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CONTINGENCIES AND COMMITMENTS
 9 Months Ended
Sep. 30, 2012
Accounting Policies [Abstract]  
CONTINGENCIES AND COMMITMENTS

Note 11: ContingencIES AND COMMITMENTs

Contingencies

Tax Filings

The Company has not filed income tax returns for several years in certain operating jurisdictions, and may be subject to possible compliance penalties and interest. Management is currently not able to make a reliably measurable provision for possible liability for penalties and interest, if any, at this time, and the Company may be liable for such amounts upon assessment. Penalties and interest, if assessed in the future, will be recorded in the period such amounts are determinable.

Commitments

Combined Research and Operating Obligations

Effective May 25, 2010, the Company entered into a research and license Option Agreement with the Mayo Clinic for the development and possible commercial use of a cancer vaccine. Subject to the approval and guidance of the United States Food and Drug Administration (“FDA”) the Mayo Clinic plans to conduct a Phase I human clinical trial (“Phase I Trial”) to test and develop the Company’s technology.

The Company has agreed that, during the period of the option and upon approval of FDA to conduct Phase I Trials, will pay all the costs incurred by the Mayo Clinic, not to exceed a total of $841,000.

On April 13, 2012, the Company entered into a Patent & Know-How agreement with the Mayo Foundation for Education and Research (“Mayo”) to license a proprietary MHC Class I HER2/neu antigen technology. Under the terms of the agreement, the Company acquired from Mayo (i) an exclusive worldwide license to use the patent rights related to patent application numbered 61600480 (titled “Methods and materials for generating CD8+ T-cells having the ability to recognize cancer cells expressing a Her2/neu polypeptide”) to make products in the prophylactic and therapeutic field (the “Licensed Products”) and (ii) a non-exclusive license to use certain of Mayo’s know-how to make the Licensed Products. The Company may sublicense the technology with the approval of Mayo, which approval may not unreasonably withheld.

In connection with the grant of the licenses, the Company is to (i) make an upfront license payment of $100,000 to Mayo followed by an additional $150,000 in license payments over a 12 month period, (ii) reimburse Mayo for documented patent expenses incurred to date by Mayo in connection with the license, (iii) pay an annual license fees, (iv) make milestone payments and (iv) pay royalties of gross annual sales. In addition, the Company is required to pay Mayo a fee if it fails to initiate a Phase I clinical trial of a Licensed Product within five years and if it fails to initiate a Phase II clinical trial of a Licensed Product within eight years.

 

Management Services Agreement

 

In February 2011, the Company approved an employment agreement with Dr. Wilson with an initial term of 2 years, which may be automatically extended for successive one-year terms. This employment agreement provides for annual compensation of $180,000 and the grant of an option to acquire 2,000,000 shares of the Company’s common stock at $0.19 per share, 50% of which vested on March 16, 2011, while the remainder will vest monthly over a period of two years (41,667 per month). The options shall be exercisable for at least five years.

 

Consultant Agreements

 

In April 2012, the Company entered into an investors’ relation consulting agreement for a one year term, with a one-time right to terminate the agreement at its six month anniversary. The consulting agreement provides for the Company to issue 620,690 shares to the consultant and a monthly payment of $7,500.

 

In April 2012, the Company entered into financial consulting service agreements, which included compensation of 14,000,000 shares of common stock, whereby the Company agreed to issue additional shares to the consultants to restore their holdings to 24.8% of fully diluted capitalization of the Company if the Company completes a re-organization, re-capitalization or a liquidity event during the eighteen months commencing with the signing of these agreements.

 

Rental Lease Agreement

 

In December 2011, the Company entered into a lease agreement, which started in January 2012 for a two year period. The Company will pay a monthly basic rent of $7,152 and additional rent for operating costs of 2.20% of total operating expenses of the property.

 

The Company has obligations under various agreements through December 31, 2014. The aggregate minimum annual payments for the years ending December 31 are as follows:

 

                                R&D                            Administrative
    Commitments   Commitments
2012    $ 1,052,500    $     195,821
2013         37,500           308,313
2014                   -               22,284
    $ 1,090,000   $      526,418