Attached files
file | filename |
---|---|
EX-32.1 - PROTALEX INC | v162669_ex32-1.htm |
EX-31.1 - PROTALEX INC | v162669_ex31-1.htm |
EX-31.2 - PROTALEX INC | v162669_ex31-2.htm |
EX-32.2 - PROTALEX INC | v162669_ex32-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended August 31, 2009
OR
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Commission
File Number: 000-28385
Protalex,
Inc.
(Exact
Name of Registrant as Specified in its Charter)
Delaware
|
91-2003490
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
Number)
|
145
Union Square Drive
New
Hope, PA 18938
(Address
of Principal Executive Offices and Zip Code)
215-862-9720
(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. R
Yes ¨
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 he
registrant was required to submit and post such files). ¨ Yes ¨ No
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
definition 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 ¨
|
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
R
No
Number of
shares outstanding of the issuer’s Common Stock, par value $0.00001 per share,
as of October 12, 2009: 28,600,464 shares.
Protalex,
Inc.
FORM
10-Q
August
31, 2009
INDEX
|
|
Page No.
|
||
PART I.
|
|
FINANCIAL
INFORMATION
|
|
|
ITEM 1.
|
|
Financial
Statements:
|
|
|
|
Balance
Sheets at August 31, 2009 (Unaudited) and May 31, 2009
|
|
3
|
|
|
Statements
of Operations for the three months ended August 31, 2009 and 2008, and the
period from September 17, 1999 (inception) to August 31, 2009
(Unaudited)
|
|
4
|
|
|
Statement
of Changes in Stockholders’ Equity for the period from September 17, 1999
(inception) through August 31, 2009 (Unaudited)
|
|
5
|
|
|
Statements
of Cash Flows for the three months ended August 31, 2009 and 2008, and the
period from September 17, 1999 (inception) to August 31, 2009
(Unaudited)
|
|
9
|
|
|
Notes
to Unaudited Financial Statements
|
|
10
|
|
ITEM 2.
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
14
|
ITEM 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|||
ITEM 4T.
|
|
Controls
and Procedures
|
|
18
|
PART II.
|
|
OTHER
INFORMATION
|
|
|
ITEM 1.
|
Legal
Proceedings
|
19
|
||
ITEM 1A.
|
Risk
Factors
|
19
|
||
ITEM 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
19
|
||
ITEM 3.
|
Defaults
Upon Senior Securities
|
19
|
||
ITEM 4.
|
Submission
of Matters to a Vote of Security Holders
|
19
|
||
ITEM 6.
|
|
Exhibits
|
|
19
|
|
SIGNATURES
|
|
22
|
|
Exhibit
31.1 Section 302 Certification of the CEO
|
||||
Exhibit
31.2 Section 302 Certification of the CFO
|
||||
Exhibit
32.1 Section 906 Certification of the CEO
|
||||
Exhibit
32.2 Section 906 Certification of the CFO
|
2
PART
I - FINANCIAL INFORMATION
ITEM 1.
|
FINANCIAL
STATEMENTS
|
PROTALEX,
INC.
(A
Company in the Development Stage)
BALANCE
SHEETS
August 31,
|
May 31,
|
|||||||
2009
|
2009
|
|||||||
(Unaudited)
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 1,866,272 | $ | 2,637,292 | ||||
Prepaid
expenses
|
225,462 | 193,757 | ||||||
Total
current assets
|
2,091,734 | 2,831,049 | ||||||
PROPERTY
& EQUIPMENT:
|
||||||||
Lab
equipment
|
327,287 | 327,287 | ||||||
Office
and computer equipment
|
195,987 | 195,987 | ||||||
Furniture
& fixtures
|
40,701 | 40,701 | ||||||
Leasehold
improvements
|
89,967 | 89,967 | ||||||
653,942 | 653,942 | |||||||
Less
accumulated depreciation and amortization
|
(632,982 | ) | (628,780 | ) | ||||
20,960 | 25,162 | |||||||
OTHER
ASSETS:
|
||||||||
Deposits
|
7,990 | 7,990 | ||||||
Intellectual
technology property, net of
|
||||||||
accumulated
amortization of $10,008 and $9,753 as
|
||||||||
of
August 31, 2009 and May 31, 2009, respectively
|
10,292 | 10,547 | ||||||
Total
other assets
|
18,282 | 18,537 | ||||||
Total
Assets
|
$ | 2,130,976 | $ | 2,874,748 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 363,674 | $ | 398,734 | ||||
Payroll
and related liabilities
|
909,032 | 1,185,638 | ||||||
Accrued
expenses
|
— | 8,057 | ||||||
Deferred
rent
|
743 | 1,192 | ||||||
Total
liabilities
|
1,273,449 | 1,593,621 | ||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Common
stock, par value $0.00001,
|
||||||||
100,000,000
shares authorized;
28,600,464
shares issued and outstanding
|
286 | 286 | ||||||
Additional
paid in capital
|
45,925,023 | 45,865,352 | ||||||
Deficit
accumulated during the development stage
|
(45,067,782 | ) | (44,584,511 | ) | ||||
Total
stockholders’ equity
|
857,527 | 1,281,127 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 2,130,976 | $ | 2,874,748 |
The
accompanying notes are an integral part of these financial
statements.
3
PROTALEX,
INC.
(A
Company in the Development Stage)
STATEMENTS
OF OPERATIONS
For the
three month period ended August 31, 2009 and 2008 and
From
Inception (September 17, 1999) through August 31, 2009
(Unaudited)
Three
|
Three
|
From Inception
|
||||||||||
Months Ended
|
Months Ended
|
Through
|
||||||||||
August 31,
|
August 31,
|
August 31,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
Revenues
|
$ | — | $ | — | $ | — | ||||||
Operating
Expenses
|
||||||||||||
Research
and development (including depreciation and amortization)
|
(193,265 | ) | (1,021,498 | ) | (27,947,049 | ) | ||||||
Administrative
(including depreciation and amortization)
|
(146,190 | ) | (631,831 | ) | (15,760,827 | ) | ||||||
Professional
fees
|
(143,129 | ) | (169,587 | ) | (3,388,263 | ) | ||||||
Depreciation
and amortization
|
(1,019 | ) | (1,085 | ) | (164,835 | ) | ||||||
Operating
loss
|
(483,603 | ) | (1,824,001 | ) | (47,260,974 | ) | ||||||
Other
income (expense)
|
||||||||||||
Interest
income
|
332 | 39,051 | 2,196,210 | |||||||||
Interest
expense
|
— | — | (70,612 | ) | ||||||||
Gain
on disposal of equipment, net
|
— | 78,174 | 67,594 | |||||||||
Net
loss
|
$ | (483,271 | ) | $ | (1,706,776 | ) | $ | (45,067,782 | ) | |||
Weighted
average number of common shares outstanding
|
28,600,464 | 28,600,464 | 18,650,682 | |||||||||
Loss
per common share – basic and diluted
|
$ | (.02 | ) | $ | (.06 | ) | $ | (2.42 | ) |
The
accompanying notes are an integral part of these financial
statements.
4
PROTALEX,
INC.
