UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

S            Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2015
 
£            Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____ to _____.
 
Commission File Number: 000-27239


TAPIMMUNE INC.
(Name of registrant in its charter)
NEVADA
 
88-0277072
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
50 N.Laura Street, Suite 2500
Jacksonville, FL 32202
 
 
98102
(Address of principal executive offices)
 
(Zip Code)
     
(206) 504 7267
   
(Issuer's telephone number)
   
     
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   S    No   £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   S    No   £
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):
 
£   Large accelerated filer                                                                                      £   Accelerated filer
 
£   Non-accelerated filer (Do not check                                                              S   Smaller reporting company
 
      if smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes   £    No   S
 
As of August 14, 2015, the Company had 46,140,771 shares of common stock issued and outstanding.
 

 
 
 
 

 


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements




Description
Page
   
Condensed Interim Financial Statements
 
Condensed Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014
3
   
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2015 and 2014 (Unaudited)
4
   
Condensed Consolidated Statement of Stockholders' Equity (Deficit) for the Six Months Ended June 30, 2015 (Unaudited)
5
   
Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2015 and 2014 (Unaudited)
6
   
Unaudited Notes to Condensed Consolidated Financial Statements
8
   



 
2

 


TAPIMMUNE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

   
June 30,
2015
   
December 31,
2014
 
   
(Unaudited)
       
ASSETS
 
Current Assets
           
  Cash
  $ 3,105,320     $ 141,944  
  Prepaid expenses and deposits
    142,590       82,504  
                 
    $ 3,247,910     $ 224,448  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
 
Current Liabilities
               
  Accounts payable and accrued liabilities
  $ 842,682     $ 693,362  
  Research agreement obligations
    492,365       492,365  
  Derivative liability – warrants
    11,673,347       9,415  
  Promissory notes
    52,942       52,942  
      13,061,336       1,248,084  
                 
COMMITMENTS AND CONTINGENCIES
 
               
Stockholders’ Equity (Deficit)
               
Convertible preferred stock, $0.001 par value — 10,000,000 shares authorized:
               
Series A, $0.001 par value, 1,250,000 shares designated, -0- shares issued and outstanding as of June 30, 2015 and December 31, 2014
    -       -  
Series B, $0.001 par value, 1,500,000 shares designated, -0- shares issued  and outstanding as of June 30, 2015 and December 31, 2014
    -       -  
Common stock, $0.001 par value, 500,000,000 shares authorized
               
38,038,921 shares issued and outstanding (2014 – 20,318,815)
    38,039       20,319  
Additional paid-in capital
    95,885,631       85,265,776  
Accumulated deficit
    (105,737,096 )     (86,309,731 )
      (9,813,426 )     (1,023,636 )
                 
    $ 3,247,910     $ 224,448  




The accompanying notes are an integral part of these condensed consolidated financial statements.

 
3

 

TAPIMMUNE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2015
   
2014
   
2015
   
2014
 
                         
Operating expenses:
                       
  General and administrative
  $ 936,887     $ 488,427     $ 1,355,673     $ 1,687,794  
  Research and development
    201,157       22,500       810,535       45,000  
 
Loss from Operations
    (1,138,044 )     (510,927 )     (2,166,208 )     (1,732,794 )
                                 
Other Income (Expense)
                               
  Accretion of interest on convertible
                               
  debt
    -       (8,660 )     -       (492,296 )
  Changes in fair value of derivative        liabilities
    (9,052,372 )     352,834       (9,005,932 )     14,537  
  Foreign exchange
    775       -       775       -  
  Gain (loss) on settlement of debt
    -       920,233       -       (26,743,197 )
  Inducement expense
    (8,256,000 )     -       (8,256,000 )     -  
                                 
Net Income (Loss) for the Period
  $ (18,445,641 )   $ 753,480     $ (19,427,365 )   $ (28,953,750 )
 
Other comprehensive income (loss)
                               
  Foreign exchange translation adjustment
    -       1,042       -       (207 )
 
TOTAL COMPREHENSIVE INCOME (LOSS)
  $ (18,445,641 )   $ 754,522     $ (19,427,365 )   $ (28,953,957 )
                                 
Basic and Diluted Net Income (Loss)
per Share
  $ (0.55 )   $ 0.05     $ (0.64 )   $ (2.57 )
                                 
Weighted Average Number of
Common Shares Outstanding
    33,525,656       15,523,016       30,584,794       11,250,240  
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 
4

 

TAPIMMUNE INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

   
Number of
shares
   
 
Common Stock
Amount
   
Additional
Paid In
Capital
   
Accumulated
Deficit
   
Total
 
            $       $       $       $    
Balance, December 31, 2014
    20,318,816       20,319       85,265,776       (86,309,731 )     (1,023,636 )
                                         
Private placement (net of finders’ fee of $173,000)
    12,319,995       12,320       2,278,694       -       2,291,014  
Fair value of warrants recognized as derivative liabilities
    -       -       (2,090,000 )     -       (2,090,000 )
Exercise of warrants
    5,000,000       5,000       2,495,000       -       2,500,000  
Fair value of warrants recognized on restructuring agreement
    -       -       7,688,000       -       7,688,000  
Stock- based compensation
    400,110       400       248,161       -       248,561  
Net loss
    -       -       -       (19,427,365 )     (19,427,365 )
Balance, June 30, 2015
    38,038,921       38,039       95,885,631       (105,737,096 )     (9,813,426


The accompanying notes are an integral part of these condensed consolidated financial statements.

 
5

 

TAPIMMUNE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)


   
Six Months Ended
June 30,
2015
   
 Six Months Ended
June 30,
2014
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
  $ (19,427,365 )   $ (28,953,750 )
Adjustments to reconcile net loss to
net cash from operating activities:
               
  Changes in fair value of derivative liabilities
    9,005,932       (14,537 )
  Inducement expense
    8,256,000       -  
  Loss on extinguishment of debt
    -       26,743,197  
  Non-cash interest and finance charges
    -       492,296  
  Stock based compensation
    248,561       799,075  
Changes in operating assets and liabilities:
               
  Prepaid expenses
    (60,086 )     -  
  Accounts payable and accrued liabilities
    149,320       322,277  
NET CASH USED IN OPERATING ACTIVITIES
    (1,827,638 )     (611,442 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
  Issuance of shares, net of issuance costs of $173,000
    2,291,014       583,000  
  Proceeds from loans payable
    -       500  
  Proceeds from exercise of warrants
    2,500,000       -  
NET CASH PROVIDED BY FINANCING ACTIVITIES
    4,791,014       583,500  
                 
INCREASE (DECREASE) IN CASH
    2,963,376       (27,942
                 
CASH, BEGINNING OF PERIOD
    141,944       48,589  
CASH, END OF PERIOD
  $ 3,105,320     $ 20,647  
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
6

 


TAPIMMUNE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

   
Six Months Ended
June 30, 2015
   
Six Months Ended
June 30, 2014
 
             
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES
 
             
Accounts payable settled in common stock
  $ 231,000     $ 683,000  
                 
Conversion of debt obligations into common stock:
               
Accrued interest
    -       476,000  
Convertible notes payable
    -       3,797,000  
Loans payable, related party
    -       42,000  
Promissory notes, related party
    -       210,000  
Due to related parties
    -       369,000  
Fair value derivative liability – conversion option at conversion
    -       708,000  
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


 
7

 

TAPIMMUNE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
(Unaudited)



NOTE 1: NATURE OF OPERATIONS
 
TapImmune Inc. (the “Company”), a Nevada corporation incorporated in 1992, is a biotechnology Company focusing on immunotherapy specializing in the development of innovative peptide and gene-based immunotherapeutics and vaccines for the treatment of oncology and infectious disease. Unlike other vaccine technologies that narrowly address the initiation of an immune response, TapImmune's approach broadly stimulates the cellular immune system by enhancing the function of killer T-cells and T-helper cells and by restoring antigen presentation in tumor cells allowing their recognition and killing by the immune system.

NOTE 2: BASIS OF PRESENTATION
 
The accompanying unaudited condensed financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet as of June 30, 2015, condensed consolidated statements of interim financials include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
 
The results for the statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2015 or for any future interim period. The condensed balance sheet at December 31, 2014 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2014, and notes thereto included in the Company’s annual report on Form 10-K.

NOTE 3: LIQUIDITY AND FINANCIAL CONDITION
 
The Company’s activities since inception have consisted principally of acquiring product and technology rights, raising capital, and performing research and development. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets; secure financing, develop a customer base; attract, retain and motivate qualified personnel; and develop strategic alliances. From inception, the Company has been funded by a combination of equity and debt financings.
 
The Company expects to continue to incur substantial losses over the next several years during its development phase. To fully execute its business plan, the Company will need to complete certain research and development activities and clinical studies. Further, the Company’s product candidates will require regulatory approval prior to commercialization. These activities may span many years and require substantial expenditures to complete and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company plans to meet its capital requirements primarily through issuances of debt and equity securities and, in the longer term, revenue from product sales.
 
As of June 30, 2015, the Company had cash and cash equivalents of approximately $3,105,000. Historically, the Company has net losses and negative cash flows from operations. The Company believes its current capital resources are not sufficient to support its operations. Management intends to continue its research efforts and to finance operations of the Company through debt and/or equity financings. Management plans to seek additional debt and/or equity financing through private or public offerings or through a business combination or strategic partnership. There can be no assurance that the Company will be successful in obtaining additional financing on favorable terms, or at all. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 
8

 


NOTE 4: SIGNIFICANT ACCOUNTING POLICIES
 
There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s annual report on Form 10-K, which was filed with the SEC on April 15, 2015.
 
Prior Period Reclassifications
 
The expense categories of the comparable prior period have been reclassified for comparability with the June 30, 2015 presentation. These reclassifications had no effect on previously reported net loss.

NOTE 5: POTENTIALLY DILUTIVE SECURITIES
 
Options, warrants, and convertible debt outstanding were all considered anti-dilutive for the six months ended June 30, 2015 and 2014, due to net losses.
 
The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented:

   
June 30,
 
   
2015
   
2014
 
Common stock options
   
465,000
     
65,000
 
Common stock warrants - equity treatment
   
71,869,000
     
185,000
 
Common stock warrants - liability treatment
   
12,514,000
     
49,000
 
Convertible notes
   
-
     
7,000
 
Potentially dilutive securities
   
84,848,000
     
306,000
 
 
NOTE 6: DERIVATIVE LIABILITY - WARRANTS AND DERIVATIVE LIABILITY – CONVERSION OPTION
 
A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s common stock purchase warrants that are categorized within Level 3 of the fair value hierarchy for the six months ended 2015 and 2014 is as follows:
 
Share Purchase Warrants
 
Weighted Average Inputs for the Period
 
Date of valuation
 
For the Six Months Ending June 30, 2015
   
For the Six Months Ending June 30, 2014
 
Fair market value of stock
  $ 0.96     $ 0.02  
Strike price
  $ 0.13     $ 5.84  
Volatility (annual)
    158.00 %     159.00 %
Risk-free rate
    1.63 %     1.08 %
Contractual term (years)
    4.60       3.58  
Dividend yield (per share)
    0 %     0 %

 
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.

