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)
|
PART
I. FINANCIAL INFORMATION
|
Page
|
|
3
|
||
4
|
||
5
|
||
7
|
||
8
|
||
16
|
||
31
|
||
41
|
||
PART
II. OTHER INFORMATION
|
||
41
|
||
41
|
||
42
|
(Unaudited)
|
|||||||
September
30,
|
|
December
31,
|
|||||
2005
|
2004
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
296
|
$
|
3,103
|
|||
Cash
and cash equivalents- restricted
|
200
|
–
|
|||||
Prepaid
expenses and other current assets
|
221
|
307
|
|||||
Total
current assets
|
717
|
3,410
|
|||||
PROPERTY,
PLANT & EQUIPMENT, NET
|
1,389
|
1,555
|
|||||
OTHER
ASSETS AND DEPOSITS
|
7
|
2
|
|||||
TOTAL
ASSETS
|
$
|
2,113
|
$
|
4,967
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Senior
secured term note payable
|
$
|
500
|
$
|
–
|
|||
Secured
term note payable
|
1,000
|
–
|
|||||
Current
maturities of capital lease obligations
|
30
|
29
|
|||||
Accrued
expenses
|
432
|
959
|
|||||
Total
current liabilities
|
1,962
|
988
|
|||||
SECURED
TERM NOTE PAYABLE
|
5,000
|
5,000
|
|||||
CAPITAL
LEASE OBLIGATIONS, less current maturities
|
40
|
64
|
|||||
TOTAL
LIABILITIES
|
7,002
|
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 September
30, 2005
and December 31, 2004, respectively
|
2,177
|
2,180
|
|||||
Common
stock - $.01 par value; authorized 650,000,000 shares; issued and
outstanding, 23,413,377 and 22,466,967 shares at September 30, 2005
and
December 31, 2004, respectively
|
234
|
225
|
|||||
Additional
paid-in capital
|
277,518
|
277,129
|
|||||
Unearned
compensation
|
(312
|
)
|
(1,078
|
)
|
|||
Accumulated
deficit
|
(284,506
|
)
|
(279,541
|
)
|
|||
STOCKHOLDERS’
DEFICIT
|
(4,889
|
)
|
(1,085
|
)
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$
|
2,113
|
$
|
4,967
|
|||
SEPTEMBER
30,
|
|||||||||||||
|
FOR
THE NINE MONTHS ENDED
|
FOR
THE THREE MONTHS ENDED
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Net
revenues
|
$
|
–
|
$
|
838
|
$
|
–
|
$
|
–
|
|||||
Cost
of manufacturing
|
–
|
1,437
|
–
|
–
|
|||||||||
Research
and development
|
2,527
|
3,179
|
845
|
1,937
|
|||||||||
Selling,
marketing, general and administrative
|
2,120
|
4,236
|
628
|
1,873
|
|||||||||
Loss
from operations
|
(4,647
|
)
|
(8,014
|
)
|
(1,473
|
)
|
(3,810
|
)
|
|||||
Other
income (expense)
|
|||||||||||||
Interest
expense
|
(434
|
)
|
(2,839
|
)
|
(171
|
)
|
(687
|
)
|
|||||
Interest
income
|
30
|
40
|
6
|
18
|
|||||||||
Amortization
and write-off of deferred debt discount and private debt offering
costs
|
–
|
(72,491
|
)
|
–
|
(47,836
|
)
|
|||||||
Gain
on asset disposals
|
85
|
2,388
|
3
|
633
|
|||||||||
Gain
on debt restructure
|
–
|
12,401
|
–
|
–
|
|||||||||
Other
|
1
|
603
|
–
|
202
|
|||||||||
Total
other expense
|
(318
|
)
|
(59,898
|
)
|
(162
|
)
|
(47,670
|
)
|
|||||
NET
LOSS
|
$
|
(4,965
|
)
|
$
|
(67,912
|
)
|
$
|
(1,635
|
)
|
$
|
(51,480
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.22
