Attached files
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| EX-99.1 - AIM ImmunoTech Inc. | v206587_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported)
December
22, 2010
HEMISPHERX
BIOPHARMA, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-27072
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52-0845822
|
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(state
or other juris-
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(Commission
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(I.R.S.
Employer
|
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diction
of incorporation)
|
File
Number)
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(Identification
No.)
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1617
JFK Boulevard, Philadelphia, Pennsylvania
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19103
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(Address
of principal executive
offices)
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(Zip Code)
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Registrant's
telephone number, including area code: (215) 988-0080
(Former name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 4.02. Non-Reliance on
Previously Issued Financial Statements or a Related Audit Report or Completed
Interim Review.
In connection with equity
financings on May 11 and 19, 2009, we issued warrants (the “Warrants”) that
contained a provision that could require us to settle the Warrants for
cash upon the happening of certain remote events. Generally, the
Warrant provision allow the Warrant holders to receive cash in certain
situations where there would no longer be a significant public market for our
common stock, e.g., in the highly unlikely event that we took action to go
private (a “Fundamental Transaction”). The amount of cash to be
received by Warrant Holders would equal the Black-Scholes value of the remaining
unexercised portion of their Warrants on the date of the consummation of the
Fundamental Transaction.
Initially, we determined
that these Warrants created a related Liability in accordance with ASC
480-10-55-29 & 30 due to the fact that the Warrants could be settled for
cash as discussed above. In our estimation of the value of
this Liability, we interpreted and applied the concept of “Fair Value” from ASC
820 (formally SFAS 157). After reviewing current accounting
literature and the findings and opinion of an independent appraiser in
determining our accounting treatment, we took into account the extreme
unlikelihood of the occurrence of a Fundamental Transaction triggering a right
to cash settlement as a probability factor in applying the Black-Scholes-Merton
valuation of the Warrants. As a result, we deemed the fair value of
the Warrants to be immaterial and, therefore, we stated the Warrants’ related
Liability from May 31, 2009 through December 31, 2009 at
zero.
As
required, our 2009 year-end financial statements and our internal controls were
subject to an annual independent audit.
On
September 15, 2010, we received a comment letter from the Security and Exchange
Commission (“SEC”) concerning its review of our annual report on Form 10-K, as
amended, for the year ended December 31, 2009. During the process of
resolving the SEC’s comments, the SEC Staff alerted us that they did not agree
with our method of computing the value of the Liability related to the Warrants
as discussed above.
As a result, on December
22, 2010, after discussion with McGladrey & Pullen, LLP, our independent
registered public accounting firm, our Audit Committee determined that
the previously issued financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2009 and in our Forms 10-Q for the
periods ended March 31, 2010, June 30, 2010 and September 30, 2010 and in our
Forms 10-Q for the periods ended June 30, 2009 and September 30, 2009, should
not be relied upon. We plan on restating the
financial statements included in our Annual Report on Form 10-K for the
year ended December 31, 2009 and in our Forms 10-Q for the periods ended March
31, 2010, June 30, 2010 and September 30, 2010 (including the comparable periods
ended June 30, 2009 and September 30, 2009) to reflect the revised
value of this Liability without regard to the probability of a cash
settlement.
2
We
believe that the related impact of this restatement on the December 31, 2009
Balance Sheet and Income Statement for the year then ended will be
approximately as follows:
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(a)
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The
total initial estimated fair value of the Liability related to the
Warrants was $15,233,000 at the date of their issuance in May
2009. In order to record this Liability, an adjustment will be
made to decrease Additional Paid-In Capital and increase Liabilities by
$15,233,000.
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(b)
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In
May 2009 and June 2009, some of these Warrants were exercised resulting in
total non-cash losses of $4,256,000. Prior to each exercise, the
individual Warrant’s fair value is revalued. Revaluation
adjustments will be made to increase the above mentioned Warrants’
Liability of $15,233,000 by the related $4,256,000 loss and then, upon
exercise of the Warrants, reduce the Warrants’ Liability value by
$7,516,000 for the exercised Warrants. As a result, we believe
that the estimated fair value of the Warrants’ Liability will become
$11,973,000.
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(c)
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The
estimated fair value of the Liability related to the Warrants will be
revalued at the end of each fiscal quarter from June 2009 through December
31, 2009. Due to the decreasing trading value of our stock
during this period, at December 31, 2009, the value of the Liability
related to the remaining outstanding Warrants will be
$3,162,000. We believe that the June to December 2009 year to
date adjustments to record the change in fair value for the remaining
Warrants’ Liability will be $8,811,000, resulting in a related non-cash
gain of $8,811,000.
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We
believe that the combined losses of approximately $4,256,000 for the exercise of
Warrants and the estimated gain of $8,811,000 from the fair value adjustment of
the Liability will result in a net non-cash gain of approximately $4,555,000 for
the year-end 2009. The impact of this
non-cash adjustment will be to reduce the 2009’s year-end Net Loss from
approximately $13,438,000 to $8,883,000.
The
estimated fair value of the Liability related to the Warrants will be revalued
at the end of each fiscal quarter on March 31, 2010, June 30, 2010 and September
30, 2010. Due to the movement in the trading value of our stock
during this these periods, the value of the Liability related to the remaining
outstanding Warrants will be approximately $4,223,000, $2,096,000 and
$2,346,000, respectively, for the fiscal quarters ended March 31, 2010, June 30,
2010 and September 30, 2010. The revaluation of the estimated fair
value of the Liability for the nine months ended September 30, 2010 will be
approximately $815,000, resulting in a related non-cash gain of
$815,000.
The above
disclosures concerning the related impact of the anticipated restatement are
estimations only, subject to our finalization of the restatement and may
change.
None of
the above issues from this non-cash adjustment will actually affect our
revenues, operating expenses, liquidity or cash flows from past or future
operations, except in the highly unlikely event the Company would be taken
private.
3
In light
of the determination to restate, our Chief Financial Officer and Chief Executive
Officer carefully reviewed the process relied upon in valuing the
Warrants. They determined that, although the financial statements
will be restated, they do not believe that our actions in originally valuing the
Warrants’ Liability utilizing a remoteness factor constituted a material
weakness in internal controls. In utilizing the above discussed
valuation method, we consulted the most recent accounting literature and
retained the services of an independent appraisal firm that conducted their
engagement as defined in the Statement on Standards for Valuation Services of
the American Institute of Certified Public Accountants. We took into
account the findings and opinion of the independent appraiser in determining our
accounting treatment.
Item
9.01. Financial Statements and Exhibits.
(c)
Exhibits:
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99.1
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Press
Release dated December 28,
2010.
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4
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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HEMISPHERX
BIOPHARMA, INC.
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December
28, 2010
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By:
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/s/ William A. Carter
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William
A. Carter M.D.,
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Chief
Executive Officer
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