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
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[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from ________________ to
________________.
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Commission file number
000-27239
TAPIMMUNE
INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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88-0277072
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(State
or other jurisdiction of incorporation of organization)
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(I.R.S.
Employer Identification No.)
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Suite 400, 800 Bellevue Way NE
Bellevue, Washington
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98004
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(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:
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our
capital needs;
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business
plans; and
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expectations.
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While
these forward-looking statements, and any assumptions upon which they are based,
are made in good faith and reflect our current judgment regarding future events,
our actual results will likely vary, sometimes materially, from any estimates,
predictions, projections, assumptions or other future performance suggested
herein. Some of the risks and assumptions include:
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our
need for additional financing;
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our
limited operating history;
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our
history of operating losses;
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our
lack of insurance coverage;
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the
competitive environment in which we
operate;
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changes
in governmental regulation and administrative
practices;
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our
dependence on key personnel;
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conflicts
of interest of our directors and
officers;
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our
ability to fully implement our business
plan;
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our
ability to effectively manage our growth;
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other
regulatory, legislative and judicial
developments.
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We advise
the reader that these cautionary remarks expressly qualify in their entirety all
forward-looking statements attributable to us or persons acting on our
behalf. Important factors that you should also consider, include, but
are not limited to, the factors discussed under “Risk Factors” in this annual
report.
The
forward-looking statements in this annual report are made as of the date of this
annual report and we do not intend or undertake to update any of the
forward-looking statements to conform these statements to actual results, except
as required by applicable law, including the securities laws of the United
States.
AVAILABLE
INFORMATION
TapImmune
Inc. files annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the
“SEC”). You may read and copy documents referred to in this Annual
Report on Form 10-K that have been filed with the SEC at the SEC’s Public
Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings
by going to the SEC’s website at http://www.sec.gov.
REFERENCES
As used
in this annual report: (i) the terms “we”, “us”, “our”, “TapImmune” and the
“Company” mean TapImmune Inc.; (ii) “SEC” refers to the Securities and Exchange
Commission; (iii) “Securities Act” refers to the United States Securities Act of 1933, as
amended; (iv) “Exchange Act” refers to the United States Securities Exchange Act of
1934, as amended; and (v) all dollar amounts refer to United States
dollars unless otherwise indicated.
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.
1
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.
2
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.
3
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.
4
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.
5
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
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 | - | - | - | 27,500 | |||||||||||||||||||||
|
Issued
at fair value pursuant to
debt
settlement agreements in July 2009
|
33,812,065 | 33,812 | 2,044,580 | - | - | - | 2,078,392 | |||||||||||||||||||||
|
Issued
on the exercise of warrants in August and November 2009
|
1,234,508 | 1,235 | 241,515 | - | - | - | 242,750 | |||||||||||||||||||||
|
Stock
based compensation in October 2009
|
- | - | 2,091,900 | - | - | - | 2,091,900 | |||||||||||||||||||||
|
Fair
value of warrants issued in February , May and June 2009 in
connection with promissory notes
|
- | - | 725,669 | (300,350 | ) | - | - | 425,319 | ||||||||||||||||||||
|
Fair
value of warrants issued in August and October 2009 in
connection with convertible notes
|
- | - | 425,491 | - | - | - | 425,491 | |||||||||||||||||||||
|
Fair
value of warrants issued in December 2009 pursuant to service
agreements
|
- | - | 374,270 | - | - | - | 374,270 | |||||||||||||||||||||
|
Obligation
to issue shares at fair value
pursuant
to service agreements in December 2009
|
- | - | - | 246,533 | - | - | 246,533 | |||||||||||||||||||||
|
Obligation
to issue shares at fair value pursuant
to
debt settlement agreements in September 2009
|
- | - | - | 243,800 | - | - | 243,800 | |||||||||||||||||||||
|
Net
loss
|
- | - | - | - | (4,461,970 | ) | - | (4,461,970 | ) | |||||||||||||||||||
|
Balance,
December 31, 2009
|
38,361,674 | $ | 38,362 | $ | 24,152,319 | $ | 513,733 | $ | (25,274,076 | ) | $ | (59,726 | ) | $ | (629,388 | ) | ||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
27
TAPIMMUNE
INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Year
Ended
December
31,
2009
|
Year
Ended
December
31,
2008
|
Period
from
July
27, 1999
(inception)
to
December
31,
2009
|
||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net
loss
|
$ | (4,461,970 | ) | $ | (2,195,939 | ) | $ | (25,274,076 | ) | |||
|
Adjustments
to reconcile net loss to
net
cash from operating activities:
|
||||||||||||
|
Depreciation
|
3,741 | 7,482 | 213,228 | |||||||||
|
Gain
on settlement of debt
|
(961,056 | ) | - | (1,134,066 | ) | |||||||
|
Loss
on disposal of assets
|
5,399 | 5,399 | ||||||||||
|
Non-cash
interest and financing charges
|
1,073,255 | 664,545 | 3,548,089 | |||||||||
|
Stock
based compensation
|
2,525,702 | 324,168 | 7,267,117 | |||||||||
|
Changes
in operating assets and liabilities:
|
||||||||||||
|
Due
from government agency
|
32,230 | 26,371 | (1,033 | ) | ||||||||
|
Prepaid
expenses and receivables
|
9,520 | 25,793 | 6,000 | |||||||||
|
Accounts
payable and accrued liabilities
|
631,244 | 389,323 | 2,486,013 | |||||||||
|
Research
agreement obligations
|
20,209 | 43,832 | 263,807 | |||||||||
|
NET
CASH USED IN
OPERATING
ACTIVITIES
|
(1,121,726 | ) | (714,425 | ) | (12,619,522 | ) | ||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
|
Issuance
of shares, net
|
700,000 | 60,000 | 9,622,125 | |||||||||
|
Convertible
notes
|
350,000 | (10,000 | ) | 658,450 | ||||||||
|
Notes
and loans payable
|
135,000 | 132,000 | 919,845 | |||||||||
|
Advances
from related parties
|
77,170 | 365,873 | 1,355,786 | |||||||||
|
NET
CASH PROVIDED BY
FINANCING
ACTIVITIES
|
1,262,170 | 547,873 | 12,556,206 | |||||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
|
Purchase
of furniture and equipment
|
- | - | (218,626 | ) | ||||||||
|
Cash
acquired on reverse acquisition
|
- | - | 423,373 | |||||||||
|
NET
CASH PROVIDED BY
INVESTING
ACTIVITIES
|
- | - | 204,747 | |||||||||
|
INCREASE
(DECREASE) IN CASH
|
140,444 | (166,552 | ) | 141,431 | ||||||||
|
CASH,
BEGINNING
|
987 | 167,539 | - | |||||||||
|
CASH,
ENDING
|
$ | 141,431 | $ | 987 | $ | 141,431 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION AND
NONCASH INVESTING AND
FINANCING ACTIVITIES (Note 9)
The
accompanying notes are an integral part of these consolidated financial
statements.
28
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
NOTE
1: NATURE OF OPERATIONS
TapImmune
Inc. (the “Company”), a Nevada corporation incorporated in 1992, is a
development stage company which was formed for the purpose of building a
biotechnology business specializing in the discovery and development of
immunotherapeutics aimed at the treatment of cancer, and therapies for
infectious diseases, autoimmune disorders and transplant tissue
rejection.
Effective
July 10, 2009 the Company executed a 1 for 10 reverse stock split reducing the
authorized capital to 50,000,000 common shares with a $0.001 par value and
5,000,000 non-voting preferred shares with a $0.001 par value. Unless
specifically noted, all amounts have been retroactively restated to recognize
the reverse stock splits (refer to Note 7). Effective February 21,
2010, the Company increased its shares of common stock from 50,000,000 common
shares to 150,000,000 common shares. The Company maintained its
authorized shares of preferred stock at 5,000,000.
Since
inception, TapImmune and the University of British Columbia (“UBC”) have been
parties to various Collaborative Research Agreements (“CRA”) appointing UBC to
carry out development of the licensed technology and providing TapImmune the
option to acquire the rights to commercialize any additional technologies
developed within the CRA. The lead product, now wholly owned and with
no ongoing license or royalty, resulting from these license agreements is an
immunotherapy vaccine, on which the Company has been completing pre-clinical
work in anticipation of clinical trials. Specifically, the Company
has obtained and expanded on three U.S. and international patents, tested
various viral vectors, licensed a viral vector and is working towards production
of a clinical grade vaccine. The Company plans to continue
development of the lead product vaccine through to clinical trials in both
oncology and infectious diseases alone or in partnership with other vaccine
developers.
These
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 had a working capital and stockholders’ deficit of $629,388,
and had 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. The Company’s future capital requirements will
depend on many factors including the rate and extent of scientific progress in
its research and development programs, the timing, cost and scope involved in
clinical trials, obtaining regulatory approvals, pursuing further patent
protections and the timing and costs of commercialization
activities.
Management
is addressing going concern remediation through seeking new sources of capital,
restructuring and retiring debt through conversion to equity and debt settlement
arrangements with creditors, cost reduction programs and seeking possible joint
venture participation. Management’s plans are intended to return the
company to financial stability and improve continuing operations. The
Company is continuing initiatives to raise capital through private placements,
related party loans and other institutional sources to meet immediate working
capital requirements (refer to Note 10).
The
Company was able to substantially complete ongoing restructuring plans in the
second half of 2009. Additional funding and equity for debt
settlements have retired notes payable and other debt obligations were
satisfied. Additional capital is required now to expand programs
including pre-clinical work and to establish future manufacturing contracts
necessary for clinical trials for the lead TAP (Transporters of Antigen
Processing) vaccine and infectious disease adjuvant
technology. Strategic partnerships will be needed to continue the
product development portfolio and fund development costs. These
measures, if successful, may contribute to reduce the risk of going concern
uncertainties for the Company over the next twelve months.
