x
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QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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¨
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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56-1953785
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(State or Other Jurisdiction of
Incorporation
or Organization)
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(I.R.S. Employer
Identification
No.)
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26361
Crown Valley Parkway, Ste. 150
Mission Viejo, California
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92691
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(Registrant’s Telephone Number, Including Area Code)
949-481-9825
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Large
accelerated filer ¨
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Non-accelerated
filer ¨
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(Do
not check if a smaller reporting company)
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Accelerated
filer ¨
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Smaller
reporting company x
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Class
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Outstanding as of
February 10, 2010
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Common Stock, par value $.01 per share
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59,784,050
shares
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Page
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|||
PART I. FINANCIAL
INFORMATION
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|||
Item
1.
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Financial
Statements
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3
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|
Statement
Regarding Financial Information
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3
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||
Condensed
Consolidated Balance Sheets as of December 31, 2010 (unaudited) and
September 30, 2010
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4
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||
Condensed
Consolidated Statements of Operations for the Three Months ended December
31, 2010 and 2009 (unaudited)
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5
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||
Condensed
Consolidated Statements of Cash Flows for the Three Months ended December
31, 2010 and 2009 (unaudited)
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6
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||
Notes to
Condensed Consolidated Financial Statements
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7
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||
Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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16
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Item
3.
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Quantitative and
Qualitative Disclosures About Market Risk
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19
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Item
4.
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Controls
and Procedures
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19
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PART
II. OTHER INFORMATION
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|||
Item
1.
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Legal
Proceedings
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20
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Item
1A.
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Risk
Factors
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20
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Item
2.
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Unregistered Sales
of Equity Securities and Use of Proceeds
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20
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Item
3.
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Defaults
Upon Senior Securities
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20
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Item
4.
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Removed
and Reserved
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20
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Item
5.
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Other
Information
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20
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Item
6.
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Exhibits
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21
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SIGNATURES
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22
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December 31,
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September 30,
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|||||||
2010
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2010
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
Current
assets:
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||||||||
Cash
and cash equivalents
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$
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2,867
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$
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2,355
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||||
Prepaids
and other current assets
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34
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46
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||||||
Total
current assets
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2,901
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2,401
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||||||
Investment
in CPEC LLC
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32
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32
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||||||
Total
assets
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$
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2,933
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$
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2,433
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||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
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||||||||
Current
liabilities:
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||||||||
Accounts
payable and accrued expenses
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$
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665
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$
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957
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||||
Short-term
debt
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657
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663
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||||||
Total
current liabilities
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1,322
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1,620
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||||||
Warrant
liability
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34,955
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27,549
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||||||
Total
liabilities
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36,277
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29,169
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||||||
Commitments
and Contingencies (Notes E and H)
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||||||||
Stockholders’
equity (deficit):
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||||||||
Preferred
stock, $.01 par value per share, 10,000,000 shares
authorized:
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||||||||
Series
B nonredeemable convertible preferred stock, 600,000 shares authorized;
475,087 shares issued and outstanding as of December 31, 2010 and
September 30, 2010, respectively
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5
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5
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||||||
Common
stock, $.01 par value per share, 200,000,000 shares authorized; 59,634,050
and 56,817,177 shares issued and outstanding at December 31, 2010 and
September 30, 2010, respectively
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596
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568
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||||||
Additional
paid-in capital
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156,387
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155,402
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||||||
