Delaware
(State
or jurisdiction
of
incorporation or organization)
|
2834
(Primary
Standard Industrial
Classification
Code Number)
|
58-1486040
(I.R.S.
Employer
Identification
No.)
|
||
180
Mount Airy Road, Suite 102
Basking
Ridge, NJ 07920
(Address
and telephone number of principal executive offices and principal
place of
business)
|
||||
Brian
Lenz
Chief
Financial Officer
VioQuest
Pharmaceuticals, Inc.
180
Mount Airy Road, Suite 102
Basking
Ridge, NJ 07920
Telephone:
(908)
766-4400
Facsimile:
(908)
766-4455
(Name,
address and telephone number of agent for service)
|
Copies
to:
Christopher
J. Melsha, Esq.
Maslon
Edelman Borman & Brand, LLP
90
South 7th Street, Suite 3300
Minneapolis,
Minnesota 55402
Telephone:
(612) 672-8200
Facsimile:
(612) 672-8397
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company x
|
Title of each class of securities
to be registered
|
Amount to be
registered (1) (2)
|
Proposed maximum offering
price per share (3)
|
Proposed maximum aggregate
offering price (3)
|
Amount of
registration fee
|
|||||||||
Common stock,
par value $0.001 per share
|
10,413,409
|
$
|
.604
|
|
$ | 6,290,203 |
$
|
247.19
|
|
(1) |
There
is also being registered hereunder an indeterminate number of additional
shares of common stock as shall be issuable pursuant to Rule 416
to
prevent dilution resulting from stock splits, stock dividends or
similar
transactions.
|
(2) |
The
offering price has been estimated solely for the purpose of computing
the
amount of the registration fee in accordance with Rule 457(o). Our
common
stock is not traded on any national exchange or unsolidated reporting
system and was determined by reference to the price at which shares
were
recently sold in a private placement. The offering price is a fixed
price
at which the selling shareholders may sell their shares until our
common
stock is quoted on the OTC Bulletin Board, at which time the shares
may be
sold at prevailing market or privately negotiated prices. There is
no
certainty that a market maker will agree to file the necessary documents
with the National Association of Securities Dealers, Inc., which
operates
the OTC Bulletin Board, for purposes of obtaining a price quotation
for
our common stock, nor is there any certainty that such an application
for
quotation will be approved.
|
(3) |
Estimated
solely for the purpose of computing the amount of the registration
fee
pursuant to Rule 457 under the Securities Act of 1933, determined
arbitrarily (please see “Determination of Offering
Price”).
|
|
Page
|
Prospectus
Summary
|
4
|
Risk
Factors
|
9
|
Note
Regarding Forward Looking Statements
|
15
|
Use
of Proceeds
|
15
|
Selling
Stockholders
|
16
|
Plan
of Distribution
|
19
|
Description
of Capital Stock
|
21
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
25
|
Description
of Business
|
38
|
Management
and Board of Directors
|
51
|
Security
Ownership of Certain Beneficial Owners and Management
|
62
|
Transactions
with Related Persons, Promoters and Certain Control
Persons
|
63
|
Material
Changes
|
64
|
Where
You Can Find More Information
|
64
|
Validity
of Common Stock
|
64
|
Experts
|
64
|
Disclosure
Of Commission Position On Indemnification For Securities Act
Liabilities
|
64
|
Financial
Statements
|
F-1
|
·
|
243,397
shares of our common stock issuable at a price of $4.00 per share
upon
exercise of warrants issued to the investors in our 2007 private
placement
of our convertible promissory notes;
|
·
|
5,774,167
shares of our common stock underlying 3,464.5 shares of our Series
A
Convertible Preferred Stock convertible at a price of $0.60 per share
issued to the investors in our private placement of Series A Convertible
Preferred stock;
|
·
|
2,887,083
shares of our common stock issuable at a price of $1.00 per share
upon the
exercise of warrants issued to the investors in our private placement
of
Series A Convertible Preferred stock;
|
·
|
896,096
shares of our common stock underlying 3,405.165 shares of our Series
B
Convertible Preferred Stock convertible at a price of $3.80 per share
as
issued to our former note holders upon the conversion of the note’s
principal and accrued interest into shares of our Series B Convertible
Preferred Stock;
|
·
|
492,416
shares of our common stock issuable at a price of $0.80 per share
upon the
exercise of warrants issued to the placement agents in connection
with our
private placement of Series A Preferred Stock.
|
·
|
120,250 shares of our common stock issuable at a price of $4.20 per share upon the exercise of warrants issued to the placement agents in connection with our private placement of our convertible promissory notes. |
Common
stock offered
|
10,413,409 shares
|
|
|
Common
stock outstanding before the offering(1)
|
5,461,644 shares
|
|
Common
stock outstanding after the offering(2)
|
15,875,053
shares
|
|
Common
Stock OTC Bulletin Board symbol
|
VOQP.OB
|
(1)
|
Based
on the number of shares outstanding as of May 19, 2008, not including
2,738,382 shares issuable upon exercise of various warrants and options
to
purchase common stock.
|
(2) |
Assumes
the issuance of all shares offered hereby that are issuable upon
exercise
of warrants.
|
•
|
the
terms of our license agreements pursuant to which we obtain the right
to
develop and commercialize drug candidates, including the amount of
license
fees and milestone payments required under such
agreements;
|
•
|
the
results of any clinical trials;
|
•
|
the
scope and results of our research and development
programs;
|
•
|
the
time required to obtain regulatory
approvals;
|
•
|
our
ability to establish and maintain marketing alliances and collaborative
agreements; and
|
•
|
the
cost of our internal marketing
activities.
|
•
|
acquire
the rights to develop and commercialize a drug
candidate;
|
•
|
undertake
pre-clinical development and clinical trials for drug candidates
that we
acquire;
|
•
|
seek
regulatory approvals for drug
candidates
|
•
|
implement
additional internal systems and
infrastructure;
|
•
|
lease
additional or alternative office facilities;
and
|
•
|
hire
additional personnel.
|
•
|
delay
commercialization of, and our ability to derive product revenues
from, a
drug candidate;
|
•
|
impose
costly procedures on us; and
|
•
|
diminish
any competitive advantages that we may otherwise
enjoy.
|
•
|
unforeseen
safety issues;
|
•
|
determination
of dosing issues;
|
•
|
lack
of effectiveness during clinical
trials;
|
•
|
slower
than expected rates of patient
recruitment;
|
•
|
inability
to monitor patients adequately during or after treatment;
and
|
•
|
inability
or unwillingness of medical investigators to follow our clinical
protocols.
|
•
|
perceptions
by members of the health care community, including physicians, about
the
safety and effectiveness of our
drugs;
|
•
|
cost-effectiveness
of our product relative to competing
products;
|
•
|
availability
of reimbursement for our products from government or other healthcare
payers; and
|
•
|
effectiveness
of marketing and distribution efforts by us and our licensees and
distributors, if any.
|
•
|
We
may be unable to identify manufacturers on commercially reasonable
terms
or at all because the number of potential manufacturers is limited
and the
FDA must approve any replacement contractor. This approval would
require
new testing and compliance inspections. In addition, a new manufacturer
would have to be educated in, or develop substantially equivalent
processes for, production of our products after receipt of FDA approval,
if any.
|
•
|
Our
third-party manufacturers might be unable to formulate and manufacture
our
drugs in the volume and of the quality required to meet our clinical
needs
and commercial needs, if any.
|
•
|
Our
future contract manufacturers may not perform as agreed or may not
remain
in the contract manufacturing business for the time required to supply
our
clinical trials or to successfully produce, store and distribute
our
products.
|
•
|
Drug
manufacturers are subject to ongoing periodic unannounced inspection
by
the FDA, the DEA, and corresponding state agencies to ensure strict
compliance with good manufacturing practice and other government
regulations and corresponding foreign standards. We do not have control
over third-party manufacturers’ compliance with these regulations and
standards.
|
•
|
If
any third-party manufacturer makes improvements in the manufacturing
process for our products, we may not own, or may have to share, the
intellectual property rights to the
innovation.
|
•
|
developing
drugs;
|
•
|
undertaking
pre-clinical testing and human clinical
trials;
|
•
|
obtaining
FDA and other regulatory approvals of
drugs;
|
•
|
formulating
and manufacturing drugs; and
|
•
|
launching,
marketing and selling drugs.
|
•
|
announcements
of technological innovations or new commercial products by our competitors
or us;
|
•
|
developments
concerning proprietary rights, including
patents;
|
•
|
regulatory
developments in the United States and foreign
countries;
|
•
|
economic
or other crises and other external
factors;
|
•
|
period-to-period
fluctuations in our revenues and other results of
operations;
|
•
|
changes
in financial estimates by securities analysts;
and
|
•
|
sales
of our common stock.
|
Selling
Stockholder
|
Shares
Beneficially Owned Before
Offering
|
Number
of Shares of Common Stock
Issuable Upon:
|
Percentage
Beneficial Ownership After
Offering
|
|
Conversion
of Series B Convertible
Preferred
Stock
|
Warrants
+
|
|||
Neel
B. Ackerman and Martha N. Ackerman
|
110,376
(1)
|
55,630
|
13,157
|
*
|
Vincent
M. Aita
|
31,009
(2)
|
2,781
|
657
|
*
|
Jesus
A. Anaya
|
8,591
|
6,947
|
1,644
|
-
|
Lucille
S. Ball Revocable Trust (a)
|
29,214
|
23,622
|
5,592
|
|
Lee
P. Bearsch
|
17,184
|
13,895
|
3,289
|
-
|
David
Benadum
|
20,486
(3)
|
5,563
|
1,315
|
*
|
Frank
Calcutta
|
66,710
(4)
|
41,722
|
9,868
|
*
|
Duane
Clarkson
|
22,340
|
18,064
|
4,276
|
-
|
Clarkson
Trust (b)
|
46,399
|
13,895
|
3,289
|
-
|
Cranshire
Capital, LP (c)
|
111,087
(5)
|
69,478
|
16,447
|
*
|
CSA
Biotechnology Fund I, LLC (d)
|
1,965,014
(6)
|
216,112
|
82,236
|
*
|
Michael
Cushing
|
17,184
|
13,895
|
3,289
|
-
|
Ennino
DePianto
|
16,151
(7)
|
6,947
|
1,644
|
*
|
Praful
Desai
|
32,599
(8)
|
20,861
|
4,934
|
*
|
Gregg
Dovolis
|
32,599
(8)
|
20,861
|
4,934
|
*
|
John
O. Dunkin
|
30,804
(3)
|
13,907
|
3,289
|
*
|
Franz
Family Trust (e)
|
8,597
|
6,953
|
1,644
|
-
|
Stephen
Gerber
|
34,393
|
27,815
|
6,578
|
-
|
Daniel
E. Greenleaf
|
189,512
(9)
|
4,867
|
1,151
|
-
|
Robert
Guercio
|
39,403
(3)
|
20,861
|
4,934
|
*
|
Robert
Joseph
|
8,591
|
6,947
|
1,644
|
-
|
Ronald
P. Laurain
|
8,597
|
6,953
|
1,644
|
-
|
Stephen
H. Lebovitz
|
8,597
|
6,953
|
1,644
|
-
|
Brian
Lenz
|
53,571
(10)
|
75
|
328
|
*
|
S.
