAL DATA SCHEDULE
Exhibit 27.1
Financial Data Schedule (submitted electronically for SEC information only).
(b) REPORTS ON FORM 8-K
No report on Form 8-K was filed by the Registrant during the fiscal quarter
ended September 30, 1997.
12
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NEOPROBE CORPORATION
(the "Registrant")
Dated: November 13, 1997
By: /s/ David C. Bupp
__________________________________________
David C. Bupp
President
(duly authorized officer)
By: /s/ John Schroepfer
__________________________________________
John Schroepfer
Vice President, Finance and Administration
(duly authorized officer and principal
financial officer)
13
<PAGE> 14
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
NEOPROBE CORPORATION
--------------------
FORM 10-Q QUARTERLY REPORT
FOR THE FISCAL QUARTER ENDED:
SEPTEMBER 30, 1997
--------------------
EXHIBITS
--------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 15
INDEX
Exhibit 3.1
Complete Restated Certificate of Incorporation of Neoprobe Corporation, as
corrected February 18, 1994 and as amended June 27, 1994, July 25, 1995 and
June 3, 1996 (incorporated by reference to Exhibit 99.2 to the Registrant's
Current Report on Form 8-K dated June 20, 1996; Commission File No. 0-26520).
Exhibit 3.2
Amended and Restated By-Laws dated July 21, 1993 as amended July 18, 1995 and
May 30, 1996 (incorporated by reference to Exhibit 99.4 to the Registrant's
Current Report on Form 8-K dated June 20, 1996; Commission File No. 0-26520).
Exhibit 4.1
See Articles FOUR, FIVE, SIX and SEVEN of the Restated Certificate of
Incorporation of the Registrant (see Exhibit 3.1).
Exhibit 4.2
See Articles II and VI and Section 2 of Article III and Section 4 of Article
VII of the Amended and Restated By-Laws of the Registrant (see Exhibit 3.2).
Exhibit 4.3
Rights Agreement dated as of July 18, 1995 between the Registrant and
Continental Stock Transfer & Trust Company (incorporated by reference to
Exhibit 1 of the registration statement on Form 8-A; Commission File No.
0-26520).
Exhibit 11.1
Computation of Net Loss Per Share
Page 23 in the manually signed original.
Exhibit 27.1
Financial Data Schedule (submitted electronically for SEC information only).
<PAGE> 1
EXHIBIT 11.1
NEOPROBE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Loss ($6,227,065) ($5,412,776) ($14,175,882) ($17,373,909)
Weighted average number of
shares outstanding:
Weighted average common shares
outstanding beginning of period 19,740,705 22,749,713 17,334,800 22,586,527
Weighted average common shares
issued during period 311,666 17,121 1,738,430 136,480
------------------------------- --------------------------------
Weighted average number of shares outstanding
used in computing primary net loss per share 20,052,371 22,766,834 19,073,230 22,723,007
=============================== ================================
Weighted average number of shares used in
computing fully diluted net loss per share 20,052,371 22,766,834 19,073,230 22,723,007
=============================== ================================
Earnings (Net Loss) Per Share:
Primary ($0.31) ($0.24) ($0.74) ($0.76)
=============================== ================================
Fully diluted ($0.31) ($0.24) ($0.74) ($0.76)
=============================== ================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<CIK> 0000810509
<NAME> NEOPROBE CORPORATION
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,303,378
<SECURITIES> 12,120,125
<RECEIVABLES> 1,084,728
<ALLOWANCES> 0
<INVENTORY> 306,156
<CURRENT-ASSETS> 34,226,786
<PP&E> 10,049,913
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,156,723
<CURRENT-LIABILITIES> 7,692,288
<BONDS> 1,957,641
0
0
<COMMON> 22,767
<OTHER-SE> 38,484,027
<TOTAL-LIABILITY-AND-EQUITY> 48,156,723
<SALES> 3,451,631
<TOTAL-REVENUES> 3,451,631
<CGS> 988,423
<TOTAL-COSTS> 988,423
<OTHER-EXPENSES> 13,334,609
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,807
<INCOME-PRETAX> (17,373,909)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,373,909)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,373,909)
<EPS-PRIMARY> (0.76)
<EPS-DILUTED> (0.76)
</TABLE>
