Patrick Keran
Vice President, Legal
Vice President, Legal
SENT VIA EDGAR
March 13, 2009
United States Securities and Exchange Commission
Division of Corporate Finance
100 F Street, N.E.
Mail Stop 6010
Washington, D.C. 20549
Division of Corporate Finance
100 F Street, N.E.
Mail Stop 6010
Washington, D.C. 20549
Attention: | James Rosenberg, Senior Assistant Chief Accountant | |
Mary Mast, Senior Staff Accountant | ||
Vanessa Robertson, Staff Accountant |
Re: | ADVENTRX Pharmaceuticals, Inc. | |
File Number: 001-32157 | ||
Form 10-K for the Fiscal Year Ended December 31, 2007 | ||
Filed March 17, 2008 |
Dear Mr. Rosenberg, Ms. Mast and Ms. Robertson:
This letter further supplements our letter dated January 14, 2009 (the “January 2009 Response). The January 2009 Response was provided in connection with your comment letter of November 3, 2008 related to our Annual Report on Form 10-K for the year ended December 31, 2007 (the “2007 Form 10-K”). Following substantial completion of our financial statements as of and for the year ended December 31, 2008 and discussions with you regarding previous supplements to the January 2009 Response, we wish to submit to you the following information, which is attached hereto:
• | The current draft of the consolidated financial statements that we intend to submit in our upcoming Annual Report on Form 10-K for the year ended December 31, 2008 (the “Financial Statements”); and |
• | The current draft of the disclosure we anticipate disclosing under the caption “Change in Accounting Principle for Registration Payment Arrangements and Correction of Error” under Note 3 to the Financial Statements. |
As requested in the original comment letter, the Company acknowledges:
• | The Company is responsible for the adequacy and accuracy of the disclosure in the filing; |
• | Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
• | The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
If you have any further questions or wish to discuss the responses we have provided above, please call me at 858-552-0866 at your convenience.
Sincerely, | ||||
/s/ Patrick Keran | ||||
Patrick Keran | ||||
Vice President, Legal |
cc: | Mark Bagnall, interim principal financial and accounting officer Priscilla Lewis, interim Vice President, Finance |
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ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Balance Sheets
(A Development Stage Enterprise)
Consolidated Balance Sheets
December 31, | ||||||||
2008 | 2007 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,849,904 | $ | 14,780,739 | ||||
Short-term investments | — | 18,682,417 | ||||||
Interest and other receivables | 121,736 | 72,029 | ||||||
Prepaid expenses | 477,902 | 615,691 | ||||||
Total current assets | 10,449,542 | 34,150,876 | ||||||
Property and equipment, net | 199,052 | 332,444 | ||||||
Other assets | 60,664 | 58,305 | ||||||
Total assets | $ | 10,709,258 | $ | 34,541,625 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,721,376 | $ | 552,143 | ||||
Accrued liabilities | 2,077,188 | 2,317,910 | ||||||
Accrued compensation and payroll taxes | 915,459 | 622,762 | ||||||
Total current liabilities | 4,714,023 | 3,492,815 | ||||||
Long-term liabilities | — | 14,270 | ||||||
Total liabilities | 4,714,023 | 3,507,085 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value; 200,000,000 shares authorized; 90,252,572 shares issued and outstanding at December 31, 2008 and 2007 | 90,254 | 90,254 | ||||||
Additional paid-in capital | 131,751,439 | 130,140,549 | ||||||
Deficit accumulated during the development stage | (125,846,458 | ) | (99,198,965 | ) | ||||
Accumulated other comprehensive income | — | 2,702 | ||||||
Total stockholders’ equity | 5,995,235 | 31,034,540 | ||||||
Total liabilities and stockholders’ equity | $ | 10,709,258 | $ | 34,541,625 | ||||
See accompanying notes to consolidated financial statements.
