| NOTE 3. Stockholders Deficit | We
have 500,000,000 authorized shares of Common Stock, $0.0001 par value, and 100,000,000 authorized shares of Series A Preferred
Stock, $0.0001 par value. As of June 30, 2017, 103,097,783 shares of Common Stock and 62,138,680 shares of Series A Preferred
Stock were issued and outstanding. The shares of Common Stock include the 31,766,503 shares held by the remaining shareholders
of AEPP prior to our acquisition of control on April 8, 2017. In addition, as of June 30, 2017, we have issued options to acquire
up to 7,200,000 shares of Common Stock, warrants to acquire up to 52,077,380 shares of Series A Preferred Stock and warrants to
acquire up to 19,188,280 shares of Common Stock. In addition, we may be obligated to issue an additional 14,000,000 shares of
Series A Preferred Stock in exchange for future clinical research services, and we may issue an additional 18,941,615 shares of
Common Stock if holders of promissory notes voluntarily convert. Series
A Preferred Stock Each
share of Series A Preferred Stock is currently convertible into one share of Common Stock. This conversion ratio is subject to
adjustment for certain dilutive events. If a liquidation event occurs, each share of Series A Preferred Stock is entitled to a
liquidation preference of $0.075 per share, and then each share will receive distributions ratably with the Common Stock based
on the then-existing conversion ratio. As of June 30, 2017, the liquidation preference of the outstanding shares of Series A Preferred
Stock is $4,660,401. The holders of Series A Preferred Stock have voting rights with the Common Stock based on the then-existing
conversion ratio, and also have certain separate voting rights. As long as at least 14,000,000 shares of Series A Preferred Stock
are outstanding, the holders of the Series A Preferred Stock have certain protective rights to nominate a director to the Board
of Directors, who shall have the right to approve certain transactions. In addition, as long as at least 14,000,000 shares of
Series A Preferred Stock are outstanding, the holders of the Series A Preferred Stock have the right to vote separately as a class
to approve certain amendments to the certificate of incorporation, any liquidation event, and certain issuances of capital stock.
The shares of Series A Preferred Stock may be converted into Common Stock at any time, but will automatically convert upon either
the written consent of the holders of the majority of such shares or the closing of a firm-commitment underwritten public offering
with gross proceeds of at least $10 million. GHC
liquidation rights On
January 24, 2007, the Company issued 24,000,000 shares of Common Stock to GHC in exchange for certain intellectual property and
a commitment by GHC to invest $3.0 million to fund the Companys operations. GHC retains the rights to the contributed intellectual
property in the event of a bankruptcy or liquidation of the Company. GHC has subordinated these rights in connection with the
Companys borrowings. Clinical
research arrangements and payment in equity During
August 2011, we agreed to pay 10% of the cost of services rendered by a non-US based clinical research organization through the
issuance of 333,340 shares of Common Stock at $0.15 per share. The $50,000 value of the Common Stock was recorded as a prepayment
of future services. As of June 30, 2017, and December 31, 2016, the unearned portion of the value of the equity issued, $43,090,
is reflected as prepaid services in the accompanying condensed balance sheets. During
January 2015, as part of a financing transaction described below, we agreed to pay the cost of services by a US-based clinical
research organization through the issuance of Series A Preferred Stock and warrants to acquire Series A Preferred Stock. The $450,000
value of the initial issuance of Series A Preferred Stock was recorded as a prepayment of future services. As of June 30, 2017,
and December 31, 2016, respectively, the unearned portion of the value of the equity issued reflected as a prepayment in the accompanying
condensed balance sheets was $319,999. Additionally, the clinical research organization may perform an additional $1,050,000 in
services, and receive an additional 14,000,000 shares of Series A Preferred Stock.
Texas
Emerging Technology Fund Investment The
Texas Emerging Technology Fund (TETF), an economic development affiliate of the State of Texas, is the majority
holder of the Companys Series A Preferred Stock as of June 30, 2017 and December 31, 2016. We agreed to certain conditions
related to the TETF investment, including certain representations and warranties. Our obligations to TETF generally expire on
September 30, 2020. In the event that we do not maintain our principal place of business or principal executive offices in Texas,
TETF may require us to repay the $3.9 million investment plus eight percent interest per annum, compounded annually, from the
date of the investment, essentially as a stipulated damage or penalty, and TETF will retain its shares of Series A Preferred Stock.
