UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 31, 2015
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______to______.
Commission File Number: 000-55330
LIGHTLAKE THERAPEUTICS INC.
(Exact name of registrant as specified in its charter)
| Nevada | 46-4744124 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 445 Park Avenue, 9th Floor, New York, NY | 10022 |
| (Address of principal executive offices) | (Zip Code) |
(212) 829-5546
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes xNo ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer ¨ (Do not check if a smaller reporting company) Smaller Reporting Company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock: As December 9, 2015, there were 1,886,118 shares, $0.001 par value per share, of common stock outstanding.
EXPLANATORY NOTE
Lightlake Therapeutics Inc. (the “Company”) is filing this Amendment No. 1 (the “Amendment”) to our Quarterly Report on Form 10-Q for the quarter ended October 31, 2015, filed on December 14, 2015 (the “Original 10-Q”) to reflect certain changes to Item 4 of Part I – Controls and Procedures. Item 4 clarifies the conclusion of the Company’s principal executive officer and principal financial officer regarding the effectiveness of the Company’s disclosure controls and procedures as required by Item 307 of Regulation S-K.
For convenience, Item 1 of Part I – Financial Statements is included in this Amendment. No changes have been made to the Financial Statements.
In accordance with applicable SEC rules and as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment includes new certifications from our Principal Executive Officer and Principal Financial Officer dated as of the date of filing of this Amendment.
No changes have been made to the Original 10-Q other than to Item 4 of Part I and to the four certification exhibits. This Amendment speaks as of the date of the Original 10-Q, does not reflect events that may have occurred after the date of the Original 10-Q and does not modify or update in any way the disclosures made in the Original 10-Q, except as required to reflect the revisions discussed above. This Amendment should be read in conjunction with the Original 10-Q and with our filings with the SEC filed subsequent to the filing of the Original 10-Q.
LIGHTLAKE THERAPEUTICS INC.
Amendment No. 1 to the
Quarterly Report on Form 10-Q/A for the
Period Ended October 31, 2015
TABLE OF CONTENTS
| PART I— FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements (Unaudited) | 4 |
| Item 4. | Control and Procedures | 14 |
| PART I— FINANCIAL INFORMATION | ||
| Item 6. | Exhibits | 14 |
| SIGNATURES | 15 | |
| 2 |
Lightlake Therapeutics Inc.
Index to Financial Statements
October 31, 2015 and 2014
| 3 |
As of October 31, 2015 and July 31, 2015
| October 31, | July 31, | |||||||
| 2015 | 2015 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 455,249 | $ | 434,217 | ||||
| Prepaid insurance | 17,708 | 33,143 | ||||||
| Total current assets | 472,957 | 467,360 | ||||||
| Other assets | ||||||||
| Patents and patent applications (net of accumulated amortization of $7,358 at October 31, 2015 and $7,015 at July 31, 2015) | 20,092 | 20,435 | ||||||
| Total assets | $ | 493,049 | $ | 487,795 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 107,102 | $ | 315,460 | ||||
| Accrued salaries and wages | 3,404,667 | 3,129,060 | ||||||
| Due to related parties | 281,191 | 130,000 | ||||||
| Total current liabilities | 3,792,960 | 3,574,520 | ||||||
| Deferred revenue | 5,918,000 | 5,300,000 | ||||||
| Total liabilities | 9,710,960 | 8,874,520 | ||||||
| Stockholders' deficit | ||||||||
| Common stock; par value $0.001; 1,000,000,000 shares authorized; | ||||||||
| 1,865,563 shares issued and outstanding at October 31, 2015 and 1,841,866 shares issued and outstanding at July 31, 2015 | 1,866 | 1,842 | ||||||
| Additional paid-in capital | 55,261,326 | 44,982,519 | ||||||
| Accumulated deficit | (64,481,103 | ) | (53,371,086 | ) | ||||
| Total stockholders' deficit | (9,217,911 | ) | (8,386,725 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 493,049 | $ | 487,795 | ||||
The accompanying notes are an integral part of these unaudited financial statements.