Alan Lisenby
|
78,806
(11)
|
41,722
|
9,868
|
*
|
M.H.
Yokoyama & J.S. Venuti Family Trust dated 4/95 (f)
|
4,295
|
3,473
|
822
|
-
|
Joe
Nitti
|
3,436
|
2,779
|
657
|
-
|
Thomas
& Denise M. Nudo
|
77,386
|
62,584
|
14,802
|
-
|
Alan
Platner
|
18,149
(12)
|
6,947
|
1,644
|
*
|
David
Pudelsky & Nancy Pudelsky
|
21,657
(13)
|
8,344
|
1,973
|
*
|
Louis
R. Reif
|
54,731
(9)
|
22,252
|
5,263
|
*
|
Suzanne
Schiller
|
15,401
(7)
|
6,953
|
1,644
|
*
|
George
L. Seward
|
8,591
|
6,947
|
1,644
|
-
|
Jerome
Shinkay
|
8,597
|
6,953
|
1,644
|
-
|
William
Silver
|
15,401
(7)
|
6,953
|
1,644
|
*
|
Vernon
L. Simpson
|
8,591
|
6,947
|
1,644
|
-
|
Lucile
Slocum
|
42,635
(4)
|
22,252
|
5,263
|
*
|
Pershing
LLC as Custodian for Howard M. Tanning
|
84,571
(1)
|
34,768
|
8,223
|
*
|
Carolyn
Taylor
|
43,463
(14)
|
27,815
|
6,578
|
*
|
Michael
Weiser
|
200,601
(15)
|
2,781
|
657
|
3.6
|
Lindsay
A. Rosenwald
|
636,002 (16)
|
-
|
12,105
|
4.0
|
GunnAllen
Financial, Inc.
|
75,250
|
-
|
75,250
|
-
|
Harris
Lydon
|
232,895
(17)
|
-
|
32,895
|
-
|
Selling
Stockholder
|
Shares
Beneficially Owned Before
Offering
|
Number
of Shares of Common Stock
Issuable Upon:
|
||
Conversion
of Series A Convertible
Preferred
Stock
|
Exercise
of
Warrants
+
|
Percentage
Beneficial Ownership
After
Offering
|
||
AB
Capital, L.P. (g)
|
150,000
|
100,000
|
50,000
|
-
|
Adams
Market Neutral, LLLP (h)
|
75,000
|
50,000
|
25,000
|
-
|
Fernando
Ahumada
|
100,000
|
66,667
|
33,333
|
-
|
Jorge
Ahumada
|
50,000
|
33,333
|
16,667
|
-
|
Balanced
Investment, LLC (i)
|
187,500
|
125,000
|
62,500
|
-
|
Alp
Benadrete
|
56,250
|
37,500
|
18,750
|
-
|
Izzet
Benadrete
|
125,000
|
83,333
|
41,667
|
-
|
Capretti
Grandi, LLC (j)
|
1,250,000
(18)
|
833,333
|
416,667
|
-
|
Tim
P. Cooper
|
50,000
|
33,333
|
16,667
|
-
|
Russell
H. Ellison
|
25,000
|
16,667
|
8,333
|
-
|
Rafit
Eskenazi
|
170,000
|
113,333
|
56,667
|
-
|
Steven
T. Glass
|
62,500
|
41,667
|
20,833
|
-
|
Ben
Heller
|
200,000
|
133,333
|
66,667
|
-
|
Elliot
H. Herskowitz IRA Rollover
|
125,000
|
83,333
|
41,667
|
-
|
Neil
Herskowitz IRA Rollover
|
125,000
|
83,333
|
41,667
|
-
|
High
Glen Properties Limited (k)
|
250,000
|
166,667
|
83,333
|
-
|
David
Jaroslawicz
|
200,000
|
133,333
|
66,667
|
-
|
Daniel
U. Kelves & BettyAnn Kelves
|
12,500
|
8,333
|
4,167
|
-
|
Charles
Hartman King
|
62,500
|
41,667
|
20,833
|
-
|
CSA
Biotechnology Fund II, LLC (l)
|
1,965,014
(6)
|
1,666,667
|
833,333
|
*
|
Klaus
Kretschmer
|
500,000
|
333,334
|
166,667
|
-
|
Nicholas
B. Kronwall Trust Dated 11/12/69
|
25,000
|
16,667
|
8,333
|
-
|
Brian
Lenz
|
53,571
(9)
|
16,667
|
8,333
|
*
|
Javier
Livas
|
25,000
|
16,667
|
8,333
|
-
|
Harris
Lydon
|
232,895 (17)
|
16,667
|
183,333
|
-
|
Susan
and Harry Newton, JTWROS
|
125,000
|
83,333
|
41,667
|
-
|
Mario
Pasquel and Begona Miranda
|
25,000
|
16,667
|
8,333
|
-
|
Neal
Polan
|
62,500
|
41,667
|
20,833
|
-
|
Elke
R de Ramirez
|
25,000
|
16,667
|
8,333
|
-
|
Riverside
Contracting, LLC (m)
|
375,000
|
250,000
|
125,000
|
-
|
Robert
Roth
|
25,000
|
16,667
|
8,333
|
-
|
Roberto
Segovia
|
22,500
|
15,000
|
7,500
|
-
|
South
Ferry #2 LP (n)
|
1,250,000
|
833,333
|
416,667
|
-
|
Starlight
Investment Holdings Limited (o)
|
250,000
|
166,667
|
83,333
|
-
|
Tokenhouse
Trading PTE Ltd. (p)
|
125,000
|
83,333
|
41,667
|
-
|
Lindsay A. Rosenwald | 636,002 (16) |
-
|
251,666
|
4.0
|
Karl Ruggeberg | 40,667 |
-
|
40,667
|
-
|
Justin Welling | 1,667 |
-
|
1,667
|
-
|
Ece Marcelli | 23,416 |
-
|
23,416
|
-
|
(10)
|
In
addition to the shares being registered, represents: (i) shares
issuable
upon exercise (at a price of $16.70 per share) of an option to
purchase
1,500 shares; (ii) shares issuable upon exercise (at a price of
$14.00 per
share) of an option to purchase 2,500 shares; (iii) shares issuable
upon
exercise (at a price of $10.80 per share) of an option, 6,000 shares
of
which were vested as of January 24, 2008; (iv) shares issuable
upon
exercise (at a price of $10.30 per share) of an option 6,667 shares
of
which vested as of November 29, 2007; (v) shares issuable upon
exercise
(at a price of $8.50 per share) of an option, of which 6,667 shares
were
vested as of March 31, 2008; (vi) shares issuable upon exercise
(at a
price of $5.50 per share) of an option, 3,334 shares of which will
vest on
May 11, 2008; and (vii) 1,500 shares of common stock. Stockholder
is also
referenced in the table with respect to the Series A Convertible
Preferred
Stock. Mr. Lenz is our Chief Financial
Officer.
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as
agent, but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
·
|
privately
negotiated transactions;
|
|
|
·
|
short
sales;
|
|
|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
|
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per share;
|
|
|
·
|
a
combination of any such methods of sale; and
|
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
Quarter
Ended
|
High
|
Low
|
|||||
March
31, 2006
|
8.50
|
8.10
|
|||||
June
30, 2006
|
8.00
|
7.70
|
|||||
September
30, 2006
|
6.50
|
6.00
|
|||||
December
31, 2006
|
5.30
|
4.30
|
|||||
March
31, 2007
|
7.50
|
4.50
|
|||||
June
30, 2007
|
6.40
|
3.60
|
|||||
September
30, 2007
|
5.50
|
2.50
|
|||||
December
31, 2007
|
3.70
|
0.90
|
|||||
March
31, 2008
|
2.00
|
0.50
|
·
|
has
the same intended use as the predicate; and
|
·
|
has
the same technological characteristics as the
predicate.
|
Three Months Ended March 31,
|
||||||||||
2008
|
2007
|
Cumulative
amounts during development |
||||||||
Lenocta
|
$
|
285,330
|
$
|
456,525
|
$
|
3,165,324
|
||||
VQD-002
|
530,613
|
477,624
|
3,663,633
|
|||||||
Xyfid
|
163,151
|
434,662
|
958,018
|
|||||||
Total
|
$
|
979,094
|
$
|
1,368,811
|
$
|
7,786,975
|
Drug Candidate
|
|||||||||||||
Lenocta
|
VQD-002
|
Xyfid
|
Three Months
Ended March 31, 2008 |
||||||||||
Clinical
Research Costs
|
$
|
160,759
|
$
|
217,708
|
$
|
104,293
|
$
|
482,760
|
|||||
Labor
Costs
|
64,403
|
167,448
|
25,761
|
257,612
|
|||||||||
Regulatory
/ Legal Fees
|
51,118
|
132,907
|
20,447
|
204,472
|
|||||||||
Licensing
/ Milestone Fees
|
8,750
|
6,250
|
-
|
15,000
|
|||||||||
Other
|
300
|
6,300
|
12,650
|
19,250
|
|||||||||
Total
|
$
|
285,330
|
$
|
530,613
|
$
|
163,151
|
$
|
979,094
|
Drug Candidate
|
|||||||||||||
Lenocta
|
VQD-002
|
Xyfid
|
Three Months
Ended March 31, 2007 |
||||||||||
Clinical
Research Costs
|
$
|
182,497
|
$
|
329,474
|
$
|
-
|
$
|
511,971
|
|||||
Labor
Costs
|
137,227
|
77,227
|
-
|
214,454
|
|||||||||
Regulatory
/ Legal Fees
|
76,864
|
60,048
|
37,490
|
174,402
|
|||||||||
Licensing
Fees
|
8,752
|
6,250
|
369,588
|
384,590
|
|||||||||
Other
|
51,185
|
4,625
|
27,584
|
83,394
|
|||||||||
Total
|
$
|
456,525
|
$
|
477,624
|
$
|
434,662
|
$
|
1,368,811
|
Years ended December 31,
|
||||||||||
2007
|
2006
|
Cumulative
amounts during
development
|
||||||||
Lenocta
|
$
|
2,056,598
|
$
|
823,396
|
$
|
2,879,994
|
||||
VQD-002
|
2,136,680 | 996,340 | 3,133,020 | |||||||
Xyfid
|
794,867 | - | 794,867 | |||||||
Total
|
$
|
4,988,145
|
$
|
1,819,736
|
$
|
6,807,881
|
Drug Candidate
|
|||||||||||||
Lenocta
|
VQD-002
|
Xyfid
|
Year-ended
December
31, 2007
|
||||||||||
Clinical
Research Costs
|
$
|
766,332
|
$
|
894,582
|
$
|
43,181
|
$
|
1,704,095
|
|||||
Labor
Costs
|
285,540 | 598,375 | 138,221 | 1,022,136 | |||||||||
Regulatory
/ Legal Fees
|
431,947 | 345,522 | 47,817 | 825,286 | |||||||||
Licensing
/ Milestone Fees
|
381,806 | 25,000 | 369,588 | 776,394 | |||||||||
Other
|
190,973 | 273,202 | 196,060 | 660,235 | |||||||||
Total
|
$
|
2,056,598
|
$
|
2,136,681
|
$
|
794,867
|
$
|
4,988,146
|
Drug Candidate
|
|||||||||||||
Lenocta
|
VQD-002
|
Xyfid
|
Year-ended
December
31, 2006
|
||||||||||
Clinical
Research Costs
|
$
|
220,780
|
$
|
233,126
|
$
|
-
|
$
|
453,906
|
|||||
Labor
Costs
|
192,554 | 192,554 | - | 385,108 | |||||||||
Regulatory
/ Legal Fees
|
255,594 | 189,194 | - | 444,788 | |||||||||
Licensing
Fees
|
64,164 | 141,666 | - | 205,830 | |||||||||
Other
|
90,304 | 239,800 | - | 330,104 | |||||||||
Total
|
$
|
823,396
|
$
|
996,340
|
$
|
-
|
$
|
1,819,736
|
Payments due by period
|
||||||||||||||||
Total
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
||||||||||||
Contractual
Obligations
|
||||||||||||||||
Convertible
Promissory Notes Obligations (1) (3)
|
$
|
3,700,000
|
$
|
3,700,000
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Continuing
Operating Lease Obligations (2)
|
416,500
|
101,500
|
315,000
|
-
|
-
|
|||||||||||
Total
|
$
|
4,116,500
|
$
|
3,801,500
|
$
|
315,000
|
$
|
-
|
$
|
-
|
(1)
|
Convertible
Promissory Notes Obligations are notes payable to accredited investors
that may convert into shares of our common stock. The total principal
obligation is for $3,700,000. In addition, we expect to become
obligated
to pay interest of $301,920. Interest is accrued at the annual
rate of 8%, compounded semi-annually, during the one-year term.
