##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-6533
 
 ALSERES PHARMACEUTICALS, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 
 Delaware
    
    87-0277826(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (IRS Employer
Identification No.)239 South Street, Hopkinton, Massachusetts
    
    01748(Address of Principal Executive Offices)
    
    (Zip Code)
 (508) 497-2360
(Registrants Telephone Number, Including Area Code)
 None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 þ 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)
 o þ




---



##### 



ALSERES PHARMACEUTICALS, INC.
FORM 10-Q
TABLE OF CONTENTS
 PagePart I FINANCIAL INFORMATIONItem 1 Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31,
2011 and 2010, and for the period from inception (October 16, 1992) to March 31, 2011
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2011 and 2010, and for the period from inception (October 16, 1992) to March 31, 2011
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    10Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    15Item 4T Controls and Procedures
    
    15Part II OTHER INFORMATIONItem 1 Legal Proceedings
    
    16Item 6 Exhibits
    
    16SIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2
  ®
 2




---



##### Table of Contents



Part I  FINANCIAL INFORMATION
 
 Item 1   Financial Statements
 Alseres Pharmaceuticals, Inc.
 
  (Unaudited)March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,898
    
    
    $
    98,514Security deposits
    
    
    96,163
    
    
    
    96,163Prepaid expenses and other current assets
    
    
    45,253
    
    
    
    14,073Total current assets
    
    
    155,314
    
    
    
    208,750Property and Equipment, net
    
    
    33,905
    
    
    
    47,674Indemnity fund
    
    
    115,530
    
    
    
    115,568Security deposits and other assets
    
    
    88,600
    
    
    
    88,600Total assets
    
    $
    393,349
    
    
    $
    460,592LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued expenses
    
    $
    3,549,074
    
    
    $
    3,576,809Convertible notes payable
    
    
    29,000,000
    
    
    
    29,000,000Notes payable
    
    
    5,260,000
    
    
    
    4,660,000Accrued interest payable on convertible notes
    
    
    5,077,221
    
    
    
    4,714,722Accrued interest payable on demand notes
    
    
    356,905
    
    
    
    270,759Accrued lease (Note 6)
    
    
    68,923
    
    
    
    65,922Total current liabilities
    
    
    43,312,123
    
    
    
    42,288,212Accrued lease, excluding current portion (Note 6)
    
    
    12,520
    
    
    
    30,503Total liabilities
    
    
    43,324,643
    
    
    
    42,318,715Commitments and contingencies (Note 7)Series F convertible redeemable preferred stock, $.01
par value; 200,000 shares designated; 196,000 shares
issued and outstanding at March 31, 2011 and December
31, 2010; (liquidation preference of $4,900,000 at
March 31, 2011)
    
    
    5,515,339
    
    
    
    5,428,158Stockholders deficit:Preferred stock, $.01 par value; 1,000,000 shares
authorized; 25,000 shares designated Convertible
Series A, 500,000 shares designated Convertible
Series D and 800 shares designated Convertible
Series E; no shares issued and outstanding at March
31, 2011 and December 31, 2010, respectively
    
    
    
    
    
    
    Common stock, $.01 par value; 79,730,000 shares
authorized at March 31, 2011 and December 31, 2010;
26,785,645 issued and outstanding at March 31, 2011
and December 31, 2010.
    
    
    267,856
    
    
    
    267,856Additional paid-in capital
    
    
    146,527,976
    
    
    
    146,611,717Deficit accumulated during development stage
    
    
    (195,242,465
    )
    
    
    (194,165,854
    )Total stockholders deficit
    
    
    (48,446,633
    )
    
    
    (47,286,281
    )Total liabilities and stockholders deficit
    
    $
    393,349
    
    
    $
    460,592
  3




---



##### Table of Contents



Alseres Pharmaceuticals, Inc.
 
   From Inception(October 16, 1992)Three Months Ended March 31,
    
    
    to2011
    
    
    2010
    
    
    March 31, 2011Revenues
    
    $
    
    
    
    $
    
    
    
    $
    900,000Operating expenses:Research and development
    
    
    25,596
    
    
    
    474,807
    
    
    
    115,973,875General and administrative
    
    
    597,597
    
    
    
    727,154
    
    
    
    67,379,539Purchased in-process research and development
    
    
    
    
    
    
    
    
    
    
    12,146,544Total operating expenses
    
    
    623,193
    
    
    
    1,201,961
    
    
    
    195,499,958Loss from operations
    
    
    (623,193
    )
    
    
    (1,201,961
    )
    
    
    (194,599,958
    )Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    6,277,100Other expense
    
    
    
    
    
    
    (966
    )
    
    
    (1,517,878
    )Interest expense, net
    
    
    (453,751
    )
    
    
    (656,700
    )
    
    
    (13,104,377
    )Investment income
    
    
    333
    
    
    
    673
    
    
    
    7,704,648Net loss
    
    
    (1,076,611
    )
    
    
    (1,858,954
    )
    
    
    (195,240,465
    )Preferred stock beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    (8,062,712
    )Accrual of preferred stock dividends and
modification of warrants held by preferred
stockholders
    
    
    
    
    
    
    
    
    
    
    (1,229,589
    )Net loss attributable to common stockholders
    
    
    (1,076,611
    )
    
    
    (1,858,954
    )
    
    
    (204,532,766
    )Basic and diluted net loss attributable to
common stockholders per share
    
    $
    (0.04
    )
    
    $
    (0.07
    )Weighted average common shares outstanding
    
    
    26,785,645
    
    
    
    25,572,312
  4




---



##### Table of Contents



Alseres Pharmaceuticals, Inc.
 
 
 From Inception(October 16,1992) toThree Months Ended March 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2011Cash flows from operating activities:Net loss
    
    $
    (1,076,611
    )
    
    $
    (1,858,954
    )
    
    $
    (195,240,465
    )Adjustments to reconcile net loss to net cash used for
operating activities:Purchased in-process research and development
    
    
    
    
    
    
    
    
    
    
    12,146,544Write-off of acquired technology
    
    
    
    
    
    
    
    
    
    
    3,500,000Interest expense settled through issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    350,500Net gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (5,277,300
    )Non-cash interest expense
    
    
    
    
    
    
    189,293
    
    
    
    3,966,394Non-cash charges related to options, warrants and common
stock
    
    
    834
    
    
    
    15,015
    
    
    
    11,115,437Amortization of financing costs
    
    
    2,606
    
    
    
    
    
    
    
    20,845Amortization and depreciation
    
    
    13,769
    
    
    
    15,844
    
    
    
    2,863,684Changes in operating assets and liabilities:(Increase) decrease in prepaid expenses and other
current assets
    
    
    (31,180
    )
    
    
    (40,941
    )
    
    
    660,210(Decrease) increase in accounts payable and accrued
expenses
    
    
    (27,735
    )
    
    
    273,187
    
    
    
    2,776,409Increase in accrued interest payable
    
    
    448,645
    
    
    
    465,648
    
    
    
    5,434,126(Decrease) increase in accrued lease
    
    
    (14,982
    )
    
    
    (10,274
    )
    
    
    81,443Net cash used for operating activities
    
    
    (684,654
    )
    
    
    (951,182
    )
    
    
    (157,602,173
    )Cash flows from investing activities:Cash acquired through Merger
    
    
    
    
    
    
    
    
    
    
    1,758,037Purchases of fixed assets
    
    
    
    
    
    
    
    
    
    
    (1,652,114
    )Decrease (increase) in security deposits and other assets
    
    
    
    
    
    
    15,696
    
    
    
    (384,898
    )Decrease (increase) in indemnity fund
    
    
    38
    
    
    
    55
    
    
    
    (115,530
    )Purchases of marketable securities
    
    
    
    
    
    
    
    
    
    
    (132,004,923
    )Sales and maturities of marketable securities
    
    
    
    
    
    
    
    
    
    
    132,004,923Net cash provided by (used for) investing activities
    
    
    38
    
    
    
    15,751
    
    
    
    (394,505
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    
    66,731,339Buyback of common stock
    
    
    
    
    
    
    
    
    
    
    (8,100
    )Proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    39,922,170Preferred stock conversion inducement
    
    
    
    
    
    
    
    
    
    
    (600,564
    )Proceeds from issuance of promissory notes
    
    
    600,000
    
    
    
    800,000
    
    
    
    56,845,000Proceeds from issuance of convertible debentures
    
    
    
    
    
    
    
    
    
    
    9,000,000Principal payments of notes payable
    
    
    
    
    
    
    
    
    
    
    (7,749,667
    )Dividend payments on Series E Cumulative Convertible
Preferred Stock
    
    
    
    
    
    
    
    
    
    
    (516,747
    )Payments of financing costs
    
    
    
    
    
    
    
    
    
    
    (5,612,855
    )Net cash provided by financing activities
    
    
    600,000
    
    
    
    800,000
    
    
    
    158,010,576Net (decrease) increase in cash and cash equivalents
    
    
    (84,616
    )
    
    
    (135,431
    )
    
    
    13,898Cash and cash equivalents, beginning of period
    
    
    98,514
    
    
    
    314,964
    
    
    
    Cash and cash equivalents, end of period
    
    $
    13,898
    
    
    $
    179,533
    
    
    $
    13,898Supplemental cash flow disclosures:Cash paid for interest
    
    $
    
    
    
    $
    
    
    
    $
    628,406
  5




---



##### Table of Contents



Alseres Pharmaceuticals, Inc.
 
   1. Basis of Presentation
      Reclassification
  2. Net Loss Per Share
   3. Reporting Comprehensive Loss
 Comprehensive Income
 6




---



##### Table of Contents



4. Accounting for Stock-Based Compensation
       Three months ended March 31,2011
    
    
    2010Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    3,650,443
    
    
    $
    1.59
    
    
    
    3,695,745
    
    
    $
    1.63Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited and expired
    
    
    (5,000
    )
    
    
    15.63
    
    
    
    (6,500
    )
    
    
    18.13Outstanding at end of period
    
    
    3,645,443
    
    
    $
    1.57
    
    
    
    3,689,245
    
    
    $
    1.60Options exercisable at end of period
    
    
    3,645,443
    
    
    $
    1.57
    
    
    
    3,536,745
    
    
    $
    1.62
  Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted-
    
    
    
    
    
    
    Average
    
    
    Weighted-Remaining
    
    
    Average
    
    
    
    
    
    
    Remaining
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    Contractual
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Life
    
    
    Price$1.15  $1.36
    
    
    2,713,000
    
    
    3.1 years
    
    $
    1.15
    
    
    
    2,713,000
    
    
    3.1 years
    
    $
    1.15$2.00  $3.00
    
    
    639,980
    
    
    4.4 years
    
    
    2.33
    
    
    
    639,980
    
    
    4.4 years
    
    
    2.33$3.10  $4.65
    
    
    255,363
    
    
    5.5 years
    
    
    3.40
    
    
    
    255,363
    
    
    5.5 years
    
    
    3.40$4.99  $6.96
    
    
    28,500
    
    
    2.8 years
    
    
    5.47
    
    
    
    28,500
    
    
    2.8 years
    
    
    5.47$8.95  $13.06
    
    
    8,600
    
    
    0.5 years
    
    
    10.57
    
    
    
    8,600
    
    
    0.5 years
    
    
    10.573,645,443
    
    
    3.5 years
    
    $
    1.57
    
    
    
    3,645,443
    
    
    3.5 years
    
    $
    1.57
  7




---



##### Table of Contents



5. Notes Payable and Debt
 Convertible Notes Payable to Significant Stockholders
    
    
    
    
    
    March 31, 2011
    
    
    December 31, 2010Unsecured convertible promissory note; interest
rate of 5%; due December 31, 2010
    
    
    
    
    
    $
    9,000,000
    
    
    $
    9,000,000Unsecured convertible promissory note; interest rate of
5%; due December 31, 2010
    
    BCF
    
    
    10,000,000
    
    
    
    10,000,000Unsecured convertible promissory note; interest rate of
5%; due December 31, 2010
    
    BCF
    
    
    5,000,000
    
    
    
    5,000,000Unsecured convertible promissory note; interest rate of
5%; due December 31, 2010
    
    
    
    
    
    
    5,000,000
    
    
    
    5,000,000Aggregate carrying value
    
    
    
    
    
    $
    29,000,000
    
    
    $
    29,000,000
    Beneficial Conversion Feature (BCF)
  Promissory Notes
 Demand Notes Payable to Significant Stockholder
    
    March 31, 2011
    
    
    December 31, 2010Unsecured demand note payable; interest rate of 7% to Neurobiologics, Inc. (a
subsidiary of the Company)
    
    $
    1,000,000
    
    
    $
    1,000,000Unsecured demand note payable; interest rate of 7%: issued December 2009
    
    
    350,000
    
    
    
    350,000Unsecured demand notes payable; interest rate of 7%: issued January 2010 - December 2010
    
    
    3,310,000
    
    
    
    3,310,000Unsecured demand notes payable; interest rate of 7%: issued January 2011 - March 2011
    
    
    600,000
    
    
    
    5,260,000
    
    
    
    4,660,000Accrued interest
    
    
    356,905
    
    
    
    270,759Aggregate carrying value
    
    $
    5,616,905
    
    
    $
    4,930,759
  8




---



##### Table of Contents



6. Exit Activities
   Cash payments,net ofDecember 31, 2010
    
    
    sublease receipts
    
    
    March 31, 2011Lease Amendment
    
    $
    96,425
    
    
    $
    14,982
    
    
    $
    81,443Short-term portion of lease accrual
    
    
    65,922
    
    
    
    
    
    
    
    68,923Long-term portion of lease accrual
    
    $
    30,503
    
    
    
    
    
    
    $
    12,520
  7. Commitments and Contingencies
  License Agreements
   8. Income taxes
  9




---



##### Table of Contents



9. Fair Value Measurements
      March 31, 2011
    
    
    
    
    
    
    December 31, 2010Fair Value
    
    
    Input Level
    
    
    Fair Value
    
    
    Input LevelCash and money market funds  current assets
    
    $
    13,898
    
    
    Level 1
    
    $
    98,514
    
    
    Level 1Indemnity fund-restricted money market funds
    
    
    115,530
    
    
    Level 1
    
    
    115,568
    
    
    Level 1$
    129,428
    
    
    
    
    
    
    $
    214,082
  10. New Accounting Pronouncements
  11. Subsequent Events
  
 Item 2   Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
 Description of Company
  
    
    Molecular imaging program focused on the diagnosis of i)
Parkinsonian Syndromes, or PS, including Parkinsons
Disease, or PD, and ii) Dementia with Lewy Bodies, or DLB;
    
    Regenerative therapeutics program primarily focused on
nerve repair in patients who have had significant loss of
CNS function resulting from CNS trauma.
 Development Stage Entities
  10




---



##### Table of Contents



Product Development  Molecular Imaging Program
 Altropane Molecular Imaging Agent
    11




---



##### Table of Contents



Altropane Diagnostic for Parkinsonian Syndromes (PS)
  Need for an Objective Diagnosis
     
    
    Patients who are improperly diagnosed as having PD but
actually do not (false positive) may be administered
medications for PD. These drugs can have damaging effects
on individuals who do not actually have PD.
    
    Patients who are improperly diagnosed as not having PD but
actually do (false negative), may not benefit from
available treatments, thereby suffering further worsening
of symptoms and progression of their disease.
 Market Opportunity
  Altropane Diagnostic for Dementia with Lewy Bodies (DLB)
   Regenerative Therapeutics Program  Nerve Repair
  12




---



##### Table of Contents



Research and Development
  Marketing and Sales
  Critical Accounting Policies and Estimates
  Going Concern Basis of Accounting
  Research Contracts
  Fair Value and Classification of Financial Instruments
    13




---



##### Table of Contents



Lease Accrual
  Stock-Based Compensation
  Results of Operations
 Three Months Ended March 31, 2011 and 2010
       Liquidity and Capital Resources
    14




---



##### Table of Contents



Contractual Obligations and Commitments
  
 Item 3   Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4T   Controls and Procedures
  15




---



##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 1   Legal Proceedings
    
 Item 6   Exhibits
 31.1*
    
    Certification of the Chief Executive Officer pursuant to Section
1350 of Title 18, United States Code, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of the Chief Financial Officer pursuant to Section
1350 of Title 18, United States Code, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith. 16




---



##### Table of Contents



SIGNATURES
  ALSERES PHARMACEUTICALS, INC
(Registrant)DATE: May 13, 2011
    /s/ Peter G. SavasPeter G. SavasChief Executive Officer
(Principal Executive Officer)DATE: May 13, 2011
    /s/ Kenneth L. Rice, Jr.Kenneth L. Rice, Jr.Executive Vice President Finance and
Administration And Chief Financial Officer
(Principal Financial and Accounting Officer) 17