Delaware
|
3841
|
83-0221517
|
||
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
No.)
|
||
2600
Stemmons Freeway, Suite 176
Dallas,
Texas 75207
(214)
905-5100
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of
Registrant’s Principal Executive Offices)
|
||||
Stephen
B. Thompson
Chief
Financial Officer
Access
Pharmaceuticals, Inc.
2600
Stemmons Freeway, Suite 176
Dallas,
Texas 75207
(214)
905-5100
(Name,
Address, Including Zip Code, and Telephone Number, Including Area
Code, of
Agent for Service)
|
with
a copy to:
|
John
J. Concannon III, Esq.
Bingham
McCutchen LLP
150
Federal Street
Boston,
MA 02110
(617)
951-8000
|
Title
of Each Class of
Securities
to be Registered
|
Amount
to
be
Registered
|
Proposed
Maximum
Offering
Price
Per
Security
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount
of
Registration
Fee
|
||||
Common
stock, $0.01 par value per share
|
10,757,864
(1)
|
$2.60
(5)
|
$27,970,447
|
$
859 (5)
|
||||
Common
stock, $0.01 par value per share
|
3,649,880
(2)
|
$2.60
(5)
|
$
9,489,688
|
$
292 (5)
|
||||
Common stock, $0.01 par value per share | 772,728 (3) | $2.60 (5) | $ 2,009,093 | $ 62 (5) | ||||
Common stock, $0.01 par value per share | 1,380,047 (4) | $2.60 (5) | $ 3,588,123 | $ 111 (5) | ||||
Total
Common stock, $0.01 par value per share
|
16,560,519
|
$43,057,351
|
$
1,324 (5)
|
|||||
Page
|
|
PROSPECTUS SUMMARY |
1
|
EXPLANATORY
NOTE
|
1
|
ABOUT
ACCESS
|
1
|
SUMMARY
OF THE OFFERING
|
4
|
SUMMARY
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
|
5
|
RISK FACTORS | 6 |
FORWARD-LOOKING STATEMENTS | 15 |
SELLING STOCKHOLDERS | 16 |
USE OF PROCEEDS | 18 |
PLAN OF DISTRIBUTION | 18 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND | |
RESULTS
OF OPERATIONS
|
21 |
DESCRIPTION OF BUSINESS | 32 |
MANAGEMENT - DIRECTORS AND EXECUTIVE OFFICERS | 45 |
LEGAL PROCEEDINGS | 57 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 57 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 62 |
MARKET FOR OUR COMMON STOCK | 63 |
SELECTED CONDENSED CONSOLIDATED FINANCIAL INFORMATION | 65 |
SUPPLEMENTARY FINANCIAL INFORMATION | 65 |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 65 |
DESCRIPTION OF SECURITIES | 67 |
EXPERTS | 69 |
LEGAL MATTERS | 69 |
WHERE YOU CAN FIND MORE INFORMATION | 69 |
FINANCIAL STATEMENTS | F-1 |
Compound
|
Originator
|
Technology
|
Indication
|
Clinical
Stage
(1)
|
||||
MuGard™
|
Access
|
Mucoadhesive
liquid
|
Mucositis
|
Marketing
clearance received
|
||||
ProLindacTM
(Polymer
Platinate,
AP5346) (2)
|
Access
- U London
|
Synthetic
polymer
|
Cancer
|
Phase
2
|
||||
Oral
Insulin
|
Access
|
Cobalamin
|
Diabetes
|
Pre-Clinical
|
||||
Oral
Delivery System
|
Access
|
Cobalamin
|
Various
|
Pre-Clinical
|
||||
Cobalamin-Targeted
Therapeutics
|
Access
|
Cobalamin
|
Anti-tumor
|
Pre-Clinical
|
||||
(1) |
For
more information, see “Government Regulation” for description of clinical
stages.
|
(2) |
Licensed
from the School of Pharmacy, The University of London. Subject to
a 1%
royalty and milestone payments on
sales.
|
Common
stock offered by Access:
|
None.
|
Common
stock offered by selling shareholders:
|
16,560,519
shares, which includes 10,757,864 shares issuable upon conversion
of
Series A Preferred Stock, 3,649,880 issuable upon exercise of
warrants, 1,380,047 shares to be issued as dividends and 772,728
issuable
upon exercise of warrants as described
above.
|
Common
stock outstanding:
|
As
of December 10, 2007, 3,575,114 shares of our common stock were
issued and outstanding.
|
Offering
Price:
|
To
be determined by the prevailing market price for the shares at the
time of
the sale or in negotiated
transactions.
|
Proceeds
to Access:
|
We
will not receive proceeds from the resale of shares by the selling
shareholders. If the warrants described herein are fully exercised
without
using any applicable cashless exercise provisions, we will receive
approximately $13,817,763 in cash from the warrant
holders.
|
Use
of proceeds:
|
We
will not receive any of the proceeds from the sale by any selling
shareholder of our common stock offered hereby, although in the event
that
the warrants are fully exercised without using any applicable cashless
exercise provisions, we will receive approximately $13,817,763 in
cash. We
intend to use these proceeds, if any, for general corporate
purposes.
|
OTC
Bulletin Board Symbol:
|
ACCP:OB
|
For
the Nine Months
Ended
September
30
|
For
the Year Ended December 31,
|
|||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||
(in
thousands, except amounts per
share)
|
Consolidated
Statement of Operations and Comprehensive Loss
Data:
|
Total
revenues
|
$
|
6
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
89
|
Operating
loss
|
(4,988
|
)
|
(4,129
|
)
|
(5,175
|
)
|
(9,622
|
)
|
(6,003
|
)
|
(5,426
|
)
|
(5,925
|
)
|
||||||||
Interest
and miscellaneous income
|
72
|
278
|
294
|
100
|
226
|
279
|
594
|
|||||||||||||||
Interest
and other expense
|
(3,277
|
)
|
(5,244
|
)
|
(7,436
|
)
|
(2,100
|
)
|
(1,385
|
)
|
(1,281
|
)
|
(1,278
|
)
|
||||||||
Unrealized
loss on fair value of warrants
|
-
|
(1,107
|
)
|
(1,107
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||
Income
tax benefit
|
-
|
-
|
173
|
4,067
|
-
|
-
|
-
|
|||||||||||||||
Loss
from continuing operations
|
(8,193
|
)
|
(10,202
|
)
|
(13,251
|
)
|
(7,555
|
)
|
(7,162
|
)
|
(6,428
|
)
|
(6,520
|
)
|
||||||||
Discontinued
operations net of taxes
|
||||||||||||||||||||||
($173
in 2006 and $4,067 in 2005)
|
-
|
-
|
377
|
5,855
|
(3,076
|
)
|
(507
|
)
|
(2,864
|
)
|
||||||||||||
Net
loss
|
(8,193
|
)
|
(10,202
|
)
|
(12,874
|
)
|
(1,700
|
)
|
(10,238
|
)
|
(6,935
|
)
|
(9,384
|
)
|
||||||||
Common
Stock Data:
|
||||||||||||||||||||||
Net
loss per basic and
diluted
common share
|
$
|
(2.31
|
)
|
$
|
(2.89
|
)
|
$
|
(3.65
|
)
|
$
|
(0.53
|
)
|
$
|
(3.38
|
)
|
$
|
(2.61
|
)
|
$
|
(3.58
|
)
|
|
Weighted
average basic and
diluted
common shares
outstanding
|
3,544
|
3,531
|
3,532
|
3,237
|
3,032
|
2,653
|
2,621
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||
(in
thousands)
|
||||||||
Consolidated
Balance Sheet Data:
|
Cash,
cash equivalents and
short
term investments
|
$
|
1,176
|
$
|
705
|
$
|
4,389
|
$
|
474
|
$
|
2,261
|
$
|
2,587
|
$
|
9,776
|
||||||||
Restricted
cash
|
-
|
-
|
-
|
103
|
1,284
|
649
|
468
|
|||||||||||||||
Total
assets
|
3,500
|
7,073
|
6,426
|
7,213
|
11,090
|
11,811
|
19,487
|
|||||||||||||||
Deferred
revenue
|
1,167
|
173
|
173
|
173
|
1,199
|
1,184
|
1,199
|
|||||||||||||||
Convertible
notes, net of discount
|
16,906
|
17,608
|
8,833
|
7,636
|
13,530
|
13,530
|
13,530
|
|||||||||||||||
Total
liabilities
|
20,691
|
21,272
|
16,313
|
11,450
|
17,751
|
17,636
|
18,998
|
|||||||||||||||
Total
stockholders' equity (deficit)
|
(17,191
|
)
|
(14,199
|
)
|
(9,887
|
)
|
(4,237
|
)
|
(6,661
|
)
|
(5,825
|
)
|
489
|
|
•
|
|
unanticipated
issues in integrating information, communications and other systems;
|
|
•
|
|
retaining
key employees;
|
|
•
|
|
consolidating
corporate and administrative infrastructures;
|
|
•
|
|
the
diversion of management’s attention from ongoing business concerns; and
|
|
•
|
|
coordinating
geographically separate organizations.
|
· |
third-party
payers' increasing challenges to the prices charged for medical products
and services;
|
· |
the
trend toward managed health care in the United States and the concurrent
growth of HMOs and similar organizations that can control or significantly
influence the purchase of healthcare services and products;
and
|
· |
legislative
proposals to reform healthcare or reduce government insurance
programs.
|
· |
Mucoadhesive
technology in 2021,
|
· |
ProLindac™
in 2021,
|
· |
Cobalamin
mediated technology between 2008 and
2019
|
Selling
Stockholder
|
Shares
Beneficially
Owned
Before
Offering
(1)
|
Percentage
of
Outstanding
Shares
Beneficially
Owned
Before
Offering
|
Shares
to
be Sold in the
Offering
|
Percentage
of
Outstanding
Shares
Beneficially
Owned
After
Offering
|
Mark J. Alvino (2) | 80,525 | 2.2% | 9,091 | 2.0% |
Beach
Capital LLC (3)
|
1,040,405 | 22.5% |
608,587
|
10.8% |
Brio
Capital LP (4)
|
75,000
|
2.1% |
75,000
|
- |
Catalytix
LDC Life Science
Hedge AC (5)
|
24,999
|
*
|
24,999
|
-
|
Cobblestone
Asset Mangement LLC (6)
|
155,450
|
4.2% |
125,000
|
* |
Cranshire
Capital, LP (7)
|
250,000 | 6.5% |
250,000
|
- |
Credit
Suisse Securities (USA) LLC (8)
|
500,000 | 12.3% |
500,000
|
- |
Enable
Growth Partners LP (9)
|
249,999
|
6.5% |
249,999
|
- |
Howard Fischer (10) | 54,545 | 1.5% | 9,091 | 1.3% |
Lake
End Capital LLC (11)
|
1,426,216 | 28.5% |
994,398
|
10.8% |
Dennis
Lavalle (12)
|
45,000 | 1.2% |
45,000
|
- |
Midsummer
Investment, Ltd (13)
|
750,000 | 17.3% |
750,000
|
- |
Oracle
Institutional Partners LP (14)
|
390,828 | 9.9% |
380,399
|
* |
Oracle
Offshore Ltd. (15)
|
76,893 | 2.1% |
71,886
|
*
|
Oracle
Partners, LP (16)
|
1,622,482 | 32.8% |
1,374,831
|
6.9% |
Perceptive
Life Sciences
Master Fund Ltd (17)
|
999,999
|
21.9%
|
999,999
|
-
|
Rockmore
Investment
Master Fund Ltd (18)
|
249,999
|
6.5%
|
249,999
|
-
|
Rodman
& Renshaw LLC (19)
|
109,000
|
3.0% |
109,000
|
- |
SAM
Oracle Investments, Inc (20)
|
389,169 | 9.9% |
359,433
|
* |
SCO
Capital Partners, LLC (21)
|
9,993,760 | 73.7% |
6,993,761
|
45.6% |
SCO Capital Partners LP (22) | 999,999 | 21.9% | 999,999 | - |
Total:
|
19,484,268 |
|
15,180,472
|
|
(1) |
Applicable
percentage of ownership is based on 3,575,114 shares of common stock
outstanding as of December 10, 2007, together with securities exercisable
or convertible into shares of common stock within 60 days of December
10,
2007, for each stockholder. Beneficial
ownership is determined in accordance with Rule 13d-3(d) promulgated
by the Commission under the Securities and Exchange Act of 1934,
as
amended. Shares of common stock issuable pursuant to options, warrants
and
convertible securities are treated as outstanding for computing the
percentage of the person holding such securities but are not treated
as
outstanding for computing the percentage of any other person. Unless
otherwise noted, each person or group identified possesses sole voting
and
investment power with respect to shares, subject to community property
laws where applicable. Shares not outstanding but deemed beneficially
owned by virtue of the right of a person or group to acquire them
within
60 days are treated as outstanding only for purposes of determining
the number of and percent owned by such person or group.Unless
a holder of Series A Cumulative Convertible Preferred Stock either
elected
otherwise prior to the purchase of such preferred stock or elects
otherwise upon not less than 61 days prior written notice, its ability
to
convert its Series A Cumulative Convertible Preferred Stock into
common
stock or to vote on an as-if-converted to common stock basis is
restricted pursuant to a beneficial ownership cap to the extent
that such conversion would result in the holder owning more than
4.99% of
our issued and outstanding common stock or voting together with the
common
stock on an as-if-converted to common stock basis in respect of more
than
4.99% of our issued and outstanding common stock. The warrants
issued in connection with the Series A Cumulative Convertible Preferred
Stock are subject to a similar beneficial ownership cap restriction
on
their exercise. SCO Capital Partners LLC, SCO Capital Partners,
L.P. and Beach Capital LLC, have elected not to be governed by these
restrictions. For purposes of the table, beneficial ownership
has been calculated as if there were no such beneficial ownership
cap.
|
|
(2)
|
Mark
J. Alvino is Managing Director of Griffin Securities
LLC. Mr. Alvino is a director of Access designated by SCO Capital
Partners
LLC pursuant to an agreement between SCO Capital Partners LLC and
Access.
