e10qsb
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
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QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006 |
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TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE
TRANSITION PERIOD FROM TO
Commission file number 000-30489
LIFELINE THERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)
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COLORADO
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90-0224471 |
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer Identification No.) |
6400 S. Fiddlers Green Circle, Suite 1970 Greenwood Village, Colorado 80111
(Address of principal executive offices)
(720) 488-1711
(Registrants 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 Exchange Act 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 þ No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
The number of shares outstanding of the issuers common stock, par value $0.001 per share, as of
September 30, 2006 was 22,118,034.
Transitional Small Business Disclosure Format (check one): Yes o No þ
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report on Form 10-QSB contains certain forward-looking statements (as such term is defined
in section 21E of the Securities Exchange Act of 1934, as amended). These statements, which
involve risks and uncertainties, reflect our current expectations, intentions or strategies
regarding our possible future results of operations, performance, and achievements.
Forward-looking statements include, without limitation: statements regarding future products or
product development; statements regarding future selling, general and administrative costs and
research and development spending; statements regarding our product development strategy; and
statements regarding future capital expenditures and financing requirements. These forward-looking
statements are made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and applicable common law and SEC rules.
These forward-looking statements are identified in this report by using words such as anticipate,
believe, could, estimate, expect, intend, plan, predict, project, should and
similar terms and expressions, including references to assumptions and strategies. These
statements reflect our current beliefs and are based on information currently available to us.
Accordingly, these statements are subject to certain risks, uncertainties, and contingencies, which
could cause our actual results, performance, or achievements to differ materially from those
expressed in, or implied by, such statements.
The following factors are among those that may cause actual results to differ materially from our
forward-looking statements:
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Our short operating history and lack of significant revenues from operations; |
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Our ability to successfully expand our operations and manage our future growth; |
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The effect of current and future government regulations and regulators on our business; |
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The effect of unfavorable publicity on our business; |
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Competition in the dietary supplement market; |
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The potential for product liability claims against us; |
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Our dependence on third party manufacturers to manufacture our product; |
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The ability to obtain raw material for our product; |
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Our dependence on a limited number of significant customers and a single
product for our revenue; |
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Our ability to protect our intellectual property rights and the value of our product; |
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Our ability to continue to innovate and provide products that are useful to consumers; |
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The significant control that our management and significant shareholders exercise over us; |
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The illiquidity of our common stock; |
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Unanticipated delays in completing the process of our restatement of
historical financial statements and related audits, including delays in or restrictions on
our ability to access the capital markets or other adverse effects to our business and
financial position; and |
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Other factors, including the other risks, uncertainties, and contingencies
under Risk Factors and Managements Discussion and Analysis or Plan of Operation in
Item 6 of Part II of our report on Form 10-KSB for the year ended June 30, 2006. |
When considering these forward-looking statements, you should keep in mind the cautionary
statements in this report and the documents incorporated by reference. We have no obligation and
do not undertake to update or revise any such forward-looking statements to reflect events or
circumstances after the date of this report.
2
LIFELINE THERAPEUTICS, INC.
INDEX
3
PART I Financial Information
Item 1. Financial Statements
LIFELINE THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2006 and June 30, 2006
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(Unaudited) |
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September 30, |
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(Audited) |
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2006 |
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June 30, 2006 |
ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
143,560 |
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$ |
228,112 |
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Marketable securities, available for sale |
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2,568,406 |
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3,008,573 |
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Accounts receivable, net |
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390,600 |
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107,892 |
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Inventory |
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91,969 |
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45,001 |
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Deferred expenses |
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125,918 |
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152,677 |
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Deposit with manufacturer |
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470,416 |
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555,301 |
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Prepaid expenses |
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584,693 |
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316,659 |
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Total current assets |
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4,375,562 |
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4,414,215 |
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Property and equipment, net |
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254,088 |
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245,000 |
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Intangible assets, net |
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2,199,412 |
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2,162,042 |
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Deposits |
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325,440 |
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316,621 |
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TOTAL ASSETS |
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$ |
7,154,502 |
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$ |
7,137,878 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
645,137 |
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$ |
613,833 |
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Accrued expenses |
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305,833 |
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399,305 |
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Margin debt payable |
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607,487 |
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Deferred revenue |
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876,660 |
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1,144,950 |
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Capital lease obligations, current portion |
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2,059 |
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1,985 |
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Total current liabilities |
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2,437,176 |
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2,160,073 |
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Long-term liabilities |
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Capital lease obligations, net of current portion |
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2,603 |
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3,146 |
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Total liabilities |
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2,439,779 |
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2,163,219 |
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Stockholders equity |
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Preferred stock par value $.001, 50,000,000
shares authorized, no shares issued or
outstanding |
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Common stock, Series A -par value $.001,
250,000,000 shares authorized
and 22,118,034 issued and outstanding |
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22,118 |
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22,118 |
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Common stock, Series B par value $.001,
250,000,000 shares authorized, no shares issued
or outstanding |
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Additional paid-in capital |
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14,542,396 |
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14,018,487 |
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Accumulated (deficit) |
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(9,830,547 |
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(9,010,339 |
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Unrealized (loss) on securities available for sale |
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(19,244 |
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(55,607 |
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Total stockholders equity |
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4,714,723 |
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4,974,659 |
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
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$ |
7,154,502 |
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$ |
7,137,878 |
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The accompanying notes are an integral part of these condensed consolidated statements.
