X__
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QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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_____
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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Commission
File Number
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0-50481
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AEOLUS
PHARMACEUTICALS, INC.
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(Exact
Name of Registrant as Specified in Its
Charter)
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Delaware
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56-1953785
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(State
or Other Jurisdiction of Incorporation or
Organization)
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(I.R.S. Employer Identification No.)
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23811 Inverness Place
Laguna Niguel, California
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92677
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(Address
of Principal Executive Offices)
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(Zip Code)
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(Registrant’s
Telephone Number, Including Area Code)
949-481-9825
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Class
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Outstanding
as of
February 6,
2008
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Common
Stock, par value $.01 per share
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31,952,749
shares
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Page
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PART
I. FINANCIAL
INFORMATION
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Item 1.
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Financial
Statements
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Statement Regarding Financial
Information
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3
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||
Condensed Consolidated Balance
Sheets as of December 31, 2007
(unaudited)
and September 30, 2007
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4
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Condensed Consolidated Statements
of Operations for the Three Months ended December 31, 2007 and 2006
(unaudited)
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5
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||
Condensed Consolidated Statements
of Cash Flows for the Three Months ended December 31, 2007 and 2006
(unaudited)
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6
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Notes to Condensed Consolidated
Financial Statements
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7
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||
Item 2.
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Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
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11
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Item 3.
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Quantitative and Qualitative
Disclosures About Market Risk
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12
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Item 4.
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Controls and
Procedures
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12
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PART
II. OTHER
INFORMATION
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Item 1.
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Legal
Proceedings
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12
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Item 1A.
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Risk
Factors
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12
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Item 2.
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Unregistered Sales of Equity
Securities and Use of Proceeds
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12
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Item 3.
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Defaults
Upon Senior Securities
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12
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Item 4.
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Submission of Matters to a Vote
of Security Holders
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13
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Item
5.
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Other
Information
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13
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Item 6.
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Exhibits
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13
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SIGNATURES
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13
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AEOLUS
PHARMACEUTICALS, INC.
|
|||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
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|||||||
(In
thousands, except shares and per share data)
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|||||||
December
31,
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September
30,
|
||||||
2007
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2007
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||||||
(Unaudited)
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|||||||
ASSETS
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|||||||
Current
assets:
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|||||||
Cash
and cash equivalents
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$ | 1,127 | $ | 1,727 | |||
Prepaids
and other current assets
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41 | 79 | |||||
Total
current assets
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1,168 | 1,806 | |||||
Investments
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125 | 125 | |||||
Total
assets
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$ | 1,293 | $ | 1,931 | |||
LIABILITIES
AND STOCKHOLDERS' EQUITY
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|||||||
Current
liabilities:
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|||||||
Accounts
payable
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$ | 106 | $ | 266 | |||
Accrued
expenses
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5 | 2 | |||||
Total
current liabilities
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111 | 268 | |||||
Long-term
note payable
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495 | 483 | |||||
Total
liabilities
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606 | 751 | |||||
Commitments
and contingences (Note F)
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|||||||
Stockholders'
equity:
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|||||||
Preferred
stock, $.01 par value per share, 10,000,000 shares
authorized:
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|||||||
Series
B nonredeemable convertible preferred stock, 600,000
shares
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|||||||
authorized;
475,087 shares issued and outstanding at December
31,
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|||||||
2007
and September 30, 2007
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5 | 5 | |||||
Common
stock, $.01 par value per share, 150,000,000 shares
authorized;
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|||||||
31,952,749 shares issued and outstanding at December 31, 2007
and
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|||||||
September
30, 2007
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320 | 320 | |||||
Additional
paid-in capital
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156,929 | 156,781 | |||||
Accumulated
deficit
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(156,567 | ) | (155,926 |
)
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|||
Total
stockholders' equity
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687 | 1,180 | |||||
Total
liabilities and stockholders' equity
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$ | 1,293 | $ | 1,931 | |||
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial
statements.
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AEOLUS
PHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In
thousands, except per share data)
|
||||||||
Three
Months Ended
|
||||||||
December
31,
|
||||||||
2007
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2006
|
|||||||
Revenue
|
||||||||
Grant
income
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$ | - | $ | - | ||||
Costs
and expenses:
|
||||||||
Research
and development
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254 | 336 | ||||||
General
and administrative
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395 | 629 | ||||||
Total
costs and expenses
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649 | 965 | ||||||
Loss
from operations
|
(649 | ) | (965 | ) | ||||
Interest
income (expense), net
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8 | 16 | ||||||
Net
loss
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$ | (641 | ) | $ | (949 | ) | ||
Net
loss per weighted share attributable to common
stockholders:
|
||||||||
(basic
and diluted)
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$ | (0.02 | ) | $ | (0.03 | ) | ||
Weighted
average common shares outstanding:
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||||||||
Basic
and diluted
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31,953 | 29,269 | ||||||
AEOLUS
PHARMACEUTICALS, INC.
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
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||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
Three
Months Ended
|
||||||||
December
31,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
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$ | (641 | ) | $ | (949 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
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||||||||
Noncash
compensation
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147 | 238 | ||||||
Noncash
interest and financing costs
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12 | 38 | ||||||
Change
in assets and liabilities:
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||||||||
Accounts
receivable, prepaids and other assets
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38 | 49 | ||||||
Accounts
payable and accrued expenses
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(157 | ) | (303 | ) | ||||
Net
cash used in operating activities
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(600 | ) | (927 | ) | ||||
Cash
flows from financing activities:
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||||||||
Proceeds
from exercise of stock options
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- | 21 | ||||||
Net
cash provided by financing activities
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- | 21 | ||||||
Net
decrease in cash and cash equivalents
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(600 | ) | (906 | ) | ||||
Cash
and cash equivalents at beginning of period
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1,727 | 3,324 | ||||||
Cash
and cash equivalents at end of period
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$ | 1,127 | $ | 2,418 | ||||
The
accompanying notes are integral part of these unaudited condensed
consolidated financial statements.
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Number of Shares
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Exercise Price
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Expiration Date
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|||
50,000
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$ 0.50
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May
2011
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|||
2,500,000
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$ 0.50
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November
2010
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2,186,668
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$ 0.75
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May
2012
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7,000,000
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$ 0.75
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June
2011
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|||
50,000
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$ 1.00
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May
2011
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|||
35,000
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$ 1.00
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July
2008
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|||
50,000
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$ 1.50
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May
2011
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|||
50,000
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$ 2.00
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May
2011
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|||
50,000
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$ 2.50
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May
2011
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|||
410,400
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$ 2.50
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April
2009
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1,641,600
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$ 4.00
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April
2009
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1,759
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$ 19.90
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October
2008
|
|||
14,025,427
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$ 1.15
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Shares
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Weighted
Average Exercise Price
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Weighted
Average Remaining Contractual Term
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Aggregate
Intrinsic Value
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||||||||||
Outstanding
at September 30, 2007
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3,873,617 | $ | 2.72 |
7.3
years
|
$ | 2 | |||||||
Granted
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50,000 | $ | 0.45 | ||||||||||
Exercised
|
--- | $ | --- | ||||||||||
Forfeited
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(98,336 | ) | $ | 0.95 | |||||||||
Outstanding
at December 31, 2007 (unaudited)
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3,825,281 | $ | 2.73 |
7.1
years
|
$ | --- | |||||||
Exercisable
at December 31, 2007 (unaudited)
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3,412,781 | $ | 2.98 |
6.8
years
|
$ | --- |
Options
Outstanding
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Options
Exercisable
|
|||||||||||
Range
of Exercise Prices
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Number
Outstanding at December 31, 2007
|
Weighted
Average Exercise Price
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Weighted
Average Remaining Contractual Life
|
Number
Exercisable at December 31, 2007
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Weighted
Average Exercise Price
|
|||||||
$0.38
- 0.60
|
491,050
|
|
$
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0.55
|
|
9.0
years
|
|
276,883
|
|
$
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0.56
|
|
$0.68
- $0.80
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464,161
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$
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0.75
|
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8.5
years
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|
464,161
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$
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0.75
|
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$0.81
- $0.89
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388,035
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$
|
0.85
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7.9
years
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388,035
|
$
|
0.85
|
|||||
$0.90
|
392,050
|
$
|
0.90
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8.9
years
|
246,217
|
$
|
0.90
|
|||||
$0.91
- $1.45
|
224,500
|
$
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1.04
|
8.3
years
|
172,000
|
$
|
1.05
|
|||||
$1.50
|
1,256,015
|
$
|
1.50
|
5.6
years
|
1,256,015
|
$
|
1.50
|
|||||
$1.52
- $5.10
|
394,391
|
$
|
2.86
|
6.4
years
|
394,391
|
$
|
2.86
|
|||||
$6.25
- $31.88
|
166,280
|
$
|
20.48
|
3.4
years
|
166,280
|
$
|
20.48
|
|||||
$50.9375
|
2,999
|
$
|
50.94
|
2.3
years
|
2,999
|
$
|
50.94
|
|||||
$51.25
|
45,800
|
$
|
51.25
|
2.3
years
|
45,800
|
$
|
51.25
|
|||||
$0.38
- $51.25
|
3,825,281
|
$
|
2.73
|
7.1
years
|
3,412,781
|
$
|
2.98
|
For
the three months
December
31,
|
||||||||
2007
|
2006
|
|||||||
Research
and development expenses
|
$ | 20 | $ | 73 | ||||
General
and administrative expenses
|
127 | 165 | ||||||
Total
stock-based compensation expense
|
$ | 147 | $ | 238 |
For
the three months December 31,
|
||||
2007
|
2006
|
|||
Dividend
yield
|
0%
|
0%
|
||
Expected
volatility
|
197%
|
191%
|
||
Risk-free
interest rate
|
4.6%
|
4.5%
- 5.0%
|
||
Expected
option life after shares are vested
|
10
years
|
10
years
|
Exhibit
#
|
Description
|
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31.1
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Certification
of the Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a).
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31.2
|
Certification
of the Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a).
|
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32.1
|
Certification
by the Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
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Date: February 6, 2008
|
By:
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/s/
John L. McManus
|
John
L. McManus
President
and Chief Executive Officer
(Principal
Executive Officer)
|
||
Date: February 6, 2008
|
By:
|
/s/
Michael P. McManus
|
Michael
P. McManus
Chief
Financial Officer, Treasurer and Secretary
(Principal
Financial and Accounting Officer)
|