| 4 |
Statements of Operations (Unaudited)
For the three months ended October 31, 2015 and 2014
| For the | ||||||||
| Three Months Ended | ||||||||
| October 31, | ||||||||
| 2015 | 2014 | |||||||
| Revenue | $ | 120,000 | $ | - | ||||
| Operating expenses | ||||||||
| General and administrative | 10,791,380 | 708,013 | ||||||
| Research and development | 429,450 | 52,101 | ||||||
| Total operating expenses | 11,220,830 | 760,114 | ||||||
| Loss from operations | (11,100,830 | ) | (760,114 | ) | ||||
| Other expense | ||||||||
| Interest expense | (5,828 | ) | (8,212 | ) | ||||
| Loss on foreign exchange | (3,359 | ) | (7,011 | ) | ||||
| Total other expense | (9,187 | ) | (15,223 | ) | ||||
| Loss before provision for income taxes | (11,110,017 | ) | (775,337 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net loss | $ | (11,110,017 | ) | $ | (775,337 | ) | ||
| Loss per common share: | ||||||||
| Basic and diluted | $ | (6.00 | ) | $ | (0.43 | ) | ||
| Weighted average common shares outstanding | ||||||||
| Basic and diluted | 1,850,182 | 1,788,367 | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 5 |
Statements of Stockholders' Deficit (Unaudited)
For the three months ended October 31, 2015
| Additional | ||||||||||||||||||||
| Common Stock | Paid In | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance at July 31, 2015 | 1,841,866 | $ | 1,842 | $ | 44,982,519 | $ | (53,371,086 | ) | $ | (8,386,725 | ) | |||||||||
| Stock issued for services | 23,697 | 24 | 186,628 | - | 186,652 | |||||||||||||||
| Stock based compensation from issuance of stock options | - | - | 10,092,179 | - | 10,092,179 | |||||||||||||||
| Net loss | - | - | - | (11,110,017 | ) | (11,110,017 | ) | |||||||||||||
| Balance at October 31, 2015 | 1,865,563 | $ | 1,866 | $ | 55,261,326 | $ | (64,481,103 | ) | $ | (9,217,911 | ) | |||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 6 |
Statements of Cash Flows
For the three months ended October 31, 2015 and 2014
| For the | ||||||||
| Three Months Ended | ||||||||
| October 31, | October 31, | |||||||
| 2015 | 2014 | |||||||
| Cash flows provided by (used in) operating activities | ||||||||
| Net loss | $ | (11,110,017 | ) | $ | (775,337 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Amortization | 343 | 344 | ||||||
| Issuance of common stock for services | 186,652 | 44,723 | ||||||
| Stock based compensation from issuance of options | 10,092,179 | 173,999 | ||||||
| Changes in assets and liabilities: | ||||||||
| Increase in prepaid insurance | 15,435 | (510,463 | ) | |||||
| Decrease in accounts payable | (208,358 | ) | (128,854 | ) | ||||
| Increase in accrued salaries and wages | 275,607 | 221,580 | ||||||
| Net cash used in operating activities | (748,159 | ) | (974,008 | ) | ||||
| Cash flows provided by (used in) financing activities | ||||||||
| Payments from related parties notes payable | 151,191 | - | ||||||
| Investment received in exchange for royalty agreement | 618,000 | 1,866,874 | ||||||
| Net cash provided by financing activities | 769,191 | 1,866,874 | ||||||
| Net increase in cash and cash equivalents | 21,032 | 892,866 | ||||||
| Cash and cash equivalents, beginning of period | 434,217 | 254,770 | ||||||
| Cash and cash equivalents, end of period | $ | 455,249 | $ | 1,147,636 | ||||
| Supplemental disclosure | ||||||||
| Interest paid during the period | $ | - | $ | - | ||||
| Taxes paid during the period | $ | - | $ | - | ||||
The accompanying notes are an integral part of these unaudited financial statements.
| 7 |
Notes to Unaudited Financial Statements
For the three months ended October 31, 2015 and 2014
| 1. | Organization and Basis of Presentation |
Lightlake Therapeutics Inc. (“Lightlake”, “we”, “our”, the “Company”) is a specialty pharmaceutical company developing opioid antagonist treatments for substance use, addictive and eating disorders, including a treatment to reverse opioid overdoses.
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these condensed financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements for the year ended July 31, 2015 and notes thereto and other pertinent information contained in the Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).
The results of operations for the three months ended October 31, 2015 are not necessarily indicative of the results for the full fiscal year ending July 31, 2016.
Reverse Stock Split
In December 2014, the Company effected a one-for-one hundred reverse stock split of its common stock (the “1:100 Reverse Stock Split”). The number of authorized shares of common stock and preferred stock remained the same following the 1:100 Reverse Stock Split. Unless otherwise noted, impacted amounts included in the consolidated financial statements and notes thereto have been retroactively adjusted for the stock splits as if such stock splits occurred on the first day of the first period presented. Impacted amounts include but are not limited to shares of common stock issued and outstanding, stock options, shares reserved, exercise prices of warrants or options, and loss per share. There was no impact on preferred or common stock authorized resulting from the 1:100 Reverse Stock Split.
| 2. | Going Concern |
The accompanying financial statements have been prepared assuming Lightlake will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has incurred significant losses, a working capital deficit as of October 31, 2015 of $3,320,003 and is dependent on generating sufficient revenues and/or obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to generate sufficient revenues and/or obtain the necessary funding it could cease operations as a new enterprise. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans include seeking additional financing in the form of debt financing and/or equity financing from the sale of the Company’s common stock and/or in the form of financing from the sale of interests in the Company’s prospective products. Such funds may also be derived pursuant to licensing agreements. There is no guarantee that additional capital or debt financing will be available when and to the extent required, or that if available, it will be on terms acceptable to us. These financial statements do not include any adjustments that might result from this uncertainty.
| 3. | Summary of Significant Accounting Policies |
Basis of Presentation and Use of Estimates
Lightlake prepares its financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| 8 |
Recently Issued Accounting Pronouncements
Lightlake has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| 4. | Related Party Transactions |
At October 31, 2015, Lightlake had loans outstanding with its three directors (two of which are officers), in the total amount of $130,000 (July 31, 2015 - $130,000). In December 2014, the agreements were amended to extend the maturity date to April 30, 2016 and increase the annual interest rate to 14.5%, which includes a penalty rate of 8.5% due to non-payment of the required repayment amounts. The loans are unsecured.
At October 31, 2015, the Company had loans outstanding from each of its three executive officers, all of who are directors, totaling $151,191. The loans bear interest at 6% per annum until January 31, 2016. After January 31, 2016, a penalty of 4% shall be added such that the loans bear interest at 10% per annum. The loans are unsecured and are due on January 31, 2016 unless the Company receives specified funding. If the Company receives the specified funding the loans become due 10 business days after the funding. If the loans are not repaid by January 31, 2016, the maturity date of the loans shall be changed to May 31, 2016.
| 5. | Deferred Revenue |
On December 17, 2013, Lightlake entered into an agreement and subsequently received additional funding totaling $250,000 for use by the Company for any purpose. In exchange for this funding, the Company agreed to provide the investor with a 0.5% interest in the Company’s Binge Eating Disorder treatment product and pay the investor 0.5% of the net profit generated from this treatment in perpetuity. Net profit is defined as the pre-tax profit generated from the product after the deduction of all expenses incurred by and payments made by the Company in connection with the product, including but not limited to an allocation of Company overhead. If the product is not approved by the U.S. Food and Drug Administration within 36 months the investor will have a sixty day option to receive 31,250 shares of common stock in lieu of the 0.5% interest in the product.
On May 15, 2014, Lightlake entered into an agreement and subsequently received funding from an individual investor in the amount of $300,000 for use by the Company for any purpose. In exchange for this funding, the Company agreed to provide the investor with a 1.5% interest in the Net Profit as related to the Company’s treatment to reverse opioid overdoses. Net profit is defined as the pre-tax profit generated from the product after the deduction of all expenses incurred by and payments made by the Company in connection with the product, including but not limited to an allocation of Company overhead. The investor also has rights with respect to its 1.5% interest if the treatment is sold or the Company is sold. If the product is not approved by the U.S. Food and Drug Administration within 24 months the investor will have a 60 day option to receive 37,500 shares of common stock in lieu of the 1.5% interest in the product.
| 9 |
On July 22, 2014, Lightlake received a $3,000,000 commitment, from which the Company has the right to make capital calls, from a foundation for the research, development, marketing, commercialization, and any other activities connected to the Company’s treatment to reverse opioid overdoses, certain operating expenses, and any other purpose consistent with the goals of the foundation. In exchange for funds invested by the foundation the Company agreed to provide the foundation with pro-rata share up to a 6.0% interest in the Net Profit as related to the Company’s treatment to reverse opioid overdoses. Net profit is defined as the pre-tax profit generated from the product after the deduction of all expenses incurred by and payments made by the Company in connection with the product, including but not limited to an allocation of Company overhead. The foundation also has rights with respect to its 6.0 % interest if the treatment is sold or the Company is sold. Additionally, the Company may buyback interests from the foundation within two and one half years or after two and a half years of the initial investment at a price of two times or three and a half times, respectively, the relevant investment amount represented by the interests to be bought back. Such buyback can be for a portion of the interest rather than for the entire interest. If the product is not approved by the U.S. Food and Drug Administration or an equivalent body in Europe for marketing and is not actually marketed within 24 months the foundation will have a 60 day option to receive shares of the Company’s common stock in lieu of the interest in the treatment at a rate of 10 shares for every dollar of its investment. On July 28, 2014 the Company received an initial investment of $111,470 from the foundation in exchange for a 0.22294% interest. On August 13, 2014, September 8, 2014, November 13, 2014, and February 17, 2015, the Company made capital calls of $422,344 $444,530, $1,033,614, and $988,043, respectively, from the foundation in exchange for 0.844687%, 0.888906%, 2.067228%, and 1.976085% interests, respectively, in the Net Profit as related to the Company’s treatment to reverse opioid overdoses.
On September 9, 2014, Lightlake entered into an agreement and subsequently received funding from an individual investor in the amount of $500,000 for use by the Company for any purpose. In exchange for this funding, the Company agreed to provide the investor with a 0.98% interest in the Net Profit as related to the Company’s treatment to reverse opioid overdoses. Net Profit includes the pre-tax profit received by the Company derived from the sale of the product after the deduction of all expenses incurred by and payments made by the Company in connection with the product, including but not limited to an allocation of Company overhead. The investor also has rights with respect to its 0.98% interest if the treatment is sold or the Company is sold. Additionally, the Company may buyback interests from the investor within two and one half years or after two and a half years but no later than four years of the investment at a price of two times or three and a half times, respectively, the relevant investment amount represented by the interests to be bought back. Such buyback can be for a portion of the interest rather than for the entire interest. If the product is not introduced to the market and not approved by the U.S. Food and Drug Administration or an equivalent body in Europe and not marketed within 24 months, the investor will have a 60 day option to receive 50,000 shares of common stock in lieu of the interest in the product.
On September 17, 2014, Lightlake entered into an agreement and subsequently received funding totaling $500,000 for use by the Company for any purpose. In exchange for this funding, the Company agreed to provide the investor with a 1.0% interest in the Company’s Binge Eating Disorder treatment product and pay the investor 1.0% of the Net Profit generated from this treatment in perpetuity. Net Profit includes the pre-tax profit generated from the product after the deduction of all expenses incurred by and payments made by the Company in connection with the product, including but not limited to an allocation of Company overhead. If the product is not approved by the U.S. Food and Drug Administration within 36 months, the investor will have a sixty day option to receive 62,500 shares of common stock in lieu of the 1.0% interest in the product.
| 10 |
On October 31, 2014, Lightlake entered into an agreement and subsequently received funding from an individual investor in the amount of $500,000 for use by the Company for any purpose. In exchange for this funding, the Company agreed to provide the investor with a 0.98% interest in the Net Profit as related to the Company’s treatment to reverse opioid overdoses. Net Profit includes the pre-tax profit received by the Company derived from the sale of the product after the deduction of all expenses incurred by and payments made by the Company in connection with the product, including but not limited to an allocation of Company overhead. The investor also has rights with respect to its 0.98% interest if the treatment is sold or the Company is sold. Additionally, the Company may buyback interests from the investor within two and one half years or after two and a half years but no later than four years of the investment at a price of two times or three and a half times, respectively, the relevant investment amount represented by the interests to be bought back. Such buyback can be for a portion of the interest rather than for the entire interest. If the product is not introduced to the market and not approved by the FDA or an equivalent body in Europe and not marketed within 24 months, the investor will have a 60 day option to receive 50,000 shares of common stock in lieu of the interest in the product.
On July 20, 2015, Lightlake entered into an agreement and subsequently received funding from an individual investor in the amount of $250,000 for use by the Company for any purpose. In exchange for this funding, the Company agreed to provide the investor with a 0.50% interest in the Net Profit as related to the Company’s treatment of Binge Eating Disorder. Net Profit includes the pre-tax profit received by the Company derived from the sale of the product after the deduction of all expenses incurred by and payments made by the Company in connection with the product, including but not limited to an allocation of Company overhead. The investor also has rights with respect to its 0.50% interest if the treatment is sold or the Company is sold. If the product is not introduced to the market and not approved by the FDA or an equivalent body in Europe and not marketed within 36 months, the investor will have a 60 day option to receive 25,000 shares of common stock in lieu of the interest in the product.
| 11 |
On September 22, 2015, Lightlake received a $1,600,000 commitment from a foundation, from which the Company has the right to make capital calls, for the research, development, any other activities connected to the Company’s opioid antagonist treatments for addictions and related disorders that materially rely on certain studies funded by the foundation’s investment, certain operating expenses, and any other purpose consistent with the goals of the foundation. In exchange for funds invested by the foundation the Company agreed to provide the foundation with pro-rata share up to a 2.1333% interest in the Net Profit as related to the Company’s opioid antagonist treatments for addictions and related disorders that materially rely on certain studies funded by the foundation’s investment. Net profit is defined as any pre-tax revenue received by the Company that was derived from the sale of the products less any and all expenses incurred by and payments made by the Company in connection with the products, including but not limited to an allocation of Company overhead. The foundation also has rights with respect to its 2.1333% interest if the products are sold or the Company is sold. Additionally, the Company may buyback interests from the foundation within two and one half years or after two and a half years of the initial investment at a price of two times or three and a half times, respectively, the relevant investment amount represented by the interests to be bought back. Such buyback can be for a portion of the interest rather than for the entire interest. If a product is not introduced to the market within 36 months the foundation will have a 60 day option to receive shares of the Company’s common stock in lieu of the interest in the product at a rate of one-tenth of a share for every dollar of its investment. On October 6, 2015, the Company received $618,000 from the foundation in exchange for a 0.824% interest in the Company’s treatments covered by the commitment agreement.
| 6. | Stockholders’ Equity |
Common Stock
Pursuant to an agreement dated September 1, 2015, Lightlake issued 10,000 shares in exchange for services rendered by a consultant. The shares issued in this transaction were valued using the stock price at issuance date and amounted to $80,500.
On October 6, 2015, the Company entered into an amendment to an agreement to use certain technology owned by Aegis Therapeutics, LLC. This amendment had an effective date of May 19, 2015 and allowed the Company to evaluate Aegis’ Technology until August 17, 2015. The amendment also provided an opportunity for the Company to elect to further extend the period of time during which the Company could evaluate Aegis’ Technology until February 13, 2016. In exchange for electing to further extend this period of time, the Company paid Aegis $75,000 and issued 13,697 shares of the Company’s common stock. The shares issued in this transaction were using the stock price at issuance date and amounted to $106,152.
Stock Options
As required by the Stock Compensation Topic, ASC 718, Lightlake measures and recognizes compensation expense for all share based payment awards made to the officers and directors based on estimated fair values at the grant date and over the requisite service period.
On October 27, 2015, Lightlake granted 1,437,500 cashless stock options to the board of directors and a senior executive of the Company. These options have an exercise price of $7.25, a term of 10 years and vested immediately. Each stock option is fully vested on the date of grant, but may only be exercised between the following dates: (i) the first to occur of: (A) the commencement of three trials on or subsequent to October 23, 2015; or (B) (1) the approval by the U.S. Food and Drug Administration of the New Drug Application with respect to the opioid overdose reversal treatment, and (2) the commencement of two trials on or subsequent to October 23, 2015; and (ii) the expiration date. The Company has valued these options using the Black-Scholes option pricing model which resulted in a fair market value of $10,062,500 which have been fully recognized as expense for the three months ended October 31, 2015.
| 12 |
Lightlake also recognized stock based compensation expense of $29,679 in connection with vested options granted in prior periods.
The assumptions used in the valuation for all of the options granted for the three months ended October 31, 2015 were as follows:
| Market value of stock on measurement date | $ | 7.00 | ||
| Risk-free interest rate | 2.05 | % | ||
| Dividend yield | 0 | % | ||
| Volatility factor | 373 | % | ||
| Term | 10 years |
Stock option activity for three months ended October 31, 2015 is presented in the table below:
| Number of Shares | Weighted- average Exercise Price | Weighted- average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at July 31, 2015 | 3,157,500 | 9.42 | 7.58 | |||||||||||||
| Granted | 1,437,500 | 7.25 | ||||||||||||||
| Forfeited/expired/cancelled | - | - | ||||||||||||||
| Outstanding at October 31, 2015 | 4,595,000 | 8.74 | 8.16 | $ | 1,335,000 | |||||||||||
| Exercisable at October 31, 2015 | 2,860,416 | 8.88 | 7.84 | $ | 1,335,000 | |||||||||||
A summary of the status of Lightlake’s non-vested options as of October 31, 2015 and changes during the three months ended October 31, 2015 are presented below:
| Non-vested options | Number of Options | Weighted Average Grant Date Fair Value | ||||||
| Non-vested at July 31, 2015 | 37,500 | $ | 3.85 | |||||
| Granted | 1,437,500 | 7.00 | ||||||
| Vested | (1,441,667 | ) | 7.00 | |||||
| Non-vested at October 31, 2015 | 33,333 | $ | 3.85 | |||||
At October 31, 2015, there was $95,471 of unrecognized compensation costs related to non-vested stock options.
Warrants
Warrant activity for the three months ended October 31, 2015 is presented in the table below:
| Number of Shares | Weighted- average Exercise Price | Weighted- average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at July 31, 2015 | 1,338,552 | $ | 19.53 | 3.55 | $ | - | ||||||||||
| Issued | - | - | - | |||||||||||||
| Exercised | - | - | - | |||||||||||||
| Outstanding at October 31, 2015 | 1,338,552 | $ | 19.53 | 3.30 | $ | - | ||||||||||
| Exercisable at October 31, 2015 | 613,522 | $ | 24.88 | 4.63 | $ | - | ||||||||||
| 7. | Subsequent Events |
In November 2015, the Company issued 14,327 shares of common stock upon the execution of a binding letter of intent to agree to negotiate and enter into an exclusive license agreement and collaboration agreement with a pharmaceutical company with certain desirable proprietary information. Pursuant to the letter of intent, the Company is obligated to issue up to an additional 92,634 common shares upon the occurrence of various milestones.
| 13 |
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
The Company’s principal executive officer and principal financial officer conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of October 31, 2015, the Company’s disclosure controls and procedures were not effective due to the material weaknesses identified in Item 9A of the Company’s Annual Report on Form 10-K filed with the SEC on October 26, 2015.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the three months ended October 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II— OTHER INFORMATION
| Item 6. | Exhibits |
Exhibit Number | Exhibit Title | |
| 31.1 | Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2* | Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.
| 14 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| LIGHTLAKE THERAPEUTICS INC. | |||
| Date: January 22, 2016 | By: | /s/ Dr. Roger Crystal | |
| Name: Dr. Roger Crystal | |||
| Title: Chief Executive Officer, President and Director | |||
| (Principal Executive Officer) | |||
| Date: January 22, 2016 | By: | /s/ Kevin Pollack | |
| Name: Kevin Pollack | |||
| Title: Chief Financial Officer and Director | |||
| (Principal Financial and Accounting Officer) |
| 15 |
