DELAWARE
|
41-1505029
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
|
1101
Brickell Ave., Suite 701-S
Miami,
FL
|
33131
|
|
(Address
of principal executive offices)
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(Zip
Code)
|
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(786)
425-3848
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||
(Issuer’s
telephone number, including area code)
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Item
|
Description
|
Page
|
Part
I
|
FINANCIAL
INFORMATION
|
|
1.
|
Financial
Statements.
|
3
|
2.
|
Management’s
Discussion and Analysis.
|
16
|
3.
|
Controls
and Procedures.
|
22
|
Part
II
|
OTHER
INFORMATION
|
|
4.
|
Exhibits.
|
23
|
|
|||||||
Assets
Current
assets:
|
|||||||
Cash
and cash equivalents
|
|
$
|
589,601
|
||||
Grants
receivable
|
|
407,564
|
|||||
Prepaid
expenses
|
|
96,868
|
|||||
Total
current assets
|
|
1,094,033
|
|||||
Office
and laboratory equipment, net
|
|
33,370
|
|||||
Intangible
assets, net
|
|
1,080,353
|
|||||
Total
assets
|
|
|
$
|
2,207,756
|
|||
Liabilities
and shareholders’ equity
Current
liabilities:
|
|||||||
Accounts
payable
|
|
|
$
|
1,713,281
|
|||
Accrued
compensation
|
|
100,229
|
|||||
Total
current liabilities
|
|
1,813,510
|
|||||
Shareholders’
equity:
|
|||||||
Common
stock, $.001 par value. Authorized 150,000,000
|
|||||||
shares;
68,687,664 issued and outstanding
|
|
68,687
|
|||||
Additional
paid-in capital
|
|
91,312,807
|
|||||
Accumulated
deficit
|
|
|
(90,987,248
|
)
|
|||
Total
shareholders’ equity
|
|
394,246
|
|||||
Total
liabilities and shareholders’ equity
|
|
|
$
|
2,207,756
|
2006
|
2005
|
||||||
Revenues:
|
$
|
117,982
|
$
|
733,892
|
|||
Cost
of revenues
|
(70,147
|
)
|
(545,812
|
)
|
|||
Gross
profit
|
47,835
|
188,080
|
|||||
Operating
expenses:
|
|||||||
Research
and development
|
761,276
|
964,398
|
|||||
General
and administrative
|
660,085
|
441,489
|
|||||
Total
operating expenses
|
1,421,361
|
1,405,887
|
|||||
Loss
from operations
|
(1,373,526
|
)
|
(1,217,807
|
)
|
|||
Other
income (expense):
|
|||||||
Interest
and other income
|
10,104
|
19,989
|
|||||
Interest
expense
|
(2,106
|
)
|
39,567
|
|
|||
Total
other income (expense)
|
7,998
|
59,556
|
|
||||
Net
loss
|
$
|
(1,365,528
|
)
|
$
|
(1,158,251
|
)
|
|
Basic
and diluted net loss per share
|
$
|
(
0.02
|
)
|
$
|
(
0.02
|
)
|
|
Basic
and diluted weighted average common shares outstanding
|
68,533,689
|
49,399,734
|
2006
|
2005
|
||||||
Revenues:
|
$
|
1,644,393
|
$
|
2,270,135
|
|||
Cost
of revenues
|
(1,198,403
|
)
|
(1,465,664
|
)
|
|||
Gross
profit
|
445,990
|
804,471
|
|||||
Operating
expenses:
|
|||||||
Research
and development
|
3,821,255
|
2,431,289
|
|||||
Purchased in-process research and development | 981,819 | - | |||||
General
and administrative
|
2,099,608
|
1,207,297
|
|||||
Total
operating expenses
|
6,902,682
|
3,638,586
|
|||||
Loss
from operations
|
(6,456,692
|
)
|
(2,834,115
|
)
|
|||
Other
income (expense):
|
|||||||
Interest
and other income