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Operations
(A Development Stage Enterprise)
Consolidated Statements of Operations
Inception | ||||||||||||
(June 12, 1996) | ||||||||||||
Through | ||||||||||||
Years Ended December 31, | December 31, | |||||||||||
2008 | 2007 | 2008 | ||||||||||
(as restated) | ||||||||||||
Licensing revenue | $ | 500,000 | $ | 500,000 | $ | 1,000,000 | ||||||
Net sales | — | — | 174,830 | |||||||||
Grant revenue | — | — | 129,733 | |||||||||
Total net revenue | 500,000 | 500,000 | 1,304,563 | |||||||||
Cost of sales | — | — | 51,094 | |||||||||
Gross margin | 500,000 | 500,000 | 1,253,469 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 17,922,183 | 15,934,409 | 62,014,556 | |||||||||
Selling, general and administrative | 9,719,613 | 8,678,853 | 42,969,202 | |||||||||
Depreciation and amortization | 168,039 | 197,783 | 10,798,071 | |||||||||
In-process research and development | — | — | 10,422,130 | |||||||||
Impairment loss — write-off of goodwill | — | — | 5,702,130 | |||||||||
Equity in loss of investee | — | — | 178,936 | |||||||||
Total operating expenses | 27,809,835 | 24,811,045 | 132,085,025 | |||||||||
Loss from operations | (27,309,835 | ) | (24,311,045 | ) | (130,831,556 | ) | ||||||
Loss on fair value of warrants | — | — | (12,239,688 | ) | ||||||||
Interest income | 549,964 | 2,169,005 | 4,582,028 | |||||||||
Interest expense | — | — | (179,090 | ) | ||||||||
Other income | 112,378 | — | 112,378 | |||||||||
Loss before income taxes | (26,647,493 | ) | (22,142,040 | ) | (138,555,928 | ) | ||||||
Provision for income taxes | — | — | — | |||||||||
Loss before cumulative effect of change in accounting principle | (26,647,493 | ) | (22,142,040 | ) | (138,555,928 | ) | ||||||
Cumulative effect of change in accounting principle | — | — | (25,821 | ) | ||||||||
Net loss | (26,647,493 | ) | (22,142,040 | ) | (138,581,749 | ) | ||||||
Preferred stock dividends | — | — | (621,240 | ) | ||||||||
Net loss applicable to common stock | $ | (26,647,493 | ) | $ | (22,142,040 | ) | $ | (139,202,989 | ) | |||
Loss per common share — basic and diluted | $ | (0.30 | ) | $ | (0.25 | ) | ||||||
Weighted average shares outstanding — basic and diluted | 90,252,572 | 89,912,732 | ||||||||||
See accompanying notes to consolidated financial statements.
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | accumulated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative convertible | Cumulative convertible | Cumulative convertible | Additional | other | during the | Treasury | stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||
preferred stock, series A | preferred stock, series B | preferred stock, series C | Common stock | paid-in | comprehensive | development | stock, | equity | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | income (loss) | stage | at cost | (deficit) | loss | |||||||||||||||||||||||||||||||||||||||||||
Balances at June 12, 1996 (date of incorporation) | — | $ | — | — | $ | — | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
Sale of common stock without par value | — | — | — | — | — | — | 503 | 5 | 5 | — | — | — | 10 | |||||||||||||||||||||||||||||||||||||||||||
Change in par value of common stock | — | — | — | — | — | — | — | (4 | ) | 4 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock and net liabilities assumed in acquisition | — | — | — | — | — | — | 1,716,132 | 1,716 | 3,224 | — | (18,094 | ) | — | (13,154 | ) | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | — | — | — | 2,010,111 | 2,010 | 456 | — | (2,466 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (259,476 | ) | — | (259,476 | ) | $ | (259,476 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 1996 | — | — | — | — | — | — | 3,726,746 | 3,727 | 3,689 | — | (280,036 | ) | — | (272,620 | ) | $ | (259,476 | ) | ||||||||||||||||||||||||||||||||||||||
Sale of common stock, net of offering costs of $9,976 | — | — | — | — | — | — | 1,004,554 | 1,004 | 1,789,975 | — | — | — | 1,790,979 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in acquisition | — | — | — | — | — | — | 375,891 | 376 | 887,874 | — | — | — | 888,250 | |||||||||||||||||||||||||||||||||||||||||||
Minority interest deficiency at acquisition charged to the Company | — | — | — | — | — | — | — | — | — | — | (45,003 | ) | — | (45,003 | ) | |||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (1,979,400 | ) | — | (1,979,400 | ) | $ | (1,979,400 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 1997 | — | — | — | — | — | — | 5,107,191 | 5,107 | 2,681,538 | — | (2,304,439 | ) | — | 382,206 | $ | (1,979,400 | ) | |||||||||||||||||||||||||||||||||||||||
Rescission of acquisition | — | — | — | — | — | — | (375,891 | ) | (376 | ) | (887,874 | ) | — | 561,166 | — | (327,084 | ) | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock at conversion of notes payable | — | — | — | — | — | — | 450,264 | 451 | 363,549 | — | — | — | 364,000 | |||||||||||||||||||||||||||||||||||||||||||
Expense related to stock warrants issued | — | — | — | — | — | — | — | — | 260,000 | — | — | — | 260,000 | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (1,204,380 | ) | — | (1,204,380 | ) | $ | (1,204,380 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 1998 | — | — | — | — | — | — | 5,181,564 | 5,182 | 2,417,213 | — | (2,947,653 | ) | — | (525,258 | ) | $ | (1,204,380 | ) | ||||||||||||||||||||||||||||||||||||||
Sale of common stock | — | — | — | — | — | — | 678,412 | 678 | 134,322 | — | — | — | 135,000 | |||||||||||||||||||||||||||||||||||||||||||
Expense related to stock warrants issued | — | — | — | — | — | — | — | — | 212,000 | — | — | — | 212,000 | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (1,055,485 | ) | — | (1,055,485 | ) | $ | (1,055,485 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 1999 | — | — | — | — | — | — | 5,859,976 | 5,860 | 2,763,535 | — | (4,003,138 | ) | — | (1,233,743 | ) | $ | (1,055,485 | ) | ||||||||||||||||||||||||||||||||||||||
Sale of preferred stock, net of offering costs of $76,500 | 3,200 | 32 | — | — | — | — | — | — | 3,123,468 | — | — | — | 3,123,500 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock at conversion of notes and interest payable | — | — | — | — | — | — | 412,487 | 412 | 492,085 | — | — | — | 492,497 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock at conversion of notes payable | — | — | — | — | — | — | 70,354 | 70 | 83,930 | — | — | — | 84,000 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to settle obligations | — | — | — | — | — | — | 495,111 | 496 | 1,201,664 | — | — | — | 1,202,160 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for acquisition | — | — | — | — | — | — | 6,999,990 | 7,000 | 9,325,769 | — | — | — | 9,332,769 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants for acquisition | — | — | — | — | — | — | — | — | 4,767,664 | — | — | — | 4,767,664 | |||||||||||||||||||||||||||||||||||||||||||
Stock issued for acquisition costs | — | — | — | — | — | — | 150,000 | 150 | 487,350 | — | — | — | 487,500 | |||||||||||||||||||||||||||||||||||||||||||
Expense related to stock warrants issued | — | — | — | — | — | — | — | — | 140,000 | — | — | — | 140,000 | |||||||||||||||||||||||||||||||||||||||||||
Dividends payable on preferred stock | — | — | — | — | — | — | — | — | (85,000 | ) | — | — | — | (85,000 | ) | |||||||||||||||||||||||||||||||||||||||||
Cashless exercise of warrants | — | — | — | — | — | — | 599,066 | 599 | (599 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (3,701,084 | ) | — | (3,701,084 | ) | $ | (3,701,084 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2000 | 3,200 | 32 | — | — | — | — | 14,586,984 | 14,587 | 22,299,866 | — | (7,704,222 | ) | — | 14,610,263 | $ | (3,701,084 | ) | |||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | accumulated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative convertible | Cumulative convertible | Cumulative convertible | Additional | other | during the | Treasury | stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||
preferred stock, series A | preferred stock, series B | preferred stock, series C | Common stock | paid-in | comprehensive | development | stock, | equity | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | income (loss) | stage | at cost | (deficit) | loss | |||||||||||||||||||||||||||||||||||||||||||
Dividends payable on preferred stock | — | — | — | — | — | — | — | — | (256,000 | ) | — | — | — | (256,000 | ) | |||||||||||||||||||||||||||||||||||||||||
Repurchase of warrants | — | — | — | — | — | — | — | — | (55,279 | ) | — | — | — | (55,279 | ) | |||||||||||||||||||||||||||||||||||||||||
Sale of warrants | — | — | — | — | — | — | — | — | 47,741 | — | — | — | 47,741 | |||||||||||||||||||||||||||||||||||||||||||
