U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10


GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934


[F100PREDPIC001.JPG]

PREDICTIVE TECHNOLOGY GROUP, INC.

(Exact Name of Registrant as Specified in its charter)


         

Nevada

 

000-

 

90-1139372

(State or other jurisdiction of incorporation or organization)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

2749 Parleys Way, Suite 101

Salt Lake City, UT 84019

 

 

(Address of principal executive offices)


Registrant's telephone number: (801) 820-0811

Registrant’s fax number: (801) 487-2477

______________________________________


Copies to :

Richard W. Jones, Esq.

Jones & Haley, P.C.

750 Hammond Drive

Building 12, Suite 100

Atlanta, Georgia 30328

(770) 804-0500

www.corplaw.net


Securities to be registered under Section 12(b) of the Act:  None

 

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


Common Stock, $.001

 

Title of Class


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

   

Large accelerated filer [  ]

Non-accelerated filer [  ]

Emerging growth company [  ]

Accelerated filer [ ]

Smaller reporting company [X]


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]



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TABLE OF CONTENTS

     

 

 

 

 

 

Page

Item 1.

Business

3

 

 

 

Item 1A.

Risk Factors

13

 

 

 

Item 2.

Financial Information

26

 

 

 

Item 3.

Properties

40

 

 

 

Item 4.

Security Ownership of Certain Beneficial Owners and Management

40

 

 

 

Item 5.

Directors and Executive Officers

42

 

 

 

Item 6.

Executive Compensation

49

 

 

 

Item 7.

Certain Relationships and Related Transactions and Director Independence

55

 

 

 

Item 8

Legal Proceedings

56

 

 

 

Item 9.

Market Price of Dividends on the Registrant's Common Equity and Related Stockholder Matters

56

 

 

 

Item 10.

Recent Sales of Unregistered Securities

57

 

 

 

Item 11.

Description of Registrant's Securities to be Registered

59

 

 

 

Item 12.

Indemnification of Directors and Officers

60

 

 

 

Item 13.

Financial Statements and Supplementary Data

60

 

 

 

Item 14.

Changes in and Disagreements with Accounting and Financial Disclosures

60

 

 

 

Item 15.

Financial Statements and Exhibits

61

 

 

 

 

Signatures

61



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ITEM 1.  BUSINESS .

 

References in this Form 10 to “Predictive,” “we,” “us,” or “the Company” refer to Predictive Technology Group, Inc., a Nevada corporation, and, unless the context otherwise requires or is otherwise expressly stated, its subsidiaries.

 

GENERAL

 

Predictive (the Company) was formed in 2005 under the laws of the State of Nevada. The Company is headquartered in Salt Lake City, Utah, with locations in Utah and Minnesota. We are a therapeutics and life sciences company and a leader in the use of data analytics for disease identification and subsequent therapeutic intervention through precision biopharmaceutical solutions. Through our wholly-owned subsidiaries, Predictive Diagnostics, Inc., Predictive Biotech, Inc., and through our majority owned subsidiaries Juneau Biosciences, LLC and Predictive Therapeutics, Inc., we focus on four main clinical categories: Endometriosis, Scoliosis, Degenerative Disc Disease and Regenerative Human Cell and Tissue Products. In addition to our efforts to advance regenerative medicine, we are committed to assisting women in overcoming the devastating consequences of endometriosis via appropriate early-stage diagnosis and subsequent treatment.

 

PRODUCTS AND TECHNOLOGIES

 

We are currently offering products in two areas: a genetic diagnostic and prognostic test for endometriosis that is targeted to women who are having trouble with pregnancy; and various regenerative medicine products and human cell tissue products (HCT/Ps) for use in regenerative medicine applications.

 

Endometriosis Diagnostic

 

Our ARTguide™ test is a proprietary gene test panel for women experiencing infertility as a result of endometriosis and other health concerns. The test is expected to give additional insights into the best course of care related to Advanced Reproductive Technologies (ART), such as in vitro fertilization (IVF), that are used to assist couples having fertility issues. ARTguide™ test results are anticipated to enable clinicians to: identify if endometriosis is a potential factor causing or contributing to infertility; efficiently optimize treatment plan selection for patients; reduce unnecessary laparoscopies, but allow for treatment of active endometriosis; minimize out-of-pocket expenses; and improve “take-home baby” rates. For the patient, ARTguide™ will assist with: identification of undetected endometriosis; avoidance of multiple failed IVF cycles; providing an individual plan to achieve higher rates of successful pregnancy; and improvement of ART success rates. Over 30,000 DNA samples and medical records have been collected as part of the development and validation process of ARTguide™.

 

We began a beta launch of our ARTguide™ in October 2018. The beta launch will roll out in certain beta sites over the next few months. We anticipate that the test will be made available to the entire United States in the first half of 2019. We are currently processing ARTguide™ in a contracted CLIA laboratory and we anticipate processing the test in our own recently acquired laboratory in Salt Lake City, Utah, once appropriate certifications are received.

 

Endometriosis affects an estimated one in ten women of reproductive age. See, for example, [ Macer, et. al, “Endometriosis and Infertility: a review of the pathogenesis and treatment of endometriosis-associated infertility” Obstet Gynecol Clin – Dec. 2012 ] Endometriosis occurs when the tissue similar to the lining of the uterus (womb) is found in other parts of the body, most commonly in the pelvis. Monthly bleeding and inflammation caused by these lesions may severely impact a woman's quality of life. Some affected women experience severe pain, infertility, and/or problems with their periods, while some have no symptoms at all. Today, definitive diagnosis requires surgery. Due to the difficulties, invasiveness, and expense of diagnosing the condition, the majority of women diagnosed with endometriosis suffer for over a decade before receiving treatment. Treatment may involve hormonal suppression or a targeted destruction of the abnormal tissue during surgery.

 


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Our ARTguide™ test was developed by Juneau Biosciences, LLC. We currently own just over fifty percent of Juneau. We have an exclusive license with Juneau to market Juneau’s patented molecular diagnostics for use in the prognosis and monitoring of endometriosis in the infertility and pelvic pain markets.

 

ARTguide™ Exclusive License

 

In 2015 we entered into an exclusive license agreement for the commercialization of the ARTguide™ test and related services for the prognosis and monitoring of endometriosis. The license agreement was amended and restated in March 2018. Under the license, as amended, (i) upon the commercial sale of the rights to the ARTguide™ or a license thereof we are required to issue to Juneau common stock with a market value of $2,500,000, (ii) we split net profits earned from the ARTguide™ evenly between Predictive and Juneau, (iii) we must have minimum sales of $12.5 million in the twelve month period beginning nine months after commercial launch, (iv) during the second year following launch we must have minimum sales of $30 million, and (v) during the third year following launch and each year thereafter we must have minimum annual sales of $60 million. If we fail to meet these metrics the license is null and void unless Predictive (a) presents written plan to Juneau describing how Predictive will use reasonable commercial efforts to improve sales and (b) Predictive agrees to spend an amount equal to the difference between the projected minimum sales and actual sales on an enhanced sales and marketing effort over the next year.


Regenerative Medicine Products


We founded our life sciences business in 2015. We are a leader in regenerative medicine products and HCT/Ps. A growing national network of clinics, health systems, researchers and physicians leverage our placental-derived and Wharton’s Jelly umbilical cord-derived products. Regenerative medicine plays an important role in the medical community and care continuum. By using regenerative medicine products and HCT/Ps to create an optimal internal healing environment, it gives patients and professionals new treatment options that were not available just a few years ago.

 

In the emerging field of regenerative medicine, we are focused on tissue processing protocol. The power of our products is in their functionality, but just like all harvested tissue, that functionality can diminish if the tissue is not properly handled. This is why we process all of our products in our Food and Drug Administration (“FDA”) registered cGMP/cCTP lab utilizing proprietary methods that reduce the loss of important scaffolding proteins, growth factors, cytokines and other properties. In our ISO Class 7 clean room, we cryogenically freeze the products to better preserve viability. Our products are derived from two tissue sources -- the Wharton’s Jelly layer of the umbilical cord, as well as placental tissue. Our products are uniquely able to help protect, cushion and support injured parts of the body, as well as aid the optimal regenerative environment. Our products are ethically sourced from donated birthing tissues, such as umbilical cords and placentas from full-term deliveries. Comprehensive medical and social histories of the donor are obtained and tissues are procured, processed, and tested to meet or exceed standards established by FDA. Through rigorous research, we have identified the Wharton’s jelly layer of the umbilical cord, as well as placental tissue to be the richest sources of regenerative properties. It is from these two sources that we derive our products, each containing a unique blend of cytokines, proteins, growth factors and scaffolding properties: the functional factors involved in the reconstruction, repair, and protection of human tissue.

 

Our four main products include AmnioCyte TM , AmnioCyte Plus TM , PolyCyte TM , and CoreCyte TM . AmnioCyte TM and AmnioCyte Plus™ are derived from amniotic fluid. PolyCyte TM is derived from the Wharton’s Jelly of the umbilical cord. CoreCyte TM is a minimally manipulated human tissue allograft derived from the Wharton’s Jelly of the umbilical cord. CoreCyte TM is processed to preserve the structural integrity of Wharton’s jelly for homologous use and cryogenically preserved.



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PRODUCTS IN DEVELOPMENT

 

Background - Molecular Diagnostics

We believe that advances in the emerging field of molecular diagnostics will improve our ability to determine which patients are subject to a greater risk of developing disease, and who therefore would benefit from preventive therapies. Molecular diagnostic products may also guide a patient’s healthcare to ensure the patient receives the most appropriate drug at the optimal dose. Every week, disease-linked genetic variations are being discovered. Genetic tests are now available for over 4,000 diseases and conditions. Once only a niche market of the in vitro diagnostics industry, molecular genetic testing is playing an increasingly valuable and prominent role in health care. In all areas of medicine, DNA based tests are assisting clinicians in the management of diseases and in the selection of treatment by enabling earlier diagnosis or prediction of disease risk years before symptoms occur. The domestic market for molecular diagnostics is a multi-billion dollar market and is the strongest segment of the entire in vitro diagnostics market, growing at an annual average rate of over 20%.

We believe there are significant diagnostic market opportunities for disease identification. Simple, non-invasive diagnostic, prognostic, and predictive tests do not exist for many of the major diseases affecting women and men. Unlike traditional medical tests, molecular genetic tests are often proprietary, high-margin tests that can move quickly from discovery to commercialization, particularly when performed at a centralized laboratory under the FDA “home-brew” exemption for LDT.

 

In general, accurate early detection, disease identification and assessment of health status can translate into reduced morbidity, improved quality of life and reduced treatment costs associated with detection and treatment of disease during later stages.

 

Technology and Products in Development

 

Our majority-owned subsidiary, Juneau Biosciences, LLC has established a core team of physicians and scientists as well as state-of-the-art genetic analysis technologies to identify disease-associated genes in the field of women’s health using clinical genetics. Juneau has the medical and patient resources which many biotechnology companies lack. Based in Utah, Juneau’s clinical network accesses the millions of living descendants of the original pioneers who settled in this region. Juneau believes that these large, genetically heterogeneous families who are well informed of their genealogy, comprise the best population in the world for discovering human disease genes. In short, Juneau believes that it can move from clinical need to clinical trials more efficiently than many other companies.

 

We recently acquired DNA and ancestry assets, including significant genetic data related to women’s diseases and degenerative disc disease. The acquired assets include: (i) approximately 1,000 degenerative disc disease-related DNA samples, related family records, relevant clinical records (including approximately 600 affected probands) and 800 ancestry matched control samples, (ii) whole exome sequencing data on approximately 300 degenerative disc disease samples, over 800 local controls, and published reference populations, together with initial analysis of the markers, and (iii) exclusive use of a DNA biobank that has collected over 300,000 samples for multiple diseases that the Company may target.  


The acquisition of these DNA and ancestry assets strengthens our development platforms to commercialize gene-based diagnostics and biotechnology treatments for other debilitating diseases, such as additional difficult-to-diagnose women’s health diseases and degenerative disc disease. These assets are complementary to our recent acquisition of Inception Dx, LLC, which is anticipated to act as our laboratory once certifications are completed, which included ancestry database records for over 31.9 million individuals for use in genetics research. 


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Tissue Availability and Laboratory Processing

 

Our regenerative medicine products and HCT/Ps are derived from the Wharton’s Jelly layer of the umbilical cord and from placental tissue. We obtain these tissues from donors in various parts of the country. Tissues are procured, processed, and tested in our laboratory in Salt Lake City, Utah to meet or exceed standards established by FDA. We are dependent on donors to supply us with sufficient umbilical cord and placental tissue to manufacture our four key regenerative medicine products and HCT/Ps. To date, we have been able to secure sufficient donated tissues to meet our manufacturing needs. In the event we are not able to secure required tissue, it will directly impact the quantity of regenerative medicine products and HCT/Ps that we are able to manufacture.

 

INTELLECTUAL PROPERTY

 

In striving to protect and enhance proprietary technology, inventions, and improvements that are commercially important to the development of our business, we currently rely heavily on trade secrets relating to our proprietary technology platform and on know-how. We enter into confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems.

 

Our objective is to continue to expand our portfolio of patents and patent applications, in conjunction with our trade secrets and know-how, in order to further protect our molecular diagnostic, therapeutics, regenerative medicine platform and derivative technologies, as well as the manufacturing and deployment processes of those technologies.

 

Intellectual Property Related to Endometriosis

 

Related to the diagnosis and treatment of endometriosis, we own 2 issued U.S. patents, 1 allowed U.S. patent, 1 pending U.S. non-provisional patent application, and national phase applications have been entered in 5 foreign countries. In the field of the prediction, prognosis, or diagnosis or therapeutic assessment of endometriosis in infertility and/or pelvic pain and/or dysmenorrhea patients using genetic data, we have exclusive license rights to 3 issued U.S. patents, 3 pending U.S. non-provisional patent applications, 13 pending U.S. provisional patent applications, and 1 PCT International Patent Application.

 

Intellectual Property Related to Spine Diseases

 

Related to the diagnosis and treatment of spine diseases, we own 5 issued U.S. patents and 1 pending U.S. non-provisional patent application.

 

Intellectual Property Related to Regenerative Medicine Products and HCT/Ps

 

Related to the processing of human cell tissue, we own 2 pending U.S. provisional patent applications.

 

REIMBURSEMENT

 

Our ARTguide™ and current regenerative medicine products and HCT/Ps are targeted as self-pay markets and, to date, substantially all of our revenues are self-pay. To the extend ARTguide™, our current regenerative medicine products and HCT/Ps or any future products and/or future services we offer are reimbursed such transactions are subject to additional regulation. In addition, in the United States, demand for access to many medical products will depend in large part on both the availability and the amount of reimbursement from third-party payers, including government healthcare programs (including Medicare and Medicaid), and commercial healthcare insurers, including managed care organizations and other private health plans. Third-party payers have complex rules and requirements for coverage and reimbursement of healthcare products and services. Even the applications to such third-party payers to be eligible for reimbursement for product or services are complex and can be lengthy and time consuming. For new technologies coming to market, these payers are increasingly examining the clinical evidence supporting medical necessity and cost effectiveness decisions in addition to safety and efficacy, which can result in barriers to early coverage reimbursement, or denial of coverage and reimbursement altogether. Accordingly, significant uncertainty exists as to the availability of coverage and reimbursement status for new medical products. If third-party payer reimbursement is unavailable to our customer hospitals, physicians, and providers, our sales may be limited and we may not be able to realize an appropriate return on our investment in research and product development.



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Payers often set payment rates depending on the site of service and many use the Medicare program as a benchmark for their own payment methodologies. In the hospital inpatient setting, Medicare payment generally is set at pre-determined rates for all products and services provided during a particular patient stay and is based on such factors as the patient diagnosis, procedures performed, patient age, and complications. In the physician office or clinic setting, Medicare payment generally is based on a fee schedule, with payment rates set for each procedure performed and product used, although the schedule may in some instance bundle the product into the payment for the procedure. In some outpatient settings, such as in the case of the hospital outpatient clinic setting, Medicare payment rates generally are premised on classifications of services that have similar clinical characteristics and similar costs.

 

Reimbursement policies depend in part on legislation designed to regulate the healthcare industry and federal and state governments continue to propose and pass new healthcare legislation and government agencies revise or change their regulations and policies from time to time. We cannot predict whether or how such reform measures and policy changes would affect reimbursement rates and demand for our products.

 

COMPETITION

Competition is intense in diagnostic, regenerative medicine products, and HCT/Ps markets. Our potential competitors in the United States and abroad are numerous and include, among others, major pharmaceutical companies, diagnostic reference laboratories, biotechnology firms, universities and other research institutions. Many potential competitors have greater financial, technical, marketing and other resources than we have. We expect competition to intensify in our current fields as technical advances occur and become more widely known.

 

The technologies for (i) discovering genes that cause major diseases, (ii) methods, processes and discoveries related to HCT/Ps, and (iii) approaches for commercializing those discoveries are rapidly evolving. Rapid technological developments could result in our services, products, or processes becoming obsolete before we recover a significantportion of our related research and development costs and associated capital expenditures. If we do not launch our services or products before our competitors, we could be adversely affected. Moreover, any products that we develop could be made obsolete by less expensive or more effective tests or methods that may be developed in the future.

 

We believe, however, based on extensive literature and patent searches, that we have far surpassed other research in endometriosis. We further believe that we are one of a few commercial enterprises currently engaged in a genomic approach to endometriosis. There are a number of established pharmaceutical companies that have franchises in the women’s health area. These include: AbbVie, Amgen, Inc., AstraZeneca, Teva/ Barr Laboratories, Bayer Corporation, Bristol-Myers Squibb Company, Eli Lilly and Company, Johnson & Johnson, GlaxoSmithKline, Neurocrine, Merck Novartis Corporation / Serono, Procter & Gamble, Pfizer, Inc. /Wyeth, Ferring Pharmaceuticals, Sanofi Aventis, and others. These companies are principally focused in the areas of HRT, contraception, osteoporosis and/or infertility based on their existing products and R&D pipeline. We view these companies as potential partners. Our gene discovery and target validation technologies will create a natural "fit" between our capabilities and large pharmaceutical companies’ chemical libraries, preclinical/clinical development, and sales and marketing capabilities.



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We face significant competition in the regenerative medicine products and HCT/Ps market. Our competitors include Alliqua, American Cryo, Athersys, AxoGen, Biodesix, Biotime, Burst Biologics, Compugen, DermaSciences, Human Regenerative Technologies, International Stem Cell, Invitrix, Lifecell, Liveyon, Longeveron, MiMeDx, Misoblast, MTF (Musculoskeletal Tissue Foundation), Orthofix, Osiris, Pluristem, Polarity, Regenerexx, TEI Biosciences, TissueTech, Wright, and Xtant. We believe that our HCT/Ps processing and preserving technologies deliver superior products and provide us with a competitive edge over other industry players.

 

GOVERNMENT REGULATION

 

General

 

Regulation by governmental authorities in the United States and foreign countries is a significant factor in the development, manufacture and marketing of our products and services and in our ongoing research and development activities. The therapeutic products, and some of the molecular diagnostic products, regenerative medicine products and HCT/Ps to be developed, will require regulatory approval by governmental agencies prior to commercialization. Various federal statutes and regulations also govern or influence the testing, manufacturing, safety, labeling, storage, record keeping, and marketing of therapeutic products, regenerative medicine products and HCT/Ps. The process of obtaining these approvals and the subsequent compliance with applicable statutes and regulations require the expenditure of substantial time and financial resources. Any failure by us or our collaborators, licensors or licensees to obtain regulatory approval or any delay in obtaining regulatory approval could have a material adverse affect on our business.

 

Molecular Diagnostics

 

The contracted laboratory that is running ARTguide™ and our laboratory that will be running ARTguide™ and our future molecular diagnostic tests is subject to governmental regulation at the federal, state, and local levels as a clinical laboratory. The Clinical Laboratory Improvement Amendments, or CLIA, provide for the regulation of clinical laboratories by the Department of Health and Human Services (“HHS”), and our diagnostic laboratory is subject to HHS regulations, which mandate that all clinical laboratories be certified to perform testing on human specimens and provide specific conditions for certification. These regulations also contain guidelines for the qualification, responsibilities, training, working conditions and oversight of clinical laboratory employees. In addition, specific standards are imposed for each type of test that is performed in a laboratory. CLIA and the regulations promulgated thereunder are enforced through quality inspections of test methods, equipment, instrumentation, materials and supplies on a periodic basis. Any change in CLIA or these regulations or in the interpretation thereof could have a material adverse effect on our business.

 

The FDA has regulatory responsibility over instruments, test kits, reagents and other medical devices used to perform diagnostic testing by clinical laboratories. In the past, the FDA has claimed regulatory authority over laboratory developed tests (LDTs), but has exercised “enforcement discretion” in not regulating most LDTs performed by high complexity CLIA-certified laboratories and that are marketed to physicians.

 

The FDA published draft guidance documents regulating LDTs. It is anticipated that regulation, if it occurs, will commence with high risk tests and proceed to low risk tests over time. If the FDA should require that our tests receive FDA approval prior to their commercial launch, there can be no assurance such approval would be received on a timely basis, if at all. At present, ARTguide™ does not require FDA approval before commercial launch.

 

The FDA has considered LDT regulations since 1992. Any attempt by the FDA to regulate LDTs now would be controversial, difficult to administer and likely to trigger legal challenges from the industry. A large number of medical laboratory tests are LDTs that have been in use for decades, are run daily in labs throughout the country, and enjoy broad clinical acceptance. FDA regulation of the entire menu of tests that currently fall under the legal definition of LDTs would be disruptive to patient care. Requiring regularly used and long-accepted LDTs to have FDA approval would drive health care costs up.



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LDTs are in vitro assays that clinical laboratories develop as testing services according to their own procedures. These tests are often created in response to unmet clinical needs, and are commonly used for early and precise diagnosing, monitoring, and guiding patient treatment. LDTs are also used to diagnose and assess diseases and disorders for which no FDA-authorized test kit currently exists, such as rare diseases, or those with small patient populations. In some cases, LDTs represent the standard of care. The ability of laboratories to develop custom diagnostic tests has been critical to the growth of personalized medicine and to keep pace with the changing face of disease. 



 

Medical laboratories are highly regulated under the Clinical Laboratory Improvement Amendments (CLIA) of 1988. High complexity laboratories must undergo additional certification to ensure the clinical validity of tests. CLIA regulations address personnel qualifications, quality control procedures, and proficiency testing programs. CLIA contains different complexity categories to describe the degree of expertise a laboratory will be required to have, and the standards that it will need to meet, in order to perform a particular test of a given type. All laboratories performing molecular diagnostic testing must be CLIA High Complexity Laboratories.

 

Greater than 95% of current and greater than 95% of new high margin tests are performed as LDTs. Molecular test development by laboratories under CLIA has become the diagnostic or prognostic standard of care for many diseases or conditions.  Under CLIA, the laboratory director, without external review, determines the analytical validity of LDTs. The laboratory is not required by CLIA to demonstrate that the test is clinically valid. The laboratory must develop the test itself and must “manufacture” the test. The laboratory performing the test must have CLIA approval and approval of any state regulators.

 

Typically molecular genetics laboratories have accreditation from the College of American Pathologists (“CAP”) and generally the lab director meets professional certification requirements. Some states have implemented regulations concerning molecular diagnostic testing that require licensing or registration of general clinical laboratory activities.

 

We believe that we will be able to take all steps required in various jurisdictions in order for us to conduct business in those jurisdictions. Failure to maintain state regulatory compliance, or changes in state regulatory schemes, could result in a substantial curtailment or even prohibition of our clinical activities and could have a material adverse effect on our business.

 

Human Cell and Tissue Products (HCT/Ps)

 

The FDA has specific regulations governing the manufacture and commercialization of HCT/Ps and the level of these regulations by the FDA, depending on whether the procedure falls solely within the scope of Section 361 of the Public Health Service Act (the “PHS Act”) (42 U.S.C. § 264) or if they are regulated as drugs, devices, and/or biological products under Section 351 of the PHS Act (42 U.S.C. § 262) and/or the FD&C Act.

 

If an HCT/P meets the criteria for regulation solely under Section 361 of the Public Health Service Act (so-called “361 HCT/Ps”), no premarket FDA review for safety and effectiveness under a drug, device, or biological product marketing application is required. However, the processor of the tissue is required to register and list its products with the FDA, comply with regulations regarding labeling, record keeping, donor eligibility and screening and testing, process the tissue in accordance with established current Good Tissue Practices (cGTP), and investigate and, in certain circumstances, report adverse events or deviations.

 

To be a Section 361 HCT/P, a product generally must meet all four of the following criteria:



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1)  It must be minimally manipulated;

2)  It must be intended for homologous use;

3)  Its manufacture must not involve combination with another article, except for water, crystalloids or a sterilizing, preserving or storage agent, provided the addition of such article does not raise new clinical safety concerns; and

4)  It must not have a systemic effect and must not be dependent upon the metabolic activity of living cells for its primary function (unless the product is intended for reproductive use, autologous use, or use in a first- or second-degree blood relative).

 

We have successfully completed an FDA audit, and management believes our structural umbilical cord tissue product qualify as Section 361 HCT/Ps. Other regenerative medicine products and product candidates that we have developed or have commercialized are being evaluated with respect to regulatory classification. We plan to prepare for any regulatory pathway that is required.  Other HCT/Ps we are developing are being evaluated with respect to regulatory classification, and we will prepare for any pathway of manufacturing or regulation that is required.

 

All establishments that manufacture Section 361 HCT/Ps must register and list their HCT/Ps with the FDA’s Center for Biologics Evaluation and Research (“CBER”) within five days after commencing operations. In addition, establishments are required to update their registration annually in December or within 30 days of certain changes, and submit changes in HCT/P listing at the time of or within six months of such change. Establishments that manufacture Section 361 HCT/Ps will know that they are registered in compliance with 21 C.F.R. § 1271.10(a) when they receive a validated form with the registration number (“FEI#”) after submitting the Form FDA 3356 (registration form).  Applicable GTP requirements govern, the facilities, controls, and methods used in the manufacture of HCT/Ps, including without limitation, recovery, donor screening, donor testing, processing, storage, labeling, packaging, and distribution of 361 HCT/Ps. FDA inspection and enforcement with respect to establishments described in 21 C.F.R. § 1271 includes inspections conducted, as deemed necessary, to determine compliance with the applicable provisions and may include, but is not limited to, an assessment of the establishment’s facilities, equipment, finished and unfinished materials, containers, processes, HCT/Ps, procedures, labeling, records, files, papers, and controls required to be maintained under 21 C.F.R. § 1271. Such inspections can occur at any time with or without written notice at such frequency as is determined by the FDA in its sole discretion.

 

Our subsidiary, Predictive Biotech, successfully completed an FDA inspection of its lab in October 2018. This inspection included the review of all of the Company’s SOPs, manufacturing processes and marketing material. The Company resolved and reported back to the FDA on 2 items that were identified on the FDA’s standard 483 form. The Company is currently listed on the FDA’s database as a Company in good standing under the status of “No Action Indicated (NAI)”.

 

We believe that we are operating our HCT/Ps business in compliance with applicable FDA regulations and other applicable laws.

 

Therapeutics

 

We intend to partner with one or more pharmaceutical partners to develop therapeutic products which will be subject to regulation by the FDA and require approval before they may be clinically tested and commercially marketed for human therapeutic use in the United States and other countries. The precise regulatory requirements with which we will have to comply are undergoing periodic revisions and refinement.

 

The steps required before a therapeutic product may be marketed in the United States are numerous and include, but are not limited to the following:

 

- completion of preclinical laboratory tests, animal studies, chemical process development, and formulation studies;

- the submission to the FDA of an IND, which must become effective before clinical trials may commence;

- performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the drug for its intended use;

- the submission of a New Drug Application, or NDA, to the FDA; and

- FDA approval of the NDA, including approval of all product labeling and initial advertising.


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The testing and approval process required to market a therapeutic product involves substantial time, effort, and financial resources and we cannot be certain that any approvals for any of our future therapeutic products will be granted on a timely basis, if at all.

 

Clinical trials are typically conducted in three sequential Phases that may overlap:

 

- PHASE 1: Initial safety study in healthy human subjects or patients where the candidate therapy is tested for safety, dosage tolerance, absorption, distribution, metabolism, and excretion.

 

- PHASE 2: Studies in a limited patient population designed to identify possible adverse effects and safety risks, to determine the efficacy of the product for specific targeted diseases and to determine tolerance and optimal dosage.

 

- PHASE 3: Studies in an expanded patient population to further evaluate clinical efficacy and to further test for safety.

 


We cannot be certain that we will successfully complete Phase 1, Phase 2 or Phase 3 testing of any compound within any specific time period, if at all. Furthermore, the FDA or the sponsor may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

 

Satisfaction of the above FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and the actual time required may vary substantially, based upon the type, complexity and novelty of the product or indication. Government regulation may delay or prevent marketing of potential products for a considerable period of time and impose costly procedures upon us or our partners’ activities. The FDA or any other regulatory agency may not grant any approvals on a timely basis, if at all. Success in early stage clinical trials does not assure success in later stage clinical trials. Data obtained from clinical activities is not always conclusive and may be susceptible to varying interpretations that could delay, limit or prevent regulatory approval. Even if a product receives regulatory approval, the approval may be significantly limited to specific indications and dosages. Delays in obtaining, or failures to obtain regulatory approvals may have a material adverse effect on our business. In addition, we cannot predict what adverse governmental regulations may arise from future U.S. or foreign governmental action.