|
39,282
|
68,588
|
|||||
Interest
expense
|
(2,106
|
)
|
36,549
|
|
|||
Total
other income (expense)
|
37,176
|
105,137
|
|
||||
Net
loss
|
$
|
(6,419,516
|
)
|
$
|
(2,728,978
|
)
|
|
Basic
and diluted net loss per share
|
$
|
(
0.10
|
)
|
$
|
(
0.06
|
)
|
|
Basic
and diluted weighted average common shares outstanding
|
62,062,667
|
49,399,734
|
2006
|
2005
|
|
|||||
Operating
activities:
|
|||||||
Net
loss
|
$
|
(6,419,516
|
)
|
$
|
(2,728,978
|
)
|
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
|||||||
Amortization
and depreciation
|
148,913
|
170,915
|
|||||
Non-cash stock compensation | 655,552 | (284,855 | ) | ||||
Non-cash
stock purchase of in-process research and development
|
|
|
981,819
|
|
-
|
||
Impairment expense for intangibles | 816,300 |
-
|
|||||
Change
in operating assets and liabilities:
|
|||||||
Grants
receivable
|
156,766
|
|
352,302
|
|
|||
Prepaid
expenses
|
41,926
|
(151,790
|
)
|
||||
Accounts payable |
|
|
77,545
|
(965,518
|
) | ||
Accrued royalties |
(60,000
|
) |
|
-
|
|||
Accrued
compensation
|
(48,535
|
)
|
-
|
|
|||
Total adjustments
|
2,770,286
|
(878,946
|
) | ||||
Net
cash used by operating activities
|
(3,649,230
|
)
|
(3,607,924
|
)
|
|||
Investing
activities:
|
|||||||
Acquisition
of intangible assets
|
(228,668
|
)
|
(313,592
|
)
|
|||
Purchases
of equipment
|
(2,552
|
)
|
(11,191
|
)
|
|||
Net
cash used by investing activities
|
(231,220
|
)
|
(324,783
|
)
|
Financing
activities:
|
|||||||
Net
proceeds from sale of common stock
|
3,535,029
|
3,549,593
|
|||||
Proceeds
from exercise of stock options
|
|
113,320 | - | ||||
Repayment
of amounts due under line of credit or note payable
|
-
|
(115,948
|
) | ||||
Net
cash provided by financing activities
|
3,648,349
|
3,433,645
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
(232,101
|
)
|
(499,062
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
821,702
|
2,332,190
|
|||||
Cash
and cash equivalents at end of period
|
$
|
589,601
|
$
|
1,833,128
|
Non-cash
transactions:
|
|||||||
Non-cash stock payment to an institutional investor | $ | 220,374 | - | ||||
Cash
paid for interest
|
|
-
|
$
|
41,865
|
Net Loss applicable to common shareholders | ||
As
reported
|
$(2,728,978
|
) |
Add stock-based employee compensation expense related to stock options determined under fair value method |
(340,237
|
) |
Pro
forma net loss according to SFAS 123
|
$
(3,069,215
|
)
|
Net
loss per share:
|
||
As
reported, basic and diluted
|
$
(
0.06
|
)
|
Pro
forma, basic and diluted
|
$
(
0.06
|
)
|
· |
The
Company is currently seeking sources of additional funding, which
could
involve debt or equity financing.
|
· |
The
Company plans to continue seeking grant funds from governmental sources.
In September 2006, the Company received two grants totaling approximately
$5,300,000 to support the development of its BioDefense vaccine
programs.
|
· |
The
Company is exploring outlicensing opportunities for orBec® both in the US
and Europe and for its BioDefense
programs.
