PROSPECTUS
SUMMARY
|
3
|
RISK
FACTORS
|
5
|
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
|
15
|
USE
OF PROCEEDS
|
16
|
SELLING
STOCKHOLDERS
|
16
|
PLAN
OF DISTRIBUTION
|
22
|
DESCRIPTION
OF CAPITAL STOCK
|
24
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
25
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
26
|
DESCRIPTION
OF BUSINESS
|
34
|
MANAGEMENT
AND BOARD OF DIRECTORS
|
44
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
54
|
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL
PERSONS
|
56
|
WHERE
YOU CAN FIND MORE INFORMATION
|
56
|
VALIDITY
OF COMMON STOCK
|
56
|
EXPERTS
|
56
|
TRANSFER
AGENT
|
56
|
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
|
56
|
INDEX
TO FINANCIAL STATEMENTS
|
F-1
|
·
|
AR-67
–
Our lead product candidate is a novel, third-generation campothecin
analogue. We are currently conducting a multi-center, ascending dose
Phase
I clinical trial of AR-67 in patients with advanced solid tumors.
Once the
maximum tolerated dose, or MTD, in the Phase I study is identified,
we
anticipate commencing a Phase II clinical trial of AR-67 in 2008
in
patients with glioblastoma multiforme, or GBM, an aggressive form
of brain
cancer. We plan to initiate additional Phase II clinical trials in a
variety of other solid and hematological cancers. We are also evaluating
an oral formulation of AR-67.
|
·
|
AR-12
–
We are also developing AR-12, an orally available pre-clinical
compound that is a novel inhibitor of phosphoinositide dependent
protein
kinase-1, or PDK-1, that targets the PI3k/Akt pathway while also
possessing activity in the endoplasmic reticulum stress and other
pathways
targeting apoptosis. Pre-clinical studies suggest that AR-12 may
provide
therapeutic benefit either alone or in combination with other therapeutic
agents. We are currently conducting prelinical toxicology studies
that we
anticipate will provide the basis for the filing of an investigational
new
drug application, or IND, in early 2009 so that we may commence a
Phase I
clinical study in the United States in
2009.
|
·
|
AR-42 –
Our third product candidate in development is AR-42, an orally available
pre-clinical compound for the treatment of cancer. AR-42 is a broad
spectrum inhibitor of deacetylase targets, referred to as pan-DAC
inhibition, as well as an inhibitor of Akt. In pre-clinical models,
AR-42
has demonstrated greater potency and a competitive profile in tumors
when
compared with vorinostat (also known as SAHA and marketed as
Zolinza®
by
Merck), the leading marketed histone deacetylase inhibitor. We are
currently conducting IND-enabling studies and anticipate filing
an IND in early 2009 so that we may commence a Phase I clinical
study in the United States 2009.
|
10,562,921
shares
|
||
Common
stock outstanding before the offering(1)
|
20,392,024
shares
|
|
Common
stock outstanding after the offering(2)
|
20,588,213
shares
|
|
Use
of Proceeds
|
We
will receive none of the proceeds from the sale of the shares by
the
selling stockholders, except for the warrant exercise price upon
exercise
of the warrants, which would be used for working capital and other
general
corporate purposes
|
|
OTC
Bulletin Board Symbol
|
ARNI.OB
|
(1) |
Based
on the number of shares outstanding as of September 22, 2008, not
including 2,931,763 shares issuable upon exercise of various warrants
and options to purchase our common
stock.
|
(2)
|
Assumes
the issuance of all shares offered hereby that are issuable upon
exercise
of warrants.
|
·
|
continue
to undertake pre-clinical development and clinical trials for our
product
candidates;
|
·
|
seek
regulatory approvals for our product
candidates;
|
·
|
in-license
or otherwise acquire additional products or product
candidates;
|
·
|
implement
additional internal systems and infrastructure;
and
|
·
|
hire
additional personnel.
|
·
|
continuing
to undertake pre-clinical development and clinical trials for our
product
candidates;
|
·
|
participating
in regulatory approval processes;
|
·
|
formulating
and manufacturing products; and
|
· |
conducting
sales and marketing activities.
|
· |
delay
commercialization of, and our ability to derive product revenues
from, our
product candidates;
|
· |
impose
costly procedures on us; or
|
·
|
diminish
any competitive advantages that we may otherwise
enjoy.
|
· |
delays
in patient enrollment, and variability in the number and types of
patients
available for clinical trials;
|
· |
difficulty
in maintaining contact with patients after treatment, resulting in
incomplete data;
|
· |
poor
effectiveness of product candidates during clinical
trials;
|
· |
safety
issues, side effects, or other adverse
events;
|
· |
results
that do not demonstrate the safety or effectiveness of the product
candidates;
|
· |
governmental
or regulatory delays and changes in regulatory requirements, policy
and
guidelines; and
|
· |
varying
interpretation of data by the FDA.
|
· |
perceptions
by members of the health care community, including physicians, about
the
safety and effectiveness of our
drugs;
|
· |
cost-effectiveness
of our products relative to competing
products;
|
· |
availability
of reimbursement for our products from government or other healthcare
payers; and
|
·
|
effectiveness
of marketing and distribution efforts by us and our licensees and
distributors, if any.
|
· |
We
may be unable to identify manufacturers on acceptable terms or at
all
because the number of potential manufacturers is limited and the
FDA must
approve any replacement contractor. This approval would require new
testing and compliance inspections. In addition, a new manufacturer
would
have to be educated in, or develop substantially equivalent processes
for,
production of our products after receipt of FDA approval, if any.
|
· |
Our
third-party manufacturers might be unable to formulate and manufacture
our
drugs in the volume and of the quality required to meet our clinical
and/or commercial needs, if any.
|
· |
Our
future contract manufacturers may not perform as agreed or may not
remain
in the contract manufacturing business for the time required to supply
our
clinical trials or to successfully produce, store and distribute
our
products.
|
· |
Drug
manufacturers are subject to ongoing periodic unannounced inspection
by
the FDA and corresponding state agencies to ensure strict compliance
with
good manufacturing practice and other government regulations and
corresponding foreign standards. We do not have control over third-party
manufacturers’ compliance with these regulations and standards, but we
will be ultimately responsible for any of their
failures.
|
· |
If
any third-party manufacturer makes improvements in the manufacturing
process for our products, we may not own, or may have to share, the
intellectual property rights to the innovation. This may prohibit
us from
seeking alternative or additional manufacturers for our
products.
|
· |
developing
drugs;
|
· |
undertaking
pre-clinical testing and human clinical
trials;
|
· |
obtaining
FDA and other regulatory approvals of
drugs;
|
· |
formulating
and manufacturing drugs; and
|
·
|
launching,
marketing and selling drugs.
|
·
|
government
and health administration
authorities;
|
·
|
private
health maintenance organizations and health insurers;
and
|
·
|
other
healthcare payers.
|
· |
the
degree and range of protection any patents will afford us against
competitors including whether third parties will find ways to invalidate
or otherwise circumvent our
patents;
|
· |
if
and when patents will issue;
|
· |
whether
or not others will obtain patents claiming aspects similar to those
covered by our patents and patent applications;
or
|
·
|
whether
we will need to initiate litigation or administrative proceedings
which
may be costly whether we win or
lose.
|
·
|
obtain
licenses, which may not be available on commercially reasonable terms,
if
at all;
|
·
|
redesign
our products or processes to avoid
infringement;
|
·
|
stop
using the subject matter claimed in the patents held by
others;
|
·
|
pay
damages; or
|
·
|
defend
litigation or administrative proceedings which may be costly whether
we
win or lose, and which could result in a substantial diversion of
our
valuable management resources.
|
·
|
the
risk that we may not successfully develop and market our product
candidates, and even if we do, we may not become
profitable;
|
·
|
risks
relating to the progress of our research and
development;
|
·
|
risks
relating to significant, time-consuming and costly research and
development efforts, including pre-clinical studies, clinical trials
and
testing, and the risk that clinical trials of our product candidates
may
be delayed, halted or fail;
|
·
|
risks
relating to the rigorous regulatory approval process required for
any
products that we may develop independently, with our development
partners
or in connection with any collaboration
arrangements;
|
·
|
the
risk that changes in the national or international political and
regulatory environment may make it more difficult to gain FDA or
other
regulatory approval of our drug product
candidates;
|
·
|
risks
that the FDA or other regulatory authorities may not accept any
applications we file;
|
·
|
risks
that the FDA or other regulatory authorities may withhold or delay
consideration of any applications that we file or limit such applications
to particular indications or apply other label
limitations;
|
·
|
risks
that, after acceptance and review of applications that we file, the
FDA or
other regulatory authorities will not approve the marketing and sale
of
our drug product candidates;
|
·
|
risks
relating to our drug manufacturing operations, including those of
our
third-party suppliers and contract
manufacturers;
|
·
|
risks
relating to the ability of our development partners and third-party
suppliers of materials, drug substance and related components to
provide
us with adequate supplies and expertise to support manufacture of
drug
product for initiation and completion of our clinical
studies;
|
·
|
risks
relating to the transfer of our manufacturing technology to third-party
contract manufacturers;
|
·
|
the
risk that recurring losses, negative cash flows and the inability
to raise
additional capital could threaten our ability to continue as a going
concern; and
|
·
|
other
risks and uncertainties detailed in “Risk
Factors.”
|
Selling
Stockholder
|
Shares
beneficially
owned before
offering (1)
|
Number of
outstanding
shares offered
by selling
stockholder
|
Number of
shares offered
by selling
stockholder
upon exercise
of warrants
|
Percentage
beneficial
ownership
after
offering(1)
|
|||||||||
Securities issued
in June 2008 private placement
|
|||||||||||||
2739-1291
Quebec Inc. (2a)
|
10,317
|
10,317
|
-
|
-
|
|||||||||
3071341
Canada Inc. (2b)
|
41,277
|
41,277
|
-
|
-
|
|||||||||
4210573
Canada Inc. (2c)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
87111
Canada Limited (2c)
|
61,916
|
61,916
|
-
|
-
|
|||||||||
A.
