Delaware
|
|
11-3516358
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
Large Accelerated Filer
|
¨
|
Accelerated Filer
|
¨
|
Non-Accelerated Filer
|
¨
|
Smaller reporting company
|
þ
|
(Do not check if a smaller reporting company)
|
|
Page
|
||
|
|
||
PART I
|
FINANCIAL INFORMATION
|
|
|
|
|
|
|
Item 1
|
Financial Statements
|
3
|
|
|
|
|
|
|
1)
|
3
|
|
|
|
|
|
|
2)
|
4
|
|
|
|
|
|
|
3)
|
5
|
|
|
|
|
|
|
4)
|
7
|
|
|
|
|
|
Item 2
|
41
|
||
|
|
|
|
Item 3
|
50
|
||
|
|
|
|
Item 4
|
50
|
||
|
|
|
|
PART II
|
OTHER INFORMATION
|
|
|
|
|
|
|
Item 1
|
51
|
||
|
|
|
|
Item 1A
|
51
|
||
|
|
|
|
Item 2
|
51
|
||
|
|
|
|
Item 3
|
51
|
||
|
|
|
|
Item 4
|
51
|
||
|
|
|
|
Item 5
|
52
|
||
|
|
|
|
Item 6
|
52
|
||
|
|
||
53
|
|
September 30, 2013
(unaudited)
|
December 31, 2012
|
||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
14,871,000
|
$
|
13,486,543
|
||||
Marketable securities (note 3)
|
100,000
|
100,000
|
||||||
Prepaid expenses and other current assets (note 4)
|
523,117
|
188,808
|
||||||
Total Current Assets
|
15,494,117
|
13,775,351
|
||||||
Restricted Cash Equivalents (note 16)
|
509,179
|
1,091,801
|
||||||
Equipment, Net (note 6)
|
70,419
|
52,156
|
||||||
Total Assets
|
$
|
16,073,715
|
$
|
14,919,308
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses (note 7)
|
$
|
750,242
|
$
|
851,837
|
||||
|
||||||||
Deferred Research and Development Arrangements (note 8)
|
1,165,429
|
1,626,000
|
||||||
|
||||||||
Other Liabilities (note 9)
|
114,588
|
65,417
|
||||||
|
||||||||
Warrant Liabilities (note 13)
|
4,192,216
|
2,842,065
|
||||||
|
||||||||
Total Liabilities
|
6,222,475
|
5,385,319
|
||||||
Commitments and Contingencies (note 16)
|
||||||||
Stockholders’ Equity (note 11):
|
||||||||
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, 134,457,144 and 119,443,194 issued and 134,442,939 and 119,428,989 outstanding
|
13,446
|
11,944
|
||||||
Additional paid-in capital
|
79,957,246
|
72,861,738
|
||||||
Accumulated deficit during the development stage
|
(70,091,042
|
)
|
(63,311,283
|
)
|
||||
Treasury stock, 14,205 shares, at cost
|
(28,410
|
)
|
(28,410
|
)
|
||||
|
||||||||
Total Stockholders’ Equity
|
9,851,240
|
9,533,989
|
||||||
|
||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
16,073,715
|
$
|
14,919,308
|
|
Cumulative
|
|||||||||||||||||||
|
from March 19,
|
|||||||||||||||||||
|
2001
|
|||||||||||||||||||
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
(Inception) to
September 30,
|
|||||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
2013
|
|||||||||||||||
Revenues:
|
||||||||||||||||||||
Research
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
||||||||||||||||||||
Expenses:
|
||||||||||||||||||||
General and administrative
|
932,762
|
600,242
|
3,001,460
|
2,071,008
|
33,061,604
|
|||||||||||||||
Research and development
|
781,281
|
1,066,245
|
2,258,877
|
3,127,201
|
37,537,376
|
|||||||||||||||
Patent fees
|
100,199
|
122,571
|
357,906
|
302,533
|
2,890,010
|
|||||||||||||||
Depreciation and amortization
|
9,645
|
10,721
|
28,196
|
32,163
|
711,119
|
|||||||||||||||
|
||||||||||||||||||||
Total Expenses
|
1,823,887
|
1,799,779
|
5,646,439
|
5,532,905
|
74,200,109
|
|||||||||||||||
|
||||||||||||||||||||
Loss from Operations
|
(1,823,887
|
)
|
(1,799,779
|
)
|
(5,646,439
|
)
|
(5,532,905
|
)
|
(74,200,109
|
)
|
||||||||||
|
||||||||||||||||||||
Other Income (Expense)
|
||||||||||||||||||||
Realized loss on marketable securities .
