See accompanying notes to condensed consolidated financial statements (unaudited).
See accompanying notes to condensed consolidated financial statements (unaudited).
See accompanying notes to condensed consolidated financial statements (unaudited).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS
The condensed consolidated financial statements include AngioGenex, Inc. (AngioGenex or the Company) and its wholly owned subsidiary AngioGenex Therapeutics, Inc. AngioGenex was incorporated in the State of New York on March 31, 1999. AngioGenex is a bio-pharmaceutical company dedicated to the development and commercialization of a novel, inexpensive treatment for vascular diseases including many forms of cancer, and macular degeneration.
NOTE 2 LIQUIDITY AND BASIS OF PRESENTATION
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company has incurred substantial net losses since inception. The future of the Company is dependent upon obtaining additional financing and generating revenue to fund research and development activities and to support operations. However, there is no assurance that the Company will be able to obtain additional financing. Furthermore, there is no assurance that the United Stated Food and Drug Administration (the FDA) will grant future approval of the Companys prospective products or that profitable operations can be attained as a result thereof. The financial statements do not include any recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.
The Company anticipates that its principal source of funds for the next year will be the issuance of additional equity or debt instruments for cash. Management plans to seek additional capital from new equity securities issuances that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan.
Based on the Company's current cash usage expectations, management believes it will not have sufficient liquidity to fund its operations through June 2018. Further, management cannot provide any assurance that it is probable that the Company will be successful in accomplishing any of its plans to raise debt or equity financing. Collectively, these factors raise substantial doubt regarding the Company's ability to continue as a going concern.
NOTE 3 BASIS OF REPORTING AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements reflect the accounts of the Company and its wholly-owned subsidiary and have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). All significant intercompany balances and transactions have been eliminated.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
In the opinion of management, these interim unaudited condensed consolidated financial statements contain all of the adjustments of a normal and recurring nature which are considered necessary for a fair presentation of the financial position of the Company and the results of its operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2018, are not necessarily indicative of the operating results for the entire year. These financial statements should be read in conjunction with the annual financial statements and related disclosures included in the audited financial statements for the year ended December 31, 2017.
7
The accompanying interim unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes. As of March 31, 2018, the Companys significant accounting policies and estimates remain unchanged from those detailed in the audited financial statements for the year ended December 31, 2017.
Recent Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019. The adoption of this standard is not expected to have a material impact on the Company's financial position or results of operations.
NOTE 4 AGREEMENT WITH MEMORIAL SLOAN KETTERING CANCER CENTER
(MSKCC)
In March 2000, in exchange for $30,000, the Company obtained from MSKCC, a related party, an exclusive worldwide right and license in the field of use, including to make, have made, use, lease, commercialize and sell licensed products and to use licensed processes derived from the invention. In 2014, the Company issued 810,000 shares of common stock in exchange for previously agreed milestone, royalty and sub-license payments. The aforementioned issuance of shares of common stock released the Company from any future obligations and there are no remaining obligations under the agreement.
In July 2017 the Company executed a service agreement with MSKCC, a related party, to provide pre-clinical research services in connection with the development and Investigational New Drug (IND) Application for the Companys lead compound and its derivatives. The effective date of the agreement is February 2, 2017, and $250,000 of fees and costs have been incurred as of March 31, 2018.
NOTE 5 RELATED PARTY TRANSACTIONS
An officer of the Company allows the Company to use space in his offices for file keeping and other business purposes. The Company pays no rent for this space. This same officer also provides services to the Company in the form of accounting, bookkeeping and tax preparation, for which the Company is billed. As of March 31, 2018 and 2017, the Company owed the officers business $179,920 and $156,329, respectively, which is included in accounts payable and accrued expenses related parties in the financial statements.
At March 31, 2018 and 2017, the Company owed a former officer $95,000 for unpaid salary pursuant to an agreement.
A shareholder provides legal services to the Company, for which the Company is billed. As of March 31, 2018 the Company owed the shareholders business $15,007, which is included in accounts payable and accrued expenses related parties in the financial statements.
