| Item 5. | 20 | |||||
| Item 6. | 20 | |||||
| Signatures | 21 | |||||
Table of Contents
PART I - FINANCIAL INFORMATION
| ITEM 1. | Financial Statements. |
CONDENSED BALANCE SHEETS
(Unaudited)
| September 30, 2007 |
December 31, 2006 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 1,203,329 | $ | 1,276,901 | ||||
| Marketable securities |
800,000 | 980,000 | ||||||
| Accounts receivable |
192,378 | — | ||||||
| Inventory |
39,031 | — | ||||||
| Prepaid expenses and other current assets |
34,441 | 93,342 | ||||||
| Total current assets |
2,269,179 | 2,350,243 | ||||||
| Property and equipment |
||||||||
| Machinery and equipment |
546,664 | 523,797 | ||||||
| Furniture and fixtures |
48,486 | 46,734 | ||||||
| Leasehold improvements |
43,993 | 43,993 | ||||||
| 639,143 | 614,524 | |||||||
| Less: accumulated depreciation |
(490,067 | ) | (419,796 | ) | ||||
| Property and equipment, net |
149,076 | 194,728 | ||||||
| Other assets: |
||||||||
| Deposits |
8,522 | 4,211 | ||||||
| Antimicrobial technology, net |
17,853 | 26,213 | ||||||
| Licensing agreement, net |
40,719 | 43,416 | ||||||
| Patents pending and approved, net |
393,599 | 441,733 | ||||||
| Other assets, net |
460,693 | 515,573 | ||||||
| Total assets |
$ | 2,878,948 | $ | 3,060,544 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 103,587 | $ | 65,549 | ||||
| Accrued payroll |
38,620 | 108,603 | ||||||
| Accrued expenses |
71,130 | 27,315 | ||||||
| Deferred revenue |
130,000 | 61,000 | ||||||
| Total current liabilities |
343,337 | 262,467 | ||||||
| Deferred rent |
1,837 | — | ||||||
| Total liabilities |
345,174 | 262,467 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.001 par value, 25,000,000 shares authorized; no shares issued or outstanding |
— | — | ||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized; 25,653,512 shares outstanding at September 30, 2007, 22,788,514 shares outstanding at December 31, 2006 |
25,654 | 22,788 | ||||||
| Additional paid-in capital |
29,184,448 | 26,908,198 | ||||||
| Accumulated deficit |
(26,676,328 | ) | (24,132,909 | ) | ||||
| Total stockholders’ equity |
2,533,774 | $ | 2,798,077 | |||||
| Total liabilities and stockholders’ equity |
$ | 2,878,948 | $ | 3,060,544 | ||||
The accompanying notes are an integral part of the financial statements.
1
Table of Contents
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Revenue: |
||||||||||||||||
| Licensing and development fees |
$ | 105,971 | $ | 3,841 | $ | 152,212 | $ | 38,940 | ||||||||
| Peptide sales |
53,397 | 15,000 | 141,832 | 28,000 | ||||||||||||
| Peptide sales to related party |
— | — | 64,400 | — | ||||||||||||
| Total revenue |
159,368 | 18,841 | 358,444 | 66,940 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Cost of peptide sales |
53,277 | 6,620 | 63,698 | 162,991 | ||||||||||||
| Other cost of revenue |
20,396 | — | 20,396 | — | ||||||||||||
| Research and development |
174,615 | 278,256 | 582,570 | 772,341 | ||||||||||||
| Depreciation and amortization |
44,172 | 46,141 | 132,138 | 136,477 | ||||||||||||
| Accounting, legal and professional fees |
140,909 | 73,602 | 423,132 | 210,023 | ||||||||||||
| General and administrative |
650,228 | 504,783 | 1,752,271 | 1,718,101 | ||||||||||||
| Total operating expenses |
1,083,597 | 909,402 | 2,974,205 | 2,999,933 | ||||||||||||
| Loss from operations |
(924,229 | ) | (890,561 | ) | (2,615,761 | ) | (2,932,993 | ) | ||||||||
| Other income: |
||||||||||||||||
| Interest income |
24,461 | 20,054 | 72,342 | 55,698 | ||||||||||||
| 24,461 | 20,054 | 72,342 | 55,698 | |||||||||||||
| Net loss |
$ | (899,768 | ) | $ | (870,507 | ) | $ | (2,543,419 | ) | $ | (2,877,295 | ) | ||||
| Basic and diluted net loss per share |
$ | (0.04 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.13 | ) | ||||
| Weighted average shares outstanding |
25,653,512 | 22,788,514 | 24,966,608 | 22,192,979 | ||||||||||||
The accompanying notes are an integral part of the financial statements.
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Table of Contents
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Year Ended December 31, 2006 and for the Nine Months Ended September 30, 2007
(Unaudited)
| Common Stock | |||||||||||||||||||||
| Number of Shares |
Amount | Additional Paid-in Capital |
Deferred Stock Compensation |
Accumulated Deficit |
Stockholders’ Equity |
||||||||||||||||
| Balance at December 31, 2005 |
20,190,514 | $ | 20,190 | $ | 23,906,974 | $ | (105,000 | ) | $ | (20,304,583 | ) | $ | 3,517,581 | ||||||||
| Adjustment to reclassify deferred compensation to additional paid in capital upon adoption of FAS123R |
— | — | (105,000 | ) | 105,000 | — | — | ||||||||||||||
| Proceeds from 2006 Private Placement, net |
2,598,000 | 2,598 | 2,581,423 | — | — | 2,584,021 | |||||||||||||||
| Stock-based compensation |
— | — | 524,801 | — | — | 524,801 | |||||||||||||||
| Net loss for the year |
— | — | — | — | (3,828,326 | ) | (3,828,326 | ) | |||||||||||||
| Balance at December 31, 2006 |
22,788,514 | 22,788 | 26,908,198 | — | (24,132,909 | ) | 2,798,077 | ||||||||||||||
| Proceeds from 2007 Private Placement, net |
2,864,998 | 2,866 | 2,140,492 | — | — | 2,143,358 | |||||||||||||||
| Stock-based compensation |
— | — | 135,758 | — | — | 135,758 | |||||||||||||||
| Net loss |
— | — | — | — | (2,543,419 | ) | (2,543,419 | ) | |||||||||||||
| Balance at September 30, 2007 |
25,653,512 | $ | 25,654 | $ | 29,184,448 | $ | — | $ | (26,676,328 | ) | $ | 2,533,774 | |||||||||
The accompanying notes are an integral part of the financial statements.
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Table of Contents
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine months ended September 30, |
||||||||
| 2007 | 2006 | |||||||
| Cash Flows from Operating Activities |
||||||||
| Net loss |
$ | (2,543,419 | ) | $ | (2,877,295 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
132,138 | 136,477 | ||||||
| Stock-based compensation costs |
135,758 | 507,051 | ||||||
| Loss on disposal of equipment |
— | 3,588 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(192,378 | ) | — | |||||
| Inventory |
(39,031 | ) | 35,316 | |||||
| Prepaid expenses and other current assets |
58,901 | 20,614 | ||||||
| Deposits |
(4,311 | ) | (4,202 | ) | ||||
| Accounts payable |
38,038 | 20,139 | ||||||
| Accrued payroll |
(69,983 | ) | (20,569 | ) | ||||
| Accrued expenses and deferred rent |
45,652 | (64,891 | ) | |||||
| Deferred revenue |
69,000 | — | ||||||
| Net cash used in operating activities |
(2,369,635 | ) | (2,243,772 | ) | ||||
| Cash Flows from Investing Activities |
||||||||
| Purchases of marketable securities |
(1,300,000 | ) | — | |||||
| Proceeds from sales of marketable securities |
1,480,000 | — | ||||||
| Purchase of property and equipment |
(27,295 | ) | (38,037 | ) | ||||
| Net cash provided by (used in) investing activities |
152,705 | (38,037 | ) | |||||
| Cash Flows from Financing Activities |
||||||||
| Proceeds from issuance of common stock and warrants, net |
2,143,358 | 2,584,022 | ||||||
| Net cash provided by financing activities |
2,143,358 | 2,584,022 | ||||||
| Net increase (decrease) in cash and cash equivalents |
(73,572 | ) | 302,213 | |||||
| Cash and cash equivalents at beginning of period |
1,276,901 | 2,827,959 | ||||||
| Cash and cash equivalents at end of period |
$ | 1,203,329 | $ | 3,130,172 | ||||
The accompanying notes are an integral part of the financial statements.
4
Table of Contents
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies