x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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11-3516358
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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|
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15245 Shady Grove Road, Suite 455
Rockville, Maryland
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20850
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.0001 par value per share
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NYSE AMEX
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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(Do not check if a smaller reporting company) |
Class
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Outstanding at March 23, 2011
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|
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Common Stock, $.0001 par value per share
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86,779,406 shares
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Document
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Parts Into Which Incorporated
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Portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on June 6, 2011
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Part III
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PAGE
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PART I | ||||
Item 1A. | Risk Factors | 1 | ||
PART II
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||||
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Item 8.
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11
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PART III
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Item 15.
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11
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SIGNATURES
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12
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·
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continued pre-clinical development and clinical trials for our current and new drug candidates;
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·
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efforts to seek regulatory approvals for our drug candidates;
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·
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implementing additional internal systems and infrastructure;
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·
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licensing in additional technologies to develop; and
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·
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hiring additional personnel.
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·
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conducting pre-clinical and clinical trials;
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·
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participating in regulatory approval processes;
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·
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formulating and manufacturing products; and
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·
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conducting sales and marketing activities.
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·
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unforeseen safety issues;
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·
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determination of dosing issues;
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·
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lack of effectiveness during clinical trials;
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·
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change in the standard of care of the indication being studied
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·
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reliance on third party suppliers for the supply of drug candidate samples;
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·
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slower than expected rates of patient recruitment;
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·
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inability to monitor patients adequately during or after treatment;
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·
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inability or unwillingness of medical investigators and institutional review boards to follow our clinical protocols; and
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·
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lack of sufficient funding to finance the clinical trials.
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·
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awareness of the drug’s availability and benefits;
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·
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perceptions by members of the health care community, including physicians, about the safety and effectiveness of our drugs;
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·
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pharmacological benefit and cost-effectiveness of our product relative to competing products;
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·
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availability of reimbursement for our products from government or other healthcare payers;
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·
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effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any; and
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·
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the price at which we sell our products.
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·
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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.
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·
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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.
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·
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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.
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·
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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.
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·
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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 of formulation patents .
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·
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A third party manufacturer may gain knowledge from working with us that could be used to supply one of our competitors with a product that competes with ours.
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·
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developing drugs;
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·
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undertaking pre-clinical testing and human clinical trials;
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·
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obtaining FDA and other regulatory approvals of drugs;
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·
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formulating and manufacturing drugs; and
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·
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launching, marketing and selling drugs.
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·
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the degree and range of protection any patents will afford us against competitors, including whether third parties find ways to invalidate or otherwise circumvent our licensed patents;
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·
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if and when patents will issue in the United States or any other country;
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·
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whether or not others will obtain patents claiming aspects similar to those covered by our licensed patents and patent applications;
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·
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whether we will need to initiate litigation or administrative proceedings which may be costly whether we win or lose;
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·
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whether our patents will be challenged by our competitors alleging that a patent is invalid or unenforceable and, if opposed or litigated, the outcome of any administrative or court action as to patent validity, enforceability, or scope;
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·
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whether a competitor will develop a similar compound that is outside the scope of protection afforded by a patent or whether the patent scope is inherent in the claims modified due to interpretation of claim scope by a court;
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·
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whether there were activities previously undertaken by a licensor that could limit the scope, validity, or enforceability of licensed patents and intellectual property;
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·
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whether there will be challenges or litigation brought by a licensor alleging breach of a license agreement and its effect on our ability to practice particular technologies and the outcome of any such challenge or litigation; or
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·
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whether a competitor will assert infringement of its patents or intellectual property, whether or not meritorious, and what the outcome of any related litigation or challenge may be.
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·
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obtain licenses, which may not be available on commercially reasonable terms, if at all;
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·
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redesign our products or processes to avoid infringement;
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·
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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;
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·
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pay damages; or
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·
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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.
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·
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the announcement of new products or product enhancements by us or our competitors;
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·
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changes in our relationships with our licensors or other strategic partners;
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·
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developments concerning intellectual property rights and regulatory approvals;
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·
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variations in our and our competitors’ results of operations;
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|
·
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changes in earnings estimates or recommendations by securities analysts; and
|
|
·
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developments in the biotechnology industry.
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(a)
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The following documents are filed as a part of this Form 10-K/A:
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(1) Financial Statements:
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Page
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Report of ParenteBeard LLC
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F-1
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Balance Sheets at December 31, 2010 and December 31, 2009
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F-2
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Statement of Operations for the years ended December 31, 2010 and December 31, 2009 and cumulative from March 19, 2001 (Inception) to December 31, 2010
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F-3
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Statements of Stockholders’ Equity and Comprehensive Loss from March 19, 2001 (Inception) to December 31, 2010
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F-4
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Statement of Cash Flows for the years ended December 31, 2010 and December 31, 2009 and cumulative from March 19, 2001 (Inception) to December 31, 2010
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F-6
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Notes to the Financial Statements
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F-8
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Exhibit Number
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Exhibit Description
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23
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Consent of ParenteBeard LLC, independent registered public accounting firm.
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24
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Power of Attorney
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31.1
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Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a).
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31.2
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Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a).
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32.1
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Certification of Chief Executive Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.
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32.2
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Certification of Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.
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REXAHN PHARMACEUTICALS, INC.
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|
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By: /s/ Chang H. Ahn
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|
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Chang H. Ahn
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|
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Chairman and Chief Executive Officer
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Name
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Title
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/s/ Chang H. Ahn*
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Chairman and Chief Executive Officer
(Principal Executive Officer)
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Chang H. Ahn
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/s/ Tae Heum Jeong*
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Chief Financial Officer, Secretary and Director
(Principal Financial and Accounting Officer)
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Tae Heum Jeong
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|
|
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/s/ Peter Brandt*
|
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Director
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Peter Brandt
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/s/ David McIntosh*
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Director
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David McIntosh
|
|
|
|
|
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/s/ Charles Beever*
|
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Director
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Charles Beever
|
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|
|
|
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/s/ Kwang Soo Cheong*
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Director
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Kwang Soo Cheong
|
|
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|
|
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/s/ Richard Kivel*
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Director
|
Richard Kivel
|
|
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Consent of ParenteBeard LLC, independent registered public accounting firm.
|
|
Power of Attorney.
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
|
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.
|
|
|
December 31, 2010
|
|
|
December 31, 2009
(Restated)
|
|
||
ASSETS
|
|
|||||||
Current Assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
12,340,239
|
|
|
$
|
7,298,032
|
|
Marketable securities (note 4)
|
|
|
2,451,620
|
|
|
|
175,000
|
|
Research tax credit receivable (note 16)
|
|
|
145,513
|
|
|
|
-
|
|
Prepaid expenses and other current assets (note 5)
|
|
|
706,649
|
|
|
|
320,935
|
|
Note receivable – current portion (note 6)
|
|
|
28,023
|
|
|
|
-
|
|
Total Current Assets
|
|
|
15,672,044
|
|
|
|
7,793,967
|
|
Restricted Cash Equivalents (note 17)
|
|
|
401,893
|
|
|
|
2,026,060
|
|
Note Receivable (note 6)
|
|
|
18,682
|
|
|
|
-
|
|
Equipment, Net (note 7)
|
|
|
123,565
|
|
|
|
168,978
|
|
Total Assets
|
|
$
|
16,216,184
|
|
|
$
|
9,989,005
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses (note 8)
|
|
$
|
1,820,900
|
|
|
$
|
785,904
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue (note 9)
|
|
|
900,000
|
|
|
|
975,000
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities (note 10)
|
|
|
133,117
|
|
|
|
128,501
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities (note 14)
|
|
|
2,966,710
|
|
|
|
3,099,476
|
|
|
|
|
|
|
|
|
|
|
Put Feature on Common Stock (note 15)
|
|
|
-
|
|
|
|
97,713
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
5,820,727
|
|
|
|
5,086,594
|
|
Commitments and Contingencies (note 17)
|
|
|
|
|
|
|
|
|
Stockholders’ Equity (note 12):
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.0001, 100,000,000 authorized shares, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, par value $0.0001, 500,000,000 authorized shares, 84,175,054 (2009 – 71,938,701) issued and outstanding 84,160,849 (2009 – 71,924,496)
|
|
|
8,418
|
|
|
|
7,194
|
|
Additional paid-in capital
|
|
|
56,157,452
|
|
|
|
36,641,183
|
|
Accumulated other comprehensive loss
|
|
|
(2,340
|
)
|
|
|
-
|
|
Accumulated deficit during the development stage
|
|
|
(45,739,663
|
)
|
|
|
(31,717,556
|
)
|
Treasury stock, 14,205 shares, at cost
|
|
|
(28,410
|
)
|
|
|
(28,410
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity
|
|
|
10,395,457
|
|
|
|
4,902,411
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
16,216,184
|
|
|
$
|
9,989,005
|
|
|
|
For the Year Ended December 31,
|
|
|
Cumulative from March 19, 2001 (Inception) to December 31,
|
|
||||||
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|||
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||
Research
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
5,990,624
|
|
|
|
2,944,103
|
|
|
|
23,799,166
|
|
Research and development
|
|
|
4,009,701
|
|
|
|
3,251,971
|
|
|
|
20,493,516
|
|
Patent fees
|
|
|
329,925
|
|
|
|
303,220
|
|
|
|
1,554,978
|
|
Depreciation and amortization
|
|
|
50,659
|
|
|
|
41,604
|
|
|
|
595,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
10,380,909
|
|
|
|
6,540,898
|
|
|
|
46,443,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(10,305,909
|
)
|
|
|
(6,465,898
|
)
|
|
|
(45,843,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gain (loss) on marketable securities .
|
|
|
-
|
|
|
|
11,025
|
|
|
|
(9,341
|
)
|
Interest income
|
|
|
133,268
|
|
|
|
67,445
|
|
|
|
1,312,067
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(301,147
|
)
|
Other income
|
|
|
56,047
|
|
|
|
-
|
|
|
|
56,047
|
|
Unrealized (loss) gain on fair value of warrants
|
|
|
(3,823,146
|
)
|
|
|
1,793,101
|
|
|
|
(1,102,345
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
97,713
|
|
|
|
1,915,179
|
|
|
|
2,315,539
|
|
Financing expense
|
|
|
(180,080
|
)
|
|
|
(223,950
|
)
|
|
|
(542,356
|
)
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,625,000
|
)
|
Total Other Income (Expense)
|
|
|
(3,716,198
|
)
|
|
|
3,562,800
|
|
|
|
103,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Before Provision for Income Taxes
|
|
|
(14,022,107
|
)
|
|
|
(2,903,098
|
)
|
|
|
(45,739,663
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(14,022,107
|
)
|
|
$
|
(2,903,098
|
)
|
|
$
|
(45,739,663
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.18
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted
|
|
|
78,662,495
|
|
|
|
61,411,442
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Accumulated Deficit During the
|
|
|
Treasury Stock
|
|
|
Accumulated Other
|
|
|
Total Stockholders’
|
|
||||||||||||||
|
|
Number of
shares
|
|
|
Amount
|
|
|
Paid in
Capital
|
|
|
Development
Stage
|
|
|
Number of
stock
|
|
|
Amount
|
|
|
Comprehensive
Loss
|
|
|
Equity
(Deficit)
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Opening balance, March 19, 2001
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Common stock issued
|
|
|
7,126,666
|
|
|
|
71,266
|
|
|
|
4,448,702
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,519,968
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(625,109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(625,109
|
)
|
Balances at, December 31, 2001
|
|
|
7,126,666
|
|
|
|
71,266
|
|
|
|
4,448,702
|
|
|
|
(625,109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,894,859
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,181,157
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,181,157
|
)
|
Balances at, December 31, 2002
|
|
|
7,126,666
|
|
|
|
71,266
|
|
|
|
4,448,702
|
|
|
|
(1,806,266
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,713,702
|
|
Common stock 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
|
)
|
Balances at, December 31, 2003
|
|
|
7,626,666
|
|
|
|
76,266
|
|
|
|
6,981,776
|
|
|
|
(4,581,341
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,476,701
|
|
Common stock issued
|
|
|
1,500
|
|
|
|
15
|
|
|
|
1,785
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,800
|
|
Stock option compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
230,770
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
230,770
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,273,442
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,273,442
|
)
|
Balances at, 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 stock 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 stock 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 stock 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
|
)
|
Balances at, 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 stock 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
|
)
|
Balances at, December 31, 2006
|
|
|
50,322,337
|
|
|
$
|
5,032
|
|
|
$
|
23,927,551
|
|
|
$
|
(20,690,326
|
)
|
|
|
14,205
|
|
|
$
|
(28,410
|
)
|
|
$
|
-
|
|
|
$
|
3,213,847
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Accumulated Deficit During the
|
|
|
Treasury Stock
|
|
|
Accumulated Other
|
|
|
Total Stockholders’
|
|
||||||||||||||
|
|
Number of
shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Development
Stage
|
|
|
Number of
shares
|
|
|
Amount
|
|
|
Comprehensive
Loss
|
|
|
Equity
(Deficit)
|
|
||||||||
Balances at December 31, 2006
|
|
|
50,322,337
|
|
|
$
|
5,032
|
|
|
$
|
23,927,551
|
|
|
$
|
(20,690,326
|
)
|
|
|
14,205
|
|
|
$
|
(28,410
|
)
|
|
|
-
|
|
|
$
|
3,213,847
|
|
Common stock issued
|
|
|
4,857,159
|
|
|
|
486
|
|
|
|
6,799,538
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,800,024
|
|
Stock options exercised
|
|
|
127,500
|
|
|
|
12
|
|
|
|
59,988
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Stock option compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
1,121,646
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,121,646
|
|
Stock issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(139,674
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(139,674
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,304,005
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,304,005
|
)
|
Balances at December 31, 2007
|
|
|
55,306,996
|
|
|
|
5,530
|
|
|
|
31,769,049
|
|
|
|
(24,994,331
|
)
|
|
|
14,205
|
|
|
|
(28,410
|
)
|
|
|
-
|
|
|
|
6,751,838
|
|
Common stock issued
|
|
|
642,858
|
|
|
|
65
|
|
|
|
899,936
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
900,001
|
|
Stock options exercised
|
|
|
90,000
|
|
|
|
9
|
|
|
|
31,191
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,200
|
|
Stock option compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
484,684
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
484,684
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,912,148
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,912,148
|
)
|
Unrealized loss on securities available-for -sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(550,480
|
)
|
|
|
(550,480
|
)
|
Balances at December 31, 2008
|
|
|
56,039,854
|
|
|
|
5,604
|
|
|
|
33,184,860
|
|
|
|
(29,906,479
|
)
|
|
|
14,205
|
|
|
|
(28,410
|
)
|
|
|
(550,480
|
)
|
|
|
2,705,095
|
|
Prior period adjustment (Note 2)
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,399,805
|
)
|
|
|
1,092,021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,307,784
|
)
|
Balances at January 1, 2009, as adjusted
|
|
|
56,039,854
|
|
|
|
5,604
|
|
|
|
26,785,055
|
|
|
|
(28,814,458
|
)
|
|
|
14,205
|
|
|
|
(28,410
|
)
|
|
|
(550,480
|
)
|
|
|
(2,602,689
|
)
|
Issuance of common stock and units
|
|
|
15,883,847
|
|
|
|
1,588
|
|
|
|
9,996,015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,997,603
|
|
Stock options exercised
|
|
|
15,000
|
|
|
|
2
|
|
|
|
3,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,602
|
|
Stock issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(641,018
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(641,018
|
)
|
Stock option compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
497,531
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
497,531
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,903,098
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,903,098
|
)
|
Reversal of unrealized loss on securities available-for-sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
550,480
|
|
|
|
550,480
|
|
Balances at December 31, 2009
|
|
|
71,938,701
|
|
|
|
7,194
|
|
|
|
36,641,183
|
|
|
|
(31,717,556
|
)
|
|
|
14,205
|
|
|
|
(28,410
|
)
|
|
|
-
|
|
|
|
4,902,411
|
|
Issuance of common stock and units
|
|
|
6,666,667
|
|
|
|
667
|
|
|
|
8,198,534
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,199,201
|
|
Stock issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(681,773
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(681,773
|
)
|
Common stock issued in exchange for services
|
|
|
1,700,000
|
|
|
|
170
|
|
|
|
2,107,830
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,108,000
|
|
Stock options exercised
|
|
|
155,500
|
|
|
|
16
|
|
|
|
107,224
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
107,240
|
|
Stock warrants exercised
|
|
|
3,714,186
|
|
|
|
371
|
|
|
|
9,199,797
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,200,168
|
|
Stock option compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
584,657
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
584,657
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,022,107
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,022,107
|
)
|
Unrealized loss on securities available-for -sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,340
|
)
|
|
|
(2,340
|
)
|
Balances at December 31, 2010
|
|
|
84,175,054
|
|
|
$
|
8,418
|
|
|
$
|
56,157,452
|
|
|
$
|
(45,739,663
|
)
|
|
|
14,205
|
|
|
$
|
(28,410
|
)
|
|
$
|
(2,340
|
)
|
|
$
|
10,395,457
|
|
|
|
For the Year Ended
December 31,
|
|
|
Cumulative From March 19, 2001 (Inception) to December 31,
|
|
||||||
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|||
Cash Flows from Operating Activities:
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|||
Net loss
|
|
$
|
(14,022,107
|
)
|
|
$
|
(2,903,098
|
)
|
|
$
|
(45,739,663
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
1,625,000
|
|
Compensatory stock
|
|
|
2,108,000
|
|
|
|
-
|
|
|
|
2,129,877
|
|
Depreciation and amortization
|
|
|
50,659
|
|
|
|
41,604
|
|
|
|
595,467
|
|
Stock option compensation
|
|
|
584,657
|
|
|
|
497,531
|
|
|
|
4,939,022
|
|
Amortization of deferred revenue
|
|
|
(75,000
|
)
|
|
|
(75,000
|
)
|
|
|
(600,000
|
)
|
Note receivable
|
|
|
(46,705
|
)
|
|
|
-
|
|
|
|
(46,705
|
)
|
Realized (gains) losses on marketable securities
|
|
|
-
|
|
|
|
(11,025
|
)
|
|
|
9,341
|
|
Amortization of deferred lease incentive
|
|
|
(20,000
|
)
|
|
|
(10,000
|
)
|
|
|
(30,000
|
)
|
Unrealized loss (gain) on fair value of warrants
|
|
|
3,823,146
|
|
|
|
(1,793,101
|
)
|
|
|
1,102,345
|
|
Unrealized gain on fair value of put feature on common stock
|
|
|
(97,713
|
)
|
|
|
(1,915,179
|
)
|
|
|
(2,315,539
|
)
|
Financing expense
|
|
|
180,080
|
|
|
|
223,950
|
|
|
|
542,356
|
|
Deferred lease expenses
|
|
|
24,616
|
|
|
|
38,501
|
|
|
|
63,117
|
|
Loss on impairment of intangible assets
|
|
|
-
|
|
|
|
286,132
|
|
|
|
286,132
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(385,714
|
)
|
|
|
45,830
|
|
|
|
(706,649
|
)
|
Research tax credit receivable
|
|
|
(145,513
|
)
|
|
|
-
|
|
|
|
(145,513
|
)
|
Accounts payable and accrued expenses
|
|
|
1,034,996
|
|
|
|
427,010
|
|
|
|
1,820,900
|
|
Net Cash Used in Operating Activities
|
|
|
(6,986,598
|
)
|
|
|
(5,146,845
|
)
|
|
|
(36,470,512
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash equivalents
|
|
|
1,624,167
|
|
|
|
(2,026,060
|
)
|
|
|
(401,893
|
)
|
Purchase of equipment
|
|
|
(5,246
|
)
|
|
|
(18,370
|
)
|
|
|
(548,948
|
)
|
Purchase of marketable securities
|
|
|
(2,353,960
|
)
|
|
|
(1,371,824
|
)
|
|
|
(13,123,960
|
)
|
Proceeds from sales of marketable securities
|
|
|
75,000
|
|
|
|
4,758,079
|
|
|
|
10,660,659
|
|
Payment of licensing fees
|
|
|
-
|
|
|
|
-
|
|
|
|
(356,216
|
)
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
(660,039
|
)
|
|
|
1,341,825
|
|
|
|
(3,770,358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and units, net of issuance costs
|
|
|
9,318,228
|
|
|
|
10,730,320
|
|
|
|
42,585,301
|
|
Proceeds from exercise of stock options
|
|
|
107,240
|
|
|
|
3,602
|
|
|
|
110,842
|
|
Proceeds from exercise of stock warrants
|
|
|
3,263,376
|
|
|
|
-
|
|
|
|
3,263,376
|
|
Proceeds from long-term debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5,150,000
|
|
Proceeds from research contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500,000
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(28,410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
12,688,844
|
|
|
|
10,733,922
|
|
|
|
52,581,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
5,042,207
|
|
|
|
6,928,902
|
|
|
|
12,340,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents - beginning of period
|
|
|
7,298,032
|
|
|
|
369,130
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents - end of period
|
|
$
|
12,340,239
|
|
|
$
|
7,298,032
|
|
|
$
|
12,340,239
|
|
|
|
For the Year Ended
December 31,
|
|
|
Cumulative From March 19, 2001 (Inception) to December 31,
|
|
||||||
|
|
2010
|
|
|
2009
(Restated)
|
|
|
2010
(Restated)
|
|
|||
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|||
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
301,147
|
|
Non-cash financing and investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued
|
|
$
|
1,980,880
|
|
|
$
|
4,565,821
|
|
|
$
|
8,130,094
|
|
Put feature on common stock issued
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,954,738
|
|
Dilutive issuances of common stock
|
|
$
|
-
|
|
|
$
|
2,639,199
|
|
|
$
|
2,639,199
|
|
Warrant liability extinguishment from exercise of warrants
|
|
$
|
5,936,792
|
|
|
$
|
-
|
|
|
$
|
5,936,792
|
|
Leasehold improvement incentive
|
|
$
|
-
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
Settlement of lawsuit
|
|
$
|
43,953
|
|
|
$
|
-
|
|
|
$
|
43,953
|
|
1.
