tenq-0908.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-QSB
(Mark
One)
ý QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended September 30, 2008
Or
¨ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from ________________________
Commission
file number: 333-105075
____________Bio-Path Holdings,
Inc.__________
(Exact
name of registrant as specified in its charter)
|
|
Utah
|
|
87-0652870
|
|
|
|
(State
or other jurisdiction of
|
|
(I.R.S.
employer
|
|
|
|
incorporation
or organization
|
|
identification
No.)
|
|
3293 Harrison Boulevard,
Suite 230, Ogden, UT 84403
(Address
of principal executive offices)
Registrant's telephone no.,
including area code: (801) 399-5500
Ogden Golf Co. Corporation,
1661 Lakeview Circle, Ogden, UT 84403
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 ý No ¨
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.
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
|
Non-accelerated
filer ¨ (Do not check if
a smaller reporting company)
|
Smaller
reporting company ý
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ ý No
At
November 14, 2008, the Company had 41,823,602 outstanding shares of common
stock, $0.001 par value.
DOCUMENTS
INCORPORATED BY REFERENCE: NONE
TABLE OF
CONTENTS
PART I - FINANCIAL
INFORMATION
|
Item
1.
|
Financial Statements
|
Page
|
|
|
Consolidated
Balance Sheets as of September 30, 2008 (unaudited) and December 31,
2007
|
|
|
|
Consolidated
Statement of Operations for the Three Months and Nine Months Ended
September 30, 2008 and 2007 (unaudited)
|
|
|
|
Consolidated
Statement of Shareholders’ Equity
|
|
|
|
Consolidated
Cash Flow Statement for the Three Months and Nine Months Ended September
30, 2008 and 2007 (unaudited)
|
|
|
|
Notes
to Interim Consolidated Financial Statements Ending September 30,
2008
|
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results
of Operations
|
|
|
Item
3A(T).
|
Controls
and Procedures
|
|
PART II - OTHER
INFORMATION
|
Item
1.
|
Legal
Proceedings
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
|
Item
3.
|
Defaults
by the Company on its Senior Securities
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
|
Item
5.
|
Other
Information
|
|
|
Item
6.
|
Exhibits
|
|
PART
I - FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
The accompanying unaudited financial
statements have been prepared in accordance with the instructions to Form 10-QSB
pursuant to the rules and regulations of the Securities and Exchange Commission
and, therefore, do not include all information and footnotes necessary for a
complete presentation of our financial position, results of operations, cash
flows, and stockholders' equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring
nature.
Our unaudited balance sheet at
September 30, 2008; the related unaudited consolidated statements of operations
for the three and nine month periods ended September 30, 2008 and from inception
(May 10, 2007) to September 30, 2008); and the related unaudited statement of
cash flows for the nine month period ended September 30, 2008 and from
inception (May 10, 2007) through September 30, 2008, are attached
hereto
BIO-PATH
HOLDINGS, INC.
(a
Development State Company)
|
|
|
30-Sep-08
|
|
|
31-Dec-07
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash
|
|
$ |
1,775,085 |
|
|
$ |
1,219,358 |
|
|
Restricted
cash
|
|
|
- |
|
|
|
208,144 |
|
|
Drug
product for testing
|
|
|
280,800 |
|
|
|
- |
|
|
Other
current assets
|
|
|
60,435 |
|
|
|
27,434 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
2,116,320 |
|
|
|
1,454,936 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
|
|
|
|
|
|
|
Technology
license
|
|
|
2,579,167 |
|
|
|
2,554,167 |
|
|
Less
Accumulated Amortization
|
|
|
(155,738 |
) |
|
|
(27,551 |
) |
|
|
|
|
2,423,429 |
|
|
|
2,526,616 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
4,539,749 |
|
|
$ |
3,981,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
& SHAREHOLDERS' EQUITY/(DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
- |
|
|
|
21,998 |
|
|
Escrow
cash payable
|
|
|
- |
|
|
|
208,144 |
|
|
Accrued
expense
|
|
|
1,650 |
|
|
|
8,175 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
1,650 |
|
|
|
238,317 |
|
|
|
|
|
|
|
|
|
|
|
|
Long
term debt
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
1,650 |
|
|
|
238,317 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity/(Deficit)
|
|
|
|
|
|
|
|
|
|
Preferred
Stock, $.001 par value
|
|
|
- |
|
|
|
- |
|
|
10,000,000
shares authorized, no shares issued and outstanding
|
|
|
|
|
|
|
|
|
|
Common
Stock, $.001 par value, 200,000,000 shares authorized
|
|
|
41,823 |
|
|
|
15,484 |
|
|
41,823,602
and 15,484,050 shares issued and outstanding as of 9/30/08 and 12/31/07,
respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid in capital
|
|
|
5,739,184 |
|
|
|
4,009,148 |
|
|
Accumulated
deficit during development stage
|
|
|
(1,242,908 |
) |
|
|
(281,397 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity/(deficit)
|
|
|
4,538,099 |
|
|
|
3,743,235 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES & SHAREHOLDERS' EQUITY/(DEFICIT)
|
|
$ |
4,539,749 |
|
|
$ |
3,981,552 |
|
See
Accompanying Notes to Financial Statements
BIO-PATH
HOLDINGS, INC.
(A
Development Stage Company)
|
|
|
3rd
Quarter
|
|
|
Year
to Date
|
|
|
From
inception
|
|
|
|
|
07/01/08
to
|
|
|
01/01/08
to
|
|
|
05/10/07
to
|
|
|
|
|
09/30/08
|
|
|
09/30/08
|
|
|
09/30/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
37,511 |
|
|
|
82,679 |
|
|
|
90,854 |
|
|
General
& administrative
|
|
|
135,430 |
|
|
|
419,452 |
|
|
|
690,733 |
|
|
Stock
issued for services
|
|
|
- |
|
|
|
260,000 |
|
|
|
260,000 |
|
|
Stock
options & warrants
|
|
|
30,770 |
|
|
|
109,037 |
|
|
|
109,037 |
|
|
Amortization
|
|
|
43,020 |
|
|
|
128,186 |
|
|
|
155,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expense
|
|
|
246,731 |
|
|
|
999,354 |
|
|
|
1,306,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
operating loss
|
|
$ |
(246,731 |
) |
|
$ |
(999,354 |
) |
|
$ |
(1,306,361 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
7,682 |
|
|
|
37,843 |
|
|
|
63,453 |
|
|
Total
Other Income
|
|
|
7,682 |
|
|
|
37,843 |
|
|
|
63,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$ |
(239,049 |
) |
|
$ |
(961,511 |
) |
|
$ |
(1,242,908 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average number of common shares
outstanding
|
|
|
41,823,602 |
|
|
|
40,930,487 |
|
|
|
33,032,287 |
|
See
Accompanying Notes to Financial Statements
BIO-PATH
HOLDINGS, INC.
(A
Development Stage Company)
Unaudited
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Paid
in
|
|
|
Accumulated
|
|
|
|
|
|
Date
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May-07
|
Common
stock issued for cash
|
|
|
6,480,994 |
|
|
$ |
6,481 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
6,481 |
|
|
Jun-07
|
Common
stock issued for cash
|
|
|
25,000 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
2nd
Quarter fund raising expense
|
|
|
|
|
|
|
|
|
|
|
(26,773 |
) |
|
|
|
|
|
|
(26,773 |
) |
|
|
Net
loss 2nd Quarter 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,210 |
) |
|
|
(56,210 |
) |
|
Balances
at June 30, 2007
|
|
|
6,505,994 |
|
|
|
6,506 |
|
|
|
(26,773 |
) |
|
|
(56,210 |
) |
|
|
(76,477 |
) |
|
Aug-07
|
Common
stock issued for cash in seed round
|
|
|
3,975,000 |
|
|
|
3,975 |
|
|
|
989,775 |
|
|
|
|
|
|
|
993,750 |
|
|
Aug-07
|
Common
stock issued for cash in second round
|
|
|
1,333,334 |
|
|
|
1,333 |
|
|
|
998,667 |
|
|
|
|
|
|
|
1,000,000 |
|
|
Aug-07
|
Common
stock issued to Placement Agent for services
|
|
|
530,833 |
|
|
|
531 |
|
|
|
198,844 |
|
|
|
|
|
|
|
199,375 |
|
|
|
3rd
Quarter fund raising expense
|
|
|
|
|
|
|
|
|
|
|
(441,887 |
) |
|
|
|
|
|
|
(441,887 |
) |
|
|
Net
loss 3rd Quarter 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(81,986 |
) |
|
|
(81,986 |
) |
|
Balances
at September 30, 2007
|
|
|
12,345,161 |
|
|
|
12,345 |
|
|
|
1,718,626 |
|
|
|
(138,196 |
) |
|
|
1,592,775 |
|
|
Nov-07
|
Common
stock issued MD Anderson for License
|
|
|
3,138,889 |
|
|
|
3,139 |
|
|
|
2,351,028 |
|
|
|
|
|
|
|
2,354,167 |
|
|
|
4th
Quarter fund raising expense
|
|
|
|
|
|
|
|
|
|
|
(60,506 |
) |
|
|
|
|
|
|
(60,506 |
) |
|
|
Net
loss 4th Quarter 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(143,201 |
) |
|
|
(143,201 |
) |
|
Balances
at December 31, 2007
|
|
|
15,484,050 |
|
|
$ |
15,484 |
|
|
$ |
4,009,148 |
|
|
$ |
(281,397 |
) |
|
$ |
3,743,235 |
|
|
Feb-08
|
Common
stock issued for cash in 3rd round
|
|
|
1,579,400 |
|
|
|
1,579 |
|
|
|
1,577,821 |
|
|
|
|
|
|
|
1,579,400 |
|
|
Feb-08
|
Common
stock issued to Placement Agent
|
|
|
78,970 |
|
|
|
79 |
|
|
|
78,891 |
|
|
|
|
|
|
|
78,970 |
|
|
Feb-08
|
Common
stock issued for services
|
|
|
80,000 |
|
|
|
80 |
|
|
|
79,920 |
|
|
|
|
|
|
|
80,000 |
|
|
Feb-08
|
Merger
with 2.20779528 : 1 exchange ratio
|
|
|
20,801,158 |
|
|
|
20,801 |
|
|
|
(20,801 |
) |
|
|
|
|
|
|
- |
|
|
Feb-08
|
Add
merger partner Odgen Golf shareholders
|
|
|
3,600,000 |
|
|
|
3,600 |
|
|
|
(3,600 |
) |
|
|
|
|
|
|
- |
|
|
|
1st
Quarter fund raising expense
|
|
|
|
|
|
|
|
|
|
|
(251,902 |
) |
|
|
|
|
|
|
(251,902 |
) |
|
|
Net
loss 1st Quarter 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(226,206 |
) |
|
|
(226,206 |
) |
|
Balances
at March 31, 2008
|
|
|
41,623,578 |
|
|
$ |
41,623 |
|
|
$ |
5,469,477 |
|
|
$ |
(507,603 |
) |
|
$ |
5,003,497 |
|
|
Apr-08
|
Common
stock issued to PCS, Inc. in connection with merger
|
|
|
200,000 |
|
|
|
200 |
|
|
|
179,800 |
|
|
|
|
|
|
|
180,000 |
|
|
Apr-08
|
Stock
option awards
|
|
|
|
|
|
|
|
|
|
|
42,216 |
|
|
|
|
|
|
|
42,216 |
|
|
Apr-08
|
Warrants
issued for services
|
|
|
|
|
|
|
|
|
|
|
36,050 |
|
|
|
|
|
|
|
36,050 |
|
|
Apr-08
|
Share
rounding
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
2nd
Quarter fund raising expense
|
|
|
|
|
|
|
|
|
|
|
(6,243 |
) |
|
|
|
|
|
|
(6,243 |
) |
|
|
Net
loss 2nd Quarter 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(496,256 |
) |
|
|
(496,256 |
) |
|
Balances
at June 30, 2008
|
|
|
41,823,602 |
|
|
$ |
41,823 |
|
|
$ |
5,721,300 |
|
|
$ |
(1,003,859 |
) |
|
$ |
4,759,264 |
|
|
Apr-08
|
Stock
option vesting
|
|
|
|
|
|
|
|
|
|
|
30,770 |
|
|
|
|
|
|
|
30,770 |
|
|
|
2nd
Quarter fund raising expense
|
|
|
|
|
|
|
|
|
|
|
(12,886 |
) |
|
|
|
|
|
|
(12,886 |
) |
|
|
Net
loss 2nd Quarter 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(239,049 |
) |
|
|
(239,049 |
) |
|
Balances
at September 30, 2008
|
|
|
41,823,602 |
|
|
$ |
41,823 |
|
|
$ |
5,739,184 |
|
|
$ |
(1,242,908 |
) |
|
$ |
4,538,099 |
|
See Accompanying Notes to Financial Statements
BIO-PATH
HOLDINGS, INC.
