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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Aevi Genomic Medicine Inc | NASDAQ:GNMX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.1659 | 0.1601 | 0.165 | 0 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
98-0217544
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
555 California Street, Suite 365, San Francisco, CA
|
94104
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
x
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Page
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PART I
|
FINANCIAL INFORMATION
|
|
ITEM 1.
|
Financial Statements
|
3 |
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
23 |
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
32 |
ITEM 4.
|
Controls and Procedures
|
32 |
PART II
|
OTHER INFORMATION
|
|
ITEM 1.
|
Legal Proceedings
|
32 |
ITEM 1A.
|
Risk Factors
|
32 |
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
32 |
ITEM 3.
|
Defaults Upon Senior Securities
|
33 |
ITEM 4.
|
(Removed and Reserved)
|
33 |
ITEM 5.
|
Other Information
|
33 |
ITEM 6.
|
Exhibits
|
35 |
Signatures
|
36 |
CONSOLIDATED BALANCE SHEETS
|
U.S. dollars in thousands
|
September 30,
|
December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
(Unaudited)
|
||||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and cash equivalents
|
$ | 7,570 | $ | 4,778 | $ | 2,859 | ||||||
Accounts receivable and prepaid expenses
|
1,298 | 468 | 983 | |||||||||
Total current assets
|
8,868 | 5,246 | 3,842 | |||||||||
LONG-TERM ASSETS:
|
||||||||||||
Restricted lease deposits
|
59 | 40 | 46 | |||||||||
Severance pay fund
|
346 | 276 | 318 | |||||||||
Total long-term assets
|
405 | 316 | 364 | |||||||||
PROPERTY AND EQUIPMENT, NET
|
428 | 237 | 243 | |||||||||
DEFERRED ISSUANCE EXPENSES
|
- | 405 | 672 | |||||||||
Total assets
|
$ | 9,701 | $ | 6,204 | $ | 5,121 |
CONSOLIDATED BALANCE SHEETS
|
U.S. dollars in thousands
|
September 30,
|
December 31,
|
|||||||||||
2011
|
2010 (*) | 2010 | ||||||||||
(Unaudited)
|
||||||||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||||||
CURRENT LIABILITIES:
|
||||||||||||
Trade payables
|
$ | 928 | $ | 780 | $ | 743 | ||||||
Advance payment
|
- | 330 | - | |||||||||
Other accounts payable and accrued expenses
|
1,413 | 1,474 | 1,235 | |||||||||
Convertible debentures
|
- | 5,251 | 5,460 | |||||||||
Total current liabilities
|
2,341 | 7,835 | 7,438 | |||||||||
LONG-TERM LIABILITIES:
|
||||||||||||
Accrued severance pay
|
1,252 | 1,043 | 1,087 | |||||||||
Liability in respect of warrants
|
1,429 | 3,607 | 3,670 | |||||||||
Total long-term liabilities
|
2,681 | 4,650 | 4,757 | |||||||||
Total liabilities
|
5,022 | 12,485 | 12,195 | |||||||||
STOCKHOLDERS' EQUITY (DEFICIT):
|
||||||||||||
Common stock - $0.0001 par value;
100,000,000 shares authorized; 9,690,117, 5,147,115
and 5,295,531 shares issued and outstanding at
September 30, 2011 and 2010 and December 31, 2010,
respectively
|
1 | 1 | 1 | |||||||||
Additional paid-in capital
|
52,172 | 34,232 | 34,334 | |||||||||
Deficit accumulated during the development stage
|
(47,494 | ) | (40,514 | ) | (41,409 | ) | ||||||
Total stockholders' equity (deficit)
|
4,679 | (6,281 | ) | (7,074 | ) | |||||||
Total liabilities and stockholders' equity (deficit)
|
$ | 9,701 | $ | 6,204 | $ | 5,121 |
CONSOLIDATED STATEMENTS OF OPERATIONS
|
U.S. dollars in thousands
(except share and per share data)
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Period from
January 27, 2000
(
inception)
through
September 30,
|
||||||||||||||||||
2011
|
2010 (*) | 2011 | 2010 | 2011 | ||||||||||||||||
Unaudited
|
||||||||||||||||||||
Research and development expenses
|
$ | 4,503 | $ | 2,377 | $ | 1 ,785 | $ | 1,011 | $ | 28,958 | ||||||||||
Less - Participation by the Office of the Chief Scientist
|
(860 | ) | (429 | ) | (357 | ) | (191 | ) | (5,293 | ) | ||||||||||
U.S. Government grant
|
- | - | - | - | (244 | ) | ||||||||||||||
Participation by third party
|
(75 | ) | (817 | ) | (75 | ) | (385 | ) | (1,067 | ) | ||||||||||
Research and development expenses, net
|
3,568 | 1,131 | 1,353 | 435 | 22,354 | |||||||||||||||
General and administrative expenses
|
3,709 | 3,727 | 1,877 | 2,616 | 25,183 | |||||||||||||||
Other income:
|
||||||||||||||||||||
Excess amount of participation in research and development from third party
|
- | (2,026 | ) | - | (734 | ) | (2,904 | ) | ||||||||||||
Operating loss
|
7,277 | 2,832 | 3,230 | 2,317 | 44,633 | |||||||||||||||
Financial expenses
|
203 | 1,382 | 267 | 2,199 | 3,523 | |||||||||||||||
Financial income
|
(1,398 | ) | (962 | ) | (74 | ) | (910 | ) | (309 | ) | ||||||||||
Loss before taxes on income
|
6,082 | 3,252 | 3,423 | 3,606 | 47,847 | |||||||||||||||
Taxes on income
|
3 | - | 1 | - | 76 | |||||||||||||||
Loss
|
$ | 6,085 | $ | 3,252 | $ | 3,424 | $ | 3,606 | $ | 47,923 | ||||||||||
Basic and fully diluted loss per share
|
$ | 0.76 | $ | 0.79 | $ | 0.35 | $ | 0.80 | ||||||||||||
Weighted average number of shares of Common stock used in computing basic and fully diluted loss per share
|
8,020,348 | 4,106,997 | 9,657,659 | 4,534,545 |
STATEMENTS OF CHANGES IN STOCKHOLDERS
’
EQUITY (DEFICIT)
|
U.S. dollars in thousands
(except share data)
|
Common stock
|
Additional
paid-in
capital
|
Receipts on
account of
shares
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
deficit
|
||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||
Balance as of January 1, 2010
|
3,490,512 | $ | 1 | $ | 29,523 | $ | 25 | $ | (37,262 | ) | $ | (7,713 | ) | |||||||||||
Exercise of warrants
|
694,145 | (* | ) | 559 | (25 | ) | - | 534 | ||||||||||||||||
Stock based compensation related to options granted to
consultants and employees
|
- | - | 1,732 | - | - | 1,732 | ||||||||||||||||||
Issuance of Common stock in February 2010 at $4.38 per share
to consultants
|
32,142 | (* | ) | 141 | - | - | 141 | |||||||||||||||||
Issuance of Common stock in March 2010, net at $2.63
(GBP 1.75) per share
|
407,800 | (* | ) | 943 | - | - | 943 | |||||||||||||||||
Issuance of Common stock in May 2010, net at $2.52
(GBP 1.75) per share
|
477,934 | (* | ) | 1,115 | - | - | 1,115 | |||||||||||||||||
Issuance of Common stock in May 2010 at $3.43 (GBP 2.28)
per share
|
5,502 | (* | ) | 19 | - | - | 19 | |||||||||||||||||
Issuance of Common stock in August and September 2010, at $4.20 per share
|
39,080 | (* | ) | 164 | - | - | 164 | |||||||||||||||||
Issuance of warrants in September 2010 to a consultant
|
- | - | 36 | - | - | 36 | ||||||||||||||||||
Loss (**)
|
- | - | - | - | (3,252 | ) | (3,252 | ) | ||||||||||||||||
Balance as of September 30, 2010 (unaudited) (**)
|
5,147,115 | $ | 1 | $ | 34,232 | $ | - | $ | (40,514 | ) | $ | (6,281 | ) |
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
U.S. dollars in thousands (except share data)
|
Common stock
|
Additional
paid-in
capital
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
deficit
|
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||
Balance as of January 1, 2011
|
5,295,531 | $ | 1 | $ | 34,334 | $ | (41,409 | ) | $ | (7,074 | ) | |||||||||
Issuance of Common stock at $4.54 per share and warrants at $0.46 per share, net
|
2,624,100 | (* | ) | 10,389 | - | 10,389 | ||||||||||||||
Issuance of Common stock upon conversion of debentures
|
1,407,898 | (* | ) | 5,577 | - | 5,577 | ||||||||||||||
Issuance of Common stock to a consultant at $3.67 per share
|
12,500 | (* | ) | 46 | - | 46 | ||||||||||||||
Issuance of warrants to consultants
|
- | - | 558 | - | 558 | |||||||||||||||
Exercise of options and warrants
|
350,088 | (* | ) | 961 | - | 961 | ||||||||||||||
Stock based compensation related to options and warrants
granted to consultants and employees
|
- | - | 307 | - | 307 | |||||||||||||||
Loss
|
- | - | - | (6,085 | ) | (6,085 | ) | |||||||||||||
Balance as of September 30, 2011 (unaudited)
|
9,690,117 | $ | 1 | $ | 52,172 | $ | (47,494 | ) | $ | 4,679 |
(A Development Stage Company)
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
U.S. dollars in thousands
|
Nine months ended
September 30,
|
Period from
January 27,
2000
(inception)
through
September 30,
|
|||||||||||
2011
|
2010(*) | 2011 | ||||||||||
Unaudited
|
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Loss
|
$ | (6,085 | ) | $ | (3,252 | ) | $ | (47,923 | ) | |||
Adjustments to reconcile loss to net cash used in operating activities:
|
||||||||||||
Depreciation
|
65 | 90 | 1,047 | |||||||||
Loss from disposal of property and equipment
|
- | 1 | 330 | |||||||||
Issuance of shares as consideration for providing security for letter of credit
|
- | - | 16 | |||||||||
Stock based compensation related to options and warrants granted to employees and consultants
|
307 | 1,732 | 7,074 | |||||||||
Interest and amortization of beneficial conversion feature of convertible note
|
- | - | 759 | |||||||||
Change in fair value of convertible debentures and warrants
|
(1,282 | ) | 360 | 2,296 | ||||||||
Accrued severance pay, net
|
137 | 38 | 907 | |||||||||
Exchange differences on a restricted lease deposit
|
(4 | ) | 2 | (5 | ) | |||||||
Exchange differences on a long term loan
|
- | - | 3 | |||||||||
Increase (decrease) in trade payables
|
789 | (167 | ) | 1,532 | ||||||||
Decrease (increase) in accounts receivable, prepaid expenses and deferred issuance expenses
|
357 | (790 | ) | (1,298 | ) | |||||||
Increase (decrease) in other accounts payable, accrued expenses and advance payment
|
259 | (290 | ) | 2,041 | ||||||||
Net cash used in operating activities
|
(5,457 | ) | (2,276 | ) | (33,221 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase of property and equipment
|
(250 | ) | (24 | ) | (1,980 | ) | ||||||
Proceeds from disposal of property and equipment
|
- | - | 173 | |||||||||
Increase in restricted lease deposit and prepaid lease payments
|
(9 | ) | (4 | ) | (54 | ) | ||||||
Net cash used in investing activities
|
$ | (259 | ) | $ | (28 | ) | $ | (1,861 | ) |
(A Development Stage Company)
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
U.S. dollars in thousands
|
Nine months ended
September 30,
|
Period from
January 27,
2000 (inception)
through
September 30,
|
|||||||||||
2011
|
2010(*) | 2011 | ||||||||||
Unaudited
|
||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds from issuance of shares and warrants, net
|
$ | 10,389 | $ | 2,077 | $ | 34,501 | ||||||
Proceeds from exercise of options and warrants, net
|
38 | 534 | 986 | |||||||||
Repayment of a long-term loan
|
- | - | (73 | ) | ||||||||
Proceeds from long term loan
|
- | - | 70 | |||||||||
Issuance of a convertible debenture and warrants
|
- | 4,001 | 7,168 | |||||||||
Net cash provided by financing activities
|
10,427 | 6,612 | 42,652 | |||||||||
Increase in cash and cash equivalents
|
4,711 | 4,308 | 7,570 | |||||||||
Balance of cash and cash equivalents at the beginning of the period
|
2,859 | 470 | - | |||||||||
Balance of cash and cash equivalents at the end of the period
|
$ | 7,570 | $ | 4,778 | $ | 7,570 | ||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the period for:
|
||||||||||||
Interest
|
$ | 49 | $ | 94 | $ | 242 | ||||||
Taxes
|
$ | 1 | $ | 15 | $ | 98 | ||||||
Supplemental disclosure of non-cash flow information:
|
||||||||||||
Issuance expenses paid with shares
|
$ | - | $ | - | $ | 310 | ||||||
Issuance of Common stock upon conversion of convertible debentures
|
$ | 5,577 | $ | - | $ | 8,422 | ||||||
Issuance of Common stock and warrants to consultants
|
$ | 604 | $ | 341 | $ | 1,151 | ||||||
Classification of liability in respect of warrants into equity due to exercise of warrants
|
$ | 834 | $ | - | $ | 834 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 1:-
|
GENERAL
|
a.
|
Medgenics, Inc. (the "Company") was incorporated in January 2000 in Delaware. The Company has a wholly-owned subsidiary, Medgenics Medical Israel Ltd. (formerly Biogenics Ltd.) (the "Subsidiary"), which was incorporated in Israel in March 2000. The Company and the Subsidiary are engaged in the research and development of products in the field of biotechnology and associated medical equipment and are thus considered development stage companies as defined in Accounting Standards Codification ("ASC") topic number 915,
"Development Stage Entities"
("ASC 915").
|
b.
|
The Company and the Subsidiary are in the development stage. As reflected in the accompanying financial statements, the Company incurred a loss during the nine month period ended September 30, 2011 of $6,085 and had a negative cash flow from operating activities of $5,457 during the nine-months period ended September 30, 2011. The Company and the Subsidiary have not yet generated revenues from product sale. The Company has begun generating income from partnering on development programs and expects to continue to expand its partnering activity. Management’s plans also include seeking additional investments and commercial agreements to continue the operations of the Company and the Subsidiary.
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 1:-
|
GENERAL (CONT.)
|
c.
|
Pursuant to an agreement entered into on February 11, 2011 (effective as of January 31, 2011), the Regents of the University of Michigan (Michigan) have granted an exclusive worldwide license for patent rights relating to certain uses of variants of clotting Factor VIII. The License Agreement covers a portfolio of 2 issued and 3 pending patents. In consideration the Company agreed to pay Michigan the following amounts:
|
I.
|
an initial license fee of $25;
|
II.
|
an annual license fee in arrears of $10 rising to $50 following the grant by the Company of a sublicense or (if sooner) from the 6th anniversary of the effective date of the Licence Agreement;
|
III.
|
staged milestone payments of $750 (in aggregate), of which $400 will be recoupable against royalties;
|
IV.
|
royalties at an initial rate of 5% of net sales, reducing by a percentage point at predetermined thresholds to 2% upon cumulative net sales exceeding $50,000;
|
V.
|
sublicense fees at an initial rate of 6% of sublicensing revenues, reducing by a percentage point at predetermined thresholds to 4% upon cumulative sublicensing revenues exceeding $50,000; and
|
VI.
|
patent maintenance costs.
|
d.
|
On October 22, 2009 ("Effective Date") the Company signed a preclinical development and option agreement which was amended in December 2009 (the "Agreement"), with a major international healthcare company (the "Healthcare company") that is a market leader in the field of hemophilia. The Agreement included funding for preclinical development of the Company’s Biopump protein technology to produce and deliver the clotting protein Factor VIII ("FVIII") for the sustained treatment of hemophilia.
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 1:-
|
GENERAL (CONT.)
|
d.
|
(cont.)
|
e.
|
In June 2011, the Subsidiary received approval for an additional Research and Development program from the Office of the Chief Scientist in Israel (“OCS”) for the period March through August 2011, subsequently extended through September 2011. The approval allows for a grant of up to approximately $900 based on research and development expenses, not funded by others, of up to $1,500.
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY
|
a.
|
Reverse split:
|
b.
|
Issuance of shares, options and warrants to investors
|
1.
|
In January 2011, an investor exercised warrants to purchase 19,558 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise mechanism. Using this cashless exercise method, the investor was issued 12,298 shares. In addition, an investor exercised warrants to purchase 3,026 shares of Common stock at an exercise price of $2.49 per share, or an aggregate exercise price of $8.
|
2.
|
In February 2011, three investors each exercised warrants to purchase 40,338 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise mechanism. Using this cashless exercise method, the investors were each issued 25,534 shares.
|
3.
|
In March 2011, two investors exercised warrants to purchase a total of 496 shares of Common stock at an exercise price of $0.002 per share. The cash consideration received was immaterial. In addition, an investor exercised warrants to purchase 12,224 shares of Common stock at an exercise price of $2.49 per share, or an aggregate exercise price of $30. Also in March 2011, eight investors exercised warrants to purchase a total of 162,765 shares of Common stock at the exercise price of $2.49 per share using the cashless exercise mechanism. Using this cashless exercise method, the investors were issued a total of 80,765 shares of Common stock.
|
4.
|
In March 2011, unexercised warrants held by eight investors to purchase a total of 270,992 shares of Common stock expired. The aggregate value of these warrants, $636, was recorded to finance income.
|
5.
|
In April 2011, an investor exercised warrants to purchase 7,334 shares of Common stock at the exercise price of $2.49 per share using the cashless exercise mechanism. Using this cashless exercise method, the investor was issued 3,060 shares of Common stock.
