UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
10-Q
 
 (Mark
One)
 
 [X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
  For
the Quarterly Period Ended September 30, 2009
 
 or
 
 [
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
 For the
transition period from _______ to ________
 
 Commission
file number:000-52530
 
 Omni
Bio Pharmaceutical, Inc.
 (Exact
Name of Registrant as Specified in its Charter)
 
 Colorado
              20-8097969(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)
 
 5350
South Roslyn, Suite 400, Greenwood Village, CO  80111
 (Address
of principal executive offices, including zip code)
 
 (303)
867-3415
 (Registrant's
telephone number including area code)
 
 Indicate
by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes
[X]   No [ ]
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes[ ] No[
]
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer [  ]
              Accelerated
      filer [  ]Non-accelerated
      filer [  ]  (Do not check if a smaller reporting
      company)
              Smaller
      reporting company [X]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes
[  ]  No [X]
 
 The
number of shares outstanding of the registrant’s common stock as of October 12,
2009 was 26,794,771.
  
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
  TABLE
OF CONTENTS
  PART
I: FINANCIAL INFORMATION
  
 PageItem
      1.
              Financial
      Statements.Consolidated
      Balance Sheets – September 30, 2009 (unaudited) and March 31,
      2009
              3Consolidated
      Statements of Operations – For the three months ended September 30,
      2009
                and
      2008 (unaudited)
              4Consolidated
      Statements of Operations – For the six months ended September 30,
      2009
                and
      2008, and February 28, 2006 (Inception) through September 30, 2009
      (unaudited)
              5Consolidated
      Statements of Stockholders’ Equity (Deficit) – As of and for the
      six
                months
      ended September 30, 2009 (unaudited) and February 28, 2006
      (Inception)
                through
      September 30, 2009 (unaudited)
              6Consolidated
      Statements of Cash Flows – For the six months ended September 30,
      2009
                and
      2008, and February 28, 2006 (Inception) through September 30, 2009
      (unaudited)
              11Notes
      to Consolidated Financial Statements (unaudited)
              13Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
              27Item
      3.
              Quantitative
      and Qualitative Disclosures About Market Risk.
              33Item
      4T.
              Controls
      and Procedures.
              33
 PART
II: OTHER INFORMATION
  Item
      1.
              Legal
      Proceedings.
              34Item
      1A.
              Risk
      Factors.
              34Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds.
              35Item
      3.
              Defaults
      Upon Senior Securities.
              36Item
      4.
              Submission
      of Matters to a Vote of Security Holders.
              36Item
      5.
              Other
      Information.
              36Item
      6.
              Exhibits.
              37Signature
              
              38
  -
2 -
  Part
I.  FINANCIAL INFORMATION
  Item
1. Financial Statements.
 
 OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
BALANCE SHEETS
 
 ASSETS
              
              September
      30, 2009
              
              
              March
      31, 2009(Unaudited)Current
      assets:Cash
      and cash equivalents
              
              $
              751,198
              
              
              $
              1,805,395Other
      current assets
              
              
              27,678
              
              
              
              21,772Total
      current assets
              
              
              778,876
              
              
              
              1,827,167Property
      and equipment, net
              
              
              1,490
              
              
              
              2,250Intangible
      assets, net
              
              
              69,708
              
              
              
              72,300Total
      long-term assets
              
              
              71,198
              
              
              
              74,550TOTAL
      ASSETS
              
              $
              850,074
              
              
              $
              1,901,717LIABILITIES & STOCKHOLDERS’
      EQUITYCurrent
      liabilities:Accounts
      payable
              
              $
              115,132
              
              
              $
              282,935Amounts
      due to UCD under sponsored research agreement
              
              
              161,300
              
              
              
              321,300Accrued
      liabilities
              
              
              40,109
              
              
              
              56,817Accrued
      compensation and related benefits and taxes
              
              
              15,250
              
              
              
              211,012Amounts
      due to related parties
              
              
              29,125
              
              
              
              138,261Note
      payable – related party
              
              
              -
              
              
              
              132,000Total
      current liabilities
              
              
              360,916
              
              
              
              1,142,325Note
      payable – related party, net of discount of $9,000 and
                $15,000,
      respectively
              
              
              16,000
              
              
              
              10,000Total
      liabilities
              
              
              376,916
              
              
              
              1,152,325Commitments
      and ContingenciesStockholders’
      equity:Preferred
      stock, $0.10 par value; 5,000,000 shares authorized; -0-
      shares
                issued
      and outstanding
              
              
              -
              
              
              
              -Common
      stock, $0.001 par value; 200,000,000 shares authorized;
                26,794,771
      and 23,164,567 shares issued and outstanding, respectively
              
              
              26,794
              
              
              
              23,164Additional
      paid-in capital
              
              
              10,507,566
              
              
              
              8,186,704Deficit
      accumulated during the development stage
              
              
              (10,061,202
              )
              
              
              (7,460,476
              )Total
      stockholders’ equity
              
              
              473,158
              
              
              
              749,392TOTAL
      LIABILITIES AND STOCKHOLDERS’EQUITY
              
              $
              850,074
              
              
              $
              1,901,717
  The
accompanying notes are an integral part of these consolidated financial
statements.
  -
3 -
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (Unaudited)
 
 
 For
      the Three Months Ended
                September
      30,2009
              
              
              2008Operating
      expenses:General
      and administrative (including share-based compensation
                of
      $226,723 and $122,374, respectively)
              
              $
              444,403
              
              
              $
              201,223License
      fee – related party
              
              
              1,495,000
              
              
              
              -Research
      and development
              
              
              -
              
              
              
              80,000Total
      operating expenses
              
              
              1,939,403
              
              
              
              281,223Loss
      from operations
              
              
              (1,939,403
              )
              
              
              (281,223
              )Non-operating
      expenses:Interest
      income (expense), net
              
              
              1,099
              
              
              
              (518
              )Accretion
      expense on notes payable –  related party
              
              
              (3,000
              )
              
              
              (3,000
              )Total
      non-operating expenses
              
              
              (1,901
              )
              
              
              (3,518
              )Net
      loss
              
              $
              (1,941,304
              )
              
              $
              (284,741
              )Basic
      and diluted net loss per share
              
              $
              (0.07
              )
              
              $
              (0.02
              )Weighted
      average shares outstanding – basic and diluted
              
              
              26,589,678
              
              
              
              18,210,295
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
   -
4 -
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (Unaudited)
 
 
 For
      the Six Months Ended
                September
      30,
              
              
              February
      28, 2006 (Inception) through September 30, 20092009
              
              
              2008Operating
      expenses:General
      and administrative (including share-based
                compensation
      of $716,022, $305,512 and
                $2,181,836,
      respectively)
              
              $
              1,100,355
              
              
              $
              521,588
              
              
              $
              4,058,611License
      fee – related party
              
              
              1,495,000
              
              
              
              -
              
              
              
              1,495,000Research
      and development
              
              
              -
              
              
              
              160,000
              
              
              
              1,132,497Charge
      for common stock issued pursuant to
                license
      agreements
              
              
              -
              
              
              
              20,833
              
              
              
              763,240Total
      operating expenses
              
              
              2,595,355
              
              
              
              702,421
              
              
              
              7,449,348Loss
      from operations
              
              
              (2,595,355
              )
              
              
              (702,241
              )
              
              
              (7,449,348
              )Non-operating
      expenses:Interest
      income (expense), net
              
              
              629
              
              
              
              (522
              )
              
              
              (60,456
              )Accretion
      expense on notes payable –
                related
      party
              
              
              (6,000
              )
              
              
              (4,000
              )
              
              
              (47,125
              )Charges
      for warrants issued in merger – related parties
              
              
              -
              
              
              
              -
              
              
              
              (1,948,237
              )Charge
      for warrants issued in private placement –
                related
      parties
              
              
              -
              
              
              
              -
              
              
              
              (403,350
              )Charges
      for modifications to warrants
              
              
              -
              
              
              
              -
              
              
              
              (152,686
              )Total
      non-operating expenses
              
              
              (5,371
              )
              
              
              (4,522
              )
              
              
              (2,611,854
              )Net
      loss
              
              $
              (2,600,726
              )
              
              $
              (706,943
              )
              
              $
              (10,061,202
              )Basic
      and diluted net loss per share
              
              $
              (0.10
              )
              
              $
              (0.04
              )Weighted
      average shares outstanding – basic and diluted
              
              
              26,305,926
              
              
              
              18,208,701
  
 The
accompanying notes are an integral part of these consolidated financial
statements.
 -
5 -
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
 Preferred
      Stock
                
                
                Common
      Stock
                
                
                Additional
      Paid-in Capital
                
                
                Deficit
      Accumulated During Development Stage
                
                
                Total
      Stockholders’ Equity (Deficit)Shares
                
                
                Amount
                
                
                Shares
                
                
                AmountBalances
      at February 28, 2006 (inception)
                
                
                -
                
                
                $
                -
                
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Common
      stock issued to founders and insiders
                  (FebruaryandMarch 2006 at $0.001 per share)
                
                
                -
                
                
                
                -
                
                
                
                10,000,000
                
                
                
                10,000
                
                
                
                -
                
                
                
                -
                
                
                
                10,000Net
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (2,715
                )
                
                
                (2,715
                )Balances
      at March 31, 2006
                
                
                -
                
                
                $
                -
                
                
                
                10,000,000
                
                
                $
                10,000
                
                
                $
                -
                
                
                $
                (2,715
                )
                
                $
                7,285Common
      stock sold in private placement offering
                  (April 2006 at $0.80 per share)
                
                
                -
                
                
                
                -
                
                
                
                150,000
                
                
                
                150
                
                
                
                119,850
                
                
                
                -
                
                
                
                120,000Common
      stock issued as additional consideration pursuant
                  to
      license agreement (May 2006 at $0.001 per share)
                
                
                -
                
                
                
                -
                
                
                
                406,000
                
                
                
                406
                
                
                
                -
                
                
                
                -
                
                
                
                406Common
      stock sold in private placement offering
                  (June
      through December 2006 at $1.00 per share)
                
                
                -
                
                
                
                -
                
                
                
                340,000
                
                
                
                340
                
                
                
                339,660
                
                
                
                -
                
                
                
                340,000Common
      stock issued in exchange for consulting services
                  (November
      2006 at $1.00 per share)
                
                
                -
                
                
                
                -
                
                
                
                30,000
                
                
                
                30
                
                
                
                29,970
                
                
                
                -
                
                
                
                30,000Common
      stock issued as additional consideration pursuant
                  to
      license agreement (December 2006 and January 2007
                  at
      $0.001 per share)
                
                
                -
                
                
                
                -
                
                
                
                32,333
                
                
                
                32
                
                
                
                32,301
                
                
                
                -
                
                
                
                32,333Common
      stock purchase warrants sold to outside investors
                  (March
      2007 at $0.25 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                102,500
                
                
                
                -
                
                
                
                102,500Common
      stock purchase warrants sold to an employee
                  (March
      2007 at $0.25 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                21,250
                
                
                
                -
                
                
                
                21,250Common
      stock purchase warrants issued to an employee
                  (March
      2007 at estimated fair value of $0.12 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,925
                
                
                
                -
                
                
                
                2,925Net
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,100,673
                )
                
                
                (1,100,673
                )Balances
      at March 31, 2007
                
                
                -
                
                
                $
                -
                
                
                
                10,958,333
                
                
                $
                10,958
                
                
                $
                648,456
                
                
                $
                (1,103,388
                )
                
                $
                (443,974
                )
  -
6 -
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
 
 Preferred
      Stock
                
                
                Common
      Stock
                
                
                Additional
      Paid-in Capital
                
                
                Deficit
      Accumulated During Development Stage
                
                
                Total
      Stockholders’ Equity (Deficit)Shares
                
                
                Amount
                
                
                Shares
                
                
                AmountCommon
      stock purchase warrants sold to an employee
                  (April
      2007 at $0.25 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                1,250
                
                
                
                -
                
                
                
                1,250Common
      stock sold in private placement offerings (May
                  andJune
      2007 at $1.00 per share)
                
                
                -
                
                
                
                -
                
                
                
                257,500
                
                
                
                257
                
                
                
                231,493
                
                
                
                -
                
                
                
                231,750Common
      stock issued as additional consideration pursuant
                  tolicense
      agreement (June 2007 at $1.00 per share)
                
                
                
                
                
                
                
                
                
                
                10,729
                
                
                
                11
                
                
                
                10,718
                
                
                
                -
                
                
                
                10,729Common
      stock purchase warrants issued to a director
                  (June
      2007 at estimated fair value of $0.73 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                21,915
                
                
                
                -
                
                
                
                21,915Common
      stock purchase warrants issued in exchange for
                  consulting
      services (June 2007 at estimated fair value
                  of
      $0.98 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                490,150
                
                
                
                -
                
                
                
                490,150Common
      stock purchase warrants issued in exchange for
                  consulting
      services (June 2007 at estimated fair value
                  of
      $0.60 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                18,033
                
                
                
                -
                
                
                
                18,033Common
      stock purchase warrants issued to an employee
                  (July
      2007 at estimated fair value of $0.73 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                109,680
                
                
                
                -
                
                
                
                109,680Common
      stock purchase warrants issued in exchange for
                  consulting
      services (March 2008 at estimated fair value
                  of
      $0.88 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                52,860
                
                
                
                -
                
                
                
                52,860Common
      stock purchase warrants exercised (March 2008
                  at
      $0.02 per share)
                
                
                -
                
                
                
                -
                
                
                
                500,000
                
                
                
                500
                
                
                
                9,500
                
                
                
                -
                
                
                
                10,000Contributed
      rent
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                10,080
                
                
                
                -
                
                
                
                10,080Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,812,567
                )
                
                
                (1,812,567
                )Common
      stock issued in reverse merger (March 2008)
                
                
                -
                
                
                
                -
                
                
                
                6,462,900
                
                
                
                6,463
                
                
                
                931,778
                
                
                
                -
                
                
                
                938,241Balances
      at March 31, 2008
                
                
                -
                
                
                $
                -
                
                
                
                18,189,462
                
                
                $
                18,189
                
                
                $
                2,535,913
                
                
                $
                (2,915,955
                )
                
                $
                (361,853
                )
  -
7 -
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
 
 Preferred
      Stock
                
                
                Common
      Stock
                
                
                Additional
      Paid-in Capital
                
                
                Deficit
      Accumulated During Development Stage
                
                
                Total
      Stockholders’ Equity (Deficit)Shares
                
                
                Amount
                
                
                Shares
                
                
                AmountCommon
      stock issued as additional consideration pursuant
                  tolicense
      agreement (April 2008 and March 2009 at
                  $1.00
      per share)
                
                
                -
                
                
                
                -
                
                
                
                719,772
                
                
                
                720
                
                
                
                719,052
                
                
                
                -
                
                
                
                719,772Share-based
      compensation related to common stock
                  purchasewarrants
      issued to directors (April through
                  October 2008 atestimated
      weighted-average fair
                  value of $0.80 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                550,555
                
                
                
                -
                
                
                
                550,555Convertible
      note payable and common stock purchase
                  warrants
      issued to a related party (May 2008 at estimated
                  fair
      value of $0.50 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                25,000
                
                
                
                -
                
                
                
                25,000Note
      payable and common stock purchase warrants issued
                  to
      a related party (October 2008 at estimated fair
                  value
      of $0.31 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                31,125
                
                
                
                -
                
                
                
                31,125Modification
      to previously issued common stock purchase
                  warrants
      to a related party (November 2008 at estimated
                  fair
      value of $0.09 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,696
                
                
                
                -
                
                
                
                1,696Modifications
      to previously issued common stock
                  purchase
      warrants to outside investors (January 2009 at
                  weighted
      average estimated fair value of $0.28 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                148,155
                
                
                
                -
                
                
                
                148,155Share-based
      compensation related to modifications to
                  previously
      issued common stock purchase warrants
                  (March
      2009 at estimated fair value of $0.62 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                79,696
                
                
                
                -
                
                
                
                79,696Share-based
      compensation related to common shares issued
                  as
      part of settlement agreements with former employees
                  (March
      2009 at $1.00 per share)
                
                
                -
                
                
                
                -
                
                
                
                110,000
                
                
                
                110
                
                
                
                109,890
                
                
                
                -
                
                
                
                110,000Common
      stock issued in private placement offering, net
                  of
      offering costs of $ 112,200 (March 2009 at $1.00
                  per
      unit)
                
                
                -
                
                
                
                -
                
                
                
                1,870,000
                
                
                
                1,870
                
                
                
                1,755,930
                
                
                
                -
                
                
                
                1,757,800
  -
8 -
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
 
 Preferred
      Stock
                
                
                Common
      Stock
                
                
                Additional
                  Paid-in
                  Capital
                
                
                Deficit
      Accumulated During Development Stage
                
                
                Total
      Stockholders’ Equity (Deficit)Shares
                
                
                Amount
                
                
                Shares
                
                
                AmountCommon
      stock purchase warrants issued in merger to
                  relatedparties
      (March 2009 at weighted average
                  estimated fairvalue
      of $1.00 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,948,237
                
                
                
                -
                
                
                
                1,948,237Common
      stock purchase warrants issued in private
                  placementto
      related parties (March 2009 at
                  weighted averageestimated
      fair value of
                  $0.80 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                403,350
                
                
                
                -
                
                
                
                403,350Contributed
      rent
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                5,880
                
                
                
                
                
                
                
                5,880Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (4,544,521
                )
                
                
                (4,544,521
                )Common
      stock issued in reverse merger
                
                
                -
                
                
                
                -
                
                
                
                2,275,333
                
                
                
                2,275
                
                
                
                (127,775
                )
                
                
                
                
                
                
                (125,500
                )Balances
      at March 31, 2009
                
                
                -
                
                
                $
                -
                
                
                
                23,164,567
                
                
                $
                23,164
                
                
                $
                8,186,704
                
                
                $
                (7,460,476
                )
                
                $
                749,392Conversion
      of related party note payable into
                  common stock(April
      2009 at $0.22 per share)
                
                
                -
                
                
                
                -
                
                
                
                600,000
                
                
                
                600
                
                
                
                131,400
                
                
                
                -
                
                
                
                132,000Common
      stock purchase warrants exercised for
                  cash byrelated
      parties (June 2009; 200,000 at
                  $0.01 pershare
      and 1,175,356 at $0.001 per share)
                
                
                -
                
                
                
                -
                
                
                
                1,375,356
                
                
                
                1,375
                
                
                
                1,800
                
                
                
                -
                
                
                
                3,175Common
      stock purchase warrants exercised cashless
                  (May
      and June 2009 at weighted average exercise
                  priceof
      $1.10 per share)
                
                
                -
                
                
                
                -
                
                
                
                126,097
                
                
                
                126
                
                
                
                (126
                )
                
                
                -
                
                
                
                -Share-based
      compensation related to common stock
                  purchasewarrants
      (April 2009 at estimated
                  weighted-average fairvalue
      of $0.87 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                238,787
                
                
                
                -
                
                
                
                238,787Common
      stock purchase warrants exercised for cash
                  byrelated
      parties (July and August 2009 at
                  $0.001 per share)
                
                
                -
                
                
                
                -
                
                
                
                774,644
                
                
                
                775
                
                
                
                -
                
                
                
                -
                
                
                
                775
  -
9 -
  OMNI
BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
 
 Preferred
      Stock
                
                
                Common
      Stock
                
                
                Additional
      Paid-in Capital
                
                
                Deficit
      Accumulated During Development Stage
                
                
                Total
      Stockholders’ Equity(Deficit)Shares
                
                
                Amount
                
                
                Shares
                
                
                AmountCommon
      stock purchase warrants exercised cashless by
                  related
      parties (July through September 2009 at
                  weighted
      average exercise price of $0.47 per share)
                
                
                -
                
                
                
                -
                
                
                
                485,387
                
                
                
                485
                
                
                
                (485
                )
                
                
                -
                
                
                
                -Common
      stock purchase warrants exercised cashless
                  (August
      and September 2009 at weighted average
                  exerciseprice
      of $1.10 per share)
                
                
                -
                
                
                
                -
                
                
                
                268,720
                
                
                
                269
                
                
                
                (269
                )
                
                
                -
                
                
                
                -Share-based
      compensation related to common stock
                  purchasewarrants
      (July and August 2009 at
                  estimatedweighted
      average fair value of $2.51 per share)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                477,235
                
                
                
                -
                
                
                
                477,235Common
      stock purchase warrant issued to related party for
                  license
      fee
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,470,000
                
                
                
                -
                
                
                
                1,470,000Contributed
      rent
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,520
                
                
                
                -
                
                
                
                2,520Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                (2,600,726
                )
                
                
                (2,600,726
                )Balances
      at September 30, 2009 (Unaudited)
                
                
                -
                
                
                
                -
                
                
                
                26,794,771
                
                
                $
                26,794
                
                
                $
                10,507,566
                
                
                $
                (10,061,202
                )
                
                $
                473,158
                )
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  -
10 -
  OMNI BIO
PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 For
      the Six Months Ended
                September
      30,
              
              
              February
      28, 2006 (Inception) Through
                September
      30, 20092009
              
              
              2008CASH FLOWS FROM OPERATING
      ACTIVITIES:Net
      loss
              
              $
              (2,600,726
              )
              
              $
              (706,943
              )
              
              $
              (10,061,202
              )Adjustments
      used to reconcile net loss to net cash used in
                operating
      activities:Charge
      for warrant issued for purchase of license –
                related
      party
              
              
              1,470,000
              
              
              
              -
              
              
              
              1,470,000Common
      stock issued pursuant to license agreements
              
              
              -
              
              
              
              20,833
              
              
              
              763,240Share-based
      compensation
              
              
              716,022
              
              
              
              305,812
              
              
              
              2,181,836Accretion
      expense – related parties
              
              
              6,000
              
              
              
              4,000
              
              
              
              47,125Charge
      for warrants issued in merger transaction -
                related
      parties
              
              
              -
              
              
              
              -
              
              
              
              1,948,237Charge
      for warrants issued in private placement transaction
                -
      related parties
              
              
              -
              
              
              
              -
              
              
              
              403,350Charges
      for modifications to warrants
              
              
              -
              
              
              
              -
              
              
              
              152,686Depreciation
      and amortization
              
              
              3,352
              
              
              
              1,931
              
              
              
              13,679Contributed
      rent
              
              
              2,520
              
              
              
              3,361
              
              
              
              18,480Loss
      on disposal of equipment
              
              
              -
              
              
              
              -
              
              
              
              2,444Changes
      in operating assets and liabilities:Other
      current assets
              
              
              (5,906
              )
              
              
              -
              
              
              
              (29,777
              )Accounts
      payable
              
              
              (167,803
              )
              
              
              33,759
              
              
              
              271,327Amounts
      due to UCD under sponsored research
                agreement
              
              
              (160,000
              )
              
              
              160,000
              
              
              
              161,300Accrued
      liabilities and accrued compensation and related
                benefits
      and taxes
              
              
              (212,470
              )
              
              
              106,121
              
              
              
              (256,465
              )Amounts
      due to related parties
              
              
              (109,136
              )
              
              
              31,190
              
              
              
              233,007Net
      cash used in operating activities
              
              
              (1,058,147
              )
              
              
              (39,936
              )
              
              
              (2,680,733
              )CASH FLOWS FROM INVESTING
      ACTIVITIES:Cash
      proceeds from reverse merger transactions
              
              
              -
              
              
              
              -
              
              
              
              11,750Purchase
      of licenses
              
              
              -
              
              
              
              -
              
              
              
              (35,401
              )Purchase
      of property and equipment
              
              
              -
              
              
              
              -
              
              
              
              (7,423
              )Net
      cash used in investing activities
              
              
              -
              
              
              
              -
              
              
              
              (31,074
              )CASH FLOWS FROM FINANCING
      ACTIVITIES:Proceeds
      from the sale of common stock
              
              
              -
              
              
              
              -
              
              
              
              2,499,055Proceeds
      from the issuance of notes payable to related
                party
              
              
              -
              
              
              
              25,000
              
              
              
              825,000Proceeds
      from the sale of common stock warrants
              
              
              -
              
              
              
              -
              
              
              
              125,000Proceeds
      from the exercise of common stock warrants
              
              
              3,950
              
              
              
              -
              
              
              
              13,950Net
      cash provided by financing activities
              
              
              3,950
              
              
              
              25,000
              
              
              
              3,463,005Net
      increase (decrease) in cash and cash equivalents
              
              
              (1,054,197
              )
              
              
              (14,936
              )
              
              
              751,198Cash
      and cash equivalents at beginning of period
              
              
              1,805,395
              
              
              
              17,309
              
              
              
              -Cash
      and cash equivalents at end of period
              
              $
              751,198
              
              
              $
              2,373
              
              
              $
              751,198
 
  -
11 -
  OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (continued)
 (Unaudited)
 
 For
      the Six Months Ended
                September
      30,
              
              
              February
      28, 2006 (Inception) Through September 30, 20092009
              
              
              2008SUPPLEMENTAL DISCLOSURES OF CASH
      FLOW
                INFORMATION:Cash
      paid for:Interest
              
              $
              1,750
              
              
              $
              -
              
              
              $
              1,750Income
      taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              -SUPPLEMENTAL DISCLOSURES OF
      NON-CASH
                INVESTING AND FINANCING
      ACTIVITIES:Note
      payable – related party converted to common stock
              
              $
              132,000
              
              
              $
              -Issuance
      of common stock pursuant to cashless exercises
                of
      warrants
              
              $
              880
              
              
              $
              -Discount
      on convertible note - related party
              
              $
              -
              
              
              $
              25,000
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
  -
12 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  NOTE
1 - ORGANIZATION AND GOING CONCERN
 
 Organization
 
 Omni Bio
Pharmaceutical, Inc. is the successor company of Across America Financial
Services, Inc. (“Across America”), which was incorporated under Colorado law on
December 1, 2005 as a wholly-owned subsidiary of Across America Real Estate
Corp. Across America intended to act as a mortgage broker for commercial real
estate transactions.  However, no revenues were generated from this
business.
 
 On March
31, 2009, Across America completed the acquisition of Apro Bio Pharmaceutical
Corporation (“Apro Bio”) pursuant to the terms of the Agreement of Merger and
Plan of Reorganization, as amended (the "Merger") among Across America, Apro Bio
and Across America Acquisition Corp. (“AAAC”), a Colorado corporation and a
wholly-owned subsidiary of Across America.  Under the terms of the
Merger, AAAC was merged into Apro Bio and Apro Bio became a wholly-owned
subsidiary of Across America.  On May 27, 2009, Across America changed
its name to Omni Bio Pharmaceutical, Inc. (“Omni”). The Merger was accounted for
as a reverse acquisition with Apro Bio being treated as the acquirer for
accounting purposes.  Accordingly, for all periods presented, the
financial statements of Apro Bio have been adopted as the historical financial
statements of Omni. See further discussion in Note 2.
 
 On March
31, 2008, Apro Bio was formed from the merger of Apro Bio Pharmaceutical
Corporation (“Apro Utah”) and Maxcure Pharmaceutical, Inc. (“Maxcure”), with
Maxcure being the surviving legal corporation and Apro Bio the deemed acquirer
for accounting purposes.  See further discussion in Note
2.
 
 Apro Utah
was originally incorporated under the laws of the state of Utah on February 28,
2006 for the purpose of advancing the underlying licensed scientific art to
attain the ability to sell treatments and/or countermeasures commercially to the
Federal Government related to bacterial infections. Maxcure was formed as a
Colorado corporation on December 26, 2006 for the purpose of entering into a
license agreement with the University of Colorado Denver (“UCD”), formerly known
as the University of Colorado Health Science Center (“UCHSC”) and to pursue a
research agreement with UCD to further scientific study on using FDA-approved
pharmaceuticals in novel methods for treatment of bacterial
infection.
 
 Nature of
Operations
 
 Except as
the context otherwise requires, the terms "Company," "we," "our" or "us" means
Omni and its wholly-owned subsidiary, Omni Bio Operating, Inc. (“Omni
Bio”).
 
 From
inception, we have been engaged in the sponsoring of research and development
programs conducted by UCD and one other academic/research
institution.  Pursuant to two existing license agreements with the
Regents of the University of Colorado (“RUC”), we have entered into one
Sponsored Research Agreement (“SRA”) related to a pending patent for the
treatment of bacterial infection utilizing Alpha 1-Antitrypsin (“AAT”) dated May
15, 2006, and are obligated to enter into additional SRAs under our license
agreement dated March 31, 2008 for methods of use of an issued patent related to
the treatment of HIV (human immunodeficiency virus).  On November 12,
2008, we executed a third license agreement with RUC, which involves patent
applications for methods of use of AAT for potential use in organ/graft
transplantation rejection.  We are also obligated to enter into an
additional SRA under this license agreement.  To date, we have not
generated any revenues from our operations.
 
 Basis of
Presentation
 
 The
accompanying unaudited consolidated financial statements are comprised of Omni
and its wholly-owned subsidiary, Omni Bio, and have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission (“SEC”).
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”) have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, the
unaudited consolidated financial statements have been prepared on the same basis
as the annual audited consolidated financial statements, and reflect all
adjustments, consisting only of normal, recurring adjustments, necessary for a
fair presentation in accordance with US GAAP. The results of operations for
interim periods presented are not necessarily indicative of the operating
results for the full year. These unaudited consolidated financial statements
should be read in connection with the audited consolidated financial statements
and notes thereto included in our Annual Report on Form 10-K for the fiscal year
ended March 31, 2009 (the “2009 10-K”).  The balances as of March 31,
2009 are derived from our audited consolidated balance sheet.
  -
13 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  
 
 Going
Concern
 
 The
accompanying financial statements have been prepared in conformity with US GAAP,
which contemplate our continuation as a going concern, whereby the realization
of assets and liquidation of liabilities are in the ordinary course of
business. We are currently in the development stage as we have not realized
any revenue since inception. Activities have included: raising capital;
reorganizations and mergers; and obtaining various rights, license agreements
and a research and development agreement. We have incurred net losses since
inception, and as of September 30, 2009, had a deficit accumulated from
inception of $10.1 million, which included total non-cash charges from inception
of approximately $7.0 million. These conditions raise substantial doubt as to
our ability to continue as a going concern. These financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities that might
be different should we be unable to continue as a going concern.
 
 Management
recognizes that we must likely generate additional cash resources by December
31, 2009 to enable us to continue operations. We intend to raise additional
financing through equity financings or through other means that we deem
necessary.  However, there is no assurance that we will be successful
in raising additional capital on acceptable terms or at all. Further, even if we
raise additional capital, there is no assurance that we will achieve
profitability or positive cash flow in the near term or at all. If we are unable
to raise additional capital and ultimately unable to achieve profitable
operations and positive cash flows, we will not be able to meet our obligations
and may have to cease operations.
 
 Codification of US
GAAP
 
 In June
2009, the Financial Accounting Standards Board (the “FASB”) issued Statement No.
168, TheFASB Accounting Standards
CodificationTMand the Hierarchy of Generally
Accepted Accounting Principles—a replacement of FASB Statement No. 162,
hereafter referred to as Accounting Standards Codification
(the “Codification,” or “ASC Topic 105”).  ASC Topic 105 is the
sole source of authoritative U.S. GAAP recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative US GAAP
for SEC registrants. The Codification supersedes all then-existing non-SEC
accounting and reporting standards. All other nongrandfathered non-SEC
accounting literature not included in the Codification are nonauthoritative.
Following the adoption of the Codification, the FASB will issue Accounting
Standards Updates, which the FASB will not consider as authoritative in their
own right, but which will serve only to update the Codification, provide
background information about the guidance, and provide the bases for conclusions
on the change(s) in the Codification. We adopted ASC Topic 105 effective with
our consolidated financial statements as of September 30, 2009.  The
adoption of ASC Topic 105 did not have a material impact on our consolidated
financial statements.
 
 Share-based
Compensation
 
 We
account for share-based compensation under FASB ASC Topic 718 Compensation – Stock
Compensation (“ASC Topic 718”).  ASC Topic 718 requires the
recognition of equity-based payments to employeesin the
financial statements and is measured based on the estimated fair value of the
award on the grant date.  ASC Topic 718 also requires the stock option
or stock purchase warrant compensation expense to be recognized over the period
during which an employee is required to provide service in exchange for the
award (generally the vesting period). We
estimated the fair value of each stock option or stock purchase warrant at the
grant date by using the Black-Scholes option pricing model. See Note 7 for
additional disclosures.
  -
14 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  
 Earnings (Loss) per
Share
 
 Basic
earnings (loss) per share is computed based on the weighted average number of
common shares outstanding during the period presented.  In addition to
common shares outstanding, and in accordance with FASB ASC Topic 260 Earnings per Share, any
shares issuable for little or no cash consideration are considered outstanding
shares and are included in the calculation of the weighted average number of
common shares. Accordingly, for the six months ended September 30, 2009, the
weighted average number of common shares outstanding included 200,000 and
2,150,000 shares issuable under outstanding common stock purchase warrants
(“warrants”) that were immediately exercisable at $0.01 and $0.001,
respectively.
 
 Diluted
earnings (loss) per share is computed using the weighted-average number of
common shares outstanding plus the number of common shares that would be issued
assuming exercise or conversion of all potentially dilutive common shares had
been issued. Potentially dilutive securities are excluded from the calculation
when their effect would be anti-dilutive. For all periods presented in these
consolidated financial statements, all potentially dilutive securities have been
excluded from the diluted share calculations as they were anti-dilutive as a
result of the net losses incurred for the respective
periods.  Accordingly, basic shares equal diluted shares for all
periods presented.  For the three and six months ended September 30,
2009, potentially dilutive securities were comprised of 9,730,500 common stock
purchase warrants and 25,000 shares issuable upon conversion of a note
payable.  For the three and six months ended September 30, 2008,
potentially dilutive securities were comprised of 1,050,000 common stock
purchase warrants and 25,000 shares issuable upon conversion of a note
payable.
 
 Recently Issued Accounting
Pronouncements (Not Effective as of the Date of Adoption of the FASB
Codification)
 
 The
following FASB accounting standards shall remain authoritative until such time
that each is integrated into the Codification:(1) FASB Statement No. 166, Accounting for Transfers of
Financial Assets - an amendment of FASB Statement No. 140(“FAS 166”) andFASB Statement No. 167, Amendments to FASB Interpretation
No. 46(R)(“FAS 167”)
 
 In June
2009, the FASB issued FAS 166.  The objective of FAS 166 is to improve
the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets. FAS 166 is effective for
fiscal years beginning after November 15, 2009, for interim periods within that
first annual reporting period and for interim and annual reporting periods
thereafter. Earlier application is prohibited.  FAS 166 must be
applied to transfers occurring on or after the effective date.  The
adoption of this statement is not expected to have a material impact on our
consolidated financial statements.
 
 In June
2009, the FASB issued FAS 167.  The objective of FAS 167 is to improve
financial reporting by enterprises involved with variable interest entities, in
particular to address:  (1) the effects on certain provisions of FASB
ASC Topic 810 (“ASC Topic 810”),as a result of the
elimination of the qualifying special-purpose entity concept in FAS 166 and (2)
constituent concerns about the application of certain key provisions of ASC
Topic 810, including those in which the accounting and disclosures do not always
provide timely and useful information about an enterprise’s involvement in a
variable interest entity. This Statement is effective for fiscal years beginning
after November 15, 2009, for interim periods within that first annual reporting
period, and for interim and annual reporting periods thereafter.  Earlier
application is prohibited.  The adoption of this statement is not
expected to have a material impact on our consolidated financial
statements.
  -
15 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  NOTE
2 - MERGER TRANSACTIONS
 
 Apro Utah and Maxcure
Merger
 
 On March
31, 2008, Apro Utah and Maxcure completed a merger with Maxcure continuing as
the surviving legal entity under the name of Apro Bio.  The purpose of
the merger was primarily one of synergies between the two companies in their
efforts to continue funding sponsored research under their existing licensing
relationships with UCD.
 
 Under
this merger, Maxcure issued to Apro Utah stockholders 11,726,562 of its common
shares in exchange for all of the issued and outstanding shares of Apro Utah.
Upon completion of the merger, former Apro Utah stockholders held 11,726,562
common shares (or approximately 64%) of the total 18,189,642 common shares
issued and outstanding of Maxcure, and former Maxcure stockholders held
6,462,900 common shares (or approximately 36%). As a result of this majority
ownership, Apro Utah was deemed the acquirer for accounting purposes and its
historical financial statements have been adopted and presented for all periods
in this report.
 
 In
exchange for the issuance of its shares, Maxcure cancelled debt due from Apro
Utah of $938,241 comprised of $804,692 of promissory notes and related accrued
interest and other intercompany amounts of approximately $133,549. Also,
warrants held by Maxcure stockholders to purchase 600,000 shares of Apro Utah
were cancelled.  Warrants to purchase 1,052,500 shares of Apro Utah
common stock were converted to an equivalent number of warrants in the merged
entity. Warrants to purchase 130,000 shares of Maxcure stock held by existing
Maxcure stockholders were retained in the merged entity.
 
 Assets
acquired and liabilities assumed of Maxcure by Apro Utah on March 31, 2008 based
on their estimated fair values were as follows:
 
 Cash
              
              $
              6,750Other
      current assets
              
              
              272Property
      and equipment
              
              
              1,524Licenses
              
              
              22,972Accounts
      payable
              
              
              (31,518
              )Net
      assets acquired
              
              $
              -
 
 Amounts
assigned to licenses relate to respective patent filings made by UCD and are
subject to amortization commensurate with the estimated patent
life.  The net unamortized amount of each license was deemed to be the
fair value and was recorded at the date of the merger.
 
 Apro Bio and Across America
Merger
 
 On March
31, 2009 and pursuant to a merger (the “Merger”) among Across America, a
non-operating public shell corporation, Apro Bio and AAAC, a wholly-owned
subsidiary of Across America, Apro Bio was merged into Across America, with
Across America being the surviving legal entity. The primary reasons for the
Merger were to create an entity which allowed Apro Bio additional opportunities
to raise capital to further its development efforts with UCD and to provide Apro
Bio and Across America investors a long-term, public trading market for their
common stock.  Across America issued a total of 18,210,295 shares of
its common stock to the stockholders of Apro Bio in exchange for all of the
issued and outstanding common stock of Apro Bio. Warrants to purchase 1,957,500
shares of Apro Bio common stock were converted to an equivalent number of
warrants in Across America. A warrant to purchase 200,000 shares of Across
America stock held by an existing Across America stockholder was retained as
part of the Merger. This warrant was exercised on June 29, 2009.  In
addition, a note, convertible into 25,000 shares of the common stock of Apro
Bio, was converted into a note convertible into 25,000 shares of Across
America’s common stock on the same terms and conditions.
  -
16 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  After the
consummation of the Merger, the former Apro Bio stockholders held approximately
91% of the issued and outstanding shares of Across America. As a result of this
majority ownership, Apro Bio was deemed the acquirer for accounting purposes,
and the transaction was accounted for as a reverse acquisition. Further, we
followed the current guidance of the SEC related to reverse mergers between a
private company and a public shell company, and considered the reverse merger as
equivalent to a reverse recapitalization. Accordingly, we recorded no goodwill
in the Merger.
 
 Assets
acquired and liabilities assumed of Across America by Apro Bio on March 31, 2009
based on their estimated fair values were as follows:
 
 Cash
              
              $
              5,000Other
      current assets
              
              
              1,500Note
      payable – related party
              
              
              (132,000
              )Net
      liabilities assumed
              
              $
              (125,500
              )
 
 For all
periods presented, the financial statements of Apro Bio have been adopted as the
historical financial statements of Omni. On May 27, 2009, we changed our name to
Omni Bio Pharmaceutical, Inc.
 
 As a
condition to the Merger, Apro Bio authorized the issuance of a warrant to an
affiliate of Across America to purchase 200,000 shares of Apro Bio’s common
stock at an exercise price of $0.001 per share. This warrant was exercised on
June 29, 2009.  In connection with the Merger, Across America paid an
advisor fee to Bathgate Capital Partners, LLC (“BCP”) in the form of a warrant
to purchase 1,750,000 shares of its common stock at an exercise price of $0.001
per share (the “Advisor Warrants”).  During the six months ended
September 30, 2009, all of the Advisor Warrants were exercised and we issued
1,750,000 shares of our common stock pursuant to those exercises.
 
 The
warrants issued in the Merger (the“Merger Warrants”) were valued using the
Black-Scholes model with the following assumptions: exercise price of $0.001 per
share, stock price of $1.00, expected life of five years (representing the full
contractual term as prescribed by the SEC for investor warrants), expected
volatility of 100%, risk-free interest rate of 1.82% (commensurate with the
expected life) and dividend yield of 0%.  The total amount of the
charges recorded for the Merger Warrants was $1,948,237.
 
 We
evaluated the Merger Warrants as potential free standing derivatives under the
criteria in FASB ASC Topic 815 Derivatives and Hedging (“ASC
Topic 815”), which requires that a contract issued by a reporting entity be
accounted for as a derivative unless it is both (1) indexed to its own stock and
(2) classified in stockholders’ equity in its statement of financial position.
We concluded that the Merger Warrants were indexed to the Company’s own stock
and should be classified in stockholders’ equity and would qualify for the scope
exception contained in ASC Topic 815.  As further required, we
reviewed the requirements for equity classification contained in ASC Topic 815,
and concluded that all of the criteria had been met and that equity
classification was appropriate.
 
 Warrant
Modifications
 
 On
January 14, 2009, our board of directors (the “Board”) unanimously authorized
the extension from March 31, 2010 to March 31, 2012 of 500,000 warrants that
were previously issued to investors. The Board concluded that these warrants
would expire prior to the expiration of lockup agreements required by Across
America in conjunction with the Merger.  The warrants that were
extended by this resolution are exercisable at $1.10 per share, and include
80,000 warrants purchased by an outside director of the Company and 5,000
warrants purchased by the former CEO, President and director of the
Company.
 
 Also
extended were 257,500 warrants issued to two unaffiliated investors that are
exercisable at $1.00 per share, of which 250,000 were extended from May 10, 2010
to May 10, 2012 and 7,500 were extended from June 6, 2010 to June 6,
2012.  Additionally, 30,000 warrants that were originally issued to a
consultant and exercisable at $1.00 per share were extended from May 10, 2010 to
May 10, 2012.
  -
17 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  
 We
accounted for these extensions as modifications to the original warrant grants
as outlined in ASC Topic 718.  For the year ended March 31, 2009, we
recorded a non-cash charge of $148,155 related to the investor warrants and
share-based compensation of $25,843 related to the employee and consultant
warrants, calculated as the difference between the estimated fair value of the
warrant immediately prior to the modification and the estimated fair value of
the warrant after the modification.  Both values were calculated using
the Black-Scholes model, with the revised exercise price and expected life of
the warrant being the only change in the assumptions.
 
 
 NOTE
3 – PRIVATE PLACEMENT
 
 In
conjunction with the Merger and also on March 31, 2009, we closed a private
placement securities offering (the “Private Placement”) to four accredited
investors. We issued units, consisting of one share of our common stock, a
warrant to purchase one-half a share of our common stock at an exercise price of
$0.25 per share (two warrants must be exercised to purchase one share of common
stock), two warrants to purchase two shares of our common stock (one warrant
purchases one share of common stock) at an exercise price of $0.50 per share and
a warrant to purchase one share of our common stock at an exercise price of
$1.00 per share (the “Units”). We sold the Units at a price of $1.00 per Unit
and issued 1,870,000 Units for gross cash proceeds of $1,820,000 and the
conversion of a note payable to a related party of $50,000.  The
warrants (the “Investor Warrants”) issued to investors in the Private Placement
expire March 31, 2014.
 
 The
Investor Warrants that are exercisable at $0.25 and $0.50 per share are callable
(the “Warrant Call”) through March 31, 2014 at our option. We may execute the
Warrant Call by giving to the warrant holder a notice of call upon 20 days
written notice (the "Call Notice"). A Call Notice may be given by the Company
only within 10 days after our common stock has had a closing price of not less
than $2.50 per share for 20 out of 30 consecutive trading days with trading
volume in excess of 50,000 shares per day for that period of days.
 
 In
connection with the offering, we paid to BCP a placement agent fee comprised of
$112,200 in cash and a warrant to purchase 56,100 shares of our common stock at
an exercise price of $0.25 per share, a warrant to purchase 224,400 shares of
our common stock at $0.50 per share, and a warrant to purchase 224,400 shares of
our common stock at $1.00 per share. We recorded a charge related to the
issuance of these warrants (the “Placement Agent Warrants”) in the amount of
$403,350 as calculated using the Black-Scholes model.
 
 We
evaluated both the Investor Warrants and the Placement Agent Warrants
(collectively, the “Private Placement Warrants”) as potential free standing
derivatives under the criteria in ASC Topic 815, which requires that a contract
issued by a reporting entity be accounted for as a derivative unless it is both
(1) indexed to its own stock and (2) classified in stockholders’ equity in its
statement of financial position.  We concluded that the Private
Placement warrants were indexed to the Company’s own stock and should be
classified in stockholders’ equity and would qualify for the scope exception
contained in ASC Topic 815.  As further required, we reviewed the
requirements for equity classification contained in ASC Topic 815, and concluded
that all of the criteria had been met and that equity classification was
appropriate.
 
 A summary
of the warrants issued in the Merger and the Private Placement is as
follows:
 
 Number
      of Warrants
              
              Exercise
      Price
              
              Estimated
      Fair Value Charge Recorded1,950,000
              
              $
      0.001
              
              $       1,948,237991,100
              
              $   0.25
              
              49,8423,964,400
              
              $   0.50
              
              185,7842,094,400
              
              $   1.00
              
              167,9048,999,900
              
              
              
              $      2,351,767
 
  -
18 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  
 NOTE
4– RELATED PARTIES AND DEBT OBLIGATIONS
 
 Convertible Note Payable –
Related Party
 
 On May
30, 2008, we entered into a $25,000 unsecured, convertible debenture agreement
with the spouse of a director and related party (the “Bathgate Note”). The
Bathgate Note bears interest at 6%, is convertible into our common stock at
$1.00 per share and matures June 30, 2010. As additional consideration, we
issued a warrant to purchase 50,000 shares of our common stock at $1.00 per
share (the “Bathgate Warrant”), which expires on June 30,
2013.  In addition, this warrant included a reset provision, which
provided, that if we issued a similar security with common stock purchase
warrants exercisable below $1.00 per share, the exercise price would be reduced
to the lower price. This reset provision pertained to any new investment made
prior to December 31, 2008 and expired effective with the completion of the
Private Placement.
 
 We
concluded that the Bathgate Note met the definition of “conventional convertible
debt,” as defined in ASC Topic 815, as the note holder may only realize the
value of the conversion option by converting the note and receiving the entire
proceeds in a fixed number of shares or the equivalent amount of cash (at the
discretion of the Company).  Further, we concluded that the conversion
option of the Bathgate Note represented an embedded derivative as defined in ASC
Topic 815 and was indexed to the Company’s common stock.Therefore, we concluded
that the conversion feature of the Bathgate note did not meet the definition of
a derivative under ASC Topic 815 and did not require separate accounting from
the debt instrument.
 
 In
accordance with FASB ASC Topic 470-20, Debt with Conversion and Other
Options (“ASC Topic 470-20”), we allocated the cash
proceeds received to both the Bathgate Note and Bathgate Warrants based on
relative fair values of each. We valued  the warrant using the
Black-Scholes model with the following assumptions:  exercise price of
$1.00 per share, stock price of $1.00, expected life of five years (representing
the full contractual term as prescribed by the SEC for investor warrants),
expected volatility of 95%, risk-free interest rate of 2.45% (commensurate with
the expected life) and dividend yield of 0%. The value assigned to the Bathgate
Warrant was $14,830 and was credited to additional paid-in capital with a
corresponding debt discount recorded as a reduction to the Bathgate
Note.
 
 We
further concluded that the conversion feature in the Bathgate Note met the
definition of a “beneficial conversion feature” as outlined in ASC Topic
470-20.  The amount of proceeds allocated to the Bathgate Note was
$10,170 (calculated as the $25,000 principal less the discount related to the
value assigned to the Bathgate Warrants of $14,830 per above), which resulted in
an effective conversion price of $0.41 per share and an intrinsic value of $0.59
per share (calculated as $1.00 conversion price less $0.41 effective conversion
price). Therefore, the value assigned to the beneficial conversion feature was
$10,170, which represented the initial amount allocated to the Bathgate Note,
and was recorded as an additional debt discount to the note with a corresponding
credit to additional paid-in capital. In accordance with ASC Topic 470-20, the
amount recorded for the beneficial conversion feature was limited to the amount
of proceeds allocated to the convertible instrument of $10,170.  This
resulted in a full discount offset to the $25,000 principal balance of the note,
or an initial carrying value of $-0-.  We are accreting the discount
over the life of the note.
 
 We also
evaluated the Bathgate Warrant as a potential free standing derivative under the
criteria in ASC Topic 815, and concluded that it was indexed to the Company’s
own stock and should be classified in stockholders’ equity and would qualify for
the scope exception contained in ASC Topic 815. As further required, we reviewed
the requirements for equity classification contained in ASC Topic 815, and
concluded that all of the criteria had been met and that equity classification
was appropriate.
 
 Pursuant
to the reset provision described above, on November 6, 2008, the exercise price
on the Bathgate Warrant was reduced to $0.50 per share with all other terms
remaining intact. This reset was a result of a bridge loan entered into on that
date with BOCO Investments, LLC (“BOCO”), a related party to Across America. We
recorded a charge for the modification of the exercise price on the Bathgate
Warrant in the amount of $4,531, which was calculated as the difference between
the estimated fair value of the warrant immediately prior to the modification
and the estimated fair value of the warrant after the modification. Both values
were calculated using the Black-Scholes model with the revised exercise price
being the only difference in the assumptions.
  -
19 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  
 
 Other
Obligations
 
 On May
31, 2008, the Chief Executive Officer and President of Apro Bio resigned from
these positions and on October 1, 2008, resigned as a director of Apro
Bio.  On March 3, 2009, we entered into a settlement agreement with
this individual and agreed to settle any and all claims for a lump sum payment
of $45,000 and the issuance of 60,000 shares of our common stock within five
business days of the closing of the Merger.
 
 
 NOTE
5 – COMMITMENTS AND CONTINGENCIES
 
 License Agreement with Bio
Holding, Inc.
 
 We
entered into a license agreement with Bio Holding, Inc. (“Bio Holding”),
effective September 28, 2009 (the “Effective Date”), pursuant to which we
obtained an exclusive license (the “License Agreement”) to practice, perform,
make, use, sell, import and offer to sell products covered by current and future
patents and patent applications owned by Bio Holding for the treatment of
diabetes (the “Licensed Technology”).  We may not sublicense, assign
or otherwise transfer its rights in the Licensed Technology without the prior
written consent of Bio Holding.  In addition, we have a right of first
refusal to license any intellectual property owned by Bio Holding that is not
part of the License Agreement.  Dr. Leland Shapiro, who is the
beneficial owner of approximately 14.4% of our common stock, is the majority
shareholder of Bio Holding.
 
 In
consideration for the License Agreement, we are obligated to pay Bio Holding
within 60 days from the Effective Date license fees of $25,000 and we issued to
a minority shareholder of Bio Holding warrants to purchase 650,000 shares of our
common stock at an exercise price of $3.00 per share.  The warrants
expire on September 28, 2014 and contain a cashless exercise
provision.  Such warrants were subject to the execution of a
subscription and lock-up agreement by the minority shareholder that will
restrict the sale or transfer of the underlying shares until March 31,
2011.  We estimated the fair value of the warrants at $1,470,000,
which was calculated using the Black-Scholes model with the following
assumptions: exercise price of $3.00 expected life of five years, assumed stock
price of $3.00 at date of grant, dividend yield of 0%, interest rate of 2.72%,
and volatility of 100.0%.  The total value ascribed to this license
agreement was $1,495,000, and we expensed this amount for the three months ended
September 30 2009.
 We are
obligated to pay royalties to Bio Holding of (i) four percent (4%) of the gross
revenues from the sale or use of the Licensed Technology and (ii) thirty percent
(30%) of the gross revenues from sublicensing of the Licensed
Technology.  We also agreed to enter into a sponsored research
agreement with UCD for $88,000 within 30 days from the Effective Date for the
benefit of Dr. Leland Shapiro’s laboratory.
 
 The term
of the License Agreement expires upon the expiration date of the last patent
underlying the Licensed Technology.  The License Agreement may be
terminated only upon the material breach of the terms and conditions of the
License Agreement by the other party, subject to a 30 day cure
period.  During the term of the License Agreement, we will bear all
expenses related to filing, prosecuting and maintaining the patents and patent
applications underlying the Licensed Technology, including, but not limited to,
expenses related to divisional, continuation-in-part patent applications and
foreign filings.
 
  -
20 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  Bacterial Infection
License
 
 As of
September 30, 2009, our current commitments under our SRA associated with this
license were as follows:
 
 Payment
      3:
              
              $
              80,000
              
              October
      1, 2009Payment
      4:
              
              $
              81,300
              
              January
      1, 2010$
              161,300
 
 If the
SRA is terminated by us (which may only be done upon 60 days written notice) for
any reason prior to termination of the license agreement, we may still be
required to reimburse UCD for its total actual and reasonable costs incurred for
the project through the date of termination, including costs necessary to
implement the early termination of the SRA and costs incurred as a result of
non-cancellable obligations that may extend beyond the date of such
termination.
 
 Pursuant
to a stock purchase agreement, which was executed on May 15, 2006 simultaneously
with the license agreement and the SRA, during the quarter ended June 30, 2008,
we issued to a designee and beneficiary of RUC, University License Equity
Holdings, Inc. (“ULEHI”), 20,833 shares of our common stock. In conjunction with
the issuance of the license for cell transplant/graft rejection on November 12,
2008, we agreed to amend the terms of the stock purchase agreement with ULEHI by
authorizing the issuance of additional shares of our common stock, calculated at
2% of the fully-diluted outstanding shares of our common stock upon completion
of the Merger.  The calculation of these shares included all common
shares and common stock purchase warrants issued in connection with the Merger
and the Private Placement. In accordance with this provision, we issued 698,939
shares of our common stock to ULEHI.
 
 We have
no further obligations for common share issuances to ULEHI under any of the
three license agreements.
 
 Viral Infection
License
 
 As of
September 30, 2009, we had not executed an SRA related to this
license.
 
 Cellular Transplant/Graft
Rejection
 
 As of
September 30, 2009, we had not executed an SRA related to this
license.
 
  -
21 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  Future
royalty payments under license agreements are summarized below:
 
 License
      Date
              Field
      of Use
              Minimum
      Royalties
              Milestone
      Royalties
              Earned
      Royalties
              Sublicense
      RoyaltiesMay
      15, 2006
              Bacterial
              $25,000
      per year starting
                May
      15, 2011
              $30,000
      to $300,000 (1)
              4%
      of Net Sales
              20%
      to 30%March
      30, 2008
              Viral
                (including
      HIV)
              $50,000
      per year after first commercial sale
              $100,000
      to $150,000 (2)
              4%
      of Net Sales
              20%
      to 30%November
      12, 2008
              Cellular
      Transplant /
                Graft
      Rejection
              $50,000
      per year after first commercial sale
              $25,000
      to $200,000 (3)
              3%
      of Net Sales
              20%
      to 30%September
      28, 2009
              Diabetes
              None
              None
              4%
      of Gross Revenues (4)
              30%
      (4)
 
  (1)
Payable to RUC as follows: $30,000 upon completion of preclinical trial; $50,000
upon completion of a phase I clinical trial; $100,000 upon completion of a phase
II clinical trial; $200,000 upon completion of a phase III clinical trial; and
$300,000 upon receipt of approval of FDA or foreign equivalent.
 
 (2)
Payable to RUC as follows: $100,000 upon completion of any phase III clinical
trial and $150,000 upon first commercial sale. No milestone royalties are
required for the first indication. For the second indication, 100% of the
milestone royalties shall be paid, and for subsequent indications 50% of the
milestone royalties shall be paid.
 
 (3)
Payable to RUC as follows: $25,000 upon initiation of a phase II clinical trial;
$100,000 upon initiation of a phase III clinical trial; and $200,000 upon
receipt of approval of FDA or foreign equivalent.
 
 (4)
Payable to Bio Holding.
 
 The
license agreements expire upon the expiration date of the last patent covered by
the agreement and may also be terminated by either party in the event of a
default by the other party.
 
 Contributed
Rent
 
 We
utilize, free-of-charge, office space of BCP, a shareholder and related party.
We calculated the value of our approximate utilized office space at $1,260 for
each of the quarters ended June 30 and September 30, 2009 and $2,100 for each of
the quarters ended June 30, and September 30, 2008, and recorded non-cash
charges for these amounts in the respective periods.
  -
22 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  NOTE
6 – STOCKHOLDERS’ EQUITY
 
 On May
27, 2009, we filed Articles of Amendment to our Articles of Incorporation to
change our corporate name from “Across America Financial Services, Inc.” to
“Omni Bio Pharmaceutical, Inc.” At the same time, we also filed Articles of
Amendment to our Articles of Incorporation to increase our authorized common
shares to 200,000,000 from 50,000,000 and to increase our authorized preferred
shares to 5,000,000 from 1,000,000. The par values of the common and preferred
shares were not changed.
 
 For the
quarter ended June 30, 2009, we issued 600,000 shares of our common stock
pursuant to the conversion of a note payable to a related party and 1,501,453
shares of our common stock pursuant to warrant exercises. A total of 1,175,356
warrants were exercised for $0.001 per share and 200,000 warrants were exercised
for $0.01 per share generating $3,175 of cash.  In addition, we issued
126,097 shares of common stock pursuant to cashless exercise provisions of
140,000 warrants exercisable at a weighted-average price of $1.09 per
share.
 
 For the
quarter ended September 30, 2009, we issued 1,528,751 shares of our common stock
pursuant to warrant exercises.  A total of 774,644 warrants were
exercised for $0.001 per share for cash proceeds of $775.  In
addition, we issued 754,107 shares of common stock pursuant to cashless exercise
provisions of 794,900 warrants exercisable at a weighted-average price of $0.43
per share.
 
 A summary
of investor warrant activity for the six months ended September 30, 2009 is as
follows:
 Number
      of WarrantsOutstanding
      and exercisable at March 31, 2009
              
              
              10,107,400Granted
      (Note 5)
              
              
              650,000Exercised
              
              
              (2,969,900
              )Forfeited/expired
              
              
              -Outstanding,
      vested and exercisable at September 30, 2009
              
              
              7,787,500
 
 
 NOTE
7 – SHARE-BASED COMPENSATION
 
 From
inception, we have not had an employee stock option plan, but have issued common
stock purchase warrants on a discretionary basis to employees, directors and
outside consultants. We calculate share-based compensation to employees and
directors in accordance with the fair-value method prescribed in FASB Topic 718.
For warrants issued to outside consultants (i.e., non-employees), we calculate
share-based compensation under the applicable provisions of ASC Topic 718 and
FASB ASC Topic505-50
Equity-Based Payments to
Non-Employees(“ASC Topic 505-50”). 
ASC Topic 718  requires fair value accounting for equity securities
issued to non-employees, and ASC Topic 505-50 specifies the measurement date for
recording compensation cost.
 
 For
warrants issued in the six months ended September 30, 2009 and 2008, the fair
value of each warrant award was estimated on the date of grant using the
Black-Scholes pricing model based on assumptions noted in the following table.
The expected life was equal to the contractual term, as the majority of all
warrants granted are not forfeited in the circumstances of disassociation with
the Company. Expected volatility was estimated based on comparisons of stock
price volatility of “peer group” publicly-traded companies. The risk-free
interest rate was based on the yield on the grant measurement date of a traded
zero-coupon U.S. Treasury bond, as reported by the U.S. Federal
Reserve, with a term equal to the expected term of the respective
warrant.
 
  -
23 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  The
following table provides the range of assumptions used in the Black-Scholes
pricing model for warrants granted during the six months ended September 30,
2009 and 2008, respectively:
 
 September
      30, 2009
              
              
              September
      30, 2008Expected
      life (years)
              
              5.0
      to 7.0
              
              
              
              7.0Expected
      volatility
              
              
              100
              %
              
              
              100.5
              %Risk-free
      interest rate
              
              1.86
      to 3.37
              %
              
              2.1
      to 3.03
              %Dividend
      yield
              
              
              0
              %
              
              
              0
              %
 
 
 Issuances for the Six Months
Ended September 30, 2008
 
 On April
11, 2008, we authorized the issuance of 100,000 common stock purchase warrants
to a director for service during the year ended March 31, 2008 (for Apro Utah,
prior to the merger with Maxcure). The warrants vested immediately and expire on
April 15, 2015 at an exercise price of $1.25. We valued these warrants at
$81,528 using the Black-Scholes model with the following assumptions: exercise
price of $1.25 expected life of seven years, assumed stock price of $1.00 at
date of grant, dividend yield of 0%, interest rate of 3.03%, and volatility of
100.5%.
 
 On April
15, 2008, we authorized the issuance of an aggregate of 500,000 common stock
purchase warrants exercisable at $1.25 and expiring on April 15, 2015 to five
directors (100,000 warrants to each) for service for fiscal year 2009. These
warrants vested quarterly during fiscal year 2009, with each tranche vested on
the first day of a fiscal quarter.  We valued these warrants at
$407,640 using the Black-Scholes model with the following assumptions: exercise
price of $1.25 expected life of seven years, assumed stock price of $1.00 at
date of grant, dividend yield of 0%, interest rate of 2.1%, and volatility of
100.5%.  Our former President and CEO resigned from his capacities as
an officer effective May 31, 2008, and as a director on October 1, 2008 and, as
result, vested one-half or 50,000 of his warrants.
 On August
6, 2008, we authorized the issuance of 75,000 common stock purchase warrants
exercisable at $1.25 and expiring on August 6, 2015 to a director for service
through March 31, 2009.  The warrants vested quarterly beginning with
the quarter ended September 30, 2009, with each tranche vested on the first day
of a fiscal quarter. We valued these warrants at $61,392 using the Black-Scholes
model with the following assumptions: exercise price of $1.25 expected life of
seven years, assumed stock price of $1.00 at date of grant, dividend yield of
0%, interest rate of 3.55%, and volatility of 100.0%.
 
 Issuances for the Six Months
Ended September 30, 2009
 On April
7, 2009, we issued a warrant to our Acting Chief Executive Officer, who is also
a director, to purchase 600,000 shares of our common stock at an exercise price
of $0.50 per share.  Shares under this warrant vest as
follows:  200,000 upon issuance, 200,000 in October 2009 and 200,000
in April 2010.  We are recognizing share-based compensation using the
straight-line method over the vesting term of the grant.  This warrant
expires on April 7, 2016.  We valued these warrants at $529,975 using
the Black-Scholes model with the following assumptions: exercise price of $0.50
expected life of seven years, assumed stock price of $1.00 at date of grant,
dividend yield of 0%, interest rate of 2.47%, and volatility of
100.0%.
 
 On April
15, 2009, we issued a warrant to our Chief Financial Officer to purchase 50,000
shares of our common stock at an exercise price of $0.50 per share. All shares
under this warrant vested upon issuance. This warrant expires on April 15,
2016.  We valued this warrant at $44,165 using the Black-Scholes model
with the following assumptions: exercise price of $0.50 expected life of seven
years, assumed stock price of $1.00 at date of grant, dividend yield of 0%,
interest rate of 2.47 %, and volatility of 100.0%.
 
  -
24 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  On April
1, 2009, we issued a warrant to a medical consultant to purchase 48,000 shares
of our common stock at an exercise price of $1.25 per share. All shares under
this warrant vested as of September 30, 2009.  This warrant
 
 On July
30, 2009 and pursuant to our compensation program for directors (whereby a
director receives a grant of 100,000 warrants in his/her first year and 50,000
warrants per year for each subsequent year of service), we granted warrants to
our directors (excluding our Acting CEO who is a director) to purchase 275,000
shares of our common stock in exchange for director services for the fiscal year
ended March 31, 2010 (the “Director Warrants”).  The Director Warrants
were granted at an exercise price of $3.00 per share, which represented
management’s estimated fair value of our common stock price as of the date of
grant based on factors, including, but not limited to: 1) initial discussions
with potential investors on an equity capital raise at a price of $3.00 per
share, 2) the limited trading volume and limited public trading duration of our
common stock, 3) recent private common stock sale transactions, and 4) the
trading lock-up requirement of two or three years on the majority of our
outstanding warrants and common stock.  Four of the directors received
an annual grant of 50,000 warrants based on the commencement of their second
year of service, which was April 1, 2009. Warrants under these grants vest on
March 31, 2010 and expire on April 1, 2016.  A fifth director received
a grant of 25,000 warrants for the fourth quarter of his first year of service.
Warrants under this grant vested April 1, 2009 and expire on April 1, 2016. A
sixth director received a grant of 50,000 warrants for the third and fourth
quarters of his first year of service, of which 25,000 vested April 1, 2009 and
expire on April 1, 2016 and 25,000 vest on July 1, 2009 and expire on July 1,
2016.
 
 We valued
these warrants at $688,908 using the Black-Scholes model with the following
assumptions: exercise price of $3.00, expected life of seven years, estimated
fair value of our common stock price of $3.00 at date of grant, dividend yield
of 0%, interest rate of 3.37 %, and volatility of 100.0%.  For the
three months ended June 30, 2009, we recorded a charge for share-based
compensation and a liability for accrued compensation in the amount of $250,512
for director services provided during the quarter.  The amount of the
charge represented the estimated fair value of 50,000 Director Warrants that
vested as of April 1, 2009 and 25% (based on the straight-line method) of the
estimated fair value of 200,000 Director Warrants that will vest as of March 31,
2010.  For the September 2009 quarter and commensurate with formal
Board approval on July 30, 2009 of the Director Warrants, we credited the
accrued compensation liability of $250,512 to additional paid-in
capital.  For the six months ended September 30, 2009, the total
share-based compensation charge and credit to additional paid in capital for the
Director Warrants was $438,395.
 
 Pursuant
to Board approval on July 30, 2009, on August 6, 2009 we issued 50,000 common
stock purchase warrants exercisable at $3.00 and expiring on August 6, 2015 to a
director for second year of service.  The warrants vest on August 5,
2010 if the director has continuously served as a director of the Company
through such date.  We valued these warrants at $125,256 using the
Black-Scholes model with the following assumptions: exercise price of $3.00,
expected life of seven years, estimated fair value of our common stock price of
$3.00 at date of grant, dividend yield of 0%, interest rate of 3.14%, and
volatility of 100.0%.
 
  -
25 -
 OMNI
BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Unaudited)
  Share-based
compensation recorded for the three and six months ended September 30, 2009 and
2008 was as follows:
 
 Three
      months ended September 30,
              
              
              Six
      months ended September 30,2009
              
              
              2008
              
              
              2009
              
              
              2008Employees,
      former employees and directors
              
              $
              208,759
              
              
              $
              122,374
              
              
              $
              680,094
              
              
              $
              305,812Outside
      consultants
              
              
              17,964
              
              
              
              -
              
              
              
              35,928
              
              
              
              -$
              226,753
              
              
              $
              183,438
              
              
              $
              716,022
              
              
              $
              305,812
 
 The
weighted average grant date fair value of warrants issued under share-based
compensation agreements for the six months ended September 30, 2009 and 2008 was
$1.39 and $0.82 per share, respectively.
 
 A summary
of warrant activity related to warrants issued under share-based compensation
agreements for the six months ended September 30, 2009 is as
follows:
 
 Shares
              
              
              Weighted
      Average Exercise Price
              
              
              Weighted
      Average Remaining Contractual Term (in years)
              
              
              Aggregate
      Intrinsic Value (a)Outstanding
      at March 31, 2009
              
              
              1,050,000
              
              
              $
              1.22Granted
              
              
              1,023,000
              
              
              $
              1.33Exercised
              
              
              (130,000
              )
              
              $
              1.08Forfeited/expired/cancelled
              
              
              -
              
              
              
              -Outstanding
      at September 30, 2009
              
              
              1,943,000
              
              
              $
              1.29
              
              
              
              5.7
              
              
              $
              3,330,000Vested
      and exercisable at September 30, 2009
              
              
              1,293,000
              
              
              $
              1.16
              
              
              
              6.3
              
              
              $
              2,330,000
 
 (a)
Calculated using the estimated fair value of our common stock price as of
September 30, 2009.
  -
26 -
  Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
 
 Forward-Looking
Information May Prove Inaccurate
 
 Some of
the information presented in this Quarterly Report on Form 10-Q constitutes
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995.  These forward-looking statements
include, but are not limited to, statements that include terms such as “may,”
“will,” “intend,” “anticipate,” “estimate,” “expect,” “continue,” “believe,”
“plan,” or the like, as well as all statements that are not historical
facts.  Forward-looking statements are inherently subject to risks and
uncertainties that could cause actual results to differ materially from current
expectations.  Although we believe our expectations are based on
reasonable assumptions within the bounds of our knowledge of our business and
operations, there can be no assurance that actual results will not differ
materially from expectations.
 
 For
additional factors that could affect the validity of our forward-looking
statements, you should read the risk factors set forth in Part I, Item 1A of our
Annual Report on Form 10-K for the fiscal year ended March 31,
2009  and the consolidated financial statements contained therein, as
well as those set forth in Part II. – Item 1A of this quarterly report.
 The forward-looking statements included in this quarterly report are
subject to additional risks and uncertainties not disclosed in this quarterly
report, some of which are not known or capable of being known by
us.  The information contained in this quarterly report is subject to
change without notice.  Readers should review future reports that we
file with the SEC.  In light of these and other risks, uncertainties
and assumptions, actual events or results may be very different from those
expressed or implied in the forward-looking statements in this quarterly report
or may not occur.  We have no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.
 
 Organization
 
 On March
31, 2009, Across America Financial Services, Inc. (“Across America”) completed
the acquisition of Apro Bio Pharmaceutical Corporation (“Apro Bio”) pursuant to
the terms of the Agreement of Merger and Plan of Reorganization, as amended (the
"Merger”), among Across America, Apro Bio and Across America Acquisition Corp.
(“AAAC”), a Colorado corporation and a wholly-owned subsidiary of Across
America.  Under the terms of the Merger, Apro Bio was merged into
AAAC, and Apro Bio became a wholly-owned subsidiary of the
Company.  On May 27, 2009, Across America changed its name to Omni Bio
Pharmaceutical, Inc. (“Omni”).
 
 The
Merger was accounted for as a reverse acquisition with Apro Bio being treated as
the acquirer for accounting purposes. Accordingly, for all periods presented in
this report, the financial statements of Apro Bio have been adopted as the
historical financial statements of Omni.
 
 Except as
the context otherwise requires, the terms "Company," "we," "our, "us" or “Omni,”
means Omni and our wholly-owned subsidiary, Omni Bio Operating,
Inc.
 
 Plan
of Operation
 
 We intend
to commercialize a broad patent portfolio licensed from the as the University of
Colorado Denver (“UCD”), formerly known as the University of Colorado Health
Sciences Center (“UCHSC”).  A component of these applications involves
use of existing FDA approved drugs to treat a variety of bacterial and viral
diseases, and transplant rejection in a subject.
 
 We are
the licensee of applications and patents related to novel compositions of matter
and methods of use for an existing FDA approved drug, Alpha 1-Antitrypsin
(“AAT”), for treating transplantation rejection, including islet cell
transplantation for the treatment of diabetes, and treating bacterial infections
including bacterial pneumonia, tuberculosis and anthrax.  We have also
licensed an existing patent for the treatment of HIV, and licensed patent
applications for the treatment of other viral-associated disorders including
influenza.
 
  -
27 -
  To date,
our business efforts have been largely dedicated to pursue additional capital in
order to continue funding Sponsored Research Agreements (“SRAs”) to further our
licenses regarding bacterial disease treatments, and in funding SRAs for the
furtherance of our licenses regarding viral disease treatment and cellular
transplantation/graft rejection.
 
 We have
licensed and plan to further develop novel therapies for the treatment of
medical conditions that we believe have the potential to move through clinical
trials quickly.  We also plan to shepherd these novel therapeutic
applications through the FDA approval processes and advance them through
commercialization.  This core strategy is based on licensing issued
patents and patent applications, partially directed to the use of an existing
FDA approved drug that has come off of its initial patents for new and novel
uses in treating disorders.
 
 We intend
to continue to outsource the normally capital intensive scientific research
function to academic research institutions such as UCD, where we currently have
one SRA.  This approach provides a specific scientific budget for
funding each application, without the possibility of substantial cost overruns
being incurred internally. Work contracted with UCD or other research
institutions is expected to provide a contractually guaranteed work product,
greatly increasing our ability for financial forecasting.  With this
approach, we expect to be able to focus on working with each project's lead
scientists, overseeing patent application projects and closely managing our
corporate overhead.  This approach should allow most of our expenses
to be focused on research and development. Future research essential for
developing these strategies will be conducted in accordance with our world-wide
licensing rights and our existing and pending collaborative SRAs with
UCD.
 
 Recent
Developments
 
 On March
31, 2009, we closed a $1,870,000 private placement offering to four investors
(the “Private Placement”). To date, this is our largest capital
raise.  See further discussion under the caption “Liquidity and
Capital Resources” under this item.
 
 During
the quarter ended September 30, 2009, we refocused our scientific and business
initiatives following completion of the Private Placement, which has allowed us
the interim financial resources necessary to advance our research and clinical
programs and continue the processing of our patent applications with the United
States Patent and Trade Office (the “USPTO”) and other foreign patent
jurisdictional offices.
 
 Clinical Trial on Type I
Diabetes
 
 We are
presently awaiting the approval of a protocol related to a proposed trial of AAT
on patients diagnosed with Type I diabetes that was submitted to the regional
Institutional Review Board (“IRB”) at a unit of the University of
Colorado-Denver-Anschutz Medical Campus.  If we receive IRB approval,
we anticipate that we will file with the FDA an Investigational New Drug
Application (“IND”) for the use of AAT on Type I diabetes and sponsor a clinical
trial.
 
 An IND is
a request for authorization from the FDA to administer an investigational drug
or biological product to humans.  AAT has received prior FDA approval
as a biological treatment of emphysema.  There is no assurance that
the FDA will approve this clinical trial, and if the clinical trial is
successful, there is no assurance that we will obtain FDA approval for the use
of AAT to treat Type I diabetes in humans.
 
 Bacterial License and
Associated Sponsored Research Agreement
 
 We are in
the third year of payments under this SRA.  Concurrently with this
work, we are continuing to pursue our patent rights on patent applications
directed to targeting bacterial disorders with the USPTO as well as
international offices.
 
  -
28 -
  Viral License and Viral
Sponsored Research Agreement
 
 We are
currently negotiating an SRA related to our licensed and issued patent related
to AAT and novel compositions for treating viral-related
disorders.  We expect that upon consummation of the SRA, we will be
obligated to expend approximately $55,000 quarterly for a period of two
years.  We are presently pursuing additional financing to fund this
SRA.  Additionally, we are continuing to pursue patent rights based on
our patent applications directed to treating disorders with the
USPTO.
 
 Cellular Transplant/Graft
Rejection License and Associated Sponsored Research
Agreement:
 
 We are
presently pursuing additional financing prior to executing an SRA related to
this license.
 
 License Agreement with Bio
Holding, Inc.
 
 We
entered into a license agreement with Bio Holding, Inc. (“Bio Holding”),
effective September 28, 2009 (the “Effective Date”), pursuant to which we
obtained an exclusive license (the “License Agreement”) to practice, perform,
make, use, sell, import and offer to sell products covered by current and future
patents and patent applications owned by Bio Holding for the treatment of
diabetes (the “Licensed Technology”).  We may not sublicense, assign
or otherwise transfer its rights in the Licensed Technology without the prior
written consent of Bio Holding.  In addition, we have a right of first
refusal to license any intellectual property owned by Bio Holding that is not
part of the License Agreement.  Dr. Leland Shapiro, who is the
beneficial owner of approximately 14.4% of our common stock, is the majority
shareholder of Bio Holding.
 
 In
consideration for the License Agreement, we are obligated to pay Bio Holding
within 60 days from the Effective Date license fees of $25,000 and issued to
issue to a minority shareholder of Bio Holding warrants to purchase 650,000
shares of our common stock at an exercise price of $3.00 per
share.  The warrants expire on September 28, 2014 and contain a
cashless exercise provision.  Such warrants were issued subject to the
execution of a subscription and lock-up agreement by the minority shareholder
that will restrict the sale or transfer of the underlying shares until March 31,
2011.  We estimated the fair value of the warrants at $1,470,000,
which was calculated using the Black-Scholes model with the following
assumptions: exercise price of $3.00 expected life of five years, assumed stock
price of $3.00 at date of grant, dividend yield of 0%, interest rate of 2.72%,
and volatility of 100.0%.  The total value ascribed to this license
agreement was $1,495,000, and we expensed this amount for the three months ended
September 30 2009.
 We are
obligated to pay royalties to Bio Holding of (i) four percent (4%) of the gross
revenues from the sale or use of the Licensed Technology and (ii) thirty percent
(30%) of the gross revenues from sublicensing of the Licensed
Technology.  We also agreed to enter into a sponsored research
agreement with UCD for $88,000 within 30 days from the Effective Date for the
benefit of Dr. Leland Shapiro’s laboratory.
 
 The term
of the License Agreement expires upon the expiration date of the last patent
underlying the Licensed Technology.  The License Agreement may be
terminated only upon the material breach of the terms and conditions of the
License Agreement by the other party, subject to a 30 day cure
period.  During the term of the License Agreement, we will bear all
expenses related to filing, prosecuting and maintaining the patents and patent
applications underlying the Licensed Technology, including expenses, but not
limited to, related to divisional, continuation-in-part patent applications and
foreign filings.
 
 
 
  -
29 -
 
 Results
of Operations For The Three Months Ended September 30, 2009 Compared to the
Three Months Ended September 30, 2008
 
 For the
three months ended September 30, 2009 (the “September 2009 quarter”), we
reported a net loss of $1,941,304 as compared to a net loss of $284,741 for the
three months ended September 30, 2008 (the “September 2008 quarter”), an
increase of $1,656,563. We have not reported any revenue since
inception.
  General
and administrative expenses for the September 2009 quarter were $444,403, which
included $226,723 of share-based compensation, as compared to $201,223 for the
September 2008 quarter, which included $122,374 of share-based compensation.
Excluding share-based compensation, general and administrative expenses in the
September 2009 quarter increased $138,831 or approximately 176% from the
September 2008 quarter.  This increase was primarily due to public
company reporting and administrative related expenses in the areas of external
audit and reporting, legal, stock administration, investor relations and
insurance that were incurred in the September 2009 quarter and not incurred in
the September 2008 quarter when we were not an SEC reporting
company.  Also for the September 2009 quarter, we had increases in
consulting and scientific advisory expenses as compared to September 2008
quarter.
 For the
September 2009 quarter, we executed a license agreement with a related
party.  The total value ascribed to the license agreement was
$1,495,000, and this amount was expensed during the September 2009
quarter.
 
 Research
and development expenses for the September 2009 quarter were $-0- as compared to
$80,000 for the September 2008 quarter as a result of the SRA expense incurred
in the September 2008 quarter related to our bacterial license.  We
did not enter into any additional SRAs during the September 2009
quarter.
 
 Interest
income, net of interest expense, for the September 2009 quarter was $1,099 and
was primarily comprised of interest income of $1,474 from cash invested in an
interest bearing, money market account.
 
 Results
of Operations For The Six Months Ended September 30, 2009 Compared to the Six
Months Ended September 30, 2008
 
 For the
six months ended September 30, 2009, we reported a net loss of $2,600,726 as
compared to a net loss of $706,943 for the six months ended September 30, 2008,
an increase of $1,893,783.
 
 General
and administrative expenses for the six months ended September 30, 2009 were
$1,100,355, which included $716,022 of share-based compensation, as compared to
$521,588 for the six months ended September 30, 2008, which included $305,812 of
share-based compensation.  Excluding share-based compensation, general
and administrative expenses for the six months ended September 30, 2009
increased $168,557 or approximately 78% from the six months ended September 30,
2008.  This increase was primarily due to public company reporting and
administrative related expenses in the areas of external audit and reporting,
legal, stock administration, investor relations and insurance that were incurred
for the six months ended September 30, 2009 and not incurred for the six months
ended September 30, 2008 when we were not an SEC reporting
company.  Also for the six months ended September 30, 2009, we had
increases in consulting and scientific advisory expenses as compared to the six
months ended September 30, 2008.
 
 As noted
above, in the September 2009 quarter, we expensed 1,495,000 related to the
execution of a license agreement with a related party.
 
 Research
and development expenses for the six months ended September 30, 2009 were $-0-
as compared to $160,000 for the six months ended September 30, 2008 as a result
of the SRA expense incurred for the six months ended September 30, 2008 related
to our bacterial license.
 
 Interest
income, net of interest expense, for the six months ended September 30, 2009 was
$629 and was primarily comprised of interest income of $1,879 from cash invested
in an interest bearing, money market account.
 
 
  -
30 -
  Liquidity
and Capital Resources
 
 Our
unaudited consolidated financial statements as presented in Item 1 of this
report have been prepared in conformity with US GAAP, which contemplate our
continuation as a going concern. However, the report of our independent
registered public accounting firm on our consolidated financial statements, as
of and for the year ended March 31, 2009, contains an explanatory paragraph
expressing substantial doubt as to our ability to continue as a going concern.
The “going concern” qualification results from, among other things, our
development-stage status, the lack of any revenue recognized since inception,
our inception to date net losses, which total approximately $10.0 million and
include non-cash charges of approximately $6.9 million, and the outstanding and
currently anticipated contractual commitments for research and development
efforts under any current or anticipated SRAs.  Our consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary if we were unable to
continue as a going concern.
 
 We
enhanced our liquidity with the completion of the Private Placement on March 31,
2009. Under its terms, we sold units, consisting of one share of our common
stock and common stock purchase warrants as follows:  one warrant to
purchase one-half a share of our common stock at an exercise price of $0.25 per
share (two warrants must be exercised to purchase one share of common stock),
two warrants to purchase two shares of our common stock at an exercise price of
$0.50 per share and one warrant to purchase one share of our common stock at an
exercise price of $1.00 per share (the “Units”).  We sold the Units at
a price of $1.00 per Unit and issued 1,870,000 Units for gross cash proceeds of
$1,820,000 and the conversion of a note payable to a related party of $50,000.
In connection with the offering, we paid to Bathgate Capital Partners LLC
(“BCP”) a placement agent fee comprised of $112,200 in cash and a warrant to
purchase 56,100 shares of our common stock at an exercise price of $0.25 per
share, a warrant to purchase 224,400 shares of our common stock at $0.50 per
share, and a warrant to purchase 224,400 shares of our common stock at $1.00 per
share.  On April 1, 2009, a related party also converted the principal
balance of its $132,000 note in exchange for 600,000 shares of our common stock
pursuant to the conversion rights included in the note.
 
 We
believe that the cash raised from the Private Placement is adequate to fund our
operations through December 31, 2009.  We intend to raise additional
financing through equity financings or through other means that we deem
necessary.  However, there is no assurance that we will be successful
in raising additional capital on acceptable terms or at all.  Further,
even if we raise additional capital, there is no assurance that we will ever
achieve profitability or positive cash flow in the near term.  If we
are unable to raise additional capital and expected significant revenues do not
result in positive cash flow, we will not be able to meet our obligations and
may have to cease operations.
 
 Cash and Cash
Flows
 
 Our cash
and cash equivalents at September 30, 2009 were $751,198 as compared to
$1,805,395 at March 31, 2009 and $2,373 at September 30, 2008.  For
the six months ended September 30, 2009, net cash used in operations was
$1,058,147 as compared to net cash used in operations of $39,936 for the six
months ended September 30, 2008. For the six months ended September 30, 2009,
the primary uses of cash were for general and administrative expenses (excluding
share-based compensation) of approximately $384,000 and a significant decrease
from March 31, 2009 to September 30, 2009 of approximately $674,000 in accounts
payable, accrued liabilities and amounts due to related parties (excluding the
liability accrued to a related party at September 30, 2009 for a warrant
issuance).  The significant decrease in these liabilities was a result
of a significant pay-down on these liabilities that had largely been incurred
during the first nine months of fiscal year 2009 as a result of the Company
having negligible cash on hand during fiscal year 2009 to settle liabilities on
reasonable and, as applicable, contractual payment terms. For the six months
ended September 30, 2008, the primary use of cash was for general and
administrative expenses (excluding share-based compensation) of approximately
$216,000, and the primary source of cash was a net increase of approximately
$171,000 from March 31, 2008 to June 30, 2008 in the aggregate of accounts
payable, accrued liabilities and amounts due to related parties.  The
significant increase in these liabilities was attributable to negligible cash on
hand during the quarter ended June 30, 2008 as noted above.
 
  -
31 -
  For the
six months ended September 30, 2009 and 2008, we did not generate or expend any
cash from investing activities. For the six months ended September 30, 2009, net
cash provided by financing activities was $3,950 and was attributable to the
exercises of common stock purchase warrants.  For the six months ended
September 30, 2008, net cash provided by financing activities was $25,000 from a
note payable executed with a related party.
 
 Contractual
Obligations
 
 As
previously disclosed under this item, we have an obligation to pay $25,000 under
the License Agreement that was effective September 28, 2009, and have a further
obligation of $88,000 under an SRA related to the License
Agreement.  Payments under this SRA are due within 12 months from the
date that the SRA is executed.  As of September 30, 2009, our
additional material contractual obligations are payments due under an SRA
associated with our bacterial license agreement with UCD in the amount of
$161,300, all of which is due by January 1, 2010 and a note payable to a related
party in the amount of $25,000, which is due in June 2010.
 
 During
the second half of fiscal year 2010, we expect to increase our research and
development expenditures commensurate with the requirements associated with
anticipated SRAs with UCD in the areas of viral infection and graft host
technology.  As of September 30, 2009, we expect that the expenditure
levels for these anticipated SRAs will be approximately $780,000 and will be
paid over approximately the next 18 to 24 months. We are currently pursuing
financing to fund these SRAs obligations over this time period.
 
 Director Warrant
Issuance
 
 On July
30, 2009 and pursuant to our compensation program for directors (whereby a
director receives a grant of 100,000 warrants in his/her first year and 50,000
warrants per year for each subsequent year of service), we granted warrants to
our directors (excluding our Acting CEO who is a director) to purchase 275,000
shares of our common stock in exchange for director services for the fiscal year
ended March 31, 2010 (the “Director Warrants”).  The Director Warrants
were granted at an exercise price of $3.00 per share, which represented
management’s estimated fair value of our common stock price as of the date of
grant based on factors, including, but not limited to: 1) initial discussions
with potential investors on an equity capital raise at a price of $3.00 per
share, 2) the limited trading volume and limited public trading duration of our
common stock, 3) recent private common stock sale transactions, and 4) the
trading lock-up requirement of two or three years on the majority of our
outstanding warrants and common shares.  Four of the directors
received an annual grant of 50,000 warrants based on the commencement of their
second year of service, which was April 1, 2009. Warrants under these grants
vest on March 31, 2010 and expire on April 1, 2016.  A fifth director
received a grant of 25,000 warrants for the fourth quarter of his first year of
service. Warrants under this grant vested April 1, 2009 and expire on April 1,
2016. A sixth director received a grant of 50,000 warrants for the third and
fourth quarters of his first year of service, of which 25,000 vested April 1,
2009 and expire on April 1, 2016 and 25,000 vest on July 1, 2009 and expire on
July 1, 2016.
 
 We valued
these warrants at $688,908 using the Black-Scholes model with the following
assumptions: exercise price of $3.00, expected life of seven years, estimated
fair value of our common stock price of $3.00 at date of grant, dividend yield
of 0%, interest rate of 3.37 %, and volatility of 100.0%.  For the
three months ended June 30, 2009, we recorded a charge for share-based
compensation and a liability for accrued compensation in the amount of $250,512
for director services provided during the quarter.  The amount of the
charge represented the estimated fair value of 50,000 Director Warrants that
vested as of April 1, 2009 and 25% (based on the straight-line method) of the
estimated fair value of 200,000 Director Warrants that will vest as of March 31,
2010.  For the three months ended September 30, 2009 and commensurate
with formal Board approval on July 30, 2009 of the Director Warrants, we
credited the accrued compensation liability of $250,512 to additional paid-in
capital.  For the six months ended September 30, 2009, the total
share-based compensation charge and credit to additional paid in capital for the
Director Warrants was $438,395.
  Pursuant
to Board approval on July 30, 2009, on August 6, 2009 we issued 50,000 common
stock purchase warrants exercisable at $3.00 and expiring on August 6, 2015 to a
director for second year of service.  The warrants vest on August 5,
2010 if the director has continuously served as a director of the Company
through such date.  We valued these warrants at $125,256 using the
Black-Scholes model with the following assumptions: exercise price of $3.00,
expected life of seven years, estimated fair value of our common stock price of
$3.00 at date of grant, dividend yield of 0%, interest rate of 3.14%, and
volatility of 100.0%.
 
 
  -
32 -
  Critical
Accounting Policies
 
 We
prepare our financial statements in accordance with US GAAP. The accounting
policies most fundamental to the understanding of our financial statements are
those relating to our use of estimates, to the capitalization of license
agreements and the impairment analysis of the capitalized license costs and to
the valuation, classification and recording of debt and equity transactions,
including those that include common stock purchase warrants.
 
 Our
significant accounting policies and estimates are disclosed in the notes to our
consolidated financial statements contained in our Annual Report on Form 10-K
for the fiscal year ended March 31, 2009.
 
 
 Item
3.  Quantitative and Qualitative Disclosures About Market
Risk.
 
 As a
smaller reporting company, we are not required to provide the information under
this item.
 
 
 Item
4T.  Controls and Procedures.
 
 Disclosure Controls and
Procedures
 
 We are
responsible for establishing and maintaining disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our management, including our Acting Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
 
 Our
management, with the participation of our Acting Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15(e) under the Exchange Act as of
September 30, 2009.  Based on this evaluation, our Acting Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of this date at the reasonable
assurance level.
 
 Internal Control over
Financial Reporting
 
 There was
no change in our internal control over financial reporting during the quarter
ended September 30, 2009 that materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.
  -
33 -
  PART
II - OTHER INFORMATION.
 
 Item
1.  Legal Proceedings.
 
 None.
 
 
 Item
1A.  Risk Factors.
 
 The
following risk factors are in addition to those set forth in our Annual Report
on Form 10-K for the year ended March 31, 2009.
 
 We
may rely on patents and proprietary rights that may fail to protect our
business.
 
 Although
we have obtained licenses to use the rights under certain patent applications
that have been filed with the U.S Patent and Trademark Office and certain
foreign patent offices, we may not be able to obtain the protection necessary to
fully cover our proposed activities. Our success will also depend on our ability
to operate without infringing the proprietary rights of other parties. Legal
standards relating to the validity of patents covering pharmaceutical and
biotechnological inventions and the scope of claims made under these patents are
still developing. There is uncertainty with policy regarding the breadth of
claims allowed in biotechnology patents. The patent position of a biotechnology
company is susceptible to uncertainty and involves complex legal and factual
questions.
 
 We are
aware of three major manufacturers of AAT in the United States for other
applications.  It is possible that these manufacturers would attempt
to sell this therapeutic agent for purposes covered by the rights licensed to
us.
 
 We may
have to initiate arbitration or litigation to enforce our patent and license
rights. If our competitors file patent applications that claim technology also
claimed by us, we may have to participate in interference or opposition
proceedings to determine who has priority of the invention. An adverse outcome
could subject us to significant liabilities to third parties and require us to
cease using the technology or to license the disputed rights from third parties.
We may not be able to obtain any required licenses on commercially acceptable
terms or at all.
 
 The cost
to us of any litigation or proceeding relating to patent rights, even if
resolved in our favor, could be substantial. Some of our competitors may be able
to sustain the costs of complex patent litigation more effectively than we can
because of their substantially greater resources. Uncertainties resulting from
the initiation and continuation of any pending patent matter or related
litigation could have a material adverse effect on our ability to compete in the
marketplace. If we are unable to obtain a license to patented technology we
need, or could only obtain a license on terms we consider to be unacceptable, or
if we were unable to design our products or processes to avoid infringement of
such patented technology, our business would be harmed.
 
 We
are subject to and will become subject to additional financial reporting and
other requirements for which our accounting, internal audit and other management
systems and resources may not be adequately prepared.
 
 We are
subject to and will become subject to additional reporting and other obligations
under the Securities Exchange Act of 1934, as amended, including the
requirements of Section 404 of the Sarbanes-Oxley Act of
2002.  Section 404 requires annual management assessment of the
effectiveness of our internal controls over financial reporting and a report by
our independent auditors addressing these assessments.  These
reporting and other obligations will increasingly place significant demands on
our management, administrative, operational, internal audit, tax and accounting
resources. We are implementing additional financial and management controls,
reporting systems and procedures. If we are unable to accomplish these
objectives in a timely and effective fashion, our ability to comply with our
financial reporting requirements and other rules that apply to reporting
companies could be impaired.
 
  -
34 -
  Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.
 
 On July
30, 2009, we issued 25,000 warrants to purchase our common stock to Michael
Iseman, one of our directors, as compensation for his services as a
director.  The warrants are exercisable at $3.00 per share and expire
on April 1, 2016.  The warrants were issued under Section 4(2) of the
Securities Act.
 
 On July
30, 2009, we issued 50,000 warrants to purchase our common stock to Albert
Kramer, one of our directors, as compensation for his services as a
director.  The warrants vest and become exercisable on March 31, 2010
with an exercise price of $3.00 per share.  The warrants expire on
April 1, 2016.  The warrants were issued under Section 4(2) of the
Securities Act.
 
 On July
30, 2009, we issued 50,000 warrants to purchase our common stock to Steven
Bathgate, one of our directors, as compensation for his services as a
director.  The warrants vest and become exercisable on March 31, 2010
with an exercise price of $3.00 per share.  The warrants expire on
April 1, 2016.  The warrants were issued under Section 4(2) of the
Securities Act.
 
 On July
30, 2009, we issued 50,000 warrants to purchase our common stock to Vicki
Barone, one of our directors, as compensation for her services as a
director.  The warrants vest and become exercisable on March 31, 2010
with an exercise price of $3.00 per share.  The warrants expire on
April 1, 2016.  The warrants were issued under Section 4(2) of the
Securities Act.
 
 On July
30, 2009, we issued 50,000 warrants to purchase our common stock to Michael
Wort, one of our directors, as compensation for his services as a
director.  The warrants are exercisable at $3.00 per
share.  Half of the warrants expire on April 1, 2016 and the remaining
warrants expire on July 1, 2016.  The warrants were issued under
Section 4(2) of the Securities Act.
 
 On July
30, 2009, we issued 50,000 warrants to purchase our common stock to Paul Dragul,
one of our directors, as compensation for his services as a
director.  The warrants vest and become exercisable on March 31, 2010
with an exercise price of $3.00 per share.  The warrants expire on
April 1, 2016.  The warrants were issued under Section 4(2) of the
Securities Act.
 
 On August
6, 2009, we issued 50,000 warrants to purchase our common stock to Michael
Iseman, one of our directors, as compensation for his services as a
director.  The warrants vest and become exercisable on August 6, 2010
with an exercise price of $3.00 per share.  The warrants expire on
August 6, 2016.  The warrants were issued under Section 4(2) of the
Securities Act.
 
 On
September 28, 2009, we issued 650,000 warrants to purchase our common stock to a
minority shareholder of Bio Holding, Inc. (“Bio Holding”) as partial
consideration for a license agreement that we entered into with Bio
Holding.  Dr. Leland Shapiro, who is the beneficial owner of
approximately 14.4% of our common stock, is the majority owner of Bio
Holding.  The warrants vested and were exercisable on September 28,
2009 with an exercise price of $3.00 per share.  The warrants expire
on September 28, 2014.  The warrants were issued under Section 4(2) of
the Securities Act.
  -
35 -
  During
the September 2009 quarter, certain investors and directors exercised common
stock purchase warrants under cashless exercise provisions.  The
following table represents the net shares surrendered in these cashless warrant
exercises.
 
 ISSUER
      PURCHASES OF EQUITY SECURITIESPeriod
              (a)
      Total Number
                of
      Shares (or Units)
                Purchased
              (b)
      Average Price
                Paid
      per Share (or Unit)
              (c)
      Total Number of Shares
                (or
      Units) Purchased as Part of
                Publicly
      Announced Plans or Programs
              (d)
      Maximum Number (or Approximate
                Dollar
      Value) of Shares (or Units)
                that
      May Yet Be Purchased Under
                the
      Plans or Programs)July
      1 to
                July
      31, 2009
              18,651
              $9.51
              -
              -August
      1
                to
      August 31, 2009
              35,308
              $13.60
              -
              -September
      1 to
                September
      30, 2009
              1,834
              $15.00
              -
              -TOTAL
              55,793
              $12.68
              -
              -
 
 
 Item
3.  Defaults Upon Senior Securities.
 
 None.
 
 
 Item
4.  Submission of Matters to a Vote of Security Holders.
 
 None.
 
 
 Item
5.  Other Information.
 
 None.
 
  -
36 -
  Item
6.  Exhibits.
 
 The
exhibits identified below are filed as part of this report:
  EXHIBIT #
              DESCRIPTION3.1
              Articles
      of Incorporation (incorporated by reference to Exhibit 3.1 to the
      Registrant’s Registration Statement on Form SB-2 filed on March 2,
      2007)3.2
              Bylaws
      (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration
      Statement on Form SB-2 filed on March 2, 2007)3.3
              Articles
      of Amendment for Across America Financial Services, Inc. including
      Amendment to Articles of Incorporation of Across America Financial
      Services, Inc. (incorporated by reference to Exhibit 3.3 to the
      Registrant’s Form 8-K filed on June 2, 2009)10.1
              License
      Agreement by and between Bio Holding, Inc. and Omni Bio Pharmaceutical,
      Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Form
      8-K filed on October 2, 2009)31.1
              Certification
      of Acting Chief Executive Officer Pursuant to Rule 13a-14(a) under the
      Securities Exchange Act of 1934 #31.2
              Certification
      of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities
      Exchange Act of 1934 #32.1
              Certification
      of Acting Chief Executive Officer Pursuant to Section 1350 of Chapter 63
      of Title 18 of the United States Code #32.2
              Certification
      of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title
      18 of the United States Code #
 _________
 
 # Filed
herewith
 
  -
37 -
  SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 OMNI
      BIO PHARMACEUTICAL, INC.October
      30, 2009
              By
              : /s/   Charles A. Dinarello,
      M.D.Charles
      A. Dinarello, M.D.Acting
      Chief Executive OfficerOctober
      30, 2009
              By
              : /s/   Robert C.
      OgdenRobert
      C. OgdenChief
      Financial Officer(Principal
      Financial and Accounting Officer)
   - 38
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