Delaware
|
11-3516358
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
·
|
our
lack of profitability and the need for additional capital to operate
our
business;
|
·
|
our
ability to obtain the necessary U.S. and worldwide regulatory
approvals for our drug candidates;
|
·
|
successful
and timely completion of clinical trials for our drug
candidates;
|
·
|
demand
for and market acceptance of our drug
candidates;
|
·
|
the
availability of qualified third-party researchers and manufacturers
for
our drug development programs;
|
·
|
our
ability to develop and obtain protection of our intellectual property;
and
|
·
|
other
risks and uncertainties, including those set forth herein under the
caption "Risk Factors" and those detailed from time to time in our
filings
with the Securities and Exchange Commission.
|
PAGE
|
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|
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|
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|
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40
|
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66
|
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66
|
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66
|
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67
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70
|
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77
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79
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80
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81
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82
|
Item
1.
|
Description
of Business
|
·
|
Long-term
control of advanced tumors:
For advanced cancer (particularly stage III-IV disease in which the
cancer
has spread throughout the body), surgery cannot eliminate the tumor
and
the patient becomes reliant on chemotherapy and/or radiation. However,
current chemotherapy, in the majority of cases, fails to eliminate
the
tumor, tending to, at best, shrink the tumor and fails to extend
the
patient’s life. These limitations translate into a need for safer and
effective cancer therapies offering a significant improvement in
survival
time or long-term chronic disease control.
|
·
|
Decreased
relapse for early-stage patients:
While many early-stage patients will enter remission as a result
of
treatment with surgery and radiation therapy and chemotherapy as
well, the
rate of relapse is high, as small numbers of tumor cells remain after
the
treatments despite standard surgical and radiation therapies. Upon
relapse, the tumor is often more aggressive than the initial occurrence,
and unresponsive to standard first-line therapies. The development
of
therapies that can maintain a patient in remission following treatment
for
the initial tumor, rather than permitting relapse, is a significant
unmet
need.
|
·
|
Less
toxic therapies:
Current chemotherapeutic drugs are associated with a high level of
toxicities, due to their nonspecific mechanism of targeting all rapidly
dividing cells, rather than cancer tumor cells in particular. For
patients
with terminal disease, the maintenance of quality of life, in addition
to
extending life, is of prime importance; however, treatment-related
toxicities severely impair the quality of life of cancer patients.
|
·
|
Generalized
anxiety disorder (GAD), which is long lasting and low-grade.
|
·
|
Panic
disorder, which has more dramatic symptoms.
|
·
|
Phobias.
|
·
|
Obsessive−compulsive
disorder (OCD).
|
·
|
Post−traumatic
stress disorder (PTSD)
|
·
|
Separation
anxiety disorder (which is almost always seen in
children).
|
·
|
Better
safety profile: Adverse
reactions associated
with current SSRI anxiolytics and antidepressants include nausea,
sexual
dysfunction, insomnia, suicidal tendency and weight gain. The occurrence
of one or more of these side effects in patients is the primary reason
that over
30% of
patients discontinue use of these
treatments.
|
·
|
Fast
therapeutic onset with immediate results:
Onset
of therapeutic action within the first week of use has been one of
the key
goals for all drug discovery programs involved in treating anxiety
and
depression. All current medications require several weeks to see
therapeutic onset.
|
·
|
Broad
spectrum of activity:
The
vast majority of patients who suffer from anxiety also display symptoms
of
depression and vice versa. In the past, each disorder was treated
with
separate medications. Recent clinical studies have demonstrated the
ability of SSRIs to be somewhat effective in treating both anxiety
and
depression. Newer drugs should have more potent efficacy with better
safety profiles than SSRIs to address both symptoms of anxiety and
depression.
|
·
|
Favorable
Environment for Formulary Access and Reimbursement.
Given the significant death rate, the relatively poor performance
of
existing drugs, and the life threatening nature of cancer, decisions
by
medical providers and health insurance companies are more heavily
focused
on outcomes than product cost for cancer drugs compared to drugs
from
other therapeutic classes. As a result cancer drugs with proven efficacy
are expected to gain rapid formulary listing and patient reimbursement,
and in addition, drugs that have orphan designations are generally
reimbursed by insurance companies given that there are few, if any,
alternatives. Since mental disorders affect an estimated 57.7 million
people in the United States, the burden of illness is significant
for
insurance companies as well as for employers. Given the significant
cost
of treating behavioral health problems, there is a favorable environment
for formulary access and reimbursement for effective products that
treat
multiple disorders.
|
·
|
Focus
on Specialty Markets.
Cancer patients are treated by oncologists, a group of physician
specialists who are early adopters of new therapies. Marketing products
to
this physician group can be accomplished with a specialty sales force
that
requires less investment than a typical product sales force that
markets
to primary care physicians and general practitioners.
|
·
|
Lower
Development Expenses/Shorter Development Time.
Drugs for life-threatening diseases such as cancer are often treated
by
the Food and Drug Administration (FDA) as candidates for fast track,
priority and accelerated reviews. Clinical studies for cancer require
fewer patients than those for non-life threatening diseases. This
results
in reduced cost and shorter clinical trials. Our lead CNS product,
Serdaxin, is also expected to have lower development expenses as
well as
shorter development time given the drug has been on the market for
20
years for other treatments, with a well-established safety
record.
|
·
|
Safety:
Serdaxin has established an excellent safety profile, and appears
to avoid
the major side effects associated with SSRIs and
anxyliotics.
|
·
|
Potency:
Combined effects of the serotonin and dopamine appear to be
pharmacologically superior to SSRIs and anxyliotics, potentially
covering
patients from both negative mood states and loss of positive mood
states.
|
·
|
Patent:
Unlike the most SSRIs whose patents have expired or will soon expire,
Serdaxin’s patent extends until 2024 or
longer.
|
·
|
continued
pre-clinical development and clinical trials for our current and
new drug
candidates;
|
·
|
efforts
to seek regulatory approvals for our drug
candidates;
|
·
|
implementing
additional internal systems and
infrastructure;
|
·
|
licensing
in additional technologies to develop;
and
|
·
|
hiring
additional personnel.
|
·
|
conducting
pre-clinical and clinical trials;
|
·
|
participating
in regulatory approval processes;
|
·
|
formulating
and manufacturing products; and
|
·
|
conducting
sales and marketing activities.
|
·
|
unforeseen
safety issues;
|
·
|
determination
of dosing issues;
|
·
|
lack
of effectiveness during clinical
trials;
|
·
|
reliance
on third party suppliers for the supply of drug candidate
samples;
|
·
|
slower
than expected rates of patient
recruitment;
|
·
|
inability
to monitor patients adequately during or after treatment;
|
·
|
inability
or unwillingness of medical investigators and institutional review
boards
to follow our clinical protocols;
and
|
·
|
lack
of sufficient funding to finance the clinical
trials.
|
·
|
awareness
of the drug's availability and
benefits;
|
·
|
perceptions
by members of the health care community, including physicians, about
the
safety and effectiveness of our
drugs;
|
·
|
pharmacological
benefit and cost-effectiveness of our product relative to competing
products;
|
·
|
availability
of reimbursement for our products from government or other healthcare
payers;
|
·
|
effectiveness
of marketing and distribution efforts by us and our licensees and
distributors, if any; and
|
·
|
the
price at which we sell our
products.
|
·
|
We
may be unable to identify manufacturers on acceptable terms or at
all
because the number of potential manufacturers is limited and the
FDA must
approve any replacement contractor. This approval would require new
testing and compliance inspections. In addition, a new manufacturer
would
have to be educated in, or develop substantially equivalent processes
for,
the production of our products after receipt of FDA approval, if
any.
|
·
|
Our
third-party manufacturers might be unable to formulate and manufacture
our
drugs in the volume and of the quality required to meet our clinical
needs
and commercial needs.
|
·
|
Our
contract manufacturers may not perform as agreed or may not remain
in the
contract manufacturing business for the time required to supply our
clinical trials or to successfully produce, store and distribute
our
products.
|
·
|
Drug
manufacturers are subject to ongoing periodic unannounced inspection
by
the FDA, the Drug Enforcement Agency ("DEA"), and corresponding state
agencies to ensure strict compliance with good manufacturing practice
and
other government regulations and corresponding foreign standards.
