Cardiff Oncology, Inc. - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - Cardiff Oncology, Inc.	Financial_Report.xls
EX-31.1 - EX-31.1 - Cardiff Oncology, Inc.	a12-9778_1ex31d1.htm
EX-32.2 - EX-32.2 - Cardiff Oncology, Inc.	a12-9778_1ex32d2.htm
EX-32.1 - EX-32.1 - Cardiff Oncology, Inc.	a12-9778_1ex32d1.htm
EX-31.2 - EX-31.2 - Cardiff Oncology, Inc.	a12-9778_1ex31d2.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 000-54556

TROVAGENE, INC.

(Exact Name of small business issuer as specified in its charter)

Delaware		27-2004382
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

11055 Flintkote Avenue, Suite B, San Diego, California 92121

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (858) 217-4838

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 o

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 o No o

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. (Check one):

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x
(Do not check if a smaller
reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 14, 2012 the issuer had 69,180,357 shares of Common Stock issued and outstanding.

Table of Contents

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	23

Item 4	Controls and Procedures	29

	PART II
Item 1.	Legal Proceedings	29

Item 6.	Exhibits	29

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS.

INDEX TO FINANCIAL STATEMENTS

	Page

Condensed Consolidated Balance Sheets as of March 31, 2012 (unaudited) and December 31, 2011	4

Condensed Consolidated Statements of Operations and Comprehensive Net Loss for the Three Months Ended March 31, 2012 and 2011 (unaudited) and the period August 4, 1999 (Inception) to March 31, 2012 (unaudited)	5

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the period August 4, 1999 (Inception) to March 31, 2012 (unaudited)	6

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 (unaudited) and the period August 4, 1999 (Inception) to March 31, 2012 (unaudited)	13

Notes to Condensed Consolidated Financial Statements (unaudited)	15

Table of Contents

Trovagene, Inc. and Subsidiaries

(A development stage company)

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2012			2011

Assets
Current assets:
Cash and cash equivalents	$	586,777		$	700,374
Accounts receivable	76,533			99,140
Prepaid expenses	42,441			42,658
Total current assets	705,751			842,172
Property and equipment, net	114,323			22,504
Other assets	362,081			174,581
Total assets	$	1,182,155		$	1,039,257

Liabilities and Stockholders’ Deficiency
Current liabilities:
Accounts payable	$	946,952		$	928,364
Accrued expenses	585,775			501,517
Total current liabilities	1,532,727			1,429,881
Derivative financial instruments	3,983,430			3,840,644
Total liabilities	5,516,157			5,270,525

Commitments and contingencies (Note 8)
Stockholders’ deficiency

Preferred stock, $0.001 par value, 20,000,000 shares authorized, 95,600 shares outstanding at March 31, 2012 and December 31, 2011, designated as Series A Convertible Preferred Stock with liquidation preference of $956,000 at March 31, 2012 and December 31, 2011	96			96

Common stock, $0.0001 par value, 100,000,000 shares authorized, 67,146,857 and 64,422,157 issued and outstanding at March 31, 2012 and December 31, 2011, respectively	6,714			6,442

Additional paid-in capital	40,429,821			39,360,625
Deficit accumulated during development stage	(44,770,633		)	(43,598,431		)
Total stockholders’ deficiency	(4,334,002		)	(4,231,268		)

	$	1,182,155		$	1,039,257

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Contents

Trovagene, Inc. and Subsidiaries
(A Development Stage Company)

Consolidated Statements of Operations and Comprehensive Loss

	Three months ended March 31,						For the period August 4, 1999 (Inception) to
	2012			2011			March 31, 2012
Royalty income	$	34,153		$	89,082		$	679,223
License fees	—			—			1,363,175
Total revenues	34,153			89,082			2,042,398
Operating expenses:
Research and development	337,407			258,016			15,866,560
Purchased in-process research and development expense-related party	—			—			2,666,869
General and administrative	826,964			551,044			23,367,818
Total operating expenses	1,164,371			809,060			41,901,247
Operating loss	(1,130,218		)	(719,978		)	(39,858,849		)
Other income (expense):
Interest income	—			171			266,883
Interest expense	—			(28,511		)	(1,325,372		)
Amortization of deferred debt costs and original issue discount	—			—			(2,346,330		)
Change in fair value of derivative instruments	(32,424		)	196,331			1,193,582
Gain on extinguishment of debt	—			—			623,383
Liquidated damages and other forbearance agreement settlement costs	—			—			(1,758,111		)
Net loss and Comprehensive loss	(1,162,642		)	(551,987		)	(43,204,814		)