|
Operations and Organization
|
2.
|
Prior Period Adjustment
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Warrant liabilities
|
|
|
-
|
|
|
|
3,099,476
|
|
|
|
3,099,476
|
|
Put feature on common stock
|
|
|
-
|
|
|
|
97,713
|
|
|
|
97,713
|
|
Total liabilities
|
|
|
1,889,405
|
|
|
|
3,197,189
|
|
|
|
5,086,594
|
|
Additional paid-in capital
|
|
|
44,414,723
|
|
|
|
(7,773,540
|
)
|
|
|
36,641,183
|
|
Accumulated deficit during the development stage
|
|
|
(36,293,907
|
)
|
|
|
4,576,351
|
|
|
|
(31,717,556
|
)
|
Total stockholders’ equity
|
|
|
8,099,600
|
|
|
|
(3,197,189
|
)
|
|
|
4,902,411
|
|
2.
|
Prior Period Adjustment, (cont’d)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
1,915,179
|
|
|
|
1,915,179
|
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
1,793,101
|
|
|
|
1,793,101
|
|
Financing expense
|
|
|
-
|
|
|
|
(223,950
|
)
|
|
|
(223,950
|
)
|
Total other income
|
|
|
78,470
|
|
|
|
3,484,330
|
|
|
|
3,562,800
|
|
Net loss before provision for income taxes
|
|
|
(6,387,428
|
)
|
|
|
3,484,330
|
|
|
|
(2,903,098
|
)
|
Net loss
|
|
|
(6,387,428
|
)
|
|
|
3,484,330
|
|
|
|
(2,903,098
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.10
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|||
Net loss
|
|
|
(6,387,428
|
)
|
|
|
3,484,330
|
|
|
|
(2,903,098
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(1,915,179
|
)
|
|
|
(1,915,179
|
)
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
(1,793,101
|
)
|
|
|
(1,793,101
|
)
|
Financing expense
|
|
|
-
|
|
|
|
223,950
|
|
|
|
223,950
|
|
Net cash used in operating activities
|
|
|
(5,146,845
|
)
|
|
|
-
|
|
|
|
(5,146,845
|
)
|
3.
|
Summary of Significant Accounting Policies
|
|
a)
|
Cash and Cash Equivalents
|
|
b)
|
Marketable Securities
|
3.
|
Summary of Significant Accounting Policies (cont’d)
|
|
c)
|
Equipment
|
|
|
Life
|
|
Depreciation Method
|
Furniture and fixtures
|
|
7 years
|
|
straight line
|
Office equipment
|
|
5 years
|
|
straight line
|
Lab equipment
|
|
5-7 years
|
|
straight line
|
Computer equipment
|
|
5 years
|
|
straight line
|
Leasehold improvements
|
|
3-5 years
|
|
straight line
|
|
d)
|
Research and Development
|
|
e)
|
Use of Estimates
|
3.
|
Summary of Significant Accounting Policies (cont’d)
|
|
f)
|
Fair Value of Financial Instruments
|
|
g)
|
Income Taxes
|
|
h)
|
Loss Per Share
|
|
|
December 31,
|
|
|
December 31,
|
|
||
|
|
2010
|
|
|
2009
|
|
||
Stock Options
|
|
|
8,076,795
|
|
|
|
7,715,795
|
|
Warrants
|
|
|
5,624,583
|
|
|
|
8,575,243
|
|
3.
|
Summary of Significant Accounting Policies (cont’d)
|
|
i)
|
Stock-Based Compensation
|
|
j)
|
Impairment of Long-Lived Assets
|
|
k)
|
Concentration of Credit Risk
|
|
l)
|
Reclassification
|
3.
|
Summary of Significant Accounting Policies (cont’d)
|
|
l)
|
Recent Accounting Pronouncements Affecting the Company
|
4.
|
Marketable Securities
|
Securities available-for-sale
|
|
Cost Basis
|
|
|
Gross Unrealized Losses
|
|
|
Fair Value
|
|
|||
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|||
State and municipal obligations
|
|
$
|
2,453,960
|
|
|
$
|
(2,340
|
)
|
|
$
|
2,451,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal obligations
|
|
$
|
175,000
|
|
|
$
|
-
|
|
|
$
|
175,000
|
|
Maturity
|
|
Cost Basis
|
|
|
Gross Unrealized Losses
|
|
|
Fair Value
|
|
|||
1 year or less
|
|
$
|
503,960
|
|
|
$
|
(2,340
|
)
|
|
$
|
501,620
|
|
10 years or more
|
|
|
1,950,000
|
|
|
|
-
|
|
|
$
|
1,950,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,453,960
|
|
|
$
|
(2,340
|
)
|
|
$
|
2,451,620
|
|
5.
|
Prepaid Expenses and Other Current Assets
|
|
|
December 31,
|
|
|
December 31,
|
|
||
|
|
2010
|
|
|
2009
|
|
||
|
|
|
|
|
|
|
||
Deposits on contracts
|
|
$
|
564,074
|
|
|
$
|
245,476
|
|
Other assets
|
|
|
142,575
|
|
|
|
75,459
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
706,649
|
|
|
$
|
320,935
|
|
6.
|
Note Receivable
|
Principal Amortization
|
|
Expected Payment
|
|
|
Within 1 year
|
|
$
|
28,023
|
|
1 year to Maturity Date (August 1, 2012)
|
|
|
18,682
|
|
|
|
|
|
|
|
|
$
|
46,705
|
|
7.
|
Equipment, Net
|
|
|
December 31,
|
|
|
December 31,
|
|
||
|
|
2010
|
|
|
2009
|
|
||
|
|
|
|
|
|
|
||
Furniture and fixtures
|
|
$
|
32,169
|
|
|
$
|
32,169
|
|
Office equipment
|
|
|
77,032
|
|
|
|
72,385
|
|
Lab and computer equipment
|
|
|
429,415
|
|
|
|
428,816
|
|
Leasehold improvements
|
|
|
110,713
|
|
|
|
110,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
649,329
|
|
|
|
644,083
|
|
Less Accumulated depreciation
|
|
|
(525,764
|
)
|
|
|
(475,105
|
)
|
|
|
|
|
|
|
|
|
|
Net carrying amount
|
|
$
|
123,565
|
|
|
$
|
168,978
|
|
8.
|
Accounts Payable and Accrued Expenses
|
|
|
December 31,
|
|
|
December 31,
|
|
||
|
|
2010
|
|
|
2009
|
|
||
|
|
|
|
|
|
|
||
Trade payables
|
|
$
|
489,527
|
|
|
$
|
132,212
|
|
Accrued expenses
|
|
|
18,466
|
|
|
|
85,470
|
|
Accrued research and development contract costs
|
|
|
1,239,233
|
|
|
|
427,189
|
|
Payroll liabilities
|
|
|
73,674
|
|
|
|
141,033
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,820,900
|
|
|
$
|
785,904
|
|
9.
|
Deferred Revenue
|
10.
|
Other Liabilities
|
|
|
December 31,
|
|
|
December 31,
|
|
||
|
|
2010
|
|
|
2009
|
|
||
|
|
|
|
|
|
|
||
Deferred lease incentive
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
Less accumulated amortization
|
|
|
(30,000
|
)
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
|
|
|
Balance
|
|
$
|
70,000
|
|
|
$
|
90,000
|
|
11.
|
Net Loss per Common Share
|
12.
|
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.
|
|
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 which occurred on May 13, 2005, (i) each share of the issued and outstanding common stock of Rexahn, Corp (“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 Corporate Road Show Com Inc. (“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. All shares and earnings per share information have been retroactively restated in these financial statements.
|
12.
|
Common Stock (cont’d)
|
|
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.
|
|
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.
|
|
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.
|
|
t)
|
On April 18, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $14,400 and the Company issued an aggregate of 18,000 shares.
|
|
u)
|
On July 23, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 15,000 shares.
|
|
v)
|
On September 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $15,600 and the Company issued an aggregate of 19,500 shares.
|
12.
|
Common Stock (cont’d)
|
|
w)
|
On December 18, 2007, the Company issued 4,857,159 units at a price $1.40 per share for total gross proceeds of $6,800,023. Investors also were issued one warrant for every five shares purchased. One warrant will entitle the holder to purchase an additional share of common stock at a purchase price of $1.80 at any time over a period of three years from the date of the closing. The Company has recorded the warrants as liabilities at fair value as discussed in footnote 14.Private placement closing costs of $139,675 were recorded as a reduction of the issuance proceeds. Private placement costs also consist of 107,144 warrants, valued at $138,326, and were recorded as a financing expense. The Company extended anti-dilutive protection to the investors. The anti-dilution protection provision is structured in a way that is designed to protect a holder’s position from being diluted and contains a price protection based on a mathematical calculation, and is recorded as a liability at fair value, as discussed in footnote 15. The Company revalues these liabilities each reporting period, with the unrealized gain (loss) recorded as other income (expense).
|
Gross Proceeds:
|
|
$
|
6,800,023
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,392,476
|
|
Put feature on common stock
|
|
|
4,401,169
|
|
Total allocated to liabilities
|
|
|
5,793,645
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
1,144,704
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(138,326
|
)
|
Total allocated gross proceeds:
|
|
$
|
6,800,023
|
|
|
x)
|
On December 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $18,000 and the Company issued an aggregate of 75,000 shares.
|
12.
|
Common Stock (cont’d)
|
|
y)
|
On March 20, 2008, the Company issued 642,858 units consisting of one share of the Company’s common stock and one warrant for every five common shares purchased in a private placement at a price of $1.40 per unit for total gross proceeds of $900,001. One warrant will entitle the holder to purchase an additional share of common stock at a price of $1.80 at any time over a period of three years from the date of the private placement, and is recorded as a liability at fair value. The Company extended anti-dilution protection to investors, and the provision is structured in a way that is designed to protect the holder’s position from being diluted and contains a price based on a mathematical computation.
|
Gross Proceeds:
|
|
$
|
900,001
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
190,917
|
|
Put feature on common stock
|
|
|
553,569
|
|
Total allocated to liabilities
|
|
|
744,486
|
|
|
|
|
|
|
Allocated to common stock and additional paid-in capital
|
|
|
155,515
|
|
Total allocated gross proceeds:
|
|
$
|
900,001
|
|
|
z)
|
On May 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $7,200 and the Company issued an aggregate of 30,000 shares.
|
|
aa)
|
On June 2, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 50,000 shares.
|
|
ab)
|
On June 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 10,000 shares.
|
12.
|
Common Stock (cont’d)
|
|
ac)
|
On June 5, 2009 the Company closed on a purchase agreement to issue 2,857,143 shares of common stock at a price of $1.05 per share to an institutional investor for total gross proceeds of $3,000,000 and incurred $289,090 of stock issuance costs. The investor was also issued:
|
|
1)
|
Series I warrants to purchase 2,222,222 shares of common stock at a purchase price of $1.05 per share at any time before September 3, 2009;
|
|
2)
|
Series II warrants to purchase 1,866,666 shares of common stock at a purchase price of $1.25 per share at any time from December 3, 2009 to June 5, 2012; and
|
|
3)
|
Series III warrants to purchase 1,555,555 shares of common stock at a purchase price of $1.50 per share at any time from December 3, 2009 to June 5, 2014.
|
Gross Proceeds:
|
|
$
|
3,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
3,451,194
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
-
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(122,257
|
)
|
Derivative loss at inception
|
|
|
(328,937
|
)
|
Total allocated to expense
|
|
|
(451,194
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
3,000,000
|
|
|
ad)
|
On June 9, 2009, the Company issued 1,833,341 shares of common stock and 862,246 warrants to purchase common stock at a purchase price of $1.05 per share to existing stockholders pursuant to the anti-dilution protection provisions of the private placements transacted on December 18, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $422,300.
|
|
ae)
|
On September 4, 2009, an option holder exercised options to purchase shares of the Company’s common stock for cash of $3,600 and the Company issued an aggregate of 15,000 shares.
|
12.
|
Common Stock (cont’d)
|
|
af)
|
On September 21, 2009, the Company issued 3,102,837 shares of common stock at a purchase price of $1.13 per share to an institutional investor for net proceeds of $3,371,340, which includes $128,659 of stock issuance costs.
|
|
ag)
|
On October 23, 2009, the Company closed on a purchase agreement to issue 6,072,383 shares of common stock at a price of $0.82 per share to five institutional investors for gross proceeds of $5,000,000, which includes $351,928 of stock issuance costs. The investors were also issued warrants to purchase 2,125,334 shares of common stock at a purchase price of $1.00 per share, exercisable on or after the date of delivery until the five-year anniversary, and were recorded as liabilities at fair value. The closing costs included 245,932 warrants valued at $101,693 and were recorded as a financing expense.
|
Gross Proceeds:
|
|
$
|
5,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,114,627
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
3,987,066
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(101,693
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
5,000,000
|
|
|
ah)
|
On October 23, 2009, the Company issued 2,018,143 shares of common stock and 569,502 warrants to purchase common stock at a purchase price of $0.82 per share to existing stockholders pursuant to anti-dilution protection provisions of the private placements transacted on December 24, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $476,200.
|
12.
|
Common Stock (cont’d)
|
|
ai)
|
On February 12, 2010, the Company entered into two consulting agreements pursuant to which the Company issued 300,000 shares of common stock upon the execution of the agreements. Upon the extension of the term, 200,000 shares of common stock for each month will be issued until the termination of services.
|
Date of Issuance
|
|
Number of Shares Issued
|
|
|
Market Value Per Share
|
|
|
Total Market Value of Share Issuance
|
|
|||
February 12, 2010
|
|
|
300,000
|
|
|
$
|
1.22
|
|
|
$
|
366,000
|
|
May 24, 2010
|
|
|
200,000
|
|
|
|
1.40
|
|
|
|
280,000
|
|
June 15, 2010
|
|
|
200,000
|
|
|
|
1.15
|
|
|
|
230,000
|
|
August 2, 2010
|
|
|
400,000
|
|
|
|
1.37
|
|
|
|
548,000
|
|
September 21, 2010
|
|
|
200,000
|
|
|
|
1.20
|
|
|
|
240,000
|
|
October 21, 2010
|
|
|
200,000
|
|
|
|
1.16
|
|
|
|
232,000
|
|
November 11, 2010
|
|
|
200,000
|
|
|
|
1.06
|
|
|
|
212,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,700,000
|
|
|
|
|
|
|
$
|
2,108,000
|
|
|
aj)
|
In March 2010, warrant holders exercised warrants to purchase shares of Company’s common stock for cash of $1,297,001 and the Company issued an aggregate of 1,197,001 shares.
|
|
ak)
|
In March 2010, option holders exercised options to purchase shares of Company’s common stock for cash of $21,240 and the Company issued an aggregate of 48,000 shares.
|
|
al)
|
In April 2010, warrant holders exercised their warrants to purchase shares of Company’s common stock for cash of $1,966,375 and the Company issued an aggregate of 1,595,825 shares.
|
am)
|
On April 20, 2010, an option holder exercised options to purchase shares of Company’s common stock for cash of $86,000 and the Company issued an aggregate of 107,500 shares.
|
|
an)
|
In May 2010, warrant holders exercised 890,051 cashless warrants to obtain shares of Company’s common stock and the Company issued an aggregate of 547,674 shares.
|
12.
|
Common Stock (cont’d)
|
|
ao)
|
On June 30, 2010, the Company entered into a purchase agreement to issue 6,666,667 shares of common stock at a price of $1.50 per share to investors for gross proceeds of $10,000,000, which includes $681,773 of stock issuance costs. The investors were also issued warrants to purchase 2,000,000 shares of common stock at an exercise price of $1.90 per share. The warrants became immediately exercisable on the date of delivery until the four-year anniversary of the date of issuance. These warrants have been valued at $1,800,800 and recorded as warrant liabilities. The closing costs included 200,000 warrants valued at $180,080 and were recorded as a financing expense.
|
Gross Proceeds:
|
|
$
|
10,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,980,880
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
8,199,200
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(180,080
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
10,000,000
|
|
|
ap)
|
In November 2010, warrant holders exercised 936,883 cashless warrants to obtain shares of Company’s common stock and the Company issued an aggregate of 247,491 shares.
|
|
aq)
|
In December 2010, warrant holders exercised 530,900 cashless warrants to obtain shares of Company’s common stock and the Company issued an aggregate of 126,195 shares.
|
13.
|
Stock-Based Compensation
|
13.
|
Stock-Based Compensation (cont’d)
|
|
|
Year Ended December 31,
|
|
|
|
|
||||||
|
|
2010
|
|
|
2009
|
|
|
Inception (March 19, 2001) to December 31, 2010
|
|
|||
Statement of operations line item:
|
|
|
|
|
|
|
|
|
|
|||
General and administrative:
|
|
|
|
|
|
|
|
|
|
|||
Payroll
|
|
$
|
393,425
|
|
|
$
|
443,013
|
|
|
$
|
1,993,516
|
|
Consulting and other professional fees
|
|
|
93,581
|
|
|
|
(67,644
|
)
|
|
|
759,957
|
|
Research and development:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll
|
|
|
76,941
|
|
|
|
122,137
|
|
|
|
876,296
|
|
Consulting and other professional fees
|
|
|
20,710
|
|
|
|
25
|
|
|
|
1,309,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
584,657
|
|
|
$
|
497,531
|
|
|
$
|
4,939,022
|
|
|
|
Year Ended December 31,
|
|
|||||
|
|
|
|
|
|
|
||
|
|
2010
|
|
|
2009
|
|
||
|
|
|
|
|
|
|
||
Black-Scholes weighted average assumptions
|
|
|
|
|
|
|
||
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected volatility
|
|
|
103 - 107
|
%
|
|
|
100 - 108
|
%
|
Risk free interest rate
|
|
|
0.26 – 2.40
|
%
|
|
|
0.51 - 2.55
|
%
|
Expected term (in years)
|
|
1 - 5 years
|
|
|
1 - 5 years
|
|
13.
|
Stock-Based Compensation (cont’d)
|
|
|
2010
|
|
|
2009
|
|
||||||||||
|
|
Shares Subject to Options
|
|
|
Weighted Avg. Exercise Prices
|
|
|
Shares Subject to Options
|
|
|
Weighted Avg. Exercise Prices
|
|
||||
Outstanding at January 1
|
|
|
7,715,795
|
|
|
$
|
0.98
|
|
|
|
7,760,795
|
|
|
$
|
1.01
|
|
Granted
|
|
|
725,000
|
|
|
$
|
1.26
|
|
|
|
180,000
|
|
|
$
|
1.09
|
|
Exercised
|
|
|
(155,500
|
)
|
|
$
|
0.68
|
|
|
|
(15,000
|
)
|
|
$
|
0.24
|
|
Cancelled
|
|
|
(208,500
|
)
|
|
$
|
1.19
|
|
|
|
(210,000
|
)
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31
|
|
|
8,076,795
|
|
|
$
|
1.01
|
|
|
|
7,715,795
|
|
|
$
|
0.98
|
|
|
|
Shares Subject to Options
|
|
|
Weighted Avg. Exercise Prices
|
|
Weighted Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|
|||
Outstanding at December 31, 2010
|
|
|
8,076,795
|
|
|
$
|
1.01
|
|
5.4 years
|
|
$
|
2,198,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2010
|
|
|
6,762,795
|
|
|
$
|
1.00
|
|
4.8 years
|
|
$
|
2,023,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
7,715,795
|
|
|
$
|
0.98
|
|
6.1 years
|
|
$
|
352,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2009
|
|
|
6,289,295
|
|
|
$
|
0.99
|
|
5.3 years
|
|
$
|
352,350
|
|
13.
|
Stock-Based Compensation (cont’d)
|
|
|
2010
|
|
|||||
|
|
Subject to Options
|
|
|
Weighted Average Fair Value at Grant Date
|
|
||
Unvested at January 1, 2010
|
|
|
1,426,500
|
|
|
$
|
0.72
|
|
Granted
|
|
|
725,000
|
|
|
$
|
0.85
|
|
Vested
|
|
|
(675,500
|
)
|
|
$
|
0.76
|
|
Cancelled
|
|
|
(162,000
|
)
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
Unvested at December 31, 2010
|
|
|
1,314,000
|
|
|
$
|
0.77
|
|
14.
|
Warrants
|
|
|
2010
|
|
|
2009
|
|
||||||||||
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
||||
Balance at January 1
|
|
|
8,575,243
|
|
|
$
|
1.10
|
|
|
|
1,207,151
|
|
|
$
|
1.80
|
|
Issued during the period
|
|
|
2,200,000
|
|
|
$
|
1.90
|
|
|
|
9,590,314
|
|
|
$
|
1.14
|
|
Exercised during the period
|
|
|
(5,150,660
|
)
|
|
$
|
1.01
|
|
|
|
-
|
|
|
$
|
-
|
|
Expired during the period
|
|
|
-
|
|
|
$
|
-
|
|
|
|
(2,222,222
|
)
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31
|
|
|
5,624,583
|
|
|
$
|
1.48
|
|
|
|
8,575,243
|
|
|
$
|
1.10
|
|
14.
|
Warrants (cont’d)
|
14.
|
Warrants (cont’d)
|
Fair Values:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
830,978
|
|
|
$
|
1,392,476
|
|
March 20, 2008 financing
|
|
|
123,558
|
|
|
|
104,752
|
|
|
|
190,917
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
-
|
|
|
|
509,973
|
|
|
|
1,315,626
|
|
Series III warrants
|
|
|
751,022
|
|
|
|
559,689
|
|
|
|
1,306,200
|
|
Warrants to placement agent
|
|
|
69,032
|
|
|
|
54,157
|
|
|
|
122,257
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
694,377
|
|
|
|
944,923
|
|
|
|
1,012,934
|
|
Warrants to placement agent
|
|
|
111,241
|
|
|
|
95,004
|
|
|
|
101,693
|
|
June 30, 2010 financing
|
|
|
1,217,480
|
|
|
|
-
|
|
|
|
1,980,880
|
|
Total:
|
|
$
|
2,966,710
|
|
|
$
|
3,099,476
|
|
|
$
|
8,130,094
|
|
14.
|
Warrants (cont’d)
|
Number of Shares indexed:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
|
-
|
|
|
|
2,357,834
|
|
|
|
1,078,579
|
|
March 20, 2008 financing
|
|
|
281,065
|
|
|
|
281,065
|
|
|
|
128,572
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
2,222,222
|
|
Series II warrants
|
|
|
-
|
|
|
|
1,866,666
|
|
|
|
1,866,666
|
|
Series III warrants
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
Warrants to placement agent
|
|
|
132,143
|
|
|
|
142,857
|
|
|
|
142,857
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
1,228,333
|
|
|
|
2,125,334
|
|
|
|
2,125,334
|
|
Warrants to placement agent
|
|
|
227,487
|
|
|
|
245,932
|
|
|
|
245,932
|
|
June 30, 2010 financing
|
|
|
2,200,000
|
|
|
|
-
|
|
|
|
2,200,000
|
|
Total:
|
|
|
5,624,583
|
|
|
|
8,575,243
|
|
|
|
11,565,717
|
|
December 18, 2007 financing:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
-
|
|
|
$
|
0.68
|
|
|
$
|
1.75
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
102
|
%
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
0.47
|
%
|
|
|
3.27
|
%
|
Equivalent volatility
|
|
|
-
|
|
|
|
100
|
%
|
|
|
106
|
%
|
Equivalent risk-free rate
|
|
|
-
|
|
|
|
0.15
|
%
|
|
|
3.26
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
-
|
|
|
|
629,264
|
|
|
|
98,838
|
|
March 20, 2008 financing:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.12
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future volatility
|
|
|
75
|
%
|
|
|
132
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
0.47
|
%
|
|
|
0.47
|
%
|
|
|
1.95
|
%
|
Equivalent volatility
|
|
|
42
|
%
|
|
|
96
|
%
|
|
|
97
|
%
|
Equivalent risk-free rate
|
|
|
0.12
|
%
|
|
|
0.24
|
%
|
|
|
1.31
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
25,462
|
|
|
|
75,011
|
|
|
|
7,479
|
|
June 5, 2009 financing:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.12
|
|
|
$
|
0.68
|
|
|
$
|
1.14
|
|
Estimated future volatility
|
|
|
94-100
|
%
|
|
|
89-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.84-4.18
|
%
|
|
|
1.81-4.18
|
%
|
|
|
0.63-4.31
|
%
|
Equivalent volatility
|
|
|
72-73
|
%
|
|
|
91-95
|
%
|
|
|
103-117
|
%
|
Equivalent risk-free rate
|
|
|
0.52
|
%
|
|
|
0.58-1.11
|
%
|
|
|
.20-1.44
|
%
|
14.
|
Warrants (cont’d)
|
October 23, 2009 financing:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.12
|
|
|
$
|
0.68
|
|
|
$
|
0.69
|
|
Estimated future volatility
|
|
|
100
|
%
|
|
|
74-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.84
|
%
|
|
|
2.82-4.18
|
%
|
|
|
2.63-3.80
|
%
|
Equivalent volatility
|
|
|
65-74
|
%
|
|
|
95-96
|
%
|
|
|
98-99
|
%
|
Equivalent risk-free rate
|
|
|
0.38-.58
|
%
|
|
|
0.86-1.27
|
%
|
|
|
.93-1.16
|
%
|
June 30, 2010 financing:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.12
|
|
|
$
|
-
|
|
|
$
|
1.43
|
|
Estimated future volatility
|
|
|
67%
|
%
|
|
|
-
|
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.84
|
%
|
|
|
-
|
|
|
|
1.78
|
%
|
Equivalent volatility
|
|
|
89
|
%
|
|
|
-
|
|
|
|
98
|
%
|
Equivalent risk-free rate
|
|
|
0.52
|
%
|
|
|
-
|
|
|
|
0.59
|
%
|
|
|
Year Ended
December 31,
2010
|
|
|
Year Ended
December 31,
2009
|
|
|
Cumulative from March 19, 2001 (Inception) to December 31,
2010
|
|
|||
December 18, 2007 financing
|
|
$
|
(510,776
|
)
|
|
$
|
(243,841
|
)
|
|
$
|
50,722
|
|
March 20, 2008 financing
|
|
|
(18,806
|
)
|
|
|
(36,196
|
)
|
|
|
67,359
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
707,111
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
(2,996,828
|
)
|
|
|
805,653
|
|
|
|
(2,191,175
|
)
|
Series III warrants
|
|
|
(191,333
|
)
|
|
|
746,511
|
|
|
|
555,178
|
|
Warrants to placement agent
|
|
|
(29,255
|
)
|
|
|
68,100
|
|
|
|
38,845
|
|
Derivative loss at inception
|
|
|
-
|
|
|
|
(328,937
|
)
|
|
|
(328,937
|
)
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
(798,694
|
)
|
|
|
68,011
|
|
|
|
(730,683
|
)
|
Warrants to placement agent
|
|
|
(40,854
|
)
|
|
|
6,689
|
|
|
|
(34,165
|
)
|
June 30, 2010 financing
|
|
|
763,400
|
|
|
|
-
|
|
|
|
763,400
|
|
Total:
|
|
$
|
(3,823,146
|
)
|
|
$
|
1,793,101
|
|
|
$
|
(1,102,345
|
)
|
15.
|
Put Feature on Common Stock
|
Fair Values:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,401,169
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
97,713
|
|
|
|
553,569
|
|
Total:
|
|
$
|
-
|
|
|
$
|
97,713
|
|
|
$
|
4,954,738
|
|
Number of Shares indexed:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
|
-
|
|
|
|
-
|
|
|
|
4,857,159
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
642,858
|
|
|
|
642,858
|
|
Total:
|
|
|
-
|
|
|
|
642,858
|
|
|
|
5,500,017
|
|
15.
|
Put Feature on Common Stock (cont’d)
|
December 18, 2007 financing:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.75
|
|
Estimated future stock price
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.98-$1.75
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
-
|
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
-
|
|
|
|
3.14
|
%
|
March 20, 2008 financing:
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future stock price
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
1.36-$2.10
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
37
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
0.06
|
%
|
|
|
1.85
|
%
|
|
|
Year Ended December 31,
2010
|
|
|
Year Ended December 31,
2009
|
|
|
Cumulative from March 19, 2001 (Inception) to December 31,
2010
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
1,794,554
|
|
|
$
|
2,148,418
|
|
March 20, 2008 financing
|
|
|
97,713
|
|
|
|
120,625
|
|
|
|
167,121
|
|
Total:
|
|
$
|
97,713
|
|
|
$
|
1,915,180
|
|
|
$
|
2,315,539
|
|
16.
|
Income Taxes
|
|
|
2010
|
|
|
2009
|
|
||
Net operating loss carry-forwards
|
|
$
|
18,050,380
|
|
|
$
|
14,138,900
|
|
Valuation allowance
|
|
|
(18,050,380
|
)
|
|
|
(14,138,900
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
17.
|
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 initial fee and monthly or periodic payments over the term of the agreement, ranging from 2 months to 36 months. The costs to be incurred are estimated and are subject to revision. As of December 31, 2010, the total estimated cost to be incurred under these agreements was approximately $17,422,893 and the Company had made payments totaling $4,353,620 under the terms of the agreements as of December 31, 2010. All of these agreements may be terminated by either party upon appropriate notice as stipulated in the respective agreements.
|
|
b)
|
The Company and three of its key executives entered into employment agreements. Each of these agreements was renewed on August 10, 2009 and expires on August 10, 2012. The agreements result in annual commitments for each key executive of $200,000, $350,000 and $250,000, respectively. The employment agreements were amended on September 9, 2010 and will expire on September 9, 2013.
|
|
c)
|
On June 22, 2009, the Company entered into a License Agreement with Korea Research Institute of Chemical Technology (“KRICT”) to acquire the rights to all intellectual properties related to Quinoxaline-Piperazine derivatives that were synthesized under a Joint Research Agreement. The initial license fee was $100,000, all of which was paid by December 31, 2009. The agreement with KRICT calls for a one-time milestone payment of $1,000,000 within 30 days after the first achievement of marketing approval of the first commercial product arising out of or in connection with the use of KRICT’s intellectual properties. As of December 31, 2010, this milestone has not yet occurred.
|
|
d)
|
On June 29, 2009, the Company signed a five year lease for 5,466 square feet of office space in Rockville, Maryland commencing on June 29, 2009. The lease requires annual base rents of $76,524 with increases over the next five years. Under the leasing agreement, the Company pays its allocable portion of real estate taxes and common area operating charges. Rent paid under the Company’s lease during the years ended December 31, 2010 and 2009 was $108,418 and $112,973, respectively.
|
2011
|
|
$
|
148,593
|
|
2012
|
|
|
158,835
|
|
2013
|
|
|
162,806
|
|
2014
|
|
|
82,408
|
|
|
|
$
|
552,642
|
|
17.
|
Commitments and Contingencies (cont’d)
|
|
e)
|
On September 21, 2009, the Company closed on a securities purchase agreement with Teva Pharmaceutical Industries Limited (“Teva”), under which Teva purchased 3,102,837 shares of our common stock for $3.5 million. Contemporaneous with the execution and delivery of this agreement, the parties executed a research and exclusive license option agreement (“RELO”) pursuant to which the Company agreed to use $2,000,000 from the gross proceeds of the issuance and sale of shares to Teva to fund a research and development program for the pre-clinical development of RX-3117. At December 31, 2010, the Company has proceeds remaining of $351,893 and has included this amount in restricted cash equivalents. The Company will be eligible to receive royalties on net sales of RX-3117 worldwide.
|
|
f)
|
The Company established a 401(k) plan for its employees where the Company matches 100% of the first 3% of the employee’s deferral plus 50% of an additional 2% of the employee’s deferral The expense related to this matching contribution aggregated $65,019 and $49,519 for the years ended December 31, 2010 and 2009 respectively.
|
|
g)
|
On June 28, 2010, the Company signed a one year renewal to use lab space commencing on July 1, 2010. The lease requires monthly rental payments of $4,554. Rent paid under the Company’s lease during the years ended December 31, 2010 and 2009 was $54,648 and $13,662, respectively.
|
18.
|
Fair Value Measurements
|
|
Level 1 Inputs —
|
Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;
|
|
Level 2 Inputs —
|
Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
|
|
Level 3 Inputs —
|
Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
|
18.
|
Fair Value Measurements (cont’d)
|
|
|
Fair Value Measurements at December 31, 2010
|
|
|||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted cash equivalents
|
|
$
|
401,893
|
|
|
$
|
351,893
|
|
|
$
|
50,000
|
|
|
|
-
|
|
Marketable Securities
|
|
|
2,451,620
|
|
|
|
2,451,620
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
2,853,513
|
|
|
$
|
2,803,513
|
|
|
$
|
50,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
2,966,710
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2,966,710
|
|
|
|
Fair Value Measurements at December 31, 2009
|
|
|||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted cash equivalents
|
|
$
|
2,026,060
|
|
|
$
|
1,925,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
Marketable Securities
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
2,201,060
|
|
|
$
|
2,100,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities
|
|
$
|
3,099,476
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,099,476
|
|
Put feature on common stock
|
|
|
97,713
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97,713
|
|
Total Liabilities:
|
|
$
|
3,197,189
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,197,189
|
|
|
a)
|
Money market funds valued at the net asset value of shares held by the Company and is classified within level 1 of the fair value hierarchy;
|
|
b)
|
Certificate of deposit valued based upon the underlying terms of a letter of credit, as discussed in note 17, and classified within level 2 of the fair value hierarchy.
|
18.
|
Fair Value Measurements (cont’d)
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2010
|
|
$
|
3,099,476
|
|
|
$
|
97,713
|
|
|
$
|
3,197,189
|
|
Additions, fair value of warrants issued in June 2010
|
|
|
1,980,880
|
|
|
|
-
|
|
|
|
1,980,880
|
|
Unrealized losses (gains)
|
|
|
3,823,146
|
|
|
|
(97,713
|
)
|
|
|
3,725,433
|
|
Transfers out of level 3
|
|
|
(5,936,792
|
)
|
|
|
-
|
|
|
|
(5,936,792
|
)
|
Balance at December 31, 2010
|
|
$
|
2,966,710
|
|
|
$
|
-
|
|
|
$
|
2,966,710
|
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2009
|
|
$
|
655,693
|
|
|
$
|
4,652,091
|
|
|
$
|
5,307,784
|
|
Additions, fair value of warrants issued in 2009, net of inception loss of $328,937
|
|
|
4,236,884
|
|
|
|
-
|
|
|
|
4,236,884
|
|
Unrealized gains
|
|
|
(1,793,101
|
)
|
|
|
(1,915,179
|
)
|
|
|
(3,708,280
|
)
|
Transfers out of level 3
|
|
|
-
|
|
|
|
(2,639,199
|
)
|
|
|
(2,639,199
|
)
|
Balance at December 31, 2009
|
|
$
|
3,099,476
|
|
|
$
|
97,713
|
|
|
$
|
3,197,189
|
|
19.
|
Subsequent Event
|
Restated Quarterly Financial Statements
|
Page
|
For the Three and Nine Months Ended September 30, 2010
|
1
|
For the Three and Six Months June 30, 2010
|
23
|
For the Three Months ended March 31, 2010
|
46
|
|
|
September 30, 2010
(Restated)
(unaudited)
|
|
|
December 31, 2009
(Restated)
|
|
||
ASSETS
|
|
|||||||
Current Assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
15,829,783
|
|
|
$
|
7,298,032
|
|
Marketable securities
|
|
|
604,275
|
|
|
|
175,000
|
|
Prepaid expenses and other current assets
|
|
|
481,048
|
|
|
|
320,935
|
|
Note receivable – current portion
|
|
|
28,023
|
|
|
|
-
|
|
Total Current Assets
|
|
|
16,943,129
|
|
|
|
7,793,967
|
|
Restricted Cash Equivalents
|
|
|
1,183,606
|
|
|
|
2,026,060
|
|
Note Receivable
|
|
|
25,688
|
|
|
|
-
|
|
Equipment, Net
|
|
|
137,879
|
|
|
|
168,978
|
|
Total Assets
|
|
$
|
18,290,302
|
|
|
$
|
9,989,005
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,341,172
|
|
|
$
|
785,904
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
|
918,750
|
|
|
|
975,000
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities
|
|
|
138,229
|
|
|
|
128,501
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities (note 3)
|
|
|
4,127,250
|
|
|
|
3,099,476
|
|
|
|
|
|
|
|
|
|
|
Put Feature on Common Stock (note 4)
|
|
|
-
|
|
|
|
97,713
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
6,525,401
|
|
|
|
5,086,594
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Stockholders' Equity (note 5):
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.0001, 100,000,000 authorized shares, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, par value $0.0001, 500,000,000 authorized shares, 83,401,368 (2009 – 71,938,701) issued and outstanding 83,387,163 (2009 – 71,924,496)
|
|
|
8,339
|
|
|
|
7,194
|
|
Additional paid-in capital
|
|
|
54,913,988
|
|
|
|
36,641,183
|
|
Accumulated other comprehensive income
|
|
|
315
|
|
|
|
-
|
|
Accumulated deficit during the development stage
|
|
|
(43,129,331
|
)
|
|
|
(31,717,556
|
)
|
Treasury stock, 14,205 shares, at cost
|
|
|
(28,410
|
)
|
|
|
(28,410
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
11,764,901
|
|
|
|
4,902,411
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
18,290,302
|
|
|
$
|
9,989,005
|
|
|
|
Three Months
Ended September 30,
|
|
|
Nine Months
Ended September 30,
|
|
|
Cumulative from March 19, 2001 (Inception) to September 30,
|
|
|||||||||||
|
|
2010
(Restated)
|
|
|
2009
(Restated)
|
|
|
2010
(Restated)
|
|
|
2009
(Restated)
|
|
|
2010
(Restated)
|
|
|||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research
|
|
$
|
18,750
|
|
|
$
|
18,750
|
|
|
$
|
56,250
|
|
|
$
|
56,250
|
|
|
$
|
581,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,561,377
|
|
|
|
724,067
|
|
|
|
4,423,376
|
|
|
|
2,285,804
|
|
|
|
22,231,918
|
|
Research and development
|
|
|
690,089
|
|
|
|
424,609
|
|
|
|
2,509,600
|
|
|
|
2,018,766
|
|
|
|
18,993,415
|
|
Patent fees
|
|
|
123,147
|
|
|
|
107,618
|
|
|
|
238,089
|
|
|
|
258,421
|
|
|
|
1,463,142
|
|
Depreciation and amortization
|
|
|
11,663
|
|
|
|
17,292
|
|
|
|
34,843
|
|
|
|
41,638
|
|
|
|
579,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
2,386,276
|
|
|
|
1,273,586
|
|
|
|
7,205,908
|
|
|
|
4,604,629
|
|
|
|
43,268,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(2,367,526
|
)
|
|
|
(1,254,836
|
)
|
|
|
(7,149,658
|
)
|
|
|
(4,548,379
|
)
|
|
|
(42,686,876
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gain (loss) on marketable securities .
