x
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o |
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
56-1953785
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S. Employer
Identification
No.)
|
|
26361
Crown Valley Parkway, Ste. 150
Mission Viejo,
California
|
92691
|
|
(Address
of Principal Executive Offices)
|
(Zip Code)
|
(Registrant’s
Telephone Number, Including Area Code)
949-481-9825
|
Class
|
Outstanding
as of
August 13, 2010
|
Common
Stock, par value $.01 per share
|
59,925,249
shares
|
Page
|
|||
PART I.
FINANCIAL
INFORMATION
|
|||
Item 1.
|
Financial
Statements
|
3
|
|
Statement Regarding Financial
Information
|
3
|
||
Condensed Consolidated Balance
Sheets as of June
30, 2010
(unaudited)
and September 30, 2009
|
4
|
||
Condensed Consolidated Statements
of Operations for the Three Months and Nine Months ended June 30, 2010 and 2009(unaudited)
|
5
|
||
Condensed Consolidated Statements
of Cash Flows for the Nine Months ended June 30, 2010 and 2009
(unaudited)
|
6
|
||
Notes to Condensed Consolidated
Financial Statements
|
7
|
||
Item 2.
|
Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
|
14
|
|
Item 3.
|
Quantitative and Qualitative
Disclosures About Market Risk
|
17
|
|
Item 4.
|
Controls and
Procedures
|
17
|
|
PART II. OTHER
INFORMATION
|
|||
Item 1.
|
Legal
Proceedings
|
18
|
|
Item 1A.
|
Risk
Factors
|
18
|
|
Item 2.
|
Unregistered Sales of Equity
Securities and Use of Proceeds
|
18
|
|
Item 3.
|
Defaults
Upon Senior Securities
|
18
|
|
Item 4.
|
Removed and
Reserved
|
18
|
|
Item
5.
|
Other
Information
|
18
|
|
Item 6.
|
Exhibits
|
18
|
|
SIGNATURES
|
19
|
AEOLUS PHARMACEUTICALS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands, except shares and per share
data)
|
June
30,
|
September
30,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 457 | $ | 646 | ||||
Prepaids
and other current assets
|
50 | 133 | ||||||
Total
current assets
|
507 | 779 | ||||||
Investment
in CPEC, LLC
|
32 | 32 | ||||||
Total
assets
|
$ | 539 | $ | 811 | ||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 330 | $ | 774 | ||||
Short-term
note payable
|
645 | 0 | ||||||
Total
current liabilities
|
975 | 774 | ||||||
Non-current
liabilities:
|
||||||||
Warrant
liability
|
14,708 | 0 | ||||||
Senior
convertible note
|
0 | 600 | ||||||
Long-term
note payable
|
0 | 594 | ||||||
Total
liabilities
|
$ | 15,683 | $ | 1,968 | ||||
Stockholders’
deficit:
|
||||||||
Preferred
stock, $.01 par value per share, 10,000,000 shares
authorized:
|
||||||||
Series
B nonredeemable convertible preferred stock, 600,000
shares
|
||||||||
authorized;
475,087 shares issued and outstanding at June 30, 2010 and
September
30, 2009
|
5 | 5 | ||||||
Common
stock, $.01 par value per share, 200,000,000 shares
authorized;
|
||||||||
48,224,320
shares issued and outstanding
at June
30, 2010 and
|
||||||||
37,563,392
shares issued and outstanding at September 30, 2009
|
482 | 376 | ||||||
Additional
paid-in capital
|
154,192 | 159,657 | ||||||
Accumulated
deficit
|
(169,823 | ) | (161,195 | ) | ||||
Total
stockholders' deficit
|
(15,144 | ) | (1,157 | ) | ||||
Total
liabilities and stockholders' deficit
|
$ | 539 | $ | 811 |
AEOLUS PHARMACEUTICALS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In
thousands, except per share data)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenue
|
||||||||||||||||
Grant
income
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Costs
and expenses:
|
||||||||||||||||
Research
and development
|
275 | 130 | 885 | 469 | ||||||||||||
General
and administrative
|
475 | 315 | 1,337 | 903 | ||||||||||||
Total
costs and expenses
|
750 | 445 | 2,222 | 1,372 | ||||||||||||
Loss
from operations
|
(750 | ) | (445 | ) | (2,222 | ) | (1,372 | ) | ||||||||
Interest
(expense), net
|
(17 | ) | (114 | ) | (860 | ) | (322 | ) | ||||||||
Other
income (expense), net
|
(3,856 | ) | 133 | (9,899 | ) | 144 | ||||||||||
Net
loss
|
$ | (4,623 | ) | $ | (426 | ) | $ | (12,981 | ) | $ | (1,550 | ) | ||||
Net
loss per weighted share attributable to common
stockholders:
|
||||||||||||||||
Basic
and diluted
|
$ | (0.10 | ) | $ | (0.01 | ) | $ | (0.27 | ) | $ | (0.05 | ) | ||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
and diluted
|
48,244 | 37,468 | 47,652 | 33,865 |
AEOLUS PHARMACEUTICALS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
thousands)
|
Nine
Months Ended
|
||||||||
June
30,
|
||||||||
2010
|
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (12,981 | ) | $ | (1,550 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Noncash
compensation
|
407 | 193 | ||||||
Change
in fair value of warrants
|
3,686 | - | ||||||
Change
in fair value of trading securities
|
- | (49 | ) | |||||
Noncash
consulting expense
|
14 | 25 | ||||||
Loss
on sale of investments
|
- | (133 | ) | |||||
Noncash
interest and warrant costs
|
7,020 | 366 | ||||||
Change
in assets and liabilities:
|
||||||||
Prepaids
and other assets
|
90 | 5 | ||||||
Accounts
payable and accrued expenses
|
(31 | ) | (247 | ) | ||||
Net
cash used in operating activities
|
(1,795 | ) | (1,390 | ) | ||||
Cash
flows from investing activities:
|
||||||||
(Purchases)
sales of investments and marketable securities
|
(7 | ) | 751 | |||||
Net
cash (used by) provided by investing activities
|
(7 | ) | 751 | |||||
Cash
flows from financing activities:
|
||||||||
Repayment
of short term note payable
|
- | (368 | ) | |||||
Proceeds
from short term note payable
|
- | 3 | ||||||
Proceeds
from the issuance of common stock and warrants
|
1,650 | 1,500 | ||||||
Proceeds
from exercise of warrants
|
17 | - | ||||||
Proceeds
from issuance of Senior Convertible Notes
|
- | 375 | ||||||
Costs
related to the issuance of common stock and warrants
|
(54 | ) | (91 | ) | ||||
Net
cash provided by financing activities
|
1,613 | 1,419 | ||||||
Net
(decrease) increase in cash and cash equivalents
|
(189 | ) | 780 | |||||
Cash
and cash equivalents at beginning of period
|
646 | 399 | ||||||
Cash
and cash equivalents, end of period
|
$ | 457 | $ | 1,179 |
Number of Shares
|
Exercise Price
|
Expiration Date
|
|||||
350,000 | $ | 0.28 |
November
2010
|
||||
2,126,668 | $ | 0.28 |
May
2012
|
||||
43,614,285 | $ | 0.28 |
October
2016
|
||||
20,000 | $ | 0.39 |
September
2014
|
||||
50,000 | $ | 0.35 |
May
2011
|
||||
15,000 | $ | 0.50 |
September
2014
|
||||
15,000 | $ | 0.60 |
September
2014
|
||||
7,000,000 | $ | 0.75 |
June
2011
|
||||
50,000 | $ | 1.00 |
May
2011
|
||||
50,000 | $ | 1.50 |
May
2011
|
||||
50,000 | $ | 2.00 |
May
2011
|
||||
50,000 | $ | 2.50 |
May
2011
|
||||
50,000 | $ | 0.38 |
April
2020
|
||||
53,440,953 | $ | 0.35 |
Weighted
Average
|
||||||||||||||||
Remaining
Contractual
|
Aggregrate
