UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(MARK ONE)
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| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the Fiscal Year Ended December 31, 2004 | ||
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Or | ||
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| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the Transition Period From To | ||
COMMISSION FILE NUMBER 33-90516
NEOPHARM, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE |
| 51-0327886 |
(State or other jurisdiction of |
| (I.R.S. Employer |
150 FIELD DRIVE
SUITE 195
LAKE FOREST, ILLINOIS 60045
(Address of Principal Executive Offices) (Zip Code)
(847) 295-8678
(Registrant’s Telephone Number, Including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.0002145 PAR VALUE
(Title of class)
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 ý No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes ý No o
The aggregate market value of the Registrant’s common stock held by non-affiliates (affiliates being, for these purposes only, directors, executive officers and holders of 5% of the registrant’s stock) of the registrant, par value $.0002145 per share, (based on the closing price of such shares on the NASDAQ on June 30, 2004) was $110,569,851. As of March 1, 2005 there were 23,525,163 shares of Common Stock outstanding.
Documents Incorporated by Reference
None.
EXPLANATORY NOTE
NeoPharm, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Amendment”) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 (which was filed with the Securities and Exchange Commission on March 16, 2005) pursuant to an exemptive order issued by the Securities and Exchange Commission (SEC Release No. 34-50754). In accordance with the exemptive order, the Company is permitted to include management’s annual report on internal control over financial reporting and the related attestation report of the Company’s independent registered public accounting firm in an amendment to its annual report on Form 10-K not later than forty-five days after the prescribed period for filing such Annual Report on Form 10-K. In compliance with the exemptive order, the Company is filing this Amendment to include:
• management’s annual report on internal control over financial reporting, and
• a Report of Independent Registered Public Accounting Firm relating to the Company’s assessment of internal control over financial reporting and the effectiveness of internal control over financial reporting.
As a result of this Amendment, (1) the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively, as exhibits to the original filing, have been re-executed, re-filed, and re-furnished as of the date of this Amendment; and (2) a Consent of Independent Registered Public Accounting Firm dated April 28, 2005 to the incorporation by reference in registration statements of the Company of their report related to our assessment of the effectiveness of internal control over financial reporting as of December 31, 2004 and the effectiveness of our internal control over financial reporting as of December 31, 2004 is being filed.
Except for the amendments described above, this Amendment does not modify or update the Company’s previously reported financial statements and other financial disclosures in, or exhibits to, the original filing. Unaffected items have not been repeated in this Amendment.
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ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
As required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, the Company has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, as of the end of the period covered by this report, the effectiveness of the design and operation of its disclosure controls and procedures. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures are effective in ensuring that material information relating to the Company, including its consolidated subsidiary, is made known to the certifying officers by others within the Company and its consolidated subsidiary, particularly during the period in which this report is being prepared. From time to time, the Company reviews the disclosure controls and procedures, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Management’s Report on Internal Control over Financial Reporting
The management of NeoPharm, Inc. (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting.
The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the reliability and preparation of published financial statements in accordance with U.S. generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004. In making this assessment, the Company used the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on management’s assessment, the Company believes that, as of December 31, 2004, the Company’s internal control over financial reporting is effective based on the criteria established in Internal Control-Integrated Framework.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, has been audited by the Company’s independent registered public accounting firm whose report follows this report.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2004 that has materially affected, or is likely to materially affect, the Company’s internal control over financial reporting.
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
NeoPharm, Inc.:
We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that NeoPharm, Inc. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). NeoPharm, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, management’s assessment that NeoPharm, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, NeoPharm, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of NeoPharm, Inc. and subsidiary as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004, and our report dated March 14, 2005 expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP |
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Chicago, Illinois
April 28, 2005
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Item 15(a)(3) Exhibit List
Exhibit |
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3.1 |
| Amended and Restated Certificate of Incorporation.(1) |
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3.1.1 |
| Amendment to the Amended and Restated Certificate of Incorporation incorporated by reference from Exhibit 3.01 contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002. (File No. 001-12493). |
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3.2 |
| Amended and Restated Bylaws of the Company incorporated by reference from Exhibit 3.2 contained in the Company’s Current Report on Form 8-K filed September 7, 2004 (File No. 001-12493).(1) |
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4.1 |
| Specimen Common Stock Certificate.(2) |
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4.1.1 |
| Preferred Stock Rights Agreement between NeoPharm, Inc. and Computershare Investor Services L.L.C. dated as of June 30, 2003, incorporated by reference from Exhibit 4.1 contained in the Company’s Current Report on Form 8-K filed July 7, 2003 (File No. 001-12493). |
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4.1.2 |
