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EX-32.1 - CEO, CFO CERTIFICATION - Synthetic Biologics, Inc.s22-9748_ex321.htm
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q

(Mark One)
   
ý
   
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
   
For the quarterly period ended March 31, 2010
OR
   
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
 
   
For the transition period from  ____________ to ____________
 
Commission File Number: 1-12584
Adeona Logo
 
ADEONA PHARMACEUTICALS, INC.
(Name of small business issuer in its charter)

Nevada
13-3808303
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification Number)
   
3930 Varsity Drive
Ann Arbor, MI
48108
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code:
(734) 332-7800
  Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.001 par value per share
 
Securities registered pursuant to Section 12(g) of the Act:
  None.

  (Title of Class)

       Indicate by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý       No  o
  
       Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   o      No  o
       Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, a non-accelerated file, or a smaller reporting company.  See the definitions of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
 
 Large accelerated filer                                o
 Accelerated filer                                o
 
 Non-Accelerated filer                                 o
 Smaller reporting company              ý
 
 (Do not check if a smaller reporting company
 
                            
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes        No  ý

As of May 10, 2010, the registrant had 21,756,772 shares of common stock outstanding.
 
 
 
 

 
 


 
  
ADEONA PHARMACEUTICALS, INC.
 
FORM 10-Q
TABLE OF CONTENTS

       
Page
   
PART I.—FINANCIAL INFORMATION
   
Item 1.
 
Financial Statements
   
   
Consolidated Balance Sheets (Unaudited)
 
2
   
Consolidated Statements of Operations (Unaudited)
 
3
   
Consolidated Statement of Equity (Unaudited)
 
4
   
Consolidated Statement of Cash Flows (Unaudited)
 
4
   
Notes to Consolidated Financial Statements (Unaudited)
    
5
Item 2.
 
Management’s Discussion and Analysis of Financial Conditions and Results of Operations
    
21
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risks
    
33
Item 4T.
 
Controls and Procedures
    
33
         
   
PART II—OTHER INFORMATION
   
Item 1.
 
Legal Proceedings
   
Item 1A.
 
Risk Factors
    
34
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds
    
34
Item 3.
 
Defaults Upon Senior Securities
 
51
Item 4.
 
Reserved and Removed
 
51
Item 5.
 
Other Information
 
51
Item 6.
 
Exhibits
    
52
SIGNATURE
    
53
 
    
 
 
 
 
 
 
1

 
 

PART I.—FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
Adeona Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Company)
 
Consolidated Balance Sheets
(Unaudited)

Assets
 
March 31, 2010
   
December 31, 2009
 
   
(Unaudited)
   
(Audited)
 
Current Assets
           
Cash
  $ 1,979,059     $ 2,715,044  
Accounts receivable - net of allowance of $43,472 and $21,481
    89,334       30,572  
Other
    4,677       8,967  
  Total Current Assets
    2,073,070       2,754,583  
                 
Property and equipment
    931,307       1,051,958  
                 
Goodwill
    178,229       178,229  
                 
Deposits and other assets
    90,848       90,848  
                 
Total Assets
  $ 3,273,454     $ 4,075,618  
                 
Liabilities and Stockholders' Equity
         
Current Liabilities:
               
Accounts payable
  $ 335,345     $ 400,475  
Accrued liabilities
    7,266       8,163  
Current portion of capital lease
    17,006       17,006  
  Total Current Liabilities
    359,617       425,644  
                 
Long Term Liabilities:
               
Accounts payable
    132,335       93,000  
Capital lease
    9,201       12,788  
Total Liabilities
    501,153       531,432  
                 
Stockholders' Equity
               
  Preferred stock,  $0.001 par value; 10,000,000 shares authorized,
               
    none issued and outstanding
    -       -  
  Common stock,  $0.001 par value; 100,000,000 shares authorized,
               
21,671,445 issued and 21,589,963 outstanding
               
and 21,530,834 issued and 21,449,352 outstanding
    21,671       21,449  
  Additional paid-in capital
    45,851,232       45,552,918  
  Deficit accumulated during the development stage
    (43,100,603 )     (42,013,081 )
  Subscription Receivable
    -       (17,100 )
  Total Stockholders' Equity
    2,772,301       3,544,187  
                 
Total Liabilities and Stockholders' Equity
  $ 3,273,454     $ 4,075,618  
 
See accompanying notes to unaudited consolidated financial statements
 
 
 
 
2

 
 

Adeona Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Company)
 
Consolidated Statements of Operations
(Unaudited)
 
               
 
 
               
 
 
