Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
x
|
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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For
the fiscal year ended December 31, 2009
OR
o
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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For
the transition period from __________ to __________
Commission
File Number 000-53127
GENESIS
BIOPHARMA, INC.
(Exact
name of registrant as specified in its charter)
Nevada
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75-3254381
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(State
or other jurisdiction
of
incorporation or organization)
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(I.R.S.
Employer
Identification
No.)
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1601
N. Sepulveda Blvd., #632, Manhattan Beach, CA
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90266
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (866) 963-2220
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $0.000041666
par value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No þ
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 þ No o
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 during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. þ
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 o
|
Accelerated
filer o
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
Smaller
reporting company þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes o No þ
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. The aggregate market value of the common stock held by non-affiliates
as of June 30, 2009 was $53,000.
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date. As of March 29, 2010, there were
71,860,008 shares of the registrant’s common stock outstanding.
Table of
Contents
PART
I
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2
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Item
1.
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Business |
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2
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Item
1A.
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Risk
Factors |
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6
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Item
1B.
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Unresolved
Staff Comments |
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6
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Item
2.
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Properties |
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7
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Item
3.
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Legal
Proceedings |
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7
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Item
4.
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(Removed
and Reserved) |
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7
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PART
II
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8
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Item
5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities |
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8
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Item
6.
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Selected
Financial Data |
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8
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations |
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8
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk |
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11
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Item
8
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Financial
Statements and Supplementary Data |
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12
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Item
9.
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Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure |
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21
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Item
9A(T)
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Controls
and Procedures |
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21
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Item
9B.
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Other
Information |
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23
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PART
III
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24
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Item
10.
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Directors,
Executive Officers and Corporate Governance |
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24
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Item
11.
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Executive
Compensation |
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25
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters |
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25
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence |
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26
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Item
14.
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Principal
Accounting Fees and Services |
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27
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PART
IV
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28
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Item
15.
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Exhibits,
Financial Statement Schedules |
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28
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PART
I
Item
1. Business
Overview
Genesis
Biopharma, Inc. (formerly named Freight Management Corp.) (“we” or the
“Company”) was incorporated in the State of Nevada on September 17, 2007 to
engage in the development of an internet-based, intelligent online system for
business owners, freight forwarders, and business people in the shipping/freight
industry and export/import industry who require assistance with their freight
and shipping related inquiries. On March 15, 2010, the Company and Genesis
Biopharma, Inc., a Nevada corporation and a newly formed merger subsidiary
wholly owned by the Company (“Merger Sub”), consummated a merger transaction
(the “Merger”) whereby Merger Sub merged into the Company, with the Company as
the surviving corporation. The Company and Merger Sub filed Articles of Merger
on March 15, 2010 with the Secretary of State of Nevada, along with the
Agreement and Plan of Merger entered into by the two parties effective as of
March 15, 2010 (the “Merger Agreement”). The Merger Agreement and the Articles
of Merger provided for an amendment of the Company’s Articles of Incorporation,
which changed the Company’s name to “Genesis Biopharma, Inc.” effective as of
March 15, 2010.
As a
result of the Merger, the Company acquired all of the assets and contractual
rights, and assumed all of the liabilities, of Merger Sub with respect to an
Asset Purchase Agreement (the “Purchase Agreement”) entered into effective March
15, 2010, by the Company and Merger Sub with Hamilton Atlantic, a Cayman Islands
company (“Hamilton”), whereby Hamilton sold, and Merger Sub acquired, all of
Hamilton’s rights, title and interest to certain assets related to the
development and commercialization of biotechnology drugs, primarily anti-CD55
antibodies (the “Anti-CD55 Antibody Program”), including certain patents, patent
applications, materials, and know-how. The Anti-CD55 Antibody Program consists
of antibodies that could be developed and commercialized for the treatment of
cancer. As consideration, the Company agreed to issue to Hamilton 20,960,016
shares of the Company’s common stock.
On March
15, 2010, after the effectiveness of the Merger, we entered into a Patent and
Know How Licence (the “License Agreement”) with Cancer Research Technology
Limited, a company registered in England and Wales (“CRT”). Pursuant to the
License Agreement, CRT granted to the Company an exclusive, worldwide right and
license in certain intellectual property related to a proprietary, therapeutic
use of anti-CD55 antibodies, including rights to patents and patent applications
related thereto, to research, develop, use, make, distribute, and sell products
utilizing the licensed intellectual property. The license granted to the Company
expires on the later to occur of the expiration of the relevant licensed patent
in the relevant country or 10 years after the date that the first therapeutic
product was placed on the market in such country. In consideration for the
license, the Company agreed to pay to CRT GBP30,000 in royalties upon the
effective date of the License Agreement. In addition, the Company agreed to pay
CRT additional royalties based on the achievement of certain milestones,
including the consummation of financing by the Company and other milestones
relating to the commencement of Phase III clinical studies, the filing of new
drug applications, and the grant of marketing approval related to the licensed
products.
As a
result of our recent acquisition of the assets related to the Anti-CD55 Antibody
Program and the License Agreement, we have become a biopharmaceutical company
engaged in the development and commercialization of drugs and other clinical
solutions for underserved diseases, including metastatic cancers and lethal
infectious diseases.
Plan
of Operation
For the
coming year we plan to continue to develop and commercialize proprietary
products that provide sustained clinical value. Such products will likely be
directed towards aggressive diseases such as metastatic cancers and lethal
infectious diseases, although other large underserved markets will be targeted
as well. The key elements of our business strategy that we plan on implementing
are as follows:
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*
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Advancing,
selectively and cost-effectively, select product candidates based on
proof-of-concept studies and ongoing assessment of their market
potential;
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*
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Developing
and deploying our internal know-how related to smart search methods and
drug discovery methods to develop proprietary cocktail therapies and
personalized medicine regimens. If discoveries are made within this
program, they may be commercialized either as a proprietary combination or
cocktail drug therapy, or possibly as a service that will assist
physicians in prescribing combination or cocktail drug
regimens;
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*
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Establishing
strategic relationships with marketing and development partners to
maximize sales and development potential for our products and to obtain
access to additional development, commercial, or financial resources;
and
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*
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Licensing
or acquiring enabling technologies and complementary drug candidates,
preferably at the clinical stage.
|
VG102
Development Plans
VG102 is
a chimeric monoclonal antibody targeting the CD55 antigen that is over-expressed
on approximately 80 percent of solid tumors and has broad clinical
applicability. The parent antibody has previously been used extensively as an
immunodiagnostic agent in humans. There is an urgent need to enhance the
efficacy of the current generation of anti-cancer antibodies. VG102 has
potential for development in a wide range of cancer indications and also as
either a stand-alone monotherapy or in combination with other marketed cancer
immunotherapies. We believe VG102 has potential to be developed as a platform
technology.
The
primary strategy for the development of VG102 will be to develop the antibody as
a monotherapy in the first instance, with the expectation that we will be
required by regulatory authorities to evaluate the antibody in combination with
standard treatment (likely chemotherapy) against standard treatment alone.
Furthermore, it may be sensible to select, as the initial disease target, an
indication which would fall within the European Union and U.S. Orphan Drug
designation (diseases with relatively few patients), as qualifying for this
designation affords certain benefits to companies developing such drugs, such as
market exclusivity, funding and tax benefits. This route lowers the barriers to
market entry for the new product. The product may then be subsequently developed
for other indications, which may have larger markets. A further possibility is
the development of the product for fast-track status. These programs, typically
of the U.S. Food and Drug Administration (the “FDA”), are designed to facilitate
the development and expedite the review of new drugs that are intended to treat
serious or life-threatening conditions and that demonstrate the potential to
address unmet medical needs. To be eligible for this program, there must be no
effective treatment available for the disease or the product in question must
bring certain benefits over existing treatments.
We
believe the VG102 product may also have utility as a combination therapy, to be
evaluated in combination with other agents, which are already approved for
cancer therapy. It is generally the case that investigational agents entering
human clinical trials must initially be trialed in combination with agents that
are already approved for the target indication. These are usually
chemotherapeutic regimens, although with the approval of newer, biological
agents such as monoclonal antibodies, there may be the potential for comparison
with these agents in a clinical trial setting.
Colorectal
cancer monotherapy is a likely indication for VG102. The market for similar
targeted colorectal cancer therapies was $7 billion in 2006, based on
information obtained from BioPlan Associates. The market success of these drugs
is unusual in that they do not typically replace other drugs. They are often
added to therapy regimes, having the effect of adding to the total colorectal
cancer market. Some regimes are also increasing from two to three drugs,
creating additional market opportunity. In addition to colorectal cancer, CD55
has broad applicability in other cancers given that CD55 is over-expressed on 80
percent of solid tumors. This includes potential for treating breast and lung
cancers as well. The parent antibody of VG102 has already been used safely in
over 100 human patients in diagnostic cancer imaging studies. Based on this
data, along with computer-generated studies performed on the chimeric version,
we believe that VG102 will be safe and non-immunogenic.
Additional
Plans for Drug Discovery Activities and Clinical Applications
We will
also focus on developing and utilizing smart search algorithms for use in drug
discovery activities and other clinical applications. These algorithms, which
are based on proven engineering methods, may eventually provide clinical utility
in multiple areas, including but not limited to the discovery of cocktail
therapies, construction of personalized medicine regimens, and for improved
optimization of research or manufacturing methods. Indications of interest for
cocktail therapies include lethal pandemic influenza, Methicillin-Resistant
Staphylococcus Aureus
(an infectious bacterial disease, “MRSA”), and diseases of normal aging.
For construction of personalized medicine regimens, possible areas of clinical
utility include pharmaceutical treatment of depression, pharmaceutical treatment
of late-stage cancer, and optimized use of nutritional supplements.
We will
require additional funds to implement the development programs set forth above.
The Company anticipates spending between $500,000 to $1,000,000 in the coming
year to process the VG102 drug development program, cocktail drug discovery
activities, and potential licensing opportunities. These funds may be raised
through equity financing, debt financing, or other sources.
Intellectual
Property
The
unique binding specificity of the VG102 parent antibody to CD55 underpins the
strength of the intellectual property position, allowing potential protection
for use in cancer as a monotherapy or in combination therapies. It is the
subject of eight (8) patent applications in major markets, including the United
States, European Union, and Japan. Exclusive and worldwide patent rights are
licensed from CRT. In addition, we have acquired the rights to eleven (11)
patents and patent applications related primarily to the Anti-CD55 Antibody
Program through our asset purchase transaction with Hamilton.
Competition
The
development and commercialization of pharmaceutical products is highly
competitive. We will be competing against a wide range of pharmaceutical and
biotechnology companies that have greater resources than us, including existing
research and development programs in the markets we plan to target. We must
compete with these companies both in regard to the discovery technology we use
to identify potential product candidates and in regard to the development and
commercialization of our product candidates themselves.
Competition
in the pharmaceutical and medical products industries is intense and is
characterized by costly and extensive research efforts and rapid technological
progress. We are aware of many pharmaceutical companies also actively engaged in
the development of therapies for the treatment of cancer and other clinical
indications that are of interest to the Company. These companies have
substantially greater research and development capabilities as well as
substantially greater marketing, financial and human resources than we do. In
addition, many of these companies have significantly greater experience than we
have in undertaking pre-clinical testing, human clinical trials and other
regulatory approval procedures. Such companies include, among others, Roche,
Amgen, GlaxoSmithKline, and Novartis. Our competitors may develop technologies
and products that are more effective than those we are currently researching and
developing. Such developments could render our products less competitive or
possibly obsolete. We are also competing with respect to marketing capabilities
and manufacturing efficiency, areas in which we have limited experience.
Mergers, acquisitions, joint ventures and similar events may also significantly
change the competition.
There are
many available drugs for bacterial infections, cancer, and other clinical
indications of interest. All of these available drugs are or will be marketed by
pharmaceutical companies with substantially greater resources than we have. In
addition, a number of generic pharmaceutical products are available. The
availability of a large number of branded prescription products, generic
products and over-the-counter products could limit the demand for, and the price
we are able to charge for a product candidate, if approved. In addition to those
drugs discussed, there may be alternative treatments or preventive measures
available that significantly impact the market potential of our product
candidates.
Governmental
Regulations
FDA
Regulation of Drugs and Biologics
Prescription
pharmaceutical products are subject to extensive pre- and post-marketing
regulation by the FDA, including regulations that govern the testing,
manufacturing, safety, efficacy, labeling, storage, record-keeping, advertising
and promotion of the products under the Federal Food, Drug and Cosmetic Act, and
by comparable agencies in most foreign countries.
In the
United States, at the federal government level, the FDA is principally
responsible for regulating drugs and biologics, including the product candidates
we have under development. Failure to comply with applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions, such as warning letters, product recalls, product seizure,
injunctions, civil penalties, disgorgement of past or future profits, criminal
prosecution, suspension of production, license suspension or revocation,
withdrawal of an approval, or FDA refusal to approve pending marketing
applications.
The steps
ordinarily required before a new pharmaceutical product may be marketed in the
United States begin primarily with preclinical testing. Preclinical tests
include laboratory evaluation of product chemistry, toxicology and other
characteristics. Animal studies are used to assess the potential safety of the
product. Many preclinical studies are regulated by the FDA and must comply with
good laboratory practice, or GLP, regulations. Violations of these regulations
can, in some cases, lead to invalidation of the studies, requiring such studies
to be replicated if the data are to be submitted to the FDA in support of a
marketing application for a new drug.
With
regard to cocktail therapies or combination drugs, in March 2006, the FDA
released Guidance for Industry: Nonclinical Safety Evaluation of Drug
Combinations. The guidance discusses what preclinical studies are appropriate to
support the clinical study and approval of new combination products and
therapies. In the case of new products composed of previously marketed drugs,
the guidance states that generally the FDA believes sufficient clinical and
preclinical data will exist for each drug component separately. Therefore, in
such a case, the issues to be resolved before the new product is tested in
humans generally relate to possible interactions between the components of the
proposed product. The guidance identifies specific potential interaction issues
to be considered and suggests the type of testing that may be appropriate to
resolve any issues that require such testing.
The
results of the preclinical development work, together with other information as
required by the FDA, are summarized in an investigational new drug application,
or “IND”, which must be submitted to the FDA before the drug may be provided to
clinical investigators for use in humans in clinical trials. An IND also sets
forth the plan for investigating the drug, including the protocols for each
planned study. FDA regulations provide that human clinical trials may begin 30
days following submission of an IND, unless the FDA advises otherwise or
requests additional information, clarification, or additional time to review the
application. Clinical trials cannot begin until any concerns raised by the FDA
have been resolved.
Each
clinical trial must also be approved by an independent institutional review
board, or “IRB”, which is typically associated with the institution or research
facility at which the investigator will conduct the trial, before the trial may
begin. The IRB must approve the protocol and the procedures for obtaining the
informed consent of the study participants. An IRB will consider, among other
things, ethical factors, the safety of human subjects, and the possible
liability of the institution in which the study will be conducted. The IRB is
required to conduct continuous review of the trials at intervals appropriate to
the degree of risk involved and may suspend or terminate its approval if the
trials are not being conducted in accordance with the IRB’s approval or there
has been unexpected serious harm to subjects.
While
conducting a clinical trial, a company is required to monitor the investigators’
compliance with the clinical study protocol and other FDA requirements,
including the requirements to submit reports to the clinical trial sponsor, the
IRB, and the FDA, and to keep detailed records regarding study findings and use
and disposition of the study drug. Although monitoring can help reduce the risk
of inadequate compliance by study investigators, it cannot eliminate this risk
entirely. Inadvertent regulatory noncompliance by the investigator, or
intentional investigator misconduct, can jeopardize the usefulness of study
results and, in rare circumstances, require a company to repeat a study. A
company must report to the FDA any adverse event that is both unexpected and
serious and there is a reasonable possibility that the event may have been
caused by the investigational drug. In addition, a company must, within seven
days of the occurrence of any unexpected fatal or life-threatening event that
may have been caused by the drug, report such event to the FDA. The FDA may stop
the trials by placing a “clinical hold” on such trials because of concerns
about, for example, the safety of the product being tested. Such holds can cause
substantial delay and in some cases may require abandonment of a product
candidate.
Clinical
testing in humans involves the administration of the investigational drug to
healthy volunteers or to patients under the supervision of a qualified principal
investigator, usually a physician, pursuant to an FDA-reviewed protocol. Human
clinical trials typically are conducted in three sequential phases, but the
phases may overlap. Phase 1 clinical trials consist of testing the product in a
small number of patients or healthy volunteers, primarily to evaluate the drug’s
safety, at one or more dosage levels, as well as to study the drug’s
pharmacokinetic and/or pharmacodynamic profile. In Phase 2 clinical trials, in
addition to safety, the efficacy of multiple dose levels of the product is
evaluated in a patient population. Phase 3 clinical trials typically involve
additional testing for safety and clinical efficacy in an expanded population at
multiple geographically dispersed sites.
Upon
completion of clinical trials, a company seeking FDA approval to market a new
drug must file a new drug application, or “NDA”, with the FDA, or in the case of
a biological product, a biological license application, or “BLA”. To approve an
NDA, the FDA must determine, based on the information submitted in the
application, that the drug is safe and effective for its intended uses. To
approve a BLA, the FDA must determine that the product is safe, pure, and potent
and that the facilities in which the product is manufactured or otherwise
handled meet the applicable standards. In addition to reports of the preclinical
and clinical trials conducted under an IND, an NDA or BLA includes information
pertaining to the product’s safety and efficacy, preparation of the drug
substance, analytical methods, drug product formulation, manufacturing details,
and proposed product packaging and labeling. In addition, the manufacturing
facility must also pass an FDA current Good Manufacturing Practices (“cGMP”)
inspection before the marketing application can be approved.
Submission
of an NDA or BLA does not assure FDA approval for marketing. After the
application is submitted, the FDA initially determines whether all pertinent
data and information have been submitted before accepting the application for
filing. After the application is accepted for filing, the FDA begins its
substantive review. The FDA typically will request a review of the data in the
NDA or BLA and recommendation regarding approval by an advisory committee
consisting of outside experts. The FDA may accept or reject the advisory
committee’s recommendations, or accept them with modifications. The application
review process generally takes a year or longer to complete, although reviews of
drugs that meet a medical need for serious or life-threatening diseases may be
accelerated or prioritized for a six-month review. The FDA may deny approval of
an application. Any such denial may require extensive additional testing, which
could take years to complete, in order to make the application approvable, or
the denial may be based on considerations that cannot be favorably resolved
through additional testing. In some circumstances, the FDA may approve an
application even though some unanswered questions remain about the product, if
the applicant agrees to conduct post-marketing studies. The FDA may impose other
conditions of approval as well. Expedited or accelerated approvals may require
additional larger confirmatory clinical studies to be conducted following
approval.
Product
approval may be withdrawn if compliance with regulatory requirements is not
maintained or if post-marketing adverse events associated with the product are
reported that cannot be addressed satisfactorily through changes to the
product’s labeling or warnings to healthcare professionals. The FDA requires
reporting of certain safety and other information that becomes known to a
manufacturer of an approved product. A company may become aware of such
information from reports of adverse events suspected to be related to the
product, voluntarily provided to the company and/or to the FDA by physicians and
other healthcare professionals, or from published scientific data. In some
circumstances, the FDA may require the company to make changes to its approved
product labeling or to issue safety warnings to healthcare professionals or the
public, which may have a negative impact on product sales. In addition, the
Amendments Act of 2007 provides the FDA with expanded authority over drug
products after approval, including the authority to require post-approval
studies and clinical trials, labeling changes based on new safety information,
and compliance with risk evaluation and mitigation strategies, or “REMS”,
approved by the FDA. The FDA’s exercise of this authority could result in delays
or increased costs during the period of product candidate development, clinical
trials and regulatory review and approval, increased costs to assure compliance
with new post-approval regulatory requirements, and potential restrictions on
the sale of approved products, which could lead to lower product revenues to us
or our collaborators. Manufacturing and sales may also be disrupted or delayed
in the event of failure to comply with all required cGMP, as determined by FDA
investigators in periodic inspections of manufacturing facilities. Upon
approval, a drug or biological product may only be marketed for the approved
indications, in the approved dosage forms, and at the approved dosage. The
nature of marketing claims that we will be permitted to make in the labeling and
advertising of our products will be limited to those specified in an FDA
approval.
Other
Regulations
In
addition to laws and regulations enforced by the FDA, we are also subject to
regulation under National Institutes of Health guidelines as well as under the
Controlled Substances Act, the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other present and potential future federal,
state or local laws and regulations, as our research and development may involve
the controlled use of hazardous materials, chemicals, viruses and various
radioactive compounds.
In
addition to regulations in the United States, we are subject to a variety of
foreign regulations governing clinical trials and commercial sales and
distribution of our investigational product candidates. Whether or not we obtain
FDA approval for a product, we must obtain approval of a product by the
comparable regulatory authorities of foreign countries before we can commence
clinical trials or marketing of the product in those countries. The approval
process varies from country to country, and the time may be longer or shorter
than that required for FDA approval. The requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursement vary greatly from
country to country.
Employees
We have
four employees, including three part-time employees. Our Chief Financial
Officer, Richard McKilligan, is a part-time employee and will provide services
as needed. We do not expect any material changes in the number of employees over
the next 12-month period. We do and will continue to outsource contract
employment as needed.
Not
required for smaller reporting companies.
Item
1B. Unresolved Staff Comments
Not
required for smaller reporting companies.
Item
2. Properties
We do not
own any real property and do not currently lease office space. Our employees
work out of their homes or out of another employer’s offices with the employer’s
permission. We intend to outsource substantially all of our clinical development
work to contract research and manufacturing providers.
Item
3. Legal Proceedings.
While we
may become involved in various lawsuits and legal proceedings from time to time
arising in the ordinary course of business, we are unaware of any material
pending legal proceedings to which we are a party or of which any of our
property is the subject.
Item 4. (Removed and Reserved).
PART
II
Item 5. Market for Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities.
Our
common stock, par value $0.000041666, is currently quoted on the OTC Bulletin
Board under the symbol “FGGT”; however, no active trading market in our
securities has yet commenced. We have requested a new trading symbol from FINRA,
and we expect to be assigned the new symbol shortly after the filing of this
report. As of the date of this report, there were 71,860,008 shares (after
taking into effect our recently completed 24-for-1 forward stock split and our
recent private placement) of our common stock outstanding and approximately 46
holders of record.
We have
not paid any cash dividends since inception to the holders of our common stock.
We currently intend to retain any earnings for internal cash flow
use.
On March
29, 2010, the Board of Directors of the Company adopted the Genesis Biopharma,
Inc. 2010 Equity Compensation Plan. The Board reserved 3,500,000
shares of common stock to be awarded to directors, employees and consultants as
equity compensation at the Board’s discretion.
Item
6. Selected Financial Data
Not
required for smaller reporting companies.
Item
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The
following discussion and analysis of our results of operations and financial
condition for the years ended December 31, 2009 and 2008 should be read in
conjunction with our financial statements and the notes to those financial
statements that are included elsewhere in this report. Our discussion includes
forward-looking statements based upon current expectations that involve risks
and uncertainties, such as our plans, objectives, expectations and intentions.
Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of
factors, including those set forth under the “Business” section and elsewhere in
this report. We use words such as “anticipate,” “estimate,” “plan,” “project,”
“continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking statements. All
forward-looking statements included in this report are based on information
available to us on the date hereof and, except as required by law, we assume no
obligation to update any such forward-looking statements.
Overview
Genesis
Biopharma, Inc. (formerly named Freight Management Corp.) (“we” or the
“Company”) was incorporated in the State of Nevada on September 17, 2007 to
engage in the development of an internet-based, intelligent online system for
business owners, freight forwarders, and business people in the shipping/freight
industry and export/import industry who require assistance with their freight
and shipping related inquiries. On March 15, 2010, the Company and Genesis
Biopharma, Inc., a Nevada corporation and a newly formed merger subsidiary
wholly owned by the Company (“Merger Sub”), consummated a merger transaction
(the “Merger”) whereby Merger Sub merged into the Company, with the Company as
the surviving corporation. The Company and Merger Sub filed Articles of Merger
on March 15, 2010 with the Secretary of State of Nevada, along with the
Agreement and Plan of Merger entered into by the two parties effective as of
March 15, 2010 (the “Merger Agreement”). The Merger Agreement and the Articles
of Merger provided for an amendment of the Company’s Articles of Incorporation,
which changed the Company’s name to “Genesis Biopharma, Inc.” effective as of
March 15, 2010.
As a
result of the Merger, the Company acquired all of the assets and contractual
rights, and assumed all of the liabilities, of Merger Sub with respect to an
Asset Purchase Agreement (the “Purchase Agreement”) entered into effective March
15, 2010, by the Company and Merger Sub with Hamilton Atlantic, a Cayman Islands
company (“Hamilton”), whereby Hamilton sold, and Merger Sub acquired, all of
Hamilton’s rights, title and interest to certain assets related to the
development and commercialization of biotechnology drugs, primarily anti-CD55
antibodies (the “Anti-CD55 Antibody Program”), including certain patents, patent
applications, materials, and know-how. The Anti-CD55 Antibody Program consists
of antibodies that could be developed and commercialized for the treatment of
cancer. As consideration, the Company agreed to issue to Hamilton 20,960,016
shares of the Company’s common stock.
On March
15, 2010, after the effectiveness of the Merger, we entered into a Patent and
Know How Licence (the “License Agreement”) with Cancer Research Technology
Limited, a company registered in England and Wales (“CRT”). Pursuant to the
License Agreement, CRT granted to the Company an exclusive, worldwide right and
license in certain intellectual property related to a proprietary, therapeutic
use of anti-CD55 antibodies, including rights to patents and patent applications
related thereto, to research, develop, use, make, distribute, and sell products
utilizing the licensed intellectual property. The license granted to the Company
expires on the later to occur of the expiration of the relevant licensed patent
in the relevant country or 10 years after the date that the first therapeutic
product was placed on the market in such country. In consideration for the
license, the Company agreed to pay to CRT GBP30,000 in royalties upon the
effective date of the License Agreement. In addition, the Company agreed to pay
CRT additional royalties based on the achievement of certain milestones,
including the consummation of financing by the Company and other milestones
relating to the commencement of Phase III clinical studies, the filing of new
drug applications, and the grant of marketing approval related to the licensed
products.
As a
result of our recent acquisition of the assets related to the Anti-CD55 Antibody
Program and the License Agreement, we have become a biopharmaceutical company
engaged in the development and commercialization of drugs and other clinical
solutions for underserved diseases, including metastatic cancers and lethal
infectious diseases.
Results
of Operations
Year
Ended December 31, 2009 Compared to the Year Ended December 31,
2008:
Operating
Expenses
General
and Administrative
Our
general and administrative expenses decreased 44% from $25,558 for the year
ended December 31, 2008 to $14,440 for the year ended December 31, 2009. These
expenses include rent and the expenses related to the Company’s SEC
filings. We expect these expenses to increase substantially during
the 2010 fiscal year as we implement our plan to develop our
products.
Database
Development Cost
Our
database development costs decreased from $30,250 for the year ended December
31, 2008, to $0, a decrease of 100%. These costs were associated with
the development of the freight management system and we do not expect to incur
any of these expenses in the future.
Amortization
Our
amortization expense remained at $1,332, for each of the years ended December
31, 2009 and 2008. This expense is related to the Freight Management
website. We expect depreciation and amortization expenses to increase
as we invest in a new website and various other intellectual
property.
Net
Loss
We had a
net loss of $57,140 for the year ended December 31, 2008 compared to a net loss
of $15,772 for the year ended December 31, 2009. As we are a
development stage company and do not expect to earn significant revenues during
the next fiscal year, we expect to continue to incur net losses and we expect
those losses to increase during the 2010 fiscal year as we incur significant
expenses to develop our products.
Liquidity
and Capital Resources
Since our
inception, we have funded our operations primarily through private sales of
equity securities and loans from a director. Effective March 15, 2010, the
Company sold to accredited investors pursuant to subscription agreements, in a
private placement offering, an aggregate of 12,799,968 shares (post-split) of
its common stock, for an aggregate purchase price of $400,000. We
expect to issue additional shares and possibly incur debt
As of
December 31, 2009, we had cash of $8,257.
Net cash
provided by operating activities was $5,352 for the year ended December 31, 2009
compared to net cash used in operating activities of $57,303 for the year ended
December 31, 2008. This difference was primarily due to a larger net
loss in the 2008 period.
Effective
March 15, 2010, the Company sold to accredited investors pursuant to
subscription agreements, in a private placement offering, an aggregate of
12,799,968 shares (post-split) of its common stock, for an aggregate purchase
price of $400,000.
We
believe that our current cash resources will be sufficient to sustain our
current operations for approximately six (6) months. We will
need to obtain additional cash resources during the next year in order to
develop our products. We expect to engage in additional sales of debt
or equity securities. The sale of additional equity or convertible debt
securities would result in additional dilution to our shareholders. The issuance
of additional debt would result in increased expenses and could subject us to
covenants that may have the effect of restricting our operations. We have not
made arrangements to obtain additional financing and we can provide no assurance
that additional financing will be available in an amount or on terms acceptable
to us, if at all.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements and accompanying notes, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
assets and liabilities. When making these estimates and assumptions, we consider
our historical experience, our knowledge of economic and market factors and
various other factors that we believe to be reasonable under the circumstances.
Actual results may differ under different estimates and
assumptions.
The
accounting estimates and assumptions discussed in this section are those that we
consider to be the most critical to an understanding of our financial statements
because they inherently involve significant judgments and
uncertainties.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from these
estimates.
Revenue
Recognition
The
Company applies the provisions of the Securities and Exchange Commission (“SEC”)
Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition in Financial
Statements,” which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements filed with the SEC. SAB No. 104
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosure related to revenue recognition policies. In general, the
Company recognizes revenue when (i) persuasive evidence of an arrangement
exists, (ii) shipment of products has occurred or services have been rendered,
(iii) the sales price charged is fixed or determinable and (iv) collection is
reasonably assured.
The
Company has not recognized any revenue to date and we do not anticipate
recognizing any significant revenue during the next fiscal year.
Impairment
of Long-lived Assets
SFAS No.
144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” requires
that long-lived assets to be disposed of by sale, including those of
discontinued operations, be measured at the lower of carrying amount or fair
value less cost to sell, whether reported in continuing operations or in
discontinued operations. SFAS No. 144 broadens the reporting of discontinued
operations to include all components of an entity with operations that can be
distinguished from the rest of the entity and that will be eliminated from the
ongoing operations of the entity in a disposal transaction. SFAS No. 144 also
establishes a `primary-asset` approach to determine the cash flow estimation
period for a group of assets and liabilities that represents the unit of
accounting for a long-lived asset to be held and used. The Company has no
impairment issues to disclose.
Stock
Based Compensation
The
Company adopted SFAS No. 123 (Revised 2004), “Share Based Payment” (“SFAS No.
123R”). SFAS No. 123R requires companies to measure and recognize the cost of
employee services received in exchange for an award of equity instruments based
on the grant-date fair value. SFAS No. 123R eliminates the ability to account
for the award of these instruments under the intrinsic value method prescribed
by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock
Issued to Employees,” and allowed under the original provisions of SFAS No. 123.
As of December 31, 2009, the Company had no employee options
outstanding.
Recent
Accounting Pronouncements
In June
2009, the FASB issued authoritative guidance on accounting standards
codification and the hierarchy of generally accepted accounting principles
(“GAAP") effective for interim and annual reporting periods ending after
September 15, 2009. The FASB accounting standards codification
(“Codification”) has become the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in accordance with GAAP. All existing
accounting standard documents are superseded by the Codification and any
accounting literature not included in the Codification will not be
authoritative. However, rules and interpretive releases of the SEC issued under
the authority of federal securities laws will continue to be sources of
authoritative GAAP for SEC registrants. Beginning with the
quarter ending September 30, 2009, all references made by the Company to GAAP in
its condensed consolidated financial statements use the Codification numbering
system. The Codification does not change or alter existing GAAP and, therefore,
it does not have an impact on our financial position, results of operations and
cash flows.
In
June 2009, the FASB made an updated the principle for the consolidation of
variable interest entities. Among other things, the update replaces the
calculation for determining which entities, if any, have a controlling financial
interest in a variable interest entity (“VIE”) from a quantitative based risks
and rewards calculation, to a qualitative approach that focuses on identifying
which entities have the power to direct the activities that most significantly
impact the VIE’s economic performance and the obligation to absorb losses of the
VIE or the right to receive benefits from the VIE. The update also requires
ongoing assessments as to whether an entity is the primary beneficiary of a VIE
(previously, reconsideration was only required upon the occurrence of specific
events), modifies the presentation of consolidated VIE assets and liabilities,
and requires additional disclosures about a company’s involvement in VIE’s. This
update will be effective for fiscal years beginning after November 15,
2009. The Company does not currently believe that the adoption of this update
will have any effect on its consolidated financial position and results of
operations.
In
October 2009, the FASB issued authoritative guidance on revenue recognition that
will become effective for us beginning July 1, 2010, with earlier adoption
permitted. Under the new guidance on arrangements that include software
elements, tangible products that have software components that are essential to
the functionality of the tangible product will no longer be within the scope of
the software revenue recognition guidance, and software-enabled products will
now be subject to other relevant revenue recognition guidance. Additionally, the
FASB issued authoritative guidance on revenue arrangements with multiple
deliverables that are outside the scope of the software revenue recognition
guidance. Under the new guidance, when vendor specific objective evidence or
third party evidence for deliverables in an arrangement cannot be determined, a
best estimate of the selling price is required to separate deliverables and
allocate arrangement consideration using the relative selling price method. The
new guidance includes new disclosure requirements on how the application of the
relative selling price method affects the timing and amount of revenue
recognition. We believe the adoption of this new guidance will
not have a material impact on our financial statements.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not or are not believed by
management to have a material impact on the Company's present or future
consolidated financial statements.
At
December 31, 2009, we had no obligations that would require disclosure as
off-balance sheet arrangements.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk
Not
required for smaller reporting companies.
Item
8. Financial Statements and Supplementary Data
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors
Freight
Management Corp.
(a
Development Stage Company)
1601 N.
Sepulveda Blvd. #632
Manhattan
Beach, CA 90266
We have
audited the balance sheet of Freight Management Corp. (a development stage
company) as of December 31, 2009, and the related statement of operations,
stockholders’ deficit and cash flows for the year ended December 31, 2009 and
for the period September 17, 2007 (inception) to December 31,
2009. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Freight Management Corp. (a
development stage company) at December 31, 2009, and the results of its
operations and its cash flows for the year ended December 31, 2009, for the
period September 17, 2007 (inception) to December 31, 2009, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming Freight Management
Corp. (a development stage company) will continue as a going
concern. The Company incurred a loss for the year ended December 31,
2009 and has a stockholders’ deficiency at December 31, 2009. These
conditions raise substantial doubt regarding the Company's ability to continue
as a going concern. Management's plans in regard to these matters are
described in Note 3 to the financial statements. The financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.
Weinberg
& Company, P.A.
Los
Angeles, California
March 29,
2010
SEALE
AND BEERS, CPAs
PCAOB & CPAB REGISTERED
AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
Freight
Management Corporation
(A
Development Stage Company)
We have
audited the accompanying balance sheets of Freight Management Corporation (A
Development Stage Company) as of December 31, 2008 and 2007, and the related
statements of operations, stockholders’ equity (deficit) and cash flows for the
year ended December 31, 2008 and the period from inception on September 17, 2007
through December 31, 2007 and 2008. These financial statements are the
responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
We
conduct our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Freight Management Corporation (A
Development Stage Company) as of December 31, 2008 and 2007, and the related
statements of operations, stockholders’ equity and cash flows for the year ended
December 31, 2008 and the period from inception on September 17, 2007 through
December 31, 2007 and 2008, in conformity with accounting principles generally
accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has an accumulated deficit of $58,716, which
raises substantial doubt about its ability to continue as a going
concern. Management’s plans concerning these matters are also
described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/
Seale and Beers, CPAs
Seale and
Beers, CPAs
Las
Vegas, Nevada
August
20, 2009
50 South Jones Blvd, Ste
202 Las Vegas,
Nevada 89107 Ph: 888-727-8251 Fx: 888-782-2351
GENESIS
BIOPHARMA, INC.
(FORMERLY
FREIGHT MANAGEMENT CORP.)
(A
Development Stage Company)
BALANCE
SHEETS
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash
|
|
$ |
8,257 |
|
|
$ |
2,905 |
|
Deposit
|
|
|
150 |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
8,407 |
|
|
|
3,055 |
|
|
|
|
|
|
|
|
|
|
Website,
net of accumulated amortization
|
|
|
1,225 |
|
|
|
2,557 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
9,632 |
|
|
$ |
5,612 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$ |
- |
|
|
$ |
8 |
|
Due
to director
|
|
|
23,120 |
|
|
|
3,320 |
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
23,120 |
|
|
|
3,328 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock, par value $0.000041666; Authorized: 1,800,000,000
shares
|
|
|
|
|
|
|
|
|
Issued
and outstanding: 121,440,000 shares
|
|
|
5,060 |
|
|
|
5,060 |
|
Additional
paid-in capital
|
|
|
55,940 |
|
|
|
55,940 |
|
Deficit
accumulated during the development stage
|
|
|
(74,488 |
) |
|
|
(58,716 |
) |
|
|
|
|
|
|
|
|
|
Total
stockholders’ deficit
|
|
|
(13,488 |
) |
|
|
2,284 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' deficit
|
|
$ |
9,632 |
|
|
$ |
5,612 |
|
The
accompanying notes are an integral part of these financial
statements.
GENESIS
BIOPHARMA, INC.
(FORMERLY
FREIGHT MANAGEMENT CORP.)
(A
Development Stage Company)
STATEMENTS OF
OPERATIONS
|
|
Year
Ended
December
31, 2009
|
|
|
Year
Ended
December
31, 2008
|
|
|
Date
of
Incorporation
on
September 17, 2007 to
December
31, 2009
|
|
REVENUE
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
1,332 |
|
|
|
1,332 |
|
|
|
2,775 |
|
Database
development costs
|
|
|
- |
|
|
|
30,250 |
|
|
|
30,250 |
|
General
& administrative
|
|
|
14,440 |
|
|
|
25,558 |
|
|
|
40,643 |
|
Organization
|
|
|
- |
|
|
|
- |
|
|
|
820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(15,772 |
) |
|
$ |
(57,140 |
) |
|
$ |
(74,488 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per common
share
|
|
$ |
|
* |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of
common shares outstanding
(Note 4)
|
|
|
121,440,000 |
|
|
|
121,440,000 |
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
GENESIS
BIOPHARMA, INC.
(FORMERLY
FREIGHT MANAGEMENT CORP.)
(A
Development Stage Company)
STATEMENTS OF STOCKHOLDERS'
DEFICIT
|
|
Common
Stock
|
|
|
Additional
|
|
|
Deficit
Accumulated
During
the
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid
in
Capital
|
|
|
Development
Stage
|
|
|
Stockholders'
Deficit
|
|
Initial
capitalization, sale of common stock to Directors on September 17,
2007
|
|
|
96,000,000 |
|
|
$ |
4,000 |
|
|
$ |
4,000 |
|
|
$ |
|
|
|
$ |
8,000 |
|
Private
placement closed December 31, 2007
|
|
|
25,440,000 |
|
|
|
1,060 |
|
|
|
51,940 |
|
|
|
|
|
|
|
53,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,576 |
) |
|
|
(1,576 |
) |
Balance
December 31, 2007
|
|
|
121,440,000 |
|
|
|
5,060 |
|
|
|
55,940 |
|
|
|
(1,576 |
) |
|
|
59,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(57,140 |
) |
|
|
(57,140 |
) |
Balance
December 31, 2008
|
|
|
121,440,000 |
|
|
|
5,060 |
|
|
|
55,940 |
|
|
|
(58,716 |
) |
|
|
2,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(15,772 |
) |
|
|
(15,772 |
) |
Balance
December 31, 2009
|
|
|
121,440,000 |
|
|
$ |
5,060 |
|
|
$ |
55,940 |
|
|
$ |
(74,488 |
) |
|
$ |
(13,488 |
) |
The
accompanying notes are an integral part of these financial
statements.
GENESIS
BIOPHARMA, INC.
(FORMERLY
FREIGHT MANAGEMENT CORP.)
(A
Development Stage Company)
STATEMENTS OF CASH
FLOWS
|
|
Year
Ended
December
31, 2009
|
|
|
Year
Ended
December
31, 2008
|
|
|
Date
of
Incorporation
on
September 17, 2007 to
December
31, 2009
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
$ |
(15,772 |
) |
|
$ |
(57,140 |
) |
|
$ |
(74,488 |
) |
Adjustments
To Reconcile Net Loss To Net Cash Used In Operating
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
expense
|
|
|
1,332 |
|
|
|
1,332 |
|
|
|
2,775 |
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit
|
|
|
- |
|
|
|
- |
|
|
|
(150 |
) |
Accounts
payable and accrued liabilities
|
|
|
(8 |
) |
|
|
(3,995 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
(14,448 |
) |
|
|
(59,803 |
) |
|
|
(71,863 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Website
|
|
|
- |
|
|
|
- |
|
|
|
(4,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
- |
|
|
|
- |
|
|
|
(4,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Due
to director
|
|
|
19,800 |
|
|
|
2,500 |
|
|
|
23,120 |
|
Proceeds
from issuance of common stock
|
|
|
- |
|
|
|
- |
|
|
|
61,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
19,800 |
|
|
|
2,500 |
|
|
|
84,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash during the period
|
|
|
5,352 |
|
|
|
(57,303 |
) |
|
|
8,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of the period
|
|
|
2,905 |
|
|
|
60,208 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of the period
|
|
$ |
8,257 |
|
|
$ |
2,905 |
|
|
$ |
8,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure with respect to cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Cash
paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
The
accompanying notes are an integral part of these financial
statements.
GENESIS
BIOPHARMA, INC.
(FORMERLY
FREIGHT MANAGEMENT CORP.)
(A
Development Stage Company)
NOTES TO FINANCIAL
STATEMENTS
For the
Years Ended December 31, 2009 and 2008
and the
Period from September 17, 2007 to December 31, 2007
NOTE 1. GENERAL ORGANIZATION
AND BUSINESS
The
Company was originally incorporated under the laws of the state of Nevada on
September 17, 2007. The Company has limited operations is considered a
development stage company, and has had no revenues from operations to
date. The Company has adopted a December 31 year end.
Initial
operations included organization, capital formation, target market
identification, new product development and marketing plans.
On March
15, 2010, the Company and Genesis Biopharma, Inc., a Nevada corporation and a
newly formed merger subsidiary wholly owned by the Company (“Merger Sub”),
consummated a merger transaction (the “Merger”) whereby Merger Sub merged into
the Company, with the Company as the surviving corporation. The
Company and Merger Sub filed the Articles of Merger on March 15, 2010 with the
Secretary of State of Nevada, along with the Agreement and Plan of Merger
entered into by the two parties effective as of March 15, 2010 (the “Merger
Agreement”). The Merger Agreement and the Articles of Merger provided
for an amendment of the Company’s Articles of Incorporation, which changed the
Company’s name to “Genesis Biopharma, Inc.” effective as of March 15, 2010. (see
Note 5)
On March
15, 2010, the Company also effected a 24−for−1 forward stock split, with a
record date of March 15, 2010, and correspondingly increased the number of its
authorized shares to 1,800,000,000 and reduced the par value of each share from
$0.001 to $0.000041666. All share and per share amounts have been
retroactively restated as if the stock split had occurred during the earliest
period presented.
Going
Concern
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates, among other things, the
realization of assets and satisfaction of liabilities in the normal course of
business. The Company has net losses for the period from inception to December
31, 2009 of $74,488. The Company intends to fund operations through sales and
equity financing arrangements, which may be insufficient to fund its capital
expenditures, working capital and other cash requirements through the next
fiscal year ending December 31, 2010.
These
factors, among others, raise substantial doubt about the Company’s ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 2. SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES
Earnings
per Share
The basic
earnings (loss) per share is calculated by dividing the Company’s net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
the Company’s net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted as of the first of the year for any potentially dilutive debt or
equity.
On March
30, 2010, the Company granted options to purchase 675,000 shares of the
Company’s common stock to a director and two consultants at an exercise price of
$0.03125. These options vest over three (3) years.
Dividends
The
Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of December 31, 2009, the carrying value of accrued
liabilities approximated fair value due to the short-term nature and maturity of
these instruments.
Income
Taxes
Income
taxes are provided in accordance with guidance of the Financial Accounting
Standards Board (“FASB”). A deferred tax asset or liability is
recorded for all temporary differences between financial and tax reporting and
net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some portion of all
of the deferred tax assets will be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Website
Costs
Costs
incurred in connection with the creation of our website have been capitalized
and are being amortized to expense over their estimated useful life of three
years using the straight-line method.
Ongoing
website post-implementation costs of operation, including training, application
maintenance and creation of database content, will be charged to expense as
incurred.
Recent
Accounting Pronouncements
In June
2009, the FASB issued authoritative guidance on accounting standards
codification and the hierarchy of generally accepted accounting principles
(“GAAP") effective for interim and annual reporting periods ending after
September 15, 2009. The FASB accounting standards codification
(“Codification”) has become the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in accordance with GAAP. All existing
accounting standard documents are superseded by the Codification and any
accounting literature not included in the Codification will not be
authoritative. However, rules and interpretive releases of the SEC issued under
the authority of federal securities laws will continue to be sources of
authoritative GAAP for SEC registrants. Beginning with the
quarter ending September 30, 2009, all references made by the Company to GAAP in
its condensed consolidated financial statements use the Codification numbering
system. The Codification does not change or alter existing GAAP and, therefore,
it does not have an impact on our financial position, results of operations and
cash flows.
In
June 2009, the FASB made an updated the principle for the consolidation of
variable interest entities. Among other things, the update replaces the
calculation for determining which entities, if any, have a controlling financial
interest in a variable interest entity (VIE) from a quantitative based risks and
rewards calculation, to a qualitative approach that focuses on identifying which
entities have the power to direct the activities that most significantly impact
the VIE’s economic performance and the obligation to absorb losses of the VIE or
the right to receive benefits from the VIE. The update also requires ongoing
assessments as to whether an entity is the primary beneficiary of a VIE
(previously, reconsideration was only required upon the occurrence of specific
events), modifies the presentation of consolidated VIE assets and liabilities,
and requires additional disclosures about a company’s involvement in VIE’s. This
update will be effective for fiscal years beginning after November 15,
2009. The Company does not currently believe that the adoption of this update
will have any effect on its consolidated financial position and results of
operations.
In
October 2009, the FASB issued authoritative guidance on revenue recognition that
will become effective for us beginning July 1, 2010, with earlier adoption
permitted. Under the new guidance on arrangements that include software
elements, tangible products that have software components that are essential to
the functionality of the tangible product will no longer be within the scope of
the software revenue recognition guidance, and software-enabled products will
now be subject to other relevant revenue recognition guidance. Additionally, the
FASB issued authoritative guidance on revenue arrangements with multiple
deliverables that are outside the scope of the software revenue recognition
guidance. Under the new guidance, when vendor specific objective evidence or
third party evidence for deliverables in an arrangement cannot be determined, a
best estimate of the selling price is required to separate deliverables and
allocate arrangement consideration using the relative selling price method. The
new guidance includes new disclosure requirements on how the application of the
relative selling price method affects the timing and amount of revenue
recognition. We believe the adoption of this new guidance will
not have a material impact on our financial statements.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not or are not believed by
management to have a material impact on the Company's present or future
consolidated financial statements.
NOTE 3. STOCKHOLDERS’
EQUITY
Authorized
The
Company is authorized to issue 1,800,000,000 shares of $0.000041666 par value
common stock. All common stock shares have equal voting rights, are
non-assessable and have one vote per share. Voting rights are not cumulative
and, therefore, the holders of more than 50% of the common stock could, if they
choose to do so, elect all of the directors of the Company.
On March
15, 2010, the Company effected a 24−for−1 forward stock split, with a record
date of March 15, 2010, and correspondingly increased the number of its
authorized shares to 1,800,000,000 and reduced the par value of each share from
$0.001 to $0.000041666.
Issued
and Outstanding
On
September 17, 2007 (inception), the Company issued 96,000,000 shares of its
common stock to its Directors, at a price of $0.00083 per share, for cash of
$8,000. See Note 4.
On
December 31, 2007, the Company closed a private placement for 25,440,000 common
shares at a price of $0.002083 per share, or an aggregate of $53,000. The
Company accepted subscriptions from 39 offshore non-affiliated
investors.
NOTE 4. RELATED PARTY
TRANSACTIONS
The
Company's neither owns nor leases any real or personal property. The Company’s
Directors provide office space free of charge. The officers and directors of the
Company are involved in other business activities and may, in the future, become
involved in other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company has not formulated a
policy for the resolution of such conflicts.
The
amount due to a director of $23,120 has no repayment terms, is unsecured without
interest and is for reimbursement of company incorporation and general operating
expenses. The Company plans to pay the amount within the next 12 months, if it
has sufficient cash to do so.
NOTE
5. SUBSEQUENT EVENTS
On March
15, 2010, the Company and Genesis Biopharma, Inc., a Nevada corporation and a
newly formed merger subsidiary wholly owned by the Company (“Merger Sub”),
consummated a merger transaction (the “Merger”) whereby Merger Sub merged into
the Company, with the Company as the surviving corporation. The
Company and Merger Sub filed the Articles of Merger on March 15, 2010 with the
Secretary of State of Nevada, along with the Agreement and Plan of Merger
entered into by the two parties effective as of March 15, 2010 (the “Merger
Agreement”). The Merger Agreement and the Articles of Merger provided
for an amendment of the Company’s Articles of Incorporation, which changed the
Company’s name to “Genesis Biopharma, Inc.” effective as of March 15,
2010.
On March
15, 2010, the Company also effected a 24−for−1 forward stock split, with a
record date of March 15, 2010, and correspondingly increased the number of its
authorized shares to 1,800,000,000 and reduced the par value of each share from
$0.001 to $0.000041666.
As a
result of the merger with Merger Sub, the Company acquired all of the assets and
contractual rights, and assumed all of the liabilities, of Merger Sub with
respect to an Asset Purchase Agreement (the “Purchase
Agreement”). Effective March 15, 2010, the Company and Merger Sub
entered into the Purchase Agreement with Hamilton Atlantic, a Cayman Islands
company (“Hamilton”), whereby Hamilton sold, and Merger Sub acquired, all of
Hamilton’s rights, title and interest to certain assets related to the
development and commercialization of biotechnology drugs, primarily anti-CD55
antibodies (the “Anti-CD55 Antibody Program”), including certain patents, patent
applications, materials, and know-how. The Anti-CD55 Antibody Program
consists of antibodies that could be developed and commercialized for the
treatment of cancer. As consideration, the Company agreed to issue to
Hamilton 20,960,016 shares of the Company’s common stock.
On March
15, 2010, after the effectiveness of the Merger, we entered into a Patent and
Know How Licence (the “License Agreement”) with Cancer Research Technology
Limited, a company registered in England and Wales (“CRT”). Pursuant
to the License Agreement, CRT granted to the Company an exclusive, worldwide
right and license in certain intellectual property related to a proprietary,
therapeutic use of anti-CD55 antibodies, including rights to patents and patent
applications related thereto, to research, develop, use, make, distribute, and
sell products utilizing the licensed intellectual property. The
license granted to the Company expires on the later to occur of the expiration
of the relevant licensed patent in the relevant country or 10 years after the
date that the first therapeutic product was placed on the market in such
country. In consideration for the license, the Company agreed to pay
to CRT £30,000 in royalties upon the effective date of the License
Agreement. In addition, the Company agreed to pay CRT additional
royalties based on the achievement of certain milestones, including the
consummation of financing by the Company and other milestones relating to the
commencement of Phase III clinical studies, the filing of new drug applications,
and the grant of marketing approval related to the licensed
products.
Effective
March 15, 2010, the Company sold to accredited investors pursuant to
subscription agreements, in a private placement offering (the “Private
Placement”), an aggregate of 12,799,968 shares (post-split) of its common stock
(the “Shares”), for an aggregate purchase price of $400,000. The
Common Stock Subscription Agreements granted the investors “piggy-back”
registration rights with respect to the Shares, pursuant to which the Company
agreed, in the event the Company determines to register its common stock with
the SEC, that it would include as part of the registration statement registering
its common stock the Shares.
The
securities sold by the Company in the Private Placement were exempt from
registration under the Securities Act of 1933, as amended, pursuant to
Regulation S promulgated thereunder and pursuant to Section 4(2)
thereunder.
Item
9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
On August
6, 2009, Board of Directors of the Company dismissed Moore & Associates
Chartered, its independent registered public accounting firm. On the same date,
the accounting firm of Seale and Beers, CPAs was engaged as the Company’s new
independent registered public accounting firm. The Board of Directors of the
Company approved of the dismissal of Moore & Associates Chartered and the
engagement of Seale and Beers, CPAs as its independent auditor. None of the
reports of Moore & Associates Chartered on the Company’s financial
statements for either of the past two years or subsequent interim period
contained an adverse opinion or disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope or accounting principles, except that
the Company’s audited financial statements for the fiscal year ended December
31, 2008 included a going concern qualification..
During
the Company’s two most recent fiscal years, there were no disagreements with
Moore and Associates, Chartered whether or not resolved, on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to Moore and Associates, Chartered’s
satisfaction, would have caused it to make reference to the subject matter of
the disagreement in connection with its report on the Company’s financial
statements, and (ii) no “reportable events” as that term is defined in Item
304(a)(1)(v) of Regulation S-K.
On August
6, 2009, the Company engaged Seale and Beers, CPAs (“Seale”) as its independent
registered public accounting firm On March 5, 2010, our Board of
Directors approved the dismissal of Seale as our
independent registered public accounting firm and the engagement of
Weinberg & Company as our
new independent registered public accounting
firm.
Other
than a going concern qualification, Seale’s audit reports on our financial
statements as of and for the year ended December 31, 2008, and for the period of
inception on September 17, 2007 to December 31, 2007, did not contain
an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles.
During
the year ended December 31, 2008, and for the period of inception on September
17, 2007 to December 31, 2007, the subsequent interim periods, and through March
5, 2010, there were (i)
no disagreements between the Company and Seale on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Seale, would have caused Seale to make
reference to the subject matter of the disagreement in their reports on the
financial statements for such years, and (ii) no “reportable events” as that
term is defined in Item 304(a)(1)(v) of Regulation S-K.
During
the year last two fiscal years there were (i) no disagreements
between the Company and Weinberg & Company on any matter of accounting
principles or practices, financial statement disclosure or
auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Weinberg & Company,
would have caused Weinberg & Company to make reference to the subject matter
of the disagreement in their reports on the financial statements for such years,
and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of
Regulation S-K.
Item
9A(T). Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
The
Company’s management, with the participation of its Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by this Annual
Report on Form 10-K. For purposes of this section, the term disclosure controls and
procedures means controls and other procedures of an issuer that are
designed to ensure that information required to be disclosed by the issuer in
the reports that it files or submits under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the issuer's management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.
Based on
this evaluation, the Company’s Chief Executive Officer and Chief Financial
Officer have concluded that as of December 31, 2009, the Company’s disclosure
controls and procedures were effective to ensure that information it is required
to disclose in reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its
principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure, and that such information is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial
reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the company's principal executive and principal
financial officers and effected by the company's board of directors, management
and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting
principles generally accepted in the United States of America and
includes those policies and procedures that:
|
*
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
|
*
|
Provide
reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company;
and
|
|
*
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial
statements.
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control
systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of the inherent limitations of
internal control, there is a risk that material misstatements may not be
prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
As of
December 31, 2009 management assessed the effectiveness of our internal control
over financial reporting based on the criteria for effective internal control
over financial reporting established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) and SEC guidance on conducting
such assessments. Based on that
evaluation, they concluded that, during the period covered by this
report, such internal controls and procedures were not
effective to detect the inappropriate application of US GAAP rules as more fully
described below. This was due to deficiencies that existed in the
design or operation of our internal controls over financial reporting that
adversely affected our internal controls and that may be considered to be
material weaknesses.
The
matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were the lack of a functioning audit committee due to
a lack of a majority of independent members and a lack of a majority of outside
directors on our board of directors, resulting in ineffective oversight in the
establishment and monitoring of required internal controls and
procedures. This material weakness was identified by our Chief
Executive Officer in connection with the review of our financial statements as
of December 31, 2009.
Management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures, which could result in a material misstatement in our
financial statements in future periods.
This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial
reporting. Management's report was not subject to
attestation by the Company's registered public accounting
firm pursuant to temporary rules of the SEC that permit the Company to provide
only the management's report in this annual report.
MANAGEMENT'S
REMEDIATION INITIATIVES
In an
effort to remediate the identified material weaknesses and other deficiencies
and enhance our internal controls, we have appointed an outside director to our
board of directors on March 29, 2010, who shall be appointed to a fully
functioning audit committee who will undertake the oversight in the
establishment and monitoring of required internal controls and procedures such
as reviewing and approving estimates and assumptions made by
management.
Management
believes that the appointment of an outside director, who shall be appointed to
a fully functioning audit committee, will remedy the lack of a functioning audit
committee and a lack of a majority of outside directors on our
Board.
Changes
in Internal Controls Over Financial Reporting
There was
no change in the Company’s internal control over financial reporting that
occurred during the Company’s last fiscal quarter that has materially affected,
or is reasonably likely to materially affect, its internal control over
financial reporting.
Item
9B. Other Information
None
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance
The
following table sets forth information concerning our current executive officers
and directors:
Name
|
|
Age
|
|
Position
|
Robert
Brooke
|
|
29
|
|
President,
Chief Executive Officer, and Director
|
Richard
McKilligan
|
|
46
|
|
Secretary,
Treasurer, Chief Financial Officer, and Director
|
Mark
J. Ahn, PhD.
|
|
47
|
|
Director
|
ROBERT
BROOKE was appointed as our President and Chief Executive Officer, and also as a
Director, on March 15, 2010. Mr. Brooke is the founder and President
of Percipio Biosciences, Inc., a research diagnostics company that
manufactures and distributes world-wide products related to oxidative
stress research. From 2004 to 2008, he was an analyst with Bristol Capital
Advisors, LLC, investment manager to Bristol Investment Fund, Ltd. During
this period, Bristol financed over 60 public healthcare and life science
companies and was listed by The PIPEs Report as the most active investor in
private placements by public biotechnology companies. He currently is a
member of the Los Angeles Gerontology Research Group. Mr. Brooke earned a
B.S. in Electrical Engineering from Georgia Tech in 2003 and a M.S. in
Biomedical Engineering from UCLA in 2005.
RICHARD
MCKILLIGAN was appointed as our Secretary, Treasurer and Chief
Financial Officer, and also as a Director, on March 15, 2010. Mr.
McKilligan is a director of Bristol Investment Fund, Ltd., which holds a
significant equity stake in the Company. He is also Chief Financial Officer
and General Counsel of Derycz Scientific, Inc., a publicly traded company
engaged in providing published content to its customers for marketing,
regulatory or research purposes. Mr. McKilligan was an associate with Morgan,
Lewis & Bockius, LLP in their New York and London offices from 2000
until January 2006. He is a member of the State Bar of California, the New
York State Bar Association and The Florida Bar. Mr. McKilligan earned his
law degree from Cornell Law School, his MBA from the University
of Chicago and his undergraduate degree in Accountancy from the University
of Illinois at Urbana-Champaign.
MARK J.
AHN, Ph.D. is Associate Professor, Global Management at Atkinson Graduate School
of Management, Willamette University; and Principal at Pukana Partners, Ltd.
which provides strategic consulting to life science companies. He
previously served as Chair, Science & Technology Management, Victoria
University at Wellington, New Zealand. Dr. Ahn was also founder, President, and
Chief Executive Officer of Hana Biosciences. Prior to Hana, he served
as Vice President, Hematology and corporate officer at Genentech, Inc., as well
as held positions of increasing responsibility at Amgen and Bristol-Myers Squibb
Company. Dr. Ahn also serves on public and venture capital-backed Board of
Directors for RXi Pharmaceuticals, Access Pharmaceuticals, Periocyte, and
Mesynthes.
The
resignations of two of our former directors, Ibrahim Abotaleb and Gerald Lewis,
became effective on March 29, 2010, ten days after the filing with the SEC and
mailing to our stockholders of our Information Statement filed pursuant to Rule
14f-1 of the Exchange Act.
There are
no family relationships among any of our directors, executive officers or key
employees.
COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Section
16(a) of the Exchange Act requires our officers, directors, and persons who own
more than 10% of a registered class of our equity securities to file reports of
ownership and changes in ownership with the SEC. Officers, directors, and
greater than 10% beneficial owners are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on our
review of copies of the Section 16(a) reports filed for the fiscal year ended
December 31, 2009, we believe that all filing requirements applicable to our
officers, directors, and greater than 10% beneficial owners have been complied
with.
Code of
Ethics
We have
not yet adopted a written code of ethics that applies to our Chief Executive
Officer, Chief Financial Officer, principal accounting officer or persons
performing similar functions. We currently are considering the terms of such a
code and expect to adopt a code of ethics during the current fiscal
year.
COMMITTEES
OF THE BOARD OF DIRECTORS
We do not
have standing audit, nominating or compensation committees of the board of
directors, or committees performing similar functions, and therefore our
entire board of directors performs such functions. We are not
currently listed on any national exchange and are not required to maintain
such committees by any self-regulatory agency. We do not believe it is
necessary for our board of directors to appoint such committees because the
volume of matters that come before our board of directors for consideration
permits each director to give sufficient time and attention to such matters
to be involved in all decision making. All directors participate in
the consideration of director nominees. We do not have a policy with regard
to attendance at board meetings.
We do not
have a policy with regard to consideration of nominations of directors. We
accept nominations for directors from our security holders. There is no
minimum qualification for a nominee to be considered by our directors.
All of our directors will consider any nomination and will consider such
nomination in accordance with his or her fiduciary responsibility to the
Company and its stockholders.
Security
holders may send communications to our board of directors by writing
to Genesis Biopharma, Inc., 1601 N. Sepulveda Blvd., #632, Manhattan
Beach, California 90266, attention Board of Directors or any specified
director. Any correspondence received at the foregoing address to the
attention of one or more directors is promptly forwarded to such director
or directors.
Item
11. Executive Compensation
In prior
fiscal years, we have not compensated our directors for their service
as members of our board of directors. On March 30, 2010, however, we
granted an option to acquire 375,000 shares of our common stock to Mr. Mark J.
Ahn, who joined us as a director of the Company on March 29, 2010. We
do reimburse our directors for reasonable expenses in connection with
attendance at board meetings. From inception to date, we have not paid
compensation to our executive officers. The Company intends to enter into
definitive employment agreements with Mr. Brooke and Mr. McKilligan, which
agreements will provide for compensation commensurate with their
responsibilities as executive officers of the Company.
Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The
following table sets forth certain information regarding the shares
of common stock beneficially owned or deemed to be beneficially owned as of
March 29, 2010 by: (i) each person whom we know beneficially owns more than 5%
of our common stock, (ii) each of our directors, (iii) each of our “named
executive officers” (as defined in Item 402(m)(2) of Regulation S-K), and (iv)
all such directors and executive officers as a group.
Except as
indicated by the footnotes below, we believe, based on the
information furnished to us, that the persons and entities named in the
table below have sole voting and investment power with respect to all
shares of our common stock that they beneficially own, subject to
applicable community property laws.
In
computing the number of shares of common stock beneficially owned by a
person and the percentage ownership of that person, pursuant to the rules
prescribed by the Securities and Exchange Commission we deem outstanding
shares of common stock subject to options or warrants held by that person
that are currently exercisable or exercisable within sixty (60) days of
March 29, 2010 and we do not deem these shares outstanding for the purpose
of computing the percentage ownership of any other person.
Name
|
|
Shares
of Common Stock
Beneficially Owned (1)
|
|
|
Percent
of Common Stock
Beneficially Owned (1)
|
|
5% or greater owners:
|
|
|
|
|
|
|
Hamilton Atlantic
(2)
|
|
|
20,960,016 |
|
|
|
29.2 |
% |
Theorem
Group, LLC (3)
|
|
|
6,400,008 |
|
|
|
8.9 |
% |
|
|
|
|
|
|
|
|
|
Directors and executive
officers:
|
|
|
|
|
|
|
|
|
Robert
Brooke
|
|
|
5,940,008 |
|
|
|
8.3 |
% |
Richard
McKilligan
|
|
|
2,720,016 |
|
|
|
3.8 |
% |
Mark
J. Ahn (4)
|
|
|
0 |
|
|
|
0 |
|
Ibrahim
Abataleb (5)
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as
a group (4 persons):
|
|
|
8,660,024 |
|
|
|
12.1 |
% |
(1)
|
Applicable
percentage ownership is based on 71,860,008 shares (post-split) of
common stock outstanding at March 29, 2010. The number of shares
of common stock owned are those “beneficially owned” as determined
under the rules of the Securities and Exchange Commission, including
any shares of common stock as to which a person has sole or shared
voting or investment power and any shares of common stock which the person
has the right to acquire within sixty (60) days through the exercise of
any option, warrant or right.
|
(2)
|
Amy
Wang and Graham May exercise dispositive and voting control
with respect to the shares held by Hamilton
Atlantic.
|
(3)
|
Anshuman
Dube exercises dispositive and voting control with respect to
the shares held by Theorem
Group.
|
(4)
|
On
March 30, 2010, the Company granted Mr. Ahn options to purchase 375,000
common shares which vest over three years. As none of the
shares underlying such options may be acquired by Mr. Ahn within sixty
(60) days of March 29, 2010, we have not included any of such shares in
the table above.
|
|
|
(5)
|
Mr.
Abataleb is listed above as he is a “named executive officer” due to his
having been the Company’s principal executive officer in 2009. Mr.
Abataleb currently is not an officer or director of the Company, having
resigned as President and Chief Executive Officer on March 15, 2010 and as
a director effective March 29,
2010.
|
Item
13. Certain Relationships and Related Transactions, and Director
Independence.
Certain
Relationships and Related Transactions
In
connection with the Company’s acquisition of the assets pursuant to
the Purchase Agreement from Hamilton, and after the related 24-for-1
forward stock split and the related merger of our wholly owned subsidiary,
Mr. Brooke acquired beneficial ownership of 9,940,008 shares (post-split)
of our common stock held by Mr. Abotaleb at a purchase price of $2,070.84
and Mr. McKilligan acquired beneficial ownership of 2,720,016 shares
(post-split) of our common stock held by Mr. Abotaleb at a purchase price of
$566.67. The balance of the shares held by Mr. Abotaleb and all of the
shares held by Mr. Lewis, totaling an aggregate of 83,339,976 (post-split),
were then returned to the Company for cancellation and are no longer
outstanding.
Richard
McKilligan is a director of Bristol Investment Fund, Ltd., which is one of
the investors in our recently completed private placement and a
current stockholder of the Company.
Director
Independence
Mr. Ahn
is an independent director as that term is defined by NYSE Rule 303A.02(a). The
Company currently does not have a nominating/corporate governance, compensation
or audit committee. Of the members of the Company’s board of directors, Mr. Ahn
does meet the NYSE’s independence standards for members of such committees and
Mr. Brooke and Mr. McKilligan do not meet the NYSE’s independence requirements
for members of such committees.
Item
14. Principal Accounting Fees and Services.
Summary
of Principal Accounting Fees for Professional Services Rendered
The
following table presents the aggregate fees for professional audit services and
other services rendered by Seale & Beers, our independent registered public
accountants in the fiscal years ended December 31, 2009 and
2008.
|
|
Year Ended
December
31, 2009
|
|
|
Year Ended
December
31, 2008
|
|
Audit
Fees
|
|
$
|
5,260
|
|
|
|
6,050
|
|
Audit-Related
Fees
|
|
|
-
|
|
|
|
-
|
|
Tax
Fees
|
|
|
-
|
|
|
|
-
|
|
All
Other Fees
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
5,260
|
|
|
|
6,050
|
|
Audit Fees consist of fees
billed for the annual audit of our financial statements and other audit services
including the provision of consents and the review of documents filed with the
SEC.
We do not
have an independent audit committee and the full Board of Directors, therefore,
serves as the audit committee for all purposes relating to communication with
our auditors and responsibility for our audit. Our Board of Directors has
considered whether the provision of the services described above for the fiscal
years ended December 31, 2008 and 2009, is compatible with maintaining the
auditor’s independence.
All audit
and non-audit services that may be provided by our principal accountant to us
shall require pre-approval by the Board of Directors. Further, our auditor shall
not provide those services to us specifically prohibited by the SEC, including
bookkeeping or other services related to the accounting records or financial
statements of the audit client; financial information systems design and
implementation; appraisal or valuation services, fairness opinion, or
contribution-in-kind reports; actuarial services; internal audit outsourcing
services; management functions; human resources; broker-dealer, investment
adviser, or investment banking services; legal services and expert services
unrelated to the audit; and any other service that the Public Company Accounting
Oversight Board determines, by regulation, is impermissible.
PART
IV
Item
15. Exhibits, Financial Statements Schedules.
(a)
Documents filed as a part of this report
(1) Financial
Statements
The financial statements of
Genesis Biopharma, Inc. are incorporated by reference to Item 8 of this
report.
(2) Financial Statement
Schedules
Not
required for smaller reporting companies.
(b)
Exhibits
3.1
|
Articles
of Incorporation filed with the Nevada Secretary of State on September 17,
2007(1)
|
|
|
3.2
|
Certificate
of Change filed with the Nevada Secretary of State on March 15, 2010(2)
|
|
|
3.3
|
Articles
of Merger filed with the Nevada Secretary of State on March 15, 2010(3)
|
|
|
4.1
|
Genesis
Biopharma, Inc. 2010 Equity Compensation Plan*
|
|
|
10.1
|
Agreement
and Plan of Merger between Freight Management Corp. (renamed Genesis
Biopharma, Inc.) and Genesis Biopharma, Inc. dated March 15, 2010(4)
|
|
|
10.2
|
Asset
Purchase Agreement among Freight Management Corp. (renamed Genesis
Biopharma, Inc.), Genesis Biopharma, Inc., Hamilton Atlantic and the other
signatories thereto dated March 15, 2010(5)
|
|
|
10.3
|
Patent
and Know How Licence between Cancer Research Technology Limited and
Genesis Biopharma, Inc. (formerly Freight Management Corp.) dated March
15, 2010(6)
|
|
|
10.4
|
Form
of Private Placement Subscription Agreement(7)
|
|
|
10.5
|
Form
of Stock Option Agreement under Genesis Biopharma, Inc. 2010 Equity
Compensation Plan*
|
|
|
16.1
|
Letter
from former accountant - Moore & Associates Chartered(8)
|
|
|
16.2
|
Letter
from former accountant - Seale and Beers, CPAs(9)
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive
Officer*
|
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial
Officer*
|
|
|
32.1
|
Section
1350 Certification of Chief Executive Officer*
|
|
|
32.2
|
Section
1350 Certification of Chief Financial
Officer*
|
*
Filed herewith
(1)
|
Incorporated
by reference to Exhibit 3.1 to the Issuer’s Registration Statement on Form
SB-2 filed on January 29, 2008.
|
(2)
|
Incorporated
by reference to Exhibit 3(i).2 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(3)
|
Incorporated
by reference to Exhibit 3(i).3 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(4)
|
Incorporated
by reference to Exhibit 10.1 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(5)
|
Incorporated
by reference to Exhibit 10.2 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(6)
|
Incorporated
by reference to Exhibit 10.3 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(7)
|
Incorporated
by reference to Exhibit 10.4 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(8)
|
Incorporated
by reference to Exhibit 16.1 to the Issuer’s Current Report on Form 8-K/A
filed on August 25, 2009.
|
(9)
|
Incorporated
by reference to Exhibit 16.1 to the Issuer’s Current Report on Form 8-K
filed on March 8, 2010.
|
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
|
|
|
GENESIS
BIOPHARMA, INC.
|
|
By:
|
/s/
Robert T. Brooke
|
|
|
Robert
T. Brooke
|
Date:
March 31, 2010
|
|
Chief
Executive Officer
|
|
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Robert T.
Brooke
|
|
President
and Chief Executive Officer |
|
March
31, 2010 |
Robert
T. Brooke
|
|
(Principal
Executive Officer) and Director
|
|
|
|
|
|
|
|
/s/
Richard McKilligan |
|
Chief
Financial Officer |
|
March
31, 2010 |
Richard
McKilligan
|
|
(Principal
Financial and Accounting Officer),
|
|
|
|
|
Treasurer,
Secretary and Director |
|
|
EXHIBIT
INDEX
3.1
|
Articles
of Incorporation filed with the Nevada Secretary of State on September 17,
2007(1)
|
|
|
3.2
|
Certificate
of Change filed with the Nevada Secretary of State on March 15, 2010(2)
|
|
|
3.3
|
Articles
of Merger filed with the Nevada Secretary of State on March 15, 2010(3)
|
|
|
4.1
|
Genesis
Biopharma, Inc. 2010 Equity Compensation Plan*
|
|
|
10.1
|
Agreement
and Plan of Merger between Freight Management Corp. (renamed Genesis
Biopharma, Inc.) and Genesis Biopharma, Inc. dated March 15, 2010(4)
|
|
|
10.2
|
Asset
Purchase Agreement among Freight Management Corp. (renamed Genesis
Biopharma, Inc.), Genesis Biopharma, Inc., Hamilton Atlantic and the other
signatories thereto dated March 15, 2010(5)
|
|
|
10.3
|
Patent
and Know How Licence between Cancer Research Technology Limited and
Genesis Biopharma, Inc. (formerly Freight Management Corp.) dated March
15, 2010(6)
|
|
|
10.4
|
Form
of Private Placement Subscription Agreement(7)
|
|
|
10.5
|
Form
of Stock Option Agreement under Genesis Biopharma, Inc. 2010 Equity
Compensation Plan*
|
|
|
16.1
|
Letter
from former accountant - Moore & Associates Chartered(8)
|
|
|
16.2
|
Letter
from former accountant - Seale and Beers, CPAs(9)
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive
Officer*
|
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial
Officer*
|
|
|
32.1
|
Section
1350 Certification of Chief Executive Officer*
|
|
|
32.2
|
Section
1350 Certification of Chief Financial
Officer*
|
(1)
|
Incorporated
by reference to Exhibit 3.1 to the Issuer’s Registration Statement on Form
SB-2 filed on January 29, 2008.
|
(2)
|
Incorporated
by reference to Exhibit 3(i).2 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(3)
|
Incorporated
by reference to Exhibit 3(i).3 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(4)
|
Incorporated
by reference to Exhibit 10.1 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(5)
|
Incorporated
by reference to Exhibit 10.2 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(6)
|
Incorporated
by reference to Exhibit 10.3 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(7)
|
Incorporated
by reference to Exhibit 10.4 to the Issuer’s Current Report on Form 8-K
filed on March 19, 2010.
|
(8)
|
Incorporated
by reference to Exhibit 16.1 to the Issuer’s Current Report on Form 8-K/A
filed on August 25, 2009.
|
(9)
|
Incorporated
by reference to Exhibit 16.1 to the Issuer’s Current Report on Form 8-K
filed on March 8, 2010.
|
Unassociated Document
GENESIS
BIOPHARMA, INC.
2010
EQUITY COMPENSATION PLAN
I. ESTABLISHMENT
OF PLAN; DEFINITIONS
1. Purpose. The
purpose of the Genesis Biopharma, Inc. 2010 Equity Compensation Plan is to
encourage certain, officers, employees, directors, and consultants of Genesis
Biopharma, Inc., a Nevada corporation (the "Company"), to acquire and hold stock
in the Company as an added incentive to remain with the Company and increase
their efforts in promoting the interests of the Company, and to enable the
Company to attract and retain capable individuals.
2. Definitions. Unless
the context clearly indicates otherwise, the following terms shall have the
meanings set forth below:
(a) "Board"
shall mean the Board of Directors of the Company.
(b) "Code"
shall mean the Internal Revenue Code of 1986, as it may be amended from time to
time.
(c) "Committee"
shall mean (i) a committee made up of members of the Board who shall, from time
to time, be appointed by the Board, or (ii) if no such committee is formed, the
Board.
(d) "Company"
shall mean Genesis Biopharma, Inc., a Nevada corporation.
(e) "Consultants"
shall mean individuals who provide services to the Company and any Subsidiary
who are not Employees or Directors.
(f) "Directors"
shall mean the members of the Board of Directors of the Company.
(g) "Disability"
shall mean a medically determinable physical or mental condition which causes an
Employee, Director, or Consultant to be unable to engage in any substantial
gainful activity and which can be expected to result in death or to be of
long-continued and indefinite duration.
(h) "Employee"
shall mean any common law employee, including officers, of the Company or any
Subsidiary as determined under the Code and the Treasury Regulations
thereunder.
(i) "Fair
Market Value" shall mean (i) if the Stock is listed on a national securities
exchange or the NASDAQ system, the mean between the highest and lowest sales
prices for the Stock on such date, or, if no such prices are reported for such
day, then on the next preceding day on which there were reported prices; (ii) if
the Stock is not listed on a national securities exchange or the NASDAQ system,
the mean between the bid and asked prices for the shares on such date, or if no
such prices are reported for such day, then on the next preceding day on which
there were reported prices; or (iii) as determined in good faith by the
Company’s Board of Directors.
(j) "Grantee"
shall mean an officer, Employee, Director, or Consultant granted a Stock Option
or Stock Award under this Plan.
(k) "Incentive
Stock Option" shall mean an option granted pursuant to the Incentive Stock
Option provisions as set forth in Part II of this Plan.
(l) "Non-Qualified
Stock Option" shall mean an option granted pursuant to the Non-Qualified Stock
Option provisions as set forth in Part III of this Plan.
(m) "Plan"
shall mean the Genesis Biopharma, Inc. 2010 Equity Compensation Plan as set
forth herein and as amended from time to time.
(n) "Restricted
Stock" shall mean Stock which is issued pursuant to the Restricted Stock Award
provisions as set forth in Part IV of this Plan.
(o) "Stock"
shall mean authorized but unissued shares of the Common Stock of the Company or
reacquired shares of the Company's Common Stock.
(p) "Stock
Appreciation Right" shall mean a stock appreciation right granted pursuant to
the Stock Appreciation Right provisions as set forth in Part II and III of this
Plan.
(q) "Stock
Award" shall mean an award of Restricted or Unrestricted Stock granted pursuant
to this Plan.
(r) "Stock
Option" shall mean an option granted pursuant to the Plan to purchase shares of
Stock.
(s) “Subsidiary”
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with and including the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(t) "Ten
Percent Shareholder" shall mean an Employee who at the time a Stock Option is
granted owns stock representing more than ten percent (10%) of the total
combined voting power of all stock of the Company or of its parent or subsidiary
corporation.
(u) "Unrestricted
Stock" shall mean Stock which is issued pursuant to the Unrestricted Stock
provisions as set forth in Part V of this Plan.
3. Shares of Stock Subject to
the Plan. Subject to the provisions of Paragraph 2 of Part VI
of the Plan, the Stock which may be issued or transferred pursuant to Stock
Options and Stock Awards granted under the Plan and the Stock which is subject
to outstanding but unexercised Stock Options under the Plan shall not exceed
Three Million Five Hundred Thousand (3,500,000) shares in the
aggregate. If a Stock Option shall expire and terminate for any
reason, in whole or in part, without being exercised or, if Stock Awards are
forfeited because the restrictions with respect to such Stock Awards shall not
have been met or have lapsed, the number of shares of Stock which are no longer
outstanding as Stock Awards or subject to Stock Options may again become
available for the grant of Stock Awards or Stock Options. There shall
be no terms and conditions in a Stock Award or Stock Option which provide that
the exercise of an Incentive Stock Option reduces the number of shares of Stock
for which an outstanding Non-Qualified Stock Option may be exercised; and there
shall be no terms and conditions in a Stock Award or Stock Option which provide
that the exercise of a Non-Qualified Stock Option reduces the number of shares
of Stock for which an outstanding Incentive Stock Option may be
exercised.
4. Administration of the
Plan. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan, the
Committee shall have authority to interpret the Plan, to prescribe, amend, and
rescind rules and regulations relating to it, to determine the terms and
provisions of Stock Option agreements, and to make all other determinations
necessary or advisable for the administration of the Plan. Any
controversy or claim arising out of or related to this Plan shall be determined
unilaterally by and at the sole discretion of the Committee.
5. Amendment or
Termination. The Board may, at any time, alter, amend,
suspend, discontinue, or terminate this Plan; provided, however, that such
action shall not adversely affect the right of Grantees to Stock Awards or Stock
Options previously granted and no amendment, without the approval of the
stockholders of the Company, shall increase the maximum number of shares which
may be awarded under the Plan in the aggregate, materially increase the benefits
accruing to Grantees under the Plan, change the class of Employees eligible to
receive options under the Plan, or materially modify the eligibility
requirements for participation in the Plan.
6. Effective Date and Duration
of the Plan. This Plan shall become effective on March 29,
2010. This Plan shall terminate at such time as may be determined by
the Board, and no Stock Award or Stock Option may be issued or granted under the
Plan thereafter, but such termination shall not affect any Stock Award or Stock
Option theretofore issued or granted.
II. INCENTIVE
STOCK OPTION PROVISIONS
1. Granting of Incentive Stock
Options.
(a) Only
Employees of the Company shall be eligible to receive Incentive Stock Options
under the Plan. Officers, Directors, and Consultants of the Company
who are not also Employees shall not be eligible to receive Incentive Stock
Options.
(b) The
purchase price of each share of Stock subject to an Incentive Stock Option shall
not be less than 100% of the Fair Market Value of a share of the Stock on the
date the Incentive Stock Option is granted; provided, however, that the purchase
price of each share of Stock subject to an Incentive Stock Option granted to a
Ten Percent Shareholder shall not be less than 110% of the Fair Market Value of
a share of the Stock on the date the Incentive Stock Option is
granted.
(c) No
Incentive Stock Option shall be exercisable more than ten (10) years from the
date the Incentive Stock Option was granted; provided, however, that an
Incentive Stock Option granted to a Ten Percent Shareholder shall not be
exercisable more than five (5) years from the date the Incentive Stock Option
was granted.
(d) The
Committee shall determine and designate from time to time those Employees who
are to be granted Incentive Stock Options and specify the number of shares
subject to each Incentive Stock Option.
(e) The
Committee, in its sole discretion, shall determine whether any particular
Incentive Stock Option shall become exercisable in one or more installments,
specify the installment dates, and, within the limitations herein provided,
determine the total period during which the Incentive Stock Option is
exercisable. Further, the Committee may make such other provisions as
may appear generally acceptable or desirable to the Committee or necessary to
qualify its grants under the provisions of Section 422 of the Code.
(f) The
Committee may grant at any time new Incentive Stock Options to an Employee who
has previously received Incentive Stock Options or other options whether such
prior Incentive Stock Options or other options are still outstanding, have
previously been exercised in whole or in part, or are canceled in connection
with the issuance of new Incentive Stock Options. The purchase price
of the new Incentive Stock Options may be established by the Committee without
regard to the existing Incentive Stock Options or other options.
(g) Notwithstanding
any other provisions hereof, the aggregate fair market value (determined at the
time the option is granted) of the Stock with respect to which Incentive Stock
Options are exercisable for the first time by the Employee during any calendar
year (under all such plans of the Grantee's employer corporation and its parent
and subsidiary corporation) shall not exceed $100,000.
2. Exercise of Incentive Stock
Options. The option price of an Incentive Stock Option shall
be payable on exercise of the option (i) in cash or by check, bank draft,
or postal or express money order, (ii) by the surrender of Stock then owned
by the Grantee, (iii) the proceeds of a loan from an independent broker-dealer
whereby the loan is secured by the option or the stock to be received upon
exercise, or (iv) any combination of the foregoing;
provided, that each such method and time for payment and each such
borrowing and terms and conditions of repayment shall then be permitted by and
be in compliance with applicable law. Shares of Stock so surrendered
in accordance with clause (ii) or (iv) shall be valued at the Fair Market Value
thereof on the date of exercise, surrender of such Stock to be evidenced by
delivery of the certificate(s) representing such shares in such manner, and
endorsed in such form, or accompanied by stock powers endorsed in such form, as
the Committee may determine.
3. Termination of
Employment.
(a) If
a Grantee's employment with the Company is terminated other than by Disability
or death, the terms of any then outstanding Incentive Stock Option held by the
Grantee shall extend for a period ending on the earlier of the date on which
such Stock Option would otherwise expire or three months after such termination
of employment, and such Stock Option shall be exercisable to the extent it was
exercisable as of such last date of employment.
(b) If
a Grantee's employment with the Company is terminated by reason of Disability,
the term of any then outstanding Incentive Stock Option held by the Grantee
shall extend for a period ending on the earlier of the date on which such Stock
Option would otherwise expire or twelve months after such termination of
employment, and such Stock Option shall be exercisable to the extent it was
exercisable as of such last date of employment.
(c) If
a Grantee's employment with the Company is terminated by reason of death, the
representative of his estate or beneficiaries thereof to whom the Stock Option
has been transferred shall have the right during the period ending on the
earlier of the date on which such Stock Option would otherwise expire or twelve
months after such date of death, to exercise any then outstanding Incentive
Stock Options in whole or in part. If a Grantee dies without having
fully exercised any then outstanding Incentive Stock Options, the representative
of his estate or beneficiaries thereof to whom the Stock Option has been
transferred shall have the right to exercise such Stock Options in whole or in
part.
4. Stock Appreciation
Rights
(a) Grant. Stock
Appreciation Rights related to all or any portion of an Incentive Stock Option
may be granted by the Committee to any Grantee in connection with the grant of
an Incentive Stock Option or unexercised portion thereof held by the Grantee at
any time and from time to time during the term thereof. Each Stock
Appreciation Right shall be granted at least at Fair Market Value on the date of
grant and be subject to such terms and conditions not inconsistent with the
provisions of this Part II as shall be determined by the Committee and included
in the agreement relating to such Stock Appreciation Right, subject in any
event, however, to the following terms and conditions of this Section
4. Each Stock Appreciation Right may include limitations as to the
time when such Stock Appreciation Right becomes exercisable and when it ceases
to be exercisable that are more restrictive than the limitations on the exercise
of the Incentive Stock Option to which it relates.
(b) Exercise. No
Stock Appreciation Right shall be exercisable with respect to such related
Incentive Stock Option or portion thereof unless such Incentive Stock Option or
portion shall itself be exercisable at that time. A Stock
Appreciation Right shall be exercised only upon surrender of the related
Incentive Stock Option or portion thereof in respect of which the Stock
Appreciation Right is then being exercised.
(c) Amount of
Payment. On exercise of a Stock Appreciation Right, a Grantee
shall be entitled to receive an amount equal to the product of (i) the amount by
which the Fair Market Value of a share of Stock on the date of exercise of the
Stock Appreciation Right exceeds the option price per share specified in the
related Incentive Stock Option and (ii) the number of shares of Stock in respect
of which the Stock Appreciation Right shall have been exercised.
(d) Form of
Payment. Stock Appreciation Rights may be settled in the form
of cash or Stock. If the form of payment is cash, then the amount
shall be calculated pursuant to subsection (c) of this Section 4. If
the form of payment is Stock, then the number of shares of Stock to be
distributed shall be the largest whole number obtained by dividing the amount
otherwise distributable in respect of such settlement by the Fair Market Value
of a share of Stock on the date of exercise of the Stock Appreciation
Right. The value of fractional shares of Stock shall be paid in
cash.
(e) Effect of Exercise of Right
or Related Option. If the related Incentive Stock Option is
exercised in whole or in part, then the Stock Appreciation Right with respect to
the Stock purchased pursuant to such exercise (but not with respect to any
unpurchased Stock) shall be terminated as of the date of exercise if such Stock
Appreciation Right is not exercised on such date.
(f) Non-transferability. A
Stock Appreciation Right shall not be transferable or assignable by the Grantee
other than by will or the laws of descent and distribution, and shall be
exercisable during the Grantee's lifetime only by the Grantee.
(g) Termination of
Employment. If the Grantee ceases to be an Employee of the
Company for any reason, each outstanding Stock Appreciation Right shall be
exercisable for such period and to such extent as the related Incentive Stock
Option or portion thereof.
III. NON-QUALIFIED
STOCK OPTION PROVISIONS
1. Granting of Stock
Options.
(a) Officers,
Employees, Directors, and Consultants shall be eligible to receive Non-Qualified
Stock Options under the Plan.
(b) The
Committee shall determine and designate from time to time those officers,
Employees, Directors, and Consultants who are to be granted Non-Qualified Stock
Options and the amount subject to each Non-Qualified Stock Option.
(c) The
Committee may grant at any time new Non-Qualified Stock Options to an Employee,
Director, or Consultant who has previously received Non-Qualified Stock Options
or other Stock Options, whether such prior Non-Qualified Stock Options or other
Stock Options are still outstanding, have previously been exercised in whole or
in part, or are canceled in connection with the issuance of new Non-Qualified
Stock Options.
(d) The
Committee shall determine the purchase price of each share of Stock subject to a
Non-Qualified Stock Option. Such price shall not be less than 100% of
the Fair Market Value of such Stock on the date the Non-Qualified Stock Option
is granted.
(e) The
Committee, in its sole discretion, shall determine whether any particular
Non-Qualified Stock Option shall become exercisable in one or more installments,
specify the installment dates, and, within the limitations herein provided,
determine the total period during which the Non-Qualified Stock Option is
exercisable. Further, the Committee may make such other provisions as
may appear generally acceptable or desirable to the Committee, including
providing for a cashless exercise provision or the extension of a Non-Qualified
Stock Option, provided that such extension does not extend the option beyond the
period specified in paragraph (f) below.
(f) No
Non-Qualified Stock Option shall be exercisable more than ten (10) years from
the date such option is granted.
2. Exercise of Stock
Options. The option price of a Non-Qualified Stock
Option shall be payable on exercise of the Stock Option (i) in cash or by
check, bank draft, or postal or express money order, (ii) by the surrender
of Stock then owned by the Grantee, (iii) the proceeds of a loan from an
independent broker-dealer whereby the loan is secured by the option or the stock
to be received upon exercise, (iv) by a cashless exercise if so granted by
the Committee, or (v) any combination of the foregoing;
provided, that each such method and time for payment and each such
borrowing and terms and conditions of repayment shall then be permitted by and
be in compliance with applicable law. Shares of Stock so surrendered
in accordance with clause (ii) or (v) shall be valued at the Fair Market Value
thereof on the date of exercise, surrender of such Stock to be evidenced by
delivery of the certificate(s) representing such shares in such manner, and
endorsed in such form, or accompanied by stock powers endorsed in such form, as
the Committee may determine.
3. Termination of
Relationship.
(a) If
a Grantee's employment with the Company is terminated, a Director Grantee ceases
to be a Director, or a Consultant Grantee ceases to be a Consultant, other than
by reason of Disability or death, the terms of any then outstanding
Non-Qualified Stock Option held by the Grantee shall extend for a period ending
on the earlier of the date established by the Committee at the time of grant or
three months after the Grantee's last date of employment or cessation of being a
Director or Consultant, and such Stock Option shall be exercisable to the extent
it was exercisable as of the date of termination of employment or cessation of
being a Director or Consultant.
(b) If
a Grantee's employment is terminated by reason of Disability, a Director Grantee
ceases to be a Director by reason of Disability or a Consultant Grantee ceases
to be a Consultant by reason of Disability, the term of any then outstanding
Non-Qualified Stock Option held by the Grantee shall extend for a period ending
on the earlier of the date on which such Stock Option would otherwise expire or
twelve months after the Grantee's last date of employment or cessation of being
a Director or Consultant, and such Stock Option shall be exercisable to the
extent it was exercisable as of such last date of employment or cessation of
being a Director or Consultant.
(c) If
a Grantee's employment is terminated by reason of death, a Director Grantee
ceases to be a Director by reason of death or a Consultant Grantee ceases to be
a Consultant by reason of death, the representative of his estate or
beneficiaries thereof to whom the Stock Option has been transferred shall have
the right during the period ending on the earlier of the date on which such
Stock Option would otherwise expire or twelve months following his death to
exercise any then outstanding Non-Qualified Stock Options in whole or in
part. If a Grantee dies without having fully exercised any then
outstanding Non-Qualified Stock Options, the representative of his estate or
beneficiaries thereof to whom the Stock Option has been transferred shall have
the right to exercise such Stock Options in whole or in part.
4.
Stock Appreciation
Rights
(a) Grant. Stock
Appreciation Rights related to all or any portion of a Non-Qualified Stock
Option may be granted by the Committee to any Grantee in connection with the
grant of a Non-Qualified Stock Option or unexercised portion thereof held by the
Grantee at any time and from time to time during the term
thereof. Each Stock Appreciation Right shall be granted at least at
Fair Market Value on the date of grant and be subject to such terms and
conditions not inconsistent with the provisions of this Part III as shall be
determined by the Committee and included in the agreement relating to such Stock
Appreciation Right, subject in any event, however, to the following terms and
conditions of this Section 4. Each Stock Appreciation Right may
include limitations as to the time when such Stock Appreciation Right becomes
exercisable and when it ceases to be exercisable that are more restrictive than
the limitations on the exercise of the Non-Qualified Stock Option to which it
relates.
(b) Exercise. No
Stock Appreciation Right shall be exercisable with respect to such related
Non-Qualified Stock Option or portion thereof unless such Non-Qualified Stock
Option or portion shall itself be exercisable at that time. A Stock
Appreciation Right shall be exercised only upon surrender of the related
Non-Qualified Stock Option or portion thereof in respect of which the Stock
Appreciation Right is then being exercised.
(c) Amount of
Payment. On exercise of a Stock Appreciation Right, a Grantee
shall be entitled to receive an amount equal to the product of (i) the amount by
which the Fair Market Value of a share of Stock on the date of exercise of the
Stock Appreciation Right exceeds the option price per share specified in the
related Non-Qualified Stock Option and (ii) the number of shares of Stock in
respect of which the Stock Appreciation Right shall have been
exercised.
(d) Form of
Payment. Stock Appreciation Rights may be settled in the form
of cash or Stock. If the form of payment is cash, then the amount
shall be calculated pursuant to subsection (c) of this Section 4. If
the form of payment is Stock, then the number of shares of Stock to be
distributed shall be the largest whole number obtained by dividing the amount
otherwise distributable in respect of such settlement by the Fair Market Value
of a share of Stock on the date of exercise of the Stock Appreciation
Right. The value of fractional shares of Stock shall be paid in
cash.
(e) Effect of Exercise of Right
or Related Option. If the related Non-Qualified Stock Option
is exercised in whole or in part, then the Stock Appreciation Right with respect
to the Stock purchased pursuant to such exercise (but not with respect to any
unpurchased Stock) shall be terminated as of the date of exercise if such Stock
Appreciation Right is not exercised on such date.
(f) Non-transferability. A
Stock Appreciation Right shall not be transferable or assignable by the Grantee
other than by will or the laws of descent and distribution, and shall be
exercisable during the Grantee's lifetime only by the Grantee.
(g) Termination of
Employment. If the Grantee ceases to be an officer, Employee,
Director, or Consultant of the Company for any reason, each outstanding Stock
Appreciation Right shall be exercisable for such period and to such extent as
the related Non-Qualified Stock Option or portion thereof.
IV. RESTRICTED
STOCK AWARDS
1. Grant of Restricted
Stock.
(a) Officers, Employees,
Directors and Consultants shall be eligible to receive grants of Restricted
Stock under the Plan.
(b) The
Committee shall determine and designate from time to time those officers,
Employees, Directors and Consultants who are to be granted Restricted Stock and
the number of shares of Stock subject to such Stock Award.
(c) The
Committee, in its sole discretion, shall make such terms and conditions
applicable to the grant of Restricted Stock as may appear generally acceptable
or desirable to the Committee.
2. Termination of
Relationship.
(a) If
a Grantee's employment with the Company is terminated, a Director Grantee ceases
to be a Director, or a Consultant Grantee ceases to be a Consultant, prior to
the lapse of any restrictions applicable to the Restricted Stock, such Stock
shall be forfeited and the Grantee shall return the certificates representing
such Stock to the Company.
(b) If
the restrictions applicable to a grant of Restricted Stock shall lapse, the
Grantee shall hold such Stock free and clear of all such restrictions except as
otherwise provided in the Plan.
V. UNRESTRICTED
STOCK AWARDS
1. Grant of Unrestricted
Stock.
(a) Officers,
Employees, Directors, and Consultants shall be eligible to receive grants of
Unrestricted Stock under the Plan.
(b) The
Committee shall determine and designate from time to time those officers,
Employees, Directors and Consultants who are to be granted Unrestricted Stock
and the number of shares of Stock subject to such Stock Award.
2. Issuance of
Stock. The Grantee shall hold Stock issued pursuant to an
Unrestricted Stock award free and clear of all restrictions except as otherwise
provided in the Plan.
VI. GENERAL
PROVISIONS
1. Substitution of
Options. In the event of a corporate merger or consolidation,
or the acquisition by the Company of property or stock of an acquired
corporation or any reorganization or other transaction qualifying under Section
424 of the Code, the Committee may, in accordance with the provisions of that
Section, substitute Stock Options, Stock Awards and Stock Appreciation Rights
under this Plan for Stock Options, Stock Awards and Stock Appreciation Rights
under the plan of the acquired corporation provided (i) the excess of the
aggregate fair market value of the shares of Stock subject to a Stock Option
immediately after the substitution over the aggregate option price of such Stock
is not more than the similar excess immediately before such substitution and
(ii) the new Stock Option does not give the Grantee additional benefits,
including any extension of the exercise period. Alternatively,
the Committee may provide that each Stock Option, Stock Award and Stock
Appreciation Right granted under the Plan shall terminate as of a date to be
fixed by the Board; provided, that no
less than thirty (30) days written notice of the date so fixed shall be given to
each holder, and each holder shall have the right, during the period of thirty
(30) days preceding such termination, to exercise the Stock Options, Stock
Awards and Stock Appreciation Rights as to all or any part of the Stock covered
thereby, including Stock as to which such Stock Options, Stock Awards and Stock
Appreciation Rights would not otherwise be exercisable.
2. Adjustment
Provisions.
(a) In
the event that a dividend shall be declared upon the Stock payable in shares of
the Company's common stock, the number of shares of Stock then subject to any
Stock Option or Stock Award outstanding under the Plan and the number of shares
reserved for the grant of Stock Options or Stock Awards pursuant to the Plan
shall be adjusted by adding to each such share the number of shares which would
be distributable in respect thereof if such shares had been outstanding on the
date fixed for determining the shareholders of the Company entitled to receive
such share dividend.
(b) If
the shares of Stock outstanding are changed into or exchanged for a different
number or class or other securities of the Company or of another corporation,
whether through split-up, merger, consolidation, reorganization,
reclassification or recapitalization, then there shall be substituted for each
share of Stock subject to any such Stock Option or Stock Award and for each
share of Stock reserved for the grant of Stock Options or Stock Awards pursuant
to the Plan the number and kind of shares or other securities into which each
outstanding share of Stock shall have been so changed or for which each share
shall have been exchanged.
(c) In
the event there shall be any change, other than as specified above in this
Section 2, in the number or kind of outstanding shares of Stock or of any shares
or other securities into which such shares shall have been changed or for which
they shall have been exchanged, then if the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in the number or
kind of shares theretofore reserved for the grant of Stock Options or Stock
Awards pursuant to the Plan and of the shares then subject to Stock Options or
Stock Awards, such adjustment shall be made by the Board and shall be effective
and binding for all purposes of the Plan and of each Stock Option and Stock
Award outstanding thereunder.
(d) Each
Stock Appreciation Right outstanding at the time of any adjustment pursuant to
this Section 2 and the number of outstanding Stock Appreciation Rights, shall be
adjusted, changed or exchanged in the same manner as related Stock
Options.
(e) In
the case of any such substitution or adjustment as provided for in this Section
2, the option price set forth in each outstanding Stock Option for each share
covered thereby prior to such substitution or adjustment will be the option
price for all shares or other securities which shall have been substituted for
such share or to which such share shall have been adjusted pursuant to this
Section 2, and the price per share shall be adjusted accordingly.
(f) No
adjustment or substitution provided for in this Section 2 shall require the
Company to sell a fractional share, and the total substitution or adjustment
with respect to each outstanding Stock Option shall be limited
accordingly.
(g)
Upon any adjustment made pursuant to this Section 2 the Company will, upon
request, deliver to the Grantee a certificate setting forth the option price
thereafter in effect and the number and kind of shares or other securities
thereafter purchasable on the exercise of such Stock Option.
3. General.
(a) Each
Stock Option, Stock Award and Stock Appreciation Right shall be evidenced by a
written instrument containing such terms and conditions, not inconsistent with
this Plan, as the Committee shall approve.
(b) The
granting of a Stock Option, Stock Award or Stock Appreciation Right in any year
shall not give the Grantee any right to similar grants in future years or any
right to be retained in the employ of the Company, and all Employees shall
remain subject to discharge to the same extent as if the Plan were not in
effect.
(c) No
officer, Employee, Director, or Consultant and no beneficiary or other person
claiming under or through him, shall have any right, title or interest by reason
of any Stock Option or any Stock Award to any particular assets of the Company,
or any shares of Stock allocated or reserved for the purposes of the Plan or
subject to any Stock Option or any Stock Award except as set forth
herein. The Company shall not be required to establish any fund or
make any other segregation of assets to assure the payment of any Stock Option
or Stock Award.
(d) No
right under the Plan shall be subject to anticipation, sale, assignment, pledge,
encumbrance, or charge except by will or the laws of descent and distribution,
and a Stock Option shall be exercisable during the Grantee's lifetime only by
the Grantee or his conservator.
(e) Notwithstanding
any other provision of this Plan or agreements made pursuant thereto, the
Company's obligation to issue or deliver any certificate or certificates for
shares of Stock under a Stock Option or Stock Award, and the transferability of
Stock acquired by exercise of a Stock Option or grant of a Stock Award, shall be
subject to all of the following conditions:
(i) Any
registration or other qualification of such shares under any state or federal
law or regulation, or the maintaining in effect of any such registration or
other qualification which the Board shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable; and
(ii) The
obtaining of any other consent, approval, or permit from any state or federal
governmental agency which the Board shall, in its absolute discretion upon the
advice of counsel, determine to be necessary or advisable.
(f) All
payments to Grantees or to their legal representatives shall be subject to any
applicable tax, community property, or other statutes or regulations of the
United States or of any state or country having jurisdiction over such
payments. The Grantee may be required to pay to the Company the
amount of any withholding taxes which the Company is required to withhold with
respect to a Stock Option or its exercise or a Stock Award. In the
event that such payment is not made when due, the Company shall have the right
to deduct, to the extent permitted by law, from any payment of any kind
otherwise due to such person all or part of the amount required to be
withheld.
(g) In
the case of a grant of a Stock Option or Stock Award to any Employee of a
Subsidiary, the Company may, if the Committee so directs, issue or transfer the
shares, if any, covered by the Stock Option or Stock Award to such Subsidiary,
for such lawful consideration as the Committee may specify, upon the condition
or understanding that such Subsidiary will transfer the shares to the Employee
in accordance with the terms of the Stock Option or Stock Award specified by the
Committee pursuant to the provisions of the Plan.
(h) A
Grantee entitled to Stock as a result of the exercise of a Stock Option or grant
of a Stock Award shall not be deemed for any purpose to be, or have rights as, a
shareholder of the Company by virtue of such exercise, except to the extent that
a stock certificate is issued therefor and then only from the date such
certificate is issued. No adjustments shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued. The Company shall issue any stock
certificates required to be issued in connection with the exercise of a Stock
Option with reasonable promptness after such exercise.
(i) The
grant or exercise of Stock Options granted under the Plan or the grant of a
Stock Award under the Plan shall be subject to, and shall in all respects comply
with, applicable law relating to such grant or exercise, or to the number of
shares of Stock which may be beneficially owned or held by any
Grantee.
(j)
The Company intends that the Plan shall comply with the requirements of Rule
16b-3 (the “Rule”) under the Securities Exchange Act of 1934, as amended, during
the term of this Plan. Should any additional provisions be necessary for the
Plan to comply with the requirements of the Rule, the Board may amend this Plan
to add to or modify the provisions of this Plan accordingly.
(k) The
Company intends that the Plan shall comply with the requirements of Section 409A
of the Code, to the extent applicable. Should any changes to the Plan
be necessary for the Plan to comply with the requirements of Code Section 409A,
the Board may amend this Plan to add to or modify the provisions of this Plan
accordingly.
(l) The
Company will seek stockholder approval in the manner and to the degree required
under applicable laws. If the Company fails to obtain any required
stockholder approval of the Plan within twelve (12) months after the date this
Plan is adopted by the Board, pursuant to Section 422 of the Code, any Option
granted as an Incentive Stock Option at any time under the Plan will not qualify
as an Incentive Stock Option within the meaning of the Code and will be deemed
to be a Non-Qualified Stock Option.
[End
of Document]
Unassociated Document
GENESIS BIOPHARMA, INC.
STOCK OPTION
AGREEMENT
Unless otherwise defined herein, the
terms defined in this Stock Option Agreement (“Agreement”) shall have the same defined meanings
as in the 2010 Equity Compensation Plan (“Plan”) of Genesis Biopharma, Inc. (the “Company”).
I.
|
NOTICE
OF STOCK OPTION GRANT
|
Name: [xxx]
Address: [xxx]
You (the “Optionee”) have been granted an option to
purchase common stock of the Company, subject to the terms and conditions of the
Plan and this
Agreement. The terms of your grant are set forth
below:
Grant Date: xxx , 20xx
Vesting: xxx shares vested [immediately]
Commencement
Date: xxx ,
20xx
Exercise Price per Share (“Exercise Price”): $x.xx
Total Number of Shares Granted
(“Shares”): xxx
Total Exercise Price: $xxx
Type of Option: Incentive Stock Option (“ISO”)
Term/Expiration Date: xxx , 20xx
1. Grant of
Option. The
Company hereby grants to the Optionee a Stock Option to purchase the Shares as
set forth in the Notice of
Stock Option Grant (“Notice
of Grant”) above, at the
Exercise Price set forth in the Notice of Grant. Notwithstanding
anything to the contrary anywhere else in this Agreement, this grant of a Stock
Option is subject to the terms, definitions, and provisions of the Plan adopted
by the Company, which is incorporated herein by reference.
If designated in the Notice of Grant as
an ISO, this Stock Option is intended to qualify as an ISO as defined in
Section 422 of the Code; provided, however, that to the extent that the aggregate
fair market value of Stock with respect to which ISOs, including the Stock
Option, are exercisable for the first time by the Optionee during any calendar
year (under the Plan and all other incentive stock option plans of the Company or any Subsidiary)
exceeds $100,000, such options shall be treated as not qualifying under Code
Section 422, but rather shall be treated as No-Qualified Stock Options
(“NSOs”) to the extent required by Code Section
422. The rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were
granted. For purposes of these rules, the Fair Market Value of Stock
shall be determined as of the time the Stock Option with respect to such Stock
is granted.
2. Exercise of
Option. This
Stock Option is exercisable as follows:
(a) Right to
Exercise.
(i) This Stock Option shall be exercisable
cumulatively according to the vesting schedule set out in the Notice of
Grant. For purposes of this Agreement, Shares subject to this Stock Option shall vest
based on continued employment of or consulting services by the Optionee with the
Company.
(ii) This Stock Option may not be exercised
for a fraction of a Share.
(iii) In the event of the Optionee’s death, Disability, or other
termination of the
employment or consulting relationship, the exercisability of the Stock Option is
governed by Sections 5,6, and 7 below.
(iv) In no event may this Stock Option be
exercised after the date of expiration of the term of this Stock Option as set
forth in the Notice of
Grant.
(b) Method of
Exercise. This
Stock Option shall be exercisable by written notice in the form attached as
Exhibit
A (“Exercise Notice”). The Exercise Notice must
state the number of Shares for which the Stock Option is being exercised, and such other representations and
agreements with respect to such shares of common stock as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice
must be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of
the Company. The Exercise Notice must be accompanied by payment of
the Exercise Price, including payment of any applicable withholding
tax. This Stock Option shall be deemed to be exercised upon receipt
by the Company of such written Exercise Notice
accompanied by the Exercise Price and payment of any applicable withholding
tax.
No Shares shall be issued pursuant to
the exercise of a Stock Option unless such issuance and such exercise comply
with all relevant provisions of law and the requirements of any
stock exchange upon which the Shares may then be listed. Assuming
such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Stock Option is
exercised with respect to such
Shares.
3. Method of
Payment. Payment
of the Exercise Price shall be by any of the following, or a combination
thereof, at the election of the Optionee:
(a) cash, check, bank draft, or postal or
express money order;
(b) with the consent of the Committee, surrendered Shares issuable
upon the exercise of the Stock Option having a Fair Market Value on the date of
exercise equal to the aggregate Exercise Price of the Stock Option or exercised
portion thereof, surrender of such shares to be evidenced by delivery of the certificate(s)
representing such shares in such manner, and endorsed in such form, or
accompanied by stock powers endorsed in such form, as the Committee may
determine;
(c) the proceeds of a loan from an
independent broker-dealer whereby the loan is secured by the Stock Option
or the Stock to be received upon exercise of the Stock Option;
(d) by
electing to receive upon such exercise the “Net Number” of Shares determined
according to the following formula (the “Cashless
Exercise”):
Net
Number = (A x B) - (A
x C)
B
For
purposes of the foregoing formula:
A
= the total number of Shares with respect to which this Stock Option is then
being exercised.
B
= the closing bid price of the common stock of the Company on the date of
exercise of the Stock Option.
C
= the Exercise Price then in effect for the applicable Shares at the time of
such exercise; or
(e) any combination of the
foregoing.
4. Restrictions
on Exercise. If
the issuance of Shares upon such exercise or if the method of payment for such
shares would constitute a
violation of any applicable federal or state securities or other law or
regulation, then the Stock Option may not be exercised. The Company
may require the Optionee to make any representation and warranty to the Company
as may be required by any applicable law or regulation before
allowing the Stock Option to be exercised.
5. Termination
of Relationship.
(a) In the case of an ISO grant, if
the Optionee’s employment with the Company is terminated other than by
Disability or death, the terms of this Stock Option shall extend for a period
ending on the earlier of the date on which this Stock Option would otherwise
expire or three months after such termination of employment, and this Stock
Option shall be exercisable to the extent it was exercisable as of such last
date of employment.
(b) In
the case of a NSO grant, if the Optionee’s employment with the Company is
terminated, a Director Optionee ceases to be a Director, or a Consultant
Optionee ceases to be a Consultant, other than by reason of Disability or death,
the terms of any then outstanding NSO held by the Optionee shall extend for a
period ending on the earlier of the date established by the Committee at the
time of grant or three months after the Optionee’s last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of the date of termination of
employment or cessation of being a Director or Consultant.
6. Disability
of Optionee.
(a) In the case of an ISO grant, if
the Optionee’s employment with the Company is terminated by reason of
Disability, the terms of this Stock Option shall extend for a period ending on
the earlier of the date on which this Stock Option would otherwise expire or
twelve months after such termination of employment, and this Stock Option shall
be exercisable to the extent it was exercisable as of such last date of
employment.
(b) In
the case of a NSO grant, if the Optionee’s employment is terminated by reason of
Disability, a Director Optionee ceases to be a Director by reason of Disability
or a Consultant Optionee ceases to be a Consultant by reason of Disability, the
term of any then outstanding NSO held by the Optionee shall extend for a period
ending on the earlier of the date on which such Stock Option would otherwise
expire or twelve months after the Optionee’s last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of such last date of employment
or cessation of being a Director or Consultant.
7. Death of
Optionee.
(a) In the case of an ISO grant, if
the Optionee’s employment with the Company is terminated by reason of death, the
representative of his estate or beneficiaries thereof to whom this Stock Option
has been transferred shall have the right during the period ending on the
earlier of the date on which this Stock Option would otherwise expire or twelve
months after such date of death, to exercise any then outstanding portion of
this Stock Option in whole or in part. If the Optionee dies without
having fully exercised any of this Stock Option, the representative of his
estate or beneficiaries thereof to whom this Stock Option has been transferred
shall have the right to exercise this Stock Option in whole or in
part.
(b) In
the case of a NSO grant, if the Optionee’s employment is terminated by reason of
death, a Director Optionee ceases to be a Director by reason of death or a
Consultant Optionee ceases to be a Consultant by reason of death, the
representative of his estate or beneficiaries thereof to whom the Stock Option
has been transferred shall have the right during the period ending on the
earlier of the date on which such Stock Option would otherwise expire or twelve
months following his death to exercise any then outstanding NSO in whole or in
part. If the Optionee dies without having fully exercised any then
outstanding NSO, the representative of his estate or beneficiaries thereof to
whom the Stock Option has been transferred shall have the right to exercise such
Stock Options in whole or in part.
8. Non-Transferability
of Option. During the
Optionee’s lifetime, the Option shall be exercisable only by the Optionee and
shall not be transferable except in case of the death of the Optionee or by will
or the laws of descent and distribution.
9. Term of
Option. This
Stock Option may be exercised only within the term set out in the Notice of
Grant.
10. Tax
Consequences. Set forth below is a brief
summary as of the date of this Stock Option of some of the federal
income tax consequences of
exercise of this Stock Option and disposition of the
Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS STOCK OPTION OR DISPOSING OF
THE SHARES.
(a) Exercise of
ISO. If this
Stock Option qualifies as an ISO, there will be no regular federal income tax
liability upon the exercise of the Stock Option, although the excess, if any, of
the Fair Market Value of the Shares on the date of exercise over the Exercise
Price will be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject the Optionee to the alternative minimum tax
in the year of exercise.
(b) Exercise of
ISO Following Disability. If the Optionee’s continuous status as an employee of,
or consultant to, the Company terminates as a result of disability that is not
total and permanent disability as defined in Code Section 22(e)(3), to the
extent permitted on the date of termination, the Optionee must exercise an ISO
within 90 days of such termination for the ISO to be qualified as an
ISO.
(c) Exercise of
NSO. There may
be a regular federal income tax liability upon the exercise of an
NSO. The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If the
Optionee is an employee of the Company, the Company will be required
to withhold from the Optionee’s compensation or collect from the
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise. If
the Optionee is subject to Section 16 of the Securities Act of 1934, as amended, the date
of income recognition may be deferred for up to six months.
(d) Disposition
of Shares. In
the case of an NSO, if the Shares are held for the minimum long-term capital
gain holding period in effect at the time of disposition, any gain realized on disposition
of the Shares will be treated as long-term capital gain for federal income tax
purposes. In the case of an ISO, if the Shares transferred pursuant
to the Stock Option are held for the minimum long-term capital gain holding period in effect at the time of
disposition (and provided such holding period comprises at least one year after
exercise of the Stock Option) and are disposed of at least two years after the
date of grant, any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If the Shares purchased under an
ISO are disposed of after such one-year period following exercise, but before
the expiration of the minimum long-term capital gain holding period in effect at the time of
disposition, then gain realized on such disposition may be taxed as a short-term
capital gain, which may or may not be equivalent to taxation as compensation
income (taxable at ordinary income rates). If the Shares
purchased under an ISO are disposed of within
such one-year period or within two years after the date of grant, any gain
realized on such disposition will be treated as compensation income to the
extent of the difference between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the
Shares.
(e) Notice of
Disqualifying Disposition of ISO Shares. If the Stock Option granted
to the Optionee herein is an ISO, and if the Optionee sells or
otherwise disposes of any
of the Shares acquired pursuant to the ISO on or before the later of
(1) the date two years after the date of grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee
agrees that the Optionee may be subject to income tax withholding by the Company
on the compensation income recognized by the Optionee.
[Signature page
follows]
This Agreement may be executed in two or
more counterparts, each of
which shall be deemed an original and all of which shall constitute one
document.
GENESIS
BIOPHARMA,
INC. |
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By: |
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Name: Robert
Brooke |
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Title: President and Chairman of the
Board |
The
foregoing Option is hereby accepted on the terms and conditions set forth
herein. The undersigned acknowledges that the Option is expressly
subject to all the provisions set forth in the Company’s 2010 Equity
Compensation Plan, and acknowledges receipt of a copy of such Plan.
OPTIONEE: |
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Signature |
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Print
Name |
EXHIBIT
A
GENESIS BIOPHARMA, INC.
2010 EQUITY COMPENSATION PLAN
EXERCISE NOTICE
To:
Genesis Biopharma, Inc.
|
Date:____________________
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1.
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The
undersigned hereby irrevocably elects to purchase __________ shares of the
common stock of Genesis Biopharma, Inc. pursuant to provisions of the
attached Stock Option Agreement.
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2.
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[The
undersigned is delivering to the Company, with this Notice of Exercise,
payment for the aggregate purchase price of the foregoing number of shares
(“Shares”), computed in accordance with the Stock Option Agreement.]
[or]
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2.
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[The
undersigned elects to exercise the Cashless Exercise provision in
accordance with the Stock Option
Agreement.]
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3.
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In
exercising the Option, the undersigned hereby confirms and acknowledges
that the Shares are being acquired solely for the account of the
undersigned and not a nominee for any other party, and for investment, and
that the undersigned will not offer, sell, or otherwise dispose of any
such Shares except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any applicable state
securities laws.
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3.
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Please
issue a certificate representing said Shares in the name of the
undersigned.
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OPTIONEE: |
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Signature |
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Print
Name |
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|
Address |
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Social
Security Number |
Unassociated Document
Exhibit
31.1
RULE
13a-14(a) CERTIFICATION
I, Robert
T. Brooke, certify that:
1.
|
I
have reviewed this annual report on Form 10-K of Genesis Biopharma,
Inc.;
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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;
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3.
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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;
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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 assurance regarding the reliability of financial reporting and 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 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.
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|
|
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Date:
March
31, 2010
|
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/s/
Robert T. Brooke |
|
|
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Robert
T. Brooke
Chief
Executive Officer
|
|
Unassociated Document
Exhibit
31.2
RULE
13a-14(a) CERTIFICATION
I,
Richard McKilligan, certify that:
1.
|
I
have reviewed this annual report on Form 10-K of Genesis Biopharma,
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 assurance regarding the reliability of financial reporting and 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 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:
March
31, 2010
|
|
/s/ Richard
McKilligan |
|
|
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Richard
McKilligan
Chief
Financial Officer
|
|
Unassociated Document
Exhibit
32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of Genesis Biopharma, Inc. (the “Company”) on
Form 10-K for the period ending December 31, 2009, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Robert T. Brooke,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
/s/ Robert
T.Brooke
Robert
T. Brooke
Chief
Executive Officer
March 31,
2010
Unassociated Document
Exhibit
32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of Genesis Biopharma, Inc. (the “Company”) on
Form 10-K for the period ending December 31, 2009, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Richard
McKilligan, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
/s/ Richard
McKilligan
Richard
McKilligan
Chief
Financial Officer
March 31,
2010