##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006.
 OR
 o
    
    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: 0-27718
 NEOSE TECHNOLOGIES, INC.
  Delaware
    
    13-3549286(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)102 Witmer RoadHorsham, Pennsylvania
    
    19044(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
  þ o
  o þ o
  o þ




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##### 



NEOSE TECHNOLOGIES, INC.
 INDEX
 PagePART I.
    
    FINANCIAL INFORMATION:Item 1.
    
    Financial Statements (unaudited)Balance Sheets as of June 30, 2006 and December 31, 2005
    
    
    3Statements of Operations for the three and six months ended June 30, 2006 and 2005
    
    
    4Statements of Cash Flows for the six months ended June 30, 2006 and 2005
    
    
    5Notes to Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    34PART II.
    
    OTHER INFORMATION:Item 1A.
    
    Risk Factors
    
    
    35Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    35Item 6.
    
    Exhibits
    
    
    36SIGNATURES
    
    
    
    
    37Certification by Chief Executive OfficerCertification by Chief Financial OfficerCertification Pursuant to 18 U.S.C. Section 1350Certification Pursuant to 18 U.S.C. Section 1350
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Neose Technologies, Inc.
 
 Balance Sheets
   June 30,
    
    
    December 31,2006
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    21,351
    
    
    $
    37,738Accounts receivable
    
    
    3
    
    
    
    1,076Prepaid expenses and other current assets
    
    
    1,727
    
    
    
    892Total current assets
    
    
    23,081
    
    
    
    39,706Property and equipment, net
    
    
    24,098
    
    
    
    24,708Intangible and other assets, net
    
    
    609
    
    
    
    949Total assets
    
    $
    47,788
    
    
    $
    65,363Liabilities and Stockholders EquityCurrent liabilities:Note payable
    
    $
    302
    
    
    $
    Current portion of long-term debt and capital lease obligations
    
    
    3,425
    
    
    
    4,031Accounts payable
    
    
    873
    
    
    
    722Accrued compensation
    
    
    1,464
    
    
    
    1,618Accrued expenses
    
    
    2,631
    
    
    
    2,697Deferred revenue
    
    
    745
    
    
    
    1,527Total current liabilities
    
    
    9,440
    
    
    
    10,595Long-term debt and capital lease obligations, net of current portion
    
    
    8,889
    
    
    
    10,423Deferred revenue, net of current portion
    
    
    3,529
    
    
    
    3,765Other liabilities
    
    
    487
    
    
    
    463Total liabilities
    
    
    22,345
    
    
    
    25,246Commitments and contingencies (Note 14)Stockholders equity:Common stock, par value $.01 per share, 75,000 and 50,000 shares
authorized; 32,829 and 32,782 shares issued and outstanding
    
    
    328
    
    
    
    328Additional paid-in capital
    
    
    280,567
    
    
    
    279,015Deferred compensation
    
    
    
    
    
    
    (6
    )Accumulated deficit
    
    
    (255,452
    )
    
    
    (239,220
    )Total stockholders equity
    
    
    25,443
    
    
    
    40,117Total liabilities and stockholders equity
    
    $
    47,788
    
    
    $
    65,363
  3




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Neose Technologies, Inc.
 
 Statements of Operations
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue from collaborative agreements
    
    $
    1,715
    
    
    $
    1,420
    
    
    $
    4,111
    
    
    $
    2,768Operating expenses:Research and development
    
    
    7,051
    
    
    
    8,987
    
    
    
    14,362
    
    
    
    18,612General and administrative
    
    
    3,094
    
    
    
    2,806
    
    
    
    6,022
    
    
    
    5,784Total operating expenses
    
    
    10,145
    
    
    
    11,793
    
    
    
    20,384
    
    
    
    24,396Operating loss
    
    
    (8,430
    )
    
    
    (10,373
    )
    
    
    (16,273
    )
    
    
    (21,628
    )Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22Interest income
    
    
    308
    
    
    
    419
    
    
    
    674
    
    
    
    723Interest expense
    
    
    (325
    )
    
    
    (331
    )
    
    
    (633
    )
    
    
    (669
    )Net loss
    
    $
    (8,447
    )
    
    $
    (10,285
    )
    
    $
    (16,232
    )
    
    $
    (21,552
    )Basic and diluted net loss per share
    
    $
    (0.26
    )
    
    $
    (0.31
    )
    
    $
    (0.49
    )
    
    $
    (0.71
    )Weighted-average shares outstanding
used in computing basic and diluted
net loss per share
    
    
    32,804
    
    
    
    32,782
    
    
    
    32,794
    
    
    
    30,378
  4




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Neose Technologies, Inc.
 
