================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO _______________
COMMISSION FILE NUMBER 0-24050
NORTHFIELD LABORATORIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3378733
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1560 SHERMAN AVENUE, SUITE 1000, EVANSTON, ILLINOIS 60201-4800
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (847) 864-3500
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT).
YES X NO
--- ---
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED
IN RULE 12B-2 OF THE EXCHANGE ACT).
YES No X
--- ---
AS OF AUGUST 31, 2005, REGISTRANT HAD 26,753,897 SHARES OF COMMON STOCK
OUTSTANDING
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report contains forward-looking statements concerning, among
other things, our prospects, clinical and regulatory developments affecting our
potential product and our business strategies. These forward-looking statements
are identified by the use of such terms as "intends," "expects," "plans,"
"estimates," "anticipates," "forecasts," "should," "believes" and similar terms.
These forward-looking statements involve risks and uncertainties. Actual results
may differ materially from those predicted by the forward-looking statements
because of various factors and possible events, including those discussed under
"Risk Factors" in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Because these forward-looking statements involve risks and
uncertainties, actual results may differ significantly from those predicted in
these forward-looking statements. You should not place undue weight on these
statements. These statements speak only as of the date of this document or, in
the case of any document incorporated by reference, the date of that document.
All subsequent written and oral forward-looking statements attributable to
Northfield or any person acting on our behalf are qualified by the cautionary
statements in this section and in our Annual Report. We will have no obligation
to revise these forward-looking statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Northfield Laboratories Inc.:
We have reviewed the balance sheet of Northfield Laboratories Inc. (a company in
the development stage) as of August 31, 2005, and the related statements of
operations and cash flows for the three-month periods ended August 31, 2005 and
August 31, 2004. We have also reviewed the statements of shareholders' equity
(deficit) for the three-month period ended August 31, 2005. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with standards of the Public Company
Accounting Oversight Board (United States), the balance sheet of Northfield
Laboratories Inc. as of May 31, 2005, and the related statements of operations,
shareholders' equity (deficit), and cash flows for the year then ended and for
the period from June 19, 1985 (inception) through May 31, 2005 (not presented
herein); and in our report dated August 12, 2005, we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth
in the accompanying balance sheet as of May 31, 2005 and in the accompanying
statements of operations, cash flows and shareholders' equity (deficit) is
fairly stated, in all material respects, in relation to the statements from
which it has been derived.
/s/ KPMG LLP
Chicago, Illinois
October 7, 2005
NORTHFIELD LABORATORIES INC.
(a company in the development stage)
Balance Sheets
August 31, 2005 and May 31, 2005
AUGUST 31, MAY 31,
ASSETS 2005 2005
------------- -------------
(unaudited)
Current assets:
Cash and cash equivalents $ 16,976,610 6,800,405
Marketable securities 74,821,186 91,330,289
Prepaid expenses 714,132 826,741
Other current assets 143,080 139,808
------------- -------------
Total current assets 92,655,008 99,097,243
Property, plant, and equipment 14,921,968 14,796,631
Accumulated depreciation (14,021,278) (13,961,694)
------------- -------------
Net property, plant, and equipment 900,690 834,937
------------- -------------
Other assets 69,270 69,392
------------- -------------
$ 93,624,968 100,001,572
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,572,244 3,325,570
Accrued expenses 68,886 110,679
Accrued compensation and benefits 676,627 539,783
------------- -------------
Total current liabilities 3,317,757 3,976,032
Other liabilities 251,590 251,582
------------- -------------
Total liabilities 3,569,347 4,227,614
------------- -------------
Shareholders' equity:
Preferred stock, $.01 par value. Authorized 5,000,000 shares;
none issued and outstanding -- --
Common stock, $.01 par value. Authorized 30,000,000 shares;
issued 26,755,614 at August 31, 2005 and 26,752,739 at
May 31, 2005 267,556 267,527
Additional paid-in capital 241,026,739 240,997,444
Deficit accumulated during the development stage (151,141,737) (145,361,011)
Deferred compensation (71,544) (104,609)
------------- -------------
90,081,014 95,799,351
Less cost of common shares in treasury; 1,717 shares (25,393) (25,393)
------------- -------------
Total shareholders' equity 90,055,621 95,773,958
------------- -------------
$ 93,624,968 100,001,572
============= =============
See accompanying notes to financial statements and accountants' review report.
NORTHFIELD LABORATORIES INC.
(a company in the development stage)
Statements of Operations
Three months ended August 31, 2005 and 2004 and for the period
from June 19, 1985 (inception) through August 31, 2005
Cumulative
from
Three months ended August 31, June 19, 1985
---------------------------------- through
2005 2004 AUGUST 31, 2005
-------------- -------------- ---------------
(unaudited) (unaudited) (unaudited)
Revenues - license income $ -- -- 3,000,000
Costs and expenses:
Research and development 5,093,874 4,038,436 128,709,665
General and administrative 1,388,994 948,725 50,832,597
------------ ------------ ------------
6,482,868 4,987,161 179,542,262
Other income and expense:
Interest income 702,142 120,192 25,558,680
Interest expense -- -- 83,234
------------ ------------ ------------
$ 702,142 120,192 25,475,446
------------ ------------ ------------
Net loss before cumulative effect of change
in accounting principle (5,780,726) (4,866,969) (151,066,816)
------------ ------------ ------------
Cumulative effect of change in
accounting principle -- -- 74,921
------------ ------------ ------------
Net loss $ (5,780,726) (4,866,969) (151,141,737)
============ ============ ============
Net loss per share - basic and diluted $ (0.22) (0.23) (13.63)
============ ============ ============
Shares used in calculation of
per share data - basic and diluted 26,751,396 21,404,374 11,089,187
============ ============ ============
See accompanying notes to financial statements and accountants' review report.
