##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2011
 or
 o
    
    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.
  Colorado
    
    20-8097969(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 5350 South Roslyn, Suite 430, Greenwood Village, CO 80111
 
   Common Stock Par Value $0.001
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    13Item 1B. Unresolved Staff Comments
    
    
    24Item 2. Properties
    
    
    24Item 3. Legal Proceedings
    
    
    25PART IIItem 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    25Item 6. Selected Financial Data
    
    
    27Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    36Item 8 Financial Statements and Supplementary Data
    
    
    37Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    37Item 9A. Controls and Procedures
    
    
    37Item 9B. Other Information
    
    
    40PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    40Item 11. Executive Compensation
    
    
    43Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    47Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    49Item 14. Principal Accountant Fees and Services
    
    
    49PART IVItem 15.
Exhibits and Financial Statement Schedules
    
    
    51SIGNATURES
    
    
    54Exhibit 21Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1




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PART I
 
 ITEM 1.
    
    BUSINESS.
 Forward looking Statements
    Background and History
     2




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Business Plan and Operation
   Inhibitors of Serine
Protease Activity, Methods and Compositions for Treatment of Bacterial Infections
 Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Viral Infections, Inhibitors of Serine
Protease Activity, Methods and Compositions for Treatment of Viral Infections,
  TM ® ®
   3




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Type 1 Diabetes Clinical Trial
 TM
 TM
  License and Sponsored Research Agreements
 RUC Licenses
   Bacterial Disorders License
 On May 15, 2006, we entered into our first exclusive license agreement with RUC covering
patent applications directed to treatment and/or prevention of bacterial disorders (the
Bacterial License). Some of these disorders include disorders due to anthrax,
tuberculosis and bacterial pneumonia. Concurrently, we entered into a three year SRA with
RUC on behalf of UCD for research to advance the bacterial disorders license agreement (the
Bacterial SRA). Under the Bacterial SRA, we made payments aggregating $1,097,460, and we
have no further obligations under this SRA. We are continuing to pursue patent rights
directed to targeting bacterial disorders with the United States Patent and Trademark Office
(USPTO) as well as international patent offices, which include Japan, Canada and Europe.
  4




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Viral Disorders License
 On March 31, 2008, we entered into a license agreement with RUC covering patent applications
and an issued patent directed to treatment and/or prevention of viral disorders (the Viral
License). Some of these disorders include, but are not limited to, HIV and influenza. We
are currently pursuing expanded patent rights based on our licensed technology directed to
treating viral-related disorders with the USPTO.
 On August 18, 2010, we entered into an SRA with RUC whereby UCD will perform studies in
vitro and in vivo to determine the biological activity of AAT as an inhibitor of
influenza (the Viral SRA). The Viral SRA was executed pursuant to the Viral License. We
are obligated to make quarterly payments to UCD, which total approximately $440,000 over a
two-year period. All rights to intellectual property developed in connection with the Viral
SRA (the Viral Intellectual Property) will belong to RUC, and RUC will have the right to
obtain patent protections on the Viral Intellectual Property. In accordance with the terms
of the Viral SRA, RUC granted to us an option to acquire an exclusive, worldwide,
royalty-bearing license of any of the Viral Intellectual Property, subject to certain
conditions and exceptions. To date, we have made payments in the amount of approximately
$110,000 under this SRA.
 On June 8, 2011, we gave written notice to RUC terminating the Viral SRA. The termination
of the Viral SRA will be effective 45 days from the date of written notification, unless an earlier termination date is
negotiated with RUC. Unless otherwise negotiated with RUC, we must reimburse UCD for the
total actual and reasonable costs it has incurred under the Viral SRA through the date of
termination, including those costs necessary to implement the early termination of the Viral
SRA and costs incurred by UCD as a result of non-cancelable obligations, which may extend
beyond the date of such termination. In addition, certain indemnification obligations and
intellectual property rights will survive the termination of the Viral SRA. The
termination of the Viral SRA does not impact the continuance of the Viral License or
licensing of the intellectual property and patents (both issued and pending).
 Cellular Transplant License
 On November 12, 2008, we entered into a license agreement with RUC for technology related to
the treatment of cellular transplantation and graft rejection and diabetes (the Cellular
Transplant License). The transplantation procedures include organ and cellular
transplantation, including bone marrow, as well as pancreatic islet cells, heart, kidney and
lung, among others. We are currently pursuing expanded patent rights based on our licensed
technology directed to treating cellular transplantation and graft rejection disorders with
the USPTO and international patent offices, which include Canada and Europe.
 Bio Holding License
     5




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License Payments and Commitments
  Fair value ofSRA
    
    
    equityLicense
    
    License fee
    
    
    payments
    
    
    securities
    
    
    TotalBacterial License
    
    $
    20,000
    
    
    $
    1,097,460
    
    
    $
    64,301
    
    
    $
    1,181,761Viral License
    
    $
    25,000
    
    
    $
    110,000
    
    
    $
    
    
    
    $
    135,000Cellular Transplant
License
    
    $
    34,736
    
    
    $
    
    
    
    $
    698,939
    
    
    $
    733,675Diabetes License
    
    $
    25,000
    
    
    $
    58,000
    
    
    $
    5,590,980
    
    
    $
    5,673,980$
    104,736
    
    
    $
    1,265,460
    
    
    $
    6,354,220
    
    
    $
    7,724,416
  Minimum
    
    Milestone
    
    Earned
    
    SublicenseLicense
    
    Field of Use
    
    Royalties
    
    Royalties
    
    Royalties (5)
    
    Royalties (6)Bacterial License
    
    Bacterial Disorders
    
    $25,000 per year starting 
May 15, 2011
    
    (1)
    
    4% of Net Sales
    
    20% to 30%Viral License
    
    Viral Disorders (including HIV)
    
    $50,000 per year after first commercial sale
    
    (2)
    
    4% of Net Sales
    
    20% to 30%Cellular License
    
    Cellular Transplantation /Graft Rejection
    
    $50,000 per year after first commercial sale
    
    (3)
    
    3% of Net Sales
    
    20% to 30%Diabetes License
    
    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.(5)
    
    Earned Royalties are based on direct net sales of product by Omni.(6)
    
    Sublicense Royalties are based on royalties received by Omni on a sublicense arrangement
with a third party.
  6




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Targeted Markets
 Type 1 Diabetes
 Proceedings of the National Academy of Sciences Alpha 1-Antitrypsin monotherapy induces immune tolerance during islet allograft
transplantation in mice.
     7




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Cellular Transplantation
   Graft Versus Host Disease
    Possible Future Clinical Trials Through Strategic Partnerships
   8




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Other AAT Indications
 Mycobacterium Tuberculosis and Mycobacterium Avium Complex
    Influenza
     9




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Anthrax
  Bacterial Pneumonia
   Commercialization and Competition
    
    
    the quality and breadth of an organizations technology, research and development
capabilities;
 
    
    an organizations intellectual property;
 
    
    the skill of an organizations employees and its ability to recruit and retain skilled
employees;
 
    
    an organizations intellectual property;
 
    
    the range of capabilities, from target identification and validation to drug discovery
and development to manufacturing and marketing; and
 
    
    the availability of substantial capital resources to fund discovery, development and
commercialization activities.
  10




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Government Regulation
  Preclinical Testing
 Clinical Testing
 
    
    Phase 1 clinical trials are conducted with a small number of subjects to determine the
early safety profile and the pattern of drug distribution and metabolism.
 
    
    Phase 2 clinical trials are conducted with groups of patients afflicted with a specified
disease in order to provide enough data to evaluate preliminary efficacy and optimal
dosages statistically and to expand evidence of safety.
 
    
    Phase 3 clinical trials are large-scale, multi-center, comparative trials, which are
designed to gather additional information for proper dosage and labeling of the drug and to
demonstrate its overall safety and efficacy.
  Marketing Approvals
  11




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Foreign Regulation
 Possible Pricing Restrictions
  Research and Development
  Backlog
  Employees
  Environmental Compliance
  Recent Developments
   12




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How to Obtain Our SEC Filings
  www.omnibiopharma.com
 
 ITEM 1A.
    
    RISK FACTORS.
 Our short and long-term success is subject to many factors beyond our control. If any of the
following risks, as well as any risks described elsewhere in this Form 10-K, actually occur, our
business, financial condition or results of operations could suffer. Given these risks and
uncertainties, investors should not place undue reliance on forward-looking statements as a
prediction of actual results.
 Financial and Market Risks
 Since inception, we have not had any revenue and have incurred operating losses, and our
accountants expressed doubts about our ability to continue as a going concern.
   13




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To pursue our current business strategy and continue developing our products, we will need
substantial additional funding in the future. If we do not obtain this funding on acceptable terms,
we may not be able to continue our business and generate enough revenue to recover our investment
in our product development efforts.
  ®
  
    
    the amount of revenue or cost sharing, if any, that we are able to obtain from
others, any approved products, and the time and costs required to achieve those
revenues;
 
    
    the timing, scope and results of preclinical studies and clinical trials;
 
    
    the size and complexity of our development programs;
 
    
    the time and costs involved in obtaining regulatory approvals;
 
    
    the costs of launching our products;
 
    
    the costs of commercializing our products, including marketing, promotional and
sales costs;
 
    
    our ability to establish and maintain collaborative partnerships;
 
    
    competing technological and market developments;
 
    
    the costs involved in filing, prosecuting and enforcing patent claims; and
 
    
    scientific progress in our research and development programs.
  
    
    delay, scale back or eliminate some or all of our research and development programs;
 
    
    delay, scale back or eliminate some or all of our commercialization activities;
 
    
    lose rights under existing licenses;
 
    
    relinquish more of, or all of, our rights to product candidates on less favorable
terms than we would otherwise seek; and
 
    
    be unable to operate as a going concern.
 We may be unsuccessful in commercializing our products. If we are unable to commercialize our
products, we may not be able to recover the large investment that we have made and plan to make in
our product development efforts.
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Our business and results of operations may be negatively impacted by general economic and financial
market conditions and such conditions may exacerbate the other risks that affect our business.
   Our insurance policies are expensive and protect us only from some business risks, which may leave
us exposed to significant, uninsured liabilities.
  Product Development and Commercialization Risks
 Our product development efforts depend on commercializing new methods of use for an existing drug.
In addition, we have no experience in developing or commercializing products.
  
    
    These technologies or any or all of the products based on these technologies may be
ineffective or toxic, or otherwise fail to receive necessary regulatory clearances;
 
    
    The products, even if safe and effective, may be difficult to manufacture on a large
scale or uneconomical to market;
 
    
    Proprietary rights of third parties may prevent us from exploiting technologies or
marketing products; and
 
    
    Third parties may market superior or equivalent products.
  
    
    complete laboratory testing and human studies;
 
    
    obtain and maintain necessary intellectual property rights to our products;
 
    
    obtain and maintain necessary regulatory approvals related to the efficacy and
safety of our products; and
 
    
    entering into arrangements with one or more of the AAT Manufacturers to provide
manufacturing capacity as well as sales and marketing resources.
   15




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Because clinical trials for our products are expensive and protracted and their outcome is
uncertain, we will have to invest substantial amounts of time and money that may not yield viable
products.
    
    
    our inability to obtain sufficient quantities of materials for use in clinical
trials;
 
    
    variability in the number and types of patients available for each study;
 
    
    difficulty in maintaining contact with patients after treatment, resulting in
incomplete data;
 
    
    unforeseen safety issues or side effects;
 
    
    poor or unanticipated effectiveness of products during the clinical trials; or
 
    
    government or regulatory delays.
   Because we will depend on third parties to conduct our human studies, we may encounter delays in,
or lose some control over, our efforts to develop products.
    16




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Our business and products may subject us to the risk of product liability claims.
  We depend on, and will continue to depend on, collaboration with and licenses from third parties,
and if we are not able to enter into and/or continue such collaborations or licenses, we may not be
able to further develop our products without substantial additional expenditures and delays, if at
all.
   We will depend on others to manufacture and distribute our products, and we will be subject to
their ability and willingness to manufacture AAT for our use. Such potential limitations on
production of AAT could significantly affect our ability to sublicense our intellectual property
rights related to AAT with the AAT Manufacturers.
    17




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The commercial success of any products that we may develop will depend upon the degree of market
acceptance by physicians, patients, healthcare payors and others in the medical community.
  
    
    the prevalence and severity of any side effects;
 
    
    the efficacy and potential advantages of alternative treatments;
 
    
    the prices of our product candidates;
 
    
    the willingness of physicians to prescribe our products; and
 
    
    sufficient third-party coverage or reimbursement.
  Intellectual Property Risks
 We may rely on patents and proprietary rights that may fail to protect our business.
     18




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If patent laws or the interpretation of patent laws change, our competitors may be able to develop
and commercialize our discoveries.
  If the patent applications for which we have obtained a license do not result in issued patents,
our competitors may obtain rights to and commercialize the discoveries.
  If others file patent applications or obtain patents similar to those we have licensed, such
patents may restrict the use of our discoveries.
   19




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Because our current intellectual property may not fully protect our discoveries, others may be able
to commercialize products in indications that are similar to those covered by issued patents that
we have licensed.
   If we are unable to protect our trade secrets, others may be able to use our secrets to compete
more effectively.
  If we lose our right to license and use of certain critical intellectual property from RUC or Bio
Holding for any reason, our business would be in jeopardy.
  Regulatory Risks
 Because we are subject to extensive changing government regulatory requirements, we may be unable
to obtain government approval of our products in a timely manner or at all
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If we or third-party manufacturers or suppliers fail to comply with ongoing FDA or other regulatory
authority requirements, or if we experience unanticipated problems with our products, our products
could be subject to restrictions or withdrawal from the market.
  Failure to obtain regulatory approval in international jurisdictions would prevent us from
marketing our products abroad.
  Other Risks Related to Our Business
 If we lose or are unable to attract key management or other personnel, we may experience delays in
product development.
  If the health care system or reimbursement policies change, the prices of our potential products
may be lower than expected and our potential sales may decline.
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We may not be able to successfully compete against companies in our industry with greater resources
or otherwise.
    If we fail to establish and maintain proper and effective internal controls, our ability to produce
accurate financial statements on a timely basis could be impaired, which would adversely affect our
operating results, financial condition and stock price.
  The restatement of our financial statements and other reports filed with the SEC has subjected the
Company to additional costs and additional risks and uncertainties.
   22




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Risks Related to Our Common Stock
 Insiders control a significant portion of our common stock and their interests may differ from
those of other stockholders.
  Our articles of incorporation and bylaws could discourage acquisition proposals, delay a change in
control or prevent other transactions.
  
    
    authorize the issuance of up to 5,000,000 shares of blank check preferred stock
that could be issued by our board of directors to increase the number of outstanding
shares and discourage a takeover attempt; and
 
    
    limit who may call special meetings of stockholders.
 Our stock price is volatile.
  
    
    the minimal amount of public float in our common stock, which is significantly
affected by a limitation on trading a substantial amount of our shares as a result of
lock-up and leakage provisions that are in place until March 31, 2012;
 
    
    shares of our common stock are not eligible to be deposited in the Depository Trust
Company (DTC), and as a result, shares of our common stock must be traded using
physical delivery of all transacted shares. The inability to utilize an electronic
exchange such as DTC may restrict the timeliness of a shareholder to buy or sell shares
of our common stock.
 
    
    future announcements about our company or our competitors, including the results of
testing; technological innovations or new commercial products;
 
    
    negative regulatory actions with respect to our potential products or regulatory
approvals with respect to our competitors products;
 
    
    changes in government regulations;
 
    
    changes in general economic conditions and in the biotechnology industry;
 
    
    developments in our relationships with our partners;
 
    
    developments affecting our partners;
 
    
    announcements relating to health care reform and reimbursement levels for new drugs;
 
    
    our failure to acquire or maintain proprietary rights to the gene sequences we
discover or the products we develop;
 
    
    litigation; and
 
    
    public concern as to the safety of our products.
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We have the ability to issue additional equity securities, which would lead to dilution of our
issued and outstanding common stock.
  The applicability of penny stock rules to broker-dealer sales of our common stock may have a
negative effect on the liquidity and market price of our common stock.
   The lack of a broker or dealer to create or maintain a market in our stock could adversely impact
the price and liquidity of our securities.
  Future sales of our common stock may cause our stock price to decline.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS.
  
 ITEM 2.
    
    PROPERTIES.
   24




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ITEM 3.
    
    LEGAL PROCEEDINGS.
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
  High
    
    
    LowFiscal year 2011March 31, 2011
    
    $
    5.50
    
    
    $
    2.40December 31, 2010
    
    $
    5.25
    
    
    $
    3.00September 30, 2010
    
    $
    10.00
    
    
    $
    3.55June 30, 2010
    
    $
    10.10
    
    
    $
    8.00Fiscal year 2010March 31, 2010
    
    $
    12.00
    
    
    $
    7.50December 31, 2009
    
    $
    15.00
    
    
    $
    11.05September 30, 2009
    
    $
    15.00
    
    
    $
    8.00June 30, 2009
    
    $
    13.50
    
    
    $
    0.50
  Number of Shareholders of Record and Dividends
    25




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Performance Graph
  
 For the Years Ended
    
    
    For the Years EndedDecember 31,
    
    
    March 31,2007
    
    
    2008
    
    
    2009 (1)
    
    
    2010
    
    
    2011Omni Bio Pharmaceutical, Inc.
    
    $
    100.00
    
    
    $
    44.00
    
    
    $
    40.00
    
    
    $
    808.00
    
    
    $
    240.00NASDAQ Composite Index
    
    $
    100.00
    
    
    $
    59.46
    
    
    $
    57.63
    
    
    $
    90.41
    
    
    $
    104.86NASDAQ Biotechnology Index
    
    $
    100.00
    
    
    $
    87.37
    
    
    $
    81.78
    
    
    $
    112.46
    
    
    $
    125.57
 (1)
    
    The Company changed its year end effective March 31, 2009.
  26




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ITEM 6.
    
    SELECTED FINANCIAL DATA.
    Years Ended March 31,2011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007Statements of Operations Data:Net sales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Loss from operations (1)
    
    
    (8,227,331
    )
    
    
    (12,991,722
    )
    
    
    (1,992,983
    )
    
    
    (1,763,142
    )
    
    
    (1,095,154
    )Net loss (1) (2)
    
    
    (8,225,477
    )
    
    
    (15,478,884
    )
    
    
    (4,544,521
    )
    
    
    (1,812,567
    )
    
    
    (1,100,674
    )Net loss per share  basic and diluted
    
    
    (0.29
    )
    
    
    (0.58
    )
    
    
    (0.25
    )
    
    
    (0.16
    )
    
    
    (0.10
    )Balance Sheet Data:Cash and cash equivalents
    
    
    301,765
    
    
    
    1,802,366
    
    
    
    1,805,395
    
    
    
    17,309
    
    
    
    46,748Total assets
    
    
    407,237
    
    
    
    1,880,378
    
    
    
    1,901,717
    
    
    
    65,702
    
    
    
    70,446Long-term debt
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    
 (1)
    
    The loss from operations and net loss for the fiscal years ended March 31, 2011, 2010,
2009, 2008 and 2007 included share-based compensation in the amounts of $6,466,435, $6,395,302,
$740,251, $692,638 and $32,925, respectively.(2)
    
    The net loss for the fiscal years ended March 31, 2010 and 2009 included non-cash charges
related to the issuance of common stock purchase warrants to investors and related parties and
modifications of certain common stock purchase warrants held by investors in the amounts of
$8,069,980 and $2,504,273, respectively.
  27




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Overview
     Inhibitors of Serine
Protease Activity, Methods and Compositions for Treatment of Bacterial Infections
 Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Viral Infections Inhibitors
of Serine Protease Activity, Methods and Compositions for Treatment of Viral Infections.
  TM ® ®
   28




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Recent Developments
 Private Placement
     Type 1 Diabetes Clinical Trial
 TM
 TM
  29




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License and Sponsored Research Agreements
 Bacterial Disorders License
  Viral Disorders License
    Cellular Transplant License
   30




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Bio Holding License
     Minimum
    
    Milestone
    
    Earned
    
    SublicenseLicense
    
    Field of Use
    
    Royalties
    
    Royalties
    
    Royalties (5)
    
    Royalties (6)Bacterial License
    
    Bacterial
    
    $25,000 per year starting 
May 15, 2011
    
    (1)
    
    4% of Net Sales
    
    20% to 30%Viral License
    
    Viral (including HIV)
    
    $50,000 per year after first commercial sale
    
    (2)
    
    4% of Net Sales
    
    20% to 30%Cellular Transplant License
    
    Cellular Transplantation /Graft Rejection
    
    $50,000 per year after first commercial sale
    
    (3)
    
    3% of Net Sales
    
    20% to 30%Diabetes License
    
    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.(5)
    
    Earned Royalties are based on direct net sales of product by Omni.(6)
    
    Sublicense Royalties are based on royalties received by Omni on a sublicense arrangement
with a third party.
  31




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##### Table of Contents



Possible Future Clinical Trials Through Strategic Partnerships
  Significant Trends, Uncertainties and Challenges
  
    
    Our ability to raise sufficient capital to fund our operations and future clinical
trials;
 
    
    The continued expected growth in the biopharmaceutical sector;
 
    
    Our ability to license key intellectual property and protect our current intellectual
property relating to our development of therapies;
 
    
    Our ability to fund and enter into SRAs and clinical trials necessary for our
development of therapies;
 
    
    Our ability to devote our resources to therapies that are the most likely to result in
commercialization;
 
    
    Our ability to shepherd potential therapies through the FDA approval process;
 
    
    Our ability to compete against companies in our industry with greater resources; and
 
    
    Our ability to partner with an existing AAT Manufacturer.
 Results of Operations  Fiscal Year Ended March 31, 2011 Compared to Fiscal Year Ended March 31,
2010
  Net loss 
  32




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##### Table of Contents



General and administrative expenses
 Research
and development 
 License fee  related party
 Non-operating income (expense)
 Results of Operations  Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31,
2009
  Net loss 
 General and administrative expenses 
 Other operating expense
  33




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##### Table of Contents



Research and development
 Other non-operating expenses
 Interest
income/expense net 
 Liquidity and Capital Resources
   Cash and Cash Equivalents
  Cash Flows from Operating Activities
   34




---



##### Table of Contents



Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  Anticipated Cash Commitments
  Contractual Obligations
  Less than
    
    
    
    
    
    
    
    
    
    
    More than1 Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    5 Years
    
    
    TotalDiabetes Clinical Trial
    
    $
    365,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    365,000SRA payments (1)
    
    
    250,000
    
    
    
    110,000
    
    
    
    
    
    
    
    
    
    
    
    360,000Corporate office lease
    
    
    19,666
    
    
    
    16,727
    
    
    
    
    
    
    
    
    
    
    
    36,393Office equipment lease
    
    
    2,298
    
    
    
    2,107
    
    
    
    
    
    
    
    
    
    
    
    4,405$
    636,964
    
    
    $
    128,834
    
    
    $
    
    
    
    $
    
    
    
    $
    765,798
 (1)
    
    As of June 8, 2011, we gave notice to terminate the Viral SRA and our obligations under SRA
payments may be reduced.
 Critical Accounting Policies
  Share-based Compensation
   35




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##### Table of Contents



Research and Development Costs
  Capitalized License Costs
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   36




---



##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 Financial Statements
  Supplementary Data
  For the Quarter EndedFiscal Year 2011
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    March 31Net sales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    
    (2,735,325
    )
    
    
    (2,714,431
    )
    
    
    (1,341,055
    )
    
    
    (1,434,666
    )Net loss per share  basic and
Diluted
    
    
    (0.10
    )
    
    
    (0.10
    )
    
    
    (0.05
    )
    
    
    (0.05
    )
 For the Quarter EndedFiscal Year 2010
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    March 31Net sales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    
    (807,096
    )
    
    
    (6,533,403
    )
    
    
    (5,032,094
    )
    
    
    (3,106,291
    )Net loss per share  basic and
diluted
    
    
    (0.03
    )
    
    
    (0.25
    )
    
    
    (0.19
    )
    
    
    (0.11
    )
 
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
    37




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##### Table of Contents



Managements Annual Report on Internal Control over Financial Reporting
 Internal Control 
Integrated Framework
  Change in Internal Control over Financial Reporting
   38




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework Managements Report on Internal Control Over Financial Reporting
  (a) (b) (c)
  Internal Control  Integrated Framework
  /s/ HEIN & ASSOCIATES LLP
 
  39




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##### Table of Contents



ITEM 9B.
    
    OTHER INFORMATION.
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 Executive Officers and Directors
  Name
    
    Age
    
    
    PositionJames D. Crapo
    
    
    68
    
    
    Chief Executive Officer and DirectorRobert C. Ogden
    
    
    50
    
    
    Chief Financial Officer, Secretary and TreasurerEdward C. Larkin
    
    
    60
    
    
    Chief Operating OfficerCharles A. Dinarello
    
    
    68
    
    
    Chief Scientific OfficerVicki D.E. Barone
    
    
    51
    
    
    Chairperson of the BoardMichael D. Iseman
    
    
    72
    
    
    DirectorMichael D. Wort
    
    
    61
    
    
    DirectorAlbert L. Kramer
    
    
    78
    
    
    DirectorSteven M. Bathgate
    
    
    56
    
    
    DirectorJeffrey S. Sperber
    
    
    46
    
    
    Director
  James D. Crapo, MD
  Robert C. Ogden
  40




---



##### Table of Contents



Edward C. Larkin
 Charles A. Dinarello, MD
 Vicki D.E. Barone
 Michael D. Iseman, MD
 Michael D. Wort
  41




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##### Table of Contents



Albert L. Kramer
 Steven M. Bathgate
 Jeffrey S. Sperber
 Compliance With Section 16(a) Of The Securities Exchange Act of 1934
 16(a)
 Code of Ethics
  Audit Committee
    42




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##### Table of Contents



ITEM 11.
    
    EXECUTIVE COMPENSATION.
 Compensation Discussion and Analysis
 General Philosophy and Objectives
  
    
    To attract, retain, motivate and reward key employees to drive the successful
implementation of our current and long-term strategic, business and financial goals;
 
    
    To align the financial interests of our executives with those of our
shareholders;
 
    
    To establish appropriate incentives for management and employees that are
consistent with our culture and values; and
 
    
    To provide an annual compensation program with a high emphasis on long-term
equity-based compensation.
   Salaries
  Equity Incentive Compensation
   43




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##### Table of Contents



Tax and Accounting Considerations
 Tax Deductibility of Executive Compensation.
 Accounting.
 Compensation Committee Report
  
  44




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##### Table of Contents



Summary Compensation Table
  All OtherName and Principal
    
    Fiscal
    
    
    Salary
    
    
    Stock Awards (1)
    
    
    Option Awards (2)
    
    
    CompensationPosition
    
    Year
    
    
    ($)
    
    
    $
    
    
    $
    
    
    ($)
    
    
    Total ($)James D. Crapo (3)
    
    
    2011
    
    
    $
    12,000
    
    
    $
    1,125,000
    
    
    $
    
    
    
    $
    
    
    
    $
    1,137,000Chief Executive OfficerCharles A. Dinarello (4)
    
    
    2011
    
    
    $
    35,000
    
    
    $
    562,500
    
    
    $
    
    
    
    $
    
    
    
    $
    597,500Chief Scientific Officer
    
    
    2010
    
    
    $
    
    
    
    $
    
    
    
    $
    6,896,971
    
    
    $
    
    
    
    $
    6,896,971(formerly Acting Chief
Executive Officer)Robert C. Ogden (5)
    
    
    2011
    
    
    $
    112,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    112,500Chief Financial Officer
    
    
    2010
    
    
    $
    72,500
    
    
    $
    
    
    
    $
    3,227,663
    
    
    $
    
    
    
    $
    3,300,163Edward C. Larkin (6)
    
    
    2011
    
    
    $
    130,000
    
    
    $
    
    
    
    $
    
    
    
    $
    12,654
    
    
    $
    142,654Chief Operating Officer
    
    
    2010
    
    
    $
    130,000
    
    
    $
    
    
    
    $
    
    
    
    $
    10,146
    
    
    $
    140,146
 (1)
    
    The amounts shown represent the fair value of RSUs granted to the named executive
officers based on the closing price of our common stock on March 31, 2011 as quoted by
the OTCBB.(2)
    
    The amounts shown represent the estimated fair value on the date of grant of
common stock purchase warrants granted to the named executive officers. The estimated
fair value was calculated using the Black-Scholes pricing model.(3)
    
    Dr. Crapo was appointed as our Chief Executive Officer on March 1, 2011. Dr.
Crapos salary for Fiscal year 2011 represents salary paid from that date through March
31, 2011. Effective with the commencement of his employment, he was granted 300,000
RSUs, which vest as follows: 100,000 on March 1, 2012, 100,000 on March 1, 2013 and
100,000 on March 1, 2014.(4)
    
    Dr. Dinarello served as our Acting Chief Executive Officer through February 22,
2011, and as of that date was appointed Chief Scientific Officer. For Fiscal year
2011, he was paid $2,500 per month, commencing May 1, 2010 for his services as our
Acting Chief Executive Officer. Effective March 1, 2011, he is being paid $10,000 per
month for his services as Chief Scientific Officer. On March 1, 2011, he was granted
150,000 RSUs, which vest over a three-year period as follows: 50,000 on March 1, 2012,
50,000 on March 1, 2013 and 50,000 on March 1, 2014. During Fiscal year 2010, he was
granted warrants to purchase 1,200,000 shares of our common stock. 600,000 warrants are
currently exercisable at $0.50 per share and 300,000 are currently exercisable at $3.00
per share.(5)
    
    During Fiscal year 2010, Mr. Ogden was granted warrants to purchase 350,000
shares of our common stock. 50,000 are currently exercisable at $0.50 per share and
140,000 are currently exercisable at $3.00 per share.(6)
    
    Mr. Larkin received other compensation in the form of health and dental
insurance premiums paid on his behalf by us.
  45




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##### Table of Contents



Outstanding Equity Awards at Fiscal Year-End
  Option Awards
    
    
    
    
    
    
    Stock AwardsNumber Of
    
    
    
    
    
    
    
    
    
    
    Number Of
    
    
    Market ValueNumber Of
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    Shares Or
    
    
    Of Shares OrSecurities
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Units Of
    
    
    Units OfUnderlying
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    Stock That
    
    
    Stock ThatUnexercised
    
    
    Options
    
    
    Exercise
    
    
    
    
    
    
    Have Not
    
    
    Have NotOptions
    
    
    Unexercisable
    
    
    Price
    
    
    Option Expiration
    
    
    Vested
    
    
    Vested (5)Name
    
    Exercisable(#)
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    (#)
    
    
    ($)James D. Crapo
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    (3)
    
    $
    900,000Charles A. Dinarello
    
    
    600,000
    
    
    
    
    
    
    $
    0.50
    
    
    April 7, 2016300,000
    
    
    
    300,000
    (1)
    
    $
    3.00
    
    
    November 13, 2016
    
    
    
    150,000
    (4)
    
    $
    450,000Robert C. Ogden
    
    
    50,000
    
    
    
    
    
    
    $
    0.50
    
    
    April 15, 2016140,000
    
    
    
    160,000
    (2)
    
    $
    3.00
    
    
    November 13, 2016
 (1)
    
    The warrants were granted on December 16, 2009 and vest as follows: 150,000 on March 31,
2012 and 150,000 on March 31, 2013.(2)
    
    The warrants were granted on December 16, 2009 and vest as follows: 80,000 on September
30, 2011 and 80,000 on September 30, 2012.(3)
    
    Represent RSUs and vest as follows: 100,000 on March 1, 2012, 100,000 on March 1, 2013
and 100,000 on March 1, 2014.(4)
    
    Represent RSUs and vest as follows: 50,000 on March 1, 2012, 50,000 on March 1, 2013
and 50,000 on March 1, 2014.(5)
    
    Calculated based on the closing price of our common stock on March 31, 2011 as reported
by the OTCBB.
 Option Exercises and Stock Vested
  Potential Payments Upon Change in Control
  Director Compensation
   46




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##### Table of Contents



Compensation Committee Interlocks and Insider Participation
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  Percent ofNumber of Shares
    
    
    OutstandingName of Beneficial Owner
    
    Beneficially Owned
    
    
    Shares (1)5% Stockholders:BOCO Investments, LLC
    
    
    7,584,000
    (2)
    
    
    21.13
    %262 East Mountain Avenue
Fort Collins, CO 80524Leland Shapiro
    
    
    3,368,750
    (3)
    
    
    10.71
    %8765 East 29th Place 
Denver, CO 80238F. Steven and Gayle S. Mooney
    
    
    5,585,000
    (4)
    
    
    16.31
    %3677 S. Huron Street, Suite 102
Englewood, CO 80110Directors and Named Executive Officers:Vicki D.E. Barone
    
    
    1,887,743
    (5)
    
    
    5.95
    %Michael D. Iseman
    
    
    200,000
    (6)
    
    
    *Michael D. Wort
    
    
    1,150,000
    (7)
    
    
    3.64
    %Albert L. Kramer
    
    
    925,000
    (8)
    
    
    2.93
    %Steven M. Bathgate
    
    
    1,931,364
    (9)
    
    
    6.10
    %Jeffrey S. Sperber
    
    
    100,000
    (10)
    
    
    *Charles A. Dinarello
    
    
    900,000
    (11)
    
    
    2.78
    %Edward C. Larkin
    
    
    520,000
    (12)
    
    
    1.65
    %Robert C. Ogden
    
    
    210,000
    (13)
    
    
    *James D. Crapo
    
    
    
    
    
    
    All directors and executive officers as a group (10 persons)
    
    
    6,847,357
    
    
    
    20.35
    %
  *
    
    Less than one percent
  47




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##### Table of Contents



(1)
    
    Applicable percentage of ownership is based on 31,444,396 shares of common stock outstanding
on June 10, 2011. Beneficial ownership is determined in accordance with the rules and
regulations of the SEC and means that the holder has voting or investment power with respect
to the subject securities. Shares of common stock issuable from vested RSUs or RSUs that vest
within 60 days of June 10, 2011 or upon the exercise of common stock purchase warrants
exercisable currently or within 60 days of June 10, 2011 (unless otherwise noted) are deemed
outstanding and to be beneficially owned by the person holding such warrant for purposes of
computing such persons percentage ownership but are not deemed outstanding for the purpose of
computing the percentage ownership of any other person. Except for shares held jointly with a
persons spouse or subject to applicable community property laws, or as indicated in the
footnotes to this table, each stockholder identified in the table possesses sole voting and
investment power with respect to all shares of common stock shown as beneficially owned by
such stockholder. Unless otherwise provided, the address of all stockholders is 5350 S.
Roslyn Street, Suite 430, Greenwood Village, CO 80111.(2)
    
    Includes 3,134,000 shares owned, 3,000,000 shares underlying warrants currently exercisable
at $0.50 per share and 1,450,000 shares underlying a warrant currently exercisable at $1.00
per share.(3)
    
    Based solely on information included in a Form 3 filed with the SEC on April 10, 2009.
Represents 3,368,750 shares owned.(4)
    
    Includes 2,785,000 shares owned, 800,000 shares underlying a warrant currently exercisable at
$0.50 per share, 400,000 shares underlying a warrant currently exercisable at $1.00 per share
and 1,600,000 shares underlying a warrant currently exercisable at $2.00 per share.(5)
    
    Includes 637,437 shares directly owned (of which 35,000 shares are held by Ms. Barones IRA),
100,000 shares underlying a warrant currently exercisable at $1.00 per share, 100,000 shares
underlying a warrant currently exercisable at $1.25 per share, 10,000 shares underlying a
warrant currently exercisable at $2.00 per share, 50,000 shares underlying a warrant currently
exercisable at $3.00 per share, 6,778 shares underlying a warrant currently exercisable at
$2.50 per share and 6,778 shares underlying a warrant currently exercisable at $3.75 per
share. Also includes 976,750 shares owned by GVC Capital, of which Ms. Barone is a Senior
Managing Partner. Ms. Barone disclaims beneficial ownership of these shares.(6)
    
    Includes 75,000 shares underlying a warrant currently exercisable at $1.25 per share and
125,000 shares underlying a warrant currently exercisable at $3.00 per share.(7)
    
    Includes 1,000,000 shares owned, 50,000 shares underlying a warrant currently exercisable at
$1.25 per share and 100,000 shares underlying a warrant currently exercisable at $3.00 per
share.(8)
    
    Includes 775,000 shares owned, 100,000 shares underlying a warrant currently exercisable at
$1.25 per share and 50,000 shares underlying a warrant currently exercisable at $3.00 per
share.(9)
    
    Includes 45,000 shares directly owned (all of which are held by Mr. Bathgates IRA), 604,000
shares owned by Mr. Bathgates spouse, 50,000 shares owned by Mr. Bathgates daughter, 30,000
shares owned by Bathgate Family Partnership Ltd., 50,000 shares underlying a warrant currently
exercisable at $0.50 per share held by Mr. Bathgates spouse, 100,000 shares underlying a
warrant currently exercisable at $1.25 per share, 20,000 shares underlying a warrant currently
exercisable at $2.00 per share, 50,000 shares underlying a warrant currently exercisable at
$3.00 per share, 2,807 shares underlying a warrant currently exercisable at $2.50 per share
and 2,807 shares underlying a warrant currently exercisable at $3.75 per share. Mr. Bathgate
disclaims beneficial ownership of all of the shares owned by his family members and Bathgate
Family Partnership Ltd. Also includes 976,750 shares owned by GVC Capital, of which Mr.
Bathgate is a Senior Managing Partner. Mr. Bathgate disclaims beneficial ownership of these
shares.(10)
    
    Includes 100,000 shares underlying a warrant currently exercisable at $3.00 per share.(11)
    
    Includes 600,000 shares underlying a warrant currently exercisable at $0.50 per share and
300,000 shares underlying a warrant currently exercisable at $3.00 per share.(12)
    
    Represents 510,000 shares owned and 10,000 shares underlying a warrant currently exercisable
at $2.00 per share.(13)
    
    Includes 10,000 shares owned, 50,000 shares underlying a warrant currently exercisable at
$0.50 per share, 10,000 shares underlying a warrant currently exercisable at $2.00 per share
and 140,000 shares underlying a warrant currently exercisable at $3.00 per share.
  48




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##### Table of Contents



ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 Related Parties and Transactions
  Approval of Related Party Transactions
  Director Independence
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  2011
    
    
    2010Audit Fees
    
    $
    116,640
    
    
    $
    85,490Audit-Related Fees
    
    
    
    
    
    
    Tax Fees
    
    
    5,000
    
    
    
    5,000All Other Fees
    
    
    
    
    
    
    Total
    
    $
    121,640
    
    
    $
    90,490
 Audit Fees
  Audit-Related Fees
  Tax Fees
   49




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##### Table of Contents



All Other Fees
    50




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##### Table of Contents



PART IV
 
 Item 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 (a) Consolidated Financial Statements
 (b) Financial Statement Schedules
 (c) Exhibits
 EXHIBIT #
    
    DESCRIPTION2.1
    
    
    Agreement of Merger and Plan of Reorganization dated November 17, 2008 (incorporated by
reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed on November 21,
2008)2.2
    
    
    Agreement to Amend and Extend Agreement of Merger and Plan of Reorganization dated February
11, 2009 (incorporated by reference to Exhibit 10.4 to the Companys Current Report on Form
8-K filed on February 18, 2009)2.3
    
    
    Second Agreement to Amend and Extend Agreement of Merger and Plan of Reorganization dated
March 11, 2009 (incorporated by reference to Exhibit 10.5 to the Companys Current Report on
Form 8-K filed on March 13, 2009)2.4
    
    
    Third Agreement to Amend Agreement of Merger and Plan of Reorganization dated March 30, 2009
(incorporated by reference to Exhibit 2.4 to the Companys Current Report on Form 8-K filed on
April 6, 2009)2.5
    
    
    Agreement and Plan of Merger between Maxcure Pharmaceutical, Inc. and Apro Bio Pharmaceutical
Corporation dated March 18, 2008 (incorporated by reference to Exhibit 2.5 to the Companys
Annual Report on Form 10-K filed on June 29, 2009)3.1
    
    
    Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Companys
Registration Statement on Form SB-2 filed on March 2, 2007)3.2
    
    
    Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Companys
Current Report on Form 8-K filed on January 5, 2010)3.3
    
    
    Articles of Amendment for Across America Financial Services, Inc. (incorporated by reference
to Exhibit 3.3 to the Companys Current Report on Form 8-K filed on June 2, 2009)10.1
    
    
    Exclusive License Agreement with the Regents of the University of Colorado dated May 15, 2006
(incorporated by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K filed
on April 6, 2009)10.2
    
    
    Exclusive License Agreement with the Regents of the University of Colorado dated March 31,
2008, as amended (incorporated by reference to Exhibit 10.8 to the Companys Current Report on
Form 8-K filed on April 6, 2009)10.3
    
    
    Exclusive License Agreement with the Regents of the University of Colorado dated November 12,
2008 (incorporated by reference to Exhibit 10.9 to the Companys Current Report on Form 8-K
filed on April 6, 2009)10.4
    
    
    License Agreement with Bio Holding, Inc. dated September 28, 2009 (incorporated by reference
to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on October 2, 2009)
  51




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##### Table of Contents



EXHIBIT #
    
    DESCRIPTION10.5
    
    
    Form of Advisor Warrant dated March 31, 2009 (incorporated by reference to Exhibit 10.11 to
the Companys Annual Report on Form 10-K filed on June 29, 2009)10.6
    
    
    Subscription Agreement and Letter of Investment (incorporated by reference to Exhibit 10.12
to the Companys Annual Report on Form 10-K filed on June 29, 2009)10.7
    
    
    Form of Investor Warrant exercisable at $0.50 per share dated March 31, 2009 (incorporated by
reference to Exhibit 10.14 to the Companys Annual Report on Form 10-K filed on June 29, 2009)10.8
    
    
    Form of Investor Warrant exercisable at $1.00 per share dated March 31, 2009 (incorporated by
reference to Exhibit 10.15 to the Companys Annual Report on Form 10-K filed on June 29, 2009)10.9
    
    
    Form of Two-Year Subscription and Lock-up Agreement (incorporated by reference to Exhibit
10.16 to the Companys Annual Report on Form 10-K filed on June 29, 2009)10.10 Form of
Three-Year Subscription and Lock-up Agreement (incorporated by reference to Exhibit 10.17 to
the Companys Annual Report on Form 10-K filed on June 29, 2009)10.11
    
    
    Warrant dated December 16, 2009 issued to Charles A. Dinarello (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed December 22, 2009)10.12
    
    
    Warrant dated April 7, 2009 issued to Charles A. Dinarello (incorporated by reference to
Exhibit 10.18 to the Companys Amendment No. 1 to the Annual Report on Form 10-K filed on
November 8, 2010.10.13
    
    
    Warrant dated December 16, 2009 issued to Robert C. Ogden (incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K filed December 22, 2009)10.14
    
    
    Sponsored Research Agreement, dated September 3, 2010 between Omni Bio Operating, Inc. and
the Regents of the University of Colorado (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on September 9, 2010)10.15
    
    
    Sponsored Research Agreement, dated August 18, 2010 between Omni Bio Operating, Inc. and the
Regents of the University of Colorado (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on August 24, 2010)10.16
    
    
    Investigational Site Agreement, dated June 7, 2010, among Omni Bio Operating, Inc., the
Regents of the University of Colorado, The Barbara Davis Center for Childhood Diabetes and Dr.
Peter Gottlieb (incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q filed on July 30, 2010)10.17
    
    
    Material Transfer Agreement, dated March 19, 2010, between the Company and Baxter Healthcare
Corporation (incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q filed on July 30, 2010)14.1
    
    
    Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the
Companys Annual Report on Form 10-K filed on June 23, 2010)
  52




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##### Table of Contents



EXHIBIT #
    
    DESCRIPTION21
    
    
    Subsidiaries of the Company #23.1
    
    
    Consent of Hein & Associates LLP #23.2
    
    
    Consent of Cordovano and Honeck LLP #31.1
    
    
    Certification of 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 Chief Executive Officer and Chief Financial Officer Pursuant to Section 1350
of Chapter 63 of Title 18 of the United States Code #
 #
    
    Filed herewith
  53




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##### Table of Contents



SIGNATURES
  OMNI BIO PHARMACEUTICAL, INC.June 29, 2011
    By:
    /s/   James D. CrapoJames D. CrapoChief Executive Officer
(Principal Executive Officer)  June 29, 2011
    By:
    /s/   James D. CrapoJames D. CrapoChief Executive Officer and Director

(Principal Executive Officer)June 29, 2011
    By:
    /s/   Robert C. OgdenRobert C. OgdenChief Financial Officer

(Principal Financial and Accounting Officer)June 29, 2011
    By:
    /s/   Vicki D.E. BaroneVicki D.E. BaroneChairperson of the BoardJune 29, 2011
    By:
    /s/   Michael D. IsemanMichael D. IsemanDirectorJune 29, 2011
    By:
    /s/   Jeffrey S. SperberJeffrey S. SperberDirectorJune 29, 2011
    By:
    /s/   Albert L. KramerAlbert L. KramerDirectorJune 29, 2011
    By:
    /s/   Steven M. BathgateSteven M. BathgateDirectorJune 29, 2011
    By:
    /s/   Edward C. LarkinEdward C. LarkinChief Operating Officer  54




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##### Table of Contents



Omni Bio Pharmaceutical, Inc. and Subsidiary
 Index to Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Report of Independent Registered Public Accounting Firm
    
    
    F-3Consolidated Balance Sheets as of March 31, 2011 and 2010
    
    
    F-4Consolidated Statements of Operations for the
Years Ended March 31, 2011, 2010, 2009 and the period from
February 28, 2006 (Inception) through March 31, 2011
    
    
    F-5Consolidated Statements of Stockholders Equity for the
Years Ended March 31, 2011, 2010, 2009 and the period from
February 28, 2006 (Inception) through March 31, 2011
    
    
    F-6Consolidated Statements of Cash Flows for the
Years Ended March 31, 2011, 2010, 2009 and the period from
February 28, 2006 (Inception) through March 31, 2011
    
    
    F-12Notes to Consolidated Financial Statements
    
    
    F-14
  F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Internal Control 
Integrated Framework Internal Control  Integrated
Framework
 /s/ HEIN & ASSOCIATES LLP
 
  F-2




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     /s/ Cordovano and Honeck LLP

Cordovano and Honeck LLPEnglewood, ColoradoFebruary 28, 2009
  F-3




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
 
 CONSOLIDATED BALANCE SHEETS
 March 31,2011
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    301,765
    
    
    $
    1,802,366Other current assets
    
    
    43,541
    
    
    
    10,049Total current assets
    
    
    345,306
    
    
    
    1,812,415Property and equipment, net
    
    
    
    
    
    
    848Intangible assets, net
    
    
    61,931
    
    
    
    67,115Total long-term assets
    
    
    61,931
    
    
    
    67,963TOTAL ASSETS
    
    $
    407,237
    
    
    $
    1,880,378LIABILITIES & STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    41,763
    
    
    $
    94,356Accrued research and development costs
    
    
    44,736
    
    
    
    Accrued liabilities
    
    
    116,500
    
    
    
    97,487Amounts due to related party
    
    
    3,750
    
    
    
    4,125Note payable
 related party, net of discount of $3,000 at March 31, 2010
    
    
    
    
    
    
    22,000Total current liabilities
    
    
    206,749
    
    
    
    217,968Commitments and Contingencies (Notes 1 and 4)Stockholders 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;
28,980,496 and 27,987,018 shares issued and outstanding, respectively
    
    
    28,980
    
    
    
    27,987Additional paid-in capital
    
    
    31,336,345
    
    
    
    24,573,783Deficit accumulated during the development stage
    
    
    (31,164,837
    )
    
    
    (22,939,360
    )Total stockholders equity
    
    
    200,488
    
    
    
    1,662,410TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    407,237
    
    
    $
    1,880,378
   F-4




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 February 28,2006 (Inception)For the Years Ended March 31,
    
    
    Through March2011
    
    
    2010
    
    
    2009
    
    
    31, 2011Operating expensesGeneral and administrative (including share-based
compensation of $6,466,435, $6,395,302, $740,251
and $14,327,551, respectively)
    
    $
    7,649,818
    
    
    $
    7,375,742
    
    
    $
    1,031,911
    
    
    $
    17,983,816License fee  related party
    
    
    
    
    
    
    5,615,980
    
    
    
    
    
    
    
    5,615,980Research and development
    
    
    577,513
    
    
    
    
    
    
    
    241,300
    
    
    
    1,710,010Charge for common stock issued pursuant to
license agreements
    
    
    
    
    
    
    
    
    
    
    719,772
    
    
    
    763,240Total operating expenses
    
    
    8,227,331
    
    
    
    12,991,722
    
    
    
    1,992,983
    
    
    
    26,073,046Loss from operations
    
    
    (8,227,331
    )
    
    
    (12,991,722
    )
    
    
    (1,992,983
    )
    
    
    (26,073,046
    )Non-operating income (expenses)Interest income (expense), net
    
    
    4,854
    
    
    
    3,838
    
    
    
    (6,140
    )
    
    
    (52,393
    )Accretion expense on notes payable 
related parties
    
    
    (3,000
    )
    
    
    (12,000
    )
    
    
    (41,125
    )
    
    
    (56,125
    )Charges for warrants issued in merger  related
parties
    
    
    
    
    
    
    
    
    
    
    (1,948,237
    )
    
    
    (1,948,237
    )Charges for warrants issued in private placement 
related parties
    
    
    
    
    
    
    
    
    
    
    (403,350
    )
    
    
    (403,350
    )Charges for modifications to warrants
    
    
    
    
    
    
    (2,479,000
    )
    
    
    (152,686
    )
    
    
    (2,631,686
    )Total non-operating income (expenses)
    
    
    1,854
    
    
    
    (2,487,162
    )
    
    
    (2,551,538
    )
    
    
    (5,091,791
    )Net loss
    
    $
    (8,225,477
    )
    
    $
    (15,478,884
    )
    
    $
    (4,544,521
    )
    
    $
    (31,164,837
    )Basic and diluted net loss per share
    
    $
    (0.29
    )
    
    $
    (0.58
    )
    
    $
    (0.25
    )Weighted average shares outstanding  basic and
diluted
    
    
    28,331,560
    
    
    
    26,845,209
    
    
    
    18,254,573
   F-5




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 DeficitAccumulatedAdditional
    
    
    During
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    
    Equity (Deficit)Balances at February 28, 2006 (inception)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Common stock issued to founders and insiders (February
and
March 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
    )
  F-6




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (continued)
 DeficitAccumulatedAdditional
    
    
    During
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    
    Equity (Deficit)Common 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 and
June 2007 at $1.00 per share)
    
    
    
    
    
    
    
    
    
    
    257,500
    
    
    
    257
    
    
    
    231,493
    
    
    
    
    
    
    
    231,750Common stock issued as additional consideration pursuant
to
license 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
    )
  F-7




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (continued)
 DeficitAccumulatedAdditional
    
    
    During
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    
    Equity (Deficit)Common stock issued as additional consideration pursuant to
license agreement (April 2008 and March 2009 at
$1.00 per share)
    
    
    
    
    
    
    
    
    
    
    719,772
    
    
    $
    720
    
    
    $
    719,052
    
    
    
    
    
    
    $
    719,772Share-based compensation related to common stock purchase
warrants issued to directors (April through October 2008
at
estimated 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
  F-8




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (continued)
 DeficitAccumulatedAdditional
    
    
    During
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    
    Equity (Deficit)Common stock purchase warrants issued in merger to related
parties (March 2009 at weighted average estimated fair
value of $1.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,948,237
    
    
    
    
    
    
    $
    1,948,237Common stock purchase warrants issued in private placement
to related parties (March 2009 at weighted average
estimated 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 by
related parties (June 2009; 200,000 at $0.01 per
share 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 price
of $1.10 per share)
    
    
    
    
    
    
    
    
    
    
    126,097
    
    
    
    126
    
    
    
    (126
    )
    
    
    
    
    
    
    Common stock purchase warrants exercised for cash by
related parties (July and August 2009 at $0.001 per share)
    
    
    
    
    
    
    
    
    
    
    774,644
    
    
    
    775
    
    
    
    
    
    
    
    
    
    
    
    775Common stock purchase warrants exercised cashless by
related parties (July through September 2009 at
weighted average exercise price of $0.75 per share)
    
    
    
    
    
    
    
    
    
    
    485,387
    
    
    
    485
    
    
    
    (485
    )
    
    
    
    
    
    
    
  F-9




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (continued)
 DeficitAccumulatedAdditional
    
    
    During
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    

Equity (Deficit)Common stock purchase warrants exercised cashless
(August and September 2009 at weighted average exercise
price of $1.10 per share)
    
    
    
    
    
    
    
    
    
    
    268,720
    
    
    $
    269
    
    
    $
    (269
    )
    
    
    
    
    
    $
    Common stock purchase warrant issued to related party for
license fee (September 2009 at estimated fair value of $8.60
per share and exercise price of $3.00 per share, as restated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,590,980
    
    
    
    
    
    
    
    5.590,980Common stock purchase warrants exercised cashless
(October through December 2009 at weighted average
exercise price of $1.02 per share)
    
    
    
    
    
    
    
    
    
    
    291,714
    
    
    
    293
    
    
    
    (293
    )
    
    
    
    
    
    
    Modification to common stock purchase warrants (October
2009 at estimated fair value of $9.92 per share), as restated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,479,000
    
    
    
    
    
    
    
    2,479,000Common stock and common stock purchase warrants sold in
private placement offering, net of offering costs of
$198,760 (December 2009 and January 2010 at
$2.50 per unit)
    
    
    
    
    
    
    
    
    
    
    794,260
    
    
    
    794
    
    
    
    1,786,096
    
    
    
    
    
    
    
    1,786,890Common stock purchase warrants exercised cashless
(March 2010 at exercise price of $1.10 per share)
    
    
    
    
    
    
    
    
    
    
    106,273
    
    
    
    106
    
    
    
    (106
    )
    
    
    
    
    
    
    Share-based compensation related to issuance of common
stock purchase warrants (April 2009 through March 2010),
as restated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,395,302
    
    
    
    
    
    
    
    6.395,302Contributed rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,780
    
    
    
    
    
    
    
    3,780Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,478,884
    )
    
    
    (15,478,884
    )Balances at March 31, 2010
    
    
    
    
    
    
    
    
    
    
    27,987,018
    
    
    
    27,987
    
    
    
    24,573,783
    
    
    
    (22,939,360
    )
    
    
    1,662,410
  F-10




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (continued)
 DeficitAccumulatedAdditional
    
    
    DuringPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Development
    
    
    Total StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    

Equity (Deficit)Conversion of accounts payable into common stock
(April 2010 at $2.50 per share)
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    20
    
    
    
    49,962
    
    
    
    
    
    
    
    49,982Conversion of note payable with related party into common
stock (June 2010 at $0.80 per share)
    
    
    
    
    
    
    
    
    
    
    31,250
    
    
    
    31
    
    
    
    24,969
    
    
    
    
    
    
    
    25,000Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,466,435
    
    
    
    
    
    
    
    6,466,435Common stock purchase warrants exercised cashless
(at weighted average exercise price of $3.13 per share)
    
    
    
    
    
    
    
    
    
    
    7,228
    
    
    
    7
    
    
    
    (7
    )
    
    
    
    
    
    
    Common stock purchase warrants exercised at exercise
price of $0.25 per share, net of placement agent fees
    
    
    
    
    
    
    
    
    
    
    935,000
    
    
    
    935
    
    
    
    221,203
    
    
    
    
    
    
    
    222,138Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,225,477
    )
    
    
    (8,225,477
    )Balances at March 31, 2011
    
    
    
    
    
    $
    
    
    
    
    28,980,496
    
    
    $
    28,980
    
    
    $
    31,336,345
    
    
    $
    (31,164,837
    )
    
    $
    200,488
   F-11




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 February 28,2006(Inception)ThroughFor the Years Ended March 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2009
    
    
    2011CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (8,225,477
    )
    
    $
    (15,478,884
    )
    
    $
    (4,544,521
    )
    
    $
    (31,164,837
    )Adjustments used to reconcile net loss to net cash used in
operating activities:Charge for warrant issued for purchase of license 
related party
    
    
    
    
    
    
    5,590,980
    
    
    
    
    
    
    
    5,590,980Common stock issued pursuant to license agreements
    
    
    
    
    
    
    
    
    
    
    719,772
    
    
    
    763,240Share-based compensation
    
    
    6,466,435
    
    
    
    6,395,302
    
    
    
    740,251
    
    
    
    14,327,551Charge for warrants issued in merger transaction 
related parties
    
    
    
    
    
    
    
    
    
    
    1,948,237
    
    
    
    1,948,237Charge for warrants issued in private placement
transaction
 related parties
    
    
    
    
    
    
    
    
    
    
    403,350
    
    
    
    403,350Charges for modifications to warrants
    
    
    
    
    
    
    2,479,000
    
    
    
    152,686
    
    
    
    2,631,686Accretion expense  related parties
    
    
    3,000
    
    
    
    12,000
    
    
    
    41,125
    
    
    
    56,125Depreciation and amortization
    
    
    6,032
    
    
    
    6,587
    
    
    
    6,193
    
    
    
    22,946Contributed rent
    
    
    
    
    
    
    3,780
    
    
    
    5,880
    
    
    
    19,740Loss on disposal of equipment
    
    
    
    
    
    
    
    
    
    
    2,443
    
    
    
    2,444Changes in operating assets and liabilities:Other current assets
    
    
    (33,492
    )
    
    
    11,723
    
    
    
    (2,499
    )
    
    
    (45,640
    )Accounts payable
    
    
    (2,611
    )
    
    
    (188,579
    )
    
    
    74,210
    
    
    
    247,940Amounts due to UCD under sponsored research
agreement
    
    
    
    
    
    
    (321,300
    )
    
    
    321,300
    
    
    
    Accrued research and development costs
    
    
    44,736
    
    
    
    
    
    
    
    
    
    
    
    44,736Accrued liabilities
    
    
    19,013
    
    
    
    (170,342
    )
    
    
    (63,201
    )
    
    
    (195,324
    )Amounts due to related parties
    
    
    (375
    )
    
    
    (134,136
    )
    
    
    138,261
    
    
    
    207,632Net cash used in operating activities
    
    
    (1,722,739
    )
    
    
    (1,793,869
    )
    
    
    (56,513
    )
    
    
    (5,139,194
    )CASH FLOWS FROM INVESTING ACTIVITIES:Cash proceeds from reverse mergers
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    11,750Purchase of licenses
    
    
    
    
    
    
    
    
    
    
    (35,401
    )
    
    
    (35,401
    )Purchase of property and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,423
    )Net cash provided by (used in) investing activities
    
    
    
    
    
    
    
    
    
    
    (30,401
    )
    
    
    (31,074
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from the sale of common stock
    
    
    
    
    
    
    1,786,890
    
    
    
    1,800,000
    
    
    
    4,285,945Proceeds from the issuance of notes payable to related
parties
    
    
    
    
    
    
    
    
    
    
    75,000
    
    
    
    825,000Proceeds from exercise of common stock warrants
    
    
    222,138
    
    
    
    3,950
    
    
    
    
    
    
    
    236,088Proceeds from the sale of common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,000Net cash provided by financing activities
    
    
    222,138
    
    
    
    1,790,840
    
    
    
    1,875,000
    
    
    
    5,472,033Net increase (decrease) in cash and cash equivalents
    
    
    (1,500,601
    )
    
    
    (3,029
    )
    
    
    1,788,086
    
    
    
    301,765Cash and cash equivalents at beginning of year
    
    
    1,802,366
    
    
    
    1,805,395
    
    
    
    17,309
    
    
    
    Cash and cash equivalents at end of year
    
    $
    301,765
    
    
    $
    1,802,366
    
    
    $
    1,805,395
    
    
    $
    301,765
  F-12




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
 For the Years Ended March 31,2011
    
    
    2010
    
    
    2009SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for:Interest
    
    $
    750
    
    
    $
    2,325
    
    
    $
    Income taxes
    
    $
    
    
    
    $
    
    
    
    $
    SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:Accounts payable converted to common stock
    
    $
    49,982Note payable with related party converted to common
stock
    
    $
    25,000
    
    
    $
    132,000
    
    
    $
    Issuance of common stock pursuant to cashless exercises
of warrants
    
    $
    7
    
    
    $
    1,278
    
    
    $
    Discount on convertible note  related party
    
    $
    
    
    
    $
    
    
    
    $
    25,000Assets acquired (liabilities assumed) in reverse mergersOther current assets
    
    $
    
    
    
    $
    
    
    
    $
    1,500Property and equipment
    
    
    
    
    
    
    
    
    
    
    Licenses
    
    
    
    
    
    
    
    
    
    
    Accounts payable
    
    
    
    
    
    
    
    
    
    
    Note payable assumed in reverse merger  related party
    
    
    
    
    
    
    
    
    
    
    (132,000
    )Note payable converted to equity in reverse merger
    
    
    
    
    
    
    
    
    
    
    Recapitalization pursuant to reverse mergers
    
    
    
    
    
    
    
    
    
    
    (125,500
    )Private placement transaction
    
    
    
    
    
    
    Amounts due from investors
    
    
    
    
    
    
    
    
    
    
    20,000Note payable converted in private placement  related
party
    
    
    
    
    
    
    
    
    
    
    50,000Accrued placement agent fees
    
    
    
    
    
    
    
    
    
    
    112,200
   F-13




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
 
 Notes to Consolidated Financial Statements
 NOTE 1  ORGANIZATION AND GOING CONCERN
 Organization
     Nature of Operations
     F-14




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
 Basis of Presentation and Going Concern
  Recent Financing
  NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  Reclassifications
  Cash and Cash Equivalents
  Revenue Recognition and Accounts Receivable
   F-15




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
 Property and Equipment
   March 31,2011
    
    
    2010Computer equipment and software
    
    $
    4,135
    
    
    $
    4,135Less: Accumulated depreciation
    
    
    (4,135
    )
    
    
    (3,287
    )Net property and equipment
    
    $
    
    
    
    $
    848
  Intangible Assets
   March 31,2011
    
    
    2010Licenses:Bacterial
    
    $
    20,665
    
    
    $
    20,665Viral
    
    
    25,000
    
    
    
    25,000Cell/Transplant rejection
    
    
    34,736
    
    
    
    34,73680,401
    
    
    
    80,401Less: Accumulated amortization
    
    
    (18,470
    )
    
    
    (13,286
    )$
    61,931
    
    
    $
    67,115
  F-16




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
  For the Years Ended March 31,2012
    
    $
    5,1852013
    
    
    5,1852014
    
    
    5,1852015
    
    
    5,1852016
    
    
    5,185Thereafter
    
    
    36,006Total
    
    $
    61,931
 Impairment of Long-lived Assets
  Research and Development
  Fair Value of Financial Instruments
  Use of Estimates
  Earnings (Loss) per Share
   F-17




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
   Years ended March 31,2011
    
    
    2010
    
    
    2009Warrants
    
    
    10,622,992
    
    
    
    11,548,612
    
    
    
    11,157,400Restricted stock units (RSUs)
    
    
    450,000Convertible notes payable
    
    
    
    
    
    
    25,000
    
    
    
    625,00011,072,992
    
    
    
    11,573,612
    
    
    
    11,782,400
 Share-based Compensation
  Income Taxes
   Recently Issued Accounting Pronouncements
   F-18




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
 NOTE 3  FINANCING TRANSACTIONS
 Private Placement  December 2009 and January 2010
    NOTE 4  CONTRACTUAL COMMITMENTS
 Bacterial Disorders License
   F-19




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
 Viral Disorders License
    Cellular Transplantation License
  Diabetes License Agreement and Sponsored Research Agreement
    F-20




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
 Type 1 Diabetes Clinical Trial
  TM
  Minimum
    
    Milestone
    
    
    Earned
    
    SublicenseLicense
    
    Field of Use
    
    Royalties
    
    Royalties
    
    
    Royalties (5)
    
    Royalties (6)Bacterial License
    
    Bacterial Disorders
    
    $25,000 per year starting 
May 15, 2011
    

    (1)
    
    
    4% of Net Sales
    
    20% to 30%Viral License
    
    Viral Disorders (including HIV)
    
    $50,000 per year after first commercial sale
    

        (2)
    
    
    4% of Net Sales
    
    20% to 30%Cellular Transplant License
    
    Cellular Transplant /Graft Rejection
    
    $50,000 per year after first commercial sale
    

    (3)
    
    
    3% of Net Sales
    
    20% to 30%Diabetes License
    
    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.  F-21




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
 (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.(5)
    
    Earned Royalties are based on direct net sales of product by Omni.(6)
    
    Sublicense Royalties are based on royalties received by Omni on a sublicense arrangement
with a third party.  Operating Leases
    Years ended March 31,2012
    
    $
    21,9642013
    
    
    18,834$
    40,798
 NOTE 5  INCOME TAXES
   F-22




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
  March 31,Deferred tax assets (all long-term)
    
    2011
    
    
    2010Net operating loss carryforwards
    
    $
    2,319,432
    
    
    $
    1,677,732Share-based compensation
    
    
    5,307,287
    
    
    
    2,908,239Valuation allowance
    
    
    (7,626,719
    )
    
    
    (4,585,971
    )Net deferred tax asset
    
    $
    
    
    
    $
    
  For the Years Ended March 31,2011
    
    
    2010
    
    
    2009Income tax benefit computed at federal statutory rate
    
    $
    (2,796,662
    )
    
    $
    (5,262,821
    )
    
    $
    (1,545,137
    )Charges for warrants issued to outside parties
    
    
    
    
    
    
    2,990,735
    
    
    
    928,084State income taxes, net of federal benefit
    
    
    (251,699
    )
    
    
    (475,195
    )
    
    
    (139,062
    )Other
    
    
    7,613
    
    
    
    (42,395
    )
    
    
    24,353Change in valuation allowance
    
    
    3,040,748
    
    
    
    2,789,676
    
    
    
    731,762Income tax benefit
    
    $
    
    
    
    $
    
    
    
    $
    
    NOTE 6  STOCKHOLDERS EQUITY
    F-23




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
  NOTE 7  SHARE-BASED COMPENSATION
   2011
    
    
    2010
    
    
    2009Expected life (years)
    
    
    
    
    
    5.0 to 7.0
    
    
    3.33 to 7.0Expected volatility
    
    
    
    
    
    100
    %
    
    100
    %Risk-free interest rate
    
    
    
    
    
    1.86 to 3.37
    %
    
    0.93 to 3.6
    %Dividend yield
    
    
    
    
    
    0
    %
    
    0
    %
 Equity Issuances for the Year Ended March 31, 2011 (Fiscal Year 2011)
  Equity Issuances for the Year Ended March 31, 2010 (Fiscal Year 2010)
   F-24




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
         F-25




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
       Equity Issuances for the Year Ended March 31, 2009 (Fiscal Year 2009)
   F-26




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
      2011
    
    
    2010
    
    
    2009Employees and directors
    
    $
    4,346,675
    
    
    $
    5,111,115
    
    
    $
    734,026Outside consultants
    
    
    2,119,760
    
    
    
    1,284,187
    
    
    
    6,225$
    6,466,435
    
    
    $
    6,395,302
    
    
    $
    740,251
    F-27




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
  WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateShares
    
    
    Price
    
    
    Term (in years)
    
    
    Intrinsic ValueOutstanding at March 31, 2010
    
    
    3,243,000
    
    
    $
    1.97Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited/expired/cancelled
    
    
    
    
    
    
    Outstanding at March 31, 2011
    
    
    3,243,000
    
    
    $
    1.97
    
    
    
    4.6
    
    
    $
    3,300,000Vested and exercisable at March 31, 2011
    
    
    2,783,000
    
    
    $
    1.80
    
    
    
    4.4
    
    
    $
    3,300,000
  Number of WarrantsOutstanding and exercisable at March 31, 2010
    
    
    8,305,612Granted
    
    
    20,000Exercised
    
    
    (945,620
    )Forfeited/expired
    
    
    Outstanding, vested and exercisable at March 31, 2011
    
    
    7,379,992
 NOTE 8  SUBSEQUENT EVENT
    F-28




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##### Table of Contents



OMNI BIO PHARMACEUTICAL, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
     F-29