There is
no certainty that the Company will be able to raise sufficient funding to
satisfy current debt obligations or to continue development of products to
marketability.
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
These
financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States of America.
29
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
Principles
of Consolidation
These
financial statements include the accounts of the Company and its wholly-owned
subsidiaries GeneMax Pharmaceuticals Inc. (“GPI”) and GeneMax Pharmaceuticals
Canada Inc. (“GPC”). All significant intercompany balances and
transactions are eliminated upon consolidation.
Use
of Estimates
Preparation
of the Company’s financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ materially from
those estimates. Significant areas requiring management’s estimates
and assumptions include deferred taxes and related tax balances and disclosures,
determining the fair value of stock-based compensation and stock based
transactions, the fair value of the components of the convertible notes payable,
foreign exchange gains and losses, the useful lives of furniture and equipment,
allocation of costs to research and development and accrued
liabilities. Matters impacting the company’s ability to continue as a
going concern and contingencies also involve the use of estimates and
assumptions.
Fair
Value Measurements
The
objective of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and
Disclosures, is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value measurements. ASC 820
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. ASC 820 applies under other accounting
pronouncements that require or permit fair value measurements and does not
require any new fair value measurements.
Foreign
Currency Translation
The
functional currency of the Company, including its subsidiary, is United States
dollars. GPC maintains its accounting records in its local currency
(Canadian dollar). In accordance with ASC 830, Foreign Currency Matters, the
financial statements of the Company's subsidiary is translated into United
States dollars using period end exchange rates for monetary assets and
liabilities and average exchange rates for revenues and
expenses. Non-monetary assets are translated at their historical
exchange rates. Net gains and losses resulting from foreign exchange
translations and foreign currency exchange gains and losses on transactions
occurring in a currency other than the Company's functional currency are
included in the determination of net income in the period.
Financial
Instruments and Concentration of Credit Risk
The fair
values of cash, accounts payable, and other current monetary liabilities
approximate their carrying values due to the immediate or short-term maturity of
these financial instruments. The Company's operations and financing
activities are conducted primarily in United States dollars, and as a result the
Company is not subject to significant exposure to market risks from changes in
foreign currency rates. Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest or credit risks
arising from assets classified as financial instruments.
Furniture
and Equipment
Furniture
and equipment is recorded at cost and amortized using the straight-line method
over the estimated useful life at the following rates:
| Computer Equipment | 2 years |
| Furniture and Fixtures | 5 years |
| Laboratory Equipment | 3 years |
Impairment
of Long-Lived Assets
Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate the carrying amount of an asset may not be
recoverable. Circumstances which could trigger a review include, but
are not limited to: significant decreases in the market price of the asset;
significant adverse changes in the business climate or legal factors;
accumulation of costs significantly in excess of the amount originally expected
for the acquisition or construction of the asset; current period cash flow or
operating losses combined with a history of losses or a forecast of continuing
losses associated with the use of the asset; and current expectation that the
asset will more likely than not be sold or disposed significantly before the end
of its estimated useful life. Recoverability of these assets is
measured by comparison of its carrying amount to future undiscounted cash flows
the assets are expected to generate. An impairment loss is recognized
when the carrying amount is not recoverable and exceeds fair
value.
30
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
Stock-Based
Compensation
The
Company uses the Black-Scholes option-pricing model to determine the grant date
fair-value of stock-based awards under ASC 718, Compensation – Stock
Compensation. The fair value is recorded in income depending
on the terms and conditions of the award, and the nature of the relationship of
the recipient of the award to the Company. The Company records the
grant date fair value in income in line with the period over which it was
earned. For employees and management this is typically considered to
be the vesting period of the award. For consultants the fair value of
the award is recorded in income over the term of the service period, and
unvested amounts are revalued at each reporting period over the service
period.
Deferred
Financing Fees
The
Company defers direct costs incurred in connection with the sale of common
shares which are offset against the proceeds of the financing upon
completion. Costs incurred in connection with convertible loans
payable are deferred and amortized as a financing cost over the term of the
convertible loans. Upon conversion of the loan, any unamortized
amount of deferred financing costs will be charged to stockholders’ equity as a
cost of financing.
Research
and Development Costs
The
Company has acquired development and marketing rights to certain
technologies. The rights and licenses acquired are considered rights
to unproven technology which may not have alternate future uses and therefore,
have been expensed as incurred as research and development costs.
Income
Taxes
The
Company follows the liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of assets and liabilities and their
respective tax balances. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the date
of enactment. The Company recognizes deferred taxes on unrealized
gains directly within other comprehensive income, and concurrently releases part
of the valuation allowance resulting in nil impact within OCI or on the balance
sheet. As at December 31, 2009, the Company had net operating loss
carry forwards; however, due to the uncertainty of realization, the Company has
provided a full valuation allowance for the potential deferred tax assets
resulting from these loss carry forwards.
Loss
per Common Share
Basic
loss per share includes no dilution and is computed by dividing loss
attributable to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflect
the potential dilution of securities that could share in the earnings (loss) of
the Company. The common shares potentially issuable on conversion of
outstanding convertible debentures and exercise of stock options were not
included in the calculation of weighted average number of shares outstanding
because the effect would be anti-dilutive.
Recent
Accounting Pronouncements
Effective
July 1, 2009, the Company adopted ASC 855, Subsequent
Events. ASC 855 establishes general standards of accounting
for and disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. ASC
855 requires the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date. ASC 855 is effective for interim
financial periods ending after June 15, 2009. The adoption of ASC 855
did not affect the Company's consolidated financial statements.
Recent
Accounting Guidance Not Yet Adopted
The
Company reviewed recently issued accounting pronouncements and plans to adopt
those that apply to it. The Company does not expect the adoption of
these pronouncements to have a material impact on its financial position,
results of operations or cash flows.
31
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
NOTE
3: FURNITURE AND EQUIPMENT
Furniture
and equipment consisted of the following:
|
December
31, 2009
|
December
31, 2008
|
|
|
Computer
equipment
|
$ 4,533
|
$ 4,533
|
|
Furniture
and fixtures
|
-
|
3,161
|
|
Laboratory
equipment
|
-
|
16,704
|
|
4,533
|
24,398
|
|
|
Less
accumulated depreciation
|
(4,533)
|
(15,259)
|
|
$ -
|
$ 9,139
|
NOTE
4: RESEARCH AGREEMENT
Crucell
Holland B.V. (“Crucell”) – Research License and Option Agreement
Effective
August 7, 2003, Crucell and GPI entered into a five-year research license and
option agreement whereby Crucell granted to GPI a non-exclusive worldwide
license for the research use of its adenovirus technology. The
Company was required to make certain payments over the five-year term totaling
Euro €450,000 (approximately $510,100).
At
December 31, 2008, $243,598 (€172,801) was owing to Crucell under this
agreement. During the year ended December 31, 2009, management
negotiated a settlement of the outstanding balance requiring a €17,000 cash
payment and the issuance of 265,000 shares of the Company’s common
stock. 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, determined by
the market price at settlement date, has been recorded as a stock issuance
obligation. On January 26, 2010 the Company issued the 265,000 shares
of restricted common stock pursuant to the settlement.
In
addition, retroactively effective August 7, 2008, the Company negotiated an
amended license agreement for the use of Crucell’s adenovirus
technology. The Company is required to make annual license payments
on the anniversary of the effective date for the three year term equal to
€75,000 per annum. As at December 31, 2009, the Company had accrued
$45,676 (€31,250) under the amended agreement.
32
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
NOTE
5: SHORT TERM DEBT
The
following is a summary of debt instrument transactions that are relevant to the
current and prior year:
|
Unsecured
|
Balance
at December 31, 2009
|
Amount
Settled Through Share Issuance
|
Accrued
Interest to Settlement Date
|
Balance
at December 31, 2008
|
Note
Discount at December 31, 2008
|
Outstanding
Principal Balance at December 31, 2008
|
||||||||||||||||||
|
2004
Convertible Debenture
|
||||||||||||||||||||||||
|
Convertible
note (i), 8% interest,
demandable
|
$ | - | $ | 73,520 | $ | 16,887 | $ | 56,633 | $ | - | $ | 56,633 | ||||||||||||
|
2007
Promissory Notes
|
||||||||||||||||||||||||
|
Notes
(ii) & (iii), 12% interest,
due
March 30, 2009
|
- | 407,710 | 82,710 | 284,119 | (40,811 | ) | 325,000 | |||||||||||||||||
|
2008
Promissory Notes
|
||||||||||||||||||||||||
|
Note
(iv), 18% interest, due
March
30, 2009
|
- | 78,303 | 13,303 | 54,545 | (10,455 | ) | 65,000 | |||||||||||||||||
|
Note
(v), 18% interest, due
March
30, 2009
|
- | 32,193 | 5,193 | 22,657 | (4,343 | ) | 27,000 | |||||||||||||||||
|
Notes
(vi) & (vii), 18% interest,
due
March 30, 2009
|
- | 533,564 | 83,564 | 377,620 | (72,380 | ) | 450,000 | |||||||||||||||||
|
Note
(viii), 18% interest, due
March
30, 2009
|
- | 29,685 | 4,685 | 20,979 | (4,021 | ) | 25,000 | |||||||||||||||||
|
Note
(ix), 18% interest, due
March
30, 2009
|
- | 10,890 | 890 | 3,407 | (6,593 | ) | 10,000 | |||||||||||||||||
| $ | - | $ | 1,165,865 | $ | 207,232 | $ | 819,960 | $ | (138,673 | ) | $ | 958,633 | ||||||||||||
(ii)
& (iii) Issued on August 31, 2007 to a company related through a family
member of a director.
(v)
Issued May 5, 2008 to a company controlled by a director.