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY (CONT.)
|
|
b.
|
Issuance of shares, options and warrants to investors (cont.)
|
6.
|
On April 13, 2011 the Company completed the IPO of its Common stock on the NYSE Amex. The Company issued 2,624,100 shares of Common stock, including 164,100 shares pursuant to the exercise of the underwriters’ over-allotment option, at a price of $4.54 per share and redeemable Common Stock purchase warrants to purchase 2,829,000 shares, including 369,000 warrants pursuant to the exercise of the underwriters’ over-allotment option, at a price of $0.46 per warrant for total gross proceeds of $13,215 or approximately $10,389 in net proceeds after deducting underwriting discounts and commissions of $1,454 and other offering costs of approximately $1,372.
|
7.
|
On the closing date of the IPO (April 13, 2011) the 2009 Debentures were automatically converted at a conversion price of $2.724 per share of Common stock into an aggregate 209,656 shares of Common stock and the Company issued 5-year warrants to purchase 84,693 shares of Common stock (of which warrants to purchase 11,310 shares of Common stock were granted to placement agents) at an initial exercise price of $4.99 per share in connection with the conversion of the 2009 Debentures. On the same date, the 2010 Debentures were automatically converted at a conversion price of $3.405 per share of Common stock into an aggregate 1,198,242 shares of Common stock.
|
8.
|
In August 2011, three investors exercised warrants to purchase a total of 137,517 shares of Common stock at an exercise price of $3.85 per share using the cashless exercise mechanism. Using this cashless exercise method, the investors were issued a total of 22,472 shares of Common stock.
|
9.
|
Subsequent to the balance sheet date, in October 2011, several investors exercised warrants to purchase a total of 314,346 shares of Common stock at an exercise price of $3.85 per share using the cashless exercise mechanism. Using this cashless exercise method, the investors were issued a total of 21,684 shares.
|
c.
|
Issuance of shares, stock options, warrants and restricted shares to employees and directors
|
1.
|
In January 2011, the Company granted options to purchase 12,857 shares of Common stock under its 2006 Stock Incentive Plan, as amended (the “Stock Incentive Plan”), at an exercise price of $6.55 per share to each of four of the Company's non-executive directors. Such options have a 10-year term and vest in equal installments over three years.
|
2.
|
In May 2011, a director of the Company exercised warrants to purchase 60,507 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise mechanism. The director was issued 18,269 shares as a result of the warrant exercise.
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY (CONT.)
|
c.
|
Issuance of shares, stock options, warrants and restricted shares to employees and directors (cont.)
|
3.
|
In May and June 2011, unexercised options held by two employees to purchase a total of 34,135 shares of Common stock expired.
|
4.
|
In May 2011, three employees exercised options to purchase a total of 67,231 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise method. The employees were issued a total of 25,159 shares as a result of the option exercises.
|
5.
|
In July 2011, the Company granted an employee 40,000 options exercisable at a price of $3.64 per share. The options have a 10-year term and vest in four equal annual tranches of 10,000 each. The options were granted under the Stock Incentive Plan.
|
6.
|
In September 2011, the Company granted an employee 11,429 options exercisable at $3.86 per share. The options have a 10-year term and vest in equal tranches over four years. The options were granted under the Stock Incentive Plan.
|
7.
|
In September 2011, a director of the Company exercised options to purchase 45,701 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise mechanism. The director was issued 16,197 shares of Common stock as a result of the option exercise.
|
8.
|
In December 2010, the Company granted the Executive Chairman of the Board of the Company 57,142 shares of restricted Common stock in compensation for his services in his new role as the Executive Chairman of the Board of the Company. These shares of Common stock are restricted in that they may not be disposed of and are not entitled to dividends. These restrictions will be removed in relation to 14,285 shares of Common stock on each of October 18, 2012 and October 18, 2013 and the final 28,572 shares of Common stock on October 18, 2014. The value of these restricted shares of Common stock, $285, was based on the fair value at the grant date and is being recognized as an expense using the straight line method. The Company recorded expenses in the amount of $55 for the period of nine months ended September 30, 2011.
|
Restricted shares
|
Outstanding
|
Exercisable
|
||||
Number of restricted shares as of December 31, 2010
and September 30, 2011
|
57,142 | - |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY (CONT.)
|
c.
|
Issuance of shares, stock options, warrants and restricted shares to employees and directors (cont.)
|
|
9.
|
A summary of the Company’s activity for options and warrants granted to employees and directors is as follows:
|
Nine months ended September 30, 2011
|
||||||||||||||||
Number of
options and
warrants
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
terms
(years)
|
Aggregate
intrinsic value
price
|
|||||||||||||
Outstanding at January 1, 2011
|
1,878,141 | $ | 4.13 | |||||||||||||
Granted
|
102,857 | 5.15 | ||||||||||||||
Expired
|
34,135 | 3.01 | ||||||||||||||
Exercised
|
112,932 | 2.49 | ||||||||||||||
Outstanding at September 30, 2011
|
1,833,931 | $ | 4.31 | 4.55 | $ | 2,246 | ||||||||||
Exercisable at September 30, 2011
|
1,534,035 | $ | 3.80 | 3.86 | $ | 2,204 | ||||||||||
Vested and expected to vest at
September 30, 2011
|
1,815,919 | $ | 4.29 | 4.51 | $ | 2,244 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY (CONT.)