 Statements of Cash Flows
   Six months endedJune 30,2006
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (16,232
    )
    
    $
    (21,552
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization expense
    
    
    1,024
    
    
    
    3,100Non-cash compensation expense
    
    
    1,463
    
    
    
    324Loss (gain) on disposition of property and equipment
    
    
    5
    
    
    
    (21
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    1,073
    
    
    
    1,326Prepaid expenses and other current assets
    
    
    (827
    )
    
    
    (389
    )Accounts payable
    
    
    219
    
    
    
    (721
    )Accrued compensation
    
    
    (25
    )
    
    
    (236
    )Accrued expenses
    
    
    (56
    )
    
    
    (180
    )Deferred revenue
    
    
    (1,018
    )
    
    
    (332
    )Other liabilities
    
    
    24
    
    
    
    (31
    )Net cash used in operating activities
    
    
    (14,350
    )
    
    
    (18,712
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (188
    )
    
    
    (656
    )Proceeds from sale of assets held for sale
    
    
    15
    
    
    
    70Purchases of marketable securities
    
    
    
    
    
    
    (9,845
    )Net cash used in investing activities
    
    
    (173
    )
    
    
    (10,431
    )Cash flows from financing activities:Proceeds from issuance of debt
    
    
    539
    
    
    
    701Repayments of debt
    
    
    (2,369
    )
    
    
    (2,490
    )Proceeds from issuance of common stock, net
    
    
    9
    
    
    
    30,092Payment of withholding taxes related to restricted stock units
    
    
    (43
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (1,864
    )
    
    
    28,303Net decrease in cash and cash equivalents
    
    
    (16,387
    )
    
    
    (840
    )Cash and cash equivalents, beginning of period
    
    
    37,738
    
    
    
    45,048Cash and cash equivalents, end of period
    
    $
    21,351
    
    
    $
    44,208
  5




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NEOSE TECHNOLOGIES, INC.
 
 NOTES TO FINANCIAL STATEMENTS
   1. Organization and Business Activities
 ® de novo
   6




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
   2. Interim Financial Information
  3. Summary of Significant Accounting Policies
 Use of Estimates
  Stock-based Compensation
 Share-Based Payment Accounting for Stock Issued to Employees
 Accounting for Stock Based Compensation 7
    Table of Contents   NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 Accounting for Stock-Based Compensation, Transition and Disclosure
   Net Loss Per Share
  Comprehensive Loss
  8




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
  Fair Value of Financial Instruments
  Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes Accounting for
Income Taxes
 Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3 Accounting Changes Reporting Accounting Changes in Interim
Financial Statements
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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 Reclassification
  4. Supplemental Disclosure of Cash Flow Information
  Six months ended June 30,2006
    
    
    2005Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    634
    
    
    $
    660Non-cash investing activity:Increase (decrease) in property and
equipment included in accounts payable and
accrued expenses
    
    $
    (78
    )
    
    $
    (38
    )Non-cash financing activity:Conversion of liability-classified award
to equity-classified award upon grant of
restricted stock units (see Note 11)
    
    $
    129
    
    
    $
    382
 5. Prepaid Expenses and Other Current Assets
  June 30,
    
    
    December 31,2006
    
    
    2005Prepaid insurance
    
    $
    436
    
    
    $
    96Prepaid maintenance agreements
    
    
    300
    
    
    
    276Prepaid clinical and preclinical studies
    
    
    510
    
    
    
    141Other prepaid expenses
    
    
    355
    
    
    
    205Other current assets
    
    
    126
    
    
    
    174$
    1,727
    
    
    $
    892
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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 6. Property and Equipment
  June 30,
    
