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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2009o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For
the transition period
from  to
 COMMISSION FILE NO. 0-27264
 VIA PHARMACEUTICALS, INC.
 (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 Delaware
    
    33-0687976(STATE OR OTHER JURISDICTION OF 
INCORPORATION OR ORGANIZATION)
    
    (I.R.S. EMPLOYER
IDENTIFICATION NO.)
 750 Battery Street, Suite 330
San Francisco, California 94111  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
 REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 283-2200
 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 Yes o No þ
 Yes o No þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS
 PageItem No.
    
    No.PART IItem 1. BUSINESS
    
    
    2EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    14Item 1A. RISK FACTORS
    
    
    16Item 2. PROPERTIES
    
    
    34Item 3. LEGAL PROCEEDINGS
    
    
    34PART IIItem 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    34Item 6. SELECTED FINANCIAL DATA
    
    
    35Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
    
    36Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    49Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
    
    
    49Item 9A(T). CONTROLS AND PROCEDURES
    
    
    49Item 9B. OTHER INFORMATION
    
    
    50PART IIIItem 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    52Item 11. EXECUTIVE COMPENSATION
    
    
    52Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
    
    
    52Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    52Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    52PART IVItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    53Exhibit 4.5Exhibit 4.6Exhibit 4.8Exhibit 10.2Exhibit 10.11Exhibit 10.12Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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PART I
 Forward-looking statements
  
    
    the Companys ability to find a market maker to apply and be cleared by the Financial
Industry Regulatory Authority to quote the Companys common stock on the OTC Bulletin Board;
 
    
    ability and willingness of active market makers in our Companys common stock to trade
the Companys common stock on the Pink Sheets under a piggyback qualification;
 
    
    the Companys ability to borrow additional amounts under the new loan from Bay City
Capital, as described in Other Information in Part II, Item 9B and in Note 12 in the Notes
to the Financial Statements;
 
    
    the Companys ability to obtain necessary financing in the near term, including amounts
necessary to repay the previous loan from Bay City Capital following the April 1, 2010
maturity date;
 
    
    the Companys ability to control its operating expenses;
 
    
    the Companys ability to comply with covenants included in the loans with Bay City
Capital;
 
    
    the Companys ability to operate its business following the restructuring, as described
in Other Information in Part II, Item 9B and in Note 12 in the Notes to the Financial
Statements;
 
    
    the Companys ability to comply with its reporting obligations under the rules and
regulations promulgated by the Securities and Exchange Commission following the
restructuring;
 
    
    the Companys ability to timely recruit and enroll patients in any future clinical
trials;
 
    
    the Companys failure to obtain sufficient data from enrolled patients that can be used
to evaluate VIA-2291, thereby impairing the validity or statistical significance of its
clinical trials;
 
    
    the Companys ability to successfully complete its clinical trials of VIA-2291 on
expected timetables and the outcomes of such clinical trials;
 
    
    complexities in designing and implementing cardiometabolic clinical trials using
surrogate endpoints in Phase 1 and Phase 2 clinical trials which may differ from the
ultimate endpoints required for registration of a candidate drug;
 
    
    the results of the Companys FDG-PET clinical trial as well as any future clinical
trials;
 
    
    if the results of the ACS and CEA studies, upon further review and analysis, are revised,
interpreted differently by regulatory authorities or negated by later stage clinical trials;
 
    
    the Companys ability to obtain necessary FDA approvals;
 
    
    the Companys ability to successfully commercialize VIA-2291;
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
    
    the Companys ability to identify potential clinical candidates from the family of DGAT1
compounds licensed and move them into preclinical development;
 
    
    the Companys ability to obtain and protect its intellectual property related to its
product candidates;
 
    
    the Companys potential for future growth and the development of its product pipeline,
including the THR beta agonist candidate and the other compounds licensed from Roche;
 
    
    the Companys ability to obtain strategic opportunities to partner and collaborate with
large biotechnology or pharmaceutical companies to further develop VIA-2291;
 
    
    the Companys ability to form and maintain collaborative relationships to develop and
commercialize our product candidates;
 
    
    general economic and business conditions; and
 
    
    the other risks described under the heading Risk Factors in Part I, Item 1A below.
  
 ITEM 1. BUSINESS
 Corporate History and Description of Merger
  Business Overview
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Business Strategy
  
    
    Maximize the value of our lead product candidate, VIA-2291.The Company seeks to develop
VIA-2291 for the treatment of atherosclerotic plaque and secondary prevention of ACS in
patients who have experienced a recent heart attack. The Company is applying its clinical
development expertise to complete its clinical trials for VIA-2291. The Company anticipates
that the development of VIA-2291 may ultimately be expanded to include primary prevention of
ACS and stroke. The Company plans to pursue business collaborations with large biotechnology
or pharmaceutical companies to conduct additional clinical trials required for regulatory
approval.
 
    
    Pursue the clinical development of the THR beta agonist compound licensed from Roche.
The Company intends to pursue this clinically ready asset and is in the planning phases
for its clinical development. The Company anticipates filing an IND application, and
initiating Phase 1 clinical trials, during the next twelve months.
 
    
    Pursue the preclinical development of DGAT1 compounds licensed from Roche.The Company
intends to pursue the preclinical development of the DGAT1 compounds in order to identify a
potential lead candidate for further development in human clinical trials.
 
    
    Expand our portfolio of small molecule product candidates through acquisitions and
in-licensing.The Company intends to continue to license and develop preclinical and
clinical small molecule compounds for the treatment of cardiovascular and metabolic disease.
The Company believes this strategy will enable the Company to build a valuable drug
development pipeline.
 
    
    Maximize economic value for our product candidates under development.The Company
intends to maximize the value of its product candidates through independent development,
licensing and other partnership and collaboration opportunities with large biotechnology or
pharmaceutical companies.
 
    
    Enhance and protect our intellectual property portfolio.The Company plans to pursue,
license and acquire additional intellectual property protection as required to enhance and
protect its existing and future portfolio and to enable the Company to maximize the
commercial lifespan of its compounds and technology.
 Inflammation and Cardiovascular Disease
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Metabolic Syndrome
   VIA-2291
     5




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VIA-2291 Clinical Trial Results
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Abbott Exclusive License Agreement
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Stanford License Agreement
  Roche Licensed Assets
         8




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Patents and Intellectual Property
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Trademarks
  Clinical Trials
  Manufacturing
  Sales and Marketing
  Competition
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Governmental Regulation
   New Drug Application
  
    
    completion of preclinical laboratory and animal testing in compliance with the FDAs good
laboratory practice regulations;
 
    
    submission to the FDA of an IND for human clinical testing which must become effective
before human clinical trials may begin;
 
    
    performance of adequate and well-controlled human clinical trials to establish the safety
and efficacy of the proposed drug product for each intended use;
 
    
    satisfactory completion of an FDA pre-approval inspection of the facility or facilities
at which the product is produced to assess compliance with the FDAs current cGMP
guidelines; and
 
    
    submission to, and approval by, the FDA of an NDA.
  i.e
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
    
    Phase 1:Studies are initially conducted in a limited population to test the product
candidate for safety, dose tolerance, absorption, metabolism, distribution and excretion in
healthy humans or, on occasion, in patients, such as cancer patients.
 
    
    Phase 2:Studies are generally conducted in a limited patient population to identify
possible adverse effects and safety risks, to evaluate the efficacy of the product for
specific targeted indications and to determine dose tolerance and optimal dosage. Multiple
Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to
beginning larger and more expensive Phase 3 clinical trials.
 
    
    Phase 3:These are commonly referred to as pivotal studies. When Phase 2 evaluations
demonstrate that a dose range of the product may be effective and has an acceptable safety
profile, Phase 3 trials are undertaken in large patient populations to further evaluate
dosage, to provide substantial evidence of clinical efficacy and to further test for safety
in an expanded and diverse patient population at multiple, geographically-dispersed clinical
trial sites.
 
    
    Phase 4:In some cases, the FDA may condition approval of an NDA for a product candidate
on the sponsors agreement to conduct additional post-approval clinical trials to further
assess the drugs safety and effectiveness after NDA approval and commercialization. Such
post approval trials are typically referred to as Phase 4 studies.
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Other Regulatory Requirements
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Research and Development
  Employees
  
 EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionLawrence K. Cohen
    
    
    56
    
    
    Director, President and Chief Executive OfficerJames G. Stewart
    
    
    57
    
    
    Senior Vice President, Chief Financial Officer and SecretaryRebecca A. Taub
    
    
    58
    
    
    Senior Vice President, Research and Development
  Lawrence K. Cohen, Ph.D.
 James G. Stewart
 Rebecca Taub, M.D.
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Advisors
   Name
    
    Specialty
    
    Employment/Current PositionsMarcelo di Carli, MD
    
    Atherosclerosis and cardiovascular
disease and imaging technologies
    
    Associate Professor of
Radiology, and Chief of
Nuclear Medicine, Brigham
and Womens HospitalRobert Fenichel, MD, Ph.D.
    
    Atherosclerosis and cardiovascular
disease and regulatory matters
    
    Former Deputy Division
Director, Division of
CardioRenal Drug Products,
Food and Drug
AdministrationPeter Libby, MD
    
    Atherosclerosis and cardiovascular
disease, including the role of
inflammation in the disease process
    
    Mallinckrodt Professor of
Medicine, and Chief,
Cardiovascular Division,
Brigham and Womens
HospitalMarc Pfeffer, MD, Ph.D.
    