|
-
|
-
|
-
|
-
|
(13,301
|
)
|
||||||||||||||
Interest income
|
13,293
|
6,641
|
34,744
|
17,184
|
1,477,143
|
|||||||||||||||
Interest expense
|
-
|
-
|
-
|
-
|
(301,147
|
)
|
||||||||||||||
Other income
|
-
|
-
|
-
|
-
|
56,047
|
|||||||||||||||
Unrealized (loss)/gain on fair value of warrants
|
(217,751
|
)
|
(1,195,932
|
)
|
(1,055,505
|
)
|
(655,545
|
)
|
3,284,476
|
|||||||||||
Unrealized gain on fair value of put feature on common stock
|
-
|
-
|
-
|
-
|
2,315,539
|
|||||||||||||||
Financing expense
|
(112,559
|
)
|
-
|
(112,559
|
)
|
-
|
(1,084,690
|
)
|
||||||||||||
Beneficial conversion feature
|
-
|
-
|
-
|
-
|
(1,625,000
|
)
|
||||||||||||||
Total Other Income (Expense)
|
(317,017
|
)
|
(1,189,291
|
)
|
(1,133,320
|
)
|
(638,361
|
)
|
4,109,067
|
|||||||||||
|
||||||||||||||||||||
Loss Before Provision for Income Taxes
|
(2,140,904
|
)
|
(2,989,070
|
)
|
(6,779,759
|
)
|
(6,171,266
|
)
|
(70,091,042
|
)
|
||||||||||
Provision for income taxes
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net Loss
|
$
|
(2,140,904
|
)
|
$
|
(2,989,070
|
)
|
$
|
(6,779,759
|
)
|
$
|
(6,171,266
|
)
|
$
|
(70,091,042
|
)
|
|||||
|
||||||||||||||||||||
Net loss per share, basic and diluted
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
$
|
(0.06
|
)
|
$
|
(0.06
|
)
|
||||||||
|
||||||||||||||||||||
Weighted average number of shares outstanding, basic and diluted
|
130,466,114
|
95,345,656
|
123,188,044
|
95,345,656
|
|
Cumulative
|
|||||||||||
|
From March 19, 2001
|
|||||||||||
|
For the Nine Months Ended
|
(Inception) to
|
||||||||||
|
September 30,
|
September 30,
|
||||||||||
|
2013
|
2012
|
2013
|
|||||||||
Cash Flows from Operating Activities:
|
||||||||||||
Net loss
|
$
|
(6,779,759
|
)
|
$
|
(6,171,266
|
)
|
$
|
(70,091,042
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Beneficial conversion feature
|
-
|
-
|
1,625,000
|
|||||||||
Compensatory stock
|
200,800
|
-
|
2,330,677
|
|||||||||
Depreciation and amortization
|
28,196
|
32,163
|
711,119
|
|||||||||
Stock-based compensation
|
494,037
|
202,537
|
6,302,653
|
|||||||||
Amortization of deferred research and development arrangements
|
(460,571
|
)
|
(56,250
|
)
|
(1,260,571
|
)
|
||||||
Note receivable (Note 5)
|
-
|
18,682
|
-
|
|||||||||
Realized losses on marketable securities
|
-
|
-
|
13,301
|
|||||||||
Unrealized loss/(gain) on fair value of warrants
|
1,055,505
|
655,545
|
(3,284,476
|
)
|
||||||||
Unrealized gain on fair value of put feature on common stock
|
-
|
-
|
(2,315,539
|
)
|
||||||||
Financing expense
|
112,559
|
-
|
1,084,690
|
|||||||||
Amortization of deferred lease incentive
|
(13,111
|
)
|
(15,000
|
)
|
(83,111
|
)
|
||||||
Deferred lease expenses
|
7,622
|
(13,739
|
)
|
43,039
|
||||||||
Loss on impairment of intangible assets
|
-
|
-
|
286,132
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
(279,649
|
)
|
115,145
|
(468,457
|
)
|
|||||||
Accounts payable and accrued expenses
|
(101,595
|
)
|
(313,898
|
)
|
750,242
|
|||||||
Net Cash Used in Operating Activities
|
(5,735,966
|
)
|
(5,546,081
|
)
|
(64,356,343
|
)
|
||||||
Cash Flows from Investing Activities:
|
||||||||||||
Restricted cash equivalents
|
582,622
|
1,214,592
|
(509,179
|
)
|
||||||||
Purchase of equipment
|
(46,459
|
)
|
-
|
(611,454
|
)
|
|||||||
Purchase of marketable securities
|
-
|
-
|
(21,123,960
|
)
|
||||||||
Proceeds from sales of marketable securities
|
-
|
1,850,000
|
21,010,659
|
|||||||||
Payment of licensing fees
|
-
|
-
|
(356,216
|
)
|
||||||||
Net Cash Provided by (Used In) Investing Activities
|
536,163
|
3,064,592
|
(1,590,150
|
)
|
||||||||
Cash Flows from Financing Activities:
|
||||||||||||
Issuance of common stock and units, net of issuance costs
|
5,173,155
|
-
|
68,107,379
|
|||||||||
Proceeds from exercise of stock options
|
90,000
|
-
|
260,082
|
|||||||||
Proceeds from exercise of stock warrants
|
1,321,105
|
-
|
4,902,442
|
|||||||||
Proceeds from long-term debt
|
-
|
-
|
5,150,000
|
|||||||||
Proceeds from research and development arrangements
|
-
|
-
|
2,426,000
|
|||||||||
Purchase of treasury stock
|
-
|
-
|
(28,410
|
)
|
||||||||
Net Cash Provided by Financing Activities
|
6,584,260
|
-
|
80,817,493
|
|||||||||
Net Increase (Decrease)in Cash and Cash Equivalents
|
1,384,457
|
(2,481,489
|
)
|
14,871,000
|
||||||||
Cash and Cash Equivalents – beginning of period
|
13,486,543
|
9,861,488
|
-
|
|||||||||
Cash and Cash Equivalents - end of period
|
$
|
14,871,000
|
$
|
7,379,999
|
$
|
14,871,000
|
|
Cumulative
|
|||||||||||
|
From March 19, 2001
|
|||||||||||
|
For the Nine Months Ended
|
(Inception) to
|
||||||||||
|
September 30,
|
September 30,
|
||||||||||
|
2013
|
2012
|
2013
|
|||||||||
Supplemental Cash Flow Information
|
||||||||||||
Interest paid
|
$
|
-
|
$
|
-
|
$
|
301,147
|
||||||
Non-cash financing and investing activities:
|
||||||||||||
Warrants issued
|
$
|
1,406,441
|
$
|
-
|
$
|
15,098,084
|
||||||
Put feature on common stock issued
|
$
|
-
|
$
|
-
|
$
|
4,954,738
|
||||||
Dilutive issuances of common stock
|
$
|
-
|
$
|
-
|
$
|
2,639,199
|
||||||
Warrant liability extinguishment from exercise of warrants
|
$
|
1,111,795
|
$
|
-
|
$
|
7,292,455
|
||||||
Leasehold improvement incentive
|
$
|
54,660
|
$
|
-
|
$
|
154,660
|
||||||
Settlement of lawsuit
|
$
|
-
|
$
|
-
|
$
|
43,953
|
1.
|
Operations and Organization
|
2.
|
Recent Accounting Pronouncement Affecting the Company
|
3.
|
Marketable Securities
|
|
||||||||||||
|
Cost
|
Gross Unrealized
|
Fair
|
|||||||||
Securities available-for-sale
|
Basis
|
Gains/(Losses)
|
Value
|
|||||||||
September 30, 2013:
|
||||||||||||
State and municipal obligations
|
$
|
100,000
|
$
|
-
|
$
|
100,000
|
||||||
|
||||||||||||
December 31, 2012:
|
||||||||||||
State and municipal obligations
|
$
|
100,000
|
$
|
-
|
$
|
100,000
|
|
Cost
|
Fair
|
|||||||
Maturity
|
Basis
|
Value
|
|||||||
10 years or more
|
$
|
100,000
|
$
|
100,000
|
4.
