Delaware
|
8731
|
91-2003490
|
(State
or other Jurisdiction of Incorporation or Organization)
|
(Primary
Standard Industrial Classification Code Number)
|
(I.R.S.
Employer Identification No.)
|
Title
of securities to be registered
|
Amount
to be registered
|
Proposed
maximum offering price per share |
Proposed
maximum aggregate offering price |
Amount
of
registration fee |
Common
Stock
|
3,470,990
|
$2.81
|
$9,753,482
|
$1,043.63
|
Page
|
|
1
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2
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12
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12
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13
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13
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14
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20
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20
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23
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28
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29
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30
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30
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30
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31
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35
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35
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35
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F-1
|
• |
statements
about our product development and commercialization goals and
expectations;
|
• |
potential
market opportunities;
|
• |
our
plans for and anticipated results of our clinical development
activities;
|
• |
the
potential advantage of our product
candidates;
|
• |
statements
about our future capital requirements, the sufficiency of our capital
resources to meet those
requirements and the expected composition of our capital resources;
and
|
• |
other
statements that are not historical
facts.
|
Common
stock offered by selling stockholders
(including shares underlying warrants)
|
3,470,990
shares.
|
Common
stock to be outstanding after the offering
|
26,208,069
shares (1).
|
Use
of proceeds
|
We
will not receive proceeds from the resale of shares by the selling
stockholders. If all warrants held by the selling stockholders are
exercised, our proceeds from the exercise of those warrants would
be
approximately $2.6 million.
|
Over-the-Counter
Bulletin Board symbol
|
PRTX.OB
|
(1) |
Based
on 22,038,353 shares of common stock outstanding as of January 23,
2006
and 5,045,574 shares issuable upon exercise of warrants relating
to the
financing transactions in September 2001, September 2003 and May
2005 but
excludes: (i) up to 4,006,805 shares of common stock issuable upon
exercise of employee and director stock options.
|
·
|
the
progress of pre-clinical development and laboratory testing and clinical
trials;
|
·
|
time
and costs involved in obtaining regulatory approvals;
|
·
|
the
number of products we pursue;
|
·
|
costs
in filing and prosecuting patent applications and enforcing or defending
patent claims; and
|
·
|
the
establishment of selected strategic alliances and activities required
for
product commercialization.
|
·
|
Contract
manufacturers are obliged to operate in accordance with FDA-mandated
current good manufacturing practices, or cGMPs. Their failure to
establish
and follow cGMPs and to document their adherence to such practices
may
lead to significant delays in the availability of material for clinical
study and may delay or prevent filing or approval of marketing
applications for our products. Additionally, failure to achieve and
maintain high manufacturing standards, including the incidence of
manufacturing errors, could result in patient injury or death, product
recalls or withdrawals, delays or failures in product testing or
delivery,
cost overruns or other problems that could seriously hurt our business.
|
·
|
It
may be difficult or impossible for us to find replacement manufacturers
quickly on acceptable terms, or at all. For example, we have initially
relied on a single contract manufacturer, Eurogentec S.A., to produce
PRTX-100. Changing this manufacturer, or changing the manufacturer
for any
other products we develop, may be difficult. The number of potential
manufacturers is limited, and changing manufacturers may require
confirmation of the analytical methods of the manufacturing processes
and
procedures in accordance with FDA-mandated cGMPs. Such confirmation
of the
analytical methods may be costly and
time-consuming.
|
·
|
Our
contract manufacturers may not perform as agreed or may not remain
in the
contract manufacturing business for the time required to produce,
store
and distribute our products successfully.
|
·
|
announcements
of the introduction of new products by us or our competitors;
|
·
|
market
conditions in the pharmaceutical and biotechnology sectors;
|
·
|
rumors
relating to us or our competitors;
|
·
|
litigation
or public concern about the safety of our potential products;
|
·
|
our
quarterly operating results;
|
·
|
deviations
in our operating results from the estimates of securities analysts;
and
|
·
|
FDA
or international regulatory actions.
|
|
High
|
Low
|
|||||
Fiscal
Year Ended May 31, 2004
|
|
||||||
First
Quarter
|
$
|
3.30
|
$
|
1.50
|
|||
Second
Quarter
|
5.70
|
2.40
|
|||||
Third
Quarter
|
2.80
|
2.25
|
|||||
Fourth
Quarter
|
2.55
|
1.45
|
|||||
|
|||||||
Fiscal
Year Ended May 31, 2005
|
|||||||
First
Quarter
|
$
|
2.95
|
$
|
2.15
|
|||
Second
Quarter
|
2.95
|
2.25
|
|||||
Third
Quarter
|
2.95
|
1.95
|
|||||
Fourth
Quarter
|
2.95
|
1.95
|
|||||
Fiscal
Year Ended May 31, 2006
|
|||||||
First
Quarter
|
$
|
2.95
|
$
|
2.00
|
|||
Second
Quarter
|
3.10
|
2.20
|
·
|
Analgesic/anti-inflammatory
preparations, ranging from simple aspirin to the recently introduced
COX-2
inhibitors;
|
·
|
Immunosuppressive/antineoplastic
drugs, including azathioprine and methotrexate;
|
·
|
TNF
(Tumor Necrosis Factor) inhibitors, also known as anti-TNF therapy,
currently represented by etanercept (Enbrel™), infliximab (Remicade™), and
adalimumab (Humira™);
|
·
|
Soluble
Interleukin-l (IL-I) Receptor Therapy, Anakinra (Kineret™). Anakinra™, a
human recombinant IL-l receptor antagonist (hu rIL-lra) is approved
by the
FDA for the treatment of RA; and
|
·
|
“Immunoadsorption
Therapy,” also known as Prosorba®, now in limited use in Europe and the
United States, entailing weekly sessions during which a patient’s blood is
separated and passed through a molecular filter. The use of such
extreme
treatment modalities emphasizes the unmet need for a new treatment
for
patients who cannot respond to existing therapies.
|
·
|
Employee
Agreements-Officers.
To attract and retain qualified management personnel, the Company
has
entered into employment agreements with three executive officers:
Steven
H. Kane, President and Chief Executive Officer, Victor S. Sloan,
MD,
Senior Vice President and Chief Medical Officer, and Marc L. Rose,
Vice
President of Finance, Chief Financial Officer, Treasurer and Corporate
Secretary.
|
·
|
Directors
Agreements.
To attract and retain qualified candidates to serve on the Board
of
Directors, the Company has entered into agreements with G. Kirk Raab,
Chairman of the Board, Carleton A. Holstrom, Chairman of the Audit
Committee, Eugene A. Bauer, MD and Peter G. Tombros, under which
Messrs.
Raab, Holstrom, Dr. Bauer and Mr. Tombros receive aggregate annual
cash
payments aggregating $150,000, $20,000, $20,000 and $20,000, respectively,
as directors’ fees.
|
·
|
Operating
Lease - Office Space.
The Company has entered into a three year operating lease in New
Hope, PA
for 3,795 square feet of office and laboratory space. The lease commenced
on January 9, 2004 and was originally to expire on February 28, 2007.
On
November 18, 2005, the company modified the existing lease which
added an
additional 2,147 square feet and extended the lease term to January
31,
2008.
|
·
|
Operating
Lease - Copier.
The Company has entered into a sixty-three month operating lease
with
Ricoh Customer Finance Corporation for a multi-function copier. The
lease
commenced on December 16, 2004 and will expire on March 16, 2010.
|
·
|
Capital
Lease - Lab Equipment. The
Company has entered into a thirty-six month capital lease with Waters
Corporation for an HPLC protein separator. The lease commenced on
April
13, 2003 and will expire May 1,
2006.
|
Payments
due by period
|
|||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
Employment
Agreements-Officers
|
1,001,320
|
1,001,320
|
0
|
0
|
0
|
Directors
Agreements
|
210,000
|
210,000
|
0
|
0
|
0
|
Operating
Lease - Office Space
|
349,051
|
9,076
|
339,975
|
0
|
0
|
Operating
Lease - Copier
|
12,946
|
249
|
8,963
|
3,735
|
0
|
Capital
Lease - Lab Equipment
|
9,425
|
9,425
|
0
|
0
|
0
|
Total
|
1,582,743
|
1,230,070
|
348,938
|
3,735
|
0
|
Name
|
Age
|
Position
and Offices Held with the Company
|
||
G.
Kirk Raab(1)(2)
|
70
|
Chairman
of the Board
|
||
Steven
H. Kane(1)
|
53
|
President,
Chief Executive Officer and Director
|
||
Victor
S. Sloan M.D.
|
46
|
Senior
Vice President and Chief Medical Officer
|
||
Marc
L. Rose, CPA
|
40
|
Vice
President of Finance, Chief Financial Officer, Treasurer and Corporate
Secretary
|
||
Dinesh
Patel, Ph.D.(3)
|
55
|
Director
|
||
Frank
M. Dougherty(1)(2)
|
57
|
Director
|
||
Carleton
A. Holstrom(3)
|
70
|
Director
|
||
Thomas
P. Stagnaro(3)
|
62
|
Director
|
||
Eugene
A. Bauer, M.D.(2)
|
64
|
Director
|
||
Peter
G. Tombros
|
62
|
Director
|
||
(1) |
Member
of the Nominating Committee.
|
(2) |
Member
of Compensation Committee.
|
(3) |
Member
of the Audit Committee.
|
Annual
Compensation
|
||||||||||||||||
Name
& Principal Position
|
Year
|
Salary
$
|
Bonus
$
|
Other
Annual
Compensation
|
Restricted
Stock
Awards
$
|
|||||||||||
Steven
H. Kane, President,
Chief
Executive Officer, and Director
|
2005
2004
2003
|
(1)
|
$
$
$
|
281,350
179,165
0
|
$
$
$
|
0
176,576
0
|
$
$
$
|
0
0
0
|
$
$
$
|
0
20,835
104,107
|
(2)
(2)
|
|||||
Hector
W. Alila, DVM, Ph.D, Senior Vice President, Drug
Development
|
2005
2004
|
(3)
|
$
$
|
180,417
42,500
|
$
$
|
0
0
|
$
$
|
0
0
|
$
$
|
0
107,500
|
||||||
Marc
L. Rose. Vice President and Chief Financial Officer, Treasurer and
Corporate Secretary
|
2005
2004
|
(4)
|
$
$
|
89,818
0
|
$
$
|
0
0
|
$
$
|
0
0
|
$
$
|
38,250
0
|
||||||
(1)
|
Mr. Kane
was hired as the Company’s President effective as of December 16,
2002. Prior to that date, he was not employed, in any capacity, by
the
Company.
|
(2)
|
Mr. Kane
received 41,668 shares of restricted stock from December 16, 2002
through
May 31, 2003. The value of this restricted stock received by
Mr. Kane was computed using the closing price of Protalex’s common
stock on May 31, 2003, which was $2.25. Mr. Kane received 8,334
shares of restricted stock on June 15, 2003. The value of this stock
was also computed using the closing price of Protalex’s common stock on
May 31, 2003.
|
(3)
|
Dr.