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,025
|
|
|
|
(9,341
|
)
|
Interest income
|
|
|
49,418
|
|
|
|
17,407
|
|
|
|
97,699
|
|
|
|
32,309
|
|
|
|
1,276,498
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(301,147
|
)
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
56,047
|
|
|
|
-
|
|
|
|
56,047
|
|
Unrealized gain (loss) on fair value of warrants
|
|
|
2,536,999
|
|
|
|
477,747
|
|
|
|
(4,333,496
|
)
|
|
|
1,074,714
|
|
|
|
(1,612,695
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
952,362
|
|
|
|
97,713
|
|
|
|
2,077,965
|
|
|
|
2,315,539
|
|
Financing expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(180,080
|
)
|
|
|
(122,257
|
)
|
|
|
(542,356
|
)
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,625,000
|
)
|
Total Other Income (Expense)
|
|
|
2,586,417
|
|
|
|
1,447,516
|
|
|
|
(4,262,117
|
)
|
|
|
3,073,756
|
|
|
|
(442,455
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Before Provision for Income Taxes
|
|
|
218,891
|
|
|
|
192,680
|
|
|
|
(11,411,775
|
)
|
|
|
(1,474,623
|
)
|
|
|
(43,129,331
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
218,891
|
|
|
$
|
192,680
|
|
|
$
|
(11,411,775
|
)
|
|
$
|
(1,474,623
|
)
|
|
$
|
(43,129,331
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share, basic and diluted
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted (Note 6)
|
|
|
83,063,250
|
|
|
|
61,027,293
|
|
|
|
76,932,814
|
|
|
|
58,440,503
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
Cumulative From March 19, 2001 (Inception) to September 30,
|
|
||||||
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|||
|
|
(Restated)
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|||
Net loss
|
|
$
|
(11,411,775
|
)
|
|
$
|
(1,474,623
|
)
|
|
$
|
(43,129,331
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
1,625,000
|
|
Compensatory stock
|
|
|
1,663,999
|
|
|
|
-
|
|
|
|
1,685,876
|
|
Depreciation and amortization
|
|
|
34,843
|
|
|
|
41,638
|
|
|
|
579,651
|
|
Stock option compensation
|
|
|
435,305
|
|
|
|
489,094
|
|
|
|
4,789,670
|
|
Amortization of deferred revenue
|
|
|
(56,250
|
)
|
|
|
(56,250
|
)
|
|
|
(581,250
|
)
|
Note receivable
|
|
|
(53,711
|
)
|
|
|
-
|
|
|
|
(53,711
|
)
|
Realized (gains) losses on marketable securities
|
|
|
-
|
|
|
|
(11,025
|
)
|
|
|
9,341
|
|
Unrealized (gain) loss on fair value of warrants
|
|
|
4,333,496
|
|
|
|
(1,074,714
|
)
|
|
|
1,612,695
|
|
Unrealized (gain) loss on fair value of put feature on common stock
|
|
|
(97,713
|
)
|
|
|
(2,077,965
|
)
|
|
|
(2,315,539
|
)
|
Financing expense
|
|
|
180,080
|
|
|
|
122,257
|
|
|
|
542,356
|
|
Amortization of deferred lease incentive
|
|
|
(15,000
|
)
|
|
|
(5,000
|
)
|
|
|
(25,000
|
)
|
Deferred lease expenses
|
|
|
24,728
|
|
|
|
26,171
|
|
|
|
63,229
|
|
Loss on impairment of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
286,132
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(160,113
|
)
|
|
|
146,482
|
|
|
|
(481,048
|
)
|
Accounts payable and accrued expenses
|
|
|
555,268
|
|
|
|
115,395
|
|
|
|
1,341,172
|
|
Net Cash Used in Operating Activities
|
|
|
(4,566,843
|
)
|
|
|
(3,758,540
|
)
|
|
|
(34,050,757
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash equivalents
|
|
|
842,454
|
|
|
|
(2,100,533
|
)
|
|
|
(1,183,606
|
)
|
Purchase of equipment
|
|
|
(3,744
|
)
|
|
|
(15,805
|
)
|
|
|
(547,446
|
)
|
Purchase of marketable securities
|
|
|
(503,960
|
)
|
|
|
(1,196,824
|
)
|
|
|
(11,273,960
|
)
|
Proceeds from sales of marketable securities
|
|
|
75,000
|
|
|
|
4,758,079
|
|
|
|
10,660,659
|
|
Payment of licensing fees
|
|
|
-
|
|
|
|
-
|
|
|
|
(356,216
|
)
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
409,750
|
|
|
|
1,444,917
|
|
|
|
(2,700,569
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and units, net of issuance costs
|
|
|
9,318,228
|
|
|
|
6,085,851
|
|
|
|
42,585,301
|
|
Proceeds from exercise of stock options
|
|
|
107,240
|
|
|
|
-
|
|
|
|
110,842
|
|
Proceeds from exercise of stock warrants
|
|
|
3,263,376
|
|
|
|
-
|
|
|
|
3,263,376
|
|
Proceeds from long-term debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5,150,000
|
|
Proceeds from research contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500,000
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(28,410
|
)
|
Net Cash Provided by Financing Activities
|
|
|
12,688,844
|
|
|
|
6,085,851
|
|
|
|
52,581,109
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
8,531,751
|
|
|
|
3,772,228
|
|
|
|
15,829,783
|
|
Cash and Cash Equivalents - beginning of period
|
|
|
7,298,032
|
|
|
|
369,130
|
|
|
|
-
|
|
Cash and Cash Equivalents - end of period
|
|
$
|
15,829,783
|
|
|
$
|
4,141,358
|
|
|
$
|
15,829,783
|
|
|
|
Nine Months Ended
September 30,
|
|
|
Cumulative From March 19, 2001 (Inception) to September 30,
|
|
||||||
|
|
2010
Restated)
|
|
|
2009
(Restated)
|
|
|
2010
(Restated)
|
|
|||
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|||
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
301,147
|
|
Non-cash financing and investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued
|
|
$
|
1,980,880
|
|
|
$
|
3,451,194
|
|
|
$
|
8,130,094
|
|
Put feature on common stock issued
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,954,738
|
|
Dilutive issuances of common stock
|
|
$
|
-
|
|
|
$
|
1,494,311
|
|
|
$
|
2,639,199
|
|
Warrant liability extinguishment from exercise of warrants
|
|
$
|
5,286,602
|
|
|
$
|
-
|
|
|
$
|
5,286,602
|
|
Leasehold improvement incentive
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
100,000
|
|
Settlement of lawsuit
|
|
$
|
43,953
|
|
|
$
|
-
|
|
|
$
|
43,953
|
|
1.
|
Prior Period Adjustment
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Warrant liabilities
|
|
|
-
|
|
|
|
4,127,250
|
|
|
|
4,127,250
|
|
Total liabilities
|
|
|
2,398,151
|
|
|
|
4,127,250
|
|
|
|
6,525,401
|
|
Additional paid-in capital
|
|
|
59,201,726
|
|
|
|
(4,287,738
|
)
|
|
|
54,913,988
|
|
Accumulated deficit during the development stage
|
|
|
(43,289,819
|
)
|
|
|
(160,488
|
)
|
|
|
(43,129,331
|
)
|
Total stockholders’ equity
|
|
|
15,892,151
|
|
|
|
(4,127,250
|
)
|
|
|
11,764,901
|
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Warrant liabilities
|
|
|
-
|
|
|
|
3,099,476
|
|
|
|
3,099,476
|
|
Put feature on common stock
|
|
|
-
|
|
|
|
97,713
|
|
|
|
97,713
|
|
Total liabilities
|
|
|
1,889,405
|
|
|
|
3,197,189
|
|
|
|
5,086,594
|
|
Additional paid-in capital
|
|
|
44,414,723
|
|
|
|
(7,773,540
|
)
|
|
|
36,641,183
|
|
Accumulated deficit during the development stage
|
|
|
(36,293,907
|
)
|
|
|
4,756,351
|
|
|
|
(31,717,556
|
)
|
Total stockholders’ equity
|
|
|
8,099,600
|
|
|
|
(3,197,189
|
)
|
|
|
4,903,697
|
|
1.
|
Prior Period Adjustment (cont’d)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
2,536,999
|
|
|
|
2,536,999
|
|
Financing expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total other income (expense)
|
|
|
49,418
|
|
|
|
2,536,999
|
|
|
|
2,586,417
|
|
Net (loss) income before provision for income taxes
|
|
|
(2,318,108
|
)
|
|
|
2,536,999
|
|
|
|
218,891
|
|
Net (loss) income
|
|
|
(2,318,108
|
)
|
|
|
2,536,999
|
|
|
|
218,891
|
|
Net (loss) income per share, basic and diluted
|
|
|
(0.03
|
)
|
|
|
0.03
|
|
|
|
0.00
|
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
952,362
|
|
|
|
952,362
|
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
477,747
|
|
|
|
477,747
|
|
Total other income
|
|
|
17,407
|
|
|
|
1,430,109
|
|
|
|
1,447,516
|
|
Net (loss) income before provision for income taxes
|
|
|
(1,237,429
|
)
|
|
|
1,430,109
|
|
|
|
192,680
|
|
Net (loss) income
|
|
|
(1,237,429
|
)
|
|
|
1,430,109
|
|
|
|
192,680
|
|
Net (loss) income per share, basic and diluted
|
|
|
(0.02
|
)
|
|
|
0.02
|
|
|
|
0.00
|
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
97,713
|
|
|
|
97,713
|
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
(4,333,496
|
)
|
|
|
(4,333,496
|
)
|
Financing expense
|
|
|
-
|
|
|
|
(180,080
|
)
|
|
|
(180,080
|
)
|
Total other income (expense)
|
|
|
153,746
|
|
|
|
(4,415,863
|
)
|
|
|
(4,262,117
|
)
|
Net loss before provision for income taxes
|
|
|
(6,995,912
|
)
|
|
|
(4,415,863
|
)
|
|
|
(11,411,775
|
)
|
Net loss
|
|
|
(6,995,912
|
)
|
|
|
(4,415,863
|
)
|
|
|
(11,411,775
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.09
|
)
|
|
|
(0.06
|
)
|
|
|
(0.15
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
2,077,965
|
|
|
|
2,077,965
|
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
1,074,714
|
|
|
|
1,074,714
|
|
Financing expense
|
|
|
-
|
|
|
|
(122,257
|
)
|
|
|
(122,257
|
)
|
Total other income (expense)
|
|
|
43,334
|
|
|
|
3,030,422
|
|
|
|
3,073,756
|
|
Net loss before provision for income taxes
|
|
|
(4,505,045
|
)
|
|
|
3,030,422
|
|
|
|
(1,474,623
|
)
|
Net loss
|
|
|
(4,505,045
|
)
|
|
|
3,030,422
|
|
|
|
(1,474,623
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.08
|
)
|
|
|
0.05
|
|
|
|
(0.03
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(6,995,912
|
)
|
|
|
(4,415,863
|
)
|
|
|
(11,411,775
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(97,713
|
)
|
|
|
(97,713
|
)
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
4,333,496
|
|
|
|
4,333,496
|
|
Financing expense
|
|
|
-
|
|
|
|
180,080
|
|
|
|
180,080
|
|
Net cash used in operating activities
|
|
|
(4,566,843
|
)
|
|
|
-
|
|
|
|
(4,566,843
|
)
|
1.
|
Prior Period Adjustment (cont’d)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(4,505,045
|
)
|
|
|
3,030,422
|
|
|
|
(1,474,623
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(2,077,965
|
)
|
|
|
(2,077,965
|
)
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
(1,074,714
|
)
|
|
|
(1,074,714
|
)
|
Financing expense
|
|
|
-
|
|
|
|
122,257
|
|
|
|
122,257
|
|
Net cash used in operating activities
|
|
|
(3,758,540
|
)
|
|
|
-
|
|
|
|
(3,758,540
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
2,315,539
|
|
|
|
2,315,539
|
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
(1,612,695
|
)
|
|
|
(1,612,695
|
)
|
Financing expense
|
|
|
-
|
|
|
|
(542,356
|
)
|
|
|
(542,356
|
)
|
Total other income (expense)
|
|
|
(602,943
|
)
|
|
|
160,488
|
|
|
|
(442,455
|
)
|
Net loss before provision for income taxes
|
|
|
(43,289,819
|
)
|
|
|
160,488
|
|
|
|
(43,129,331
|
)
|
Net loss
|
|
|
(43,289,819
|
)
|
|
|
160,488
|
|
|
|
(43,129,331
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(43,289,819
|
)
|
|
|
160,488
|
|
|
|
(43,129,331
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(2,315,539
|
)
|
|
|
(2,315,539
|
)
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
1,612,695
|
|
|
|
1,612,695
|
|
Financing Expense
|
|
|
-
|
|
|
|
542,356
|
|
|
|
542,356
|
|
Net cash used in operating activities
|
|
|
(34,050,757
|
)
|
|
|
-
|
|
|
|
(34,050,757
|
)
|
2.
|
Fair Value Measurements (restated)
|
|
Level 1 Inputs —
|
Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;
|
Level 2 Inputs —
|
Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
|
|
Level 3 Inputs —
|
Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
|
Fair Value Measurements at September 30, 2010
|
|
|||||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted Cash equivalents
|
|
$
|
1,183,606
|
|
|
$
|
1,133,606
|
|
|
$
|
50,000
|
|
|
|
-
|
|
Marketable Securities
|
|
|
604,275
|
|
|
|
604,275
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
1,787,881
|
|
|
$
|
1,737,881
|
|
|
$
|
50,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
4,127,250
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4,127,250
|
|
Fair Value Measurements at December 31, 2009
|
|
|||||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted Cash equivalents
|
|
$
|
2,026,060
|
|
|
$
|
1,925,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
Marketable Securities
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
2,201,060
|
|
|
$
|
2,100,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
3,099,476
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,099,476
|
|
Put Feature on Common Stock
|
|
|
97,713
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97,713
|
|
Total Liabilities:
|
|
$
|
3,197,189
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,197,189
|
|
2.
|
Fair Value Measurements (restated) (cont’d)
|
|
a)
|
Money market funds valued at the net asset value of shares held by the Company and is classified within level 1 of the fair value hierarchy.
|
|
b)
|
Certificate of deposit valued based upon the underlying terms of a letter of credit, as discussed in note 16, and classified within level 2 of the fair value hierarchy.
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2010
|
|
$
|
3,099,476
|
|
|
$
|
97,713
|
|
|
$
|
3,197,189
|
|
Additions, fair value of warrants issued in June 2010
|
|
|
1,980,880
|
|
|
|
-
|
|
|
|
1,980,880
|
|
Unrealized losses (gains)
|
|
|
4,333,496
|
|
|
|
(97,713
|
)
|
|
|
4,235,783
|
|
Transfers out of Level 3
|
|
|
(5,286,602
|
)
|
|
|
-
|
|
|
|
(5,286,602
|
)
|
Balance at September 30, 2010
|
|
$
|
4,127,250
|
|
|
$
|
-
|
|
|
$
|
4,127,250
|
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2009
|
|
$
|
655,693
|
|
|
$
|
4,652,091
|
|
|
$
|
5,307,784
|
|
Additions, fair value of warrants issued in 2009, net of derivative loss of $328,937
|
|
|
3,122,257
|
|
|
|
-
|
|
|
|
3,122,257
|
|
Unrealized gains
|
|
|
(1,074,714
|
)
|
|
|
(2,077,965
|
)
|
|
|
(3,152,679
|
)
|
Transfers out of Level 3
|
|
|
-
|
|
|
|
(1,494,311
|
)
|
|
|
(1,494,311
|
)
|
Balance at September 30, 2009
|
|
$
|
2,703,236
|
|
|
$
|
1,079,815
|
|
|
$
|
3,783,051
|
|
3.
|
Warrants (restated)
|
|
|
2010
|
|
|
2009
|
|
||||||||||
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
||||
Balance, January 1
|
|
|
8,575,243
|
|
|
$
|
1.10
|
|
|
|
1,207,151
|
|
|
$
|
1.80
|
|
Issued during the period
|
|
|
2,200,000
|
|
|
$
|
1.90
|
|
|
|
6,649,546
|
|
|
$
|
1.22
|
|
Exercised during the period
|
|
|
(3,682,877
|
)
|
|
$
|
(0.89
|
)
|
|
|
-
|
|
|
$
|
-
|
|
Expired during the period
|
|
|
-
|
|
|
$
|
-
|
|
|
|
(2,222,222
|
)
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30
|
|
|
7,092,366
|
|
|
$
|
1.35
|
|
|
|
5,634,475
|
|
|
$
|
1.41
|
|
3.
|
Warrants (restated) (cont’d)
|
Fair Values:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
$
|
650,190
|
|
|
$
|
830,978
|
|
|
$
|
1,392,476
|
|
March 20, 2008 financing
|
|
|
121,071
|
|
|
|
104,752
|
|
|
|
190,917
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
-
|
|
|
|
509,973
|
|
|
|
1,315,626
|
|
Series III warrants
|
|
|
965,377
|
|
|
|
559,689
|
|
|
|
1,306,200
|
|
Warrants to placement agent
|
|
|
86,052
|
|
|
|
54,157
|
|
|
|
122,257
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
913,880
|
|
|
|
944,923
|
|
|
|
1,012,934
|
|
Warrants to placement agent
|
|
|
140,200
|
|
|
|
95,004
|
|
|
|
101,693
|
|
June 30, 2010 financing
|
|
|
1,250,480
|
|
|
|
-
|
|
|
|
1,980,880
|
|
Total:
|
|
$
|
4,127,250
|
|
|
$
|
3,099,476
|
|
|
$
|
8,130,094
|
|
Number of Shares indexed:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
|
1,467,783
|
|
|
|
2,357,834
|
|
|
|
1,078,579
|
|
March 20, 2008 financing
|
|
|
281,065
|
|
|
|
281,065
|
|
|
|
128,572
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
2,222,222
|
|
Series II warrants
|
|
|
-
|
|
|
|
1,866,666
|
|
|
|
1,866,666
|
|
Series III warrants
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
Warrants to placement agent
|
|
|
132,143
|
|
|
|
142,857
|
|
|
|
142,857
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
1,228,333
|
|
|
|
2,125,334
|
|
|
|
2,125,334
|
|
Warrants to placement agent
|
|
|
227,487
|
|
|
|
245,932
|
|
|
|
245,932
|
|
June 30, 2010 financing
|
|
|
2,200,000
|
|
|
|
-
|
|
|
|
2,200,000
|
|
Total:
|
|
|
7,092,366
|
|
|
|
8,575,243
|
|
|
|
11,565,717
|
|
3.
|
Warrants (restated) (cont’d)
|
December 18, 2007 financing:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.16
|
|
|
$
|
0.68
|
|
|
$
|
1.75
|
|
Estimated future volatility
|
|
|
92
|
%
|
|
|
102
|
%
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
0.16
|
%
|
|
|
0.47
|
%
|
|
|
3.27
|
%
|
Equivalent volatility
|
|
|
39
|
%
|
|
|
100
|
%
|
|
|
106
|
%
|
Equivalent risk-free rate
|
|
|
0.16
|
%
|
|
|
0.15
|
%
|
|
|
3.26
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
84,405
|
|
|
|
629,264
|
|
|
|
98,838
|
|
March 20, 2008 financing:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.16
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future volatility
|
|
|
225
|
%
|
|
|
132
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
0.19
|
%
|
|
|
0.47
|
%
|
|
|
1.95
|
%
|
Equivalent volatility
|
|
|
36
|
%
|
|
|
96
|
%
|
|
|
97
|
%
|
Equivalent risk-free rate
|
|
|
0.16
|
%
|
|
|
0.24
|
%
|
|
|
1.31
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
16,163
|
|
|
|
75,011
|
|
|
|
7,479
|
|
June 5, 2009 financing:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.16
|
|
|
$
|
0.68
|
|
|
$
|
1.14
|
|
Estimated future volatility
|
|
|
70
|
%
|
|
|
89-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.08
|
%
|
|
|
1.81-4.18
|
%
|
|
|
0.63-4.31
|
%
|
Equivalent volatility
|
|
|
84
|
%
|
|
|
91-95
|
%
|
|
|
103-117
|
%
|
Equivalent risk-free rate
|
|
|
0.39
|
%
|
|
|
0.58-1.11
|
%
|
|
|
.20-1.44
|
%
|
October 23, 2009 financing:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.16
|
|
|
$
|
0.68
|
|
|
$
|
0.69
|
|
Estimated future volatility
|
|
|
70-75
|
%
|
|
|
74-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.08
|
%
|
|
|
2.82-4.18
|
%
|
|
|
2.63-3.80
|
%
|
Equivalent volatility
|
|
|
78-84
|
%
|
|
|
95-96
|
%
|
|
|
98-99
|
%
|
Equivalent risk-free rate
|
|
|
0.32-0.41
|
%
|
|
|
0.86-1.27
|
%
|
|
|
.93-1.16
|
%
|
June 30, 2010 financing:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.16
|
|
|
|
-
|
|
|
$
|
1.43
|
|
Estimated future volatility
|
|
|
70
|
%
|
|
|
-
|
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.08
|
%
|
|
|
-
|
|
|
|
1.78
|
%
|
Equivalent volatility
|
|
|
85
|
%
|
|
|
-
|
|
|
|
98
|
%
|
Equivalent risk-free rate
|
|
|
0.39
|
%
|
|
|
-
|
|
|
|
0.59
|
%
|
3.
|
Warrants (restated) (cont’d)
|
|
|
Three Months Ended September 30, 2010
|
|
|
Three Months Ended September 30, 2009
|
|
||
December 18, 2007 financing
|
|
$
|
601,900
|
|
|
$
|
145,188
|
|
March 20, 2008 financing
|
|
|
128,848
|
|
|
|
36,949
|
|
June 5, 2009 financing:
|
|
|
-
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
286,222
|
|
Series II warrants
|
|
|
-
|
|
|
|
9,520
|
|
Series III warrants
|
|
|
627,978
|
|
|
|
311
|
|
Warrants to placement agent
|
|
|
52,315
|
|
|
|
(443
|
)
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
277,849
|
|
|
|
-
|
|
Warrants to placement agent
|
|
|
117,709
|
|
|
|
-
|
|
June 30, 2010 financing
|
|
|
730,400
|
|
|
|
-
|
|
Total:
|
|
$
|
2,536,999
|
|
|
$
|
477,747
|
|
|
|
Nine Months Ended September 30, 2010
|
|
|
Nine Months Ended September 30, 2009
|
|
|
Cumulative from March 19, 2001 (Inception) to September 30, 2010
|
|
|||
December 18, 2007 financing
|
|
$
|
(510,776
|
)
|
|
$
|
(213,864
|
)
|
|
$
|
50,722
|
|
March 20, 2008 financing
|
|
|
(16,319
|
)
|
|
|
(31,967
|
)
|
|
|
69,846
|
|
June 5, 2009 financing:
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
707,111
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
(2,996,828
|
)
|
|
|
476,933
|
|
|
|
(2,191,175
|
)
|
Series III warrants
|
|
|
(405,688
|
)
|
|
|
426,067
|
|
|
|
340,823
|
|
Warrants to placement agent
|
|
|
(46,275
|
)
|
|
|
39,371
|
|
|
|
21,825
|
|
Derivative loss at inception
|
|
|
-
|
|
|
|
(328,937
|
)
|
|
|
(328,937
|
)
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
(1,018,197
|
)
|
|
|
-
|
|
|
|
(950,186
|
)
|
Warrants to placement agent
|
|
|
(69,813
|
)
|
|
|
-
|
|
|
|
(63,124
|
)
|
June 30, 2010 financing
|
|
|
730,400
|
|
|
|
-
|
|
|
|
730,400
|
|
Total:
|
|
$
|
(4,333,496
|
)
|
|
$
|
1,074,714
|
|
|
$
|
(1,612,695
|
)
|
4.
|
Put Feature on Common Stock
|
4.
|
Put Feature on Common Stock (cont’d)
|
Fair Values:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,401,169
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
97,713
|
|
|
|
553,569
|
|
Total:
|
|
$
|
-
|
|
|
$
|
97,713
|
|
|
$
|
4,954,738
|
|
Number of Shares indexed:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
|
-
|
|
|
|
-
|
|
|
|
4,857,159
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
642,858
|
|
|
|
642,858
|
|
Total:
|
|
|
-
|
|
|
|
642,858
|
|
|
|
5,500,017
|
|
4.
|
Put Feature on Common Stock (cont’d)
|
December 18, 2007 financing:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.75
|
|
Estimated future stock price
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.98-1.73
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
-
|
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
-
|
|
|
|
3.14
|
%
|
March 20, 2008 financing:
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future stock price
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
1.36-2.10
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
37
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
0.06
|
%
|
|
|
1.85
|
%
|
|
|
Three Months Ended September 30, 2010
|
|
|
Three Months Ended September 30, 2009
|
|
||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
872,102
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
80,260
|
|
Total:
|
|
$
|
-
|
|
|
$
|
952,362
|
|
|
|
Nine Months Ended September 30, 2010
|
|
|
Nine Months Ended September 30, 2009
|
|
|
Cumulative from March 19, 2001 (Inception) to September 30, 2010
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
1,923,269
|
|
|
$
|
2,148,418
|
|
March 20, 2008 financing
|
|
|
97,713
|
|
|
|
154,696
|
|
|
|
167,121
|
|
Total:
|
|
$
|
97,713
|
|
|
$
|
2,077,965
|
|
|
$
|
2,135,539
|
|
5.
|
Common Stock (restated)
|
|
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.
|
|
iv)
|
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.
|
|
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 which occurred on May 13, 2005, (i) each share of the issued and outstanding common stock of Rexahn, Corp (“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 Corporate Road Show Com Inc. (“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. All shares and earnings per share information have 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.
|
5.
|
Common Stock (restated) (cont’d)
|
|
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.
|
|
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.
|
|
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.
|
|
t)
|
On April 18, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $14,400 and the Company issued an aggregate of 18,000 shares.
|
|
u)
|
On July 23, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 15,000 shares.
|
|
v)
|
On September 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $15,600 and the Company issued an aggregate of 19,500 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
w)
|
On December 18, 2007, the Company issued 4,857,159 units at a price $1.40 per share for total gross proceeds of $6,800,023. Investors also were issued one warrant for every five shares purchased. One warrant will entitle the holder to purchase an additional share of common stock at a purchase price of $1.80 at any time over a period of three years from the date of the closing. The Company has recorded the warrants as liabilities at fair value in accordance with ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). Private placement closing costs of $139,675 were recorded as a reduction of the issuance proceeds. Private placement costs also consist of 107,144 warrants, valued at $138,326, and were recorded as a financing expense. The Company extended anti-dilutive protection to the investors. The anti-dilution protection provision is structured in a way that is designed to protect a holder’s position from being diluted and contains a price protection based on a mathematical calculation, and is recorded as a liability at fair value in accordance with ASC Topic 480. The Company revalues these liabilities each reporting period, with the unrealized gain (loss) recorded as other income (expense).
|
Gross Proceeds:
|
|
$
|
6,800,023
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,392,476
|
|
Put feature on common stock
|
|
|
4,401,169
|
|
Total allocated to liabilities
|
|
|
5,793,645
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
1,144,704
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(138,326
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
6,800,023
|
|
|
x)
|
On December 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $18,000 and the Company issued an aggregate of 75,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
y)
|
On March 20, 2008, the Company issued 642,858 units consisting of one share of the Company’s common stock and one warrant for every five common shares purchased in a private placement at a price of $1.40 per unit for total gross proceeds of $900,001. One warrant will entitle the holder to purchase an additional share of common stock at a price of $1.80 at any time over a period of three years from the date of the private placement, and is recorded as a liability at fair value. The Company extended anti-dilution protection to investors, and the provision is structured in a way that is designed to protect the holder’s position from being diluted and contains a price based on a mathematical computation.
|
Gross Proceeds:
|
|
$
|
900,001
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
190,917
|
|
Put feature on common stock
|
|
|
553,569
|
|
Total allocated to liabilities
|
|
|
744,486
|
|
|
|
|
|
|
Allocated to common stock and additional paid-in capital
|
|
|
155,515
|
|
Total allocated gross proceeds:
|
|
$
|
900,001
|
|
|
z)
|
On May 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $7,200 and the Company issued an aggregate of 30,000 shares.
|
|
aa)
|
On June 2, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 50,000 shares.
|
|
ab)
|
On June 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 10,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
ac)
|
On June 5, 2009 the Company closed on a purchase agreement to issue 2,857,143 shares of common stock at a price of $1.05 per share to an institutional investor for total gross proceeds of $3,000,000 and incurred $289,090 of stock issuance costs. The investor was also issued:
|
|
1)
|
Series I warrants to purchase 2,222,222 shares of common stock at a purchase price of $1.05 per share at any time before September 3, 2009;
|
|
2)
|
Series II warrants to purchase 1,866,666 shares of common stock at a purchase price of $1.25 per share at any time from December 3, 2009 to June 5, 2012; and
|
|
3)
|
Series III warrants to purchase 1,555,555 shares of common stock at a purchase price of $1.50 per share at any time from December 3, 2009 to June 5, 2014.
|
Gross Proceeds:
|
|
$
|
3,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
3,451,194
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
-
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(122,257
|
)
|
Derivative loss at inception
|
|
|
(328,937
|
)
|
Total allocated to expense
|
|
|
(451,194
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
3,000,000
|
|
|
ad)
|
On June 9, 2009, the Company issued 1,833,341 shares of common stock and 862,246 warrants to purchase common stock at a purchase price of $1.05 per share to existing stockholders pursuant to the anti-dilution protection provisions of the private placements transacted on December 18, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $422,300.
|
|
ae)
|
On September 4, 2009, an option holder exercised options to purchase shares of the Company’s common stock for cash of $3,600 and the Company issued an aggregate of 15,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
af)
|
On September 21, 2009, the Company issued 3,102,837 shares of common stock at a purchase price of $1.13 per share to an institutional investor for net proceeds of $3,371,340, which includes $128,659 of stock issuance costs.
|
|
ag)
|
On October 23, 2009, the Company closed on a purchase agreement to issue 6,072,383 shares of common stock at a price of $0.82 per share to five institutional investors for gross proceeds of $5,000,000, which includes $351,928 of stock issuance costs. The investors were also issued warrants to purchase 2,125,334 shares of common stock at a purchase price of $1.00 per share, exercisable on or after the date of delivery until the five-year anniversary, and were recorded as liabilities at fair value. The closing costs included 245,932 warrants valued at $101,693 and were recorded as a financing expense.
|
Gross Proceeds:
|
|
$
|
5,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,114,627
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
3,987,066
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(101,693
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
5,000,000
|
|
|
ah)
|
On October 23, 2009, the Company issued 2,018,143 shares of common stock and 569,502 warrants to purchase common stock at a purchase price of $0.82 per share to existing stockholders pursuant to anti-dilution protection provisions of the private placements transacted on December 24, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $476,200.
|
|
ai)
|
On February 12, 2010, the Company entered into two consulting agreements pursuant to which the Company issued 300,000 shares of common stock upon the execution of the agreements. Upon the extension of the term, 200,000 shares of common stock for each month will be issued until the termination of services.
|
Date of Issuance
|
|
Number of Shares Issued
|
|
|
Market Value Per Share
|
|
|
Total Market Value of Share Issuance
|
|
|||
February 12, 2010
|
|
|
300,000
|
|
|
$
|
1.22
|
|
|
$
|
366,000
|
|
May 24, 2010
|
|
|
200,000
|
|
|
|
1.40
|
|
|
|
280,000
|
|
June 15, 2010
|
|
|
200,000
|
|
|
|
1.15
|
|
|
|
230,000
|
|
August 2, 2010
|
|
|
400,000
|
|
|
|
1.37
|
|
|
|
548,000
|
|
September 21, 2010
|
|
|
200,000
|
|
|
|
1.20
|
|
|
|
240,000
|
|
Total
|
|
|
1,300,000
|
|
|
|
|
|
|
$
|
1,664,000
|
|
5.
|
Common Stock (restated) (cont’d)
|
|
aj)
|
In March 2010, warrant holders exercised warrants to purchase shares of Company’s common stock for cash of $1,297,001 and the Company issued an aggregate of 1,197,001 shares.
|
|
ak)
|
In March 2010, option holders exercised options to purchase shares of Company’s common stock for cash of $21,240 and the Company issued an aggregate of 48,000 shares.
|
|
al)
|
In April 2010, warrant holders exercised their warrants to purchase shares of Company’s common stock for cash of $1,966,375 and the Company issued an aggregate of 1,595,825 shares.
|
am)
|
On April 20, 2010, an option holder exercised options to purchase shares of Company’s common stock for cash of $86,000 and the Company issued an aggregate of 107,500 shares.
|
|
an)
|
In May 2010, warrant holders exercised 890,051 cashless warrants to obtain shares of Company’s common stock and the Company issued an aggregate of 547,674 shares.
|
|
ao)
|
On June 30, 2010, the Company entered into a purchase agreement to issue 6,666,667 shares of common stock at a price of $1.50 per share to investors for gross proceeds of $10,000,000, which includes $681,773 of stock issuance costs. The investors were also issued warrants to purchase 2,000,000 shares of common stock at an exercise price of $1.90 per share. The warrants became immediately exercisable on the date of delivery until the four-year anniversary of the date of issuance. These warrants have been valued at $1,800,800 and recorded as warrant liabilities. The closing costs included 200,000 warrants valued at $180,080 and were recorded as a financing expense.
|
Gross Proceeds:
|
|
$
|
10,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,980,880
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
8,199,200
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(180,080
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
10,000,000
|
|
6.
|
Diluted Earnings Per Share
|
|
|
June 30, 2010
(Restated)
(unaudited)
|
|
|
December 31, 2009
(Restated)
|
|
||
ASSETS
|
|
|||||||
Current Assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
17,814,799
|
|
|
$
|
7,298,032
|
|
Marketable securities
|
|
|
100,000
|
|
|
|
175,000
|
|
Prepaid expenses and other current assets
|
|
|
588,974
|
|
|
|
320,935
|
|
Note receivable – current portion
|
|
|
23,353
|
|
|
|
-
|
|
Total Current Assets
|
|
|
18,527,126
|
|
|
|
7,793,967
|
|
Restricted Cash Equivalents
|
|
|
1,292,506
|
|
|
|
2,026,060
|
|
Note Receivable
|
|
|
32,694
|
|
|
|
-
|
|
Equipment, Net
|
|
|
148,795
|
|
|
|
168,978
|
|
Total Assets
|
|
$
|
20,001,121
|
|
|
$
|
9,989,005
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,609,939
|
|
|
$
|
785,904
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
|
937,500
|
|
|
|
975,000
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities
|
|
|
143,340
|
|
|
|
128,501
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities (note 3)
|
|
|
6,664,249
|
|
|
|
3,099,476
|
|
|
|
|
|
|
|
|
|
|
Put Feature on Common Stock (note 4)
|
|
|
-
|
|
|
|
97,713
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
9,355,028
|
|
|
|
5,086,594
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Stockholders' Equity (note 5):
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.0001, 100,000,000 authorized shares, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, par value $0.0001, 500,000,000 authorized shares, 82,801,368 (2009 – 71,938,701) issued and outstanding 82,787,163 (2009 – 71,924,496)
|
|
|
8,280
|
|
|
|
7,194
|
|
Additional paid-in capital
|
|
|
54,014,445
|
|
|
|
36,641,183
|
|
Accumulated deficit during the development stage
|
|
|
(43,348,222
|
)
|
|
|
(31,717,556
|
)
|
Treasury stock, 14,205 shares, at cost
|
|
|
(28,410
|
)
|
|
|
(28,410
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
10,646,093
|
|
|
|
4,902,411
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
20,001,121
|
|
|
$
|
9,989,005
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
|
|
|||||||||||
|
|
2010
(Restated)
|
|
|
2009
(Restated)
|
|
|
2010
(Restated)
|
|
|
2009
(Restated)
|
|
|
Cumulative from March 19, 2001 (Inception) to June 30, 2010
(Restated)
|
|
|||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research
|
|
$
|
18,750
|
|
|
$
|
18,750
|
|
|
$
|
37,500
|
|
|
$
|
37,500
|
|
|
$
|
562,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,805,534
|
|
|
|
838,630
|
|
|
|
2,861,999
|
|
|
|
1,561,737
|
|
|
|
20,670,541
|
|
Research and development
|
|
|
1,328,389
|
|
|
|
872,231
|
|
|
|
1,819,511
|
|
|
|
1,594,157
|
|
|
|
18,303,326
|
|
Patent fees
|
|
|
62,208
|
|
|
|
96,666
|
|
|
|
114,942
|
|
|
|
150,803
|
|
|
|
1,339,995
|
|
Depreciation and amortization
|
|
|
11,633
|
|
|
|
12,355
|
|
|
|
23,180
|
|
|
|
24,346
|
|
|
|
567,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
3,207,764
|
|
|
|
1,819,882
|
|
|
|
4,819,632
|
|
|
|
3,331,043
|
|
|
|
40,881,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(3,189,014
|
)
|
|
|
(1,801,132
|
)
|
|
|
(4,782,132
|
)
|
|
|
(3,293,543
|
)
|
|
|
(40,319,350
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gain (loss) on marketable securities .
|
|
|
-
|
|
|
|
11,025
|
|
|
|
-
|
|
|
|
11,025
|
|
|
|
(9,341
|
)
|
Interest income
|
|
|
26,267
|
|
|
|
7,293
|
|
|
|
48,281
|
|
|
|
14,902
|
|
|
|
1,227,080
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(301,147
|
)
|
Other income
|
|
|
56,047
|
|
|
|
-
|
|
|
|
56,047
|
|
|
|
-
|
|
|
|
56,047
|
|
Unrealized (loss) gain on fair value of warrants
|
|
|
(310,290
|
)
|
|
|
466,857
|
|
|
|
(6,870,495
|
)
|
|
|
596,967
|
|
|
|
(4,149,694
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
797,183
|
|
|
|
97,713
|
|
|
|
1,125,603
|
|
|
|
2,315,539
|
|
Financing expense
|
|
|
(180,080
|
)
|
|
|
(122,257
|
)
|
|
|
(180,080
|
)
|
|
|
(122,257
|
)
|
|
|
(542,356
|
)
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,625,000
|
)
|
Total Other Income (Expense)
|
|
|
(408,056
|
)
|
|
|
1,160,101
|
|
|
|
(6,848,534
|
)
|
|
|
1,626,240
|
|
|
|
(3,028,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Before Provision for Income Taxes
|
|
|
(3,597,070
|
)
|
|
|
(641,031
|
)
|
|
|
(11,630,666
|
)
|
|
|
(1,667,303
|
)
|
|
|
(43,348,222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(3,597,070
|
)
|
|
$
|
(641,031
|
)
|
|
$
|
(11,630,666
|
)
|
|
$
|
(1,667,303
|
)
|
|
$
|
(43,348,222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.05
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted
|
|
|
74,247,302
|
|
|
|
58,214,542
|
|
|
|
73,875,701
|
|
|
|
57,120,095
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
Cumulative From March 19, 2001 (Inception) to
|
|
||||||
|
|
2010
|
|
|
2009
|
|
|
June 30, 2010
|
|
|||
|
|
(Restated)
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|||
Net loss
|
|
$
|
(11,630,666
|
)
|
|
$
|
(1,667,303
|
)
|
|
$
|
(43,348,222
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
1,625,000
|
|
Compensatory stock
|
|
|
876,000
|
|
|
|
-
|
|
|
|
897,877
|
|
Depreciation and amortization
|
|
|
23,180
|
|
|
|
24,346
|
|
|
|
567,988
|
|
Stock option compensation
|
|
|
323,702
|
|
|
|
342,029
|
|
|
|
4,678,067
|
|
Amortization of deferred revenue
|
|
|
(37,500
|
)
|
|
|
(37,500
|
)
|
|
|
(562,500
|
)
|
Note receivable
|
|
|
(56,047
|
)
|
|
|
-
|
|
|
|
(56,047
|
)
|
Realized (gains) losses on marketable securities
|
|
|
-
|
|
|
|
(11,025
|
)
|
|
|
9,341
|
|
Unrealized loss (gain) on fair value of warrants
|
|
|
6,870,495
|
|
|
|
(596,967
|
)
|
|
|
4,149,694
|
|
Unrealized gain on put feature on common stock
|
|
|
(97,713
|
)
|
|
|
(1,125,603
|
)
|
|
|
(2,315,539
|
)
|
Financing expense
|
|
|
180,080
|
|
|
|
122,257
|
|
|
|
542,356
|
|
Amortization of deferred lease incentive
|
|
|
(10,000
|
)
|
|
|
-
|
|
|
|
(20,000
|
)
|
Deferred lease expenses
|
|
|
24,839
|
|
|
|
-
|
|
|
|
63,340
|
|
Loss on impairment of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
286,132
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(268,039
|
)
|
|
|
137,747
|
|
|
|
(588,974
|
)
|
Accounts payable and accrued expenses
|
|
|
824,035
|
|
|
|
409,796
|
|
|
|
1,609,939
|
|
Net Cash Used in Operating Activities
|
|
|
(2,977,634
|
)
|
|
|
(2,402,223
|
)
|
|
|
(32,461,548
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash equivalents
|
|
|
733,554
|
|
|
|
(100,000
|
)
|
|
|
(1,292,506
|
)
|
Purchase of equipment
|
|
|
(2,997
|
)
|
|
|
(9,547
|
)
|
|
|
(546,699
|
)
|
Purchase of marketable securities
|
|
|
-
|
|
|
|
(1,196,824
|
)
|
|
|
(10,770,000
|
)
|
Proceeds from sales of marketable securities
|
|
|
75,000
|
|
|
|
4,758,079
|
|
|
|
10,660,659
|
|
Payment of licensing fees
|
|
|
-
|
|
|
|
-
|
|
|
|
(356,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
805,557
|
|
|
|
3,451,708
|
|
|
|
(2,304,762
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and units, net of issuance costs
|
|
|
9,318,228
|
|
|
|
2,775,000
|
|
|
|
42,585,301
|
|
Proceeds from exercise of stock options
|
|
|
107,240
|
|
|
|
-
|
|
|
|
110,842
|
|
Proceeds from exercise of stock warrants
|
|
|
3,263,376
|
|
|
|
-
|
|
|
|
3,263,376
|
|
Proceeds from long-term debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5,150,000
|
|
Proceeds from research contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500,000
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(28,410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
12,688,844
|
|
|
|
2,775,000
|
|
|
|
52,581,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
10,516,767
|
|
|
|
3,824,485
|
|
|
|
17,814,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents - beginning of period
|
|
|
7,298,032
|
|
|
|
369,130
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents - end of period
|
|
$
|
17,814,799
|
|
|
$
|
4,193,615
|
|
|
$
|
17,814,799
|
|
|
|
Six Months Ended
June 30,
|
|
|
Cumulative From March 19, 2001 (Inception) to
June 30,
|
|
||||||
|
|
2010
(Restated)
|
|
|
2009
(Restated)
|
|
|
2010
(Restated)
|
|
|||
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|||
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
301,147
|
|
Non-cash financing and investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued
|
|
$
|
1,980,880
|
|
|
$
|
3,451,194
|
|
|
$
|
8,130,094
|
|
Put feature on common stock issued
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,954,738
|
|
Dilutive issuances of common stock
|
|
$
|
-
|
|
|
$
|
1,494,311
|
|
|
$
|
2,639,199
|
|
Warrant liability extinguishment from exercise of warrants
|
|
$
|
5,286,602
|
|
|
$
|
-
|
|
|
$
|
5,286,602
|
|
Leasehold improvement incentive
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
100,000
|
|
Settlement of lawsuit
|
|
$
|
43,953
|
|
|
$
|
-
|
|
|
$
|
43,953
|
|
1.
|
Prior Period Adjustment
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Warrant liabilities
|
|
|
-
|
|
|
|
6,664,249
|
|
|
|
6,664,249
|
|
Total liabilities
|
|
|
2,690,779
|
|
|
|
6,664,249
|
|
|
|
9,355,028
|
|
Additional paid-in capital
|
|
|
58,302,183
|
|
|
|
(4,287,738
|
)
|
|
|
54,014,445
|
|
Accumulated deficit during the development stage
|
|
|
(40,971,711
|
)
|
|
|
(2,376,511
|
)
|
|
|
(43,348,222
|
)
|
Total stockholders’ equity
|
|
|
17,310,342
|
|
|
|
(6,664,249
|
)
|
|
|
10,646,093
|
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Warrant liabilities
|
|
|
-
|
|
|
|
3,099,476
|
|
|
|
3,099,476
|
|
Put feature on common stock
|
|
|
-
|
|
|
|
97,713
|
|
|
|
97,713
|
|
Total liabilities
|
|
|
1,889,405
|
|
|
|
3,197,189
|
|
|
|
5,086,594
|
|
Additional paid-in capital
|
|
|
44,414,723
|
|
|
|
(7,773,540
|
)
|
|
|
36,641,183
|
|
Accumulated deficit during the development stage
|
|
|
(36,293,907
|
)
|
|
|
4,576,351
|
|
|
|
(31,717,556
|
)
|
Total stockholders’ equity
|
|
|
8,099,600
|
|
|
|
(3,197,189
|
)
|
|
|
4,902,411
|
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
(310,290
|
)
|
|
|
(310,290
|
)
|
Financing expense
|
|
|
-
|
|
|
|
(180,080
|
)
|
|
|
(180,080
|
)
|
Total other income (expense)
|
|
|
82,314
|
|
|
|
(490,370
|
)
|
|
|
(408,056
|
)
|
Net loss before provision for income taxes
|
|
|
(3,106,700
|
)
|
|
|
(490,370
|
)
|
|
|
(3,597,070
|
)
|
Net loss
|
|
|
(3,106,700
|
)
|
|
|
(490,370
|
)
|
|
|
(3,597,070
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.04
|
)
|
|
|
(0.01
|
)
|
|
|
(0.05
|
)
|
1.
|
Prior Period Adjustment (cont’d)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
797,183
|
|
|
|
797,183
|
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
466,857
|
|
|
|
466,857
|
|
Financing expense
|
|
|
-
|
|
|
|
(122,257
|
)
|
|
|
(122,257
|
)
|
Total other income (expense)
|
|
|
18,318
|
|
|
|
1,141,783
|
|
|
|
1,160,101
|
|
Net loss before provision for income taxes
|
|
|
(1,782,814
|
)
|
|
|
1,141,783
|
|
|
|
(641,037
|
)
|
Net loss
|
|
|
(1,782,814
|
)
|
|
|
1,141,783
|
|
|
|
(641,037
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.03
|
)
|
|
|
0.02
|
|
|
|
(0.01
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
97,713
|
|
|
|
97,713
|
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
(6,870,495
|
)
|
|
|
(6,870,495
|
)
|
Financing expense
|
|
|
-
|
|
|
|
(180,080
|
)
|
|
|
(180,080
|
)
|
Total other income (expense)
|
|
|
104,328
|
|
|
|
(6,952,862
|
)
|
|
|
(6,848,534
|
)
|
Net loss before provision for income taxes
|
|
|
(4,677,804
|
)
|
|
|
(6,952,862
|
)
|
|
|
(11,630,666
|
)
|
Net loss
|
|
|
(4,677,804
|
)
|
|
|
(6,952,862
|
)
|
|
|
(11,630,666
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.06
|
)
|
|
|
(0.10
|
)
|
|
|
(0.16
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
1,125,603
|
|
|
|
1,125,603
|
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
596,967
|
|
|
|
596,967
|
|
Financing expense
|
|
|
-
|
|
|
|
(122,257
|
)
|
|
|
(122,257
|
)
|
Total other income (expense)
|
|
|
25,927
|
|
|
|
1,600,313
|
|
|
|
1,626,240
|
|
Net loss before provision for income taxes
|
|
|
(3,267,616
|
)
|
|
|
1,600,313
|
|
|
|
(1,667,303
|
)
|
Net loss
|
|
|
(3,267,616
|
)
|
|
|
1,600,313
|
|
|
|
(1,667,303
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.06
|
)
|
|
|
0.03
|
|
|
|
(0.03
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(4,677,804
|
)
|
|
|
(6,952,862
|
)
|
|
|
(11,630,666
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(97,713
|
)
|
|
|
(97,713
|
)
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
6,870,495
|
|
|
|
6,870,495
|
|
Financing expense
|
|
|
-
|
|
|
|
180,080
|
|
|
|
180,080
|
|
Net cash used in operating activities
|
|
|
(2,977,634
|
)
|
|
|
-
|
|
|
|
(2,977,634
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(3,267,616
|
)
|
|
|
1,600,313
|
|
|
|
(1,667,303
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(1,125,603
|
)
|
|
|
(1,125,603
|
)
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
(596,967
|
)
|
|
|
(596,967
|
)
|
Financing expense
|
|
|
-
|
|
|
|
122,257
|
|
|
|
122,257
|
|
Net cash used in operating activities
|
|
|
(2,402,223
|
)
|
|
|
-
|
|
|
|
(2,402,223
|
)
|
1.
|
Prior Period Adjustment (cont’d)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
2,315,539
|
|
|
|
2,315,539
|
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
(4,149,694
|
)
|
|
|
(4,149,694
|
)
|
Financing expense
|
|
|
-
|
|
|
|
(542,356
|
)
|
|
|
(542,356
|
)
|
Total other income (expense)
|
|
|
(652,361
|
)
|
|
|
(2,376,511
|
)
|
|
|
(3,028,872
|
)
|
Net loss before provision for income taxes
|
|
|
(40,971,711
|
)
|
|
|
(2,376,511
|
)
|
|
|
(43,348,222
|
)
|
Net loss
|
|
|
(40,971,711
|
)
|
|
|
(2,376,511
|
)
|
|
|
(43,348,222
|
)
|
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(40,971,711
|
)
|
|
|
(2,376,511
|
)
|
|
|
(43,348,222
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(2,315,539
|
)
|
|
|
(2,315,539
|
)
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
4,149,694
|
|
|
|
4,149,694
|
|
Financing Expense
|
|
|
-
|
|
|
|
542,356
|
|
|
|
542,356
|
|
Net cash used in operating activities
|
|
|
(32,461,548
|
)
|
|
|
-
|
|
|
|
(32,461,548
|
)
|
2.
|
Fair Value Measurements (restated)
|
|
Level 1 Inputs —
|
Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;
|
|
Level 2 Inputs —
|
Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
|
|
Level 3 Inputs —
|
Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
|
Fair Value Measurements at June 30, 2010
|
|
|||||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted Cash equivalents
|
|
$
|
1,292,506
|
|
|
$
|
1,190,406
|
|
|
$
|
102,100
|
|
|
|
-
|
|
Marketable Securities
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
1,392,506
|
|
|
$
|
1,290,406
|
|
|
$
|
102,100
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
6,664,249
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
6,664,249
|
|
Fair Value Measurements at December 31, 2009
|
|
|||||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted Cash equivalents
|
|
$
|
2,026,060
|
|
|
$
|
1,925,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
Marketable Securities
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
2,201,060
|
|
|
|
2,100,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
3,099,476
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,099,476
|
|
Put Feature on Common Stock
|
|
|
97,713
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97,713
|
|
Total Liabilities:
|
|
$
|
3,197,189
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,197,189
|
|
2.
|
Fair Value Measurements restated (cont’d)
|
|
a)
|
Money market funds valued at the net asset value of shares held by the Company and is classified within level 1 of the fair value hierarchy.
|
|
b)
|
Certificate of deposit valued based upon the underlying terms of a letter of credit, and classified within level 2 of the fair value hierarchy.
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2010
|
|
$
|
3,099,476
|
|
|
$
|
97,713
|
|
|
$
|
3,197,189
|
|
Additions, fair value of warrants issued in June 2010
|
|
|
1,980,880
|
|
|
|
-
|
|
|
|
1,980,880
|
|
Unrealized losses (gains)
|
|
|
6,870,495
|
|
|
|
(97,713
|
)
|
|
|
6,772,782
|
|
Transfers out of Level 3
|
|
|
(5,286,602
|
)
|
|
|
-
|
|
|
|
(5,286,602
|
)
|
Balance at June 30, 2010
|
|
$
|
6,664,249
|
|
|
$
|
-
|
|
|
$
|
6,664,249
|
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2009
|
|
$
|
655,693
|
|
|
$
|
4,652,091
|
|
|
$
|
5,307,784
|
|
Additions, fair value of warrants issued in 2009, net of derivative loss of $328,937
|
|
|
3,122,257
|
|
|
|
-
|
|
|
|
3,122,257
|
|
Unrealized gains
|
|
|
(596,967
|
)
|
|
|
(1,125,603
|
)
|
|
|
(1,722,570
|
)
|
Transfers out of Level 3
|
|
|
-
|
|
|
|
(1,494,311
|
)
|
|
|
(1,494,311
|
)
|
Balance at June 30, 2009
|
|
$
|
3,180,983
|
|
|
$
|
2,032,177
|
|
|
$
|
5,213,160
|
|
3.
|
Warrants (restated)
|
|
|
2010
|
|
|
2009
|
|
||||||||||
|
|
Number of
warrants
|
|
|
Weighted average
exercise price
|
|
|
Number of
warrants
|
|
|
Weighted average
exercise price
|
|
||||
Balance at January 1
|
|
|
8,575,243
|
|
|
$
|
1.10
|
|
|
|
1,207,151
|
|
|
$
|
1.80
|
|
Issued during the period
|
|
|
2,200,000
|
|
|
$
|
1.90
|
|
|
|
6,649,546
|
|
|
$
|
1.22
|
|
Exercised during the period
|
|
|
(3,682,877
|
)
|
|
$
|
(0.89
|
)
|
|
|
-
|
|
|
$
|
-
|
|
Expired during the period
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Balance at June 30
|
|
|
7,092,366
|
|
|
$
|
1.35
|
|
|
|
7,856,697
|
|
|
$
|
1.26
|
|
3.
|
Warrants (restated) (cont’d)
|
Fair Values:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
$
|
1,252,090
|
|
|
$
|
830,978
|
|
|
$
|
1,392,476
|
|
March 20, 2008 financing
|
|
|
249,919
|
|
|
|
104,752
|
|
|
|
190,917
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
-
|
|
|
|
509,973
|
|
|
|
1,315,626
|
|
Series III warrants
|
|
|
1,593,355
|
|
|
|
559,689
|
|
|
|
1,306,200
|
|
Warrants to placement agent
|
|
|
138,367
|
|
|
|
54,157
|
|
|
|
122,257
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
1,191,729
|
|
|
|
944,923
|
|
|
|
1,012,934
|
|
Warrants to placement agent
|
|
|
257,909
|
|
|
|
95,004
|
|
|
|
101,693
|
|
June 30, 2010 financing
|
|
|
1,980,880
|
|
|
|
-
|
|
|
|
1,980,880
|
|
Total:
|
|
$
|
6,664,249
|
|
|
$
|
3,099,476
|
|
|
$
|
8,130,094
|
|
3.
|
Warrants (restated) (cont’d)
|
Number of Shares indexed:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
|
1,467,783
|
|
|
|
2,357,834
|
|
|
|
1,078,579
|
|
March 20, 2008 financing
|
|
|
281,065
|
|
|
|
281,065
|
|
|
|
128,572
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
2,222,222
|
|
Series II warrants
|
|
|
-
|
|
|
|
1,866,666
|
|
|
|
1,866,666
|
|
Series III warrants
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
Warrants to placement agent
|
|
|
132,143
|
|
|
|
142,857
|
|
|
|
142,857
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
1,228,333
|
|
|
|
2,125,334
|
|
|
|
2,125,334
|
|
Warrants to placement agent
|
|
|
227,487
|
|
|
|
245,932
|
|
|
|
245,932
|
|
June 30, 2010 financing
|
|
|
2,200,000
|
|
|
|
-
|
|
|
|
2,200,000
|
|
Total:
|
|
|
7,092,366
|
|
|
|
8,575,243
|
|
|
|
11,565,717
|
|
December 18, 2007 financing:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.43
|
|
|
$
|
0.68
|
|
|
$
|
1.75
|
|
Estimated future volatility
|
|
|
168
|
%
|
|
|
102
|
%
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
0.22
|
%
|
|
|
0.47
|
%
|
|
|
3.27
|
%
|
Equivalent volatility
|
|
|
131
|
%
|
|
|
100
|
%
|
|
|
106
|
%
|
Equivalent risk-free rate
|
|
|
0.19
|
%
|
|
|
0.15
|
%
|
|
|
3.26
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
84,405
|
|
|
|
629,264
|
|
|
|
98,838
|
|
March 20, 2008 financing:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.43
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future volatility
|
|
|
223
|
%
|
|
|
132
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
0.32
|
%
|
|
|
0.47
|
%
|
|
|
1.95
|
%
|
Equivalent volatility
|
|
|
122
|
%
|
|
|
96
|
%
|
|
|
97
|
%
|
Equivalent risk-free rate
|
|
|
0.20
|
%
|
|
|
0.24
|
%
|
|
|
1.31
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
16,163
|
|
|
|
75,011
|
|
|
|
7,479
|
|
June 5, 2009 financing:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.43
|
|
|
$
|
0.68
|
|
|
$
|
1.14
|
|
Estimated future volatility
|
|
|
100
|
%
|
|
|
89-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.78
|
%
|
|
|
1.81-4.18
|
%
|
|
|
0.63-4.31
|
%
|
Equivalent volatility
|
|
|
108
|
%
|
|
|
91-95
|
%
|
|
|
103-117
|
%
|
Equivalent risk-free rate
|
|
|
0.59
|
%
|
|
|
0.58-1.11
|
%
|
|
|
.20-1.44
|
%
|
3.
|
Warrants (restated) (cont’d)
|
October 23, 2009 financing:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.43
|
|
|
$
|
0.68
|
|
|
$
|
0.69
|
|
Estimated future volatility
|
|
|
100
|
%
|
|
|
74-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.78-2.98
|
%
|
|
|
2.82-4.18
|
%
|
|
|
2.63-3.80
|
%
|
Equivalent volatility
|
|
|
98-112
|
%
|
|
|
95-96
|
%
|
|
|
98-99
|
%
|
Equivalent risk-free rate
|
|
|
0.50-0.63
|
%
|
|
|
0.86-1.27
|
%
|
|
|
.93-1.16
|
%
|
June 30, 2010 financing:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.43
|
|
|
|
-
|
|
|
$
|
1.43
|
|
Estimated future volatility
|
|
|
100
|
%
|
|
|
-
|
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.78
|
%
|
|
|
-
|
|
|
|
1.78
|
%
|
Equivalent volatility
|
|
|
98
|
%
|
|
|
-
|
|
|
|
98
|
%
|
Equivalent risk-free rate
|
|
|
0.59
|
%
|
|
|
-
|
|
|
|
0.59
|
%
|
|
|
Three Months Ended June 30, 2010
|
|
|
Three Months Ended June 30, 2009
|
|
||
December 18, 2007 financing
|
|
$
|
565,643
|
|
|
$
|
(464,416
|
)
|
March 20, 2008 financing
|
|
|
49,267
|
|
|
|
(93,662
|
)
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
420,889
|
|
Series II warrants
|
|
|
(1,627,142
|
)
|
|
|
467,413
|
|
Series III warrants
|
|
|
267,400
|
|
|
|
425,756
|
|
Warrants to placement agent
|
|
|
21,839
|
|
|
|
39,814
|
|
Derivative loss at inception
|
|
|
-
|
|
|
|
(328,937
|
)
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
402,078
|
|
|
|
-
|
|
Warrants to placement agent
|
|
|
10,625
|
|
|
|
-
|
|
June 30, 2010 financing
|
|
|
-
|
|
|
|
-
|
|
Total:
|
|
$
|
(310,290
|
)
|
|
$
|
466,857
|
|
3.
|
Warrants (restated) (cont’d)
|
|
|
Six Months Ended June 30, 2010
|
|
|
Six Months Ended June 30, 2009
|
|
|
Cumulative from March 19, 2001 (Inception) to June 30, 2010
|
|
|||
December 18, 2007 financing
|
|
$
|
(1,112,676
|
)
|
|
$
|
(359,052
|
)
|
|
$
|
(551,178
|
)
|
March 20, 2008 financing
|
|
|
(145,167
|
)
|
|
|
(68,916
|
)
|
|
|
(59,002
|
)
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
420,889
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
(2,996,828
|
)
|
|
|
467,413
|
|
|
|
(2,191,175
|
)
|
Series III warrants
|
|
|
(1,033,666
|
)
|
|
|
425,756
|
|
|
|
(287,155
|
)
|
Warrants to placement agent
|
|
|
(98,590
|
)
|
|
|
39,814
|
|
|
|
(30,490
|
)
|
Derivative loss at inception
|
|
|
-
|
|
|
|
(328,937
|
)
|
|
|
(328,937
|
)
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
(1,296,046
|
)
|
|
|
-
|
|
|
|
(1,228,035
|
)
|
Warrants to placement agent
|
|
|
(187,522
|
)
|
|
|
-
|
|
|
|
(180,833
|
)
|
June 30, 2010 financing
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total:
|
|
$
|
(6,870,495
|
)
|
|
$
|
596,697
|
|
|
$
|
(4,149,694
|
)
|
4.
|
Put Feature on Common Stock
|
4.
|
Put Feature on Common Stock (cont’d)
|
Fair Values:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,401,169
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
97,713
|
|
|
|
553,569
|
|
Total:
|
|
$
|
-
|
|
|
$
|
97,713
|
|
|
$
|
4,954,738
|
|
Number of Shares indexed:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
|
-
|
|
|
|
-
|
|
|
|
4,857,159
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
642,858
|
|
|
|
642,858
|
|
Total:
|
|
|
-
|
|
|
|
642,858
|
|
|
|
5,500,017
|
|
December 18, 2007 financing:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.75
|
|
Estimated future stock price
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.98-1.73
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
-
|
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
-
|
|
|
|
3.14
|
%
|
4.
