Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED: June 30, 2011

 

or

 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                     to                    

 

Commission File Number: 001-32325

 

CALLISTO PHARMACEUTICALS, INC.

(Exact name of Registrant as specified in its charter)

 

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

 

13-3894575
(I.R.S. Employer
Identification No.)

 

420 Lexington Avenue, Suite 1609, New York, New York 10170

(Address of principal executive offices) (Zip Code)

 

(212) 297-0010

(Registrant’s telephone number)

 

 

(Former Name, Former Address and Former Fiscal Year, if changed since last report)

 

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 x  No o

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 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 x  No o

 

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 o

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company x

(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 o  No x

 

The number of the registrant’s shares of common stock outstanding was 158,516,071 as of August 12, 2011.

 

 

 



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

 

FORM 10-Q

 

CONTENTS

 

 

 

Page

PART I—FINANCIAL INFORMATION

4

Item 1.

Financial Statements

4

 

Condensed Consolidated Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010

4

 

Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2011 and 2010 (unaudited) and the period June 5, 1996 (Inception) to June 30, 2011 (unaudited)

5

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the period June 5, 1996 (Inception) to June 30, 2011 (unaudited)

6

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010 (unaudited) and for the period June 5, 1996 (Inception) to June 30, 2011 (unaudited)

15

 

Notes to Condensed Consolidated Financial Statements (unaudited)

17

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II—OTHER INFORMATION

33

Item 6.

Exhibits

33

Signatures

34

 

2



Table of Contents

 

INTRODUCTORY NOTE

 

This Report on Form 10-Q for Callisto Pharmaceuticals, Inc. (“Callisto” or the “Company”) may contain forward-looking statements. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. Forward-looking statements include information concerning possible or assumed future business success or financial results. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 and other periodic reports filed with the SEC. Accordingly, to the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the Company, please be advised that Callisto’s actual financial condition, operating results and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. All drug candidates to treat GI disorders and diseases, currently plecanatide and SP-333, are being developed exclusively by Synergy Pharmaceuticals, Inc., our controlled subsidiary (“Synergy”). Use of the terms “we”, “our” or “us” in connection with GI drug candidates discussed herein refer to research and development activities and plans of Synergy.

 

3



Table of Contents

 

PART I—FINANCIAL INFORMATION

 

Item 1.    Financial Statements

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

June 30, 2011

 

December 31, 2010

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

598,104

 

$

1,708,982

 

Prepaid expenses and other

 

969,399

 

769,403

 

Tax credits receivable

 

250,000

 

781,127

 

 

 

 

 

 

 

Total Current Assets

 

1,817,503

 

3,259,512

 

Property and equipment, net

 

6,763

 

9,397

 

Security deposits

 

87,740

 

87,740

 

 

 

 

 

 

 

Total Assets

 

$

1,912,006

 

$

3,356,649

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

4,382,375

 

$

4,755,361

 

Accrued expenses

 

2,306,145

 

2,311,050

 

Total Current Liabilities

 

6,688,520

 

7,066,411

 

Derivative financial instruments, at estimated fair value—warrants

 

7,958,506

 

3,487,959

 

 

 

 

 

 

 

Total Liabilities

 

14,647,026

 

10,554,370

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ Deficit:

 

 

 

 

 

Series A convertible preferred stock, par value $0.0001, 700,000 shares authorized, 8,000 shares outstanding at June 30, 2011 and December 31, 2010

 

1

 

1

 

Series B convertible preferred stock, par value $0.0001, 2,500,000 shares authorized, no shares outstanding at June 30, 2011 and December 31, 2010

 

 

 

Common stock, par value of $.0001 per share: 225,000,000 shares authorized; 158,516,071 and 157,509,404 shares outstanding at June 30, 2011 and December 31, 2010, respectively

 

15,852

 

15,751

 

Additional paid-in capital

 

142,565,138

 

139,496,452

 

Deficit accumulated during development stage

 

(139,835,231

)

(135,573,268

)

 

 

 

 

 

 

Total Stockholders’ Equity

 

2,745,760

 

3,938,936

 

Non-controlling interest

 

(15,480,780

)

(11,136,657

)

 

 

 

 

 

 

Total Stockholders’ Deficit

 

(12,735,020

)

(7,197,721

)

 

 

 

 

 

 

Total Liabilities and Stockholders’ Deficit

 

$

1,912,006

 

$

3,356,649

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

June 5, 1996
(Inception) to

 

 

 

2011

 

2010

 

2011

 

2010

 

June 30, 2011

 

Revenues

 

$

 

$

 

$

 

$

 

$

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

2,356,099

 

4,402,155

 

3,728,027

 

5,597,565

 

49,560,509

 

Government grants

 

 

 

 

 

(1,135,318

)

Purchased in process research and development

 

 

 

 

 

6,944,553

 

General and administrative

 

1,875,688

 

1,604,747

 

3,835,532

 

3,038,534

 

56,541,633

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(4,231,787

)

(6,006,902

)

(7,563,559

)

(8,636,099

)

(111,911,377

)

Interest and investment income

 

3

 

7,675

 

54

 

24,150

 

914,936

 

State tax credit

 

 

 

 

628,806

 

1,025,606

 

Interest and other expense

 

6,208

 

(16,542

)

(6,206

)

(300,711

)

(937,453

)

Loss on debt extinguishment

 

 

 

 

 

(2,099,892

)

Change in fair value of derivative instruments—warrants

 

(697,660

)

1,420,784

 

(1,036,375

)

(15,641,361

)

(23,203,691

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(4,923,236

)

(4,594,985

)

(8,606,086

)

(23,925,215

)

(136,211,871

)

Net Loss of subsidiary attributable to noncontrolling interest

 

2,422,640

 

2,870,134

 

4,344,123

 

4,035,191

 

15,480,780

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to controlling interest

 

(2,500,596

)

(1,724,851

)

(4,261,963

)

(19,890,024

)

(120,731,091

)

Series A Preferred stock beneficial conversion feature accreted as a dividend

 

 

 

 

 

(4,888,960

)

Series B Preferred stock beneficial conversion feature accreted as a dividend

 

 

 

 

 

(10,495,688

)

Series A Preferred stock conversion rate change accreted as a dividend

 

 

 

 

 

(136,889

)

Series B Preferred stock conversion rate change accreted as a dividend

 

 

 

 

 

(1,678,703

)

Cumulative effect of adopting ASC Topic 815 January 1, 2009

 

 

 

 

 

(1,903,900

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss available to common stockholders

 

$

(2,500,596

)

$

(1,724,851

)

$

(4,261,963

)

$

(19,890,024

)

$

(139,835,231

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

basic and diluted

 

158,506,181

 

54,420,023

 

158,078,170

 

54,146,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share :

 

 

 

 

 

 

 

 

 

 

 

basic and diluted

 

$

(0.02

)

$

(0.03

)

$

(0.03

)

$

(0.37

)

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

5



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY (DEFICIT)

 

(Unaudited)

 

 

 

Preferred
Shares

 

Preferred
Stock,
Par Value

 

Common
Shares

 

Common
Stock,
Par Value

 

Additional
Paid in Capital

 

Balance at inception, June 5, 1996

 

 

$

 

 

$

 

$

 

Net loss for the year

 

 

 

 

 

 

 

 

 

 

 

Issuance of founder shares

 

 

 

2,642,500

 

264

 

528

 

Common stock issued

 

 

 

1,356,194

 

136

 

272

 

Common stock issued via private placement

 

 

 

1,366,667

 

137

 

1,024,863

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 1996

 

 

 

5,365,361

 

537

 

1,025,663

 

Net loss for the year

 

 

 

 

 

 

Common stock issued via private placement

 

 

 

1,442,666

 

144

 

1,081,855

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 1997

 

 

 

6,808,027

 

681

 

2,107,518

 

Net loss for the year

 

 

 

 

 

 

Amortization of Stock based Compensation

 

 

 

 

 

52,778

 

Common stock issued via private placement

 

 

 

1,416,667

 

142

 

1,062,358

 

Common stock issued for services

 

 

 

788,889

 

79

 

591,588

 

Common stock repurchased and cancelled

 

 

 

(836,792

)

(84

)

(96,916

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 1998

 

 

 

8,176,791

 

818

 

3,717,326

 

Net loss for the year

 

 

 

 

 

 

Deferred Compensation—stock options

 

 

 

 

 

9,946

 

Amortization of Stock based Compensation

 

 

 

 

 

 

Common stock issued for services

 

 

 

 

 

3,168,832

 

Common stock issued via private placement

 

 

 

346,667

 

34

 

259,966

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 1999

 

 

 

8,523,458

 

852

 

7,156,070

 

Net loss for the year

 

 

 

 

 

 

Amortization of Stock based Compensation

 

 

 

 

 

 

Common stock issued

 

 

 

4,560,237

 

455

 

250,889

 

Other

 

 

 

 

 

432

 

Preferred shares issued

 

3,485,299

 

348

 

 

 

5,986,302

 

Preferred stock issued for services

 

750,000

 

75

 

 

 

1,124,925

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2000

 

4,235,299

 

423

 

13,083,695

 

1,307

 

14,518,618

 

Net loss for the year

 

 

 

 

 

 

Deferred Compensation—stock Options

 

 

 

 

 

20,000

 

Amortization of Stock based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2001

 

4,235,299

 

423

 

13,083,695

 

1,307

 

14,538,618

 

Net loss for the year

 

 

 

 

 

 

Amortization of Stock based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2002

 

4,235,299

 

$

423

 

13,083,695

 

$

1,307

 

$

14,538,618

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.
(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

 

 

Unamortized Deferred
Stock Based
Compensation

 

Deficit Accumulated
during the Development
Stage

 

Total Stockholders’
Equity

 

Balance at inception, June 5, 1996

 

$

 

$

 

$

 

Net loss for the year

 

 

 

(404,005

)

(404,005

)

Issuance of founder shares

 

 

 

792

 

Common stock issued

 

 

 

408

 

Common stock issued via private placement

 

 

 

1,025,000

 

 

 

 

 

 

 

 

 

Balance, December 31, 1996

 

 

(404,005

)

622,195

 

Net loss for the year

 

 

(894,505

)

(894,505

)

Common stock issued via private placement

 

 

 

1,081,999

 

 

 

 

 

 

 

 

 

Balance, December 31, 1997

 

 

(1,298,510

)

809,689

 

Net loss for the year

 

 

(1,484,438

)

(1,484,438

)

Amortization of Stock based Compensation

 

 

 

52,778

 

Common stock issued

 

 

 

 

 

1,062,500

 

Common stock issued for services

 

 

 

591,667

 

Common Stock repurchased and cancelled

 

 

 

(97,000

)

 

 

 

 

 

 

 

 

Balance, December 31, 1998

 

 

(2,782,948

)

935,196

 

Net loss for the year

 

 

(4,195,263

)

(4,195,263

)

Deferred Compensation—stock options

 

(9,946

)

 

 

Amortization of Stock based Compensation

 

3,262

 

 

3,262

 

Common stock issued for services

 

 

 

3,168,832

 

Common stock issued via private placement

 

 

 

260,000

 

 

 

 

 

 

 

 

 

Balance, December 31, 1999

 

(6,684

)

(6,978,211

)

172,027

 

Net loss for the year

 

 

 

(2,616,261

)

(2,616,261

)

Amortization of Stock based Compensation

 

4,197

 

 

 

4,197

 

Common stock issue

 

 

 

251,344

 

Other

 

 

 

432

 

Preferred shares issued

 

 

 

5,986,650

 

Preferred stock issued for services

 

 

 

1,125,000

 

 

 

 

 

 

 

 

 

Balance, December 31, 2000

 

(2,487

)

(9,594,472

)

4,923,389

 

Net loss for the year

 

 

(1,432,046

)

(1,432,046

)

Deferred Compensation—stock options

 

(20,000

)

 

 

Amortization of Stock based Compensation

 

22,155

 

 

22,155

 

 

 

 

 

 

 

 

 

Balance, December 31, 2001

 

(332

)

(11,026,518

)

3,513,498

 

Net loss for the year

 

 

(1,684,965

)

(1,684,965

)

Amortization of Stock based Compensation

 

332

 

 

332

 

 

 

 

 

 

 

 

 

Balance, December 31, 2002

 

$

 

$

(12,711,483

)

$

1,828,865

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.
(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

 

 

Preferred
Stock

 

Preferred
Stock Par
Value

 

Common
Stock

 

Common
Stock
Par
Value

 

Additional
Paid in
Capital

 

Unamortized
Deferred
Stock Based
Compensation

 

Deficit
Accumulated
during the
Development
Stage

 

Total
Stockholders’
Equity

 

Balance December 31, 2002

 

4,235,299

 

$

423

 

13,083,695

 

$

1,307

 

$

14,538,618

 

$

 

$

(12,711,483

)

$

1,828,865

 

Net loss for the year

 

 

 

 

 

 

 

(13,106,247

)

(13,106,247

)

Conversion of preferred stock in connection with the Merger

 

(4,235,299

)

(423

)

4,235,299

 

423

 

 

 

 

 

Common stock issued to former Synergy stockholders

 

 

 

 

4,329,927

 

432

 

6,494,458

 

 

 

6,494,890

 

Common stock issued in exchange for Webtronics common stock

 

 

 

 

1,503,173

 

150

 

(150

)

 

 

 

Deferred Compensation—stock options

 

 

 

 

 

 

9,313,953

 

(9,313,953

)

 

 

Amortization of deferred Stock based Compensation

 

 

 

 

 

 

 

3,833,946

 

 

3,833,946

 

Private placement of common stock, net

 

 

 

2,776,666

 

278

 

3,803,096

 

 

 

3,803,374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2003

 

 

$

 

25,928,760

 

$

2,590

 

$

34,149,975

 

$

(5,480,007

)

$

(25,817,730

)

$

2,854,828

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

8



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.
(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

 

 

Common
Stock

 

Common
Stock
Par Value

 

Additional
Paid in
Capital

 

Unamortized
Deferred
Stock Based
Compensation

 

Deficit
Accumulated
during the
Development
Stage

 

Total
Stockholders’
Equity

 

Balance, December 31, 2003

 

25,928,760

 

$

2,590

 

$

34,149,975

 

$

(5,480,007

)

$

(25,817,730

)

$

2,854,828

 

Net loss for the year

 

 

 

 

 

(7,543,467

)

(7,543,467

)

Amortization of deferred Stock-based compensation expense

 

 

 

 

3,084,473

 

 

3,084,473

 

Variable accounting for stock options

 

 

 

(816,865

)

 

 

(816,865

)

Stock-based compensation net of forfeitures

 

 

 

240,572

 

93,000

 

 

333,572

 

Common stock issued via private placements, net

 

3,311,342

 

331

 

6,098,681

 

 

 

6,099,012

 

Warrant and stock-based compensation for services in connection with the Merger

 

 

 

269,826

 

 

 

269,826

 

Common stock returned from former Synergy stockholders

 

(90,000

)

(9

)

(159,083

)

 

 

(159,092

)

Stock issued for patent rights

 

25,000

 

3

 

56,247

 

 

 

56,250

 

Common stock issued for services

 

44,000

 

7

 

70,833

 

 

 

70,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2004

 

29,219,102

 

$

2,922

 

$

39,910,186

 

$

(2,302,534

)

$

(33,361,197

)

$

4,249,377

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

9



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

 

 

Common
Stock

 

Common
Stock
Par Value

 

Additional
Paid in
Capital

 

Unamortized
Deferred
Stock Based
Compensation

 

Deficit
Accumulated
during the
Development
Stage

 

Total
Stockholders’
Equity
(Deficit)

 

Balance, December 31, 2004

 

29,219,102

 

$

2,922

 

$

39,910,186

 

$

(2,302,534

)

$

(33,361,197

)

$

4,249,377

 

Net loss for the year

 

 

 

 

 

(11,779,457

)

(11,779,457

)

Deferred stock-based compensation—new grants

 

 

 

1,571,772

 

(1,571,772

)

 

 

Amortization of deferred stock-based compensation

 

 

 

 

2,290,843

 

 

2,290,843

 

Variable accounting for stock options

 

 

 

75,109

 

 

 

75,109

 

Common stock issued via private placement:

 

 

 

 

 

 

 

 

 

 

 

 

 

March 2005

 

1,985,791

 

198

 

3,018,203

 

 

 

3,018,401

 

August 2005

 

1,869,203

 

187

 

1,812,940

 

 

 

1,813,127

 

Finders fees and expenses

 

 

 

(176,249

)

 

 

(176,249

)

Exercise of common stock warrant

 