|
d.
|
Issuance of shares, stock options and warrants to consultants
|
1.
|
In September 2010, the Company issued warrants to purchase 46,071 shares of Common stock in settlement of fees in relation to the 2010 Debentures issued in 2010. These warrants were cancelled in March 2011.
|
2.
|
In January 2011, a consultant exercised warrants to purchase 2,250 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise mechanism. Using this cashless exercise method, the consultant was issued 1,428 shares.
|
3.
|
In March 2011, a consultant exercised warrants to purchase 34,288 shares of Common stock at an exercise price of $0.02 per share using the cashless exercise mechanism. Using this cashless exercise method, the consultant was issued 34,111 shares. In addition, a consultant exercised warrants to purchase 32,038 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise mechanism. Using this cashless exercise method, the consultant was issued 13,400 shares.
|
4.
|
In March 2011, the Company granted options to purchase 19,068 shares of Common stock under the Stock Incentive Plan at an exercise price of $6.65 per share to each of two new members of the Company's Strategic Advisory Board. Such options have a 10 year term and vest in equal installments over three years. The fair value of these options at the grant date was $2.51 per option.
|
5.
|
In March 2011, unexercised warrants held by a consultant to purchase 15,234 shares of Common stock expired.
|
6.
|
In April 2011, the Company granted warrants to purchase 11,310 shares of Common stock at an exercise price of $4.99 per share to placement agents in settlement of fees in relation to the 2009 Debentures.
|
7.
|
In April 2011, unexercised options held by a consultant to purchase 3,056 shares of Common stock expired.
|
8.
|
In June and July 2011, unexercised options held by a consultant to purchase an aggregate 19,355 shares of Common stock expired.
|
9.
|
In May and June 2011, three consultants exercised warrants to purchase a total of 85,383 shares of Common stock at an exercise price of $2.49 per share using the cashless exercise method. The consultants were issued a total of 30,553 shares.
|
10.
|
In July 2011, the Company issued warrants to purchase 50,000 shares of Common stock at an exercise price of $4.01 to consultants in compensation for financial advisory services.
|
11.
|
In August 2011, the Company issued warrants to purchase 150,000 shares of Common stock at an exercise price of $4.80 to a consultant in compensation for financial advisory services.
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY (CONT.)
|
d.
|
Issuance of shares, stock options and warrants to consultants (cont.)
|
|
12.
|
In September 2011, the Company issued 12,500 shares of Common stock to a consultant in compensation for investor relation services. Total compensation, measured as the grant date fair market value of the stock, amounted to $46 and was recorded as an operating expense in the Statement of Operations.
|
|
13.
|
Subsequent to the balance sheet date, in October 2011, several consultants exercised warrants to purchase a total of 29,725 shares of Common stock at an exercise price of $3.85 per share using the cashless exercise method. The consultants were issued a total of 1,896 shares.
|
|
14.
|
A summary of the Company's activity for warrants and options granted to consultants under the stock option plan is as follows:
|
Nine months ended September 30, 2011
|
||||||||||||||||
Number of
options and
warrants
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
terms
(years)
|
Aggregate
intrinsic value
price
|
|||||||||||||
Outstanding at January 1, 2011
|
558,292 | $ | 5.04 | |||||||||||||
Granted
|
249,446 | 4.93 | ||||||||||||||
Exercised
|
153,959 | 1.94 | ||||||||||||||
Cancelled or expired
|
83,716 | 6.46 | ||||||||||||||
Outstanding at September 30, 2011
|
570,063 | $ | 5.41 | 3.77 | $ | 65 | ||||||||||
Exercisable at September 30, 2011
|
485,654 | $ | 5.16 | 3.13 | $ | 61 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY (CONT.)
|
e.
|
Compensation expenses
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Research and development (income)
expenses
|
$ | 76 | $ | 154 | $ | 21 | $ | 95 | ||||||||
General and administrative (income)
expenses
|
231 | 1,578 | 75 | 1,437 | ||||||||||||
$ | 307 | $ | 1,732 | $ | 96 | $ | 1,532 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 3:-
|
STOCKHOLDERS’ EQUITY (CONT.)
|
|
f.
|
Summary of options and warrants:
|
As of September 30, 2011
|
||||||||||||||||
Options / Warrants
|
Exercise
Price
per
Share
|
Options and
W
arrants
Outstanding
|
Options and
Warrants
Exercisable
|
Weighted
Average
Remaining
Contractual
Terms (in years)
|
||||||||||||
Options
:
|
||||||||||||||||
Granted to Employees and Directors
|
$ | 2.49 | 182,806 | 182,806 | 4.5 | |||||||||||
$ | 3.64 | 40,000 | - | 9.8 | ||||||||||||
$ | 3.86 | 11,429 | - | 9.9 | ||||||||||||
$ | 4.10 | 42,783 | 42,783 | 0.9 | ||||||||||||
$ | 5.47 | 49,536 | 37,152 | 1.7 | ||||||||||||
$ | 6.55 | 51,428 | - | 9.3 | ||||||||||||
$ | 7.35 | 332,046 | 300,831 | 1.1 | ||||||||||||
$ | 8.19 | 218,713 | 65,273 | 9.0 | ||||||||||||
928,741 | 628,845 | |||||||||||||||
Granted to Consultants
|
$ | 4.20 | 19,354 | 6,451 | 3.2 | |||||||||||
$ | 5.47 | 19,354 | 19,354 | 2.0 | ||||||||||||
$ | 6.65 | 38,136 | - | 9.1 | ||||||||||||
$ | 7.35 | 46,045 | 38,099 | 1.1 | ||||||||||||
$ | 8.19 | 38,136 | 12,712 | 9.0 | ||||||||||||
161,025 | 76,616 | |||||||||||||||
Total Options
|
1,089,766 | 705,461 | ||||||||||||||
Warrants
:
|
||||||||||||||||
Granted to Employees and Directors
|
$ | 2.49 | 905,190 | 905,190 | 4.5 | |||||||||||
Granted to Consultants
|
$ | 3.19 | 11,370 | 11,370 | 4.0 | |||||||||||
$ | 3.85 | 29,725 | 29,725 | 0.1 | ||||||||||||
$ | 4.01 | 50,000 | 50,000 | 4.8 | ||||||||||||
$ | 4.80 | 150,000 | 150,000 | 4.8 | ||||||||||||
$ | 4.99 | 11,310 | 11,310 | 4.5 | ||||||||||||
$ | 5.22 | 16,976 | 16,976 | 1.2 | ||||||||||||
$ | 5.37 | 37,508 | 37,508 | 0.9 | ||||||||||||
$ | 5.65 | 102,149 | 102,149 | 1.8 | ||||||||||||
409,038 | 409,038 | |||||||||||||||
Granted to Investors
|
$ | 0.0002 | 35,922 | 35,922 | 4.5 | |||||||||||
$ | 3.85 | 397,238 | 397,238 | 0.1 | ||||||||||||
$ | 4.54 | 428,571 | 428,571 | 4.0 | ||||||||||||
$ | 4.99 | 73,383 | 73,383 | 4.5 | ||||||||||||
$ | 5.37 | 166,132 | 166,132 | 1.0 | ||||||||||||
$ | 5.65 | 50,721 | 50,721 | 1.2 | ||||||||||||
$ | 6.00 | 2,829,000 | 2,829,000 | 4.6 | ||||||||||||
$ | 8.75 | 34,804 | 34,804 | 0.3 | ||||||||||||
4,015,771 | 4,015,771 | |||||||||||||||
Total Warrants
|
5,329,999 | 5,329,999 | ||||||||||||||
Total Options and Warrants
|
6,419,765 | 6,035,460 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S. dollars in thousands
|
NOTE 4:-
|
RESTATEMENT
|
Sept. 30, 2010
as reported
|
Adjustment
|
Sept. 30, 2010
restated
|
||||||||||
Consolidated Balance Sheet
:
|
||||||||||||
Liability in respect of warrants
|
$ | 1,137 | $ | 2,470 | $ | 3,607 | ||||||
Total long-term liabilities
|
$ | 2,180 | $ | 2,470 | $ | 4,650 | ||||||
Total liabilities
|
$ | 10,015 | $ | 2,470 | $ | 12,485 | ||||||
Additional paid-in capital
|
$ | 35,066 | $ | (834 | ) | $ | 34,232 | |||||
Deficit Accumulated
|
$ | (38,918 | ) | $ | (1,596 | ) | $ | (40,514 | ) | |||
Total stockholders' deficit
|
$ | (3,811 | ) | $ | (2,470 | ) | $ | (6,281 | ) |
Nine months
ended Sept. 30,
2010
as reported
|
Adjustment
|
Nine months
ended Sept. 30,
2010
restated
|
||||||||||
Consolidated Statement of Operations
:
|
||||||||||||
Financial
income
|
$ | 59 | $ | 903 | $ | 962 | ||||||
Income (loss) before taxes on income
|
$ | (4,155 | ) | $ | 903 | $ | (3,252 | ) | ||||
Net income (loss)
|
$ | (4,155 | ) | $ | 903 | $ | (3,252 | ) | ||||
Net income (loss) attributable to Common
Stockholders
|
$ | (4,155 | ) | $ | 903 | $ | (3,252 | ) | ||||
Basic and fully diluted earnings (loss) per
share of Common stock
|
$ | (1.05 | ) | $ | 0.26 | $ | (0.79 | ) |
|
·
|
an initial license fee of $25,000;
|
|
·
|
an annual license fee in arrears of $10,000 rising to $50,000 following the grant by the Company of a sublicense or (if sooner) from the 6th anniversary of the effective date of the Licence Agreement;
|
|
·
|
staged milestone payments of $750,000 (in aggregate), of which $400,000 will be recoupable against royalties;
|
|
·
|
royalties at an initial rate of 5% of net sales, reducing by a percentage point at predetermined thresholds to 2% upon cumulative net sales exceeding $50,000,000;
|
|
·
|
Sublicense fees at an initial rate of 6% of sublicensing revenues, reducing by a percentage point at predetermined thresholds to 4%. upon cumulative sublicensing revenues exceeding $50,000,000; and
|
|
·
|
Patent maintenance costs.
|
|
·
|
Non-refundable license fee of $0.4 million to be paid in three installments, as follows:
|
|
·
|
$0.05 million when the accrued investments in us by any third party after May 23, 2005 equal at least $3 million (paid in 2007);
|
|
·
|
$0.15 million when the accrued investments in us by any third party after May 23, 2005 equal at least $12 million (paid in second quarter of 2010); and
|
|
·
|
$0.2 million when the accrued investments in us by any third party after May 23, 2005 equal at least $18 million (paid in April 2011).
|
|
·
|
Royalties at a rate of 5% of net sales of product incorporating the licensed technology; and
|
|
·
|
Sub-license fees at a rate of 9% of sublicense considerations received by us.
|
|
·
|
a one time, non-refundable license fee of $25,000 which was paid in 2007;
|
|
·
|
an annual non-refundable maintenance fee of $20,000;
|
|
·
|
a one-time milestone payment of $75,000 upon FDA clearance or equivalent of clearance for therapeutic use. As of the balance sheet date, we have not achieved FDA clearance; and
|
|
·
|
an installment of $25,000 upon our executing any sub-licenses in respect of the BCM technology.
|
|
·
|
an initial license fee of $25,000;
|
|
·
|
an annual license fee in arrears of $10,000 rising to $50,000 following the grant by us of a sublicense or (if sooner) from the 6th anniversary of the effective date of the licence agreement;
|
|
·
|
staged milestone payments of $750,000 (in aggregate), of which $400,000 will be recoupable against royalties;
|
|
·
|
royalties at an initial rate of 5% of net sales, reducing by a percentage point at predetermined thresholds to 2% upon cumulative net sales exceeding $50,000,000;
|
|
·
|
sublicense fees at an initial rate of 6% of sublicensing revenues, reducing by a percentage point at predetermined thresholds to 4%. upon cumulative sublicensing revenues exceeding $50,000,000; and
|
|
·
|
patent maintenance costs.
|
Exhibit No.
|
Description
|
3.1
|
Amended and Restated Certificate of Incorporation (previously filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed November 5, 2010 (File No. 333-170425) and incorporated herein by reference).
|
3.2
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation (previously filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed November 5, 2010 (File No. 333-170425) and incorporated herein by reference).
|
3.3
|
Amended and Restated By-Laws (previously filed as Exhibit 3.3 to the Company’s Amendment No. 4 to Registration Statement on Form S-1 filed February 22, 2011 (File No. 333-170425) and incorporated herein by reference).
|
3.4
|
Amendment to Amended and Restated By-Laws (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed April 11, 2011 (File No. 001-35112) and incorporated herein by reference).
|
10.1
|
Employment Agreement, effective as of July 1, 2011, between the Company and Clarence L. “Butch” Dellio (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 8, 2011 (File No. 001-35112) and incorporated herein by reference).
|
10.2
|
Resignation Agreement dated as of November 9, 2011 between Dr. Baruch Stern and Medgenics Medical Israel Ltd. (filed herewith).
|
31.1
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
31.2
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
32.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
|
101
|
Interactive Data File (furnished herewith).
|
MEDGENICS, INC.
|
|||
Date: November 10, 2011
|
By:
|
/s/ Andrew L. Pearlman
|
|
Andrew L. Pearlman
|
|||
President and Chief Executive Officer
|
|||
(Principal Executive Officer)
|
|||
Date: November 10, 2011
|
By:
|
/s/ Phyllis Bellin
|
|
Phyllis Bellin
|
|||
Director of Finance and Administration
|
|||
(Principal Accounting and Financial Officer)
|
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