|
|||||||||||||||
Number
of Shares
|
Exercise
Price
|
Term
(in years)
|
Intrinsic
Value
|
|||||||||||||
Outstanding
at 9/30/2009
|
27,379,525 | $ | 0.46 | 3.25 | $ | 1,051,248 | ||||||||||
Granted
|
43,664,285 | $ | 0.28 | 6.27 | $ | 5,234,714 | ||||||||||
Exercised
|
(60,000 | ) | $ | 0.28 | 1.89 | $ | 9,000 | |||||||||
Expired
or Canceled
|
(17,542,857 | ) | $ | 0.36 | 3.27 | $ | 927,643 | |||||||||
Forfeited
|
$ | 0.00 | $ | 0 | ||||||||||||
Vested
RSAs
|
||||||||||||||||
Outstanding
at 6/30/2010
|
53,440,953 | $ | 0.35 | 5.33 | $ | 5,532,114 |
Weighted
Average
|
||||||||||||||||
Number
of
|
Remaining
Contractual
|
Aggregrate
|
||||||||||||||
Shares
|
Exercise
Price
|
Term
(in years)
|
Intrinsic
Value
|
|||||||||||||
Outstanding
at 9/30/2009
|
6,175,015 | $ | 1.58 | 6.96 | $ | 137,913 | ||||||||||
Granted
|
185,000 | $ | 0.35 | 9.53 | $ | 8,825 | ||||||||||
Exercised
|
$ | 0.00 | 0.00 | $ | 0 | |||||||||||
Expired or
Canceled
|
(1,200 | ) | $ | 51.25 | 0.00 | $ | 0 | |||||||||
Forfeited
|
(421,250 | ) | $ | 0.62 | $ | 4,500 | ||||||||||
Vested
(RSAs)
|
||||||||||||||||
Outstanding
at 6/30/2010
|
5,937,565 | $ | 1.60 | 6.24 | $ | 163,775 |
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||
Number
|
Weighted
|
Weighted
Average
|
Number
|
Weighted
|
||||||||||||||||||
Range
of
|
Outstanding
at
|
Average
Exercise
|
Remaining
|
Exercisable
at June
|
Average
Exercise
|
|||||||||||||||||
Exercise
Prices
|
June
30, 2010
|
Price
|
Contractual
Life
|
30,
2010
|
Price
|
|||||||||||||||||
$ | 0.29-0.32 | 1,526,250 | $ | 0.30 | 8.72 | 1,509,583 | $ | 0.30 | ||||||||||||||
$ | 0.33-0.45 | 903,500 | $ | 0.39 | 8.82 | 784,545 | $ | 0.39 | ||||||||||||||
$ | 0.55-0.75 | 768,111 | $ | 0.65 | 6.41 | 768,111 | $ | 0.65 | ||||||||||||||
$ | 0.78-0.90 | 794,335 | $ | 0.87 | 5.91 | 794,335 | $ | 0.87 | ||||||||||||||
$ | 0.91-1.50 | 1,382,019 | $ | 1.46 | 3.25 | 1,382,019 | $ | 1.46 | ||||||||||||||
1.52 | 2,500 | $ | 1.52 | 4.25 | 2,500 | $ | 1.52 | |||||||||||||||
$ | 1.55-2.10 | 211,750 | $ | 1.85 | 4.22 | 211,750 | $ | 1.85 | ||||||||||||||
$ | 2.50-11.50 | 188,624 | $ | 4.95 | 3.27 | 188,624 | $ | 4.95 | ||||||||||||||
$ | 12.85-20.00 | 79,754 | $ | 15.10 | 1.09 | 79,754 | $ | 15.10 | ||||||||||||||
$ | 22.50-51.25 | 80,722 | $ | 36.75 | 0.15 | 80,722 | $ | 36.75 | ||||||||||||||
$ | 0.29-51.25 | 5,937,565 | $ | 1.60 | 6.23 | 5,801,943 | $ | 1.63 |
For
the three months ended June 30,
|
For
the nine months ended June 30,
|
|||||
2010
|
2009
|
2010
|
2009
|
|||
Research
and Development Expenses
|
8
|
11
|
41
|
34
|
||
General
and Administrative Expenses
|
79
|
71
|
366
|
159
|
||
87
|
82
|
407
|
193
|
For
the nine months ended June 30
|
||||
2010
|
2009
|
|||
Dividend
yield
|
0%
|
0%
|
||
Expected
volatility
|
95%
- 96%
|
96%–
209%
|
||
Risk-free
interest rate
|
3.3%
- 3.5%
|
2.6%
- 3.8%
|
||
Expected
term
|
10
years
|
10
years
|
Exhibit
#
|
Description
|
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a).
|
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a).
|
|
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.
|
AEOLUS PHARMACEUTICALS, INC. | ||
Date: August 13,
2010
|
By:
|
/s/
John L. McManus
|
John
L. McManus
President
and Chief Executive Officer
(Principal
Executive Officer)
Chief
Financial Officer, Treasurer and Secretary
(Principal
Financial and Accounting Officer)
|
||