Page
|
|
Prospectus
Summary
|
1
|
Risk
Factors
|
5
|
Use
of Proceeds
|
14
|
Determination
of Offering Price
|
14
|
Market
for common stock
|
15
|
Capitalization
|
16
|
Dividend
Policy
|
16
|
Selected
Financial Data
|
17
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
19
|
Business
|
29
|
Management
|
46
|
Security
Ownership of Certain Beneficial Owners and Management
|
50
|
Selling
Stockholders
|
58
|
Plan
of Distribution
|
60
|
Certain
Relationships and Related Transactions
|
62
|
Description
of Capital Stock
|
62
|
Legal
Matters
|
65
|
Experts
|
65
|
Where
You Can Find More Information About Us
|
65
|
Index
to Financial Statements
|
F-1
|
Common
stock offered by selling stockholders:
|
4,853,335
shares
|
||
Use
of proceeds:
|
The
selling stockholders will receive all net proceeds from the offering
of
our common stock covered by this prospectus. We will not receive
any
proceeds from this offering.
Any
proceeds we receive from the exercise of warrants to purchase the
shares
included in the shares that are being offered by the selling stockholders
hereunder will be used to continue the development of our product
candidates and to expand the development of our drug pipeline and
for
general working capital. See “Use of Proceeds” on page 14.
|
Risk
Factors
|
See
“Risk Factors” beginning on page 5 and other information included in this
prospectus for a discussion of factors you should carefully consider
before deciding to invest in the shares.
|
||
OTC
Bulletin Board Symbol:
|
AOLS
|
Statement
of Operations Data:
|
||||||||||||||||||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||||||||||||||
Year
Ended September 30,
|
Six
Months Ended March 31,
|
|||||||||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
2006
|
||||||||||||||||||||||
Revenue:
|
(unaudited)
|
(unaudited)
|
||||||||||||||||||||||||||
Grant
income and contract revenue
|
$ |
92
|
$ |
252
|
$ |
305
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
92
|
||||||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||||||
Research
and development
|
3,480
|
4,515
|
8,295
|
2,780
|
3,927
|
677
|
2,258
|
|||||||||||||||||||||
General
and administrative
|
2,216
|
2,674
|
3,987
|
2,025
|
2,778
|
1,076
|
1,047
|
|||||||||||||||||||||
Total
costs and expenses
|
5,696
|
7,189
|
12,282
|
4,805
|
6,705
|
1,753
|
3,305
|
|||||||||||||||||||||
Loss
from operations
|
(5,604 | ) | (6,937 | ) | (11,977 | ) | (4,805 | ) | (6,705 | ) | (1,753 | ) | (3,213 | ) | ||||||||||||||
Equity
in loss of Incara Development
|
-
|
-
|
-
|
(76 | ) | (1,040 | ) |
-
|
-
|
|||||||||||||||||||
Equity
in income of CPEC LLC
|
433
|
-
|
-
|
-
|
-
|
-
|
433
|
|||||||||||||||||||||
Interest
income (expense), net
|
(6 | ) | (31 | ) | (5,213 | ) | (192 | ) | (50 | ) |
35
|
(19 | ) | |||||||||||||||
Other
income
|
53
|
63
|
23
|
223
|
150
|
225
|
36
|
|||||||||||||||||||||
(Increase)
decrease in fair value of common stock warrants
|
(604 | ) |
-
|
-
|
-
|
-
|
-
|
401
|
||||||||||||||||||||
Loss
from continuing operations
|
(5,728 | ) | (6,905 | ) | (17,167 | ) | (4,850 | ) | (7,645 | ) | (1,493 | ) | (2,362 | ) | ||||||||||||||
Discontinued
operations
|
-
|
-
|
-
|
(38 | ) | (3,657 | ) |
-
|
-
|
|||||||||||||||||||
Gain
(loss) on sale of discontinued operations
|
- |
-
|
-
|
1,912
|
-
|
-
|
-
|
|||||||||||||||||||||
Net
loss
|
(5,728 | ) | (6,905 | ) | (17,167 | ) | (2,976 | ) | (11,302 | ) | (1,493 | ) | (2,362 | ) | ||||||||||||||
Preferred
stock dividend and accretion
|
(81
|
) |
-
|
(135 | ) | (949 | ) | (887 | ) |
-
|
(55 | ) | ||||||||||||||||
Net
loss attributable to common stockholders
|
$ | (5,809 | ) | $ | (6,905 | ) | $ | (17,302 | ) | $ | (3,925 | ) | $ | (12,189 | ) | $ | (1,493 | ) | $ | (2,417 | ) | |||||||
Net
loss per share from continuing operations
|
$ | (0.31 | ) | $ | (0.49 | ) | $ | (2.06 | ) | $ | (4.25 | ) | $ | (6.58 | ) | $ | (0.05 | ) | $ | (0.17 | ) | |||||||
Net
loss per share attributable to common stockholders
|
$ | (0.31 | ) | $ | (0.49 | ) | $ | (2.06 | ) | $ | (2.88 | ) | $ | (9.40 | ) | $ | (0.05 | ) | $ | (0.17 | ) | |||||||
Weighted
average common shares outstanding:
|
||||||||||||||||||||||||||||
Basic
and diluted
|
18,926
|
13,976
|
8,388
|
1,365
|
1,296
|
29,277
|
14,058
|
|||||||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||||||||||
(in
thousands)
|
as
of
|
|||||||||||||||||||||||||||
as
of September 30,
|
March
31,
|
|||||||||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
|||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||
Cash
and cash equivalents and marketable securities
|
$ |
3,324
|
$ |
626
|
$ |
7,381
|
$ |
586
|
$ |
209
|
$ |
913
|
||||||||||||||||
Working
capital (deficiency)
|
$ |
1,581
|
$ | (73 | ) | $ |
6,093
|
$ | (2,242 | ) | $ | (1,590 | ) | $ |
971
|
|||||||||||||
Total
assets
|
$ |
3,554
|
$ |
937
|
$ |
7,856
|
$ |
1,080
|
$ |
2,201
|
$ |
1,386
|
||||||||||||||||
Long-term
portion of capital lease obligations and
|
||||||||||||||||||||||||||||
notes
payable
|
$ |
-
|
$ |
867
|
$ |
787
|
$ |
714
|
$ |
944
|
$ |
459
|
||||||||||||||||
Redeemable
convertible exchangeable preferred stock
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
14,503
|
$ |
13,554
|
$ |
-
|
||||||||||||||||
Total
liabilities
|
$ |
1,847
|
$ |
1,869
|
$ |
2,324
|
$ |
18,159
|
$ |
3,127
|
$ |
748
|
||||||||||||||||
Total shareholders' equity (deficit) | $ | 1,707 | $ | (932 | ) | $ | 5,532 | $ | (17,079 | ) | $ | (14,480 | ) | $ | 638 |
|
·
|
any
or all of these proposed products or procedures are found to be
unsafe or
ineffective or otherwise fail to receive necessary regulatory
approvals;
|
|
·
|
the
receipt of regulatory approvals for the indications that we are
studying;
|
|
·
|
the
establishment and demonstration in the medical community of the
safety,
clinical efficacy and cost
|
|
·
|
effectiveness
of our products and their potential advantages over existing therapeutic
products;
|
|
·
|
marketing
and distribution support;
|
|
·
|
the
introduction, market penetration and pricing strategies of competing
and
future products; and
|
|
·
|
coverage
and reimbursement policies of governmental and other third-party
payors
such as insurance companies, health maintenance organizations and
other
plan administrators.
|
High
|
Low
|
|||||||
Fiscal
Year Ended September 30, 2005
|
||||||||
October
1, 2004 through December 31, 2004
|
$ |
1.60
|
$ |
1.04
|
||||
January
1, 2005 through March 31, 2005
|
$ |
1.25
|
$ |
0.65
|
||||
April
1, 2005 through June 30, 2005
|
$ |
0.95
|
$ |
0.44
|
||||
July
1, 2005 through September 30, 2005
|
$ |
1.38
|
$ |
0.75
|
||||
Fiscal
Year Ended September 30, 2006
|
||||||||
October
1, 2005 through December 31, 2005
|
$ |
1.35
|
$ |
0.80
|
||||
January
1, 2006 through March 31, 2006
|
$ |
1.00
|
$ |
0.76
|
||||
April
1, 2006 through June 28, 2006
|
$ |
0.90
|
$ |
0.42
|
||||
July
1, 2006 through September 30, 2006
|
$ |
0.91
|
$ |
0.50
|
||||
Fiscal
Year Ending September 30, 2007
|
||||||||
October
1, 2006 through December 31, 2006
|
$ |
0.85
|
$ |
0.51
|
||||
January
1, 2007 through March 31, 2007
|
$ |
0.75
|
$ |
0.34
|
||||
April
1, 2007 through May 25, 2007
|
$ |
1.50
|
$ |
0.51
|
·
|
on
an actual basis; and
|
·
|
on
an as adjusted basis to give effect to the sale by us of
2,666,667 shares of common stock at a purchase price of $0.75 per
share and the issuance of warrants to purchase up to an aggregate
of
2,186,668 shares of common stock with an exercise price of $0.75
per share
in our private placement closed on May 22, 2007, after deducting
expenses
and fees for the private placement paid by
us.