(vi)
& (vii) Issued on May 14, 2008 to a company related through a family member
of an officer.
(viii)
Issued May 15, 2008 to an officer of the Company.
(ix)
Issued November 15, 2008 to an officer of the Company.
During
the year ended December 31, 2009, the Company issued 31,812,065 shares with a
fair value of $1,678,391 in settlement of $3,181,207 resulting in a gain on debt
settlement of $1,502,815 (refer to Note 7).
|
Face
Value
|
Unamortized
Note
Discount
|
Balance
at
December
31,
2009
|
Balance
at
December
31,
2008
|
|||||||||||||
|
2009
Secured Debentures
|
||||||||||||||||
|
Secured
Notes (x), 30% interest, due October 4, 2009
|
$ | 135,000 | $ | - | $ | 135,000 | $ | - | ||||||||
In
connection with the issuance of the Debentures, the Company entered into a
Security Agreement with the Debenture holders secured by all of the Company’s
assets, including the Company’s tangible assets and patents and patent
applications, until there has been full compliance with the terms of the
Debentures.
In
connection with the Debentures, the Company issued a total of 270,000 warrants
which have a term of two years from the date of issuance. Management
estimated the fair value of these warrants to be $60,000 using the Black-Scholes
pricing model (refer to Note 7).
33
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
At
December 31, 2009, no repayment has been made to the principal amount and
interest of $35,396 (2008 - $Nil) has been accrued and included in accounts
payable and accrued liabilities.
|
Unsecured
|
Face
Value
|
Unamortized
Note
Discount
|
Balance
at
December
31,
2009
|
Balance
at
December
31,
2008
|
||||||||||||
|
2009
Convertible Debentures
|
||||||||||||||||
|
Convertible
Note (xi), 10% interest, due February 28, 2010
|
$ | 350,000 | $ | (146,979 | ) | $ | 203,021 | $ | - | |||||||
(xi) On
August 31, 2009, the Company completed a convertible debenture financing of
$350,000 issuing a convertible promissory note bearing interest at 10% per
annum. If not converted, the note would be due on February 28,
2010. The unpaid amount of principal and accrued interest can be
converted at any time at the holder's option into shares of the Company's common
stock at a price of $0.80 per share.
Under the
terms of the debenture agreement, the note will automatically convert to equity
if, during the term of the note, the Company receives funding equal to or
exceeding $2,000,000 through the sale of its shares of common stock or
additional debt instruments that are converted into common stock during the term
of the debenture. If the Company does not receive $2,000,000
additional funding by the end of the term the holders may convert the debentures
into 3,500,000 common shares of the Company or get repaid in full.
The
Company recognized the embedded beneficial conversion feature of $139,571 as
additional paid-in capital as the convertible notes were issued with an
intrinsic value conversion feature. Additionally, the Company issued
437,500 non-transferable and registerable share purchase
warrants. Management estimated the fair value of the warrants to be
$210,429 as the relative fair value of the warrants and beneficial conversion
feature together is limited to the face value of the loan (refer to Note
7).
NOTE
6: RELATED PARTY TRANSACTIONS
The
Company had transactions with certain officers and directors of the Company for
the fiscal year ended December 31, 2009 as follows:
|
|
a)
|
incurred
$260,242 (2008 - $308,162) in management fees, $42,000 (2008 - $74,579) in
research and development, and recorded an additional $2,019,660 (2008 -
$172,668) as management fees, in stock based compensation expense for the
estimated fair value of options to management that were vested during the
year;
|
|
|
b)
|
effective
June 4, 2009, an outstanding balance of $595,987 due to directors and
officers was settled through the issuance of 5,959,870 shares in
conjunction with a debt settlement
agreement;
|
|
|
c)
|
incurred
$9,247 (2008 - $16,932) in interest and finance charges on a $125,000
promissory note due to a company related through a direct family member of
a current director (refer to Note 5); incurred $14,795 (2008 - $27,090) in
interest and finance charges on a $200,000 convertible promissory note due
to the same company (refer to Note 5); and incurred $40,881 (2008 -
$35,369) in interest and finance charges related to an agreement to issue
warrants in connection with extending the terms of the $125,000 and
$200,000 notes through March 30, 2009 (refer to Note 5), and effective
June 4, 2009 the outstanding principal and interest was settled in
conjunction with an equity
issuance;
|
|
|
d)
|
incurred
$1,997 (2008 - $3,196) in interest and finance charges on a $27,000
promissory note issued to a company controlled by a director of the
Company, and incurred $4,343 (2008 - $3,757) in interest and finance
charges related to an agreement to issue warrants in connection to
extending the term through March 30, 2009 (refer to Note 5), and effective
June 4, 2009 the outstanding principal and interest was settled in
conjunction with an equity
issuance;
|
|
|
e)
|
incurred
$14,795 (2008 - $22,784) in interest and finance charges on a $200,000
promissory note issued to a company related through a family member of an
officer of the Company (refer to Note 5); incurred $18,493 (2008 -
$27,493) in interest and finance charges on a $250,000 promissory note
issued to the same company (refer to Note 5); and incurred $72,380 (2008 -
$62,620) in interest and finance charges related to an agreement to issue
warrants in connection to extending the terms of the $200,000 and $250,000
notes through March 30, 2009 (refer to Note 5), and effective June 4, 2009
the outstanding principal and interest was settled in conjunction with an
equity issuance;
|
34
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
|
|
f)
|
incurred
$1,849 (2008 - $2,836) in interest and finance charges on a $25,000
promissory note issued to an officer of the Company, and incurred $4,021
(2008 - $3,479) in interest and finance charges related to an agreement to
issue warrants in connection to extending the term through March 30, 2009
(refer to Note 5), and effective June 4, 2009 the outstanding principal
and interest was settled in conjunction with an equity
issuance;
|
|
|
g)
|
incurred
$740 (2008 - $150) in interest and finance charges on a $10,000 promissory
note issued to an officer of the Company, and incurred $4,343 (2008 -
$3,407) in interest and finance charges related to an agreement to issue
warrants in connection to the note issuance (refer to Note 5), and
effective June 4, 2009 the outstanding principal and interest was settled
in conjunction with an equity issuance;
and
|
|
|
h)
|
issued
a $15,000 secured promissory note bearing interest at 30% per annum and
issued 30,000 transferable and registerable share purchase warrants with
an exercise price of $0.20 per share for an exercise period of up to two
years from the issuance date to a direct family member of an officer of
the Company, incurred $4,068 (2008 - $Nil) in interest and finance charges
on the $15,000 promissory note, and incurred $4,167 (2008 - $Nil) in
interest and finance charges related to the issued warrants (refer to Note
5).
|
All
related party transactions (other than stock based consideration) involving
provision of services were recorded at the exchange amount, which is the amount
established and agreed to by the related parties. The Company has
accounted for the debt settlement transactions with related parties at
management’s estimate of fair value, which was determined by reference to
similar settlements with arms-length parties. The debt settlement
transactions with related parties resulted in a gain of $284,368 being included
in the statement of operations.
At
December 31, 2009, the Company had amounts owing to directors and officers of
$16,100 (2008 - $468,121). These amounts were in the normal course of
operations. Amounts due to related parties are unsecured,
non-interest bearing and have no specific terms of repayment, except as
described above.
NOTE
7: CAPITAL STOCK
Share
Capital
Prior to
March 27, 2007, the authorized capital of the Company consisted of 500,000,000
common shares with $0.001 par value and 5,000,000 non-voting preferred shares
with $0.001 par value. On March 27, 2007, the Company’s Articles of
Incorporation were amended to increase the authorized shares of common stock
from 20,000,000 shares of common stock to 80,000,000 shares of common stock, and
on January 22, 2009 the authorized shares of common stock increased from
80,000,000 shares of common stock to 500,000,000 shares of common
stock. Effective July 10, 2009, the Company executed a further 1 for
10 reverse stock split while simultaneously reducing the authorized shares of
common stock to 50,000,000 common shares with a $0.001 par value and maintaining
5,000,000 non-voting preferred shares with a $0.001 par
value. Effective February 21, 2010, the Company increased its shares
of common stock from 50,000,000 common shares to 150,000,000 common
shares. The Company maintained its authorized shares of preferred
stock at 5,000,000.
All prior
period share transactions included in the company’s stock transactions and
balances have been retroactively restated to give effect to the 1 for 10 reverse
stock split noted above.
2008
Share Transactions
On April
8, 2008, the Company issued 30,000 shares of restricted common stock with an
estimated fair value based on market trading of $3.00 per share, pursuant to a
consulting services agreement. The $90,000 estimated fair value of
the issued shares has been recorded as stock-based consulting
fees. Additionally, pursuant to the consulting services agreement,
the Company had agreed to issue stock options to acquire 20,000 shares of the
Company’s common stock at an exercise price of $2.50 per share. The
vesting and expiry terms were to be determined at the time of grant. As of
December 31, 2009 the options were not issued and there was no vesting or expiry
terms established. No stock based compensation has been recorded for
this commitment as the fair value can not be reasonably determined at the
commitment date.
On July
31, 2008, with an effective date of June 30, 2008, the Company completed a
private placement in the amount of 14,000 Units at a subscription price of $2.50
per unit for gross proceeds to the Company of $35,000. Each Unit is
comprised of one common share and one-half of one non-transferable share
purchase warrant of the Company. Each whole warrant entitles the
holder to purchase an additional common share of the Company at an exercise
price of $3.00 per share for a period which is the earlier of (i) two years from
the date of issuance, or (ii) 18 months from the effective date of
registration. The Company estimated the total fair market value of
the warrants to be $21,000 at the date of grant, using the Black-Scholes option
pricing model using an expected life of 18 months, a risk-free interest rate of
2.60% and an expected volatility of 202%. The fair value of the
warrants has been included in capital stock.