(A
Development Statge Company)
Unaudited
|
|
|
Year
to Date
|
|
|
From
inception
|
|
|
|
|
01/01/2008
to
|
|
|
05/10/2007
to
|
|
|
|
|
09/30/2008
|
|
|
09/30/2008
|
|
|
CASH
FLOW FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(961,511 |
) |
|
$ |
(1,242,908 |
) |
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
128,186 |
|
|
|
155,737 |
|
|
Common
stock issued for services
|
|
|
260,000 |
|
|
|
260,000 |
|
|
Stock
options and warrants
|
|
|
109,037 |
|
|
|
109,037 |
|
|
(Increase)
decrease in assets
|
|
|
|
|
|
|
|
|
|
Restricted
escrow cash
|
|
|
208,144 |
|
|
|
|
|
|
Drug
product for testing
|
|
|
(280,800 |
) |
|
|
(280,800 |
) |
|
Other
current assets
|
|
|
(33,001 |
) |
|
|
(60,435 |
) |
|
Increase
(decrease) in liabilities
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
(28,523 |
) |
|
|
1,650 |
|
|
Escrow
cash payable
|
|
|
(208,144 |
) |
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(806,612 |
) |
|
|
(1,057,719 |
) |
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of exclusive license
|
|
|
(25,000 |
) |
|
|
(225,000 |
) |
|
Net
cash used in investing activities
|
|
|
(25,000 |
) |
|
|
(225,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from convertible notes
|
|
|
|
|
|
|
435,000 |
|
|
Cash
repayment of convertible notes
|
|
|
. |
|
|
|
(15,000 |
) |
|
Net
proceeds from sale of common stock
|
|
|
1,387,339 |
|
|
|
2,637,804 |
|
|
Net
cash from financing activities
|
|
|
1,387,339 |
|
|
|
3,057,804 |
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH
|
|
|
555,727 |
|
|
|
1,775,085 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
1,219,358 |
|
|
|
- |
|
|
Cash,
end of period
|
|
$ |
1,775,085 |
|
|
$ |
1,775,085 |
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Income
taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
Non-cash
financing activities
|
|
|
|
|
|
|
|
|
|
Common
stock issued upon conversion of convertible notes
|
|
|
|
|
|
$ |
420,000 |
|
|
Common
stock issued to Placement Agent
|
|
$ |
78,970 |
|
|
$ |
278,165 |
|
See
Accompanying Notes to Financial Statements
Notes to the Interim Consolidated Financial Statements Ending
September 30, 2008
The
accompanying interim financial statements have been prepared without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of management, the accompanying interim
financial statements contain all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation. The results of operations for the
period ended September 30, 2008, are not necessarily indicative of the results
for a full-year period.
|
1.
|
Organization and Business
|
Bio-Path
Holdings, Inc. (“Bio-Path” or the “Company”) is a development stage company
founded with technology from The University of Texas, M. D. Anderson Cancer
Center (“M. D. Anderson”) dedicated to developing novel cancer drugs under an
exclusive license arrangement. The Company has drug delivery platform
technology with composition of matter intellectual property that enables
systemic delivery of antisense, small interfering RNA (“siRNA”) and small
molecules for treatment of cancer. In addition to its existing
technology under license, the Company expects to have a close working
relationship with key members of the M. D. Anderson’s staff, which should
provide Bio-Path with a strong pipeline of promising drug candidates in the
future. Bio-Path expects the program with M. D. Anderson to enable
the Company to broaden its technology to include cancer drugs other than
antisense and siRNA.
Bio-Path
believes that its core technology, if successful, will enable it to be at the
center of emerging genetic and molecular target-based therapeutics that require
systemic delivery of DNA and RNA-like material. The Company’s two
lead drug candidates treat acute myeloid leukemia, chronic myelogenous leukemia,
acute lymphoblastic leukemia and follicular lymphoma, and if successful, could
potentially be used in treating many other indications of
cancer. These two lead drug candidates will be ready for clinical
trials after receiving an investigational new drug (“IND”) status from the
FDA. The Company has filed an IND application for its lead drug
candidate and currently anticipates commencing a Phase I clinical trial of this
drug by the end of the year.
