UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 3, 2006 (March 31, 2006)
HEMISPHERX BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27072 52-0845822
(state or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) (Identification No.)
1617 JFK Boulevard, Philadelphia, Pennsylvania 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 988-0080
--------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Explanatory Note
This Form 8-K/A is filed to add and clarify information in the original Form
8-K.
Section 4 - Matters Related to Accountants and Financial Statements
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
During the preparation of the Company's annual report on Form 10-K for the
fiscal year ended December 31, 2005, after discussions with the audit committee
and BDO Seidman, LLP, the Company's Independent Registered Public Accounting
Firm, and after doing additional analysis on guidance set forth in EITF 00-27:
Application of Issue No. 98-5 to Certain Convertible Instruments ("EITF 00-27"),
it was determined that the interpretation of the accounting guidelines under
EITF 00-27 applied to the initial recording of our convertible debentures that
contained beneficial conversion features, the investment banking fees incurred
with regard to the issuance of the convertible debentures, and the subsequent
debenture conversion price and related warrant price resets dating back to 2003
was not correctly applied. As a result, we are required to restate our
historical financial statements to account for certain non-cash expenses
reflected in our interim financial statements from 2003 through 2005, and our
annual financial statements for the years ended December 31, 2003 and 2004.
All of the above issues relate to accounting for convertible debt, additional
paid-in capital and related non-cash financing charges. These non-cash charges
do not affect the Company's revenues, cash flows from past or future operations,
or its liquidity.
On March 29, 2006, after discussions with the audit committee and BDO Seidman,
LLP the audit committee agreed with management's recommendations and concluded
that the previously issued financial statements included in the Forms 10-Q and
Forms 10-K for the periods ended from March 31, 2003 to December 31, 2005,
should not be relied upon.
The Company has filed its Form 10-K for the year ended December 31, 2005 (the
"Report") without audited financial statements. The anticipated restatements of
the Company's financial statements for the years ended December 31, 2003 and
2004 are contained therein. As audited financial statements are not contained in
the Report, the Report does not satisfy all requirements under the Securities
Exchange Act and, therefore, is deficient. Based on representations from BDO
Seidman, LLP, the Company anticipates that it will file an amendment to the
Report containing audited financial statements within the next 30 days and file
it's Forms 10-Q for the quarters ended March 31, 2005, June 30, 2005 and
September 30, 2005 which will contain restated 2004 quarterly and year-to-date
financial statements, as soon as practicable thereafter.
At the time of their assessments of the effectiveness of the Company's controls
and procedures at the end of the periods reflected in prior reporting periods
that now need to be restated, the Company's Chief Financial Officer and Chief
Executive Officer believed that the Company's controls were effective. This
includes the Company's interpretation and application of EITF No. 00-27 with
regard to the original recording of its convertible debentures containing
embedded conversion features, the related valuation of common stock warrants,
the investment banking fees incurred with regard to the issuance of the
convertible debentures, and the subsequent conversion and warrant price resets
dating back to 2003. Although the Company did not rely upon them, the Company
notes that unqualified audit opinions by its independent registered public
accounting firm were issued for the years ended December 31, 2003 and 2004.
2
In retrospect, it appears that the Company's belief in the adequacy of
disclosure controls and procedures was not accurate; therefore, the Company
will, for the quarters in its Quarterly reports on Form 10-Q for the periods
ended March 31, 2005, June 30, 2005 and September 30, 2005, which will also
cover the corresponding periods in 2004, amend its assertions regarding
disclosure controls and procedures to reflect the material weaknesses regarding
its initial recording of its convertible debentures that contained beneficial
conversion features, the investment banking fees incurred with regard to the
issuance of the convertible debentures, and the subsequent debenture conversion
price and related warrant price resets.
The root of the referenced non-cash restatements above stems from the entering
into convertible debenture arrangements by the Company for the periods from
March 2003 through July 2004. The Company has not entered into any debenture
arrangements thereafter. The Company implemented compliance with Section 404 of
the Sarbanes Oxley Act of 2002 in the fourth quarter 2004 and subsequently
concluded that its internal controls over financial reporting were effective as
of December 31, 2004. Although the Company did not rely on them, the Company's
independent register public accounting firm concurred with the Company's
assessment in their "Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting" issued within the Company's Annual
Report on Form 10-K for the year ended December 31, 2004. These convertible
debenture arrangements are inherently complicated and are not classified as
normal recurring transactions. The Company has taken, and plans to take,
additional steps to remediate these material weaknesses concerning its
accounting for the convertible debentures that contained an embedded conversion
feature, the related valuation of common stock warrants, the investment banking
fees incurred with regard to the issuance of the convertible debentures, and the
subsequent conversion and warrant price resets, and enhance its disclosure
controls over financial reporting. In March 2006, the Company increased the time
allocated by its financial consultant with regards to remediating these
disclosed internal control weaknesses so that the financial consultant may
further assist the Company with implementing processes and procedures to enhance
its internal control framework. The financial consultant, with management, will
spend additional time monitoring the Company's internal controls on an on-going
basis. In addition, the Company has subscribed to CCH's "Accounting Research
Manager," a recognized on-line service in order to maintain up-to-date
accounting guidance to enhance internal control over both financial reporting
and disclosure requirements.
Although the Company has not concluded its evaluation of material weaknesses,
the Company believes the material weaknesses are limited to the Company's
accounting for convertible securities with beneficial conversion features and
related warrant issuances and the related financial statement close and
reporting process.
3
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
The following Exhibit is filed as part of this report:
Exhibit No. Description
----------- -----------
99.1 Press Release dated April 3, 2006*
----------
* filed with the Securities and Exchange Commission on April 3, 2006 with
the original 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HEMISPHERX BIOPHARMA, INC.
April 11, 2006 By: s/ Robert Peterson
--------------------------------------------
Robert Peterson, Chief Financial Officer
4