Documents incorporated by reference: None.
This Annual Report on Form 10-K for the year ended December 31, 2009 contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or future financial performance. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Annual Report. Forward-looking statements are often identified by words like: “believe,” “expect,” estimate,” “anticipate,” “intend,” “project” and similar expressions or words which, by their nature, refer to future events. In some cases, you can also identify forward-looking statements by terminology such as “may,” “will,” “should,” “plans,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks discussed in Item 1A under the caption “Risk Factors,” as well as those discussed elsewhere in this Annual Report, that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should carefully review these risks and additional risks described in other documents we file from time to time with the Securities and Exchange Commission (“SEC”), including the Quarterly Reports on From 10-Q.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. The cautionary statements made in this report are intended to be applicable to all related forward-looking statements wherever they may appear in this report.
Overview
Omnimmune Holdings, Inc. (“Omnimmune” or the “Company”) is the holding company of Omnimmune Corp., a development-stage biotechnology company integrating complementary cancer therapeutic, diagnostic and prognostic technologies. Our mission is to provide a comprehensive and personalized approach to the clinical management of cancer through improved diagnostic, prognostic and therapeutic interventions. Omnimmune has acquired licensed rights to breakthrough diagnostic and platform monoclonal antibody technologies.
Omnimmune intends to play a leading role in the development of personalized cancer treatment with the selection of prophylactic and therapeutic vaccines (active immunization), monoclonal antibodies (passive immunization) and genomic-based products, which target a hormone called human chorionic gonadotropin (“hCG”). Appropriate patient-specific passive immunotherapies will be based upon a patient’s own sequences of hCGß (human chorionic gonadotropin beta subunit), and its gene products (mRNA). HCGß and its genes have been detected in a majority of cancers studied to date, and is a well validated, ubiquitous, and prototypical tumor associated antigen marker. On this basis, hCGß has enormous potential as a target for the diagnosis and treatment of cancer patients . The application of appropriate patient-specific immunotherapy will be based upon the genomic expression and translation of a patient’s own subunit marker(s), as determined by Omnimmune’s combined immuno-genomic cancer diagnostic and prognostic systems. An immuno-genomic companion diagnostic trial is being planned by Omnimmune, and is expected to take place during the 2010 calendar year, subject to the Company obtaining sufficient financing. Omnimmune expects that the results of that trial will be a prelude to the development of a widely applicable diagnostic system for the diagnosis, prognosis and determination of recurrence of many types of cancer. Omnimmune plans to conduct a Phase I trial with its lead candidate anti-hCGb monoclonal antibodies based upon the results of the diagnostic trial.
Omnimmune believes that this customized diagnostic-therapeutic coupling approach represents a new paradigm for targeted therapy, and will significantly alter the way in which cancer patients will be managed in the future.
Omnimmune’s objective is to be a leader in the implementation (reduction to practice) of previously discovered and characterized vaccines and monoclonal antibodies, and in the discovery, development and commercialization of new vaccines (active immunization) and monoclonal antibodies for diagnostic, prognostic and therapeutic (passive immunization) purposes, as well as genomic-based products targeting hCGß.
Omnimmune’s unique hCGß and related technologies, which are protected through an expanding intellectual property portfolio, have been developed at institutions including Columbia University of New York, New York (“Columbia”), The Allegheny-Singer Research Institute of the West Penn Allegheny Health System, Pittsburgh, Pennsylvania (“Allegheny”) and The Institute Gustave Roussy, Paris, France (“IGR”).
Formation
The predecessor of the Company was originally incorporated on February 22, 2007, in the state of Nevada as Roughneck Supplies, Inc. (“Roughneck”). On August 6, 2008, Roughneck merged with and into Omnimmune Holdings, Inc. which resulted in (i) Roughneck changing its domicile from Nevada to Delaware, (ii) Roughneck changing its name from “Roughneck Supplies, Inc.” to “Omnimmune Holdings, Inc.”, (iii) Roughneck changing its fiscal year end from May 31 to December 31 and (iv) Roughneck’s shareholders becoming the stockholders of the Company.
On August 7, 2008, Omnimmune Corp., a privately-held Texas corporation, merged with and into Omnimmune Acquisition Corp., a Delaware corporation, and a wholly-owned subsidiary of the Company formed for the purpose of the merger. As a result, (i) Omnimmune Corp. became a wholly-owned subsidiary of the Company, (ii) the shareholders of Omnimmune Corp. became the majority stockholders of the Company and the shareholders prior to the merger were reduced to a minority ownership, (iii) the historical management of the Company resigned, and the management of Omnimmune Corp. became the management of the Company, (iv) the business of Omnimmune Corp. became the business of Omnimmune and the former business of Roughneck was eliminated, and (v) the historical financial statements of Omnimmune Corp. became the historical financial s tatements of the Company. Therefore, as a consequence of two mergers, one on August 6, 2008, and one on August 7, 2008, Omnimmune (formerly Roughneck) went from being a public corporation domiciled in Nevada formerly in the business of marketing and retailing oil and gas drilling supply products with little or no continuing operations and a fiscal year end of May 31, to being a public company domiciled in Delaware in the biotechnology business with a fiscal year end of December 31. These transactions are described in detail in the Company’s Form 8-K filed with the SEC on August 12, 2008, as amended on August 21, 2008, August 27, 2008 and September 5, 2008, respectively.
Technology and Intellectual Property
Proprietary protection for our products, processes and know-how is important to our business. We rely on exclusive license agreements, patents, trade secrets and proprietary know-how to protect our intellectual property rights. We plan to aggressively prosecute and defend our patents and proprietary technology.
Our intellectual property portfolio includes the worldwide exclusively licensed rights to seven issued patents, ten pending patent applications, two applications in preparation and other proprietary technology. Some of the issued and pending patent applications contain broad claims for the detection and treatment of cancer using genetic probes and anti-hCGβ monoclonal antibodies. Pursuant to three license agreements with leading national and international institutions, Omnimmune Corp. has exclusively licensed rights to twenty-nine anti-hCG monoclonal antibodies, as candidates for both cancer therapy and a new system for cancer diagnostics.
Each of the Company’s license agreements require certain periodic payments by us to the licensors for the licensed rights, including, by way of example, upfront and annual license maintenance fees, royalties based on product sales utilizing the licensed technology, sublicensing royalties, milestone payments based on certain achievements as we conduct trials on the licensed products and progress them through the FDA approval process, and the reimbursement or payment of costs associated with prosecuting the patents subject to these license agreements. Given our significant cash flow limitations, we have had difficulties making required milestone and other payments under certain of our license agreements. Our three licensors for our core diagnostic technologies, Columbia, Allegheny and IGR, have all accomm odated our various requests to make partial payments of certain license obligations and to extend our payment schedule so that, at present, there has been no default called by any such licensors, though we are delinquent in certain of our payment obligations to these institutions. (See Note 10 – Commitments and Contingencies). However, our license agreement (the “OSU License Agreement”) with The Ohio State University (“OSU”) relating to a multivalent vaccine remains in dispute.
As described in detail in the Company’s Form 8-K filed with the SEC on August 24, 2009, on August 17, 2009, OSU issued a formal notice to the Company of its alleged default under the OSU License Agreement based on the Company’s non-payment of certain license fees. The Company has acknowledged that certain license fees called for under the OSU License Agreement have not been paid. However, as reported by the Company in the aforementioned 8-K, the Company believes that it has meritorious defenses and counterclaims to OSU’s claim of breach under the OSU License Agreement.
The Company has provided formal notice to OSU that it disputes OSU’s characterization that the Company’s non-payment of scheduled fees and interest constitutes a breach of the OSU License Agreement. Thereafter, OSU advised the Company that it did not believe that the issues raised by the Company constituted a valid dispute that would call into play the tolling provisions of the license agreement and stated its view that it was considering the OSU License Agreement as terminated, which the Company has disputed.
The technology that is the subject of the OSU License Agreement relates exclusively to the Company’s vaccine technology and has no direct connection to the Company’s diagnostic and prognostic technologies that are under license from academic institutions other than OSU. Any termination of the OSU License Agreement, whether through a consensual understanding reached with OSU or through an adverse result following litigation, will have no effect on the Company’s portfolio of diagnostic and prognostic technologies, which are expected to be the Company’s primary focus going forward.
At present, negotiations are ongoing between the Company and OSU regarding the voluntary termination of the OSU License Agreement on mutually agreeable terms. The Company cannot predict the likelihood that the dispute will be settled, or if not, the likelihood of prevailing in its dispute with OSU. However, the Company believes that whether the dispute is resolved through settlement or litigation, and regardless of the party that might prevail in any litigation, it remains likely that the Company will not retain ongoing rights in the technology that is the subject of the OSU License Agreement and that the Company will instead focus on its core diagnostic technologies.
Government Regulation
Our product candidates under development are subject to extensive and rigorous domestic government regulation and will be subject to further regulation if approved for commercial sale. The FDA regulates, among other things, the development, testing, manufacture, safety, efficacy, record keeping, labeling, storage, approval, advertising, promotion, sale and distribution of biopharmaceutical products. If we market our products abroad, they will also be subject to extensive regulation by foreign governments. Non-compliance with applicable requirements can result in fines, warning letters, recall or seizure of products, clinical study holds, total or partial suspension of production, refusal of the government to grant approvals, withdrawal of approval, and civil and criminal penalties.
Employees
We currently have two full-time employees. We also engage the services of consultants from time to time. None of our employees are members of any labor union and we are not a party to any collective bargaining agreement.
An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and all other information contained in this report before deciding to invest in shares of our common stock. While all risks and uncertainties that we believe to be material to our business and, therefore, the value of our common stock are described below, it is possible that other risks and uncertainties that affect our business will arise or become material in the future. If we are unable to effectively address these risks and uncertainties, our business, financial condition or results of operations could be materially and adversely affected. In this event, the value of the common stock could decline and you could lose all or a portion of your investment.
Our auditors have substantial doubts as to our ability to continue as a going concern.
The auditor’s report on each of our financial statements for the years ended December 31, 2008 and 2009 expresses an opinion that substantial doubt exists as to whether Omnimmune can continue to meet its ongoing obligations and remain in business. Because Omnimmune has been issued an opinion by its auditors that substantial doubt exists as to whether we can continue as a going concern, it may be more difficult for us to attract investors, and we may not survive. Our future is dependent upon our ability to obtain financing and upon future profitable operations from the development and commercialization of our products. We may seek additional funds through private placements of equity or the incurrence of additional debt. Our financial statements do not include any adjustments relati ng to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in existence.
We require additional financing, and an inability to raise the necessary capital or to do so on acceptable terms would threaten our ability to stay in business.
As of December 31, 2009, we had cash and cash equivalents of approximately $5,627, and that balance is under $1,000 as of May 17, 2010. The Company has been unable to meet certain of its ongoing obligations, including payments due to consultants, employees, attorneys, noteholders, licensors and other creditors Absent immediate additional infusions of capital, the Company does not have sufficient liquidity to meet its ongoing obligations on a timely basis, and must resort to consensual extensions and hope that creditors will refrain from pursuing default remedies with respect to delinquent obligations of the Company. The limited amount of cash on hand jeopardizes the Company’s ability to fund operations and satisfy i ts ongoing obligations in a timely manner, including to the licensors of its core technologies.
We may seek to raise additional funds through public or private equity or debt financing, licensing and other agreements, a line of credit, asset sales or other arrangements. However, we cannot be sure that any additional funding, when needed, will be available on terms favorable to us or at all. Furthermore, any additional equity or equity-related financing may be dilutive to our stockholders, and debt financing, if available, may subject us to restrictive covenants and significant interest costs. We may also choose to obtain funding through licensing and other contractual arrangements. Such agreements may require us to relinquish our rights to certain of our technologies, products or marketing territories.
If we are unable to obtain additional capital, we may then attempt to preserve our available resources by various methods including deferring the satisfaction of commitments, reducing expenditures on our research and development programs or otherwise scaling back our operations. If we are unable to raise additional capital or defer costs, that inability would have a material adverse effect on our financial position, results of operations and prospects and our business could fail.
We are or soon may be past due under certain of our material license agreements and other agreements and notes with respect to our payment obligations. There is no assurance that we will receive extensions of these obligations or that we will not default under these agreements in the future; any such defaults could materially and adversely affect our business.
Each of our existing license agreements with third party collaborators require us to make periodic payments to the licensors for the licensed rights, including, by way of example, upfront and annual license maintenance fees, royalties based on product sales utilizing the licensed technology, sublicensing royalties, milestone payments based on certain achievements as we conduct trials on the licensed products and progress them through the FDA approval process, and the reimbursement or payment of costs associated with prosecuting the patents subject to these license agreements.
Given our significant cash flow limitations and our inability to raise additional capital, we have had difficulties making required milestone and other payments under certain of our license agreements. With the exception of OSU, with whom the Company is engaged in an ongoing dispute regarding the purported termination of the OSU License Agreement (See Note 10--Commitments and Contingencies), and based on voluntary concessions and extensions by the affected licensors, no notice of default has been issued under any of our license agreements as of the date of this Report. However, there is no assurance that existing or future delinquencies will not lead to the issuance of a notice of default, that we will be able to remain current on the payment of our license fees on a go-forward basis, or that the respective l icensors will cooperate in any requests for waivers or extensions. All of the license agreements require the licensors to give written notice of any payment default, which would then commence a period of between 30 days and 90 days, depending on the particular license agreement, during which time the Company could cure the default. If we default in the payment of any of our obligations to our licensors, there is no assurance that we will be in a position to cure any such defaults during the particular cure period. In that event, the continued existence and/or exclusivity of the affected license could be at risk.
Additionally, our license agreements provide for various performance and achievement milestones to ensure that we devote adequate personnel and financial resources to the commercialization of the licensed patents and processes. For example, if we do not achieve the milestones in our agreements with The Allegheny-Singer Research Institute and Columbia University, the respective licensor can, with prior notice and an opportunity to cure, elect to terminate the subject license agreement or convert the exclusive worldwide license to a non-exclusive license. With respect to our license agreement with IGR, we have until November 1, 2010 to achieve net sales or sublicense revenue from products developed with the licensed patents, after which time the licensed rights will become non-exclusive; however, we can r equest two one-year extensions of the exclusive license with the payment of an additional license fee to the licensor.
In addition to our license agreements, a number of material obligations to certain lenders, including $550,000 in principal indebtedness owed to certain bridge lenders, significant monies owed to employees, consultants and attorneys, and other debt holders, are either due currently or will become due during 2010, and the Company has no present wherewithal to satisfy these obligations. Although no creditor has issued a notice of default under the applicable debt instrument or otherwise sought to enforce its remedies, there is no assurance that the holders of the Company’s debt, including certain related parties, will continue to acquiesce to any extensions or will not otherwise seek to pursue remedies they may have or will have once their obligations are past due. Should the Company fail to either pay th e amounts due or work out consensual extensions and/or modifications of terms, it may default on such obligations, which could significantly and irreparably harm the Company’s business.
We rely almost entirely on third party collaborators and licensors for assistance in developing our products and sharing in the costs of product development.
The antibody therapeutic products and the related technologies we are pursuing for commercialization were developed and licensed to us by third party collaborators, including Columbia, Allegheny and IGR. We have entered into three primary license agreements that grant to us certain exclusive rights to utilize these institutions’ patented processes and products to develop our own product portfolio. Subject to specific termination provisions, each of these agreements generally extend until the expiration of the patents licensed to Omnimmune or some period after the commercialization of products using the subject patents, whichever is later.
Our strategy for the development and commercialization of antibody therapeutic products depends, in part, upon the formation of collaboration agreements with third parties. Potential third parties include pharmaceutical and biotechnology companies, technology companies, academic institutions and other entities. We will rely on these agreements to successfully develop and commercialize product candidates, including for us to:
| · | access proprietary target antigens for which we can generate fully human antibody products; |
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| · | fund research, preclinical development, clinical trials and manufacturing; |
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| · | seek and obtain regulatory approvals; and |
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| · | successfully commercialize existing and future product candidates. |
Our dependence on licensing, collaboration, manufacturing and other agreements with third parties subjects us to a number of risks. These agreements may not be on terms that prove favorable to us, and we may afford our collaborators significant discretion in electing whether to pursue any of the planned activities. Licensing and other contractual arrangements may require us to relinquish our rights to certain of our technologies, products or marketing territories. To the extent we agree to work exclusively with one collaborator in a given therapeutic area, our opportunities to collaborate with other entities could be curtailed.
We cannot control the amount or timing of resources our collaborators may devote to collaboration, and collaborators may not perform their obligations as expected. Additionally, business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under the arrangement. Even if we fulfill our obligations under an agreement, our collaborators may terminate the agreement at any time following proper written notice. The termination or breach of agreements by our collaborators, or the failure of our collaborators to complete their obligations in a timely manner, could materially harm our business, financial condition and results of operations. If we are not able to establish furt her collaboration agreements or any or all of our agreements are terminated, we may be required to seek new collaborators or to undertake product development and commercialization at our own expense.
Potential collaborators may pursue alternative technologies, including those of our competitors, or enter into other transactions that could make collaboration with us less attractive to them. For example, if an existing collaborator purchases a company that is one of our competitors, that company could be less willing to continue its collaboration with us. Moreover, disputes may arise with respect to the ownership of rights to any technology or products developed with any current or future collaborator. Lengthy negotiations with potential new collaborators or disagreements between us and our collaborators may lead to delays in or termination of the research, development or commercialization of product candidates or result in time-consuming and expensive litigation or arbitration. The de cision by our collaborators to pursue alternative technologies or the failure of our collaborators to develop or commercialize successfully any product candidate to which they have obtained rights from us could materially harm our business, financial condition and results of operations.
Our technologies may not produce safe, efficacious or commercially viable products, which will be critical to our ability to generate revenues from our potential products.
Our technologies involve novel approaches to developing vaccines and antibodies as products for the diagnosis and treatment of cancer. To date, we have not commercialized any diagnostics, vaccines and antibody therapeutic products based on our technologies. Moreover, we are not aware of any commercialized, fully human antibody therapeutic products that have been generated from any technologies similar to ours. Our diagnostics and antibody therapeutic product candidates are still in various stages of development and many are in an early development stage. We cannot be certain that the cell lines licensed from certain of our third party collaborators on which we depend to produce monoclonal antibodies remain or will remain viable or, in such a case, that acceptable alternative cell lines can be obtai ned, or that our technologies will generate antibodies against every antigen to which they are exposed in an efficient and timely manner, if at all. Furthermore, our technologies may not result in product candidates that are safe and efficacious for patients. Our failure to generate commercial products with our technology would materially harm our business, financial condition and results of operations.
If we do not successfully develop products, or if we cannot achieve commercial success, our business will be materially harmed.
Our development of product candidates, either alone or in conjunction with collaborators, is subject to the risks of failure inherent in the development of new pharmaceutical products and products based on new technologies. These risks include:
| · | delays or failures in funding, product development, clinical testing or manufacturing; |
| · | unplanned expenditures in product development, clinical testing or manufacturing; |
| · | failure in clinical trials or failure to receive regulatory approvals; |
| · | emergence of superior or equivalent product development technologies or products; |
| · | disruption in the available supply of animal colonies; |
| · | inability to manufacture on our own, or through others, product candidates on a clinical or commercial scale; |
| · | inability to market products due to third party proprietary rights; |
| · | election by our customers not to pursue product development; |
| · | failure by our collaborators to develop products successfully; and |
| · | failure to achieve market acceptance. |
Because of these risks, our research and development efforts and those of our collaborators may not result in any commercially viable products. Our failure to successfully complete a significant portion of these development efforts, to obtain required regulatory approvals or to achieve commercial success with any approved products would materially harm our business, financial condition and results of operations.
Before we commercialize and sell any of our product candidates, we must conduct clinical trials, which are expensive, will require additional funds to be raised and have uncertain outcomes.
Conducting clinical trials is a lengthy, time-consuming and expensive process.
Before obtaining regulatory approvals for the commercial sale of any products, we must demonstrate through preclinical testing and clinical trials that our product candidates are safe and effective for use in humans. We have incurred and will continue to incur substantial expense for, and we have devoted and expect to continue to devote a significant amount of time to, preclinical testing.
Completion of clinical trials may take several years or more. The length of time generally varies substantially according to the type, complexity, novelty and intended use of the product candidate. Many factors may delay our commencement and rate of completion of clinical trials, including:
| · | the number of patients that ultimately participate in the trial, which may be affected by the availability of competing therapeutic alternatives; |
| · | the length of time required to enroll suitable subjects; |
| · | the duration of patient follow-up that seems appropriate in view of the results; |
| · | the number of clinical sites included in the trials; |
| · | changes in regulatory requirements for clinical trials or any governmental or regulatory delays or clinical holds requiring suspension or termination of the trials; |
| · | delays, suspensions or termination of the clinical trials due to the institutional review board responsible for overseeing the study at a particular study site; |
| · | regulatory policies regarding expedited approval procedures; |
| · | inability to raise adequate funding; |
| · | unforeseen safety issues; and |
| · | inability to manufacture on our own, or through others, adequate supplies of the product candidate being tested. |
We have limited experience in conducting and managing clinical trials. We will rely on third parties, including our collaborators, to assist us in managing and monitoring clinical trials. Our reliance on these third parties may result in delays in completing, or in failure to complete, these trials if the third parties fail to perform under our agreements with them.