 

Any products manufactured or distributed by us pursuant to FDA approval is subject to pervasive and continuing regulation by the FDA, including record-keeping requirements and reporting of adverse experiences with the drug. Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA to assess compliance with current Good Manufacturing Practices, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. We cannot be certain that we or our suppliers will be able to comply with current Good Manufacturing Practices regulations and other FDA regulatory requirements.

 

Fraud, Abuse and False Claims

 

We are directly and indirectly subject to various federal and state laws governing relationships with healthcare providers and other potential referral sources for our products pertaining to healthcare fraud and abuse, including anti-kickback, false claims, and similar laws. In addition, federal and state laws are also sometimes open to interpretation. We could potentially face legal risks if our interpretation differs from those of enforcement authorities. Further, from time to time we may find that we are at a competitive disadvantage if our interpretation differs from that of our competitors.

 

In particular, the federal healthcare program Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration (in cash or in kind), directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for, or recommending of, a good or service for which payment may be made in whole or part under federal healthcare programs, such as the Medicare and Medicaid programs. Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. The Anti-Kickback Statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. In implementing the statute, the Office of Inspector General of the U.S. Department of Health and Human Services (“OIG”) has issued a series of regulations, known as the “safe harbors.” These safe harbors set forth provisions that, if all their applicable requirements are met, exclude certain specified remuneration and remunerative arrangements from being violations of the Anti-Kickback Statute. The failure of a transaction or arrangement to fit precisely within one or more safe harbors does not necessarily mean that it is illegal or that prosecution will be pursued. However, conduct and business arrangements that do not fully satisfy each applicable element of a safe harbor may result in increased scrutiny by Government enforcement authorities, such as the OIG. Many states have laws similar to the federal law.


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Also, the federal civil False Claims Act (“FCA”) imposes civil liability on any person or entity that submits, or causes the submission of, a false or fraudulent claim to the U.S. government. Damages under the FCA can be significant and consist of the imposition of fines and penalties. The FCA also allows a private individual or entity (i.e., a whistleblower) with knowledge of past or present fraud against the federal government to sue on behalf of the government and to be paid a portion of the government’s recovery, which can include both civil penalties and up to three times the amount of the government’s damages (usually the amount reimbursed by federal healthcare programs). The DOJ takes the position that the marketing and promotional practices of life sciences product manufacturers, including the off-label promotion of products, the provision of inaccurate or misleading reimbursement guidance, or the payment of prohibited kickbacks, may cause the submission of improper claims to federal and state healthcare entitlement programs such as Medicare and Medicaid by health care providers that use the manufacturer’s products, which results in a violation of the FCA. In certain cases, manufacturers have entered into criminal and civil settlements with the federal government under which they entered into plea agreements, paid substantial monetary amounts and entered into corporate integrity agreements (“CIAs”) that require, among other things, substantial government oversight, as well as reporting and remedial actions going forward

 

If we fail to comply with these laws, we could be subject to enforcement actions, including but not limited to:

 

- Multi-year investigations by federal and state governments;

- Criminal and civil fines and penalties;

- Obligations under settlement agreements, such as CIAs or Deferred Prosecution Agreements; and/or

- Exclusion from participation in federal and state healthcare programs. 

 

Other Regulations

 

In 1996, Congress passed the Health Insurance Portability and Accountability Act, or HIPAA. HIPAA, among other things, required HHS to issue regulations that are designed to improve the efficiency and effectiveness of the healthcare system by facilitating the transfer of health information along with protecting the confidentiality and security of health information. Specifically, Title II of HIPAA, the Administrative Simplification Act, contains four provisions that address the privacy of health data, the security of health data, the standardization of identifying numbers used in the healthcare system and the standardization of data content, codes and formats used in healthcare transactions. We are currently subject to the HIPAA regulations and maintain an active program designed to address regulatory compliance issues. Penalties for non-compliance with HIPAA include both civil and criminal penalties. Violations could result in civil penalties of up to $25,000 per type of violation in each calendar year and criminal penalties of up to $250,000 per violation.

 

The privacy regulations protect medical records and other personal health information by limiting their use and release, giving patients the right to access their medical records and limiting most disclosures of health information to the minimum amount necessary to accomplish an intended purpose. In addition to the federal privacy regulations, there are a number of state laws regarding the confidentiality of health information that are applicable to clinical laboratories. The penalties for violation of state privacy laws may vary widely and new privacy laws in this area are pending. We believe that we have taken the steps required of us to comply with all applicable health information privacy and confidentiality statutes and regulations. Failure to maintain compliance, or changes in state or federal laws regarding privacy, could result in civil and/or criminal penalties and could have a material adverse effect on our business.

 

HHS has regulations which establish standards for electronic transactions and for code sets to be used in those transactions. They also contain requirements concerning the use of these standards by health plans, healthcare clearinghouses, and certain healthcare providers. In addition, HHS has security regulations which establish standards for the security of electronic protected health information to be implemented by health plans, healthcare clearinghouse, and certain healthcare providers. We believe we has taken the steps required of it to comply with both the transactions and code sets as well as the security regulations. However, failure to maintain compliance with these regulations could result in civil and/or criminal penalties and could have a material adverse effect on our business.

 

Our business is also subject to regulation under state and federal laws regarding environmental protection and hazardous substances control, such as the Occupational Safety and Health Act, the Environmental Protection Act, and the Toxic Substance Control Act. We believe that we are in material compliance with these and other applicable laws and that the costs of our ongoing compliance will not have a material adverse effect on our business. However, statutes or regulations applicable to our business may be adopted which could impose substantial additional costs to assure compliance and/or otherwise materially and adversely affect our operations.

 

EMPLOYEES

 

We had 63 full-time employees and 5 part-time employees as of December 1, 2018.

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ITEM 1A.  RISK FACTORS .

 

The following risks and uncertainties are important factors that could cause actual results or events to differ materially from those indicated by forward-looking statements. The factors described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and results.  If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected.  As a result, the market price of shares of our Common Stock could decline significantly.

 

This Registration Statement includes management’s best current estimate of the future potential of the business. Investors should be aware that this business has inherent risks that must be fully evaluated, discussed with management and experts fully capable of interpreting the information prior to any investment.

 

Risks Relating to our Business and Industry Generally

 

Our operating results may fluctuate significantly as a result of a variety of   factors, many of which are outside of our control.

 

We are subject to the following factors, among others, that may negatively affect our operating results:


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  The announcement or introduction of new products by our competitors;

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  Failure of Government and private health plans to adequately and timely reimburse the users of our products;

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  Our ability to upgrade and develop our systems and infrastructure to accommodate growth;

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  Our ability to attract and retain key personnel in a timely and cost-effective manner;

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  The amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure;

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  Regulation by federal, state or local Governments; and

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  General economic conditions as well as economic conditions specific to the healthcare industry.

 

We have based our current and future expense levels largely on our investment plans and estimates of future events, although certain of our expense levels are, to a large extent, fixed. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenue relative to our planned expenditures would have an immediate adverse effect on our business, results of operations and financial condition.  Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions that could have a material and adverse effect on our business, results of operations and financial condition.  Due to the foregoing factors, our revenue and operating results are and will remain difficult to forecast.

 

We are in a highly competitive and evolving field and face competition from well-established tissue processors, genetic testing laboratories and medical device manufacturers, as well as new market entrants.

 

Our business is in a very competitive and evolving field. Competition from other tissue processors, genetic testing laboratories, medical device companies and from research and academic institutions is intense, expected to increase, subject to rapid change and could be significantly affected by new product introductions. In addition, consolidation in the healthcare industry continues to lead demands for price concessions or to the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, results of operations or financial condition. The presence of this competition in our market may lead to pricing pressure, which would make it more difficult to sell our products at a price that will make us profitable or prevent us from selling our products at all. Our failure to compete effectively would have a material and adverse effect on our business, results of operations and financial condition.


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Rapid technological change could cause our products to become obsolete and if we do not enhance our product offerings through our research and development efforts, we may be unable to effectively compete.

 

The technologies underlying our products are subject to rapid and profound technological change. Competition intensifies as technical advances in each field are made and become more widely known. We can give no assurance that others will not develop services, products, or processes with significant advantages over the products, services, and processes that we offer or are seeking to develop. Any such occurrence could have a material and adverse effect on our business, results of operations and financial condition.

 

We plan to enhance and broaden our product offerings in response to changing customer demands and competitive pressure and technologies. The success of any new product offering or enhancement to an existing product will depend on numerous factors, including our ability to:

 

 

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Properly identify and anticipate physician and patient needs;

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Develop and introduce new products or product enhancements in a timely manner;

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Adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties;

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Demonstrate the safety and efficacy of new products; and 

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Obtain the necessary regulatory clearances or approvals for new products or product enhancements.

 

If we do not develop and, when necessary, obtain regulatory clearance or approval for new products or product enhancements in time to meet market demand, or if there is insufficient demand for these products or enhancements, our results of operations will suffer. Our research and development efforts may require a substantial investment of time and resources before we are adequately able to determine the commercial viability of a new product, technology, material or other innovation. In addition, even if we are able to successfully develop enhancements or new generations of our products, these enhancements or new generations of products may not produce sales in excess of the costs of development and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features.

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We are subject to numerous federal and state healthcare laws regulations, and a failure to comply with such laws and regulations could have an adverse effect on our business and our ability to compete in the marketplace.

If we fail to comply with the FDA regulations and laws applicable to our operation or tissue products, the FDA could take enforcement action, including, without limitation, pursuing any of the following sanctions, among others:

 

- Untitled letters, warning letters, fines, injunctions, product seizures, and civil penalties;

- Orders for product retention, recall, and/or destruction;

- Operating restrictions, partial suspension or total shutdown of operations;

- Refusing any requests for product clearance or approval;

- Withdrawing or suspending any applications for approval or approvals already granted; and/or

- Criminal prosecution.