NORTHFIELD LABORATORIES INC.
(a company in the development stage)
Statements of Shareholders' Equity (Deficit)
Three months ended August 31, 2005 and for
the period from June 19, 1985 (inception) through August 31, 2005
PREFERRED STOCK COMMON STOCK
---------------------- ----------------------------
NUMBER AGGREGATE NUMBER AGGREGATE
OF SHARES AMOUNT OF SHARES AMOUNT
--------- ---------- -------------- ----------
Issuance of common stock on August 27, 1985 -- $ 3,500,000 $ 35,000
Issuance of Series A convertible preferred stock at $4.00
per share on August 27, 1985 (net of costs of issuance
of $79,150) -- -- -- --
Net loss -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1986 -- -- 3,500,000 35,000
Net loss -- -- -- --
Deferred compensation relating to grant of stock options -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1987 -- -- 3,500,000 35,000
Issuance of Series B convertible preferred stock at
$35.68 per share on August 14, 1987 (net of costs of
issuance of $75,450) -- -- -- --
Net loss -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1988 -- -- 3,500,000 35,000
Issuance of common stock at $24.21 per share on June 7,
1988 (net of costs of issuance of $246,000) -- -- 413,020 4,130
Conversion of Series A convertible preferred stock to
common stock on June 7, 1988 -- -- 1,250,000 12,500
Conversion of Series B convertible preferred stock to
common stock on June 7, 1988 -- -- 1,003,165 10,032
Exercise of stock options at $2.00 per share -- -- 47,115 471
Issuance of common stock at $28.49 per share on March 6,
1989 (net of costs of issuance of $21,395) -- -- 175,525 1,755
Issuance of common stock at $28.49 per share on March 30,
1989 (net of costs of issuance of $10,697) -- -- 87,760 878
Sale of options at $28.29 per share to purchase common
stock at $.20 per share on March 30, 1989 (net of costs
of issuance of $4,162) -- -- -- --
Net loss -- -- -- --
Deferred compensation relating to grant of stock options -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1989 -- -- 6,476,585 64,766
Net loss -- -- -- --
Deferred compensation relating to grant of stock options -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1990 -- -- 6,476,585 64,766
Net loss -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1991 -- -- 6,476,585 64,766
Exercise of stock warrants at $5.60 per share -- -- 90,000 900
Net loss -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1992 -- -- 6,566,585 65,666
Exercise of stock warrants at $7.14 per share -- -- 15,000 150
Issuance of common stock at $15.19 per share on April 19,
1993 (net of costs of issuance of $20,724) -- -- 374,370 3,744
Net loss -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1993 -- -- 6,955,955 69,560
Net loss -- -- -- --
Issuance of common stock at $6.50 per share on May 26,
1994 (net of costs of issuance of $2,061,149) -- -- 2,500,000 25,000
Cancellation of stock options -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1994 -- -- 9,455,955 94,560
Net loss -- -- -- --
Issuance of common stock at $6.50 per share on June 20,
1994 (net of issuance costs of $172,500) -- -- 375,000 3,750
Exercise of stock options at $7.14 per share -- -- 10,000 100
Exercise of stock options at $2.00 per share -- -- 187,570 1,875
Cancellation of stock options -- -- -- --
Amortization of deferred compensation -- -- -- --
--- --------- ---------- ---------
Balance at May 31, 1995 -- $ -- 10,028,525 $ 100,285
See accompanying notes to financial statements and accountants' review report.
SERIES A CONVERTIBLE SERIES B CONVERTIBLE DEFICIT TOTAL
PREFERRED STOCK PREFERRED STOCK ACCUMULATED SHARE-
----------------------- ----------------------- ADDITIONAL DURING THE DEFERRED HOLDERS'
NUMBER AGGREGATE NUMBER AGGREGATE PAID-IN DEVELOPMENT COMPEN- TREASURY EQUITY
OF SHARES AMOUNT OF SHARES AMOUNT CAPITAL STAGE SATION SHARES (DEFICIT)
---------- ---------- ---------- --------- ------------ ------------- ----------- -------- -------------
-- $ -- -- $ -- $ (28,000) $ -- $ -- -- $ 7,000
250,000 250,000 -- -- 670,850 -- -- -- 920,850
-- -- -- -- -- (607,688) -- -- (607,688)
-------- ---------- ---------- ---------- ------------ ------------- ----------- ----- ------------
250,000 250,000 -- -- 642,850 (607,688) -- -- 320,162
-- -- -- -- -- (2,429,953) -- -- (2,429,953)
-- -- -- -- 2,340,000 -- (2,340,000) -- --
-- -- -- -- -- -- 720,000 -- 720,000
-------- ---------- ---------- ---------- ------------ ------------- ----------- ----- ------------
250,000 250,000 -- -- 2,982,850 (3,037,641) (1,620,000) -- (1,389,791)
-- -- 200,633 200,633 6,882,502 -- -- -- 7,083,135
-- -- -- -- -- (3,057,254) -- -- (3,057,254)
-- -- -- -- -- -- 566,136 -- 566,136
-------- ---------- ---------- ---------- ------------ ------------- ----------- ----- ------------