Cashless exercise of warrants | — | — | — | — | — | — | 218,493 | 219 | (219 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to pay preferred dividends | — | — | — | — | — | — | 93,421 | 93 | 212,907 | — | — | — | 213,000 | |||||||||||||||||||||||||||||||||||||||||||
Detachable warrants issued with notes payable | — | — | — | — | — | — | — | — | 450,000 | — | — | — | 450,000 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants to pay operating expenses | — | — | — | — | — | — | — | — | 167,138 | — | — | — | 167,138 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to pay operating expenses | — | — | — | — | — | — | 106,293 | 106 | 387,165 | — | — | — | 387,271 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of preferred stock to pay operating expenses | 137 | 1 | — | — | — | — | — | — | 136,499 | — | — | — | 136,500 | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (16,339,120 | ) | — | (16,339,120 | ) | $ | (16,339,120 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2001 | 3,337 | 33 | — | — | — | — | 15,005,191 | 15,005 | 23,389,818 | — | (24,043,342 | ) | — | (638,486 | ) | $ | (16,339,120 | ) | ||||||||||||||||||||||||||||||||||||||
Dividends payable on preferred stock | — | — | — | — | — | — | — | — | (242,400 | ) | — | — | — | (242,400 | ) | |||||||||||||||||||||||||||||||||||||||||
Repurchase of warrants | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Sale of warrants | — | — | — | — | — | — | 240,000 | 240 | 117,613 | — | — | — | 117,853 | |||||||||||||||||||||||||||||||||||||||||||
Cashless exercise of warrants | — | — | — | — | — | — | 100,201 | 100 | (100 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | 344,573 | 345 | 168,477 | — | — | — | 168,822 | |||||||||||||||||||||||||||||||||||||||||||
Sale of preferred stock at $1.50 per share | — | — | 200,000 | 2,000 | — | — | — | — | 298,000 | — | — | — | 300,000 | |||||||||||||||||||||||||||||||||||||||||||
Sale of preferred stock at $10.00 per share | — | — | — | — | 70,109 | 701 | — | — | 700,392 | — | — | — | 701,093 | |||||||||||||||||||||||||||||||||||||||||||
Conversion of preferred stock into common stock | (3,000 | ) | (30 | ) | — | — | — | — | 1,800,000 | 1,800 | (1,770 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends forgiven | — | — | — | — | — | — | — | — | 335,440 | — | — | — | 335,440 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants to pay operating expenses | — | — | — | — | — | — | — | — | 163,109 | — | — | — | 163,109 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to pay operating expenses | — | — | — | — | — | — | 6,292 | 6 | 12,263 | — | — | — | 12,269 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of preferred stock to pay operating expenses | 136 | 1 | — | — | — | — | — | — | 6,000 | — | — | — | 6,001 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to employees | — | — | — | — | — | — | — | — | 329,296 | — | — | — | 329,296 | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (2,105,727 | ) | — | (2,105,727 | ) | $ | (2,105,727 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2002 | 473 | 4 | 200,000 | 2,000 | 70,109 | 701 | 17,496,257 | 17,496 | 25,276,138 | — | (26,149,069 | ) | — | (852,730 | ) | $ | (2,105,727 | ) | ||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | accumulated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative convertible | Cumulative convertible | Cumulative convertible | Additional | other | during the | Treasury | stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||
preferred stock, series A | preferred stock, series B | preferred stock, series C | Common stock | paid-in | comprehensive | development | stock, | equity | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | income (loss) | stage | at cost | (deficit) | loss | |||||||||||||||||||||||||||||||||||||||||||
Dividends payable on preferred stock | — | — | — | — | — | — | — | — | (37,840 | ) | — | — | — | (37,840 | ) | |||||||||||||||||||||||||||||||||||||||||
Conversion of Series C preferred stock into common stock | — | — | — | — | (70,109 | ) | (701 | ) | 14,021,860 | 14,022 | (13,321 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to pay interest on Bridge Notes | — | — | — | — | — | — | 165,830 | 165 | 53,326 | — | — | — | 53,491 | |||||||||||||||||||||||||||||||||||||||||||
Sale of common stock at $0.40 per share, net of issuance costs | — | — | — | — | — | — | 6,640,737 | 6,676 | 2,590,656 | — | — | — | 2,597,332 | |||||||||||||||||||||||||||||||||||||||||||
Sale of common stock at $1.00 per share, net of issuance costs | — | — | — | — | — | — | 3,701,733 | 3,668 | 3,989,181 | — | — | — | 3,992,849 | |||||||||||||||||||||||||||||||||||||||||||
Exchange of warrants | — | — | — | — | — | — | 235,291 | 235 | 49,486 | — | — | — | 49,721 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to pay operating expenses | — | — | — | — | — | — | 230,000 | 230 | 206,569 | — | — | — | 206,799 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants to pay operating expenses | — | — | — | — | — | — | — | — | 156,735 | — | — | — | 156,735 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to employees | — | — | — | — | — | — | — | — | 286,033 | — | — | — | 286,033 | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (2,332,077 | ) | — | (2,332,077 | ) | $ | (2,332,077 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2003 | 473 | 4 | 200,000 | 2,000 | — | — | 42,491,708 | 42,492 | 32,556,963 | — | (28,481,146 | ) | — | 4,120,313 | $ | (2,332,077 | ) | |||||||||||||||||||||||||||||||||||||||
Extinguishment of dividends payable on preferred stock | — | — | — | — | — | — | — | — | 72,800 | — | — | — | 72,800 | |||||||||||||||||||||||||||||||||||||||||||
Conversion of Series A cumulative preferred stock | (473 | ) | (4 | ) | — | — | — | — | 236,500 | 236 | (232 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Conversion of Series B preferred stock | — | — | (200,000 | ) | (2,000 | ) | — | — | 200,000 | 200 | 1,800 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Cashless exercise of warrants | — | — | — | — | — | — | 464,573 | 465 | (465 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | 23,832 | 23 | 27,330 | — | — | — | 27,353 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants in settlement of a claim | — | — | — | — | — | — | — | — | 86,375 | — | — | — | 86,375 | |||||||||||||||||||||||||||||||||||||||||||
Sale of common stock at $1.50 per share | — | — | — | — | — | — | 10,417,624 | 10,419 | 15,616,031 | — | — | — | 15,626,450 | |||||||||||||||||||||||||||||||||||||||||||
Payment of financing and offering costs | — | — | — | — | — | — | — | — | (1,366,774 | ) | — | — | — | (1,366,774 | ) | |||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to employees | — | — | — | — | — | — | — | — | 524,922 | — | — | — | 524,922 | |||||||||||||||||||||||||||||||||||||||||||
Acquisition of treasury stock | — | — | — | — | — | — | — | — | 34,747 | — | — | (34,747 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (6,701,048 | ) | — | (6,701,048 | ) | $ | (6,701,048 | ) | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2004 | — | — | — | — | — | — | 53,834,237 | 53,835 | 47,553,497 | — | (35,182,194 | ) | (34,747 | ) | 12,390,391 | $ | (6,701,048 | ) | ||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | accumulated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative convertible | Cumulative convertible | Cumulative convertible | Additional | other | during the | Treasury | stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||
preferred stock, series A | preferred stock, series B | preferred stock, series C | Common stock | paid-in | comprehensive | development | stock, | equity | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | income (loss) | stage | at cost | (deficit) | loss | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (24,782,646 | ) | — | (24,782,646 | ) | $ | (24,782,646 | ) | ||||||||||||||||||||||||||||||||||||||
Effect of change in fair value of available-for-sale securities | — | — | — | — | — | — | — | — | — | (1,722 | ) | — | — | (1,722 | ) | $ | (1,722 | ) | ||||||||||||||||||||||||||||||||||||||
Par value of shares issued in conjunction with mezzanine financing | — | — | — | — | — | — | 10,810,809 | 10,811 | (10,811 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Cashless exercise of warrants | — | — | — | — | — | — | 149,613 | 149 | (149 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | 2,258,703 | 2,259 | 3,071,179 | — | — | — | 3,073,438 | |||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | 185,000 | 185 | 144,815 | — | — | — | 145,000 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to employees | — | — | — | — | — | — | — | — | 994,874 | — | — | — | 994,874 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to non-employee | — | — | — | — | — | — | — | 93,549 | — | — | — | 93,549 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to vendor | — | — | — | — | — | — | 125,000 | 125 | 258,375 | — | — | — | 258,500 | |||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2005, as restated | — | — | — | — | — | — | 67,363,362 | 67,364 | 52,105,329 | (1,722 | ) | (59,964,840 | ) | (34,747 | ) | (7,828,616 | ) | $ | (24,784,368 | ) | ||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (29,331,773 | ) | — | (29,331,773 | ) | $ | (29,331,773 | ) | ||||||||||||||||||||||||||||||||||||||