|
)
|
$
|
(3.12
|
)
|
$
|
(0.07
|
)
|
$
|
(2.35
|
)
|
|
Weighted
average number of outstanding shares
|
22,906,380
|
21,749,212
|
23,169,179
|
21,927,943
|
|||||||||
September
30,
|
|||||||
2005
|
2004
|
||||||
Cash
flows from Operating Activities:
|
|||||||
Net
loss
|
$
|
(4,965
|
)
|
$
|
(67,912
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|||||||
Depreciation
and amortization
|
97
|
328
|
|||||
Amortization
of deferred debt discount and private debt offering costs
|
–
|
30,684
|
|||||
Write-off
of unamortized deferred debt discount and private debt offering
costs
|
–
|
41,807
|
|||||
Non-cash
compensation charge on options
|
766
|
1,442
|
|||||
Gain
on asset disposals
|
(85
|
)
|
(2,388
|
)
|
|||
Gain
on debt restructure
|
–
|
(12,401
|
)
|
||||
Gain
on Department of Justice settlement
|
–
|
(403
|
)
|
||||
Bad
debt reserve
|
–
|
(428
|
)
|
||||
Changes
in assets and liabilities
|
|||||||
Accounts
receivable
|
–
|
729
|
|||||
Inventories
|
–
|
312
|
|||||
Prepaid
expenses and other current assets
|
86
|
176
|
|||||
Other
assets and deposits
|
(5
|
)
|
159
|
||||
Accounts
payable
|
–
|
(1,895
|
)
|
||||
Accrued
expenses
|
(137
|
)
|
1,650
|
||||
Total
adjustments
|
722
|
59,772
|
|||||
Net
cash used in operating activities
|
(4,243
|
)
|
(8,140
|
)
|
|||
Cash
flows from Investing Activities:
|
|||||||
Capital
expenditures
|
(34
|
)
|
(273
|
)
|
|||
Proceeds
from asset disposals
|
187
|
4,520
|
|||||
Net
cash provided by investing activities
|
153
|
4,247
|
|||||
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
|
1,300
|
–
|
|||||
Payments
on capital lease obligations
|
(21
|
)
|
(38
|
)
|
|||
Payments
on private offering costs
|
–
|
(315
|
)
|
||||
Proceeds
from issuance of subordinated convertible debentures
|
–
|
11,951
|
|||||
Proceeds
from exercise of stock options
|
|||||||
Payments
to Department of Justice
|
–
|
(31
|
)
|
||||
Net
cash provided by financing activities
|
1,283
|
7,567
|
|||||
(Decrease)
increase in cash and cash equivalents - unrestricted
|
(2,807
|
)
|
3,674
|
||||
Cash
and cash equivalents at beginning of period - unrestricted
|
3,103
|
942
|
|||||
Cash
and cash equivalents at end of period -
unrestricted
|
$
|
296
|
$
|
4,616
|
|||
Cash
paid for interest
|
$
|
44
|
$
|
47
|
|||
1. |
The
Company issued 632,588
shares of Common Stock as payment of $391,000 of Term Note payable
accrued
interest.
|
2. |
The
Company 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 valued at
$14,000,000.
|
2. |
The
Company 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 issued 326,239 shares of Common Stock as payment of $169,000
of
Secured Term Note Payable accrued
interest.
|
5. |
Convertible
Subordinated Debentures of $100,632,000 and accrued interest of $3,939,000
were converted into 217,973,000 shares of Convertible Preferred Stock
(See
Note 11).
|
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
|
–
|
–
|
633
|
6
|
385
|
–
|
–
|
391
|
|||||||||||||||||
Issuance
of Common Shares for exercise of options
|
–
|
–
|
34
|
–
|
4
|
–
|
–
|
4
|
|||||||||||||||||
Conversion
of Series C-1 Junior Convertible Preferred Shares
|
(279
|
)
|
(3
|
)
|
279
|
3
|
–
|
–
|
–
|
–
|
|||||||||||||||
Amortization
of unearned compensation
|
–
|
–
|
–
|
–
|
–
|
766
|
–
|
766
|
|||||||||||||||||
Net
loss
|
–
|
–
|
–
|
–
|
–
|
–
|
(4,965
|
)
|
(4,965
|
)
|
|||||||||||||||
Balance
at September 30, 2005
|
217,694
|
$
|
2,177
|
23,413
|
$
|
234
|
$
|
277,518
|
$
|
(312
|
)
|
$
|
(284,506
|
)
|
$
|
(4,889
|
)
|
SEPTEMBER
30,
|
|||||||||||||
|
FOR
THE NINE MONTHS ENDED
|
FOR
THE THREE MONTHS ENDED
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(In
thousands, except per share data)
|
|||||||||||||
Net
loss, as reported
|
$
|
(4,965
|
)
|
$
|
(67,912
|
)
|
$
|
(1,635
|
)
|
$
|
(51,480
|
)
|
|
Add:
Stock-based employee compensation expense included in reported net
loss
|
766
|
1,442
|
173
|
-
|
|||||||||
Deduct:
Total stock-based employee compensation expense determined under
fair value-based method for all awards
|
(1,156
|
)
|
(2,313
|
)
|
(267
|
)
|
(250
|
)
|
|||||
Net
loss, pro forma
|
$
|
(5,355
|
)
|
$
|
(68,783
|
)
|
$
|
(1,729
|
)
|
$
|
(51,730
|
)
|
|
Weighted
average number of outstanding shares
|
22,906
|
21,749
|
23,169
|
21,928
|
|||||||||
Earnings
per share:
|
|||||||||||||
Basic
and diluted loss per share, as reported
|
$
|
(0.22
|
)
|
$
|
(3.12
|
)
|
$
|
(0.07
|
)
|
$
|
(2.35
|
)
|
|
Basic
and diluted loss per share, pro forma
|
$
|
(0.23
|
)
|
$
|
(3.16
|
)
|
$
|
(0.08
|
)
|
$
|
(2.36
|
)
|
|
September
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
|
September
30, 2005
|
December
31, 2004
|
||||||
(In
thousands)
|
|||||||
Bonus,
Payroll, Payroll Taxes and Benefits
|
69
|
573
|
|||||
Legal
Fees
|
58
|
124
|
|||||
Audit
Examination and Tax Preparation Fees
|
62
|
85
|
|||||
Litigation
Settlement
|
35
|
25
|
|||||
Franchise
Taxes
|
20
|
–
|
|||||
Property
Taxes
|
59
|
30
|
|||||
Medicaid
Rebates
|
13
|
50
|
|||||
Regulatory,
Trademarks and Patent Consulting
|
–
|
40
|
|||||
Directors
Fees
|
9
|
–
|
|||||
Clinical
and Laboratory Testing
|
107
|
–
|
|||||
Other
|
–
|
32
|
|||||
|
$
|
432
|
$
|
959
|
|||
· |
The
Company’s ability to secure additional financing to fund continued
operations;
|
·
|
The
successful completion of the formulation development, clinical
testing and
acceptable regulatory review of product candidates utilizing
the
Aversion®
Technology;
|
·
|
The
receipt of issued patents from the U.S. Patent and Trademark Office
(“PTO”) for the material claims in the Company's patent applications
relating to the Aversion®Technology;
|
·
|
The
Company's ability to negotiate and execute appropriate licensing,
development and commercialization agreements with interested
third parties
relating to the Company’s product candidates;
and,
|
·
|
The
successful commercialization by licensees of products incorporating
the
Aversion®
Technology without infringing the patents and other intellectual
property
rights of third parties.
|
· |
Development
and evaluation, in concert with contract research organizations
(“CROs”),
in laboratory settings and clinical trials, of product candidates
utilizing the Company's Aversion®
Technology.
|
·
|
Manufacture,
quality assurance testing and release, and stability studies
of clinical
trial supplies and NDA submission batches of certain finished
dosage form
product candidates utilizing the Company’s Aversion®
Technology.
|
·
|
Prosecution
of the Company’s patent applications relating to the Aversion®
Technology with the United States Patent and Trademark Office (“PTO”) and
foreign equivalents.
|
·
|
Negotiation
and execution of license and development agreements with strategic
pharmaceutical company partners providing that such licensees
will further
develop certain finished dosage product candidates utilizing
the
Aversion®
Technology, file for regulatory approval with the FDA and other
regulatory
authorities and commercialize such
products.
|
·
|
Prosecution
of the Company's application to the U.S. Drug Enforcement Administration
(“DEA”) for registration to import narcotic raw materials
(“NRMs”).
|
9
MONTHS ENDED 9/30/05
NET
REVENUES
|
9
MONTHS ENDED 9/30/04
NET
REVENUES
|
9
MONTHS ENDED
9/30/05-9/30/04
NETREVENUES
CHANGE
($)
|
9
MONTHS ENDED
9/30/05-9/30/04
NET
REVENUES
CHANGE
(%)
|
$
–
|
$838
|
$(838)
|
(100%)
|
9
MONTHS ENDED 9/30/05
COST
OF MANUFACTURING
|
9
MONTHS ENDED 9/30/04
COST
OF MANUFACTURING
|
9
MONTHS ENDED
9/30/05-9/30/04
COST
OF MANUFACTURING
CHANGE
($)
|
9
MONTHS ENDED
9/30/05-9/30/04
COST
OF MANUFACTURING
CHANGE
(%)
|
$
–
|
$1,437
|
$(1,437)
|
(100%)
|
9
MONTHS ENDED 9/30/05
R&D
EXPENSES
|
9
MONTHS ENDED 9/30/04
R&D
EXPENSES
|
9
MONTHS ENDED
9/30/05
and 9/30/04
R&D
EXPENSES
CHANGE
($)
|
9
MONTHS ENDED
9/30/05
and 9/30/04
R&D
EXPENSES
CHANGE
(%)
|
$2,527
|
$3,179
|
$(652)
|
(21%)
|
9
MONTHS
ENDED
9/30/05
SELLING,
MARKETING, G&A EXPENSES
|
9
MONTHS
ENDED
9/30/04
SELLING,
MARKETING,
G&A EXPENSES
|
9
MONTHS ENDED
9/30/05
and 9/30/04
SELLING,
MARKETING,
G&A EXPENSES
CHANGE
($)
|
9
MONTHS ENDED
9/30/05
and 9/30/04
SELLING,
MARKETING,
G&A EXPENSES
CHANGE
(%)
|
$2,120
|
$4,236
|
$(2,116)
|
(50%)
|
9
MONTHS ENDED 9/30/05
ENVIRONMENTAL
COMPLIANCE EXPENSES
|
9
MONTHS ENDED 9/30/04
ENVIRONMENTAL
COMPLIANCE EXPENSES
|
9
MONTHS ENDED
9/30/05
and 9/30/04
ENVIRONMENTAL
COMPLIANCE
EXPENSES
CHANGE
($)
|
9
MONTHS ENDED
9/30/05
and 9/30/04
ENVIRONMENTAL
COMPLIANCE EXPENSES
CHANGE
(%)
|
$
–
|
$180
|
$(180)
|
(100%)
|
9
MONTHS ENDED 9/30/05
INTEREST
EXPENSE, NET OF INTEREST INCOME
|
9
MONTHS ENDED 9/30/04
INTEREST
EXPENSE, NET OF INTEREST INCOME
|
9
MONTHS ENDED
9/30/05
and 9/30/04
INTEREST
EXPENSE,
NET
OF INTEREST
INCOME
CHANGE
($)
|
9
MONTHS ENDED
9/30/05
and 9/30/04
INTEREST
EXPENSE,
NET
OF INTEREST INCOME
CHANGE
(%)
|
$404
|
$2,799
|
$(2,395)
|
(86%)
|
9
MONTHS ENDED 9/30/05
DEFERRED
DEBT DISCOUNT AND PRIVATE DEBT OFFERING COSTS
|
9
MONTHS ENDED 9/30/04
DEFERRED
DEBT DISCOUNT AND PRIVATE DEBT OFFERING COSTS
|
9
MONTHS ENDED
9/30/05
and 9/30/04
DEFERRED
DEBT DISCOUNT AND
PRIVATE
DEBT
OFFERING
COSTS
CHANGE
($)
|
9
MONTHS ENDED
9/30/05
and 9/30/04
DEFERRED
DEBT DISCOUNT AND
PRIVATE
DEBT OFFERING COSTS CHANGE
(%)
|
$
–
|
$72,491,
consisting of
·
$1,030
private debt offering costs
· $71,461
deferred debt discount
|
$(72,491)
|
(100%)
|
9
MONTHS ENDED 9/30/05
NET
LOSS
|
9
MONTHS ENDED 9/30/04
NET
LOSS
|
9
MONTHS ENDED
9/30/05
and 9/30/04
NET
LOSS
CHANGE
($)
|
9
MONTHS ENDED 9/30/05 and 9/30/04
NET
LOSS
CHANGE
(%)
|
$(4,965)
|
$(67,912)
|
$(62,947)
|
(93%)
|
3
MONTHS ENDED 9/30/05
R&D
EXPENSES
|
3
MONTHS ENDED 9/30/04
R&D
EXPENSES
|
3
MONTHS ENDED
9/30/05
and 9/30/04
R&D
EXPENSES
CHANGE
($)
|
3
MONTHS ENDED
9/30/05
and 9/30/04
R&D
EXPENSES
CHANGE
(%)
|
$845
|
$1,937
|
$(1,092)
|
(56%)
|
3
MONTHS ENDED 9/30/05
SELLING,
MARKETING, G&A EXPENSES
|
3
MONTHS ENDED 9/30/04
SELLING,
MARKETING, G&A EXPENSES
|
3
MONTHS ENDED
9/30/05
and 9/30/04
SELLING,
MARKETING,
G&A
EXPENSES
CHANGE
($)
|
3
MONTHS ENDED
9/30/05
and 9/30/04
SELLING,
MARKETING,
G&A
EXPENSES
CHANGE
(%)
|
$628
|
$1,873
|
$(1,245)
|
(67%)
|
3
MONTHS ENDED 9/30/05
INTEREST
EXPENSE, NET OF INTEREST INCOME
|
3
MONTHS ENDED 9/30/04
INTEREST
EXPENSE, NET OF INTEREST INCOME
|
3
MONTHS ENDED
9/30/05
and 9/30/04
INTEREST
EXPENSE,
NET
OF INTEREST
INCOME
CHANGE
($)
|
3
MONTHS ENDED
9/30/05
and 9/30/04
INTEREST
EXPENSE, NET OF INTEREST INCOME
CHANGE
(%)
|
$165
|
$669
|
($504)
|
(75%)
|
3
MONTHS ENDED 9/30/05
DEFERRED
DEBT DISCOUNT AND PRIVATE DEBT OFFERING COSTS
|
3
MONTHS ENDED 9/30/04
DEFERRED
DEBT DISCOUNT AND PRIVATE DEBT OFFERING COSTS
|
3
MONTHS ENDED
9/30/05
and 9/30/04
DEFERRED
DEBT DISCOUNT AND PRIVATE DEBT OFFERING COSTS CHANGE
($)
|
3
MONTHS ENDED
9/30/05
and 9/30/04
DEFERRED
DEBT DISCOUNT AND PRIVATE DEBT OFFERING COSTS CHANGE
(%)
|
$
–
|
$47,836,
consisting of
· $796
private debt offering costs
· $47,040
deferred debt discount
|
$(47,836)
|
(100%)
|
3
MONTHS ENDED 9/30/05
NET
LOSS
|
3
MONTHS ENDED 9/30/04
NET
LOSS
|
3
MONTHS ENDED
9/30/05
and 9/30/04
NET
LOSS
CHANGE
($)
|
3
MONTHS ENDED
9/30/05
and 9/30/04
NET
LOSS
CHANGE
(%)
|
$(1,635)
|
$(51,480)
|
$(49,845)
|
(97%)
|
TOTAL
|
DUE
IN 4th
QUARTER OF
2005
|
DUE
IN
2006
|
DUE
IN
2007
|
DUE
THEREAFTER
|
||||||||||||
Term
notes
|
$
|
6,500
|
$
|
–
|
$
|
1,500
|
$
|
5,000
|
$
|
–
|
||||||
Interest
on term notes
|