250,000 250,000 200,633 200,633 9,865,352 (6,094,895) (1,053,864) -- 3,202,226
-- -- -- -- 9,749,870 -- -- -- 9,754,000
(250,000) (250,000) -- -- 237,500 -- -- -- --
-- -- (200,633) (200,633) 190,601 -- -- -- --
-- -- -- -- 93,759 -- -- -- 94,230
-- -- -- -- 4,976,855 -- -- -- 4,978,610
-- -- -- -- 2,488,356 -- -- -- 2,489,234
-- -- -- -- 7,443,118 -- -- -- 7,443,118
-- -- -- -- -- (791,206) -- -- (791,206)
-- -- -- -- 683,040 -- (683,040) -- --
-- -- -- -- -- -- 800,729 -- 800,729
-------- ---------- ---------- ------- ------------ ------------- ----------- ----- ------------
-- -- -- -- 35,728,451 (6,886,101) (936,175) -- 27,970,941
-- -- -- -- -- (3,490,394) -- -- (3,490,394)
-- -- -- -- 699,163 -- (699,163) -- --
-- -- -- -- -- -- 546,278 -- 546,278
-------- ---------- ---------- -------- ------------ ------------- ----------- ----- ------------
-- -- -- -- 36,427,614 (10,376,495) (1,089,060) -- 25,026,825
-- -- -- -- -- (5,579,872) -- -- (5,579,872)
-- -- -- -- -- -- 435,296 -- 435,296
-------- ---------- ---------- -------- ------------ ------------- ----------- ----- ------------
-- -- -- -- 36,427,614 (15,956,367) (653,764) -- 19,882,249
-- -- -- -- 503,100 -- -- -- 504,000
-- -- -- -- -- (7,006,495) -- -- (7,006,495)
-- -- -- -- -- -- 254,025 -- 254,025
-------- ---------- ---------- ---------- ------------ ------------- ----------- ----- ------------
-- -- -- -- 36,930,714 (22,962,862) (399,739) -- 13,633,779
-- -- -- -- 106,890 -- -- -- 107,040
-- -- -- -- 5,663,710 -- -- -- 5,667,454
-- -- -- -- -- (8,066,609) -- -- (8,066,609)
-- -- -- -- -- -- 254,025 -- 254,025
-------- ---------- ---------- ---------- ------------ ------------- ----------- ----- ------------
-- -- -- -- 42,701,314 (31,029,471) (145,714) -- 11,595,689
-- -- -- -- -- (7,363,810) -- -- (7,363,810)
-- -- -- -- 14,163,851 -- -- -- 14,188,851
-- -- -- -- (85,400) -- 85,400 -- --
-- -- -- -- -- -- 267 -- 267
-------- ---------- ---------- ---------- ------------ ------------- ----------- ----- ------------
-- -- -- -- 56,779,765 (38,393,281) (60,047) -- 18,420,997
-- -- -- -- -- (7,439,013) -- -- (7,439,013)
-- -- -- -- 2,261,250 -- -- -- 2,265,000
-- -- -- -- 71,300 -- -- -- 71,400
-- -- -- -- 373,264 -- -- -- 375,139
-- -- -- -- (106,750) -- 106,750 -- --
-- -- -- -- -- -- (67,892) -- (67,892)
-------- ---------- ---------- ---------- ------------ ------------- ----------- ----- ------------
-- $ -- -- $ -- $ 59,378,829 $ (45,832,294) $ (21,189) -- $ 13,625,631
NORTHFIELD LABORATORIES INC.
(a company in the development stage)
Statements of Shareholders' Equity (Deficit)
Three months ended August 31, 2005 and for the period
from June 19, 1985 (inception) through August 31, 2005
PREFERRED STOCK COMMON STOCK
--------------------- ----------------------------
NUMBER AGGREGATE NUMBER AGGREGATE
OF SHARES AMOUNT OF SHARES AMOUNT
--------- --------- ------------ -------------
Net loss
Issuance of common stock at $17.75 per share on August 9, 1995 -- $ -- -- $ --
(net of issuance costs of $3,565,125) -- -- 2,925,000 29,250
Issuance of common stock at $17.75 per share on September 11, 1995
(net of issuance costs of $423,238) -- -- 438,750 4,388
Exercise of stock options at $2.00 per share -- -- 182,380 1,824
Exercise of stock options at $6.38 per share -- -- 1,500 15
Exercise of stock options at $7.14 per share -- -- 10,000 100
Cancellation of stock options -- -- -- --
Amortization of deferred compensation -- -- -- --
----- ----- ---------- ----------
Balance at May 31, 1996 -- -- 13,586,155 135,862
Net loss -- -- -- --
Exercise of stock options at $0.20 per share -- -- 263,285 2,633
Exercise of stock options at $2.00 per share -- -- 232,935 2,329
Exercise of stock options at $7.14 per share -- -- 10,000 100
Amortization of deferred compensation -- -- -- --
----- ----- ---------- ----------
Balance at May 31, 1997 -- -- 14,092,375 140,924
Net loss -- -- -- --
Exercise of stock options at $7.14 per share -- -- 5,000 50
Amortization of deferred compensation -- -- -- --
----- ----- ---------- ----------
Balance at May 31, 1998 -- -- 14,097,375 140,974
Net loss -- -- -- --
Non-cash compensation -- -- -- --
Exercise of stock options at $7.14 per share -- -- 17,500 175
Exercise of stock warrants at $8.00 per share -- -- 125,000 1,250
----- ----- ---------- ----------
Balance at May 31, 1999 -- -- 14,239,875 142,399
Net loss -- -- -- --
Non-cash compensation -- -- -- --
Exercise of stock options at $13.38 per share -- -- 2,500 25
----- ----- ---------- ----------
Balance at May 31, 2000 -- -- 14,242,375 142,424
Net loss -- -- -- --
Non-cash compensation -- -- -- --
Exercise of stock options at $6.38 per share -- -- 6,000 60
Exercise of stock options at $10.81 per share -- -- 17,500 175
----- ----- ---------- ----------
Balance at May 31, 2001 -- -- 14,265,875 142,659
Net loss -- -- -- --
----- ----- ---------- ----------
Balance at May 31, 2002 -- -- 14,265,875 142,659
Net loss -- -- -- --
----- ----- ---------- ----------
Balance at May 31, 2003 -- -- 14,265,875 142,659
Issuance of common stock at $5.60 per share on July 28, 2003
(net of costs of issuance of $909,229) -- -- 1,892,857 18,928
Issuance of common stock to directors at $6.08 per share on
October 30, 2003 -- -- 12,335 123
Deferred compensation related to stock grants -- -- 25,500 255
Amortization of deferred compensation -- -- -- --
Issuance of common stock at $5.80 per share on January 29, 2004
(net of costs of issuance of $1,126,104) -- -- 2,585,965 25,860
Issuance of common stock at $5.80 per share on February 18, 2004
(net of costs of issuance of $116,423) -- -- 237,008 2,370
Issuance of common stock at $5.80 per share on April 15, 2004
(net of costs of issuance of $192,242) -- -- 409,483 4,095
Issuance of common stock at $12.00 per share on May 18, 2004
(net of costs of issuance of $1,716,831.36) -- -- 1,954,416 19,544
Exercise of stock options at $6.38 per share -- -- 15,000 150
Net loss -- -- -- --
----- ------ ----------- ----------
Balance at May 31, 2004 21,398,439 213,984
Deferred compensation related to stock grants -- -- 5,500 55
Amortization of deferred compensation -- -- -- --
Exercise of stock options between $5.08 and $14.17 per share -- -- 167,875 1,679
Cost of shares in treasury, 1,717 shares -- -- -- --
Issuance of common stock to directors at $12.66 per share on
September 21, 2004 -- -- 5,925 59
Issuance of common stock at $15.00 per share on February 9,
2005 (net of costs of issuance of $4,995,689) -- -- 5,175,000 51,750
Net loss -- -- -- --
----- ------ ----------- ----------
Balance at May 31, 2005 -- $ -- 26,752,739 $ 267,527
Amortization of deferred compensation (unaudited) -- -- -- --
Exercise of stock options at $7.13 and $10.66 per share (unaudited) -- -- 2,875 29
Net loss (unaudited) -- -- -- --
----- ------ ----------- ----------
Balance at August 31, 2005 (unaudited) -- $ -- 26,755,614 $ 267,556
===== ====== =========== ==========
See accompanying notes to financial statements and accountants' review report.
SERIES A CONVERTIBLE SERIES B CONVERTIBLE TOTAL
PREFERRED STOCK PREFERRED STOCK ACCUMULATED SHARE-
--------------------- --------------------- ADDITIONAL DURING THE DEFERRED HOLDERS'
NUMBER AGGREGATE NUMBER AGGREGATE PAID-IN DEVELOPMENT COMPEN- TREASURY EQUITY
OF SHARES AMOUNT OF SHARES AMOUNT CAPITAL STAGE SATION SHARES (DEFICIT)
--------- ---------- -------- ---------- ------------- --------------- ----------- ------------ -------------
-- $ -- -- $ -- -- $ (4,778,875) $ -- -- $ (4,778,875)
-- -- -- -- 48,324,374 -- -- -- 48,353,624
-- -- -- -- 7,360,187 -- -- -- 7,364,575
-- -- -- -- 362,937 -- -- -- 364,761
-- -- -- -- 9,555 -- -- -- 9,570
-- -- -- -- 71,300 -- -- -- 71,400
-- -- -- -- (80,062) -- 80,062 -- --
-- -- -- -- -- -- (62,726) -- (62,726)
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 115,427,120 (50,611,169) (3,853) -- 64,947,960
-- -- -- -- -- (4,245,693) -- -- (4,245,693)
-- -- -- -- 50,025 -- -- -- 52,658
-- -- -- -- 463,540 -- -- -- 465,869
-- -- -- -- 71,300 -- -- -- 71,400
-- -- -- -- -- -- 2,569 -- 2,569
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 116,011,985 (54,856,862) (1,284) -- 61,294,763
-- -- -- -- -- (5,883,378) -- -- (5,883,378)
-- -- -- -- 35,650 -- -- -- 35,700
-- -- -- -- -- -- 1,284 -- 1,284
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 116,047,635 (60,740,240) -- -- 55,448,369
-- -- -- -- -- (7,416,333) -- -- (7,416,333)
-- -- -- -- 14,354 -- -- -- 14,354
-- -- -- -- 124,775 -- -- -- 124,950
-- -- -- -- 998,750 -- -- -- 1,000,000
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 117,185,514 (68,156,573) -- -- 49,171,340
-- -- -- -- -- (9,167,070) -- -- (9,167,070)
-- -- -- -- 57,112 -- -- -- 57,112
-- -- -- -- 33,425 -- -- -- 33,450
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 117,276,051 (77,323,643) -- -- 40,094,832
-- -- -- -- -- (10,174,609) -- -- (10,174,609)
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 38,220 -- -- -- 38,280
-- -- -- -- 189,000 -- -- -- 189,175
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 117,503,271 (87,498,252) -- -- 30,147,678
-- -- -- -- -- (10,717,360) -- -- (10,717,360)
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 117,503,271 (98,215,612) -- -- 19,430,318
-- -- -- -- -- (12,250,145) -- -- (12,250,145)
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 117,503,271 (110,465,757) -- -- 7,180,173
-- -- -- -- 9,671,843 -- -- -- 9,690,771
-- -- -- -- 74,877 -- -- -- 75,000
-- -- -- -- 190,995 -- (191,250) -- --
-- -- -- -- -- -- 35,630 -- 35,630
-- -- -- -- 13,846,633 -- -- -- 13,872,493
-- -- -- -- 1,255,853 -- -- -- 1,258,223