Effect of change in fair value of available-for-sale securities | — | — | — | — | — | — | — | — | — | (368 | ) | — | — | (368 | ) | $ | (368 | ) | ||||||||||||||||||||||||||||||||||||||
Cashless exercise of warrants | — | — | — | — | — | — | 420,161 | 420 | (420 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants, net of financing costs | — | — | — | — | — | — | 5,103,746 | 5,104 | 7,686,486 | — | — | — | 7,691,590 | |||||||||||||||||||||||||||||||||||||||||||
Acquisition of SD Pharmaceuticals. Inc. | — | — | — | — | — | — | 2,099,990 | 2,100 | 10,161,852 | — | — | — | 10,163,952 | |||||||||||||||||||||||||||||||||||||||||||
Sale of common stock at $2.75 per share, net of offering costs | — | — | — | — | — | — | 14,545,000 | 14,545 | 37,055,666 | — | — | — | 37,070,211 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock for severance agreement | — | — | — | — | — | — | 60,145 | 60 | 196,614 | — | — | — | 196,674 | |||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | 92,500 | 93 | 125,658 | — | — | — | 125,751 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock to non-employees | — | — | — | — | — | — | 15,000 | 15 | 68,635 | — | — | — | 68,650 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to employees | — | — | — | — | — | — | — | — | 1,697,452 | — | — | — | 1,697,452 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to non-employee | — | — | — | — | — | — | — | — | 104,225 | — | — | — | 104,225 | |||||||||||||||||||||||||||||||||||||||||||
Cancellation of treasury stock shares | — | — | — | — | — | — | (23,165 | ) | (23 | ) | (34,724 | ) | — | — | 34,747 | — | ||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2006, as restated | — | — | — | — | — | — | 89,676,739 | 89,678 | 109,166,773 | (2,090 | ) | (89,296,613 | ) | — | 19,957,748 | $ | (29,332,141 | ) | ||||||||||||||||||||||||||||||||||||||
Cumulative-effect adjustment of adopting FASB Staff Position No. EITF 00-19-2 (see Note 3) | — | — | — | — | — | — | — | — | 18,116,751 | — | 12,239,688 | — | 30,356,439 | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (22,142,040 | ) | — | (22,142,040 | ) | $ | (22,142,040 | ) | ||||||||||||||||||||||||||||||||||||||
Effect of change in fair value of available-for-sale securities | — | — | — | — | — | — | — | — | — | 4,792 | — | — | 4,792 | $ | 4,792 | |||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | 575,833 | 576 | 441,040 | — | — | — | 441,616 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to employees | — | — | — | — | — | — | — | — | 2,414,077 | — | — | — | 2,414,077 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to non-employee | — | — | — | — | — | — | — | — | 1,908 | — | — | — | 1,908 | |||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2007 | — | — | — | — | — | — | 90,252,572 | 90,254 | 130,140,549 | 2,702 | (99,198,965 | ) | — | 31,034,540 | $ | (22,137,248 | ) | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (26,647,493 | ) | — | (26,647,493 | ) | $ | (26,647,493 | ) | ||||||||||||||||||||||||||||||||||||||
Effect of change in fair value of available-for-sale securities | — | — | — | — | — | — | — | — | — | (2,702 | ) | — | — | (2,702 | ) | $ | (2,702 | ) | ||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to employees | — | — | — | — | — | — | — | — | 1,605,908 | — | — | — | 1,605,908 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of stock options to non-employee | — | — | — | — | — | — | — | — | 4,982 | — | — | — | 4,982 | |||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2008 | — | $ | — | — | $ | — | — | $ | — | 90,252,572 | $ | 90,254 | 131,751,439 | $ | — | $ | (125,846,458 | ) | $ | — | $ | 5,995,235 | $ | (26,650,195 | ) | |||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
Inception | ||||||||||||
(June 12, 1996) | ||||||||||||
Through | ||||||||||||
Years Ended December 31, | December 31, | |||||||||||
2008 | 2007 | 2008 | ||||||||||
(as restated) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (26,647,493 | ) | $ | (22,142,040 | ) | $ | (138,581,749 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Depreciation and amortization | 168,039 | 197,783 | 10,348,071 | |||||||||
Gain on disposal of fixed assets | (3,598 | ) | — | (3,598 | ) | |||||||
Loss on fair value of warrants | — | — | 12,239,688 | |||||||||
Amortization of debt discount | — | — | 450,000 | |||||||||
Forgiveness of employee receivable | — | — | 30,036 | |||||||||
Impairment loss — write-off of goodwill | — | — | 5,702,130 | |||||||||
Expenses related to employee stock options and restricted stock issued | 1,605,907 | 2,414,077 | 7,852,562 | |||||||||
Expenses related to options issued to non-employees | 4,983 | 1,908 | 204,664 | |||||||||
Expenses paid by issuance of common stock | 78,333 | 1,341,372 | ||||||||||
Expenses paid by issuance of warrants | — | — | 573,357 | |||||||||
Expenses paid by issuance of preferred stock | — | — | 142,501 | |||||||||
Expenses related to stock warrants issued | — | — | 612,000 | |||||||||
Equity in loss of investee | — | — | 178,936 | |||||||||
In-process research and development | — | — | 10,422,130 | |||||||||
Write-off of license agreement | — | — | 152,866 | |||||||||
Write-off assets available-for-sale | — | — | 108,000 | |||||||||
Cumulative effect of change in accounting principle | — | — | 25,821 | |||||||||
Accretion of discount | (208,103 | ) | (1,041,750 | ) | (1,249,853 | ) | ||||||
Accretion of discount on investments in securities | — | — | (354,641 | ) | ||||||||
Changes in assets and liabilities, net of effect of acquisitions: | ||||||||||||
Increase in prepaid and other assets | 85,723 | (174,388 | ) | (907,671 | ) | |||||||
Increase in accounts payable and accrued liabilities | 1,221,208 | 1,044,291 | 4,890,730 | |||||||||
Decrease in long-term liabilities | (14,270 | ) | (21,404 | ) | — | |||||||
Net cash used in operating activities | (23,787,604 | ) | (19,643,190 | ) | (85,822,648 | ) | ||||||
Inception | ||||||||||||
(June 12, 1996) | ||||||||||||
Through | ||||||||||||
Years Ended December 31, | December 31, | |||||||||||
2008 | 2007 | 2008 | ||||||||||
(as restated) | ||||||||||||
Cash flows from investing activities: | ||||||||||||
Proceeds from sales and maturities of short-term investments | 33,243,602 | 59,240,000 | 112,788,378 | |||||||||
Purchases of short-term investments | (14,355,784 | ) | (51,104,469 | ) | (111,183,884 | ) | ||||||
Purchases of property and equipment | (64,955 | ) | (127,259 | ) | (1,030,354 | ) | ||||||
Proceeds from sale of property and equipment | 33,906 | — | 33,906 | |||||||||
Purchase of certificate of deposit | — | — | (1,016,330 | ) | ||||||||
Maturity of certificate of deposit | — | — | 1,016,330 | |||||||||
Cash paid for acquisitions, net of cash acquired | — | — | 32,395 | |||||||||
Payment on obligation under license agreement | — | — | (106,250 | ) | ||||||||
Issuance of note receivable — related party | — | — | (35,000 | ) | ||||||||
Payments on note receivable | — | — | 405,993 | |||||||||
Advance to investee | — | — | (90,475 | ) | ||||||||
Cash transferred in rescission of acquisition | — | — | (19,475 | ) | ||||||||
Cash received in rescission of acquisition | — | — | 230,000 | |||||||||
Net cash provided by investing activities | 18,856,769 | 8,008,272 | 1,025,234 | |||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from sale of common stock | — | — | 84,151,342 | |||||||||
Proceeds from exercise of stock options | — | 441,616 | 712,367 | |||||||||
Proceeds from sale or exercise of warrants | — | — | 11,382,894 | |||||||||
Proceeds from sale of preferred stock | — | — | 4,200,993 | |||||||||
Repurchase of warrants | — | — | (55,279 | ) | ||||||||
Payments for financing and offering costs | — | — | (6,483,809 | ) | ||||||||
Payments on notes payable and long-term debt | — | — | (605,909 | ) | ||||||||
Proceeds from issuance of notes payable and detachable warrants | — | — | 1,344,718 | |||||||||
Net cash provided by financing activities | — | 441,616 | 94,647,317 | |||||||||
Net decrease in cash and cash equivalents | (4,930,835 | ) | (11,193,302 | ) | ||||||||
Cash and cash equivalents at beginning of period | 14,780,739 | 25,974,041 | — | |||||||||
Cash and cash equivalents at end of period | $ | 9,849,904 | $ | 14,780,739 | $ | 9,849,904 | ||||||
See accompanying notes to consolidated financial statements.
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
December 31, 2008
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
December 31, 2008
(3) Summary of Significant Accounting Policies
[]
Change in Accounting Principle for Registration Payment Arrangements and Correction of Error
On January 1, 2007, we adopted the provisions of the Financial Accounting Standards Board (“FASB”) Staff Position on No. EITF 00-19-2, “Accounting for Registration Payment Arrangements"(“FSP EITF 00-19-2”). In December 2007, management determined that it was not probable that we would have any payment obligation under the July 2005 Registration Payment Arrangement; therefore, no accrual for contingent obligation was required under the provisions of FSP EITF 00-19-2. Accordingly, the warrant liability account was eliminated and the comparative condensed consolidated financial statements of the prior periods and as of December 31, 2006 were adjusted to apply the new method retrospectively.
The Company accounted for FSP EITF 00-19-2 appropriately by eliminating the warrant liability as of December 31, 2007, but upon further review in 2008, management determined that it was not correct to adjust the prior period comparative financial statements. Accordingly, the Company has made the appropriate adjustments to reinstate the warrant liability accounting as originally recorded.
The following consolidated financial statement line items were affected by the correction of the error:
Consolidated Statement of Operations
Inception (June 12, 1996) through December 31, 2008
Inception (June 12, 1996) through December 31, 2008
As previously | Effect of | |||||||||||
reported | As restated | change | ||||||||||
Gain (loss) on fair value of warrants | $ | — | $ | (12,239,688 | ) | $ | (12,239,688 | ) |
Consolidated Statement of Stockholders’ Equity (Deficit)
As previously | Effect of | |||||||||||
reported | As restated | change | ||||||||||
For the year ended December 31, 2005: | ||||||||||||
Net loss | $ | (13,202,986 | ) | $ | (24,782,646 | ) | $ | (11,579,660 | ) | |||
Additional paid-in-capital | 70,222,080 | 52,105,329 | (18,116,751 | ) | ||||||||
Deficit accumulated during development stage | (48,385,180 | ) | (59,964,840 | ) | (11,579,660 | ) | ||||||
Total stockholders’ equity | 21,867,795 | (7,828,616 | ) | (29,696,411 | ) | |||||||
For the year ended December 31, 2006: | ||||||||||||
Net loss | $ | (28,671,745 | ) | $ | (29,331,773 | ) | $ | (660,028 | ) | |||
Additional paid-in-capital | 127,283,254 | 109,166,773 | (18,116,751 | ) | ||||||||
Deficit accumulated during development stage | (77,056,925 | ) | (89,296,613 | ) | (12,239,688 | ) | ||||||
Total stockholders’ equity | 50,314,187 | 19,957,748 | (30,356,439 | ) | ||||||||
At December 31, 2007: | ||||||||||||
Cumulative-effect of adopting FASB Staff Position No. EITF 00-19-2: | ||||||||||||
Additional paid-in-capital | $ | — | $ | 18,116,751 | $ | 18,116,751 | ||||||
Deficit accumulated during development stage | — | 12,239,688 | 12,239,688 | |||||||||
Total stockholders’ equity | — | 30,356,439 | 30,356,439 |
Consolidated Statement of Cash Flows
Inception (June 12, 1996) through December 31,
Inception (June 12, 1996) through December 31,
As previously | As restated, | Effect of | ||||||||||
reported, 2007 | 2008 | change | ||||||||||
Loss on fair value of warrants | $ | — | $ | 12,239,688 | $ | 12,239,688 |