100
|
38
|
62
|
–
|
–
|
|||||||||||
Capital
leases
|
70
|
7
|
31
|
25
|
7
|
|||||||||||
Operating
leases
|
12
|
7
|
5
|
–
|
–
|
|||||||||||
Employment
agreements
|
510
|
185
|
325
|
–
|
–
|
|||||||||||
Total
Contractual Cash Obligations
|
$
|
7,192
|
$
|
237
|
$
|
1,923
|
$
|
5,025
|
$
|
7
|
· |
The
Company’s ability to secure additional financing to fund continued
operations;
|
·
|
The
successful completion of the formulation development, clinical
testing and
acceptable regulatory review of product candidates utilizing
the
Aversion®
Technology;
|
·
|
The
receipt of issued patents from the U.S. Patent and Trademark Office
(“PTO”) for the material claims in the Company's patent applications
relating to the Aversion®Technology;
|
·
|
The
Company's ability to negotiate and execute appropriate licensing,
development and commercialization agreements with interested
third parties
relating to the Company’s product candidates;
and,
|
·
|
The
successful commercialization by licensees of products incorporating
the
Aversion®
Technology without infringing the patents and other intellectual
property
rights of third parties.
|
· |
The
time required and expenses incurred in the development and
commercialization of products incorporating our Aversion®
Technology;
|
·
|
The
structure of any future collaborative or development agreements
relating
to the Aversion®
Technology, including the timing and amount of payments, if any,
that may
be received under possible future collaborative
agreements;
|
·
|
Our
ability to develop additional product candidates utilizing the
Aversion®
Technology;
|
·
|
Our
ability to negotiate agreements with third parties for development,
manufacture, marketing, sale and distribution of products utilizing
our
Aversion®
Technology;
|
·
|
The
prosecution, defense and enforcement of patent claims and other
intellectual property rights relating to the Aversion®
Technology; and
|
·
|
The
successful commercialization by licensees of products incorporating
our
Aversion®
Technology 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.
|
ACURA PHARMACEUTIALS, INC. | ||
|
|
|
Date: November 10, 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.
|
Date: November 10, 2005 | By: | /s/ Andrew D. Reddick |
|
||
Andrew
D. Reddick
Chief Executive Officer
|
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.
|
Date: November 10, 2005 | By: | /s/ Peter A. Clemens |
|
||
Peter
A. Clemens
Chief Financial
Officer
|
Date: November 10, 2005 | By: | /s/ Andrew D. Reddick |
|
||
Andrew
D. Reddick
Chief Executive Officer
|
Date: November 10, 2005 | By: | /s/ Peter A. Clemens |
|
||
Peter
A. Clemens
Chief Financial
Officer
|