-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EnLPiksdX3lKGsfp1os/quG0Rj3/Vv2mSo3R5cSqLfiCfwiCBLds877dL1rzXYbu HnyecR3e3aD/kQxoPVuSiw== 0001017951-01-500124.txt : 20010814 0001017951-01-500124.hdr.sgml : 20010814 ACCESSION NUMBER: 0001017951-01-500124 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIMMUNE PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000818808 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 841044910 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-22865 FILM NUMBER: 1707395 BUSINESS ADDRESS: STREET 1: 21550 OXNARD STREET STREET 2: SUITE 830 CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8186760404 MAIL ADDRESS: STREET 1: 1200 17TH STREET STREET 2: SUITE 1000 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: MAN O WAR INC /CO/ DATE OF NAME CHANGE: 19970714 FORMER COMPANY: FORMER CONFORMED NAME: VERSAILLES CAPITAL CORP /CO DATE OF NAME CHANGE: 19970714 10QSB 1 q601.txt JUNE 30, 2001 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB [ x ] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: June 30, 2001 [ ] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from _____________ to _______________ Commission file number: 0-22865 ------- AMERIMMUNE PHARMACEUTICALS, INC. - -------------------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in Its Charter) Colorado 84-1044910 - -------------------------------------- -------------------------------- (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 21550 Oxnard Street, Suite 830 * Woodland Hills, California 91367 - -------------------------------------------------------------------------- (Address of Principal Executive Offices) (818)676-0404 - -------------------------------------------------------------------------- (Issuer's Telephone Number, Including Area Code) - -------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: AS OF JULY 31, 2001, 43,042,856 SHARES OF THE ISSUER'S COMMON STOCK, $0.05 PAR VALUE PER SHARE, WERE OUTSTANDING. Transitional Small Business Disclosure Format (check one): Yes No X ------- ------- AMERIMMUNE PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PART I FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements: Consolidated Balance Sheets - March 31, 2001 and June 30, 2001 (unaudited). . . . . . . . . . . . . . . . . . . . . . . .2 Consolidated Statements of Operations - for the Three Months Ended June 30, 2000 and 2001 and cumulative amounts from inception through June 30, 2001 (unaudited). . . . . . . . . . . . . . .3 Consolidated Statements of Cash Flows - for the Three Months Ended June 30, 2000 and 2001 and cumulative amounts from inception through June 30, 2001 (unaudited). . . . . . . . . . . . . . .4 Notes to Unaudited Consolidated Financial Statements . . . . . . . . . .6 Item 2. Management's Discussion and Analysis or Plan of Operation . . 15 PART II OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 18 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 19 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 PART I AMERIMMUNE PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS ITEM 1. FINANCIAL STATEMENTS ASSETS
MARCH 31, 2001 JUNE 30, 2001 CURRENT ASSETS (AUDITED) (UNAUDITED) -------------- ------------- Cash and cash equivalents $ 215,810 $ 19,424 Other current assets 18,728 16,223 ------------ ------------ TOTAL CURRENT ASSETS 234,538 35,647 ------------ ------------ PROPERTY AND EQUIPMENT, NET 12,089 9,105 ------------ ------------ OTHER ASSETS Deposits 3,040 3,040 ------------ ------------ TOTAL ASSETS $ 249,667 $ 47,792 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES Accounts payable $ 16,860 $ 12,732 Accrued liabilities 249,946 294,946 ------------ ------------ TOTAL CURRENT LIABILITIES 266,806 307,678 ------------ ------------ COMMITMENTS AND CONTINGENCIES (Note 3) SHAREHOLDERS' EQUITY (DEFICIENCY) Preferred stock $0.10 par value, 50,000,000 shares authorized, no shares issued or outstanding - - Common stock $0.05 par value, 100,000,000 shares authorized, 43,042,856 shares issued and outstanding in both years 2,152,143 2,152,143 Additional paid-in-capital 3,094,099 3,094,099 Note receivable from affiliate, net (54,048) (44,993) Deficit accumulated during the development stage (5,209,333) (5,461,135) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY) (17,139) (259,886) ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) $ 249,667 $ 47,792 ============ ============
See accompanying notes 2 AMERIMMUNE PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 2001 AND CUMULATIVE AMOUNTS FROM APRIL 10, 1998 (Date of Inception) THROUGH JUNE 30, 2001 (unaudited)
THREE MONTHS THREE MONTHS CUMULATIVE ENDED ENDED AMOUNTS FROM JUNE 30, 2000 JUNE 30, 2001 INCEPTION ------------- ------------- --------- COSTS AND EXPENSES Research and development $ 119,075 $ 62,763 $ 1,722,671 General and administrative 169,766 192,324 3,872,133 ------------ ------------ ------------ OPERATING LOSS (288,841) (255,087) (5,594,804) OTHER INCOME (EXPENSE) Interest income 14,967 5,819 156,080 Interest expense (889) (934) (16,811) ------------ ------------ ------------ 14,078 4,885 139,269 ------------ ------------ ------------ LOSS BEFORE PROVISION FOR INCOME TAXES (274,763) (250,202) (5,455,535) PROVISION FOR INCOME TAXES 1,600 1,600 5,600 ------------ ------------ ------------ NET LOSS $ (276,363) $ (251,802) $ (5,461,135) ============ ============ ============ NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.01) $ (0.01) ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED 43,042,856 43,042,856 ============ ============
See accompanying notes 3 AMERIMMUNE PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 2001 AND CUMULATIVE AMOUNTS FROM APRIL 10, 1998 (Date of Inception) THROUGH JUNE 30, 2001 (unaudited)
THREE MONTHS THREE MONTHS CUMULATIVE ENDED ENDED AMOUNTS FROM JUNE 30, 2000 JUNE 30, 2001 INCEPTION ------------- ------------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (276,363) $ (251,802) $ (5,461,135) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY OPERATING ACTIVITIES Noncash transactions: Depreciation and amortization 2,945 2,984 26,436 Reserve for note receivable from affiliate - 13,300 128,900 Fair value of stock and an option issued in exchange for services and trademark rights - - 814,000 Fair value of stock issued to prospective officers - - 142,500 Fair value of stock transferred to a prospective officer by a principal shareholder - - 90,000 Fair value of stock and an option transferred by a principal shareholder in exchange for services - - 452,000 Fair value of stock options issued in exchange for Services - - 9,996 Modification of stock options - - 383,794 Changes in assets and liabilities: Other current assets 9,894 2,505 (16,223) Deposits - - (3,040) Accounts payable and accrued expenses (31,736) 40,872 307,678 ------------ ------------ ------------ Total adjustments (18,897) 59,661 2,336,041 ------------ ------------ ------------ NET CASH USED BY OPERATING ACTIVITIES (295,260) (192,141) (3,125,094) ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Sales of marketable securities 618,360 - - Purchases of property and equipment - - (35,541) Loan to an affiliate (3,033) (4,245) (173,893) ------------ ------------ ------------ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 615,327 (4,245) (209,434) ------------ ------------ ------------
Continued on next page 4 AMERIMMUNE PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 2001 AND CUMULATIVE AMOUNTS FROM APRIL 10, 1998 (Date of Inception) THROUGH JUNE 30, 2001 (unaudited)
THREE MONTHS THREE MONTHS CUMULATIVE ENDED ENDED AMOUNTS FROM JUNE 30, 2000 JUNE 30, 2001 INCEPTION ------------- ------------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from sale of common stock - - 3,353,952 ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 320,067 (196,386) 19,424 ------------ ------------ ------------ CASH AND CASH EQUIVALENTS, Beginning of Period 522,649 215,810 - ------------ ------------ ------------ CASH AND CASH EQUIVALENTS, Ending of Period $ 842,716 $ 19,424 $ 19,424 ============ ============ ============
See accompanyng notes 5 AMERIMMUNE PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2001 1. BUSINESS AND BASIS OF PRESENTATION BUSINESS AND ORGANIZATION Amerimmune Pharmaceuticals, Inc. (the "Company"), formerly named Versailles Capital Corporation, is a Colorado Corporation incorporated on December 31, 1986. From 1991 through February 22, 1999, the Company was inactive aside from seeking a business combination candidate. British Lion Medical, Inc. ("British Lion") was incorporated in California in August 1997 and commenced operations on April 10, 1998. British Lion was engaged in the pharmaceutical research business with the primary purpose of developing Cytolin(R), a drug designed to protect the immune system, especially in patients suffering from Human Immunodeficiency Virus ("HIV"). On February 17, 1999, the Company, British Lion and Amerimmune, Inc. ("AI"), a newly organized, wholly owned subsidiary of the Company, entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger Agreement on February 23, 1999, each share of British Lion's issued and outstanding no par value common stock (5,853,500 shares) was exchanged for 7.133978 newly issued shares (41,758,740 shares) of the Company's $0.05 par value per share common stock. After the exchange, former British Lion shareholders acquired approximately 97% of the issued and outstanding voting shares of the Company and the Company acquired all of the issued and outstanding shares of British Lion through a merger of British Lion with and into AI, with AI as the surviving legal entity (the "Transaction"). Prior to the Transaction, the Company had nominal assets and liabilities. Unless otherwise noted, all references to the number of shares of common stock in these financial statements are based upon the equivalent post-exchange number of shares of the Company's common stock. For financial reporting purposes, the Transaction has been accounted for as a reverse acquisition whereby British Lion is deemed to have acquired the Company. Since this was a reverse acquisition, the legal acquiror, the Company, continued in existence as the legal entity whose shares represent the outstanding common stock of the combined entities. The acquisition has been accounted for as a recapitalization of British Lion based upon historical cost. The recapitalization was given retroactive effect. In connection with the Transaction, the Company succeeded to the business of British Lion and became engaged in the pharmaceutical research business with the primary purpose of developing Cytolin(R). The Company has assumed the obligations of British Lion including all outstanding stock options and warrants to purchase shares of British Lion's common stock and has issued equivalent shares of the Company common stock under the same terms and conditions. 6 On August 6, 1999, the shareholders of the Company adopted an amendment to the Company's articles of incorporation to change the name of the Company to Amerimmune Pharmaceuticals, Inc. from Versailles Capital Corporation. BASIS OF PRESENTATION AND MANAGEMENT PLAN The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and with the instructions to Form 10-QSB on the basis of a going concern. Certain notes and other information have been condensed or omitted from the interim financial statements presented in this report. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the financial statements reflect all adjustments considered necessary for a fair presentation. The results of operations for the three months ended June 30, 2001 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the period ended March 31, 2001 as filed with the Securities and Exchange Commission. All significant intercompany balances and transactions have been eliminated in consolidation. The Company is a development stage pharmaceutical research company and has not generated any revenues from operations for the period from April 10, 1998 (the date that British Lion commenced operations) through June 30, 2001. The Company has devoted substantially all of its resources to the acquisition of a license, research and development of Cytolin(R), and expenses related to the startup of its business. The Company has been unprofitable since inception and expects to incur substantial additional operating losses for the next twelve months, as well as for the next few years, as it increases expenditures on its research and development activities and allocates significant and increasing resources to clinical testing, marketing and other activities. The Company commenced a tolerability study for Cytolin(R) after a clinical protocol was sanctioned by the Food and Drug Administration ("FDA") and the bulk drug has been manufactured, tested, packaged, and released for clinical use. The Company has completed the submission of related manufacturing records to the FDA. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company estimates that it will require significant additional funding over the next three years to continue operations and to successfully complete the FDA approval process for Cytolin(R). The Company believes that additional funds will be needed to fund operations after October 31, 2001. The Company has established plans designed to increase the capitalization of the Company and is actively seeking additional capital that will provide funds needed to increase the internal growth of the Company in order to fully implement its business plans. There can be no assurances that such additional capital will be available to the Company on favorable terms, if at all. The failure of the Company to obtain additional funding if and when required would have a material adverse effect on the Company's ability to fulfill its business plan, continue its operations and meet its financial commitments. 7 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents. At June 30, 2001, substantially all cash and cash equivalents were on deposit with one financial institution. PROPERTY AND EQUIPMENT Office furniture and equipment is recorded at cost. Depreciation commences as assets are placed in service and is computed on a straight-line method over their estimated useful lives of three years. Leasehold improvements are recorded at cost and amortized over the three- year term of the lease. RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred. Payments related to the acquisition of technology rights, for which development work is in- process, are expensed and considered a component of research and development costs. NET LOSS PER SHARE Loss per share is presented in accordance with the provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"), and the Securities and Exchange Commission ("SEC") Staff Accounting Bulletin No. 98 ("SAB 98"). Basic earnings per share excludes dilution for common stock equivalents and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted and resulted in the issuance of common stock. Pursuant to SAB 98, common stock issued for nominal consideration is required to be included in the calculation of basic and diluted earnings per share, as if they were outstanding for all periods presented. In accordance with the SAB 98 requirements, 21,936,981 of the founder's shares are considered to be nominal issuances and have been considered outstanding for all of the period ended March 31, 1999. All outstanding stock options and warrants have been excluded from the calculation of diluted loss per share, because the assumed conversion of such instruments is antidilutive. 8 COMPREHENSIVE INCOME Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. To date, the Company has not had any transactions that are required to be reported in comprehensive income. SEGMENT INFORMATION The Company has determined that it does not have separately reportable operating segments in accordance with Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information". FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount of cash and cash equivalents is assumed to be fair value because of the liquidity of these instruments. Accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 3. COMMITMENTS AND CONTINGENCIES TERMINATION, SALE AND SHAREHOLDER AGREEMENT Allen D. Allen ("Allen") is the present owner of all United States patent and foreign patent rights to the technology and know-how under the product Cytolin(R) ("the "Technology"). In 1994, Allen granted CytoDyn of New Mexico, Inc. ("CytoDyn"), of which Allen owns 100% of the voting stock, an exclusive, worldwide license to use the patent rights and technology. In addition, CytoDyn obtained a trademark name for Cytolin(R). In August 1998, Allen and CytoDyn entered into a Termination, Sale and Shareholder Agreement ("the Purchase Agreement") with Three R Associates, Inc. ("Three R"), a corporation affiliated with the Company through its ownership by three of the Company's former directors and/or officers. Pursuant to the terms of the Purchase Agreement, CytoDyn agreed to relinquish the exclusive license to use the technology and patents previously granted to it by Allen in exchange for 4,280,387 shares of the Company's common stock. In addition, Allen agreed to sell all United States Patent rights, foreign patent rights, and all technological know-how underlying the product, Cytolin(R), to Three R in exchange for $1,350,000, 9 payable monthly over a fifteen year period. Payments to Allen commenced and the Company assumed the obligation to Allen, as part of the Patent and Trademark License Agreement discussed below, upon completion of the Transaction. In September 1999, Allen and CytoDyn delivered written notice to the Company that they believed that the Purchase Agreement was void and not enforceable due to fraudulent inducement by Three R and other, unspecified reasons. Allen and CytoDyn demanded that Three R and its owners surrender any and all stock in the Company, which was obtained pursuant to such Agreement. In February 2000, the Company entered into a Conditional License Agreement discussed below, with Allen and CytoDyn, which is designed to preserve the Company's rights to the technology in the event that the technology reverted to or was acquired by Allen and CytoDyn. In May 2001, the dispute between Allen, CytoDyn and Three R was settled. As a result of the settlement, all of Three R's rights, title, and interest in, to and under the Purchase Agreement may have been assigned to Allen and CytoDyn. CONSULTING AGREEMENT - RESEARCH AND DEVELOPMENT In August 1998, Allen entered into a consulting agreement with Three R whereby Allen agreed to provide the Company with any new and additional similar technologies, if any, for a period of fifteen years in exchange for a consulting fee of $10,000 per year. Payments under the consulting agreement commenced subsequent to completion of the Transaction, and the Company assumed the obligation to Allen upon completion of the Transaction, as part of the License Agreement. Effective February 23, 2000, the Company can terminate the consulting agreement with one year's notice. PATENT AND TRADEMARK LICENSE AGREEMENT In October 1998, the Company entered into a Patent and Trademark License Agreement ("the License Agreement") with Three R. The Company was granted an irrevocable, exclusive, worldwide license to use all present and future patent rights, know-how and background technology of Three R relating to Cytolin(R), which Three R had previously obtained from Allen and CytoDyn. In addition, the License Agreement granted the Company a sublicense to the trademark name, Cytolin(R). The License Agreement was consummated simultaneously with the Transaction. The Company issued 21,936,981 shares of its common stock to Three R upon execution of the Agreement, and the Company also assumed Three R's obligations to pay Allen under the agreements discussed above between Three R and Allen. Under the terms of the Purchase Agreement discussed above, the Company became obligated to pay Allen, at a minimum, $180,000 in scheduled monthly installments through February 23, 2001. The Company has the option to terminate the payments due Allen after the minimum amounts are paid. If the Company elects to terminate the payment in excess of the minimum due, it would abandon the rights acquired through the Purchase agreement. 10 In May 2001, all of Three R's rights, title, and interest in, to and under the License Agreement may have been assigned to Allen and CytoDyn. If so, pursuant to the terms of the Conditional License Agreement discussed below, the Company is obligated to pay Allen and CytoDyn as successor Licensor pursuant to the terms of the License Agreement. During fiscal 1999, the Company accrued research and development expenses of $166,000 in connection with the minimum payments due to Allen through February 23, 2001. The payments were discounted to their fair value of $166,000 by applying an imputed interest rate of 8% to future cash outflows. As of June 30, 2001, all of the minimum payments had been made to Allen. CONDITIONAL LICENSE AGREEMENT In September 1999, Allen and CytoDyn delivered written notice to the Company that they believed that the Purchase Agreement was void and not enforceable due to fraudulent inducement by Three R and other, unspecified reasons. Allen and CytoDyn demanded that Three R and its owners surrender any and all stock in the Company, which was obtained pursuant to such Agreement. In February 2000, the Company entered into a Conditional License Agreement with Allen and CytoDyn which is designed to preserve the Company's rights to the technology in the event that the technology that is the subject of both the Purchase Agreement and the License Agreement, in the event that Three R's rights to such technology reverted to or was acquired by Allen and CytoDyn. The Conditional License Agreement further stipulates that any and all Company stock, awarded or returned to Allen or CytoDyn as a result of the dispute between Allen, CytoDyn and Three R, be returned immediately by Allen to the Company as treasury stock. In consideration for entering into the Conditional License Agreement, the Company advanced CytoDyn an additional $50,000 pursuant to the terms of a Loan Agreement which was previously entered into whereby the Company loaned CytoDyn $100,000 (See Note 4). At June 30, 2001 and March 31, 2001, the note receivable of $150,000, which is collateralized by shares of the Company's stock, plus accrued interest of $23,893 at June 30, 2001 and $19,648 at March 31, 2001, was classified as a reduction of shareholders' equity. At June 30, 2001 and March 31, 2001, the Company reserved $128,900 and $115,600 respectively, against the note receivable and accrued interest to reflect the fair market value of the collateral shares of the Company's stock. In May 2001, the dispute between Allen, CytoDyn and Three R was settled The Company is currently evaluating the terms of such settlement. As a result of the settlement, all of Three R's rights, title, and interest in, to and under the License Agreement and the Purchase Agreement may have been assigned to Allen and CytoDyn. If so, pursuant to the terms of the Conditional License Agreement, the Company is obligated to pay Allen and CytoDyn as successor Licensor pursuant to the terms of the License Agreement. The Company has received a claim from CytoDyn and Allen that, pursuant to the 11 Conditional License Agreement among them, the Company owes CytoDyn and Allen approximately $150,000 for legal fees allegedly incurred by CytoDyn and Allen in connection with disputes with Three R. The Company has disputed this claim alleging that the Conditional License Agreement only covers the "incremental cost" of CytoDyn and Allen in trying to recover certain Company stock (which, under the Agreement, CytoDyn and Allen are obligated to surrender to the Company), that this should be a small amount, and that CytoDyn and Allen have failed to live up to their obligation to surrender the stock in question. CytoDyn and Allen have also claimed that the Company has breached an alleged obligation under the Conditional License Agreement to allow him to inspect the Company's manufacturing processes. The Company has disputed Allen's alleged inspection rights. In the event that Allen and CytoDyn are successful in any efforts to terminate the Conditional License Agreement, the License Agreement with Three R and/or any other rights of the Company to utilize the technology that is the subject of such agreement, the Company's business, financial position and prospects would be materially and adversely affected. MANAGEMENT AGREEMENT In October 1998, the Company entered into a three year management agreement for $585,000 per year with Western Center for Clinical Studies, Inc. ("WCCS"), a corporation that is wholly-owned by three of the Company's former officers and directors. The agreement was scheduled to expire on February 23, 2002. The management agreement provided for services by WCCS to the Company for the purpose of assisting the Company in obtaining FDA approval to market Cytolin(R) for commercial use. In November 1999, the Company notified WCCS of its rescission of this agreement based upon the Company's belief that WCCS made certain fraudulent misrepresentations to the Company and had breached its performance under the management agreement. The Company is evaluating possible remedies to collect all amounts paid to WCCS in conjunction with this agreement. In September 2000, five current or former officers and/or directors of the Company were served with a Complaint ("the Complaint") filed by WCCS, one of the plaintiffs, in the Superior Court of California ("the Action"). The Company was not named as a defendant. The Complaint alleges causes of action against the defendants for libel and slander, intentional infliction of emotional distress, interference with contract, and unfair business practices. It seeks compensatory damages in the amount of $20 million and punitive damages and injunctive relief. The allegations of the Complaint involve acts relating to: (1) the Company's cancellation in November 1999, of the Management Agreement with plaintiff WCCS, and (2) the cancellation and rescission of a technology licensing agreement by co-defendant CytoDyn. The Complaint alleges that certain Company officers and directors (as well as officers and directors of CytoDyn) made libelous and slanderous statements about the background and competency of certain plaintiffs, who are officers and shareholders of WCCS. It alleges that these statements caused the Company to cancel its Management Agreement with WCCS and CytoDyn to cancel its technology licensing agreement with plaintiff Three R. In May 2001, Three R, WCCS, Allen and CytoDyn settled the claims 12 among them. See Conditional License Agreement section above. The Company and the defendants have retained counsel to defend the five defendants, and the Company will indemnify the defendants for fees and expenses incurred in their defense. The Company has received coverage for the acts alleged in the Complaint from its insurance company under a general liability policy. The Company has been informed that the defendants intend to vigorously contest the allegations of the Complaint. To the extent that the costs of the defense and any damages resulting from the Action are not covered by insurance and the Company is required to pay such amounts, the Company's financial condition could be materially adversely affected. 4. RELATED PARTY TRANSACTIONS During the period from inception (April 10, 1998) through March 31, 2000, the Company incurred expenses of $442,575 as a result of services performed by an affiliate, WCCS, on behalf of the Company. In fiscal 1999, the Company advanced $219,375 to WCCS to commence certain services in connection with the development of Cytolin(R) to be performed over a three year period beginning when the management agreement between the parties became effective. In November 1999, the Company notified WCCS of its rescission of this agreement and expensed the remaining prepaid management fees. The Company is evaluating possible remedies to collect all amounts paid to WCCS in conjunction with this agreement. See Note 3 for a discussion of a Complaint filed against current or former officers and/or directors of the Company related to the rescission of this agreement. During the period from inception (April 10, 1998) through June 30, 2001, the Company paid consulting fees of $82,300 to Allen for providing scientific expertise regarding the development of Cytolin(R), $215,625 pursuant to the Patent and Trademark License Agreement, and $30,000 in consulting fees in connection with the Phase I Testing of Cytolin(R). As of June 30, 2001, $3,500 of such fees were included in accounts payable. During the period from inception (April 10, 1998) through March 31, 2000, the Company incurred legal expenses of $10,000 for an attorney who is also a director of the Company. Since inception through January 31, 1999, the Company used part of an office facility and administrative services provided by WCCS at no cost. On February 1, 1999, the Company entered into a long-term non-cancellable operating lease agreement with an unrelated party. During June 1999, the Company loaned CytoDyn $100,000 to facilitate payment by CytoDyn of certain legal and office expenses and to facilitate repayment to the Company by CytoDyn of previous advances. In February 2000, the Company loaned CytoDyn an additional $50,000 under the same terms and conditions as the original loan, as consideration for entering into the Conditional License Agreement (see Note 3). The loans bore interest at a rate of 8% per annum and were due, together with accrued 13 interest, on or before February 23, 2001. If the loans and accrued interest were not paid by February 23, 2001, the loans plus accrued interest bear interest at a rate of 10% per annum going forward. The loans are secured by 450,000 shares of Company common stock, which are owned by CytoDyn. The loans were not paid on February 23, 2001 and CytoDyn has indicated that it would return the 450,000 shares. Accordingly, at June 30, 2001 and March 31, 2001, the Company reserved $128,900 and $115,600 respectively, against the note receivable and accrued interest to reflect the fair market value of the collateral shares of the Company's stock. 5. SUBSEQUENT EVENT In July 2001, the Company entered into a Warrant Purchase Agreement ("Warrant Agreement") with Maya LLC, a limited liability company of which Rex H. Lewis, the Company's president and chief executive officer, is the manager. The Warrant Agreement stipulates that Maya LLC will purchase an initial Warrant for $125,000 and will be entitled to purchase additional Warrants in up to three separate closings of no less than $125,000 per closing during the 12-month period ending in July 2002. Each Warrant shall have an exercise price of $.20 per share of common stock, and expires 10 years from the date of issuance of the Warrant. The number of shares of common stock underlying each Warrant has not yet been determined and is being calculated using a valuation prepared by an independent valuation consultant 14 PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Some of the statements made in this Form 10-QSB and the documents incorporated herein by reference that are not historical facts, such as anticipated results of clinical trials, may constitute "forward-looking statements," which forward looking statements are made pursuant to the safe harbor provisions in the federal securities laws. These statements often can be identified by the use of terms such as "may," "will," "expect," "anticipate," "estimate," "should", "could", "experts", "plans", "believes", "predicts", "potential", or "continue," or the negative thereof. Such forward-looking statements speak only as of the date made. Forward-looking statements are subject to risks, uncertainties and other factors beyond the control of the Company that could cause actual results, levels of activity, performance, achievements, and events to differ materially from historical results of operations, levels of activity, performance, achievements, and events and any future results, levels of activity, performance, achievements and events implied by such forward- looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, achievements, or events. Moreover, neither the Company nor any other person assumes responsibility for the accuracy or completeness of such statements. The Company disclaims any obligation to revise any forward- looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. Plan of Operation - ----------------- The Company (for purposes of this section, the term the "Company" includes the predecessor entity to its current operations, British Lion) is a development stage pharmaceutical research company and has not generated any revenues from operations for the period from April 10, 1998 (the date that British Lion commenced operations) through June 30, 2001. The Company is engaged in the pharmaceutical research business with the primary purpose of developing Cytolin(R), a drug designed to protect the immune system, especially in patients suffering from Human Immunodeficiency Virus (HIV). The Company believes that Cytolin(R) may be an important drug for the growing number of patients who have not been receiving treatment, for those who are on multi-drug therapy, and for those who have become resistant to drugs currently used to treat the HIV/AIDS virus. The Company intends to seek governmental approval from the Food and Drug Administration ("FDA") for Cytolin(R). The Company has devoted substantially all of its resources to the acquisition of a license, research and development of Cytolin(R), and expenses related to the startup of its business. The Company has been unprofitable since inception and expects to incur substantial additional operating losses for the next twelve months, as well as for the next few years, as it increases expenditures on research and development and allocates significant and increasing resources to clinical testing, marketing and other activities. In November and December 1998, the Company sold 1,426,790 shares of its common stock (at approximately $0.21 per share), for gross proceeds of $300,000, to certain accredited investors in a private placement. In December 1998, the Company 15 began a second private placement of common stock to accredited investors, which was completed on February 22, 1999. The second private placement was made on a minimum/maximum "best efforts" basis. The Company raised the maximum amount of gross proceeds of $3,210,000 (7,633,364 common shares at approximately $0.42 per share) and paid cash offering expenses of $159,698. Net cash proceeds from the private placement aggregated $3,050,302. The Company has commenced a tolerability study for Cytolin(R) after a clinical protocol was sanctioned by the FDA and the bulk drug was manufactured, tested, packaged, and released for clinical use. The Company has completed the submission of related manufacturing records to the FDA. The Company estimates that it will require significant additional funding over the next three years in order to continue operations and to successfully complete the FDA approval process for Cytolin(R). The Company believes that additional funds will be needed to fund operations after October 31, 2001. There can be no assurances that such additional capital will be available to the Company on favorable terms, if at all. The failure of the Company to obtain additional funding if and when required would have a material adverse effect on the Company's ability to fulfill its business plan, continue its operations and meet its financial commitments. Results of Operations - --------------------- For the three months ended June 30, 2001, the Company incurred $62,763 in research and development expenses, $192,324 in general and administrative expenses and earned $3,285 in interest income net of taxes and interest expense, resulting in a net loss of $251,802. The expenses incurred during this period relate primarily to commencement of research activities, regulatory and administrative expenses. For the three months ended June 30, 2000, the Company incurred $119,075 in research and development expenses, $169,766 in general and administrative expenses and earned $12,478 in interest income net of taxes and interest expense, resulting in a net loss of $276,363. The expenses incurred during this period relate primarily to commencement of research activities, regulatory and administrative expenses. From April 10, 1998 (date of inception) to June 30, 2001, the Company incurred $1,722,671 in research and development expenses, $3,872,133 in general and administrative expenses and earned $133,669 in interest income net of taxes and other expenses, resulting in a net loss of $5,461,135 (which included significant non-cash, general and administrative expenses aggregating $1,498,500 related primarily to issuance of securities in exchange for services for the period ended March 31, 1999). The expenses incurred during inception to June 30, 2001 relate primarily to the commencement of business operations, the acquisition of a license, fundraising activities and merger expenses. The Company's activities to date are not as broad in depth or scope as the activities it must undertake in the future, and the Company's historical operations and financial information are not indicative of its future operating results or financial condition or its ability to operate profitably as a commercial enterprise if and when it succeeds in bringing any product to market. 16 Capital Resources and Liquidity - ------------------------------- From the commencement of operations of April 10, 1998 to June 30, 2001, the Company had no operating revenues and incurred net losses of $5,461,135. At June 30, 2001, the Company had negative working capital of $272,031. The Company requires significant capital to conduct the research and development and preclinical and clinical testing of Cytolin(R) that is necessary in order to complete the FDA approval process. Management of the Company does not expect to generate revenue from operations within the next year. The Company believes that additional funds will be needed to fund operations after October 31, 2001. There can be no assurance that such additional capital will be available to the Company on favorable terms, if at all. The failure of the Company to obtain additional funding if and when required would have a material adverse effect on the Company's ability to fulfill its business plan, continue its operations and meet its financial commitments. In October 1998, the Company entered into a Patent and Trademark License Agreement (the "License Agreement") with Three R. The Company was granted an irrevocable, exclusive, worldwide license to use all present and future patent rights, knowledge and background technology owned by Three R relating to the product, Cytolin(R). In addition, the License Agreement granted the Company a sublicense to the trademark Cytolin(R). The License Agreement was consummated simultaneously with the Company's acquisition of British Lion. The Company issued 21,936,981 shares of its common stock at $.001 per share to Three R upon execution of the License Agreement, and the Company also agreed to assume Three R's obligations to pay Mr. Allen $1,350,000, payable monthly over a fifteen year period, and fees of $10,000 per year for consulting services under the agreements discussed above between Three R and Mr. Allen. In May 2001, Mr. Allen and CytoDyn NM may have been assigned all of Three R's rights, title, and interest in, to and under the License Agreement pursuant to a settlement agreement among Mr. Allen, CytoDyn NM and Three R. See Note 3 to Unaudited Consolidated Financial Statements contained in Item 1. of Part I of this Form 10-QSB for a description of these agreements and certain potential disputes. The Company could abandon its patent rights with no further obligations after minimum payments aggregating $180,000 to Mr. Allen, with one year's notice. At June 30, 2001, all of the minimum payments had been made to Mr. Allen. Effect of Inflation and Foreign Currency Exchange - ------------------------------------------------- The Company has not experienced material unfavorable effects on its results of operations due to currency exchange fluctuations with any foreign suppliers or material unfavorable effects upon its results of operations as a result of domestic inflation. Plant, Equipment and Employees - ------------------------------ As of this time, the Company does not expect to make any purchases of significant plant, facilities or equipment and does not foresee a significant change in the number of employees. 17 PART II ITEM 1. LEGAL PROCEEDINGS Except as described below, the Company is not a party to any legal proceedings which management believes are not routine and incidental to its business or which are material. The Company may in the future be a party to legal proceedings. See Note 3 to Unaudited Consolidated Financial Statements contained in Item 1. of Part I of this Form 10-QSB for a discussion of certain potential disputes. In September 2000, Rex Lewis, O.B. Parrish, Kimberlie Cerrone, Wellington Ewen and Pamela Kapustay, each a current or former officer and/or director of the Company, were served with a Complaint filed in August 2000 in the Superior Court of California for Los Angeles County (Case No. BC 235312). The Company was not named as a defendant. The Complaint alleges causes of action against the defendants for libel and slander, intentional infliction of emotional distress, interference with contract, and unfair business practices. It seeks compensatory damages in the amount of $20 million and punitive damages and injunctive relief. The allegations of the Complaint involve acts relating to: (1) the Company's cancellation in November 1999, of a Management Agreement with plaintiff WCCS, and (2) the cancellation and rescission of a technology licensing agreement by co-defendant CytoDyn. The Complaint alleges that certain Company officers and directors (as well as officers and directors of CytoDyn) made libelous and slanderous statements about the background and competency of certain plaintiffs, who are officers and shareholders of WCCS. It alleges that these statements caused the Company to cancel its Management Agreement with WCCS and CytoDyn to cancel its technology licensing agreement with plaintiff Three R. In May 2001, Three R, WCCS, Mr. Allen and CytoDyn NM settled the claims among them. See Note 3 to Unaudited Consolidated Financial Statements contained in Item 1. of Part I of this Form 10-QSB. The Company and the defendants have retained counsel to defend the five defendants, and the Company will indemnify the defendants for fees and expenses incurred in their defense. The Company has received coverage for the acts alleged in the Complaint from its insurance company under a general liability policy. The Company has been informed that the defendants intend to vigorously contest the allegations of the Complaint. To the extent that the costs of the defense and any damages resulting from the Action are not covered by insurance and the Company is required to pay such amounts, the Company's financial condition could be materially adversely affected. The Company has received a claim from CytoDyn NM and Mr. Allen that, pursuant to the Conditional License Agreement among them, the Company owes CytoDyn NM and Mr. Allen approximately $150,000 for legal fees allegedly incurred by CytoDyn NM and Mr. Allen in connection with disputes with Three R. The Company has disputed this claim alleging that the Conditional License Agreement only covers the "incremental cost" 18 of CytoDyn NM and Mr. Allen in trying to recover certain Company stock (which, under the Agreement, CytoDyn NM and Mr. Allen are obligated to surrender to the Company), that this should be a small amount, and that CytoDyn NM and Mr. Allen have failed to live up to their obligation to surrender the stock in question. CytoDyn NM and Mr. Allen have also claimed that the Company has breached an alleged obligation under the Conditional License Agreement to allow him to inspect the Company's manufacturing processes. The Company has disputed Mr. Allen's alleged inspection rights. In the event that Mr. Allen and CytoDyn NM are successful in any efforts to terminate the Conditional License Agreement, the License Agreement with Three R and/or any other rights of the Company to utilize the technology that is the subject of such agreement, the Company's business, financial position and prospects would be materially and adversely affected. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits -------- 2.1 Agreement and Plan of Merger, dated February 17, 1999, by and among Versailles Capital Corporation, Amerimmune, Inc. and British Lion Medical, Inc. (2) 3.1 Amended and Restated Articles of Incorporation.(1) 3.2 Amended and Restated By-Laws.(1) 3.3 Articles of Merger, as filed with the Colorado Secretary of State on February 23, 1999.(2) 3.4 Articles of Amendment to the Articles of Incorporation.(3) 10.1 Patent and Trademark License Agreement between British Lion Medical, Inc. and Three R Associates, Inc., dated October 24, 1998.(2) 10.2 Termination, Sale and Shareholder Agreement by and among Three R Associates, Inc., Allen D. Allen and CytoDyn(R) of New Mexico, Inc., dated August 1, 1998. (2) 10.3 Management Agreement between British Lion Medical, Inc. and WCCS, Inc., dated October 24, 1998. (2) 10.4 Subscription, Share Restriction and Proxy Agreement between British Lion Medical, Inc. and Allen D. Allen, dated October 23, 1998. (2) 10.5 Versailles Capital Corporation 1998 Omnibus Stock Incentive Plan as amended and restated through February 23, 1999.(4) 10.6 Conditional License Agreement between Allen D. Allen, CytoDyn of New Mexico, Inc. and Amerimmune, Inc., dated February 24, 2000.(5) 19 10.7 Warrant Purchase Agreement between Amerimmune Pharmaceuticals, Inc. and Maya LLC (a limited liability company of which Rex H. Lewis, the Company's president and chief executive officer is the manager), dated July 13, 2001. 16.0 Letter on change in certifying accountant. (6) __________________________________________________________________________ (1) Incorporated by reference to the Registrant's Registration Statement on Form 10-SB, Registration No. 0-22865, as filed with the Commission on July 22, 1997, and amended on Form 10-SB/A-1, filed with the Commission on February 25, 1998. (2) Incorporated by reference from the like numbered exhibits filed with the Registrant's Current Report on Form 8-K, as amended, dated March 10, 1999. (3) Incorporated by reference from the Registrant's September 30, 1999 Form 10-QSB, dated November 12, 1999. (4) Incorporated by reference from the Registrant's March 31, 1999 Form 10-KSB. (5) Incorporated by reference from the Registrant's March 31, 2000 Form 10-KSB. (6) Incorporated by reference from the like numbered exhibit filed with the Registrant's Current Report on Form 8-K, dated March 29, 1999. (b) Reports on Form 8-K ------------------- During the three months ended June 30, 2001, the Company filed no Current Reports on Form 8-K. 20 SIGNATURES ---------- In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERIMMUNE PHARMACEUTICALS, INC. Signatures Title Date ---------- ----- ---- Chairman of the Board /s/ O.B Parrish and Director August 10, 2001 - ------------------------- O.B. Parrish /s/ Deborah Garrett Kalof Chief Financial Officer August 10, 2001 - ------------------------- Deborah Garrett Kalof, M.B.A., C.P.A. 21 EX-10.7 3 exh10-7.txt WARRANT PURCHASE AGMT WITH MAYA LLC Exhibit 10.7 AMERIMMUNE PHARMACEUTICALS, INC. WARRANT PURCHASE AGREEMENT THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made as of July 13, 2001, by and among Amerimmune Pharmaceuticals, Inc., a Colorado corporation (the "Company"), and MAYA LLC, a Nevada limited liability company (the "Investor"). THE PARTIES HEREBY AGREE AS FOLLOWS: 1. PURCHASE AND SALE OF WARRANTS. 1.1 APPRAISAL; NUMBER OF WARRANT SHARES. As further described in Sections 1.2 and 1.3 hereof, the Investor will purchase an Initial Warrant for $125,000 and will be entitled to purchase Additional Warrants in up to three (3) separate closings of no less than $125,000 per closing. Each Warrant shall have an exercise price of $0.20 per share of common stock (each a "Warrant Share") and the Warrants shall be for that aggregate number of Warrant Shares such that the aggregate value of the Warrants (assuming that Investor purchases all of the Additional Warrants) shall be $500,000, as determined by a valuation to be conducted by an independent valuation consultant selected by the Investor and reasonably acceptable to the Company and calculated in accordance with customary derivative security appraisal standards (the "Appraisal"). The Company and the Investor acknowledge that the Appraisal will likely be stated as a range between two prices per Warrant Share (rather than one price), and in that event the parties agree to apply that price in the range that would provide for the greatest number of Warrant Shares into which each Warrant may be exercised (i.e., the lowest price in the Appraisal range). The Company shall pay for all costs of the Appraisal. 1.2 SALE AND ISSUANCE OF THE INITIAL WARRANT. Upon completion of the Appraisal, and subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to sell and issue to the Investor a warrant to purchase common stock of the Company in the form attached hereto as Exhibit A (the "Initial Warrant"). The number of Warrant Shares into which the Initial Warrant may be exercised shall be determined by the Appraisal referenced in Section 1.1. Simultaneous with the issuance of the Initial Warrant, the Investor shall pay the Company the purchase price for the Initial Warrant of $125,000 in cash; provided that the Investor may choose to pay to the Company the purchase price for the Initial Warrant prior to the completion of the Appraisal, on the condition that the Initial Warrant be issued within two (2) business days of the completion of the Appraisal. 1.3 SALE AND ISSUANCE OF THE ADDITIONAL WARRANTS. Subject to the terms and conditions of this Agreement, the Investor shall have the option, but not the obligation, to purchase additional warrants (the "Additional Warrants" and collectively with the Initial Warrant, the "Warrants") in the same form as the Initial Warrant. The Additional Warrants shall be purchasable by the Investor in up to three (3) separate closings of no less than $125,000 per closing during the 12-month period following the date first set forth above. The number of Warrant Shares into which each Additional Warrant may be exercised shall have been determined by the Appraisal referenced in Section 1.1. If the Investor elects to purchase an Additional Warrant, he shall provide the Company with five (5) business days' advance notice of the date that Investor will make the required payment in exchange for his receipt of such Additional Warrant. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to the Investor as follows: -1- 2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. 2.2 AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Warrant being sold hereunder has been taken or will be taken prior to the Closing, and this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. The Company has all requisite legal and corporate power and authority to execute and deliver this Agreement, to issue and sell the Warrants, to issue the Common Stock upon exercise of the Warrants and to carry out and perform its obligations under the terms of the Agreement. 2.3 VALID ISSUANCE OF WARRANTS. The Warrants, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws. The Warrant Shares, when issued upon exercise of any Warrant, will be duly and validly issued, fully paid and will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws 2.4 BROKERS. The Company has no contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement. 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby represents and Warrants that: 3.1 AUTHORIZATION. The Investor has full power and authority to enter into this Agreement, and the Agreement constitutes his valid and legally binding obligation, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. 3.2 ACCREDITED INVESTOR. The Investor is an "accredited investor" within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.3 RESTRICTED SECURITIES. Such Investor understands that the Warrant it is purchasing and the Warrant Shares into which the Warrants are exercisable are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may not be resold without registration under the Act or pursuant to an exemption from such registration. 3.4 LEGENDS. It is understood that the certificates evidencing any Warrant Shares issued upon exercise of a Warrant may bear the following legend: "These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act and applicable state law or an opinion of counsel satisfactory to the Company that such registration is not required." -2- 4. MISCELLANEOUS. 4.1 SURVIVAL. The warranties, representations and covenants of the Company and the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing. 4.2 SUCCESSORS AND ASSIGNS. The Investor shall have the right to assign his rights hereunder without the consent of the Company. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Warrants or Warrant Shares). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 4.3 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Nevada as applied to agreements among Nevada residents entered into and to be performed entirely within Nevada. 4.4 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 4.5 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 4.6 NOTICES. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon delivery by overnight mail, personal delivery to the party to be notified, or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 4.7 EXPENSES. The Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 4.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the parties to this Agreement. 4.9 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 4.10 ENTIRE AGREEMENT. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. -3- AMERIMMUNE PHARMACEUTICALS, INC., MAYA LLC, a Colorado corporation a Nevada limited liability company By: /s/ O.B. Parrish By: /s/ Rex H. Lewis ---------------- ---------------- Name: O.B. Parrish Rex H. Lewis, Manager Title: Chairman of the Board -4- EXHIBIT A FORM OF WARRANT --------------- [Please see attached] -5- THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH WARRANTS AND SHARES MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF AMERIMMUNE PHARMACEUTICALS, INC. Dated ____________ HOLDER: _______________________________________ NUMBER OF SHARES: _____________________________ THIS CERTIFIES THAT, for good and valuable consideration, the above referenced holder ("Holder"), or its assigns, is entitled to subscribe for and purchase from AMERIMMUNE PHARMACEUTICALS, INC., a Colorado corporation (the "Company"), at any time commencing on the date of this Warrant and ending at the close of business ten (10) years from the date of issuance, the number of fully paid and nonassessable shares of the Common Stock of the Company set forth above at an exercise price of twenty cents ($0.20) per share (the "Warrant Exercise Price"), subject to the adjustment provisions of Sections 5 and 6 of this Warrant. The shares which may be acquired upon exercise of this Warrant are referred to herein as the "Warrant Shares." As used herein, the term "Holder" includes any party who acquires all or a part of this Warrant as a transferee of Holder; the term "Common Stock" means and includes the Company's presently authorized Common Stock, $0.05 par value. This Warrant is subject to the following provisions, terms and conditions: 1. EXERCISE; TRANSFERABILITY. (a) The rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part (but not as to any fractional shares of Common Stock), by written notice of exercise (in the form attached hereto) delivered to the Company at the principal office of the Company prior to the expiration of this Warrant and accompanied or preceded by the surrender of this Warrant along with payment of the Warrant Exercise Price for such shares (i) in cash, by check or by wire transfer of federal funds, (ii) on a cashless basis in accordance with the provisions of Section 11 of this Warrant, or (iii) by a combination of the methods specified in clauses (a) and (b). Notwithstanding the foregoing, the Company, in its sole discretion, may extend and maintain, or arrange for the extension and maintenance of, credit to the Holder to finance payment of the purchase price on such terms as may be approved by the Board of Directors of the Company. (b) This Warrant may not be sold, transferred, assigned, hypothecated or divided except as provided in Section 9 hereof. 2. EXCHANGE AND REPLACEMENT. Subject to Sections 1 and 9 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Company at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant; provided, however, that if Holder shall be such Holder, an agreement of indemnity by such Holder shall be sufficient for all purposes of this Section 2. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement. The Company shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2. 3. ISSUANCE OF THE WARRANT SHARES. (a) The Company agrees that the Warrant Shares shall be and will be deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as provided herein. Subject to the provisions of the next section, certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time. (b) Notwithstanding the foregoing, however, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Nothing herein, however, shall obligate the Company to effect registrations under federal or state securities laws. If registrations are not in effect and if exemptions are not available when the Holder seeks to exercise the Warrant, the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring, until such time as either registrations become effective or exemptions are available, and the Warrant shall then remain exercisable for a period of at least 90 calendar days from the date the Company delivers to the Holder written notice of the availability of any registrations or exemptions. The Holder agrees to execute such documents and make such representations, warranties and agreements as maybe required solely to comply with the exemptions relied upon by the Company, or any registrations made, for the issuance of the Warrant Shares. 4. COVENANTS OF THE COMPANY. The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable, and free from all taxes, liens, and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the purchase rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. 5. RESTRICTIONS ON ISSUANCE AND TRANSFER OF SHARES. Shares of Common Stock acquired pursuant to the exercise of this Warrant which are not registered under the Securities Act of 1933, as amended (the "Act"), shall be subject to restrictions on transfer and as required by applicable state and/or federal securities laws. Any unregistered shares acquired by exercise of this Warrant shall bear a legend referring to the restrictions and limitations of this Section. The Company may impose stop transfer instructions to implement such restrictions and limitations. 6. ANTI-DILUTION ADJUSTMENTS. The number of Warrant Shares purchasable upon the exercise of this Warrant and the Warrant Exercise Price shall be subject to adjustment as follows: (a) In case the Company shall (i) pay a dividend or make a distribution on its Common Stock in shares of its capital stock or other securities, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, or (iii) issue, by reclassification of its Common Stock, shares of its capital stock or other securities of the Company (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares, shares of its capital stock and other securities of the Company which such holder would have owned or would have been entitled to receive immediately after the happening of any of the events described above, had the Warrant been exercised immediately prior to the happening of such event or any record date with respect thereto. Any adjustment made pursuant to this subsection 6(a) shall become effective immediately after the effective date of such event. (b) In case the Company shall issue rights, options, warrants or convertible securities to holders of its Common Stock, without any charge to such holders, containing the right to subscribe for or purchase Common Stock, the number of Warrant Shares thereafter purchasable upon the exercise of this Warrant shall be determined by multiplying the number of Warrant shares theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such rights, options, warrants or convertible securities plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such rights, options, warrants or convertible securities. Such adjustment shall be made whenever such rights, options, warrants or convertible securities are issued, and shall become effective immediately upon issuance of such rights, options, warrants or convertible securities. In the event of such adjustment, corresponding adjustments shall be made to the Warrant Exercise Price. (c) In case the Company shall distribute to holders of its Common Stock evidences of its indebtedness or assets (excluding cash dividends or distributions out of current earnings made in the ordinary course of business consistent with past practices), then in each case the number of Warrant shares thereafter purchasable upon the exercise of this Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the then Market Price (as defined below) on the date of such distribution, and of which the denominator shall be such Market Price on such date minus the then fair value (determined as provided in subsection 6(e) below) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective on the date of distribution. In the event of any such adjustment, the number of shares of Common Stock subject to the Warrant shall also be adjusted and shall be that number determined by multiplying the number of shares of Common Stock issuable upon exercise before the adjustment by a fraction, the numerator of which shall be the Warrant Exercise Price in effect immediately before the adjustment and the denominator of which shall be the Warrant Exercise Price as so adjusted. (d) Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted as herein provided, the Warrant Exercise Price payable upon exercise of the Warrant shall be adjusted by multiplying such Warrant Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of Warrant Shares purchasable upon the exercise of this Warrant immediately prior to such adjustment, and the denominator of which shall be the number of Warrant Shares purchasable immediately thereafter. (e) In case the Company shall sell or issue shares of Common Stock, or rights, options, warrants, or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock at a price per share of Common Stock (determined, in the case of such rights, options, warrants, or convertible or exchangeable securities, by dividing (X) the total amount receivable by the Company in consideration of the sale and issuance of such rights, options, warrants, or convertible or exchangeable securities, plus the total consideration payable to the Company upon exercise, conversion, or exchange thereof, by (Y) the total number of shares of Common Stock covered by such rights, options, warrants, or convertible or exchangeable securities) that is lower than the Warrant Exercise Price, then the Warrant Exercise Price shall be adjusted so that it shall equal the price per share of Common Stock at which such Common Stock or other securities were sold or issued. Such adjustment shall be made successively whenever such a sale or issuance occurs. In the event of any such adjustment, the number of shares of Common Stock subject to the Warrant shall also be adjusted and shall be that number determined by multiplying the number of shares of Common Stock issuable upon exercise before the adjustment by a fraction, the numerator of which shall be the Warrant Exercise Price in effect immediately before the adjustment and the denominator of which shall be the Warrant Exercise Price as so adjusted. For the purposes of adjustments, the shares of Common Stock which the holder of any such rights, options, warrants, or convertible or exchangeable securities shall be entitled to subscribe for or purchase shall be deemed to be issued and outstanding as of the date of the sale or issuance of the rights, warrants, or convertible or exchangeable securities and the consideration received by the Company therefor shall be deemed to be the consideration received by the Company for such rights, options, warrants, or convertble or exchangeable securities, plus the consideration or premiums stated in such rights, options, warrants or convertible or exchangeable securities to be paid for the shares of Common Stock covered thereby. In case the Company shall sell or issue shares of Common Stock or rights, options, warrants, or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock for a consideration consisting, in whole or in part, of property other than cash or its equivalent, then in determining the "price per share of Common Stock" and the "consideration received by the Company," the Board of Directors of the Company shall determine, in good faith, the fair value of said property. PROVIDED, that there shall be no adjustment due to the recoupment by the Company of any number of the Company's shares of Common Stock from Three R Associates, Inc. ("3R") or Joseph J. McCann, Jr., an agent of 3R. (f) Upon any adjustment of the Warrant Exercise Price and the number of Warrant Shares subject to this Warrant, then and in each such case, the Company shall give written notice thereof, by first-class mail, postage prepaid, addressed to the Holder as shown on the books of the Company, which notice shall state the Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Whenever the Company's Board of Directors determines the fair market value as stated in Section 6(e) above or Section 10 below and the Holder disagrees, the Holder may, within 60 days of receipt of such notice of determination, require the Company to deliver a certificate of a firm of independent public accountants of recognized standing selected by the Board of Directors (which may be the regular auditors of the Company) recomputing the Exercise Price and the number of Warrant Shares after the adjustment or the effect of the modification and a brief statement of the firm's manner of recomputing the same. Such recomputation shall be binding upon the Company and the Holder. The cost of obtaining the second certificate shall be borne by the Company unless the recomputation is the same as or less favorable to the Holder than the Company's initial computation, in which case the cost of obtaining the second certificate shall be borne by the Holder. 7. MERGER, REORGANIZATION OR CONSOLIDATION. In any case in which a transaction would result in a complete liquidation of the Company or a merger, reorganization, or consolidation of the Company with any other unrelated corporation or other entity in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another unrelated corporation or other entity (all such transactions being referred to herein as a "Reorganization"), the surviving corporation or other entity shall be required to assume the Warrant or to issue substitute warrants in place thereof which substitute warrants shall provide for terms at least as favorable to the Warrantholders as contained in this Warrant and shall provide the Warrantholder the right to acquire the kind and amount of shares and other securities and property which the Warrantholder would have owned or been entitled to receive had the Warrants been exercised immediately prior to such Reorganization. 8. NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. 9. NOTICE OF TRANSFER OF WARRANT OR RESALE OF THE WARRANT SHARES. (a) The Holder, by acceptance hereof, agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder's intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company's counsel and to counsel to the original purchaser of this Warrant. If in the opinion of each such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided that an appropriate legend may be endorsed on the Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as amended (the "Act"), and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be reasonably required solely to comply with the exemptions relied upon by the Company or the Holder for the transfer or disposition of the Warrant or Warrant Shares. (b) If in the opinion of counsel referred to in this Section 9, the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 9 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Company shall promptly give written notice thereof to the Holder. 10. FRACTIONAL SHARES. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the Holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Company shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess, if any, of the Market Price of such fractional share over the proportional part of the Warrant Exercise Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price represented by such fractional share. For purposes of this Section, the term"Market Price" with respect to shares of Common Stock of any class or series means the average of the last reported sale prices or, if none, the average of the last reported closing bid and asked prices on any national securities exchange, the Nasdaq National Market, Nasdaq SmallCap Market, or NASD OTC Bulletin Board over the five (5) trading days immediately preceding the determination date. If the Company's Common Stock is not listed on a national securities exchange or quoted on Nasdaq or the OTC Bulletin Board, the Market Price shall be the average of the last reported closing bid and asked prices as reported in the "pink sheets" or other standard compilation of quotations by market makers in the over-the-counter market over the five consecutive trading days immediately prior to the determination date. In the event that no quotations are available, the "Market Price" shall be the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Company. 11. RIGHT TO CONVERT WARRANT INTO COMMON STOCK; NET ISSUANCE. In addition to any other methods of payment set forth in Section 1(a) above and in lieu of any cash payment required thereunder, unless otherwise prohibited by law, the Holder shall have the right at any time, when exercisable, and from time to time to exercise this Warrant in full or in part (i) by receiving from the Company the number of Warrant Shares equal to the number of Warrant shares otherwise issuable upon such exercise less the number of Warrant Shares having an aggregate value on the date of exercise equal to the Warrant Exercise Price multiplied by the number of Warrant Shares for which this Warrant is being exercised. For purposes hereof, the "value" of a share of Common Stock on a given date shall equal to the Market Price on such date as defined in Section 10 of this Agreement. 12. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Holder of this Warrant as follows: (a) This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law or principles at equity governing specific performance, injunctive relief and other equitable remedies; (b) The Warrant Shares have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable; and (c) The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the articles of incorporation, by-laws or other organizational documents of the Company, do not and will not contravene, in any material respect, any governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any Federal, state or local government authority or agency or other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby. 13. NOTICES. Notices and other communications provided for herein shall be in writing and may be given by mail, courier, confirmed telex or facsimile transmission and shall, unless otherwise expressly required, be deemed given when received or when delivery thereof is refused. In the case of Holder, such notices and communications shall be addressed to its address as shown on the books maintained by the Company unless Holder shall notify the Company that notices and communications should be sent to a different address (or telex or facsimile number) in which case such notices and communications shall be sent to the address (or telex or facsimile number) specified by Holder. 14. GOVERNING LAW. This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada. 15. GENERAL PROVISIONS. (a) This Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and supersedes any and all prior written or oral agreements between the parties with respect to the subject matter hereof. There are no representations, agreements, arrangements, or understandings, either written or oral, between or among the parties with respect to the subject matter hereof which are not set forth in this Agreement. (b) Each party to this Agreement agrees to perform such further acts and to execute and deliver such other and additional documents as may be reasonably necessary to carry out the provisions of this Agreement. (c) If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any of the other terms, provisions, covenants, or conditions of this Agreement, each of which shall be binding and enforceable. (d) This Agreement may not be modified, extended, renewed or substituted without an amendment or other agreement in writing signed by the parties to this Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer as the date first specified above. AMERIMMUNE PHARMACEUTICALS, INC. By:______________________________________ Name: Title: ATTEST: By:________________________________________ Name: Title: AMERIMMUNE PHARMACEUTICALS, INC. WARRANT EXERCISE NOTICE (TO BE SIGNED ONLY UPON EXERCISE OF WARRANT) The undersigned Holder of the foregoing Warrant hereby irrevocably elects to exercise the right, represented by such Warrant, to purchase ________ shares of the Common Stock, _____ par value, of AMERIMMUNE PHARMACEUTICALS, INC. and tenders herewith payment in accordance with Section 1 of said Warrant as follows: _____ shares for CASH: $ _______________________ _____ shares for CASHLESS EXERCISE (pursuant to Section 11 of the Warrant) Please deliver the stock certificate to the address set forth below. In addition, if the number of shares being purchased pursuant to this exercise is less than the all of the shares purchasable under this Warrant, please return to such address either (1) the Warrant marked to reflect the remaining balance of shares purchasable thereunder or (2) a newly issued Warrant in the name of the undersigned for such remaining balance of shares purchasable thereunder. Dated: ____________________________ Name of Warrant Holder: _______________________________________________ Tax Identification No. or Social Security No. of Warrant Holder: _________________________________ ______________________________________ (Signature) Title: NOTE: THE ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH THE NAME OF THE WARRANT HOLDER AS IT APPEARS ON THE FIRST PAGE OF THE WARRANT OR ON A DULY EXECUTED WARRANT ASSIGNMENT. AMERIMMUNE PHARMACEUTICALS, INC. WARRANT ASSIGNMENT (TO BE SIGNED ONLY UPON TRANSFER OF WARRANT) FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________________________________________________, the assignee, whose address is ______________________________________________, and whose tax identification or social security number is __________________,the right represented by the foregoing Warrant to purchase ___________________shares of the Common Stock of AMERIMMUNE PHARMACEUTICALS, INC., to which the foregoing Warrant relates and appoints ___________________ attorney to transfer said right on the books of Amerimmune Pharmaceuticals, Inc., with full power of substitution in the premises. If the number of shares assigned is less than all of the shares purchasable under the Warrant, anew Warrant will be issued in the name of the undersigned for the remaining balance of the shares purchasable thereunder. Dated: ____________________________ Name of Warrant Holder/Assignor: _______________________________________ (Please print) ______________________________________ (Signature) Title: Address of Warrant Holder/Assignor: ______________________________________ _______________________________________ _______________________________________ Tax Identification No. or Social Security No. of Warrant Holder/Assignor: _________________________________________________ NOTE: THE ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH THE NAME OF THE WARRANT HOLDER AS IT APPEARS ON THE FIRST PAGE OF THE WARRANT OR ON A DULY EXECUTED ASSIGNMENT FORM. -----END PRIVACY-ENHANCED MESSAGE-----