Lapidot Pharmaceuticals Ltd. (3)
|
95,690
|
41,277
|
-
|
-
|
|||||||||
Allen
Rubin
|
10,317
|
10,317
|
-
|
-
|
|||||||||
Andre
Telio Investments Inc. (4)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Barry
Goodman
|
21,855
|
8,254
|
-
|
-
|
|||||||||
Bayside
Development Corporation Limited (5)
|
206,393
|
206,393
|
-
|
-
|
|||||||||
Bonnie
Kazam (6)
|
91,118
|
20,637
|
-
|
*
|
|||||||||
Brilar
Investments Limited (7)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Burton
Koffman
|
23,919
|
10,317
|
-
|
-
|
|||||||||
Canyon
Value Realization Fund (Cayman) Ltd. (8)
|
1,011,330
|
687,651
|
-
|
-
|
|||||||||
Canyon
Value Realization Fund, L.P. (8)
|
1,011,330
|
263,069
|
-
|
-
|
|||||||||
Canyon
Value Realization Mac-18 Ltd. (8)
|
1,011,330
|
60,610
|
-
|
-
|
|||||||||
Caroline
Sacchetti
|
10,317
|
10,317
|
-
|
-
|
|||||||||
Clairmark
Investments Ltd. (9)
|
39,875
|
39,875
|
-
|
-
|
|||||||||
Clal
Insurance Company Ltd. - Profit Participating Policies
(10)
|
1,454,727
|
825,578
|
-
|
-
|
|||||||||
Cohen
Family Enterprises LLC (11)
|
41,277
|
41,277
|
-
|
-
|
|||||||||
Danny
Ritter
|
10,317
|
10,317
|
-
|
-
|
|||||||||
David
Bengal
|
20,637
|
20,637
|
-
|
-
|
|||||||||
David
M. Tanen (12)
|
1,458,102
|
10,317
|
-
|
6.97
|
|||||||||
David
Wilstein and Susan Wilstein, Trustees of The Century Trust
|
137,210
|
10,317
|
-
|
*
|
|||||||||
Dikla
Insurance Company Ltd. – Nostro (13)
|
4,127
|
4,127
|
-
|
-
|
|||||||||
Dikla
Insurance Company Ltd. – Siudi (13)
|
10,317
|
10,317
|
-
|
-
|
|||||||||
Diversiplex
Corporation (14)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Egosah
Reichmann
|
41,277
|
41,277
|
-
|
-
|
|||||||||
Erez
and Elyse Halevah
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Eric
Raphael
|
10,317
|
10,317
|
-
|
-
|
|||||||||
Fred
Mermelstein
|
10,317
|
10,317
|
-
|
-
|
|||||||||
Gems
Progressive Fund II Perennial Segregated Portfolio (15)
|
412,788
|
412,788
|
-
|
-
|
|||||||||
Gerald
Lieberman
|
41,277
|
41,277
|
-
|
-
|
|||||||||
Gilad
Pension Fund Mekifa - Gilad Rivchit (16)
|
398,325
|
20,637
|
-
|
-
|
|||||||||
GMM
Capital, LLC (17)
|
235,601
|
41,277
|
-
|
*
|
Selling
Stockholder
|
Shares
beneficially
owned before
offering (1)
|
Number of
outstanding
shares offered
by selling
stockholder
|
Number of
shares offered
by selling
stockholder
upon exercise
of warrants
|
Percentage
beneficial
ownership
after
offering(1)
|
|||||||||
Governing Dynamics Investment,
LLC (18)
|
41,277
|
41,277
|
-
|
-
|
|||||||||
Harel
Insurance Company Ltd. – Clali (19)
|
398,325
|
20,637
|
-
|
-
|
|||||||||
Harel
Insurance Company Ltd. – Mishtatefet (19)
|
398,325
|
115,580
|
-
|
-
|
|||||||||
Harel
Insurance Company Ltd. – Nostro (19)
|
398,325
|
45,406
|
-
|
-
|
|||||||||
Harel
Pension Fund Management Company Ltd.-Harel Pensia (19)
|
398,325
|
41,277
|
-
|
-
|
|||||||||
Harel
Provident Funds Ltd. – Taoz (19)
|
398,325
|
28,893
|
-
|
-
|
|||||||||
Harel
Provident Funds, Ltd.- Hishtalmut (19)
|
398,325
|
10,317
|
-
|
-
|
|||||||||
Harel
Provident Funds, Ltd.-Gmisha (19)
|
398,325
|
8,254
|
-
|
-
|
|||||||||
Harel
Provident Funds, Ltd.-Otzma (19)
|
398,325
|
107,324
|
-
|
-
|
|||||||||
High
Glen Properties Limited (20)
|
61,916
|
61,916
|
-
|
-
|
|||||||||
Irvin
R. Kessler
|
151,037
|
123,833
|
-
|
-
|
|||||||||
Joan
K. Cohn
|
10,317
|
10,317
|
-
|
-
|
|||||||||
Joseph
J. Sitt
|
68,481
|
41,277
|
-
|
-
|
|||||||||
Joshua
Kazam Trust (21)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Leonard
Grunstein
|
34,238
|
20,637
|
-
|
-
|
|||||||||
Leumi
Overseas Trust Corporation Limited as Trustees of the BTL Trust
(22)
|
61,916
|
61,916
|
-
|
-
|
|||||||||
Meitavit
Atudot Pension Funds Management Company Ltd. (Sapir) (10)
|
1,454,727
|
412,788
|
-
|
-
|
|||||||||
Meitavit
Atudot Pension Funds Management Company Ltd. (Yahalom)
(10)
|
1,454,727
|
206,393
|
-
|
-
|
|||||||||
Michael
Chisek
|
34,238
|
20,637
|
-
|
-
|
|||||||||
Michael
T. Cohen
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Millennium
Partners, L.P. (23)
|
412,788
|
412,788
|
-
|
-
|
|||||||||
Nancy
Spielberg Venture Trust (24)
|
10,317
|
10,317
|
-
|
-
|
|||||||||
Peter
D. Kiernan
|
82,556
|
82,556
|
-
|
-
|
|||||||||
Peter
M. Kash (25)
|
1,688,977
|
20,637
|
-
|
7.97
|
|||||||||
Peter
Strumph
|
12,383
|
12,383
|
-
|
-
|
|||||||||
Platinum-Montaur
Life Sciences, LLC (26)
|
41,277
|
41,277
|
-
|
-
|
|||||||||
Primafides
(Suisse) SA as Trustees of the Sirius Trust (27)
|
541,806
|
206,393
|
-
|
*
|
|||||||||
Raymond
Telio Investments Inc. (28)
|
41,277
|
41,277
|
-
|
-
|
|||||||||
Renato
Negrin
|
99,090
|
61,916
|
-
|
*
|
|||||||||
Rennat
Inc. (29)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Robert
I. Falk (30)
|
195,378
|
41,277
|
-
|
*
|
|||||||||
Ronnie
Fortis
|
39,875
|
39,875
|
-
|
-
|
|||||||||
Sabrinco
Inc. (31)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Sarbin
Investments Limited (32)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Shirley
Ann Lewis Enterprises, Inc. (33)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Standu
Investments Limited (34)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Venture
Enterprises, Inc. (35)
|
15,950
|
15,950
|
-
|
-
|
|||||||||
David
Lifschitz
|
10,367
|
10,367
|
-
|
-
|
|||||||||
Wealthplan
Corporation (36)
|
20,637
|
20,637
|
-
|
-
|
|||||||||
Wexford
Spectrum Investors, LLC (37)
|
2,005,789
|
1,733,712
|
-
|
-
|
|||||||||
Subtotal
|
7,360,689
|
||||||||||||
Shares
issued upon conversion of the 6% convertible promissory notes on
June 2,
2008
|
|||||||||||||
A.
Lapidot Pharmaceuticals, Ltd. (3)
|
95,690
|
49,467
|
4,946
|
-
|
|||||||||
Mark
Ahn
|
24,287
|
3,955
|
394
|
*
|
|||||||||
Alyad
Foundation (38)
|
54,413
|
49,467
|
4,946
|
-
|
|||||||||
Atlas
Master Fund, Ltd. (39)
|
12,594
|
11,450
|
1,144
|
-
|
Selling
Stockholder
|
Shares
beneficially
owned before
offering (1)
|
Number of
outstanding
shares offered
by selling
stockholder
|
Number of
shares offered
by selling
stockholder
upon exercise
of warrants
|
Percentage
beneficial
ownership
after
offering(1)
|
|||||||||
Beck Family
Partners, LP (40)
|
54,413
|
49,467
|
4,946
|
-
|
|||||||||
Bristol
Investment Fund, Ltd. (41)
|
292,014
|
247,345
|
24,732
|
*
|
|||||||||
Michael
Chisek
|
34,328
|
12,365
|
1,236
|
-
|
|||||||||
David
and Susan Wilstein, TTEES of the Century Trust
|
137,210
|
24,732
|
2,472
|
*
|
|||||||||
Diversified
Fund, Ltd. (42)
|
33,539
|
12,365
|
1,236
|
*
|
|||||||||
Falk
Family Partners, LLC (30)
|
195,378
|
49,467
|
4,946
|
*
|
|||||||||
Arnold
and Lynn Feld
|
13,601
|
12,365
|
1,236
|
-
|
|||||||||
Gitel
Family LP (31)
|
54,413
|
49,467
|
4,946
|
-
|
|||||||||
GMM
Capital (17)
|
235,601
|
31,659
|
3,164
|
*
|
|||||||||
Barry
Goodman
|
21,855
|
12,365
|
1,236
|
-
|
|||||||||
Leonard
Grunstein
|
34,238
|
12,365
|
1,236
|
-
|
|||||||||
Inversiones
Miraconcha, SL (43)
|
104,257
|
49,467
|
4,946
|
*
|
|||||||||
Robert
Israel
|
13,601
|
12,365
|
1,236
|
-
|
|||||||||
Kappa
Investors, LLC (37)
|
2,005,789
|
247,345
|
24,732
|
-
|
|||||||||
Peter
M. Kash (25)
|
1,688,977
|
24,732
|
2,472
|
7.97
|
%
|
||||||||
Shimon
Katz
|
13,601
|
12,365
|
1,236
|
-
|
|||||||||
Kauffman
Family Trust (44)
|
54,413
|
49,467
|
4,946
|
-
|
|||||||||
Joshua
Kazam (45)
|
1,566,686
|
49,467
|
4,946
|
7.35
|
%
|
||||||||
Irvin
Kessler
|
151,037
|
24,732
|
2,472
|
-
|
|||||||||
Robert
Klein
|
17,190
|
12,365
|
1,236
|
*
|
|||||||||
Burton
Koffman
|
23,919
|
12,365
|
1,236
|
-
|
|||||||||
Harvey
Krueger
|
27,204
|
24,732
|
2,472
|
-
|
|||||||||
Larich
Associates (46)
|
27,204
|
24,732
|
2,472
|
-
|
|||||||||
Leiden
Overseas (S. Pilpel) (47)
|
27,204
|
24,732
|
2,472
|
-
|
|||||||||
Bruce
Lipnick
|
13,601
|
12,365
|
1,236
|
-
|
|||||||||
Alan
Mendelson
|
38,523
|
12,365
|
1,236
|
*
|
|||||||||
Naftali
Investments, Ltd. (48)
|
37,173
|
24,732
|
2,472
|
*
|
|||||||||
Renato
Negrin
|
99,090
|
24,732
|
2,472
|
*
|
|||||||||
Rachel
Family Partnership (49)
|
54,413
|
49,467
|
4,946
|
-
|
|||||||||
Primafides
(Suisse) SA as Trustees of the Sirius Trust (27)
|
541,806
|
123,671
|
12,365
|
*
|
|||||||||
Albert
Reichmann
|
54,413
|
49,467
|
4,946
|
-
|
|||||||||
Rel
Tech Holdings, Ltd. (50)
|
54,413
|
49,467
|
4,946
|
-
|
|||||||||
Henry
Rothman
|
27,204
|
24,732
|
2,472
|
-
|
|||||||||
Seymour
& Star Sacks, JTWROS
|
13,601
|
12,365
|
1,236
|
-
|
|||||||||
Joseph
Sitt
|
68,481
|
24,732
|
2,472
|
-
|
|||||||||
Smithfield
Fiduciary, LLC (51)
|
119,712
|
108,831
|
10,881
|
-
|
|||||||||
Speisman
Family 2000 LP (52)
|
13,601
|
12,365
|
1,236
|
-
|
|||||||||
Gary
Stein
|
13,601
|
12,365
|
1,236
|
-
|
|||||||||
Stephen
and Barbara Vermut Trust dtd March 19, 2002
|
27,204
|
24,732
|
2,472
|
-
|
|||||||||
David
M. Tanen (12)
|
1,444,759
|
12,365
|
1,236
|
6.97
|
%
|
||||||||
Visium
Balanced Fund, LP (53)
|
205,057
|
41,572
|
4,157
|
-
|
|||||||||
Visium
Balanced Offshore Fund, Ltd (53)
|
205,057
|
66,137
|
6,613
|
-
|
|||||||||
Visium
Long Bias Fund, LP (53)
|
205,057
|
18,723
|
1,872
|
-
|
|||||||||
Visium
Long Bias Offshore Fund, Ltd. (53)
|
205,057
|
59,986
|
5,997
|
-
|
|||||||||
Subtotal
|
1,962,338
|
196,189
|
|||||||||||
Other
Miscellaneous Shares
|
|||||||||||||
Fountainhead
Capital Management Limited (54)
|
276,811
|
276,811
|
-
|
- | |||||||||
Fountainhead Capital Partners Limited (54) | 318,569 | 318,569 | - | - | |||||||||
La
Pergola Investments Limited (54)
|
60,646
|
60,646
|
-
|
-
|
|||||||||
Ko Zen Asset Management, Inc. (55) | 387,679 | 387,679 | - | - | |||||||||
Subtotal |
1,043,705
|
||||||||||||
TOTAL
|
10,366,732
|
196,189
|
(1) |
Based
on 20,588,213 shares of outstanding common stock, which assumes the
issuance of all shares offered hereby that are issuable upon exercise
of
warrants. Beneficial ownership is determined in accordance with Rule
13d-3
under the Securities Act, and includes any shares as to which the
security
or stockholder has sole or shared voting power or investment power,
and
also any shares which the security or stockholder has the right to
acquire
within 60 days of the date hereof, whether through the exercise or
conversion of any stock option, convertible security, warrant or
other
right. The indication herein that shares are beneficially owned is
not an
admission on the part of the security or stockholder that he, she
or it is
a direct or indirect beneficial owner of those shares.
|
(2a)
|
Ira
Roth is the president of the selling
stockholder.
|
(2b)
|
Ruth
Hornstein is the president and sole owner of the selling
stockholder.
|
(2c) |
Hershie
Schacter, president of the selling stockholder, holds voting and/or
dispositive power over the shares held by the selling
stockholder.
|
(3)
|
Mr.
Ami Lapidot, chief executive officer of the selling stockholder,
holds
voting and/or dispositive power over the shares held by the selling
stockholder.
|
(4)
|
Andre
Telio, president of the selling stockholder, holds voting and/or
dispositive power over the shares held by the
stockholder.
|
(5)
|
David
Litton is a director of the selling
stockholder.
|
(6)
|
Shares
beneficially owned by Bonnie Kazam include 20,637 shares of our common
stock held as trustee of the Joshua Kazam Trust, with respect to
which
Mrs. Kazam holds voting and/or investment power. Joshua Kazam, a
director
of our company, is a beneficiary of such trust, but disclaims any
beneficial ownership in such shares except to the extent of any pecuniary
interest therein.
|
(7)
|
Brian
Smith and Lawrence Smith hold voting and/or dispositive power over
the
shares held by the selling
stockholder.
|
(8)
|
John
Simpson, Joshua S. Friedman, Mitchell R. Julius and John P. Plaga
have
voting and/or dispositive power over the shares held by the selling
stockholder. The selling stockholder has informed us that it is affiliated
with a broker-dealer, and has represented to us that it purchased
the
shares in the ordinary course of business with no agreement or
understanding, directly or indirectly, with any persons regarding
the
distribution of the shares.
|
(9)
|
Leslie
Dan is the president of the selling
stockholder.
|
(10)
|
Beneficial
ownership includes: (i) 825,578 shares of our common stock held by
Clal
Insurance Company Ltd. - Profits Participating Policies; (ii) 412,788
shares of our common stock held by Meitavit Atudot Pension Funds
Management Company Ltd. (Sapir)("Sapir"); (iii) 206,393 shares of
our
common stock held by Meitavit Atudot Pension Funds Management Company
Ltd.
(Yahalom)("Yahalom"); and (iv) 9,968 shares of our common stock held
by
Clal Finance Underwriting Ltd. Yossi Dori holds voting and/or dispositive
power over the shares held by Sapir and Yahalom. Nir Moroz holds
voting
and/or dispositive power over the shares held by Clal Insurance Company
Ltd. - Profits Participating
Policies.
|
(11)
|
Michael
Cohen is the manager of the selling
stockholder.
|
(12)
|
Mr.
Tanen is a director of our company. Shares listed as beneficially
owned by
Mr. Tanen include 149,532 shares of our common stock held by Mr.
Tanen’s
wife, as custodian for the benefit of their minor children under
the UGMA,
for which Mr. Tanen disclaims any beneficial
ownership.
|
(13)
|
Amir
Hessel and Alfred Rozenfeld hold voting and/or dispositive power
over the
shares held by the selling
stockholder.
|
(14)
|
Stanley
Plotnick, president of the selling stockholder, holds voting and/or
dispositive power over the shares held by the selling stockholder.
|
(15)
|
Cedric
Carroll holds voting and/or dispositive power over the shares held
by the
selling stockholder.
|
(16)
|
Amir
Hessel and Yaniv Melamud hold voting and/or dispositive power over
the
shares held by the selling
stockholder.
|
(17)
|
Isaac
Dabah has voting and/or investment control over the shares held by
GMM
Capital LLC.
|
(18)
|
Alex
Mashinsky has voting and/or investment control over the shares held
by
Governing Dynamics Investment, LLC.
|
(19)
|
Amir
Hessel and Yaniv Melamud hold voting and/or dispositive power over
the
shares held by the selling
stockholder.
|
(20)
|
David
Ulmer, vice president of High Glen Properties, holds voting and/or
dispositive power over the shares beneficially owned by the selling
stockholder.
|
(21)
|
Bonnie
Kazam serves as the Trustee of the Joshus Kazam Trust. Mr. Kazam
is a
director of Arno, but disclaims beneficial ownership over such shares
except to the extent of his pecuniary interest therein.
|
(22)
|
Mr.
John Le M. Germain, director of the Leumi Overseas Trust Corporation,
holds voting and/or dispositive power over the shares beneficially
owned
by the selling stockholder.
|
(23)
|
Millennium
Management LLC, a Delaware limited liability company, is the general
partner of Millennium Partners, L.P., a Cayman Islands exempted limited
partnership, and consequently may be deemed to have voting control
and
investment discretion over securities owned by Millennium Partners,
L.P.
Israel A. Englander is the managing member of Millennium Management
LLC.
As a result, Mr. Englander may be deemed to be the beneficial owner
of any
shares deemed to by beneficially owned by Millennium Management LLC.
The
foregoing should not be construed in and of itself as an admission
by
either of Millennium Management LLC or Mr. Englander as to beneficial
ownership of the shares of our common stock owned by Millennium Partners,
L.P. Millennium Partners, L.P. has identified itself as being affiliated
with one or more registered broker-dealers, and has represented to
us that
it has purchased the shares in the ordinary course of business and,
at the
time of purchase, with no arrangement or understanding, directly
or
indirectly, with any persons regarding the distribution of such
shares.
|
(24)
|
Auram
Y. Katz, trustee of the selling stockholder, holds voting and/or
dispositive control over the shares held by the selling
stockholder.
|
(25)
|
Beneficial
ownership includes 358,876 shares of our common stock held by Mr.
Kash’s
wife as custodian for the benefit of their minor children under the
UGMA,
for which Mr. Kash disclaims any beneficial ownership. Does not include
119,626 shares of our common stock held by the Kash Family Trust,
for
which Mr. Kash disclaims any beneficial ownership interest, except
to the
extent of his pecuniary interest therein. Mr. Kash is a director
of
Arno.
|
(26)
|
Michael
M. Goldberg has
voting and/or investment power over the shares beneficially owned
by
Platinum-Montaur
Life Sciences, LLC.
|
(27)
|
Ari
Tatos, Nigel Mifsud, Magali Garcia-Baudin, David Moran, Phillippe
De Salis
and Ewald Scherrer are directors of Primafides (Suisse) SA,
the trustee of the Sirius Trust, and share voting and/or dispositive
power
over the shares held by the Sirius
Trust.
|
(28)
|
Raymond
Telio, president of Raymond
Telio Investments Inc., holds voting and/or dispositive power over
the
shares held by the selling
stockholder.
|
(29)
|
Marvin
Tanner, president of the selling stockholder, holds voting and/or
dispositive control over the shares held by the selling
stockholder.
|
(30)
|
Beneficial
ownership includes: (i) 49,844 shares of our common stock and warrants
to
purchase 4,946 shares of our common stock at an exercise price of
$2.42
per share held by Falk Family Partners, LP, of which Mr. Falk is
General
Partner; and (ii) vested options held by Mr. Falk to purchase 49,844
shares of our common stock at an exercise price of $2.42 per share;
but
does not include options to purchase 49,844 shares of our common
stock at
an exercise price of $2.42 per share, the rights to which vest in
two
equal installments on March 31, 2009, and March 31, 2010. Mr. Falk
is a
director of Arno.
|
(31)
|
Samuel
Gewurz is the president and sole owner of the selling
stockholder.
|
(32)
|
Sarah
Rubin holds voting and/or dispositive power over the shares held
by Sarbin
Investments Limited.
|
(33)
|
Shirley
Ann Lewis is the president and sole owner of the selling
stockholder.
|
(34)
|
Stephen
Reitman is the president and sole owner of the selling
stockholder.
|
(35)
|
Bruce
Weiner holds voting and/or dispositive power over the shares held
by
Venture Enterprises, Inc.
|
(36)
|
F.
Lawrence Plotnick, president of Wealthplan Corporation, holds voting
and/or dispositive power over the shares held by the selling
stockholder.
|
(37)
|
Beneficial
ownership includes: (i) 247,345 shares of our common stock held by
Kappa
Investors, LLC (“Kappa”); (ii) a five year warrant held by Kappa to
purchase 24,372 shares of our common stock that are exercisable at
$2.42
per share; and (iii) 1,733,712 shares of our common stock held by
Wexford
Spectrum Investors LLC, a Delaware limited liability company ("Wexford
Spectrum"). Wexford Capital LLC, a Connecticut limited liability
company
("Wexford Capital") is a registered Investment Advisor and also serves
as
an investment advisor or sub-advisor to the members of Kappa and
Wexford
Spectrum. Mr. Charles E. Davidson is chairman, a managing member
and a
controlling member of Wexford Capital and Mr. Joseph M. Jacobs is
president, a managing member and a controlling member of Wexford
Capital.
Messrs. Davidson and Jacobs each disclaim all beneficial ownership
of the
shares held by Kappa, Wexford Spectrum and Wexofrd Capital, except
to the
extent of any pecuniary interest
therein.
|
(38)
|
Dov
Perlysky holds voting and/or dispositive control over the shares
held by
the selling
stockholder.
|
(39)
|
Scott
Schroeder holds voting and/or dispositive power over the shares held
by
Atlas Master Fund, Ltd.
|
(40)
|
Ronald
Beck, general partner of Beck Family Partners, L.P., holds voting
and/or
dispositive power over the shares held by the selling
stockholder.
|
(41)
|
Bristol
Capital Advisors, LLC (“BCA”) is the investment advisor to Bristol
Investment Fund, Ltd. (“Brisol”). Paul Kessler is the manager of BCA and
as such has voting and investment control over the securities held
by
Bristol. Mr. Kessler disclaims beneficial ownership of these
securities.
|
(42)
|
Carlo
Pagani, president of Diversified Fund, holds voting and/or dispositive
power over the shares held by the selling
stockholder.
|
(43)
|
Jose
Luis Diaz-Rio, director of Inversiones Mirachonda, SL, holds voting
and/or
dispositive power over the shares held by the selling
stockholder.
|
(44)
|
Joseph
Martello, trustee, holds voting and/or dispositive power over the
shares
held by the selling stockholder.
|
(45)
|
Total
shares beneficially owned by Mr. Kazam include: (i) 332,293 shares
of our
common stock held by the Kazam Family Trust; and (ii) 99,688 shares
of our
common stock held by Mr. Kazam’s wife as custodian for the benefit of
their minor daughter under the Uniform Gift to Minors Act (UGMA),
for
which Mr. Kazam disclaims any beneficial ownership interest. Does
not
include 20,637 shares of our common stock held by the Joshua Kazam
Trust,
for which Mr. Kazam disclaims any beneficial ownership interest,
except to
the extent of his pecuniary interest therein. Mr. Kazam is a director
of
our company.
|
(46)
|
Lawrence
R. Gross holds voting and/or dispositive power over the shares held
by the
selling stockholder.
|
(47)
|
Shai
Pilpel, chairman of Leiden Overseas, holds voting and/or dispositive
power
over the shares held by the selling
stockholder.
|
(48)
|
Meir
Hadar, president and CEO of Naftali Investments, holds voting and/or
dispositive power over the shares held by the selling
stockholder.
|
(49)
|
Ruki
Renon holds voting and/or dispositive control over the shares held
by the
selling stockholder.
|
(50)
|
Leon
Recanti, chairman and chief executive officer of Rel Tech Holdings,
Ltd.,
holds voting and/or dispositive power over the shares held by the
selling
stockholder.
|
(51)
|
Highbridge
Capital Management, LLC is the trading manager of Smithfield Fiduciary
LLC
and has voting control and investment discretion over the securities
held
by Smithfield Fiduciary LLC. Glenn Dubin and Henry Swieca control
Highbridge Capital Management, LLC and have voting control and investment
discretion over the securities held by Smithfield Fiduciary LLC.