NOTE 6 NOTES PAYABLE
At March 31, 2018, the Companys loans from related parties total $155,200 of principle and accrued interest of $74,444. The interest rate on these notes vary from 0% to 6%. Related parties include directors, officers, stockholders and stock option holders.
At March 31, 2018, the Companys loans from unrelated parties total $11,000 in principle and $792 of accrued interest. The interest rate on these notes is 6%, and the principal and accrued interest is due on demand.
8
The principal maturity on all of these notes payable (including related parties and non-related parties) is as follows:
| |
March 31, 2019
|
$
138,750
|
March 31, 2020
|
-
|
March 31, 2021
|
4,700
|
March 31, 2022
|
-
|
Thereafter
|
22,750
|
|
$
166,200
|
NOTE 7 CAPITAL STOCK
Common Stock
The Company is authorized to issue 150,000,000 shares of $0.001 par value common stock
In July 2017 the Company sold 3,000,000 shares of common stock to related parties at $0.25 per share for proceeds of $750,000.
NOTE 8 STOCK OPTIONS
The Company did not grant any options during the three months ended March 31, 2018. As of March 31, 2018, 3,890,000 options are available under the 2012 Plan.
The following table summarizes information regarding outstanding stock option grants as of March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Outstanding
|
|
Exercisable
|
Range of Exercise Prices
|
|
Granted
Stock Options
Outstanding
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Weighted-
Average
Exercise
Price
|
|
Granted
Stock Options
Exercisable
|
|
Weighted-
Average
Exercise
Price
|
$
|
|
|
0.01-0.05
|
|
|
|
|
6,659,999
|
|
2.60
|
|
$
|
0.04
|
|
|
6,659,999
|
|
|
0.04
|
|
|
|
0.08-0.10
|
|
|
|
3,570,000
|
|
3.13
|
|
0.08
|
|
|
3,070,000
|
|
0.08
|
|
|
|
0.17-0.20
|
|
|
|
2,060,000
|
|
1.30
|
|
0.18
|
|
|
2,060,000
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
0.01-0.20
|
|
|
|
|
12,289,999
|
|
2.54
|
|
$
|
0.07
|
|
|
11,789,999
|
|
$
|
0.07
|
|
Compensation expense of ($10,530) and $25,316 has been recognized for stock options for the three months ended March 31, 2018 and 2017. The aggregate intrinsic value of the outstanding and exercisable options at March 31, 2018 was $1,569,380 and $1,508,380 respectively. At March 31, 2018, $34,032 of unamortized compensation expense for unvested options is expected to be recognized over the next year.
During 2016, the Company granted 200,000 stock options to a consultant, 100,000 that will vest upon obtaining certain regulatory approval and submission of an IND application to the FDA, and 100,000 upon the commencement of the Phase I human clinical trial. The first stock option is accounted for as variable performance based option awards, as the performance is probable of occurring, and will be adjusted each reporting period to reflect the estimated fair value until such approvals and filings are obtained. The second award is contingent upon an event (initiation of a clinical trial) in the future and the management cannot determine if this event is probable at this time. The fair value of these options as of March 31, 2018 and 2017 was $13,950 and $28,876, respectively. The change in value of ($19,041) and $16,805 has been included with stock based compensation in research and development for the three months ended March 31, 2018 and 2017.
9
NOTE 9 COMMITMENTS AND CONTINGENCIES
In July 2006, Comparative Biosciences Inc. (CompBio) , a company that AngioGenex hired to breed and house a colony of its proprietary Id-Knockout mice, sued the Company claiming approximately $200,000 in unpaid invoices. AngioGenexs response included counter-claims for CompBios breaches of contract, as well as a number of business torts. On November 6, 2007 the parties agreed to a disposition of the suit under a stipulated judgment and settlement agreement pursuant to which: CompBio must return the laboratory mice and all scientific data from the research, CompBio agreed to forego all intellectual property rights in the mice and in the research that it acknowledged belong to AngioGenex, and AngioGenex agreed to pay the CompBio $55,000 in installments over a 5-year period, plus accumulated interest at 5% per annum. The stipulated judgment and settlement agreement was filed with the court in November 2007. The Company has not made the required payments since the fourth quarter of 2008, and is in default of this settlement agreement. Under the terms of the agreement, upon receipt of written notification of default from CompBio the Company has five days to cure. Failure by the Company to cure the default results in an increase in the settlement amount to $75,000 plus retroactive interest of 5% on the balance. The Company has not received any notification of default from CompBio as of report date. In November 2007 and various dates in 2008 the Company has made $17,500 payments to CompBio pursuant to the settlement agreement, and had accrued interest of $44,281. Since those dates, no payments have been made.
NOTE 10 NET LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding and issuable during the periods presented. The computation of diluted loss per share is similar to the computation of basic loss per share, except that the denominator is increased for the assumed exercise of dilutive options and other potentially dilutive securities using the treasury stock method unless the effect is antidilutive.
The Company has 12,289,999 common stock options outstanding as of March 31, 2018 and 2017. These options are excluded from the calculation as they are antidilutive.
10
Special Note Regarding Forward-Looking Statements
In this document we make a number of statements, referred to as forward-looking statements, that are intended to convey our expectations or predictions regarding, among other things, our product development and commercialization goals and expectations, our plans and anticipated timing and results of clinical development activities, potential market opportunities, revenue expectations and the potential advantages and applications of our products and product candidates under development. Such forward-looking statements involve risks and uncertainties.
These forward-looking statements are derived, in part, from various assumptions and analyses we have made in the context of our current business plan and information currently available to us and in light of our experience and perceptions of historical trends, current conditions and expected future developments and other factors we believe to be appropriate in the circumstances.
You can generally identify forward-looking statements through words and phrases such as WILL, SEEK, ANTICIPATE, BELIEVE, ESTIMATE, EXPECT, INTEND, PLAN, BUDGET, PROJECT, MAY BE, MAY CONTINUE, MAY LIKELY RESULT and similar expressions. When reading any forward looking-statement, you should remain mindful that all forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of our Company, and that actual results or developments may vary substantially from those expected as expressed in or implied by that statement for a number of reasons or factors, including those relating to:
·
expectations for the clinical and pre-clinical development, manufacturing, regulatory approval, and commercialization of our pharmaceutical product candidates or any other products we may acquire or in-license
;
·
expectations for increases or decreases in expenses
;
·
our use of clinical research organizations and other contractors
;
·
whether or not markets for our products develop and, if they do develop, the pace at which they develop;
·
expectations for generating revenue or becoming profitable on a sustained basis
;
·
expectations for or ability to enter into marketing and other partnership agreements
;
·
our ability to attract and retain qualified personnel to implement our growth strategies;
·
our ability to obtain approval from the FDA for our products;
·
acceptance of our products by doctors, patients or payors
;
·
availability of reimbursement for our products
;
·
our ability to obtain and then protect the patents on our proprietary technology
;
·
our ability to fund our short-term and long-term operating needs;
·
estimates of the sufficiency of our existing cash and cash equivalents and investments to finance our operating requirements, including expectations regarding the value and liquidity of our investments
;
·
changes in our business plan and corporate strategies; and
·
other risks and uncertainties discussed in greater detail in this document, including those captioned
Risk Factors
and
Financial Information.
Any of the assumptions underlying any forward-looking statement could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statement included in this Quarterly Report for the period ended March 31, 2018 filed on Form 10-Q (this Form 10-Q). All forward-looking statements are made as of the date of this
11
Form 10-Q and the risk that our actual results will differ materially from the expectations expressed in this Form 10-Q will increase with the passage of time. Except as otherwise required by law, we undertake no obligation to publicly update or revise any forward-looking statement after the date of this Form 10-Q, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Form 10-Q, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and expectations set forth in this Form 10-Q will be achieved.