##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR
THE QUARTERLY PERIOD ENDED August 31, 2007
 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 0-24050
 NORTHFIELD LABORATORIES INC.
  DELAWARE
(State or other jurisdiction 
of incorporation or organization)
    
    36-3378733
(I.R.S. Employer
Identification Number)1560 SHERMAN AVENUE, SUITE 1000, EVANSTON, 
ILLINOIS
(Address of principal executive offices)
    
    60201-4800
(Zip Code)
  þ o
  o þ o
 o þ




---



##### 



TABLE OF CONTENTS  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPart IIItem 1. Legal ProceedingsSIGNATURES CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION




---



##### 



Report of Independent Registered Public Accounting Firm




---



##### 



NORTHFIELD LABORATORIES INC.
   August 31,
    
    
    May 31,2007
    
    
    2007(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    22,237,015
    
    
    
    23,224,026Restricted cash
    
    
    
    
    
    
    529,752Marketable securities
    
    
    11,961,447
    
    
    
    16,934,204Prepaid expenses
    
    
    685,051
    
    
    
    673,192Other current assets
    
    
    646,625
    
    
    
    212,854Total current assets
    
    
    35,530,138
    
    
    
    41,574,028Property, plant, and equipment
    
    
    19,759,536
    
    
    
    19,588,246Accumulated depreciation
    
    
    (11,228,022
    )
    
    
    (11,063,080
    )Net property, plant, and equipment
    
    
    8,531,514
    
    
    
    8,525,166Other assets
    
    
    19,550
    
    
    
    19,550$
    44,081,202
    
    
    
    50,118,744Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    1,992,518
    
    
    
    3,573,025Accrued expenses
    
    
    176,281
    
    
    
    101,118Accrued compensation and benefits
    
    
    849,048
    
    
    
    565,709Government grant liability
    
    
    
    
    
    
    529,752Total current liabilities
    
    
    3,017,847
    
    
    
    4,769,604Other liabilities
    
    
    9,664
    
    
    
    7,431Total liabilities
    
    
    3,027,511
    
    
    
    4,777,035Shareholders equity:Preferred stock, $.01 par value. Authorized 5,000,000 shares;
none issued and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value. Authorized 60,000,000 shares;
issued 26,916,541 at August 31, 2007 and 26,916,541 at
May 31, 2007
    
    
    269,165
    
    
    
    269,165Additional paid-in capital
    
    
    245,422,982
    
    
    
    244,905,543Deficit accumulated during the development stage
    
    
    (204,613,063
    )
    
    
    (199,807,606
    )41,079,084
    
    
    
    45,367,102Less cost of common shares in treasury; 1,717 shares and
1,717 shares, respectively
    
    
    (25,393
    )
    
    
    (25,393
    )Total shareholders equity
    
    
    41,053,691
    
    
    
    45,341,709$
    44,081,202
    
    
    
    50,118,744




---



##### 



NORTHFIELD LABORATORIES INC.
  
 CumulativefromJune 19, 1985Three months ended August 31,
    
    
    through2007
    
    
    2006
    
    
    August 31, 2007(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Revenues  license income
    
    $
    
    
    
    
    
    
    
    
    3,000,000Costs and expenses:Research and development
    
    
    3,777,501
    
    
    
    5,826,112
    
    
    
    172,618,317General and administrative
    
    
    1,510,284
    
    
    
    2,563,649
    
    
    
    66,160,5795,287,785
    
    
    
    8,389,761
    
    
    
    238,778,896Other income and expense:Interest income
    
    
    482,328
    
    
    
    827,187
    
    
    
    31,323,988Interest expense
    
    
    
    
    
    
    
    
    
    
    83,234$
    482,328
    
    
    
    827,187
    
    
    
    31,240,754Net loss before cumulative effect of change
in accounting principle
    
    
    (4,805,457
    )
    
    
    (7,562,574
    )
    
    
    (204,538,142
    )Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    74,921Net loss
    
    $
    (4,805,457
    )
    
    
    (7,562,574
    )
    
    
    (204,613,063
    )Net loss per share  basic and diluted
    
    $
    (0.18
    )
    
    
    (0.28
    )
    
    
    (15.87
    )Shares used in calculation of
per share data  basic and diluted
    
    
    26,914,814
    
    
    
    26,775,762
    
    
    
    12,896,844




---



##### 



NORTHFIELD LABORATORIES INC.
  