| First Amendment to Rights Agreement between NeoPharm, Inc. and Computershare Investor Services L.L.C. dated as of September 10, 2004, incorporated by reference from the Company’s Current Report on Form 8-K filed September 24, 2004 (File No. 001-12493). |
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4.1.3 |
| Second Amendment to Rights Agreement between NeoPharm, Inc. and Computershare Investor Services, L.L.C. dated as of November 11, 2004, incorporated by reference from the Company’s Current Report on Form 8-K filed November 17, 2004 (File No. 001-12493). |
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*10.1 |
| 1995 Stock Option Plan, with forms of Incentive and Nonstatutory Stock Option Agreements.(2) |
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*10.2 |
| 1995 Director Option Plan, with form of Director Stock Option Agreement.(2) |
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10.3 |
| Form of Director and Officer Indemnification Agreement.(2) |
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10.4 |
| Cooperative Research and Development Agreement between the Company and the National Cancer Institute dated September 13, 1993.(2) |
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10.5 |
| License Agreement between the Company and Georgetown University dated July 1990.(2) |
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10.6 |
| License Agreement between the Company and Georgetown University dated April 18, 1994.(2) |
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10.7 |
| Loan Repayment Note, dated June 18, 1990, by and between the Company and the John N. Kapoor Trust.(2) |
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10.8 |
| Consulting Agreement, dated July 1, 1994, by and between the Company and EJ Financial Services, Inc.(2) |
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| Harris Bank and Trust Company Loan Agreement dated March 16, 1995, as amended October 5, 1995.(2) |
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*10.10 |
| Option Agreement, dated as of August 13, 1996, between the Company and John N. Kapoor and Anatoly Dritschilo.(3) |
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10.11 |
| Cooperative Research and Development Agreement between the Company and the Food and Drug Administration dated August 27, 1997.(4) |
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10.12 |
| License Agreement between the Company and the National Institute of Health dated September 23, 1997.(4) |
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*10.13 |
| Employment Agreement between James M. Hussey and the Company dated March 16, 1998.(4) |
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*10.14 |
| 1998 Equity Incentive Plan.(5) |
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10.15 |
| Collaboration Agreement by and between the Company and BioChem Therapeutics dated May 12, 1997.(4) |
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10.16 |
| License Agreement by and between the Company and Pharmacia and Upjohn Company dated February 19, 1999, incorporated by reference from Exhibit 10.1 of the Company’s report on Form 8-K (File No. 33-09516). |
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10.17 |
| Stock Purchase Agreement by and between the Company and Pharmacia and Upjohn dated February 19, 1999, incorporated by reference from Exhibit 10.2 of the Company’s Report on Form 8-K (File No. 33-09516). |
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10.18 |
| Amendment No. 1 dated January 22, 1999 to the License Agreement between the Company and Georgetown University dated January, 1990.(4) |
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10.19 |
| Amendment No. 1 dated January 22, 1999 to the License Agreement between the Company and Georgetown University dated April 18, 1994.(4) |
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10.20 |
| Line of Credit Agreement, dated as of September 30, 1998, by and between the Company and the John N. Kapoor Trust dated September 20, 1989 incorporated by reference from Exhibit 10.15 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (File No. 33-09516). |
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10.21 |
| Consulting Agreement dated as of June 19,2000 by and between the Company and Unicorn Pharma Consulting, Inc., incorporated by reference from Exhibit 10.01 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. |
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10.22 |
| Consulting Agreement dated as of November 12, 2001 by and between the Company and Unicorn Pharma Consulting, Inc., incorporated by reference from Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001. |
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10.23 |
| Promissory Note dated as of December 20, 2001 by and between the Company and Akorn, Inc., incorporated by reference from Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001. |
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10.24 |
| Processing Agreement dated as of December 20, 2001 by and between the Company and Akorn, Inc., incorporated by reference from Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, |
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10.25 |
| Subordination and Intercreditor Agreement dated as of December 20, 2001 by and between the Company and John N. Kapoor, as Trustee under the John N. Kapoor Trust, dated September 20, 1989, incorporated by reference from Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001. |
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10.26 |
| Subordination, Standby and Intercreditor Agreement dated as of December 20, 2001 by and between the Company and the Northern Trust Company, incorporated by reference from Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001. |
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*10.27 |
| Amendment to the 1998 Equity Incentive Plan, incorporated by reference from Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held June 6, 2002. |
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10.28 |
| First Amended and Restated Synthetic Cardiolipin Supply Agreement dated as of November 1999, by and between Avanti Polar Lipids, Inc. and NeoPharm, Inc., incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (File No. 001-12493). |
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10.29 |
| Conditional Option Agreement between Avanti Polar Lipids and NeoPharm, Inc. dated as of January 26, 1999, incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (File No. 001-12493). |
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10.30 |
| Form of Amendment to Processing Agreement dated as of October 7, 2003 by and between NeoPharm, Inc. and Akorn, Inc. |
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10.31 |
| Form of Amended and Restated Promissory Note dated as of October 7, 2003 by and between the Company and Akorn, Inc. |
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10.32 |
| Subordination and Intercreditor Agreement dated as of October 7, 2003 by and between the Company and LaSalle Bank National Association. |