-- -- -- -- 2,178,664 -- -- -- 2,182,759
-- -- -- -- 21,716,616 -- -- -- 21,736,160
-- -- -- -- 95,550 -- -- -- 95,700
-- -- -- -- -- (14,573,798) -- -- (14,573,798)
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- -- -- -- 166,534,302 (125,039,555) (155,620) -- 41,553,111
-- -- -- -- 71,055 -- (71,110) -- --
-- -- -- -- -- -- 122,121 -- 122,121
-- -- -- -- 1,739,585 -- -- -- 1,741,264
-- -- -- -- -- -- -- (25,393) (25,393)
-- -- -- -- 74,941 -- -- -- 75,000
-- -- -- -- 72,577,561 -- -- -- 72,629,311
-- -- -- -- -- (20,321,456) -- -- (20,321,456)
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- $ -- -- $ -- $ 240,997,444 $(145,361,011 $ (104,609) (25,393) $ 95,773,958
-- -- -- -- -- -- 33,065 -- 33,065
-- -- -- -- 29,295 -- -- -- 29,324
-- -- -- -- -- (5,780,726) -- -- (5,780,726)
------- --------- -------- ---------- ------------- ------------- ----------- ----------- ------------
-- $ -- -- $ -- $ 241,026,739 $(151,141,737) $ (71,544) (25,393) $ 90,055,621
======= ========= ======== ========== ============= ============= =========== =========== ============
NORTHFIELD LABORATORIES INC.
(a company in the development stage)
Statements of Cash Flows
Three months ended August 31, 2005 and 2004
and for the period from June 19, 1985
(inception) through August 31, 2005
Cumulative
from
Three months ended August 31, June 19, 1985
--------------------------------- through
2005 2004 August 31, 2005
-------------- --------------- ---------------
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities:
Net loss $ (5,780,726) (4,866,969) (151,141,737)
Adjustments to reconcile net loss to net
cash used in operating activities:
Marketable security amortization (484,070) 8,492 (1,085,390)
Depreciation and amortization 59,707 159,485 18,336,415
Non-cash compensation 33,065 23,841 3,893,539
Loss on sale of equipment -- -- 66,359
Changes in assets and liabilities:
Prepaid expenses 112,609 21,275 (923,343)
Other current assets (3,272) (23,160) (2,039,331)
Other assets -- -- 6,851
Accounts payable (753,326) (800,905) 2,572,244
Accrued expenses (41,793) (60,855) 68,886
Accrued compensation and benefits 136,844 (2,285) 676,627
Other liabilities 8 (954) 251,590
------------ ------------ ------------
Net cash used in operating activities (6,720,954) (5,542,035) (129,317,290)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of property, plant, equipment, and
capitalized engineering costs (125,337) (60,564) (19,162,716)
Proceeds from sale of land and equipment -- -- 1,863,023
Proceeds from matured marketable securities 37,820,000 3,090,000 467,672,352
Proceeds from sale of marketable securities -- -- 7,141,656
Purchase of marketable securities (20,826,828) (10,672,560) (548,555,501)
------------ ------------ ------------
Net cash provided by (used in) investing activities 16,867,835 (7,643,124) (91,041,186)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 29,324 38,280 236,016,514
Payment of common stock issuance costs -- -- (14,128,531)
Proceeds from issuance of preferred stock -- -- 6,644,953
Proceeds from sale of stock options to
purchase common shares -- -- 7,443,118
Proceeds from issuance of notes payable -- -- 1,500,000
Repayment of notes payable -- -- (140,968)
------------ ------------ ------------
Net cash provided by financing activities 29,324 38,280 237,335,086
------------ ------------ ------------
Net (decrease) increase in cash 10,176,205 (13,146,879) 16,976,610
Cash at beginning of period 6,800,405 39,042,884 --
------------ ------------ ------------
Cash at end of period $ 16,976,610 25,896,005 16,976,610
============ ============ ============
Supplemental schedule of noncash financing activities:
Exercise of stock option, 5,000 shares in exchange for
1,717 treasury shares $ -- -- 25,393
See accompanying notes to financial statements and accountants' review report.
NORTHFIELD LABORATORIES INC.
(A COMPANY IN THE DEVELOPMENT CHANGE)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005
(UNAUDITED)
(1) BASIS OF PRESENTATION
The interim financial statements presented are unaudited but, in the opinion of
management, have been prepared in conformity with accounting principles
generally accepted in the United States of America applied on a basis consistent
with those of the annual financial statements. Such interim financial statements
reflect all adjustments (consisting of normal recurring accruals) necessary for
a fair presentation of the financial position, results of operations and cash
flows for the interim periods presented. The results of operations for the
interim periods presented are not necessarily indicative of the results to be
expected for the full fiscal years. The interim financial statements should be
read in connection with the audited financial statements for the year ended May
31, 2005.
