<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2000
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)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 614.793.7500
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___
---
26,071,777 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 July 26, 2000)
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEOPROBE CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JUNE 30, DECEMBER 31,
2000 1999
------------------- ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,706,596 $ 4,882,537
Accounts receivable, net 2,123,382 453,406
Inventory 331,899 1,134,427
Prepaid expenses and other 470,438 674,165
------------------- ------------------
Total current assets 5,632,315 7,144,535
------------------- ------------------
Investment in affiliates - 1,500,000
Property and equipment 2,317,669 2,167,245
Less accumulated depreciation and amortization 1,413,648 1,264,299
------------------- ------------------
904,021 902,946
------------------- ------------------
Intangible assets, net 771,215 775,088
------------------- ------------------
Total assets $ 7,307,551 $10,322,569
=================== ==================
</TABLE>
2
CONTINUED
<PAGE> 3
NEOPROBE CORPORATION
BALANCE SHEETS, CONTINUED
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) JUNE 30, DECEMBER 31,
2000 1999
------------------ ------------------
<S> <C> <C>
Current liabilities:
Line of credit $ 100,000 $ 480,000
Notes payable to finance company 22,443 154,626
Capital lease obligations, current 73,872 87,007
Accrued liabilities 884,775 1,365,649
Accounts payable 1,011,243 759,961
Deferred license revenue, current 800,000 800,000
Obligation to preferred stockholder, current - 2,500,000
------------------ ------------------
Total current liabilities 2,892,333 6,147,243
------------------ ------------------
Capital lease obligations 80,501 68,809
Deferred license revenue 2,600,000 3,000,000
Obligation to preferred stockholder - 1,245,536
------------------ ------------------
Total liabilities 5,572,834 10,461,588
------------------ ------------------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock; $.001 par value; 5,000,000 shares authorized at June 30,
2000 and December 31,1999; none issued and outstanding (500,000 shares
designated as Series A, $.001 par value, at June 30, 2000 and
and December 31, 1999; none outstanding) - -
Common stock; $.001 par value; 50,000,000 shares
authorized; 26,240,777 shares issued and
outstanding at June 30, 2000; 23,046,644
shares issued and outstanding at December 31, 1999 26,241 23,047
Additional paid-in capital 120,665,295 119,407,204
Accumulated deficit (118,956,819) (119,569,270)
------------------ ------------------
Total stockholders' equity (deficit) 1,734,717 (139,019)
------------------ ------------------
Total liabilities and stockholders' equity (deficit) $ 7,307,551 $ 10,322,569
================== ==================
</TABLE>
See accompanying notes to the financial statements
3
<PAGE> 4
NEOPROBE CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------- -------------------------------------
2000 1999 2000 1999
----------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 2,511,659 $ 1,914,650 $ 4,117,470 $3,825,621
License revenue 200,000 - 450,000 -
----------------- ---------------- --------------- -----------------
Total revenues 2,711,659 1,914,650 4,567,470 3,825,621
----------------- ---------------- --------------- -----------------
Cost of goods sold 1,444,411 657,270 2,282,025 1,276,923
----------------- ---------------- --------------- -----------------
Gross profit 1,267,248 1,257,380 2,285,445 2,548,698
----------------- ---------------- --------------- -----------------
Operating expenses:
Research and development 81,309 351,961 375,354 814,296
Marketing and selling 52,094 1,134,620 162,976 2,257,422
General and administrative 568,550 810,999 1,236,892 1,816,225
Losses related to subsidiaries in liquidation - 388,406 - 475,231
----------------- ---------------- --------------- -----------------
Total operating expenses 701,953 2,685,986 1,775,222 5,363,174
----------------- ---------------- --------------- -----------------
Income (loss) from operations 565,295 (1,428,606) 510,223 (2,814,476)
----------------- ---------------- --------------- -----------------
Other income (expenses):
Interest income 43,065 21,331 88,426 47,990
Interest expense (5,911) (26,419) (15,967) (42,945)
Other 36,864 251 29,769 71,241
----------------- ---------------- --------------- -----------------
Total other income (expenses) 74,018 (4,837) 102,228 76,286
----------------- ---------------- --------------- -----------------
Net income (loss) 639,313 (1,433,443) 612,451 (2,738,190)
----------------- ---------------- --------------- -----------------
Conversion discount on preferred stock - - - 1,795,775
Preferred stock dividend requirements - 37,500 - 56,250
Loss on retirement of preferred stock - - 764,668 -
----------------- ---------------- --------------- -----------------
Income (loss) attributable to
common stockholders $ 639,313 $ (1,470,943) $ (152,217) $ (4,590,215)
================= ================ =============== =================
Income (loss) per common share
(basic and diluted) $ 0.02 $ (0.06) $ (0.01) $ (0.20)
================= ================ =============== =================
Weighted average shares outstanding:
Basic 25,850,777 22,972,910 25,513,614 22,960,700
Diluted 26,734,898 22,972,910 25,513,614 22,960,700
</TABLE>
See accompanying notes to the financial statements
4
<PAGE> 5
NEOPROBE CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------------------------
2000 1999
------------------- ------------------
<S> <C> <C>
Net cash used in operating activities $(623,461) $ (3,089,235)
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities - 443,729
Maturities of available-for-sale securities - 4,467
Proceeds from sale of investment in affiliate 1,500,000 -
Purchases of property and equipment (32,386) (58,259)
Proceeds from sales of property and equipment 41,120 23,440
Patent costs (12,253) (17,767)
------------------- ------------------
Net cash provided by investing activities 1,496,481 395,610
------------------- ------------------
Cash flows from financing activities:
Proceeds from issuance of preferred stock
and warrants, net - 2,820,739
Settlement of obligation to preferred stockholder (2,500,000) -
Proceeds from issuance of common stock, net 15,750 145
Payments under line of credit (380,000) -
Payments under notes payable (132,183) (160,295)
Payments under capital leases (52,528) (49,403)
------------------- ------------------
Net cash (used in) provided by financing activities (3,048,961) 2,611,186
------------------- ------------------
Effect of exchange rate changes on cash - (5,430)
------------------- ------------------
Net decrease in cash and cash equivalents (2,175,941) (87,869)
Cash and cash equivalents, beginning of period 4,882,537 1,061,936
------------------- ------------------
Cash and cash equivalents, end of period $ 2,706,596 $ 974,067
=================== ==================
</TABLE>
See accompanying notes to the financial statements
5
<PAGE> 6
1. BASIS OF PRESENTATION:
The information presented for June 30, 2000 and 1999, 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, 1999, which were included as part of the
Company's Annual Report on Form 10-K. Certain 1999 amounts have been
reclassified to conform with the 2000 presentation.