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*10.33 |
| Separation Agreement and Full Release of Claims between the Company and James M. Hussey, dated as of June 17, 2004, incorporated by reference from Exhibit 10.01 contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. |
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*10.34 |
| Employment Agreement by and between NeoPharm, Inc. and Gregory P. Young dated as of June 17, 2004, incorporated by reference from Exhibit 10.02 contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. |
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*10.35 |
| Form of Director and Executive Officer Indemnification Agreement of NeoPharm, Inc., as adopted on September 20, 2004, incorporated by reference from Exhibit 10.01 to the Company’s Current Report on Form 8-K filed September 30, 2004 (File No. 001-12493). |
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10.36 |
| Settlement Agreement among NeoPharm, Inc., John N. Kapoor, Ph.D., Erick E. Hanson, Gregory P. Young, and Dr. Kaveh T. Safavi dated as of November 11, 2004, incorporated by reference from Exhibit 10.01 to the Company’s Current Report on Form 8-K filed November 17, 2004 (File No. 001-12493). |
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*10.37 |
| Separation Agreement by and between NeoPharm, Inc. and Sander A. Flaum dated as of November 11, 2004, incorporated by reference from Exhibit 10.02 the |
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| Company’s Current Report on Form 8-K filed September 17, 2004 (File No. 001-12493). |
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*10.38 |
| Separation Agreement by and between NeoPharm, Inc. and Matthew P. Rogan dated as of November 11, 2004, incorporated by reference from Exhibit 10.03 to the Company’s Report on Form 8-K filed on November 17, 2004 (File No. 001-12493). |
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10.39 |
| Sublicense and License Agreement between Nippon Kayaku Co., Ltd. and NeoPharm, Inc. dated as of December 28, 2004, incorporate by reference from Exhibit 10.01 to the Company’s Current Report on Form 8-K filed January 4, 2005 (File No. 001-112493). |
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*10.40 |
| Terms of Employment by and between NeoPharm, Inc. and Ronald G. Eidell dated March 10, 2005, incorporated by reference from Exhibit 10.01 to the Company’s Current Report on Form 8-K filed on March 14, 2005 (File No. 001-12493). |
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*10.41 |
| Separation Agreement and Full Release of Claims by and between NeoPharm, Inc. and Gregory P. Young dated as of March 11, 2005, incorporated by reference from Exhibit 10.02 to the Company’s Current Report on Form 8-K filed on March 14, 2005 (File No. 001-12493). |
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*10.42 |
| Amendment No. 1 to Separation Agreement and Full Release of Claims by and between NeoPharm, Inc and James M. Hussey dated March 10, 2005, incorporated by reference from Exhibit 10.03 to the Company’s Current Report on Form 8-K filed on March 14, 2005 (File No. 001-12493). |
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23.1 |
| Consent of Independent Registered Public Accounting Firm. |
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**23.2 |
| Consent of Independent Registered Public Accounting Firm. |
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**31.1 |
| Certification of Chief Executive Officer. |
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**31.2 |
| Certification of Chief Financial Officer. |
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**32.1 |
| Certification pursuant to Section 906 of the Sarbanes-Oxley Act. |
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**32.2 |
| Certification pursuant to Section 906 of the Sarbanes-Oxley Act. |
* Denotes management contract or compensatory plan or arrangement.
** Filed herewith
(1) Incorporated by reference to the exhibit of the same number contained in the Company’s registration statement on Form S-3 filed under the Securities Act of 1933 (the “33 Act”) on October 1, 2003. (File No. 333-44396).
(2) Incorporated by reference to the exhibit of the same number contained in the Company’s registration statement on Form S-1 filed under the “33 Act. (File No. 33-90516).
(3) Incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996. (File No. 001-12493)
(4) Incorporated by reference to the exhibit of the same number contained in the Company’s Annual Report on Form 10-K for the year ended December 31,1998. (File No. 001-12493)
(5) Incorporated by reference to the Exhibit 4.1 to the Company’s registration statement on Form S-8 filed under the “33 Act. (File No. 333-66365).
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All schedules and exhibits, other than those listed above are omitted as the information is not required or is furnished elsewhere in the financial statements or the notes thereto.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED
| NeoPharm, Inc. | ||
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| By: | /s/ RONALD G. EIDELL |
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| Ronald G. Eidell | |
| President and Chief Executive Officer | ||
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS ANNUAL REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
Signature |
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/s/ ERICK E. HANSON |
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| Director, Chairman of the Board |
| April 29, 2005 |
Erick E. Hanson |
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/s/ RONALD G. EIDELL |
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| Director, President, and Chief Executive |
| April 29, 2005 |
Ronald G. Eidell |
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| Officer (Principal Executive Officer) |
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/s/ FRANK C. BECKER |
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| Director |
| April 29, 2005 |
Frank C. Becker |
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/s/ BERNARD A. FOX |
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| Director |
| April 29, 2005 |
Bernard A. Fox |
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/s/ PAUL E. FREIMAN |
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| Director |
| April 29, 2005 |
Paul E. Freiman |
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/s/ JOHN N. KAPOOR |
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| Director |
| April 29, 2005 |
John N. Kapoor |
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/s/ KAVEH T. SAFAVI |
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| Director |
| April 29, 2005 |
Kaveh T. Safavi |
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/s/ LAWRENCE A. KENYON |
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| Chief Financial Officer (Principal |
| April 29, 2005 |
Lawrence A. Kenyon |
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| Financial Officer and Principal |
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| Accounting Officer) |
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