NOTE 5. INTANGIBLE ASSETS
The
following table summarizes the Company’s intangible assets as
of September 30, 2017 and December 31, 2016:
Asset Category
|
Weighted Average Amortization Period (in Years)
|
|
|
|
Carrying Value (Net of Impairments and Accumulated
Amortization)
|
|
|
|
|
|
|
IPR&D
|
N/A
|
22,000,000
|
-
|
(22,000,000
)
|
-
|
Total
|
|
$
22,000,000
|
|
$
(22,000,000
)
|
$
-
|
The
aggregate amortization expense on the above intangibles was $0 for
each of the three and nine months ended September 30, 2017 and
2016.
In Process Research and Development
The
levosimendan
product represents
an in process research and development (“IPR&D”)
asset. The IPR&D asset is a research and development project
rather than a product or process already in service or being sold.
Research and development intangible assets are considered
indefinite-lived until the abandonment or completion of the
associated research and development efforts. If abandoned, the
assets would be impaired. Research and development expenditures
that are incurred after the acquisition, including those for
completing the research and development activities related to the
acquired intangible research and development assets, are generally
expensed as incurred.
The
LEVO-CTS trial was completed in December of 2016. Based on the data
from the trial, l
evosimendan, given
prophylactically prior to cardiac surgery to patients with reduced
left ventricular function, had no effect on the co-primary
outcomes
.
The study
did not achieve statistically significant reductions in the dual
endpoint of death or use of a mechanical assist device at 30 days,
nor in the quad endpoint of death, myocardial infarction, need for
dialysis, or use of a mechanical assist device at 30 days. Based on
the results of the LEVO-CTS trial, the Company does not anticipate
additional development of levosimendan for the treatment of LCOS
in patients undergoing cardiac
surgery
. As of December 31, 2016, the Company determined the
IPR&D asset, and corresponding goodwill, was more than
temporarily impaired.
During
the quarter ended December 31, 2016, the Company recognized an
impairment charge of $33.3 million related to its levosimendan
product in Phase III clinical trial, which represents approximately
$22 million for IPR&D assets and approximately $11.3 million
for goodwill.
NOTE
6. COMMITMENTS AND CONTINGENCIES
Simdax license agreement
On November 13, 2013, the Company acquired,
through its
wholly owned subsidiary, Life Newco,
that certain
License Agreement (the
“License”), dated September 20, 2013 by and between
Phyxius and Orion Corporation, a global healthcare company
incorporated under the laws of Finland (“Orion”), and
that certain Side Letter, dated October 15, 2013 by and between
Phyxius and Orion. The License grants the Company
an exclusive, sublicensable right to develop and
commercialize pharmaceutical products containing levosimendan (the
“Product”) in the United States and Canada (the
“Territory”) from Orion. Pursuant to the
License, the Company must use Orion’s
“Simdax®” trademark to commercialize the
Product. The License also grants to the Company a right
of first refusal to commercialize new developments of the Product,
including developments as to the formulation, presentation, means
of delivery, route of administration, dosage or
indication. Orion’s ongoing role under the License
includes sublicense approval, serving as the sole source of
manufacture, holding a first right to enforce intellectual property
rights in the Territory, and certain regulatory participation
rights. Additionally, the Company must grant back to
Orion a broad non-exclusive license to any patents or clinical
trial data related to the Product developed by the Company under
the License. The License has a fifteen (15) year term,
provided, however, that the License will continue after the end of
the fifteen year term in each country in the Territory until the
expiration of Orion’s patent rights in the Product in such
country.
Pursuant to the terms of the License, the Company paid to Orion a
non-refundable up-front payment in the amount of $1.0
million. The License also includes the following
development milestones for which the Company shall make
non-refundable payments to Orion no later than twenty-eight (28)
days after the occurrence of the applicable milestone event: (i)
$2.0 million upon the grant of FDA approval, including all
registrations, licenses, authorizations and necessary approvals, to
develop and/or commercialize the Product in the United States; and
(ii) $1.0 million upon the grant of regulatory approval for the
Product in Canada. Once commercialized, the Company is obligated to
make certain non-refundable commercialization milestone payments to
Orion, aggregating up to $13.0 million, contingent upon achievement
of certain cumulative net sales amounts in the
Territory. The Company must also pay Orion tiered
royalties based on net sales of the Product in the Territory made
by the Company and its sublicensees. After the end of the term of
the License, the Company must pay Orion a royalty based on net
sales of the Product in the Territory for as long as Life Newco
sells the Product in the Territory
.
As of
September 30, 2017, the Company has not met any of the
developmental milestones and, accordingly, has not recorded any
liability for the contingent payments due to Orion.
NOTE 7.
STOCKHOLDERS’ EQUITY
Preferred Stock
Under
the Company’s Certificate of Incorporation, the Board of
Directors is authorized, without further stockholder action, to
provide for the issuance of up to 10,000,000 shares of preferred
stock, par value $0.0001 per share, in one or more series, to
establish from time to time the number of shares to be included in
each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the
qualifications, limitations and restrictions thereof. As of
September 30, 2017, no shares of preferred stock are designated,
issued or outstanding.
Common Stock
The
Company’s Certificate of Incorporation authorizes it to issue
400,000,000 shares of $0.0001 par value common stock. As of
September 30, 2017, there were 28,236,546 shares of common stock
issued and outstanding.
Warrants
As of
September 30, 2017, the Company has 2,415,268 warrants outstanding.
The following table summarizes the warrant activity for the nine
months ended September 30, 2017:
|
|
Weighted Average Exercise Price
|
Outstanding at December 31, 2016
|
2,415,675
|
$
2.64
|
Cancelled
|
(407
)
|
123.00
|
Outstanding at September 30, 2017
|
2,415,268
|
$
2.62
|
2016 Stock Incentive Plan
In June
2016, the Company adopted the 2016 Stock Incentive Plan (the
“2016 Plan”). Under the 2016 Plan, with the
approval of the Compensation Committee of the Board of Directors,
the Company may grant stock options, stock appreciation rights,
restricted stock, restricted stock units, performance shares,
performance units, cash-based awards or other stock-based awards.
On June 16, 2016, the Company’s stockholders approved the
2016 Plan and authorized for issuance under the 2016 Plan a total
of 3,000,000 shares of common stock. As of September 30, 2017, no
awards have been granted under the 2016 Plan.
1999 Amended Stock Plan
In
October 2000, the Company adopted the 1999 Stock Plan, as amended
and restated on June 17, 2008 (the “1999 Plan”).
Under the 1999 Plan, with the approval of the Compensation
Committee of the Board of Directors, the Company may grant stock
options, restricted stock, stock appreciation rights and new shares
of common stock upon exercise of stock options. On March 13, 2014,
the Company’s stockholders approved an amendment to the 1999
Plan which increased the number of shares of common stock
authorized for issuance under the 1999 Plan to a total of 4,000,000
shares, up from 300,000 previously authorized. On September 15,
2015, the Company’s stockholders approved an additional
amendment to the 1999 Plan which increased the number of shares of
common stock authorized for issuance under the 1999 Plan to a total
of 5,000,000 shares, up from 4,000,000 previously authorized. As of
September 30, 2017, the Company had 1,094,808 shares of common
stock available for grant under the 1999 Plan.
The
following table summarizes the shares available for grant under the
1999 Plan for the nine months ended September 30,
2017:
|
Shares Available for
Grant
|
Balances, at December 31, 2016
|
268,500
|
Options
granted
|
(260,000
)
|
Options
cancelled/forfeited
|
1,202,553
|
Restricted
stock granted
|
(213,420
)
|
Restricted
stock cancelled/forfeited
|
97,175
|
Balances, at September 30, 2017
|
1,094,808
|
1999 Plan Stock Options
Stock
options granted under the 1999 Plan may be either incentive stock
options (“ISOs”), or nonqualified stock options
(“NSOs”). ISOs may be granted only to employees. NSOs
may be granted to employees, consultants and directors. Stock
options under the 1999 Plan may be granted with a term of up to ten
years and at prices no less than fair market value for ISOs and no
less than 85% of the fair market value for NSOs. Stock options
granted generally vest over one to three years.
The
following table summarizes the outstanding stock options under the
1999 Plan for the nine months ended September 30,
2017:
|
|
|
|
Weighted Average
Exercise Price
|
Balances, at December 31, 2016
|
4,733,698
|
$
4.98
|
Options
granted
|
260,000
|
$
0.55
|
Options
cancelled
|
(1,202,553
)
|
$
4.76
|
Balances, at September 30, 2017
|
3,791,145
|
$
4.75
|
The
Company chose the “straight-line” attribution method
for allocating compensation costs of each stock option over the
requisite service period using the Black-Scholes Option Pricing
Model to calculate the grant date fair value.
The Company recorded compensation expense for these stock options
grants of $128,856 and $426,837 for the three and nine months ended
September 30, 2017, respectively.
As of
September 30, 2017, there were unrecognized compensation costs of
approximately $465,000 related to non-vested stock option awards
that will be recognized on a straight-line basis over the weighted
average remaining vesting period of 1.6 years. Additionally, there
were unrecognized compensation costs of approximately $5.9 million
related to non-vested stock option awards subject to
performance-based vesting milestones with a weighted average
remaining life of 2.5 years. As of September 30, 2017, none of
these milestones have been achieved.
The
Company used the following assumptions to estimate the fair value
of options granted under its stock option plans for the nine months
ended September 30, 2017 and 2016:
|
For the nine months ended September 30,
|
|
|
|
Risk-free
interest rate (weighted average)
|
2.19
%
|
1.60
%
|
Expected
volatility (weighted average)
|
99.59
%
|
84.53
%
|
Expected
term (in years)
|
7
|
7
|
Expected
dividend yield
|
0.00
%
|
0.00
%
|
Risk-Free Interest Rate
|
The
risk-free interest rate assumption was based on U.S. Treasury
instruments with a term that is consistent with the expected term
of the Company’s stock options.
|
Expected Volatility
|
The
expected stock price volatility for the Company’s common
stock was determined by examining the historical volatility and
trading history for its common stock over a term consistent with
the expected term of its options.
|
Expected Term
|
The
expected term of stock options represents the weighted average
period the stock options are expected to remain outstanding. It was
calculated based on the Company’s historical experience with
its stock option grants.
|
Expected Dividend Yield
|
The
expected dividend yield of 0% is based on the Company’s
history and expectation of dividend payouts. The Company has not
paid and does not anticipate paying any dividends in the near
future.
|
Forfeitures
|
Stock
compensation expense recognized in the statements of operations for
the nine months ended September 30, 2017 and 2016 is based on
awards ultimately expected to vest, and it has been reduced for
estimated forfeitures. ASC 718 requires forfeitures to be estimated
at the time of grant and revised, if necessary, in subsequent
periods if actual forfeitures differ from those estimates.
Forfeitures were estimated based on the Company’s historical
experience.
|
Restricted Stock Grants
The
following table summarizes the restricted stock grants under the
1999 Plan for the nine months ended September 30, 2017
.
|
Outstanding Restricted Stock Grants
|
|
|
Weighted Average Grant Date Fair Value
|
Balances, at December 31, 2016
|
214
|
$
2.72
|
Restricted
stock granted
|
213,420
|
$
0.68
|
Restricted
stock vested
|
(116,525
)
|
$
0.68
|
Restricted
stock cancelled
|
(97,109
)
|
$
0.68
|
Balances, at September 30, 2017
|
-
|
$
-
|
The Company recorded compensation expense for these restricted
stock grants of $35 and $425 for the three and nine months ended
September 30, 2017, respectively.
As of
September 30, 2017, there was no unrecognized compensation costs
related to the non-vested restricted stock grants.
Inducement Stock Options
On
February 15, 2015, an employment inducement stock option award for
25,000
shares of common stock
was made to the Company’s former chief medical officer. This
employment inducement stock option was awarded in accordance with
the employment inducement award exemption provided by Nasdaq Rule
5635(c)(4) and was therefore not awarded under the Company’s
stockholder approved equity plan. The option award was set to vest
over a three-year period, with one-third vesting per year,
beginning one year from the grant date. The options had a 10-year
term and an exercise price of $3.22 per share, the February 13,
2015 closing price of the Company’s common
stock.
The
estimated weighted average fair value per inducement option share
granted was
$
2.57 in 2015 using
a Black-Scholes option pricing model based on market prices and the
following assumptions at the date of inducement option grant:
weighted average risk-free interest rate of 1.84
%
, dividend yield of
0%
, volatility factor for the
Company’s common stock of 93.90
%
and a weighted average expected life of 7
years for inducement options not forfeited.
A
summary of the activity and related information for the inducement
stock options follows:
|
|
Weighted Average
Exercise Price
|
Inducement
Stock Options outstanding at December 31, 2016
|
8,334
|
$
3.22
|
Options
forfeited or expired
|
(8,334
)
|
$
3.22
|
Inducement
Stock Options outstanding at September 30, 2017
|
-
|
$
-
|
Inducement
stock option compensation expense totaled $1,787 and $4,468 for the
three months ended September 30,
2017
and 2016, respectively, and $6,255 and
$15,191 for the nine months ended September 30, 2017 and 2016,
respectively.
At
September 30
, 2017
, there were
no inducement stock options outstanding.
ITEM 2.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, which are subject to the “safe
harbor” created by those sections. Forward-looking statements
are based on our management’s beliefs and assumptions and on
information currently available to them. In some cases you can
identify forward-looking statements by words such as
“may,” “will,” “should,”
“could,” “would,” “expects,”
“plans,” “anticipates,”
“believes,” “estimates,”
“projects,” “predicts,”
“potential” and similar expressions intended to
identify forward-looking statements. Examples of these statements
include, but are not limited to, statements regarding: the
implications of interim or final results of our clinical trials,
the progress of our research programs, including clinical testing,
the extent to which our issued and pending patents may protect our
products and technology, our ability to identify new product
candidates, the potential of such product candidates to lead to the
development of commercial products, our anticipated timing for
initiation or completion of our clinical trials for any of our
product candidates, our future operating expenses, our future
losses, our future expenditures for research and development, our
ability to raise capital and the sufficiency of our cash resources.
Our actual results could differ materially from those anticipated
in these forward-looking statements for many reasons, including the
risks faced by us and described in Part II, Item 1A of this
Quarterly Report on Form 10-Q, Part I, Item 1A of our Annual Report
on Form 10-K, and our other filings with the Securities and
Exchange Commission, or SEC. You should not place undue reliance on
these forward-looking statements, which apply only as of the date
of this Quarterly Report on Form 10-Q. You should read this
Quarterly Report on Form 10-Q completely and with the understanding
that our actual future results may be materially different from
those we expect. Except as required by law, we assume no obligation
to update these forward-looking statements, whether as a result of
new information, future events or otherwise.
The following discussion and analysis should be read in conjunction
with the unaudited
condensed
consolidated financial statements and notes thereto included in
Part I, Item 1 of this Quarterly Report on Form 10-Q and with
the audited consolidated financial statements and related notes
thereto included as part of our Annual Report on Form 10-K for the
year ended December 31, 2016.
All references in this Quarterly Report to “Tenax
Therapeutics”, “we”, “our” and
“us” means Tenax Therapeutics, Inc.
Overview
Strategy
We are
a specialty pharmaceutical company focused on identifying,
developing and commercializing drugs for critical care patients.
Our principal business objective is to acquire or discover,
develop, and commercialize novel therapeutic products for disease
indications that represent significant areas of clinical need and
commercial opportunity. Our lead product is levosimendan, which was
acquired in an asset purchase agreement with Phyxius Pharma, Inc.,
or Phyxius. Levosimendan is a calcium sensitizer developed for
intravenous use in hospitalized patients with acutely decompensated
heart failure. The treatment is currently approved in more than 60
countries for this indication.
The
United States Food and Drug Administration, or FDA, has granted
Fast Track status for levosimendan for the reduction of morbidity
and mortality in cardiac surgery patients at risk for developing
Low Cardiac Output Syndrome, or LCOS. In addition, the FDA has
agreed to the Phase III protocol design under Special Protocol
Assessment, or SPA, and provided guidance that a single successful
trial will be sufficient to support approval of levosimendan in
this indication.
On January 31, 2017,
we announced top-line results from the Phase III LEVO-CTS trial.
Levosimendan, given prophylactically prior to cardiac surgery to
patients with reduced left ventricular function, had no effect on
the co-primary outcomes. The study did not achieve statistically
significant reductions in the dual endpoint of death or use of a
mechanical assist device at 30 days, nor in the quad endpoint of
death, myocardial infarction, need for dialysis, or use of a
mechanical assist device at 30 days. However, the study results
demonstrated statistically significant reductions in two of three
secondary endpoints including reduction in LCOS and a reduction in
postoperative use of secondary inotropes. Additionally,
levosimendan was found to be safe with no clinically significant
increases in hypotension or cardiac arrhythmias and the clinical
data showed a non-significant numerical reduction in 90-day
mortality.
Notwithstanding the fact that the trial’s primary endpoints
were not statistically significant, and given the statistically
significant reductions in the secondary endpoints, we continue to
believe levosimendan is an effective and safe inotrope to increase
cardiac output in patients at risk for or with perioperative low
cardiac output. Following the announcement of the Phase III
LEVO-CTS top-line results, we held a meeting with the FDA to review
the preliminary trial data and discuss a path forward to file a NDA
for levosimendan. As a follow-up to this meeting, in May 2017, we
participated in a pre-NDA meeting with the FDA to discuss the
possibility of submitting an NDA for levosimendan in two
indications: treatment of patients undergoing coronary artery
bypass grafting (CABG) to reduce the risk of low cardiac output
syndrome (LCOS) and treatment of patients with acute decompensated
heart failure (ADHF) for improvement in symptoms. In July 2017,
both the FDA and Health Canada determined that another trial would
be necessary in order to support the filing of an NDA for
levosimendan. We are currently evaluating clinical, regulatory and
financial options with regard to continued development of the
levosimendan program in the U.S. and Canada.
Additionally, our Board of Directors is conducting a comprehensive
review of strategic alternatives focused on maximizing stockholder
value and has formed a strategic committee of three independent
board members to supervise management in this review. We have
engaged Ladenburg Thalmann & Co. Inc. as our financial advisor
to assist in the strategic review process; including, but not
limited to a merger, a business combination, or a purchase, license
or other acquisition of assets. This process may not result in any
transaction and we do not intend to disclose additional details
unless and until we determine further disclosure is appropriate or
required
.
Third Quarter 2017 Highlights
The
following summarizes certain key financial measures for the three
months ended September 30, 2017:
●
Cash and cash
equivalents, including the fair-value of our marketable securities,
were $10.9 million at September 30, 2017.
●
Our net loss from
operations was $1.3 million and $4.5 million for the three months
ended September 30, 2017 and 2016, respectively.
●
Net cash used in
operating activities was $1.3 million and $4.3 million for the
three months ended September 30, 2017 and 2016,
respectively.
Opportunities and Trends
As we
focus on the development of our existing product candidate, we also
continue to position ourselves to execute upon licensing and other
partnering opportunities. To do so, we will need to continue to
maintain our strategic direction, manage and deploy our available
cash efficiently and strengthen our collaborative research
development and partner relationships.
During
the remainder of calendar year 2017, we are focused on the
following initiatives:
●
Working with
collaborators and partners to accelerate product development,
reduce our development costs, and broaden our commercialization
capabilities; and
●
Identifying
strategic alternatives, including, but not limited to, the
potential acquisition of additional products or product
candidates.
Critical Accounting Policies and Significant Judgments and
Estimates
There
have been no significant changes in critical accounting policies,
as compared to the critical accounting policies described in
“
Item 7—Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—
Summary of Significant
Accounting Policies”
in our Annual Report on Form 10-K for the year ended December 31,
2016.
Financial Overview
Results of Operations- Comparison of the Three Months Ended
September 30, 2017 and 2016
General and Administrative Expenses
General
and administrative expenses consist primarily of compensation for
executive, finance, legal and administrative personnel, including
stock-based compensation. Other general and administrative expenses
include facility costs not otherwise included in research and
development expenses, legal and accounting services, other
professional services, and consulting fees. General and
administrative expenses and percentage changes for the three months
ended September 30, 2017 and 2016, respectively, are as
follows:
|
Three months ended September 30,
|
|
|
|
|
|
|
|
Personnel
costs
|
$
599,289
|
$
629,187
|
$
(29,898
)
|
(5
)%
|
Legal
and professional fees
|
284,470
|
379,286
|
(94,816
)
|
(25
)%
|
Other
costs
|
136,096
|
220,160
|
(84,064
)
|
(38
)%
|
Facilities
|
34,024
|
34,042
|
(18
)
|
(0
)%
|
Depreciation
and amortization
|
2,568
|
3,205
|
(637
)
|
(20
)%
|
Personnel costs:
Personnel
costs decreased approximately $30,000 for the
three months ended September 30, 2017
compared to the same period in the prior year. This decrease was
due primarily to reductions in headcount, partially offset by an
increase in the vested value of outstanding stock options during
the current period as compared to the same period of the prior
year.
Legal and professional fees:
Legal
and professional fees consist of the costs incurred for legal fees,
accounting fees, consulting fees, recruiting costs and investor
relations services, as well as fees paid to our Board of Directors.
Legal and professional fees decreased approximately $95,000 for the
three months ended September 30,
2017
compared to the same period in the prior year. This
decrease was due primarily to a decrease in consulting fees paid to
third-party firms for pre-launch commercialization preparations for
LCOS and a reduction in the recognized expense for the vesting of
stock options awarded in the current period as compared to the same
period in the prior year.
Other costs:
Other
costs include costs incurred for travel, supplies, insurance and
other miscellaneous charges. The approximately $84,000 decrease in
other costs for the
three months ended
September 30, 2017
was due primarily to decreases in costs
incurred for taxes, banking fees associated with our investments in
marketable securities and general office expenses as compared to
the same period in the prior year.
Facilities:
Facilities
expenses include costs paid for rent and utilities at our corporate
headquarters in North Carolina. Facilities costs remained
relatively consistent for the three months
ended September 30, 2017 and
2016.
Depreciation and Amortization:
Depreciation
and amortization costs remained relatively consistent for the three
months
ended September 30, 2017 and
2016.
Research and Development
Expenses
Research
and development expenses include, but are not limited to,
(i) expenses incurred under agreements with CROs and
investigative sites, which conduct our clinical trials and a
substantial portion of our pre-clinical studies; (ii) the cost
of manufacturing and supplying clinical trial materials;
(iii) payments to contract service organizations, as well as
consultants; (iv) employee-related expenses, which include
salaries and benefits; and (v) facilities, depreciation and
other allocated expenses, which include direct and allocated
expenses for rent and maintenance of facilities and equipment,
depreciation of leasehold improvements, equipment, laboratory and
other supplies. All research and development expenses are expensed
as incurred. Research and development expenses and percentage
changes for the
three months ended
September 30, 2017 and 2016, respectively
, are as
follows:
|
Three months ended September 30,
|
|
|
|
|
|
|
|
Clinical
and preclinical development
|
$
226,225
|
$
2,959,210
|
$
(2,732,985
)
|
(92
)%
|
Personnel
costs
|
25,993
|
179,032
|
(153,039
)
|
(85
)%
|
Other
costs
|
1,755
|
4,043
|
(2,288
)
|
(57
)%
|
Consulting
|
-
|
92,401
|
(92,401
)
|
(100
)%
|
Clinical and preclinical development:
Clinical
and preclinical development costs include, primarily, the costs
associated with our Phase III clinical trial for levosimendan. The
decrease of approximately $2.7 million in clinical and preclinical
development costs for the three months ended September 30, 2017,
compared to the same period in the prior year, was primarily due to
decreased expenditures for CRO costs to manage the Levo-CTS Phase
III clinical trial.
For the three months ended
September 30, 2017, we recorded CRO costs of approximately $205,000
for the management of the Phase III trial, compared to CRO costs of
$3.0 million, which included approximately $1.2 million in
pass-through site activation and enrolled patient costs, during the
same period in the prior year.
Personnel costs:
Personnel
costs decreased approximately $153,000 for the three months ended
September 30, 2017 primarily due to a reduction in headcount in the
current period as compared to the same period in the prior
year.
Other costs:
Other
costs remained relatively consistent for the three months
ended September 30, 2017 and
2016.
Consulting fees:
Consulting
fees decreased approximately $92,000 for the three months ended
September 30, 2017 compared to the same period in the prior year,
primarily due to a decrease in fees paid to a third-party
consulting firm for services provided to improve training and
communication with active sites in support of our Phase III
Levo-CTS clinical trial and contract labor for additional clinical
trial support services in the prior year which were not incurred in
the current period.
The
process of conducting preclinical studies and clinical trials
necessary to obtain approval from the FDA is costly and time
consuming. The probability of success for each product candidate
and clinical trial may be affected by a variety of factors,
including, among other things, the quality of the product
candidate’s early clinical data, investment in the program,
competition, manufacturing capabilities and commercial viability.
