Item 6 together with our financial
statements and notes thereto that appear elsewhere in this Annual Report. This
Annual Report contains forward-looking statements that involve risks,
uncertainties, and assumptions. Actual results may differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including, but not limited to, those presented under “Risk Factors “ included in
Item 1 and elsewhere in this Annual Report.
Overview
Since
our
inception in 2001, we have been in the business of selling nutritional products.
As a result of the entering into of a license agreement with Vitae, we spun
off
this business and began to pursue a new business plan in the pharmaceuticals
industry.
On
or
about May 16, 2007, we raised approximately $20,000,000 from a small group
of
accredited investors from the sale of 40,000,000 shares of common stock at
a
price of $.50 per share in a private placement offering. Hunter World Markets,
Inc. acted as the exclusive placement agent in the private placement offering,
and received a fee of $2,000,000 (10% of the gross proceeds) and a warrant
to
purchase 12,000,000 shares of the Company’s common stock, which is exercisable
at $1.00 per share, commencing February 18, 2008 and expiring May 16, 2013.
The
private placement provides price protection to the accredited investors for
one
year from the effective date of the Form SB-2 registration statement (July
18, 2007) for the 40,000,000 shares issued sold in the offering. If the Company
issues additional shares at a price less than $.50 per share for financing
purposes, then the accredited investors may purchase, at par value, such
additional number of shares so that their effective purchase price per share
is
the same per share purchase price of the additional shares sold.
In
connection with the private offering, stockholders who had acquired our common
stock prior to April 27, 2007 canceled an aggregate of 7,759,000 shares of
common stock in consideration for an aggregate amount of $750,000. In connection
with the private placement offering, Hunter World loaned us $125,000 at an
interest rate of 6% per annum. This loan together with accrued interest and
a
loan fee of $12,500 was repaid from the proceeds of the private
placement.
In
connection with the private placement offering, on or about May 30, 2007, we
issued and sold to the Baradaran Revocable Trust 500,000 shares of our common
stock for $0.50 per share, for an aggregate purchase price of $250,000. On
or
about June 25, 2007, we issued and sold to City National Bank, Trustee FBO
Harin
Padma-Nathan, 500,000 shares of common stock for $0.50 per share, for an
aggregate purchase price of $250,000. In connection with the sale of these
securities, Hunter World Markets received a placement agent fee of $12,500
and
six-year warrants to purchase 300,000 shares of common stock, exercisable at
$1.00 per share
On
May
11, 2007, we entered into a license agreement with Vitae, pursuant to which
we
acquired an exclusive, worldwide sublicense, with the right to grant further
sublicenses, to certain compounds and technology for all human and veterinary
use. The indications for the lead compounds are acute promyelocytic leukemia,
solid cancers (lung and breast) and chemotherapy-induced neutropenia (low white
cell count). On October 31, 2007, we received approval from the FDA for our
IND
application to initiate clinical studies with our compound for the treatment
of
solid cancers. As a result of this milestone achievement, we are obligated
to
issue to Vitae 7,026,927 shares of common stock representing 5.66% of our
outstanding common stock (after the issuance of these shares) as of the
effective date of the license.
We
currently are in active research and clinical development of therapeutic
compounds relating to our nuclear receptor target technologies.
Plan
of Operation
Beginning
May 1, 2007, we have begun to pursue a new business plan in the pharmaceuticals
industry. Our prior history is not indicative of the new business. We expect
to
incur significant research, development and administrative expenses before
any
of our products from our new business can be launched and revenues generated.
During
the period inception (May 1, 2007) through ended September 30, 2007, our
activities included completing the acquisition and transfer of the patents,
patent applications, compounds and related materials pursuant to the license
agreement with Vitae, securing leased premises in which to conduct our research
and development activities, and submission of an application for an IND with
the
FDA for our compound for the treatment of solid cancers, which was granted
on
October 31, 2007. We expect to enter Phase I clinical trials for this compound
early in 2008.
For
the
year ended September 30, 2007 and for period from inception (May 1, 2007)
through September 30, 2007, we incurred a loss from continuing operations of
$2,954,723 and a net loss of $130,654 from discontinued operations.
For
the
year ended September 30, 2007 and for period from inception (May 1, 2007)
through September 30, 2007, total operating expenses were $3,205,745, including
$818,596 in general and administrative costs and $2,387,149 in research and
clinical development costs. General and administrative costs consisted of
$207,598 in compensation costs, employee benefits and related payroll taxes
(including stock based compensation of $65,829), $176,779 in general legal
and
accounting fees, $164,523 in intellectual property legal fees and maintenance
costs, $154,700 in consulting fees, and $114,996 in other operating expenses.
Research and development costs included $2,150,000 in-process research and
development costs incurred in connection with the Vitae license, $187,737 in
research and development salaries and $51,412 in outside product development
expenses.
For
the
year ended September 30, 2007 and for period from inception (May 1, 2007)
through September 30, 2007 we also generated $251,022 in interest income, net
of
$12,625 in interest expense.
We
believe that the total aggregate net amount of approximately $18,500,000 raised
in the recent private placement offering provides us with sufficient funds
for
clinical development and operations through May 2009. We believe that the
intellectual property and compounds we have licensed from Vitae have significant
potential in leading to individualized cancer therapies and the Company will
focus on these therapies. These therapies would be based on the retinoid and
rexinoid classes of compounds. Retinoids and rexinoids are small molecule
hormones that elicit their biological effects by binding to and regulating
the
function of two distinct families of nuclear receptors, the Retinoic Acid
Receptors (RARs) and Retinoid X Receptors (RXRs), respectively. Each family
consists of three distinct subtypes which separately mediate a broad range
of
physiological functions including cell differentiation, proliferation and
apoptosis, bone and cartilage formation and lipid metabolism. Although this
biology enables the potential therapeutic application of the retinoid and
rexinoid classes of drugs in many diseases, the currently used, non-selective
compounds are not suitable because of complicating toxic effects. A next
generation of retinoid and rexinoid drugs that have receptor subtype and
functional selectivity are required to unlock the full therapeutic value of
these compounds. The portfolio of compounds acquired through the license
agreement with Vitae has been developed for this receptor and functional
selectivity and contains three lead “next generation” compounds. We are in
active research and development of these three lead compounds, two of which
are
in the clinical stage of development and one in the preclinical discovery stage.
The
first
compound will enter a Phase II study for the treatment of acute promyelocytic
leukemia. Based on patent protection which specifically covers it as a new
chemical entity (“NCE”), the Company believes that this compound has a generic
competition-free product life until 2020.
The
second lead compound will be tested for safety in cancer patients followed
by
efficacy studies in some of the most common cancers, including lung and breast
cancer. On October 31, 2007, the FDA granted the Company’s IND application for
this compound permitting it to move into the Phase I stage of clinical
development and the initial study will characterize its safety, pharmacokinetics
and pharmacology in advanced cancer patients. Based on patent protection which
covers it as a NCE, the Company believes that this compound has a generic
competition-free product life until 2015. Additional patents for specific
methods of use of this compound could extend the product life of the compound
until 2026.
The
third
lead compound is derived from a discovery program directed towards treatments
for chemotherapy-induced neutropenia (low white cell count). This program is
intended to evaluate and develop a lead compound as therapy to reduce the
toxicity of chemotherapy; in particular, diminish the risk of infection as
consequence of reduction in white blood cell count. Two patents cover this
compound as a NCE and the Company believes these patents will provide a product
life free of generic competition till 2016. However, another patent covers
the
method of use of this compound in treating chemotherapy-induced neutropenia,
and
this patent, if issued, could extend the product life of this compound till
2026.
Preclinical
pharmacology studies, including extensive studies in animal models, using the
above lead compounds as well as other compounds from our library have identified
alternate therapeutic targets for retinoids and rexinoids including the
following:
|
·
|
Spinal
fusion
|
|
·
|
Osteoarthritis
|
|
·
|
Hypertriglyceridemia
|
|
·
|
Diabetes
|
Development
activities in these areas are outsourced and are at the preclinical discovery
stage.