Mr. Alvino is known to beneficially own warrants to purchase an
aggregate
of 55,525 shares of Access’ Common Stock and options to purchase 25,000
shares of Access’ Common Stock pursuant to the 2005 Equity Incentive
Plan.
|
(3)
|
Beach
Capital LLC is known to directly beneficially own warrants to purchase
an
aggregate of 435,197 shares of Access’ Common Stock and Series A Preferred
Stock which may be converted into an aggregate of 514,299 shares
of
Access’ Common Stock. Beach Capital LLC and affiliates (SCO Capital
Partners LP and SCO Capital Partners LLC) are known to beneficially
own
warrants to purchase an aggregate of 5,551,770 shares of Access’ Common
Stock and 6,410,436 shares of Common Stock issuable to them upon
conversion of Series A Preferred Stock. Steven H. Rouhandeh, in
his
capacity as managing member of Beach Capital LLC has the power
to direct
the vote and disposition of the shares owned by Beach Capital
LLC. Beach Capital LLC has opted out of the beneficial
ownership cap described above. Each of Mr. Davis and Mr. Alvino,
Access’
directors and Mr. Davis an executive with SCO Capital Partners
LLC,
disclaim beneficial ownership of such shares except to the extent
of his
pecuniary interest therein.
|
(4)
|
Brio
Capital LP is known to beneficially own an aggregate of warrants
to
purchase and aggregate of 25,000 shares of Access’ Common Stock and Series
A Preferred Stock which may be converted into an aggregate of 50,000
shares of Access’ Common Stock.
|
(5)
|
Catalytix
LDC Life Science Hedge AC is known to beneficially
own warrants to purchase an aggregate of 8,333 shares of Access’ Common
Stock and Series A Preferred Stock which may be converted into
an
aggregate of 16,666 shares of Access’ Common
Stock.
|
(6)
|
Cobblestone
Asset Management LLC is known to beneficially own an aggregate
of 30,450
shares of Access’ Common Stock, warrants to purchase an aggregate of
41,667 shares of Access’ Common Stock and Series A Preferred Stock which
may be converted into an aggregate of 83,333 shares of Access’ Common
Stock.
|
(7)
|
Cranshire
Capital, LP is known to beneficially own warrants to purchase an
aggregate
of 83,333 shares of Access’ Common Stock and Series A Preferred Stock
which may be converted into an aggregate of 166,667 shares of Access’
Common Stock. Michael P. Koplin, the president of Downsview Capital,
Inc.,
the general partner of Cranshire Capital, L.P., has sole voting
control
and investment discretion over securities held by Cranshire Capital,
L.P.
Each of Michael P. Koplin and Downsview Capital, Inc. disclaims
beneficial
ownership of shares held by Cranshire Capital,
L.P.
|
(8)
|
Credit
Suisse Securities (USA) LLC is known to beneficially
own warrants to purchase an aggregate of 166,667 shares of Access’ Common
Stock and Series A Preferred Stock which may be converted into
an
aggregate of 333,333 shares of Access’ Common
Stock.
|
(9)
|
Enable
Growth Partners LP is known to beneficially own warrants to purchase
an
aggregate of 83,333 shares of Access’ Common Stock and Series A Preferred
Stock which may be converted into an aggregate of 166,666 shares
of
Access’ Common Stock.
|
(10)
|
Howard
Fischer is known to beneficially own warrants to
purchase an aggregate of 54,545 shares of Access’ Common
Stock.
|
(11)
|
Lake
End Capital LLC is known to beneficially own warrants to purchase
an
aggregate of 716,482 shares of Access’ Common Stock and Series A Preferred
Stock which may be converted into an aggregate of 709,734 shares
of
Access’ Common Stock. Lake End Capital LLC and Mr. Davis are known to
beneficially own warrants and options to purchase an aggregate
of 747,302
of Access’ Common Stock and 709,734 shares of Common Stock issuable upon
conversion of Series A Preferred Stock. Jeffrey B. Davis, in his
capacity as managing member of Lake End Capital LLC, has the power
to
direct the vote and disposition of the shares owned by Lake End
Capital
LLC. Mr. Davis is President of SCO Securities LLC, a wholly-owned
subsidiary of SCO Financial Group LLC. Mr. Davis is a director
of Access
designated by SCO Capital Partners LLC pursuant to an agreement
between
SCO Capital Partners LLC and
Access.
|
(12)
|
Dennis
Lavalle is known to beneficially own warrants to purchase an aggregate
of
15,000 shares of Access’ Common Stock and Series A Preferred Stock which
may be converted into an aggregate of 30,000 shares of Access’ Common
Stock.
|
(13)
|
Midsummer
Investment, Ltd. is known to beneficially own
warrants to purchase an aggregate of 250,000 shares of Access’ Common
Stock and Series A Preferred Stock which may be converted into
an
aggregate of 500,000 shares of Access’ Common
Stock.
|
(14)
|
Oracle
Institutional Partners LP is known to beneficially own an aggregate
of
10,429 shares of Access’ Common Stock, warrants to purchase an aggregate
of 126,800 shares of Access’ Common Stock and Series A Preferred Stock
which may be converted into an aggregate of 253,599 shares of Access’
Common Stock. Larry N. Feinberg is a partner in Oracle Partners,
L.P.
Oracle Partners, L.P. and affiliates (Oracle Institutional Partners,
L.P.,
Oracle Investment Management, Inc., SAM Oracle Fund, Inc. and Mr.
Feinberg) are known to beneficially own an aggregate of 292,823
shares of
Access’ Common Stock, warrants to purchase an aggregate of 728,850 shares
of Access’ Common Stock and Series A Preferred Stock which may be
converted into an aggregate of 1,457,699 shares of Access’ Common
Stock.
|
(15)
|
Oracle
Offshore Ltd is known to beneficially own an aggregate of 5,007
shares of
Access’ Common Stock, warrants to purchase an aggregate of 23,962 shares
of Access’ Common Stock and Series A Preferred Stock which may be
converted into an aggregate of 47,924 shares of Access’ Common Stock.
Larry N. Feinberg is a partner in Oracle Partners, L.P. Oracle
Partners,
L.P. and affiliates (Oracle Institutional Partners, L.P., Oracle
Investment Management, Inc., SAM Oracle Fund, Inc. and Mr. Feinberg)
are
known to beneficially own an aggregate of 292,823 shares of Access’ Common
Stock, warrants to purchase an aggregate of 728,850 shares of Access’
Common Stock and Series A Preferred Stock which may be converted
into an
aggregate of 1,457,699 shares of Access’ Common
Stock.
|
(16)
|
Oracle
Partners, LP is known to beneficially own an
aggregate of 247,651 shares of Access’ Common Stock, warrants to purchase
an aggregate of 458,277 shares of Access’ Common Stock and Series A
Preferred Stock which may be converted into an aggregate of 916,554
shares
of Access’ Common Stock. Larry N. Feinberg is a partner in Oracle
Partners, L.P. Oracle Partners, L.P. and affiliates (Oracle Institutional
Partners, L.P., Oracle Investment Management, Inc., SAM Oracle
Fund, Inc.
and Mr. Feinberg) are known to beneficially own an aggregate of
292,823
shares of Access’ Common Stock, warrants to purchase an aggregate of
728,850 shares of Access’ Common Stock and Series A Preferred Stock which
may be converted into an aggregate of 1,457,699 shares of Access’ Common
Stock.
|
(17)
|
Perceptive
Life Sciences Master Fund Ltd is known to beneficially own warrants
to
purchase an aggregate of 333,333 shares of Access’ Common Stock and Series
A Preferred Stock which may be converted into an aggregate of 666,666
shares of Access’ Common Stock.
|
(18)
|
Rockmore
Investment Master Fund Ltd is known to beneficially own warrants
to
purchase an aggregate of 83,333 shares of Access’ Common Stock and Series
A Preferred Stock which may be converted into an aggregate of 166,666
shares of Access’ Common Stock. Rockmore Capital, LLC (“Rockmore Capital”)
and Rockmore Partners, LLC (“Rockmore Partners”), each a limited liability
company formed under the laws of the State of Delaware, serve as
the
investment manager and general partner, respectively, to Rockmore
(US) LP,
a Delaware limited partnership, which invests all of its assets
through
Rockmore Investment Master Fund Ltd., an exempted company formed
under the
laws of Bermuda (“Rockmore Master Fund”). By reason of such relationships,
Rockmore Capital and Rockmore Partners may be deemed to share dispositive
power over shares of our common stock owned by Rockmore Master
Fund.
Rockmore Capital and Rockmore Partners disclaim beneficial ownership
of
such shares of our common stock. Rockmore Partners has delegated
authority
to Rockmore Capital regarding portfolio management decisions with
respect
to the shares of common stock owned by Rockmore Master Fund and,
as of
December 10, 2007, Mr. Bruce T. Bernstein and Mr. Brian Daly, as
officers
of Rockmore Capital, are responsible for the portfolio management
decisions of the shares of common stock owned by Rockmore Master
Fund. By
reason of such authority, Messsrs. Bernstein and Daly may be deemed
to
share dispositive power over the shares of our common stock owned
by
Rockmore Master Fund. Messrs. Bernstein and Daly disclaim beneficial
ownership of such shares of our common stock and neither of such
persons
has any legal right to maintain such authority. No other person
has sole
or shared voting or dispositive power with respect to the shares
of our
common stock as those terms are used for purposes under Regulation
13D-G
of the Securities Exchange Act of 1934, as amended. No person or
“group”
(as that term is used in Section 13(d) of the Securities Act of
1934, as
amended, or the SEC’s Regulation 13D-G) controls Rockmore Master
Fund.
|
(19)
|
Rodman
& Renshaw LLC is known to beneficially own warrants to purchase an
aggregate of 109,000 shares of Access’ Common
Stock.
|
(20)
|
SAM
Oracle Investments, Inc. is known to beneficially own an aggregate
of
29,736 shares of Access’ Common Stock, warrants to purchase an aggregate
of 119,811 shares of Access’ Common Stock and Series A Preferred Stock
which may be converted into an aggregate of 239,622 shares of Access’
Common Stock. Larry N. Feinberg is a partner in Oracle Partners,
L.P.
Oracle Partners, L.P. and affiliates (Oracle Institutional Partners,
L.P.,
Oracle Investment Management, Inc., Sam Oracle Fund, Inc. and Mr.
Feinberg) are known to beneficially own an aggregate of 292,823
shares of
Access’ Common Stock, warrants to purchase an aggregate of 728,850 shares
of Access’ Common Stock and Series A Preferred Stock which may be
converted into an aggregate of 1,457,699 shares of Access’ Common
Stock.
|
(21)
|
SCO
Capital Partners LLC is known to directly beneficially own warrants
to
purchase an aggregate of 4,783,240 shares of Access’ Common Stock and
Series A Preferred Stock which may be converted into an aggregate
of
5,229,470 shares of Access’ Common Stock. SCO Capital Partners LLC and
affiliates (SCO Capital Partners, L.P. and Beach Capital LLC) are
known to
beneficially own warrants to purchase an aggregate of 5,551,770
shares of
Access’ Common Stock and 6,410,436 shares of Common Stock issuable to them
upon conversion of Series A Preferred Stock. Steven H. Rouhandeh,
in his
capacity as chairman and managing member of SCO Capital Partners
LLC, has
the power to direct the vote and disposition of the shares owned
by SCO
Capital Partners LLC. SCO Capital Partners LLC has opted out of
the beneficial ownership cap described
above.
|
(22)
|
SCO
Capital Partners, L.P. is known to directly beneficially own warrants
to
purchase an aggregate of 333,333 shares of Access’ Common Stock and Series
A Preferred Stock which may be converted into an aggregate of 666,666
shares of Access’ Common Stock. SCO Capital Partners, L.P. and affiliates
(SCO Capital Partners LLC and Beach Capital LLC) are known to beneficially
own warrants to purchase an aggregate of 5,551,770 shares of Access’
Common Stock and 6,410,436 shares of Common Stock issuable to them
upon
conversion of Series A Preferred Stock. Steven H. Rouhandeh, in
his
capacity as managing member of the entity that serves as general
partner
of SCO Capital Partners, L.P. has the power to direct the vote
and
disposition of the shares owned by SCO Capital Partners,
L.P.. SCO Capital Partners, L.P. has opted out of the
beneficial ownership cap described
above.
|
-
|
a
block trade in which the broker-dealer so engaged will attempt to
sell the
shares as agent but may position and resell a portion of the block
as
principal to facilitate the transaction (including crosses in which
the
same broker acts as agent for both sides of the
transaction);
|
-
|
purchases
by a broker-dealer as principal and resale by such broker-dealer,
including resales for its account, pursuant to this
prospectus;
|
-
|
ordinary
brokerage transactions and transactions in which the broker solicits
purchases;
|
-
|
through
options, swaps or derivatives;
|
-
|
in
privately negotiated transactions;
|
-
|
in
making short sales or in transactions to cover short sales; and
|
-
|
put
or call option transactions relating to the shares.
|
- |
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
|
- |
a
combination of any such methods of sale;
or
|
- |
any
other method permitted pursuant to applicable
law.
|
-
|
the
name of each such selling security holder and of the participating
broker-dealer(s);
|
-
|
the
number of shares involved;
|
-
|
the
initial price at which the shares were
sold;
|
-
|
the
commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
|
-
|
that
such broker-dealer(s) did not conduct any investigation to verify
the
information set out or incorporated by reference in this prospectus;
and
|
-
|
other
facts material to the transactions.
|
Compound
|
|
Originator
|
|
Technology
|
|
Indication
|
|
FDA
Filing
|
|
Clinical
Stage
(1)
|
|
|
|
|
|
|
|
|
|
|
|
MuGard™
|
Access
|
Mucoadhesive
Liquid
|
Mucositis
|
510(k)
|
Marketing
clearance
received
|
|||||
ProLindacTM
(Polymer
Platinate,
AP5346) (2)
|
|
Access
- U London
|
|
Synthetic
polymer
|
|
Cancer
|
|
Clinical
Development(3)
|
|
Phase
2
|
Oral
Insulin
|
Access
|
Cobalamin
|
Diabetes
|
Research
|
Pre-Clinical
|
|||||
Oral
Delivery System
|
Access
|
Cobalamin
|
Various
|
Research
|
Pre-Clinical
|
|||||
Cobalamin-Targeted
Therapeutics
|
|
Access
|
|
Cobalamin
|
|
Anti-tumor
|
|
Research
|
|
Pre-Clinical
|
· |
costs
for product manufacturing for a new ProLindac clinical trial expected
to
start in 2008 ($214,000);
|
· |
higher
salary and related cost due to the hiring of additional scientific
staff
($30,000); and
|
· |
other
net increases ($25,000).
|
· |
higher
investor relations expenses ($149,000) due to our increased investor
relations efforts;
|
· |
higher
salary related expenses due to stock option expenses ($156,000);
and
|
· |
higher
salary expenses ($65,000).
|
· |
lower
patent expenses ($90,000);
|
· |
lower
professional fees ($59,000); and
|
· |
other
net decreases ($21,000).
|
· |
lower
costs for product manufacturing for ProLindac ($198,000). Product
manufacturing was completed early in 2006 which we believe is adequate
to
supply drug product for our current ovarian cancer
trial;
|
· |
lower
costs of clinical trials for ProLindac
($170,000). We incurred start-up costs for the clinical trial in
early
2006; and
|
· |
other
net decreases ($53,000).
|
· |
higher
salary and related cost due to the hiring of additional scientific
staff
($121,000); and
|
· |
higher
scientific consulting costs
($63,000).
|
· |
higher
salary related expenses due mainly to stock option expenses
($580,000);
|
· |
higher
investor relations expenses ($368,000) due to our increased investor
relations efforts;
|
· |
higher
salary and related costs ($178,000);
and
|
· |
higher
travel costs ($58,000).
|
· |
lower
patent expenses ($45,000); and
|
· |
other
net decreases ($16,000).
|
· |
Salary
expenses due to the separation agreement in 2005 with our former
CEO
($909,000);
|
· |
Professional
fees for investment strategies and fairness opinions in 2005
($397,000);
|
· |
Legal
fees ($313,000);
|
· |
Patent
and license fees ($194,000);
|
· |
Rent
($113,000);
|
· |
Compensation
paid to Chairman in 2005 ($140,000)
and
|
· |
Other
net decreases ($41,000).
|
· |
Salary
related costs due to the expensing of stock options ($180,000);
and
|
· |
Investor/public
relations fees ($102,000).
|
· |
Expenses
due to the separation agreement with our former CEO
($909,000);
|
· |
Professional
fees for investment banking and financing decisions
($397,000);
|
· |
Higher
legal fees due to changes in our convertible debt and legal fees
associated with merger candidates ($161,000);
and
|
· |
Royalty
license fee ($150,000).
|
· |
Lower
investor relations costs ($90,000);
|
· |
Lower
patent expenses ($61,000); and
|
· |
Lower
net other increases ($27,000).
|
· |
the
successful development and commercialization of ProLindac™, MuGard™ and
our other product candidates;
|
· |
the
ability to convert, repay or restructure our outstanding convertible
notes
and debentures;
|
· |
the
ability to merge with Somanta Pharmaceuticals, Inc. and integrate
their
assets and programs with ours;
|
· |
the
ability to establish and maintain collaborative arrangements with
corporate partners for the research, development and commercialization
of
products;
|
· |
continued
scientific progress in our research and development
programs;
|
· |
the
magnitude, scope and results of preclinical testing and clinical
trials;
|
· |
the
costs involved in filing, prosecuting and enforcing patent
claims;
|
· |
the
costs involved in conducting clinical
trials;
|
· |
competing
technological developments;
|
· |
the
cost of manufacturing and scale-up;
|
· |
the
ability to establish and maintain effective commercialization arrangements
and activities; and
|
· |
successful
regulatory filings.
|
Twleve
Months ended
|
Nine
Months ended
|
Inception
To
|
|||||||||||
December
31,
|
September 30, |
Date
(1)
|
|||||||||||
2006
|
2005
|
2007
|
|||||||||||
Polymer
Platinate
(ProLindac™)
|
$
|
2,043
|
$
|
2,653
|
$
|
1,433
|
$
|
21,087
|
|||||
Mucoadhesive
Liquid
Technology
(MLT)
|
10
|
-
|
21
|
1,511
|
|||||||||
Others
(2)
|
-
|
130
|
78
|
5,122
|
|||||||||
Total
|
$
|
2,053
|
$
|
2,783
|
$
|
1,532
|
$
|
27,720
|
(1) |
Cumulative
spending from inception of the Company or project through September
30,
2007.
|
(2) |
Includes:
Vitamin Mediated Targeted Delivery, carbohydrate targeting, amlexanox
cream and gel and other related
projects.
|
Payment Due by Period | ||||||||||
Less
Than 1
|
||||||||||
Total
|
Year
|
1-4
Years
|
||||||||
Long-Term
Debt
Obligations
|
$
|
5,564,000
|
$
|
64,000
|
$
|
5,500,000
|
||||
Interest
|
1,976,000
|
522,000
|
1,454,000
|
|||||||
Lease
Obligations
|
125,000
|
90,000
|
35,000
|
|||||||
Total
|
$
|
7,665,000
|
$
|
676,000
|
$
|
6,89,000
|
Compound
|
Originator
|
Technology
|
Indication
|
FDA
Filing
|
Clinical
Stage
(1)
|
|||||
MuGard™
|
Access
|
Mucoadhesive
liquid
|
Mucositis
|
510(k)
|
Marketing
clearance
received
|
|||||
ProLindacTM
(Polymer
Platinate,
AP5346) (2)
|
Access
- U London
|
Synthetic
polymer
|
Cancer
|
Clinical
Development(3)
|
Phase
2
|
|||||
Oral
Insulin
|
Access
|
Cobalamin
|
Diabetes
|
Research
|
Pre-Clinical
|
|||||
Oral
Delivery System
|
Access
|
Cobalamin
|
Various
|
Research
|
Pre-Clinical
|
|||||
Cobalamin-Targeted
Therapeutics
|
Access
|
Cobalamin
|
Anti-tumor
|
Research
|
Pre-Clinical
|
|||||
- |
folate
conjugates of polymer therapeutics, to enhance tumor delivery by
targeting
folate receptors, which are upregulated in certain tumor types with
two
U.S. and two European patent
applications;
|
- |
the
use of vitamin B12 to target the transcobalamin II receptor which
is
upregulated in numerous diseases including cancer, rheumatoid arthritis,
certain neurological and autoimmune disorders with two U.S. patents
and
three U.S. and four European patent applications;
and
|
- |
oral
delivery of a wide variety of molecules which cannot otherwise be
orally
administered, utilizing the active transport mechanism which transports
vitamin B12 into the systemic circulation with six U.S. patents and
two
European patents and one U.S. and one European patent
application.
|
· |
Mucoadhesive
technology in 2021,
|
· |
ProLindac™
in 2021,
|
· |
Cobalamin
mediated technology between 2008 and
2019
|
Jeffrey B. Davis | 44 | Chairman of the Board | |
Stephen R. Seiler | 51 | President, Chief Executive Officer, Director | |
Rosemary Mazanet, M.D., Ph.D. | 52 | Vice Chairman | |
Esteban Cvitkovic , M.D. | 58 | Vice Chairman - Europe | |
Mark J. Ahn, Ph.D. | 45 | Director | |
Mark J. Alvino | 40 | Director | |
Stephen B. Howell, M.D. | 63 | Director | |
David P. Luci | 41 | Director | |
John J. Meakem, Jr. | 71 | Director | |
David P. Nowotnik, Ph.D. | 58 | Senior Vice President Research & Development | |
Phillip S. Wise | 49 | Vice President, Business Development & Strategy | |
Stephen B. Thompson | 54 | Vice President, Chief Financial Officer, Treasurer, | |
Secretary
|
Name
and Principal Position (7)
|
Year
|
Salary
($) (1)
|
Bonus
($)
|
Stock
Awards ($) (2)
|
Option
Awards ($) (3)
|
All
Other Compensation (4)
|
Total
($)
|
|||||||||||||||
Rosemary
Mazanet(5)(8)
Acting
CEO
|
2006
2005
|
$
|
357,385
217,500
|
$
|
100,000
30,000
|
$
|
-
-
|
$
|
81,464
168,468
|
$
|
2,594
1,297
|
$
|
541,443
248,797
|
|||||||||
Kerry
P. Gray(6)
Former
President and
CEO
|
2005
|
$
|
133,332
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
3,505
|
$
|
136,837
|
|||||||||
David
P. Nowotnik, Ph.D.
Senior
Vice President Research
and
Development
|
2006
2005
|
$
|
253,620
250,710
|
$
|
20,000
25,408
|
$
|
-
24,154
|
$
|
40,732
67,619
|
$
|
7,152
7,094
|
$
|
321,504
374,985
|
|||||||||
Phillip
S. Wise(7)
Vice
President, Business
Development
|
2006
|
$
|
116,667
|
$
|
25,000
|
$
|
-
|
$
|
40,732
|
$
|
358
|
$
|
182,757
|
|||||||||
Stephen
B. Thompson
Vice
President, Chief Financial Officer
|
2006
2005
|
$
|
154,080
152,310
|
$
|
20,000
15,435
|
$
|
-
14,704
|
$
|
40,732
42,262
|
$
|
4,508
4,455
|
$
|
219,320
229,166
|
(1)
|
Includes
amounts deferred under Access’ 401(k)
Plan.
|
(2)
|
There
were no stock awards granted in 2006 and no restricted stock outstanding
at December 31, 2006.
|
(3)
|
The
value listed in the above table represents the fair value of the
options
granted in prior years that were recognized in 2006 under FAS 123R.
Fair
value is calculated as of the grant date using a Black-Sholes
option-pricing model. The determination of the fair value of share-based
payment awards made on the date of grant is affected by Access’ stock
price as well as assumptions regarding a number of complex and subjective
variables. Access’ assumptions in determining fair value are described in
note 10 to Access’ audited financial statements for the year ended
December 31, 2006, included in Access’ Annual Report on Form
10-KSB.
|
(4)
|
Amounts
reported for fiscal years 2006 and 2005 consist of: (i) amounts Access
contributed to its 401(k) Plan with respect to each named individual,
(ii)
amounts Access paid for group term life insurance for each named
individual, and (iii) for Mr. Gray, premiums paid by Access each
year for
life insurance for Mr. Gray.
|
(5)
|
Amounts
listed in 2006 and 2005 for Dr. Mazanet indicate compensation paid
to her
in connection with her services as Access’ Acting CEO commencing on May
11, 2005.
|
(6)
|
Amounts
listed in 2005 for Mr. Gray indicate compensation paid to him in
connection with his services as Access’ President and CEO through May 10,
2005. In addition to such amounts listed in the table above, Mr.
Gray also
received a total of $333,333 and $488,335 per the terms of his Separation
Agreement in 2006 and 2005,
respectively.
|
(7)
|
Phillip
S. Wise became Access’ Vice President Business Development June 1,
2006.
|
(8)
|
Stephen
R. Seiler became Access’ President and Chief Executive Officer effective
January 4, 2007 and is not included in this table.
|
· |
a
bonus payable in cash and Common Stock related to the attainment
of
reasonable performance goals specified by the
Board;
|
· |
stock
options at the discretion of the
Board;
|
· |
long-term
disability insurance to provide compensation equal to at least $60,000
annually; and
|
· |
term
life insurance coverage of $254,000.
|
· |
a
bonus payable in cash and Common Stock related to the attainment
of
reasonable performance goals specified by the
Board;
|
· |
stock
options at the discretion of the
Board;
|
· |
long-term
disability insurance to provide compensation equal to at least $90,000
annually; and
|
· |
term
life insurance coverage of
$155,000.
|
Option
Awards
|
|||||
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Grant
Date
(5)
|
Rosemary
Mazanet(2)
(4)
|
50,000
39,796
6,000
|
150,000
10,204
|
-
|
0.63
5.45
12.50
|
08/17/06
11/02/05
05/11/05
|
Kerry
P. Gray(3)
|
20,000
28,000
32,000
32,000
20,000
100,000
32,000
32,000
|
|
-
|
29.25
11.50
18.65
34.38
27.50
12.50
10.00
15.00
|
01/23/04
05/19/03
03/22/02
11/20/00
10/12/00
03/01/00
07/20/99
06/18/98
|
David
P. Nowotnik, Ph.D.
|
25,000
3,167
3,646
6,854
10,000
10,000
10,000
10,000
|
75,000
4,833
1,354
146
|
-
|
0.63
11.60
29.25
10.10
18.65
12.50
10.00
15.00
|
08/17/06
05/23/05
01/23/04
01/30/03
03/22/02
03/01/00
07/20/99
11/16/98
|
Phillip
S. Wise
|
25,000
|
75,000
|
-
|
0.63
|
08/17/06
|
Stephen
B. Thompson
|
25,000
1,979
2,187
3,917
6,000
9,000
4,000
4,000
|
75,000
3,021
813
83
|
-
|
0.63
11.60
29.25
10.10
18.65
12.50
10.00
15.00
|
08/17/06
05/23/05
01/23/04
01/30/03
03/22/02
03/01/00
07/20/99
06/18/98
|
(1)
|
On
December 31, 2006, the closing price of Access’ Common Stock as quoted on
the OTC Bulletin Board was $2.80.
|
(2)
|
Options
listed for Dr. Mazanet include options paid to her in connection
with her
services as Access’ Acting CEO commencing on May 11,
2005.
|
(3)
|
Options
listed for Mr. Gray include options paid to him in connection with
his
services as Access’ President and CEO through May 10, 2005. Mr. Gray
resigned as CEO on May 10, 2005.
|
(4)
|
Stephen
R. Seiler became Access’ President and Chief Executive Officer effective
January 4, 2007 and is not included in this
table.
|
(5)
|
All
options expire 10 years after the grant
date.
|
Name
|
Fees
earned or
Paid
in Cash ($)
|
Option
Awards
($)(1)
|
All
Other Compensation ($)
|
Total
($)
|
Mark
J. Ahn, PhD (2)
|
4,000
|
7,592
|
-
|
11,592
|
Mark
J. Alvino (3)
|
13,000
|
5,581
|
-
|
18,581
|
Esteban
Cvitkovic, MD (8)
|
-
|
-
|
-
|
-
|
Jeffrey
B. Davis (3)
|
16,650
|
5,581
|
-
|
22,231
|
Stuart
M. Duty (4)
|
16,000
|
8,379
|
-
|
24,379
|
J.