We do
not have control over third-party manufacturers' compliance with
these
regulations and standards, but we may be ultimately responsible for
any of
their failures.
|
·
|
If
any third-party manufacturer makes improvements in the manufacturing
process for our products, we may not own, or may have to share, the
intellectual property rights to the
innovation.
|
·
|
developing
drugs;
|
·
|
undertaking
pre-clinical testing and human clinical trials;
|
·
|
obtaining
FDA and other regulatory approvals of
drugs;
|
·
|
formulating
and manufacturing drugs; and
|
·
|
launching,
marketing and selling drugs.
|
·
|
the
degree and range of protection any patents will afford us against
competitors, including whether third parties will find ways to invalidate
or otherwise circumvent our licensed
patents;
|
·
|
if
and when patents will issue;
|
·
|
whether
or not others will obtain patents claiming aspects similar to those
covered by our licensed patents and patent applications; or
|
·
|
whether
we will need to initiate litigation or administrative proceedings
which
may be costly whether we win or
lose.
|
·
|
obtain
licenses, which may not be available on commercially reasonable terms,
if
at all;
|
·
|
redesign
our products or processes to avoid infringement;
|
·
|
stop
using the subject matter claimed in the patents held by others, which
could cause us to lose the use of one or more of our drug candidates;
|
·
|
pay
damages; or
|
·
|
defend
litigation or administrative proceedings which may be costly whether
we
win or lose, and which could result in a substantial diversion of
our
management resources.
|
·
|
the
announcement of new products or product enhancements by us or our
competitors;
|
·
|
developments
concerning intellectual property rights and regulatory
approvals;
|
·
|
variations
in our and our competitors' results of operations;
|
·
|
changes
in earnings estimates or recommendations by securities
analysts;
and
|
·
|
developments
in the biotechnology industry.
|
Item 2.
|
Description
of Property.
|
Item 3.
|
Legal
Proceedings.
|
Item 4.
|
Submission
of Matters to a Vote of Security
Holders.
|
Item 5.
|
Market
for Common Equity and Related Stockholder
Matters.
|
Period
|
High
|
Low
|
|||||
2005
|
|||||||
First
Quarter1
|
$
|
0.15
|
$
|
0.02
|
|||
Second
Quarter 1,2
|
$
|
4.00
|
$
|
0.30
|
|||
Third
Quarter
|
$
|
4.60
|
$
|
2.50
|
|||
Fourth
Quarter
|
$
|
3.25
|
$
|
1.50
|
|||
2006
|
|||||||
First
Quarter
|
$
|
2.50
|
$
|
1.11
|
|||
Second
Quarter
|
$
|
2.00
|
$
|
1.15
|
|||
Third
Quarter
|
$
|
5.00
|
$
|
1.50
|
|||
Fourth
Quarter
|
$
|
3.05
|
$
|
1.01
|
1
|
Reflects
adjustments made in accordance with a 1-for-100 reverse stock split
in
May 2005.
|
2
|
The
merger of Corporate Road Show.Com and Rexahn, Corp was completed
on
May 13, 2005.
|
Item 6.
|
Management's
Discussion and Analysis or Plan of
Operation
|
For
the years ended December 31
|
||||
2007
|
$
|
216,170
|
||
2008
|
222,655
|
|||
2009
|
112,972
|
|||
$
|
551,797
|
·
|
the
progress of our product development
activities;
|
·
|
the
number and scope of our product development
programs;
|
·
|
the
progress of our pre-clinical and clinical trial
activities;
|
·
|
the
progress of the development efforts of parties with whom we have
entered
into collaboration agreements;
|
·
|
our
ability to maintain current collaboration programs and to establish
new
collaboration arrangements;
|
·
|
the
costs involved in prosecuting and enforcing patent claims and other
intellectual property rights; and
|
·
|
the
costs and timing of regulatory
approvals.
|
Item 7.
|
Financial
Statements
|
December
31,
2006
|
December
31,
2005
|
||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,034,060
|
$
|
10,116,625
|
|||
Prepaid
expenses and other
|
483,186
|
54,774
|
|||||
Total
Current Assets
|
4,517,246
|
10,171,399
|
|||||
Equipment,
Net (note
3)
|
149,993
|
203,632
|
|||||
Intangible
Assets, Net (note
4)
|
321,971
|
339,890
|
|||||
Total
Assets
|
$
|
4,989,210
|
$
|
10,714,921
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
575,363
|
$
|
587,612
|
|||
Licensing
fee payable (note 4)
|
-
|
172,813
|
|||||
Total
Current Liabilities
|
575,363
|
760,425
|
|||||
Long-Term
Convertible Debt (note
5)
|
-
|
3,850,000
|
|||||
Deferred
Revenue (note
6)
|
1,200,000
|
1,275,000
|
|||||
Total
Liabilities
|
1,775,363
|
5,885,425
|
|||||
Commitment
and Contingencies (note
10)
|
|||||||
Stockholders'
Equity (note
7):
|
|||||||
Preferred
stock, par value $0.0001, 100,000 authorized shares, none issued and
outstanding
|
-
|
-
|
|||||
Common
stock, par value $0.0001, 500,000,000 authorized shares, 50,322,337
issued
(2005- 46,410,632) and 50,308,132 outstanding (2005- 46,410,632)
|
5,032
|
4,641
|
|||||
Treasury
stock, 14,205 (2005 - 0) shares, at cost
|
(28,410
|
)
|
-
|
||||
Additional
paid-in capital
|
23,927,551
|
19,029,178
|
|||||
Accumulated
deficit during the development stage
|
(20,690,326
|
)
|
(14,204,323
|
)
|
|||
Total
Stockholders' Equity
|
3,213,847
|
4,829,496
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
4,989,210
|
$
|
10,714,921
|
Cumulative
from March 19, 2001 (Inception) to
|
Years
Ended
December
31,
|
|||||||||
December
31, 2006
|
2006
|
2005
|
||||||||
Revenues:
|
||||||||||
Research
|
$
|
300,000
|
$
|
75,000
|
$
|
75,000
|
||||
Expenses:
|
||||||||||
General
and administrative
|
9,610,582
|
3,051,493
|
2,801,743
|
|||||||
Research
and development
|
9,275,043
|
3,325,423
|
1,716,566
|
|||||||
Patent
fees
|
518,860
|
291,174
|
178,625
|
|||||||
Depreciation
and amortization
|
382,391
|
124,510
|
96,400
|
|||||||
Total
Expenses
|
19,786,876
|
6,792,600
|
4,793,334
|
|||||||
Loss
from Operations
|
(19,486,876
|
)
|
(6,717,600
|
)
|
(4,718,334
|
)
|
||||
Other
(Income) Expense
|
||||||||||
Interest
income
|
(722,697
|
)
|
(331,248
|
)
|
(190,610
|
)
|
||||
Interest
expense
|
301,147
|
99,651
|
196,816
|
|||||||
Beneficial
conversion feature
|
1,625,000
|
-
|
1,625,000
|
|||||||
1,203,450
|
(231,597
|
)
|
1,631,206
|
|||||||
Net
Loss
|
$
|
(20,690,326
|
)
|
$
|
(6,486,003
|
)
|
$
|
(6,349,540
|
)
|
|
Loss
per weighted average number of shares outstanding, basic and
diluted
|
$
|
(0.13
|
)
|
$
|
(0.15
|
)
|
||||
Weighted
average number of shares outstanding, basic and diluted
|
48,865,988
|
41,976,959
|
Accumulated
|
||||||||||||||||||||||
Deficit
|
||||||||||||||||||||||
During
|
Total
|
|||||||||||||||||||||
Common
Stock
|
Treasury
Stock
|
Additional
|
the
|
Stockholders’
|
||||||||||||||||||
Number
|
Number
|
Paid
in
|
Development
|
Equity
|
||||||||||||||||||
of
shares
|
Amount
|
of
shares
|
Amount
|
Capital
|
Stage
|
(Deficit)
|
||||||||||||||||
Opening
balance, March 19, 2001
|
-
|
$
|
-
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Common
shares issued
|
7,126,666
|
71,266
|
-
|
-
|
4,448,702
|
-
|
4,519,968
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(625,109
|
)
|
(625,109
|
)
|
|||||||||||||
Balance,
December 31, 2001
|
7,126,666
|
71,266
|
-
|
-
|
4,448,702
|
(625,109
|
)
|
3,894,859
|
||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(1,181,157
|
)
|
(1,181,157
|
)
|
|||||||||||||
Balance,
December 31, 2002
|
7,126,666
|
71,266
|
-
|
-
|
4,448,702
|
(1,806,266
|
)
|
2,713,702
|
||||||||||||||
Common
shares issued
|
500,000
|
5,000
|
-
|
-
|
1,995,000
|
-
|
2,000,000
|
|||||||||||||||
Stock
option compensation
|
-
|
-
|
-
|
-
|
538,074
|
-
|
538,074
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(2,775,075
|
)
|
(2,775,075
|
)
|
|||||||||||||
Balance,
December 31, 2003
|
7,626,666
|
76,266
|
-
|
-
|
6,981,776
|
(4,581,341
|
)
|
2,476,701
|
||||||||||||||
Common
shares issued
|
1,500
|
15
|
-
|
-
|
1,785
|
-
|
1,800
|
|||||||||||||||
Stock
option compensation
|
-
|
-
|
-
|
-
|
230,770
|
-
|
230,770
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(3,273,442
|
)
|
(3,273,442
|
)
|
|||||||||||||
Balance,
December 31, 2004
|
7,628,166
|
$
|
76,281
|
-
|
$
|
-
|
$
|
7,214,331
|
$
|
(7,854,783
|
)
|
$
|
(564,171
|
)
|
Accumulated
|
||||||||||||||||||||||
Deficit
|
||||||||||||||||||||||
During
|
Total
|
|||||||||||||||||||||
Common
Stock
|
Treasury
Stock
|
Additional
|
the
|
Stockholders’
|
||||||||||||||||||
Number
|
Number
|
Paid
in
|
Development
|
Equity
|
||||||||||||||||||
of
shares
|
Amount
|
of
shares
|
Amount
|
Capital
|
Stage
|
(Deficit)
|
||||||||||||||||
Balance,
December 31, 2004
|
7,628,166
|
$
|
76,281
|
-
|
$
|
-
|
$
|
7,214,331
|
$
|
(7,854,783
|
)
|
$
|
(564,171
|
)
|
||||||||
Stock
split (5 for 1)
|
30,512,664
|
(72,467
|
)
|
-
|
-
|
72,467
|
-
|
-
|
||||||||||||||
Common
shares issued in connection with merger
|
3,397,802
|
340
|
-
|
-
|
(340
|
)
|
-
|
-
|
||||||||||||||
Common
stock issued for cash
|
4,175,000
|
417
|
-
|
-
|
8,349,565
|
-
|
8,349,982
|
|||||||||||||||
Common
shares issued on conversion of convertible debt
|
650,000
|
65
|
-
|
-
|
1,299,935
|
-
|
1,300,000
|
|||||||||||||||
Exercise
of stock options
|
40,000
|
4
|
-
|
-
|
9,596
|
-
|
9,600 | |||||||||||||||
Common
shares issued in exchange for services
|
7,000
|
1
|
-
|
-
|
21,876
|
-
|
21,877
|
|||||||||||||||
Beneficial
conversion feature
|
-
|
-
|
-
|
-
|
1,625,000
|
-
|
1,625,000
|
|||||||||||||||
Stock
option compensation
|
-
|
-
|
-
|
-
|
436,748
|
-
|
436,748
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(6,349,540
|
)
|
(6,349,540
|
)
|
|||||||||||||
Balance,
December 31, 2005
|
46,410,632
|
4,641
|
-
|
-
|
19,029,178
|
(14,204,323
|
)
|
4,829,496
|
||||||||||||||
Exercise
of stock options
|
61,705
|
6
|
-
|
-
|
14,802
|
-
|
14,808
|
|||||||||||||||
Common
shares issued on conversion of convertible debt
|
3,850,000
|
385
|
-
|
-
|
3,849,615
|
-
|
3,850,000
|
|||||||||||||||
Purchase
of treasury stock
|
-
|
-
|
14,205
|
(28,410
|
)
|
-
|
-
|
(28,410
|
)
|
|||||||||||||
Stock
option compensation
|
-
|
-
|
-
|
-
|
1,033,956
|
-
|
1,033,956
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(6,486,003
|
)
|
(6,486,003
|
)
|
|||||||||||||
Balance,
December 31, 2006
|
50,322,337
|
$
|
5,032
|
14,205
|
$
|
(28,410
|
)
|
$
|
23,927,551
|
$
|
(20,690,326
|
)
|
$
|
3,213,847
|
Cumulative
from March 19, 2001 (Inception) to
|
Years
Ended
December
31,
|
|||||||||
December
31, 2006
|
2006
|
2005
|
||||||||
Cash
Flows from Operating Activities:
|
||||||||||
Net
loss
|
$
|
(20,690,326
|
)
|
$
|
(6,486,003
|
)
|
$
|
(6,349,540
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||
Beneficial
conversion feature
|
1,625,000
|
-
|
1,625,000
|
|||||||
Compensatory
stock
|
21,877
|
-
|
21,877
|
|||||||
Depreciation
and amortization
|
382,391
|
124,510
|
96,400
|
|||||||
Stock
option compensation expense
|
2,239,548
|
1,033,956
|
436,748
|
|||||||
Amortization
of deferred revenue
|
(300,000
|
)
|
(75,000
|
)
|
(75,000
|
)
|
||||
Changes
in assets and liabilities:
|
||||||||||
Prepaid
expenses and other
|
(483,186
|
)
|
(428,412
|
)
|
(38,579
|
)
|
||||
Accounts
payable and accrued expenses
|
575,363
|
(12,249
|
)
|
151,644
|
||||||
Net
Cash Used in Operating Activities
|
(16,629,333
|
)
|
(5,843,198
|
)
|
(4,131,450
|
)
|
||||
Cash
Flows from Investing Activities:
|
||||||||||
Purchase
of equipment
|
(498,139
|
)
|
(52,952
|
)
|
(94,083
|
)
|
||||
Net
Cash Used in Investing Activities
|
(498,139
|
)
|
(52,952
|
)
|
(94,083
|
)
|
||||
Cash
Flows from Financing Activities:
|
||||||||||
Issuance
of common stock
|
14,896,158
|
14,808
|
8,359,582
|
|||||||
Proceeds
from long-term debt
|
5,150,000
|
-
|
5,150,000
|
|||||||
Proceeds
from research contribution
|
1,500,000
|
-
|
-
|
|||||||
Payment
of licensing fees
|
(356,216
|
)
|
(172,813
|
)
|
(183,403
|
)
|
||||
Purchase
of treasury stock
|
(28,410
|
)
|
(28,410
|
)
|
-
|
|||||
Net
Cash Provided by (Used in) Financing Activities
|
21,161,532
|
(186,415
|
)
|
13,326,179
|
||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
4,034,060
|
(6,082,565
|
)
|
9,100,646
|
||||||
Cash
and Cash Equivalents - beginning of period
|
-
|
10,116,625
|
1,015,979
|
|||||||
Cash
and Cash Equivalents - end of period
|
$
|
4,034,060
|
$
|
4,034,060
|
$
|
10,116,625
|
||||
Supplemental
Cash Flow Information
|
||||||||||
Interest
paid
|
$
|
292,912
|
$
|
280,535
|
$
|
4,316
|
1.