(2) USE OF ESTIMATES
Our management has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity with accounting
principles generally accepted in the United States of America. Actual results
could differ from those estimates.
(3) COMPUTATION OF NET LOSS PER SHARE
Basic earnings per share is based on the weighted average number of shares
outstanding and excludes the dilutive effect of unexercised common stock
equivalents. Diluted earnings per share is based on the weighted average number
of shares outstanding and includes the dilutive effect of unexercised common
stock equivalents. Because we reported net losses for all periods presented,
basic and diluted per share amounts are the same. As of August 31, 2005, we have
1,401,625 options and 212,392 warrants that were excluded from the net loss per
share calculation because their inclusion would have been antidilutive.
(4) STOCK OPTIONS
We account for our fixed plan stock options under the intrinsic value method of
accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations in accounting for
options granted to directors, officers, and key employees under the plans. As
such, compensation expense is recorded on the date of grant and amortized over
the period of service only if the current market value of the underlying stock
exceeded the exercise price. No stock option based employee compensation cost is
reflected in net loss, as each option granted under these plans had an exercise
price equal to the market value of the underlying common stock on the date of
grant.
The following table illustrates the effect on net loss if we had applied the
fair value recognition provisions of Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock Based Compensation" to the measurement of
stock-based employee compensation, including a straight-line recognition of
compensation costs over the related vesting periods for fixed awards:
Three Months Ended
August 31, August 31,
2005 2004
----------- -----------
(unaudited) (unaudited)
Net loss as reported ............ $(5,780,726) (4,866,969)
Add: Stock based compensation
expense included in statements
of operations ................... 33,065 23,841
Deduct: Total stock based
compensation expense
determined under the fair
value method for all awards ..... (469,812) (269,613)
----------- -----------
Pro forma net loss .............. $(6,217,473) (5,112,741)
=========== ===========
Basic and diluted loss per share:
As reported ............ (0.22) (0.23)
Pro forma .............. (0.23) (0.24)
=========== ===========
The weighted-average fair value of options granted during the period ended
August 31, 2005 and 2004 was $8.62 and $9.10, respectively.
For purposes of calculating the compensation cost consistent with SFAS 123, the
fair value of each option grant is estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants in the periods ended August 31, 2005 and 2004:
2005 2004
---------- ----------
Expected volatility ............... 74.3% 68.6%
Risk-free interest rate ........... 3.9% 4.5%
Dividend yield .................... -- --
Expected lives .................... 7.2 years 7.8 years
========== ==========
(5) RECENTLY ISSUED ACCOUNTING STANDARD
In December 2004, Statement of Financial Accounting Standards (SFAS) No. 123
(Revised 2004), "Share-Based Payment: an amendment of FASB Statements No. 123
and 95", was issued. This Statement amends SFAS No. 123, "Accounting for
Stock-Based Compensation", and requires companies to recognize in the income
statement the grant-date fair value of stock options and other equity-based
compensation issued to employees. The Statement is effective for public
companies with annual periods beginning after June 15, 2005. The Company will
adopt SFAS 123(R) for the three-month period ended August 31, 2006. The Company
will assess the impact of the transition to this new accounting standard during
the upcoming months.
(6) MARKETABLE SECURITIES
The Company invests in U.S. treasury securities, obligations of U.S.
government agencies and high grade commercial paper. The Company has the intent
and ability to hold these securities until maturity and all securities have a
maturity of less than one year.
The fair market value of the Company's marketable securities was $74,744,979
at August 31, 2005, which included gross unrealized holding losses of $76,207.
The fair market value of the Company's marketable securities was $91,209,903 at
May 31, 2005, which included gross unrealized holding losses of $120,386. All of
these marketable securities are scheduled to mature in less than one year.
(7) SUBSEQUENT EVENT
At the 2005 Annual Meeting on September 29, 2005, the stockholders of the
Company approved an amendment to the Company's restated certificate of
incorporation to increase the number of authorized shares of the Company's
common stock from 30,000,000 to 60,000,000 shares.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RECENT DEVELOPMENTS
We are currently enrolling patients in a pivotal Phase III trial in which
our PolyHeme(R) hemoglobin-based oxygen-carrying resuscitative fluid is being
used for the first time in the U.S. to treat severely injured patients in
hemorrhagic shock before they reach the hospital. Under this protocol, treatment
with PolyHeme begins at the scene of the injury or in the ambulance and
continues during transport and the initial 12-hour post-injury period in the
hospital. Since blood is not presently carried in ambulances, the use of
PolyHeme in this setting has the potential to improve survival and address a
critical, unmet medical need.
As of September 30, 2005, 23 clinical sites in the United States were
enrolling patients in our pivotal Phase III trial and seven other sites had
received final Institutional Review Board, or IRB, approval and were preparing
to begin patient enrollment. Multiple additional sites were engaged in the
pre-trial public disclosure and community consultation process. Each of the
sites participating in the trial is designated as a Level I trauma center,
indicating its capacity to treat the most severely injured trauma patients. We
anticipate a total of 25 or more clinical sites across the United States will
eventually participate in the trial. The trial has an expected enrollment of 720
patients.
As part of our trial protocol, an Independent Data Monitoring Committee,
or IDMC, is responsible for periodically evaluating the safety data from the
trial and making recommendations relating to the continuation or modification of
the trial protocol to minimize any identified risks to patients. The protocol
includes four planned evaluations by the IDMC that occur after 60, 120, 250 and
500 patients have been enrolled and monitored for a 30-day follow up period. The
IDMC focuses its reviews on mortality and serious adverse events and evaluates
all safety data as the trial continues. We receive a recommendation from the
IDMC after each review, but we will not have access to the trial data reviewed
by the IDMC until the trial is completed.