 
9

 


 
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Derivative liability – warrants:
 

   
As of June 30, 2015
 
         
Fair Value Measurements
       
   
Fair Value
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Derivative liability - warrants
  $ 11,673,000       -       -     $ 11,673,000     $ 11,673,000  
Total
  $ 11,673,000       -       -     $ 11,673,000     $ 11,673,000  
 

   
As of December 31, 2014
 
         
Fair Value Measurements
       
   
Fair Value
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Derivative liability - warrants
  $ 9,000       -       -     $ 9,000     $ 9,000  
Total
  $ 9,000       -       -     $ 9,000     $ 9,000  
 
There were no transfers between Level 1, 2 or 3 during the three months ended June 30, 2015.

The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2015:
 
Derivative liability – warrants
Balance – December 31, 2014
$        9,000 
Additions during the period
2,658,000 
Change in fair value of warrant liability
9,006,000 
Balance – June 30, 2015
$ 11,673,000 
 
The valuation of warrants is subjective and is affected by changes in inputs to the valuation model including the price per share of common stock, the historical volatility of the stock price, risk-free rates based on U.S. Treasury security yields, the expected term of the warrants and dividend yield. Changes in these assumptions can materially affect the fair value estimate. The Company could ultimately incur amounts to settle the warrant at a cash settlement value that is significantly different than the carrying value of the liability on the financial statements. The Company will continue to classify the fair value of the warrants as a liability until the warrants are exercised, expire, or are amended in a way that would no longer require these warrants to be classified as a liability. Changes in the fair value of the common stock warrants liability are recognized as a component of other income (expense) in the Statements of Operations.

 
10

 
During 2014 the Company entered into numerous extinguishment agreements with various holders. As a result the derivative liability associated with the bifurcated conversion options were extinguished at the date of conversion and recorded in the loss on extinguishment in the Statement of Operations. The inputs utilized in the final mark to market were as follows:

Conversion Option
 
Weighted Average Inputs for the Period
 
Date of valuation
 
For the Quarter Ending June 30, 2015
   
For the Quarter Ending June 30, 2014
 
Strike price
  $ -     $ 1.03  
Volatility (annual)
    - %     199.00 %
Risk-free rate
    - %     0.05 %
Contractual term (years)
    -       0.24  
Dividend yield (per share)
    - %     - %
Fair value of Conversion Option at extinguishment
  $ -     $ 708,000  
 
NOTE 7: PROMISSORY NOTES, RELATED PARTY
 
The Company has outstanding promissory notes in the amount of $52,942 (December 31, 2014 - $52,942), of which $23,000 of promissory notes are from an officer and a director of the Company. The promissory notes bear no interest charges and have no fixed repayment terms.

NOTE 8: CAPITAL STOCK
 
2015 Share Transactions
 
Private placements
 
In January, 2015, the Company entered into a Securities Purchase Agreement with certain investors for the sale of 7,320,000 units at a purchase price of $0.20 per unit, for a total purchase price of approximately $1,250,000, net of finders’ fee and offering expenses of approximately $214,000. Each unit consisting of (i) one share of the Company’s Common Stock, (ii) one Series A warrant to purchase one share of common stock, (iii) one Series B warrant to purchase one share of common stock (iv) one Series C warrant to purchase one share of common stock, (v) one Series D warrant to purchase one share of common stock, and (vi) one Series E warrant to purchase one share of common stock (the Series A, B, C, D and E warrants are hereby collectively referred to as the “January 2015 Warrants”). Series A warrants are exercisable at $1.50 per share, with a five year term. Series B warrants are exercisable at $0.40 per share, with a six month term. Series C warrants are exercisable at $1.00 per share, with a five year term. Series D warrants are exercisable at $0.75 per share only if and to the extent that the Series B warrants are exercised, with a five year term from the date that the Series B warrants are exercised. Series E warrants are exercisable at $1.25 per share, only if and to the extent that the Series C warrants are exercised, with a five year term from the date that the Series C warrants are exercised.
 
Pursuant to a placement agent agreement, the Company agreed to issue warrants to purchase 366,000 common shares with substantially the same terms as the January 2015 Warrants.
 
The Series A warrants were issued with price reset features. The fair value of these warrants was determined to be $1,346,000 and recognized as a derivative liability.
 
The fair value of Series B, C, D & E warrants was determined to be $4,635,000 and was included within equity.
 
In March, 2015, the Company entered into a Securities Purchase Agreement with certain accredited investors for the sale of 5,000,000 units at a purchase price of $0.20 per unit, for a total purchase price of approximately $950,000, net of finders’ fee and offering expenses of approximately $50,000. Each unit consisting of (i) one share of the Company’s Common Stock, (ii) one Series A warrant to purchase one share of common stock, (iii) one Series B warrant to purchase one share of common stock (iv) one Series C warrant to purchase one share of common stock, (v) one Series D warrant to purchase one share of common stock, and (vi) one Series E warrant to purchase one share of common stock (the Series A, B, C, D and E warrants are hereby  collectively referred to as the “March 2015 Warrants”). The March 2015 Warrants have substantially the same terms as the January 2015 Warrants.
 
Pursuant to a placement agent agreement, the Company agreed to issue warrants to purchase 125,000 common shares with substantially the same terms as the March 2015 Warrants.

 
11

 
The Series A warrants were issued with price reset features. The fair value of these warrants was determined to be $744,000 and recognized as a derivative liability.
 
The fair value of Series B, C, D & E warrants was determined to be $2,588,000 and was included within equity.
 
In May 2015, the Company entered into a restructuring agreement with the investors of the January 2015 and March 2015 private placements, where:
 
 
·
The exercise price of the Series A warrants was changed from $1.50 per warrant to $0.10 per warrant,
 
 
·
The exercise price of Series B warrants was changed from $0.40 per warrant to $0.20 per warrant,
 
 
·
Each warrant of Series B existing prior to the restructuring agreement was replaced with two warrants of such series,
 
 
·
The exercise price of the Series C warrants was changed from $1.00 per warrant to $0.50 per warrant, and
 
 
·
Each warrant of Series C existing prior to the restructuring agreement was replaced with two warrants of such series.
 
As a result of the restructuring agreement, the Company issued an additional 12,320,000 Series B warrants and 12,320,000 Series C Warrants.
 
The incremental fair value of Series A warrants due to repricing was determined to be $568,000 and recognized as a derivative liability with a corresponding inducement expense in the Statement of Operations.
 
The incremental fair value of Series B and Series C warrants due to repricing and increasing the number of warrants was determined to be $7,688,000. The fair value of these warrants was recognized as additional paid-in capital with a corresponding inducement expense in the Statement of Operations.
 
The fair value was estimated immediately prior to the date of the restructuring agreement using the Black-Scholes option pricing model with the following weighted average assumptions:
 
Share Purchase Warrants
 
Weighted Average Inputs
Date of valuation
 
May 28, 2015
 
Strike price
  $
0.40 – 1.00
 
Volatility (annual)
   
127.00 – 155.00
%
Risk-free rate
   
.01 - 1.51
%
Contractual term (years)
   
.13 - 4.79
 
Dividend yield (per share)
   
0
%
 
The fair value was estimated immediately after, on the date of the restructuring agreement, using the Black-Scholes option pricing model with the following weighted average assumptions:
 
Share Purchase Warrants
 
Weighted Average Inputs
Date of valuation
 
May 28, 2015
 
Strike price
  $
0.20 – 0.50
 
Volatility (annual)
   
127.00 – 155.00
%
Risk-free rate
   
.01 - 1.51
%
Contractual term (years)
   
.29 - 4.79
 
Dividend yield (per share)
   
0
%
 

 
12

 
 
Share Purchase Warrants
 
During the six months ended June 30, 2015, a warrant holder exercised 5,000,000 of Series C warrants at $0.50 per warrant for a total of $2,500,000.
 
A summary of the Company’s share purchase warrants as of June 30, 2015 and changes during the period is presented below:

   
Number of
Warrants
   
Weighted Average
Exercise Price
   
Weighted Average
Remaining Life
 
                   
Balance, December 31, 2014
    2,659,417       1.83       4.15  
  Issued
    86,730,975       0.54       3.25  
  Exercised
    (5,000,000 )     0.50       -  
  Extinguished or expired
    (7,500 )     50.00       -  
Balance, June 30, 2015
    84,382,892     $ 0.54       3.26  
 
Stock Compensation Plan
 
On October 14, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan”) which supersedes and replaces the 2007 Stock Plan. The 2009 Plan allows for the issuance of up to 10,000,000 common shares. Options granted under the Plan shall be at prices and for terms as determined by the Board of Directors.
 
On February 10, 2015, the Company granted 250,000 stock options at an exercise price of $0.145 per share, of which, 33,333 vested on May 31, 2015 and the remaining vesting monthly over a nine month period, to a consultant of the Company. The term of the options is five years. The fair value of the new grant was estimated at $33,000, or $0.133 per option, using the Black-Scholes Option Pricing Model with a risk free interest rate of 1.52%, a dividend yield of 0%, volatility of 154.6%, and life of 5 years. The expensed portion of the value of these options during the six months ended June 30, 2015 was $7,635, which was recorded as stock based consultant compensation.
 
On March 6, 2015, the Company granted 150,000 stock options at an exercise price of $0.20 per share, vesting monthly over a twenty four month period, to a director of the Company. The term of the options is five years. The fair value of the new grant was estimated at $29,000, or $0.194 per option, using the Black-Scholes Option Pricing Model with a risk free interest rate of 1.70%, a dividend yield of 0%, volatility of 155.2%, and life of 5 years. The expensed portion of the value of these options during the six months ended June 30, 2015 was $4,850, which was recorded as stock based management compensation.
 
Share purchase options
 
A summary of the Company’s stock options as of June 30, 2015 and changes during the period is presented below:
 
   
Number of
Options
   
Weighted Average
Exercise Price
   
Weighted Average
Remaining Life
 
                   
Balance, December 31, 2013
    65,430       18.00       5.04  
  Issued
    -       -       -  
  Cancelled/Forfeited
    -       -       -  
                         
Balance, December 31, 2014
    65,430       18.00       4.04  
  Issued
    400,000       0.17       4.64  
Balance, June 30, 2015
    465,430     $ 2.62       4.49  
 
At June 30, 2015, the intrinsic value of the vested options was equal to $66,000 (2014 - $nil).
 
A summary of the status of the Company’s unvested options as of June 30, 2015 is presented below:
 
   
Number of
Shares
   
Weighted Average
Grant-Date
Fair Value
 
             
Unvested, December 31, 2014
    278     $ 18.00  
  Granted
    400,000       0.16  
  Vested
    (82,685 )     0.21  
  Cancelled
    -       -  
                 
Unvested, June 30, 2015
    317,593     $ 0.16  


 
13

 
 
NOTE 9: SUBSEQUENT EVENTS
 
 
1.
Between July 16, 2015 and August 13, 2015, holders of the Series B warrant exercised 7,890,000 of the Series B Warrants registered under our recent registration statements on Form S-1 resulting in proceeds of $1,578,000 to the Company.
 
 
2.
On July 21, 2015, the Company entered into a License and Assignment Agreement with the Mayo Foundation for Medical Education and Research (“Mayo Foundation”) pursuant to which we acquired certain intellectual property rights from the Mayo Foundation for the development and commercialization of certain products, methods and processes property relating to a folate receptor alpha immunotherapeutic vaccine comprised of a set of unique peptide epitopes targeting breast, lung and ovarian cancer. The Mayo Foundation granted us a license (with a right to sublicense) on a worldwide basis to make, sell and use products for therapeutic use against breast, ovarian, lung and other cancers that express folate receptor alpha.  This license is an exclusive license for products that are based on the intellectual property and non-exclusive for products that are based on Mayo Foundation know–how and materials. The intellectual property that is being licensed includes (i) U.S. patent application numbers 12/303,054 and 13/202,236, (ii) U.S. patent number 8,486,412 and 8,858,952 and provisionals, (iii) divisionals including 13/917,410 and (iv) continuations including 14/484,057. The Mayo Foundation granted this license in exchange for an initial upfront payment of $350,000, which was made on July 21, 2015.  Upon the payment of the initial upfront payment, the Mayo Foundation assigned to us IND # 14546, and we assumed all responsibility and liability for this investigative new drug application. In addition to the initial upfront payment, we are to pay additional upfront payments, an annual license maintenance fee, milestone fees and royalty fees (which will be subject to a minimum annual royalty fee once royalty fees are due).
 
  3.
On July 31, 2015, the Company issued to its counsel 118,450 shares of common stock for legal services rendered through January 21, 2015. Such shares were authorized to be issued on January 23, 2015, but were not issued until July 31, 2015.
 
 
4.
 
On August 10, 2015, the Company issued 50,000 shares of common stock as full settlement of a dispute with a marketing consultant that provided services to the Company in 2014 and 2015.

 
 
 
 
 
 
 
 
 

 
14

 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, that involve risks and uncertainties. All statements other than statements relating to historical matters including statements to the effect that we “believe”, “expect”, “anticipate”, “plan”, “target”, “intend” and similar expressions should be considered forward-looking statements. Our actual results could differ materially from those discussed in the forward-looking statements as a result of a number of important factors, including factors discussed in this section and elsewhere in this quarterly report on Form 10-Q, and the risks discussed in our other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as the date hereof. We assume no obligation to update these forward-looking statements to reflect events or circumstance that arise after the date hereof.
 
As used in this quarterly report: (i) the terms “we”, “us”, “our”, “TapImmune” and the “Company” mean TapImmune Inc. and its wholly owned subsidiary, GeneMax Pharmaceuticals Inc. which wholly owns GeneMax Pharmaceuticals Canada Inc., unless the context otherwise requires; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.
 
The following should be read in conjunction with our unaudited consolidated interim financial statements and related notes for the three months ended June 30, 2015 included in this quarterly report, as well as our Annual Report on Form 10-K for the year ended December 31, 2014.
 
Company Overview
 
Our Cancer Vaccines
 
TapImmune is a biotechnology company focusing on immunotherapy specializing in the development of innovative peptide and gene-based immunotherapeutics and vaccines for the treatment of cancer and infectious disease. The Company combines a set of proprietary technologies to improve the ability of the cellular immune system to destroy diseased cells. These are peptide antigen technologies and DNA expression technologies, Polystart™ and TAP.
 
To enhance shareholder value and taking into account development timelines, the Company plans to focus on advancing its clinical programs including our HER2/neu peptide antigen program and our Folate Receptor Alpha program for breast and ovarian trials into Phase II. In parallel, we plan to complete the preclinical development of our Polystart™ technology and to continue to develop the TAP-based franchise as an integral component of our prime-and-boost vaccine methodology.
 
 The Immunotherapy Industry for Cancer
 
Immunotherapy has become the most rapidly growing sector in the pharmaceutical and biotech industry. The approval and success of checkpoint inhibitors Yervoy and Opdivo (Bristol Myers Squibb) and Keytruda (Merck) together with the development of CAR T-cell therapies (Juno, Kite) has provided much momentum in this sector. In addition, new evidence points to the increasing use of combination immunotherapies for the treatment of cancer. This has provided greater opportunities for the successful development of T-cell vaccines in combination with other approaches.
 
Products and Technology in Development
 
Clinical
 
Phase I Human Clinical Trials – HER2/neu+ Breast Cancer – Mayo Clinic
 
Patient dosing has been completed. Final safety analysis on all the patients treated is complete and shown to be safe. In addition, 19 out of 20 evaluable patients showed robust  T-cell immune responses to the antigens in the vaccine composition providing a solid case for advancement to Phase II in 2015. An additional secondary endpoint incorporated into this Phase I Trial will be a two year follow on recording time to disease recurrence in the participating breast cancer patients.
 
For Phase I(b)/II studies, we plan to add a Class I peptide, licensed from the Mayo Clinic (April 16, 2012), to the four Class II peptides. Management believes that the combination of Class I and Class II HER2/neu antigens, gives us the leading HER2/neu vaccine platform. Therefore a key goal in 2015 is to progress the HER2/neu vaccine towards the above mentioned Phase 1(b)/II Clinical Trial.

 
15

 
 
Phase I Human Clinical Trials – Folate Alpha Breast and Ovarian Cancer – Mayo Clinic
 
Folate Receptor Alpha is expressed in over 80% of triple negative breast cancers,  and in addition, over 90% of ovarian cancers, for which the only treatment options are surgery and chemotherapy, leaving a very important and urgent clinical need for a new therapeutic. Time to recurrence is relatively short for these types of cancer and survival prognosis is extremely poor after recurrence. In the United States alone, there are approximately 30,000 ovarian cancer patients and 40,000 triple negative breast cancer patients newly diagnosed every year.
 
A 24 patient Phase I clinical trial has been completed. The vaccine is well tolerated and safe and 20 out of 21 evaluable patients showed positive immune responses providing a strong rationale rational for progressing to phase 2 trials. GMP manufacturing for Phase II trials is underway and final analyses of clinical plans are near completion. TapImmune has now converted the exclusive license option into a full License Agreement.
 
Preclinical
 
Polystart™
 
The Company has converted the previously filed U.S. Provisional Patent Application on Polystart™ into a full Patent Application, and will extend technology constructs as boost strategies for the current clinical programs in breast and ovarian cancer.

Current State of the Company
 
TapImmune is a clinical-stage immunotherapy company specializing in the development of innovative peptide and gene-based immunotherapeutics and vaccines for the treatment of cancer. The Company now has multiple clinical trials underway at the Mayo Clinic in Rochester, MN. In addition to our own sponsored clinical trials, a new grant-funded breast and ovarian cancer trial was started by Mayo using the same Folate Alpha Receptor peptides to which we have the exclusive commercial rights. Our development pipeline is extremely strong and provides us the opportunity to continue to expand on collaborations with leading institutions and corporations.
 
In Q1 and Q2 2015, we strengthened our balance sheet by raising additional $4.8 M in working capital giving us confidence in our ability to continue developing our products on the path to commercialization. The structure of this financing gives us additional opportunities to raise additional capital through the exercise of short-term and long-term warrants. The strength of our science and development approaches is becoming more widely appreciated, particularly as our clinical program has now generated positive interim data on both clinical programs in Breast and Ovarian Cancer. Also, we are pleased to report that our clinical programs are seeing positive outcomes and we expect to present more detailed findings at major symposia toward the end of the year.
 
We continue to be focused on our entry into Phase II Triple Negative Cancer Trials including application for Fast Track & Orphan Drug Status as well as planning for Phase II HER2/neu Breast Cancer Trials.
 
We will also produce new PolyStart constructs, in-house, to facilitate collaborative efforts in our current clinical indications and those where others have already indicated interest in combination therapies.
 
In addition, we will continue to work on deficit reduction and capital improvement in order to make the required benchmarks for an uplisting to the NASDAQ or another major US exchange. To that end we are also anticipating the result of grant applications submitted early this year.
 
Together, these fundamental programs and corporate activities have positioned TapImmune extremely well to capitalize on the acceptance of immunotherapy as a leading therapeutic strategy in cancer and infectious disease resulting in exploding valuations in the market.
 
TapImmune’s Pipeline
 
The Company has a deep pipeline of potential blockbuster immunotherapies under development. Two of the clinical programs are completing Phase I studies and are expected to advance to Phase II in 2015. These are major inflection and valuation events, and we believe that, in light of these assets, the Company is significantly undervalued. Over the past year a number of highly visible transactions and billion dollar acquisitions have taken place that validate the work we are doing. We believe that, if our treatment successfully reaches commercialization, it will be applicable to 50% of the HER2/neu Breast Cancer market, which is a $21 billion annual market. Lastly, we further believe that if our Ovarian Cancer treatment reaches commercialization, it will be applicable to 95% of the market which Decision Resources, one of the world’s leading research firms for pharmaceuticals and healthcare, believes will triple in the next 10 years to at least $1.5 billion annually.
 
In addition to the exciting clinical developments, our peptide vaccine technology may be coupled with our recently developed in-house Polystart™ nucleic acid-based technology designed to make vaccines significantly more effective by producing four times the required peptides for the immune systems to recognize and act on. Our nucleic acid-based systems can also incorporate “TAP” which stands for Transporter associated with Antigen Presentation. Our technologies are also widely applicable to the treatment of emerging viral threats and pandemics. In particular, our highly versatile PolyStart technology has application in these areas. With respect to validation of our technologies, it is important to note that the majority of our technologies have been published in leading peer-reviewed journals. The timing of such publications is consistent with the filing of patents.

 
16

 
 
A list of publications on our TAP technology can be found on our website ( www.tapimmune.com ). Publication of our data on PolyStart will occur after current patent filings have been completed.
 
A key component to success is having a comprehensive patent strategy that continually updates and extends patent coverage for key products. It is highly unlikely that early patents will extend through ultimate product marketing, so extending patent life is an important strategy for ensuring product protection. TapImmune has four patent estates, details of which can be found on our website: www.tapimmune.com
 
While the pathway to successful product development takes time, we believe we have put in place significant resources in technical and corporate fundamentals for success. The strength of our product pipeline and access to leading scientists and institutions gives us a unique opportunity to make a major contribution to global health care.
 
A number of early stage billion dollar pharma acquisitions and recent IPOs have highlighted the growing interest in investment in immunotherapy space. Looking at our current valuation and those of our peers and considering our pipeline of clinical programs with very near-term advancements and the value inflections those represent, we believe this is an excellent opportunity and presents exceptional entry point for those that have not yet become a shareholder.
 
With respect to the broader market, a major driver and positive influence on our activities has been the emergence and general acceptance of the potential of a new generation of immunotherapies that promise to change the standard of care for cancer. The immunotherapy sector has been greatly stimulated by the approval of Provenge® for prostate cancer and Yervoy™ for metastatic melanoma, progression of the areas of checkpoint inhibitors and adoptive T-cell therapy and multiple approaches reaching Phase II and Phase III status.
 
We believe that through our combination of technologies, we are well positioned to be a leading player in this emerging market. It is important to note that many of the late stage immunotherapies currently in development do not represent competition to our programs, but instead offer synergistic opportunities to partner our antigen based immunotherapeutics, Polystart™ and/or TAP expression systems. Thus, the use of naturally processed T-cell antigens discovered using samples derived from cancer patients plus our Polystart™ expression technology to improve antigen presentation to T-cells could not only produce an effective cancer vaccines in its own right but also to enhance the efficacy of other immunotherapy approaches such as CAR-T and PD1 inhibitors for example.
 
Consistent with our corporate development and advancement of clinical trials we have made significant additions to our personnel through appointments of a Consultant Medical Director (Patrick Yeramian, M.D.) and a Consultant Regulatory Director (Dr. Stacy Suber). In addition, we have appointed Dr. John Bonfiglio as a Corporate Strategic Advisor and also to our Board of Directors and have appointed David Lasko-Pooley to our Board of Directors
 
On the technology and product pipeline side, management believes that the company is fundamentally strong and poised to be a leading company in a highly attractive, multi-billion dollar and expanding market, a position reinforced by our recruitment of top-class managers, advisors and investors who all share our vision.
 
Results of Operations
 
In this discussion of the Company’s results of operations and financial condition, amounts, other than per-share amounts, have been rounded to the nearest thousand dollars.
 
Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

We recorded a net loss of $18,446,000 or ($0.55) per share during the three months ended June 30, 2015 compared to net income of $753,000 or $0.05 per share for the three months ended June 30, 2014.
 
Operating costs increased to $1,138,000 during the three months ended June 30, 2015 compared to $511,000 in the prior period. Significant changes in operating expenses are outlined as follows:
 
 
·
General and administrative expenses increased to $937,000 during the three months ended June 30, 2015 from $488,000 during the prior period. The increase was primarily due to increased investor relations activities and higher legal fee during the three months ended June 30, 2015 compared to the prior period. The decrease in non-cash consulting fees from the prior year was due to the Company curtailing its business development activities in the current year.
 
 
·
Research and development costs during the three months ended June 30, 2015 were $201,000 compared to $23,000 during the prior period. This was due to the Company’s plan to exercise its option to acquire Mayo Clinic technology as part of an agreement entered into in March 2014 and increased in in-house research activity in the current period.
 
The weighted average number of shares outstanding was 33,525,656 for the three months ended June 30, 2015 compared to 15,523,016 for the prior year.

 
17

 
 
Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

We recorded a net loss of $19,427,000 or ($0.64) per share during the six months ended June 30, 2015 compared to $28,954,000 or ($2.57) per share for the six months ended June 30, 2014.
 
Operating costs increased to $2,166,000 during the six months ended June 30, 2015 compared to $1,733,000 in the prior period. Significant changes in operating expenses are outlined as follows:
 
 
·
General and administrative expenses decreased to $1,356,000 during the six months ended June 30, 2015 from $1,688,000 during the prior period. The decrease was primarily due to decrease in non-cash consulting fees paid as stock-based compensation during the six months ended June 30, 2015 compared to the prior period. The decrease in non-cash consulting fees from the prior year was due to the Company curtailing its business development activities in the current year.
 
 
·
Research and development costs during the six months ended June 30, 2015 were $811,000 compared to $45,000 during the prior period. This was due to the Company exercising its option to acquire Mayo Clinic technology as part of an agreement entered into in March 2014 and increased in in-house research activity in the current period.
 
The weighted average number of shares outstanding was 30,584,794 for the three months ended June 30, 2015 compared to 11,250,240 for the prior year.
 
Liquidity and Capital Resources
 
The following table sets forth our cash and working capital as of June 30, 2015 and December 31, 2014:
 
   
June 30, 2015
   
December 31, 2014
 
             
Cash reserves
  $ 3,105,000     $ 142,000  
Working capital (deficit)
  $ (9,813,000 )   $ (1,024,000 )

 
Subject to the availability of additional financing, we intend to spend approximately $7,500,000 over the next twelve months in carrying out our plan of operations. At June 30, 2015, we had $3,105,000 of cash on hand and a working capital deficit of $9,813,000. In January and March 2015, we raised approximately $2.33 million in private and brokered placements and another $2,500,000 in warrants exercised in May 2015.
 
Various conditions outside of our control may detract from our ability to raise additional capital needed to execute our plan of operations, including overall market conditions in the international and local economies. We recognize that the United States economy has suffered through a period of uncertainty during which the capital markets have been depressed, and that there is no certainty that these levels will stabilize or reverse despite the optics of an improving economy. Any of these factors could have a material impact upon our ability to raise financing and, as a result, upon our short-term or long-term liquidity.
 
Net Cash Used in Operating Activities
 
Net cash used in operating activities during the six months ended June 30, 2015 was $1,828,000 compared to $611,000 during the prior period. We had no revenues during the current or prior periods. Operating expenditures, excluding non-cash interest and stock-based charges during the current period primarily consisted of consulting and management fees, office and general expenditures, and professional fees.
 
Net Cash Provided by Financing Activities
 
Net cash provided by financing activities during the six months ended June 30, 2015 was $4,791,000 compared to $584,000 during the prior period. Current period financing consisted of proceeds from private placements and warrant exercises while prior period financing relates to proceeds from convertible notes.
 
As of June 30, 2015, we anticipate that we will need significant financing to enable us to meet our anticipated expenditures for the next twelve months, which are expected to be in the range of $7,500,000 assuming a single Phase 2 clinical trial.
 
Going Concern
 
We have no sources of revenue to provide incoming cash flows to sustain our future operations. As outlined above, our ability to pursue our planned business activities is dependent upon our successful efforts to raise additional financing. These factors raise substantial doubt regarding our ability to continue as a going concern. Our condensed consolidated financial statements have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. As at June 30, 2015, we had accumulated losses of $105,737,000 since inception. Our financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 
18

 
 
Off-Balance Sheet Arrangements
 
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes of financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
 
Item 4. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.
 
It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals.
 
Changes in Internal Control Over Financial Reporting
 
There have been no changes in our internal control over financial reporting during the six months ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
19

 
 
PART II – OTHER INFORMATION
 
Item 1. Legal Proceedings
 
Consultant Litigation
 
In May 2012, we issued what is now equal to 112,000 shares of our common stock to two consultants. We contested the validity of the issuances of this common stock based on our belief that the consultants did not perform the services agreed to under their respective consulting agreements. While we initially were able to delay the sale of the contested shares, we were not successful in clawing back the contested shares. A claim for perceived damages from Michael Gardner (one of the consultants) suffered as a result of our contesting the issuance under the consulting agreements has been filed in the Supreme Court of New York. He has based his claim for damages on the difference between market price at the time we were able to delay the sale of his shares and the market price at the time of the sale of all of his shares. As the result of a judicial decision in New York he received a bond payment of ($100,000) that the Company had used to secure a temporary restraining order against the issuance of stock to him.
 
On July 18, 2014, the International Center for Dispute Resolution International Arbitration Tribunal issued a Final Award in the matter of TapImmune Inc. vs. Michael Gardner awarding TapImmune $196,204 plus post-award interest at a rate of 9% per year. This award stemmed from the dispute discussed above with Mr. Gardner regarding the May 2012 consulting agreement. The arbitrator found that we were fraudulently induced into entering said agreement through “1) misrepresentations as to what he would or could do for the Company, including raising funds, and 2) omissions about his reputation and ability to obtain or assist in obtaining financing for TapImmune” among other reasons. We are attempting to collect the award from Mr. Gardner.
 
Vendor Litigation
 
One of our suppliers, Fischer Scientific was awarded a judgment against us for $51,000 which is equal to the amount owed to them. We intend on settling that matter in the third quarter of 2015 .
 
Item 1A. Risk Factors
 
Not required.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
We have not issued any unregistered equity securities that we have not previously reported in a current or periodic report filed with the US Securities and Exchange Commission.
 
Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure
 
Not Applicable.
 
Item 5. Other Information
 
None.
 


 
20

 
 
Item 6. Exhibits
 
The following exhibits are included with this Quarterly Report on Form 10-Q:
 
 
Exhibit Number
Description of Exhibit
 
10.1
 
31.1
License and Assignment Agreement, dated July 21, 2015, with The Mayo Foundation for Medical Education and Research***
Certification of Principal Executive Officer and Acting Principal Accounting Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1933, as amended.
 
32.1
Certification of Principal Executive Officer and Acting Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Exhibit 101
101.INS - XBRL Instance Document
101.SCH - XBRL Taxonomy Extension Schema Document
101.CAL - XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF - XBRL Taxonomy Extension Definition Linkbase Document
101.LAB - XBRL Taxonomy Extension Label Linkbase Document
101.PRE - XBRL Taxonomy Extension Presentation Linkbase Document

***             Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been submitted separately with the SEC.

 
 
21

 

SIGNATURES
 
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TAPIMMUNE INC.
 
 
/s/ Glynn Wilson
 
Glynn Wilson
Chairman, Chief Executive Officer, Principal Executive Officer and Chief Financial Officer
Date:  August 14, 2015



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22


 
 


Exhibit 31.1

 
CERTIFICATION
 
I, Glynn Wilson, certify that:
 
(1)
I have reviewed this Report on Form 10-Q for the quarterly period ended June 30, 2015 of TapImmune Inc.;
 
(2)
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
 
(3)
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
 
(4)
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
(b)
Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting in the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
(d)
Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
(5)
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:           August 14, 2015
 
/s/ Glynn Wilson
By:            Glynn Wilson
Title:           Chairman, Chief Executive Officer, Principal Executive Officer and Acting Principal Accounting Officer

 
 
 


 
 


Exhibit 32.1

 
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
 
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Glynn Wilson, the Principal Executive Officer and Acting Principal Accounting Officer of TapImmune Inc. (the “Company”) hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her knowledge, the Report on Form 10-Q of TapImmune Inc., for the quarterly period ended June 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of TapImmune Inc.

Date:  August 14, 2015

 
/s/ Glynn Wilson
 
Glynn Wilson
Chairman, Chief Executive Officer,
Principal Executive Officer and Acting Principal Accounting Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 


EXHIBIT 10.1
 
MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH LICENSE AND ASSIGNMENT AGREEMENT
 
     This patent, know-how, materials license and IND assignment agreement ("Agreement") is by and between Mayo Foundation for Medical Education and Research, a Minnesota charitable corporation, located at 200 First Street SW, Rochester, Minnesota 55905-0001 ("MAYO"), and Taplmmune, Inc., a for-profit corporation, having a place of business at 2815 Eastlake Avenue, E. Suite 300, Seattle, WA 98102 ("COMPANY"), each a "Party," and collectively "Parties".

WHEREAS, MAYO desires to make its intellectual property rights available for the development and commercialization of products, methods and processes for public use and benefit;

WHEREAS, COMPANY represents itself as being knowledgeable in developing and commercializing vaccine technology;

WHEREAS, MAYO entered into a Technology Option Agreement on March 19th, 2014 with Ayer Special Situations Fund I, LP located at 616 Corporate Way, Suite 2-4931, Valley Cottage, NY 10989 ("AYER") for the intellectual property rights to be licensed hereunder;

WHEREAS, AYER subsequently entered into an exclusive Option Agreement with COMPANY to have AYER assign its right under its Technology Option Agreement with MAYO to the COMPANY;

WHERAS, COMPANY has exercised the option it received from AYER as evidenced by Exhibit 1 attached hereto; and

WHEREAS, MAYO is willing to grant and COMPANY is willing to accept license under such rights for the purpose of developing such technology.

NOW THEREFORE, in consideration of the foregoing and the terms and conditions set forth below, the Parties hereby agree as follows:

Article 1.00 -Definitions
   
     For purposes of this Agreement, the terms defined in this Article will have the meaning specified and will be applicable both to the singular and plural forms:

 
1.1          For MAYO, "Affiliate": any corporation or other entity within the same "controlled group of corporations" as MAYO or its parent MAYO Clinic. For purposes of this definition, the term "controlled group of corporations" will have the same definition as Section 1563 of the Internal Revenue Code as of November 10, 1998, but will include corporations or other entities which if not a stock corporation, more than fifty percent (50%) of the board of directors or other governing body of such corporation or other entity is controlled by a corporation within the controlled group of corporations of MAYO or Mayo Clinic. MAYO' s Affiliates include, but are not limited to: Mayo Clinic; Mayo Collaborative Services, Inc.; Mayo Clinic Hospital, Rochester; Mayo Clinic Florida; Mayo Clinic Arizona; and its Mayo Clinic Health System entities.
 
For COMPANY, "Affiliate" : any corporation or other entity that controls, is controlled by, or is under common control with, COMPANY. For purposes of this definition, "control" means ownership of: (a) at least fifty percent (50%) or the maximum percentage, if less than fifty percent (50%), as allowed by applicable law, of the outstanding voting securities of such entity; or (b) at least fifty percent (50%) of the decision-making authority of such entity.

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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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1.2          "Change of Control": (a) the acquisition of COMPANY by another person or entity by means of any transaction or series of related transactions (including any stock transfer or series of transfers, reorganization, merger or consolidation) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of COMPANY; or (b) a sale of all or substantially all of the assets of COMPANY to which this Agreement relates.
 
1.3           "Confidential Information": all proprietary unpublished or nonpublic information or materials including, but not limited to, written, oral or virtually presented information and such items as electronic media products, trade secrets, financial information, equipment, databases and the like provided by one Party to the other under this Agreement, or which is observed by a Party while on the other Party's premises. Confidential Information does not include any information or material that receiving party evidences is: (a) already known to the receiving party at the time of disclosure (other than from the disclosing party); (b) publicly known other than through acts or omissions of the receiving party; (c) disclosed to the receiving party by a third party who was not and is not under any obligation of confidentiality; or (d) independently developed by employees of the receiving party without knowledge of or access to the  Confidential Information.

1.4     "Effective Date" July 21, 2015.
 
1.5          "Field" Therapeutic use against breast, ovarian, lung and any other cancers that overexpress folate receptor alpha.
 
1.6           "Know-How": research and development information, unpatented inventions, trade secrets, know-how and supportive information developed by Dr. Keith Knutson while at MAYO, which are related to the technology under the Patent Rights, controlled by MAYO as of the Effective Date to the extent it is necessary for the development or manufacture of a Licensed Product (MAYO files #2006-024 and #2007-248).
 
1.7           "Licensed Product": Products or services that (i) in the absence of the Agreement, would infringe at least one Valid Claim or (ii) the development, manufacture or use incorporates or was derived from the Know-How or Materials provided to COMPANY by MAYO and/or its Affiliates.
 
1.8           "Materials": Biological specimens, software or other tangible property including data and written information provided by MAYO to COMPANY including the trial data and analysis for Mayo Trial MC1015 listed in Exhibit 2 under Section 2.
 
1.9      "Net Sales": the amount invoiced by COMPANY or, in the case of a permitted sublicense, a Sublicensee, for the sale or transfer of a Licensed Product to a third party, less documented: (a) sales, excise or use taxes shown on the face of the invoice, excluding value­ added tax; (b) credits for defective or returned Licensed Products actually given; and (c) regular trade and discount allowances given. Leasing, lending, consigning or any other activity by means of which a non-affiliated third party acquires the right to possess or use a Licensed Product shall be deemed a transfer for the purpose of determining Net Sales. Net Sales on Licensed Products transferred as part of a non-cash exchange shall be calculated at the then­ current customary sales price invoiced to third parties or fair market value if there are no current invoices to third parties. In the event that COMPANY transfers Licensed Products to an Affiliate, and the Affiliate retransfers the Licensed Product to third-party customers, the Net Sales shall be the price charged by the Affiliate to third-party customers, less documented allowable deductions actually taken. If such Affiliate does not transfer the Licensed Product to a third-party customer within one year, Net Sales shall be calculated to be the higher of (i) the price charged by the Licensee to the Affiliate, (ii) the average price charged by the licensee to third-party customers, or (iii) in the absence of sales to third-party customers, the fair market price for the Licensed Products.
 
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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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Net Sales accrues with the first of delivery or invoice.
 
1.10             "Patent Rights” U.S. patent application numbers 12/303,054 and 13/202,263, U.S. patent number 8,486,412 and 8,858,952, and provisionals, divisionals including 13/917,410, continuations including 14/484,057, and continuations-in-part (but only for subject matter supported pursuant to 35 U.S.C. §112 by the foregoing) therefrom, patents issuing thereon, re­ examinations and re-issues thereof, as well as extensions and supplementary protection certificates and any foreign counterpart, including Canada patent application 2,685,300, of any of the foregoing (MAYO file #2006-024 and #2007-248).
 
1.11           "Sublicensee": any third party or any Affiliate to whom COMPANY has conveyed rights or the forbearance of suit under the Patent Rights, Know-How or Material.
 
  "Sublicense Income": consideration in any form received by COMPANY from each Sublicensee, excluding amount paid by COMPANY to MAYO on Sublicensee's Net Sales in Section 3.04 and milestone payments in Section 3.03. Sublicense Income shall include, (i) all fees, (ii) payments, (iii) equity, (iv) research and development funding in excess of COMPANY's reasonable and documented costs of performing such research and development, and (v) any consideration received for an equity interest in, extension of credit to, or other investment in COMPANY, to the extent such consideration exceeds the fair market value as promptly determined by agreement of the Parties or by an independent appraiser mutually agreeable to the Parties.
 
  "Term": begins on the Effective Date and ends, subject to Article 10, upon COMPANY's last obligation to make payments to MAYO under Articles 3 and 4.
 
1.14     "Territory": worldwide.
 
  "Valid Claim": a claim within the Patent Rights that is in force and has not been held to be invalid by any patent office or court of final jurisdiction.
 
Article 2.00 - Grant of Rights
 
2.1    GRANT. Subject to the terms and conditions of this Agreement, MAYO grants to COMPANY: (a) an exclusive license with the right to sublicense, within the Field and Territory, under the Patent Rights to make, have made, use, offer for sale, sell, and import Licensed Products; and (b) a nonexclusive license, with the right to sublicense, within the Field and Territory, to use the Know-How and Materials to develop, make, have made; use, offer for sale, sell, and import Licensed Products.
 
     Once MAYO receives the initial upfront payment of $350,000 in Section 3.0l (a), MAYO will provide reasonable access to necessary personnel to transfer Know-How and Materials including the CT.Gov record transfer and associated clinical trial data each under IND #14546 ("IND"), but in no event shall MAYO be required to provide any Know-How or Materials in tangible form if it does not exist in tangible form as of the Effective Date, and in no event shall MAYO be required to provide more than four (4) hours of service for such access.
 
     Once MAYO receives the initial upfront payment from COMPANY of $350,000 in Section 3.01 (a), MAYO will assign IND # 14546 to Taplmmune along with the associated regulatory documents listed in Exhibit 2 under Section I . Taplmmune will assume all regulatory reporting responsibility for this IND and any existing or future liabilities associated with it. COMPANY does agree to allow MAYO and its Affiliates the right to cross-reference IND
 
#14546 for any MAYO clinical trials on folate receptor alpha vaccine and the COMPANY will use reasonable efforts to provide assistance that may be needed for MAYO to cross-reference IND #14546.
 
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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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2.2           RESERVATION OF RIGHTS. All rights herein are subject to: (a) the rights and obligations to and requirements of the U.S. government, if any have arisen or may arise, regarding the Patent Rights, including as set forth in 35 U.S.C. §§200 et al., 37 C.F.R. Part 401 et al. ("Bayh-Dole Act"); and (b) MAYO's and its Affiliates' reserved, irrevocable right to practice and have practiced the Patent Rights in connection with MAYO's and its Affiliates' educational, research and clinical programs, including MAYO's reference laboratory, Mayo Collaborative Services, Inc. COMPANY agrees to comply with the provisions of the Bayh-Dole Act, including promptly providing to MAYO with information requested to enable MAYO to meet its compliance requirements and substantially manufacturing Licensed Product in the U.S.
 
2.3           NO OTHER RIGHTS GRANTED. This Agreement does not grant any right, title or interest in or to any tangible or intangible property right of MAYO or its Affiliates, including any improvements thereon, or to any Patent Rights, Know-How or Materials outside the Field that is not expressly stated in Section 2.01. All such rights, titles and interests are expressly reserved by MAYO and COMPANY agrees that in no event will this Agreement be construed as a sale, an assignment or an implied license by MAYO or its Affiliates to COMPANY of any such tangible or intangible property rights.
 
2.4           SUBLICENSES. Any sublicense by COMPANY shall be to a Sublicensee that agrees in writing to be bound by substantially the same terms and conditions as COMPANY herein, excluding financial terms and conditions, or such sublicense shall be null and void. Sublicenses granted hereunder shall not be transferable, including by further sublicensing, delegatable or assignable without the prior written approval of MAYO or such further sublicensing, delegation or assignation shall be null and void. COMPANY will provide MAYO with a copy of each sublicense agreement promptly after execution. COMPANY is responsible for the performance of all Sublicensees as if such performance were carried out by COMPANY itself, including the payment of any royalties or other payments provided for hereunder triggered by such Sublicense, regardless of whether the terms of any sublicense require that Sublicensee pay such amounts (such as in a fully paid-up license) to COMPANY or that such amounts be paid by the Sublicensee directly to MAYO. Each sublicense agreement shall name MAYO as a third party beneficiary and, unless MAYO has provided written consent, all rights of Sublicensees shall terminate when COMPANY's rights terminate. COMPANY shall not grant any fully-paid up, royalty-free or exclusive sublicenses without MAYO's prior written consent.
 
Article 3.00 - Royalties
 
3.1               UP-FRONT. COMPANY will make each of the following nonrefundable and noncreditable up-front license fee payments to MAYO totaling *** (US $***) as partial consideration for entering into this agreement:

 
(a)
Within sixty (60) days of the Effective Date, three hundred and fifty thousand dollars (US$350,000);
 
 
(b)
Within eight (8) months of the Effective Date, *** dollars (US$***); and
 
 
(c)
Within eleven (11) months of the Effective Date, *** dollars (US$***).
 
For avoidance of any doubt, failure of COMPANY to make any of the payments listed in this Section 3.01 on time is a material breach of this Agreement.
 
3.2              ANNUAL LICENSE MAINTENANCE FEE. During the Term of this Agreement, COMPANY will pay annual, nonrefundable and noncreditable license maintenance fees of *** DOLLARS (US $***) to MAYO beginning on the second (2nd) anniversary of the Effective Date and every anniversary thereafter (i) until royalties are due under Section 3.04 or (ii) unless COMPANY is making other payments to MAYO in such year pursuant to COMPANY's obligation under Article 3.00.
 
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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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3.3             MILESTONE FEES. COMPANY will pay the following nonrefundable and noncreditable milestone fees to MAYO for each Licensed Product developed by COMPANY it Affiliates or a Sublicensee within thirty (30) days of the achievement of the following events:
 
   
EVENT
MILESTONE PAYMENT
  1  
Completion of a phase II clinical trial for each Licensed Product and submission of a final report to the FDA
$US [***]
  2  
Receipt of US regulatory approval for each Licensed Product
$US [***]
  3  
Receipt of Canadian regulatory approval for each Licensed Product
$US [***]
  4  
Achievement of annual worldwide Net Sales between $75-150 million
$US [***]
  5  
Achievement of annual worldwide Net Sales between $150-500 million
$US [***]
  6  
Achievement of annual worldwide Net Sales $500 million or greater
$US [***]
  7  
Change in Control to another company with a market capitalization at the time of the Change in Control between $100-$750 million dollars
$US [***]
  8  
Change in Control to another company with a market capitalization at the time of the Change in Control greater than $750 million dollars
$US [***]
 
For avoidance of doubt, the annual period for milestone payments will be a calendar year.
 
There will be no Change of Control Milestones to another company with a market capitalization of under $100 million dollars.
 
3.4             EARNED ROYALTIES. COMPANY shall pay MAYO a nonrefundable and noncreditable royalty of *** percent (***%) of the Net Sales of the Licensed Product sold by COMPANY, its Affiliates and/or its Sublicensees ("Earned Royalties"). The Earned Royalties are payable as described in Section 4.01. Licensed Products transferred to MAYO or its Affiliates are not considered transfers for purposes of determining Net Sales or for calculating Earned Royalties. No Earned Royalties are due MAYO on transfers to MAYO or MAYO Affiliates. Earned Royalties shall terminate on a Licensed Product-by-Licensed Product and country-by-country basis the latter of (i) first date when there is no longer a Valid Claim covering such Licensed Product in the country where such Product is made or sold; or (ii) ten (10) years from the first commercial sale in a country when a Licensed Product is not covered by a Valid Claim in that country.
 
3.5             MINIMUM ROYALTIES. Beginning in the calendar year following the first commercial sale of a Licensed Product and continuing through the Term, COMPANY shall pay MAYO an annual minimum royalty ("Annual Minimum Royalty") of *** DOLLARS (US$***) if the royalties otherwise due from the Net Sales of Licensed Products falls below this amount. If in any calendar year during the COMPANY's obligation to make a minimum royalty payment the aggregate amount of the Earned Royalty payments made during such year is less than the applicable Annual Minimum Royalty for such year (a "Shortfall"), then COMPANY shall make an additional payment to MAYO in the amount of the Shortfall together with the second half-year Earned Royalty payment for such year.
 
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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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3.6     ROYALTY STACKING. If COMPANY is a party to a license agreement with any third party, which license is required for the manufacture, use and/or sale of a Licensed Product and the total royalty due such third party and MAYO (to be paid by COMPANY) exceeds *** (***%) percent of Net Sales on a Licensed Product-by-Licensed Product and country-by-country basis, COMPANY may reduce the royalty rate applicable hereunder on such Licensed Product by 0.5% for each 1% of the royalty rate payable to such third party until such time that the total royalty obligation to all parties on such Licensed Product is *** (***%) or less; provided, however, that in no event will the Earned Royalties otherwise due to MAYO be reduced to less than *** (***%) percent. If such other license(s) include(s) a royalty stacking provision of like intent to this Section, the royalty rate reduction provided for in this Section 3.06 would be calculated as if such provision in such other license were absent. COMPANY agrees to notify MAYO immediately if COMPANY enters into any additional license(s) with a third party or parties that would affect the Earned Royalty amount received by MAYO.
 
For avoidance of any doubt, any royalties or other payments that the COMPANY may make to AYER or any other party for COMPANY's acquisition of AYER's rights under AYER's existing option agreement with MAYO to take a license to Patent Rights, Know-How and Materials shall not be subject to the royalty stacking provisions under this Section 3.06.
 
3.7           SUBLICENSE INCOME ROYALTY. COMPANY will make nonrefundable and noncreditable payments to MAYO of: (i) *** percent (***%) percent of Sublicense Income received by COMPANY resulting from sublicenses granted to Sublicensees prior to the completion of a phase II trial and (ii) *** percent (***%) of Sublicense Income received by the COMPANY resulting from sublicenses granted to Sublicensees after the completion of a phase II trial. The Sublicense Income is payable as described in Section 4.01.
 
3.8     BEST PRICE. Subject to any marketing agreement(s) between COMPANY and its marketing partner(s) and Sublicensees, MAYO may, at its sole option, purchase the Licensed Product from COMPANY or a Sublicensee for use within MAYO's and its Affiliates' educational, research and clinical programs in any quantity at the prior year's best net price offered by the COMPANY to any end user. The prior year's best net price will be determined on each January 1st and reported to MAYO in its Feb 1st reports due under Section 4.01 and will apply for the entire forthcoming calendar year (January 1 -December 31). COMPANY will report such sales to MAYO as part of the royalty report described in Section 4.01.
 
3.9     TAXES. COMPANY is responsible for all taxes, duties, import duties, assessments and other governmental charges, however designated, which are now or hereafter imposed by any authority on COMPANY: (a) by reason of the performance by MAYO of its obligations under this Agreement, or the payment of any amounts by COMPANY to MAYO under this Agreement; (b) based on the Patent Rights; or (c) related to use, sale or importation of the Licensed Product. Any withholding taxes that COMPANY is required by law to withhold on remittance of the royalty payments shall be paid forthwith to MAYO in an amount which shall result in the net amount being received by MAYO being equal to the amount which would have been received by MAYO had no such deduction or withholding been made. If necessary, COMPANY will obtain, or assist MAYO in obtaining, any tax reduction (including avoidance of double taxation), tax refund or tax exemption available to MAYO by treaty or otherwise.
 
 
 
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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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3.10           U.S. CURRENCY. All payments to MAYO under this Agreement will be made by draft drawn on a U.S. bank, and payable in U.S. dollars. In the event that conversion from foreign currency is required in calculating a payment under this Agreement, the exchange rate used shall be the Interbank rate quoted by US Bank at the end of the last business day of the quarter in which the payment accrued.
 
3.11           OVERDUE PAYMENTS. If overdue, the payments due under this Agreement shall bear interest until paid at a per annum rate of two percent (2%) above the prime rate in effect at US Bank on the due date. MAYO shall be entitled to recover, in addition to all other remedies, reasonable attorneys' fees and costs related to the administration or enforcement of this Agreement, including collection of payments, following COMPANY's such failure to pay. The acceptance of any payment, including such interest, shall not foreclose MAYO from exercising any other right or seeking any other remedy that it may have as a consequence of the failure of COMPANY to make any payment when due.
 
Accounting and Reports
 
4.1      REPORTS AND PAYMENT. COMPANY will deliver to MAYO on or before the following dates: 1 February and 1 August, a written report setting forth a full accounting showing how any amounts due to MAYO for the preceding calendar half-year have been calculated as provided in this Agreement, including an accounting of total Net Sales with a reporting of any applicable foreign exchange rates, deductions, allowances, and charges and any payments due from Sublicensees. Each report will include product names, part numbers and quantity sold for each country in which the Licensed Product was sold. Furthermore, the report will include detailed information about Licensed Products sold to MAYO or MAYO Affiliates at cost, pursuant to Section 3.08. Info Licensed Product transfers have occurred and no other amounts are due to MAYO, COMPANY will submit a report so stating. Each such report will be accompanied by the payment of all amounts due for such calendar half-year.
 
4.2            ACCOUNTING. COMPANY will, throughout the Term, keep complete, continuous, true and accurate books of accounts and records sufficient to support and verify the calculation of Net Sales, all royalties and any other amount believed due and payable to MAYO under this Agreement. Such books and records will be open at all reasonable times for inspection by a representative of MAYO for audit and verification of royalty statements or of compliance with other aspects of this Agreement. The MAYO representative will treat as confidential all relevant matters and will be a person or firm reasonably acceptable to COMPANY. In the event such audit reveals an underpayment by COMPANY, COMPANY will within thirty (30) days pay the royalty due in excess of the royalty actually paid. In the event the audit reveals an underpayment by COMPANY of more than *** percent (***%) of the amount due, COMPANY will pay interest on the royalty due in excess of the royalty actually paid at the highest rate then permitted by law. In either event, COMPANY will pay all of MAYO's costs in conducting the audit.

Article 5.00 - Diligence
5.1            DILIGENCE. COMPANY, its Affiliate or a Sublicensee shall diligently develop the technology under the Patent Rights to bring Licensed Products to market.

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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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5.2            DILIGENCE MILESTONES. COMPANY understands that such diligence by COMPANY is essential for MAYO to realize it value from the commercialization of the Patent Rights. Hence, COMPANY, its Affiliate or a Sublicensee shall, during the Term, use best efforts to achieve the diligence events described in this Section 5.02.

DILIGENCE EVENT
Initiate a Phase II clinical trial for a Licensed Product prior to the 2nd anniversary of the Agreement and, once initiated, keep current on all COMPANY phase II funding obligations.
Initiate a Phase IIB or III clinical trial for a Licensed Product prior to the 5th anniversary of the Agreement
 
If COMPANY fails to meet one of the diligence events, then MAYO may elect to terminate the License Agreement upon ninety (90) days' prior written notice, in which case all licensed right in the Agreement will revert to MAYO, unless MAYO and COMPANY agree in writing to amend or modify the diligence events in connection with COMPANY' s demonstration to MAYO of its bona fide intention to commercialize a Licensed Product through COMPANY' s delivery to MAYO of a reasonable action plan to achieve the diligence event, its payment to MAYO of a mutually agreed amount, or otherwise. Notwithstanding the foregoing, COMPANY shall not be responsible for the failure to meet the diligence event stated in this section if the inability of COMPANY to do so results from scientific non-performance of a Licensed Product to achieve a primary endpoint. In any such case of non-performance, COMPANY shall promptly inform MAYO of such situation and Mayo will terminate the licenses granted in the Agreement unless COMPANY can reasonably demonstrate that it can rectify the situation within one hundred and eighty ( 180) days.
Article 6.00 - Intellectual Property Management
 
6.1            REIMBURSEMENT AND CONTROL. COMPANY will have the first right to prepare, file, prosecute abandon, or otherwise handle the Patent Rights with prior advice and comment from MAYO. COMPANY shall pay all costs and expenses associated with the filing, prosecution and maintenance of the Patent Rights, whether arising before or during the Term. COMPANY shall pay for costs and expenses associated with the Patent Rights incurred by MAYO prior to the Effective Date within ninety (90) days of receiving an invoice from MAYO. In the event that the COMPANY decides to abandon certain patents within the Patent Rights, COMPANY shall so inform MAYO within at least sixty (60) days of taking the action or failing to act, which would cause such abandonment of rights. Should MAYO choose to continue the prosecution or maintenance of the said patents(s) within the Patent Rights, MAYO shall pay the cost of such activity, and the license to the COMPANY for the said patent(s) within the Patent Rights shall terminate. MAYO shall have sole control over the protection, defense, enforcement, maintenance, abandonment and other handling of the Know-How and Materials. MAYO will have no liability to COMPANY for any act or omission in the preparation, filing, prosecution, maintenance, abandonment, or other handling of the Patent Rights, Know-How and Materials.
 
           ENFORCEMENT. If either Party becomes aware of a third party infringement of any unexpired claim within the Patent Rights, that Party will promptly notify the other Party with written notice. COMPANY shall have the first right, but not the obligation, to prosecute in its own name and at its own expense any infringement of the Patent Rights. If COMPANY elects to commence an infringement action, COMPANY shall bear all expenses related to such action and, MAYO at its option, may join as a party to such action. Regardless of whether MAYO joins as a party, COMPANY shall control such action, and MAYO shall, within reason, cooperate fully with COMPANY in connection with any such action provided any reasonable out-of-pocket expense incurred by MAYO in providing such cooperation will be paid by COMPANY. Recoveries or reimbursements from infringement actions commenced by COMPANY shall be distributed as follow: (i) the Parties shall be reimbursed litigation expenses, including but not limited to reasonable attorneys' fees; (ii) as to ordinary damages, COMPANY shall receive an amount equal to its lost profits or a reasonable royalty on the sales of the infringer's product (whichever measure of damages the court shall have applied) and shall be included towards Net Sales calculations for royalty determination for payment to MAYO; and (iii) any remaining recoveries or reimbursements shall be paid *** percent (***%) to  COMPANY and *** percent (***%) to MAYO. If COMPANY decides not to prosecute infringement of any Patent Rights, MAYO reserves the right, without obligation, to prosecute such infringement, in which roles and returns stated above in this paragraph shall be reversed.

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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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For avoidance of doubt regarding returns resulting from MAYO prosecution, recoveries or reimbursements from infringement actions commenced by MAYO shall be distributed as follow: (i) the Parties shall be reimbursed litigation expenses, including but not limited to reasonable attorneys' fees; (ii) as to ordinary damages, MAYO shall receive an amount equal to COMPANY's lost profits or a reasonable royalty on the sales of the infringer's product (whichever measure of damages the court shall have applied) and MAYO will apply the applicable Earned Royalty rate under Section 3.04 to the distribution received by MAYO and provide that calculated amount to the COMPANY; and (iii) any remaining recoveries or reimbursements shall be paid *** percent (***%) to MAYO and *** percent (***%) to COMPANY.
 
6.3           PATENT TERM EXTENSION. COMPANY shall consult with MAYO in selecting the patent covering each Licensed Product for patent term extension for or supplementary protection certificate under in accordance with the applicable laws of any country. Each Party agrees to execute any documents and to take any additional actions as the other Party may reasonably request in connection therewith.
 
6.4           PATENT MARKING. To the extent commercially feasible, COMPANY will mark all Licensed Products that are manufactured or sold under this Agreement with the number of each issued patent within the Patent Rights that cover such Licensed Product(s). Any such marking will be in conformance with the patent laws and other laws of the country of manufacture or sale.
 
6.5           DEFENSE. MAYO will have the first right, but not the obligation, to take any measures deemed appropriate by MAYO, regarding (a) challenges to the Patent Rights (including interferences in the U.S. Patent and Trademark Office and oppositions in foreign jurisdictions) and (b) defense of the Patent Rights (including declaratory judgment actions), Know-How or Materials. COMPANY shall reasonably cooperate in any such measures if requested to do so by MAYO.
 
6.6           THIRD PARTY LITIGATION. In the event a third party institutes a suit against COMPANY for patent infringement involving a Licensed Product, COMPANY will promptly inform MAYO and keep MAYO regularly informed of the proceedings. COMPANY agrees to indemnify, defend and hold harmless MAYO for any claims, demands or law suits related thereto.

Article 7.00 -Use of Name
 
7.01           USE OF NAME AND LOGO. Neither Party will use for publicity, promotion or otherwise, any logo, name, trade name, service mark or trademark of the other Party without the other Parties prior, written, express consent. COMPANY will not use for publicity, promotion or otherwise, any logo, name, trade name, service mark or trademark of MAYO or its Affiliates, including, but not limited to, the terms "MAYO®," "MAYO Clinic®" and the triple shield MAYO logo, or any simulation, abbreviation or adaptation of the same, or the name of any MAYO employee or agent, without MAYO's prior, written, express consent. Either Party may withhold such consent in its absolute discretion. With regard to the use of MAYO's name, all requests for approval pursuant to this Section must be submitted to the MAYO Clinic Public Affairs Business Relations Group, at the following e-mail address:
 
PublicAffairsBR@MAYO.edu at least five (5) business days prior to the date on which a response is needed.

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Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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Article 8.00 - Confidentiality
 
8.1           TREATMENT OF CONFIDENTIAL INFORMATION. Except as provided for in Section 8.02, neither Party will disclose, use or otherwise make available the other's Confidential Information during the Term and for three (3) years thereafter and will use the same degree of care it employs to protect its own confidential information.

8.2
RIGHT TO DISCLOSE.
 
 
(a)
To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement, COMPANY may disclose Confidential Information of MAYO to its Sublicensees, consultants, and outside contractors on the condition that each such entity agrees to obligations of confidentiality and non-use at least as stringent as those therein.
 
 
(b)
To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement, MAYO may disclose Confidential Information of COMPANY to its consultants and outside contractors on the condition that each such entity agrees to obligations of confidentiality and non­ use at least as stringent as those therein.
 
 
(c)
If Party is required by law, regulation or court order to disclose any of the Confidential Information, it will have the right to do so, provided it: (i) promptly notifies the disclosing party; and (ii) reasonably assists the disclosing party to obtain a protective order or other remedy of disclosing party's election and at disclosing party's expense, and only disclose the minimum amount necessary to satisfy such obligation.
 
8.3           CONFIDENTIALITY OF AGREEMENTS. Except as otherwise required by law, the specific terms and conditions of this Agreement shall be Confidential Information but the existence and Field of this Agreement will not be Confidential Information and the Parties may state that COMPANY is licensed under the Patent Rights.
 
Article 9.00 - Warranties, Representations, Disclaimers and Indemnification
 
9.1
REPRESENTATIONS AND WARRANTIES OF COMPANY. COMPANY warrants and represents to MAYO that:
 
 
(a)
it is experienced in the development, production, quality control, service, manufacture, marketing and sales of products similar to the subject matter of the Patent Rights, and that it will commit itself to a thorough, vigorous and diligent program of developing and marketing the Licensed Products;
 
 
(b)
it has independently evaluated the Patent Rights, Know-How, and Materials and Confidential Information, if any, their applicability or utility in COMPANY's activities, is entering into this Agreement on the basis of its own evaluation and not in reliance of any representation by MAYO, and assumes all risk and liability in connection with such determination;
 
 
(c)
it now maintains and will continue to maintain throughout the Term and beyond insurance coverage as set forth in Section 9.03 and that such insurance coverage sufficiently covers the MAYO Indemnitees;

*
Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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(d)
the execution and delivery of this Agreement has been duly authorized and no further approval, corporate or otherwise, is required in order to execute this binding Agreement;
 
 
(e)
it shall comply and require its Sublicensees to comply with all applicable international, national and state laws, ordinances and regulations in its performance under this Agreement; and
 
 
(f)
its rights and obligations under this Agreement do not conflict with any contractual obligation or court or administrative order by which it is bound.
 
9.2
DISCLAIMERS.
 
     (a)      MAYO HAS NOT MADE AND DOES NOT MAKE ANY PROMISES, COVENANTS, GUARANTEES, REPRESENTATIONS OR WARRANTIES OF ANY NATURE, DIRECTLY OR INDIRECTLY, EXPRESS, STATUTORY OR IMPLIED, INCLUDING WITHOUT LIMITATION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, SUITABILITY, DURABILITY, CONDITION, QUALITY OR ANY OTHER CHARACTERISTIC OF THE PATENT RIGHTS, KNOW-HOW, MATERIALS, IND, OR CONFIDENTIAL INFORMATION.
 
     b)      PATENT RIGHTS, KNOW-HOW, MATERIALS , IND, AND CONFIDENTIAL INFORMATION ARE PROVIDED "AS IS," "WITH ALL FAULTS" AND "WITH ALL DEFECTS," AND COMPANY EXPRESSLY WAIVES ALL RIGHTS TO MAKE ANY CLAIM WHATSOEVER AGAINST MAYO FOR MISREPRESENTATION OR FOR BREACH OF PROMISE, GUARANTEE, REPRESENTATION OR WARRANTY OF ANY KIND RELATING TO THE PATENT RIGHTS, KNOW-HOW, MATERIALS, IND OR CONFIDENTIAL INFORMATION. MAYO EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES ARISING FROM ANY COURSE OF DEALING, USAGE OR TRADE PRACTICE, WITH RESPECT TO: THE SCOPE, VALIDITY OR ENFORCEABILITY OF THE PATENT RIGHTS, KNOW-HOW, MATERIALS, IND AND CONFIDENTIAL INFORMATION; THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION; OR THAT THE USE, SALE, OFFER FOR SALE OR IMPORTATION OF THE LICENSED PRODUCT WILL NOT INFRINGE OTHER INTELLECTUAL PROPERTY RIGHTS. NOTHING IN THIS AGREEMENT WILL BE CONSTRUED AS AN OBLIGATION FOR MAYO TO BRING, PROSECUTE OR DEFEND ACTIONS REGARDING THE PATENT RIGHTS, KNOW-HOW, MATERIALS, IND AND CONFIDENTIAL INFORMATION.
 
     (c)      COMPANY AGREES THAT MAYO AND ITS AFFILIATES WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY OR ARISING OUT OF ANY ASSIGNMENTS OR RIGHTS GRANTED OR PERFORMANCE MADE UNDER THIS AGREEMENT, WHETHER TO OR BY COMPANY, SUBLICENSEE OR A THIRD PARTY. IN NO EVENT WILL MAYO'S LIABILITY OF ANY KIND INCLUDE ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE LOSSES OR DAMAGES, EVEN IF MAYO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR EXCEED THE TOTAL AMOUNT OF ROYALTIES THAT HAVE ACTUALLY BEEN PAID TO MAYO BY COMPANY AS OF THE DATE OF FILING AN ACTION AGAINST MAYO THAT RESULTS IN THE SETTLEMENT OR AWARD OF DAMAGES TO COMPANY.
 
*
Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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9.3           INDEMNIFICATION AND INSURANCE.
 
     (a)      COMPANY will defend, indemnify and hold harmless MAYO, MAYO's Affiliates and their respective trustees, officers, agents, independent contractors and employees ("MAYO Indemnitees") from any and all claims, actions, demands, judgments, losses, costs, expenses, damages and liabilities (including attorneys' fees, court costs and other expenses of litigation), regardless of the legal theory asserted, arising out of or connected with: (i) the practice or exercise of any rights and assignments granted hereunder by or on behalf of COMPANY or any Sublicensee; (ii) research, development, design, manufacture, distribution, use, sale, importation, exportation or other disposition of Licensed Products; and (iii) any act or omission of COMPANY or any Sublicensee hereunder, including the negligence or willful misconduct thereof. MAYO and MAYO's Affiliates shall have no obligation to indemnify COMPANY hereunder.
 
     (b)      The Parties agree that this indemnity should be construed and applied in favor of maximum indemnification of MAYO Indemnitees.
 
     (c)      COMPANY will continuously carry occurrence-based liability insurance, including products liability and contractual liability, in an amount and for a time period sufficient to cover the liability assumed by COMPANY hereunder during the Term and after, such amount being at least FIVE MILLION (US $5,000,000). In addition, such policy will name MAYO and its Affiliates as additional-named insureds. The minimum limits of any insurance coverage required herein shall not limit COMPANY's liability.
 
     (d)      COMPANY expressly waives any right of subrogation that it may have against MAYO Indemnitees resulting from any claim, demand, liability, judgment, settlement, costs, fees (including attorneys' fees) and expenses for which COMPANY is obligated to indemnify, defend and hold MAYO Indemnitees harmless under this Agreement.
 
9.4      PROHIBITION AGAINST INCONSISTENT STATEMENTS. COMPANY shall not make any statements, representations or warranties, or accept any liabilities or responsibilities whatsoever that are inconsistent with any disclaimer or limitation included in this section or any other provision of this Agreement. COMPANY shall not settle any matter that will incur liability for MAYO or require MAYO to make any admission of liability without MAYO's prior written consent.

Article 10.00 - Term and Termination
 
10.1     TERM. This Agreement will expire at the end of the Term. After expiration of this Agreement, COMPANY shall have a fully-paid up license.
 
10.2      TERMINATION FOR BREACH OR LACK OF DILIGENCE. If COMPANY commits a material breach of this Agreement, including without limitation, the failure to make any required royalty or fee payments hereunder, MAYO will notify COMPANY in writing of such breach and COMPANY will have thirty (30) days after such notice to cure such breach to MAYO's satisfaction. If COMPANY fails to cure such breach, MAYO may, at its sole option, convert any or all exclusive licenses granted hereunder to non-exclusive licenses, or terminate this Agreement in whole or in part by sending COMPANY written notice of termination. MAYO may, at its sole option, terminate this Agreement if a sale of a Licensed Product has not occurred within ten (10) years of the Effective Date unless the Parties agree in writing to amend the Agreement to extend this deadline.
 
*
Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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10.3          TERMINATION FOR SUIT. MAYO does not license entities that bring suit against MAYO or its Affiliates and as such, MAYO may immediately terminate this Agreement if COMPANY or any Sublicensee directly or indirectly brings any action or proceeding against MAYO or its Affiliates, except for an uncured material breach of this Agreement by MAYO.
 
10.4          INSOLVENCY OF COMPANY. This Agreement terminates immediately without an obligation of notice of termination to COMPANY in the event COMPANY ceases conducting business in the normal course, becomes insolvent or bankrupt, makes a general assignment for the benefit of creditors, admits in writing its inability to pay its debts as they are due, permits the appointment of a receiver for its business or assets or avails itself of or becomes subject to any proceeding under any statute of any governing authority relating to insolvency or the protection of rights of creditors.
 
10.5          COMPANY's RIGHTS TO TERMINATE. COMPANY may terminate the Agreement any time by providing written notice to MAYO and the provisions in Section I 0.06 shall immediately apply.
 
10.6           SURVIVAL. The termination or expiration of this Agreement does not relieve either Party of its rights and obligations that have previously accrued. After the Term, all license rights granted immediately revert to MAYO. All Confidential Information of a Party shall be returned or destruction certified, at the disclosing party's election. All tangible Know-How and Materials provided by MAYO to the COMPANY shall be returned or destruction certified, as directed by MAYO. MAYO shall have the right but not an obligation to have COMPANY reassign the IND and the associated regulatory files back to MAYO. Rights and obligations that by their nature prescribe continuing rights and obligations shall survive the termination or expiration of this Agreement including Sections 4.02 (Accounting), 9.03(Indemnification and Insurance), 10.6(Survival) and Articles 7 (Name Use), 8 (Confidentiality) and 11 (General Provisions). COMPANY, on behalf of itself and its Sublicensees, shall provide an accounting for and pay, within thirty (30) days of termination or expiration, all amounts due hereunder.

Article 11.00 - General Provisions
 
11.1          AMENDMENTS. This Agreement may not be amended or modified except by a writing signed by both Parties and identified as an amendment to this Agreement.
 
11.2           CONSTRUCTION. Each Party acknowledges that it was provided an opportunity to seek advice of counsel and as such this Agreement shall not be construed for or against either Party.
 
11.3          ENTIRE AGREEMENT. This Agreement constitutes the final, complete and exclusive agreement between the Parties with respect to its subject matter and supersedes all past and contemporaneous agreements, promises, and understandings, whether oral or written, between the Parties.
 
11.4          EXPORT CONTROL. The Parties agree not to use or otherwise export or re-export anything exchanged or transferred between them pursuant to this agreement except as authorized by United States law and the laws of the jurisdiction in which it was obtained. In particular, but without limitation, items exchanged may not be exported or re-exported (a) into any U.S. embargoed countries or (b) to anyone on the U.S. Treasury Department's list of Specially Designated Nationals or the U.S. Department of Commerce Denied Person's List or Entity List. By entering into this Agreement, each Party represents and warrants that they are not located in any such country or on any such list. Each Party also agrees that they will not use any item exchanged for any purposes prohibited by United States law, including, without limitation, the development, design, manufacture or production of missiles, or nuclear, chemical or biological weapons. In the event either Party becomes aware of any suspected violations of this paragraph that Party will promptly inform the other Party of such suspected violation, and cooperate with one another in any subsequent investigation and defense, be they civil or criminal.


*
Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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11.5          GOVERNING LAW AND JURISDICTION. This Agreement is made and performed in Minnesota. The terms and conditions of this Agreement, as well as all disputes arising under or relating to this Agreement, shall be governed by Minnesota law, specifically excluding its choice-of-law principles, except that the interpretation, validity and enforceability of the Patent Rights will be governed by the patent laws of the country in which the patent application is pending or issued. This is not an Agreement for the sale of goods and as such Article 2 of the Uniform Commercial Code as enacted in Minnesota does not apply. The exclusive fora for the foregoing are the State or District Court of Olmsted County, Minnesota, unless such action cannot by law be brought in such forum, in which case the venue required by law shall govern. COMPANY agrees unconditionally that it is personally subject to the jurisdiction of such courts.
 
11.6          HEADINGS. The headings of articles and sections used in this document are for convenience of reference only.
 
11.7          INDEPENDENT CONTRACTORS. It is mutually understood and agreed that the relationship between the Parties is that of independent contractors. Neither Party is the agent, employee, or servant of the other. Except as specifically set forth herein, neither Party shall have nor exercise any control or direction over the methods by which the other Party performs work or obligations under this Agreement. Further, nothing in this Agreement is intended to create any partnership, joint venture, lease or equity relationship, expressly or by implication, between the Parties.
11.8          INDUCEMENT OF REFERRALS. It is not the purpose of this Agreement or the intent of the Parties to induce or encourage the referral of patients, and there is no requirement under this Agreement or under any other Agreement between the Parties that COMPANY or its staff refer patients to MAYO for products or services. No payment made under this Agreement is made in return for the referral of patients, or is made in return for the purchasing, leasing, or ordering of any products or services.
 
11.9          LIMITATION OF RIGHTS CREATED. This Agreement is personal to the Parties and shall be binding on and inure to the sole benefit of the Parties and their permitted successors and assigns and shall not be construed as conferring any rights to any third party. Specifically, no interests are intended to be created for any customer, patient, research subjects, or other persons (or their relatives, heirs, dependents, or personal representatives) by or upon whom the Licensed Products may be used.
 
11.10          NO ASSIGNMENT. Neither Party may assign its rights hereunder to any third party without the prior written consent of the other Party; provided, that a Party may assign its rights without the prior written consent of the other Party to any affiliate or other entity that controls, is controlled by or is under common control with such Party. Any purported assignment in violation of this clause is void. Such written consent, if given, shall not in any manner relieve the assignor from liability for the performance of this Agreement by its assignee.


*
Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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11.11          NOTICES. All notices and other business communications between the Parties related to this Agreement shall be in writing, sent by certified mail, addressed as follows:

 
To MAYO:
Mayo Foundation for Medical Education and Research Mayo Clinic Ventures - BB4
200 First Street SW
Rochester, Minnesota 55905-0001
Attn: Ventures Operations, Leif Nelson Phone: (507)293-3900
Facsimile: (507) 284-5410
Email: MayoClinicVentures@mayo.edu   Fed Tax ID: 41-1506440
 
 
 
To COMPANY: Tapimmune Inc.
2815 Eastlake Avenue East, Suite 300
Seattle, WA 98126
Phone: (206) 504-7267
Email:gwilson@tapimmune.com
 
Notices sent by certified mail shall be deemed delivered on the third day following the date of mailing. Either Party may change its address or facsimile number by giving written notice in compliance with this section.
 
11.12          REGISTRATION OF LICENSES. COMPANY will register and give required notice concerning this Agreement, at its expense, in each country in the Territory where an obligation under law exists to so register or give notice.
 
11.13          SEVERABILITY. In the event any provision of this Agreement is held to be invalid or unenforceable, the remainder of this Agreement shall remain in full force and effect as if the invalid or unenforceable provision had never been a part of the Agreement.
 
11.14 WAIVER. The failure of either Party to complain of any default by the other Party or to enforce any of such Party's rights, no matter how long such failure may continue, will not constitute a waiver of the Party's rights under this Agreement. The waiver by either Party of any breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same or any other provision. No part of this Agreement may be waived except by the further written agreement of the Parties.
 
     This Agreement may be executed in any number of counterparts which, when taken together, will constitute an original, and photocopy, facsimile, electronic or other copies shall have the same effect for all purposes as an ink-signed original. Each Party hereto consents to be bound by photocopy or facsimile signatures of such Party's representative hereto.
 
MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH

 
COMPANY
 
 


*
Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.

 
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By  /s/ Daniel Estes                                                            
Name: Daniel D. Estes Title: Assistant Treasurer

 
/s/ Glynn Wilson
Name: Glynn Wilson, Ph.D. Title: CEO
 
Date:            July 21, 2015         

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.