Michael Flinn (5)
|
17,525
|
15,411
|
183,333
|
216,269
|
Stephen
B. Howell, MD (6)
|
12,000
|
6,137
|
-
|
18,137
|
David
P. Luci (8)
|
-
|
-
|
-
|
-
|
Rosemary
Mazanet, MD, PhD (9)
|
-
|
-
|
-
|
-
|
Max
Link, PhD (9)
|
12,000
|
556
|
-
|
12,557
|
Herbert
H. McDade, Jr. (6)
|
17,200
|
6,137
|
-
|
23,338
|
John
J. Meakem, Jr. (4)
|
16,000
|
8,379
|
-
|
24,380
|
|
(1)
|
|
The
value listed in the above table represents the fair value of the
options
recognized as expense under FAS 123R during 2006, including unvested
options granted before 2006 and those granted in 2006. Fair value
is
calculated as of the grant date using a Black-Scholes (“Black-Scholes”)
option-pricing model. The determination of the fair value of share-based
payment awards made on the date of grant is affected by Access’ stock
price as well as assumptions regarding a number of complex and subjective
variables. Access’ assumptions in determining fair value are described in
note 10 to Access’ audited financial statements for the year ended
December 31, 2006, included in Access’ Annual Report on Form
10-KSB.
|
(2)
|
Represents
expense recognized in 2006 in respect of option to purchase 25,000
shares
based on a grant date fair value of $7,592.
|
||
(3)
|
Represents
expense recognized in 2006 in respect of option to purchase 25,000
shares
based on grant date fair value of $5,581.
|
||
(4)
|
Represents
expense recognized in 2006 in respect of option to purchase 25,000
shares
based on a grant date fair value of $5,581; option to purchase 1,200
shares based on a grant date fair value of $556; and option to purchase
4,836 shares based on a grant date fair value of
$2,242.
|
||
(5)
|
Represents
expense recognized in 2006 in respect of option to purchase 25,000
shares
based on a grant date fair value of $5,581; option to purchase 1,200
shares based on a grant date fair value of $556; and option to purchase
20,000 shares based on a grant date fair value of
$9,274.
|
||
(6)
|
Represents
expense recognized in 2006 in respect of option to purchase 25,000
shares
based on a grant date fair value of $5,581 and option to purchase
1,200
shares based on a grant date fair value of $556.
|
||
(7)
|
Represents
expense recognized in 2006 in respect of option to purchase 1,200
shares
based on grant date fair value of $556.
|
||
(8)
|
Dr.
Cvitkovic and Mr. Luci became directors in 2007.
|
||
(9)
|
Dr.
Mazanet was an inside director during 2006 and was not paid directors
fees. She became an outside director in January
2007.
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Mark
J. Ahn, PhD
|
-
|
25,000
|
-
|
0.85
|
09/01/16
|
Mark
J. Alvino
|
-
|
25,000
|
-
|
0.63
|
08/17/16
|
Jeffrey
B. Davis
|
-
|
25,000
|
-
|
0.63
|
08/17/16
|
Esteban
Cvitkovic, MD (1)
|
-
|
-
|
-
|
-
|
-
|
Stuart
M. Duty
|
2,500
4,836
1,200
|
25,000
|
-
|
0.63
12.40
3.15
3.15
|
08/17/16
5/12/15
2/05/16
2/05/16
|
J.
Michael Flinn
|
2,000
2,000
1,000
2,000
2,000
2,500
2,500
2,500
1,200
20,000
|
25,000
|
-
|
0.63
15.00
10.00
17.81
23.05
14.05
11.50
28.50
12.40
3.15
3.15
|
08/17/16
06/18/08
07/20/09
06/26/10
05/21/11
05/20/12
05/19/13
05/19/14
05/12/15
02/05/16
02/05/16
|
Stephen
B. Howell, MD (3)
|
417
1,000
2,000
2,000
2,500
2,500
2,500
1,200
|
25,000
|
-
|
0.63
15.00
17.81
23.05
14.05
11.50
28.50
12.40
3.15
|
08/17/16
06/18/08
06/26/10
05/21/11
05/20/12
05/19/13
05/19/14
05/12/15
02/05/16
|
David
P. Luci (1)
|
-
|
-
|
-
|
-
|
-
|
Rosemary
Mazanet, MD, PhD (2)
|
|
|
-
|
|
|
Max
Link, PhD
|
1,200
|
|
-
|
0.63
|
08/17/16
|
Herbert
H. McDade, Jr.
|
2,500
1,000
2,000
2,000
2,500
2,500
1,200
|
25,000
|
-
|
0.63
15.00
17.81
23.05
14.05
28.50
12.40
3.15
|
08/17/16
06/18/08
06/26/10
05/21/11
05/20/12
05/19/14
05/12/15
02/05/16
|
John
J. Meakem, Jr.
|
4,000
2,000
2,500
2,500
2,500
4,836
1,200
|
25,000
|
-
|
0.63
20.25
14.05
11.50
28.50
12.40
3.15
3.15
|
08/17/16
02/16/11
05/20/12
05/19/13
05/19/14
05/12/15
02/05/16
02/05/16
|
(1)
|
Dr.
Cvitkovic and Mr. Luci became directors in 2007.
|
(2)
|
Since
Dr. Mazanet became an outside director in January 2007, her options
are
reported in the executive compensation tables.
|
(3)
|
Dr.
Howell also has a warrant to purchase 3,000 shares of Access Common
Stock
at an exercise price of $15.00 per share, and a warrant to purchase
2,000
shares of Access Common Stock at an exercise price of $24.80 per
share.
|
Common
Stock Beneficially Owned
|
||
Name
of Beneficial Owner
|
Number
of Shares(1)
|
%
of Class
|
Jeffery
B. Davis (2)
|
30,820
|
*
|
Stephen
R. Seiler (3
|
135,417
|
3.7%
|
Mark
J. Ahn, Ph. D. (4)
|
25,000
|
*
|
Mark
J. Alvino (5)
|
80,525
|
2.2%
|
Esteban
Cvitkovic, M.D. (6)
|
37,500
|
1.0%
|
Stephen
B. Howell, M.D. (7)
|
53,839
|
1.5%
|
David
P. Luci (8)
|
25,000
|
*
|
Rosemary
Mazanet, M.D., Ph.D.(9)
|
228,376
|
6.0%
|
John
J. Meakem, Jr.
(10)
|
53,536
|
1.5%
|
David
P. Nowotnik, Ph.D. (11)
|
149,849
|
4.0%
|
Phillip
S. Wise (12)
|
75,000
|
2.0%
|
Stephen
B. Thompson (13)
|
117,854
|
3.2%
|
SCO Capital Partners LLC, SCO Capital
Partners LP, and Beach Capital LLC (14)
|
12,034,164
|
77.0%
|
Larry
N. Feinberg (15)
|
2,479,372
|
43.0%
|
Lake
End Capital LLC (16)
|
1,426,216
|
28.5%
|
Perceptive
Life Sciences
Master
Fund, Ltd. (17)
|
999,999
|
21.9%
|
Midsummer
Investment, Ltd. (18)
|
750,000
|
17.3%
|
All
Directors and Executive
Officers
as a group
(consisting
of 12 persons) (19)
|
1,012,717
|
22.3%
|
(1) |
Includes
Access’ outstanding shares of Common Stock held plus all shares of Common
Stock issuable upon conversion of Series A Preferred Stock, exercise
of
options, warrants and other rights exercisable within 60 days of
December
10, 2007.
|
(2) |
Includes
5,820 shares underlying warrants held directly by Mr. Davis and
presently
exercisable options for the purchase of 25,000 shares of Access’ Common
Stock pursuant to the 2005 Equity Incentive Plan. Mr. Davis is
President of SCO Securities LLC, a wholly owned subsidiary of SCO
Financial Group. His address is c/o SCO Capital Partners LLC, 1285
Avenue
of the Americas, 35th Floor, New York, NY 10019. SCO Securities
LLC and affiliates (SCO Capital Partners LP and Beach Capital LLC)
are
known to beneficially own warrants to purchase an aggregate
of 5,623,730 shares of Access’ Common Stock and 6,410,434 shares
of Common Stock are issuable to them upon conversion of Series
A Preferred
Stock. Mr. Davis disclaims beneficial ownership of all such shares
except
to the extent of his pecuniary interest
therein.
|
(3) |
Includes
presently exercisable options for the purchase of 13,542 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive Plan and 121,875
shares
of Access’ Common Stock pursuant to the 2007 Special Stock Option
Plan.
|
(4) |
Includes
presently exercisable options for the purchase of 25,000 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive
Plan.
|
(5) |
Includes
55,525 shares of Common Stock underlying warrants held by Mr. Alvino
and
presently exercisable options for the purchase of 25,000 shares
of Access’
Common Stock pursuant to the 2005 Equity Incentive Plan. Mr. Alvino
is
Managing Director of Griffin Securities LLC. His address is c/o
Griffin
Securities LLC, 17 State St., 3rd Floor, New York, NY 10004.
Mr. Alvino is a designated director of SCO Securities LLC. SCO
Securities
LLC and affiliates (SCO Capital Partners LP and Beach Capital LLC)
are
known to beneficially own warrants to purchase an aggregate
of 5,623,730 shares of Access’ Common Stock and 6,410,434 shares of
Common Stock are issuable to them upon conversion of Series A Preferred
Stock. Mr. Alvino disclaims beneficial ownership of all such shares
except
to the extent of his pecuniary interest therein. Mr. Alvino disclaims
beneficial ownership of all such shares except to the extent of
his
pecuniary interest therein.
|
(6) |
Includes
presently exercisable options for the purchase of 37,500 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive
Plan.
|
(7) |
Includes
presently exercisable options for the purchase of 26,200 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive Plan, 12,917 shares
of
Access’ Common Stock pursuant to the 1995 Stock Option Plan, a warrant to
purchase 3,000 shares of Access’ Common Stock at an exercise price of
$15.00 per share, and a warrant to purchase 2,000 shares of Access’ Common
Stock at an exercise price of $24.80 per
share.
|
(8) |
Includes
presently exercisable options for the purchase of 25,000 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive
Plan.
|
(9) |
Includes
presently exercisable options for the purchase of 222,376 shares
of
Access’ Common Stock pursuant to the 2005 Equity Incentive Plan and 6,000
shares of Access’ Common Stock pursuant to the 1995 Stock Option
Plan.
|
(10) |
Includes
presently exercisable options for the purchase of 31,036 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive Plan and 13,500
shares
of Access’ Common Stock pursuant to the 1995 Stock Option
Plan.
|
(11) |
Includes
presently exercisable options for the purchase of 75,000 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive Plan and 57,333
shares
of Access’ Common Stock pursuant to the 1995 Stock Option
Plan.
|
(12) |
Includes
presently exercisable options for the purchase of 75,000 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive
Plan.
|
(13) |
Includes
presently exercisable options for the purchase of 75,000 shares of
Access’
Common Stock pursuant to the 2005 Equity Incentive Plan and 33,333
shares
of Access’ Common Stock pursuant to the 1995 Stock Option
Plan.
|
(14) | SCO Capital Partners LLC, SCO Capital Partner LP and Beach Capital LLC's address is 1285 Avenue of the Americas, 35th Floor, New York, NY 10019. SCO Capital Partners LLC and affiliates (SCO Capital Partners LP and Beach Capital LLC) are known to beneficially own warrants to purchase an aggregate of 5,623,730 shares of Access’ Common Stock and 6,410,434 shares of Common Stock issuable to them upon conversion of Series A Preferred Stock. Each of Mr. Davis and Mr. Alvino, Access’ directors and Mr. Davis an executive with SCO Capital Partners LLC, disclaim beneficial ownership of such shares except to the extent of his pecuniary interest therein. |
(15) |
Larry
N. Feinberg is a partner in Oracle Partners, L.P. His address is
c/o
Oracle Partners, L.P., 200 Greenwich Avenue, 3rd
Floor, Greenwich, CT 06830. Oracle Partners, L.P. and affiliates
(Oracle
Institutional Partners, L.P., Oracle Investment Management, Inc.,
Sam
Oracle Fund, Inc. and Mr. Feinberg) are known to beneficially own
an
aggregate of 339,964 shares of Access’ Common Stock, warrants to purchase
an aggregate of 728,850 shares of Access’ Common Stock and Series A
Preferred Stock which may be converted into an aggregate of 1,457,699
shares of Access’ Common Stock.
|
(16) | Lake End Capital LLC's address is 1285 Avenue of the Americas, 35th Floor, New York, NY 10019. Lake End Capital LLC is known to beneficially own warrants to purchase an aggregate of 716,482 shares of Access’ Common Stock and 709,734 shares of Common Stock issuable to them upon conversion of Series A Preferred Stock. |
(17) |
Perceptive
Life Sciences Master Fund, Ltd.’s address is 499 Park Ave., 25th
Fl., New York, NY 10022. Perceptive Life Sciences Master Fund is
known to
beneficially own warrants to purchase an aggregate of 333,333 shares
of
Access’ Common Stock and Series A Preferred Stock which may be converted
into an aggregate of 666,666 shares of Access’ Common
Stock.
|
(18) |
Midsummer
Investment, Ltd.’s address is 295 Madison Ave., 38th
Fl., New York, NY 10017. Midsummer Investment is known to beneficially
own
warrants to purchase an aggregate of 250,000 shares of Access’ Common
Stock and Series A Preferred Stock which may be converted into
an
aggregate of 500,000 shares of Access’ Common
Stock.
|
(18) |
Does
not include shares held by SCO Securities LLC and
affiliates.
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding
options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants
and rights
|
Number
of securities remaining available for future issuance under
equity
compensation
plans
(excluding
securities
reflected in
column (a))
|
(a)
|
(b)
|
(c)
|
|
Equity
compensation plans approved by security holders
|
|||
2005
Equity Incentive Plan
1995
Stock Awards Plan
2001
Restricted Stock Plan
|
802,672
360,917
-
|
$
1.04
$18.03
-
|
197,328
-
52,818
|
Equity
compensation plans not approved by security holders
|
|||
2000
Special Stock Option Plan*
|
100,000
|
$12.50
|
-
|
Total
|
1,263,589
|
$
6.80
|
250,146
|
Common
Stock
|
||||||||
|
High
|
Low
|
||||||
Period
Ended
|
||||||||
First
quarter March 31, 2007
|
$
|
10.66
|
$
|
2.50
|
||||
Second
quarter June 30, 2007
|
6.75
|
4.30
|
||||||
Third
quarter September 30, 2007
|
5.16
|
2.10
|
||||||
Fourth
quarter to December 7, 2007
|
4.48 | 2.50 | ||||||
Fiscal
Year Ended December 31, 2006
|
||||||||
First
quarter
|
$
|
2.65
|
$
|
0.80
|
||||
Second
quarter
|
1.50
|
0.10
|
||||||
Third
quarter
|
1.30
|
0.45
|
||||||
Fourth
quarter
|
3.00
|
1.05
|
||||||
Fiscal
Year Ended December 31, 2005
|
||||||||
First
quarter
|
$
|
18.30
|
$
|
11.00
|
||||
Second
quarter
|
15.05
|
8.80
|
||||||
Third
quarter
|
9.95
|
2.80
|
||||||
Fourth
quarter
|
8.65
|
2.60
|
For
the Nine Months
Ended
September
30
|
For
the Year Ended December 31,
|
|||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||
(in
thousands, except amounts per share)
|
||||||||
Consolidated
Statement of Operations and Comprehensive Loss
Data:
|
Total
revenues
|
$
|
6
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
89
|
||||||||
Operating
loss
|
(4,988
|
)
|
(4,129
|
)
|
(5,175
|
)
|
(9,622
|
)
|
(6,003
|
)
|
(5,426
|
)
|
(5,925
|
)
|
||||||||
Interest
and miscellaneous income
|
72
|
278
|
294
|
100
|
226
|
279
|
594
|
|||||||||||||||
Interest
and other expense
|
(3,277
|
)
|
(5,244
|
)
|
(7,436
|
)
|
(2,100
|
)
|
(1,385
|
)
|
(1,281
|
)
|
(1,278
|
)
|
||||||||
Unrealized
loss on fair value of warrants
|
-
|
(1,107
|
)
|
(1,107
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||
Income
tax benefit
|
-
|
-
|
173
|
4,067
|
-
|
-
|
-
|
|||||||||||||||
Loss
from continuing operations
|
(8,193
|
)
|
(10,202
|
)
|
(13,251
|
)
|
(7,555
|
)
|
(7,162
|
)
|
(6,428
|
)
|
(6,520
|
)
|
||||||||
Discontinued
operations net of taxes
|
||||||||||||||||||||||
($173
in 2006 and $4,067 in 2005)
|
-
|
-
|
377
|
5,855
|
(3,076
|
)
|
(507
|
)
|
(2,864
|
)
|
||||||||||||
Net
loss
|
(8,193
|
)
|
(10,202
|
)
|
(12,874
|
)
|
(1,700
|
)
|
(10,238
|
)
|
(6,935
|
)
|
(9,384
|
)
|
||||||||
Common
Stock Data:
|
||||||||||||||||||||||
Net
loss per basic and
diluted
common share
|
$
|
(2.31
|
)
|
$
|
(2.89
|
)
|
$
|
(3.65
|
)
|
$
|
(0.53
|
)
|
$
|
(3.38
|
)
|
$
|
(2.61
|
)
|
$
|
(3.58
|
)
|
|
Weighted
average basic and
diluted
common shares
outstanding
|
3,544
|
3,531
|
3,532
|
3,237
|
3,032
|
2,653
|
2,621
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||
(in
thousands)
|
||||||||
Consolidated
Balance Sheet Data:
|
Cash,
cash equivalents and
short
term investments
|
$
|
1,176
|
$
|
705
|
$
|
4,389
|
$
|
474
|
$
|
2,261
|
$
|
2,587
|
$
|
9,776
|
||||||||
Restricted
cash
|
-
|
-
|
-
|
103
|
1,284
|
649
|
468
|
|||||||||||||||
Total
assets
|
3,500
|
7,073
|
6,426
|
7,213
|
11,090
|
11,811
|
19,487
|
|||||||||||||||
Deferred
revenue
|
1,167
|
173
|
173
|
173
|
1,199
|
1,184
|
1,199
|
|||||||||||||||
Convertible
notes, net of discount
|
16,906
|
17,608
|
8,833
|
7,636
|
13,530
|
13,530
|
13,530
|
|||||||||||||||
Total
liabilities
|
20,691
|
21,272
|
16,313
|
11,450
|
17,751
|
17,636
|
18,998
|
|||||||||||||||
Total
stockholders' equity (deficit)
|
(17,191
|
)
|
(14,199
|
)
|
(9,887
|
)
|
(4,237
|
)
|
(6,661
|
)
|
(5,825
|
)
|
489
|
PAGE
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
|
|
Consolidated
Balance Sheets at December 31, 2006 and 2005
|
F-4
|
|
|
Consolidated
Statements of Operations and Comprehensive Loss for 2006, 2005
and
2004
|
F-5
|
|
|
Consolidated
Statement of Stockholders' Equity (Deficit) for 2006, 2005 and
2004
|
F-6
|
|
|
Consolidated
Statements of Cash Flows for 2006, 2005 and 2004
|
F-7
|
|
|
Notes
to Consolidated Financial Statements (Three years ended December
31,
2006)
|
F-8
|
Condensed
Consolidated Balance Sheets at September 30, 2007
(unaudited)
|
F-18
|
|
|
Condensed
Consolidated Statements of Operations for September 30, 2007 and
2006
(unaudited)
|
F-19
|
|
|
Condensed
Consolidated Statements of Cash Flows for September 30, 2007 and
2006
(unaudited)
|
F-20
|
|
|
Notes
to Condensed Consolidated Financial Statements (Nine Months Ended
September 30, 2007 and 2006) (unaudited)
|
F-21
|
ASSETS
|
December
31, 2006
|
December
31, 2005
|
|||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
1,194,000
|
$
|
349,000
|
|||
Short
term investments, at cost
|
3,195,000
|
125,000
|
|||||
Receivables
|
359,000
|
4,488,000
|
|||||
Prepaid
expenses and other current assets
|
283,000
|
197,000
|
|||||
Total
current assets
|
5,031,000
|
5,159,000
|
|||||
Property
and equipment, net
|
212,000
|
300,000
|
|||||
Debt
issuance costs, net
|
158,000
|
-
|
|||||
Patents,
net
|
878,000
|
1,046,000
|
|||||
Licenses,
ne
|
25,000
|
75,000
|
|||||
Restricted
cash and other assets
|
122,000
|
633,000
|
|||||
Total
assets
|
$
|
6,426,000
|
$
|
7,213,000
|
|||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable and accrued expenses
|
$
|
1,226,000
|
$
|
2,883,000
|
|||
Accrued
interest payable
|
581,000
|
652,000
|
|||||
Deferred
revenues
|
173,000
|
173,000
|
|||||
Current
portion long-term debt, net
of discount $2,062,000 in 2006
|
8,833,000
|
106,000
|
|||||
Total
current liabilities
|
10,813,000
|
3,814,000
|
|||||
Long-term
debt, net of discount $1,879,000 in 2005
|
5,500,000
|
7,636,000
|
|||||
Total
liabilities
|
16,313,000
|
11,450,000
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders'
deficit
|
|||||||
Preferred
stock - $.01 par value; authorized 2,000,000 shares;
none
issued or outstanding
|
-
|
-
|
|||||
Common
stock - $.01 par value; authorized 100,000,000 shares;
issued,
3,535,108 at December 31, 2006 and authorized
50,000,000
shares; issued 3,528,108 at December 31, 2005
|
35,000
|
35,000
|
|||||
Additional
paid-in capital
|
68,799,000
|
62,942,000
|
|||||
Notes
receivable from stockholders
|
(1,045,000
|
)
|
(1,045,000
|
)
|
|||
Treasury
stock, at cost - 163 shares
|
(4,000
|
)
|
(4,000
|
)
|
|||
Accumulated
deficit
|
(77,672,000
|
)
|
(66,165,000
|
)
|
|||
Total
stockholders' deficit
|
(9,887,000
|
)
|
(4,237,000
|
)
|
|||
Total
liabilities and stockholders' deficit
|
$
|
6,426,000
|
$
|
7,213,000
|
Year
ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Expenses
|
||||||||||
Research
and development
|
$
|
2,053,000
|
$
|
2,783,000
|
$
|
2,335,000
|
||||
General
and administrative
|
2,813,000
|
4,638,000
|
3,199,000
|
|||||||
Depreciation
and amortization
|
309,000
|
333,000
|
469,000
|
|||||||
Write
off of goodwill
|
-
|
1,868,000
|
-
|
|||||||
Total
expenses
|
5,175,000
|
9,622,000
|
6,003,000
|
|||||||
Loss
from operations
|
(5,175,000
|
)
|
(9,622,000
|
)
|
(6,003,000
|
)
|
||||
Interest
and miscellaneous income
|
294,000
|
100,000
|
226,000
|
|||||||
Interest
and other expense
|
(7,436,000
|
)
|
(2,100,000
|
)
|
(1,385,000
|
)
|
||||
Unrealized
loss on fair value of warrants and beneficial
conversion
feature
|
(1,107,000
|
)
|
-
|
-
|
||||||
(8,249,000
|
)
|
(2,000,000
|
)
|
(1,159,000
|
||||||
Loss
before discontinued operations and before tax benefit
|
(13,424,000
|
)
|
(11,622,000
|
)
|
(7,162,000
|
)
|
||||
Income
tax benefit
|
173,000 |
4,067,000
|
-
|
|||||||
Loss
from continuing operations
|
(13,251,000
|
)
|
(7,555,000
|
)
|
(7,162,000
|
)
|
||||
Discontinued
operations, net of taxes of $173,000 in 2006 and $4,067,000
in
2005
|
377,000
|
5,855,000
|
(3,076,000
|
)
|
||||||
Net
loss
|
$
|
(12,874,000
|
)
|
$
|
(1,700,000
|
)
|
$
|
(10,238,000
|
)
|
|
Basic
and diluted loss per common share
|
||||||||||
Loss
from continuing operations allocable to common
stockholders
|
$
|
(3.75
|
)
|
$
|
(2.34
|
)
|
$
|
(2.36
|
)
|
|
Discontinued
operations
|
0.11
|
1.81
|
(1.02
|
)
|
||||||
Net
loss allocable to common stockholders
|
$
|
(3.65
|
)
|
$
|
(0.53
|
)
|
$
|
(3.38
|
)
|
|
Weighted
average basic and diluted common shares
outstanding
|
3,531,934
|
3,237,488
|
3,032,451
|
|||||||
Net
loss
|
$
|
(12,874,000
|
)
|
$
|
(
1,700,000
|
)
|
$
|
(10,238,000
|
)
|
|
Other
comprehensive loss
Foreign
currency translation adjustment
|
-
|
3,000
|
(17,000
|
)
|
||||||
Comprehensive
loss
|
$
|
(12,874,000
|
)
|
$
|
(1,697,000
|
)
|
$
|
(10,255,000
|
)
|
Common
Stock
|
|||||||||||||||||||||||
Shares
|
Amount
|
Additional
paid in capital
|
Notes
receivable from stockholders
|
Unamortized
value
of restricted stock grants
|
Treasury
stock
|
Accumulated
other
comprehensive
income
(loss)
|
Accumulated
deficit
|
||||||||||||||||
Balance,
December 31, 2003
|
2,679,000
|
$
27,000
|
$49,704,000
|
(1,045,000)
|
$(294,000)
|
$(4,000)
|
$14,000
|
$(54,227,000)
|
|||||||||||||||
Common
stock issued
for
cash, net of offering
costs
|
359,000
|
4,000
|
9,012,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common
stock issued for
cash
exercise of
warrants
and options
|
23,000
|
-
|
283,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common
stock issued for cashless
exercise
of warrants
|
42,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Issuance
of restricted
stock
grants
|
2,000
|
-
|
135,000
|
-
|
(135,000)
|
-
|
-
|
-
|
|||||||||||||||
Other
comprehensive
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(17,000)
|
-
|
|||||||||||||||
Amortization
of restricted stock grants
|
-
|
-
|
-
|
-
|
120,000
|
-
|
-
|
-
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(10,238,000)
|
|||||||||||||||
Balance,
December 31, 2004
|
3,105,000
|
31,000
|
59,134
000
|
(1,045,000)
|
(309,000)
|
(4,000)
|
(3,000)
|
(64,465,000)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
Common
stock issued,
net
of offering costs
|
237,000
|
2,000
|
1,119,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common
stock issued
for
payment of interest
|
190,000
|
2,000
|
616,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other
comprehensive
income
|
-
|
-
|
-
|
-
|
-
|
-
|
3,000
|
-
|
|||||||||||||||
Discount
on convertible
note
extension
|
-
|
-
|
2,109,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Amortization
and
forfeiture
of restricted
stock
grants
|
(4,000)
|
-
|
(36,000)
|
-
|
309,000
|
-
|
-
|
-
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,700,000)
|
|||||||||||||||
Balance,
December 31, 2005
|
3,528,000
|
35,000
|
62,942,000
|
(1,045,000)
|
-
|
(4,000)
|
-
|
(66,165,000)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
Common
stock issued for
compensation
|
7,000
|
-
|
77,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Warrants
issued
|
-
|
-
|
100,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Stock
option
compensation
expense
|
-
|
-
|
248,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Issuance
of convertible
debt
with warrants
|
-
|
-
|
5,432,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Cumulative
effect of
change
in accounting
principle
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,367,000
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(12,874,000)
|
|||||||||||||||
Balance,
December 31, 2006
|
3,535,000
|
$
35,000
|
$
68,799,000
|
(1,045,000)
|
$
-
|
$
(4,000)
|
$
-
|
$(77,672,000)
|
Year
ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Cash
flows from operating activities
|
||||||||||
Net
loss
|
$
|
(12,874,000
|
)
|
$
|
(1,700,000
|
)
|
$
|
(10,238,000
|
)
|
|
Adjustments
to reconcile net loss to net cash used
|
||||||||||
in
operating activities:
|
||||||||||
Unrealized
Loss
|
1,107,000
|
-
|
-
|
|||||||
Loss
on sale Australia assets
|
-
|
208,000
|
-
|
|||||||
Impairment
of investment
|
-
|
-
|
112,000
|
|||||||
Write
off of goodwill
|
-
|
1,868,000
|
-
|
|||||||
Amortization
of restricted stock grants
|
-
|
309,000
|
120,000
|
|||||||
Stock
option expense
|
248,000
|
-
|
-
|
|||||||
Stock
issued for compensation
|
77,000
|
42,000
|
-
|
|||||||
Stock
issued for interest
|
-
|
618,000
|
-
|
|||||||
Depreciation
and amortization
|
309,000
|
570,000
|
773,000
|
|||||||
Amortization
of debt costs and discounts
|
6,749,
000
|
695,000
|
183,000
|
|||||||
Gain
on sale of assets
|
(550,000)
|
(12,891,000
|
)
|
-
|
||||||
Change
in operating assets and liabilities:
|
||||||||||
Receivables
|
4,129,000
|
622,000
|
358,000
|
|||||||
Inventory
|
-
|
104,000
|
60,000
|
|||||||
Prepaid
expenses and other current assets
|
14,000
|
|
817,000
|
(195,000
|
)
|
|||||
Restricted
cash and other assets
|
127,000
|
-
|
-
|
|||||||
Accounts
payable and accrued expenses
|
(1,657,000
|
)
|
490,000
|
401,000
|
||||||
Accrued
interest payable
|
363,000
|
341,000
|
-
|
|||||||
Deferred
revenues
|
-
|
606,000
|
15,000
|
|||||||
Net
cash used in operating activities
|
(1,958,000
|
)
|
(7,301,000
|
)
|
(8,411,000
|
)
|
||||
Cash
flows from investing activities:
|
||||||||||
Capital
expenditures
|
(3,000
|
)
|
(28,000
|
)
|
(221,000
|
)
|
||||
Proceeds
from sale of equipment
|
-
|
355,000
|
-
|
|||||||
Proceeds
from sale of patents
|
-
|
974,000
|
-
|
|||||||
Proceeds
from sale of oral/topical care assets
|
550,000
|
7,391,000
|
-
|
|||||||
Restricted
cash and other assets
|
|
684,000
|
(666,000
|
)
|
||||||
Redemptions
of short-term investments
|
||||||||||
and
certificates of deposit, net
|
(3,070,000
|
)
|
361,000
|
1,374,000
|
||||||
Net
cash provided by (used in) investing activities
|
(2,523,000
|
)
|
9,717,000
|
487,000
|
||||||
Cash
flows from financing activities:
|
||||||||||
Payments
of notes payable
|
(106,000
|
)
|
(407,000
|
)
|
(310,000
|
)
|
||||
Payment
of secured notes payable and convertible notes
|
-
|
(6,648,000
|
)
|
-
|
||||||
Proceeds
from secured notes payable
|
5,432,000
|
2,633,000
|
-
|
|||||||
Proceeds
from stock issuances, net of costs
|
-
|
577,000
|
9,299,000
|
|||||||
Net
cash provided by (used in) financing activities
|
5,326,000
|
(3,845,000
|
)
|
8,989,000
|
||||||
Net
increase (decrease) in cash and cash equivalents
|
845,000
|
(1,429,000
|
)
|
1,065,000
|
||||||
Effect
of exchange rate changes on cash and cash equivalents
|
-
|
3,000
|
(17,000
|
)
|
||||||
Cash
and cash equivalents at beginning of year
|
349,000
|
1,775,000
|
727,000
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
1,194,000
|
$
|
349,000
|
$
|
1,775,000
|
||||
Cash
paid for interest
|
$
|
315,000
|
$
|
445,000
|
$
|
1,073,000
|
||||
Supplemental
disclosure of noncash transactions
|
||||||||||
Value
of restricted stock grants
|
-
|
-
|
135,000
|
|||||||
Assets
acquired under capital leases
|
-
|
-
|
59,000
|
|||||||
Common
stock issued for SEDA and
|
||||||||||
Secured
Convertible Notes
|
-
|
502,000
|
-
|
|||||||
Discount
on convertible note extension
|
-
|
2,109,000
|
-
|
|||||||
Debt
issuance costs
|
568,000
|
|||||||||
Accrued
interest capitalized
|
433,000
|
|||||||||
Warrants
issued per professional agreement of consulting
services
|
100,000
|
|||||||||
Cumulative
change of accounting principle
|
1,367,000
|
|||||||||
Issuance
of convertible debt with warrants
|
5,432,000
|
December
31, 2006
|
December
31, 2005
|
December
31, 2004
|
|||||||||||||||||
Gross
carrying
value
|
Accumulated
amortization
|
Gross
carrying
value
|
Accumulated
amortization
|
Gross
carrying
value
|
Accumulated
amortization
|
||||||||||||||
Amortizable
intangible assets
|
|||||||||||||||||||
Patents
|
$
|
1,680
|
$
|
802
|
$
|
1,680
|
$
|
634
|
$
|
3,179
|
$
|
864
|
|||||||
Licenses
|
500
|
475
|
500
|
425
|
500
|
375
|
|||||||||||||
Total
|
$
|
2,180
|
$
|
1,277
|
$
|
2,180
|
$
|
1,059
|
$
|
3,679
|
$
|
1,239
|
2007
|
$
|
193
|
||
2008
|
168
|
|||
2009
|
168
|
|||
2010
|
168
|
|||
2011
|
168
|
|||
Thereafter
|
38
|
|||
Total
|
$
|
903
|
· |
127%
- the expected volatility assumption was based upon a combination
of
historical stock price volatility measured on a twice a month
basis and is
a reasonable indicator of expected volatility.
