News Column

ONCOSEC MEDICAL INC - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

June 13, 2014

Cautionary Statement

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Unaudited Consolidated Financial Statements and the related notes thereto contained in Part I, Item 1 of this Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Report and in our other reports filed with the Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K for the fiscal year ended July 31, 2013, our subsequent quarterly reports on Form 10-Q and our subsequent reports on Form 8-K, which discuss our business in greater detail.

This quarterly report on Form 10-Q contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, our results could differ materially from those expressed or implied by such forward-looking statements and assumptions. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. All statements made in this Form 10-Q other than statements of historical fact are statements that could be deemed forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" in Part II, Item IA of this Quarterly Report on Form 10-Q, and similar discussions in our other SEC filings. Risks that could cause actual results to differ from those contained in the forward-looking statements include but are not limited to risks related to: our ability to continue as a going concern; our need to raise additional capital and our ability to obtain financing; uncertainties inherent in pre-clinical studies and clinical trials and our ability to commercialize our products; our expected reliance on third parties; general economic and business conditions; our limited operating history; our ability to recruit and retain qualified personnel; competition we face within our industry; our ability to manage future growth; our ability to develop our planned products; our ability to protect our intellectual property; and various risks related to our common stock. These forward-looking statements speak only as of the date of this Form 10-Q, except as required by applicable law, we do not intend to update any of these forward-looking statements.

As used in this quarterly report on Form 10-Q and unless otherwise indicated, the terms "the Company", "we", "us" and "our" refer to OncoSec Medical Incorporated.

Company Overview



We were incorporated under the laws of the State of Nevada on February 8, 2008 under the name Netventory Solutions Inc. to pursue the business of inventory management solutions. Effective March 1, 2011, we consummated a 32 for one forward stock split of our common stock and completed a merger with our subsidiary, OncoSec Medical Incorporated, a Nevada corporation which was incorporated solely to change our name to "OncoSec Medical Incorporated".

Recent Events



Proceeds from Warrant and Option Exercises

As discussed in more detail in Liquidity and Capital Resources, from May 1, 2014 through June 9, 2014, we have received approximately $1.8 million in cash from the exercise of warrants and stock options.

June 2014 Public Offering



On June 6, 2014, the Company closed a registered public offering of an aggregate of 22,535,212 shares of the Company's common stock and warrants to purchase an aggregate of 7,887,325 shares of common stock for gross proceeds to the Company of approximately $16.0 million (the "June 2014 Public Offering"). A summary of the terms of the June 2014 Public Offering is set forth under the heading "Recent Equity Financings" below.

12



--------------------------------------------------------------------------------

Table of Contents Asset Purchase Agreement



We have acquired certain assets pursuant to our Asset Purchase Agreement with Inovio Pharmaceuticals, Inc. ("Inovio"), dated March 14, 2011 (as amended, the "Asset Purchase Agreement"). The acquired assets relate to certain non-DNA vaccine technology and intellectual property relating to selective tumor ablation technologies, which we refer to as the OncoSec Medical System ("OMS"), a therapy which uses an electroporation device to facilitate delivery of chemotherapy agents, or nucleic acids encoding cytokines, into tumors and/or surrounding tissue for the treatment and diagnosis of various cancers. The acquired assets included various assets related to the OMS technology.

We did not assume any liabilities of Inovio except liabilities under the assigned contracts and assigned intellectual property arising after the closing date of the Asset Purchase Agreement. We agreed to pay Inovio $3,000,000 in scheduled payments beginning on the closing date as well as certain royalties in the event we commercialize our OMS technology. We made the final payment to Inovio of $1 million on December 19, 2013. As a result, we are not subject to further scheduled payment obligations to Inovio pursuant to the Asset Purchase Agreement.

The Asset Purchase Agreement was amended in September 2011 (the "First Amendment") and in March 2012 (the "Second Amendment") to modify the terms of our payment obligations (among other modifications). In consideration for the First Amendment, we issued to Inovio a warrant to purchase 1,000,000 shares of common stock with an exercise price of $1.20 per share. In consideration for the Second Amendment, we issued to Inovio a warrant to purchase 3,000,000 shares of our common stock with an exercise price of $1.00 per share. Each of the warrants is subject to a five year term. Each of the warrants also contains a mandatory exercise provision allowing us to request the exercise of the warrant in whole provided that our daily market price (as defined in the warrant) is equal to or greater than $2.40 for twenty consecutive trading days. We completed an evaluation of the warrants issued to Inovio and determined the warrants should be classified as equity within our consolidated balance sheet.

We are also party to a cross-license agreement with Inovio, which we entered into concurrently with the closing of our asset acquisition. This agreement provides for the exclusive license to Inovio of rights related to certain OMS technology patents in the field of gene or nucleic acids, outside of those encoding cytokines, delivered by electroporation and for the non-exclusive cross-license by Inovio to us of rights related to certain non-OMS technology patents in the OMS field in exchange for specified sublicensing and other licensing fees and royalties.

We are focused on designing, developing and commercializing innovative and proprietary medical approaches for the treatment of solid tumors where currently approved therapies are inadequate based on their therapeutic benefit or side-effect profile. Our therapies are based on the use of electroporation as a monotherapy or as a synergistic component of a combination-based therapeutic approach to deliver active therapeutic agents to treat solid tumors. We hope to improve the lives of people suffering from the life-altering effects of cancer through the development of our novel treatment approaches. In pursuit of our corporate goals, we have initiated three Phase II clinical trials for the use of our therapies to treat metastatic melanoma, Merkel cell carcinoma and cutaneous T-cell lymphoma. We plan to initiate a Phase I study in a new solid tumor indication and to initiate a Phase IIb pivotal trial in metastic melanoma. We continue to investigate collaboration opportunities that will enable us to identify combinations with current standards of care, using immune-modulating checkpoint inhibitors (i.e. anti-CTLA-4 or anti-PD-1) that may improve the efficacy of standard of care. We continue to seek additional clinical development opportunities to expand our clinical pipeline. Funding for these potential new programs may come from third parties, non-dilutive grant funding or establishment of strategic partnerships.

University of South Florida License

On August 24, 2012, we secured an exclusive license for specific patented technology from the University of South Florida Research Foundation relating to the delivery of gene-based therapeutics via intratumoral and intramuscular electroporation. This patent directly supports our clinical development focus in solid tumor applications and specifically in metastatic melanoma, Merkel cell carcinoma and cutaneous T-cell lymphoma using our ImmunoPulse therapy, and extends patent protection for the ImmunoPulse technology through the year 2024.

Old Dominion University Sponsored Research Agreement

On June 4, 2013, we entered into a sponsored research agreement with Old Dominion University and The Frank Reidy Research Center for Bioelectrics (the "ODU SRA"). The intent of the ODU SRA was to pursue some or all of the following goals in furtherance of our operational milestones: (i) to initiate and collaborate on nonclinical research focused on developing new technology related to electroporation and delivery of different agents into solid tumors by electroporation, (ii) to pursue exploratory research to support the development of ImmunoPulse for our melanoma program and other solid tumor malignancies in response to new advances being made in the melanoma field and (iii) to support additional research and development on our electroporation parameters for certain targets. Our initial work order under the ODU SRA was submitted concurrently with our execution of the ODU SRA and we have submitted subsequent work orders for additional research under the ODU SRA since its execution, including during the nine month period ended April 30, 2014.

13



--------------------------------------------------------------------------------

Table of Contents Facility Lease



On May 31, 2013, we entered into a thirty-eight month lease agreement for office space to serve as our corporate headquarters. Our lease commenced on July 1, 2013 and is subject to an initial base monthly rent of approximately $8,000. The lease calls for annual increases to the base rent of three percent.

Effective April 1, 2014, we entered into a short-term, six-month lease agreement for temporary office/lab space in Seattle, Washington to support our R&D operations.

Recent Equity Financings



On June 6, 2014, the Company closed a registered public offering of an aggregate of 22,535,212 shares of the Company's common stock and warrants to purchase an aggregate of 7,887,325 shares of common stock for gross proceeds to the Company of approximately $16.0 million. The warrants issued in the June 2014 Public Offering have an exercise price of $0.90 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of issuance of the warrants. After deducting for fees and expenses, the aggregate net proceeds to us from the sale of the common stock and the warrants in the June 2014 Public Offering were approximately $14.9 million.

In connection with the offering, we paid placement agent fees consisting of (i) a cash fee equal to 6% of the gross proceeds of the offering, as well as a non-accountable expense allowance equal to 1% of the gross proceeds and (ii) warrants to purchase up to an aggregate of 6% of the aggregate number of shares of common stock sold in the offering, or 1,352,113 shares of our common stock (the "June 2014 Placement Agent Warrants"). The June 2014 Placement Agent Warrants have substantially the same terms as the warrants issued to the purchasers in the offering, except that such warrants expire on May 12, 2019. We intend to use the net proceeds from the June 2014 Public Offering for general corporate purposes, including clinical trial expenses and research and development expenses.

September 2013 Public Offering

On September 18, 2013, we closed a registered public offering and issued an aggregate of 47,792,000 shares of our common stock and warrants to purchase an aggregate of 23,896,000 shares of common stock for gross proceeds of approximately $11.95 million (the "September 2013 Public Offering"). The warrants have an exercise price of $0.35 per share, are exercisable immediately upon issuance and have a term of exercise equal to four years from the date of issuance of the warrants. After deducting for fees and expenses, the aggregate net proceeds to us from the sale of the common stock and the warrants in the September 2013 Public Offering were approximately $11.1 million.

In connection with the offering, we paid placement agent fees consisting of (i) a cash fee equal to 6% of the gross proceeds of the offering, as well as a non-accountable expense allowance equal to 1% of the gross proceeds and (ii) warrants to purchase up to an aggregate of 5% of the aggregate number of shares of common stock sold in the offering, or 2,389,600 shares of our common stock (the "September 2013 Placement Agent Warrants"). The September 2013 Placement Agent Warrants have substantially the same terms as the warrants issued to the purchasers in the offering, except that such warrants have an exercise price of $0.3125 and expire on September 13, 2018.

December 2012 Public Offering

On December 17, 2012, we completed a registered public offering of an aggregate of 28,800,000 shares of our common stock and warrants to purchase an aggregate of 14,400,000 shares of common stock for gross proceeds of $7.2 million (the "December 2012 Public Offering"). After deducting for fees and expenses, the aggregate net proceeds to us from the sale of the common stock and the warrants in the December 2012 Public Offering were approximately $6.7 million. In connection with the offering, we paid placement agent fees consisting of (i) a cash fee equal to 6% of the gross proceeds of the offering, as well as a non-accountable expense allowance equal to 1% of the gross proceeds and (ii) warrants to purchase up to an aggregate of 5% of the aggregate number of shares of common stock sold in the offering, or 1,440,000 shares of our common stock (the "December 2012 Placement Agent Warrants"). The December 2012 Placement Agent Warrants have substantially the same terms as the warrants issued to the purchasers in the offering, except that such warrants have an exercise price of $0.3125 and expire on December 11, 2017.

We completed an evaluation of all of the warrants issued in connection with the foregoing offerings and determined the warrants should be classified as equity within our consolidated balance sheets.

14



--------------------------------------------------------------------------------

Table of Contents Critical Accounting Policies



Accounting for Long-Lived Assets / Intangible Assets

We assess the impairment of long-lived assets, consisting of property and equipment, and finite-lived intangible assets, whenever events or circumstances indicate that the carry value may not be recoverable. Examples of such circumstances include: (1) loss of legal ownership or title to an asset; (2) significant changes in our strategic business objectives and utilization of the assets; and (3) the impact of significant negative industry or economic trends.

Recoverability of assets to be held and used in operations is measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the assets. The factors used to evaluate the future net cash flows, while reasonable, require a high degree of judgment and the results could vary if the actual results are materially different than the forecasts. In addition, we base useful lives and amortization or depreciation expense on our subjective estimate of the period that the assets will generate revenue or otherwise be used by us. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less selling costs.

We also periodically review the lives assigned to our intangible assets to ensure that our initial estimates do not exceed any revised estimated periods from which we expect to realize cash flows from the technologies. If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase.

Share-Based Compensation



We grant equity-based awards under our share-based compensation plan. We estimate the fair value of share-based payment awards using the Black-Scholes option valuation model. This fair value is then amortized over the requisite service periods of the awards. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option. Share-based compensation expense is based on awards ultimately expected to vest, and therefore is reduced by expected forfeitures. Share-based compensation expense related to stock option grants issued to consultants not entirely vested at grant date are marked-to-market each month. Changes in assumptions used under the Black-Scholes option valuation model could materially affect our net loss and net loss per share.

Results of Operations for the Nine Months Ended April 30, 2014 Compared to the Nine Months Ended April 30, 2013

The unaudited consolidated financial data for the nine month periods ended April 30, 2014 and April 30, 2013 is presented in the following table and the results of these two periods are included in the discussion thereafter.

April 30, April 30, Increase/ Increase/ 2014 2013 (Decrease) (Decrease) ($) ($) ($) % Revenue - - - - Operating expenses Research and development 3,933,611 2,362,872 1,570,739 66 General and administrative 4,472,692 2,941,625 1,531,067 52 Loss from operations (8,406,303 ) (5,304,497 ) (3,101,806 ) 58 Other income (expense) Interest expense - non-cash and other (20,684 ) (71,075 ) 50,391 (71 ) Net loss before income taxes (8,426,987 ) (5,375,572 ) (3,051,415 ) 57 Tax provision 41,773 2,000 39,773 ** Net loss (8,468,760 ) (5,377,572 ) (3,091,188 ) 57



--------------------------------------------------------------------------------

** Percentage increase/(decrease) is greater than 100%.

Operational Milestones and Research and Development Expenses

The $1,571,000 increase in research and development expenses for the nine month period ended April 30, 2014, as compared to the nine month period ended April 30, 2013 is primarily the result of increased salary costs and stock-based compensation expense of $951,000 as a result of additional headcount during the period including the appointment of our Chief Medical Officer and our issuance of options to purchase up to 2.7 million shares of our common stock, increased clinical operations and engineering consulting fees of $300,000 due to an increase in pre-clinical development, research and development and clinical trial advancement over the comparable period, and $300,000 of costs related to our sponsored research agreement with ODU. Research and development expenses for the nine month period ended April 30, 2014 were lower than our previous estimates, although we expect research and

15



--------------------------------------------------------------------------------

Table of Contents

development expense to continue to increase in future periods for various reasons, including the continuation of our ongoing Phase II clinical trials, and the initiation of new clinical trials (including our anticipated Phase I and Phase IIb studies described above) and, more generally, as we continue to focus on designing and developing our product candidates.

We expect to use our current funds following our June 2014 Public Offering for the advancement of our operational milestones. Our significant milestones currently include the expansion of our research and development efforts in furtherance of our ImmunoPulse clinical pipeline (our "Clinical Pipeline") and electroporation devices ("Device R&D"). Specifically, we intend to pursue the following key activities: (i) ongoing product development and execution of clinical trials supporting our Clinical Pipeline; (ii) research related to new product candidates entering into our Clinical Pipeline; and (iii) new Device R&D and support for clinical trials including improvements to existing devices.

Activities related to the above milestones, including aggregate material costs we have incurred and including approximate material costs that we estimate we may incur during the fourth quarter of our current fiscal year ending July 31, 2014 ("Fiscal 2014") that are associated with our Clinical Pipeline, include research and clinical trial and related costs of approximately $4,700,000, which are inclusive of plasmid manufacturing costs of approximately $700,000. Material costs we estimate to incur in Fiscal 2014 associated with our Device R&D milestone include salary and related costs of approximately $700,000 and engineering and professional services of approximately $350,000. During the nine month period ended April 30, 2014, we incurred approximately $2,700,000 in costs associated with our Clinical Pipeline and approximately $600,000 in costs associated with our Device R&D milestone.

General and Administrative



The $1,531,000 increase in general and administrative expenses for the nine month period ended April 30, 2014, as compared to the nine month period ended April 30, 2013, was primarily the result of an increase in salary cost and stock-based compensation expense of $830,000 during the period as a result of additional headcount, Board approved bonuses, salary increases and our issuance of options to purchase up to 3.0 million shares of our common stock, increased corporate communications and business development costs of approximately $700,000 and $100,000 in increased legal fees associated with the advisement of certain corporate matters, partially offset by a decrease in travel and conference fees of $60,000 and $80,000, respectively. General and administrative expenses for the nine month period ended April 30, 2014 were higher than our previous estimates, which we attribute primarily to the expansion of our operations and the hiring of additional key employees during the period. We expect general and administrative expenses to continue to increase in future periods as we continue to expand our business and further our operational milestones.

Other Income (Expense)



The $50,000 decrease in other expense for the nine month period ended April 30, 2014, as compared to the comparable nine month period ended April 30, 2013, was due to the decrease in non-cash interest expense related to our payment obligations to Inovio pursuant to the Asset Purchase Agreement which was fully paid in December 2013.

Liquidity and Capital Resources

Working Capital Our working capital as of April 30, 2014 and July 31, 2013 is summarized as follows: At At April 30, 2014 July 31, 2013 ($) ($) Current assets 24,783,830 5,169,687 Current liabilities 1,176,239 1,770,604 Working capital 23,607,591 3,399,083 Current Assets



The increase in our current assets was primarily due to an increase in cash from $4,970,000 as of July 31, 2013, to $24,252,000 as of April 30, 2014, which is attributable to our receipt of approximately $11.1 million in proceeds received from our September 2013 Public Offering and approximately $15.6 million in proceeds received from the cash exercise of warrants and stock options, partially offset by cash used in operations during the nine month period ended April 30, 2014.

Current Liabilities



Current liabilities as of April 30, 2014 decreased to approximately $1,176,000, in comparison to our approximate current liabilities of $1,771,000 as of July 31, 2013. This decrease was primarily due to our final payment of $1,000,000 to Inovio in December 2013 pursuant to the Asset Purchase Agreement, partially offset by an increase in accrued liabilities related to our clinical studies.

16



--------------------------------------------------------------------------------

Table of Contents Cash Flow



Cash Used in Operating Activities

Cash used in operating activities for the nine month period ended April 30, 2014 was $6,269,000, as compared to $4,233,000 for the nine month period ended April 30, 2013. This increase was primarily related to the advancement of our product development and clinical trial pipeline, corporate communications and development expenses and other general and administrative fees.

Cash Used in Investing Activities

Cash used in investing activities for the nine month period ended April 30, 2014 was $154,000, as compared to $16,800 for the nine month period ended April 30, 2013. This increase was primarily related to the purchase of property and equipment.

Cash Flow Provided by Financing Activities

Cash provided by financing activities was $25,705,000 for the nine month period ended April 30, 2014, as compared to $6,437,000 for the comparable nine month period ended April 30, 2013. Our cash provided by financing activities for the nine month period ended April 30, 2014 primarily consisted of the proceeds we received from the September 2013 Public Offering as well as cash received from warrant and option exercise activity during the period.

Equity Financings Since March 2011

In March 2011, we closed a private placement of 1,456,000 units at a purchase price of $0.75 per unit for gross proceeds of $1,092,000 (the "March 2011 Private Placement"). Each unit consisted of one share of our common stock and one share purchase warrant entitling the holder to acquire one share of our common stock at a price of $1.00 per share for a period of five years from the closing of the March 2011 Private Placement. The warrants were exercisable as of March 18, 2011 and any unexercised warrants will expire on March 18, 2016. We completed an evaluation of the warrants issued with this private placement and determined the warrants should be classified as equity within our consolidated balance sheet. We are not obligated to register any of the shares issued or issuable upon exercise of the warrants issued in the March 2011 Private Placement.

On June 24, 2011, we sold in a private placement an aggregate of 4,000,000 shares of our common stock and three series of warrants to purchase an aggregate of 12,000,000 shares of our common stock at a per unit purchase price of $0.75 per unit, for gross proceeds of $3.0 million (the "June 2011 Private Placement"). We also issued warrants to purchase 240,000 shares of our common stock to the co-placement agents in the offering. After deducting for fees and expenses, the aggregate net cash proceeds from the June 2011 Private Placement were approximately $2.79 million.

Pursuant to the terms of the securities purchase agreement that we entered into with the purchasers in the June 2011 Private Placement, each purchaser was issued a Series A Warrant, a Series B Warrant and a Series C Warrant, each to purchase up to a number of shares of our common stock equal to 100% of the shares issued to such purchaser pursuant to the securities purchase agreement. The Series A Warrants had an initial exercise price of $1.20 per share, are exercisable immediately upon issuance and have a term of five years. On February 21, 2012, the Series B and Series C Warrants expired unexercised. On March 28, 2012, the exercise price of the Series A Warrants reset to $0.50 upon the closing of the March 2012 Public Offering.

On March 28, 2012, in the March 2012 Public Offering, we sold an aggregate of 31,000,000 shares of our common stock plus warrants to purchase an aggregate of 31,000,000 shares of common stock for a purchase price of $0.25 per share, for gross proceeds of approximately $7.75 million. The warrants have an exercise price of $0.35 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of issuance. We paid fees and expenses of $542,500 and issued warrants to purchase 1,550,000 shares of our common stock on terms substantially similar to the purchaser warrants to the placement agent and a financial advisor in the March 2012 Public Offering. After deducting for fees and expenses, our aggregate net proceeds from the offering were approximately $7.2 million.

On December 17, 2012, in the December 2012 Public Offering, we sold an aggregate of 28,800,000 shares of our common stock and warrants to purchase an aggregate of 14,400,000 shares of common stock for a purchase price of $0.25 per share, for gross proceeds of approximately $7.2 million. The warrants have an exercise price of $0.26 per share, are exercisable immediately upon issuance and have a term of exercise equal to four years from the date of issuance. We paid fees and expenses of $504,000 and issued warrants to purchase 1,440,000 shares of our common stock on terms substantially similar to the purchaser warrants to the placement agent and our financial advisors in the December 2012 Public Offering. After deducting for fees and expenses, the aggregate net proceeds from the offering were approximately $6.7 million.

17



--------------------------------------------------------------------------------

Table of Contents

On September 18, 2013, we closed the September 2013 Public Offering, in which we sold an aggregate of 47,792,000 shares of our common stock plus warrants to purchase an aggregate of 23,896,000 shares of common stock for a purchase price of $0.25 per share, for gross proceeds of approximately $11.95 million. The warrants have an exercise price of $0.35 per share, are exercisable immediately upon issuance and have a term of exercise equal to four years from the date of issuance. We paid placement agent fees consisting of (i) $836,360 in cash fees and expenses and (ii) issued warrants to purchase 2,389,600 shares of our common stock on terms substantially similar to the purchaser warrants in the September 2013 Public Offering. After deducting for fees and expenses, the aggregate net proceeds from the September 2013 Public Offering were approximately $11.1 million.

On June 6, 2014, the Company closed a registered public offering of an aggregate of 22,535,212 shares of the Company's common stock and warrants to purchase an aggregate of 7,887,325 shares of common stock for gross proceeds to the Company of approximately $16.0 million (the "June 2014 Public Offering"). On June 3, 2014, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") for the issuance and sale by the Company of the common stock and warrants in the June 2014 Public Offering. After deducting for fees and expenses, the aggregate net proceeds from the sale of the common stock and the warrants in the June 2014 Public Offering were approximately $14.9 million.

Pursuant to the terms of the Securities Purchase Agreement, at the closing each purchaser was issued a warrant to purchase up to a number of shares of the Company's common stock equal to 35% of the shares issued to such purchaser in the offering. The warrants have an exercise price of $0.90 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of issuance of the warrants.

Cash Requirements



Our primary objectives for Fiscal 2014 are to continue the advancement of our research and development and clinical trial pipeline and to identify additional products for acquisition and development. We continuously search for industry experts to expand our management team and better position our company. In addition, we expect to pursue raising sufficient capital to fund our operations and to acquire and develop additional assets and technology consistent with our business objectives.

We continue to estimate our aggregate operating expenses and working capital requirements for Fiscal 2014 (inclusive of the nine month period ended April 30, 2014) to be approximately $11 million, although our estimates for certain categories of operating expenses and working capital requirements for Fiscal 2014 may vary by classification. As of April 30, 2014, we estimate the components of our operating expenses and working capital requirements for Fiscal 2014 (inclusive of the nine month period ended April 30, 2014) to be approximately as follows:

Cash Requirements Amount Product development $ 4,541,000 Employee compensation 2,903,000 General and administration 2,889,000 Professional services fees 642,000 Total $ 10,975,000



On June 6, 2014, we closed a registered direct public offering of our equity securities whereby we issued an aggregate of 22,535,212 shares of our common stock plus warrants to purchase an aggregate of 7,887,325 shares of our common stock, at a purchase price of $0.71 per share, which resulted in net proceeds to us of approximately $14.9 million, as more fully described elsewhere in this quarterly report. As of April 30, 2014, we had cash and cash equivalents of approximately $24,250,000. In addition, subsequent to April 30, 2014, we have received approximately $1,850,000 from the exercise of warrants and stock options as of June 9, 2014. During the nine month period ended April 30, 2014, our operating cash outflow was approximately $7,300,000, inclusive of our final payment of $1,000,000 to Inovio in December 2013. Based on our current operating costs and our operational goals, we expect our monthly cash outflows for May 2014 and July 2014 to range from approximately $800,000 to $1,000,000 per month. Our expected cash outflow for June 2014 is expected to be approximately $1,400,000, which includes an expected cash payment of approximately $300,000 related to the equipment purchases for our increased research and development activities. In general, our cash outflows for future periods may increase as we expand our business, increase our headcount and further our development activities. We expect our current funds to be sufficient to allow us to continue to operate our business for at least the next twelve months.

If the investors in the June 2011 Private Placement, the March 2012 Public Offering, the December 2012 Public Offering, the September 2013 Public Offering and the June 2014 Public Offering choose to exercise their remaining outstanding warrants in full on a cash basis, we would receive approximately $1.7 million, $3.7 million, $0.2 million, $4.0 million and $7.1 million, respectively. However, the warrant holders may choose not to exercise their warrants or, alternatively, may choose to net exercise their warrants as provided in such warrants under certain limited circumstances. As our stock price continues to fluctuate in the market, the exercise prices of the outstanding warrants issued in each such offering may or may not exceed the current market price of our common stock on the OTCQB Marketplace. As a result, we are not assured to receive any proceeds from the exercise of such warrants.

Since inception we have funded our operations primarily through equity financings and we expect to fund our operations through equity and debt financings in the future. If we obtain additional financing by issuing equity securities, our existing stockholders' ownership will be diluted. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. We may be unable to maintain operations at a level sufficient for investors to obtain a return on their investments in our common stock. Further, we may continue to be unprofitable.

18



--------------------------------------------------------------------------------

Table of Contents

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters