UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2010
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________________ to ________________.
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Commission file number 000-27239
TAPIMMUNE INC.
(Exact name of registrant as specified in its charter)
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Nevada
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88-0277072
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(State or other jurisdiction of incorporation of organization)
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(I.R.S. Employer Identification No.)
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2815 Eastlake Avenue East, Suite 300
Seattle, Washington
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98102
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(Address of Principal Executive Offices)
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(Zip Code)
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(206) 336-5560
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer (do not check if a smaller reporting company) [ ] Smaller reporting company [X]
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at which the registrant’s common equity was last sold, as of June 30, 2010 (the last day of the registrant’s most recently completed second fiscal quarter) was approximately $3,815,464.
The registrant had 45,452,099 shares of common stock outstanding as of April 15, 2011.
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FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties outlined in this annual report under “Risk Factors”. These factors or any of them may cause our actual results to differ materially from any forward-looking statement made in this annual report. Forward-looking statements in this annual report include, among others, statements regarding:
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our capital needs;
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business plans; and
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expectations.
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While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Some of the risks and assumptions include:
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our need for additional financing;
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our limited operating history;
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our history of operating losses;
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our lack of insurance coverage;
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the competitive environment in which we operate;
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changes in governmental regulation and administrative practices;
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our dependence on key personnel;
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conflicts of interest of our directors and officers;
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our ability to fully implement our business plan;
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our ability to effectively manage our growth; and
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other regulatory, legislative and judicial developments.
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We advise the reader that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Important factors that you should also consider, include, but are not limited to, the factors discussed under “Risk Factors” in this annual report.
The forward-looking statements in this annual report are made as of the date of this annual report and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.
AVAILABLE INFORMATION
TapImmune Inc. files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy documents referred to in this Annual Report on Form 10-K that have been filed with the SEC at the SEC’s Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the SEC’s website at http://www.sec.gov.
REFERENCES
As used in this annual report: (i) the terms “we”, “us”, “our”, “TapImmune” and the “Company” mean TapImmune Inc.; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the United States Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the United States Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.
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TABLE OF CONTENTS
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Page
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ITEM 1.
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BUSINESS
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1
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ITEM 1A.
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RISK FACTORS
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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8 |
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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(REMOVED AND RESERVED)
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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ITEM 6.
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SELECTED FINANCIAL DATA
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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ITEM 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 8.
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FINANCIAL STATEMENTS
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ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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ITEM 9A.
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CONTROLS AND PROCEDURES
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ITEM 9B
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OTHER INFORMATION
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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ITEM 11.
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EXECUTIVE COMPENSATION
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
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ITEM 14.
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PRINCIPAL ACCOUNTING FEES AND SERVICES
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ITEM 15.
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EXHIBITS
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PART I
ITEM 1.BUSINESS
Company Overview
We are a biotechnology company whose strategic vision is to develop and market products specializing in the application of discoveries in cellular and molecular immunology and cancer biology to the development of proprietary therapeutics aimed at the treatment and eradication of cancer and prevention of infectious diseases. Our technologies are based on an understanding of the function of a protein pump known as “TAP”, which is located within cells and which is essential to the processing of foreign (microbial) or autologous antigens, and subsequent presentation to the immune system for eradication of the cancer or infected cell. We currently have none of our product candidates on the market and are focusing on the development and testing of our product candidates.
The current standard therapies for cancer treatment include surgery, radiation therapy and chemotherapy. However, we believe that these treatments are not precise in targeting only cancerous cells and often fail to remove or destroy all of the cancer. The remaining cancer cells may then grow into new tumors, which can be resistant to further chemotherapy or radiation, which may result in death. In the United States, deaths from cancer are second only to cardiovascular deaths.
Company History
We currently trade on the OTC Bulletin Board under the symbol “TPIV”.
We were incorporated under the laws of the State of Nevada in 1991 under the name “Ward’s Futura Automotive Ltd”. We changed our name a number of times since 1991 and, in July 2002, we completed the acquisition of GeneMax Pharmaceuticals Inc. (“GeneMax Pharmaceuticals”), a Delaware corporation, in a reverse merger and changed our name to “GeneMax Corp”. As a result of this transaction the former stockholders of GeneMax Pharmaceuticals then owned 75% of the total issued and outstanding shares of GeneMax Corp. GeneMax Pharmaceuticals is now a wholly owned subsidiary of TapImmune, and GeneMax Pharmaceuticals Canada Inc. (“GPCanada”), a British Columbia corporation, is a wholly owned subsidiary of GeneMax Pharmaceuticals. On June 28, 2007, we approved a name change to TapImmune Inc.
The Immunotherapy Industry for Cancer
Management believes that there is a critical need for more effective cancer therapies. Management further believes that the global market for effective cancer treatments is large, and that immunotherapies representing potential treatments for metastatic cancer are an unmet need in the area of oncology.
The human immune system appears to have the potential to clear cancers from the body, based on clinical observations that some tumors spontaneously regress when the immune system is activated. Most cancers are not very “immunogenic”, however, meaning that the cancers are not able to induce an immune response because they no longer express sufficient levels of key proteins on their cell surface, known as Major Histocompatability Class I or MHC Class I proteins. In healthy cells, these proteins provide the information to the immune system that defines whether the cell is healthy or, in the case of cancer or viral infection, abnormal. If the MHC Class I proteins signal that the cells are abnormal, then the immune system’s T-cells are activated to attack and kill the infected or malignant cell.
In many solid cancer tumors, the TAP protein system does not function and, therefore, the immune system is not stimulated to attack the cancer. Management believes that although a number of cancer therapies have been developed that stimulate the immune system, these approaches have often proven ineffective because the cancers remain invisible to the immune system due to this apparent lack of or low expression of the TAP protein.
By restoring TAP expression to TAP-deficient cells, the MHC Class I protein peptide complexes could signal the immune system to attack the cancer. The strategic vision of TapImmune is to be a product-driven biotechnology company, focusing primarily on use of its patented TAP technology to restore the TAP function within cancerous cells, thus making them immunogenic, or more “visible” to cancer fighting immune cells. Management believes that this cancer vaccine strategy will provide the most viable therapeutic approach that addresses this problem of “non-immunogenicity” of cancer. Management believes that this therapy may have a strong competitive advantage over other cancer therapies, since restoring the TAP protein will direct the immune system to specifically target the cancerous cells without damaging healthy tissue.
As a key part of its overall strategy, and with adequate funding, the company is pursuing the development of prophylactic vaccines against infectious microbes and will also do so in partnership with other vaccine developers. The company intends to develop the TAP technology for use as a vaccine that restores normal immune recognition for the treatment of cancer and supplements immune recognition for the development of prophylactic vaccines.
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TapImmune’s Target Market and Strategy
With the required funding in place, we will support and expand on our key infectious disease partnerships, including our collaboration efforts with the Mayo Clinic and Aeras TB Foundation. We will also continue product development in oncology both alone and with corporate partners and collaborators including the Mayo Clinic for HER2/neu positive Breast Cancer. Cancer encompasses a large number of diseases that affect many different parts of the human body. The diversity of cancer types and their overall prevalence create a large need for new and improved treatments. Management believes that there is a significant market opportunity for a cancer treatment that utilizes the highly specific defense mechanisms of the immune system to attack cancers. Research & Markets (Global Vaccine Market Outlook 2007 – 2010) estimated that the market for cancer vaccines could reach approximately $6 billion in 2010. IMS has estimated that the cancer market will mushroom from $48 billion to $75 billion in 2012 with biopharma companies anticipating that cancer vaccines will grab a large slice of the market (Fierch Biotech, March 23, 2010). The goal of TapImmune management is to have the FDA approve our cancer vaccines within the next few years so that we can secure a portion of this market.
Management also believes that our prophylactic vaccine adjuvant will improve the creation of new vaccines and enhance the efficacy of current vaccines in the treatment of infectious disease. It will be a key business development strategy to pursue additional partnerships and joint research and development ventures with vaccine manufacturers and pharmaceutical companies to bring new and improved vaccines to market. This strategy includes the development of vaccines for pandemic diseases and for bioterrorism threats. The market for prophylactic vaccines is around $6 Billion and is expected to reach $11 billion in 2010 (Frost & Sullivan). Management believes that our adjuvant will increase the potency of many of the currently available vaccines and lead to the creation of better, more effective new vaccines, thereby allowing us to participate in this large market through novel new products and in combination with existing vaccines.
Research and Development Efforts
We direct our research and development efforts towards the development of immunotherapeutic and prophylactic vaccine products for the treatment of cancer and protection against pathogenic microbes respectively, using our proprietary TAP technology and synergistic technologies from the Mayo Clinic for which TapImmune has Exclusive Options to License. We have focused our efforts initially on the development of a therapeutic vaccine for applications in cancer treatment while demonstrating the breadth of the TAP technology for the development of prophylactic vaccines and its ability to complement currently approved and emerging products in both cancer therapeutics and prophylactic vaccines against microbes. This approach allows us to pursue our own internal product development while positioning us to enter into multiple partnerships and licensing agreements. Our first generation TAP vaccines that have been used in animal preclinical studies are based on insertion of TAP genes into a proprietary modified adenovirus vector.. We also plan to develop gene expression vectors that can deliver plasmid DNA encoding TAP. We have an opportunity to take advantage of our potential partners’ capabilities while reducing our overhead costs. Our relationship with the University of British Columbia (“UBC”) allowed us to conduct contract research and development by employing highly skilled scientists at UBC. The research and development team performed the basic research on the biological function of TAP and related licensed technology as well as preclinical animal studies in cancer and infectious diseases. Moving into the development phase, we plan to work closely with our collaborators and use their extensive facilities, infrastructure and resources to initiate clinical work. We have initiated discussions with a qualified CRO (contract research organization), with specialist expertise in viral vectors, for the production of clinical grade vaccine products to be used in preclinical and clinical studies that require production facilities with Good Manufacturing Practices (“GMP”) and Good Laboratory Practices (“GLP”) certification. We will also plan to rely on partnership with Aeras to demonstrate the use of TAP in a new TB vaccine candidate. Second generation vaccines using TAP-encoding DNA plasmids will also be developed.
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Products and Technology in Development
TAP Cancer Vaccine
Research on our TAP Cancer Vaccine was conducted at the UBC Biomedical Research Centre under an agreement we refer to in this Annual Report as our “Collaborative Research Agreement”. This therapeutic cancer vaccine candidate, to be tested in preclinical toxicology studies, will, if successfully developed, include the patented use of the TAP-1 gene to restore the TAP protein, with the objective being to develop the TAP technology as a therapeutic cancer vaccine that will restore the normal immune recognition of cancer cells. The TAP Cancer Vaccine will be targeted at those cancers that are deficient in the TAP protein, which include breast cancer, prostate cancer, lung cancer, liver cancer, melanoma, renal cancer and colorectal cancer.
Management believes that the TAP Cancer Vaccine will deliver the genetic information required for the production of the TAP protein in the target cancer cell. This will trigger the cancer cell’s ability to effectively identify itself to the body’s immune system by transporting the cancer antigen peptides to the cell surface using the individual’s specific MHC Class I proteins. As a result, we believe that the immune response could be targeted to the entire repertoire of cancer antigen peptides produced by the cancer cell, rather than just to a single cancer antigen, as delivered by current cancer vaccines. The TAP Cancer Vaccine could allow the immune response to respond to the cancer even if the TAP protein and genetic information were only delivered to a small portion of the cancer cells. In addition, the TAP Cancer Vaccine would generate an immune response to any TAP-deficient cancer, regardless of the patient’s individual genetic variability either in the MHC Class I proteins or in the cancer-specific proteins and resultant peptides.
In general, a “cancer vaccine” is a therapy whose goal is to stimulate the immune system to attack tumors. Management believes that most current cancer vaccines contain either cancer-specific proteins that directly activate the immune system or contain genetic information, such as DNA, that encodes these cancer-specific proteins. Management believes that there are a number of key conditions that must be met before a cancer vaccine can be effective in generating a therapeutic immune response: (i) the cancer antigen peptide delivered by the vaccine has to be recognized by the immune system as “abnormal” or “foreign” in order to generate a strong and specific T-cell response; (ii) the same cancer antigen peptide has to be displayed on the surface of the cancer cells in association with the MHC Class I proteins; and (iii) these cancer antigen peptides then have to be sufficiently different from normal proteins in order to generate a strong anti-tumor response.
If these conditions are all met, then management believes that such cancer vaccines should generate a sufficiently strong immune response to kill the cancer cells. However, the identification of suitable cancer-specific antigen proteins to use in these therapeutic vaccines has proven extremely complex. In addition, the MHC Class I proteins are highly variable, with over 100 different types in humans and, as a result, any one-cancer antigen peptide will not produce an immune response for all individuals. Cancers are “genetically unstable” and their proteins are highly variable, so that the selected cancer antigen protein may result in the immune system only attacking a small subset of the cancerous cells.
Laboratory Testing of the TAP Cancer Vaccine
Management believes that the key milestone of efficacy in animal models of cancer has been attained and that other scientific research teams have validated the experimental data from these animal studies. The proof of principle for the TAP technology as a cancer vaccine was established in research conducted during the last ten years at UBC. The initial studies were conducted using a small-cell lung cancer cell line that was derived from an aggressive, metastatic cancer. These cells have multiple defects in the “antigen presentation pathway” in that they are not detected by the immune system. When the TAP protein was introduced into these cells, antigen presentation was restored. In addition, a series of animal studies have demonstrated the ability of TAP to restore an immune response. This study was published in Nature Biotechnology (Vol. 18, pp. 515-520, May 2000). Management believes that the TAP technology has been further validated in metastatic melanoma, where animal studies similar to the small-cell lung cancer studies described above were performed and similar results were achieved.
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Pre-Clinical Testing
We have completed small animal pre-clinical animal testing of our TAP Cancer Vaccine to the extent that is required as a prerequisite for further preclinical toxicology analysis and Investigational New Drug (or “IND”) application to the FDA. The pre-clinical testing of the TAP Cancer Vaccine to date included the evaluation of several strains of vaccinia and adenovirus vectors to assess their respective ability to deliver the correct genetic information allowing expression of the TAP protein in tumors, the selection and licensing of the vector from Crucell and the identification and entering into an agreement, that we refer to in this Annual Report as our “Production Services Agreement”, with a CRO, a GMP manufacturer, for subsequent production of the TAP Cancer Vaccine. We have to complete the performance of toxicology studies using the TAP Cancer Vaccine on at least two animal species to confirm its non-toxicity. In addition, we must complete initial vaccine production, and develop internal and external clinical trials, support personnel and infrastructure before commencing clinical trials.
Once the formal pre-clinical testing is completed, we intend to compile and summarize the data and submit it to the United States Federal Drug Administration (or “FDA”) and/or the Canadian Health Canada (or “HC”), and/or other national regulatory agencies, in the form of an investigational new drug application. We anticipate that these applications would include data on vaccine production, animal studies and toxicology studies, as well as proposed protocols for the Phase I human clinical trials, described below.
Phase I Human Clinical Trials
Management believes that, subject to the completion of remaining pre-clinical work in 2011and financing, estimated at approximately $5,000,000, the Phase I human clinical trials could commence at the start of 2012. The Phase I human clinical trials will be designed to provide data on the safety of the TAP Cancer Vaccine when used alone or as a component of a cancer vaccine in humans. If the latter strategy is employed the clinical trial design and specific cancer indication will be dependent upon the collaboration.
Clinical trials to support new drug applications are typically conducted in three sequential phases, although the phases may overlap. During Phase I there is an initial introduction of the therapeutic candidate into healthy human subjects or patients. The drug is tested to assess metabolism, pharmacokinetics and pharmacological actions and safety, including side effects associated with increasing doses. Phase II usually involves studies in a limited patient population to assess the clinical activity of the drug in specific targeted indications, assess dosage tolerance and optimal dosage and continue to identify possible adverse effects and safety risks. If the therapeutic candidate is found to be potentially effective and to have an acceptable safety profile in Phase II evaluations, Phase III trials are undertaken to further demonstrate clinical efficacy and to further test for safety within an expanded patient population at geographically dispersed clinical trial sites.
Infectious Disease Application for “TAP” Adjuvant
TapImmune plans to develop or license out our technology for the creation of enhanced viral vaccines, such as for smallpox and others, based on our findings that TAP can augment immune responses. We have presented data showing that increasing TAP expression in TAP-competent antigen presenting cells (APCs) and/or virus infected cells increases the antigenic peptide associated with MHC class I expression on the cell surface, and leads to increased specific T cell-mediated immune responses. We believe this technology can add great value to the creation of new vaccines and enhance those that already exist. Our collaboration with Aeras TB Foundation is evidence of this and we will continue to pursue additional partnerships and collaborations as a key strategy to expand our R&D program to optimize resources and to reduce costs and development Times.
Strategic Relationships
University of British Columbia Agreement
We had conducted our research and development at the University of British Columbia (“UBC”) under a Collaborative Research Agreement (“CRA”), however, as a consequence of our Option and Settlement Agreement with UBC, we presently plan to contract out our research and development and continue to contract out clinical grade production of our TAP based vaccines. In addition, we have an option on any improvements or related TAP technologies coming out of UBC.
Crucell Holland B.V. Research License and Option Agreement
Effective August 7, 2003, we entered into a five-year research license and option agreement with Crucell Holland B.V. (“Crucell”), whereby Crucell granted us a non-exclusive worldwide license for the research use of its packaging cell (PerC6) technology. We were required to make certain payments over the five-year term totaling Euro €450,000 (approximately $510,100).
The license was dormant with an outstanding balance owing of 170,000 Euro ($248,938) that was included in research obligations. Management has completed a settlement for the remaining balance including a €17,000 cash payment and the issuance of 265,000 shares of the Company’s restricted common stock.
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Effective August 7, 2008, we negotiated an amended license agreement for the use of Crucell’s adenovirus technology. We are required to make annual license payments on the anniversary of the effective date for the three year term equal to €75,000 per annum. As at December 31, 2010, we have accrued $141,761 (€106,250) under the amended agreement.
National Institute of Allergy and Infectious Diseases
We signed a License Agreement with the National Institute of Health (USA) for the use of the Modified Vaccinia Ankora (MVA) virus for the development of vaccines. We will continue to license this technology for the development of prophylactic vaccines against infectious diseases. Under the terms of this agreement we are required to pay a royalty of $2,500 per year. This license is expected to be renegotiated pending adequate funding.
Mayo Foundation for Medical Education and Research
On May 26, 2010 we signed a Technology Option Agreement with the Mayo Foundation for Medical Education and Research, Rochester, MN, for the evaluation of HER2/neu peptide epitopes as antigens for a breast cancer vaccine. The agreement grants TapImmune and exclusive worldwide option to become the exclusive licensee of the technology.
On July 24, 2010, we signed a Research and Technology License Option Agreement with the Mayo Foundation for Medical Education and Research, Rochester, MN, to evaluate novel smallpox peptide antigens. The Agreement grants TapImmune an exclusive worldwide option to become the exclusive licensee of the smallpox vaccine technology after research studies have been completed under the terms of the agreement.
Other Technology
On February 16, 2004, we added to our technology portfolio by expanding the License Agreement (now assigned under the purchase agreement) with UBC to include a technological method that identifies agonists or antagonists antigen presentation to the immune system by normal and cancerous cells. Management believes that this technology can be used to screen and select new drugs that regulate immune responses.
Intellectual Property, Patents and Trademarks
Patents and other proprietary rights are vital to our business operations. We protect our technology through various United States and foreign patent filings, and maintain trade secrets that we own. Our policy is to seek appropriate patent protection both in the United States and abroad for its proprietary technologies and products. We require each of our employees, consultants and advisors to execute a confidentiality agreement upon the commencement of any employment, consulting or advisory relationship with us. Each agreement provides that all confidential information developed or made known to the individual during the course of the relationship will be kept confidential and not be disclosed to third parties except in specified circumstances. In the case of employees, the agreements provide that all inventions conceived of by an employee shall be our exclusive property.
Patent applications in the United States are maintained in secrecy until patents are issued. There can be no assurance that our patents, and any patents that may be issued to us in the future, will afford protection against competitors with similar technology. In addition, no assurances can be given that the patents issued to us will not be infringed upon or designed around by others or that others will not obtain patents that we would need to license or design around. If the courts uphold existing or future patents containing broad claims over technology used by us, the holders of such patents could require us to obtain licenses to use such technology.
Pursuant to the acquisition agreement with UBC, we acquired the portfolio of intellectual property as follows:
Method of Enhancing Expression of MHC Class I Molecules Bearing Endogenous Peptides
On March 26, 2002, the United States Patent and Trademark Office issued US Patent No. 6,361,770 to UBC for the use of TAP-1 as an immunotherapy against all cancers. The patent is titled “Method of Enhancing Expression of MHC Class I Molecules Bearing Endogenous Peptides” and provides comprehensive protection and coverage to both in vivo and ex vivo applications of TAP-1 as a therapeutic against all cancers with a variety of delivery mechanisms. The inventors were Dr. Jefferies, Dr. Reinhard Gabathuler, Dr. Gerassinmoes Kolaitis and Dr. Gregor S.D. Reid, who collectively assigned the patent to UBC under an assignment agreement. The patent expires March 23, 2014. We have pending applications for patent protection for this patent in Europe and in Japan.
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Method of Enhancing an Immune Response
U.S. patent No. 7,378,087, issued May 27 2008. The patent claims relate to methods for enhancing the immune response to tumor cells by introducing the TAP molecule into the infected cells. Patent applications are pending on other aspects of the company’s technology. The inventors were Jefferies, Wilfred A.; Zhang, Qian-Jin; Chen, Susan Shu-Ping; Alimonti, Judie B., who collectively assigned the patent to UBC under an assignment agreement.
Method of Identifying MHC Class I Restricted Antigens Endogenously Processed by a Secretory Pathway
On August 11, 1998, the U.S. Patent and Trademark Office issued US Patent No. 5,792,604 to UBC, being a patent for the use of bioengineered cell lines to measure the output of the MHC Class I restricted antigen presentation pathway as a way to screen for immunomodulating drugs. The patent is titled “Method of Identifying MHC Class I Restricted Antigens Endogenously Processed by a Secretory Pathway.” This patent covers the assay which can identify compounds capable of modulating the immune system. The inventors were Dr. Jefferies, Dr. Gabathuler, Dr. Kolaitis and Dr. Reid, who collectively assigned the patent to UBC under an assignment agreement. The patent expires on March 12, 2016. We have been granted patent protection for this patent in Finland, France, Germany, Italy, Sweden Switzerland and the United Kingdom, and have applied for patent protection in Canada and Japan.
On August 8th 2011 the U.S. Patent and Trademark Office (USPTO) has issued a Notice of Allowance for U.S. patent application number 20100303894 entitled “POXVIRIDAE TREATMENT”. U.S. Patent Application Serial No. 12/474,331 Title: POX VIRIDAE TREATMENT Inventor: Jefferies et al.
This patent claims a vaccine composition containing TAP-1 and/or TAP-2 to augment the antigen processing capability of infected cells and hence their immunogenicity. The composition may be used alone or as an adjuvant with a pox antigen-based vaccine, especially in the treatment or prophylaxis of viral infections such as smallpox.
TAP Vaccines and other filings
Patent applications have been filed by TapImmune and UBC in respect of our technologies and those currently under assignment. In December 2006, January, November, and December 2007 we made additional filings as continuations or new filings with regard to the same technologies as well as their applications in infectious diseases. We intend to continue to work with UBC to file additional patent applications with respect to any novel aspects of our technology to further protect our intellectual property portfolio. As disclosed in previous filings, additional patents have been acquired under the execution of the option agreement. An invention that describes the use of bio-acceptable substances to promote the transcription of the TAP-1 gene in TAP-1 expression-deficient cells was filed in July 2009. The patent is entitled “HAT acetylation promoters and uses of compositions thereof in promoting immunogenicity”.
Competition
The oncology industry is characterized by rapidly evolving technology and intense competition. Many companies of all sizes, including a number of large pharmaceutical companies as well as several specialized biotechnology companies, are developing various immunotherapies and drugs to treat cancer. There may be products on the market that will compete directly with the products that we are seeking to develop. In addition, colleges, universities, governmental agencies and other public and private research institutions will continue to conduct research and are becoming more active in seeking patent protection and licensing arrangements to collect license fees and royalties in exchange for license rights to technologies that they have developed, some of which may directly compete with our technologies and products. These companies and institutions may also compete with us in recruiting qualified scientific personnel. Many of our potential competitors have substantially greater financial, research and development, human and other resources than us. Furthermore, large pharmaceutical companies may have significantly more experience than we do in pre-clinical testing, human clinical trials and regulatory approval procedures. Such competitors may develop safer and more effective products, obtain patent protection or intellectual property rights that limit our ability to commercialize products, or commercialize products earlier than we do.
Management expects technology developments in the oncology industry to continue to occur at a rapid pace. Commercial developments by any competitors may render some or all of our potential products obsolete or non-competitive, which could materially harm the company’s business and financial condition.
Management believes that the following companies, which are developing various types of similar immunotherapies and therapeutic cancer vaccines to treat cancer, could be our major competitors: CellGenSys Inc., Dendreon Corp., Genzyme Molecular Oncology, Immune Design, Oncothyreon, Celldex, BN Immunotherapeutics, Apthera and Transgene S.A.
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Government Regulation
United States
The design, research, development, testing, manufacturing, labeling, promotion, marketing, advertising and distribution of drug products are extensively regulated by the FDA in the United States and similar regulatory bodies in other countries. The regulatory process is similar for a new drug application, or NDA. The steps ordinarily required before a new drug may be marketed in the United States, which are similar to steps required in most other countries, include: (i) pre-clinical laboratory tests, pre-clinical studies in animals, formulation studies and the submission to the FDA of an initial NDA; (ii) adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication; (iii) the submission of the NDA to the FDA; and (iv) review by an FDA advisory committee and approval by the FDA.
Pre-clinical tests include laboratory evaluation of product chemistry, preparation of consistent test batches of product to what is known as GLP, toxicology studies, animal pre-clinical efficacy studies and manufacturing pursuant to what is known as GMP. The results of pre-clinical testing are submitted to the FDA as part of an initial NDA. After the filing of each initial NDA, and assuming all pre-clinical results have been approved, a thirty-day waiting period is required prior to the commencement of clinical testing in humans. At any time during this thirty-day period or at any time thereafter, the FDA may halt proposed or ongoing clinical trials until the FDA authorizes trials under specified terms. The initial NDA process may be extremely costly and substantially delay development of products. Moreover, positive results of pre-clinical tests will not necessarily indicate positive results in subsequent clinical trials.
After successful completion of the required clinical trials, a NDA is generally submitted. The NDA is usually reviewed by an outside committee consisting of physicians, scientists, and at least one consumer representative. The advisory committee reviews, evaluates and recommends whether the application should be approved, but the FDA is not bound by the recommendation of an advisory committee. The FDA may request additional information before accepting a NDA for filing, in which case the application must be resubmitted with the additional information. Once the submission has been accepted for filing, the FDA or the advisory committee reviews the application and responds to the applicant. The review process is often extended by FDA requests for additional information or clarification. The FDA cites 24 months as the median time for NDA review.
If the FDA evaluations of the NDA and the manufacturing facilities are favorable, the FDA may issue an approval letter. An approval letter will usually contain a number of conditions that must be met in order to secure final approval of the NDA and authorization of commercial marketing of the drug for certain indications. The FDA may also refuse to approve the NDA or issue a not approval letter, outlining the deficiencies in the submission and often requiring either additional testing or information or withdrawal of the submission.
The manufacturers of approved products and their manufacturing facilities are subject to continual review and periodic inspections. We intend to enter into a contract with SAFC Pharma for commercial scale manufacturing of the TAP Cancer Vaccine, therefore our ability to control compliance with FDA manufacturing requirements will be limited.
Approved drugs are subject to ongoing compliance requirements and identification of certain side effects after any of the drug products are on the market. This could result in issuance of warning letters, subsequent withdrawal of approval, reformulation of the drug product, and additional pre-clinical studies or clinical trials.
Canada
In Canada, the Therapeutic Products Directorate and the Biologics and Genetic Therapies Directorate of HC ensure that clinical trials are properly designed and undertaken and that subjects are not exposed to undue risk. Regulations define specific Investigational New Drug Submission (or IND) application requirements, which must be complied with before a new drug can be distributed for trial purposes. The Directorates currently review the safety, efficacy and quality data submitted by the sponsor and approve the distribution of the drug to the investigator. The sponsor of the trial is required to maintain accurate records, report adverse drug reactions, and ensure that the investigator adheres to the approved protocol. Trials in humans should be conducted according to generally accepted principles of good clinical practice. Management believes that these standards provide assurance that the data and reported results are credible and accurate, and that the rights, integrity, and privacy of clinical trial subjects are protected.
7
Sponsors wishing to conduct clinical trials in Phases I to III of development must apply under a 30-day default system. Applications must contain the information described in the regulations, including: a clinical trial attestation; a protocol; statements to be contained in each informed consent form, that set out the risks posed to the health of clinical trial subjects as a result of their participation in the clinical trial; an investigator’s brochure; applicable information on excipients (delivery vehicles); and chemistry and manufacturing information.
The sponsor can proceed with the clinical trial if the Directorates have not objected to the sale or importation of the drug within 30 days after the date of receipt of the clinical trial application and Research Ethics Board approval for the conduct of the trial at the site has been obtained. Additional information is available on Health Canada’s website - www.hc-sc.gc.ca.
Other Jurisdictions
Outside the United States and Canada, the company’s ability to market drug products is contingent upon receiving marketing authorization from the appropriate regulatory authorities. Management believes that the foreign regulatory approval process includes all of the complexities associated with FDA approval described above. The requirements governing the conduct of clinical trials and marketing authorization vary widely from country to country. At present, foreign marketing authorizations are applied for at a national level, although within the European Union procedures are available to companies wishing to market a product in more than one member country.
Product Liability and Insurance
Once we are able to commence the sale of our products into the market, we will face the risk of product liability claims. Because we are not yet selling our products, we have not experienced any product liability claims to date and we do not yet maintain product liability insurance. Management intends to maintain product liability insurance consistent with industry standards upon commencement of the marketing and distribution of the TAP Cancer Vaccine. There can be no assurance that product liability claims will not exceed such insurance coverage limits, which could have a materially adverse effect on our business, financial condition or results of operations, or that such insurance will continue to be available on commercially reasonable terms, if at all.
Employees
Dr. Glynn Wilson is our Chief Executive Officer and Principal Executive Officer, Mr. Denis Corin is our President, and Acting Chief Financial Officer and Acting Principal Accounting Officer. These individuals are primarily responsible for all our day-to-day operations. Other services are provided by outsourcing and consultant service agreements. As of December 31, 2010, we did not have any payroll or regular employees.
ITEM 1A.RISK FACTORS
We are not required to provide the information required by this item because we are a smaller reporting company.
ITEM 1B.UNRESOLVED STAFF COMMENTS
None.
ITEM 2.PROPERTIES
We do not own any real estate or other properties. Our registered office is located at 2815 Eastlake Ave East, Seattle, WA 98012. We rent office space at this address and have a yearly lease renewable on July 5, 2011.
ITEM 3.LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any government authority or any other party involving the Company. As of the date of this Annual Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceeding. Management is not aware of any other legal proceedings pending or threatened against the Company.
ITEM 4.(REMOVED AND RESERVED)
Not Applicable.
8
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is traded on the Over the Counter Bulletin Board (“OTCBB”) under the symbol “TPIV.OB” and on the Frankfurt and Berlin Stock Exchanges under the symbol “GX1A.” The listing on the Berlin Stock Exchange was done without the company’s knowledge and consent.
The market for our common stock is limited, volatile and sporadic. The following table sets forth, for the periods indicated, the high and low bid prices of our common stock as reported on the OTCBB. The following quotations reflect inter-dealer prices, without retail mark-up, markdown, or commissions, and may not reflect actual transactions.
|
High Bid
|
Low Bid
|
|||||||
|
Fiscal Year 2011
|
||||||||
|
March 31, 2011
|
$ | 0.30 | $ | 0.165 | ||||
|
Fiscal Year 2010
|
||||||||
|
December 31, 2010
|
$ | 0.19 | $ | 0.13 | ||||
|
September 30, 2010
|
$ | 0.21 | $ | 0.11 | ||||
|
June 30, 2010
|
$ | 0.29 | $ | 0.21 | ||||
|
March 31, 2010
|
$ | 0.70 | $ | 0.23 | ||||
|
Fiscal Year 2009
|
||||||||
|
December 31, 2009
|
$ | 1.56 | $ | 0.42 | ||||
|
September 30, 2009
|
$ | 2.60 | $ | 0.83 | ||||
|
June 30, 2009
|
$ | 0.80 | $ | 0.11 | ||||
|
March 31, 2009
|
$ | 2.00 | $ | 0.20 | ||||
The last reported sales price for our shares on the OTCBB as of April 11, 2011, was $0.34 per share. As of April 11, 2011, we had 428 shareholders of record.
On June 28, 2007, we completed a reverse stock split thereby issuing 1 new share of common stock in exchange for each 2.5 outstanding shares of our common stock. Accordingly, we decreased our authorized shares of common stock from 200,000,000 common shares to 80,000,000 common shares. On January 22, 2009, in a special meeting of shareholders we increased our authorized shares of common stock from 80,000,000 to 500,000,000. Effective July 10, 2009, we executed a further 1 for 10 reverse stock split reducing the authorized shares of common stock from 50,000,000 common shares with a $0.001 par value.
Effective February 21, 2010, we amended our Articles of Incorporation to increase our authorized share capital from 55 million authorized shares, consisting of 50 million shares of common stock and 5 million shares of preferred stock, to 155,000,000 million authorized shares, consisting of 150,000,000 million shares of common stock and 5 million shares of preferred stock.
Dividend Policy
No dividends have been declared or paid on our common stock. We have incurred recurring losses and do not currently intend to pay any cash dividends in the foreseeable future.
9
Securities Authorized For Issuance under Compensation Plans
The following table sets forth information as of December 31, 2010:
Equity Compensation Plan Information
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted average exercise price of
outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
|
|
(a) Equity compensation plans approved by security holders
|
Nil
|
Nil
|
Nil
|
|
(b) Equity compensation plans not approved by security holders
|
3,272,000(1)
|
$0.92
|
6,728,000
|
|
3,272,000(1)
|
$0.92
|
6,728,000
|
(1) The plan under which these shares were issued was approved by the Board of Directors and the shareholders in 2009 but did not come into effect until February 22, 2010.
Stock Incentive Plan
On October 14, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan”). The 2009 Plan allows for the issuance of up to 10,000,000 common shares. Options granted under the Plan shall be at prices and for terms as determined by our Board of Directors, and may have vesting requirements as determined by our Board of Directors.
The foregoing summary of the 2009 Stock Incentive Plan is not complete and is qualified in its entirety by reference to the 2009 Stock Incentive Plan, a copy of which has been filed with the SEC.
As of the date of this annual report, there are an aggregate of 4,258,000 stock options granted and outstanding.
Warrants
As of the date of this annual report, there are an aggregate of 24,868,300 common stock purchase warrants issued and outstanding.
Recent Sales of Unregistered Securities
On Feb 21, 2010, the company entered into a one year consulting agreement for business consulting services for 240,000 restricted common shares and a commitment to issue an additional 80,000 shares per month from the 4th through the 12th month.
On Feb 21, 2010, the company entered into a one year consulting agreement for business consulting services for 240,000 restricted common shares and a commitment to issue an additional 80,000 shares per month from the 4th through the 12th month.
10
On Jan 6, 2010 the Company entered into a one year consulting agreement for 500,000 restricted shares of the Company’s common stock.
On March 15, 2010, the company entered into a management consulting agreement for business consulting services for 500,000 restricted common shares.
On Jan 20, 2011, the company entered into a consulting agreement for business and financing consulting services for 350,000 restricted common shares.
During the first quarter of 2010, the company settled approximately $500,000 of debt converted into approximately 3,700,000 shares of common stock.
On May 17, 2010, we entered into a securities purchase agreement with accredited investors to place Senior Secured Convertible Notes (the “2010 Notes”) with a final maturity date of May 24, 2011 with a face amount of $1,530,000 and convertible into 6,375,000 shares of our common stock. In connection with the issuance of the 2010 Notes, we also issued the holders of such 2010 Notes Series A Warrants exercisable into 6,375,000 shares of common stock, Series B Warrants exercisable into 5,100,000 shares of common stock and Series C Warrants exercisable into 6,375,000 shares of common stock.
We also entered into a Security Agreement (the “2010 Security Agreement”) to secure payment and performance of our obligations under the 2010 Notes pursuant to which we granted the investors a security interest in all of its assets.
On February 24, 2011, we entered into a securities purchase agreement with accredited investors to place $1,159,413 of Secured Convertible Notes (the “February 2011 Notes”) which mature February 24, 2014. $25,000 of the February 2011 Notes was issued to a family member of an officer and director of the Company. The February 2011 Notes bear interest at the rate of 10% per annum, which in the case of a default increases to 20% per annum. Interest is due and payable at the end of each three month period, starting three months from their issuance.
One year after the issuance of the February 2011 Notes, we may elect to prepay a portion of the principle. If we make such an election, the holders may elect to receive such prepayment in cash or in shares of the Company’s common stock or in a combination thereof. One year after the issuance of the February 2011 Notes, a note holder may elect convert a portion or all of such 2011 Note at $0.15 per share.
Consideration received for the February 2011 Notes consisted of $919,413 in cash and rolling in $240,000 of consideration from the 2010 Notes (See below).
In connection with the issuance of the February 2011 Notes, we issued 2,318,826 warrants, exercisable into common stock at $0.25 with five year terms. We may force the exercise of the warrants at any time that the average VWAP of the Company’s common stock over the prior ten trading days is greater than $0.50, the average daily dollar volume of the Company’s common stock sold over those ten trading days is greater than $25,000 and there is an effective registration statement covering the resale of the shares underlying the warrants.
We also entered into a Security Agreement to secure payment and performance of its obligations under the 2011 Notes pursuant to which we granted the investors a security interest in all of its assets not otherwise encumbered.
In February 2011, we negotiated an early settlement of $640,000 of the outstanding 2010 Secured Convertible Notes (“the 2010 Notes”). Pursuant to the settlement agreement, we paid $480,000 in cash, issued $240,000 in February 2011 Notes and retired 4,000,000 Series A Warrants, 3,200,000 Series B Warrants and 4,000,000 Series C Warrants. Under the agreement, those holders released the Company from the remaining obligations under the securities purchase agreement entered into during fiscal year 2010, the 2010 security agreement and other documents related to the issuance of the 2010 Notes.
In addition, we entered into an exchange agreement to settle $83,333 of the 2010 Notes and retire 625,000 Series A Warrants, 500,000 Series B Warrants and 625,000 Series C Warrants of the Company by issuing to the 2010 Note holder 641,023 shares of Common Stock in accordance with the terms thereof and a warrant, to purchase up to 250,000 shares of Common Stock.
We has also entered into an agreement to early settle the remaining $233,333 of the 2010 Notes in exchange for 2,048,578 common shares, a warrant to purchase 1,000,000 shares of common stock and a new April 2011 Note for $25,000. On closing we expect to retire the outstanding 4,900,000 warrants related to the 2010 Note. The transaction has not closed as at the date of the financial statements, as it’s contingent upon the Company securing issue date.
11
On April 12, 2011 we sold Convertible Notes (the “April 2011 Notes”) to accredited investors with a final maturity date of April 12, 2014 and a face amount of $165,000. The April Notes bear interest at the rate of 10% per year which, in the case of a default, increases to 20% per annum. The principal is due on the third anniversary of the April 2011 Notes and interest is due on the April 2011 Notes every three months starting three months from their issuance. One year after the issuance of the April Notes, we may elect to prepay a portion of all of the April Notes. If we make such an election, the holders of the April 2011 Notes may elect to receive such prepayment in cash, in shares of our common stock or in a combination thereof. One year after the issuance of the April 2011 Notes, a holder of an April 2011 Note may elect to convert a portion or all of such April 211Note at $0.15 per share.
We also entered into a Security Agreement to secure payment and performance of our obligations under the April 2011 Notes pursuant to which we granted the investors a security interest in all of our assets.
On April 14, 2011 we sold 27,000 Units for an aggregate of $81,000 where each “Unit” was sold at a per-Unit price of $3.00 and consists of 20 shares of common stock and 6 warrants to purchase 6 shares of our common stock at an exercise price of $0.38 for a term of 24 months. The Units do not provide purchasers with registration rights.
We issued the equity securities described in this section in reliance on the registration exemption provided by Section 4(2) of the Securities Act of 1933.
ITEM 6.SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition, changes in financial condition, plan of operations and results of operations should be read in conjunction with (i) our audited consolidated financial statements as at December 31, 2010 and for the period from inception (July 27, 1999) to December 31, 2010 and (ii) the section entitled “Business”, included in this annual report. The discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this annual report.
Plan of Operations
Management believes that as a result of restructuring and recent financings and along with our exclusive Licensing Option agreement with the Mayo Clinic in Rochester, Minnesota, for the clinical development of a vaccine technology to treat HER-2/neu positive breast cancer we expect that an IND for the commencement of Phase 1 clinical trials will be filed in the near future.
The technology entering the clinic targets a novel set of HER-2/neu antigens discovered in breast cancer patients with pre-existent immunity to these antigens (Clinical Cancer Research 16[3]:825-34, 2010). This technology complements TapImmune’s TAP technology that we envision as part of a final vaccine product. This technology is currently completing preclinical development. Currently, Herceptin® (trastuzumab: an intravenously delivered monoclonal antibody) is used in the treatment of HER-2/neu breast cancer. Sales of this product in 2009 were approximately US$5 billion (source: Roche AG’s Pharmaceutical Division). As our vaccine approach has the potential to treat a broader HER-2/neu positive clinical population, the market potential is significant.
12
In August 2010, we announced a second Research and Technology License Option Agreement with the Mayo Clinic, Rochester, MN, for the development of a new smallpox vaccine. Research in progress in the laboratories of Gregory Poland M.D., at the Mayo Clinic will select the most potent peptide antigens against the smallpox virus for combination with our TAP technology. In preclinical studies (Plos Pathogens 1: 289-98, 2005) our TAP technology improved the efficacy of a vaccinia virus vaccine by over a 100 fold. TapImmune believes that its approach provides the potential for development of a vaccine against smallpox that has broader application, is more cost effective and has a better shelf-life than existing viral-based products.
TapImmune plans to evaluate its TAP technology for improving the efficacy of vaccines designed to combat a range of additional viral threats in the biodefense and infectious disease field. To expand its technology platform TapImmune also plans additional partnerships for the development of DNA plasmid expression vectors that can deliver TAP genes into target cells.
Over the past 12 months TapImmune has completed financings in excess of $2 million that have enabled the company to continue to grow its technology platform including those through collaborative projects and expand as well as protect its IP portfolio.
We have made significant progress in the last 12 months with the establishment of excellent research and development collaborations and the recruitment of world-class advisors to help guide our technical and commercial programs. As we start our clinical programs we expect to reach a number of important milestones in 2011 in both cancer and infectious disease.
We have not generated any cash flows from operations to fund our operations and activities due primarily to the nature of lengthy product development cycles that are normal to the biotech industry. Therefore, we must raise additional funds in the future to continue operations. We intend to finance our operating expenses with further issuances of common stock and/or debt. Although we do not currently have funds to continue operations for more than four months, we believe that future investment, if successful, should be adequate to fund our operations over the next 24 months. Thereafter, we expect we will need to raise additional capital to meet long-term operating requirements. Our future success and viability are dependent on our ability to raise additional capital through further private offerings of our stock or loans from private investors. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or not available on acceptable terms, we may not be able to conduct our proposed business operations successfully, which could significantly and materially restrict or delay our overall business operations.
13
Results of Operations
The following table sets out our consolidated losses for the periods indicated and reflects the audited restated December 31, 2009 numbers (See Note 1(A) in the Financial Statements) as referenced by our Form 8-K filed April 6, 2011:
|
Year Ended
December 31,
2010
|
(Restated)
(Note 1(A))
Year Ended
December 31,
2009
|
Period from
July 27, 1999
(inception) to
December 31,
2010
|
||||||||||
|
EXPENSES
|
||||||||||||
|
Consulting
|
$ | 88,231 | $ | 552,339 | $ | 1,859,437 | ||||||
|
Consulting, stock-based (Note 8)
|
1,200,736 | 506,042 | 4,992,553 | |||||||||
|
Depreciation
|
- | 3,741 | 213,227 | |||||||||
|
General and administrative
|
203,066 | 85,146 | 2,611,522 | |||||||||
|
Interest and financing charges (Notes 6 and 7)
|
1,242,978 | 1,188,934 | 5,153,581 | |||||||||
|
Management fees (Note 7)
|
329,177 | 260,242 | 2,523,654 | |||||||||
|
Management fees, stock-based (Notes 7 and 8)
|
1,087,915 | 2,019,660 | 3,934,965 | |||||||||
|
Professional fees
|
742,338 | 673,227 | 4,056,787 | |||||||||
|
Research and development (Note 7)
|
290,048 | 93,041 | 5,707,440 | |||||||||
|
Research and development, stock-based
|
- | - | 612,000 | |||||||||
| 5,184,489 | 5,382,372 | 31,665,166 | ||||||||||
|
NET LOSS BEFORE OTHER ITEMS
|
(5,184,489 | ) | (5,382,372 | ) | (31,665,166 | ) | ||||||
|
OTHER ITEMS
|
||||||||||||
|
Foreign exchange
|
(1,237 | ) | (38,069 | ) | 43,353 | |||||||
|
Changes in fair value of derivative liabilities (Note 4)
|
1,686,236 | - | 1,686,236 | |||||||||
|
Loss on debt financing (Note 5)
|
(1,644,750 | ) | - | (1,644,750 | ) | |||||||
|
Gain on settlement of debt (Note 8)
|
53,589 | 194,287 | 420,886 | |||||||||
|
Interest income
|
- | 2,814 | 33,344 | |||||||||
|
Loss on disposal of assets
|
- | (5,399 | ) | (5,399 | ) | |||||||
|
NET LOSS
|
$ | (5,090,651 | ) | $ | (5,228,739 | ) | $ | (31,131,496 | ) | |||
14
Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009
We are a development stage company. We recorded a net loss of $5,090,651 during the year ended December 31, 2010 compared to $5,228,739 for the year ended December 31, 2009.
Operating Expenses
Operating expenses incurred during the fiscal year ended December 31, 2010 were $5,184,489 compared to $5,382,372 in the prior year. Significant changes and expenditures are outlined as follows:
|
·
|
Consulting fees were $88,231 during the fiscal year ended December 31, 2010 compared to $552,339 during the prior fiscal year. The decrease was due primarily to absence of business development services including those relating to financing and debt restructuring that were in place during the prior period.
|
|
·
|
Stock-based consulting fees were $1,200,736 in the year ended December 31, 2010 compared to $506,042 in the prior year. The current and prior year charges result from the fair valuation of shares issued to consultants and options granted to or earned by consultants during such periods.
|
|
·
|
General and administrative expenses were $203,066 in the year ended December 31, 2010 compared to $85,146 in the prior year, with the increase resulting primarily from increased investor relations and travel expenses.
|
|
·
|
Interest and finance charges were $1,242,978 during the fiscal year ended December 31, 2010 compared to $1,188,934 during the prior fiscal year. Current and prior period interest charges are primarily accretion of interest and the fair value of warrants issued with convertible notes.
|
|
·
|
Management fees were $329,177 in the year ended December 31, 2010 compared to $260,242 in the prior year, with the difference resulting primarily from a change in executive compensation during the second half of the prior year and additional directors’ fees during the current year. Additionally, our Board of Directors and management were reorganized last year, and as of June 1, 2009, a portion of the fees paid or accrued to our Chief Executive Officer have been allocated to research and development.
|
|
·
|
Management compensation – stock-based were $1,087,915 in the year ended December 31, 2010 compared to $2,019,660 in the prior year. The current and prior year charges result from the fair valuation of options granted to management that were earned during the period.
|
|
·
|
Professional fees were $742,338 in the year ended December 31, 2010 compared to $284,288 in the prior year. The increase from the prior year results from significant activity relating to debt restructuring and continuing patent applications in the current year.
|
|
·
|
Research and development costs during the fiscal year ended December 31, 2010 were $290,048 compared to $93,041 during the prior fiscal year. The increase results from research and consulting service agreements in effect with Crucell and Mayo Foundation during the current fiscal year. Our Board of Directors and management were reorganized during the year, and as of June 1, 2009, a portion of the fees paid or accrued to our Chief Executive Officer have been allocated to research and development.
|
During the fiscal year ended December 31, 2010, we recorded a net gain on settlement of debt of $53,589 from $194,287 in the prior year. The current year gain was recognized due to write off of accrued interest charges and credit received for consulting services compared to retirement of debt and obligations through conversion to equity and debt settlement arrangements with creditors in the last fiscal year. Foreign exchange loss decreased to $1,237 during the fiscal year ended December 31, 2010 from a loss of $38,069 in the prior year. Interest income was $nil during the fiscal year ended December 31, 2010 compared to $2,814 in the prior year. Loss on disposal of assets decreased to $nil during the fiscal year ended December 31, 2010 from $Nil in the prior year.
Our net loss for the year ended December 31, 2010 was $5,090,651 or ($0.13) per share, compared to a net loss of $5,228,739 or ($0.27) per share in the prior period. The weighted average number of shares outstanding was 39,803,173 for the year ended December 31, 2010 compared to 19,704,002 for the prior year.
15
Liquidity and Capital Resources
The following table sets forth our cash and working capital as of December 31, 2009 and 2008:
|
December 31, 2010
|
December 31, 2009
|
|||||||
|
Cash reserves
|
$ | 23,516 | $ | 141,431 | ||||
|
Working capital (deficit)
|
$ | (3,272,489 | ) | $ | (629,388 | ) | ||
Subject to the availability of additional financing, we intend to spend approximately $5,000,000 over the next twelve months in carrying out our plan of operations. At December 31, 2010, we had $23,516 of cash on hand and a working capital deficit of $3,372,489. As such, our working capital at December 31, 2010 will not be sufficient to enable us to pay our general and administrative expenses, and to pursue our plan of operations over the next twelve months. We anticipate that we will require additional funding of approximately $5,000,000. Our management is currently making significant efforts to secure the needed financing, but we have not yet secured any commitments with respect to such financing. If we are not able to obtain financing in the amounts required or on terms that are acceptable to us, we may be forced to scale back, or abandon, our plan of operations.
Various conditions outside of our control may detract from our ability to raise the capital needed to execute our plan of operations, including overall market conditions in the international and local economies. We recognize that the United States economy has suffered through a period of uncertainty during which the capital markets have been depressed from levels established twelve months ago, and that there is no certainty that these levels will stabilize or reverse. Any of these factors could have a material impact upon our ability to raise financing and, as a result, upon our short-term or long-term liquidity.
Going Concern
We have no sources of revenue to provide incoming cash flows to sustain our future operations. As outlined above, our ability to pursue our planned business activities is dependent upon our successful efforts to raise additional equity financing. These factors raise substantial doubt regarding our ability to continue as a going concern. Our consolidated financial statements have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. As at December 31, 2010, we had accumulated losses of $31,131,496 since inception. Our financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Net Cash Used in Operating Activities
Operating activities in the year ended December 31, 2010 used cash of $925,041 compared to $1,121,726 in the year ended December 31, 2009. Operating activities in the period from inception on July 27, 1999 to December 31, 2019 used cash of $13,544,563. Operating activities have primarily used cash as a result of the operating and organizational activities such as consulting fees, management fees, professional fees and research and development.
Net Cash Used in Investing Activities
In the year ended December 31, 2010, investing activities provided cash of $nil compared to $204,747 in the year ended December 31, 2009. In the period from inception on July 27, 1999 to December 31, 2010 investing activities provided cash of $204,747.
Net Cash Provided by Financing Activities
As we have had no revenues since inception, we have financed our operations primarily through private placements of our stock. Financing activities in the year ended December 31, 2010 provided cash of $807,126 compared to $1,262,170 in the year ended December 31, 2009. In the period from inception on July 27, 1999 to December 31, 2010 financing activities provided net cash of $13,363,332 primarily from the sale of our equity securities.
16
Critical Accounting Policies
Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
See Note 2 of our consolidated financial statements for our year ended December 31, 2010 for a summary of significant accounting policies.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes of financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
17
ITEM 8.FINANCIAL STATEMENTS
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of TapImmune Inc.
We have audited the accompanying consolidated balance sheets of TapImmune Inc.(a development stage company) as of December 31, 2010 and 2009 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years ended December 2010 and 2009 and the period from July 27, 1999 (inception) through December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of TapImmue Inc. as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the years ended December 31, 2010 and 2009 and the period from July 27,1999 (inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated revenues since inception, has incurred losses in developing its business, and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ DALE MATHESON CARR-HILTON LABONTE LLP
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
April 15, 2011
Vancouver Suite 1500 -1140 West Pender Street, Vancouver, B.C., Canada V6E 4G1, Tel: 604 687 4747 • Fax: 604 689 2778 - Main Reception
South Surrey Suite 301 - 1656 Martin Drive, White Rock, B.C., Canada V4A 6E7, Tel: 604 531 1154 • Fax: 604 538 2613
Port Coquitlam Suite 700 - 2755 Lougheed Highway, Port Coquitlam, B.C., Canada V3B 5Y9, Tel; 604 941 8266 • Fax: 604 941 0971
19
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
|
December 31,
2010
|
(Restated)
(Note 1(A))
December 31,
2009
|
|||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash
|
$ | 23,516 | $ | 141,431 | ||||
|
Due from government agency
|
1,083 | 1,033 | ||||||
|
Prepaid expenses and deposits
|
700 | 214,501 | ||||||
|
Deferred financing costs (Note 5)
|
91,134 | - | ||||||
| $ | 116,433 | $ | 356,965 | |||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable and accrued liabilities (Note 11)
|
$ | 809,292 | $ | 586,556 | ||||
|
Research agreement obligations (Note 3)
|
141,761 | 45,676 | ||||||
|
Derivative liability – conversion option (Note 4)
|
175,389 | - | ||||||
|
Derivative liability – warrants (Note 4)
|
1,225,125 | - | ||||||
|
Convertible note payable (Note 5)
|
353,050 | 203,021 | ||||||
|
Loans payable (Note 6)
|
425,000 | - | ||||||
|
Notes payable and secured loan (Note 5)
|
- | 135,000 | ||||||
|
Due to related parties (Note 7)
|
259,305 | 16,100 | ||||||
| 3,388,922 | 986,353 | |||||||
|
Stockholders’ Deficit
|
||||||||
|
Capital stock (Note 8)
|
||||||||
|
Common stock, $0.001 par value, 150,000,000 shares authorized
|
||||||||
|
40,256,027 shares issued and outstanding (2009 – 38,361,674)
|
40,256 | 38,362 | ||||||
|
Additional paid-in capital
|
27,844,666 | 24,919,088 | ||||||
|
Shares and warrants to be issued
|
34,980 | 513,733 | ||||||
|
Deficit accumulated during the development stage
|
(31,131,496 | ) | (26,040,845 | ) | ||||
|
Accumulated other comprehensive loss
|
(60,895 | ) | (59,726 | ) | ||||
| (3,272,489 | ) | (629,388 | ) | |||||
| $ | 116,433 | $ | 356,965 | |||||
COMMITMENTS AND CONTINGENCIES (Notes 1, 3, 5, 6 and 11)
The accompanying notes are an integral part of these consolidated financial statements.
20
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Year Ended
December 31,
2010
|
(Restated)
(Note 1(A))
Year Ended
December 31,
2009
|
Period from
July 27, 1999
(inception) to
December 31,
2010
|
||||||||||
|
EXPENSES
|
||||||||||||
|
Consulting
|
$ | 88,231 | $ | 552,339 | $ | 1,859,437 | ||||||
|
Consulting, stock-based (Note 8)
|
1,200,736 | 506,042 | 4,992,553 | |||||||||
|
Depreciation
|
- | 3,741 | 213,227 | |||||||||
|
General and administrative
|
203,066 | 85,146 | 2,611,522 | |||||||||
|
Interest and financing charges (Notes 6 and 7)
|
1,242,978 | 1,188,934 | 5,153,581 | |||||||||
|
Management fees (Note 7)
|
329,177 | 260,242 | 2,523,654 | |||||||||
|
Management fees, stock-based (Notes 7 and 8)
|
1,087,915 | 2,019,660 | 3,934,965 | |||||||||
|
Professional fees
|
742,338 | 673,227 | 4,056,787 | |||||||||
|
Research and development (Note 7)
|
290,048 | 93,041 | 5,707,440 | |||||||||
|
Research and development, stock-based
|
- | - | 612,000 | |||||||||
| 5,184,489 | 5,382,372 | 31,665,166 | ||||||||||
|
NET LOSS BEFORE OTHER ITEMS
|
(5,184,489 | ) | (5,382,372 | ) | (31,665,166 | ) | ||||||
|
OTHER ITEMS
|
||||||||||||
|
Foreign exchange
|
(1,237 | ) | (38,069 | ) | 43,353 | |||||||
|
Changes in fair value of derivative liabilities (Note 4)
|
1,686,236 | - | 1,686,236 | |||||||||
|
Loss on debt financing (Note 5)
|
(1,644,750 | ) | - | (1,644,750 | ) | |||||||
|
Gain on settlement of debt (Notes 1(A) and 8)
|
53,589 | 194,287 | 420,886 | |||||||||
|
Interest income
|
- | 2,814 | 33,344 | |||||||||
|
Loss on disposal of assets
|
- | (5,399 | ) | (5,399 | ) | |||||||
|
NET LOSS
|
$ | (5,090,651 | ) | $ | (5,228,739 | ) | $ | (31,131,496 | ) | |||
|
BASIC AND DILUTED NET LOSS PER SHARE
|
$ | (0.13 | ) | $ | (0.27 | ) | ||||||
|
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING,
BASIC AND DILUTED
|
39,803,173 | 19,704,002 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
21
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2010
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
Shares
|
Amount
|
Paid in
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
|
Issued on incorporation - July 27, 1999
|
1 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
|
Issued to the founders for:
|
||||||||||||||||||||||||||||
|
- cash
|
74,000 | 740 | 1,110 | - | - | - | 1,850 | |||||||||||||||||||||
|
- consulting services
|
86,000 | 860 | 1,290 | - | - | - | 2,150 | |||||||||||||||||||||
|
Common stock subscriptions
|
- | - | - | 177,100 | - | - | 177,100 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (80,733 | ) | - | (80,733 | ) | |||||||||||||||||||
|
Balance, December 31, 1999
|
160,001 | 1,600 | 2,400 | 177,100 | (80,733 | ) | - | 100,367 | ||||||||||||||||||||
|
Issued with UBC agreement for:
|
||||||||||||||||||||||||||||
|
- consulting services
|
144,000 | 1,440 | 2,160 | - | - | - | 3,600 | |||||||||||||||||||||
|
- for license fees
|
20,000 | 200 | 300 | - | - | - | 500 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $1.50 per share, net of finders’ fees of $95,570
|
56,353 | 564 | 749,166 | (177,100 | ) | - | - | 572,630 | ||||||||||||||||||||
|
- at $1.50 per share
|
34,160 | 342 | 512,058 | - | - | - | 512,400 | |||||||||||||||||||||
|
Issued for finders’ fees
|
4,986 | 50 | (50 | ) | - | - | - | - | ||||||||||||||||||||
|
Net loss
|
- | - | - | - | (935,332 | ) | - | (935,332 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (1,937 | ) | (1,937 | ) | |||||||||||||||||||
|
Balance, December 31, 2000
|
419,499 | 4,195 | 1,266,034 | - | (1,016,065 | ) | (1,937 | ) | 252,228 | |||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $1.88 per share
|
4,413 | 44 | 82,706 | - | - | - | 82,750 | |||||||||||||||||||||
|
- at $2.50 per share
|
10,600 | 106 | 264,894 | - | - | - | 265,000 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (671,986 | ) | - | (671,986 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (2,041 | ) | (2,041 | ) | |||||||||||||||||||
|
Balance, December 31, 2001
|
434,512 | 4,345 | 1,613,635 | - | (1,688,051 | ) | (3,978 | ) | (74,049 | ) | ||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $2.50 per share, net of finders’ fees of $17,000
|
7,500 | 75 | 170,425 | - | - | - | 170,500 | |||||||||||||||||||||
|
Issued on settlement of debt
|
7,266 | 73 | 136,172 | - | - | - | 136,245 | |||||||||||||||||||||
|
GPI balance, July 15, 2002
|
449,279 | 4,493 | 1,920,232 | - | (1,688,051 | ) | (3,978 | ) | 232,696 | |||||||||||||||||||
|
GMC balance, July 15, 2002
|
612,805 | 6,128 | 7,180,164 | (85,000 | ) | (6,607,580 | ) | - | 493,712 | |||||||||||||||||||
|
Reverse acquisition recapitalization adjustment
|
(449,279 | ) | (4,493 | ) | (6,603,087 | ) | - | 6,607,580 | - | - | ||||||||||||||||||
22
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2010
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
|
Balance post reverse acquisition
|
612,805 | 6,128 | 2,497,309 | (85,000 | ) | (1,688,051 | ) | (3,978 | ) | 726,408 | ||||||||||||||||||
|
GMC subscription proceeds received
|
- | - | - | 285,000 | - | - | 285,000 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $6.25 per share
|
17,016 | 170 | 1,063,330 | - | - | - | 1,063,500 | |||||||||||||||||||||
|
Exercise of stock options
|
4,080 | 41 | 50,959 | - | - | - | 51,000 | |||||||||||||||||||||
|
Stock-based compensation
|
- | - | 630,275 | - | - | - | 630,275 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (2,284,709 | ) | - | (2,284,709 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (5,645 | ) | (5,645 | ) | |||||||||||||||||||
|
Balance, December 31, 2002
|
633,901 | 6,339 | 4,241,873 | 200,000 | (3,972,760 | ) | (9,623 | ) | 465,829 | |||||||||||||||||||
|
Exercise of stock options
|
92,745 | 927 | 1,420,888 | - | - | - | 1,421,815 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $12.50 per share
|
1,720 | 17 | 214,983 | (185,000 | ) | - | - | 30,000 | ||||||||||||||||||||
|
- at $2.50 per share, net of finders’ fees
|
22,214 | 222 | 521,593 | - | - | - | 521,815 | |||||||||||||||||||||
|
Issued as finders’ fees
|
1,341 | 13 | (13 | ) | - | - | - | - | ||||||||||||||||||||
|
Issued for license agreement
|
400 | 4 | 9,996 | - | - | - | 10,000 | |||||||||||||||||||||
|
Subscriptions repaid
|
- | - | 5,000 | (15,000 | ) | - | - | (10,000 | ) | |||||||||||||||||||
|
Stock-based compensation
|
- | - | 2,733,000 | - | - | - | 2,733,000 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (5,778,905 | ) | - | (5,778,905 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (37,299 | ) | (37,299 | ) | |||||||||||||||||||
|
Balance, December 31, 2003
|
752,321 | 7,523 | 9,147,319 | - | (9,751,665 | ) | (46,922 | ) | (643,745 | ) | ||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $1.75 per share, net of finders’ fees of $50,000
|
34,286 | 343 | 549,657 | - | - | - | 550,000 | |||||||||||||||||||||
|
Issued as finders’ fees
|
2,857 | 29 | (29 | ) | - | - | - | - | ||||||||||||||||||||
|
Fair value of warrants issued in connection
with convertible notes
|
- | - | 65,000 | - | - | - | 65,000 | |||||||||||||||||||||
|
Exercise of stock options
|
14,291 | 143 | 204,942 | - | - | - | 205,085 | |||||||||||||||||||||
|
Settlement of debt
|
400 | 4 | 9,996 | - | - | - | 10,000 | |||||||||||||||||||||
|
Stock-based compensation
|
- | - | 73,500 | - | - | - | 73,500 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (2,683,105 | ) | - | (2,683,105 | ) | |||||||||||||||||||
23
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2010
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (16,865 | ) | (16,865 | ) | |||||||||||||||||||
|
Balance, December 31, 2004
|
804,155 | 8,042 | 10,050,385 | - | (12,434,770 | ) | (63,787 | ) | (2,440,130 | ) | ||||||||||||||||||
|
Warrant component of convertible note
|
- | - | 46,250 | - | - | - | 46,250 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $0.38 per share, net of finders’ fees
of $97,620 and legal fees of $100,561
|
362,732 | 3,627 | 1,158,437 | - | - | - | 1,162,064 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (985,599 | ) | - | (985,599 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (2,333 | ) | (2,333 | ) | |||||||||||||||||||
|
Balance, December 31, 2005
|
1,166,887 | 11,669 | 11,255,072 | - | (13,420,369 | ) | (66,120 | ) | (2,219,748 | ) | ||||||||||||||||||
|
Fair value of beneficial feature on
convertible notes (Note 5)
|
- | - | 205,579 | - | - | - | 205,579 | |||||||||||||||||||||
|
Fair value of warrants issued with
convertible notes (Note 5)
|
- | - | 288,921 | - | - | - | 288,921 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (1,304,387 | ) | - | (1,304,387 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | 29,555 | 29,555 | |||||||||||||||||||||
|
Balance, December 31, 2006
|
1,166,887 | 11,669 | 11,749,572 | - | (14,724,756 | ) | (36,565 | ) | (3,000,080 | ) | ||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $0.25 per share
|
218,000 | 2,180 | 542,820 | - | - | - | 545,000 | |||||||||||||||||||||
|
Issued on the conversion of notes:
|
||||||||||||||||||||||||||||
|
- 2006 convertible notes at $0.25 per share
|
197,800 | 1,978 | 492,522 | - | - | - | 494,500 | |||||||||||||||||||||
|
- 2007 convertible notes at $0.25 per share
|
406,400 | 4,064 | 1,011,936 | - | - | - | 1,016,000 | |||||||||||||||||||||
|
Issued on the conversion of accounts payable
and related party debt at $0.25 per share
|
291,181 | 2,912 | 725,040 | - | - | - | 727,952 | |||||||||||||||||||||
|
Issued for finance charges on the 2007
convertible notes $0.25 per share
|
60,000 | 600 | 149,400 | - | - | - | 150,000 | |||||||||||||||||||||
|
Issued pursuant to service agreements at a
fair value of $0.36 per share
|
10,000 | 100 | 35,900 | - | - | - | 36,000 | |||||||||||||||||||||
|
Financing charges
|
- | - | (167,500 | ) | - | - | - | (167,500 | ) | |||||||||||||||||||
24
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2010
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
|
Fair value of beneficial conversion feature on
the 2007 convertible notes
|
- | - | 358,906 | - | - | - | 358,906 | |||||||||||||||||||||
|
Fair value of warrants issued in connection
with the 2007 convertible notes
|
- | - | 657,095 | - | - | - | 657,095 | |||||||||||||||||||||
|
Fair value of warrants issued in connection
with the 2007 promissory notes
|
- | - | 374,104 | - | - | - | 374,104 | |||||||||||||||||||||
|
Fair value of warrants issued as finders’ fees
for the 2007 promissory notes
|
- | - | 35,600 | - | - | - | 35,600 | |||||||||||||||||||||
|
Re-pricing and extension of warrants
|
- | - | 40,000 | - | - | - | 40,000 | |||||||||||||||||||||
|
Stock based compensation
|
- | - | 904,822 | - | - | - | 904,822 | |||||||||||||||||||||
|
Obligation to issue warrants at fair value pursuant
to promissory note extension
|
- | - | - | 44,000 | - | - | 44,000 | |||||||||||||||||||||
|
Obligation to issue shares at fair value pursuant
to service agreements
|
- | - | - | 23,400 | - | - | 23,400 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (3,891,411 | ) | - | (3,891,411 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (23,161 | ) | (23,161 | ) | |||||||||||||||||||
|
Balance, December 31, 2007
|
2,350,268 | 23,503 | 16,910,218 | 67,400 | (18,616,167 | ) | (59,726 | ) | (1,674,772 | ) | ||||||||||||||||||
|
Issued for cash
|
||||||||||||||||||||||||||||
|
- at $0.25 per share in July 2008
|
14,000 | 140 | 34,860 | - | - | - | 35,000 | |||||||||||||||||||||
|
Issued on the exercise of warrants in June 2008
|
20,715 | 207 | 24,793 | - | - | - | 25,000 | |||||||||||||||||||||
|
Issued pursuant to service agreements
at a fair value of $0.30 per share in April 2008
|
30,000 | 300 | 89,700 | - | - | - | 90,000 | |||||||||||||||||||||
|
Fair value of warrants issued in connection
with the 2008 promissory notes in May 2008
|
- | - | 206,820 | - | - | - | 206,820 | |||||||||||||||||||||
|
Fair value of warrants to be issued in
connection with notes payable in October 2008
|
- | - | - | 256,350 | - | - | 256,350 | |||||||||||||||||||||
|
Stock based compensation in January to December 2008
|
- | - | 234,168 | - | - | - | 234,168 | |||||||||||||||||||||
25
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2010
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
|
Net loss
|
- | - | - | - | (2,195,939 | ) | - | (2,195,939 | ) | |||||||||||||||||||
|
Balance, December 31, 2008
|
2,414,983 | 24,150 | 17,500,559 | 323,750 | (20,812,106 | ) | (59,726 | ) | (3,023,373 | ) | ||||||||||||||||||
|
Reverse split recapitalization adjustment (rounding) in July 2009
|
118 | (21,735 | ) | 21,735 | - | - | - | - | ||||||||||||||||||||
|
Issued for cash
|
||||||||||||||||||||||||||||
|
- at $0.80 per share in November 2009
|
875,000 | 875 | 699,125 | - | - | - | 700,000 | |||||||||||||||||||||
|
Issued at fair value pursuant to service agreements in August 2009
|
25,000 | 25 | 27,475 | - | - | - | 27,500 | |||||||||||||||||||||
|
Issued at fair value pursuant to
debt settlement agreements in July 2009
|
33,812,065 | 33,812 | 2,044,580 | - | - | - | 2,078,392 | |||||||||||||||||||||
|
Issued on the exercise of warrants in August and November 2009
|
1,234,508 | 1,235 | 241,515 | - | - | - | 242,750 | |||||||||||||||||||||
|
Stock based compensation in October 2009
|
- | - | 2,091,900 | - | - | - | 2,091,900 | |||||||||||||||||||||
|
Fair value of warrants issued in February , May and June 2009 in connection with promissory notes
|
- | - | 725,669 | (300,350 | ) | - | - | 425,319 | ||||||||||||||||||||
|
Fair value of warrants issued in August and October 2009 in connection with convertible notes
|
- | - | 425,491 | - | - | - | 425,491 | |||||||||||||||||||||
|
Fair value of warrants issued in December 2009 pursuant to service agreements
|
- | - | 374,270 | - | - | - | 374,270 | |||||||||||||||||||||
|
Settlement of debt with related parties
|
- | - | 766,769 | - | - | - | 766,769 | |||||||||||||||||||||
|
Obligation to issue shares at fair value
pursuant to service agreements in December 2009
|
- | - | - | 246,533 | - | - | 246,533 | |||||||||||||||||||||
|
Obligation to issue shares at fair value pursuant
to debt settlement agreements in September 2009
|
- | - | - | 243,800 | - | - | 243,800 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (5,228,739 | ) | - | (5,228,739 | ) | |||||||||||||||||||
|
Balance, December 31, 2009 (Note 1(A))
|
38,361,674 | $ | 38,362 | $ | 24,919,088 | $ | 513,733 | $ | (26,040,845 | ) | $ | (59,726 | ) | $ | (629,388 | ) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
26
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2010
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
|
Notes converted into shares
|
952,305 | 952 | 427,003 | (243,800 | ) | - | - | 184,155 | ||||||||||||||||||||
|
Stock based compensation in 2010
|
- | - | 1,385,229 | - | - | - | 1,385,229 | |||||||||||||||||||||
|
Obligation to issue shares at fair value
pursuant to service agreements
|
- | - | - | 28,220 | - | - | 28,220 | |||||||||||||||||||||
|
Issued at fair value pursuant to
debt settlement agreements
|
361,648 | 372 | 190,040 | - | - | - | 190,412 | |||||||||||||||||||||
|
Issued at fair value pursuant to service agreements
|
570,000 | 570 | 275,306 | (263,173 | ) | - | - | 12,703 | ||||||||||||||||||||
|
Untraceable shares reissued
|
10,400 | - | - | |||||||||||||||||||||||||