Accumulated
deficit
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(190,332
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)
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(182,711
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) | ||||
Total
stockholders’ equity (deficit)
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(33,344
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)
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(26,736
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) | ||||
Total
liabilities and stockholders’ equity (deficit)
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$
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2,933
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2,433
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Three Months Ended
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||||||||
December 31,
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||||||||
2010
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2009
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|||||||
Revenue
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||||||||
Miscellaneous
Income (Note B)
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$
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337
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$
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-
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||||
Costs
and expenses:
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||||||||
Research
and development
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190
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184
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||||||
General
and administrative
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550
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406
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||||||
Total
costs and expenses
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740
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590
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||||||
Loss
from operations
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(403
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) |
(590
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) | ||||
Non-cash
financing charges and change in fair value of warrants (Notes
D, E and F)
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(7,202
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) |
(13,860
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) | ||||
Interest
expense, net
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(15
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) |
(826
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) | ||||
Net
loss
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$
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(7,620
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) |
$
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(15,276
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) | ||
Net
loss per weighted share attributable to common
stockholders:
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||||||||
Basic
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$
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(0.13
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) |
$
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(0.33
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) | ||
Diluted
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$
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(0.13
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) |
$
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(0.33
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) | ||
Weighted
average common shares outstanding:
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||||||||
Basic
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57,026
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46,527
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||||||
Diluted
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57,026
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46,527
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Three Months Ended
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||||||||
December 31,
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||||||||
2010
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2009
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|||||||
Cash
flows from operating activities:
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||||||||
Net
loss
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$
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(7,620
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) |
$
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(15,276
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) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
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||||||||
Noncash
compensation
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187
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190
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||||||
Change
in fair value of warrants
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6,645
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7,646
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||||||
Noncash
exercise of warrants
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169
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—
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||||||
Noncash
consulting expense
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—
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14
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||||||
Noncash
interest and warrant costs
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382
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6,986
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||||||
Change
in assets and liabilities:
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||||||||
Prepaid
and other assets
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11
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105
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||||||
Accounts
payable and accrued expenses
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(291
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) |
(54
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) | ||||
Net
cash used in operating activities
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(517
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) |
(389
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) | ||||
Cash
flows from financing activities:
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||||||||
Proceeds
from issuance of common stock and warrants
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1,000
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1,650
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||||||
Costs
related to the issuance of common stock and warrants
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(13
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) |
(54
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) | ||||
Proceeds
from exercise of warrants
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42
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17
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||||||
Net
cash provided by financing activities
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1,029
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1,613
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||||||
Net
increase in cash and cash equivalents
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512
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1,224
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||||||
Cash
and cash equivalents at beginning of period
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2,355
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646
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||||||
Cash
and cash equivalents at end of period
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$
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2,867
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$
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1,870
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||||
Supplemental
disclosure of cash flow information:
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||||||||
Cash
payments of interest
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$
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—
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$
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—
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||||
Supplemental
disclosure of non-cash investing and financing activities:
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||||||||
Common
stock issued for payment of accounts payable
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$
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—
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$
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413
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||||
Common
stock issued upon conversion of Senior Convertible Notes
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$
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—
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$
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1,000,000
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||||
Common
stock issued for payment of interest on Senior Convertible
Notes
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$
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—
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$
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13
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Number of Shares
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Exercise Price
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Expiration Date
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||||||
50,000
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$
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0.35
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May
2011
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|||||
50,000
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$
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1.00
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May
2011
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|||||
50,000
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$
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1.50
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May
2011
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|||||
50,000
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$
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2.00
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May
2011
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|||||
50,000
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$
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2.50
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May
2011
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|||||
7,000,000
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$
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0.75
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June
2011
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|||||
1,776,668
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$
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0.28
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May
2012
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|||||
20,000
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$
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0.39
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September
2014
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|||||
15,000
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$
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0.50
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September
2014
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|||||
15,000
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$
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0.60
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September
2014
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|||||
43,614,285
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$
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0.28
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October
2016
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|||||
11,785,714
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$
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0.28
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July
2017
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|||||
1,875,000
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$
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0.50
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August
2017
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|||||
1,875,000
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$
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0.50
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December
2017
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|||||
50,000
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$
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0.38
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April
2020
|
|||||
68,276,667
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$
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0.34
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Weighted Average
|
||||||||||||||||
Number of
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Remaining
Contractual
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Aggregate
|
||||||||||||||
Shares
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Exercise Price
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Term (in years)
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Intrinsic Value
|
|||||||||||||
Outstanding
at 9/30/2010
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7,921,904
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$
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1.12
|
7.00
|
$
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874,345
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||||||||||
Granted
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170,000
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$
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0.62
|
9.91
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$
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11,625
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||||||||||
Exercised
|
—
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$
|
0.00
|
0.00
|
$
|
—
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||||||||||
Expired or Canceled
|
(55,748
|
)
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$
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31.75
|
0.00
|
$
|
—
|
|||||||||
Forfeited
|
—
|
$
|
—
|
—
|
$
|
—
|
||||||||||
Vested (RSAs)
|
—
|
$
|
—
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—
|
$
|
—
|
||||||||||
Outstanding at 12/31/2010
|
8,036,156
|
$
|
0.89
|
6.86
|
$
|
1,463,680
|
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||
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|
Number
|
|
||||||||||||||||||
Range of
|
Number Outstanding at |
Weighted Average Exercise |
Weighted Average Remaining |
Exercisable at
December
|
Weighted Average Exercise |
||||||||||||||||
Exercise Prices
|
December 31, 2010
|
Price
|
Contractual Life
|
31, 2010
|
Price
|
||||||||||||||||
$
|
0.29-0.32
|
1,526,250
|
$
|
0.30
|
8.82
|
1,526,250
|
$
|
0.30
|
|||||||||||||
$
|
0.33-0.45
|
2,928,500
|
$
|
0.40
|
9.19
|
1,723,504
|
$
|
0.39
|
|||||||||||||
$
|
0.55-0.73
|
674,111
|
$
|
0.60
|
7.07
|
509,739
|
$
|
0.59
|
|||||||||||||
$
|
0.75-0.89
|
667,835
|
$
|
0.81
|
5.18
|
667,835
|
$
|
0.81
|
|||||||||||||
$
|
0.90-1.45
|
516,500
|
$
|
0.94
|
5.53
|
516,500
|
$
|
0.94
|
|||||||||||||
$
|
1.50
|
1,256,019
|
$
|
1.50
|
2.57
|
1,256,019
|
$
|
1.50
|
|||||||||||||
$
|
1.52-1.85
|
211,250
|
$
|
1.84
|
3.72
|
211,250
|
$
|
1.84
|
|||||||||||||
$
|
2.10-12.85
|
237,045
|
$
|
6.46
|
2.47
|
237,045
|
$
|
6.46
|
|||||||||||||
$
|
15.00-19.38
|
18,646
|
$
|
17.91
|
0.40
|
18,646
|
$
|
17.91
|
|||||||||||||
$
|
0.29-19.38
|
8,036,156
|
$
|
0.89
|
6.86
|
6,666,788
|
$
|
0.99
|
For the three months ended
December 31,
|
||||||||
2010
|
2009
|
|||||||
Research
and Development Expenses
|
20 | 24 | ||||||
General
and Administrative Expenses
|
167 | 166 | ||||||
187 | 190 |
For the three months ended
December 31
|
||||||||
2010
|
2009
|
|||||||
Dividend
yield
|
0 | % | 0 | % | ||||
Expected
volatility
|
92.0 | % | 96 | % | ||||
Risk-free
interest rate
|
3.1 | % | 3.3 | % | ||||
Expected
term
|
10
years
|
10
years
|
Exhibit #
|
Description
|
|
10.1
|
*
|
Consulting
Agreement, dated December 1, 2010, by and among Aeolus Pharmaceuticals,
Inc., Aeolus Sciences, Inc. and Brian J. Day.
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a).
|
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a).
|
|
32.1
|
Certification
by the Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
AEOLUS
PHARMACEUTICALS, INC.
|
||
Date:
February
10, 2011
|
By:
|
/s/ John L. McManus
|
John
L. McManus
President
and Chief Executive Officer
(Principal
Executive Officer)
Chief
Financial Officer, Treasurer and Secretary
(Principal
Financial and Accounting
Officer)
|