Alila was hired as the Company’s Senior Vice President, Drug Development
effective as of March 1, 2004. Prior to that date, he was not employed,
in
any capacity, by the Company. Effective January 31, 2006, the employment
of Dr. Alila will cease.
|
(4)
|
Mr. Rose
was hired as the Company’s Vice President, Chief Financial Officer,
Treasurer and Corporate Secretary effective as of November 15, 2004.
Prior
to that date, he was not employed, in any capacity, by the
Company.
|
Number
of
Securities
Underlying
Options/SARs
Granted
(#)
|
Percent
of Total
Options/SARs
Granted
to
Employees
in Fiscal
Year
(%)
|
Exercise
or Base
Price
($/Share)
|
Market
Price on
Date
of Grant
|
||||||||||
Steven
H. Kane
|
175,000
|
23
|
%
|
$
|
2.55
|
$
|
2.55
|
||||||
Victor
S. Sloan
|
0
|
0
|
%
|
—
|
—
|
||||||||
Hector
W. Alila
|
50,000
|
7
|
%
|
$
|
2.55
|
$
|
2.55
|
||||||
Marc
L. Rose
|
100,000
|
13
|
%
|
$
|
2.55
|
$
|
2.55
|
Number
of Securities Underlying
Unexercised
Options at Year End
|
Value
of Unexercised In The Money
Options
at Year End
|
||||||||||||
Name
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||
Steven
H. Kane
|
682,163
|
531,079
|
$
|
284,832
|
$
|
196,789
|
|||||||
Victor
S. Sloan
|
0
|
0
|
$
|
0
|
$
|
0
|
|||||||
Hector
W. Alila
|
47,915
|
152,085
|
$
|
0
|
$
|
0
|
|||||||
Marc
L. Rose
|
12,500
|
87,500
|
$
|
0
|
$
|
0
|
Shares
Beneficially Owned
|
|||||||
Name
and Title
|
Number
|
Percent
|
|||||
G.
Kirk Raab, Chairman of the Board and Director
|
492,798(1
|
)
|
2.2
|
%
|
|||
Steven
H. Kane, President and Director
|
1,218,538(2
|
)
|
5.5
|
%
|
|||
Victor
S. Sloan, M.D., Senior Vice President and Chief Medical
Officer
|
98,907(3
|
)
|
*
|
||||
Hector
W. Alila D.V.M, Ph.D, former Senior Vice President, Drug
Development
|
137,500(4
|
)
|
*
|
||||
Marc
L. Rose, CPA, Vice President, Chief Financial Officer, Treasurer
and
Corporate Secretary
|
49,762(5
|
)
|
*
|
||||
Peter
G. Tombros, Director
|
125,000(6
|
)
|
*
|
||||
John
E. Doherty, Former Director
|
3,201,549(7
|
)
|
14.4
|
%
|
|||
Frank
M. Dougherty, Director
|
445,581(8
|
)
|
2.0
|
%
|
|||
Eugene
A. Bauer, M.D., Director
|
125,000(9
|
)
|
*
|
||||
Thomas
Stagnaro, Director
|
269,500(10
|
)
|
1.4
|
%
|
|||
vSpring
SBIC, L.P.
Attn:
Dinesh Patel
2795
E. Cottonwood Pkwy, Suite 360
Salt
Lake City, UT 84121
|
13,140,340(11
|
)
|
59.6
|
%
|
|||
Integral
Capital Partners VI, L.P.
Attn:
Pamela K. Hagenah
3000
Sand Hill Road Big 3, Suite 240
Menlo
Park, CA 94025
|
1,687,500(12
|
)
|
7.7
|
%
|
|||
SF
Capital Partners Ltd.
Attn:
Daniel McNally
3600
South Lake Drive
St.
Francis, WI 53235
|
1,588,235(13
|
)
|
7.2
|
%
|
|||
All
officers and directors as a group (11 persons)
|
13,751,747(14
|
)
|
62.4
|
%
|
|||
* |
Indicates
less than 1%.
|
(1)
|
Includes
options to purchase 492,798 shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(2)
|
Includes
options to purchase 1,135,117 shares of Protalex common stock and
warrants
to purchase 7,778 shares of Protalex common stock exercisable within
60
days of January 23, 2006.
|
(3)
|
Includes
options to purchase 58,907, shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(4)
|
Includes
options to purchase 87,500 shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(5)
|
Includes
options to purchase 34,762 shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(6)
|
Includes
options to purchase 100,000 shares of Protalex common stock and warrants
to purchase 5,000 shares of Protalex common stock exercisable within
60
days of January 23, 2006.
|
(7)
|
Includes
options to purchase 110,000 shares of Protalex common stock and warrants
to purchase 27,778 shares of Protalex common stock exercisable within
60
days of January 23, 2006.
|
(8)
|
Includes
options to purchase 90,000 shares of Protalex common stock and warrants
to
purchase 2,778 shares of Protalex common stock exercisable within
60 days
of January 23, 2006
|
(9)
|
Includes
options to purchase 125,000 shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(10)
|
Includes
options to purchase 269,500 shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(11)
|
Includes
warrants to purchase 1,047,255 shares of Protalex common stock exercisable
within 60 days of January 23, 2006, and 8,957,338 shares of Protalex
common stock (including options and warrants to purchase 3,027,151
shares
of Protalex common stock exercisable within 60 days of January 23,
2006)
held by Steven H. Kane, John E. Doherty, Frank M. Dougherty, G. Kirk
Raab,
Thomas P. Stagnaro, Marc L. Rose, Integral Capital Partners VI, L.P.
and
SF Capital Partners Ltd. for which vSpring SBIC, L.P. shares voting
power
as described in the following sentence. vSpring SBIC, L.P. has entered
into a Shareholder Agreement dated September 18, 2003, as amended
on May
25, 2005, with Steven H. Kane, John E. Doherty, Frank M. Dougherty,
G.
Kirk Raab, Thomas P. Stagnaro, Marc L. Rose, Integral Capital Partners
VI,
L.P. and SF Capital Partners Ltd., pursuant to which each such party
executed proxies appointing vSpring SPEC, L.P. as their proxy to
vote all
of such party's respective shares (i) to fix and maintain the number
of
directors at seven unless a greater or lesser number is approved
by
vSpring and the Company and (ii) to cause and maintain the election
of a
candidate designated by vSpring SBIC, L.P. on the Protalex board
of
directors. The proxy may not be exercised on any other matter, and
each
party may vote their shares on all other matters.
|
(12)
|
Includes
warrants to purchase 437,500 shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(13)
|
Includes
warrants to purchase 411,765 shares of Protalex common stock exercisable
within 60 days of January 23, 2006.
|
(14)
|
Includes
options to purchase 496,407 shares of Protalex common stock and warrants
to purchase 1,052,255 shares of Protalex common stock exercisable
within
60 days of January 23, 2006.
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits the purchaser;
|
·
|
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;
|
·
|
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.
|
·
|
Terral
Jordan employer’s wholly-owned subsidiary is a member of the
NASD.
|
·
|
William
M. Hitchcock is a registered representative of Pembroke Financial
Partners
LLC, which is a NASD member firm.
|
·
|
John
C. Lipman is the managing member of Carter Management Group LLC.
Mr.
Lipman is the chairman and sole owner of Carter Securities LLC, which
is a
NASD member firm.
|
·
|
Seymour
Rose is a registered representative of AXA Advisors, LLC, which is
a NASD
member firm.
|
·
|
Paramount
BioCapital Asset Management, Inc. is the general partner and investment
manager of the following selling stockholders: (i) Aries Master Fund
II,
LP (ii) Aries Domestic Fund, LP and (iii) Aries Domestic Fund II,
LP.
Lindsay A. Rosenwald is the chief executive officer, chairman and
sole
stockholder of Paramount BioCapital Asset Management, Inc. and is
the
chief executive officer, chairman and sole stockholder of Paramount
Biocapital, Inc, an NASD member
firm.
|
·
|
Larry
Gellman is a managing director of, and owns equity securities in,
Robert
W. Baird & Co. Incorporated, which is a NASD member
firm.
|
·
|
Anthony
Cantone is the President of Cantone Research, Inc., which is a NASD
member
firm.
|
·
|
Cantone
Partners, L.P. is a fund, in which Anthony Cantone is the General
Manager.
Anthony Cantone is President of Cantone Research, Inc., which is
a NASD
member firm.
|
·
|
Griffin
Securities, Inc. acted a placement agent for this transaction and
is a
NASD member firm.
|
·
|
Salvatore
Saraceno is an employee of Griffin Securities, Inc, which is a NASD
member
firm.
|
·
|
Mark
Zizzamia is an employee of Griffin Securities, Inc, which is a NASD
member
firm.
|
·
|
Mufson,
Howe, Hunter and Partners, LLC is wholly-owned by Mufson, Howe, Hunter
and
Company, LLC, acted as placement agent for this transaction and is
a NASD
member firm.
|
SHARES
OWNED PRIOR
TO
THE OFFERING
|
SHARES
OWNED
AFTER
THE OFFERING
|
|||||||||||||||
NO.
OF SHARES OFFERED (INCLUDES STOCK UNDERLYING WARRANTS)
|
NUMBER
|
PERCENTAGE
|
NUMBER
|
PERCENTAGE
|
||||||||||||
Larry
Gellman
|
250,000(1
|
)
|
250,000
|
1.1
|
%
|
0
|
*
|
|||||||||
Christoph
Henkel
|
196,005(2
|
)
|
943,794
|
4.1
|
%
|
747,789
|
3.4
|
%
|
||||||||
Mosaix
Ventures, LP
|
194,445(3
|
)
|
194,445
|
*
|
0
|
*
|
||||||||||
Anthony
J. Cantone
|
187,500(4
|
)
|
187,500
|
*
|
0
|
*
|
||||||||||
Cordillera
Fund, LP
|
167,500(5
|
)
|
167,500
|
*
|
0
|
*
|
||||||||||
Hauck-Aufhaeueer
Banquiers Luxembourg S.A.
|
166,666(6
|
)
|
166,666
|
0
|
0
|
*
|
||||||||||
Sandra
F. Pessin
|
166,666(7
|
)
|
362,166
|
1.6
|
%
|
195,500
|
*
|
|||||||||
Aries
Master Fund II
|
158,334(8
|
)
|
158,334
|
*
|
0
|
*
|
||||||||||
John
E. Doherty
|
138,889(9
|
)
|
3,091,549
|
12.4
|
%
|
2,952,660
|
13.3
|
%
|
||||||||
Griffin
Securities, Inc
|
114,764(10
|
)
|
114,764
|
*
|
0
|
*
|
||||||||||
Jean
Robert Bourgeois
|
112,500(11
|
)
|
112,500
|
*
|
0
|
*
|
||||||||||
The
Lincoln Fund, L.P.
|
111,111(12
|
)
|
384,809
|
1.7
|
%
|
273,698
|
1.2
|
%
|
||||||||
Carter
Management Group, LLP
|
93,750(13
|
)
|
93,750
|
*
|
0
|
*
|
||||||||||
Aries
Domestic Fund, LP
|
86,111(14
|
)
|
86,111
|
*
|
0
|
*
|
||||||||||
Investment
Strategies Fund, L.P.
|
83,750(15
|
)
|
83,750
|
*
|
0
|
*
|
||||||||||
Richard
L. Braeux
|
62,500(16
|
)
|
141,912
|
*
|
79,412
|
*
|
||||||||||
PAM
Investments, LTD-I
|
62,500(17
|
)
|
62,500
|
*
|
0
|
*
|
||||||||||
Larry
S. Kopp
|
56,250(18
|
)
|
56,250
|
*
|
0
|
*
|
||||||||||
William
M. Hitchcock
|
55,555(19
|
)
|
325,850
|
1.5
|
%
|
270,295
|
1.2
|
%
|
||||||||
Kinloch
& Company, LLC, SC
|
55,555(20
|
)
|
530,392
|
2.4
|
%
|
474,837
|
2.1
|
%
|
||||||||
Lance,
Malvin & Partners, Inc.
|
55,555(21
|
)
|
55,555
|
*
|
0
|
*
|
||||||||||
NITE
Capital, LP
|
55,555(22
|
)
|
55,555
|
*
|
0
|
*
|
||||||||||
Maud
Tilghman Walker
|
55,555(23
|
)
|
165,641
|
*
|
110,086
|
*
|
||||||||||
Thomas
Veasey Zug, Jr.
|
55,555(24
|
)
|
211,222
|
1.0
|
%
|
155,667
|
*
|
|||||||||
Cantone
Partners, L.P.
|
52,369(25
|
)
|
52,369
|
*
|
0
|
*
|
||||||||||
Mufson,
Hunter, Howe and Partners LLC
|
43,691(26
|
)
|
43,691
|
*
|
0
|
*
|
||||||||||
Boris
Volman
|
37,505(27
|
)
|
37,505
|
*
|
0
|
*
|
||||||||||
Aries
Domestic Fund II, LP
|
33,333(28
|
)
|
33,333
|
*
|
0
|
*
|
||||||||||
David
A. Dent
|
31,250(29
|
)
|
31,250
|
*
|
0
|
*
|
||||||||||
Philip
Isaacson
|
31,250(30
|
)
|
31,250
|
*
|
0
|
*
|
||||||||||
N.
Dean Meyer
|
31,250(31
|
)
|
31,250
|
*
|
0
|
*
|
||||||||||
Richard
Molinsky
|
31,250(32
|
)
|
31,250
|
*
|
0
|
*
|
||||||||||
PAM
Investments, Ltd. II
|
31,250(33
|
)
|
31,250
|
*
|
0
|
*
|
||||||||||
Salvatore
Saraceno
|
30,000(34
|
)
|
30,000
|
*
|
0
|
*
|
||||||||||
Mark
Zizzamia
|
30,000(35
|
)
|
30,000
|
*
|
0
|
*
|
||||||||||
Ranjan
Lal
|
27,780(36
|
)
|
27,780
|
*
|
0
|
*
|
||||||||||
Clancy
Douglas McKenzie, MD
|
27,778(37
|
)
|
27,778
|
*
|
0
|
*
|
||||||||||
Sterling
Securities International Ltd.
|
27,766(38
|
)
|
27,766
|
*
|
0
|
*
|
||||||||||
Daniel
A. Bachtle
|
25,000(39
|
)
|
25,000
|
*
|
0
|
*
|
||||||||||
Ben
& Sophie Reuben
|
25,000(40
|
)
|
25,000
|
*
|
0
|
*
|
||||||||||
Peter
G. Tombros
|
25,000(41
|
)
|
125,000
|
*
|
100,000
|
*
|
||||||||||
Craig
William Lunsman
|
22,500(42
|
)
|
48,567
|
*
|
26,067
|
*
|
||||||||||
Jack
& Sharon Benoff
|
22,250(43
|
)
|
30,271
|
*
|
8,021
|
*
|
||||||||||
David
S. Hannes
|
20,000(44
|
)
|
20,000
|
*
|
0
|
*
|
||||||||||
Tony
Nikolich
|
18,750(45
|
)
|
18,750
|
*
|
0
|
*
|
||||||||||
Victor
Polakoff
|
15,000(46
|
)
|
15,000
|
*
|
0
|
*
|
||||||||||
Frank
Dougherty Rev. Trust UAD 9-30-05
|
13,889(47
|
)
|
217,485
|
1.0
|
%
|
203,596
|
*
|
|||||||||
Philip
& Cheryl McDonald
|
13,889(48
|
)
|
13,889
|
*
|
0
|
*
|
||||||||||
Mark
S. Robinow
|
13,889(48
|
)
|
13,889
|
*
|
0
|
*
|
||||||||||
Terral
Jordan
|
13,875(50
|
)
|
120,667
|
*
|
106,792
|
*
|
||||||||||
Mai
N. Pogue
|
12,500(51
|
)
|
12,500
|
*
|
0
|
*
|
||||||||||
DCB
Enterprises Inc.
|
6,250(52
|
)
|
6,250
|
*
|
0
|
*
|
||||||||||
Howard
Allen LeVaux
|
6,250(53
|
)
|
6,250
|
*
|
0
|
*
|
||||||||||
Seymour
Rose
|
5,555(54
|
)
|
5,555
|
*
|
0
|
*
|
||||||||||
Joe
Jude Dervan & Elena Lisk
|
1,875(55
|
)
|
6,875
|
*
|
5,000
|
*
|
||||||||||
David
Dervan
|
475(56
|
)
|
475
|
*
|
0
|
*
|
||||||||||
* |
Indicates
less than 1%.
|
(1)
|
Includes
stock underlying a warrant to purchase 50,000 shares of common stock
at an
exercise price of $2.99 per share.
|
(2)
|
Includes
stock underlying a warrant to purchase 39,201 shares of common stock
at an
exercise price of $2.99 per share.
|
(3)
|
Includes
stock underlying a warrant to purchase 38,889 shares of common stock
at an
exercise price of $2.99 per share.
|
(4)
|
Includes
stock underlying a warrant to purchase 37,500 shares of common stock
at an
exercise price of $2.99 per share.
|
(5)
|
Includes
stock underlying a warrant to purchase 33,500 shares of common stock
at an
exercise price of $2.99 per share.
|
(6)
|
Includes
stock underlying a warrant to purchase 33,333 shares of common stock
at an
exercise price of $2.99 per share.
|
(7)
|
Includes
stock underlying a warrant to purchase 33,333 shares of common stock
at an
exercise price of $2.99 per share.
|
(8)
|
Includes
stock underlying a warrant to purchase 31,667 shares of common stock
at an
exercise price of $2.99 per share.
|
(9)
|
Includes
stock underlying a warrant to purchase 27,778 shares of common stock
at an
exercise price of $2.99 per share. Mr. Doherty previously served
a member
of the Company’s Board of Directors from September 1999 to October 2005
and as the Company’s President and Chief Executive Officer from September
1999 to December 2002.
|
(10)
|
Includes
stock underlying a warrant to purchase 114,764 shares of common stock
at
an exercise price of $2.99 per share. Griffin Securities, Inc. acted
as
placement agents for the December 2005 financing
transaction.
|
(11)
|
Includes
stock underlying a warrant to purchase 22,500 shares of common stock
at an
exercise price of $2.99 per share.
|
(12)
|
Includes
stock underlying a warrant to purchase 22,222 shares of common stock
at an
exercise price of $2.99 per share.
|
(13)
|
Includes
stock underlying a warrant to purchase 18,750 shares of common stock
at an
exercise price of $2.99 per share.
|
(14)
|
Includes
stock underlying a warrant to purchase 17,222 shares of common stock
at an
exercise price of $2.99 per share.
|
(15)
|
Includes
stock underlying a warrant to purchase 16,750 shares of common stock
at an
exercise price of $2.99 per share.
|
(16)
|
Includes
stock underlying a warrant to purchase 12,500 shares of common stock
at an
exercise price of $2.99 per share.
|
(17)
|
Includes
stock underlying a warrant to purchase 12,500 shares of common stock
at an
exercise price of $2.99 per share.
|
(18)
|
Includes
stock underlying a warrant to purchase 11,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(19)
|
Includes
stock underlying a warrant to purchase 11,111 shares of common stock
at an
exercise price of $2.99 per share. Mr. Hitchcock previously served
as the
Company’s Chairman of the Board from October 2001 to October
2003.
|
(20)
|
Includes
stock underlying a warrant to purchase 11,111 shares of common stock
at an
exercise price of $2.99 per share.
|
(21)
|
Includes
stock underlying a warrant to purchase 11,111 shares of common stock
at an
exercise price of $2.99 per share.
|
(22)
|
Includes
stock underlying a warrant to purchase 11,111 shares of common stock
at an
exercise price of $2.99 per share.
|
(23)
|
Includes
stock underlying a warrant to purchase 11,111 shares of common stock
at an
exercise price of $2.99 per share.
|
(24)
|
Includes
stock underlying a warrant to purchase 11,111 shares of common stock
at an
exercise price of $2.99 per share.
|
(25)
|
Includes
stock underlying a warrant to purchase 8,750 shares of common stock
at an
exercise price of $2.99 per share Cantone Partners, L.P. was compensated
for a finders’ fee in connection with the December 2005 financing
transaction.