    Pathophysiology and clinical management
of progressive cardiac dysfunction
following heart attack or hypertension
    
    Dzau Professor of Medicine,
Harvard Medical School
Senior Physician, Brigham
and Womens Hospital in
BostonThomas Quertermous, MD
    
    Vascular pathophysiological, genetic and
molecular mechanisms of inflammation and
atherogenics
    
    William G. Irwin Professor
of Cardiovascular Medicine
and Chief of Research,
Cardiovascular Medicine
Division, at Stanford
University School of
Medicine.Paul Ridker, MD
    
    Atherosclerosis and cardiovascular
disease, including the role of
inflammation in the disease process and
the role of CRP
    
    Eugene Braunwald Professor
of Medicine, Harvard
Medical School and
Director, Center for
Cardiovascular Disease
Prevention, Divisions of
Cardiovascular Diseases and
Preventive Medicine,
Brigham and Womens
HospitalJean-Lucien Rouleau, MD
    
    Atherosclerosis and cardiovascular disease
    
    Dean, Faculty of Medicine,
University of MontrealJean-Claude Tardif, MD
    
    Atherosclerosis and cardiovascular disease
    
    Associate Professor of
Medicine, University of
Montreal Director of
Research, Montreal Heart
InstituteRenu Virmani, MD
    
    Cardiovascular pathology
    
    President and Medical
Director of CVPath
Institute, Inc.
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Corporate Information
  
 ITEM 1A. RISK FACTORS
 Risks Related to the Companys Financial Results
 The Company has experienced significant losses, expects losses in the future, has limited
resources and there is substantial doubt as to the Companys ability to continue as a going
concern.
    The Company will require substantial additional funding in the near term to continue operating its
business, which may not be available to the Company on acceptable terms, or at all, which could
force the Company to delay, scale back or eliminate some or all of its research and development
programs, or ultimately cease operations.
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
    
    fund the business operations of the Company, including general and administrative
expenses and the expenses surrounding the restructuring as described in Other Information
in Part II, Item 9B and in Note 12 in the Notes to the Financial Statements;
 
    
    fund clinical trials and seek regulatory approvals;
 
    
    pursue and implement strategic partnering transactions;
 
    
    pursue the development of additional product candidates;
 
    
    conduct and expand the Companys research and development activities;
 
    
    access manufacturing and commercialization capabilities, including seeking collaboration
and partnering opportunities;
 
    
    implement additional internal systems and infrastructure; and
 
    
    maintain, defend and expand the scope of the Companys intellectual property portfolio.
  
    
    the terms and timing of any collaboration, licensing or other strategic arrangements into
which the Company may enter;
 
    
    the scope, cost, rate of progress, and results of the Companys current and future
clinical trials, preclinical studies and other discovery, research and development
activities;
 
    
    the costs associated with establishing manufacturing and commercialization capabilities;
 
    
    the costs of acquiring or investing in product candidates and technologies;
 
    
    the costs of filing, prosecuting, defending and enforcing any patent claims and other
intellectual property rights;
 
    
    the costs and timing of seeking and obtaining FDA and other regulatory approvals;
 
    
    the potential need to hire additional management and research, development and clinical
personnel;
 
    
    the effect of competing technological and market developments; and
 
    
    general and industry-specific economic conditions that may affect the Companys research
and development expenditures.
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The Company expects to be in default under the March 2009 Loan, which default could lead to a
foreclosure on the Companys assets.
  The Company may not be able to satisfy certain covenant restrictions, which could adversely affect
the Companys business, financial condition, results of operations and liquidity.
  Raising additional funds by issuing securities or through collaboration and other strategic
arrangements will likely cause dilution to existing stockholders, restrict operations or require
the Company to relinquish potentially valuable rights.
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Risks Related to the Companys Business
 The Company is at an early stage of development. The Company has never generated and may never
generate revenues from commercial sales of its products and the Company may not have products to
market for several years, if ever.
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Clinical trials are expensive, difficult to design and implement, time-consuming and subject to
delay, particularly in the cardiovascular area due to the large number of patients who must be
enrolled and treated in clinical trials. As a result, there is a high risk that the Companys drug
development activities will not result in regulatory approval, or that such approval will be
delayed, thereby reducing the likelihood of successful commercialization of products.
    
    
    lack of adequate funding to continue the clinical development of VIA-2291 or to commence
the preclinical and clinical development of the Metabolic Compounds, including the
incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional
trials and studies and increased expenses associated with the services of the Companys
clinical research organizations (CROs) and other third parties;
 
    
    failure to enter into strategic partnering transactions or other strategic arrangements
for the continued research and development of compounds for clinical trials;
 
    
    delays in obtaining regulatory approvals to commence a clinical trial;
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
    
    delays in identifying and reaching agreement on acceptable terms with prospective CROs
and clinical trial sites;
 
    
    delays in obtaining institutional review board approval to conduct a clinical trial at a
prospective site;
 
    
    slower than expected rates of patient recruitment and enrollment for a variety of
reasons, including competition from other clinical trial programs for the treatment of
similar indications, the nature of the protocol, and the eligibility criteria for the trial;
 
    
    enrolled patients may not remain in or complete clinical trials at the rates we expect;
 
    
    failure to obtain sufficient data from enrolled patients that can be used to evaluate
VIA-2291, thereby impairing the validity or statistical significance of our clinical trials;
 
    
    lack of effectiveness during clinical trials;
 
    
    failure to achieve clinical trial endpoints;
 
    
    unforeseen safety issues;
 
    
    uncertain dosing issues;
 
    
    changes in regulatory requirements causing the Company to amend clinical trial protocols
or add new clinical trials to comply with these changes;
 
    
    unforeseen difficulties developing the advanced manufacturing techniques, including
adequate process controls, quality controls, and quality assurance testing, required to
scale up production of the Companys product candidates to commercial levels;
 
    
    inability to monitor patients adequately during or after treatment;
 
    
    conflicting or negating results, upon further analysis of the data from the clinical
trials;
 
    
    retaining participants who have enrolled in a clinical trial but may be prone to withdraw
due to the design of the trial, lack of efficacy or personal issues or who fail to return
for follow-up visits for a variety of reasons; and
 
    
    inability or unwillingness of medical investigators to follow the Companys clinical
trial protocols and follow good clinical practices.
  Failure to timely recruit and enroll patients for any future clinical trials may cause the
development of the Companys product candidates to be delayed.
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The Companys Phase 2 clinical trials of VIA-2291 primarily target biomarkers, histology and
medical imaging as endpoints, and the results of any Phase 2 clinical trials may not be indicative
of success in future clinical trials that will target outcomes such as
heart attack and stroke. The results of previous clinical trials may not be predictive of future
results, and the Companys current and future clinical trials may not satisfy the requirements of
the FDA or other non-U.S. regulatory authorities.
   The Companys Phase 2 FDG-PET clinical trial utilizes new, innovative imaging technology that does
not represent a widely accepted and validated clinical trial methodology for measuring
inflammation in atherosclerosis. The results of this clinical trial may not be predictive of
future results and may not be consistent with the results of the CEA and ACS clinical trials, the
ACS MDCT sub-study or future clinical trials.
  The Companys clinical trials could be delayed, suspended or stopped.
  The Company relies on third parties to conduct its clinical trials. If these third parties do not
successfully carry out their contractual duties or meet expected deadlines, the Company may be
unable to obtain, or may experience delays in obtaining, regulatory approval, or may not be
successful in commercializing the Companys planned and future products.
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The Company will need to provide additional information to the FDA regarding preclinical and
clinical safety issues raised during prior trials of VIA-2291 that could result in delays in
future FDA approvals.
  VIA-2291 is the Companys only product candidate currently in clinical trials. The Companys
efforts to identify, develop and commercialize new product candidates beyond VIA-2291 will be at
an early stage and will be subject to a high risk of failure.
  If the Company is unable to form and maintain the collaborative relationships that its business
strategy requires, its product development programs will suffer, and the Company may not be able
to develop or commercialize its product candidates and may ultimately have to cease operations.
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Even if the Company receives regulatory approval to market VIA-2291 and its other product
candidates, such products may not gain the market acceptance among physicians, patients,
healthcare payors and the medical community.
  
    
    demonstration of efficacy and safety in clinical trials;
 
    
    the prevalence and severity of any side effects;
 
    
    the introduction and availability of generic substitutes for any of the Companys
products, potentially at lower prices (which, in turn, will depend on the strength of the
Companys intellectual property protection for such products);
 
    
    potential or perceived advantages over alternative treatments;
 
    
    the timing of market entry relative to competitive treatments;
 
    
    the ability to offer the Companys product candidates for sale at competitive prices;
 
    
    relative convenience and ease of administration;
 
    
    the strength of marketing and distribution support;
 
    
    sufficient third party coverage or reimbursement; and
 
    
    the product labeling or product insert (including any warnings) required by the FDA or
regulatory authorities in other countries.
 The Company will rely on third parties to manufacture and supply its product candidates.
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The Company may be subject to costly claims related to its clinical trials and may not be able to
obtain adequate insurance.
  The Company may be subject to costly claims related to Corautus former clinical trials of
Vascular Endothelial Growth Factor 2.
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If the Company is unable to retain its management, research, development, clinical teams and
scientific advisors or to attract additional qualified personnel, the Companys product operations
and development efforts may be seriously jeopardized.
   If the Companys competitors develop and market products that are more effective than the
Companys product candidates or others it may develop, or obtain regulatory and marketing approval
for similar products before the Company does, the Companys commercial opportunity may be reduced
or eliminated.
  The Company may be subject to damages resulting from claims that the Company or its employees,
have wrongfully used or disclosed alleged trade secrets of its employees former employers.
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Risks Related to the Companys Intellectual Property
 The Companys failure to protect adequately or to enforce its intellectual property rights or
secure rights to third party patents could materially harm its proprietary position in the
marketplace or prevent the commercialization of its products.
    Because VIA-2291 is exclusively licensed from Abbott and the Metabolic Compounds are exclusively
licensed from Roche, any dispute with Abbott or Roche, respectively, may materially harm the
Companys ability to develop and commercialize VIA-2291 or the Metabolic Compounds, as applicable.
   27




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If Abbott or Roche elect to maintain or enforce proprietary rights under the Abbott License or the
Roche Licenses, respectively, the Company will depend on Abbott or Roche, as applicable, for the
maintenance and enforcement of certain intellectual
property rights and will have limited control, if any, over the amount or timing of resources that
Abbott or Roche devote on the Companys behalf.
    If the Company fails to comply with its obligations and meet certain milestones related to its
intellectual property licenses with third parties, the Company could lose license rights that are
important to its business.
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Third parties may own or control intellectual property that the Company may infringe.
  
