Delaware (State or other jurisdiction of incorporation or organization) | 36-3898269 (I.R.S. Employer Identification No.) |
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PART I | FINANCIAL INFORMATION | |
Item 1. | Unaudited Condensed Consolidated Balance Sheets | 3 |
Unaudited Condensed Consolidated Statements of Operations | 4 | |
Unaudited Condensed Consolidated Statement of Stockholders’ Equity (Deficiency) | 5 | |
Unaudited Condensed Consolidated Statements of Cash Flows | 6 | |
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 |
Item 3. | Controls and Procedures | 15 |
PART II | OTHER INFORMATION | |
Item 5. | Other Events | 16 |
Item 6. | Exhibits and Reports on Form 8-K | 16 |
Signatures | 17 |
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MANHATTAN PHARMACEUTICALS, INC. AND SUBSIDIARIES | |||||||
(A Development Stage Company) | |||||||
Condensed Consolidated Balance Sheets | |||||||
(Unaudited) | |||||||
September 30, | December 31, | ||||||
Assets | 2004 | 2003 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 7,408,879 | $ | 7,413,803 | |||
Marketable equity securities, available for sale, at market | — | 352,147 | |||||
Prepaid expenses | 22,690 | 24,981 | |||||
Total current assets | 7,431,569 | 7,790,931 | |||||
Property and equipment, net | 123,513 | 8,021 | |||||
Other assets | 70,506 | — | |||||
Total assets | $ | 7,625,588 | $ | 7,798,952 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,386,614 | $ | 548,595 | |||
Accrued expenses | 88,225 | 417,425 | |||||
Total liabilities | 1,474,839 | 966,020 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Series A convertible preferred stock, $.001 par value. | |||||||
Authorized 1,500,000 shares; 988,000 and 1,000,000 shares issued | |||||||
and outstanding at Septemer 30, 2004 and December 31, 2003, respectively | |||||||
(liquidation preference aggregating $9,684,320) | 966 | 1,000 | |||||
Common stock, $.001 par value. Authorized 150,000,000 shares; | |||||||
27,291,981 and 23,362,396 shares issued and outstanding | |||||||
at September 30, 2004 and December 31, 2003, respectively | 27,291 | 23,362 | |||||
Additional paid-in capital | 18,079,524 | 14,289,535 | |||||
Deficit accumulated during development stage | (12,119,314 | ) | (7,473,205 | ) | |||
Dividends payable in Series A preferred shares | 212,690 | — | |||||
Accumulated other comprehensive (loss) | — | (7,760 | ) | ||||
Unearned consulting costs | (50,408 | ) | — | ||||
Total stockholders’ equity | 6,150,749 | 6,832,932 | |||||
Total liabilities and stockholders' equity | $ | 7,625,588 | $ | 7,798,952 | |||
See accompanying notes to unaudited condensed consolidated financial statements. |
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MANHATTAN PHARMACEUTICALS, INC. AND SUBSIDIARIES | ||||||||||||||||
(A Development Stage Company) | ||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Cumulative | ||||||||||||||||
period from | ||||||||||||||||
August 6, 2001 | ||||||||||||||||
(inception) to | ||||||||||||||||
Three Months ended September 30, | Nine Months ended September 30, | September 30, | ||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | ||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Costs and expenses: | ||||||||||||||||
Research and development | 1,678,939 | 377,820 | 2,907,173 | 734,351 | 5,356,613 | |||||||||||
General and administrative | 562,752 | 412,730 | 1,443,745 | 1,255,446 | 3,579,406 | |||||||||||
Impairment of intangible assets | — | 1,248,230 | — | 1,248,230 | 1,248,230 | |||||||||||
Loss on disposition of intangible assets | — | 1,213,878 | — | 1,213,878 | 1,213,878 | |||||||||||
Total operating expenses | 2,241,691 | 3,252,658 | 4,350,918 | 4,451,905 | 11,398,127 | |||||||||||
Operating loss | (2,241,691 | ) | (3,252,658 | ) | (4,350,918 | ) | (4,451,905 | ) | (11,398,127 | ) | ||||||
Other (income) expense: | ||||||||||||||||
Interest and other income | (47,614 | ) | (564 | ) | (128,705 | ) | (4,704 | ) | (144,784 | ) | ||||||