35
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
During
the year ended December 31, 2008 the Company issued 20,715 shares of restricted
common stock pursuant to the exercise of 35,800 warrants, for total proceeds of
$25,000. Of the 35,800 warrants exercised, 25,800 were exercised for
$Nil proceeds, in accordance with a cash-less exercise option, resulting in the
issuance of 10,715 shares of restricted common stock.
2009
Share Transactions
Effective
June 4, 2009, the Company completed a debt conversion and assignment transaction
resulting in an obligation to issue 31,812,065 common shares in conjunction with
the retirement of $3,181,207 in accounts payable and accrued liabilities, notes
payable and related party debt. The shares were issued on July 1,
2009. Management estimated the fair value of the resultant obligation
to issue shares to be $1,678,392 based on third party debt
settlements. Included in the statement of operations is a gain on
debt settlement of $972,369, net of transaction costs. Of the
33,812,065 share issuance, 2,000,000 shares were issued pursuant to a consulting
services agreement related to the debt conversion and assignment
transaction. The 2,000,000 share issuance has an estimated fair value
of $400,000 which was recorded against the gain on debt
settlement. The Company also settled accounts payable and incurred a
loss on debt settlement of $11,314.
On August
10, 2009, the Company issued 162,500 shares of its common stock pursuant to the
exercise of 130,000 warrants on a cashless basis for $Nil proceeds, and as a
settlement with the warrant holders which included a waiver of rights to
additional ratchet provisions. The warrants were originally issued in
conjunction with a 2007 Loan and Security Agreement. At the time of
issuance, the market price of shares was $1.10 per share and the estimated fair
value of $178,750 was recorded as interest and financing charges.
On August
10, 2009, the Company issued 25,000 shares of its restricted common stock
pursuant to a consulting services agreement in relation to the settlement of
financing transaction. At the time of issuance, the market price of
shares was $1.10 per share and the estimated fair value of $27,500 was recorded
as stock-based consulting fees.
On August
26, 2009, the Company issued 50,000 shares of its common stock pursuant to the
exercise of 40,000 warrants on a cashless basis for $Nil proceeds, as a
settlement with the warrant holders which included a waiver of rights to
additional ratchet provisions. The warrants were originally issued in
conjunction with a 2007 Loan and Security Agreement. At the time of
issuance, the market price of shares was $1.28 per share and the estimated fair
value of $64,000 was recorded as interest and financing charges.
On
October 20, 2009, the Company issued 314,466 shares of its common stock pursuant
to the exercise of 385,532 warrants on a cashless basis for $Nil
proceeds. The warrants were originally issued in conjunction with the
2009 Secured Loan Agreement (refer to Note 5). The fair value of
these shares was determined by management to be $62,893.
On
November 6, 2009, the Company completed a private placement for 625,000 Units at
a subscription price of $0.80 per Unit for gross proceeds of
$500,000. Each Unit is comprised of one common share and one
non-transferable share purchase warrant of the Company. Each warrant
entitles the holder to purchase an additional common share of the Company at an
exercise price of $1.20 per warrant share, for a period of five years from the
date of issuance.
On
November 6, 2009, the Company completed a private placement for 125,000 Units at
a subscription price of $0.80 per Unit for gross proceeds of
$100,000. Each Unit is comprised of one common share and one
non-transferable share purchase warrant of the Company. Each warrant
entitles the holder to purchase an additional common share of the Company at an
exercise price of $1.20 per warrant share, for a period of five years from the
date of issuance.
On
November 30, 2009, the Company completed a private placement for 125,000 Units
at a subscription price of $0.80 per Unit for gross proceeds of
$100,000. Each Unit is comprised of one common share and one
non-transferable share purchase warrant of the Company. Each warrant
entitles the holder to purchase an additional common share of the Company at an
exercise price of $1.20 per warrant share, for a period of five years from the
date of issuance.
On
November 30, 2009, the Company issued 707,542 shares of its common stock
pursuant to the exercise of 915,642 warrants on a cashless basis for $Nil
proceeds. The warrants were originally issued in conjunction with the
2009 Secured Loan Agreement (refer to Note 5). The fair value of
these shares was determined by management to be $141,508.
The
Company has not separately disclosed the fair market value of the warrants
attached to private placements units during the current and prior fiscal
years.
36
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
Share
Purchase Warrants
The
following table is a summary of warrant issuances during the current
year:
|
Estimated
fair value recorded as
|
||||||||||||||||||||||||
|
Issued
for:
|
Number
of Warrants Issued
|
Exercise
Price per Share ($)
|
Interest
and Finance Charges
|
Note
Discounts
|
Loss
on Debt Settlement
|
Consulting
Services
|
||||||||||||||||||
|
(i)
Consideration for
promissory
note extensions
|
532,700 | $ | 0.10 – $2.50 | $ | 290,350 | $ | 44,000 | $ | - | $ | - | |||||||||||||
|
(ii)
Consideration for
promissory
note grants
|
1,758,674 | $ | 0.10 – $0.20 | - | 398,801 | - | - | |||||||||||||||||
|
(iii)
Debt settlement
|
30,000 | $ | 0.40 | - | - | 12,000 | - | |||||||||||||||||
|
(iv)
Consideration for
consulting
services
|
1,225,000 | $ | 0.50 – $0.60 | - | - | - | 622,750 | |||||||||||||||||
|
Units
in private placements
|
875,000 | $ | 1.20 | - | - | - | - | |||||||||||||||||
| 4,421,374 | ||||||||||||||||||||||||
(i)
During the year ended December 31, 2009, the Company extended terms of the 2007
and 2008 promissory notes (refer to Note 5) in exchange for the issuance of
532,700 warrants. The fair value of these warrants was determined to
be $290,350 using the Black-Scholes option pricing model with an expected life
of 2 - 3 years, a risk free interest rate of 1.64% - 4.21%, a dividend yield of
0%, and an expected volatility of 100% - 199%. For the fiscal year ended
December 31, 2009 the remaining $132,079 of the total value was expensed as
financing charges.
(ii)
During the year ended December 31, 2009, in connection with debenture issuances,
the following transactions occurred: the Company issued 20,000 share purchase
warrants on March 11, 2009, the Company issued 270,000 warrants on February 4,
2009, the Company issued to the secured promissory note lenders (refer to Note
5), 1,031,174 share purchase warrants on July 1, 2009 and October 28, 2009, and
the Company issued 437,500 share purchase warrants on August 31,
2009. The aggregate fair value of these warrants was determined to be
$398,801 using the Black-Scholes option pricing model with an expected life of 2
- - 5 years, a risk free interest rate of 0.23% - 1.64%, a dividend yield of 0%,
and an expected volatility of 195% - 245%. The fair values of the warrants
issued on February 4, 2009 and August 31, 2009 were recorded as discounts to the
notes and are being amortized over the term of the notes.
(iii) On
July 14, 2009, the Company issued 30,000 share purchase warrants as part of the
debt assignment transaction. The fair value of these warrants was
determined to be $12,000, using the Black-Scholes option pricing model with an
expected life of 4 years, a risk free interest rate of 0.96%, a dividend yield
of 0%, and an expected volatility of 192%.
(iv)
During the year ended December 31, 2009, pursuant to consulting services
agreements, the following transactions occurred: the Company issued 200,000
share purchase warrants on December 17, 2009, the Company issued 125,000 share
purchase warrants on December 18, 2009, the Company issued a further 400,000
share purchase warrants on December 18, 2009, the Company issued a further
500,000 share purchase warrants on December 18, 2009. The aggregate
fair value of these warrants was determined to be $622,750 using the
Black-Scholes option pricing model with an expected life of 5 years, a risk free
interest rate of 2.24% - 2.3%, a dividend yield of 0%, and an expected
volatility of 236%. The expensed portion of the value of these
warrants during the year ended December 31, 2009 was $374,270. The
remaining portion of $248,480 will be recorded in fiscal 2010 as stock based
consulting fees.
37
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
A summary
of the Company’s issued stock purchase warrants as of December 31, 2009 and
changes during the year is presented below:
|
Number
of
Warrants
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
|
||||||||||
|
Balance,
December 31, 2007
|
1,107,167 | $ | 2.50 | 4.04 | ||||||||
|
Issued
|
120,400 | 2.50 | 5.00 | |||||||||
|
Exercised
|
(35,800 | ) | (2.50 | ) | (4.30 | ) | ||||||
|
Balance,
December 31, 2008
|
1,191,767 | 2.50 | 3.15 | |||||||||
|
Issued
|
4,421,374 | 0.60 | 3.74 | |||||||||
|
Exercised
|
(1,471,174 | ) | (0.46 | ) | n/a | |||||||
|
Expired
|
(29,167 | ) | (2.75 | ) | n/a | |||||||
|
Balance,
December 31, 2009
|
4,112,800 | $ | 1.19 | 3.71 | ||||||||
Stock
Compensation Plan
On June
8, 2007, the Board of Directors of the Company approved the adoption of a stock
option plan (the “2007 Plan”) allowing for the granting of up to 640,000 options
to directors, officers, employees and consultants of the Company and its
subsidiaries. On October 14, 2009, the Company adopted the 2009 Stock
Incentive Plan (the “2009 Plan”) which supersedes and replaces the 2007 Stock
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 the Board of Directors. Options granted
under the Plan may have vesting requirements as determined by the Board of
Directors.
On June
8, 2007, a total of 632,000 stock options were granted (164,000 to consultants
and 468,000 to officers and directors) at an exercise price of $2.50 per
share. The term of these options is ten years. Of the
632,000 options granted, 310,000 vested upon grant, 242,000 vested in one year,
40,000 vested in two years and 40,000 vested in three years. The
aggregate fair value of these options was estimated at $1,179,600, or $1.90 per
option, using the Black-Scholes option pricing model with a risk free interest
rate of 5.26%, a dividend yield of 0%, an expected volatility of 83%, and
expected life of 5 years for the options vesting immediately, 4 years for the
options vesting in one year, 3 years for the options vesting in two years, and 2
years for the options vesting in three years. The expensed portion of
the value of these options during the year ended December 31, 2009 was $23,500
(2008 - $234,168) which was recorded as stock based management
fees.
On
October 14, 2009, the Company granted a total of 3,326,000 stock options at an
exercise price of $0.97 per share to consultants and management, of which
1,913,000 vested immediately and the remaining 1,413,000 vest in one
year. The term of the options is ten years. Additionally,
on October 14, 2009, the Company approved the repricing of certain stock options
issued to consultants and management. Options with an exercise price
of $2.50 were repriced to $0.97 per share and the aggregate fair value of the
repriced options is $5,840. The aggregate fair value of the new
grants was estimated at $3,192,960, or $0.96 per option, using the Black-Scholes
option pricing model with a risk free interest rate of 2.36%, a dividend yield
of 0%, an expected volatility of 236%, and an expected life of 5
years. The expensed portion of the value of these options during the
year ended December 31, 2009 was $2,068,400 which was recorded as $72,240 stock
based consulting and $1,996,160 stock based management fees. The
remaining portion of $1,130,400 will be recorded in fiscal 2010 as stock based
consulting and management fees. The 2009 Stock Plan, the grant of the
stock options thereunder and the repricing of existing options are subject to
shareholder approval.
A summary
of the Company’s stock options as of December 31, 2009 and changes during the
year is presented below:
|
Number
of
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
|
||||||||||
|
Balance,
December 31, 2007 and 2008
|
632,000 | 2.50 | 9.44 | |||||||||
|
Issued
|
3,326,000 | 0.97 | 10.00 | |||||||||
|
Cancelled
|
(340,000 | ) | (2.50 | ) | 8.00 | |||||||
|
Balance,
December 31, 2009
|
3,618,000 | $ | 0.97 | 9.60 | ||||||||
38
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
A summary
of the status of the Company’s unvested options as of December 31, 2009 and
changes during the year is presented below:
|
Number
of Shares
|
Weighted-Average
Grant-Date
Fair
Value
|
|||||||
|
Unvested,
December 31, 2007
|
322,000 | $ | 2.00 | |||||
|
Issued
|
- | - | ||||||
|
Vested
|
(242,000 | ) | 2.00 | |||||
|
Unvested,
December 31, 2008
|
80,000 | 2.00 | ||||||
|
Issued
|
3,326,000 | 0.96 | ||||||
|
Vested
|
(1,993,000 | ) | 0.96 | |||||
|
Unvested,
December 31, 2009
|
1,413,000 | $ | 0.96 | |||||
NOTE
8: INCOME TAXES
The
Company has not identified or quantified any significant temporary differences
between the Company’s tax and financial bases of assets and liabilities that
result in deferred tax assets, except for the Company’s net operating loss
carry-forwards amounting to approximately $11,770,000 at December 31, 2009 (2008
- - $10,575,000), which may be available to reduce future year’s taxable
income. These carry forwards begin to expire, if not utilized,
commencing in 2010. Future tax benefits which may arise as a result
of these losses have not been recognized in these financial statements, as their
realization does not meet a more likely than not test and accordingly, the
Company has recorded a valuation allowance for the potential deferred tax asset
relating to these tax loss carry forwards.
The
Company reviews its valuation allowance requirements on an annual basis based on
management’s expectations of future operations. Should circumstances
change resulting in a change in management’s judgment about the recoverability
of future tax assets, the impact of the change on the valuation allowance would
be reflected in current operations and disclosures.
The
Company’s policy is to accrue amounts for known or likely interest and penalties
related to unrecognized tax charges or likely penalties and interest in its
provision for income taxes. Additionally, ASC 740-10 requires that a
company recognize in its financial statements the impact of a tax position that
is more likely than not to be sustained upon examination based on the technical
merits of the position. The Company has incurred taxable losses for
all tax years since inception and accordingly, no provision for taxes has been
recorded for the current or any prior fiscal year.
The
actual income tax provisions differ from the expected amounts calculated by
applying the combined federal and state corporate income tax rates to the
Company’s loss before income taxes and other temporary adjusted as appropriate
for temporary and permanent tax basis differences. The components of
these differences are as follows:
|
Year
Ended
|
Year
Ended
|
|||||||
|
December
31, 2009
|
December
31, 2008
|
|||||||
|
Loss
before income taxes
|
$ | (4,461,970 | ) | $ | (2,195,411 | ) | ||
|
Corporate
tax rate
|
35.00 | % | 35.00 | % | ||||
|
Expected
tax recovery
|
(1,561,690 | ) | (768,579 | ) | ||||
|
Increase
(decrease) resulting from:
|
||||||||
|
Permanent
differences
|
377,529 | 232,591 | ||||||
|
Other
items
|
(3,908 | ) | (3,908 | ) | ||||
|
Change
in enacted tax rates
|
- | 914,482 | ||||||
|
Change
in valuation allowance
|
1,188,069 | (374,586 | ) | |||||
|
Income
tax recovery
|
$ | - | $ | - | ||||
39
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
The
Company’s deferred tax assets are as follows:
|
Year
Ended
|
Year
Ended
|
|||||||
|
December
31, 2009
|
December
31, 2008
|
|||||||
|
Deferred
tax assets:
|
||||||||
|
Stock
option expense
|
$ | 2,333,683 | $ | 1,601,518 | ||||
|
Loss
carry-forwards and tax pools
|
3,966,692 | 3,510,788 | ||||||
|
Valuation
allowance
|
(6,300,375 | ) | (5,112,306 | ) | ||||
|
Net
deferred income tax assets
|
$ | - | $ | - | ||||
As the
criteria for recognizing future income tax assets have not been met due to the
uncertainty of realization, a valuation allowance of 100% has been recorded for
the current and prior year.
The
Company has not filed income tax returns for several years for the US entities
within the consolidated group of companies. Canadian corporate tax returns to
the end of 2007 have been filed. Both taxing authorities prescribe
penalties for failing to file certain tax returns and supplemental
disclosures. Upon filing and/or review there could be penalties and
interest assessed. Such penalties vary by jurisdiction and by
assessing practices and authorities. As the Company has incurred
losses since inception anticipated risk for exposure to penalties for income tax
liability is determined to be low. However, certain jurisdictions may
assess penalties for failing to file returns and other disclosures and for
failing to file other supplementary information associated with foreign
ownership, debt and equity positions. Inherent uncertainties arise
over tax positions taken, or expected to be taken, with respect to transfer
pricing, inter-company charges and allocations, financing charges, fees, related
party transactions, tax credits, tax based incentives and stock based
transactions.
Management
has considered the likelihood and significance of possible penalties associated
with its current and intended filing positions and has determined, based on
their assessment, that such penalties, if any, would not be expected to be
material (refer to Note 10).
NOTE
9: SUPPLEMENTAL CASH FLOW INFORMATION AND
NON-CASH INVESTING AND FINANCING
ACTIVITIES
As
disclosed in Notes 5, 6 and 7 effective June 4, 2009, the Company completed a
debt conversion and assignment transaction resulting in the issuance 33,812,065
common shares in conjunction with the retirement of $3,181,207 (2008 - $Nil) in
accounts payable and accrued liabilities, notes payable and related party
debt. Accordingly, the Company recorded a cumulative net gain on the
settlement of debt of $972,370 (2008 - $Nil) related to the
transaction.
As
disclosed in Note 4 effective September 30, 2009, the Company completed the
settlement of research obligations of $248,938 (2008 - $Nil) for cash and a
stock issuance obligation with a cumulative fair value of $269,267 (2008 - $Nil)
resulting in a loss of $20,329. Also, effective September 30, 2009, the Company
recorded a gain on the settlement of outstanding legal fees of
$9,014. The aggregate impact of these two settlements was
a loss of $11,314.
The
prepaid portion of shares issued in exchange for public relations and consulting
services amounted to $214,501 (2008 - $Nil).
|
December
31, 2009
|
December
31, 2008
|
|||||||
|
Interest
paid in cash
|
$ | - | $ | - | ||||
|
Income
taxes paid
|
$ | - | $ | - | ||||
NOTE
10: CONTINGENCIES AND COMMITMENTS
Contingency
The
Company has not filed income tax returns for several years in certain operating
jurisdictions, and may be subject to possible compliance penalties and interest
(refer to Note 8.)
40
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
Commitments
The
Company signed an agreement effective October 1, 2008 with an arm’s length
consulting firm in the United States, Dusford Overseas Management (“Dusford”) to
assist in strategic planning, debt consolidation and negotiation, strategic
partnering, mergers, acquisition and near and long term
financing. Pursuant to the Agreement the consulting firm is
compensated $10,000 a month for the term of the Agreement (36 months with mutual
cancellation clauses upon notice). Continuation of the agreement is
subject to the deliverables outlined therein including strategic planning,
successful debt consolidation and restructuring and funding of at least
$750,000. After certain restructuring efforts have taken place, the
consulting firm would be provided with a mobilization fee of $75,000 (settled),
issued 2,000,000 common shares and three tranches of warrants, the first priced
at the market when issued and the subsequent warrants at 50% and 100% premiums,
respectively, to the first set of warrants. As at December 31, 2009,
the monthly and mobilization fees through June 30, 2009 have been converted as
part of the debt settlement transaction, monthly fees from July 1, 2009 through
September 30, 2009 have been paid, monthly fees from October 1, 2009 through
December 31, 2009 have been accrued, the 2,000,000 shares were issued as a
result of the June 4, 2009 debt conversion and assignment transaction (refer to
Note 7). The warrants have not been issued.
