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,
2008
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[ ]
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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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Unit 2, 3590 West 41st Avenue, Vancouver,
British Columbia, Canada
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V6N 3E6
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(604)
264-8274
(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 r Accelerated
filer r
Non-accelerated
filer (do not check if a smaller reporting company)r 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, 2008 (the last day of
the registrant’s most recently completed second fiscal quarter) was
approximately $6,177,000.
The
registrant had 24,149,827 shares of common stock outstanding as of May 7,
2009.
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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·
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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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·
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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.
1
TABLE OF
CONTENTS
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ITEM 1.
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BUSINESS
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3
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ITEM 1A.
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RISK FACTORS
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10
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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12
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ITEM 2.
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PROPERTIES
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12
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ITEM 3.
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LEGAL PROCEEDINGS
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12
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ITEM 4.
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
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12
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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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13
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ITEM 6.
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SELECTED FINANCIAL DATA
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14
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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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15
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ITEM 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
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18
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ITEM 8.
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FINANCIAL STATEMENTS
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19
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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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46
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ITEM 9A.
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CONTROLS AND PROCEDURES
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46
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ITEM 9B.
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OTHER INFORMATION
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47
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
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47
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ITEM 11.
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EXECUTIVE COMPENSATION
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50
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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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52
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
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54
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ITEM 14.
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PRINCIPAL ACCOUNTING FEES AND
SERVICES
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55
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ITEM 15.
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EXHIBITS
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56
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2
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 the latest 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, the American Cancer
Society estimates more than 600,000 deaths from cancer annually, second only to
cardiovascular deaths and the ACS estimates over 1.4 million new diagnosis will
be made this year
Company
History
We
currently trade on the OTC Bulletin Board under the symbol “TPIM”.
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. As part of its overall strategy, and
with additional funding, the Company also intends to pursue the development of
prophylactic vaccines against infectious microbes. The company
intends to develop the TAP technology for use as a therapeutic cancer vaccine
that management believes will restore the normal immune
recognition. Management further believes that this cancer vaccine
strategy is the only 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.
TapImmune’s
Target Market and Strategy
With the
required funding in place, we will pursue product development in
oncology. With additional funding and the possible collaboration of
other vaccine companies we will also pursue product development in our adjuvant
for prophylactic vaccines. The initial development process is the
same for both therapeutic and prophylactic vaccines, so some parallel
development will take place. 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. Based upon recent market reports, management believes that
the market for cancer vaccines could be approximately $6 billion by 2010, with a
compounded annual growth rate of 104%. Our goal is to have the FDA
approve our cancer vaccine 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. It will
be a key business development strategy to pursue partnerships and joint research
and development ventures with vaccine manufacturers and pharmaceutical companies
to bring new and improved vaccines to market. 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.
3
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. 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. We previously produced, and still plan to
produce in the future, our TAP vaccines by inserting the TAP gene material into
a proprietary, modified adeno virus licensed from Crucell Holland B.V.
(“Crucell”) or a generic HEK293 adenovirus, and it will and has been
used as the prototype vaccine product for performing in-vitro immunological and
animal preclinical studies. 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 will
initiate our contract with SAFC Pharma (Sigma Aldrich), for the production of
clinical grade vaccine product to be used in preclinical and clinical studies
that require production facilities with Good Manufacturing Practices (“GMP”) and
Good Laboratory Practices (“GLP”) certification.
Products
and Technology in Development
TAP
Cancer Vaccine
We
previously developed our TAP Cancer Vaccine 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 melanoma, where animal studies similar to the
small-cell lung cancer studies described above were performed and similar
results were achieved.
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
(now dormant until funding is restored) 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 SAFC Pharma, 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 and
financing, estimated at approximately $5,000,000, the Phase I human clinical
trials could commence in the second half of 2010 or early 2011 depending how
quickly funding is in place. The Phase I human clinical trials will
be designed to provide data on the safety of the TAP Cancer Vaccine when used in
humans. We may conduct the Phase I human clinical trials at the
British Columbia Cancer Agency in Vancouver, British Columbia, or other
locations to be evaluated. These trials will be conducted in respect
of certain carcinomas. We have presented information on the TAP
Cancer Vaccine to members of the Department of Advanced Therapeutics of the
British Columbia Cancer Agency, with the intent of obtaining their assistance in
the design and execution of the clinical study.
4
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
Beyond
the TAP cancer vaccine, 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.
Future
Products and Technology
Peptide
Transfer Assay
Depending
on resources and funding, we may also develop potential products that may
stimulate or interrupt the chain of events involved in certain immune
system-related diseases. One such potential product, referred to in
this Annual Report as the “Peptide Transfer Assay”, would be used to identify
compounds effective in the treatment of cancer, infectious diseases, autoimmune
diseases and transplant rejection. Autoimmune diseases include, but
are not limited to, psoriasis, rheumatoid arthritis, multiple sclerosis,
myasthenia gravis and diabetes. T cells and antibodies in the body’s
immune system normally identify and destroy foreign substances and cancerous
cells. Autoimmune diseases are generally caused by the abnormal
destruction of healthy body tissues when T cells and antibodies react against
normal tissue.
The
Peptide Transfer Assay is ready for development for high-throughput screening
and partnering. High-throughput screening is the use of robotics and
automated industrial processes used to speed up the drug discovery process,
testing large number of compounds against certain targets. Additional
funding will be required to exploit this opportunity, however, the technology
has been licensed and will continue to be protected by us. This technology is
not currently a focus for development.
Screen
for Regulators of Antigenicity
We
recently acquired via our agreement with UBC a drug discovery technology that
can be used to identify small molecule regulators of the immune
response. We refer to this technology in this Annual Report as the
Screen for Regulators of Antigenicity Technology. Management believes
that the Screen for Regulators of Antigenicity Technology can be used to screen
and select new drugs that regulate immune responses, and that it has relevance
to both cancers and viral diseases and in modulating transplant rejection and
autoimmune diseases. This technology is of interest but will only be
developed after successful development of the cancer and prophylactic
vaccines.
5
Strategic
Relationships
UBC
Collaborative
Research Agreement
In
September of 2000, through our wholly owned subsidiaries, GeneMax
Pharmaceuticals and GeneMax Canada, entered into a Collaborative Research
Agreement with UBC to carry out further development of the TAP technologies as a
cancer vaccine and other commercial products, and to provide GeneMax
Pharmaceuticals with the option to acquire the rights to commercialize any
additional technologies developed under the agreement. Pursuant to
the Collaborative Research Agreement UBC retained all rights and title to all
inventions, improvements and discoveries that are conceived by employees of UBC
during the term of the Collaborative Research Agreement; however, UBC therein
granted us an option to obtain a royalty-bearing license to use such inventions,
improvements and discoveries that were not covered under the existing license
agreement and included improvements and enhancements of the licensed
technologies.
The
Collaborative Research Agreement, as amended, provided for payments to UBC in
the aggregate of $2,973,049 (CDN). In addition, we reimbursed UBC a
total of $55,812 (CDN) of patent expenditures in connection with technologies
licensed to us.
The
parties to the Collaborative Research Agreement had agreed to the principal
terms of a renegotiated agreement which would provide for an estimated annual
budget of $295,000 (CDN) (in quarterly installments of $73,750 (CDN)) to allow
for funding for one Ph.D. scientist and two support technicians. In
addition, UBC continued to provide us with access to university laboratories and
equipment at UBC.
License
Agreement
In March
of 2000, we entered into a license agreement with UBC and Dr. Wilfred A.
Jefferies, then our Chief Scientific Officer and a director, which is referred
to in this Annual Report as the License Agreement, providing us with an
exclusive world-wide license to use certain technology developed by UBC and Dr.
Jefferies. The License Agreement allowed us to use the technology
associated with the patents entitled “Method for Enhancing Expression of
MHC-Class 1 Molecules Bearing Endogenous Peptides” and “Method of Identifying
MHC-Class 1 restricted Antigens Endogenously Processed by a Cellular Secretory
Pathway” and to manufacture, distribute, market, sell, lease and license or
sub-license products derived or developed from the above licensed technologies
until the later of March 6, 2015 or the expiration of the last patent obtained
under the License Agreement, including the expiration of patents obtained from
modifications to existing patents. As consideration for entering into
the License Agreement we paid an initial license fee of $113,627 (CDN) and
issued 500,000 GeneMax Pharmaceutical shares to the University of British
Columbia; which were subsequently exchanged for 200,000 shares of our restricted
common stock.
On
February 16, 2004, UBC granted us an exclusive, worldwide license to use a novel
assay technology to screen and select new drugs that regulate immune
responses. As consideration for entering into this license, which we
refer to in this Annual Report as the “Immune Response License”, we issued UBC
4,000 shares of our common stock and were required to pay UBC an annual
maintenance fee of $500 (CDN). The term for the Immune Response
License was the longer of either 20 years or the expiration of the last patent
licensed under the Immune Response License, including the expiration of patents
obtained from modifications to existing patents.
Option
and Settlement Agreements
On
January 24, 2006, and in accordance with the terms and conditions of a certain
Option and Settlement Agreement (the “Option and Settlement Agreement”), dated
for reference January 23, 2006, as entered among each of us, UBC, Dr. Jefferies
and each of our predecessor and subsidiary companies, GeneMax Pharmaceuticals
and GPCanada, the parties thereto reached a definitive agreement pursuant to
which all existing financial claims by UBC (collectively, the “UBC Financial
Claims”) as against us under each of those certain “License Agreement” among us,
UBC and Dr. Jefferies dated March 6, 2000, as amended February 28, 2003
(“License Agreement #1”), and “License Agreement” between us and UBC dated
February 16, 2004 (“License Agreement #2” and, collectively, the “License
Agreements”), and under that certain “Collaborative Research Agreement” between
UBC and GPCanada dated May 6, 2005 (the “CRA”), are satisfied (the “Settlement”)
in consideration of UBC providing us with the consequent right to acquire,
outright, by way of assignment (the “Option to Purchase”), all of UBC’s right
title and interest in the technologies licensed to us under the terms of the
License Agreements, including the “Technology” as that term is defined in the
License Agreements, and all “Improvements” made prior to the date of execution
of the Option and Settlement Agreement in furtherance of the same (collectively,
the “Technology” thereunder).
6
In
accordance with the terms and conditions of the Option and Settlement Agreement,
and in order to keep the right and Option to Purchase the Technology granted to
us by UBC in good standing and in force and effect; and in order to maintain the
Settlement of all UBC Financial Claims consequent therein; we were obligated to
provide cash payment (“Purchase Price Payment”) and to maintain the current
status of UBC’s existing patent and patent pending applications respecting the
Technology (the “Purchase Price Patent Obligations”; and the Purchase Price
Payments and the Purchase Price Patent Obligations being, collectively, the
“Purchase Price”) to the order and direction of UBC in the aggregate amount of
$556,533 (CDN) (which also equate to the present UBC Financial Claims) prior to
December 31, 2006 (the end of the “Option Period”), and in due complete
satisfaction of the settlement of the UBC Financial Claims.
The
Option and Settlement Agreement replaced our previously disclosed (by way of
Current Report on Form 8-K dated December 23, 2005) “Letter of Intent” as
previously entered into between us and UBC.
On
December 18, 2006, we negotiated an extension with UBC of the January 24, 2006
Option and Settlement Agreement. Under the terms of the extension we
were obligated to pay UBC $216,533 (CDN) as follows:
|
(a)
|
$72,177
(CDN) on or before December 31, 2006;
(paid);
|
|
(b)
|
$72,178
(CDN) plus interest of $3,362 (CDN) on or before March 20, 2007; (paid);
and
|
|
(c)
|
$72,178
(CDN) plus interest of $1,423 (CDN) on or before May 31, 2007
(paid).
|
As of May
31, 2007 we completed our obligation with UBC, and the technology assignment and
transfer was completed in the 2007 fiscal year.
Crucell
On August
7, 2003, we entered into an agreement with Crucell, which we refer to in this
Annual Report as the “Research License and Option
Agreement”. Pursuant to that agreement, Crucell granted us a
non-exclusive, worldwide license for Crucell’s adenovirus technology and an
option for a non-exclusive, worldwide commercial license to manufacture, use,
offer for sale, sell and import products using the licensed technology in the
therapy of human subjects by administering a modified and proprietary adeno
virus vector (used to package our TAP gene technology and deliver it to the
target cancer cell in the patient) including, but not limited to, therapeutic
gene sequence(s).
The
Research License and Option Agreement provided for bi-annual license maintenance
fees of 50,000 Euros, exclusive of applicable taxes, during the first two years
of the agreement, and an annual license maintenance fees of 75,000 Euros,
exclusive of applicable taxes, starting on the third anniversary until the
expiration of the agreement on August 7, 2008. Total obligations
under this agreement were 450,000 Euros.
To
December 31, 2005, we had made payments required totaling $115,490 (€100,000) to
Crucell pursuant to the terms of the Research License and Option
Agreement. Pursuant to the terms of the Research License and Option
Agreement, a further $60,864 (€ 50,000) was due and payable on February7, 2004
and a further $60,103 (€ 50,000) was due and payable on August 7, 2004
leaving $120,967 owing as of December31, 2004 under the terms of the
agreement. Pursuant to the Research License and Option Agreement, if
a party defaults in the performance of or fails to be in compliance with any
material condition of this agreement, the Research License and Option Agreement
may be terminated if the default or noncompliance is not remedied or steps
initiated to remedy three months after receipt in writing to the defaulting
party. Effective June 6, 2005, Crucell gave us notice of default
whereby we had three months to remedy the default. On November 16,
2005, Crucell provided notice of Termination by Default due to our failure to
remedy the default within the required three month period.
In May of
2006, we negotiated a reinstatement of the original Research and License Option
Agreement with Crucell and paid Crucell on April 20, 2006 €123,590 (US$151,521)
in connection with the reinstatement. Under the revised terms of the
agreement, we agreed to pay Crucell 12 monthly payments of €10,300 starting May
2006 (paid to October 31, 2006 as of December 31, 2008) and a €75,000 annual
license fee (not paid as of December 31, 2008) in order to keep the reinstated
agreement in good standing. In January, 2008 we paid $40,000 to the
outstanding balance of €184,484, and are currently working with Crucell to
maintain our license and relationship as well as reaching a new payment schedule
for the outstanding fees. At the date of our annual report, Crucell has
indicated that there is an outstanding balance of €172,801 owing to them. Over
the last few months we have had discussions resulting in an informal commitment
to hold our license in a dormant state until we are able to meet some of the
payment requirements and are funded to continue with our development
program.
SAFC
Pharma (Molecular Medicine)
On March
18, 2003, we entered into a production service agreement; referred to in this
Annual Report as the “PSA”, with Molecular Medicine of the United
States. The PSA provides for the performance of certain production
services by Molecular Medicine relating to the adenoviral vector product
containing our TAP gene technology. The product is required to
conduct pre-clinical toxicology studies and subsequent human clinical
trials.
We were
in breach of our PSA in respect of payments due for Phase I of the
project. The parties have agreed that advance payments that had been
made for subsequent phases could be allocated to the Phase I deficiency so that
all payments that were due under the PSA have now been paid in full and we have
a $78,000 surplus which can be applied towards subsequent phases of the
project.
7
In August
2005, we postponed production of our clinical grade TAP adeno based vaccine for
pre-clinical toxicology analysis with Molecular Medicine due to technical
difficulties related to the yields of vaccine. We have developed a
second option and are preparing to initiate viral construction on the best and
most suitable cell line. Despite the technical difficulties we
anticipate production of a clinical grade TAP based vaccine to be produced
utilizing the adeno vector from Crucell or an in-house vector supplied by SAFC
to allow us to meet our milestones for commencing toxicology analysis by the end
of 2010.
National
Institute of Allergy and Infectious Diseases
On
October 21, 2003, we entered into an agreement, which we refer to in this Annual
Report as the “Biological Materials Transfer Agreement”, with the National
Institute of Allergy and Infectious Diseases (or “NIAID”), a division of the
Public Health Service (or “PHS”). The Biological Materials Transfer
Agreement provides for the license of NIAID’s Modified Vaccinia Ankara virus for
use in our research and product development. The licensed technology
and virus material will be used with the goal of developing a vaccine platform
capable of generating superior protective immune responses against
smallpox. Pursuant to the Biological Materials Transfer Agreement we
pay a non-refundable annual royalty of $2,500 per year. The
Biological Materials Transfer Agreement expired on November 5,
2008. The Company will renegotiate with PHS once funding is in
place.
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.
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.
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 also filed for a continuation and had
reinstated a previously ‘unintentionally abandoned’ patent. A
clerical error at our previous patent counsel caused a filing date to be
erroneously missed. That patent is now issued. 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.
8
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, and Transgene S.A.
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.
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
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
Mr. Denis
Corin is our President, Chief Executive Officer and Principal Executive Officer,
Mr. Patrick McGowan is our Secretary, Treasurer, Chief Financial Officer and
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, 2008, we did not have any employees.
9
ITEM
1A. RISK
FACTORS
An
investment in our common stock involves a number of very significant
risks. You should carefully consider the following risks and
uncertainties in addition to other information in this annual report in
evaluating our company and its business before purchasing shares of our common
stock. Our business, operating results and financial condition could
be seriously harmed due to any of the following risks. The risks
described below may not be all of the risks facing our
company. Additional risks not presently known to us or that we
currently consider immaterial may also impair our business
operations. You could lose all or part of your investment due to any
of these risks.
Risks
Related to Our Company
We
have a history of operating losses.
We
continue to incur losses and will require additional financing to continue our
operations. We have incurred operating losses and negative cash flow
from operations for most of our history. Losses incurred since our
inception have aggregated $20,812,106, and there can be no assurance that we
will be able to generate positive cash flows to fund our operations in the
future or to pursue our strategic objectives. We believe that we will
have sufficient cash to satisfy our needs for at least the next four to six
months. We will need to raise additional capital, most likely via the
sale of equity securities, to fund our operations. There can be no
assurance that we will be able to obtain such financing on terms satisfactory to
us, if at all. Any additional equity financing may be dilutive to
existing stockholders, and debt financing, if available, may include restrictive
covenants. If adequate funds are not available, we might be required
to limit our research and development activities or our selling, marketing and
administrative activities any of which could have a material adverse effect on
the future of the business.
Further,
we do not have any products that generate revenue and expect our operating
losses to increase significantly as we commence clinical trials. We
do not expect to earn significant revenue for several years, and may never do
so. Continued operating losses and the failure to satisfy our
financial obligations will have a material adverse effect upon our financial
condition and the future of our business.
The
independent auditor’s report accompanying our December 31, 2008 consolidated
financial statements contains an explanatory paragraph expressing substantial
doubt about our ability to continue as a going concern.
The
consolidated financial statements have been prepared “assuming that we will
continue as a going concern,” which contemplates that we will realize our assets
and satisfy our liabilities and commitments in the ordinary course of
business. Our ability to continue as a going concern is dependent on
raising additional capital to fund ongoing research and development, successful
renegotiations and continued support from our creditors and ultimately on
generating future profitable operations. There can be no assurance
that we will be able to raise sufficient additional capital or eventually
achieve positive cash flow from operations to address all of our cash flow
needs. If we were not able to find alternative sources of cash or
generate positive cash flow from operations, our business and financial
condition would be materially and adversely affected.
We
depend upon collaborative relationships and third parties for product
development and commercialization and are in breach of many of the agreements
with these parties.
We have
historically entered into research and development agreements with collaborative
partners. Pursuant to these agreements, our collaborative partners provide us
with the intellectual property and options for the license of the intellectual
property necessary to develop and commercialize our product
candidates. We will continue to rely on future collaborative partners
for the development of products and technologies. There can be no
assurance that we will be able to negotiate such collaborative arrangements on
acceptable terms, if at all, or that current or future collaborative
arrangements will be successful. To the extent that we are not able
to establish such arrangements, we could be forced to undertake such activities
at our own expense. The amount and timing of resources that any of
these partners devotes to these activities will generally be based on progress
by us in our product development efforts. Some of our collaborative
arrangements may be terminated by the partner upon prior notice without cause
and there can be no assurance that any of these partners will perform its
contractual obligations or that it will not terminate its
agreement.
Preclinical
testing and future clinical trials may take longer than anticipated, and we may
be unable to complete them at all.
While
management believes that the Phase I human clinical trials of the TAP Cancer
Vaccine in oncology will commence in fiscal year 2010 there can be no assurances
that they will occur on this time frame, if at all. We may not
commence or complete the pivotal clinical trials of the TAP Cancer Vaccine or
commence or complete clinical trials involving any other product candidates or
may not conduct them successfully. Further, our development costs
will increase if we experience any future delays in the preclinical trials or
clinical trials for the TAP Cancer Vaccine or other potential products or if we
are required to perform additional or larger clinical trials than currently
planned. Any substantial delay of or the failure to complete the
clinical trials would have a material adverse effect upon our
business.
If
testing of a particular product candidate does not yield successful results,
then we will be unable to commercialize that product. We must
demonstrate the safety and efficacy of the TAP Cancer Vaccine and its other
potential products in humans through extensive preclinical and clinical
testing. We may experience numerous unforeseen events during, or as a
result of, the testing process that could delay or prevent commercialization of
our product candidates. Further, clinical testing is very expensive,
the process takes many years, and the outcome is
uncertain. Unsuccessful results from preclinical and clinical testing
will have a material adverse effect on our business.
Our
products and activities are subject to regulation by various governments and
government agencies.
The
testing of our products is subject to regulation by numerous governmental
authorities, principally the FDA and certain foreign regulatory
agencies. Pursuant to the Federal Food, Drug, and Cosmetic Act, and
the regulations promulgated there under, the FDA regulates the preclinical and
clinical testing, development, and commercialization of our potential
products. Noncompliance with applicable requirements can result in,
among other consequences, fines, injunctions, civil penalties, recall or seizure
of products, repair, replacement or refund of the cost of products, total or
partial suspension of production, failure of the government to grant pre-market
clearance or pre-market approval for devices, withdrawal of marketing clearances
or approvals, and criminal prosecution.
Government
regulation imposes significant costs and restrictions on the development and
commercialization of our products and services. Our success will
depend on our ability to satisfy regulatory requirements. We may not
receive required regulatory approvals on a timely basis, if at
all. Government agencies heavily regulate the production and sale of
healthcare products and the provision of healthcare services. In
particular, the FDA and comparable agencies in foreign countries must approve
human therapeutic and diagnostic products before they are marketed, as well as
the facilities in which they are made. This approval process can
involve lengthy and detailed laboratory and clinical testing, sampling
activities and other costly and time-consuming procedures. Our
failure to comply with applicable regulatory approval requirements may lead
regulatory authorities to take action against us, which may delay or cease the
development and commercialization of our product candidates.
Therapies
that have received regulatory approval for commercial sale may continue to face
regulatory difficulties. The FDA and comparable foreign regulatory
agencies, may require post-marketing clinical trials or patient outcome
studies. In addition, regulatory agencies subject a marketed therapy,
its manufacturer and the manufacturer’s facilities to continual review and
periodic inspections. The discovery of previously unknown problems
with a therapy, the therapy’s manufacturer or the facility used to produce the
therapy could prompt a regulatory authority to impose restrictions on the
therapy, manufacturer or facility, including withdrawal of the therapy from the
market.
10
Competition
in the human medical diagnostics industry is, and is expected to remain,
significant, and we may never obtain market acceptance of our product
candidates.
Competition
in the cancer therapeutics field is intense and is accentuated by the rapid pace
of technological development. Our competitors range from development
stage diagnostics companies to major domestic and international pharmaceutical
companies. Many of these companies have financial, technical,
marketing, sales, manufacturing, distribution and other resources significantly
greater than ours. In addition, many of these companies have name
recognition, established positions in the market and long standing relationships
with customers and distributors. Moreover, the industry has recently
experienced a period of consolidation, during which many of the large domestic
and international pharmaceutical companies have been acquiring mid-sized
diagnostics companies, further increasing the concentration of
resources. Our future success will depend on our ability to
effectively develop and market our product candidates against those of our
competitors. If our product candidates receive marketing approval,
but cannot compete effectively in the marketplace, our business and financial
position would suffer greatly. There can be no assurance that
technologies will not be introduced that could be directly competitive with or
superior to our technologies.
Market
acceptance of the TAP Cancer Vaccine and our other product candidates is
uncertain. Even if the TAP Cancer Vaccine and other potential
products are approved and sold, physicians may not ultimately use them or may
use them only in applications more restricted than we
expect. Physicians will only prescribe a product if they determine,
based on experience, clinical data, side effect profiles and other factors, that
it is beneficial and preferable to other products and treatments then in
use. Many other factors influence the adoption of new products,
including marketing and distribution restrictions, course of treatment, adverse
publicity, product pricing, the views of thought leaders in the medical
community, and reimbursement by third-party payers. Failure to obtain
market acceptance of our product candidates will have a material adverse effect
upon our business.
We
depend on key employees.
Due to
the specialized nature of our business, our success will be highly dependent
upon our ability to attract and retain qualified scientific and executive
personnel. Our success depends to a significant extent upon our key
management, including Denis Corin, our President and Chief Executive
Officer, and Patrick McGowan, our Chief Financial
Officer. There can be no assurance that we will be successful in
attracting and retaining the personnel we require to develop and market our
product candidates and to conduct our operations
successfully. Failure to retain Mr. Corin or Mr. McGowan would have a
material adverse effect upon our business.
Our
success depends, in part, on our ability to obtain patents and license patent
rights, to maintain trade secret protection and to operate without infringing on
the proprietary rights of others.
Our
success depends in part on our ability to obtain and maintain patent protection
for the technology underlying our product candidates, both in the United States
and in other countries. We cannot assure you that any of our current
or future patent applications will result in issued patents, or that any patents
issued to us or licensed by us will not be challenged, invalidated or held
unenforceable. Further, we cannot guarantee that any patents issued
to us will provide us with a significant competitive advantage. If we
fail to successfully enforce our proprietary technology or otherwise maintain
the proprietary nature of our intellectual property with respect to our
significant current and proposed products, it would have a material adverse
effect upon our business. We could incur substantial costs in
defending the Company or our licensees in litigation brought by others who claim
that we are infringing on their intellectual property rights. The
potential for reduced sales and increased legal expenses would have a negative
impact on our cash flow and thus our overall business could be adversely
affected.
The
testing, manufacturing and marketing of therapeutic medical technology entails
an inherent risk of product liability claims.
To date,
we have experienced no product liability claims, but any such claims arising in
the future could have a material adverse effect on our business, financial
condition and results of operations. Potential product liability
claims may exceed the amount of our insurance coverage or may be excluded from
coverage under the terms of our policy or limited by other claims under our
umbrella insurance policy. Additionally, there can be no assurance
that our existing insurance can be renewed by us at a cost and level of coverage
comparable to that presently in effect, if at all. In the event that
we are held liable for a claim against which we are not insured or for damages
exceeding the limits of our insurance coverage, such claim could have a material
adverse effect on our cash flow and thus potentially have a materially adverse
effect on our business, financial condition and results of
operations.
There
has, to date, been no active public market for our common stock, and there can
be no assurance that an active public market will develop or be
sustained.
Our
common stock has been traded on the OTCBB since prior to the acquisition of
GeneMax Pharmaceuticals. Both before and since the acquisition
trading in our common stock has been sporadic with insignificant
volume. Moreover, the over-the-counter markets for securities of very
small companies historically have experienced extreme price and volume
fluctuations. These broad market fluctuations and other factors, such
as new product developments, trends in our industry, the investment markets,
economic conditions generally, and quarterly variation in our results of
operations, may adversely affect the market price of our common
stock. In addition, our common stock is subject to rules adopted by
the SEC regulating broker-dealer practices in connection with transactions in
“penny stocks.” Such rules require the delivery prior to any penny
stock transaction of a disclosure schedule explaining the penny stock market and
all associated risks and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors, which are generally defined as institutions or an
investor with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with the spouse. For these types of
transactions the broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser’s written consent to the
transaction prior to sale. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in securities subject to the penny stock rules. We do
not intend to pay any cash dividends on our common stock in the foreseeable
future. Significant fluctuations in out stock price may have a
material adverse effect upon our shareholders.
We
are controlled by management.
As of the
date of this Annual Report our officers and directors owned of record
approximately 868,896 or 3.6% of the outstanding shares of common
stock. If they exercise all of the warrants and vested options that
they currently hold, they would own 3,372,896 shares of our common stock or
13.6% of the outstanding shares of common stock. Due to their stock
ownership, the officers and directors may be in a position to elect the Board of
Directors and to control our business and affairs, including certain significant
corporate actions such as acquisitions, the sale or purchase of assets and the
issuance and sale of the Company’s securities. The interest of our
officers and directors may differ from the interests of other
shareholders.
As of the
date of this Annual Report we had reserved 6,400,000 shares of common stock for
issuance upon exercise of options which have been or may be granted pursuant to
our stock option plans, of which options to purchase 6,320,000 shares are
outstanding. Additionally, as of the date of this Annual Report there
were 11,917,667 warrants outstanding to purchase our common stock and a
commitment to issue 5,527,000 additional warrants. Sales of common
stock underlying these stock options and warrants would have a significant
dilutive effect upon our current shareholders and may adversely affect the price
of the common stock.
11
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 Unit 2, 3590 West 41st Avenue, Vancouver, British Columbia Canada,
V6N 3E6. On March 1, 2007, the Company entered into a five year lease
agreement for lab facilities in Vancouver, British Columbia,
Canada. The agreement requires monthly payments of $2,671 (CDN) plus
a share of operating costs during the first two years of the term, and monthly
payments of $2,820 (CDN) plus a share of operating costs for the final three
years.
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. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
We
delivered proxy statements on schedule 14A as filed with the SEC on December 31,
2008 for a special meeting of shareholders. As described in our
current report filed with the SEC on February 6, 2009, our shareholders approved
at a special meeting of shareholders held on January 22, 2009, an amendment to
our articles of incorporation to increase our authorized shares of common stock
from 80,000,000 to 500,000,000.
12
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 “TPIM.OB” and on the Frankfurt and Berlin Stock Exchanges under the
symbol “GX1.” The listing on the Berlin Stock Exchange was done
without the Company’s knowledge and consent. The company has
attempted to have the Berlin Stock Exchange listing terminated, however, it has
not been able to do so.
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 2008
|
||
|
December
31, 2008
|
$0.09
|
$0.02
|
|
September
30, 2008
|
$0.31
|
$0.04
|
|
June
30, 2008
|
$0.43
|
$0.10
|
|
March
31, 2008
|
$0.36
|
$0.09
|
|
Fiscal
Year 2007
|
||
|
December
31, 2007
|
$0.17
|
$0.14
|
|
September
30, 2007
|
$0.45
|
$0.30
|
|
June
30, 2007
|
$0.39
|
$0.39
|
|
March
31, 2007
|
$0.35
|
$0.28
|
The last
reported sales price for our shares on the OTCBB as of May 8, 2009 was $0.04 per
share. As of May 7, 2009, we had approximately 107 shareholders of
record.
On June
28, 2007, we completed a reverse stock split thereby issuing 1 new share for
each 2.5 outstanding shares of our common stock. Accordingly, our
authorized share capital was decreased from 200,000,000 common shares to
80,000,000 common shares. On January 22, 2009, in a special meeting
of shareholders our authorized share capital was increased from 80,000,000 to
500,000,000.
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.
Securities
Authorized For Issuance Under Compensation Plans
The
following table sets forth information as of December 31, 2008:
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
|
6,320,000
|
$0.25
|
80,000
|
|
6,320,000
|
$0.25
|
80,000
|
13
2007
Stock Incentive Plan
On June
8, 2007, our Board of Directors approved the adoption of a stock option plan
(the “2007 Plan”) allowing for the granting of up to 6,400,000 options to our
directors, officers, employees and consultants. 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 2007 Stock Incentive Plan is not complete and is
qualified in its entirety by reference to the 2007 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 6,320,000 stock options
granted and outstanding.
Warrants
As of the
date of this annual report, there are an aggregate of 11,917,667 common stock
purchase warrants issued and outstanding and 5,527,000 common stock purchase
warrants committed to be issued.
Recent
Sales of Unregistered Securities
Previously
disclosed in filings with the SEC.
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.
14
|
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, 2008 and
for the period from inception (July 27, 1999) to December 31, 2008 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 an estimated $5,000,000 in conjunction with a significant debt
reduction through creditor negotiation and /or equity for debt settlement is
required over the next two years for expenses associated with the balance of
pre-clinical development and completion of toxicology trials for the TAP Cancer
Vaccine and prophylactic vaccine adjuvant and for various operating
expenses. We are encouraged by recent success stories in the small
cap biotech arena where larger biotech and pharmaceutical companies have taken
significant positions in, or invested in joint development projects with,
smaller companies like ours. While the capital markets are currently
very challenging, we are hopeful that our early success and very promising
technology will enable us to raise the required funding to proceed.
2008 was
a very challenging year in the capital markets. We were not able to secure
significant funding after the smaller bridge funding we completed in December
2007. We were able to continue important patent work resulting in the granting
of a significant patent mid way through 2008. We were also able to complete
initial testing of the research vaccine stocks we had. With that data in hand,
we were able to set out a clear pre-clinical vaccine construction and
manufacturing plan and timeline with the right FDA accredited partners.
Unfortunately, as the markets continued to deteriorate we were not able to
secure the funding required to enter into those contracts. As all of the
relationships are in place and contracts have been planned, once funding is
secured, this work could begin fairly quickly.
Over the
past several years and 2008 being no exception, the Company has obtained
financing from related and unrelated parties under challenging conditions. The
company has been successful to date in raising sufficient funding to sustain
operations by renegotiating or replacing debt instruments and by extending
terms and conditions when default has occurred. These forms of financing are
costly from a market risk perspective and from a legal and operation expense
perspective. As a consequence of debt restructuring there has been substantial
dilution and potential dilution to shareholders through stock based payments and
commitments required to continue or renew debt arrangements. As an example,
during 2008 some of promissory notes had expired (some well over a year beyond
their initial term) and a call on them would have caused the Company severe
distress and even bankruptcy, as consideration for the extension and continued
support additional warrants were issued at a discount to the lowest bid price at
the time. The note holders had all expected the short term loans to be repaid
and could have asked for collateral security. All the note holders indicated
that the outstanding debt was a significant burden on their own businesses
during a very challenging capital market and now carried significant risk. These
loans were crucial to the Company in order to keep it afloat and to make
payments that would ultimately have left company with no assets had they not
been entered into.
Management
has been working with a consulting firm over the past few months to determine a
workable solution for the Company going forward. As the Company’s
growth has been limited by a significant debt burden, a consulting firm has been
engaged to negotiate with various creditors in an effort to restructure certain
debt, including the notes mentioned above, and payables thereby placing the
Company on a stronger foundation for a subsequent
fundraising. Management is confident that a workable solution can be
achieved.
Fund
raising is required to initiate our preclinical manufacturing
contracts. The short term requirement is roughly $1,000,000 with a
further $1.5M to $2M required for the next 12 months to get us to a point where
we can initiate a Phase 1 study (a single phase 1 study will cost approximately
$1M). Outside of internal development and contracted manufacturing,
management has been actively seeking partnerships and joint venture
opportunities with suitable companies.
We have
not generated any cash flows 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. We believe that
anticipated future private placements of equity capital, if successful, may 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.
15
Results
of Operations
The
following sets table sets out our consolidated losses for the periods
indicated:
|
Year
Ended
December
31, 2008
|
Year
Ended
December
31, 2007
|
For
the Period
from
Inception
(July
27, 1999) to
December
31, 2008
|
||||||||||
|
Expenses
|
||||||||||||
|
Consulting
|
$ | 233,283 | $ | 171,854 | $ | 1,218,867 | ||||||
|
Consulting,
stock-based
|
151,500 | 309,500 | 3,285,775 | |||||||||
|
Depreciation
|
7,482 | 5,970 | 209,486 | |||||||||
|
Gain
on Settlement of Debt
|
- | - | (173,010 | ) | ||||||||
|
General
and Administrative
|
115,693 | 132,587 | 2,323,310 | |||||||||
|
Interest
and Finance Charges
|
778,179 | 1,380,075 | 2,721,669 | |||||||||
|
Management
Fees
|
353,162 | 286,632 | 1,934,235 | |||||||||
|
Management
Fees, stock based
|
172,668 | 654,722 | 827,390 | |||||||||
|
Professional
Fees
|
284,288 | 524,502 | 2,641,222 | |||||||||
|
Research
and Development
|
182,343 | 425,569 | 5,324,351 | |||||||||
|
Research
and Development,
stock-based
|
- | - | 612,000 | |||||||||
| 2,278,598 | 3,891,411 | 20,925,295 | ||||||||||
|
Loss
Before Other Items
|
(2,278,598 | ) | (3,891,411 | ) | (20,925,295 | ) | ||||||
|
Other
Items
|
||||||||||||
|
Foreign
exchange gain
|
82,659 | - | 82,659 | |||||||||
|
Interest
Income
|
- | - | 30,530 | |||||||||
|
Net
Loss
|
$ | (2,195,939 | ) | $ | (3,891,411 | ) | $ | (20,812,106 | ) | |||
Year
Ended December 31, 2008 Compared to the Year Ended December 31,
2007
We are a
development stage company. We recorded a net loss of $2,195,939
during the year ended December 31, 2008, compared to $3,891,411 for the year
ended December 31, 2007.
16
Operating
Expenses
Operating
expenses incurred during the fiscal year ended December 31, 2008 were $2,278,598
compared to $3,891,411 in the prior year. Significant changes and
expenditures are outlined as follows:
|
·
|
Consulting
fees were $233,283 during the fiscal year ended December 31, 2008 compared
to $171,854 during the prior fiscal year. The increase was due
primarily to new agreements in the current year for investor relations and
marketing services.
|
|
·
|
Stock-based
consulting fees were $151,500 in the year ended December 31, 2008 compared
to $309,500 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.
|
|
·
|
Depreciation
was $7,482 in the year ended December 31, 2008 compared to $5,970 in the
prior year, with the increase resulting from full depreciation in the
current year on furniture and equipment purchased in the prior fiscal
year.
|
|
·
|
General
and administrative expenses were $115,693 in the year ended December 31,
2008 compared to $132,587 in the prior year, with the decrease resulting
primarily from a reduction in operations in the current year due to
resource restrictions.
|
|
·
|
Interest
and finance charges were $778,179 during the fiscal year ended December
31, 2008 compared to $1,380,075 during the prior fiscal
year. The current year consisted of $113,634 in accrued
interest on notes payable, $206,820 representing the fair value of
warrants attached to debt issued during the year, a $340,048 non-monetary
charge related to the fair value of a beneficial conversion feature and
warrants on 2007 convertible debt, and $117,677 representing the fair
value of warrants to be issued which relate to outstanding
debt. The prior year consisted of accrued interest, accretion
of the discount on the 2006 convertible debt, amortization of the fair
value of warrants on the 2006 convertible debt, $1,016,000 in costs
classified as interest charges resulting from conversion of the debt, and
the fair value of warrants issuable with new promissory notes signed
during the current year. The $1,016,000 non-monetary charge
related to the unaccreted fair value of the beneficial conversion feature
and warrants on the 2007 convertible debt. Once the debt was
converted, the unaccreted charge was required to be recognized
immediately.
|
|
·
|
Management
fees were $353,162 in the year ended December 31, 2008 compared to
$286,632 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.
|
|
·
|
Stock-based
management fees were $172,668 in the year ended December 31, 2008 compared
to $654,722 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 $284,288 in the year ended December 31, 2008 compared to
$524,502 in the prior year. The decrease from the prior year
results from a decrease in operations in the current year, and additional
work relating to financing arrangements and fees relating to the review
of, and reinstatement patent applications incurred in the prior
year.
|
|
·
|
Research
and development costs during the fiscal year ended December 31, 2007 were
$182,343 compared to $425,569 during the prior fiscal year. The
decrease results from research and consulting service agreements in effect
during the prior fiscal year.
|
Our net
loss for the year ended December 31, 2008 was $2,195,939 or ($0.09) per share,
compared to a net loss of $3,891,411 or ($0.19) per share in the prior
period. The weighted average number of shares outstanding was
23,900,839 for the year ended December 31, 2008 compared to 20,815,273 for the
prior year.
17
Liquidity
and Capital Resources
The
following table sets forth our cash and working capital as of December 31, 2008
and 2007:
|
December
31, 2008
|
December
31, 2007
|
|||||||
|
Cash
reserves
|
$ | 987 | $ | 167,539 | ||||
|
Working
capital (deficit)
|
$ | (3,032,512 | ) | $ | (1,691,393 | ) | ||
Subject
to the availability of additional financing, we intend to spend approximately
$3,000,000 over the next twelve months in carrying out our plan of
operations. At December 31, 2008, we had $987 of cash on hand and a
working capital deficit of $3,032,512. As such, our working capital
at December 31, 2008 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 $3,000,000. 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, 2008, we had accumulated
losses of $20,812,106 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, 2008 used cash of $714,425 compared to
$1,248,810 in the year ended December 31, 2007. Operating activities
in the period from inception on July 27, 1999 to December 31, 2008 used cash of
$11,445,979. 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, 2008 investing activities used cash of $Nil compared to
$22,426 in the year ended December 31, 2007. In the period from
inception on July 27, 1999 to December 31, 2008 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, 2008 provided cash of $547,873 compared to $1,318,339 in
the year ended December 31, 2007. In the period from inception on
July 27, 1999 to December 31, 2008 financing activities provided net cash of
$11,242,219 primarily from the sale of our equity securities.
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, 2008
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.
18
ITEM
8. FINANCIAL
STATEMENTS
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
Report
of Independent Registered Public Accounting Firm
Consolidated
Balance Sheets
Consolidated
Statements of Operations
Consolidated
Statement of Stockholders’ Deficit
Consolidated
Statements of Cash Flows
Notes
to the Consolidated Financial Statements
19
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, 2008 and 2007 and the related
consolidated statements of operations, stockholders’ deficit and cash flows for
the years ended December 31, 2008 and 2007 and the period from July 27, 1999
(inception) through December 31, 2008. 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, and 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 TapImmune Inc. as of December 31, 2008 and
2007 and the results of its operations and its cash flows for the years ended
December 31, 2008 and 2007 and the period from July 27, 1999 (inception) through
December 31, 2008 in conformity with accounting principles generally accepted in
the United States of America.
The
accompanying 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
Labunte LLP
DALE
MATHESON CARR-HILTON LABONTE LLP
CHARTERED
ACCOUNTANTS
Vancouver,
Canada
March 31,
2009
20
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
|
December
31, 2008
|
December
31, 2007
|
|||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
|
$ | 987 | $ | 167,539 | ||||
|
Due from government
agency
|
33,263 | 59,634 | ||||||
|
Prepaid expenses and
deposits
|
9,520 | 35,313 | ||||||
| 43,770 | 262,486 | |||||||
|
FURNITURE AND
EQUIPMENT,
NET (Note 3)
|
9,139 | 16,621 | ||||||
| $ | 52,909 | $ | 279,107 | |||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts payable and accrued
liabilities
|
$ | 1,492,586 | $ | 1,103,263 | ||||
|
Research agreement obligations
(Note 4)
|
243,598 | 199,766 | ||||||
|
Convertible notes payable (Note
5)
|
56,633 | 66,633 | ||||||
|
Notes payable (Note
5)
|
763,327 | 429,952 | ||||||
|
Due to related parties (Note
6)
|
520,138 | 154,265 | ||||||
| 3,076,282 | 1,953,879 | |||||||
|
STOCKHOLDERS’
DEFICIT
|
||||||||
|
Capital Stock (Note
7)
|
||||||||
|
Common stock $0.001 par value:
500,000,000 shares
|
||||||||
|
authorized, 24,149,827 (2007 -
23,502,682) shares
|
||||||||
|
issued and outstanding
|
24,150 | 23,503 | ||||||
|
Additional paid-in
capital
|
17,500,559 | 16,910,218 | ||||||
|
Shares and warrants to be issued
(Notes 5, 7, and 11)
|
323,750 | 67,400 | ||||||
|
Deficit accumulated during the
development stage
|
(20,812,106 | ) | (18,616,167 | ) | ||||
|
Accumulated other comprehensive
income (loss)
|
(59,726 | ) | (59,726 | ) | ||||
| (3,023,373 | ) | (1,674,772 | ) | |||||
| $ | 52,909 | $ | 279,107 | |||||
COMMITMENTS AND CONTINGENCIES
(Notes 1, 4, 5, 7, 10 and 11)
The
accompanying notes are an integral part of these consolidated financial
statements.
21
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
Year
Ended
December
31,
2008
|
Year
Ended
December
31,
2007
|
Period
from
July
27, 1999
(inception)
to
December
31,
2008
|
||||||||||
|
EXPENSES
|
||||||||||||
|
Consulting
|
$ | 233,283 | $ | 171,854 | $ | 1,218,867 | ||||||
|
Consulting, stock-based (Note
7)
|
151,500 | 309,500 | 3,285,775 | |||||||||
|
Depreciation
|
7,482 | 5,970 | 209,486 | |||||||||
|
Gain on settlement of
debt
|
- | - | (173,010 | ) | ||||||||
|
General and
administrative
|
115,693 | 132,587 | 2,323,310 | |||||||||
|
Interest and financing charges
(Note 5)
|
778,179 | 1,380,075 | 2,721,669 | |||||||||
|
Management fees (Note
6)
|
353,162 | 286,632 | 1,934,235 | |||||||||
|
Management fees, stock-based
(Note 7)
|
172,668 | 654,722 | 827,390 | |||||||||
|
Professional fees
|
284,288 | 524,502 | 2,641,222 | |||||||||
|
Research and development (Note
6)
|
182,343 | 425,569 | 5,324,351 | |||||||||
|
Research and development,
stock-based
|
- | - | 612,000 | |||||||||
| 2,278,598 | 3,891,411 | 20,925,295 | ||||||||||
|
NET
LOSS BEFORE OTHER ITEMS
|
(2,278,598 | ) | (3,891,411 | ) | (20,925,295 | ) | ||||||
|
OTHER
ITEMS
|
||||||||||||
|
Foreign
exchange gain
|
82,659 | - | 82,659 | |||||||||
|
Interest income
|
- | - | 30,530 | |||||||||
|
NET
LOSS
|
$ | (2,195,939 | ) | $ | (3,891,411 | ) | $ | (20,812,106 | ) | |||
|
BASIC
AND DILUTED NET LOSS PER SHARE
|
$ | (0.09 | ) | $ | (0.19 | ) | ||||||
|
WEIGHTED
AVERAGE NUMBER OF
COMMON
SHARES OUTSTANDING,
BASIC
AND DILUTED
|
23,900,839 | 20,815,273 | ||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
22
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM
JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2008
|
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 founders for:
-
cash
|
740,000 | 740 | 1,110 | - | - | - | 1,850 | |||||||||||||||||||||
|
-
consulting services
|
860,000 | 860 | 1,290 | - | - | - | 2,150 | |||||||||||||||||||||
|
Common
stock subscriptions
|
- | - | - | 177,100 | - | - | 177,100 | |||||||||||||||||||||
|
Net
loss
|
- | - | - | - | (80,733 | ) | - | (80,733 | ) | |||||||||||||||||||
|
Balance,
December 31, 1999
|
1,600,001 | 1,600 | 2,400 | 177,100 | (80,733 | ) | - | 100,367 | ||||||||||||||||||||
|
Issued
with UBC agreement:
|
||||||||||||||||||||||||||||
|
-
for consulting services
|
1,440,000 | 1,440 | 2,160 | - | - | - | 3,600 | |||||||||||||||||||||
|
-
for license fees
|
200,000 | 200 | 300 | - | - | - | 500 | |||||||||||||||||||||
|
Issued
for cash:
|
||||||||||||||||||||||||||||
|
-
at $1.50 per share, net of finders’ fees of $95,570
|
563,531 | 564 | 749,166 | (177,100 | ) | - | - | 572,630 | ||||||||||||||||||||
|
-
at $1.50 per share
|
341,600 | 342 | 512,058 | - | - | - | 512,400 | |||||||||||||||||||||
|
Issued
for finders’ fees
|
49,857 | 50 | (50 | ) | - | - | - | - | ||||||||||||||||||||
|
Net
loss
|
- | - | - | - | (935,332 | ) | - | (935,332 | ) | |||||||||||||||||||
|
Currency
translation adjustment
|
- | - | - | - | - | (1,937 | ) | (1,937 | ) | |||||||||||||||||||
|
Balance,
December 31, 2000
|
4,194,989 | 4,195 | 1,266,034 | - | (1,016,065 | ) | (1,937 | ) | 252,228 | |||||||||||||||||||
|
Issued
for cash:
|
||||||||||||||||||||||||||||
|
-
at $1.88 per share
|
44,133 | 44 | 82,706 | - | - | - | 82,750 | |||||||||||||||||||||
|
-
at $2.50 per share
|
106,000 | 106 | 264,894 | - | - | - | 265,000 | |||||||||||||||||||||
|
Net
loss
|
- | - | - | - | (671,986 | ) | - | (671,986 | ) | |||||||||||||||||||
|
Currency
translation adjustment
|
- | - | - | - | - | (2,041 | ) | (2,041 | ) | |||||||||||||||||||
|
Balance,
December 31, 2001
|
4,345,122 | 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
|
75,000 | 75 | 170,425 | - | - | - | 170,500 | |||||||||||||||||||||
|
Issued
on settlement of debt
|
72,664 | 73 | 136,172 | - | - | - | 136,245 | |||||||||||||||||||||
|
GPI
balance, July 15, 2002
|
4,492,786 | 4,493 | 1,920,232 | - | (1,688,051 | ) | (3,978 | ) | 232,696 | |||||||||||||||||||
23
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM
JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2008
|
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
|
||||||||||||||||||||||
|
GMC
balance, July 15, 2002
|
6,128,048 | 6,128 | 7,180,164 | (85,000 | ) | (6,607,580 | ) | - | 493,712 | |||||||||||||||||||
|
Reverse
acquisition recapitalization adjustment
|
(4,492,786 | ) | (4,493 | ) | (6,603,087 | ) | - | 6,607,580 | - | - | ||||||||||||||||||
|
Balance
post reverse acquisition
|
6,128,048 | 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
|
170,160 | 170 | 1,063,330 | - | - | - | 1,063,500 | |||||||||||||||||||||
|
Exercise
of stock options
|
40,800 | 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
|
6,339,008 | 6,339 | 4,241,873 | 200,000 | (3,972,760 | ) | (9,623 | ) | 465,829 | |||||||||||||||||||
|
Exercise
of stock options
|
927,452 | 927 | 1,420,888 | - | - | - | 1,421,815 | |||||||||||||||||||||
|
Issued
for cash:
|
||||||||||||||||||||||||||||
|
-
at $12.50 per share
|
17,200 | 17 | 214,983 | (185,000 | ) | - | - | 30,000 | ||||||||||||||||||||
|
-
at $2.50 per share, net of finders’ fees
|
222,140 | 222 | 521,593 | - | - | - | 521,815 | |||||||||||||||||||||
|
Issued
as finders’ fees
|
13,414 | 13 | (13 | ) | - | - | - | - | ||||||||||||||||||||
|
Issued
for license agreement
|
4,000 | 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
|
7,523,214 | 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
|
342,857 | 343 | 549,657 | - | - | - | 550,000 | |||||||||||||||||||||
|
Issued
as finders’ fees
|
28,571 | 29 | (29 | ) | - | - | - | - | ||||||||||||||||||||
|
Fair
value of warrants issued in connection
with
convertible notes
|
- | - | 65,000 | - | - | - | 65,000 | |||||||||||||||||||||
24
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM
JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2008
|
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
|
||||||||||||||||||||||
|
Exercise
of stock options
|
142,908 | 143 | 204,942 | - | - | - | 205,085 | |||||||||||||||||||||
|
Settlement
of debt
|
4,000 | 4 | 9,996 | - | - | - | 10,000 | |||||||||||||||||||||
|
Stock-based
compensation
|
- | - | 73,500 | - | - | - | 73,500 | |||||||||||||||||||||
|
Net
loss
|
- | - | - | - | (2,683,105 | ) | - | (2,683,105 | ) | |||||||||||||||||||
|
Currency
translation adjustment
|
- | - | - | - | - | (16,865 | ) | (16,865 | ) | |||||||||||||||||||
|
Balance,
December 31, 2004
|
8,041,550 | 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
|
3,627,320 | 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
|
11,668,870 | 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
|
11,668,870 | 11,669 | 11,749,572 | - | (14,724,756 | ) | (36,565 | ) | (3,000,080 | ) | ||||||||||||||||||
|
Issued
for cash:
|
||||||||||||||||||||||||||||
|
-
at $0.25 per share
|
2,180,000 | 2,180 | 542,820 | - | - | - | 545,000 | |||||||||||||||||||||
|
Issued
on the conversion of notes:
|
||||||||||||||||||||||||||||
|
-
2006 convertible notes at $0.25 per share
|
1,978,000 | 1,978 | 492,522 | - | - | - | 494,500 | |||||||||||||||||||||
|
-
2007 convertible notes at $0.25 per share
|
4,064,000 | 4,064 | 1,011,936 | - | - | - | 1,016,000 | |||||||||||||||||||||
|
Issued
on the conversion of accounts payable
and
related party debt at $0.25 per share
|
2,911,812 | 2,912 | 725,040 | - | - | - | 727,952 | |||||||||||||||||||||
25
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM
JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2008
|
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
for finance charges on the 2007 convertible
notes $0.25 per share
|
600,000 | 600 | 149,400 | - | - | - | 150,000 | |||||||||||||||||||||
|
Issued
pursuant to service agreements
|
||||||||||||||||||||||||||||
|
-
at a fair value of $0.36 per share
|
100,000 | 100 | 35,900 | - | - | - | 36,000 | |||||||||||||||||||||
|
Financing
charges
|
- | - | (167,500 | ) | - | - | - | (167,500 | ) | |||||||||||||||||||
|
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
|
23,502,682 | 23,503 | 16,910,218 | 67,400 | (18,616,167 | ) | (59,726 | ) | (1,674,772 | ) | ||||||||||||||||||
|
Issued
for cash
|
||||||||||||||||||||||||||||
|
-
at $0.25 per share
|
140,000 | 140 | 34,860 | - | - | - | 35,000 | |||||||||||||||||||||
26
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM
JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2008
|
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 the exercise of warrants
|
207,146 | 207 | 24,793 | - | - | - | 25,000 | |||||||||||||||||||||
|
Issued
pursuant to service agreements
|
||||||||||||||||||||||||||||
|
-
at a fair value of $0.30 per share
|
300,000 | 300 | 89,700 | - | - | - | 90,000 | |||||||||||||||||||||
|
Fair
value of warrants issued in connection
with
the 2008 promissory notes
|
- | - | 206,820 | - | - | - | 206,820 | |||||||||||||||||||||
|
Fair
value of warrants to be issued in connection
with
notes payable
|
- | - | - | 256,350 | - | - | 256,350 | |||||||||||||||||||||
|
Stock
based compensation
|
- | - | 234,168 | - | - | - | 234,168 | |||||||||||||||||||||
|
Net
loss
|
- | - | - | - | (2,195,939 | ) | - | (2,195,939 | ) | |||||||||||||||||||
|
Balance,
December 31, 2008
|
24,149,827 | $ | 24,150 | $ | 17,500,559 | $ | 323,750 | $ | (20,812,106 | ) | $ | (59,726 | ) | $ | (3,023,373 | ) | ||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
27
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Year
Ended
December
31,
2008
|
Year
Ended
December
31,
2007
|
Period
from
July
27, 1999
(inception)
to
December
31,
2008
|
||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net
loss
|
$ | (2,195,939 | ) | $ | (3,891,411 | ) | $ | (20,812,106 | ) | |||
|
Adjustments
to reconcile net loss to
net
cash from operating activities:
|
||||||||||||
|
Convertible debenture
costs
|
- | - | 51,817 | |||||||||
|
Depreciation
|
7,482 | 5,971 | 209,487 | |||||||||
|
Gain on settlement of
debt
|
- | - | (173,010 | ) | ||||||||