Delaware
|
|
56-1953785
|
(State
or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer Identification
No.)
|
|
|
||
23811
Inverness Place
Laguna
Niguel, California
|
92677
|
|
(Address
of Principal Executive Offices)
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(Zip Code)
|
|
(Registrant’s
Telephone Number, Including Area Code) 949-481-9825
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Class
|
Outstanding
as of August 10,
2006
|
Common Stock, par value $.01 per share |
29,244,416
shares
|
|
|
|
Page
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3
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4
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|||
5
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|||
6
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|||
7
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|||
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15
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|||
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|||
20
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|||
21
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|||
21
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|||
21
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|||
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|||
21
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|||
22
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22
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22
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23
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SIGNATURES
|
24
|
AEOLUS
PHARMACEUTICALS, INC.
|
||||||||||
(In
thousands, except shares and per share data)
|
||||||||||
June
30,
|
September
30,
|
|||||||||
2006
|
2005
|
|||||||||
(Unaudited)
|
||||||||||
ASSETS
|
||||||||||
Current
assets:
|
||||||||||
Cash
and cash equivalents
|
$
|
4,003
|
$
|
626
|
||||||
Accounts
receivable
|
9
|
14
|
||||||||
Prepaids
and other current assets
|
314
|
289
|
||||||||
Total
current assets
|
4,326
|
929
|
||||||||
Investment
in CPEC LLC
|
126
|
8
|
||||||||
Total
assets
|
$
|
4,452
|
$
|
937
|
||||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||||
Current
liabilities:
|
||||||||||
Accounts
payable
|
$
|
662
|
$
|
712
|
||||||
Accrued
expenses
|
3
|
290
|
||||||||
Current
maturity of long-term note payable
|
933
|
-
|
||||||||
Total
current liabilities
|
1,598
|
1,002
|
||||||||
Warrant
liability
|
6,827
|
-
|
||||||||
Long-term
note payable
|
-
|
867
|
||||||||
Total
liabilities
|
8,425
|
1,869
|
||||||||
Stockholders'
deficit:
|
||||||||||
Preferred
stock, $.01 par value per share, 10,000,000 shares authorized at
|
||||||||||
June 30, 2006 and 3,000,000 shares authorized at September 30,
2005:
|
||||||||||
Series
B nonredeemable convertible preferred stock, 600,000 shares
authorized;
|
||||||||||
475,087 shares issued and outstanding at June 30, 2006 and
|
||||||||||
September 30, 2005
|
5
|
5
|
||||||||
Common
stock, $.01 par value per share, 50,000,000 shares
authorized;
|
||||||||||
29,223,583 and 14,038,259 shares issued and outstanding at June 30,
2006
|
||||||||||
and September 30, 2005, respectively
|
292
|
140
|
||||||||
Additional
paid-in capital
|
148,417
|
146,016
|
||||||||
Accumulated
deficit
|
(152,687
|
)
|
(147,093
|
)
|
||||||
Total
stockholders' deficit
|
(3,973
|
)
|
(932
|
)
|
||||||
Total
liabilities and stockholders' deficit
|
$
|
4,452
|
$
|
937
|
||||||
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
|
AEOLUS
PHARMACEUTICALS, INC.