(A
Company in the Development Stage)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
From
Inception (September 17, 1999) through August 31, 2009
(Unaudited)
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During
The
|
||||||||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
September
17, 1999 — initial issuance of 10,000 shares for intellectual technology
license at $.03 per share
|
10,000 | $ | 300 | $ | — | $ | — | $ | — | $ | 300 | |||||||||||||
September
30, 1999 — cost of public shell acquisition over net assets acquired to be
accounted for as a Recapitalization
|
— | — | — | (250,000 | ) | — | (250,000 | ) | ||||||||||||||||
October
27, 1999 — issuance of 84 shares to individual for $25,000
|
84 | 25,000 | — | — | — | 25,000 | ||||||||||||||||||
November
15, 1999 — reverse merger transaction with Enerdyne Corporation, net
transaction amounts
|
8,972,463 | 118,547 | — | (118,547 | ) | — | — | |||||||||||||||||
November
18, 1999 — February 7, 2000 — issuance of 459,444 shares to various
investors at $0.36 per share
|
459,444 | 165,400 | — | — | — | 165,400 | ||||||||||||||||||
January
1, 2000 — issuance of 100,000 shares in exchange for legal
services
|
100,000 | 15,000 | — | — | — | 15,000 | ||||||||||||||||||
May
1 - 27, 2000 — issuance of 640,000 shares to various investors at $1.00
per share
|
640,000 | 640,000 | — | — | — | 640,000 | ||||||||||||||||||
May
27, 2000 — issuance of 1,644 shares to an individual in exchange for
interest Due
|
1,644 | 1,644 | — | — | — | 1,644 | ||||||||||||||||||
Net
loss for the year ended May 31, 2000
|
— | — | — | — | (250,689 | ) | (250,689 | ) | ||||||||||||||||
Balance,
May 31, 2000
|
10,183,635 | 965,891 | — | (368,547 | ) | (250,689 | ) | 346,655 | ||||||||||||||||
December
7, 2000 — issuance of 425,000 shares to various investors at $1.00 per
share
|
425,000 | 425,000 | — | — | — | 425,000 | ||||||||||||||||||
May
31, 2001 — Forgiveness of debt owed to shareholder
|
— | — | 40,000 | — | — | 40,000 | ||||||||||||||||||
Net
loss for the year ended May 31, 2001
|
— | — | — | — | (553,866 | ) | (553,866 | ) | ||||||||||||||||
Balance,
May 31, 2001
|
10,608,635 | 1,390,891 | 40,000 | (368,547 | ) | (804,555 | ) | 257,789 |
The
accompanying notes are an integral part of this financial
statement.
5
PROTALEX,
INC.
(A
Company in the Development Stage)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY - (continued)
From
Inception (September 17, 1999) through February 28, 2009
(Unaudited)
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During
The
|
||||||||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
August
13, 2001 — Contribution by Shareholders
|
— | — | 143,569 | — | — | $ | 143,569 | |||||||||||||||||
November
7, 2001 — issuance of 881,600 Shares at $1.25 per share
|
881,600 | $ | 1,102,000 | $ | — | — | $ | — | $ | 1,102,000 | ||||||||||||||
November
26, 2001 — options issued to board member
|
— | — | 133,000 | — | — | 133,000 | ||||||||||||||||||
Net
loss for the year ended May 31, 2002
|
— | — | — | — | (1,280,465 | ) | (1,280,465 | ) | ||||||||||||||||
Balance,
May 31, 2002
|
11,490,235 | 2,492,891 | 316,569 | (368,547 | ) | (2,085,020 | ) | 355,893 | ||||||||||||||||
July
5, 2002 — issuance of 842,000 shares at $1.50 per share
|
842,000 | 1,263,000 | — | — | — | 1,263,000 | ||||||||||||||||||
July
1, 2002 - May 1, 2003 – purchase of common stock from shareholder at $.70
per share
|
(130,955 | ) | (91,667 | ) | — | — | — | (91,667 | ) | |||||||||||||||
January
15, 2003 - May 15, 2003 — common stock issued to Company
president
|
41,670 | 82,841 | — | — | — | 82,841 | ||||||||||||||||||
May
14, 2003 — common stock issued to employee
|
5,000 | 11,250 | — | — | — | 11,250 | ||||||||||||||||||
June
1, 2002 - May 31, 2003 – compensation related to stock options issued to
board members, employees and consultants
|
— | — | 287,343 | — | — | 287,343 | ||||||||||||||||||
Net
loss for the year ended May 31, 2003
|
— | — | — | — | (1,665,090 | ) | (1,665,090 | ) | ||||||||||||||||
Balance,
May 31, 2003
|
12,247,950 | 3,758,315 | 603,912 | (368,547 | ) | (3,750,110 | ) | 243,570 | ||||||||||||||||
June
15, 2003, common stock issued to Company president
|
8,334 | 16,418 | — | — | — | 16,418 | ||||||||||||||||||
June
15, 2003, purchase of common stock from shareholder
|
(12,093 | ) | (8,333 | ) | — | — | — | (8,333 | ) | |||||||||||||||
September
18, 2003 – issuance of 7,445,646 of common stock issued in private
placement At $1.70 per share, net of transaction costs
|
7,445,646 | 11,356,063 | — | — | — | 11,356,063 | ||||||||||||||||||
September
19, 2003 – repurchase and retired 2,994,803 shares for
$300,000
|
(2,994,803 | ) | (300,000 | ) | — | — | — | (300,000 | ) | |||||||||||||||
December
12, 2003 – issuance of 39,399 shares to terminated employees at $2.60 per
share
|
39,399 | 102,438 | — | — | — | 102,438 | ||||||||||||||||||
March
1, 2004 – common stock issued to employee at $2.55 per
share
|
50,000 | 127,500 | — | — | — | 127,500 | ||||||||||||||||||
May
31, 2004 – reclassify common stock contra to common stock
|
— | (368,547 | ) | — | 368,547 | — | — |
The
accompanying notes are an integral part of this financial
statement.
6
PROTALEX,
INC.
(A
Company in the Development Stage)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY - (continued)
From
Inception (September 17, 1999) through February 28, 2009
(Unaudited)
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During
The
|
||||||||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
June
1, 2003 – May 31, 2004 – compensation related to stock options issued to
board members, employees and consultants
|
— | — | 448,096 | — | — | 448,096 | ||||||||||||||||||
Net
loss for the year ended May 31, 2004
|
— | — | — | — | (2,989,364 | ) | (2,989,364 | ) | ||||||||||||||||
Balance,
May 31, 2004
|
16,784,433 | 14,683,854 | 1,052,008 | — | (6,739,474 | ) | 8,996,388 | |||||||||||||||||
November
30, 2004 – adjust March 1, 2004 common stock issued to
employee
|
— | (20,000 | ) | — | — | (20,000 | ) | |||||||||||||||||
January
13, 2005 – common stock issued to employee at $2.55 per
share
|
15,000 | 38,250 | — | — | — | 38,250 | ||||||||||||||||||
February
28, 2005 – Reclass Par Value for Reincorporation into DE as of
12/1/04
|
— | (14,701,935 | ) | 14,701,935 | — | — | 0 | |||||||||||||||||
May
25, 2005 - issuance of 2,593,788 shares of common stock issued in private
placement At $1.95 per share, net of transaction costs
|
2,593,788 | 25 | 4,851,168 | — | — | 4,851,193 | ||||||||||||||||||
June
1, 2004 – May 31, 2005 – compensation related to stock options issued to
board members, employees and consultants
|
— | — | 308,711 | — | — | 308,711 | ||||||||||||||||||
Net
loss for the year ended May 31, 2005
|
— | — | — | — | (5,567,729 | ) | (5,567,729 | ) | ||||||||||||||||
Balance,
May 31, 2005
|
19,393,221 | 194 | 20,913,822 | — | (12,307,203 | ) | 8,606,813 | |||||||||||||||||
August
23, 2005 – common stock issued to employee
|
40,000 | 0 | 100,000 | — | — | 100,000 | ||||||||||||||||||
October
19, 2005 – common stock issued to employee
|
10,000 | 0 | 25,000 | — | — | 25,000 | ||||||||||||||||||
December
30, 2005 – issuance of 2,595,132 shares of common stock issued in private
placement at $2.25 per share, net of transaction costs
|
2,595,132 | 26 | 5,510,941 | — | — | 5,510,967 | ||||||||||||||||||
June
1, 2005 – May 31, 2006 – warrants exercised
|
351,598 | 4 | 786,534 | — | — | 786,538 | ||||||||||||||||||
June
1, 2005– May 31, 2006 – compensation related to stock options issued to
board members, employees and consultants
|
— | — | 404,679 | — | — | 404,679 | ||||||||||||||||||
Net
loss for the year ended May 31, 2006
|
— | — | — | — | (6,104,402 | ) | (6,104,402 | ) | ||||||||||||||||
Balance,
May 31, 2006
|
22,389,951 | 224 | 27,740,976 | — | (18,411,605 | ) | 9,329,595 |
The
accompanying notes are an integral part of this financial
statement.
