UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 |
FORM 10-QSB
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(Mark One) x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: November 30, 2006 |
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o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to ______ |
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Commission file number: 000-28385 |
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PROTALEX, INC. (Exact Name of Small Business Issuer as Specified in its Charter) |
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Delaware | 91-2003490 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
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145 Union Square Drive New Hope, PA (Address of Principal Executive Offices) | 18938 (Zip Code) |
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Issuer's telephone number: (215) 862-9720 |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 28,600,464 shares of common stock, as of January 12, 2007
Transitional Small Business Disclosure Format (check one): Yes o No x
PART I — FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
Protalex, Inc.
(A Company in the Development Stage)
BALANCE SHEETS
| | | | | |
| | | | | |
| | November 30, 2006 | | May 31, 2006 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 21,077,612 | | $ | 9,992,545 | |
Prepaid expenses | | | 147,823 | | | 221,187 | |
Total current assets | | | 21,225,435 | | | 10,213,732 | |
| | | | | | | |
PROPERTY & EQUIPMENT: | | | | | | | |
Lab equipment | | | 708,396 | | | 327,287 | |
Office and computer equipment | | | 157,787 | | | 157,787 | |
Furniture & fixtures | | | 40,701 | | | 40,701 | |
Leasehold improvements | | | 89,967 | | | 89,967 | |
| | | 996,851 | | | 615,742 | |
Less accumulated depreciation | | | (549,563 | ) | | (478,785 | ) |
| | | 447,288 | | | 136,957 | |
OTHER ASSETS: | | | | | | | |
Deposits | | | 7,990 | | | 7,990 | |
Intellectual technology property, net of | | | | | | | |
accumulated amortization of $7,203 and $6,693 as | | | | | | | |
of November 30, 2006 and May 31, 2006, respectively | | | 13,097 | | | 13,607 | |
Total other assets | | | 21,087 | | | 21,597 | |
| | $ | 21,693,810 | | $ | 10,372,286 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| | | | | | | |
CURRENT LIABILITIES: | | | | | | | |
Accounts payable | | $ | 598,849 | | $ | 744,732 | |
Payroll and related liabilities | | | 32,475 | | | 67,415 | |
Accrued expenses | | | 103,823 | | | 226,848 | |
Total current liabilities | | | 735,147 | | | 1,038,995 | |
| | | | | | | |
OTHER LIABILITIES | | | 4,357 | | | 3,696 | |
Total liabilities | | | 739,504 | | | 1,042,691 | |
| | | | | | | |
STOCKHOLDERS' EQUITY | | | | | | | |
Common stock, par value $0.00001, | | | | | | | |
100,000,000 shares authorized as of November 30, 2006 and May 31, 2006; 28,600,464 and 22,389,951 shares issued and outstanding as of November 30, 2006 and May 31, 2006, respectively | | | 286 | | | 224 | |
Additional paid in capital | | | 43,300,827 | | | 27,740,976 | |
Deficit accumulated during the development stage | | | (22,346,807 | ) | | (18,411,605 | ) |
Total stockholders’ equity | | | 20,954,306 | | | 9,329,595 | |
| | $ | 21,693,810 | | $ | 10,372,286 | |
| | | | | | | |
| | | | | | | |
The accompanying notes are an integral part of these financial statements.
Protalex, Inc.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
For the three and six month periods ended November 30, 2006 and 2005, and From
Inception (September 17, 1999) through November 30, 2006
(Unaudited)
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | 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, | |
| | 2006 | | 2005 | | 2006 | | 2005 | | 2006 | |
| | | | | | | | | | | |
Revenues | | $ | — | | $ | | | $ | | | $ | | | $ | | |
| | | | | | | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | | | | | | |
Research and development | | | (2,344,344 | ) | | (1,687,014 | ) | | (1,426,585 | ) | | (994,739 | ) | | (13,387,560 | ) |
Administrative | | | (1,809,295 | ) | | (965,384 | ) | | (1,111,369 | ) | | (569,268 | ) | | (7,798,958 | ) |
Professional fees | | | (303,277 | ) | | (226,294 | ) | | (181,985 | ) | | (91,133 | ) | | (2,018,524 | ) |
Depreciation and amortization | | | (2,752 | ) | | (2,105 | ) | | (1,376 | ) | | (1,050 | ) | | (153,154 | ) |
Operating Loss | | | (4,459,668 | ) | | (2,880,797 | ) | | (2,721,315 | ) | | (1,656,190 | ) | | (23,358,196 | ) |
| | | | | | | | | | | | | | | | |
Other income (expense) | | | | | | | | | | | | | | | | |
Interest income | | | 524,466 | | | 135,441 | | | 290,642 | | | 67,107 | | | 1,092,581 | |
Interest expense | | | | | | (614 | ) | | | | | (302 | ) | | (70,612 | ) |
Loss on disposal of equipment | | | | | | | | | | | | | | | (10,580 | ) |
Net Loss | | $ | (3,935,202 | ) | $ | (2,745,970 | ) | $ | (2,430,673 | ) | $ | (1,589,385 | ) | $ | (22,346,807 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of common | | | | | | | | | | | | | | | | |
shares outstanding | | | 27,568,568 | | | 19,435,516 | | | 28,600,464 | | | 19,437,836 | | | 14,523,174 | |
| | | | | | | | | | | | | | | | |
Loss per common share - basic and diluted | | $ | (.14 | ) | $ | (.14 | ) | $ | (.08 | ) | $ | (.08 | ) | $ | (1.54 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
Protalex, Inc.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
For the six month periods ended November 30, 2006 and 2005 and From
Inception (September 17, 1999) through November 30, 2006
(Unaudited)
| | Six | | Six | | From Inception | |
| | Months Ended | | Months Ended | | Through | |
| | November 30, | | November 30, | | November 30, | |
| | 2006 | | 2005 | | 2006 | |
| | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |
Net loss | | $ | (3,935,202 | ) | $ | (2,745,970 | ) | $ | (22,346,807 | ) |
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 | | | 71,288 | | | 35,502 | | | 579,287 | |
Non cash compensation expense | | | 1,026,618 | | | 293,511 | | | 3,092,143 | |
Non cash expenses | | | | | | | | | 16,644 | |
(Increase) decrease in: | | | | | | | | | | |
Prepaid expenses and deposits | | | 73,364 | | | (35,760 | ) | | (155,813 | ) |
Increase (decrease) in: | | | | | | | | | | |
Accounts payable and accrued expenses | | | (268,908 | ) | | (227,338 | ) | | 702,672 | |
Payroll and related liabilities | | | (34,940 | ) | | 11,935 | | | 32,475 | |
Other liabilities | | | 661 | | | 38 | | | 4,357 | |
Net cash and cash equivalents used in operating activities | | | (3,067,119 | ) | | (2,668,082 | ) | | (18,064,462 | ) |
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | |
Acquisition of intellectual technology license - fee portion | | | | | | | | | (20,000 | ) |
Acquisition of equipment | | | (381,109 | ) | | (13,674 | ) | | (883,371 | ) |
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 | | | (381,109 | ) | | (13,674 | ) | | (1,147,371 | ) |
| | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Proceeds from stock issuance | | | 14,533,295 | | | | | | 40,658,458 | |
Principal payment on equipment notes payable | | | | | | | | | | |
and capital leases | | | | | | (10,779 | ) | | (295,411 | ) |
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 provided by (used in) financing activities | | | 14,533,295 | | | (10,779 | ) | | 40,289,445 | |
| | | | | | | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 11,085,067 | | | (2,692,535 | ) | | 21,077,612 | |
| | | | | | | | | | |
Cash and cash equivalents, beginning | | | 9,992,545 | | | 9,453,367 | | | | |
Cash and cash equivalents, end | | $ | 21,077,612 | | $ | 6,760,832 | | $ | 21,077,612 | |
| | | | | | | | | | |
SUPPLEMENTAL SCHEDULE OF CASH | | | | | | | | | | |
FLOW INFORMATION: | | | | | | | | | | |
| | | | | | | | | | |
Interest paid | | $ | | | $ | 614 | | $ | 66,770 | |
| | | | | | | | | | |
Taxes paid | | $ | | | $ | | | $ | 100 | |
| | | | | | | | | | |
| | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
NOTE A - NOTES TO INTERIM FINANCIAL STATEMENTS
The interim financial data is unaudited; however in the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim period. The financial statements included herein have been prepared by Protalex, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading.
Information regarding the organization and business of the Company, accounting policies followed by the Company and other important information are contained in the notes to the Company's financial statements filed as part of the Company's Annual Report on Form 10-KSB for the fiscal year ended May 31, 2006. This quarterly report should be read in conjunction with such annual report.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues and expense, and the disclosure of contingent assets and liabilities. Estimated amounts could differ from actual results.
The Company follows Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (SFAS No. 128). SFAS No. 128 provides for the calculation of “Basic” and “Diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net loss to common shareholders by the weighted average number of common shares outstanding for the period. All potentially dilutive securities have been excluded from the computations since they would be antidilutive. However, these dilutive securities could potentially dilute earnings per share in the future. As of November 30, 2006 and 2005, the Company had potentially dilutive securities representing 10,666,256 shares and 8,058,521 shares, respectively.
3. | Stock Based Compensation |
Effective June 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standard No. 123 (revised), Accounting for Share-Based Payment (“SFAS No. 123R”) using the modified prospective method. This standard requires the Company to measure the cost of employee services received in exchange for equity share options granted based on the grant-date fair value of the options. The cost is recognized as compensation expense over the vesting period of the options. Under the modified prospective method, compensation cost included in operating expenses was $1,026,618 and $687,661 for the six and three months ended November 30, 2006, respectively and included both the compensation cost of stock options granted prior to but not yet vested as of June 1, 2006 and compensation cost for all options granted subsequent to May 31, 2006. In accordance with the modified prospective application transition method of SFAS No. 123R, prior period results are not restated. Incremental compensation cost for a modification of the terms or conditions of an award is measured by comparing the fair value of the modified award with the fair value of the award immediately before the modification. No tax benefit was recorded as of November 30, 2006 in connection with these compensation costs due to the uncertainty regarding ultimate realization of certain net operating loss carryforwards. The Company has also implemented the SEC interpretations in Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payments, in connection with the adoption of SFAS No. 123R.
Prior to the adoption of SFAS No. 123R, the Company accounted for stock options granted to employees using the intrinsic value method under the guidance of APB No. 25, and provided pro forma disclosure as required by SFAS No. 123. Stock options issued to non-employees were accounted for as required by SFAS No. 123. Options to non-employees were accounted for using the fair value method, which recognizes the value of the option as an expense over the related service period with a corresponding increase to additional paid-in capital.
As of November 30, 2006, there were 4,064,876 stock options outstanding. At November 30, 2006, the aggregate fair value of the remaining compensation cost of unvested options, as determined using a Black-Scholes option valuation model was approximately $1,817,464 (net of estimated forfeitures). During the six and three months ended November 30, 2006, the Company granted 240,000 and 225,000 stock options respectively, with a fair value of $501,653 and $477,096 (net of estimated forfeitures), and 3,749 and 0 options were forfeited, respectively.
The following table illustrates the effect on net loss and earnings per share for periods prior to the adoption of SFAS No. 123R if the Company applied the fair value recognition provision of SFAS No. 123 to stock-based employee compensation.
| | Six | | Three | | From Inception | |
| | Months Ended | | Months Ended | | Through | |
| | November 30, | | November 30, | | November 30, | |
| | 2005 | | 2005 | | 2005 | |
| | $(2,745,970) | | $(1,589,385) | | $(15,053,173) | |
Net loss, as reported | | | | | | | | | | |
| | | | | | | | | | |
Add: Stock-based compensation expense | | | | | | | | | | |
included in reported net loss | | | 293,511 | | | 199,048 | | | 1,176,533 | |
| | | | | | | | | | |
Deduct: Stock-based compensation expense | | | | | | | | | | |
determined under fair value method | | | | | | | | | | |
for all awards | | | (818,866 | ) | | (562,376 | ) | | (4,108,516 | ) |
Pro forma net loss | | $ | (3,271,325 | ) | $ | (1,952,713 | ) | | (17,985,156 | ) |
| | | | | | | | | | |
Loss per share, as reported - basic and diluted | | $ | (.14 | ) | | | | $ | (1.13 | ) |
| | | | | | | | | | |
Pro forma loss per share basic and diluted | | $ | (.17 | ) | $ | (.08 | ) | $ | (1.36 | ) |
| | | | | | | | | | |
The fair value of the options is estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions:
| | Six | | Six | | From Inception | |
| | Months Ended | | Months Ended | | Through | |
| | November 30, | | November 30, | | November 30, | |
| | 2006 | | 2005 | | 2006 | |
| | | | | | | |
Dividends per year | | | 0 | | | 0 | | | 0 | |
Volatility percentage | | | 96 | % | | 107 | % | | 90%-131 | % |
Risk free interest rate | | | 4.77 | % | | 3.85 | % | | 2.07%-5.11 | % |
Expected life (years) | | | 4 | | | 4 | | | 3-5 | |
Weighted Average Fair Value | | $ | 2.10 | | $ | 2.09 | | $ | 2.10 | |
A summary of the common stock option activity for employees, directors, officers and consultants as of November 30, 2006 is as follows:
| | Options | | Grant 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 | ) | | 0.36 | | | — | |
Granted, June 1, 2002 | | | 125,000 | | | 1.50 | | | — | |
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 | | | 847,185 | |
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 | | | 35,832 | |
Granted, July 1, 2003 | | | 40,000 | | | 1.50 | | | 30,000 | |
Granted, August 13, 2003 | | | 100,000 | | | 1.50 | | | 100,000 | |
Granted, September 19, 2003 | | | 584,333 | | | 1.50 | | | 483,424 | |
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 | | | 63,747 | |
Granted, January 22, 2004 | | | 50,000 | | | 2.75 | | | — | |
Forfeited, January 22, 2004 | | | (130,000 | ) | | 1.50 | | | — | |
Granted, March 1, 2004 | | | 150,000 | | | 2.17 | | | — | |
| | Options | | Grant Prices | | Exercisable | |
Granted, March 1, 2004 | | | 150,000 | | | 2.17 | | | — | |
Granted, July 22, 2004 | | | 15,000 | | | 2.60 | | | 8,749 | |
Granted, October 26, 2004 | | | 30,000 | | | 2.70 | | | 5,208 | |
Granted, October 26, 2004 | | | 100,000 | | | 2.30 | | | 100,000 | |
Granted, January 13, 2005 | | | 330,000 | | | 2.55 | | | 102,350 | |
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 | | | 19,791 | |
Forfeited, June 1, 2005 | | | (125,000 | ) | | 1.50 | | | — | |
Granted, July 29, 2005 | | | 51,429 | | | 2.80 | | | 16,665 | |
Granted, August 23, 2005 | | | 250,000 | | | 2.50 | | | 76,123 | |
Forfeited, October 22, 2005 | | | (10,000 | ) | | 2.70 | | | — | |
Forfeited, October 22, 2005 | | | (1,000 | ) | | 2.55 | | | — | |
Granted, October 25, 2005 | | | 200,714 | | | 2.65 | | | 156,963 | |
Granted, November 8, 2005 | | | 121,407 | | | 2.75 | | | 121,407 | |
Granted, January 11, 2006 | | | 133,000 | | | 2.85 | | | 27,703 | |
Forfeited, January 25, 2006 | | | (50,000 | ) | | 2.75 | | | — | |
Forfeited, January 25, 2006 | | | (25,000 | ) | | 2.55 | | | — | |
Forfeited, January 25, 2006 | | | (25,000 | ) | | 2.65 | | | — | |
Forfeited, February 28, 2006 | | | (150,000 | ) | | 2.17 | | | — | |
Forfeited, February 28, 2006 | | | (50,000 | ) | | 2.55 | | | — | |
Forfeited, March 13, 2006 | | | (10,000 | ) | | 2.70 | | | — | |
Forfeited, March 13, 2006 | | | (1,500 | ) | | 2.55 | | | — | |
Forfeited, March 13, 2006 | | | (1,429 | ) | | 2.80 | | | — | |
Granted, March 16, 2006 | | | 115,000 | | | 2.90 | | | 115,000 | |
Granted, April 20, 2006 | | | 27,000 | | | 4.50 | | | 3,937 | |
Forfeited, April 30, 2006 | | | (16,251 | ) | | 2.80 | | | — | |
Exercised, July 28, 2006 | | | (4,000 | ) | | 2.55 | | | — | |
Forfeited, July 29, 2006 | | | (3,749 | ) | | 2.80 | | | — | |
Granted, August 10, 2006 | | | 15,000 | | | 2.35 | | | — | |
Exercised, August 14, 2006 | | | (2,000 | ) | | 2.50 | | | — | |
Granted, October 24, 2006 | | | 225,000 | | | 2.87 | | | 176,041 | |
| | | 4,064,876 | | | | | | 3,323,805 | |
The following summarizes certain information regarding stock options at November 30, 2006:
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Total | | | | | | | | | | |
| | | | | | Total | | | Weighted | | | Exercisable | | | Exercisable | | | | |
| | | | | | Weighted | | | Average | | | Weighted | | | Weighted | | | | |
Exercise Price | | | | | | Average | | | Remaining Life | | | Average | | | Average | | | Remaining Life | |
Range | | | Number | | | Exercise Price | | | (years) | | | Number | | | Exercise Price | | | (years) | |
$0.90 - 1.35 | | | 100,000 | | $ | 1.25 | | | 5.0 | | | 100,000 | | $ | 1.25 | | | 5.0 | |
$1.36 - 1.80 | | | 2,061,255 | | $ | 1.50 | | | 6.3 | | | 1,930,121 | | $ | 1.50 | | | 6.3 | |
$1.81 - 2.25 | | | 165,000 | | $ | 2.13 | | | 7.2 | | | 138,747 | | $ | 2.13 | | | 7.2 | |
$2.26 - 2.70 | | | 987,214 | | $ | 2.53 | | | 8.4 | | | 594,184 | | $ | 2.53 | | | 8.4 | |
$2.71 - 3.15 | | | 724,407 | | $ | 2.84 | | | 9.2 | | | 556,816 | | $ | 2.83 | | | 9.2 | |
$3.16 - 4.50 | | | 27,000 | | $ | 4.50 | | | 9.4 | | | 3,937 | | $ | — | | | 9.4 | |
| | | 4,064,876 | | $ | 2.03 | | | | | | 3,323,805 | | $ | 1.93 | | | | |
NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued Statement No. 123 (revised) Share-Based Payment (“SFAS No. 123R”), which is a revision of Statement No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”). SFAS No. 123R supersedes APB No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123R is similar to the approach described in SFAS No. 123. However, SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.
Had the Company adopted SFAS No. 123R in prior periods, the impact of that standard would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share in the Notes to these financial statements. SFAS No. 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. For the periods ended November 30, 2006 and 2005, the Company did not pay any taxes; therefore, there was no effect on operating cash flows for such excess tax deductions.
In May 2005, the FASB issued FASB Statement No. 154, Accounting Changes and Error Corrections. (“SFAS No. 154”). This new standard replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and represents another step in the FASB’s goal to converge its standards with those issued by the International Accounting Standards Board (“IASB”). Among other changes, SFAS No. 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS No. 154 also provides that (1) a change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) correction of errors in previously issued financial statements should be termed a “restatement.” The new standard is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company believes that changes resulting from the adoption of SFAS No. 154 did not have a material effect on the financial statements taken as a whole.
In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN No. 48”), “Accounting for Uncertainty in Income Taxes,” that provides guidance on the accounting for uncertainty in income taxes recognized in financial statements. The interpretation will be adopted by the Company on June 1, 2007. The Company is currently evaluating the impact of adopting FIN No. 48; however, the Company does not expect the adoption of this provision to have a material effect on the Company’s financial position, results of operations or cash flows.
In September 2006, the FASB issued Statement No. 157, “Fair Value Measurements” (“SFAS No. 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect the adoption of SFAS No. 157 to have a material impact on the consolidated financial statements.
In September 2006, the SEC staff issued Staff Accounting Bulletin SAB, No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, or SAB No. 108. SAB No. 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of determining whether the current year’s financial statements are materially misstated. SAB No. 108 is effective for fiscal years ending after November 15, 2006. The Company will initially apply the provisions of SAB No. 108 in connection with the preparation of the annual financial statements for the year ending May 31, 2007. The Company has evaluated the potential impact that SAB No. 108 may have on the financial statements and do not believe the impact of the application of this guidance will be material.
NOTE D - RELATED PARTIES
For the six and three month periods ended November 30, 2006, the Company incurred $35,626 and $33,426 respectively, of expenses related to air travel to a partnership principally owned by the Chief Executive Officer of the Company. For the six and three month periods ended November 30, 2005, the Company incurred $20,717 and $17,240, respectively, of expenses related to air travel to a partnership principally owned by the Chief Executive Officer of the Company.
The Company has an agreement with its Chairman to pay $12,500 per month as a director fee. For the six and three month periods ended November 30, 2006, the Company incurred $75,000 and $37,500 respectively, for this director’s fee. For the six and three month periods ended November 30, 2005, the Company incurred $75,000 and $37,500 respectively, for this director’s fee.