4
LIFELINE THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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For the three months ended |
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September 30, |
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2006 |
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2005 |
Sales, net |
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$ |
2,075,482 |
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$ |
2,964,591 |
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Cost of sales |
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375,552 |
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596,561 |
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Gross profit |
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1,699,930 |
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2,368,030 |
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Operating expenses: |
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Marketing and customer service |
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1,032,815 |
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1,144,470 |
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General and administrative |
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1,407,626 |
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1,065,409 |
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Research and development |
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65,683 |
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Depreciation and amortization |
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29,432 |
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86,374 |
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Total operating expenses |
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2,535,556 |
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2,296,253 |
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Operating (loss) |
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(835,626 |
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71,777 |
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Other income and (expense): |
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Interest income (expense) |
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15,418 |
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20,466 |
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Other |
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(11,928 |
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Net other income (expense) |
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15,418 |
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8,538 |
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Net income (loss) |
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$ |
(820,208 |
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$ |
80,315 |
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Net income (loss) per share, basic and diluted |
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$ |
(0.04 |
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$ |
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Weighted average shares outstanding, basic |
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22,118,034 |
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22,117,992 |
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Weighted average shares outstanding, fully diluted |
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22,118,034 |
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24,953,510 |
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The accompanying notes are an integral part of these condensed consolidated statements.
5
LIFELINE THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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For the three months ended September 30, |
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2006 |
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2005 |
Cash Flows from Operating Activities: |
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Net income (loss) |
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$ |
(820,208 |
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$ |
80,315 |
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Adjustments to reconcile net income (loss) to
net cash (used) provided by operating
activities: |
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Depreciation and amortization |
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29,432 |
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86,374 |
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Stock based compensation |
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523,910 |
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21,388 |
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Changes in operating assets and liabilities: |
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Decrease/(increase) in accounts receivable |
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(282,708 |
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302,707 |
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(Increase)/decrease in inventory |
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(46,968 |
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83,283 |
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Decrease in deferred expenses |
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26,759 |
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Decrease in deposits to manufacturer |
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84,884 |
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300,292 |
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(Increase)/decrease in prepaid expenses |
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(268,035 |
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99,432 |
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(Increase) in other assets |
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(8,819 |
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(210,002 |
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Increase/(decrease) in accounts payable |
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31,304 |
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(122,461 |
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Increase/(decrease) in accrued expenses |
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(93,472 |
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328,335 |
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(Decrease)/increase in deferred revenue |
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(268,290 |
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483,840 |
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Net Cash (Used) Provided by Operating Activities |
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(1,092,211 |
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1,453,503 |
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Cash Flows from Investing Activities: |
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Redemption of marketable securities |
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476,531 |
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Purchase of intangible assets |
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(37,370 |
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(969 |
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Purchase of equipment |
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(38,520 |
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(75,483 |
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Net Cash Provided (Used) by Investing Activities |
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400,641 |
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(76,452 |
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Cash Flows from Financing Activities: |
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Proceeds from margin debt |
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767,378 |
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Repayment on margin debt |
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(159,891 |
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Principal payments under capital lease obligation |
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(469 |
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Net Cash Provided by Financing Activities |
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607,018 |
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(Decrease)/Increase in cash |
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(84,552 |
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1,377,051 |
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Cash and Cash Equivalents beginning of period |
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228,112 |
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3,385,205 |
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Cash and Cash Equivalents end of period |
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$ |
143,560 |
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$ |
4,762,256 |
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Non Cash Investing and Financing Activities: |
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Acquisition of asset through capital lease |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
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Cash paid for interest expense |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated statements.
6
LIFELINE THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(UNAUDITED)
These unaudited Condensed Consolidated Financial Statements and Notes should be read in conjunction
with the audited financial statements and notes of Lifeline Therapeutics, Inc. as of and for the
year ended June 30, 2006 included in our Annual Report on Form 10-KSB.
Note 1 Organization and Basis of Presentation:
The condensed consolidated financial statements included herein have been prepared by us, without
audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In
the opinion of the management of Lifeline Therapeutics, Inc. (Lifeline or the Company), these
interim Financial Statements include all adjustments, consisting of normal recurring adjustments,
that are considered necessary for a fair presentation of the Companys financial position as of
September 30, 2006, and the results of operations for the three month periods ended September 30,
2006 and 2005 and the cash flows for the three month periods ended September 30, 2006 and 2005.
Interim results are not necessarily indicative of results for a full year or for any future period.
Certain prior period amounts have been reclassified to conform with our current period
presentation.
The condensed consolidated financial statements and notes included herein are presented as required
by Form 10-QSB, and do not contain certain information included in the Companys audited financial
statements and notes for the fiscal year ended June 30, 2006 pursuant to the rules and regulations
of the SEC. For further information refer to the financial statements and notes thereto as of and
for the year ended June 30, 2006, included in the Annual Report on Form 10-KSB on file with the
SEC.
Note 2 Summary of Significant Accounting Policies:
Restatement
On March 10, 2005, the Company reached an agreement with the minority shareholder in the Companys
81% owned subsidiary, Lifeline Nutraceuticals Corporation (LNC). The minority shareholder was a former officer of LNC. In accordance
with the terms of the agreement, the Company exchanged 1,000,000 shares of its Series A common
stock for the remaining 4,500,000 shares of LNC, representing 19% of the outstanding shares of LNC.
The closing price of the Companys Series A common stock on March 10, 2005 was $9.00 per share.
Since the Companys stock had historically been thinly traded, this 1,000,000-share issuance
represented a significant block of the Companys total outstanding shares. Accordingly, the
Company took a marketability discount to arrive at an estimated fair value of $5.31 per share. The
acquisition of the minority interest was previously accounted for utilizing the purchase method of
accounting resulting in goodwill of $5,310,000.
On November 10, 2006, in response to comments raised by the Staff of the Securities and Exchange
Commission (SEC) concerning the Companys registration statement filed on Form SB-2 and the
Companys valuation of goodwill and intangible assets on its financial statements, and to ensure
that its financial reporting remains in full compliance with Generally Accepted Accounting
Principles, the Companys Board of Directors concluded that it was appropriate to restate the
Companys annual report on Form 10-KSB for the fiscal year ended June 30, 2006. The Board
determined that, due to a concurrent private placement of the Companys Series A Common Stock at
$2.00 per share at about the time of the acquisition, the acquisition cost of the minority interest
in LNC should be recorded at $2,000,000. In addition, since the Companys motivation in purchasing
the minority interest in its subsidiary was to gain control over its intellectual property, the
purchase price for the acquisition should be allocated entirely to intellectual property.
7
The balance sheet as of September 30, 2006 reflects the Companys reduction of goodwill from
$5,310,000 to $0, an increase of patent costs by $2,000,000 and a reduction of additional paid-in
capital by $3,310,000. The Company intends to reflect these revisions on the Companys balance
sheets as of June 30, 2006 and 2005 included in its Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2006. The Company is working to complete the review and restate the financial
statements. The Company will file the restated financial statements as soon as is practicable. The
Company expects no adjustment to the income statement nor in cash expenditures as a result of the
restatement.
Consolidation
The accompanying financial statements include the accounts of the Company and its wholly owned
subsidiary, LNC. All inter-company accounts and
transactions between the entities have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires us to make estimates and assumptions. Such estimates and assumptions
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expense
during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenue from product sales is recognized upon passage of title and risk of loss to customers (when
product is shipped from the fulfillment facility to direct sales customers). The Company ships the
majority of its direct sales product by United Parcel Service (UPS) and receives substantially
all payment for these sales in the form of credit card charges. Sales revenue and estimated
returns are recorded when product is shipped. The Companys return policy is to provide a 30-day
money back guarantee on orders placed by customers. To date, the Company has experienced monthly
returns of approximately 2% of sales. As of September 30, 2006 and 2005, the Companys reserve
balance for returns and allowances was approximately $65,000 and $26,000, respectively.
For retail customers, the Company analyzes its contracts to determine the appropriate accounting
treatment for its recognition of revenue on a customer by customer basis.
In July 2005, the Company entered into an agreement with General Nutrition Distribution, LP
(GNC). Among other terms of the agreement, sales are subject to a provision whereby the seller
and buyer agree that all Products shall be sold on a sale or return basis whereby product can be
returned by GNC customers for a full refund. The GNC Vendor Handbook pledges a 100-percent
guarantee by GNC to the purchasers of its products and expects vendors to do the same. The
Company has begun the recognition of revenue during the current interim reporting period due to the
accumulation of historical data. The Company recognizes revenue and its related costs when it
obtains sufficient information to reasonably estimate the amount of future returns. Accordingly,
the Company recognizes revenue associated with sales to the distributor when the product is resold
by the distributor. Prior to this change, all revenue and related costs from this customer were
deferred. A total of $748,230 of revenue previously deferred was recognized from the GNC agreement
in the three months ended September 30, 2006.
In July 2006, Lifeline entered into an agreement with CVS/pharmacy (CVS) for the sale of
Protandim® throughout the CVS store network. Among other terms of the agreement,
one-half of the payment for the initial order, approximately $247,000, is withheld by CVS until
certain sell-through parameters are met. Since the Company does not have sufficient history with
CVS to reasonably
8
estimate the sell-through of Protandim® within the CVS store network, 50% of the revenue
and related cost has been deferred. The Company will recognize this deferred revenue and related
cost of sales when it obtains sufficient sell-through information to reasonably estimate the amount
of future returns.
The table below shows the effect of the change in the Companys deferred revenue and expense for
the three months ended September 30, 2006:
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Deferred |
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Deferred |
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Revenue |
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Expense |
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Deferred revenue and expense as
of June 30, 2006 |
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$ |
1,144,950 |
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$ |
152,677 |
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Additional deferred revenue /
expense in the current period |
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678,960 |
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|
101,627 |
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Recognition of revenue from
prior period GNC sales |
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(748,230 |
) |
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(98,268 |
) |
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Recognition of revenue due to GNC
sell-through in the current period |
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(199,020 |
) |
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(30,118 |
) |
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Deferred revenue / expenses
as of September 30, 2006 |
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$ |
876,660 |
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$ |
125,918 |
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Accounts Receivable
The Companys accounts receivable consist of receivables from retail distributors. Management
reviews accounts receivable on a regular basis to determine if any receivables will potentially be
uncollectible. However, as the Company had only two retail distributors, GNC and CVS, as of
September 30, 2006, and has not experienced non-payment from these customers, the Company has no
allowance for doubtful accounts. For credit card sales to direct sales customers, the Company
verifies the customers credit card prior to shipment of product. Payment on credit cards is
treated as a deposit in transit and is not reflected as a receivable on the accompanying balance
sheet. Based on information available, management does not believe that there is justification for
an allowance for doubtful accounts as of September 30, 2006. There is no bad debt expense for the
three month period ended September 30, 2006.
Earnings per share
Basic earnings (loss) per share are computed by dividing the net income or loss by the weighted
average number of common shares outstanding during the period. Diluted earnings per common share
are computed by dividing net income by the weighted average common shares and potentially dilutive
common share equivalents. The effects of potential common stock equivalents are not included in
computations when their effect is antidilutive. Because of the net loss for the three month
periods ended September 30, 2006 and 2005, the basic and diluted average outstanding shares are the
same, since including the additional shares would have an antidilutive effect on the loss per share
calculation.
Goodwill and Other Intangible Assets
The Company has adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets
(SFAS 142). SFAS 142 establishes standards for accounting for goodwill and other intangibles
acquired in business combinations. Goodwill and other intangibles with indefinite lives are not
amortized.
9
As of September 30, 2006 and June 30, 2006, intangible assets consisted of:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
June 30, |
|
|
|
2006 |
|
|
2006 |
|
Patent costs |
|
$ |
2,118,542 |
|
|
$ |
2,097,905 |
|
Trademark costs |
|
|
80,870 |
|
|
|
64,137 |
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net |
|
$ |
2,199,412 |
|
|
$ |
2,162,042 |
|
|
|
|
|
|
|
|
Stock-Based Compensation
Prior to July 1, 2006, the Company adhered to SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS 123). SFAS 123 provides a method of accounting for stock-based compensation
arrangements, based on fair value of the stock-based compensation utilizing various assumptions
regarding the underlying attributes of the options and stock, rather than the intrinsic method of
accounting for stock-based compensation which is proscribed in Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25). The Company adopted the
modified prospective application of SFAS 123(R), Share-Based Payment (SFAS 123(R)), for all
options and warrants issued to employees and directors during the first quarter ended September 30,
2006 and, as a result, has not restated its financial results for prior periods.
In an effort to advance the interests of the Company and its shareholders, the Company has
established its 2007 Long-Term Incentive Plan (the Plan) to provide incentives to certain
eligible employees who contribute significantly to the strategic and long-term performance
objectives and growth of the Company. The Plan is subject to shareholder approval at the November
21, 2006 shareholder meeting. Options to purchase approximately 600,000 shares have been granted
to various employees at a price of $0.76 per share, vesting over a three-year period. A maximum of
6,000,000 shares of Series A Common Stock can be issued under the Plan in connection with the grant
of awards.
Options granted prior to the adoption of the Plan will be terminated and new options on
substantially identical terms and provisions (i.e., identical number of underlying shares, exercise
price, vesting schedule, and expiration date as the original options) will be granted under the
Plan. As no modifications to the terms and provisions of the previously granted options will
occur, the Company will account for the related compensation expense under SFAS 123(R) as it did
prior to the effective date of the Plan.
In certain circumstances, the Company issued common stock for invoiced services, to pay creditors
and in other similar situations. In accordance with Emerging Issues Task Force 96-18 (EITF
96-18), payments in equity instruments to non-employees for goods or services are accounted for by
the fair value method, which relies on the valuation of the service at the date of the transaction,
or public stock sales price, whichever is more reliable as a measurement.
Warrants and options were granted to various consultants and directors for services rendered during
the three month period ended September 30, 2006. As the Company has adopted SFAS 123(R) effective
July 1, 2006, an adjustment to net income for compensation expense to recognize annual vesting has
been recorded under SFAS 123(R).
10
|
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|
Three month period |
|
|
|
ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
Net income (loss) as reported: |
|
$ |
(820,208 |
) |
|
$ |
80,315 |
|
|
|
|
|
|
|
|
|
|
Share-based employee compensation cost
included in net income (loss): |
|
|
523,910 |
|
|
|
21,388 |
|
|
|
|
|
|
|
|
|
|
Share-based employee compensation cost
that would have been included in net
income if the fair value-based method had
been applied to all awards: |
|
|
(523,910 |
) |
|
|
(54,904 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income (loss) as if the
fair value-based method had been applied
to all awards: |
|
$ |
(820,208 |
) |
|
$ |
46,799 |
|
|
|
|
|
|
|
|
|
|
Basic and fully diluted earnings per
share: |
|
|
|
|
|
|
|
|
As Reported: |
|
$ |
(0.04 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
Pro forma: |
|
$ |
(0.04 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
The total unrecognized compensation expense to be recognized in the future is approximately
$3,750,000.
The fair value of the options granted in the three month periods ended September 30, 2006 and 2005
was estimated at the date of grant using the Black-Scholes option pricing model with the following
assumptions:
|
1. |
|
risk-free interest rate of between 4.71 and 4.97 percent in the three month period ended
September 30, 2006 and between 3.84 and 4.18 percent in the three month period ended
September 30, 2005; |
|
|
2. |
|
dividend yield of -0- percent in 2006 and 2005; |
|
|
3. |
|
expected life of 2 6 years in 2006 and 2005; and |
|
|
4. |
|
a volatility factor of the expected market price of the Companys common stock of
between 185 and 211 percent in the three month period ended September 30, 2006 and
between 220 and 259 percent in the three month period ended September 30, 2005. |
Reclassification
Certain prior period amounts have been reclassified to comply with current period presentation.
Effect of New Accounting Pronouncements
In September 2006, SFAS No. 158, Employers Accounting for Defined Benefit Pensions and Other
Post-Retirement Plans (SFAS 158), was issued by the FASB and is effective for financial
statements for fiscal years ending after December 15, 2006. SFAS 158 improves financial reporting
by requiring an employer to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in which the changes
occur through comprehensive income of a business entity or changes in unrestricted net assets of a
not-for-profit organization. This
11
Statement also improves financial reporting by requiring an employer to measure the funded status
of a plan as of the date of its year-end statement or financial position, with limited exceptions.
We anticipate that SFAS 158 will not have a material impact on our financial statements.
Note 3 Margin Debt
In order that sales of marketable securities would not have to occur before maturity to fund short
term operating needs of the Company, a margin account was established to borrow against the
marketable securities at a variable interest rate. Margin Debt payable was approximately $607,500
as of September 30, 2006, and there was none outstanding as of June 30, 2006.
Note 4 Stockholders Equity
On June 12, 2006, the Company purchased a portfolio of marketable securities primarily comprised of
corporate bonds. As of September 30, 2006, the portfolio declined in value and the Company
reported in comprehensive income an unrealized loss of $(19,244). In accordance with SFAS 115,
Accounting for Certain Investments in Debt and Equity Securities (SFAS 115), the Company
accounted for the investment as available for sale securities and recorded the unrealized loss as
comprehensive income in a separate component of stockholders equity.
During the three month period ended September 30, 2006, the Company granted warrants and options to
consultants for services rendered, under EITF 96-18. Effective July 1, 2006, the Company adopted
SFAS 123(R) for employees and directors. In accordance with SFAS 123(R), payments in equity
instruments for goods or services are accounted for by the fair value method. For the three months
ended September 30, 2006 and 2005, compensation of $523,910 and $21,388, respectively, was
reflected as an increase to additional paid in capital.
In April and May 2005, the Company issued, in a private placement, units consisting of 10,000
shares of common stock and a warrant to purchase 10,000 shares of common stock for $2.50 per share,
exercisable through April 18, 2008, to accredited investors for cash and exchange of bridge loan
notes. Each unit was offered at a purchase price equal to $2.00 per share. The private placement
was made pursuant to an agreement with an investment banking firm entered into by the Company on
January 15, 2005. The securities offered in the private placement have not been registered under
the Securities Act of 1933 (the Act) or under the securities laws of any state. The securities
are restricted securities as defined in Rule 144 under the Act. The securities were offered
pursuant to an exemption from registration and may not be reoffered or sold in the United States
absent registration or an applicable exemption from the registration requirements.
Pursuant to the private placement, the Company received $4,988,811 in cash from certain accredited
investors in exchange for 2,499,764 shares of common stock and an equal number of warrants. The
Company also issued 1,507,202 shares of its common stock and an equal number of warrants in
exchange for $3,014,372 bridge notes and accrued interest. The Company paid commissions of
$508,134 plus a $75,000 expense allowance to the investment banking firm, and issued warrants to
the investment banking firm and another placement agent to purchase 409,281 shares of common stock,
exercisable at $2.00 per share through April 18, 2008. After payment of commissions, the expense
allowance, and a fee to the escrow agent, the Company received net proceeds of $4,405,677. In
conjunction with the closing of the private placement, the Company repaid bridge notes payable with
a principal balance of $160,000 and related accrued interest of $10,733 to note holders electing to
be repaid rather than exchange their notes for units in the private placement.
The Company has an obligation to register the Series A common stock issued in the private placement
and the shares underlying the warrants received by bridge note holders and investors in the private
placement. The Company filed a registration statement for these shares in June 2005 and is
currently in discussions with the Staff of the Securities and Exchange Commission (See SEC Staff
Comments).
12
The Companys articles of incorporation authorize the issuance of preferred shares. However, as of
September 30, 2006, none have been issued nor have any rights or preferences been assigned to the
preferred shares by the Board of Directors.
Note 5 Stock Option Grants and Warrants
Stock Option Grants During the three months ended September 30, 2006, the Company granted
approximately 600,000 options to employees. No additional stock options were granted to directors
or consultants. Options outstanding grant the right to purchase shares of the Companys Series A
common stock at prices between $2.00 and $3.47 per share. The options are not transferable and
expire on various dates through January 4, 2016. The Company adopted SFAS 123(R) beginning July 1,
2006 for the first quarter ended September 30, 2006.
Warrants At September 30, 2006, 176,428 warrants were outstanding. There were 9,000
warrants granted during the three months ended September 30, 2006 at exercise prices ranging
between $0.76 and $0.98 with a weighted average exercise price of $0.90 and expiration dates
ranging from July 31, 2008 to September 30, 2008.
There were 10,170 warrants granted during the three months ended September 30, 2005 at exercise
prices ranging between $5.10 and $9.85 with a weighted average exercise price of $6.66 and
expiration dates ranging from July 31, 2007 to September 30, 2007.
13
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis should be read in conjunction with the accompanying Financial
Statements and related notes, as well as the section entitled Cautionary Note Regarding
Forward-Looking Statements in our Form 10-KSB for the fiscal year ended June 30, 2006 and the risk
factors discussed therein. The statements contained in this report that are not purely historical
are forward-looking statements. Forward-looking statements include statements regarding our
expectations, hopes, intentions, or strategies regarding the future. Forward-looking statements
include statements regarding future products or product development; statements regarding future
selling, general and administrative costs and research and development spending, and our product
development strategy; statements regarding future capital expenditures and financing requirements;
and similar forward-looking statements. It is important to note that our actual results could
differ materially from those in such forward-looking statements.
Overview
This managements discussion and analysis discusses the financial condition and results of
operations of Lifeline Therapeutics, Inc. (the Company, Lifeline Therapeutics, or we, us or
our) and its wholly-owned subsidiary, Lifeline Nutraceuticals Corporation (LNC).
At the present time, we sell a single product, Protandim®. We developed
Protandim®, a proprietary blend of ingredients that has (through studies on animals and
humans) demonstrated the ability to increase the production of superoxide dismutase (SOD) and
catalase (CAT) in brain, liver, and blood. Protandim® is designed to induce the human
body to produce more of its own catalytic antioxidants, and to decrease the process of lipid
peroxidation, an indicator of oxidative stress. Each component of Protandim® has been
selected on its ability to meet these criteria. Low, safe doses of each component ensure that
unwanted additional effects that might be associated with one or another of the components are not
seen with the formulation.
We sell Protandim® directly to individuals as well as to retail stores. We began
significant sales of Protandim® in the fourth quarter ended June 30, 2005. In June
2005, the Company and Protandim® were discussed on a nationally televised news program,
which led to a substantial increase in sales. Since June 2005, sales of Protandim® have
declined on a monthly basis as we have not received continuing similar national news exposure.
During the three month period ended September 30, 2006, the Companys advertising expenditures
increased over the three month period ended September 30, 2005.
Our research efforts to date have been focused on investigating various aspects and consequences of
the imbalance of oxidants and antioxidants, an abnormality which is a central underlying feature in
many disorders. We intend to continue our research, development, and documentation of
Protandim® to provide credibility to the market. We also anticipate undertaking
research, development, testing, and licensing efforts to be able to introduce additional products
under the Protandim® brand name in the future, although we cannot offer any assurance
that we will be successful in this endeavor.
The primary operational components of our business are outsourced to companies we believe possess a
high degree of professionalism and achievement in their particular field of endeavor. One
advantage of outsourcing we hope to achieve is a more direct correlation of the costs we incur to
our level of product sales versus the relatively high fixed costs of building our own
infrastructure to accomplish these same tasks. Another advantage of this structure is to minimize
our commitment of resources to the human capital required to manage these operational components
successfully. Outsourcing also provides additional capacity without significant advance notice and
often at an incremental price lower than the unit prices for the base service.
14
Recent Developments
CVS/pharmacy
In July 2006, Lifeline entered into an agreement with CVS/pharmacy (CVS) for the sale of
Protandim® throughout the CVS drugstore chain, which includes more than 6,100 stores
throughout the United States, including the Sav-on and Osco stores recently acquired by CVS.
As part of the launch, CVS/pharmacy will co-market Protandim® through a variety of
initiatives, including national print advertisements in over 800 publications, in-store signage,
and off-shelf merchandising.
Addition to the Board of Directors
On October 6, 2006, Lifeline announced that Dr. Larry Gold had been elected to the Companys Board
of Directors as the ninth member to fill a vacancy established by the Board on September 26, 2006.
Dr. Gold also serves on the Companys Scientific Advisory Board, where he provides advice to the
Company with respect to activities and special projects.
Discussions with the Staff of the Securities and Exchange Commission
We have been in discussion with the Securities and Exchange Commission regarding, among other
issues, the accounting for the convertible debentures issued by us in 2005, as well as the
accounting for goodwill from the purchase of the minority interest of LNC in 2005. The outcome of
such discussions with the SEC resulted in adjustments to certain amounts reported in our financial
statements issued for the year ended June 30, 2006 and the current filing. These adjustments
affected the presentation and classification of amounts and costs relating to certain patents,
goodwill, and additional paid-in capital on our balance sheet. In resolving the above items with
the SEC, the Company requested resolution on its revenue recognition policy. We will continue to
utilize the sell-through amounts from the distributor to the consumer to recognize revenue for
sales to a distributor with right of return provisions, and we will apply an allowance for product
returns.
Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2005
Sales We generated revenues of approximately $2,075,500 during the three months ended
September 30, 2006 and approximately $2,964,600 during the same period of the prior fiscal year.
For the three month periods ended September 30, 2006 and 2005, cost of sales was approximately
$375,600 and $596,600 resulting in a gross profit of approximately $1,699,900 and $2,368,000,
respectively. The decrease in sales and gross profit was due to a nationally televised news
program in June 2005 which led to substantial sales during the three month period ended September
30, 2005. No similar national news exposure occurred during the three month period ended September
30, 2006.
Gross Margin Our gross profit percentage for the three month periods ended September 30,
2006 and 2005 was 82% and 80%, respectively. The slight increase in margin is due to the
recognition of higher margin distributor revenue during the three month period ended September 30,
2006.
Operating Expenses Total operating expenses reported during the three month period ended
September 30, 2006 were approximately $2,535,600 as compared to operating expenses of approximately
$2,296,300 during the three month period ended September 30, 2005. Operating expenses increased
approximately $239,300 primarily due to stock-based compensation expense under SFAS 123(R), which
was adopted by the Company effective July 1, 2006.
Marketing and Customer Service Expenses Marketing and customer service expense decreased
from approximately $1,144,500 in the three months ended September 30, 2005 to approximately
$1,032,800 in the three months ended September 30, 2006. This decrease was due to higher customer
service and
15
call center costs in the three months ended September 30, 2005 associated with the creation and
ramp-up of call center and order taking capabilities.
General and Administrative Expenses Our general and administrative expense increased from
approximately $1,065,400 in the three months ended September 30, 2005 to approximately $1,407,600
in the three months ended September 30, 2006. The increase resulted from the adoption of SFAS
123(R) during the three month period ended September 30, 2006. During the three months ended
September 30, 2006, stock related compensation was approximately $523,900 compared to approximately
$21,400 during the three months ended September 30, 2005.
Research and Development Our research and development expenditures increased from $-0- in
the three months ended September 30, 2005 to approximately $65,700 in the three months ended
September 30, 2006 as a result of research, development, and documentation of the efficacy of
Protandim®.
Depreciation and Amortization Expense Depreciation and amortization expense decreased from
approximately $86,400 during the three months ended September 30, 2005 to approximately $29,400 in
the three months ended September 30, 2006. This decrease was due to the amortization of a
non-compete agreement prior to the beginning of the Companys first fiscal quarter ended September
30, 2006.
Net Other Income and Expense We recognized net other income of approximately $15,400 in the
three months ended September 30, 2006 as compared to net other income of approximately $8,500 in
the three months ended September 30, 2005. This change is largely the result of increased interest
income.
Net Loss As a result of the revenues and expenses described above and because of lower
first fiscal quarter 2007 revenue, the Companys net loss was approximately $(820,200) for the
three month period ended September 30, 2006 compared to net income of approximately $80,300 for the
three month period ended September 30, 2005.
Our ability to finance future operations will depend on our existing liquidity (discussed in more
detail below) and, ultimately, on our ability to generate additional revenues and profits from
operations. At this time, we believe that Lifeline Therapeutics has sufficient funds to allow us
to continue our planned marketing efforts and the manufacturing and sale of Protandim®
through June 30, 2007. Nevertheless, even if we do generate revenues at increasing levels, the
revenues generated may not be greater than the expenses incurred. Operating results will depend on
several factors, including the selling price of the product, the number of units of product sold,
the costs of manufacturing and distributing the product, the costs of marketing and advertising,
and other costs, including corporate overhead, which we will be incurring during that period of
time.
Liquidity and Capital Resources
Our primary liquidity and capital resource requirements are to finance the cost of our planned
marketing efforts and the manufacture and sale of Protandim® and to pay our general and
administrative expenses. Our primary sources of liquidity are cash flow from the sales of our
product.
At September 30, 2006, our available liquidity was approximately $2,712,000, including available
cash and cash equivalents and marketable securities. This represented a decrease of approximately
$524,700 from the approximately $3,236,700 in cash, cash equivalents and marketable securities as
of June 30, 2006. During the three months ended September 30, 2006, our net cash used by operating
activities was approximately $(1,092,200) as compared to net cash provided by operating activities
of approximately $1,453,500 during the three months ended September 30, 2005. The Companys cash
used by operating activities during the three month period ended September 30, 2006 decreased as a
result of lower sales than the same period during the prior fiscal year.
16
During the three months ended September 30, 2006, our net cash provided by investing activities was
approximately $400,600, primarily due to the sale and redemption of marketable securities available
for sale. During the three months ended September 30, 2005, we used approximately $(76,500) in
investing activities, primarily due to the purchase of equipment.
Cash provided by financing activities during the three months ended September 30, 2006 was
approximately $607,000, compared to none during the three months ended September 30, 2005. Cash
provided from financing activities during the three month period ended September 30, 2006 was due
to proceeds from margin debt.
At September 30, 2006, we had working capital (current assets minus current liabilities) of
approximately $1,938,400, compared to working capital of approximately $2,254,100 at June 30, 2006.
The decrease in working capital was due to cash used in operating activities.
We currently anticipate that existing cash resources will be sufficient to fund our anticipated
working capital and capital expenditure needs through at least June 30, 2007. We base our expenses
and expenditures in part on our expectations of future revenue levels from the sale of
Protandim®. If our revenue for a particular period is lower than expected, we may take
steps to reduce our operating expenses accordingly. If cash generated from operations is
insufficient to satisfy our liquidity requirements, we may seek to sell additional public or
private equity securities or obtain debt financing. Additional financing may not be available at
all or, if available, may not be obtainable on terms favorable to us. If we are unable to obtain
additional financing needed if and when cash generated from operations is insufficient to satisfy
our liquidity requirements, we may be required to reduce the scope of our planned operations, which
could harm our business, financial condition and operating results. Additional financing may also
be dilutive to our existing shareholders.
Critical Accounting Policies
We prepare our financial statements in conformity with accounting principles generally accepted in
the United States of America. As such, we are required to make certain estimates, judgments, and
assumptions that we believe are reasonable based upon the information available. These estimates
and assumptions affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the periods presented. Actual
results could differ from these estimates. Our significant accounting policies are described in
Note 2 to our financial statements. Certain of these significant accounting policies require us to
make difficult, subjective, or complex judgments or estimates. We consider an accounting estimate
to be critical if (1) the accounting estimate requires us to make assumptions about matters that
were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate
that are reasonably likely to occur from period to period, or use of different estimates that we
reasonably could have used in the current period, would have a material impact on our financial
condition or results of operations.
There are other items within our financial statements that require estimation, but are not deemed
critical as defined above. Changes in estimates used in these and other items could have a
material impact on our financial statements. Management has discussed the development and
selection of these critical accounting estimates with our board of directors, and the audit
committee has reviewed the foregoing disclosure.
Allowances for Product Returns We record allowances for product returns at the time we ship
the product. We base these accruals on the historical return rate since the inception of our
selling activities, and the specific historical return patterns of the product. Our return rate
since the inception of selling activities is approximately 2% of sales.
We offer a 30-day, money back unconditional guarantee to all customers. As of September 30, 2006,
our September 2006 direct sales shipments of approximately $365,600 were subject to the money back
17
guarantee. We replace returned product damaged during shipment wholly at our cost, which
historically has been negligible.
As the Company has begun to recognize revenue associated with sales to distributors, the Company
has also utilized its return rate experience of 2% of sales to estimate returns on its sales to
distributors.
We monitor our return estimate on an ongoing basis and may revise the allowances to reflect our
experience. Our allowance for product returns was approximately $65,000 on September 30, 2006,
compared with approximately $26,000 on September 30, 2005. To date, product expiration dates have
not played any role in product returns, and we do not expect they will in the foreseeable future
because it is unlikely that we will ship product with an expiration date earlier than the latest
allowable product return date.
Inventory Valuation We state inventories at the lower of cost or market on a first-in
first-out basis. We maintain a reserve for inventory obsolescence and we base this reserve on
assumptions about current and future product demand, inventory whose shelf life has expired and
market conditions. We may be required to make additional reserves in the event there is a change
in any of these variables. We recorded no reserves for obsolete inventory as of September 30, 2006
because our product and raw materials have a shelf life of over 3 years and we purchased all
product and raw materials in the second half of fiscal 2005.
Revenue Recognition We ship the majority of our product by United Parcel Service (UPS)
and receive payment for those shipments in the form of credit card charges. Our return policy is
to provide a 30-day money back guarantee on orders placed by customers. After 30 days, we do not
refund customers for returned product. We have experienced monthly returns approximating 2% of
sales. Sales revenue and estimated returns are recorded when the merchandise is shipped because
performance by us is considered met when shipped by UPS.
For retail customers, the Company analyzes its contracts to determine the appropriate accounting
treatment for its recognition of revenue on a customer by customer basis.
In July 2005, we entered into an agreement with GNC pursuant to which GNC has the right to return
any and all product shipped to them, at any time, for any reason. The Company has begun the
recognition of revenue during the current interim reporting period. The Company recognizes revenue
and its related costs when it obtains sufficient information to reasonably estimate the amount of
future returns. Accordingly, the Company recognizes revenue associated with sales to the
distributor when the product is resold by the distributor. Prior to this change all revenue and
related costs to this customer were deferred.
In July 2006, Lifeline entered into an agreement with CVS/pharmacy (CVS) for the sale of
Protandim® throughout the CVS store network. Among other terms of the agreement,
one-half of the payment for the initial order, approximately $247,000, is withheld by CVS until
certain sell-through parameters are met. Since the Company does not have sufficient history with
CVS to reasonably estimate the sell-through of Protandim® within the CVS store network,
50% of the revenue and related cost has been deferred. The Company will recognize this deferred
revenue and related cost of sales when it obtains sufficient sell-through information to reasonably
estimate the amount of future returns.
Research and Development Costs We have expensed all of our payments related to research and
development activities.
Recently Issued Accounting Standards
In September 2006, SFAS 158, Employers Accounting for Defined Benefit Pensions and Other
Post-Retirement Plans (SFAS 158), was issued by the FASB and is effective for financial
statements for fiscal years ending after December 15, 2006. SFAS 158 improves financial reporting
by requiring an
18
employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan
(other than a multiemployer plan) as an asset or liability in its statement of financial position
and to recognize changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring an employer to measure
the funded status of a plan as of the date of its year-end statement or financial position, with
limited exceptions. We anticipate that SFAS 158 will not have a material impact on our financial
statements.
We have reviewed all other recently issued, but not yet effective, accounting pronouncements and do
not believe any such pronouncements will have a material impact on our financial statements.
SEC Staff Comments
On June 30, 2005, we filed a registration statement on Form SB-2 related to the sale by certain of
our shareholders of up to 12,323,867 shares of our Series A common stock issued in connection with
our private placement completed in May 2005. We subsequently amended our registration statement to
respond to comments from the Staff. We have been in ongoing dialogue with SEC Staff to resolve the
following outstanding issues and the Company believes:
|
a) |
|
The 1,000,000 shares issued to purchase a minority interest in Lifeline
Nutraceuticals in March 2005 should be valued at $2.00 per share instead of $5.31
per share; |
|
|
b) |
|
the valuation of the goodwill resulting from the transaction should be
$-0-; |
|
|
c) |
|
the appropriate purchase price allocation to patent related intellectual
property should be $2,000,000; and |
|
|
d) |
|
the Companys calculation of the beneficial conversion factor related to
the bridge notes in fiscal year 2005 was properly reported. |
Accordingly,
the Company intends to restate its annual report on Form 10-KSB for the fiscal year ended June
30, 2006.
Item 3. Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the Companys reports is recorded, processed, summarized,
and reported within the time periods specified in the Securities and Exchange Commissions rules
and forms, and that such information is accumulated and communicated to the Companys management to
allow timely decisions regarding required disclosure. As of the end of the period covered by this
Report on Form 10-QSB, we evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934), under the
supervision and with the participation of our principal executive officer and principal financial
officer. Based on this evaluation, our management, including our principal executive officer and
principal financial officer, concluded that our disclosure controls and procedures were effective
as of the end of the period covered by this Report on Form 10-QSB.
There have been no changes in our internal control over financial reporting that occurred during
our fiscal quarter ended September 30, 2006 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
19
PART II Other Information
Item 1. Legal Proceedings
On December 7, 2005, John Bradley commenced a lawsuit naming Lifeline Therapeutics, Inc., Lifeline
Nutraceuticals Corporation, and others as defendants in District Court, Arapahoe County, Colorado.
Mr. Bradley alleged that he is entitled to additional compensation, in the form of approximately
450,000 shares of our Series A common stock, for services rendered to the Company and Lifeline
Nutraceuticals. Principally, the suit alleged violations of the Colorado Securities Act, breach of
contract, and fraudulent inducement.
On January 30, 2006, we filed a Motion to Dismiss Mr. Bradleys claims with the District Court.
After written briefing and a hearing, the District Court granted this Motion, without prejudice, on
May 16, 2006.
On May 31, 2006, Mr. Bradley filed a Motion for Reconsideration of Order Granting Defendants
Motion to Dismiss, or, in the Alternative, for New Hearing. On June 14, 2006, the Motion for
Reconsideration was denied.
The Company filed a Motion for Payment of Attorneys Fees and on June 14, 2006, the Motion was
granted. In a letter dated September 1, 2006, Mr. Bradley agreed to pay certain amounts in respect
of legal fees to Lifeline Therapeutics, Inc., Lifeline Nutraceuticals Corporation and the other
defendants, and to file a stipulation and dismissal of the action. On October 25, 2006, a
Stipulation and Proposed Order was filed pursuant to which Mr. Bradley agreed to pay the Company
approximately $53,300 with respect to legal fees.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended September 30, 2006, the Company granted options to purchase 605,000
shares of the Companys Series A Common Stock to certain employees (see Note 2). The options are
exercisable for Series A Common Stock at an exercise price of $0.76 per share. For these
compensatory options, there was no underwriter involved in the transactions, and the options were
issued pursuant to the exemption from registration contained in Section 4(2) of the Securities Act
of 1933, as amended.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits
|
3.2 |
|
Amended and Restated Bylaws of Lifeline Therapeutics, Inc. as adopted on October 2, 2006
(incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Lifeline
Therapeutics, Inc. (File No. 000-30489) filed on October 6, 2006). |
|
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 |
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act
of 2002 |
|
|
32.1 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
of 2002 |
|
|
32.2 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 |
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
LIFELINE
THERAPEUTICS, INC. |
|
Date: November 13, 2006 |
/s/ Stephen K. Onody
|
|
|
Stephen K. Onody, |
|
|
Chief Executive Officer |
|
|
|
|
|
Date: November 13, 2006 |
/s/ Gerald J. Houston
|
|
|
Gerald J. Houston, |
|
|
Chief Financial Officer |
|
|
21
Exhibit Index
3.2 |
|
Amended and Restated Bylaws of Lifeline Therapeutics, Inc. as adopted on October 2, 2006
(incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Lifeline
Therapeutics, Inc. (File No. 000-30489) filed on October 6, 2006). |
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 |
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act
of 2002 |
|
32.1 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
of 2002 |
|
32.2 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 |