7
PROTALEX,
INC.
(A
Company in the Development Stage)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY - (continued)
From
Inception (September 17, 1999) through February 28, 2009
(Unaudited)
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During
The
|
||||||||||||||||||||||
Common
Stock
|
Paid
in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
July
7, 2006 – issuance of 6,071,013 shares of common stock issued in private
placement at $2.50 per share, net of transaction costs
|
6,071,013 | 61 | 14,217,660 | — | — | 14,217,721 | ||||||||||||||||||
June
1, 2006 – May 31, 2007 – warrants exercised
|
133,500 | 1 | 300,373 | — | — | 300,374 | ||||||||||||||||||
June
1, 2006 – May 31, 2007 – stock options exercised
|
6,000 | 0 | 15,200 | — | — | 15,200 | ||||||||||||||||||
June
1, 2006 – May 31, 2007 – share based compensation to board members,
employees and consultants
|
— | — | 1,826,850 | — | — | 1,826,850 | ||||||||||||||||||
Net
loss for the year ended May 31, 2007
|
— | — | — | — | (8,451,942 | ) | (8,451,942 | ) | ||||||||||||||||
Balance,
May 31, 2007
|
28,600,464 | 286 | 44,101,059 | — | (26,863,547 | ) | 17,237,798 | |||||||||||||||||
June
1, 2007 – May 31, 2008 – share based compensation to board members,
employees and consultants
|
— | — | 1,011,025 | — | — | 1,011,025 | ||||||||||||||||||
Net
loss for the year ended May 31, 2008
|
— | — | — | — | (10,490,758 | ) | (10,490,758 | ) | ||||||||||||||||
Balance,
May 31, 2008
|
28,600,464 | 286 | 45,112,084 | — | (37,354,305 | ) | 7,758,065 | |||||||||||||||||
June
1, 2008 – May 31, 2009 – shared-based compensation to board members,
employees and consultants
|
— | — | 753,268 | — | — | 753,268 | ||||||||||||||||||
Net
loss for the year ended May 31, 2009
|
— | — | — | — | (7,230,206 | ) | (7,230,206 | ) | ||||||||||||||||
Balance,
May 31, 2009
|
28,600,464 | $ | 286 | $ | 45,865,352 | $ | — | $ | (44,584,511 | ) | $ | 1,281,127 | ||||||||||||
June
1, 2009 – August 31, 2009 – shared-based compensation to board members,
employees and consultants
|
— | — | 59,671 | — | — | 59,671 | ||||||||||||||||||
Net
loss for the three months ended August 31, 2009
|
— | — | — | — | (483,271 | ) | (483,271 | ) | ||||||||||||||||
Balance,
August 31, 2009
|
28,600,464 | $ | 286 | $ | 45,925,023 | $ | — | $ | (45,067,782 | ) | $ | 857,527 |
The
accompanying notes are an integral part of this financial
statement.
8
PROTALEX,
INC.
(A
Company in the Development Stage)
STATEMENTS
OF CASH FLOWS
For the
three month periods ended August 31, 2009 and 2008 and
From
Inception (September 17, 1999) through August 31, 2009
(Unaudited)
Three
|
Three
|
From
Inception
|
||||||||||
Months Ended
|
Months Ended
|
Through
|
||||||||||
August 31,
|
August 31,
|
August 31,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (483,271 | ) | $ | (1,706,776 | ) | $ | (45,067,782 | ) | |||
Adjustments
to reconcile net loss to net cash and cash equivalents used in operating
activities
|
||||||||||||
(Gain)
on disposal of equipment, net
|
— | (78,174 | ) | (67,594 | ) | |||||||
Depreciation
and amortization
|
4,457 | 36,318 | 909,159 | |||||||||
Share
based compensation expense
|
59,671 | 176,565 | 5,716,339 | |||||||||
Non
cash expenses
|
— | — | 16,644 | |||||||||
(Increase)/decrease
in:
|
||||||||||||
Prepaid
expenses and deposits
|
(31,705 | ) | (3,919 | ) | (233,452 | ) | ||||||
Increase/(decrease)
in:
|
||||||||||||
Accounts
payable and accrued expenses
|
(43,117 | ) | (389,944 | ) | 363,674 | |||||||
Payroll
and related liabilities
|
(276,606 | ) | (15,328 | ) | 909,032 | |||||||
Other
liabilities
|
(449 | ) | (248 | ) | 743 | |||||||
Net
cash and cash equivalents used in operating activities
|
(771,020 | ) | (1,981,506 | ) | (37,453,237 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Acquisition
of intellectual technology license – fee portion
|
— | — | (20,000 | ) | ||||||||
Acquisition
of equipment
|
— | — | (905,936 | ) | ||||||||
Excess
of amounts paid for public shell over assets acquired to be accounted for
as a recapitalization
|
— | — | (250,000 | ) | ||||||||
Proceeds
from disposal of equipment
|
— | 200,000 | 206,000 | |||||||||
Net
cash and cash equivalents provided by (used in) investing
activities
|
— | 200,000 | (969,936 | ) | ||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from stock issuance, including options and warrants
exercised
|
— | — | 40,658,458 | |||||||||
Principal
payment on equipment notes payable and capital leases
|
— | — | (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 financing
activities
|
— | — | 40,289,445 | |||||||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(771,020 | ) | (1,781,506 | ) | 1,866,272 | |||||||
Cash
and cash equivalents, beginning
|
2,637,292 | 8,442,809 | — | |||||||||
Cash
and cash equivalents, ending
|
$ | 1,866,272 | $ | 6,661,303 | $ | 1,866,272 | ||||||
SUPPLEMENTAL
SCHEDULE OF CASH FLOW INFORMATION:
|
||||||||||||
Interest
paid
|
$ | — | $ | — | $ | 66,770 | ||||||
Taxes
paid
|
$ | — | $ | — | $ | 100 |
The
accompanying notes are an integral part of these financial
statements.
9
PROTALEX,
INC.
(A
Company in the Development Stage)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
From
Inception (September 17, 1999) through August 31, 2009
NOTE
1. 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. The results of operations in interim periods are not
necessarily indicative of the results that may be expected for the full year.