125,000

 

13

 

128,737

 

 

 

128,750

 

Common stock issued for services

 

34,000

 

3

 

47,177

 

 

 

47,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2005

 

33,233,096

 

$

3,323

 

$

46,387,875

 

$

(1,583,463

)

$

(45,140,654

)

$

(332,919

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

10



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

 

 

Series A
Convertible
Preferred
Shares

 

Series A
Convertible
Preferred
Stock

 

Common
Stock

 

Common
Stock
Par
Value

 

Additional
Paid in
Capital

 

Unamortized
Deferred
Stock Based
Compensation

 

Deficit
Accumulated
during the
Development
Stage

 

Total
Stockholders’
Equity
(Deficit)

 

Balance, December 31, 2005

 

 

$

 

33,233,096

 

$

3,323

 

$

46,387,875

 

$

(1,583,463

)

$

(45,140,654

)

$

(332,919

)

Net loss for the year

 

 

 

 

 

 

 

(12,919,229

)

(12,919,229

)

Reclassification of deferred unamortized stock-based compensation upon adoption of FAS 123R

 

 

 

 

 

(1,583,463

)

1,583,463

 

 

 

Stock based compensation expense

 

 

 

 

 

2,579,431

 

 

 

2,579,431

 

Common stock issued via private placement:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

February 2006

 

 

 

 

4,283,668

 

428

 

5,139,782

 

 

 

 

 

5,140,210

 

Finders fees and expenses

 

 

 

 

 

 

(561,808

)

 

 

(561,808

)

April 2006

 

 

 

666,667

 

67

 

799,933

 

 

 

 

 

800,000

 

Finders fees and expenses

 

 

 

 

 

(41,000

)

 

 

(41,000

)

Waiver and Lock-up Agreement

 

 

 

740,065

 

74

 

579,622

 

 

 

579,696

 

Common stock issued for services

 

 

 

87,000

 

9

 

121,101

 

 

 

121,110

 

Exercise of common stock warrants

 

 

 

184,500

 

18

 

190,017

 

 

 

190,035

 

Series A convertible preferred stock issued via private placement:

 

574,350

 

57

 

 

 

5,743,443

 

 

 

5,743,500

 

Finders fees and expenses

 

11,775

 

1

 

 

 

(448,909

)

 

 

(448,908

)

Detachable warrants

 

 

 

 

 

2,384,485

 

 

 

2,384,485

 

Beneficial conversion feature accreted as a dividend

 

 

 

 

 

 

 

(2,384,485

)

(2,384,485

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2006

 

586,125

 

$

58

 

39,194,996

 

$

3,919

 

$

61,290,509

 

$

 

$

(60,444,368

)

$

850,118

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

11



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

 

 

Series A
Convertible
Preferred
Shares

 

Series A
Convertible
Preferred
Stock,
Par Value

 

Series B
Convertible
Preferred
Shares

 

Series B
Convertible
Preferred
Stock,
Par Value

 

Common
Shares

 

Common
Stock,
Par
Value

 

Additional
Paid in
Capital

 

Deficit
Accumulated
during the
Development
Stage

 

Total
Stockholders’
Equity

 

Balance, December 31, 2006

 

586,125

 

$

58

 

 

$

 

39,194,996

 

$

3,919

 

$

61,290,509

 

$

(60,444,368

)

$

850,118

 

Net loss for the year

 

 

 

 

 

 

 

 

(7,887,265

)

(7,887,265

)

Stock-based compensation expense

 

 

 

 

 

 

 

591,561

 

 

591,561

 

Common stock issued for services

 

 

 

 

 

80,000

 

8

 

36,792

 

 

36,800

 

Series A convertible preferred stock, issued via private placement

 

28,000

 

4

 

 

 

 

 

279,997

 

 

280,001

 

Finders fees and expenses, Series A private placement

 

 

 

 

 

 

 

(36,400

)

 

(36,400

)

Conversion of Series A preferred stock to common stock

 

(395,450

)

(40

)

 

 

7,668,165

 

767

 

(727

)

 

 

Beneficial conversion feature accreted as a dividend to Series A preferred stock

 

 

 

 

 

 

 

2,504,475

 

(2,504,475

)

 

Series B convertible preferred stock, issued via private placement

 

 

 