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2007
|
|
|||||
|
|
Actual
|
|
|
As
Adjusted
|
|
||
|
|
(Unaudited)
(Amounts
in thousands)
|
|
|||||
|
||||||||
Current
portion of long-term debt
|
|
$
|
0
|
|
|
$
|
0
|
|
Long-term
debt, less current portion
|
|
|
459
|
|
|
|
459
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
||
Preferred
stock, $.01 par value per share, 10,000,000 shares authorized
at
March
31, 2007:
Series
B nonredeemable convertible preferred stock, 600,000 shares
authorized;
475,087 shares issued and outstanding at March 31, 2007
|
|
|
5
|
|
|
|
5
|
|
Common
stock, $.01 par value per share, 150,000,000 shares
authorized;
29,286,082
and 31,952,749 shares issued and outstanding at March 31,
2007
(actual) and March 31, 2007 (as adjusted), respectively
|
|
|
293
|
|
|
|
320
|
|
Additional
paid-in capital
|
|
|
154,735
|
|
|
|
156,468
|
|
Accumulated
deficit
|
|
|
(154,395
|
)
|
|
|
(154,395
|
)
|
Total
stockholders’ equity
|
|
|
638
|
|
|
|
2,398
|
|
|
|
|
|
|
|
|
||
Total
capitalization
|
|
$
|
1,097
|
|
|
$
|
2,857
|
|
|
|
|
|
|
|
|
|
|
·
|
the
date that Goodnow owns less than 20% of our outstanding common
stock on an
as converted basis;
|
·
|
the
completion, to the absolute satisfaction of Goodnow, of initial
human
clinical safety studies of AEOL 10150 and analysis of the data
developed
based upon such studies with the results satisfactory to
Goodnow,
|
·
|
in
its absolute discretion, to initiate efficacy studies of AEOL 10150
in
humans; or
|
·
|
the
initiation of dosing of the first human patient in an efficacy-based
study
of AEOL 10150.
|
Statement
of Operations Data:
|
||||||||||||||||||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||||||||||||||
Year
Ended September 30,
|
Six
Months Ended March 31,
|
|||||||||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
2006
|
||||||||||||||||||||||
Revenue:
|
(unaudited)
|
(unaudited)
|
||||||||||||||||||||||||||
Grant
income and contract revenue
|
$ |
92
|
$ |
252
|
$ |
305
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
92
|
||||||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||||||
Research
and development
|
3,480
|
4,515
|
8,295
|
2,780
|
3,927
|
677
|
2,258
|
|||||||||||||||||||||
General
and administrative
|
2,216
|
2,674
|
3,987
|
2,025
|
2,778
|
1,076
|
1,047
|
|||||||||||||||||||||
Total
costs and expenses
|
5,696
|
7,189
|
12,282
|
4,805
|
6,705
|
1,753
|
3,305
|
|||||||||||||||||||||
Loss
from operations
|
(5,604 | ) | (6,937 | ) | (11,977 | ) | (4,805 | ) | (6,705 | ) | (1,753 | ) | (3,213 | ) | ||||||||||||||
Equity
in loss of Incara Development
|
-
|
-
|
-
|
(76 | ) | (1,040 | ) |
-
|
-
|
|||||||||||||||||||
Equity
in income of CPEC LLC
|
433
|
-
|
-
|
-
|
-
|
-
|
433
|
|||||||||||||||||||||
Interest
income (expense), net
|
(6 | ) | (31 | ) | (5,213 | ) | (192 | ) | (50 | ) |
35
|
(19 | ) | |||||||||||||||
Other
income
|
53
|
63
|
23
|
223
|
150
|
225
|
36
|
|||||||||||||||||||||
(Increase)
decrease in fair value of common stock warrants
|
(604 | ) |
-
|
-
|
-
|
-
|
-
|
401
|
||||||||||||||||||||
Loss
from continuing operations
|
(5,728 | ) | (6,905 | ) | (17,167 | ) | (4,850 | ) | (7,645 | ) | (1,493 | ) | (2,362 | ) | ||||||||||||||
Discontinued
operations
|
-
|
-
|
-
|
(38 | ) | (3,657 | ) |
-
|
-
|
|||||||||||||||||||
Gain
(loss) on sale of discontinued operations
|
- |
-
|
-
|
1,912
|
-
|
-
|
-
|
|||||||||||||||||||||
Net
loss
|
(5,728 | ) | (6,905 | ) | (17,167 | ) | (2,976 | ) | (11,302 | ) | (1,493 | ) | (2,362 | ) | ||||||||||||||
Preferred
stock dividend and accretion
|
(81
|
) |
-
|
(135 | ) | (949 | ) | (887 | ) |
-
|
(55 | ) | ||||||||||||||||
Net
loss attributable to common stockholders
|
$ | (5,809 | ) | $ | (6,905 | ) | $ | (17,302 | ) | $ | (3,925 | ) | $ | (12,189 | ) | $ | (1,493 | ) | $ | (2,417 | ) | |||||||
Net
loss per share from continuing operations
|
$ | (0.31 | ) | $ | (0.49 | ) | $ | (2.06 | ) | $ | (4.25 | ) | $ | (6.58 | ) | $ | (0.05 | ) | $ | (0.17 | ) | |||||||
Net
loss per share attributable to common stockholders
|
$ | (0.31 | ) | $ | (0.49 | ) | $ | (2.06 | ) | $ | (2.88 | ) | $ | (9.40 | ) | $ | (0.05 | ) | $ | (0.17 | ) | |||||||
Weighted
average common shares outstanding:
|
||||||||||||||||||||||||||||
Basic
and diluted
|
18,926
|
13,976
|
8,388
|
1,365
|
1,296
|
29,277
|
14,058
|
|||||||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||||||||||
(in
thousands)
|
as
of
|
|||||||||||||||||||||||||||
as
of September 30,
|
March
31,
|
|||||||||||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
2007
|
|||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||
Cash
and cash equivalents and marketable securities
|
$ |
3,324
|
$ |
626
|
$ |
7,381
|
$ |
586
|
$ |
209
|
$ |
913
|
||||||||||||||||
Working
capital (deficiency)
|
$ |
1,581
|
$ | (73 | ) | $ |
6,093
|
$ | (2,242 | ) | $ | (1,590 | ) | $ |
971
|
|||||||||||||
Total
assets
|
$ |
3,554
|
$ |
937
|
$ |
7,856
|
$ |
1,080
|
$ |
2,201
|
$ |
1,386
|
||||||||||||||||
Long-term
portion of capital lease obligations and
|
||||||||||||||||||||||||||||
notes
payable
|
$ |
-
|
$ |
867
|
$ |
787
|
$ |
714
|
$ |
944
|
$ |
459
|
||||||||||||||||
Redeemable
convertible exchangeable preferred stock
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
14,503
|
$ |
13,554
|
$ |
-
|
||||||||||||||||
Total
liabilities
|
$ |
1,847
|
$ |
1,869
|
$ |
2,324
|
$ |
18,159
|
$ |
3,127
|
$ |
748
|
||||||||||||||||
Total stockholders' equity (deficit) | $ | 1,707 | $ | (932 | ) | $ | 5,532 | $ | (17,079 | ) | $ | (14,480 | ) | $ | 638 |
Payments
due by period
|
||||||||||||||||||||
Total
|
Less
than
1
Year
|
1-3
Years
|
3-5
Years
|
More
than
5
Years
|
||||||||||||||||
Long-term
debt
|
$ |
459
|
$ |
—
|
$ |
459
|
$ |
—
|
$ |
—
|
||||||||||
Operating
leases
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Purchase
obligations
|
810
|
672
|
138
|
—
|
—
|
|||||||||||||||
Total
|
$ |
1,269
|
$ |
672
|
$ |
597
|
$ |
—
|
$ |
—
|
·
|
to
secure the $8.0 million debt with liens on all of our assets, which
liens
expired on April 19, 2004 when the remaining debt converted to
shares of
common stock;
|
·
|
to
spend the financing proceeds only in accordance with a budget and
development plan agreed to by
Goodnow;
|
·
|
to
not enter into any arrangement with a party other than Goodnow
in which we
would raise capital through the issuance of our securities other
than the
raising of up to an aggregate of $20,000,000 through the issuance
of
shares of our common stock at a price of greater than $3.00 per
share and
which would represent 25% or less of our then outstanding common
stock on
an as-converted to common and fully diluted basis. If we consummate
or
agree to consummate a financing transaction with someone other
than
Goodnow that exceeds these limitations, we will pay Goodnow a break-up
fee
of $500,000. Goodnow approved the April 2004 private placement,
which
exceeded these limitations, and waived the fee. However, the $20,000,000
limitation was lowered to $9,740,000 and the 25% limitation was
reduced to
zero. Goodnow also approved the November 2005 private placement,
the June
2006 private placement and the May 2007 private placement, each
of which
exceeded these limitations, and, in each case, waived the fee;
and
|
·
|
to
allow Goodnow to appoint one director to our board of directors,
provided
Goodnow owns at least 10%, but less than 20%, of our outstanding
common
stock, in each case on a fully diluted basis, and two directors
if Goodnow
owns more than 20% of our outstanding common
stock.
|
·
|
make
any expenditure or series of related expenditures in excess of
$25,000,
except (i) expenditures pursuant to the SBIR grant from the U.S.
Small
Business Administration, (ii) specified in a budget approved in
writing in
advance by Goodnow and our Board, and (iii) directly relating to
the
development of AEOL 10150 for the treatment of
ALS;
|
·
|
change
our business or operations;
|
·
|
merge
with or sell or lease a substantial portion of our assets to any
entity;
|
·
|
incur
debt from any third party or place a lien on any of our
properties;
|
·
|
amend
our certificate of incorporation or
bylaws;
|
·
|
increase
the compensation we pay our
employees;
|
·
|
pay
dividends on any class of our capital
stock;
|
·
|
cancel
any debt except for full value; or
|
·
|
issue
any capital stock except pursuant to agreements with or as agreed
to by
Goodnow.
|
·
|
the
date that Goodnow owns less than 20% of our outstanding common
stock on a
fully diluted basis;
|
·
|
the
completion, to the absolute satisfaction of Goodnow, of initial
human
clinical safety studies of AEOL 10150, and analysis of the data
developed
based upon such studies with results satisfactory to Goodnow, in
its
absolute discretion, to initiate efficacy studies of AEOL 10150;
or
|
·
|
the
initiation of dosing of the first human patient in an efficacy-based
study
of AEOL 10150.
|
|
·
|
Retain
the catalytic mechanism and high antioxidant efficiency of the
natural
enzymes, and
|
|
·
|
Create
and develop stable and small molecule antioxidants without the
limitations
of superoxide dismutases (“SOD”) so that
they:
|
|
·
|
have
broader antioxidant activity,
|
|
·
|
have
better tissue penetration,
|
|
·
|
have
a longer life in the body, and
|
|
·
|
are
not proteins, which are more difficult and expensive to
manufacture.
|
Treatment
|
|
Age
at Symptom onset mean days + SD(range)
|
|
Survival
Interval mean days + SD(range)
|
|
P-value
Log-rank (v. control)
|
|
P-value
Wilcoxon (v. control)
|
|
|
|
|
|
|
|
|
|
Control
|
104.8
+ 1.43
|
12.8
+ 0.79
|
|
|
||||
|
|
(100-112
|
)
|
(9-16
|
)
|
|
|
|
AEOL
10150
|
|
106.1
+ 1.5
|
|
32.2
+ 2.73
|
|
|
|
|
|
|
(100-115
|
)
|
(15-46
|
)
|
<
0.0001
|
|
0.0002
|
|
|
AEOL
10150
|
||||||||||||
Pharmacokinetic
Parameter
|
|
3
mg N = 3
|
|
12
mg N = 4
|
|
30
mg N = 3
|
|
45
mg N = 4
|
|
45
mg N = 4 (repeat, different
patients)
|
|
60
mg N = 4
|
|
75
mg
N=
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUC(0-∞)
(hr•ng/mL)
|
354
±100
|
1,494
±386
|
4,580
±1828
|
7,116
±1010
|
5,922
±1307
|
9,087
±2180
|
12,167
±1543
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tmax
(0-48) (hr)
|
1
±0
|
|
1
±1
|
|
1
±0
|
|
1
±0
|
|
2
±1
|
|
2
±0
|
|
2
±1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cmax
(0-48) (ng/mL)
|
|
115
±38
|
|
267
±40
|
|
733
±166
|
|
1,245
±247
|
|
962
±333
|
|
1,330
±226
|
|
1,584
±378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T1/2
(hr)
|
|
2.61
±0.60
|
|
3.97
±1.09
|
|
5.25
±1.65
|
|
6.31
±2.54
|
|
5.28
±1.00
|
|
5.93
±0.90
|
|
6.36
±0.47
|
|
|
|||||
Pharmacokinetic
Parameter
|
|
40
mg N = 4
|
|
60
mg N = 4
|
|
|
|
|
|
|
|
|
|
AUC(0-8)
(hr•ng/mL)
|
7,545
±1310
|
10,289
±2,608
|
||||
|
|
|
|
|
|
|
Tmax
(0-48) (hr)
|
1
±0
|
|
1
±0
|
|
|
|
|
|
|
|
|
|
|
Cmax
(0-48) (ng/mL)
|
|
1,735
±221
|
|
2,315
±775
|
|
|
|
|
|
|
|
|
|
T1/2
(hr)
|
|
9.4
±3.4
|
|
7.8
±0.8
|
|
|
|
·
|
Increases
in Cmax and AUC(0-8) appears to correlate with increases in dose,
but the
correlation is not strong.
|
|
·
|
The
mean Cmax for the 40 mg cohort was 1,735 ng/mL; and 2,313 ng/mL
for the 60
mg cohort.
|
|
·
|
There
were linear correlations between both Cmax and AUC(0-8) and dose
based on
body weight.
|
|
·
|
The
terminal half life (a measurement of the time period for which
a compound
stays in the body) as determined from Day 7 data was approximately
8 to 9
hours. The shorter (i.e. 4-5 hours) half life determined from
Day 1 data is most probably related to distribution of
compound.
|
|
·
|
Steady-state
occurs within three days of multiple dosing. There was no
evidence for a third longer half life that would be associated
with long
term accumulation. Thus, importantly compound accumulation is
not expected beyond the third day with multiple
dosing.
|
|
·
|
completion
of preclinical studies;
|
|
·
|
the
submission to the FDA of a request for authorization to conduct
clinical
trials on an IND, which must become effective before clinical trials
may
commence;
|
|
·
|
adequate
and well-controlled Phase I, Phase II and Phase III clinical trials
to
establish and confirm the safety and efficacy of a drug candidate
;
|
|
·
|
submission
to the FDA of a New Drug Application (an “NDA”) for the drug candidate;
and
|
|
·
|
review
and approval of the NDA by the FDA before the product may be shipped
or
sold commercially.
|
Name
|
Age
as of
May
25,
2007
|
Position(s)
|
David
C. Cavalier
|
37
|
Chairman
|
John
M. Farah, Jr., Ph.D.
|
55
|
Director
|
Chris
A. Rallis
|
53
|
Director
|
Peter
D. Suzdak, Ph.D.
|
48
|
Director
|
Michael
E. Lewis, Ph.D.
|
55
|
Director
|
Joseph
J. Krivulka
|
55
|
Director
|
Amit
Kumar, Ph.D.
|
42
|
Director
|
John
L. McManus
|
42
|
President
and Chief Executive Officer
|
Brian
J. Day, Ph.D.
|
46
|
Chief
Scientific Officer
|
Elaine
Alexander, M.D.
|
54
|
Executive
Vice President and Chief Medical Officer
|
Michael
P. McManus
|
37
|
Chief
Financial Officer, Treasurer and
Secretary
|
|
·
|
Each
non-executive Board member will receive annual cash compensation
of
$15,000, which will be paid in equal quarterly payments. Cash compensation
for new and terminating Board members will be prorated for the
period of
time that they are a Board member during the respective
quarter.
|
|
·
|
Audit
Committee members will receive an additional $10,000 of annual
cash
compensation, which will be paid in equal quarterly payments. Cash
compensation for new and terminating Audit Committee members will
be
prorated for the period of time that they are members of the Audit
Committee during the respective
quarter.
|
|
·
|
Each
non-executive Board member shall receive an annual nonqualified
stock
option pursuant to the 2004 Plan for 30,000 shares in September
of each
year during service. The option exercise prices shall be equal
to the
closing price of the common stock on the grant date. The options
shall
have 10-year terms and vest, as long as the director remains on
the Board,
on a monthly basis over a 12-month period beginning on the date
of grant.
Vested shares shall be exercisable for 10 years from the grant
date.
Unvested options expire upon resignation from the
Board.
|
|
·
|
each
person known by Aeolus to
beneficially own more than 5% of the outstanding shares of each
class of
the Company’s stock;
|
|
·
|
each
of Aeolus’
directors;
|
|
·
|
each
of Aeolus’ Named Executive
Officers (as defined under “Executive Compensation” below);
and
|
|
·
|
all
of Aeolus’ directors and
executive officers as a
group.
|
Preferred
Stock
|
Common
Stock
|
|||||||||||||||||||
Identity
of Owner or Group (1)(2)
|
Beneficially
Owned
|
Percentage
Owned(3)
|
Beneficially
Owned
|
|
Percentage
Owned(4)
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Directors:
|
|
|
|
|
|
|||||||||||||||
David
C. Cavalier
|
-
|
-
|
16,081,833
|
(5 | ) | 47.1 | % | |||||||||||||
John
M. Farah, Jr., Ph.D. (6)
|
-
|
-
|
42,591
|
*
|
||||||||||||||||
Joseph
J. Krivulka (6)
|
-
|
-
|
66,000
|
*
|
||||||||||||||||
Amit
Kumar, Ph.D. (6)
|
-
|
-
|
66,000
|
*
|
||||||||||||||||
Michael
E. Lewis, Ph.D. (6)
|
-
|
-
|
66,000
|
*
|
||||||||||||||||
Chris
A. Rallis (6)
|
-
|
-
|
66,000
|
*
|
||||||||||||||||
Peter
D. Suzdak, Ph.D. (6)
|
-
|
-
|
66,000
|
*
|
||||||||||||||||
|
||||||||||||||||||||
Named
Executive Officers:
|
||||||||||||||||||||
Elaine
Alexander, M.D. (6)
|
-
|
-
|
76,000
|
*
|
||||||||||||||||
Brain
Day, Ph.D. (7)
|
-
|
-
|
110,478
|
*
|
||||||||||||||||
John
L. McManus (8)
|
-
|
-
|
395,000
|
1.2 | % | |||||||||||||||
Michael
P. McManus (9)
|
-
|
-
|
109,850
|
*
|
||||||||||||||||
Richard
P. Burgoon, Jr. (10)
|
-
|
-
|
269,250
|
*
|
||||||||||||||||
All
directors and executive officers as a group (11
persons)
|
-
|
-
|
17,145,752
|
(11 | ) | 48.7 | % | |||||||||||||
Greater
than 5% Stockholders:
|
||||||||||||||||||||
BVF
Partners, L.P. and its affiliates
|
-
|
-
|
1,881,869
|
(12 | ) | 5.8 | % | |||||||||||||
900
N. Michigan Ave, Suite 1100
|
||||||||||||||||||||
Chicago IL 60611
|
||||||||||||||||||||
|
||||||||||||||||||||
Elan
Corporation, plc
|
475,087
|
100.0 | % |
475,087
|
(13 | ) | 1.5 | % | ||||||||||||
Lincoln
House
|
||||||||||||||||||||
Lincoln
Place
|
||||||||||||||||||||
Dublin
2, Ireland
|
||||||||||||||||||||
|
||||||||||||||||||||
Efficacy
Biotech Master Fund Ltd
|
-
|
-
|
20,660,000
|
(14 | ) | 48.3 | % | |||||||||||||
11622
El Camino Real, Suite 100
|
||||||||||||||||||||
San
Diego, CA 92130
|
||||||||||||||||||||
|
||||||||||||||||||||
Great
Point Partners, LLC
|
-
|
-
|
1,704,747
|
(15 | ) | 5.3 | % | |||||||||||||
2
Pickwick Plaza, Suite 450
|
||||||||||||||||||||
Greenwich,
CT 06830
|
||||||||||||||||||||
|
||||||||||||||||||||
Xmark
Opportunity Partners, LLC and its affiliates
|
-
|
-
|
16,016,833
|
(16 | ) | 47.0 | % | |||||||||||||
301
Tresser Blvd, Suite 1320
|
||||||||||||||||||||
Stamford,
CT 06901
|
Summary
Compensation Table
|
|||||||||||||||||
|
|
|
|
Long-Term
Compensation
Awards
|
|
||||||||||||
Name
and Principal
|
Fiscal
|
Annual
Compensation (1)
|
Securities
Underlying
|
All
Other
|
|||||||||||||
Position(s)
|
Year
|
Salary
($)
|
Bonus
($)
|
Options
(2)
|
Compensation
($)
|
||||||||||||
John
L. McManus (3)
|
2006
|
$ |
62,550
|
—
|
340,000
|
—
|
|||||||||||
President
and Chief Executive Officer
|
2005
|
—
|
—
|
30,000
|
$ |
34,091
|
|||||||||||
|
|
||||||||||||||||
Elaine
Alexander, M.D. (4)
|
2006
|
—
|
—
|
24,000
|
185,000
|
||||||||||||
Chief
Medical Officer
|
2005
|
—
|
—
|
16,000
|
95,645
|
||||||||||||
|
|
||||||||||||||||
Brian
Day, Ph.D. (5)
|
2006
|
—
|
—
|
49,000
|
144,000
|
||||||||||||
Chief
Scientific Officer
|
2005
|
—
|
—
|
16,000
|
84,000
|
||||||||||||
|
|
||||||||||||||||
Michael
P. McManus (6)
|
2006
|
—
|
—
|
101,250
|
—
|
||||||||||||
Chief
Financial Officer,
|
2005
|
—
|
—
|
5,000
|
—
|
||||||||||||
Treasurer
and Secretary
|
|
||||||||||||||||
|
|
||||||||||||||||
Richard
P. Burgoon, Jr. (7)
|
2006
|
281,132
|
$ |
164,413
|
—
|
—
|
|||||||||||
Former
Chief Executive Officer
|
2005
|
148,413
|
147,275
|
250,000
|
803
|
(1)
|
Column
with respect to "Other Annual Compensation" has not been included
in this
table because the aggregate amount of perquisites and other personal
benefits received from the Company by any of the Named Executive
Officers did not exceed the lesser of $50,000 or 10% of the total
annual
salary and bonus reported for each such Named Executive Officer in
the table.
