SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934: |
For the quarterly period ended September
30, 2015
| ☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934 |
Commission file number: 333-128226
| |
INTELLECT NEUROSCIENCES, INC. |
|
| (Exact name of registrant as specified in its charter) |
| |
|
|
| Delaware |
|
20-8329066 |
| (State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
550 Sylvan Ave.
Englewood Cliffs, NJ |
|
07632 |
| (Address of principal executive offices) |
|
(Zip Code) |
| |
(201) 608 5101 |
|
| (Registrant’s telephone number, including area code) |
Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by checkmark whether the Registrant
has submitted electronically and posted on its corporate website, if any, any Interactive Data File required to be submitted and
posted pursuant to Rule 405 of regulation S-T (Section 232.405) of this chapter during the preceding 12 months or for such shorter
period that the Registrant was required to submit and post such files. Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
| Large accelerated filer |
Accelerated filer |
Non-accelerated filer |
Smaller reporting company |
| |
|
|
|
| ☐ |
☐ |
(Do not check if a smaller reporting
company) |
☒ |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The registrant had 5,567,037 shares of
Common Stock, par value $.001 par value per share, outstanding as of November 11, 2015.
Intellect Neurosciences Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited)
| | |
September 30, 2015 | | |
June 30, 2015 | |
| ASSETS | |
| | |
| |
| Current assets: | |
| | |
| |
| Cash and cash equivalents | |
$ | 189,160 | | |
$ | 23,858 | |
| Total current assets | |
| 189,160 | | |
| 23,858 | |
| | |
| | | |
| | |
| Security deposits | |
| 2,250 | | |
| 2,250 | |
| Total Assets | |
$ | 191,410 | | |
$ | 26,108 | |
| | |
| | | |
| | |
| LIABILITIES AND CAPITAL DEFICIENCY | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 2,549,010 | | |
$ | 2,599,706 | |
| Accrued interest - convertible promissory notes | |
| 1,402,067 | | |
| 1,447,601 | |
| Derivative instruments | |
| 422,562 | | |
| 2,682,541 | |
| Preferred stock dividend payable | |
| 11,762,418 | | |
| 11,880,647 | |
| Convertible promissory notes - current, net of debt discount of $57,240 and $155,528, respectively | |
| 2,227,260 | | |
| 2,166,472 | |
| Total Current liabilities | |
$ | 18,363,317 | | |
$ | 20,776,967 | |
| | |
| | | |
| | |
| Long Term Debt | |
| | | |
| | |
| Convertible promissory notes - long term, net of debt discount of $54,822 and $298,368, respectively | |
$ | 580,676 | | |
$ | 339,130 | |
| | |
| | | |
| | |
| Total Liabilities | |
$ | 18,943,993 | | |
$ | 21,116,097 | |
| | |
| | | |
| | |
| Capital deficiency: | |
| | | |
| | |
| | |
| | | |
| | |
| Series B Convertible Preferred Stock, $.001 par value - 459,309 shares designated and 40,686 and 76,887 shares issued and outstanding at September 30, 2015 and June 30, 2015 (liquidation preference at September 30, 2015 of $1,111,551) | |
$ | 41 | | |
$ | 77 | |
| | |
| | | |
| | |
| Series C Convertible Preferred Stock, $.001 par value - 25,000 shares designated and 14,960 and 16,636 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively (liquidation preference at September 30, 2015 of $21,401,274) | |
| 15 | | |
| 16 | |
| | |
| | | |
| | |
| Series D Convertible Preferred stock, $.001 par value - 25,000 shares designated and 1,054 and 2,729 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively (liquidation preference at September 30, 2015 of $1,345,626) | |
| 1 | | |
| 3 | |
| | |
| | | |
| | |
| Series E Convertible Preferred stock, $.001 par value - 25,000 shares designated and 19,233 shares issued and outstanding at September 30, 2015 and June 30, 2015 (liquidation preference at September 30, 2015 of $23,511,030) | |
| 19 | | |
| 19 | |
| | |
| | | |
| | |
| Series F Convertible Preferred stock, $.001 par value - 25,000 shares designated and 1,005 and 1,200 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively (liquidation preference at September 30, 2015 of $2,219,191) | |
| 1 | | |
| 1 | |
| | |
| | | |
| | |
| Series G Convertible Preferred stock, $.001 par value - 10,000 shares designated and 3,489 shares issued and outstanding at September 30, 2015 (liquidation preference $7,119,129) | |
| 4 | | |
| — | |
| | |
| | | |
| | |
| Series H Convertible Preferred stock, $.001 par value - 2,000 shares designated and 1,081 shares issued and outstanding at September 30, 2015 (liquidation preference $2,194,655) | |
| 1 | | |
| — | |
| | |
| | | |
| | |
| Common stock, par value $0.001 per share, 2,000,000,000 shares authorized; 5,567,037 and 3,550,336 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively | |
| 5,568 | | |
| 3,550 | |
| | |
| | | |
| | |
| Additional paid in capital | |
| 74,248,801 | | |
| 72,144,582 | |
| | |
| | | |
| | |
| Accumulated Deficit | |
| (93,007,034 | ) | |
| (93,238,237 | ) |
| | |
| | | |
| | |
| Total Capital Deficiency | |