As a result of the uncertainties discussed above, uncertainty
associated with clinical trial enrollment and risks inherent in the
development process, we are unable to determine the duration and
completion costs of current or future clinical stages of our
product candidates or when, or to what extent, we will generate
revenues from the commercialization and sale of any of our product
candidates. Development timelines, probability of success and
development costs vary widely. We will need substantial additional
capital in the future in order to continue with the development of
our potential product candidates.
Other income and expense, net
Other
income and expense includes non-operating income and expense items
not otherwise recorded in our
condensed
consolidated statement of
comprehensive loss
. These items
include, but are not limited to, changes in the fair value of
financial assets and derivative liabilities, interest income earned
and fixed asset disposals. Other income for the three months ended
September 30, 2017 and 2016, respectively, is as
follows:
|
Three months ended September 30,
|
|
|
|
|
|
Other
income, net
|
$
(76,226
)
|
$
(226,914
)
|
$
150,688
|
Other
income decreased approximately $151,000 for the three months ended
September 30, 2017 compared to the same period in the prior year.
This decrease is due primarily to the change in fair value of our
Series C warrant derivative liability in the current period and by
a reduction in the interest earned on our investment in marketable
securities.
During the three months ended September 30, 2017, we recorded a
derivative gain of approximately $36,000 which compared to a
derivative gain of approximately $60,000 for the same period in the
prior year. These charges to income are derived from the free
standing Series C warrants which are measured at their fair market
value each period using the Monte Carlo simulation
model
.
During
the three months ended September 30, 2017, we recorded interest
income of approximately $40,000 from our investments in marketable
securities. This income is derived from approximately $84,000 in
bond interest paid, partially offset by approximately $44,000 in
charges for amortization of premiums paid and fair-value
adjustments measured each period, which compares to approximately
$229,000 in bond interest paid, partially offset by approximately
$137,000 in charges for amortization of premiums paid and
fair-value adjustments during the same period in the prior
year.
Results of Operations- Comparison of the Nine Months Ended
September 30, 2017 and 2016
General and Administrative Expenses
General
and administrative expenses and percentage changes for the nine
months ended September 30, 2017 and 2016, respectively, are as
follows:
|
Nine months ended September 30,
|
|
|
|
|
|
|
|
Personnel
costs
|
$
2,510,569
|
$
1,964,135
|
$
546,434
|
28
%
|
Legal
and professional fees
|
1,324,424
|
1,495,868
|
(171,444
)
|
(11
)%
|
Other
costs
|
347,585
|
691,883
|
(344,298
)
|
(50
)%
|
Facilities
|
104,850
|
105,794
|
(944
)
|
(1
)%
|
Depreciation
and amortization
|
7,908
|
9,538
|
(1,630
)
|
(17
)%
|
Personnel costs:
Personnel
costs increased approximately $546,000 for the
nine months ended September 30, 2017
compared to the same period in the prior year. This increase was
due primarily to the recognized expense for the vesting of
outstanding stock options and the severance costs incurred upon the
resignation of our former chief executive officer during the
current period as compared to the same period of the prior
year.
Legal and professional fees:
Legal
and professional fees decreased approximately $171,000 for the
nine months ended September 30,
2017
compared to the same period in the prior year. This
decrease was due primarily to decreases in costs incurred for
auditing and consulting fees, and the vested value of stock option
grants to our Board of Directors, partially offset by an increase
in costs incurred for investor relations services.
-
Audit and
accounting fees decreased approximately $40,000 in the current
period. This decrease was due primarily to the costs incurred for
the change in our fiscal year, which necessitated the filing of our
audited transitional financial statements in the prior year which
were not incurred in the current period.
-
Consulting fees
decreased approximately $102,000 in the current period. This
decrease was due primarily to the fees paid to third-party firms
for pre-launch commercialization preparations for LCOS, nationwide
registrations for drug distribution and market analysis and
research for septic shock in the prior year which were not incurred
in the current period, partially offset by an increase in fees paid
for medical consulting services in the current period.
-
Costs associated
with investor relations and communication increased approximately
$34,000 in the current period. This increase was due primarily to
fees paid to a third-party investor relations firm providing
marketing and corporate communications services to us in the
current period, which were not incurred in the same period of the
prior year.
-
Board of Directors
fees decreased in the current period by approximately $55,000. This
decrease was due primarily to a reduction in the recognized expense
for the vesting of stock options awarded in the current period as
compared to the recognized expense for stock options awarded in the
same period of the prior year.
Other costs:
The
approximately $344,000 decrease in other costs for the
nine months ended September 30, 2017
was
due primarily to a reduction of approximately $204,000 in franchise
taxes paid, a reduction of approximately $30,000 in travel related
costs, a reduction of approximately $25,000 in costs incurred for
online database research subscriptions, a reduction of
approximately $38,000 in bank fees associated with the management
of our investments in marketable security and an overall decrease
in supplies expenses, insurance and other miscellaneous charges in
the current period as compared to the same period in the prior
year.
Facilities:
Facilities
costs remained relatively consistent for the nine months
ended September 30, 2017 and
2016.
Depreciation and Amortization:
Depreciation
and amortization costs remained relatively consistent for the nine
months
ended September 30, 2017 and
2016.
Research and Development
Expenses
Research
and development expenses and percentage changes for the
nine months ended September 30, 2017
and 2016, respectively
, are as follows:
|
Nine months ended September 30,
|
|
|
|
|
|
|
|
Clinical
and preclinical development
|
$
3,230,215
|
$
9,609,182
|
$
(6,378,967
)
|
(66
)%
|
Personnel
costs
|
177,615
|
451,760
|
(274,145
)
|
(61
)%
|
Consulting
|
112,936
|
522,725
|
(409,789
)
|
(78
)%
|
Other
costs
|
7,572
|
26,245
|
(18,673
)
|
(71
)%
|
Clinical and preclinical development:
The
decrease of approximately $6.4 million in clinical and preclinical
development costs for the nine months ended September 30, 2017,
compared to the same period in the prior year, was primarily due to
decreased expenditures for CRO costs to manage the Levo-CTS Phase
III clinical trial.
For the nine months ended
September 30, 2017, we recorded CRO costs of approximately $3.2
million for the management of the Phase III trial, compared to CRO
costs of $9.6 million, which included approximately $4.5 million in
pass-through site activation and enrolled patient costs, during the
same period in the prior year.
