UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
| x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the fiscal year ended December 31, 2007 |
| ¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the transition period from to |
Commission File No. 000-32877
PRO-PHARMACEUTICALS, INC.
| Nevada | 04-3562325 | |
| (State or other jurisdiction of incorporation) |
(I.R.S. Employer Identification No.) | |
| 7 Wells Avenue, Newton, Massachusetts | 02459 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(617) 559-0033
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Name of Exchange on which registered | |
| Common Stock, Par Value $.001 | American Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ¨ NO x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ¨ NO x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
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 ¨ Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of June 29, 2007 was $11,046,971.
The number of shares outstanding of the registrant’s common stock as of March 28, 2008 was 47,864,792.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the 2008 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.
Amendment No. 1 to the Annual Report on Form 10-K
For the Year Ended December 31, 2007
EXPLANATORY NOTE
Pro-Pharmaceuticals, Inc. (the “Company”) is filing this Amendment No. 1 (this “Amendment”) on Form 10-K/A to amend the Company’s Form 10-K for the fiscal year ended December 31, 2007 (the “Original Report”) in order to (i) insert paragraph (b) “Management’s Annual Report on Internal Control Over Financial Reporting” in Item 9A(T), “Controls and Procedures” and (ii) file correct versions of the certifications required by Rule 13a-14(a) of the Securities Exchange Act of 1934 (the “Section 302 Certifications”). Management’s Annual Report on Internal Control Report Over Financial Reporting was inadvertently omitted from the Original Report. The Section 302 Certifications filed with the Original Report were inadvertently missing certain required information not previously required to be contained in Section 302 Certifications.
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company is including in this Amendment only (i) Item 9A(T), “Controls and Procedures,” of Part II and (ii) Item 15, “Exhibits,” of Part IV (including correct Section 302 Certifications). The remaining Items of the Original Report are not amended hereby.
PART II
Item 9A(T). Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of December 31, 2007. Our management has concluded, based on their evaluation, that as of the end of the period covered by this report, our disclosure controls and procedures were effective as of December 31, 2007 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b) Management’s Annual Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. It includes those policies and procedures that:
a) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company;
b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
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expenditures of a company are being made only in accordance with authorizations of management and the board of directors of the company; and
c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on its financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management has used the criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate the effectiveness of the Company’s internal control over financial reporting. Management has selected the COSO framework for its evaluation as it is a control framework recognized by the SEC and the Public Company Accounting Oversight Board, that is free from bias, permits reasonably consistent qualitative and quantitative measurement of the Company’s internal controls, is sufficiently complete so that relevant controls are not omitted, and is relevant to an evaluation of internal controls over financial reporting.
Based on our assessment, management has concluded that our internal control over financial reporting, based on criteria established in “Internal Control-Integrated Framework” issued by COSO was effective as of December 31, 2007.
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only our management’s report in this annual report.
(c) Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fourth quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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| Item 15. | Exhibits and Financial Statement Schedules |
| Exhibit Number |
Description of Document |
Note Reference | ||
| 3.1 | Articles of Incorporation of the Registrant, dated January 23, 2001, as filed with the Secretary of State of the State of Nevada | 1 | ||
| 3.2 | Certificate of Amendment to Articles of Incorporation of the Registrant, as filed with the Secretary of State of the State of Nevada Secretary of State on May 28, 2004 | 2 | ||
| 3.3 | Certificate of Designation of Preferences, Rights and Limitations of Series A 12% Convertible Preferred Stock of the Registrant, as filed with the Secretary of State of the State of Nevada on October 5, 2007 | 3 | ||
| 3.4 | Amended and Restated Bylaws of the Registrant | 4 | ||
| 10.1 | Pro-Pharmaceuticals, Inc. 2001 Stock Incentive Plan. | 5 | ||
| 10.2 | Pro-Pharmaceuticals, Inc. 2003 Non-employee Director Stock Incentive Plan. | 6 | ||
| 10.3 | Employment Agreement, effective January 2, 2004, by and between the Registrant and David Platt. | 7 | ||
| 10.4 | Form of Incentive Stock Option Agreement (under the 2001 Stock Incentive Plan). | 8 | ||
| 10.5 | Form of Non-Qualified Stock Option Agreement (under the 2001 Stock Incentive Plan). | 8 | ||
| 10.6 | Form of Non-Qualified Stock Option Agreement (under the 2003 Non-Employee Director Stock Incentive Plan). | 8 | ||
| 10.7 | Form of 7% Convertible Debenture issued on February 14, 2006 | 9 | ||
| 10.8 | Securities Purchase Agreement dated February 14, 2006, between Pro-Pharmaceuticals, Inc. and the Purchasers named therein | 9 | ||
| 10.9 | Registration Rights Agreement dated February 14, 2006, between Pro-Pharmaceuticals, Inc. and the Purchasers named therein. | 9 | ||
| 10.10 | Form of Common Stock Purchase Warrant issued on February 14, 2006. | 9 | ||
| 10.11 | Office Lease Agreement dated May 2, 2006 between NS 5/27 Acquisition LLC, landlord, and the Registrant, tenant. | 10 | ||
| 10.12 | Waiver and Exchange Agreement dated March 21, 2007. | 11 | ||
| 10.13 | Employment Agreement effective October 1, 2007 between Theodore D. Zucconi, President, and the Registrant. | 12 | ||
| 10.14 | Employment Agreement dated May 1, 2003 between Anthony D. Squeglia, and Registrant filed upon succession as Chief Financial Officer effective October 1, 2007. | 13 | ||
| 10.15 | Form of Securities Purchase Agreement for units of Series A 12% Convertible Preferred Stock and Common Stock Purchase Warrants. | 3 | ||
| 10.16 | Form of Registration Rights Agreement | 3 | ||
| 10.17 | Form of Common Stock Purchase Warrant | 3 | ||
| 10.18 | Form of Common Stock Purchase Warrant | 3 | ||
| 10.19 | Amended and Restated Employment Agreement dated December 20, 2007 between Anthony D. Squeglia and the Registrant. | 14 | ||
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| Exhibit Number |
Description of Document |
Note Reference | ||
| 10.20 | Amended and Restated Employment Agreement dated December 19, 2007 between Theodore D. Zucconi and the Registrant | 15 | ||
| 10.21 | Securities Purchase Agreement dated February 14, 2008 between the Registrant and Alpha Capital, Rockmore Investment Master Fund, Ltd., Iroquois Master Fund, Ltd., Cranshire Capital, L.P., Hudson Bay Fund, L.P., Hudson Bay Overseas Fund, Ltd., Truk International Fund, L.P., Truk Opportunity Fund, LLC, ICM Business Trust, Ionic Capital Master Fund, Ltd., Highbridge Capital Management, LLC, Portside Growth & Opportunity Fund, Millenium Partners, L.P., Peter Hauser, Peter L. Hauser IRA, Enable Growth Partners L.P., George Macricostas, CAMOFI Master LDC, Cougar Trading, LLC, Brio Capital L.P., Fairfield Investments | 16 | ||
| 10.22 | Form of Common Stock Purchase Warrant issued on February 25, 2008 | 16 | ||
| 10.23 | Placement Agent Agreement dated February 12, 2008 between Maxim Group LLC and the Registrant | 16 | ||
| 21.1** | Subsidiaries of the Registrant | |||
| 23.1** | Consent of Deloitte & Touche LLP, an independent registered public accounting firm | |||
| 31.1* | Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |||
| 31.2* | Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |||
| 32.1* | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
| 32.2* | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
| * | Filed herewith. |
| ** | Previously filed. |
| 1. | Incorporated by reference to the Registrant’s Registration Statement on Form 10-SB, as filed with the Commission on June 13, 2001. |
| 2. | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 16, 2004. |
| 3. | Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on October 9, 2007. |
| 4. | Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on December 17, 2007. |
| 5. | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2001 filed with the Commission on November 14, 2001. |
| 6. | Incorporated by reference to the Registrant’s Registration Statement on Form S-8, as filed with the Commission on October 22, 2003. |
| 7. | Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, as filed with the Commission on March 30, 2004. |
| 8. | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2004 as filed with the Commission on November 19, 2004. |
| 9. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on February 15, 2006. |
| 10. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on May 5, 2006. |
| 11. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on March 21, 2007. |
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| 12. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on September 27, 2007 |
| 13. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on October 4, 2007. |
| 14. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on October December 20, 2007. |
| 15. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on October December 26, 2007. |
| 16. | Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on October February 15, 2008. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March 31, 2008.
| PRO-PHARMACEUTICALS, INC. | ||
| By: | /S/ DAVID PLATT | |
| Name: David Platt, Ph.D. Title: Chief Executive Officer | ||
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Exhibit 31.1
Certification pursuant to Rule 13a-14(a) of the Securities Act of 1934
I, David Platt, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Pro-Pharmaceuticals, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and we have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| March 31, 2008 | /s/ David Platt
| |||||||
| Name: | David Platt | |||||||
| Title: | Chief Executive Officer (principal executive officer) | |||||||
Exhibit 31.2
Certification pursuant to Rule 13a-14(a) of the Securities Act of 1934
I, Anthony D. Squeglia, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Pro-Pharmaceuticals, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and we have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| March 31, 2008 | /s/ Anthony D. Squeglia
| |||||||
| Name: | Anthony D. Squeglia | |||||||
| Title: | Chief Financial Officer (principal financial and accounting officer) | |||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Pro-Pharmaceuticals, Inc. (the “Company”) on Form 10-K/A for the year ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Platt, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| March 31, 2008 | /s/ David Platt
| |||||||
| Name: | David Platt | |||||||
| Title: | Chief Executive Officer (principal executive officer) | |||||||
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Pro-Pharmaceuticals, Inc. and will be retained by Pro-Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Pro-Pharmaceuticals, Inc. (the “Company”) on Form 10-K/A for the year ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony D. Squeglia, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| March 31, 2008 | /s/ Anthony D. Squeglia
| |||||||
| Name: | Anthony D. Squeglia | |||||||
| Title: | Chief Financial Officer (principal financial and accounting officer) | |||||||
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Pro-Pharmaceuticals, Inc. and will be retained by Pro-Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.