Information
regarding the organization and business of the Company, accounting policies
followed by the Company and other important information is contained in the
notes to the Company's financial statements filed as part of the Company's
Annual Report on Form 10-K for the fiscal year ended May 31, 2009. This
quarterly report should be read in conjunction with such annual
report.
As of the
date of this Report, the Company has no employees and has insufficient funds to
cover future clinical trials and Chemistry, Manufacturing and Control or CMC
related expenses. As of the date of this Report, the Company has ceased or
suspended all operations. These matters raise substantial doubt about the
ability of the Company to continue as a going concern.
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. Additional financing
or potential sublicensing of PRTX-100 will be required in order to restart
operations. As a result, our independent registered public accounting firm,
Grant Thornton LLP, indicated in their report on our 2009 financial statements
that there is substantial doubt about our ability to continue as a going
concern. The Company is a development stage enterprise and does not anticipate
generating operating revenue for the foreseeable future. The ability of the
Company to continue as a going concern is dependent upon raising sufficient
funds to continue the development of PRTX-100 through the regulatory process.
There is no assurance that these plans will be realized in whole or in part. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates
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.
Loss
per Common Share
The
Financial Accounting Standards Board (FASB) has issued 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 consisting of employee stock options and warrants 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
August 31, 2009 and 2008, the Company had potentially dilutive securities
consisting of warrants and stock options totaling 6,959,389 comprised of
3,928,896 warrants and 3,030,493 stock options and 12,448,206 comprised of
6,601,380 warrants and 5,846,826 stock options, respectively.
10
Share
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 $59,671 and $176,565 for the three months ended August 31, 2009 and 2008,
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 were 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 to date 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 “Valuation of Share-Based Payment Arrangements for Public Companies”,
and No. 110, Share-Based Payment, 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.
The Board
of Directors adopted and the stockholders approved the 2003 Stock Option Plan in
October 2003 and it was amended in October 2005. The plan was adopted to
recognize the contributions made by the Company’s employees, officers,
consultants, and directors, to provide those individuals with additional
incentive to devote themselves to the Company’s future success, and to improve
the Company’s ability to attract, retain and motivate individuals upon whom the
Company’s growth and financial success depends. Under the plan, stock
options may be granted as approved by the Board of Directors or the Compensation
Committee. There are 4,500,000 shares reserved for grants of options under
the plan, of which 1,677,571 have been issued and 4,000 were exercised. The
Company has issued 1,358,922 stock options as stand alone grants, of which
2,000 were exercised prior to the adoption of the 2003 Stock Option Plan. Stock
options vest pursuant to individual stock option agreements. No options
granted under the plan are exercisable after the expiration of ten years (or
less in the discretion of the Board of Directors or the Compensation Committee)
from the date of the grant. The plan will continue in effect until
terminated or amended by the Board of Directors.
SFAS No.
123R requires the use of a valuation model to calculate the fair value of each
stock-based award. The Company uses the Black-Scholes model to estimate the fair
value of stock options granted based on the following assumptions:
Expected Term or Life. The
expected term or life of stock options granted represents the expected weighted
average period of time from the date of grant to the estimated date that the
stock option would be fully exercised. The weighted average expected option term
was determined using the “simplified method” for plain vanilla options as
allowed by SAB No. 107 and as further permitted by SAB No. 110. The
“simplified method” calculates the expected term as the average of the vesting
term and original contractual term of the options.
Expected Volatility. Expected
volatility is a measure of the amount by which the Company’s stock price is
expected to fluctuate over the option’s expected term. Expected volatility is
based on the historical daily volatility of the price of our common shares. The
Company estimated the expected volatility of the stock options at grant
date.
Risk-Free Interest Rate. The
risk-free interest rate is based on the implied yield on U.S. Treasury
zero-coupon issues with remaining terms equivalent to the expected term of our
stock-based awards.
As of
August 31, 2009, there were 3,030,493 stock options outstanding. At August
31, 2009, the aggregate unrecognized compensation cost of unvested options, as
determined using a Black-Scholes option valuation model was approximately
$484,000 (net of estimated forfeitures) and will be recognized over a weighted
average period of 0.84 years. During the three months ended August 31,
2009, the Company granted no stock options and 266,319 options were
forfeited or expired, respectively.
11
Three Months
Ended
August 31,
2009
|
Three Months
Ended
August 31,
2008
|
From
Inception
through
August 31,
2009
|
||||||||||
Dividends
per year
|
— | 0 | 0 | |||||||||
Volatility
percentage
|
— | 96 | % | 90%-112 | % | |||||||
Risk
free interest rate
|
— | 3.51 | % | 2.07%-5.11 | % | |||||||
Expected
life (years)
|
— | 6.25-10 | 3-10 | |||||||||
Weighted
average fair value
|
— | $ | .41 | $ | 1.56 |
The
following summarizes certain information regarding stock options as of and for
the period ended August 31, 2009:
Shares
|
Weighted
Average Exercise
Price
|
Weighted Average
Remaining
Contractual Term
(Years)
|
||||||||||
Outstanding
at May 31, 2009
|
3,296,812 | $ | 1.57 | 6.0 | ||||||||
Granted
|
— | — | — | |||||||||
Exercised
|
— | — | — | |||||||||
Forfeited
|
(115,627 | ) | $ | 0.86 | — | |||||||
Expired
|
(150,692 | ) | $ | 1.43 | — | |||||||
Outstanding
at August 31, 2009
|
3,030,493 | $ | 1.61 | 5.5 | ||||||||
Exercisable
at August 31, 2009
|
2,414,545 | $ | 1.80 | 5.5 |
The
outstanding and exercisable stock options as of August 31, 2009 had an intrinsic
value of $0 and $0, respectively.
Total
|
Exercisable
|
|||||||||||||||||||||||
Exercise
Price Range
|
Number
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
(years)
|
Number
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
(years)
|
||||||||||||||||||
$0.00
– 0.45
|
500,000 | $ | 0.45 | 8.9 | 135,427 | $ | 0.45 | 8.9 | ||||||||||||||||
$0.46
– 0.90
|
150,000 | $ | 0.85 | 9.0 | 37,500 | $ | 0.85 | 9.0 | ||||||||||||||||
$0.91
– 1.35
|
200,000 | $ | 1.23 | 5.3 | 139,590 | $ | 1.24 | 5.3 | ||||||||||||||||
$1.36
– 1.80
|
1,256,922 | $ | 1.50 | 3.3 | 1,256,922 | $ | 1.50 | 3.3 | ||||||||||||||||
$1.81
– 2.25
|
92,000 | $ | 2.13 | 5.0 | 89,374 | $ | 2.13 | 5.0 | ||||||||||||||||
$2.26
– 2.70
|
550,000 | $ | 2.50 | 6.0 | 495,831 | $ | 2.52 | 6.0 | ||||||||||||||||
$2.71
– 3.15
|
281,571 | $ | 2.87 | 6.6 | 259,901 | $ | 2.87 | 6.6 | ||||||||||||||||
3,030,493 | $ | 1.61 | 5.5 | 2,414,545 | $ | 1.80 | 5.5 |
NOTE
3. LIQUIDITY
Since
inception, the Company has incurred an accumulated deficit of $45,067,782
through August 31, 2009. As of August 31, 2009, the Company had cash and cash
equivalents of $1,866,272 and net working capital of $818,285. The Company has
incurred negative cash flow from operating activities since its inception. The
Company has spent, and subject to obtaining additional financing, expects to
continue to spend, substantial amounts in connection with executing its business
strategy, including the continued development efforts relating to
PRTX-100. As of the date of this Report, the Company has no employees
and has insufficient funds to cover future clinical trials and CMC related
expenses. As of the date of this Report, the Company has suspended or
ceased all operations. These matters raise substantial doubt about the ability
of the Company to continue as a going concern.