|
(26)
|
Includes
stock underlying a warrant to purchase 43,691 shares of common stock
at an
exercise price of $2.99 per share. Mufson, Howe, Hunter and Partners,
LLC
acted as placement agents for the December 2005 financing transaction.
|
(27)
|
Includes
stock underlying a warrant to purchase 7,501 shares of common stock
at an
exercise price of $2.99 per share.
|
(28)
|
Includes
stock underlying a warrant to purchase 6,667 shares of common stock
at an
exercise price of $2.99 per share.
|
(29)
|
Includes
stock underlying a warrant to purchase 6,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(30)
|
Includes
stock underlying a warrant to purchase 6,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(31)
|
Includes
stock underlying a warrant to purchase 6,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(32)
|
Includes
stock underlying a warrant to purchase 6,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(33)
|
Includes
stock underlying a warrant to purchase 6,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(34)
|
Includes
stock underlying a warrant to purchase 30,000 shares of common stock
at an
exercise price of $2.99 per share. Mr. Saraceno, an employee of Griffin
Securities, Inc. acted as placement agents for the December 2005
financing
transaction.
|
(35)
|
Includes
stock underlying a warrant to purchase 30,000 shares of common stock
at an
exercise price of $2.99 per share. Mr. Zizzamia, an employee of Griffin
Securities, Inc. acted as placement agents for the December 2005
financing
transaction.
|
(36)
|
Includes
stock underlying a warrant to purchase 5,556 shares of common stock
at an
exercise price of $2.99 per share.
|
(37)
|
Includes
stock underlying a warrant to purchase 5,556 shares of common stock
at an
exercise price of $2.99 per share.
|
(38)
|
Includes
stock underlying a warrant to purchase 5,553 shares of common stock
at an
exercise price of $2.99 per share.
|
(39)
|
Includes
stock underlying a warrant to purchase 5,000 shares of common stock
at an
exercise price of $2.99 per share.
|
(40)
|
Includes
stock underlying a warrant to purchase 5,000 shares of common stock
at an
exercise price of $2.99 per share.
|
(41)
|
Includes
stock underlying a warrant to purchase 5,000 shares of common stock
at an
exercise price of $2.99 per share. Mr. Tombros has served on the
Company’s
board of directors since November
2005.
|
(42)
|
Includes
stock underlying a warrant to purchase 4,500 shares of common stock
at an
exercise price of $2.99 per share.
|
(43)
|
Includes
stock underlying a warrant to purchase 4,450 shares of common stock
at an
exercise price of $2.99 per share.
|
(44)
|
Includes
stock underlying a warrant to purchase 4,000 shares of common stock
at an
exercise price of $2.99 per share.
|
(45)
|
Includes
stock underlying a warrant to purchase 3,750 shares of common stock
at an
exercise price of $2.99 per share.
|
(46)
|
Includes
stock underlying a warrant to purchase 3,000 shares of common stock
at an
exercise price of $2.99 per share.
|
(47)
|
Includes
stock underlying a warrant to purchase 2,778 shares of common stock
at an
exercise price of $2.99 per share. Mr. Dougherty has served on the
Company’s board of directors since October
2001.
|
(48)
|
Includes
stock underlying a warrant to purchase 2,778 shares of common stock
at an
exercise price of $2.99 per share.
|
(49)
|
Includes
stock underlying a warrant to purchase 2,778 shares of common stock
at an
exercise price of $2.99 per share.
|
(50)
|
Includes
stock underlying a warrant to purchase 2,775 shares of common stock
at an
exercise price of $2.99 per share.
|
(51)
|
Includes
stock underlying a warrant to purchase 2,500 shares of common stock
at an
exercise price of $2.99 per share.
|
(52)
|
Includes
stock underlying a warrant to purchase 1,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(53)
|
Includes
stock underlying a warrant to purchase 1,250 shares of common stock
at an
exercise price of $2.99 per share.
|
(54)
|
Includes
stock underlying a warrant to purchase 1,111 shares of common stock
at an
exercise price of $2.99 per share. Mr. Rose is the father of the
Company’s
Vice
President and Chief Financial Officer, Marc L.
Rose.
|
(55)
|
Includes
stock underlying a warrant to purchase 375 shares of common stock
at an
exercise price of $2.99 per share. Mr. Dervan is an employee of the
Company.
|
(56)
|
Includes
stock underlying a warrant to purchase 95 shares of common stock
at an
exercise price of $2.99 per share. Mr. Dervan is the bother of Joe
Jude
Dervan, an employee of the Company.
|
Audited
Financial Statements
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-9
|
|
F-10
|
|
Unaudited
Financial Statements
|
|
F-17
|
|
F-18
|
|
F-19
|
|
F-20
|
ASSETS
|
|||||||
2005
|
2004
|
||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
9,453,367
|
$
|
9,292,783
|
|||
Prepaid
expenses and employee advances
|
9,281
|
22,041
|
|||||
Total
current assets
|
9,462,648
|
9,314,824
|
|||||
PROPERTY
& EQUIPMENT:
|
|||||||
Lab
equipment
|
313,613
|
260,425
|
|||||
Office
and computer equipment
|
157,787
|
153,266
|
|||||
Furniture
& fixtures
|
25,556
|
25,556
|
|||||
Leasehold
improvements
|
27,060
|
5,540
|
|||||
524,016
|
444,787
|
||||||
Less
accumulated depreciation and amortization
|
(400,387
|
)
|
(342,723
|
)
|
|||
123,629
|
102,064
|
||||||
OTHER
ASSETS:
|
|||||||
Deposits
|
7,590
|
7,590
|
|||||
Intellectual
technology property, net of accumulated amortization
of $5,673 in 2005 and $4,653 in 2004
|
14,627
|
15,647
|
|||||
Total
other assets
|
22,217
|
23,237
|
|||||
$
|
9,608,494
|
$
|
9,440,125
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Current
maturities of capital lease obligation
|
$
|
20,046
|
$
|
20,487
|
|||
Accounts
payable
|
866,628
|
377,100
|
|||||
Payroll
and related liabilities
|
28,835
|
24,560
|
|||||
Accrued
expenses
|
81,517
|
—
|
|||||
Total
current liabilities
|
997,026
|
422,147
|
|||||
Capital
lease obligation, less current portion
|
—
|
20,046
|
|||||
Other
|
4,655
|
1,544
|
|||||
Total
liabilities
|
1,001,681
|
443,737
|
|||||
STOCKHOLDERS'
EQUITY:
|
|||||||
Common
stock, par value $0.00001, 40,000,000
shares authorized, 19,393,221 and 16,784,433 shares issued and
outstanding
as of May 31, 2005 and 2004, respectively
|
194
|
14,683,854
|
|||||
Additional
paid in capital
|
20,913,822
|
1,052,008
|
|||||
Deficit
accumulated during
|
|||||||
the
development stage
|
(12,307,203
|
)
|
(6,739,474
|
)
|
|||
Total
stockholders’ equity
|
8,606,813
|
8,996,388
|
|||||
|
$
|
9,608,494
|
$
|
9,440,125
|
|||
From
Inception
|
||||||||||
Year
Ended
|
Year
Ended
|
Through
|
||||||||
May
31, 2005
|
May
31, 2004
|
May
31, 2005
|
||||||||
REVENUES
|
$
|
—
|
$
|
—
|
$
|
—
|
OPERATING
EXPENSES:
|
||||||||||
Research
and development
|
(3,519,910
|
)
|
(1,399,190
|
)
|
(7,202,816
|
)
|
||||
Administrative
|
(1,457,694
|
)
|
(1,393,347
|
)
|
(3,814,440
|
)
|
||||
Professional
fees
|
(714,665
|
)
|
(288,077
|
)
|
(1,279,958
|
)
|
||||
Depreciation
and amortization
|
(5,111
|
)
|
(5,486
|
)
|
(146,106
|
)
|
||||
Operating
Loss
|
(5,697,380
|
)
|
(3,026,100
|
)
|
(12,443,320
|
)
|
||||
Other
income (expense)
|
||||||||||
Interest
income
|
132,181
|
44,618
|
216,466
|
|||||||
Interest
expense
|
(2,530
|
)
|
(6,321
|
)
|
(69,769
|
)
|
||||
Loss
on disposal of equipment
|
—
|
(1,561
|
)
|
(10,580
|
)
|
|||||
Net
Loss
|
$
|
(5,567,729
|
)
|
$
|
(2,989,364
|
)
|
$
|
(12,307,203
|
)
|
|
Weighted
average number of common shares outstanding
|
16,832,643
|
15,384,933
|
12,737,901
|
|||||||
Loss
per common share - basic and diluted
|
$
|
(.33
|
)
|
$
|
(.19
|
)
|
$
|
(.97
|
)
|
|
Deficit
|
|||||||||||||||||||
Accumulated
|
|||||||||||||||||||
Additional
|
Common
|
In
The
|
|||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
||||||||||||||
September 17,
1999 — initial issuance of 10,000 shares for intellectual technology
license at $.03 per share
|
10,000
|
$
|
300
|
$ | — |
$
|
—
|
$
|
—
|
$
|
300
|
||||||||
September 30,
1999 — cost of public shell acquisition over net assets acquired to be
accounted for as a Recapitalization
|
—
|
—
|
— |
(250,000
|
)
|
—
|
(250,000
|
)
|
|||||||||||
October 27,
1999 — issuance of 84 shares to individual for $25,000
|
84
|
25,000
|
— |
—
|
—
|
25,000
|
|||||||||||||
November 15,
1999 — reverse merger transaction with Enerdyne Corporation, net
transaction amounts
|
8,972,463
|
118,547
|
— |
(118,547
|
)
|
—
|
—
|
||||||||||||
November 18,
1999 — February 7, 2000 — issuance of 459,444 shares to various
investors at $0.36 per share
|
459,444
|
165,400
|
— |
—
|
—
|
165,400
|
|||||||||||||
January 1,
2000 — issuance of 100,000 shares in exchange for legal services
|
100,000
|
15,000
|
— |
—
|
—
|
15,000
|
|||||||||||||
May
1 - 27, 2000 — issuance of 640,000 shares to various investors at $1.00
per share
|
640,000
|
640,000
|
— |
—
|
—
|
640,000
|
|||||||||||||
