Knobias ClipReport (8-27-2007)

Submitted from Knobias ClipReport

Friday’s session was greeted with positive economic data in the better than expected jump in new home sales. Sales of new homes increased 2.8% in July to a seasonally adjusted annual rate of 870,000 as the inventory of homes for sale dropped for a fourth straight month estimated by the Commerce Department. The Commerce Department also reported that orders for U.S. made durable goods surged in July, jumping 5.9% on higher demand for airplanes, vehicles, computers, machinery, steel and most other kinds of long-lasting manufactured goods. The gain far out paced the expected 1.5% forecast. The culmination caused a triple digit gain on the Dow putting aside subprime fears for the time being.

Some names weren't included in the day’s gains. One name that didn’t see some of the appreciation was Cortex Pharmaceuticals (COR).

The Company’s shares lost some 27.6% on 2,900,000 shares traded. Earlier in the month the Company reported a net loss of $2,850,000, or $0.07 per share for the quarter ended June 30, 2007 compared with a net loss of $4,398,000, or $0.13 per share for the corresponding prior year period. Non cash stock-based compensation charges for the quarter ended June 30, 2007 and 2006 were approximately $416,000 and $582,000, respectively.

Results for the quarter reflected decreased operating expenses, mostly resulting from reduced contract research expenses for the AMPAKINE(R) CX717 due to the timing of additional toxicology studies performed in prior periods.

The Company also announced that during the quarter, they intended to file an Investigational New Drug Application for CX717 with the Division of Psychiatry Products of the FDA to allow Cortex to initiate a Phase IIb study with the compound as a treatment for Attention Deficit Hyperactivity Disorder. Prior to the FDA clinical hold on the compound, the Company announced positive statistical and clinical results with CX717 in a Phase IIa trial in adults with that indication.

Regarding their cash balances, the Company noted that they anticipated having enough cash to support their funding requirements into 2008. The expectation seemed to be a little off.

On Friday, the Company announced that it had obtained commitments from several institutional investors to purchase shares of its common stock and warrants to purchase common stock in a registered direct offering for an aggregate purchase price of approximately $14.2 million. Under the terms of the transaction, Cortex expected to sell an aggregate of approximately 7.075 million shares of its common stock and warrants to purchase approximately 2.83 million shares of common stock. The warrants have an exercise price of $2.64 per share. Proceeds were noted to be used to accelerate development of AMPAKINE technology, licensing activities, working capital, capital expenditures and other general corporate purposes.

The action caused shares to tumble to their closing price of $1.90 on extremely high volume as many in the market felt a distrust towards management following their comments in the earnings release and subsequent actions regarding their cash position. With any continuation of Friday’s sell off, next week could see shares test lows in the $1.05 range not seen since the early months of this year.


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