12
Additional
financing or potential sublicensing of PRTX-100 will be required in order to
restart and continue operations. The most likely sources of additional financing
include the private sale of the Company’s equity or debt securities, including
bridge loans to the Company from third party lenders. Additional capital that is
required by the Company may not be available on reasonable terms, or at
all.
NOTE
4. RECENT ACCOUNTING PRONOUNCEMENTS
In June
2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles-a replacement of
FASB Statement No.162 (“SFAS 168”). SFAS 168 establishes the FASB Accounting
Standards Codification as the single source of authoritative US generally
accepted accounting principles recognized by the FASB to be applied to
nongovernmental entities. SFAS 168 is effective for financial statements issued
for interim and annual periods ending after September 15, 2009. The adoption of
SFAS 168 will not have an impact on the Company’s financial position, results of
operations or cash flow. The Company will update the disclosures for the
appropriate FASB codification reference after adoption in the second quarter of
fiscal 2010.
In May
2009, the FASB issued SFAS No. 165, Subsequent Events ("SFAS
165"). SFAS 165 is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for selecting that date, that is, whether that date represents the
date the financial statements were issued or were available to be issued. SFAS
165 is effective for interim or annual financial periods ending after June 15,
2009. The Company has evaluated subsequent events after the balance sheet date
of August 31, 2009 through the date this quarterly report is filed on October
15, 2009.
In
December 2007, the FASB issued SFAS No. 141R (revised 2007) Business Combinations (“SFAS
141R”). SFAS 141R states that all business combinations (whether full, partial
or step acquisitions) will result in all assets and liabilities of an acquired
business being recorded at their fair values. Certain forms of contingent
considerations and certain acquired contingencies will be recorded at fair value
at the acquisition date. SFAS 141R also states acquisition costs will generally
be expensed as incurred and restructuring costs will be expensed in periods
after the acquisition date. This statement is effective for financial statements
issued for fiscal years beginning after December 15, 2008. The Company
adopted SFAS 141R on June 1, 2009. The adoption did not have a material
impact on its financial statements.
In
December 2007, the FASB ratified the Emerging Issue Task Force (“EITF”) Issue
07-01, Accounting for
Collaborative Arrangements (“EITF 07-01”). EITF 07-01 clarifies the
accounting for contractual arrangements wherein two or more parties come
together to participate in a joint operating activity which is conducted based
on provisions of a contract. EITF 07-01 provides guidance on income statement
classification of revenues and expenses related to such activities, and
specifies disclosures that should be made with respect to such activities. EITF
07-01 is effective for fiscal years beginning after December 15, 2008. The
Company adopted EITF 07-01 on June 1, 2009. The adoption did not have a
material impact on its financial statements.
NOTE
5. RELATED PARTIES
For the
three month period ended August 31, 2009, the Company incurred $0 of expenses
related to air travel to a partnership principally owned by the Chief Executive
Officer of the Company. For the three month period ended August 31, 2008, the
Company incurred $1,758 of expenses related to air travel to a partnership
principally owned by the Chief Executive Officer of the Company.
The
Company had an agreement with its Chairman to pay $12,500 per month as a
director fee which was terminated effective as of April 1, 2009 as described
below. For the three month period ended August 31, 2009, the Company
incurred $0, for this director’s fee. For the three month period ended
August 31, 2008, the Company incurred $37,500, for this director’s
fee.
The
Company had an agreement with Carleton A. Holstrom, Eugene A. Bauer, MD, Peter
G. Tombros, Frank M. Dougherty and Thomas P. Stagnaro to pay each $1,667 per
month payable on a quarterly basis in arrears as a director fee which agreement
for each director was terminated effective as of April 1, 2009 as described
below. For the three month periods ended August 31, 2009, the Company
incurred $0 for these directors’ fees. For the three month periods ended August
31, 2008, the Company incurred $21,668 for these directors’ fees.
Pursuant
to a Cash Waiver & Option Termination Agreement dated April 10, 2009, each
of the outside Directors of the Company, G. Kirk Raab, Carleton A. Holstrom,
Eugene A. Bauer, MD, Peter G. Tombros, Frank M. Dougherty and Thomas P. Stagnaro
who were entitled to a Director's cash fee agreed to waive all such
accrued and unpaid Director cash fees and terminate any rights for further cash
fees. For Mr. Raab, those cash fees ceased as of April 1, 2009. For the other
Directors, those cash fees ceased as of February 1, 2009. In addition, each of
these Directors agreed to terminate immediately all of their existing stock
options in the Company (vested and unvested).
13
As
previously disclosed in our Form 10-K filed on August 28, 2009, Messers. Kane
and Rose have voluntarily terminated their employment. Messers. Kane and Rose
remain the CEO and CFO, respectively, of the Company. As of the date of this
Report, while Mr. Rose has not accepted full time employment elsewhere, Mr. Kane
is now currently also the Chairman and CEO of Patient Safety Technologies, Inc.
At May 31, 2009, the Company accrued $845,406 for the Company’s severance
obligations to Messers. Kane and Rose covering salary, payroll taxes and health
benefits. As also disclosed on our Form 8-K dated July 2, 2009, the
Company subsequently entered into a consulting agreement with Mr. Rose providing
for certain consulting fees.
ITEM 2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
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-Q, as well as the Company’s
Annual Report on Form 10-K for the fiscal year ended May 31, 2009. This
discussion, as well as the remainder of this Quarterly Report on Form 10-Q, 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-K for the fiscal year ended May 31, 2009 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.
Overview
As of the
date of this Report, the Company has no employees and insufficient funds to
cover future clinical trials and Chemistry, Manufacturing and Control or CMC
related expenses. The Company has suspended or ceased all
operations.
These
matters raise substantial doubt about the ability of the Company to continue as
a going concern.
We are a
development stage company which has been engaged in developing a class of
biopharmaceutical drugs for treating autoimmune and inflammatory diseases. Our
lead product, PRTX-100, has demonstrated effectiveness in pre-clinical studies
in regulating the immune system with persisting effects. The effectiveness
of PRTX-100 shown in pre-clinical studies using animal models may not be
predictive of the results that we would see in future clinical trials. We
currently have no product on the market. We initially targeted the autoimmune
diseases idiopathic thrombocytopenic purpura, or ITP and rheumatoid arthritis,
or RA.
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
RA. We submitted the IND to the United States Food and Drug Administration
or FDA in March 2005 and later in March 2005 the FDA verbally disclosed to us
that it had placed our IND on clinical hold, pending additional product
characterization. In August 2005, we formally replied to the FDA and in
September 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 our first
Phase I clinical trial in December 2005 and completed the Phase I clinical trial
in March 2006. This Phase I clinical trial was performed in healthy
volunteers, and was designed primarily to assess the safety and tolerability of
PRTX-100. The basic safety data demonstrated that PRTX-100 was safe and
well tolerated. There were no deaths or serious adverse events. The
pharmacokinetic (PK) profile was favorable and the pre-clinical PK data were
confirmed by the data in this Phase I clinical trial. In May 2007, we
filed an amendment to the IND with the FDA. This amendment included the
final Phase I safety study report, CMC update, and a protocol for another Phase
I clinical trial.