   
For the three months ended
March 31,
   
January 8, 2001
(Inception) to
 
   
2010
   
2009
   
March 31, 2010
 
                   
Net Revenues
  $ 60,039     $ -     $ 163,127  
                         
Operating Expenses:
                       
Research and development
    419,213       495,994       17,427,508  
General and administrative
    735,447       593,444       12,836,933  
Total Operating Expenses
    1,154,661       1,089,438       30,264,441  
                         
Loss from Operations
    (1,094,622 )     (1,089,438 )     (30,101,314 )
                         
Other Income (Expense):
                       
Interest income
    71       2,622       474,662  
Gain (loss) on sale of equipment
    6,262       (26,459 )     (28,494 )
Interest expense
    -       -       (66,760 )
Other Expense
    767       -       (7,845 )
Total Other Income, net
    7,100       (23,837 )     371,563  
                         
Net Loss
  $ (1,087,522 )   $ (1,113,275 )   $ (29,729,751 )
                         
Less: Preferred stock dividend - subsidiary
    -       -       (951,250 )
Less: Merger dividend
    -       -       (12,409,722 )
                         
Net Loss Applicable to Common Shareholders
  $ (1,087,522 )   $ (1,113,275 )   $ (43,090,723 )
                         
Net Loss Per Share  - Basic and Diluted
  $ (0.05 )   $ (0.05 )   $ (5.14 )
                         
Weighted average number of shares outstanding
                       
  during the period - basic and diluted
    21,560,692       20,852,935       8,387,351  
 
See accompanying notes to unaudited consolidated financial statements
 
 
 
 
3

 
 
  Adeona Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Company)

Consolidated Statements of Stockholders' Equity
For period from January 8, 2001 (inception) to March 31, 2010
(Unaudited)

                                 
Deficit
             
      Series A, Convertible                        accumulated              
      Preferred Stock      Common Stock      Additional      during            Total  
      $0.001 Par Value      $0.001 Par Value      Paid-in      development      Subscription      Stockholders'  
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
stage
   
Receivable
   
Equity
 
                                                 
Balance, January 8, 2001 (inception)
    -     $ -       -       -       -       -       -       -  
Issuance of common stock to founders in exchange for subscription receivable ($0.00003/share)
    -       -       1,572,136       1,572       (1,222 )     -       -       350  
Issuance of preferred stock to founder for cash ($0.055/share)
    5,421,554       5,422       -       -       294,578       -       -       300,000  
Issuance of preferred and common stock to founder for cash - subsidiaries
    -       -       -       -       850,540       -       -       850,540  
Net loss for the period ended December 31, 2001
    -       -       -       -       -       (277,868 )     -       (277,868 )
Balance, December 31, 2001
    5,421,554       5,422       1,572,136       1,572       1,143,896       (277,868 )     -       873,022  
Issuance of common stock for compensation and consulting - subsidiary
    -       -       -       -       119       -       -       119  
                                                                 
Grant of stock options for consulting services - subsidiary
    -       -       -       -       5,890       -       -       5,890  
                                                                 
Net loss for the year ended December 31, 2002
    -       -       -       -       -       (768,508 )     -       (768,508 )
                                                                 
Balance, December 31, 2002
    5,421,554       5,422       1,572,136       1,572       1,149,905       (1,046,376 )     -       110,523  
                                                                 
Grant of stock options for compensation - subsidiary
    -       -       -       -       17,984       -       -       17,984  
                                                                 
Net loss for the year ended December 31, 2003
    -       -       -       -       -       (719,307 )     -       (719,307 )
                                                                 
Balance, December 31, 2003
    5,421,554       5,422       1,572,136       1,572       1,167,889       (1,765,683 )     -       (590,800 )
                                                                 
Issuance of common stock for cash - subsidiary
    -       -       -       -       50       -       -       50  
                                                                 
Grant of stock options for consulting services - subsidiary
    -       -       -       -       10,437       -       -       10,437  
                                                                 
Net loss for the year ended December 31, 2004
    -       -       -       -       -       (602,493 )     -       (602,493 )
                                                                 
Balance, December 31, 2004
    5,421,554       5,422       1,572,136       1,572       1,178,376       (2,368,176 )     -       (1,182,806 )
                                                                 
Recognition of stock based consulting in connection with stock options grants
    -       -       -       -       59,960       -       -       59,960  
                                                                 
Recognition of stock based compensation in connection with stock option grants
    -       -       -       -       10,493       -       -       10,493  
                                                                 
Recognition of deferred compensation - subsidiary
    -       -       -       -       14,057       -       -       14,057  
                                                                 
Issuance of Series B, convertible preferred stock for cash - subsidiary
    -       -       -       -       1,902,500       -       -       1,902,500  
                                                                 