2. COMPREHENSIVE INCOME (LOSS):
Due to the Company's net operating loss carryforward position, there
are no income tax effects on comprehensive income components for any of
the periods presented.
Other comprehensive income (loss) consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) $ 639,313 $ (1,433,443) $ 612,451 $ (2,738,190)
Other comprehensive income (loss):
Foreign currency translation adjustment - (440) - (1,204)
Unrealized gains on securities - - - (219)
------------- ---------------- ------------- ----------------
Comprehensive income (loss) $ 639,313 $ (1,433,883) $ 612,451 $ (2,739,613)
============= ================ ============= ================
</TABLE>
3. EARNINGS PER SHARE:
Basic earnings per share is calculated using the weighted average
number of common shares outstanding during the periods. Diluted
earnings per share is calculated using the weighted average number of
common shares outstanding during the periods, adjusted for the effects
of convertible securities, options and warrants, if dilutive.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 2000
-------------------------------
BASIC DILUTED
EARNINGS EARNINGS PER
PER SHARE SHARE
------------- --------------
<S> <C> <C>
Outstanding shares 26,240,777 26,240,777
Effect of weighting changes
in outstanding shares (170,000) (170,000)
Contingently issuable shares (220,000) (220,000)
Stock options - 331,211
Warrants - 552,910
------------- --------------
Adjusted shares 25,850,777 26,734,898
============= ==============
</TABLE>
Due to net loses incurred during the three-month period ended June 30,
1999 and the six-month periods ended June 30, 2000 and June 30, 1999,
common equivalent shares are considered anti-dilutive for these periods
and are therefore not presented.
6
<PAGE> 7
The following table summarizes options to purchase common stock of the
Company which were outstanding during the second quarter of 2000, but
which were not included in the computation of diluted income (loss) per
share because their effect was anti-dilutive.
<TABLE>
<CAPTION>
EXERCISE OPTIONS
PRICE OUTSTANDING
--------------------- ---------------
<S> <C> <C>
$ 1.03 - $ 2.50 597,669
$ 3.00 - $ 6.00 463,367
$13.38 - $17.44 144,700
---------------
1,205,736
===============
</TABLE>
4. INVENTORY:
The components of inventory are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------------ ----------------
<S> <C> <C>
Materials and component parts $ 136,859 $ 104,441
Finished goods 195,040 1,029,986
------------------ ----------------
$ 331,899 $1,134,427
================== ================
</TABLE>
5. EQUITY:
A. REDEEMABLE PREFERRED STOCK: During the first quarter of 1999, the
Company completed the private placement of 30,000 shares of 5%
Series B convertible preferred stock (the "Series B") for gross
proceeds of $3 million ($2.8 million, net of certain placement
costs), 2.9 million Class L warrants to purchase common stock of
the Company at an initial exercise price of $1.03 per share, and
issued Unit Purchase Options ("UPOs") entitling the placement agent
to purchase approximately 150,000 shares of common stock in the
Company.
On November 12, 1999, the Company entered into a binding letter
agreement to retire the 30,000 outstanding shares of Series B
preferred stock, and to cancel the related 2.9 million Class L
warrants, the UPOs and the financial advisory agreement with the
Series B placement agent. The letter agreement committed the Series
B holders to surrender the Series B shares and Class L warrants and
for the placement agent to surrender the UPOs and cancel the
financial advisory agreement as well as to grant the Company
general releases from potential litigation associated with the
transaction. In exchange for the retirement of the Series B
preferred shares and surrendering the Class L warrants and UPOs,
the Company agreed to pay the Series B holders a total of $2.5
million and issue the Series B holders 3 million shares of common
stock and warrants to purchase 3 million shares of common stock
with an exercise price of $0.74 per share. However, at December 31,
1999, final definitive agreements had not been signed. Therefore,
at December 31, 1999, the Company reclassified its obligations to
the Series B holders to reflect the $2.5 million payable in cash as
a current liability and the remaining book value of the Series B,
including dividends payable, as a long-term liability.
During January 2000, the Company executed a definitive settlement
agreement with terms consistent with the letter agreement, paid the
Series B holders the $2.5 million, and issued the related stock and
warrants. The transaction has been reported in the Company's first
quarter 2000 financial statements and was measured based on the
market price of the Company's common stock as of the execution of
the definitive agreement on January 20, 2000 (i.e., $0.59 per
share). As a result, the Company reflected a
7
<PAGE> 8
loss on the retirement of the preferred shares of $765,000
(approximately $0.03 per share) below net income and in its
calculation of loss per share during the first quarter of 2000.
This amount represents the value of the cash given up plus the
market value of the stock issued and the estimated market value of
the warrants issued as valued on January 20, 2000 less the
previously recorded book value of the Series B preferred stock and
warrants. In addition, the long-term liability at December 31, 1999
was reclassified during the first quarter of 2000 to additional
paid-in capital as a result of the definitive settlement.
B. STOCK OPTIONS: During the first quarter of 2000, the Board of
Directors granted options to employees and certain directors of the
Company for 690,000 shares of common stock, exercisable at $0.50
per share, vesting over three years. As of June 30, 2000, the
Company has 1.7 million options outstanding under two stock option
plans. Of the outstanding options, 677,000 options are exercisable
as of June 30, 2000, at an average exercise price of $5.07 per
share.
C. RESTRICTED STOCK: On March 22, 2000, the Board of Directors granted
a total of 170,000 shares of restricted common stock to officers of
the Company under the 1996 Stock Incentive Plan. All of the
Company's 370,000 outstanding restricted shares vest on a change of
control of the Company as defined in the specific grant agreements.
As a result, the Company has not recorded any deferred compensation
due to the inability to assess the probability of the vesting
event.
6. SEGMENTS AND SUBSIDIARIES INFORMATION:
A. SEGMENTS: The Company owns or has rights to intellectual property
involving three primary areas of cancer diagnosis and treatment
including: hand-held gamma detection instruments currently used
primarily in the application of Intraoperative Lymphatic Mapping
("ILM"), diagnostic radiopharmaceutical technology to be used in
the Company's proprietary RIGS process, and Activated Cellular
Therapy ("ACT"). During 1998, the Company's business plan
suspended ongoing research activities related to RIGS and ACT to
allow the Company to focus primarily on the hand-held gamma
detection instruments while efforts are carried out to find
partners or licensing parties to fund future RIGS and ACT
research and development. The Company generated $50,000 in
revenue during the first quarter of 2000 under an option
agreement to license its RIGS technology, but incurred no
RIGS-related expenses during that period. The Company did not
generate any revenue related to RIGS during the first half of 1999,
but did incur $475,000 in overhead and interest expenses during
that period related to the RIGS segment. The Company had no revenue
or expenses in either the first half of 2000 or 1999 related to its
ACT initiative. All other revenue and costs included in the
Company's financial statements for the six months ended June 30,
2000 and June 30, 1999 relate primarily to the Company's ILM
initiative.
B. SUBSIDIARIES: The Company's suspended RIGS initiative included the
operations of the Company's two majority-owned international
subsidiaries, Neoprobe Europe and Neoprobe Israel. Neoprobe Europe
was acquired in 1993 primarily to perform a portion of the
manufacturing process of the monoclonal antibody used in the first
RIGS product to be used for colorectal cancer, RIGScan CR49.
Neoprobe Israel was founded to radiolabel RIGScan CR49. Neoprobe
Europe and Neoprobe Israel also both performed limited research and
development activities related to the Company's RIGS process on
behalf of the U.S. parent company. Under SFAS No. 131, neither
subsidiary is considered a segment. During 1998, the Company
initiated steps to liquidate both Neoprobe Europe and Neoprobe
Israel as a result of the suspension of RIGS research and
development activities. At December 31, 1999, both subsidiaries
were deconsolidated due to statutory liquidation or receivership
activities then underway.
7. AGREEMENTS:
A. PLEXUS MANUFACTURING AND SUPPLY AGREEMENT: In March 2000, the
Company entered into a manufacturing and supply agreement with
Plexus for the exclusive manufacture of the Company's 14mm probe
and neo2000 control unit. The original term of the agreement
expires on December 31, 2003 but may be extended for an additional
year given six months notice prior to December 31, 2003. The
Company has the right to terminate the agreement upon six months
written notice. The agreement
8
<PAGE> 9
may be terminated by either party in the event of material breach
or insolvency, or by the Company in the event of failure to supply.
The Company may also have the covered product manufactured by other
suppliers in the event of failure to supply or if the Company is
able to secure another source of supply with significantly more
favorable pricing terms than those offered by Plexus. The agreement
calls for the Company to deliver rolling 12-month product forecasts
to Plexus and to place purchase orders 60 days prior to requested
delivery in accordance with the forecast. In the event the
agreement is terminated by Neoprobe or if Plexus ceases to be the
exclusive supplier of the covered products, the Company is required
to purchase all finished components on hand at Plexus plus raw
materials not able to be restocked with suppliers.
B. NURIGS OPTION AGREEMENT: During the first quarter of 2000, the
Company entered into an option agreement for the development of its
initial RIGS compound, RIGScan CR. The option agreement is with a
newly-formed development entity, NuRigs, Ltd. ("NuRigs"). Based in
Tel Aviv, Israel, NuRigs has been organized for the express purpose
of developing a second-generation humanized RIGScan CR antibody
fragment. The Company recognized $50,000 in milestone revenue
during the first quarter of 2000 based upon written notification
from NuRigs of its intention to proceed with preliminary clinical
evaluation of the second-generation RIGScan CR product. The option
agreement calls for Neoprobe to receive, with the execution of a
definitive agreement, a license fee of $900,000 and a product
royalty of approximately 5 percent on NuRigs' commercial sales of
the product. The Company and NuRigs expect to begin negotiating a
definitive license agreement that may be completed in the fourth
quarter of 2000, at the earliest. However, there can be no
assurance that a definitive license agreement will be completed, on
terms consistent with the option agreement, or at all. Under the
terms of the option, NuRigs will assume all clinical and other
development costs for RIGScan CR. NuRigs expects to begin clinical
evaluation of the second-generation RIGScan CR agent by the end of
2000, at the earliest.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The statements contained in this Management Discussion and Analysis of Financial
Condition and Results of Operations and other parts of this Report that are not
purely historical or which might be considered an opinion or projection
concerning the Company or its business, whether express or implied, are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements may include statements regarding
the Company's expectations, intentions, plans or strategies regarding the future
which involve risks and uncertainties. All forward-looking statements included
in this document are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward looking
statements. It is important to note that the Company's actual results in 2000
and future periods may differ significantly from the prospects discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, limited revenues, continuing net
losses, accumulated deficit, future capital needs, uncertainty of capital
funding, dependence on exclusive distributor, competition, limited marketing
experience, limited manufacturing experience, dependence on principal product
line, uncertainty of market acceptance, patents, proprietary technology and
trade secrets, government regulation, risk of technological obsolescence,
limited third party reimbursement, product liability, need to manage a changing
business, possible volatility of stock, anti-takeover provisions, dependence on
key personnel, and no dividends.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. Through June 30, 2000, the Company's activities have
resulted in an accumulated deficit of $119 million. Substantially all of the
Company's efforts and resources through early 1999 were devoted to research and
clinical development of innovative systems for the intraoperative diagnosis and
treatment of cancers. To date, the Company's activities have been financed
primarily through the public and private sale of equity securities. Prior to
1999, the Company's research and development efforts were principally related to
the Company's proprietary RIGS system. Efforts since early 1997 have also
included activities related to development of the Company's ACT process and ILM
products. Beginning in the first half of 1998, due primarily to feedback
received from regulatory authorities in the U.S. and Europe related to the
Company's applications for marketing approval for its RIGScan CR49 product, the
Company began a series of changes to its business plan. Since that time, the
Company has
9
<PAGE> 10
continued to modify its business plan to one that is primarily focused on the
continued development of the Company's ILM business. During 1999, the Company
continued the operating expense reduction efforts started in 1998 and has nearly
eliminated non-ILM-related research and development activities.
To further support the Company's goal of achieving operating profitability, the
Company entered into a multi-year distribution agreement with Ethicon
Endo-Surgery, Inc. ("EES"), a subsidiary of Johnson & Johnson, effective October
1, 1999. As a result of entering the agreement, the Company achieved its first
quarter of operating profitability during the fourth quarter of 1999. The
Company expects to continue to achieve operating profitability on an annual
basis for 2000; however, the Company anticipates there may be quarterly
variations in profitability, such as occurred in the first quarter of 2000, due
to the timing of purchases by EES. There can be no assurances that the Company
will achieve the volume of sales anticipated in connection with the agreement,
or if achieved, that the margin on such sales will be adequate to achieve
operating profitability in the near term, or at all.
During the first quarter of 2000, the Company entered into an option agreement
for the development of its initial RIGS compound, RIGScan CR. The option
agreement is with a newly-formed development entity, NuRigs, Ltd. ("NuRigs").
Based in Tel Aviv, Israel, NuRigs has been organized for the express purpose of
developing a second-generation humanized RIGScan CR antibody fragment. The
Company recognized $50,000 in milestone revenue during the first quarter of 2000
based upon written notification from NuRigs of its intention to proceed with
preliminary clinical evaluation of the second-generation RIGScan CR product. The
option agreement calls for Neoprobe to receive, with the execution of a
definitive agreement, a license fee of $900,000 and a product royalty of
approximately 5 percent on NuRigs' commercial sales of the product. The Company
and NuRigs expect to begin negotiating a definitive license agreement that may
be completed in the fourth quarter of 2000, at the earliest. However, there can
be no assurance that a definitive license agreement will be completed, on terms
consistent with the option agreement, or at all. Under the terms of the option,
NuRigs will assume all clinical and other development costs for RIGScan CR.
NuRigs expects to begin clinical evaluation of the second-generation RIGScan CR
agent by the end of 2000, at the earliest.
Accounts receivable increased significantly at June 30, 2000 from December 31,
1999 due primarily to the timing of sales to EES during the second quarter of
2000 versus the fourth quarter of 1999. Inventory levels declined at June 30,
2000 as compared to December 31, 1999. This is primarily due to the purchase by
EES of $630,000 of demonstrator units the Company had repurchased from KOL
BioMedical Instruments, Inc. in accordance with the termination of the marketing
agreement. The Company expects receivable levels to fluctuate in 2000 depending
on the timing of purchases by EES; however, inventory is expected to remain
relatively constant or decrease slightly over time as the strategic relationship
progresses and the Company manages its production to meet EES's forecasted
needs.
At June 30, 2000, the Company's balance sheet does not reflect any obligations
of Neoprobe Israel. However, it is possible, in the event the liquidation of
Neoprobe Israel resulting from the receivership does not fully satisfy the
outstanding obligations of Neoprobe Israel, that the Creditors could seek to
pursue claims directly against the Company under a judicial doctrine generally
referred to as "piercing the corporate veil." In the event the Creditors were
successful in making a claim under this judicial doctrine, the Company may be
required to pay the Creditors some or all of the amounts owed by Neoprobe
Israel. Payment of such an amount would severely deplete the Company's cash, and
the Company might not be able to continue operations without seeking Creditor
relief. However, Management believes that the prospect that Creditors would
prevail if such claims were brought against the Company is remote. As such, no
provision for such a contingent loss has been recorded in the Company's
financial statements at June 30, 2000.
Investing Activities. The Company's investing activities during the first half
of 2000 involved primarily the sale of its equity interest in XTL
Biopharmaceuticals Ltd. ("XTL") for $1.5 million. The Company's investing
activities during the first half of 1999 involved primarily the sale of certain
available-for-sale securities to fund operations.
Financing Activities. On February 16, 1999, the Company executed a Purchase
Agreement (the "Purchase Agreement") to complete the private placement of 30,000
shares of 5% Series B convertible preferred stock (the "Series B") for gross
proceeds of $3 million ($2.8 million, net). The Series B were issued with a $100
per share stated value and were convertible into common stock of the Company. In
connection with the private placement, the Company also issued 2.9 million Class
L warrants to purchase common stock of the Company at an initial
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<PAGE> 11
exercise price of $1.03 per share. The Series B paid a 5% annual dividend
payable in cash or common stock. The Series B were convertible at variable
prices based on the market price of the Company's common stock, subject to a
conversion price floor of $0.55. The Class L warrants were also subject to
variable exercise prices, subject to an exercise price floor of $0.62. Holders
of the Series B had certain liquidation preferences over other shareholders
under certain provisions as defined in the Purchase Agreement and had the right
to cast the same number of votes as if the owner had converted on the record
date. Pursuant to the private placement, the Company entered into a financial
advisory agreement with the placement agent providing the agent with Unit
Purchase Options ("UPOs") entitling the placement agent to purchase
approximately 150,000 shares of common stock in the Company. Under certain
conditions, the Company would have been obligated to redeem outstanding shares
of Series B for $120 per share (i.e., a total of $3.6 million) such as the
delisting of the Company's common stock from the Nasdaq Stock Market as occurred
on July 27, 1999 and other conditions outlined in the Purchase Agreement.
The Series B were recorded by the Company during the first quarter of 1999 at
the amount of gross proceeds less the costs of the financing and the fair value
of the warrants and classified as mezzanine financing above the stockholders'
equity section on the Company's interim balance sheets for 1999. The calculated
conversion price at February 16, 1999, the first available conversion date, was
$1.03 per share. In accordance with the FASB's Emerging Issues Task Force Topic
D-60, the difference between the initial conversion price and the closing market
price on February 16, 1999 of $1.81 resulted in an implied incremental yield to
Series B holders of approximately $1.8 million that is reflected as conversion
discount in the Company's loss per share calculation for the first quarter of
1999.
