UNITED STATES SECURITY AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM 10-Q _______________ (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 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 0-23280 NEUROBIOLOGICAL TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Delaware 94-3049219 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3260 Blume Drive, Suite 500 Richmond, California 94806 (Address of principal executive offices) (510) 262-1730 (Registrant's telephone number, including area code) 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 the number of shares outstanding of each of the issuer's classes of the common stock, as of the latest practical date. Common Stock, $.001 Par Value 17,503,699 shares outstanding as of November 1, 2001 NEUROBIOLOGICAL TECHNOLOGIES, INC. FORM 10-Q TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited)..................................... 3 Condensed Balance Sheets -- September 30, 2001 and June 30, 2001..... 3 Condensed Statements of Operations -- Three months ended September 30, 2001 and 2000; Period from August 27, 1987 (inception) through September 30, 2001............................... 4 Condensed Statements of Cash Flows -- Three months ended September 30, 2001 and 2000; Period from August 27, 1987 (inception) through September 30, 2001............................... 5 Notes to Condensed Financial Statements.............................. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION................................... 7 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........... 12 PART II. OTHER INFORMATION.................................................... 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................... 13 SIGNATURES.................................................................... 13 2 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NEUROBIOLOGICAL TECHNOLOGIES, INC. (A development stage company) CONDENSED BALANCE SHEETS September 30, June 30, 2001 2001 ------------------------------------- (unaudited) (Note 1) ASSETS Current assets: Cash and cash equivalents $ 2,367,311 $ 3,626,700 Short-term investments 7,910,574 6,555,575 Interest receivable 116,624 132,044 Prepaid expenses and other 182,723 253,827 ------------------------------------- Total current assets 10,577,232 10,568,146 Long-term investments -- 861,313 Property and equipment, net 22,979 28,820 ------------------------------------- $ 10,600,211 $ 11,458,279 ===================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 528,847 $ 762,049 ------------------------------------- Total current liabilities 528,847 762,049 Stockholders' equity: Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, 2,332,000 issued in series, 1,582,000 outstanding at September 30, 2001 and June 30, 2001 791,000 791,000 Common stock, $.001 par value, 35,000,000 shares authorized, 17,503,699 outstanding at September 30, 2001 and June 30, 2001 43,660,557 43,660,557 Deferred compensation (177,938) (191,626) Deficit accumulated during development stage (34,202,255) (33,563,701) ------------------------------------- Total stockholders' equity 10,071,364 10,696,230 ------------------------------------- $ 10,600,211 $ 11,458,279 ===================================== See accompanying notes. 3 NEUROBIOLOGICAL TECHNOLOGIES, INC. (A development stage company) CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Period from Three months ended September 30, August 27, 1987 -------------------------------- (inception) through 2001 2000 September 30, 2001 ---------------------------------------------------------- Revenues License $ -- $ -- $ 6,881,250 Grant -- -- 149,444 ---------------------------------------------------------- Total revenues -- -- 7,030,694 Expenses Research and development 255,561 235,597 28,414,001 General and administrative 499,690 528,671 15,832,242 ---------------------------------------------------------- Total expenses 755,251 764,268 44,246,243 ---------------------------------------------------------- Operating loss (755,251) (764,268) (37,215,549) Interest income 116,697 145,897 3,055,125 ---------------------------------------------------------- Loss before income tax expense (638,554) (618,371) (34,160,424) Income tax expense -- -- 41,831 ---------------------------------------------------------- Net loss $ (638,554) $ (618,371) $(34,202,255) ========================================================== Basic and diluted net loss per share $(0.04) $(0.04) ================================= Weighted average shares used in basic and diluted net loss per share calculation 17,503,699 16,103,854 ================================= See accompanying notes. 4 NEUROBIOLOGICAL TECHNOLOGIES, INC. (A development stage company) CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Period from Three months ended September 30, August 27, 1987 ----------------------------------- (inception) through 2001 2000 September 30, 2001 ------------------------------------------------------------- OPERATING ACTIVITIES: Net loss $ (638,554) $ (618,371) $(34,202,255) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,841 4,959 672,546 Gain on sale of property and equipment -- -- (1,500) Amortization of deferred stock compensation 13,688 13,688 95,812 Issuance of common stock, options and warrants for license rights and services -- -- 209,975 Changes in assets and liabilities: Interest receivable 15,420 -- (116,624) Prepaid expenses and other current assets 71,104 (6,963) (182,723) Accounts payable and accrued expenses (233,202) (233,390) 528,847 ------------------------------------------------------------- Net cash used in operating activities (765,703) (840,077) (32,995,922) INVESTING ACTIVITIES: Purchase of investments (5,421,046) (3,204,163) (52,228,486) Maturity of investments 4,927,360 -- 44,317,912 Purchases of property and equipment, net -- (22,569) (412,463) Proceeds from sale of property & equipment -- -- 1,500 Additions to patents and licenses -- -- (283,062) ------------------------------------------------------------- Net cash used in investing activities (493,686) (3,226,732) (8,604,599) FINANCING ACTIVITIES: Payment of note payable -- -- (200,000) Proceeds from short-term borrowings -- -- 435,000 Issuance of common stock, net -- 465,999 35,574,750 Issuance of preferred stock, net -- -- 8,158,082 ------------------------------------------------------------- Net cash provided by financing activities -- 465,999 43,967,832 ------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (1,259,389) (3,600,810) 2,367,311 Cash and equivalents at beginning of period 3,626,700 7,387,076 -- ------------------------------------------------------------- Cash and equivalents at end of period $ 2,367,311 $ 3,786,266 $ 2,367,311 ============================================================= SUPPLEMENTAL DISCLOSURES: Conversion of short-term borrowings to Series A preferred stock $ -- $ -- $ 235,000 ============================================================= Conversion of preferred stock to common stock $ -- $ 50,000 $ 7,602,082 ============================================================= Deferred stock compensation related to options granted $ -- $ -- $ 273,750 ============================================================= See accompanying notes. 5 NEUROBIOLOGICAL TECHNOLOGIES, INC. (A development stage company) NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2001 NOTE 1-BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended September 30, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ended June 30, 2002. The balance sheet at June 30, 2001 has been derived from the audited financials at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes included in our annual report on Form 10-K for the fiscal year ended June 30, 2001. BASIC AND DILUTED NET LOSS PER SHARE Net loss per share is presented under the requirements of Financial Accounting Standards Board ("FAS") No. 128, "Earnings per Share." Basic loss per share is computed based on the average shares of common stock outstanding and excludes any options, warrants, and convertible securities. Potentially dilutive securities, such as options, warrants, and convertible preferred stock, have also been excluded from the computation of diluted net loss per share as their effect is antidilutive. COMPREHENSIVE INCOME (LOSS) The Company has no items of other comprehensive income (loss), and, accordingly, its net income (loss) is equal to its comprehensive income (loss). REVENUE RECOGNITION Revenue related to license fees with non-cancelable, non-refundable terms and no future performance obligations are recognized when collection is assured. Such revenues are deferred and recognized over the performance period if future performance obligations exist. Non-refundable up-front payments received in connection with research and development activities are deferred and recognized on a straight-line basis over the relevant periods specified in the agreement, generally the research term. Revenue associated with milestones are recognized as earned, based on completion of development milestones, either upon receipt, or when collection is assured. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for the historical information contained herein, the matters discussed in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-Q are forward-looking statements that involve risks and uncertainties. The factors listed in the section captioned "Risk Factors," as well as any cautionary language in this Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from those projected. These forward- looking statements represent our judgment as of the date of the filing. We disclaim, however, any intent or obligation to update these forward-looking statements. OVERVIEW Neurobiological Technologies, Inc. or NTI(R) ("NTI," "we," "us," "our" or the "Company") is an emerging drug development company focused on the clinical development and regulatory approval of neuroscience drugs. We are developing neuroprotective and neuromodulatory agents to treat progressive neurological impairments characteristic of various nervous system disorders, including diabetic neuropathy, brain cancer and AIDS-related dementia. Our strategy is to in-license and develop early-stage drug candidates that target major medical needs and that may be rapidly commercialized. In April 1998, we entered into a strategic research and marketing cooperation agreement with Merz + Co. ("Merz") and Children's Medical Center Corporation to further the clinical development and commercialization of Memantine. Pursuant to this agreement, NTI and Merz share scientific, clinical and regulatory information about Memantine, particularly safety data, to facilitate regulatory review and marketing approval by the Federal Drug Administration ("FDA") and foreign regulatory authorities. Pursuant to this agreement, we will share in future revenues from sales of Memantine for all indications. In June 2000, Merz entered into an agreement with Forest Laboratories, Inc. ("Forest") for the development and marketing of Memantine in the United States for the treatment of Alzheimer's disease, neuropathic pain and AIDS-related dementia. In August 2000, Merz entered into a strategic license and cooperation agreement with H. Lundbeck A/S ("Lundbeck") of Copenhagen, Denmark for the further development and marketing of Memantine for the treatment of Alzheimer's disease, neuropathic pain and AIDS-related dementia. Lundbeck has acquired exclusive rights to Memantine in certain European markets, Canada, Australia and South Africa and semi-exclusive rights to co-market Memantine with Merz in other markets worldwide, excluding the United States, where Forest has development rights, and Japan, where Merz has granted development rights to Suntory Ltd. ("Suntory"). Memantine has been marketed by Merz in Germany since 1989 with the labeling "dementia syndrome." In August 2001, we entered into an agreement with Merz and Suntory. NTI has granted to Merz the right to use all confidential data for the commercial exploitation of Memantine. Merz will provide Suntory with a hard copy of the data. If Suntory decides