In the event of a breach of other conditions of the investment or representations and warranties, TETF may seek any remedies it
may have in law or equity. We can terminate our obligations to TETF at any time by the repayment of the amount invested plus 8%
interest calculated as described above. Warrants
to Acquire Series A Preferred Stock As
of June 30, 2017, and December 31, 2016, respectively, we have issued warrants to acquire up to 52,077,380 and 50,810,720 shares
of Series A Preferred Stock (the Preferred Warrants). The Preferred Warrants expire if not otherwise exercised at
various dates commencing on January 16, 2020 and ending May 12, 2022. The exercise price is $0.0825 per share, subject to adjustment
for certain dilutive transactions. The Preferred Warrants may be exercised on a cash-less basis. Warrants
to Acquire Common Stock As
of June 30, 2017, and December 31, 2016, respectively, we have issued warrants to acquire up to 19,188,280 and 0 shares of Common
Stock (the Common Warrants). The Common Warrants expire if not otherwise exercised on or prior to July 31, 2022.
The exercise price is $0.0825 per share, subject to adjustment for certain dilutive transactions. The Common Warrants may be exercised
on a cash-less basis. These Common Warrants were exchanged for a new class of warrants in August 2017. See Note 8. 2007
Stock Option Plan The
authority to make grants under the 2007 Stock Option Plan expired on December 31, 2016, and no further grants may be made. We
expect to adopt a new plan in 2017. As of June 30, 2017, and December 31, 2016, options to acquire 7,200,000 shares of Common
Stock were outstanding. These options are fully vested and are exercisable at an average price of $0.0093 per share. We recognize
stock-based compensation expense for equity awards over the requisite service period of each grant using the Black-Scholes option
pricing model to estimate the fair value of the stock options on the date of grant. There was no unamortized stock-based compensation
expense recognized related to stock options during any period in 2016 and 2017. | As of December 31, 2016, 71,153,300 shares
of Common Stock and 62,138,680 shares of Series A Preferred Stock were issued and outstanding. In addition, as of December 31,
2016, we have issued options to acquire up to 7,200,000 shares of Common Stock and warrants to acquire up to 50,810,720 shares
of Series A Preferred Stock. Series A Preferred Stock Each share of Series A Preferred Stock is currently
convertible into one share of Common Stock. This conversion ratio is subject to adjustment for certain dilutive events. If a liquidation
event occurs, each share of Series A Preferred Stock is entitled to a liquidation preference of $0.075 per share, and then each
share will receive distributions ratably with the Common Stock based on the then-existing conversion ratio. As of December 31,
2016, the liquidation preference of the outstanding shares of Series A Preferred Stock is $4,660,401. The holders of Series A Preferred
Stock have voting rights with the Common Stock based on the then-existing conversion ratio, and also have certain separate voting
rights. As long as at least 14,000,000 shares of Series A Preferred Stock are outstanding, the holders of the Series A Preferred
Stock have certain protective rights to nominate a director to the Board of Directors, who shall have the right to approve certain
transactions. In addition, as long as at least 14,000,000 shares of Series A Preferred Stock are outstanding, the holders of the
Series A Preferred Stock have the right to vote separately as a class to approve certain amendments to the certificate of incorporation,
any liquidation event, and certain issuances of capital stock. The shares of Series A Preferred Stock may be converted into Common
Stock at any time, but will automatically convert upon either the written consent of the holders of the majority of such shares
or the closing of a firm-commitment underwritten public offering with gross proceeds of at least $10 million. Common Stock On January 24, 2007, Oncolix issued 24,000,000
shares of Common Stock to GHC in exchange for certain intellectual property and a commitment by GHC to invest $3.0 million to
fund Oncolixs operations. GHC retains the rights to the contributed intellectual property in the event of a bankruptcy
or liquidation of the Company. Also on January 24, 2007, Oncolix issued 7,999,960 shares of Common Stock for $0.01 per share in
cash to four individuals (the Scientific Founders) in exchange for future services and sold 4,000,000 shares of
Common Stock for $0.0005 per share to the Chief Executive Officer (CEO). Oncolix retains the right to repurchase
1,000,000 shares until such time as the Company has received $10 million in capital contributions or income from licensing or
sales of our intellectual property. In connection with this purchase of stock at
formation, the Scientific Founders and CEO agreed to certain conditions, including the obligation to offer to other holders on
a pro rata basis any offer the individual receives to sell his/her Common Stock, the right to require other holders to sell their
pro rata shares in any sale of Common Stock by the individual. Additionally, in the event of a proposed sale of Common Stock by
the individuals, GHC was granted the right of first refusal to acquire the shares from the individuals. The individuals were also
granted certain rights to include their shares in registered public offerings, and agreed to certain restrictions on sales of Common
Stock following certain public offerings. Contract manufacturing arrangements and
payment in equity During August 2009, we engaged a non-US manufacturer
for the production of Prolanta and to provide certain quality assurance services. Our agreement ended in August 2016. Of
amounts earned by the manufacturer, approximately 58%, or $1.5 million, was payable in Oncolix Common Stock at $0.15 per share.
The remaining amounts due are payable in cash. As of December 31, 2016 and 2015, there are no prepaid services on the accompanying
balance sheets. Clinical research arrangements and payment
in equity During August 2011, we agreed to pay 10% of
the cost of services rendered by a non-US based clinical research organization through the issuance of 16,667 shares of Common
Stock at $0.15 per share. The $50,000 value of the Common Stock was recorded as a prepayment of future services. As of December
31, 2016 and 2015, the unearned portion of the value of the equity issued, $43,090, is reflected as prepaid services in the accompanying
balance sheets. During January 2015, as part of a financing
transaction described below, we agreed to pay the cost of services by a US-based clinical research organization through the issuance
of Series A Preferred Stock and warrants to acquire Series A Preferred Stock. The $450,000 value of the initial issuance of Series
A Preferred Stock was recorded as a prepayment of future services. As of December 31,2016 and 2015, respectively, the unearned
portion of the value of the equity issued reflected as a prepayment in the accompanying balance sheets was $319,999 and $450,000.
The clinical research organization may perform an additional $1,050,000 in services, and receive an additional $1,050,000 of Series
A Preferred Stock. Texas Emerging Technology Fund Investment During 2014, an agreement with an existing
investor, the Texas Emerging Technology Fund (TETF), an economic development affiliate of the State of Texas, was
amended and the TETF invested $300,000 through a bridge loan, which was converted into Series A Preferred Stock in 2015. Additionally,
the TETF purchased an additional $1,200,000 of Series A Preferred Stock in 2015. See the description of the sale of convertible
notes and the sale of Series A Preferred Stock herein. We agreed to certain conditions related to
the TETF investment, including certain representations and warranties. Our obligations to TETF generally expire on September 30,
2020. In the event that we do not maintain our principal place of business or principal executive offices in Texas, TETF may require
us to repay the $3.9 million investment plus eight percent interest per annum, compounded annually, from the date of the investment,
essentially as a stipulated damage or penalty, and TETF will retain the TETF Warrant or any stock acquired through the exercise
of the Warrant. In the event of a breach of other conditions of the investment or representations and warranties, TETF may seek
any remedies it may have in law or equity. We can terminate our obligations to TETF at any time by the repayment of the amount
invested plus 8% interest calculated as described above. Sale of convertible notes to affiliates Prior to 2015, GHC funded our continuing operations
by purchasing units consisting of convertible promissory notes (Bridge Notes) and warrants to acquire Common Stock
(Bridge Warrants). As of January 1, 2015, GHC had advanced $750,000 under such Bridge Notes. Prior to 2015, GHC and TETF also advanced funds
by purchasing units consisting of convertible promissory notes secured by the assets of Oncolix (Secured Bridge Notes)
and warrants to acquire Common Stock (Secured Bridge Warrants). As of January 1, 2015, GHC had acquired $435,000
and TETF had acquired $300,000 of such Secured Bridge Notes. The Bridge Notes and Secured Bridge Notes accrued
interest at the rate of 12% per annum, simple interest, until maturity. During the year ended December 31, 2015, we incurred $7,812
of interest under these notes. Pursuant to the terms of the notes, the principal
amount of the Bridge Notes and Secured Bridge Notes and accrued interest automatically converted into shares of Series A Preferred
Stock and warrants to acquire Series A Preferred Stock in January 2015. In addition, the holder of the notes received a warrant
to acquire additional shares equal to 30% of the shares received upon conversion of the principal amount of the notes. These additional
warrants expired in June 2015. Sale of Series A Preferred Stock and Warrants
in 2015 During January 2015, we issued 62,119,080 shares
of Series A Preferred Stock and warrants to acquire 62,119,080 shares of Series A Preferred Stock (the Preferred Warrants)
in exchange for $1,200,630 of cash, the conversion of $1,808,702 of indebtedness and accrued interest, and the agreement to provide
$450,000 of future clinical services. In connection with this transaction, 15,994,660 shares of Common Stock previously issued
to TETF were exchanged for 15,994,660 shares of Series A Preferred Stock. The stated price of the unit of one share of Series A
Preferred Stock and the Preferred Warrant was $0.075. The expenses related to the transaction were $23,941 and are deducted from
the proceeds of the offering in the accompanying Statements of Stockholders Deficit. The Preferred Warrants expire on January 16,
2020 if not otherwise exercised. The exercise price is $0.0825 per share, subject to adjustment for certain dilutive transactions.
The Preferred Warrants may be exercised on a cash-less basis. The purchase price of the units of Series A
Preferred Stock and the Preferred Warrant were allocated between the stock and warrant using a Black-Scholes pricing model. As
a result, the Preferred Warrants were ascribed a value of $854,455 at the date of the offering. Placement Agent Compensation Agreement In connection with the sale of convertible
notes in 2017 (see Note 8), we executed an agreement with a placement agent in 2016. The agreement provides that the agent will
receive a cash payment equal to 8 to 10% of the cash proceeds received, as well as 4% of the net exercise value upon exercise of
any warrants issued. The agent may also receive a warrant equal to 10% of the equity, including warrants, issued. In addition,
the agent and its employees were granted a warrant to acquire 2,000,000 shares of Series A Preferred Stock at $0.0825 per share.
The warrant expires if not exercised in January 2020, and has cashless exercise provisions. The warrant was issued in December
2016, and the estimated value of the warrant, $38,687, is reflected as a deferred offering cost in the accompanying balance sheets
as of December 31, 2016. 2007 Stock Option Plan The 2007 Stock Option Plan (the 2007
Plan) authorized the Company to award options to acquire up to 10,880,000 shares of Common Stock to employees, Directors
and consultants through December 31, 2016. There were no option awards granted, exercised or forfeited in 2015 as noted in the
following table.
Number of Shares Weighted Average Exercise Price Per Share Weighted average remaining life in years
Balance, December 31, 2014 7,820,000 $ 0.01 6.76
Balance, December 31, 2015 7,820,000 $ 0.01 5.76
Exercises (20,000 ) $ 0.05
Forfeitures (600,000 ) $ 0.015
Balance, December 31, 2016 7,200,000 $ 0.0095 4.40
Exercisable December 31, 2016 7,200,000 $ 0.0095 4.40 The authority to make grants under the 2007
plan expired on December 31, 2016, and no further grants may be made. We expect to adopt a new plan in 2017. We recognize stock-based compensation expense
for equity awards over the requisite service period of each grant using the Black-Scholes option pricing model to estimate the
fair value of the stock options on the date of grant. We do not currently have sufficient historical exercise or forfeiture data
on which to base an estimate of the expected term of each option, so we use the life of the grant and assume no forfeitures. Additionally,
we utilize an expected volatility of 200% because we do not have any trading experience. We base the risk-free interest rate used
in the Black-Scholes option pricing model on the implied yield currently available on U.S. Treasury securities. The following table summarizes the assumptions
we utilized for grants of options to acquire Common Stock:
Assumptions Employees Non-Employee Director Consultants
Expected life (years) 10 5-10 10
Expected volatility (%) 200 200 200
Risk-free interest rate (%) 2.0-3.39 0.93-3.39 2.0
Forfeiture rate (%) 0.0 0.0 0.0
Expected dividend yield 0.0 0.0 0.0
Assumed value per share of common stock on grant date $0.15 $0.15 $0.125 to $0.15 There were no independent determinations of
the valuation of our Common Stock on the date of each option grant. For accounting purposes, the price of the most recent sale
of Common Stock, regardless of the contractual date of such sale, was utilized, resulting in an assumed value of $0.15 per share.
Since the exercise price was substantially less than the assumed value per share of Common Stock on the grant date, the value of
each option granted was the approximate intrinsic value of each option. The most recent sales price of stock, Series A Preferred
Stock, was at $0.075 per unit of one share and a warrant to acquire one share as described above. There was no unamortized stock-based compensation
expense recognized related to stock options during the year ended December 31, 2016. We recognized stock-based compensation expense
of $172,808 in 2015. |