Each of
Highbridge Capital Management, LLC, Glenn Dubin and Henry Swieca
disclaims
beneficial ownership of the securities held by Smithfield Fiduciary
LLC.
|
(52)
|
Aaron
Speisman, general partner of Speisman Family 2000, LP, holds
voting and/or dispositive power over the shares held by the selling
stockholder.
|
(53)
|
Jacob
Gottlieb has voting and investment power over the shares held by
Visium
Balanced Fund, LP, Visium Balanced Offshore Fund, Ltd., Visium Long
Bias Fund, LP and Visium Long Bias Offshore
Fund, Ltd.
|
(54) | Gisele Le Miere and Carole Dodge share voting and/or dispositive power over the shares held by the selling stockholder. |
(55) | Mr. Daniel Marty, director of the selling stockholder, holds voting and/or dispositive power over the shares held by the selling stockholder. |
· |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
· |
block
trades in which the broker-dealer will attempt to sell the shares
as
agent, but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
· |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
· |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
· |
privately
negotiated transactions;
|
· |
short
sales;
|
· |
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
|
· |
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
· |
a
combination of any such methods of sale;
and
|
· |
any
other method permitted pursuant to applicable
law.
|
· |
a
standardized risk disclosure
document;
|
· |
current
quotations or similar price
information;
|
· |
disclosure
of the amount of compensation or other remuneration received by the
broker
and its sales persons as a result of the penny stock transactions;
and
|
· |
monthly
account statements.
|
·
|
AR-67
-
Our lead product candidate is a novel, third-generation campothecin
analogue. We are currently conducting a multi-center, ascending
dose Phase
I clinical trial of AR-67 in patients with advanced solid tumors.
Once the
maximum tolerated dose in the Phase I study is identified, we anticipate
commencing a Phase II clinical trial of AR-67 in 2008 in patients
with
glioblastoma multiforme, or GBM, an aggressive form of brain cancer.
We plan to initiate additional Phase II clinical trials in a
variety of other solid and hematological cancers. We are also evaluating
an oral formulation of AR-67.
|
·
|
AR-12
-
We are also developing AR-12, an orally available pre-clinical
compound for the treatment of cancer. AR-12 is a novel inhibitor
of phosphoinositide dependent protein kinase-1, or PDK-1, that
targets the
PI3k/Akt pathway while also possessing activity in the endoplasmic
reticulum stress and other pathways targeting apoptosis. Pre-clinical
studies suggest that AR-12 may provide therapeutic benefit either
alone or
in combination with other therapeutic agents. We are currently
conducting
pre-clinical toxicology and manufacturing studies that we anticipate
will
provide the basis for the filing of an investigational new drug
application, or IND, in early 2009, which will permit us to commence
a
Phase I clinical study in the United States in
2009.
|
·
|
AR-42 –
We are also developing AR-42, an orally available pre-clinical
compound
for the treatment of cancer. AR-42 is a broad spectrum inhibitor
of
deacetylase targets, or pan-DAC, as well as an inhibitor of Akt.
In
pre-clinical models, AR-42 has demonstrated greater potency and
a
competitive profile in tumors when compared with vorinostat (also
known as
SAHA and marketed as Zolinza®
by
Merck), the leading marketed histone deacetylase inhibitor. We
are
currently conducting IND-enabling studies and anticipate filing
an IND in early 2009, which will permit us to commence a Phase I
clinical study in the United States in
2009.
|
·
|
AR-67
-
Our lead product candidate is a novel, third-generation campothecin
analogue. We are currently conducting a multi-center, ascending
dose Phase
I clinical trial of AR-67 in patients with advanced solid tumors.
Once the
maximum tolerated dose, or MTD, in the Phase I study is identified,
we
anticipate commencing a Phase II clinical trial of AR-67 in 2008 in
patients with glioblastoma multiforme, or GBM, an aggressive form
of brain
cancer. We plan to initiate additional Phase II clinical trials
in a variety of other solid and hematological cancers. We are also
evaluating an oral formulation of
AR-67.
|
·
|
AR-12
-
We are also developing AR-12, an orally available pre-clinical
compound that is a novel inhibitor of phosphoinositide dependent
protein
kinase-1, or PDK-1, that targets the PI3k/Akt pathway while also
possessing activity in the endoplasmic reticulum stress and other
pathways
targeting apoptosis. Pre-clinical studies suggest that AR-12 may
provide
therapeutic benefit either alone or in combination with other therapeutic
agents. We are currently conducting toxicology and manufacturing
studies
that we anticipate will provide the basis for the filing of an
investigational new drug application, or IND, in early 2009, which,
if accepted by the FDA, will permit us to commence a Phase I clinical
trial in the United States in
2009.
|
·
|
AR-42 –
We are also developing AR-42, an orally available pre-clinical
compound
for the treatment of cancer. AR-42 is a broad spectrum inhibitor
of
deacetylase targets, or pan-DAC, as well as an inhibitor of Akt
via the
protein phosphatase I pathway. In pre-clinical models, AR-42 has
demonstrated greater potency and a competitive profile in tumors
when
compared with vorinostat (also known as SAHA and marketed as
Zolinza®
by
Merck), the leading marketed histone deacetylase inhibitor. We
are
currently conducting IND-enabling studies and anticipate filing
an IND in early 2009, which,
if accepted by the FDA, will permit us to commence a Phase I clinical
trial in the United States in
2009.
|
·
|
our
ability to develop novel compounds with attractive pharmaceutical
properties and to secure and protect intellectual property rights
based on
our innovations;
|
·
|
the
efficacy, safety and reliability of our drug
candidates;
|
·
|
the
speed at which we develop our drug
candidates;
|
·
|
our
ability to design and successfully complete appropriate clinical
trials;
|
·
|
our
ability to maintain a good relationship with regulatory
authorities;
|
·
|
the
timing and scope of regulatory
approvals;
|
·
|
our
ability to manufacture and sell commercial quantities of future
products
to the market; and
|
·
|
acceptance
of future products by physicians and other healthcare
providers.
|
·
|
completion
of extensive pre-clinical laboratory tests, pre-clinical animal
studies
and formulation studies, all performed in accordance with the FDA’s good
laboratory practice regulations and other
regulations;
|
·
|
submission
to the FDA of an IND application, which must become effective before
clinical trials may begin;
|
·
|
performance
of multiple adequate and well-controlled clinical trials meeting
FDA
requirements to establish the safety and efficacy of the product
candidate
for each proposed indication;
|
·
|
submission
of a new drug application, or NDA, to the
FDA;
|
·
|
satisfactory
completion of an FDA pre-approval inspection of the manufacturing
facilities at which the product candidate is produced, and potentially
other involved facilities as well, to assess compliance with current
good
manufacturing practice, or cGMP, regulations and other applicable
regulations; and
|
·
|
FDA
review and approval of the NDA prior to any commercial marketing,
sale or
shipment of the drug.
|
·
|
Phase
I clinical trials are
initially conducted in a limited population to test the drug candidate
for
safety, dose tolerance, absorption, metabolism, distribution and
excretion
in healthy humans or, on occasion, in patients, such as cancer
patients.
In some cases, particularly in cancer trials, a sponsor may decide
to
conduct what is referred to as a “Phase Ib” evaluation, which is a second
safety-focused Phase I clinical trial typically designed to evaluate
the
impact of the drug candidate in combination with currently FDA-approved
drugs or in a particular patient
population.
|
·
|
Phase
II clinical trials are
generally conducted in a limited patient population to identify
possible
adverse effects and safety risks, to determine the efficacy of
the drug
candidate for specific targeted indications and to determine dose
tolerance and optimal dosage. Multiple Phase II clinical trials
may be
conducted by the sponsor to obtain information prior to beginning
larger
and more expensive Phase III clinical trials. In some cases, a
sponsor may
decide to conduct what is referred to as a “Phase IIb” evaluation, which
is a second, confirmatory Phase II clinical trial that could, if
accepted
by the FDA, serve as a pivotal clinical trial in the approval of
a drug
candidate.
|
·
|
Phase
III clinical trials are
commonly referred to as pivotal trials. When Phase II clinical
trials
demonstrate that a dose range of the drug candidate is effective
and has
an acceptable safety profile, Phase III clinical trials are undertaken
in
large patient populations to further evaluate dosage, to provide
substantial evidence of clinical efficacy and to further test for
safety
in an expanded and diverse patient population at multiple, geographically
dispersed clinical trial sites.
|
·
|
Priority
Review. As
explained above, a drug candidate may be eligible for a six-month
priority
review. The FDA assigns priority review status to an application
if the
drug candidate provides a significant improvement compared to marketed
drugs in the treatment, diagnosis or prevention of a disease. A
fast track
drug would ordinarily meet the FDA’s criteria for priority review, but may
also be assigned a standard review. We do not know whether any
of our drug
candidates will be assigned priority review status or, if priority
review
status is assigned, whether that review or approval will be faster
than
conventional FDA procedures, or that the FDA will ultimately approve
the
drug.
|
·
|
Accelerated
Approval. Under
the FDA’s accelerated approval regulations, the FDA is authorized to
approve drug candidates that have been studied for their safety
and
efficacy in treating serious or life-threatening illnesses and
that
provide meaningful therapeutic benefit to patients over existing
treatments based upon either a surrogate endpoint that is reasonably
likely to predict clinical benefit or on the basis of an effect
on a
clinical endpoint other than patient survival or irreversible morbidity.
In clinical trials, surrogate endpoints are alternative measurements
of
the symptoms of a disease or condition that are substituted for
measurements of observable clinical symptoms. A drug candidate
approved on
this basis is subject to rigorous post-marketing compliance requirements,
including the completion of Phase IV or post-approval clinical
trials to
validate the surrogate endpoint or confirm the effect on the clinical
endpoint. Failure to conduct required post-approval studies with
due
diligence, or to validate a surrogate endpoint or confirm a clinical
benefit during post-marketing studies, may cause the FDA to seek
to
withdraw the drug from the market on an expedited basis. All promotional
materials for drug candidates approved under accelerated regulations
are
subject to prior review by the FDA.
|
Name
|
Age
|
Positions
|
||
Roger
G. Berlin, M.D.
|
58
|
Chief Executive Officer and Director
|
||
Scott
Z. Fields, M.D.
|
53
|
President
and Chief Medical Officer
|
||
Brian Lenz
|
36
|
Chief
Financial Officer
|
||
Arie
S. Belldegrun, M.D., FACS
|
58
|
Non-Executive Chairman of the Board
|
||
65
|
Director
|
|||
Peter
M. Kash
|
46
|
Director
|
||
Joshua
A. Kazam
|
31
|
Director
|
||
David
M. Tanen
|
37
|
Director
and Secretary
|
||
J.