Preferred stock dividend	(9,560		)	(9,560		)	(317,478		)
Cumulative effect of early adoption of ASC 815-40 on November 1, 2006	—			—			(455,385		)
Series A convertible preferred stock beneficial conversion feature accreted as a dividend	—			—			(792,956		)
Net loss and Comprehensive loss attributable to common stockholders	$	(1,172,202	)	$	(561,547	)	$	(44,770,633	)
Weighted average shares of common stock outstanding:
Basic and diluted	66,010,076			54,137,893
Net loss per common share:
Basic and diluted	$	(0.02	)	$	(0.01	)

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

Trovagene, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficiency)

																	Deficit
														Deferred			Accumulated			Total
											Additional			Stock			During			Stockholders’
	Common Stock					Treasury Shares					Paid-In			Based			Development			Equity
	Shares		Amount			Shares		Amount			Capital			Compensation			Stage			(Deficiency)
Balance, August 4, 1999 (Inception)	0		$	0		0		$	0		$	0		$	0		$	0		$	0
Issuance of common stock to founders for cash at $0.0002 per share	222,000,000		22,200								19,800									42,000
Net loss																	(14,760		)	(14,760		)
Balance, January 31, 2000	222,000,000		22,200			0		0			19,800			0			(14,760		)	27,240
Net loss																	(267,599		)	(267,599		)
Balance, January 31, 2001	222,000,000		22,200			0		0			19,800			0			(282,359		)	(240,359		)
Capital contribution of cash											45,188									45,188
Net loss																	(524,224		)	(524,224		)
Balance, January 31, 2002	222,000,000		22,200			0		0			64,988			0			(806,583		)	(719,395		)
Issuance of common stock for cash at $0.0005 per share	7,548,000		755								2,645									3,400
Capital contribution of cash	*										2,500									2,500
Net loss																	(481,609		)	(481,609		)
Balance, January 31, 2003	229,548,000		22,955			0		0			70,133			0			(1,288,192		)	(1,195,104		)
Net loss																	(383,021		)	(383,021		)
Balance, January 31, 2004	229,548,000		22,955			0		0			70,133			0			(1,671,213		)	(1,578,125		)
Waiver of founders’ deferred compensation											1,655,031									1,655,031
Private placement of common stock	2,645,210		265								2,512,685									2,512,950
Redemption of shares held by Panetta Partners, Inc.	(218,862,474	)	(21,886		)						(478,114		)							(500,000		)
Costs associated with recapitalization											(301,499		)							(301,499		)
Share exchange with founders	2,258,001		226								(226		)							0
Issuance of treasury shares						350,000		35			(35		)							0
Issuance of treasury shares to escrow	350,000		35			(350,000	)	(35		)	0									0
Issuance of common stock and warrants for cash at $1.95 per share	1,368,154		136								2,667,764									2,667,900
Issuance of 123,659 warrants to selling agents											403,038									403,038
Finders warrants charged to cost of capital											(403,038		)							(403,038		)
Deferred stock-based compensation											1,937,500			(1,937,500		)				0
Amortization of deferred stock-based compensation														245,697						245,697
Options issued to consultants											1,229,568									1,229,568
Warrants issued to consultants											2,630,440									2,630,440
Net loss																	(5,371,027		)	(5,371,027		)
Balance, January 31, 2005	17,306,891		$	1,731		0		$	0		$	11,923,247		$	(1,691,803	)	$	(7,042,240	)	$	3,190,935

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Trovagene, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficiency) (Continued)

																				Deficit
																	Deferred			Accumulated			Total
														Additional			Stock			During			Stockholders’
	Preferred Stock			Common Stock					Treasury Shares					Paid-In			Based			Development			Equity
	Shares	Amount		Shares		Amount			Shares		Amount			Capital			Compensation			Stage			(Deficiency)
Balance, January 31, 2005	0	$	0	17,306,891		$	1,731		0		$	0		$	11,923,247		$	(1,691,803	)	$	(7,042,240	)	$	3,190,935
Private placement of common stock				102,564		10								199,990									200,000
Payment of selling agents fees and expenses in cash														(179,600		)							(179,600		)
Common stock issued to selling agents				24,461		2								(2		)							0
Private placement of common stock				1,515,384		152								2,954,847									2,954,999
Payment of selling agents fees and expenses in cash														(298,000		)							(298,000		)
Issuance of 121,231 warrants issued to selling agents														222,188									222,188
Selling agents warrants charged to cost of capital														(222,188		)							(222,188		)
Private placement of preferred stock and warrants for cash at $10.00 per share (restated)	277,100	277												2,770,723									2,771,000
Accretion of preferred stock dividends (restated)														792,956						(792,956		)	0
Value of warrants reclassified to derivative financial instrument liability														(567,085		)							(567,085		)
Payment of selling agents fees and expenses in cash														(277,102		)							(277,102		)
Issuance of 105,432 warrants issued to selling agents														167,397									167,397
Selling agents warrants charged to cost of capital														(167,397		)							(167,397		)
Return of treasury shares from escrow				(350,000	)	(35		)	350,000		35												0
Retirement of treasury shares									(350,000	)	(35		)	35									0
Common stock issued for services				5,000		0								16,500									16,500
Stock-based compensation expense for non-employees														2,928,298									2,928,298
Amortization of deferred stock-based compensation																	645,832						645,832
Preferred stock dividend																				(60,741		)	(60,741		)
Net loss																				(7,844,326		)	(7,844,326		)
Balance, January 31, 2006	277,100	$	277	18,604,300		$	1,860		0		$	0		$	20,264,807		$	(1,045,971	)	$	(15,740,263	)	$	3,480,710

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Trovagene, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficiency) (Continued)

															Deficit
												Deferred			Accumulated			Total			Temporary Equity—
									Additional			Stock			During			Stockholders’			Unregistered
	Preferred Stock					Common Stock			Paid-In			Based			Development			Equity			Common Stock
	Shares		Amount			Shares	Amount		Capital			Compensation			Stage			(Deficiency)			Shares	Amount
Balance, January 31, 2006	277,100		$	277		18,604,300	$	1,860	$	20,264,807		$	(1,045,971	)	$	(15,740,263	)	$	3,480,710		—	$	—
Conversion of Series A preferred stock and issuance of common stock	(174,000	)	(174		)	826,431	83		91									—			—	—
Implementation of ASC 718									(1,045,971		)	1,045,971						0
Private placement of common stock						754,721	75		943,326									943,401
Payment of selling agents fees and expenses in cash									(118,341		)							(118,341		)
Issuance of 94,672 warrants to selling agents									55,568									55,568
Selling agents warrants charged to cost of apital									(55,568		)							(55,568		)
Issuance of common stock and warrants for cash at $1.00 per share																					1,000,000	1,000,000
Payment of finders fees and expenses in cash																						(80,000		)
Value of warrants classified as derivative financial instrument liability																						(15,000		)
Issuance of 164,550 units to finder									167,856									167,856
Common Stock issued for services						8,696	1		9,565									9,566
Value attributed to warrants issued with 6% convertible debentures									1,991,822									1,991,822
Reclassification of derivative financial instruments to stockholders’ equity upon adoption of ASC 815-40									567,085						(455,385		)	111,700
Warrants issued for services									101,131									101,131
Donated services									62,500									62,500
Stock based compensation									1,572,545									1,572,545
Preferred stock dividend															(59,164		)	(59,164		)
Net loss															(7,134,067		)	(7,134,067		)
Balance, January 31, 2007	103,100		$	103		20,194,148	$	2,019	$	24,516,416		$	0		$	(23,388,879	)	$	1,129,659		1,000,000	$	905,000

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Trovagene, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficiency) (Continued)

												Deficit
												Accumulated			Total			Temporary Equity—
									Additional			During			Stockholders’			Unregistered
	Preferred Stock					Common Stock			Paid-In			Development			Equity			Common Stock
	Shares		Amount			Shares	Amount		Capital			Stage			(Deficiency)			Shares		Amount
Balance, January 31, 2007	103,100		$	103		20,194,148	$	2,019	$	24,516,416		$	(23,388,879	)	1,129,659			1,000,000		$	905,000

Conversion of preferred stock to common stock	(7,500	)	(7		)	46,875	5		2						—

Private placement of common stock						1,700,000	170		849,830						850,000
Payment of selling agent fees and expenses									(51,733		)				(51,733		)
Issuance of warrants to selling agents									45,403						45,403
Selling agent warrants charged to cost of capital									(45,403		)				(45,403		)

Derivative liability — warrants at issuance									(45,371		)				(45,371		)
Donated services									275,000						275,000
Stock-based compensation expense									914,847						914,847
Preferred stock dividend												(35,054		)	(35,054		)
Net loss												(4,683,141		)	(4,683,141		)
Balance, December 31, 2007	95,600		$	96		21,941,023	$	2,194	$	26,458,991		$	(28,107,074	)	(1,645,793		)	1,000,000		$	905,000

Reclassification of common stock initially recorded as temporary equity						1,000,000	100		904,900						905,000			(1,000,000	)	(905,000		)

Private placement of common stock						1,984,091	198		1,144,802						1,145,000
Payment of selling agents fees and expenses									(74,500		)				(74,500		)

Conversion of debenture to common stock						187,282	19		93,622						93,641

Derivative liability — warrants at issuance									(201,122		)				(201,122		)

Donated services									390,750						390,750

Stock based compensation									543,697						543,697

Preferred stock dividend												(38,240		)	(38,240		)

Net loss												(5,166,240		)	(5,166,240		)
Balance, December 31, 2008	95,600		$	96		25,112,396	$	2,511	$	29,261,140		$	(33,311,554	)	$	(4,047,807	)	0		$	0

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Trovagene, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficiency) (Continued)

										Deficit
										Accumulated			Total
							Additional			During			Stockholders’
	Preferred Stock			Common Stock			Paid-In			Development			Equity
	Shares	Amount		Shares	Amount		Capital			Stage			(Deficiency)

Balance December, 31, 2008	95,600	$	96	25,112,396	$	2,511	$	29,261,140		$	(33,311,554	)	$	(4,047,807	)
Issuance of shares of common stock in connection with convertible debenture forbearance agreement				5,437,472	544		1,739,415						1,739,959
Issuance of shares of common stock in payment of convertible debenture interest				360,881	36		112,255						112,291
Private placements of common stock				2,930,000	293		1,464,707						1,465,000
Issuance of common stock pursuant to a non-exclusive selling agent’s agreement ‘				413,379	41		306,696						306,737
Issuance of shares of common stock re settlement for consulting services rendered				957,780	96		478,794						478,890
Stock based compensation expense							177,836						177,836
Preferred stock dividend										(38,240		)	(38,240		)
Derivative liability — warrants and price protected units upon issuance							(1,497,568		)				(1,497,568		)
Net loss										(2,483,807		)	(2,483,807		)
Balance, December 31, 2009	95,600	$	96	35,211,908	$	3,521	$	32,043,275		$	(35,833,601	)	$	(3,786,709	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Trovagene, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficiency) (Continued)

									Accumulated
	Preferred Stock			Common Stock			Additional Paid-In		Deficit During Development			Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Capital		Stage			(Deficiency)

Balance, December 31, 2009	95,600	$	96	35,211,908	$	3,521	32,043,275		(35,833,601		)	$	(3,786,709	)
Issuance of shares of common stock in payment of convertible debenture interest				513,712	51		115,920					115,971
Issuance of common stock to selling agents				476,000	48		(48	)				—
Private placement of units				3,469,400	347		1,734,353					1,734,700
Derivative liability — price protected units upon issuance							(1,010,114	)				(1,010,114		)
Consulting services settled via issuance of stock				425,000	43		212,457					212,500
Shares issued in settlement of legal fees				175,439	17		99,983					100,000
Stock issued in payment of deferred salary to former CEO				76,472	8		28,338					28,346
Shares issued in connection with Agreement & Plan of Merger with Etherogen, Inc,				12,262,782	1,226		2,770,163					2,771,389
Stock Based Compensation expense							325,930					325,930
Preferred stock dividend									(38,240		)	(38,240		)

Net loss									(5,449,138		)	(5,449,138		)

Balance, December 31, 2010	95,600	$	96	52,610,713	$	5,261	36,320,257		$	(41,320,979	)	$	(4,995,365	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Trovagene, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficiency)

										Deficit
										Accumulated
	Preferred	Preferred		Common	Common		Additional			During			Total
	Stock	Stock		Stock	Stock		Paid-In			Development			Stockholders’
	Shares	Amount		Shares	Amount		Capital			Stage			Deficiency

Balance, December 31, 2010	95,600	$	96	52,610,713	$	5,261	$	36,320,257		$	(41,320,979	)	$	(4,995,365	)
Issuance of shares of common stock in payment of convertible debenture interest in accordance with Forbearance Agreement				385,284	38		85,237						85,275
Private placement of units				5,147,000	515		2,572,985						2,573,500
Derivative liability-fair value of warrants and price protected units issued							(1,298,618		)				(1,298,618		)
Shares issued in connection with Board Compensation				250,500	25		125,225						125,250
Issuance of common stock to shareholder as finder’s fees				541,550	54		(54		)				—
Issuance of common stock in connection with consulting services				350,000

Cardiff Oncology, Inc. - FORM 10-Q - May 15, 2012

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