Personnel costs:
Personnel
costs decreased approximately $274,000 for the nine months ended
September 30, 2017 compared to the same period in the prior year,
primarily due to a reduction in headcount in the current
period.
Consulting fees:
Consulting
fees decreased approximately $410,000 for the nine months ended
September 30, 2017 compared to the same period in the prior year,
primarily due to a decrease in fees paid to a third-party
consulting firm for services provided to improve training and
communication with active sites in support of our Phase III
Levo-CTS clinical trial and contract labor for additional clinical
trial support services in the prior year which were not incurred in
the current period.
Other costs:
Other
costs decreased approximately $19,000 for the nine months
ended September 30, 2017 as compared
to the same period in the prior year due primarily to a reduction
in travel related costs in the current period.
Other income and expense, net
Other
income for the nine months ended September 30, 2017 and 2016,
respectively, is as follows:
|
Nine months ended September 30,
|
|
|
|
|
|
Other
income
|
$
(327,725
)
|
$
(600,610
)
|
$
272,885
|
Other
income decreased approximately $273,000 for the nine months ended
September 30, 2017 compared to the same period in the prior year.
This decrease is due primarily to the change in fair value of our
Series C warrant derivative liability in the current period and a
reduction in the interest earned on our investment in marketable
securities.
During
the nine months ended September 30, 2017, we recorded interest
income of approximately $137,000 from our investments in marketable
securities. This income is derived from approximately $287,000 in
bond interest paid, partially offset by approximately $158,000 in
charges for amortization of premiums paid and fair-value
adjustments measured each period, which compares to approximately
$816,000 in bond interest paid, partially offset by approximately
$464,000 in charges for amortization of premiums paid and
fair-value adjustments during the same period in the prior
year.
Liquidity, Capital Resources and Plan of Operation
We have
incurred losses since our inception and as of September 30, 2017 we
had an accumulated deficit of approximately $212 million. We will
continue to incur losses until we generate sufficient revenue to
offset our expenses, and we anticipate that we will continue to
incur net losses for at least the next several years. We expect to
incur additional expenses related to our development of
levosimendan as well as identifying and developing other potential
product candidates and, as a result, we will need to generate
significant net product sales, royalty and other revenues to
achieve profitability.
Liquidity
We have
financed our operations since September 1990 through the issuance
of debt and equity securities and loans from stockholders. We had
total current assets of $8,663,210 and $13,628,175 and working
capital of $7,824,658 and $7,428,938 as of September 30, 2017 and
December 31, 2016, respectively. Based on our working capital and
the value of our investments in marketable securities at September
30, 2017, we believe we have sufficient capital to fund our
operations through the fourth quarter of calendar year
2018.
We
recently completed a Phase III clinical trial for levosimendan.
In July 2017, after presenting data
from the LEVO-CTS trial, both the FDA and Health Canada determined
that another trial would be necessary in order to support the
filing of an NDA for levosimendan. We are currently evaluating
clinical regulatory and financial options with regard to continued
development of the levosimendan program in the U.S. and
Canada.
Our ability to continue to pursue testing and
development of levosimendan or other potential products depends on
obtaining license income or outside financial resources. There is
no assurance that we will obtain any license agreement or outside
financing or that we will otherwise succeed in obtaining the
necessary resources.
Our common stock is currently listed on
The Nasdaq Capital
Market. In order to maintain this listing, we must satisfy minimum
financial and other requirements. On March 15, 2017, we received a
notification letter from Nasdaq’s Listing Qualifications
Department indicating that we were not in compliance with Nasdaq
Listing Rule 5550(a)(2), because the minimum bid price of our
common stock on the Nasdaq Capital Market had closed below $1.00
per share for 30 consecutive business days. In accordance with
Nasdaq Listing Rule 5810(c)(3)(A), we were given 180 calendar days,
or until September 11, 2017, to regain compliance with the minimum
$1.00 bid price per share requirement.
On
September 12, 2017, we received a notice from Nasdaq’s
Listing Qualifications Department indicating that, while we had not
regained compliance with the minimum bid price requirement, we were
eligible for an additional 180-day compliance period, or until
March 12, 2018, to regain compliance with the minimum $1.00 bid
price per share requirement for continued listing on the Nasdaq
Capital Market due to our meeting the continued listing requirement
for market value of publicly held shares and all other applicable
requirements for initial listing on the Nasdaq Capital Market, with
the exception of the bid price requirement, and due to our written
notice of our intention to cure the deficiency during the second
compliance period by effecting a reverse stock split, if
necessary.
To
regain compliance, any time before March 12, 2018, the bid price of
our common stock must close at $1.00 per share or more for a
minimum of 10 consecutive business days. If we do not regain
compliance by March 12, 2018, we expect that Nasdaq will provide
written notification to us that our common stock will be subject to
delisting. Upon such notice, we may appeal Nasdaq’s delisting
determination to a Nasdaq hearings panel, pursuant to the
procedures set forth in the applicable Nasdaq Marketplace Rules.
There can be no assurance that, if we appeal the Nasdaq
Staff’s determination, such appeal would be
successful.
We are
currently evaluating our alternatives to resolve this listing
deficiency. However, there can be no assurance that we will be able
to regain compliance during the applicable time periods set forth
above. If we fail to continue to meet all applicable Nasdaq Capital
Market requirements in the future and Nasdaq determines to delist
our common stock, the delisting could substantially decrease
trading in our common stock; adversely affect the market liquidity
of our common stock as a result of the loss of market efficiencies
associated with Nasdaq and the loss of federal preemption of state
securities laws; adversely affect our ability to obtain financing
on acceptable terms, if at all; and may result in the potential
loss of confidence by investors, suppliers, customers, and
employees and fewer business development opportunities.
Additionally, the market price of our common stock may decline
further and shareholders may lose some or all of their
investment.
Cash Flows
The following table shows a summary of our cash flows for the nine
months ended September 30, 2017 and 2016:
|
Nine months ended September 30,
|
|
|
|
Net
cash used in operating activities
|
$
(10,858,446
)
|
$
(12,766,231
)
|
Net
cash provided by investing activities
|
2,626,374
|
9,827,930
|
Net cash used in operating activities.
Net cash used
in operating activities was approximately $10.9 million for the
nine months ended September 30, 2017 compared to net cash used in
operating activities of approximately $12.8 million for the nine
months ended September 30, 2016. The decrease in cash used in
operating activities was due primarily to a decrease in our accrued
costs related to the Phase III clinical trial for levosimendan in
the current period.
Net cash provided by investing activities
. Net cash
provided by investing activities was approximately $2.6 million for
the nine months ended September 30, 2017 compared to approximately
$9.8 million for the nine months ended September 30, 2016. The
decrease in cash provided by investing activities was primarily due
a reduction in the sale of marketable securities in the current
period.
Operating Capital and Capital Expenditure Requirements
Our
future capital requirements will depend on many factors that
include, but are not limited to the following:
●
the initiation,
progress, timing and completion of clinical trials for our product
candidates and potential product candidates;
●
the outcome, timing
and cost of regulatory approvals and the regulatory approval
process;
●
delays that may be
caused by changing regulatory requirements;
●
the number of
product candidates that we pursue;
●
the costs involved
in filing and prosecuting patent applications and enforcing and
defending patent claims;
●
the timing and
terms of future collaboration, licensing, consulting or other
arrangements that we may enter into;
●
the cost and timing
of establishing sales, marketing, manufacturing and distribution
capabilities;
●
the cost of
procuring clinical and commercial supplies of our product
candidates;
●
the extent to which
we acquire or invest in businesses, products or technologies;
and
●
the possible costs
of litigation.
We
believe that our existing cash and cash equivalents, along with our
investment in marketable securities, will be sufficient to fund our
projected operating requirements through the fourth quarter of
calendar year 2018. We will need substantial additional capital in
the future in order to continue the development of levosimendan and
to fund the development and commercialization of other future
product candidates. Until we can generate a sufficient amount of
product revenue, if ever, we expect to finance future cash needs
through public or private equity offerings, debt financings or
corporate collaboration and licensing arrangements. Such funding,
if needed, may not be available on favorable terms, if at all. In
the event we are unable to obtain additional capital, we may delay
or reduce the scope of our current research and development
programs and other expenses.
To the
extent that we raise additional funds by issuing equity securities,
our stockholders may experience additional significant dilution,
and debt financing, if available, may involve restrictive
covenants. To the extent that we raise additional funds through
collaboration and licensing arrangements, it may be necessary to
relinquish some rights to our technologies or our product
candidates or grant licenses on terms that may not be favorable to
us. We may seek to access the public or private capital markets
whenever conditions are favorable, even if we do not have an
immediate need for additional capital.
Critical Accounting Policies
Our consolidated financial statements have been prepared in
accordance with GAAP. For information regarding our critical
accounting policies and estimates, please refer to
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Summary of Significant
Accounting Policies” contained in our Annual Report on Form
10-K for the year ended December 31, 2016. There have not been
material changes to the critical accounting policies previously
disclosed in that report.
Recent Accounting Pronouncements
In July
2017, the
Financial Accounting
Standards Board, or the FASB,
issued an accounting standard
that change the classification analysis of certain equity-linked
financial instruments (or embedded features) with down round
features. When determining whether certain financial instruments
should be classified as liabilities or equity instruments, a down
round feature no longer precludes equity classification when
assessing whether the instrument is indexed to an entity’s
own stock. The amendments also clarify existing disclosure
requirements for equity-classified instruments. As a result, a
freestanding equity-linked financial instrument (or embedded
conversion option) no longer would be accounted for as a derivative
liability at fair value as a result of the existence of a down
round feature. The standard will be effective for us on January 1,
2019. Early adoption is permitted, including adoption in an interim
period. We are currently evaluating the effect that the standard
will have on our condensed consolidated financial statements and
related disclosures.
In
January 2017,
the
FASB, issued
an accounting standard that provides guidance for evaluating
whether transactions should be accounted for as acquisitions (or
disposals) of assets or businesses. The guidance provides a screen
to determine when an integrated set of assets and activities, or a
set, does not qualify to be a business. The screen requires that
when substantially all of the fair value of the gross assets
acquired (or disposed of) is concentrated in an identifiable asset
or a group of similar identifiable assets, the set is not a
business. If the screen is not met, the guidance requires a set to
be considered a business to include, at a minimum, an input and a
substantive process that together significantly contribute to the
ability to create outputs and removes the evaluation as to whether
a market participant could replace the missing elements. The
standard will be effective for us on January 1, 2018 and will be
adopted on a prospective basis. Early adoption is permitted.
We do not believe the adoption of this
standard will have a material impact on our condensed consolidated
financial statements and related disclosures
.
In
August 2016, the FASB issued an accounting standard that clarifies
how companies present and classify certain cash receipts and cash
payments in the statement of cash flows where diversity in practice
exists. The standard is effective for us in our first quarter of
fiscal 2018 and earlier adoption is permitted. We do not believe
that adopting this updated standard will have a material impact on
our condensed consolidated financial statements and related
disclosures.
In June
2016,
the
FASB, issued an
accounting standard that amends how credit losses are measured and
reported for certain financial instruments that are not accounted
for at fair value through net income. This standard will require
that credit losses be presented as an allowance rather than as a
write-down for available-for-sale debt securities and will be
effective for interim and annual reporting periods beginning
January 1, 2020, with early adoption permitted, but not
earlier than annual reporting periods beginning January 1,
2019. A modified retrospective approach is to be used for certain
parts of this guidance, while other parts of the guidance are to be
applied using a prospective approach. We are currently evaluating
the impact that this standard will have on our
condensed consolidated financial statements and
related disclosures
.
In May 2014, the FASB issued an accounting standard that supersedes
nearly all existing revenue recognition guidance under GAAP. The
standard is principles-based and provides a five-step model to
determine when and how revenue is recognized. The core principle of
the standard is that revenue should be recognized when a company
transfers promised goods or services to customers in an amount that
reflects the consideration to which we expect to be entitled in
exchange for those goods or services. In March 2016, the FASB
issued a standard to
clarify the implementation guidance on
principal versus agent considerations, and in April 2016, the FASB
issued a standard to clarify the implementation guidance on
identifying performance obligations and licensing.
The standard also requires disclosure of
qualitative and quantitative information surrounding the amount,
nature, timing and uncertainty of revenues and cash flows arising
from contracts with customers. In July 2015, the FASB agreed to
defer the effective date of the standard from annual periods
beginning after December 15, 2016, to annual periods beginning
after December 15, 2017. Early application prior to the original
effective date is not permitted. The standard permits the use of
either the retrospective or cumulative effect transition method. We
do not believe the adoption of this standard will have a material
impact on our condensed consolidated financial statements and
related disclosures
.