    
    infringement and other intellectual property claims, which would be costly and
time-consuming to litigate, whether or not the claims have merit, and which could delay the
regulatory approval process and divert managements attention from the Companys business;
 
    
    substantial damages for past infringement, which the Company may have to pay if a court
determines that the Company has infringed a third partys patents, copyrights, trademarks,
trade secrets or other proprietary rights;
 
    
    a court prohibiting the Company from selling or licensing its technologies or future
products unless such third party licenses its patents, copyrights, trademarks, trade secrets
or other proprietary rights to the Company, which it is not required to do; and
 
    
    if a license is available from a third party, the requirement that the Company pay
substantial royalties or grant cross licenses to its patents, copyrights, trademarks, trade
secrets or other proprietary rights.
 The Companys commercial success will depend in part on its ability to manufacture, use, sell and
offer to sell its products without infringing patents or other proprietary rights of others.
   Risks Related to the Companys Industry
 The Companys product candidates are subject to extensive regulation, which can be costly and
time-consuming, cause unanticipated delays or prevent the receipt of the required approvals to
commercialize such product candidates.
  
    
    the FDA may not deem a product candidate safe and effective;
 
    
    the FDA may not find the data from preclinical studies and clinical trials sufficient to
support approval;
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
    
    the FDA may not approve of the Companys third-party manufacturers processes and
facilities;
 
    
    the FDA may change its approval policies or adopt new regulations; or
 
    
    the FDA may condition approval on additional clinical studies, including post-approval
clinical studies.
   Even if any of the Companys product candidates receives regulatory approval, it may still face
future development and regulatory difficulties.
  
    
    issue warning letters or untitled letters;
 
    
    impose civil or criminal penalties;
 
    
    suspend regulatory approval;
 
    
    suspend any ongoing clinical trials;
 
    
    refuse to approve pending applications or supplements to approved applications filed by
the Company or its collaborators;
 
    
    impose restrictions on operations, including costly new manufacturing requirements; or
 
    
    seize or detain products or require a product recall.
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Legislative or regulatory reform of the healthcare system may affect the Companys ability to sell
its products profitably.
  Risks Related to the Securities Market and Ownership of the Companys Common Stock
 Our common stock has been delisted from the NASDAQ Capital Market and is not listed on any other
national securities exchange. It will likely be more difficult for stockholders and investors to
sell our common stock or to obtain accurate quotations of the share price of our common stock.
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The Companys operating results and stock price may fluctuate significantly.
  
    
    the Companys ability to obtain additional financing and the terms of such financing;
 
    
    the Companys ability to operate its business following the restructuring, as described
in Other Information in Part II, Item 9B and in Note 12 in the Notes to the Financial
Statements;
 
    
    the status of development of VIA-2291, the Metabolic Compounds, and any other product
candidates;
 
    
    whether or not the Company enters into development and license agreements with strategic
partners that provide for payments to the Company, and the timing and accounting treatment
of payments to the Company, if any, under those agreements;
 
    
    whether or not the Company achieves specified development or commercialization milestones
under any agreement that the Company enters into with collaborators and the timely payment
by commercial collaborators of any amounts payable to the Company;
 
    
    the addition or termination of research programs or funding support;
 
    
    the timing of milestone and other payments that the Company may be required to make to
others; and
 
    
    variations in the level of expenses related to the Companys product candidates or
potential product candidates during any given period.
  The Companys stock price could decline significantly based on the results and timing of its
clinical trials.
  Bay City Capital, the Companys principal stockholder, has significant influence over the
Company, and the interests of the Companys other stockholders may conflict with the interests of
Bay City Capital.
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A significant portion of the Companys outstanding common stock may be sold into the market in the
future. Substantial sales of the Companys common stock, or the perception that such sales are
likely to occur, could cause the price of the Companys common stock to decline.
  Our change of control agreements with our named executive officers may require us to pay severance
benefits to any of those persons who are terminated in connection with a change of control of the
Company.
  As a smaller reporting company, the Company has not been subject to the full requirements of
Section 404 of the Sarbanes-Oxley Act of 2002. If the Company is unable to favorably assess the
effectiveness of its internal controls over financial reporting, or if, beginning the year ending
December 31, 2010, the Companys independent registered public accounting firm is unable to
provide an unqualified attestation report on the Companys assessment, the price of the Companys
common stock could be adversely affected.
   33




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The stock price of the Companys common stock is likely to be volatile and you may lose all, or a
substantial portion, of your investment.
  The Company has never paid cash dividends on its common stock, and the Company does not anticipate
that it will pay any cash dividends on its common stock in the foreseeable future.
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
   34




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##### Table of Contents



High
    
    
    LowFISCAL YEAR ENDED December 31, 2008:First Quarter
    
    $
    3.20
    
    
    $
    2.11Second Quarter
    
    $
    3.20
    
    
    $
    1.90Third Quarter
    
    $
    2.23
    
    
    $
    0.67Fourth Quarter
    
    $
    1.60
    
    
    $
    0.11FISCAL YEAR ENDED December 31, 2009:First Quarter
    
    $
    0.25
    
    
    $
    0.08Second Quarter
    
    $
    0.84
    
    
    $
    0.15Third Quarter
    
    $
    0.74
    
    
    $
    0.21Fourth Quarter
    
    $
    0.60
    
    
    $
    0.20
 Dividend Policy
  
 ITEM 6. SELECTED FINANCIAL DATA
  Period fromJune 14, 2004(Date ofYears Ended December 31,
        
        
    Inception) to(In whole dollars)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    Dec 31, 2009Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Loss from continuing operations
    
    
    (20,978,324
    )
    
    
    (20,274,828
    )
    
    
    (21,835,382
    )
    
    
    (8,626,887
    )
    
    
    (8,804,220
    )
    
    
    (81,604,565
    )Loss from continuing
operations per common share
    
    
    (1.05
    )
    
    
    (1.03
    )
    
    
    (2.24
    )
    
    
    (19.81
    )
    
    
    (21.63
    )
    
    
    Total assets
    
    
    2,556,094
    
    
    
    5,000,803
    
    
    
    24,484,941
    
    
    
    3,726,420
    
    
    
    686,856
    
    
    
    Long-term obligations
    
    
    37,450
    
    
    
    30,637
    
    
    
    3,980
    
    
    
    6,827
    
    
    
    4,946
    
    
    
    Cash dividends declared per
common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  35




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion of our financial condition contains certain statements that are not
strictly historical and are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve a high degree of risk and uncertainty. Our
actual results may differ materially from those projected in the forward-looking statements due to
risks and uncertainties that exist in our operations, development efforts and business environment,
including those set forth under the Section entitled Risk Factors in Item 1A, and other documents
we file with the Securities and Exchange Commission. All forward-looking statements included in
this report are based on information available to us as of the date hereof, and, unless required by
law, we assume no obligation to update any such forward-looking statement.
 Management Overview
        36




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Background
  VIA-2291
       37




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Roche Licensed Assets
        38




---



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Going Concern
       39




---



##### Table of Contents




    
    terminate or delay clinical trials or studies of VIA-2291;
    
    terminate or delay the preclinical development of one or more of its other preclinical
candidates;
    
    curtail its licensing activities that are designed to identify molecular targets and
small molecules for treating cardiovascular disease;
    
    relinquish rights to product candidates, development programs, or discovery development
programs that it may otherwise seek to develop or commercialize on its own; and
    
    delay, reduce the scope of, or eliminate one or more of its research and development
programs, or ultimately cease operations.
  Revenue
  Research and Development Expenses
   
    
    compensation of personnel associated with research and development activities, including
consultants, investigators, and contract research organizations (CROs);
    
    in-licensing fees;
  40




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##### Table of Contents




    
    laboratory supplies and materials;
    
    costs associated with the manufacture of product candidates for preclinical testing and
clinical studies;
    
    preclinical costs, including toxicology and carcinogenicity studies;
    
    fees paid to professional service providers for independent monitoring and analysis of the
Companys clinical trials;
    
    depreciation and equipment; and
    
    allocated costs of facilities and infrastructure.
  Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception)toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Externally generated research and development expense
    
    $
    3,639,215
    
    
    $
    7,906,799
    
    
    $
    28,705,191Internally generated research and development expense
    
    
    2,416,000
    
    
    
    3,897,254
    
    
    
    12,200,987Total
    
    $
    6,055,215
    
    
    $
    11,804,053
    
    
    $
    40,906,178
  Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Externally generated research and development expenseIn-licensing expenses
    
    $
    400,000
    
    
    $
    25,000
    
    
    $
    5,270,000CRO and investigator expenses
    
    
    1,090,115
    
    
    
    4,841,760
    
    
    
    10,749,339Consulting expenses
    
    
    1,120,131
    
    
    
    1,239,447
    
    
    
    6,418,669Other
    
    
    1,028,969
    
    
    
    1,800,592
    
    
    
    6,267,183Total
    
    $
    3,639,215
    
    
    $
    7,906,799
    
    
    $
    28,705,191
  Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Internally generated research and development expensePersonnel and related expenses
    
    $
    1,693,205
    
    
    $
    2,771,734
    
    
    $
    8,507,159Stock-based compensation expense
    
    
    275,961
    
    
    
    320,624
    
    
    
    1,095,794Travel and entertainment expense
    
    
    170,249
    
    
    
    320,616
    
    
    
    1,155,619Other
    
    
    276,585
    
    
    
    484,280
    
    
    
    1,442,415Total
    
    $
    2,416,000
    
    
    $
    3,897,254
    
    
    $
    12,200,987
   41




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##### Table of Contents



General and Administrative
  Interest Income, Interest Expense and Other Expenses
  Results of Operations
 Comparison of the years ended December 31, 2009 and 2008
  For the Years EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeRevenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    Research and development expense
    
    
    6,055,215
    
    
    
    11,804,053
    
    
    
    (5,748,838
    )
    
    
    (49
    )%General and administrative expense
    
    
    7,198,320
    
    
    
    8,657,166
    
    
    
    (1,458,846
    )
    