We
currently have 6 employees, 2 of whom are part time. We do not expect
significant changes in the number of our employees over the next
year.
Revenues
We
had no
revenues related to our new pharmaceuticals business and we do not anticipate
that we will derive any revenues from either product sales or licensing during
the foreseeable future. We have no R&D co-development or other agreements
which provide for future revenue or obligations to transfer rights to any of
our
intellectual property to third parties. We have agreed to pay Allergan and
Vitae
up to 12% of future net sales of products based on the licensed
technology.
During
the fiscal year ending September 30, 2007, we generated a net loss of $130,654
from discontinued operations.
Liquidity
and Capital Resources
As
of
September 30, 2007, we had $14,941,723 of cash and cash equivalents. We have
no
significant capital expenditure requirements as of September 30,
2007.
We
believe that available cash resources are likely to be sufficient to meet
anticipated working capital requirements through May 2009. However, we
may seek additional funding for possible acquisitions, expansion of existing
operations or other purposes. Should we seek to raise additional capital, there
can be no assurances that such capital can be raised on satisfactory terms,
on a
timely basis, or at all.
Critical
Accounting Policies
Management’s
discussion and analysis of our financial condition and results of operations
are
based on our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues
and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, management evaluates its estimates, including those related
to
impairment of long-lived assets, including finite lived intangible assets,
accrued liabilities and certain expenses. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ materially from
these estimates under different assumptions or conditions.
Development
Stage Enterprise
We
are a
development stage enterprise as defined by the Financial Accounting Standards
Board’s (“FASB”)
Statement of Financial Accounting Standards (“SFAS”)
No. 7,
“Accounting and Reporting by Development Stage Enterprises.” We are devoting
substantially all of our present efforts to research and development. All losses
accumulated will be considered as part of our development stage activities.
Research
and Development Costs
Although
we believe that our research and development activities and underlying
technologies have continuing value, the amount of future benefits to be derived
from them is uncertain. Furthermore, our development activities are in the
pre-clinical discovery stage. Research and development costs will therefore
be
expensed as incurred.
Stock-Based
Compensation
In
December 2004, the FASB issued SFAS 123R, Share Based Payment (SFAS 123R).
This
statement requires that the cost resulting from all share-based payment
transactions be recognized in our financial statements. In addition, in March
2005 the SEC (the “SEC”)
released SEC Staff Accounting Bulletin No. 107, Share-Based Payment (SAB 107).
SAB 107 provides the SEC staff’s position regarding the application of SFAS 123R
and certain SEC rules and regulations, and also provides the SEC staff’s views
regarding the valuation of share-based payment arrangements for public
companies. However, SFAS 123R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the statement
of
operations based on their fair values.
Off-Balance
Sheet Arrangements
We
are
not a party to any off-balance sheet arrangements, and we do not engage in
trading activities involving non-exchange traded contracts. In addition, we
have
no financial guarantees, debt or lease agreements or other arrangements that
could trigger a requirement for an early payment or that could change the value
of our assets.
|
ITEM
7.
|
FINANCIAL
STATEMENTS
|
Our
financial statements and notes thereto and the related reports of Gumbiner
Savett, Inc. (“Gumbiner Savett”) and Jones Simkins, P.C. are attached to this
Annual Report beginning at page F-1 and are incorporated herein by
reference.
|
ITEM
8.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
Effective
June 4, 2007, the Board of Directors of the Company dismissed Jones
Simkins, P.C. (“Jones Simkins”) as
the
Company’s independent accountant.
Jones
Simkins served as our principal independent accountant from our inception on
August 14, 2001, through June 4, 2007. No report of Jones Simkins on our
financial statements for either of the past two years contained an adverse
opinion or a disclaimer of opinion, or was modified as to uncertainty, audit
scope, or accounting principle. Since August 14, 2001 and through June 4, 2007:
(i) we had no disagreements with Jones Simkins on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or
procedure, which, if not resolved to the satisfaction of Jones Simkins, would
have caused it to make reference to the subject matter of the disagreement
in
connection with its report; and (ii) Jones Simkins did not advise us of any
of
the events requiring reporting.
Effective
June 4, 2007, we engaged Gumbiner Savett as our independent accountant to audit
our financial statements for our fiscal year ending September 30, 2007. Our
Board of Directors approved the appointment of Gumbiner Savett. Prior to such
engagement, we did not consult with Gumbiner Savett regarding either (i) the
application of accounting principles to a specific, completed or contemplated
transaction, or the type of audit opinion that might be rendered on the
Company’s financial statements, and neither a written report nor advice was
provided to the Company that the Company concluded was an important factor
considered by the Company in reaching a decision as to the accounting, auditing
or financial reporting issue, or (ii) any matter that was the subject of a
disagreement.
|
ITEM
8A.
|
CONTROLS
AND PROCEDURES
|
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms and that such information is accumulated and communicated
to this Company’s management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow for timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management is required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.
As
required by SEC Rule 13a-15(b), we carried out an evaluation, under the
supervision and with the participation of the Company’s management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness
of
the design and operation of our disclosure controls and procedures as of the
end
of the quarter covered by this Annual Report. Based on the foregoing, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are not effective to ensure the information required
to
be disclosed in our reports filed or submitted under the Exchange Act is timely
recorded, processed and reported within the time periods specified in the SEC
rules and forms. Based on the limited number of employees, the Company is unable
to segregate accounting procedures over financial activities to provide adequate
internal controls.
|
ITEM
8B.
|
OTHER
INFORMATION
|
None.
PART
III
|
ITEM
9.
|
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION
16(a) OF THE EXCHANGE ACT
|
Executive
Officers and Directors
The
following table sets forth the name, age and position held by each of our
executive officers and directors. Directors are elected for a period of one
year
and thereafter serve until the next annual meeting at which their successors
are
duly elected by the stockholders.
|
Name
|
Age
|
Position
|
||
|
Kurt
Brendlinger
|
|
Director,
Chairman of the Board
|
||
|
Harin
Padma-Nathan
|
|
Director,
President and Chief Executive Officer
|
||
|
Parkash
Gill
|
|
Director
|
||
|
Sharyar
Baradaran
|
|
Director
and Secretary
|
||
|
Matt
Borenzweig
|
|
Director
|
||
|
Steven
Gershick
|
|
Chief
Financial Officer
|
Business
Experience and Directorships
The
following describes the backgrounds of current executive officers and directors.
There are no family relationships among any of our directors or
officers.
Harin
Padma-Nathan
has been
our president and Chief Executive Officer since May 2007 and has served as
a
director since June 2007. He also has been Chief Scientific Officer at Insyght
Interactive, a medical communications company, since 2004. Dr. Padma-Nathan
has been a Clinical Professor of Urology at the Keck School of Medicine of
the
University of Southern California since 1995, and has also been involved in
numerous clinical research studies from 1994 to 2006, including erectile
dysfunction (Principal Investigator for Viagra as well as other compounds listed
in CV), Hypertension, BPH, Incontinence, Coronary Artery Disease, Female Sexual
Dysfunction, and Prostate Cancer. His publications include two in the
New
England Journal of Medicine.
Kurt
Brendlinger
has been
a director and our Chairman of the Board of Directors since April 2007. He
also
has been a partner of Santa Monica Capital Partners, LLC, a consulting firm
where he is responsible for corporate and business development and
strategy, capital raising, and seeking investment opportunities since
June 2005. Mr. Brendlinger is also a Managing Director of Aaron Fleck &
Associates, LLC, a registered investment advisor where he is responsible for
deal sourcing, capital raising, venture capital and private equity investments
and asset management, since July 2004. From January 2002 to June 2004,
Mr. Brendlinger was Chief Executive Officer and President of Rainmakers,
Inc., an internet marketing services company for the entertainment industry
and
currently serves as its Chief Executive Officer. Since June 2005, Mr.
Brendlinger has been the Chief Financial Officer and a director of Santa Monica
Media Corporation (AMEX.MEJ), a blank check company formed for the purpose
of
effecting a merger, capital stock exchange, asset or stock acquisition or other
similar business combination with an operating business in the communications,
media, gaming and/or entertainment industries. Since October 2006,
Mr. Brendlinger has been the Secretary and a director of ProElite, Inc.
(PETE.PK), a company that conducts a mixed martial arts business both live
and
on line.
Parkash
Gill has
been
a director since June 2007. He also has been a Professor of Medicine
(Hematology, Oncology and Pathology) at the University of Southern California
Keck School of Medicine since July 1999, where he holds an endowed chair in
Cancer Therapeutics since July 2005. He has been scientific advisor to
Vasgene since 2002, and chairman of the scientific advisory board of
Mesothelioma Research Foundation since its inception in 2001. He is an author
of
nearly 200 research publications in oncology. Dr. Gill has also demonstrated
entrepreneurial translation of his research into viable companies, most recently
Vasgene Therapeutics.
Sharyar
Baradaran
has been
a director since June 2007. He also has
served as Chief Executive Officer and chairman of BaradaranVentures, a privately
held investment fund located in Los Angeles, California since January 2001.
Since November 2003, Dr. Baradaran has served on the board of directors of
InnerWorkings Inc., (NASDAQ - INWK), a leading provider of print and related
procurement services to corporate clients utilizing a propriety technology
and
database creating a competitive bid process to procure, purchase and deliver
printed products as part of a comprehensive outsourced enterprise solution
and
in individual transactions. Dr. Baradaran has served on the board of
directors of Rainmakers, Inc., an Internet marketing services company for the
entertainment industry from November 2002 until the present, on the board of
directors of MOTA Inc., an Internet-based, used-vehicle remarketing solution
to
transact pre-owned cars on line from September 2005 until the present. From
June
2002 until December 2004, and subsequently from August, 2006 to the present,
Dr. Baradaran served on the advisory board of ISENSIX Inc., a propriety
wireless and web-based system providing safety/quality management solutions
for
vital systems in hospital, blood bank, and clinical laboratories.
Dr. Baradaran has been engaged as a consultant and on the advisory board of
Echo Global Logistics Inc., a transportation management firm providing superior
cost savings technology and services for companies ranging from small
enterprises to the Fortune 100, from August 2005 until the present. Since April
2006, Dr. Baradaran has been a director of Santa Monica Media Corporation
(AMEX.MEJ), a blank check company formed for the purpose of effecting a merger,
capital stock exchange, asset or stock acquisition or other similar business
combination with an operating business in the communications, media, gaming
and/or entertainment industries. Dr. Baradaran also served on the advisory
board of KIYON Inc., a provider of autonomic mesh networking products,
technology and services for wireless and wired markets, from December 2003
until
September 2005.
Matt
Borenzweig
has
served as a director since November 2007. Mr.
Borenzweig has been senior vice president of sales and marketing at Cardiomems,
Inc. since 2006. Prior to that position, he served as Vice President U.S. Sales,
Endovascular at Medtronic Vascular, a position he held since 2000.
Steven
Gershick
was
appointed as the Chief Financial Officer of the Company by the Board of
Directors in September 2007. Mr. Gershick has served as a consultant to the
Company since June 2007. Mr. Gershick will serve the Company on a part-time
and non-exclusive basis. Mr. Gershick is also the Chief Financial Officer
of Santa Monica Capital Partners and a financial and securities regulation
consultant to Santa Monica Media Corporation. Prior to such positions, he served
as Chief Financial Officer of PrimeGen Biotech, LLC, a stem cell research
company, since 2004, and as a financial and securities regulation consultant
for
St. Cloud Capital Partners, LP, an SBIC providing mezzanine financing to middle
market companies, since 2006. From 2002 until 2005, Mr. Gershick served as
a
financial and securities regulations consultant for Amazing Global
Technologies, Ltd. and as Chief Financial Officer of Case Financial, Inc.
Prior to such engagements, Mr. Gershick served as President and
Chief
Executive Officer of Spatializer Audio Laboratories, Inc. and its operating
subsidiaries from 1992 to 1998. Mr. Gershick has been a certified public
accountant since 1979.
Business
Experience of Key Employee
Rosh
Chandraratna,
age 59,
has been our Chief Scientific Officer since May 2007. He also has served in
various research and development positions at Allergan, Inc., including Vice
President, Retinoid Research, from 1984 to May 2004, where he directed a
multidisciplinary group focused on drug discovery research primarily in the
areas of dermatology, oncology and metabolic disease. Dr. Chandraratna is the
sole inventor of tazarotene (Tazorac, Avage), and he led the Tazarotene
Development Team from its inception through successful NDA and global regulatory
filings. In addition to tazarotene, he is an inventor of five other drugs which
are currently in human clinical trial or preclinical development. Dr.
Chandraratna was subsequently Senior Vice President, R&D, at Vitae
Pharmaceuticals, Inc. from May 2004 until September, 2006, where he led research
and development efforts in the cancer, cancer supportive care and dermatology
areas, and brought 3 compounds into clinical development. Prior to joining
us,
Dr. Chandraratna was Senior Vice President, R&D at Acucela from September
2006 to May, 2007, where he led all discovery research, preclinical development
and clinical development activities in ophthalmology with particular emphasis
on
blinding retinal degenerative diseases. Dr. Chandraratna has published over
150
research articles and is an inventor on over 200 issued U.S.
Patents.
Committees
of the Board
Audit
Committee
We
do not
presently have an audit committee. The Board of Directors acts in that capacity
and has determined that we do not currently have an audit committee financial
expert serving on our audit committee or Board of Directors. Because of the
relatively small size of our Board of Directors and our Company, we believe
that
a financial expert is unnecessary to monitor our financial operations and it
is
in the best interest of the Company for all the members of the Board of
Directors to be involved in the duties that would be performed by an audit
committee.
Scientific
Board
We
have
established a Scientific Board to assist our management in the areas of
expertise of the members of our Scientific Board. Dr. Gill has been
appointed the Chairman of our Scientific Board, and with Dr. Gill, we are
in the process of identifying and recruiting other individuals to serve on
this
board.
Code
of Ethics
We
have a
code of ethics and insider trading policy that applies to our directors,
officers and employees. A copy of the Company’s Code of Ethics is attached to
this Annual Report as an exhibit and incorporated herein by reference. We also
will provide without charge a copy of the code of ethics to any person who
so
requests by a letter addressed to the Corporate Secretary, NuRx Pharmaceuticals,
Inc., 18 Technology, Suite 130, Irvine, California 92618.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our directors and executive officers, and persons
who own more than 10% of the outstanding shares of our common
stock
(collectively, “Reporting Persons”) to file reports of ownership and changes in
ownership with the SEC. Reporting Persons are required by SEC regulations to
furnish us with copies of all Section 16(a) forms that they file.
Based
solely on our review of the copies of such forms received or written
representations from the Reporting Persons, we believe that, with respect to
the
fiscal year ended September 30, 2007, all other Reporting Persons complied
with
all applicable Section 16 filing requirements on a timely basis except that
the initial filings for Dr. Padma-Nathan, Dr. Baradaran, Absolute Return Europe
Fund and Absolute Octane Fund were not filed on a timely basis. To the Company’s
knowledge, there were no other late reports of any transactions by these
filers.
|
ITEM
10.
|
EXECUTIVE
COMPENSATION
|
Compensation
of Executive Officers
The
following table summarizes compensation paid or, or earned by our Chief
Executive Officer and the Chief Financial Officer. No other officer received
annual compensation in excess of $100,000 for the fiscal year ended September
30, 2007.
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($)(1)
|
Non-Equity
Incentive Plan Compensation
($)
|
Non-qualified
Deferred Compensation Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||
|
Harin
Padma-Nathan, Chief Executive Officer (2)
|
|
$
|
65,385
|
—
|
$
|
750,000
|
—
|
—
|
—
|
$
|
815,385
|
||||||||||||||
|
Steven
Gershick, Chief Financial Officer(3)
|
|
$
|
30,440
|
—
|
—
|
—
|
—
|
—
|
$
|
30,440
|
|||||||||||||||
|
Matthew
Evans, former Chief Executive Officer (4)
|
|
$
|
15,000
|
—
|
—
|
—
|
—
|
—
|
$
|
15,000
|
|||||||||||||||
|
Craig
Davis, former Chief
Executive Officer and Director
|
|
$
|
79,100
|
(5)
|
—
|
—
|
—
|
—
|
—
|
$
|
79,100
|
||||||||||||||
|
|
|
$
|
96,000
|
—
|
—
|
—
|
—
|
—
|
$
|
96,000
|
|||||||||||||||
(1) This
value represents the dollar amount recognized for financial statement reporting
purposes with respect to the 2007 fiscal year for the fair value of stock
options granted to the named director in fiscal year 2007, in accordance with
SFAS 123R. Pursuant to SEC rules, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting conditions. For
additional information on the valuation assumptions with respect to the 2007
grants, refer to Note 9 of our financial statements in this Annual Report.
These
amounts reflect our accounting expense for these awards, and do not correspond
to the actual value that will be recognized from these awards by the named
director.
(2) Dr.
Padma-Nathan was appointed as Chief Executive Officer on May 31, 2007. See
“Item
9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with
Section 16(a) of the Exchange Act”
of
this
Annual Report.
(3) This
amount includes $10,594 received by Mr. Gershick for services provided as a
consultant from May 2007 until July 31, 2007 when he became employed. Mr.
Gershick was appointed as Chief Financial Officer on September 20, 2007. See
“Item
9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with
Section 16(a) of the Exchange Act”
of
this
Annual Report.
(4) Mr.
Evans
served as the sole officer and director of the Company from October 2006 until
May 2006.
(5) Mr.
Davis
resigned as CEO of the Company in October 2006. From October 2006 until May
2007, he was compensated as a consultant to the Company.
Employment
Agreements and Severance Agreements
The
Company entered into several new employment agreements with newly appointed
executive officers and key employees of the Company.
Harin
Padma-Nathan
has
served as our Chief Executive Officer and President since May 31, 2007. We
entered a five-year employment agreement with Dr. Padma-Nathan pursuant to
which
we agreed to pay Dr. Padma-Nathan an annual salary of $200,000. Thereafter,
the
salary will increase by a minimum of 5% on May 31 of each year during the term
of his employment. Dr. Padma-Nathan’s agreement also provides him an option to
purchase up to 3,474,000 shares of our common stock at an exercise price of
$1.00 on the terms and conditions of our 2007 Plan. The agreement provides
discretion for our Board of Directors to grant a bonus to Dr. Padma-Nathan
based
upon our and Dr. Padma-Nathan’s performance. This agreement can be terminated by
either of us for cause or by Dr. Padma-Nathan for good reason, as such terms
are
defined in the agreement.
Steven
Gershick
has
served as our Chief Financial Officer since September 20, 2007. We entered
into
a five-year employment agreement with Mr. Gershick pursuant to which the Company
agreed to pay Mr. Gershick an annual salary of $120,000. Thereafter, the salary
will increase by a minimum of 5% each year during the term of his employment.
The agreement provides discretion for the Company’s Board of Directors to grant
a bonus to Mr. Gershick based upon the performance of the Company and Mr.
Gershick. This agreement can be terminated by either the Company for cause
or by
Mr. Gershick for good reason, as such terms are defined in the
agreement.
Dr.
Rosh Chandraratna serves
as
our Chief Scientific Officer. We entered into a five-year employment agreement
with Dr. Chandraratna on May 25, 2007, which presently expires on June 4, 2012,
pursuant to which he receives $250,000 per year,
subject to annual minimum increases of 5%. The
agreement provides discretion for our Board of Directors to grant a bonus to
Dr.
Chandraratna based upon our and his performance. This agreement can be
terminated by either of us for cause or by Dr. Chandraratna for good reason,
as
such t