x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Nevada
|
20-1212923
|
(State
or other jurisdiction
of
incorporation or organization)
|
(IRS
Employer
Identification
No.)
|
Large
accelerated filer o
|
Accelerated
filer o
|
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
Page No.
|
||
PART
I - FINANCIAL INFORMATION
|
[1]
|
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
|
Consolidated
Balance Sheets
|
[1]
|
|
Consolidated
Statements of Operations
|
[2]
|
|
Consolidated
Statements of Cash Flows
|
[3]
|
|
Notes
to Consolidated Financial Statements
|
[6]
|
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
[13]
|
ITEM 4T.
|
CONTROLS
AND PROCEDURES
|
[19]
|
PART
II - OTHER INFORMATION
|
[20]
|
|
ITEM
1A. RISK FACTORS
|
[20]
|
|
ITEM
5.
|
OTHER
INFORMATION
|
[20]
|
ITEM
6.
|
EXHIBITS
|
[21]
|
SIGNATURES
|
[22]
|
June 30,
2010
(Unaudited)
|
December 31,
2009
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 771,016 | $ | 1,000,874 | ||||
Other
current assets
|
179,790 | 58,200 | ||||||
Total
current assets
|
950,806 | 1,059,074 | ||||||
Equipment
and furniture, net
|
15,508 | 1,470 | ||||||
Debt
issuance costs, net
|
6,893 | 27,383 | ||||||
Deferred
offering costs
|
63,850 | — | ||||||
$ | 1,037,057 | $ | 1,087,927 | |||||
Liabilities
and Shareholders’ Deficit
|
||||||||
Current
liabilities:
|
||||||||
Notes
payable, bank
|
1,300,025 | 1,300,000 | ||||||
Notes
payable
|
985,422 | 624,865 | ||||||
Notes
payable - related party
|
516,000 | — | ||||||
Accounts
payable
|
843,538 | 985,560 | ||||||
Accrued
license and development fees
|
— | 1,595,385 | ||||||
Accrued
expenses
|
1,049,204 | 269,230 | ||||||
Total
current liabilities
|
4,694,189 | 4,775,040 | ||||||
Commitments
and contingencies
|
||||||||
Long-term
note payable, bank
|
— | 100,025 | ||||||
Long-term
note payable
|
— | 300,000 | ||||||
Long-term
note payable - related party
|
— | 243,000 | ||||||
Total
liabilities
|
4,694,189 | 5,418,065 | ||||||
Shareholders’
deficit:
|
||||||||
Common
stock, $0.00001 par. Authorized 50,000,000 shares; issued and
outstanding 13,045,375 and 11,326,283 shares on June 30, 2010 and December
31, 2009, respectively
|
130 | 113 | ||||||
Additional
paid-in capital
|
27,190,587 | 23,549,626 | ||||||
Deficit
accumulated during development stage
|
(30,847,849 | ) | (27,879,877 | ) | ||||
Total
shareholders’ deficit
|
(3,657,132 | ) | (4,330,138 | ) | ||||
$ | 1,037,057 | $ | 1,087,927 |
Three Months Ended
June 30
|
Six Months Ended
June 30
|
Period from
August 17, 1999
(Inception) to
|
||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
June 30, 2010
|
||||||||||||||||
Operating
expenses:
|
||||||||||||||||||||
Research
and development
|
$ | 74,932 | $ | 108,881 | $ | 159,086 | $ | 208,881 | $ | 7,853,983 | ||||||||||
General
and administrative
|
454,227 | 286,110 | 939,377 | 711,627 | 12,481,625 | |||||||||||||||
Total
operating expenses
|
529,159 | 394,991 | 1,098,463 | 920,508 | 20,335,608 | |||||||||||||||
Operating
loss
|
(529,159 | ) | (394,991 | ) | (1,098,463 | ) | (920,508 | ) | (20,335,608 | ) | ||||||||||
Incentive
for early warrant exercise
|
— | — | — | — | (1,313,309 | ) | ||||||||||||||
Incentive
for early warrant exercise - related parties
|
— | — | — | — | (43,555 | ) | ||||||||||||||
Interest
income
|
740 | — | 2,035 | 21 | 20,488 | |||||||||||||||
Interest
expense
|
(513,659 | ) | (40,949 | ) | (581,887 | ) | (804,183 | ) | (5,305,842 | ) | ||||||||||
Interest
expense - related parties
|
(349,203 | ) | — | (369,231 | ) | (284,289 | ) | (2,028,454 | ) | |||||||||||
Debt
extinguishment expense
|
(5,000 | ) | (83,236 | ) | (887,092 | ) | (129,176 | ) | (1,385,373 | ) | ||||||||||
Debt
extinguishment expense - related parties
|
— | (74,683 | ) | (33,334 | ) | (195,091 | ) | (456,196 | ) | |||||||||||
Net
loss
|
$ | (1,396,281 | ) | $ | (593,859 | ) | $ | (2,967,972 | ) | $ | (2,333,226 | ) | $ | (30,847,849 | ) | |||||
Net
loss per common share:
|
||||||||||||||||||||
Basic
and diluted
|
$ | (0.11 | ) | $ | (0.06 | ) | $ | (0.24 | ) | $ | (0.26 | ) | $ | (13.18 | ) | |||||
Weighted
average number of shares outstanding:
|
||||||||||||||||||||
Basic
and diluted
|
12,909,867 | 9,574,042 | 12,267,166 | 8,827,218 | 2,341,325 |
Six Months Ended
June 30
|
Period from August 17,
1999 (Inception) to
|
|||||||||||
2010
|
2009
|
June 30, 2010
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (2,967,972 | ) | $ | (2,333,226 | ) | $ | (30,847,849 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Depreciation
and amortization
|
276 | 62 | 21,259 | |||||||||
Gain
on sale of furniture and equipment
|
— | — | (2,200 | ) | ||||||||
Stock-based
compensation
|
62,903 | 158,233 | 2,308,123 | |||||||||
Common
stock issued for services rendered
|
— | — | 222,046 | |||||||||
Common
stock issued to related parties for interest
|
— | — | 1,322 | |||||||||
Common
stock issued for debt guarantees
|
9,533 | — | 116,200 | |||||||||
Common
stock issued for debt issuance cost
|
— | — | 6,667 | |||||||||
Common
stock issued for debt extinguishment
|
33,333 | 33,333 | 66,666 | |||||||||
Units
issued for debt extinguishment
|
870,981 | — | 870,981 | |||||||||
Units
issued for interest expense
|
8,700 | — | 8,700 | |||||||||
Notes
payable issued for intangibles expensed as research and
development
|
— | — | 150,000 | |||||||||
Warrants
issued for services
|
— | — | 567,036 | |||||||||
Warrants
issued for debt guarantees
|
— | — | 355,197 | |||||||||
Warrants
issued for debt extinguishment
|
— | 607 | 360,007 | |||||||||
Warrants
issued for debt extinguishment-related parties
|
— | — | 26,828 | |||||||||
Warrants
issued for debt issuance cost
|
— | — | 12,834 | |||||||||
Warrants
issued for early warrant exercise incentive
|
— | — | 1,356,864 | |||||||||
Amortization
of note payable-original issue discount
|
— | — | 152,247 | |||||||||
Amortization
of note payable-related parties original issue discount
|
— | 2,720 | 142,964 | |||||||||
Amortization
of convertible debt-original issue discount
|
— | 507,902 | 1,146,587 | |||||||||
Amortization
of convertible debt-related parties original issue
discount
|
— | 444,328 | 1,194,132 | |||||||||
Amortization
of debt issuance costs
|
243,856 | 309,529 | 2,392,750 | |||||||||
Bargain
conversion option added to note payable-related parties for debt
extinguishment
|
— | — | 48,214 | |||||||||
Write-off
debt issuance cost for debt extinguishment
|
— | — | 42,797 | |||||||||
Write-off
of deferred offering cost
|
— | — | 59,696 | |||||||||
License
rights expensed as research and development, paid by issuance of common
stock to CS Medical Technologies, LLC
|
— | — | 475,000 | |||||||||
License
rights expensed as research and development, paid by issuance of common
stock to Profile, LLC
|
— | — | 1,713,600 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Other
current assets
|
(121,590 | ) | 4,814 | (122,473 | ) | |||||||
Accounts
payable
|
(205,595 | ) | (144,493 | ) | 672,230 | |||||||
Accrued
development expense
|
(30,000 | ) | — | 2,065,385 | ||||||||
Accrued
expenses
|
712,120 | (911,880 | ) | 1,563,557 | ||||||||
Net
cash used in operating activities
|
(1,383,455 | ) | (1,928,071 | ) | (12,852,633 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Purchases
of equipment and furniture
|
(14,314 | ) | (561 | ) | (36,767 | ) | ||||||
Deposit
into a restricted cash account
|
— | — | (44,214 | ) | ||||||||
Withdrawal
from a restricted cash account
|
— | — | 44,214 | |||||||||
Net
cash used in investing activities
|
(14,314 | ) | (561 | ) | (36,767 | ) |
Six Months Ended
June 30
|
Period from August
17, 1999 (Inception) to
|
|||||||||||
2010
|
2009
|
June 30, 2010
|
||||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
of note payable, bank
|
— | 100,000 | 600,000 | |||||||||
Payments
of note payable, bank
|
(100,000 | ) | (400,000 | ) | (1,000,000 | ) | ||||||
Proceeds
of notes payable
|
693,345 | — | 1,033,845 | |||||||||
Payments
of notes payable
|
(32,788 | ) | (87,864 | ) | (1,494,211 | ) | ||||||
Proceeds
of notes payable - related parties
|
273,000 | 67,638 | 926,738 | |||||||||
Payments
of notes payable - related parties
|
— | (34,000 | ) | (282,800 | ) | |||||||
Proceeds
from long-term notes payable and bank debt
|
— | — | 4,207,362 | |||||||||
Proceeds
from long-term notes payable, related parties
|
— | — | 1,363,500 | |||||||||
Payments
on long-term bank debt
|
— | — | (600,000 | ) | ||||||||
Proceeds
from warrants
|
— | — | 104,500 | |||||||||
Proceeds
from exercise of warrants
|
334,631 | — | 2,048,227 | |||||||||
Payments
for debt issuance costs
|
— | (600 | ) | (766,227 | ) | |||||||
Payment
for rescission of common stock
|
— | — | (100,000 | ) | ||||||||
Payments
for offering expenses
|
(277 | ) | (363,662 | ) | (514,100 | ) | ||||||
Cost
of reverse merger
|
— | — | (162,556 | ) | ||||||||
Net
proceeds from issuance of common stock
|
— | 2,613,600 | 8,296,138 | |||||||||
Net
cash provided by financing activities
|
1,167,911 | 1,895,112 | 13,660,416 | |||||||||
Net
increase (decrease) in cash
|
(229,858 | ) | (33,520 | ) | 771,016 | |||||||
Cash,
beginning of the period
|
1,000,874 | 48,114 | — | |||||||||
Cash,
end of the period
|
$ | 771,016 | $ | 14,594 | $ | 771,016 | ||||||
Supplemental
cash flow information:
|
||||||||||||
Cash
paid for interest
|
$ | 36,228 | $ | 71,883 | $ | 875,280 | ||||||
Non-cash
investing and financing activities:
|
||||||||||||
Deferred
offering costs included in accounts payable
|
63,573 | (200,508 | ) | 573,520 | ||||||||
Deferred
offering costs included in accrued expenses
|
— | (70,000 | ) | — | ||||||||
Debt
issuance costs included in accounts payable
|
— | — | 114,156 | |||||||||
Warrants
issued pursuant to notes payable
|
— | 3,327 | 467,191 | |||||||||
Common
stock issued pursuant to notes payable
|
223,336 | — | 223,336 | |||||||||
Warrants
issued for debt issuance costs
|
— | — | 298,021 | |||||||||
Prepaid
expenses financed by note payable
|
— | 81,345 | 246,871 | |||||||||
Convertible
debt issued in lieu of cash for accrued expenses
|
— | — | 31,413 | |||||||||
Common
stock issued in lieu of cash for accrued expenses
|
66,666 | 20,250 | 325,719 | |||||||||
Common
stock issued in lieu of cash for accrued development cost
|
1,565,385 | 500,000 | 2,065,385 | |||||||||
Common
stock issued for debt issuance cost
|
— | 72,734 | 301,230 |
Six Months Ended
June 30
|
Period from August
17, 1999 (Inception) to
|
|||||||||||
2010
|
2009
|
June 30, 2010
|
||||||||||
Warrants