|
(2)
|
All
options reflected in this table were granted under the 2004
Plan.
|
(3)
|
Mr.
John McManus became an employee of the Company on July 14, 2006
and serves
as the Company’s Principal Executive Officer with the title of President
and Chief Executive Officer. Prior to July 14, 2006, Mr. John McManus
was
paid a monthly consulting fee of $10,000 and received an option
to
purchase up to 10,000 shares of common stock at the end of each
month he
provided consulting services to the Company. During fiscal 2006
and 2005,
Mr. John McManus was paid $165,000 and $34,091, respectively, in
consulting fees. Mr. John McManus is also a 50% owner of McManus
&
Company, Inc., which provides administrative, accounting and financial
consulting services to the Company. (See footnote (6) for more
information.)
|
(4)
|
Dr.
Alexander is not an employee of the Company. For her services as
Chief
Medical Officer, Dr. Alexander is paid a monthly consulting fee
of $15,000
and receives an option to purchase up to 2,000 shares of common
stock at
the end of each months she provides consulting services to the
Company. During fiscal 2006 and 2005, Dr. Alexander was paid
$185,000 and $95,645, respectively, in consulting
fees.
|
(5)
|
Dr.
Day is not an employee of the Company. For his services as Chief
Scientific Officer during fiscal 2006, Dr. Day was initially paid
a
monthly consulting fee of $9,500, which was subsequently increased
to
$11,000 in October 2006. During fiscal 2006 and 2005, Dr. Day
received an option to purchase up to 2,000 shares of common stock
at the
end of each month he provided consulting services to the Company.
During
fiscal 2006 and 2005, Dr. Day was paid $144,000 and $84,000, respectively,
in consulting fees. Dr. Day is also Associate Professor of Medicine,
Immunology & Pharmaceutical Sciences at the NJC, which provides
research services to the Company. In September 2005, the Company
entered
into a grant agreement with the NJC in the amount of $133,000,
for which
Dr. Day was the principal investigator. The Company also has an
exclusive worldwide license from the NJC to develop, make, have
made, use
and sell products using certain technology developed by certain
scientists
at the NJC.
|
(6)
|
Mr.
Michael McManus is not an employee of the Company. For his services
as
Chief Financial Officer, McManus & Company, Inc., a consulting firm in
which Mr. Michael McManus and Mr. John McManus are each 50% owners,
is
paid a monthly consulting payment of $25,000 and Mr. McManus receives
an
option to purchase up to 90,000 shares of common stock on July
10th of
each year that he provides consulting services to the Company.
During
fiscal 2006 and 2005, McManus & Company, Inc. was paid $207,500 and
$43,750, respectively, in consulting fees pursuant to services
rendered by
Mr. Michael McManus to the Company.
|
(7)
|
Mr.
Burgoon was Chief Executive Officer from January 5, 2005 to November
30,
2006. “All Other Compensation” consists of life and long-term disability
insurance premiums.
|
|
|
Number
of
Shares
Underlying
Options
|
|
%
of Total Options Granted to Employees in
Fiscal
|
|
Exercise
or
Base
Price
|
|
Expiration
|
|
Potential
Realizable Value at
Assumed
Annual Rates
of
Stock Price Appreciation for
Option
Term (5)
|
|
||||||||
Name
|
|
Granted
|
|
2006
(2)
|
|
per
Share (3)
|
|
Date (4)
|
|
5%
|
|
10%
|
|
||||||
John
L. McManus
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
1.15
|
|
|
10/31/2015
|
|
$
|
575
|
|
$
|
1,150
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
1.03
|
|
|
11/30/2015
|
|
$
|
515
|
|
$
|
1,030
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
0.95
|
|
|
12/31/2015
|
|
$
|
475
|
|
$
|
950
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
0.89
|
|
|
1/31/2016
|
|
$
|
445
|
|
$
|
890
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
0.90
|
|
|
2/28/2016
|
|
$
|
450
|
|
$
|
900
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
0.80
|
|
|
3/31/2016
|
|
$
|
400
|
|
$
|
800
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
0.75
|
|
|
4/30/2016
|
|
$
|
375
|
|
$
|
750
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
0.60
|
|
|
5/31/2016
|
|
$
|
300
|
|
$
|
600
|
|
|
|
|
10,000
|
(6)
|
|
1.94
|
%
|
$
|
0.81
|
|
|
6/30/2016
|
|
$
|
405
|
|
$
|
810
|
|
|
|
|
250,000
|
(7)
|
|
48.61
|
%
|
$
|
0.75
|
|
|
7/14/2016
|
|
$
|
9,375
|
|
$
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elaine
Alexander, M.D.
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
1.15
|
|
|
10/31/2015
|
|
$
|
115
|
|
$
|
230
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
1.03
|
|
|
11/30/2015
|
|
$
|
103
|
|
$
|
206
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.95
|
|
|
12/31/2015
|
|
$
|
95
|
|
$
|
190
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.89
|
|
|
1/31/2016
|
|
$
|
89
|
|
$
|
178
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.90
|
|
|
2/28/2016
|
|
$
|
90
|
|
$
|
180
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.80
|
|
|
3/31/2016
|
|
$
|
80
|
|
$
|
160
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.75
|
|
|
4/30/2016
|
|
$
|
75
|
|
$
|
150
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.60
|
|
|
5/31/2016
|
|
$
|
60
|
|
$
|
120
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.81
|
|
|
6/30/2016
|
|
$
|
81
|
|
$
|
162
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.69
|
|
|
7/31/2016
|
|
$
|
69
|
|
$
|
138
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.80
|
|
|
8/31/2016
|
|
$
|
80
|
|
$
|
160
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.80
|
|
|
9/30/2016
|
|
$
|
80
|
|
$
|
160
|
|
Brain
Day, Ph.D.
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
1.15
|
|
|
10/31/2015
|
|
$
|
115
|
|
$
|
230
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
1.03
|
|
|
11/30/2015
|
|
$
|
103
|
|
$
|
206
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.95
|
|
|
12/31/2015
|
|
$
|
95
|
|
$
|
190
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.89
|
|
|
1/31/2016
|
|
$
|
89
|
|
$
|
178
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.90
|
|
|
2/28/2016
|
|
$
|
90
|
|
$
|
180
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.80
|
|
|
3/31/2016
|
|
$
|
80
|
|
$
|
160
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.75
|
|
|
4/30/2016
|
|
$
|
75
|
|
$
|
150
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.60
|
|
|
5/31/2016
|
|
$
|
60
|
|
$
|
120
|
|
|
|
|
25,000
|
(7)
|
|
4.86
|
%
|
$
|
0.85
|
|
|
6/5/2016
|
|
$
|
1,063
|
|
$
|
2,125
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.81
|
|
|
6/30/2016
|
|
$
|
81
|
|
$
|
162
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.69
|
|
|
7/31/2016
|
|
$
|
69
|
|
$
|
138
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.80
|
|
|
8/31/2016
|
|
$
|
80
|
|
$
|
160
|
|
|
|
|
2,000
|
(6)
|
|
0.39
|
%
|
$
|
0.80
|
|
|
9/30/2016
|
|
$
|
80
|
|
$
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Michael
P. McManus
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
1.15
|
|
|
10/31/2015
|
|
$
|
72
|
|
$
|
144
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
1.03
|
|
|
11/30/2015
|
|
$
|
64
|
|
$
|
129
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
0.95
|
|
|
12/31/2015
|
|
$
|
59
|
|
$
|
119
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
0.89
|
|
|
1/31/2016
|
|
$
|
56
|
|
$
|
111
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
0.90
|
|
|
2/28/2016
|
|
$
|
56
|
|
$
|
113
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
0.80
|
|
|
3/31/2016
|
|
$
|
50
|
|
$
|
100
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
0.75
|
|
|
4/30/2016
|
|
$
|
47
|
|
$
|
94
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
0.60
|
|
|
5/31/2016
|
|
$
|
38
|
|
$
|
75
|
|
|
|
|
1,250
|
(6)
|
|
0.24
|
%
|
$
|
0.81
|
|
|
6/30/2016
|
|
$
|
51
|
|
$
|
101
|
|
|
|
|
90,000
|
(7)
|
|
17.50
|
%
|
$
|
0.80
|
|
|
7/10/2016
|
|
$
|
3,600
|
|
$
|
7,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
P. Burgoon, Jr.
|
|
|
None
|
|
(1)
|
No
stock appreciation rights (“SARs”) were granted to any of the Named
Executive Officers during the fiscal year ended September 30,
2006.