|
Operations
and Organization
|
1.
|
Operations
and Organization (cont’d)
|
2.
|
Summary
of Significant Accounting
Policies
|
a)
|
Cash
and Cash Equivalents
|
b)
|
Equipment
|
Life
|
Depreciation
Method
|
||||||
Furniture
and fixtures
|
7
years
|
double declining balance | |||||
Office
equipment
|
5
years
|
double declining balance | |||||
Lab
equipment
|
5-7
years
|
double declining balance | |||||
Computer
equipment
|
5
years
|
straight line | |||||
Leasehold
improvements
|
3
years
|
straight line | |||||
Cylinders
and designs
|
3
years
|
straight line |
c)
|
Research
and Development
|
2.
|
Summary
of Significant Accounting Policies (cont’d)
|
d)
|
Use
of Estimates
|
e)
|
Fair
Value of Financial Instruments
|
f)
|
Income
Taxes
|
2.
|
Summary
of Significant Accounting Policies (cont’d)
|
g)
|
Earnings
or Loss Per Share
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Shares
subject to options
|
6,123,295
|
5,770,000
|
|||||
Shares
potentially issued upon conversion of convertible debt
|
-
|
3,850,000
|
|||||
Total
|
6,123,295
|
9,620,000
|
h)
|
Stock-Based
Compensation
|
2.
|
Summary
of Significant Accounting Policies (cont’d)
|
h)
|
Stock-Based
Compensation (cont’d)
|
i)
|
Impairment
of Long-Lived Assets
|
2.
|
Summary
of Significant Accounting Policies (cont’d)
|
j)
|
Concentration
of Credit Risk
|
k)
|
Recent
Accounting Pronouncements Affecting the
Company
|
2.
|
Summary
of Significant Accounting Policies (cont’d)
|
k)
|
Recent
Accounting Pronouncements Affecting the
Company(cont’d)
|
2.
|
Summary
of Significant Accounting Policies (cont’d)
|
m)
|
Comparative
information
|
3.
|
Equipment,
Net
|
|
December
31,
|
December
31,
|
|||||
2006
|
2005
|
||||||
Furniture
and fixtures
|
$
|
31,713
|
$
|
31,713
|
|||
Office
equipment
|
43,648
|
43,648
|
|||||
Lab
equipment
|
416,093
|
363,140
|
|||||
Computer
equipment
|
5,066
|
5,066
|
|||||
Cylinders
and designs
|
2,000
|
2,000
|
|||||
498,520
|
445,567
|
||||||
Less:
Accumulated depreciation
|
348,526
|
241,935
|
|||||
Net
carrying amount
|
$
|
149,993
|
$
|
203,632
|
4.
|
Intangible
Assets, Net
|
5.
|
Long-Term
Convertible Debt
|
6.
|
Deferred
Revenue
|
7.
|
Common
Stock
|
a)
|
On
May 10, 2001 the Company issued 3,600,000 shares of common stock
to the
Company's founders for $1.
|
b)
|
On
August 10, 2001 the Company issued:
|
i)
|
1,208,332
shares of common stock to the directors of the Company for cash of
$1,450,000.
|
ii)
|
958,334
shares of common stock to Rexgene for cash of
$550,000.
|
iii)
|
360,000
shares of common stock in a private placement to individual investors
for
cash of $1,080,000.
|
c)
|
On
October 10, 2001 the Company issued 400,000 shares of common stock
to
Chong Kun Dang Pharmaceutical Corp. ("CKD") for cash of $479,991
and
400,000 shares of common stock to an individual investor for cash
of
$479,991.
|
d)
|
On
October 10, 2001 the Company issued 200,000 shares of common stock
to CKD
for cash of $479,985.
|
e)
|
Since
inception, the Company's founders have transferred 800,000 shares
of the
common stock described in a) to officers and directors of the
Company.
|
f)
|
In
July 2003, the shareholders described in b)(iii) and e) transferred
an
aggregate of 1,268,332 shares of common stock to a voting trust.
The trust
allows for the unified voting of the stock by the trustees. The appointed
trustees are senior management of the Company who, together with
their
existing shares, control a majority of the voting power of the
Company.
|
7.
|
Common
Stock (cont’d)
|
g)
|
On
August 20, 2003 the Company issued 500,000 shares of common stock
to
KT&G Corporation for cash of
$2,000,000.
|
h)
|
On
October 29, 2004, an option holder exercised options to purchase
shares of
the Company’s common stock for cash of $1,800 and the Company issued an
aggregate of 1,500 shares.
|
i)
|
Pursuant
to the agreement and plan of merger as disclosed in Note 1, in the
Acquisition Merger, (i) each share of the issued and outstanding
common
stock of Rexahn (other than dissenting shares) was converted into
the
right to receive five shares of Rexahn Pharmaceuticals common stock;
(ii)
each issued, outstanding and unexercised option to purchase a share
of
Rexahn common stock was converted into an option to purchase five
shares
of Rexahn Pharmaceuticals common stock and (iii) the par value of
Rexahn's
common stock was adjusted to reflect the par value of CRS common
stock. In
the Acquisition Merger, 289,780,000 CRS pre-reverse stock split shares
were converted into 2,897,802 post-reverse stock split Rexahn
Pharmaceuticals shares, and an additional 500,000 post-reverse stock
split
Rexahn Pharmaceuticals shares were issued to a former executive of
CRS.
For purposes of the Statement of Stockholders' Equity, the five-for-one
stock split is reflected as a one-line adjustment. All shares and
earnings
per share information has been retroactively restated in these financial
statements.
|
j)
|
On
August 8, 2005, the Company issued, in a transaction exempt from
registration under the Securities Act, 4,175,000 shares of common
stock at
a purchase price of $2.00 per
share.
|
k)
|
On
October 3, 2005, the Company issued 7,000 shares of common stock
for
$21,877 and $7,500 cash in exchange for
services.
|
l)
|
On
December 2, 2005, the holders of a convertible note, representing
$1,300,000 aggregate principal amount, exercised their option to
convert
the entire principal amount of the note into the Company's common
stock.