|
· |
4.85%
(average) - the risk-free interest rate assumption is based upon
U.S.
Treasury bond interest rates appropriate for the term of the
Company’s
employee stock options.
|
· |
None
- the dividend yield assumption is based on our history and expectation
of
dividend payments.
|
· |
1.6
years - the estimated expected term (average of 1.6 years) is
based on
employee exercise behavior.
|
|
|
Year ended
December 31,
2006
|
|
Research
and development
|
|
$
|
68
|
General
and administrative
|
|
|
180
|
|
|
|
|
Stock-based
compensation expense included in operating expenses
|
|
|
248
|
|
|
|
|
Total
stock-based compensation expense
|
|
|
248
|
Tax
benefit
|
|
|
—
|
|
|
|
|
Stock-based
compensation expense, net of tax
|
|
$
|
248
|
|
|
|
(in
thousands)
|
Year
ended
December
31,
|
||||||
2006
|
|
|
2005
|
|
|||
Net
loss, as reported under APB 25 for the prior period (1)
|
$
|
N/A
|
$
|
(1,700
|
)
|
||
Add
back stock based employee compensation expense in
reported
net loss, net of related tax effects
|
-
|
-
|
|||||
Subtract
total stock-based compensation expense determined
under
fair value-based method for all awards, net of related tax
effects(2)
|
(248
|
)
|
(750
|
)
|
|||
Net
loss including the effect of stock-based compensation expense(3)
|
$
|
(12,874
|
)
|
$
|
(2,450
|
)
|
|
Loss
per share:
|
|||||||
Basic
and diluted, as reported for the prior period(1)
|
$
|
(3.65
|
)
|
$
|
(0.53
|
)
|
|
Basic
and diluted, including the effect of stock-based
compensation
expense(3)
|
$
|
(3.65
|
)
|
$
|
(0.76
|
)
|
(1)
|
Net
loss and loss per share for periods prior to year 2006 does not
include
stock-based compensation expense under SFAS 123 because the Company
did
not adopt the recognition provisions of SFAS 123.
|
(2)
|
Stock-based
compensation expense for periods prior to year 2006 was calculated
based
on the pro forma application of SFAS 123.
|
(3)
|
Net
loss and loss per share for periods prior to year 2006 represent
pro forma
information based on SFAS 123.
|
Year
|
Consulting
Fees
|
Expense
Reimbursement
|
|||||
2006
|
$
|
69,000
|
$
|
5,000
|
|||
2005
|
79,000
|
5,000
|
|||||
2004
|
58,000
|
9,000
|
Property
and equipment consists of the following:
|
December
31,
|
||||||
2006
|
|
|
2005
|
||||
Laboratory
equipment
|
$
|
1,090,000
|
$
|
1,090,000
|
|||
Laboratory
and building improvements
|
167,000
|
167,000
|
|||||
Furniture
and equipment
|
134,000
|
138,000
|
|||||
|
1,391,000
|
1,395,000
|
|||||
Less
accumulated depreciation and amortization
|
1,179,000
|
1,095,000
|
|||||
Net
property and equipment
|
$
|
212,000
|
$
|
300,000
|
2006
|
2005
|
2004
|
||||||||
Revenues |
$
|
550,000
|
$
|
781,000
|
$
|
549,000
|
||||
|
||||||||||
Expenses | ||||||||||
Cost
of
product sales
|
|
(1,012,000
|
)
|
(239,000
|
)
|
|||||
Research
and
development
|
(2,501,000
|
)
|
(3,082,000
|
)
|
||||||
Depreciation
|
(237,000
|
)
|
(304,000
|
)
|
||||||
Total
expenses
|
-
|
(3,750,000
|
)
|
(3,625,000
|
)
|
|||||
|
||||||||||
Income/loss from discontinued operations |
550,000
|
(2,969,000
|
)
|
(3,076,000
|
)
|
|||||
|
||||||||||
Gain on sale of assets |
-
|
12,891,000
|
-
|
|||||||
Tax expense
|
(173,000
|
)
|
(4,067,000
|
)
|
-
|
|||||
Discontinued operations
|
$
|
377,000
|
$
|
5,855,000
|
$
|
(3,076,000
|
)
|
Future
Maturities
|
Debt
|
|
2007
|
10,895,000
|
|
2010
|
5,500,000
|
Summary of Warrants |
|
Outstanding
|
Exercise
Price
|
Expiration
Date
|
||||||||
2006
convertible note (a)
|
3,863,634
|
$
|
1.32
|
2/16/12
|
||||||||
2006
convertible note (a)
|
386,364
|
1.32
|
10/24/12
|
|||||||||
2006
convertible note (a)
|
386,364
|
1.32
|
12/06/12
|
|||||||||
2006
investor relations advisor (b)
|
50,000
|
2.70
|
12/27/11
|
|||||||||
2004
offering (c)
|
89,461
|
35.50
|
2/24/09
|
|||||||||
2004
offering (c)
|
31,295
|
27.00
|
2/24/09
|
|||||||||
2003
financial advisor (d)
|
14,399
|
19.50
|
10/30/08
|
|||||||||
2002
scientific consultant (e)
|
2,000
|
24.80
|
2/01/09
|
|||||||||
2001
scientific consultant (f)
|
3,000
|
15.00
|
1/1/08
|
|||||||||
Total
|
4,826,517
|
a) |
In
connection with the convertible note offerings in 2006, warrants
to
purchase a total of 4,636,362 shares of common stock were issued.
All of
the warrants are exercisable immediately and expire six years
from date of
issue.
|
b) |
During
2006, an investor relations advisor received warrants to purchase
50,000
shares of common stock at an exercise price of $2.70 per share
at any time
from December 27, 2006 until December 27, 2011, for investor
relations
consulting services to be rendered in 2007. All of the warrants
were
exercisable at December 31, 2006. The fair value of the warrants
was $2.00
per share on the date of the grant using the Black-Scholes pricing
model
with the following assumptions: expected dividend yield 0.0%,
risk-free
interest rate 4.58%, expected volatility 138% and a term of 2.5
years.
|
c) |
In
connection with offering of common stock in 2004, warrants to
purchase a
total of 120,756 shares of common stock were issued. All of the
warrants
are exercisable and expire five years from date of
issuance.
|
d) |
During
2003, financial advisors received warrants to purchase 14,399
shares of
common stock at any time until October 30, 2008, for financial
consulting
services rendered in 2003 and 2004. All the warrants are exercisable.
The
fair value of the warrants was $14.10 per share on the date of
the grant
using the Black-Scholes pricing model with the following assumptions:
expected dividend yield 0.0%, risk-free interest rate 2.9%, expected
volatility 92% and a term of 5 years.
|
e) |
During
2002, a director who is also a scientific advisor received warrants
to
purchase 2,000 shares of common stock at an exercise price of
$24.55 per
share at any time until February 1, 2009, for scientific consulting
services rendered in 2002. The fair value of the warrants was
$18.50 per
share on the date of the grant using the Black-Scholes pricing
model with
the following assumptions: expected dividend yield 0.0%, risk-free
interest rate 3.90%, expected volatility 81% and a term of 7
years.
|
f) |
During
2001, a director who is also a scientific advisor received warrants
to
purchase 3,000 shares of common stock at an exercise price of
$15.00 per
share at any time until January 1, 2008, for scientific consulting
services rendered in 2001. The fair value of the warrants was
$13.70 per
share on the date of the grant using the Black-Scholes pricing
model with
the following assumptions: expected dividend yield 0.0%, risk-free
interest rate 5.03%, expected volatility 118% and a term of 7
years.
