Attached files
file | filename |
---|---|
EX-31.2 - EX-31.2 - Advaxis, Inc. | v196513_ex31-2.htm |
EX-10.1 - EX-10.1 - Advaxis, Inc. | v196513_ex10-1.htm |
EX-32.1 - EX-32.1 - Advaxis, Inc. | v196513_ex32-1.htm |
EX-31.1 - EX-31.1 - Advaxis, Inc. | v196513_ex31-1.htm |
EX-32.2 - EX-32.2 - Advaxis, Inc. | v196513_ex32-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x
|
QUARTERLY REPORT UNDER SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended July 31, 2010
¨
|
TRANSITION REPORT UNDER SECTION
13 OR 15(d) OF THE EXCHANGE
ACT
|
For the
transition period from to ________________ to ________________
Commission
file number 000-28489
ADVAXIS,
INC.
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
02-0563870
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification
No.)
|
The
Technology Centre of New Jersey, 675 Route 1, Suite 119, North Brunswick,
NJ 08902
|
(Address
of principal executive
offices)
|
(732)
545-1590
|
(Registrant’s
telephone number)
|
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No ¨
Indicate
by check mark 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 (Section 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 ¨ No
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
Smaller Reporting Company
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No x
The
number of shares of the registrant's common stock, $0.001 par value, outstanding
as of September 8, 2010 was 180,432,817.
INDEX
Page
No.
|
|||
PART
I
|
FINANCIAL
INFORMATION
|
||
Item
1.
|
Financial
Statements
|
||
Balance
Sheets at July 31, 2010 (unaudited) and October 31, 2009
|
2
|
||
Statements
of Operations for the three and nine month periods ended July 31, 2010 and
2009 and the period March 1, 2002 (inception) to July 31, 2010
(unaudited)
|
3
|
||
Statements
of Cash Flow for the nine month periods ended July 31, 2010 and 2009 and
the period March 1, 2002 (inception) to July 31, 2010
(unaudited)
|
4
|
||
Supplemental
Schedule of Noncash Investing and Financing Schedules
|
5
|
||
Notes
to Financial Statements
|
6
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
13
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
18
|
|
Item
4.
|
Controls
and Procedures
|
18
|
|
PART
II
|
OTHER
INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
19
|
|
Item
1A.
|
Risk
Factors
|
19
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
20
|
|
Item
6.
|
Exhibits
|
20
|
|
SIGNATURES
|
22
|
All other
items called for by the instructions to Form 10-Q have been omitted because the
items are not applicable or the relevant information is not
material.
1
PART
I-FINANCIAL INFORMATION
Item
1. Financial Statements
ADVAXIS,
INC.
(A
Development Stage Company)
BALANCE
SHEETS
July 31,
2010
|
October 31,
2009
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
|
$
|
26,274
|
$
|
659,822
|
||||
Prepaid
expenses
|
55,985
|
36,445
|
||||||
Total
Current Assets
|
82,259
|
696,267
|
||||||
Deferred
expenses
|
364,200
|
288,544
|
||||||
Property
and Equipment (net of accumulated depreciation)
|
37,096
|
54,499
|
||||||
Intangible
Assets (net of accumulated amortization)
|
2,044,065
|
1,371,638
|
||||||
Deferred
Financing Cost
|
299,493
|
|||||||
Other
Assets
|
51,963
|
3,876
|
||||||
Total
Assets
|
$
|
2,579,583
|
$
|
2,714,317
|
||||
LIABILITIES
AND SHAREHOLDERS’ DEFICIENCY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$
|
2,323,383
|
2,368,716
|
|||||
Accrued
expenses
|
565,507
|
917,250
|
||||||
Convertible
Bridge Notes and fair value of embedded derivative
|
891,806
|
2,078,851
|
||||||
Notes
payable – including interest payable
|
597,509
|
1,121,094
|
||||||
Total
Current Liabilities
|
4,378,205
|
6,485,911
|
||||||
Common
Stock Warrant
|
17,982,187
|
11,961,734
|
||||||
Total
Liabilities
|
$
|
22,360,392
|
$
|
18,447,645
|
||||
Shareholders’
Deficiency:
|
||||||||
Preferred
stock, $0.001 par value; 5,000,000 shares authorized; Series B Preferred
Stock; issued and outstanding 500 at July 31, 2010 and 0 at October 31,
2009. Series A Preferred Stock; issued and outstanding 0 at July 31,
2010 and 0 at October 31, 2009
|
||||||||
Common
Stock - $0.001 par value; authorized 500,000,000 shares, issued and
outstanding 170,585,758 at July 31, 2010 and 115,638,243 at October 31,
2009
|
170,585
|
115,638
|
||||||
Additional
Paid-In Capital
|
14,039,517
|
754,834
|
||||||
Stock
subscription receivable
|
(6,250,970
|
)
|
||||||
Deficit
accumulated during the development stage
|
(27,739,941
|
) |
(16,603,800
|
)
|
||||
Total
Shareholders' Deficiency
|
$
|
(19,780,809
|
)
|
$
|
(15,733,328
|
)
|
||
Total
Liabilities and Shareholders’ Deficiency
|
$
|
2,579,583
|
$
|
2,714,317
|
The
accompanying notes are an integral part of these financial
statements.
2
ADVAXIS,
INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
(unaudited)
Three Months Ended
July 31,
|
Nine Months Ended
July 31,
|
Period from
March 1, 2002
(Inception) to
July 31,
|
||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
||||||||||||||||
Revenue
|
$
|
176,768
|
$
|
(5,369
|
)
|
$
|
264,002
|
$
|
(5,369
|
)
|
$
|
1,618,864
|
||||||||
Research
& Development Expenses
|
847,995
|
476,421
|
2,930,033
|
939,407
|
13,103,574
|
|||||||||||||||
General
& Administrative Expenses
|
1,128,952
|
985,726
|
2,496,873
|
2,019,648
|
15,206,582
|
|||||||||||||||
Total
Operating expenses
|
1,976,947
|
1,462,147
|
5,426,906
|
2,959,055
|
28,310,156
|
|||||||||||||||
Loss
from Operations
|
(1,800,179
|
)
|
(1,467,516
|
)
|
(5,162,904
|
)
|
(2,964,424
|
)
|
(26,691,292
|
)
|
||||||||||
-
|
||||||||||||||||||||
-
|
||||||||||||||||||||
Interest
expense
|
(316,385
|
)
|
(374,563
|
)
|
(3,629,592
|
)
|
(410,615
|
)
|
(5,565,084
|
)
|
||||||||||
Interest
Income
|
31,287
|
-
|
48,088
|
294,554
|
||||||||||||||||
Gain
on note retirement
|
12,664
|
-
|
77,018
|
-
|
1,609,495
|
|||||||||||||||
Net
changes in fair value of common stock warrant liability and embedded
derivative liability
|
4,127,643
|
2,014,220
|
(2,747,729
|
) |
2,014,220
|
1,455,269
|
||||||||||||||
Net
Income (Loss) before benefit for income taxes
|
2,055,030
|
172,141
|
(11,415,119
|
)
|
(1,360,819
|
)
|
(28,897,058
|
)
|
||||||||||||
Income
tax benefit
|
-
|
-
|
278,978
|
922,020
|
1,201,001
|
|||||||||||||||
Net
Income (Loss)
|
2,055,030
|
172,141
|
(11,136,141
|
)
|
(438,799
|
)
|
(27,696,057
|
)
|
||||||||||||
Dividends
attributable to preferred shares
|
-
|
-
|
-
|
-
|
(43,884
|
)
|
||||||||||||||
Net
Income (Loss) applicable to Common Stock
|
$
|
2,055,030
|
$
|
172,141
|
$
|
(11,136,141
|
)
|
$
|
(438,799
|
)
|
$
|
(27,739,941
|
)
|
|||||||
Net
(Loss) per share, basic
|
$
|
0.01
|
$
|
0.00
|
$
|
(0.08
|
)
|
$
|
0.00
|
|||||||||||
Net
(Loss) per share, diluted
|
$
|
0.01
|
$
|
0.00
|
$
|
(0.08
|
)
|
$
|
0.00
|
|||||||||||
Weighted
average number of shares outstanding, basic
|
166,101,987
|
115,243,678
|
139,132,168
|
112,599,706
|
||||||||||||||||
Weighted
average number of shares, diluted
|
185,016,037
|
115,243,678
|
139,132,168
|
112,599,706
|
The
accompanying notes are an integral part of these financial
statements.
3
ADVAXIS,
INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
(unaudited)
Nine Months Ended
July 31,
|
Period from
March 1, 2002
(Inception) to
July 31,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
loss
|
(11,136,141 | ) | (438,799 | ) | (27,696,057 | ) | ||||||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Non-cash
charges to consultants and employees for options and stock
|
472,215 | 372,695 | 2,896,970 | |||||||||
Amortization
of deferred financing costs
|
- | - | 260,000 | |||||||||
Amortization
of deferred expenses
|
169,344 | - | 230,800 | |||||||||
Amortization
of discount on Bridge Loans
|
528,989 | 37,231 | 652,835 | |||||||||
Impairment
of intangible assets
|
- | - | 26,087 | |||||||||
Non-cash
interest expense
|
3,084,821 | 345,044 | 4,301,657 | |||||||||
Loss
(Gain) on change in value of warrants and embedded
derivative
|
2,747,728 | (2,014,220 | ) | (1,455,269 | ) | |||||||
Value
of penalty shares issued
|
- | - | 149,276 | |||||||||
Depreciation
expense
|
28,771 | 27,486 | 157,509 | |||||||||
Amortization
expense of intangibles
|
69,794 | 54,374 | 431,726 | |||||||||
Gain
on note retirement
|
(77,018 | ) | - | (1,609,495 | ) | |||||||
Decrease
(Increase) in prepaid expenses
|
(19,540 | ) | (1,243 | ) | (55,984 | ) | ||||||
Increase
in other assets
|
(45,824 | ) | - | (49,701 | ) | |||||||
Increase
in Deferred Expenses
|
- | (116,938 | ) | - | ||||||||
(Decrease)
increase in accounts payable
|
121,021 | 415,954 | 2,978,920 | |||||||||
(Decrease)
Increase in accrued expenses
|
(11,745 | ) | 112,541 | 465,873 | ||||||||
(Decrease)
in interest payable
|
(171,200 | ) | - | (152,909 | ) | |||||||
Net
cash used in operating activities
|
(4,238,785 | ) | (1,205,873 | ) | (18,467,762 | ) | ||||||
INVESTING
ACTIVITIES
|
||||||||||||
Cash
paid on acquisition of Great Expectations
|
- | (44,940 | ) | |||||||||
Purchase
of property and equipment
|
(11,369 | ) | - | (149,026 | ) | |||||||
Cost
of intangible assets
|
(672,220 | ) | (227,054 | ) | (2,506,829 | ) | ||||||
Net
cash used in Investing Activities
|
(683,589 | ) | (227,054 | ) | (2,700,795 | ) | ||||||
FINANCING
ACTIVITIES
|
||||||||||||
Proceeds
from convertible secured debenture
|
- | 960,000 | ||||||||||
Cash
paid for deferred financing costs
|
(559,493 | ) | ||||||||||
Principal
payment on notes payable
|
(1,384,001 | ) | (12,320 | ) | (1,507,592 | ) | ||||||
Proceeds
from notes payable
|
1,015,000 | 1,434,635 | 6,020,859 | |||||||||
Net
proceeds of issuance of Preferred Stock
|
4,487,827 | - | 4,722,827 | |||||||||
Cancellation
of warrants
|
- | (600,000 | ) | |||||||||
Proceeds
from exercise of warrants
|
170,000 | - | 170,000 | |||||||||
Proceeds
from issuance of common stock
|
- | 11,988,230 | ||||||||||
Net
cash provided by financing Activities
|
$ | 4,288,826 | $ | 1,422,315 | $ | 21,194,831 | ||||||
Net
(Decrease) increase in cash
|
(633,548 | ) | (10,612 | ) | 26,274 | |||||||
Cash
at beginning of period
|
659,822 | 59,738 | - | |||||||||
Cash
at end of period
|
$ | 26,274 | $ | 49,126 | $ | 26,274 |
The
accompanying notes are an integral part of these financial
statements.
4
Supplemental
Schedule of Noncash Investing and Financing Activities
Nine Months Ended
July 31,
|
Period from
March 1, 2002
(Inception)
to July 31
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
Equipment
acquired under capital lease
|
-
|
-
|
$
|
45,580
|
||||||||
Common
Stock issued to Founders
|
-
|
-
|
$
|
40
|
||||||||
Notes
payable and accrued interest converted to Preferred Stock
|
-
|
-
|
$
|
15,969
|
||||||||
Stock
dividend on Preferred Stock
|
-
|
-
|
$
|
43,884
|
||||||||
Accounts
payable from consultants settled with Common Stock
|
-
|
$
|
||||||||||
Notes
payable and embedded derivative liabilities converted to Common
Stock
|
$
|
3,322,092
|
-
|
$
|
5,835,250
|
|||||||
Intangible
assets acquired with notes payable
|
-
|
-
|
$
|
360,000
|
||||||||
Intangible
assets acquired with Common Stock
|
$ |
70,000
|
-
|
70,000
|
||||||||
Debt
discount in connection with recording the original value of the embedded
derivative liability
|
$
|
539,354
|
-
|
$
|
2,621,796
|
|||||||
Allocation
of the original secured convertible debentures to warrants
|
-
|
$
|
214,950
|
|||||||||
Allocation
of the warrants on Bridge Notes as debt discount
|
$
|
639,735
|
-
|
$
|
1,580,246
|
|||||||
Note
receivable in connection with exercise of warrants
|
$
|
6,250,970
|
-
|
$
|
6,250,970
|
|||||||
Warrants
Issued in connection with issuance of Common Stock
|
-
|
$
|
1,505,550
|
|||||||||
Warrants
issued in connection with issuances of Preferred stock
|
-
|
$
|
3,587,625
|
The
accompanying notes are an integral part of these financial
statements.
5
ADVAXIS,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(unaudited)
1.
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature
of Operations
Advaxis,
Inc. (the “Company”) is a development stage biotechnology company with the
intent to develop safe and effective cancer vaccines that utilize multiple
mechanisms of immunity. The Company is developing a live Listeria vaccine technology
under license from the University of Pennsylvania (“Penn”) which secretes a
protein sequence containing a tumor-specific antigen. The Company believes this
vaccine technology is capable of stimulating the body’s immune system to process
and recognize the antigen as if it were foreign, generating an immune response
able to attack the cancer. The Company believes this to be a broadly enabling
platform technology that can be applied to the treatment of many types of
cancers, infectious diseases and auto-immune disorders.
The
discoveries that underlie this innovative technology are based upon the work of
Yvonne Paterson, Ph.D., Professor of Microbiology at Penn. This technology
involves the creation of genetically engineered Listeria that stimulate the
innate immune system and induce an antigen-specific immune response involving
both arms of the adaptive immune system. In addition, this technology
supports, among other things, the immune response by altering tumors to make
them more susceptible to immune attack, stimulating the development of specific
blood cells that underlie a strong therapeutic immune response.
Since the
Company’s inception in 2002, it has focused its initial development efforts upon
therapeutic cancer vaccines targeting cervical cancer, its predecessor
condition, cervical intraepithelial neoplasia, head and neck cancer, breast
cancer, prostate cancer, and other cancers. Although no products have been
commercialized to date, research and development and investment continues to be
placed behind the pipeline and the advancement of this technology. Pipeline
development and the further exploration of the technology for advancement entail
risk and expense. It is anticipated that ongoing operational costs for the
Company will continue to increase significantly due to several ongoing clinical
trials that began this fiscal year.
Basis
of Presentation
The
accompanying unaudited interim financial statements include all adjustments
(consisting only of those of a normal recurring nature) necessary for a fair
statement of the results of the interim period. The October 31, 2009 balance
sheet is derived from the audited balance sheet included in the Company’s Annual
Report on Form 10-K for the fiscal year ended October 31, 2009 (the “Form
10-K’). These interim financial statements should be read in conjunction with
the Company’s financial statements and notes for the fiscal year ended October
31, 2009 included in the Form 10-K. The Company believes these financial
statements reflect all adjustments (consisting only of normal, recurring
adjustments) that are necessary for a fair presentation of its financial
position and results of operations for the periods presented. Management’s plans
are to continue to raise additional funds through the sales of debt or equity
securities. Results of operations for the interim periods presented are not
necessarily indicative of results to be expected for the year.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. There is a working capital deficiency, a
shareholders’ deficiency and recurring losses from operations that raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments to the carrying amount and
classification of recorded assets and liabilities should the Company be unable
to continue operations.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles required management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and the differences could be
material. The most significant estimates impact the following transactions or
account balances: stock compensation, liabilities (including the embedded
derivative liability), warrant valuation, impairment of intangibles and fixed
assets and projected operating results.
6
Net
Loss Per Share
Basic net
income or basic net loss per common share is computed by dividing net income
available to common shareholders by the weighted average number of common shares
outstanding during the periods. Diluted earnings per share gives effect to
dilutive options, warrants, convertible debt and other potential common
stock outstanding during the period. Therefore, in the case of a net loss the
impact of the potential common stock resulting from warrants, outstanding stock
options and convertible debt are not included in the computation of diluted
loss per share, as the effect would be anti-dilutive. In the case of net income
the impact of the potential common stock resulting from these instruments that
have intrinsic value are included in the diluted earnings per share. The table
sets forth the number of potential shares of common stock that have been
excluded from diluted net loss per share. In the calculation of diluted weighted
average number of shares (for the three months ending July 31, 2010)
approximately 1.2 million shares were included from stock options, 6.2 million
shares from convertible debt and 11.5 million shares from in-the-money
warrants. The warrants (excluding approximately 43.3 million warrants held
by an affiliate of Optimus (as defined below) include anti-dilutive provisions
to adjust the number and price of the warrants based on certain types of equity
transactions.
As of July 31,
|
||||||||
2010
|
2009
|
|||||||
Warrants
|
40,550,218
|
89,143,801
|
||||||
Stock
Options
|
-
|
17,962,841
|
||||||
Total
|
40,550,218
|
107,106,642
|
Research
and Development Expenses
Research
and development expenses include, but are not limited to, payroll and personnel
expenses, lab expenses, clinical trial and related clinical manufacturing costs,
facilities and related overhead costs.
Accounting
for Stock-Based Compensation
Stock-based
compensation is estimated at the grant date based on the award’s fair value as
calculated by the Black-Scholes-Merton option-pricing model (hereinafter
referred to as the “BSM model”) and is recognized as expense over the requisite
service period. The BSM model requires various assumptions including volatility,
forfeiture rates and expected option life. If any of the assumptions used in the
BSM model change significantly, stock-based compensation expense may differ
materially in the future from that recorded in the current period. See Note 5
for information on stock-based compensation expense incurred in the three months
ending July 31, 2010.
Warrant
Liability/Embedded Derivative Liability
The
Company has outstanding Warrants and convertible features (Embedded Derivatives)
in its outstanding Senior and Junior Subordinated Promissory Notes. The Warrants
and Embedded Derivatives are recorded at their relative fair values at issuance
and will continue to be recorded at fair value each subsequent balance sheet
date. Any change in value between reporting periods will be recorded at each
reporting date. Both derivatives will continue to be reported until such time as
they are exercised, expire, or mature at which time these derivatives will be
adjusted to fair value and reclassified from liabilities to equity.
In April 2010, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-17, Revenue Recognition—Milestone Method
(Topic 605) - Milestone Method of Revenue Recognition - a consensus of the FASB
Emerging Issues Task Force . This ASU provides guidance to vendors on the
criteria that should be met for determining whether the milestone method of
revenue recognition is appropriate. This guidance is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Early adoption is permitted.
Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
7
3.
INTANGIBLE ASSETS
Intangible
assets primarily consist of legal and filing costs associated with obtaining
patents and licenses. The license and patent costs capitalized primarily
represent the value assigned to the Company’s 20-year exclusive worldwide
license agreement with Penn which are amortized on a straight-line basis over
their remaining useful lives which are estimated to be twenty years from the
effective date of Penn Agreement dated July 1, 2002. The value of the license
and patents are based on management’s assessment regarding the ultimate
recoverability of the amounts paid and the potential for alternative future
uses. This license now includes the exclusive right to exploit 28 patents issued
and 44 patents pending and applied for in most of the largest markets in the
world.
As of
July 31, 2010, all gross capitalized costs associated with the licenses and
patents filed and granted as well as costs associated with patents pending are
$2,393,795 as shown under license and patents on the table below. The
expirations of the existing patents range from 2014 to 2023 but the expirations
can be extended based on market approval if granted and/or based on existing
laws and regulations. Capitalized costs associated with patent applications that
are abandoned without future value are charged to expense when the determination
is made not to pursue the application. No other patent applications with future
value were abandoned and charged to expense in the current or prior year.
Amortization expense for licensed technology and capitalized patent cost is
included in general and administrative expenses.
Under the
amended and restated agreement we are billed actual patent expenses as they are
passed through from Penn and or billed directly from our patent attorney. The
following is a summary of intangible assets as of the end of the following
fiscal periods:
July 31,
2010
|
October 31,
2009
|
|||||||
License
|
$
|
651,992
|
$
|
571,275
|
||||
Patents
|
1,741,803
|
1,080,299
|
||||||
Total
intangibles
|
2,393,795
|
1,651,574
|
||||||
Accumulated
Amortization
|
(349,730
|
) |
(279,936
|
) | ||||
Intangible
Assets
|
$
|
2,044,065
|
$
|
1,371,638
|
The
Company reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An asset is considered to be impaired when the sum of the
undiscounted future net cash flows expected to result from the use of the asset
and its eventual disposition exceeds its carrying amount. The amount of
impairment loss, if any, is measured as the difference between the net book
value of the asset and its estimated fair value.
4.
NOTES PAYABLE AND DERIVATIVE INSTRUMENTS
Moore
Notes
On
September 22, 2008, Advaxis entered into an agreement (the “Moore Agreement”)
with the Company’s Chief Executive Officer, Thomas Moore, pursuant to which the
Company agreed to sell senior promissory notes to Mr. Moore, from time to time
(“the Moore Notes”). On June 15, 2009, Mr. Moore and the Company amended the
Moore Notes to increase the amounts available pursuant to the Moore Agreement
from $800,000 to $950,000 and change the maturity date of the Moore Notes from
June 15, 2009 to the earlier of January 1, 2010 or the Company’s next equity
financing resulting in gross proceeds to the Company of at least $6 million. The
Moore Agreement was amended per the terms of the June 18, 2009 Note Purchase
Agreement (described below) retroactively to include the same warrant provision
provided to investors purchasing notes under the Note Purchase
Agreement.
On
February 15, 2010, we agreed to amend the terms of the Moore Notes such that (i)
Mr. Moore may elect, at his option, to receive accumulated interest thereon on
or after March 17, 2010, (ii) we would begin to make monthly installment
payments of $100,000 on the outstanding principal amount beginning on April 15,
2010; provided, however, that the balance of the principal will be repaid in
full on consummation of our next equity financing resulting in gross proceeds to
us of at least $6.0 million and (iii) we would retain $200,000 of the repayment
amount for investment in our next equity financing.
In the
three months ending July 31, 2010, the Company issued 1,176,471 shares in
satisfaction of $200,000 of the aggregate principal amount outstanding under the
Moore Notes. For the nine months ending July 31,2010, the Company paid Mr. Moore
$250,000 in principal and $130,000 in interest.
Senior
Convertible Promissory Notes
Effective
June 18, 2009, the Company entered into a Note Purchase Agreement with certain
accredited investors, pursuant to which such investors acquired senior
convertible promissory notes of the Company in the aggregate principal face
amount of $1,131,353, for an aggregate net purchase price of $961,650. At July
31, 2010, the Company had repaid $981,353 of these notes and $150,000 principal
value remained outstanding.
8
Junior
Subordinated Convertible Promissory Notes
Additionally,
on October 26, and October 30, 2009 the Company entered into Bridge Note
agreements whereby certain accredited investors acquired junior subordinated
convertible promissory notes of the Company in the aggregate face amounts of
$1,617,647 and $529,412 for aggregate net purchase prices of $1,375,000 and
$450,000 respectively. As of July 31, 2010, of the $1,617,647 the Company had
repaid $117,647 and issued common stock in satisfaction of the remaining
$1,500,000. All $529,412 of the October 30, 2009 notes were satisfied by the
issuance of 3,114,188 shares of the Company’s common stock during the quarter
ending July 31, 2010.
During
the three months ended January 31, 2010 the Company entered into Bridge Note
agreements whereby certain accredited investors acquired junior subordinated
convertible promissory notes of the Company in the aggregate face amounts of
$555,882 for aggregate net purchase prices of $472,500. These junior
subordinated convertible promissory notes matured on dates ranging from March
16, 2010 through August 11, 2010 subject to certain provisions in the note
agreement. As of July 31, 2010, of the $555,882, the Company had issued common
stock in satisfaction of $147,058 of these promissory notes, leaving $408,824
outstanding.
During
the three months ended April 30, 2010 the Company entered into Junior
Subordinated Convertible Promissory Notes in the aggregate principal value of
$640,307 for an aggregate net purchase price of $542,500. These notes mature on
dates ranging from July 30, 2010 to November 30, 2010. As of July 31, 2010, the
Company had repaid $29,412, issued common stock in satisfaction of $243,902 of
these notes, leaving $366,993 outstanding at July 31, 2010.
As of
July 31, 2010, all Bridge Notes were originally issued with an original issue
discounts ranging from 10% to 18%. Each Investor paid between $0.82 and $.90 for
each $1.00 of principal amount of notes purchased at the closing. The bridge
notes are convertible into shares of the Company’s common stock at an exercise
price contingent on the completion of an equity financing. For every dollar
invested, each Investor received warrants to purchase 2 ½ shares of common stock
(the “Bridge Warrants”) subject to adjustments upon the occurrence of certain
events as more particularly described below and in the form of Warrant. As of
July 31, 2010 all Bridge Note warrants have an exercise price of $.17 per share.
The Bridge Notes may be prepaid in whole or in part at the option of the Company
without penalty at any time prior to the Maturity Date. The warrants may be
exercised on a cashless basis under certain circumstances.
We
refer to all Senior Convertible Promissory Notes and Junior Subordinated
Convertible Promissory Notes as “Bridge Notes”.
Activity
related to the Bridge Notes from issuance is as follows:
Bridge
Note – Principal Value - Issued
|
$
|
4,474,601
|
||
Principal
payments on Bridge Notes
|
(1,128,413
|
)
|
||
Bridge
Note Conversions
|
(2,420,373
|
)
|
||
Original
Issue Discount, net of accreted interest
|
(17,532
|
)
|
||
Fair
Value of Attached Warrants at issuance
|
(1,580,247
|
)
|
||
Fair
Value of Embedded Derivatives at issuance
|
(2,430,858
|
)
|
||
Accreted
interest on embedded derivative and warrant liabilities
|
3,892,195
|
|||
Convertible
Bridge Notes- as of July 31, 2010
|
$
|
789,373
|
||
Embedded
Derivatives Liability at July 31, 2010
|
102,433
|
|||
Convertible Bridge
Notes and fair value of embedded derivative
|
$
|
891,806
|
BioAdvance
Note
BioAdvance
Biotechnology Greenhouse of Southeastern Pennsylvania Notes (“BioAdvance”)
received notes from the Company for $10,000 dated November 13, 2003 and $40,000
dated December 17, 2003 that were each due on the fifth anniversary date
thereof. During November 2009 , the Company paid $14,788 in full payment of the
November 13, 2003 note and BioAdvance agreed to extend the remaining note.
During the three months ending July 31, 2010, the Company paid $10,000 in
accrued interest on the remaining note. As of July 31, 2010, the Company owes
approximately $40,000 in principal and $11,000 in interest to BioAdvance. The
terms of the outstanding note calls for accrual of 8% interest per annum on the
unpaid principal.
9
Derivative
Instruments
The table
below lists the Company’s derivative instruments as of July 31,
2010:
Description
|
Principal
|
Original
Issue
Discount
|
Warrant
Liability
|
Embedded
Derivative
Liability
|
||||||||||||
Bridge
Note I-June 18, 2009
|
$
|
1,131,353
|
$
|
169,703
|
$
|
250,392
|
$
|
711,258
|
||||||||
Bridge
Note II & III-October 26 & 30, 2009
|
2,147,059
|
322,059
|
690,119
|
868,388
|
||||||||||||
Optimus
September 24, 2009
|
-
|
-
|
3,587,625
|
-
|
||||||||||||
Other
outstanding warrants
|
-
|
-
|
12,785,695
|
-
|
||||||||||||
Total
Valuation at Origination
|
$
|
3,278,412
|
$
|
491,762
|
$
|
17,313,831
|
$
|
1,579,646
|
||||||||
Change
in fair value
|
-
|
-
|
(5,352,097
|
)
|
(493,132
|
)
|
||||||||||
Accreted
interest
|
-
|
(123,846
|
)
|
-
|
-
|
|||||||||||
Total
Valuation as of October 31, 2009
|
$
|
3,278,412
|
$
|
367,916
|
$
|
11,961,734
|
$
|
1,086,514
|
||||||||
Bridge
Notes IV – December 1, 2009 through January 31, 2010
|
555,882
|
83,382
|
207,617
|
164,400
|
||||||||||||
Bridge
Note I- Extension of Maturity Date
|
202,500
|
103,400
|
||||||||||||||
Change
in fair value
|
1,995,372
|
(905,259
|
)
|
|||||||||||||
Accreted
interest
|
(225,321
|
)
|
||||||||||||||
Exercise
of Common Stock Warrants
|
(1,702,073
|
)
|
||||||||||||||
Total
Valuation as of January 31, 2010
|
$
|
3,834,294
|
$
|
225,977
|
$
|
12,665,150
|
$
|
449,055
|
||||||||
Bridge
Note V
|
640,307
|
97,807
|
229,619
|
271,554
|
||||||||||||
Change
in fair value
|
5,363,854
|
421,404
|
||||||||||||||
Accreted
interest
|
(251,188
|
)
|
||||||||||||||
Exercise
of common stock warrants
|
(1,790,823
|
)
|
||||||||||||||
Note
Payoffs
|
(1,040,177
|
)
|
(4,222
|
)
|
(64,354
|
)
|
||||||||||
Total
Valuation as of April 30, 2010
|
$
|
3,434,424
|
$
|
68,374
|
$
|
16,467,800
|
$
|
1,077,659
|
||||||||
Issuance
of Optimus Warrants
|
6,856,946
|
|||||||||||||||
Bridge
Note Conversions
|
(2,420,373
|
)
|
(701,718
|
)
|
||||||||||||
Change
in fair value
|
(3,866,801
|
)
|
(260,843
|
)
|
||||||||||||
Accreted
interest
|
(50,842
|
)
|
||||||||||||||
Exercise
of common stock warrants
|
(1,475,758
|
)
|
||||||||||||||
Note
Payoffs
|
(88,236
|
)
|
(12,665
|
)
|
||||||||||||
Total
Valuation as of July 31, 2010
|
$
|
925,815
|
$
|
17,532
|
$
|
17,982,187
|
$
|
102,433
|
Warrants
As of
July 31, 2010, there were outstanding warrants to purchase 120,754,407 shares of
our common stock with exercise prices ranging from $0.17 to $0.287 per share.
Information on the outstanding warrants is as follows:
Type
|
Exercise
Price
|
Amount
|
Expiration Date
|
Type of Financing
|
||||
Common
Stock Purchase Warrant
|
$0.17
– 0.287
|
65,049,197
|
February
2011 – October 2012
|
2007
Securities Purchase Agreement
|
||||
Common
Stock Purchase Warrant
|
$0.17
|
12,387,210
|
June
2014 – April 2015
|
Bridge
Notes
|
||||
Subtotal
|
77,436,407
|
|||||||
Common
Stock Purchase
Warrant
|
$0.18
|
2,818,000
|
September
2012
|
Optimus
Preferred Stock Agreement (9/24/2009)
|
||||
Common
Stock Purchase Warrant
|
TBD
(1)
|
40,500,000
|
July
2013
|
Optimus
Preferred Stock Agreement (7/19/2010)
|
||||
Grand
Total
|
120,754,407
|
(1) For purposes of
this warrant, exercise price means an amount per warrant share equal to the
closing sale price of a share of common stock on the applicable tranche notice
date.
10
Warrant
Liability/Embedded Derivative Liability
The fair
value of the Warrants and Embedded Derivatives are estimated using the BSM
model. As of July 31, 2010, the fair value of the Warrants and Embedded
Derivatives were determined to be approximately $18.0 million and $0.1 million,
respectively. We charged to income approximately $2.8 million in net changes in
fair value of common stock warrant liability and embedded derivative liability
for the nine months ended July 31, 2010.
5.
ACCOUNTING FOR STOCK BASED COMPENSATION PLANS
The
Company records compensation expense associated with stock options based on the
estimated fair value of each option award that was granted using the
Black-Scholes option valuation model.
The table
below summarizes compensation expenses from share-based payment
awards:
For the nine months ending
July 31
|
||||||||
2010
|
2009
|
|||||||
Research
and development
|
$
|
115,285
|
$
|
143,486
|
||||
General
and Administrative
|
318,091
|
202,984
|
||||||
Total
stock compensation expense recognized
|
$
|
433,376
|
$
|
346,470
|
Total
unrecognized estimated compensation expense related to non-vested stock options
granted and outstanding as of July 31, 2010 was $425,000 which is expected to be
recognized over a weighted-average period of one year.
Approximately
300,000 options were exercised over the three and nine months ended July 31,
2010. For the three and nine months ended July 31, 2010, the Company
granted 150,000 and 1,900,000 options at a weighted average Black Scholes value
and exercise price of approximately $0.18 and $0.13, respectively.
6.
COMMITMENTS AND CONTINGENCIES
University
of Pennsylvania
On May
10, 2010, the Company and Penn entered into a second amendment (the “ Second Amendment
Agreement ”) to the 20-year exclusive worldwide license agreement.
Pursuant to the Second Amendment Agreement, the Company acquired exclusive
licenses for an additional 27 patents related to the Company’s proprietary Listeria vaccine technology,
some of which expire as late as 2023. As per the terms of the Second Amendment
Agreement, the Company acknowledges that it owes Penn approximately $249,000 in
patent expenses and $130,000 in sponsored research agreement fees. The Company
has agreed to satisfy these obligations in five monthly payments of $65,000
beginning in May, 2010 plus a payment of approximately $54,000 before September
30, 2010.
In
addition, the Company has exercised an option for the rights to seven additional
patent dockets at an option exercise fee of $10,000 per patent docket ($70,000
in the aggregate). Pursuant to the terms of the Second Amendment Agreement, Penn
has the option to receive the option exercise fee in the form of a cash payment
in the amount of $70,000, shares of the Company common stock valued at $140,000
(based on a price per share of the Company’s most recently completed financing
round) or a combination of cash and Company common stock (provided that the
stock component is not less than 25% of the total payment). Penn has elected to
receive payment of the option exercise fee in the form of $35,000 in cash and
$70,000 in company common stock (approximately 388,889 shares of common stock
based on a price of $0.18 per share).
After
giving effect to the foregoing payments and stock issuances, the Company will
have completed its acquisition of available patents previously reported as an
unrecorded contingent liability of approximately $589,000.
During
the first nine months of 2010, the Company paid $368,615 to Penn under these
agreements.
Other
Pursuant
to a Clinical Research Service Agreement, the Company is obligated to pay
Pharm–Olam International for service fees related to our Phase I clinical trial.
As of July 31, 2010, the Company has an outstanding balance of $219,131 on this
agreement.
11
We are
party to a consulting agreement with The Sage Group, a health-care strategy
consultant assisting us with a program to commercialize our vaccines. The
initial agreement was entered into in January 2009 and subsequently amended on
July 22, 2009. Pursuant to the terms of agreement, as amended, we have
agreed to pay Sage (i) $5,000 per month until an aggregate of $120,000 has been
paid to Sage under the consulting agreement and (ii) a 5% commission for certain
transactions if completed in the first 24 months of the term of the agreement,
reduced to 2% if completed in the 12 months thereafter. The Sage Group has been
paid approximately $40,600 through July 31, 2010.
On June
19, 2009 we entered into a Master Agreement and on July 8, 2009 we entered into
a Project Agreement with Numoda, a leading clinical trial and logistics
management company, to oversee Phase II clinical activity with ADXS11-001 for
the treatment of invasive cervical cancer and CIN. Numoda will be
responsible globally for integrating oversight and logistical functions with the
clinical research organizations, contract laboratories, academic laboratories
and statistical groups involved. The scope of this agreement covers over
three years and is estimated to cost approximately $8 million for both trials.
Per the agreement, the Company is permitted to pay a portion of outstanding
charges to Numoda in the form of the Company’s common stock and during May 2010,
the Company issued 3,500,000 shares of its common stock to an affiliate of
Numoda in satisfaction of $595,000 in services rendered by Numoda to the Company
under the Master Agreement. The Company has recorded deferred expenses on the
balance sheet for this amount and amortizes this amount to expense over the life
of the agreement. At July 31, 2010, the balance in deferred expenses was
approximately $361,000.
The
Company operates under a month to month lease for its laboratory and office
space. There are no aggregate future minimum payments due as of July 31,
2010.
7.
SHAREHOLDERS’ EQUITY
Series
A Preferred Stock Equity Financing
On May
13, 2010, the Company issued and sold 139 shares of non-convertible, redeemable
Series A preferred stock to Optimus Life Sciences Capital Partners, LLC
(“Optimus”) pursuant to the terms of a Preferred Stock Purchase Agreement
between the Company and Optimus dated September 24, 2009 (the “Series A Purchase
Agreement ”). The Company received net proceeds of $1,285,000 from this
transaction. The aggregate purchase price for the Series A preferred stock was
$1.39 million (less $105,000 representing an administrative fee and legal
fees).
Series
B Preferred Stock Financing
On July
19, 2010, the Company entered into a Series B Preferred Stock Purchase Agreement
with Optimus (the “Series B Purchase Agreement”), pursuant to which Optimus
agreed to purchase, upon the terms and subject to the conditions set forth
therein and described below, up to $7.5 million of the Company’s newly
authorized, non-convertible, redeemable Series B preferred stock (“Series B
Preferred Stock”) at a price of $10,000 per share. Under the terms of the
Series B Purchase Agreement, subject to the Company’s ability to maintain an
effective registration statement for the Warrant Shares (as defined below), the
Company may from time to time until July 19, 2013, present Optimus with a notice
to purchase a specified amount of Series B Preferred Stock. Subject to
satisfaction of certain closing conditions, Optimus is obligated to purchase
such shares of Series B Preferred Stock on the 10th trading day after the date
of the notice. The Company will determine, in its sole discretion, the timing
and amount of Series B Preferred Stock to be purchased by Optimus, and may sell
such shares in multiple tranches. Optimus will not be obligated to purchase the
Series B Preferred Stock upon the Company’s notice (i) in the event the average
closing sale price of the Company’s common stock during the nine trading days
following delivery of such notice falls below 75% of the closing sale price of
the Company’s common stock on the trading day prior to the date such notice is
delivered to Optimus, or (ii) to the extent such purchase would result in the
Company and its affiliates beneficially owning more than 9.99% of the Company’s
outstanding common stock. The Series B Preferred Stock is only redeemable
at the option of the Company as set forth in the Company’s Certificate of
Designations of Preferences, Rights and Limitations of Series B Preferred Stock
and not otherwise subject to redemption or repurchase by the Company in any
circumstances.
On July
19, 2010, the Company issued 500 shares of Series B Preferred Stock to Optimus
in exchange for the 500 shares of Series A Preferred Stock issued under the
Series A Purchase Agreement so that all shares of the Company’s preferred stock
held or subsequently purchased by Optimus under the Series B Purchase Agreement
would be redeemable upon substantially identical terms. Any accrued and
unpaid dividends on the Series A Preferred Stock were deemed cancelled and such
amount of accrued and unpaid dividends were reflected as accrued and unpaid
dividends of the Series B Preferred Stock issued to Optimus.
Pursuant
to the Series B Purchase Agreement, on July 19, 2010, the Company issued to an
affiliate of Optimus a three-year warrant to purchase up to 40,500,000 shares of
the Company’s common stock (the “Warrant Shares”), at an initial exercise price
of $0.25 per share, subject to adjustment as described below. The warrant
consists of and is exercisable in tranches, with a separate tranche being
created upon each delivery of a tranche notice under the Series B Purchase
Agreement. On each tranche notice date, that portion of the warrant equal to
135% of the tranche amount will vest and become exercisable, and such vested
portion may be exercised at any time during the exercise period on or after such
tranche notice date. On and after the first tranche notice date and each
subsequent tranche notice date, the exercise price of the warrant will be
adjusted to the closing sale price of a share of the Company’s common stock on
the applicable tranche notice date. The exercise price of the warrant may be
paid (at the option of the affiliate of Optimus) in cash or by its issuance of a
four-year, full-recourse promissory note, bearing interest at 2% per annum, and
secured by a specified portfolio of assets. However, such promissory note is not
due or payable at any time that (a) the Company is in default of any preferred
stock purchase agreement for Series B Preferred Stock or any warrant issued
pursuant thereto, any loan agreement or other material agreement or (b) there
are any shares of the Series B Preferred Stock issued or
outstanding.
12
Warrants
Almost
all of our warrants (except the warrants issued to an affiliate of Optimus)
contain “full-ratchet” anti-dilution provisions originally set at $0.20 with a
term of five years. The Optimus exercise of warrants on January 11, 2010
triggered the anti dilution provisions of the warrant agreements requiring a
reset of both the price of these warrants (from $.20 to $.17) and an increase in
amount of warrants. Therefore, any future financial offering or instrument
issuance below $0.17 per share of the Company’s common stock or warrants
(subject to certain exceptions) will cause further anti-dilution and/or
repricing provisions in the above mentioned 77.4 million outstanding
warrants. Additionally, the Company had approximately 31.4 million warrants
expire during November and December 2009.
8. SUBSEQUENT EVENTS
Series
B Preferred Equity Financing
On August
13, 2010, the Company issued and sold 124 shares of Series B preferred stock to
Optimus pursuant to the terms of the Series B Purchase Agreement. The
aggregate purchase price for the shares of Series B Preferred Stock was $1.24
million (of which the Company received $1.040 million, net of the $.2
million commitment fee) . As of July 31, 2010, 626 shares of Series B
Preferred Stock remained available for sale under the Series B Purchase
Agreement.
In
connection with the issuance by the Company of the Series B Preferred Stock
described above, an affiliate of Optimus exercised a warrant to purchase
9,847,059 shares of the Company’s common stock at an exercise price of $0.17 per
share. As permitted by the terms of such warrant, the aggregate exercise
price of $1,674,000 received by the Company is payable pursuant to a 4 year full
recourse promissory note bearing interest at the rate of 2% per
year.
Junior
Subordinated Convertible Promissory Notes
In August
2010, the Company entered into Bridge Note agreements whereby certain accredited
investors acquired junior subordinated convertible promissory notes of the
Company in the aggregate face amounts of approximately $254,000 for aggregate
net purchase prices of $230,000. These junior subordinated convertible
promissory notes mature on dates ranging from December 31, 2010 through April
30, 2011 subject to certain provisions in the note agreement. In addition,
in August 2010, the Company repaid two junior bridge notes in the principal
amounts of $64,706.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Cautionary
Note Regarding Forward Looking Statements
The
Company has included in this Quarterly Report certain “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995 concerning the Company’s business, operations and financial condition.
“Forward-looking statements” consist of all non-historical information, and the
analysis of historical information, including the references in this Quarterly
Report to future revenues, collaborative agreements, future expense growth,
future credit exposure, earnings before interest, taxes, depreciation and
amortization, future profitability, anticipated cash resources, anticipated
capital expenditures, capital requirements, and the Company’s plans for future
periods. In addition, the words “could”, “expects”, “anticipates”, “objective”,
“plan”, “may affect”, “may depend”, “believes”, “estimates”, “projects” and
similar words and phrases are also intended to identify such forward-looking
statements. Such factors include the risk factors included in the Company’s
Annual Report on Form 10-K for the fiscal year ended October 31, 2009 and other
factors discussed in connection with any forward-looking statement.
Actual
results could differ materially from those projected in the Company’s
forward-looking statements due to numerous known and unknown risks and
uncertainties, including, among other things, the Company’s ability to raise
capital unanticipated technological difficulties, the length, scope and outcome
of our clinical trial, costs related to intellectual property, cost of
manufacturing and higher consulting costs, product demand, changes in domestic
and foreign economic, market and regulatory conditions, the inherent uncertainty
of financial estimates and projections, the uncertainties involved in certain
legal proceedings, instabilities arising from terrorist actions and responses
thereto, and other considerations described as “Risk Factors” in other filings
by the Company with the SEC. Such factors may also cause substantial volatility
in the market price of the Company’s Common Stock. All such forward-looking
statements are current only as of the date on which such statements were made.
The Company does not undertake any obligation to publicly update any
forward-looking statement to reflect events or circumstances after the date on
which any such statement is made or to reflect the occurrence of unanticipated
events.
13
General
On July
28, 2005 we began trading on the Over-The-Counter Bulletin Board (OTC: BB) under
the ticker symbol ADXS.
We are a
development stage biotechnology company with the intent to develop safe and
effective cancer vaccines that utilize multiple mechanisms of immunity. We are
developing a live Listeria vaccine technology
under license from the University of Pennsylvania (“Penn”) which secretes a
protein sequence containing a tumor-specific antigen. We believe this vaccine
technology is capable of stimulating the body’s immune system to process and
recognize the antigen as if it were foreign, generating an immune response able
to attack the cancer. We believe this to be a broadly enabling platform
technology that can be applied to the treatment of many types of cancers,
infectious diseases and auto-immune disorders.
The
discoveries that underlie this innovative technology are based upon the work of
Yvonne Paterson, Ph.D., Professor of Microbiology at Penn. This technology
involves the creation of genetically engineered Listeria that stimulate the
innate immune system and induce an antigen-specific immune response involving
both arms of the adaptive immune system. In addition, this technology supports
among other things the immune response by altering tumors to make them more
susceptible to immune attack stimulating the development of specific
blood cells that underlie a strong therapeutic immune response.
We have
no customers. Since our inception in 2002, we have focused our development
efforts upon understanding our technology and establishing a product development
pipeline that incorporates this technology in the therapeutic cancer vaccines
area targeting cervical, head and neck, prostate, breast, and a pre cancerous
indication of cervical intraepithelial neoplasia, which we refer to as CIN.
Although no products have been commercialized to date, research and development
and investment continues to be placed behind the pipeline and the advancement of
this technology. Pipeline development and the further exploration of the
technology for advancement entail risk and expense. We anticipate that our
ongoing operational costs will increase significantly as we continue our four
Phase II clinical trials that started his fiscal year.
RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2010 AND 2009
Revenue
Revenue
increased for the current period by approximately $176, 800 representing grant
revenue received compared to $(5,369) in the same period a year
ago.
Research
and Development Expenses
Research
and development expenses increased by approximately $371, 600, or 78% to
approximately $848,000 for the three months ended July 31, 2010 as compared with
approximately $476,400 for the same period a year ago. This is
principally attributable to clinical trial expenses increasing significantly
resulting from our clinical trials in the United States and India which were
initiated during the first fiscal quarter of 2010. This increase was somewhat
offset by overall lower compensation expense resulting from fewer employees
compared with the prior year and lower stock-based compensation compared with
the prior year.
We
anticipate a significant increase in R&D expenses as a result of expanded
development efforts primarily related to clinical trials and product
development. In addition, expenses will be incurred in the development of
strategic and other relationships required to license, manufacture and
distribute our product candidates.
General
and Administrative Expenses
General
and administrative expenses increased by $143,300 or 15%, to approximately
$1,129,000 for the three months ended July 31, 2010 as compared with $985,700
for the same period a year ago. This was the result of overall compensation
expense being higher in the current period resulting from additional employees,
costs related to a former employee and stock based compensation as a result of
the issuance of 750,000 shares of the Company’s common stock pursuant to an
executive’s employment agreement with the Company. Overall professional and
consulting fees decreased as a result of higher legal fees in 2009 which did not
repeat in the current period more than offset by higher current period
consulting and travel costs associated with increased efforts by the Company to
present its scientific and business plans.
Interest
Expense/ Income
For the
three months ended July 31, 2010, interest expense decreased to approximately
$316,400 from approximately $374,600 primarily resulting from the conversion and
payoff of Bridge Notes during the second and third fiscal quarters of 2010.
Interest income of approximately $31,000 was the result of interest earned from
the Optimus transaction note receivable.
14
Changes
in Fair Values
The
change in fair value of the common stock warrant liability and embedded
derivative liability increased income by approximately $2.1 million for the
three months ending July 31, 2010 compared to the same period a year ago. Both
periods recorded income as a result of a decline in share price during each
period. The Company’s common stock declined, from $0.21 at April 30, 2010 to
$0.17 at July 31, 2010, resulting in substantially all of the $4.1 million
reflected on the statement of operations for the three months ended July 31,
2010.
Potential
future increases or decreases in our stock price will result in increased or
decreased warrant and embedded derivative liabilities, respectively, on our
balance sheet and therefore increased expenses being recognized in our statement
of operations in future periods.
For the three months ended July 31,
2010, the Company recorded income of approximately $12,700 on the non-cash gain
on the early retirement of certain Bridge Notes.
RESULTS
OF OPERATIONS FOR THE NINE MONTHS ENDED JULY 31, 2010 AND 2009
Revenue
Revenue
increased for the current period by approximately $264,000 representing grant
revenue received compared to essentially zero for the same period a year
ago.
Research
and Development Expenses
Research
and development expenses increased by approximately $1,991,000 to approximately
$2,930,000 for the nine months ended July 31, 2010 as compared with
approximately $939,000 for same period a year ago. This is
principally attributable to clinical trial expenses increasing significantly,
due to our clinical trial activity in the United States and
India initiated during the first fiscal quarter of 2010 somewhat
offset by lower overall compensation expense in the current period, reflecting
fewer employees than the same period a year ago as well as lower stock based
compensation. Additionally, the reversal of a bonus accrual in the 2009 period
did not repeat in the current year.
We
anticipate a significant increase in R&D expenses as a result of expanded
development and commercialization efforts primarily related to clinical trials
and product development. In addition, expenses will be incurred in the
development of strategic and other relationships required to license manufacture
and distribute our product candidates.
General
and Administrative Expenses
General
and administrative expenses increased by approximately $477,200 or 24%, to
approximately $2,496,900 for the nine months ended July 31, 2010 as compared to
$2,019,600 for the same period last year. This is primarily
attributable to overall compensation expense being higher in the current period
resulting from additional employees and costs related to a former employee.
Stock-based non cash compensation increased during the current period as a
result of the issuance of 750,000 shares of the company’s common stock pursuant
to an executive’s employment agreement with the company and was largely offset
by lower expense associated with the Company’s stock options. Overall
professional and consulting fees decreased as a result of higher legal fees in
2009 which did not repeat in the current period more than offset by higher
current period consulting and travel costs associated with increased efforts by
the Company to present its scientific and business plans.
Interest
Expense/Income
In the
nine months ended July 31, 2010, net interest expense increased by approximately
$3.2 million primarily due to the sale of Bridge Notes during the third and
fourth fiscal quarters of 2009 and the nine months ended July 31, 2010.
Additionally, the debt discount, warrant liabilities and embedded derivatives
related to the Bridge Notes are recorded as a liability on the balance sheet and
are amortized to interest expense over the life of the Bridge
Note. Interest income of approximately $48,000 was the result of
interest earned from the Optimus transaction note receivable.
Changes
in Fair Values
The
change in fair value of the common stock warrant liability and embedded
derivative liability increased expense by approximately $4.8 million for the
nine months ending July 31, 2010 compared to the same period a year ago. During
the 2009 period the Company recorded income as the fair value of its derivative
liability was lower resulting from a lower per share price of its common
stock. For the nine months ending July 31, 2010, the BSM
values associated with these derivatives increased resulting from the increase
in the price of Advaxis common stock, from $0.135 at October 31, 2009 to $0.17
at July 31, 2010.,
15
Potential
future increases or decreases in our stock price will result in increased or
decreased warrant and embedded derivative liabilities, respectively, on our
balance sheet and therefore increased expenses being recognized in our statement
of operations in future periods.
In the nine months ended July 31, 2010,
the Company recorded income of approximately $77,000 on the non-cash gain on the
early retirement of certain Bridge Notes.
Income
Tax Benefit
For the
nine months ended July 31, 2010, other income decreased by approximately
$643,000, to approximately $279,000 in income from approximately $922,000 a year
ago, primarily due to the 2009 period NOL being the first time we received funds
from the program and covered all prior years NOLs from our inception
whereas Fiscal 2010 covered only the current year’s NOL and prior two years of
the research tax credit.
Liquidity
and Capital Resources
Since our
inception through July 31, 2010, the Company has reported accumulated net losses
of approximately$27.8 million and recurring negative cash flows from operations.
We anticipate that we will continue to generate significant losses from
operations for the foreseeable future.
Cash used
in operating activities, for the nine months ending July 31, 2010, was
approximately $4.2 million, primarily as a result of the following: increased
R&D spending on clinical trials, and somewhat higher general and
administrative spending compared to the corresponding period in the
prior year.
Cash used
in investing activities, for the nine months ending July 31, 2010, was
approximately $.8 million resulting from legal cost spending in support of our
intangible assets (patents) and costs paid to the University of Pennsylvania for
patent research.
Cash
provided by financing activities, for the nine months ending July 31, 2010, was
approximately $4.3 million, resulting from the sale of preferred stock to
Optimus and proceeds received from exercise of warrants. Principal payments on
notes payable were slightly higher than proceeds from the sale of promissory
notes.
Preferred
Equity Financing
From
January 11, 2010, through July 31, 2010 the Company issued and sold 500 shares
of non-convertible, redeemable Series A Preferred Stock to Optimus pursuant to
the terms of a Preferred Stock Purchase Agreement (the “Series A Preferred Stock
Purchase Agreement”). The Company received gross proceeds of $5.0 million (net
proceeds of $4.5 million) from this transaction.
In
connection with the transaction, an affiliate of Optimus was granted 33,750,000
warrants on September 24, 2009 and 2,818,000 warrants on May 13, 2010. Optimus
exercised all 33,750,000 warrants at exercise prices ranging from $.17 to $.20
and the May 2010 warrants remained outstanding as of July 31, 2010.
We have
entered into the Series B Preferred Stock Purchase Agreement with Optimus dated
July 19, 2010 (the “Series B Purchase Agreement”), pursuant to which Optimus has
agreed to purchase up to $7.5 million of our Series B Preferred Stock from time
to time, subject to our ability to maintain an effective registration statement
for the shares underlying warrants issued to an affiliate of Optimus in
connection with the transaction. A registration statement for
40,500,000 shares of common stock related to this transaction was effective on
July 30, 2010. On July 19, 2010, as part of the Series B purchased
agreement, the Company issued 500 shares of Series B Preferred Stock to Optimus
in exchange for the 500 shares of Series A Preferred Stock issued under the
Series A Purchase Agreement so that all shares of the Company’s preferred stock
held or subsequently purchased by Optimus under the Series B Purchase Agreement
would be redeemable upon substantially identical terms.
Pursuant
to the Series B Purchase Agreement, on July 19, 2010, the Company issued to
Optimus a three-year warrant to purchase up to 40,500,000 shares of the
Company’s common stock (the “Warrant Shares”), at an initial exercise price of
$0.25 per share, subject to adjustment as described below. The
warrant consists of and is exercisable in tranches, with a separate tranche
being created upon each delivery of a tranche notice under the Series B Purchase
Agreement. On each tranche notice date, that portion of the warrant equal to
135% of the tranche amount will vest and become exercisable, and such vested
portion may be exercised at any time during the exercise period on or after such
tranche notice date. On and after the first tranche notice date and each
subsequent tranche notice date, the exercise price of the warrant will be
adjusted to the closing sale price of a share of the Company’s common stock on
the applicable tranche notice date. The exercise price of the warrant may be
paid (at the option of Optimus) in cash or by Optimus’s issuance of a four-year,
full-recourse promissory note, bearing interest at 2% per annum, and secured by
a specified portfolio of assets. However, such promissory note is not due or
payable at any time that (a) the Company is in default of any preferred stock
purchase agreement for Series B Preferred Stock or any warrant issued pursuant
thereto, any loan agreement or other material agreement or (b) there are any
shares of the Series B Preferred Stock issued or outstanding.
16
Notes
Payable
The
Company issued Junior Promissory Notes in the aggregate amount of approximately
$1.0 million during the nine months ended July 31, 2010. As of July
31, 2010, the Company agreed with certain of the holders of the
Company’s junior unsecured convertible promissory notes (the “Junior Bridge
Notes”) to make payments of approximately $2.42 million aggregate principal
amount due to such holders under certain of the Junior Bridge Notes in the form
of 14,237,489 shares of Common Stock based on a price of $0.17 per share.
The Company’s common stock was issued in May 2010. During the nine months ended
July 31, 2010 the Company paid approximately $1.4 million in principal value on
its Bridge Notes
During
late April 2010, the Company agreed with our Chief Executive Officer, Thomas A.
Moore, to make a payment of $200,000 due to Mr. Moore under certain of the
Company’s senior promissory notes held by Mr. Moore (the “Moore Notes”) in the
form of 1,176,471 shares of the Company’s common stock based on a price of $0.17
per share issued in May 2010.
Our
limited capital resources and operations to date have been funded primarily with
the proceeds from public and private equity and debt financings, NOL tax sale
and income earned on investments and grants. We have sustained losses
from operations in each fiscal year since our inception, and we expect losses to
continue for the indefinite future, due to the substantial investment in
research and development. As of July 31, 2010 and October 31, 2009, we had an
accumulated deficit of $27,759,941 and $16,603,800, respectively and
shareholders’ deficiency of $19,800,809 and $15,733,328, respectively. Based on
our available cash of approximately $1,038,000 on August 21, 2010, we do not
have adequate cash on hand to cover our anticipated expenses for the next 12
months. If we fail to raise a significant amount of capital, we may need to
significantly curtail operations in the near future. These conditions raised
substantial doubt about our ability to continue as a going concern.
Consequently, the audit report prepared by our independent public accounting
firm relating to our financial statements for the year ended October 31, 2009
included a going concern explanatory paragraph.
Our
business will require substantial additional investment that we have not yet
secured, and our failure to raise capital and/or pursue partnering opportunities
will materially adversely affect our business, financial condition and results
of operations. We expect to spend substantial additional sums on the continued
administration and research and development of proprietary products and
technologies, including conducting clinical trials for our product candidates,
with no certainty that our products will become commercially viable or
profitable as a result of these expenditures. Further, we will not
have sufficient resources to develop fully any new products or technologies
unless we are able to raise substantial additional financing on acceptable terms
or secure funds from new partners. We cannot be assured that financing will be
available at all. Any additional investments or resources required would be
approached, to the extent appropriate in the circumstances, in an incremental
fashion to attempt to cause minimal disruption or dilution. Any
additional capital raised through the sale of equity or convertible debt
securities will result in dilution to our existing stockholders. No
assurances can be given, however, that we will be able to achieve these goals or
that we will be able to continue as a going concern.
We are
pursuing additional investments, grants, partnerships as well as collaborations
and exploring other financing options, with the objective of minimizing dilution
and disruption.
Off-Balance
Sheet Arrangements
As of
July 31, 2010, we had no off-balance sheet arrangements, other than our lease
for space. There were no changes in significance contractual obligation during
the nine months ended July 31, 2010.
Critical
Accounting and New Accounting Pronouncements
Critical Accounting
Estimates
The
preparation of financial statements in accordance with generally accepted
accounting principles accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts and related
disclosures in the financial statements. Management considers an accounting
estimate to be critical if:
|
·
|
It
requires assumptions to be made that were uncertain at the time the
estimate was made, and
|
|
·
|
Changes
in the estimate of difference estimates that could have been selected
could have an material impact on our results of operations or financial
condition.
|
17
Actual
results could differ from those estimates and the differences could be material.
The most significant estimates impact the following transactions or account
balances: stock compensation, liabilities, warrant valuation, impairment of
intangibles and fixed assets and projected operating results.
Share-Based Payments -The
Company records compensation expense associated with stock options in accordance
with ASC 718-10-25 (SFAS No. 123R, “Share Based Payment,” which is a revision of
SFAS No. 123). The Company adopted the modified prospective transition method
provided under SFAS No. 123R. Under this transition method, compensation expense
associated with stock options recognized in the first quarter of fiscal year
2007, and in subsequent quarters, includes expense related to the remaining
unvested portion of all stock option awards granted prior to April 1, 2006, the
estimated fair value of each option award granted was determined on the date of
grant using the Black-Scholes option valuation model, based on the grant date
fair value estimated in accordance with the original provisions of SFAS No.
123.
We
estimate the value of stock options awards on the date of grant using the
Black-Scholes-Merton option-pricing model. The determination of the fair value
of the share-based payment awards on the date of grant is affected by our stock
price as well as assumptions regarding a number of complex and subjective
variables. These variables include our expected stock price volatility over the
term of the awards, expected term, risk-free interest rate, expected dividends
and expected forfeiture rates. The forfeiture rate is estimated using historical
option cancellation information, adjusted for anticipated changes in expected
exercise and employment termination behavior. Our outstanding awards do not
contain market or performance conditions; therefore we have elected to recognize
share based employee compensation expense on a straight-line basis over the
requisite service period.
If factors change and we employ
different assumptions in the application of SFAS 123(R) in future periods, the
compensation expense that we record under SFAS 123(R) relative to new grants may
differ significantly from what we have recorded in the current period. There is
a high degree of subjectivity involved when using option-pricing models to
estimate share-based compensation under SFAS 123(R). Consequently, there is a
risk that our estimates of the fair values of our share-based compensation
awards on the grant dates may bear little resemblance to the actual values
realized upon the exercise, expiration, early termination or forfeiture of those
share-based payments in the future. Employee stock options may expire worthless
or otherwise result in zero intrinsic value as compared to the fair values
originally estimated on the grant date and reported in our financial statements.
Alternatively, value may be realized from these instruments that are
significantly in excess of the fair values originally estimated on the grant
date and reported in our financial statements.
Warrants
Warrants
were issued in connection with the equity financings completed in October 2007,
the preferred equity financing with Optimus and our Bridge Notes issued from
June 2009 through early April 2010. At the balance sheet date we estimated
the fair value of these instruments using the Black-Scholes model, which takes
into account a variety of factors, including historical stock price volatility,
risk-free interest rates, remaining term and the closing price of our common
stock. Changes in assumptions used to estimate the fair value of these
derivative instruments could result in a material change in the fair value of
the instruments. We believe the assumptions used to estimate the fair values of
the warrants are reasonable.
New Accounting
Pronouncements
In April 2010, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-17, Revenue Recognition—Milestone Method
(Topic 605) - Milestone Method of Revenue Recognition - a consensus of the FASB
Emerging Issues Task Force . This ASU provides guidance to vendors on the
criteria that should be met for determining whether the milestone method of
revenue recognition is appropriate. This guidance is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Early adoption is permitted
Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not
Applicable
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
As of the
end of the period covered by this report, we conducted an evaluation, under the
supervision and with the participation of our chief executive officer and chief
financial officer of our disclosure controls and procedures (as defined in Rule
13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation,
our chief executive officer and chief financial officer concluded that our
disclosure controls and procedures were effective to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is: (1) accumulated and communicated to our management, including
our chief executive officer and chief financial officer, as appropriate to allow
timely decisions regarding required disclosure; and (2) recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms.
18
Changes
in Internal Control over Financial Reporting
During
the quarter ended July 31, 2010, there were no changes in our internal control
over financial reporting that have materially affected, or are reasonably likely
to materially affect our internal control over financial reporting.
PART
II - OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
As of the
date hereof, there are no pending legal proceedings to which we are a party or
of which any of our property is the subject. In the ordinary course
of our business we may become subject to litigation regarding our products or
our compliance with applicable laws, rules, and regulations.
ITEM
1A. RISK FACTORS
There
have been no material changes in our risk factors disclosed in our Annual Report
on Form 10-K for the year ended October 31, 2009 except for the
following:
There
can be no assurance that we will receive full funding from Optimus in
connection with the Series B preferred equity financing.
We
have entered into the Series B Purchase Agreement, pursuant to which Optimus has
agreed to purchase up to $7.5 million of our Series B Preferred Stock from time
to time, subject to our ability to effect and maintain an effective registration
statement for the shares underlying the warrant issued to an affiliate of
Optimus to purchase up to 40,500,000 shares of common stock, issued in
connection with the transaction. Additionally, the Series B Purchase
Agreement provides that in order to require Optimus to purchase our Series B
Preferred Stock at any time: (i) we must be in compliance with our SEC reporting
obligations, (ii) our common stock must be quoted on the OTC Bulletin Board or
another eligible trading market, (iii) a material adverse effect relating to,
among other things, our results of operations, assets, business or financial
condition must not have occurred since July 19, 2010, other than losses incurred
in the ordinary course of business, (iv) we must not be in default under any
material agreement, (v) Optimus and its affiliates must not own more than 9.99%
of our outstanding common stock, and (vi) we must comply with certain other
requirements set forth in the Series B Purchase Agreement. If we fail
to comply with any of these requirements, Optimus will not be obligated to
purchase our Series B Preferred Stock and we will not receive any funding from
Optimus. Moreover, if we exercise our option to require Optimus to purchase our
Series B Preferred Stock, and our common stock has a closing price of less than
$0.17 per share on the trading day immediately preceding our delivery of the
exercise notice, we will trigger at closing certain anti-dilution protection
provisions in certain outstanding warrants that would result in an adjustment to
the number and price of certain outstanding warrants.
If
the average closing sale price of our common stock on each tranche notice date
is less than $0.25 per share, we will be required to register additional shares
of our common stock in order to require Optimus to purchase the entire $7.5
million of Series B Preferred Stock issuable under the Series B Purchase
Agreement.
In connection with our Series B
preferred equity financing, we issued to an affiliate of Optimus a three-year
warrant to purchase up to 40,500,000 shares of our common stock, at an initial
exercise price of $0.25 per share. The warrant provides that on each
tranche notice date under the Series B purchase agreement, (i) that portion of
the warrant equal to 135% of the tranche amount will vest and become exercisable
(and such vested portion may be exercised at any time during the exercise period
on or after such tranche notice date) and (ii) the exercise price will be
adjusted to the closing sale price of a share of our common stock on such
tranche notice date. We are not permitted to deliver a tranche notice
under the Series B purchase agreement if the number of registered shares
underlying the warrant is insufficient to cover the portion of the warrant that
will vest and become exercisable in connection with such tranche
notice. If the average closing sale price on each tranche notice date
is less than $0.25 per share, we will not have a sufficient number of registered
shares available under this prospectus to require Optimus to purchase the entire
$7.5 million without issuing an additional warrant, and effecting an additional
registration statement relating to the shares of our common stock issuable upon
exercise of such additional warrant. In such an event, we cannot
assure you that we will be able to timely effect and maintain a registration
statement so as to permit us to require Optimus to purchase the entire $7.5
million of Series B preferred stock under the Series B purchase
agreement.
19
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During
the period covered by this report, we have issued unregistered securities to the
persons as described below. None of these transactions involved any
underwriters, underwriting discounts or commissions, except as specified below,
or any public offering, and we believe that each transaction was exempt from the
registration requirements of the Securities Act of 1933 by virtue of Section
4(2) thereof and/or Regulation D promulgated thereunder. All recipients had
adequate access to information about us. We have not furnished information under
this item to the extent that such information previously has been included under
Item 3.02 in a Current Report on Form 8-K.
On August
4, 2010, the Company issued a convertible promissory note to an accredited
investor in the aggregate principal face amount of approximately $35,000 (the “
Series B Note
”), for an aggregate net purchase price of $30,000. The Series B Note
was issued with an original issue discount of approximately 15% and is
convertible into shares of Common Stock at $0.19 per share. In
connection with the purchase of the Series B Note, the Company issued to the
purchaser of the Series B Note a warrant to purchase 75,000 shares of Common
Stock at an exercise price of $0.25 per share, subject to adjustments upon the
occurrence of certain events. The Series B Note matures on May 31, 2011, if not
retired sooner and may be prepaid at anytime by the Company without
penalty.
On August
9, 2010, the Company issued a convertible promissory note to an accredited
investor in the aggregate principal face amount of $159,000 (the “ Series C Note ”), for
an aggregate net purchase price of $150,000. The Series C Note was
issued with an original issue discount of approximately 6% and is convertible
into shares of Common Stock at $0.17 per share. In connection with
the purchase of the Series C Note, the Company issued to the purchaser of the
Series C Note a warrant to purchase 300,000 shares of Common Stock at an
exercise price of $0.20 per share, subject to adjustments upon the occurrence of
certain events. The Series C Note matures on December 31, 2010, if not retired
sooner and may be prepaid at anytime by the Company without
penalty.
On August
12, 2010, the Company issued a convertible promissory note to an accredited
investor in the aggregate principal face amount of approximately $58,000 (the
“additional Series B
Note ”), for an aggregate net purchase price of $50,000. The
additional Series B Note was issued with an original issue discount of
approximately 15% and is convertible into shares of Common Stock at $0.19 per
share. In connection with the purchase of the additional Series B
Note, the Company issued to the purchaser of the additional Series B Note a
warrant to purchase 125,000 shares of Common Stock at an exercise price of $0.25
per share, subject to adjustments upon the occurrence of certain events. The
additional Series B Note matures on April 30, 2011, if not retired sooner and
may be prepaid at anytime by the Company without penalty.
Item
6. Exhibits.
3.1(i)
|
Amended
and Restated Certificate of Incorporation. Incorporated by reference to
Annex C to DEF 14A Proxy Statement filed with the SEC on May 15,
2006.
|
|
3.1(ii)
|
Amended
and Restated Bylaws. Incorporated by reference to Exhibit 10.4 to
Quarterly Report on Form 10-QSB filed with the SEC on September 13,
2006.
|
|
10.1*
|
Separation
Agreement and General Release dated January 6, 2010 between the Company
and Fred Cobb.
|
20
31.1*
|
Certification
of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.2*
|
Certification
of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley
Act of 2002
|
|
32.1*
|
Certification
of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley
Act of 2002
|
|
32.2*
|
Certification
of Chief Financial Officer pursuant to section 906 of the
Sarbanes-Oxley Act of
2002
|
*Filed
herewith
21
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ADVAXIS, INC.
Registrant
|
||
Date: September
14, 2010
|
By:
|
/s/ Thomas Moore
|
Thomas Moore
Chief Executive Officer and Chairman of the Board
|
||
By:
|
/s/ Mark J. Rosenblum
|
|
Mark J. Rosenblum
Chief Financial Officer, Senior Vice President and Secretary
|
22