|
(2)
|
Based
on options to purchase 514,250 shares of common stock granted to
employees, including the Named Executive Officers, under the 2004
Plan
during the fiscal year ended September 30,
2006.
|
(3)
|
The
exercise price is equal to or greater than 100% of the fair market
value
of the common stock on the date of
grant.
|
(4)
|
The
options have a term of ten years, subject to earlier termination
in
certain events.
|
(5)
|
Use
of the assumed rates of appreciation is mandated by the rules of
the SEC
and does not represent the Company’s estimate or projection of the future
price of its stock. There is no assurance provided to
any
|
|
executive
officer or any other holder of Aeolus’ securities that the actual stock
price appreciation over the ten-year option term will be at the
assumed 5%
or 10% annual rates of compounded stock price appreciation or at
any other
defined level. Unless the market price of the common stock
appreciates over the option term, no value will be realized from
the
option grants made to the Named Executive
Officers.
|
(6)
|
The
option grant to this officer was granted fully vested with a ten-year
term.
|
(7)
|
The
option grant to this officer vests on a monthly basis for twelve
months
with a ten-year term.
|
|
Shares
Acquired
on
|
Value
|
Number
of Securities Underlying Unexercised Options at
September
30, 2006
|
Value
of Unexercised
In-the-Money
Options at
September
30, 2006 (3)
|
||||||||||||||||||||
Name
|
Exercise
|
Realized
(2)
|
Exercisable
|
Unexerciseable
|
Exercisable
|
Unexerciseable
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
John
L. McManus
|
—
|
—
|
161,667
|
208,333
|
$ |
4,583
|
10,417
|
|||||||||||||||||
Elaine
Alexander, M.D.
|
—
|
—
|
60,000
|
—
|
$ |
1,740
|
—
|
|||||||||||||||||
Brain
Day, Ph.D.
|
—
|
—
|
42,903
|
25,000
|
$ |
2,421
|
—
|
|||||||||||||||||
Michael
P. McManus
|
—
|
—
|
31,250
|
75,000
|
$ |
400
|
—
|
|||||||||||||||||
Richard
P. Burgoon, Jr.
|
83,332
|
$ | (13,541 | ) |
104,169
|
—
|
$ |
—
|
—
|
(1)
|
No
SARs were exercised by any Named Executive Officer during the fiscal
year
ended September 30, 2006 and no SARs were held by any Named Executive
Officer at September 30, 2006.
|
(2)
|
Value
is calculated based on the difference between the option exercise
price
and the closing market price of the common stock on the date prior
to the
date of exercise multiplied by the number of shares
exercised.
|
(3)
|
Value
based on the difference between the fair market value of the shares
of
common stock at September 30, 2006 ($0.80), as quoted on the OTC
Bulletin
Board, and the exercise price of the options, multiplied by the
number of
shares covered by the in-the-money
options.
|
|
Beneficial
Ownership Prior
to
Offering
|
Number
of
Shares
to
Be Sold
|
|
Beneficial Ownership
After
Offering (1)
|
|||||||
Name
|
|
Number
of
Shares
|
|
Number of
Shares
|
|
Percent of
Class
|
|||||
Bristol
Investment Fund, Ltd. (A)
|
|
233,333
|
(2)
|
233,333
|
|
0
|
|
0.0
|
%
|
||
DAFNA
LifeScience, Ltd. (A)
|
|
95,767
|
(3)
|
95,767
|
|
0
|
|
0.0
|
%
|
||
DAFNA
LifeScience Select, Ltd. (A)
|
|
249,615
|
(4)
|
249,615
|
|
0
|
|
0.0
|
%
|
||
DAFNA
LifeScience Market Neutral, Ltd. (A)
|
|
121,284
|
(5)
|
121,284
|
|
0
|
|
0.0
|
%
|
||
Hudson
Bay Fund LP (A)
|
|
50,167
|
(6)
|
50,167
|
|
0
|
|
0.0.
|
%
|
||
Hudson
Bay Overseas Fund LTD (A)
|
|
66,500
|
(7)
|
66,500
|
|
0
|
|
0.0
|
%
|
||
GCA
Strategic Investment Fund (A)
|
|
1,166,667
|
(8)
|
1,166,667
|
|
0
|
|
0.0
|
%
|
||
Cranshire
Capital, L.P. (A)
|
|
583,335
|
(9)
|
583,335
|
|
0
|
|
0.0
|
%
|
||
Nite
Capital Master Ltd. (A)
|
|
466,667
|
(10)
|
466,667
|
|
0
|
|
0.0
|
%
|
||
Crescent
International Ltd (A)
|
700,000
|
(11)
|
700,000
|
0
|
|
0.0
|
%
|
||||
Double
U Master Fund LP (A)
|
233,333
|
(12)
|
233,333
|
0
|
|
0.0
|
%
|
||||
R&R
Opportunity Fund, L.P. (A)
|
385,000
|
(13)
|
385,000
|
0
|
|
0.0
|
%
|
||||
RHP
Master Fund, Ltd. (A)
|
116,667
|
(14)
|
116,667
|
0
|
0.0
|
%
|
|||||
Iroquois
Master Fund Ltd. (A)
|
58,333
|
(15)
|
58,333
|
0
|
0.0
|
%
|
|||||
Icon
Capital Partners LP (A)
|
140,000
|
(16)
|
140,000
|
0
|
0.0
|
%
|
|||||
Rodman
& Renshaw LLC (B)
|
186,667
|
(17)
|
186,667
|
0
|
0.0
|
%
|
|||||
TOTAL
|
4,853,335
|
4,853,335
|
0
|
0.0
|
%
|
(1)
|
Assumes
the sale of all the shares offered hereby. This registration statement
also shall cover any additional shares of common stock which become
issuable in connection with the shares registered for resale hereby
by
reason of any stock dividend, stock split, recapitalization or
other
similar transaction effected without the receipt of consideration
which
results in an increase in the outstanding shares of our common
stock.
|
|
(2)
|
Includes
100,000 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(3)
|
Includes
41,043 shares issuable upon exercise of a warrant held by the selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(4)
|
Includes
106,978 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(5)
|
Includes
51,979 shares issuable upon exercise of a warrant held by the selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(6)
|
Includes
21,500 shares issuable upon exercise of a warrant held by the selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(7)
|
Includes
28,500 shares issuable upon exercise of a warrant held by the selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(8)
|
Includes
500,000 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(9)
|
Includes
250,001 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(10)
|
Includes
200,000 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(11)
|
Includes
300,000 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(12)
|
Includes
100,000 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(13)
|
Includes
165,000 shares issuable upon exercise of a warrant held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(14)
|
Includes
50,000 shares issuable upon exercise of a warrant held by the selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(15)
|
Includes
25,000 shares issuable upon exercise of a warrant held by the selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(16)
|
Includes
60,000 shares issuable upon exercise of a warrant held by the selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
|
(17)
|
Consists
entirely of shares issuable upon exercise of warrants held by the
selling
stockholder. Such shares are subject to resale by the use of this
prospectus.
|
(A)
|
We
issued an aggregate of 2,666,667 shares of our common stock to
the selling
stockholders in connection with our $2.0 million private placement
in May
2007. We also issued to the selling stockholders warrants to purchase
a
total of 2,186,668 shares of our common stock in that private placement.
We agreed to register all of these shares, including those issuable
upon
exercise of the warrants, and to pay substantially all of the expenses
of
offering them under this
prospectus.
|
(B)
|
In
connection with the private placement referred to above under footnote
(A), we issued for services as a placement agent a warrant to purchase
an
aggregate of 186,667 shares of our common stock. We agreed to
register all the shares issuable upon exercise of the warrants
and to pay
substantially all of the expenses of offering them under this
prospectus.
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
|
|
·
|
a
combination of any such methods of sale;
or
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
·
|
before
such person became an interested stockholder, the board of directors
of
the corporation approved the transaction in which the interested
stockholder became an interested stockholder or approved the business
combination;
|
·
|
upon
consummation of the transaction that resulted in the interested
stockholder’s becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding stock
held by
directors who are also officers of the corporation and by employee
stock
plans that do not provide employees with the rights to determine
confidentially whether shares held subject to the plan will be
tendered in
a tender or exchange offer); or
|
·
|
following
the transaction in which such person became an interested stockholder,
the
business combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the
affirmative
vote of the holders of two-thirds of the outstanding voting stock
of the
corporation not owned
|
·
|
by
the interested stockholder.
|
·
|
shall
be indemnified by the corporation for all expenses of such legal
proceedings when he is successful on the
merits;
|
·
|
may
be indemnified by the corporation for the expenses, judgments,
fines and
amounts paid in settlement of such proceedings (other than a derivative
suit), even if he is not successful on the merits, if he acted
in good
faith and in a manner he reasonably believed to be in or not opposed
to
the best interests of the corporation, and, with respect to any
criminal
action or proceeding, had no reasonable cause to believe his conduct
was
unlawful; and
|
·
|
may
be indemnified by the corporation for the expenses of a derivative
suit (a
suit by a stockholder alleging a breach by a director or officer
of a duty
owed to the corporation), even if he is not successful on the merits,
if
he acted in good faith and in a manner he reasonably believed to
be in or
not opposed to the best interests of the
corporation.
|
·
|
for
any breach of the director’s duty of loyalty to the corporation or its
stockholders,
|
·
|
for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of
law,
|
·
|
under
Section 174 of the DGCL, or
|
·
|
for
any transaction from which the director derived an improper personal
benefit.
|
·
|
Article
Eighth of our certificate of incorporation provides for the elimination
of
personal liability of a director for breach of fiduciary duty,
as
permitted by Section 102(b)(7) of the DGCL. We maintain liability
insurance on our officers and directors against liabilities that
they may
incur in such capacities. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors,
officers
or persons controlling our company pursuant to the foregoing provisions,
we have been informed that in the opinion of the SEC such indemnification
is against public policy as expressed in the Act and is therefore
unenforceable.
|
Page
|
||
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
|
Consolidated
Balance Sheets – As of March 31, 2007 (unaudited), September 30, 2006 and
September 30, 2005
|
F-4
|
|
Consolidated
Statements of Operations – For each of the three fiscal years ended
September 30, 2006 and the six months ended March 31, 2007 and
2006
(unaudited)
|
F-5
|
|
Consolidated
Statements of Stockholders’ Equity (Deficit) – For each of the three
fiscal years ended September 30, 2006 and the six months ended
March 31,
2007 (unaudited)
|
F-6
|
|
Consolidated
Statements of Cash Flows – For each of the three fiscal years ended
September 30, 2006 and the six months ended March 31, 2007 and
2006
(unaudited)
|
F-7
|
|
Notes
to Consolidated Financial Statements
|
F-8
|
CONSOLIDATED
BALANCE SHEETS
|
||||||||||||
(Dollars
in thousands, except per share data)
|
||||||||||||
September
30,
|
March
31,
|
|||||||||||
2006
|
2005
|
2007
|
||||||||||
ASSETS
|
(Unaudited)
|
|||||||||||
Current
assets:
|
||||||||||||
Cash
and cash equivalents
|
$ |
3,324
|
$ |
626
|
$ |
913
|
||||||
Accounts
receivable
|
-
|
14
|
200
|
|||||||||
Prepaids
and other current assets
|
104
|
289
|
147
|
|||||||||
Total
current assets
|
3,428
|
929
|
1,260
|
|||||||||
Other
assets
|
126
|
8
|
126
|
|||||||||
Total
assets
|
$ |
3,554
|
$ |
937
|
$ |
1,386
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||||||
Current
liabilities:
|
||||||||||||
Accounts
payable
|
$ |
868
|
$ |
712
|
$ |
273
|
||||||
Accrued
expenses
|
23
|
290
|
16
|
|||||||||
Current
maturities of long-term note payable
|
956
|
-
|
-
|
|||||||||
Total
current liabilities
|
1,847
|
1,002
|
289
|
|||||||||
Long-term
note payable
|
-
|
867
|
459
|
|||||||||
Total
liabilities
|
1,847
|
1,869
|
748
|
|||||||||
Commitments
and Contingencies (Note G and O)
|
||||||||||||
Stockholders'
equity (deficit):
|
||||||||||||
Preferred
stock, $.01 par value per share, 10,000,000 shares
authorized:
|
||||||||||||
Series
B nonredeemable convertible preferred stock, 600,000 shares
authorized;
|
||||||||||||
475,087shares
issued and outstanding as of September 30, 2006 and 2005
|
||||||||||||
and
March 31, 2007, respectively
|
5
|
5
|
5
|
|||||||||
Common
stock, $.01 par value per share, 150,000,000 shares
authorized;
|
||||||||||||
29,265,249,
14,038,259 and 29,286,082 shares issued and outstanding at
|
||||||||||||
September
30, 2006 and 2005 and March 31, 2007, respectively
|
293
|
140
|
293
|
|||||||||
Additional
paid-in capital
|
154,311
|
146,016
|
154,735
|
|||||||||
Accumulated
deficit
|
(152,902 | ) | (147,093 | ) | (154,395 | ) | ||||||
Total
stockholders' equity (deficit)
|
1,707
|
(932 | ) |
638
|
||||||||
Total
liabilities and stockholders' equity
|
$ |
3,554
|
$ |
937
|
$ |
1,386
|
||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||||||
Six
Months Ended
|
||||||||||||||||||||
Fiscal
Year Ended September 30,
|
March
31,
|
|||||||||||||||||||
2006
|
2005
|
2004
|
2007
|
2006
|
||||||||||||||||
Revenue
|
(Unaudited)
|
(Unaudited)
|
||||||||||||||||||
Grant
income
|
$ |
92
|
$ |
252
|
$ |
305
|
$ |
-
|
$ |
92
|
||||||||||
Costs
and expenses:
|
||||||||||||||||||||
Research
and development
|
3,480
|
4,515
|
8,295
|
677
|
2,258
|
|||||||||||||||
General
and administrative
|
2,216
|
2,674
|
3,987
|
1,076
|
1,047
|
|||||||||||||||
Total
costs and expenses
|
5,696
|
7,189
|
12,282
|
1,753
|
3,305
|
|||||||||||||||
Loss
from operations
|
(5,604 | ) | (6,937 | ) | (11,977 | ) | (1,753 | ) | (3,213 | ) | ||||||||||
Equity
in income of CPEC LLC ($315 dividend received in 2006)
|
433
|
-
|
-
|
-
|
433
|
|||||||||||||||
Interest
income (expense), net
|
(6 | ) | (31 | ) | (5,213 | ) |
35
|
(19 | ) | |||||||||||
Other
income
|
53
|
63
|
23
|
225
|
36
|
|||||||||||||||
(Increase)
decrease in fair value of common stock warrants
|
(604 | ) |
-
|
-
|
-
|
401
|
||||||||||||||
Net
loss
|
(5,728 | ) | (6,905 | ) | (17,167 | ) | (1,493 | ) | (2,362 | ) | ||||||||||
Preferred
stock dividend and accretion
|
(81 | ) |
-
|
(135 | ) |
-
|
(55 | ) | ||||||||||||
Net
loss attributable to common stockholders
|
$ | (5,809 | ) | $ | (6,905 | ) | $ | (17,302 | ) | $ | (1,493 | ) | $ | (2,417 | ) | |||||
Net
loss per common share (basic and diluted):
|
$ | (0.31 | ) | $ | (0.49 | ) | $ | (2.06 | ) | $ | (0.05 | ) | $ | (0.17 | ) | |||||
Weighted
average common shares outstanding:
|
||||||||||||||||||||
Basic
and diluted
|
18,926
|
13,976
|
8,388
|
29,277
|
14,058
|
|||||||||||||||
The
accompanying notes are an integral part of the consolidated financial
statements.
|
AEOLUS
PHARMACEUTICALS, INC.
|
||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||||||||||||||||||||||||||||||||||
(Dollars
in thousands, Amounts for the six months ended March 31, 2007
are
unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Series
A
|
Series
B
|
Common
|
Total
|
|||||||||||||||||||||||||||||||||||||
Preferred
Stock
|
Preferred
Stock
|
Stock
|
Additional
|
Stockholders'
|
||||||||||||||||||||||||||||||||||||
Number
|
Number
|
Par
|
Number
|
Par
|
Paid-in
|
Restricted
|
Accumulated
|
Equity
|
||||||||||||||||||||||||||||||||
of
Shares
|
Value
|
of
Shares
|
Value
|
of
Shares
|
Value
|
Capital
|
Stock
|
Deficit
|
(Deficit)
|
|||||||||||||||||||||||||||||||
Balance
at September 30, 2003
|
-
|
$ |
-
|
503,544
|
$ |
5
|
1,413,383
|
$ |
14
|
$ |
105,892
|
$ | (104 | ) | $ | (122,886 | ) | $ | (17,079 | ) | ||||||||||||||||||||
Series
C preferred stock dividends and accretion
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(135 | ) | (135 | ) | ||||||||||||||||||||||||||||
Common
stock issued in exchange of Series C preferred stock
|
-
|
-
|
-
|
-
|
225,533
|
2
|
14,635
|
-
|
-
|
14,637
|
||||||||||||||||||||||||||||||
Common
stock issued in exchange for notes payable and accrued
interest
|
-
|
-
|
-
|
-
|
8,141,979
|
81
|
8,061
|
-
|
-
|
8,142
|
||||||||||||||||||||||||||||||
Beneficial
conversion feature of convertible debt
|
-
|
-
|
-
|
-
|
-
|
-
|
5,000
|
-
|
-
|
5,000
|
||||||||||||||||||||||||||||||
Proceeds
from offerings of Employee Stock Purchase Plan
|
-
|
-
|
-
|
-
|
652
|
-
|
2
|
-
|
-
|
2
|
||||||||||||||||||||||||||||||
Sale
of common stock pursuant to stock offering, net of issuance costs
of
$901
|
-
|
-
|
-
|
-
|
4,104,000
|
41
|
9,318
|
-
|
-
|
9,359
|
||||||||||||||||||||||||||||||
Exercise
of common stock options
|
-
|
-
|
-
|
-
|
61,756
|
1
|
75
|
-
|
-
|
76
|
||||||||||||||||||||||||||||||
Stock-based
compensation and amortization of restricted stock
|
-
|
-
|
-
|
-
|
-
|
-
|
2,593
|
104
|
-
|
2,697
|
||||||||||||||||||||||||||||||
Net
loss for the fiscal year ended September 30, 2004
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(17,167 | ) | (17,167 | ) | ||||||||||||||||||||||||||||
Balance
at September 30, 2004
|
-
|
-
|
503,544
|
5
|
13,947,303
|
139
|
145,576
|
-
|
(140,188 | ) |
5,532
|
|||||||||||||||||||||||||||||
Common
stock issued in exchange of Series B preferred stock
|
-
|
-
|
(28,457 | ) |
-
|
28,457
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Compensation
expense on the accelerated vesting of employee stock
options
|
-
|
-
|
-
|
-
|
-
|
-
|
293
|
-
|
-
|
293
|
||||||||||||||||||||||||||||||
Exercise
of common stock options
|
-
|
-
|
-
|
-
|
62,499
|
1
|
62
|
-
|
-
|
63
|
||||||||||||||||||||||||||||||
Stock-based
compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
85
|
-
|
-
|
85
|
||||||||||||||||||||||||||||||
Net
loss for the fiscal year ended September 30, 2005
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,905 | ) | (6,905 | ) | ||||||||||||||||||||||||||||
Balance
at September 30, 2005
|
-
|
-
|
475,087
|
5
|
14,038,259
|
140
|
146,016
|
-
|
(147,093 | ) | (932 | ) | ||||||||||||||||||||||||||||
Sale
of Series A preferred stock pursuant to stock offering, net of
issuance
|
||||||||||||||||||||||||||||||||||||||||
costs
of $88
|
1,250,000
|
354
|
-
|
-
|
(87 | ) |
-
|
-
|
(87 | ) | ||||||||||||||||||||||||||||||
Conversion
of Series A Preferred Stock
|
(1,250,000 | ) | (354 | ) |
-
|
-
|
5,000,000
|
50
|
304
|
-
|
-
|
354
|
||||||||||||||||||||||||||||
Sale
of common stock pursuant to stock offering, net of issuance costs
of
$46
|
-
|
-
|
-
|
-
|
10,000,000
|
100
|
43
|
-
|
-
|
143
|
||||||||||||||||||||||||||||||
Common
stock issued pursuant to a license agreement
|
-
|
-
|
-
|
-
|
25,000
|
1
|
12
|
-
|
-
|
13
|
||||||||||||||||||||||||||||||
Series
A Preferred Stock dividend and accretion
|
-
|
-
|
-
|
-
|
118,658
|
1
|
80
|
-
|
(81 | ) |
-
|
|||||||||||||||||||||||||||||
Exercise
of common stock options
|
-
|
-
|
-
|
-
|
83,332
|
1
|
82
|
-
|
-
|
83
|
||||||||||||||||||||||||||||||
Reclassifcation
of common stock warrant liabilities
|
-
|
-
|
-
|
-
|
-
|
-
|
7,361
|
-
|
-
|
7,361
|
||||||||||||||||||||||||||||||
Stock-based
compensation and amortization of warrants
|
-
|
-
|
-
|
-
|
-
|
-
|
500
|
-
|
-
|
500
|
||||||||||||||||||||||||||||||
Net
loss for the fiscal year ended September 30, 2006
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,728 | ) | (5,728 | ) | ||||||||||||||||||||||||||||
Balance
at September 30, 2006
|
-
|
-
|
475,087
|
5
|
29,265,249
|
293
|
154,311
|
-
|
(152,902 | ) |
1,707
|
|||||||||||||||||||||||||||||
Exercise
of common stock options (unaudited)
|
-
|
-
|
-
|
-
|
20,833
|
-
|
21
|
-
|
-
|
21
|
||||||||||||||||||||||||||||||
Stock-based
compensation and amortization of
warrants (unaudited)
|
-
|
-
|
-
|
-
|
-
|
-
|
403
|
-
|
-
|
403
|
||||||||||||||||||||||||||||||
Net
loss for the six months ended March 31, 2007 (unaudited)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,493 | ) | (1,493 | ) | ||||||||||||||||||||||||||||
Balance
at March 31, 2007 (unaudited)
|
-
|
$ |
-
|
475,087
|
$ |
5
|
29,286,082
|
$ |
293
|
$ |
154,735
|
$ |
-
|
$ | (154,395 | ) | $ |
638
|
||||||||||||||||||||||
The
accompanying notes are an integral part of the consolidated financial
statements.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Six
Months Ended
|
||||||||||||||||||||
Fiscal
Year Ended September 30,
|
March
31,
|
|||||||||||||||||||
2006
|
2005
|
2004
|
2007
|
2006
|
||||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||||||
Net
loss
|
$ | (5,728 | ) | $ | (6,905 | ) | $ | (17,167 | ) | $ | (1,493 | ) | $ | (2,362 | ) | |||||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||||||||||
Depreciation
and amortization
|
-
|
9
|
10
|
-
|
-
|
|||||||||||||||
Noncash
compensation
|
500
|
293
|
2,569
|
403
|
156
|
|||||||||||||||
Noncash
interest and financing costs
|
89
|
81
|
5,153
|
28
|
41
|
|||||||||||||||
Noncash
consulting and license fee
|
13
|
85
|
128
|
-
|
||||||||||||||||
Foregiveness
of note payable
|
-
|
(225 | ) | |||||||||||||||||
Equity
in income of CPEC LLC
|
-
|
-
|
-
|
(433 | ) | |||||||||||||||
Amortization
of debt issuance costs
|
-
|
-
|
15
|
-
|
-
|
|||||||||||||||
(Increase)
decrease in fair value of common stock warrants
|
604
|
-
|
-
|
-
|
(401 | ) | ||||||||||||||
(Gain)
Loss on sale or disposal of equipment
|
-
|
(19 | ) |
-
|
-
|
-
|
||||||||||||||
Change
in assets and liabilities:
|
||||||||||||||||||||
Accounts
receivable
|
13
|
124
|
(131 | ) | (199 | ) |
9
|
|||||||||||||
Prepaids
and other assets
|
(247 | ) |
25
|
140
|
(44 | ) | (71 | ) | ||||||||||||
Accounts
payable and accrued expenses
|
(111 | ) | (535 | ) |
642
|
(602 | ) |
284
|
||||||||||||
Net
cash used in operating activities
|
(4,867 | ) | (6,842 | ) | (8,641 | ) | (2,132 | ) | (2,777 | ) | ||||||||||
Cash
flows from investing activities:
|
||||||||||||||||||||
Proceeds
from dividend from CPEC LLC
|
315
|
-
|
-
|
-
|
-
|
|||||||||||||||
Proceeds
from sale of equipment
|
-
|
25
|
-
|
-
|
-
|
|||||||||||||||
Net
cash provided by investing activities
|
315
|
25
|
-
|
-
|
-
|
|||||||||||||||
Cash
flows from financing activities:
|
||||||||||||||||||||
Proceeds
from notes payable, net of issuance costs
|
-
|
-
|
6,000
|
-
|
-
|
|||||||||||||||
Repayment
of note payable
|
-
|
-
|
-
|
(300 | ) |
-
|
||||||||||||||
Proceeds
from issuance of Series A preferred stock
|
2,413
|
-
|
-
|
-
|
2,413
|
|||||||||||||||
Proceeds
from issuance of common stock and warrants,
|
||||||||||||||||||||
net
of issuance costs
|
4,754
|
-
|
9,436
|
-
|
-
|
|||||||||||||||
Proceeds
from exercise of stock options
|
83
|
62
|
-
|
21
|
42
|
|||||||||||||||
Principal
payments on notes payable
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Principal
payments on capital lease obligations
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net
cash provided by (used in) financing activities
|
7,250
|
62
|
15,436
|
(279 | ) |
2,455
|
||||||||||||||
Net
(decrease) increase in cash and cash equivalents
|
2,698
|
(6,755 | ) |
6,795
|
(2,411 | ) | (322 | ) | ||||||||||||
Cash
and cash equivalents at beginning of year
|
626
|
7,381
|
586
|
3,324
|
626
|
|||||||||||||||
Cash
and cash equivalents at end of year
|
$ |
3,324
|
$ |
626
|
$ |
7,381
|
$ |
913
|
$ |
304
|
||||||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||||||||||
Cash
payments of interest
|
$ |
-
|
$ |
-
|
$ |
1
|
$ |
-
|
$ |
-
|
||||||||||
Supplemental
disclosure of non-cash investing and financing activities:
|
||||||||||||||||||||
Common
stock issued in exchange for Series A preferred stock
|
$ |
354
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||||
Common