|
|||||||||||||
(Unaudited)
|
|||||||||||||
(In
thousands, except per share data)
|
|||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Revenue
|
|||||||||||||
Grant
income
|
$
|
-
|
$
|
121
|
$
|
92
|
$
|
236
|
|||||
Costs
and expenses:
|
|||||||||||||
Research
and development
|
419
|
849
|
2,677
|
3,621
|
|||||||||
General
and administrative
|
524
|
898
|
1,571
|
1,851
|
|||||||||
Total
costs and expenses
|
943
|
1,747
|
4,248
|
5,472
|
|||||||||
Loss
from operations
|
(943
|
)
|
(1,626
|
)
|
(4,156
|
)
|
(5,236
|
)
|
|||||
Interest
expense, net
|
(10
|
)
|
(10
|
)
|
(29
|
)
|
(17
|
)
|
|||||
Equity
in income of CPEC LLC
|
-
|
-
|
433
|
-
|
|||||||||
Other
income
|
17
|
-
|
53
|
-
|
|||||||||
Increase
in fair value of common stock warrants
|
(2,216
|
)
|
-
|
(1,815
|
)
|
-
|
|||||||
Net
loss
|
(3,152
|
)
|
(1,636
|
)
|
(5,514
|
)
|
(5,253
|
)
|
|||||
Preferred
stock dividend accreted
|
(26
|
)
|
-
|
(81
|
)
|
-
|
|||||||
Net
loss attributable to common stockholders
|
$
|
(3,178
|
)
|
$
|
(1,636
|
)
|
$
|
(5,595
|
)
|
$
|
(5,253
|
)
|
|
Net
loss per weighted share attributable to common
stockholders:
|
|||||||||||||
(basic
and diluted)
|
$
|
(0.17
|
)
|
$
|
(0.12
|
)
|
$
|
(0.36
|
)
|
$
|
(0.38
|
)
|
|
Weighted
average common shares outstanding:
|
|||||||||||||
(basic
and diluted)
|
18,234
|
13,976
|
15,450
|
13,966
|
|||||||||
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
|
AEOLUS
PHARMACEUTICALS, INC.
|
|||||||
(Unaudited)
|
|||||||
(In
thousands)
|
|||||||
Nine
Months Ended
|
|||||||
June
30,
|
|||||||
2006
|
2005
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(5,514
|
)
|
$
|
(5,253
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
and amortization
|
-
|
8
|
|||||
Noncash
compensation
|
264
|
329
|
|||||
Noncash
interest expense
|
66
|
59
|
|||||
Noncash
licensing fee
|
12
|
-
|
|||||
Equity
in income of CPEC LLC
|
(433
|
)
|
-
|
||||
Increase
in fair value of common stock warrants
|
1,815
|
-
|
|||||
Change
in assets and liabilities:
|
|||||||
Accounts
receivable
|
5
|
9
|
|||||
Prepaids
and other assets
|
(25
|
)
|
(69
|
)
|
|||
Accounts
payable and accrued expenses
|
(337
|
)
|
(437
|
)
|
|||
Net
cash used in operating activities
|
(4,147
|
)
|
(5,354
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from dividend from CPEC LLC
|
315
|
-
|
|||||
Proceeds
from issuance of Series A Preferred Stock
|
2,413
|
-
|
|||||
Proceeds
from issuance of common stock
|
4,754
|
-
|
|||||
Proceeds
from exercise of stock options
|
42
|
-
|
|||||
Net
cash provided by financing activities
|
7,524
|
-
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
3,377
|
(5,354
|
)
|
||||
Cash
and cash equivalents at beginning of period
|
626
|
7,381
|
|||||
Cash
and cash equivalents at end of period
|
$
|
4,003
|
$
|
2,027
|
|||
The
accompanying notes are integral part of these unaudited condensed
consolidated financial statements.
|
Number
of Shares
|
Exercise
Price
|
Expiration
Date
|
|||||
4,000,000
|
$
|
0.50
|
June
2007
|
||||
50,000
|
|
$
|
0.50
|
May
2011
|
|||
2,500,000
|
$
|
0.50
|
November
2010
|
||||
7,000,000
|
$
|
0.75
|
June
2011
|
||||
50,000
|
$
|
1.00
|
May
2011
|
||||
35,000
|
$
|
1.00
|
July
2008
|
||||
50,000
|
$
|
1.50
|
May
2011
|
||||
50,000
|
$
|
2.00
|
May
2011
|
||||
50,000
|
$
|
2.50
|
May
2011
|
||||
410,400
|
$
|
2.50
|
April
2009
|
||||
1,641,600
|
$
|
4.00
|
April
2009
|
||||
1,860
|
$
|
16.125
|
August
2006
|
||||
1,759
|
$
|
19.90
|
October
2008
|
||||
106,783
|
$
|
20.25
|
August
2006
|
||||
10,000
|
$
|
20.25
|
October
2006
|
||||
15,957,402