Effective
December 10, 2009, the Company entered into a twelve month public relations
retainer agreement. Pursuant to the terms of the agreement, the
Company agreed to: (i) pay a monthly fee of $6,500 through November 30, 2010,
(ii) issue 200,000 share purchase warrants to acquire an equivalent number of
common shares of the Company, at an exercise price of $0.50 per share and for an
exercise period of up to five years from the issuance date (issued), and (iii)
issue 200,000 share purchase warrants to acquire an equivalent number of common
shares of the Company, at an exercise price of $0.60 per share for an exercise
period of up to five years from the issuance date (issued). The fair
value of these warrants was determined to be $204,000 using the Black-Scholes
option pricing model (refer to Note 7).
Effective
December 17, 2009, the Company entered into a six month consulting services
agreement. Pursuant to the terms of the agreement, the Company agreed
to: (i) issue 250,000 shares of its common stock, (ii) issue 250,000 share
purchase warrants to acquire an equivalent number of common shares of the
Company, at an exercise price of $0.50 per share and for an exercise period of
up to five years from the issuance date, and (iii) issue 250,000 share purchase
warrants to acquire an equivalent number of common shares of the Company, at an
exercise price of $0.60 per share for an exercise period of up to five years
from the issuance date. The fair value of these warrants was
determined to be $255,000 using the Black-Scholes option pricing model (refer to
Note 7).
Effective
December 17, 2009, the Company entered into a second six month consulting
services agreement. Pursuant to the terms of the agreement, the
Company agreed to issue 100,000 shares of its restricted common
stock. At the time of entry into the agreement, the market price of
shares was $0.52 per share and the estimated fair value of $52,000 was recorded
as an issuance obligation.
Effective
December 17, 2009, the Company entered into a third six month consulting
services agreement. Pursuant to the terms of the agreement, the
Company agreed to issue 100,000 shares of its restricted common
stock. At the time of entry into the agreement, the market price of
shares was $0.52 per share and the estimated fair value of $52,000 was recorded
as an issuance obligation
Operating
Lease
On June
22, 2009, the Company entered into a one year office lease in Bellevue,
Washington commencing on July 1, 2009. The terms of the lease require
the Company to make minimum monthly payments of $2,654 per month.
Combined
Research and Operating Obligations
The
Company has obligations under various agreements through June 30,
2010. The aggregate minimum annual payments for the year ending
December 31 is as follows:
2010 $87,424
41
TAPIMMUNE
INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
NOTE
11: SUBSEQUENT EVENTS
Effective
January 19, 2010, the Company entered into a one year consulting services
agreement. Pursuant to the terms of the agreement, the Company issued
(i) 600,000 share purchase warrants to acquire an equivalent number of common
shares of the Company, at an exercise price of $0.50 per share for an exercise
period of up to three years from the issuance date, and (ii) 600,000 share
purchase warrants to acquire an equivalent number of common shares of the
Company, at an exercise price of $0.60 per share and for an exercise period of
up to three years from the issuance date.
On
January 22, 2010, the Company and Dusford agreed to terminate the consulting
agreement (Note 10). Dusford has released the company from any and all
obligations under the contract including the 2,250,000 unissued warrants that
have now been cancelled and any unpaid accrued fees.
Effective
February 8, 2010, the Company entered into a debt settlement agreement for an
outstanding amount of $100,000 which was settled through the issuance of 750,000
share purchase warrants to acquire an equivalent number of common shares of the
Company, at an exercise price of $0.50 per share and for an exercise period of
up to five years from the issuance date.
42
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
We have
had no disagreements with our principal independent accountants.
|
ITEM
9A.
|
CONTROLS
AND PROCEDURES
|
Evaluation
of Disclosure Controls and Procedures
Our
management, with the participation of our Principal Executive Officer and
Principal Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act, as of the end of the period covered by this
report. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in the reports we file or submit under the Exchange Act is
accumulated and communicated to management, including our Principal Executive
Officer and Principal Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. Based on such evaluation,
our Principal Executive Officer and Principal Financial Officer have concluded
that, as of the end of the period covered by this report, our disclosure
controls and procedures are not effective in recording, processing, summarizing
and reporting, on a timely basis, information required to be disclosed by us in
the reports that we file or submit under the Exchange Act.
It should
be noted that any system of controls is based in part upon certain assumptions
designed to obtain reasonable (and not absolute) assurance as to its
effectiveness, and there can be no assurance that any design will succeed in
achieving its stated goals.
Management’s
Report on Internal Control Over Financial Reporting
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting, as required by
Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control
over financial reporting is a process designed under the supervision of the
Company's Principal Executive Officer and Principal Financial Officer to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of the Company's financial statements for external purposes in
accordance with United States generally accepted accounting principles (“US
GAAP”).
As of
December 31, 2009, management assessed the effectiveness of the Company's
internal control over financial reporting based on the criteria for effective
internal control over financial reporting established in Internal Control
- -Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO") and SEC guidance on conducting such
assessments. Based on that evaluation, they concluded that, as at
December 31, 2009 such internal controls and procedures were not effective to
detect the inappropriate application of US GAAP rules as more fully described
below.
The
matters involving internal controls and procedures that the Company’s management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) inadequate entity level controls due to an
ineffective audit committee resulting from a lack of independent members on the
current audit committee and a lack of outside directors on our board of
directors; (2) inadequate segregation of duties consistent with control
objectives; (3) insufficient written policies and procedures for accounting and
financial reporting with respect to the requirements and application of US GAAP
and SEC disclosure requirements; (4) ineffective controls over period end
financial disclosure and reporting processes.
Management
believes that none of the material weaknesses set forth above had a material
adverse effect on the Company's financial results for the fiscal year ended
December 31, 2009 but management is concerned that the material weakness in
entity level controls set forth in item (1) results in ineffective oversight in
the establishment and monitoring of required internal controls and procedures,
it could result in a material misstatement in our financial statements in future
periods.
43
We are
committed to improving our financial organization. As part of this
commitment, we will continue to enhance our internal control over financial
reporting by: i) expanding our personnel, ii) improving segregated duties
consistent with control objectives, iii) appointing one or more outside
directors to our board of directors who shall be appointed to our audit
committee resulting in a fully functioning audit committee who will undertake
the oversight in the establishment and monitoring of required internal controls
and procedures such as reviewing and approving estimates and assumptions made by
management; and iv) preparing and implementing sufficient written policies and
checklists which will set forth procedures for accounting and financial
reporting with respect to the requirements and application of US GAAP and SEC
disclosure requirements.
Management
believes that the appointment of one or more outside directors, who shall be
appointed to a fully functioning audit committee, will remedy the ineffective
audit committee and a lack of outside directors on our Board. In
addition, management believes that preparing and implementing sufficient written
policies and checklists will remedy the following material weaknesses (i)
insufficient written policies and procedures for accounting and financial
reporting with respect to the requirements and application of US GAAP and SEC
disclosure requirements; and (ii) ineffective controls over period end financial
close and reporting processes. Further, management believes that the
hiring of additional personnel will result in improved segregation of duties and
provide more checks and balances within the financial reporting
department.
We will
continue to monitor and evaluate the effectiveness of our internal controls and
procedures over financial reporting on an ongoing basis and are committed to
taking further action by implementing additional enhancements or improvements,
or deploying additional human resources as may be deemed necessary.
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal controls over financial
reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to the temporary rules of
the SEC that permit the Company to provide only management’s report in this
annual report.
Changes
in Internal Control Over Financial Reporting
There
have been no changes in our internal control over financial reporting during our
fourth fiscal quarter of our fiscal year ended December 31, 2009 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
|
ITEM
9B.
|
OTHER
INFORMATION
|
Not
applicable.
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
Our
directors and executive officers and their respective ages as of the date of
this annual report are as follows:
|
Name
|
Age
|
Position
with the Company
|
|
Glynn
Wilson
|
63
|
Chairman,
Chief Executive Officer, Principal Executive Officer
|
|
Tracy
A. Moore
|
57
|
Secretary,
Treasurer, Chief Financial Officer, Principal Accounting Officer and a
Director
|
|
Denis
Corin
|
37
|
President
and a Director
|
The
following describes the business experience of each of our directors and
executive officers, including other directorships held in reporting
companies:
44
Glynn
Wilson, Ph.D., Executive Chairman
Dr.
Wilson brings an extensive background of success in corporate management and
product development with tenures in both major multinational pharmaceutical
companies and start-up pharmaceutical/biotech organizations. Dr.
Wilson's former positions include Head of Drug Delivery at SmithKline Beecham
Pharmaceuticals, Research Area Head in Advanced Drug Delivery at Ciba-Geigy
Pharmaceuticals, and President and co-founder of Auriga
Pharmaceuticals. As Executive Vice President of R&D at Tacora
Corporation he was responsible for merging the Company with Access
Pharmaceuticals. He is a recognized leader in the development of drug
delivery systems and has been involved in taking lead products &
technologies from concept to commercialization. Glynn has a Ph.D. in
Biochemistry and conducted medical research at The Rockefeller University, New
York. He has been on the Board of TapImmune for 4 years.
Denis
D Corin, President
Denis
Corin served as TapImmune’s President and CEO from November 2006 to July
2009. He is a management consultant. Mr. Corin has worked
in large pharmaceutical (Novartis), diagnostic instrumentation companies
(Beckman Coulter) as well as the small cap biotech arena (MIV
Therapeutics). He holds a double major Bachelors degree in Economics
and Marketing from the University of Natal, South Africa.
Tracy
A Moore, Chief Financial Officer
Tracy A.
Moore specializes in corporate finance matters, strategic planning and business
planning services. In addition to his consulting practice, he has
owned and operated a variety of businesses. He serves on boards of
directors and advises boards on financing, business planning issues, mergers,
acquisitions, divestitures, joint ventures and fund raising. Mr. Moore has
provided corporate finance services to private, going public and publicly traded
companies since 1990 in 15 countries.