Based on a $2.00 per share conversion price, the holders received
an
aggregate of 650,000 shares.
|
m)
|
On
December 27, 2005, option holders exercised options to purchase shares
of
the Company's common stock for cash of $9,600.and the Company issued
an
aggregate of 40,000 shares.
|
n)
|
On
February 22, 2006, an option holder exercised options to purchase
shares
of the Company's common stock for cash of $1,200 and the Company
issued an
aggregate of 5,000 shares.
|
7.
|
Common
Stock (cont’d)
|
o)
|
On
April 12, 2006, an option holder exercised options to purchase shares
of
the Company’s common stock for cash of $3,409 and the Company issued an
aggregate of 14,205 shares. On the same date, the Company agreed
to
repurchase common stock from the option holder based on the then
market
price for treasury in exchange for the aggregate purchase price of
$28,410
in cash.
|
p)
|
On
May 13, 2006, holders of the $3,850,000 convertible notes issued
on
February 28, 2005, exercised their rights to convert the entire principal
amount of the notes into shares of the Company’s common stock. Based on a
$1.00 per share conversion price, the Company issued 3,850,000 shares
of
common stock in connection with the conversion (See note
5).
|
q)
|
On
October 9, 2006, an option holder exercised options to purchase shares
of
the Company’s common stock for cash of $2,400 and the Company issued an
aggregate of 10,000 shares.
|
r)
|
On
November 19, 2006, an option holder exercised options to purchase
shares
of the Company's common stock for cash of $1,800 and the Company
issued an
aggregate of 7,500 shares.
|
s)
|
On
December 19, 2006, an option holder exercised options to purchase
shares
of the Company's common stock for cash of $6,000 and the Company
issued an
aggregate of 25,000 shares.
|
8.
|
Stock-Based
Compensation
|
8.
|
Stock-Based
Compensation (cont'd)
|
8.
|
Stock-Based
Compensation (cont'd)
|
8.
|
Stock-Based
Compensation (cont'd)
|
2006
|
2005
|
||||||
Black-Scholes
weighted average assumptions:
|
|||||||
Expected
dividend yield
|
0
|
0
|
|||||
Expected
volatility
|
100
|
%
|
100
|
%
|
|||
Risk
free interest rate
|
4.70%-5.00
|
%
|
4.54
|
%
|
|||
Expected
term (in years)
|
1-5
years
|
5
years
|
Year
Ended December 31, 2005
|
||||
Net
loss, as reported
|
$
|
(6,349,540
|
)
|
|
Add,
Stock-based employee compensation recorded under APB No. 25 intrinsic
share method included in reported net loss
|
-
|
|||
Deduct,
Stock-based employee compensation expense determined under fair
value-based method for all employee awards (no tax effect)
|
(638,918
|
)
|
||
Pro
forma net loss
|
$
|
(6,988,458
|
)
|
|
Net
loss per share:
|
||||
Basic
and diluted-as reported
|
$
|
(0.15
|
)
|
|
Basic
and diluted-pro forma
|
$
|
(0.17
|
)
|
8.
|
Stock-Based
Compensation (cont'd)
|
2006
|
2005
|
||||||||||||
Shares
Subject to Options
|
Weighted
Avg. Option Prices
|
Shares
Subject to Options
|
Weighted
Avg. Option Prices
|
||||||||||
Outstanding
at January 1
|
5,770,000
|
$
|
0.84
|
2,775,000
|
$
|
0.24
|
|||||||
Cancelled
due to repricing
|
-
|
-
|
(927,500
|
)
|
0.24
|
||||||||
Granted
due to repricing
|
-
|
-
|
927,500
|
0.80
|
|||||||||
Granted
|
1,165,000
|
1.31
|
3,810,000
|
1.01
|
|||||||||
Exercised
|
(61,705
|
)
|
0.24
|
(40,000
|
)
|
0.24
|
|||||||
Cancelled
|
(750,000
|
)
|
0.80
|
(775,000
|
)
|
0.24
|
|||||||
Outstanding
at December 31
|
6,123,295
|
$
|
0.94
|
5,770,000
|
$
|
0.84
|
8.
|
Stock-Based
Compensation (cont'd)
|
Shares
Subject to Options
|
Weighted
Avg. Option Prices
|
Weighted
Average Remaining Contractual Term
|
Aggregated
Intrinsic Value
|
||||||||||
Outstanding
at December 31, 2006
|
6,123,295
|
$
|
0.94
|
8.0
years
|
$
|
-
|
|||||||
Exercisable
at December 31, 2006
|
3,035,628
|
$
|
0.85
|
7.6
years
|
$
|
-
|
Shares
Subject to Options
|
Weighted
Avg. Option Prices
|
Weighted
Average Remaining Contractual Term
|
Aggregated
Intrinsic Value
|
||||||||||
Outstanding
at December 31, 2005
|
5,770,000
|
$
|
0.84
|
8.7
years
|
$
|
6,693,200
|
|||||||
Exercisable
at December 31, 2005
|
1,677,708
|
$
|
0.54
|
7.9
years
|
$
|
2,449,454
|
9.
|
Income
Taxes
|
2006
|
2005
|
||||||
Deferred
income tax assets:
|
|||||||
Net
operating loss carryforwards
|
$
|
7,918,491
|
$
|
5,397,643
|
|||
Valuation
allowance
|
(7,918,491
|
) |
$
|
(5,397,643
|
) | ||
Deferred
income taxes
|
$
|
-
|
$
|
-
|
10.
|
Commitments
and Contingencies
|
a)
|
The
Company has contracted with various vendors to provide research and
development services. The terms of these agreements usually require
an
initiation fee and monthly or periodic payments over the terms of
the
agreement, ranging from 6 months to 24 months. The costs to be incurred
are estimated and are subject to revision. As of December 31, 2006,
the
total value of these agreements was approximately $1,800,000
(2005-$1,900,000) and the Company had made payments totaling $1,150,000
under the terms of the agreements as at December 31, 2006
(2005-$1,000,000). All of these agreements may be terminated by either
party upon appropriate notice as stipulated in the respective
agreements.
|
10.
|
Commitments
and Contingencies (cont’d)
|
b)
|
On
April 19, 2006, the Company executed definitive agreements with Future
Systems, Inc. ("FSI"), a Korean stock exchange (KOSDAQ) listed information
technology company based in Seoul, Korea. Pursuant to the agreements,
the
Company would transfer to FSI exclusive rights and a non-exclusive
license
to develop, manufacture, and sell products based on Rexahn’s RX-0201,
RX-0047 and RX-10100 drug candidates in certain territories for
approximately $35.8 million, and simultaneously, FSI would issue
and sell
4,326,854 shares of its common stock to the Company, representing
approximately 28% of FSI’s outstanding shares, after giving effect to the
subscription. The investment, of approximately $35.8 million, would
have
made the Company the largest single stockholder of FSI. In addition,
the
Company entered into an agreement with FSI and Core F.G. Co., Ltd.,
the
general partner of Triplewin Corporate Restructuring Partnership,
the
then-current majority shareholder of FSI, with respect to the management
of FSI in connection with redirecting FSI’s business focus to the
biopharmaceutical industry. Completion of the transactions was subject
to
customary closing conditions, including approval by FSI
shareholders. On June 8, 2006, the Company terminated the agreements
entered into with FSI and Core F.G. Co., Ltd., including a share
subscription agreement, an intellectual property assignment and license
agreement and a management agreement, providing for, among other
things,
the assignment and license by the Company to FSI of certain intellectual
property rights for the Company's drug candidates in specified markets
and
the acquisition by the Company of an ownership interest in FSI. The
termination followed a vote on the proposed transactions that was
not
approved by the FSI shareholders at a meeting in Seoul, Korea on
June 7,
2006.
|
c)
|
On
September 12, 2005, the Company and three of its key executives
entered
into employment agreements. Two of the three agreements expire
on
September 12, 2007 and result in an annual commitment of $360,000.