Cash paid as direct offering costs in connection with sale of Series B,
                                                               
  convertible preferred stock - subsidiary
    -       -       -       -       (152,200 )     -       -       (152,200 )
                                                                 
10% in-kind Series B, convertible preferred stock dividend - subsidiary
    -       -       -       -       190,250       (190,250 )     -       -  
                                                                 
Net loss for the year ended December 31, 2005
    -       -       -       -       -       (1,355,842 )     -       (1,355,842 )
                                                                 
Balance, December 31, 2005
    5,421,554       5,422       1,572,136       1,572       3,203,436       (3,914,268 )     -       (703,838 )
                                                                 
Conversion of related party loan to common stock ($2.02/share)
    -       -       1,665,211       1,665       3,273,063       -       -       3,274,728  
                                                                 
Issuance of common stock for cash - private placement ($2.02/share)
    -       -       6,900,931       6,901       13,919,462       -       -       13,926,363  
                                                                 
Cash paid as direct offering costs in private placements
    -       -       -       -       (1,160,418 )     -       -       (1,160,418 )
                                                                 
Issuance of common stock for license fees ($0.92/share)
    -       -       422,314       422       388,269       -       -       388,691  
                                                                 
Conversion of accrued expenses to contributed capital - former related party
    -       -       -       -       3,017       -       -       3,017  
                                                                 
Deemed issuance to shareholders of legal acquiror and recapitalization
    -       -       245,824       246       (665,246 )     -       -       (665,000 )
                                                                 
Conversion of Series A, convertible preferred stock to common stock
    (5,421,554 )     (5,422 )     5,421,554       5,422       -       -       -       -  
                                                                 
Recognition of stock based consulting in connection with stock option grants
    -       -       -       -       411,310       -       -       411,310  
                                                                 
Recognition of stock based compensation in connection with stock option grants
    -       -       -       -       410,639       -       -       410,639  
                                                                 
10% in-kind Series B, convertible preferred stock dividend - subsidiary
    -       -       -       -       190,250       (190,250 )     -       -  
                                                                 
30% in-kind Series B, convertible preferred stock dividend - subsidiary
    -       -       -       -       570,750       (570,750 )     -       -  
                                                                 
Net loss for the year ended December 31, 2006
    -       -       -       -       -       (4,099,095 )     -       (4,099,095 )
                                                                 
Balance, December 31, 2006
    -       -       16,227,970       16,228       20,544,532       (8,774,363 )     -       11,786,397  
                                                                 
Issuance of common stock for consideration of preferred shares in EPI acquisition ($19.95/share)
    -       -       765,087       765       12,408,957       (12,409,722 )     -       0  
                                                              -  
Issuance of common stock for consideration of common shares in EPI acquisition ($19.95/share)
    -       -       30,161       30       601,682       -       -       601,712  
                                                              -  
Cash paid as direct offering costs in private placements
    -       -       -       -       (579,569 )     -       -       (579,569 )
                                                                 
Issuance of common stock for license fees ($6.85/share)
    -       -       2,920       3       19,997       -       -       20,000  
                                                                 
Issuance of common stock for milestone payment ($4.90/share)
    -       -       5,102       5       24,995       -       -       25,000  
                                                                 
Recognition of stock based consulting in connection with stock option grants
    -       -       -       -       673,271       -       -       673,271  
                                                              -  
Recognition of stock based compensation in connection with stock option grants
    -       -       -       -       1,483,123       -       -       1,483,123  
                                                                 
Sale of common stock in connection with warrants exercise
    -       -       3,401,967       3,402       7,548,976       -       -       7,552,378  
                                                                 
Contributed services - related party
                                    275,645       -       -       275,645  
                                                                 
Rounding of shares due to reverse split
                    260               -       -       -       -  
                                                                 
Net loss for the year ended December 31, 2007
    -       -                               (9,892,433 )     -       (9,892,433 )
                                                                 
Balance, December 31, 2007
    -       -       20,433,467       20,433       43,001,609       (31,076,518 )     -       11,945,524  
                                                                 
Recognition of stock based consulting in connection with stock option grants
    -       -       -       -       366,683       -       -       366,683  
                                                                 
Recognition of stock based compensation in connection with stock option grants
    -       -       -       -       1,224,975       -       -       1,224,975  
                                                                 
Recognition of stock based compensation in connection with issuance of common stock
    -       -       61,392       61       55,324       -       -       55,385  
                                                                 
Issuance of common stock for consulting fee
    -       -       172,157       172       103,870       -       -       104,042  
                                                                 
Issuance of common stock for milestone payment
    -       -       39,370       39       49,961       -       -       50,000  
                                                                 