Our ability to file IND’s, and to build diversity and scale in our product portfolio, depends to a significant extent on our ability to identify potential product candidates through our preclinical research and to conduct preclinical research efficiently. Our preclinical or clinical development efforts may not be successfully completed, we may not file further IND’s and clinical trials may not commence as planned.
Our product candidates may fail to demonstrate safety or efficacy in clinical trials. Failures of clinical trials of any product candidate could delay the development of other product candidates or hinder our ability to obtain additional financing. In addition, failures in our clinical trials can lead to additional research and development expenses. Any delays in, or termination of, our clinical trials could impede our ability to commercialize our product candidates and materially harm our business, financial condition and results of operations.
We are subject to extensive government regulation, which will require us to spend significant amounts of money, and we may not be able to obtain regulatory approvals, which are required for us to conduct clinical testing and commercialize our future products.
Our potential product candidates will be subject to extensive and rigorous domestic government regulation. The FDA regulates, among other things, the development, testing, manufacture, safety, efficacy, record-keeping, labeling, storage, approval, advertising, promotion, sale and distribution of biopharmaceutical products. If we market our products abroad, they will also be subject to extensive regulation by foreign governments. Neither the FDA nor any other regulatory agency has approved any of our product candidates for sale in the United States or any foreign market. The regulatory review and approval process, which includes preclinical studies and clinical trials of each product candidate, is lengthy, expensive and uncertain. The recent withdrawal of certain approved products from th e market may lead to longer review periods by the FDA, particularly for product candidates being reviewed under an accelerated approval process, or may result in requests for more extensive trials or data.
Securing FDA approval requires the submission of extensive preclinical and clinical data, manufacturing data and supporting information to the FDA for each indication to establish the product candidate’s safety and efficacy. The generation of data supporting the approval process takes many years, requires the expenditure of substantial resources, and may involve post-marketing surveillance and requirements for post-marketing studies. As we conduct clinical trials for a given product candidate, we may decide or the FDA may require us to make changes in our plans and protocols. Such changes may relate to, for example, changes in the standard of care for a particular disease indication, comparability of efficacy and toxicity of materials where a change in materials is proposed, or competitive de velopments foreclosing the availability of expedited approval procedures. We may be required to support proposed changes with additional preclinical or clinical testing, which could delay the expected time line for concluding clinical trials. The approval of a product candidate may depend on the acceptability to the FDA of data from clinical trials conducted outside the United States. Regulatory requirements are subject to frequent change. Delays in obtaining regulatory approvals may:
| ● | adversely affect the successful commercialization of any drugs that we or our collaborators develop; |
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| ● | impose costly procedures on us or our collaborators; |
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| ● | diminish any competitive advantages that we or our collaborators may attain; and |
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| ● | adversely affect our receipt of revenues or royalties. |
Our product candidates may not be approved or may be approved with limitations or for indications that differ from those we initially target. Even if marketing approval from the FDA is received, the FDA may impose post-marketing requirements, such as:
| ● | labeling and advertising requirements, restrictions or limitations, such as the inclusion of warnings, precautions, contra-indications or use limitations that could have a material impact on the future profitability of our product candidates; |
| ● | testing and surveillance to monitor our future products and their continued compliance with regulatory requirements; and |
| ● | inspection of products and manufacturing operations and, if any inspection reveals that the product or operation is not in compliance, prohibiting the sale of all products, suspending manufacturing or withdrawing market clearance. |
The discovery of previously unknown problems with our future products may result in restrictions of the products, including withdrawal from manufacture. Additionally, certain material changes affecting an approved product such as manufacturing changes or additional labeling claims are subject to further FDA review and approval. The FDA may revisit and change its prior determination with regard to the safety or efficacy of our proposed products and withdraw any required approvals after we obtain them. Even prior to any formal regulatory action requiring labeling changes or affecting manufacturing, we could voluntarily decide to cease the distribution and sale or recall any of our future products if concerns about their safety and efficacy develop.
In their regulation of advertising, the FDA and the Federal Trade Commission (“FTC”) may issue correspondence alleging that particular advertising or promotional practices are false, misleading or deceptive. The FDA or FTC may impose a wide array of sanctions on companies for such advertising practices. Additionally, physicians may prescribe pharmaceutical or biologic products for uses that are not described in a product’s labeling or differ from those tested by us and approved by the FDA. While such “off-label” uses are common and the FDA does not regulate physicians’ choice of treatments, the FDA does restrict a manufacturer’s communications on the subject of “off-label” use. Companies cannot promote FDA-approved pharmaceutical or b iologic products for off-label uses. If our advertising or promotional activities fail to comply with the FDA’s or FTC’s regulations or guidelines, we may be subject to warnings from, or enforcement action by, the FDA or FTC.
If we fail to comply with applicable FDA and other regulatory requirements at any stage during the regulatory process, we or our third party manufacturers may be subject to sanctions.
In many instances we expect to rely on our co-developers to file INDs and generally direct the regulatory approval process for products derived from our technologies. These co-developers may not be able to or may choose not to conduct clinical testing or obtain necessary approvals from the FDA or other regulatory authorities for any product candidates. If they fail to obtain required governmental approvals, we will experience delays in or be precluded from marketing or realizing the commercial benefits from the marketing of products derived from our technologies. In addition, our failure to obtain the required approvals would preclude the commercial use of our products. Any such delays and limitations may materially harm our business, financial condition and results of operations.
We may not be able to adequately protect our proprietary rights, which would have a negative impact on our operations.
Our ability to compete partly depends on the superiority, uniqueness and value of our technology, including both internally developed technology and technology licensed from third parties. To protect our proprietary rights, we rely on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements with our employees and third parties, and protective contractual provisions.
We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. We attempt to protect our proprietary position by filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development of our business. However, the patent position of biotechnology companies involves complex legal and factual questions, and the laws governing broad biotechnology patents continue to evolve, including in ways that could undermine or adversely affect the Company’s patent position, including the validity of previously issued patents. Therefore, we cannot predict with certaint y whether our patent applications will be approved or any resulting patents will be enforced, nor can we be assured that previously issued patents will continue to be enforceable. In addition, third parties may challenge, seek to invalidate or circumvent any of our patents, once they are issued. Thus, any patents that we own or license from third parties may not provide any protection against competitors and our efforts to protect our intellectual property rights may not be effective in preventing misappropriation of our technology. Another party may obtain a blocking patent and we would need to either obtain a license or design around the patent in order to continue to offer the contested feature or service in our products. Our pending patent applications, those we may file in the future, or those we may license from third parties, may not result in patents being issued. Also, patent rights may not provide us with adequate proprietary protection or competitive adv antages against the development and design by others of products or technologies similar to or competitive with, or superior to those we develop. The laws of certain foreign countries do not protect our intellectual property rights to the same extent as do the laws of the United States.
In addition, effective protection of intellectual property rights may be unavailable or limited in certain foreign countries. If we are unable to adequately protect our proprietary rights, then it would have a negative impact on our operations.
Apart from patents, we rely on trade secrets and proprietary know-how. We seek protection, in part, through confidentiality and proprietary information agreements. These agreements may not provide meaningful protection for our technology or adequate remedies in the event of unauthorized use or disclosure of confidential and proprietary information, and, in addition, the parties may breach such agreements. Also, our trade secrets may otherwise become known to, or be independently developed by, our competitors. Furthermore, others may independently develop similar technologies or duplicate any technology that we have developed.
We may face challenges from third parties regarding the validity of our patents and proprietary rights, or from third parties asserting that we are infringing their patents or proprietary rights, which could result in litigation that would be costly to defend and could deprive us of valuable rights.
Parties have conducted research for many years in the cancer diagnostics, antibody immunotherapy and cancer vaccine fields. This research has resulted in a substantial number of issued patents and an even larger number of pending patent applications. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made.
Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of thirds parties. Our technologies may unintentionally infringe the patents or violate other proprietary rights of third parties. Such infringement or violation may prevent us and our collaborators from pursuing product development or commercialization. Such a result could materially harm our business, financial condition and results of operations.
Extensive litigation regarding patents and other intellectual property rights has been common in the biotechnology and pharmaceutical industries. The defense and prosecution of intellectual property suits, United States Patent and Trademark Office interference proceedings, and related legal and administrative proceedings in the United States and internationally involve complex legal and factual questions. As a result, such proceedings are costly and time-consuming to pursue and their outcome is uncertain.
Our involvement in any litigation, interference or other administrative proceedings could cause us to incur substantial expense and could significantly divert the efforts of our technical and management personnel. An adverse determination may subject us to loss of our proprietary position or to significant liabilities, or require us to seek licenses that may not be available from third parties. An adverse determination in a judicial or administrative proceeding, or a failure to obtain necessary licenses, may restrict or prevent us from manufacturing and selling our products, if any.
Also, questions of inventorship or ownership related to a particular patent, if raised, could diminish the value of the technology, cause potential investors to refrain from investing or insist on less favorable terms, or otherwise dilute the value of the patent. These risks are present through the mere assertion of questions related to ownership or inventorship regardless of whether such assertions ultimately prove to have merit.
Funding for early stage biotechnology companies has been severely curtailed and may continue to prove challenging for the foreseeable future.
Over the past year and more, funding for early stage biotechnology companies such as ours has been drastically reduced from previous levels, and traditional sources of financing have all but disappeared. There is a substantial risk that the ongoing economic situation will worsen or continue for an extended period, which could exacerbate funding difficulties for Omnimmune and other similarly situated companies. The current economic climate substantially increases the risk that Omnimmune will not be able to raise sufficient funding levels to execute on its business plan or remain current on its obligations to its licensors and other creditors.
Our stock price is volatile.
The market price of our common stock is highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.
The stock market in general has recently experienced relatively large price and volume fluctuations. In particular, market prices of securities of biotechnology companies have experienced fluctuations that often have been unrelated or disproportionate to the operating results of these companies. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Prospective investors should also be aware that price volatility may be worse if the trading volume of our common stock is low. These market fluctuations may also materially and adversely affect the market price of common stock.
Should our common stock remain listed on the OTC Bulletin Board or be suspended from the OTC Bulletin Board, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility. Furthermore, for companies whose securities are traded in the OTC Bulletin Board, it is more difficult (1) to obtain accurate quotations, (2) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies, and (3) to obtain needed capital.
Our common stock may be subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on The NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share (post split), other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.
Substantial future issuances and sales of our common stock, the exercise and sale of our common stock underlying our warrants or options, or the conversion and sale of our common stock underlying our convertible promissory notes could result in substantial dilution for existing shareholders and could also depress our stock price.
The market price for our common stock could decline, perhaps significantly, as a result of issuances of a large number of shares of our common stock in the public market or even the perception that such issuances could occur. As of December 31, 2009, we have issued options and warrants to purchase approximately 3,280,452 shares of our common stock. In addition, we have convertible promissory notes outstanding which have the right to convert into an aggregate amount of 8,457,039 shares of common stock. If all, or a substantial part of these options, warrants or notes, were exercised or converted and the underlying common stock sold, then it could also cause the market price for our common stock to decline, perhaps significantly.
Furthermore, subsequent to the period covered by this Report, and as described below in Note 12, Subsequent Events, the Company entered into a Term Sheet for Debt Financing and Agreed Upon Restructuring, pursuant to which (i) up to $500,000 in convertible debt financing may take place at a conversion price of $0.01 per share, (ii) the conversion price related to approximately $800,000 in existing unsecured indebtedness to a significant creditor was re-set at $0.01 per share, and (iii) management received certain limited anti-dilution protection that will result in the issuance to management of such additional shares as are required to maintain management’s specified collective ownership interest through the next $3.5 million in net financing. Should the entire $500,000 financing be fully subscribed to, or sh ould the holder of the newly ratcheted convertible debt convert her shares, and based upon automatic adjustments to management to implement their anti-dilution protection, the number of additional shares of Common Stock of the Company that will be issued or issuable, would result in highly dilutive issuances of new common stock which could dwarf the number of shares currently outstanding and could also cause the market price for our common stock to decline, perhaps significantly.
Under certain registration rights agreements and a tag-along rights agreement outstanding, certain holders of outstanding shares of our common stock and other securities have registration rights with respect to the common stock held or upon conversion of the underlying security. Sales of a substantial number of these shares of common stock, or the perception that holders of a large number of shares intend to sell their shares, could depress the market price of our common stock. The existence of such registration rights could also make it more difficult for us to raise funds through future offerings of our equity securities.
We face product liability risks for which we do not currently maintain insurance and may not, in the future, be able to obtain adequate insurance, and if we are held liable for an uninsured claim or a claim in excess of our insurance limits, our business, financial condition and results of operations may be harmed.
The use of any of our product candidates in clinical trials and the sale of any approved products may expose us to liability claims resulting from such use or sale. Consumers, healthcare providers, pharmaceutical companies or others selling such products might make claims of this kind. We may experience financial losses in the future due to product liability claims. We do not currently carry insurance coverage for product liability claims. At the time we procure our own laboratory facilities or begin conducting clinical trials, we plan to obtain limited product liability and contractual liability insurance coverage for our activities. We may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses. If thir d parties bring a successful product liability claim or series of claims against us for uninsured liabilities or in excess of insured liabilities, our business, financial condition and results of operations may be materially harmed.
Our operations involve hazardous materials, and we could be held responsible for any damages caused by such materials.
Our research activities involve the controlled use of hazardous materials. In addition, although we will maintain insurance for harm to employees and to our facilities caused by hazardous materials, we do not insure against any other harm (including harm to the environment) caused by the use of hazardous materials on our premises. We cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident or environmental discharge, we may be held liable for any resulting damages, which may exceed our financial resources and may materially harm our business, financial condition and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Our principal offices are located in Houston, Texas occupying approximately 315 square feet of office space subleased from Deutser and Weil, a partnership of which one of our shareholders is a partner. The lease term is month to month. Our rental obligation is $8,400 per year.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market Information
Since August 6, 2008, our common stock has been quoted on the OTC Bulletin Board under the symbol “OMMH.OB”. The following table sets forth the high and low bid prices for our common stock for the periods noted, as reported by the National Daily Quotation Service and the Over-The-Counter Bulletin Board, from August 6, 2008 through December 31, 2009. Quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
| 2008 | | High | | | Low | |
| Fourth Quarter | | $ | 3.25 | | | $ | 0.10 | |
| Third Quarter (August 6 - September 30) | | | 7.50 | | | | 1.80 | |
| 2009 | | High | | | Low | |
| Fourth Quarter | | $ | 0.25 | | | $ | 0.12 | |
| Third Quarter | | | 0.40 | | | | 0.15 | |
| Second Quarter | | | 0.50 | | | | 0.20 | |
| First Quarter | | | 0.85 | | | | 0.17 | |
On May 11, 2010 the closing price of our common stock as reported by the OTC Bulletin Board was $0.035 per share (post split).
Holders of Our Common Stock
The outstanding voting securities of Omnimmune Holdings, Inc. consist of shares of common stock, par value $0.0001 per share. As of March 31, 2010, we had approximately 173 holders of record of our common stock, with 8,914,921 shares of common stock issued and outstanding.
Unregistered Sale of Equity Securities
None.
Dividends and Distributions
We have not paid any cash dividends to date. We intend to retain our future earnings, if any, and we do not anticipate paying cash dividends on our common stock in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Omnimmune Holdings, Inc. is the holding company of Omnimmune Corp., a development-stage biotechnology company integrating complementary cancer therapeutic, diagnostic and prognostic technologies. Our mission is to provide a comprehensive and personalized approach to the clinical management of cancer through improved diagnostic, prognostic and therapeutic interventions. Omnimmune has acquired licensed rights to breakthrough diagnostic and platform monoclonal antibody technologies.
RESULTS OF OPERATIONS
As a development stage pharmaceutical company, we produce no revenues and do not expect to produce any revenues for the foreseeable future. We have incurred operating losses of $1,761,268 and $5,989,872 for the years ended December 31, 2009 and December 31, 2008, respectively, and as of December 31, 2009, we had an accumulated deficit of $21,099,267.
Because we produce no revenues, we rely entirely on debt and equity financing to fund ongoing operations, and expect to continue to do so for the foreseeable future. Generating revenues and ultimately achieving profitability will require the successful completion of our research and development programs, and the subsequent commercialization of the results or of products derived from such research and development efforts or from our patents and patents pending and those licensed from our strategic collaborators. No assurances can be given as to our ability to identify sufficient sources of funding to sustain our operations, commercialize our products or achieve profitability. These matters raise substantial doubt about our ability to continue as a going concern. The financial statements do no t include any adjustments that may result from the outcome of this uncertainty. In order to alleviate our working capital deficiency and address our continued financing concerns, management intends to take affirmative steps towards identifying sources of capital that will be sufficient to fund our operations until such time as we are cash flow positive.
Revenues
As a development stage pharmaceutical company, we produce no revenues and do not expect to produce any revenues for the foreseeable future.
Costs and Expenses
Our selling, general and administrative expenses decreased approximately 72% to $1,522,060 in the year ended December 31, 2009, from $5,475,869 in the same period in 2008. For the year ended December 31, 2009, selling, general, and administrative expenses decreased primarily due to a decrease in non-cash compensation in the amount of $2,975,737, from $3,054,333 in the prior period to $78,596 for the year ended December 31, 2009. Non-cash compensation in the prior period consisted primarily of a charge of $2,811,963 related to stock options issued to officers and directors. The other primary reason for the decrease in selling, general, and administrative expenses for the period was a decrease in legal and accounting costs, which were $1,009,720 during the prior year compared to $157,481 i n the year ended December 31, 2009. The primary reason for this decrease of $852,239 was the costs incurred with regard to the Roughneck acquisition in the prior period. Other components of selling, general, and administrative costs during the current period include payroll and related costs of $538,777; consulting fees of $317,050; license fees of $291,723; insurance costs of $33,408; and office expenses of $17,345.
Net Loss
For the reasons stated above, our net loss for the twelve months ending December 31, 2009 was $1,761,268, compared to a net loss for the twelve months ended December 31, 2008 of $5,989,872. For the period since inception, or January 15, 1997 through December 31, 2009, our accumulated net loss is $21,009,267.
We have incurred negative operating cash flows of $252,427 and $1,910,581, respectively, for the year ended December 31, 2009 and December 31, 2008. This loss, in addition to a lack of continuing operations, raises substantial doubt about our ability to continue as a going concern. Also, as of March 30, 2010, we had less than $5,000 of cash on hand. Accordingly, absent an immediate infusion of new capital, we will be unable to meet our ongoing obligations on a timely basis. Since we do not expect to generate significant revenues in the foreseeable future, we, in order to fund future operations, will be completely dependent on additional debt and equity financing arrangements to fund future operations.
Liquidity and Capital Resources
At December 31, 2009, we had a cash balance of $5,627 and under $1,000 as of March 31, 2010. In the absence of substantial and immediate new funding, we will not have sufficient cash to fund our ongoing payment obligations to our employees, consultants, licensors, noteholders or other creditors. We have financed ourselves primarily through cash on hand and through loans from shareholders and investors in our bridge financings and private placement offerings.
Net cash flow used in operating activities was $252,427 for the year ended December 31, 2009, compared to net cash flow used in operating activities of $1,910,581 for the same period in 2008. This decrease was principally due to a decrease in our net loss and a decrease in selling, general, and administrative costs.
Net cash provided by financing activities was $205,439 for the year ended December 31, 2009, compared to $1,962,987 for the same period in 2008. We have financed our operations primarily through loans from shareholders and investors in our bridge financings and private placement equity offerings.
On August 7, 2008, we closed on an offering to accredited investors of 707,200 Units (each Unit selling for $2.50 and consisting of one share (post split) of Omnimmune common stock and a warrant to purchase one share (post split) of common stock at an exercise price of $5.00 per share (post split)) and raised aggregate gross proceeds of $1,768,000 (the “First Offering”). We paid the placement agent a placement fee in the amount of $176,800 with respect to the funds raised in the First Offering (10% of the gross proceeds), plus a non-accountable expense allowance equal to 3% of the gross proceeds of such offering (equaling $53,040), and its reasonable out-of-pocket expenses up to $30,000, which resulted in an aggregate payment of $259,729 to the placement agent at the closing. Upon completion of th e First Offering, our cash balance was approximately $716,500 after payments to the placement agent, professional fees and repayment of certain loans and a portion of the certain outstanding promissory notes for which we received payment demands upon the closing of the offering. Subsequent activities have reduced the Company’s cash to less than $1,000 at present.
Management is seeking to raise additional money through private debt and equity offerings to enable us to satisfy our cash requirements in the coming months and beyond and to fund ongoing research and development activities. We are not self-supporting through internally generated capital, and rely exclusively on our continued ability to raise additional funds through private or public debt or equity financings to meet our ongoing cash needs.
We will require substantial additional funding in order to meet our obligations to our licensors, continue our research and product development programs, including preclinical testing and clinical trials of our product candidates, and meet ongoing operating expenses. We expect to continue to incur substantial losses through at least the next several years and may incur losses in subsequent periods. The amount and timing of our future losses are highly uncertain. Our ability to achieve and thereafter sustain profitability will be dependent upon, among other things, successfully developing, commercializing and obtaining regulatory approval or clearances for our technologies and products resulting from these technologies, which will require substantial additional funding, the availability of which is uncert ain.
There is no assurance that we will obtain financing sufficient to pay ongoing obligations or to fund our working capital and other cash requirements. No assurance can be given that any such additional funding will be available or that, if available, can be obtained on terms favorable to us. If we are unable to raise needed funds on acceptable terms, we will not be able to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. A material shortage of capital will require us to take drastic steps such as reducing our levels of operations, disposing of selected assets, curtailing our development efforts or seeking an acquisition partner. If cash is insufficient, we may not be able to continue operations .
Off-Balance Sheet Arrangements
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
Critical Accounting Policies
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements; we believe the following critical accounting policy involves the most complex, difficult and subjective estimates and judgments:
Stock Based Compensation Effective January 1, 2006, the Company adopted ASC 718-10 (formerly referred to as SFAS No. 123 (revised), "Share-Based Payment" (SFAS 123(R))) utilizing the modified prospective approach. Prior to the adoption of ASC 718-10 we accounted for stock option grant in accordance with ASC 718-10, and accordingly, recognized compensation expense for stock option grants.
Under the modified prospective approach, ASC 718-10 applies to new awards and to awards that were outstanding on January 1, 2006 that are subsequently modified, repurchased or cancelled. Under the modified prospective approach, compensation cost recognized in the nine months of fiscal 2006 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of ASC 718-10, and compensation cost for all share-based payments granted subsequent to January 1, 2006 based on the grant-date fair value estimated in accordance with the provisions of ASC 718-10 Prior periods were not restated to reflect the impact of adopting the new standard.
A summary of option activity under the Plan as of December 31, 2009, and changes during the period ended are presented below:
| | | Options | | | Weighted Average Exercise Price | |
| Outstanding at December 31, 2007 | | | - | | | $ | - | |
| Issued | | | 2,350,000 | | | | 2.50 | |
| Exercised | | | - | | | | - | |
| Forfeited or expired | | | - | | | | - | |
| Outstanding at December 31, 2008 | | | 2,350,000 | | | $ | 2.50 | |
| | | | | | | | | |
| Issued | | | - | | | $ | - | |
| Exercised | | | - | | | | - | |
| Forfeited or expired | | | - | | | | | - |
| Outstanding at December 31, 2009 | | | 2,350,000 | | | $ | 2.50 | |
| Exercisable | | | 2,327,656 | | | $ | 2.50 | |
| Not exercisable | | | 22,344 | | | $ | 2.50 | |
Aggregate intrinsic value of options outstanding and exercisable at December 31, 2009 was $0. Aggregate intrinsic value represents the difference between the Company's closing stock price on the last trading day of the fiscal period, which was $0.16 as of December 31, 2009, and the exercise price multiplied by the number of options outstanding. As of December 31, 2009, total unrecognized stock-based compensation expense related to stock options was $27,749. The total fair value of options vested during the year December 31, 2009 and 2008 was $41,598 and $2,866,810, respectively.
Revenue Recognition. Our policy is to recognize revenue over the period that we perform required activities under the terms of various agreements. Revenue from transactions that do not require future performance obligations from us is recognized as contemplated in the agreements, typically upon acceptance and when collectability is reasonably assured. Revenue resulting from the achievement of milestone events stipulated in the agreements will be recognized when the milestone is achieved.
Research and Development. Research and development expenditures, including direct and allocated overhead expenses, are charged to expense as incurred.
Royalties. We are required to remit royalty payments based on product sales to certain parties under our license agreements. From time to time we have been in default under certain of our material license agreements with respect to our payment obligations and achievement of performance milestones; however, such license agreements are currently in good standing.
Long-Lived Assets. Equipment is stated at acquired cost less accumulated depreciation. Laboratory and office equipment are depreciated on the straight-line basis over the estimated useful lives (three to seven years).
Impairment of long-lived assets is recognized when events or changes in circumstances indicate that the carrying amount of the asset or related group of assets may not be recoverable. If the expected future undiscounted cash flows are less than the carrying amount of the asset, an impairment loss is recognized at that time. Measurement of impairment may be based upon appraisal, market value of similar assets or discounted cash flows.
Patent Costs and Rights. Patent costs and rights are expensed as incurred.
Income Taxes. As of December 31, 2009, we had aggregate unused net operating loss carryforwards of approximately $21,300,000. These carryforwards may be used to reduce future tax liabilities and expire at various dates through 2028. Our use of current net operating loss carryforwards may be substantially limited as a result of the change in ownership related to the Merger and the Offering.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
See the Index to Financial Statements on page F-1. The supplementary data is included in Part IV, Item 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer and Chief Financial Officer, Dr. Harris Lichtenstein, of the effectiveness of the design and operation of our disclosure controls and procedures, as of December 31, 2009. Based upon, and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2009, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act was complete. For the prior year ended December 31, 2008, we previously determined that we omitted Management’s Report on Internal Control over Financial Reporting requ ired by Item 308T of Regulation S-K from Item 9A – Controls and Procedures from our report 10-K for the year ended December 31, 2008 and, on that basis, we reported that our disclosure controls and procedures were ineffective as of that date. In response to that deficiency, we have taken corrective action by instituting a more detailed and comprehensive checklist and expanded our internal review and have determined that, as of December 31, 2009, our disclosure controls and procedures are now effective.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. As required by Exchange Act Rule 13a-15(f), for the period covered by the Annual Report on Form 10-K for the year ended December 31, 2009, our management, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial (and principal accounting) Officer conducted an evaluation of the effectiveness of our internal control over financial reporting with reference to the framework in Internal Control--I ntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on, and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2009, our internal controls over financial reporting were effective.
Significant Deficiencies in Internal Controls for Prior Calendar Year
We previously determined and reported that there were disclosure errors in Item 9A - Controls and Procedures as contained in our Form 10-K for the year ended December 31, 2008, filed with the SEC on April 15, 2009, and as amended by Amendment No. 1, filed with the SEC on January 23, 2010. Our annual report did not include all disclosures as required by Item 308T of Regulation S-K.
As noted above, the Company has implemented enhanced internal controls over financial reporting and improved disclosure controls and procedures which it has determined have remedied this deficiency. The Company is not aware of any other deficiencies in its system of internal controls over financial reporting.
This annual report does not include an audit report of our registered public accounting firm regarding internal control over financial reporting. In addition, management's report on internal control over financial reporting was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
(c) Changes in Internal Control over Financial Reporting
Except as described above, there were no changes in internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially effect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Directors and Executive Officers
Set forth below is certain information relating to the Company’s directors and officers as of April 6, 2010, including their name, age, and business experience. Each director’s term lasts until the next subsequent annual meeting of stockholders and until he is succeeded by another qualified director who has been elected. There are no family relationships between any of the directors or executive officers.
| Name and Business Address | | Age | | Position |
| Harris A. Lichtenstein | | | 68 | | President, Chief Executive Officer; Chief Financial Officer and Director |
| Mark S. Germain | | | 62 | | Chairman of the Board of Directors |
| Alexander Krichevsky | | | 59 | | V.P. and Director of Research and Director |
| Charles Duff | | | 30 | | Director |
| Matthew A. Gonda | | | 60 | | Director |
| Howard Becker | | | 51 | | Chief Operating Officer |
Harris A. Lichtenstein, Ph.D. – Dr. Lichtenstein has been a Director, President and Chief Executive Officer of Omnimmune Corp. since 1994. Dr. Lichtenstein has had over 35 years of experience in bioscience technology, including ownership of a consulting testing laboratory for 18 years prior to its sale to a Fortune 500 company prior to founding Omnimmune Corp. Dr. Lichtenstein has served as an Adjunct Professor at the University of Texas, School of Public Health, and consulted for the University of Texas, Dental Science Institute, the University of Texas, M.D. Anderson Cancer Center, and Baylor College of Medicine. Dr. Lichtenstein received a B.A. in English from Tulane University, and received B.S., M.S. and Ph.D. degrees in biology, Ph i Kappa Phi, from the University of Houston.
Alexander Krichevsky, D.V.M – Dr. Krichevsky has been an officer and director of Omnimmune Corp. since January 15, 2001. Prior to joining Omnimmune Corp., Dr. Krichevsky served as Director of Tissue Culture and Hybridoma Laboratories at Columbia University, Director of Monoclonal Antibody Development and Hybridoma Laboratories for Allegheny-Singer Research Institute, and Senior Vice President for R&D at InVitro Technologies, Inc.
Mark S. Germain – Mr Germain has served on the Board of Directors of Omnimmune since January 1, 2006. For more than the past five years, Mr. Germain has been a Managing Director of The Olmsted Group, LLC, which is a consultant to biotechnology and other high technology companies. Mr. Germain serves as a director of several privately-held biotechnology companies and of Reis, Inc. and Stem Cell Innovations, Inc., each of which is a publically traded company. Mr. Germain is a graduate of NYU School of Law, cum laude, and Order of the Coif, and was previously a partner in a New York law firm.
Charles Duff – Mr. Duff has served as a Director of the Company since August 2008. Mr. Duff is a principal of the firm Emissary Capital Group, LLC based in New York City, and currently serves as Managing Director and Head of Capital Markets of the firm. Prior to joining Emissary Capital, Mr. Duff founded and served as CEO of Mint Capital Partners LLC, a merchant bank specializing in biotechnology and healthcare companies. Mr. Duff has been associated with a number of boutique and mid-tier venture capital, private equity and investment banking firms, including serving as Senior Managing Director of New Castle Financial Services LLC, and Senior Vice President of Advanced Equities, Inc. Throughout his career, he has executed various types of financing transactions, and has acted as investment banker and advisor to numerous private and publicly traded companies.
Matthew A. Gonda, Ph.D. – Dr. Gonda has served as a Director of the Company since August 2008. Dr. Gonda currently serves as Chief Executive Officer of IMI International Medical Innovations. Prior to joining IMI Medical International Innovations, Dr. Gonda served as President, Chief Executive Officer and Director of TransMolecular, Inc. from January 1999 to April 2005. From 1997 to 1998, he was President and CEO of Genova, Inc. From 1996 to 1997, he was Vice President of Discovery at Genovo, Inc. Dr. Gonda has more than 30 years of entrepreneurial, general management, and research and development experience in the biomedical/life science and biotechnology industries. Dr. Gonda has published over 140 scientific articles and is an inventor on more than 25 patents in the field.
Howard Becker – Mr. Becker has served as the Chief Operating Officer of the Company on a part-time consultancy basis since August 2008. In addition to his role with the Company, Mr. Becker is serving as chief executive officer and director of CepTor Corp., a development stage biotechnology company based in New York. Before joining CepTor, Mr. Becker was engaged by Xechem International, a development stage pharmaceutical company headquartered in Edison, New Jersey, where he was vice president of operations until his departure in December 2006. From 2000 to 2005, Mr. Becker served as an independent business consultant to a variety of public and private companies. Mr. Becker is also licensed attorney who practiced law for eighteen years in New York City, concentrating his practice in the areas of business reorganizations and corporate restructuring. Mr. Becker graduated magna cum laude from Tufts University in 1981 and received his law degree from the University of Michigan Law School in 1984.
Compliance with Section 16(a) of the Exchange Act
Our officers, directors and shareholders owning greater than ten percent of our shares are not required to comply with Section 16(a) of the Securities Exchange Act of 1934 because we do not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934.
Resignation of Director
As reported in the Company’s Form 8-K dated February 20, 2009, Frank McDaniel resigned from the Company’s Board of Directors effective February 16, 2009.
Code of Ethics
We have not adopted a Code of Business Conduct and Ethics applicable to our principal executive, financial and accounting officer, because we have one person, our sole full-time employee, serving all of the foregoing capacities.
Committees
The Board of Directors currently does not have an audit committee. Due to the Company’s size and limited resources and employees, the Company’s board of directors has determined that the functions of such committees, including the compensation committee, will be undertaken by the entire board. Further, we have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Upon securing additional financing and the hiring of additional employees, the board of directors anticipates the creation of free standing committees. Executive compensation is determined by the entire board.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section discusses the principles underlying our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers, and places in perspective the data presented in the compensation tables and narratives that follow.
Compensation Objectives and Philosophy
Our board of directors is responsible for establishing and approving the compensation of its executive officers and key employees. With respect to compensation matters, the objective of the Board of Directors is to establish a compensation program that attracts and helps retain talented and experienced individuals for senior level positions throughout the organization, as well as to authorize appropriate compensation for our employees and key consultants.
Components of Compensation
The Company’s executive compensation program includes the following elements: base salary; discretionary and performance-based bonuses; long-term incentive plan awards; and retirement and health insurance benefits.
It is the Board’s objective to set the total annual compensation of each executive officer at levels that are competitive for comparable positions based on available industry data. However, in determining the compensation of each executive officer, the Board also considers a number of other factors, including recent Company and individual performance, the CEO’s recommendations, cost of living and internal pay equity. There is no pre-established policy for allocation of compensation between cash and non-cash components or between short-term and long-term components. Instead, the Board determines the mix of compensation for each executive officer based on its review of the competitive data and its subjective analysis of that individual’s performance and contribution to our overall perfor mance.
Long-Term Incentive Program
The Company plans to adopt a stock incentive plan pursuant to which shares of common stock will be reserved for issuance to employees, directors, consultants, and other service providers. We believe that we can encourage superior long-term performance by our executive officers and employees through encouraging them to own, and assisting them with the acquisition of, our stock. The Board of Directors believes that the use of stock and stock-based awards offers the best approach to achieving our compensative objective of fostering a culture of ownership, which it believes will, in turn, motivate our executive officers to create and enhance stockholder value. In determining the number of stock options to be granted to executives, we will take into account the individual’s position, scope of responsibility, ability to affect profits and stockholder value and the individual’s historic and recent performance and the value of stock options in relation to other elements of the individual executive’s total compensation.
IRC Section 162(m) Compliance
We intend to structure our compensation program to comply with Internal Revenue Code Sections 162(m) and 409A. Under Section 162(m) of the Internal Revenue Code, a limitation was placed on tax deductions of any publicly-held corporation, such as the Company, for individual compensation to certain executives of such corporation exceeding $1,000,000 in any taxable year, unless the compensation is performance-based. If an executive is entitled to nonqualified deferred compensation benefits that are subject to Section 409A, and such benefits do not comply with Section 409A, then the benefits are taxable in the first year they are not subject to a substantial risk of forfeiture. In such case, the executive is subject to regular federal income tax, interest and an additional federal income of 20% of the benefit inc ludible in income. We intend for our Board of Directors to generally manage our incentive programs to qualify for the performance based exemption.
Summary Compensation Table.
The following table sets forth the aggregate compensation paid by us for services for the years ended December 31, 2009 and 2008 to our named Chief Executive Officer and, to the extent applicable, each of the three other most highly compensated executive officers of the Company in all capacities in which they served:
| Name and Principal Position Held | | Year | | Salary ($) | | | Bonus ($) | | | Option Awards ($) | | | All Other Comp ($) | | | Total ($) | |
| Harris A Lichtenstein Ph. D | | 2009 | | $ | 7,500 | (1) | | $ | - | | | $ | - | | | $ | - | | | $ | 7,500 | |
| | 2008 | | $ | 129,193 | | | $ | - | | | $ | 937,321 | | | $ | - | | | $ | 1,066,514 | |
| | | 2007 | | $ | 56,398 | | | $ | - | | | $ | - | | | $ | - | | | $ | 56,398 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Alexander Krichevsky | | 2009 | | $ | - | (2) | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | 2008 | | $ | 122,193 | | | $ | - | | | $ | 937,321 | | | $ | - | | | $ | 1,059,514 | |
| | | 2007 | | $ | 14,047 | | | $ | - | | | $ | - | | | $ | - | | | $ | 14,047 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Howard Becker (1) | | 2009 | | $ | 4,000 | (3) | | $ | - | | | $ | - | | | $ | - | | | $ | 4,000 | |
| | 2008 | | $ | 63,600 | | | $ | 3,000 | | | $ | 124,192 | | | $ | 4,400 | | | $ | 195,192 | |
| | | 2007 | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
1.) Consists of $7,500 cash salary paid to Dr. Lichtenstein; does not include $237,500 salary accrued during the 12 months ended December 31, 2009. 2.) Does not include $245,000 salary accrued during the 12 months ended December 31, 2009. 3.) Consists of $4,000 in consulting fees paid to Becker Advisors. Does not include $158,000 consulting fees accrued and $13,200 office reimbursement accrued during the 12 months ended December 31, 2009. |
Outstanding Equity Awards at Fiscal Year-End
The following table details all outstanding equity grants as of December 31, 2008.
| | | Option Awards |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | Option Expiration Date |
Harris A. Lichtenstein CE( Chief Executive Officer | | | 750,000 | | | | - | | | $ | 2.50 | | 06/20/2018 |
| | | | | | | | | | | | | | |
Alex Krichevsky Senior Vice President | | | 750,000 | | | | - | | | $ | 2.50 | | 06/20/2018 |
| | | | | | | | | | | | | | |
Howard Becker Chief Operating Officer | | | 77,056 | | | | 22,344 | | | $ | 2.50 | | 08/12/2013 |
Compensation of Directors
The table below reflects non-employee director compensation for the year ended December 31, 2008.
| Name | | Fees Earned or Paid in Cash ($) | | | Option Awards ($) | | | All Other Compensation ($) | | | Total ($) | |
| Mar Mark S. Germain | | $ | - | | | $ | 625,000 | | | $ | 120,000 | | | $ | 745,000 | |
| Ch Charles Duff | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Mat Mathew A. Gonda | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
Frank McDaniel (1) | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Name | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | |
| Harris A Lichtenstein Ph. D | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Mark S. Germain (1) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 120,000 | | | | 120,000 | |
| Alexander Krichevsky | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Charles Duff | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Matthew A. Gonda Ph. D | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
(1) Includes compensation earned under Mr. Germain’s consulting agreement with Omnimmune Corp.
Employment Contracts, Termination of Employment and Change of Control Arrangements
Omnimmune Corp., the Company’s operating subsidiary, has employment agreements with certain key executives, providing for base salaries plus performance incentive bonuses.
Harris A. Lichtenstein, the Company’s President and Chief Executive Officer, is employed pursuant to a written employment agreement. The employment agreement has an initial term of four years beginning May 1, 2008 and automatically renews each year thereafter for an additional one-year period unless either party provides written notice of termination at least 180 days in advance of the expiration date of the current term. Dr. Lichtenstein will receive an annual base salary of not less than $245,000. Dr. Lichtenstein is entitled to an initial bonus of $30,000 within 30 days of the date on which the Company raises $3.0 million in equity financing. In addition, if, during the term of the employment agreement or within 24 months thereafter, Omnimmune Corp. enters into any transaction w ith a third party from which it earns revenues, as defined in the employment agreement, Dr. Lichtenstein shall be entitled to a bonus payment equal to 2% of such revenues, payable within 30 days of receipt of such revenues by Omnimmune Corp. Dr. Lichtenstein is also eligible for additional bonus amounts to be determined by the board of directors based on performance milestones. If within the initial four year term of the employment agreement, Dr. Lichtenstein resigns for good reason, as defined in the agreement, or is terminated without cause, Omnimmune Corp. will pay his base salary for the remainder of the initial four year term. Dr. Lichtenstein’s employment agreement includes post-employment restrictive covenants not to disclose confidential information, solicit customers or recruit employees.
Alexander Krichevsky, Omnimmune Corp.’s executive vice president and director of research & development, is employed pursuant to a written employment agreement. The employment agreement has an initial term of four years beginning May 1, 2008 and automatically renews thereafter for successive one year periods unless either party provides written notice of termination at least 180 days in advance of the expiration date of the current term. Dr. Krichevsky will receive an annual base salary of not less than $245,000. Dr. Krichevsky shall be entitled to an initial bonus of $51,000 payable as follows: $12,000 within 10 days of the initial closing of the Offering and $39,000 within 30 days of the date on which the Company raises $3.0 million in equity financing. In addition, if, durin g the term of the employment agreement or within 24 months thereafter, Corp. enters into any transaction with a third party from which it earns revenues, as defined in the employment agreement, Dr. Krichevsky shall be entitled to a bonus payment equal to 2% of such revenues, payable within 30 days of receipt of such revenues by Omnimmune Corp. Dr. Krichevsky is also eligible for additional bonus amounts to be determined by the board of directors. If within the initial four year term of the employment agreement, Dr. Krichevsky resigns for good reason, as defined in the agreement, or is terminated without cause, Omnimmune Corp. will pay his base salary for the remainder of the initial four year term. Dr. Krichevsky’s employment agreement includes post-employment restrictive covenants not to disclose confidential information, solicit customers or recruit employees.
Mark Germain, a member of our board of directors, has entered into a consulting agreement to provide certain business development services to Omnimmune Corp. The consulting agreement has an initial term of ten years beginning March 1, 2008 and automatically renews thereafter for successive one year periods unless terminated in writing by either party on at least 30 days advance written notice. For his services under the consulting agreement, Omnimmune Corp. shall pay Mr. Germain a fee of $10,000 per month. In addition, if, during the term of the consulting agreement or within 24 months thereafter, Omnimmune Corp. enters into any transaction with a third party from which it earns revenues, as defined in the consulting agreement, Mr. Germain shall be entitled to a bonus payment equal to 2% of such re venues, payable within 30 days of receipt of such revenues by Omnimmune Corp. Omnimmune Corp. may terminate Mr. Germain’s agreement for cause, as defined in the agreement, following 30 days notice and an opportunity for Mr. Germain to cure such cause. Mr. Germain’s consulting agreement includes post-termination restrictive covenants not to disclose confidential information or recruit employees.
Howard Becker, Chief Operating Officer for the Company has been retained by us on a part-time basis pursuant to a consulting agreement with his firm, Becker Advisors, Ltd. The consulting agreement has an initial term of one year beginning August 12, 2008 and automatically renews thereafter for successive one year periods unless terminated in writing by either party on at least 30 days advance notice. For the services being provided, the Company will pay Becker Advisors a fee of $7,500 per month during the term of the agreement. Mr. Becker also received an initial bonus of $3,000 following the signing of the consulting agreement. In addition, the Company provides Becker Advisors with a rental allowance of $1,100 per month for the rental of office space. The monthly fee payable to Bec ker Advisors is based on a maximum of 80 hours of service per month in accordance with the agreement. If Mr. Becker’s service to the registrant exceeds the maximum commitment, the registrant will pay for such additional service on an hourly basis at a rate of $93.75 per hour. During the term of the consulting agreement, Becker Advisors will also be eligible for bonuses, in cash or stock, as determined by the registrant’s board of directors. Mr. Becker’s consulting agreement includes post-termination restrictive covenants in favor of the registrant and its affiliates not to disclose confidential information, solicit customers or recruit employees.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Equity Compensation Plans Information
| Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| Equity compensation plans approved by security holders | | - | | | - | | - |
| Equity compensation plans not approved by security holders | | 2,350,000 | | $ | 2.50 | | - |
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the beneficial ownership of common stock as of March 31, 2010 for: (i) each stockholder known by us to be the beneficial owner of more than 5% of our outstanding securities; (ii) each of our current directors; (iii) each of our named executive officers; and (iv) all of our current directors and named executive officers as a group. Except as otherwise indicated, each person listed below has sole voting and investment power with respect to all shares shown to be beneficially owned by him except to the extent that such power is shared by a spouse under applicable law.
| Name and Address of Beneficial Owner (1) | | Amount and Nature of Beneficial Owner | | | Percentage of Outstanding Common Stock (2) | |
| Harris A. Lichtenstein, Ph.D. (Officer, Director) (3) | | | 2,374,973 | | | | 24.6 | % |
| Alexander Krichevsky (Officer, Director) (4) | | | 1,880,507 | | | | 19.5 | % |
| Mark S. Germain (Director) (5) | | | 1,752,731 | | | | 18.1 | % |
| D Charles Duff, (Director) (6) | | | 152,500 | | | | 1.7 | % |
| Howard Becker (Officer) (7) | | | 91,611 | | | | 1.0 | % |
| Matthew A. Gonda, Ph.D. (Director) | | | - | | | | ** | |
| 8 Margie Chassman (8) | | | 3,792,158 | | | | 32.0 | % |
| Michael & Tracy Heller (9) | | | 879,723 | | | | 9.0 | % |
| Wood River Trust (10) | | | 773,138 | | | | 8.4 | % |
| S. Conrad Weil (11) | | | 754,995 | | | | 7.8 | % |
| Estelle K. Blumberg (12) | | | 588,482 | | | | 6.2 | % |
| John Schleyer (13) | | | 587,482 | | | | 6.2 | % |
Frederick F. Becker, M.D. (14)) | | | 501,864 | | | | 5.3 | % |
| | | | | | | | | |
| All directors and officers as a group (6 persons) | | | 6,252,322 | | | | 53.2 | % |
** Less than 1%.
| (1) | The address for all above listed individuals is 4600 Post Oak Place, Suite 352, Houston, Texas 77027. |
| | |
| (2) | Beneficial ownership is determined as shares deemed to be beneficially owned by any person or group who has shares or voting investment power with respect to such shares and includes any security that such person or persons have or have the right to acquire within 60 days. Percentage of ownership is based on 8,914,921 shares of common stock outstanding plus securities deemed outstanding pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended. |
| | |
| (3) | Includes 1,130,507 shares of common stock held by Dr. Lichtenstein, and 750,000 shares of common stock issuable upon the exercise of options held by Dr. Lichtenstein. Also includes 2,807 shares held by relatives of Dr. Lichtenstein, and 463,587 shares of common stock issuable upon conversion of notes payable held by relatives of Dr. Lichtenstein, and 28,072 shares issuable upon exercise of warrants held by relatives of Dr. Lichtenstein. |
| (4) | Includes 1,130,507 shares of common stock held by Mr. Krichevsky, and 750,000 shares issuable upon the exercise of options held by Mr. Krichevsky. |
| (5) | Includes 421,080 shares of common stock held by Mr. Germain, and an additional 581,651 shares of common stock held by relatives of Mr. Germain. Also includes 750,000 shares of common stock issuable upon the exercise of options held by Mr. Germain. |
| (6) | Includes 151,250 shares of common stock held by Mr. Duff, and an additional 1,250 shares of common stock issuable upon the exercise of warrants held by Mr. Duff. |
| (7) | Includes shares issuable upon the exercise of options to purchase 91,611 shares of common stock. |
| (8) | Includes 175,918 shares of common stock held by Ms. Chassman, and an additional 689,794 shares held by relatives of Ms. Chassman. Also includes 2,926,446 shares issuable upon the conversion of notes payable held by Ms. Chassman. |
| (9) | Includes 37,500 shares of common stock held by Michael & Tracy Heller, and an additional 842,223 shares issuable upon conversion of notes payable held by Michael & Tracy Heller. |
| (10) | Includes 432,397 shares of common stock held by Wood River Trust, and an additional 280,741 shares issuable upon the conversion of notes payable held by Wood River Trust; also includes 60,000 shares issuable upon the exercise of warrants held by Wood River Trust. |
| (11) | Includes 40,199 shares of common stock held by Mr. Weil, and an additional 714,796 shares issuable upon conversion of notes payable held by Mr. Weil. |
| (12) | Includes 27,000 shares of common stock held by Ms. Blumberg, and an additional 561, shares issuable upon conversion of notes payable held by Ms. Blumberg. |
| (13) | Includes 26,000 shares of common stock held by Mr. Schleyer, and an additional 561,482 shares issuable upon conversion of notes payable held by Mr. Schleyer. |
| (14) | Includes 7,018 shares of common stock held by Dr. Becker, and an additional 494,846 shares issuable upon conversion of notes payable held by Dr. Becker. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
Our officers and directors have from time to time extended loans to us to fund our operating expenses and have forgone compensation payments in exchange for promissory notes.
Intrepid Technologies, Inc., an affiliate of Dr. Lichtenstein, loaned us approximately $800,000, all of which has been forgiven.
Harris Lichtenstein, our Chief Executive Officer, has loaned us approximately $3,300,000, of which $500,000 remains outstanding following the completion of a partial debt forgiveness and restructuring with Dr. Lichtenstein. This note is not interest bearing.
Alexander Krichevsky, a director and officer, has loaned us approximately $2,600,000, of which $500,000 remains outstanding following completion of a partial debt forgiveness and restructuring. This note is not interest bearing.
As consideration for the forgiveness of the balance of their outstanding advances for the Company’s operating expenses the Company issued each of Dr. Lichtenstein and Dr. Krichevsky 75,000 shares of common stock with a fair value of $187,500.
The outstanding obligations to Dr. Lichtenstein and Dr. Krichevsky are represented by promissory notes that bear no interest in and are payable out of proceeds either (1) designated and set aside by our board of directors for the payment of these notes and other executive compensation, which amounts are funded from fees, proceeds and other payments, whether cash, stock or other consideration, received by Omnimmune Corp. from transactions involving its intellectual properties, including, without limitation, royalties, milestone payments and sublicense fees or (2) from the sale of all or substantially all of Omnimmune Corp.’s assets.
The Company has a note payable in the amount of $287,768 at December 31, 2009, to the law firm of McDaniel & Henry LLP, an affiliate of a former board member. This note bears interest at the rate of 10% per annum. Interest in the amount of $28,777 was accrued on this note during the year ended December 31, 2009.
Director Independence
We do not believe that any of our directors other than Matthew A. Gonda is an “independent director,” as that term is defined by applicable listing standards of the Nasdaq Stock Market and SEC rules, including the rules relating to the independence standards of an audit committee and the non-employee director definition of Rule 16b-3 promulgated under the Exchange Act.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of the fees billed to us by Bernstein & Pinchuk LLP . for professional services rendered for the years ended December 31, 2009 and 2008:
| | | December 31, 2009 | | | December 31, 2008 | |
| (i) Audit Fees | | $ | 35,000 | | | $ | 33,615 | |
| (ii) Audit Related Fees | | | - | | | | - | |
| (iii) Tax Fees | | | - | | | | - | |
| (iv) All Other Fees | | | - | | | | - | |
| Total fees | | $ | 35,000 | | | $ | 33,615 | |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We currently do not have a designated audit committee, and accordingly, our Board of Directors' policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to our Board of Directors regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Board of Directors may also pre-approve particular services on a case-by-case basis. Directors m ay also pre-approve particular services on a case-by-case basis.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| (a) (1) | Financial Statements – see index on Page F-1 herein. |
| | |
| (2) | Other financial statements and schedules are not presented because they are either not required or the information required by such financial statements or schedules is presented elsewhere. |
| | |
| (b) | The exhibits filed as part of this Report as required by Item 601 of Regulation S-K are included in the Index to Exhibits at page E-1 included elsewhere in this Annual Report. |
| | |
SIGNATURES
In accordance with the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | OMNIMMUNE HOLDINGS, INC. |
| | | |
| May 17, 2010 | | |
| | By: | /s/Harris A. Lichtenstein, Ph.D. |
| | Name: | Harris A. Lichtenstein, Ph.D. |
| | Title: | President, Chief Executive Officer and Director |
| | | (Principal Executive, |
| | | Financial, and Accounting |
| | | Officer) |
In accordance with 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.
| May 17, 2010 | By: | /s/ Harris A. Lichtenstein, Ph.D. |
| | Name: | Harris A. Lichtenstein, Ph.D. |
| | Title: | President, Chief Executive Officer and Director |
| | | (Principal Executive, |
| | | Financial, and Accounting Officer) |
| | | |
| May 17, 2010 | By: | /s/ Mark S. Germain |
| | Name: | Mark S. Germain |
| | Title: | Chairman of the Board of Directors |
| | | |
| May 17, 2010 | By: | /s/ Alexander Krichevsky, D.V.M. |
| | Name: | Alexander Krichevsky, D.V.M. |
| | Title: | Director |
| | | |
| May 17, 2010 | By: | /s/ Charles Duff |
| | Name: | Charles Duff |
| | Title: | Director |
| | | |
| May 17, 2010 | By: | /s/ Matthew A. Gonda, Ph.D. |
| | Name: | Matthew A. Gonda, Ph.D. |
| | Title: | Director |
Audited Financial Statements of Omnimmune Holdings, Inc. and Subsidiaries
The audited financial statements of Omnimmune Holdings, Inc. included in this Annual Report on Form 10-K are as follows:
REPORT OF INDEPENDENT REGISTERED PUBLIC AACCOUNTING FIRM
To the Board of Directors and Shareholders of
Omnimmune Holdings, Inc.
Houston, Texas
We have audited the accompanying consolidated balance sheets of Omnimmune Holdings, Inc., (“the Company”), a development stage enterprise, and subsidiary as of December 31, 2009 and 2008 and the related consolidated statements of operations, stockholders' deficiency, and cash flows for the years then ended and for the period from January 15, 1997 (inception) to December 31, 2009. These consolidated 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 the audits to obtain reasonable assurance about 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, ev idence supporting the amounts and disclosures in the financial statements, 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended and for the period from January 15, 1997 (inception) to December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company has incurred significant losses from operations since its inception and has limited capital resources. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Bernstein & Pinchuk LLP
New York, NY
May 17, 2010
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
| | | December 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| Assets | | | | | | |
| Current assets | | | | | | |
| | | | | | | |
| Cash and cash equivalents | | $ | 5,627 | | | $ | 52,615 | |
| Prepaid Insurance | | | 25,805 | | | | - | |
| | | | | | | | | |
| Total current assets | | $ | 31,432 | | | $ | 52,615 | |
| | | | | | | | | |
| Liabilities and stockholders' deficiency | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 906,893 | | | $ | 471,775 | |
| Accounts payable and accrued liabilities-related party | | | 1,156,038 | | | | 351,748 | |
| Line of credit | | | 253,059 | | | | 259,157 | |
| Accrued interest | | | 327,078 | | | | 192,380 | |
| Accrued interest- related party | | | 483,836 | | | | 424,210 | |
| Cash advances | | | 310,400 | | | | 100,000 | |
| Notes payable -, net | | | 987,046 | | | | - | |
| Notes payable to related parties -, net | | | - | | | | 287,768 | |
| | | | | | | | | |
| Total current liabilities | | | 4,424,350 | | | | 2,087,038 | |
| | | | | | | | | |
| Long term portion of notes payable | | | 29,374 | | | | 709,035 | |
| Long term portion of notes payable - due to related parties | | | 1,003,563 | | | | 1,000,864 | |
| | | | | | | | | |
| | | | 5,457,287 | | | | 3,796,937 | |
| | | | | | | | | |
| Commitments and contingencies | | | - | | | | - | |
| | | | | | | | | |
| Stockholders' deficiency | | | | | | | | |
| Common stock, $0.0001 par value; 50,000,000 shares authorized; | | | | | | | | |
| 8,914,921 and 8,814,921 shares issued and outstanding | | | | | | | | |
| at December 31, 2009 and 2008, respectively | | | 890 | | | | 880 | |
| Additional paid-in capital | | | 15,671,385 | | | | 15,592,797 | |
| Common stock subscribed | | | 1,137 | | | | - | |
| Deficit Accumulated during the Development Stage | | | (21,099,267 | ) | | | (19,337,999 | ) |
| Total stockholder's deficiency | | | (5,425,855 | ) | | | (3,744,322 | ) |
| | | | | | | | | |
| | | $ | 31,432 | | | $ | 52,615 | |
| | | | | | | | | |
See notes to consolidated financial statements.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | Cumulative from | |
| | | For the | | | For the | | | Inception | |
| | | Year Ended | | | Year Ended | | | (January 12, 2005) | |
| | | December 31, | | | December 31, | | | to December 31, | |
| | | 2009 | | | 2008 | | | 2009 | |
| | | | | | | | | | |
| Revenue | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| Selling, general and administrative expenses | | | 1,522,060 | | | | 5,475,869 | | | | 14,039,069 | |
| Impairment of license agreement | | | - | | | | - | | | | 1,701,936 | |
| Total operating expenses | | | 1,522,060 | | | | 5,475,869 | | | | 15,741,005 | |
| | | | | | | | | | | | | |
| Operating loss | | | (1,522,060 | ) | | | (5,475,869 | ) | | | (15,741,005 | ) |
| | | | | | | | | | | | | |
| Other (income) expense: | | | | | | | | | | | | |
| Interest expense, net | | | 239,208 | | | | 7,044,446 | | | | 11,775,411 | |
| Cancellation of shares previously issued for license agreement | | | - | | | | (842,514 | ) | | | (842,514 | ) |
| (Gain) on restructuring of debt | | | - | | | | (5,687,929 | ) | | | (5,574,635 | ) |
| Total other (income) expense | | | (239,208 | ) | | | (514,003 | ) | | | (5,358,262 | ) |
| | | | | | | | | | | | | |
| Loss before income taxes | | | (1,761,268 | ) | | | (5,989,872 | ) | | | (21,099,267 | ) |
| | | | | | | | | | | | | |
| Provision for income taxes | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| Net loss | | $ | (1,761,268 | ) | | $ | (5,989,872 | ) | | $ | (21,099,267 | ) |
| | | | | | | | | | | | | |
| Net loss per share – basic and diluted | | $ | (0.20 | ) | | $ | (1.00 | ) | | | | |
| | | | | | | | | | | | | |
| Weighted average shares outstanding – basic and diluted | | | 8,843,967 | | | | 6,014,144 | | | | | |
| | | | | | | | | | | | | |
See notes to consolidated financial statements.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Balance at January 15, 1997 (date of inception) | | | - | | | $ | - | | | $ | - | | | | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Contribution of assets and liabilities by founder | | | 11,229 | | | | 112 | | | | 49,888 | | | | 1,055,507 | | | | 106 | | | | 43,466 | | | | - | | | | - | | | | 93,572 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 1997 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 327,700 | | | | - | | | | - | | | | 327,700 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 1997 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,366,300 | ) | | | (1,366,300 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 1997 | | | 11,229 | | | $ | 112 | | | $ | 49,888 | | | | 1,055,507 | | | $ | 106 | | | $ | 371,166 | | | $ | - | | | $ | (1,366,300 | ) | | $ | (945,028 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 1998 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 43,000 | | | | - | | | | - | | | | 43,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 1998 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (328,534 | ) | | | (328,534 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 1998 | | | 11,229 | | | $ | 112 | | | $ | 49,888 | | | | 1,055,507 | | | $ | 106 | | | $ | 414,166 | | | $ | - | | | $ | (1,694,834 | ) | | $ | (1,230,562 | ) |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Issuance of 55,553 shares of common stock for technology license at $1.10 per share | | | - | | | | - | | | | - | | | | 55,553 | | | | 5 | | | | 61,837 | | | | - | | | | - | | | | 61,842 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 1999 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 12,000 | | | | - | | | | - | | | | 12,000 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Loss for the year ended December 31, 1999 | | - | | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | | (429,692 | ) | | | (429,692 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 1999 | | | 33,685 | | | $ | 336 | | | $ | 149,664 | | | | 1,111,060 | | | $ | 111 | | | $ | 488,003 | | | $ | - | | | $ | (2,124,526 | ) | | $ | (1,486,412 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 11,229 shares of convertible preferred stock at $4.45 per share to investors | | | 11,229 | | | | 112 | | | | 49,888 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 50,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 2000 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 30,302 | | | | - | | | | - | | | | 30,302 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2000 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (422,306 | ) | | | (422,306 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2000 | | | 56,142 | | | $ | 560 | | | $ | 249,440 | | | | 1,113,867 | | | $ | 111 | | | $ | 524,555 | | | $ | - | | | $ | (2,546,832 | ) | | $ | (1,772,166 | ) |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Issuance of 1,055,507 shares of common stock at $2.24 per share in exchange for 2,500,000 shares in InVitro technology | | | - | | | | - | | | | - | | | | 1,055,507 | | | | 107 | | | | 59,894 | | | | - | | | | - | | | | 60,001 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 2,807 | | | | - | | | | 6,250 | | | | - | | | | - | | | | 6,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 60,665 shares of common stock at $2.24 per share for a technology license | | | - | | | | - | | | | - | | | | 60,665 | | | | 7 | | | | 135,060 | | | | - | | | | - | | | | 135,067 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors | | | 5,614 | | | | 56 | | | | 24,944 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 7,018 shares of common stock at $2.24 per share to a consultant for services rendered | | | - | | | | - | | | | - | | | | 7,018 | | | | 2 | | | | 15,624 | | | | - | | | | - | | | | 15,626 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value of 14,036 warrants issued to consultants | | | - | | | | - | | | | - | | | | - | | | | - | | | | 15,500 | | | | - | | | | - | | | | 15,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 2001 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2001 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (959,531 | ) | | | (959,531 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2001 | | | 67,370 | | | $ | 672 | | | $ | 299,328 | | | | 2,270,741 | | | $ | 227 | | | $ | 850,633 | | | $ | - | | | $ | (3,506,363 | ) | | $ | (2,355,503 | ) |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Issuance of 1,123 shares of convertible preferred stock at $4.45 per share to investors | | | 1,123 | | | | 11 | | | | 4,989 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of 11,229 shares convertible preferred stock into 44,915 shares of common stock at $2.24 per share | | | (11,229 | ) | | | (112 | ) | | | (49,888 | ) | | | 44,915 | | | | 4 | | | | 49,996 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share | | | (5,614 | ) | | | (56 | ) | | | (24,944 | ) | | | 11,229 | | | | 2 | | | | 24,998 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share | | | (5,614 | ) | | | (56 | ) | | | (24,944 | ) | | | 11,229 | | | | 2 | | | | 24,998 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share | | | (5,614 | ) | | | (56 | ) | | | (24,944 | ) | | | 11,229 | | | | 1 | | | | 24,999 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of 16,843 shares convertible preferred stock into 33,686 shares of common stock at $2.24 per share | | | (16,843 | ) | | | (56 | ) | | | (74,832 | ) | | | 33,686 | | | | 3 | | | | 74,997 | | | | - | | | | - | | | | - | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Conversion of 16,843 shares convertible preferred stock into 33,686 shares of common stock at $2.24 per share | | | (16,843 | ) | | | (168 | ) | | | (74,832 | ) | | | 33,686 | | | | 3 | | | | 74,997 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share | | | (5,614 | ) | | | (168 | ) | | | (24,944 | ) | | | 11,229 | | | | 1 | | | | 24,999 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of 1,123 shares convertible preferred stock into 2,246 shares of common stock at $2.24 per share | | | (1,122 | ) | | | (11 | ) | | | (4,989 | ) | | | 2,246 | | | | - | | | | 5,000 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 2002 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,175,356 | | | | - | | | | - | | | | 1,175,356 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2002 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,061,599 | ) | | | (3,061,599 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2002 | | | - | | | $ | - | | | $ | - | | | | 2,430,190 | | | $ | 243 | | | $ | 2,330,973 | | | $ | - | | | $ | (6,567,962 | ) | | $ | (4,236,746 | ) |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Beneficial conversion feature of note payable for the year ended December 31, 2003 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 29,401 | | | | - | | | | - | | | | 29,401 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2003 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (540,986 | ) | | | (540,986 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2003 | | | - | | | $ | - | | | $ | - | | | | 2,430,190 | | | $ | 243 | | | $ | 2,360,374 | | | $ | - | | | $ | (7,108,948 | ) | | $ | (4,748,331 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,404 shares of common stock at $2.24 to a consultant for services rendered | | | - | | | | - | | | | - | | | | 1,404 | | | | - | | | | 3,125 | | | | - | | | | - | | | | 3,125 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,404 shares of common stock at $2.24 to a consultant for services rendered | | | - | | | | - | | | | - | | | | 1,404 | | | | - | | | | 3,125 | | | | - | | | | - | | | | 3,125 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value of 26,107 warrants issued to consultants | | | - | | | | - | | | | - | | | | - | | | | - | | | | 93,000 | | | | - | | | | - | | | | 93,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 2004 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 17,149 | | | | - | | | | - | | | | 17,149 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2004 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,252,796 | ) | | | (1,252,796 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2004 | | | - | | | $ | - | | | $ | - | | | | 2,432,998 | | | $ | 243 | | | $ | 2,476,773 | | | $ | - | | | $ | (8,361,744 | ) | | $ | (5,884,728 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 134,746 shares of common stock at $2.24 for a technology license | | | - | | | | - | | | | - | | | | 134,746 | | | | 13 | | | | 299,987 | | | | - | | | | - | | | | 300,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 6,661 shares at $3.74 per share for cash | | | - | | | | - | | | | - | | | | 6,661 | | | | 1 | | | | 24,999 | | | | - | | | | - | | | | 25,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable for the year ended December 31, 2005 | | | - | | | | - | | | | - | | | | - | | | | - | | | | 72,000 | | | | - | | | | - | | | | 72,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2005 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,141,448 | ) | | | (1,141,448 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2005 | | | - | | | $ | - | | | $ | - | | | | 2,574,405 | | | $ | 257 | | | $ | 2,873,759 | | | $ | - | | | $ | (9,503,192 | ) | | $ | (6,629,176 | ) |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
Issuance of 4,913 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 4,913 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 1,235 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 1,235 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 1,235 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 3,706 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 3,705 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 3,706 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 3,705 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 1,235 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 225 shares of common stock pursuant to an antidilution agreement | | | - | | | | - | | | | - | | | | 225 | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,000 | | | | - | | | | - | | | | 4,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2006 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,076,266 | ) | | | (1,076,266 | ) |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2006 | | | - | | | $ | - | | | $ | - | | | | 2,591,893 | | | $ | 257 | | | $ | 2,877,759 | | | $ | - | | | $ | (10,579,458 | ) | | $ | (7,701,442 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of 7,018 shares of common stock at $3.74 per share for services rendered | | | - | | | | - | | | | - | | | | 7,017 | | | | 2 | | | | 26,249 | | | | - | | | | - | | | | 26,251 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 25,989 shares of common stock for $3.74 per share for licensing agreement | | | - | | | | - | | | | - | | | | 25,988 | | | | 2 | | | | 97,204 | | | | - | | | | - | | | | 97,206 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 25,989 shares of common stock for $3.74 per share for licensing agreement | | | - | | | | - | | | | - | | | | 25,990 | | | | 2 | | | | 97,204 | | | | - | | | | - | | | | 97,206 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 119,053 shares of common stock to be issued at $0.37 per share for license agreement | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 445,305 | | | | - | | | | 445,305 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 119,053 shares of common stock to be issued at $0.37 per share for license agreement | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 445,305 | | | | - | | | | 445,305 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Beneficial conversion feature of note payable | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6,604,430 | | | | - | | | | - | | | | 6,604,430 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2007 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,768,669 | ) | | | (2,768,669 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2007 | | | - | | | $ | - | | | $ | - | | | | 2,650,888 | | | $ | 263 | | | $ | 9,702,846 | | | $ | 890,610 | | | $ | (13,348,127 | ) | | $ | (2,754,408 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Recapitalization upon reverse merger | | | - | | | | - | | | | - | | | | 3,000,000 | | | | 300 | | | | (300 | ) | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 119,053 shares of common stock at $0.37 per share, previously accrued | | | - | | | | - | | | | - | | | | 119,053 | | | | 12 | | | | 445,293 | | | | (445,305 | ) | | | - | | | | - | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | | | | Accumulated Deficit During the Development Stage | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 119,053 shares of common stock at $0.37 per share, previously accrued | | | - | | | | - | | | | - | | | | 119,053 | | | | 12 | | | | 445,293 | | | | (445,305 | ) | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,055,507 shares of common stock for cash at a price of $0.011 per share | | | - | | | | - | | | | - | | | | 1,055,508 | | | | 106 | | | | 44,690 | | | | - | | | | - | | | | 44,796 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 100,000 shares of common stock and 20,000 warrants to purchase additional shares of common stock at a price of $0.05 per share as a discount on notes payable | | | - | | | | - | | | | - | | | | 100,000 | | | | 10 | | | | 55,991 | | | | - | | | | - | | | | 56,001 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 1,055,508 shares of common stock at a price of $0.03 per share to a board member for services | | | - | | | | - | | | | - | | | | 1,055,507 | | | | 105 | | | | 29,895 | | | | - | | | | - | | | | 30,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 150,000 shares of common stock at a price of $1.25 per share to officers for services | | | - | | | | - | | | | - | | | | 150,000 | | | | 15 | | | | 187,485 | | | | - | | | | - | | | | 187,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of 137,500 shares of common stock at a price of $0.05 per share as a discount to notes payable | | | - | | | | - | | | | - | | | | 137,500 | | | | 14 | | | | 6,861 | | | | - | | | | - | | | | 6,875 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Sale of 707,200 shares of common stock and 707,200 warrants to purchase additional shares of common stock at a price of $2.50 per share for cash, net of costs of $359,729 | | | - | | | | - | | | | - | | | | 707,200 | | | | 71 | | | | 1,408,200 | | | | - | | | | - | | | | 1,408,271 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cancellation of 279,788 shares of common stock issued for technology license | | | - | | | | - | | | | - | | | | (279,788 | ) | | | (28 | ) | | | (842,486 | ) | | | - | | | | - | | | | (842,514 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value of options to purchase 2,250,000 shares of common stock at a price of $2.50 per shares issued to board member for extension of payment terms | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,811,962 | | | | - | | | | - | | | | 2,811,962 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value of warrants to purchase 75,000 shares of common stock at $2.50 per share issued to a board member for services | | | - | | | | - | | | | - | | | | - | | | | - | | | | 93,733 | | | | - | | | | - | | | | 93,733 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value of warrants to 70,180 shares of common stock at $1.78 per share issued to a board member for extension of credit terms | | | - | | | | - | | | | - | | | | - | | | | - | | | | 129,278 | | | | - | | | | - | | | | 129,278 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value of vested portion of options issued to officer | | | - | | | | - | | | | - | | | | - | | | | - | | | | 54,848 | | | | - | | | | - | | | | 54,848 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Discount to notes payable due to beneficial conversion feature | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,019,208 | | | | - | | | | - | | | | 1,019,208 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the year ended December 31, 2008 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (5,989,872 | ) | | | (5,989,872 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2008 | | | - | | | $ | - | | | $ | - | | | | 8,814,921 | | | $ | 880 | | | $ | 15,592,797 | | | $ | - | | | $ | (19,337,999 | ) | | $ | (3,744,322 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Continued)
| | | Preferred Stock | | | Common Stock | | | | | | | | | | |
| | | Shares | | | Value | | | Additional Paid-in Capital | | | Shares | | | Value | | | Additional Paid-in Capital | | | Common Stock Subscribed | | | Accumulated Deficit During the Development Stage | | | Total Stockholders Equity | |
| Value of shares to be issued for the exercise of warrants | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,137 | | | | - | | | | 1,137 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares for services at a price of $0.30 per share | | | - | | | | - | | | | - | | | | 50,000 | | | | 5 | | | | 14,995 | | | | - | | | | - | | | | 15,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares for services at a price of $0.44 per share | | | - | | | | - | | | | - | | | | 50,000 | | | | 5 | | | | 21,995 | | | | - | | | | - | | | | 22,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value of vested Portion of 100,000 options issued to a consultant | | | - | | | | - | | | | - | | | | - | | | | - | | | | 41,598 | | | | - | | | | | | | | 41,598 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss for the year ended December 31, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,761,268 | ) | | | (1,761,268 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2009 | | $ | - | | | $ | - | | | $ | - | | | | 8,914,921 | | | $ | 890 | | | $ | 15,671,385 | | | $ | 1,137 | | | $ | (21,099,267 | ) | | $ | (5,425,855 | ) |
See notes to consolidated financial statements.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | For the | | | For the | | | Cumulative | |
| | | Year Ended | | | Year Ended | | | from Inception | |
| | | December 31, | | | December 31, | | | (January 12, 2005) to | |
| | | 2009 | | | 2008 | | | December 31, 2009 | |
| | | | | | | | | | |
| Cash flows from operating activities: | | | | | | | | | |
| Net loss | | $ | (1,761,268 | ) | | $ | (5,989,872 | ) | | $ | (21,099,267 | ) |
| Adjustments to reconcile net loss to net | | | | | | | | | | | | |
| cash used in operating activities: | | | | | | | | | | | | |
| Non-cash compensation | | | 78,598 | | | | 3,054,311 | | | | 4,085,108 | |
| Amortization of discount on notes payable | | | 22,317 | | | | 6,794,202 | | | | 8,764,736 | |
| Impairment of technology licenses and equity securities | | | - | | | | - | | | | 1,701,936 | |
| Gain or loss on restructuring of debt | | | - | | | | (5,690,287 | ) | | | (5,577,000 | ) |
| Redemption of shares previously issued for license agreement | | | - | | | | (842,513 | ) | | | (842,513 | ) |
| Net change in operating assets and liabilities: | | | | | | | | | | | | |
| Advances to related party | | | - | | | | - | | | | (10,000 | ) |
| Prepaid insurance | | | (25,805 | ) | | | - | | | | (25,805 | ) |
| Accounts payable and accrued liabilities | | | 1,433,731 | | | | 763,578 | | | | 9,013,581 | |
| | | | | | | | | | | | | |
| Net cash used in operating activities | | | (252,427 | ) | | | (1,910,581 | ) | | | (3,989,224 | ) |
| | | | | | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | | | | | |
| Cash portion of investment in technology license | | | - | | | | - | | | | (6,000 | ) |
| | | | | | | | | | | | | |
| Net cash used in investing activities | | | - | | | | - | | | | (6,000 | ) |
| | | | | | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | | | | | |
| Proceeds from cash advances | | | 210,400 | | | | 172,000 | | | | 1,006,400 | |
| Principal payments on cash advances | | | - | | | | (130,000 | ) | | | (130,000 | ) |
| Proceeds from notes payable | | | - | | | | 950,000 | | | | 1,644,974 | |
| Proceeds from the exercise of warrants | | | 1,137 | | | | - | | | | 1,137 | |
| Principal payments on debt | | | - | | | | (436,545 | ) | | | (512,993 | ) |
| Stock sold for cash, net of costs | | | - | | | | 1,408,271 | | | | 1,738,271 | |
| Proceeds from (repayments) of line of credit | | | (6,098 | ) | | | (739 | ) | | | 253,062 | |
| | | | | | | | | | | | | |
| Net cash provided by financing activities | | | 205,439 | | | | 1,962,987 | | | | 4,000,851 | |
| | | | | | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | (46,988 | ) | | | 52,406 | | | | 5,627 | |
| | | | | | | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 52,615 | | | | 209 | | | | - | |
| | | | | | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 5,627 | | | $ | 52,615 | | | $ | 5,627 | |
See notes to consolidated financial statements.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
| | | For the | | | For the | | | Cumulative | |
| | | Year Ended | | | Year Ended | | | from Inception | |
| | | December 31, | | | December 31, | | | (January 12, 2005) to | |
| | | 2009 | | | 2008 | | | December 31, 2009 | |
| | | | | | | | | | |
| | | | | | | | | | |
| Supplemental disclosures of cash flow information: | | | | | | | | | |
| | | | | | | | | | |
| Cash paid during the period for: | | | | | | | | | |
| Interest | | $ | 9,757 | | | $ | 27,427 | | | $ | 74,080 | |
| | | | | | | | | | | | | |
| Taxes | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| Beneficial conversion feature of notes payable | | $ | - | | | $ | 1,082,078 | | | $ | 14,891,240 | |
| | | | | | | | | | | | | |
| Common stock issued for services | | $ | 37,000 | | | $ | 187,500 | | | $ | 354,875 | |
| | | | | | | | | | | | | |
| Notes payable issued under restructure of debt | | $ | - | | | $ | - | | | $ | 7,284,998 | |
| | | | | | | | | | | | | |
| Value of warrant issued as discount on debt | | $ | - | | | $ | 223,010 | | | $ | 331,510 | |
| | | | | | | | | | | | | |
| Notes payable issued for accounts payable | | $ | - | | | $ | 287,768 | | | $ | 287,768 | |
| | | | | | | | | | | | | |
| Common stock issued for technology license | | $ | - | | | $ | - | | | $ | 920,610 | |
| | | | | | | | | | | | | |
| Common stock issued for the conversion of preferred stock | | $ | - | | | $ | - | | | $ | 355,000 | |
| | | | | | | | | | | | | |
| Notes payable issued for services | | $ | - | | | $ | - | | | $ | 3,746,971 | |
| | | | | | | | | | | | | |
| Impairment of technology licenses | | $ | - | | | $ | - | | | $ | 616,908 | |
| | | | | | | | | | | | | |
| Value of warrants issued for debt | | $ | - | | | $ | 12,747 | | | $ | 12,747 | |
| | | | | | | | | | | | | |
| Issuance of common stock for cash | | $ | - | | | $ | 1,408,271 | | | $ | 1,408,271 | |
| | | | | | | | | | | | | |
| Gain from the restructuring of debt | | $ | - | | | $ | (5,690,287 | ) | | $ | (5,576,993 | ) |
| | | | | | | | | | | | | |
| Value of vested portion of options issued for services | | $ | 41,598 | | | $ | 2,866,811 | | | $ | 2,908,409 | |
| | | | | | | | | | | | | |
| Common stock issued for accounts payable | | $ | - | | | $ | 30,000 | | | $ | 30,000 | |
| | | | | | | | | | | | | |
| Cash advance converted to note payable | | $ | - | | | $ | 521,200 | | | $ | 521,200 | |
| | | | | | | | | | | | | |
| Capitalization of interest on debt | | $ | - | | | $ | 33,754 | | | $ | 33,751 | |
| | | | | | | | | | | | | |
| Value of warrants and options issued for services | | $ | - | | | $ | - | | | $ | 2,905,694 | |
See notes to consolidated financial statements.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Basis of Presentation
Omnimmune Holdings, Inc. (“Omnimmune” or the “Company”) is the holding company of Omnimmune Corp., a development-stage biotechnology company integrating complementary cancer therapeutic, diagnostic and prognostic technologies. Our mission is to provide a comprehensive and personalized approach to the clinical management of cancer through improved diagnostic, prognostic and therapeutic interventions.
The Company’s operating subsidiary, Omnimmune Corp., is currently a development stage company under the provisions of Financial Accounting Standards Board “FASB” Accounting Standard Codification “ASC” 915-10-15 (formerly referred to as Statement of Financial Accounting Standards, (“SFAS”) No 7). The Company, whose principal business is to act as a holding company for Omnimmune Corp., is also a development-stage company. The accounts of the Company also include those of its wholly owned subsidiary, InVitro Technologies, Inc., an inactive company.
Merger with Roughneck Supplies, Inc.
The predecessor of the Company was originally incorporated on February 22, 2007, in the State of Nevada as Roughneck Supplies, Inc. ( “Roughneck”). On August 6, 2008, Roughneck merged with and into Omnimmune Holdings, Inc. On August 7, 2008, Omnimmune Corp., a privately held Texas corporation, incorporated January 15, 1997 merged with and into Omnimmune Acquisition Corp., a Delaware corporation, and a wholly-owned subsidiary of the Company formed for the purpose of the merger. As a result, (i) Omnimmune Corp became a wholly-owned subsidiary of the Company, (ii) the shareholders of Omnimmune Corp. became the majority stockholders of the Company and the shareholders prior to the merger were reduced to a minority ownership, (iii) the historical management of the Company resigned , and the management of Omnimmune Corp. became the management of the Company, (iv) the prior business of Omnimmune Corp. became the business of the Company and the former business of Roughneck was eliminated, and (v) the historical financial statements of Omnimmune Corp. became the historical financial statements of the Company. Therefore, as a consequence of the two mergers, one on August 6, 2008 and one on August 7, 2008, Omnimmune (formerly Roughneck) went from being a public corporation domiciled in Nevada formerly in the business of marketing and retailing oil and gas drilling supply products with little or no continuing operations and a fiscal year end of May 31, to being a public company domiciled in Delaware in the biotechnology business with a fiscal year end of December 31. These transactions are described in detail in the Company’s Form 8-K filed with the SEC on August 12, 2008, as amended on August 21, 2008, August 27, 2008 and September 5, 2008, respectively.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements the Company incurred losses from operations of $1,761,268 and $5,989,872 for the year ended December 31, 2009 and 2008, respectively; and $21,099,267 from inception (January 15, 1997) through December 31, 2009. In addition, the Company’s current liabilities exceed its current assets by $4,392,918 as of December 31, 2009. These factors among others, including the Company’s current cash position, which was $5,627 as of December 31, 2009, may indicate that the Company will be unable to continue as a going concern for a reasonable period of time absent t he infusion of substantial additional capital.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
If operations and cash flows substantially improve, management believes that the Company can continue to operate. However, no assurance can be given that management’s actions will result in profitable operations or the resolution of its liquidity problems.
The accompanying consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could materially differ from those estimates.
Long-lived Assets
In accordance with ASC 360-10-15 (formerly referred to as SFAS No. 144), long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360-10-15 relates to assets that can be amortized and the life determinable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undis counted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less the cost to sell. During the years ended December 31, 2009, and 2008, the Company recognized $0 impairment of long-lived assets. From inception to December 31, 2009 an impairment of license agreement in the amount of $1,701,936 was recorded.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents include highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations.
Net Income (Loss) Per Common Share
The Company computes earnings per share under ASC 360-10-45 (formerly referred to as Financial Accounting Standard No. 128, "Earnings Per Share" (SFAS 128)). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the year. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible notes and the exercise of the Company's stock options and warrants (calculated using the treasury stock method). During 2009, 2008, and from inception to December 31, 2009, common stock equivalents 60; were not considered in the calculation of the weighted average number of common shares outstanding because they would be anti-dilutive, thereby decreasing the net loss per common share.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Research and Development
The Company accounts for research and development costs in accordance with the ASC 730-10-15 (formerly referred to as Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 2 ("SFAS 2"), "Accounting for Research and Development Costs"). Under ASC 730-10-15, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. There were no expenditures on research and product development for the years 2009 and 2008, and from inception through Dece mber 31, 2009.
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and related party receivables. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.
Comprehensive Income
Statement of ASC 220-10-15 (formerly referred to as Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income,") establishes standards for reporting and displaying of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220-10-15 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. During the years ended December 31, 2009 and 2008 there were no terms of other comprehensive income.
Stock Based Compensation
Effective January 1, 2006, the Company adopted ASC 718-10 (formerly referred to as SFAS No. 123 (revised), "Share-Based Payment" (SFAS 123(R))) utilizing the modified prospective approach. Prior to the adoption of ASC 718-10 we accounted for stock option grant in accordance with ASC 718-10 and accordingly, recognized compensation expense for stock option grants.
Under the modified prospective approach, ASC 718-10 applies to new awards and to awards that were outstanding on January 1, 2006 that are subsequently modified, repurchased or cancelled. Under the modified prospective approach, compensation cost recognized in the nine months of fiscal 2006 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of ASC 718-10, and compensation cost for all share-based payments granted subsequent to January 1, 2006 based on the grant-date fair value estimated in accordance with the provisions of ASC 718-10. Prior periods were not restated to reflect the impact of adopting the new standard.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
A summary of option activity under the Plan as of December 31, 2009, and changes during the period ended are presented below:
| | | Options | | | Weighted Average Exercise Price | |
| Outstanding at December 31, 2008 | | | - | | | $ | - | |
| Issued | | | 2,350,000 | | | | 2.50 | |
| Exercised | | | - | | | | - | |
| Forfeited or expired | | | - | | | | - | |
| Outstanding at December 31, 2009 | | | 2,350,000 | | | $ | 2.50 | |
| | | | | | | | | |
| Vested at December 31, 2009 | | | 2,327,656 | | | $ | 2.50 | |
| Non-vested at December 31, 2009 | | | 22,344 | | | $ | 2.50 | |
Aggregate intrinsic value of options outstanding and exercisable at December 31, 2009 was $0. Aggregate intrinsic value represents the difference between the Company's closing stock price on the last trading day of the fiscal period, which was $0.16 as of December 31, 2009, and the exercise price multiplied by the number of options outstanding. As of December 31, 2009, total unrecognized stock-based compensation expense related to stock options was $27,749. The total fair value of options vested during the year December 31, 2009 and 2008 was $41,594 and $2,866,810, respectively.
Income Taxes
The Company has implemented the provisions of ASC 740-10-05 (formerly referred to as Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109)). ASC 740-10-05 requires that income tax accounts be computed using the liability method. Deferred taxes are determined based upon the estimated future tax effects of differences between the financial reporting and tax reporting bases of assets and liabilities given the provisions of currently enacted tax laws. Since the Company remained insolvent after the debt restructuring during the year ended December 31, 2009, the gain on the restructuring was not taxable to the Company.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary 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 enactment date.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Realization of the deferred tax asset is dependent on generating sufficient taxable income in future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Due to the uncertainties as to the realization of deferred tax assets, an allowance has been provided regarding all deferred tax assets of the Company.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with accounting principles generally accepted in the United States of America. The estimated fair values approximate their carrying value because of the short-term maturity of these instruments or the stated interest rates are indicative of market interest rates.
Reclassifications
Certain reclassifications have been made in prior year's financial statements to conform to classifications used in the current year.
Foreign Currency
Aside from one of its license agreements, which requires milestone and other payments to be made in Euros, the Company is not involved any transactions with foreign currency implications.
New Accounting Pronouncements
The following accounting guidance has been issued and will be effective for the Company in or after fiscal year 2009:
Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820” and formerly referred to as FAS-157), establishes a framework for measuring fair value in GAAP, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements. ASC 820 is effective for fiscal years beginning after November 15, 2007. ASC 820-10-65, Transition and Open Effective Date Information, deferred the effective date of ASC 820, for non-financial assets and liabilities that are not on a recurring basis recognized or disclosed at fair value in the financial statements, to fiscal years, and interim periods, beginning after November 15, 2008. The Company has adopted the guidance within ASC 820 for non-financial assets and liabilities measured at fair value on a nonrecurring basis at January 1, 2009 and will continue to apply its provisions prospectively from January 1, 2009. The application of ASC 820 for non-financial assets and liabilities did not have a significant impact on earnings nor the financial position for the periods presented.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
FASB ASC 805, Business Combinations (“ASC 805” and formerly referred to as FAS-141(R)) requires the acquisition method to be applied to all transactions and other events in which an entity obtains control over one or more other businesses, requires the acquirer to recognize the fair value of all assets and liabilities acquired, even if less than one hundred percent ownership is acquired, and establishes the acquisition date fair value as measurement date for all assets and liabilities assumed. The guidance within ASC 805 is effective prospectively for any acquisitions made after fiscal years beginning after December 15, 2008.
FASB ASC 810, Consolidation (“ASC 810”), ASC 810-10-65, Transition and Open Effective Date Information (“ASC 810-10-65” and formerly referred to as FAS-160) establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated financial statements. ASC 810-10-65 is effective for fiscal years beginning after December 15, 2008. The application of ASC 810-10-65 did not have a significant impact on earnings nor the financial position.
FASB ASC 815, Derivatives and Hedging (“ASC 815”), ASC 815-10-65, Transition and Open Effective Date Information (“ASC 815-10-65”and formerly referred to as FAS-161) includes a requirement for enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. ASC 815 is effective prospectively for fiscal years beginning after November 15, 2008. The application of ASC 815 expanded the required disclosures in regards to the Company’s derivative and hedging activities.
FASB ASC 350, Intangibles – Goodwill and Other, ASC 350-30-65, Transition and Open Effective Date Information (“ASC 350-30-65” and formerly referred to as FSP FAS 142-3) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible. ASC 350-30-65 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The guidance in this ASC 350-30-65 for determining the useful life of a recognized intangible shall be applied prospectively to intangible assets acquired after the effective date. The disclosure requirements of ASC 350-30-65, however, shall be applied prospec tively to all intangible assets recognized in the Company’s financial statements as of the effective date. The application of ASC 350-30-65 is not expected to have a material impact on earnings nor the financial position.
FASB ASC 715, Compensation – Retirement Benefits, ASC 715-20-65, Transition and Open Effective Date Information (“ASC 715-20-65” and formerly referred to as FSP FAS-132(R)-1) provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plans. ASC 715-20-65 is effective prospectively for fiscal years ending after December 15, 2009. The application of ASC 715-20-65 will expand the Company’s disclosures regarding pension plan assets.
FASB ASC 825 Financial Instruments, ASC 825-10-65, Transition and Open Effective Date Information (“ASC 825-10-65” and formerly referred to as FSP FAS 107-1 and APB 28-1) requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. This guidance also requires those disclosures in summarized financial information at interim reporting periods. ASC 825-10-65 is effective prospectively for interim reporting periods ending after June 15, 2009. The application of ASC 825-10-65 expanded the Company’s disclosures regarding the use of fair value in interim periods.
FASB ASC 855, Subsequent Events (“ASC 855” and formerly referred to as FAS-165), modified the subsequent event guidance. The three modifications to the subsequent events guidance are: 1) To name the two types of subsequent events either as recognized or non-recognized subsequent events, 2) To modify the definition of subsequent events to refer to events or transactions that occur after the balance sheet date, but before the financial statement is issued or available to be issued and 3) To require entities to disclose the date through which an entity has evaluated subsequent events and the basis for that date, i.e. whether that date represents the date the financial statements were issued or were available to be issued. This guidance is effective for interim or annual financial periods ending after June 15, 2009, and has been applied prospectively.
NOTE 2 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES – RELATED PARTIES
Accounts payable and accrued liabilities at December 31, 2009 and 2008 consist of trade payables.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Accounts payable and accrued liabilities – related parties at December 31, 2009 and 2008 consist of the following:
| | | December 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Accrued consulting fees | | $ | 621,200 | | | $ | 351,748 | |
| Accrued payroll and related costs | | | 531,500 | | | | - | |
| Expense reimbursements | | | 3,338 | | | | - | |
| | | | | | | | | |
| | | $ | 1,156,038 | | | $ | 351,748 | |
NOTE 3 – LINE OF CREDIT
The Company has bank loan and credit card agreements with various banks. The bank loan is jointly guaranteed by two of the Company’s shareholders. The Company's Chief Executive Officer, Harris Lichtenstein, co-signs the credit card agreements and remains jointly liable with the Company on all outstanding amounts due for these credit card liabilities. At December 31, 2009 and 2008, the Company had the following amounts due under its loan and credit agreement:
| | | December 31, | |
| | | 2009 | | | 2008 | |
| Bank loan | | $ | 149,976 | | | $ | 149,976 | |
| Credit cards | | | 103,083 | | | | 109,181 | |
| Total | | $ | 253,059 | | | $ | 259,157 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 4 – ACCRUED INTEREST
Notes payable and accrued interest at December 31, 2009 and 2008 is summarized as follows:
| | | 2009 | | | 2008 | |
| Number of notes payable | | | 16 | | | | 17 | |
| Number of notes payable - related party | | | 4 | | | | 8 | |
| | | | | | | | | |
| Principal amount - notes payable | | $ | 1,016,420 | | | $ | 709,035 | |
| Principal amount - notes payable - related party | | $ | 1,003,563 | | | $ | 1,000,864 | |
| | | | | | | | | |
| Accrued interest | | $ | 327,078 | | | $ | 192,380 | |
| Accrued interest - related party | | $ | 483,836 | | | $ | 424,210 | |
Interest expense consisted of the following for the year ended December 31, 2009 and 2008:
| | | 2009 | | | 2008 | |
| Accrued interest - notes payable | | $ | 186,067 | | | $ | 142,678 | |
| Accrued interest - notes payable – related party | | | 8,256 | | | | 87,803 | |
| Bank credit line | | | 12,373 | | | | 12,650 | |
| Amortization of discount on notes payable | | | 22,317 | | | | 6,571,185 | |
| Amortization of discount on accounts payable | | | - | | | | 223,011 | |
| Credit Cards | | | 9,757 | | | | 7,505 | |
| Insurance financing | | | 439 | | | | - | |
| Interest (income) | | | - | | | | (386 | ) |
| Total | | $ | 239,209 | | | $ | 7,044,446 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 5 – CASH ADVANCES
During the year ended December 31, 2009, the Company received $210,400, in new non-interest bearing payable on demand, unsecured cash advances from related parties and had a balance of $100,000 in such advances from 2008.
During the year ended December 31, 2008, the Company repaid $130,000 of cash advances, converted $521,200 of cash advances into a note payable, and issued 1,055,507 shares of common stock for $44,800 of the cash advances.
NOTE 6 – NOTES PAYABLE
At December 31, 2006, the Company had outstanding 21 notes payable and one interest-bearing liability not yet formalized as a note (the “Old Notes”) in the aggregate principal amount of $5,002,860. At December 31, 2006, a total of 16 of the Old Notes in the aggregate principal amount of $2,495,736 were in default.
On January 1, 2007 and March 1, 2007, the Old Notes were cancelled and replaced by new notes payable (the “New Notes”). The principal of the New Notes included the principal of the Old Notes, the accrued interest on the Old Notes, certain amounts due the investors which were in accounts payable on the Company’s balance sheet at December 31, 2006, and an additional amount of $113,284. This additional amount has been charged to operations as Loss on Debt Conversion during the twelve months ended December 31, 2007. At December 31, 2007, the Company had outstanding 21 notes payable in the aggregate principal amount of $7,284,998 including $5,951,511 to related parties, none of which were in default.
On March 1, 2008, 15 of the previously issued notes were cancelled and replaced by new notes payable. The principal of the new notes included the principal of the New Notes and accrued interest on those notes. At September 30, 2008, the Company had outstanding 15 notes payable in the aggregate principal amount of $2,638,262, none of which were in default. During the period ended December 31, 2008, pursuant to the terms in the note payable in the aggregate principal amount of $149,278, the Company exercised its right to extend the date of maturity until February 28, 2010.
On March 1, 2008, the New Notes were cancelled and $5,677,726 of the old principal was forgiven by the note holders, resulting in a gain on the financial statements. During the period ended June 30, 2008, $20,203 of old principal was forgiven by a note holder, resulting in an additional gain on the financial statements.
During the three months ended March 31, 2008, the Company also converted unsecured cash advances in the amount of $581,200 into a convertible note payable. During the period ended September 30, 2008, the Company determined that the amount of unsecured cash advances contributed by the note holder was $521,000. As a result, the original note in the amount of $581,200 was returned for cancellation and a new note in the amount of $521,200 was issued to the note holder.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
The Company has convertible notes payable outstanding which contain a provision for contingent warrants that are potentially issuable. Pursuant to the convertible notes agreements, these warrants are issuable if the note holder elects to convert at least 25% of the principal amount of the note during the term of the note. At December 31, 2009 and 2008, there are contingent 5 year warrants issuable to purchase an aggregate of 43,000 shares (post splits) of the Company’s common stock at a price of $5.00 per share.
The Company has convertible notes payable in the amount of $1,506,199 which are convertible into shares of common stock of the Company at a price of $0.1781, or 8,457,039 shares.
The following table summarizes amounts due under the notes payable at December 31, 2009 and 2008:
| | | Principal balance: | |
| | | December 31, 2009 | | | December 31, 2008 | |
| Total outstanding | | $ | 2,943,252 | | | $ | 2,943,252 | |
| Less discount on notes payable | | | (923,269 | ) | | | (945,585 | ) |
| Net Total | | | 2,019,983 | | | | 1,997,667 | |
| Less current portion | | | (987,046 | ) | | | (287,768 | ) |
| TOTAL | | $ | 1,032,937 | | | $ | 1,709,899 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
The following table lists the notes payable at December 31, 2009 and December 31, 2008:
| | | Principal balance: | |
| | | December 31, 2009 | | | December 31, 2008 | |
| | | | | | | |
| Convertible note payable to a related party in the amount of $427,379 dated June 14, 1994. On March 3, 2007, this note was replaced with a new note in the amount of $805,974, which included accrued interest in the amount of $271,437, and a loss of $107,158. On March 1, 2008, this note was forgiven by the note holder. Interest in the amount of $0 and $9,374 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $0 and $56,179, respectively | | $ | - | | | $ | - | |
| | | | | | | | | |
| Convertible note payable to a related party in the amount of $2,000,000 dated June 14, 1994. On March 3, 2007, this note was replaced with a new note in the amount of $3,170,188, which included accrued interest in the amount of $959,089, a salary payable of $106,575, and a loss of $104,524. On March 1, 2008, this note was replaced with a new note in the amount of $500,000, the amount of $2,670,188 was forgiven by the note holder. The note signed on March 2, 2008, is a non interest bearing note, and is payable contingent upon (a) the Company’s receipt of revenues, as defined, in which case the Company will pay 2% of such revenues, as received, in satisfaction of this note; and/or (b) the sale of substantially all of the Company’s assets. Interest in the amount of $0 and $37,087 was accrued on these notes dur ing the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $222,52.1 | | $ | 500,000 | | | $ | 500,000 | |
| | | | | | | | | |
| Convertible note payable to a related party in the amount of $79,745 dated June 14, 1994. On March 3, 2007, this note was replaced with a new note in the amount of $131,722, which included accrued interest of $40,065, and a loss of $11,912. On March 1, 2008, this debt was forgiven by the note holder. Interest in the amount of $0 and $1,541 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $9,246. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Convertible note payable to a related party in the amount of $1,170,356 dated May 15, 2002. On March 3, 2007, this note was replaced with a new note in the amount of $1,342,127, which included accrued interest of $379,324, and a gain of $207,553. On March 1, 2008, this note was replaced with a new note in the amount of $500,000, the amount of $842,127 was forgiven by the debt holder. The note dated March 1, 2008 is a non interest bearing note, and is payable contingent upon (a) the Company’s receipt of revenues, as defined, in which case the Company will pay 2% of such revenues, as received, in satisfaction of this note; and/or (b) the sale of substantially all of the Company’s assets. Interest in the amount of $0 and $15,701 was accrued on these notes during the years ended December 31, 2009 and 2008, respective ly. Total accrued interest at December 31, 2009 and 2008 amounted to $94,206. | | $ | 500,000 | | | $ | 500,000 | |
| | | | | | | | | |
| Convertible note payable to a related party in the amount of $25,000 dated March 10, 2005. On March 3, 2007, this note was replaced with a new note in the amount of $30,211, which includes accrued interest of $4,938 and a loss of $272. On March 31, 2008, this note was replaced with a new note, which includes accrued interest of $3,021. The note bears interest at the rate of 10% per annum, and was due in full on February 28, 2013. This note is convertible into common stock of the Company at a conversion price of $0.1781 per share (post split). A beneficial conversion feature in the amount of $33,232 was recorded as a discount to the note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%. Interest in the amount of $3,323 and $3,283 was accrued on this note during the year s ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $6,109 and $2,786, respectively. | | $ | 33,232 | | | $ | 33,232 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
| Convertible note payable to a related party in the amount of $37,000 dated February 26, 2005. On March 3, 2007, this note was replaced with a new note in the amount of $44,848, which included accrued interest of $6,418, and loss of $1,430. On March 1, 2008, this note was replaced with a new note, which includes accrued interest of $4,485. The note bears interest at the rate of 10% per annum, and is due in full on February 1, 2013. This note is convertible into common stock of the Company at a conversion price of $1.78 per share (post split). A beneficial conversion feature in the amount of $49,333 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8% Interest in the amount of $4,933 and $4,873 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to$9,069 and $4,136 , respectively. | | $ | 49,333 | | | $ | 49,333 | |
| | | | | | | | | |
| Note payable in the amount of $8,110 dated December 31, 1997. On March 3, 2007, this note was replaced with a new note in the amount of $19,442, which included accrued interest of $7,437, and loss of $3,895. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2010. Interest in the amount of $1,944 and $1,950 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $4,054 and $3,574, respectively. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010 This note became due at February 28, 2010. As of May 14, 2010, the Company has not received a notice of default from the noteholder. | | $ | 19,442 | | | $ | 19,442 | |
| | | | | | | | | |
| Note payable in the amount of $15,392 dated December 31, 1998. On March 3, 2007, this note was replaced with a new convertible note in the amount of $33,545, which included accrued interest of $12,575, and a loss of $5,578. . The note bears interest at the rate of 10% per annum, and is due in full on March 1, 2008. This note is convertible into common stock of the Company at a conversion price of $5.00 per share (post split). A beneficial conversion feature in the amount of $33,545 was recorded as a discount to the note. Interest in the amount of $0 and $2,123 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $4,926. The note was repaid during the year ended December 31, 2008. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Note payable in the amount of $10,000 dated October 20, 1999. On March 3, 2007, this note was replaced with a new note in the amount of $20,203, which included accrued interest in the amount of $7, 367, and a loss of $2,836. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2008. Interest in the amount of $0 and $670 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $2,358. During the year ended December 31, 2008, this note was forgiven by the note holder. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Note payable in the amount of $11,932 dated December 31, 1999. On March 3, 2007, this note was replaced with a new note in the amount of $23,641, which included accrued interest of $8,168, and a loss of $3,540. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2010. Interest in the amount of $1,775 and $1,380 was accrued on this note during the nine months ended September 30, 2008 and 2007. Total accrued interest at December 31, 2009 and 2008 amounted to $6,114 and $4,346, respectively. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010. This note became due at February 28, 2010. As of May 14, 2010, the Company has not received a notice of default from the noteholder. | | $ | 23,641 | | | $ | 23,641 | |
| | | | | | | | | |
| Note payable in the amount of $33,860 dated December 31, 2000. On March 3, 2007, this note was replaced with a new note in the amount of $60,971, which included accrued interest of $20,882, and a loss of $6,228. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2010. Interest in the amount of $6,097 and $6,114 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $17,306 and $11,209, respectively. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010. This note became due at February 28, 2010. As of May 14, 2010, the Company has not received a notice of default from the noteholder. | | $ | 60,971 | | | $ | 60,971 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
| Note payable in the amount of $25,000 dated February 28, 2001. On March 3, 2007, this note was replaced with a new not in the amount of $44,355, which included accrued interest in the amount of $15,014, and a loss of $4,341. On March 1, 2008, this note was replaced with a new note in the amount of $127,305, which consolidated two other notes payable to this note holder in the amounts of $41,774, and $28,603, and accrued interest of $11,573.The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2013. This note is convertible into shares (post split) of common stock at a rate of $1.78 per share (post split). A beneficial conversion in the amount of $127,305 was recorded for this note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.2%. Interest in the amount of $12,731 and $11,402 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $23,403 and $10,673 , respectively. | | $ | 127,305 | | | $ | 127,305 | |
| | | | | | | | | |
| Note payable in the amount of $25,000 dated July 19, 2001. On March 3, 2007, this note was replaced with a new note in the amount of $42,774, which included accrued interest in the amount of $14,048, and a loss of $3,726. On March 2, 2008 this note was consolidated into a new note, shown above. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2008. Interest in the amount of $0 and $703 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $0. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Note payable in the amount of $16,750 dated June 1, 2002. On March 3, 2007, this note was replaced with a new note in the amount of $45,224, which included accrued interest in the amount of $14,275, and a loss of $3,322. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2010. Interest in the amount of $4,522 and $4,535 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $12,836 and $8,314, respectively. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010. This note became due at February 28, 2010. As of May 14, 2010, the Company has not received a notice of default from the noteholder. | | $ | 45,224 | | | $ | 45,224 | |
| | | | | | | | | |
| Note payable in the amount of $18,000 dated June 1, 2002. On March 3, 2007, this note was replaced wit ha new note in the amount of $28,350, which included accrued interest in the amount of $8,551, and a loss of $1,798. On March 1, 2008, a new note replaced with a new note in the amount of $31,185, which includes accrued interest in the amount of $2,835. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2013. This note is convertible into shares (post split) of common stock at a rate of $1.78 per shares (post split). A beneficial conversion feature in the amount of $31,285 was recorded for this note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%. Interest in the amount of $3,119 and $3,080 was accrued on this note during the years en ded December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $5,733 and $2,614, respectively. | | $ | 31,185 | | | $ | 31,185 | |
| | | | | | | | | |
| Note payable to a related party in the amount of $136,815 dated May 15, 2002. On March 3, 2007, this note was replaced with a new note in the amount of $189,400, which included accrued interest in the amount of $45,944, and a loss of $8,641. On March 1, 2008, the note holder forgave this debt amount. Interest in the amount of $0 and $2,216 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $13,294. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Note payable in the amount of $62,019 dated July 1, 2005. On January 1, 2007, this note was replaced with a new note in the amount of $94,334, which included accrued interest of $9,328, and a loss of 422,987. On March 1, 2008, a new note replaced this note in the amount of $91,149, which includes accrued interest in the amount of $2,221. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2013. This note is convertible into shares (post split) of common stock at a price of $1.78 per share (post split). A beneficial conversion feature was recorded in the amount of $91,149 on the note. Interest in the amount of $8,813 and $8,823 and $9,113 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to$15,452 and $ 6,639, respectively. | | $ | 88,139 | | | $ | 88,139 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
| Note payable in the amount of $25,000 dated October 6, 2005. On March 3, 2007, this note was replaced with a new note in the amount of $28,603, which included interest in the amount of $3,500, and a loss of $103. On March 1, 2008, this note was consolidated into a new note, shown above. Interest in the amount of $0 and $470 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $0. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Note payable in the amount of $16,750 dated June 1, 2002. On March 3, 2007, this note was replaced with a new note in the amount of $26,387, which included accrued interest in the amount of $7,957, and a loss of $1,674. On March 1, 2008, this note was replaced with a new note in the amount of $29,025, which included accrued interest in the amount of $29,025. The note bears interest at the rate of 10% per annum, and was due in full on February 28, 2013. This note is convertible into shares (post split) of common stock at a price of $1.78 per shares (post split). A beneficial conversion feature in the amount of $29,025 was recorded on this note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3% Interest in the amount of $2,902 and $2,866was accrued on this note during the years ende d December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $5,335 and $2,433, respectively. | | $ | 29,025 | | | $ | 29,025 | |
| | | | | | | | | |
| Note payable in the amount of $69,806 dated March 3, 2007. On March 1, 2008, this note was replaced with a new note in the amount of $76,787, which included accrued interest in the amount of $6,981. The note bears interest at a rate of 10% per annum, and is due in full on February 28, 2013. This note is convertible into shares (post shares) of common stock at a rate of $1.78 per share (post split). A beneficial conversion feature in the amount of $76,787 was recorded on the note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%. Interest in the amount of $7,679 and $7,526 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to$14,057 and $6,378, , respectively. | | $ | 76,787 | | | $ | 76,787 | |
| | | | | | | | | |
| Note payable to a related party in the amount of $750,000. On March 3, 2007, this was signed into a note payable in the amount of $1,043,015, which included accrued interest in the amount of $166,266, and a loss of $28,874. On March 1, 2008, the note holder forgave this note. Interest in the amount of $0 and $12,202 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to$ $73,211. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Note payable in the amount of $300,000 dated March 27, 2008. During the three months ended June 30, 2008, the Company collected an additional $100,000 for this bridge loan. The note bears interest at a rate of 10% per annum, and is due in full on September 28, 2010. This note becomes convertible into shares (post split) of common stock upon the closing of a qualified financing. Interest in the amount of $0 was accrued on this note during the years ended December 31, 2009 and 2008. Total accrued interest at December 31, 2009 and 2008 amounted to $0. During the year ended December 31, 2008, this note was repaid with interest. | | $ | - | | | $ | - | |
| | | | | | | | | |
| Note payable in the amount of $550,000 dated June 24, 2008. The note bears interest at a rate of 10% per annum, and is due in full on June 24, 2010. This note becomes convertible into shares (post split) of common stock upon the closing of a qualified financing. Interest in the amount of $55,000 and $28,630 was accrued during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $$83,630 and $28,360, respectively. | | $ | 550,000 | | | $ | $550,000 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
| Note payable in the amount of $521,200 dated March 1, 2008. The note bears interest at a rate of 10% per annum, and is due in full on February 28, 2013. This note is convertible into common stock at a rate of $1.78 per share (post split). A beneficial conversion feature in the amount of $521,200 was recorded and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%. Interest in the amount of $521,120 and $46,873 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to $98,993 and $46,873, respectively. | | $ | 521,200 | | | $ | 521,200 | |
| | | | | | | | | |
| Note payable in the amount of $287,768 dated October 31, 2008. The note bears interest at a rate of 10% per annum, and is due in full on June 30, 2009. Interest in the amount of $28,777 and $4,809 was accrued on this note during the years ended December 31, 2009 and 2008, respectively. Total accrued interest at December 31, 2009 and 2008 amounted to$33,586 and $4,809, respectively. This note is past due at December 31, 2009. | | $ | 287,768 | | | $ | 287,768 | |
| Total outstanding | | $ | 2,943,252 | | | $ | 2,943,252 | |
| Less discount on notes payable | | | (932,269 | ) | | | (945,585 | ) |
| Total | | | 2,019,983 | | | | 1,997,667 | |
| Less current portion | | | (987,046 | ) | | | (287,768 | ) |
| | | $ | 1,032,937 | | | $ | 1,709,899 | |
| | | | | | | | | |
| Related Party | | | 1,003,563 | | | | 1,288,632 | |
| Related Party – current portion | | | - | | | | 287,768 | |
| Related Party – long term portion | | $ | 1,003,563 | | | $ | 1,000,864 | |
| | | | | | | | | |
| Non-related party | | $ | 1,016,420 | | | $ | 709,035 | |
| Non-related party – current portion | | | 987,046 | | | | - | |
| Non-related party – long term portion | | $ | 29,374 | | | $ | 709,035 | |
Maturities of debt are as follows:
| December 31, | | | |
| 2010 (a) | | $ | 987,046 | |
| 2011 | | | - | |
| 2012 | | | - | |
| thereafter | | | 1,956,206 | |
| | | $ | 2,943,252 | |
(a) $287,768 of this amount was due on June 30, 2009.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 7 – EQUITY
On July 8, 2008, the Company filed an amendment to the articles of incorporation to the State of Delaware amended the number of authorized shares from 300,000,000 to 50,000,000 and the par value from $0.01 to $0.0001. At December 31, 2009 and December 31, 2008, the Company had issued and outstanding 8,914,921 and 8,814,921 shares of common stock, respectively. No shares of preferred stock are issued or outstanding.
The Company completed a 1-for-2.8072 split of its common stock, effective March 27, 2008. The Company completed a 10-for-1 reverse split of its common stock effective June 9, 2008. Each of these stock splits is accounted for in all share numbers included in this report, unless otherwise indicated.
Common Stock
The following equity transactions occur during the year ended December 31, 2008:
The Company issued 119,053 shares of common stock valued at $445,305 pursuant to a license agreement.
The Company issued 119,053 shares of common stock valued at $445,305 pursuant to a license agreement.
The Company issued 1,055,508 shares of common stock for cash in the amount of $44,801 that had been previously received.
The Company agreed to issue 1,055,508 shares of common stock to a board member for services.
The Company issued 100,000 shares of common stock, warrants to purchase 20,000 shares of common stock, and a note payable in the amount of $400,000 for cash of $400,000. The fair value of these shares and warrants in the aggregate amount of $55,987 was considered a discount to the note payable and amortized to additional paid-in capital during the year ended December 31, 2008.
Pursuant to an amendment to a licensing agreement, the Company cancelled 279,788 shares of common stock with a fair value of $842,514 that had been previously issued for a licensing agreement.
The Company issued 150,000 shares of common stock to employees for services that have been provided. The fair value of these shares of $187,500 was charged to operations during the year ended December 31, 2008.
The Company issued 137,500 shares of common stock and a note payable in the amount of $550,000 for cash of $550,000. The fair value of these shares of $6,875 was considered a discount to the note payable and charged to additional paid-in capital during the year ended December 31, 2008.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
In August 2008, the Company completed a private placement of its common stock (the “Private Placement”) whereby the Company sold an aggregate of $1,786,000 worth of units (each “Unit” and collectively the “Units”) to accredited investors (as defined by Rule 501 under the Securities Act of 1933, as amended). The Company received proceeds of $1,408,648 after costs of the issuance of $359,330. The number of shares of common stock issued pursuant to the Private Placement was 707,200 along with warrants to purchase an additional 707,200 shares of common stock. Pursuant to the terms of the Private Placement, each Unit was sold for $2.50 (the “Unit Price”) and consisted of one share of Common Stock and one warrant to purchase one share of common stock for $5.00 per share.
During the year ended December 31, 2008, the Company entered into an amendment to the Columbia License Agreement, pursuant to which Columbia terminated the Stock Purchase agreement. As a result, the Company cancelled 279,788 shares of common stock, which had been previously issued to Columbia. During the year ended December 31, 2008, the Company and Columbia agreed to further amend the Columbia License Agreement which amendment became effective June 30, 2008. The fair value of the shares in the amount of $842,514 was credited to operations during the year ended December 31, 2008.
The following equity transactions occur during the year ended December 31, 2009:
The Company issued 50,000 shares of common stock to consultants for services that have been provided. The fair value of these shares of $15,000 was charged to operations during the year ended December 31, 2009.
The Company issued 50,000 shares of common stock to consultants for services that have been provided. The fair value of these shares of $22,000 was charged to operations during the year ended December 31, 2009.
The Company has committed to issue a total of 40,845 shares pursuant to the exercise of warrants. An aggregate 9,264 of these shares are to be issued pursuant to a cashless conversion provision of the warrants; an additional 31,581 of these shares are to be issued for the conversion price of $0.036 per share, or a total of $1,137. The amount of $1,137 is shown as common stock subscribed on the Company’s balance sheet at December 31, 2009.
Roughneck Exchange
On August 6, 2008, through a statutory merger with the sole purpose of changing the Company’s state of domestication from Nevada to Delaware, the shareholders of Roughneck converted 3,000,000 shares of Roughneck outstanding common stock into 3,000,000 shares of Omnimmune common stock. On August 7, 2008, in a transaction known as a reverse acquisition, the shareholders of Omnimmune, a publicly-traded company, exchanged 5,107,721 shares of Omnimmune common stock for 5,107,721 shares in Omnimmune Corp, a Texas corporation, and the Company’s wholly owned subsidiary, Omnimmune Acquisition Corp., a Delaware corporation, merged with and into Omnimmune Corp. The shareholders of Omnimmune Corp. thus assumed control of the Company, and the Company became the parent holding company of Omnimmune Corp.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Warrants
The following warrant activity occurred during the year ended December 31, 2008:
The Company issued warrants to purchase 70,180 shares of common stock to a board member for an extension of payment terms. The value of the warrants in the amount of $129,278 is considered a discount on accounts payable.
The Company issued warrants to purchase 20,000 shares of common stock to note holders pursuant to the note agreement. The fair value of these shares of $50,987 is considered as a discount to the notes payable.
The Company issued warrants to purchase 75,000 additional shares of common stock to a board member for an extension of payment terms. The value of the warrants in the amount of $93,733 is considered a discount to accounts payable.
The Company issued warrants to purchase 707,200 additional shares of common stock pursuant to the Private Placement of common stock.
The following warrant activity occurred during the year ended December 31, 2009:
Warrants to purchase an aggregate 40,845 shares of common stock were exercised by an investor.
Warrants to purchase an additional 40,845 shares of common stock expired.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
The following table summarizes the changes in warrants outstanding and the related prices for the shares of the Company’s common stock issued to non-employees of the Company. The following table summarizes the warrants outstanding as of December 31, 2009:
| Warrants Outstanding | | Warrants Exercisable |
| Exercise Prices | | Number Outstanding | | Weighted Average Remaining Contractual Life (years) | | Weighted Average Exercise Price | | Number Exercisable | | Weighted Average Remaining Contractual Life (years) |
| $ | | | 1.78 – 2.50 | | | 145,180 | | 5.92 | | | 1.78 – 2.50 | | 145,180 | | 5.92 |
| | 5.00 | | | 727,200 | | 3.61 | | | 5.00 | | 727,200 | | 3.61 |
| Total | | | 872,380 | | 4.00 | | | | | 872,380 | | 4.00 |
Transactions involving warrants are summarized as follows:
| | | Number of Shares (post-split) | | | Weighted Average Price Per Share (post-split) | |
| Outstanding at December 31, 2007 | | | 84,216 | | | $ | 0.10 | |
| Granted | | | 872,380 | | | | 4.53 | |
| Exercised | | | - | | | | - | |
| Cancelled or expired | | | - | | | | - | |
| Outstanding at December 31, 2008 | | | 956,596 | | | $ | 4.14 | |
| Granted | | | - | | | | - | |
| Exercised | | | (42,108 | ) | | | (0.036 | ) |
| Cancelled or expired | | | (42,108 | ) | | | (0.036 | ) |
| Outstanding at December 31, 2009 | | | 872,380 | | | | 4.54 | |
The Company has convertible notes payable outstanding which contain a provision for contingent warrants that are potentially issuable. Pursuant to the convertible notes agreements that warrants are issuable if the notes holder elects to convert at least 25% of the principal amount due, during the term of the note. According to the convertible note payable agreements there are warrants issuable to purchase 120,710 shares of common stock. Upon issuance these warrants are exercisable for 5 years at a price of $1.80 per share.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Options
During the year ended December 31, 2008, the Company issued options to purchase 2,250,000 shares of common stock at a price per share of $2.50 to employees for services rendered. The fair value of these options of $2,811,962 was charged to operations.
During the year ended December 31, 2008, the Company issued options to purchase 100,000 shares of common stock at a price per share of $2.50. These options were valued at an aggregate of $124,192, and vest at the following rate: 33,000 vested at the time of issuance, and the balance vest over a 23 month period. During the year ended December 31, 2009 and 2008, the Company charged to operations the fair value of the vested options, or $41,598 and $54,848, respectively.
The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to non-employees of the Company. The following table summarizes the warrants outstanding as of December 31, 2009:
| Options Outstanding | | Options Exercisable |
| Exercise Prices | | | Number Outstanding | | Weighted Average Remaining Contractual Life (years) | | Weighted Average Exercise Price | | Number Exercisable | | Weighted Average Remaining Contractual Life (years) |
| $ | 2.50 | | | | 2,350,000 | | 8.27 | | $ | 2.50 | | 2,327,656 | | 8.27 |
| Total | | | | 2,350,000 | | 8.27 | | | | | 2,327,656 | | 8.27 |
Transactions involving warrants are summarized as follows:
| | | Number of Shares | | | Weighted Average Price Per Share | |
| Outstanding at December 31, 2008 | | | - | | | $ | - | |
| Granted | | | 2,350,000 | | | | 2.50 | |
| Exercised | | | - | | | | - | |
| Cancelled or expired | | | - | | | | - | |
| Outstanding at December 31, 2009 | | | 2,235,000 | | | $ | 2.50 | |
| | | | | | | | | |
| Exercisable | | | 2,319,283 | | | $ | 2.50 | |
| Not exercisable | | | 22,344 | | | $ | 2.50 | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 8 – GAIN FROM RESTRUCTURING OF DEBT
On March 1, 2008, 15 of the New Notes were cancelled and replaced by new notes payable. The principal of the new notes included the principal of the New Notes and accrued interest on those notes. At September 30, 2008, the Company had outstanding 15 notes payable in the aggregate principal amount of $2,638,262. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010.
On March 1, 2008, the New Notes were cancelled and $5,677,726 of the old principal was forgiven by the note holders, resulting in a gain on the financial statements. During the period ended June 30, 2008, $20,203 of old principal was forgiven by a note holder, resulting in an additional gain on the financial statements. During the year ended December 31, 2008, the Company forgave a note receivable from Intrepid Technologies, Inc. in the amount of $10,000.
NOTE 9- RELATED PARTIES
Amounts due to related parties at December 31, 2009 and 2008 consisted of the following:
Convertible Notes Payable to related parties
The Company has a note payable to Intrepid Technologies, Inc., a company controlled by its Chief Executive Officer, in the amount of $0 at December 31, 2009 and December 31, 2008. The note bears interest at the rate of 7% per annum. During the year months ended December 31, 2009 and 2008, the Company accrued interest in the amount of $0 and $9,374 , respectively. This note was forgiven by the note holder in March, 2008.
The Company has a note payable outstanding to its Chief Executive Officer, in the amount of $500,000 at December 31, 2009 and December 31, 2008. The March 31, 2007 note bears interest at a rate of 7% per annum, and was replaced with a note that was signed during the three months ended March 31, 2008which is a non interest bearing note, and is payable contingent upon (a) the Company’s receipt of revenues, as defined, in which case the Company will pay 2% of such revenues, as received, in satisfaction of this note; and/or (b) the sale of substantially all of the Company’s assets. During the year ended December 31, 2009 and 2008, the Company accrued interest in the amount of $0 and $37,087, respectively, on these notes.
The Company has a second convertible note payable outstanding to its Chief Executive Officer, in the amount of $0 at December 31, 2009 and December 31, 2008, respectively. This note bears interest at a rate of 7% per annum. During the three months ended March 31, 2008, the note holder forgave this note. During the years ended December 31, 2009 and 2008, the Company accrued interest in the amount of $0 and $1,541, respectively.
The Company has a convertible note payable outstanding to Dennis Lichtenstein, a relative of the Chief Executive Officer, in the amount of $49,333 at December 31, 2009 and December 31, 2008. The note bears interest at a rate of 10% per annum. During the years ended December 31, 2009 and 2008, the Company accrued interest in the amount of $4,933 and $4,873, respectively.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
The Company has a note payable outstanding to Alexander Krichevsky, an officer of the Company, in the amount of $500,000 at December 31, 2009 and December 31, 2008. The March 31, 2007 note bears interest at a rate of 7% per annum. The note signed during the three months ended March 31, 2008 is a non interest bearing note, and is payable contingent upon (a) the Company’s receipt of revenues, as defined, in which case the Company will pay 2% of such revenues, as received, in satisfaction of this note; and/or (b) the sale of substantially all of the Company’s assets. During the years ended December 31, 2009 and 2008, the Company accrued interest in the amount of $0 and $15,701, respectively, on these notes.
The Company has a note payable outstanding to Alexander Krichevsky, an officer of the Company, in the amount of $136,815 at December 31, 2006. On March 3, 2007, the Company replaced this note with a convertible note payable in the amount of $189,400. As of March 31, 2008, the note holder forgave this note. During the years ended December 31, 2009 and 2008, the Company accrued interest in the amount of $0 and $2,216, respectively.
The Company has a note payable outstanding to Jennie Fay Lichtenstein, a relative of the Chief Executive Officer, in the amount of $25,000 at December 31, 2006. On March 3, 2007, the Company replaced this note with a convertible note payable in the amount of $30,211. As of December 31, 2008, the principal outstanding on this convertible note payable is $33,232. This note bears interest at a rate of 10% per annum. During the years ended December 31, 2009 and 2008, the Company accrued interest in the amount of $3,323 and $3,283, respectively.
The Company had a convertible note payable outstanding to Alexander Krichevsky, an officer of the Company, in the amount $0 at December 31, 2009 and December 31, 2008. Accrued salary in the amount of $750,000 was added to the principal amount due under this note during the twelve months ended December 31, 2007. During the year ended December 31, 2008 the note holder forgave this note. During the years ended December 31, 2009 and 2008, the Company accrued interest in the amount of $0 and $12,202, respectively.
Accounts Payable- related parties
The Company had a liability to Harris Lichtenstein for purchases made on behalf of the Company in the amount of $1,049 and $0 at December 31, 2009, and December 31, 2008, respectively.
The Company had a liability to Alexander Krichevsky for purchases made on behalf of the Company in the amount of $2,289 and $0 at December 31, 2009, and December 31, 2008, respectively.
The Company had a liability with a director for consulting fees payable in the amount of $525,000 and $330,000 at December 31, 2009 and December 31, 2008 respectively. .
The Company had a liability with a director for legal fees payable in the amount of $15,130 at December 31, 2008. This individual is no longer a director or a related party at December 31, 2009.
The Company had a liability to an officer for consulting fees payable of $171,200 and $0 at December 31, 2009 and 2008.
The Company had a liability to Harris Lichtenstein for accrued salary in the amount of $262,000 and $0 at December 31, 2009 and 2008, respectively.
The Company had a liability to Alexander Krichevsky for accrued salary in the amount of $269,500 and $0 at December 31, 2009 and 2008, respectively.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Note Receivable from related party
During the year ended December 31, 2008, the Company forgave a note receivable from Intrepid Technologies, inc which is owned by the Company’s Chief Executive Officer, Harris Lichtenstein.. in the amount of $10,000.
Options
The Company issued 1,500,000 options to purchase additional shares of common stock to executive officers of the Company in 2008.
The Company issued 750,000 options to purchase additional shares of common stock to a director of the Company in 2008.
The Company issued 100,000 options to purchase additional shares of common stock to a consultant during the year ended December 31, 2008. This individual is now an officer of the Company.
Common stock
The Company issued 150,000 shares of common stock to each the Chief Executive Officer and another officer of the Company in 2008.
The Company issued 1,055,507 shares of common stock to a director during the year ended December 31, 2008.
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Lease of office space
The Company leases office space in Houston, Texas under a month to month lease calling for annual rent of $8,400 per year.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
ASRI License Agreement
The Company entered into a license agreement (the “ASRI License Agreement”) with Allegheny-Singer Research Institute (“ASRI”) on February 3, 1999, as amended. The two parties agreed to an amended and restated agreement which became effective February 1, 2005. ASRI granted the Company rights to develop, manufacture, sell, rent or lease Licensed Products in the Field (each as defined in the ASRI License Agreement). The Company agreed to pay royalties of 1-2% of net sales of all products covered in the agreement. The ASRI License Agreement gives the Company the right to sublicense to third parties. The Company agreed to pay ASRI between 5-20% of the sublicense income depending on the nature of the sublicense.
The Company and ASRI agreed to further amend the ASRI License Agreement which amendment became effective February 1, 2007. As part of the amendment, ASRI granted the Company an extension on the first payment of licensing fees from the original due date of February 1, 2007 to May 1, 2007. During the three months ended March 31, 2008, the Company issued 119,053 shares of common stock previously accrued, and has issued a total of 145,042 shares of common stock under this agreement.
The Company and ASRI agreed to further amend the license agreement, which amendment became effective June 30, 2008. ASRI granted the Company an extension of the second payment of licensing fees from the original due date of February 1, 2008 to June 30, 2008. Thereafter, ASRI agreed to further extend from February 1, 2009 to August 1, 2009, the license fee of $50,000.
The Company has not made the payment of $50,000 that was due on August 1, 2009, nor has it received a formal extension from ASRI with respect thereto. The Company paid ASRI $15,000 toward this past due obligation and continues to engage in informal discussions with ASRI in an attempt to achieve a consensual payment arrangement to resolve its past due obligations under the ASRI License Agreement. Although no agreement has been reached with ASRI regarding these delinquent obligations, ASRI has not, as of the date of this report, declared a default under the ASRI License Agreement, after which we would have a contractual period in which to make such payment and cure the default before the ASRI License Agreement could be terminated. Should such a declaration of default be issued, there is no ass urance that the Company would have sufficient wherewithal to cure the default within the prescribed cure period or to otherwise stave off the termination of the ASRI License Agreement.
As of March 31, 2010, the Company has paid $115,000 in licensing fees under this agreement and has accrued the past due amount of $35,000, which is the balance due from August 1, 2009.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Columbia License Agreement
The Company entered into a license agreement (the “Columbia License Agreement”) with Columbia University (“Columbia”) that was effective February 1, 2005, pursuant to which Columbia granted the Company rights to develop, manufacture, sell, rent or lease Licensed Products in the Field (each as defined in the Columbia License Agreement). Columbia received a 5% equity stake in the Company. In addition, the Company paid a nonrefundable license fee of $30,000. The agreement provided that $15,000 was to be paid 60 days from the effective date of the agreement and the other $15,000 to be paid one year from the effective of the agreement. The Company agreed to reimburse Columbia for past expenses of $50,000, of which $25,000 has been paid and the other $25,000 is due after sales of the licensed products amount to $1,000,000. The Company agreed to pay royalties of 1-2% of net sales of all products covered in the agreement. The agreement gives the Company the right to sublicense to third parties. The Company agreed to pay Columbia between 10-20% of the sublicense income depending on the nature of the sublicense. The Company agreed to pay annual license maintenance fees according to the schedule below:
$10,000 during the fiscal year ended December 31, 2007
$20,000 during the fiscal year ending December 31, 2008
$35,000 during the fiscal year ending December 31, 2009
$50,000 on or before February 1, 2010; and $40,000 each year thereafter.
During the three months ended March 31, 2008, the Company issued 119,053 shares of common stock previously accrued, and has issued a total of 145,042 shares of common stock under the Columbia License Agreement.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
During the year ended December 31, 2008, the Company entered into an amendment to the Columbia License Agreement, pursuant to which Columbia terminated the Stock Purchase agreement. As a result, the Company cancelled 279,788 shares of common stock, which had been previously issued to Columbia. During the year ended December 31, 2008, the Company and Columbia agreed to further amend the Columbia License Agreement which amendment became effective June 30, 2008. The annual license maintenance fees have been amended to the schedule shown below:
$52,500 due on or before May 1, 2009
$75,000 due on or before May 1, 2010
$60,000 due on May 1 each year thereafter
During the fourth quarter 2009, Columbia and the Company agreed to a further amendment to the Columbia License Agreement, pursuant to which the $52,500 license maintenance fee due on May 1, 2009 was split into two equal payments of $26,250, the first of which continued to be due on May 1, 2009, and the second of which was extended to August 1, 2009. The Company has not made the required payments of $26,250 that were due, respectively, on May 1, 2009 and August 1, 2009, nor has it received a formal extension from Columbia with respect thereto. The Company has paid an additional $17,500 toward the May 1 payment and continues to engage in informal discussions with Columbia in an attempt to achieve a consensual payment arrangement to resolve its past due obligations under the Columbia License Ag reement. Although no agreement has been reached with Columbia regarding these delinquent obligations, Columbia has not, as of the date of this report, declared a default under the Columbia License Agreement, after which we would have a contractual period in which to make such payment and cure the default before the Columbia License Agreement could be terminated. Should such a declaration of default be issued, there is no assurance that the Company would have sufficient wherewithal to cure the default within the prescribed cure period or to otherwise stave off the termination of the Columbia License Agreement.
IGR
The Company entered into a licensing agreement with Institut Gustave Roussy (IGR) that was effective November 1, 2007 (the “IGR License Agreement”). IGR granted the Company rights to use the Licensed Patents, Licensed Material and Licensed Information (each as defined in the IGR License Agreement). The Company agreed to pay a one time license fee of €125,000, of which €25,000 was payable on the effective date, €50,000 was payable one year from effective date and €50,000 is due two years from effective date. In addition, the Company agreed to pay license maintenance fees according to the schedule below:
€10,000 during the fiscal year ending December 31, 2008
€20,000 during the fiscal year ending December 31, 2009
€35,000 during the fiscal year ending December 31, 2010
€50,000 on or before November 1, 2011 and €50,000 every year thereafter
During the year ended December 31, 2007, the Company has paid $36,087 (approximately €25,000).
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
In accordance with the above described schedule, on November 1, 2008, the Company was obligated to pay a total of €60,000 to IGR in license fees and maintenance fees, which payments were not made. The Company and IGR agreed to modify the payment schedule described above, so that the €10,000 maintenance fee that would otherwise have been due on November 1, 2008 matured in December 2008, at which time it was paid by the Company, and the license fee €50,000 otherwise due on November 1, 2008, became payable in two equal installments of €25,000 on March 1, 2009 and June 1, 2009, respectively.
Thereafter, IGR agreed to split the €25,000 payment that would otherwise have been due on March 1, 2009, into two payments, the first of which was in the amount of €15,000 and continued to be due in March 2009. The second payment of €10,000 became due no later than June 2009. The Company paid to IGR the €15,000 that was due in March 2009 and paid the remaining balance of the March 1 payment in August 2009. Subsequent to the period covered by this report, the Company paid IGR an additional $25,000 toward this past due obligation and continues to engage in informal discussions with IGR in an attempt to achieve a consensual payment arrangement to resolve its past due obligations under the IGR License Agreement. Although no agreement has be en reached with IGR regarding these delinquent obligations, IGR has not, as of the date of this report, declared a default under the IGR License Agreement, after which we would have a contractual period in which to make such payment and cure the default before the IGR License Agreement could be terminated. Should such a declaration of default be issued, there is no assurance that the Company would have sufficient wherewithal to cure the default within the prescribed cure period or to otherwise stave off the termination of the IGR License Agreement.
As of December 31, 2009, the Company has accrued $98,347, and has paid total licensing fees of $66,653, $19,653 of which was paid during the year ended December 31, 2009.
Ohio State Licensing Agreement
The Company entered into a licensing agreement (the “OSU License Agreement”) with Ohio State University (OSU) that was effective April 18, 2008, pursuant to which OSU granted the Company rights to use the Licensed Patents, Licensed Material and Licensed Information (each as defined in the OSU License Agreement). The Company agreed to pay a one time license fee of $300,000, of which $5,000 was paid on execution, $45,000 was paid on the first business day following the Phase 1 Data Review Period, $50,000 was paid three months after first payment, $100,000 is due November 15, 2008, $50,000 is due June 30, 2009, and $50,000 is due September 30, 2009. In addition, the Company agreed to reimburse OSU for its patent expenses according to the schedule below:
$12,738 payable in eight quarterly payments beginning October 1, 2009
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
With respect to the license fee of $100,000 which, under the OSU License Agreement, was scheduled to be paid on or before November 15, 2008, the parties previously reached an understanding whereby $10,000 was to be and was paid immediately, $40,000 was to be due on March 1, 2009 and the balance of $50,000 would be due on June 30, 2009. In addition, it is the Company’s position that the parties agreed to extend until September 30, 2009 the $50,000 license fee which, under the OSU Agreement, was scheduled to be paid on June 30, 2009, although OSU disputes that this amendment was effectuated.
As described in detail in the Company’s Form 8-K filed with the SEC on August 24, 2009, on August 17, 2009, OSU issued a formal notice (the “Notice”) to the Company of its alleged default under the OSU License Agreement based on the Company’s non-payment of certain license fees. The Company has acknowledged that certain license fees called for under the OSU License Agreement have not been paid. However, as reported by the Company in the aforementioned 8-K the Company believes that it has meritorious defenses and counterclaims to OSU’s claim of breach under the OSU License Agreement.
The OSU License Agreement provides that if the Company fails to make any required payment when due, OSU has the right to terminate the OSU License Agreement on 30 days’ written notice, which has been provided to the Company in the form of the Notice. Under Section 11.2 of the OSU License Agreement, any payments which, in fact, are due and owing as of the date of the Notice must be paid in full within 30 days of the receipt of the Notice, failing which the OSU License Agreement would terminate automatically. However, Section 11.5 of the OSU License Agreement provides that if the Company, as licensee, disputes an alleged default or breach, the 30 day cure period shall be tolled pending the resolution of the dispute. Such tolling is conditioned upon the posting of an appropriate bond and payment of all attorney fees and costs should OSU prevail. Once the dispute is resolved, either for or against the Company, the Company would have the remainder of the cure period to pay such amounts found to be due to avoid automatic termination of the OSU License Agreement.
The Company has provided formal notice to OSU that it disputes OSU’s characterization in the Notice that the Company’s non-payment of scheduled fees and interest constitutes a breach of the OSU License Agreement. On October 9, 2009, OSU advised the Company that it did not believe that the issues raised by the Company constituted a valid dispute that would call into play the tolling provisions of Section 11.5 and stated its view that it was considering the OSU License Agreement as terminated. While not waiving its right to assert that the License Agreement was terminated, OSU also demanded a bond from the Company in the amount of $450,371 under Section 11.5 of the OSU License Agreement pending the resolution of the dispute. Thereafter, the Company advised OSU of its position that, based on the nature of its claims against OSU, the provisions in the OSU License Agreement that purport to require a bond were not enforceable and that no bond was required. The Company further informed OSU that, in its view, if it were determined subsequently that a bond was required, the amount of any such bond would be substantially less than that demanded by OSU. As of the date of this report, no formal action has been taken by either OSU or the Company regarding the bond or the underlying dispute.
Omnimmune continues to engage in discussions regarding the voluntary termination of the OSU License Agreement on terms acceptable to both parties. The Company cannot predict the likelihood that this dispute will be resolved consensually, or if litigation ensues, of prevailing in its dispute with OSU, either with respect to the question of the need for a bond or the amount thereof, or as to the underlying dispute itself. However, if it were ultimately determined that the Company’s defenses and counterclaims lack merit and the dispute were resolved in favor of OSU, it is highly likely that the OSU License Agreement will be terminated. Also, if it were determined that a bond was required within 30 days of receipt of the Notice from OSU, or if a bond is required which the Company is unable to post, it is highly likely that the OSU License Agreement will be terminated. In addition, if OSU were to prevail in its position that the Company was in breach of the OSU License Agreement, the Company would also face an award or judgment for all past due payments, plus interest, legal fees and court costs. The Company believes that whether through litigation or settlement, and regardless of which party prevails, there is a substantial likelihood that the OSU License Agreement will be terminated, leaving the Company free to focus on its core diagnostic technologies.
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
The technology that is the subject of the OSU License Agreement relates exclusively to the Company’s vaccine technology and has no direct connection to the Company’s diagnostic and prognostic technologies that are under license from academic institutions other than OSU. Any termination of the OSU License Agreement, whether through a consensual understanding with OSU or through an adverse result following litigation, will have no effect on the Company’s portfolio of diagnostic and prognostic technologies, which are expected to be the Company’s primary focus going forward.
As of December 31, 2009, the Company has paid $110,000 in licensing fees under this agreement, plus an additional $200,000 in related payments under separate gift agreements with OSU. The Company has accrued unpaid license fees in the amount of $163,7385, which obligations are noted as being disputed.
Contingent warrants issuable
The Company has convertible notes payable outstanding which contain a provision for contingent warrants that are potentially issuable. Pursuant to the convertible notes agreements that warrants are issuable if the notes holder elects to convert at least 25% of the principal amount due, during the term of the note. According to the convertible note payable agreements, there are potentially 1,207,096 warrants issuable to purchase shares of common stock. Upon issuance these warrants are exercisable for 5 years at a price of $0.1781 per share.
NOTE 11- INCOME TAXES
The Company has adopted ASC 740-10-05 (formerly referred to as Financial Accounting Standard No. 109) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.
For income tax reporting purposes, the Company's aggregate unused net operating losses approximate $14,200,000 which expire through 2028, subject to limitations of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset related to the carry forward is approximately $4,970,000. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the earning history of the Company, it is more likely than not that the benefits will not be realized.
Components of deferred tax assets as of December 31, 2009 and 2008 are as follows:
| | | 2009 | | | 2008 | |
| Non Current: | | | | | | |
| Net operating loss carry forward | | $ | 7,455,000 | | | $ | 4,970,000 | |
| Valuation allowance | | | (7,455,000 | ) | | | (4,970,000 | ) |
| Net deferred tax asset | | $ | - | | | $ | - | |
OMNIMMUNE HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 12 – SUBSEQUENT EVENT
The Company has evaluated events subsequent to December 31, 2009 to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these consolidated financial statements were issued and has disclosed such items in this note, “Subsequent Events” hereinafter.
Anti-Dilution and Restructuring
As described in the Company’s Form 8-K filed on January 26, 2010, subsequent to the period covered by this Report, the Company entered into a Term Sheet for Debt Financing and Agreed Upon Restructuring with Margie Chassman (“Chassman”), pursuant to which (i) up to $500,000 in convertible debt financing may take place at a conversion price of $0.01 per share, of which $208,500 has been funded to date, (ii) the conversion price related to approximately $800,000 in existing unsecured indebtedness to Chassman was fixed at $0.01 per share, (iii) Chassman agreed to a 2-year lock-up with respect to her convertible debt and underlying stock, subject to agreed upon quarterly leakage amounts, and (iv) management and certain angel investors received limited anti-dilution protection that will result in the issuance to management of such additional shares as are required to maintain management’s specified collective ownership interest through the next $3.5 million in net financing and the angel investors to maintain their specified collective ownership interest through the initial round of up to $500,000 in convertible debt financing. Should the enti re $500,000 financing be fully subscribed to, or should the holder of the newly ratcheted convertible debt convert its shares, and based upon automatic adjustments to management to implement their anti-dilution protection, the number of additional shares of Common Stock of the Company that would be issued or become issuable would result in substantial dilution to existing holders of Common Stock many times in excess of the number of shares currently outstanding and could also cause the market price for our common stock to decline, perhaps significantly.
EXHIBIT INDEX
| Exhibit No. | | Description |
| 2.1 | | Agreement of Merger, dated as of August 6, 2008, by and between Roughneck Supplies, Inc. and Omnimmune Holdings, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed August 12, 2008.) |
| 2.2 | | Agreement of Merger and Plan of Reorganization, dated as of August 7, 2008, by and among the Omnimmune Holdings, Inc., Omnimmune Acquisition Corp., and Omnimmune Corp. (incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K filed August 12, 2008.) |
| 2.3 | | Certificate of Merger, effective August 6, 2008, merging Roughneck Supplies, Inc. with and into Omnimmune Holdings, Inc. (incorporated by reference to Exhibit 2.3 to our Current Report on Form 8-K filed August 12, 2008.) |
| 2.4 | | Articles of Merger, effective August 7, 2008, merging Omnimmune Corp. with and into Omnimmune Acquisition Corp. (incorporated by reference to Exhibit 2.4 to our Current Report on Form 8-K filed August 12, 2008.) |
| 3.1 | | Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed August 12, 2008.) |
| 3.2 | | Bylaws (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.1 | | Form of Executive Stock Option Agreement (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.2 | | Form of Investor Warrant (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.3 | | Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.4 | | Form of Warrant (1st Interim Bridge Note Offering) (incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.5 | | Form of Warrant (Phillip Costa, Jr. and Alejandro Romero) (incorporated by reference to Exhibit 4.5 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.6 | | Form of Warrant to Purchase Shares of Common Stock of Omnimmune Corp. (Frank E. McDaniel) (incorporated by reference to Exhibit 4.6 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.7 | | Form of Amended and Restated Convertible Demand Promissory Note with Warrant (incorporated by reference to Exhibit 4.7 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.8 | | Form of Amended and Restated Convertible Demand Promissory Note (incorporated by reference to Exhibit 4.8 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.9 | | Form of 10% Convertible Promissory Note (1st Interim Bridge Note Offering) (incorporated by reference to Exhibit 4.9 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.10 | | Form of 10% Convertible Promissory Note (2nd Interim Bridge Note Offering) (incorporated by reference to Exhibit 4.10 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.11 | | Convertible Promissory Note (Mark R. Wisner, P.C.) (incorporated by reference to Exhibit 4.11 to our Current Report on Form 8-K filed August 12, 2008.) |
| 4.12 | | Second Amended and Restated Convertible Demand Promissory Note issued September 19, 2008 to Margie Chassman |
| 10.1 | | Letter of Consent, effective as of January 31, 2009, to modifications of Unit Offering and Registration Rights Agreement of Omnimmune Holdings, Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed February 20, 2009.) |
| 10.2 | | Demand Promissory Note, dated October 31, 2008, issued to McDaniel & Henry, LLP (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed November 25, 2008.) |
| 10.3 | | Consulting Agreement, dated as of August 12, 2008, by and among Omnimmune Holdings, Inc., Becker Advisors, Ltd. and Howard Becker (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed August 15, 2008.) |
| Exhibit No. | | Description |
| 10.4 | | Stock Option Agreement, dated as of August 12, 2008, by and between Omnimmune Holdings, Inc. and Howard Becker (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed August 15, 2008.) |
| 10.5 | | Contingent Promissory Note (Harris A. Lichtenstein) (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.6 | | Contingent Promissory Note (Alexander Krichevsky) (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.7 | | Exclusive License Agreement, effective as of April 18, 2008, by and between Omnimmune Corp. and The Ohio State University Research Foundation (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.8 | | Amended and Restated License Agreement, dated as of February 1, 2005, between Allegheny-Singer Research Institute and Omnimmune Corp. (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.9 | | Amendment #1 to Amended and Restated License Agreement, effective as of January 31, 2007, between Allegheny-Singer Research Institute and Omnimmune Corp. (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.10 | | Termination Agreement, effective as of June 20, 2008, by and between Allegheny-Singer Research Institute and Omnimmune Corp. (incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.11 | | Second Amendment to Amended and Restated License Agreement, effective as of June 20, 2008, by and between Allegheny-Singer Research Institute and Omnimmune Corp. (incorporated by reference to Exhibit 10.7 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.12 | | License Agreement, dated as of February 1, 2005, between The Trustees of Columbia University in the City of New York and Omnimmune Corp. (incorporated by reference to Exhibit 10.8 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.13 | | First Amendment to License Agreement, dated March 29, 2005, between The Trustees of Columbia University in the City of New York and Omnimmune Corp. (incorporated by reference to Exhibit 10.9 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.14 | | Second Amendment to License Agreement, dated June 10, 2005, between The Trustees of Columbia University in the City of New York and Omnimmune Corp. (incorporated by reference to Exhibit 10.10 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.15 | | Amendment #3 to License Agreement, effective as of January 31, 2007, between The Trustees of Columbia University in the City of New York and Omnimmune Corp. (incorporated by reference to Exhibit 10.11 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.16 | | Master Termination Agreement, effective as of June 20, 2008, by and between The Trustees of Columbia University in the City of New York and Omnimmune Corp. (incorporated by reference to Exhibit 10.12 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.17 | | Fourth Amendment to License Agreement, dated as of June 20, 2008, by and between The Trustees of Columbia University in the City of New York and Omnimmune Corp. (incorporated by reference to Exhibit 10.13 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.18 | | Exclusive License Agreement, entered into as of November 1, 2007, by and among Institut Gustave Roussy, IGR&D, S.A., and Omnimmune Corp. (incorporated by reference to Exhibit 10.14 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.19 | | Registration Rights Agreement, dated as of August 7, 2008, by and among Omnimmune Holdings, Inc. and the stockholders of Omnimmune Holdings, Inc. parties thereto (incorporated by reference to Exhibit 10.15 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.20 | | Registration Rights Agreement, dated as of November 1, 2003, between Omnimmune Corp. and Phillip B. Costa, Jr. (incorporated by reference to Exhibit 10.16 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.21 | | Tag-Along Rights Agreement, effective as of November 1, 2003, by and among Harris A. Lichtenstein, Alexander Krichevsky, and certain shareholders and derivative owners of Omnimmune Corp. (incorporated by reference to Exhibit 10.17 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.22 | | Form of Lock-Up Agreement between the Company and executive officers and certain stockholders (incorporated by reference to Exhibit 10.18 to our Current Report on Form 8-K filed August 12, 2008.) |
| Exhibit No. | | Description |
| 10.23 | | Employment Agreement, entered into as of June 20, 2008, by and between Harris A. Lichtenstein and Omnimmune Corp. (incorporated by reference to Exhibit 10.19 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.24 | | Employment Agreement, entered into as of June 20, 2008, by and between Alexander Krichevsky and Omnimmune Corp. (incorporated by reference to Exhibit 10.20 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.25 | | Consulting Agreement, entered into as of March 1, 2008, between Omnimmune Corp. and Mark S. Germain (incorporated by reference to Exhibit 10.21 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.26 | | Gift Agreement entered into as of April 18, 2008, by and among The Ohio State University Medical Center, The Ohio State University Foundation and Omnimmune Corp. (incorporated by reference to Exhibit 10.22 to our Current Report on Form 8-K filed August 12, 2008.) |
| 10.27 | | Amendment and Pledge dated July 31, 2008, to Gift Agreement entered into as of April 18, 2008, by and among The Ohio State University Medical Center, The Ohio State University Foundation and Omnimmune Corp. (incorporated by reference to Exhibit 10.23 to our Current Report on Form 8-K filed August 12, 2008.) |
| 16.1 | | Letter from Schumacher & Associates, Inc. to the Securities and Exchange Commission dated August 19, 2008 (incorporated by reference to Exhibit 16.1 to our Current Report on Form 8-K filed September 5, 2008.) |
| 21.1 | | |
| 31.1 | | |
| 32.1 | | |
