Florida
|
04-3721895
|
(State
or Other Jurisdiction of Incorporation
or Organization)
|
(I.R.S.
Employer Identification
No.)
|
|
||
Page
|
||
PART
I – FINANCIAL INFORMATION
|
||
Item
1.
|
||
4
|
||
|
||
5
|
||
6
|
||
|
||
9
|
||
10
|
||
Item
2.
|
16
|
|
Item
3.
|
20
|
|
PART
II – OTHER INFORMATION
|
||
21
|
||
22
|
ASSETS
|
||||
|
|
|||
Current
Assets:
|
||||
Cash
and cash equivalents
|
$
|
5,090,177
|
||
Prepaid
expenses
|
97,773
|
|||
TOTAL
CURRENT ASSETS
|
5,187,950
|
|||
|
||||
Property
and equipment, net
|
90,514
|
|||
Security
deposits
|
55,698
|
|||
$
|
5,334,162
|
|||
|
||||
|
||||
Current
Liabilities:
|
||||
Accounts
payable
|
$
|
68,972
|
||
Accrued
expenses
|
32,500
|
|||
TOTAL
CURRENT LIABILITIES
|
101,472
|
|||
Non-current
liability:
|
||||
Derivative financial instrument | 418,474 | |||
Stockholders'
equity:
|
||||
Preferred
stock, $.001 par value, 20,000,000 shares
|
||||
authorized,
277,100 shares outstanding, designated
|
||||
as
Series A Convertible Preferred Stock
|
2,203,915
|
|||
Common
stock, $.0001 par value, authorized 100,000,000
|
||||
shares,
18,604,300 issued and outstanding
|
1,860
|
|||
Additional
paid-in-capital
|
17,590,422
|
|||
Deferred
stock based compensation
|
(1,207,429
|
)
|
||
Deficit
accumulated during the development stage
|
(13,774,552
|
)
|
||
|
4,814,216 | |||
|
$
|
5,334,162
|
Three
Months Ended October
31,
|
Nine
Months Ended October
31,
|
August
4, 1999
(Inception)
to
|
||||||||||||||
2005
|
2004
|
2005
|
2004
|
October
31, 2005
|
||||||||||||
Revenues
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||
|
||||||||||||||||
Costs
and expenses:
|
||||||||||||||||
|
|
|||||||||||||||
Research
and development
|
366,555
|
301,622
|
959,363
|
469,796
|
3,249,690
|
|||||||||||
|
||||||||||||||||
General
and administrative
|
627,634
|
42,402
|
2,155,814
|
44,405
|
2,822,056
|
|||||||||||
|
||||||||||||||||
Stock
based compensation
|
161,458
|
545,311
|
3,429,172
|
706,641
|
7,534,878
|
|||||||||||
|
||||||||||||||||
Total
costs and expenses
|
1,155,647
|
889,335
|
6,544,349
|
1,220,842
|
13,606,624
|
|||||||||||
|
||||||||||||||||
Loss
from operations
|
(1,155,647
|
)
|
(889,335
|
)
|
(6,544,349
|
)
|
(1,220,842
|
)
|
(13,606,624
|
)
|
||||||
|
||||||||||||||||
Interest
and investment income
|
7,633
|
3,971
|
53,443
|
3,971
|
73,478
|
|||||||||||
Other
(expense)
|
(27,710
|
)
|
—
|
(44,014
|
)
|
—
|
(44,014
|
)
|
||||||||
|
||||||||||||||||
Derivative financial instrument | ||||||||||||||||
income | 179,663 |
—
|
148,611 |
—
|
148,611 | |||||||||||
Net
loss
|
(996,061
|
)
|
(885,364
|
)
|
(6,386,309
|
)
|
(1,216,871
|
)
|
(13,428,549
|
)
|
||||||
Preferred
stock dividend
|
(23,794
|
)
|
—
|
(23,794
|
)
|
—
|
(23,794
|
)
|
||||||||
Accretion on Series A | ||||||||||||||||
Preferred
stock
|
—
|
—
|
(322,209 | ) |
—
|
(322,209 | ) | |||||||||
Net
loss applicable to common stockholders
|
$
|
(1,019,855
|
)
|
$
|
(885,364
|
)
|
$
|
(6,732,312
|
)
|
$
|
(1,216,871
|
)
|
$
|
(13,774,552
|
)
|
|
|
||||||||||||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
and diluted
|
18,604,300
|
15,811,712
|
18,425,825
|
14,338,921
|
12,760,308
|
|||||||||||
|
||||||||||||||||
Net
loss per common share:
|
||||||||||||||||
Basic
and diluted
|
$
|
(0.05
|
)
|
$
|
(0.37
|
)
|
$
|
(0.37
|
)
|
$
|
(0.08
|
)
|
$
|
(1.08
|
)
|
Deficit
|
||||||||||||||||||||||
Deferred
|
Accumulated
|
|||||||||||||||||||||
Additional
|
Unamortized
|
During
|
Total
|
|||||||||||||||||||
Common
Stock
|
Treasury
|
Paid
in
|
Stock-based
|
Development
|
Stockholders'
|
|||||||||||||||||
|
|
Shares
|
Par
Value
|
Shares
|
Capital
|
Compensation
|
Stage
|
Equity
|
||||||||||||||
Balance
August 4, 1999 (Inception)
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||
Sale
of common stock - founders
|
222,000,000
|
22,200
|
—
|
19,800
|
—
|
—
|
42,000
|
|||||||||||||||
Net
loss for the period ended January 31, 2000
|
—
|
—
|
—
|
—
|
—
|
(14,760
|
)
|
(14,760
|
)
|
|||||||||||||
Balance,
January 31, 2000
|
222,000,000
|
22,200
|
0
|
19,800
|
0
|
(14,760
|
)
|
27,240
|
||||||||||||||
Net
loss for the period ended January 31, 2001
|
—
|
—
|
—
|
—
|
—
|
(267,599
|
)
|
(267,599
|
)
|
|||||||||||||
Balance,
January 31, 2001
|
222,000,000
|
22,200
|
0
|
19,800
|
0
|
(282,359
|
)
|
(240,359
|
)
|
|||||||||||||
Capital
contribution cash
|
45,188
|
45,188
|
||||||||||||||||||||
Net
loss for the period ended January 31, 2002
|
—
|
—
|
—
|
—
|
—
|
(524,224
|
)
|
(524,224
|
)
|
|||||||||||||
Balance,
January 31, 2002
|
222,000,000
|
22,200
|
0
|
64,988
|
0
|
(806,583
|
)
|
(719,395
|
)
|
|||||||||||||
Sale
of common stock
|
7,548,000
|
755
|
2,645
|
3,400
|
||||||||||||||||||
Capital
contribution cash
|
2,500
|
2,500
|
||||||||||||||||||||
Net
loss for the period ended January 31, 2003
|
—
|
—
|
—
|
—
|
—
|
(481,609
|
)
|
(481,609
|
)
|
|||||||||||||
Balance,
January 31, 2003
|
229,548,000
|
22,955
|
0
|
70,133
|
0
|
(1,288,192
|
)
|
(1,195,104
|
)
|
|||||||||||||
Net
loss for the period ended January 31, 2004
|
—
|
—
|
—
|
—
|
—
|
(383,021
|
)
|
(383,021
|
)
|
|||||||||||||
Balance,
January 31, 2004
|
229,548,000
|
$
|
22,955
|
$
|
0
|
$
|
70,133
|
$
|
0
|
(1,671,213
|
)
|
(1,578,125
|
)
|
Deficit
|
||||||||||||||||||||||
Deferred
|
Accumulated
|
|||||||||||||||||||||
Additional
|
Unamortized
|
During
|
Total
|
|||||||||||||||||||
Common
Stock
|
Treasury
|
Paid
in
|
Stock-based
|
Development
|
Stockholders'
|
|||||||||||||||||
|
|
Shares
|
Par
Value
|
Shares
|
Capital
|
Compensation
|
Stage
|
Equity
|
||||||||||||||
Balance,
January 31, 2004
|
229,548,000
|
$
|
22,955
|
$
|
0
|
$
|
70,133
|
$
|
0
|
$ |
(1,671,213
|
)
|
$ |
(1,578,125
|
)
|
|||||||
|