In February 2016, the FASB issued an accounting standard intended
to improve financial reporting regarding leasing transactions. The
standard will require us to recognize on our balance sheet the
assets and liabilities for the rights and obligations created by
all leased assets. The standard will also require us to provide
enhanced disclosures designed to enable users of financial
statements to understand the amount, timing, and uncertainty of
cash flows arising from all leases, operating and capital, with
lease terms greater than 12 months. The standard is effective for
financial statements beginning after December 15, 2018, and interim
periods within those annual periods. Early adoption is permitted.
We are currently evaluating the impact that this standard will have
on our condensed consolidated financial statements and related
disclosures.
In January 2016, the FASB issued an accounting standard that will
enhance our reporting for financial instruments. The standard is
effective for financial statements issued for annual periods
beginning after December 15, 2017, and interim periods within those
annual periods. Earlier adoption is permitted for interim and
annual reporting periods as of the beginning of the fiscal year of
adoption. We do not believe the adoption of this standard will have
a material impact on our consolidated financial
statements.
Contractual Obligations
There have been no material changes, outside of the ordinary course
of business, to our contractual obligations as previously disclosed
in our Annual Report on Form 10-K for the year ended December 31,
2016.
Off-Balance Sheet Arrangements
Since
our inception, we have not engaged in any off-balance sheet
arrangements, including the use of structured finance, special
purpose entities or variable interest entities.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
There
have been no material changes to our quantitative and qualitative
disclosures about market risk as compared to the quantitative and
qualitative disclosures about market risk described in our
Annual Report on Form 10-K for the
year ended December 31, 2016
.
ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As
required by paragraph (b) of Rules 13a-15 and 15d-15
promulgated under the Exchange Act, our management, including our
Interim Chief Executive Officer and Chief Financial Officer,
conducted an evaluation as of the end of the period covered by this
report, of the effectiveness of our disclosure controls and
procedures as defined in Exchange Act Rule 13a-15(e) and
15d-15(e). Based on that evaluation, our Interim Chief Executive
Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of September 30, 2017,
the end of the period covered by this report in that they provide
reasonable assurance that the information we are required to
disclose in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time
periods required by the SEC and is accumulated and communicated to
our management, including our Interim Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Control over Financial Reporting
There
were no significant changes in our internal control over financial
reporting during our most recently completed fiscal quarter that
has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. We routinely
review our internal controls over financial reporting and from time
to time make changes intended to enhance the effectiveness of our
internal control over financial reporting. We will continue to
evaluate the effectiveness of our disclosure controls and
procedures and internal controls over financial reporting on an
ongoing basis and will take action as appropriate.
PART II – OTHER INFORMATION
ITEM 1.
LEGAL
PROCEEDINGS
There
are no material pending legal proceedings to which we are a party
or to which any of our property is subject.
The
risks we face have not materially changed from those disclosed in
our Annual Report on Form 10-K for the year ended December 31,
2016, except as set forth below:
Our failure to maintain compliance with Nasdaq’s continued
listing requirements could result in the delisting of our common
stock.
Our
common stock is currently listed on The Nasdaq Capital Market. In
order to maintain this listing, we must satisfy minimum financial
and other requirements. On March 15, 2017, we received a
notification letter from Nasdaq’s Listing Qualifications
Department indicating that we were not in compliance with Nasdaq
Listing Rule 5550(a)(2), because the minimum bid price of our
common stock on the Nasdaq Capital Market had closed below $1.00
per share for 30 consecutive business days. In accordance with
Nasdaq Listing Rule 5810(c)(3)(A), we were given 180 calendar days,
or until September 11, 2017, to regain compliance with the minimum
$1.00 bid price per share requirement.
On
September 12, 2017, we received a notice from Nasdaq’s
Listing Qualifications Department indicating that, while we had not
regained compliance with the minimum bid price requirement, we were
eligible for an additional 180-day compliance period, or until
March 12, 2018, to regain compliance with the minimum $1.00 bid
price per share requirement for continued listing on the Nasdaq
Capital Market due to our meeting the continued listing requirement
for market value of publicly held shares and all other applicable
requirements for initial listing on the Nasdaq Capital Market, with
the exception of the bid price requirement, and due to our written
notice of our intention to cure the deficiency during the second
compliance period by effecting a reverse stock split, if
necessary.
To
regain compliance, anytime before March 12, 2018, the bid price of
our common stock must close at $1.00 per share or more for a
minimum of 10 consecutive business days. If we do not regain
compliance by March 12, 2018, we expect that Nasdaq will provide
written notification to us that our common stock will be subject to
delisting. Upon such notice, we may appeal Nasdaq’s delisting
determination to a Nasdaq hearings panel, pursuant to the
procedures set forth in the applicable Nasdaq Marketplace Rules.
There can be no assurance that, if we appeal the Nasdaq
Staff’s determination, such appeal would be
successful.
We are
currently evaluating our alternatives to resolve this listing
deficiency. However, there can be no assurance that we will be able
to regain compliance during the applicable time periods set forth
above. If we fail to continue to meet all applicable Nasdaq Capital
Market requirements in the future and Nasdaq determines to delist
our common stock, the delisting could substantially decrease
trading in our common stock; adversely affect the market liquidity
of our common stock as a result of the loss of market efficiencies
associated with Nasdaq and the loss of federal preemption of state
securities laws; adversely affect our ability to obtain financing
on acceptable terms, if at all; and may result in the potential
loss of confidence by investors, suppliers, customers, and
employees and fewer business development opportunities.
Additionally, the market price of our common stock may decline
further and shareholders may lose some or all of their
investment.
The
following exhibits are being filed herewith and are numbered in
accordance with Item 601 of Regulation S-K:
No.
|
Description
|
|
|
|
Certification of
Interim Chief Executive Officer and Chief Financial Officer
Pursuant to Section 302 of the Sarbanes Oxley Act of
2002.*
|
|
Certification of
Interim Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.*
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XBRL Instance
Document
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XBRL Taxonomy
Extension Schema Document
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XBRL Taxonomy
Extension Calculation Linkbase Document
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XBRL Taxonomy
Extension Definition Linkbase Document
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XBRL Taxonomy
Extension Label Linkbase Document
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XBRL Taxonomy
Extension Presentation Linkbase Document
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