1,147,050

 

115

 

 

 

11,470,385

 

 

11,470,500

 

Finders fees and expenses, Series B private placement

 

 

 

 

 

 

 

(920,960

)

 

(920,960

)

Beneficial conversion feature accreted as a dividend to Series B preferred stock

 

 

 

 

 

 

 

10,495,688

 

(10,495,688

)

 

Change in fair value of Series B warrants from date of issuance to expiration of put option

 

 

 

 

 

 

 

(2,591,005

)

 

(2,591,005

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2007

 

218,675

 

22

 

1,147,050

 

115

 

46,943,161

 

4,694

 

83,120,315

 

(81,331,796

)

1,793,350

 

Net loss for the year

 

 

 

 

 

 

 

 

(9,655,471

)

(9,655,471

)

Recapitalization of majority owned subsidiary via private placements of common stock

 

 

 

 

 

 

 

2,951,913

 

 

2,951,913

 

Minority interest in equity of subsidiary acquired

 

 

 

 

 

 

 

(42,824

)

 

(42,824

)

Stock-based compensation expense

 

 

 

 

 

 

 

589,063

 

 

589,063

 

Proceeds from issuance of 11% Notes attributable to detachable warrants

 

 

 

 

 

 

 

181,732

 

 

181,732

 

Conversion of Series A preferred stock to common stock

 

(120,675

)

(12

)

 

 

2,413,500

 

241

 

(229

)

 

 

Conversion of Series B preferred stock to common stock

 

 

 

(10,000

)

(1

)

200,000

 

20

 

(19

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2008

 

98,000

 

$

10

 

1,137,050

 

$

114

 

49,556,661

 

$

4,955

 

$

86,799,951

 

$

(90,987,267

)

$

(4,182,237

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

12



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

(Unaudited)

 

 

 

Series A
Convertible
Preferred
Shares

 

Series A
Convertible
Preferred
Stock

 

Series B
Convertible
Preferred
Shares

 

Series B
Convertible
Preferred
Stock

 

Common
Shares

 

Common
Stock
Par Value

 

Additional
Paid in
Capital

 

Deficit
Accumulated
during the
Development
Stage

 

Non-
Controlling
Interest

 

Total
Stockholders’
Equity
(Deficit)

 

Balance, December 31, 2008

 

98,000

 

$

10

 

1,137,050

 

$

114

 

49,556,661

 

4,955

 

$

86,799,951

 

$

(90,987,267

)

$

 

$

(4,182,237

)

Cumulative effect of adoption of ASC Topic 815

 

 

 

 

 

 

 

(181,732

)

(1,903,900

)

 

(2,085,632

)

Net Loss

 

 

 

 

 

 

 

 

(15,073,021

)

(3,282,393

)

(18,355,414

)

Stock based compensation expense

 

 

 

 

 

 

 

1,119,856

 

 

 

1,119,856

 

Conversion of Series A preferred stock to common stock

 

(35,000

)

(4

)

 

 

894,445

 

89

 

(85

)

 

 

 

Conversion of Series B preferred stock to common stock

 

 

 

(122,884

)

(12

)

2,963,236

 

296

 

(284

)

 

 

 

Private placements of common stock of majority owned subsidiary

 

 

 

 

 

 

 

15,970,100

 

 

 

15,970,100

 

Fees and expenses associated with private placements of majority owned subsidiary

 

 

 

 

 

 

 

(260,002

)

 

 

(260,002

)

Preferred Stock dividend attributable to reset of conversion price in conjunction with waiver of liquidation preference

 

 

 

 

 

 

 

1,815,592

 

(1,815,592

)

 

 

Cashless Conversion of Warrants to Common Stock

 

 

 

 

 

193,769

 

19

 

(19

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2009

 

63,000

 

$

6

 

1,014,166

 

$

102

 

53,608,111

 

$

5,359

 

$

105,263,377

 

$

(109,779,780

)

$

(3,282,393

)

$

(7,793,329

)

Net Loss

 

 

 

 

 

 

 

 

(25,793,488

)

(7,854,264

)

(33,647,752

)

Stock based compensation expense

 

 

 

 

 

 

 

854,651

 

 

 

854,651

 

Conversion of Series A preferred stock to common stock

 

(55,000

)

(5

)

 

 

1,527,777

 

153

 

(148

)

 

 

 

Conversion of Series B preferred stock to common stock

 

 

 

(1,014,166

)

(102

)

28,171,278

 

2,817

 

(2,715

)

 

 

 

Common shares in exchange for modification of convertible notes

 

 

 

 

 

265,770

 

27

 

100,169

 

 

 

100,196

 

Extinguishment on debt

 

 

 

 

 

 

 

2,809,531

 

 

 

2,809,531

 

Cashless conversion of Warrants to common stock upon extinguishment of convertible notes

 

 

 

 

 

72,355,769

 

7,236

 

(7,236

)

 

 

 

Warrants exchanged

 

 

 

 

 

1,505,699

 

151

 

(151

)

 

 

 

Direct offering of common stock of controlled subsidiary

 

 

 

 

 

 

 

7,179,000

 

 

 

7,179,000

 

Fair value of warrants issued in connection with controlled subsidiary registered direct offerings reclassified to derivative liability

 

 

 

 

 

 

 

(3,784,743

)

 

 

(3,784,743

)

Fees and expenses associated with direct offering of controlled subsidiary

 

 

 

 

 

 

 

(468,130

)

 

 

(468,130

)

Reclassification of derivative liability to equity upon termination of price protection

 

 

 

 

 

 

 

27,511,730

 

 

 

27,511,730

 

Common stock issued as settlement for director’s fees

 

 

 

 

 

75,000

 

8

 

41,117

 

 

 

41,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2010

 

8,000

 

$

1

 

 

$

 

157,509,404

 

$

15,751

 

$

139,496,452

 

$

(135,573,268

)

$

(11,136,657

)

$

(7,197,721

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

13



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.
(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

 

(Unaudited)

 

 

 

Series A
Convertible
Preferred
Shares

 

Series A
Convertible
Preferred
Stock

 

Common
Shares

 

Common
Stock
Par Value

 

Additional
Paid in
Capital

 

Deficit
Accumulated
during the
Development
Stage

 

Non-
Controlling
Interest

 

Total
Stockholders’
Equity
(Deficit)

 

Balance December 31, 2010

 

8,000

 

$

1

 

157,509,404

 

$

15,751

 

$

139,496,452

 

$

(135,573,268

)

$

(11,136,657

)

$

(7,197,721

)

Net Loss

 

 

 

 

 

 

(4,261,963

)

(4,344,123

)

(8,606,086

)

Stock based compensation expense

 

 

 

 

 

 

 

 

 

294,444

 

 

 

 

 

294,444

 

Common stock issued for services

 

 

 

850,000

 

85

 

532,915

 

 

 

533,000

 

Direct offering of common stock of controlled subsidiary

 

 

 

 

 

5,461,242

 

 

 

5,461,242

 

Fees and expenses associated with direct offering of controlled subsidiary

 

 

 

 

 

(395,620

)

 

 

(395,620

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants exercise

 

 

 

106,667

 

11

 

53,323

 

 

 

53,334

 

Warrants issued in connection with controlled subsidiary registered direct offering reclassified to derivative liability -net

 

 

 

 

 

(3,434,172

)

 

 

(3,434,172

)

Exercise of warrants-controlled subsidiary

 

 

 

 

 

415,309

 

 

 

415,309

 

Common stocks issued for settlement of directors’ fee

 

 

 

50,000

 

5

 

41,245

 

 

 

41,250

 

Sale of option to purchase shares of controlled subsidiary

 

 

 

 

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2011

 

8,000

 

$

1

 

158,516,071

 

$

15,852

 

$

142,565,138

 

$

(139,835,231

)

$

(15,480,780

)

$

(12,735,020

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

14



Table of Contents

 

CALLISTO PHARMACEUTICALS, INC.

(A Development Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

Six months
ended June 30, 2011

 

Six months
ended June 30, 2010

 

Period from
June 5, 1996
(inception) to
June 30, 2011

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(8,606,086

)

$

(23,925,215

)

$

(136,211,871

)

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation

 

2,634

 

2,634

 

110,469

 

Purchase discount accreted as interest income on U.S.Treasury bills

 

 

 

(26,950

)

Stock-based compensation expense

 

469,444

 

449,951

 

20,178,820

 

Purchased in-pro