ADVENTRX to File Amended 2005 Third Quarter to Reflect Accounting for July 2005 Financing Under EITF 00-19
March 20 2006 - 2:21PM
PR Newswire (US)
SAN DIEGO, March 20 /PRNewswire-FirstCall/ -- ADVENTRX
Pharmaceuticals, Inc. (AMEX:ANX) today announced that an
interpretation of EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock" ("EITF 00-19"), would affect the accounting treatment of an
equity financing that the Company consummated in July 2005. The
Company's management determined, after consultation with J.H. Cohn
LLP, the Company's independent registered public accounting firm,
that the Company would be required to amend its financial
statements included in its Quarterly Report on Form 10-Q for the
quarter ended September 30, 2005 (the "Q3 Report"). As a result,
the Company's Audit Committee, Board of Directors and management
concluded that the financial statements in its originally-filed Q3
Report should no longer be relied upon with respect to the
accounting treatment of the July 2005 financing and that the
Company should amend certain portions of the Q3 Report that do not
adequately disclose the effect of the July 2005 Financing in light
of EITF 00-19. The Company is promptly filing a Current Report on
Form 8-K and an amendment to its Q3 Report. Although this issue
arose shortly before the Company filed its Annual Report on Form
10-K for the year ended December 31, 2005, filed with the SEC on
March 16, 2006, the audited financial statements included in that
report reflect the correct accounting treatment of the July 2005
financing under EITF 00-19. As the Company previously reported in a
Current Report on Form 8-K, filed with the SEC on July 27, 2005, in
July 2005, the Company entered into a Securities Purchase Agreement
with a number of investors for the sale of 10,810,809 shares of
Common Stock and the issuance of warrants to purchase 10,810,809
shares of Common Stock. Pursuant to the terms of the Securities
Purchase Agreement the Company filed and obtained the effectiveness
in a timely manner of a re-sale registration statement on Form S-3
covering the resale of the shares and the warrant shares issued in
the financing. The Company is also obligated pursuant to the
Securities Purchase Agreement to maintain the effectiveness of the
registration statement. If the Company fails to maintain the
effectiveness of the registration statement, the Company would be
obligated to pay to each investor in the financing a liquidated
damages amount under the Securities Purchase Agreement. The Company
filed a copy of the Securities Purchase Agreement describing these
obligations as exhibit 4.23 to its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2005, filed with the SEC on August
12, 2005. In accordance with EITF 00-19, due to the potential
payment of these liquidated damages, the fair value of the warrants
issued in the financing should have been accounted for as a
liability, with an offsetting reduction to the additional paid-in
capital account at the closing date. The value of the warrants
should have been remeasured based on their fair market value at the
end of the quarterly period ended September 30, 2005, and changes
to the warrant liability and related gain or loss should have been
reflected in the financial statements in the Company's Q3 Report.
About ADVENTRX ADVENTRX Pharmaceuticals is a biopharmaceutical
research and development company focused on introducing new
technologies for anticancer and antiviral treatments that surpass
the performance and safety of existing drugs, by addressing
significant problems such as drug metabolism, toxicity,
bioavailability and resistance. More information can be found on
the Company's Web site at http://www.adventrx.com/. Forward-Looking
Statement This press release contains forward-looking statements,
within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, regarding ADVENTRX. Such
statements are made based on management's current expectations and
beliefs. Actual results may vary from those currently anticipated
based upon a number of factors, including uncertainties inherent in
the drug development process, the timing and success of clinical
trials, the validity of research results, and the receipt of
necessary approvals from the FDA and other regulatory agencies. For
a discussion of such risks and uncertainties, which could cause
actual results to differ from those contained in the
forward-looking statements regarding ADVENTRX, see the section
titled "Risk Factors" in ADVENTRX's last annual report on Form
10-K, as well as other reports that ADVENTRX files from time to
time with the Securities and Exchange Commission. All
forward-looking statements regarding ADVENTRX are qualified in
their entirety by this cautionary statement. ADVENTRX undertakes no
obligation to release publicly any revisions, which may be made to
reflect events or circumstances after the date hereof. DATASOURCE:
ADVENTRX Pharmaceuticals, Inc. CONTACT: Andrea Lynn of ADVENTRX
Pharmaceuticals, Inc., +1-858-552-0866 Web site:
http://www.adventrx.com/ Company News On-Call:
http://www.prnewswire.com/gh/cnoc/comp/920134.html
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