RA is an
autoimmune disease that causes the inflammation of the membrane lining multiple
joints, resulting in pain, stiffness, warmth, redness and swelling. The inflamed
joint lining, the synovium, can invade and damage bone and cartilage.
Inflammatory cells release enzymes and cytokines that may damage bone and
cartilage. The involved joint can lose its shape and alignment, resulting in
pain and loss of movement. In July 2007, we commenced with an additional
Phase I clinical trial designed to gain more detailed information on biomarkers,
including gene expression profiling and platelet functional assessments which
will allow for more optimized patient selection and targeting in the upcoming
clinical trials. This second Phase I clinical trial extended the clinical
investigation of PRTX-100 tolerability, PK, and pharmacodynamics, or PD, at
higher dose ranges. Dosing was completed in July 2007 and final results
indicated that the drug was safe and well tolerated. A Phase Ib
randomized, double-blind, placebo-controlled, multiple dose, dose escalation
safety and tolerability study of PRTX-100 in combination with methotrexate in
patients with active RA in South Africa has been approved.
14
ITP is an
uncommon autoimmune bleeding disorder characterized by too few platelets in the
blood. Affected individuals may have bruising, small purple marks on the
skin called petechiae, bleeding from the gums after having dental work,
nosebleeds or other bleeding that is hard to stop, and in women, heavy menstrual
bleeding. Although bleeding in the brain is rare, it can be life
threatening if it occurs. The affected individuals make antibodies against
their own platelets leading to the platelets' destruction, which in turn leads
to the abnormal bleeding. In ITP, we contracted Trident Clinical Research Pty
Ltd, a leading Australian clinical research organization, to manage and monitor
our first-in-patient ITP clinical trial. This clinical trial is designed to
provide initial multiple dose safety and PK data as well as preliminary efficacy
information. We have been approved for six sites in Australia and one in New
Zealand, all regional referral centers for treatment of chronic ITP, to conduct
a repeated dose study of PRTX-100 in chronic ITP patients. This clinical trial
began enrolling patients in the second calendar quarter of 2008. In calendar
2008, we enrolled nine patients of which five completed the trial and final
results indicated that the drug was safe and well tolerated, although no
efficacy data was obtained. Subsequently, the Company obtained protocol
approval to increase the dose range. While the Company was actively soliciting
patients in calendar 2009 under this new protocol, no patients have been
enrolled and none are currently being solicited as of the date of this
Report.
As of the
date of this Report, the Company has terminated further recruitment of
patients for its ITP clinical trials pending the raising of additional
funding, the retention of additional clinical personnel and an evaluation of the
Company's clinical trial programs.
Our
bioregulatory compounds are based on the principle of normalizing the activities
of immune cells at a more basic level than traditional pharmaceutical agents,
which act upon the end products of complex body functions. In autoimmune disease
models, PRTX-100, which is a natural compound, has reversed the pathologic
process resulting in a restoration and maintenance of normal healthy
tissue. This biotechnology could be applied to a range of serious
autoimmune diseases that affect millions of sufferers worldwide, such as
pemphigus, systemic lupus erythematosus or lupus, psoriasis, inflammatory bowel
diseases such as Crohn’s disease and ulcerative colitis, insulin-dependent
diabetes mellitus, and multiple sclerosis. To date, however, we have not
conducted any pre-clinical trials related to the treatment of these diseases and
to do so would require substantial additional capital infusions.
Our
business and laboratory operations were located in New Hope, Pennsylvania where
we continue to maintain our lease. We previously outsourced all of our
activities to contract organizations and facilities. For example, we previously
refined the manufacturing process of PRTX-100 under Current Good Manufacturing
Practice, or cGMP. With all of our operations suspended or ceased, the Company
runs the risk of a significant delay in commencing future clinical trial
programs due to the lack of adequate clinical trial material.
Our
in-house research previously included demonstrating the efficacy of PRTX-100 in
well established and characterized animal models of RA and other autoimmune
diseases. For example, we have tested PRTX-100 in the murine collagen induced
arthritis model, or CIA, which is considered to be a predictive efficacy model
for RA in humans. This is the model that was used to test the efficacy of the
FDA approved drug, etanercept, or Enbrel®. PRTX-100 has also demonstrated its
efficacy in an animal model of systemic lupus erythematosus. Additionally,
our laboratory personnel have developed a pre-clinical ITP model with data
showing that PRTX-100 inhibits the phagocytosis (ingestion) of platelets in
vitro. Platelet phagocytosis is the effector limb of ITP.
We have
concluded eight private placements of our common stock, raising a total of $42.2
million in the aggregate and carrying us through basic research, pre-clinical
and early stage clinical trials. The private placement in July 2006 raised
approximately $15.2 million. We have completed two Phase I clinical
trials, commenced with the Phase Ib clinical trial for ITP in Australia which as of the date of this Report has been terminated and
previously commenced the planning process for a Phase Ib clinical trial for RA
in South Africa, which planning process is currently suspended. Without adequate additional financing, however, the Company
will be unable to restart and fund a continuance of the FDA approval
process.
Critical
Accounting Policies
Our
financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America. Note 2 to the financial
statements describes the significant accounting policies and methods used in the
preparation of our financial statements.
We have
identified the policies below as some of the more critical to our business and
the understanding of our financial position and results of operations.
These policies may involve a high degree of judgment and complexity in their
application and represent the critical accounting policies used in the
preparation of our financial statements. Although we believe our judgments and
estimates are appropriate and correct, actual future results may differ from
estimates. If different assumptions or conditions were to prevail, the results
could be materially different from these reported results. The impact and any
associated risks related to these policies on our business operations are
discussed throughout this report where such policies affect our reported and
expected financial results.
15
The
preparation of our financial statements, in conformity with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and equity and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses during
the reporting period. These estimates have a material impact on our financial
statements and are discussed in detail throughout this report.
As part
of the process of preparing our financial statements, we are required to
estimate income taxes in each of the jurisdictions in which we operate. This
process involves estimating actual current tax expense together with assessing
temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and
liabilities, which are included within the balance sheet. We must then assess
the likelihood that our deferred tax assets will be recovered from future
taxable income and to the extent we believe that recovery is not likely, we must
establish a valuation allowance. In the event that we determine that we would be
able to realize deferred tax assets in the future in excess of the net recorded
amount, an adjustment to the deferred tax asset valuation allowance would
increase income in the period such determination was made.
We
account for our stock option grants under the provisions of SFAS No. 123R,
Share-Based Payments (“SFAS 123R”). SFAS 123R requires the recognition of the
fair value of share-based compensation in the statements of operations. The fair
value of our stock option awards was estimated using a Black-Scholes option
valuation model. This model requires the input of highly subjective assumptions
and elections in adopting and implementing SFAS 123R, including expected stock
price volatility and the estimated life of each award. The fair value of
share-based awards is amortized over the vesting period of the award and we have
elected to use the straight-line method for awards granted after the adoption of
SFAS 123R. Prior to the adoption of SFAS 123R, we accounted for our stock option
grants under the provisions of Accounting Principles Board (“APB”) Opinion
No. 25, Accounting for Stock Issued to Employees (“APB25”) and
made pro forma footnote disclosures as required by SFAS No. 148,
Accounting for Stock-Based Compensation—Transition and Disclosure, which amends
SFAS No. 123, Accounting for Stock-Based Compensation.
Results
of Operations
Research and Development Expenses
- Research and Development expenses were $193,265 and $1,021,498 for the
three months ended August 31, 2009 and 2008, respectively. The decrease of
$828,233, or 81%, for the three month period was primarily the result of
decreased employee compensation and share based compensation expense and a
decrease in product manufacturing, formulation and packaging related costs as
compared to the same period last year.
