EOM Pharmaceutical Holdings, Inc. - Quarter Report: 2013 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35560

ImmunoCellular Therapeutics, Ltd.

(Exact name of registrant as specified in its charter)


Delaware			93-1301885
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

23622 Calabasas Road, Suite 300 Calabasas, California			91302
(Address of principal executive offices)			(Zip code)

(818) 264-2300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated Filer	x

Non-accelerated filer (Do not check if a smaller reporting company)	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The Issuer had 57,095,788 shares of its common stock outstanding as of November 1, 2013.

ImmunoCellular Therapeutics, Ltd.

FORM 10-Q

Table of Contents

	Page
PART 1
FINANCIAL INFORMATION	3

Item 1: Condensed Financial Statements	3

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3: Quantitative and Qualitative Disclosures About Market Risk	25

Item 4: Controls and Procedures	25

PART II
OTHER INFORMATION	26

Item 1: Legal Proceedings	26

Item 1A: Risk Factors	26

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3: Defaults Upon Senior Securities	26

Item 4: Mine Safety Disclosures	26

Item 5: Other Information	26

Item 6: Exhibits	27

SIGNATURES	28

EXHIBIT INDEX	29

PART 1

FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

ImmunoCellular Therapeutics, Ltd.

(A Development Stage Company)

Condensed Balance Sheets

	September 30, 2013			December 31, 2012
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	29,433,560		$	26,216,668
Other assets		401,962			714,508
Total current assets		29,835,522			26,931,176
Property and equipment, net		74,667			76,289
Deposits		28,844			11,736
Total assets	$	29,939,033		$	27,019,201
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	554,743		$	732,851
Accrued compensation and benefits		296,262			309,345
Accrued expenses		216,524			56,111
Total current liabilities		1,067,529			1,098,307
Warrant liability		3,690,609			2,852,880
Commitments and contingencies (Note 5)
Shareholders’ equity:
Common stock, $0.0001 par value; 149,000,000 shares and 99,000,000 shares authorized as of September 30, 2013 and 2012, respectively; 56,625,294 shares and 51,500,996 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively		5,663			5,150
Additional paid-in capital		77,261,623			66,231,694
Deficit accumulated during the development stage		(52,086,391	)		(43,168,830	)
Total shareholders’ equity		25,180,895			23,068,014
Total liabilities and shareholders’ equity	$	29,939,033		$	27,019,201

The accompanying notes are an integral part of these unaudited condensed financial statements.

ImmunoCellular Therapeutics, Ltd.

(A Development Stage Company)

Condensed Statements of Operations

(unaudited)

	For the Three Months Ended September 30, 2013			For the Three Months Ended September 30, 2012			For the Nine Months Ended September 30, 2013			For the Nine Months Ended September 30, 2012			February 25, 2004 (Inception) to September 30 2013
Revenues	$	0		$	0		$	0		$	0		$	300,000
Expenses:
Research and development		1,276,507			2,378,917			3,905,338			6,567,086			22,165,450
Stock based compensation		156,277			33,887			500,351			382,611			9,216,363
General and administrative		985,107			1,004,181			2,542,794			2,647,301			15,227,541
Total expenses		2,417,891			3,416,985			6,948,483			9,596,998			46,609,354
Loss before other income (expense) and income taxes		(2,417,891	)		(3,416,985	)		(6,948,483	)		(9,596,998	)		(46,309,354	)
Interest income		3,667			1,858			14,310			4,867			362,053
Financing expense		0			0			0			(368,524	)		(397,294	)
Change in fair value of warrant liability		(1,379,217	)		2,777,500			(1,983,388	)		(5,018,224	)		(3,649,296	)
Loss before income taxes		(3,793,441	)		(637,627	)		(8,917,561	)		(14,978,879	)		(49,993,891	)
Income taxes		0			0			0			0			0
Net loss		(3,793,441	)		(637,627	)		(8,917,561	)		(14,978,879	)		(49,993,891	)
Deemed dividend on redemption of preferred stock		0			0			0			0			(2,092,500	)
Net loss attributable to common stock	$	(3,793,441	)	$	(637,627	)	$	(8,917,561	)	$	(14,978,879	)	$	(52,086,391	)
Net loss per share, basic and diluted	$	(0.07	)	$	(0.02	)	$	(0.17	)	$	(0.38	)	$	(2.68	)
Weighted average number of shares basic and diluted		55,307,906			40,329,306			53,289,854			39,260,253			19,438,888

The accompanying notes are an integral part of these unaudited condensed financial statements.

ImmunoCellular Therapeutics, Ltd.

(A Development Stage Company)

Condensed Statements of Shareholders’ Equity (Deficit)

(unaudited)

	Preferred Stock				Common Stock						Additional Paid-in Capital			Promissory Note		Deficit Accumulated During the Development Stage			Total
	Shares		Amount		Shares			Amount			Additional Paid-in Capital			Promissory Note		Deficit Accumulated During the Development Stage			Total
Initial capitalization at $0.00002 per share		0	$	0		6,256,500		$	10		$	87		$	0	$	0		$	97
Common stock issued for cash during 2004 at $0.00078 per share		0		0		193,500			15			135			0		0			150
Net loss		0		0		0			0			0			0		(11,741	)		(11,741	)

Balance at December 31, 2004		0		0		6,450,000			25			222			0		(11,741	)		(11,494	)
Common stock issued for cash during 2005 at $0.19 per share		0		0		387,000			659			74,341			0		0			75,000
Common stock issued for cash during 2005 at $0.32 per share		0		0		154,800			16			49,984			0		0			50,000
Common stock issued for research and development during 2005 at $0.99 per share		0		0		154,800			15			152,745			0		0			152,760
Net loss		0		0		0			0			0			0		(246,004	)		(246,004	)

Balance at December 31, 2005		0		0		7,146,600			715			277,292			0		(257,745	)		20,262
Common stock issued for services during 2006 at $0.50 per share		0		0		73,093			7			36,539			0		0			36,546
Common stock issued for cash during 2006 in private placements at $1.00 per share, net of redemptions		0		0		1,510,000			151			549,249			0		0			549,400
Common stock issued for research and development during 2006 at $1.00 per share		0		0		694,000			69			693,931			0		0			694,000
Shares issued in connection with reverse merger		0		0		825,124			83			(83	)		0		0			0
Shares cancelled in connection with the sale of Optical Molecular Imaging, Inc.		0		0		(2,059,100	)		(206	)		(64,794	)		0		0			(65,000	)
Exercise of stock options		0		0		10,062			1			3,521			0		0			3,522
Stock based compensation (options)		0		0		0			0			4,103,645			0		0			4,103,645
Net loss		0		0		0			0			0			0		(5,152,713	)		(5,152,713	)

Balance at December 31, 2006		0		0		8,199,779			820			5,599,300			0		(5,410,458	)		189,662
Common stock issued for cash during 2007 in private placements at $1.50 per share		0		0		3,531,603			353			4,892,133			0		0			4,892,486
Exercise of stock options		0		0		51,111			5			(5	)		0		0			0
Reclassification of warrant derivative liability		0		0		0			0			2,233,600			0		0			2,233,600

Stock based compensation (options)		0		0		0			0			1,296,714			0		0			1,296,714
Net loss		0		0		0			0			0			0		(3,614,753	)		(3,614,753	)

	Preferred Stock					Common Stock				Additional Paid-in Capital			Promissory Note			Deficit Accumulated During the Development Stage			Total
	Shares			Amount		Shares		Amount		Additional Paid-in Capital			Promissory Note			Deficit Accumulated During the Development Stage			Total
Balance at December 31, 2007		0		$	0		11,782,493	$	1,178		14,021,742			0			(9,025,211	)		4,997,709
Common stock issued for research and development during 2008 at $0.53 per share		0			0		800,000		80		423,920			0			0			424,000
Common stock issued for research and development during 2008 at $0.65 per share		0			0		100,000		10		64,990			0			0			65,000
Stock based compensation (options)		0			0		0		0		513,357			0			0			513,357
Net loss		0			0		0		0		0			0			(3,059,730	)		(3,059,730	)

Balance at December 31, 2008		0			0		12,682,493		1,268		15,024,009			0			(12,084,941	)		2,940,336
Exercise of warrants		0			0		1,970,992		197		462,551			0			0			462,748
Exercise of stock options		0			0		214,357		22		64,460			(52,668	)		0			11,814
Stock based compensation (options)		0			0		0		0		308,302			0			0			308,302
Net loss		0			0		0		0		0			0			(2,626,205	)		(2,626,205	)

Balance at December 31, 2009		0			0		14,867,842		1,487		15,859,322			(52,668	)		(14,711,146	)		1,096,995
Common stock and warrants issued for cash during 2010 at $1.00 per share, net of offering costs		0			0		4,230,910		423		3,248,315			0			0			3,248,738
Preferred stock and warrants issued for cash during 2010 at $10,000 per share, net of offering costs		400			0		0		0		0			0			0			0
Exercise of warrants in exchange for promissory note		0			0		2,700,000		270		5,399,730			(5,400,000	)		0			0
Redemption of preferred stock for repayment of promissory note		(400	)		0		0		0		0			5,400,000			(2,092,500	)		3,307,500
Exercise of stock options		0			0		50,000		5		26,495			0			0			26,500
Cashless exercise of stock options		0			0		297,156		30		(30	)		0			0			0
Common stock issued for services during 2010 at $0.90 per share		0			0		60,000		6		53,994			0			0			54,000
Common stock issued for services during 2010 at $1.06 per share		0			0		7,694		0		8,156			0			0			8,156
Stock based compensation		0			0		0		0		745,697			0			0			745,697
Interest on promissory note		0			0		0		0		0			(1,614	)		0			(1,614	)
Net loss		0			0		0		0		0			0			(6,150,142	)		(6,150,142	)
Balance at December 31, 2010		0			0		22,213,602		2,221		25,341,679			(54,282	)		(22,953,788	)		2,335,830

Common stock and warrants issued for cash during 2011 at $1.55 per share, net of offering costs		0			0		5,219,768		522		4,982,817			0			0			4,983,339
Exercise of stock options		0			0		382,000		38		388,341			0			0			388,379
Cashless exercise of stock options		0			0		667,077		67		(67	)		0			0			0
Stock based compensation		0			0		131,537		13		1,190,120			0			0			1,190,133
Interest on promissory note		0			0		0		0		0			(352	)		0			(352	)
Redemption of promissory note		0			0		0		0		0			54,634			0			54,634
Net loss		0			0		0		0		0			0			(5,719,903	)		(5,719,903	)

	Preferred Stock				Common Stock				Additional Paid-in Capital			Promissory Note		Deficit Accumulated During the Development Stage			Total
	Shares		Amount		Shares		Amount		Additional Paid-in Capital			Promissory Note		Deficit Accumulated During the Development Stage			Total
Balance at December 31, 2011		0	$	0		28,613,984	$	2,861		31,902,890			0		(28,673,691	)		3,232,060
Common stock and warrants issued for cash during 2012 at $1.10 per share, net of offering costs in January 2012		0		0		9,489,436		949		9,270,421			0		0			9,271,370

Common stock and warrants issued for cash during 2012 at $2.10 per share, net of offering costs in October 2012		0		0		10,000,000		1,000		19,358,553			0		0			19,359,553
Exercise of warrants		0		0		2,295,334		230		3,201,690			0		0			3,201,920
Reclassification of warrant liability upon exercise		0		0		0		0		1,981,743			0		0			1,981,743
Cashless exercise of warrants		0		0		288,973		29		(29	)		0		0			0
Cashless exercise of stock options		0		0		792,018		79		(79	)		0		0			0
Restricted stock vested		0		0		1,251		0		0			0		0			0
Stock based compensation		0		0		0		0		496,007			0		0			496,007
Exercise of stock options		0		0		20,000		2		20,498			0		0			20,500
Net loss		0		0		0		0		0			0		(14,495,139	)		(14,495,139	)
Balance at December 31, 2012		0		0		51,500,996		5,150		66,231,694			0		(43,168,830	)		23,068,014
Exercise of warrants		0		0		2,926,072		293		5,407,089			0		0			5,407,382
Cashless exercise of warrants		0		0		28,300		3		(3	)		0		0			0
Exercise of stock options		0		0		145,401		15		141,616			0		0			141,631
Cashless exercise of stock options		0		0		131,228		13		(13	)		0		0			0
Stock based compensation		0		0		0		0		500,351			0		0			500,351
Common stock issued for license rights in January 2013 at $2.41 per share		0		0		31,155		3		74,997			0		0			75,000
Common stock issued through controlled equity offering during May 2013 at an average of $2.57 per share, net of offering costs		0		0		172,988		17		404,191			0		0			404,208
Common stock issued through controlled equity offering during July 2013 at an average of $2.79 per share, net of offering costs		0		0		770,508		77		2,013,039			0		0			2,013,116
Common stock issued through controlled equity offering during August 2013 at an average of $2.90 per share, net of offering costs		0		0		642,604		64		1,752,267			0		0			1,752,331
Common stock issued through controlled equity offering during September 2013 at an average of $2.84 per share, net of offering costs		0		0		276,042		28		736,395			0		0			736,423
Net loss		0		0		0		0		0			0		(8,917,561	)		(8,917,561	)

Balance at September 30, 2013		0		0		56,625,294	$	5,663	$	77,261,623		$	0	$	(52,086,391	)	$	25,180,895

The accompanying notes are an integral part of these unaudited condensed financial statements.

ImmunoCellular Therapeutics, Ltd.

(A Development Stage Company)

Condensed Statements of Cash Flows

(unaudited)

	For the Nine Months Ended September 30, 2013			For the Nine Months Ended September 30, 2012			February 25, 2004 (Inception) to September 30, 2013
Cash flows from operating activities:
Net loss	$	(8,917,561	)	$	(14,978,879	)	$	(49,993,891	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		35,682			34,331			110,967
Loss on disposal of assets		3,817			0			3,817
Change in fair value of warrant liability		1,983,388			5,018,224			3,649,296
Financing expense		0			368,524			397,294
Stock-based compensation		500,351			382,611			9,154,207
Common stock issued for services		0			0			98,703
Common stock issued for research and development		0			0			1,335,760
Changes in assets and liabilities:
Other assets		370,438			(501,714	)		(421,969	)
Accounts payable		(178,108	)		91,421			554,393
Accrued liabilities		147,330			397,899			512,786
Net cash used in operating activities		(6,054,663	)		(9,187,583	)		(34,598,637	)
Cash flows from investing activities:
Purchase of property and equipment		(37,877	)		(5,668	)		(193,569	)
Cash paid for sale of Optical Molecular Imaging, Inc.		0			0			(25,000	)
Net cash used in investing activities		(37,877	)		(5,668	)		(218,569	)
Cash flows from financing activities:
Proceeds from exercise of stock options		141,631			20,500			592,344
Proceeds from exercise of warrants		4,261,723			3,153,852			7,926,389
Payments on promissory note receivable		0			0			53,018
Proceeds from issuance of common stock and warrants, net of offering costs		4,906,078			9,371,370			51,899,857
Proceeds from issuance of preferred stock and warrants, net of offering costs		0			0			3,779,158
Net cash provided by financing activities		9,309,432			12,545,722			64,250,766
Increase in cash and cash equivalents		3,216,892			3,352,471			29,433,560
Cash and cash equivalents, beginning of period		26,216,668			6,653,168			0
Cash and cash equivalents, end of period	$	29,433,560		$	10,005,639		$	29,433,560
Supplemental cash flows disclosures:
Interest expense paid	$	0		$	0		$	0
Income taxes paid	$	0		$	0		$	0
Supplemental non-cash financing disclosures:
Exercise of warrants in exchange for promissory note	$	0		$	0		$	3,350,000
Redemption of preferred stock for repayment of promissory note	$	0		$	0		$	3,350,000
Deemed dividend on redemption of preferred stock	$	0		$	0		$	2,092,500
Warrant liability converted to additional paid-in capital upon exercise	$	1,145,659		$	1,944,688		$	3,127,404
Deposits used to acquire property and equipment	$	0		$	35,882		$	35,882
Deferred offering costs	$	0		$	0		$	182,599
Common stock issued for license rights	$	75,000		$	0		$	75,000

The accompanying notes are an integral part of these unaudited condensed financial statements.

ImmunoCellular Therapeutics, Ltd.

(A Development Stage Company)

Notes to Unaudited Condensed Financial Statements

1. Nature of Organization and Development Stage Operations

ImmunoCellular Therapeutics, Ltd. (the Company) is a development stage company that is seeking to develop and commercialize new therapeutics to fight cancer using the immune system.

Since the Company’s inception on February 25, 2004, the Company has been primarily engaged in the acquisition of certain intellectual property, together with development of its product candidates and the recent clinical testing activities for one of its vaccine product candidates, and has not generated any recurring revenues. The Company’s lead product candidate, ICT-107, is in Phase II clinical development. The Company has two other candidates, ICT-140 and ICT-121, that each have investigational new drug (IND) applications for initiation of clinical development. The Company has sustained operating losses and, as of September 30, 2013, the Company had an accumulated deficit of $52,086,391. The Company expects to incur significant research, development and administrative expenses before any of its products can be launched and recurring revenues generated.

Interim Results

The accompanying condensed financial statements as of September 30, 2013 and for the three and nine months periods ended September 30, 2013 and 2012 and for the period from February 25, 2004 (inception) to September 30, 2013 are unaudited, but include all adjustments, consisting of normal recurring entries, which the Company’s management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2012 have been derived from the Company’s audited financial statements included in its Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (SEC) on March 11, 2013.

The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the Company’s audited financial statements in its Form 10-K for the year ended December 31, 2012. The Company’s operating results will fluctuate for the foreseeable future. Therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.

2. Summary of Significant Accounting Policies

Development Stage Enterprise – The Company is a development stage enterprise and is devoting substantially all of its present efforts to research and development. All losses accumulated since inception are considered part of the Company’s development stage activities.

Liquidity – As of September 30, 2013, the Company had working capital of $28,767,993, compared to working capital of $25,832,869 as of December 31, 2012. The estimated cost of completing the development of any of our current vaccine product candidates and of obtaining all required regulatory approvals to market any of those product candidates is substantially greater than the amount of funds we currently have available. However, we believe that our existing cash balances will be sufficient to fund our operations for at least the next twelve months, although there is no assurance that such proceeds will be sufficient.

Cash and cash equivalents – The Company considers all highly liquid instruments with an original maturity of 90 days or less at acquisition to be cash equivalents. As of September 30, 2013 and December 31, 2012, the Company had $25,910,858 and $23,646,922, respectively, of certificates of deposit. The Company places its cash and cash equivalents with various banks in order to maintain FDIC insurance on all of its investments.

Property and Equipment – Property and equipment are stated at cost and depreciated using the straight-line method based on the estimated useful lives (generally three to five years) of the related assets. Computer and computer equipment are depreciated over three years. Management continuously monitors and evaluates the realizability of recorded long-lived assets to determine whether their carrying values have been impaired. The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the nondiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. Any impairment loss is measured by comparing the fair value of the asset to its carrying amount. Repairs and maintenance costs are expensed as incurred.

Research and Development Costs – Research and development expenses consist of costs incurred for direct research and development and are expensed as incurred.

Stock Based Compensation – The Company records the cost for all share-based payment transactions in the Company’s financial statements.

Stock option grants issued prior to March 31, 2011 to employees and officers and directors were valued using the Black-Scholes pricing model. Stock option grants made subsequent to March 31, 2011 were valued using the binomial lattice simulation model.

Fair value was estimated at the date of grant using the following weighted average assumptions:

	Nine months Ended September 30, 2013			Nine months Ended September 30, 2012
Risk-free interest rate		1.61	%		0.66	%
Expected dividend yield		None			None
Expected life		5.12 Years			4.42 Years
Expected volatility		90.6	%		64.7	%
Expected forfeitures		0	%		0	%

The risk-free interest rate used is based on the implied yield currently available in U.S. Treasury securities at maturity with an equivalent term. The Company has not declared or paid any dividends and does not currently expect to do so in the future. The expected term of options represents the period that our stock-based awards are expected to be outstanding and was determined based on projected holding periods for the remaining unexercised shares. Consideration was given to the contractual terms of our stock-based awards, vesting schedules and expectations of future employee behavior. For the nine months ended September 30, 2013, the expected volatility is based upon the historical volatility of the Company’s common stock. For the nine months ended September 30, 2012, the expected volatility is based on market prices of traded options for comparable entities within our industry. Forfeitures have been estimated to be nil.

The Company’s stock price volatility and option lives involve management’s best estimates, both of which impact the fair value of the option calculated and, ultimately, the expense that will be recognized over the life of the option.

When options are exercised, our policy is to issue previously unissued shares of common stock to satisfy share option exercises. As of September 30, 2013, the Company had approximately 56,617,706 million shares of authorized but unissued common stock.

No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for substantially all net deferred tax assets.

Income Taxes – The Company accounts for federal and state income taxes under the liability method, with a deferred tax asset or liability determined based on the difference between the financial statement and tax basis of assets and liabilities, as measured by the enacted tax rates. The Company’s provision for income taxes represents the amount of taxes currently payable, if any, plus the change in the amount of net deferred tax assets or liabilities. A valuation allowance is provided against net deferred tax assets if recoverability is uncertain on a more likely than not basis. As of September 30, 2013 and December 31, 2012, the Company fully reserved its deferred tax assets. The Company recognizes in its financial statements the impact of an uncertain tax position if the position will more likely than not be sustained upon examination by a taxing authority, based on the technical merits of the position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company is not currently under examination by any taxing authority nor has it been notified of an impending examination. The Company’s tax returns for the years ended December 31, 2012, 2011 and 2010 remain open for possible review.

Fair Value of Financial Instruments – The carrying amounts reported in the balance sheets for cash, cash equivalents, and accounts payable approximate their fair values due to their quick turnover. The fair value of warrant derivative liability is estimated using the Binomial Lattice option valuation model.

Fair value for financial reporting is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1—quoted prices in active markets for identical assets or liabilities

Level 2—quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3—inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

Warrant liabilities represent the only financial assets or liabilities recorded at fair value by the Company. The fair value of warrant liabilities are determined based on Level 3 inputs.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions about the future outcome of current transactions which may affect the reporting and disclosure of these transactions. Accordingly, actual results could differ from those estimates used in the preparation of these financial statements.

Basic and Diluted Loss per Common Share – Basic and diluted loss per common share are computed based on the weighted average number of common shares outstanding. Common share equivalents (which consist of options and warrants) are excluded from the computation if the effect would be antidilutive. Common share equivalents which could potentially dilute earnings per share, and which were excluded from the computation of diluted loss per share, totaled 14,610,187 shares and 19,290,100 shares at September 30, 2013 and 2012 respectively.

Recently Issued Accounting Standards – In June 2011, the Financial Accounting Standards Board (FASB) issued ASU No. 2011-5, which amends the Comprehensive Income Topic of the ASC. The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 became effective for interim and annual periods beginning after December 15, 2011. In February 2013, the FASB issued ASU No. 2013-02, which further amends the Comprehensive Income Topic of the ASC. This amendment requires entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount is being reclassified in its entirety to net income. This standard became effective for periods beginning after December 15, 2012. The adoption of these ASU’s did not have a material impact on the Company’s results of operations, financial condition or liquidity.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities Exchange Commission (the SEC) did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

3. Property and Equipment

Property and equipment consist of the following:

	September 30, 2013			December 31, 2012
Computers	$	58,375		$	23,192
Research equipment		120,505			128,381
		178,880			151,573
Accumulated depreciation		(104,213	)		(75,284	)
	$	74,667		$	76,289

Depreciation expense was $13,998 and $11,443 for the three months ended September 30, 2013 and 2012, respectively. Depreciation expense was $35,682 and $34,331 for the nine months ended September 30, 2013 and 2012, respectively. Depreciation expense was $110,967 for the period from February 25, 2004 (date of inception) to September 30, 2013.

4. Related-Party Transactions

Cedars-Sinai Medical Center License Agreement

Dr. John Yu, our Chief Scientific Officer and former interim Chief Executive Officer, is a neurosurgeon at Cedars-Sinai Medical Center (Cedars-Sinai). In November 2006, the Company entered into a license agreement with Cedars-Sinai under which the Company acquired an exclusive, worldwide license to its technology for use as cellular therapies, including cancer stem cell and dendritic cell-based vaccines for neurological disorders that include brain tumors and neurodegenerative disorders and other cancers. This technology is covered by a number of issued and pending U.S. and foreign patents and applications, and the term of the license will be until the last to expire of any patent claims that are issued covering this technology.

As an upfront licensing fee, the Company issued Cedars-Sinai 694,000 shares of its common stock and paid Cedars-Sinai $62,000. Additional specified milestone payments will be required to be paid to Cedars-Sinai when the Company initiates patient enrollment in its first Phase III clinical trial and when it receives FDA marketing approval for its first product.

The Company has agreed to pay Cedars-Sinai specified percentages of all of its sublicensing income and gross revenues from sales of products based on the licensed technology. To maintain its rights to the licensed technology, the Company must meet certain development and funding milestones. These milestones include, among others, commencing a Phase I clinical trial for a product candidate by March 31, 2007 and raising at least $5,000,000 in funding from equity or other sources by December 31, 2008. The Company satisfied the foregoing funding requirement in 2007 and commenced a Phase I clinical trial in May 2007, which was within the applicable cure period for the milestone requirement. Through December 31, 2009, the Company has paid Cedars-Sinai a total of $166,660 in connection with the Phase I clinical trial. The Company also was required to commence a Phase II clinical trial for a product candidate by December 31, 2008 and a waiver of this requirement was obtained from Cedars-Sinai (see Second Amendment below).

On June 16, 2008, the Company entered into a First Amendment to Exclusive License Agreement (the Amendment) with Cedars-Sinai. The Amendment amended the License Agreement to include in the Company’s exclusive license from Cedars-Sinai under that agreement an epitope to CD133 and certain related intellectual property. This technology is covered by U.S. patent applications filed by both parties. Pursuant to the Amendment, the Company issued Cedars-Sinai 100,000 shares of the Company’s common stock as an additional license fee for the licensed CD133 epitope technology, which will be subject to the royalty and other terms of the License Agreement.

On July 22, 2009, the Company entered into a Second Amendment to Exclusive License Agreement (the Second Amendment) with Cedars-Sinai to become effective August 1, 2009. The Second Amendment amended the License Agreement to revise the milestones set forth in the License Agreement that the Company must achieve in order to maintain its license rights under that agreement. The revised milestones include the replacement of a milestone that required commencement of a Phase II clinical trial for the Company’s first product candidate by no later than December 31, 2008 with milestones that require commencement of a Phase I clinical trial for the Company’s second product candidate by no later than June 30, 2010 and commencement of a Phase II clinical trial for one of the Company’s product candidates by no later than March 31, 2012.

Effective March 23, 2010, the Company entered into a Third Amendment to Exclusive License Agreement (the Third Amendment) with Cedars-Sinai. The Third Amendment amended the License Agreement to revise the milestones set forth in the License Agreement that the Company must achieve in order to maintain its license rights under that agreement. The revised milestones include the replacement of a milestone that required commencement of a Phase I clinical trial for the Company’s second product candidate by no later than June 30, 2010 and commencement of a Phase II clinical trial for one of the Company’s product candidates by no later than March 31, 2012 with a requirement that by September 30, 2011 the Company either commence a Phase II clinical trial for its dendritic cell vaccine candidate or a Phase I clinical trial for its cancer stem cell vaccine candidate. The amendment also added a requirement that the Company obtain certain defined forms of equity or other funding in the amount of at least $2,500,000 by December 31, 2010 and a total of at least $5,000,000 by September 30, 2011. These funding requirements were fully satisfied as of June 30, 2011.

Effective September 1, 2012, the Company entered into a new agreement with Cedars-Sinai whereby Cedars-Sinai provided research support for CD133 experiments in support of ICT-121. The agreement expired on September 19, 2013 and the Company made payments to Cedars-Sinai of $329,832. The Company is currently in negotiations with Cedars-Sinai to extend this research agreement.

5. Commitments and Contingencies

Sponsored Research Agreements

In an effort to expand the Company’s intellectual property portfolio to use antigens to create personalized vaccines, the Company has entered into various intellectual property and research agreements. Those agreements are long-term in nature and are discussed below.

Aptiv Solutions

The Company has contracted with Aptiv Solutions to provide certain services related to the Company’s ICT-107 Phase II trial. The original agreement was entered into in August of 2010 and provided for estimated payments of approximately $3 million for services through September 2013. Subsequently, the Company and Aptiv entered into three contract amendments. Under the first amendment, effective January 20, 2011, Aptiv agreed to provide additional services in conjunction with the Phase II trial of ICT-107 for an additional fee of $469,807. The second amendment, effective February 4, 2012, extended the services to be provided by Aptiv and further increased the fees by $986,783. The second amendment also extended the term of the agreement to March 31, 2014. On January 11, 2013, the third amendment was finalized whereby the services were further extended and the fees were further increased by $608,201. The total aggregate fee pursuant to the original agreement and the three modifications is $5,078,169. As of September 30, 2013, the Company’s remaining obligation under the existing commitment is approximately $962,190.

University of Pennsylvania

On February 13, 2012, the Company entered into a Patent License Agreement with The Trustees of the University of Pennsylvania under which the Company acquired an exclusive, worldwide license relating to intellectual property for the production, use and cryopreservation of high-activity dendritic cell cancer vaccines, including ICT-107, its lead dendritic cell-based cancer vaccine candidate for the treatment of glioblastoma multiforme.

Pursuant to the License Agreement, the Company paid an upfront licensing fee and will be obligated to pay annual license maintenance fees. In addition, the Company has agreed to make payments upon completion of specified milestones and to pay royalties of a specified percentage on net sales, subject to a specified minimum royalty, and sublicensing fees.

The Johns Hopkins University Licensing Agreement

On February 23, 2012, the Company entered into an Exclusive License Agreement, effective as of February 16, 2012, with The Johns Hopkins University (JHU) under which it received an exclusive, worldwide license to JHU’s rights in and to certain intellectual property related to mesothelin-specific cancer immunotherapies.

Pursuant to the License Agreement, the Company agreed to pay an upfront licensing fee, payable half in cash and half in shares of its common stock, within 30 days of the effective date of the License Agreement and upon issuance of the first U.S. patent covering the subject technology. In addition, the Company has agreed to pay milestone license fees upon completion of specified milestones, customary royalties based on a specified percentage of net sales, sublicensing payments and annual minimum royalties. Effective September 24, 2013, the Company entered into an Amendment No. 1 to the Exclusive License Agreement that updated certain milestones.

The University of Pittsburgh Patent License Agreement

On March 20, 2012, the Company entered into an Exclusive License Agreement with the University of Pittsburgh under which the Company has licensed intellectual property surrounding EphA2, a tyrosine kinase receptor that is highly expressed by ovarian cancer and other advanced and metastatic malignancies. The License Agreement grants a worldwide exclusive license to the intellectual property for ovarian and pancreatic cancers; and a worldwide non-exclusive license to the intellectual property for brain cancer. The Company intends to employ the intellectual property in the development and commercialization of ICT-140, a multivalent, dendritic cell-based vaccine for the treatment of ovarian cancer.

Pursuant to the License Agreement, the Company agreed to pay an upfront nonrefundable and noncreditable licensing fee and nonrefundable and noncreditable maintenance fees due annually starting 12 months from the anniversary of the effective date of the License Agreement. In addition, the Company has agreed to make certain milestone payments upon completion of specified milestones and to pay customary royalties based on a specified percentage of net sales and sublicensing payments, as applicable.

Torrey Pines

On October 1, 2012, the Company entered into a Contract Services Agreement with Torrey Pines under which the Company has engaged Torrey Pines to determine the immunogenicity of certain peptides that are used in conjunction with the Company’s ICT-107 Phase IIb trial and in the development of ICT-140. The Company agreed to pay an upfront nonrefundable and noncreditable fee and is obligated to pay the remainder at the conclusion of the contract. On April 1, 2013, the Company and Torrey Pines expanded the scope of work to be completed by Torrey Pines under an additional Contract Services Agreement. This supplemental agreement provides for the Company to pay an upfront fee and additional fees at the conclusion of the contract.

Cedars-Sinai Medical Center

In connection with the Cedars-Sinai Medical Center License Agreement, the Company has certain commitments as described in Note 4.

Employment Agreements

The Company has one-year employment agreements with its management that provide for a base salary, bonus and stock option grants. The aggregate annual base salary payable to this group is approximately $1,179,000 and the potential bonus is approximately $362,000. Additionally, during the nine months ended September 30, 2013, the Company issued an aggregate of 489,000 stock options to its management at a weighted average exercise price of $2.66 that vest over a period of four years.

Operating Lease

The Company entered into a lease for new office space effective June 15, 2013 and continuing through August 31, 2016 at an initial monthly rental of $8,063. The monthly rental will increase by 3% on each anniversary date of the lease. Rent for the months of August and September 2013 was abated. Rent expense was approximately $17,900 and $14,000 for the three months ended September 30, 2013 and 2012, respectively. Rent expense was approximately $55,000 and $40,000 for the nine months ended September 30, 2013 and 2012, respectively.

Future minimum rentals under the operating lease are as follows:

Years ending December 31,	Amount
2013	$	24,189
2014		97,724
2015		100,905
2016		68,432
Total	$	291,250

6. Shareholders’ Equity

Common Stock

In March 2010, the Company raised $1,654,686 (after commissions and offering expenses) from the sale of 1,740,000 shares of common stock and warrants to purchase 696,000 shares of common stock at an exercise price of $1.15 per share, to various investors in a private placement. (See “Warrants and Warrant Liabilities” below.)

In May 2010, the Company raised $2,716,308 (after commissions and offering expenses) from the sale of 2,490,910 shares of common stock and warrants to purchase 1,245,455 shares of common stock at an exercise price of $1.50 per share, to various investors in a private placement. (See “Warrants and Warrant Liabilities” below)

In February 2011, the Company raised $7,460,129 (after commissions and offering expenses) from the sale of 5,219,768 shares of common stock and warrants to purchase 2,609,898 shares of common stock at an exercise price of $2.25 per share, to various investors in a private placement. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that certain future common stock issuances are made at a price less than $1.55. The January and October 2012 underwritten public offering (see below) provided for the issuance of shares at prices that were less than $1.55. Accordingly, the exercise price of these warrants was adjusted to $1.87 and the number of warrants was proportionally increased to 2,823,670 net of exercises. (See “Warrants and Warrant Liabilities” below)

In January 2012, the Company raised approximately $9,271,370 in an underwritten public offering, net of offering expenses of approximately $1.1 million, from the sale of 9,489,436 shares of common stock and warrants to purchase 4,744,718 shares of common stock at an exercise price of $1.41 per share, to various investors in an underwritten public offering. The warrants have a term of 60 months from the date of issuance. The warrants do not contain any features (such as net cash settlement or anti-dilution features) that would preclude the Company from accounting for these warrants as equity. Accordingly, the warrants are accounted for as equity.

In October 2012, the Company raised $19,359,553 in an underwritten public offering, net of offering expenses of approximately $1.6 million, from the sale of 10,000,000 shares of common stock and warrants to purchase 4,500,000 shares of common stock at an exercise price of $2.65 per share, to various investors in an underwritten public offering. The warrants have a term of 60 months from the date of issuance. The warrants do not contain any features (such as net cash settlement or anti-dilution features) that would preclude the Company from accounting for these warrants as equity. Accordingly, the warrants are accounted for as equity.

Controlled Equity Offering

On April 18, 2013, the Company entered into a Controlled Equity Offering^SM Sales Agreement (the Sales Agreement) with Cantor Fitzgerald & Co., as agent (Cantor), pursuant to which the Company may offer from time to time through Cantor, shares of our common stock having an aggregate offering price of up to $25.0 million (of which only $17.0 million is currently registered for offer and sale). Under the Sales Agreement, Cantor may sell shares by any method permitted by law and deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act, as amended, including sales made directly on the NYSE MKT, on any other existing trading market for our common stock or to or through a market maker. The Company may instruct Cantor not to sell shares if the sales cannot be effected at or above the price designated by us from time to time. The Company is not obligated to make any sales of the shares under the Sales Agreement. The offering of shares pursuant to the Sales Agreement will terminate upon the earlier of (a) the sale of all of the shares subject to the Sales Agreement or (b) the termination of the Sales Agreement by Cantor or the Company, as permitted therein. Cantor will receive a commission rate of 3.0% of the aggregate gross proceeds from each sale of shares and the Company has agreed to provide Cantor with customary indemnification and contribution rights. The Company will also reimburse Cantor for certain specified expenses in connection with entering into the Sales Agreement. On April 22, 2013, NYSE MKT approved the listing of 10,593,220 shares of our common stock in connection with the Sales Agreement. Through September 30, 2013, we sold 1,862,142 shares of our common stock under the Sales Agreement that resulted in proceeds to the Company of approximately $4,906,078, less offering expenses of approximately $338,000. As of September 30, 2013, aggregate gross sales for additional common stock of approximately $11,754,071 remained available under the Sales Agreement.

Stock Options

In February 2005, the Company adopted an Equity Incentive Plan (the Plan). Pursuant to the Plan, a committee appointed by the Board of Directors may grant, at its discretion, qualified or nonqualified stock options, stock appreciation rights and may grant or sell restricted stock to key individuals, including employees, nonemployee directors, consultants and advisors. Option prices for qualified incentive stock options (which may only be granted to employees) issued under the plan may not be less than 100% of the fair market value of the common stock on the date the option is granted (unless the option is granted to a person who, at the time of grant, owns more than 10% of the total combined voting power of all classes of stock of the Company; in which case the option price may not be less than 110% of the fair market value of the common stock on the date the option is granted). Option prices for nonqualified stock options issued under the Plan are at the discretion of the committee and may be equal to, greater or less than fair market value of the common stock on the date the option is granted. The options vest over periods determined by the Board of Directors and are exercisable no later than ten years from date of grant (unless they are qualified incentive stock options granted to a person owning more than 10% of the total combined voting power of all classes of stock of the Company, in which case the options are exercisable no later than five years from date of grant). Initially, the Company reserved 6,000,000 shares of common stock for issuance under the Plan. On October 24, 2011, the Company’s shareholders voted to increase the number of authorized shares reserved for the Plan to 8,000,000 shares. On September 20, 2013, the Company’s shareholders voted to increase the number of authorized shares reserved for the Plan to 12,000,000 shares. Options to purchase 3,852,655 common shares have been granted under the Plan and are outstanding as of September 30, 2013. As of September 30, 2013, there were 5,644,347 options available for issuance under the Plan.

The following is a summary of stock option grants issued outside the Plan:

In January 2007, the Company granted an option to purchase 1,500,000 shares of its common stock at an exercise price of $1.10 per share to the Chairman of the Company’s Scientific Advisory Board.

In November 2006, the Company granted an option to purchase 300,000 shares of its common stock at an exercise price of $1.00 per share to an affiliate of the Company’s then Chairman of the Board.

In November 2006, the Company granted an option to purchase 5,933,424 shares of its common stock at an exercise price of $1.00 per share to a Board member in connection with the Cedars-Sinai license acquisition.

The following table summarizes stock option activity for the Company during the nine months ended September 30, 2013:


	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding December 31, 2012	10,581,194		$	1.16		0		0
Granted	847,287			2.67		0		0
Exercised	(422,401	)		1.33		0		0
Forfeited or expired	(120,000	)		1.77		0		0
Outstanding September 30, 2013	10,886,080		$	1.34		3.74	$	13,830,748
Vested or expected to vest at September 30, 2013	8,806,043		$	1.06		2.98	$	13,394,524

As of September 30, 2013, the total unrecognized compensation cost related to unvested stock options amounted to $2,641,357, which will be amortized over the weighted-average remaining requisite service period of approximately 22 months.

Warrants

In connection with the May 2010 common stock private placement, the Company issued to the investors warrants to purchase 1,287,733 shares of the Company’s common stock at $1.50 per share. The warrants have a term of 36 months from the date of issuance. As of September 30, 2013 these warrants have been fully exercised, except for warrants to purchase 4,000 shares of the Company’s common stock that expired. (See Warrant Liabilities below.)

In connection with the sale of Preferred Stock in May 2010, the Company issued warrants to purchase 1,350,000 shares of common stock at an exercise price of $2.50. The warrants have a term of five-years from the date of issuance. As of September 30, 2013, warrants to purchase 1,290,996 shares of the Company’s common stock at $2.50 remain outstanding related to this private placement. (See “Warrant Liability” below.)

In connection with the February 2011 common stock private placement, the Company issued to the investors warrants to purchase 2,818,675 shares of the Company’s common stock at $2.25 per share. The warrants have a five-year term from the date of issuance and contain a provision that provides for an adjustment to the exercise price in the event the Company completes an equity financing at a per share price of its common stock that is less than $1.55. As a result of the January and October 2012 financings, the exercise price of the warrants was adjusted to $1.87 and the number of warrants was proportionately increased to 2,823,670 net of exercises. As of September 30, 2013, warrants to purchase 2,823,670 shares of the Company’s common stock remain outstanding related to this private placement. (See “Warrant Liability” below.)

In connection with the January 2012 underwritten public offering, the Company issued to the investors warrants to purchase 4,744,718 shares of the Company’s common stock at $1.41 per share. The warrants have a five-year term from the date of issuance. These warrants qualify for equity treatment since they do not have any provisions that would require the Company to redeem them for cash or that would result in an adjustment to the number of warrants. As of September 30, 2013, warrants to purchase 1,900,079 shares of the Company’s common stock remain outstanding relating to this public offering.

In connection with the October 2012 underwritten public offering, the Company issued to the investors warrants to purchase 4,500,000 shares of the Company’s common stock at $2.65 per share. The warrants have a five-year term from the date of issuance. These warrants qualify for equity treatment since they do not have any provisions that would require the Company to redeem them for cash or that would result in an adjustment to the number of warrants. As of September 30, 2013, warrants to purchase 4,480,750 shares of the Company’s common stock remain outstanding relating to this public offering.

Warrant Liability

The Company’s warrant liability is adjusted to fair value each reporting period and is influenced by several factors including the price of the Company’s common stock as of the balance sheet date. On September 30, 2013, the price per share of Company’s common stock was $2.57 per share compared to $1.92 per share at December 31, 2012 and $2.81 per share on September 30, 2012.

In connection with the March 2010 common stock private placement, the Company issued to the investors warrants to purchase 696,000 shares of the Company’s common stock at $1.15 per share. Of the total proceeds from the March 2010 common stock private placement, $257,520 was allocated to the freestanding warrants associated with the units based upon the fair value of the warrants determined under the Black Scholes option pricing model. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that future common stock issuances are made at a price less than $1.00. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. The warrant liability was adjusted to fair value each reporting period, and any change in value is recognized in the statement of operations. Prior to 2011, the Company had concluded that Black-Scholes method of valuing the price adjustment feature does not materially differ from the valuation of such warrants using the lattice simulation model, and therefore, the use of the Black-Scholes valuation model was considered a reasonable method to value the warrants. The assumptions used in the Black Scholes model for determining the initial fair value of the warrants were as follows: (i) dividend yield of 0%; (ii) expected volatility of 102%, (iii) risk-free interest rate of 1.00%, and (iv) contractual life of 26 months. During the year ended December 31, 2011, the Company determined that it was more appropriate to value the warrants using a binomial lattice simulation model. During the six months ended June 30, 2012, the remaining warrants were fully exercised; however, the Company recognized an expense of $45,570 as the Company revalued the warrants at the date of exercise. For the three and nine months ended September 30, 2012, the Company recorded a charge to other expense of nil and $745,500, respectively.

In connection with the May 2010 common stock private placement, the Company issued to the investors warrants to purchase 1,287,773 shares of the Company’s common stock at $1.50 per share. Of the total proceeds from the May 2010 common stock private placement, $834,455 was allocated to the freestanding warrants associated with the units based upon the fair value of the warrants determined under the Black Scholes option pricing model. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that future common stock issuances are made at a price less than $1.00. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. The warrant liability is adjusted to fair value each reporting period, and any change in value is recognized in the statement of operations. Prior to 2011, the Company had concluded that the Black-Scholes method of valuing the price adjustment feature does not materially differ from the valuation of such warrants using the binomial lattice simulation model, and therefore, the use of the Black-Scholes valuation model was considered a reasonable method to value the warrants. The assumptions used in the Black Scholes model for determining the initial fair value of the warrants were as follows: (i) dividend yield of 0%; (ii) expected volatility of 102%, (iii) risk-free interest rate of 1.375%, and (iv) contractual life of 36 months. Effective January 1, 2011, the Company determined that it was more appropriate to value the warrants using a binomial lattice simulation model. For the three months ended September 30, 2012, the Company recorded a credit to other income of $745,778 and for the nine months ended September 30, 2012, the Company recorded a charge to other expense of $1,181,075. During the six months ended June 30, 2013, the remaining warrants were fully exercised; however, the Company recognized a credit to other income of $403,665 as the Company revalued the warrants at the date of exercise. For the three and nine months ended September 30, 2013, the Company recorded a charge to other expense of nil and $583,134, respectively.

In connection with the sale of Preferred Stock in 2010, the Company vested warrants to purchase 1,350,000 shares of the Company’s common stock at an exercise price of $2.50 per share. Of the total proceeds from the May 2010 preferred stock sale, $5,710,500 was allocated to the freestanding warrants associated with the units based upon the fair value of these warrants determined under the Black Scholes option pricing model. The warrants contain a provision whereby the warrant may be settled for cash in connection with a change of control with a private company. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. The warrant liability is adjusted to fair value each reporting period and any change in value is recognized in the statement of operations. Prior to 2011, the Company concluded that the Black-Scholes method of valuing the price adjustment feature does not materially differ from the valuation of such warrants using the Monte Carlo or binomial lattice simulation models, and therefore, the use of the Black-Scholes valuation model was considered a reasonable method to value the warrants. The assumptions used in the Black Scholes model for determining the initial fair value of the warrants were as follows: (i) dividend yield of 0%; (ii) expected volatility of 102%, (iii) risk-free interest rate of 2.50%, and (iv) contractual life of 60 months. Effective January 1, 2011, the Company determined that it was more appropriate to value the warrants using a binomial lattice simulation model. For the three months ended September 30, 2012, the Company recorded a credit to other income of $718,720 and for the nine months ended September 30, 2012, the Company recorded a charge to other expense of $732,750. As of September 30, 2013, the Company revalued the warrants using the binomial lattice simulation model assuming (i) dividend yield of 0%; (ii) expected volatility of 70%; (iii) risk free rate of 0.24% and (iv) expected term of 1.59 years. For the three and nine months ended September 30, 2013, the Company recorded a charge to other expense of $348,569 and $345,987, respectively. As of September 30, 2013, the carrying value of the warrant liability is $934,681.

In connection with the February 2011 common stock private placement, the Company issued to the investors warrants to purchase 2,818,675 shares of the Company’s common stock at $2.25 per share. Of the total proceeds from the February 2011 common stock private placement, $2,476,790 was allocated to the freestanding warrants associated with the units based upon the fair value of the warrants determined under the Binomial lattice model. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that certain future common stock issuances are made at a price less than $1.55. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. As a result of the January and October 2012 financings, the exercise price of the warrants was adjusted to $1.87 and the number of warrants was proportionately increased to 2,823,670 net of exercises. The Company recorded a charge to financing expense of $397,294 to reflect the issuance of the additional warrants. The warrant liability is adjusted to fair value each reporting period, and any change in value is recognized in the statement of operations. The Company initially valued these warrants using a binomial lattice simulation model assuming (i) dividend yield of 0%; (ii) expected volatility of 146%; (iii) risk free rate of 1.96% and (iv) expected term of 5 years. Based upon those calculations, the Company calculated the initial valuation of the warrants to be $2,476,790. For the three months ended September 30, 2012, the Company recorded a credit to other income of $1,313,003 and for the nine months ended September 30, 2012, the Company recorded a charge to other expense of $2,727,643, As of September 30, 2013, the Company revalued the warrants using the binomial lattice simulation model assuming (i) dividend yield of 0%; (ii) expected volatility of 73%; (iii) risk free rate of 0.45% and (iv) expected term of 2.39 years. For the three and nine months ended September 30, 2013, the Company recorded a charge to other expense of $1,030,649 and $1,054,268, respectively. As of September 30, 2013, the carrying value of the warrant liability is $2,755,928.

For the three and nine months ended September 30, 2013, the expected volatility is based upon the historical volatility of the Company’s stock. For the three and nine months ended September 30, 2012, the expected volatility is based on market prices of traded options for comparable entities within our industry.

The following reconciliation of the beginning and ending balances for all warrant liabilities measured at fair market value on a recurring basis using significant unobservable inputs (level 3) during the period ended September 30, 2013 and 2012:

	September 30, 2013			September 30, 2012
Balance – January 1	$	2,852,880		$	2,157,408
Issuance of warrants and effect of repricing		0			368,524
Exercise of warrants		(1,145,659	)		(1,944,688	)
(Gain) or loss included in earnings		1,983,388			5,018,224
Transfers in and out/or out of Level 3		—			—
Balance – September 30	$	3,690,609		$	5,599,468

7. 401(k) Profit Sharing Plan

During 2011, the Company adopted a Profit Sharing Plan that qualifies under Section 401(k) of the Internal Revenue Code. Contributions to the plan are at the Company’s discretion. The Company did not make any matching contributions during the three and nine months ended September 30, 2013 or September 30, 2012.

8. Income Taxes

Deferred taxes represent the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Temporary differences result primarily from the recording of tax benefits of net operating loss carry forwards and stock-based compensation.

As of September 30, 2013, the Company has an insufficient history to support the likelihood of ultimate realization of the benefit associated with its deferred tax assets. Accordingly, a valuation allowance has been established for the full amount of the net deferred tax asset.

The Company’s effective income tax rate differs from the amount computed by applying the federal statutory income tax rate to loss before income taxes as follows:

	September 30, 2013			September 30, 2012
Income tax benefit at the federal statutory rate		-34	%		-34	%
State income tax benefit, net of federal tax benefit		-6	%		-6	%
Change in fair value of warrant liability		9	%		14	%
Change in valuation allowance for deferred tax assets		31	%		26	%
Total		0	%		0	%

	September 30, 2013			December 31, 2012
Net operating loss carryforwards	$	15,759,274		$	12,821,749
Stock-based compensation		1,931,443			1,796,954
Less valuation allowance		(17,690,717	)		(14,618,703	)
Net deferred tax asset	$	0		$	—

As of September 30, 2013 and December 31, 2012, the Company had federal and California income tax net operating loss carryforwards of approximately $38 million. These net operating losses will begin to expire in 2022 and 2016, respectively, unless previously utilized.

Section 382 of the Internal Revenue Code can limit the amount of net operating losses which may be utilized if certain changes to a company’s ownership occur. While the Company underwent an ownership change in 2012 as defined by Section 382 of the Internal Revenue Code, management estimated that the Company had not incurred any limitations on its ability to utilize its net operating losses under Section 382 of the Internal Revenue Code during 2012. The Company may incur limitations in the future if there is a change in ownership.

9. Subsequent Events

Warrant Exercises

Subsequent to September 30, 2013, certain warrant holders exercised 198,550 warrants for cash and the Company received $279,956.

Stock Option Exercises

Subsequent to September 30, 2013, the Company issued 18,157 shares of common stock upon the cashless exercise of stock options to purchase 24,000 shares of common stock. Additionally, the Company issued 267,387 shares of common stock as a result of the exercise of stock options and the Company received cash proceeds of $66,847.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and “our company” refer to ImmunoCellular Therapeutics, Ltd., a Delaware corporation.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements, which reflect the views of our management with respect to future events and financial performance. These forward-looking statements are subject to a number of uncertainties and other factors that could cause actual results to differ materially from such statements. Forward-looking statements are identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “targets” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on the information available to management at this time and which speak only as of this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a discussion of some of the factors that may cause actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2012. The identification in this Quarterly Report of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Overview and Plan of Operation

ImmunoCellular Therapeutics, Ltd. (the Company) is a development stage company that is seeking to develop and commercialize new therapeutics to fight cancer using the immune system.

Since the Company’s inception on February 25, 2004, the Company has been primarily engaged in the acquisition of certain intellectual property, together with development of its product candidates and the recent clinical testing activities for one of its vaccine product candidates, and has not generated any recurring revenues. The Company’s lead product candidate, ICT-107 is in Phase II clinical development. The Company has two other candidates, ICT-140 and ICT-121, that each have investigational new drug (IND) applications for initiation of clinical development. The Company has sustained operating losses and, as of September 30, 2013, the Company had an accumulated deficit of $52,086,391. The Company expects to incur significant research, development and administrative expenses before any of its products can be launched and recurring revenues generated.

On January 31, 2006, we completed a merger, pursuant to which Spectral Molecular Imaging, Inc. became our wholly owned subsidiary. At the time of the merger, we had virtually no assets or liabilities, and we had not conducted any business operations for several years. In connection with the merger, we changed our name from Patco Industries, Ltd. to Optical Molecular Imaging, Inc. and replaced our officers and directors with those of Spectral Molecular Imaging. Although we acquired Spectral Molecular Imaging in the merger, for accounting purposes the merger was treated as a reverse merger since the stockholders of Spectral Molecular Imaging acquired a majority of our outstanding shares of common stock and the directors and executive officers of Spectral Molecular Imaging became our directors and executive officers. Accordingly, our financial statements contained in this Report and the description of our results of operations and financial condition reflect the operations of Spectral Molecular Imaging through September 2006, when we sold that subsidiary and all of its operations to a third party.

In November 2006, we acquired an exclusive, worldwide license from Cedars-Sinai Medical Center for certain cellular-based therapy technology that we are developing for the potential treatment of brain tumors and other forms of cancer. We have completed a Phase I clinical trial of a vaccine product candidate for the treatment of glioblastoma multiforme based on this technology and in January 2011, we initiated a Phase II clinical trial. During 2012, we completed our patient enrollment for this trial.

In February 2008, we acquired certain monoclonal antibody related technology owned by Molecular Discoveries LLC. This technology consists of (1) a platform technology referred to by Molecular Discoveries as differential immunization for antigen and antibody discovery for the potentially rapid discovery of targets (antigens) and monoclonal antibodies for diagnosis and treatment of diverse human diseases and (2) certain monoclonal antibody candidates for the potential detection and treatment of multiple myeloma, small cell lung, pancreatic and ovarian cancers. These monoclonal antibody programs are at a pre-clinical stage of development and will require further development before an IND can be potentially filed for human testing. We do not plan to develop these technologies for our own use, but we may choose to license or discontinue them in the future.

In February 2012, we acquired an exclusive worldwide license from the University of Pennsylvania related to intellectual property for the production, use and cryopreservation of high-activity dendritic cell cancer vaccines, including ICT-107, our lead dendritic cell-based cancer vaccine candidate for the treatment of glioblastoma multiforme.

Also in February 2012, we acquired an exclusive, worldwide license from The John Hopkins University to certain intellectual property related to mesothelin-specific cancer immunotherapies.

In January 2013, the U.S. Food and Drug Administration allowed our IND for a clinical trial for ICT-140 Phase II open-label safety study to initially enroll 30 ovarian cancer patients with an option to enroll another 30 patients at our discretion. The study is designed with a 2-to-1 randomization, whereby for every 2 patients who will receive the treatment 1 patient will receive the current standard of care. All of the patients participating in the study will have been previously treated with standard chemotherapeutic agents. This trial is expected to include five clinical sites in the United States and we expect to initiate the trial in the first quarter of 2014.

On July 30, 2013, we announced the initiation of a Phase I clinical trial of cancer vaccine ICT-121 as a potential treatment for patients with recurrent glioblastoma multiforme.

Since our inception on February 25, 2004, we have been primarily engaged in the acquisition of certain intellectual property, together with the recent clinical testing activities for our vaccine product candidates, and have not generated any recurring revenues. As a result, we have incurred operating losses and, as of September 30, 2013 we had an accumulated deficit of $52,086,391. We expect to incur significant research, development and administrative expenses before any of our products can be launched and recurring revenues, if ever, are generated.

Critical Accounting Policies

Management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to impairment of long-lived assets, including finite lived intangible assets, accrued liabilities, fair value of warrant derivatives and certain expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting policies are summarized in Note 2 of our financial statements for the period from February 25, 2004 to September 30, 2013. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

Development Stage Enterprise

We are a development stage enterprise as defined by FASB ASC Topic 915, “Accounting and Reporting by Development Stage Enterprises.” We are devoting substantially all of our present efforts to research and development. All losses accumulated since inception are considered as part of our development stage activities.

Research and Development Costs

Although we believe that our research and development activities and underlying technologies have continuing value, the amount of future benefits to be derived from them is uncertain. Research and development costs are therefore expensed as incurred rather than capitalized. During the nine months ended September 30, 2013 and 2012 we recorded an expense of $3,905,338 and $6,567,086, respectively related to research and development activities. We expect our research and development expenses during the remainder of 2013 to remain relatively constant with the first half of the year.

Stock-Based Compensation

Stock-based compensation expense is estimated as of the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally equals the vesting period, based on the number of awards that are expected to vest. Estimating the fair value for stock options requires judgment, including the expected term of our stock options, volatility of our stock, expected dividends, risk-free interest rates over the expected term of the options and the expected forfeiture rate. In connection with our performance based programs, we make assumptions principally related to the number of awards that are expected to vest after assessing the probability that certain performance criteria will be met.

Income Taxes

The Company accounts for federal and state income taxes under the liability method, with a deferred tax asset or liability determined based on the difference between the financial statement and tax basis of assets and liabilities, as measured by the enacted tax rates. The Company’s provision for income taxes represents the amount of taxes currently payable, if any, plus the change in the amount of net deferred tax assets or liabilities. A valuation allowance is provided against net deferred tax assets if recoverability is uncertain on a more likely than not basis. The Company recognizes in its financial statements the impact of an uncertain tax position if the position will more likely than not be sustained upon examination by a taxing authority, based on the technical merits of the position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company is not currently under examination by any taxing authority nor has it been notified of an impending examination. The Company’s tax returns for the years ended December 31, 2012, 2011 and 2010, remain open for possible review.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash, cash equivalents, and accounts payable approximate their fair values due to their quick turnover. The fair value of warrant liability is estimated using the Binomial Lattice option valuation model.

Results of Operations

Three months ended September 30, 2013 and 2012

Net Loss

We incurred a net loss of $3,793,441 and $637,627 for the three months ended September 30, 2013 and 2012, respectively. The increase in the net loss is primarily due to a charge during the three months ended September 30, 2013 of $1,379,217 related to the increase in the fair value of the warrant liability, compared to a credit of $2,777,500 to revalue the warrant liability during the same period last year. This increase was partially offset by reductions in our research and development expenses during the current period.

Revenues

We did not have any revenue during the three months ended September 30, 2013 and 2012 and we do not expect to have any revenue in 2013.

Expenses

General and administrative expenses for the three months ended September 30, 2013 and 2012 were $985,107 and $1,004,181, respectively. During the three months ended September 30, 2013, we optimized our spending in the areas of investor relations, travel and professional fees, which resulted in a decrease in expense. These decreases were partially offset by increases in personnel related expenses as we hired additional employees and we concluded a litigation matter. The Company and certain officers and directors were the defendants in a lawsuit. The plaintiff alleged that the Company and our directors breached their fiduciary duty for making inadequate disclosures in our proxy statement related to the proposed amendment to our 2006 Equity Incentive Plan. The litigation was settled during the quarter ended September 30, 2013 and the Company does not expect to incur any additional expenses related to this matter.

Research and development expenses for the three months ended September 30, 2013 and 2012 were $1,276,507 and $2,378,917, respectively. During the three months ended September 30, 2012, we completed our enrollment by enrolling 39 new patients in our Phase II clinical trial of ICT-107 bringing the total number of enrolled patients to 278. Since a significant amount of the expenses that we incur to treat patients are incurred shortly after enrollment, our patient treatment costs for ICT-107 were substantially higher during the three months ended September 30, 2012. The decrease in the amounts expended for ICT-107 was partially offset by certain pre-clinical expenses we incurred related to ICT-121 and ICT-140. Our future research and development expenses are heavily dependent on the outcome of our Phase II trial of ICT-107. Depending on the outcome of that trial, we may need to conduct a Phase III trial with a patient enrollment that will likely be significantly larger than the Phase II trial. The number of patients to be enrolled and the ultimate cost will be dependent on factors that are not presently known by us. We will incur additional costs as we enroll patients in our ICT-121 and ICT-140 clinical trials.

We had $1,549,492 of non-cash expenses during the three months ended September 30, 2013, consisting of $1,379,217 related to the increase in our warrant liabilities, $156,277 of stock based compensation and $13,998 of depreciation expense. We had $45,330 of non-cash expenses for the three months ended September 30, 2012, consisting of $33,887 of stock based compensation and $11,443 of depreciation expense. During the three months ended September 30, 2012, we recorded $2,777,500 of other income related to the decrease in the fair value of our warrant liabilities.

Nine months ended September 30, 2013 and 2012

Net Loss

We incurred a net loss of $8,917,561 and $14,978,879 for the nine months ended September 30, 2013 and 2012, respectively. The decrease in the net loss is primarily due to reductions in research and development expenses and a reduced charge to other expense related to the increase in the fair value of the warrant liability.

Revenues

We did not have any revenue during the nine months ended September 30, 2013 and 2012 and we do not expect to have any revenue in 2013.

Expenses

General and administrative expenses for the nine months ended September 30, 2013 and 2012 were $2,542,794 and $2,647,301, respectively. During the three months ended September 30, 2013, we optimized our spending in the areas of investor relations, travel and professional fees, which resulted in a decrease in expense. These decreases were partially offset by increases in personnel related expenses as we hired additional employees and we concluded a litigation matter.

Research and development expenses for the nine months ended September 30, 2013 and 2012 were $3,905,338 and $6,567,086, respectively. During the nine months ended September 30, 2012, we completed our enrollment by enrolling 39 new patients in our Phase II clinical trial of ICT-107 bringing the total number of enrolled patients to 278. Additionally, we had two manufacturing facilities and 25 Phase II trial clinical sites that were operational. Since we completed our ICT-107 patient enrollment during the third quarter of 2012, we did not incur certain expenses related to product manufacturing or quality control during the nine months ended September 30, 2013. However, we continued to incur other trial related expenses related to ICT-107. The decrease in the amounts expended for ICT-107 was partially offset by certain pre-clinical expenses we incurred related to ICT-121 and ICT-140. We expect our research and development expenses to increase during the remainder of 2013 as we incur on-going expenses related to our Phase II trial of ICT-107 and as we begin enrolling patients in our clinical trials for ICT-121 and ICT-140.

We had $2,523,238 of non-cash expenses during the nine months ended September 30, 2013, consisting of $1,983,388 related to the increase in our warrant liabilities, $500,351 of stock based compensation, $3,817 loss on disposal of assets and $35,682 of depreciation expense. We had $5,435,166 of non-cash expenses for the nine months ended September 30, 2012, consisting of $5,018,224 related to the increase in our warrant liability, $382,611 of stock based compensation and $34,331 of depreciation expense.

Liquidity and Capital Resources

As of September 30, 2013, we had working capital of $28,767,993, compared to working capital of $25,832,869 as of December 31, 2012. The estimated cost of completing the development of either of our current vaccine product candidates and of obtaining all required regulatory approvals to market either of those product candidates is substantially greater than the amount of funds we currently have available. However, we believe that our existing cash balances will be sufficient to fund our operations for at least the next twelve months, although there is no assurance that such proceeds will be sufficient.

On April 18, 2013, we entered into a Controlled Equity Offering^SM Sales Agreement (the Sales Agreement) with Cantor Fitzgerald & Co., as agent (Cantor), pursuant to which we may offer and sell, from time to time through Cantor, shares of our common stock having an aggregate offering price of up to $25.0 million (of which only $17.0 million was initially registered for offer and sale). Under the Sales Agreement, Cantor may sell shares by any method permitted by law and deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act, as amended, including sales made directly on the NYSE MKT, on any other existing trading market for our common stock or to or through a market maker. We may instruct Cantor not to sell shares if the sales cannot be effected at or above the price designated by us from time to time. We are not obligated to make any sales of the shares under the Sales Agreement. The offering of shares pursuant to the Sales Agreement will terminate upon the earlier of (a) the sale of all of the shares subject to the Sales Agreement or (b) the termination of the Sales Agreement by Cantor or the Company, as permitted therein. We will pay Cantor a commission rate of 3.0% of the aggregate gross proceeds from each sale of shares and have agreed to provide Cantor with customary indemnification and contribution rights. We will also reimburse Cantor for certain specified expenses in connection with entering into the Sales Agreement. On April 22, 2013, NYSE MKT approved the listing of 10,593,220 shares of our common stock in connection with the Sales Agreement. During the nine months ended September 30, 2013, we issued 1,862,142 shares and received net proceeds of $4,906,078. As of September 30, 2013, we had $11,754,071 remaining under the registration statement. See additional discussion in Note 6 to the unaudited condensed financial statements which are included in Part 1 of this Form 10-Q.

In October 2012, we raised $19,359,553 in an underwritten public offering, net of offering expenses of approximately $1.6 million, of 10 million units priced at $2.10 per unit. Each unit consisted of one share of common stock and a warrant to purchase .45 of a share of our common stock at an exercise price of $2.65 per share. In January 2012, we raised approximately $9,271,370 in an underwritten public offering, net of offering expenses of approximately $1.1 million, of 9,489,436 units at a price of $1.10 per unit. Each unit consists of one share of stock and a warrant to purchase 0.5 of a share of our common stock at an exercise price of $1.41 per share. In February 2011, we raised $7,460,129 (after commissions and offering expenses) from the sale of 5,219,768 units at a price of $1.55 per unit, with each unit consisting of one share of our common stock and a warrant to purchase 0.5 of a share of our common stock at an exercise price of $2.25 per share. In May 2010, we raised $2,716,308 (after commissions and offering expenses) from the sale of 2,490,910 shares of common stock and warrants to purchase 1,245,455 shares of common stock at an exercise price of $1.50 per share. In March 2010, we raised $1,654,686 (after commissions and offering expenses) from the sale of 1,740,000 shares of common stock and warrants to purchase 696,000 shares of common stock at an exercise price of $1.15 per share.

We may also seek to obtain funding through strategic alliances with larger pharmaceutical or biomedical companies. We cannot be sure that we will be able to obtain any additional funding from either financings or alliances, or that the terms under which we may be able to obtain such funding will be beneficial to us. If we are unsuccessful or only partly successful in our efforts to secure additional financing, we may find it necessary to suspend or terminate some or all of our product development and other activities.

As of September 30, 2013, we did not have any bank credit lines, long-term debt obligations, capital lease obligations, or other similar long-term liabilities. We have various purchase commitments for sponsored research and license fees. We have no financial guarantees, debt or lease agreements or other arrangements that could trigger a requirement for an early payment or that could change the value of our assets, and we do not engage in trading activities involving non-exchange traded contracts.

Contractual Obligations

The following is a summary of our contractual obligations including those entered into subsequent to September 30, 2013.

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Unconditional purchase obligations	$	1,099,016	$	1,099,016	$	0	$	0	$	0
Operating lease obligation		291,250		96,998		194,252		0		0
	$	1,390,266	$	1,196,014	$	194,252	$	0	$	0

Cash Flows

We used $6,054,663 of cash in our operations for the nine months ended September 30, 2013, compared to $9,187,583 for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, we greatly expanded our research and development activities, expanded our investor relations program and obtained a listing on NYSE MKT. Since we completed our ICT-107 patient enrollment during the third quarter of 2012, we did not incur certain expenses related to product manufacturing or quality control during the nine months ended September 30, 2013. During the nine months ended September 30, 2013, we incurred non-cash expenses consisting primarily of a valuation adjustment to our warrant liabilities of $1,983,388 and stock based compensation of $500,351. During the nine months ended September 30, 2012, we incurred non-cash expenses consisting primarily of a valuation adjustment to our warrant liabilities of $5,018,224. Additionally, during the nine months ended September 30, 2012, we recorded a non-cash financing expense of $368,524 related to the issuance of additional warrants triggered by the January 2012 stock issuance.

We used $37,877 cash from our investing activities during the nine months ended September 30, 2013 primarily to purchase computer equipment and a telephone system. During the nine months ended September 30, 2012, we used $5,668 of cash from our investing activities to acquire office equipment.

During the nine months ended September 30, 2013, we received net proceeds of $141,631 from the exercise of stock options and $4,261,723 from the exercise of warrants. We also received $4,906,078 in net proceeds from our controlled equity offering. During the nine months ended September 30, 2012, we received net proceeds of $9,271,370, excluding $100,000 of deferred offering costs that were previously advanced by the Company, from the issuance of common stock and warrants and we received $3,153,852 of proceeds from the exercise of warrants.

Inflation and changing prices have had no effect on our income or losses from operations over our two most recent fiscal years.

Off-Balance Sheet Arrangements

We are not party to any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

During the three months ended September 30, 2013, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 11, 2013 with the SEC.

Item 4. Controls and Procedures

As of the end of the fiscal quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, regarding the effectiveness of the design and operation of our disclosure controls and procedures pursuant to SEC Rule 15d-15(b) of the Exchange Act. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2013, (i) our disclosure controls and procedures were effective to ensure that information that is required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported or submitted within the time period specified in the rules and forms of the SEC and (ii) our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Exchange Act was accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. The design of any system of controls also is based in part upon assurance that any design will succeed in achieving its stated goals under all potential future conditions. However, controls may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

You should read and consider the risk factors included under Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 11, 2013 with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about the Company’s repurchases of its common stock during the quarter ended September 30, 2013.

Month	Total Number of Shares (or Units) Purchased (1)		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
July		0	$	0		0		0
August		99,331	$	0		0		0
September		5,491	$	0		0		0
		104,822	$	0		0		0

(1)	These shares are deemed to be repurchased through the cashless exercise of warrants and stock options during the quarter ended September 30, 2013.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.		Description

3.1		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of ImmunoCellular Therapeutics, Ltd. (1)

10.1		Employment Agreement dated August 19, 2013 between Anthony Gringeri and ImmunoCellular Therapeutics, Ltd.

10.2		Amendment No. 1 to the Exclusive License Agreement between the Johns Hopkins University and ImmunoCellular Therapeutics, Ltd.†

10.3		Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd.

10.4		Amendment No. 1 to Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd.

10.5		Form of Stock Option Grant Notice for the 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd.

31.1		Certification of the Registrant’s Principal Executive Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Registrant’s Principal Financial Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Registrant’s Principal Executive Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Registrant’s Principal Financial Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

(1)	Previously filed by us on September 24, 2013 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.

†	Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by us with the Securities and Exchange Commission. The omitted portions of the exhibit have been separately filed by us with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 7, 2013		IMMUNOCELLULAR THERAPEUTICS, LTD.

	By:	/s/ Andrew Gengos
	Name:	Andrew Gengos
	Title:	President and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ David Fractor
	Name:	David Fractor
	Title:	Principal Accounting Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

IMMUNOCELLULAR THERAPEUTICS, LTD.

FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 2013

Exhibit No.		Description

3.1		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of ImmunoCellular Therapeutics, Ltd. (1)

10.1		Employment Agreement dated August 19 ,2013 between Anthony Gringeri and ImmunoCellular Therapeutics, Ltd.

10.2		Amendment No. 1 to the Exclusive License Agreement between the Johns Hopkins University and ImmunoCellular Therapeutics, Ltd. †

10.3		Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd.

10.4		Amendment No. 1 to Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd.

10.5		Form of Stock Option Grant Notice for the 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd.

31.1		Certification of the Registrant’s Principal Executive Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Registrant’s Principal Financial Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Registrant’s Principal Executive Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Registrant’s Principal Financial Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

(1)	Previously filed by us on September 24, 2013 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.

†	Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by us with the Securities and Exchange Commission. The omitted portions of the exhibit have been separately filed by us with the Securities and Exchange Commission.