þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934.
|
¨
|
TRANSACTION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
New
York
|
11-0853640
|
(State
or other Jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
incorporation
or organization)
|
|
616
N. North Court, Suite 120
|
|
Palatine,
Illinois
|
60067
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Page
|
|
Item
1. Financial Statements
|
|
Consolidated
Balance Sheets-June 30, 2005 (Unaudited) and December 31,
2004
|
2
|
Consolidated
Statements of Operations (Unaudited) - Three months and six months
ended
June 30, 2005 and June 30, 2004
|
4
|
Consolidated
Statements of Cash Flows (Unaudited) - Six months ended June 30,
2005 and
June 30, 2004
|
5
|
Consolidated
Statement of Stockholders' Equity (Deficit) (Unaudited) - Six months
ended
June 30, 2005
|
7
|
Notes
to Consolidated Financial Statements
|
8
|
Item
2. Management's Discussion and Analysis of
Financial
Condition and Results of Operations
|
17
|
Risk
Factors Relating to the Company
|
31
|
Item
4. Controls and Procedures
|
40
|
PART
II. OTHER INFORMATION
|
|
Item
2. Changes in Securities, Use of Proceeds
and Issuer
Purchases of Equity Securities
|
40
|
Item
6. Exhibits
|
40
|
SIGNATURES
|
41
|
(Unaudited)
|
|||||||
June
30,
|
December
31,
|
||||||
2005
|
2004
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
1,033
|
$
|
3,103
|
|||
Cash
and cash equivalents- restricted
|
200
|
--
|
|||||
Prepaid
expenses and other current assets
|
216
|
307
|
|||||
Total
current assets
|
1,449
|
3,410
|
|||||
PROPERTY,
PLANT & EQUIPMENT, NET
|
1,422
|
1,555
|
|||||
OTHER
ASSETS AND DEPOSITS
|
7
|
2
|
|||||
TOTAL
ASSETS
|
$
|
2,878
|
$
|
4,967
|
|||
(Unaudited)
|
|||||||
June
30,
|
December
31,
|
||||||
2005
|
2004
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Senior
secured term note payable
|
$
|
1,000
|
$
|
--
|
|||
Current
maturities of capital lease obligations
|
30
|
29
|
|||||
Accrued
expenses
|
369
|
959
|
|||||
Total
current liabilities
|
1,399
|
988
|
|||||
TERM
NOTE PAYABLE
|
5,000
|
5,000
|
|||||
CAPITAL
LEASE OBLIGATIONS, less current maturities
|
48
|
64
|
|||||
TOTAL
LIABILITIES
|
6,447
|
6,052
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
|||||||
Convertible
Preferred Stock - $.01 par value; authorized
|
|||||||
290,000,000
shares; issued and outstanding,
|
|||||||
217,694,414
and 217,972,986 shares, at June 30, 2005
|
|||||||
and
December 31, 2004, respectively
|
2,177
|
2,180
|
|||||
Common
stock - $.01 par value; authorized
|
|||||||
650,000,000
shares; issued and outstanding,
|
|||||||
23,152,438
and 22,466,967 shares at June 30, 2005
|
|||||||
and
December 31, 2004, respectively
|
232
|
225
|
|||||
Additional
paid-in capital
|
277,378
|
277,129
|
|||||
Unearned
compensation
|
(485
|
)
|
(1,078
|
)
|
|||
Accumulated
deficit
|
(282,871
|
)
|
(279,541
|
)
|
|||
STOCKHOLDERS’
DEFICIT
|
(3,569
|
)
|
(1,085
|
)
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$
|
2,878
|
$
|
4,967
|
|||
JUNE
30,
|
|||||||||||||
|
FOR
THE SIX
MONTHS
ENDED
|
FOR
THE THREE
MONTHS
ENDED
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Net
revenues
|
$
|
--
|
$
|
838
|
$
|
--
|
$
|
210
|
|||||
Cost
of manufacturing
|
--
|
1,437
|
--
|
184
|
|||||||||
Research
and development
|
1,682
|
1,242
|
729
|
1,004
|
|||||||||
Selling,
marketing, general and administrative
|
1,492
|
2,363
|
537
|
1,142
|
|||||||||
Loss
from operations
|
(3,174
|
)
|
(4,204
|
)
|
(1,266
|
)
|
(2,120
|
)
|
|||||
Other
income (expense)
|
|||||||||||||
Interest
expense
|
(263
|
)
|
(2,152
|
)
|
(137
|
)
|
(1,194
|
)
|
|||||
Interest
income
|
24
|
22
|
9
|
15
|
|||||||||
Amortization
of deferred debt discount
|
|||||||||||||
and
private debt offering costs
|
--
|
(24,655
|
)
|
--
|
(13,812
|
)
|
|||||||
Gain
on asset disposals
|
83
|
1,755
|
13
|
1
|
|||||||||
Gain
on debt restructure
|
--
|
12,401
|
--
|
--
|
|||||||||
Other
|
--
|
401
|
(1
|
)
|
(2
|
)
|
|||||||
Total
other expense
|
(156
|
)
|
(12,228
|
)
|
(116
|
)
|
(14,992
|
)
|
|||||
NET
LOSS
|
$
|
(3,330
|
)
|
$
|
(16,432
|
)
|
$
|
(1,382
|
)
|
$
|
(17,112
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.15
|
)
|
$
|
(0.76
|
)
|
$
|
(0.06
|
)
|
$
|
(0.79
|
)
|
|
Weighted
average number of outstanding shares
|
22,772,803
|
21,612,382
|
22,948,679
|
21,623,061
|
|||||||||
June
30,
|
|||||||
2005
|
2004
|
||||||
Cash
flows from Operating Activities:
|
|||||||
Net
loss
|
$
|
(3,330
|
)
|
$
|
(16,432
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|||||||
Depreciation
and amortization
|
65
|
251
|
|||||
Amortization
of deferred debt discount and private debt offering costs
|
--
|
24,655
|
|||||
Amortization
of deferred product acquisition costs
|
--
|
205
|
|||||
Non-cash
compensation charge on options
|
593
|
--
|
|||||
Gain
on asset disposals
|
(82
|
)
|
(1,755
|
)
|
|||
Gain
on debt restructure
|
--
|
(12,401
|
)
|
||||
Changes
in assets and liabilities
|
|||||||
Accounts
receivable
|
--
|
315
|
|||||
Inventories
|
--
|
312
|
|||||
Prepaid
expenses and other current assets
|
91
|
182
|
|||||
Other
assets and deposits
|
(5
|
)
|
149
|
||||
Accounts
payable
|
--
|
(1,895
|
)
|
||||
Accrued
expenses
|
(338
|
)
|
2,665
|
||||
Total
adjustments
|
324
|
12,683
|
|||||
Net
cash used in operating activities
|
(3,006
|
)
|
(3,749
|
)
|
|||
Cash
flows from Investing Activities:
|
|||||||
Capital
expenditures
|
(34
|
)
|
(99
|
)
|
|||
Proceeds
from asset disposals
|
184
|
2,002
|
|||||
Net
cash provided by investing activities
|
150
|
1,903
|
|||||
Cash
flows from Financing Activities:
|
|||||||
Payments
on senior secured term note payable
|
--
|
(4,000
|
)
|
||||
Proceeds
from issuance of senior secured term note payable, less restricted
cash
|
800
|
--
|
|||||
Payments
on capital lease obligations
|
(14
|
)
|
(30
|
)
|
|||
Proceeds
from issuance of subordinated convertible debentures
|
--
|
11,951
|
|||||
Payments
to Department of Justice
|
--
|
(434
|
)
|
||||
Net
cash provided by financing activities
|
786
|
7,487
|
|||||
(Decrease)
increase in cash and cash equivalents
|
(2,070
|
)
|
5,641
|
||||
Cash
and cash equivalents at beginning of period
|
3,103
|
942
|
|||||
Cash
and cash equivalents at end of period
|
$
|
1,033
|
$
|
6,583
|
|||
Cash
paid for interest
|
$
|
6
|
$
|
47
|
|||
1. |
The
Company has issued 406,899 shares of Common Stock as payment of $253,000
of Term Note Payable accrued
interest.
|
2. |
The
Company has issued 278,572 shares of Common Stock as result of the
conversion of 278,572 shares of the Company’s Series C-1 Junior Preferred
Stock.
|
1. |
The
Company's Convertible Subordinated Debentures contained beneficial
conversation features, which were valued at
$14,000,000.
|
2. |
The
Company has repaid $166,000 of indebtedness in the form of product
deliveries.
|
3. |
Bridge
Loans of $2,000,000 and accrued interest of $49,000 were converted
into
like amounts of Convertible Subordinated
Debentures.
|
4. |
The
Company has issued 114,322 shares of Common Stock as payment of $63,000
of
Secured Term Note Payable accrued
interest.
|
Preferred
Stock
$.01
Par Value
|
Common
Stock
$.01
Par Value
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Unearned
Compensation
|
Accumulated
Deficit
|
Total
|
||||||||||||||||||
Balance
at January 1, 2005
|
217,973
|
$
|
2,180
|
22,467
|
$
|
225
|
$
|
277,129
|
$
|
(1,078
|
)
|
$
|
(279,541
|
)
|
$
|
(1,085
|
)
|
||||||||
Issuance
of Common Shares for interest
|
--
|
--
|
407
|
4
|
249
|
--
|
--
|
253
|
|||||||||||||||||
Conversion
of Series C-1 Junior Convertible Preferred Shares
|
(279
|
)
|
(3
|
)
|
279
|
3
|
--
|
--
|
--
|
--
|
|||||||||||||||
Amortization
of unearned compensation
|
--
|
--
|
--
|
--
|
--
|
593
|
--
|
593
|
|||||||||||||||||
Net
loss
|
--
|
--
|
--
|
--
|
--
|
--
|
(3,330
|
)
|
(3,330
|
)
|
|||||||||||||||
Balance
at June 30, 2005
|
217,694
|
$
|
2,177
|
23,153
|
$
|
232
|
$
|
277,378
|
$
|
(485
|
)
|
$
|
(282,871
|
)
|
$
|
(3,569
|
)
|
||||||||
JUNE
30,
|
|||||||||||||
|
FOR
THE
SIX
MONTHS ENDED
|
FOR
THE
THREE
MONTHS ENDED
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(In
thousands, except per share data)
|
|||||||||||||
Net
loss, as reported
|
$
|
(3,330
|
)
|
$
|
(16,432
|
)
|
$
|
(1,382
|
)
|
$
|
(17,112
|
)
|
|
Deduct:
Total stock-based employee compensation
expense
determined under fair value-based method
for
all awards
|
(59
|
)
|
(111
|
)
|
(28
|
)
|
(47
|
)
|
|||||
Net
loss, pro forma
|
$
|
(3,389
|
)
|
$
|
(16,543
|
)
|
$
|
(1,410
|
)
|
$
|
(17,159
|
)
|
|
Weighted
average number of outstanding shares
|
22,773
|
21,612
|
22,949
|
21,623
|
|||||||||
Earnings
per share:
|
|||||||||||||
Basic
and diluted loss per share, as reported
|
$
|
(0.15
|
)
|
$
|
(0.76
|
)
|
$
|
(0.06
|
)
|
$
|
(0.79
|
)
|
|
Basic
and diluted loss per share, pro forma
|
$
|
(0.15
|
)
|
$
|
(0.77
|
)
|
$
|
(0.06
|
)
|
$
|
(0.79
|
)
|
|
JUNE
30,
|
|||||||||||||
|
FOR
THE
SIX
MONTHS ENDED
|
FOR
THE
THREE
MONTHS ENDED
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(In
thousands, except per share data)
|
|||||||||||||
Numerator:
|
|||||||||||||
Net
loss
|
$
|
(3,330
|
)
|
$
|
(16,432
|
)
|
$
|
(1,382
|
)
|
$
|
(17,112
|
)
|
|
Denominator:
|
|||||||||||||
Basic
weighted average of shares outstanding
|
22,773
|
21,612
|
22,949
|
21,623
|
|||||||||
Convertible
debentures
|
--
|
--
|
--
|
--
|
|||||||||
Convertible
preferred stock
|
--
|
--
|
--
|
--
|
|||||||||
Warrants
|
--
|
--
|
--
|
--
|
|||||||||
Stock
options
|
--
|
--
|
--
|
--
|
|||||||||
Diluted
weighted average of shares outstanding
|
22,773
|
21,612
|
22,949
|
21,623
|
|||||||||
Earnings
per share:
|
|||||||||||||
Basic
and diluted loss per share
|
$
|
(0.15
|
)
|
$
|
(0.76
|
)
|
$
|
(0.06
|
)
|
$
|
(0.79
|
)
|
|
June
30, 2005
|
||||||||||||||||
Convertible
Preferred Stock
|
Authorized
Shares
|
Issued
and Outstanding
Shares
|
$.01
Par
Value
|
Common
Stock Equivalents
|
Liquidation
Preference
|
|||||||||||
Series
A
|
45,000,000
|
21,963,757
|
$
|
219,638
|
109,818,785
|
$
|
70,558,570
|
|||||||||
Series
B Junior
|
25,000,000
|
20,246,506
|
202,465
|
20,246,506
|
6,924,305
|
|||||||||||
Series
C-1 Junior
|
70,000,000
|
56,143,987
|
561,440
|
56,143,987
|
32,428,767
|
|||||||||||
Series
C-2 Junior
|
50,000,000
|
37,433,096
|
374,331
|
37,433,096
|
22,433,655
|
|||||||||||
Series
C-3 Junior
|
100,000,000
|
81,907,068
|
819,071
|
81,907,068
|
28,511,850
|
|||||||||||
Total
|
290,000,000
|
217,694,414
|
$
|
2,176,945
|
305,549,442
|
$
|
160,857,147
|
|||||||||
June
30, 2005
|
December
31, 2004
|
||||||
(In
thousands)
|
|||||||
Bonus,
Payroll, Payroll Taxes and Benefits
|
67
|
573
|
|||||
Legal
Fees
|
75
|
124
|
|||||
Audit
Examination and Tax Preparation Fees
|
51
|
85
|
|||||
Litigation
Settlement
|
35
|
25
|
|||||
Franchise
Taxes
|
60
|
--
|
|||||
Property
and Sales Taxes
|
53
|
30
|
|||||
Medicaid
Rebates
|
16
|
50
|
|||||
Regulatory,
Trademarks and Patent Consulting
|
12
|
40
|
|||||
Other
|
--
|
32
|
|||||
|
$
|
369
|
$
|
959
|
6/30/05
NET
REVENUES
|
6/30/04
NET
REVENUES
|
6/30/05-6/30/04
NET
REVENUES
CHANGE
($)
|
6/30/05-6/30/04
NET
REVENUES
CHANGE
(%)
|
$
--
|
$838
|
$(838)
|
(100%)
|
6/30/05
COST
OF
MANUFACTURING
|
6/30/04
COST
OF
MANUFACTURING
|
6/30/05-6/30/04
COST
OF
MANUFACTURING
CHANGE
($)
|
6/30/05-6/30/04
COST
OF
MANUFACTURING
CHANGE
(%)
|
$
--
|
$1,437
|
$(1,437)
|
(100%)
|
6/30/05
R&D
EXPENSES
|
6/30/04
R&D
EXPENSES
|
6/30/05-6/30/04
R&D
EXPENSES
CHANGE
($)
|
6/30/05-6/30/04
R&D
EXPENSES
CHANGE
(%)
|
$1,682
|
$1,242
|
$440
|
35.4%
|
6/30/05
SELLING,
MARKETING,
G&A
EXPENSES
|
6/30/04
SELLING,
MARKETING,
G&A
EXPENSES
|
6/30/05-6/30/04
SELLING,
MARKETING,
G&A
EXPENSES
CHANGE
($)
|
6/30/05-6/30/04
SELLING,
MARKETING,
G&A
EXPENSES
CHANGE
(%)
|
$1,492
|
$2,363
|
$(871)
|
(36.9%)
|
6/30/05
ENVIRONMENTAL
COMPLIANCE
EXPENSES
|
6/30/04
ENVIRONMENTAL
COMPLIANCE
EXPENSES
|
6/30/05-6/30/04
ENVIRONMENTAL
COMPLIANCE
EXPENSES
CHANGE
($)
|
6/30/05-6/30/04
ENVIRONMENTAL
COMPLIANCE
EXPENSES
CHANGE
(%)
|
$
--
|
$180
|
$(180)
|
(100%)
|
6/30/05
INTEREST
EXPENSE,
NET
OF INTEREST INCOME
|
6/30/04
INTEREST
EXPENSE,
NET
OF INTEREST INCOME
|
6/30/05-6/30/04
INTEREST
EXPENSE,
NET
OF INTEREST INCOME
CHANGE
($)
|
6/30/05-6/30/04
INTEREST
EXPENSE,
NET
OF INTEREST INCOME
CHANGE
(%)
|
$239
|
$2,130
|
$(1,891)
|
(88.8%)
|
6/30/05
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS
|
6/30/04
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS
|
6/30/05-6/30/04
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS CHANGE
($)
|
6/30/05-6/30/04
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS CHANGE
(%)
|
$
-, consisting of
|
$24,655,
consisting of
|
$(24,655)
|
(100%)
|
·
$ - private debt offering costs
·
$
- deferred debt
discount
|
·
$234
private debt offering costs
·
$24,421
deferred debt discount
|
|
|
6/30/05
NET
LOSS
|
6/30/04
NET
LOSS
|
6/30/05-6/30/04
NET
(LOSS)
CHANGE
($)
|
6/30/05-6/30/04
NET
INCOME (LOSS) CHANGE
(%)
|
$(3,330)
|
$(16,432)
|
$(13,102)
|
(79.7%)
|
3
MONTHS
ENDED
6/30/05
NET
REVENUES
|
3
MONTHS
ENDED
6/30/04
NET
REVENUES
|
3
MONTHS ENDED
6/30/05-6/30/04
NET
REVENUES
CHANGE
($)
|
3
MONTHS ENDED
6/30/05-6/30/04
NET
REVENUES
CHANGE
(%)
|
$
--
|
$210
|
$(210)
|
(100%)
|
3
MONTHS ENDED
6/30/05
COST
OF
MANUFACTURING
|
3
MONTHS ENDED
6/30/04
COST
OF
MANUFACTURING
|
3
MONTHS ENDED
6/30/05-6/30/04
COST
OF MANUFACTURING
CHANGE
($)
|
3
MONTHS ENDED
6/30/05-6/30/04
COST
OF MANUFACTURING
CHANGE
(%)
|
$
--
|
$184
|
$(184)
|
(100%)
|
3
MONTHS ENDED
6/30/05
R&D
EXPENSES
|
3
MONTHS ENDED
6/30/04
R&D
EXPENSES
|
3
MONTHS ENDED
6/30/05-6/30/04
R&D
EXPENSES
CHANGE
($)
|
3
MONTHS ENDED
6/30/05-6/30/04
R&D
EXPENSES
CHANGE
(%)
|
$729
|
$1,004
|
$(275)
|
(27.4)%
|
3
MONTHS ENDED
6/30/05
SELLING,
MARKETING,
G&A
EXPENSES
|
3
MONTHS ENDED
6/30/04
SELLING,
MARKETING,
G&A
EXPENSES
|
3
MONTHS ENDED
6/30/05-6/30/04
SELLING,
MARKETING,
G&A
EXPENSES
CHANGE
($)
|
3
MONTHS ENDED
6/30/05-6/30/04
SELLING,
MARKETING,
G&A
EXPENSES
CHANGE
(%)
|
$537
|
$1,142
|
$(605)
|
(53.0%)
|
3
MONTHS ENDED
6/30/05
ENVIRONMENTAL
COMPLIANCE
EXPENSES
|
3
MONTHS ENDED
6/30/04
ENVIRONMENTAL
COMPLIANCE
EXPENSES
|
3
MONTHS ENDED
6/30/05-6/30/04
ENVIRONMENTAL
COMPLIANCE
EXPENSES
CHANGE
($)
|
3
MONTHS ENDED
6/30/05-6/30/04
ENVIRONMENTAL
COMPLIANCE
EXPENSES
CHANGE
(%)
|
$
-
|
$83
|
$(83)
|
(100%)
|
3
MONTHS ENDED
6/30/05
INTEREST
EXPENSE, NET OF INTEREST INCOME
|
3
MONTHS ENDED
6/30/04
INTEREST
EXPENSE, NET OF INTEREST INCOME
|
3
MONTHS ENDED
6/30/05-6/30/04
INTEREST
EXPENSE, NET OF INTEREST INCOME
CHANGE
($)
|
3
MONTHS ENDED
6/30/05-6/30/04
INTEREST
EXPENSE, NET OF INTEREST INCOME
CHANGE
(%)
|
$128
|
$1,179
|
($1,051)
|
(89.1%)
|
3
MONTHS ENDED
6/30/05
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS
|
3
MONTHS ENDED
6/30/04
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS
|
3
MONTHS ENDED
6/30/05-6/30/04
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS CHANGE
($)
|
3
MONTHS ENDED
6/30/05-6/30/04
DEFERRED
DEBT
DISCOUNT
AND PRIVATE DEBT OFFERING COSTS CHANGE
(%)
|
$
-, consisting of
|
$13,812,
consisting of
|
$(13,812)
|
(100%)
|
·
$
- private debt offering
costs
·
$
- deferred debt
discount
|
·
$136
private debt
offering costs
·
$13,676
deferred debt
discount
|
3
MONTHS ENDED
6/30/05
NET
LOSS
|
3
MONTHS ENDED
6/30/04
NET
LOSS
|
3/31/05-3/31/04
NET
LOSS
CHANGE
($)
|
3/31/05-3/31/04
NET
LOSS
CHANGE
(%)
|
$(1,382)
|
$(17,112)
|
$(15,730)
|
(91.9%)
|
TOTAL
|
DUE
IN
2005
|
DUE
IN
2006
|
DUE
IN
2007
|
DUE
THEREAFTER
|
||||||||||||
(In
thousands)
|
||||||||||||||||
Term
notes
|
$
|
6,000
|
$
|
--
|
$
|
1,000
|
$
|
5,000
|
$
|
--
|
||||||
Interest
on term notes
|
1,168
|
322
|
579
|
267
|
--
|
|||||||||||
Capital
leases
|
79
|
15
|
32
|
25
|
7
|
|||||||||||
Operating
leases
|
20
|
15
|
5
|
--
|
--
|
|||||||||||
Contract
research obligations
|
859
|
859
|
--
|
--
|
--
|
|||||||||||
Employment
agreements
|
395
|
270
|
125
|
--
|
--
|
|||||||||||
Total
Contractual Cash Obligations
|
$
|
8,521
|
$
|
1,481
|
$
|
1,741
|
$
|
5,292
|
$
|
7
|
||||||
· |
the
successful completion of the formulation development, clinical testing
and
acceptable regulatory review of our AversionTM
Technologies;
|
· |
the
receipt of a notice of allowance and issued patents from the US Patent
and
Trademark Office ("PTO") for the material claims in our patent
applications relating to the AversionTM
Technologies;
|
· |
the
AversionTM
Technologies not infringing third-party patents or other intellectual
property rights;
|
· |
the
interest of qualified third parties in our AversionTM
Technologies
and our Opioid Synthesis Technologies (collectively the “Technologies”)
and our ability to negotiate and execute commercially viable collaboration
agreements with qualified third parties relating to the Technologies.
|
· |
the
time required and expenses incurred in the development and
commercialization of products incorporating our AversionTM
Technologies;
|
· |
the
structure of any future collaborative or development agreements relating
to the AversionTM
Technologies, including the timing and amount of payments, if any,
that
may be received under possible future collaborative
agreements;
|
· |
our
ability to develop additional products utilizing the AversionTM
Technologies;
|
· |
our
ability to negotiate agreements with third parties for development,
manufacture, marketing, sale and distribution of products utilizing
our
AversionTM
Technologies;
|
· |
the
prosecution, defense and enforcement of patent claims and other
intellectual property rights relating to the AversionTM
Technologies; and
|
· |
the
commercialization of products incorporating our AversionTM
Technologies without infringing third-party patents or other intellectual
property rights.
|
· |
the
relative advantages and disadvantages of our Technologies and timing
to
commercial launch of products utilizing our Technologies compared
to
products incorporating competitive
technologies;
|
· |
the
timing of the receipt of marketing approvals and the countries in
which
such approvals are obtained;
|
· |
the
safety and efficacy of products incorporating our Technologies as
compared
to competitive products; and/or
|
· |
the
cost-effectiveness of products incorporating our Technologies and
the
ability to receive third-party
reimbursement.
|
· |
we
may initiate litigation or other proceedings against third parties
to
enforce our patent rights or other intellectual property
rights;
|
· |
we
may initiate litigation or other proceedings against third parties
to seek
to invalidate the patents held by such third parties or to obtain
a
judgment that our products or processes do not infringe such third
parties' patents;
|
· |
if
our competitors file patent applications that claim technology also
claimed by us, we may participate in interference or opposition
proceedings to determine the priority of invention;
and
|
· |
if
third parties initiate litigation claiming that our processes or
products
infringe their patent or other intellectual property rights, we will
need
to defend against such proceedings.
|
(a)
|
The
exhibits required to be filed as part of this Report on form 10-Q
are
listed in the attached Exhibit
Index.
|
ACURA PHARMACEUTICALS, INC. | ||
|
|
|
Date: July 13, 2005 | By: | /s/ Andrew D. Reddick |
|
||
Andrew
D. Reddick
President & Chief Executive
Officer
|
By: | /s/ Peter A. Clemens | |
|
||
Peter
A. Clemens
Senior VP & Chief Financial
Officer
|
Exhibit
|
Document
|
|
31.1 |
Certification
of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14
and
15d-14 of the Securities Exchange Act of 1934.
|
|
31.2 |
Certification
of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14
and
15d-14 of the Securities Exchange Act of 1934.
|
|
32.1 |
Certification
of Periodic Report by Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act
of 2002.
|
|
32.2 |
Certification
of Periodic Report by Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act
of 2002.
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Acura Pharmaceuticals,
Inc.;
|
2.
|
Based
on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to
make the statements made, in light of the circumstances under which
such
statements were made, not misleading with respect to the period covered
by
this quarterly report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material
respects
the financial condition, results of operations and cash flows of
the
registrant as of, and for, the periods presented in this quarterly
report;
|
4.
|
The
registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we
have:
|
a) |
designed
such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is
being
prepared;
|
b) |
evaluated
the effectiveness of the registrant's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
|
c) |
presented
in this quarterly report our conclusions about the effectiveness
of the
disclosure controls and procedures based on our evaluation as of
the
Evaluation Date;
|
5.
|
The
registrant's other certifying officers and I have disclosed, based
on our
most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing
the
equivalent function):
|
a. |
all
significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record,
process,
summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls;
and
|
b. |
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
|
6.
|
The
registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Acura Pharmaceuticals,
Inc.;
|
2.
|
Based
on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to
make the statements made, in light of the circumstances under which
such
statements were made, not misleading with respect to the period covered
by
this quarterly report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material
respects
the financial condition, results of operations and cash flows of
the
registrant as of, and for, the periods presented in this quarterly
report;
|
4.
|
The
registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we
have:
|
d) |
designed
such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is
being
prepared;
|
e) |
evaluated
the effectiveness of the registrant's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
|
f) |
presented
in this quarterly report our conclusions about the effectiveness
of the
disclosure controls and procedures based on our evaluation as of
the
Evaluation Date;
|
5.
|
The
registrant's other certifying officers and I have disclosed, based
on our
most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing
the
equivalent function):
|
a. |
all
significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record,
process,
summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls;
and
|
b. |
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
|
6.
|
The
registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|
(1) |
The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
(2) |
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
(3) |
The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
(4) |
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|