There are
significant risks and uncertainties inherent in the preclinical and clinical
studies associated with our research and development program. These studies may
yield varying results that could delay, limit or prevent a program’s advancement
through the various stages of product development and significantly impact the
costs to be incurred, and time involved, in bringing a program to completion. As
a result, the costs to complete such programs, as well as the period in which
net cash outflows from such programs are expected to be incurred, are not
reasonably estimable.
Administrative Expenses -
Administrative expenses were $146,190, and $631,831 for the three months
ended August 31, 2009 and 2008, respectively. The decrease of $485,641, or
77%, for the three month period was due to decreased employee compensation and
share based compensation expense as compared to the same periods last
year.
Professional Fees -
Professional expenses were $143,129, and $169,587, for the three months ended
August 31, 2009 and 2008. The decrease of $26,458, or 16%, for the three month
period was due to a decrease in legal, accounting, and consulting fees as
compared to the same period last year.
Interest income - Interest
income was $332, and $39,051, for the three months ended August 31, 2009 and
2008, respectively. The decrease of $38,719, or 99%, for the three month
period was attributed to a decrease in interest bearing cash balances resulting
from the use of cash in operations and lower interest rates as compared to the
same periods last year.
Net
Loss Outlook
We have
not generated any product sales revenues, have incurred operating losses since
inception and have not achieved profitable operations. Our deficit accumulated
during the development stage through August 31, 2009 is $45,067,782, and we
expect to continue to incur substantial losses in future periods if additional
financing is obtained. We expect that if we obtain additional financing then our
operating losses in future periods will be the result of continued research and
development expenses relating to PRTX-100, as well as costs incurred in
preparation for the potential commercialization of PRTX-100.
16
In
addition to obtaining additional financing, we are highly dependent on the
success of our research and development efforts and, ultimately, upon regulatory
approval and market acceptance of our products under development, particularly
our lead product candidate, PRTX-100. Even if we obtain additional
financing, we may never receive regulatory approval for any of our product
candidates, generate product sales revenues, achieve profitable operations or
generate positive cash flows from operations, and even if profitable operations
are achieved, they may not be sustained on a continuing basis.
Liquidity
and Capital Resources
Since
1999, we have incurred significant losses, and if we obtain additional financing
to restart operations, we expect to experience operating losses and negative
operating cash flow for the foreseeable future. Historically, our primary source
of cash to meet short-term and long-term liquidity needs has been the sale of
shares of our common stock. We have issued shares in private placements at a
discount to the current market price.
On
September 18, 2003, we raised $12,657,599 through the sale of 7,445,646 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.
These warrants expired on September 19, 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. All of
these warrants expire on May 25, 2010. Net of transaction costs of
$206,717, our proceeds were $4,851,168.
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. We
also issued warrants to purchase 227,074 shares of our common stock, at an
exercise price of $2.99 per share, to the placement agent. All of these
warrants expire on December 30, 2010. Net of transaction costs of
approximately $328,118, our proceeds were $5,510,941.
In the
fourth fiscal quarter of 2006, existing investors exercised 351,598 warrants
which resulted in $786,538 in cash proceeds.
On July
7, 2006, we raised $14,217,660, net of transaction costs of $959,874, 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. We also issued warrants to purchase 531,214
shares of our common stock, at an exercise price of $3.85 per share, to the
placement agent. All of these warrants expire on July 7,
2011.
In the
first fiscal quarter of 2007, existing investors and option holders exercised
133,500 warrants and 6,000 options which resulted in $315,574 in cash
proceeds.
To the
extent any further warrants are exercised, we intend to use the proceeds for
general working capital and corporate purposes. Currently, however, the exercise
price of all of our outstanding warrants as disclosed above are significantly in
excess of what our stock has been trading in calendar year 2009 as of the date
of this Report.
Net
Cash Used In Operating Activities and Operating Cash Flow Requirements
Outlook
Our
operating cash outflows for the three months ended August 31, 2009 and 2008 have
resulted primarily from research and development expenditures associated for
PRTX-100 and administrative purposes. If additional financing is obtained,
we expect to continue to use cash resources to fund operating losses and expect
to continue to incur operating losses in fiscal 2010 and beyond due to
continuing research and development activities if our operations are
restarted.
Net
Cash Used In Investing Activities and Investing Requirements
Outlook
We expect
to continue to require investments in information technology and laboratory
equipment to support our research and development activities. In August 2008, we
sold laboratory equipment with net proceeds of $200,000.
Net
Cash Provided by Financing Activities and Financing Requirements
Outlook
We had no
net cash inflows provided by financing activities for the three months ended
August 31, 2009 and 2008, respectively.
17
We may
never receive regulatory approval for any of our product candidates, generate
product sales revenues, achieve profitable operations or generate positive cash
flows from operations, and even if profitable operations are achieved, these may
not be sustained on a continuing basis. We have invested a significant portion
of our time and financial resources since our inception in the development of
PRTX-100, and our potential to achieve revenues from product sales in the
foreseeable future is dependent largely upon obtaining regulatory approval for
and successfully commercializing PRTX-100, especially in the United States. If
we obtain additional financing, we expect to continue to use our new cash and
investments resources to fund operating and investing activities.
As of
August 31, 2009, we had cash and cash equivalents of $1,866,272 and net working
capital of $818,285. We have suffered recurring losses from operations and
negative cash flows from operating activities. If we had continued
operations beyond the end of third calendar quarter, without additional funds
from third party sources, we would not have been able to meet our financial
obligations. Additional financing or potential sublicensing of PRTX-100 will be
required in order to fund and restart our operations. As a result, our
independent registered public accounting firm, Grant Thornton LLP, indicated in
their report on our 2009 financial statements that there is substantial doubt
about our ability to continue as a going concern.
Off
Balance Sheet Arrangements and Contractual Obligations
We have
entered into the following contractual obligations:
|
·
|
Employee
Agreements-Officers. As previously disclosed in our Form 10-K filed
on August 28, 2009, Messers. Kane and Rose voluntarily terminated their
employment. Messers. Kane and Rose remain the CEO and CFO, respectively,
of the Company. As of the date of this Report, while Mr. Rose has not
accepted full time employment elsewhere, Mr. Kane is now currently also
the Chairman and CEO of Patient Safety Technologies,
Inc.
|
|
·
|
Directors
Agreements. To attract and retain qualified candidates to
serve on the board of directors, we have previously entered into
agreements with G. Kirk Raab, Chairman of the Board, Carleton A. Holstrom,
Chairman of the Audit Committee, Eugene A. Bauer, MD, Peter G. Tombros,
Frank M. Dougherty and Thomas P. Stagnaro under which Messrs. Raab,
Holstrom, Dr. Bauer, Mr. Tombros, Mr. Dougherty and Mr. Stagnaro received
aggregate annual cash payments aggregating $150,000, $20,000, $20,000,
$20,000, $20,000 and $20,000 respectively, as directors’ fees.
Pursuant to a Cash Waiver & Option Termination Agreement dated April
10, 2009, each of the outside Directors of the Company, G. Kirk Raab,
Carleton A. Holstrom, Eugene A. Bauer, MD, Peter G. Tombros, Frank M.
