form10-k.htm
 
 



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, 2009
 
[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from ________________ to ________________.
 
Commission file number 000-27239
 
TAPIMMUNE INC.
(Exact name of registrant as specified in its charter)
 
Nevada
88-0277072
(State or other jurisdiction of incorporation of organization)
(I.R.S. Employer Identification No.)

Suite 400, 800 Bellevue Way NE
Bellevue, Washington
 
98004
(Address of Principal Executive Offices)
(Zip Code)
 
(425) 462-2556
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:  None
 
Securities registered pursuant to Section 12(g) of the Act:
 
Common Stock, Par Value $0.001
(Title of class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Yes [  ]  No [X]
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act.
 
Yes [  ]  No [X]
 
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [  ]
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
 
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer [  ]                                                                                                      Accelerated filer  [  ]
 
Non-accelerated filer  (do not check if a smaller reporting company) [  ]                      Smaller reporting company  [X]
 
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes [  ]  No [X]
 
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at which the registrant’s common equity was last sold, as of June 30, 2009 (the last day of the registrant’s most recently completed second fiscal quarter) was approximately $920,000.
 
The registrant had 39,076,674 shares of common stock outstanding as of April 9, 2010.
 
 
 

 

 
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:
 
 
·
our capital needs;
 
 
·
business plans; and
 
 
·
expectations.
 
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:
 
 
·
our need for additional financing;
 
 
·
our limited operating history;
 
 
·
our history of operating losses;
 
 
·
our lack of insurance coverage;
 
 
·
the competitive environment in which we operate;
 
 
·
changes in governmental regulation and administrative practices;
 
 
·
our dependence on key personnel;
 
 
·
conflicts of interest of our directors and officers;
 
 
·
our ability to fully implement our business plan;
 
 
·
our ability to effectively manage our growth; and
 
 
·
other regulatory, legislative and judicial developments.
 
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.
 
 
 

 
 
TABLE OF CONTENTS
 
  ITEM 1. BUSINESS  1
  ITEM 1A. RISK FACTORS  8
  ITEM 1B. UNRESOLVED STAFF COMMENTS  12
  ITEM 2. PROPERTIES  12
  ITEM 3. LEGAL PROCEEDINGS  13
  ITEM 4. (REMOVED AND RESERVED)  13
  ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  14
  ITEM 6. SELECTED FINANCIAL DATA  15
  ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  15
  ITEM 7A.    19
  ITEM 8. FINANCIAL STATEMENTS  20
  ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  44
  ITEM 9A. CONTROLS AND PROCEDURES  44
  ITEM 9B. OTHER INFORMATION  45
  ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  45
  ITEM 11. EXECUTIVE COMPENSATION  47
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS  48
  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE  50
  ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES  51
  ITEM 15. EXHIBITS  51

 
 

 
 
PART I
 
ITEM 1.                      BUSINESS
 
Company Overview
 
We are a biotechnology company whose strategic vision is to develop and market products specializing in the application of discoveries in cellular and molecular immunology and cancer biology to the development of proprietary therapeutics aimed at the treatment and eradication of cancer and prevention of infectious diseases.  Our technologies are based on an understanding of the function of a protein pump known as “TAP”, which is located within cells and which is essential to the processing of foreign (microbial) or autologous antigens, and subsequent presentation to the immune system for eradication of the cancer or infected cell.  We currently have none of our product candidates on the market and are focusing on the development and testing of our product candidates.
 
The current standard therapies for cancer treatment include surgery, radiation therapy and chemotherapy.  However, we believe that these treatments are not precise in targeting only cancerous cells and often fail to remove or destroy all of the cancer.  The remaining cancer cells may then grow into new tumors, which can be resistant to further chemotherapy or radiation, which may result in death.  In the United States, deaths from cancer are second only to cardiovascular deaths.
 
Company History
 
We currently trade on the OTC Bulletin Board under the symbol “TPIV”.
 
We were incorporated under the laws of the State of Nevada in 1991 under the name “Ward’s Futura Automotive Ltd”.  We changed our name a number of times since 1991 and, in July 2002, we completed the acquisition of GeneMax Pharmaceuticals Inc. (“GeneMax Pharmaceuticals”), a Delaware corporation, in a reverse merger and changed our name to “GeneMax Corp”.  As a result of this transaction the former stockholders of GeneMax Pharmaceuticals then owned 75% of the total issued and outstanding shares of GeneMax Corp.  GeneMax Pharmaceuticals is now a wholly owned subsidiary of TapImmune, and GeneMax Pharmaceuticals Canada Inc. (“GPCanada”), a British Columbia corporation, is a wholly owned subsidiary of GeneMax Pharmaceuticals.  On June 28, 2007, we approved a name change to TapImmune Inc.
 
The Immunotherapy Industry for Cancer
 
Management believes that there is a critical need for more effective cancer therapies.  Management further believes that the global market for effective cancer treatments is large, and that immunotherapies representing potential treatments for metastatic cancer are an unmet need in the area of oncology.
 
The human immune system appears to have the potential to clear cancers from the body, based on clinical observations that some tumors spontaneously regress when the immune system is activated.  Most cancers are not very “immunogenic”, however, meaning that the cancers are not able to induce an immune response because they no longer express sufficient levels of key proteins on their cell surface, known as Major Histocompatability Class I or MHC Class I proteins.  In healthy cells, these proteins provide the information to the immune system that defines whether the cell is healthy or, in the case of cancer or viral infection, abnormal.  If the MHC Class I proteins signal that the cells are abnormal, then the immune system’s T-cells are activated to attack and kill the infected or malignant cell.
 
In many solid cancer tumors, the TAP protein system does not function and, therefore, the immune system is not stimulated to attack the cancer.  Management believes that although a number of cancer therapies have been developed that stimulate the immune system, these approaches have often proven ineffective because the cancers remain invisible to the immune system due to this apparent lack of or low expression of the TAP protein.
 
By restoring TAP expression to TAP-deficient cells, the MHC Class I protein peptide complexes could signal the immune system to attack the cancer.  The strategic vision of TapImmune is to be a product-driven biotechnology company, focusing primarily on use of its patented TAP technology to restore the TAP function within cancerous cells, thus making them immunogenic, or more “visible” to cancer fighting immune cells.  Management believes that this cancer vaccine strategy will provide the most viable therapeutic approach that addresses this problem of “non-immunogenicity” of cancer.  Management believes that this therapy may have a strong competitive advantage over other cancer therapies, since restoring the TAP protein will direct the immune system to specifically target the cancerous cells without damaging healthy tissue.

 
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As a key part of its overall strategy, and with adequate funding, the company is pursuing the development of prophylactic vaccines against infectious microbes and will also do so in partnership with other vaccine developers.  The company intends to develop the TAP technology for use as a vaccine that restores normal immune recognition for the treatment of cancer and supplements immune recognition for the development of prophylactic vaccines.
 
TapImmune’s Target Market and Strategy
 
With the required funding in place, we will support and expand on our key infectious disease partnerships, including our recently announced collaboration effort with Aeras TB Foundation.  We will also continue product development in oncology either alone with corporate partners.  Cancer encompasses a large number of diseases that affect many different parts of the human body.  The diversity of cancer types and their overall prevalence create a large need for new and improved treatments.  Management believes that there is a significant market opportunity for a cancer treatment that utilizes the highly specific defense mechanisms of the immune system to attack cancers.  Research & Markets (Global Vaccine Market Outlook 2007 – 2010) estimated that the market for cancer vaccines could reach approximately $6 billion in 2010.  IMS has estimated that the cancer market will mushroom from $48 billion to $75 billion in 2012 with biopharma companies anticipating that cancer vaccines will grab a large slice of the market (Fierch Biotech, March 23, 2010).  The goal of TapImmune management is to have the FDA approve our cancer vaccines within the next few years so that we can secure a portion of this market.
 
Management also believes that our prophylactic vaccine adjuvant will improve the creation of new vaccines and enhance the efficacy of current vaccines.  It will be a key business development strategy to pursue additional partnerships and joint research and development ventures with vaccine manufacturers and pharmaceutical companies to bring new and improved vaccines to market.  This strategy includes the development of vaccines for pandemic diseases and for bioterrorism threats. The market for prophylactic vaccines is around $6 Billion and is expected to reach $11 billion in 2010 (Frost & Sullivan).  Management believes that our adjuvant will increase the potency of many of the currently available vaccines and lead to the creation of better, more effective new vaccines, thereby allowing us to participate in this large market through novel new products and in combination with existing vaccines.
 
Research and Development Efforts
 
We direct our research and development efforts towards the development of immunotherapeutic and prophylactic vaccine products for the treatment of cancer and protection against pathogenic microbes respectively, using our proprietary TAP technology.  We have focused our efforts initially on the development of a therapeutic vaccine for applications in cancer treatment while demonstrating the breadth of the TAP technology for the development of prophylactic vaccines and its ability to complement currently approved and emerging products in both cancer therapeutics and prophylactic vaccines against microbes.  This approach allows us to pursue our own internal product development while positioning us to enter into multiple partnerships and licensing agreements.  Our first generation TAP vaccines that have been used in animal preclinical studies are based on insertion of TAP genes into a proprietary modified adeno virus vector.  For clinical studies we plan to have this product manufactured using the PerC6 cell line licensed from Crucell Holland B.V. (“Crucell”). We have an opportunity to take advantage of our potential partners’ capabilities while reducing our overhead costs.  Our relationship with the University of British Columbia (“UBC”) allowed us to conduct contract research and development by employing highly skilled scientists at UBC.  The research and development team performed the basic research on the biological function of TAP and related licensed technology as well as preclinical animal studies in cancer and infectious diseases.  Moving into the development phase, we plan to initiate a contract with a qualified CRO (contract research organization), 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. We will also plan to rely on our new partnership with Aeras to demonstrate the use of TAP in a new TB vaccine candidate.  Second generation vaccines using TAP-encoding DNA plasmids will also be developed.

 
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Products and Technology in Development
 
TAP Cancer Vaccine
 
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 metastatic melanoma, where animal studies similar to the small-cell lung cancer studies described above were performed and similar results were achieved.

 
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Pre-Clinical Testing
We have completed small animal pre-clinical animal testing of our TAP Cancer Vaccine to the extent that is required as a prerequisite for further preclinical toxicology analysis and Investigational New Drug (or “IND”) application to the FDA.  The pre-clinical testing of the TAP Cancer Vaccine to date included the evaluation of several strains of vaccinia and adenovirus vectors to assess their respective ability to deliver the correct genetic information allowing expression of the TAP protein in tumors, the selection and licensing of the vector from Crucell and the identification and entering into an agreement, that we refer to in this Annual Report as our “Production Services Agreement”, with a CRO, a GMP manufacturer, for subsequent production of the TAP Cancer Vaccine.  We have to complete the performance of toxicology studies using the TAP Cancer Vaccine on at least two animal species to confirm its non-toxicity.  In addition, we must complete initial vaccine production, and develop internal and external clinical trials, support personnel and infrastructure before commencing clinical trials.
 
Once the formal pre-clinical testing is completed, we intend to compile and summarize the data and submit it to the United States Federal Drug Administration (or “FDA”) and/or the Canadian Health Canada (or “HC”), and/or other national regulatory agencies, in the form of an investigational new drug application.  We anticipate that these applications would include data on vaccine production, animal studies and toxicology studies, as well as proposed protocols for the Phase I human clinical trials, described below.
 
Phase I Human Clinical Trials
Management believes that, subject to the completion of remaining pre-clinical work and financing, estimated at approximately $5,000,000, the Phase I human clinical trials could commence in 2011 depending on how quickly funding or an appropriate partnership 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 alone or as a component of a cancer vaccine in humans.  If the latter strategy is employed the clinical trial design and specific cancer indication will be dependent upon the collaboration.
 