|
Shares
|
Weighted
Average Exercise Price
|
||||||
Outstanding
at September 30, 2005
|
2,394,091
|
$
|
4.05
|
||||
Granted
|
180,641
|
$
|
0.87
|
||||
Exercised
|
(41,666
|
)
|
$
|
1.00
|
|||
Forfeited
|
(16,281
|
)
|
$
|
13.23
|
|||
Outstanding
at June 30, 2006 (unaudited)
|
2,516,785
|
$
|
3.81
|
||||
Exercisable
at June 30, 2006 (unaudited)
|
2,466,917
|
$
|
3.87
|
Research
and development expenses
|
$
|
31
|
||
General
and administrative expenses
|
191
|
|||
Total
stock-based compensation expense
|
$
|
222
|
Dividend
yield
|
0
|
%
|
||
Expected
volatility
|
187
- 190
|
%
|
||
Risk-free
interest rate
|
4.4%
- 5.2
|
%
|
||
Expected
option life
|
10
years
|
Three
Months Ended June 30, 2005
|
Nine
Months Ended June 30, 2005
|
||||||
Net
loss attributable to common stockholders as reported
|
$
|
(1,636
|
)
|
$
|
(5,253
|
)
|
|
Pro
forma adjustment for stock-based compensation
|
(111
|
)
|
(400
|
)
|
|||
Pro
forma net loss attributable to common stockholders
|
$
|
(1,747
|
)
|
$
|
(5,653
|
)
|
|
Basic
and diluted net loss per weighted share attributable
|
|||||||
to
common stockholders:
|
|||||||
As
reported
|
$
|
(0.12
|
)
|
$
|
(0.38
|
)
|
|
Pro
forma - adjusted for stock-based compensation
|
$
|
(0.13
|
)
|
$
|
(0.40
|
)
|
Dividend
yield
|
0
|
%
|
||
Expected
volatility
|
195
|
%
|
||
Risk-free
interest rate
|
2.9%
- 4.3
|
%
|
||
Expected
option life (in years from vesting)
|
3
years
|
Exhibit
#
|
Description
|
|
10.1
|
Subscription
Agreement dated June 5, 2006 by and between the Company and the investors
whose names appear on the signature pages thereof (incorporated by
reference to Exhibit 10.1 of the Company’s Form 8-K filed dated June 6,
2006).
|
|
10.2
|
Conversion
Agreement dated June 5, 2006 by and among the Company, the Company’s
Series A Preferred Stockholders, Efficacy Biotech Master Fund Ltd.
and
Ronin Capital, LLC (incorporated by reference to Exhibit 10.2 of
the
Company’s Form 8-K filed dated June 6, 2006).
|
|
10.3
|
Form
of Warrant to Purchase Common Stock dated June 5, 2006 (incorporated
by
reference to Exhibit 10.3 of the Company’s Form 8-K filed dated June 6,
2006).
|
|
10.4
|
Warrant
to Purchase Common Stock dated June 5, 2006.by and among the Company
and
Efficacy Biotech Master Fund Ltd (incorporated by reference to Exhibit
10.4 of the Company’s Form 8-K filed dated June 6, 2006).
|
|
10.5
|
Right
of First Offer Agreement dated June 5, 2006 by and among the Company
and
Efficacy Biotech Master Fund Ltd (incorporated by reference to Exhibit
10.5 of the Company’s Form 8-K filed dated June 6, 2006).
|
|
10.6
|
Board
Observer Letter dated June 5, 2006 by and among the Company and Efficacy
Biotech Master Fund Ltd (incorporated by reference to Exhibit 10.6
of the
Company’s Form 8-K filed dated June 6, 2006).
|
|
10.7
|
Employment
Agreement dated July 14, 2006 between Aeolus Pharmaceuticals, Inc.
and
John L. McManus (incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K filed dated July 14, 2006).
|
|
10.8
|
Consulting
Agreement dated July 10, 2006 between Aeolus Pharmaceuticals, Inc.
and
McManus & Company, Inc. (incorporated by reference to Exhibit 10.1 of
the Company’s Form 8-K filed dated June 14, 2006).
|
|
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.
|
Date: August
11, 2006
|
By:
|
/s/
John L. McManus
|
John
L. McManus
President
and Chief Operating Officer
(Principal
Executive Officer)
|
||
Date: August
11, 2006
|
By:
|
/s/
Michael P. McManus
|
Michael
P. McManus
Chief
Financial Officer and Treasurer
(Principal
Financial and Accounting Officer)
|