$ | (18,752,583 | ) | |
$ | (21,089,989 | ) |
| | |
| | | |
| | |
| Total Liabilities and Capital Deficiency | |
$ | 191,410 | | |
$ | 26,108 | |
See notes to consolidated financial statements
Intellect Neurosciences Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
| | |
| | |
| |
| | |
Three Months Ended | |
| | |
September 30, | |
| | |
2015 | | |
2014 | |
| | |
| | |
| |
| Revenues: | |
| | |
| |
| License fee | |
$ | — | | |
$ | — | |
| Total revenue | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Costs and Expenses: | |
| | | |
| | |
| Research and development | |
| 5,605 | | |
$ | 27,326 | |
| General and administrative | |
| 491,275 | | |
| 468,041 | |
| Total cost and expenses | |
| 496,880 | | |
$ | 495,367 | |
| | |
| | | |
| | |
| Loss from operations | |
$ | (496,880 | ) | |
$ | (495,367 | ) |
| | |
| | | |
| | |
| Other income/(expenses): | |
| | | |
| | |
| | |
| | | |
| | |
| Interest expense, net | |
$ | (1,531,896 | ) | |
$ | (1,726,795 | ) |
| Changes in fair value of derivative instruments | |
| 2,259,979 | | |
| 5,596,259 | |
| Total other income/(expense): | |
$ | 728,083 | | |
$ | 3,869,464 | |
| | |
| | | |
| | |
| Income before provision for taxes | |
$ | 231,203 | | |
$ | 3,374,097 | |
| Income tax provision | |
| | | |
| | |
| Net income allocable to common shareholders | |
| | | |
| | |
| | |
$ | 231,203 | | |
$ | 3,374,097 | |
| Income per share | |
| | | |
| | |
| Basic and Diluted | |
$ | 0.05 | | |
$ | 2.64 | |
| | |
| | | |
| | |
| Weighted average number of shares outstanding: | |
| | | |
| | |
| Basic and Diluted | |
| 4,899,131 | | |
| 1,279,007 | |
See notes to consolidated financial statements
Intellect Neurosciences Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
| | |
Three Months Ended | |
| | |
September 30, | |
| | |
2015 | | |
2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net income / (loss) | |
$ | 231,203 | | |
$ | 3,374,097 | |
| | |
| | | |
| | |
| Adjustments to reconcile net income / (loss) to net cash used in operating activities: | |
| | | |
| | |
| Change in fair value of derivative instruments | |
| (2,259,979 | ) | |
| (5,596,259 | ) |
| Non-cash interest expense | |
| 1,532,274 | | |
| 1,727,352 | |
| | |
| | | |
| | |
| Change in assets and liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
| (50,697 | ) | |
| (3,894 | ) |
| | |
| | | |
| | |
| Net cash used in operating activities | |
$ | (547,199 | ) | |
$ | (498,704 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from issuance of convertible notes | |
| | | |
$ | — | |
| Proceeds from issuance of preferred stock | |
$ | 750,000 | | |
| 1,200,000 | |
| Repayments of convertible notes | |
| (37,500 | ) | |
| (300,000 | ) |
| | |
| | | |
| | |
| Net cash provided by financing activities | |
$ | 712,500 | | |
$ | 900,000 | |
| | |
| | | |
| | |
| NET INCREASE (DECREASE) IN CASH | |
$ | 165,301 | | |
$ | 401,296 | |
| | |
| | | |
| | |
| CASH - BEGINNING OF PERIOD | |
$ | 23,858 | | |
| — | |
| | |
| | | |
| | |
| CASH - END OF PERIOD | |
$ | 189,159 | | |
$ | 401,296 | |
| | |
| | | |
| | |
| SUPPLEMENTAL CASH FLOW INFORMATION: | |
| | | |
| | |
| Non-cash financing activities | |
| | | |
| | |
| Conversion of convertible notes and interest to common stock | |
$ | — | | |
$ | 131,929 | |
| Debt discount recognized as derivative liabiltiy | |
$ | — | | |
$ | 637,500 | |
| See notes to consolidated financial statements |
Intellect
Neurosciences, Inc.
Notes
to Unaudited Consolidated Condensed Financial Statements
September
30, 2015
Note
1. Basis of Presentation
The
accompanying unaudited consolidated condensed financial statements presented herein have been prepared in accordance with the
instructions to Form 10-Q and do not include all the information and note disclosures required by accounting principles generally
accepted in the United States. The consolidated financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June
30, 2015 filed with the Securities and Exchange Commission (the “SEC”) on October 14, 2015. In the opinion of management,
this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for fair presentation.
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to
change include assumptions used in determining the fair value of securities owned or issued and non-readily marketable securities.
The
results of operations for the three months ended September 30, 2015, are not necessarily indicative of the results to be expected
for the entire year or for any other period.
Note
2. Business Description and Going Concern
Intellect
Neurosciences, Inc., a Delaware corporation, (“Intellect”, “our”, “us”, “we” or
the “Company” refer to Intellect Neurosciences, Inc. and its subsidiary) is a biopharmaceutical company, which together
with its subsidiary, Intellect Neurosciences, USA, Inc. (“Intellect USA”), is engaged in the discovery and development
of disease-modifying therapeutic agents for the treatment and prevention of rare neurodegenerative conditions.
Since
our inception in 2005, we have devoted all of our efforts and resources to research and development activities and advancing our
patent estate. Our losses from operations have been funded with the proceeds of equity and debt financings and fees from license
arrangements.
These
consolidated financial statements are presented on the basis that we will continue as a going concern. The going concern concept
contemplates the realization of assets and satisfaction of liabilities in the normal course of business. No adjustment has been
made to the carrying amount and classification of our assets and the carrying amount of our liabilities based on the going concern
uncertainty.
Note
3. Summary of Significant Accounting Policies
Principles
of Consolidation. The consolidated financial statements include the accounts of our wholly owned subsidiary, Intellect USA.
Use
of Estimates. The preparation of consolidated financial statements in accordance with accounting principles generally accepted
in the United States involves the use of estimates and assumptions that affect the recorded amounts of assets and liabilities
as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant
estimates include the fair value of derivative instruments, including stock options and warrants to purchase our common stock,
recognition of clinical trial costs, certain consulting expenses and deferred taxes. Actual results may differ substantially from
these estimates.
Revenue
Recognition. We recognize revenue in accordance with authoritative accounting guidance, which provides that non-refundable
upfront and research and development milestone payments and payments for services are recognized as revenue as the related services
are performed over the term of the collaboration.
Convertible
Instruments We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815
“Derivatives and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their
host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria
include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly
and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both
the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair
value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument
would be considered a derivative instrument.
We
account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from
their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion
options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt to their stated date of redemption. We also record when necessary, deemed dividends
for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of
the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred
shares.
Common
Stock Purchase Warrants We classify as equity any contracts that require physical settlement or net-share settlement or provide
us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that
such contracts are indexed to our own stock as defined in ASC 815-40 (“Contracts in Entity’s Own Equity”). We
classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the
contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement
or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock purchase warrants
and other free standing derivatives at each reporting date to determine whether a change in classification between assets and
liabilities is required.
Preferred
Stock. We apply the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the
classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. We classify conditionally redeemable preferred shares (if any), which includes
preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, we classified our preferred
shares in stockholders’ equity.
Derivative
Instruments. Our derivative financial instruments consist of embedded derivatives related to the convertible debt, warrants
and beneficial conversion features embedded within our convertible debt. The accounting treatment of derivative financial instruments
requires that we record the derivatives and related warrants at their fair values as of the inception date of the debt agreements
and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, non-cash income
or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we
recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date,
we recorded non-operating, non-cash income.
During
the three month period ended September 30, 2015, we recognized other income (expense) of $2,259,979 relating to recording the
derivative instruments at their fair value. At September 30, 2015 and June 30, 2015, there were approximately
$423 thousand and $2.7 million of derivative liabilities outstanding, respectively.
Our
derivative instruments were valued using the Black-Scholes option pricing model, using the following assumptions during the quarter
ended September 30, 2015:
| Estimated dividends |
|
None |
| Expected volatility |
|
188% |
| Risk-free interest rate |
|
0.28% - 0.92% |
| Expected term (years) |
|
1 - 5 years |
Note
4. Notes Payable
The
following table presents the components of Convertible Notes Payable at September 30, 2015 and June 30, 2015:
| | |
September 30, 2015 | | |
June 30, 2015 | |
| Convertible Notes issued during fiscal year ended June 30, 2010 | |
$ | 17,500 | | |
$ | 17,500 | |
| Convertible Notes issued during fiscal year ended June 30, 2011 | |
| 812,500 | | |
| 850,000 | |
| Convertible Notes issued during fiscal year ended June 30, 2012 | |
| 301,500 | | |
| 301,500 | |
| Convertible Notes issued during fiscal year ended June 30, 2013 | |
| 1,116,000 | | |
| 1,116,000 | |
| Convertible Notes issued during fiscal year ended June 30, 2014 | |
| 657,500 | | |
| 657,500 | |
| Convertible Notes issued during fiscal year ended June 30, 2015 | |
| 15,000 | | |
| 15,000 | |
| Balance at End of Period | |
$ | 2,920,000 | | |
$ | 2,957,500 | |
| Less debt discount: | |
| 112,062 | | |
| 451,898 | |
| Convertible Notes Payable, Net | |
$ | 2,807,938 | | |
$ | 2,505,602 | |
| | |
| | | |
| | |
| Classified as follows on the accompanying consolidated balance sheets: | |
| | | |
| | |
| Current portion of Convertible Notes Payable | |
$ | 2,227,260 | | |
$ | 2,166,472 | |
| Long term portion of Convertible Notes Payable | |
| 580,676 | | |
| 339,130 | |
| | |
$ | 2,807,936 | | |
$ | 2,505,602 | |
All
of the foregoing convertible notes carry interest at 14% annually, mature three years from the issue date and are convertible
into the Company’s common shares at a conversion price of $1.25 per share except for notes with an aggregate principal amount
of $420,000 and $500,000, whch are convertible into the Company’s common shares at a conversion price of $0.08 and $0.14
per share, respectively.
| |
|
|
|
|
| Convertibe Notes Payable are payable as follows: |
|
|
|
|
| Past Due |
|
$ |
1,131,500 |
|
| Fiscal year ended June 30, 2016 |
|
|
1,116,000 |
|
| Fiscal year ended June 30, 2017 |
|
|
657,500 |
|
| Fiscal year ended June 30, 2018 |
|
|
15,000 |
|
| Total |
|
$ |
2,920,000 |
|
Note
5. Convertible Preferred Stock
Series
B Convertible Preferred Stock
The
Series B Convertible Preferred Stock carries a cumulative dividend of 6% per annum and a stated value of $17.50 per share.
Each share is convertible into 0.05 common shares based on the current conversion price of $375. During the quarter
ended September 30, 2015, 36,201 shares of Series B Convertible Preferred Stock plus accrued dividends were exchanged for
1,081 shares of newly issued Series H Convertible Preferred Stock.
Series
C Convertible Preferred Stock
The
Series C Convertible Preferred Stock carries a cumulative dividend of 14% per annum and a stated value of $1,000 per share. Each
share is convertible into 800 common shares based on the current conversion price of $1.25.
During
the quarter ended September 30, 2015, 700 shares of Series C Convertible Preferred Stock were exchanged for 700 shares of
Series G Convertible Preferred Stock. During the quarter ended September 30, 2015 and the
fiscal year ended June 30, 2015, 913 and 1,013 shares of Series C Convertible Preferred Stock were converted into 730,400
and 810,000 common shares, respectively. In addition, during the year ended June 30, 2015, one of our significant
shareholders surrendered shares of Series C Convertible Preferred Stock carrying accrued dividends of $7,232,864.
Series
D Convertible Preferred Stock
The
Series D Convertible Preferred Stock carries a cumulative dividend of 8% per annum and a stated value of $1,000 per share.
Each share is convertible into 800 common shares based on the current conversion price of $1.25. During the quarter ended
September 30, 2015, 1,675 shares of Series D Convertible Preferred Stock plus accrued dividends thereon were exchanged for
2,039 shares of Series G Convertible Preferred Stock.
Series
E Convertible Preferred Stock
The
Series E Convertible Preferred Stock carries a cumulative dividend of 8% per annum and a stated value of $1,000 per share.
Each share is convertible into 400 common shares based on the current conversion price of $2.50.
Series
F Convertible Preferred Stock
The
Series F Convertible Preferred Stock (the “Series F Preferred”) carries a cumulative dividend of 8% per annum and
a stated value of $1,000 per share. Each share is convertible into 10,000 common shares based on the current conversion price
of $0.10. The Series F Preferred has a right to a liquidation preference of $2,000 per share.
The
Series F Preferred was issued on July 25, 2014, pursuant to a stock purchase agreement with certain accredited investors whereby
we issued 1,200 shares of Series F Preferred and warrants to purchase an aggregate of 9,600,000 shares of common stock (the “Series
F Financing”). The Warrants are exercisable for a period of five (5) years from the date of issuance and are exercisable
into shares of common stock at an exercise price of $.10 per share.
In
connection with the Series F Financing, we repaid $300,000 of principal on outstanding promissory notes of a
certain investor and the investor surrendered shares of Series C Convertible Preferred Stock carrying accrued dividends
of $7,232,864.
Based
on authoritative guidance, the entire proceeds from the Series F Financing were credited to preferred stock and
additional paid in capital.
During
the quarter ended September 30, 2015 and the fiscal year ended June 30, 2015, 95 and 100 shares of Series F Preferred were
converted into 950,000 and 400,000 common shares, respectively.
Series
G and Series H Convertible Preferred Stock
On
July 1, 2015, (the “Closing Date”) we entered into a stock purchase agreement (the
“Purchase Agreement”) with certain accredited investors (the “Investors”) whereby we issued to the
Investors (i) an aggregate of 3,490 shares of Series G Convertible Preferred Stock (the “Series G Preferred”)
(ii) an aggregate of 1,117 shares of Series Convertible H Preferred Stock (the “Series H Preferred”) and (iii)
warrants to purchase an aggregate of 15,000,000 shares of common stock (the “Series G Financing”). The Warrants
are exercisable for a period of five (5) years from the date of issuance and are exercisable into shares of common stock at
an exercise price of $.10 per share.
In
connection with the Series G Financing, the Board of Directors of the Company approved the filing of Certificates
of Designations, Preferences and Rights of Series G Convertible Preferred Stock (the “Series G Certificate
of Designation”) and Series H Convertible Preferred Stock (the “Series H Certificate of Designation”) both
of which were filed with and accepted by the Secretary of State of the State of Delaware on June 30, 2015. Pursuant to the
Series G and Series H Certificates of Designation, we established a new series of 10,000 shares, par value $0.001 per share,
and 2,000 shares, par value $0.001 per share of Series G Preferred and Series H Preferred, respectively.
The
Series G Preferred has a right to a liquidation preference of $2,000 per share and is convertible at any time into shares
of our common stock at a conversion price of $.10 per share, subject to adjustment. Each share of Series G Preferred has
a stated value of $1,000 (the “Stated Value”) and accrues a dividend of 8% of the Stated Value per annum, which is
payable annually on June 30th in cash or, at the holder’s option, in common stock, or a combination thereof. The Series
G Preferred has no voting rights and holders thereof shall vote together with holders of common stock on an as converted
basis.