Issuance of common stock for license fee
    -       -       138,505       139       144,861       -       -       145,000  
                                                                 
Issuance of common stock for stock option exercises
    -       -       37,948       38       4,352       -       -       4,390  
                                                                 
Contributed services - related party
    -       -       -       -       73,750       -       -       73,750  
                                                                 
Net loss for year ended December 31, 2008
    -       -       -       -       -       (7,205,158 )     -       (7,205,158 )
                                                                 
Balance, December 31, 2008
    -       -       20,882,839       20,883       45,025,385       (38,281,676 )     -       6,764,592  
                                                                 
Stock based compensation
    -       -       -       -       323,936       -       -       323,936  
                                                                 
Issuance of common stock for options exercised
    -               104,633       105       27,729       -       (17,100 )     10,734  
                                                                 
Issuance of common stock for consulting fee
    -       -       235,549       236       65,550       -       -       65,786  
                                                                 
Issuance of common stock for license fee
    -       -       257,813       258       40,992       -       -       41,250  
                                                                 
Issuance of common stock for acquisition of Hart Lab, LLC
    -       -       50,000       50       18,950       -       -       19,000  
                                                                 
Contributed services - related party
    -       -       -       -       100,000       -       -       100,000  
                                                                 
Acquisition of treasury stock
                    (81,482 )     (81 )     (49,624 )     -       -       (49,706 )
                                                                 
Net loss for the year ended December 31, 2009
    -       -       -       -       -       (3,731,405 )     -       (3,731,405 )
                                              -                  
Balance, December 31, 2009
    -       -       21,449,352       21,449       45,552,918       (42,013,081 )     (17,100 )     3,544,187  
                                                                 
Stock based compensation
    -       -       -       -       185,627       -       -       185,627  
                                                                 
Issuance of common stock for options exercised
    -               138,454       138       45,889       -       17,100       63,128  
                                                                 
Issuance of common stock for consulting
    -       -       33,118       33       33,236       -       -       33,269  
                                                                 
Issuance of common stock for compensation
    -       -       50,521       51       33,562       -       -       33,613  
                                                                 
Net loss for the three months ended March 31, 2010
    -       -       -       -       -       (1,087,522 )     -       (1,087,522 )
                                                                 
Balance, March 31, 2010
    -       -       21,671,445     $ 21,671     $ 45,851,232     $ (43,100,603 )   $ -     $ 2,772,301  

See accompanying notes to consolidated financial statements

 
 
 
4

 
 
Adeona Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Company)

Consolidated Statements of Cash Flows
(Unaudited)
               
January 8, 2001
 
`
 
For the three months ended March 31,
   
(Inception) to
 
   
2010
   
2009
   
March 31, 2010
 
Cash Flows From Operating Activities:
                 
Net loss
  $ (1,087,522 )   $ (1,113,275 )   $ (29,739,631 )
Adjustments to reconcile net loss to net cash
                       
 used in operating activities:
                       
Recognition of stock-based compensation
    185,627       91,544       5,254,240  
Stock issued as compensation in acquisition of subsidiary
    -       -       601,712  
Stock issued for consulting fees
    33,269       27,750       203,096  
Stock issued for employment
    33,613       -          
Stock issued for license fee
            41,250       628,554  
Stock issued for milestone payments
                    75,000  
Contributed services - related party
    -       100,000       449,395  
Depreciation
    92,646       94,510       1,111,922  
Provision for uncollectible accounts receivable
    -       7,785       97,377  
Loss (gain) on sale of equipment
    (6,262 )     -       9,820  
Loss on exchange of equipment to settle accounts payable     -       18,674       18,674  
Changes in operating assets and liabilities:
                       
Accounts receivable
    (58,762 )     -       (107,054 )
Other receivables
    4,290                  
Prepaid expenses and other current assets
    -       (5,218 )     4,008  
Deposits and other assets
    -       -       (90,848 )
Accounts payable
    (25,795 )     90,968       503,132  
Accrued liabilities
    (897 )     78,670       19,499  
Net Cash Used In Operating Activities
    (829,793 )     (567,342 )     (20,961,105 )
                         
Cash Flows From Investing Activities:
                       
Purchases of property and equipment
    (2,070 )     -       (2,036,725 )
Proceeds from the sale of equipment
    36,337       -       193,802  
Cash paid to acquire shell in reverse acquisition
    -       -       (665,000 )
Cash paid to acquire Hart Lab
    -       -       (201,141 )
Cash received from Acquisition of Hart Lab
    -       -       5,624  
Net Cash Provided By Investing Activities
    34,267       -       (2,703,440 )
                         
Cash Flows From Financing Activities: