Delaware
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2835
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31-1080091
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
standard industrial
classification
code number)
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(IRS
employer
identification
number)
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Large accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
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(Do
not check if a smaller reporting company)
|
Title of Each Class of
Securities to be
Registered
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Amount to be
Registered
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Proposed Maximum
Offering Price Per Unit
(1)
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Proposed Maximum
Offering Price (1)
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Amount of Registration
Fee
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||||||||||||
Common
Stock, par
value $.001 per share |
15,500,000 | $ | 1.07 | $ | 16,585,000 | $ | 1,183.00 |
(1)
|
Estimated
solely for purposes of calculating the registration fee in accordance with
Rule 457(c) under the Securities Act of 1933, using the average of the
high and low price as reported on the OTC Bulletin Board on December 28,
2009, which was $1.07 per share.
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2
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Risk
Factors
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5
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Cautionary
Note Regarding Forward-Looking Statements
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16
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Use
of Proceeds
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16
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Market
for Common Equity and Related Stockholder Matters
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17
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Description
of Business
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18
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Description
of Property
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33
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Management’s
Discussion and Analysis of Financial Condition and
Results of Operations
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33
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Our
Management
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47
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Security
Ownership of Certain Beneficial Owners and Management
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56
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Certain
Relationships and Related Transactions
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58
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Description
of Capital Stock
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59
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Acquisition
of Common Stock by Selling Stockholder
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61
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Selling
Stockholder
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69
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Plan
of Distribution
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70
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Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
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71
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Legal
Opinion
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72
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Experts
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72
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72
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Index
to Financial Statements
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F-1
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|
·
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ineffectiveness
of the product candidate;
|
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·
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discovery
of unacceptable toxicities or side
effects;
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·
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development
of disease resistance or other physiological
factors;
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·
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delays
in patient enrollment; or
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·
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other
reasons that are internal to the businesses of our potential collaborative
partners, which reasons they may not share with
us.
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·
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generate
cash flow and revenue;
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·
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offset
some of the costs associated with our internal research and development,
preclinical testing, clinical trials and
manufacturing;
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·
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seek
and obtain regulatory approvals faster than we could on our own;
and,
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·
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successfully
commercialize existing and future product
candidates.
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·
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delay
marketing of potential products for a considerable period of
time;
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·
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limit
the indicated uses for which potential products may be
marketed;
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·
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impose
costly requirements on our activities;
and
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·
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provide
competitive advantage to other pharmaceutical and biotechnology
companies.
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·
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restrictions
on the products, manufacturers or manufacturing
processes;
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·
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warning
letters;
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·
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civil
or criminal penalties;
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·
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fines;
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·
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injunctions;
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·
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product
seizures or detentions;
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·
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import
bans;
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·
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voluntary
or mandatory product recalls and publicity
requirements;
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·
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suspension
or withdrawal of regulatory
approvals;
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·
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total
or partial suspension of production;
and
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·
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refusal
to approve pending applications for marketing approval of new drugs or
supplements to approved
applications.
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·
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we
pay all principal by December 26,
2011;
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·
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we
use the proceeds from the sale of the Notes only for permitted purposes,
such as Lymphoseek development and general corporate
purposes;
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·
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we
keep reserved out of our authorized shares of common stock sufficient
shares to satisfy our obligation to issue shares on conversion of the
Notes and the exercise of the warrants issued in connection with the sale
of the Notes; and
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·
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we
indemnify the purchasers of the Notes against certain
liabilities.
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·
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amending
our organizational or governing agreements and documents, entering into
any merger or consolidation, dissolving the company or liquidating its
assets, or acquiring all or any substantial part of the business or assets
of any other person;
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·
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engaging
in transactions with any affiliate;
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·
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entering
into any agreement inconsistent with our obligations under the Notes and
related agreements;
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·
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incurring
any indebtedness, capital leases, or contingent obligations outside the
ordinary course of business;
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·
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granting
or permitting liens against or security interests in our
assets;
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·
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making
any material dispositions of our assets outside the ordinary course of
business;
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·
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declaring
or paying any dividends or making any other restricted payments;
or
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·
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making
any loans to or investments in other persons outside of the ordinary
course of business.
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·
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price
and volume fluctuations in the stock market at large which do not relate
to our operating performance;
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·
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financing
arrangements we may enter that require the issuance of a significant
number of shares in relation to the number of shares currently
outstanding;
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·
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public
concern as to the safety of products that we or others develop;
and
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·
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fluctuations
in market demand for and supply of our
products.
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·
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general
economic and business conditions, both nationally and in our
markets;
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·
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our
history of losses, negative net worth and uncertainty of future
profitability;
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·
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our
expectations and estimates concerning future financial performance,
financing plans and the impact of
competition;
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·
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our
ability to implement our growth
strategy;
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·
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anticipated
trends in our business;
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·
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advances
in technologies; and
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·
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other
risk factors set forth under “Risk Factors” in this
prospectus.
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High
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Low
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Close
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||||||||||
Fiscal
Year 2009
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||||||||||||
First
Quarter
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$ | 0.80 | $ | 0.42 | $ | 0.54 | ||||||
Second
Quarter
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1.20 | 0.35 | 0.95 | |||||||||
Third
Quarter
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1.48 | 0.91 | 1.40 | |||||||||
Fourth
Quarter through December
28, 2009
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1.40 | 0.95 | 1.05 | |||||||||
Fiscal
Year 2008
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||||||||||||
First
Quarter
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$ | 0.42 | $ | 0.29 | $ | 0.35 | ||||||
Second
Quarter
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0.87 | 0.34 | 0.68 | |||||||||
Third
Quarter
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0.75 | 0.42 | 0.57 | |||||||||
Fourth
Quarter
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0.68 | 0.45 | 0.57 | |||||||||
Fiscal
Year 2007:
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||||||||||||
First
Quarter
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$ | 0.27 | $ | 0.20 | $ | 0.24 | ||||||
Second
Quarter
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0.32 | 0.19 | 0.31 | |||||||||
Third
Quarter
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0.50 | 0.23 | 0.31 | |||||||||
Fourth
Quarter
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0.35 | 0.25 | 0.29 |
Indication
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Phase
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Number of
Patients
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Status
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Breast
(peritumoral injection)
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1
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24
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Completed
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|||
Melanoma
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1
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24
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Completed
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Breast
(intradermal injection, next day surgery)
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1
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60
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Ongoing
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|||
Prostate
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1
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20
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Ongoing
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Colon
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1
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20
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Ongoing
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|||
Breast
or Melanoma
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2
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80
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Completed
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Breast
or Melanoma
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3
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130
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Completed
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|||
Head
and Neck Squamous Cell Carcinoma (“Sentinel”)
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3
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180*
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Ongoing
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·
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Completed
a multi-center Phase 3 clinical trial of Lymphoseek (NEO3-05) in patients
with breast cancer or melanoma and announced that the primary efficacy
endpoint was exceeded with no drug-related safety events
reported.
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·
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Initiated
patient enrollment in a second multi-center Phase 3 clinical trial of
Lymphoseek (NEO3-06 or the “Sentinel” trial) in patients with head and
neck squamous cell carcinoma.
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·
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Initiated
drug development activities for RIGScan CR to support a multi-center Phase
3 study.
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·
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Began
a new five-year term of our EES gamma detection device distribution
agreement.
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·
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Added
a high energy (F-18) probe to our gamma detection device product
portfolio.
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·
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Completed
a debt restructuring agreement allowing reclassification of a majority of
the Company’s derivative liabilities and resulting in the accelerated
exercise of the Series Y Warrants, producing $3.45 million in cash flow to
the Company.
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·
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Stock-Based
Compensation. We account for stock-based compensation in
accordance with FASB ASC Topic 718, Compensation – Stock
Compensation. FASB ASC 718 requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their estimated fair
values. Compensation cost arising from stock-based awards is
recognized as expense using the straight-line method over the vesting
period. We use the Black-Scholes option pricing model to value
share-based payments.
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·
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Inventory
Valuation. We value our inventory at the lower of cost
(first-in, first-out method) or market. Our valuation reflects
our estimates of excess, slow moving and obsolete inventory as well as
inventory with a carrying value in excess of its net realizable
value. Write-offs are recorded when product is removed from
saleable inventory. We review inventory on hand at least
quarterly and record provisions for excess and obsolete inventory based on
several factors, including current assessment of future product demand,
anticipated release of new products into the market, historical experience
and product expiration. Our industry is characterized by rapid
product development and frequent new product
introductions. Uncertain timing of product approvals,
variability in product launch strategies, regulations regarding use and
shelf life, product recalls and variation in product utilization all
impact the estimates related to excess and obsolete
inventory.
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·
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Impairment or Disposal of
Long-Lived Assets. We account for long-lived assets in
accordance with the provisions of FASB ASC Topic 360, Property, Plant and
Equipment. FASB ASC 360 requires that long-lived assets
and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an
asset to future net undiscounted cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to
sell.
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·
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Product
Warranty. We warrant our products against defects in
design, materials, and workmanship generally for a period of one year from
the date of sale to the end customer. Our accrual for warranty
expenses is adjusted periodically to reflect actual
experience. EES also reimburses us for a portion of warranty
expense incurred based on end customer sales they make during a given
fiscal year.
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·
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Fair Value of Derivative
Instruments. We account for derivative
instruments in accordance with FASB ASC Topic 815, Derivatives and
Hedging. FASB ASC 815 provides accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts. We do not use
derivative instruments for hedging of market risks or for trading or
speculative purposes. Effective January 1, 2009, we were
required to adopt new provisions of FASB ASC 815 which clarified the
determination of whether equity-linked instruments (or embedded features),
such as our convertible securities and warrants to purchase our common
stock, are considered indexed to our own stock, which would qualify as a
scope exception. As a result of adopting the new provisions of
FASB ASC 815, certain embedded features of our convertible securities, as
well as warrants to purchase our common stock, that were previously
treated as equity are now considered derivative
liabilities.
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Name
|
Age
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Position
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||
Anthony
K. Blair
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49
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Vice
President, Manufacturing Operations
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||
Rodger
A. Brown
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59
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Vice
President, Regulatory Affairs and Quality
Assurance
|
||
Frederick
O. Cope, Ph.D.
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63
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Vice
President of Pharmaceutical Research and
Clinical Development
|
||
Brent
L. Larson
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46
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Vice
President, Finance; Chief Financial Officer;
Treasurer and Secretary
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||
Douglas
L. Rash
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66
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Vice
President,
Marketing
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(c)
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||||||||||||||||||||||||||
(b)
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Restricted
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(d)
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||||||||||||||||||||||||
(a)
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Option
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Stock
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All Other
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Total
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||||||||||||||||||||||
Name and Principal Position
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Year
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Compensation
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|||||||||||||||||||
Anthony
K. Blair
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2008
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$ | 150,000 | $ | 15,700 | $ | 10,827 | $ | 8,975 | $ | 4,676 | $ | 190,178 | |||||||||||||
Vice
President,
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2007
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134,000 | 19,125 | 8,550 | - | 3,887 | 165,562 | |||||||||||||||||||
Manufacturing
Operations
|
||||||||||||||||||||||||||
David
C. Bupp
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2008
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$ | 325,000 | $ | 40,000 | $ | 43,875 | $ | 53,850 | $ | 7,208 | $ | 469,933 | |||||||||||||
President
and
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2007
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305,000 | 60,000 | 51,808 | - | 8,398 | 425,206 | |||||||||||||||||||
Chief
Executive Officer
|
||||||||||||||||||||||||||
Brent
L. Larson
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2008
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$ | 177,000 | $ | 15,000 | $ | 9,677 | $ | 8,975 | $ | 5,442 | $ | 216,094 | |||||||||||||
Vice
President, Finance and
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2007
|
170,000 | 19,125 | 10,184 | - | 4,896 | 204,205 | |||||||||||||||||||
Chief
Financial Officer
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(a)
|
Bonuses,
if any, have been disclosed for the year in which they were earned (i.e.,
the year to which the service
relates).
|
(b)
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Amount
represents the dollar amount recognized for financial statement reporting
purposes in accordance with SFAS No. 123(R). Assumptions made
in the valuation of stock option awards are disclosed in Note 1(o) of the
Notes to the December 31, 2008 Consolidated Financial Statements in this
Registration Statement on Form S-1.
|
(c)
|
Amount
represents the dollar amount recognized for financial statement reporting
purposes in accordance with SFAS No. 123(R). Assumptions made
in the valuation of restricted stock awards are disclosed in Note 1(o) of
the Notes to the December 31, 2008 Consolidated Financial Statements in
this Registration Statement on Form
S-1.
|
(d)
|
Amount
represents life insurance premiums paid during the fiscal year for the
benefit of the Named Executives and matching contributions under the
Neoprobe Corporation 401(k) Plan (the Plan). Eligible employees
may make voluntary contributions and we may, but are not obligated to,
make matching contributions based on 40 percent of the employee’s
contribution, up to 5 percent of the employee’s
salary. Employee contributions are invested in mutual funds
administered by an independent plan administrator. Company
contributions, if any, are made in the form of shares of common
stock. The Plan qualifies under section 401 of the Internal
Revenue Code, which provides that employee and company contributions and
income earned on contributions are not taxable to the employee until
withdrawn from the Plan, and that we may deduct our contributions when
made.
|
|
·
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by
our company without cause (cause is defined as any willful breach of a
material duty by Mr. Bupp in the course of his employment or willful and
continued neglect of his duty as an
employee);
|
|
·
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by
the expiration of the term of Mr. Bupp’s employment agreement;
or
|
|
·
|
by
the resignation of Mr. Bupp because his title, authority,
responsibilities, salary, bonus opportunities or benefits have materially
diminished, a material adverse change in his working conditions has
occurred, his services are no longer required in light of the company’s
business plan, or we breach the
agreement;
|
|
·
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the
acquisition, directly or indirectly, by a person (other than our company
or an employee benefit plan established by the Board of Directors) of
beneficial ownership of thirty percent (30%) or more of our securities
with voting power in the next meeting of holders of voting securities to
elect the directors;
|
|
·
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a
majority of the Directors elected at any meeting of the holders of our
voting securities are persons who were not nominated by our then current
Board of Directors or an authorized committee
thereof;
|
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·
|
our
stockholders approve a merger or consolidation of our company with another
person, other than a merger or consolidation in which the holders of our
voting securities outstanding immediately before such merger or
consolidation continue to hold voting securities in the surviving or
resulting corporation (in the same relative proportions to each other as
existed before such event) comprising eighty percent (80%) or more of the
voting power for all purposes of the surviving or resulting corporation;
or
|
|
·
|
our
stockholders approve a transfer of substantially all of our assets to
another person other than a transfer to a transferee, eighty percent (80%)
or more of the voting power of which is owned or controlled by us or by
the holders of our voting securities outstanding immediately before such
transfer in the same relative proportions to each other as existed before
such event.
|
|
·
|
by
our company without cause (cause is defined as any willful breach of a
material duty by Mr. Blair in the course of his employment or willful and
continued neglect of his duty as an
employee);
|
|
·
|
by
the expiration of the term of Mr. Blair’s employment agreement;
or
|
|
·
|
by
the resignation of Mr. Blair because his title, authority,
responsibilities, salary, bonus opportunities or benefits have materially
diminished, a material adverse change in his working conditions has
occurred, his services are no longer required in light of the company’s
business plan, or we breach the
agreement;
|
|
·
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the
acquisition, directly or indirectly, by a person (other than our company
or an employee benefit plan established by the Board of Directors) of
beneficial ownership of thirty percent (30%) or more of our securities
with voting power in the next meeting of holders of voting securities to
elect the directors;
|
|
·
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a
majority of the directors elected at any meeting of the holders of our
voting securities are persons who were not nominated by our then current
Board of Directors or an authorized committee
thereof;
|
|
·
|
our
stockholders approve a merger or consolidation of our company with another
person, other than a merger or consolidation in which the holders of our
voting securities outstanding immediately before such merger or
consolidation continue to hold voting securities in the surviving or
resulting corporation (in the same relative proportions to each other as
existed before such event) comprising eighty percent (80%) or more of the
voting power for all purposes of the surviving or resulting corporation;
or
|
|
·
|
our
stockholders approve a transfer of substantially all of the assets of our
company to another person other than a transfer to a transferee, eighty
percent (80%) or more of the voting power of which is owned or controlled
by us or by the holders of our voting securities outstanding immediately
before such transfer in the same relative proportions to each other as
existed before such event.
|
|
·
|
If
a change in control occurs with respect to our company and the employment
of Mr. Larson is concurrently or subsequently terminated, then Mr. Larson
will be paid a severance payment of $360,000;
and
|
|
·
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Mr.
Larson will be paid a severance amount of $184,000 if his employment is
terminated at the end of his employment agreement or without
cause.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||
Number of Securities
Underlying Unexercised
Options (#)
|
Option Exercise
|
Option
Expiration
|
Number of
|
Market value of
|
||||||||||||||||||||
Name
|
Exercisable
|
Unexercisable
|
Price
|
Date
|
Note
|
unearned shares
|
unearned shares (q)
|
Note
|
||||||||||||||||
Anthony
K. Blair
|
50,000 | - | $ | 0.60 |
7/1/2014
|
(h)
|
50,000 | $ | 28,500 |
(p)
|
||||||||||||||
40,000 | - | $ | 0.39 |
12/10/2014
|
(j)
|
|||||||||||||||||||
30,000 | - | $ | 0.26 |
12/27/2015
|
(k)
|
|||||||||||||||||||
20,000 | 10,000 | $ | 0.27 |
12/15/2016
|
(l)
|
|||||||||||||||||||
6,667 | 13,333 | $ | 0.35 |
7/27/2017
|
(m)
|
|||||||||||||||||||
- | 50,000 | $ | 0.362 |
1/3/2018
|
(n)
|
|||||||||||||||||||
David
C. Bupp
|
180,000 | - | $ | 0.50 |
1/4/2010
|
(b)
|
300,000 | $ | 171,000 |
(p)
|
||||||||||||||
180,000 | - | $ | 0.41 |
1/3/2011
|
(c)
|
|||||||||||||||||||
180,000 | - | $ | 0.42 |
1/7/2012
|
(d)
|
|||||||||||||||||||
100,000 | - | $ | 0.14 |
1/15/2013
|
(e)
|
|||||||||||||||||||
70,000 | - | $ | 0.13 |
2/15/2013
|
(f)
|
|||||||||||||||||||
150,000 | - | $ | 0.30 |
1/7/2014
|
(g)
|
|||||||||||||||||||
150,000 | - | $ | 0.49 |
7/28/2014
|
(i)
|
|||||||||||||||||||
200,000 | - | $ | 0.39 |
12/10/2014
|
(j)
|
|||||||||||||||||||
200,000 | - | $ | 0.26 |
12/27/2015
|
(k)
|
|||||||||||||||||||
200,000 | 100,000 | $ | 0.27 |
12/15/2016
|
(l)
|
|||||||||||||||||||
- | 200,000 | $ | 0.362 |
1/3/2018
|
(n)
|
|||||||||||||||||||
Brent
L. Larson
|
25,000 | - | $ | 1.25 |
2/11/2009
|
(a)
|
50,000 | $ | 28,500 |
(p)
|
||||||||||||||
60,000 | - | $ | 0.50 |
1/4/2010
|
(b)
|
|||||||||||||||||||
60,000 | - | $ | 0.41 |
1/3/2011
|
(c)
|
|||||||||||||||||||
50,000 | - | $ | 0.42 |
1/7/2012
|
(d)
|
|||||||||||||||||||
40,000 | - | $ | 0.14 |
1/15/2013
|
(e)
|
|||||||||||||||||||
30,000 | - | $ | 0.13 |
2/15/2013
|
(f)
|
|||||||||||||||||||
70,000 | - | $ | 0.30 |
1/7/2014
|
(g)
|
|||||||||||||||||||
50,000 | - | $ | 0.49 |
7/28/2014
|
(i)
|
|||||||||||||||||||
50,000 | - | $ | 0.39 |
12/10/2014
|
(j)
|
|||||||||||||||||||
40,000 | - | $ | 0.26 |
12/27/2015
|
(k)
|
|||||||||||||||||||
33,333 | 16,667 | $ | 0.27 |
12/15/2016
|
(l)
|
|||||||||||||||||||
- | 50,000 | $ | 0.362 |
1/3/2018
|
(n)
|
(a)
|
Options
were granted 2/11/1999 and vested as to one-third immediately and on each
of the first two anniversaries of the date of
grant.
|
(b)
|
Options
were granted 1/4/2000 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(c)
|
Options
were granted 1/3/2001 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(d)
|
Options
were granted 1/7/2002 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(e)
|
Options
were granted 1/15/2003 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(f)
|
Options
were granted 2/15/2003 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(g)
|
Options
were granted 1/7/2004 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(h)
|
Options
were granted 7/1/2004 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(i)
|
Options
were granted 7/28/2004 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(j)
|
Options
were granted 12/10/2004 and vested as to one-third on each of the first
three anniversaries of the date of
grant.
|
(k)
|
Options
were granted 12/27/2005 and vested as to one-third immediately and on each
of the first two anniversaries of the date of
grant.
|
(l)
|
Options
were granted 12/15/2006 and vest as to one-third on each of the first
three anniversaries of the date of
grant.
|
(m)
|
Options
were granted 7/27/2007 and vest as to one-third on each of the first three
anniversaries of the date of grant.
|
(n)
|
Options
were granted 1/3/2008 and vest as to one-third on each of the first three
anniversaries of the date of grant.
|
(o)
|
Estimated
by reference to the closing market price of the Company’s common stock on
December 31, 2008, pursuant to Instruction 3 to Item 402(p)(2) of
Regulation S-K. The closing price of the Company’s common stock
on December 31, 2008, was $0.57.
|
(p)
|
Restricted
shares granted January 3, 2008. Pursuant to the terms of Restricted Stock
Agreements between the Company and each grantee, the restricted shares
will vest upon the approval by the United States Food and Drug
Administration of the New Drug Application for Lymphoseek. If the
employment of a grantee with the Company is terminated before all of the
restricted shares have vested, then pursuant to the terms of the
Restricted Stock Agreements all restricted shares that have not vested at
the effective date of such grantee’s termination shall immediately be
forfeited by the grantee. Pursuant to its authority under Section 3.2 of
the Restricted Stock Agreements the Company’s Compensation, Nominating and
Governance Committee eliminated the forfeiture provision in Section 3.2(b)
of the Restricted Stock Agreements effective January 1, 2009, which
provision effected the forfeiture of the shares if the vesting event did
not occur before June 30, 2010.
|
Name
|
Fees Earned
or Paid in
Cash(a)
|
Option
Awards(b),(c)
|
Total
Compensation
|
|||||||||
Carl
J. Aschinger, Jr.
|
$ | 37,500 | $ | 3,046 | $ | 40,546 | ||||||
Reuven
Avital
|
28,000 | 3,046 | 31,046 | |||||||||
Kirby
I. Bland, M.D.
|
27,500 | 3,046 | 30,546 | |||||||||
Owen
E. Johnson, M.D.
|
27,500 | 6,011 | 33,511 | |||||||||
Fred
B. Miller
|
38,000 | 3,046 | 41,046 | |||||||||
Gordon
A. Troup
|
13,000 | 2,020 | 15,202 | |||||||||
J.
Frank Whitley, Jr.
|
28,000 | 3,046 | 31,046 |
(a)
|
Amount
represents fees earned during the fiscal year ended December 31, 2008
(i.e., the year to which the service relates). Quarterly
retainers and meeting attendance fees are paid during the quarter
following the quarter in which they are
earned.
|
(b)
|
Amount
represents the dollar amount recognized for financial statement reporting
purposes in accordance with SFAS No. 123(R). Assumptions made
in the valuation of stock option awards are disclosed in Note 1(o) of the
Notes to the Consolidated Financial Statements in this Registration
Statement on Form S-1.
|
(c)
|
At
December 31, 2008, the non-employee directors held an aggregate of
1,057,500 options to purchase shares of common stock of the
Company.
|
Beneficial Owner
|
Number of Shares
Beneficially Owned (*)
|
Percent
of Class (**)
|
|||||
Carl
J. Aschinger, Jr.
|
368,245 |
(a)
|
(n)
|
||||
Reuven
Avital
|
455,556 |
(b)
|
(n)
|
||||
Anthony
K. Blair
|
288,762 |
(c)
|
(n)
|
||||
Kirby
I. Bland, M.D.
|
205,000 |
(d)
|
(n)
|
||||
David
C. Bupp
|
7,036,975 |
(e)
|
8.1 | % | |||
Frederick
O. Cope, Ph.D.
|
- |
(f)
|
(n)
|
||||
Owen
E. Johnson, M.D.
|
75,000 |
(g)
|
(n)
|
||||
Brent
L. Larson
|
692,472 |
(h)
|
(n)
|
||||
Fred
B. Miller
|
386,000 |
(i)
|
(n)
|
||||
Gordon
A. Troup
|
50,000 |
(j)
|
(n)
|
||||
J.
Frank Whitley, Jr.
|
286,500 |
(k)
|
(n)
|
||||
All
directors and officers as a group
|
10,398,833 |
(l)(o)
|
11.6 | % | |||
(13
persons)
|
|||||||
Platinum-Montaur
Life Sciences, LLC
|
7,323,789 |
(m)
|
9.1 | % |
(*)
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission which generally attribute beneficial ownership of
securities to persons who possess sole or shared voting power and/or
investment power with respect to those securities. Unless
otherwise indicated, voting and investment power are exercised solely by
the person named above or shared with members of such person’s
household.
|
(**)
|
Percent
of class is calculated on the basis of the number of shares outstanding on
December 15, 2009, plus the number of shares the person has the right to
acquire within 60 days of December 15,
2009.
|
(a)
|
This
amount includes 150,000 shares issuable upon exercise of options which are
exercisable within 60 days and 1,145 shares held in a trust account for
which Mr. Aschinger is the custodian, but does not include 30,000 shares
of unvested restricted stock which are not exercisable within 60
days.
|
(b)
|
This
amount consists of 139,256 shares of our common stock owned by Mittai
Investments Ltd. (Mittai), an investment fund under the management and
control of Mr. Avital, and 195,000 shares issuable upon exercise of
options which are exercisable within 60 days but does not include 30,000
shares of unvested restricted stock which are not exercisable within 60
days. The shares held by Mittai were obtained through a
distribution of 2,785,123 shares previously held by Ma’Aragim Enterprise
Ltd. (Ma’Aragim), another investment fund under the management and control
of Mr. Avital. On February 28, 2005, Ma’Aragim distributed its
shares to the partners in the fund. Mr. Avital is not an
affiliate of the other fund to which the remaining 2,645,867 shares were
distributed. Of the 2,785,123 shares previously held by
Ma’Aragim, 2,286,712 were acquired in exchange for surrendering its shares
in Cardiosonix Ltd. on December 31, 2001, in connection with our
acquisition of Cardiosonix, and 498,411 were acquired by Ma’Aragim based
on the satisfaction of certain developmental milestones on December 30,
2002, associated with our acquisition of
Cardiosonix.
|
(c)
|
This
amount includes 205,000 shares issuable upon exercise of options which are
exercisable within 60 days and 33,763 shares in Mr. Blair’s account in the
401(k) Plan, but it does not include 100,000 shares of unvested restricted
stock and 115,000 shares issuable upon exercise of options which are not
exercisable within 60 days.
|
(d)
|
This
amount includes 180,000 shares issuable upon exercise of options which are
exercisable within 60 days but does not include 30,000 shares of unvested
restricted stock which are not exercisable within 60
days.
|
(e)
|
This
amount includes 1,683,333 shares issuable upon exercise of options which
are exercisable within 60 days, 770,000 warrants which are exercisable
within 60 days, a promissory note convertible into 3,225,806 shares of our
common stock, 213,746 shares that are held by Mr. Bupp’s wife for which he
disclaims beneficial ownership and 119,390 shares in Mr. Bupp’s account in
the 401(k) Plan, but it does not include 1,000,000 shares of unvested
restricted stock and 66,667 shares issuable upon exercise of options which
are not exercisable within 60 days.
|
(f)
|
This
amount does not include 175,000 shares of unvested restricted stock and
125,000 shares issuable upon exercise of options which are not exercisable
within 60 days.
|
(g)
|
This
amount includes 40,000 shares issuable upon exercise of options which are
exercisable within 60 days but does not include 30,000 shares of unvested
restricted stock which are not exercisable within 60
days.
|
(h)
|
This
amount includes 481,666 shares issuable upon exercise of options which are
exercisable within 60 days and 87,414 shares in Mr. Larson’s account in
the 401(k) Plan, but it does not include 125,000 shares of unvested
restricted stock and 108,334 shares issuable upon exercise of options
which are not exercisable within 60
days.
|
(i)
|
This
amount includes 255,000 shares issuable upon exercise of options which are
exercisable within 60 days and 81,000 shares held by Mr. Miller’s wife for
which he disclaims beneficial ownership, but does not include 30,000
shares of unvested restricted stock which are not exercisable within 60
days.
|
(j)
|
This
amount does not include 30,000 shares of unvested restricted stock which
are not exercisable within 60 days.
|
(k)
|
This
amount includes 255,000 shares issuable upon exercise of options which are
exercisable within 60 days, but does not include 30,000 shares of unvested
restricted stock which are not exercisable within 60
days.
|
(l)
|
This
amount includes 3,979,998 shares issuable upon exercise of options which
are exercisable within 60 days, 770,000 warrants which are exercisable
within 60 days, a promissory note convertible into 3,225,806 shares of our
common stock, 295,891 shares that are held by spouses of our Directors and
Officers or in trusts for which they are custodian but for which they
disclaim beneficial ownership and 253,224 shares held in the 401(k) Plan
on behalf of certain officers, but it does not include 1,680,000 shares of
unvested restricted stock and 530,002 shares issuable upon the exercise of
options which are not exercisable within 60 days. The Company
itself is the trustee of the Neoprobe 401(k) Plan and may, as such, share
investment power over common stock held in such plan. The
trustee disclaims any beneficial ownership of shares held by the 401(k)
Plan. The 401(k) Plan holds an aggregate total of 575,350
shares of common stock.
|
(m)
|
Based
on information filed on Schedule 13G with the Securities and Exchange
Commission on August 18, 2009 and information supplied subsequently by
holder. The number of shares beneficially owned by Platinum-Montaur Life
Sciences, LLC (Montaur), 152 W. 57th Street, 54th Floor, New York, NY
10019, does not include 17,061,621 shares of common stock issuable upon
conversion of a 10% Series A Convertible Senior Secured Promissory Note
issued to Montaur on December 26, 2007, as amended (the “Series A Note”),
8,333,333 shares of common stock issuable upon conversion of a 10% Series
B Convertible Senior Secured Promissory Note issued to Montaur on April
16, 2008 (the “Series B Note”), 6,000,000 shares of common stock issuable
upon conversion of 3,000 shares Series A 8% Cumulative Convertible
Preferred Stock issued to Montaur on December 5, 2008 (the “Preferred
Stock”), 6,000,000 shares of common stock issuable upon exercise of a
Series W Warrant issued to Montaur on December 26, 2007, as amended (the
“Series W Warrant”), 8,333,333 shares of common stock issuable upon
exercise of a Series X Warrant issued to Montaur on April 16, 2008 (the
“Series X Warrant”), and 2,400,000 shares of common stock issuable upon
exercise of a Series AA Warrant issued to Montaur on July 24, 2009 (the
“Series AA Warrant”). The Certificates of Designation of the Preferred
Stock, the Series A Note, the Series B Note, the Series W Warrant, the
Series X Warrant and the Series AA Warrant each provide that the holder of
shares of the Preferred Stock, the Series A Note, the Series B Note, the
Series W Warrant, the Series X Warrant and the Series AA Warrant,
respectively, may not convert any of the preferred stock or notes or
exercise any of the warrants to the extent that such conversion or
exercise would result in the holder and its affiliates together
beneficially owning more than 4.99% or 9.99% of the outstanding shares of
Common Stock, except on 61 days’ prior written notice to Neoprobe that the
holder waives such limitation. Effective September 23, 2009,
the 4.99% limitation, however, does not apply to shares of Common Stock
issued as a dividend on the Preferred Stock or shares of Common Stock
issued as interest on the Series A Note or the Series B
Note.
|
(n)
|
Less
than one percent.
|
(o)
|
The
address of all directors and executive officers is c/o Neoprobe
Corporation, 425 Metro Place North, Suite 300, Dublin, Ohio
43017-1367.
|
Number of Shares at December 15,
2009
|
||||||||||||
Title of Class
|
Authorized
|
Outstanding
|
Reserved
|
|||||||||
Common
Stock, $0.001 par value per share
|
150,000,000 | 80,889,561 | 58,188,511 | |||||||||
Preferred
Stock, $0.001 par value per share
|
5,000,000 | 3,000 | 0 |
|
·
|
the
corporation’s board of directors approved in advance either the business
combination or the transaction which resulted in the stockholder becoming
an interested stockholder;
|
|
·
|
the
interested stockholder owned at least 85 percent of the corporation’s
voting stock at the time the transaction commenced;
or
|
|
·
|
the
business combination is approved by the corporation’s board of directors
and the affirmative vote of at least two-thirds of the voting stock which
is not owned by the interested
stockholder.