As of September 30, 2005, approximately 500 patients had been enrolled in
the study. Enrollment in the trial continues during the 30-day follow-up period,
data preparation and analysis, and meetings of the IDMC; therefore, the
disclosure of the IDMC recommendation does not correspond to the current status
of patient enrollment. We anticipate that the IDMC will complete its final
interim review of safety data on the first 500 patients enrolled in our trial
and make a recommendation to us in the fourth calendar quarter of 2005. Patient
enrollment in our trial will continue during the IDMC review process.
Our current goal is to complete the patient enrollment phase early in
calendar year 2006. Our ability to achieve this goal will depend, in part, on
the number of clinical sites participating in our trial and the ability of these
sites to enroll patients at the projected rates.
The progress of our pivotal Phase III trial and the timing and outcome of
the Food and Drug Administration, or FDA, review process are subject to
significant risks and uncertainties, many of which are outside of our control.
We urge you to review the "Risk Factors" section in our most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission for a
discussion of certain of these risks and uncertainties.
Since Northfield's incorporation in 1985, we have devoted substantially all
of our efforts and resources to the research, development and clinical testing
of our potential product, PolyHeme(R). We have incurred operating losses during
each year of our operations since inception and expect to incur substantial
additional operating
losses for the next several years. From Northfield's inception through August
31, 2005, we have incurred operating losses totaling $151,142,000.
We will be required to complete our pivotal Phase III trial and obtain FDA
regulatory approval before PolyHeme can be sold commercially. The FDA regulatory
process is subject to significant risks and uncertainties, and we therefore
cannot at this time reasonably estimate the timing of any future revenues from
the commercial sale of PolyHeme. The costs incurred by Northfield to date and
during each period presented below in connection with our development of
PolyHeme are described in the Statements of Operations in our financial
statements.
Our success will depend on several factors, including our ability to obtain
FDA regulatory approval of PolyHeme and our manufacturing facilities, obtain
sufficient quantities of blood to manufacture PolyHeme in commercial quantities,
manufacture and distribute PolyHeme in a cost-effective manner, enforce our
patent positions and raise sufficient capital to fund these activities. We have
experienced significant delays in the development and clinical testing of
PolyHeme. We cannot ensure that we will be able to achieve these goals or that
we will be able to realize product revenues or profitability on a sustained
basis or at all.
RESULTS OF OPERATIONS
We reported no revenues for either of the three-month periods ended August
31, 2005 or 2004. From Northfield's inception through August 31, 2005, we have
reported total revenues of $3,000,000, all of which were derived from licensing
fees.
OPERATING EXPENSES
Operating expenses for our first fiscal quarter ended August 31, 2005
totaled $6,483,000, an increase of $1,496,000, or 30.0%, from the $4,987,000
reported in the first quarter of fiscal 2005. As expected, significant increases
in operating expenses were incurred to conduct, expand, report and support our
pivotal phase III trial and to support our efforts relating to internal controls
compliance required under the Sarbanes-Oxley Act.
Research and development expense during the first quarter of fiscal
2006 totaled $5,094,000, an increase of $1,056,000, or 26.2%, from the
$4,038,000 reported in the first quarter of fiscal 2005. The increase is
primarily due to costs associated with our pivotal phase III trial. Our pivotal
phase III trial continues to expand as we continue to actively pursue additional
Level I trauma sites to participate.
General and administrative expenses in the first quarter of fiscal 2006
totaled $1,389,000, which is an increase of $440,000, or 46.4%, from the general
and administrative expenses reported in the first quarter of fiscal 2005 of
$949,000. The increased expenses this year are due to legal and accounting costs
for Sarbanes-Oxley internal controls compliance work.
INTEREST INCOME
Interest income for the three-month period ended August 31, 2005
totaled $702,000, an increase of $582,000 from the $120,000 in interest income
reported in the three-month period ended August 31, 2004. Following our
successful fund raising efforts in fiscal 2005, Northfield started the fiscal
year 2006 with $98,131,000 in available cash and marketable securities. This
compares to available cash resources at the beginning of fiscal 2005 of
$42,487,000. The significant increase in cash balances and an increase in
available short-term interest rates caused interest income to increase. We
continue to invest our funds only in high grade, short-term instruments.
NET LOSS
The net loss for the three-month period ended August 31, 2005 totaled
$5,781,000, or $0.22 per share, compared to a net loss of $4,867,000, or $0.23
per share, for the first quarter ended August 31, 2004. In dollar terms the loss
increased by $914,000, or 18.8%, but on a per share basis the dilutional effect
of our additional 5,347,000 weighted average shares outstanding in the current
period caused a 4.4% decrease in loss per share.
LIQUIDITY AND CAPITAL RESOURCES
From Northfield's inception through August 31, 2005, we have used cash in
operating activities and for the purchase of property, plant, equipment and
engineering services in the amount of $148,480,000. For the first fiscal
quarters ended August 31, 2005 and 2004, these cash expenditures totaled
$6,846,000 and $5,603,000, respectively. The first fiscal quarter 2006 increase
in cash utilization is due primarily to expenses related to our pivotal Phase
III trial and our Sarbanes-Oxley internal controls compliance work.
We have financed our research and development and other activities to date
through the public and private sale of equity securities and, to a more limited
extent, through the license of product rights. As of August 31, 2005, we had
cash and marketable securities totaling $91,798,000.