|
|
|
|
|
|
|
|||||||||||||||
Founders
waive deferred compensation
|
|
|
|
1,655,029
|
|
|
1,655,029
|
|||||||||||||||
Private
Placement common stock
|
2,645,210
|
265
|
2,512,685
|
2,512,950
|
||||||||||||||||||
Redeemed
shares from Panetta Partners, Ltd
|
(218,862,474
|
)
|
(21,886
|
)
|
(478,114
|
)
|
(500,000
|
)
|
||||||||||||||
Cost
associated with recapitalization
|
(301,498
|
)
|
(301,498
|
)
|
||||||||||||||||||
Share
exchange with Xenomics Founders
|
2,258,001
|
226
|
(226
|
)
|
0
|
|||||||||||||||||
Issuance
of treasury shares to escrow
|
350,000
|
35
|
(35
|
)
|
0
|
|||||||||||||||||
Private
Placement common stock
|
1,368,154
|
136
|
2,667,764
|
2,667,900
|
||||||||||||||||||
Issuance
of warrants to finders
|
|
|
|
157,062
|
|
|
157,062
|
|||||||||||||||
Finders
warrants charged cost of capital
|
|
|
|
(157,062
|
)
|
|
|
(157,062
|
)
|
|||||||||||||
Deferred
stock based compensation
|
1,937,500
|
(1,937,500
|
)
|
0
|
||||||||||||||||||
Amortization
of deferred stock based compensation
|
245,697
|
245,697
|
||||||||||||||||||||
Stock
based compensation expense - non-employees
|
3,862,007
|
3,862,007
|
||||||||||||||||||||
Net
loss for the year ended January 31, 2005
|
—
|
—
|
—
|
—
|
—
|
(5,371,027
|
)
|
(5,371,027
|
)
|
|||||||||||||
Balance,
January 31, 2005
|
17,306,891
|
$
|
1,731
|
$ |
(35
|
)
|
$
|
11,923,280
|
$ |
(1,691,803
|
)
|
$ |
(7,042,240
|
)
|
$
|
3,190,935
|
Deficit
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
Accumulated
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
Additional
|
|
Unamortized
|
|
During
|
|
Total
|
|
||||||||
|
|
Preferred
|
|
Common
Stock
|
|
Treasury
|
|
Paid
in
|
|
Stock-based
|
|
Development
|
|
Stockholders'
|
|
||||||||||
|
|
Stock
|
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Capital
|
|
Compensation
|
|
Stage
|
|
Equity
|
|||||||||
Balance,
January 31, 2005
|
0
|
17,306,891
|
$
|
1,731
|
$ |
(35
|
)
|
11,923,282
|
$ |
(1,691,803
|
)
|
$ |
(7,042,250
|
)
|
$
|
3,190,935
|
|||||||||
|
|||||||||||||||||||||||||
Private
Placement common stock - February 2005
|
102,564
|
10
|
199,990
|
200,000
|
|||||||||||||||||||||
Payment
of finders fees and expenses in cash
|
(179,600
|
)
|
(179,600
|
)
|
|||||||||||||||||||||
Common
stock issued to finders
|
— |
24,461
|
2
|
— |
(2
|
)
|
— | — |
—
|
||||||||||||||||
Private
placement of common stock - net
|
127,025
|
12
|
20,388
|
20,400
|
|||||||||||||||||||||
|
|||||||||||||||||||||||||
Private
Placement common stock - April 2005
|
1,515,384
|
152
|
2,954,847
|
2,954,999
|
|||||||||||||||||||||
Payment
of finders fees and expenses in cash
|
(298,000
|
)
|
(298,000
|
)
|
|||||||||||||||||||||
Issuance
of warrants to finders at fair value
|
222,188
|
222,188
|
|||||||||||||||||||||||
Finders
warrants treated cost of capital
|
— | — | — | — |
(222,188
|
)
|
— | — |
(222,188
|
)
|
|||||||||||||||
Private
placement of common stock - net
|
1,515,384
|
152
|
2,656,847
|
2,656,999
|
|||||||||||||||||||||
|
|||||||||||||||||||||||||
Sale
of Series A Convertible Preferred Stock
|
2,448,791
|
322,209 |
2,771,000
|
||||||||||||||||||||||
Accretion on Series A Convertible Preferred Stock | 322,209 | (322,209 | ) | — | |||||||||||||||||||||
Value of warrants reclassified to derivative financial instrument liability | (567,085 | ) | (567,085 | ) | |||||||||||||||||||||
Payment
of finders fees and expenses in cash
|
(277,102
|
)
|
(277,102
|
)
|
|||||||||||||||||||||
Issuance
of warrants to finders at fair value
|
167,397
|
167,397
|
|||||||||||||||||||||||
Finders
warrants treated cost of capital
|
— | — | — | — |
(167,397
|
)
|
— | — |
(167,397
|
)
|
|||||||||||||||
Sale
of Series A Convertible Preferred Stock - net
|
$
|
2,203,915
|
45,107
|
|
(322,209 | ) |
1,926,813
|
||||||||||||||||||
|
|||||||||||||||||||||||||
Retirement
of Treasury Shares
|
(350,000
|
)
|
(35
|
)
|
35
|
—
|
|||||||||||||||||||
Shares
issued for services
|
5,000
|
|
16,500
|
16,500
|
|||||||||||||||||||||
Stock
based compensation expense - non-employees
|
2,928,298
|
2,928,298
|
|||||||||||||||||||||||
Amortization
of deferred stock based compensation
|
484,374
|
484,294
|
|||||||||||||||||||||||
Preferred
stock dividend
|
(23,794
|
)
|
(23,294
|
)
|
|||||||||||||||||||||
Net
loss for nine months ended October 31, 2005
|
—
|
—
|
—
|
—
|
—
|
—
|
(6,386,309
|
)
|
(6,386,309
|
)
|
|||||||||||||||
Balance,
October 31, 2005
|
$
|
2,203,915
|
18,604,300
|
$
|
1,860
|
$
|
0
|
$
|
17,590,422
|
$ |
(1,207,429
|
)
|
$ |
(13,774,552
|
)
|
$
|
4,814,216
|
Nine
months ended October 31,
|
Period
from
August
4, 1999
(inception)
to
|
|||||||||
2005
|
2004
|
October
31, 2005
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
loss
|
$
|
(6,386,309
|
)
|
$
|
(1,216,871
|
)
|
$
|
(13,428,549
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
||||||||||
Depreciation
|
16,558
|
—
|
25,624
|
|||||||
Stock
based compensation expense
|
3,429,172
|
706,641
|
7,534,878
|
|||||||
Founders
compensation contributed to equity
|
—
|
74,404
|
1,655,029
|
|||||||
Derivative financial instrument (income) | (148,611 | ) | (148,611 | ) | ||||||
Changes
in operating assets and liabilities:
|
||||||||||
Prepaid
expenses
|
(62,413
|
)
|
(43,334
|
)
|
(97,773
|
)
|
||||
Security
deposit
|
2,475
|
(57,207
|
)
|
(55,698
|
)
|
|||||
Accounts
payable and accrued expenses
|
(105,586
|
)
|
74,356
|
101,472
|
||||||
Patent
costs
|
—
|
(4,402
|
)
|
—
|
||||||
Total
adjustments
|
3,131,595
|
750,458
|
9,014,921
|
|||||||
Net
cash used in operating activities
|
(3,254,714
|
)
|
(466,413
|
)
|
(4,413,628
|
)
|
||||
Cash
flows from investing activities:
|
||||||||||
Acquisition
of equipment
|
(29,575
|
)
|