    
    (17
    )%Interest income
    
    
    
    
    
    
    189,656
    
    
    
    (189,656
    )
    
    
    Interest expense
    
    
    7,733,390
    
    
    
    6,029
    
    
    
    7,727,361
    
    
    
    Other income
    
    
    8,601
    
    
    
    2,764
    
    
    
    5,837
    
    
    
    211
    %
  42




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##### Table of Contents



Revenue.
 Research and Development Expense.
 General and Administrative Expense.
 Interest Income.
 Interest Expense.
 Other Income.
 Income Tax Expense.
  43




---



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Liquidity and Capital Resources
       44




---



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45




---



##### Table of Contents



Contractual Obligation and Commitments
  Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsOperating lease obligations (1)
    
    $
    1,385,584
    
    
    $
    437,597
    
    
    $
    808,245
    
    
    $
    139,742
    
    
    $
    Notes and related interest payable  affiliate (2)
    
    
    10,789,041
    
    
    
    10,789,041
    
    
    
    
    
    
    
    
    
    
    
    Uncertain tax positions (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Licensing agreements (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,174,625
    
    
    $
    11,226,638
    
    
    $
    808,245
    
    
    $
    139,742
    
    
    $
    
 
 (1)
    
    Operating lease obligations reflect contractual commitments for the
Companys office facilities for its headquarters in San Francisco,
California and its clinical operations location in Princeton, New
Jersey. In January 2008, the Company expanded and extended both leases
to ensure adequate facilities for current activities. The
San Francisco headquarters lease has been extended through May 31,
2013 and has been expanded to a total of 8,180 square feet. The lease
amendment resulted in an increase of approximately $1.5 million in
future rent. The lease amendment to the Princeton, New Jersey facility
extends the lease through April 2, 2012 and has been expanded to a
total of 4,979 square feet. The lease amendment resulted in an
increase of approximately $330,000 in future rent.(2)
    
    As more fully described in Note 6 in the notes to the financial
statements, in March 2009, the Company entered into the Loan Agreement
with the Lenders whereby the Lenders agreed to lend to the Company in
the aggregate up to $10.0 million, pursuant to the terms of the Notes
delivered under the Loan Agreement. On March 12, 2009, the Company
borrowed an initial amount of $2.0 million. During the three months
ended June 30, 2009, the Company borrowed $2.0 million on May 19,
2009, and another $2.0 million on June 29, 2009. During the three
months ended September 30, 2009, the Company borrowed $2.0 million on
August 14, 2009, and a final $2.0 million on September 11, 2009. The
Notes are secured by a first priority lien on all of the assets of the
Company, including the Companys intellectual property. Amounts
borrowed under the Notes accrue interest at the rate of 15% per annum,
which increases to 18% per annum following an event of default. As of
December 31, 2009, the Company accrued $789,041 in interest payable -
affiliate for unpaid interest expenses. Unless earlier paid in
accordance with the terms of the Notes, all unpaid principal and
accrued interest shall become fully due and payable on the earlier to
occur of (i) April 1, 2010, as more fully discussed in Note 12 in the
notes to the financial statements, (ii) the closing of a Financing,
and (iii) the closing of a transaction in which the Company sells,
conveys, licenses or otherwise disposes of a majority of its assets or
is acquired by way of a merger, consolidation, reorganization or other
transaction or series of transactions pursuant to which stockholders
of the Company prior to such acquisition own less than 50% of the
voting interests in the surviving or resulting entity.(3)
    
    The Company adopted new accounting guidance for the accounting for
uncertainty in income tax positions on the first day of its 2007
fiscal year. The amount of unrecognized tax benefits at December 31,
2009 was $584,710. This amount has been excluded from the contractual
obligations table because a reasonably reliable estimate of the timing
of future tax settlements cannot be determined.(4)
    
    Under certain licensing agreements, Roche may receive up to $22.4
million in milestone payments, the majority of which would be tied to
the achievement of product development and regulatory milestones. In
addition, once products containing the compounds are approved for
marketing, Roche will receive single-digit royalties based on net
sales, subject to certain reductions. Off-Balance Sheet Arrangements
  Critical Accounting Policies
   46




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Research and Development Accruals
    Incentive Award Accruals
   47




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Stock-based Compensation
       Years EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Expected life from grant date
    
    
    6.08  7.96
    
    
    
    2.75  6.25Expected volatility
    
    
    105%  114
    %
    
    
    79%  82
    %Risk free interest rate
    
    
    2.89%  3.07
    %
    
    
    1.52%  3.49
    %Dividend yield
    
    
    
    
    
    
    
  48




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##### Table of Contents



Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception)toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    260,226
    
    
    $
    319,990
    
    
    $
    1,079,426General and administrative expense
    
    
    941,540
    
    
    
    979,061
    
    
    
    2,804,862Total
    
    $
    1,201,766
    
    
    $
    1,299,051
    
    
    $
    3,884,288
   Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    15,734
    
    
    $
    634
    
    
    $
    16,368General and administrative expense
    
    
    47,655
    
    
    
    1,893
    
    
    
    49,548Total
    
    $
    63,389
    
    
    $
    2,527
    
    
    $
    65,916
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A(T). CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   49




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Managements Annual Report on Internal Control Over Financial Reporting
  1.
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company;2.
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and3.
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect on the
financial statements.
    Changes in Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
    50




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2010
Warrants 2010 Warrant Shares
        51




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
     
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   52




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 Financial Statements and Financial Statement Schedules
  Report of Independent Registered Public Accounting Firm
    
    
    F-1Balance Sheets as of December 31, 2009 and 2008
    
    
    F-2Statements of Operations for the years ended December 31, 2009 and
2008, and for the period from inception (June 14, 2004) to
December 31, 2009
    
    
    F-3Statements of Stockholders Equity (Deficit) for the years ended
December 31, 2009, 2008, 2007, 2006, 2005 and for the period from
inception (June 14, 2004) to December 31, 2004
    
    
    F-4Statements of Cash Flow for the years ended December 31, 2009 and
2008, and for the period from inception (June 14, 2004) to
December 31, 2009
    
    
    F-5Notes to the Financial Statements
    
    
    F-6
 Financial Statement Schedules
  Exhibits required to be filed by Item 601 of Regulation S-K.
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger and Reorganization, dated February 7, 2007, as amended, by and among
Corautus Genetics Inc., Resurgens Merger Corp., and VIA Pharmaceuticals, Inc. (filed as Exhibit 2.1 to
the Form 8-K filed on February 8, 2007 and incorporated herein by reference)3.1
    
    Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Form 10-K filed on March 22, 2005
and incorporated herein by reference)3.2
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.1 to the
Form 10-KSB filed on March 30, 2000 and incorporated herein by reference)3.3
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.3 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.4
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.4 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.5
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.5 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.6
    
    Amended and Restated Certificate of Designation of Preferences and Rights of Series C Preferred Stock
(filed as Annex H to the Form S-4/A filed on December 19, 2002 and incorporated herein by reference)3.7
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Increase in Authorized Shares)
(filed as Exhibit 3.7 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)3.8
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Reverse Stock Split) (filed as
Exhibit 3.8 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)3.9
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Name Change) (filed as Exhibit
3.9 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)
  53




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##### Table of Contents



ExhibitNumber
    
    Description3.10
    
    Fourth Amended and Restated Bylaws (filed as Exhibit 3.1 to the Form 8-K filed on April 17, 2008 and
incorporated herein by reference)4.1
    
    Warrant issued to Trout Partners LLC, dated July 31, 2007 (filed as Exhibit 99.1 to the Form 8-K filed
on August 6, 2007 and incorporated herein by reference)4.2
    
    Warrant issued to Redington, Inc., dated March 1, 2008 (filed as Exhibit 4.2 to the Form 10-K filed on
March 28, 2008 and incorporated herein by reference)4.3
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV Fund,
L.P., dated March 12, 2009 (filed as Exhibit 4.1 to the Form 8-K filed on March 12, 2009 and
incorporated herein by reference)4.4
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV
Co-Investment Fund, L.P., dated March 12, 2009 (filed as Exhibit 4.2 to the Form 8-K filed on March
12, 2009 and incorporated herein by reference)4.5
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV Fund,
L.P., dated March 26, 20104.6
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV
Co-Investment Fund, L.P., dated March 26, 20104.7
    
    Second Amended and Restated Registration Rights Agreement, dated as of March 12, 2009, by and among
VIA Pharmaceuticals, Inc. and the parties named therein (filed as Exhibit 4.3 to the Form 8-K filed on
March 12, 2009 and incorporated herein by reference)4.8
    
    Amendment No. 1 to the Second Amended and Restated Registration Rights Agreement, dated as of March
26, 2010, by and among VIA Pharmaceuticals, Inc. and the parties named therein10.1
    
    Note and Warrant Purchase Agreement, dated as of March 12, 2009 by and among VIA Pharmaceuticals,
Inc., Bay City Capital Fund IV, L.P. and Bay City Capital Fund IV Co-Investment Fund, L.P. (filed as
Exhibit 10.1 to the Form 8-K filed on March 12, 2009 and incorporated herein by reference)10.2
    
    Note and Warrant Purchase Agreement, dated as of March 26, 2010 by and among VIA Pharmaceuticals,
Inc., Bay City Capital Fund IV, L.P. and Bay City Capital Fund IV Co-Investment Fund, L.P.10.3
    
    Promissory Note, dated as of March 12, 2009, by VIA Pharmaceuticals, Inc. and payable to Bay City
Capital Fund IV, L.P. (filed as Exhibit 10.2 to the Form 8-K filed on March 12, 2009 and incorporated
herein by reference)10.4
    
    Promissory Note, dated as of March 12, 2009, by VIA Pharmaceuticals, Inc. and payable to Bay City
Capital Fund IV Co-Investment Fund, L.P. (filed as Exhibit 10.3 to the Form 8-K filed on March 12,
2009 and incorporated herein by reference)10.5
    
    First Amendment to Promissory Note, dated as of September 11, 2009, by VIA Pharmaceuticals, Inc. and
Bay City Capital Fund IV, L.P. (filed as Exhibit 10.1 to the Form 8-K filed on September 11, 2009 and
incorporated herein by reference)10.6
    