issued in lieu of cash for accrued expenses
|
— | — | 1,250 | |||||||||
Conversion
of notes payable, related parties into convertible
debentures
|
— | — | 200,000 | |||||||||
Common
stock issued in lieu of cash for accounts payable
|
— | — | 122,291 | |||||||||
Common
stock issued in lieu of cash for notes payable-related
parties
|
— | — | 10,300 | |||||||||
Convertible
debt issued as debt issuance costs related to guarantee of long-term debt
(recorded as a beneficial conversion in additional paid-in capital)
applied to accounts payable
|
— | — | 733,334 | |||||||||
Issuance
of note payable for redemption of common stock
|
— | — | 650,000 | |||||||||
Conversion
of accounts payable to note payable
|
— | 12,293 | 253,906 | |||||||||
Conversion
of accrued expenses to note payable
|
— | 13,569 | 13,569 | |||||||||
Deposits
applied to note payable and accrued interest
|
— | — | 142,696 | |||||||||
Deposits
applied to accounts payable
|
— | — | 45,782 | |||||||||
Assumption
of liabilities in the Profile, LLC transaction
|
— | — | 25,000 | |||||||||
Proceeds
from sale of furniture and equipment
|
— | — | 2,200 | |||||||||
Deposits
applied to accrued expenses
|
— | — | 1,076 | |||||||||
Deferred
offering costs offset against gross proceeds of offering
|
— | 823,078 | 823,078 | |||||||||
Conversion
of convertible debt to units
|
— | 1,638,750 | 1,638,750 | |||||||||
Conversion
of convertible debt-related parties to units
|
— | 1,323,334 | 1,323,334 | |||||||||
Conversion
of convertible debt-related parties to common stock
|
— | 281,000 | 281,000 | |||||||||
Conversion
of notes payable to units
|
600,000 | — | 600,000 | |||||||||
Conversion
of accrued expenses to units
|
88,846 | 331,261 | 420,107 | |||||||||
Note
payable-related party tendered for warrant exercise
|
— | — | 26,000 | |||||||||
Warrant
exercise cost paid in lieu of cash for services
rendered-related party
|
— | — | 11,250 |
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Risk-free
Interest Rate
|
n/a | n/a | 1.82 | % | 2.98 | % | ||||||||||
Expected
Life of Options Granted
|
n/a | n/a |
4.02
years
|
3.85
years
|
||||||||||||
Expected
Volatility
|
n/a | n/a | 131.2 | % | 130.6 | % | ||||||||||
Expected
Dividend Yield
|
n/a | n/a | 0 | 0 |
June 30,
2010
|
December 31,
2009
|
|||||||
Debt
issuance costs, gross
|
$ | 103,650 | $ | 203,662 | ||||
Less
amortization
|
(96,757 | ) | (176,279 | ) | ||||
Debt
issuance costs, net
|
$ | 6,893 | $ | 27,383 |
June 30,
2010
|
December 31,
2009
|
|||||||
Accrued
interest expense payable in warrants
|
$ | 651,042 | $ | — | ||||
Accrued
loan guarantee consideration and interest payable in common
stock
|
219,424 | 20,014 | ||||||
Accrued
interest payable in cash
|
74,209 | 137,340 | ||||||
Accrued
audit fees
|
36,000 | 14,000 | ||||||
Accrued
directors’ fees
|
36,416 | — | ||||||
Uninvoiced
expenses
|
21,001 | 22,210 | ||||||
Accrued
debt extinguishment payable in common stock
|
11,112 | 66,666 | ||||||
Other
|
— | 9,000 | ||||||
$ | 1,049,204 | $ | 269,230 |
For
|
Withhold
|
Abstain
|
Broker
Non-Votes |
|||||||
Richard
C. Carlson
|
5,887,767
|
186,427
|
843
|
5,975,874
|
||||||
Michael
Chambers
|
6,074,194
|
0
|
843
|
5,975,974
|
||||||
James
L. Davis
|
5,911,767
|
162,427
|
843
|
5,975,974
|
||||||
David
F. Koenig
|
6,071,694
|
2,500
|
843
|
5,975,974
|
||||||
Robert
J. Rudelius
|
6,074,194
|
0
|
843
|
5,975,974
|
||||||
Scott
E. Smith
|
6,074,194
|
0
|
843
|
5,975,974
|
For
|
Against
|
Abstain
|
||||
12,050,911
|
0
|
500
|
Exhibit No.