    
    December 31,2006
    
    
    2005Building, facility improvements, and land
    
    $
    19,486
    
    
    $
    19,486Laboratory, manufacturing, and office equipment
    
    
    9,705
    
    
    
    9,60629,191
    
    
    
    29,092Less accumulated depreciation and amortization
    
    
    (5,093
    )
    
    
    (4,384
    )$
    24,098
    
    
    $
    24,708
   7. Intangible and Other Assets
  June 30,
    
    
    December 31,2006
    
    
    2005Acquired intellectual property, net of
accumulated amortization of $4,134 and
$3,836 as of June 30, 2006 and December 31,
2005, respectively
    
    $
    416
    
    
    $
    714Deferred financing costs, net of accumulated
amortization of $45 and $36 as of June 30,
2006 and December 31, 2005, respectively
    
    
    136
    
    
    
    145Receivable from related party
    
    
    
    
    
    
    29Deposits
    
    
    57
    
    
    
    61$
    609
    
    
    $
    949
 11




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##### Table of Contents



NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 8. Debt and Capital Lease Obligations
  June 30,
    
    
    December 31,2006
    
    
    2005Term loan from bank
    
    $
    6,667
    
    
    $
    7,111Industrial development authority bond
    
    
    1,000
    
    
    
    1,000Term loan from landlord (unsecured), annual
interest at 13.00%, due June 2008
    
    
    815
    
    
    
    997Notes payable to equipment lender, secured by
equipment and facility improvements, interest
rates from 8.09% to 9.44%, due 2006 to 2009
    
    
    3,676
    
    
    
    5,075Note payable, secured by insurance policies,
annual interest at 5.40%, due November 2006
    
    
    302
    
    
    
    Subtotal
    
    
    12,460
    
    
    
    14,183Capital lease obligations
    
    
    156
    
    
    
    271Total debt and capital lease obligations
    
    
    12,616
    
    
    
    14,454Less note payable, secured by insurance policies
    
    
    (302
    )
    
    
    Less current portion of long-term debt
    
    
    (3,425
    )
    
    
    (4,031
    )Total long-term debt and capital lease
obligations, net of current portion
    
    $
    8,889
    
    
    $
    10,423
 Term Loan from Bank and Industrial Development Authority Bond
   12




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
      13




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##### Table of Contents



NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
  2006 Activity
  9. Accrued Expenses
  June 30,
    
    
    December 31,2006
    
    
    2005Professional fees
    
    $
    1,308
    
    
    $
    1,346Contract research and development services
    
    
    578
    
    
    
    650Clinical and preclinical studies
    
    
    407
    
    
    
    183Other expenses
    
    
    338
    
    
    
    518$
    2,631
    
    
    $
    2,697
 10. Stockholders Equity
  11. Equity-based Compensation
 Equity Incentive Plans
  14




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
    Weighted-Weighted-
    
    
    
    
    
    
    averageaverage
    
    
    Aggregate
    
    
    remainingexercise
    
    
    intrinsic
    
    
    contractualShares
    
    
    price
    
    
    value
    
    
    life (years)Outstanding at January 1, 2006
    
    
    4,995
    
    
    $
    14.01Granted
    
    
    1,012
    
    
    
    2.55Exercised
    
    
    (4
    )
    
    
    2.58Forfeited
    
    
    (139
    )
    
    
    4.33Expired
    
    
    (254
    )
    
    
    14.47Outstanding at June 30, 2006
    
    
    5,610
    
    
    $
    12.17
    
    
    $
    2,298
    
    
    
    6.6Vested at June 30, 2006 and
expected to vest
    
    
    5,232
    
    
    $
    12.75
    
    
    $
    1,945
    
    
    
    6.4Exercisable at June 30, 2006
    
    
    3,657
    
    
    $
    15.65
    
    
    $
    801
    
    
    
    5.5
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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 Fair Value Disclosures
   Three months ended
    
    Six months endedJune 30, 2006
    
    June 30, 2006Expected volatility
    
    75%
    
    75%Expected term (years)
    
