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 June 30, 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)

 
(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 practical date: 35,452,580 shares of Common Stock outstanding as of August 13, 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 June 30, 2010 as filed with the Securities and Exchange Commission on August 13, 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.
TABLE OF CONTENTS
 
 
     
PAGES
   
       
 
4
       
 
20
       
 
24
       
 
24
       
   
       
 
25
       
 
25
       
 
25
       
 
25
       
 
25
       
  25

 
 
 

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.
 
 
TABLE OF CONTENTS 
 
   
PAGE
     
 
5
     
 
6
     
 
7
     
 
8
     
 
9

 
4
 

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

 
 
 ASSETS
  
June 30,
2010
    
September 30,
2009
  
CURRENT ASSETS
  
(Unaudited)
        
             
Cash
  
$
599,801
    
$
345,604
  
Prepaid expenses
    
27,211
      
-
  
Security deposits
    
85,025
      
85,025
  
                 
Total Current Assets
    
712,037
      
430,629
  
                 
OTHER ASSETS
                
                 
Patent costs
    
800,000
      
800,000
  
                 
TOTAL ASSETS
  
$
1,512,037
    
$
1,230,629
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                
                 
CURRENT LIABILITIES
                
                 
Accounts payable and accrued expenses
  
$
157,007
    
$
157,956
  
Short-term notes payable
    
16,524
      
-
  
Convertible debentures
    
-
      
180,000
  
                 
Total Current Liabilities
    
173,531
      
337,956
  
                 
LONG-TERM LIABILITIES
                
Convertible debenture-long term
    
48,832
      
279,988
  
Stock warrant derivative liability
    
2,727,273
      
-
  
                 
Total Long-term Liabilities
    
2,776,105
      
279,988
  
                 
TOTAL LIABILITIES
    
2,949,636
      
617,944
  
                 
STOCKHOLDERS' EQUITY (DEFICIT)
                
                 
Preferred stock, Series B; 15,000,000 shares authorized,
                
at $0.0001 par value, 5,583,336  and 5,583,336 shares
                
issued and outstanding, respectively
    
558
      
558
  
Common stock; 180,000,000 shares authorized,
                
at $0.0001 par value, 35,402,580 and 25,247,006
                
shares issued and outstanding, respectively
    
3,541
      
2,525
  
Additional paid-in capital
    
21,523,833
      
23,077,972
  
Accumulated deficit
    
(21,628,748
)
    
(21,628,748
)
Deficit accumulated during the development stage
    
(1,336,783
)
    
(839,622
)
                 
Total Stockholders' Equity (Deficit)
    
(1,437,599
)
    
612,685
  
TOTAL LIABILITIES AND
                
STOCKHOLDERS' EQUITY (DEFICIT)
  
$
1,512,037
    
$
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)

 
   
For the Three Months Ended
June 30,
    
For the Nine Months Ended
June 30,
    
From Inception of
the Development
Stage on
October 1, 2007
Through
June 30,
  
   
2010
    
2009
    
2010
    
2009
    
2010
  
REVENUES
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
COST OF SALES
    
-
      
-
      
-
      
-
      
-
  
GROSS PROFIT
    
-
      
-
      
-
      
-
      
-
  
                                         
OPERATING EXPENSES
                                        
                                         
General and administrative
    
354,593
      
216,583
      
686,943
      
724,117
      
2,286,467
  
                                         
Total Operating Expenses
    
354,593
      
216,583
      
686,943
      
724,117
      
2,286,467
  
                                         
OPERATING LOSS
    
(354,593
)
    
(216,583
)
    
(686,943
)
    
(724,117
)
    
(2,286,467
)
                                         
OTHER INCOME AND EXPENSE
                                        
                                         
Gain (loss) on foreign currency
    
(312
)
    
1,312
      
(312
 )    
1,312
      
2,284
  
Interest income
    
98
      
-
      
259
      
438
      
259
  
Interest expense
    
(2,495
)
    
(13,712
)
    
(19,288
 )    
(15,520
)
    
(45,085
)
Gain on settlement of debt
    
32,539
      
-
      
49,559
      
-
      
114,003
  
Gain on derivative liability
    
140,969
      
-
      
140,969
      
-
      
140,969
  
Other income and expense
    
7,189
      
-
      
18,595
      
-
      
58,841
  
                                         
Total Other Income and Expense
    
177,988
      
(12,400
)
    
189,782
      
(13,770
)
    
271,271
  
                                         
LOSS FROM CONTINUING OPERATIONS
                                        
BEFORE INCOME TAXES
    
(176,605
)
    
(228,983
)
    
(497,161
)
    
(737,887
)
    
(2,015,196
)
                                         
PROVISION FOR INCOME TAXES
    
-
      
-
      
-
      
-
      
-
  
                                         
LOSS FROM CONTINUING OPERATIONS
    
(176,605
)
    
(228,983
)
    
(497,161
)
    
(737,887
)
    
(2,015,196
)
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
  
$
(176,605
)
  
$
(228,983
)
  
$
(497,161
)
  
$
(737,887
)
  
$
(1,336,783
)
                                         
BASIC LOSS PER SHARE
                                        
Continuing operations
  
$
(0.00
)
  
$
(0.01
)
  
$
(0.02
)
  
$
(0.03
)
        
Discontinued operations
    
0.00
      
0.00
      
0.00
      
0.00
          
   
$
(0.00
)
  
$
(0.01
)
  
$
(0.02
)
  
$
(0.03
)
        
WEIGHTED AVERAGE  NUMBER
                                        
OF SHARES OUTSTANDING:
                                        
BASIC AND DILUTED
    
35,379,778
      
25,247,006
      
31,742,119
      
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)
 

   
Series B Preferred Stock
    
Common Stock
    
Additional
Paid-in
    
Accumulated
    
Deficit
Accumulated
During the
Development
    
Total
Stockholders'
Equity
  
   
Shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Deficit
    
Stage
    
(Deficit)
  
                                                 
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
    
-
      
-
      
-
      
-
      
92,553
      
-
      
-
      
92,553
  
                                                                 
Fair value of employee stock options
                                    
207,566 
      
- 
      
-
      
207,566 
  
                                                                 
Exercise of warrants for cash at $0.18 per share
    
-
      
-
      
5,583,336
      
558
      
1,004,442
      
-
      
-
      
1,005,000
  
                                                                 
Exercise of cashless warrants
    
-
      
-
      
4,547,238
      
455
      
(455
)
    
-
      
-
      
-
  
                                                                 
Conversion of convertible debenture at $0.40 per share
    
-
      
-
      
25,000
      
3
      
9,997
      
-
      
-
      
10,000
  
                                                                 
 Issuance of replacement warrants
                                    
(2,868,242
)
                    
(2,868,242
)
                                                                 
Net loss for the nine months ended June 30, 2010
    
-
      
-
      
-
      
-
      
-
      
-
      
(497,161
)
    
(497,161
)
                                                                 
Balance, June 30, 2010
    
5,583,336
    
$
558
      
35,402,580
    
$
3,541
    
$
21,523,833
    
$
(21,628,748
)
  
$
(1,336,783
)
  
$
(1,437,599
)
 
The accompanying notes are an integral part of these financial statements.

 
7
 

OHR PHARMACEUTICAL, INC
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
 
 
   
For the Nine Months Months
June 30,
    
From Inception
of the
Development
 Stage on
October 1, 2007
Through
June 30,
  
   
2010
    
2009
    
2010
  
                   
OPERATING ACTIVITIES
                  
Net income (loss)
  
$
(497,161
)
  
$
(737,887
)
  
$
(1,336,783
)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
                        
Discontinued operations
    
-
      
-
      
(678,413
)
Fair value of warrants issued for services
    
296,128
      
438,939
      
1,006,551
  
Gain on extinguishment of debt
    
(49,559
)
    
-
      
(49,559
)
Gain on derivative liability
    
(140,969
)
    
-
      
(140,969
)
Changes in operating assets and liabilities
                        
Change in prepaid expenses and deposits
    
(27,211
)
    
-
      
(26,791
)
Change in accounts payable and accrued expenses
    
52,601
      
(6,596
)
    
(74,866
)
                         
Net Cash (Used in) Operating Activities
    
(366,171
)
    
(305,544
)
    
(1,300,830
)
                         
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
      
1,005,000
  
Proceeds of warrants exercised for cash
    
1,005,000
      
-
      
1,005,000
  
Proceeds from related party payables
    
-
      
124,953
      
125,453
  
Repayments of related party payables
    
-
      
(119,953
)
    
(125,453
)
Proceeds from short-term notes payable
    
24,500
      
-
      
24,500
  
Repayments of short-term notes payable
    
(7,976
)
    
-
      
(7,976
)
Repayment of convertible debentures
    
(401,156
)
    
(37,538
)
    
(441,168
)
                         
Net Cash Provided by Financing Activities
    
620,368
      
972,462
      
1,585,356
  
                         
NET INCREASE IN CASH
    
254,197
      
558,965
      
402,526
  
CASH AT BEGINNING OF PERIOD
    
345,604
      
95,782
      
197,275
  
                         
CASH AT END OF PERIOD
  
$
599,801
    
$
654,747
    
$
599,801
  
                         
SUPPLEMENTAL DISCLOSURES OF
                        
CASH FLOW INFORMATION
                        
                         
CASH PAID FOR:
                        
Interest
  
$
30,963
    
$
-
    
$
44,963
  
Income Taxes
    
-
      
-
      
-
  
                         
NON CASH FINANCING ACTIVITIES:
                        
Transfer of investment for dividends payable
  
$
-
    
$
-
    
$
186,000
  
Purchase of patents for debenture
    
-
      
500,000
      
500,000
  
Conversion of debenture
    
10,000
      
-
      
10,000
  
 
The accompanying notes are an integral part of these financial statements.

 
8
 
 
OHR PHARMACEUTICAL, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 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 June 30, 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 for the period ended June 30, 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
June 30, 2010 and September 30, 2009
(Unaudited)
 
 
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

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 June 30, 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.

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 nine months ended June 30, 2010, the Company paid $30,181 in interest and $401,156 in principal on the convertible debt, respectively.   On June 23, 2010 the holder of the note converted $10,000 of principal into 25,000 shares of the Company’s common stock at $0.40 per share.  The balance of the convertible note as of June 30, 2010 was $48,832.  Accrued interest as of June 30, 2010 totaled $2,851.

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.

 
10
 

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.
 
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 another income or expense tem. .  At June 30, 2010, the Company revalued the warrants using the Black-Scholes option pricing model and determined that the Company’s liability associated with this derivative liability decreased by $140,969 to $2,727,273.  The Company recognized a corresponding gain on derivative liability in conjunction with this revaluation.

Stock Price at Valuation Date
  
$
0.49
  
Exercise (Strike) Price
  
$
0.55
  
Dividend Yield
    
0.00
%
Years to Maturity
    
4.59
  
Risk-free Rate
  
1.79
%
Volatility
  
277
%

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 11,166,672 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.

On April 9, 2010 the Company granted 10,000 warrants as payment for an outstanding accounts payable balance.  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 $0.40 per warrant. Accordingly, the Company recognized an expense of $4,000 associated with the issuance.

 
11
 

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

 
NOTE 7 – CAPITAL STOCK (CONTINUED)

Stock Price at Valuation Date
  
$
0.40
  
Exercise (Strike) Price
  
$
0.55
  
Dividend Yield
    
0.00
%
Years to Maturity
    
5.00
  
Risk-free Rate
    
1.35
%
Volatility
    
277
%

On April 12, 2010 the Company granted 1,000,000 warrants to employees as part of its 2009 stock option plan.  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 $0.40 per warrant. Of the 1,000,000 options issued, 520,000 vested upon issuance and the remaining 480,000 will vest over the 5 year life of the options.  Accordingly, the Company recognized compensation expense of $207,566 for the vested options.
 
Stock Price at Valuation Date
  
$
0.40
  
Exercise (Strike) Price
  
$
0.50
  
Dividend Yield
    
0.00
%
Years to Maturity
    
5.00
  
Risk-free Rate
    
2.60
%
Volatility
    
277
%
 
On June 23, 2010 the holder of the convertible debenture elected to convert $10,000 of the remaining principal balance into 25,000 shares of Common Stock at $0.40 per share pursuant to the conversion rights of the note.

NOTE 8 – SUBSEQUENT EVENTS

On August 5, 2010 the Company issued 50,000 shares of its common stock to a consultant for services to be provided to the Company.

On June 22, 2010 the Company authorized the issuance of 93,000 warrants to be issued for services to be provided to the Company.  Of these authorized warrants, 90,000 were issued on June 23, 2010 once the contract for services was finalized.  As of August 13, 2010, the remaining 3,000 warrants had yet to be issued as the services have not yet been completed.

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

 
12
 
 
OHR PHARMACEUTICAL, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 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 June 30, 2010 (“June”) 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 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.  

 
13
 

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

BALANCE SHEETS
                  
   
June 30,
    
June 30,
    
June 30,
  
   
2010
    
2010
    
2010
  
ASSETS
  
(As Filed)
    
(Restated)
    
(Difference)
  
CURRENT ASSETS
                  
                   
Cash
   $ 599,801     $ 599,801       -  
Prepaid expenses
     27,211       27,211       -  
Security deposits
     85,025       85,025       -  
Total Current Assets
     712,037       712,037       -  
                         
 
                        
Patent costs
     800,000       800,000       -  
TOTAL ASSETS
   $ 1,512,037     $ 1,512,037       -  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY
                        
                         
CURRENT LIABILITIES
                        
Accounts payable
   $ 157,007     $ 157,007       -  
Short-term notes payable
     16,524       16,524       -  
Total Current Liabilities
     173,531       173,531       -  
                         
LONG-TERM LIABILITIES
                        
Convertible debenture-long term
     48,832       48,832       -  
Stock warrant derivative liability
     2,727,273       2,727,273       -  
Total Long-term Liabilities
     2,776,105       2,776,105       -  
TOTAL LIABILITIES
     2,949,636       2,949,636       -  
                         
STOCKHOLDERS' EQUITY
                        
                         
Preferred stock
     558       558       -  
Common stock
     3,541       3,541       -  
Additional paid-in capital
     24,392,075       21,523,833       (2,868,242 )
Accumulated deficit
     (21,628,748 )     (21,628,748 )     -  
Deficit accumulated during the development stage
     (4,205,025 )     (1,336,783 )     2,868,242  
                         
Total Stockholders' Equity
     (1,437,599 )     (1,437,599 )     -  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 1,512,037     $ 1,512,037       -  

 
14
 

STATEMENTES OF OPERATIONS
   
For the
    
For the
    
For the
  
   
Three Months
    
Three Months
    
Three Months
  
   
June 30,
    
June 30,
    
June 30,
  
   
(Originally Filed)
    
(Restated)
    
(Difference)
  
                   
REVENUES
   $ -     $ -     $ -  
COST OF SALES
     -       -       -  
GROSS PROFIT
     -       -       -  
                         
OPERATING EXPENSES
                        
                         
General and administrative
     354,593       354,593       -  
Total Operating Expenses
     354,593       354,593       -  
OPERATING LOSS
     (354,593 )     (354,593 )     -  
                         
OTHER INCOME AND EXPENSE
                        
Gain on foreign currency
     (312 )     (312 )     -  
Interest income
     98       98       -  
Interest expense
     (2,495 )     (2,495 )     -  
Gain on settlement of debt
     32,539       32,539       -  
Gain on derivative liability
     140,969       140,969       -  
Other income and expense
     7,189       7,189       -  
Total Other Income and Expense
     177,988       177,988       -  
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (176,605 )     (176,605 )     -  
PROVISION FOR INCOME TAXES
     -       -       -  
LOSS FROM CONTINUING OPERATIONS
     (176,605 )     (176,605 )     -  
DISCONTINUED OPERATIONS
                        
Income from discontinued
                        
operations (including gain on
                        
disposal of $606)
     -       -       -  
Income tax benefit
     -       -       -  
GAIN ON DISCONTINUED OPERATIONS
     -       -       -  
NET LOSS
   $ (176,605 )   $ (176,605 )   $ -  
                         
BASIC LOSS PER SHARE
                        
Continuing operations
   $ (0.00 )   $ (0.00 )   $ 0.00  
Discontinued operations
     0.00       0.00       0.00  
    $ (0.00 )   $ (0.00 )   $ 0.00  
                         
WEIGHTED AVERAGE  NUMBER OF SHARES OUTSTANDING:
                        
BASIC AND DILUTED
     35,379,778       35,379,778       -  

 
15
 

STATEMENTS OF OPERATIONS
   
For the
  
For the
    
For the
  
   
Nine Months
  
Nine Months
    
Nine Months
  
   
June 30,
  
June 30,
    
June 30,
  
   
(Originally Filed)
  
(Restated)
    
(Difference)
  
                   
REVENUES
   $ -     $ -     $ -  
COST OF SALES
     -       -       -  
GROSS PROFIT
     -       -       -  
                         
OPERATING EXPENSES
                        
Warrant expense
     2,868,242       -       (2,868,242 )
General and administrative
     686,943       686,943       -  
Total Operating Expenses
     3,555,185       686,943       (2,868,242 )
OPERATING LOSS
     (3,555,185 )     (686,943 )     2,868,242  
                         
OTHER INCOME AND EXPENSE
                        
Gain on foreign currency
     (312 )     (312 )     -  
Interest income
     259       259       -  
Interest expense
     (19,288 )     (19,288 )     -  
Gain on settlement of debt
     49,559       49,559       -  
Gain on derivative liability
     140,969       140,969       -  
Other income and expense
     18,595       18,595       -  
Total Other Income and Expense
     189,782       189,782       -  
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (3,365,403 )     (497,161 )     2,868,242  
PROVISION FOR INCOME TAXES
     -       -       -  
LOSS FROM CONTINUING OPERATIONS
     (3,365,403 )     (497,161 )     2,868,242  
DISCONTINUED OPERATIONS
                        
Income from discontinued
                        
operations (including gain on
                        
disposal of $606)
     -       -       -  
Income tax benefit
     -       -       -  
GAIN ON DISCONTINUED OPERATIONS
     -       -       -  
NET LOSS
   $ (3,365,403 )   $ (497,161 )   $ 2,868,242  
                         
BASIC LOSS PER SHARE
                        
Continuing operations
   $ (0.11 )   $ (0.02 )   $ 0.09  
Discontinued operations
     0.00       0.00       0.00  
    $ (0.11 )   $ (0.02 )   $ 0.09  
WEIGHTED AVERAGE  NUMBER
                        
OF SHARES OUTSTANDING:
                        
BASIC AND DILUTED
     31,742,119       31,742,119       -  

 
16
 

STATEMENTS OF OPERATIONS
   
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
  
   
June 30,
    
June 30,
    
June 30,
  
   
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
     1,487,492       2,286,467       798,975  
Total Operating Expenses
     5,154,709       2,286,467       (2,868,242 )
OPERATING LOSS
     (5,154,709 )     (2,286,467 )     2,868,242  
                         
OTHER INCOME AND EXPENSE
                        
Gain on foreign currency
     2,284       2,284       -  
Interest income
     259       259       -  
Interest expense
     (45,085 )     (45,085 )     -  
Gain on settlement of debt
     114,003       114,003       -  
Gain on derivative liability
     140,969       140,969       -  
Other income and expense
     58,841       58,841       -  
Total Other Income and Expense
     271,271       271,271       -  
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (4,883,438 )     (2,015,196 )     2,868,242  
PROVISION FOR INCOME TAXES
     -       -       -  
LOSS FROM CONTINUING OPERATIONS
     (4,883,438 )     (2,015,196 )     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
   $ (4,205,025 )   $ (1,336,783 )   $ 2,868,242  

 
17
 

STATEMENTS OF CASH FLOWS
   
For the nine Months
    
For the Nine Months
    
For the Nine Months
  
   
June 30,
    
June 30,
    
June 30,
  
   
2010
    
2010
    
2010
  
   
(Originally Filed)
    
(Restated)
    
(Difference)
  
OPERATING ACTIVITIES
                  
Net income (loss)
   $ (3,365,403 )   $ (497,161 )   $ 2,868,242  
Adjustments to reconcile net income (loss) to net cash used by operating activities:
                        
Fair value of warrants issued for services
     3,164,370       296,128       (2,868,242 )
Gain on extinguishment of debt
     (49,559 )     (49,559 )     -  
Gain on derivative liability
     (140,969 )     (140,969 )        
Changes in operating assets and liabilities
                        
Change in prepaid expenses and deposits
     (27,211 )     (27,211 )     -  
Change in accounts payable and accrued expenses
     52,601       52,601       -  
Net Cash Used in Operating Activities
     (366,171 )     (366,171 )     -  
                         
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       -  
Repayments of short-term notes payable
     (7,976 )     (7,976 )     -  
Repayment of convertible debentures
     (401,156 )     (401,156 )     -  
Net Cash Provided by Financing Activities
     620,368       620,368       -  
                         
NET INCREASE (DECREASE) IN CASH
     254,197       254,197       -  
CASH AT BEGINNING OF PERIOD
     345,604       345,604       -  
CASH AT END OF PERIOD
   $ 599,801     $ 599,801     $ -