Chris Houchins
|
44
|
Vice
President, Clinical
Operations
|
Committee
|
|
Membership
|
|
|
|
Audit
|
|
Mr.
Kash (Chair), Mr. Falk and Mr. Kazam
|
Compensation
|
|
Dr.
Belldegrun (Chair), Mr. Kash and Mr. Tanen
|
Nominating
& Governance
|
|
Mr.
Falk (Chair), Dr. Belldegrun and Mr.
Tanen
|
Name
and
Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
(1)
|
|
|
Option
Awards
(2)
|
|
Non-Equity
Incentive Plan Compensation
|
|
All
Other Compensation
|
|
Total
|
|
|||||||
Scott
Z. Fields, M.D. (3)
President
and Chief Medical Officer
|
|
|
2007
2006
|
|
$
|
198,333
-
|
|
$
|
72,900
-
|
|
|
$
|
73,600
-
|
|
$
|
-
-
|
|
$
|
-
-
|
|
$
|
344,833
-
|
|
J.
Chris Houchins (4)
Vice
President, Clinical Development
|
|
|
2007
2006
|
|
$
|
52,500
-
|
|
$
|
15,000
-
|
|
|
$
|
9,200
|
|
$
|
-
-
|
|
$
|
-
-
|
|
$
|
76,700
-
|
|
Joshua
Kazam (5)
President
|
|
|
2007
2006
|
|
$
|
-
-
|
|
$
|
-
-
|
|
|
$
|
-
-
|
|
$
|
-
-
|
|
$
|
-
-
|
|
$
|
-
-
|
|
Thomas
W. Colligan (6)
Former
CEO of Laurier
|
|
|
2007
2006
|
|
$
|
-
-
|
|
$
|
-
-
|
|
|
$
|
-
-
|
|
$
|
-
-
|
|
$
|
-
-
|
|
$
|
-
-
|
|
(1)
|
The
named executives are eligible for annual bonuses upon the successful
achievement of agreed upon corporate and individual performance-based
milestones.
|
(2)
|
Amount
reflects the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2007 in accordance
with
SFAS 123R of stock option awards, and may include amounts from
awards
granted in and prior to fiscal year
2006.
|
(3)
|
Dr.
Fields is entitled to an annual performance-based bonus of up to
$150,000
upon the successful completion of annual corporate and individual
performance-based milestones. See “—Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
|
(4)
|
Mr.
Houchins is entitled to an annual performance-based bonus of up
to $45,500
upon the successful completion of annual corporate and individual
performance based milestones. See “—Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
|
(5)
|
Joshua
Kazam served as President of Arno until June 1, 2007. During
this time, he
did not receive any
compensation.
|
(6)
|
Mr.
Colligan served as President of Laurier until June 3, 2008, when
he
resigned and was replaced by Dr. Fields, in connection with the
merger.
During this time, Mr. Colligan did not receive any
compensation.
|
|
·
|
willful
failure to adequately perform material duties or obligations
under the
agreement, including without limitation, willful failure, disregard
or
refusal to abide by specific objective and lawful directions
received by
him in writing constituting an action of our board of
directors;
|
|
·
|
any
willful, intentional or grossly negligent act having the reasonably
foreseeable effect of actually and substantially injuring, whether
financial or otherwise, our business
reputation;
|
|
·
|
indictment
of any felony or conviction of a misdemeanor involving moral
turpitude
that causes or could reasonably be expected to cause, substantial
harm to
us or our reputation;
|
|
·
|
engagement
in some form of harassment prohibited by law (including, without
limitation, age, sex or race
discrimination);
|
|
·
|
misappropriation
or embezzlement of Arno property;
and
|
|
·
|
material
breach of the agreement.
|
· |
1%
of the then fully diluted outstanding shares of our common stock
for the
rights to a product candidate that is in pre-clinical development;
and
|
· |
2%
of the then fully diluted outstanding shares of our common
stock for the
rights to a product candidate that is in human clinical
trials.
|
· |
options
to purchase 24,922 shares of our common stock shall become exercisable
on
the first anniversary of his employment;
and
|
·
|
thereafter,
options to purchase 2,077 shares of our common stock shall become
exercisable on the last day of each calendar month until all remaining
options are fully vested and
exercisable.
|
Name
|
Number of
Securities
Underlying
Unexercised Options
Exercisable
|
Number of
Securities
Underlying
Unexercised Options
Unexercisable
|
Option Exercise
Price ($)
|
Option
Expiration Date
|
|||||||||
Dr.
Fields
|
-
|
398,754
|
1.00
|
06/01/2017
|
(1)
|
||||||||
|
|||||||||||||
Mr.
Houchins
|
-
|
99,688
|
1.00
|
09/01/2017
|
(2)
|
(1)
|
The
right to purchase 199,377 shares vests in two equal installments
in June
2008 and June 2009. The remaining 199,377 shares vest upon the
completion
of corporate and individual milestones.
|
(2)
|
The
right to purchase 24,922 shares vests in September 2008, and thereafter,
2,077 shares vest each month until fully
vested.
|
·
|
stock
options;
|
·
|
stock
appreciation rights, or SARs;
|
·
|
stock
awards;
|
·
|
restricted
stock;
|
·
|
performance
shares; and
|
·
|
cash
awards.
|
Name of Beneficial Owner
|
Shares of
Common Stock
Beneficially Owned
(#)(1)
|
Percentage of
Common Stock
Beneficially Owned
(%)(1)
|
|||||
Roger
G. Berlin, M.D.
|
0
|
-
|
|||||
Scott
Z. Fields, M.D. (2)
|
199,377
|
*
|
|||||
Brian
Lenz
|
4,000
|
*
|
|||||
David
M. Tanen (3)
Two
River Group Holdings, LLC
689
Fifth Avenue, 12th Floor
New
York, NY 10022
|
1,458,102
|
7.15
|
|||||
Peter
M. Kash (4)
Two
River Group Holdings, LLC
689
Fifth Avenue, 12th Floor
New
York, NY 10022
|
1,688,987
|
8.87
|
|||||
Joshua
A. Kazam (5)
Two
River Group Holdings, LLC
689
Fifth Avenue, 12th Floor
New
York, NY 10022
|
1,566,686
|
7.68
|
|||||
Arie
S. Belldegrun (6)
Two
River Group Holdings, LLC
689
Fifth Avenue, 12th Floor
New
York, NY 10022
|
186,526
|
*
|
|||||
Robert
I. Falk (7)
507
Belle Meade Blvd.
Nashville,
TN 37205
|
195,378
|
*
|
|||||
Wexford
Capital LLC (8)
411
West Putnam Avenue
Greenwich,
CT 06830
|
2,005,789
|
9.82
|
|||||
Clal
Finance Management Ltd. (9)
c/o
Clal Finance Underwriting, Ltd.
Bet
Rubinstein, 37 Menachem Begin St.
Tel
Aviv 67137 Israel
|
1,454,727
|
7.13
|
|||||
All
Executive Officers and Directors as a group (8
persons)
|
5,299,056
|
25.53
|
(1) |
Assumes
20,392,024 shares of our common stock are outstanding. Beneficial
ownership is determined in accordance with Rule 13d-3 under the Securities
Act, and includes any shares as to which the security or stockholder
has
sole or shared voting power or investment power, and also any shares
which
the security or stockholder has the right to acquire within 60 days
of the
date hereof, whether through the exercise or conversion of any stock
option, convertible security, warrant or other right. The indication
herein that shares are beneficially owned is not an admission on
the part
of the security or stockholder that he, she or it is a direct or
indirect
beneficial owner of those shares.
|
(2)
|
Represents
shares issuable upon the exercise of options to purchase shares
of our
common stock that are exercisable within 60 days of the date hereof.
See
“Executive
Compensation - Employment Agreements, Termination of Employment
and
Change-in-Control
Arrangements.”
|
(3)
|
Includes:
(i) 1,236 shares of our common stock issuable upon exercise of
a five year
warrant held by Mr. Tanen exercisable at a price per share of $2.42;
and
(ii) 149,532 shares of our common stock held by Mr. Tanen’s wife as
custodian for the benefit of two of their minor children under
the Uniform
Gift to Minors Act (UGMA).
|
(4)
|
Includes:
(i) 2,472 shares of our common stock issuable upon exercise of
a five year
warrant held by Mr. Kash exercisable at a price per share of $2.42;
and
(ii) 358,876 shares held by Mr. Kash’s wife as custodian for the benefit
of each of their minor children under UGMA; and (iii) 119,626 shares
of
out common stock held by the Kash Family Irrevocable Trust.
|
(5)
|
Includes:
(i) 4,946 shares of our common stock issuable upon exercise of a five
year warrant held by Mr. Kazam exercisable at a price per share
of $2.42;
(ii) 332,293 shares of our common stock held by the Kazam Family
Trust; (iii) 99,688 shares of our common stock held by Mr. Kazam’s
wife as custodian for the benefit of their minor daughter under
the UGMA;
and (iv) 20,637 shares of our common stock held by the Joshua Kazam
Trust,
in which Mr. Kazam has a pecuniary
interest.
|
(6)
|
Includes:
(i) 61,916 shares of our common stock held by a trust of which
Dr.
Belldegrun is a beneficiary; and (ii) 10 year options to purchase
99,688
shares of our common stock at an exercise price equal to $2.42
per
share.
|
(7) |
Includes:
(i) 49,844 shares of our common stock held by the Falk Family
Partners, L.P. a Tennessee limited partnership for which Mr. Falk
serves
as general partner; and (ii) 4,946 shares of our common stock issuable
upon exercise of a five year warrant held by Falk Family Partners.
Also
includes 10 year options to purchase 49,844 shares of our common
stock at
an exercise price equal to $2.42 per
share.
|
(8)
|
Includes:
(i) 247,345 shares of our common stock held by Kappa Investors,
LLC
(“Kappa”); (ii) a five year warrant held by Kappa to purchase 24,734
shares of our common stock that are exercisable at $2.42 per share;
and
(ii) 1,733,712 shares of our common stock held by Wexford Spectrum
Investors LLC, a Delaware limited liability company ("Wexford Spectrum").
Wexford Capital LLC, a Connecticut limited liability company ("Wexford
Capital") is a registered Investment Advisor and also serves as
an
investment advisor or sub-advisor to the members of Kappa and Wexford
Spectrum. Mr. Charles E. Davidson is chairman, a managing member
and a
controlling member of Wexford Capital and Mr. Joseph M. Jacobs
is
chairman, a managing member and a controlling member of Wexford
Capital.
|
(9) |
Includes:
(i) 825,578 shares of our common stock held by Clal Insurance Company
Ltd.
- Profits Participating Policies; (ii) 412,788 shares of our common
stock
held by Meitavit Atudot Pension Funds Management Company Ltd. (Sapir);
(iii) 206,393 shares of our common stock held by Meitavit Atudot
Pension
Funds Management Company Ltd. (Yahalom); and (iv) 9,968 shares
of our
common stock held by Clal Finance Underwriting
Ltd.
|
Arno
Therapeutics, Inc. for the years ended December 31, 2007 and
2006
|
|
|||
Independent
Auditor's Report
|
F-2
|
|||
Balance
Sheets as of December 31, 2007 and 2006
|
F-3
|
|||
Statements
of Operations for the years ended December 31, 2007 and 2006 and
the
period from August 1, 2005 (Inception) through December 31,
2007
|
F-4
|
|||
Statement
of Changes in Stockholders’ Equity for the period from August 1, 2005
(Inception) through December 31, 2007
|
F-5
|
|||
Statements
of Cash Flows for the years ended December 31, 2007 and 2006 and
the
period from August 1, 2005(Inception) through December 31,
2007
|
F-6
|
|||
Notes
to Financial Statements
|
F-7
|
|||
|
||||
Arno
Therapeutics, Inc. for the three and six months ended June 30, 2008
and 2007 (Unaudited)
|
||||
Condensed
Balance Sheets as of June 30, 2008 and December 31, 2007
|
F-16
|
|||
Condensed
Statements of Operations for the three and six months ended June 30,
2008 and 2007 and the period from August 1, 2005 (Inception)
through June 30, 2008
|
F-17
|
|||
Condensed
Statement of Changes in Stockholders’ Equity (Deficiency) for the
period from August 1, 2005 (Inception) through June 30,
2008
|
F-18
|
|||
Condensed
Statements of Cash Flows for the six months ended June 30, 2008 and
2007 and the period from August 1, 2005 (Inception) through June 30,
2008
|
F-19
|
|||
Notes
to Unaudited Condensed Financial Statements
|
F-20
|
|||
|
||||
Laurier
International, Inc. for the period from March 8, 2000 (Inception)
to
December 31, 2007
|
||||
Report
of Independent Registered Public Accounting Firm
|
F-29
|
|||
Balance
Sheet as of December 31, 2007
|
F-30
|
|||
Statements
of Operations for the period from March 8, 2000 (Inception) to December
31, 2007
|
F-31
|
|||
Statements
of Changes in Stockholders’ Equity for the period from March 8, 2000
(Inception) to December 31, 2007
|
F-32
|
|||
Statements
of Cash Flows for the period from March 8, 2000 (Inception) to December
31, 2007
|
F-33
|
|||
Notes
to Financial Statements
|
F-34
|
December 31,
|
|||||||
2007
|
2006
|
||||||
ASSETS
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
1,646,243
|
$
|
18,201
|
|||
Deposits
|
12,165
|
-
|
|||||
Prepaid
expenses
|
74,092
|
18,275
|
|||||
Total
Current assets
|
1,732,500
|
36,476
|
|||||
Deferred
financing fees, net of accumulated amortization
of $11,459
|
13,541
|
-
|
|||||
Property
and equipment, net of accumulated depreciation
of $1,650
|
38,193
|
-
|
|||||
Intangible
assets
|
-
|
85,125
|
|||||
Total
assets
|
$
|
1,784,234
|
$
|
121,601
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable and accrued expenses
|
$
|
1,231,653
|
$
|
27,794
|
|||
Due
to related party
|
583
|
350,000
|
|||||
Total
current liabilities
|
1,232,236
|
377,794
|
|||||
Convertible
notes and accrued interest payable
|
4,179,588
|
100,000
|
|||||
Total
liabilities
|
5,411,824
|
477,794
|
|||||
Commitments
and contingencies (Notes
3, 5, 6, 7, 8, 9 and 10)
|
|||||||
Stockholders'
equity (deficiency)
|
|||||||
Preferred
stock, $0.001 par value; 5,000,000
shares authorized, none
issued and outstanding
|
-
|
-
|
|||||
Common
stock, $0.001 par value; 25,000,000
shares authorized, 5,000,000
issued and outstanding
|
5,000
|
5,000
|
|||||
Additional
paid-in capital
|
98,000
|
9,700
|
|||||
Deficit
accumulated during the development stage
|
(3,730,590
|
)
|
(370,893
|
)
|
|||
Total
stockholders' deficiency
|
(3,627,590
|
)
|
(356,193
|
)
|
|||
Total
liabilities and stockholders' deficiency
|
$
|
1,784,234
|
$
|
121,601
|
|||
Period from
August 1, 2005
(inception)
through
|
||||||||||
Year ended December 31,
|
December 31,
|
|||||||||
2007
|
2006
|
2007
|
||||||||
Operating
expenses
|
||||||||||
Research
and development
|
$
|
2,899,264
|
$
|
365,833
|
$
|
3,265,097
|
||||
General
and administrative
|
360,349
|
5,060
|
365,409
|
|||||||
Loss
from operations
|
(3,259,613
|
)
|
(370,893
|
)
|
(3,630,506
|
)
|
||||
Interest
income
|
123,962
|
-
|
123,962
|
|||||||
Interest
expense
|
(224,046
|
)
|
-
|
(224,046
|
)
|
|||||
Net
loss
|
$
|
(3,359,697
|
)
|
$
|
(370,893
|
)
|
$
|
(3,730,590
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.67
|
)
|
$
|
(0.07
|
)
|
$
|
(0.75
|
)
|
|
Weighted-average
common shares outstanding
|
5,000,000
|
5,000,000
|
5,000,000
|
Deficit
|
||||||||||||||||
accumulated
|
||||||||||||||||
during
the
|
||||||||||||||||
Common
stock
|
Additional
|
development
|
||||||||||||||
Shares
|
Amount
|
paid-in
capital
|
stage
|
Total
|
||||||||||||
Issuance
of common stock to founders at $0.001 per share
|
5,000,000
|
$
|
5,000
|
$
|
-
|
$
|
-
|
$
|
5,000
|
|||||||
Net
loss, period from August 1, 2005 (inception) through
December 31, 2005
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Balance,
December 31, 2005
|
5,000,000
|
5,000
|
-
|
-
|
5,000
|
|||||||||||
Issuance
of stock options for services at $0.25
|
-
|
-
|
9,700
|
-
|
9,700
|
|||||||||||
Net
loss, year ended December 31, 2006
|
-
|
-
|
-
|
(370,893
|
)
|
(370,893
|
)
|
|||||||||
Balance,
December 31, 2006
|
5,000,000
|
5,000
|
9,700
|
(370,893
|
)
|
(356,193
|
)
|
|||||||||
Issuance
of stock options for services at $2.00
|
-
|
-
|
88,300
|
-
|
88,300
|
|||||||||||
Net
loss, year ended December 31, 2007
|
-
|
-
|
-
|
(3,359,697
|
)
|
(3,359,697
|
)
|
|||||||||
Balance,
December 31, 2007
|
5,000,000
|
$
|
5,000
|
$
|
98,000
|
$
|
(3,730,590
|
)
|
$
|
(3,627,590
|
)
|
Period from
August 1, 2005
(inception)
through
|
||||||||||
Year ended December 31,
|
December 31,
|
|||||||||
2007
|
2006
|
2007
|
||||||||
Cash
flows from operating activities
|
||||||||||
Net
loss
|
$
|
(3,359,697
|
)
|
$
|
(370,893
|
)
|
$
|
(3,730,590
|
)
|
|
Adjustments
to reconcile net loss to net
cash used in operating activities
|
||||||||||
Depreciation
and amortization
|
13,109
|
-
|
13,109
|
|||||||
Stock
based compensation
|
88,300
|
9,700
|
98,000
|
|||||||
Write-off
of intangible assets
|
85,125
|
-
|
85,125
|
|||||||
Changes
in operating assets and liabilities
|
||||||||||
Increase
in deposits
|
(12,165
|
)
|
-
|
(12,165
|
)
|
|||||
Increase
in prepaid expenses
|
(55,817
|
)
|
(18,275
|
)
|
(74,092
|
)
|
||||
Increase
in accounts payable and accrued
expenses
|
1,203,859
|
27,794
|
1,231,653
|
|||||||
Increase
in due to related party
|
583
|
-
|
583
|
|||||||
Increase
in accrued interest - notes payable
|
212,588
|
-
|
212,588
|
|||||||
Net
cash used in operating activities
|
(1,824,115
|
)
|
(351,674
|
)
|
(2,175,789
|
)
|
||||
Cash
flows from investing activities
|
||||||||||
Purchase
of property and equipment
|
(39,843
|
)
|
-
|
(39,843
|
)
|
|||||
Cash
paid for intangible assets
|
-
|
(85,125
|
)
|
(85,125
|
)
|
|||||
Proceeds
from related party advance
|
175,000
|
350,000
|
525,000
|
|||||||
Repayment
of related party advance
|
(525,000
|
)
|
-
|
(525,000
|
)
|
|||||
Net
cash used in investing activities
|
(389,843
|
)
|
264,875
|
(124,968
|
)
|
|||||
Cash
flows from financing activities
|
||||||||||
Deferred
financing fees paid
|
(25,000
|
)
|
-
|
(25,000
|
)
|
|||||
Proceeds
from sale of common stock
|
-
|
5,000
|
5,000
|
|||||||
Proceeds
from sale of convertible notes payable
|
3,867,000
|
100,000
|
3,967,000
|
|||||||
Net
cash provided by financing activities
|
3,842,000
|
105,000
|
3,947,000
|
|||||||
Net
increase in cash and cash equivalents
|
1,628,042
|
18,201
|
1,646,243
|
|||||||
Cash
and cash equivalents, beginning of period
|
18,201
|
-
|
-
|
|||||||
Cash
and cash equivalents, end of period
|
$
|
1,646,243
|
$
|
18,201
|
$
|
1,646,243
|
||||
Supplemental
disclosure of cash flow information
|
||||||||||
Interest
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
Note
1
|
Organization
and business activities
|
Note
2
|
Significant
accounting policies
|
|
|
December 31, 2007
|
|
December 31, 2006
|
|
||
Warrants
to purchase common stock
|
|
|
-
|
|
|
-
|
|
Options
to purchase common stock
|
|
|
345,000.00
|
|
|
75,000.00
|
|
Total
potentially dilutive securities
|
|
|
345,000.00
|
|
|
75,000.00
|
Note 3 |
License
agreement
|
Note 4 |
Stockholders'
equity
|
Note 5 |
Convertible
notes payable
|
Note 6 |
Stock
based compensation
|
|
|
4.23%
- 4.85%
|
|
Volatility
|
|
|
62.67%
- 67.88%
|
Estimated
life in years
|
|
|
4-6
years
|
Dividends
paid
|
|
|
None
|
Shares
|
Weighted-
Average
Exercise Price
|
||||||
2006
|
|
|
|||||
Options
granted
|
75,000
|
$
|
0.25
|
||||
Options
exercised
|
-
|
$
|
-
|
||||
2007
|
|
|
|||||
Options
granted
|
270,000
|
$
|
2.00
|
||||
Options
exercised
|
-
|
$
|
-
|
||||
Outstanding
at December 31, 2007
|
345,000
|
$
|
1.62
|
||||
Exercisable
at December 31, 2007
|
75,000
|
$
|
0.25
|
Note 7 |
Pension
plan
|
Note 8 |
Related
parties
|
Note 9 |
Income
taxes
|
$
|
1,496,000
|
|||
Noncurrent
R&D credit
|
157,000
|
|||
Other
noncurrent
|
42,000
|
|||
Total
noncurrent
|
1,695,000
|
|||
Other
current
|
-
|
|||
Total
deferred tax assets
|
1,695,000
|
|||
Deferred
tax asset valuation allowance
|
(1,695,000
|
)
|
||
Net
deferred taxes
|
$
|
-
|
Note 10 |
Commitments
|
Year
ending December 31,
|
|
|||
2008
|
$
|
39,750
|
||
2009
|
55,000
|
|||
2010
|
52,000
|
|||
|
$
|
146,750
|
Year
ending December 31,
|
|
|||
2008
|
355,000
|
|||
2009
|
183,333
|
|||
|
$
|
538,333
|
Note 11 |
Subsequent
events
|
June 30, 2008
(unaudited)
|
December 31, 2007
|
||||||
ASSETS
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
14,412,517
|
$
|
1,646,243
|
|||
Prepaid
expenses
|
122,999
|
74,092
|
|||||
Total
current assets
|
14,535,516
|
1,720,335
|
|||||
Deferred
financing fees, net
|
—
|
13,541
|
|||||
Property
and equipment, net
|
47,086
|
38,193
|
|||||
Security