|
Prepaid Expenses and Other Current Assets
|
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Deposits on contracts
|
$
|
35,490
|
$
|
12,818
|
||||
Other assets
|
487,627
|
175,990
|
||||||
|
||||||||
|
$
|
523,117
|
$
|
188,808
|
5.
|
Note Receivable
|
6.
|
Equipment, Net
|
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Furniture and fixtures
|
$
|
58,171
|
$
|
34,200
|
||||
Office equipment
|
39,024
|
81,074
|
||||||
Lab and computer equipment
|
425,195
|
430,261
|
||||||
Leasehold improvements
|
119,841
|
119,841
|
||||||
|
||||||||
Total fixed assets
|
642,231
|
665,376
|
||||||
Less: Accumulated depreciation
|
(571,812
|
)
|
(613,220
|
)
|
||||
|
||||||||
Net carrying amount
|
$
|
70,419
|
$
|
52,156
|
7.
|
Accounts Payable and Accrued Expenses
|
|
||||||||
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Trade payables
|
$
|
267,362
|
$
|
250,682
|
||||
Accrued expenses
|
21,693
|
76,289
|
||||||
Accrued research and development contract costs
|
290,002
|
452,577
|
||||||
Payroll liabilities
|
171,185
|
72,289
|
||||||
|
||||||||
|
$
|
750,242
|
$
|
851,837
|
8.
|
Deferred Research and Development Arrangements
|
9.
|
Other Liabilities
|
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Deferred lease incentive
|
$
|
154,660
|
$
|
100,000
|
||||
Less accumulated amortization
|
(83,111
|
)
|
(70,000
|
)
|
||||
|
||||||||
Balance
|
$
|
71,549
|
$
|
30,000
|
10. | Net Loss per Common Share |
11. | Common Stock |
a)
|
On May 10, 2001, the Company issued 3,600,000 shares of common stock to the Company’s founders for cash of $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 stockholders 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.
|
g)
|
On August 20, 2003, the Company issued 500,000 shares of common stock to KT&G Corporation for cash consideration of $2,000,000.
|
h)
|
On October 29, 2004, an option holder exercised options to purchase shares of 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 that 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 pre‑reverse stock split CRS 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 of 1993, as amended, 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 paid $7,500 in cash in exchange for legal services from W. Rosenstadt and Steve Sanders.
|
l)
|
On December 2, 2005, the holders of a convertible note that was issued on August 8, 2005 and, represented an aggregate principal amount of $1,300,000, 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 of 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.
|
w)
|
On December 18, 2007, the Company issued 4,857,159 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 $6,800,023. One warrant will entitle the holder to purchase an additional share of common stock at an exercise 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. Private placement closing costs of $139,675 were recorded as a reduction of the issuance proceeds. Private placements costs also consist of 107,144 warrants, valued at $138,326, and were recorded as a financing expense. The Company extended anti-dilution protection to investors. The anti-dilution protection provision is structured to protect a holder’s position from being diluted, contains a price protection based on a mathematical calculation, and is recorded as a liability at fair value. The Company revalues these liabilities each reporting period, with the unrealized (loss) gain recorded as other income (expense).
|
Gross Proceeds:
|
$
|
6,800,023
|
||
|
||||
Allocated to liabilities:
|
||||
Warrant liabilities
|
1,392,476
|
|||
Less: Warrants allocated to placement agent
|
(138,326
|
)
|
||
Put feature on common stock
|
4,401,169
|
|||
Total allocated to liabilities
|
5,655,319
|
|||
|
||||
Allocated to equity:
|
||||
Common stock and additional paid-in capital
|
1,144,704
|
|||
|
||||
|
||||
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.
|
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 an exercise 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. The Company extended anti-dilution protection to investors. The anti-dilution protection provision is structured to protect a holder’s position from being diluted, contains a price protection based on a mathematical calculation, and is recorded as a liability at fair value. The Company revalues these liabilities each reporting period, with the unrealized (loss)/gain recorded as other income (expense).
|
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.
|
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
|
|||
Less: Warrants allocated to placement agent
|
(122,257
|
)
|
||
Total allocated to liabilities
|
3,328,937
|
|||
|
||||
Allocated to equity:
|
||||
Common stock and additional paid-in capital
|
-
|
|||
|
||||
Allocated to expense:
|
||||
Derivative loss at inception
|
(328,937
|
)
|
||
|
||||
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 fair value of the additional warrants issued was 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.
|
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 an exercise 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
|
|||
Less: Warrants allocated to placement agent
|
(101,693
|
)
|
||
Total allocated to liabilities
|
1,012,934
|
|||
|
||||
Allocated to equity:
|
||||
Common stock and additional paid-in capital
|
3,987,066
|
|||
|
||||
|
||||
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 fair value of the additional warrants issued was 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
|
|||||||||
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 their warrants to purchase shares of the 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 the 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 the 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 the 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 the Company’s common stock and the Company issued an aggregate of 547,674 shares.
|
ao)
|
On June 30, 2010, the Company closed on 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, exercisable from date of delivery until the four-year anniversary of that date. These warrants were valued at $1,800,800 and recorded as liabilities at fair value. 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
|
|||
Less: Warrants allocated to placement agent
|
(180,080
|
)
|
||
Total allocated to liabilities
|
1,800,800
|
|||
|
||||
Allocated to equity:
|
||||
Common stock and additional paid-in capital
|
8,199,200
|
|||
|
||||
Total allocated gross proceeds:
|
$
|
10,000,000
|
ap)
|
In November 2010, warrant holders exercised 936,883 cashless warrants to obtain shares of the 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 the Company’s common stock, and the Company issued an aggregate of 126,195 shares.
|
ar)
|
On January 19, 2011, the Company issued 2,334,515 shares of common stock at a purchase price of $1.69 per share to an institutional investor for net proceeds of $3,926,397, which includes $23,603 of stock issuance costs.
|
as)
|
On February 15, 2011, a warrant holder exercised warrants to purchase shares of the Company’s common stock for cash of $215,104, and the Company issued 209,042 shares.
|
at)
|
On February 28, 2011, an option holder exercised options to purchase shares of the Company’s common stock for cash of $6,000, and the Company issued 25,000 shares.
|
au)
|
On March 11, 2011, an option holder exercised options to purchase shares of the Company’s common stock for cash of $12,000, and the Company issued 50,000 shares.
|
av)
|
On March 28, 2011, warrant holders exercised their warrants to purchase shares of the Company’s common stock for cash of $102,857, and the Company issued 124,917 shares.
|
aw)
|
On March 31, 2011, the Company closed on a purchase agreement to issue 8,333,333 shares of common stock at a price of $1.20 per share to five institutional investors for gross proceeds of $10,000,000, which includes $706,124 of cash stock issuance costs. The investors were also issued warrants to purchase 3,333,333 shares of common stock at an exercise price of $1.50 per share, exercisable on or after six months after the closing date until the five-year anniversary of the initial exercise date. These warrants were valued at $2,826,666 and recorded at fair value. The closing costs included 208,333 warrants valued at $97,667 and were recorded as a financing expense.
|
Gross Proceeds:
|
$
|
10,000,000
|
||
|
||||
Allocated to liabilities:
|
||||
Warrant liabilities
|
2,924,333
|
|||
Less: Warrants allocated to placement agent
|
(97,667
|
)
|
||
Total allocated to liabilities
|
2,826,666
|
|||
|
||||
Allocated to equity:
|
||||
Common stock and additional paid-in capital
|
7,173,334
|
|||
|
||||
Total allocated gross proceeds:
|
$
|
10,000,000
|
ax)
|
In September 2011, an option holder exercised options to purchase shares of the Company’s common stock for cash of $22,040, and the Company issued 28,000 shares.
|
ay)
|
In October 2011, an option holder exercised options to purchase shares of the Company’s common stock for cash of $19,200, and the Company issued 80,000 shares.
|
az)
|
On December 4, 2012 the Company closed on an underwritten public offering to issue and sell 19,130,435 shares of common stock and warrants to purchase up to 10,521,739 shares of common stock. The common stock and warrants were sold in units, consisting of common stock and a warrant to purchase 0.55 shares of common stock, at a price of $0.33 per share, and the warrants have an exercise price of $0.472 per share. Pursuant to the underwriting agreement, the Company granted the underwriters a 45-day option to purchase an additional 2,869,565 shares of common stock and warrants to purchase 1,578,261 shares of common stock. On December 4, 2012, the underwriters partially exercised this option, and 869,565 units, consisting of 869,565 shares and 478,261 warrants were issued. On December 10, 2012, the underwriters exercised the remaining overallotment option, and the Company issued 2,000,000 units, consisting of 2,000,000 shares and 1,100,000 warrants. The total gross proceeds of the offering were $7,260,000. The warrants issued are exercisable on the closing date until the five-year anniversary of the closing date, and were recorded as liabilities at fair value.
|
Gross Proceeds:
|
$
|
7,260,000
|
||
|
||||
Allocated to liabilities:
|
||||
Warrant liabilities
|
2,637,216
|
|||
Less: Warrants allocated to placement agent
|
(163,096
|
)
|
||
Total allocated to liabilities
|
2,474,120
|
|||
|
||||
|
||||
Allocated to equity:
|
||||
Common stock and additional paid-in capital
|
4,785,880
|
|||
|
||||
Total allocated gross proceeds:
|
$
|
7,260,000
|
ba)
|
On December 7, 2012, the Company issued 2,083,333 shares of common stock at a purchase price of $0.36 per share to an institutional investor for gross proceeds of $750,000. The total stock issuance costs were $63,658.
|
bb)
|
On May 10, 2013, the Company issued 120,000 shares of stock to a vendor in exchange for investor relations services. The market value of the stock issued was $0.31, and the total market value of the issuance was $37,200.
|
bc)
|
On June 10, 2013, the Company issued 200,000 shares of stock to a vendor in exchange for investor relations services. The market value of the stock issued was $0.50, and the total market value of the issuance was $100,000.
|
bd)
|
On June 21, 2013, a warrant holder exercised warrants to purchase shares of the Company’s common stock for cash of $26,739, and the Company issued 56,650 shares.
|
be)
|
In July, 2013 option holders exercised options to purchase shares of the Company’s common stock for cash of $36,000, and the Company issued 150,000 shares.
|
bf)
|
On July 26, 2013 the Company closed on a registered direct public offering to issue and sell 11,400,000 shares of common stock and warrants to purchase up to 3,990,000 shares of common stock. The common stock and warrants were sold in units, consisting of common stock and a warrant to purchase 0.35 shares of common stock, at a price of $0.50 per share, and the warrants have an exercise price of $0.59 per share. The total gross proceeds of the offering were $5,700,000. The warrants issued are exercisable beginning six months after the closing date until the five-year anniversary of the closing date, and were recorded as liabilities at fair value.
|
Gross Proceeds:
|
$
|
5,700,000
|
||
|
||||
Allocated to liabilities:
|
||||
Warrant liabilities
|
1,406,441
|
|||
Less: Warrants allocated to placement agent
|
(110,489
|
)
|
||
Total allocated to liabilities
|
1,295,952
|
|||
|
||||
|
||||
Allocated to equity:
|
||||
Common stock and additional paid-in capital
|
4,404,048
|
|||
|
||||
Total allocated gross proceeds:
|
$
|
5,700,000
|
bg)
|
In July 2013 warrant holders exercised warrants to purchase shares of the Company’s common stock for cash of $1,199,966 and the Company issued 2,542,300 shares.
|
bh)
|
On August 1, 2013, the Company issued 120,000 shares of stock to a vendor in exchange for investor relations services. The market value of the stock issued was $0.53, and the total market value of the issuance was $63,600.
|
bi)
|
In August, 2013 warrant holders exercised warrants to purchase shares of the Company’s common stock for cash of $94,400, and the Company issued 200,000 shares.
|
bj)
|
In September, 2013 option holders exercised options to purchase shares of the Company’s common stock for cash of $54,000, and the Company issued 225,000 shares.
|
12.
|
Stock-Based Compensation
|
|
Cumulative from
|
|||||||||||||||||||
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
March 19, 2001
(Inception) to
|
|||||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
September 30, 2013
|
|||||||||||||||
Statement of operations line item:
|
||||||||||||||||||||
General and administrative:
|
||||||||||||||||||||
Payroll
|
$
|
53,459
|
$
|
25,932
|
$
|
444,373
|
$
|
100,097
|
3,065,802
|
|||||||||||
Consulting and other professional fees
|
-
|
10,470
|
3,893
|
32,965
|
814,348
|
|||||||||||||||
Research and development:
|
||||||||||||||||||||
Payroll
|
12,043
|
18,973
|
41,611
|
59,940
|
1,089,668
|
|||||||||||||||
Consulting and other professional fees
|
2,213
|
5,236
|
4,160
|
9,535
|
1,332,835
|
|||||||||||||||
|
||||||||||||||||||||
Total
|
$
|
67,715
|
$
|
60,611
|
$
|
494,037
|
$
|
202,537
|
6,302,653
|
|
Nine Months Ended September 30,
|
|||||||
|
2013
|
2012
|
||||||
Black-Scholes weighted average assumptions
|
||||||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
||||
Expected volatility
|
94-96
|
%
|
99-101
|
%
|
||||
Risk free interest rate
|
0.75-1.39
|
%
|
0.62-0.89
|
%
|
||||
Expected term (in years)
|
5 years
|
5 years
|
|
2013
|
2012
|
||||||||||||||
|
Number of
Options
|
Weighted
Average Exercise
Price
|
Number of
Options
|
Weighted Average
Exercise Price
|
||||||||||||
Outstanding at
|
||||||||||||||||
January 1
|
7,741,795
|
$
|
1.03
|
7,646,795
|
$
|
1.05
|
||||||||||
Granted
|
2,425,000
|
0.39
|
245,000
|
0.41
|
||||||||||||
Exercised
|
(375,000
|
)
|
0.24
|
-
|
-
|
|||||||||||
Expired
|
(225,000
|
)
|
0.34
|
-
|
-
|
|||||||||||
Cancelled
|
(85,000
|
)
|
0.80
|
(150,000
|
)
|
1.15
|
||||||||||
|
||||||||||||||||
Outstanding at September 30
|
9,481,795
|
$
|
0.92
|
7,741,795
|
$
|
1.03
|
|
Number of
Options
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic Value
|
|||||||||
Outstanding at
|
|
||||||||||||
September 30, 2013
|
9,481,795
|
$
|
0.92
|
4.9 years
|
$
|
209,717
|
|||||||
|
|
||||||||||||
Exercisable at
|
|
||||||||||||
September 30, 2013
|
8,106,795
|
$
|
0.99
|
4.1 years
|
$
|
115,267
|
|||||||
|
|
||||||||||||
Outstanding at
|
|
||||||||||||
December 31, 2012
|
7,741,795
|
$
|
1.03
|
3.9 years
|
$
|
41,706
|
|||||||
|
|
||||||||||||
Exercisable at
|
|
||||||||||||
December 31, 2012
|
7,176,795
|
$
|
1.04
|
3.5 years
|
$
|
41,706
|
|
2013
|
|||||||
|
Number of
Options
|
Weighted
Average Fair Value at
Grant Date
|
||||||
Unvested at January 1, 2013
|
565,000
|
$
|
0.66
|
|||||
Granted
|
2,425,000
|
$
|
0.28
|
|||||
Vested
|
(1,597,500
|
)
|
$
|
0.36
|
||||
Cancelled
|
(17,500
|
)
|
$
|
0.36
|
||||
|
||||||||
Unvested at September 30, 2013
|
1,375,000
|
$
|
0.34
|
13.
|
Warrants
|
|
2013
|
2012
|
||||||||||||||
|
Number of
warrants
|
Weighted average
exercise price
|
Number of
warrants
|
Weighted average
exercise price
|
||||||||||||
Balance, January 1
|
21,656,142
|
$
|
0.89
|
8,676,142
|
$
|
1.53
|
||||||||||
Issued during the period
|
4,446,000
|
0.59
|
-
|
$
|
-
|
|||||||||||
Exercised during the period
|
(2,798,950
|
)
|
0.47
|
-
|
$
|
-
|
||||||||||
Expired during the period
|
(426,778
|
)
|
1.67
|
-
|
$
|
-
|
||||||||||
|
||||||||||||||||
Balance, September 30
|
22,876,414
|
$
|
0.87
|
8,676,142
|
$
|
1.53
|
|
Fair Value as of:
|
|||||||||||
Warrant Issuance:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
December 18, 2007 financing
|
$
|
-
|
$
|
-
|
$
|
1,392,476
|
||||||
March 20, 2008 financing
|
-
|
-
|
190,917
|
|||||||||
June 5, 2009 financing:
|
||||||||||||
Series I warrants
|
-
|
-
|
707,111
|
|||||||||
Series II warrants
|
-
|
-
|
1,315,626
|
|||||||||
Series III warrants
|
10,578
|
35,311
|
1,306,200
|
|||||||||
Warrants to placement agent
|
1,097
|
3,489
|
122,257
|
|||||||||
October 23, 2009 financing:
|
||||||||||||
Warrants to institutional investors
|
44,834
|
73,454
|
1,012,934
|
|||||||||
Warrants to placement agent
|
-
|
41
|
101,693
|
|||||||||
June 30, 2010 financing
|
||||||||||||
Warrants to institutional investors
|
7,800
|
12,200
|
1,800,800
|
|||||||||
Warrants to placement agent
|
-
|
20
|
180,080
|
|||||||||
March 31, 2011 financing:
|
||||||||||||
Warrants to institutional investors
|
359,667
|
306,333
|
2,826,666
|
|||||||||
Warrants to placement agent
|
-
|
83
|
97,667
|
|||||||||
December 4, 2012 financing:
|
||||||||||||
Warrants to institutional investors
|
2,453,617
|
2,263,910
|
2,474,120
|
|||||||||
Warrants to placement agent
|
207,592
|
147,224
|
163,096
|
|||||||||
July 26, 2013 financing:
|
||||||||||||
Warrants to institutional investors
|
1,023,036
|
-
|
1,295,952
|
|||||||||
Warrants to placement agent
|
83,995
|
-
|
110,489
|
|||||||||
Total:
|
$
|
4,192,216
|
$
|
2,842,065
|
$
|
15,098,084
|
|
Number of Shares indexed as of:
|
|||||||||||
Warrant Issuance
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
December 18, 2007 financing
|
-
|
-
|
1,078,579
|
|||||||||
March 20, 2008 financing
|
-
|
-
|
128,572
|
|||||||||
June 5, 2009 financing:
|
||||||||||||
Series I warrants
|
-
|
-
|
2,222,222
|
|||||||||
Series II warrants
|
-
|
-
|
1,866,666
|
|||||||||
Series III warrants
|
1,555,555
|
1,555,555
|
1,555,555
|
|||||||||
Warrants to placement agent
|
132,143
|
132,143
|
142,857
|
|||||||||
October 23, 2009 financing:
|
||||||||||||
Warrants to institutional investors
|
1,228,333
|
1,228,333
|
2,125,334
|
|||||||||
Warrants to placement agent
|
-
|
18,445
|
245,932
|
|||||||||
June 30, 2010 financing
|
||||||||||||
Warrants to institutional investors
|
2,000,000
|
2,000,000
|
2,000,000
|
|||||||||
Warrants to placement agent
|
-
|
200,000
|
200,000
|
|||||||||
March 31, 2011 financing:
|
||||||||||||
Warrants to institutional investors
|
3,333,333
|
3,333,333
|
3,333,333
|
|||||||||
Warrants to placement agent
|
-
|
208,333
|
208,333
|
|||||||||
December 4, 2012 financing:
|
||||||||||||
Warrants to institutional investors
|
9,301,050
|
12,100,000
|
12,100,000
|
|||||||||
Warrants to placement agent
|
880,000
|
880,000
|
880,000
|
|||||||||
July 26, 2013 financing:
|
||||||||||||
Warrants to institutional investors
|
3,990,000
|
-
|
3,990,000
|
|||||||||
Warrants to placement agent
|
456,000
|
-
|
456,000
|
|||||||||
Total:
|
22,876,414
|
21,656,142
|
32,533,383
|
December 18, 2007 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
-
|
$
|
-
|
$
|
1.75
|
||||||
Estimated future volatility
|
-
|
-
|
143
|
%
|
||||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
-
|
-
|
3.27
|
%
|
||||||||
Equivalent volatility
|
-
|
-
|
106
|
%
|
||||||||
Equivalent risk-free rate
|
-
|
-
|
3.26
|
%
|
||||||||
Estimated additional shares to be issued upon dilutive event
|
-
|
-
|
98,838
|
March 20, 2008 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
-
|
$
|
-
|
$
|
2.14
|
||||||
Estimated future volatility
|
-
|
-
|
142
|
%
|
||||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
-
|
-
|
1.95
|
%
|
||||||||
Equivalent volatility
|
-
|
-
|
97
|
%
|
||||||||
Equivalent risk-free rate
|
-
|
-
|
1.31
|
%
|
||||||||
Estimated additional shares to be issued upon dilutive event
|
-
|
-
|
7,479
|
June 5, 2009 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
0.45
|
$
|
0.31
|
$
|
1.14
|
||||||
Estimated future volatility
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
0.10
|
%
|
0.16
|
%
|
0.63-4.31
|
%
|
||||||
Equivalent volatility
|
79
|
%
|
92
|
%
|
103-117
|
%
|
||||||
Equivalent risk-free rate
|
0.03
|
%
|
0.11
|
%
|
0.20-1.44
|
%
|
October 23, 2009 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
0.45
|
$
|
0.31
|
$
|
0.69
|
||||||
Estimated future volatility
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
0.10
|
%
|
0.16-0.34
|
%
|
2.63-3.80
|
%
|
||||||
Equivalent volatility
|
73
|
%
|
74-93
|
%
|
98-99
|
%
|
||||||
Equivalent risk-free rate
|
0.05
|
%
|
0.06-0.13
|
%
|
0.93-1.16
|
%
|
June 30, 2010 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
0.45
|
$
|
0.31
|
$
|
1.43
|
||||||
Estimated future volatility
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
0.10
|
%
|
0.16-0.34
|
%
|
1.78
|
%
|
||||||
Equivalent volatility
|
73
|
%
|
74-75
|
%
|
98
|
%
|
||||||
Equivalent risk-free rate
|
0.05
|
%
|
0.06
|
%
|
0.59
|
%
|
March 31, 2011 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
0.45
|
$
|
0.31
|
$
|
1.18
|
||||||
Estimated future volatility
|
100
|
%
|
93-100
|
%
|
100
|
%
|
||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
1.23
|
%
|
0.16-0.58
|
%
|
1.32-3.64
|
%
|
||||||
Equivalent volatility
|
80
|
%
|
74-89
|
%
|
79-96
|
%
|
||||||
Equivalent risk-free rate
|
0.25
|
%
|
0.06-0.23
|
%
|
0.39-1.09
|
%
|
December 4, 2012 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
0.45
|
$
|
0.31
|
$
|
0.30-0.33
|
||||||
Estimated future volatility
|
71-100
|
%
|
85-100
|
%
|
100
|
%
|
||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
1.23-2.53
|
%
|
0.58-1.26
|
%
|
0.52-1.065
|
%
|
||||||
Equivalent volatility
|
80-81
|
%
|
88
|
%
|
88-90
|
%
|
||||||
Equivalent risk-free rate
|
0.20-0.32
|
%
|
0.21-0.32
|
%
|
0.22-0.31
|
%
|
July 26, 2013 financing:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
0.45
|
-
|
$
|
0.53
|
|||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Equivalent volatility
|
80
|
%
|
-
|
78-80
|
%
|
|||||||
Equivalent risk-free rate
|
0.23-0.50
|
%
|
-
|
0.20-0.48
|
%
|
|
Three Months Ended
September 30, 2013
|
Three Months Ended
September 30, 2012
|
||||||
December 18, 2007 financing
|
$
|
-
|
$
|
-
|
||||
March 20, 2008 financing
|
-
|
-
|
||||||
June 5, 2009 financing:
|
||||||||
Series I warrants
|
-
|
-
|
||||||
Series II warrants
|
-
|
-
|
||||||
Series III warrants
|
(5,336
|
)
|
(172,355
|
)
|
||||
Warrants to placement agent
|
(410
|
)
|
(16,121
|
)
|
||||
October 23, 2009 financing:
|
-
|
|||||||
Warrants to institutional investors
|
2,580
|
(176,511
|
)
|
|||||
Warrants to placement agent
|
-
|
(1,586
|
)
|
|||||
June 30, 2010 financing
|
||||||||
Warrants to institutional investors
|
(4,600
|
)
|
(187,200
|
)
|
||||
Warrants to placement agent
|
-
|
(7,200
|
)
|
|||||
March 31, 2011 financing:
|
||||||||
Warrants to institutional investors
|
(33,334
|
)
|
(624,000
|
)
|
||||
Warrants to placement agent
|
-
|
(10,959
|
)
|
|||||
December 4, 2012 financing:
|
||||||||
Warrants to institutional investors
|
(464,181
|
)
|
-
|
|||||