    5.1  6.6
    
    5.1  7.6Risk-free interest rate
    
    5.0  5.1%
    
    4.5  5.1%Expected dividend yield
    
    0%
    
    0%
 Share-Based Payment
 16




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
     17




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 Three months
    
    
    Six monthsended June 30,
    
    
    ended June 30,2005
    
    
    2005Net loss  as reported
    
    $
    (10,285
    )
    
    $
    (21,552
    )Add: Stock-based
employee
compensation expense
included in reported
net loss
    
    
    521
    
    
    
    822Deduct: Total
stock-based employee
compensation expense
determined under
fair value-based
method for all
awards
    
    
    (1,804
    )
    
    
    (2,945
    )Net loss  pro forma
    
    $
    (11,568
    )
    
    $
    (23,675
    )Basic and diluted net
loss per share  as
reported
    
    $
    (0.31
    )
    
    $
    (0.71
    )Basic and diluted net
loss per share  pro
forma
    
    $
    (0.35
    )
    
    $
    (0.78
    )
  Three months ended
    
    Six months endedJune 30, 2005
    
    June 30, 2005Expected volatility
    
    75%
    
    75%Expected term (years)
    
    6.0  6.3
    
    6.0  8.5Risk-free interest rate
    
    4.0  4.2%
    
    4.0  4.2%Expected dividend yield
    
    0%
    
    0%
 Restricted Stock Units
   18




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NEOSE TECHNOLOGIES, INC.
 NOTES
TO FINANCIAL STATEMENTS
  Weighted-Weighted-
    
    
    
    
    
    
    averageaverage
    
    
    Aggregate
    
    
    remaininggrant-date
    
    
    intrinsic
    
    
    contractualShares
    
    
    fair value
    
    
    value
    
    
    life (years)Outstanding at January 1,
2006
    
    
    290
    
    
    $
    3.68Awarded
    
    
    84
    
    
    
    2.29Settled
    
    
    (57
    )
    
    
    3.90Forfeited
    
    
    
    
    
    
    Outstanding at June 30, 2006
    
    
    317
    
    
    $
    3.27
    
    
    $
    1,283
    
    
    
    0.3Vested at June 30, 2006 and
expected to vest
    
    
    317
    
    
    $
    3.27
    
    
    $
    1,283
    
    
    
    0.3
  12. Collaborative Agreements and Significant Customer Concentration
  19




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 Novo Nordisk A/S Agreements
  13. Restructuring
   20




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NEOSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
 Employee
    
    
    Facilityseverance
    
    
    closurecosts
    
    
    costs
    
    
    TotalInitial provision
    
    $
    867
    
    
    $
    152
    
    
    $
    1,069Cash payments
    
    
    (841
    )
    
    
    (91
    )
    
    
    (932
    )Balance as of December 31, 2005
    
    
    26
    
    
    
    61
    
    
    
    87Change in estimate
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )Cash payments
    
    
    (9
    )
    
    
    (61
    )
    
    
    (70
    )Balance as of June 30, 2006
    
    $
    
    
    
    $
    
    
    
    $
    
 14. Commitments and Contingencies
   21




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION ACT OF
1995:
 This report includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to,
statements about our plans, objectives, representations and contentions that are not historical
facts and that typically may be identified by use of terms such as anticipate, believe,
estimate, plan, may, expect, intend, could, potential, and similar expressions,
although some forward-looking statements are expressed differently. These forward-looking
statements include, among others, the statements about our:
 
    
    estimate that our existing cash and cash equivalents, expected revenue from
collaborations and license agreements, and interest income should be sufficient to meet
our operating and capital requirements at least through 2006;
    
    expected losses;
    
    expectations for future capital requirements;
    
    expectations for operating expenses;
    
    expectations for expenses for research and development, and general and
administrative activities, in order to develop products, procure commercial quantities
of reagents and products, and commercialize our technology;
    
    expectations regarding the scope and expiration of patents;
    
    expectations regarding the timing of preclinical activities, regulatory meetings and
submissions, as well as the progression of clinical trials, for NE-180 and preclinical
activities and the initiation of clinical trials for GlycoPEG-GCSF;
    