May 27,
2000 — issuance of 1,644 shares to individual in exchange for interest Due
|
1,644
|
1,644
|
— |
—
|
—
|
1,644
|
|||||||||||||
Net
loss for the year ended May 31, 2000
|
—
|
—
|
— |
—
|
(250,689
|
)
|
(250,689
|
)
|
|||||||||||
Balance,
May 31, 2000
|
10,183,635
|
965,891
|
— |
(368,547
|
)
|
(250,689
|
)
|
346,655
|
Deficit
|
|||||||||||||||||||
Accumulated
|
|||||||||||||||||||
Additional
|
Common
|
In
The
|
|||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
December 7,
2000 — issuance of 425,000 shares to various investors at $1.00 per share
|
425,000
|
425,000
|
—
|
—
|
—
|
425,000
|
|||||||||||||
May 31,
2001 — Forgiveness of debt owed to shareholder
|
—
|
—
|
40,000
|
—
|
—
|
40,000
|
|||||||||||||
Net
loss for the year ended May 31, 2001
|
—
|
—
|
—
|
—
|
(553,866
|
)
|
(553,866
|
)
|
|||||||||||
Balance,
May 31, 2001
|
10,608,635
|
1,390,891
|
40,000
|
(368,547
|
)
|
(804,555
|
)
|
257,789
|
|||||||||||
August 13,
2001 — Contribution by Shareholders
|
—
|
—
|
143,569
|
—
|
—
|
143,569
|
|||||||||||||
November 7,
2001 — issuance of 881,600 Shares at $1.25 per share
|
881,600
|
1,102,000
|
—
|
—
|
—
|
1,102,000
|
|||||||||||||
November 26,
2001 — options issued to board member
|
—
|
—
|
133,000
|
—
|
—
|
133,000
|
|||||||||||||
Net
loss for the year ended May 31, 2002
|
—
|
—
|
—
|
—
|
(1,280,465
|
)
|
(1,280,465
|
)
|
|||||||||||
Balance,
May 31, 2002
|
11,490,235
|
2,492,891
|
316,569
|
(368,547
|
)
|
(2,085,020
|
)
|
355,893
|
|||||||||||
July 5,
2002 — issuance of 842,000 shares at $1.50 per share
|
842,000
|
1,263,000
|
—
|
—
|
—
|
1,263,000
|
|||||||||||||
July 1,
2002 - May 1, 2003 - purchase of common stock from shareholder at
$.70 per share
|
(130,955
|
)
|
(91,667
|
)
|
—
|
—
|
—
|
(91,667
|
)
|
||||||||||
January 15,
2003 - May 15, 2003 — common stock issued to Company president
|
41,670
|
82,841
|
—
|
—
|
—
|
82,841
|
|||||||||||||
May 14,
2003 — common stock issued to employee
|
5,000
|
11,250
|
—
|
—
|
—
|
11,250
|
|||||||||||||
June 1,
2002 - May 31, 2003 — options issued to board members and employees
|
—
|
—
|
287,343
|
—
|
—
|
287,343
|
|||||||||||||
Net
loss for the year ended May 31, 2003
|
—
|
—
|
—
|
—
|
(1,665,090
|
)
|
(1,665,090
|
)
|
|||||||||||
Balance,
May 31, 2003
|
12,247,950
|
3,758,315
|
603,912
|
(368,547
|
)
|
(3,750,110
|
)
|
243,570
|
|||||||||||
June 15,
2003, common stock issued to Company president
|
8,334
|
16,418
|
—
|
—
|
—
|
16,418
|
|||||||||||||
June 15,
2003, purchase of common stock from shareholder
|
(12,093
|
)
|
(8,333
|
)
|
—
|
—
|
—
|
(8,333
|
)
|
Deficit
|
|||||||||||||||||||
Accumulated
|
|||||||||||||||||||
Additional
|
Common
|
In
The
|
|||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
September 18,
2003 - issuance of 7,445,646 of common stock issued in private placement
At $1.70 per share, net of transaction costs
|
7,445,646
|
11,356,063
|
— |
—
|
—
|
11,356,063
|
|||||||||||||
September 19,
2003 - repurchase and retired 2,994,803 shares for $300,000
|
(2,994,803
|
)
|
(300,000
|
)
|
— |
—
|
—
|
(300,000
|
)
|
||||||||||
December 12,
2003 - issuance of 39,399 shares to terminated employees at $2.60
per
share
|
39,399
|
102,438
|
— |
—
|
—
|
102,438
|
|||||||||||||
March 1,
2004 - common stock issued to employee at $2.55 per share
|
50,000
|
127,500
|
— |
—
|
—
|
127,500
|
|||||||||||||
May 31,
2004 - reclassify common stock contra to common stock
|
—
|
(368,547
|
)
|
— |
368,547
|
—
|
—
|
||||||||||||
December 12,
2003 - issuance of 39,399 shares to terminated employees at $2.60
per
share
|
39,399
|
102,438
|
— |
—
|
—
|
102,438
|
|||||||||||||
June
1 , 2003 - May 31, 2004 - options issued to board members, employees
and consultants
|
—
|
—
|
448,096 |
—
|
—
|
448,096
|
|||||||||||||
Net
loss for the year ended May 31, 2004
|
—
|
—
|
— |
—
|
(2,989,364
|
)
|
(2,989,364
|
)
|
|||||||||||
Balance,
May 31, 2004
|
16,784,433
|
$
|
14,683,854
|
$ | 1,052,008 |
—
|
$
|
(6,739,474
|
)
|
$
|
8,996,388
|
||||||||
November
30, 2004 - adjust March 1, 2004 common stock issued to
employee
|
(20,000
|
)
|
(20,000
|
)
|
|||||||||||||||
January
13, 2005 - common stock issued to employee at $2.55 per
share
|
15,000
|
38,250
|
38,250
|
||||||||||||||||
February
28, 2005 - Reclass Par Value for Reincorporation into DE as of
12/1/04
|
(14,701,935
|
)
|
14,701,935 |
0
|
|||||||||||||||
May
25, 2005 - issuance of 2,593,788 of common stock issued in private
placement At $1.95 per share, net of transaction costs
|
2,593,788
|
25
|
4,851,168 |
4,851,193
|
Deficit
|
|||||||||||||||||||
Accumulated
|
|||||||||||||||||||
Additional
|
Common
|
In
The
|
|||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
June
1 , 2004 - May 31, 2005 - options issued to board members, employees
and consultants
|
308,711
|
308,711
|
|||||||||||||||||
Net
loss for the year ended May 31, 2005
|
—
|
—
|
—
|
—
|
(5,567,729
|
)
|
(5,567,729
|
)
|
|||||||||||
Balance,
May 31, 2005
|
19,393,221
|
$
|
194
|
$
|
20,913,822
|
—
|
$
|
(12,307,203
|
)
|
$
|
8,606,813
|
||||||||
From
Inception
|
||||||||||
Year
Ended
|
Year
Ended
|
Through
|
||||||||
May
31, 2005
|
May
31, 2004
|
May
31, 2005
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
Net
loss
|
$
|
(5,567,729
|
)
|
$
|
(2,989,364
|
)
|
$
|
(12,307,203
|
)
|
|
Adjustments
to reconcile net loss to net cash and cash equivalents used in operating
activities:
|
||||||||||
Loss
on disposal of equipment
|
—
|
1,561
|
10,580
|
|||||||
Depreciation
and amortization
|
58,684
|
64,631
|
428,581
|
|||||||
Non
cash compensation expense
|
326,960
|
694,452
|
1,535,846
|
|||||||
Non
cash expenses
|
—
|
—
|
16,644
|
|||||||
(Increase)/Decrease
in advances, prepaid expenses and deposits
|
12,760
|
(22,759
|
)
|
(16,871
|
)
|
|||||
Increase
in accounts payable and accrued expenses
|
571,045
|
261,606
|
948,145
|
|||||||
Increase
in payroll and related liabilities
|
4,275
|
15,744
|
28,835
|
|||||||
Increase
in other liabilities
|
3,111
|
1,529
|
4,655
|
|||||||
Net
cash and cash equivalents used in operating activities
|
(4,590,894
|
)
|
(1,972,600
|
)
|
(9,350,788
|
)
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
Acquisition
of intellectual technology license - fee portion
|
—
|
—
|
(20,000
|
)
|
||||||
Acquisition
of property and equipment
|
(79,229
|
)
|
(40,426
|
)
|
(410,536
|
)
|
||||
Excess
of amounts paid for Public Shell over assets acquired to be accounted
for
as a recapitalization
|
—
|
—
|
(250,000
|
)
|
||||||
Proceeds
from disposal of equipment
|
—
|
—
|
6,000
|
|||||||
Net
cash and cash equivalents used in investing activities
|
(79,229
|
)
|
(40,426
|
)
|
(674,536
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Proceeds
from stock issuance
|
4,851,194
|
11,356,063
|
19,827,658
|
|||||||
Principal
payment on capital leases and installment purchase payable
|
(20,487
|
)
|
(21,973
|
)
|
(275,365
|
)
|
||||
Contribution
by shareholders
|
—
|
—
|
183,569
|
|||||||
Principal
payment on note payable individual
|
—
|
—
|
(225,717
|
)
|
||||||
Issuance
of note payable to individual
|
—
|
—
|
368,546
|
|||||||
Acquisition
of common stock
|
—
|
(308,333
|
)
|
(400,000
|
)
|
|||||
Net
cash and cash equivalents provided by financing activities
|
4,830,707
|
11,025,757
|
19,478,691
|
|||||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
160,584
|
9,012,731
|
9,453,367
|
|||||||
Cash
and cash equivalents, beginning
|
9,292,783
|
280,052
|
—
|
|||||||
Cash
and cash equivalents, ending
|
$
|
9,453,367
|
$
|
9,292,783
|
$
|
9,453,367
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||||
Interest
paid
|
$
|
2,128
|
$
|
6,336
|
$
|
66,156
|
||||
Taxes
paid
|
$
|
50
|
$
|
—
|
$
|
100
|
||||
From
Inception
|
||||||||||
Year
Ended
|
Year
Ended
|
Through
|
||||||||
May
31, 2005
|
May
31, 2004
|
May
31, 2005
|
||||||||
Net
loss, as reported
|
$
|
(5,567,729
|
)
|
$
|
(2,989,364
|
)
|
$
|
(12,307,203
|
)
|
|
Add:
stock-based employee compensation expense included in reported net
loss
|
288,710
|
306,969
|
883,022
|
|||||||
Deduct:
stock-based employee compensation Expense determined under fair-value
method for all awards
|
(1,384,715
|
)
|
(1,087,701
|
)
|
(3,289,649
|
)
|
||||
Pro
forma net loss
|
$
|
(6,663,734
|
)
|
$
|
(3,770,096
|
)
|
$
|
(14,713,830
|
)
|
|
Loss
per common share, as reported - basic and diluted
|
$
|
(.33
|
)
|
$
|
(.19
|
)
|
$
|
(.97
|
)
|
|
Proforma
loss per common share - basic and diluted
|
$
|
(.40
|
)
|
$
|
(.25
|
)
|
$
|
(1.16
|
)
|
From
Inception
|
||||||||||
Year
Ended
|
Year
Ended
|
Through
|
||||||||
May,
31, 2005
|
May,
31, 2005
|
May
31, 2005
|
||||||||
Dividends
per year
|
0
|
0
|
0
|
|||||||
Volatility
percentage
|
102-107
|
%
|
95%-102
|
%
|
90%-131
|
%
|
||||
Risk
free interest rate
|
2.57-3.52%
|
%
|
2.07%-4.78
|
%
|
2.07%-5.11
|
%
|
||||
Expected
life (years)
|
4
|
4
|
3-5
|
Enerdyne
|
Transaction
|
Balance
Sheet at
|
|||||||||||
Account Description |
Protalex,
Inc.