|
· |
In
January 2006, the Company entered into a $6,000,000, 15 month equity
financing agreement with Fusion Capital to fund operations into the
second quarter of 2007. This agreement provides for the sale of $20,000
of
common stock per working day (the amount can be increased if the
stock
price is greater than $0.40). The stock price must be greater than
$0.12
in order to use the financing agreement. Pursuant to the terms of
our
April 2006 private placement, we may not sell any additional shares
to
Fusion Capital without the prior consent of our lead investor until
the
earlier to occur of (i) seven business days after an FDA advisory
panel
meeting regarding the NDA for orBec® or (ii) the date the FDA responds to
the NDA for orBec®. The Company filed its NDA for orBec® on September 21,
2006 with the FDA. The Company expects an initial response as to
its
acceptance of the filing and whether it will be granted priority
review
from the FDA by mid to late November
2006.
|
· |
The
Company believes that if there were no other sources of financing
and it
is not able to utilize the funding from the investment banking
organization, reductions or discontinued operations of several of
the
Company’s programs may be required. If this should occur, the Company
believes it could continue to operate over the next eight quarters
at a
reduced level and only continue with the existing NIH grant
projects.
|
Weighted
Average Amortization period
(years)
|
Cost
|
Accumulated
Amortization
|
Net
Book Value
|
|
September 30, 2006
|
10.1
|
$
1,762,338
|
$
681,985
|
$
1,080,353
|
December
31, 2005
|
10.2
|
$
2,605,472
|
$
802,452
|
$
1,803,020
|
Amortization
Amount
|
|
2006
|
$
145,000
|
2007
|
115,000
|
2008
|
115,000
|
2009
|
115,000
|
2010
|
115,000
|
For
the three months ended September 30,
|
||||||
2006
|
2005
|
|||||
Revenues
|
||||||
BioDefense
|
$
71,881
|
$
733,892
|
||||
BioTherapeutics
|
46,101
|
-
|
||||
Total
|
$
117,982
|
$ 733,892
|
||||
Income
(Loss) from Operations
|
||||||
BioDefense
|
$
(99,395
|
)
|
$
(390,617
|
)
|
||
BioTherapeutics
|
(624,952
|
)
|
(399,842
|
)
|
||
Corporate
|
(649,179
|
)
|
(427,348
|
)
|
||
Total
|
$
(1,373,526
|
)
|
$ (1,217,807
|
)
|
||
Amortization
and Depreciation Expense
|
||||||
BioDefense
|
$
38,001
|
$
39,119
|
||||
BioTherapeutics
|
9,001
|
9,819
|
||||
Corporate
|
2,002
|
3,152
|
||||
Total
|
$
49,004
|
$
52,090
|
||||
Identifiable
Assets
|
||||||
BioDefense
|
$
1,140,106
|
$
2,008,034
|
||||
BioTherapeutics
|
377,812
|
471,770
|
||||
Corporate
|
689,838
|
2,042,203
|
||||
Total
|
$
2,207,756
|
$
4,552,007
|
For
the nine months ended September 30,
|
||||||
2006
|
2005
|
|||||
Revenues
|
||||||
BioDefense
|
$
1,506,092
|
$
2,207,135
|
||||
BioTherapeutics
|
138,301
|
-
|
||||
Total
|
$
1,644,393
|
$
2,207,135
|
||||
Income
(Loss) from Operations
|
||||||
BioDefense
|
$
(1,907,899
|
)
|
$
(548,941
|
)
|
||
BioTherapeutics
|
(3,468,298
|
)
|
(991,535
|
)
|
||
Corporate
|
(1,080,495
|
)
|
(1,293,639
|
)
|
||
Total
|
$
( 6,456,692
|
)
|
$
(2,834,115
|
)
|
||
Amortization
and Depreciation Expense
|
||||||
BioDefense
|
$
112,477
|
$
67,316
|
||||
BioTherapeutics
|
29,478
|
94,105
|
||||
Corporate
|
6,955
|
9,494
|
||||
Total
|
$
148,910
|
$
170,915
|
||||
Contractual
Obligations
|
Year
2006
|
Year
2007
|
Year
2008
|
Non-cancelable
obligations (1)
|
$
17,100
|
$
33,703
|
$
-
|
TOTALS
|
$
17,100
|
$
33,703
|
$
-
|