On November 12, 1999, the Company entered into a binding letter agreement to
retire the 30,000 outstanding shares of Series B preferred stock, the related
2.9 million Class L warrants and the Unit Purchase Options ("UPOs") and to
cancel the financial advisory agreement with the placement agent for the Series
B. The letter agreement committed the Series B holders to surrender the Series B
shares and Class L warrants and for the placement agent to surrender the UPOs
and cancel the financial advisory agreement as well as to grant the Company
general releases from potential litigation associated with the transaction. In
exchange for the retirement of the Series B preferred shares and surrendering
the Class L warrants and UPOs, the Company agreed to pay the Series B holders a
total of $2.5 million and issue the Series B holders 3 million shares of common
stock and 3 million warrants to purchase common stock with an exercise price of
$0.74 per share. However, at December 31, 1999, final definitive agreements had
not been signed. Therefore, at December 31, 1999, the Company reclassified its
obligations to the Series B holders to reflect the $2.5 million payable in cash
as a current liability and the remaining book value of the Series B, including
dividends payable, as a long-term liability. In January 2000, the Company
executed a definitive settlement agreement with terms consistent with the letter
of intent, paid the Series B holders the $2.5 million, and issued the related
stock and warrants. The Company reported a loss on the retirement of the
preferred shares of $ 765,000 (approximately $0.03 per share) below net income
during the first quarter of 2000. This amount represents the value of the cash
given up plus the market value of the stock and warrants issued as valued on
January 20, 2000 less the previously recorded book value of the Series B
preferred stock and warrants.
Operational Outlook. The Company's only approved products are instruments and
related products used in gamma guided surgery. The Company does not currently
have a RIGS drug or ACT product approved for commercial sale in any major
market. The Company entered into a distribution agreement (the "Agreement") with
EES effective October 1, 1999, for an initial five-year term with options to
extend for two successive two-year terms. Under the Agreement, the Company will
manufacture and sell its ILM products (the "Products") exclusively to EES who
will distribute the Products globally. EES agreed to purchase minimum quantities
of the Company's Products over the first three years of the term of the
Agreement and to reimburse the Company for certain research and development
costs and a portion of the Company's warranty costs. The Company is obligated to
continue certain product maintenance activities and to provide ongoing
regulatory support for the Products. As a result of entering the Agreement, the
Company expects to achieve operating profitability on an annual basis in the
near term. However, there can be no assurances that the Company will achieve the
volume of sales anticipated in connection with the Agreement, or if achieved,
that the margin on such sales will be adequate to achieve operating
profitability on either an interim or annual basis in the near term, or at all.
Under the Agreement, EES received a worldwide paid-up license (the "License") to
the Company's ILM intellectual property to make and sell other products that may
be developed using the Company's ILM intellectual property. The term of the
License is the same as that of the Agreement. EES paid the Company a
non-refundable license fee
11
<PAGE> 12
of $4 million. The Company is recognizing the license fee as revenue ratably
over the five-year initial term of the Agreement. If the Agreement is terminated
by the Company as a result of a material breach by EES, EES would be required to
pay the Company a royalty on all products developed and sold by EES using the
Company's ILM intellectual property. In addition, the Company is entitled to a
royalty on any ILM product commercialized by EES that does not infringe any of
the Company's existing intellectual property.
During 1998, the Company began revising its business plan to focus on its ILM
technology and essentially suspended activities related to its RIGS and ACT
initiatives pending identification of a developing partner. The Company has
entered into an option agreement with NuRigs, Ltd. ("NuRigs"), a Tel Aviv,
Israel entity, interested in commercializing a second-generation antibody for
use in colorectal cancer surgery. At this time, the Company has not reached
definitive agreement with the option party that would ensure the continued
development of the RIGS process. In addition, should NuRigs ultimately decide to
exercise its license option and reach an agreement satisfactory to the Company,
the Company believes that the likely timeframe required for the continued
development, regulatory and commercialization of a RIGS product would take a
minimum of four to five years before the Company would receive any significant
product-related royalties. However, there can be no assurance that the Company
will be able to complete definitive license agreements with NuRigs for the RIGS
technology, on terms acceptable to the Company, or at all. To date, a partner
for ACT has not been identified or secured. Until definitive agreements with
development partners are reached and the appropriate regulatory approvals are
received, the Company is limited in its ability to generate revenue from RIGS or
ACT. The Company therefore intends to continue to focus on further development
of the ILM market in conjunction with its distribution partner, EES.
As of June 30, 2000, the Company had cash and cash equivalents of $2.7 million.
The Company expects to generate positive cash flow from operations in the near
term as a result of the Agreement with EES. However, there can be no assurances
that the Company will achieve the volume of sales anticipated in connection with
the Agreement, or if achieved that the margin on such sales will be adequate to
produce positive operating cash flow. The Company expects to continue to
experience cost savings during 2000 as a result of the transfer of marketing
responsibilities for the Company's ILM products to EES. In January 2000, the
Company sold its investment in XTL for $1.5 million. The Company believes its
June 30, 2000 cash balances and sources of future cash flow are adequate for the
Company to continue operating for the foreseeable future. However, if the
Company does not receive adequate funds from operations, it may need to further
modify its business plan and seek other financing alternatives. Such
alternatives may include asset dispositions that could force the Company to
further change its business plan.
The Company has, from time to time, been approached by entities interested in
acquiring some or all of the assets of the Company. The Company has, as
appropriate, engaged in discussions with certain of these entities; however,
such discussions to this point have been only preliminary in nature and none has
resulted in a definitive transaction for further consideration. The Company
anticipates that it may continue to be approached by such entities. At such time
as a definitive transaction is proposed, if any, it will be considered by
management and the Board of Directors, and if necessary, referred to the
shareholders of the Company for their consideration. However, there can be no
assurances that such a transaction will be proposed, or if proposed, that the
terms would be acceptable to the Company or its shareholders.
At December 31, 1999, the Company had federal net operating tax loss
carryforwards and tax credit carryforwards of approximately $93.3 million and
$4.9 million, respectively, available to offset or reduce future income tax
liability, if any, through 2019. However, under Sections 382 and 383 of the
Internal Revenue Code of 1986, as amended, use of prior tax loss and credit
carryforwards may be limited after an ownership change. As a result of ownership
changes as defined by Sections 382 and 383, which have occurred at various
points in the Company's history, management believes utilization of the
Company's tax loss carryforwards and tax credit carryforwards may be limited.
The Company's international subsidiaries also have net operating tax loss
carryforwards in their respective foreign jurisdictions. However, as the Company
is in the process of liquidating its interests in both foreign subsidiaries as
of June 30, 2000, the Company does not anticipate that the foreign loss
carryforwards will ever be utilized.
Impact of Recent Accounting Pronouncements. In June 1998, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 was originally required to be adopted in years beginning after June
15, 1999; however, SFAS No. 137 deferred the effective date to fiscal quarters
of fiscal years beginning after June 15, 2000.