    First Amendment to Promissory Note, dated as of September 11, 2009, by VIA Pharmaceuticals, Inc. and
Bay City Capital Fund IV Co-Investment Fund, L.P. (filed as Exhibit 10.2 to the Form 8-K filed on
September 11, 2009 and incorporated herein by reference)10.7
    
    Second Amendment to Promissory Note, dated as of September 11, 2009, by VIA Pharmaceuticals, Inc. and
Bay City Capital Fund IV, L.P. (filed as Exhibit 10.1 to the Form 8-K filed on October 30, 2009 and
incorporated herein by reference)10.8
    
    Second Amendment to Promissory Note, dated as of September 11, 2009, by VIA Pharmaceuticals, Inc. and
Bay City Capital Fund IV Co-Investment Fund, L.P. (filed as Exhibit 10.2 to the Form 8-K filed on
October 30, 2009 and incorporated herein by reference)10.9
    
    Third Amendment to Promissory Note, dated as of September 11, 2009, by VIA Pharmaceuticals, Inc. and
Bay City Capital Fund IV, L.P. (filed as Exhibit 10.1 to the Form 8-K filed on December 22, 2009 and
incorporated herein by reference)
  54




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ExhibitNumber
    
    Description10.10
    
    Third Amendment to Promissory Note, dated as of September 11, 2009, by VIA Pharmaceuticals, Inc. and
Bay City Capital Fund IV Co-Investment Fund, L.P. (filed as Exhibit 10.2 to the Form 8-K filed on
December 22, 2009 and incorporated herein by reference)10.11
    
    Promissory Note, dated as of March 26, 2010, by VIA Pharmaceuticals, Inc. and payable to Bay City
Capital Fund IV, L.P.10.12
    
    Promissory Note, dated as of March 26, 2010, by VIA Pharmaceuticals, Inc. and payable to Bay City
Capital Fund IV Co-Investment Fund, L.P.10.13
    
    Form of Securities Purchase Agreement, dated June 29, 2007, by and among VIA Pharmaceuticals, Inc. and
the Investors named therein (filed as Exhibit 10.1 to the Form 8-K filed on July 3, 2007 and
incorporated herein by reference)10.14
    
    Exclusive License Agreement, effective August 10, 2005, between VIA Pharmaceuticals, Inc. and Abbott
Laboratories (filed as Exhibit 10.4 to the Form 10-Q filed on August 14, 2007 and incorporated herein
by reference)10.15
    
    Research, Development and Commercialization Agreement, dated as of December 18, 2008, by and between
Hoffmann-La Roche Inc., F. Hoffmann-La Roche Ltd and VIA Pharmaceuticals, Inc. (filed as Exhibit 10.1
to the Form 8-K filed on December 23, 2008 and incorporated herein by reference)10.16
    
    Research, Development and Commercialization Agreement, dated as of December 18, 2008, by and between
Hoffmann-La Roche Inc., F. Hoffmann-La Roche Ltd and VIA Pharmaceuticals, Inc. (filed as Exhibit 10.2
to the Form 8-K filed on December 23, 2008 and incorporated herein by reference)10.17
    
    Employment Agreement, dated as of August 10, 2004, by and between VIA Pharmaceuticals, Inc. and
Lawrence K. Cohen (filed as Exhibit 10.2 to the Form 8-K filed on June 11, 2007 and incorporated
herein by reference)10.18
    
    Amendment to Employment Agreement, dated as of June 4, 2007, by and between VIA Pharmaceuticals, Inc.
and Lawrence K. Cohen (filed as Exhibit 10.3 to the Form 8-K filed on June 11, 2007 and incorporated
herein by reference)10.19
    
    Letter Agreement, dated as of October 3, 2006, between VIA Pharmaceuticals, Inc. and James G. Stewart
(filed as Exhibit 10.6 to the Form 8-K filed on June 11, 2007 and incorporated herein by reference)10.20
    
    Amendment to Letter Agreement, dated as of June 4, 2007, by and between VIA Pharmaceuticals, Inc. and
James G. Stewart (filed as Exhibit 10.7 to the Form 8-K filed on June 11, 2007 and incorporated herein
by reference)10.21
    
    Letter Agreement, dated as of December 21, 2007, between VIA Pharmaceuticals, Inc. and Rebecca Taub
(filed as Exhibit 10.15 to the Form 10-K filed on March 28, 2008 and incorporated herein by reference)10.22
    
    Consulting Agreement, dated as of January 29, 2009, by and between VIA Pharmaceuticals, Inc. and
Adeoye Olukotun (filed as Exhibit 10.1 to the Form 8-K filed on February 3, 2009 and incorporated
herein by reference)10.23
    
    VIA Pharmaceuticals, Inc. 2004 Stock Plan (filed as Exhibit 10.8 to the Form 8-K filed on June 11,
2007 and incorporated herein by reference)10.24
    
    VIA Pharmaceuticals, Inc. standard form of stock option agreement (filed as Exhibit 10.9 to the Form
8-K filed on June 11, 2007 and incorporated herein by reference)10.25
    
    VIA Pharmaceuticals, Inc. early exercise form of stock option agreement (filed as Exhibit 10.10 to the
Form 8-K filed on June 11, 2007 and incorporated herein by reference)10.26
    
    Standard Director Form of Option Agreement (filed as Exhibit 10.18 to the Form 10-Q filed on August
14, 2007 and incorporated herein by reference)10.27
    
    Conversion Agreement, dated as of May 11, 2007, between Corautus Genetics Inc. and Boston Scientific
Corporation (filed as Exhibit 10.19 to the Form 10-Q filed on August 14, 2007 and incorporated herein
by reference)10.28
    
    Change in Control Agreement by and between VIA Pharmaceuticals, Inc and Lawrence K. Cohen, Ph.D.,
dated December 21, 2007 (filed as Exhibit 10.1 to the Form 8-K/A filed on December 21, 2007 and
incorporated herein by reference)10.29
    
    Change in Control Agreement by and between VIA Pharmaceuticals, Inc and James G. Stewart, dated
December 21, 2007 (filed as Exhibit 10.2 to the Form 8-K/A filed on December 21, 2007 and incorporated
herein by reference)
  55




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##### Table of Contents



ExhibitNumber
    
    Description10.30
    
    Change in Control Agreement by and between VIA Pharmaceuticals, Inc and Rebecca Taub, M.D., dated
January 14, 2008 (filed as Exhibit 10.25 to the Form 10-K filed on March 28, 2008 and incorporated
herein by reference)10.31
    
    VIA Pharmaceuticals, Inc. Form of Stock Option Agreement (filed as Exhibit 10.1 to the Form 8-K filed
on December 19, 2007 and incorporated herein by reference)10.32
    
    VIA Pharmaceuticals, Inc. 2007 Incentive Award Plan (filed as Exhibit A to the Definitive Proxy
Statement filed on November 5, 2007 and incorporated herein by reference)10.33
    
    Office Lease, dated October 13, 2005, between VIA Pharmaceuticals, Inc. and James P. Edmondson, as
amended by Lease Amendment No. One, dated January 15, 2008 (filed as Exhibit 10.28 to the Form 10-K
filed on March 28, 2008 and incorporated herein by reference)10.34
    
    Lease, dated July 24, 2006, between VIA Pharmaceuticals, Inc. and 100 & RW CRA LLC, as amended by
First Extension and Modification of Lease, dated January 15, 2008 (filed as Exhibit 10.29 to the
Form 10-K filed on March 28, 2008 and incorporated herein by reference)21.1
    
    Subsidiaries of VIA Pharmaceuticals, Inc.23.1
    
    Consent of Independent Registered Public Accounting Firm31.1
    
    Principal Executive Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Principal Financial Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002).32.2
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002).
  56




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##### Table of Contents



VIA PHARMACEUTICALS, INC.By:
    /s/  James G. StewartJames G. StewartSenior Vice President, Chief Financial Officer   Signatures
    
    Titles
    
    Date/s/ Lawrence K. Cohen
    
    President, Chief Executive Officer and
    
    March 31, 2010Lawrence K. Cohen
    
    Director/s/ James G. Stewart
    
    Senior Vice President, Chief Financial
    
    March 31, 2010James G. Stewart
    
    Officer and Secretary/s/ Douglass B. Given

Douglass B. Given
    
    Chairman of the Board of Directors
    
    March 31, 2010/s/ Mark N.K. Bagnall

Mark N.K. Bagnall
    
    Director
    
    March 31, 2010/s/ Fred B. Craves

Fred B. Craves
    
    Director
    
    March 31, 2010/s/ David T. Howard

David T. Howard
    
    Director
    
    March 31, 2010/s/ John R. Larson

John R. Larson
    
    Director
    
    March 31, 2010
  57




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  F-1




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##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 BALANCE SHEETS
 December 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,189,742
    
    
    $
    4,064,545Prepaid expenses and other current assets
    
    
    155,361
    
    
    
    604,080Total current assets
    
    
    2,345,103
    
    
    
    4,668,625Property and equipment-net
    
    
    170,617
    
    
    
    291,804Other non-current assets
    
    
    40,374
    
    
    
    40,374Total
    
    $
    2,556,094
    
    
    $
    5,000,803LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable
    
    $
    705,887
    
    
    $
    753,824Accrued expenses and other liabilities
    
    
    2,226,720
    
    
    
    2,652,458Interest payable  affiliate
    
    
    789,041
    
    
    
    Notes payable  affiliate  net of discount of $4,374
    
    
    9,995,626
    
    
    
    Total current liabilities
    
    
    13,717,274
    
    
    
    3,406,282Deferred rent
    
    
    37,450
    
    
    
    30,637Total liabilities
    
    
    13,754,724
    
    
    
    3,436,919Commitments and contingenciesShareholders equity (deficit):Common stock, $0.001 par value-200,000,000 shares
authorized at December 31, 2009 and December 31,
2008, respectively; 20,646,374 and 20,592,718 shares
issued and outstanding at December 31, 2009 and
December 31, 2008, respectively
    