One
agreement expires on September 12, 2010 and results in an annual
commitment of $350,000.
|
d)
|
In
April 2004, the Company signed a 5 year lease for 8,030 square feet
of
office space in Rockville, Maryland commencing July 2004. The lease
requires annual base rents of $200,750 subject to annual increases
of 3%
of the preceding years adjusted base rent. Under the leasing agreement,
the Company also pays its allocable portion of real estate taxes
and
common area operating charges.
|
For
the years ended December 31
|
||||
2007
|
$
|
216,170
|
||
2008
|
222,655
|
|||
2009
|
112,972
|
|||
$
|
551,797
|
e)
|
Regulation
by governmental authorities in the United States and other countries
constitutes a significant consideration in our product development,
manufacturing and marketing strategies. The Company expects that
all of
drug candidates will require regulatory approval by appropriate
governmental agencies prior to commercialization and will be subjected
to
rigorous pre-clinical, clinical, and post-approval testing, as
well as to
other approval processes by the FDA and by similar health authorities
in
foreign countries. United States federal regulations control the
ongoing
safety, manufacture, storage, labeling, record keeping, and marketing
of
all biopharmaceutical products intended for therapeutic purposes.
The
Company believes that it is in compliance in all material respects
with
currently applicable rules and regulations.
|
/s/
Lazar Levine & Felix LLP
|
|
Lazar
Levine & Felix LLP
|
Item 8.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure
|
Item 8A.
|
Controls
and Procedures
|
Item 8B.
|
Other
Information
|
Item 9.
|
Directors,
Executive Officers, Promoters and Control Persons; Compliance With
Section 16(a) of the Exchange
Act
|
Name
|
Age
|
Position
|
Dr.
Chang H. Ahn
|
55
|
Chairman
of the Board, Chief Executive Officer and Director
|
Dr.
Young-Soon Park
|
60
|
Director
|
Charles
Beever
|
54
|
Director
|
Kwang
Soo Cheong
|
45
|
Director
|
Y.
Michele Kang
|
47
|
Director
|
David
McIntosh
|
48
|
Director
|
Tae
Heum Jeong
|
36
|
Chief
Financial Officer, Secretary and
Director
|
·
|
appoints
or replaces and oversee our independent auditors and approves all
audit
engagement fees and terms;
|
·
|
preapproves
all audit (including audit-related) services, internal control-related
services and permitted non-audit services (including fees and terms
thereof) to be performed for us by our independent
auditors;
|
·
|
reviews
and discusses with our management and independent auditors significant
issues regarding accounting and auditing principles and practices
and
financial statement presentations;
|
·
|
reviews
and approves our procedures for the receipt, retention and treatment
of
complaints regarding accounting, internal accounting controls or
auditing
matters and the confidential, anonymous submission by our employees
of
concerns regarding accounting or auditing matters; and
|
·
|
reviews
and oversees our compliance with legal and regulatory
requirements.
|
·
|
reviews,
evaluates and seeks out candidates qualified to become Board
members;
|
·
|
reviews
committee structure and recommends directors for appointment to
committees;
|
·
|
develops,
reevaluates (not less frequently than every three years) and recommends
the selection criteria for Board and committee
membership;
|
·
|
establishes
procedures to oversee evaluation of our Board, its committees, individual
directors and management; and
|
·
|
develops
and recommends guidelines on corporate
governance.
|
·
|
fixes
salaries of executive officers and reviews salary plans for other
executives in senior management
positions;
|
·
|
reviews
and makes recommendations with respect to the compensation and benefits
for non-employee directors, including through equity-based
plans;
|
·
|
evaluates
the performance of our CEO and other senior executives and assists
the
Board in developing and evaluating potential candidates for executive
positions; and
|
·
|
administers
our incentive compensation, deferred compensation and equity-based
plans
pursuant to the terms of the respective
plans.
|
Item 10.
|
Executive
Compensation
|
Name
and Principal Position(s)
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Non-Qualified
Deferred Compensation Earnings ($)
|
All
Other Compensation ($)
|
Total
($)
|
|||||||||||||||||||
Chang
H. Ahn
|
2006
|
$
|
330,769
|
-
|
-
|
$
|
183,000
|
-
|
-
|
-
|
$
|
513,769
|
||||||||||||||||
Chairman
of the Board and Chief Executive Officer
|
||||||||||||||||||||||||||||
Tae
Heum Jeong
|
2006
|
$
|
148,829
|
-
|
-
|
$
|
91,500
|
-
|
-
|
-
|
$
|
240,329
|
||||||||||||||||
Chief
Financial Officer
|
||||||||||||||||||||||||||||
George
F. Steinfels1
|
2006
|
$
|
125,273
|
-
|
-
|
$
|
91,500
|
-
|
-
|
-
|
$
|
216,773
|
||||||||||||||||
Former
Chief Business Officer and Senior Vice President, Clinical
Development
|
1
|
Dr.
Steinfels resigned from all his positions with the Company in
September 2006.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||
Name
|
Number
of Securities Underlying Unexer-cised Options
(#) Exer-cisable1
|
Number
of Securities Underlying Unexer-cised Options
(#) Unexer-cisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other
Rights
That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or
Other Rights That Have Not Vested ($)
|
|||||||||||||||||||
Chang
H. Ahn
|
600,000
|
400,000
|
-
|
0.80
|
1/20/2015
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Tae
Heum Jeong
|
150,000
|
-
|
-
|
0.24
|
8/5/2013
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
100,000
|
-
|
-
|
0.80
|
8/5/2013
|
||||||||||||||||||||||||
300,000
|
200,000
|
-
|
0.80
|
1/20/2015
|
||||||||||||||||||||||||
George
F. Steinfels2
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
Represents
option awards under the Company's Stock Option Plan which vest 30%,
30%
and 40% on the first, second and third anniversaries of the date
of
grant.
|
2
|
Dr.
Steinfels resigned from all his positions with the Company in
September 2006.
|
·
|
the
option price will be determined by the stock option committee; provided,
however, that the option price for an incentive stock option may
not be
less than 100% of the fair market value of the shares of our common
stock
on the date of grant (110% for grants to an optionee owning more
than 10%
of our total combined voting power);
|
·
|
the
term during which each stock option may be exercised will be determined
by
the stock option committee; provided, however, that incentive stock
options generally may not be exercised more than ten years from the
date
of grant (five years for grants to an optionee owning more than 10%
of our
total combined voting power); and
|
·
|
at
the time of exercise of a stock option the option price must be paid
in
full in cash or in shares of our common stock or in a combination
of cash
and shares of our common stock or by such other means as the stock
option
committee may determine.
|
(a)
|
Incentive
Stock Options. The
grant of an incentive stock option will not result in any immediate
tax
consequences to us or the optionee. An optionee will not realize
taxable
income, and we will not be entitled to any deduction, upon the timely
exercise of an incentive stock option, but the excess of the fair
market
value of the shares of our common stock acquired over the option
exercise
price will be includable in the optionee's "alternative minimum taxable
income" for purposes of the alternative minimum tax. If the optionee
does
not dispose of the shares of our common stock acquired within one
year
after their receipt, and within two years after the option was granted,
gain or loss realized on the subsequent disposition of the shares
of our
common stock will be treated as long-term capital gain or loss. Capital
losses of individuals are deductible only against capital gains and
a
limited amount of ordinary income. In the event of an earlier disposition,
the optionee will realize ordinary income in an amount equal to the
lesser
of (i) the excess of the fair market value of the shares of our
common stock on the date of exercise over the option exercise price
or
(ii) if the disposition is a taxable sale or exchange, the amount of
any gain realized. Upon such a disqualifying disposition, we will
be
entitled to a deduction in the same amount as the optionee realizes
such
ordinary income.
|
(b)
|
Non-qualified
Stock Options. In
general, the grant of a non-qualified stock option will not result
in any
immediate tax consequences to us or the optionee. Upon the exercise
of a
non-qualified stock option, generally the optionee will realize ordinary
income and we will be entitled to a deduction, in each case, in an
amount
equal to the excess of the fair market value of the shares of our
common
stock acquired at the time of exercise over the option exercise price.
|
Name
|
Fees
Earned Or Paid In Cash ($)
|
Stock
Awards ($)
|
Option
Awards ($) (1)
|
Non-Equity
Incentive Plan Compensation ($)
|
Non-qualified
Deferred Compensation Earnings
|
All
Other Compensation ($)
|
Total
($)
|
|||||||||||||||
Young-Soon
Park
|
$
|
1,000
|
-
|
$
|
39,754
|
-
|
-
|
-
|
$
|
40,754
|
||||||||||||
Charles
Beever
|
$
|
3,000
|
-
|
$
|
4,545
|
-
|
-
|
-
|
$
|
7,545
|
||||||||||||
Kwang
Soo Cheong
|
$
|
3,000
|
-
|
$
|
4,545
|
-
|
-
|
-
|
$
|
7,545
|
||||||||||||
Y. Michele
Kang
|
$
|
2,000
|
-
|
$
|
4,545
|
-
|
-
|
-
|
$
|
6,545
|
||||||||||||
David
McIntosh
|
$
|
4,000
|
-
|
$
|
36,556
|
-
|
-
|
-
|
$
|
40,556
|
(1) |
Director
Name
|
Aggregate
Number of
Option
Awards
at
Fiscal Year End
|
Option Exercise
Price
($)
|
Option
Expiration Date
|
||||||
Young-Soon
Park
|
220,000
|
$
|
3.00
|
9/12/2015
|
||||||
20,000
|
$
|
1.20
|
5/1/2016
|
|||||||
Charles
Beever
|
20,000
|
$
|
1.20
|
5/1/2016
|
||||||
Kwang
Soo Cheong
|
20,000
|
$
|
1.20
|
5/1/2016
|
||||||
Y.
Michele Kang
|
20,000
|
$
|
1.20
|
5/1/2016
|
||||||
David
McIntosh
|
125,000
|
$
|
0.80
|
4/20/2014
|
||||||
20,000
|
$
|
3.00
|
9/12/2015
|
|||||||
20,000
|
$
|
1.20
|
5/1/2016
|
(a)
|
each
of the non-employee directors of the Company will receive 20,000
options
to purchase shares of the common stock of the Company for each year
he or
she serves on the Board; and
|
(b)
|
each
of the non-employee directors of the Company will receive an additional
board meeting fee of $1,000 for each meeting he or she participates
in.
|
Item 11.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted
average exercise price of outstanding options, warrants
and rights
|
Number
of securities remaining available for future issuance under equity
compensation
plans
|
||||||||
Equity
compensation plans approved by stockholders
|
6,123,295
|
$
|
0.94
|
10,876,705
|
||||||
Equity
compensation plans not approved by stockholders
|
──
|
──
|
──
|
|||||||
Total
|
6,123,295
|
$
|
0.94
|
10,876,705
|
·
|
each
person, or group of affiliated persons, known to us to own beneficially
own 5% or more of the outstanding common
stock;
|
·
|
each
director;
|
·
|
each
executive officer; and
|
·
|
all
of the directors and executive officers as a
group.
|
Shares
of Rexahn Pharmaceuticals Common Stock Beneficially
Owned
|
||||
Name
of Beneficial Owner
|
Number
of Shares
|
Percentage
|
||
Directors
and Executive Officers:
|
||||
Chang
H. Ahn*
|
14,900,000(1)
|
29.62%
|
||
Charles
Beever*(2)
|
20,000
|
Less
than 1%
|
||
Kwang
Soo Cheong*(2)
|
20,000
|
Less
than 1%
|
||
Tae
Heum Jeong*
|
1,050,000(3)
|
2.09%
|
||
Y.
Michele Kang*(2)
|
20,000
|
Less
than 1%
|
||
David
McIntosh*
|
165,000(4)
|
Less
than 1%
|
||
Young-Soon
Park*
|
3,365,000(5)
|
6.69%
|
||
All
executive officers and directors as a group (7 persons)
|
19,540,000
|
38.84%
|
||
|
|
|||
Holders
of more than 5% of shares:
|
|
|
||
Rexgene
Biotech Co., Ltd.**
|
4,791,670(6)
|
9.52%
|
||
Chong
Kun Dang Pharmaceutical Corp.***
|
3,000,000(6)(7)
|
5.96%
|
||
KT&G
Corporation****
|
2,500,000(6)
|
4.97%
|
*
|
c/o
Rexahn Pharmaceuticals, Inc., 9620 Medical Center Drive, Rockville,
MD
20850.
|
**
|
9F
Wooyoung Venture Bldg. 1330-13, Seocho-dong, Seocho-gu, Seoul 137-070,
Korea.
|
***
|
368,3-ga,
Chungjeong-ro , Seodaemun-gu, Seoul 120-756,
Korea.
|
****
|
100
Pyongchon-dong, Daedeog-gu, Daejeon 306-130,
Korea.
|
(1)
|
Includes
Dr. Ahn’s options to purchase 600,000 shares of common stock that are
currently exercisable or exercisable within 60 days of May 1, 2007,
500,000 shares held by Dr. Ahn’s wife, Inok Ahn, and Mrs. Ahn’s options to
purchase 300,000 shares of common stock that are currently exercisable
or
exercisable within 60 days of March 30,
2007.
|
(2)
|
Charles
Beever, Kwang Soo Cheong and Y. Michele Kang became directors on
May 1,
2006.
|
(3)
|
Includes
Mr. Jeong’s options to purchase 550,000 shares of common stock that are
currently exercisable or exercisable within 60 days of March 30,
2007.
|
(4)
|
Includes
Mr. McIntosh’s options to purchase 165,000 shares common stock that
are currently exercisable or exercisable within 60 days of March
30,
2007.
|
(5)
|
Includes
Dr. Park's options to purchase 240,000 shares common stock that are
currently exercisable or exercisable within 60 days of March 30,
2007.
|
(6)
|
The
boards of directors of each of Rexgene, Chong Kun Dang and KT&G, each
a Korean corporation, have sole voting and sole investment power
as to the
shares owned by their respective
corporations.
|
(7)
|
Includes
750,000 shares of common stock held by Kyungbo Pharm, a subsidiary
of
Chong Kun Dang. Excludes 2,000,000 shares of common stock held by
Jang-Han
Rhee, Chief Executive Officer of Chong Kun Dang and a former director
of
Rexahn.
|
Item 12.
|
Certain
Relationships and Related Transactions; and Director
Independence
|
Item 13.
|
Exhibits
|
Exhibit Number
|
Exhibit Description
|
3.1.
|
Amended
and Restated Certificate of Incorporation, filed as Appendix G to the
Company's Definitive Proxy Statement on Schedule 14A (File No.
000-50590) dated April 29, 2004, is incorporated herein by
reference.
|
3.2.
|
Amended
and Restated Bylaws, filed as Appendix H to the Company's Definitive
Proxy Statement on Schedule 14A (File No. 000-50590) dated
April 29, 2004, is incorporated herein by
reference.
|
4.1.
|
Specimen
Certificate for the Company's Common Stock, par value $.0001 per
share, filed as Exhibit 4.3 to the Company's Registration Statement
on Form S-8 (File No. 333-129294 ) dated October 28, 2005, is
incorporated herein by reference.
|
*10.1.1.
|
Rexahn
Pharmaceuticals, Inc. Stock Option Plan, as amended, filed as
Exhibit 4.4 to the Company's Registration Statement on Form S-8
(File No. 333-129294 ) dated October 28, 2005, is incorporated herein
by reference.
|
*10.1.2.
|
Form
of Stock Option Grant Agreement for Employees, filed as Exhibit 4.5.1
to the Company's Registration Statement on Form S-8 (File No.
333-129294 ) dated October 28, 2005, is incorporated herein by
reference.
|
*10.1.3.
|
Form
of Stock Option Grant Agreement for Non-Employee Directors and
Consultants, filed as Exhibit 4.5.2 to the Company's Registration
Statement on Form S-8 (File No. 333-129294 ) dated October 28,
2005, is incorporated herein by reference.
|
*10.2.
|
Employment
Agreement, dated September 12, 2005, by and between Rexahn
Pharmaceuticals, Inc. and C. H. Ahn, filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on September 12,
2005, is incorporated herein by reference.
|
*10.3.
|
Employment
Agreement, dated September 12, 2005, by and between Rexahn
Pharmaceuticals, Inc. and T. H. Jeong, filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K filed on September 12,
2005, is incorporated herein by reference.
|
*10.4
|
Employment
Agreement, dated September 12, 2005, by and between Rexahn
Pharmaceuticals, Inc. and G. Steinfels, filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on September 12,
2005, is incorporated herein by reference.
|
10.5.
|
Research
Collaboration Agreement dated February 6, 2003 by and between Rexahn
Pharmaceuticals, Inc. and Rexgene Biotech Co., Ltd, filed as Exhibit
10.5
to the Company's Annual Report on Form 10-KSB the fiscal year ended
December 31, 2005, is incorporated herein by reference.
|
10.6.
|
Revaax
License Agreement, dated February 8, 2005, by and between Rexahn
Pharmaceuticals, Inc. and Revaax Pharmaceuticals LLC, filed as Exhibit
10.6 to the Company's Annual Report on Form 10-KSB for the fisal year
ended December 31, 2005, is incorporated herein by
reference.
|
23.
|
Consent
of Lazar, Levine & Felix, LLP, independent registered public
accounting firm.
|
24.
|
Power
of Attorney.
|
31.1.
|
Certification
of Chief Executive Officer of Periodic Report Pursuant to Pursuant
to
Rule 13a-15(e) or Rule 15d-15(e).
|
31.2.
|
Certification
of Chief Financial Officer of Periodic Report Pursuant to Pursuant
to
Rule 13a-15(e) or
Rule 15d-15(e).
|
32.1.
|
Certification
of Chief Executive Officer of Periodic Report Pursuant to 18 U.S.C.
Section 1350.
|
32.2.
|
Certification
of Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C.
Section 1350.
|
*
|
Management
contract or compensation plan or arrangement.
|
Item 14.
|
Principal
Accountant Fees and
Services
|
2006
|
2005
|
||||||
Audit
Fees
|
$
|
77,500
|
1 |
$
|
61,000
|
||
Audit-Related
Fees
|
—
|
—
|
|||||
Tax
Fees
|
—
|
—
|
|||||
All
Other Fees
|
—
|
—
|
1
|
Audit
Fees relate to the audit of the Company's financial statements and
reviews
of certain financial statements included in the Company's quarterly
reports on Form 10-QSB. The amount shown represents the maximum fees
for
such services.
|
REXAHN
PHARMACEUTICALS, INC.
|
|||
By:
|
/s/
Chang H. Ahn
|
||
Chang
H. Ahn
|
|||
Chairman
and Chief Executive Officer
|
Name
|
Title
|
|
Chang
H. Ahn*
|
Chairman
and Chief Executive Officer
|
|
Chang
H. Ahn
|
||
Tae
Heum Jeong*
|
Chief
Financial Officer, Secretary and Director
|
|
Tae
Heum Jeong
|
||
Young-Soon
Park*
|
Director
|
|
Young-Soon
Park
|
||
David
McIntosh*
|
Director
|
|
David
McIntosh
|
||
Charles
Beever*
|
Director
|
|
Charles
Beever
|
||
Kwang
Soo Cheong*
|
Director
|
|
Kwang
Soo Cheong
|
||
Y.
Michele Kang*
|
Director
|
|
Y.
Michele Kang
|
*
By:
|
/s/ Tae
Heum Jeong
|
|
Tae
Heum Jeong, Attorney-in-Fact**
|
Exhibit Number
|
Exhibit Description
|
Page
|
3.1.
|
Amended
and Restated Certificate of Incorporation, filed as Appendix G to the
Company's Definitive Proxy Statement on Schedule 14A (File No.
000-50590) dated April 29, 2004, is incorporated herein by
reference.
|
|
3.2.
|
Amended
and Restated Bylaws, filed as Appendix H to the Company's Definitive
Proxy Statement on Schedule 14A (File No. 000-50590) dated
April 29, 2004, is incorporated herein by reference.
|
|
4.1.
|
Specimen
Certificate for the Company's Common Stock, par value $.0001 per
share, filed as Exhibit 4.3 to the Company's Registration Statement
on Form S-8 (File No. 333-129294 ) dated October 28, 2005, is
incorporated herein by reference.
|
|
*10.1.1.
|
Rexahn
Pharmaceuticals, Inc. Stock Option Plan, as amended, filed as
Exhibit 4.4 to the Company's Registration Statement on Form S-8
(File No. 333-129294 ) dated October 28, 2005, is incorporated herein
by reference.
|
|
*10.1.2.
|
Form
of Stock Option Grant Agreement for Employees, filed as Exhibit 4.5.1
to the Company's Registration Statement on Form S-8 (File No.
333-129294 ) dated October 28, 2005, is incorporated herein by
reference.
|
|
*10.1.3.
|
Form
of Stock Option Grant Agreement for Non-Employee Directors and
Consultants, filed as Exhibit 4.5.2 to the Company's Registration
Statement on Form S-8 (File No. 333-129294 ) dated October 28,
2005, is incorporated herein by reference.
|
|
*10.2.
|
Employment
Agreement, dated September 12, 2005, by and between Rexahn
Pharmaceuticals, Inc. and C. H. Ahn, filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on September 12,
2005, is incorporated herein by reference.
|
|
*10.3.
|
Employment
Agreement, dated September 12, 2005, by and between Rexahn
Pharmaceuticals, Inc. and T. H. Jeong, filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K filed on September 12,
2005, is incorporated herein by reference.
|
|
*10.4
|
Employment
Agreement, dated September 12, 2005, by and between Rexahn
Pharmaceuticals, Inc. and G. Steinfels, filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on September 12,
2005, is incorporated herein by reference.
|
|
10.5.
|
Research
Collaboration Agreement dated February 6, 2003 by and between Rexahn
Pharmaceuticals, Inc. and Rexgene Biotech Co., Ltd, filed as Exhibit
10.5
to the Company's Annual Report on Form 10-KSB the fiscal year ended
December 31, 2005, is incorporated herein by
reference.
|
|
10.6.
|
Revaax
License Agreement, dated February 8, 2005, by and between Rexahn
Pharmaceuticals, Inc. and Revaax Pharmaceuticals LLC, filed as
Exhibit 10.6 to the Company's Annual Report on Form 10-KSB for the
fiscal
year ended December 31, 2005, is incorporated herein by
reference.
|
|
Consent
of Lazar, Levine & Felix, LLP, independent registered public
accounting firm.
|
Exhibit Number
|
Exhibit Description
|
Page
|
Power
of Attorney.
|
||
Certification
of Chief Executive Officer of Periodic Report Pursuant to Pursuant
to
Rule 13a-15(e) or Rule 15d-15(e).
|
||
Certification
of Chief Financial Officer of Periodic Report Pursuant to Pursuant
to
Rule 13a-15(e) or Rule 15d-15(e).
|
||
Certification
of Chief Executive Officer of Periodic Report Pursuant to 18 U.S.C.
Section 1350.
|
||
Certification
of Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C.
Section 1350.
|
*
|
Management
contract or compensation plan or arrangement.
|