We believe our existing capital resources will be adequate to fund the
completion of the patient enrollment phase of our pivotal phase III clinical
trial, the preparation and submission of a Biologics License Application for
PolyHeme with FDA, our planned construction of a 75,000-unit commercial
manufacturing facility, and our operating capital requirements for approximately
the next 24 months. Thereafter, we may require substantial additional funding to
continue our operations.
We may issue additional equity or debt securities or enter into
collaborative arrangements with strategic partners, which could provide us with
additional funding or absorb expenses we would otherwise be required to pay. We
are also pursuing potential sources of additional government funding. Any one or
a combination of these sources may be utilized to raise additional capital. We
believe our ability to raise additional capital or enter into a collaborative
arrangement with a strategic partner will depend primarily on the results of our
clinical trial, as well as general conditions in the business and financial
markets. An inability to raise sufficient levels of capital could materially
delay or prevent the commercialization of PolyHeme, even if approved by FDA.
Our capital requirements may vary materially from those now anticipated
because of the timing and results of our clinical testing of PolyHeme, the
establishment of relationships with strategic partners, changes in the scale,
timing or cost of our commercial manufacturing facility, competitive and
technological advances, the FDA regulatory process, changes in our marketing and
distribution strategy and other factors.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements requires management to make
estimates and assumptions that affect amounts reported therein. We believe the
following critical accounting policy reflects our more significant judgments and
estimates used in the preparation of our financial statements.
NET DEFERRED TAX ASSETS VALUATION
We record our net deferred tax assets in the amount that we expect to
realize based on projected future taxable income. In assessing the
appropriateness of our valuation, assumptions and estimates are required, such
as Northfield's ability to generate future taxable income. In the event we were
to determine that it was more likely than not we would be able to realize our
deferred tax assets in the future in excess of their carrying value, an
adjustment to recognize the deferred tax assets would increase income in the
period such determination was made. As of August 31, 2005, we have recorded a
100% percent valuation allowance against our net deferred tax assets.
CONTRACTUAL OBLIGATIONS
The following table reflects a summary of our contractual cash obligations
as of August 31, 2005:
LESS THAN 4-5
CONTRACTUAL CASH OBLIGATIONS TOTAL ONE YEAR 1-3 YEARS YEARS
---------------------------------- ---------- ---------- ---------- ----------
Lease Obligations(1) ............. $3,304,828 $ 854,288 $1,688,698 $ 761,842
Other Obligations ................ 1,251,250 1,251,250 -- --
---------- ---------- ---------- ----------
Total Contractual Cash Obligations $4,556,078 $2,105,538 $1,688,698 $ 761,842
========== ========== ========== ==========
----------
(1) The lease for our Evanston headquarters is cancelable with six months
notice combined with a termination payment equal to three months base rent at
any time after February 14, 2009. If the lease is cancelled as of February 14,
2009 unamortized broker commissions of $17,470 would also be due.
(2) Represents payments required to be made upon termination of employment
agreements with two of our executive officers. The employment contracts renew
automatically unless terminated. Figures shown represent compensation payable
upon the termination of the employment agreements for reasons other than death,
disability, cause or voluntary termination of employment by the executive
officer other than for good reason. Additional payments may be required under
the employment agreements in connection with a termination of employment of the
executive officer following a change in control of Northfield.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued SFAS 123R which requires the measurement
of all share-based payments to employees, including grants of employee stock
options, using a fair-value-based method and the recording of such expense in
our statements of operations over the relevant service period. The accounting
provisions of SFAS 123R are effective for annual reporting periods beginning
after June 15, 2005. We are required to adopt SFAS 123R for the period ended
August 31, 2006. The pro forma disclosures previously permitted under SFAS 123
no longer will be an alternative to financial statement recognition. Although we
have not yet determined whether the adoption of SFAS 123R will result in amounts
that are similar to the current pro forma disclosures under SFAS 123, we are
evaluating the requirements under SFAS 123R and expect the adoption to have an
impact on our statements of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We currently do not have any foreign currency exchange risk. We invest our
cash and cash equivalents in government securities, certificates of deposit and
money market funds. These investments are subject to interest rate risk.
However, due to the nature of our short-term investments, we believe that the
financial market risk exposure is not material. A one percentage point decrease
in the interest rate received on our cash and marketable securities of $91.8
million at August 31, 2005 would decrease interest income by $918,000 on an
annual basis.
ITEM 4. CONTROLS AND PROCEDURES.
Based on their evaluation as of the end of the period covered by this
report, our Chief Executive Officer and Senior Vice President and Chief
Financial Officer have concluded that Northfield's disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, are effective to ensure that information required to be
disclosed by us in the reports that we file or submit under the Securities
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
There were no changes in our internal control over financial reporting that
occurred during our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
a) Exhibit 15 - Letter Re: unaudited interim financial
information
Exhibit 31.1 - Certification of Steven A. Gould, M.D.,
pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
Exhibit 31.2 - Certification of Jack J. Kogut, pursuant to
Rule 13a-14(a) under the Securities Exchange
Act of 1934
Exhibit 32.1 - Certification of Steven A. Gould, M.D.,
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
Exhibit 32.2 - Certification of Jack J. Kogut, pursuant to
18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley
Act of 2002
b) None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company in the capacities indicated on October 11, 2005.
SIGNATURE TITLE
/s/ Steven A. Gould, M.D. Chairman of the Board and Chief
------------------------- Executive Officer
Steven A. Gould, M.D.
/s/ Jack J. Kogut Sr. Vice President and Chief
------------------------- Financial Officer
Jack J. Kogut