to use the data in any way, a payment will be made to NTI. If the data constitutes and essential part of the New Drug Application ("NDA") documents, an additional payment will be made to NTI. In August 2001, we announced that Forest would be conducting the second of two trials necessary for registration of an NDA to the FDA for diabetic neuropathy. This will be a large-scale, multi-center, double-blind placebo controlled trial to assess the safety and efficacy of Memantine in the treatment of diabetic neuropathy and is expected to be completed in 2002. We conducted the first such trial with an enrollment of over 400 patients and reported positive results in January 2000. Since our founding in 1987, we have applied a majority of our resources to our research and development programs and have generated only limited operating revenue. Except for fiscal 2001, we have incurred losses in each year since our inception and we expect to continue to incur losses in the future due to ongoing research and development efforts. 7 RESULTS OF OPERATIONS Our research and development expenses increased slightly to approximately $256,000 in the three months ended September 30, 2001 from approximately $236,000 in the three months ended September 30, 2000. The increase was primarily due to costs associated with the initiation of long term toxicology studies for the development of XERECEPT(TM). General and administrative expenses decreased to approximately $500,000 in the three months ended September 30, 2001 from $529,000 in the same period of the prior year. The decrease was primarily due to decreased expenditures in activities relating to seeking financing and corporate partnerships. Interest income decreased to approximately $117,000 in the three months ended September 30, 2001 from approximately $146,000 in the same period of the prior year due to lower average interest rates and lower average invested cash balances. We expect to incur ongoing costs primarily for Phase II and Phase III clinical trials for our development of XERECEPT(TM) and CRH-analogues and related administrative support. Merz and Merz's marketing partners will pay all future development costs of Memantine. LIQUIDITY AND CAPITAL RESOURCES From inception through September 30, 2001, we have raised a total of approximately $44 million in net proceeds from the sale of common and preferred stock. We had available cash and cash equivalents and investments of approximately $10.3 million as of September 30, 2001 compared to approximately $11.0 million at June 30, 2001. We believe that our capital resources will be adequate to fund our operations through at least the next twelve months. In the course of our development activities we have incurred significant losses, and, although we were profitable in the fiscal year ended June 30, 2001, we expect additional losses in the fiscal year ending June 30, 2002. We expect to incur costs in fiscal 2002 primarily for Phase II and Phase III clinical trials of XERECEPT and CRH-analogues and related administrative support. Merz and Merz's marketing partners will pay all future development costs of Memantine. Our future capital requirements will depend on a number of factors, including: . the amount of payments received from marketing agreements for Memantine; . the amount of royalties received from Merz for future sales of Memantine; . the progress of our clinical development programs; . the time and cost involved in obtaining regulatory approvals; . the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; . competing technological and market developments; . our ability to establish collaborative relationships; and . the development of commercialization activities and arrangements. RISK FACTORS Because all of our potential products are in clinical development, we may not develop a candidate product that will receive required regulatory approval or be successfully commercialized. We are still in the development stage and have no marketable products. As a result, there is no revenue from product sales, and most of our resources are dedicated to the development of selected candidate pharmaceutical products. The results of our preclinical studies and early stage clinical trials are not necessarily indicative of those that will be obtained upon further clinical testing in later stage clinical trials. It is possible that none of our candidate products will receive regulatory approval or be successfully commercialized. 8 Our potential products are subject to the risks of failure inherent in the development of products based on new technologies. Our potential products are subject to the risks of failure inherent in the development of products based on new technologies. These risks include the possibility that the potential products may: . be found to be unsafe, ineffective or toxic; . fail to receive necessary regulatory clearances; . if approved, be difficult to manufacture on a large scale or uneconomical to market; . be precluded from marketing by us due to the proprietary rights of third parties; and . not be successful because third parties market or may market superior or equivalent products. Further, our development activities may not result in any commercially viable products. We do not expect to be able to commercialize any products for a number of years, if at all. We are dependent on Merz and its marketing partners, Forest and Lundbeck, for the successful commercialization of Memantine. All of our revenues in fiscal 2001 were license fee payments from Merz related to our portion of payments received by Merz pursuant to Merz's agreements with its partners. We received no such payments in the first quarter of fiscal 2002 and there can be no assurance that we will receive any payments from Merz in fiscal 2002. The only revenues that we will receive in the foreseeable future for Memantine are royalties on product sales by Merz or its marketing partners and our share of payments received by Merz from its partners. Under certain circumstances, Merz can terminate its agreement with us upon six months notice. The termination