We may
elect to extend the term to an additional year, which election
would
trigger an increase in the annual interest rate to 12%, compounded
semi-annually, during the extended term and we would become obligated
to
pay additional interest in the amount of
$326,557.
|
(2)
|
Operating
Lease Obligations are payment obligations under an “operating lease” as
classified by FASB Statement of Financial Accounting Standards
No. 13.
According to SFAS No. 13, any lease that does not meet the criteria
for a
“capital lease” is considered an “operating
lease.”
|
(3)
|
As
of March 14, 2008, we are no longer obligated to repay the convertible
promissory notes as a result of the majority of the note holders
converting their notes to Convertible Preferred Stock as a condition
to
the March 14, 2008 financing.
|
·
|
Cutaneous
leishmaniasis –
Cutaneous forms of the disease normally produce skin ulcers on
the exposed
parts of the body such as the face, arms and legs). The disease
can
produce a large number of lesions - sometimes up to 200 - causing
serious
disability, and invariably leaving the patient permanently scarred,
a
stigma which can cause serious social
prejudice;
|
·
|
Mucocutaneous
– in mucocutaneous
forms of leishmaniasis, lesions can lead to partial or total destruction
of the mucous membranes of the nose, mouth and throat cavities
and
surrounding tissues. These disabling and degrading forms of leishmaniasis
can result in victims being humiliated and cast out from society;
and
|
·
|
Visceral
leishmaniasis
- also known as kala azar - is characterized by irregular bouts
of fever,
substantial weight loss, swelling of the spleen and liver, and
anaemia
(occasionally serious). If left untreated, the fatality rate in
developing
countries can be as high as 100% within 2
years.
|
· |
preclinical
laboratory tests, animal studies, and formulation
studies,
|
· |
submission
to the FDA of an IND for human clinical testing, which must become
effective before human clinical trials may
begin,
|
· |
adequate
and well-controlled human clinical trials to establish the safety
and
efficacy of the drug for each
indication,
|
· |
submission
to the FDA of an NDA,
|
· |
satisfactory
completion of an FDA inspection of the manufacturing facility or
facilities at which the drug is produced to assess compliance with
current
good manufacturing practices, or cGMPs,
and
|
· |
FDA
review and approval of the NDA.
|
Name
|
Age
|
Positions
|
||
Michael
D. Becker
|
|
39
|
|
Director,
Chief Executive Officer and President
|
Brian
Lenz
|
|
36
|
|
Chief
Financial Officer, and Treasurer
|
Stephen
C. Rocamboli
|
|
36
|
|
Director,
non-executive Chairman of Board of Directors and
Secretary
|
Johnson
Y.N. Lau, M.D.
|
|
47
|
|
Director
|
Michael
Weiser, M.D., Ph.D.
|
|
45
|
|
Director
|
Name and
Principal Position
|
Year
|
Salary
|
Bonus
|
Option
Awards (1)
|
Non-Equity
Incentive Plan
Compensation
|
All Other
Compensation
|
Total
|
|||||||||||||||
Michael
D. Becker
|
2007
|
$
|
40,894
|
(2)
|
$
|
–
|
$
|
45,954
|
(3)
|
$
|
–
|
$
|
–
|
$
|
86,848
|
|||||||
Chief
Executive Officer and President
|
2006
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||
Edward
C. Bradley, M.D.
|
2007
|
$
|
273,679
|
(4)
|
$
|
–
|
$
|
111,013
|
(5)
|
$
|
–
|
$
|
–
|
$
|
384,692
|
|||||||
Former
Chief Scientific and Medical Officer
|
2006
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||
Brian
Lenz
|
2007
|
$
|
185,000
|
$
|
–
|
$
|
92,542
|
(6)
|
$
|
36,483
|
(7)
|
$
|
–
|
$
|
314,025
|
|||||||
Chief
Financial Officer and Treasurer
|
2006
|
134,583
|
–
|
86,546
|
24,412
|
3,600
|
(7)
|
249,141
|
||||||||||||||
Daniel
E. Greenleaf
|
2007
|
$
|
311,013
|
$
|
100,000
|
$
|
87,026
|
$
|
100,000
|
(9)
|
$
|
–
|
$
|
598,039
|
||||||||
Former
Chief Executive Officer and President
(8)
|
2006
|
360,000
|
100,000
|
818,053
|
100,000
|
–
|
1,378,053
|
(1)
|
Amount
reflects the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2007 in accordance
with SFAS 123(R) of stock option awards, and may include amounts
from
awards granted in and prior to fiscal year 2007. Assumptions used
in the
calculation of this amount for employees are identified in Note 8
to our
annual financial statements for the year ended December 31, 2007
included
elsewhere in this prospectus. The number of shares granted by the
stock
option awards described in this table have been adjusted pursuant
to our
1-for-10 reverse stock split on April 25, 2008.
|
(2)
|
Pursuant
to Mr. Becker’s employment agreement dated November 11, 2007, Mr. Becker’s
employment commenced with the Company on November 21, 2007, and is
for a
four year term. Mr. Becker’s annual salary is $358,400.
|
(3)
|
Amount
reflects the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2007 in accordance
with SFAS 123(R), of the following stock option awards: (i) the
vesting of 501,334 share option granted on November 21, 2007 which
vests
in equal installments over four years; and (ii) the vesting of a
portion of shares subject to an option to purchase an aggregate of
85,640
shares granted November 21, 2007 which vests in equal amounts over
four
years, but is subject to vesting to the extent the Company’s shares held
in escrow in connection with our acquisition of Greenwich Therapeutics,
Inc. are released. On December 4, 2007, 29,974 shares of the such
escrowed
shares were released. Thus, 21,410 share options vest on November
21, 2008
and 8,564 vest on November 21, 2009.
|
(4)
|
Pursuant
to Dr. Bradley’s employment agreement dated February 1, 2007, Dr. Bradley
is entitled to receive a salary of $330,000 on an annualized basis.
On
March 20, 2008, Dr. Bradley entered into an agreement with the Company
which provided for a reduction in his base salary from $330,000 to
$165,000. In addition, the agreement provided for a reduction in
the
number of hours of service required to be provided by Dr. Bradley
to the
Company. On April 11, 2008, Dr. Bradley resigned from his part-time
position with the Company.
|
(5)
|
Amount
reflects the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2007 in accordance
with
SFAS 123(R) of the following stock option awards: (i) the vesting
of
one-third of a 70,000 share option granted on February 1, 2007 which
vests
in equal amounts over 3 years.
|
(6)
|
Amount
reflects the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2007 in accordance
with
SFAS 123(R) of the following stock option awards: (i) the vesting
of
one-third of a 2,500 share option granted on April 19, 2004 which
vests in
equal amounts over 3 years; (ii) the vesting of one-third of a 6,000
share
option granted on January 24, 2005 which vests in equal amounts over
3
years; (iii) the vesting of one-third of a 10,000 share option granted
on
November 29, 2005, which vests in equal amounts over 3 years; (iv)
the
vesting of one-third of a 10,000 share option granted on March 31,
2006,
which vests in equal amounts over 3 years; and (v) the vesting of
one-third of a 10,000 share option granted on May 11, 2007, which
vests in
equal amounts over 3 years.
|
(7)
|
Amount
represents a cash bonus awarded based upon the satisfaction of performance
criteria established by our Board of Directors. See “– Employment
Agreements with Named Executives – Brian Lenz – Bonus
Compensation.”
|
(8)
|
Pursuant
to Mr. Greenleaf’s employment agreement, he is entitled to a bonus of
$100,000 upon each anniversary of his agreement. On November 14,
2007, the
Company and Mr. Greenleaf, the Company’s former President & Chief
Executive Officer, entered into a Separation and Release Agreement.
Pursuant to the Separation Agreement, we and Mr. Greenleaf agreed
that Mr.
Greenleaf’s employment with the Company terminated as of November 9, 2007,
and that Mr. Greenleaf resigned from all positions as officer and
director
of the Company.
|
(9)
|
Amount
represents a cash bonus awarded based upon the satisfaction of performance
criteria established by our Board of Directors. See “– Employment
Agreements with Named Executives – Daniel Greenleaf – Bonus
Compensation.”
|
·
|
his
willful and repeated failure or refusal to perform his material duties
or
obligations;
|
·
|
any
willful, intentional or grossly negligent act having the effect of
injuring, in a material way (whether financial or otherwise), the
Company’s business or reputation;
|
·
|
willful
misconduct by in respect of his material duties or obligations;
|
·
|
his
indictment of any felony involving a crime of moral turpitude;
|
·
|
the
determination by the Company that Mr. Becker engaged in material
harassment or discrimination prohibited by law;
|
·
|
any
misappropriation or embezzlement of the Company’s property;
|
·
|
a
breach of the non-solicitation, non-competition, invention assignment
and
confidentiality provisions of the Becker Agreement; or
|
·
|
a
material breach of any other material provision of the Becker Agreement
that is not cured within 30 days after written notice thereof is
given by
the Company.
|
·
|
a
material reduction by the Company of Mr. Becker’s compensation or
benefits;
|
·
|
a
material reduction or change in Mr. Becker’s duties, responsibilities or
position;
|
·
|
a
material breach by the Company of any material term of the Becker
Agreement; or
|
·
|
a
relocation of the principal place of employment by more than 50 miles
without Mr. Becker’s consent.