The
Company was founded in May of 2007 as a Utah corporation. In February
of 2008, Bio-Path completed a reverse merger with Ogden Golf Co. Corporation, a
public company traded over the counter that has no current
operations. The name of Ogden Golf was changed to Bio-Path Holdings,
Inc. and the directors and officers of Bio-Path, Inc. became the directors and
officers of Bio-Path Holdings, Inc. Bio-Path has become a publicly
traded company (symbol OTCBB: BPTH) as a result of this merger.
The
Company’s operations to date have been limited to organizing and staffing the
Company, acquiring, developing and securing its technology and undertaking
product development for a limited number of product candidates. As the Company
has not begun its planned principal operations of commercializing a product
candidate, the accompanying financial statements have been prepared in
accordance with principles established for development stage
enterprises.
2. Drug
Product for Testing
The
Company paid an initial installment to Althea Technologies, Inc. of $280,800
during the third quarter pursuant to a Project Plan and Supply Agreement (see
Note 6. below) for the manufacture and delivery of the Company’s lead drug
product for testing in a Phase I clinical trial. This amount is
carried on the Balance Sheet as of September 30, 2008 at cost as Drug Product
for Testing and will be expensed as the drug product is used during the Phase I
clinical trial.
3. Convertible
Debt
The
Company issued $435,000 in notes convertible into common stock at a rate of $.25
per common share. As of December 31, 2007, $15,000 of the convertible
notes had been repaid in cash and $420,000 of the convertible notes had been
converted into 1,680,000 shares of Bio-Path common stock and were included in
the seed round completed in August of 2007. No interest was recorded
because interest was nominal prior to conversion. No beneficial
conversion feature existed as of the debt issuance date since the conversion
rate was greater than or equal to the fair value of the common stock on the
issuance date.
Issuance of
Common Stock – In May and June of 2007, the Company issued 6,505,994
shares of common stock for $6,506 in cash to founders of the
Company. In August of 2007, the Company issued 3,975,000 shares of
common stock for $993,750 in cash to investors in the Company pursuant to a
private placement memorandum. In August of 2007 the Company issued an
additional 1,333,334 shares of common stock for $1,000,000 in cash to investors
in the Company pursuant to a second round of financing. The Company
issued 530,833 shares of common stock to the Placement Agent as commission for
the shares of common stock sold to investors. In November of 2007,
the Company issued 3,138,889 shares in common stock to MD Anderson as partial
consideration for its two technology licenses from MD Anderson. In
February of 2008, the Company issued 1,579,400 shares of common stock for
$1,579,400 in cash to investors in the Company pursuant to a private placement
memorandum. The Company issued 78,970 in common stock to the
Placement Agent as commission for the shares of common stock sold to
investors. In February, the Company completed a reverse merger with
Ogden Golf Co. Corporation and issued 38,023,578 shares of common stock of the
public company Bio-Path Holdings (formerly Ogden Golf Co. Corporation) in
exchange for pre-merger common stock of Bio-Path, Inc. In addition,
shareholders of Ogden Golf Co. Corporation retained 3,600,000 shares of common
stock of Bio-Path Holdings. In February of 2008 Bio-Path issued
80,000 shares of common stock to strategic consultants pursuant to executed
agreements and the fair value was expensed upfront as common stock for
services. In April of 2008, the Company issued 200,000 shares of
common stock to a firm in connection with introducing Bio-Path, Inc. to its
merger partner Ogden Golf Co. Corporation. The fair value of this
stock issuance was expensed upfront as common stock for services. In
April of 2008, the Company recorded an additional 24 shares for rounding in
accordance with FINRA rules. There were no issuances of common or
preferred stock during the third quarter 2008. As of September 30,
2008 there were 41,823,602 shares of common stock issued and
outstanding. There are no preferred shares outstanding as of
September 30, 2008.
5. Stock
Options and Warrants
Stock Options -
In April of 2008 the Company made stock option grants for services over
the next three years to purchase in the aggregate 1,615,000 shares of the
Company’s common stock. Terms of the stock option grants require,
among other things, that the individual continues to provide services over the
vesting period of the option, which is four or five years from the date that
each option granted to the individual becomes effective. The exercise
price of the options is $0.90 a share. None of the stock options
grants are for current officers of the Company. The Company
determined the fair value of the stock options granted using the Black Scholes
model and expenses this value monthly based upon the vesting schedule for each
stock option award. For purposes of determining fair value, the
Company used an average annual volatility of seventy two percent (72%), which
was calculated based upon an average of volatility of similar biotechnology
stocks. The risk free rate of interest used in the model ranged from
2.54% to 3.63% and was taken from a table of the market rate of interest for U.
S. Government Securities for the date of the stock option awards and
interpolated as necessary to match the appropriate effective term for the
award. The total value of stock options granted was determined
using this methodology to be $761,590, which will be expensed over the next six
years based on the stock option vesting schedule.
In August
2008, Dr. Ulrich Mueller resigned as a consultant and director of the
Company. There were no disagreements with Dr. Mueller at the time of
his resignation. As a result of his resignation, the Company
cancelled granted but unvested stock options to purchase in the aggregate
450,000 shares of common stock granted to Dr. Mueller for three years of planned
service as a director and consultant to the Company. An adjustment
was made to the third quarter 2008 stock option expense to reverse $13,022 in
expense for Dr. Mueller’s unvested stock option expense recognized in the second
quarter of 2008 and subsequently cancelled in the third quarter
2008. As of September 2008, the Company had outstanding stock option
grants to purchase 1,165,000 shares of the Company’s common
stock. The expense for the three months ended September 30, 2008 was
$30,770.
Warrants -
In April of 2008 the Company awarded warrants for services to purchase in
the aggregate 85,620 shares of the Company’s common stock. The
exercise price is $0.90 a share. The warrants were one hundred
percent (100%) vested upon issuance and were expensed upfront as warrants for
services. The fair value of the warrants expensed was determined
using the same methodology as described above for stock options. The
total value of the warrants granted was determined using this methodology to be
$36,050, the total amount of which was expensed in the second quarter
2008.
6. Drug
Project Plan and Supply Agreement
In June
of 2008, Bio-Path entered into a Project Plan agreement with Althea
Technologies, Inc. for delivery of drug product in November of 2008 to support
commencement of the Company’s Phase I clinical trial of its first cancer drug
product. In September 2008, the Company further executed a Supply
Agreement with Althea Technologies that incorporates the Project Plan agreement
as well as the broader commercial terms and conditions normally included in a
full contractual supplier and customer agreement. Among other things,
the Supply Agreement and Project Plan require Althea Technologies to manufacture
the Company’s lead drug product in accordance with current Good
Manufacturing Practice (cGMP) guidelines. Althea Technologies will be
paid a total of $705,750 in three installments if all drug products are
manufactured and delivered to the Company in conformance with cGMP quality
guidelines. The Company’s requirement to pay for the manufactured
drug product is based on Althea Technologies successfully delivering finished
and tested drug product. The Supply Agreement allows for
cancellation, subject to various penalties depending on the time of notification
of cancellation. The first batch of cGMP drug product is expected to
be manufactured in the fourth quarter of 2008.
|
7.
|
Commitments and Contingencies
|
Technology
License - The Company has negotiated exclusive licenses from MD Anderson
to develop drug delivery technology for siRNA and antisense drug
products. These licenses require, among other things, the Company to
reimburse MD Anderson for ongoing patent expense. As of September
2008, the Company estimates these expenses will total approximately
$300,000. The Company will be required to pay the patent expenses at
the rate of $25,000 per quarter per license.
8. Subsequent
Events
In July of 2008,
Bio-Path initiated discussions with M. D. Anderson for commencement of a Phase I
clinical trial for its first cancer drug product. The Company
anticipates that it will execute an agreement with M. D. Anderson in the fourth
quarter 2008 for the conduct of this clinical trial. The costs of M.
D. Anderson services to conduct this trial are expected to be approximately
$400,000.
During
the first quarter of 2008, Bio-Path engaged Westcap Securities as a placement
agent to raise additional capital for the Company through sale of its common
stock. As of June 30, 2008, Westcap Securities had not closed on any
sales of common stock and the Company subsequently notified Westcap Securities
in July 2008 that it was canceling its placement agent agreement.
In
October 2008 the Company entered into co-placement agent agreements with
broker-dealers Equinox Securities, Inc. and Acap Financial, Inc. to raise
additional capital for the Company through sale of its common
stock.
In early
November 2008, the Company received notification from the Financial Industry
Regulatory Authority (FINRA) that its common stock would now be listed on the
OTC Bulletin Board (symbol OTCBB: BPTH).
In
October 2008, the Company granted stock options to purchase in the aggregate
2,500,000 shares of common stock to the Chief Executive Officer and Vice
President of Operations. Terms of the stock option grants provide for
an immediate vesting of 50% of the options shares with the remaining options
shares vesting monthly over a three year period. The exercise price
of these options is $1.40 a share.
9. New
Accounting Pronouncements
In
December 2007, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 141(R), “Business Combinations.” SFAS No. 141(R) changes the
accounting for and reporting of business combination transactions in the
following way: Recognition with certain exceptions, of 100% of the fair
values of assets acquired, liabilities assumed, and non controlling interests of
acquired businesses; measurement of all acquirer shares issued in consideration
for a business combination at fair value on the acquisition date; recognition of
contingent consideration arrangements at their acquisition date fair values,
with subsequent changes in fair value generally reflected in earnings;
recognition of pre-acquisition gain and loss contingencies at their acquisition
date fair value; capitalization of in-process research and development
(IPR&D) assets acquired at acquisition date fair value; recognition of
acquisition-related transaction costs as expense when incurred; recognition of
acquisition-related restructuring cost accruals in acquisition accounting only
if the criteria in Statement No. 146 are met as of the acquisition date; and
recognition of changes in the acquirer’s income tax valuation allowance
resulting from the business combination separately from the business combination
as adjustments to income tax expense. SFAS No. 141(R) is effective
for the first annual reporting period beginning on or after December 15, 2008
with earlier adoption prohibited. The adoption of SFAS No. 141(R)
will affect valuation of business acquisitions made in 2009 and
forward. We do not anticipate a material impact upon
adoption.
In
December 2007, the FASB issued SFAS No. 160 "Noncontrolling Interest in
Consolidated Financial Statements – an Amendment of ARB 51" (SFAS
160). SFAS 160 clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. It also
requires consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling interest, and
requires disclosure, on the face of the consolidated statement of income, of the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest. SAFS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. We do not anticipate
a material impact upon adoption.
In March
2008, the FSAB issued FASS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.” SFAS 161 is intended to improve financial
reporting about derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their effects on
an entity's financial position, financial performance, and cash
flows. SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged. We do not anticipate a material impact upon
adoption.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
When
you read this section of this Quarterly Form 10-QSB, it is important that you
also read the financial statements and related notes included elsewhere in this
Form 10-QSB. This section of this quarterly report contains forward-looking
statements that involve risks and uncertainties, such as statements of our
plans, objectives, expectations, and intentions. We use words such as
“anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,”
“believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions
to identify forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking statements for many
reasons, including the matters discussed under the caption “Risk Factors”
in the Company’s Form 8-K that was filed February 19,
2008
Overview
Bio-Path Holdings, Inc. (the
“Company”), was formed under the name of Ogden Golf Co.
Corporation. The Company terminated its retail golf store operations
in December 2006. On February 14, 2008, the Company acquired
Bio-Path, Inc. (“Bio-Path”) in a merger transaction. In connection
with the Merger, we changed our name to Bio-Path Holdings, Inc., we acquired
Bio-Path as a wholly owned subsidiary and we appointed new officers and
directors. In connection with the Merger, we also increased our
authorized capital stock and adopted a Stock Incentive Plan. The
Merger and related matters are further described in a Form 8-K filed on February
19, 2008.
Subsequent to the Merger, we changed
our fiscal year end from September 30th to
December 31st.
Bio-Path Holdings, Inc., through our
subsidiary Bio-Path, Inc. is engaged in the business of financing and
facilitating the development of novel cancer therapeutics. Our
initial plan is to acquire licenses for drug technologies from The University of
Texas M. D. Anderson Cancer Center (“M. D. Anderson”), to fund clinical and
other trials for such technologies and to commercialize such technologies. We
have negotiated and executed two exclusive licenses (“License
Agreements”) for three lead products and nucleic acid drug delivery technology.
These licenses specifically provide drug delivery platform technology with
composition of matter intellectual property that enables systemic delivery of
antisense, small interfering RNA (“siRNA”) and small molecules for treatment of
cancer.
Our business plan is to act efficiently
as an intermediary in the process of translating newly discovered drug
technologies into authentic therapeutic drugs candidates. Our
strategy is to selectively license potential drug candidates for certain
cancers, and, primarily utilizing the comprehensive drug development
capabilities of M. D. Anderson, to advance these candidates proof of concept
(Phase I), to human efficacy trials (Phase IIA), and then out-license each
successful potential drug to a pharmaceutical company.
Bio-Path Subsidiary was formed in May
2007. Bio-Path acquired Bio-Path Subsidiary in February 2008 in a reverse merger
transaction (the “Merger”).
Plan
of Operation
Our plan of operation over the next 36
months is focused on achievement of milestones with the intent to demonstrate
clinical proof-of concept of our drug delivery technology and lead drug
products. Furthermore, we will attempt to validate our business model by
in-licensing additional products to broaden our drug product
pipeline. We anticipate that over the next 36 months, we will need to
raise approximately $11,500,000 to completely implement our current business
plan. Since its formation in May 2007, Bio-Path Subsidiary has
completed several financings, raising net proceeds of
$3,057,804.
Our short term plan is to achieve three
key milestones:
(1) conduct a Phase I
clinical trial of our lead drug BP-100-1.01, which if successful, will validate
our liposomal delivery technology for nucleic acid drug products including
siRNA;
(2) perform necessary
pre-clinical studies in our lead liposomal siRNA drug candidate to enable the
filing of an Investigational New Drug (”IND") for a Phase I clinical trial;
and
(3) out-license
(non-exclusively) our delivery technology for either antisense or siRNA to a
pharmaceutical partner to speed development applications of our
technology.
The Phase I clinical trial of
BP-100-1.01 is budgeted for $1,675,000. BP-100-1.01 is our lead lipid
delivery RNAi antisense drug, which will be clinically tested for valuation in
Acute Myeloid Leukemia (AML), Myelodysplastic Syndrome (MDS) and Chronic
Myelogenous Leukemia (CML). If this outcome is favorable, we expect
there will be numerous opportunities to negotiate non-exclusive license
applications involving upfront cash payments with pharmaceutical companies
developing siRNA and antisense drugs that need systemic delivery
technology. Commencement of the Phase I clinical trial depends on the
Federal Drug Administration (“FDA”) approving the IND for
BP-100-1.01. In June 2008, we entered into a Project Plan Agreement
with Althea Technologies, Inc. (“Althea”) relating to our first Phase 1 clinical
trials. In September 2008, we entered into a Supply Agreement with
Althea to manufacture our drug requirements for the upcoming Phase I clinical
trial of BP-100-1.01.
BP-100-2.01 is our lead siRNA drug,
which will be clinically tested for validation as a novel, targeted ovarian
cancer therapeutic agent. Performing the remaining pre-clinical
development work for BP-100-2.01 will be required before an IND is filed with
the FDA. The pre-clinical development is budgeted for
$225,000.
Results
of Operations
Except
as discussed below, a discussion of our past financial results is not pertinent
to the business plan of the Company on a going forward basis, due to
the change in our business which occurred upon consummation of the Merger on
February 14, 2008.
Results
of Operations for the three months and nine months ended September 30, 2008 and
period from inception (May 10, 2007) to September 30, 2008.
We have
no operating revenues since our inception. Our operating expenses for
the three months ended September 30, 2008 aggregated $246,731 and consisted of
general and administrative expenses of $135,430, stock issued for services of $
-0-, cost of stock options and warrants of $30,770, research and development of
$37,511, and amortization expense of $43,020 for the Company’s technology
license.
Our
operating expenses for the nine months ended September 30, 2008 aggregated
$999,354 and consisted of general and administrative expenses of $419,452, stock
issued for services of $260,000, cost of stock options and warrants of $109,037,
research and development of $82,679 and amortization expenses of $128,186 for
the Company’s technology license. We expect these costs to increase
moderately as we proceed with our development plans.
We had
interest income of $7,682 and $37,843, for the three months and nine months
ended September 30, 2008. Our interest income was derived from cash and cash
equivalents net of bank fees.
Our net
loss was $239,049 and $961,511, for the three months and nine months ended
September 30, 2008, respectively. Net loss per share, both basic and
diluted was $0.01and $0.02for the respective periods.
Liquidity
and Capital Resources
At September 30, 2008, we had cash of
$1,775,085. Cash used in operations since inception to September 30,
2008 totaled $1,057,719. Since inception we have net cash from
financing activities of $3,057,804. As discussed in our Plan of Operation above,
we believe that our available cash will be sufficient to fund our liquidity and
capital expenditure requirements through the current fiscal year ending December
31, 2008. However, we believe that we will need to raise approximately an
additional $11,500,000 to completely implement our business plan.
Projected
Financing Needs
We anticipate that will need to raise
an additional $11,500,000 in the next 36 months in funding to complete our $15
million fund raising objective to conduct additional clinical trials in other
Bio-Path drug candidates and extend operations through 36 months.
The Phase I clinical trial of
BP-100-2.01 is expected to cost $2,000,000. Commencement of the Phase
I clinical trial depends on the FDA approving the IND for
BP-100-2.01. Success in the Phase I clinical trial will be based on
the demonstration that the delivery technology for siRNA has the same delivery
characteristics seen in other non-siRNA, small molecule cancer drug
applications.
If the Phase I clinical trial in
BP-100-1.01 is successful, the Company will follow with a Phase IIa trial in
BP-100-1.01. Successful Phase I and IIa trials of BP-100-1.01 will
demonstrate clinical proof-of-concept that BP-100-1.01 is a viable therapeutic
drug product for treatment of AML, MDS and CML. The Phase IIa
clinical trial in BP-100-1.01 is expected to cost approximately
$1,600,000.
We intend to attempt to raise
additional capital. If we are successful in our attempts to raise additional
capital of $11,500,000 in net proceeds, of which there can be no assurance, we
anticipate that the additional capital will also allow us to conduct a Phase I
clinical trial of BP-100-1.02, which is an anti-tumor drug that treats a broad
range of cancer tumors. This trial is budgeted to cost $2,500,000 and
is higher than the Phase I clinical trial for BP-100-1.01 due to expected higher
hospital, patient monitoring and drug costs. Similar to the case with
BP-100-1.01, commencement of the Phase I clinical trial of BP-100-1.02 requires
that the FDA approve the IND application for BP-100-1.02.
We have currently budgeted
approximately $3,000,000 for additional drug development opportunities,
including the possibility of funding an additional Phase I clinical trial for a
second siRNA drug product. The balance of the funding is planned to
fund patent expenses, licensing fees, pre-clinical costs to M. D. Anderson’s
Pharmaceutical Development Center, consulting fees and management and
administration costs.
We have generated approximately one
full year of financial information and have not previously demonstrated that we
will be able to expand our business through an increased investment in our
technology and trials. We cannot guarantee that plans as described in this
report will be successful. Our business is subject to risks inherent in growing
an enterprise, including limited capital resources and possible rejection of our
new products and/or sales methods. If financing is not available on satisfactory
terms, we may be unable to continue expanding our operations. Equity financing
will result in a dilution to existing shareholders.
There can be no assurance of the
following: (1) That the actual costs of a particular trial will come within our
budgeted amount; (2) That any trials will be successful or will result in drug
commercialization opportunities, or (3) That we will be able to raise the
sufficient funds to allow us to operate for three years or to complete our
trials.
Other
Events
In October 2008, we entered into a
Placement Agent Agreement with Equinox Securities, Inc. and ACAP Financial, Inc.
for the sale of our common stock in a private offering.
In
October we granted stock options to purchase in the aggregate 2,500,000 shares
of our common stock to our Chief Executive Officer and Vice President of
Operations. Terms of the stock option grants provide for an immediate
vesting of 50% of the options shares with the remaining options shares vesting
monthly over a three year period. The exercise price of these options
is $1.40 a share.
Off-Balance
Sheet Arrangements
We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.
Contractual
Obligations and Commitments
Bio-Path has recently entered into
two Patent and Technology License Agreements (the “Licenses”) with M. D.
Anderson relating to its technology. A summary of certain material terms of each
of the Licenses is as follows:
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Licensor:
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The
Board of Regents of the University of Texas System on behalf of The
University of Texas M. D. Anderson Cancer Center
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Licensee:
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Bio-Path,
Inc.
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License:
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A
royalty bearing, exclusive license to manufacture, use and sell the
Licensed Products
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Territory:
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Worldwide
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Retained
Rights
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Certain
research and academic rights are retained by Licensor
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License
Fees:
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Documentation
Fee - $40,000 for the first license and $60,000 for the second license;
annual maintenance fee - $25,000 for years 1, 2 & 3 increasing to
$100,000 in the eighth year. After the first sale, increasing
to $125,000
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Royalties:
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Three
percent of net sales
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Milestone
Payments:
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One-time
payments range from $150,000 to $2,000,000. Total up to
$8,150,000
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Securities
Issuance:
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1,883,333
shares of Bio-Path for first License and 1,255,556 shares for second
License. These shares were converted into shares of the
Company’s common stock in the Merger.
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Expense:
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Bio-Path
will reimburse M. D. Anderson for expenses
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Term:
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Full
term of patents
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In September 2008, we entered into a
supply agreement with Althea Technologies, Inc. for the manufacture of
BP-100-1.01 for our upcoming Phase I Clinical Trial. Althea is a
contract manufacturer who will formulate and lyophilize our BP-100-1.01 product
requirements according to current Good Manufacturing Practices
(cGMP). The contract includes payments by Bio-Path of approximately
$700,000 for process development and manufacture of cGMP product suitable for
use in human patients in the Company’s Phase I clinical
trial. Bio-Path has the right to terminate the agreement at any time,
subject to payment of a termination fee to Althea. The termination
fee is not material.
Inflation
The Company does not believe that
inflation will negatively impact its business plans.
Critical
Accounting Policies
The preparation of financial statements
in conformity with generally accepted accounting principles (”GAAP”) in the
United States has required the management of the Company to make assumptions,
estimates and judgments that affect the amounts reported in the financial
statements, including the notes thereto, and related disclosures of commitments
and contingencies, if any. The Company considers its critical accounting
policies to be those that require the more significant judgments and estimates
in the preparation of financial statements, including the
following:
Concentration of
Credit Risk -- Financial instruments that potentially subject the Company
to a significant concentration of credit risk consist of cash. The
Company maintains its cash balances with one major commercial
bank. The balances are insured by the Federal Deposit Insurance
Corporation up to $250,000. As a result, $1,525,085 of the Company’s cash
balances are not covered by the FDIC.
Impairment of
Long-Lived Assets -- As of September 30, 2008, Other Assets total
$2,423,429 for the Company’s two technology licenses, comprised of $2,579,167 in
original value less accumulated amortization of $155,738. The
original value consists of $200,000 in cash paid to M. D. Anderson plus
3,138,889 shares of common stock granted to M. D. Anderson valued at
$2,354,167. This value is being amortized over a fifteen year (15
year) period from November 7, 2007, the date that the technology licenses became
effective. The Company accounts for the impairment and disposition of
its long-lived assets in accordance with Statement of Financial Accounting
Standards (“SFAS”) No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. In accordance with SFAS No.
144, long-lived assets are reviewed for events of changes in circumstances which
indicate that their carrying value may not be recoverable.
Research and
Development Costs -- Costs and expenses that can be clearly identified as
research and development are charged to expense as incurred in accordance with
SFAS No. 2, “Accounting for Research and Development Costs.”
Stock-Based
Compensation -- Stock Options - In April of 2008 the Company made stock
option grants for services over the next three years to purchase in the
aggregate 1,615,000 shares of the Company’s common stock. Terms of
the stock option grants require, among other things, that the individual
continues to provide services over the vesting period of the option, which is
four or five years from the date that each option granted to the individual
becomes effective. The exercise price of the options is $0.90 a
share. None of the stock options grants are for current officers of
the Company. The Company determined the fair value of the stock
options granted using the Black Scholes model and expenses this value monthly
based upon the vesting schedule for each stock option award. For
purposes of determining fair value, the Company used an average annual
volatility of seventy two percent (72%), which was calculated based upon an
average of volatility of similar biotechnology stocks. The risk free
rate of interest used in the model was taken from a table of the market rate of
interest for U. S. Government Securities for the date of the stock option awards
and interpolated as necessary to match the appropriate effective term for the
award. The total value of stock options granted was determined
using this methodology to be $1,053,940, which will be expensed over the next
six years based on the stock option vesting schedule. The expense for the three
months ended September 30, 2008 was $30,770.
Warrants -
In April of 2008 the Company awarded warrants for services to purchase in
the aggregate 85,620 shares of the Company’s common stock. The
exercise price is $0.90 a share. The warrants were one hundred
percent (100%) vested upon issuance and were expensed upfront as warrants for
services. The fair value of the warrants expensed was determined
based using the same methodology as described above for stock
options. The total value of the warrants granted was determined using
this methodology to be $36,050, the total amount of which was expensed in the
second quarter 2008.
Net Loss Per
Share – In accordance with SFAS No. 128, Earnings Per Share, and SEC
Staff Accounting Bulletin (“SAB”) No. 98, basic net loss per common share is
computed by dividing net loss for the period by the weighted average number of
common shares outstanding during the period. Under SFAS No. 128,
diluted net income (loss) per share is computed by dividing the net income
(loss) for the period by the weighted average number of common and common
equivalent shares, such as stock options and warrants, outstanding during the
period.
Comprehensive
Income -- Comprehensive income (loss) is defined as all changes in a
company’s net assets, except changes resulting from transactions with
shareholders. At September 30, 2008, the Company has no reportable
differences between net loss and comprehensive loss.
Use of Estimates
-- The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the Company’s consolidated financial statements and accompanying notes. On an
ongoing basis, the Company evaluates its estimates and judgments, which are
based on historical and anticipated results and trends and on various other
assumptions that the Company believes to be reasonable under the circumstances.
By their nature, estimates are subject to an inherent degree of uncertainty and,
as such, actual results may differ from the Company’s estimates.
An evaluation was carried out by the
Company’s Chief Executive Officer and Principal Financial Officer of the
effectiveness of the Company’s disclosure controls and procedures (as defined in
Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as
amended) as of September 30, 2008, the end of the period covered by this Form
10-QSB. Based upon that evaluation, the Chief Executive Officer and
Principal Financial Officer concluded that these disclosure controls and
procedures were effective at a reasonable level..
A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations on all control systems, no
evaluation of controls can provide absolute assurance that all errors, control
issues and instances of fraud, if any, with a company have been
detected. The design of any system of controls is also based in part
on certain assumptions regarding the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
PART
II – OTHER INFORMATION
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None
ITEM 3. DEFAULTS BY THE COMPANY ON ITS SENIOR
SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
No matter was submitted to our
shareholders for a vote or consent during the quarter ended September 30, 2008.
On or about January 9, 2008, we distributed an Information Statement to each of
our shareholders relating to our plans to take corporation action by written
consent in lieu of taking action at a special meeting of shareholders. This
information statement was discussed in our Form 10-QSB for the quarter ended
March 31, 2008.
None
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Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to Section
302 of the Sarbanes Oxley Act of 2002.
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Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to Section
906 of the Sarbanes Oxley Act of 2002.
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SIGNATURE
In
accordance with the requirements of the Exchange Act, the Company has caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
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Dated:
November 14, 2008
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BIO-PATH
HOLDINGS, INC.
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By /s/
Peter H. Nielsen,
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Chief
Executive Officer, President/Principal Executive Officer, Chief Financial
Officer, Principal Financial
Officer
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