|
Description
|
|
4.1
|
Form
of warrant to be issued as interest under form of unsecured promissory
note issued pursuant to June 11, 2010 $885,000 private placement
(incorporated by reference to Exhibit 4.1 to Amended Current Report on
Form 8-K/A filed June 25, 2010).
|
|
4.2
|
Form
of Second Amendment to Warrant Agreement between ProUroCare Medical Inc.
and Interwest Transfer Company, Inc. (incorporated by reference to Exhibit
4.24 to Registration Statement on Form S-4 filed July 2,
2010).
|
|
4.3
|
Specimen
2010 Replacement Warrant (incorporated by reference to Exhibit 4.25 to
Registration Statement on Form S-4 filed July 2, 2010).
|
|
10.1
|
Form
of Promissory Note issued pursuant to the Company’s private placement of
promissory notes on June 11, 2010 (incorporated by reference to Exhibit
10.1 to Current Report on Form 8-K/A filed June 25,
2010).
|
|
10.2
|
$900,000
Promissory Note dated June 28, 2010 issued in favor of Crown Bank
(incorporated by reference to Exhibit 10.1 to Current Report on
Form 8-K filed July 2, 2010).
|
|
10.3
|
$100,000
Promissory Note dated June 28, 2010 issued in favor of Crown Bank
(incorporated by reference to Exhibit 10.2 to Current Report on
Form 8-K filed July 2, 2010).
|
|
10.4
|
Form of
Loan Guarantor Compensation Letter Agreement dated June 28, 2010
(incorporated by reference to Exhibit 10.3 to Current Report on
Form 8-K filed July 2, 2010).
|
|
31.1 *
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
Sarbanes-Oxley Act of 2002.
|
|
31.2 *
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
Sarbanes-Oxley Act of 2002.
|
|
32.1 *
|
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of
2002
|
ProUroCare Medical Inc. | ||
Date: August
16, 2010
|
By:
|
/s/ Richard C.
Carlson
|
Name: Richard
C. Carlson
|
||
Title: Chief
Executive Officer
|
||
Date: August
16, 2010
|
By:
|
/s/ Richard
Thon
|
Name: Richard
Thon
|
||
Title: Chief
Financial
Officer
|
Exhibit No.
|
Description
|
|
4.1
|
Form
of warrant to be issued as interest under form of unsecured promissory
note issued pursuant to June 11, 2010 $885,000 private placement
(incorporated by reference to Exhibit 4.1 to Amended Current Report on
Form 8-K/A filed June 25, 2010).
|
|
4.2
|
Form
of Second Amendment to Warrant Agreement between ProUroCare Medical Inc.
and Interwest Transfer Company, Inc. (incorporated by reference to Exhibit
4.24 to Registration Statement on Form S-4 filed July 2,
2010).
|
|
4.3
|
Specimen
2010 Replacement Warrant (incorporated by reference to Exhibit 4.25 to
Registration Statement on Form S-4 filed July 2, 2010).
|
|
10.1
|
Form
of Promissory Note issued pursuant to the Company’s private placement of
promissory notes on June 11, 2010 (incorporated by reference to Exhibit
10.1 to Current Report on Form 8-K/A filed June 25,
2010).
|
|
10.2
|
$900,000
Promissory Note dated June 28, 2010 issued in favor of Crown Bank
(incorporated by reference to Exhibit 10.1 to Current Report on
Form 8-K filed July 2, 2010).
|
|
10.3
|
$100,000
Promissory Note dated June 28, 2010 issued in favor of Crown Bank
(incorporated by reference to Exhibit 10.2 to Current Report on
Form 8-K filed July 2, 2010).
|
|
10.4
|
Form of
Loan Guarantor Compensation Letter Agreement dated June 28, 2010
(incorporated by reference to Exhibit 10.3 to Current Report on
Form 8-K filed July 2, 2010).
|
|
31.1 *
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
Sarbanes-Oxley Act of 2002.
|
|
31.2 *
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
Sarbanes-Oxley Act of 2002.
|
|
32.1 *
|
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of
2002
|