|
2007
Criteria
|
Eligible Amount
|
Amount Awarded
|
|||||
Completion of
financings resulting in gross proceeds of a targeted
amount
|
$
|
11,100
|
$
|
0
|
|||
Listing
of common stock on a national securities exchange
|
$
|
16,650
|
$
|
0
|
|||
Company’s
initiation of 5 Phase II corporate sponsored clinical
trials
|
$
|
5,550
|
$
|
0
|
|||
Chiral
Quest sale process completion
|
$
|
16,650
|
$
|
16,650
|
|||
Qualitative
factors relating to leadership, teamwork, peer interaction, initiative
and
communication
|
$
|
5,550
|
$
|
0
|
|||
Total
|
$
|
55,500
|
$
|
16,650
|
·
|
the
sale, lease, exchange or other transfer, directly or indirectly,
of
substantially all of the assets of the Company (in one transaction
or in a
series of related transactions) to a person or entity that is not
controlled by the Company;
|
·
|
the
approval by our shareholders of any plan or proposal for the liquidation
or dissolution of the Company;
|
·
|
any
person becomes after the effective date of the Plan the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of (i) 20% or more, but not 50% or more, of the combined voting power
of
our outstanding securities ordinarily having the right to vote at
elections of directors, unless the transaction resulting in such
ownership
has been approved in advance by the board members who continue as
directors, or (ii) 50% or more of the combined voting power of our
outstanding securities ordinarily having the right to vote at elections
of
directors (regardless of any approval by the continuing directors);
provided that a traditional institution or venture capital financing
transaction shall be excluded from this
definition;
|
·
|
a
merger or consolidation to which we are a party if our shareholders
immediately prior to effective date of such merger or consolidation
have
beneficially own, immediately following the effective date of such
merger
or consolidation, securities of the surviving corporation representing
(i)
50% or more, but less than 80%, of the combined voting power of the
surviving corporation’s then outstanding securities ordinarily having the
right to vote at elections of directors, unless such merger or
consolidation has been approved in advance by our continuing directors,
or
(ii) less than 50% of the combined voting power of the surviving
corporation’s then outstanding securities (regardless of any approval by
our continuing directors; or
|
·
|
after
the date our securities are first sold in a registered public offering,
our continuing directors cease for any reason to constitute at least
a
majority of the Board.
|
2007
Criteria
|
Eligible Amount
|
Amount Awarded
|
|||||
Completion of financings
resulting in gross proceeds of a targeted amount
|
$
|
40,000
|
$
|
0
|
|||
Listing
of common stock on national securities exchange
|
$
|
50,000
|
$
|
0
|
|||
Company’s
initiation of 5 Phase II corporate sponsored clinical
trials
|
$
|
30,000
|
$
|
0
|
|||
Company’s
completion of enrollment of 3 Phase II clinical trials
|
$
|
20,000
|
$
|
0
|
|||
Acquisition
of a compound as approved by the Board of Directors
|
$
|
30,000
|
$
|
30,000
|
|||
Sale
of Chiral Quest
|
$
|
40,000
|
$
|
40,000
|
|||
Acceptance
of NDA filing for review for Leishmaniasis
|
$
|
15,000
|
$
|
0
|
|||
Qualitative
factors relating to leadership, teamwork, peer interaction, initiative
and
communication
|
$
|
25,000
|
$
|
0
|
|||
Total
|
$
|
250,000
|
$
|
70,000
|
Name
|
Number of
Securities
Underlying
Unexercised Options
Exercisable
|
Number of
Securities
Underlying
Unexercised Options
Unexercisable
|
Option
Exercise Price
|
Option
Expiration Date
|
|||||||||
Michael
D. Becker
|
–
|
501,334
|
(2)
|
$
|
3.00
|
11/21/2017
|
|||||||
|
–
|
29,974
|
(2)
|
$
|
3.00
|
11/21/2017
|
|||||||
Brian
Lenz
|
1,500
|
(3)
|
–
|
$
|
16.70
|
10/06/2013
|
|||||||
|
2,500
|
(4) |
–
|
(4)
|
$
|
14.00
|
04/19/2014
|
||||||
|
4,000
|
(5) |
2,000
|
(5)
|
$
|
10.80
|
01/24/2015
|
||||||
|
6,667
|
(6) |
3,333
|
(6)
|
$
|
10.30
|
11/29/2015
|
||||||
|
3,333
|
(7) |
6,667
|
(7)
|
$
|
8.50
|
03/31/2016
|
||||||
–
|
(8)
|
10,000
|
(8)
|
$
|
5.50
|
05/11/2017
|
|||||||
Edward
C. Bradley
|
–
|
70,000
|
(9)
|
$
|
5.50
|
02/01/2017
|
|||||||
Daniel
Greenleaf
|
594,264
|
(10)
|
–
|
$
|
8.80
|
11/08/2008
|
|||||||
|
963,386
|
(10) |
–
|
$
|
8.90
|
11/08/2008
|
|||||||
|
197,290
|
(10) |
–
|
$
|
5.60
|
11/08/2008
|
(1)
|
All
options granted pursuant to our 2003 Stock Option
Plan.
|
(2) |
Options
were granted in accordance with Mr. Becker’s employment agreement dated
November 11, 2007. Pursuant to Mr. Becker’s employment agreement, we
issued 501,334 shares of our common stock, equal to 10% of the outstanding
shares of our common stock at the date of the employment agreement.
Additionally, we issued to Mr. Becker merger options to purchase
85,644
shares of our common stock on the date of the employment agreement,
equal
to 10% of the shares of common stock that have not been released
from
escrow pursuant to the Greenwich Therapeutics, Inc. acquisition in
October
2005. As stated above, 35% of the shares held in escrow were released
on
December 4, 2007, and a commensurate portion of Mr. Becker’s option to
purchase 85,640 immediately vested.
|
(3) |
Options
were granted on October 6, 2003 and vested in three equal amounts
on each
of October 6, 2004, October 6, 2005 and October 6,
2006.
|
(4) |
Options
were granted on April 19, 2004 and vested in three equal amounts
on each
of April 19, 2005, April 19, 2006 and April 19, 2007.
|
(5) |
Options
were granted on January 24, 2005 and vest in three equal amounts
on each
of January 24, 2006, January 24, 2007, and January 24,
2008.
|
(6) |
Options
were granted on November 29, 2005 and vest in three equal amounts
on each
of November 29, 2006, November 29, 2007, and November 29,
2008.
|
(7) |
Options
were granted on March 31, 2006 and vest in three equal amounts on
each of
March 31, 2007, March 31, 2008, and March 31,
2009.
|
(8) |
Options
were granted on May 11, 2007 and vest in three equal amounts on each
of
May 11, 2008, May 11, 2009, and May 11,
2010.
|
(9) |
Upon
commencement of Dr. Bradley’s employment with us, Dr. Bradley had received
stock options to purchase 70,000 shares of our common stock. The
terms of
his employment agreement provided that stock options representing
23,333
shares of our common stock vested on February 1, 2008, with the balance
of
the stock options to vest in equal installments on February 1, 2009
and
2010. As disclosed above, Dr. Bradley resigned from his position
with us
on April 11, 2008. See “ – Employment Agreements with Named
Executives – Edward C.
Bradley.”
|
(10) |
Options
vested in accordance with Mr. Greenleaf’s separation agreement with us
dated November 14, 2007.
|
Name
|
Fees Earned or
Paid in Cash
|
Option
Awards
|
All Other
Compensation
|
Total
|
|||||||||
Vincent M.
Aita (1)
|
$
|
17,000
|
$
|
12,651
|
(1)
|
$
|
–
|
$
|
29,651
|
||||
Johnson
Y.N. Lau
|
$
|
20,000
|
$
|
76,657
|
(2)
|
$
|
–
|
$
|
96,657
|
||||
Stephen
C. Rocamboli
|
$
|
17,000
|
$
|
18,660
|
(3)
|
$
|
–
|
$
|
35,660
|
||||
Stephen
A. Roth (4)
|
$
|
17,000
|
$
|
60,712
|
(4)
|
$
|
–
|
$
|
77,712
|
||||
Michael
Weiser
|
$
|
16,000
|
$
|
18,660
|
(3)
|
$
|
–
|
$
|
34,660
|
||||
Xumu
Zhang (5)
|
$
|
–
|
$
|
3,085
|
(5)
|
$
|
45,000
(6
|
)
|
$
|
48,085
|
·
|
any
breach of his or her duty of loyalty to us or our
stockholders
|
·
|
acts
or omissions not in good faith which involve intentional misconduct
or a
knowing violation of law
|
·
|
the
payment of dividends or the redemption or purchase of stock in violation
of Delaware law; or
|
·
|
any
transaction from which the director derived an improper personal
benefit.
|
Name
and Address
|
Number of Shares
Beneficially Owned (1)
|
Percentage
of Class
|
|||||
Michael
D. Becker
|
5,000
|
(1)
|
*
|
||||
Brian
Lenz
|
53,571
|
(2)
|
*
|
||||
Stephen
C. Rocamboli
|
95,840
|
(3)
|
*
|
||||
Michael
Weiser, M.D., Ph.D.
|
200,601
|
(4)
|
1.0
|
||||
Edward
C. Bradley, M.D.
|
47,667
|
(5)
|
*
|
||||
Johnson
Y.N. Lau, M.D., Ph.D.
|
33,000
|
(6)
|
*
|
||||
All
Executive Officers and Directors as a group (6 persons)
|
439,013
|
||||||
Lester
Lipschutz
|
1,054,136
|
(7)
|
6.6
|
||||
1650
Arch Street –
22nd
Floor
Philadelphia,
PA 19103
|
|||||||
Lindsay
A. Rosenwald
|
1,886,002
|
(8)
|
11.6
|
||||
787
7th
Avenue, 48th
Floor
New
York, NY 10019
|
(1) |
Represents
5,000 shares purchased on January 14,
2008.
|
(2) |
Represents:
(i) shares issuable upon exercise (at a price of $16.70 per share)
of an
option, 1,500 shares of which were vested as of October 6, 2006;
(ii)
shares issuable upon exercise (at a price of $14.00 per share) of
an
option, 2,500 of which were vested as of April 19, 2007; (iii) shares
issuable upon exercise (at a price of $10.80 per share) of an option,
2,000 shares of which were vested as of January 24, 2008; (iv) shares
issuable upon exercise (at a price of $10.30 per share) of an option
6,667
shares of which vested as of November 29, 2007; (v) shares issuable
upon
exercise (at a price of $8.50 per share) of an option, of which 6,667
shares were vested as of March 31, 2008; (vi) shares issuable upon
exercise (at a price of $5.50 per share) of an option, 3,334 shares
of
which vested as of May 11, 2007; (vii) shares issuable upon exercise
of a
warrant issued on June 29, 2007, to purchase 328 shares at a price
of
$4.00; (viii) 500 shares purchased December 9, 2005; (ix) 1,000 shares
purchased on January 14, 2008; (x) 10 shares of Series A convertible
preferred stock and warrants which convert into 16,667 shares common
stock
and 8,333 warrants; and (xi) 0.285 shares of Series B convertible
preferred stock which converts into 75 shares of common stock.
|
(3) |
Represents:
(i) 71,936 shares owned by, and 14,400 shares issuable upon the exercise
of two warrants held by, Stephen C. Rocamboli as Trustee for The
Stephen
C. Rocamboli April 2005 Trust u/a/d April 7, 2005; (ii) 1,290 shares
issuable upon exercise (at a price of $19.60 per share) of an option
which
fully vested on October 28, 2006; (iii) 10,000 shares issuable upon
exercise (at a price of $3.80 per share) of an option, 3,334 shares
were
vested as of July 11, 2007; and (iv) 1,550 shares purchased on January
14,
2008.
|
(4) |
Represents:
(i) 161,206 shares owned by, and 28,000 shares issuable upon the
exercise
of a warrant; (ii) 1,290 shares issuable upon exercise (at a price
of
$19.60 per share) of an option which fully vested on October 28,
2006;
(iii) 10,000 shares issuable upon exercise (at a price of $3.80 per
share)
of an option, 6,667 shares were vested as of July 11, 2007; and (iv)
10.570 shares of Series B convertible stock and warrants which convert
into 2,781 shares of common stock and 657
warrants.
|
(5) |
Represents:
(i) 1,000 shares purchased on February 7, 2007; and (ii) shares issuable
upon exercise (at a price of $5.50 per share) of an option, 46,666
of
which were vested as of April 15,
2008.
|
(6) |
Represents:
(i) shares issuable upon exercise (at a price of $7.50 per share)
of an
option, 17,000 shares of which 113,33 were vested as of January 12,
2008;
(ii) shares issuable upon exercise (at a price of $8.50 per share)
of an
option to purchase 15,000 shares which fully vested on March 31,
2007;
(iii) shares issuable upon exercise (at a price of $3.80 per share)
of an
option, 3,334 shares of which vested on July 11,
2007.
|
(7) |
Based
on Schedule 13G filed with the SEC on August 1, 2007. Represents
shares
owned equally by several trusts established for the benefit of Dr.
Lindsay
A. Rosenwald or members of his immediate family, for which Mr. Lipschutz
is the trustee/investment manager, and over which he has voting control
and investment power.
|
(8) |
Based
on a Schedule 13G/A filed February 13, 2008, and includes (i) 392,319
shares issuable upon the exercise of warrants; (ii) 39,283 shares
held by
Paramount BioCapital Investments, LLC of which Dr. Rosenwald is the
managing member. In addition, this total includes 500 shares of Series
A
convertible stock and warrants held by Capretti Grandi, LLC, of which
Dr.
Rosenwald is a controlling executive, which convert into 833,333
shares of
common stock and 416,667
warrants.
|
Unaudited
Interim Condensed Consolidated Financial Statements of VioQuest
Pharmaceuticals, Inc., and Subsidiaries:
|
|
Condensed
Consolidated Balance Sheets as of March 31, 2008 and December 31,
2007
|
F-2
|
Condensed
Consolidated Statements of Operations for the Three Months Ended
March 31,
2008 and 2007
|
F-3
|
Condensed
Consolidated Statements of Changes in Stockholders’ Equity for the Three
Months Ended March 31, 2008
|
F-4
|
Condensed
Consolidated Statements of Cash Flows for the Three Months Ended
March 31,
2008 and 2007
|
F-5
|
Notes
to Condensed Consolidated Financial Statements
|
F-6
|
Audited
Consolidated Financial Statements of VioQuest Pharmaceuticals, Inc.,
and
Subsidiaries
|
|
Report
of J.H. Cohn LLP
|
F-14
|
Consolidated
Balance Sheets as of December 31, 2007 and 2006
|
F-15
|
Consolidated
Statements of Operations for the Years Ended December 31, 2007 and
2006
|
F-16
|
Consolidated
Statements of Changes in Stockholders’ Equity (Deficiency) for the Years
Ended
December
31, 2007 and 2006
|
F-17
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2007 and
2006
|
F-18
|
Notes
to Consolidated Financial Statements
|
F-19
|
March 31, 2008
(Unaudited)
|
December 31, 2007
(Note 1A)
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
305,561
|
$
|
694,556
|
|||
Prepaid
clinical research costs
|
287,055
|
189,359
|
|||||
Deferred
financing costs
|
-
|
357,581
|
|||||
Other
current assets
|
57,925
|
66,836
|
|||||
Total
Current Assets
|
650,541
|
1,308,332
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
32,464
|
34,789
|
|||||
SECURITY
DEPOSITS
|
15,232
|
15,232
|
|||||
TOTAL
ASSETS
|
$
|
698,237
|
$
|
1,358,353
|
|||
LIABILITIES,
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
DEFICIENCY
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Accounts
payable
|
$
|
2,635,869
|
$
|
1,873,500
|
|||
Accrued
compensation and related taxes
|
255,208
|
373,460
|
|||||
Other
accrued expenses
|
561,070
|
665,273
|
|||||
Convertible
notes, net of unamortized debt discount of $0 and $917,612
|
-
|
2,930,388
|
|||||
TOTAL
LIABILITIES
|
3,452,147
|
5,842,621
|
|||||
MANDATORILY
REDEEMABLE CONVERTIBLE PREFERRED STOCK; $0.001 par value: 10,000,000
shares authorized
|
|||||||
Series
A mandatorily redeemable convertible preferred stock; 765 shares
issued
and outstanding at March 31, 2008
|
6,321
|
-
|
|||||
Series
B mandatorily redeemable convertible preferred stock; 3,910 shares
issued
and outstanding at March 31, 2008
|
3,910,165
|
-
|
|||||
Dividends
payable in shares of common stock
|
14,947
|
-
|
|||||
TOTAL
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
STOCK
|
3,931,433
|
-
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS'
DEFICIENCY
|
|||||||
Common
stock; $0.001 par value: 200,000,000 shares authorized, 5,462,112
shares
issued and outstanding
|
5,462
|
5,462
|
|||||
Additional
paid-in capital
|
35,822,473
|
34,942,567
|
|||||
Accumulated
deficit
|
(42,513,278
|
)
|
(39,432,297
|
)
|
|||
Total
Stockholders' Deficiency
|
(6,685,343
|
)
|
(4,484,268
|
)
|
|||
TOTAL
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND
STOCKHOLDERS' DEFICIENCY
|
$
|
698,237
|
$
|
1,358,353
|
For the Three
Months Ended
March 31, 2008
|
For the Three
Months Ended
March 31, 2007
|
||||||
OPERATING
EXPENSES
|
|||||||
Research
and development
|
$
|
979,094
|
$
|
1,368,811
|
|||
General
and administrative
|
690,339
|
913,651
|
|||||
Total
Operating Expenses
|
1,669,433
|
2,282,462
|
|||||
LOSS
FROM OPERATIONS
|
(1,669,433
|
)
|
(2,282,462
|
)
|
|||
INTEREST
(EXPENSE) / INCOME, NET
|
(1,411,548
|
)
|
25,684
|
||||
LOSS
FROM CONTINUING OPERATIONS
|
(3,080,981
|
)
|
(2,256,778
|
)
|
|||
LOSS
FROM DISCONTINUED OPERATIONS
|
-
|
(261,475
|
)
|
||||
NET
LOSS
|
$
|
(3,080,981
|
)
|
$
|
(2,518,253
|
)
|
|
NET
LOSS PER COMMON SHARE:
|
|||||||
CONTINUING
OPERATIONS
|
$
|
(0.63
|
)
|
$
|
(0.49
|
)
|
|
DISCONTINUED
OPERATIONS
|
-
|
(0.06
|
)
|
||||
NET
LOSS PER SHARE – BASIC AND DILUTED
|
$
|
(0.63
|
)
|
$
|
(0.55
|
)
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED
|
4,905,426
|
4,605,672
|
Common Stock
|
Additional Paid-In Capital
|
Accumulated
Deficit
|
Total
Stockholders'
Deficiency
|
|||||||||||||
Shares
|
Amount
|
|||||||||||||||
Balance, January
1, 2008
|
5,462,112
|
$
|
5,462
|
$
|
34,942,567
|
$
|
(39,432,297
|
)
|
$
|
(4,484,268
|
)
|
|||||
Net
loss for the three months ended March 31, 2008
|
(3,080,981
|
)
|
(3,080,981
|
)
|
||||||||||||
Value
of warrants issued to placement agents with March 14, 2008 Series
A
mandatorily redeemable convertible preferred stock
|
140,164
|
140,164
|
||||||||||||||
Value
of warrants issued to investors and beneficial conversion feature
embedded
in Series A mandatorily redeemable convertible preferred
stock
|
531,286
|
531,286
|
||||||||||||||
Accretion
of discount on Series A mandatorily redeemable convertible preferred
stock
|
(6,321
|
)
|
(6,321
|
)
|
||||||||||||
Discount
on convertible notes
|
62,166
|
62,166
|
||||||||||||||
Stock-based
compensation to employees
|
152,599
|
152,599
|
||||||||||||||
Stock-based
compensation to consultants and finder
|
12
|
12
|
||||||||||||||
Balance,
March 31, 2008
|
5,462,112
|
$
|
5,462
|
$
|
35,822,473
|
$
|
(42,513,278
|
)
|
$
|
(6,685,343
|
)
|
For the Three
Months Ended
March 31, 2008
|
For the Three
Months Ended
March 31, 2007
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(3,080,981
|
)
|
$
|
(2,518,253
|
)
|
|
Loss
from discontinued operations
|
-
|
261,475
|
|||||
Loss
from continuing operations
|
(3,080,981
|
)
|
(2,256,778
|
)
|
|||
Adjustments
to reconcile loss from continuing operations to net cash used in
continuing operating activities:
|
|||||||
Depreciation
|
2,325
|
2,307
|
|||||
Stock-based
compensation to employees
|
152,599
|
221,771
|
|||||
Stock-based
compensation to consultants and finder
|
12
|
53,178
|
|||||
Amortization
of debt discount and deferred financing fees
|
1,399,524
|
-
|
|||||
Dividends
payable on mandatorily redeemable convertible preferred
stock
|
14,947
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Prepaid
clinical research costs
|
(97,696
|
)
|
17,215
|
||||
Other
assets
|
8,911
|
(100,907
|
)
|
||||
Accounts
payable
|
762,369
|
759,403
|
|||||
Accrued
expenses
|
(222,455
|
)
|
(43,297
|
)
|
|||
Net
Cash Used in Continuing Operating Activities
|
(1,060,445
|
)
|
(1,347,108
|
)
|
|||
Net
Cash Used in Discontinued Operating Activities:
|
-
|
(342,098
|
)
|
||||
Net
Cash Used in Operating Activities
|
(1,060,445
|
)
|
(1,689,206
|
)
|
|||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Payments
for purchased equipment
|
-
|
(2,277
|
)
|
||||
Net
Cash Used in Continuing Investing Activities
|
-
|
(2,277
|
)
|
||||
Net
Cash Used in Discontinued Investing Activities:
|
-
|
(23,555
|
)
|
||||
Net
Cash Used in Investing Activities
|
-
|
(25,832
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from issuance of mandatorily redeemable convertible preferred stock
with
warrants, net of cash costs of $93,550
|
671,450
|
-
|
|||||
Repayment
of note payable
|
-
|
(75,000
|
)
|
||||
Net
Cash Provided By / (Used in) Continuing Financing
Activities
|
671,450
|
(75,000
|
)
|
||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(388,995
|
)
|
(1,790,038
|
)
|
|||
CASH
AND CASH EQUIVALENTS – BEGINNING OF PERIOD
|
694,556
|
2,931,265
|
|||||
CASH
AND CASH EQUIVALENTS – END OF PERIOD
|
$
|
305,561
|
$
|
1,141,227
|
|||
Supplemental
Schedule of Non-Cash Investing and Financing
Activities:
|
|||||||
Value
of warrants issued to the placement agent in connection with issuance
of
mandatorily redeemable convertible preferred stock
|
$
|
140,164
|
$
|
-
|
|||
Value
of beneficial conversion feature related to mandatorily redeemable
convertible preferred stock
|
$
|
531,286
|
$
|
-
|
|||
Conversion
of convertible notes into mandatorily redeemable convertible series
B
preferred stock
|
$
|
3,910,165
|
$
|
-
|
Three
Months Ended
March
31,
|
|||||||
2008
|
2007
|
||||||
Term
|
7
years
|
7
years
|
|||||
Volatility
|
298
|
%
|
232-233
|
%
|
|||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
|||
Risk-free
interest rate
|
3.3
|
%
|
4.5-4.9
|
%
|
|||
Forfeiture
rate
|
0%-26
|
%
|
22
|
%
|
Number of
Shares
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining Contractual
Life (Years)
|
Aggregate
Intrinsic Value
|
||||||||||
Balance,
January 1, 2008
|
1,013,339
|
$
|
9.90
|
||||||||||
Granted
|
120,000
|
$
|
1.20
|
||||||||||
Exercised
|
-
|
-
|
|||||||||||
Forfeited
or expired
|
(18,600
|
)
|
$
|
6.00
|
|||||||||
Outstanding
at March 31, 2008
|
1,114,739
|
$
|
4.60
|
7.75
|
$
|
-
|
|||||||
Exercisable
at March 31, 2008
|
311,261
|
$
|
8.50
|
3.00
|
$
|
-
|
Term
|
5
years
|
|||
Volatility
|
240
|
%
|
||
Dividend
yield
|
0.0
|
%
|
||
Risk-free
interest rate
|
4.9-5.0
|
%
|
Term
|
5
years
|
|||
Volatility
|
301
|
%
|
||
Dividend
yield
|
0.0
|
%
|
||
Risk-free
interest rate
|
2.4
|
%
|
2007
|
2006
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
694,556
|
$
|
2,931,265
|
|||
Prepaid
clinical research costs
|
189,359
|
273,172
|
|||||
Deferred
financing costs
|
357,581
|
-
|
|||||
Other
current assets
|
66,836
|
168,841
|
|||||
Current
assets associated with discontinued operations
|
-
|
2,396,435
|
|||||
Total
Current Assets
|
1,308,332
|
5,769,713
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
34,789
|
43,378
|
|||||
SECURITY
DEPOSITS
|
15,232
|
15,232
|
|||||
TOTAL
ASSETS
|
$
|
1,358,353
|
$
|
5,828,323
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIENCY)
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Accounts
payable
|
$
|
1,873,500
|
$
|
1,031,458
|
|||
Accrued
compensation and related taxes
|
373,460
|
245,475
|
|||||
Other
accrued expenses
|
665,273
|
180,440
|
|||||
Note
payable - Paramount BioSciences, LLC
|
-
|
264,623
|
|||||
Convertible
notes, net of unamortized debt discount of $917,612
|
2,930,388
|
-
|
|||||
Current
liabilities associated with discontinued operations
|
-
|
1,265,568
|
|||||
TOTAL
LIABILITIES
|
5,842,621
|
2,987,564
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS'
EQUITY (DEFICIENCY)
|
|||||||
Preferred
stock; $0.001 par value: 10,000,000 shares authorized, 0 shares
issued and
outstanding
|
-
|
-
|
|||||
Common
stock; $0.001 par value: 200,000,000 shares authorized, 54,621,119
shares
issued and outstanding
|
54,621
|
54,621
|
|||||
Additional
paid-in capital
|
34,893,408
|
31,326,694
|
|||||
Accumulated
deficit
|
(39,432,297
|
)
|
(28,540,556
|
)
|
|||
Total
Stockholders' Equity (Deficiency)
|
(4,484,268
|
)
|
2,840,759
|
||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
|
$
|
1,358,353
|
$
|
5,828,323
|
2007
|
2006
|
||||||
OPERATING
EXPENSES
|
|||||||
In-process
research and development
|
$
|
963,225
|
$
|
-
|
|||
Research
and development
|
4,988,145
|
1,819,736
|
|||||
General
and administrative
|
3,791,089
|
3,461,529
|
|||||
Total
Operating Expenses
|
9,742,459
|
5,281,265
|
|||||
LOSS
FROM OPERATIONS
|
(9,742,459
|
)
|
(5,281,265
|
)
|
|||
INTEREST
(EXPENSE) / INCOME, NET
|
(1,126,273
|
)
|
105,695
|
||||
LOSS
BEFORE INCOME TAXES
|
(10,868,732
|
)
|
(5,175,570
|
)
|
|||
INCOME
TAX BENEFIT
|
240,684
|
-
|
|||||
LOSS
FROM CONTINUING OPERATIONS
|
(10,628,048
|
)
|
(5,175,570
|
)
|
|||
DISCONTINUED
OPERATIONS
|
|||||||
Loss
from discontinued operations, net of income tax benefit of $0 and
$201,079
for the years ended December 31, 2007 and 2006,
respectively
|
(702,137
|
)
|
(3,095,594
|
)
|
|||
Gain
on sale of business
|
438,444
|
-
|
|||||
LOSS
FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT
|
(263,693
|
)
|
(3,095,594
|
)
|
|||
NET
LOSS
|
$
|
(10,891,741
|
)
|
$
|
(8,271,164
|
)
|
|
NET
LOSS PER SHARE:
|
|||||||
CONTINUING
OPERATIONS
|
$
|
(0.23
|
)
|
$
|
(0.13
|
)
|
|
DISCONTINUED
OPERATIONS
|
(0.00
|
)
|
(0.08
|
)
|
|||
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$
|
(0.23
|
)
|
$
|
(0.21
|
)
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
|
46,721,932
|
39,786,686
|
|
Total
|
|||||||||||||||
Additional
|
Stockholders'
|
|||||||||||||||
Common
Stock
|
Paid-In
|
|
Accumulated
|
|
Equity
|
|||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
(Deficiency)
|
||||||||||||
Balance,
January 1, 2006
|
46,729,519
|
$
|
46,729
|
$
|
26,561,672
|
$
|
(20,269,392
|
)
|
$
|
6,339,009
|
||||||
Net
loss for the year ended December 31, 2006
|
(8,271,164
|
)
|
(8,271,164
|
)
|
||||||||||||
October
18, 2006 private placement, net of $296,554 in financing
costs
|
7,891,600
|
7,892
|
3,641,354
|
3,649,246
|
||||||||||||
Stock-based
compensation to employees
|
1,040,145
|
1,040,145
|
||||||||||||||
Stock-based
compensation to consultants and finder
|
83,523
|
83,523
|
||||||||||||||
Balance,
December 31, 2006
|
54,621,119
|
|
54,621
|
|
31,326,694
|
|
(28,540,556
|
)
|
|
2,840,759
|
||||||
Net
loss for the year ended December 31, 2007
|
(10,891,741
|
)
|
(10,891,741
|
)
|
||||||||||||
Fair
value of beneficial conversion feature and warrants issued in conjunction
with convertible notes
|
2,037,512
|
2,037,512
|
||||||||||||||
October
12, 2007 release of shares and warrants held in escrow
|
963,225
|
963,225
|
||||||||||||||
Stock-based
compensation to employees
|
500,700
|
500,700
|
||||||||||||||
Stock-based
compensation to consultants and finder
|
65,277
|
65,277
|
||||||||||||||
Balance,
December 31, 2007
|
54,621,119
|
$
|
54,621
|
$
|
34,893,408
|
$
|
(39,432,297
|
)
|
$
|
(4,484,268
|
)
|
2007
|
2006
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(10,891,741
|
)
|
$
|
(8,271,164
|
)
|
|
Loss
from discontinued operations
|
263,693
|
3,095,594
|
|||||
Loss
from continuing operations
|
(10,628,048
|
)
|
(5,175,570
|
)
|
|||
Adjustments
to reconcile loss from continuing operations to net cash used in
continuing operating activities:
|
|||||||
In-process
research and development
|
963,225
|
-
|
|||||
Depreciation
|
8,877
|
6,304
|
|||||
Loss
on disposal of assets
|
5,253
|
-
|
|||||
Stock-based
compensation to employees
|
462,704
|
830,715
|
|||||
Stock-based
compensation to consultants and finder
|
62,193
|
33,830
|
|||||
Amortization
of debt discount and deferred financing fees
|
1,195,615
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Prepaid
clinical research costs
|
83,813
|
(273,172
|
)
|
||||
Other
assets
|
102,005
|
(164,420
|
)
|
||||
Accounts
payable
|
842,042
|
756,381
|
|||||
Accrued
expenses
|
612,818
|
30,915
|
|||||
Net
Cash Used in Continuing Operating Activities
|
(6,289,503
|
)
|
(3,955,017
|
)
|
|||
Discontinued
Operating Activities:
|
|||||||
Gain
on sale of business
|
(438,444
|
)
|
-
|
||||
Net
cash used in discontinued operating activities
|
(354,281
|
)
|
(2,502,814
|
)
|
|||
Net
Cash Used in Operating Activities
|
(7,082,228
|
)
|
(6,457,831
|
)
|
|||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Payments
for purchased equipment
|
(5,127
|
)
|
(28,406
|
)
|
|||
Net
Cash Used in Continuing Investing Activities
|
(5,127
|
)
|
(28,406
|
)
|
|||
Discontinued
Investing Activities:
|
|||||||
Proceeds
from sale of business
|
1,727,263
|
-
|
|||||
Other
net cash used in discontinued investing activities
|
(26,698
|
)
|
(253,143
|
)
|
|||
Net
Cash Provided By / (Used in) Investing Activities
|
1,695,438
|
(281,549
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from private placement of common stock, net of
$296,554 in financing costs
|
-
|
3,649,246
|
|||||
Proceeds
from issuance of convertible notes with warrants, net of cash costs
of
$285,296
|
3,414,704
|
-
|
|||||
Repayment
of note payable
|
(264,623
|
)
|
-
|
||||
Net
Cash Provided By Continuing Financing Activities
|
3,150,081
|
3,649,246
|
|||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(2,236,709
|
)
|
(3,090,134
|
)
|
|||
CASH
AND CASH EQUIVALENTS - BEGINNING OF YEAR
|
2,931,265
|
6,021,399
|
|||||
CASH
AND CASH EQUIVALENTS - END OF YEAR
|
$
|
694,556
|
$
|
2,931,265
|
|||
Supplemental
Schedule of Non-Cash Investing and Financing
Activities:
|
|||||||
Value
of warrants issued to the placement agent in connection with issuances
of
convertible notes
|
$
|
429,866
|
$
|
-
|
|||
Value
of beneficial conversion feature related to convertible
notes
|
$
|
877,823
|
$
|
-
|
(i)
|
35%
of the escrowed securities were earned on October 12, 2007, from
the
conclusion of a Phase I clinical trial pursuant to an investigational
new
drug application (“IND”) accepted by the U.S. Food and Drug Administration
(“FDA”) for Lenocta or SSG;
|
(ii)
|
15%
of the escrowed securities shall be released immediately upon conclusion
of a Phase II clinical trial for Lenocta or SSG under a Company-sponsored
IND; provided that a majority of the members of the Company’s then
existing medical advisory board conclude that such trial yielded
results
which, in the opinion of such advisory board, warrant initiation
of Phase
III trial(s) (provided that this milestone shall be deemed to have
been
satisfied in the event a new drug application, or NDA, relating
to Lenocta
or SSG has been accepted for review by the FDA prior to any determination
by the medical advisory board to initiate a Phase III
trial);
|
(iii)
|
35%
of such escrowed securities shall be released immediately upon
the
conclusion of a Phase I clinical trial pursuant to a Company-sponsored
IND
application accepted by the FDA for VQD-002 or TCN-P;
|
(iv)
|
15%
of such escrowed securities shall be released immediately upon
conclusion
of a Phase II clinical trial for VQD-002 or TCN-P under a
Company-sponsored IND; provided that a majority of the members
of the
Company’s then existing medical advisory board conclude that such trial
yielded results which, in the opinion of such advisory board,
warrant
initiation of Phase III trial(s) (provided that this milestone
shall be
deemed to have been satisfied in the event an NDA relating to
VQD-002 or
has been accepted for review by the FDA prior to any determination
by the
medical advisory board to initiate a Phase III
trial).
|
December
31, 2007
|
December
31, 2006
|
||||||
Office
equipment
|
$
|
20,280
|
$
|
27,346
|
|||
Computer
equipment
|
29,999
|
24,123
|
|||||
Property
and equipment
|
50,279
|
51,469
|
|||||
Less
accumulated depreciation
|
15,490
|
8,091
|
|||||
Property
and Equipment, Net
|
$
|
34,789
|
$
|
43,378
|
Face
value of convertible notes
|
$
|
3,700,000
|
||
Accrued
but unpaid interest
|
148,000
|
|||
|
||||
Gross
value of convertible notes
|
3,848,000
|
|||
|
||||
Debt
discount attributable to Bridge Warrants
|
729,823
|
|||
BCF
attributable to Bridge Warrants
|
877,823
|
|||
BCF
attributable to convertible interest
|
148,000
|
|||
Less:
Amortization of debt discount
|
(838,034
|
)
|
||
|
||||
Unamortized
debt discount
|
917,612
|
|||
|
||||
Convertible
notes, net of unamortized debt discount
|
$
|
2,930,388
|
Deferred
financing costs
|
$
|
715,161
|
||
Less:
Accumulated amortization
|
(357,580
|
)
|
||
|
||||
Deferred
financing costs, net
|
$
|
357,581
|
Term
|
5
years
|
|||
Volatility
|
240
|
%
|
||
Dividend
yield
|
0.0
|
%
|
||
Risk-free
interest rate
|
4.9-5.0
|
%
|
Year
Ended December 31,
|
|||||||
2007
|
2006
|
||||||
NOL
carryforwards - Federal
|
$
|
9,605,910
|
$
|
6,168,321
|
|||
NOL
carryforwards - State
|
1,061,842
|
674,556
|
|||||
Tax
credits - Federal
|
377,179
|
-
|
|||||
Tax
credits - State
|
483,949
|
483,949
|
|||||
Inventory
reserve
|
-
|
170,800
|
|||||
Employee
and consultant stock compensation
|
748,209
|
416,058
|
|||||
Accrued
compensation
|
144,660
|
-
|
|||||
Other,
net
|
(1,756
|
)
|
114,748
|
||||
Valuation
allowance
|
(12,419,993
|
)
|
(8,028,432
|
)
|
|||
Net
deferred tax assets
|
$
|
-
|
$
|
-
|
December
31, 2007
|
December
31, 2006
|
||||||
Income
tax benefit at statutory rate
|
$
|
(3,695,369
|
)
|
$
|
(2,880,563
|
)
|
|
State
income taxes net of Federal tax
|
(652,124
|
)
|
(508,335
|
)
|
|||
Nondeductible
expenses and prior year true-up
|
(77,356
|
)
|
299,628
|
||||
Nondeductible
in-process research and development
|
385,290
|
||||||
Tax
credits
|
(352,002
|
)
|
(483,949
|
)
|
|||
Sale
of state NOLs
|
(240,684
|
)
|
-
|
||||
Increase
in valuation allowance
|
4,391,561
|
3,573,219
|
|||||
$
|
(240,684
|
)
|
$
|
-
|
December
31, 2007
|
December
31, 2006
|
||||||||||||
Weighted
|
Weighted
|
||||||||||||
Average
|
Average
|
||||||||||||
Exercise
|
Exercise
|
||||||||||||
Shares
|
Price
|
Shares
|
Price
|
||||||||||
Outstanding
at beginning of year
|
5,384,807
|
$
|
0.99
|
4,273,227
|
$
|
1.07
|
|||||||
Granted
|
7,295,783
|
$
|
0.49
|
1,746,580
|
$
|
0.73
|
|||||||
Expired
|
(2,547,200
|
)
|
$
|
1.20
|
(635,000
|
)
|
$
|
0.89
|
|||||
Outstanding
at end of year
|
10,133,390
|
$
|
0.50
|
5,384,807
|
$
|
0.99
|
|||||||
Options
exercisable at year-end
|
2,728,274
|
$
|
0.88
|
1,909,397
|
$
|
1.20
|
Range
of Exercise Prices
|
Outstanding
Options
|
Weighted
Average Exercise Price
|
Life
In Years
|
|||||||
$.01-$0.49
|
6,253,115
|
$
|
0.30
|
10
|
||||||
$.50
- $0.99
|
3,432,275
|
$
|
0.75
|
4
|
||||||
$1.00-$1.49
|
335,000
|
$
|
1.12
|
6
|
||||||
$1.50-$1.99
|
113,000
|
$
|
1.70
|
3
|
||||||
Total
|
10,133,390
|
December
31,
2007
|
December
31,
2006
|
||||||
Expected
lives
|
7
years
|
7
years
|
|||||
Expected
volatility
|
232%-277
|
%
|
210%-225
|
%
|
|||
Dividend
yield
|
0
|
%
|
0
|
%
|
|||
Risk-free
interest rate
|
4%-5
|
%
|
4
|
%
|
|||
Forfeiture
rate
|
0%-26
|
%
|
19%-25
|
%
|
Remaining
Contractual Life In Years
|
Price
|
Number
of Outstanding Warrants
|
||||||||
4.50
|
$
|
0.40
|
2,434,211
|
(A)
|
|
|||||
4.50
|
$
|
0.42
|
1,202,500
|
(B)
|
|
|||||
4.25
|
$
|
0.50
|
300,000
|
(C)
|
|
|||||
3.75
|
$
|
0.73
|
2,762,060
|
(D)
|
|
|||||
3.75
|
$
|
0.55
|
394,580
|
(E)
|
|
|||||
2.75
|
$
|
1.00
|
5,589,987
|
(F)
|
|
|||||
2.75
|
$
|
1.41
|
4,000,000
|
(G)
|
|
|||||
1.10
|
$
|
1.65
|
2,896,132
|
(H)
|
|
|||||
0.35
|
$
|
1.50
|
20,000
|
(I)
|
|
|||||
0.13
|
$
|
1.25
|
550,000
|
(J)
|
|
|||||
20,149,470
|
|
(A) |
-
Warrants issued as a result of the Company’s June 29 and July 3, 2007
issuance of convertible promissory notes to investors. All warrants
are
exercisable as of December 31,
2007.
|
(B) |
-
Warrants issued as a result of the Company’s June 29 and July 3, 2007
issuance of convertible promissory notes to placement agents. All
warrants
are exercisable as of December 31,
2007.
|
(C) |
-
Warrants issued as a result of the Xyfid license agreement. In
connection
with the agreement, two-thirds of the warrants are exercisable
upon the
achievement of certain clinical milestones. One-third of the warrants
are
exercisable as of December 31,
2007.
|
(D) |
-
Warrants issued as a result of the Company’s private placement of its
common stock in October 2006 to investors. All warrants are exercisable
as
of December 31, 2007.
|
(E) |
-
Warrants issued as a result of the Company’s private placement of its
common stock in October 2006 to placement agents. All warrants
are
exercisable as of December 31,
2007.
|
(F) |
-
Warrants issued as a result of the Company’s private placement of its
common stock in October 2005 to investors and placement agents.
All
warrants are exercisable as of December 31,
2007.
|
(G) |
-
Warrants issued as a result of the merger with Greenwich. Based
upon the
terms of the merger agreement, one-half of the warrants were immediately
exercisable, and one-half are exercisable upon the achievement
of certain
clinical milestones (see Note 4). As of December 31, 2007, there
are
2,700,001 merger warrants that are
exercisable.
|
(H) |
-
Warrants issued as a result of the Company’s private placement of its
common stock in February 2004 to investors and placement agents.
All
warrants are exercisable as of December 31,
2007.
|
(I) |
-
Warrants issued as a result of the lease agreement between Chiral
Quest,
Inc. and Princeton Corporate Plaza in May 2003. All warrants are
exercisable as of December 31,
2007.
|
(J) |
-
Warrants issued as a result of the merger by and among Surg II,
Inc.,
Chiral Quest, LLC and CQ Acquisition Corp. in February 2003. All
warrants
exercisable as of December 31,
2007.
|
· |
A
bonus of $150,000 payable when the Company receives gross proceeds
from
the sale of its securities in one or a series of related
transactions;
|
· |
A
bonus of $125,000 payable when the Company’s aggregate market
capitalization (determined by multiplying the closing sale price
of the
Company’s common stock by the number of shares issues and outstanding at
a
given time) exceeds $125 million for a period of 15 consecutive
trading
days.
|
· |
A
bonus of $500,000 payable when the Company’s aggregate market
capitalization (determined by multiplying the closing sale price
of the
Company’s common stock by the number of shares issues and outstanding at
a
given time) exceeds $250 million for a period of 15 consecutive
trading
days.
|
· |
A
bonus of $1,000,000 payable when the Company’s aggregate market
capitalization (determined by multiplying the closing sale price
of the
Company’s common stock by the number of shares issues and outstanding at
a
given time) exceeds $500 million for a period of 15 consecutive
trading
days.
|
· |
A
bonus of $2,000,000 payable when the Company’s aggregate market
capitalization (determined by multiplying the closing sale price
of the
Company’s common stock by the number of shares issues and outstanding at
a
given time) exceeds $1 billion for a period of 15 consecutive trading
days.
|
Years
ended
December
31,
|
Continuing
Operations
|
Discontinued
Operations
|
Total
|
|||||||
2008
|
$
|
102,000
|
$ |
-
|
$ |
102,000
|
||||
2009
|
102,000
|
-
|
102,000
|
|||||||
2010
|
106,000
|
-
|
106,000
|
|||||||
2011
|
106,000
|
-
|
106,000
|
|||||||
2012
|
-
|
-
|
-
|
|||||||
Total
|
$
|
416,000
|
$ |
-
|
$ |
416,000
|
SEC
registration fee
|
$
|
247.19
|
||
Legal
fees and expenses
|
$
|
10,000.00
|
||
Accounting
fees and expenses
|
$
|
10,000.00
|
||
Printing
and engraving expenses
|
$
|
1,000.00
|
||
Miscellaneous
|
$
|
2,000.00
|
||
Total
|
$
|
23,247.19
|
Exhibit
No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger dated July 1, 2005 by and among the Registrant,
VQ
Acquisition Corp. and Greenwich Therapeutics, Inc. (incorporated
by
reference to Exhibit 2.1 to the Registrant’s Form 10-QSB filed November
14, 2005).
|
|
2.2
|
First
Amendment to Agreement and Plan of Merger dated August 19, 2005 by
and
among the Registrant, VQ Acquisition Corp. and Greenwich Therapeutics,
Inc. (incorporated by reference to Exhibit 2.2 to the Registrant’s Form
10-QSB filed November 14, 2005).
|
|
2.3
|
Agreement
and Plan of Merger dated October 14, 2005 by and between the Registrant
and VioQuest Delaware, Inc. (incorporated by reference to Exhibit
10.1 to
the Registrant’s Form 8-K filed October 20, 2005).
|
|
2.4
|
Stock
Purchase and Sale Agreement dated April 10, 2007 between the Registrant
and Chiral Quest Acquisition Corp. (incorporated by reference to
Appendix
A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed
April 25, 2007).
|
|
2.5
|
Amendment
No. 1 to Stock Purchase and Sale Agreement dated June 8, 2007 between
the
Registrant and Chiral Quest Acquisition Corp. (incorporated by reference
to Exhibit 10.1 to the Registrant’s 8-K filed June 12,
2007).
|
|
3.1
|
Certificate
of Incorporation, as amended to date (incorporated by reference to
Exhibit
3.1 to the Registrant’s Annual Report on Form 10-KSB for the year ended
December 31, 2007).
|
|
3.2
|
Bylaws,
as amended to date (incorporated by reference to Exhibit 3.2 of
Registrant’s Annual Report on Form 10-KSB for the year ended December 31,
2003).
|
|
3.3
|
Certificate
of Designation of Series A Convertible Preferred Stock and Series
B
Convertible Preferred Stock (incorporated by reference to Exhibit
3.1
filed with the Registrant’s Form 8-K filed on March 20,
2008).
|
|
4.1
|
Option
Agreement No. LL-1 dated May 6, 2003 issued to
Princeton Corporate Plaza, LLC. (incorporated by reference to Exhibit
4.1
to the Registrant’s Form 10-QSB for the period ended June 30, 2003).
|
|
4.2
|
Form
of Option Agreement dated May 6, 2003 issued to Princeton
Corporate Plaza, LLC (incorporated by reference to Exhibit 4.2 to
the
Registrant’s Form 10-QSB for the period ended June 30, 2003).
|
|
4.3
|
Schedule
of Options substantially identical to Exhibit 4.3 (incorporated by
reference to Exhibit 4.3 to the Registrant’s Form 10-QSB for the period
ended June 30, 2003).
|
|
4.4
|
Form
of common stock purchase warrant issued in connection with February
2004
private placement (incorporated by reference to the Registrant’s Form SB-2
filed March 26, 2004).
|
|
4.5
|
Form
of common stock purchase warrant issued in connection with the October
2005 private placement (incorporated by reference to Exhibit 4.1
of the
Registrant’s Form SB-2 filed November 17, 2005).
|
|
4.6
|
Form
of common stock purchase warrant issued to placement agents in connection
with the October 2005 private placement (incorporated by reference
to
Exhibit 4.2 of the Registrant’s Form SB-2 filed November 17,
2005).
|
|
4.7
|
Form
of common stock purchase warrant issued in connection with the October
2005 acquisition of Greenwich Therapeutics, Inc. (incorporated by
reference to Exhibit 4.3 of the Registrant’s Form SB-2 filed November 17,
2005).
|
|
4.8
|
Form
of warrant issued to investors in October 18, 2006 private placement
(incorporated by reference to Exhibit 4.1 to the Registrant’s Current
Report on Form 8-K filed on October 24, 2006).
|
|
4.9
|
Form
of warrant issued to placement agents in October 18, 2006 private
placement (incorporated by reference to Exhibit 4.2 to the Registrant’s
Current Report on Form 8-K filed on October 24, 2006).
|
|
4.10
|
Form
of senior convertible promissory note issued by Registrant on June
29,
2007 and July 3, 2007 (incorporated by reference to Exhibit 4.1 of
the
Registrant’s Form 8-K filed July 6, 2007).
|
|
4.11
|
Form
of warrant issued to investors by Registrant on June 29, 2007 and
July 3,
2007 (incorporated by reference to Exhibit 4.1 of the Registrant’s Form
8-K filed July 6, 2007).
|
|
4.12
|
Form of warrant issued to investors By Registrant on April 9, 2008(incorporated by reference to Exhibit 4.1 to Registrant's 10-Q Filed on May 14, 2008). | |
4.13
|
Form of First Amentment to Senior Convertible Promissory Note issued by Registrant on June 29, 2007 and July 3, 2007 (incorporated by reference to Registrant's 10-Q filed on May 14, 2008). | |
5.1
|
Opinion
of Maslon Edelman Borman & Brand, LLP.
|
|
10.1
|
2003
Stock Option Plan, as amended (incorporated by reference to Exhibit
10.1
to the Registrant’s Annual Report on Form 10-KSB for the year ended
December 31, 2007).
|
|
10.2
|
License
Agreement dated February 8, 2005 by and between Greenwich Therapeutics,
Inc. and The Cleveland Clinic Foundation (incorporated by reference
to
Exhibit 10.6 of the Registrant’s Form SB-2 filed November 17,
2005).++
|
|
10.3
|
License
Agreement dated April 19, 2005 by and between Greenwich Therapeutics,
Inc.
and the University of South Florida Research Foundation, Inc.
(incorporated by reference to Exhibit 10.7 of the Registrant’s Form SB-2
filed November 17, 2005).++
|
|
10.4
|
Form
of Subscription Agreement issued in connection with the October 2005
private placement (incorporated by reference to Exhibit 10.9 to the
Registrant’s Annual Report on Form 10-KSB for the year ended December 31,
2005).
|
10.5
|
Summary
terms of 2006 management bonus compensation plan (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
filed on May 25, 2006).
|
|
10.6
|
Summary
terms of outside director compensation (incorporated by reference
to
Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May
25, 2006).
|
|
10.7
|
Severance
Benefits Agreement dated August 8, 2006 by and between the Registrant
and
Brian Lenz (incorporated by reference to Exhibit 10.3 to the Registrant’s
Quarterly Report on Form 10-QSB for the period ended June 30, 2006).
|
|
10.8
|
Form
of subscription agreement between the Registrant and investors accepted
as
of October 18, 2006 (incorporated by reference to Exhibit 10.1 to
the
Registrant’s Current Report on Form 8-K filed on October 24, 2006).
|
|
10.9
|
First
Amendment to Lease dated September 15, 2006 between the Registrant
and
Mount Airy Associates, LLC (incorporated by reference to Exhibit
10.2 to
the Registrant’s Quarterly Report on Form 10-QSB for the period ended
September 30, 2006).
|
|
10.10
|
Letter
Agreement between the Registrant and Edward C. Bradley, dated January
31,
2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed on February 6, 2007).
|
|
10.11
|
Amended
and Restated License Agreement dated December 29, 2006, among Onc
Res,
Inc., Asymmetric Therapeutics, LLC, Fiordland Pharmaceuticals, Inc.,
and
Stason Pharmaceuticals, Inc., as assigned to the Registrant on March
29,
2007 (incorporated by reference to Exhibit 10.2 on the Registrant’s 10-QSB
for the period ended March 31, 2007).++
|
|
10.12
|
Form
of Note and Warrant Purchase Agreement between the Registrant and
various
investors accepted as of June 29, 2007 and July 3, 2007 (incorporated
by
reference to Exhibit 4.1 of the Registrant’s Form 8-K filed July 6,
2007).
|
|
10.13
|
Sublease
dated July 16, 2007 between the Registrant and Chiral Quest Acquisition
Corp. (incorporated by reference to Exhibit 10.2 to the Registrant’s
10-QSB for the period ended September 30, 2007).
|
|
10.14
|
Employment
Agreement between the Registrant and Michael D. Becker, dated November
11,
2007 (incorporated by reference to Exhibit 10.14 to the Registrant’s
Annual Report on Form 10-KSB for the year ended December 31,
2007).
|
|
10.15
|
Form
of Stock Option Agreement for use under the 2003 Stock Option Plan
(incorporated by reference to Exhibit 10.15 filed with the Registrant’s
Annual Report on Form 10-KSB for the year ended December 31,
2006).
|
|
10.16
|
Separation
and Release Agreement between the Registrant and Daniel Greenleaf
dated
November 14, 2007 (incorporated by reference to Exhibit 10.16 to
the
Registrant’s Annual Report on Form 10-KSB for the year ended December 31,
2007).
|
|
10.17
|
Form of Subscription Agreement between Registrant and various investors accepted on March 14, 2008 and April 9, 2008 (incorporated by reference to Registrant's 10-Q filed on May 14, 2008). | |
21.1
|
Subsidiaries
of the Registrant (incorporated by reference to Exhibit 21.1 to the
Registrant’s Annual Report on Form 10-KSB for the year ended December 31,
2007).
|
|
23.1
|
Consent
of J.H. Cohn LLP.
|
|
23.2
|
Consent
of Maslon Edelman Borman & Brand, LLP (as filed under Exhibit
5.1).
|
|
24.1
|
Power
of Attorney (filed below).
|
VIOQUEST
PHARMACEUTICALS, INC.
|
|
By:
|
/s/
Michael
D. Becker
|
Michael
D. Becker
|
|
Chief
Executive Officer and
President
|
Name
|
Title
|
|
/s/
Michael D. Becker
|
President,
Chief Executive Officer and Director (Principal
|
|
Michael
D. Becker
|
Executive
Officer)
|
|
/s/
Brian Lenz
|
Chief Financial Officer (Principal Financial and Accounting
|
|
Brian
Lenz
|
Officer)
|
|
/s/
Stephen C. Rocamboli
|
Chairman
of the Board and Secretary
|
|
Stephen
C. Rocamboli
|
||
/s/
Johnson Y.N. Lau
|
Director
|
|
Johnson
Y.N. Lau
|
||
/s/
Michael Weiser
|
Director
|
|
Michael
Weiser
|
Exhibit
No.
|
Description
|
5.1
|
Consent
of Maslon Edelman Borman & Brand, LLP.
|
23.1
|
Consent
of J.H. Cohn LLP
|
23.2
|
Consent
of Maslon Edelman Borman & Brand, LLP (included as Exhibit
5.1)
|
24.1
|
Power
of Attorney (included on the signature page
hereof)
|