deposit
|
12,165
|
12,165
|
|||||
TOTAL
ASSETS
|
$
|
14,594,767
|
$
|
1,784,234
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable
|
$
|
856,948
|
$
|
111,474
|
|||
Accrued
expenses
|
880,232
|
1,120,179
|
|||||
Due
to related party
|
203,426
|
583
|
|||||
Convertible
notes and accrued interest payable
|
—
|
4,179,588
|
|||||
TOTAL
LIABILITIES
|
1,940,606
|
5,411,824
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS’
EQUITY (DEFICIENCY)
|
|||||||
Preferred
stock, $0.0001 par value: 20,000,000 shares authorized, 0 shares
issued
and outstanding at June 30, 2008 and December 31, 2007
|
—
|
—
|
|||||
Common
stock, $0.0001 par value: 80,000,000 shares authorized, 20,392,024
shares
issued and outstanding at June 30, 2008 and 9,968,797 shares
issued and
outstanding at December 31, 2007
|
2,039
|
997
|
|||||
Additional
paid-in capital
|
23,852,225
|
102,003
|
|||||
Deficit
accumulated during the development stage
|
(11,200,103
|
)
|
(3,730,590
|
)
|
|||
TOTAL
STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
12,654,161
|
(3,627,590
|
)
|
||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
$
|
14,594,767
|
$
|
1,784,234
|
For the Three
Months Ended
June 30, 2008
|
For the Three
Months Ended
June 30, 2007
|
For the Six
Months Ended
June 30, 2008
|
For the Six
Months Ended
June 30, 2007
|
Cumulative
Period from
August 1,
2005
(inception)
Through
June 30, 2008
|
||||||||||||
OPERATING
EXPENSES
|
||||||||||||||||
Research
and development
|
$
|
2,101,862
|
$
|
401,402
|
$
|
5,289,044
|
$
|
612,199
|
$
|
8,554,141
|
||||||
General
and administrative
|
741,112
|
75,512
|
1,173,377
|
133,540
|
1,538,786
|
|||||||||||
Total
Operating Expenses
|
2,842,974
|
476,914
|
6,462,421
|
745,739
|
10,092,927
|
|||||||||||
LOSS
FROM OPERATIONS
|
(2,842,974
|
)
|
(476,914
|
)
|
(6,462,421
|
)
|
(745,739
|
)
|
(10,092,927
|
)
|
||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Interest
income
|
18,173
|
36,146
|
28,961
|
47,697
|
152,923
|
|||||||||||
Interest
expense
|
(946,129
|
)
|
(64,550
|
)
|
(1,036,053
|
)
|
(97,808
|
)
|
(1,260,099
|
)
|
||||||
Total
Other Income (Expense)
|
(927,956
|
)
|
(28,404
|
)
|
(1,007,092
|
)
|
(50,111
|
)
|
(1,107,176
|
)
|
||||||
NET
LOSS
|
$
|
(3,770,930
|
)
|
$
|
(505,318
|
)
|
$
|
(7,469,513
|
)
|
$
|
(795,850
|
)
|
$
|
(11,200,103
|
)
|
|
NET
LOSS PER SHARE – BASIC AND DILUTED
|
$
|
(0.29
|
)
|
$
|
(0.05
|
)
|
$
|
(0.65
|
)
|
$
|
(0.08
|
)
|
||||
WEIGHTED
AVERAGE SHARES OUTSTANDING – BASIC AND
DILUTED
|
13,175,944
|
9,968,797
|
11,572,370
|
9,968,797
|
Common
Stock
|
|
Additional Paid-
|
|
Deficit
Accumulated
During the
Development
|
|
Total Stockholders'
|
||||||||||
Shares
|
Amount
|
In Capital
|
Stage
|
Equity (Deficiency)
|
||||||||||||
Issuance
of common stock to founders at $0.0001 per share
|
9,968,797
|
$
|
997
|
$
|
4,003
|
$
|
-
|
$
|
5,000
|
|||||||
Issuance
of stock options for services
|
-
|
-
|
98,000
|
-
|
98,000
|
|||||||||||
Net
loss, period from August 1, 2005 (inception) through December 31,
2007
|
-
|
-
|
-
|
(3,730,590
|
)
|
(3,730,590
|
)
|
|||||||||
Balance
at December 31, 2007
|
9,968,797
|
$
|
997
|
$
|
102,003
|
$
|
(3,730,590
|
)
|
$
|
(3,627,590
|
)
|
|||||
Common
stock sold in private placement, net of issuance costs of
$141,646
|
7,360,689
|
736
|
17,689,301
|
-
|
17,690,037
|
|||||||||||
Conversion
of notes payable upon closing of private placement
|
1,962,338
|
196
|
4,278,322
|
-
|
4,278,518
|
|||||||||||
Discount
arising from note conversion
|
-
|
-
|
475,391
|
-
|
475,391
|
|||||||||||
Warrants
issued in connection with note conversion
|
-
|
-
|
348,000
|
-
|
348,000
|
|||||||||||
Reverse
merger transaction-Elimination
of accumulated deficit
|
-
|
-
|
(120,648
|
)
|
-
|
(120,648
|
)
|
|||||||||
Previously
issued Laurier common stock
|
1,100,200
|
110
|
120,538
|
-
|
120,648
|
|||||||||||
Warrants
issued for services
|
-
|
-
|
480,400
|
-
|
480,400
|
|||||||||||
Employee
stock based compensation
|
-
|
-
|
400,818
|
-
|
400,818
|
|||||||||||
Consultant
stock based compensation
|
-
|
-
|
78,100
|
-
|
78,100
|
|||||||||||
Net
loss, six months ended June 30, 2008
|
(7,469,513
|
)
|
(7,469,513
|
)
|
||||||||||||
Balance
at June 30, 2008
|
20,392,024
|
$
|
2,039
|
$
|
23,852,225
|
$
|
(11,200,103
|
)
|
$
|
12,654,161
|
|
For the Six
Months Ended
June 30, 2008
|
For the Six
Months Ended
June 30, 2007
|
Cumulative Period
from August 1, 2005
(inception) Through
June 30, 2008
|
|||||||
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITES:
|
||||||||||
Net
loss
|
$
|
(7,469,513
|
)
|
$
|
(795,850
|
)
|
$
|
(11,200,103
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||
Depreciation
and amortization
|
38,598
|
5,269
|
51,707
|
|||||||
Stock
based compensation to employees
|
400,818
|
10,000
|
498,818
|
|||||||
Stock
based compensation to consultants
|
78,100
|
-
|
78,100
|
|||||||
Write-off
of intangible assets
|
-
|
-
|
85,125
|
|||||||
Warrants
issued for services
|
480,400
|
-
|
480,400
|
|||||||
Warrants
issued in connection with note conversion
|
348,000
|
-
|
348,000
|
|||||||
Note
discount arising from beneficial conversion feature
|
475,391
|
-
|
475,391
|
|||||||
Non-cash
interest expense
|
98,930
|
92,599
|
311,518
|
|||||||
Changes
in operating assets and liabilities:
|
||||||||||
Prepaid
expenses
|
(48,907
|
)
|
10,965
|
(122,999
|
)
|
|||||
Security
deposit
|
-
|
-
|
(12,165
|
)
|
||||||
Accounts
payable
|
745,474
|
(12,438
|
)
|
856,948
|
||||||
Accrued
expenses
|
(239,947
|
)
|
327,554
|
880,232
|
||||||
Due
to related parties
|
202,843
|
53,871
|
203,426
|
|||||||
Net
cash used in operating activities
|
(4,889,813
|
)
|
(308,030
|
)
|
(7,065,602
|
)
|
||||
|
||||||||||
CASH
FLOWS FROM INVESTING ACTIVITES:
|
||||||||||
Purchase
of equipment
|
(13,950
|
)
|
(2,098
|
)
|
(53,793
|
)
|
||||
Cash
paid for intangible assets
|
-
|
(35,479
|
)
|
(85,125
|
)
|
|||||
Proceeds
from related party advance
|
-
|
175,000
|
525,000
|
|||||||
Repayment
of related party advance
|
-
|
(525,000
|
)
|
(525,000
|
)
|
|||||
Net
cash used in investing activities
|
(13,950
|
)
|
(387,577
|
)
|
(138,918
|
)
|
||||
|
||||||||||
CASH
FLOWS FROM FINANCING ACTIVITES:
|
||||||||||
Deferred
financing fees paid
|
(20,000
|
)
|
(25,000
|
)
|
(45,000
|
)
|
||||
Proceeds
from issuance of common stock in private placement, net
|
17,690,037
|
-
|
17,690,037
|
|||||||
Proceeds
from issuance
of common stock to founders
|
-
|
-
|
5,000
|
|||||||
Proceeds
from issuance of notes payable
|
1,000,000
|
-
|
1,000,000
|
|||||||
Repayment
of notes payable
|
(1,000,000
|
)
|
-
|
(1,000,000
|
)
|
|||||
Proceeds
from issuance of convertible notes payable
|
-
|
3,867,000
|
3,967,000
|
|||||||
Net
cash provided by financing activities
|
17,670,037
|
3,842,000
|
21,617,037
|
|||||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
12,766,274
|
3,146,393
|
14,412,517
|
|||||||
CASH
AND CASH EQUIVALENTS – BEGINNING OF PERIOD
|
1,646,243
|
18,201
|
-
|
|||||||
CASH
AND CASH EQUIVALENTS – END OF PERIOD
|
$
|
14,412,517
|
$
|
3,164,594
|
$
|
14,412,517
|
||||
Supplemental
Disclosure of Non-Cash and Financing Activities:
|
||||||||||
Conversion
of notes payable and interest to common stock
|
$
|
4,277,729
|
$
|
-
|
$
|
4,277,729
|
||||
Common
shares of Laurier issued in reverse merger transaction
|
$
|
110
|
-
|
$
|
110
|
Description
|
Estimated Useful Life
|
|
Office
equipment and furniture
|
5
to 7 years
|
|
Leasehold
improvements
|
3
years
|
|
Computer
equipment
|
3
years
|
June 30, 2008
|
June 30, 2007
|
||||||
Warrants
to purchase common stock
|
495,252
|
—
|
|||||
Options
to purchase common stock
|
1,116,508
|
548,286
|
|||||
Total
potential dilutive securities
|
1,611,760
|
548,286
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Term
|
5
years
|
10
years
|
5-10
years
|
10
years
|
|||||||||
Volatility
|
89
|
%
|
65
|
%
|
83-89
|
%
|
65
|
%
|
|||||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
|||||
Risk-free
interest rate
|
2.5
|
%
|
4.9
|
%
|
2.5-2.8
|
%
|
4.9
|
%
|
|||||
Forfeiture
rate
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
|
Number
Outstanding
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
||||||
Total
outstanding options
|
1,116,508
|
$
|
1.43
|
8.29 years
|
$
|
2,031,306
|
|||||||
Total
exercisable options
|
548,286
|
$
|
1.28
|
7.25 years
|
$
|
1,058,089
|
|
For
the Six Months Ended
June
30, 2008
|
For the Six
Months Ended
June
30, 2007
|
|||||||||||
|
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||
Balance
at January 1, 2008
|
687,849
|
$
|
1.32
|
149,532
|
$
|
0.13
|
|||||||
Granted
under the Plan
|
428,659
|
2.42
|
398,754
|
1.00
|
|||||||||
Exercised
|
—
|
—
|
—
|
—
|
|||||||||
Surrendered/cancelled
|
—
|
—
|
—
|
—
|
|||||||||
Forfeited
|
—
|
—
|
—
|
—
|
|||||||||
Outstanding
at June 30, 2008 and 2007, respectively
|
1,116,508
|
$
|
1.43
|
548,286
|
$
|
0.76
|
|||||||
Exercisable
at June 30, 2008 and 2007, respectively
|
548,286
|
$
|
1.28
|
149,532
|
$
|
0.13
|
2008
|
$
|
26,000
|
||
2009
|
55,000
|
|||
52,000
|
||||
Total
|
$
|
133,000
|
ASSETS
|
||||
CURRENT
ASSETS:
|
||||
Prepaid
Expense
|
3,333
|
|||
TOTAL
ASSETS
|
$
|
3,333
|
||
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
||||
|
||||
CURRENT
LIABILITIES:
|
||||
Note
payable—related party
|
$
|
17,132
|
||
TOTAL
CURRENT LIABILITIES
|
17,132
|
|||
|
||||
STOCKHOLDERS’
DEFICIENCY:
|
||||
|
||||
Preferred
stock, $0.0001 par value, 20,000,000 Shares
authorized, none issued and outstanding Common Stock, $0.0001
par value,
80,000,000 shares
authorized, 5,501,000 shares issued and
outstanding as of December 31,
2007
|
550
|
|||
Additional
paid-in capital
|
120,098
|
|||
Accumulated
deficit during development stage
|
(134,447
|
)
|
||
TOTAL
STOCKHOLDERS’ DEFICIENCY
|
(13,779
|
)
|
||
|
||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
$
|
3,333
|
|
YEAR ENDED DECEMBER 31,
|
FROM
INCEPTION
(MAR. 8, 2000)
TO
|
||||||||
|
2007
|
2006
|
DEC.
31, 2007
|
|||||||
|
|
|
|
|||||||
REVENUES
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
|
||||||||||
OPERATING
AND EXPENSES:
|
||||||||||
General
and administrative
|
18,357
|
15,270
|
126,385
|
|||||||
TOTAL
OPERATING EXPENSES
|
18,357
|
15,270
|
126,385
|
|||||||
|
||||||||||
LOSS
FROM CONTINUING OPERATIONS
|
(18,357
|
)
|
(15,270
|
)
|
(126,385
|
)
|
||||
|
||||||||||
DISCONTINUED
OPERATIONS:
|
||||||||||
Gain/Loss
from Subsidiary (including gain on disposal of $85,326)
|
55,585
|
-
|
(8,062
|
)
|
||||||
GAIN/LOSS
FROM DISCONTINUED OPERATIONS
|
55,585
|
-
|
(8,062
|
)
|
||||||
|
||||||||||
NET
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
|
37,228
|
(15,270
|
)
|
(134,447
|
)
|
|||||
|
||||||||||
Provision
for Income Taxes
|
-
|
-
|
-
|
|||||||
|
||||||||||
NET
INCOME (LOSS)
|
$
|
37,228
|
$
|
(15,270
|
)
|
$
|
(134,447
|
)
|
||
BASIC
AND DILUTED INCOME (LOSS) PER COMMON SHARE
|
||||||||||
Continued
operation
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||||
Discontinued
operation
|
$
|
0.01
|
$
|
(0.00
|
)
|
|||||
Net
income (loss)
|
$
|
0.01
|
$
|
(0.00
|
)
|
|||||
WEIGHTED
AVERAGE NUMBER OF
|
||||||||||
SHARES
OUTSTANDING—BASIC AND DILUTED
|
5,501,000
|
5,501,000
|
|
Common Stock
|
Common
Stock
Amount
|
Additional
Paid-in
Capital
|
Deficit
Accumulated
During
Development
Stage
|
Total
|
|||||||||||
Beginning balance, March
8, 2000
|
$
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Stock
issued for cash on August 1,
|
||||||||||||||||
2000
@ $0.0001 per share
|
5,000,000
|
500
|
500
|
|||||||||||||
Net
income, December 31, 2000
|
||||||||||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2000
|
5,000,000
|
500
|
500
|
|||||||||||||
|
||||||||||||||||
Stock
issued for cash on March 16, 2001 @ $0.15 per share
|
231,000
|
23
|
34,627
|
34,650
|
||||||||||||
Stock
issued for cash on May 1, 2001 @ $0.15 per share
|
5,000
|
750
|
750
|
|||||||||||||
Stock
issued for cash on June 8, 2001 @ $0.15 per share
|
20,000
|
2
|
2,998
|
3,000
|
||||||||||||
Stock
issued for cash on July 18, 2001 @ $0.15 per share
|
10,000
|
1
|
1,499
|
1,500
|
||||||||||||
Stock
issued for cash on August 2, 2001 @ $0.15 per share
|
110,000
|
11
|
16,489
|
16,500
|
||||||||||||
Stock
issued for cash on August 13, 2001 @ $0.15 per share
|
50,000
|
5
|
7,495
|
7,500
|
||||||||||||
Stock
issued for cash on September 7, 2001 @ $0.15 per share
|
10,000
|
1
|
1,499
|
1,500
|
||||||||||||
Stock
issued for cash on October 25, 2001 @ $0.15 per share
|
15,000
|
2
|
2,248
|
2,250
|
||||||||||||
Net
loss, December 31, 2001
|
|
|
|
(47,341
|
)
|
(47,341
|
)
|
|||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2001
|
5,451,000
|
545
|
67,605
|
(47,341
|
)
|
20,809
|
||||||||||
|
||||||||||||||||
Stock
issued for cash on March 1, 2002 @ $0.15 per share
|
50,000
|
5
|
7,495
|
7,500
|
||||||||||||
Net
loss, December 31, 2002
|
|
(46,364
|
)
|
(46,364
|
)
|
|||||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2002
|
5,501,000
|
550
|
75,100
|
(93,705
|
)
|
(18,055
|
)
|
|||||||||
|
||||||||||||||||
Capital
contribution
|
12,213
|
12,213
|
||||||||||||||
Net
loss, December 31, 2003
|
(35,565
|
)
|
(35,565
|
)
|
||||||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2003
|
5,501,000
|
$
|
550
|
$
|
87,313
|
$
|
(129,270
|
)
|
$
|
(41,407
|
)
|
|||||
|
||||||||||||||||
Capital
contribution
|
5,253
|
5,253
|
||||||||||||||
Net
loss, December 31, 2004
|
|
|
|
(11,298
|
)
|
(11,298
|
)
|
|||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2004
|
5,501,000
|
$
|
550
|
$
|
92,566
|
$
|
(140,568
|
)
|
$
|
(47,452
|
)
|
|||||
|
||||||||||||||||
Capital
contribution
|
27,532
|
27,532
|
||||||||||||||
Net
loss, December 31, 2005
|
|
|
|
(15,837
|
)
|
(15,837
|
)
|
|||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2005
|
5,501,000
|
$
|
550
|
$
|
120,098
|
$
|
(156,405
|
)
|
$
|
(35,757
|
)
|
|||||
|
||||||||||||||||
Net
loss, December 31, 2006
|
(15,270
|
)
|
(15,270
|
)
|
||||||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2006
|
5,501,000
|
$
|
550
|
$
|
120,098
|
$
|
(171,675
|
)
|
$
|
(51,027
|
)
|
|||||
|
||||||||||||||||
Net
Profit, December 31, 2007
|
37,228
|
37,228
|
||||||||||||||
|
||||||||||||||||
BALANCE,
DECEMBER 31, 2007
|
5,501,000
|
$
|
550
|
$
|
120,098
|
$
|
134,447
|
$
|
(13,799
|
)
|
|
YEAR ENDED DEC. 31
|
FROM
INCEPTION
(MAR. 8, 2000)
TO
|
||||||||
|
2007
|
2006
|
DEC.
31, 2007
|
|||||||
|
|
|
|
|||||||
OPERATING
ACTIVITIES:
|
||||||||||
Net
income (loss)
|
$
|
37,228
|
$
|
(15,270
|
)
|
$
|
(134,447
|
)
|
||
Adjustments
to reconcile net income (loss) to net
cash provided by (used in) operating
activities:
|
||||||||||
Depreciation
expense
|
369
|
713
|
3,744
|
|||||||
Changes
in operating assets and liabilities:
|
||||||||||
Increase
(decrease) in:
|
||||||||||
Accounts
receivable
|
-
|
554
|
-
|
|||||||
Prepaid
Expense
|
(3,333
|
)
|
(3,333
|
)
|
||||||
Accounts
payable
|
(12,000
|
)
|
6,000
|
-
|
||||||
Sales
tax payable
|
(43
|
)
|
-
|
-
|
||||||
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
22,221
|
(8,003
|
)
|
(134,036
|
)
|
|||||
|
||||||||||
INVESTING
ACTIVITIES:
|
||||||||||
Acquisition
of property & equipment
|
-
|
(207
|
)
|
(3,744
|
)
|
|||||
NET
CASH USED IN INVESTING ACTIVITIES
|
-
|
(207
|
)
|
(3,744
|
)
|
|||||
|
||||||||||
FINANCING
ACTIVITIES:
|
||||||||||
Proceeds
from note payable
|
(14,193
|
)
|
8,459
|
17,132
|
||||||
Increase
in loan from officer
|
(8,995
|
)
|
-
|
-
|
||||||
Common
stock issued for cash
|
-
|
550
|
||||||||
Additional
paid-in capital
|
-
|
120,098
|
||||||||
NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
(23,188
|
)
|
8,459
|
137,780
|
||||||
|
||||||||||
INCREASE
(DECREASE) IN CASH
|
(967
|
)
|
249
|
-
|
||||||
|
||||||||||
CASH
- BEGINNING OF YEAR
|
967
|
718
|
-
|
|||||||
CASH
- END OF YEAR
|
$
|
-
|
$
|
967
|
$
|
-
|
||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|||||||
Cash
paid for interest
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
Cash
paid for taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
NOTE
1
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND
ORGANIZATION
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
NOTE
3
|
WARRANTS
AND OPTIONS
|
NOTE
4
|
GOING
CONCERN
|
NOTE
5
|
PROPERTY
AND EQUIPMENT
|
|
December
31,
|
December
31,
|
|||||
|
2007
|
2006
|
|||||
|
|
|
|||||
Office
Equipment
|
$
|
–
|
$
|
2,528
|
|||
Equipment
|
–
|
1,216
|
|||||
|
|||||||
Total
Property and Equipment
|
–
|
3,744
|
|||||
|
|||||||
Less:
Accumulated Depreciation
|
–
|
(3,375
|
)
|
||||
|
|||||||
Net
Property and Equipment
|
–
|
369
|
NOTE
6
|
NOTE
PAYABLE - (A RELATED
PARTY)
|
NOTE
7
|
RELATED
PARTY TRANSACTION
|
NOTE
7
|
RELATED
PARTY TRANSACTION
|
NOTE
8
|
INCOME
TAXES
|
|
As of
December
31, 2007 |
|||
|
|
|||
Deferred
tax assets:
|
|
|||
Net
operating tax carryforwards
|
$
|
45,712
|
||
Other
|
0
|
|||
|
||||
Gross
deferred tax assets
|
45,712
|
|||
Valuation
allowance
|
(45,712
|
)
|
||
|
||||
Net
deferred tax assets
|
$
|
0
|
NOTE
9
|
SCHEDULE
OF NET OPERATING LOSSES
|
2000
Net Operating Income
|
$
|
0
|
||
2001
Net Operating Loss
|
(47,341
|
)
|
||
2002
Net Operating Loss
|
(46,364
|
)
|
||
2003
Net Operating Loss
|
(35,565
|
)
|
||
2004
Net Operating Loss
|
(11,298
|
)
|
||
2005
Net Operating Loss
|
(15,837
|
)
|
||
2006
Net Operating Loss
|
(15,270
|
)
|
||
2007
Net Operating Income
|
37,228
|
|||
Net
Operating Loss
|
$
|
(134,447
|
)
|
NOTE
10
|
STOCK
TRANSACTIONS
|
NOTE
11
|
STOCKHOLDERS'
EQUITY
|