 Deficit
    
    
    
    
    
    
    
    
    
    
    TotalSeries A convertible
    
    
    Series B convertible
    
    
    
    
    
    
    accumulated
    
    
    
    
    
    
    
    
    
    
    share-Preferred stock
    
    
    Common stock
    
    
    preferred stock
    
    
    preferred stock
    
    
    Additional
    
    
    during the
    
    
    Deferred
    
    
    
    
    
    
    holdersNumber
    
    
    Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    paid-in
    
    
    development
    
    
    compen-
    
    
    Treasury
    
    
    equityof shares
    
    
    amount
    
    
    of shares
    
    
    amount
    
    
    of shares
    
    
    amount
    
    
    of shares
    
    
    amount
    
    
    capital
    
    
    stage
    
    
    sation
    
    
    shares
    
    
    (deficit)Issuance of common stock on August 27, 1985
    
    
    
    
    
    $
    
    
    
    
    3,500,000
    
    
    $
    35,000
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    (28,000
    )
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    7,000Issuance of Series A convertible preferred stock at $4.00 per share on
August 27, 1985 (net of costs of issuance of $79,150)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    670,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    920,850Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (607,688
    )
    
    
    
    
    
    
    
    
    
    
    (607,688
    )Balance at May 31, 1986
    
    
    
    
    
    $
    
    
    
    
    3,500,000
    
    
    $
    35,000
    
    
    
    250,000
    
    
    $
    250,000
    
    
    
    
    
    
    $
    
    
    
    $
    642,850
    
    
    $
    (607,688
    )
    
    $
    
    
    
    
    
    
    
    $
    320,162Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,429,953
    )
    
    
    
    
    
    
    
    
    
    
    (2,429,953
    )Deferred compensation relating to grant of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,340,000
    
    
    
    
    
    
    
    (2,340,000
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    720,000
    
    
    
    
    
    
    
    720,000Balance at May 31, 1987
    
    
    
    
    
    $
    
    
    
    
    3,500,000
    
    
    $
    35,000
    
    
    
    250,000
    
    
    $
    250,000
    
    
    
    
    
    
    $
    
    
    
    $
    2,982,850
    
    
    $
    (3,037,641
    )
    
    $
    (1,620,000
    )
    
    
    
    
    
    $
    (1,389,791
    )Issuance of Series B convertible preferred stock at $35.68 per share on
August 14, 1987 (net of costs of issuance of $75,450)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,633
    
    
    
    200,633
    
    
    
    6,882,502
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,083,135Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,057,254
    )
    
    
    
    
    
    
    
    
    
    
    (3,057,254
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    566,136
    
    
    
    
    
    
    
    566,136Balance at May 31, 1988
    
    
    
    
    
    $
    
    
    
    
    3,500,000
    
    
    $
    35,000
    
    
    
    250,000
    
    
    $
    250,000
    
    
    
    200,633
    
    
    $
    200,633
    
    
    $
    9,865,352
    
    
    $
    (6,094,895
    )
    
    $
    (1,053,864
    )
    
    
    
    
    
    $
    3,202,226Issuance of common stock at $24.21 per share on June 7, 1988 (net of costs of issuance of $246,000)
    
    
    
    
    
    
    
    
    
    
    413,020
    
    
    
    4,130
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,749,870
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,754,000Conversion of Series A convertible preferred stock to common stock on June 7, 1988
    
    
    
    
    
    
    
    
    
    
    1,250,000
    
    
    
    12,500
    
    
    
    (250,000
    )
    
    
    (250,000
    )
    
    
    
    
    
    
    
    
    
    
    237,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conversion of Series B convertible preferred stock to common stock on June 7, 1988
    
    
    
    
    
    
    
    
    
    
    1,003,165
    
    
    
    10,032
    
    
    
    
    
    
    
    
    
    
    
    (200,633
    )
    
    
    (200,633
    )
    
    
    190,601
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options at $2.00 per share
    
    
    
    
    
    
    
    
    
    
    47,115
    
    
    
    471
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,759
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94,230Issuance of common stock at $28.49 per share on March 6, 1989 (net of costs of issuance of $21,395)
    
    
    
    
    
    
    
    
    
    
    175,525
    
    
    
    1,755
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,976,855
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,978,610Issuance of common stock at $28.49 per share on March 30, 1989 (net of costs of issuance of $10,697)
    
    
    
    
    
    
    
    
    
    
    87,760
    
    
    
    878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,488,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,489,234Sale 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)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,443,118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,443,118Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (791,206
    )
    
    
    
    
    
    
    
    
    
    
    (791,206
    )Deferred compensation relating to grant of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    683,040
    
    
    
    
    
    
    
    (683,040
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800,729
    
    
    
    
    
    
    
    800,729Balance at May 31, 1989
    
    
    
    
    
    $
    
    
    
    
    6,476,585
    
    
    $
    64,766
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    35,728,451
    
    
    $
    (6,886,101
    )
    
    $
    (936,175
    )
    
    
    
    
    
    $
    27,970,941Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,490,394
    )
    
    
    
    
    
    
    
    
    
    
    (3,490,394
    )Deferred compensation relating to grant of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    699,163
    
    
    
    
    
    
    
    (699,163
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    546,278
    
    
    
    
    
    
    
    546,278Balance at May 31, 1990
    
    
    
    
    
    $
    
    
    
    
    6,476,585
    
    
    $
    64,766
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    36,427,614
    
    
    $
    (10,376,495
    )
    
    $
    (1,089,060
    )
    
    
    
    
    
    $
    25,026,825Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,579,872
    )
    
    
    
    
    
    
    
    
    
    
    (5,579,872
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    435,296
    
    
    
    
    
    
    
    435,296Balance at May 31, 1991
    
    
    
    
    
    $
    
    
    
    
    6,476,585
    
    
    $
    64,766
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    36,427,614
    
    
    $
    (15,956,367
    )
    
    $
    (653,764
    )
    
    
    
    
    
    $
    19,882,249Exercise of stock warrants at $5.60 per share
    
    
    
    
    
    
    
    
    
    
    90,000
    
    
    
    900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    503,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    504,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,006,495
    )
    
    
    
    
    
    
    
    
    
    
    (7,006,495
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    254,025
    
    
    
    
    
    
    
    254,025Balance at May 31, 1992
    
    
    
    
    
    $
    
    
    
    
    6,566,585
    
    
    $
    65,666
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    36,930,714
    
    
    $
    (22,962,862
    )
    
    $
    (399,739
    )
    
    
    
    
    
    $
    13,633,779Exercise of stock warrants at $7.14 per share
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,890
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107,040Issuance of common stock at $15.19 per share on April 19, 1993 (net of costs of issuance of $20,724)
    
    
    
    
    
    
    
    
    
    
    374,370
    
    
    
    3,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,663,710
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,667,454Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,066,609
    )
    
    
    
    
    
    
    
    
    
    
    (8,066,609
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    254,025
    
    
    
    
    
    
    
    254,025Balance at May 31, 1993
    
    
    
    
    
    $
    
    
    
    
    6,955,955
    
    
    $
    69,560
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    42,701,314
    
    
    $
    (31,029,471
    )
    
    $
    (145,714
    )
    
    
    
    
    
    $
    11,595,689Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,363,810
    )
    
    
    
    
    
    
    
    
    
    
    (7,363,810
    )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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,163,851
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,188,851Cancellation of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85,400
    )
    
    
    
    
    
    
    85,400
    
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    267
    
    
    
    
    
    
    
    267Balance at May 31, 1994
    
    
    
    
    
    $
    
    
    
    
    9,455,955
    
    
    $
    94,560
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    56,779,765
    
    
    $
    (38,393,281
    )
    
    $
    (60,047
    )
    
    
    
    
    
    $
    18,420,997Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,439,013
    )
    
    
    
    
    
    
    
    
    
    
    (7,439,013
    )Issuance of common stock at $6.50 per share on June 20, 1994 (net of issuance costs of $172,500)
    
    
    
    
    
    
    
    
    
    
    375,000
    
    
    
    3,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,261,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,265,000Exercise of stock options at $7.14 per share
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,400Exercise of stock options at $2.00 per share
    
    
    
    
    
    
    
    
    
    
    187,570
    
    
    
    1,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    373,264
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    375,139Cancellation of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (106,750
    )
    
    
    
    
    
    
    106,750
    
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67,892
    )
    
    
    
    
    
    
    (67,892
    )Balance at May 31, 1995
    
    
    
    
    
    $
    
    
    
    
    10,028,525
    
    
    $
    100,285
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    59,378,829
    
    
    $
    (45,832,294
    )
    
    $
    (21,189
    )
    
    
    
    
    
    $
    13,625,631




---



##### 



NORTHFIELD
LABORATORIES INC.
  
 Deficit
    
    
    
    
    
    
    
    
    
    
    TotalSeries A convertible
    
    
    Series B convertible
    
    
    
    
    
    
    accumulated
    
    
    
    
    
    
    
    
    
    
    share-Preferred stock
    
    
    Common stock
    
    

preferred stock
    
    

preferred stock
    
    
    Additional
    
    
    during the
    
    
    Deferred
    
    
    
    
    
    
    holdersNumber
    
    
    Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    Number
    
    
    Aggregate
    
    
    paid-in
    
    
    development
    
    
    compen-
    
    
    Treasury
    
    
    equityof
shares
    
    

amount
    
    

of
shares
    
    

amount
    
    

of shares
    
    

amount
    
    

of shares
    
    

amount
    
    

capital
    
    

stage
    
    

sation
    
    

shares
    
    

(deficit)Net loss
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (4,778,875
    )
    
    $
    
    
    
    
    
    
    
    $
    (4,778,875
    )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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,324,374
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,353,624Issuance of common stock at $17.75 per share on September 11, 1995 (net of issuance costs of $423,238)
    
    
    
    
    
    
    
    
    
    
    438,750
    
    
    
    4,388
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,360,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,364,575Exercise of stock options at $2.00 per share
    
    
    
    
    
    
    
    
    
    
    182,380
    
    
    
    1,824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    362,937
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    364,761Exercise of stock options at $6.38 per share
    
    
    
    
    
    
    
    
    
    
    1,500
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,555
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,570Exercise of stock options at $7.14 per share
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,400Cancellation of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80,062
    )
    
    
    
    
    
    
    80,062
    
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62,726
    )
    
    
    
    
    
    
    (62,726
    )Balance at May 31, 1996
    
    
    
    
    
    $
    
    
    
    
    13,586,155
    
    
    $
    135,862
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    115,427,120
    
    
    $
    (50,611,169
    )
    
    $
    (3,853
    )
    
    
    
    
    
    $
    64,947,960Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,245,693
    )
    
    
    
    
    
    
    
    
    
    
    (4,245,693
    )Exercise of stock options at $0.20 per share
    
    
    
    
    
    
    
    
    
    
    263,285
    
    
    
    2,633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,025
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,658Exercise of stock options at $2.00 per share
    
    
    
    
    
    
    
    
    
    
    232,935
    
    
    
    2,329
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463,540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    465,869Exercise of stock options at $7.14 per share
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,400Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,569
    
    
    
    
    
    
    
    2,569Balance at May 31, 1997
    
    
    
    
    
    $
    
    
    
    
    14,092,375
    
    
    $
    140,924
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    116,011,985
    
    
    $
    (54,856,862
    )
    
    $
    (1,284
    )
    
    
    
    
    
    $
    61,294,763Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,883,378
    )
    
    
    
    
    
    
    
    
    
    
    (5,883,378
    )Exercise of stock options at $7.14 per share
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,650
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,700Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,284
    
    
    
    
    
    
    
    1,284Balance at May 31, 1998
    
    
    
    
    
    $
    
    
    
    
    14,097,375
    
    
    $
    140,974
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    116,047,635
    
    
    $
    (60,740,240
    )
    
    $
    
    
    
    
    
    
    
    $
    55,448,369Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,416,333
    )
    
    
    
    
    
    
    
    
    
    
    (7,416,333
    )Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,354
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,354Exercise of stock options at $7.14 per share
    
    
    
    
    
    
    
    
    
    
    17,500
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,775
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,950Exercise of stock warrants at $8.00 per share
    
    
    
    
    
    
    
    
    
    
    125,000
    
    
    
    1,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    998,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Balance at May 31, 1999
    
    
    
    
    
    $
    
    
    
    
    14,239,875
    
    
    $
    142,399
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    117,185,514
    
    
    $
    (68,156,573
    )
    
    $
    
    
    
    
    
    
    
    $
    49,171,340Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,167,070
    )
    
    
    
    
    
    
    
    
    
    
    (9,167,070
    )Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,112
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,112Exercise of stock options at $13.38 per share
    
    
    
    
    
    
    
    
    
    
    2,500
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,425
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,450Balance at May 31, 2000
    
    
    
    
    
    $
    
    
    
    
    14,242,375
    
    
    $
    142,424
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    117,276,051
    
    
    $
    (77,323,643
    )
    
    $
    
    
    
    
    
    
    
    $
    40,094,832Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,174,609
    )
    
    
    
    
    
    
    
    
    
    
    (10,174,609
    )Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options at $6.38 per share
    
    
    
    
    
    
    
    
    
    
    6,000
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,280Exercise of stock options at $10.81 per share
    
    
    
    
    
    
    
    
    
    
    17,500
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,175Balance at May 31, 2001
    
    
    
    
    
    $
    
    
    
    
    14,265,875
    
    
    $
    142,659
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    117,503,271
    
    
    $
    (87,498,252
    )
    
    $
    
    
    
    
    
    
    
    $
    30,147,678Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,717,360
    )
    
    
    
    
    
    
    
    
    
    
    (10,717,360
    )Balance at May 31, 2002
    
    
    
    
    
    $
    
    
    
    
    14,265,875
    
    
    $
    142,659
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    117,503,271
    
    
    $
    (98,215,612
    )
    
    $
    
    
    
    
    
    
    
    $
    19,430,318Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,250,145
    )
    
    
    
    
    
    
    
    
    
    
    (12,250,145
    )Balance at May 31, 2003
    
    
    
    
    
    $
    
    
    
    
    14,265,875
    
    
    $
    142,659
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    117,503,271
    
    
    $
    (110,465,757
    )
    
    $
    
    
    
    
    
    
    
    $
    7,180,173Issuance 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,671,843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,690,771Issuance of common stock to directors at $6.08 per share on October 30, 2003
    
    
    
    
    
    
    
    
    
    
    12,335
    
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,877
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000Deferred compensation related to stock grants
    
    
    
    
    
    
    
    
    
    
    25,500
    
    
    
    255
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,995
    
    
    
    
    
    
    
    (191,250
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,630
    
    
    
    
    
    
    
    35,630Issuance 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,846,633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,872,493Issuance of common stock at $5.80 per share on February 18, 2004 (net of costs of issuance of $116,423)
    
    
    
    
    
    
    
    
    
    
    237,008
    
    
    
    2,370
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,255,853
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,258,223Issuance of common stock at $5.80 per share on April 15, 2004 (net of costs of issuance of $192,242)
    
    
    
    
    
    
    
    
    
    
    409,483
    
    
    
    4,095
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,178,664
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,182,759Issuance 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,716,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,736,160Exercise of stock options at $6.38 per share
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,700Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,573,798
    )
    
    
    
    
    
    
    
    
    
    
    (14,573,798
    )Balance at May 31, 2004
    
    
    
    
    
    $
    
    
    
    
    21,398,439
    
    
    $
    213,984
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    166,534,302
    
    
    $
    (125,039,555
    )
    
    $
    (155,620
    )
    
    
    
    
    
    $
    41,553,111Deferred compensation related to stock grants
    
    
    
    
    
    
    
    
    
    
    5,500
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,055
    
    
    
    
    
    
    
    (71,110
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,121
    
    
    
    
    
    
    
    122,121Exercise of stock options between $5.08 and $14.17 per share
    
    
    
    
    
    
    
    
    
    
    167,875
    
    
    
    1,679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,739,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,741,264Cost of shares in treasury, 1,717 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,393
    )
    
    
    (25,393
    )Issuance of common stock to directors at $12.66 per share on September 21, 2004
    
    
    
    
    
    
    
    
    
    
    5,925
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,941
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000Issuance 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,577,561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,629,311Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,321,456
    )
    
    
    
    
    
    
    
    
    
    
    (20,321,456
    )Balance at May 31, 2005
    
    
    
    
    
    $
    
    
    
    
    26,752,739
    
    
    $
    267,527
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    240,997,444
    
    
    $
    (145,361,011
    )
    
    $
    (104,609
    )
    
    
    (25,393
    )
    
    $
    95,773,958Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,550
    
    
    
    
    
    
    
    95,550Exercise of stock options at $7.13 and $10.66 per share
    
    
    
    
    
    
    
    
    
    
    2,875
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,295
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,324Issuance of common stock to directors at $13.05 per share on September 29, 2005
    
    
    
    
    
    
    
    
    
    
    5,750
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,943
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000Issuance of common stock to director at $13.21 per share on October 3, 2005
    
    
    
    
    
    
    
    
    
    
    1,135
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Issuance of common stock to director at $10.67 per share on February 24, 2006
    
    
    
    
    
    
    
    
    
    
    1,406
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,986
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Exercise of stock options at $10.66, $5.15 and $11.09 per share
    
    
    
    
    
    
    
    
    
    
    8,000
    
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,075
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,155Exercise of stock options at $10.66 and $7.13 per share
    
    
    
    
    
    
    
    
    
    
    2,750
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,640
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,668Exercise of stock options at $5.15 and $7.13 per share
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,905
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,935Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,775,418
    )
    
    
    
    
    
    
    
    
    
    
    (26,775,418
    )Balance at May 31, 2006
    
    
    
    
    
    $
    
    
    
    
    26,777,655
    
    
    $
    267,777
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    241,240,276
    
    
    $
    (172,136,429
    )
    
    $
    (9,059
    )
    
    
    (25,393
    )
    
    $
    69,337,172Eliminate remaining deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,059
    )
    
    
    
    
    
    
    9,059
    
    
    
    
    
    
    
    Exercise of stock options at $5.15 and $7.13 per share
    
    
    
    
    
    
    
    
    
    
    2,750
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,133Exercise of stock options at $7.13 per share
    
    
    
    
    
    
    
    
    
    
    750
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,348
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,355Issuance of common stock to directors at $13.03 per share on September 20, 2006
    
    
    
    
    
    
    
    
    
    
    6,912
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,931
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,000Exercise of stock options at $11.44 per share
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,400Exercise of stock options at $5.15, $11.92 and $13.21 per share
    
    
    
    
    
    
    
    
    
    
    3,125
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,646
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,677Exercise of stock options at $5.08 and $6.08 per share
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,200Exercise of stock options at $5.15 per share
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,450Exercise of stock options at $11.92 per share
    
    
    
    
    
    
    
    
    
    
    375
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,466
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,470Exercise of warrants at $6.88 per share
    
    
    
    
    
    
    
    
    
    
    96,974
    
    
    
    969
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    666,211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    667,180Share-based compenstion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,655,849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,655,849Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,671,177
    )
    
    
    
    
    
    
    
    
    
    
    (27,671,177
    )Balance at May 31, 2007
    
    
    
    
    
    $
    
    
    
    
    26,916,541
    
    
    $
    269,165
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    244,905,543
    
    
    $
    (199,807,606
    )
    
    $
    
    
    
    
    (25,393
    )
    
    $
    45,341,709Share-based compenstion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    517,439
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    517,439Net loss (unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,805,457
    )
    
    
    
    
    
    
    
    
    
    
    (4,805,457
    )Balance at August 31, 2007 (unaudited)
    
    
    
    
    
    $
    
    
    
    
    26,916,541
    
    
    $
    269,165
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    245,422,982
    
    
    $
    (204,613,063
    )
    
    $
    
    
    
    
    (25,393
    )
    
    $
    41,053,691




---



##### 



NORTHFIELD LABORATORIES INC.
  
 CumulativefromJune 19, 1985Three months ended August 31,
    
    
    through2007
    
    
    2006
    
    
    August 31, 2007(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net loss
    
    $
    (4,805,457
    )
    
    
    (7,562,574
    )
    
    
    (204,613,063
    )Adjustments to reconcile net loss to net
cash used in operating activities:Marketable security amortization
    
    
    (228,212
    )
    
    
    (420,609
    )
    
    
    (3,740,279
    )Depreciation and amortization
    
    
    164,943
    
    
    
    109,729
    
    
    
    19,598,605Stock based compensation
    
    
    517,439
    
    
    
    595,230
    
    
    
    7,324,312Loss of sale of equipment
    
    
    
    
    
    
    
    
    
    
    86,088Changes in assets and liabilities:Restricted cash
    
    
    (529,752
    )
    
    
    251,730
    
    
    
    Prepaid expenses
    
    
    (11,859
    )
    
    
    46,305
    
    
    
    (894,262
    )Other current assets
    
    
    (433,771
    )
    
    
    
    
    
    
    (2,542,877
    )Other assets
    
    
    
    
    
    
    49,282
    
    
    
    55,791Accounts payable
    
    
    (1,580,507
    )
    
    
    (657,512
    )
    
    
    1,992,518Accrued expenses
    
    
    75,163
    
    
    
    (25,828
    )
    
    
    176,281Government grant liability
    
    
    529,752
    
    
    
    (251,730
    )
    
    
    Accrued compensation and benefits
    
    
    283,339
    
    
    
    194,019
    
    
    
    849,048Other liabilities
    
    
    2,233
    
    
    
    (249,580
    )
    
    
    9,664Net cash used in operating activities
    
    
    (6,016,689
    )
    
    
    (7,921,538
    )
    
    
    (181,698,174
    )Cash flows from investing activities:Purchase of property, plant, equipment, and
capitalized engineering costs
    
    
    (171,291
    )
    
    
    (7,227,898
    )
    
    
    (28,074,458
    )Proceeds from sale of land and equipment
    
    
    
    
    
    
    
    
    
    
    1,863,023Proceeds from matured marketable securities
    
    
    23,946,753
    
    
    
    34,000,000
    
    
    
    729,593,105Proceeds from sale of marketable securities
    
    
    
    
    
    
    
    
    
    
    7,141,656Purchase of marketable securities
    
    
    (18,745,784
    )
    
    
    (23,677,908
    )
    
    
    (744,961,709
    )Net cash provided by (used in) investing activities
    
    
    5,029,678
    
    
    
    3,094,194
    
    
    
    (34,438,383
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    
    
    
    
    22,488
    
    
    
    237,055,000Payment of common stock issuance costs
    
    
    
    
    
    
    
    
    
    
    (14,128,531
    )Proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    6,644,953Proceeds from sale of stock options to
purchase common shares
    
    
    
    
    
    
    
    
    
    
    7,443,118Proceeds from issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    1,500,000Repayment of notes payable
    
    
    
    
    
    
    
    
    
    
    (140,968
    )Net cash provided by financing activities
    
    
    
    
    
    
    22,488
    
    
    
    238,373,572Net increase (decrease) in cash
    
    
    (987,011
    )
    
    
    (4,804,856
    )
    