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<PAGE> 13
The Company expects to adopt SFAS No. 133 and a second related amendment, SFAS
No. 138 effective January 1, 2001. The Statement will require companies to
recognize all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If a derivative is
a hedge, depending on the nature of the hedge, changes in the fair value of the
derivative will either be offset against the change in fair value of the hedge
asset, liability or firm commitment through earnings, or recognized in other
comprehensive income until the hedge item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings. The Company does not anticipate that the adoption of
this Statement will have a significant effect on its results of operations or
financial position.
On December 31, 1999, the SEC staff issued Staff Accounting Bulletin ("SAB") No.
101, Revenue Recognition in Financial Statements. SAB 101 was also amended by
SAB 101A and SAB 101B. SAB 101, SAB 101A and SAB 101B summarize certain of the
staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. SAB 101 adds new major Topic 13, "Revenue
Recognition" and Topic 13:A, "Views on Selected Revenue Recognition Issues" to
the Staff Accounting Bulletin Series. The Company adopted SAB 101 during the
second quarter of 2000. The adoption of this SAB had no material impact on the
Company's results of operations or financial position.
FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation: an Interpretation of APB Opinion No. 25" ("FIN44"). This
interpretation is effective July 1, 2000. However, certain of the conclusions
included in the interpretation apply to events occurring after December 15, 1998
or January 12, 2000. The December 15, 1998 effective date applies prospectively
after July 1, 2000 to the accounting for certain exercise price modifications
made after December 15, 1998 and for the definition of an employee for purposes
of determining eligibility to apply APB 25 to accounting for stock option grants
to such persons where the grant occurred after December 15, 1998. The January
12, 2000 effective date applies prospectively after July 1, 2000 to certain
fixed stock award modifications to add a reload feature after January 12, 2000.
The Company does not believe application of FIN44 will have a material adverse
effect on the results of operations or financial position of the Company.
RESULTS OF OPERATIONS
Revenue for the first half of 2000 increased $742,000 or 19% to $4.6 million
from $3.8 million for the same period in 1999. Research and development expenses
during the first half of 2000 were $375,000 or 21% of operating expenses.
Marketing and selling expenses were $163,000 or 9% of operating expenses, and
general and administrative expenses were $1.2 million or 70% of operating
expenses. Overall, operating expenses for the first half of 2000 decreased $3.6
million or 67% over the same period in 1999. The Company anticipates that total
operating expenses for the remainder of 2000 will also decrease over 1999
levels. The Company expects research and development and general and
administrative expenses to decrease slightly for the second half of 2000 as
compared to 1999 levels as a result of cost containment measures implemented
during 1999 and research and development reimbursement provided by EES.
Marketing expenses, as a percentage of sales, decreased to 4% of sales for the
first half of 2000 from 59% of sales for the same period in 1999. The Company
expects marketing and selling expenses for the remainder of 2000 to decrease
from 1999 levels.
Three months ended June 30, 2000 and 1999
Revenues and Margins. Net product sales increased $597,000 or 31% to $2.5
million during the second quarter of 2000 from $1.9 million during the same
period in 1999. Sales during both periods were comprised almost entirely of
sales of the Company's hand-held gamma detection instruments. Gross margins
decreased to 42% of net sales for the second quarter of 2000 from 66% of net
sales for the same period in 1999. The decrease in gross margins is primarily
the result of the change in the type of sales made by the Company related to
entering the distribution agreement with EES at the end of September 1999. Under
the terms of this agreement, the Company's instrument products are sold to EES
at a wholesale transfer price. Prior to entering the EES agreement, the Company
sold its instrument products directly to end customers at retail prices during
second quarter of 1999. The cost to manufacture the Company's products did not
change significantly from 1999 to 2000. The effect of the decrease in gross
margins on profitability is offset by the decline in marketing expenses
discussed below. Revenues in the second quarter of 2000 also included $200,000
from the pro-rata recognition of license fees related to the distribution
agreement with EES.
13
<PAGE> 14
Research and Development Expenses. Research and development expenses decreased
$271,000 or 77% to $81,000 during the second quarter of 2000 from $352,000
during the same period in 1999. The decrease is primarily due to the
reimbursement of certain research and development expenses associated with the
Company's distribution agreement with EES.
Marketing and Selling Expenses. Marketing and selling expenses decreased $1.1
million or 95% to $52,000 during the second quarter of 2000 from $1.1 million
during the same period in 1999. Marketing and selling expenses, as a percentage
of sales, decreased to 2% of sales for the second quarter of 2000 from 59% of
sales for the same period in 1999. These results reflect lower internal
marketing headcount and out-of-pocket expense levels during the second quarter
of 2000 as compared to the same period in 1999 as well as elimination of
marketing partner commissions over the same periods, due to entering the
distribution agreement with EES.
General and Administrative Expenses. General and administrative expenses
decreased $242,000 or 30% to $569,000 during the second quarter of 2000 from
$811,000 during the same period in 1999. The decrease was primarily a result of
reductions in overhead costs such as professional services, space costs, taxes
and insurance.
Losses Related to Subsidiaries in Liquidation. The Company incurred certain
charges during the second quarter of 1999 related to interest and other overhead
costs incurred during the wind-down process of subsidiaries in liquidation. No
such charges were incurred in the second quarter of 2000.
Other Income. Other income increased $79,000 to $74,000 during the second
quarter of 2000 from other expenses of $5,000 during the same period in 1999.
Other income during the second quarter of 2000 consisted primarily of interest
income and gains on the sale of certain property and equipment. Other expenses
during the second quarter of 1999 consisted primarily of interest expense offset
by interest income. The Company's interest income increased due to overall
average levels of cash and investments during the second quarter of 2000 as
compared to the same period in 1999.
Six months ended June 30, 2000 and 1999
Revenues and Margins. Net product sales increased $292,000 or 8% to $4.1 million
during the first half of 2000 from $3.8 million during the same period in 1999.
Sales during both periods were comprised almost entirely of sales of the
Company's hand-held gamma detection instruments. Gross margins decreased to 45%
of net sales for the first half of 2000 from 67% of net sales for the same
period in 1999. The decrease in gross margins is primarily the result of the
change in the type of sales made by the Company related to entering the
distribution agreement with EES at the end of September 1999. Under the terms of
this agreement, the Company's instrument products are sold to EES at a wholesale
transfer price. Prior to entering the EES agreement, the Company sold its
instrument products directly to end customers at retail prices during the first
half of 1999. The cost to manufacture the Company's products did not change
significantly from 1999 to 2000. The effect of the decrease in gross margins on
profitability is offset by the decline in marketing expenses discussed below.
Revenues in the first half of 2000 also included $400,000 from the pro-rata
recognition of license fees related to the distribution agreement with EES and
$50,000 from the recognition of milestone fees related to an option agreement to
license certain of the Company's RIGS products.
Research and Development Expenses. Research and development expenses decreased
$439,000 or 54% to $375,000 during the first half of 2000 from $814,000 during
the same period in 1999. The decrease is primarily due to the reimbursement of
certain research and development expenses associated with the Company's
distribution agreement with EES. First half 2000 research and development
expenses included approximately $40,000 in non-recurring severance costs and
$150,000 in unreimbursed costs for development of products to be launched in
fiscal year 2000.
Marketing and Selling Expenses. Marketing and selling expenses decreased $2.1
million or 93% to $163,000 during the first half of 2000 from $2.3 million
during the same period in 1999. Marketing and selling expenses, as a percentage
of sales, decreased to 4% of sales for the first half of 2000 from 59% of sales
for the same period in 1999. These results reflect lower internal marketing
headcount and out-of-pocket expense levels during the first half of 2000 as
compared to the same period in 1999 as well as elimination of marketing partner
commissions over the same periods, due to entering the distribution agreement
with EES. The first half of 2000 also included approximately $40,000 in
non-recurring severance charges related to the separation of marketing
personnel.
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<PAGE> 15
General and Administrative Expenses. General and administrative expenses
decreased $579,000 or 32% to $1.2 million during the first half of 2000 from
$1.8 million during the same period in 1999. The decrease was primarily a result
of reductions in overhead costs such as professional services, space costs,
taxes and insurance.
Losses Related to Subsidiaries in Liquidation. The Company incurred certain
charges during the first half of 1999 related to interest and other overhead
costs incurred during the wind-down process of subsidiaries in liquidation. No
such charges were incurred in the first half of 2000.
Other Income. Other income increased $26,000 or 34% to $102,000 during the first
half of 2000 from $76,000 during the same period in 1999. Other income during
the first half of 2000 consisted primarily of interest income and gains on the
sale of certain property and equipment. Other income during the first half of
1999 consisted primarily of gains from settlement of certain liabilities at less
than face value. The Company's interest income increased due to overall average
levels of cash and investments during the first half of 2000 as compared to the
same period in 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not currently use derivative financial instruments, such as
interest rate swaps, to manage its exposure to changes in interest rates for its
debt instruments or investment securities. As of June 30, 2000 and December 31,
1999, the Company had outstanding debt instruments of $280,000 and $790,000,
respectively. Outstanding debt consisted primarily of a variable rate line of
credit and fixed rate financing instruments, with average interest rates of 8%
at June 30, 2000 and December 31, 1999. At June 30, 2000 and December 31, 1999,
the fair market values of the Company's debt instruments approximated their
carrying values. A hypothetical 100-basis point change in interest rates would
not have a material effect on cash flows, income or market values.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On February 16, 1999, the Registrant executed a purchase agreement to complete
the private placement of 30,000 shares of 5% Series B redeemable convertible
preferred stock (the "Series B"). The Series B were issued with a $100 per share
stated value and were convertible into common stock of the Registrant at the
option of the Series B holders. In connection with the private placement, the
Registrant also issued 2.9 million Class L warrants to purchase common stock of
the Registrant at an initial exercise price of $1.03 per share and the
Registrant entered into a financial advisory agreement with the placement agent
providing the agent with Unit Purchase Options ("UPOs") entitling the placement
agent to purchase approximately 150,000 shares of common stock in the
Registrant.
On January 20, 2000, the Registrant executed a definitive Settlement Agreement
with the Series B holders to retire the 30,000 shares of Series B preferred
stock issued in February 1999. In addition to retiring the preferred shares,
the Series B holders returned the Class L warrants issued in connection with the
Series B and the placement agent returned the UPOs. In exchange for the
retirement of the Series B preferred shares and surrendering the Class L
warrants and UPOs, the Registrant paid the Series B holders $2.5 million and
issued to the Series B Holders 3 million shares of common stock of the
Registrant and 3 million warrants to purchase common stock of the Registrant
with an exercise price of $0.74 per share.
On May 9, 2000, the Registrant filed a Certificate of Elimination with the
Secretary of State of the State of Delaware to remove all reference to the
Series B from the Registrant's Restated Certificate of Incorporation.
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, June 3, 1996, March 17, 1999 and May 9, 2000 (incorporated by
reference to Exhibit 3.1 of the March 31, 2000 Form 10-Q).
16
<PAGE> 17
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 3.3
Certificate of Elimination of Neoprobe Corporation filed on May 9, 2000
with the Secretary of State of Delaware (incorporated by reference to
Exhibit 3.3 of the March 31, 2000 Form 10-Q).
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).
Exhibit 4.4
Amendment Number 1 to the Rights Agreement between the Registrant and
Continental Stock Transfer & Trust Company dated February 16, 1999
(incorporated by reference to Exhibit 4.4 of the 1998 Form 10-K/A).
10. MATERIAL CONTRACTS
Exhibit 10.1.39
Settlement Agreement among the Registrant, The Aries Master Fund, The
Aries Domestic Fund, L.P., Paramount Capital, Inc. and Paramount
Capital Asset Management, Inc. dated January 20, 2000 (incorporated by
reference to Exhibit 10.1.39 of the March 31, 2000 Form 10-Q).
Exhibit 10.1.40
Option Agreement between the Registrant and Reico Ltd. dated February
1, 2000 (incorporated by reference to Exhibit 10.1.40 of the March 31,
2000 Form 10-Q).
Exhibit 10.2.53
Non-Qualified Stock option Agreement dated January 4, 2000 between the
Registrant and David C. Bupp. This agreement is one of three
substantially identical agreements and is accompanied by a schedule
identifying the other agreements omitted and setting forth the material
details in which such documents differ from the one that is filed
herewith (incorporated by reference to Exhibit 10.2.53 of the March 31,
2000 Form 10-Q).
17
<PAGE> 18
Exhibit 10.2.54
Restricted Stock Agreement dated March 22, 2000 between the Registrant
and David C. Bupp. This agreement is one of three substantially
identical agreements and is accompanied by a schedule identifying the
other agreements omitted and setting forth the material details in
which such documents differ from the one that is filed herewith
(incorporated by reference to Exhibit 10.2.54 of the March 31, 2000
Form 10-Q).