    expectations for the development of long-acting versions of EPO and G-CSF, and
subsequent proprietary drug candidates;
    
    expectations as to the costs and benefits of our plans to dispose of our Witmer Road
facility;
    
    expectations regarding net cash utilization;
    
    expectations for generating revenue; and
    
    expectations regarding the timing and character of new or expanded collaborations
and for the performance of our existing collaboration partners in connection with the
development and commercialization of products incorporating our technologies.
 You should be aware that the forward-looking statements included in this report represent
managements current judgment and expectations, but our actual results, events and performance
could differ materially from those in the forward-looking statements. Potential risks and
uncertainties that could affect our actual results include the following:
 
    
    our ability to obtain the funds necessary for our operations;
    
    our ability to meet forecasted timelines due to internal or external causes;
    
    our ability to resolve the clinical hold issues raised by the FDA and to obtain
clearance to conduct clinical trials for NE-180 in the U.S.;
    
    our preclinical and clinical results for our products may not be favorable;
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
    
    our ability to develop commercial-scale manufacturing processes for our products and
reagents, either independently or in collaboration with others;
    
    our ability to enter into and maintain collaborative arrangements;
    
    our ability to obtain adequate sources of proteins and reagents either manufactured
internally or sourced externally;
    
    our ability to develop and commercialize products without infringing the patent or
intellectual property rights of others;
    
    our ability to expand and protect our intellectual property and to operate without
infringing the rights of others;
    
    our ability and our collaborators ability to develop and commercialize therapeutic
proteins and our ability to commercialize our technologies;
    
    our ability to attract and retain key personnel;
    
    our ability to compete successfully in an intensely competitive field;
    
    our ability to renovate our facilities as required for our operations; and
    
    general economic conditions.
 These and other risks and uncertainties that could affect our actual results are discussed in
this report and in our other filings with the Securities and Exchange Commission (SEC),
particularly in Item 1A of Part I of our Annual Report on Form 10-K in the section entitled Risk
Factors.
 Although we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, events, levels of activity, performance, or
achievements. We do not assume responsibility for the accuracy and completeness of the
forward-looking statements other than as required by applicable law. We do not undertake any duty
to update any of the forward-looking statements after the date of this report to conform them to
actual results, except as required by the federal securities laws.
 You should read this section in combination with the section entitled Managements Discussion
and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2005,
included in our Annual Report on Form 10-K for the year ended December 31, 2005 and in our 2005
Annual Report to Stockholders.
 Overview
 ® de novo
 23




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24




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Liquidity and Capital Resources
 Overview
    Operating Activities
  25




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Investing Activities
  Financing Activities
 Equity Financing Activities
  Debt Financing Activities
  Note Payable Secured by Insurance Policies
  Term Loan from Bank and Industrial Development Authority Bond
   26




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27




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Term Loan from Landlord
  Equipment Loans
  Capital Lease Obligations
  Operating Leases
  28




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Summary of Contractual Obligations
  Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  Stock-based Compensation
 Share-Based Payment Accounting for Stock Issued to Employees
 Accounting for Stock Based Compensation Accounting for Stock-Based Compensation, Transition and 29
    Table of Contents   Disclosure
 Share-Based Payment
   Results of Operations
   30
    Table of Contents     Revenue from Collaborative Agreements
    Research and Development Expense
  31




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Development Stage
    
    StatusGlycoAdvance and GlycoPEGylationNE-180
    
    Phase I
    
    ActiveGlycoPEG-GCSF
    
    Preclinical
    
    ActiveOther protein projects
    
    Preclinical/Research
    
    ActiveOther Glycotechnology ProgramsNon-protein therapeutic applications
    
    Research
    
    Active
    32




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005GlycoAdvance and
GlycoPEGylation
    
    $
    4,638
    
    
    $
    5,000
    
    
    
    8,884
    
    
    $
    10,149Other Glycotechnology Programs
    
    
    181
    
    
    
    397
    
    
    
    333
    
    
    
    529Indirect expenses
    
    
    2,232
    
    
    
    3,590
    
    
    
    5,145
    
    
    