|
Corporation
|
Adjustments
|
November
16, 1999
|
|||||||||
Cash
|
$
|
23,531
|
$ | — |
$
|
—
|
$
|
23,531
|
|||||
Note
receivable shareholder
|
—
|
118,547 |
—
|
118,547
|
|||||||||
License
|
20,300
|
— |
—
|
20,300
|
|||||||||
Investment
in Enerdyne
|
368,547
|
— |
(368,547
|
)
|
—
|
||||||||
Other
current assets
|
8,212
|
— |
—
|
8,212
|
|||||||||
Other
current liabilities
|
(17,555
|
)
|
— |
—
|
(17,555
|
)
|
|||||||
Accounts
payable Alex
|
(40,000
|
)
|
— |
—
|
(40,000
|
)
|
|||||||
Note
payable
|
(368,546
|
)
|
— |
—
|
(368,546
|
)
|
|||||||
Common
stock
|
(25,300
|
)
|
(833,459
|
)
|
714,912
|
(143,847
|
)
|
||||||
Additional
paid in capital
|
—
|
(1,105,014
|
)
|
1,105,014
|
—
|
||||||||
Treasury
stock
|
—
|
430,424 |
(430,424
|
)
|
—
|
||||||||
Accumulated
deficit
|
30,811
|
1,389,502 |
(1,389,502
|
)
|
30,811
|
||||||||
Common
stock - contra
|
—
|
— |
368,547
|
368,547
|
|||||||||
$
|
—
|
$ | — |
$
|
—
|
$
|
—
|
Year
Ended
|
Year
Ended
|
||||||
May
31, 2005
|
May
31, 2004
|
||||||
Statutory
federal and state rates of 40%
|
$
|
2,227,000
|
$
|
1,196,000
|
|||
Increase
in valuation allowance
|
(2,227,000
|
)
|
(1,196,000
|
)
|
|||
Actual
tax benefit
|
$
|
—
|
$
|
—
|
Year
Ended
|
Year
Ended
|
||||||
Current: |
May
31, 2005
|
May
31, 2004
|
|||||
Federal
|
$
|
—
|
$
|
—
|
|||
State
|
—
|
—
|
|||||
Deferred:
|
|||||||
Federal
|
1,858,000
|
926,000
|
|||||
State
|
369,000
|
163,000
|
|||||
Valuation
allowance
|
(2,227,000
|
)
|
(1,089,000
|
)
|
|||
Income
tax benefit
|
$
|
—
|
$
|
—
|
Year
Ended
|
Year
Ended
|
||||||
Assets: |
May
31, 2005
|
May
31, 2004
|
|||||
Net
operating losses
|
$
|
3,818,000
|
$
|
2,311,000
|
|||
Vacation
accrual
|
12,000
|
6,000
|
|||||
Stock
based compensation
|
613,00
|
411,000
|
|||||
General
business credit
|
506,000
|
—
|
|||||
Deferred
tax assets
|
4,949,000
|
2,728,000
|
|||||
Liability,
Equipment
|
(26,000
|
)
|
(32,000
|
)
|
|||
Gross
deferred tax asset
|
4,923,000
|
2,696,000
|
|||||
Less
valuation allowance
|
(4,923,000
|
)
|
(2,696,000
|
)
|
|||
Deferred
tax asset, net of valuation allowance
|
$
|
—
|
$
|
—
|
Year
|
||||
2006
|
20,736
|
|||
Total
minimum obligations
|
20,736
|
|||
Interest
|
(690
|
)
|
||
Present
value of minimum capital lease obligations
|
20,046
|
|||
Current
portion
|
(20,046
|
)
|
||
Long-term
capital lease obligations
|
$
|
0
|
Weighted
Average Exercise
|
||||||||||
Options
|
Prices
|
Exercisable
|
||||||||
Balance,
September 17, 1999
|
—
|
$
|
—
|
—
|
||||||
Granted,
April 28, 2000
|
40,000
|
0.36
|
—
|
|||||||
Granted,
November 26, 2001
|
100,000
|
1.25
|
100,000
|
|||||||
Expired,
April 28, 2002
|
(40,000
|
)
|
.036
|
—
|
||||||
Granted,
June 1, 2002
|
125,000
|
1.50
|
125,000
|
|||||||
Granted,
July 18, 2002
|
233,680
|
1.50
|
233,680
|
|||||||
Granted,
October 24, 2002
|
100,000
|
1.45
|
100,000
|
|||||||
Granted,
December 16, 2002
|
863,242
|
1.50
|
469,664
|
|||||||
Granted,
December 16, 2002
|
50,000
|
1.70
|
40,000
|
|||||||
Granted,
March 15, 2003
|
130,000
|
1.50
|
—
|
|||||||
Granted,
April 1, 2003
|
40,000
|
1.50
|
20,833
|
|||||||
Granted,
July 1, 2003
|
40,000
|
1.50
|
18,333
|
|||||||
Granted,
August 13, 2003
|
100,000
|
1.50
|
100,000
|
|||||||
Granted,
September 19, 2003
|
584,333
|
1.50
|
301,802
|
|||||||
Granted,
October 28, 2003
|
60,000
|
1.50
|
60,000
|
|||||||
Granted,
January 22, 2004
|
75,000
|
2.13
|
75,000
|
|||||||
Granted,
January 22, 2004
|
100,000
|
2.13
|
29,997
|
|||||||
Granted,
January 22, 2004
|
50,000
|
2.75
|
16,666
|
|||||||
Forfeited,
January 22, 2004
|
(130,000
|
)
|
1.50
|
—
|
||||||
Granted,
March 1, 2004
|
150,000
|
2.17
|
43,749
|
|||||||
Granted,
July 22, 2004
|
15,000
|
2.60
|
3,124
|
|||||||
Granted,
October 26, 2004
|
30,000
|
2.70
|
4,790
|
|||||||
Granted,
October 26, 2004
|
100,000
|
2.30
|
100,000
|
|||||||
Granted,
January 13, 2005
|
330,000
|
2.55
|
31,663
|
|||||||
Granted,
January 13, 2005
|
125,000
|
2.55
|
125,000
|
|||||||
Forfeited,
January 26, 2005
|
(10,000
|
)
|
1.70
|
—
|
||||||
Forfeited,
January 26, 2005
|
(10,000
|
)
|
2.13
|
—
|
||||||
Granted,
February 15, 2005
|
100,000
|
2.80
|
100,000
|
|||||||
Granted,
April 13, 2005
|
50,000
|
2.60
|
1,041
|
|||||||
3,401,255
|
2,100,342
|
Total
|
Exercisable
|
||||||||||||||||||
Exercise
Price
|
Weighted
Average
|
Weighted
Average
|
Weighted
Average
|
Weighted
Average
|
|||||||||||||||
Range
|
Number
|
Exercise
Price
|
Remaining
Life (yrs)
|
Number
|
Exercise
Price
|
Remaining
Life
|
|||||||||||||
$1.25
- 1.75
|
2,286,255
|
$
|
1.49
|
7.1
|
1,569,312
|
$
|
1.49
|
7.1
|
|||||||||||
$1.76
- 2.25
|
315,000
|
$
|
2.15
|
8.8
|
148,746
|
$
|
2.14
|
8.8
|
|||||||||||
$2.26
- 2.75
|
700,000
|
$
|
2.54
|
9.5
|
282,284
|
$
|
2.48
|
9.5
|
|||||||||||
$2.76
- 3.25
|
100,000
|
$
|
2.80
|
9.7
|
100,000
|
$
|
2.80
|
9.7
|
|||||||||||
3,401,255
|
2,100,342
|
Year
ending May 31,
|
||||
2006
|
$
|
113,500
|
||
2007
|
78,752
|
|||
2008
|
2,988
|
|||
2009
|
2,988
|
|||
2010
|
2,241
|
|||
Total
|
$
|
200,469
|
November
30, 2005
|
May
31, 2005
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
6,760,832
|
$
|
9,453,367
|
|||
Prepaid
expenses and employee advances
|
45,041
|
9,281
|
|||||
Total
current assets
|
6,805,873
|
9,462,648
|
|||||
PROPERTY
& EQUIPMENT:
|
|||||||
Lab
equipment
|
327,287
|
313,613
|
|||||
Office
and computer equipment
|
157,787
|
157,787
|
|||||
Furniture
& fixtures
|
25,556
|
25,556
|
|||||
Leasehold
improvements and amortization
|
27,060
|
27,060
|
|||||
537,690
|
524,016
|
||||||
Less
accumulated depreciation
|
(435,379
|
)
|
(400,387
|
)
|
|||
102,311
|
123,629
|
||||||
OTHER
ASSETS:
|
|||||||
Deposits
|
7,590
|
7,590
|
|||||
Intellectual
technology property, net of accumulated amortization
of $6,183 and $5,673 as of November 30, 2005 and May 31, 2005,
respectively
|
14,117
|
14,627
|
|||||
Total
other assets
|
21,707
|
22,217
|
|||||
$
|
6,929,891
|
$
|
9,608,494
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Current
maturities of capital lease obligation
|
$
|
9,267
|
$
|
20,046
|
|||
Accounts
payable
|
613,799
|
866,628
|
|||||
Payroll
and related liabilities
|
40,770
|
28,835
|
|||||
Accrued
expenses
|
107,008
|
81,517
|
|||||
Total
current liabilities
|
770,844
|
997,026
|
|||||
OTHER
LIABILITIES
|
4,693
|
4,655
|
|||||
Total
liabilities
|
775,537
|
1,001,681
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
Common
stock, par value $0.00001, 100,000,000 and 40,000,000
shares authorized as of November
30, 2005 and May 31, 2005 respectively, 19,443,221 and 19,393,221
shares
issued and outstanding as of November 30, 2005 and May 31, 2005,
respectively
|
194
|
194
|
|||||
Additional
paid in capital
|
21,207,333
|
20,913,822
|
|||||
Deficit
accumulated during the development stage
|
(15,053,173
|
)
|
(12,307,203
|
)
|
|||
Total
stockholders’ equity
|
6,154,354
|
8,606,813
|
|||||
|
$
|
6,929,891
|
$
|
9,608,494
|
|||
From
|
||||||||||||||||
Six
|
Six
|
Three
|
Three
|
Inception
|
||||||||||||
Months
Ended
|
Months
Ended
|
Months
Ended
|
Months
Ended
|
Through
|
||||||||||||
November
30,
|
November
30,
|
November
30,
|
November
30,
|
November
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
2005
|
||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Operating
Expenses
|
||||||||||||||||
Research
and development
|
(1,687,014
|
)
|
(1,639,264
|
)
|
(994,739
|
)
|
(919,718
|
)
|
(8,889,830
|
)
|
||||||
Administrative
|
(965,384
|
)
|
(605,854
|
)
|
(569,268
|
)
|
(386,079
|
)
|
(4,779,824
|
)
|
||||||
Professional
fees
|
(226,294
|
)
|
(267,192
|
)
|
(91,133
|
)
|
(178,991
|
)
|
(1,506,252
|
)
|
||||||
Depreciation
and amortization
|
(2,105
|
)
|
(2,733
|
)
|
(1,050
|
)
|
(1,337
|
)
|
(148,211
|
)
|
||||||
Operating
Loss
|
(2,880,797
|
)
|
(2,515,043
|
)
|
(1,656,190
|
)
|
(1,486,125
|
)
|
(15,324,117
|
)
|
||||||
Other
income (expense)
|
||||||||||||||||
Interest
income
|
135,441
|
46,637
|
67,107
|
21,042
|
351,907
|
|||||||||||
Interest
expense
|
(614
|
)
|
(1,637
|
)
|
(302
|
)
|
(973
|
)
|
(70,383
|
)
|
||||||
Loss
on disposal
|
—
|
—
|
—
|
—
|
(10,580
|
)
|
||||||||||
Net
Loss
|
$
|
(2,745,970
|
)
|
$
|
(2,470,043
|
)
|
$
|
(1,589,385
|
)
|
$
|
(1,466,056
|
)
|
$
|
(15,053,173
|
)
|
|
Weighted
average number of common shares outstanding
|
19,435,516
|
16,784,433
|
19,437,836
|
16,784,433
|
13,276,836
|
|||||||||||
Loss
per common share - basic and diluted
|
$
|
(.14
|
)
|
$
|
(.15
|
)
|
$
|
(.08
|
)
|
$
|
(.09
|
)
|
$
|
(1.13
|
)
|
|
Six
|
Six
|
From
Inception
|
||||||||
Months
Ended
|
Months
Ended
|
Through
|
||||||||
November
30,
|
November
30,
|
November
30,
|
||||||||
2005
|
2004
|
2005
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
Net
loss
|
$
|
(2,745,970
|
)
|
$
|
(2,470,043
|
)
|
$
|
(15,053,173
|
)
|
|
Adjustments
to reconcile net loss to net cash and cash equivalents used in operating
activities
|
||||||||||
Loss
on disposal of equipment
|
—
|
—
|
10,580
|
|||||||
Depreciation
and amortization
|
35,502
|
24,686
|
464,083
|
|||||||
Non
cash compensation expense
|
293,511
|
151,515
|
1,829,357
|
|||||||
Non
cash expenses
|
—
|
—
|
16,644
|
|||||||
(Increase)
in:
|
||||||||||
Prepaid
expense and employee advances
|
(35,760
|
)
|
(8,556
|
)
|
(52,631
|
)
|
||||
Increase
(decrease) in:
|
||||||||||
Accounts
payable and accrued expenses
|
(227,338
|
)
|
40,328
|
720,807
|
||||||
Payroll
and related liabilities
|
11,935
|
7,601
|
40,770
|
|||||||
Other
liabilities
|
38
|
2,316
|
4,693
|
|||||||
Net
cash and cash equivalents used in operating activities
|
(2,668,082
|
)
|
(2,252,153
|
)
|
(12,018,870
|
)
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
Acquisition
of intellectual technology license - fee portion
|
—
|
—
|
(20,000
|
)
|
||||||
Acquisition
of equipment
|
(13,674
|
)
|
(19,539
|
)
|
(424,210
|
)
|
||||
Excess
of amounts paid for public shell over assets acquired
to be accounted for as a recapitalization
|
—
|
—
|
(250,000
|
)
|
||||||
Proceeds
from disposal of equipment
|
—
|
—
|
6,000
|
|||||||
Net
cash and cash equivalents used in investing activities
|
(13,674
|
)
|
(19,539
|
)
|
(688,210
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Proceeds
from stock issuance
|
—
|
—
|
19,827,658
|
|||||||
Principal
payment on equipment notes payable and capital
leases
|
(10,779
|
)
|
(10,070
|
)
|
(286,144
|
)
|
||||
Contribution
by shareholders
|
—
|
—
|
183,569
|
|||||||
Principal
payment on note payable to individuals
|
—
|
—
|
(225,717
|
)
|
||||||
Issuance
of note payable to individuals
|
—
|
—
|
368,546
|
|||||||
Acquisition
of common stock
|
—
|
—
|
(400,000
|
)
|
||||||
Net
cash and cash equivalents (used in) provided by financing
activities
|
(10,779
|
)
|
(10,070
|
)
|
19,467,912
|
|||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(2,692,535
|
)
|
(2,281,762
|
)
|
6,760,832
|
|||||
Cash
and cash equivalents, beginning
|
9,453,367
|
9,292,783
|
—
|
|||||||
Cash
and cash equivalents, end
|
$
|
6,760,832
|
$
|
7,011,021
|
$
|
6,760,832
|
||||
SUPPLEMENTAL
SCHEDULE OF CASH FLOW INFORMATION:
|
||||||||||
Interest
paid
|
$
|
614
|
$
|
1,637
|
$
|
66,770
|
||||
Taxes
paid
|
$
|
4,625
|
$
|
—
|
$
|
4,725
|
||||
From
|
||||||||||||||||
Six
|
Six
|
Three
|
Three
|
Inception
|
||||||||||||
Months
Ended
|
Months
Ended
|
Months
Ended
|
Months
Ended
|
Through
|
||||||||||||
November
30,
|
November
30,
|
November
30,
|
November
30,
|
November
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
2005
|
||||||||||||
Net
loss, as reported
|
$
|
(2,745,970
|
)
|
$
|
(2,470,043
|
)
|
$
|
(1,589,385
|
)
|
$
|
(1,466,056
|
)
|
$
|
(15,053,173
|
)
|
|
Add: stock-based
employee Compensation expense included in reported Net
loss
|
293,511
|
151,515
|
199,048
|
92,919
|
1,176,533
|
|||||||||||
Deduct: Stock-based
employee Compensation expense determined under fair-value method
for
all
|
||||||||||||||||
Awards
|
(818,866
|
)
|
(548,485
|
)
|
(562,376
|
)
|
(388,311
|
)
|
(4,108,516
|
)
|
||||||
Pro
forma net loss
|
$
|
(3,271,325
|
)
|
$
|
(2,867,013
|
)
|
$
|
(1,952,713
|
)
|
$
|
(1,761,447
|
)
|
(17,985,156
|
)
|
||
Loss
per share, as reported basic and
diluted
|
$
|
(.14
|
)
|
$
|
(.15
|
)
|
$
|
(.08
|
)
|
$
|
(.09
|
)
|
$
|
(1.13
|
)
|
|
Pro
forma loss per share basic and Diluted
|
$
|
(.17
|
)
|
$
|
(.17
|
)
|
$
|
(.11
|
)
|
$
|
(.11
|
)
|
$
|
(1.36
|
)
|
Six
Months
Ended
|
Six
Months
Ended
|
Three
Months
Ended
|
Three
Months
Ended
|
From
Inception
Through
|
||||||||||||
November
30,
2005
|
November
30,
2004
|
November
30,
2005
|
November
30,
2004
|
November
30,
2005
|
||||||||||||
Dividends
per year
|
0
|
0
|
0
|
0
|
0
|
|||||||||||
Volatility
percentage
|
107
|
%
|
103
|
%
|
103
|
%
|
103
|
%
|
90%-131
|
%
|
||||||
Risk
free interest rate
|
3.85
|
%
|
2.57
|
%
|
2.25
|
%
|
2.57
|
%
|
2.07%-5.11
|
%
|
||||||
Expected
life (years)
|
4
|
4
|
4
|
4
|
3-5
|
·
|
Employee
Agreements-Officers.
To attract and retain qualified management personnel, the Company
has
entered into employment agreements with four executive officers:
Steven H.
Kane, President and Chief Executive Officer, Victor S. Sloan, MD,
Senior
Vice President and Chief Medical Officer, Hector W. Alila, DVM, Ph.D.,
Senior Vice President of Drug Development, and Marc L. Rose, Vice
President of Finance, Chief Financial Officer, Treasurer and Corporate
Secretary.
|
·
|
Directors
Agreements.
To attract and retain qualified candidates to serve on the Board
of
Directors, the Company has entered into agreements with G. Kirk Raab,
Chairman of the Board, Carleton A. Holstrom, Chairman of the Audit
Committee, and Eugene A. Bauer, MD and Peter G. Tombros, under which
Messrs. Raab, Holstrom, Dr. Bauer and Mr. Tombros receive aggregate
annual
cash payments aggregating $150,000, $20,000, $20,000 and $20,000,
respectively, as directors’ fees.
|
·
|
Operating
Lease - Office Space.
The Company has entered into a three year operating lease in New
Hope, PA
for 3,795 square feet of office and laboratory space. The lease commenced
on January 9, 2004 and was originally to expire on February 28, 2007.
On
November 18, 2005, the company modified the existing lease which
added an
additional 2,147 square feet and extended the lease term to January
31,
2008.
|
·
|
Operating
Lease - Copier.
The Company has entered into a sixty-three month operating lease
with
Ricoh Customer Finance Corporation for a multi-function copier. The
lease
commenced on December 16, 2004 and will expire on March 16, 2010.
|
·
|
Capital
Lease - Lab Equipment. The
Company has entered into a thirty-six month capital lease with Waters
Corporation for an HPLC protein separator. The lease commenced on
April
13, 2003 and will expire May 1,
2006.
|
Payments
due by period
|
|||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
Employment
Agreements-Officers
|
1,090,369
|
1,090,369
|
0
|
0
|
0
|
Directors
Agreements
|
210,000
|
210,000
|
0
|
0
|
0
|
Operating
Lease - Office Space
|
349,051
|
9,076
|
339,975
|
0
|
0
|
Operating
Lease - Copier
|
12,946
|
249
|
8,963
|
3,735
|
0
|
Capital
Lease - Lab Equipment
|
9,425
|
9,425
|
0
|
0
|
0
|
Total
|
1,671,792
|
1,319,119
|
348,938
|
3,735
|
0
|
Nature
of Expense
|
Amount
|
|||
SEC
registration fee
|
$
|
1,085
|
||
Accounting
fees and expenses
|
$
|
8,000
|
||
Legal
fees and expenses
|
$
|
25,000
|
||
Printing
and related expenses
|
$
|
1,000
|
||
Total
|
$
|
35,085
|
Exhibit
No.
|
Description
|
|
2.1
|
Stock
Purchase Agreement among the Company, Don Hanosh and Enerdyne Corporation
(Incorporated by reference, to Exhibit 2.1 to the Company’s 10-SB filing
on December 6, 1999)
|
|
2.2
|
Merger
Agreement and Plan of Re-organization between the Company and Enerdyne
Corporation (Incorporated by reference, to Exhibit 2.2 to the Company’s
10-SB filing on December 6, 1999)
|
|
2.3
|
Plan
of Merger and Agreement between Protalex, Inc., a New Mexico corporation
and Protalex, Inc. a Delaware Corporation (Incorporated by reference,
to
Exhibit 2.1 to the Company’s 8K filing on December 6,
2004)
|
|
3.1
|
Certificate
of Incorporation of the Company (Incorporated by reference, to
Exhibit 3.1
to the Company’s 8-K filing on December 6, 2004)
|
|
3.2
|
Bylaws
of the Company (Incorporated by reference, to Exhibit 3.2 to the
Company’s
8-K filing on December 6, 2004)
|
|
3.3
|
State
of Delaware, Certificate of Amendment of Certificate of Incorporation
(Incorporated by reference, to Exhibit 3.3 to the Company 10-QSB
filed on
January 13, 2006)
|
|
4.1
|
Letter
Agreement with Pembroke Financial Ltd. dated July 9, 2001 (Incorporated
by
reference, to Exhibit 10.9 to the Company’s 10-KSB/A filed on September
24, 2003)
|
|
4.2
|
Securities
Purchase Agreement dated September 18, 2003 between the Company
and
certain of the Selling Stockholders (Incorporated by reference,
to Exhibit
4.2 to the Company’s SB-2 filed on October 20, 2003)
|
|
4.3
|
Investor
Rights Agreement dated September 18, 2003 between the Company and
certain
of the Selling Stockholders (Incorporated by reference, to Exhibit
4.3 to
the Company’s SB-2 filed on October 20, 2003)
|
|
4.4
|
Form
of Common Stock Purchase Warrant issued by the Company to the Selling
Stockholders (Incorporated by reference, to Exhibit 4.4 to Company’s SB-2
filed on October 20, 2003)
|
|
9.1
|
First
Amended and Restated Shareholders Agreement dated May 25, 2005,
between
the Company and various common stock holders (Incorporated by reference,
to Exhibit 9.1 to Company’s Pre-Effective Amendment No. 1 to Form SB-2
filed on July 13, 2005)
|
|
10.1
|
Employment
offer letter executed by Steven H. Kane (Incorporated by reference
to
Exhibit 10.1 to the Company’s 10-QSB filed on January 13, 2006).
|
|
10.2
|
Board
appointment executed by G. Kirk Raab (Incorporated by reference,
to
Exhibit 10.4 to the Company’s 10-KSB/A filed on September 24, 2003)
|
|
10.3
|
Form
of Option Agreement (Incorporated by reference, to Exhibit 10.6
to the
Company’s 10-KSB/A filed on September 24, 2003)
|
|
10.4
|
Equipment
Lease Agreement between the Company and Waters Technologies Corporation
(Incorporated by reference, to Exhibit 10.5 to the Company’s 10-KSB/A
filed on September 24, 2003)
|
|
10.5
|
Real
Estate Lease between the Company and Kleinfeld Commercial Brokerage,
LLC
(Incorporated by reference, to Exhibit 10.5 to the Company’s 10-KSB/A
filed on September 24, 2003)
|
|
10.6
|
Frame
Contract between the Company and Eurogentec S.A. (Incorporated
by
reference, to Exhibit 10.5 to the Company’s 10-KSB/A filed on September
24, 2003)
|
|
10.7
|
Project
Assignment 2 between the Company and Eurogentec S.A. (Incorporated
by
reference, to Exhibit 10.5 to the Company’s 10-KSB/A filed on September
24, 2003)
|
|
10.8
|
Assignment
of Intellectual Property from Alex LLC to the Company (Incorporated
by
reference, to Exhibit 10.8 to the Company’s 10-KSB/A filed on September
24, 2003)
|
|
10.9
|
Assignment
of Intellectual Property from Dr. Paul Mann to the Company (Incorporated
by reference, to Exhibit 10.8 to the Company’s 10-KSB/A filed on September
24, 2003)
|
|
10.10
|
Project
Assignment 1 between the Company and Eurogentec, S.A. (Incorporated
by
reference, to Exhibit 10.5 to the Company’s 10-KSB/A filed September 24,
2003)
|
|
10.11
|
Stock
Redemption Agreement dated August 15, 2003, by and between the
Company,
Paul L. Mann, Leslie A. McCament-Mann, Gail Stewe and Elizabeth
Sarah Anne
Wiley (Incorporated by reference, to Exhibit 10.10 to the Company’s
10-KSB/A filed on September 24, 2003)
|
|
10.12
|
Letter
dated August 21, 2003 from Paul L. Mann to the Company (Incorporated
by
reference, to Exhibit 10.11 to the Company’s 10-KSB/A filed on September
24, 2003)
|
|
10.13
|
Promissory
Note dated August 15, 2003, issued by the Company in favor of John
E.
Doherty (Incorporated by reference, to Exhibit 10.7 to the Company’s
10-KSB/A filed on September 24, 2003)
|
|
10.14
|
Promissory
Note dated August 15, 2003, issued by the Company in favor of Steven
H.
Kane (Incorporated by reference, to Exhibit 10.7 to the Company’s 10-KSB/A
filed on September 24, 2003)
|
|
10.15
|
Continuing
and Unconditional Guaranty executed by John E. Doherty (Incorporated
by
reference, to Exhibit 10.2 to the Company’s 10-SB filed on December 6,
1999)
|
|
10.16
|
Continuing
and Unconditional Guaranty executed by James K. Strattman (Incorporated
by
reference, to Exhibit 10.3 to the Company’s 10-SB filed on December 6,
1999)
|
|
10.17
|
Form
of Confidential Disclosure Agreement (Incorporated by reference,
to
Exhibit 10.5 to the Company’s 10-SB filed on December 6, 1999)
|
|
10.18
|
Technology
License Agreement dated November 17, 1999, between the Company
and Alex,
LLC (Incorporated by reference, to Exhibit 10.4 to the Company’s 10-SB
filed on December 6, 1999)
|
|
10.19
|
Offer
of Employment to Joseph Dervan dated January 20, 2003 (Incorporated
by
reference, to Exhibit 10.4 to the Company’s 10-KSB/A filed on September
24, 2003)
|
|
10.20
|
Modified
lease agreement with Union Square LP, dated November 18, 2005 (Incorporate
by reference to Exhibit 99.1 to the Form 8-K filed and filed with
the
Securities and Exchange Commission on November 22,
2005).
|
|
10.21
|
Employment
offer letter executed by Hector W. Alila (Incorporated by reference,
to
Exhibit 10.1 to the Company’s 10-QSB filed on January 14,
2005)
|
|
10.22
|
Employment
offer letter executed by Marc L. Rose (Incorporated by reference,
to
Exhibit 10.2 to the Company’s 10-QSB filed on January 14,
2005)
|
|
10.23
|
Employment
off letter executed by Victor S. Sloan (Incorporated by reference,
to
Exhibit 10.1 to the Company’s Form 10-QSB filed on October 14,
2005)
|
|
10.24
|
Clinical
Study Agreement executed October 19, 2005 between the Company and
PAREXEL
International LLC (Incorporated by reference to Exhibit 10.2 to
the
Company’s 10-QSB filed on January 13, 2006).
|
|
* |
Filed
herewith
|
PROTALEX,
INC.
a
Delaware
corporation
|
||
|
|
|
Date: January 27, 2006 | By: | /s/ STEVEN H. KANE |
|
||
Name:
Steven H. Kane
Title:
President and Chief Executive
Officer
|
/s/
G. Kirk Raab
|
Chairman
of the Board and Director
|
January
27, 2006
|
||
G. Kirk Raab | ||||
/s/
Steven H. Kane
|
President,
Chief Executive Officer and Director
|
January
27, 2006
|
||
Steven H. Kane | (Principal Executive Officer) | |||
/s/
Marc L. Rose
|
Vice
President of Finance, Chief Financial Officer,
|
January
27, 2006
|
||
Marc L. Rose | Treasurer and Corporate Secretary (Principal Financial and Accounting Officer) | |||
/s/
Dinesh Patel, Ph.D
|
Director
|
January
27, 2006
|
||
Dinesh Patel, Ph.D. | ||||
/s/
Peter G. Tombros
|
Director
|
January
27, 2006
|
||
Peter G. Tombros | ||||
/s/
Frank M. Dougherty
|
Director
|
January
27, 2006
|
||
Frank M. Dougherty | ||||
/s/
Thomas P. Stagnaro
|
Director
|
January
27, 2006
|
||
Thomas P. Stagnaro | ||||
/s/
Carleton A. Holstrom
|
Director
|
January
27, 2006
|
||
Carleton A. Holstrom | ||||
/s/
Eugene A. Bauer, M.D.
|
Director
|
January
27, 2006
|
||
Eugene A. Bauer, M.D. |