    
    20,646
    
    
    
    20,593Preferred stock Series A, $0.001 par
value-5,000,000 shares authorized at December 31,
2009 and December 31, 2008, respectively; 0 shares
issued and outstanding at December 31, 2009 and
December 31, 2008, respectively
    
    
    
    
    
    
    Convertible preferred stock Series C, $0.001 par
value-17,000 shares authorized at December 31, 2009
and December 31, 2008, respectively; 2,000 shares
issued and outstanding at December 31, 2009 and
December 31, 2008, respectively; liquidation
preference of $2,000,000
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    70,385,287
    
    
    
    62,169,530Deficit accumulated in the development stage
    
    
    (81,604,565
    )
    
    
    (60,626,241
    )Total shareholders equity (deficit)
    
    
    (11,198,630
    )
    
    
    1,563,884Total
    
    $
    2,556,094
    
    
    $
    5,000,803
   F-2




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##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS OF OPERATIONS
 Period fromJune 14, 2004(Date ofYears Ended
    
    
    Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Revenue
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses:Research and development
    
    
    6,055,215
    
    
    
    11,804,053
    
    
    
    40,906,178General and administration
    
    
    7,198,320
    
    
    
    8,657,166
    
    
    
    29,046,053Merger transaction costs
    
    
    
    
    
    
    
    
    
    
    3,824,090Total operating expenses
    
    
    13,253,535
    
    
    
    20,461,219
    
    
    
    73,776,321Operating loss
    
    
    (13,253,535
    )
    
    
    (20,461,219
    )
    
    
    (73,776,321
    )Other income (expense):Interest income
    
    
    
    
    
    
    189,656
    
    
    
    914,628Interest expense
    
    
    (7,733,390
    )
    
    
    (6,029
    )
    
    
    (8,738,483
    )Other income (expense)-net
    
    
    8,601
    
    
    
    2,764
    
    
    
    (4,389
    )Total other income (expense)
    
    
    (7,724,789
    )
    
    
    186,391
    
    
    
    (7,828,244
    )Net Loss
    
    $
    (20,978,324
    )
    
    $
    (20,274,828
    )
    
    $
    (81,604,565
    )Loss per share of common stock-basic and diluted
    
    $
    (1.05
    )
    
    $
    (1.03
    )Weighted average shares outstanding-basic and diluted
    
    
    19,939,848
    
    
    
    19,606,526
   F-3




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##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
For the Period June 14, 2004 (Date of Inception) To December 31, 2009
 DeficitPreferred
    
    
    Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    AccumulatedSeries A
    
    
    Series C
    
    
    Common Stock
    
    
    Treasury Stock
    
    
    Additional
    
    
    Deferred
    
    
    in the
    
    
    Other
    
    
    Total
    
    
    TotalShares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Paid-in
    
    
    Stock
    
    
    Development
    
    
    Comprehensive
    
    
    Stockholders
    
    
    ComprehensiveIssued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Stage
    
    
    Income
    
    
    Equity (Deficit)
    
    
    Income (Loss)BALANCE  June 14, 2004 (date of inception)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Issuance of common stock  net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    371,721
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    Stock-based compensation  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,360
    
    
    
    (4,675
    )
    
    
    
    
    
    
    
    
    
    
    1,685
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,084,924
    )
    
    
    
    
    
    
    (1,084,924
    )
    
    
    BALANCE  December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    371,721
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    6,360
    
    
    
    (4,675
    )
    
    
    (1,084,924
    )
    
    
    
    
    
    
    (1,082,239
    )
    
    
    Issuance of common stock  net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,172
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    Exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,965
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    266
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    Stock-based compensation  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,124
    
    
    
    4,568
    
    
    
    
    
    
    
    
    
    
    
    5,692
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,804,220
    )
    
    
    
    
    
    
    (8,804,220
    )
    
    
    BALANCE  December 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    419,858
    
    
    
    1,130
    
    
    
    
    
    
    
    
    
    
    
    8,650
    
    
    
    (107
    )
    
    
    (9,889,144
    )
    
    
    
    
    
    
    (9,879,471
    )
    
    
    Exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,181
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    1,360
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,427
    
    
    
    Issuance of series A preferred stock
    
    
    3,234,900
    
    
    
    8,703
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,174,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,183,500
    
    
    
    Stock-based compensation  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    107
    
    
    
    Stock based compensation  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    434,837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    434,837
    
    
    
    Unrealized gain from foreign currency hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,582
    
    
    
    12,582
    
    
    
    12,582Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,626,887
    )
    
    
    
    
    
    
    (8,626,887
    )
    
    
    (8,626,887
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,614,305
    )BALANCE  December 31, 2006
    
    
    3,234,900
    
    
    $
    8,703
    
    
    
    
    
    
    $
    
    
    
    
    445,039
    
    
    $
    1,197
    
    
    
    
    
    
    $
    
    
    
    $
    12,619,644
    
    
    $
    
    
    
    $
    (18,516,031
    )
    
    $
    12,582
    
    
    $
    (5,873,905
    )Issuance of common stock  net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,288,065
    
    
    
    10,288
    
    
    
    
    
    
    
    
    
    
    
    23,130,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,140,360
    
    
    
    Exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    317,369
    
    
    
    854
    
    
    
    
    
    
    
    
    
    
    
    41,469
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,323
    
    
    
    Repurchase and retirement of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,283
    )
    
    
    (95
    )
    
    
    
    
    
    
    
    
    
    
    (5,654
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,749
    )
    
    
    Issuance of series A preferred stock
    
    
    3,540,435
    
    
    
    9,524
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,324,698
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,334,222
    
    
    
    Merger
    
    
    (6,775,335
    )
    
    
    (18,227
    )
    
    
    2,000
    
    
    
    2
    
    
    
    8,699,067
    
    
    
    7,463
    
    
    
    (2,014
    )
    
    
    (10,276
    )
    
    
    10,818,077
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,797,039
    
    
    
    Stock-based compensation  warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,954
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,954
    
    
    
    Stock based compensation  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    926,574
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    926,574
    
    
    
    Unrealized gain from foreign currency hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,302
    
    
    
    4,302
    
    
    
    4,302Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,835,382
    )
    
    
    
    
    
    
    (21,835,382
    )
    
    
    (21,835,382
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (21,831,080
    )BALANCE  December 31, 2007
    
    
    
    
    
    $
    
    
    
    
    2,000
    
    
    $
    2
    
    
    
    19,707,257
    
    
    $
    19,707
    
    
    
    (2,014
    )
    
    $
    (10,276
    )
    
    $
    60,876,834
    
    
    $
    
    
    
    $
    (40,351,413
    )
    
    $
    16,884
    
    
    $
    20,551,738Exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,711
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    2,247
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,280
    
    
    
    Repurchase and retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,014
    
    
    
    10,276
    
    
    
    (10,276
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    852,750
    
    
    
    853
    
    
    
    
    
    
    
    
    
    
    
    1674
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,527
    
    
    
    Stock-based compensation  warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,525
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,525
    
    
    
    Stock based compensation  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,251,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,251,526
    
    
    
    Unrealized gain from foreign currency hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,884
    )
    
    
    (16,884
    )
    
    
    (16,884
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,274,828
    )
    
    
    
    
    
    
    (20,274,828
    )
    
    
    (20,274,828
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (20,291,712
    )BALANCE  December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    2,000
    
    
    $
    2
    
    
    
    20,592,718
    
    
    $
    20,593
    
    
    
    
    
    
    $
    
    
    
    $
    62,169,530
    
    
    $
    
    
    
    $
    (60,626,241
    )
    
    $
    
    
    
    $
    1,563,884Exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,615
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    1,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,932
    
    
    
    Retirement of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,959
    )
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    4Stock-based compensation  restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,389
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,389
    
    
    
    Stock based compensation  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,201,766
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,201,766
    
    
    
    Issuance of warrants  affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,948,723
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,948,723
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,978,324
    )
    
    
    
    
    
    
    (20,978,324
    )
    
    
    (20,978,324
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (20,978,324
    )BALANCE  December 31, 2009
    
    
    
    
    
    $
    
    
    
    
    2,000
    
    
    $
    2
    
    
    
    20,646,374
    
    
    $
    20,646
    
    
    
    
    
    
    $
    
    
    
    $
    70,385,287
    
    
    $
    
    
    
    $
    (81,604,565
    )
    
    $
    
    
    
    $
    (11,198,630
    )
   F-4




---



##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS OF CASH FLOWS
 Period fromJune 14, 2004(Date ofYears Ended
    
    
    Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (20,978,324
    )
    
    $
    (20,274,828
    )
    
    $
    (81,604,565
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    136,360
    
    
    
    205,919
    
    
    
    529,873Amortization of discount on notes payable  affiliate
    
    
    6,944,349
    
    
    
    
    
    
    
    6,944,349Disposal of property and equipment
    
    
    450
    
    
    
    4,163
    
    
    
    4,613Change in unrealized gain on foreign currency hedge
    
    
    
    
    
    
    (16,884
    )
    
    
    Stock compensation expense
    
    
    1,265,155
    
    
    
    1,301,578
    
    
    
    3,957,582Deferred rent
    
    
    6,813
    
    
    
    26,657
    
    
    
    37,450Changes in assets and liabilities:Prepaid expenses and other assets
    
    
    448,719
    
    
    
    383,978
    
    
    
    (220,735
    )Accounts payable
    
    
    (47,937
    )
    
    
    1,617
    
    
    
    702,398Accrued expenses and other liabilities
    
    
    (425,738
    )
    
    
    (525,995
    )
    
    
    2,326,721Interest payable  affiliate
    
    
    789,041
    
    
    
    
    
    
    
    1,781,763Net cash used in operating activities
    
    
    (11,861,112
    )
    
    
    (18,893,795
    )
    
    
    (65,540,551
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (16,155
    )
    
    
    (140,653
    )
    
    
    (664,175
    )Sale of property and equipment
    
    
    532
    
    
    
    
    
    
    
    532Cash provided in the Merger
    
    
    