|
Weighted-
|
|||
average
|
|||
exercise
|
|||
Options
|
price
|
||
Outstanding
options at January 1, 2005
|
-
|
$
-
|
|
Granted,
fair value of $8.50 per share
|
50,000
|
5.45
|
|
Outstanding
options at December 31, 2005
|
50,000
|
5.45
|
|
Granted,
fair value of $ 0.36 per share
|
753,872
|
1.32
|
|
Forfeited
|
(1,200)
|
3.15
|
|
Outstanding
options at December 31, 2006
|
802,672
|
1.04
|
|
Exercisable
at December 31, 2005
|
14,000
|
5.45
|
|
Exercisable
at December 31, 2006
|
204,718
|
2.00
|
Number
of
|
Weighted
average
|
Number
of
|
Weighted
aververage
|
|||
|
options
|
Remaining
|
Exercise
|
options
|
Remaining
|
Exercise
|
Range
of excercise prices
|
outstanding
|
life
in years
|
price
|
exerciseable
|
life
in years
|
price
|
$0.63
- 0.85
|
717,000
|
9.6
|
$0.63
|
129,250
|
9.6
|
$0.63
|
$3.15
- 5.45
|
85,672
|
8.9
|
4.49
|
75,468
|
8.9
|
4.36
|
802,672
|
204,718
|
Weighted-
|
||
average
|
||
exercise
|
||
Options
|
price
|
|
Outstanding
options at January 1, 2004
|
410,725
|
$
17.25
|
Granted,
fair value of $10.90 per share
|
62,840
|
28.75
|
Exercised
|
(21,939)
|
11.90
|
Forfeited
|
(15,196)
|
21.05
|
Outstanding
options at December 31, 2004
|
436,430
|
18.80
|
Granted,
fair value of $6.45 per share
|
49,700
|
12.05
|
Forfeited
|
(55,859)
|
17.30
|
Outstanding
options at December 31, 2005
|
430,271
|
18.20
|
Forfeited
|
(69,354)
|
19.12
|
Outstanding
options at December 31, 2006
|
360,917
|
18.03
|
Exercisable
at December 31, 2004
|
334,232
|
18.20
|
Exercisable
at December 31, 2005
|
406,760
|
18.40
|
Exercisable
at December 31, 2006
|
349,990
|
18.12
|
Range
of
|
Number
of
|
Weighted
average
|
Number
of
|
Weighted
average
|
||
exercise
|
shares
|
Remaining
|
Exercise
|
shares
|
Remaining
|
Exercise
|
prices
|
outstanding
|
life
in years
|
price
|
exercisable
|
life
in years
|
Price
|
$10.00
- 12.50
|
147,640
|
3.6
|
$11.15
|
139,032
|
3.3
|
$11.12
|
$14.05
- 18.65
|
112,717
|
1.9
|
16.61
|
112,717
|
1.9
|
16.61
|
$20.25
- 34.38
|
100,560
|
2.1
|
29.73
|
98,241
|
2.0
|
29.74
|
|
|
|
|
|
|
|
|
360,917
|
|
|
349,990
|
|
|
2006
|
2005
|
2004
|
||||||||
Income
taxes at U.S. statutory rate
|
$
|
(4,378,000
|
)
|
$
|
(438,000
|
)
|
$
|
(3,442,000
|
)
|
|
Change
in valuation allowance
|
3,972,000
|
(2,051,000
|
)
|
895,000
|
||||||
Change
in miscellaneous items
|
(130,000) |
397,000
|
598,000
|
|||||||
Benefit
of foreign losses not recognized
|
58,000 |
304,000
|
-
|
|||||||
Expenses
not deductible
|
240,000 |
738,000
|
7,000
|
|||||||
Expiration
of net operating loss and general
|
||||||||||
business
credit carryforwards, net of revisions
|
238,000
|
1,050,000
|
1,942,000
|
|||||||
Total
tax expense
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Deferred
tax assets (liabilities)
|
||||||||||
Net
operating loss carryforwards
|
$
22,634,000
|
$
20,261,000
|
$
20,808,000
|
|||||||
General
business credit carryforwards
|
2,402,000
|
2,261,000
|
2,094,000
|
|||||||
Deferred
gain on sale of oral/topical care assets
|
-
|
(1,490,000
|
)
|
-
|
||||||
Property,
equipment and goodwill
|
46,000
|
78,000
|
259,000
|
|||||||
Gross
deferred tax assets
|
25,082,000
|
21,110,000
|
23,161,000
|
|||||||
Valuation
allowance
|
(25,082,000
|
)
|
(21,110,000
|
)
|
(23,161,000
|
)
|
||||
Net
deferred taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
|
Net
operating
loss
carryforwards
|
General
business
credit
carryforwards
|
|||||
2007
|
$
|
994,000
|
$
|
26,000
|
|||
2008
|
4,004,000
|
138,000
|
|||||
2009
|
1,661,000
|
185,000
|
|||||
2010
|
2,171,000
|
140,000
|
|||||
2011
|
4,488,000
|
13,000
|
|||||
Thereafter
|
53,251,000
|
1,900,000
|
|||||
$
|
66,569,000
|
$
|
2,402,000
|
2006
Quarter Ended
|
|||||||||||||
March
31
|
June
30
|
September
30
|
December
31
|
||||||||||
Loss
from operations
|
$
|
(4,856
|
)
|
$
|
(3,331
|
)
|
$
|
(2,015
|
)
|
$
|
(3,222
|
)
|
|
Discontinued
operations
|
-
|
-
|
-
|
550
|
|||||||||
Net
loss
|
$
|
(4,856
|
)
|
$
|
(3,331
|
)
|
$
|
(2,015
|
)
|
$
|
(2,672
|
)
|
|
Basic
and diluted income/loss per common share
|
$
|
(1.38
|
)
|
$
|
(0.94
|
)
|
$
|
(0.57
|
)
|
$
|
(0.76
|
)
|
|
|
2005
Quarter Ended
|
||||||||||||
|
March
31
|
|
|
June
30
|
|
|
September30
|
|
|
December31
|
|||
Loss
from operations
|
$
|
(1,616
|
)
|
$
|
(2,988
|
)
|
$
|
(1,612
|
)
|
$
|
(1,339
|
)
|
|
Discontinued
operations
|
(806
|
)
|
(798
|
)
|
(451
|
)
|
7,910
|
||||||
Net
loss/income
|
$
|
(2,422
|
)
|
$
|
(3,786
|
)
|
$
|
(2,063
|
)
|
$
|
6,571
|
||
Basic
and diluted loss per
common
share
|
$
|
(0.78
|
)
|
$
|
(1.21
|
)
|
$
|
(0.65
|
)
|
$
|
2.11
|
|
September
30, 2007
|
December
31, 2006
|
|||||
ASSETS
|
(unaudited)
|
(audited)
|
|||||
Current
assets
Cash
and cash equivalents
Short
term investments, at cost
Receivables
Prepaid
expenses and other current assets
|
$
|
661,000
515,000
861,000
530,000
|
$
|
1,194,000
3,195,000
359,000
283,000
|
|||
Total
current assets
|
2,567,000
|
5,031,000
|
Property
and equipment, net
|
156,000
|
212,000
|
|||||
Debt
issuance costs, net
|
-
|
158,000
|
|||||
Patents,
net
|
752,000
|
878,000
|
|||||
Licenses,
net
|
-
|
25,000
|
|||||
Other
assets
|
25,000
|
122,000
|
|||||
Total
assets
|
$
|
3,500,000
|
$
|
6,426,000
|
|||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|||||||
Current
liabilities
Accounts
payable and accrued expenses
Accrued
interest payable
Deferred
revenues
Current
portion of long-term debt, net of discount $0 at
September
30, 2007 and $2,062,000 at December 31, 2006
|
$
|
1,595,000
1,023,000
1,167,000
11,406,000
|
$
|
1,226,000
581,000
173,000
8,833,000
|
|
||
Total
current liabilities
|
15,191,000
|
10,813,000
|
|||||
Long-term
debt
|
5,500,000
|
5,500,000
|
|||||
Total
liabilities
|
20,691,000
|
16,313,000
|
|||||
Commitments
and contingencies
|
-
|
-
|
|||||
Stockholders'
deficit
Preferred
stock - $.01 par value; authorized 2,000,000 shares;
none
issued or outstanding
Common
stock - $.01 par value; authorized 100,000,000 shares;
issued,
3,575,114 at September 30, 2007 and 3,535,108 at
December
31, 2006
Additional
paid-in capital
Notes
receivable from stockholders
Treasury
stock, at cost - 163 shares
Accumulated
deficit
|
-
36,000
69,687,000
(1,045,000
(4,000
(85,865,000
|
)
)
)
|
-
35,000
68,799,000
(1,045,000
(4,000
(77,672,000
|
)
)
)
|
|||
Total
stockholders' deficit
|
(17,191,000
|
)
|
(9,887,000
|
)
|
|||
Total
liabilities and stockholders' deficit
|
$
|
3,500,000
|
$
|
6,426,000
|
Three
months ended
|
Nine
months ended
|
||||||||||||
September
30,
|
September
30
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Revenues
|
License
revenues
|
$
|
6,000
|
$
|
-
|
$ | 6,000 |
$
|
-
|
|||||
Expenses
|
|||||||||||||
Research
and development
|
596,000
|
379,000
|
1,532,000 |
1,769,000
|
|||||||||
General
and administrative
|
1,000,000
|
800,000
|
3,252,000 |
2,129,000
|
|||||||||
Depreciation
and amortization
|
61,000
|
77,000
|
210,000 |
231,000
|
|||||||||
Total
expenses
|
1,657,000
|
1,256,000
|
4,994,000 |
4,129,000
|
|||||||||
Loss
from operations
|
(1,651,000
|
)
|
(1,256,000
|
)
|
(4,988,000 | ) |
(4,129,000
|
)
|
|||||
Interest
and miscellaneous income
|
12,000
|
86,000
|
72,000 |
278,000
|
|||||||||
Interest
and other expense
|
(318,000
|
)
|
(1,976,000
|
)
|
(3,277,000 | ) |
(5,244,000
|
)
|
Unrealized
gain (loss) on fair value of
warrants
and conversion feature
|
-
|
|
1,131,000
|
|
-
|
|
(1,107,000
|
)
|
|||||
(306,000
|
) |
(759,000
|
) | (3,205,000 | ) |
(6,073,000
|
) | ||||||
Net
loss
|
$
|
(1,957,000
|
)
|
$
|
(2,015,000
|
)
|
$
|
(8,193,000
|
)
|
$
|
(10,202,000
|
)
|
|
Basic
and diluted loss per common share
Net
loss allocable to common
shareholders
|
$
|
(0.55
|
)
|
$
|
(0.57
|
)
|
|
|
|
$
|
(2.89
|
)
|
|
Weighted
average basic and diluted
common
shares outstanding
|
3,575,114
|
3,534,408
|
3,544,181
|
3,530,941
|
Nine
months ended September 30,
|
|||||||
2007
|
2006
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(8,193,000
|
)
|
$
|
(10,202,000
|
)
|
|
Adjustments
to reconcile net loss to cash used
in
operating activities:
|
|||||||
Depreciation
and amortization
|
210,000
|
230,000
|
|||||
Stock
option expense
|
810,000
|
171,000
|
|||||
Stock
compensation expense
|
-
|
69,000
|
|||||
Stock
issued for compensation
|
44,000
|
-
|
|||||
Amortization
of debt costs and discounts
|
2,316,000
|
4,192,000
|
|||||
Unrealized
loss on fair value of warrants and
conversion
feature
|
-
|
1,107,000
|
Loss on
sale of asset
|
2,000
|
|
-
|
||||
Change
in operating assets and liabilities:
|
|||||||
Receivables
|
(502,000
|
)
|
14,000
|
||||
Prepaid
expenses and other current assets
|
(247,000
|
)
|
143,000
|
||||
Other
assets
|
1,000
|
128,000
|
|||||
Accounts
payable and accrued expenses
|
369,000
|
(849,000
|
)
|
||||
Accrued
interest payable
|
953,000
|
805,000
|
|||||
Deferred
revenue
|
994,000
|
-
|
|||||
Net
cash used in operating activities
|
(3,243,000
|
)
|
(4,192,000
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Capital
expenditures
|
(18,000
|
)
|
(3,000
|
)
|
|||
Proceeds
from sale of asset
|
13,000
|
-
|
|||||
Redemptions
of short term investments and
certificates
of deposit, net
|
2,680,000
|
(98,000
|
)
|
||||
Net
cash provided by (used in) investing activities
|
2,675,000
|
(101,000
|
)
|
||||
Cash
flows from financing activities:
|
|||||||
Payments
of notes payable
|
-
|
(106,000
|
)
|
||||
Proceeds
from secured convertible notes payable
|
-
|
4,532,000
|
|||||
Exercise
of stock options
|
35,000
|
-
|
|||||
Net
cash provided by financing activities
|
35,000
|
4,426,000
|
|||||
Net
(decrease) increase in cash and cash equivalents
|
(533,000
|
)
|
133,000
|
||||
Cash
and cash equivalents at beginning of period
|
1,194,000
|
349,000
|
|||||
Cash
and cash equivalents at end of period
|
$
|
661,000
|
$
|
482,000
|
|||
Supplemental
cash flow information:
|
|||||||
Cash
paid for interest
|
$
|
5,000
|
$
|
5,000
|
|||
Accrued
interest capitalized
|
511,000 | - |
(1) |
Interim
Financial Statements
|
September
30, 2007
|
December
31, 2006
|
||||||||||||
Gross
carrying
value
|
Accumulated
amortization
|
Gross
carrying
value
|
Accumulated
amortization
|
||||||||||
Amortizable
intangible assets
Patents
Licenses
|
$
|
1,680
-
|
$
|
928
-
|
$
|
1,680
500
|
$
|
802
475
|
|||||
Total
|
$ | $1,680 |
$
|
928
|
$
|
2,180
|
$
|
1,277
|
2007 | $ | 42 | ||
2008 | 168 | |||
2009 | 168 | |||
2010 | 168 | |||
2011 | 168 | |||
Thereafter | 38 | |||
Total | $ | 752 |
|
|
9/30/07
|
|
|||
Expected
life
|
|
2.0
yrs.
|
|
|||
Risk
free interest rate
|
|
4.63
|
%
|
|||
Expected
volatility(a)
|
|
141
|
%
|
|||
Expected
dividend yield
|
|
0.0
|
%
|
|||
(a)
|
Reflects
movements in our stock price over the most recent historical
period
equivalent to the expected life.
|
September
30,
2007
|
December
31,
2006
|
||||||
Convertible
note - Oracle and affiliates
|
$
|
4,015,000
|
$
|
4,015,000
|
|||
Convertible
note
|
5,500,000
|
5,500,000
|
|||||
Convertible
note
|
1,391,000
|
880,000
|
|||||
10,906,000
|
10,395,000
|
||||||
Discount
|
-
|
(456,000
|
)
|
||||
10,906,000
|
9,939,000
|
||||||
Convertible
note - SCO and affiliates
|
6,000,000
|
6,000,000
|
|||||
Discount
|
-
|
(1,606,000
|
)
|
||||
6,000,000
|
4,394,000
|
||||||
Total
|
$
|
16,906,000
|
$
|
14,333,000
|
|||
Short
term
|
$
|
11,406,000
|
$
|
8,833,000
|
|||
Long
term
|
5,500,000
|
5,500,000
|
|||||
Total
|
$
|
16,906,000
|
$
|
14,333,000
|
|||
SEC
Registration Fee
|
|
$
|
1,324 |
Printing
and Engraving Expenses
|
|
$
|
2,500 |
Legal
Fees and Expenses
|
|
$
|
20,000
|
Accountants'
Fees and Expenses
|
|
$
|
25,000 |
Miscellaneous
Costs
|
|
$
|
2,176 |
Total
|
$
|
51,000 |
Exhibit
|
Number
|
Description
of Document
|
2.1
|
Amended
and Restated Agreement of Merger and Plan of Reorganization between
Access
Pharmaceuticals, Inc. and Chemex Pharmaceuticals, Inc., dated
as of
October 31, 1995 (Incorporated by reference to Exhibit A of the
our
Registration Statement on Form S-4 dated December 21, 1995, Commission
File No. 33-64031)
|
2.2
|
Agreement
and Plan of Merger, by and among Access Pharmaceuticals, Inc.,
Somanta
Acquisition Corporation, Somanta Pharmaceuticals, Inc. Somanta
Incorporated and Somanta Limited, dated April 18, 2007. (Incorporated
by
reference to Exhibit 2.1 to our Form 8-K dated April 18,
2007)
|
3.0 |
Articles
of incorporation and bylaws
|
3.1
|
Certificate
of Incorporation (Incorporated by Reference to Exhibit 3(a) of
our Form
8-B dated July 12, 1989, Commission File Number
9-9134)
|
3.2 |
Certificate
of Amendment of Certificate of Incorporation filed August 21,
1992
|
3.3
|
Certificate
of Merger filed January 25, 1996. (Incorporated by reference
to Exhibit E
of our Registration Statement on Form S-4 dated December 21,
1995,
Commission File No. 33-64031)
|
3.4
|
Certificate
of Amendment of Certificate of Incorporation filed January 25,
1996.
(Incorporated by reference to Exhibit E of our Registration Statement
on
Form S-4 dated December 21, 1995, Commission File No.
33-64031)
|
3.5
|
Certificate
of Amendment of Certificate of Incorporation filed July 18, 1996.
(Incorporated by reference to Exhibit 3.8 of our Form 10-K for
the year
ended December 31, 1996)
|
3.6
|
Certificate
of Amendment of Certificate of Incorporation filed June 18, 1998.
(Incorporated by reference to Exhibit 3.8 of our Form 10-Q for
the quarter
ended June 30, 1998
|
3.7
|
Certificate
of Amendment of Certificate of Incorporation filed July 31, 2000.
(Incorporated by reference to Exhibit 3.8 of our Form 10-Q for
the quarter
ended March 31, 2001)
|
3.8
|
Certificate
of Designations of Series A Junior Participating Preferred Stock
filed
November 7, 2001 (Incorporated by reference to Exhibit 4.1.h
of our
Registration Statement on Form S-8, dated December 14, 2001,
Commission
File No. 333-75136)
|
3.9
|
Amended
and Restated Bylaws (Incorporated by reference to Exhibit 3.1
of our Form
10-Q for the quarter ended June 30,
1996)
|
3.10
|
Certificate
of Designation of Series A Cumulative Convertible Preferred Stock
filed
November 9, 2007
|
5.1
|
Opinion
of Bingham McCutchen LLP regarding the legality of the
securities
|
10.1*
|
1995
Stock Option Plan (Incorporated by reference to Exhibit F of
our
Registration Statement on Form S-4 dated December 21, 1995, Commission
File No. 33-64031
|
10.2*
|
Amendment
to 1995 Stock Option Plan (Incorporated by reference to Exhibit
10.25 of
our Form 10-K for the year ended December 31,
2001)
|
10.3
|
Lease
Agreement between Pollock Realty Corporation and us dated July
25, 1996
(Incorporated by reference to Exhibit 10.19 of our Form 10-Q
for the
quarter ended September 30, 1996)
|
10.4
|
Platinate
HPMA Copolymer Royalty Agreement between The School of Pharmacy,
University of London and the Company dated November 19, 1996
(Incorporated
by reference to Exhibit 10.11 of our Form 10-K for the year ended
December
31, 1996)
|
10.5*
|
Employment
Agreement of David P. Nowotnik, PhD (Incorporated by reference
to Exhibit
10.19 of our Form 10-K for the year ended December 31,
1999)
|
10.6*
|
401(k)
Plan (Incorporated by reference to Exhibit 10.20 of our Form
10K for the
year ended December 31, 1999)
|
10.7
|
Form
of Convertible Note (Incorporated by reference to Exhibit 10.24
of our
Form 10-Q for the quarter ended September 30,
2000)
|
10.8
|
Rights
Agreement, dated as of October 31, 2001 between the us and American
Stock
Transfer & Trust Company, as Rights Agent (incorporated by reference
to Exhibit 99.1 of our Current Report on Form 8-K dated October
19,
2001)
|
10.9
|
Amendment
to Rights Agreement, dated as of February 16, 2006 between us
and American
Stock Transfer & Trust Company, as Rights Agent
(2)
|
10.10*
|
2001
Restricted Stock Plan (Incorporated by reference to Appendix
A of our
Proxy Statement filed on April 16,
2001)
|
10.11*
|
2005
Equity Incentive Plan (Incorporated by reference to Exhibit 1
of our Proxy
Statement filed on April 18, 2005
(2)
|
10.12*
|
Employment
Agreement, dated as of June 1, 2005 by and between us and Stephen
B.
Thompson (1)
|
10.13 |
Asset
Sale Agreement, dated as of October 12, 2005, between us and
Uluru, Inc.
(1)
|
10.14
|
Amendment
to Asset Sale Agreement, dated as of December 8, 2006, between
us and
Uluru, Inc. (3)
|
10.15 |
License
Agreement, dated as of October 12, 2005, between us and Uluru,
Inc.
(1)
|
10.16
|
Form
of Warrant, dated February 16, 2006, issued by us to certain
Purchasers
(2)
|
10.17
|
Form
of Warrant, dated October 24, 2006, issued by us to certain Purchasers
(3)
|
10.18 | Investor Rights Agreement, dated October 24, 2006, between us and certain Purchasers |
10.19
|
Form
of Warrant, December 6, 2006, issued by us to certain Purchasers
(3)
|
10.20 | Investor Rights Agreement, dated December 6, 2006, between us and certain Purchasers |
10.21*
|
2007
Special Stock Option Plan and Agreement, dated January 4, 2007,
by and
between us and Stephen R. Seiler, President and Chief Executive
Officer
(4)
|
10.22*
|
Employment
Agreement, dated January 4, 2007 by and between us and Stephen
R. Seiler,
President and Chief Executive Officer
(4)
|
10.23
|
Note
Purchase Agreement dated April 26, 2007 between us and Somanta
Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 10.42
of our
Form 10-Q for the quarter ended June 30 30,
2007)
|
10.24 | Preferred Stock and Warrant Purchase Agreement, dated November 7, 2007, between us and certain Purchasers |
10.25
|
Investor
Rights Agreement, dated November 10, 2007, between us and certain
Purchasers
|
10.26 | Form of Warrant Agreement dated November 10, 2007, between us and certain Purchasers |
10.27
|
Board
Designation Agreement, dated November 15, 2007, between us and
SCO Capital
Partners LLC
|
*
|
[Management
contract or compensatory plan required to be filed as an Exhibit
to this
Form pursuant to Item 15(c) of the report.]
|
(1) |
Incorporated
by reference to our Form 10-K for the year ended December 31,
2005.
|
(2) |
Incorporated
by reference to our Form 10-Q for the quarter ended March 31,
2006.
|
(3) |
Incorporated
by reference to our Form 10-KSB for the year ended December 31,
2006.
|
(4) |
Incorporated
by reference to our Form 10-QSB for the quarter ended March 31,
2007.
|
Date December 10, 2007 | By: | /s/ Stephen R. Seiler | |
Stephen R. Seiler | |||
President and Chief Financial | |||
Officer | |||
Date December 10, 2007 | By: | /s/ Stephen B. Thompson | |
Stephen B. Thompson | |||
Vice President, Chief Financial | |||
Officer and Treasurer |
Date December 10, 2007 |
By:
|
/s/ Mark J. Ahn | ||
Mark J. Ahn, Director | ||||
Date December 10, 2007 |
By:
|
/s/ Mark J. Alvino | ||
Mark J. Alvino, Director | ||||
Date December 10, 2007 |
By:
|
/s/
Esteban Cvitkovic
|
||
Esteban Cvitkovic, Director | ||||
Date December 10, 2007 |
By:
|
/s/ Jeffrey B. Davis | ||
Jeffrey B. Davis, Director | ||||
Date December 10, 2007 | By: | /s/ Stephen B. Howell | ||
Stephen B. Howell, Director | ||||
Date December 10, 2007 | By: | /s/ David P. Luci | ||
David P. Luci, Director | ||||
Date December 10, 2007 | By: | /s/ Rosemary Mazanet | ||
Rosemary Mazanet, Director | ||||
Date December 10, 2007 | By: | /s/ John J. Meakem | ||
John J. Meakem, Jr., Director | ||||
Date December 10, 2007 | By: | /s/ Stephen R. Seiler | ||
Stephen R. Seiler | ||||
President and Chief Executive, Officer, and Director |
Number
|
Description
of Document
|
2.1
|
Amended
and Restated Agreement of Merger and Plan of Reorganization between
Access
Pharmaceuticals, Inc. and Chemex Pharmaceuticals, Inc., dated
as of
October 31, 1995 (Incorporated by reference to Exhibit A of the
our
Registration Statement on Form S-4 dated December 21, 1995, Commission
File No. 33-64031)
|
2.2
|
Agreement
and Plan of Merger, by and among Access Pharmaceuticals, Inc.,
Somanta
Acquisition Corporation, Somanta Pharmaceuticals, Inc. Somanta
Incorporated and Somanta Limited, dated April 18, 2007. (Incorporated
by
reference to Exhibit 2.1 to our Form 8-K dated April 18,
2007)
|
3.0 |
Articles
of incorporation and bylaws
|
3.1
|
Certificate
of Incorporation (Incorporated by Reference to Exhibit 3(a) of
our Form
8-B dated July 12, 1989, Commission File Number
9-9134)
|
3.2 |
Certificate
of Amendment of Certificate of Incorporation filed August 21,
1992
|
3.3
|
Certificate
of Merger filed January 25, 1996. (Incorporated by reference
to Exhibit E
of our Registration Statement on Form S-4 dated December 21,
1995,
Commission File No. 33-64031)
|
3.4
|
Certificate
of Amendment of Certificate of Incorporation filed January 25,
1996.
(Incorporated by reference to Exhibit E of our Registration Statement
on
Form S-4 dated December 21, 1995, Commission File No.
33-64031)
|
3.5
|
Certificate
of Amendment of Certificate of Incorporation filed July 18, 1996.
(Incorporated by reference to Exhibit 3.8 of our Form 10-K for
the year
ended December 31, 1996)
|
3.6
|
Certificate
of Amendment of Certificate of Incorporation filed June 18, 1998.
(Incorporated by reference to Exhibit 3.8 of our Form 10-Q for
the quarter
ended June 30, 1998
|
3.7
|
Certificate
of Amendment of Certificate of Incorporation filed July 31, 2000.
(Incorporated by reference to Exhibit 3.8 of our Form 10-Q for
the quarter
ended March 31, 2001)
|
3.9
|
Amended
and Restated Bylaws (Incorporated by reference to Exhibit 3.1
of our Form
10-Q for the quarter ended June 30,
1996)
|
3.10
|
Certificate
of Designation of Series A Cumulative Convertible Preferred Stock
filed
November 9, 2007
|
5.1
|
Opinion
of Bingham McCutchen LLP regarding the legality of the
securities
|
10.1*
|
1995
Stock Option Plan (Incorporated by reference to Exhibit F of
our
Registration Statement on Form S-4 dated December 21, 1995, Commission
File No. 33-64031
|
10.2*
|
Amendment
to 1995 Stock Option Plan (Incorporated by reference to Exhibit
10.25 of
our Form 10-K for the year ended December 31,
2001)
|
10.3
|
Lease
Agreement between Pollock Realty Corporation and us dated July
25, 1996
(Incorporated by reference to Exhibit 10.19 of our Form 10-Q
for the
quarter ended September 30, 1996)
|
10.4
|
Platinate
HPMA Copolymer Royalty Agreement between The School of Pharmacy,
University of London and the Company dated November 19, 1996
(Incorporated
by reference to Exhibit 10.11 of our Form 10-K for the year ended
December
31, 1996)
|
10.5*
|
Employment
Agreement of David P. Nowotnik, PhD (Incorporated by reference
to Exhibit
10.19 of our Form 10-K for the year ended December 31,
1999)
|
10.6*
|
401(k)
Plan (Incorporated by reference to Exhibit 10.20 of our Form
10K for the
year ended December 31, 1999)
|
10.7
|
Form
of Convertible Note (Incorporated by reference to Exhibit 10.24
of our
Form 10-Q for the quarter ended September 30,
2000)
|
10.8
|
Rights
Agreement, dated as of October 31, 2001 between the us and American
Stock
Transfer & Trust Company, as Rights Agent (incorporated by reference
to Exhibit 99.1 of our Current Report on Form 8-K dated October
19,
2001)
|
10.9
|
Amendment
to Rights Agreement, dated as of February 16, 2006 between us
and American
Stock Transfer & Trust Company, as Rights Agent
(2)
|
10.10*
|
2001
Restricted Stock Plan (Incorporated by reference to Appendix
A of our
Proxy Statement filed on April 16,
2001)
|
10.11*
|
2005
Equity Incentive Plan (Incorporated by reference to Exhibit 1
of our Proxy
Statement filed on April 18, 2005
(2)
|
10.12*
|
Employment
Agreement, dated as of June 1, 2005 by and between us and Stephen
B.
Thompson (1)
|
10.13 |
Asset
Sale Agreement, dated as of October 12, 2005, between us and
Uluru, Inc.
(1)
|
10.14
|
Amendment
to Asset Sale Agreement, dated as of December 8, 2006, between
us and
Uluru, Inc. (3)
|
10.16
|
Form
of Warrant, dated February 16, 2006, issued by us to certain
Purchasers
(2)
|
10.17
|
Form
of Warrant, dated October 24, 2006, issued by us to certain Purchasers
(3)
|
10.18
|
Investor Rights Agreement, dated October 24, 2006, between us and certain Purchasers |
10.19
|
Form
of Warrant, December 6, 2006, issued by us to certain Purchasers
(3)
|
10.20 | Investor Rights Agreement, dated December 6, 2006, between us and certain Purchasers |
10.21*
|
2007
Special Stock Option Plan and Agreement, dated January 4, 2007,
by and
between us and Stephen R. Seiler, President and Chief Executive
Officer
(4)
|
10.22*
|
Employment
Agreement, dated January 4, 2007 by and between us and Stephen
R. Seiler,
President and Chief Executive Officer
(4)
|
10.23
|
Note
Purchase Agreement dated April 26, 2007 between us and Somanta
Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 10.42
of our
Form 10-Q for the quarter ended June 30 30,
2007)
|
10.24 | Preferred Stock and Warrant Purchase Agreement, dated November 7, 2007, between us and certain Purchasers |
10.25
|
Investor
Rights Agreement, dated November 10, 2007, between us and certain
Purchasers
|
10.26 | Form of Warrant Agreement dated November 10, 2007, between us and certain Purchasers |
10.27 | Board Designation Agreement, dated November 15, 2007, between us and SCO Cpaital Partners LLC |
23.1 | Consent of Whitley Penn LLP |
23.2 |
Consent
of Grant Thornton LLP
|
23.3 |
Opinion
of Bingham McCutchen LLP regarding the legality of the
securities
|
*
|
[Management
contract or compensatory plan required to be filed as an Exhibit
to this
Form pursuant to Item 15(c) of the report.]
|
(5) |
Incorporated
by reference to our Form 10-K for the year ended December 31,
2005.
|
(6) |
Incorporated
by reference to our Form 10-Q for the quarter ended March 31,
2006.
|
(7) |
Incorporated
by reference to our Form 10-KSB for the year ended December 31,
2006.
|
(8) |
Incorporated
by reference to our Form 10-QSB for the quarter ended March 31,
2007.
|