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Telomolecular Corp – ‘10SB12G’ on 11/7/06

On: Tuesday, 11/7/06, at 3:08pm ET · Accession #: 1353532-6-4 · File #: 0-52303

  As Of                Filer                Filing    For·On·As Docs:Size

11/07/06  Telomolecular Corp                10SB12G                1:277K

Registration of Securities of a Small-Business Issuer — Form 10-SB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10SB12G     Cover and Prospectus                                HTML    279K

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Untitled Document

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-SB

GENERAL FORM FOR REGISTRATION OF SECURITIES

OF SMALL BUSINESS ISSUERS

Under Section 12(b) or 12(g) of

The Securities Exchange Act of 1934

Telomolecular, Corp.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

DELEWARE                                       20-4094917
-------------------------------             -------------------
(State or other jurisdiction of              (I.R.S. Employer
incorporation or organization)             Identification No.)

10933 Trade Center Drive, Suite 102, Rancho Cordova,    California     95670
------------------------------------------------------------           ----------
(Address of registrant's principal executive offices)               (Zip Code)

(916) 410-8681
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)

Securities to be registered under Section 12(b) of the Act:

Title of Each Class                   Name of Each Exchange on which
to be so Registered:                 Each Class is to be Registered:
--------------------                 -------------------------------
18,054,981 Common              Not Applicable

Securities to be registered under Section 12(g) of the Act:

Common Stock, Par Value $.001
-----------------------------
(Title of Class)

Copies to:
----------

Rod Underhill (Attorney at Law)

10933 Trade Center Drive, Suite 102, Rancho Cordova, 95670

Exhibit Index is specified on Page 45

TELOMOLECULAR CORP.

a Delaware corporation

Index to Form 10-SB

Item Number and Caption Page
----------------------- ----

1. Description of Business 3

2. Management's Discussion and Analysis of Financial

Condition and Results of Operations 32

3. Description of Property 34

4. Security Ownership of Certain Beneficial Owners and

Management 34

5. Directors, Executive Officers, Promoters and Control

Persons 36

6. Executive Compensation - Remuneration of Directors and

Officers 41

7. Certain Relationships and Related Transactions 42

8. Description of Securities 43

PART II

1. Market Price of and Dividends on the Registrant's

Common Equity and Related Stockholder Matters 54

2. Legal Proceedings 55

3. Changes in and Disagreements with Accountants 55

4. Recent Sales of Unregistered Securities 55

5. Indemnification of Directors and Officers 56

PART F/S

Financial Statements F-1 through F-19

PART III

1. Index to Exhibits 70

Signatures 71

PART I

Item 1. Description of Business.

Special Cautionary Notice Regarding Forward-Looking Statements.
----------------------------------------------------------------------------------

Various matters discussed in this document and in documents incorporated by reference herein, including matters discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," may constitute forward-looking statements for purposes of the Securities Act and the Securities Exchange Act. These forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Telomolecular (the "Company") to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," and similar expressions are intended to identify such forward-looking statements. The Company's actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:

* The effects of future economic conditions;

* Governmental monetary and fiscal policies, as well as legislative and regulatory changes;

* The risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks;

* The effects of competition from other biomedical entities in the Company's market area and elsewhere, including firms operating locally, regionally, nationally and internationally, together with such competitors offering services by mail, telephone, and computer and the Internet; and

* The failure of assumptions underlying the establishment of reserves for possible loan losses and estimations of values of collateral and various financial assets and liabilities.

All written or oral forward-looking statements attributable to the Company are expressly qualified
in their entirety by these cautionary statements.

Background of the Company
-----------------------------------

Telomolecular Corp., a biomedical nanotechnology startup established in Sacramento, California in August of 2005, was formed to commercialize a new class of synthetic nanotechnologies that have been shown to regenerate human cells and tissues. The Corporation intends to perform continued research and development, and commercialize products important in the treatment of aging, age-related disease, and cancer.

By combining new large-molecule delivery technologies with biomedical agents shown to lengthen chromosomal telomeres in vitro, successful in vivo therapies might be developed that significantly offset, and potentially reverse many age-related diseases and address symptoms and signs recognized as human aging. The Corporation’s early work and experimentation was performed through contracted research by third parties and through the scientific staff managed by its executives who run other (public) biotechnology corporations.

In January of 2006, the Corporation signed an exclusive licensing agreement with the University of Nebraska Medical Center through its licensing arm UNeMed for the delivery of telomere elongating agents in organismal cells via the University’s unique biodegradable nanoparticle platform. The delivery tool is the first gene therapy approved by the FDA for use in the United States, is capable of comprehensively and safely transducing exceptionally large-molecules across cell membranes in a living organism, supports sustained release, is non-toxic, there is no immune response, and it possesses other important pharmacological properties.

In February of 2006, the Corporation acquired, through Stanford University, the exclusive in vivo licensing rights to “Synthetic DNA Nanocircles in the elongation of telomeric repeats”. Synthetic DNA nanocircles have been shown to repair damaged telomeres in vitro. Nanocircles show promise as an in vivo tool capable of rejuvenating human tissues and is likely to be a therapeutically cost efficient solution to creating pharmaceutical products.

On March 3rd 2006, the Corporation completed development of and “invented” a synthetically engineered protein called oTert useful in telomere elongation, and later in March the corporation completed development on and “invented” a synthetically engineered protein called “XfactorTrt” also useful in the elongation of chromosomal telomeres.

On June 13th, 2006, through contracted research, the Corporation began in vivo studies with telomere elongating agents and expects to report preliminary results from these studies in February of 2007. The company hopes that this effort will result in new products for rejuvenating human hair and skin that might be sold in the United States and abroad perhaps as early as the first quarter of 2008. A continuation of this research will be sponsored up through the year 2011 and may result in targeted pharmaceutical products for treating human diseases known as “age-associated” diseases.

On June 30th, 2006, the Corporation announced that it had successfully completed a round of financing according to Rule 504 Regulation D of the 1933 Securities and Exchange Act for $1,000,000. 200,000 of the company’s total 4,500,00 shares of common stock were sold to investors at a $5 per share price.

On July 5th, 2006, the Corporation opened an additional laboratory in Rancho Cordova, California in order to perform in vivo work with synthetic DNA nanocircles. There is no predicted time frame for the completion of products but the short-term scientific goals of the program are to assess the function of nanocircles in repairing diseases of the vascular endothelium, bones, and skin.

On July 13th, 2006, the company agreed to acquire exclusive rights to all technologies resulting from sponsored research for the development of improved methods of DNA, RNA, and siRNA production. Management believes this technology could reduce the industry wide costs of producing pharmaceutical grade DNA, RNA and siRNA and that it may increase yield efficiency many times over. The company successfully raised $350,000 through private accredited active investors to help pay for the new program.

On July 20th, 2006, the company acquired exclusive licensing rights from Stanford University for the research, development, and commercialization of “Notch 1 in the regeneration of human musculature, heart tissue, and neuronal tissue”. The company paid approximately $75,000 in upfront licensing and patent related fees, and further agreed to certain milestones.

On August 28th, 2006, the company acquired through a contract expansion with the University of Nebraska Medical Center expanded licensing rights to deliver all anti-cancer agents, including p53 DNA damage checkpoint control reactivators and pRB tumor suppressor reactivators (as a combination therapy) with the University’s unique biodegradable nanoparticle platform. The company paid $20,000 in licensing fees and is obligated to meet certain milestones.

On August 29th, 2006, the company acquired exclusive licensing rights from Stanford University for the research, development, and commercialization of “Mitofusin 1 in the repair of Mitochondrial DNA”. The company paid approximately $85,000 in upfront licensing and patent related fees, and further agreed to certain milestones.

On August 30th, 2006, the Corporation announced that it had successfully completed a second round of financing according to Rule 504 Regulation D of the 1933 Securities and Exchange Act for $1,000,000. 100,000 of the company’s total 4,500,00 shares of common stock were sold to investors at a $10 per share price.

On September 15th, 2006, the company received a term sheet from El Charis Mikman Firm, LLC, an investment bank, to provide $10,000,000 in financing once Telomolecular reaches the OTCBB according to certain milestones cited in the agreement.

On October 15th, 2006, the Corporation received a Letter of Intent from the Louisiana State Development Fund indicating that the State intends to sponsor the acquisition of an anti-aging research facility in Louisiana. The discussed purchase price was $7.5 million USD.

The Corporation has also reached terms on certain tentative licensing agreements to be announced upon payment and ratification, including the acquisition of technologies for the therapeutic treatment of cancer.

Business of the Issuer
--------------------------

Telomeres cap the ends of chromosomal DNA and consist of repeated sequences of the chemicals thymine, adenine, and guanine. They are longest at conception and become shorter each time a cell divides. This shortening eventually becomes critical and leads to a programmed form of cell death. As a result, the human cell has a replicative lifespan of about 50 to 70 doublings. Cell function, such as protein production, DNA repair, waste management, metabolism, and signaling, decline as telomeres shorten. In general, aging cells become progressively less able to form and maintain tissue. This dysfunction plays a key role in a variety of age-associated diseases such as macular degeneration, arteriosclerosis, atherosclerosis, osteoporosis, skin atrophy, Progeria and others. It can also be seen in symptoms we often label as human aging, such as wrinkled and deteriorating skin and the decline of vital organs.

Dr. Harley and colleagues at Geron, Dr. Woodring Wright, Dr. Jerry Shay, and colleagues at Southwestern Medical Center discovered in 1998, as reported in Science magazine, that human cells can be immortalized in a petri dish by repairing their degraded telomeres with the key catalytic enzyme telomerase reverse transcriptase (TERT). Treated cells, even if genetically old, begin to divide vigorously and exhibit the characteristics and protein production of “young” cells. Scientists at more than 800 universities and institutions have now repaired degraded chromosomal telomeres in vitro.

The effect of telomerase in various cell types has been studied. Dr. Shay and Dr. Wright found that adding the gene that encodes human telomerase reverse transcriptase (TERT) into telomerase-negative human retina and foreskin cells caused the expression of telomerase. Telomeres elongated, and the cells divided vigorously and did not express a cell marker for senescence (beta galactosidase). Furthermore, the cells showed an increased number of cell divisions and a limitless life span, compared to cells that were not treated with telomerase, whose telomeres shortened with each division, leading to senescence. Another important observation was that the introduction of telomerase into the cells and their continuous rapid division and longer life span did not make them cancerous. They remained with a young appearance and normal number of chromosomes.

These experiments used cells important in human disease and aging--retinal pigment epithelium, fibroblasts, and vascular endothelium. Slowed metabolism of retinal epithelium can cause age-related macular degeneration. Fibroblasts in aging skin make less collagen and elastin and more collagenase, causing wrinkles. An overgrowth of the endothelium that forms capillaries and lines blood vessel interiors contributes to atherosclerosis. The results of adding telomerase to these cells were striking--the cells regained their proliferative and reparative potential, ignoring Hayflick’s limits. Cell lines that would normally be considered “diseased by age” were restored to a normal state.

Subsequent experiments by other groups further established the role telomeres play in organismal aging. In an experiment conducted by Geron Corp., and published in November of 2000 in the Journal of Experimental Cell Research, scientists modified aging human skin cells to express TERT, from these cells they developed skin grafts, which were then transplanted into mice. The results showed that TERT restored normal function to the aged cells: their ability to divide increased exponentially and the pattern of gene expression changed. The transplanted skin remained young throughout the lifespan of the mouse while its native cells aged.

The barrier to practical in vivo applications of telomerase reverse transcriptase (TERT) has been the difficulty of delivering large and complex molecules across otherwise impermeable cell membranes to the trillions of cells that makeup a living human. TERT is a massive molecule from a bioengineering standpoint and cannot be sensibly delivered with known traditional vectors such as viral based carriers and or liposome technologies.

In order to overcome this barrier, Telomolecular is working on the direct delivery of a synthetic genetically optimized enzyme similar to telomerase reverse transcriptase (TERT) into cells by utilizing its exclusive licensing rights to a novel new FDA approved nanotechnology capable of transporting exceptionally large biomolecules that were previously considered too large to deliver comprehensively in living animals. The company is presently working in vivo in fibroblast skin grafts through a sponsored research program.

Proteins delivered via the nanotechnology are encapsulated and protected from the cell membrane and there is no immune response or toxicity. Successful drug formulations based on this strategy might make possible the treatment of specific diseases and more generalized anti-aging therapies.

In addition to the delivery of TERT (and variants like its proprietary vTert), Telomolecular has acquired exclusive licensing rights for the in vivo use of a nanotechnology created by Leland Stanford University called “Synthetic DNA Nanocircles”. DNA nanocircles have been shown to effectively elongate chromosomal telomeres in vitro. They consist of DNA bases arranged in a circular sequence that template the lengthening of telomeres by repeated addition of new TTAGGG sequences. By combining nanocircles with Telomolecular's rights in the field of large-molecule delivery, nanocircles might work efficiently in vivo.

From a commercialization standpoint Telomolecular intends to focus first on delivering natural proteins like TERT, but as a long-term solution, once synthesis and manufacturing capabilities have been mastered, nanocircles show great promise in becoming a therapeutically superior and substantially more cost efficient way of regenerating human tissues.

The Corporation is also working on cutting edge anti-cancer technologies. The permanent expression of telomerase after cell-crisis is observed in most cases of cancer; however, paradoxically, temporary expression of telomerase before cell-crisis has been shown to act as a preventative therapy. Normal cells altered to express telomerase in experimentation do not become cancerous and show an ability to inhibit “prevent” cell crisis, which according to recent studies appears to be the primary cause of all cancer. Furthermore, the company licensed a technology from Stanford University called Mutant Telomere Elongation Nanocircles (MTENS) that have been evaluated as an anti-cancer tool in vitro. MTENs react in cancerous cells by modifying the telomere (elongating it with the wrong sequences), which causes the cancerous cell to self-destruct. The Company has identified novel proteins and inducible genes that activate p53 DNA damage checkpoint control and pRB tumor suppressors as novel drug candidates for effectively preventing and treating cancer. Other important technologies are discussed later in this document.

Bankruptcy
--------------

The corporation has not been a party, or itself been subject to, any bankruptcy, receivership or similar proceeding; and has not undergone any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business.

Dependence on one or a few major customers
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The corporation would not depend largely on one or a few major customers and expects to sell products to a very broad and diversified audience of consumers.

Government Approval
---------------------------

Government approval is necessary for many of the Corporation’s mission critical products that will fall under the regulation of the U.S. Food and Drug Administration, as well as the equivalent regulatory bodies of other countries. The business issuer’s research programs do not generally require State or Federal approval.

Existing and Probable Regulations
-----------------------------------

The Corporation intends to develop many pharmaceutical products that require approval by the FDA and other bodies around the world in respect to foreign market entries. The FDA does not traditionally regulate some of the company’s expected products, such as cosmeceutical products.

Generally, even in liposome-based cosmetics that deliver data across cell membranes, the FDA does not interfere with the sale of products if it can be demonstrated that they meet those safety guidelines required in the industry. Many foreign markets are even more lenient. It is likely that there will be markets for cosmeceutical products. Management anticipates a rejuvenating skin cream to be developed, tested and ready for initial marketing within perhaps 48 months.

The sale of pharmaceuticals in the United States requires FDA approval. Other major markets have similar regulatory bodies and approval requirements. It is likely, that the FDA study and application process could take many years. Therefore, we do not outline income from pharmaceuticals in our 7-year financial projections; however, the world demand for highly effective pharmaceutical products would be in the many billions of dollars. The process of applying for and receiving FDA drug approval is expensive and may require many millions of dollars in corporate expenditure. Possible applications in valued livestock and in veterinary application present an excellent ancillary market that does not require FDA approval.

Costs and effects of compliance with environmental laws
---------------------------------------------------------

The company does not foresee compliance with environmental laws having a cost or effect according to its current business plan.

Product liability and insurance
------------------------------------

The company maintains $5,000,000 of general liability insurance through Aegis Insurance, Corporaiton, $600,000 in business equipment insurance, and full workers compensation insurance.

Principal products and their markets
-------------------------------------------

Telomolecular’s primary product focus includes: (1) products for the treatment of age related diseases known to be caused by critical telomere shortening, (2) products for the general treatment of human aging, (3) the delivery of ancillary molecules such as catalase, SOD, and glutathione for specific therapeutic reasons, (4) manufacturing and production solutions, (5) and anti-cancer therapies.

In vitro applications of telomere therapy are already in use. Researchers at the University of Tennessee-Memphis are using telomerase to grow artificial corneas from real cornea cells. Telomerase allows these cells to replicate far beyond their inherent replication limits, something they couldn't do in nature because their telomeres become too short. A Dutch pharmaceutical company is growing telomerized skin grafts for burn victims, while Geron Corp. is growing whole organs and tissues in the lab to replace dysfunctional and diseased organs and tissues. What separates Telomolecular from its competitors is a focus on “in vivo” rather than “in vitro” applications.

As a first application, Telomolecular plans the development of an (probably topical) anti-aging product for the skin and hair follicles. Telomerized skin cells have been shown to produce high levels of elastin and collagen, which improve elasticity and sheen. Management expects the fibroblasts and tissue that comprise skin to regain full elasticity in the presence of active telomerase. The principal reason to consider cosmetic applications is that they might be produced and released in a short time frame while the corporation works with the FDA on the release of more regulated pharmaceuticals.

A great number of diseases are known to be caused by or correlate strongly with critical telomere shortening, and in addition there are tremendous tested health benefits, such as the repair and restoration of the immune system, which has been qualifiedly demonstrated by UCLA scientists. The market for treating age-related disease is worth many billions of dollars and is comprised of specific lower risk applications in areas that appear to benefit from therapy, such as in the treatment of macular degeneration, arteriosclerosis, atherosclerosis, osteoporosis, skin atrophy, emphysema, cirrhosis, certain aspects of AIDS, Progeria, Werner’s Syndrome and other diseases.

Macular degeneration, for example, is the leading cause of irreversible, severe loss of vision in people 50 and older. There are 15 million people in the United States living with some form of AMD, with more than 1.6 million experiencing the active blood vessel growth and blood vessel leakage associated with neovascular AMD. In addition to AMD, 10 million to 15 million Americans have chronic obstructive pulmonary disease; another 20 million to 30 million go undiagnosed. 1.4 million patients require bypass surgery each year because of age related arteriosclerosis. Studies demonstrate that these afflictions are likely to be corrected with telomere therapy. Other age-related diseases may also be treated with telomere therapy.

Restoring telomeres holds promise as an effective anti-cancer therapy. Cancer cells benefit from activation of a gene that “immortalizes” cells by causing the permanent expression (and an endless supply) of human telomerase. Telomolecular addresses safety concerns related to “immortalization” by elongating the telomere with a therapeutic dose of nanocircles, hTert, or telomerase, without altering genes. This approach offsets cell crisis, which is the primary cause of all cancer.

In respect to cosmeceutical possibilities, the present worldwide market for cosmeceuticals is $250 billion dollars per annum. It is our assumption, confirmed by market specialists, that an effective skin-and-hair rejuvenation product could create a large world demand.

The international market for pharmaceuticals is greater than $500 Billion with
market growth of 1.7 % per annum. FDA approved pharmaceuticals characterize the most profitable market opportunity for the company.

Beyond the broader markets described above, it is possible to define more specific markets according to the problem that telomere therapy might address. Many diseases are caused by critical telomere shortening. Therapies that effectively treat these diseases are likely to enjoy strong demand in underserved consumer markets.

Our Financing Strategy
-----------------------

From February 1st to June 30th of 2006 the company completed a successful $1 million private placement at $5 per share according to Regulation D Rule 504 on the 1933 U.S. Securities and Exchange Act. On August 30th, the company completed a second successful $1 million private placement (according to a separate plan of finance) at $10 per share according to Regulation D Rule 504 on the 1933 U.S. Securities and Exchange Act. Management intends to list its securities on the pink sheets through a 10-SB offering, and move it’s securities
up to the OTCBB in January of 2007 after the completion of its’ Year 2006 audited financial statements. We expect to continue to issue private placements for different plans of finance in the aggregate amount of $4,000,000 over the next 12 months and the aggregate amount of $8,000,000 USD in a subsequent 12 month period. We expect to require possibly $50,000,000 in investment capital through FY 2012.

On August 1st, 2006, the company’s shareholders voted on and passed with a greater than 75% majority of votes a resolution to increase the company’s total number of authorized and issued shares. The new capital structure of the company increases the total number of common shares of common stock from 4.5 million shares to 500 million shares and creates 1 million shares of preferred stock convertible to 50 million shares (1 to 50) of common stock. The new capital structure does not cause dilution for current shareholders and maintains the pre-existing ownership ratio of all shareholders on a per shareholder percentage basis.

On or about October 15th, El Charis Mikman Firm, LLC, a Southeastern investment bank, signed a term sheet with Telomolecular, for $10,000,000. Key milestones in the term sheet include quoting its shares on the Over the Counter Bulletin Board and reaching certain stock price milestones.

Products in Development Include:
----------------------------------

Cosmeceuticals
----------------

Telomolecular Corp. has commenced in vivo studies and plans to develop, test, and ready a rejuvenating skin cream for initial market and resale in the domestic United States and abroad possibly within 48 months. Though management expects the successful completion of these studies there are many unforeseen risks that could cause significant delays or difficulties. The skin cream will make cosmetic claims only (more youthful and healthier skin appearance) and represents the most immediate commercial profit opportunity for the company. Test have already commenced in fibroblast cells and there is evidence that the product may make a big impact on aged skin, resulting in a reduction of wrinkles and discoloration, and leading to improvements in elasticity, texture, and sheen. It is also likely to help restore the youthful, healthy appearance and color of hair. In experiments, old skin cells augmented with TERT express collagen and elastin like young cells. Tissue grown from these once old skin cells is perfectly young.

The production of a nanoparticle formulation that can be applied directly on the skin makes an in vivo product viable. Cosmetics production enjoys inherent marketplace advantages.

In regulated markets approvals for “cosmetic claims only” are minimal and take months, not years.
Cosmetics are easier to develop and administer than pharmaceuticals.
Development costs for a first commercial product are lower (overall costs of US $3 million over a one year period).
The technology is safe and readily available for effective delivery to the basal layer of the skin (liposome or nanoparticle technology).
The world market for such an effective cosmetic product is in the many billions.
Existing cosmetic surgery clinics, health and beauty spas and clinics, anti-aging clinics provide a rapid market entry vehicle through the franchising and licensing of “clinics” to be operated within existing clinics and spas who service and can be expected to expand their present clientele.
Results of the cosmetics testing form the basis for further testing and an application for a DIN (drug identification number) for the product with medical claims. This process is generally faster for topical (skin) applications than for more invasive types of delivery.

The process involved in reaching the marketplace includes:

Encapsulating TERT or nanocircles in a nanoparticle formulation.
Producing these new proteins or nanocircles together in sufficient quantities to conduct in vivo experiments.
Understanding the safety and efficacy of the new product.
Producing these new proteins or nanocircles in sufficient quantities, and at reasonable a cost, to formulate a topical skin cream appropriate for resale and distribution.

*** Results of the cosmeceuticals testing form the basis for further testing and an application for a DIN (drug identification number) for the product with medical claims.

Pharmaceuticals
----------------

Pharmaceutical applications that treat specific diseases or rejuvenate the body are primary long-term goals of the company. We believe such applications will transform human health. New pharmaceutical drugs could be a multi-billion dollar profit center.

The development of IV administered pharmaceuticals presents fewer hurdles than the production of oral applications. Both applications are based on the creation of a nanoparticle delivery mechanism and a TERT analogue, variant, or synthetic DNA nanocircles; however, IV administration of pharmaceuticals tends to have superior uptake and distribution potential. Oral applications, once developed, tend to be less expensive to administer and more popular to buy.

Pharmaceutical targets include:

Cell culture enhancement: Laboratories perform experiments in cell cultures. The longer the cell culture can live and replicate the more research that can be performed or the more pharmaceutical products that can be produced. TERT is already being administered in extending the lifespan of cell cultures through expensive and inefficient manual infection processes. Telomolecular nanotechnologies are expected to be easier and cheaper to use.

Skin grafts: Skin cells can only replicate a limited number of times in the production of skin grafts. For burn victims who need new skin this represents a challenge as it becomes hard to grow even a few centimeters of artificial skin. The more skin cells divide the slower they replicate and function. This leads to thin and frail skin grafts because telomeres wear out quickly during replication. Telomolecular nanotechnologies may make safe and economical the large-scale growth of higher quality skin grafts.

The treatment of age-related disease: Many diseases are known to be caused by telomere shortening such as macular degeneration, atherosclerosis, age-related liver and kidney disease, age-related cirrhosis, certain rare genetic disorders like Progeria and other important diseases. Fixing these problems by extending telomeres is a multi-billion dollar business opportunity and there are no working products in this marketplace.

Healing agents: The elongation of telomeres at a wound site has been shown to provide extra-ordinary healing capabilities. A wound, whether external or internal, can only heal as quickly as new cells can divide to build new tissue. Elongating chromosomal telomeres allows skin and tissues to divide more quickly and constitute healthier structures. Applying a healing agent to a wound site, either internally, or externally, is likely to save lives or help prevent infection, scarring, and disability.

The prevention of cancer: Telomeres serve in part to prevent chromosome ends from activating a DNA damage response. However, this important function can be lost as telomeres shorten with cell division in culture or in self-renewing tissues with advancing age. Impaired telomere function leads to induction of a DNA damage response and inactivation of the tumor suppressor protein p53. p53 serves a critical role in enforcing both senescence and apoptotic responses to dysfunctional telomeres. Loss of p53 creates a permissive environment in which critically short telomeres are inappropriately joined to generate chromosomal end-to-end fusions. These fused chromosomes result in cycles of chromosome fusion-bridge-breakage, which fuels greater than 97% of cancer initiation, especially in epithelial tissues, by facilitating changes in gene copy number. Telomere therapy is likely to greatly reduce the development cancer.

The treatment of human aging: Because the rejuvenation of aged tissues is observed in vitro the generic elongation of telomeres in living animals might likely have a rejuvenating affect on tissues and organs in vivo, potentially resulting in significant rejuvenation of living humans including possibly substantial lifespan extension.

The treatment of trauma disorders: Many trauma disorders like stroke and traumatic inflammation have an association with aging and might be offset by telomere therapy or treated with synergistic enzymes like catalase, superoxide dismutase, and glutathione.

Ex vivo organs: The new science of organ engineering requires a method for repairing exhausted telomeres. Telomolecular approaches may make the ex vivo production of organs and tissues more practical and affordable. This technique might also yield improved methods for growing artificial corneas, valves, and arteries.

Stem cell therapy enhancement: Stem cell therapy runs out of steam as telomeres degrade. An effective combination therapy that keeps telomeres extended is likely to improve stem cell therapy applications.

Veterinary applications: Many valued breeding animals and livestock can live longer healthier lives through telomere therapy. Unlike administration in human beings the use of drugs in animals does not require years of FDA study and approval and makes for early market opportunities.

Immunomodulation: Restoring degraded telomeres in immune cells has been demonstrated to help AIDS patients better fight disease and improve the capabilities of aged immune systems when transfused into the body. A non-invasive therapy based on PLGA might represent a preferable regiment.

Muscle Regeneration: The Company has acquired licensing rights to a technology developed by Stanford University shown to regenerate musculature, heart tissue, and neuronal tissue called generically “Notch 1”. A hallmark of aging is diminished regenerative potential of human musculature. The mechanism of this decline is now known. Analysis of injured muscle revealed that, with age, resident precursor cells (satellite cells) had a markedly impaired propensity to proliferate and to produce myoblasts necessary for muscle regeneration. Sufficient up-regulation of a special receptor ligand results in muscle, neuronal, and heart tissue regeneration in old musculature.

DNA, RNA, and siRNA production: The next wave of pharmaceutical products will be made from human DNA, RNA, and siRNA. Nanotechnologies like Telomolecular’s make it possible to deliver large molecules like DNA and RNA across human cell membranes. The production of DNA, RNA and siRNA is a rapidly growing $40 billion industry however, current methods for producing DNA do not scale up well and are expensive. Telomolecular is working on technologies for producing DNA, RNA, and siRNA in transgenic plants, bacteria, and animals that is likely to reduce the cost of goods very significantly and permanently change the way pharmaceutical grade DNA is produced.

Repair of damaged mitochondrial DNA: The company has acquired licensing rights to a technology developed by Stanford University shown to be useful in the repair of damaged mitochondrial DNA called generically “Mitofusin 1”. In the future it may become important to correct dysfunctional and aberrant mitochondrial DNA.

Corrective therapy for cancer: In addition to potential preventative therapies that may offset or prevent cancer by repairing telomeres, Telomolecular is focused on the discovery of inducible genes and enzymes that may reactivate p53 DNA damage checkpoint control activator, pRB tumor suppressor, and other tumor suppressors. Special agreements have been reached with partners in this area. Inactivation of the p53 tumor suppressor protein, by mutation or by viruses, has been identified in over one-half of all human tumors. The inactivated protein usually has reduced DNA-binding capacity, which renders it ineffective in regulating cell division and cell growth. Delivery of the p53 gene to tumor cells has led to the elimination of the tumor in both animal models and some early clinical studies. The retinoblastoma protein (pRb)/cyclin/cyclin-dependent kinase (Cdk)/p16 tumor-suppressor pathway participates in the regulation of cellular proliferation and undergoes mutational or epigenetic inactivation in essentially 100% of selected human malignancies. Since this pathway is frequently altered by inactivation of either the RB gene or the upstream Cdk4/6-inhibitor gene, Cdkn2a/p16ink4a, it is commonly referred to as the RB/p16 tumor-suppressor pathway. Reactivating this pathway delimits human cancers.

Initial targets include:

Targeted therapy for macular degeneration
In vitro cell culture enhancement, reagent kits, and in vitro cloning enhancement
Skin cream skin therapy
Targeted therapy for arteriosclerosis
Rehabilitation of damaged immune system
Curative therapy for Progeria and Werner’s Syndrome
DNA, RNA, and siRNA production

Future targets include:

The use of ancillary proteins in treating traumatic damage to the organs and the brain
Improvements in the growth of ex vivo organs and skin grafts
Targeted therapy for cardiovascular disease
Veterinary products
Progenitor cell therapy for musculature
Repair of damaged mitochondrial DNA
Reactivation of pRB tumor suppressors
Reactivation of p53 DNA damage checkpoint control
Improvements in therapeutic protein delivery
Novel protein production in transgenic plants, animals and bacteria
Treatment of viruses and mycosis involved in cancer
Notch 1 therapy
General anti-aging pharmaceuticals for improved health and longer lifespan

As it relates to pharmaceutical drug development, if murine experiments prove successful we expect to file a New Drug Application with the FDA by the last quarter of 2009. Under FDA requirements, a sponsor must first submit data showing that the drug is reasonably safe for use in initial, small-scale clinical studies. This requires: (1) compiling existing non-clinical data from past in vitro laboratory or animal studies on the compound; (2) compiling data from previous clinical testing or marketing of the drug in the United States or another country whose population is relevant to the U.S. population; or (3) undertaking new preclinical studies designed to provide the evidence necessary to support the safety of administering the compound to humans.

During preclinical drug development, a sponsor must evaluate the drug's toxic and pharmacologic effects through in vitro and in vivo laboratory animal testing. Genotoxicity screening is performed, as well as investigations on drug absorption and metabolism, the toxicity of the drug's metabolites, and the speed with which the drug and its metabolites are excreted from the body. At the preclinical stage, the FDA will generally ask, at a minimum, that sponsors: (1) develop a pharmacological profile of the drug; (2) determine the acute toxicity of the drug in at least two species of animals, and (3) conduct short-

term toxicity studies ranging from 2 weeks to 3 months, depending on the proposed duration of use of the substance in the proposed clinical studies.

Simultaneous to FDA trials we intend to begin studies and trials in Eastern Europe through IMGB (a Europe based Contract Research Organization). Eastern European markets can be accessed much faster and the data collected from actual distribution of the product can accelerate approval time in the U.S. Entry into these foreign markets is likely to greatly accelerate FDA approval in the United States.

In or around 2010, following a successful preclinical development program Telomolecular hopes to file an investigational new drug (IND) application and begin clinical trials in the following year on a drug for treating macular degeneration

By 2012, Telomolecular Corp. hopes to achieve approval for the sale of one or more pharmaceutical drugs useful in the treatment of an age-associated disease.

*** If the efficacy of our general pharmaceutical products is very high, the market for cosmeceuticals could be considerably lessened.

The commercial use of pharmaceutical products for veterinary use could become feasible as early as the first quarter of 2008, while the commercial production of DNA, RNA, and siRNA in transgenic systems could become practical as early as the last quarter of 2007. The sublicensing of the Corporation’s proprietary Nanofect transfection reagent, based on modified PLGA technologies could be available for sale as soon as the third quarter of 2007.

Anti-Cancer Therapies
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Recent studies show that more than 90% of all cancer is caused by critical telomere shortening, for example, in 97% of premalignant endothelial lesions critical telomere shortening is observed (Meeker, John Hopkins University 2005). These "destabilized" cells have a tendency to transform as a result of end-to-end chromosomal fusions or as a result of a generally high metastatic potential. After the accumulation of critical errors the cell may immortalize. Immortal cells express high levels of telomerase, as well as exotic growth factors that stimulate cell proliferation and permit cancer cells to grow without limitation. In the instance of inactivated p53 DNA damage checkpoint control and inactivated pRB tumor suppressor pathway, immortalization in normal somatic cells is dangerous. Paradoxically, p53 and pRB pathways do not tend to inactivate when chromosomal telomeres are healthy. In the laboratory, the maintenance of telomeres in normal somatic cells does not lead to the development of cancer because it prohibits “cell crisis”, a fundamental process required in the development of most cancer. In hundreds of parallel experiments, when cell lines are pushed beyond their traditional replicative capacities the development of cancer has not been observed.

Telomolecular's therapeutic strategy does not immortalize cells through gene modification, which could cause undesirable side effects, but instead administers a therapeutic dose of the active TERT enzyme or synthetic DNA nanocircles. In this way cells avoid cell crisis in a safe way.

This strategy may greatly inhibit the formation of cancer and has putative potential as a preventative medicine. "It appears that the telomere shortening frequently observed in large advanced tumors has already occurred before it can be detected by standard diagnostic tools, when cellular changes characteristic of early precancer can only be seen through a microscope by a pathologist," says Angelo M. De Marzo, M.D., Ph.D., senior author of the study and associate professor of urology, pathology and oncology at Johns Hopkins. "Therefore, intervention strategies aimed at preventing, or even reversing, telomere shortening may be effective in lowering cancer incidence. And assessing telomere length may provide a new direction for cancer prevention studies, and lead to improved early diagnosis of precancerous lesions."

In addition to potential preventative therapies that may offset or prevent cancer, Telomolecular is focused on the discovery of inducible genes and enzymes (and the acquisition of licenses) that may activate p53 DNA damage checkpoint control, pRB tumor suppressor, and other tumor suppressors. Inactivation of the p53 tumor suppressor protein, by mutation or by viruses, has been identified in over one-half of all human tumors. The inactivated protein usually has reduced DNA-binding capacity, which renders it ineffective in regulating cell division and cell growth. Delivery of the p53 gene to tumor cells has led to the elimination of tumors in both animal models and some early clinical studies. The retinoblastoma protein (pRb)/cyclin/cyclin-dependent kinase (Cdk)/p16 tumor-suppressor pathway participates in the regulation of cellular proliferation and undergoes mutational or epigenetic inactivation in essentially 100% of selected human malignancies. Since this pathway is frequently altered by inactivation of either the RB gene or the upstream Cdk4/6-inhibitor gene, Cdkn2a/p16ink4a, it is commonly referred to as the RB/p16 tumor-suppressor pathway. Reactivating this pathway appears to be a promising approach in delimiting human cancers.

Sources and availability of raw materials and the names of principal suppliers
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Most of the company’s raw materials will come from contracted protein and DNA synthesis firms. A large quantity of oTert has been paid for and secured from a contracted laboratory while DNA nanocircles are expected to be produced first through a paid research organization and eventually by the Corporation. We expect to produce nanoparticles and nanoparticle products internally and through the University of Nebraska Medical Center as the university hospital’s guidelines permit.

Pricing
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Based on our current manufacturing capabilities it will take time to produce a sufficient quantity of cosmeceutical products to satisfy consumer demand. With a highly limited number of suppliers it may be possible to command high profit margins. The first year of production could be very restricted from a supply perspective; however, the per-treatment costs are likely to be expensive. Initial pricing may exceed $10,000 per treatment and represent a profit margin of 80%. As manufacturing capabilities improve and subsequent production costs decline, it will be possible to boost output. We hope to halve production and resale costs each year in order to reach a steady price by 2010, where per unit profits will decline, while relative margins, gross revenues, and overall supply capability will improve. We hope to produce 10,000 units (treatments) in the first year of production Year 3, and augment production to 40,000 units by the next year. By Year 2011, with the addition of new product lines, we hope to increase supply to 400,000 units per year.

We expect ex vivo applications to be ready for market production by 2011. Due to a general supply shortage, and due to expected cost differences between the cosmeceutical and ex vivo products, we foresee parallel profit and sales growth in both markets until 2015 when the ex vivo market might begin to take market share from cosmeceuticals. We expect a first year per treatment ex vivo cost of $1,000 (on a skin graft for example). Nearly 10,000 units are projected for production. In 2013 we hope to reduce production costs and bolster production ability by adding manufacturing facilities and achieving process refinement. Subsequently we hope to reach international sales revenues of ex vivo products of $200 million in 2016 by selling over 520,000 units.

We look forward to the release of a first line of pharmaceuticals by 2017. As a result of innovations in the manufacturing process due to the corporations experience with ex vivo and cosmeceutical production, while administration costs are hard to predict, the production cost of pharmaceutical drugs should near $2,500 to $5,000 per unit. The cost of treatments may approach $7,500 to $12,000 per administration resulting in international gross sales of many billions each year. Other costs and revenue streams, such as those derived from the recent acquisitions of Notch 1 and Mitofusin 1 have not yet been projected.

Veterinary applications in valued livestock and breeding animals might be relatively expensive at $10,000 per administration but could enter commercialization more rapidly after less extensive safety studies. The production of DNA, RNA, and siRNA in transgenic systems might lead to cost reductions of 80% to 200% over existing lab synthesis techniques and could result in commercial contracts of an average value of $100,000.

Distribution methods of the products or services
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Cosmeceutical and pharmaceuticals applications will be initially sold and administered by physicians and health experts at established clinics, by physicians at managed facilities, possibly by health spas (for cosmetic applications), and in institutes and centers established to specialize in Telomolecular therapeutics. We believe that these products require administration by trained experts and that it is possible to distribute products effectively through these outlets. Qualified physicians and medical institutions will administer pharmaceuticals.

Anti-aging practitioners and clinics will form a channel of distribution for Telomolecular products. The American Anti-Aging Association has over 10,000 member MD’s specializing in anti-aging medicine, and the field is one of the fastest growing segments of medical practice.

In respect to the distribution of cosmetic products, a year 2000 study performed by PricewaterhouseCoopers shows the health spa industry has grown. According to this study, there are about 5,700 health spas in the United States--day spas account for more than three-quarters of all spa locations. Resort/hotel spas are the second-largest group, followed by club spas, medical spas, mineral spring spas, destination spas and cruise ship spas.

There are more than 700,000 physicians in the U.S., of which approximately 300,000 are considered “general practitioners” or “family practitioners” with a combined 100,000 doctor’s offices.

DNA, RNA and siRNA production will be sold by sales agents to existing commercial laboratories and research centers through traditional phone marketing techniques.

Status of publicly announced new product or service
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The Corporation is still in a research and development stage and has not announced any products or services.

Competitive business conditions, methods of competition, and position in the industry
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The general market in which Telomolecular operates is highly competitive. However, the niche in which the company competes is limited to only several entities.

Telomolecular is one of two groups, known to our management, to control patented properties that have been shown to elongate human chromosomal telomeres. Geron Corporation is a more established company that works on small molecule stimulators of telomerase reverse transcriptase. This approach has shown great promise but has a presently limited ability in most cell types and has not proven, and may never prove, to be safe, effective, and non-toxic. Our management believes that the direct delivery of enzymes or nanocircles might prove a more reliable and safe tactic, capable of targeting specific disease states. Geron has not to our management’s knowledge, to this date, demonstrated an ability to deliver large-molecules but does possess significant patents to an enzyme known as telomerase (and TERT) which has been shown to effectively elongate chromosomal telomeres. To management’s knownledge Geron has not succeeded in delivering the enzyme in vivo. Telomolecular controls both enzymes and synthetic nanotechnologies shown to elongate chromosomal telomeres, however, our synthetic nanotechnologies are presently cheaper and faster to produce than natural enzymes, appear to possess clear therapeutic superiority, and do not need to be enzymatically active, and are therefore easier to work with.

Since Geron Corp. has positioned itself as a “licensor” of many of its key technologies, ideally, Telomolecular would like to partner with Geron by co-licensing technologies, and enhancing product lines through cooperative establishment of mutual market value. Our long-term strategy is to partner rather than compete.

Our peers, such as Geron Corp., MIT, and a number of other institutions and corporations, have made efforts in the emerging telomere therapy field. Some competitors have used viral delivery methods (gene therapy) and primitive versions of protein transduction technology to deliver Geron’s enzymes. These efforts have been successful in vitro, but ineffective and impractical in living organisms. Present viral delivery processes are ineffective and dangerous, with serious unintended side effects ranging from induced cancers to deadly immune responses. The Telomolecular approach solves this delivery problem.

There are limited intellectual property opportunities in the elongation of telomeres and in the delivery of extra-large biological agents. PLGA biodegradable nanoparticles appear to be a safe, inexpensive, and effective option. It is the only FDA approved gene therapy in the U.S. While there are several patented varieties of PLGA, Telomolecular’s proprietary surface modified nanoparticle formulation is capable of extra-large molecule delivery, sustained release, and other significant pharmacological advances crucial to developing a workable pharmaceutical technology.

Our management believes we are years ahead of our closest competitor in the application of “nanoparticle” technologies, and that the company is in a position to control important patents and intellectual properties in the field. We believe that our products will maintain superiority based on the control of the best and most efficient delivery platforms. We believe that there are no more than four known delivery technologies that represent a sensible source of immediate competition. We feel our technology is better and will be easier and significantly more affordable to produce products with.

The Corporation’s scientists are leaders in the industry. We believe we can maintain and further our expertise and dominate the talent pool in this narrow field.

Being the first to market will confer certain cash and market penetration advantages. Our ability to create a wide and recognized distribution network is enhanced by early market entry, and furthermore, our products may enjoy a “consumer confidence” and trust conferred often to the first product in a medicinal marketplace.

Description of existing and potential competitors
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Geron Corp.
Geron is focused on developing and commercializing therapeutic and diagnostic products for cancer based on telomerase technology, and cell-based therapeutics using our human embryonic stem cell technology. They have also contributed sums to the development of anti-aging therapeutics. Geron Corp. makes for a logical competitor but because Geron has positioned itself as a licensor it is also viewed as a potential industry partner.

MP Biomedicals
MP Biomedicals produces a specialty reagent for DNA and gene transfection and protein delivery into living cells. Both systems are based on a novel lipid delivery reagent. The GeneChauffeur displays high transfection efficiencies in many types of mammalian cells, including those that have proven difficult to transfect. It is gentle on cells and does not require use of a serum-free environment. The NeuroShuttle reagent has been optimized for use with neuronal cells. Telomolecular management believes that this system is presently inefficient.

Sierra Sciences
Sierra Sciences, Inc. (SSI) is an early stage biotechnology company (Founded 1999) whose long-term goal is to develop drugs and therapies that will cure and prevent human diseases associated with aging. In the event that Sierra does succeed their technologies are likely to be synergistic with Telomolecular’s and joint venturing may be possible. The companies maintain a cooperative business relationship.

Traditional Gene Therapy
Traditional gene therapy operations pose a competitive possibility. One of these labs could begin the development of protein transduction based telomerase studies. Among the most probable competitors is:

Traditional Cosmeceuticals
Companies that produce traditional cosmetic products, particularly those companies with emphasis on anti-aging products and skin creams represent an indirect source of competition. It is unlikely that traditional cosmeceuticals represent a genuine competitive threat. Telomere therapy is likely to obsolete traditional cosmeceuticals in this genre. Many of these presently megalithic companies may cease to operate or may be considerably impacted by the introduction of Telomolecular Corp. products. Telomolecular intends to partner with one major cosmetic company to improve distribution and access to the market.

Plastic Surgery
Plastic surgery is a form of competition as an existing cosmetic procedure. Plastic surgery is a consumer-driven and medical surgery industry. However, it seems an obviously less preferable alternative to our products and does not represent a serious form of competition.

Partners
Telomolecular is working closely with its key strategic partner New Life Scientific to combine telomere therapy with New Life Scientifics’ advances in stem cell therapy. Together these synergistic approaches are likely to maximize the therapeutic regeneration of tissues and organs. Telomolecular has agreed to conduct all of its material clinical studies through New Life Scientifics’ strong U.S. and European Contract Research Organizations.

Telomolecular has also partnered with Helyxzion, a company that produces software and diagnostics for the reading and identification of genomic errors in human DNA. By combining our nanotechnologies with their new identification technologies we believe it may one day be possible to find and replace genetic errors and undesirable gene transformations, on an individual basis.

Telomolecular has also partnered with Diagen, a company that produces new diagnostics for oncology and pathology. By identifying and patenting new markers for disease and cancer, Telomolecular nanotechnologies may be able to deliver customized genes and proteins that treat a whole array of vary specific diseases and disorders.

Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration
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The Corporation maintains a variety of licensing agreements to patent and patent pending technologies developed by U.S. universities. As a market strategy the Corporation attempts to enter into licensing agreements with academic institutions that are considered “perpetual” and “exclusive” in order to achieve essentially patent ownership.

The Corporation has secured, through the University of Nebraska Medical Center, a field-of-use license to utilize a proprietary patented formulation of PLGA biodegradable nanoparticles in the lengthening of chromosomal telomeres.