    7,934$
    7,051
    
    
    $
    8,987
    
    
    $
    14,362
    
    
    $
    18,612
 GlycoAdvance and GlycoPEGylation
  Other Glycotechnology Programs
  Indirect expenses
  General and Administrative Expense
  Other Income and Expense
  33




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Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures
  Changes in internal controls over financial reporting
  34




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
  Our clinical trials may be delayed.
  
    
    the failure to obtain or maintain regulatory clearance to conduct clinical trials;
    
    slower than anticipated patient enrollment;
    
    human errors in the conduct of the clinical trials;
    
    insufficient supplies of clinical trial materials; and
    
    adverse events occurring during the clinical trial.
 You should read the above risk with all other risks and uncertainties discussed elsewhere in
this report and in our other filings with the Securities and Exchange Commission (SEC),
particularly in Item 1A of Part I of our Annual Report on Form 10-K in the section entitled Risk
Factors.
 
 Item 4. Submission of Matters to a Vote of Security Holders
 A.
    
    Our Annual Meeting of Stockholders was held on May 4, 2006.B.
    
    The motions before stockholders were:
 1.
    
    To elect ten Directors.
 Votes
    
    Votes
    
    Votes
    
    
    
    
    
    BrokerName of Director
    
    For
    
    Against
    
    Withheld
    
    Abstentions
    
    NonvotesC. Boyd Clarke
    
    
    29,049,121
    
    
    
    
    
    
    
    706,678
    
    
    
    
    
    
    
    Brian H. Dovey
    
    
    29,070,318
    
    
    
    
    
    
    
    688,481
    
    
    
    
    
    
    
    L. Patrick Gage, Ph.D.
    
    
    29,022,699
    
    
    
    
    
    
    
    736,100
    
    
    
    
    
    
    
    William F. Hamilton, Ph.D.
    
    
    29,070,718
    
    
    
    
    
    
    
    688,081
    
    
    
    
    
    
    
    Douglas J. MacMaster, Jr.
    
    
    29,005,572
    
    
    
    
    
    
    
    753,227
    
    
    
    
    
    
    
    H. Stewart Parker
    
    
    29,070,318
    
    
    
    
    
    
    
    688,481
    
    
    
    
    
    
    
    Mark H. Rachesky, M.D.
    
    
    29,071,318
    
    
    
    
    
    
    
    687,481
    
    
    
    
    
    
    
    Lowell E. Sears
    
    
    29,070,318
    
    
    
    
    
    
    
    688,481
    
    
    
    
    
    
    
    George J. Vergis
    
    
    29,054,191
    
    
    
    
    
    
    
    704,608
    
    
    
    
    
    
    
    Elizabeth H. S. Wyatt
    
    
    28,943,869
    
    
    
    
    
    
    
    814,930
    
    
    
    
    
    
    
    
 35




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##### Table of Contents



2.
    
    To ratify the appointment of KPMG LLP as our independent registered public
accounting firm for fiscal 2006.
 Votes For
    
    
    29,723,640Votes Against
    
    
    21,501Votes Withheld
    
    
    Abstentions
    
    
    13,659Broker Nonvotes
    
    
    
 3.
    
    To approve an amendment to our Certificate of Incorporation.
 Votes For
    
    
    29,001,610Votes Against
    
    
    744,883Votes Withheld
    
    
    Abstentions
    
    
    12,306Broker Nonvotes
    
    
    
 
 Item 6. Exhibits
 10.1*
    
    Employment Agreement by and between Neose Technologies, Inc. and
George J. Vergis, Ph.D. dated May 4, 2006.31.1
    
    Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference to our Current Report on Form 8-K filed with the SEC on May 8, 2006. 36




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##### Table of Contents



SIGNATURES
  NEOSE TECHNOLOGIES, INC.Date: August 9, 2006
    
    By:
    
    /s/ A. Brian DavisA. Brian Davis
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer and Duly
Authorized Signatory)
 37




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Exhibit Index
 Exhibit
    
    Description10.1*
    
    Employment Agreement by and between Neose Technologies, Inc. and
George J. Vergis, Ph.D. dated May 4, 2006.31.1
    
    Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference to our Current Report on Form 8-K filed with the SEC on May 8, 2006.