Exhibit 10.2.55
Agreement, Release and Waiver between the Registrant and Matthew F.
Bowman dated March 31, 2000 (incorporated by reference to Exhibit
10.2.55 of the March 31, 2000 Form 10-Q).
Exhibit 10.2.56
Employment Agreement between the Registrant and Carl Bosch dated April
1, 2000 (incorporated by reference to Exhibit 10.2.56 of the March 31,
2000 Form 10-Q).
Exhibit 10.2.57
Employment Agreement between the Registrant and Brent L. Larson dated
April 1, 2000 (incorporated by reference to Exhibit 10.2.57 of the
March 31, 2000 Form 10-Q).
Exhibit 10.2.58
Employment Agreement between the Registrant and David C. Bupp dated
July 1, 2000.
Page 23 in the manually signed original.
Exhibit 10.3.50
Share Purchase Agreement between the Registrant and Biomedical
Investments (1997) Ltd. dated January 19, 2000 (incorporated by
reference to Exhibit 10.3.50 of the March 31, 2000 Form 10-Q).
Exhibit 10.4.45
Manufacturing and Supply Agreement between the Registrant and Plexus
Corp. dated March 30, 2000 (filed pursuant to Rule 24b-2 under which
the Registrant has requested confidential treatment of certain portions
of this Exhibit) (incorporated by reference to Exhibit 10.4.45 of the
March 31, 2000 Form 10-Q).
11. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Exhibit 11.1
Computation of Income (Loss) Per Share.
Page 31 in the manually signed original.
27. FINANCIAL DATA SCHEDULE
Exhibit 27.1
Financial Data Schedule (submitted electronically for SEC information
only).
(B) REPORTS ON FORM 8-K.
None.
18
<PAGE> 19
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: August 11, 2000
By: /s/ David C. Bupp
-----------------------------------
David C. Bupp,
President and Chief Executive Officer
(duly authorized officer; principal
executive officer)
By: /s/ Brent L. Larson
------------------------------------
Brent Larson
Vice President, Finance and
Chief Financial Officer
(principal financial and
accounting officer)
19
<PAGE> 20
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------
NEOPROBE CORPORATION
----------------------------------------
FORM 10-Q QUARTERLY REPORT
FOR THE FISCAL QUARTER ENDED:
JUNE 30, 2000
----------------------------------------
EXHIBITS
-----------------------------------------
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<PAGE> 21
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, June 3, 1996, March 17, 1999 and
May 9, 2000 (incorporated by reference to Exhibit 3.1 of the
March 31, 2000 Form 10-Q).
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 3.3
Certificate of Elimination of Neoprobe Corporation filed on
May 9, 2000 with the Secretary of State of the State of
Delaware (incorporated by reference to Exhibit 3.3 of the
March 31, 2000 Form 10-Q).
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 4.4
Amendment Number 1 to the Rights Agreement between the
Registrant and Continental Stock Transfer & Trust Company
dated February 16, 1999 (incorporated by reference to Exhibit
4.4 of the 1998 Form 10-K/A).
EXHIBIT 10.1.39
Settlement Agreement among the Registrant, The Aries Master
Fund, The Aries Domestic Fund, L.P., Paramount Capital, Inc.,
and Paramount Capital Asset Management, Inc. dated January 20,
2000 (incorporated by reference to Exhibit 10.1.39 of the
March 31, 2000 Form 10-Q).
EXHIBIT 10.1.40
Option Agreement between the Registrant and Reico Ltd. dated
February 1, 2000 (incorporated by reference to Exhibit 10.1.40
of the March 31, 2000 Form 10-Q).
<PAGE> 22
EXHIBIT 10.2.53
Non-Qualified Stock Option Agreement between the Registrant
and David C. Bupp dated January 4, 2000. This Agreement is one
of three substantially identical agreements and is accompanied
by a schedule identifying the other agreements omitted and
setting forth the material details in which such agreements
differ from the one that is filed herewith (incorporated by
reference to Exhibit 10.2.53 of the March 31, 2000 Form 10-Q).
EXHIBIT 10.2.54
Restricted Stock Agreement dated March 22, 2000 between the
Registrant and David C. Bupp. This Agreement is one of three
substantially identical agreements and is accompanied by a
schedule identifying the other agreements omitted and setting
forth the material details in which such agreements differ
from the one that is filed herewith (incorporated by reference
to Exhibit 10.2.54 of the March 31, 2000 Form 10-Q).
EXHIBIT 10.2.55
Agreement, Release and Waiver between the Registrant and
Matthew F. Bowman dated March 31, 2000 (incorporated by
reference to Exhibit 10.2.55 of the March 31, 2000 Form 10-Q).
EXHIBIT 10.2.56
Employment Agreement between the Registrant and Carl Bosch
dated April 1, 2000 (incorporated by reference to Exhibit
10.2.56 of the March 31, 2000 Form 10-Q).
EXHIBIT 10.2.57
Employment Agreement between the Registrant and Brent L.
Larson dated April 1, 2000 (incorporated by reference to
Exhibit 10.2.57 of the March 31, 2000 Form 10-Q).
EXHIBIT 10.2.58
Employment Agreement between the Registrant and David C. Bupp
dated July 1, 2000.
EXHIBIT 10.3.50
Share Purchase Agreement between the Registrant and Biomedical
Investments (1997) Ltd. dated January 19, 2000 (incorporated
by reference to Exhibit 10.3.50 of the March 31, 2000 Form
10-Q).
EXHIBIT 10.4.45
Manufacturing and Supply Agreement between the Registrant and
Plexus Corporation dated March 30, 2000 (filed pursuant to
Rule 24b-2 under which the Registrant has requested
confidential treatment of certain portions of this Exhibit)
(incorporated by reference to Exhibit 10.4.45 of the March 31,
2000 Form 10-Q).
EXHIBIT 11.1
Computation of Income (Loss) Per Share.
EXHIBIT 27.1
Financial Data Schedule (submitted electronically for SEC
information only).