of our agreement with Merz or any failure by Merz or its partners to successfully commercialize Memantine after its development would have a material adverse effect on our business, financial condition and results of operations. Our quarterly operating results may fluctuate significantly in future periods, and, as a result, our stock price may fluctuate or decline. To date, our revenues have primarily come from licensing fee payments from Merz. Licensing fee payments and, therefore, our results of operations, may vary significantly from quarter to quarter. Accordingly, we believe that quarter-to-quarter comparisons of our historical results of operations are not indicative of our future performance. We have relied and will continue to rely on others for research, development, manufacture and commercialization of our potential products. We have entered into various contractual arrangements (many of which are non-exclusive) with consultants, academic collaborators, licensors, licensees and others, and we are dependent upon the level of commitment and subsequent success of these outside parties in performing their responsibilities. Certain of these agreements place significant responsibility for preclinical testing and human clinical trials and for preparing and submitting submissions for regulatory approval for potential products on the collaborator, licensor or contractor. If the collaborator, licensor or contractor fails to perform, our business, financial conditions and results may be adversely affected. We have also relied on scientific, technical, clinical, commercial and other data supplied and disclosed by others in entering into these agreements. We have relied on this data in support of applications for human clinical trials for our potential products. Although we have no reason to believe that this information contains errors or omissions of fact, it is possible that there are errors or omissions of fact that would change materially our view of the future likelihood of FDA approval or commercial viability of these potential products. We have agreements and licenses with third parties that require us to pay royalties and make other payments to such parties. Our failure to make such payments could cause us to lose rights to technology or data under these agreements. 9 The FDA and state and local agencies, and comparable agencies and entities in foreign countries impose substantial requirements on the manufacturing and marketing of human therapeutics through lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time consuming procedures. Fulfillment of regulatory requirements for marketing human therapeutics typically takes many years and varies substantially based on the type, complexity, and novelty of the drug for which approval is sought. Government regulation may: . delay for a considerable period of time or prevent marketing of any product that we may develop; and/or . impose costly procedures upon our activities. Either of these effects of government regulation may provide an advantage to our competitors. There can be no assurance that FDA or other regulatory approval for any products developed by NTI will be granted on a timely basis or at all. Any delay in obtaining, or failure to obtain, required approvals would adversely affect the marketing of our proposed products and our ability to earn product revenues or royalties. In addition, success in preclinical or early stage clinical trials does not assure success in later stage clinical trials. As with any regulated product, additional government regulations may be instituted which could delay regulatory approval of our potential products. Additional government regulations that might result from future legislation or administrative action cannot be predicted. The impact of recent changes in global economic conditions may negatively impact our stock price. The domestic and international economic environment is more uncertain than it has been in recent periods. Additionally, the September 11, 2001 terrorist attacks in New York City, Washington, D.C. and Pennsylvania, and the United States' military response, has further affected economic certainty and the economic environment. Economic and political uncertainty resulting from the attacks and the U.S. military response could adversely affect our development efforts as well as those of Merz and its marketing partners. This would have a material adverse effect on our results of operations and our stock price. Our success will depend, in large part, on our ability to obtain or license patents, protect trade secrets and operate without infringing upon the proprietary rights of others. The patent position of biotechnology firms generally is highly uncertain because: . patents involve complex legal and factual issues that have recently been the subject of much litigation; . no consistent policy has emerged from the United States Patent and Trademark Office regarding the breadth of claims allowed or the degree of protection afforded under biotechnology patents; and . others may independently develop similar products, duplicate any of our potential products, or design around the claims of any of our potential patented products. In addition, because of the time delay in patent approval and the secrecy afforded United States patent applications, we do not know if other applications, which might have priority over our applications, have been filed. Further, because we have non-exclusive licenses to patent rights covering certain uses of XERECEPT, others may develop, manufacture and market products that could compete with those we develop. As a result of all of these factors, there can be no assurance that patent applications relating to our potential products or processes will result in patents being issued, or that patents, if issued, will 10 provide protection against competitors who successfully challenge our patents, obtain patents that may have an adverse effect on our ability to conduct business, or be able to circumvent our patent position. A number of pharmaceutical and biotechnology companies and research and academic institutions have developed technologies, filed patent applications or received patents on various technologies that may be related to our business. Some of these technologies, applications or patents may conflict with our or any of our licensors' technologies or patent applications. Such conflict could limit the scope of the patents, if any, that we may be able to obtain or to which we have a license or result in the denial of our patent applications or the patent applications for which we have licenses. In addition, if patents that cover our activities have been or are issued to other companies, there can be no assurance that we would be able to obtain licenses to these patents at a reasonable cost, or be able to develop alternative technology. Because we do not have our own manufacturing facilities, we face risks from outsourcing. Merz and Merz's marketing partners have the responsibility of supplying Memantine for their clinical trials. We rely on third-party contract manufacturers to provide us with XERECEPT which is manufactured to our specifications using established chemical synthesis methods. We have performed audits on these third-party manufacturers to ensure compliance with the current Good Manufacturing Practice (cGMP) regulations. We currently have no plans to build or develop an in-house manufacturing capability for XERECEPT. We believe that alternative cGMP suppliers of the bulk drug and finished dosage forms of the product will be available to meet our needs. However, we face certain risks by outsourcing manufacturing, including: . the delay of our preclinical and human clinical testing if our contractors are unable to supply sufficient quantities of product candidates manufactured in accordance with cGMP on acceptable terms; . the delay of market introduction and subsequent sales if we should encounter difficulties establishing relationships with manufacturers to produce, package and distribute our products; and . adverse effects on FDA pre-market approval of potential products and contract manufacturers if they do not adhere to cGMP regulations. Therefore, our dependence on third parties for the manufacture of products may adversely affect our results of operations and our ability to develop and deliver products on a timely and competitive basis. Clinical trials or marketing of any of our potential products may expose us to liability claims from the use of such products which our insurance may not cover. We have a limited amount of product liability insurance to cover liabilities arising from clinical trials. Our current product liability insurance does not cover commercial sales of products. We cannot be sure that we will be able to obtain product liability insurance covering commercial sales or, if such insurance is obtained, that sufficient coverage can be acquired at a reasonable cost. An inability to obtain insurance at acceptable cost or otherwise protect against potential product liability claims could prevent or inhibit commercialization of any products we develop. Further reductions in our staff might significantly delay the achievement of planned development objectives. Each person currently employed by NTI serves an essential function. Any reductions in work force could impair our ability to manage ongoing clinical trials and may have a material adverse effect on our operations. 11 The market price of our common stock has been, and is likely to continue to be, highly volatile. The average daily trading volume of our common stock has been low compared to that of other biopharmaceutical companies. Our common stock was delisted from The Nasdaq Stock Market in February 1998 because we failed to meet the financial conditions necessary to remain listed. In July 2000, we were approved for listing on The Nasdaq SmallCap Market. However, we may not continue to qualify for listing on that market. Factors that may cause volatility in our stock price include: . the results of preclinical studies and clinical trials by the Company, Merz or its marketing partners or our competitors; . other evidence of the safety or efficacy of products of the Company, Merz or its marketing partners or our competitors; . announcements of technological innovations or new therapeutic products by the Company or our competitors; . developments in patent or other proprietary rights of the Company or our competitors, including litigation; . fluctuations in our operating results; . government regulation and health care legislation; and . market conditions for life science companies' stocks in general. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK In the normal course of business, our financial position is subject to a variety of risks, including market risk associated with interest rate movements. We regularly assess these risks and have established policies and business practices to protect against these and other exposures. As a result, we do not anticipate material potential losses in these areas. The primary objective for our investment activities is to preserve principal while maximizing yields without significantly increasing risk. This is accomplished by investing in widely diversified investments, consisting primarily of investment grade securities. As of September 30, 2001, 100% of our portfolio will mature in one year or less. A hypothetical 50 basis point increase in interest rates would not result in a material decrease or increase in the fair value of our available-for-sale securities. We have no investments denominated in foreign country currencies and therefore our investments are not subject to foreign currency exchange risk. 12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None. (b) Reports: The Company did not file a report on Form 8-K during the three months ended September 30, 2001. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEUROBIOLOGICAL TECHNOLOGIES, INC. Dated: November 14, 2001 /s/ Paul E. Freiman ---------------------------------- Paul E. Freiman President, Chief Executive Officer (Principal Executive and Accounting Officer) and Director 13