    
    22,237,015Cash at beginning of period
    
    
    23,224,026
    
    
    
    39,304,602
    
    
    
    Cash at end of period
    
    $
    22,237,015
    
    
    
    34,499,746
    
    
    
    22,237,015Supplemental Schedule of Noncash Financing Activities :Exercise of stock option, 5,000 shares in exchange for
1,717 treasury shares
    
    $
    
    
    
    
    
    
    
    
    25,393




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##### 



Northfield Laboratories Inc.
(a company in the development stage)
 Notes to the Financial Statements
 August 31, 2007
(unaudited)
 (1) BASIS OF PRESENTATION
  (2) RECLASSIFICATIONS
  (3) USE OF ESTIMATES
  (4) COMPUTATION OF NET LOSS PER SHARE
  (5) SHARE-BASED COMPENSATION




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##### 








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##### 



Three Months EndedAugust 31, 2007
    
    August 31, 2006Fair Value
    
    $
    580,250
    
    
    $
    512,200Expected volatility
    
    
    95.9
    %
    
    
    73.2
    %Risk-free interest rate
    
    
    4.9
    %
    
    
    5.0
    %Dividend yield
    
    
    
    
    
    
    Expected lives
    
    6.3 years
    
    6.9 years




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##### 



Weighted AverageWeighted
    
    
    RemainingRange of
    
    
    Average
    
    
    Contractual Terms
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Prices
    
    
    Exercise Price
    
    
    (years)
    
    
    ValueOutstanding at May 31, 2007
    
    
    1,681,375
    
    
    $
    3.61  $18.55
    
    
    $
    11.08Granted at Fair Value
    
    
    527,500
    
    
    $
    1.36  $1.43
    
    
    $
    1.37Exercised
    
    
    0Expired
    
    
    10,000
    
    
    $
    9.56
    
    
    $
    9.56Cancelled
    
    
    77,000
    
    
    $
    7.57  $13.05
    
    
    $
    11.18Outstanding at August 31, 2007
    
    
    2,121,875
    
    
    $
    1.36  $18.55
    
    
    $
    8.67
    
    
    
    7.24
    
    
    
    154,575Exercisable at August 31, 2007
    
    
    1,096,625
    
    
    $
    3.62  $18.55
    
    
    $
    10.29
    
    
    
    5.70
    
    
    
    0
  (6) RESTRICTED CASH
  (7) MISCELLANEOUS RECEIVABLE
  (8) MARKETABLE SECURITIES
   (9) PROPERTY, PLANT & EQUIPMENT
  (10) INCOME TAXES




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##### 



(11) LEGAL PROCEEDINGS
    
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 RECENT DEVELOPMENTS




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##### 



RESULTS OF OPERATIONS
  OPERATING EXPENSES




---



##### 



INTEREST INCOME
  NET LOSS
  LIQUIDITY AND CAPITAL RESOURCES




---



##### 



CRITICAL ACCOUNTING POLICIES
  NET DEFERRED TAX ASSETS VALUATION
  CONTRACTUAL OBLIGATIONS
  LESS THANContractual Obligations
    
    TOTAL
    
    
    ONE YEAR
    
    
    1-3 YEARSLease Obligations (1)
    
    $
    637,890
    
    
    $
    361,888
    
    
    $
    276,002Other Obligations (2)
    
    $
    1,266,900
    
    
    $
    1,266,900
    
    
    
    Total Contractual Cash Obligation
    
    $
    1,904,790
    
    
    $
    1,628,788
    
    
    $
    276,002
 
 (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 15, 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




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##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  
 ITEM 4. CONTROLS AND PROCEDURES.
  
 Part II
OTHER INFORMATION
 
 Item 1. Legal Proceedings




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##### 








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##### 



SIGNATURES
  Signature
    
    Title/s/ Steven A. Gould, M.D.Steven A. Gould, M.D.
    
    Chairman of the Board and Chief Executive Officer/s/ Donna ONeill-MulvihillDonna ONeill-Mulvihill
    
    Vice President of Finance