Warrants to placement agent
|
(11,880
|
)
|
-
|
|||||
July 26, 2013 financing:
|
||||||||
Warrants to institutional investors
|
272,916
|
-
|
||||||
Warrants to placement agent
|
26,494
|
-
|
||||||
Total:
|
$
|
(217,751
|
)
|
$
|
(1,195,932
|
)
|
|
Nine Months Ended
September 30, 2013
|
Nine Months Ended
September 30, 2012
|
Cumulative from
March 19, 2001
(Inception) to
September 30, 2013
|
|||||||||
December 18, 2007 financing
|
$
|
-
|
$
|
-
|
$
|
50,722
|
||||||
March 20, 2008 financing
|
-
|
-
|
160,063
|
|||||||||
June 5, 2009 financing:
|
||||||||||||
Series I warrants
|
-
|
-
|
707,111
|
|||||||||
Series II warrants
|
-
|
-
|
(2,191,175
|
)
|
||||||||
Series III warrants
|
24,733
|
(101,266
|
)
|
1,295,622
|
||||||||
Warrants to placement agent
|
2,392
|
(9,118
|
)
|
106,780
|
||||||||
Derivative loss at inception
|
-
|
-
|
(328,937
|
)
|
||||||||
October 23, 2009 financing:
|
||||||||||||
Warrants to institutional investors
|
28,620
|
(89,422
|
)
|
(81,140
|
)
|
|||||||
Warrants to placement agent
|
41
|
(1,016
|
)
|
(135,938
|
)
|
|||||||
June 30, 2010 financing
|
||||||||||||
Warrants to institutional investors
|
4,400
|
(112,600
|
)
|
1,793,000
|
||||||||
Warrants to placement agent
|
20
|
(5,060
|
)
|
180,080
|
||||||||
March 31, 2011 financing:
|
||||||||||||
Warrants to institutional investors
|
(53,334
|
)
|
(329,667
|
)
|
2,466,999
|
|||||||
Warrants to placement agent
|
83
|
(7,396
|
)
|
97,667
|
||||||||
December 4, 2012 financing:
|
||||||||||||
Warrants to institutional investors
|
(1,301,502
|
)
|
-
|
(1,091,292
|
)
|
|||||||
Warrants to placement agent
|
(60,368
|
)
|
-
|
(44,496
|
)
|
|||||||
July 26, 2013 financing:
|
||||||||||||
Warrants to institutional investors
|
272,916
|
-
|
272,916
|
|||||||||
Warrants to placement agent
|
26,494
|
-
|
26,494
|
|||||||||
Total:
|
$
|
(1,055,505
|
)
|
$
|
(655,545
|
)
|
$
|
3,284,476
|
14.
|
Put feature on Common Stock
|
Fair Values:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
December 18, 2007 financing
|
$
|
-
|
$
|
-
|
$
|
4,401,169
|
||||||
March 20, 2008 financing
|
-
|
-
|
553,569
|
|||||||||
Total:
|
$
|
-
|
$
|
-
|
$
|
4,954,738
|
Number of Shares indexed:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
December 18, 2007 financing
|
-
|
-
|
4,857,159
|
|||||||||
March 20, 2008 financing
|
-
|
-
|
642,858
|
|||||||||
Total:
|
-
|
-
|
5,500,017
|
December 18, 2007 financing:
|
September 30, 2013
|
December 31, 2012
|
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:
|
September 30, 2013
|
December 31, 2012
|
Transaction Date
|
|||||||||
Trading market prices
|
$
|
-
|
$
|
-
|
$
|
2.14
|
||||||
Estimated future stock price
|
-
|
-
|
$
|
1.36-$2.10
|
||||||||
Estimated future volatility
|
-
|
-
|
142
|
%
|
||||||||
Dividend
|
-
|
-
|
-
|
|||||||||
Estimated future risk-free rate
|
-
|
-
|
1.85
|
%
|
|
Three and Nine
Months Ended
September 30,
2013
|
Three and Nine
Months Ended
September 30,
2012
|
Cumulative from
March 19, 2001
(Inception) to
September 30, 2013
|
|||||||||
December 18, 2007 financing
|
$
|
-
|
$
|
-
|
$
|
2,148,418
|
||||||
March 20, 2008 financing
|
-
|
-
|
167,121
|
|||||||||
Total:
|
$
|
-
|
$
|
-
|
$
|
2,315,539
|
15.
|
Income Taxes
|
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Net Operating Loss Carryforwards
|
$
|
26,094,100
|
24,094,200
|
|||||
Stock Option Expense
|
2,000,400
|
1,843,000
|
||||||
Book tax differences on assets and liabilities
|
346,900
|
352,500
|
||||||
Valuation Allowance
|
(28,441,400
|
)
|
(26,289,700
|
)
|
||||
|
||||||||
Net Deferred Tax Assets
|
$
|
-
|
$
|
-
|
16.
|
Commitments and Contingencies
|
a)
|
The Company has contracted with various vendors for 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 two months to 36 months. The costs to be incurred are estimated and are subject to revision. As of September 30, 2013, the total estimated cost to be incurred under these agreements was approximately $21,511,134 and the Company had made payments totaling $19,482,775 since inception under the terms of the agreements. All of these agreements may be terminated by either party upon appropriate notice as stipulated in the respective agreements.
|
b)
|
The Company and four of its key executives currently have outstanding employment agreements,. The agreements result in annual commitments for each key executive of $330,000, $285,000, $250,000, and $250,000, respectively.
|
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 as of 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 September 30, 2013, the milestone has not occurred.
|
d)
|
On June 29, 2009, the Company signed a five year commercial lease agreement for 5,466 square feet of office space in Rockville, Maryland commencing on June 29, 2009. The lease agreement required annual base rent with increases over the next five years. Under the lease 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 three months ended September 30, 2013 and 2012, including the amendment terms described below, was $18,789 and $40,199, respectively. Rent paid under the Company’s lease during the nine months ended September 30, 2013 and 2012 was $99,187 and $118,636.
|
For the remaining three months ending December 31:
|
2013
|
$
|
18,789
|
||||
For the year ending December 31:
|
2014
|
139,675
|
|||||
|
2015
|
156,000
|
|||||
|
2016
|
159,881
|
|||||
|
2017
|
163,871
|
|||||
|
2018 and thereafter
|
252,994
|
|||||
|
|||||||
|
|||||||
|
Total
|
$
|
891,210
|
e)
|
On September 21, 2009, the Company closed on the Purchase Agreement with Teva, and contemporaneous with the execution and delivery of this agreement, the parties executed the RELO Agreement, pursuant to which the Company agreed to use proceeds from the issuance and sale of shares to Teva to fund a research and development program for the pre-clinical development of RX-3117. On December 27, 2012 the Company received $926,000 from Teva in accordance with a second amendment to the RELO Agreement, entered into on November 27, 2012 for the development of RX-3117. The Company did not issue equity for this transaction. On August 28, 2013, the Company announced that Teva had decided not to exercise its option to license RX-3117, and as a result the RELO Agreement was terminated. The remaining proceeds of $471,679, which is included in restricted cash equivalents at September 30, 2013 either will be used to pay for unbilled expenses or will be returned to Teva.
|
f)
|
The Company has established a 401(k) plan for its employees. The Company has elected to match 100% of the first 3% of an employee’s compensation plus 50% of an additional 2% of the employee’s deferral. Expense related to this matching contribution aggregated to $21,837 and $16,207 for the three months ended September 30, 2013, and 2012, respectively, and $60,084 and $52,545 for the nine months ended September 30, 2013 and 2012, respectively.
|
g)
|
On June 24, 2013 and May 30, 2012, the Company signed a one year renewal to use lab space commencing on July 1, 2013 and 2012, respectively. The lease requires monthly rental payments of $4,554. Rent paid under the Company’s lease during the three and nine months ended September 30, 2013 and 2012 was $13,662 and $27,324.
|
17.
|
Fair Value Measurements
|
Level 1 Inputs —
|
Unadjusted quoted prices in active markets for identical assets or liabilities that are 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, 2013
|
|||||||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Restricted Cash Equivalents
|
$
|
509,179
|
$
|
471,679
|
$
|
37,500
|
$
|
-
|
||||||||
Marketable Securities
|
100,000
|
100,000
|
-
|
-
|
||||||||||||
Total Assets:
|
$
|
609,179
|
$
|
571,679
|
$
|
37,500
|
$
|
-
|
||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Warrant Liabilities
|
$
|
4,192,216
|
-
|
-
|
$
|
4,192,216
|
|
Fair Value Measurements at December 31, 2012
|
|||||||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Restricted Cash Equivalents
|
$
|
1,091,801
|
$
|
1,054,301
|
$
|
37,500
|
$
|
-
|
||||||||
Marketable Securities
|
100,000
|
100,000
|
-
|
-
|
||||||||||||
Total Assets:
|
$
|
1,191,801
|
$
|
1,154,301
|
$
|
37,500
|
$
|
-
|
||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Warrant Liabilities
|
$
|
2,842,065
|
-
|
-
|
$
|
2,842,065
|
a)
|
Money market funds valued at the net asset value of shares held by the Company and 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 disclosed in Note 16, and classified within level 2 of the fair value hierarchy.
|
|
Warrant Liabilities
|
|||
Balance at January 1, 2013
|
$
|
2,842,065
|
||
Additions
|
1,406,441
|
|||
Unrealized losses, net
|
1,055,649
|
|||
Unrealized gains on expiration
|
(144
|
)
|
||
Transfers out of level 3
|
(1,111,795
|
)
|
||
Balance at September 30, 2013
|
$
|
4,192,216
|
|
Warrant Liabilities
|
|||
Balance at January 1, 2012
|
$
|
868,725
|
||
Additions
|
-
|
|||
Unrealized losses, net
|
655,545
|
|||
Unrealized gains on expiration
|
-
|
|||
Transfers out of level 3
|
-
|
|||
Balance at September 30, 2012
|
$
|
1,524,270
|
18.
|
Subsequent Events
|
· | our lack of profitability and the need for additional capital to operate our business; |
· | our ability to obtain the necessary U.S. and worldwide regulatory approvals for our drug candidates; |
· | successful and timely completion of clinical trials for our drug candidates; |
· | demand for and market acceptance of our drug candidates; |
· | the availability of qualified third-party researchers and manufacturers for our drug development programs; |
· | our ability to develop and obtain protection of our intellectual property; and |
· | Other risks and uncertainties, including those detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”). |
· | the progress of our product development activities; |
· | the number and scope of our product development programs; |
· | the progress of our pre-clinical and clinical trial activities; |
· | the progress of the development efforts of parties with whom we have entered into collaboration agreements; |
· | our ability to maintain current collaboration programs and to establish new collaboration arrangements; |
· | the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and |
· | the costs and timing of regulatory approvals. |
Exhibit No
|
Description
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) / 15d-14(a)
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) / 15d-14(a)
|
|
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101
|
The following materials from Rexahn Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q, formatted in Extensible Business Reporting Language (“XBRL”): i) Condensed Balance Sheet, ii) Condensed Statement of Operations, iii) Condensed Statement of Cash Flows and (iv) Notes to the Financial Statements.
|
|
|
REXAHN PHARMACEUTICALS, INC.
|
|
|
(Registrant)
|
|
|
|
|
By:
|
/s/ Peter D. Suzdak
|
Date: November 13, 2013
|
|
Peter D. Suzdak
|
|
|
Chief Executive Officer
(principal executive officer)
|
|
|
|
|
By:
|
/s/ Tae Heum Jeong
|
Date: November 13, 2013
|
|
Tae Heum Jeong
|
|
|
Chief Financial Officer and Secretary
(principal financial and accounting officer)
|
Exhibit No
|
Description
|
Location
|
|
|
|
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) / 15d-14(a)
|
Filed herewith
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) / 15d-14(a)
|
Filed herewith
|
|
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
|
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
Filed herewith
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
Filed herewith
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
Filed herewith
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
Filed herewith
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
Filed herewith
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
Filed herewith
|