|
Put Feature on Common Stock (cont’d)
|
March 20, 2008 financing:
|
|
June 30,
2010
|
|
|
December 31,
2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future stock price
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
1.36-2.10
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
37
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
0.06
|
%
|
|
|
1.85
|
%
|
|
|
Three Months Ended June 30, 2010
|
|
|
Three Months Ended June 30, 2009
|
|
||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
720,563
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
76,620
|
|
Total:
|
|
$
|
-
|
|
|
$
|
797,183
|
|
|
|
Six Months Ended June 30, 2010
|
|
|
Six Months Ended June 30, 2009
|
|
|
Cumulative from March 19, 2001 (Inception) to June 30, 2010
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
1,051,167
|
|
|
$
|
2,148,418
|
|
March 20, 2008 financing
|
|
|
97,713
|
|
|
|
74,436
|
|
|
|
167,121
|
|
Total:
|
|
$
|
97,713
|
|
|
$
|
1,125,603
|
|
|
$
|
2,135,539
|
|
5.
|
Common Stock (restated)
|
|
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.
|
|
v)
|
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.
|
|
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 which occurred on May 13, 2005, (i) each share of the issued and outstanding common stock of Rexahn, Corp (“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 Corporate Road Show Com Inc. (“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. All shares and earnings per share information have 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.
|
5.
|
Common Stock (restated) (cont’d)
|
|
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.
|
|
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.
|
|
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.
|
|
t)
|
On April 18, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $14,400 and the Company issued an aggregate of 18,000 shares.
|
|
u)
|
On July 23, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 15,000 shares.
|
|
v)
|
On September 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $15,600 and the Company issued an aggregate of 19,500 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
w)
|
On December 18, 2007, the Company issued 4,857,159 units at a price $1.40 per share for total gross proceeds of $6,800,023. Investors also were issued one warrant for every five shares purchased. One warrant will entitle the holder to purchase an additional share of common stock at a purchase price of $1.80 at any time over a period of three years from the date of the closing. The Company has recorded the warrants as liabilities at fair value in accordance with ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). Private placement closing costs of $139,675 were recorded as a reduction of the issuance proceeds. Private placement costs also consist of 107,144 warrants, valued at $138,326, and were recorded as a financing expense. The Company extended anti-dilutive protection to the investors. The anti-dilution protection provision is structured in a way that is designed to protect a holder’s position from being diluted and contains a price protection based on a mathematical calculation, and is recorded as a liability at fair value in accordance with ASC Topic 480. The Company revalues these liabilities each reporting period, with the unrealized gain (loss) recorded as other income (expense).
|
Gross Proceeds:
|
|
$
|
6,800,023
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,392,476
|
|
Put feature on common stock
|
|
|
4,401,169
|
|
Total allocated to liabilities
|
|
|
5,793,645
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
1,144,704
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(138,326
|
)
|
Total allocated gross proceeds:
|
|
$
|
6,800,023
|
|
|
x)
|
On December 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $18,000 and the Company issued an aggregate of 75,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
y)
|
On March 20, 2008, the Company issued 642,858 units consisting of one share of the Company’s common stock and one warrant for every five common shares purchased in a private placement at a price of $1.40 per unit for total gross proceeds of $900,001. One warrant will entitle the holder to purchase an additional share of common stock at a price of $1.80 at any time over a period of three years from the date of the private placement, and is recorded as a liability at fair value. The Company extended anti-dilution protection to investors, and the provision is structured in a way that is designed to protect the holder’s position from being diluted and contains a price based on a mathematical computation.
|
Gross Proceeds:
|
|
$
|
900,001
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
190,917
|
|
Put feature on common stock
|
|
|
553,569
|
|
Total allocated to liabilities
|
|
|
744,486
|
|
|
|
|
|
|
Allocated to common stock and additional paid-in capital
|
|
|
155,515
|
|
Total allocated gross proceeds:
|
|
$
|
900,001
|
|
|
z)
|
On May 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $7,200 and the Company issued an aggregate of 30,000 shares.
|
|
aa)
|
On June 2, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 50,000 shares.
|
|
ab)
|
On June 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 10,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
ac)
|
On June 5, 2009 the Company closed on a purchase agreement to issue 2,857,143 shares of common stock at a price of $1.05 per share to an institutional investor for total gross proceeds of $3,000,000 and incurred $289,090 of stock issuance costs. The investor was also issued:
|
|
1)
|
Series I warrants to purchase 2,222,222 shares of common stock at a purchase price of $1.05 per share at any time before September 3, 2009;
|
|
2)
|
Series II warrants to purchase 1,866,666 shares of common stock at a purchase price of $1.25 per share at any time from December 3, 2009 to June 5, 2012; and
|
|
3)
|
Series III warrants to purchase 1,555,555 shares of common stock at a purchase price of $1.50 per share at any time from December 3, 2009 to June 5, 2014.
|
Gross Proceeds:
|
|
$
|
3,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
3,451,194
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
-
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(122,257
|
)
|
Derivative loss at inception
|
|
|
(328,937
|
)
|
Total allocated to expense
|
|
|
(451,194
|
)
|
Total allocated gross proceeds:
|
|
$
|
3,000,000
|
|
|
ad)
|
On June 9, 2009, the Company issued 1,833,341 shares of common stock and 862,246 warrants to purchase common stock at a purchase price of $1.05 per share to existing stockholders pursuant to the anti-dilution protection provisions of the private placements transacted on December 18, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $422,300.
|
|
ae)
|
On September 4, 2009, an option holder exercised options to purchase shares of the Company’s common stock for cash of $3,600 and the Company issued an aggregate of 15,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
af)
|
On September 21, 2009, the Company issued 3,102,837 shares of common stock at a purchase price of $1.13 per share to an institutional investor for net proceeds of $3,371,340, which includes $128,659 of stock issuance costs.
|
|
ag)
|
On October 23, 2009, the Company closed on a purchase agreement to issue 6,072,383 shares of common stock at a price of $0.82 per share to five institutional investors for gross proceeds of $5,000,000, which includes $351,928 of stock issuance costs. The investors were also issued warrants to purchase 2,125,334 shares of common stock at a purchase price of $1.00 per share, exercisable on or after the date of delivery until the five-year anniversary, and were recorded as liabilities at fair value. The closing costs included 245,932 warrants valued at $101,693 and were recorded as a financing expense.
|
Gross Proceeds:
|
|
$
|
5,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,114,627
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
3,987,066
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(101,693
|
)
|
Total allocated gross proceeds:
|
|
$
|
5,000,000
|
|
|
ah)
|
On October 23, 2009, the Company issued 2,018,143 shares of common stock and 569,502 warrants to purchase common stock at a purchase price of $0.82 per share to existing stockholders pursuant to anti-dilution protection provisions of the private placements transacted on December 24, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $476,200.
|
|
ai)
|
On February 12, 2010, the Company entered into two consulting agreements pursuant to which the Company issued 300,000 shares of common stock upon the execution of the agreements. Upon the extension of the term, 200,000 shares of common stock for each month will be issued until the termination of services.
|
Date of Issuance
|
|
Number of Shares Issued
|
|
|
Market Value Per Share
|
|
|
Total Market Value of Share Issuance
|
|
|||
February 12, 2010
|
|
|
300,000
|
|
|
$
|
1.22
|
|
|
$
|
366,000
|
|
May 24, 2010
|
|
|
200,000
|
|
|
|
1.40
|
|
|
|
280,000
|
|
June 15, 2010
|
|
|
200,000
|
|
|
|
1.15
|
|
|
|
230,000
|
|
Total
|
|
|
700,000
|
|
|
|
|
|
|
$
|
876,000
|
|
5.
|
Common Stock (restated) (cont’d)
|
|
aj)
|
In March 2010, warrant holders exercised warrants to purchase shares of Company’s common stock for cash of $1,297,001 and the Company issued an aggregate of 1,197,001 shares.
|
|
ak)
|
In March 2010, option holders exercised options to purchase shares of Company’s common stock for cash of $21,240 and the Company issued an aggregate of 48,000 shares.
|
|
al)
|
In April 2010, warrant holders exercised their warrants to purchase shares of Company’s common stock for cash of $1,966,375 and the Company issued an aggregate of 1,595,825 shares.
|
|
am)
|
On April 20, 2010, an option holder exercised options to purchase shares of Company’s common stock for cash of $86,000 and the Company issued an aggregate of 107,500 shares.
|
|
an)
|
In May 2010, warrant holders exercised 890,051 cashless warrants to obtain shares of Company’s common stock and the Company issued an aggregate of 547,674 shares.
|
|
ao)
|
On June 30, 2010, the Company entered into a purchase agreement to issue 6,666,667 shares of common stock at a price of $1.50 per share to investors for gross proceeds of $10,000,000, which includes $681,773 of stock issuance costs. The investors were also issued warrants to purchase 2,000,000 shares of common stock at an exercise price of $1.90 per share. The warrants became immediately exercisable on the date of delivery until the four-year anniversary of the date of issuance. These warrants have been valued at $1,800,800 and recorded as warrant liabilities. The closing costs included 200,000 warrants valued at $180,080 and were recorded as a financing expense.
|
Gross Proceeds:
|
|
$
|
10,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,980,880
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
8,199,200
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(180,080
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
10,000,000
|
|
|
|
March 31, 2010
(Restated)
(unaudited)
|
|
|
December 31,
2009
(Restated)
|
|
||
ASSETS
|
|
|||||||
Current Assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
7,682,191
|
|
|
$
|
7,298,032
|
|
Marketable securities
|
|
|
175,000
|
|
|
|
175,000
|
|
Prepaid expenses and other current assets
|
|
|
491,923
|
|
|
|
320,935
|
|
Total Current Assets
|
|
|
8,349,114
|
|
|
|
7,793,967
|
|
Restricted Cash Equivalents
|
|
|
1,909,827
|
|
|
|
2,026,060
|
|
Equipment, Net
|
|
|
158,701
|
|
|
|
168,978
|
|
Total Assets
|
|
$
|
10,417,642
|
|
|
$
|
9,989,005
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
917,356
|
|
|
$
|
785,904
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
|
956,250
|
|
|
|
975,000
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities
|
|
|
135,921
|
|
|
|
128,501
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities (note 3)
|
|
|
8,357,981
|
|
|
|
3,099,476
|
|
|
|
|
|
|
|
|
|
|
Put Feature on Common Stock (note 4)
|
|
|
-
|
|
|
|
97,713
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
10,367,508
|
|
|
|
5,086,594
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Stockholders' Equity (note 5):
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.0001, 100,000,000 authorized shares, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, par value $0.0001, 500,000,000 authorized shares, 73,483,702 (2009 – 71,938,701) issued and outstanding 73,469,497 (2009 – 71,924,496)
|
|
|
7,349
|
|
|
|
7,194
|
|
Additional paid-in capital
|
|
|
39,822,347
|
|
|
|
36,641,183
|
|
Accumulated deficit during the development stage
|
|
|
(39,751,152
|
)
|
|
|
(31,717,556
|
)
|
Treasury stock, 14,205 shares, at cost
|
|
|
(28,410
|
)
|
|
|
(28,410
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
50,134
|
|
|
|
4,902,411
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
10,417,642
|
|
|
$
|
9,989,005
|
|
|
|
Three Months
Ended March 31,
|
|
|
Cumulative from March 19, 2001 (Inception) to March 31,
|
|
||||||
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|||
|
|
(Restated)
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||
Research
|
|
$
|
18,750
|
|
|
$
|
18,750
|
|
|
$
|
543,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,056,465
|
|
|
|
723,107
|
|
|
|
18,865,007
|
|
Research and development
|
|
|
491,122
|
|
|
|
721,926
|
|
|
|
16,974,937
|
|
Patent fees
|
|
|
52,734
|
|
|
|
54,137
|
|
|
|
1,277,787
|
|
Depreciation and amortization
|
|
|
11,547
|
|
|
|
11,991
|
|
|
|
556,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
1,611,868
|
|
|
|
1,511,161
|
|
|
|
37,674,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(1,593,118
|
)
|
|
|
(1,492,411
|
)
|
|
|
(37,130,336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized loss on marketable securities .
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,341
|
)
|
Interest income
|
|
|
22,014
|
|
|
|
7,609
|
|
|
|
1,200,813
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(301,147
|
)
|
Unrealized (loss) gain on fair value of warrants
|
|
|
(6,560,205
|
)
|
|
|
130,110
|
|
|
|
(3,839,404
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
97,713
|
|
|
|
328,420
|
|
|
|
2,315,539
|
|
Financing expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(362,276
|
)
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,625,000
|
)
|
Total Other Income (Expense)
|
|
|
(6,440,478
|
)
|
|
|
466,139
|
|
|
|
(2,620,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Before Provision for Income Taxes
|
|
|
(8,033,596
|
)
|
|
|
(1,026,272
|
)
|
|
|
(39,751,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(8,033,596
|
)
|
|
$
|
(1,026,272
|
)
|
|
$
|
(39,751,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.11
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted
|
|
|
72,271,780
|
|
|
|
55,025,649
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Cumulative From March 19, 2001 (Inception) to March 31
|
|
||||||
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|||
|
|
(Restated)
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|||
Net loss
|
|
$
|
(8,033,596
|
)
|
|
$
|
(1,026,272
|
)
|
|
$
|
(39,751,152
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
1,625,000
|
|
Compensatory stock
|
|
|
366,000
|
|
|
|
-
|
|
|
|
387,877
|
|
Depreciation and amortization
|
|
|
11,547
|
|
|
|
11,991
|
|
|
|
556,355
|
|
Stock option compensation
|
|
|
195,378
|
|
|
|
134,910
|
|
|
|
4,549,743
|
|
Amortization of deferred revenue
|
|
|
(18,750
|
)
|
|
|
(18,750
|
)
|
|
|
(543,750
|
)
|
Realized losses on marketable securities
|
|
|
-
|
|
|
|
-
|
|
|
|
9,341
|
|
Unrealized loss (gain) on fair value of warrants
|
|
|
6,560,205
|
|
|
|
(130,110
|
)
|
|
|
3,839,404
|
|
Unrealized gain on fair value of put feature on common stock
|
|
|
(97,713
|
)
|
|
|
(328,420
|
)
|
|
|
(2,315,539
|
)
|
Financing expense
|
|
|
-
|
|
|
|
-
|
|
|
|
362,276
|
|
Amortization of deferred lease incentive
|
|
|
(5,000
|
)
|
|
|
-
|
|
|
|
(15,000
|
)
|
Deferred lease expenses
|
|
|
12,420
|
|
|
|
-
|
|
|
|
50,921
|
|
Loss on impairment of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
286,132
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(170,988
|
)
|
|
|
184,186
|
|
|
|
(491,923
|
)
|
Accounts payable and accrued expenses
|
|
|
131,452
|
|
|
|
115,494
|
|
|
|
917,356
|
|
Net Cash Used in Operating Activities
|
|
|
(1,049,045
|
)
|
|
|
(1,056,971
|
)
|
|
|
(30,532,959
|
)
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash equivalents
|
|
|
116,233
|
|
|
|
-
|
|
|
|
(1,909,827
|
)
|
Purchase of equipment
|
|
|
(1,270
|
)
|
|
|
(835
|
)
|
|
|
(544,972
|
)
|
Purchase of marketable securities
|
|
|
-
|
|
|
|
(1,001,345
|
)
|
|
|
(10,770,000
|
)
|
Proceeds from sales of marketable securities
|
|
|
-
|
|
|
|
3,550,001
|
|
|
|
10,585,659
|
|
Payment of licensing fees
|
|
|
-
|
|
|
|
-
|
|
|
|
(356,216
|
)
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
114,963
|
|
|
|
2,547,821
|
|
|
|
(2,995,356
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and units, net of issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
33,267,073
|
|
Proceeds from exercise of stock options
|
|
|
21,240
|
|
|
|
-
|
|
|
|
24,842
|
|
Proceeds from exercise of stock warrants
|
|
|
1,297,001
|
|
|
|
-
|
|
|
|
1,297,001
|
|
Proceeds from long-term debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5,150,000
|
|
Proceeds from research contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500,000
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(28,410
|
)
|
Net Cash Provided by Financing Activities
|
|
|
1,318,241
|
|
|
|
-
|
|
|
|
41,210,506
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
384,159
|
|
|
|
1,490,850
|
|
|
|
7,682,191
|
|
Cash and Cash Equivalents - beginning of period
|
|
|
7,298,032
|
|
|
|
369,130
|
|
|
|
-
|
|
Cash and Cash Equivalents - end of period
|
|
$
|
7,682,191
|
|
|
$
|
1,859,980
|
|
|
$
|
7,682,191
|
|
|
|
Three Months Ended March 31,
|
|
|
Cumulative From March 19, 2001 (Inception) to March 31
|
|
||||||
|
|
2010 (Restated)
|
|
|
2009 (Restated)
|
|
|
2010 (Restated)
|
|
|||
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
301,147
|
|
Non-cash financing and investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,149,214
|
|
Put feature on common stock issued
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,954,743
|
|
Dilutive issuances of common stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,639,199
|
|
Warrant liability extinguishment from exercise of warrants
|
|
$
|
1,301,700
|
|
|
$
|
-
|
|
|
$
|
1,301,700
|
|
Leasehold improvement incentive
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
100,000
|
|
1.
|
Prior Period Adjustment
|
BALANCE SHEET AS OF MARCH 31, 2010
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Warrant liabilities
|
|
|
-
|
|
|
|
8,357,981
|
|
|
|
8,357,981
|
|
Total liabilities
|
|
|
2,009,527
|
|
|
|
8,357,981
|
|
|
|
10,367,508
|
|
Additional paid-in capital
|
|
|
46,294,187
|
|
|
|
(6,471,840
|
)
|
|
|
39,822,347
|
|
Accumulated deficit during the development stage
|
|
|
(37,865,011
|
)
|
|
|
(1,886,141
|
)
|
|
|
(39,751,152
|
)
|
Total stockholders’ equity
|
|
|
8,408,115
|
|
|
|
(8,357,981
|
)
|
|
|
50,134
|
|
BALANCE SHEET AS OF DECEMBER 31, 2009
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Warrant liabilities
|
|
|
-
|
|
|
|
3,099,476
|
|
|
|
3,099,476
|
|
Put feature on common stock
|
|
|
-
|
|
|
|
97,713
|
|
|
|
97,713
|
|
Total liabilities
|
|
|
1,889,405
|
|
|
|
3,197,189
|
|
|
|
5,086,594
|
|
Additional paid-in capital
|
|
|
44,414,723
|
|
|
|
(7,773,540
|
)
|
|
|
36,641,183
|
|
Accumulated deficit during the development stage
|
|
|
(36,293,907
|
)
|
|
|
4,756,351
|
|
|
|
(31,717,556
|
)
|
Total stockholders’ equity
|
|
|
8,099,600
|
|
|
|
(3,197,189
|
)
|
|
|
4,902,411
|
|
1.
|
Prior Period Adjustment (cont’d)
|
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2010
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
(6,560,205
|
)
|
|
|
(6,560,205
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
97,713
|
|
|
|
97,713
|
|
Total other income (expense)
|
|
|
22,014
|
|
|
|
(6,462,492
|
)
|
|
|
(6,440,478
|
)
|
Net loss before provision for income taxes
|
|
|
(1,571,104
|
)
|
|
|
(6,462,492
|
)
|
|
|
(8,033,596
|
)
|
Net loss
|
|
|
(1,571,104
|
)
|
|
|
(6,462,492
|
)
|
|
|
(8,033,596
|
)
|
Net loss per share, basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.11
|
)
|
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
328,420
|
|
|
|
328,420
|
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
130,110
|
|
|
|
130,110
|
|
Total other income (expense)
|
|
|
7,609
|
|
|
|
458,530
|
|
|
|
466,139
|
|
Net loss before provision for income taxes
|
|
|
(1,484,802
|
)
|
|
|
458,530
|
|
|
|
(1,026,272
|
)
|
Net loss
|
|
|
(1,484,802
|
)
|
|
|
458,530
|
|
|
|
(1,026,272
|
)
|
Net income (loss) per share, basic and diluted
|
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2010
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(1,571,104
|
)
|
|
|
(6,462,492
|
)
|
|
|
(8,033,596
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(97,713
|
)
|
|
|
(97,713
|
)
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
6,560,205
|
|
|
|
6,560,205
|
|
Net cash used in operating activities
|
|
|
(1,049,045
|
)
|
|
|
-
|
|
|
|
(1,049,045
|
)
|
STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2009
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(1,484,802
|
)
|
|
|
458,530
|
|
|
|
(1,026,272
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(328,420
|
)
|
|
|
(328,420
|
)
|
Unrealized gain on fair value of warrants
|
|
|
-
|
|
|
|
(130,110
|
)
|
|
|
(130,110
|
)
|
Net cash used in operating activities
|
|
|
(1,056,971
|
)
|
|
|
-
|
|
|
|
(1,056,971
|
)
|
STATEMENT OF OPERATIONS FROM MARCH 19, 2001 (INCEPTION) TO MARCH 31, 2010
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
2,315,539
|
|
|
|
2,315,539
|
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
(3,839,404
|
)
|
|
|
(3,839,404
|
)
|
Financing expense
|
|
|
-
|
|
|
|
(362,276
|
)
|
|
|
(362,276
|
)
|
Total other income (expense)
|
|
|
(734,675
|
)
|
|
|
(1,886,141
|
)
|
|
|
(2,620,816
|
)
|
Net loss before provision for income taxes
|
|
|
(37,865,011
|
)
|
|
|
(1,886,141
|
)
|
|
|
(39,751,152
|
)
|
Net loss
|
|
|
(37,865,011
|
)
|
|
|
(1,886,141
|
)
|
|
|
(39,751,152
|
)
|
1.
|
Prior Period Adjustment(cont’d)
|
STATEMENT OF CASH FLOWS FROM MARCH 19, 2001 (INCEPTION) TO MARCH 31, 2010
|
|
|||||||||||
|
|
As previously reported
|
|
|
Effect of Restatement
|
|
|
As restated
|
|
|||
Net loss
|
|
|
(37,865,011
|
)
|
|
|
(1,886,141
|
)
|
|
|
(39,751,152
|
)
|
Unrealized gain on fair value of put feature on common stock
|
|
|
-
|
|
|
|
(2,315,539
|
)
|
|
|
(2,315,539
|
)
|
Unrealized loss on fair value of warrants
|
|
|
-
|
|
|
|
3,839,404
|
|
|
|
3,839,404
|
|
Financing Expense
|
|
|
-
|
|
|
|
362,276
|
|
|
|
362,276
|
|
Net cash used in operating activities
|
|
|
(30,532,959
|
)
|
|
|
-
|
|
|
|
(30,532,959
|
)
|
2.
|
Fair Value Measurements (restated)
|
|
Level 1 Inputs —
|
Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;
|
|
Level 2 Inputs —
|
Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
|
|
Level 3 Inputs —
|
Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
|
Fair Value Measurements at March 31, 2010
|
|
|||||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted Cash equivalents
|
|
$
|
1,909,827
|
|
|
$
|
1,808,261
|
|
|
$
|
101,156
|
|
|
|
-
|
|
Marketable Securities
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
2,084,827
|
|
|
$
|
1,983,261
|
|
|
$
|
101,156
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
8,357,981
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
8,357,981
|
|
Fair Value Measurements at December 31, 2009
|
|
|||||||||||||||
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted Cash equivalents
|
|
$
|
2,026,060
|
|
|
$
|
1,925,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
Marketable Securities
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
Total Assets:
|
|
$
|
2,201,060
|
|
|
|
2,100,012
|
|
|
$
|
101,048
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities
|
|
$
|
3,099,476
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,099,476
|
|
Put Feature on Common Stock
|
|
|
97,713
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97,713
|
|
Total Liabilities:
|
|
$
|
3,197,189
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,197,189
|
|
2.
|
Fair Value Measurements (restated) (cont’d)
|
|
a)
|
Money market funds valued at the net asset value of shares held by the Company and is classified within level 1 of the fair value hierarchy.
|
|
b)
|
Certificate of deposit valued based upon the underlying terms of a letter of credit, and classified within level 2 of the fair value hierarchy.
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2010
|
|
$
|
3,099,476
|
|
|
$
|
97,713
|
|
|
$
|
3,197,189
|
|
Additions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized gains
|
|
|
6,560,205
|
|
|
|
(97,713
|
)
|
|
|
6,462,492
|
|
Transfers out of level 3
|
|
|
(1,301,700
|
)
|
|
|
-
|
|
|
|
(1,301,700
|
)
|
Balance at March 31, 2010
|
|
$
|
8,357,981
|
|
|
$
|
-
|
|
|
$
|
8,357,981
|
|
|
|
Warrant Liabilities
|
|
|
Put Feature on Common Stock
|
|
|
Total Level 3 Liabilities
|
|
|||
Balance at January 1, 2009
|
|
$
|
655,693
|
|
|
$
|
4,652,091
|
|
|
$
|
5,307,784
|
|
Additions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized gains
|
|
|
(130,110
|
)
|
|
|
(328,420
|
)
|
|
|
(458,530
|
)
|
Transfers out of level 3
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance at March 31, 2009
|
|
$
|
525,583
|
|
|
$
|
4,323,671
|
|
|
$
|
4,849,254
|
|
3.
|
Warrants (restated)
|
|
|
2010
|
|
|
2009
|
|
||||||||||
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
||||
Balance at January 1
|
|
|
8,575,243
|
|
|
$
|
1.10
|
|
|
|
1,207,151
|
|
|
$
|
1.80
|
|
Issued during the period
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Exercised during the period
|
|
|
(1,197,001
|
)
|
|
$
|
(1.08
|
)
|
|
|
-
|
|
|
$
|
-
|
|
Expired during the period
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31
|
|
|
7,378,242
|
|
|
$
|
1.10
|
|
|
|
1,207,151
|
|
|
$
|
1.80
|
|
3.
|
Warrants (restated) (cont’d)
|
Fair Values:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
$
|
2,509,297
|
|
|
$
|
830,978
|
|
|
$
|
1,392,476
|
|
March 20, 2008 financing
|
|
|
299,186
|
|
|
|
104,752
|
|
|
|
190,917
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
1,483,679
|
|
|
|
509,973
|
|
|
|
1,315,626
|
|
Series III warrants
|
|
|
1,860,755
|
|
|
|
559,689
|
|
|
|
1,306,200
|
|
Warrants to placement agent
|
|
|
174,586
|
|
|
|
54,157
|
|
|
|
122,257
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
1,737,327
|
|
|
|
944,923
|
|
|
|
1,012,934
|
|
Warrants to placement agent
|
|
|
293,151
|
|
|
|
95,004
|
|
|
|
101,693
|
|
Total:
|
|
$
|
8,357,981
|
|
|
$
|
3,099,476
|
|
|
$
|
6,149,214
|
|
Number of Shares indexed:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
|
At transaction date
|
|
|||
December 18, 2007 financing
|
|
|
2,357,834
|
|
|
|
2,357,834
|
|
|
|
1,078,579
|
|
March 20, 2008 financing
|
|
|
281,065
|
|
|
|
281,065
|
|
|
|
128,572
|
|
June 5, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
2,222,222
|
|
Series II warrants
|
|
|
1,466,666
|
|
|
|
1,866,666
|
|
|
|
1,866,666
|
|
Series III warrants
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
|
|
1,555,555
|
|
Warrants to placement agent
|
|
|
142,857
|
|
|
|
142,857
|
|
|
|
142,857
|
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
1,328,333
|
|
|
|
2,125,334
|
|
|
|
2,125,334
|
|
Warrants to placement agent
|
|
|
245,932
|
|
|
|
245,932
|
|
|
|
245,932
|
|
Total:
|
|
|
7,378,242
|
|
|
|
8,575,243
|
|
|
|
9,365,717
|
|
3.
|
Warrants (restated) (cont’d)
|
December 18, 2007 financing:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.62
|
|
|
$
|
0.68
|
|
|
$
|
1.75
|
|
Estimated future volatility
|
|
|
101
|
%
|
|
|
102
|
%
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
0.19
|
%
|
|
|
0.47
|
%
|
|
|
3.27
|
%
|
Equivalent volatility
|
|
|
101
|
%
|
|
|
100
|
%
|
|
|
106
|
%
|
Equivalent risk-free rate
|
|
|
0.19
|
%
|
|
|
0.15
|
%
|
|
|
3.26
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
213,597
|
|
|
|
629,264
|
|
|
|
98,838
|
|
March 20, 2008 financing:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.62
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future volatility
|
|
|
108
|
%
|
|
|
132
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
0.41
|
%
|
|
|
0.47
|
%
|
|
|
1.95
|
%
|
Equivalent volatility
|
|
|
100
|
%
|
|
|
96
|
%
|
|
|
97
|
%
|
Equivalent risk-free rate
|
|
|
0.23
|
%
|
|
|
0.24
|
%
|
|
|
1.31
|
%
|
Estimated additional shares to be issued upon dilutive event
|
|
|
16,163
|
|
|
|
75,011
|
|
|
|
7,479
|
|
June 5, 2009 financing:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.62
|
|
|
$
|
0.68
|
|
|
$
|
1.14
|
|
Estimated future volatility
|
|
|
100
|
%
|
|
|
89-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
1.63-3.98
|
%
|
|
|
1.81-2.69
|
%
|
|
|
0.63-4.31
|
%
|
Equivalent volatility
|
|
|
105-106
|
%
|
|
|
91-95
|
%
|
|
|
103-117
|
%
|
Equivalent risk-free rate
|
|
|
0.49-1.02
|
%
|
|
|
0.58-1.11
|
%
|
|
|
.20-1.44
|
%
|
October 23, 2009 financing:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
|
At transaction date
|
|
|||
Trading market prices
|
|
$
|
1.62
|
|
|
$
|
0.68
|
|
|
$
|
0.69
|
|
Estimated future volatility
|
|
|
100
|
%
|
|
|
74-100
|
%
|
|
|
100
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
2.76-3.98
|
%
|
|
|
2.82-4.18
|
%
|
|
|
2.63-3.80
|
%
|
Equivalent volatility
|
|
|
103-106
|
%
|
|
|
95-96
|
%
|
|
|
98-99
|
%
|
Equivalent risk-free rate
|
|
|
0.80-1.11
|
%
|
|
|
0.86-1.27
|
%
|
|
|
.93-1.16
|
%
|
3.
|
Warrants (restated) (cont’d)
|
|
|
Three Months Ended March 31, 2010
|
|
|
Three Months Ended March 31, 2009
|
|
|
Cumulative from March 19, 2001 (Inception) to March 31, 2010
|
|
|||
December 18, 2007 financing
|
|
$
|
(1,678,319
|
)
|
|
$
|
105,365
|
|
|
$
|
(1,116,821
|
)
|
March 20, 2008 financing
|
|
|
(194,434
|
)
|
|
|
24,745
|
|
|
|
(108,269
|
)
|
June 5, 2009 financing:
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Series I warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
707,111
|
|
Series II warrants
|
|
|
(1,369,686
|
)
|
|
|
-
|
|
|
|
(564,033
|
)
|
Series III warrants
|
|
|
(1,301,066
|
)
|
|
|
-
|
|
|
|
(554,555
|
)
|
Warrants to placement agent
|
|
|
(120,429
|
)
|
|
|
-
|
|
|
|
(52,329
|
)
|
Derivative loss at inception
|
|
|
-
|
|
|
|
-
|
|
|
|
(328,937
|
)
|
October 23, 2009 financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to institutional investors
|
|
|
(1,698,124
|
)
|
|
|
-
|
|
|
|
(1,630,113
|
)
|
Warrants to placement agent
|
|
|
(198,147
|
)
|
|
|
-
|
|
|
|
(191,458
|
)
|
Total:
|
|
$
|
(6,560,205
|
)
|
|
$
|
130,110
|
|
|
$
|
(3,839,404
|
)
|
4.
|
Put Feature on Common Stock
|
4.
|
Put Feature on Common Stock (cont’d)
|
Fair Values:
|
|
March 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction
date
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,401,169
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
97,713
|
|
|
|
553,569
|
|
Total:
|
|
$
|
-
|
|
|
$
|
97,713
|
|
|
$
|
4,954,738
|
|
Number of Shares indexed:
|
|
March 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction
date
|
|
|||
December 18, 2007 financing
|
|
|
-
|
|
|
|
-
|
|
|
|
4,857,159
|
|
March 20, 2008 financing
|
|
|
-
|
|
|
|
642,858
|
|
|
|
642,858
|
|
Total:
|
|
|
-
|
|
|
|
642,858
|
|
|
|
5,500,017
|
|
4.
|
Put Feature on Common Stock (cont’d)
|
December 18, 2007 financing:
|
|
March 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction
date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.75
|
|
Estimated future stock price
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.98-1.73
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
-
|
|
|
|
143
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
-
|
|
|
|
3.14
|
%
|
March 20, 2008 financing:
|
|
March 31,
2010
|
|
|
December 31,
2009
|
|
|
At transaction
date
|
|
|||
Trading market prices
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
2.14
|
|
Estimated future stock price
|
|
|
-
|
|
|
$
|
0.68
|
|
|
$
|
1.36-2.10
|
|
Estimated future volatility
|
|
|
-
|
|
|
|
37
|
%
|
|
|
142
|
%
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Estimated future risk-free rate
|
|
|
-
|
|
|
|
0.06
|
%
|
|
|
1.85
|
%
|
|
|
Three Months Ended March 31, 2010
|
|
|
Three Months Ended March 31, 2009
|
|
|
Cumulative from March 19, 2001 (Inception) to March 31, 2010
|
|
|||
December 18, 2007 financing
|
|
$
|
-
|
|
|
$
|
330,603
|
|
|
$
|
2,148,418
|
|
March 20, 2008 financing
|
|
|
97,713
|
|
|
|
(2,183
|
)
|
|
|
167,121
|
|
Total:
|
|
$
|
97,713
|
|
|
$
|
328,420
|
|
|
$
|
2,135,539
|
|
5.
|
Common Stock (restated)
|
|
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.
|
|
vi)
|
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.
|
|
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 which occurred on May 13, 2005, (i) each share of the issued and outstanding common stock of Rexahn, Corp (“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 Corporate Road Show Com Inc. (“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. All shares and earnings per share information have been retroactively restated in these financial statements.
|
5.
|
Common Stock (restated) (cont’d)
|
|
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.
|
|
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.
|
|
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.
|
|
t)
|
On April 18, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $14,400 and the Company issued an aggregate of 18,000 shares.
|
|
u)
|
On July 23, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 15,000 shares.
|
|
v)
|
On September 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $15,600 and the Company issued an aggregate of 19,500 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
w)
|
On December 18, 2007, the Company issued 4,857,159 units at a price $1.40 per share for total gross proceeds of $6,800,023. Investors also were issued one warrant for every five shares purchased. One warrant will entitle the holder to purchase an additional share of common stock at a purchase price of $1.80 at any time over a period of three years from the date of the closing. The Company has recorded the warrants as liabilities at fair value in accordance with ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). Private placement closing costs of $139,675 were recorded as a reduction of the issuance proceeds. Private placement costs also consist of 107,144 warrants, valued at $138,326, and were recorded as a financing expense. The Company extended anti-dilutive protection to the investors. The anti-dilution protection provision is structured in a way that is designed to protect a holder’s position from being diluted and contains a price protection based on a mathematical calculation, and is recorded as a liability at fair value in accordance with ASC Topic 480. The Company revalues these liabilities each reporting period, with the unrealized gain (loss) recorded as other income (expense).
|
Gross Proceeds:
|
|
$
|
6,800,023
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,392,476
|
|
Put feature on common stock
|
|
|
4,401,169
|
|
Total allocated to liabilities
|
|
|
5,793,645
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
1,144,704
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(138,326
|
)
|
Total allocated gross proceeds:
|
|
$
|
6,800,023
|
|
|
x)
|
On December 27, 2007, an option holder exercised options to purchase shares of the Company’s common stock for cash of $18,000 and the Company issued an aggregate of 75,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
y)
|
On March 20, 2008, the Company issued 642,858 units consisting of one share of the Company’s common stock and one warrant for every five common shares purchased in a private placement at a price of $1.40 per unit for total gross proceeds of $900,001. One warrant will entitle the holder to purchase an additional share of common stock at a price of $1.80 at any time over a period of three years from the date of the private placement, and is recorded as a liability at fair value. The Company extended anti-dilution protection to investors, and the provision is structured in a way that is designed to protect the holder’s position from being diluted and contains a price based on a mathematical computation.
|
Gross Proceeds:
|
|
$
|
900,001
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
190,917
|
|
Put feature on common stock
|
|
|
553,569
|
|
Total allocated to liabilities
|
|
|
744,486
|
|
|
|
|
|
|
Allocated to common stock and additional paid-in capital
|
|
|
155,515
|
|
Total allocated gross proceeds:
|
|
$
|
900,001
|
|
|
z)
|
On May 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $7,200 and the Company issued an aggregate of 30,000 shares.
|
|
aa)
|
On June 2, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 50,000 shares.
|
|
ab)
|
On June 30, 2008, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000 and the Company issued an aggregate of 10,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
ac)
|
On June 5, 2009 the Company closed on a purchase agreement to issue 2,857,143 shares of common stock at a price of $1.05 per share to an institutional investor for total gross proceeds of $3,000,000 and incurred $289,090 of stock issuance costs. The investor was also issued:
|
|
1)
|
Series I warrants to purchase 2,222,222 shares of common stock at a purchase price of $1.05 per share at any time before September 3, 2009;
|
|
2)
|
Series II warrants to purchase 1,866,666 shares of common stock at a purchase price of $1.25 per share at any time from December 3, 2009 to June 5, 2012; and
|
|
3)
|
Series III warrants to purchase 1,555,555 shares of common stock at a purchase price of $1.50 per share at any time from December 3, 2009 to June 5, 2014.
|
Gross Proceeds:
|
|
$
|
3,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
3,451,194
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Derivative loss at inception
|
|
|
(328,937
|
)
|
Common stock and additional paid-in capital
|
|
|
-
|
|
Total allocated to equity:
|
|
|
(328,937
|
)
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(122,257
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
3,000,000
|
|
|
ad)
|
On June 9, 2009, the Company issued 1,833,341 shares of common stock and 862,246 warrants to purchase common stock at a purchase price of $1.05 per share to existing stockholders pursuant to the anti-dilution protection provisions of the private placements transacted on December 18, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $422,300.
|
|
ae)
|
On September 4, 2009, an option holder exercised options to purchase shares of the Company’s common stock for cash of $3,600 and the Company issued an aggregate of 15,000 shares.
|
5.
|
Common Stock (restated) (cont’d)
|
|
af)
|
On September 21, 2009, the Company issued 3,102,837 shares of common stock at a purchase price of $1.13 per share to an institutional investor for net proceeds of $3,371,340, which includes $128,659 of stock issuance costs.
|
|
ag)
|
On October 23, 2009, the Company closed on a purchase agreement to issue 6,072,383 shares of common stock at a price of $0.82 per share to five institutional investors for gross proceeds of $5,000,000, which includes $351,928 of stock issuance costs. The investors were also issued warrants to purchase 2,125,334 shares of common stock at a purchase price of $1.00 per share, exercisable on or after the date of delivery until the five-year anniversary, and were recorded as liabilities at fair value. The closing costs included 245,932 warrants valued at $101,693 and were recorded as a financing expense.
|
Gross Proceeds:
|
|
$
|
5,000,000
|
|
|
|
|
|
|
Allocated to liabilities:
|
|
|
|
|
Warrant liabilities
|
|
|
1,114,627
|
|
|
|
|
|
|
Allocated to equity:
|
|
|
|
|
Common stock and additional paid-in capital
|
|
|
3,987,066
|
|
|
|
|
|
|
Allocated to expense:
|
|
|
|
|
Financing expense
|
|
|
(101,693
|
)
|
|
|
|
|
|
Total allocated gross proceeds:
|
|
$
|
5,000,000
|
|
|
ah)
|
On October 23, 2009, the Company issued 2,018,143 shares of common stock and 569,502 warrants to purchase common stock at a purchase price of $0.82 per share to existing stockholders pursuant to anti-dilution protection provisions of the private placements transacted on December 24, 2007 and March 20, 2008. The issuance of additional warrants resulted in an increase in fair value of approximately $476,200.
|
5.
|
Common Stock (restated) (cont’d)
|
|
ai)
|
On February 12, 2010, the Company entered into two consulting agreements pursuant to which the Company issued 300,000 shares of common stock upon the execution of the agreements. Upon the extension of the term, 200,000 shares of common stock for each month will be issued until the termination of services.
|
Date of Issuance
|
|
Number of Shares Issued
|
|
|
Market Value Per Share
|
|
|
Total Market Value of Share Issuance
|
|
|||
February 12, 2010
|
|
|
300,000
|
|
|
$
|
1.22
|
|
|
$
|
366,000
|
|
|
aj)
|
In March 2010, warrant holders exercised warrants to purchase shares of Company’s common stock for cash of $1,297,001 and the Company issued an aggregate of 1,197,001 shares.
|
|
ak)
|
In March 2010, option holders exercised options to purchase shares of Company’s common stock for cash of $21,240 and the Company issued an aggregate of 48,000 shares.
|