|
Payee
|
Cash
Payment
|
Purpose of Payment
|
|||
Platinum-Montaur
Life Sciences, LLC
|
$ | 30,000 |
Selling
Shareholder's Diligence Fee
|
||
Burak
Anderson & Melloni, PLC, attorney for the Selling
Shareholder
|
2,610 |
Reimbursement
of document amendment, filing and recording fees
|
|||
Subtotal,
transaction costs paid to Selling Stockholder
|
32,610 | ||||
Interest
payments December 26, 2007 through December 31, 2008 (1)
|
923,506 |
Interest
paid on outstanding principal
|
|||
Total
of transaction costs and possible payments to Selling Stockholder (2),(3),(4)
|
$ | 956,116 |
Principal
Amount
of
Note
|
Total
Possible
Shares
|
Market
Price per
Share(1)
|
Conversion
Price
per
Share(2)
|
Combined
Market
Price
|
Combined
Conversion
Price
|
Total
Possible
Discount(3)
(Net Profit to
Selling
Stockholder)
|
||||||||||||||||||||||
Note
A
|
$ | 3,500,000 | 13,461,538 | $ | 0.27 | $ | 0.2600 | $ | 3,634,615 | $ | 3,500,000 | $ | 134,615 | |||||||||||||||
Note
A
|
3,500,000 | 3,600,000 | $ | 1.12 | $ | 0.9722 | 4,032,000 | 3,500,000 | 532,000 | |||||||||||||||||||
Note
B
|
3,000,000 | 8,333,333 | $ | 0.52 | $ | 0.3600 | 4,333,333 | 3,000,000 | 1,333,333 | |||||||||||||||||||
$ | 10,000,000 | 25,394,871 | $ | 11,999,948 | $ | 10,000,000 | $ | 1,999,948 |
Purchase
Price
of
Preferred
Stock
|
Total
Possible
Shares
|
Market
Price
per
Share(1)
|
Conversion
Price
per
Share(2)
|
Market
Price
|
Conversion
Price
|
Total
Possible
Discount(3)
(Net Profit to
Selling
Stockholder)
|
|||||||||||||||||||
$3,000,000
|
6,000,000 | $ | 0.57 | $ | 0.50 | $ | 3,420,000 | $ | 3,000,000 | $ | 420,000 |
Total
Possible
Shares
|
Market
Price
per
Share(1)
|
Exercise
Price per
Share(2)
|
Combined
Market
Price
|
Combined
Exercise
Price
|
Total Possible
(Premium)
Discount(3) (Net
Profit to Selling
Stockholder)
|
|||||||||||||||||||
Series
W Warrant
|
6,000,000 | $ | 0.27 | $ | 0.32 | $ | 1,620,000 | $ | 1,920,000 | $ | (300,000 | ) | ||||||||||||
Series
X Warrant
|
8,333,333 | $ | 0.52 | $ | 0.46 | 4,333,333 | 3,833,333 | 500,000 | ||||||||||||||||
Series
Y Warrant
|
6,000,000 | $ | 0.57 | $ | 0.575 | 3,420,000 | 3,450,000 | (30,000 | ) | |||||||||||||||
Series
AA Warrant
|
2,400,000 | $ | 1.12 | $ | 0.97 | 2,688,000 | 2,328,000 | 360,000 | ||||||||||||||||
22,733,333 | $ | 12,061,333 | $ | 11,531,333 | $ | 530,000 |
Gross
proceeds to the Company
|
||||
Gross
proceeds from the issuance of Note A
|
$ | 7,000,000 | ||
Gross
proceeds from the issuance of Note B
|
3,000,000 | |||
Gross
proceeds from the issuance of Preferred Stock
|
3,000,000 | |||
Subtotal
gross proceeds to the Company
|
13,000,000 | |||
Less:
|
||||
Transaction
costs and possible payments to Selling Shareholder(1),(2)
|
956,116 | |||
Net
proceeds to the Company during first year following issuance of the
notes
|
$ | 12,043,884 |
Total
possible profit to selling stockholder
|
||||
From
the conversion of the convertible notes(1)
|
$ | 1,999,948 | ||
From
the exercise of the warrants(2)
|
530,000 | |||
From
the conversion of Preferred Stock(3)
|
420,000 | |||
Combined
total possible profit to Selling Shareholder
|
$ | 2,949,948 | ||
Total
possible payments to Selling Shareholder(4)
|
$ | 956,116 | ||
Total
possible profit to Selling Shareholder on conversion of the notes and
preferred stock only(5)
|
2,419,948 | |||
Total
possible payments and profit from note and preferred stock conversion to
Selling Shareholder
|
$ | 3,376,064 | ||
Total
net proceeds to the Company(6)
|
$ | 12,043,884 | ||
Total
possible profit to selling stockholder related to the notes, preferred
stock and payments as a percentage of Net Proceeds to the
Company
|
28.0 | % | ||
Total
possible profit to selling stockholder related to the notes, preferred
stock and payments as a percentage of Net Proceeds to the Company averaged
over the four-year term of the notes
|
7.0 | % |
Shares
outstanding prior to the date of the amendment and exchange
agreement
|
73,353,787 | |||||||
Less: Shares
outstanding prior to the date of the amendment and exchange agreement held
by the Selling Stockholder and affiliates, or officers, directors and
affiliates of the Company(1)
|
(3,600,805 | ) | ||||||
Shares
outstanding prior to the date of the amendment and exchange agreement held
by persons other than the Selling Stockholder and affiliates, or officers,
directors and affiliates of the Company
|
72,396,079 | |||||||
Shares
registered for sale by the Selling Stockholder pursuant to this prospectus
(2)
|
15,500,000 | 21.41 | % |
Selling
Stockholder
|
Shares
Owned
Before
Offering
(1)
|
Percentage
of
Outstanding
Shares
Owned
Before
Offering
(1)
|
Shares
to be
Sold
in the
Offering
|
Percentage
of
Outstanding
Shares
Owned
After
Offering (1)
|
||||||||||||
Platinum-Montaur
Life Sciences, LLC (2)(3)
|
7,323,789 | 9.1 | % | 15,500,000 | 4.99 | % |
(1)
|
The
ownership percentages listed in these columns include only shares
beneficially owned by the listed selling stockholder. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission. In computing the percentage of shares beneficially owned by a
selling stockholder, shares of common stock subject to options or
warrants, or debt convertible into common stock held by that selling
stockholder that was exercisable on or within 60 days after December 15,
2009, were deemed outstanding for the purpose of computing the percentage
ownership of that selling stockholder. The ownership percentages are
calculated assuming that 80,889,561 shares of common stock were
outstanding on December 15,
2009.
|
(2)
|
Prior
to giving effect to the offering, Platinum-Montaur Life Sciences, LLC
(“Montaur”), 152 W. 57th
Street, 54th
Floor, New York, NY 10019, holds promissory notes in the principal amount
of $10,000,000 convertible into 25,394,953 shares of our common stock,
3,000 shares of Series A 8% Cumulative Convertible Preferred Stock
convertible into an aggregate 6,000,000 shares of our common stock and
warrants to purchase 16,733,333 shares of our common
stock. Each of our convertible promissory notes, shares of
preferred stock and warrants held by Montaur provide that Montaur may not
convert any of the preferred stock or notes or exercise any of the
warrants to the extent that such conversion or exercise would result in
the holder and its affiliates together beneficially owning more than 4.99%
or 9.99% of the outstanding shares of our common stock, except on 61 days’
prior written notice to us that Montaur waives such limitation, provided,
however, that: (a) on July 24, 2009, Montaur waived the 4.99%
limitation with respect to the Series Y Warrant; and (b) effective
September 23, 2009, the 4.99% limitation does not apply to shares of our
common stock issued as a dividend on the Preferred Stock or shares of our
common stock issued as interest on the Series A Note or the Series B Note.
The shares to be sold in the offering by Montaur also include 3,500,000
shares which we have issued, or may elect to issue, in payment of
interest or dividends on the promissory notes and preferred stock,
respectively. Following the offering, assuming the sale of all shares of
our common stock offered hereby, Montaur will still hold 42,128,286 shares
of our common stock, which remaining shares are: (a) issuable upon the
conversion of debt or preferred shares which is subject to demand
registration rights; or (b) issuable upon the exercise of warrants to
purchase shares of our common stock which are subject to demand
registration rights (in each case subject to the limitations on
exercisability and conversion discussed
above).
|
(3)
|
Marc
Nordlicht has the voting and dispositive power over the shares to be sold
in the offering. Mr. Nordlicht disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest in the selling
stockholder. The selling stockholder has advised us that it is not a
broker-dealer or affiliate of a
broker-dealer.
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits investors;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
to
cover short sales made after the date that this Registration Statement is
declared effective by the
Commission;
|
|
·
|
broker-dealers
may agree with the Selling Stockholder to sell a specified number of such
shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
Consolidated
Financial Statements of Neoprobe Corporation
|
|||
Report
of Independent Registered Public Accounting Firm BDO Seidman,
LLP
|
F-2
|
||
Consolidated
Balance Sheets as of December 31, 2008 and December 31,
2007
|
F-3
|
||
Consolidated
Statements of Operations for the years ended December 31, 2008 and
December 31, 2007
|
F-5
|
||
Consolidated
Statements of Stockholders’ Equity (Deficit) for the years ended December
31, 2008 and December 31, 2007
|
F-6
|
||
Consolidated
Statements of Cash Flows for the years ended December 31, 2008 and
December 31, 2007
|
F-7
|
||
Notes
to the Consolidated Financial Statements
|
F-8
|
||
Unaudited
Consolidated Financial Statements of Neoprobe Corporation
|
|||
Consolidated
Balance Sheets as of September 30, 2009 (unaudited) and December 31,
2008
|
F-36
|
||
Consolidated
Statements of Operations for the Three-Month and Nine-Month Periods Ended
September 30, 2009 and September 30, 2008 (unaudited)
|
F-38
|
||
Consolidated
Statement of Stockholders’ Deficit for the Nine-Month Period Ended
September 30, 2009 (unaudited)
|
F-39
|
||
Consolidated
Statements of Cash Flows for the Nine-Month Periods Ended September 30,
2009 and September 30, 2008 (unaudited)
|
F-40
|
||
Notes
to the Consolidated Financial Statements (Unaudited)
|
F-41
|
ASSETS
|
2008
|
2007
|
||||||
Current
assets:
|
||||||||
Cash
|
$ | 3,565,837 | $ | 1,540,220 | ||||
Available-for-sale
securities
|
495,383 | - | ||||||
Accounts
receivable, net
|
1,626,065 | 1,560,877 | ||||||
Inventory
|
544,126 | 690,452 | ||||||
Prepaid
expenses and other
|
573,573 | 247,035 | ||||||
Assets
associated with discontinued operations
|
435,740 | 607,984 | ||||||
Total
current assets
|
7,240,724 | 4,646,568 | ||||||
Property
and equipment
|
1,940,748 | 1,733,077 | ||||||
Less
accumulated depreciation and amortization
|
1,593,501 | 1,528,667 | ||||||
347,247 | 204,410 | |||||||
Patents
and trademarks
|
459,431 | 456,867 | ||||||
Less
accumulated amortization
|
433,358 | 425,506 | ||||||
26,073 | 31,361 | |||||||
Other
assets
|
594,449 | 527,634 | ||||||
Other
assets associated with discontinued operations
|
1,410,957 | 1,652,974 | ||||||
Total
assets
|
$ | 9,619,450 | $ | 7,062,947 |
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
2008
|
2007
|
||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 725,820 | $ | 771,807 | ||||
Accrued
liabilities and other
|
900,796 | 786,815 | ||||||
Capital
lease obligations, current portion
|
9,084 | 14,592 | ||||||
Deferred
revenue, current portion
|
526,619 | 451,512 | ||||||
Notes
payable to finance companies
|
137,857 | 124,770 | ||||||
Liabilities
associated with discontinued operations
|
22,280 | 21,412 | ||||||
Total
current liabilities
|
2,322,456 | 2,170,908 | ||||||
Capital
lease obligations
|
11,095 | 2,422 | ||||||
Deferred
revenue
|
490,165 | 623,640 | ||||||
Note
payable to CEO, net of discounts of $76,294 and $95,786,
respectively
|
923,706 | 904,214 | ||||||
Notes
payable to investors, net of discounts of $5,001,149 and $2,600,392,
respectively
|
4,998,851 | 4,399,608 | ||||||
Derivative
liabilities
|
853,831 | 2,853,476 | ||||||
Other
liabilities
|
45,071 | 52,273 | ||||||
Total
liabilities
|
9,645,175 | 11,006,541 | ||||||
Commitments
and contingencies
|
||||||||
Preferred
stock; $.001 par value; 5,000,000 shares authorized; 3,000 Series A
shares, par value $1,000, issued and outstanding at December 31, 2008;
none outstanding at December 31, 2007
|
3,000,000 | - | ||||||
Stockholders’
deficit:
|
||||||||
Common
stock; $.001 par value; 150,000,000 shares authorized; 70,862,641 and
67,240,030 shares issued and outstanding at December 31, 2008 and 2007,
respectively
|
70,863 | 67,240 | ||||||
Additional
paid-in capital
|
145,742,044 | 136,765,697 | ||||||
Accumulated
deficit
|
(148,840,015 | ) | (140,776,531 | ) | ||||
Unrealized
gain on available-for-sale securities
|
1,383 | - | ||||||
Total
stockholders’ deficit
|
(3,025,725 | ) | (3,943,594 | ) | ||||
Total
liabilities and stockholders’ deficit
|
$ | 9,619,450 | $ | 7,062,947 |
Years Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Revenues:
|
||||||||
Net
sales
|
$ | 7,417,751 | $ | 6,773,442 | ||||
License
and other revenue
|
171,750 | - | ||||||
Total
revenues
|
7,589,501 | 6,773,442 | ||||||
Cost
of goods sold
|
2,845,498 | 2,901,581 | ||||||
Gross
profit
|
4,744,003 | 3,871,861 | ||||||
Operating
expenses:
|
||||||||
Research
and development
|
4,286,474 | 2,506,467 | ||||||
Selling,
general and administrative
|
2,965,342 | 2,380,181 | ||||||
Total
operating expenses
|
7,251,816 | 4,886,648 | ||||||
Loss
from operations
|
(2,507,813 | ) | (1,014,787 | ) | ||||
Other
income (expense):
|
||||||||
Interest
income
|
60,808 | 70,659 | ||||||
Interest
expense
|
(1,744,825 | ) | (2,283,585 | ) | ||||
Loss
on extinguishment of debt
|
- | (859,955 | ) | |||||
Change
in derivative liabilities
|
(451,381 | ) | (247,876 | ) | ||||
Other
|
11,308 | (4,487 | ) | |||||
Total
other expense, net
|
(2,124,090 | ) | (3,325,244 | ) | ||||
Loss
from continuing operations
|
(4,631,903 | ) | (4,340,031 | ) | ||||
Discontinued
operations:
|
||||||||
Loss
from operations
|
(534,323 | ) | (748,181 | ) | ||||
Net
loss
|
$ | (5,166,226 | ) | $ | (5,088,212 | ) | ||
Loss
per common share (basic):
|
||||||||
Continuing
operations
|
$ | (0.07 | ) | $ | (0.07 | ) | ||
Discontinued
operations
|
$ | (0.01 | ) | $ | (0.01 | ) | ||
Loss
per common share (diluted):
|
||||||||
Continuing
operations
|
$ | (0.07 | ) | $ | (0.07 | ) | ||
Discontinued
operations
|
$ | (0.01 | ) | $ | (0.01 | ) | ||
Weighted
average shares outstanding:
|
||||||||
Basic
|
68,594,172 | 62,921,491 | ||||||
Diluted
|
68,594,172 | 62,921,491 |
Common Stock
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other
Comprehensive
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Total
|
|||||||||||||||||||
Balance,
December 31, 2006
|
59,624,379 | $ | 59,624 | $ | 135,330,668 | $ | (135,688,319 | ) | $ | - | $ | (298,027 | ) | |||||||||||
Cancelled
restricted stock that did not vest
|
(130,000 | ) | (130 | ) | - | - | - | (130 | ) | |||||||||||||||
Issued
stock to 401(k) plan at $0.28
|
107,313 | 108 | 29,423 | - | - | 29,531 | ||||||||||||||||||
Issued
stock in connection with stock purchase agreement, net of
costs
|
7,588,338 | 7,588 | 1,703,953 | - | - | 1,711,541 | ||||||||||||||||||
Issued
stock as fees to an investment banking firm
|
50,000 | 50 | 11,950 | - | - | 12,000 | ||||||||||||||||||
Effect
of beneficial conversion feature of convertible promissory
note
|
- | - | 86,587 | - | - | 86,587 | ||||||||||||||||||
Issued
warrants to purchase common stock
|
- | - | 175,719 | - | - | 175,719 | ||||||||||||||||||
Repurchased
warrants related to extinguishment of debt
|
- | - | (675,000 | ) | - | - | (675,000 | ) | ||||||||||||||||
Stock
compensation expense
|
- | - | 102,397 | - | - | 102,397 | ||||||||||||||||||
Net
loss
|
- | - | - | (5,088,212 | ) | - | (5,088,212 | ) | ||||||||||||||||
Balance,
December 31, 2007
|
67,240,030 | 67,240 | 136,765,697 | (140,776,531 | ) | - | (3,943,594 | ) | ||||||||||||||||
Issued
restricted stock to employees
|
480,000 | 480 | (30 | ) | - | - | 450 | |||||||||||||||||
Issued
stock to investor advisory service firms
|
117,500 | 118 | 78,433 | - | - | 78,551 | ||||||||||||||||||
Issued
stock to 401(k) plan at $0.26
|
114,921 | 115 | 29,916 | - | - | 30,031 | ||||||||||||||||||
Issued
stock upon exercise of warrants
|
2,365,190 | 2,365 | 167,441 | - | - | 169,806 | ||||||||||||||||||
Issued
stock upon exercise of options
|
185,000 | 185 | 61,715 | - | - | 61,900 | ||||||||||||||||||
Issued
stock as a commitment fee in connection with a stock purchase
agreement
|
360,000 | 360 | 215,640 | - | - | 216,000 | ||||||||||||||||||
Paid
preferred stock issuance costs
|
- | - | (180,000 | ) | - | - | (180,000 | ) | ||||||||||||||||
Paid
common stock issuance costs
|
- | - | (900 | ) | - | - | (900 | ) | ||||||||||||||||
Issued
warrants to purchase common stock
|
- | - | 2,473,087 | (1,130,629 | ) | - | 1,342,458 | |||||||||||||||||
Effect
of beneficial conversion feature of convertible promissory
note
|
- | - | 1,443,845 | - | - | 1,443,845 | ||||||||||||||||||
Effect
of beneficial conversion feature of convertible preferred
stock
|
- | - | 1,550,629 | (1,550,629 | ) | - | - | |||||||||||||||||
Effect
of put option feature of convertible preferred stock
|
- | - | - | (216,000 | ) | - | (216,000 | ) | ||||||||||||||||
Reclassified
derivative liabilities
|
- | - | 2,924,994 | - | - | 2,924,994 | ||||||||||||||||||
Stock
compensation expense
|
- | - | 211,577 | - | - | 211,577 | ||||||||||||||||||
Comprehensive
income (loss):
|
||||||||||||||||||||||||
Net
loss
|
- | - | - | (5,166,226 | ) | - | (5,166,226 | ) | ||||||||||||||||
Unrealized
gain on available-for- sale securities
|
- | - | - | - | 1,383 | 1,383 | ||||||||||||||||||
Total
comprehensive loss
|
- | - | - | - | - | (5,164,843 | ) | |||||||||||||||||
Balance,
December 31, 2008
|
70,862,641 | $ | 70,863 | $ | 145,742,044 | $ | (148,840,015 | ) | $ | 1,383 | $ | (3,025,725 | ) |
Years Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (5,166,226 | ) | $ | (5,088,212 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation
of property and equipment
|
183,209 | 171,713 | ||||||
Amortization
of intangible assets
|
225,143 | 233,006 | ||||||
Loss
on disposal and abandonment of assets
|
30,850 | 22,551 | ||||||
Amortization
of debt discount and debt offering costs
|
706,064 | 1,406,195 | ||||||
Provision
for bad debts
|
849 | 1,000 | ||||||
Stock
compensation expense
|
211,577 | 102,397 | ||||||
Loss
on extinguishment of debt
|
- | 859,955 | ||||||
Change
in derivative liabilities
|
451,381 | 247,876 | ||||||
Other
|
130,341 | 29,400 | ||||||
Change
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(23,009 | ) | (376,821 | ) | ||||
Inventory
|
93,372 | (166,838 | ) | |||||
Prepaid
expenses and other assets
|
131,039 | 177,351 | ||||||
Accounts
payable
|
(46,865 | ) | 109,797 | |||||
Accrued
liabilities and other liabilities
|
108,525 | 319,337 | ||||||
Deferred
revenue
|
(58,368 | ) | 686,089 | |||||
Net
cash used in operating activities
|
(3,022,118 | ) | (1,265,204 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchases
of available-for-sale securities
|
(690,000 | ) | - | |||||
Maturities
of available-for-sale securities
|
196,000 | - | ||||||
Purchases
of property and equipment
|
(116,352 | ) | (41,274 | ) | ||||
Proceeds
from sales of property and equipment
|
495 | - | ||||||
Patent
and trademark costs
|
(17,486 | ) | (6,736 | ) | ||||
Net
cash used in investing activities
|
(627,343 | ) | (48,010 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of preferred stock
|
3,000,000 | - | ||||||
Payment
of preferred stock offering costs
|
(180,000 | ) | - | |||||
Proceeds
from issuance of common stock
|
232,156 | 1,900,000 | ||||||
Payment
of common stock offering costs
|
(900 | ) | (22,674 | ) | ||||
Proceeds
from notes payable
|
3,000,000 | 8,000,000 | ||||||
Payment
of debt issuance costs
|
(200,154 | ) | (565,004 | ) | ||||
Payment
of notes payable
|
(158,304 | ) | (8,271,702 | ) | ||||
Payments
under capital leases
|
(17,720 | ) | (14,841 | ) | ||||
Payment
for repurchase of warrants
|
- | (675,000 | ) | |||||
Net
cash provided by financing activities
|
5,675,078 | 350,779 | ||||||
Net
increase (decrease) in cash
|
2,025,617 | (962,435 | ) | |||||
Cash,
beginning of year
|
1,540,220 | 2,502,655 | ||||||
Cash,
end of year
|
$ | 3,565,837 | $ | 1,540,220 |
1.
|
Organization
and Summary of Significant Accounting
Policies:
|
|
a.
|
Organization and Nature of
Operations: Neoprobe Corporation (Neoprobe, the company,
or we), a Delaware corporation, is engaged in the development and
commercialization of innovative surgical and diagnostic products that
enhance patient care by meeting the critical decision making needs of
physicians. We currently manufacture a line of gamma radiation
detection equipment used in the application of sentinel lymph node biopsy
(SLNB).
|
|
b.
|
Principles of
Consolidation: Our consolidated financial statements
include the accounts of Neoprobe, our wholly-owned subsidiary, Cardiosonix
Ltd. (Cardiosonix), and our majority-owned subsidiary, Cira
Bio. All significant inter-company accounts were eliminated in
consolidation.
|
|
c.
|
Use of
Estimates: The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
|
|
d.
|
Financial Instruments and Fair
Value: We adopted Statement of Financial Accounting
Standards (SFAS) No. 157, Fair Value
Measurements, for financial assets and liabilities as of January 1,
2008. SFAS No. 157 establishes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to unobservable inputs (Level 3
measurements). The three levels of the fair value hierarchy
under SFAS No. 157 are described
below:
|
|
(1)
|
Cash,
accounts receivable, accounts payable, and accrued
liabilities: The carrying amounts approximate fair value
because of the short maturity of these
instruments.
|
|
(2)
|
Available-for-sale
securities: Available-for-sale securities are recorded at fair
value. Unrealized holding gains and losses on
available-for-sale securities are excluded from earnings and are reported
as a separate component of other comprehensive income (loss) until
realized. Realized gains and losses from the sale of
available-for-sale securities are determined on a specific identification
basis.
|
|
A
decline in the market value of any available-for-sale security below cost
that is deemed to be other than temporary results in a reduction in
carrying amount to fair value. The impairment is charged to
earnings and a new cost basis for the security is
established. Premiums and discounts are amortized or accreted
over the life of the related available-for-sale security as an adjustment
to yield using the effective interest method. Dividend and
interest income are recognized when
earned.
|
|
Available-for-sale
securities are accounted for on a specific identification
basis. As of December 31, 2008, we held available-for-sale
securities with an aggregate fair value of $495,383, including $1,383 of
net unrealized gains recorded in accumulated other comprehensive
income. As of December 31, 2008, all of our available-for-sale
securities were invested in short-term certificates of deposit with
maturity dates within 1 year. Available-for-sale securities
were classified as current based on their maturity dates as well as our
intent to use them to fund short-term working capital needs. We
held no available-for-sale securities at December 31,
2007.
|
|
(3)
|
Notes
payable to finance companies: The fair value of our debt is
estimated by discounting the future cash flows at rates currently offered
to us for similar debt instruments of comparable maturities by banks or
finance companies. At December 31, 2008 and 2007, the carrying
values of these instruments approximate fair
value.
|
|
(4)
|
Note
payable to CEO: The carrying value of our debt is presented as
the face amount of the note less the unamortized discount related to the
initial estimated fair value of the warrants to purchase common stock
issued in connection with the note. At December 31, 2008, the
note payable to our CEO had an estimated fair value of $1.8
million. At December 31, 2007, the carrying value of the note
payable to our CEO approximated fair
value.
|
|
(5)
|
Notes
payable to outside investors: The carrying value of our debt is
presented as the face amount of the notes less the unamortized discounts
related to the fair value of the beneficial conversion feature, the
initial estimated fair value of the put options embedded in the notes and
the initial estimated fair value of the warrants to purchase common stock
issued in connection with the notes. At December 31, 2008, the
notes payable to outside investors had an estimated fair value of $15.9
million. At December 31, 2007, the carrying value of the notes
payable to outside investors approximated fair
value.
|
|
e.
|
Cash and Cash
Equivalents: There were no cash equivalents at December
31, 2008 or 2007. No cash was restricted as of December 31,
2008 or 2007.
|
|
f.
|
Inventory: All
components of inventory are valued at the lower of cost (first-in,
first-out) or market. We adjust inventory to market value when
the net realizable value is lower than the carrying cost of the
inventory. Market value is determined based on recent sales
activity and margins achieved. During 2008 and 2007, we wrote
off $4,000 and $37,000, respectively, of excess and obsolete
materials.
|
2008
|
2007
|
|||||||
Materials
and component parts
|
$ | 112,637 | $ | 176,531 | ||||
Work-in-process
|
- | 151,741 | ||||||
Finished
goods
|
431,489 | 362,180 | ||||||
$ | 544,126 | $ | 690,452 |
|
g.
|
Property and
Equipment: Property and equipment are stated at
cost. Property and equipment under capital leases are stated at
the present value of minimum lease payments. Depreciation is
computed using the straight-line method over the estimated useful lives of
the depreciable assets ranging from 2 to 7 years, and includes
amortization related to equipment under capital
leases. Maintenance and repairs are charged to expense as
incurred, while renewals and improvements are
capitalized. Property and equipment includes $44,000 and
$57,000 of equipment under capital leases with accumulated amortization of
$25,000 and $47,000 at December 31, 2008 and 2007,
respectively. During 2008 and 2007, we recorded losses of
$31,000 and $21,000, respectively, on the disposal of property and
equipment.
|
Useful Life
|
2008
|
2007
|
||||||||
Production
machinery and equipment
|
5 years
|
$ | 623,107 | $ | 606,492 | |||||
Other
machinery and equipment, primarily research equipment, loaners and
computers
|
2 – 5 years
|
727,483 | 584,076 | |||||||
Furniture
and fixtures
|
7 years
|
349,369 | 340,007 | |||||||
Software
|
3 years
|
166,107 | 127,820 | |||||||
Leasehold
improvements
|
Life of Lease1
|
74,682 | 74,682 | |||||||
$ | 1,940,748 | $ | 1,733,077 |
|
h.
|
Intangible
Assets: Intangible assets consist primarily of patents
and other acquired intangible assets. Intangible assets are
stated at cost, less accumulated amortization. Patent costs are
amortized using the straight-line method over the estimated useful lives
of the patents of 5 to 15 years. Patent application costs are
deferred pending the outcome of patent applications. Costs
associated with unsuccessful patent applications and abandoned
intellectual property are expensed when determined to have no recoverable
value. Acquired technology costs are amortized using the
straight-line method over the estimated useful life of seven
years. We evaluate the potential alternative uses of all
intangible assets, as well as the recoverability of the carrying values of
intangible assets on a recurring
basis.
|
December 31, 2008
|
December 31, 2007
|
|||||||||||||||||
Wtd
Avg
Life
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
||||||||||||||
Patents
and trademarks
|
1.2 yrs
|
$ | 459,431 | $ | 433,358 | $ | 456,867 | $ | 425,506 |
|
During
2008 and 2007, we recorded $22,000 and $30,000, respectively, of
intangible asset amortization in general and administrative
expenses. During 2007, we wrote off $1,000 of intangible assets
related to patents and trademarks that were determined to have no
recoverable value. No intangible assets were written off during
2008.
|
Estimated
Amortization
Expense
|
||||
For
the year ended 12/31/2009
|
$ | 13,325 | ||
For
the year ended 12/31/2010
|
2,393 | |||
For
the year ended 12/31/2011
|
1,088 | |||
For
the year ended 12/31/2012
|
885 | |||
For
the year ended 12/31/2013
|
126 |
|
i.
|
Impairment or Disposal of
Long-Lived Assets: We account for the impairment of long-lived
assets in accordance with the provisions of SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to future net undiscounted cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value
less costs to sell. We recorded no impairment charges during 2008 or
2007.
|
|
j.
|
Other Assets: Other
assets consist primarily of deferred debt issuance costs. We defer costs
associated with the issuance of notes payable and amortize those costs
over the period of the notes using the effective interest method. In 2008
and 2007, we incurred $200,000 and $565,000, respectively, of debt
issuance costs related to notes payable. During 2007, we expensed $209,000
of deferred debt issuance costs related to debt refinancing activities.
Other assets include deferred debt issuance costs of $588,000 and $496,000
at December 31, 2008 and 2007, respectively. See Note
8.
|
|
k.
|
Deferred Revenue:
Deferred revenue as of December 31, 2008 and 2007 consists primarily of
$500,000 in non-refundable license fees and reimbursement of past research
and development expenses which EES paid us as consideration for extending
our distribution agreement with them. We intend to recognize the $500,000
payment as license revenue on a straight-line basis over the extended term
of the agreement, or January 2009 through December 2013. In addition,
deferred revenue as of December 31, 2008 and 2007 includes revenues from
the sale of extended warranties covering our medical devices over periods
of one to four years. We recognize revenue from extended warranty sales on
a pro-rata basis over the period covered by the extended
warranty.
|
|
l.
|
Derivatives: We
account for
derivatives in accordance with SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which provides accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts. Derivative instruments
embedded in contracts, to the extent not already a free-standing contract,
are required to be bifurcated from the debt instrument and accounted for
separately. All derivatives are recorded on the consolidated balance sheet
at fair value in accordance with current accounting guidelines for such
complex financial instruments. See Note
8.
|
m.
|
Revenue
Recognition:
|
|
(1)
|
Product Sales: We derive
revenues primarily from sales of our medical devices. Our standard
shipping terms are FOB shipping point, and title and risk of loss passes
to the customer upon delivery to a common carrier. We generally recognize
sales revenue when the products are shipped and the earnings process has
been completed. However, in cases where product is shipped but the
earnings process is not yet completed, revenue is deferred until it has
been determined that the earnings process has been completed. Our
customers generally have no right to return products purchased in the
ordinary course of business.
|
|
(2)
|
Extended Warranty
Revenue: We derive revenues from the sale of extended
warranties covering our medical devices over periods of one to four
years. We recognize revenue from extended warranty sales on a
pro-rata basis over the period covered by the extended
warranty. Expenses related to the extended warranty are
recorded when incurred.
|
|
(3)
|
Service
Revenue: We derive revenues from the repair and service
of our medical devices that are in use beyond the term of the original
warranty and that are not covered by an extended warranty. We
recognize revenue from repair and service activities once the activities
are complete and the repaired or serviced device has been shipped back to
the customer.
|
|
n.
|
Research and Development
Costs: All costs related to research and development are
expensed as incurred.
|
|
o.
|
Stock-Based
Compensation: At December 31, 2008, we have three
stock-based compensation plans. Under the Amended and Restated
Stock Option and Restricted Stock Purchase Plan (the Amended Plan), the
1996 Stock Incentive Plan (the 1996 Plan), and the Second Amended and
Restated 2002 Stock Incentive Plan (the 2002 Plan), we may grant incentive
stock options, nonqualified stock options, and restricted stock awards to
full-time employees, and nonqualified stock options and restricted stock
awards may be granted to our consultants and agents. Total
shares authorized under each plan are 2 million shares, 1.5 million shares
and 7 million shares, respectively. Although options are still
outstanding under the Amended Plan and the 1996 Plan, these plans are
considered expired and no new grants may be made from
them. Under all three plans, the exercise price of each option
is greater than or equal to the closing market price of our common stock
on the date of the grant.
|
2008
|
2007
|
|||||||
Expected
volatility
|
93%-104%
|
102%-104% | ||||||
Weighted-average
volatility
|
101%
|
103% | ||||||
Expected
dividends
|
- | - | ||||||
Expected
term
|
5.9
years
|
5.8
years
|
||||||
Risk-free
rate
|
3.4% | 4.6% |
Year Ended December 31, 2008
|
|||||||||||||
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding
at beginning of period
|
5,495,473 | $ | 0.42 | ||||||||||
Granted
|
576,000 | 0.42 | |||||||||||
Exercised
|
(185,000 | ) | 0.33 | ||||||||||
Forfeited
|
- | - | |||||||||||
Expired
|
(266,973 | ) | 1.02 | ||||||||||
Outstanding
at end of period
|
5,619,500 | $ | 0.40 |
5.3
years
|
$ | 1,102,325 | |||||||
Exercisable
at end of period
|
4,880,167 | $ | 0.40 |
4.8
years
|
$ | 958,712 |
Year Ended
December 31, 2008
|
||||||||
Number of
Shares
|
Weighted
Average
Grant-Date
Fair Value
|
|||||||
Unvested
at beginning of period
|
- | - | ||||||
Granted
|
480,000 | $ | 0.38 | |||||
Vested
|
(7,000 | ) | 0.65 | |||||
Forfeited
|
- | - | ||||||
Unvested
at end of period
|
473,000 | $ | 0.37 |
|
p.
|
Income
Taxes: Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. Due to the uncertainty
surrounding the realization of the deferred tax assets in future tax
returns, all of the deferred tax assets have been fully offset by a
valuation allowance at December 31, 2008 and 2007. See Note
9.
|
|
q.
|
Recent Accounting
Developments: In September 2006, the FASB issued SFAS No. 157,
Fair Value
Measurements (SFAS No. 157). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value
measurements. SFAS No. 157 applies under other accounting pronouncements
that require or permit fair value measurements, the FASB having previously
concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, SFAS No. 157 does not require
any new fair value measurements. SFAS No. 157 was initially effective for
Neoprobe beginning January 1, 2008. In February 2008, the FASB approved
the issuance of FASB Staff Position (FSP) FAS 157-2. FSP FAS 157-2 allows
entities to electively defer the effective date of SFAS No. 157 until
January 1, 2009 for nonfinancial assets and nonfinancial liabilities
except those items recognized or disclosed at fair value on at least an
annual basis. We will apply the fair value measurement and disclosure
provisions of SFAS No. 157 to nonfinancial assets and liabilities
effective January 1, 2009. The application of such is not expected to be
material to our consolidated results of operations or financial condition.
See Note 1(d) and Note 3 for a discussion regarding the January 1, 2008
implementation of SFAS No. 157 relating to our financial assets and
liabilities.
|
2.
|
Discontinued
Operations:
|
December 31,
2008
|
December 31,
2007
|
|||||||
Accounts
receivable, net
|
$ | 18,005 | $ | 61,033 | ||||
Inventory
|
417,735 | 546,951 | ||||||
Current
assets associated with discontinued operations
|
435,740 | 607,984 | ||||||
Property
and equipment, net of accumulated depreciation
|
43,545 | 83,193 | ||||||
Patents
and trademarks, net of accumulated amortization
|
1,367,412 | 1,569,781 | ||||||
Other
assets associated with discontinued operations
|
1,410,957 | 1,652,974 | ||||||
Assets
associated with discontinued operations
|
$ | 1,846,697 | $ | 2,260,958 | ||||
Accounts
payable
|
$ | 5,400 | $ | 6,278 | ||||
Accrued
expenses
|
16,880 | 15,134 | ||||||
Liabilities
associated with discontinued operations
|
$ | 22,280 | $ | 21,412 |
Years Ended
December 31,
|
||||||||
2008
|
2007
|
|||||||
Net
sales
|
$ | 296,769 | $ | 351,369 | ||||
Cost
of goods sold
|
164,734 | 283,125 | ||||||
Gross
profit
|
132,035 | 68,244 | ||||||
Operating
expenses:
|
||||||||
Research
and development
|
219,148 | 359,072 | ||||||
Selling,
general and administrative
|
447,192 | 457,163 | ||||||
Total
operating expenses
|
666,340 | 816,235 | ||||||
Other
income (expense)
|
(18 | ) | (190 | ) | ||||
Loss
from discontinued operations
|
$ | (534,323 | ) | $ | (748,181 | ) |
3.
|
Fair
Value Hierarchy:
|
Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2008
|
||||||||||||||||
Quoted Prices
in Active
Markets for
Identical
Assets and
Liabilities
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
Balance as of
December 31,
|
|||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
2008
|
||||||||||||
Assets:
|
||||||||||||||||
Available-for-sale
securities
|
$ | 495,383 | $ | - | $ | - | $ | 495,383 | ||||||||
Liabilities:
|
||||||||||||||||
Derivative
liabilities related to conversion and put options
|
$ | - | $ | - | $ | 853,831 | $ | 853,831 |
Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2007
|
||||||||||||||||
Quoted Prices
in Active
Markets for
Identical
Assets and
Liabilities
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
Balance as of
December 31,
|
|||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
2007
|
||||||||||||
Liabilities:
|
||||||||||||||||
Derivative
liabilities related to warrants
|
$ | - | $ | 1,254,404 | $ | - | $ | 1,254,404 | ||||||||
Derivative
liabilities related to conversion and put options
|
- | - | 1,599,072 | 1,599,072 | ||||||||||||
Total
derivative liabilities
|
$ | - | $ | 1,254,404 | $ | 1,599,072 | $ | 2,853,476 |
Description
|
Balance at
December 31,
2007
|
Unrealized
Losses
|
Issuance of
Put Options
Related to
the Montaur
Notes and
Preferred
Stock
|
Transfers In
and/or (Out)
(See Note 7)
|
Balance at
December 31,
2008
|
|||||||||||||||
Derivative
liabilities related to conversion and put options
|
$ | 1,599,072 | $ | 180,727 | $ | 473,968 | $ | (1,399,936 | ) | $ | 853,831 |
4.
|
Earnings
Per Share:
|
Year Ended
December 31, 2008
|
Year Ended
December 31, 2007
|
|||||||||||||||
Basic
Earnings
Per Share
|
Diluted
Earnings
Per Share
|
Basic
Earnings
Per Share
|
Diluted
Earnings
Per Share
|
|||||||||||||
Outstanding
shares
|
70,862,641 | 70,862,641 | 67,240,030 | 67,240,030 | ||||||||||||
Effect
of weighting changes in outstanding shares
|
(1,795,469 | ) | (1,795,469 | ) | (4,318,539 | ) | (4,318,539 | ) | ||||||||
Contingently
issuable shares
|
(473,000 | ) | (473,000 | ) | - | - | ||||||||||
Adjusted
shares
|
68,594,172 | 68,594,172 | 62,921,491 | 62,921,491 |
5.
|
Accounts
Receivable and Concentrations of Credit
Risk:
|
2008
|
2007
|
|||||||
Trade
|
$ | 1,585,709 | $ | 1,548,912 | ||||
Other
|
40,356 | 11,965 | ||||||
$ | 1,626,065 | $ | 1,560,877 |
6.
|
Accrued
Liabilities and Other:
|
2008
|
2007
|
|||||||
Contracted
services and other
|
$ | 584,004 | $ | 441,933 | ||||
Compensation
|
220,487 | 207,904 | ||||||
Warranty
reserve
|
62,261 | 104,365 | ||||||
Interest
|
18,000 | 9,409 | ||||||
Inventory
purchases
|
16,044 | 23,204 | ||||||
$ | 900,796 | $ | 786,815 |
2008
|
2007
|
|||||||
Warranty
reserve at beginning of year
|
$ | 104,365 | $ | 22,965 | ||||
Provision
for warranty claims and changes in reserve for warranties
|
32,194 | 107,423 | ||||||
Payments
charged against the reserve
|
(74,298 | ) | (26,023 | ) | ||||
Warranty
reserve at end of year
|
$ | 62,261 | $ | 104,365 |
9.
|
Income
Taxes:
|
As of December 31,
|
||||||||
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Federal
net operating loss carryforwards
|
$ | 30,071,041 | $ | 32,428,173 | ||||
State
net operating loss carryforwards
|
1,945,601 | 2,229,635 | ||||||
R&D
credit carryforwards
|
4,781,584 | 4,906,697 | ||||||
Temporary
differences
|
979,828 | 552,981 | ||||||
Deferred
tax assets before valuation allowance
|
37,778,055 | 40,117,486 | ||||||
Valuation
allowance
|
(37,778,055 | ) | (40,117,486 | ) | ||||
Net
deferred tax assets
|
$ | - | $ | - |
Years Ended December 31,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Benefit
at statutory rate
|
$ | (1,756,517 | ) | (34.0 | )% | $ | (1,729,992 | ) | (34.0 | )% | ||||||
Adjustments
to valuation allowance
|
1,582,238 | 30.6 | % | 1,502,950 | 29.5 | % | ||||||||||
Other
|
174,279 | 3.4 | % | 227,042 | 4.5 | % | ||||||||||
Benefit
per financial statements
|
$ | - | $ | - | - |
10.
|
Preferred
Stock:
|
11.
|
Equity:
|
|
a.
|
Stock
Warrants: At December 31, 2008, there are 23.4 million
warrants outstanding to purchase our common stock. The warrants
are exercisable at prices ranging from $0.31 to $0.85 per share with a
weighted average exercise price per share of
$0.45.
|
Exercise
Price
|
Number of
Warrants
|
Expiration Date
|
||||||||
Series
Q
|
$ | 0.50 | 375,000 |
March
2009
|
||||||
Series
U
|
$ | 0.46 | 1,600,000 |
December 2009
|
||||||
Series
V
|
$ | 0.31 | 500,000 |
July
2012
|
||||||
Series
V
|
$ | 0.32 | 500,000 |
December
2012
|
||||||
Series
W
|
$ | 0.32 | 6,000,000 |
December
2012
|
||||||
Series
X
|
$ | 0.46 | 8,333,333 |
April
2013
|
||||||
Series
Y
|
$ | 0.575 | 6,000,000 |
December
2013
|
||||||
Series
Z
|
$ | 0.70 | 60,000 |
August
2013
|
||||||
Series
Z
|
$ | 0.85 | 60,000 |
August
2013
|
||||||
$ | 0.45 | 23,428,333 |
|
b.
|
Common Stock Purchase
Agreement: In December 2006, we entered into a Common
Stock Purchase Agreement with Fusion Capital, an Illinois limited
liability company, to sell $6.0 million of our common stock to Fusion
Capital over a 24-month period which ended on November 21,
2008. Through November 21, 2008, we sold to Fusion Capital
7,568,671 shares for proceeds of $1.9 million under the
agreement. We have not sold any shares under the agreement
since November 13, 2007. In December 2008, we entered into the
First Amendment to the Common Stock Purchase Agreement (the First
Amendment) which gave us a right to sell to Fusion Capital before March 1,
2011, an additional $6.0 million of our common stock along with the $4.1
million of the unsold balance of the $6.0 million we originally had the
right to sell to Fusion Capital under the agreement prior to the First
Amendment. After giving effect to the First Amendment, the
remaining aggregate amount of our common stock we can now sell to Fusion
Capital is $10.1 million. In respect of sales to Fusion Capital
that we may make in the future under the agreement as amended, we have
authorized a total of 10,654,000 shares of our common stock for sale to
Fusion Capital.
|
|
c.
|
Common Stock
Reserved: As of December 31, 2008, we have reserved
59,793,178 shares of authorized common stock for the exercise of all
outstanding options, warrants, convertible debt, and convertible preferred
stock.
|
12.
|
Segments
and Subsidiary Information:
|
|
a.
|
Segments: We
report information about our operating segments using the “management
approach” in accordance with SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information. This information
is based on the way management organizes and reports the segments within
the enterprise for making operating decisions and assessing
performance. Our reportable segments are identified based on
differences in products, services and markets served. There
were no inter-segment sales. We own or have rights to
intellectual property involving two primary types of medical device
products, including gamma detection instruments currently used primarily
in the application of SLNB, and blood flow measurement
devices. We also own or have rights to intellectual property
related to several drug and therapy
products.
|
($ amounts in thousands)
2008
|
Gamma
Detection
Devices
|
Blood
Flow
Devices
|
Drug and
Therapy
Products
|
Corporate
|
Total
|
|||||||||||||||
Net
sales:
|
||||||||||||||||||||
United
States1
|
$ | 7,422 | $ | — | $ | — | $ | — | $ | 7,422 | ||||||||||
International
|
167 | — | — | — | 167 | |||||||||||||||
Research
and development expenses
|
948 | — | 3,338 | — | 4,286 | |||||||||||||||
Selling,
general and administrative expenses, excluding depreciation and
amortization2
|
17 | — | — | 2,780 | 2,797 | |||||||||||||||
Depreciation
and amortization
|
120 | — | 2 | 46 | 168 | |||||||||||||||
Income
(loss) from operations3
|
3,658 | — | (3,340 | ) | (2,826 | ) | (2,508 | ) | ||||||||||||
Other
income (expense)4
|
— | — | — | (2,124 | ) | (2,124 | ) | |||||||||||||
Loss
from discontinued operations
|
— | (534 | ) | — | — | (534 | ) | |||||||||||||
Total
assets, net of depreciation and amortization:
|
||||||||||||||||||||
United
States operations
|
2,410 | — | 25 | 5,337 | 7,772 | |||||||||||||||
Discontinued
operations
|
— | 1,847 | — | — | 1,847 | |||||||||||||||
Capital
expenditures
|
9 | — | 18 | 89 | 116 |
($ amounts in thousands)
2007
|
Gamma
Detection
Devices
|
Blood
Flow
Devices
|
Drug and
Therapy
Products
|
Corporate
|
Total
|
|||||||||||||||
Net
sales
|
||||||||||||||||||||
United
States1
|
$ | 6,576 | $ | — | $ | — | $ | — | $ | 6,576 | ||||||||||
International
|
197 | — | — | — | 197 | |||||||||||||||
Research
and development expenses
|
680 | — | 1,826 | — | 2,506 | |||||||||||||||
Selling,
general and administrative expenses, excluding depreciation and
amortization2
|
— | — | — | 2,237 | 2,237 | |||||||||||||||
Depreciation
and amortization
|
99 | — | — | 44 | 143 | |||||||||||||||
Income
(loss) from operations3
|
3,092 | — | (1,826 | ) | (2,281 | ) | (1,015 | ) | ||||||||||||
Other
income (expense)
4
|
— | — | — | (3,325 | ) | (3,325 | ) | |||||||||||||
Loss
from discontinued operations
|
— | (748 | ) | — | — | (748 | ) | |||||||||||||
Total
assets, net of depreciation and amortization:
|
||||||||||||||||||||
United
States operations
|
2,280 | — | 186 | 2,336 | 4,802 | |||||||||||||||
Discontinued
operations
|
— | 2,261 | — | — | 2,261 | |||||||||||||||
Capital
expenditures
|
16 | 9 | — | 16 | 41 |
|
b.
|
Subsidiary: On
December 31, 2001, we acquired 100 percent of the outstanding common
shares of Cardiosonix, an Israeli company. We accounted for the
acquisition under SFAS No. 141, Business Combinations,
and certain provisions of SFAS No. 142, Goodwill and Other Intangible
Assets. In August 2009, the Company’s Board of Directors
decided to discontinue operations of Cardiosonix and to attempt to divest
our Cardiosonix subsidiary. This decision was based on the
determination that the blood flow measurement device segment was no longer
considered a strategic initiative to the Company, due in large part to
positive events in our other development initiatives. Our
consolidated balance sheets and statements of operations have been
restated for all prior periods presented to reflect Cardiosonix as a
discontinued operation. Cash flows associated with the
operation of Cardiosonix have been combined within operating, investing
and financing cash flows, as appropriate, in our consolidated statements
of cash flows. See Note
2.
|
13.
|
Agreements:
|
|
a.
|
Supply
Agreement: In February 2004, we entered into a product
supply agreement with TriVirix International (TriVirix) for the
manufacture of certain of our medical device products. The term
of this agreement expired in February 2008, but was automatically extended
through February 2009, and may continue to be automatically extended for
successive one-year periods. Either party has the right to
terminate the agreement at any time upon 180 days prior written notice, or
may terminate the agreement upon a material breach or repeated
non-material breaches by the other. Total purchases under the
product supply agreement were $1.5 million and $1.2 million for the years
ended December 31, 2008 and 2007, respectively. As of December
31, 2008, we have issued purchase orders under the agreement with TriVirix
for $1.7 million of our products for delivery through December
2009.
|
|
b.
|
Marketing and Distribution
Agreement: During 1999, we entered into a distribution
agreement with EES covering our gamma detection devices used in surgical
radiation detection. The initial five-year term expired
December 31, 2004, with options to extend for two successive two-year
terms. In March 2006, EES exercised its option for a second
two-year term extension of the distribution agreement covering our gamma
detection devices, thus extending the distribution agreement through the
end of 2008. In December 2007, Neoprobe and EES executed an
amendment to the distribution agreement which extended the agreement
through the end of 2013. Under the agreement, we manufacture
and sell our current line of gamma detection device products exclusively
to EES, who distributes the products globally, except in
Japan. EES agreed to purchase minimum quantities of our
products over the first three years of the term of the agreement and to
reimburse us for certain research and development costs and a portion of
our warranty costs. We are obligated to continue certain
product maintenance activities and to provide ongoing regulatory support
for the products.
|
|
c.
|
Research and Development
Agreements: Cardiosonix’s research and development
efforts have been partially financed through grants from the Office of the
Chief Scientist of the Israeli Ministry of Industry and Trade (the
OCS). Through the end of 2004, Cardiosonix received a total of
$775,000 in grants from the OCS. In return for the OCS’s
participation, Cardiosonix is committed to pay royalties to the Israeli
Government at a rate of 3% to 5% of the sales of its products, up to 300%
of the total grants received, depending on the portion of manufacturing
activity that takes place in Israel. There are no future
performance obligations related to the grants received from the
OCS. However, under certain limited circumstances, the OCS may
withdraw its approval of a research program or amend the terms of its
approval. Upon withdrawal of approval, Cardiosonix may be
required to refund the grant, in whole or in part, with or without
interest, as the OCS determines. In January 2006, the OCS
consented to the transfer of manufacturing as long as we comply with the
terms of the OCS statutes under Israeli law. As long as we
maintain at least 10% Israeli content in our blood flow devices, we will
pay a royalty rate of 4% on sales of applicable blood flow devices and
must repay the OCS a total of $1.2 million in
royalties. However, should the amount of Israeli content of our
blood flow device products decrease below 10%, the royalty rate could
increase to 5% and the total royalty payments due could increase to $2.3
million. As such, the total amount we will have to repay the
OCS will likely be 150% to 300% of the amounts of the original
grants. Through December 2008, we have paid the OCS a total of
$66,000 in royalties related to sales of products developed under this
program. As of December 31, 2008, we have accrued obligations
for royalties totaling $6,000.
|
|
d.
|
Employment
Agreements: We maintain employment agreements with five
of our officers. The employment agreements contain change in
control provisions that would entitle each of the officers to 1 to 2.5
times their current annual salaries, vest outstanding restricted stock and
options to purchase common stock, and continue certain benefits if there
is a change in control of our company (as defined) and their employment
terminates. As of December 31, 2008, our maximum contingent
liability under these agreements in such an event is approximately $2.0
million. The employment agreements also provide for severance,
disability and death benefits. See Note
18(c).
|
14.
|
Leases:
|
Capital
Leases
|
Operating
Leases
|
|||||||
2009
|
$ | 10,382 | $ | 98,465 | ||||
2010
|
7,897 | 101,285 | ||||||
2011
|
3,948 | 104,105 | ||||||
2012
|
- | 106,925 | ||||||
2013
|
- | 8,930 | ||||||
22,227 | $ | 419,710 | ||||||
Less
amount representing interest
|
2,048 | |||||||
Present
value of net minimum lease payments
|
20,179 | |||||||
Less
current portion
|
9,084 | |||||||
Capital
lease obligations, excluding current portion
|
$ | 11,095 |
15.
|
Employee
Benefit Plan:
|
16.
|
Supplemental
Disclosure for Statements of Cash
Flows:
|
17.
|
Contingencies:
|
18.
|
Subsequent
Events:
|
|
a.
|
Stock-Based
Compensation: On January 5, 2009, the Compensation,
Nominating and Governance (CNG) Committee of the Board of Directors
granted 165,000 stock options with an exercise price of $0.59 to employees
and directors. Also on January 5, 2009, the CNG Committee
granted 400,000 shares of restricted stock that will vest based on certain
defined performance objectives to David C. Bupp, our President and
CEO. In addition, on February 16, 2009, we granted 50,000 stock
options with an exercise price of $0.65 and 100,000 shares of restricted
stock that will vest based on certain defined performance objectives to
Frederick O. Cope, our Vice President, Pharmaceutical Research and
Clinical Development. On February 27, 2009, the CNG Committee
granted 68,000 stock options with an exercise price of $0.55 to
employees. See Note
1(o).
|
|
b.
|
Warrant
Exercises: During the first quarter of 2009, David C.
Bupp, our President and CEO, exercised Series Q warrants resulting in the
issuance of 50,000 shares of our common stock and from which we received
gross proceeds of $25,000. See Note
11(a).
|
c.
|
Employment Agreements:
During January 2009, we entered into new employment agreements with six
officers. The new agreements have substantially similar terms to the
officers’ previous agreements. See Note
13(d).
|
|
d.
|
Discontinued
Operations: In August 2009, the Company’s Board of
Directors decided to discontinue operations of Cardiosonix and to attempt
to divest our Cardiosonix subsidiary. This decision was based
on the determination that the blood flow measurement device segment was no
longer considered a strategic initiative of the Company, due in large part
to positive events in our other product and drug development
initiatives. See Note 2.
|
19.
|
Supplemental
Information (Unaudited):
|
(Amounts in thousands, except per share data)
|
Years Ended December 31,
|
|||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||
Net
sales
|
$ | 7,418 | $ | 6,773 | $ | 5,445 | $ | 5,579 | $ | 5,264 | ||||||||||
License
and other revenue
|
172 | - | - | - | 600 | |||||||||||||||
Gross
profit
|
4,744 | 3,872 | 3,291 | 3,356 | 3,745 | |||||||||||||||
Research
and development expenses
|
4,286 | 2,506 | 3,095 | 2,618 | 892 | |||||||||||||||
Selling,
general and administrative expenses
|
2,965 | 2,380 | 2,467 | 2,442 | 2,192 | |||||||||||||||
(Loss)
income from operations
|
(2,508 | ) | (1,015 | ) | (2,270 | ) | (1,704 | ) | 660 | |||||||||||
Other
expenses, net
|
(2,124 | ) | (3,325 | ) | (1,283 | ) | (1,278 | ) | (1,535 | ) | ||||||||||
Loss
from continuing operations
|
(4,632 | ) | (4,340 | ) | (3,553 | ) | (2,982 | ) | (875 | ) | ||||||||||
Discontinued
operations
|
(534 | ) | (748 | ) | (1,188 | ) | (1,947 | ) | (2,666 | ) | ||||||||||
Net
loss
|
$ | (5,166 | ) | $ | (5,088 | ) | $ | (4,741 | ) | $ | (4,929 | ) | $ | (3,541 | ) | |||||
Loss
per common share (basic):
|
||||||||||||||||||||
Continuing
operations
|
$ | (0.07 | ) | $ | (0.07 | ) | $ | (0.06 | ) | $ | (0.05 | ) | $ | (0.01 | ) | |||||
Discontinued
operations
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.05 | ) | |||||
Loss
per common share (diluted):
|
||||||||||||||||||||
Continuing
operations
|
$ | (0.07 | ) | $ | (0.07 | ) | $ | (0.06 | ) | $ | (0.05 | ) | $ | (0.01 | ) | |||||
Discontinued
operations
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.05 | ) | |||||
Shares
used in computing loss per common share: (1)
|
||||||||||||||||||||
Basic
|
68,594 | 62,921 | 58,587 | 58,434 | 56,764 | |||||||||||||||
Diluted
|
68,594 | 62,921 | 58,587 | 58,434 | 56,764 |
As
of December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Total
assets
|
$ | 9,619 | $ | 7,063 | $ | 8,034 | $ | 11,570 | $ | 15,366 | ||||||||||
Long-term
obligations
|
7,323 | 8,836 | 4,922 | 6,052 | 8,192 | |||||||||||||||
Accumulated
deficit
|
(148,840 | ) | (140,777 | ) | (135,688 | ) | (130,947 | ) | (126,018 | ) |
(1)
|
Basic
earnings (loss) per share are calculated using the weighted average number
of common shares outstanding during the periods. Diluted
earnings (loss) per share is calculated using the weighted average number
of common shares outstanding during the periods, adjusted for the effects
of unvested restricted stock, convertible securities, options and
warrants, if dilutive.
|
ASSETS
|
September 30,
2009
(unaudited)
|
December 31,
2008
|
||||||
Current
assets:
|
||||||||
Cash
|
$ | 6,031,298 | $ | 3,565,837 | ||||
Available-for-sale
securities
|
— | 495,383 | ||||||
Accounts
receivable, net
|
1,393,420 | 1,626,065 | ||||||
Inventory
|
1,038,407 | 544,126 | ||||||
Prepaid
expenses and other
|
319,647 | 573,573 | ||||||
Assets
associated with discontinued operations
|
31,389 | 435,740 | ||||||
Total
current assets
|
8,814,161 | 7,240,724 | ||||||
Property
and equipment
|
1,949,461 | 1,940,748 | ||||||
Less
accumulated depreciation and amortization
|
1,654,969 | 1,593,501 | ||||||
294,492 | 347,247 | |||||||
Patents
and trademarks
|
519,896 | 459,431 | ||||||
Less
accumulated amortization
|
440,018 | 433,358 | ||||||
79,878 | 26,073 | |||||||
Other
assets
|
26,266 | 594,449 | ||||||
Other
assets associated with discontinued operations
|
— | 1,410,957 | ||||||
Total
assets
|
$ | 9,214,797 | $ | 9,619,450 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
September 30,
2009
(unaudited)
|
December 31,
2008
|
||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 772,483 | $ | 725,820 | ||||
Accrued
liabilities and other
|
1,155,398 | 900,796 | ||||||
Capital
lease obligations, current portion
|
7,092 | 9,084 | ||||||
Deferred
revenue, current portion
|
526,898 | 526,619 | ||||||
Notes
payable to finance companies
|
— | 137,857 | ||||||
Liabilities
associated with discontinued operations
|
20,686 | 22,280 | ||||||
Total
current liabilities
|
2,482,557 | 2,322,456 | ||||||
Capital
lease obligations, net of current portion
|
5,721 | 11,095 | ||||||
Deferred
revenue, net of current portion
|
440,873 | 490,165 | ||||||
Notes
payable to CEO, net of discounts of $59,917 and $76,294,
respectively
|
940,083 | 923,706 | ||||||
Notes
payable to investors, net of discounts of $0 and $5,001,149,
respectively
|
10,000,000 | 4,998,851 | ||||||
Derivative
liabilities
|
2,697,487 | 853,831 | ||||||
Other
liabilities
|
36,348 | 45,071 | ||||||
Total
liabilities
|
16,603,069 | 9,645,175 | ||||||
Commitments
and contingencies
|
||||||||
Preferred
stock; $.001 par value; 5,000,000 shares authorized;
|
||||||||
3,000
Series A shares, par value $1,000, issued and
|
||||||||
outstanding
at September 30, 2009 and December 31, 2008
|
3,000,000 | 3,000,000 | ||||||
Stockholders’
deficit:
|
||||||||
Common
stock; $.001 par value; 150,000,000 shares
|
||||||||
authorized;
79,363,787 and 70,862,641 shares outstanding at
|
||||||||
September
30, 2009 and December 31, 2008, respectively
|
79,364 | 70,863 | ||||||
Additional
paid-in capital
|
181,877,412 | 145,742,044 | ||||||
Accumulated
deficit
|
(192,345,048 | ) | (148,840,015 | ) | ||||
Unrealized
gain on available-for-sale securities
|
— | 1,383 | ||||||
Total
stockholders’ deficit
|
(10,388,272 | ) | (3,025,725 | ) | ||||
Total
liabilities and stockholders’ deficit
|
$ | 9,214,797 | $ | 9,619,450 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues:
|
||||||||||||||||
Net
sales
|
$ | 2,562,079 | $ | 1,715,324 | $ | 6,998,299 | $ | 5,629,573 | ||||||||
License
and other revenue
|
25,000 | — | 75,000 | — | ||||||||||||
Total
revenues
|
2,587,079 | 1,715,324 | 7,073,299 | 5,629,573 | ||||||||||||
Cost
of goods sold
|
927,587 | 641,106 | 2,330,032 | 2,123,728 | ||||||||||||
Gross
profit
|
1,659,492 | 1,074,218 | 4,743,267 | 3,505,845 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
1,204,811 | 1,741,484 | 3,730,361 | 3,084,432 | ||||||||||||
Selling,
general and administrative
|
778,658 | 707,794 | 2,417,622 | 2,248,466 | ||||||||||||
Total
operating expenses
|
1,983,469 | 2,449,278 | 6,147,983 | 5,332,898 | ||||||||||||
Loss
from operations
|
(323,977 | ) | (1,375,060 | ) | (1,404,716 | ) | (1,827,053 | ) | ||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income
|
2,360 | 18,824 | 16,068 | 47,891 | ||||||||||||
Interest
expense
|
(330,806 | ) | (456,941 | ) | (1,249,525 | ) | (1,258,500 | ) | ||||||||
Change
in derivative liabilities
|
(6,334,479 | ) | 59,415 | (18,539,318 | ) | (440,773 | ) | |||||||||
Loss
on extinguishment of debt
|
(16,240,592 | ) | — | (16,240,592 | ) | — | ||||||||||
Other
|
(585 | ) | 4,242 | (2,216 | ) | 2,501 | ||||||||||
Total
other expense, net
|
(22,904,102 | ) | (374,460 | ) | (36,015,583 | ) | (1,648,881 | ) | ||||||||
Loss
from continuing operations
|
(23,228,079 | ) | (1,749,520 | ) | (37,420,299 | ) | (3,475,934 | ) | ||||||||
Discontinued
operations:
|
||||||||||||||||
Impairment
loss
|
(1,728,887 | ) | — | (1,728,887 | ) | — | ||||||||||
Loss
from operations
|
(52,303 | ) | (141,070 | ) | (162,896 | ) | (459,506 | ) | ||||||||
Net
loss
|
(25,009,269 | ) | (1,890,590 | ) | (39,312,082 | ) | (3,935,440 | ) | ||||||||
Preferred
stock dividends
|
(60,000 | ) | — | (180,000 | ) | — | ||||||||||
Loss
attributable to common
stockholders
|
$ | (25,069,269 | ) | $ | (1,890,590 | ) | $ | (39,492,082 | ) | $ | (3,935,440 | ) | ||||
Loss
per common share (basic):
|
||||||||||||||||
Continuing
operations
|
$ | (0.31 | ) | $ | (0.03 | ) | $ | (0.53 | ) | $ | (0.05 | ) | ||||
Discontinued
operations
|
$ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||
Loss
to common stockholders
|
$ | (0.34 | ) | $ | (0.03 | ) | $ | (0.56 | ) | $ | (0.06 | ) | ||||
Loss
per common share (diluted):
|
||||||||||||||||
Continuing
operations
|
$ | (0.31 | ) | $ | (0.03 | ) | $ | (0.53 | ) | $ | (0.05 | ) | ||||
Discontinued
operations
|
$ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||
Loss
to common stockholders
|
$ | (0.34 | ) | $ | (0.03 | ) | $ | (0.56 | ) | $ | (0.06 | ) | ||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
74,380,714 | 68,758,281 | 70,915,204 | 68,191,889 | ||||||||||||
Diluted
|
74,380,714 | 68,758,281 | 70,915,204 | 68,191,889 |
Common Stock
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other
Comprehensive
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Total
|
|||||||||||||||||||
Balance,
December 31, 2008
|
70,862,641 | $ | 70,863 | $ | 145,742,044 | $ | (148,840,015 | ) | $ | 1,383 | $ | (3,025,725 | ) | |||||||||||
Effect
of adopting EITF 07-5
|
— | — | (8,948,089 | ) | (4,012,951 | ) | — | (12,961,040 | ) | |||||||||||||||
Issued
restricted stock
|
500,000 | 500 | — | — | — | 500 | ||||||||||||||||||
Cancelled
restricted stock
|
(9,000 | ) | (9 | ) | 9 | — | — | — | ||||||||||||||||
Issued
stock upon exercise of warrants and other
|
6,641,555 | 6,641 | 6,196,513 | — | — | 6,203,154 | ||||||||||||||||||
Issued
stock upon exercise of options
|
330,000 | 330 | 133,420 | — | — | 133,750 | ||||||||||||||||||
Issued
stock as payment of interest on convertible debt and dividends on
preferred stock
|
957,708 | 958 | 553,709 | — | — | 554,667 | ||||||||||||||||||
Effect
of change in terms of notes payable, warrants and preferred
stock
|
— | — | 37,999,312 | — | — | 37,999,312 | ||||||||||||||||||
Issued
stock to 401(k) plan at $0.41
|
80,883 | 81 | 33,392 | — | — | 33,473 | ||||||||||||||||||
Stock
compensation expense
|
— | — | 271,554 | — | — | 271,554 | ||||||||||||||||||
Paid
common stock issuance costs
|
— | — | (98,129 | ) | — | — | (98,129 | ) | ||||||||||||||||
Paid
preferred stock issuance costs
|
— | — | (6,323 | ) | — | — | (6,323 | ) | ||||||||||||||||
Preferred
stock dividends
|
— | — | — | (180,000 | ) | — | (180,000 | ) | ||||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||||
Net
loss
|
— | — | — | (39,312,082 | ) | — | (39,312,082 | ) | ||||||||||||||||
Unrealized
loss on available-for-sale
securities
|
— | — | — | — | (1,383 | ) | (1,383 | ) | ||||||||||||||||
Total
comprehensive loss
|
(39,313,465 | ) | ||||||||||||||||||||||
Balance,
September 30, 2009
|
79,363,787 | $ | 79,364 | $ | 181,877,412 | $ | (192,345,048 | ) | $ | — | $ | (10,388,272 | ) |
Nine Months Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (39,312,082 | ) | $ | (3,935,440 | ) | ||
Adjustments
to reconcile net loss to net cash
|
||||||||
used
in operating activities:
|
||||||||
Depreciation
and amortization
|
284,219 | 302,904 | ||||||
Amortization
of debt discount and debt offering costs
|
420,063 | 515,056 | ||||||
Provision
for bad debts
|
458 | 699 | ||||||
Issuance
of common stock in payment of interest and dividends
|
554,667 | — | ||||||
Stock
compensation expense
|
271,554 | 156,897 | ||||||
Change
in derivative liabilities
|
18,539,318 | 440,773 | ||||||
Loss
on extinguishment of debt
|
16,240,592 | — | ||||||
Impairment
loss on discontinued operations
|
1,728,887 | — | ||||||
Other
|
48,697 | 111,295 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
226,052 | 305,274 | ||||||
Inventory
|
(550,816 | ) | 323,957 | |||||
Prepaid
expenses and other assets
|
260,470 | 111,229 | ||||||
Accounts
payable
|
47,063 | (79,470 | ) | |||||
Accrued
liabilities and other liabilities
|
53,104 | 105,775 | ||||||
Deferred
revenue
|
(49,013 | ) | (81,638 | ) | ||||
Net
cash used in operating activities
|
(1,236,767 | ) | (1,722,689 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchases
of available-for-sale securities
|
— | (196,000 | ) | |||||
Maturities
of available-for-sale securities
|
494,000 | 196,000 | ||||||
Purchases
of property and equipment
|
(74,554 | ) | (97,673 | ) | ||||
Proceeds
from sales of property and equipment
|
251 | 120 | ||||||
Patent
and trademark costs
|
(66,317 | ) | (13,616 | ) | ||||
Net
cash provided by (used in) investing activities
|
353,380 | (111,169 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of common stock
|
3,625,250 | 232,156 | ||||||
Payment
of common stock offering costs
|
(104,673 | ) | (900 | ) | ||||
Payment
of preferred stock offering costs
|
(6,323 | ) | — | |||||
Proceeds
from notes payable
|
— | 3,000,000 | ||||||
Payment
of debt issuance costs
|
(20,183 | ) | (200,154 | ) | ||||
Payment
of notes payable
|
(137,857 | ) | (124,770 | ) | ||||
Payments
under capital leases
|
(7,366 | ) | (12,878 | ) | ||||
Net
cash provided by financing activities
|
3,348,848 | 2,893,454 | ||||||
Net
increase in cash
|
2,465,461 | 1,059,596 | ||||||
Cash,
beginning of period
|
3,565,837 | 1,540,220 | ||||||
Cash,
end of period
|
$ | 6,031,298 | $ | 2,599,816 |
1.
|
Summary
of Significant Accounting Policies
|
|
a.
|
Basis of
Presentation: The information presented as of September
30, 2009 and for the three-month and nine-month periods ended September
30, 2009 and September 30, 2008 is unaudited, but includes all adjustments
(which consist only of normal recurring adjustments) that the management
of Neoprobe Corporation (Neoprobe, the Company, or we) 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
accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to the rules and regulations of
the U.S. Securities and Exchange Commission. We have evaluated
subsequent events through December 28, 2009, the date our consolidated
financial statements were issued. The balances as of September
30, 2009 and the results for the interim periods are not necessarily
indicative of results to be expected for the year. The
consolidated financial statements should be read in conjunction with
Neoprobe’s audited consolidated financial statements for the year ended
December 31, 2008, which were included as part of our Annual Report on
Form 10-K.
|
|
b.
|
Financial Instruments and Fair
Value: The fair value hierarchy prioritizes the inputs
to valuation techniques used to measure fair value, giving the highest
priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of
the fair value hierarchy are described
below:
|
|
1.
|
Cash,
accounts receivable, accounts payable, and accrued
liabilities: The carrying amounts approximate fair value
because of the short maturity of these
instruments.
|
2.
|
Available-for-sale
securities: Available-for-sale securities are recorded at fair value. Fair
value of available-for-sale securities is determined based on a discounted
cash flow analysis using current market rates. Unrealized holding gains
and losses on available-for-sale securities are excluded from earnings and
are reported as a separate component of other comprehensive income (loss)
until realized. Realized gains and losses from the sale of
available-for-sale securities are determined on a specific identification
basis.
|
|
3.
|
Notes
payable to finance companies: The fair value of our debt is
estimated by discounting the future cash flows at rates currently offered
to us for similar debt instruments of comparable maturities by banks or
finance companies. At December 31, 2008, the carrying values of
these instruments approximate fair value. We had no notes
payable to finance companies at September 30,
2009.
|
|
4.
|
Note
payable to CEO: The carrying value of our debt is presented as
the face amount of the note less the unamortized discount related to the
initial estimated fair value of the warrants to purchase common stock
issued in connection with the note. At September 30, 2009, the
note payable to our CEO had an estimated fair value of $4.5
million. At December 31, 2008, the note payable to our CEO had
an estimated fair value of $1.8
million.
|
|
5.
|
Notes
payable to outside investors: The carrying value of our debt is
presented as the face amount of the notes less the unamortized discounts
related to the fair value of the beneficial conversion features, the
initial estimated fair value of the put options embedded in the notes and
the initial estimated fair value of the warrants to purchase common stock
issued in connection with the notes. At September 30, 2009, the
notes payable to outside investors had an estimated fair value of $35.6
million. At December 31, 2008, the notes payable to outside
investors had an estimated fair value of $15.9
million.
|
6.
|
Derivative
liabilities: Derivative liabilities are recorded at fair value. Fair value
of warrant liabilities is determined based on a Black-Scholes option
pricing model calculation. Fair value of conversion and put option
liabilities is determined based on a probability-weighted Black-Scholes
option pricing model calculation. Unrealized gains and losses on the
derivatives are classified in other expenses as a change in derivative
liabilities in the statements of
operations.
|
2.
|
Discontinued
Operations
|
September 30,
2009
|
December 31,
2008
|
|||||||
Accounts
receivable, net
|
$ | 5,727 | $ | 18,005 | ||||
Inventory
|
25,662 | 417,735 | ||||||
Current
assets associated with discontinued operations
|
31,389 | 435,740 | ||||||
Property
and equipment, net of accumulated depreciation
|
— | 43,545 | ||||||
Patents
and trademarks, net of accumulated amortization
|
— | 1,367,412 | ||||||
Other
assets associated with discontinued operations
|
— | 1,410,957 | ||||||
Assets
associated with discontinued operations
|
$ | 31,389 | $ | 1,846,697 | ||||
Accounts
payable
|
$ | 5,800 | $ | 5,400 | ||||
Accrued
expenses
|
14,886 | 16,880 | ||||||
Liabilities
associated with discontinued operations
|
$ | 20,686 | $ | 22,280 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
sales
|
$ | 9,345 | $ | 84,942 | $ | 81,904 | $ | 208,510 | ||||||||
Cost
of goods sold
|
2,432 | 51,711 | 36,156 | 135,766 | ||||||||||||
Gross
profit
|
6,913 | 33,231 | 45,748 | 72,744 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
2,642 | 69,445 | 23,128 | 188,912 | ||||||||||||
Selling,
general and administrative
|
56,659 | 104,958 | 185,506 | 343,578 | ||||||||||||
Total
operating expenses
|
59,301 | 174,403 | 208,634 | 532,490 | ||||||||||||
Other
income (expense)
|
85 | 102 | (10 | ) | 240 | |||||||||||
Loss
from discontinued operations
|
$ | (52,303 | ) | $ | (141,070 | ) | $ | (162,896 | ) | $ | (459,506 | ) |
3.
|
Fair
Value Hierarchy
|
Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2009
|
||||||||||||||||
Quoted Prices
in Active Markets for Identical Assets and Liabilities |
Significant
Other Observable Inputs |
Significant
Unobservable Inputs |
Balance as of
September 30, |
|||||||||||||
Description
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
2009
|
||||||||||||
Liabilities:
|
||||||||||||||||
Derivative
liabilities related to warrants
|
$ | — | $ | 1,731,487 | $ | — | $ | 1,731,487 | ||||||||
Derivative
liabilities related to put options
|
— | — | 966,000 | 966,000 | ||||||||||||
Total
derivative liabilities
|
$ | — | $ | 1,731,487 | $ | 966,000 | $ | 2,697,487 |
Assets and Liabilities Measured at Fair Value on a
Recurring Basis as of December 31, 2008
|
||||||||||||||||
Quoted Prices
in Active Markets for Identical Assets and Liabilities |
Significant
Other Observable Inputs |
Significant
Unobservable Inputs |
Balance as of
December 31, |
|||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
2008
|
||||||||||||
Assets:
|
||||||||||||||||
Available-for-sale
securities
|
$ | 495,383 | $ | — | $ | — | $ | 495,383 | ||||||||
Liabilities:
|
||||||||||||||||
Derivative
liabilities related to conversion and put options
|
$ | — | $ | — | $ | 853,831 | $ | 853,831 |
Three Months Ended September 30,
2009
|
||||||||||||||||||||
Description
|
Balance at
June 30, 2009 |
Unrealized
Losses |
Purchases,
Issuances and Settlements |
Transfers In
and/or (Out) |
Balance at
September 30, 2009
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Derivative
liabilities related to conversion and put options
|
$ | 11,289,422 | $ | 2,465,225 | $ | — | $ | (12,788,647 | ) | $ | 966,000 |
Three Months Ended September 30,
2008
|
||||||||||||||||||||
Description
|
Balance at
June 30, 2008
|
Unrealized
Gains |
Purchases,
Issuances and Settlements |
Transfers In
and/or (Out) |
Balance at
September 30, 2008
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Derivative
liabilities related to conversion and put options
|
$ | 686,638 | $ | (59,415 | ) | $ | — | $ | — | $ | 627,223 |
Nine Months Ended September 30,
2009
|
||||||||||||||||||||
Description
|
Balance at
December 31, 2008
|
Adoption of
EITF 07-5
(See
Note 10)
|
Unrealized
Losses |
Transfers In
and/or (Out) |
Balance at
September 30, 2009
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Derivative
liabilities related to conversion and put options
|
$ | 853,831 | $ | 5,304,487 | $ | 7,596,329 | $ | (12,788,647 | ) | $ | 966,000 |
Nine Months Ended September 30, 2008
|
||||||||||||||||||||
Description
|
Balance at
December 31, 2007
|
Purchases,
Issuances and Settlements |
Unrealized
Losses |
Transfers In
and/or (Out) |
Balance at
September 30, 2008
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Derivative
liabilities related to conversion and put options
|
$ | 1,599,072 | $ | 257,968 | $ | 170,119 | $ | (1,399,936 | ) | $ | 627,223 |
4.
|
Stock-Based
Compensation
|
Nine Months Ended September 30, 2009
|
|||||||||||||
Number of
Options |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contractual Life |
Aggregate
Intrinsic Value |
||||||||||
Outstanding at
beginning of period
|
5,619,500 | $ | 0.40 | ||||||||||
Granted
|
283,000 | 0.59 | |||||||||||
Exercised
|
(330,000 | ) | 0.41 | ||||||||||
Forfeited
|
(10,000 | ) | 0.61 | ||||||||||
Expired
|
(111,000 | ) | 1.10 | ||||||||||
Outstanding
at end of period
|
5,451,500 | $ | 0.39 |
5.1
years
|
$ | 5,492,084 | |||||||
Exercisable
at end of period
|
4,682,833 | $ | 0.38 |
4.5
years
|
$ | 4,763,057 |
Nine Months Ended
September 30, 2009
|
||||||||
Number of
Shares |
Weighted
Average Grant-Date Fair Value |
|||||||
Unvested
at beginning of period
|
473,000 | $ | 0.37 | |||||
Granted
|
500,000 | 0.60 | ||||||
Vested
|
— | — | ||||||
Forfeited
|
(9,000 | ) | 0.68 | |||||
Unvested
at end of period
|
964,000 | $ | 0.49 |
5.
|
Comprehensive
Loss
|
Three Months
Ended September 30,
2009 |
Three Months
Ended
September 30,
2008 |
|||||||
Net
loss
|
$ | (25,009,269 | ) | $ | (1,890,590 | ) | ||
Unrealized
losses on securities
|
— | — | ||||||
Other
comprehensive loss
|
$ | (25,009,269 | ) | $ | (1,890,590 | ) |
Nine Months
Ended September 30,
2009 |
Nine Months
Ended
September 30,
2008 |
|||||||
Net
loss
|
$ | (39,312,082 | ) | $ | (3,935,440 | ) | ||
Unrealized
losses on securities
|
(1,383 | ) | — | |||||
Other
comprehensive loss
|
$ | (39,313,465 | ) | $ | (3,935,440 | ) |
6.
|
Earnings
(Loss) Per Share
|
Three Months Ended
September 30, 2009
|
Three Months Ended
September 30, 2008
|
|||||||||||||||
Basic
Earnings
Per Share
|
Diluted
Earnings
Per Share
|
Basic
Earnings
Per Share
|
Diluted
Earnings
Per Share
|
|||||||||||||
Outstanding
shares
|
79,363,787 | 79,363,787 | 69,787,540 | 69,787,540 | ||||||||||||
Effect
of weighting changes in outstanding shares
|
(4,019,073 | ) | (4,019,073 | ) | (579,259 | ) | (579,259 | ) | ||||||||
Unvested
restricted stock
|
(964,000 | ) | (964,000 | ) | (450,000 | ) | (450,000 | ) | ||||||||
Adjusted
shares
|
74,380,714 | 74,380,714 | 68,758,281 | 68,758,281 |
Nine Months Ended
September, 2009
|
Nine Months Ended
September 30, 2008
|
|||||||||||||||
Basic
Earnings
Per Share
|
Diluted
Earnings
Per Share
|
Basic
Earnings
Per Share
|
Diluted
Earnings
Per Share
|
|||||||||||||
Outstanding
shares
|
79,363,787 | 79,363,787 | 69,787,540 | 69,787,540 | ||||||||||||
Effect
of weighting changes in outstanding shares
|
(7,484,583 | ) | (7,484,583 | ) | (1,145,651 | ) | (1,145,651 | ) | ||||||||
Unvested
restricted stock
|
(964,000 | ) | (964,000 | ) | (450,000 | ) | (450,000 | ) | ||||||||
Adjusted
shares
|
70,915,204 | 70,915,204 | 68,191,889 | 68,191,889 |
7.
|
Inventory
|
September 30,
2009
(unaudited)
|
December 31,
2008
|
|||||||
Materials
and component parts
|
$ | 691,276 | $ | 112,637 | ||||
Finished
goods
|
347,131 | 431,489 | ||||||
Total
|
$ | 1,038,407 | $ | 544,126 |
8.
|
Intangible
Assets
|
September 30, 2009
|
December 31, 2008
|
|||||||||||||||||
Wtd
Avg Life |
Gross
Carrying Amount |
Accumulated
Amortization |
Gross
Carrying Amount |
Accumulated
Amortization |
||||||||||||||
Patents
and trademarks
|
0.2
yrs
|
$ | 519,896 | $ | 440,018 | $ | 459,431 | $ | 433,358 |
Estimated
Amortization Expense |
||||
For
the year ended 12/31/20091
|
$ | 126,228 | ||
For
the year ended 12/31/2010
|
2,393 | |||
For
the year ended 12/31/2011
|
1,088 | |||
For
the year ended 12/31/2012
|
885 | |||
For
the year ended 12/31/2013
|
126 |
|
1
|
Amortization
expense for the year ended 12/31/2009 includes approximately $113,000 of
intangible asset amortization related to Cardiosonix, which is included in
loss from discontinued operations. Intangible asset
amortization related to Cardiosonix stopped during the third quarter of
2009 as a result of the decision to discontinue the operations of
Cardiosonix and hold the associated assets for
sale.
|
9.
|
Product
Warranty
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Warranty
reserve at beginning of period
|
$ | 71,412 | $ | 87,679 | $ | 72,643 | $ | 115,395 | ||||||||
Provision
for warranty claims and changes in reserve for warranties
|
10,021 | 3,932 | 65,172 | 13,894 | ||||||||||||
Payments
charged against the reserve
|
(21,369 | ) | (18,816 | ) | (77,751 | ) | (56,494 | ) | ||||||||
Warranty
reserve at end of period
|
$ | 60,064 | $ | 72,795 | $ | 60,064 | $ | 72,795 |
10.
|
Convertible
Securities
|
11.
|
Derivative
Instruments
|
December 31,
2008 |
Impact of
New Accounting Standard Adoption |
January 1,
2009
|
||||||||||
Other
assets
|
$ | 594,449 | $ | 2,104 | $ | 596,553 | ||||||
Total
assets
|
$ | 9,619,450 | $ | 9,621,554 | ||||||||
Notes
payable to investors, net of discounts
|
$ | 4,998,851 | (54,396 | ) | $ | 4,944,455 | ||||||
Derivative
liabilities
|
853,831 | 13,017,540 | 13,871,371 | |||||||||
Total
liabilities
|
$ | 9,645,175 | $ | 22,608,319 | ||||||||
Additional
paid-in capital
|
$ | 145,742,044 | (8,948,089 | ) | $ | 136,793,955 | ||||||
Accumulated
deficit
|
(148,840,015 | ) | (4,012,951 | ) | (152,852,966 | ) | ||||||
Total
stockholders’ deficit
|
$ | (3,025,725 | ) | $ | (15,986,765 | ) |
12.
|
Stock
Warrants
|
13.
|
Income
Taxes
|
14.
|
Segment
Information
|
($
amounts in thousands)
Three
Months Ended
September
30, 2009
|
Oncology
Devices |
Blood
Flow Devices |
Drug
and
Therapy Products |
Corporate
|
Total
|
|||||||||||||||
Net
sales:
|
||||||||||||||||||||
United
States1
|
$ | 2,477 | $ | — | $ | — | $ | — | $ | 2,477 | ||||||||||
International
|
85 | — | — | — | 85 | |||||||||||||||
License
and other revenue
|
25 | — | — | — | 25 | |||||||||||||||
Research
and development expenses
|
220 | — | 985 | — | 1,205 | |||||||||||||||
Selling,
general and administrative expenses, excluding depreciation and
amortization2
|
26 | — | — | 705 | 731 | |||||||||||||||
Depreciation
and amortization
|
32 | — | 1 | 15 | 48 | |||||||||||||||
Income
(loss) from operations
|
1,382 | — | (986 | ) | (720 | ) | (324 | ) | ||||||||||||
Other
income (expenses)4
|
— | — | — | (22,904 | ) | (22,904 | ) | |||||||||||||
Loss
from discontinued operations
|
— | (1,781 | ) | — | — | (1,781 | ) | |||||||||||||
Total
assets, net of depreciation and amortization:
|
||||||||||||||||||||
United
States operations
|
2,148 | — | 555 | 6,481 | 9,184 | |||||||||||||||
Discontinued
operations
|
— | 31 | — | — | 31 | |||||||||||||||
Capital
expenditures
|
12 | — | — | 4 | 16 | |||||||||||||||
($
amounts in thousands)
Three
Months Ended
September
30, 2008
|
Oncology
Devices |
Blood
Flow Devices |
Drug
and
Therapy Products |
Corporate
|
Total
|
|||||||||||||||
Net
sales:
|
||||||||||||||||||||
United
States1
|
$ | 1,630 | $ | — | $ | — | $ | — | $ | 1,630 | ||||||||||
International
|
85 | — | — | — | 85 | |||||||||||||||
Research
and development expenses
|
267 | — | 1,474 | — | 1,741 | |||||||||||||||
Selling,
general and administrative expenses, excluding depreciation and
amortization2
|
7 | — | — | 656 | 663 | |||||||||||||||
Depreciation
and amortization
|
32 | — | 1 | 12 | 45 | |||||||||||||||
Income
(loss) from operations3
|
768 | — | (1,475 | ) | (668 | ) | (1,375 | ) | ||||||||||||
Other
income (expenses)4
|
— | — | — | (374 | ) | (374 | ) | |||||||||||||
Loss
from discontinued operations
|
— | (141 | ) | — | (141 | ) | ||||||||||||||
Total
assets, net of depreciation and amortization:
|
||||||||||||||||||||
United
States operations
|
1,796 | — | 26 | 3,537 | 5,359 | |||||||||||||||
Discontinued
operations
|
— | 1,990 | — | — | 1,990 | |||||||||||||||
Capital
expenditures
|
2 | — | — | 51 | 53 |
($ amounts in thousands)
Nine Months Ended September 30,
2009
|
Oncology
Devices
|
Blood
Flow
Devices
|
Drug and
Therapy
Products
|
Corporate
|
Total
|
|||||||||||||||
Net
sales:
|
||||||||||||||||||||
United
States1
|
$ | 6,745 | $ | — | $ | — | $ | — | $ | 6,745 | ||||||||||
International
|
253 | — | — | — | 253 | |||||||||||||||
License
and other revenue
|
75 | — | — | — | 75 | |||||||||||||||
Research
and development expenses
|
857 | — | 2,873 | — | 3,730 | |||||||||||||||
Selling,
general and administrative expenses, excluding depreciation and
amortization2
|
95 | — | — | 2,167 | 2,262 | |||||||||||||||
Depreciation
and amortization
|
108 | — | 3 | 45 | 156 | |||||||||||||||
Income
(loss) from operations
|
3,683 | — | (2,876 | ) | (2,212 | ) | (1,405 | ) | ||||||||||||
Other
income (expenses)4
|
— | — | — | (36,016 | ) | (36,016 | ) | |||||||||||||
Loss
from discontinued operations
|
— | (1,892 | ) | — | — | (1,892 | ) | |||||||||||||
Total
assets, net of depreciation and amortization:
|
||||||||||||||||||||
United
States operations
|
2,148 | — | 555 | 6,481 | 9,184 | |||||||||||||||
Discontinued
operations
|
— | 31 | — | — | 31 | |||||||||||||||
Capital
expenditures
|
13 | — | — | 62 | 75 |
($ amounts in thousands)
Nine Months Ended September 30,
2008
|
Oncology
Devices
|
Blood
Flow
Devices
|
Drug and
Therapy
Products
|
Corporate
|
Total
|
|||||||||||||||
Net
sales:
|
||||||||||||||||||||
United
States1
|
$ | 5,513 | $ | — | $ | — | $ | — | $ | 5,513 | ||||||||||
International
|
117 | — | — | — | 117 | |||||||||||||||
Research
and development expenses
|
718 | — | 2,366 | — | 3,084 | |||||||||||||||
Selling,
general and administrative expenses, excluding depreciation and
amortization2
|
7 | — | — | 2,122 | 2,129 | |||||||||||||||
Depreciation
and amortization
|
86 | — | 1 | 32 | 119 | |||||||||||||||
Income
(loss) from operations3
|
2,694 | — | (2,367 | ) | (2,154 | ) | (1,827 | ) | ||||||||||||
Other
income (expenses)4
|
— | — | — | (1,649 | ) | (1,649 | ) | |||||||||||||
Loss
from discontinued operations
|
— | (460 | ) | — | — | (460 | ) | |||||||||||||
Total
assets, net of depreciation and amortization:
|
||||||||||||||||||||
United
States operations
|
1,796 | — | 26 | 3,537 | 5,359 | |||||||||||||||
Discontinued
operations
|
— | 1,990 | — | — | 1,990 | |||||||||||||||
Capital
expenditures
|
4 | — | 18 | 76 | 98 |
1
|
All
sales to EES are made in the United States. EES distributes the
product globally through its international
affiliates.
|
2
|
General
and administrative expenses, excluding depreciation and amortization,
represent costs that relate to the general administration of the Company
and as such are not currently allocated to our individual reportable
segments.
|
3
|
Income
(loss) from operations does not reflect the allocation of general and
administrative expenses, excluding depreciation and amortization, to the
operating segments.
|
4
|
Amounts
consist primarily of interest income, interest expense and changes in
derivative liabilities which are not currently allocated to our individual
reportable segments.
|
15.
|
Supplemental
Disclosure for Statements of Cash
Flows
|
16.
|
Subsequent
Event
|
SEC
Registration
|
$ | 509 | ||
Legal
Fees and Expenses*
|
$ | 15,000 | ||
Accounting
Fees*
|
$ | 20,000 | ||
Miscellaneous*
|
$ | 1,491 | ||
Total
|
$ | 37,000 |
Exhibit
Number
|
Exhibit Description
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of Neoprobe Corporation as
corrected February 18, 1994 and amended June 27, 1994, June 3, 1996, March
17, 1999, May 9, 2000, June 13, 2003, July 27, 2004, June 22, 2005 and
November 20, 2006 (incorporated by reference to Exhibit 3.1 to the
Company’s Registration Statement on Form SB-2 filed December 7,
2006).
|
|
3.2
|
Amended
and Restated By-Laws dated July 21, 1993, as amended July 18, 1995, May
30, 1996 and July 26, 2007 (filed as Exhibit 3.2 to the Company’s Current
Report on Form 8-K dated August 3, 2007, and incorporated herein by
reference).
|
|
4.1
|
Neoprobe
Corporation Second Amended and Restated Certificate of Designations,
Voting Powers, Preferences, Limitations, Restrictions, and Relative Rights
of Series A 8% Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed
July 29, 2009).
|
|
5.1
|
Opinion
of Porter, Wright, Morris & Arthur LLP (incorporated by reference to
Exhibit 5.1 to Post-effective Amendment No. 1 the Company’s Registration
Statement on Form S-1, filed January 7, 2009, Registration file No.
333-150650).
|
|
10.1
|
Amended
and Restated Stock Option and Restricted Stock Purchase Plan dated March
3, 1994 (incorporated by reference to Exhibit 10.2.26 to the Company’s
December 31, 1993 Form 10–K).
|
|
10.2
|
1996
Stock Incentive Plan dated January 18, 1996 as amended March 13, 1997
(incorporated by reference to Exhibit 10.2.37 to the Company’s December
31, 1997 Form 10–K).
|
|
10.3
|
Neoprobe
Corporation Second Amended and Restated 2002 Stock Incentive Plan
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed June 27, 2008).
|
|
10.4
|
Form
of Stock Option Agreement under the Neoprobe Corporation Amended and
Restated 2002 Stock Incentive Plan (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed December 21,
2006).
|
|
10.5
|
Form
of Restricted Stock Award and Agreement under the Neoprobe Corporation
Amended and Restated 2002 Stock Incentive Plan (incorporated by reference
to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed January
9, 2008).
|
10.6
|
Form
of Employment Agreement between the Company and certain named executive
officers (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed December 23, 2008). This
Agreement is one of three substantially identical employment agreements
and is accompanied by a schedule which identifies material details in
which each agreement differs from the form filed
herewith.
|
|
10.7
|
Schedule
identifying material differences between the employment agreements
incorporated by reference as Exhibit 10.6 to this Registration Statement
on Form S-1 (incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K filed December 23, 2008).
|
|
10.8
|
Employment
Agreement, commencing February 15, 2009, by and between the Company and
Frederick O. Cope, Ph.D. (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed February 17,
2009).
|
|
10.9
|
Technology
Transfer Agreement dated July 29, 1992 between the Company and The Dow
Chemical Corporation (portions of this Exhibit have been omitted pursuant
to a request for confidential treatment and have been filed separately
with the Commission) (incorporated by reference to Exhibit 10.10 to the
Company’s Form S-1 filed October 15, 1992).
|
|
10.10
|
Cooperative
Research and Development Agreement between the Company and the National
Cancer Institute (incorporated by reference to Exhibit 10.3.31 to the
Company’s September 30, 1995 Form 10–QSB).
|
|
10.11
|
License
dated May 1, 1996 between the Company and The Dow Chemical Company
(incorporated by reference to Exhibit 10.3.45 to the Company’s June 30,
1996 Form 10–QSB).
|
|
10.12
|
License
Agreement dated May 1, 1996 between the Company and The Dow Chemical
Company (portions of this Exhibit have been omitted pursuant to a request
for confidential treatment and have been filed separately with the
Commission) (incorporated by reference to Exhibit 10.3.46 to the Company’s
June 30, 1996 Form 10–QSB).
|
|
10.13
|
License
Agreement dated January 30, 2002 between the Company and the Regents of
the University of California, San Diego, as amended on May 27, 2003 and
February 1, 2006 (portions of this Exhibit have been omitted pursuant to a
request for confidential treatment and have been filed separately with the
Commission) (incorporated by reference to Exhibit 10.11 to the Company’s
Annual Report on Form 10-KSB filed March 31, 2006).
|
|
10.14
|
Evaluation
License Agreement dated March 31, 2005 between the Company and the Regents
of the University of California, San Diego (portions of this Exhibit have
been omitted pursuant to a request for confidential treatment and have
been filed separately with the Commission) (incorporated by reference to
Exhibit 10.12 to the Company’s Annual Report on Form 10-KSB filed March
31, 2006).
|
|
10.15
|
Distribution
Agreement between the Company and Ethicon Endo-Surgery, Inc. dated October
1, 1999 (portions of this Exhibit have been omitted pursuant to a request
for confidential treatment and have been filed separately with the
Commission) (incorporated by reference to Exhibit 10.13 to the Company’s
Annual Report on Form 10-KSB filed March 16, 2007).
|
|
10.16
|
First
Amendment to Distribution Agreement, dated December 14, 2007, by and
between the Company and Ethicon Endo-Surgery, Inc. (portions of this
Exhibit have been omitted pursuant to a request for confidential treatment
and have been filed separately with the Commission) (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed December 20,
2007).
|
10.17
|
Product
Supply Agreement between the Company and TriVirix International, Inc.,
dated February 5, 2004 (portions of this Exhibit have been omitted
pursuant to a request for confidential treatment and have been filed
separately with the Commission) (incorporated by reference to Exhibit
10.17 to the Company’s December 31, 2004 Form 10-KSB).
|
|
10.18
|
Supply
and Distribution Agreement, dated November 15, 2007, by and between the
Company and Cardinal Health 414, LLC (portions of this Exhibit have been
omitted pursuant to a request for confidential treatment and have been
filed separately with the Commission) (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November
21, 2007).
|
|
10.19
|
Warrant
to Purchase Common Stock of Neoprobe Corporation dated March 8, 2004
between the Company and David C. Bupp (incorporated by reference to
Exhibit 10.28 to the Company’s December 31, 2003 Form
10-KSB).
|
|
10.20
|
Registration
Rights Agreement dated April 2, 2003 between the Company, David C. Bupp
and Donald E. Garlikov (incorporated by reference to Exhibit 99(i) to the
Company’s Current Report on Form 8-K filed April 2,
2003).
|
|
10.21
|
Stock
Purchase Agreement dated October 22, 2003 between the Company and Bridges
& Pipes, LLC. This agreement is one of 21 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 10.32 to the Company’s registration statement on Form
SB-2 filed December 2, 2003).
|
|
10.22
|
Registration
Rights Agreement dated October 22, 2003 between the Company and Bridges
& Pipes, LLC. This agreement is one of 21 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 10.33 to the Company’s registration statement on Form
SB-2 filed December 2, 2003).
|
|
10.23
|
Series
R Warrant Agreement dated October 22, 2003 between the Company and Bridges
& Pipes, LLC. This agreement is one of 21 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 10.34 to the Company’s registration statement on Form
SB-2 filed December 2, 2003).
|
|
10.24
|
Series
S Warrant Agreement dated November 21, 2003 between the Company and
Alberdale Capital, LLC. This agreement is one of 7
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 10.35 to the Company’s registration
statement on Form SB-2 filed December 2, 2003).
|
|
10.25
|
Common
Stock Purchase Agreement between the Company and Fusion Capital Fund II,
LLC dated December 1, 2006 (incorporated by reference to Exhibit 10.5 to
the Company’s Current Report on Form 8-K filed December 4,
2006).
|
|
10.26
|
First
Amendment to Common Stock Purchase Agreement between the Company and
Fusion Capital Fund II, LLC, dated December 24, 2008 (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed December 31,
2008).
|
10.27
|
Registration
Rights Agreement dated December 1, 2006, between the Company and Fusion
Capital Fund II, LLC (incorporated by reference to Exhibit 10.6 to the
Company’s Current Report on Form 8-K filed December 4,
2006).
|
|
10.28
|
10%
Convertible Note Purchase Agreement, dated July 3, 2007, between the
Company and David C. Bupp, Cynthia B. Gochoco and Walter H. Bupp, as joint
tenants with right of survivorship (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed July 9,
2007).
|
|
10.29
|
Amendment
to Convertible Note Purchase Agreement, dated December 26, 2007, between
the Company and David C. Bupp, Cynthia B. Gochoco and Walter H. Bupp, as
joint tenants with right of survivorship (incorporated by reference to
Exhibit 10.10 to the Company’s Current Report on Form 8-K filed January 2,
2008).
|
|
10.30
|
Neoprobe
Corporation 10% Convertible Promissory Note Due July 8, 2007, executed in
favor of David C. Bupp, Cynthia B. Gochoco and Walter H. Bupp, as joint
tenants with right of survivorship (incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed July 9,
2007).
|
|
10.31
|
Amended
Neoprobe Corporation 10% Convertible Promissory Note Due December 31,
2011, executed in favor of David C. Bupp, Cynthia B. Gochoco and Walter H.
Bupp, as joint tenants with right of survivorship (incorporated by
reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K
filed January 2, 2008).
|
|
10.32
|
Security
Agreement, dated December 26, 2007, by and between the Company and David
C. Bupp, Cynthia B. Gochoco and Walter H. Bupp, as joint tenants with
right of survivorship (incorporated by reference to Exhibit 10.12 to the
Company’s Current Report on Form 8-K filed January 2,
2008).
|
|
10.33
|
Series
V Warrant to Purchase Common Stock of Neoprobe Corporation issued to David
C. Bupp, Cynthia B. Gochoco and Walter H. Bupp, as joint tenants with
right of survivorship (incorporated by reference to Exhibit 10.3 to the
Company’s Current Report on Form 8-K filed July 9,
2007).
|
|
10.34
|
Additional
Series V Warrant to Purchase Common Stock of Neoprobe Corporation issued
to David C. Bupp, Cynthia B. Gochoco and Walter H. Bupp, as joint tenants
with right of survivorship (incorporated by reference to Exhibit 10.13 to
the Company’s Current Report on Form 8-K filed January 2,
2008).
|
|
10.35
|
Form
of Series U Warrant Agreement, dated December 13, 2004, between the
Company and the placement agents for the Series A Convertible Promissory
Notes and Series T Warrants (incorporated by reference to Exhibit 10.35 to
the Company’s December 31, 2004 Form 10-KSB. This is the form
of six substantially identical agreements. A schedule
identifying the warrants and setting forth the material details in which
such agreements differ from the form that is incorporated by reference
herein is filed as Exhibit 10.34 to this Annual Report on Form
10-K).
|
|
10.36
|
Registration
Rights Agreement, dated July 3, 2007, by and among Neoprobe Corporation
and David C. Bupp, Cynthia B. Gochoco and Walter H. Bupp, as joint tenants
with right of survivorship (incorporated by reference to Exhibit 10.4 to
the Company’s Current Report on Form 8-K filed July 9,
2007).
|
|
10.37
|
Securities
Purchase Agreement, dated as of December 26, 2007, by and between the
Company and Platinum-Montaur Life Sciences, LLC (incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January
2, 2008).
|
10.38
|
Amendment
and Waiver for Securities Purchase Agreement, dated April 16, 2008,
between Neoprobe Corporation and Platinum-Montaur Life Sciences, LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed April 18, 2008).
|
|
10.39
|
Amended
and Restated Neoprobe Corporation 10% Series A Convertible Senior Secured
Promissory Note in the principal amount of $7,000,000, due December 26,
2011 (incorporated by reference to Exhibit 10.2 to the Company’s Current
Report on Form 8-K filed July 29, 2009).
|
|
10.40
|
Amended
and Restated Neoprobe Corporation 10% Series B Convertible Senior Secured
Promissory Note in the principal amount of $3,000,000, due December 26,
2011 (incorporated by reference to Exhibit 10.3 to the Company’s Current
Report on Form 8-K filed July 29, 2009).
|
|
10.41
|
Amended
and Restated Series W Warrant to Purchase Shares of Common Stock of
Neoprobe Corporation (incorporated by reference to Exhibit 10.4 to the
Company’s Current Report on Form 8-K filed July 29,
2009).
|
|
10.42
|
Amended
and Restated Series X Warrant to Purchase Shares of Common Stock of
Neoprobe Corporation (incorporated by reference to Exhibit 10.5 to the
Company’s Current Report on Form 8-K filed July 29,
2009).
|
|
10.43
|
Amended
and Restated Series Y Warrant to Purchase Shares of Common Stock of
Neoprobe Corporation (incorporated by reference to Exhibit 10.6 to the
Company’s Current Report on Form 8-K filed July 29,
2009).
|
|
10.44
|
Series
AA Warrant to Purchase Shares of Common Stock of Neoprobe Corporation
(incorporated by reference to Exhibit 10.7 to the Company’s Current Report
on Form 8-K filed July 29, 2009).
|
|
10.45
|
Registration
Rights Agreement, dated December 26, 2007, between the Company and
Platinum-Montaur Life Sciences, LLC (incorporated by reference to Exhibit
10.7 to the Company’s Current Report on Form 8-K filed January 2,
2008).
|
|
10.46
|
Second
Amendment to Registration Rights Agreement, dated April 16, 2008, between
Neoprobe Corporation and Platinum-Montaur Life Sciences, LLC (incorporated
by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed April 18, 2008).
|
|
10.47
|
Third
Amendment to Registration Rights Agreement, dated July 10, 2008, between
Neoprobe Corporation and Platinum-Montaur Life Sciences, LLC (incorporated
by reference to Exhibit 10.55 to pre-effective amendment No. 2 to the
Company’s Registration Statement on Form S-1, filed July 24, 2008,
Registration file No. 333-150650).
|
|
10.48
|
Fourth
Amendment to Registration Rights Agreement, dated December 5, 2008,
between Neoprobe Corporation and Platinum-Montaur Life Sciences, LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed December 9, 2008).
|
|
10.49
|
Fifth
Amendment to Registration Rights Agreement, dated December 21, 2009,
between Neoprobe Corporation and Platinum-Montaur Life Sciences, LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed December 21, 2009).
|
|
10.50
|
Security
Agreement, dated December 26, 2007, between the Company and
Platinum-Montaur Life Sciences, LLC (incorporated by reference to Exhibit
10.8 to the Company’s Current Report on Form 8-K filed January 2,
2008).
|
10.51
|
Patent,
Trademark, and Copyright Security Agreement, dated December 25, 2007, by
and among Neoprobe Corporation, Cardiosonix Ltd., Cira Biosciences, Inc.
and Platinum-Montaur Life Sciences, LLC (incorporated by reference to
Exhibit 10.9 to the Company’s Current Report on Form 8-K filed January 2,
2008).
|
|
10.52
|
Agreement
Modifying the Interest and Dividend Payment Dates of the Neoprobe
Corporation Series A and B Promissory Notes and Series A Preferred Stock,
and Exercise and Conversion Price Adjustment Provisions of the Neoprobe
Corporation Series X and Y Warrants and Series A Preferred Stock, dated as
of March 31, 2009, by and between Neoprobe Corporation and
Platinum-Montaur Life Sciences, LLC (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed April 6,
2009).
|
|
10.53
|
Securities
Amendment and Exchange Agreement, dated July 24, 2009, by and between
Neoprobe Corporation and Platinum-Montaur Life Sciences, LLC (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed July 29, 2009).
|
|
21.1
|
Subsidiaries
of the registrant.*
|
|
23.1
|
Consent
of BDO Seidman, LLP.*
|
|
23.2
|
Consent
of Porter, Wright, Morris & Arthur LLP (included in Exhibit 5.1
hereto)
|
|
24.1
|
Power
of Attorney.*
|
(1)
|
to
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement
to:
|
|
(i)
|
include
any prospectus required by section 10(a)(3) of the Securities Act of
1933;
|
(ii)
|
reflect
in the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b)(§230.424(b) of this chapter) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration
statement;
|
(iii)
|
include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration
statement.
|
(2)
|
that
for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
|
(3)
|
to
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
(4)
|
that
for purposes of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
|
|
the
undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
|
|
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424(§230.424 of this chapter);
|
|
Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
|
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
Neoprobe
Corporation
|
||
By:
|
/s/ Brent L. Larson
|
|
Brent L. Larson, Vice President, Finance and
|
||
Chief Financial Officer
|
Signature
|
Title
|
Date
|
||
/s/ David C. Bupp*
|
President,
Chief Executive Officer
|
December
29, 2009
|
||
David
C. Bupp
|
and
Director
|
|||
(principal
executive officer)
|
||||
/s/ Brent L. Larson
|
Vice
President, Finance and Chief
|
December
29, 2009
|
||
Brent
L. Larson
|
Financial
Officer
|
|||
(principal
financial officer and
|
||||
principal
accounting officer)
|
||||
/s/ Carl J. Aschinger, Jr.*
|
Chairman
of the Board of
|
December
29, 2009
|
||
Carl
J. Aschinger, Jr.
|
Directors
|
|||
/s/ Reuven Avital*
|
Director
|
December
29, 2009
|
||
Reuven
Avital
|
||||
/s/ Kirby I. Bland*
|
Director
|
December
29, 2009
|
||
Kirby
I. Bland
|
||||
/s/ Owen E. Johnson*
|
Director
|
December
29, 2009
|
||
Owen
E. Johnson
|
||||
/s/ Fred B. Miller*
|
Director
|
December
29, 2009
|
||
Fred
B. Miller
|
||||
/s/ Gordon A. Troup*
|
Director
|
December
29, 2009
|
||
Gordon
A. Troup
|
||||
/s/ Frank Whitley, Jr.*
|
Director
|
December
29, 2009
|
||
J.
Frank Whitley, Jr.
|
*By:
|
/s/ Brent L. Larson
|
Brent
L. Larson, Attorney-in fact
|