(88,195
|
)
|
(116,138
|
)
|
||||
Net
cash used in investing activities
|
(29,575
|
)
|
(88,185
|
)
|
(116,138
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Proceeds
from issuance of common stock
|
3,154,999
|
2,512,950
|
8,428,937
|
|||||||
Payment
of acquisition costs on common stock
|
(477,600
|
)
|
(301,498
|
)
|
(779,098
|
)
|
||||
Proceeds
from issuance of preferred stock
|
2,771,000
|
2,771,000
|
||||||||
Payment
of acquisition costs on preferred stock
|
(277,102
|
)
|
(277,102
|
)
|
||||||
Purchase
of common stock
|
—
|
(500,000
|
)
|
(500,000
|
)
|
|||||
Payment
of preferred stock dividend
|
(23,794
|
)
|
—
|
(23,794
|
)
|
|||||
Net
cash provided by financing activities
|
5,147,503
|
1,711,452
|
9,619,943
|
|||||||
|
||||||||||
Net
increase in cash and cash equivalents
|
1,863,212
|
1,156,844
|
5,090,177
|
|||||||
|
||||||||||
Cash
and cash equivalents at beginning of period
|
3,226,965
|
339
|
—
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
5,090,177
|
$
|
1,157,183
|
$
|
5,090,177
|
||||
|
||||||||||
Supplementary
disclosure of cash flow information:
|
||||||||||
Cash
paid for taxes
|
$
|
—
|
$
|
—
|
$
|
—
|
||||
Cash
paid for interest
|
$
|
—
|
$
|
—
|
$
|
—
|
Three
Months Ended October 31,
|
Nine
Months Ended October, 31
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Net
loss applicable to common stockholders as reported
|
$
|
(1,019,855
|
)
|
$
|
(885,364
|
)
|
$
|
(6,732,312
|
)
|
$
|
(1,216,871
|
)
|
|
Add:
Stock-based employee compensation expense
|
|||||||||||||
recorded under APB No. 25 intrinsic value method
|
161,458
|
84,239
|
484,375
|
84,239
|
|||||||||
Deduct:
Stock-based employee compensation
|
|||||||||||||
expense determined under fair value method
|
(324,742
|
)
|
(174,239
|
)
|
(974,225
|
)
|
(174,388
|
)
|
|||||
|
|||||||||||||
Pro
forma net loss applicable to common stockholders
|
$
|
(1,183,138
|
)
|
$
|
(975,364
|
)
|
$
|
(7,222,162
|
)
|
$
|
(1,307,020
|
)
|
|
|
|||||||||||||
Net
loss per share:
|
|||||||||||||
Basic
and diluted -as reported
|
$
|
(0.05
|
)
|
$
|
(0.06
|
)
|
$
|
(0.37
|
)
|
$
|
(0.08
|
)
|
|
|
|||||||||||||
Basic
and diluted -pro forma
|
$
|
(0.06
|
)
|
$
|
(0.06
|
)
|
$
|
(0.39
|
)
|
$
|
(0.09
|
)
|
|
Black-Scholes
Methodology Assumptions:
|
|||||||||||||
Dividend
yield
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
|||||
|
|||||||||||||
Risk
free interest rate
|
4.25
|
%
|
4.25
|
%
|
4.25
|
%
|
4.25
|
%
|
|||||
|
|||||||||||||
Expected
lives of options
|
7
years
|
7
years
|
7
years
|
7
years
|
Year
Ended
January
31, 2005
|
Nine
Months
Ended
October
31, 2005
|
|
|||||
Net
loss prior to adjustments
|
$
|
(3,336,018
|
)
|
$
|
(3,248,507
|
)
|
|
Reversal
of charge for acquired in-process research and
development
|
2,145,101
|
0
|
|||||
Stock
based compensation - Trilogy Capital Partners, Inc.
|
(123,063
|
)
|
(453,294
|
)
|
|||
Deferred
founders' compensation contributed to capital
|
(74,404
|
)
|
0
|
||||
Net
loss as reported in Amendment #1
|
(1,388,384
|
)
|
(3,701,801
|
)
|
|||
Stock
based compensation:
|
|||||||
Trilogy
Capital Partners, Inc.
|
(2,507,377
|
)
|
453,294
|
||||
Consultants
other than Trilogy
|
(1,229,568
|
)
|
(2,928,298
|
)
|
|||
Employees
|
(245,697
|
)
|
(322,916
|
)
|
|||
Other
|
0
|
(35,199
|
)
|
||||
Net
loss as reported in Amendment #2
|
(5,371,026
|
)
|
(6,534,920
|
)
|
|||
Derivative
financial instrument
|
0
|
(418,474
|
)
|
||||
Net
loss as reported in Amendment #3
|
$
|
(5,371,026
|
)
|
$
|
(6,953,394
|
)
|
|
Derivative financial instrument | — | 567,085 | |||||
Net loss as reported in Amendment #4 | $ | (5,371,026 | ) | $ | (6,386,309 | ) | |
Weighted
average common shares
|
14,580,186
|
18,425,825
|
|||||
Loss
per share - Basic and diluted - Prior to adjustments
|
$
|
(0.23
|
)
|
$
|
(0.18
|
)
|
|
Loss
per share - Basic and diluted - As reported in Amendment
#4
|
$
|
(0.37
|
)
|
$
|
(0.37
|
)
|
Nine
Months
Ended
October
31, 2005
|
Nine
Months
Ended
October
31, 2004
|
||||||
Net
loss prior to adjustments
|
$
|
(3,248,507
|
)
|
$
|
(435,826
|
)
|
|
Deferred
founders’ compensation contributed to capital
|
— |
(74,404
|
)
|
||||
Stock
based compensation:
|
|||||||
Adjustment
for use of quoted market price
|
(322,916
|
)
|
(84,239
|
)
|
|||
Adjustment
for the application of EITF 96-18
|
(2,928,298
|
)
|
(622,402
|
)
|
|||
Shares
issued for service
|
(35,199
|
)
|
0
|
||||
(3,286,413
|
)
|
(706,641
|
)
|
||||
Derivative
financinal instrument
|
148,611
|
0
|
|||||
Total
adjustments
|
(3,137,802
|
)
|
(781,045
|
)
|
|||
Net
loss as restated
|
(6,386,309
|
)
|
(1,216,871
|
)
|
|||
Weighted
average common shares
|
18,425,825
|
14,338,921
|
|||||
Loss
per share - Basic and diluted - Prior to adjustments
|
$
|
(0.18
|
)
|
$
|
(0.03
|
)
|
|
Loss
per share - Basic and diluted - Prior to adjustments
|
$
|
(0.35
|
)
|
$
|
(0.08
|
)
|
a)
|
Deferred
Founders’ Compensation Contributed To Capital
-
Originally, there was no accounting recognition as financial
management
was not aware of the existence of deferred compensation agreements.
This
resulted in an understatement of compensation expense. The
cause of this
error was attributable to inadequate communication within
our
company.
|
b)
|
Stock
Compensation - Adjustment Resulting From Use Of Quoted Market
Price
-
The original accounting treatment for stock based compensation
was based
upon a subjective determination of the most appropriate value
of our
common shares to be used in the valuation calculations. Specifically,
we
elected to use $1.95 per share for such calculations,
representing the sales price per share from a recent financing
transaction, rather than the quoted market price with a simple
average of
approximately $3.70 per share during the applicable period.
This error
resulted in an understatement of compensation expense. The
cause of this
error was attributable to financial management’s lack of familiarity with
certain provisions of the accounting literature concerning
stock
compensation expense.
|
c)
|
Stock
Compensation - Adjustment For The Application Of EITF
96-18
-
The original accounting treatment for options issued to the
Co-Chairmen of
the Board of Directors erroneously assumed those individuals
to be
employees and no expense was recorded. This error resulted
in an
understatement of compensation expense. The cause of this
error was
attributable to financial management’s lack of familiarity with certain
provisions of EITF 96-18 concerning stock compensation
expense.
|
d)
|
Stock
Compensation - Shares Issued For Services
-
Originally, there was no accounting recognition as financial
management
was not aware of an agreement with a service provider. This
resulted in an
understatement of professional services expense. The cause
of this error
was attributable to inadequate communication within our
company.
|
e)
|
Derivative
Financial Instrument
-
The original treatment for the warrants issued in connection
with the
financing transaction in July 2005 was erroneously limited
solely to
disclosure. This error resulted in: i) an understatement
of a derivative
financial instrument liability and an overstatement of proceeds
allocated
to preferred stock, and ii) the absence of a net benefit
to operating
results for the marking-to-market of that derivative financial
instrument
liability at subsequent reporting dates. The cause of this
error was
attributable to financial management’s lack of familiarity with certain
provisions of EITF
00-19.
|
a)
|
On
December 1, 2005, the Board of Directors appointed
John Brancaccio as director and Chairman of the Audit Committee.
Mr.
Brancaccio is a retired Certified Public Accountant and has
over 30 years
of financial management experience. He currently serves as
the Chief
Financial Officer of Accelerated Technologies, Inc., a medical
device
company, and on the boards of the following publicly-held
companies:
Callisto Pharmaceuticals, Inc., Alfacell Corporation, and
FermaVir
Pharmaceuticals, Inc. Mr. Brancaccio was formerly the acting
Chief
Financial Officer and Treasurer of Memory Pharmaceuticals
Corporation.
The
Board has designated Mr. Brancaccio as the audit
committee financial expert.
|
b)
|
On
January 16, 2006 we hired Frederick Larcombe as Chief Financial
Officer.
Mr. Larcombe is a Certified Public Accountant and has over
twenty-five
years of financial management experience which includes serving
as Chief
Financial Officer and Vice President of Finance with MicroDose
Technologies, Inc., a privately held drug delivery company,
and
ProTeam.com, Inc., a publicly held Internet-oriented retailer.
Prior to
that, he held financial positions with Cambrex Corporation,
a
publicly-held life sciences company, and PriceWaterhouseCoopers.
|
a)
|
Effective
January 2006, the Chief Financial Officer participates in all
meetings of
the Board of Directors;
|
b)
|
Effective
January 2006 discussions concerning all contracts, commitments,
and
general business activities include a member of the financial
management
team;
|
c)
|
Effective
March 2006, a Disclosure Committee was established consisting
of the Chief
Executive Officer, Chief Financial Officer, and the Chairman
of the Audit
Committee which will meet periodically to ensure the identification
of key
business matters and ensure the adequacy of related disclosures;
and
|
d)
|
Effective
March 2006, resources supporting the accounting and reporting
function has
been strengthened with the addition of a more experienced individual.
Additionally, a search has been initiated for an individual
to fill the
role of accounting manager or
controller.
|
31.1 | Certification of Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act. | |
31.2 | Certification of Principal Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act. | |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
Date: March 15, 2006 | By: | /s/ L. David Tomei |
|
||
L.
David Tomei
Chief Executive
Officer
|
Date: March 15, 2006 | By: | /s/ Frederick Larcombe |
|
||
Frederick
Larcombe
Chief Financial
Officer
|
/s/ L. David Tomei | ||
|
||
Name:
L. David Tomei
Title:
Chief Executive Officer and President
(Principal
Executive Officer)
|
/s/ Frederick Larcombe | ||
|
||
Name:
Frederick Larcombe
Title:
Chief Financial Officer
(Principal
Financial Officer)
|
/s/ L. David Tomei | ||
|
||
Name:
L. David Tomei
Title:
Chief Executive Officer
|
/s/ Frederick Larcombe | ||
|
||
Name:
Frederick Larcombe
Title:
Chief Financial Officer
|