Interest expense | — | 933 | — | 4,089 | 23,893 | |||||||||||
Realized gain on sale of | ||||||||||||||||
marketable equity securities | — | — | (71,182 | ) | — | (71,182 | ) | |||||||||
Total other (income) expense | (47,614 | ) | 369 | (199,887 | ) | (615 | ) | (192,073 | ) | |||||||
Net loss | (2,194,077 | ) | (3,253,027 | ) | (4,151,031 | ) | (4,451,290 | ) | (11,206,054 | ) | ||||||
Preferred stock dividends | ||||||||||||||||
(including imputed amounts) | (102,273 | ) | — | (495,078 | ) | — | (913,260 | ) | ||||||||
Net loss applicable to common shares | $ | (2,296,350 | ) | $ | (3,253,027 | ) | $ | (4,646,109 | ) | $ | (4,451,290 | ) | $ | (12,119,314 | ) | |
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.14 | ) | $ | (0.17 | ) | $ | (0.20 | ) | ||||
Weighted average shares of common stock outstanding: | ||||||||||||||||
Basic and diluted | 26,866,155 | 23,362,396 | 26,585,823 | 22,061,978 | ||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements. |
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Deficit | Dividends | Total | ||||||||||||||||||||||||||||||||
Series A | accumulated | payable in | Accumulated | stock– | ||||||||||||||||||||||||||||||
convertible | Additional | during | Series A | other | Unearned | holders' | ||||||||||||||||||||||||||||
preferred stock | Common stock | paid-in | Subscription | development | preferred | comprehensive | consulting | equity | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | capital | receivable | stage | shares | income/(loss) | costs | (deficiency) | ||||||||||||||||||||||||
Stock issued at $0.0004 per share for | ||||||||||||||||||||||||||||||||||
subscription receivable | — | $ | — | 10,167,741 | $ | 10,168 | $ | (6,168 | ) | $ | (4,000 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Net loss | — | — | — | — | — | — | (56,796 | ) | — | — | — | (56,796 | ) | |||||||||||||||||||||
Balance at December 31, 2001 | — | — | 10,167,741 | 10,168 | (6,168 | ) | (4,000 | ) | (56,796 | ) | — | — | — | (56,796 | ) | |||||||||||||||||||
Proceeds from subscription receivable | — | — | — | — | — | 4,000 | — | — | — | — | 4,000 | |||||||||||||||||||||||
Stock issued at $0.0004 per share for | ||||||||||||||||||||||||||||||||||
license rights | — | — | 2,541,935 | 2,542 | (1,542 | ) | — | — | — | — | — | 1,000 | ||||||||||||||||||||||
Stock options issued for consulting services | — | — | — | — | 60,589 | — | — | — | — | (60,589 | ) | — | ||||||||||||||||||||||
Amortization of unearned consulting services | — | — | — | — | — | — | — | — | — | 22,721 | 22,721 | |||||||||||||||||||||||
Sales of common stock at $0.63 per share | ||||||||||||||||||||||||||||||||||
through private placement, net of | ||||||||||||||||||||||||||||||||||
expenses | — | — | 3,043,332 | 3,043 | 1,701,275 | — | — | — | — | — | 1,704,318 | |||||||||||||||||||||||
Net loss | — | — | — | — | — | (1,037,320 | ) | — | — | — | (1,037,320 | ) | ||||||||||||||||||||||
Balance at December 31, 2002 | — | — | 15,753,008 | 15,753 | 1,754,154 | — | (1,094,116 | ) | — | — | (37,868 | ) | 637,923 | |||||||||||||||||||||
Common stock issued at $0.63 per share, net of expenses | — | — | 1,321,806 | 1,322 | 742,369 | — | — | — | — | — | 743,691 | |||||||||||||||||||||||
Effect of reverse acquisition | — | — | 6,287,582 | 6,287 | 2,329,954 | — | — | — | — | — | 2,336,241 | |||||||||||||||||||||||
Amortization of unearned consulting costs | — | — | — | — | — | — | — | — | — | 37,868 | 37,868 | |||||||||||||||||||||||
Unrealized loss on marketable equity securities | — | — | — | — | — | — | — | — | (7,760 | ) | — | (7,760 | ) | |||||||||||||||||||||
Payment for fractional shares for stock combination | — | — | — | — | (300 | ) | — | — | — | — | — | (300 | ) | |||||||||||||||||||||
Preferred stock issued, net of expenses | 1,000,000 | 1,000 | — | — | 9,045,176 | — | — | — | — | — | 9,046,176 | |||||||||||||||||||||||
Imputed preferred stock dividend | 418,182 | — | (418,182 | ) | — | — | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (5,960,907 | ) | — | — | — | (5,960,907 | ) | |||||||||||||||||||||
Balance at December 31, 2003 | 1,000,000 | 1,000 | 23,362,396 | 23,362 | 14,289,535 | — | (7,473,205 | ) | — | (7,760 | ) | — | 6,832,932 | |||||||||||||||||||||
Exercise of stock options | — | — | 27,600 | 27 | 30,073 | — | — | — | — | — | 30,100 | |||||||||||||||||||||||
Common stock issued through private placement at $1.10 per share, net of expenses | — | — | 3,368,637 | 3,369 | 3,358,349 | — | — | — | — | — | 3,361,718 | |||||||||||||||||||||||
Conversion of preferred stock to common stock | (58,669 | ) | (59 | ) | 533,348 | 533 | (474 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Preferred stock dividends paid by issuance of shares | 24,901 | 25 | — | — | 281,073 | — | — | (282,388 | ) | — | — | (1,290 | ) | |||||||||||||||||||||
Preferred stock dividends accrued | — | — | — | — | — | — | (495,078 | ) | 495,078 | — | — | — | ||||||||||||||||||||||
Warrants issued for consulting services | — | — | — | — | 120,968 | — | — | — | — | (120,968 | ) | — | ||||||||||||||||||||||
Amortization of unearned consulting costs | — | — | — | — | — | — | — | — | — | 70,560 | 70,560 | |||||||||||||||||||||||
Reversal of unrealized loss on marketable equity securities | — | — | — | — | — | — | — | — | 7,760 | — | 7,760 | |||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (4,151,031 | ) | — | — | — | (4,151,031 | ) | |||||||||||||||||||||
Balance at September 30, 2004 | 966,232 | $ | 966 | 27,291,981 | $ | 27,291 | $ | 18,079,524 | $ | — | $ | (12,119,314 | ) | $ | 212,690 | $ | — | $ | (50,408 | ) | $ | 6,150,749 |
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Cumulative | ||||||||||
period from | ||||||||||
August 6, 2001 | ||||||||||
(inception) to | ||||||||||
Nine months ended September 30, | September 30, | |||||||||
2004 | 2003 | 2004 | ||||||||
Cash flows from operating activities: | ||||||||||
Net loss | $ | (4,151,031 | ) | $ | (4,451,290 | ) | $ | (11,206,054 | ) | |
Adjustments to reconcile net loss to | ||||||||||
net cash used in operating activities: | ||||||||||
Common stock issued for license rights | — | — | 1,000 | |||||||
Amortization of unearned consulting costs | 70,560 | 37,868 | 131,149 | |||||||
Amortization of intangible assets | — | 145,162 | 145,162 | |||||||
Gain on sale of marketable equity securities | (71,182 | ) | — | (71,182 | ) | |||||
Depreciation | 15,806 | 4,233 | 22,022 | |||||||
Loss on impairment of intangible assets | — | 1,248,230 | 1,248,230 | |||||||
Loss on disposition of intangible assets | — | 1,213,878 | 1,213,878 | |||||||
Changes in operating assets and liabilities, net of acquisition: | ||||||||||
Decrease in prepaid expenses | 2,291 | 11,298 | 35,555 | |||||||
Increase in other assets | (70,506 | ) | — | (70,506 | ) | |||||
Increase in accounts payable | 838,019 | 271,889 | 1,062,879 | |||||||
Decrease in accrued expenses | (329,200 | ) | (121,225 | ) | (452,096 | ) | ||||
Decrease in due affiliate | — | (96,328 | ) | — | ||||||
Net cash used in operating activities | (3,695,243 | ) | (1,736,285 | ) | (7,939,963 | ) | ||||
Cash flows from investing activities: | ||||||||||
Purchase of property and equipment | (131,298 | ) | (6,554 | ) | (137,852 | ) | ||||
Cash paid in connection with acquisition | — | (32,808 | ) | (32,808 | ) | |||||
Proceeds from sale of marketable equity securities | 431,089 | — | 431,089 | |||||||
Proceeds from sale of license | — | 200,001 | 200,001 | |||||||
Net cash provided by investing activities | 299,791 | 160,639 | 460,430 | |||||||
Cash flows from financing activities: | ||||||||||
Proceeds from issuances of notes payable to stockholders | — | — | 233,500 | |||||||
Repayments of notes payable to stockholders | — | (136,000 | ) | (233,500 | ) | |||||
Proceeds from issuance of note payable to bank | — | — | 600,000 | |||||||
Repayment of note payable to bank | — | (600,000 | ) | (600,000 | ) | |||||
Proceeds from subscriptions receivable | — | — | 4,000 | |||||||
Payment for fractional shares for stock combination | (1,290 | ) | 300 | (990 | ) | |||||
Proceeds from sale of common stock, net | 3,361,718 | 692,337 | 5,809,126 | |||||||
Proceeds from sale of preferred stock, net | — | — | 9,046,176 | |||||||
Proceeds from exercise of stock options | 30,100 | — | 30,100 | |||||||
Net cash provided by (used in) financing activities | 3,390,528 | (43,363 | ) | 14,888,412 | ||||||
Net increase (decrease) in cash and cash equivalents | (4,924 | ) | (1,619,009 | ) | 7,408,879 | |||||
Cash and cash equivalents at beginning of period | 7,413,803 | 1,721,123 | — | |||||||
Cash and cash equivalents at end of period | $ | 7,408,879 | $ | 102,114 | $ | 7,408,879 | ||||
Supplemental disclosure of cash flow information: | ||||||||||
Interest paid | $ | — | $ | 502 | $ | 26,934 | ||||
Supplemental disclosure of noncash investing and financing activities: | ||||||||||
Issuance of common stock for acquisition | $ | — | $ | 2,336,242 | $ | 2,336,242 | ||||
Marketable equity securities received in connection with | ||||||||||
sale of license | — | 359,907 | 359,907 | |||||||
Stock options/warrants issued for consulting services | 120,968 | — | 181,557 | |||||||
Preferred stock dividends | 495,078 | — | 495,078 |
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MANHATTAN PHARMACEUTICALS, INC. and SUBSIDIARIES |
(1) | BASIS OF PRESENTATION |
(2) | LIQUIDITY |
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MANHATTAN PHARMACEUTICALS, INC. and SUBSIDIARIES |
(3) | REVERSE STOCK SPLIT |
(4) | COMPUTATION OF NET LOSS PER COMMON SHARE |
(5) | STOCK OPTIONS |
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MANHATTAN PHARMACEUTICALS, INC. and SUBSIDIARIES |
Three months ended September 30, | Nine months ended | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Net loss applicable to common shares, as reported | $ | (2,296,350 | ) | $ | (3,253,027 | ) | $ | (4,646,109 | ) | $ | (4,451,290 | ) | |
Deduct: Total stock-based employee compensation expense determined under fair value method | (432,923 | ) | (74,763 | ) | (997,211 | ) | (228,210 | ) | |||||
Net loss applicable to common shares, pro forma | $ | (2,729,273 | ) | $ | (3,327,790 | ) | $ | (5,643,320 | ) | $ | (4,679,500 | ) | |
Net loss per common share – basic | |||||||||||||
As reported | $ | (0.09 | ) | $ | (0.14 | ) | $ | (0.17 | ) | $ | (0.20 | ) | |
Pro forma | (0.10 | ) | (0.14 | ) | (0.21 | ) | (0.21 | ) |
(6) | PRIVATE PLACEMENT OF COMMON SHARES |
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MANHATTAN PHARMACEUTICALS, INC. and SUBSIDIARIES |
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Nominee | Votes For | Votes Withheld | |||||
Leonard Firestone, M.D. | 22,881,683 | 72,548 | |||||
Neil Herskowitz | 22,867,288 | 86,943 | |||||
Malcolm Hoenlein | 22,881,723 | 72,508 | |||||
Joshua Kazam | 22,670,178 | 284,053 | |||||
Timothy McInerney | 22,684,653 | 269,578 | |||||
Joan Pons Gimbert | 22,881,643 | 72,588 | |||||
Richard I. Steinhart | 22,867,288 | 86,943 | |||||
David M. Tanen | 22,883,554 | 70,677 | |||||
Michael Weiser, M.D. | 22,881,913 | 72,318 |
(a) | Exhibits |
Exhibit No. | Description |
31.1 | Certification of Chief Executive Officer |
31.2 | Certification of Chief Financial Officer |
32.1 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(b) | Reports on Form 8-K |
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MANHATTAN PHARMACEUTICALS, INC. | ||
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Date: November 15, 2004 | By: | /s/ Leonard Firestone |
Leonard Firestone | ||
President and Chief Executive Officer |
| | |
Date: November 15, 2004 | By: | /s/ Nicholas J. Rossettos |
Nicholas J. Rossettos | ||
Chief Financial Officer and Chief Operating Officer |
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Exhibit No. | Description |
31.1 | Certification of Chief Executive Officer |
31.2 | Certification of Chief Financial Officer |
32.1 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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