The Series H Preferred has a
right to a liquidation preference of $2,000 per share and is convertible into common stock of the Company at a conversion
price equal to eight times the fair market value of the underlying common stock into which the Series H Preferred are
convertible. “Fair Market Value” means the average of the closing price of the common stock for the five
trading days preceding the exchange date of the Series B Convertible Preferred Stock for the Series H Preferred (the
“Conversion Price”). The fair market value conversion price was set at $1.92 per share on the date of the
exchange. The Series H Preferred has no voting rights and holders thereof vote together with holders of common
stock on an as converted basis.
Pursuant
to the Purchase Agreement, we granted holders of previously issued Series C and Series D Convertible Preferred Stock the
right to exchange their shares of Series C and Series D Convertible Preferred Stock for shares of Series G Preferred and
holders of previously issued Series B Convertible Preferred Stock the right to exchange their shares of Series B
Convertible Preferred Stock for shares of Series H Preferred. The stated value of each share of exchanged Series B, Series C
and Series D Preferred Stock, plus accrued dividends, was treated as the cash value of such shares for purposes of
determining the number of shares of Series G and H Preferred Stock to be issued in connection with such exchange.
Based
on authoritative guidance, the entire proceeds from the Series G Financing were credited to preferred stock and additional paid
in capital.
Note
6. Outstanding Warrants
The
following table presents the number of warrants outstanding at the periods ended September 30, 2015 and June 30, 2015. All warrants
have a 5 year term and are exercisable at September 30, 2015. The warrants issued in connection with the Series F and Series G
Financings described above in Note 5 have an exercise price of $0.10 per share. All other outstanding warrants have an exercise
price of $1.25 per common share, except for 44,800 warrants, which have an exercise price of $15.625 per share.
| Warrants outstanding at June 30, 2015 | |
| 12,500,327 | |
| Issued | |
| 15,000,000 | |
| Exercised | |
| — | |
| Expired | |
| — | |
| Warrants outstanding at September 30, 2015 | |
| 27,500,327 | |
Note
7. Capital Deficiency
Common
stock
In
July 2015, we issued 816,400 and 650,000 shares of our common stock to holders of Series C Convertible Preferred Stock and Series
F Convertible Preferred Stock, respectively, upon their exercise of the conversion feature contained in those securities.
In
August 2015, we issued 250,000 and 300,000 shares of our common stock to holders of Series C Convertible Preferred Stock and Series
F Convertible Preferred Stock, respectively, upon their exercise of the conversion feature contained in those securities.
In
August 2015, we issued 301 shares of our common stock in connection with implementation of the reverse stock split on our outstanding
common shares that was effective on February 11, 2015.
Note
8. Income Taxes
No
provision for income taxes has been recorded due to the utilization of net operating losses for which a 100% valuation allowance
had been provided.
Note
9. Subsequent Events
Management
has evaluated events occurring after the date of these financial statements through the date these financial statements were issued.
There were no material subsequent events as of that date other than disclosed below.
ITEM
2. MANAGEMENTS’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of our financial condition and results of operations contains information that management believes
is relevant to an assessment and understanding of our results of operations. You should read this discussion in conjunction with
the Financial Statements and Notes included elsewhere in this report and with Management’s Discussion and Analysis of Financial
Condition and Results of Operations for the year ended June 30, 2015 contained in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the “SEC”) on October 14, 2015. Certain statements set forth below constitute
“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. See “Special Note Regarding Forward-Looking Statements”. References
to “Intellect,” the “Company,” “we,” “us” and “our” refer to Intellect
Neurosciences, Inc. and its subsidiaries.
General
We
are a biopharmaceutical company engaged in the discovery and development of disease-modifying therapeutic agents for the treatment
and prevention of rare neurodegenerative conditions. We have an internal pipeline and have granted licenses related to our patent
estate to major pharmaceutical companies.
Since
our inception in 2005, we have devoted substantially all of our efforts and resources to advancing our intellectual property portfolio
and research and development activities. We have entered into license and other agreements with large pharmaceutical companies
related to our patent estate, however, neither we nor any of our licensees have obtained regulatory approval for sales of any
product candidates covered by our patents. We operate under a single segment. Our fiscal year end is June 30th.
Our
core business strategy is to build a portfolio of compounds with the potential to treat or prevent rare neurodegenerative
diseases, develop each compound to pre-determined milestones, and license the compounds to pharmaceutical companies for
advanced development and commercialization. We intend to obtain revenues from licensing fees, milestone payments, development
fees, royalties and/or sales related to the use of our drug candidates or intellectual property for specific therapeutic
indications or applications. As an example, we developed OX1, a small molecule multi-modal antioxidant, completed preclinical
and human safety trials, and then licensed the program to ViroPharma Inc. (subsequently merged into Shire plc) for
development of a drug to treat Friedreich’s Ataxia and other neurodegenerative diseases. We could receive up to $120
million in milestone payments from Shire and significant royalties from sales if the resulting drug product is approved for
sale by the US Food and Drug Administration (“FDA”). There can be no assurance that we will receive such
milestone payments or royalties.
Our
research and development activity is subject to change as we develop a better understanding of our projects and their prospects.
Total research and development costs from inception through September 30, 2015 were $15,086,730.
Results
of Operations
Three
Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014:
| | |
| | |
| | |
| |
| | |
Three Months Ended September 30, |
| | |
| | |
| | |
| |
| | |
2015 | | |
2014 | | |
Change | |
| | |
| | | |
| | | |
| | |
| Revenue | |
$ | — | | |
$ | — | | |
$ | — | |
| Research and Development Costs | |
| 5,605 | | |
| 27,326 | | |
| (21,721 | ) |
| General and Administrative | |
| 491,275 | | |
| 468,041 | | |
| 23,234 | |
| | |
| | | |
| | | |
| | |
| Income (loss) from operations | |
$ | (496,880 | ) | |
$ | (495,367 | ) | |
$ | 1,513 | |
| | |
| | | |
| | | |
| | |
| | |
Three Months Ended September 30, |
| | |
| | | |
| | | |
| | |
| | |
2015 | | |
2014 | | |
Change | |
| | |
| | | |
| | | |
| | |
| Income (loss) from operations | |
$ | (496,880 | ) | |
$ | (495,367 | ) | |
$ | (1,512 | ) |
| Other income (expenses): | |
| 728,083 | | |
| 3,869,464 | | |
| (3,141,381 | ) |
| | |
| | | |
| | | |
| | |
| Net income (loss) | |
$ | 231,203 | | |
$ | 3,374,097 | | |
$ | (3,142,894 | ) |
Our
operating loss increased by $1,513 to a loss of $496,880 for the three months ended September 30, 2015 from an operating loss
of $495,367 for the three months ended September 30, 2014. This was due to an increase in our General and Administrative costs
of $23,234 offset by reductions in Research and Development costs of $21,721.
General
and Administrative expenses, which includes patent filing and maintenance costs, increased by $23,234, to $491,275 for the three
months ended September 30, 2015 as compared to $468,041 for the three months ended September 30, 2014. The increase in General
and Administrative expenses primarily was due to an increase in professional fees of approximately $44,000 offset by a reduction
in board fees of approximately $20,000.
Research
and Development costs decreased by $21,721, to $5,605 for the three months ended September 30, 2015 from $27,326 for the three
months ended September 30, 2014. The reduction in R&D costs primarily was associated with the completion of a preclinical
study for our TauC3 antibody program that occurred in the period ended September 30, 2014.
Other
income decreased by $3,141,381, to $728,083 for the three months ended September 30, 2015 from $3,869,464 for the three months
ended September 30, 2014. This difference primarily is due to the recording of a gain on the change in the fair market value of
derivative instruments of $2,259,979 for the three months ended September 30, 2015 as compared to a gain of $5,596,259 for the
three months ended September 30, 2014, a decrease in gain of $3,336,280. This decrease was offset in part by a reduction in interest
expense of $194,899, to $1,531,896 for the three months ended September 30, 2015 from an expense of $1,726,795 for the period
ended September 30, 2014. The decrease in interest expense for the period ended September 30, 2015 as compared to the period ended
September 30, 2014 primarily was due to a decrease in interest expense with respect to outstanding convertible preferred
stock of approximately $300,000 offset by an increase in interest expense recognized with respect to outstanding convertible promissory
notes of approximately $105,000.
As
a result of the foregoing, we recognized net income of $231,203 for the three months ended September 30, 2015 as compared to $3,
374,097 for the comparable period last year, a decrease in income of $3,142,894.
Liquidity
and Capital Resources
Since
our inception in 2005, we have mainly generated losses from operations and we anticipate that we will continue to generate significant
losses from operations for the foreseeable future. As of September 30, 2015, our accumulated deficit was $93,007,034. Our net
cash used in operations was $547,198 and $498,704 for the three months ended September 30, 2015 and 2014, respectively. Our capital
deficiency was $18,752,583 as of September 30, 2015.
We
have limited capital resources and operations since inception have been funded with the proceeds from equity and debt financings
and license fee arrangements. As of September 30, 2015, we had approximately $189,160 of cash and cash equivalents. We anticipate
that our existing capital resources will enable us to continue operations for the next three months. If we fail to raise additional
capital or obtain substantial cash inflows from existing or potential partners within the next few months, we may be forced to
cease operations. We cannot assure you that financing will be available in a timely manner, on favorable terms or at all.
The
audit report prepared by our independent registered public accounting firm relating to our consolidated financial statements for
the year ended June 30, 2015 includes an explanatory paragraph expressing substantial doubt about our ability to continue as a
going concern.
Off-Balance
Sheet Arrangements
As
of September 30, 2015, our material off-balance sheet arrangements, other than obligations under various agreements, are as follows:
Under
Research License Agreements with NYU and SAMSF (“RLA”), we are obligated to make future payments totaling approximately
$1.5 million to each of NYU and SAMSF upon achievement of certain milestones based on phases of clinical development and approval
of the FDA (or foreign equivalent) and also to pay each of NYU and SAMSF a royalty based on product sales by Intellect or royalty
payments received by Intellect. In September 2011, we granted a sublicense of the RLAs to ViroPharma (merged into Shire plc).
Pursuant to the terms of the RLAs, we paid SAMSF and NYU $650,000 of the up-front licensing fee and are obligated to pay a portion
of future payments we may receive from Shire.
Under
a License Agreement with Northwestern University (“NWU”) dated as of May 3, 2012, we are obligated to make future
payments totaling approximately $700,000 to NWU upon achievement of certain milestones based on phases of clinical development
and also to pay NWU a royalty based on product sales.
Mindset
Biopharmaceuticals, Inc. (“Mindset”) acquired from Mayo Foundation for Medical Education and Research (“Mayo”)
a non-exclusive license to use certain transgenic mice as models for AD and is obligated to pay Mayo a royalty of 2.5% of any
net revenue that Mindset receives from the sale or licensing of a drug product for AD in which the Mayo transgenic mice were used
for research purposes. The Mayo transgenic mice were used by SAMSF to conduct research with respect to OX1. Pursuant to an Assignment
Agreement dated as of June 23, 2005, which we executed with SAMSF, we agreed to assume Mindset’s obligations to pay royalties
to Mayo.
Pursuant
to a Letter Agreement with the Institute for the Study of Aging dated as of December 29, 2006, we are obligated to pay a total
of $225,500 of milestone payments contingent upon future clinical development of OX1.
Under
a Research Agreement with MRCT dated as of September 16, 2012, we are obligated to make future research milestone payments totaling
approximately $560,000 to MRCT related to the development of the 82E1 humanized antibody and to pay additional milestones related
to the commercialization, and a royalty based on sales, of the resulting drug products.
Under
the terms of the IBL Agreement with Immuno-Biological Laboratories Co., Ltd. dated as of December 26, 2006, we agreed to pay IBL
a total of $2,125,000 upon the achievement of certain milestones plus a specified royalty based on sales of any pharmaceutical
product derived from the 82E1or 1A10 antibodies.
In
the ordinary course of business, we enter into agreements with third parties that include indemnification provisions which,
in our judgment, are normal and customary for companies in our industry sector. These agreements are typically with business
partners, clinical sites, and suppliers. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and
reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to our product
candidates, use of such product candidates, or other actions taken or omitted by us. The maximum potential amount of future
payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material
costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value
of liabilities relating to these provisions is minimal. Accordingly, we have no liabilities recorded for these provisions as
of September 30, 2015 or June 30, 2015.
In
the normal course of business, we may be confronted with issues or events that may result in a contingent liability. These generally
relate to lawsuits, claims, environmental actions or the actions of various regulatory agencies. We consult with counsel and other
appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by accounting principles
generally accepted in the United States, an estimate is made of the loss and the appropriate accounting entries are reflected
in our consolidated financial statements. After consultation with legal counsel, we do not anticipate that liabilities arising
out of currently pending or threatened lawsuits and claims will have a material adverse effect on our consolidated financial position,
results of operations or cash flows.
Critical
Accounting Estimates and New Accounting Pronouncements
Critical
Accounting Estimates
The
preparation of financial statements in accordance with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect reported amounts and related disclosures in the financial statements.
Management considers an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time
the estimate was made, and changes in the estimate or different estimates that could have been selected could have a material
impact on our consolidated results of operations or financial condition.
Convertible
Instruments. We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815
“Derivatives and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their
host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria
include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly
and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both
the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair
value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument
would be considered a derivative instrument.
We
account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from
their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion
options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt to their stated date of redemption. We also record when necessary, deemed dividends
for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of
the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred
shares.
Common
Stock Purchase Warrants. We classify as equity any contracts that require physical settlement or net-share settlement or provide
us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that
such contracts are indexed to our own stock as defined in ASC 815-40 (“Contracts in Entity’s Own Equity”). We
classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the
contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement
or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock purchase warrants
and other free standing derivatives at each reporting date to determine whether a change in classification between assets and
liabilities is required.
Preferred
Stock. We apply the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the
classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. We classify conditionally redeemable preferred shares (if any), which includes
preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, we classified our preferred
shares in stockholders’ equity.
Derivative
Instruments. Our derivative financial instruments consist of embedded derivatives related to the convertible debt, warrants
and beneficial conversion features embedded within our convertible debt. The accounting treatment of derivative financial instruments
requires that we record the derivatives and related warrants at their fair values as of the inception date of the debt agreements
and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, non-cash income
or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we
recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date,
we recorded non-operating, non-cash income.
Research
and Development Costs and Clinical Trial Expenses. Research and development costs include costs directly attributable to the
conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, materials, supplies,
maintenance of research equipment, costs related to research collaboration and licensing agreements, the cost of services provided
by outside contractors, including services related to our clinical trials, clinical trial expenses, the full cost of manufacturing
drugs for use in research, preclinical development, and clinical trials. All costs associated with research and development are
expensed as incurred.
Revenue
Recognition. We recognize revenue in accordance with authoritative accounting guidance, which provides that non-refundable
upfront and research and development milestone payments and payments for services are recognized as revenue as the related services
are performed over the term of the collaboration. For the year ended June 30, 2015, all revenue was received from one licensee.
New
Accounting Pronouncements
In
August 2014, the FASB issued authoritative guidance that requires an entity’s management to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern
and requires additional disclosures if certain criteria are met. This guidance is effective for fiscal periods ending after December
15, 2016, with early adoption permitted. This accounting standard update is not expected to have any impact on the Company’s
financial statements.
In
June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. We have elected to adopt
early application of Accounting Standards Update No. 2014-10; accordingly we no longer present or disclose inception-to-date information
and other remaining disclosure requirements of Topic 915.
Management
does not believe that any other recently issued, but not yet effective accounting pronouncements, when adopted, will have a material
effect on the accompanying financial statements.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable to smaller reporting companies
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated
to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding
required disclosure.
Our
principal executive officer and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures,
as defined in Rules 13a – 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect
the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits
of possible controls and procedures relative to their costs.
Our
CEO and CFO has concluded that, based on such evaluation, our disclosure controls and procedures are not designed at a reasonable
assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that
we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in
SEC rules and forms as of September 30, 2015.
The
conclusion was due to the presence of the following material weaknesses in disclosure controls and procedures due to our small
size and limited resources: (1) we lack a sufficient number of employees to properly segregate duties and provide adequate review
of the preparation of the financial statements and (2) we lack sufficient independent directors on our Board of Directors to maintain
Audit and other committees consistent with proper corporate governance standards. We have limited financial resources and only
one employee. The lack of personnel is a weakness because it could lead to improper classification of items and other failures
to make the entries and adjustments necessary to comply with U.S. GAAP. Accordingly, management’s assessment is that the
Company’s internal controls over financial reporting were not effective as of September 30, 2015.
Changes
in Internal Controls Over Financial Reporting
No
changes in the Company’s internal control over financial reporting have come to management’s attention during the
Company’s last fiscal quarter that have materially affected, or are likely to materially affect, the Company’s internal
control over financial reporting.
PART
II - OTHER INFORMATION
ITEM
1. Legal Proceedings.
We
are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in
the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers
or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
ITEM
1A. Risk Factors.
Not
required for smaller reporting companies.
ITEM
2. Unregistered Sales of Equity Securities and Use of Proceeds
In
July 2015, we issued 3,490 shares of Series G Convertible Preferred Stock; 1,081 shares of Series H Convertible Preferred Stock;
and warrants to purchase an aggregate of 15,000,000 shares of common stock to investors who purchased the Series G and Series
H Preferred Shares, as described in Note 5 to the unaudited consolidated financial statements of the Company.
In
July 2015, we issued 816,400 and 650,000 shares of our common stock to holders of Series C Convertible Preferred Stock and Series
F Convertible Preferred Stock, respectively, upon their exercise of the conversion feature contained in those securities.
In
August 2015, we issued 250,000 and 300,000 shares of our common stock to holders of Series C Convertible Preferred Stock and Series
F Convertible Preferred Stock, respectively, upon their exercise of the conversion feature contained in those securities.
In
August 2015, we issued 301 shares of our common stock in connection with implementation of the reverse stock split on our outstanding
common shares that was effective on February 11, 2015.
ITEM
3. Defaults Upon Senior Securities.
None.
ITEM
4. Mine Safety Disclosures.
Not
applicable.
ITEM
5. Other
None
ITEM
6. Exhibits
31.1*
Certification of Principal Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1*
Certification of Principal Executive Officer and Chief Financial Officer pursuant to Rule 18 U.S.C Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101.INS**
XBRL Instance Document
101.SCH**
XBRL Taxonomy Extension Schema
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase
101.DEF**
XBRL Taxonomy Extension Definition Linkbase
101.LAB**
XBRL Taxonomy Extension Label Linkbase
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase
*
Filed herewith
**
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement
or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and
otherwise are not subject to liability.
SIGNATURES
Pursuant
to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
| November 12, 2015 |
Intellect Neurosciences, Inc. |
| |
|
| |
/s/ Elliot Maza |
|
| |
|
| |
Elliot Maza |
|
Chief Executive Officer and Chief Financial Officer |
EXHIBIT 31.01
OFFICER’S CERTIFICATE PURSUANT TO
SECTION 302
I, Elliot Maza, certify that:
1. I have reviewed this quarterly report
on Form 10-Q of Intellect Neurosciences, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial
statements, and other financial information included in this 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 report;
4. The registrant’s other certifying
officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
(b) Designed such internal control over
financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change
in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying
officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; 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 over financial
reporting.
Date: November 12, 2015
| /s/ ELLIOT MAZA |
|
| |
| Elliot Maza |
| |
| Chief Executive Officer and Chief Financial Officer |
| (Principal Executive Officer and Principal Financial Officer) |
EXHIBIT 32.01
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
I, Elliot Maza, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Intellect Neurosciences, Inc.
on Form 10-Q for the fiscal period ended September 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that information contained in this Quarterly Report on Form 10-Q fairly presents in all material
respects the financial condition and results of operations of Intellect Neurosciences, Inc.
| |
|
|
|
|
| Date: November 12, 2015 |
By: |
|
/s/ ELLIOT MAZA |
| |
|
|
|
| |
Name: |
Elliot Maza |
| |
|
|
| |
Title: |
Chief Executive Officer (Principal Executive Officer)
and Chief Financial Officer (Principal Financial Officer) |