stock issued in exchange for Series B preferred stock
|
$ |
-
|
$ |
28
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||||
Common
stock issued in exchange for Series C preferred stock
|
$ |
-
|
$ |
-
|
$ |
14,637
|
$ |
-
|
$ |
-
|
||||||||||
Common
stock issued in exchange for notes payable
|
||||||||||||||||||||
and
accrued interest
|
$ |
-
|
$ |
-
|
$ |
8,142
|
$ |
-
|
$ |
-
|
||||||||||
Beneficial
conversion feature of convertible debt
|
$ |
-
|
$ |
-
|
$ |
5,000
|
$ |
-
|
$ |
-
|
||||||||||
Preferred
stock dividend accreted
|
$ |
81
|
$ |
-
|
$ |
135
|
$ |
-
|
$ |
-
|
September
30, 2006
|
September
30, 2005
|
March
31,
2007
|
||||||||||
(unaudited)
|
||||||||||||
Office
equipment
|
$ |
35
|
$ |
35
|
$ |
35
|
||||||
Laboratory
equipment
|
-
|
-
|
-
|
|||||||||
Leasehold
improvements
|
-
|
-
|
-
|
|||||||||
35
|
35
|
35
|
||||||||||
Less: accumulated
depreciation and amortization
|
(35 | ) | (35 | ) | (35 | ) | ||||||
$ |
-
|
$ |
-
|
$ |
-
|
September
30,
2006
|
September
30,
2005
|
March
31,
2007
(unaudited)
|
||||||||||
Lease
reserve (Note G)
|
$ |
—
|
$ |
267
|
$ |
—
|
||||||
Payroll-related
liabilities
|
23
|
10
|
16
|
|||||||||
Other
|
—
|
13
|
—
|
|||||||||
$ |
23
|
$ |
290
|
$ |
16
|
Number
of Shares
|
|
Exercise
Price
|
|
Expiration
Date
|
|||
|
|
|
|
|
|
||
4,000,000
|
$
|
0.50
|
June
2007
|
||||
50,000
|
|
$
|
0.50
|
|
May
2011
|
||
2,500,000
|
$
|
0.50
|
November
2010
|
||||
7,000,000
|
$
|
0.75
|
June
2011
|
||||
50,000
|
$
|
1.00
|
May
2011
|
||||
35,000
|
$
|
1.00
|
July
2008
|
||||
50,000
|
$
|
1.50
|
May
2011
|
||||
50,000
|
$
|
2.00
|
May
2011
|
||||
50,000
|
$
|
2.50
|
May
2011
|
||||
410,400
|
$
|
2.50
|
April
2009
|
||||
1,641,600
|
$
|
4.00
|
April
2009
|
||||
1,759
|
|
$
|
19.90
|
|
October
2008
|
||
15,838,759
|
|
|
|
|
|
Intrinsic
|
|||||||||||||
Weighted
Average
|
Weighted
Average
|
Value
|
|||||||||||
Shares
|
Exercise
Price
|
Contractual
Life
|
(in
000s)
|
||||||||||
Outstanding
at September 30, 2003
|
1,675,685
|
$ |
5.25
|
9.3
years
|
$ |
367
|
|||||||
Granted
|
406,324
|
$ |
2.62
|
||||||||||
Exercised
|
(61,756 | ) | $ |
1.22
|
8.8
years
|
$ |
11
|
||||||
Cancelled
|
(8,033 | ) | $ |
43.26
|
|||||||||
Outstanding
at September 30, 2004
|
2,012,220
|
$ |
4.69
|
8.6
years
|
$ |
93
|
|||||||
Granted
|
463,300
|
$ |
0.96
|
||||||||||
Exercised
|
(62,499 | ) | $ |
1.00
|
9.9
years
|
$ |
2
|
||||||
Cancelled
|
(18,930 | ) | $ |
6.77
|
|||||||||
Outstanding
at September 30, 2005
|
2,394,091
|
$ |
4.05
|
8.0
years
|
$ |
65
|
|||||||
Granted
|
777,641
|
$ |
0.81
|
10.0
years
|
$ |
-
|
|||||||
Exercised
|
(83,332 | ) | $ |
1.00
|
9.2
years
|
$ | (14 | ) | |||||
Cancelled
|
(16,594 | ) |
16.84
|
||||||||||
Outstanding
at September 30, 2006
|
3,071,806
|
$ |
3.25
|
7.7
years
|
$ |
22
|
|||||||
Granted
|
742,000
|
$ |
0.60
|
||||||||||
Exercised
|
(20,833 | ) | $ |
1.00
|
|||||||||
Cancelled
|
(452,356 | ) |
0.64
|
||||||||||
Outstanding
at March 31, 2007 (unaudited)
|
3,340,617
|
$ |
3.02
|
7.2
years
|
$ |
27
|
|
Shares
|
|||
|
|
|||
Nonvested
at September 30, 2005
|
112,917
|
|||
Granted
|
777,641
|
|||
Vested
|
(350,972 | ) | ||
Nonvested
at September 30, 2006
|
539,586
|
|||
Granted
|
742,000
|
|||
Cancelled
|
(452,356 | ) | ||
Vested
|
(446,313 | ) | ||
Nonvested
at March 31, 2007 (unaudited)
|
382,917
|
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||
Range
of Exercise Prices
|
Number
Outstanding at March 31, 2007
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Life
|
Number
Exercisable at March 31, 2007
|
Weighted
Average Exercise Price
|
||||||||||||||
|
|
|
|
|
|
||||||||||||||
$0.38
- $0.73
|
337,211
|
$ |
0.61
|
8.0
years
|
183,044
|
$ |
0.61
|
||||||||||||
$0.75
- $0.80
|
396,000
|
$ |
0.76
|
8.9
years
|
282,667
|
$ |
0.76
|
||||||||||||
$0.81
- $0.85
|
350,994
|
$ |
0.85
|
8.6
years
|
235,994
|
$ |
0.85
|
||||||||||||
$0.89
- $1.12
|
340,477
|
$ |
0.95
|
8.5
years
|
340,477
|
$ |
0.95
|
||||||||||||
$1.13
- $1.45
|
50,450
|
$ |
1.16
|
7.7
years
|
50,450
|
$ |
1.16
|
||||||||||||
$1.50
|
1,256,015
|
$ |
1.50
|
6.3
years
|
1,256,015
|
$ |
1.50
|
||||||||||||
$1.52
- $5.00
|
374,556
|
$ |
2.74
|
7.3
years
|
374,139
|
$ |
2.74
|
||||||||||||
$5.10
- $31.88
|
186,115
|
$ |
18.84
|
4.2
years
|
186,115
|
$ |
18.84
|
||||||||||||
$50.9375
|
2,999
|
$ |
50.94
|
3.0
years
|
2,999
|
$ |
50.94
|
||||||||||||
$51.25
|
45,800
|
$ |
51.25
|
3.0
years
|
45,800
|
$ |
51.25
|
||||||||||||
$0.38
- $51.25
|
3,340,617
|
$ |
3.02
|
7.2
years
|
2,957,700
|
$ |
3.32
|
For
the year ended September 30,
|
||||||||
2005
|
2004
|
|||||||
Net
loss attributable to common stockholders (in thousands):
|
||||||||
As
reported
|
$ | (6,905 | ) | $ | (17,302 | ) | ||
Add:
APB 25 compensation expense on the accelerated
|
||||||||
vesting
of employee stock options
|
294
|
1,394
|
||||||
Less: pro
forma adjustment for stock-based
|
||||||||
compensation
expense
|
(676 | ) | (1,081 | ) | ||||
Pro
forma
|
$ | (7,287 | ) | $ | (16,989 | ) | ||
Basic
and diluted net loss per weighted share attributable to
|
||||||||
common
stockholders:
|
||||||||
As
reported
|
$ | (0.49 | ) | $ | (2.06 | ) | ||
Effect
of pro forma adjustment
|
(0.03 | ) |
0.03
|
|||||
Pro
forma
|
$ | (0.52 | ) | $ | (2.03 | ) |
For
the year ended September 30,
|
Six
Months Ended March 31, 2007
(unaudited)
|
|||||||
2006
|
2005
|
2004
|
||||||
Dividend
yield
|
0%
|
0%
|
0%
|
0%
|
||||
Expected
volatility
|
189
– 191%
|
195%
|
274%
|
191
- 195%
|
||||
Risk-free
interest rate
|
4.3%
- 5.2%
|
2.9%
- 4.3%
|
1.2%
- 4.7%
|
4.5%
- 5.1%
|
||||
Expected
option life after shares are vested
|
10
years
|
10
years
|
3
years
|
10
years
|
For
the year ended September 30, 2006
|
For
six months ended March 31,
|
|||||||||||
2007
|
2006
|
|||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||
Research
and development expenses
|
$ |
43
|
$ |
130
|
$ |
23
|
||||||
General
and administrative expenses
|
457
|
248
|
133
|
|||||||||
Total
stock-based compensation expense
|
$ |
500
|
$ |
378
|
$ |
156
|
|
2006
|
2005
|
||||||
|
|
|
||||||
Net
operating loss carryforwards
|
$ |
35,772
|
$ |
35,068
|
||||
AMT
credit carryforwards
|
37
|
37
|
||||||
Research
and development credit
carryforwards
|
3,244
|
2,967
|
||||||
Accrued
payroll related liabilities
|
2,464
|
2,464
|
||||||
Charitable
contribution carryforwards
|
1,109
|
1,109
|
||||||
Total
deferred tax assets
|
42,626
|
41,645
|
||||||
Deferred
tax liabilities
|
--
|
(109 | ) | |||||
Valuation
allowance for deferred assets
|
(42,626 | ) | (41,536 | ) | ||||
Net
deferred tax asset
|
$ |
—
|
$ |
—
|
|
2006
|
2005
|
2004
|
|||||||||
|
|
|
|
|||||||||
Effective
income tax rate
|
0 | % | 0 | % | 0 | % | ||||||
|
||||||||||||
United
States Federal income tax at statutory rate
|
$ | (1,975 | ) | $ | (2,348 | ) | $ | (5,837 | ) | |||
State
income taxes (net of federal benefit)
|
(277 | ) | (296 | ) | (773 | ) | ||||||
Change
in valuation reserves
|
2,351
|
2,629
|
4,923
|
|||||||||
Other
|
(99 | ) |
15
|
1,687
|
||||||||
Provision
for income taxes
|
$ |
—
|
$ |
—
|
$ |
—
|
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
Year
|
|||||||||||||||
|
(in
thousands, except per share amounts)
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Fiscal
2006
|
|
|
|
|
|
|||||||||||||||
Total
revenue
|
$ |
1
|
$ |
91
|
$ |
—
|
$ |
—
|
$ |
92
|
||||||||||
Net
loss attributable to common stockholders
|
$ | (1,523 | ) | $ | (894 | ) | $ | (3,178 | ) | $ | (214 | ) | $ | (5,809 | ) | |||||
Net
loss per common share (basic and diluted):
|
||||||||||||||||||||
Net
loss attributable to common stockholders
|
$ | (0.11 | ) | $ | (0.06 | ) | $ | (0.17 | ) | $ | (0.01 | ) | $ | (0.31 | ) | |||||
|
||||||||||||||||||||
Fiscal
2005
|
||||||||||||||||||||
Total
revenue
|
$ |
109
|
$ |
6
|
$ |
121
|
$ |
16
|
$ |
252
|
||||||||||
Net
loss attributable to common stockholders
|
$ | (1,957 | ) | $ | (1,659 | ) | $ | (1,636 | ) | $ | (1,653 | ) | $ | (6,905 | ) | |||||
Net
loss per common share (basic and diluted):
|
||||||||||||||||||||
Net
loss attributable to common stockholders
|
$ | (0.14 | ) | $ | (0.12 | ) | $ | (0.12 | ) | $ | (0.12 | ) | $ | (0.49 | ) |