Between
1976 and 1990, Mr. Moore worked for three international accounting firms in
restructuring, consulting and audit positions. Mr. Moore received a
Bachelor of Commerce in Accounting and Management Information Systems from the
University of British Columbia in 1976 and was admitted as a member of the
Institute of Chartered Accountants in British Columbia in 1979 (and resigned in
2008).
Term
of Office
Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our stockholders or until they resign or are removed from the
board in accordance with our bylaws. Our officers are appointed by
our Board of Directors and hold office until they resign or are removed from
office by the Board of Directors.
Significant
Employees
Audit
Committee
Our Board
of Directors has established an Audit Committee which functions pursuant to a
written charter adopted by our Board of Directors in March 2004. The
members of our Audit Committee are Messrs. Moore and Corin, and Dr.
Wilson.
Our Board
of Directors has determined that our Audit Committee does not have a member that
qualifies as an “audit committee financial expert” as defined in Item 401(e) of
Regulation S-B. Our Board of Directors believes that it is capable of
analyzing and evaluating our financial statements and understanding internal
controls and procedures for financial reporting and that retaining an
independent director who would qualify as an “audit committee financial expert”
would be overly costly and burdensome at this time.
45
Involvement
in Certain Legal Proceedings
None of
our directors, executive officers or control persons has been involved in any of
the following events during the past five years: (i) any bankruptcy petition
filed by or against any business of which such person was a general partner or
executive officer either at the time of the bankruptcy or within two years prior
to that time; (ii) any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offences); (iii) being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; or (iv) being found by a court of competent jurisdiction (in
a civil action), the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.
Code
of Conduct
We have
adopted a Code of Conduct policy that applies to all directors and
officers. The code describes the legal, ethical and regulatory
standards that must be followed by the directors and officers of the Company and
sets forth high standards of business conduct applicable to each director and
officer. A copy of the Code of Conduct can be viewed on our website
at the following URL:
http://www.tapimmune.com/investors/corporate_info/
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act requires our directors and officers, and the persons
who beneficially own more than 10% of our common stock, to file reports of
ownership and changes in ownership with the SEC. Copies of all filed
reports are required to be furnished to us pursuant to Rule 16a-3 promulgated
under the Exchange Act. Based solely on the reports received by us
and on the representations of the reporting persons, we believe that these
persons have complied with all applicable filing requirements during the year
ended December 31, 2009.
ITEM
11. EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The
following table sets forth the compensation paid to our executive officers for
their services as executive officers during our fiscal years ended December 31,
2009 and December 31, 2008:
Summary
Compensation Table
|
Name
and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
All
Other
Compen-sation
($)
|
Total
($)
|
|
Glynn
Wilson
Chairman,
CEO and Principal Executive Officer
|
2009
2008
|
84,000
Nil
|
Nil
Nil
|
Nil
Nil
|
896,800
Nil
|
Nil
Nil
|
980,800
Nil
|
|
Tracy
A. Moore
Secretary,
Treasurer, CFO, Principal Accounting Officer and a
director
|
2009
2008
|
30,000
Nil
|
Nil
Nil
|
Nil
Nil
|
480,000
Nil
|
Nil
Nil
|
510,000
Nil
|
|
Denis
Corin
President
and a director
|
2009
2008
|
138,600
132,000
|
Nil
Nil
|
Nil
Nil
|
617,600
Nil
|
Nil
Nil
|
756,200
132,000
|
The
amounts represent fees paid or accrued by us to the executive officers during
the past year pursuant to various employment and consulting services agreements,
as between us and the executive officers, which are described
below. Our executive officer are also reimbursed for any
out-of-pocket expenses incurred in connection with corporate
duties. We presently have no pension, health, annuity, insurance,
profit sharing or similar benefit plans.
46
The
following table sets forth information as at December 31, 2009 relating to
outstanding equity awards for each Named Executive Officer:
Outstanding
Equity Awards at Year End Table
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(exerciseable)
|
Number
of
Securities
Underlying
Unexercised
Options
(unexerciseable)
|
Number
of
Securities
Underlying
Unexercised
Unearned
Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
|
Glynn
Wilson
Chairman,
CEO and Principal Executive Officer
|
40,000
800,000
|
Nil
800,000
|
Nil
Nil
|
$0.97
$0.97
|
06/08/17
10/14/19
|
|
Tracy
A. Moore
Secretary,
Treasurer, CFO, Principal Accounting Officer and a
director
|
500,000
|
500,000
|
Nil
|
$0.97
|
10/14/19
|
|
Denis
Corin
President
and a director
|
80,000
550,000
|
Nil
550,000
|
Nil
Nil
|
$0.97
$0.97
|
06/08/17
10/14/19
|
The
following table sets forth information relating to compensation paid to our
directors for their services as directors in the fiscal year ended December 31,
2009, and excludes compensation paid to our directors for their services as
executive officers:
Director
Compensation Table
|
Name
|
Year
|
Fees
Earned
or
Paid
in
Cash
|
Stock
Awards
($)
|
Option
Awards
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Glynn
Wilson
|
2009
2008
|
17,500
42,000
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
17,500
42,000
|
|
Tracy
A. Moore
|
2009
2008
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
|
Denis
Corin
|
2009
2008
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
|
Alan
Lindsay
|
2009
2008
|
25,000
100,000
|
Nil
Nil
|
1,760
Nil
|
Nil
Nil
|
26,760
100,000
|
|
Patrick
A. McGowan
|
2009
2008
|
7,142
34,162
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
7,142
34,162
|
Employment,
Consulting and Services Agreements
On June
30, 2007, with an effective date of May 1, 2007, our Board of Directors approved
an amended executive services agreement with Mr. Corin with a one year term with
automatic annual renewal. The amended agreement, provides for an
increase in the month consulting fees to $10,000 USD per month through the term
of the agreement, with annual increase of 10% and providing for the granting of
an aggregate of not less than 1,180,000 stock options to acquire a similar
number of our common shares at an exercise price of $0.97 per share for a period
of not less than ten years from the date of grant as amended.
We have a
compensation committee is comprised of Messrs. Moore and Corin, and Dr.
Wilson. All compensation is recommended and resolved by the
compensation committee and board of directors.
47
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
The
following table sets forth, as of the date of this Annual Report certain
information regarding the ownership of our common stock by (i) each person known
by us to be the beneficial owner of more than 5% of our outstanding shares of
common stock, (ii) each of our directors, (iii) our Principal Executive Officer
and (iv) all of our executive officers and directors as a group. Unless
otherwise indicated, the address of each person shown is c/o TapImmune Inc., 800
Bellevue Way, NE, Suite 400, Bellevue, Washington, 98004. Beneficial
ownership, for purposes of this table, includes options to purchase common stock
that are either currently exercisable or will be exercisable within 60 days of
the date of this annual report.
|
Name
and Address of Beneficial Owner
|
Amount
and
Nature
of
Beneficial Owner(1)
|
Percent
of Class
|
|
Directors
and Officers:
|
||
|
Glynn
Wilson
Suite
400, 800 Bellevue Way NE, Bellevue, WA 98004
|
1,740,000
(2)
|
4.5%
|
|
Tracy
A. Moore
Suite
400, 800 Bellevue Way NE, Bellevue, WA 98004
|
550,000
(3)
|
1.4%
|
|
Denis
Corin
Suite
400, 800 Bellevue Way NE, Bellevue, WA 98004
|
2,918,308
(4)
|
7.5%
|
|
All
executive officers and directors as a group (3 persons)
|
5,208,308
|
13.3%
|
|
Major
Stockholders:
|
||
|
Alan
P. Lindsay
|
2,491,547
(5)
|
6.4%
|
|
New
Paradigm Capital
|
4,077,100
|
10.4%
|
|
Michelle
Stannard
|
2,496,892
|
6.4%
|
|
St.
George Trust Company Ltd.
|
5,335,640
|
13.7%
|
|
(1)
|
Under
Rule 13d-3, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes
the power to vote, or to direct the voting of shares; and (ii) investment
power, which includes the power to dispose or direct the disposition of
shares. Certain shares may be deemed to be beneficially owned
by more than one person (if, for example, persons share the power to vote
or the power to dispose of the shares). In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire the shares (for example, upon exercise of an option) within 60
days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition
rights. As a result, the percentage of outstanding shares of
any person as shown in this table does not necessarily reflect the
person’s actual ownership or voting power with respect to the number of
shares of common stock actually outstanding as of the date of this Annual
Report. As of the date of this Annual Report, there were
39,076,674 shares issued and
outstanding.
|
|
(2)
|
This
figure includes (i) 900,000 shares of common stock; and (ii) 840,000
options to acquire an equivalent number of common shares at $0.97 for 10
years.
|
48
|
(3)
|
This
figure includes (i) 50,000 shares of common stock; and (ii) 500,000
options to acquire an equivalent number of common shares at $0.97 for 10
years.
|
|
(4)
|
This
figure includes: (i) 1,925,750 shares of common stock; (ii) 295,300 shares
of common stock held his spouse; (iii) 54,458 common share purchase
warrants; (iv) 2,400 common share purchase warrants held by his spouse;
and (v) 630,000 options to acquire an equivalent number of common shares
at $0.97 for 10 years.
|
|
(5)
|
This
figure includes: (i) 66,6667 shares of common stock held by
Alan Lindsay & Associates Inc., (ii) 54,000 common share purchase
warrants and (iii) 88,000 options to acquire an equivalent number of
common shares at $0.97 for 10 years
granted.
|
There are
no arrangements or understanding among the parties set out above or their
respective associates or affiliates concerning election of directors or any
other matters which may require shareholder approval.
Changes
in Control
We are
unaware of any contract, or other arrangement or provision, the operation of
which may at a subsequent date result in a change of control of our
Company.
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
Except as
described below, none of the following parties has had any material interest,
direct or indirect, in any transaction with us during our last fiscal year or in
any presently proposed transaction that has or will materially affect
us:
|
|
1.
|
any
of our directors or officers;
|
|
|
2.
|
any
person proposed as a nominee for election as a
director;
|
|
|
3.
|
any
person who beneficially owns, directly or indirectly, shares carrying more
than 5% of the voting rights attached to our outstanding shares of common
stock; or
|
|
|
4.
|
any
member of the immediate family (including spouse, parents, children,
siblings and in-laws) of any of the above
persons.
|
We had
transactions with certain of our officers and directors during our fiscal year
ended December 31, 2009 as follows:
|
|
a)
|
incurred
$260,242 (2008 - $308,162) in management fees, $42,000 (2008 - $74,579) in
research and development, and recorded an additional $2,019,660 (2008 -
$172,668) in stock based compensation expense for the fair value of
options granted to management that were vested during the
period;
|
|
|
b)
|
effective
June 4, 2009, an outstanding balance of $595,987 due to directors and
officers was settled through an obligation to issue 5,959,870 shares in
conjunction with a debt settlement
agreement;
|
|
|
c)
|
incurred
$9,247 (2008 - $16,932) in interest and finance charges on a $125,000
promissory note due to a company related through a direct family member of
a current director (refer to Note 5(ii)); incurred $14,795 (2008 -
$27,090) in interest and finance charges on a $200,000 convertible
promissory note due to the same company (refer to Note 5(iii)); and
incurred $40,881 (2008 - $35,369) in interest and finance charges related
to an agreement to issue warrants in connection with extending the terms
of the $125,000 and $200,000 notes through March 30, 2009 (refer to Note
5(iii)), and effective June 4, 2009 the outstanding principal and interest
was settled in conjunction with an equity issuance
obligation;
|
|
|
d)
|
incurred
$1,997 (2008 - $3,196) in interest and finance charges on a $27,000
promissory note issued to a company controlled by a director of the
Company, and incurred $4,343 (2008 - $3,757) in interest and finance
charges related to an agreement to issue warrants in connection to
extending the term through March 30, 2009 (refer to Note 5(v)), and
effective June 4, 2009 the outstanding principal and interest was settled
in conjunction with an equity issuance
obligation;
|
|
|
e)
|
incurred
$14,795 (2008 - $22,784) in interest and finance charges on a $200,000
promissory note issued to a company related through a family member of an
officer of the Company (refer to Note 5(vi)); incurred $18,493 (2008 -
$27,493) in interest and finance charges on a $250,000 promissory note
issued to the same company (refer to Note 5(vii)); and incurred $72,380
(2008 - $62,620) in interest and finance charges related to an agreement
to issue warrants in connection to extending the terms of the $200,000 and
$250,000 notes through March 30, 2009 (refer to Note 5(vii)), and
effective June 4, 2009 the outstanding principal and interest was settled
in conjunction with an equity issuance
obligation;
|
49
|
|
f)
|
incurred
$1,849 (2008 - $2,836) in interest and finance charges on a $25,000
promissory note issued to an officer of the Company, and incurred $4,021
(2008 - $3,479) in interest and finance charges related to an agreement to
issue warrants in connection to extending the term through March 30, 2009
(refer to Note 5(viii)), and effective June 4, 2009 the outstanding
principal and interest was settled in conjunction with an equity issuance
obligation;
|
|
|
g)
|
incurred
$740 (2008 - $150) in interest and finance charges on a $10,000 promissory
note issued to an officer of the Company, and incurred $6,593 (2008 -
$3,407) in interest and finance charges related to an agreement to issue
warrants in connection to the note issuance (refer to Note 5(ix)), and
effective June 4, 2009 the outstanding principal and interest was settled
in conjunction with an equity issuance obligation;
and
|
|
|
h)
|
issued
a $15,000 secured promissory note bearing interest at 30% per annum and
issued 30,000 transferable and registerable share purchase warrants with
an exercise price of $0.20 per share for an exercise period of up to two
years from the issuance date to a direct family member of an officer of
the Company, incurred $4,068 (2008 - $Nil) in interest and finance charges
on the $15,000 promissory note, and incurred $6,000 (2008 - $Nil) in
interest and finance charges related to the issued warrants (refer to Note
5(x)).
|
ITEM
14. PRINCIPAL
ACCOUNTING FEES AND SERVICES
Dale
Matheson Carr-Hilton LaBonte LLP served as our independent registered public
accounting firm and audited our financial statements for the fiscal years ended
December 31, 2009 and 2008. Aggregate fees for professional services
rendered to us by our auditor are set forth below:
|
Year
Ended
December
31, 2009
|
Year
Ended
December
31, 2008
|
|||||||
|
Audit
Fees
|
$ | 43,500 | $ | 28,000 | ||||
|
Audit
Related Fees
|
$ | 21,500 | $ | 21,100 | ||||
|
Tax
Fees
|
Nil
|
Nil
|
||||||
|
All
Other Fees
|
Nil
|
Nil
|
||||||
| $ | 65,000 | $ | 49,100 | |||||
Audit
Fees
Audit
fees are the aggregate fees billed for professional services rendered by our
independent auditors for the audit of our annual financial statements, the
review of the financial statements included in each of our quarterly reports and
services provided in connection with statutory and regulatory filings or
engagements.
Audit
Related Fees
Audit
related fees are the aggregate fees billed by our independent auditors for
assurance and related services that are reasonably related to the performance of
the audit or review of our financial statements and are not described in the
preceding category.
Tax
Fees
Tax fees
are billed by our independent auditors for tax compliance, tax advice and tax
planning.
All
Other Fees
All other
fees include fees billed by our independent auditors for products or services
other than as described in the immediately preceding three
categories.
Policy
on Pre-Approval of Services Performed by Independent Auditors
It is our
audit committee’s policy to pre-approve all audit and permissible non-audit
services performed by the independent auditors. We approved all
services that our independent accountants provided to us in the past two fiscal
years.
50
ITEM
15. EXHIBITS
The
following exhibits are filed with this Annual Report on Form 10-K:
|
Exhibit
Number
|
Description
of Exhibit
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Securities Exchange Act of 1934
Rule 13a-14(a) or 15d-14(a)
|
|
31.2
|
Certification
of Acting Principal Accounting Officer pursuant to Securities Exchange Act
of 1934 Rule 13a-14(a) or 15d-14(a)
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section
1350
|
|
32.2
|
Certification
of Acting Principal Accounting Officer pursuant to 18 U.S.C. Section
1350
|
51
SIGNATURES
Pursuant
to the requirements of Section 13 and 15 (d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TAPIMMUNE
INC.
By: /s/ Glynn
Wilson
Glynn Wilson
Chairman, Chief Executive Officer
and Principal Executive Officer
Date: April 13, 2010
By: /s/ Tracy A.
Moore
Tracy A. Moore
Secretary, Treasurer and Chief
Financial Officer, Acting Principal Accounting Officer and a
director
Date: April 13, 2010
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/
Denis Corin
Denis Corin
President and a director
Date: April 13, 2010
Exhibit 31.1
CERTIFICATION
PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Glynn
Wilson, certify that:
|
1.
|
I
have reviewed this annual report on Form 10-K of TapImmune
Inc.;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
|
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
|
b.
|
designed
such internal control over financial reporting or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurances regarding the reliability of financial
reporting in the preparation of financial statements for external purposes
in accordance with generally accepted accounting
principles;
|
|
|
c.
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such
evaluation;
|
|
|
d.
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the Audit Committee of the registrant’s
Board of Directors (or persons performing the equivalent
functions):
|
|
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting, which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
April 13, 2010
By: /s/ Glynn Wilson________________________
Glynn Wilson
Chairman, Chief Executive Officer
and
Principal Executive
Officer
Exhibit
31.2
CERTIFICATION
PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Tracy
A. Moore, certify that:
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1.
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I
have reviewed this annual report on Form 10-K of TapImmune
Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
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The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) for the registrant and
have:
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a.
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
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b.
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designed
such internal control over financial reporting or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurances regarding the reliability of financial
reporting in the preparation of financial statements for external purposes
in accordance with generally accepted accounting
principles;
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c.
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Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such
evaluation;
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d.
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Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
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5.
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The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the Audit Committee of the registrant’s
Board of Directors (or persons performing the equivalent
functions):
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a.
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting, which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
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b.
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
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Date:
April 13, 2010
By: /s/ Tracy A.
Moore________________________
Tracy A.
Moore
Secretary, Treasurer, Chief Financial
Officer,
Acting Principal Accounting Officer and
a director
Exhibit
32.1
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT
TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
The
undersigned, Glynn Wilson, the Chief Executive Officer of TapImmune Inc. (the
“Company”), hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her
knowledge, the Annual Report on Form 10-K for the year ended December 31, 2009
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, and that the information contained in the
Annual Report on Form 10-K, as amended, fairly presents in all material respects
the financial condition and results of operations of the Company.
Date:
April 13, 2010
By:
/s/ Glynn
Wilson________________________
Glynn Wilson
Chairman, Chief Executive
Officer,
Principal Executive Officer and a
director
Exhibit
32.2
CERTIFICATION
OF ACTING PRINCIPAL ACCOUNTING OFFICER
PURSUANT
TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
The
undersigned, Tracy A. Moore, the Acting Principal Accounting Officer of
TapImmune Inc. (the “Company”), hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to his or her knowledge, the Annual Report on Form 10-K for the year ended
December 31, 2009 fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended, and that the information
contained in the Annual Report on Form 10-K, as amended, fairly presents in all
material respects the financial condition and results of operations of the
Company.
Date:
April 13, 2010
By:
/s/ Tracy
Moore________________________
Tracy A. Moore
Secretary, Treasurer, Chief Financial
Officer,
Acting Principal Accounting Officer and
a director