The Company has an agreement with Carleton A. Holstrom, Eugene A. Bauer, MD and Peter G. Tombros to pay each $1,667 per month payable on a quarterly basis in arrears as a director fee. For the six and three month periods ended November 30, 2006, the Company incurred $30,000 and $15,000 respectively for these directors’ fees. For the six and three month periods ended November 30, 2005, the Company incurred $20,000 and $10,000, respectively, for these directors’ fees. As of November 30, 2006, $3,334, is included within Accrued Expenses and was subsequently paid on December 15, 2006.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Company’s unaudited financial statements and related notes included in Item 1, “Financial Statements,” of this Quarterly Report on Form 10-QSB, as well as the Company’s Annual Report on Form 10-KSB for the fiscal year ended May 31, 2006. This discussion, as well as the remainder of this Quarterly Report on Form 10-QSB, may contain forward-looking statements that are not historical facts and that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by the use of words such as “believe,” “expect,” “may,” “will,” “should,” “intend”, “anticipate” or the negative thereof or comparable terminology, and include discussions of matters such as anticipated financial performance, liquidity and capital resources, business prospects, technological developments, new and existing products, regulatory approvals and research and development activities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expected. Please see the Company’s Annual Report on Form 10-KSB for the fiscal year ended May 31, 2006 and other documents filed with the Securities and Exchange Commission for additional disclosures regarding potential risk factors that may cause the Company’s actual results and experience to differ materially from those contained in such forward-looking statements.
Plan of Operations
Favorable pre-clinical safety and efficacy studies for our lead compound, PRTX-100, laid the foundation for the Investigational New Drug Application or IND, for treating Rheumatoid Arthritis or RA. We submitted the IND application to the United Stated Food and Drug Administration or FDA on March 4, 2005 and on March 31, 2005 the FDA verbally disclosed to us that it had placed our IND on clinical hold, pending additional product characterization. On August 10, 2005, we formally replied to the FDA and on September 9, 2005, the FDA notified us that it had lifted the clinical hold on our IND and that our proposed study could proceed. We commenced with the Phase I clinical trial on December 5, 2005 and completed the Phase I clinical trial in March 2006. This Phase I trial was performed in healthy volunteers, and was designed primarily to assess the safety and tolerability of PRTX-100. During the quarter ended November 30, 2006, we received preliminary feedback from the FDA expressing concern related to data on certain subjects who participated in our Phase I clinical trial for PRTX-100. Based on this feedback, we are conducting additional analyses of data from the Phase I clinical trial. Consequently, the submission of an IND in Idiopathic Thrombocytopenic Purpura (ITP), initially planned for the fourth calendar quarter of this year, will be delayed.
We expect that clinical trial-related activities will occur during the next 12 months, including arranging for packaging and testing, designing clinical trial protocols and completing additional toxicology studies utilizing our manufactured drug. Additionally, we intend to conduct research and pre-clinical activities with PRTX-100 and other compounds in pemphigus, Graves’ disease and other autoimmune indications.
In the area of intellectual property and derivative drug development, our patent application was filed in April 2002. On July 26, 2006, we received an Office Action Summary (rejection) of our initial usage patent application from the United States Patent and Trademark Office or PTO. On August 16, 2006, we met with the patent examiner and his supervisor and as a result of that meeting, the rejection was retracted. In October 2006, the PTO notified the Company of the allowance of the patent. At this time, the patent is being processed by the PTO’s publication department. Additionally, patent applications relating to the manufacturing process of PRTX-100 and new compounds are currently in process.
Staffing plans for fiscal 2007 include hiring additional clinical and laboratory support personnel. Continued growth in staffing is anticipated in our business plan, and specialized staffing requirements in the areas of scientific and FDA regulatory affairs will call for competitive salaries to attract and retain qualified personnel.
In the third fiscal quarter of 2006, we completed the expansion of our current facility in New Hope, PA. Additional expansion of laboratory space is anticipated with our further growth.
Research and Development Expenses - Research and Development expenses were $2,344,344 and $1,426,585 for the six and three months ended November 30, 2006, compared with $1,687,014 and $994,739 for the six and three months ended November 30, 2005. The year-to date increase of $657,330 or 39% was primarily the result of increased clinical personnel, preparation for clinical trials, on-going product manufacturing and product qualification related costs. Also, included in Research & Development expenses was $168,029 for stock option compensation expense subsequent to the adoption of SFAS No. 123R.
Administrative Expenses - Administrative expenses were $1,809,295 and $1,111,369 for the six and three months ended November 30, 2006, compared with $965,384 and $569,268 for the six and three months ended November 30, 2005. The year-to-date increase of $843,911 or 87% was due to wage increases for existing personnel, travel and stock option compensation expense. Included in Administrative expenses was $858,588 for stock option compensation expense subsequent to the adoption of SFAS No. 123R, compared to $293,511 for the same six month period in fiscal 2006.
Professional Fees - Professional expenses were $303,277 and $181,985 for the six and three months ended November 30, 2006, compared with $226,294 and $91,133 for the six and three months ended November 30, 2005. The year-to-date increase of $76,983 or 34% was primarily due to our Sarbanes-Oxley project and investor relations related activity.
Liquidity and Capital Resources
Since 1999, we have incurred significant losses, and we expect to experience operating losses and negative cash flow for the foreseeable future. Our primary source of cash to meet short-term and long-term liquidity needs is the sale of shares of our common stock. We issue shares in private placements at a discount to the current market price, as such the resale of privately-placed shares are restricted under the Securities Act, which reduces their liquidity and, accordingly, their value as compared to freely-tradable shares on the open market.
On September 18, 2003, we raised $12,657,599 through the sale of 7,445,654 shares of our common stock at $1.70 per share, with warrants to purchase an additional 3,164,395 shares of our common stock, at an exercise price of $2.40 per share. The warrants expire on September 18, 2008. Net of transaction costs of $1,301,536, our proceeds were $11,356,063.
On May 25, 2005, we raised $5,057,885 through the sale of 2,593,788 shares of our common stock at $1.95 per share, with warrants to purchase an additional 920,121 shares of our common stock, at an exercise price of $2.25 per share. The warrants expire on May 25, 2010. As part of this transaction, the exercise price for the warrants from the September 2003 transaction were lowered from $2.40 per share to $2.25 per share. Net of transaction costs of $206,692, our proceeds were $4,851,193.
On December 30, 2005, we raised $5,839,059 through the sale of 2,595,132 shares of our common stock at $2.25 per share, with warrants to purchase an additional 648,784 shares of our common stock, at an exercise price of $2.99 per share. The warrants expire on December 30, 2010. Net of transaction costs of approximately $328,000, our proceeds were $5,510,967.
In the fourth fiscal quarter of 2006, existing investors exercised 351,598 warrants which resulted in $786,538 in cash proceeds. In the first fiscal quarter of 2007, existing investors and option holders exercised 133,500 warrants and 6,000 options which resulted in $315,575 in cash proceeds.
On July 7, 2006, we raised $15,177,534 through the sale of 6,071,013 shares of our common stock at $2.50 per share, with warrants to purchase an additional 1,517,753 shares of our common stock, at an exercise price of $3.85 per share. The warrants expire on July 7, 2011. Net of transaction costs of approximately $960,000, our proceeds were $14,217,658.
As of November 30, 2006, our net working capital was $20,490,288 and our total cash and cash equivalents were $21,077,612. We have no significant payments due on long-term obligations, and other demands or commitments to be incurred beyond the next 12 months. However, we anticipate entering into significant contracts to perform product manufacturing and clinical trials in fiscal year 2007 that will extend into future fiscal years. With the completion of the $15.2 million financing transaction in July 2006, we anticipate that we will need to raise additional capital in fiscal year 2009 to fund the ongoing FDA approval process. If we are unable to obtain approval of our future IND applications or otherwise advance in the FDA approval process, our ability to sustain our operations would be significantly jeopardized.
Off-Balance Sheet Arrangements
We have entered into the following off-balance sheet arrangements:
| · | Employee Agreements-Officers. To attract and retain qualified management personnel, we have 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, CPA, 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, we have 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. We have 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. We have entered into a sixty-three month operating lease for a multi-function copier. The lease commenced on December 16, 2004 and will expire on March 16, 2010. |
| | 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 | | | 196,123 | | | 168,060 | | | 28,063 | | | 0 | | | 0 | |
Operating Lease - Copier | | | 9,959 | | | 1,494 | | | 7,718 | | | 747 | | | 0 | |
Total | | $ | 1,417,402 | | $ | 1,380,874 | | $ | 35,781 | | $ | 747 | | $ | 0 | |
Critical Accounting Policies and Estimates
The Company's significant accounting policies are more fully described in Note B to the financial statements included in this Quarterly Report and in Note B to the financial statements included in the Company's Annual Report on Form 10-KSB for the fiscal year ended May 31, 2006 filed with the Securities and Exchange Commission. Certain accounting policies are particularly important to the portrayal of the Company's financial position and results of operations and require the application of significant judgment by management. As a result, these policies are subject to an inherent degree of uncertainty. In applying these policies, management makes estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and related disclosures. The Company bases its estimates and judgments on historical experience, terms of existing contracts, observance of trends in the industry, information received from outside sources, and on various other assumptions that management believes to be reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company has reviewed and determined that those policies remain the Company's critical accounting policies as of and for the six months ended November 30, 2006. The Company did not make any changes to those policies during the period.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed and implemented to ensure that all material information relating to the Company is made known to its Chief Executive Officer and Chief Financial Officer and such other persons who are responsible for preparing and filing periodic reports with the Securities and Exchange Commission. As of November 30, 2006, Steven H. Kane, President and Chief Executive Officer, and Marc L. Rose, Vice President of Finance, Chief Financial Officer, Treasurer and Corporate Secretary, representing all of the officers and directors of the Company, evaluated the Company’s disclosure controls and procedures and concluded that such controls were adequate as of that date.
Changes in Internal Control
There have been no changes in the Company’s internal controls over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses
PART II — OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On October 24, 2006, the Company held its 2006 annual meeting of stockholders. Based on the Inspector of Elections Report, dated October 24, 2006, the voting results for the matters submitted to a vote of the Company’s stockholders at such meeting were as follows:
1. | Eight board nominees for director were elected for terms expiring at the 2007 annual meeting of stockholders, as follows: |
Nominee | | Votes For | | Votes Withheld | |
G. Kirk Raab | | | 21,651,186 | | | 900 | |
Steven H. Kane | | | 21,594,657 | | | 57,429 | |
Carleton A. Holstrom | | | 21,647,186 | | | 4,900 | |
Eugene A. Bauer, MD | | | 21,647,186 | | | 4,900 | |
Thomas P. Stagnaro | | | 21,647,186 | | | 4,900 | |
Dinesh Patel, PhD | | | 21,647,186 | | | 900 | |
Frank M. Dougherty | | | 21,594,657 | | | 57,429 | |
Peter G. Tombros | | | 21,651,186 | | | 900 | |
2. | A proposal to ratify the appointment of Grant Thornton LLP as the Company’s independent public accountants for fiscal year ending May 31, 2007 was approved, as follows: |
Votes For | | Votes Against | | Abstentions |
21,647,486 | | 100 | | 4,500 |
3. | To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof: |
Votes For | | Votes Against | | Abstentions |
20,097,529 | | 169,186 | | 1,385,370 |
ITEM 6. EXHIBITS
2.1 | Stock Purchase Agreement among the Company, Don Hanosh and Enerdyne Corporation, dated December 6, 1999 | 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 September 25, 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 September 25, 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 September 25, 2003 |
4.5 | Warrant and Common Stock Purchase Agreement dated May 25, 2005 among the Company and the several purchasers thereunder | Incorporated by reference to Exhibit 4.5 to the Company’s Form SB-2 filed on June 16, 2005 |
4.6 | Registration Rights Agreement dated May 25, 2005 among the purchasers under the Warrant and Common Stock Purchase Agreement of even date therewith | Incorporated by reference to Exhibit 4.6 to the Company’s Form SB-2 filed on June 16, 2005 |
4.7 | Addendum 1 to Subscription Agreement and Questionnaire of vSpring SBIC, LP dated May 25, 2005 | Incorporated by reference to Exhibit 4.7 to the Company’s Annual Report on Form 10-KSB filed on August 26, 2005 |
4.8 | Warrant and Common Stock Purchase Agreement dated December 22, 2005 among the Company and the several purchasers thereunder | Incorporated by reference, to Exhibit 4.5 to the Company’s SB-2 filed on January 27, 2006 |
4.9 | Registration Rights Agreement dated December 22, 2005 among the purchasers under the Warrant and Common Stock Purchase Agreement of even date therewith | Incorporated by reference, to Exhibit 4.6 to the Company’s SB-2 filed on January 27, 2006 |
4.10 | Form of Warrant issued by the Company to the Selling Stockholders dated December 22, 2005 of even date therewith | Incorporated by reference, to Exhibit 4.7 to the Company’s SB-2 filed on January 27, 2006 |
4.11 | Warrant and Common Stock Purchase Agreement dated June 30, 2006 among the Company and the several purchasers thereunder | Incorporated by reference, to Exhibit 10.1 to the Company’s Current Report on Form 8K filed on July 10, 2006. |
4.12 | Registration Rights Agreement dated June 30, 2006 among the purchasers under the Warrant and Common Stock Purchase Agreement of even date therewith | Incorporated by reference, to Exhibit 10.2 to the Company’s Current Report on Form 8K filed on July 10, 2006 |
4.13 | Form of Warrant issued by the Company to the Selling Stockholders dated June 30, 2006 of even date therewith | Incorporated by reference, to Exhibit 10.3 to the Company’s Current Report on Form 8K filed on July 10, 2006 |
10.1 | Employment offer letter executed by Steven H. Kane | Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 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 Annual Report on Form 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 Annual Report on Form 10-KSB/A filed on September 24, 2003 |
10.4 | 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 |
10.5 | 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. |
10.6 | Assignment of Intellectual Property from Dr. Paul Mann to the Company | Incorporated by reference, to Exhibit 10.8 to the Company’s Annual Report on Form 10-KSB/A filed on September 24, 2003. |
10.7 | 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 Annual Report on Form 10-KSB/A filed on September 24, 2003. |
10.8 | Letter dated August 21, 2003 from Paul L. Mann to the Company | Incorporated by reference, to Exhibit 10.11 to the Company’s Annual Report on Form 10-KSB/A filed on September 24, 2003. |
10.9 | Technology License Agreement dated November 17, 1999, between the Company and Alex, LLC | Incorporated by reference, to Exhibit 10.4 to the Company’s Registration of Securities on Form 10-SB filed on December 6, 1999. |
10.10 | Letter Agreement, dated March 16, 2005, effective September 256, 2004, between the Company and Carleton A. Holstrom | Incorporated by reference, to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-QSB/A filed on April 14, 2005. |
10.11 | Description of the verbal agreement between the Company and Eugene A. Bauer, M.D. | Incorporated by reference to the Company’s Current Report on Form 8K filed on February 22, 2005. |
10.12 | Protalex, Inc. 2003 Stock Option Plan Amended and Restated as of July 29, 2005 | Incorporated by reference to Appendix B to the Company’s Proxy Statement filed with the SEC on September 23, 2005. |
10.13 | Description of the verbal agreement between the Company and Peter G. Tombros | Incorporated by reference to the Company’s Current Report on Form 8K filed on November 14, 2005. |
10.14 | Modified lease agreement with Union Square LP, dated November 18, 2005 | Incorporate by reference to Exhibit 99.1 to the Company’s Current Report Form 8-K filed with the Securities and Exchange Commission on November 22, 2005. |
10.15 | Employment offer letter executed by Marc L. Rose | Incorporated by reference, to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-QSB filed on January 14, 2005. |
10.16 | Employment off letter executed by Victor S. Sloan, M.D | Incorporated by reference, to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed on October 14, 2005. |
10.17 | 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 Quarterly Report on Form 10-QSB filed on January 13, 2006. |
10.18 | Service Contract with AAIPharma Inc., dated February 8, 2006 | Incorporated by reference to exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed on April 14, 2006. |
| Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act | |
| Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act | |
| Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
| Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: January 12, 2007
PROTALEX, INC.
Steven H. Kane, President and Chief Executive Officer
Date: January 12, 2007
Marc L. Rose, Vice President of Finance,
Chief Financial Officer, Treasurer and Corporate Secretary
EXHIBIT INDEX
2.1 | Stock Purchase Agreement among the Company, Don Hanosh and Enerdyne Corporation, dated December 6, 1999 | 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 September 25, 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 September 25, 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 September 25, 2003 |
4.5 | Warrant and Common Stock Purchase Agreement dated May 25, 2005 among the Company and the several purchasers thereunder | Incorporated by reference to Exhibit 4.5 to the Company’s Form SB-2 filed on June 16, 2005 |
4.6 | Registration Rights Agreement dated May 25, 2005 among the purchasers under the Warrant and Common Stock Purchase Agreement of even date therewith | Incorporated by reference to Exhibit 4.6 to the Company’s Form SB-2 filed on June 16, 2005 |
4.7 | Addendum 1 to Subscription Agreement and Questionnaire of vSpring SBIC, LP dated May 25, 2005 | Incorporated by reference to Exhibit 4.7 to the Company’s Annual Report on Form 10-KSB filed on August 26, 2005 |
4.8 | Warrant and Common Stock Purchase Agreement dated December 22, 2005 among the Company and the several purchasers thereunder | Incorporated by reference, to Exhibit 4.5 to the Company’s SB-2 filed on January 27, 2006 |
4.9 | Registration Rights Agreement dated December 22, 2005 among the purchasers under the Warrant and Common Stock Purchase Agreement of even date therewith | Incorporated by reference, to Exhibit 4.6 to the Company’s SB-2 filed on January 27, 2006 |
4.10 | Form of Warrant issued by the Company to the Selling Stockholders dated December 22, 2005 of even date therewith | Incorporated by reference, to Exhibit 4.7 to the Company’s SB-2 filed on January 27, 2006 |
4.11 | Warrant and Common Stock Purchase Agreement dated June 30, 2006 among the Company and the several purchasers thereunder | Incorporated by reference, to Exhibit 10.1 to the Company’s Current Report on Form 8K filed on July 10, 2006. |
4.12 | Registration Rights Agreement dated June 30, 2006 among the purchasers under the Warrant and Common Stock Purchase Agreement of even date therewith | Incorporated by reference, to Exhibit 10.2 to the Company’s Current Report on Form 8K filed on July 10, 2006 |
4.13 | Form of Warrant issued by the Company to the Selling Stockholders dated June 30, 2006 of even date therewith | Incorporated by reference, to Exhibit 10.3 to the Company’s Current Report on Form 8K filed on July 10, 2006 |
10.1 | Employment offer letter executed by Steven H. Kane | Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 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 Annual Report on Form 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 Annual Report on Form 10-KSB/A filed on September 24, 2003 |
10.4 | 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 |
10.5 | 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. |
10.6 | Assignment of Intellectual Property from Dr. Paul Mann to the Company | Incorporated by reference, to Exhibit 10.8 to the Company’s Annual Report on Form 10-KSB/A filed on September 24, 2003. |
10.7 | 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 Annual Report on Form 10-KSB/A filed on September 24, 2003. |
10.8 | Letter dated August 21, 2003 from Paul L. Mann to the Company | Incorporated by reference, to Exhibit 10.11 to the Company’s Annual Report on Form 10-KSB/A filed on September 24, 2003. |
10.9 | Technology License Agreement dated November 17, 1999, between the Company and Alex, LLC | Incorporated by reference, to Exhibit 10.4 to the Company’s Registration of Securities on Form 10-SB filed on December 6, 1999. |
10.10 | Letter Agreement, dated March 16, 2005, effective September 256, 2004, between the Company and Carleton A. Holstrom | Incorporated by reference, to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-QSB/A filed on April 14, 2005. |
10.11 | Description of the verbal agreement between the Company and Eugene A. Bauer, M.D. | Incorporated by reference to the Company’s Current Report on Form 8K filed on February 22, 2005. |
10.12 | Protalex, Inc. 2003 Stock Option Plan Amended and Restated as of July 29, 2005 | Incorporated by reference to Appendix B to the Company’s Proxy Statement filed with the SEC on September 23, 2005. |
10.13 | Description of the verbal agreement between the Company and Peter G. Tombros | Incorporated by reference to the Company’s Current Report on Form 8K filed on November 14, 2005. |
10.14 | Modified lease agreement with Union Square LP, dated November 18, 2005 | Incorporate by reference to Exhibit 99.1 to the Company’s Current Report Form 8-K filed with the Securities and Exchange Commission on November 22, 2005. |
10.15 | Employment offer letter executed by Marc L. Rose | Incorporated by reference, to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-QSB filed on January 14, 2005. |
10.16 | Employment off letter executed by Victor S. Sloan, M.D | Incorporated by reference, to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed on October 14, 2005. |
10.17 | 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 Quarterly Report on Form 10-QSB filed on January 13, 2006. |
10.18 | Service Contract with AAIPharma Inc., dated February 8, 2006 | Incorporated by reference to exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed on April 14, 2006. |
| Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act | |
| Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act | |
| Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
| Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |