UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
 
x           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2010

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

For the transition period from ________ to ________

Commission File Number:  333-88480
 
OHR PHARMACEUTICAL, INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware
  
90-0577933
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)

489 Fifth Avenue 28th Floor
New York, NY 10017
(Address of principal executive offices)

(212) 682-8452
(Registrant’s telephone number, including area code)

1245 Brickyard Rd., Suite 590
Salt Lake City, Utah 84106
(Former name, former address, and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x   No  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  o   No  x

 
 
 

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
 
Do not check if smaller reporting company
    
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No   x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 35,377,580 shares of Common Stock outstanding as of May 17, 2010.
 
 
EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A (the “Amendment”) amends the quarterly report of Ohr Pharmaceutical, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2010 as filed with the Securities and Exchange Commission on May 17, 2010 (the “Original Filing”).  This Amendment amends Items 1 and  2. Other than the change referred to above, all other information in the Original Filing remains unchanged.

 
 
 

OHR PHARMACEUTICAL, INC.
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PART I  FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS.
 
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K/A filed with the SEC on January 19, 2010. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
 
 
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4
 

OHR PHARMACEUTICAL, INC
(A Development Stage Company)
Balance Sheets

 
ASSETS
            
   
March 31,
    
September 30,
  
   
2010
    
2009
  
CURRENT ASSETS
  
(Unaudited)
        
Cash
  
$
716,916
    
$
345,604
  
Prepaid expenses
    
56,896
      
-
  
Security deposits
    
85,025
      
85,025
  
Total Current Assets
    
858,837
      
430,629
  
                 
OTHER ASSETS
                
Patent costs
    
800,000
      
800,000
  
                 
TOTAL ASSETS
  
$
1,658,837
    
$
1,230,629
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                
                 
CURRENT LIABILITIES
                
Accounts payable
  
$
162,770
    
$
77,399
  
Convertible debentures
    
-
      
180,000
  
Accrued expenses
    
27,044
      
80,557
  
Short-term notes payable
    
24,500
      
-
  
Total Current Liabilities
    
214,314
      
337,956
  
                 
LONG-TERM LIABILITIES
                
Convertible debenture-long term
    
58,832
      
279,988
  
Stock warrant derivative liability
    
2,868,242
      
-
  
Total Long-term Liabilities
    
2,927,074
      
279,988
  
                 
TOTAL LIABILITIES
    
3,141,388
      
617,944
  
                 
STOCKHOLDERS' EQUITY (DEFICIT)
                
                 
Preferred stock, Series B; 15,000,000 shares authorized,
                
at $0.0001 par value, 5,583,336  shares
                
issued and outstanding, respectively
    
558
      
558
  
Common stock; 180,000,000 shares authorized,
                
at $0.0001 par value, 35,377,580 and 25,247,006
                
shares issued and outstanding, respectively
    
3,538
      
2,525
  
Additional paid-in capital
    
21,302,279
      
23,077,972
  
Accumulated deficit
    
(21,628,748
)
    
(21,628,748
)
Deficit accumulated during the development stage
    
(1,160,178
)
    
(839,622
)
Total Stockholders' Equity (Deficit)
    
(1,482,551
)
    
612,685
  
TOTAL LIABILITIES AND
                
STOCKHOLDERS' EQUITY (DEFICIT)
  
$
1,658,837
    
$
1,230,629
  
 
The accompanying notes are an integral part of these financial statements.

 
5
 

OHR PHARMACEUTICAL, INC
(A Development Stage Company)
Statements of Operations
(Unaudited)

 
                           
From Inception of
  
                           
the Development
  
                           
Stage on
  
                           
October 1, 2007
  
   
For the Three Months Ended
    
For the Six Months Ended
    
Through
  
   
March 31,
    
March 31,
    
March 31,
  
   
2010
    
2009
    
2010
    
2009
    
2010
  
                               
REVENUES
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
COST OF SALES
    
-
      
-
      
-
      
-
      
-
  
GROSS PROFIT
    
-
      
-
      
-
      
-
      
-
  
                                         
OPERATING EXPENSES
                                        
General and administrative
    
173,846
      
440,444
      
332,349
      
506,886
      
1,931,874
  
Total Operating Expenses
    
173,846
      
440,444
      
332,349
      
506,886
      
1,931,874
  
OPERATING LOSS
    
(173,846
)
    
(440,444
)
    
(332,349
)
    
(506,886
)
    
(1,931,874
)
OTHER INCOME AND EXPENSE
                                        
Gain on foreign currency
    
-
      
-
      
-
      
-
      
2,596
  
Interest income
    
116
      
-
      
161
      
-
      
161
  
Interest expense
    
(2,794
)
    
(1,808
)
    
(16,793
)
    
(1,808
)
    
(42,590
)
Gain on extinguishment of debt
    
17,021
      
-
      
17,021
      
-
      
81,464
  
Other income and expense
    
5,702
      
-
      
11,404
      
-
      
51,652
  
Total Other Income and Expense
    
20,045
      
(1,808
)
    
11,793
      
(1,808
)
    
93,283
  
                                         
LOSS FROM CONTINUING OPERATIONS
                                        
BEFORE INCOME TAXES
    
(153,801
)
    
(442,252
)
    
(320,556
)
    
(508,694
)
    
(1,838,591
)
PROVISION FOR INCOME TAXES
    
-
      
-
      
-
      
-
      
-
  
LOSS FROM CONTINUING OPERATIONS
    
(153,801
)
    
(442,252
)
    
(320,556
)
    
(508,694
)
    
(1,838,591
)
DISCONTINUED OPERATIONS
                                        
Income from discontinued
                                        
operations (including gain on
                                        
disposal of $606)
    
-
      
-
      
-
      
-
      
678,413
  
Income tax benefit
    
-
      
-
      
-
      
-
      
-
  
GAIN ON DISCONTINUED OPERATIONS
    
-
      
-
      
-
      
-
      
678,413
  
NET LOSS
  
$
(153,801
)
  
$
(442,252
)
  
$
(320,556
)
  
$
(508,694
)
  
$
(1,160,178
)
BASIC LOSS PER SHARE
                                        
Continuing operations
  
$
(0.00
)
  
$
(0.02
)
  
$
(0.01
)
  
$
(0.02
)
        
Discontinued operations
    
0.00
      
0.00
      
0.00
      
0.00
          
   
$
(0.00
)
  
$
(0.02
)
  
$
(0.01
)
  
$
(0.02
)
        
WEIGHTED AVERAGE NUMBER
                                        
OF SHARES OUTSTANDING:
                                        
BASIC AND DILUTED
    
34,629,137
      
25,247,006
      
30,317,933
      
25,247,006
          
 
The accompanying notes are an integral part of these financial statements.

 
6
 

OHR PHARMACEUTICAL, INC
(A Development Stage Company)
Statements of Changes in Stockholders' Equity (Deficit)
(Unaudited)
 

                                       
Deficit
        
                                       
Accumulated
    
Total
  
                           
Additional
          
During the
    
Stockholders'
  
   
Series B Preferred Stock
    
Common Stock
    
Paid-in
    
Accumulated
    
Development
    
Equity
  
   
Shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Deficit
    
Stage
    
(Deficit)
  
Balance, September 30, 2007
    
-
    
$
-
      
25,247,006
    
$
2,525
    
$
21,363,107
    
$
(21,628,748
)
  
$
-
    
$
(263,116
)
Fair value of warrants granted
                                                                
to employees
    
-
      
-
      
-
      
-
      
271,484
      
-
      
-
      
271,484
  
Net income for the year
                                                                
ended September 30, 2008
    
-
      
-
      
-
      
-
      
-
      
-
      
24,827
      
24,827
  
Balance, September 30, 2008
    
-
      
-
      
25,247,006
      
2,525
      
21,634,591
      
(21,628,748
)
    
24,827
      
33,195
  
Fair value of warrants granted
                                                                
to employees
    
-
      
-
      
-
      
-
      
411,860
      
-
      
-
      
411,860
  
Preferred stock issued for cash
    
5,583,336
      
558
      
-
      
-
      
348,442
      
-
      
-
      
349,000
  
Warrants issued for in conjunction
                                                                
with preferred stock offering
    
-
      
-
      
-
      
-
      
656,000
      
-
      
-
      
656,000
  
Fair value of warrants granted
    
-
      
-
      
-
      
-
      
27,079
      
-
      
-
      
27,079
  
Net loss for the year
                                                                
ended September 30, 2009
    
-
      
-
      
-
      
-
      
-
      
-
      
(864,449
)
    
(864,449
)
Balance, September 30, 2009
    
5,583,336
      
558
      
25,247,006
      
2,525
      
23,077,972
      
(21,628,748
)
    
(839,622
)
    
612,685
  
Fair value of warrants granted for services and accounts payable
    
-
      
-
      
-
      
-
      
88,562
      
-
      
-
      
88,562
  
Exercise of warrants for cash
                                                                
at $0.18 per share
    
-
      
-
      
5,583,336
      
558
      
1,004,442
      
-
      
-
      
1,005,000
  
Cashless exercise of warrants
    
-
      
-
      
4,547,238
      
455
      
(455
)
    
-
      
-
      
-
  
Issuance of replacement warrants
                                    
(2,868,242)
                      
(2,868,242)
  
Net loss for the six months
                                                                
ended March 31, 2010
    
-
      
-
      
-
      
-
      
-
      
-
      
(320,556
)
    
(320,556
)
Balance, March 31, 2010
    
5,583,336
    
$
558
      
35,377,580
    
$
3,538
    
$
21,302,279
    
$
(21,628,748
)
  
$
(1,160,178
)
  
$
(1,482,551
)
 
The accompanying notes are an integral part of these financial statements.

 
7
 

OHR PHARMACEUTICAL, INC
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
 
 
               
From Inception
  
               
of the
  
               
Development
  
               
Stage on
  
               
October 1, 2007
  
   
For the Six Months
    
Through
  
   
March 31,
    
March 31,
  
   
2010
    
2009
    
2010
  
OPERATING ACTIVITIES
                  
Net income (loss)
  
$
(320,556
)
  
$
(508,694
)
  
$
(1,160,178
)
Adjustments to reconcile net income (loss) to net cash
                        
used by operating activities:
                        
Discontinued operations
    
-
      
-
      
(678,413
)
Fair value of warrants issued for services
    
88,562
      
411,671
      
798,985
  
Gain on extinguishment of debt
    
(17,021
)
    
-
      
(17,021
)
Changes in operating assets and liabilities
                        
Change in prepaid expenses and deposits
    
(56,896
)
    
(10,000
)
    
(56,476
)
Change in accounts payable and accrued expenses
    
48,879
      
2,571
      
(78,588
)
Net Cash Used in Operating Activities
    
(257,032
)
    
(104,452
)
    
(1,191,691
)
                         
INVESTING ACTIVITIES
                        
Purchase of patents and other intellectual property
    
-
      
(107,953
)
    
(300,000
)
Discontinued operations
    
-
      
-
      
418,000
  
Net Cash (Used In) Provided by Investing Activities
    
-
      
(107,953
)
    
118,000
  
                         
FINANCING ACTIVITIES
                        
Sale of preferred stock and warrants
    
-
      
-
      
1,005,000
  
Proceeds from warrants exercised with cash
    
1,005,000
      
-
      
1,005,000
  
Proceeds from related party payables
    
-
      
125,453
      
-
  
Proceeds from short-term notes payable
    
24,500
      
-
      
24,500
  
Repayment of convertible debentures
    
(401,156
)
    
-
      
(441,168
)
Net Cash Provided by Financing Activities
    
628,344
      
125,453
      
1,593,332
  
                         
NET INCREASE (DECREASE) IN CASH
    
371,312
      
(86,952
)
    
519,641
  
CASH AT BEGINNING OF PERIOD
    
345,604
      
95,782
      
197,275
  
CASH AT END OF PERIOD
  
$
716,916
    
$
8,830
    
$
716,916
  
                         
SUPPLEMENTAL DISCLOSURES OF
                    
-
  
CASH FLOW INFORMATION
                        
CASH PAID FOR:
                        
Interest
  
$
41,332
    
$
-
    
$
55,332
  
Income Taxes
    
-
      
-
      
-
  
NON CASH FINANCING ACTIVITIES:
                        
Transfer of investment for dividends payable
  
$
-
    
$
-
    
$
186,000
  
Purchase of patents for debenture
    
-
      
500,000
      
500,000
  
 
The accompanying notes are an integral part of these financial statements.

 
8
 

OHR PHARMACEUTICAL, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2010 and September 30, 2009
(Unaudited)
 

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2010, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2009 audited financial statements.  The results of operations statement for the period ended March 31, 2010 is not necessarily indicative of the operating results for the full year.

NOTE 2 - GOING CONCERN

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that could change in the near term are impairment assessments, fair value of warrants and stock issued under cashless exercise of warrants.

 
9
 

OHR PHARMACEUTICAL, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2010 and September 30, 2009
(Unaudited)

 
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset de-recognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.

In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. It is effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.

In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167.

In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166.

In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1.

In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that include both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-14 to have a material effect on the financial position, results of operations or cash flows of the Company.

 
10
 

OHR PHARMACEUTICAL, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2010 and September 30, 2009
(Unaudited)
 

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (continued)

In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. It is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-13 to have a material effect on the financial position, results of operations or cash flows of the Company.

In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued. The Company does not expect the provisions of ASU 2009-12 to have a material effect on the financial position, results of operations or cash flows of the Company.

In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The provisions of EITF 09-1, clarifies the accounting treatment and disclosure of share-lending arrangements that are classified as equity in the financial statements of the share lender. An example of a share-lending arrangement is an agreement between the Company (share lender) and an investment bank (share borrower) which allows the investment bank to use the loaned shares to enter into equity derivative contracts with investors. EITF 09-1 is effective for fiscal years that beginning on or after December 15, 2009 and requires retrospective application for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009. Share-lending arrangements that have been terminated as a result of counterparty default prior to December 15, 2009, but for which the entity has not reached a final settlement as of December 15, 2009 are within the scope. It is effective for share-lending arrangements entered into on or after the beginning of the first reporting period that begins on or after June 15, 2009. The Company does not expect the provisions of EITF 09-1 to have a material effect on the financial position, results of operations or cash flows of the Company.
 
NOTE 4 – PATENT COSTS

Patent costs represent the capitalized purchase price of assets acquired in the secured party sale as part of the Company’s previously announced strategy to create a rollup of undervalued biotechnology companies and assets.  As of March 31, 2010, the Company had purchased $800,000 worth of biotechnology patents and other intellectual property.  In these acquisitions, the Company used approximately $300,000 in cash and issued a $500,000 convertible debenture for the remainder of the cost which is secured by the acquired assets.

 
11
 

OHR PHARMACEUTICAL, INC.
 (A Development Stage Company)
Notes to the Financial Statements
March 31, 2010 and September 30, 2009
(Unaudited)
 

NOTE 5 – CONVERTIBLE DEBT

During the year ended September 30, 2009, the Company issued an 11% convertible note in the amount of $500,000, due June 20, 2011. Under the note, the Company was to pay $180,000 on December 15, 2009, and quarterly payments of $25,000 commencing on March 30, 2010, each of which shall be applied first towards the satisfaction of accrued interest and then towards the satisfaction of principal. All principal and accrued interest on the notes is convertible into shares of the Company’s common stock at the election of the purchasers at any time at the conversion price of $0.40 per share.

During the six months ended March 31, 2010, the Company paid $30,181 in interest and $401,156 in principle on the convertible debt, respectively.   The balance of the convertible note as of March 31, 2010 is $58,832.

NOTE 6 – DERIVATIVE LIABILITY AND FAIR VALUE MEASUREMENTS
 
On January 15, 2010 the Company issued 5,583,336 warrants to warrant holders that had exercised warrants during the period at $0.18.  The Company used the Black-Scholes option pricing model to calculate the fair market value of these warrants.  Using the assumptions in the table below, the Company calculated a fair value of $0.51 per warrant.

Stock Price at Valuation Date
  
$
0.52
  
Exercise (Strike) Price
  
$
0.55
  
Dividend Yield
    
0.00
%
Years to Maturity
    
5.00
  
Risk-free Rate
    
1.35
%
Volatility
    
270
%
 
Effective July 31, 2009, the Company adopted FASB ASC Topic No. 815-40 which defines determining whether an instrument (or embedded feature) is solely indexed to an entity’s own stock. The exercise price of the 5,583,336 warrants issued to on January 15, 2010 are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than $0.55. If these provisions are triggered, the exercise price of all their warrants will be reduced.  As a result, the warrants are not considered to be solely indexed to the Company’s own stock and are not afforded equity treatment.
 
The total fair value of the warrants, amounting to $2,868,242 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these warrants being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) – Gain (loss) on warrant derivative liability” until such time as the warrants are exercised or expire.  Because these warrants were issued in conjunction with common stock that had been exchanged for warrants with an exercise price of $0.18, the fair value on the date of issuance includes the net cash proceeds from the sale of stock of $1,005,000 and the fair value of $0.18 warrants being forfeited valued on the date of exercise at $2,867,856.

 
12
 

The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with 5,583,336 warrants to purchase common stock issued on January 15, 2010.  ASC 815 requires Company management to assess the fair market value of the warrants at each reporting period and recognize any change in the fair market value of the warrants as an other income or expense tem.  At March 31, 2010, the Company revalued the warrants using the Black-Scholes option pricing model with the assumptions in the table below and determined that the Company’s liability associated with this derivative liability had not materially changed since its issuance on January 15, 2010.

Stock Price at Valuation Date
  
$
0.51
  
Exercise (Strike) Price
  
$
0.55
  
Dividend Yield
    
0.00
%
Years to Maturity
    
4.8
  
Risk-free Rate
  
1.35
%
Volatility
  
270
%
  
NOTE 7 – CAPITAL STOCK

On June 3, 2009, the Company sold $1,005,000 in securities in a private placement, comprised of 5,583,336 shares of Series B Convertible Preferred Stock and 10,116,672 Common Stock purchase warrants exercisable at a price of $0.18 per share.  

Between October 29, 2009 and December 4, 2009, the Company issued a total of 236,000 warrants for services rendered to the Company.  In conjunction with this issuance, the Company recognized $88,562 in consulting expense.

On December 15, 2009, investors exercised 5,583,336 warrants via a cashless exchange for 4,547,238 shares of the Company’s common stock.

Between December 24, 2009 and March 31, 2010, the Company received $1,005,000 in cash upon the exercise of warrants for cash.  The exercise price of these warrants was $0.18 per share resulting in the Company issuing 5,583,336 shares of common stock.

On January 15, 2010 the Company issued 5,583,336 warrants to warrant holders that had exercised warrants during the period at $0.18.  The Company used the Black-Scholes option pricing model to calculate the fair market value of these warrants at $0.51 per warrant and recognized a derivative liability of $2,868,242 associated with the issuance.

NOTE 8 – SUBSEQUENT EVENTS

On April 12, 2010 the Company hired Dr. Irach Taraporewala as CEO and Sam Backenroth as Vice President of Business Development and Interim CFO. In connection with the new hires, Andrew Limpert resigned as an officer of the Company.  Pursuant to the ESOP plan adopted September 2009, Dr. Taraporewala received 800,000 options exercisable at $0.50 vesting over 4 years and Mr. Backenroth received 200,000 options exercisable at $0.50 vesting over 4 years. Further details about Dr. Taraporewala and Mr. Backenroth’s employment can be found in the Company’s Form 8/K filed with the SEC on April 12, 2010.

On April 15, 2010 the Company issued 10,000 warrants exercisable at $0.55 for legal services rendered to the Company. These warrants have an expiration of 5 years.

On April 20, 2010 the Company moved corporate headquarters to 489 5th Avenue 28th Floor, New York, NY 10017.

In accordance with ASC 855, management evaluated subsequent events through the date these financial statements were issued and the Company had no additional material subsequent events to report.

 
13
 

OHR PHARMACEUTICAL, INC.
 (A Development Stage Company)
Notes to the Financial Statements
March 31, 2010 and September 30, 2009
(Unaudited)
 
 
NOTE 9 – RESTATEMENT OF FINANCIAL STATEMENTS

On January 12th, 2010, management concluded that the Company’s unaudited interim consolidated financial statements for the quarterly periods ended March 31, 2010 (“March”) should be restated due to an error discovered during our annual audit for the year ended September 30, 2010.  The error relates to the accounting of warrants issued as an inducement to warrant holders to exercise their warrants on January 15, 2010.  Originally, the Company viewed the issuance of inducement warrants as an additional warrant expense of $2,868,242 which was recorded in earnings with an offset to derivative liability.  Due to the fact that the replacement warrants were issued in conjunction with common stock that had been exchanged for warrants, the fair value received by the Company on the date of issuance includes both the net cash proceeds of $1,005,000 from the sale of stock and the $2,867,856 fair value of the warrants being forfeited valued on the date of exercise.

The calculated fair market value of the warrants at the time of issuance was accurate, however when considering the fair market value of the warrants forfeited by shareholders under the modified arrangement, no expense ought to have been recognized and instead a reduction to the Company’s Additional Paid-in Capital account should have been recorded.

The modifications to the restated financial statements reduce Warrant Expense by $2,868,242 and Additional-Paid in Capital by the same amount.   Additionally, these changes affect two of the elements of the Changes in Shareholders’ Equity by reducing both the Additional Paid-in Capital and Accumulated Deficit accounts by $2,868,282.  

A comparison of the summarized financial statements as revised and as originally presented is a follows:

 
14
 

BALANCE SHEETS
   
March 31,
    
March 31,
    
March 31,
  
   
2010
    
2010
    
2010
  
ASSETS
  
(Originally Filed)
    
(Restated)
    
(Difference)
  
CURRENT ASSETS
                  
                   
Cash
   $ 716,916     $ 716,916       -  
Prepaid expenses
     56,896       56,896       -  
Security deposits
     85,025       85,025       -  
Total Current Assets
     858,837       858,837       -  
                         
OTHER ASSETS
                        
Patent costs
     800,000       800,000       -  
TOTAL ASSETS
   $ 1,658,837     $ 1,658,837       -  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY
                        
                         
CURRENT LIABILITIES
                        
Accounts payable
   $ 162,770     $ 162,770       -  
Accrued expenses
     27,044       27,044       -  
Short-term notes payable
     24,500       24,500       -  
Total Current Liabilities
     214,314       214,314       -  
                         
LONG-TERM LIABILITIES
                        
Convertible debenture-long term
     58,832       58,832       -  
Stock warrant derivative liability
     2,868,242       2,868,242       -  
Total Long-term Liabilities
     2,927,074       2,927,074       -  
TOTAL LIABILITIES
     3,141,388       3,141,388       -  
                         
STOCKHOLDERS' EQUITY
                        
                         
Preferred stock
     558       558       -  
Common stock
     3,538       3,538       -  
Additional paid-in capital
     24,170,521       21,302,279       (2,868,242 )
Accumulated deficit
     (21,628,748 )     (21,628,748 )     -  
Deficit accumulated during the development stage
     (4,028,420 )     (1,160,178 )     2,868,242  
                         
Total Stockholders' Equity
     (1,482,551 )     (1,482,551 )     -  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 1,658,837     $ 1,658,837       -  
 
 
15
 

INCOME STATEMENTS
   
For the
    
For the
    
For the
  
   
Three Months
    
Three Months
    
Three Months
  
   
March 31,
    
March 31,
    
March 31,
  
   
2010
    
2010
    
2010
  
   
(Originally Filed)
    
(Restated)
    
(Difference)
  
                   
REVENUES
   $ -     $ -     $ -  
COST OF SALES
     -       -       -  
GROSS PROFIT
     -       -       -  
                         
OPERATING EXPENSES
                        
Warrant expense
     2,868,242       -       (2,868,242 )
General and administrative
     173,846       173,846       -  
Total Operating Expenses
     3,042,088       173,846       (2,868,242 )
OPERATING LOSS
     (3,042,088 )     (173,846 )     2,868,242  
                         
OTHER INCOME AND EXPENSE
                        
Gain on foreign currency
     -       -       -  
Interest income
     116       116       -  
Interest expense
     (2,794 )     (2,794 )     -  
Gain on settlement of debt
     17,021       17,021       -  
Other income and expense
     5,702       5,702       -  
Total Other Income and Expense
     20,045       20,045       -  
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (3,022,043 )     (153,801 )     2,868,242  
PROVISION FOR INCOME TAXES
     -       -       -  
LOSS FROM CONTINUING OPERATIONS
     (3,022,043 )     (153,801 )     2,868,242  
DISCONTINUED OPERATIONS
                        
Income from discontinued
                        
operations (including gain on
                        
disposal of $606)
     -       -       -  
Income tax benefit
     -       -       -  
GAIN ON DISCONTINUED OPERATIONS
     -       -       -  
NET LOSS
   $ (3,022,043 )   $ (153,801 )   $ 2,868,242  
                         
BASIC LOSS PER SHARE
                        
Continuing operations
   $ (0.09 )   $ (0.00 )   $ 0.09  
Discontinued operations
     0.00       0.00       0.00  
    $ (0.09 )   $ (0.00 )   $ 0.09  
                         
WEIGHTED AVERAGE  NUMBER OF SHARES OUTSTANDING:
                        
BASIC AND DILUTED
     34,629,137       34,629,137       -  

 
16
 

INCOME STATEMENTS
   
For the
    
For the
    
For the
  
   
Six Months
    
Six Months
    
Six Months
  
   
March 31,
    
March 31,
    
March 31,
  
   
2010
    
2010
    
2010
  
   
(Originally Filed)
    
(Restated)
    
(Difference)
  
                   
REVENUES
   $ -     $ -     $ -  
COST OF SALES
     -       -       -  
GROSS PROFIT
     -       -       -  
                         
OPERATING EXPENSES
                        
Warrant expense
     2,956,804       -       (2,956,804 )
General and administrative
     243,787       332,349       88,562  
Total Operating Expenses
     3,200,591       332,349       (2,868,242 )
OPERATING LOSS
     (3,200,591 )     (332,349 )     2,868,242  
                         
OTHER INCOME AND EXPENSE
                        
Gain on foreign currency
     -       -       -  
Interest income
     161       161       -  
Interest expense
     (16,793 )     (16,793 )     -  
Gain on settlement of debt
     17,021       17,021       -  
Other income and expense
     11,404       11,404       -  
Total Other Income and Expense
     11,793       11,793       -  
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (3,188,798 )     (320,556 )     2,868,242  
PROVISION FOR INCOME TAXES
     -       -       -  
LOSS FROM CONTINUING OPERATIONS
     (3,188,798 )     (320,556 )     2,868,242  
DISCONTINUED OPERATIONS
                        
Income from discontinued
                        
operations (including gain on
                        
disposal of $606)
     -       -       -  
Income tax benefit
     -       -       -  
GAIN ON DISCONTINUED OPERATIONS
     -       -       -  
NET LOSS
   $ (3,188,798 )   $ (320,556 )   $ 2,868,242  
                         
BASIC LOSS PER SHARE
                        
Continuing operations
   $ (0.11 )   $ (0.01 )   $ 0.10  
Discontinued operations
     0.00       0.00       0.00  
    $ (0.11 )   $ (0.01 )   $ 0.10  
WEIGHTED AVERAGE  NUMBER
                        
OF SHARES OUTSTANDING:
                        
BASIC AND DILUTED
     30,317,933       30,317,933       -  
 
 
17
 

INCOME STATEMENTS
   
From Inception of
    
From Inception of
    
From Inception of
  
   
the Development
    
the Development
    
the Development
  
   
Stage on
    
Stage on
    
Stage on
  
   
October 1, 2007
    
October 1, 2007
    
October 1, 2007
  
   
Through
    
Through
    
Through
  
   
March 31,
    
March 31,
    
March 31,
  
   
2010
    
2010
    
2010
  
   
(Originally Filed)
    
(Restated)
    
(Difference)
  
                   
REVENUES
   $ -     $ -     $ -  
COST OF SALES
     -       -       -  
GROSS PROFIT
     -       -       -  
                         
OPERATING EXPENSES
                        
Warrant expense
     3,667,217       -       (3,667,217 )
General and administrative
     1,132,899       1,931,874       798,975  
Total Operating Expenses
     4,800,116       1,931,874       (2,868,242 )
OPERATING LOSS
     (4,800,116 )     (1,931,874 )     2,868,242  
                         
OTHER INCOME AND EXPENSE
                        
Gain on foreign currency
     2,596       2,596       -  
Interest income
     161       161       -  
Interest expense
     (42,590 )     (42,590 )     -  
Gain on settlement of debt
     81,464       81,464       -  
Other income and expense
     51,652       51,652       -  
Total Other Income and Expense
     93,283       93,283       -  
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (4,706,833 )     (1,838,591 )     2,868,242  
PROVISION FOR INCOME TAXES
     -       -       -  
LOSS FROM CONTINUING OPERATIONS
     (4,706,833 )     (1,838,591 )     2,868,242  
DISCONTINUED OPERATIONS
                        
Income from discontinued
                        
operations (including gain on
                        
disposal of $606)
     678,413       678,413       -  
Income tax benefit
     -       -       -  
GAIN ON DISCONTINUED OPERATIONS
     678,413       678,413       -  
NET LOSS
   $ (4,028,420 )   $ (1,160,178 )   $ 2,868,242  
                         
 
 
18
 

STATEMENTS OF CASH FLOWS
   
For the Six Months
    
For the Six Months
    
For the Six Months
  
   
March 31,
    
March 31,
    
March 31,
  
   
2010
    
2010
    
2010
  
   
(Originally Filed)
    
(Restated)
    
(Difference)
  
OPERATING ACTIVITIES
                  
Net income (loss)
   $ (3,188,798 )   $ (320,556 )   $ 2,868,242  
Adjustments to reconcile net income (loss) to net cash used by operating activities:
                        
Fair value of warrants issued for services
     2,956,804       88,562       (2,868,242 )
Gain on extinguishment of debt
     (17,021 )     (17,021 )     -  
Changes in operating assets and liabilities
                        
Change in prepaid expenses and deposits
     (56,896 )     (56,896 )     -  
Change in accounts payable and accrued expenses
     48,879       48,879       -  
Net Cash Used in Operating Activities
     (257,032 )     (257,032 )     -  
                         
INVESTING ACTIVITIES
     -       -       -  
                         
FINANCING ACTIVITIES
                        
Proceeds of warrants exercised for cash
     1,005,000       1,005,000       -  
Proceeds from short-term notes payable
     24,500       24,500       -  
Repayment of convertible debentures
     (401,156 )     (401,156 )     -  
Net Cash Provided by Financing Activities
     628,344       628,344       -  
                         
NET INCREASE (DECREASE) IN CASH
     371,312       371,312       -  
CASH AT BEGINNING OF PERIOD
     345,604       345,604       -  
CASH AT END OF PERIOD
   $ 716,916     $ 716,916     $ -  
                         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
                        
CASH PAID FOR:
                        
Interest
   $ 41,332     $ 41,332     $ -  
 
 
19
 

STATEMENTS OF CASH FLOWS
   
From Inception of
    
From Inception of
    
From Inception of
  
   
the Development
    
the Development
    
the Development
  
   
Stage on
    
Stage on
    
Stage on
  
   
October 1, 2007
    
October 1, 2007
    
October 1, 2007
  
   
Through
    
Through
    
Through
  
   
March 31,
    
March 31,
    
March 31,
  
   
2010
    
2010
    
2010
  
   
(Originally Filed)
    
(Restated)
    
(Difference)
  
OPERATING ACTIVITIES
                  
Net income (loss)
   $ (4,028,420 )   $ (1,160,178 )   $ 2,868,242  
Adjustments to reconcile net income (loss) to net cash used by operating activities:
                        
Discontinued operations
     (678,413 )     (678,413 )     -  
Fair value of warrants issued for services
     3,667,227       798,985       (2,868,242 )
Gain on extinguishment of debt
     (17,021 )     (17,021 )     -  
Changes in operating assets and liabilities
                        
Change in prepaid expenses and deposits
     (56,476 )     (56,476 )     -  
Change in accounts payable and accrued expenses
     (78,588 )     (78,588 )     -  
Net Cash Used in Operating Activities
     (1,191,691 )     (1,191,691 )     -  
                         
INVESTING ACTIVITIES
                        
Purchase of patents and other intellectual property
     (300,000 )     (300,000 )     -  
Discontinued operations
     418,000       418,000       -  
Net Cash (Used In) Provided by Investing Activities
     118,000       118,000       -  
                         
FINANCING ACTIVITIES
                        
Sale of preferred stock and warrants
     1,005,000       1,005,000       -  
Proceeds of warrants exercised for cash
     1,005,000       1,005,000       -  
Proceeds from short-term notes payable
     24,500       24,500       -  
Repayment of convertible debentures
     (441,168 )     (441,168 )     -  
Net Cash Provided by Financing Activities
     1,593,332       1,593,332       -  
                         
NET INCREASE (DECREASE) IN CASH
     519,641       519,641