Dougherty and Thomas P. Stagnaro who were entitled to a Director's cash
fee agreed to waive all such accrued and unpaid Director cash fees and
terminate any rights for further cash fees. For Mr. Raab, those cash fees
ceased as of April 1, 2009. For the other Directors, those cash fees
ceased as of February 1, 2009. In addition, each of these Directors agreed
to terminate immediately all of their existing stock options in the
Company (vested and unvested).
|
|
·
|
Operating Lease – Office
Space. We 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, we modified the existing lease which
added an additional 2,147 square feet and extended the lease term to
January 31, 2008 and on April 30, 2007, we modified the existing lease and
extended the lease term to January 31,
2010.
|
|
·
|
Operating Lease –
Copier. We 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.
|
ITEM 3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Intentionally
Omitted.
ITEM 4T.
CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Management
of our company is responsible for establishing and maintaining effective
disclosure controls and procedures as defined under Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934. As of August 31, 2009, an
evaluation was performed, under the supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that as of August 31, 2009, our disclosure controls
and procedures were effective at the reasonable assurance level to ensure that
information required to be disclosed by the Company in reports filed under the
Exchange Act was recorded, processed, summarized and reported within the time
period required by the Securities and Exchange Commission’s rules and forms and
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
Changes
in Internal Control Over Financial Reporting
During
the quarter ended August 31, 2009 and thereafter, there have been no changes in
our internal control over financial reporting that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
18
PART
II – OTHER INFORMATION
ITEM 1. LEGAL
PROCEEDINGS
Not
applicable.
ITEM 1A. RISK
FACTORS
Intentionally
omitted.
ITEM 2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not
applicable.
ITEM 3. DEFAULTS
UPON SENIOR SECURITIES
Not
applicable.
ITEM 4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not
applicable.
ITEM 6.
EXHIBITS
EXHIBIT
INDEX
2.1
|
Stock
Purchase Agreement among the Company, Don Hanosh and Enerdyne Corporation,
dated December 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 8-K 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 4.3 to the Company’s SB-2 filed on October 20,
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 October 20,
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 October 20,
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
|
19
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 8-K
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 8-K
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 8-K
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-QSB filed on December 6, 1999.
|
||
10.10
|
Letter
Agreement, dated March 16, 2005, effective October 26, 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 8-K 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 on
September 23, 2005.
|
20
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 8-K filed on November
14, 2005.
|
||
10.14
|
Modified
lease agreement with Union Square LP, dated November 18,
2005
|
Incorporated
by reference to Exhibit 99.1 to the Company’s Current Report Form 8-K
filed on November 22, 2005.
|
||
10.15
|
Employment
offer letter executed by Marc L. Rose, CPA, Vice President, Chief
Financial Officer, Treasurer and Corporate Secretary
|
Incorporated
by reference, to Exhibit 10.2 to the Company’s Quarterly Report on Form
10-QSB filed on January 14, 2005.
|
||
10.16†
|
Service
Contract with AAIPharma Inc., dated January 29, 2007
|
Incorporated
by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form
10-QSB filed on April 13, 2007.
|
||
10.17
|
Modified
lease agreement with Union Square LP, dated April 30, 2007
|
Incorporated
by reference to Exhibit 99.1 to the Company’s Current Report Form 8-K
filed on May 3, 2007.
|
||
10.18
|
Settlement
Agreement with Steven H. Kane, President, Chief Executive Officer and
Director dated April 14, 2009
|
Incorporated
by reference to Exhibit 10.18 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
||
10.19
|
Settlement
Agreement with Marc L. Rose, Vice President, Finance, Chief Financial
Officer, Secretary and Treasurer dated April 14, 2009
|
Incorporated
by reference to Exhibit 10.19 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
||
10.20
|
Cash
Waiver & Option Termination Agreement dated April 10, 2009 with G.
Kirk Raab, Carleton A. Holstrom, Eugene A. Bauer, MD, Peter G. Tombros,
Frank M. Dougherty and Thomas P. Stagnaro
|
Incorporated
by reference to Exhibit 10.20 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
10.21
|
Indemnification
Agreement with Directors and Executive Officers dated August 28,
2009
|
Incorporated
by reference to Exhibit 10.21 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
||
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act
|
Filed
herewith
|
||
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act
|
Filed
herewith
|
||
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
|
Filed
herewith
|
||
32.2
|
|
Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
|
|
Filed
herewith
|
†Portions of the exhibit have been
omitted pursuant to a request for confidential treatment. The confidential
portions have been filed with the SEC.
21
SIGNATURES
In
accordance with 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.
Date:
October 15, 2009
|
PROTALEX,
INC.
|
|
By: /s/ Steven H. Kane
|
||
Steven
H. Kane, President and Chief
|
||
Executive
Officer
|
Date:
October 15, 2009
|
||
By: /s/ Marc L. Rose
|
||
Marc
L. Rose, Vice President of Finance,
|
||
Chief
Financial Officer, Treasurer
|
||
and
Corporate Secretary
|
22
EXHIBIT
INDEX
2.1
|
Stock
Purchase Agreement among the Company, Don Hanosh and Enerdyne Corporation,
dated December 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 8-K 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 4.3 to the Company’s SB-2 filed on October 20,
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 October 20,
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 October 20,
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 8-K
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 8-K
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 8-K
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.
|
23
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-QSB filed on December 6, 1999.
|
||
10.10
|
Letter
Agreement, dated March 16, 2005, effective October 26, 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 8-K 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 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 8-K filed on November
14, 2005.
|
||
10.14
|
Modified
lease agreement with Union Square LP, dated November 18,
2005
|
Incorporated
by reference to Exhibit 99.1 to the Company’s Current Report Form 8-K
filed on November 22, 2005.
|
||
10.15
|
Employment
offer letter executed by Marc L. Rose, CPA, Vice President, Chief
Financial Officer, Treasurer and Corporate Secretary
|
Incorporated
by reference, to Exhibit 10.2 to the Company’s Quarterly Report on Form
10-QSB filed on January 14, 2005.
|
||
10.16†
|
Service
Contract with AAIPharma Inc., dated January 29, 2007
|
Incorporated
by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form
10-QSB filed on April 13, 2007.
|
||
10.17
|
Modified
lease agreement with Union Square LP, dated April 30, 2007
|
Incorporated
by reference to Exhibit 99.1 to the Company’s Current Report Form 8-K
filed on May 3, 2007.
|
||
10.18
|
Settlement
Agreement with Steven H. Kane, President, Chief Executive Officer and
Director dated April 14, 2009
|
Incorporated
by reference to Exhibit 10.18 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
||
10.19
|
Settlement
Agreement with Marc L. Rose, Vice President, Finance, Chief Financial
Officer, Secretary and Treasurer dated April 14, 2009
|
Incorporated
by reference to Exhibit 10.19 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
||
10.20
|
Cash
Waiver & Option Termination Agreement dated April 10, 2009 with G.
Kirk Raab, Carleton A. Holstrom, Eugene A. Bauer, MD, Peter G. Tombros,
Frank M. Dougherty and Thomas P. Stagnaro
|
Incorporated
by reference to Exhibit 10.20 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
24
10.21
|
Indemnification
Agreement with Directors and Executive Officers dated August 28,
2009
|
Incorporated
by reference to Exhibit 10.21 to the Company’s Current Report Form 10-K
filed on August 28, 2009.
|
||
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act
|
Filed
herewith
|
||
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act
|
Filed
herewith
|
||
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
|
Filed
herewith
|
||
32.2
|
|
Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
|
|
Filed
herewith
|
†Portions
of the exhibit have been omitted pursuant to a request for confidential
treatment. The confidential portions have been filed with the
SEC.
25