Clinical trials to support new drug applications are typically conducted in three sequential phases, although the phases may overlap.  During Phase I there is an initial introduction of the therapeutic candidate into healthy human subjects or patients.  The drug is tested to assess metabolism, pharmacokinetics and pharmacological actions and safety, including side effects associated with increasing doses.  Phase II usually involves studies in a limited patient population to assess the clinical activity of the drug in specific targeted indications, assess dosage tolerance and optimal dosage and continue to identify possible adverse effects and safety risks.  If the therapeutic candidate is found to be potentially effective and to have an acceptable safety profile in Phase II evaluations, Phase III trials are undertaken to further demonstrate clinical efficacy and to further test for safety within an expanded patient population at geographically dispersed clinical trial sites.
 
Infectious Disease Application for “TAP” Adjuvant
 
TapImmune plans to develop or license out our technology for the creation of enhanced viral vaccines, such as for smallpox and others, based on our findings that TAP can augment immune responses.  We have presented data showing that increasing TAP expression in TAP-competent antigen presenting cells (APCs) and/or virus infected cells increases the antigenic peptide associated with MHC class I expression on the cell surface, and leads to increased specific T cell-mediated immune responses.  We believe this technology can add great value to the creation of new vaccines and enhance those that already exist.  Our collaboration with Aeras TB Foundation is evidence of this and we will continue to pursue additional partnerships and collaborations as a key strategy to expand our R&D program to optimize resources and to reduce costs and development Times.
 
Strategic Relationships
 
University of British Columbia Agreement
We had conducted our research and development at the University of British Columbia (“UBC”) under a Collaborative Research Agreement (“CRA”), however, as a consequence of our Option and Settlement Agreement with UBC, we presently plan to contract out our research and development and continue to contract out clinical grade production of our TAP based vaccines.  In addition, we have an option on any improvements or related TAP technologies coming out of UBC.

 
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Crucell Holland B.V. Research License and Option Agreement
Effective August 7, 2003, we entered into a five-year research license and option agreement with Crucell Holland B.V. (“Crucell”), whereby Crucell granted us a non-exclusive worldwide license for the research use of its packaging cell (PerC6) technology.  We were required to make certain payments over the five-year term totaling Euro €450,000 (approximately $510,100).
 
The license was dormant with an outstanding balance owing of 170,000 Euro ($248,938) that was included in research obligations.  Management has completed a settlement for the remaining balance including a €17,000 cash payment and the issuance of 265,000 shares of the Company’s restricted common stock, and a new license agreement is in place.  As at December 31, 2009, the $25,467 (€17,000) cash payment has been made and the $243,800 fair value of the non-cash settlement has been recorded to discharge the outstanding balance owing.
 
National Institute of Allergy and Infectious Diseases
We signed a License Agreement with the National Institute of Health (USA) for the use of the Modified Vaccinia Ankora (MVA) virus for the development of vaccines.  We will continue to license this technology for the development of prophylactic vaccines against infectious diseases.  Under the terms of this agreement we are required to pay a royalty of $2,500 per year.  This license is expected to be renegotiated pending adequate funding.
 
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.

 
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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 intend to continue to work with UBC to file additional patent applications with respect to any novel aspects of our technology to further protect our intellectual property portfolio.  As disclosed in previous filings, additional patents have been acquired under the execution of the option agreement.  An invention that describes the use of bio-acceptable substances to promote the transcription of the TAP-1 gene in TAP-1 expression-deficient cells was filed in July 2009.  The patent is entitled “HAT acetylation promoters and uses of compositions thereof in promoting immunogenicity”.
 
Competition
 
The oncology industry is characterized by rapidly evolving technology and intense competition.  Many companies of all sizes, including a number of large pharmaceutical companies as well as several specialized biotechnology companies, are developing various immunotherapies and drugs to treat cancer.  There may be products on the market that will compete directly with the products that we are seeking to develop.  In addition, colleges, universities, governmental agencies and other public and private research institutions will continue to conduct research and are becoming more active in seeking patent protection and licensing arrangements to collect license fees and royalties in exchange for license rights to technologies that they have developed, some of which may directly compete with our technologies and products.  These companies and institutions may also compete with us in recruiting qualified scientific personnel.  Many of our potential competitors have substantially greater financial, research and development, human and other resources than us.  Furthermore, large pharmaceutical companies may have significantly more experience than we do in pre-clinical testing, human clinical trials and regulatory approval procedures.  Such competitors may develop safer and more effective products, obtain patent protection or intellectual property rights that limit our ability to commercialize products, or commercialize products earlier than we do.
 
Management expects technology developments in the oncology industry to continue to occur at a rapid pace.  Commercial developments by any competitors may render some or all of our potential products obsolete or non-competitive, which could materially harm the company’s business and financial condition.
 
Management believes that the following companies, which are developing various types of similar immunotherapies and therapeutic cancer vaccines to treat cancer, could be our major competitors: CellGenSys Inc., Dendreon Corp., Genzyme Molecular Oncology, 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.

 
6

 
 
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.

 
7

 
 
Other Jurisdictions
 
Outside the United States and Canada, the company’s ability to market drug products is contingent upon receiving marketing authorization from the appropriate regulatory authorities.  Management believes that the foreign regulatory approval process includes all of the complexities associated with FDA approval described above.  The requirements governing the conduct of clinical trials and marketing authorization vary widely from country to country.  At present, foreign marketing authorizations are applied for at a national level, although within the European Union procedures are available to companies wishing to market a product in more than one member country.
 
Product Liability and Insurance
 
Once we are able to commence the sale of our products into the market, we will face the risk of product liability claims.  Because we are not yet selling our products, we have not experienced any product liability claims to date and we do not yet maintain product liability insurance.  Management intends to maintain product liability insurance consistent with industry standards upon commencement of the marketing and distribution of the TAP Cancer Vaccine.  There can be no assurance that product liability claims will not exceed such insurance coverage limits, which could have a materially adverse effect on our business, financial condition or results of operations, or that such insurance will continue to be available on commercially reasonable terms, if at all.
 
Employees
 
Dr. Glynn Wilson is our Chief Executive Officer and Principal Executive Officer, Mr. Denis Corin is our President, and Mr. Tracy Moore is our 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, 2009, we did not have any payroll or regular employees.
 
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 to $25,274,076, 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 currently do not have sufficient cash to satisfy our needs beyond four 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 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.

 
8

 
 
The independent auditor’s report accompanying our December 31, 2009 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 on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As at December 31, 2009, the Company has a working capital and capital deficiency of $629,388, and has incurred significant losses since inception.  Further losses are anticipated in the development stage raising substantial doubt as to the Company’s ability to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on raising additional capital to fund ongoing research and development, maintenance and protection of patents, accommodation from certain debt obligations and ultimately on generating future profitable operations.  Planned expenditures relating to future clinical trials of the Company’s immunotherapy vaccine will require significant additional funding.  The Company is dependent on future financings to fund ongoing research and development as well as working capital requirements.
 
We depend upon collaborative relationships and third parties for product development and commercialization.
 
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 devote to these activities will generally be based on progress by us in our funding and 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 product candidates 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.

 
9

 
 
Government regulation imposes significant costs and restrictions on the development and commercialization of our product candidates 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.
 
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 management and advisors.
 
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 Glynn Wilson, our Chairman and Chief Executive Officer, Denis Corin, our President, and Tracy Moore, 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. Wilson, Mr. Corin or Mr. Moore would have a material adverse effect upon our business.

 
10

 
 
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 our stock price may have a material adverse effect upon our shareholders.
 
Risks relating to our shares
 
We have not paid dividends to date and do not intend to pay any dividends in the near future.
 
We have never paid dividends on our common stock and presently intend to retain any future earnings to finance the operations of our business. You may never receive any dividends on our shares.

 
11

 
 
The exercise of stock options and warrants, the conversion of debentures, or the later sales of our common stock may further dilute the shares of common stock you receive in this offering.
 
As of the date of this Annual Report, we had outstanding 3,618,000 options to purchase shares of our common stock and 6,062,800 warrants exercisable into shares of our common stock.  The issuance of any shares of common stock pursuant to exercise of such options and warrants or the redemption of the debentures could dilute the interest of our current or future shareholders.
 
Our Board of Directors is authorized to sell additional shares of common stock, or securities convertible into shares of common stock, if in their discretion they determine that such action would be beneficial to us.  Any such issuance could dilute the interest of our current or future shareholders.
 
Our articles of association provide indemnification for officers, directors and employees.
 
Our governing instruments provide that officers, directors, employees and other agents and their affiliates shall only be liable to our Company for losses, judgments, liabilities and expenses that result from the negligence, misconduct, fraud or other breach of fiduciary obligations.  Thus certain alleged errors or omissions might not be actionable by us.  The governing instruments also provide that, under the broadest circumstances allowed under law, we must indemnify our officers, directors, employees and other agents and their affiliates for losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by them in connection with our Company, including liabilities under applicable securities laws.
 
If large amounts of our shares held by existing shareholders are sold in the future, the market price of our common stock could decline.
 
Four shareholders beneficially own approximately 14,401,173 shares of our common stock.  The market price of our shares could fall substantially if these or other shareholders sell large amounts of our common stock in the public market.  These sales, or the possibility that these sales may occur, could also make it more difficult for us to sell equity or equity-related securities if we need to do so in the future to address then-existing financing needs.  U.S. federal securities laws requiring the registration or exemption from registration in connection with the sale of securities limit the number of common stock available for sale in the public market.
 
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 Suite 400, 800 Bellevue Way NE, Bellevue, Washington, 98004.  On June 22, 2009, we entered into a one year office lease in Bellevue, Washington commencing on July 1, 2009.  The terms of the lease require us to make minimum monthly payments of $2,654 per month.
 
ITEM 3.                      LEGAL PROCEEDINGS
 
Management is not aware of any legal proceedings contemplated by any government authority or any other party involving the Company.  As of the date of this Annual Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceeding.  Management is not aware of any other legal proceedings pending or threatened against the Company.
 
ITEM 4.                      (REMOVED AND RESERVED)
 
Not Applicable

 
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 “TPIV.OB” and on the Frankfurt and Berlin Stock Exchanges under the symbol “GX1A.”  The listing on the Berlin Stock Exchange was done without the company’s knowledge and consent.  We have attempted to have the Berlin Stock Exchange listing terminated, however it has not been able to do so.  We do not intend to maintain either Frankfurt or Berlin listings.
 
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 2010
           
  March 31, 2010
  $ 0.70     $ 0.23  
                 
Fiscal Year 2009
               
  December 31, 2009
  $ 1.56     $ 0.42  
  September 30, 2009
  $ 2.60     $ 0.83  
  June 30, 2009
  $ 0.80     $ 0.11  
  March 31, 2009
  $ 2.00     $ 0.20  
                 
Fiscal Year 2008
               
  December 31, 2008
  $ 0.90     $ 0.20  
  September 30, 2008
  $ 3.10     $ 0.40  
  June 30, 2008
  $ 4.30     $ 1.00  
  March 31, 2008
  $ 3.60     $ 0.90  
 
The last reported sales price for our shares on the OTCBB, as of April 9, 2010, was $0.29 per share.  As of April 9, 2010, we had 328 shareholders of record.
 
On June 28, 2007, we completed a reverse stock split thereby issuing 1 new share of common stock in exchange for each 2.5 outstanding shares of our common stock.  Accordingly, we decreased our authorized shares of common stock from 200,000,000 common shares to 80,000,000 common shares.  On January 22, 2009, in a special meeting of shareholders we increased our authorized shares of common stock from 80,000,000 to 500,000,000.  Effective July 10, 2009, we executed a further 1 for 10 reverse stock split reducing the authorized shares of common stock from 50,000,000 common shares with a $0.001 par value.  Effective February 21, 2010, we increased our shares of common stock from 50,000,000 common shares to 150,000,000 common shares.
 
Over the past five years, we have maintained 5,000,000 authorized shares of preferred stock, of which we have issued none.
 
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, 2009:
 
 
13

 
 
Equity Compensation Plan Information
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
Weighted average exercise price of outstanding options, warrants and rights
(b)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
(a)Equity compensation plans approved by security holders
Nil
Nil
Nil
(b)Equity compensation plans not approved by security holders
3,618,000
$0.97
6,382,000
 
3,618,000
$0.97
6,382,000
 
Stock Incentive Plan
 
On October 14, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan”).  The 2009 Plan allows for the issuance of up to 10,000,000 common shares.  Options granted under the Plan shall be at prices and for terms as determined by our Board of Directors, and may have vesting requirements as determined by our Board of Directors.
 
The foregoing summary of the 2009 Stock Incentive Plan is not complete and is qualified in its entirety by reference to the 2009 Stock Incentive Plan, a copy of which has been filed with the SEC.
 
As of the date of this annual report, there are an aggregate of 3,618,000 stock options granted and outstanding.
 
Warrants
As of the date of this annual report, there are an aggregate of 6,062,800 common stock purchase warrants issued and outstanding.
 
Recent Sales of Unregistered Securities
Effective February 8, 2010, we settled $100,000 of debt through the issuance of 750,000 share purchase warrants to acquire an equivalent number of our common shares , at an exercise price of $0.50 per share and for an exercise period of up to five years from the issuance date.  We issued these options in transactions relying on the registration exemption provided by Section 4(2) of the Securities Act of 1933.
 
ITEM 6.                  SELECTED FINANCIAL DATA
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
 
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion of our financial condition, changes in financial condition, plan of operations and results of operations should be read in conjunction with (i) our audited consolidated financial statements as at December 31, 2009 and for the period from inception (July 27, 1999) to December 31, 2009 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.

 
14

 
 
Plan of Operations
 
Management believes that as a result of a significant debt settlement and restructuring in July 2009, the company is well positioned and has a balance sheet that has been restructured to make it possible to go to the equity market to raise the estimated $5,000,000 necessary 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 development and for various operating expenses.
 
2008 and 2009 were very challenging years in the capital markets.  We were however able secure over $1,000,000 enabling us to complete our restructure, ensure our important patent work continued along and pursue our business development initiatives.  These initiatives resulted in a collaboration agreement with Aeras Global Tuberculosis Foundation and a new license agreement with Crucell Holland, giving us access to a best of breed technology and the necessary components to improve the possible outcome in our vaccine manufacturing process.
 
Over the last two years, we have been working diligently on finding partners that we believe we can work closely with to form collaborative arrangements that will be mutually beneficial.  On February 1, 2010, we announced our collaboration intent with Aeras Global TB Foundation.  Aeras, a leading non-profit Product Development Partnerships, is dedicated to the development of effective tuberculosis (TB) vaccine regimens that will prevent tuberculosis in all age groups and will be affordable, available and adopted worldwide.
 
According to the World Health Organization (WHO), in 2007 there were an estimated 13.7 million chronic active cases of TB, 9.3 million new cases, and 1.8 million deaths from TB, mostly in developing countries.
 
Aeras Global TB Vaccine Foundation and TapImmune have entered into an R&D collaboration effort with an overall goal to evaluate the efficacy of TAP in concert with novel TB vaccine candidates.  Aeras is based in Rockville, Maryland, where it operates a state-of-the-art manufacturing and laboratory facility.
 
We have identified additional partnership opportunities and encourage shareholders to keep an eye on our news in the coming months.
 
The scope of these kinds of collaborations cannot be emphasized enough. World class institutions have identified the uniqueness and the potential of our technology platform and the opportunities we are pursuing.
 
We have not generated any cash flows from operations to fund our operations and activities due primarily to the nature of lengthy product development cycles that are normal to the biotech industry.  Therefore, we must raise additional funds in the future to continue operations.  We intend to finance our operating expenses with further issuances of common stock and/or debt.  Although we do not currently have funds to continue operations for more than four months, we believe that future investment, if successful, should be adequate to fund our operations over the next 24 months.  Thereafter, we expect we will need to raise additional capital to meet long-term operating requirements.  Our future success and viability are dependent on our ability to raise additional capital through further private offerings of our stock or loans from private investors.  Additional financing may not be available upon acceptable terms, or at all.  If adequate funds are not available or not available on acceptable terms, we may not be able to conduct our proposed business operations successfully, which could significantly and materially restrict or delay our overall business operations.
 
Results of Operations
 
The following sets table sets out our consolidated losses for the periods indicated:
 

 
15

 
 
   
Year Ended
December 31, 2009
   
Year Ended
December 31, 2008
   
For the Period
from Inception
(July 27, 1999) to
December 31, 2009
 
Expenses
                 
Consulting
  $ 552,339     $ 233,283     $ 1,771,206  
Consulting, stock-based
    506,042       151,500       3,791,817  
Depreciation
    3,741       7,482       213,227  
General and administrative
    85,146       115,693       2,408,456  
Interest and finance charges
    1,188,934       778,179       3,910,603  
Management fees
    260,242       353,162       2,194,477  
Management fees, stock based
    2,019,660       172,668       2,847,050  
Professional fees
    673,227       284,288       3,314,449  
Research and development
    93,041       182,343       5,417,392  
Research and development,
   stock-based
    -       -       612,000  
      5,382,372       2,278,598       26,480,677  
Loss Before Other Items
    (5,382,372 )     (2,278,598 )     (26,480,677 )
Other Items
                       
Foreign exchange
    (38,069 )     82,659       44,590  
Gain on settlement of debt
    961,056       -       1,134,066  
Interest income
    2,814       -       33,344  
Loss on disposal of assets
    (5,399 )     -       (5,399 )
Net Loss
  $ (4,461,970 )   $ (2,195,939 )   $ (25,274,076 )
 
Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008
We are a development stage company.  We recorded a net loss of $4,461,970 during the year ended December 31, 2009 compared to $2,195,939 for the year ended December 31, 2008.
 
Operating Expenses
Operating expenses incurred during the fiscal year ended December 31, 2009 were $5,382,372 compared to $2,278,598 in the prior year.  Significant changes and expenditures are outlined as follows:
 
 
·
Consulting fees were $552,339 during the fiscal year ended December 31, 2009 compared to $233,283 during the prior fiscal year.  The increase was due primarily to business development services including those relating to financing and debt restructuring that were not in place during the prior period.
 
 
·
Stock-based consulting fees were $506,042 in the year ended December 31, 2009 compared to $151,500 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.
 
 
·
General and administrative expenses were $85,146 in the year ended December 31, 2009 compared to $115,693 in the prior year, with the decrease resulting primarily from a reduction in operations in the current year due to resource restrictions, including the closure of the Vancouver location.
 
 
·
Interest and finance charges were $1,188,934 during the fiscal year ended December 31, 2009 compared to $778,179 during the prior fiscal year.  Current and prior period interest charges are primarily accretion of interest and the fair value of warrants issued with promissory notes.
 
 
·
Management fees were $260,242 in the year ended December 31, 2009 compared to $353,162 in the prior year, with the difference resulting primarily from a change in executive compensation during the second half of the prior year and additional directors’ fees during the current year.  Additionally, our Board of Directors and management were reorganized during the year, and as of June 1, 2009, a portion of the fees paid or accrued to our Chief Executive Officer have been allocated to research and development.

 
16

 
 
 
·
Stock-based management fees were $2,019,660 in the year ended December 31, 2009 compared to $172,668 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 $673,227 in the year ended December 31, 2009 compared to $284,288 in the prior year.  The increase from the prior year results from significant activity relating to debt restructuring and continuing patent applications in the current year.
 
 
·
Research and development costs during the fiscal year ended December 31, 2009 were $93,041 compared to $182,343 during the prior fiscal year.  The decrease results from research and consulting service agreements in effect during the prior fiscal year.  Our Board of Directors and management were reorganized during the year, and as of June 1, 2009, a portion of the fees paid or accrued to our Chief Executive Officer have been allocated to research and development.
 
During the fiscal year ended December 31, 2009, we recorded a net gain on settlement of debt of $961,056 from $Nil in the prior year.  The gain was recognized in conjunction with the retirement of debt and obligations through conversion to equity and debt settlement arrangements with creditors.  The cumulative net gain includes the fair value of common stock and warrants issued as part of the transaction.
 
Foreign exchange decreased to a loss of $38,069 during the fiscal year ended December 31, 2009 from a gain of $82,659 in the prior year.  Interest income increased to $2,814 during the fiscal year ended December 31, 2009 from $Nil in the prior year.  Loss on disposal of assets increased to $5,399 during the fiscal year ended December 31, 2009 from $Nil in the prior year.
 
Our net loss for the year ended December 31, 2009 was $4,461,970 or ($0.23) per share, compared to a net loss of $2,195,939 or ($0.90) per share in the prior period.  The weighted average number of shares outstanding was 19,704,002 for the year ended December 31, 2009 compared to 2,390,084 for the prior year.
 
Liquidity and Capital Resources
The following table sets forth our cash and working capital as of December 31, 2009 and 2008:
 
 
December 31, 2009
December 31, 2008
     
Cash reserves
$   141,431 
$              987 
Working capital (deficit)
$  (629,388)
$  (3,032,512)
 
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, 2009, we had $141,431 of cash on hand and a working capital deficit of $629,388.  As such, our working capital at December 31, 2009 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.

 
17

 
 
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, 2009, we had accumulated losses of $25,274,076 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, 2009 used cash of $1,121,726 compared to $714,425 in the year ended December 31, 2008.  Operating activities in the period from inception on July 27, 1999 to December 31, 2009 used cash of $12,619,522.  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, 2009, investing activities used cash of $Nil compared to $Nil in the year ended December 31, 2008.  In the period from inception on July 27, 1999 to December 31, 2009 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, 2009 provided cash of $1,262,170 compared to $547,873 in the year ended December 31, 2008.  In the period from inception on July 27, 1999 to December 31, 2009 financing activities provided net cash of $12,556,206 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, 2009 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, 2009 AND 2008












 
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

 

DMCL Graphic




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, 2009 and 2008 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years ended December 31, 2009 and 2008 and the period from July 27, 1999 (inception) through December 31, 2009.  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, 2009 and 2008 and the results of its operations and its cash flows for the years ended December 31, 2009 and 2008 and the period from July 27, 1999 (inception) through December 31, 2009 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/ DMCL

DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
April 9, 2010



 
20

 

TAPIMMUNE INC.
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS


             
   
December 31, 2009
   
December 31, 2008
 
             
CURRENT ASSETS
           
Cash
  $ 141,431     $ 987  
Due from government agency
    1,033       33,263  
Prepaid expenses and deposits (Note 9)
    214,501       9,520  
      356,965       43,770  
                 
FURNITURE AND EQUIPMENT, NET (Note 3)
    -       9,139  
    $ 356,965     $ 52,909  
                 
CURRENT LIABILITIES
               
Accounts payable and accrued liabilities
  $ 586,556     $ 1,544,603  
Research agreement obligations (Note 4)
    45,676       243,598  
Convertible notes payable (Note 5)
    203,021       56,633  
Short term debt (Note 5)
    135,000       763,327  
Due to related parties (Note 6)
    16,100       468,121  
      986,353       3,076,282  
                 
STOCKHOLDERS’ DEFICIT
               
Capital stock (Note 7)
               
  Common stock $0.001 par value: 150,000,000 shares
               
  authorized, 38,361,674 (2008 - 2,414,983) shares
               
  issued and outstanding
    38,362       24,150  
Additional paid-in capital
    24,152,319       17,500,559  
Shares and warrants to be issued (Notes 5, 7, and 11)
    513,733       323,750  
Deficit accumulated during the development stage
    (25,274,076 )     (20,812,106 )
Accumulated other comprehensive income (loss)
    (59,726 )     (59,726 )
      (629,388 )     (3,023,373 )
    $ 356,965     $ 52,909  

COMMITMENTS AND CONTINGENCIES (Notes 1, 4, 5, 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,
2009
   
Year Ended
December 31,
2008
   
Period from
July 27, 1999
(inception) to
December 31,
2009
 
                   
EXPENSES
                 
Consulting
  $ 552,339     $ 233,283     $ 1,771,206  
Consulting, stock-based (Note 7)
    506,042       151,500       3,791,817  
Depreciation
    3,741       7,482       213,227  
General and administrative
    85,146       115,693       2,408,456  
Interest and financing charges (Note 5)
    1,188,934       778,179       3,910,603  
Management fees (Note 6)
    260,242       353,162       2,194,477  
Management fees, stock-based (Note 7)
    2,019,660       172,668       2,847,050  
Professional fees
    673,227       284,288       3,314,449  
Research and development (Note 6)
    93,041       182,343       5,417,392  
Research and development, stock-based
    -       -       612,000  
      5,382,372       2,278,598       26,480,677  
NET LOSS BEFORE OTHER ITEMS
    (5,382,372 )     (2,278,598 )     (26,480,677 )
OTHER ITEMS
                       
Foreign exchange
    (38,069 )     82,659       44,590  
Gain on settlement of debt (Note 7)
    961,056       -       1,134,066  
Interest income
    2,814       -       33,344  
Loss on disposal of assets
    (5,399 )     -       (5,399 )
NET LOSS
  $ (4,461,970 )   $ (2,195,939 )   $ (25,274,076 )
                         
                         
BASIC AND DILUTED NET LOSS PER SHARE
  $ (0.23 )   $ (0.90 )        
                         
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING,
BASIC AND DILUTED
    19,704,002       2,390,084          


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, 2009


   
Common Stock
   
Additional
   
Obligation
to Issue
   
Deficit
Accumulated
During the
   
Accumulated
Other
       
   
Number of
Shares
   
Amount
   
Paid in
Capital
   
Shares and
Warrants
   
Development
Stage
   
Comprehensive
Loss
   
Total
 
                                           
Issued on incorporation - July 27, 1999
    1     $ -     $ -     $ -     $ -     $ -     $ -  
Issued to the founders for:
                                                       
 - cash
    74,000       740       1,110       -       -       -       1,850  
 - consulting services
    86,000       860       1,290       -       -       -       2,150  
Common stock subscriptions
    -       -       -       177,100       -       -       177,100  
Net loss
    -       -       -       -       (80,733 )     -       (80,733 )
Balance, December 31, 1999
    160,001       1,600       2,400       177,100       (80,733 )     -       100,367  
Issued with UBC agreement for:
                                                       
 - consulting services
    144,000       1,440       2,160       -       -       -       3,600  
 - for license fees
    20,000       200       300       -       -       -       500  
Issued for cash:
                                                       
 - at $1.50 per share, net of finders’ fees of $95,570
    56,353       564       749,166       (177,100 )     -       -       572,630  
 - at $1.50 per share
    34,160       342       512,058       -       -       -       512,400  
Issued for finders’ fees
    4,986       50       (50 )     -       -       -       -  
Net loss
    -       -       -       -       (935,332 )     -       (935,332 )
Currency translation adjustment
    -       -       -       -       -       (1,937 )     (1,937 )
Balance, December 31, 2000
    419,499       4,195       1,266,034       -       (1,016,065 )     (1,937 )     252,228  
Issued for cash:
                                                       
 - at $1.88 per share
    4,413       44       82,706       -       -       -       82,750  
 - at $2.50 per share
    10,600       106       264,894       -       -       -       265,000  
Net loss
    -       -       -       -       (671,986 )     -       (671,986 )
Currency translation adjustment
    -       -       -       -       -       (2,041 )     (2,041 )
Balance, December 31, 2001
    434,512       4,345       1,613,635       -       (1,688,051 )     (3,978 )     (74,049 )
Issued for cash:
                                                       
 - at $2.50 per share, net of finders’ fees of $17,000
    7,500       75       170,425       -       -       -       170,500  
Issued on settlement of debt
    7,266       73       136,172       -       -       -       136,245  
GPI balance, July 15, 2002
    449,279       4,493       1,920,232       -       (1,688,051 )     (3,978 )     232,696  
GMC balance, July 15, 2002
    612,805       6,128       7,180,164       (85,000 )     (6,607,580 )     -       493,712  
Reverse acquisition recapitalization adjustment
    (449,279 )     (4,493 )     (6,603,087 )     -       6,607,580       -       -  


 
23

 

TAPIMMUNE INC.
(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2009


   
Common Stock
   
Additional
   
Obligation
to Issue
   
Deficit
Accumulated
During the
   
Accumulated
Other
       
   
Number of
shares
   
Amount
   
Paid In
Capital
   
Shares and
Warrants
   
Development
Stage
   
Comprehensive
Loss
   
Total
 
                                           
Balance post reverse acquisition
    612,805       6,128       2,497,309       (85,000 )     (1,688,051 )     (3,978 )     726,408  
GMC subscription proceeds received
    -       -       -       285,000       -       -       285,000  
Issued for cash:
                                                       
 - at $6.25 per share
    17,016       170       1,063,330       -       -       -       1,063,500  
Exercise of stock options
    4,080       41       50,959       -       -       -       51,000  
Stock-based compensation
    -       -       630,275       -       -       -       630,275  
Net loss
    -       -       -       -       (2,284,709 )     -       (2,284,709 )
Currency translation adjustment
    -       -       -       -       -       (5,645 )     (5,645 )
Balance, December 31, 2002
    633,901       6,339       4,241,873       200,000       (3,972,760 )     (9,623 )     465,829  
Exercise of stock options
    92,745       927       1,420,888       -       -       -       1,421,815  
Issued for cash:
                                                       
 - at $12.50 per share
    1,720       17       214,983       (185,000 )       -       -       30,000  
 - at $2.50 per share, net of finders’ fees
    22,214       222       521,593       -       -       -       521,815  
Issued as finders’ fees
    1,341       13       (13 )     -       -       -       -  
Issued for license agreement
    400       4       9,996       -       -       -       10,000  
Subscriptions repaid
    -       -       5,000       (15,000 )     -       -       (10,000 )
Stock-based compensation
    -       -       2,733,000       -       -       -       2,733,000  
Net loss
    -       -       -       -       (5,778,905 )     -       (5,778,905 )
Currency translation adjustment
    -       -       -       -       -       (37,299 )     (37,299 )
Balance, December 31, 2003
    752,321       7,523       9,147,319       -       (9,751,665 )     (46,922 )     (643,745 )
Issued for cash:
                                                       
 - at $1.75 per share, net of finders’ fees of $50,000
    34,286       343       549,657       -       -       -       550,000  
Issued as finders’ fees
    2,857       29       (29 )     -       -       -       -  
Fair value of warrants issued in connection
  with convertible notes
    -       -       65,000       -       -       -       65,000  
Exercise of stock options
    14,291       143       204,942       -       -       -       205,085  
Settlement of debt
    400       4       9,996       -       -       -       10,000  
Stock-based compensation
    -       -       73,500       -       -       -       73,500  
Net loss
    -       -       -       -       (2,683,105 )     -       (2,683,105 )


 
24

 

TAPIMMUNE INC.
(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2009


   
Common Stock
   
Additional
   
Obligation
to Issue
   
Deficit
Accumulated
During the
   
Accumulated
Other
       
   
Number of
shares
   
Amount
   
Paid In
Capital
   
Shares and
Warrants
   
Development
Stage
   
Comprehensive
Loss
   
Total
 
                                           
Currency translation adjustment
    -       -       -       -       -       (16,865 )     (16,865 )
Balance, December 31, 2004
    804,155       8,042       10,050,385       -       (12,434,770 )     (63,787 )     (2,440,130 )
Warrant component of convertible note
    -       -       46,250       -       -       -       46,250  
Issued for cash:
                                                       
 - at $0.38 per share, net of finders’ fees
  of $97,620 and legal fees of $100,561
    362,732       3,627       1,158,437       -       -       -       1,162,064  
Net loss
    -       -       -       -       (985,599 )     -       (985,599 )
Currency translation adjustment
    -       -       -       -       -       (2,333 )     (2,333 )
Balance, December 31, 2005
    1,166,887       11,669       11,255,072       -       (13,420,369 )     (66,120 )     (2,219,748 )
Fair value of beneficial feature on
  convertible notes (Note 5)
    -       -       205,579       -       -       -       205,579  
Fair value of warrants issued with
  convertible notes (Note 5)
    -       -       288,921       -       -       -       288,921  
Net loss
    -       -       -       -       (1,304,387 )     -       (1,304,387 )
Currency translation adjustment
    -       -       -       -       -       29,555       29,555  
Balance, December 31, 2006
    1,166,887       11,669       11,749,572       -       (14,724,756 )     (36,565 )     (3,000,080 )
Issued for cash:
                                                       
 - at $0.25 per share
    218,000       2,180       542,820       -       -       -       545,000  
Issued on the conversion of notes:
                                                       
 - 2006 convertible notes at $0.25 per share
    197,800       1,978       492,522       -       -       -       494,500  
 - 2007 convertible notes at $0.25 per share
    406,400       4,064       1,011,936       -       -       -       1,016,000  
Issued on the conversion of accounts payable
  and related party debt at $0.25 per share
    291,181       2,912       725,040       -       -       -       727,952  
Issued for finance charges on the 2007
  convertible notes $0.25 per share
    60,000       600       149,400       -       -       -       150,000  
Issued pursuant to service agreements at a
  fair value of $0.36 per share
    10,000       100       35,900       -       -       -       36,000  
Financing charges
    -       -       (167,500 )     -       -       -       (167,500 )


 
25

 

TAPIMMUNE INC.
(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2009


   
Common Stock
   
Additional
   
Obligation
to Issue
   
Deficit
Accumulated
During the
   
Accumulated
Other
       
   
Number of
shares
   
Amount
   
Paid In
Capital
   
Shares and
Warrants
   
Development
Stage
   
Comprehensive
Loss
   
Total
 
                                           
Fair value of beneficial conversion feature on
   the 2007 convertible notes
    -       -       358,906       -       -       -       358,906  
Fair value of warrants issued in connection
   with the 2007 convertible notes
    -       -       657,095       -       -       -       657,095  
Fair value of warrants issued in connection
   with the 2007 promissory notes
    -       -       374,104       -       -       -       374,104  
Fair value of warrants issued as finders’ fees
   for the 2007 promissory notes
    -       -       35,600       -       -       -       35,600  
Re-pricing and extension of warrants
    -       -       40,000       -       -       -       40,000  
Stock based compensation
    -       -       904,822       -       -       -       904,822  
Obligation to issue warrants at fair value pursuant
   to promissory note extension
    -       -       -       44,000       -       -       44,000  
Obligation to issue shares at fair value pursuant
   to service agreements
    -       -       -       23,400       -       -       23,400  
Net loss
    -       -       -       -       (3,891,411 )     -       (3,891,411 )
Currency translation adjustment
    -       -       -       -       -       (23,161 )     (23,161 )
Balance, December 31, 2007
    2,350,268       23,503       16,910,218       67,400       (18,616,167 )     (59,726 )     (1,674,772 )
Issued for cash
                                                       
 - at $0.25 per share in July 2008
    14,000       140       34,860       -       -       -       35,000  
Issued on the exercise of warrants in June 2008
    20,715       207       24,793       -       -       -       25,000  
Issued pursuant to service agreements
  at a fair value of $0.30 per share in April 2008
    30,000       300       89,700       -       -       -       90,000  
Fair value of warrants issued in connection
  with the 2008 promissory notes in May 2008
    -       -       206,820       -       -       -       206,820  
Fair value of warrants to be issued in
  connection with notes payable in October 2008
    -       -       -       256,350       -       -       256,350  
Stock based compensation in January to December 2008
    -       -       234,168       -       -       -       234,168  


 
26

 

TAPIMMUNE INC.
(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2009


   
Common Stock
   
Additional
   
Obligation
to Issue
   
Deficit
Accumulated
During the
   
Accumulated
Other
       
   
Number of
shares
   
Amount
   
Paid In
Capital
   
Shares and
Warrants
   
Development
Stage
   
Comprehensive
Loss
   
Total
 
                                           
Net loss
    -       -       -       -       (2,195,939 )     -       (2,195,939 )
Balance, December 31, 2008
    2,414,983       24,150       17,500,559       323,750       (20,812,106 )     (59,726 )     (3,023,373 )
Reverse split recapitalization adjustment (rounding) in July 2009
    118       (21,735 )     21,735       -       -       -       -  
Issued for cash
                                                       
- at $0.80 per share in November 2009
    875,000       875       699,125       -       -       -       700,000  
Issued at fair value pursuant to service agreements in August 2009
    25,000       25       27,475       -       -