    
    
    
    
    
    
    
    11,147,160Capitalized merger transaction costs
    
    
    
    
    
    
    
    
    
    
    (350,069
    )Net cash provided by (used in) investing activities
    
    
    (15,623
    )
    
    
    (140,653
    )
    
    
    10,133,448Cash flows from financing activities:Proceeds from convertible promissory notes  affiliate
    
    
    
    
    
    
    
    
    
    
    24,425,000Proceeds from notes payable  affiliate
    
    
    10,000,000
    
    
    
    
    
    
    
    10,000,000Capital lease payments
    
    
    
    
    
    
    (2,051
    )
    
    
    (11,973
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    23,141,360Exercise of stock options for the issuance of common stock
    
    
    1,932
    
    
    
    2,280
    
    
    
    48,258Repurchase and retirement of common stock
    
    
    
    
    
    
    
    
    
    
    (5,800
    )Net cash provided by financing activities
    
    
    10,001,932
    
    
    
    229
    
    
    
    57,596,845Increase (decrease) in cash and cash equivalents
    
    
    (1,874,803
    )
    
    
    (19,034,219
    )
    
    
    2,189,742Cash and cash equivalents-beginning of period
    
    
    4,064,545
    
    
    
    23,098,764
    
    
    
    Cash and cash equivalents-end of period
    
    $
    2,189,742
    
    
    $
    4,064,545
    
    
    $
    2,189,742Supplemental disclosure of noncash activities:Issuance of warrant and related discount on notes payable  affiliate
    
    $
    6,948,723
    
    
    $
    
    
    
    $
    6,948,723Interest on convertible debt converted to notes payable  affiliate
    
    $
    
    
    
    $
    
    
    
    $
    992,722Conversion of notes to preferred stock Series A  affiliate
    
    $
    
    
    
    $
    
    
    
    $
    25,517,722Accrued compensation converted to notes payable
    
    $
    
    
    
    $
    
    
    
    $
    100,000Equipment acquired under capital lease
    
    $
    
    
    
    $
    (11,973
    )
    
    $
    Stock issuance for license acquisition
    
    $
    
    
    
    $
    
    
    
    $
    1,000Supplemental disclosure of cash flow information:Interest paid
    
    $
    
    
    
    $
    6,028
    
    
    $
    7,856Taxes paid (refunded)
    
    $
    (2,834
    )
    
    $
    3,470
    
    
    $
    36,615
   F-5




---



##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO THE FINANCIAL STATEMENTS
 1. ORGANIZATION
 Overview 
   Merger
 Going Concern 
  F-6




---



##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Use of Estimates 
 Cash and Cash Equivalents 
 Property and Equipment 
 Long-Lived Assets 
 Incentive Award Accruals 
  F-7




---



##### Table of Contents



Research and Development Expenses 
  Fair Value of Financial and Derivative Instruments 
 
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
    
    Level 2  Inputs other than quoted prices included in Level 1, such as quoted prices for
similar assets and liabilities in active markets; quoted prices for identical or similar
assets and liabilities in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data.
    
    Level 3  Unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities. This includes certain
pricing models, discounted cash flow methodologies and similar techniques that use
significant unobservable inputs.
  
    
    Derivative financial instruments indexed to and potentially settled in a Companys own
stock;
    
    Accounting for derivative instruments and hedging activities; and
    
    Accounting for convertible debt and debt issued with stock purchase warrants.
  Changes in Level 3 Recurring Fair Value Measurements 
  F-8




---



##### Table of Contents



As ofDecember 31,2009Fair value  December 31, 2008
    
    $
    Warrants (1)
    
    
    6,948,723Change in unrealized gains related to financial instruments at December 31, 2009 (2)
    
    
    Fair value  December 31, 2009
    
    $
    6,948,723Total unrealized gains (losses) (2)
    
    $
    
 
 (1)
    
    The Warrants are included in additional paid in capital in the Stockholders Equity section
of the Balance Sheet.(2)
    
    The Warrants are not revalued at the reporting date and do not result in gains and losses. Income Taxes 
 Segment Reporting 
 Earnings (Loss) Per Share of Common Stock 
  Years EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Net loss
    
    $
    (20,978,324
    )
    
    $
    (20,274,828
    )Basic and diluted net loss per share:Weighted-average shares of common stock outstanding
    
    
    20,634,380
    
    
    
    19,754,046Less: Weighted-average shares of common stock subject to repurchase
    
    
    (694,532
    )
    
    
    (147,520
    )Weighted-average shares used in computing basic net loss per share
    
    
    19,939,848
    
    
    
    19,606,526Dilutive effect of common share equivalents
    
    
    
    
    
    
    Weighted-average shares used in computing diluted net loss per share
    
    
    19,939,848
    
    
    
    19,606,526Basic and diluted net loss per share
    
    $
    (1.05
    )
    
    $
    (1.03
    )
  F-9




---



##### Table of Contents



Years EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Common stock equivalents (in shares):Shares of common stock subject to outstanding options
    
    
    2,740,686
    
    
    
    2,807,927Shares of common stock subject to outstanding warrants
    
    
    83,403,348
    
    
    
    207,479Shares of common stock subject to conversion from series C preferred stock
    
    
    
    
    
    
    Total shares of common stock equivalents
    
    
    86,144,034
    
    
    
    3,015,406
  Comprehensive Income (Loss) 
  Years EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Net loss
    
    $
    (20,978,324
    )
    
    $
    (20,274,828
    )Change in unrealized gain on foreign currency cash flow hedges
    
    
    
    
    
    
    (16,884
    )Total comprehensive loss
    
    $
    (20,978,324
    )
    
    $
    (20,291,712
    )
 Derivative Instruments 
   Recently Adopted Accounting Pronouncements 
  F-10




---



##### Table of Contents



F-11




---



##### Table of Contents



Subsequent Events 
 3. STOCK-BASED COMPENSATION
      F-12




---



##### Table of Contents



Years EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Expected life from grant date
    
    
    6.08  7.96
    
    
    
    2.75  6.25Expected volatility
    
    
    105%  114
    %
    
    
    79%  82
    %Risk free interest rate
    
    
    2.89%  3.07
    %
    
    
    1.52%  3.49
    %Dividend yield
    
    
    
    
    
    
    
  Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    260,226
    
    
    $
    319,990
    
    
    $
    1,079,426General and administrative expense
    
    
    941,540
    
    
    
    979,061
    
    
    
    2,804,862Total
    
    $
    1,201,766
    
    
    $
    1,299,051
    
    
    $
    3,884,288
   Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    15,734
    
    
    $
    634
    
    
    $
    16,368General and administrative expense
    
    
    47,655
    
    
    
    1,893
    
    
    
    49,548Total
    
    $
    63,389
    
    
    $
    2,527
    
    
    $
    65,916
  4. RESEARCH AND DEVELOPMENT
   F-13




---



##### Table of Contents



Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Externally generated research and development expense
    
    $
    3,639,215
    
    
    $
    7,906,799
    
    
    $
    28,705,191Internally generated research and development expense
    
    
    2,416,000
    
    
    
    3,897,254
    
    
    
    12,200,987Total
    
    $
    6,055,215
    
    
    $
    11,804,053
    
    
    $
    40,906,178
  Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Externally generated research and development expenseIn-licensing expenses
    
    $
    400,000
    
    
    $
    25,000
    
    
    $
    5,270,000CRO and investigator expenses
    
    
    1,090,115
    
    
    
    4,841,760
    
    
    
    10,749,339Consulting expenses
    
    
    1,120,131
    
    
    
    1,239,447
    
    
    
    6,418,669Other
    
    
    1,028,969
    
    
    
    1,800,592
    
    
    
    6,267,183Total
    
    $
    3,639,215
    
    
    $
    7,906,799
    
    
    $
    28,705,191
  Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Internally generated research and development expensePersonnel and related expenses
    
    $
    1,693,205
    
    
    $
    2,771,734
    
    
    $
    8,507,159Stock-based compensation expense
    
    
    275,961
    
    
    
    320,624
    
    
    
    1,095,794Travel and entertainment expense
    
    
    170,249
    
    
    
    320,616
    
    
    
    1,155,619Other
    
    
    276,585
    
    
    
    484,280
    
    
    
    1,442,415Total
    
    $
    2,416,000
    
    
    $
    3,897,254
    
    
    $
    12,200,987
 5. PROPERTY AND EQUIPMENT
  Years EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Property and equipment at cost:Computer equipment and software
    
    $
    308,467
    
    
    $
    321,217Furniture and fixtures
    
    
    113,363
    
    
    
    108,869Office equipment
    
    
    38,282
    
    
    
    38,282Leasehold Improvements
    
    
    129,740
    
    
    
    129,740Total property and equipment at cost
    
    
    589,852
    
    
    
    598,108Less: accumulated depreciation
    
    
    (419,235
    )
    
    
    (306,304
    )Total
    
    $
    170,617
    
    
    $
    291,804
  F-14




---



##### Table of Contents



Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    22,292
    
    
    $
    58,761
    
    
    $
    131,928General and administrative expense
    
    
    114,068
    
    
    
    124,841
    
    
    
    371,945Total
    
    $
    136,360
    
    
    $
    183,602
    
    
    $
    503,873
 6. NOTES PAYABLE AFFILIATES
      F-15




---



##### Table of Contents



.
  March 12, 2009Expected life from grant date  in years
    
    
    5.0Expected volatility
    
    
    116.79
    %Risk free interest rate
    
    
    2.10
    %Dividend yield
    
    
    
   May 19, 2009Expected life from grant date  in years
    
    
    4.81Expected volatility
    
    
    108.63
    %Risk free interest rate
    
    
    2.05
    %Dividend yield
    
    
    
   F-16




---



##### Table of Contents



June 29, 2009Expected life from grant date  in years
    
    
    4.7Expected volatility
    
    
    112.03
    %Risk free interest rate
    
    
    2.40
    %Dividend yield
    
    
    
   August 14, 2009Expected life from grant date  in years
    
    
    4.58Expected volatility
    
    
    115.22
    %Risk free interest rate
    
    
    2.32
    %Dividend yield
    
    
    
 .
  F-17




---



##### Table of Contents



September 11, 2009Expected life from grant date  in years
    
    
    4.50Expected volatility
    
    
    115.41
    %Risk free interest rate
    
    
    2.07
    %Dividend yield
    
    
    
  7. EQUITY
  Common Stock 
  December 31,
    
    
    December 31,2009
    
    
    20082007 Incentive Award Plan  outstanding and available to grant
    
    
    3,328,398
    
    
    
    2,882,054Shares of common stock subject to outstanding warrants
    
    
    83,403,348
    
    
    
    207,479Shares of common stock subject to conversion from series C preferred stock
    
    
    
    
    
    
    Total shares of common stock equivalents
    
    
    86,731,746
    
    
    
    3,089,533
 Preferred Stock 
  2002 Stock Option Plans 
  F-18




---



##### Table of Contents



2004 Stock Option Plans 
 2007 Incentive Award Plan 
  WeightedAverageOption Shares
    
    
    ExerciseStock Option Awards
    
    Outstanding
    
    
    Price2007 Incentive Award Plan Options Outstanding  December 31, 2007
    
    
    2,642,110
    
    
    $
    7.02Granted
    
    
    332,750
    
    
    $
    2.42Exercised
    
    
    (32,711
    )
    
    $
    0.07Canceled
    
    
    (134,222
    )
    
    $
    2.722007 Incentive Award Plan Options Outstanding  December 31, 2008
    
    
    2,807,927
    
    
    $
    6.77Granted
    
    
    11,000
    
    
    $
    0.18Exercised
    
    
    (57,615
    )
    
    $
    0.03Canceled
    
    
    (20,626
    )
    
    $
    3.792007 Incentive Award Plan Options Outstanding  December 31, 2009
    
    
    2,740,686
    
    
    $
    6.90
  F-19




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##### Table of Contents



Options Outstanding
    
    
    Options Vested or Expected to Vest
    
    
    Options ExercisableAverage
    
    
    Weighted
    
    
    Number
    
    
    Average
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange of
    
    Number of
    
    
    Remaining
    
    
    Average
    
    
    Exercisable or
    
    
    Remaining
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    Options
    
    
    Contractual
    
    
    Exercise
    
    
    Expected to
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExercisePrices
    
    Outstanding
    
    
    Life (Years)
    
    
    Price
    
    
    Vest
    
    
    Life (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$0.03
    
    
    183,565
    
    
    
    5.41
    
    
    $
    0.03
    
    
    
    183,565
    
    
    
    5.41
    
    
    $
    0.03
    
    
    
    183,565
    
    
    $
    0.03$0.14
    
    
    87,718
    
    
    
    6.82
    
    
    $
    0.14
    
    
    
    87,675
    
    
    
    6.82
    
    
    $
    0.14
    
    
    
    86,176
    
    
    $
    0.14$0.15
    
    
    50,000
    
    
    
    8.96
    
    
    $
    0.15
    
    
    
    50,000
    
    
    
    8.96
    
    
    $
    0.15
    
    
    
    50,000
    
    
    $
    0.15$0.18
    
    
    11,000
    
    
    
    9.29
    
    
    $
    0.18
    
    
    
    10,690
    
    
    
    9.29
    
    
    $
    0.18
    
    
    
    
    
    
    $
    0.18$1.70
    
    
    750
    
    
    
    8.61
    
    
    $
    1.70
    
    
    
    736
    
    
    
    8.61
    
    
    $
    1.70
    
    
    
    265
    
    
    $
    1.70$2.19
    
    
    35,000
    
    
    
    8.46
    
    
    $
    2.19
    
    
    
    34,404
    
    
    
    8.46
    
    
    $
    2.19
    
    
    
    13,854
    
    
    $
    2.19$2.38
    
    
    1,383,025
    
    
    
    7.96
    
    
    $
    2.38
    
    
    
    1,364,662
    
    
    
    7.96
    
    
    $
    2.38
    
    
    
    731,844
    
    
    $
    2.38$2.90
    
    
    235,000
    
    
    
    8.04
    
    
    $
    2.90
    
    
    
    231,548
    
    
    
    8.04
    
    
    $
    2.90
    
    
    
    112,604
    
    
    $
    2.90$3.10
    
    
    12,000
    
    
    
    8.23
    
    
    $
    3.10
    
    
    
    11,810
    
    
    
    8.23
    
    
    $
    3.10
    
    
    
    5,270
    
    
    $
    3.10$3.48
    
    
    389,375
    
    
    
    7.59
    
    
    $
    3.48
    
    
    
    384,800
    
    
    
    7.59
    
    
    $
    3.48
    
    
    
    227,131
    
    
    $
    3.48$5.10
    
    
    22,300
    
    
    
    7.43
    
    
    $
    5.10
    
    
    
    22,300
    
    
    
    7.43
    
    
    $
    5.10
    
    
    
    22,300
    
    
    $
    5.10$5.55
    
    
    18,586
    
    
    
    7.42
    
    
    $
    5.55
    
    
    
    18,586
    
    
    
    7.42
    
    
    $
    5.55
    
    
    
    18,586
    
    
    $
    5.55$11.25$1023.75
    
    
    312,367
    
    
    
    4.90
    
    
    $
    42.36
    
    
    
    312,367
    
    
    
    4.90
    
    
    $
    42.36
    
    
    
    312,367
    
    
    $
    42.362,740,686
    
    
    
    7.38
    
    
    $
    6.90
    
    
    
    2,713,143
    
    
    
    7.38
    
    
    $
    6.95
    
    
    
    1,763,962
    
    
    $
    9.29
   Restricted Stock 
  WeightedAverageGrant DateRestricted Stock Awards
    
    Shares
    
    
    Fair ValueUnvested at December 31, 2007
    
    
    
    
    
    
    Granted
    
    
    852,750
    
    
    $
    0.15Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Unvested at December 31, 2008
    
    
    852,750
    
    
    $
    0.15Granted
    
    
    
    
    
    
    Vested
    
    
    (424,916
    )
    
    $
    0.15Forfeited
    
    
    (3,959
    )
    
    $
    0.15Unvested at December 31, 2009
    
    
    423,875
    
    
    $
    0.15
  F-20




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##### Table of Contents



Warrants  Affiliates 
  Warrants  Other 
     F-21




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##### Table of Contents



8. RELATED PARTIES
       F-22




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##### Table of Contents



9. COMMITMENTS
 Operating Leases 
 Period fromJune 14, 2004Years Ended
    
    
    (Date of Inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    121,986
    
    
    $
    154,329
    
    
    $
    517,724General and administrative expense
    
    
    312,570
    
    
    
    238,626
    
    
    
    917,360Total
    
    $
    434,556
    
    
    $
    392,955
    
    
    $
    1,435,084
  Amount2010
    
    $
    437,5972011
    
    
    445,7772012
    
    
    362,4682013
    
    
    139,742Total minimum lease payments
    
    $
    1,385,584
  Capital Leases 
 10. INCOME TAXES
   Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2009
    
    
    2008Tax provision (benefit) at federal statutory income tax rate
    
    
    (34
    )%
    
    
    (34
    )%State income taxes, net of federal income tax effect
    
    
    (6
    )
    
    
    1Adjustments of deferred tax assets
    
    
    
    
    
    
    37Other
    
    
    1
    
    
    
    1Valuation allowance
    
    
    39
    
    
    
    (5
    )Income tax expense (benefit)
    
    
    0
    %
    
    
    0
    %
  F-23




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##### Table of Contents



2009
    
    
    2008Deferred tax assets and liabilities:Net operating loss carryforwards
    
    $
    6,214,313
    
    
    $
    1,456,856Tax credit carryforwards
    
    
    115,393
    
    
    
    46,056Property and equipment and intangibles
    
    
    10,953,858
    
    
    
    8,002,996Other
    
    
    1,638,641
    
    
    
    1,144,89918,922,205
    
    
    
    10,650,807Less valuation allowance
    
    
    (18,922,205
    )
    
    
    (10,650,807
    )Net deferred tax assets and liabilities
    
    $
    
    
    
    $
    
      AmountBalance at January 1, 2008
    
    $
    139,711Additions based on tax positions related to current year
    
    
    83,208Additions for tax positions of prior year
    
    
    474,484Reductions for tax positions of current year
    
    
    Reductions for tax positions of prior year
    
    
    (423,273
    )Settlements
    
    
    Balance at December 31, 2008
    
    $
    274,130Additions based on tax positions related to current year
    
    
    310,580Additions for tax positions of prior year
    
    
    Reductions for tax positions of current year
    
    
    Reductions for tax positions of prior year
    
    
    Settlements
    
    
    Balance at December 31, 2009
    
    $
    584,710
  F-24




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##### Table of Contents



11. EMPLOYEE BENEFIT PLANS
  12. SUBSEQUENT EVENTS
     F-25




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##### Table of Contents



13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter2009Net service revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Gross profit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss before extraordinary items
and cumulative effect of any
accounting change
    
    
    (4,302,138
    )
    
    
    (4,391,189
    )
    
    
    (8,038,046
    )
    
    
    (4,246,951
    )Net loss per share  Basic and diluted
    
    
    (0.22
    )
    
    
    (0.22
    )
    
    
    (0.40
    )
    
    
    (0.21
    )Net loss
    
    
    (4,302,138
    )
    
    
    (4,391,189
    )
    
    
    (8,038,046
    )
    
    
    (4,246,951
    )2008Net service revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Gross profit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss before extraordinary items
and cumulative effect of any
accounting change
    
    
    (5,909,224
    )
    
    
    (5,171,023
    )
    
    
    (4,967,272
    )
    
    
    (4,227,309
    )Net loss per share  Basic and diluted
    
    
    (0.30
    )
    
    
    (0.27
    )
    
    
    (0.25
    )
    
    
    (0.21
    )Net loss
    
    
    (5,909,224
    )
    
    
    (5,171,023
    )
    
    
    (4,967,272
    )
    
    
    (4,227,309
    )
  F-26