 

In addition, there are numerous laws and regulations that govern the means by which companies in the healthcare industry may market their treatments to healthcare professionals and may compete by discounting the prices of their treatments, including for example, the federal Anti-Kickback Statute, the federal False Claims Act (“FCA”), the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), and state law equivalents to these federal laws that are meant to protect against fraud and abuse and analogous laws in foreign countries. Violations of these laws are punishable by criminal and civil sanctions, including, but not limited to, in some instances civil and criminal penalties, damages, fines, and exclusion from participation in federal and state healthcare programs, including Medicare and Medicaid. In addition, federal and state laws are also sometimes open to interpretation. Accordingly, we could potentially face legal risks if our interpretation differs from those of enforcement authorities. Further, from time to time we may find ourselves at a competitive disadvantage if our interpretation differs from that of our competitors.

 

Specifically, anti-kickback laws and regulations prohibit any knowing and willful offer, payment, solicitation or receipt of any form of remuneration (direct or indirect, in case or in kind) in return for the referral, use, ordering, or recommending of the use of a product or service for which payment may be made by Medicare, Medicaid or other Government-sponsored healthcare programs. We have entered into consulting agreements, research agreements and product development agreements with physicians, including some who may order our products or make decisions to use them. In addition, some of these physicians own our stock, which they purchased in arm’s length transactions on terms identical to those offered to non-physicians or received stock awards from us as consideration for services performed by them. While these transactions were structured with the intention of complying with all applicable laws, including state anti-referral laws and other applicable anti-kickback laws, it is possible that regulatory or enforcement agencies or courts may in the future view these transactions as prohibited arrangements that must be restructured or for which we would be subject to other significant civil or criminal penalties. There can be no assurance that regulatory or enforcement authorities will view these arrangements as being in compliance with applicable laws or that one or more of our employees or agents will not disregard the rules we have established. Because our strategy relies on the involvement of physicians who consult with us on the design of our potential products, perform clinical research on our behalf or educate the market about the efficacy and uses of our potential products, we could be materially impacted if regulatory or enforcement agencies or courts interpret our financial relationships with physicians who refer or order our potential products to be in violation of applicable laws and determine that we would be unable to achieve compliance with such applicable laws. This could harm our reputation and the reputations of the physicians we engage to provide services on our behalf. In addition, the cost of noncompliance with these laws could be substantial since we could be subject to monetary fines and civil or criminal penalties, and we could also be excluded from federally-funded healthcare programs, including Medicare and Medicaid, for non-compliance. Further, even the costs of defending investigations of noncompliance could be substantial.

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The scope and enforcement of all of these laws is uncertain and subject to rapid change, especially in light of the lack of applicable precedent and regulations. There can be no assurance that federal or state regulatory or enforcement authorities will not investigate or challenge our current or future activities under these laws. Any investigation or challenge could have a material adverse effect on our business, financial condition and results of operations. Any state or federal regulatory or enforcement review of us, regardless of the outcome, would be costly and time consuming. Additionally, we cannot predict the impact of any changes in these laws, whether these changes are retroactive or will have effect on a going-forward basis only.

In order to grow revenues from certain of our products, we must expand our relationships with distributors and independent sales representatives, whom we do not control.

 

We derive significant revenues through our relationships with distributors and independent sales representatives, though no one distributor comprised over 5% of our revenues.  If such relationships were terminated for any reason, it could materially and adversely affect our ability to generate revenues and profits.  Because the independent distributor often controls the customer relationships within its territory, there is a risk that if our relationship with the distributor ends, our relationship with the customer will be lost. Also, because we do not control a distributor's field sales agents, there is a risk we will be unable to ensure that our sales processes, compliance, and other priorities will be consistently communicated and executed by the distributor. If we fail to maintain relationships with our key distributors or fail to ensure that our distributors adhere to our sales processes, compliance, and other priorities, this could have an adverse effect on our operations.

 

We continue to invest significant capital in expanding our internal sales force, and there can be no assurance that these efforts will continue to result in significant increases in sales.

 

We are engaged in a major initiative to build and further expand our internal sales and marketing capabilities which has contributed to our increased sales.  As a result, we continue to invest in a direct sales force for certain of our products to allow us to reach new customers.  These expenses impact our operating results, and there can be no assurance that we will continue to be successful in significantly expanding the sales of our products.

 

To be commercially successful, we must convince physicians that our products are   safe and effective alternatives to existing treatments and that our   products should be used in their procedures.

 

We believe physicians will only adopt our products if they determine, based on experience, clinical data and published peer reviewed journal articles, that the use of our products in a particular procedure is a favorable alternative to conventional methods.  Physicians may be slow to change their medical treatment practices for the following reasons, among others: 

   
 

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Their lack of experience with prior procedures in the field using our products;

 

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Lack of evidence supporting additional patient benefits and our products over conventional methods;

 

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Perceived liability risks generally associated with the use of new products and procedures;

 

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Limited availability of reimbursement from third party payers; and

 

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The time that must be dedicated to training.


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In addition, we believe recommendations for and support of our products by influential physicians are essential for market acceptance and adoption.  If we do not receive this support or if we are unable to demonstrate favorable long-term clinical data, physicians and hospitals may not use our products, which would significantly reduce our ability to achieve expected revenue and would prevent us from sustaining profitability.

 

In the course of conducting our business, we must adequately address quality issues that may arise with our products, as well as defects in third-party components included in our products. Although we have established internal procedures to minimize risks that may arise from quality issues, we may not be able to eliminate or mitigate occurrences of these issues and associated liabilities. If the quality of our products does not meet the expectations of physicians or patients, then our brand and reputation could suffer and our business could be adversely impacted.

 

We will need to expand our organization and managing growth may be more difficult than expected.

 

Managing our growth may be more difficult than we expect.  We anticipate that a period of significant expansion will be required to penetrate and service the market for our existing and anticipated future products and to continue to develop new products.  This expansion will place a significant strain on management, operational and financial resources.  To manage the expected growth of our operations and personnel, we must both modify our existing operational and financial systems, procedures and controls and implement new systems, procedures and controls.  We must also expand our finance, administrative, and operations staff.  Management may be unable to hire, train, retain, motivate and manage necessary personnel or to identify, manage and exploit existing and potential strategic relationships and market opportunities.

 

We face the risk of product liability claims and may not be able to   obtain or maintain adequate product liability insurance.

 

Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, processing and marketing of medical devices genetic tests and human tissue products.  We may be subject to such claims if our products cause, or appear to have caused, an injury.  Claims may be made by patients, healthcare providers or others selling our products.  Defending a lawsuit, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market.

 

Although we have product liability insurance that we believe is adequate, this insurance is subject to deductibles and coverage limitations and we may not be able to maintain this insurance. Also, it is possible that claims could exceed the limits of our coverage. If we are unable to maintain product liability insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect ourselves against potential product liability claims or we underestimate the amount of insurance we need, we could be exposed to significant liabilities, which may harm our business.  A product liability claim or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could result in significant costs and significant harm to our business.

 

Significant disruptions of information technology systems or breaches of information security could adversely affect our business.


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We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinary course of business, we collect, store and transmit large amounts of confidential information (including, but not limited to, personal information and intellectual property). We also have outsourced significant elements of our operations to third parties, including significant elements of our information technology infrastructure and, as a result, third party relationships with parties who may or could have access to our confidential information. The size and complexity of our information technology and information security systems, and those of our third parties with whom we contract (and the large amounts of confidential information that is present on them), make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including, but not limited to, industrial espionage and market manipulation) and expertise. While we have invested significantly in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches. Although we have cyber-insurance coverage that may cover certain events described above, this insurance is subject to deductibles and coverage limitations and we may not be able to maintain this insurance. Also, it is possible that claims could exceed the limits of our coverage.  Any interruption or breach in our systems could adversely affect our business operations and/or result in the loss of critical or sensitive confidential information or intellectual property, and could result in financial, legal, business and reputational harm to us or allow third parties to gain material, inside information that they use to trade in our securities. 

 

We may expand our business through acquisitions, licenses, investments, and other commercial arrangements in other companies or technologies, which contain significant risks.

 

We periodically evaluate strategic opportunities to acquire companies, divisions, technologies, products, and rights through licenses, distribution agreements, investments, and outright acquisitions to grow our business. In connection with one or more of those transactions, we may:


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Issue additional equity securities that would dilute our stockholders’ value;

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Use cash that we may need in the future to operate our business;

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Incur debt that could have terms unfavorable to us or that we might be unable to repay;

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Structure the transaction in a manner that has unfavorable tax consequences, such as a stock purchase that does not permit a step-up in the tax basis for the assets acquired;

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Be unable to realize the anticipated benefits, such as increased revenues, cost savings, or synergies from additional sales;

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Be unable to secure the services of key employees related to the acquisition; and

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Be unable to succeed in the marketplace with the acquisition.



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Any of these items could materially, and adversely affect our revenues, financial condition, and profitability. Business acquisitions also involve the risk of unknown liabilities associated with the acquired business, which could be material. Incurring unknown liabilities or the failure to realize the anticipated benefits of an acquisition could materially, and adversely affect our business if we are unable to recover our initial investment, which could include the cost of acquiring licenses or distribution rights, acquiring products, purchasing initial inventory, or investments in early stage companies. Inability to recover our investment, or any write off of such investment, associated goodwill, or assets, could have a material and adverse effect on our business, results of operations and financial condition.

 

Our existing capital resources will not meet our current needs and we must raise additional funding in the immediate future to execute our business plan.

 

We believe we have sufficient funding to execute our business plan over the next twelve months and thereafter. However, we may elect to expand and accelerate our growth and business lines which could require additional funding outside of continued operations.  There can be no assurance that the necessary funds will be timely available if needed or that continuing operations will provide the needed cash flows.

 

Our financial resources are insufficient to repay amounts owed on outstanding liabilities.

 

Our cash reserves are not sufficient to pay current liabilities. We will be looking to pay these obligations through equity financings and/or revenues from operations. We do not have any financial commitments with respect to future financings, we have found it difficult to raise funding in recent periods and we have had negative cash flow from operating activities since organization. As a result, there can be no assurance that we will have the means to repay its obligations in full or at all.

 

We will rely on a single laboratory facility to process our molecular diagnostic tests and a second single laboratory facility to process and produce our regenerative medicine products and HCT/Ps.

 

Initially, we will rely on a single CLIA-approved laboratory facility in Salt Lake City, Utah to process our molecular diagnostic tests. We rely on a second laboratory facility in Salt Lake City, Utah to process our regenerative medicine products and HCT/Ps. These facilities and certain pieces of laboratory equipment would be difficult to replace and may require significant replacement lead-time. These facilities could be affected by natural disasters such as earthquakes, floods and fires. In the event either of these facilities or the equipment located in the facilities are affected by man-made or natural disasters, we would be unable to continue our genetic and/or molecular diagnostic business and meet customer demands for a significant period of time. Any interruption in our molecular diagnostic and/or regenerative medicine business would result in a loss of goodwill, including damage to its reputation. If our regenerative medicine and/or planned molecular diagnostic business were interrupted, it would seriously harm our business.

Our success is dependent on its key personnel.

 

Our success depends upon the skills, experience and efforts of senior management. We do have employment agreements with all members of senior management listed in management section. Should the services of any of these people become unavailable to us for any reason, our business would likely be adversely affected and may not continue at all. Competition for such personnel is intense in the genetics industry, and there can be no assurance that we will be successful in attracting and retaining such personnel. Our success will depend on its continued ability to attract and retain highly skilled and qualified personnel.

 

We may never achieve the goals of our genetics business.

 

We have not generated operating revenues from the sale of genetics products. There can be no assurance that we will develop any commercially viable genetic testing or treatment techniques. Our success will depend in part on our ability to deal with the problems, expenses, and delays frequently associated with establishing a new business venture. Future losses relating to our genetics business are planned prior to genetic operations potentially becoming profitable. Given the uncertainties surrounding the commercialization of genetic discoveries, we are unable to predict when we will achieve profitability, if ever. Announcements by our present or potential competitors, technological innovations, new commercial products or services, regulatory developments, other developments, disputes concerning patent or proprietary rights, public concern regarding the safety, efficacy or other implications of the products or services that are expected to be developed by us or any future collaborators and other events or factors may have a significant impact on our business, financial condition and results of operations. As a result, there is no assurance that our operations will ever become profitable.

 


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There can be no assurance of market acceptance for our genetic tests.

 

The commercial success of genetic predisposition and other genetic tests and treatments, which we may develop, will depend upon their acceptance as medically useful and cost-effective by physicians and other members of the medical community, patients and third-party payers. Broad market acceptance can be achieved only with substantial education about the benefits and limitations of such tests, as well as resolution of concerns about their appropriate and ethical use. For example, there continues to be widespread concern that people with genetic predispositions to diseases may suffer discrimination from employers, as well as providers of health and life insurance. There are also certain groups who oppose the use of genetic tests for inherited diseases for which no cures currently exist. We or our collaborative partners, if any, may be required to expend substantial financial resources to responsibly promote the benefits of any genetic tests and treatments it develops. There can be no assurance that any genetic tests and treatments we develop will gain market acceptance on a timely basis, if at all. Failure to achieve market acceptance will have a material adverse effect on our business, financial condition and results of operations.

 

Our License Agreement is Subject to Certain Minimum Sales Requirements

 

We have an exclusive license to promote, market, offer for sale and sell the ARTguide™ test and other endometriosis tests in the United States. The territory can be expanded. To maintain the license, we must have minimum sales of $12.5 million in the twelve-month period beginning nine months after commercial launch. In the next year minimum sales must be $30 million and in the third year and thereafter minimum sales must be $60 million. Failure to meeting the minimum sales can result in the termination of our license agreement. There can be no assurance that we will meet the minimum sales requirements. The termination of the license agreement will bar our continued use and sale of the ARTguide™ test.

 

Our Ownership of Juneau is not Fully Paid

 

We currently own 51 percent of Juneau. We have fully paid for 23 percent of our ownership in Juneau and owe an additional $14.1 for the remainder of our interest. We are paying this amount in monthly installments for a period ending in December 2020. Failure to pay the monthly installments may result in our losses of the Juneau equity that has not been paid for. There can be no assurance that we will be able to pay for the entire outstanding balance. In that case, we would no longer be the majority and controlling equity owner of Juneau.

 

We may not be successful in developing genetic tests or in correctly interpreting the results of our genetic tests.

 

Whether the Company will be successful in offering genetic testing depends in large part upon the Company’s ability to develop genetic tests for genes discovered by the Company. We are seeking to develop genetic tests that can identify the existence of a particular gene mutations that predispose a person to a particular disease. These gene mutations cannot be discovered until the relevant genes have been discovered and fully sequenced. Genes can be complex and may have numerous mutations. Moreover, a defective gene may malfunction in many different ways, and the many mutated versions of the gene may make a genetic test difficult to perform and interpret. Until a mutation has been characterized, researchers cannot say for sure what risk it poses for an individual. Further, even when a genetic test identifies the existence of a mutation in a particular individual, the interpretation of the genetic test results is limited to the identification of a statistical probability that the tested individual will develop the disease for which the test has been completed. There can be no assurance that we will be successful in developing genetic tests based on our gene discoveries or other such tests will be able to be marketed at acceptable prices or will receive commercial acceptance in the market.

 

We may not be successful in obtaining adequate reimbursement for our genetic services and products.

 

Our ability to successfully commercialize any genetic test or treatments we develop, and the ability of any future collaborative partners, if any, to successfully commercialize such products, depends in part on obtaining adequate reimbursement for such services and products and related treatments from government and private health care insurers (including health maintenance organizations) and other third-party payers. Physicians' decisions to recommend genetic tests and treatments, as well as patients' elections to pursue testing and treatments, are likely to be heavily influenced by the scope and extent of coverage for such tests by third-party payers. Government and private third-party payers are increasingly attempting to contain health care costs by limiting both the extent of coverage and the reimbursement rate for new diagnostic and therapeutic products and services. In particular, services which are determined to be investigational in nature or which are not considered "reasonable and necessary" for diagnosis or treatment may be denied reimbursement coverage. If adequate reimbursement coverage is not available from third-party payers, there can be no assurance that individuals will elect to pay directly for the genetic testing and treatments and market acceptance of the genetic testing and treatments will likely be adversely impacted, which would have a material adverse effect on the Company’s business, financial condition and results of operations.

 


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In addition, Medicare often permits coverage decisions to be made by its carriers and intermediaries, leading to different coverage decisions in various parts of the United States. Disapproval of, or limitations in, coverage by the United States Health Care Financing Administration ("HCFA") or other third-party payers, as well as inadequate payment levels, could have a material adverse effect on the Company’s future revenues. A key component in the reimbursement decision by HCFA and most private insurers is the development of Current Procedural Terminology ("CPT") codes, which are used in the submission of claims to insurers for reimbursement for medical services. CPT codes are developed, maintained and revised by a committee of medical specialists which is administered by the American Medical Association ("AMA"). Currently, reimbursement for genetic testing and treatments is made on the basis of CPT codes that may not accurately reflect the complexity or sophistication of specific genetic tests. There can be no assurance that specific CPT codes will be implemented for any genetic testing or treatments developed by the Company. Failure to secure recognition of such CPT codes would have a material adverse effect on the Company’s business, financial condition and results of operations.

 

There can be no assurance that we will be able to maintain or develop appropriate collaborative arrangements that will be necessary for us to develop and commercialize our genetics products and services.

 

Our current strategy is to rely, in part, on collaborative arrangements to develop and commercialize products based on gene discoveries. There can be no assurance that we will be able to negotiate acceptable collaborative arrangements, or that any collaborative arrangement will be successful. In addition, there can be no assurance that our collaborative partners will not pursue alternative technologies or develop alternative products either on their own or in collaboration with others, including with our competitors, as a means of developing diagnostic products or treatments for the diseases targeted by the collaborative programs. Milestone payments are frequently built into collaborative arrangements relating to gene discoveries. It is anticipated that our receipt of a substantial portion of

the potential milestone payments under future collaborative agreements, if any, is dependent upon the efforts of our strategic collaborators. Failure of any collaborative arrangement could have a material adverse effect on our business, financial condition or results of operations. Additionally, there can be no assurance that disputes over rights or technology or other proprietary interests will not arise. Such disputes or disagreements between with future

collaborative partners could lead to delays in collaborative research projects, or could result in litigation or arbitration, any of which could have a material adverse effect on our business, financial condition or results of operations.

 

We may not be successful in protecting our intellectual property.

 

Our success will depend, in part, on our ability to obtain patent protection, both in the United States and in other countries. Patents may be issued for various aspects of our product, including genes, gene markers associated with disease, methods of diagnosing a women's predisposition to endometriosis, and methods for treating endometriosis which we believe are patentable. Also important to our success is its ability to preserve its trade secrets and to operate without infringing the proprietary rights of third parties. The patent position of biotechnology firms generally involves complex legal and factual questions. Isolated gene sequences have been considered patentable subject matter since the 1980s and the U.S. Patent and Trademark Office (“USPTO”) has regularly issued patents covering isolated gene sequences. In addition, the USPTO has granted patents on gene markers associated with disease, as well as methods of diagnosing patients for a predisposition to disease. Some argue, however, that genes and diagnostics should not be eligible for patent protection for a number of public policy reasons. Recently, the Supreme Court of the United States ruled that “naturally occurring” genes are not patentable subject matter. As a result, the legal landscape is not settled and several important cases are under review at both the Federal Circuit and the U.S. Supreme Court. If one or more of these decisions rule against gene based diagnostic patents, it may significantly limit or eliminate our ability to obtain patent protection in the United States. Further, there can be no assurance that we will develop patentable applications or that patents will issue or that the claims of any issued patents will afford meaningful protection for any technology or products that we develop. In addition, there can be no assurance that any patents issued to us or our licensors will not be challenged, and subsequently narrowed, invalidated or circumvented.

 

We depend on a limited number of third parties for some of our supplies of equipment and reagents. If these supplies become unavailable, then we may not be able to successfully conduct research or operate our genetics business at all or on a timely basis.

 


-21-

We (and are partners) currently rely on a small number of suppliers to provide its gene sequencing machines, robots, and specialty reagents required in connection with its research. Management believes that currently there are limited alternative suppliers of gene sequencing machines, robots, and reagents. The gene sequencing machines, robots, or the reagents may not remain available in commercial quantities at acceptable costs. If we are unable to obtain when needed additional gene sequencing machines, robots, or an adequate supply of reagents or other ingredients at commercially reasonable rates, our ability to continue to identify genes and perform molecular diagnostic testing would be adversely affected.

 

Risks Related to FDA Approval

 

As noted, our initial commercial genetics product will be an LDT, conducted in a CLIA-certified laboratory, for indications of endometriosis, which will be marketed to Assisted Reproductive Therapy centers and, subsequently, to the broader OB/GYN physician marketplace. We currently contemplate the eventual launch of a test “kit”, to be marketed as a companion diagnostic for on-label therapeutic indication. We believe that such a kit would be subject to the FDA approval protocol, including clinical trials.  The FDA Approval process can be an extended, complex, and expensive process.  No assurances can be given that, in the event the Company does elect to pursue a kit, FDA approval will be granted.

 

Risks Relating to our regenerative medicine products and HCT/Ps

 

Our regenerative medicine products and HCT/Ps are dependent on the availability of tissue from human donors, and any disruption in supply could adversely affect our business.

 

The success of our regenerative medicine products and HCT/Ps depends upon, among other factors, the availability of tissue from human donors. Any failure to obtain tissue from our sources will interfere with our ability to effectively meet demand for our products incorporating human tissue. The processing of human tissue into our products is very labor-intensive and it is therefore difficult to maintain a steady supply stream. The availability of donated tissue could also be adversely impacted by regulatory changes, public opinion of the donor process as well as our own reputation in the industry. The challenges we may face in obtaining adequate supplies of human tissue involve several risks, including limited control over availability, quality and delivery schedules. In addition, any interruption in the supply of any human tissue component could materially harm our ability to manufacture our products until a new source of supply, if any, could be found. We may be unable to find a sufficient alternative supply channel in a reasonable time period or on commercially reasonable terms, if at all, which would have a material adverse effect on our business, results of operations and financial condition.

 

The regenerative medicine products and HCT/Ps we manufacture and process are derived from human tissue and, therefore, have the potential for disease transmission.

 

The utilization of human tissue creates the potential for transmission of communicable disease, including, but not limited to, human immunodeficiency virus (“HIV”), viral hepatitis, syphilis and other viral, fungal or bacterial pathogens.  We are required to comply with federal and state regulations intended to prevent communicable disease transmission. Although we maintain strict quality controls over the procurement and processing of our tissue, there is no assurance that these quality controls will be adequate.  In addition, negative publicity concerning disease transmission from other companies' improperly processed donated tissue could have a negative impact on the demand for our products.

 

Disruption of our processing could adversely affect our business, financial   condition and results of operations.

 

Our results of operations are dependent upon the continued operation of our processing facilities.  Risks that could impact our ability to use these facilities include the occurrence of natural and other disasters, and the need to comply with the requirements of directives from Government agencies, including the FDA.  We do not have a secondary processing facility. The unavailability of our manufacturing and processing facilities could have a material adverse effect on our business, financial condition, and results of operations during the period of such unavailability.

 

We may implement a product recall or voluntary market withdrawal, which could significantly increase our costs, damage our reputation and disrupt our business.

 

The manufacturing, marketing and processing of our regenerative medicine products and HCT/Ps involves an inherent risk that our tissue products or processes do not meet applicable quality standards and requirements.  In that event, we may voluntarily implement a recall or market withdrawal or may be required to do so by a regulatory authority.  A recall or market withdrawal of one of our products would be costly and would divert management resources.  A recall or withdrawal of one of our products, or a similar product processed by another entity, also could impair sales of our products as a result of confusion concerning the scope of the recall or withdrawal, or as a result of the damage to our reputation for quality and safety.


-22-

Any changes in the governmental regulatory classifications of our product candidates could prevent, limit or delay our ability to market or develop our product candidates.

The FDA establishes regulatory requirements based on the classification of a product. An HCT/P is a product containing or consisting of human cells or tissue intended for transplantation into a human patient. 361 HCT/Ps are not subject to any premarket clearance or approval requirements and are subject to less extensive post-market regulatory requirements. Because our product development programs are designed to satisfy the standards applicable to 361 HCT/Ps, any change in the regulatory classification or designation of our products would affect our ability to obtain FDA approval or clearance for and marketing of our product candidates.

 

If a product candidate is deemed not to be a 361 HCT/P, FDA regulations will require premarket clearance or approval requirements that will involve significant time and cost investments by us. Further, there can be no assurance that the FDA will not, at some future point, change its position on current or future products’ 361 HCT/P status, and any regulatory reclassification could have adverse consequences for us and make it substantially more difficult or expensive for us to conduct our business by requiring extensive clinical trials, premarket clearance or approval and compliance with additional post-market regulatory requirements with respect to those product candidates. Moreover, increased regulatory scrutiny within the industry in which we operate could lead to increased regulation of HCT/Ps, including 361 HCT/Ps. We also cannot assure you that the FDA will not impose more stringent interpretations, restrictions, or requirements with respect to products that qualify as 361 HCT/Ps.

Risks Related to Our Common Stock

The price of our common stock has been, and will likely continue to be,   volatile.

 

The market price of our common stock, like that of the securities of many other companies that are in, or are just emerging from, the development stage, has fluctuated over a wide range and it is likely that the price of our common stock will fluctuate in the future.  The market price of our common stock could be impacted by a variety of factors, including:

   

-

Fluctuations in stock market prices and trading volumes of similar companies or of the markets generally;

 

-

Our ability to successfully launch, market and earn significant revenue from our products;

 

-

Our ability to obtain additional financing to support our continuing operations;

 

-

Disclosure of the details and results of regulatory applications and proceedings;

 

-

Changes in Government regulations or our failure to comply with any such regulations;

 

-

Additions or departures of key personnel;

 

-

Our investments in research and development or other corporate resources;

 

-

Announcements of technological innovations or new commercial products by us or our competitors;

 


-23-

-

Developments in the patents or other proprietary rights owned or licensed by us or our competitors;

 

-

The timing of new product introductions;

 

-

Actual or anticipated fluctuations in our operating results, including any restatements of previously reported results;

 

-

 

Our ability to effectively and consistently manufacture our products and avoid costs associated with the recall of defective or potentially defective products;

 

-

Our ability and the ability of our distribution partners to market and sell our products;

 

-

Changes in reimbursement for our products or the price for our products to our customers;

 

-

Removal of our products from the Federal Supply Schedule, or changes in how Government accounts purchase products such as ours or in the price for our products to Government accounts;

 

-

Material amounts of short-selling of our common stock; and

 

The other risks detailed in this Registration Statement.

Further, due to the relatively fixed nature of most of our costs, which primarily include personnel costs as well as facilities costs, any unanticipated shortfall in revenue in any fiscal quarter would have an adverse effect on our results of operations in that quarter.  These fluctuations could cause the trading price of our stock to be negatively affected. Our quarterly operating results have varied substantially in the past and may vary substantially in the future.  In addition, the stock market and certain of the indices on which we are included has been very volatile in the recent past.  This volatility is often not related to the operating performance of companies listed thereon and will probably continue in the foreseeable future.

Securities analysts may elect not to report on our common stock or may issue negative reports that adversely affect the stock price.


-24-

At this time, no analysts provide research coverage of our common stock.  There is no assurance that any analysts will ever report on our common stock or that any analysts will initiate reporting on our common stock.  Rules mandated by the Sarbanes-Oxley Act and a global settlement reached in 2003 among the SEC, other regulatory agencies, and a number of investment banks led to a number of fundamental changes in how analysts are reviewed and compensated.  In particular, many investment banking firms are required to contract with independent financial analysts for their stock research.  If securities analysts discontinue covering our common stock, the lack of research coverage may adversely affect its actual and potential market price.  The trading market for our common stock may be affected in part by the research and reports that industry or financial analysts publish about our business.  If one or more analysts elect to cover us and then downgrade the stock, the stock price would likely decline rapidly.  If one or more of these analysts cease coverage of us, we could lose visibility in the market, which in turn could cause our stock price to decline.  This could have a negative effect on the market price of our shares.

Our charges to earnings resulting from acquisition, restructuring and integration costs may materially adversely affect the market value of our common stock.

 

We account for the completion of our acquisitions using the purchase method of accounting. We allocate the total estimated purchase prices to net tangible assets, amortizable intangible assets and indefinite-lived intangible assets, and based on their fair values as of the date of completion of the acquisitions, record the excess of the purchase price over those fair values as goodwill. Our financial results, including earnings per share, could be adversely affected by a number of financial adjustments required in purchase accounting including the following:

-

We will incur additional amortization expense over the estimated useful lives of certain of the intangible assets acquired in connection with acquisitions during such estimated useful lives.

-

We will incur additional depreciation expense as a result of recording purchased tangible assets.

-

To the extent the value of goodwill or intangible assets becomes impaired, we may be required to incur material charges relating to the impairment of those assets.

-

Cost of sales may increase temporarily following an acquisition as a result of acquired inventory being recorded at its fair market value.

-

Earnings may be affected by changes in estimates of future contingent consideration to be paid when an earn-out is part of the consideration.

-

Earnings may be affected by transaction and implementation costs, which are expensed immediately.

 

We do not intend to pay cash dividends.

 

We have never declared or paid cash dividends on our capital stock. We currently expect to use available funds and any future earnings in the development, operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.  In addition, the terms of our existing credit facility restrict us from paying dividends.  As a result, capital appreciation, if any, of our common stock will be an investor's only source of potential gain from our common stock for the foreseeable future.

Substantial future sales of our common stock by us or by our existing stockholders could cause our stock price to fall.

Additional equity financings or other share issuances by us, including shares issued in connection with strategic alliances and corporate partnering transactions, could adversely affect the market price of our common stock. Sales by existing stockholders of a large number of shares of our common stock in the public market or the perception that additional sales could occur could cause the market price of our common stock to drop.

We have experienced volatility in the price of our stock and are subject to volatility in the future.

The price of our common stock has experienced significant volatility. The high and low bid quotations for our common stock, as reported by the OTC Markets, ranged between a high of $3.87 and a low of $.60 during the past 12 months. The historic market price of our common stock may be higher or lower than the price paid for our shares and may not be indicative of future market prices, depending on many factors, some of which are beyond our control. As a result, investors may be unwilling to purchase our common stock and our market price may be affected. The price of our stock may change dramatically in response to our success or failure and based upon our relationship and the decisions of our Chief Executive Officer.

We may not be able to obtain or maintain a listing on NASDAQ.

Our common stock currently trades on the Over-The-Counter markets under the symbol PRED. We will seek a listing on NASDAQ. We currently do not qualify for a listing on NASDAQ and there can be no assurance that we will qualify for a NASDAQ listing in the future. In addition, if a NASDAQ listing is obtained then we will be subject to continued listing requirements to maintain the listing and to avoid delisting. Our results of operations and our current and fluctuating stock price directly impact our ability to satisfy these listing standards.

The Over-The-Counter market is generally considered to be a less efficient system than listing on markets such as NASDAQ or other national exchanges because of lower trading volumes, transaction delays and reduced security analyst and news media coverage. These factors could contribute to lower prices and larger spreads in the bid and ask prices for our common stock. Additionally, trading of our common stock on the OTCBB may make us less desirable to institutional investors and may, therefore, limit our future equity funding options and could negatively affect the liquidity of our stock.


-25-


ITEM 2.  FINANCIAL INFORMATION .

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   

 

Forward Looking Statements

From time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but not limited to, press releases, oral statements made with the approval of an authorized executive officer or in various filings made by us with the Securities and Exchange Commission. Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project or projected", or similar expressions are intended to identify "forward-looking statements". Such statements are qualified in their entirety by reference to and are accompanied by the above discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements.

 

Management is currently unaware of any trends or conditions other than those mentioned in this management's discussion and analysis that could have a material adverse effect on the company's current financial position, future results of operations, or liquidity, because its current operations are limited. However, investors should also be aware of factors that could have a negative impact on the company's prospects and the consistency of progress in the areas of revenue generation, liquidity, and generation of capital resources, once it begins to implement its business plan. These may include: (i) variations in revenue, (ii) possible inability to attract investors for its equity securities or otherwise raise adequate funds from any source should the company seek to do so, (iii) increased governmental regulation or significant changes in that regulation, (iv) increased competition, (v) unfavorable outcomes to litigation involving the Company or to which the Company may become a party in the future, and (vi) a very competitive and rapidly changing operating environment.

 

The risks identified here are not all inclusive. New risk factors emerge from time to time and it is not possible for management to predict all of such risk factors, nor can it assess the impact of all such risk factors on the company's business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.

 

The financial information set forth in the following discussion should be read with our financial statements included elsewhere herein.

 

Overview  

 

We develop and commercialize discoveries and technologies involved in novel molecular diagnostic, regenerative medicine products and HCT/Ps. We use this information as the cornerstone in the development of new diagnostics that assess a person’s risk of disease and pharmaceutical therapeutics and HCT/Ps designed to effectively prevent and treat the disease.

In accordance with ASC 280-10-50, Segment Reporting, operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.  We operate in two reportable segments: HCT/Ps and diagnostics and therapeutics. Our HCT/Ps are processed in our FDA registered lab. Our minimally manipulated tissue products are prepared utilizing proprietary extraction methods that reduce the loss of important scaffolding, growth factor and general cytokines and are intended for homologous use. Our diagnostics and therapeutics uses data analytics for disease identification and subsequent therapeutic intervention through unique novel gene-based diagnostics, biotechnology treatments and companion therapeutics.


-26-


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Years ended June 30,

 

 

 

 

 

 

 

 

2018

 

2017

 

Segment revenues

 

 

 

 

 

HCT/Ps

 

 

 $     16,624,336

 

 $   2,585,362

 

 

Diagnostics and therapeutics

                          -

 

                          -

 

 

 

Total consolidated revenues

 $     16,624,336

 

 $    2,585,362

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss)

 

 

 

 

 

HCT/Ps

 

 

 $     (5,821,549)

 

 $     (3,220,478)

 

 

Diagnostics and therapeutics

         (6,503,628)

 

         (1,568,070)

 

 

 

Total consolidated operating income (loss)

 $   (12,325,177)

 

 $     (4,788,548)

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of segment operating income

 

 

 

 

 

to income before income taxes

 

 

 

 

 

Segment operating income

 $   (12,325,177)

 

 $     (4,788,548)

 

 

Equity method gain/(loss)

            (899,950)

 

            (128,594)

 

 

Impairment charges

                          -   

 

         (1,603,394)

 

 

Interest income / (expense)

               199,953

 

               315,742

 

 

 

Income before income taxes

 $   (13,025,174)

 

 $     (6,204,794)

 

 

 

 

 

 

 

 

 

 


-27-


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 months ended

 

Year ended

 

 

 

 

 

 

 

 September 31,

 

 June 30,

 

 

 

 

 

 

 

2018

 

2018

Segment revenues

 

 

 

 

Regenerative medicine products and HCT/Ps

 $                         8,063,800

 

 $              16,624,336

 

Diagnostics and therapeutics

 -

 

  -

 

 

Total consolidated revenues

 $                        8,063,800

 

 $              16,624,336

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss)

 

 

 

 

Regenerative medicine products and HCT/Ps

 $                             673,003

 

 $              (5,821,549)

 

Diagnostics and therapeutics

                          (2,739,916)

 

                 (6,503,628)

 

 

Total consolidated operating income (loss)

 $                       (2,066,913)

 

 $            (12,325,177)

 

 

 

 

 

 

 

 

 

 

Reconciliation of segment operating income

 

 

 

 

to income before income taxes

 

 

 

 

Segment operating income

 $                       (2,066,913)

 

 $            (12,325,177)

 

Equity method gain/(loss)

                              (314,782)

 

                     (899,950)

 

Impairment charges

 -

 

 -

 

Interest income / (expense)

                                         424

 

                       199,953

 

 

Segment income before income taxes

 $                       (2,381,271)

 

 $            (13,025,174)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


-28-


 

 

 

 

 

 

 

 

 Years ended June 30,

 

Capital assets, net

2018

 

2017

 

 

HCT/Ps

 

 

 $     438,277

 

 $      73,143

 

 

Diagnostics and therapeutics

               335,592

 

               445,791

 

 

 

Total capital assets, net

 $     773,870

 

 $    518,934

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

 

 

HCT/Ps

 

 

 $       82,306

 

 $        2,895

 

 

Diagnostics and therapeutics

                 68,339

 

                   1,677

 

 

 

Total depreciation expense

 $     150,645

 

 $        4,572

 

 

 

 

 

 

 

 

 

 

 

 

Intangible and equity method investment assets, net

 

 

 

 

 

HCT/Ps

 

 

 $   8,096,311

 

 $ 10,914,097

 

 

Diagnostics and therapeutics

         74,288,652

 

         26,968,113

 

 

 

Total intangible and equity method investment assets, net

 $ 82,384,963

 

 $ 37,882,210

 

 

 

 

 

 

 

 

 

 

 

 

Amortization expense

 

 

 

 

 

HCT/Ps

 

 

 $   2,817,786

 

 $  2,817,786

 

 

Diagnostics and therapeutics

           1,605,103

 

               871,221

 

 

 

Total amortization expense

 $   4,422,889

 

 $  3,689,007

 

 

 

 

 

 

 

 

 

 

 

 

Warrants and options expense (non-cash)

 

 

 

 

 

HCT/Ps

 

 

 $    8,216,888

 

 $   1,116,586

 

 

Diagnostics and therapeutics

           2,310,539

 

               105,338

 

 

 

Total warrants and options expense (non-cash)

 $  10,527,427

 

 $   1,221,924

 

 

 

 

 

 

 

 

 

 

 

               

-29-


 

 

 

 

 

 

 

3 months ended

 

Year ended

 

 

 

 

 

 

 

 September 31,

 

 June 30,

Capital assets, net

2018

 

2018

 

Regenerative medicine products and HCT/Ps

 $        892,584

 

 $    438,277

 

Diagnostics and therapeutics

                             1,025,650

 

                       335,592

 

 

Total capital assets, net

 $      1,918,234

 

 $    773,869

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

 

Regenerative medicine products and HCT/Ps

 $         37,021

 

 $     82,306

 

Diagnostics and therapeutics

                                   45,120

 

                          68,339

 

 

Total depreciation expense

 $         82,141

 

 $   150,645

 

 

 

 

 

 

 

 

 

 

Intangible and equity method investment assets, net

 

 

 

 

Regenerative medicine products and HCT/Ps

 $     7,643,543

 

 $ 8,096,311

 

Diagnostics and therapeutics

                        101,078,430

 

                 74,288,652

 

 

Total intangible and equity method investment assets, net

 $  108,721,973

 

 $82,384,963

 

 

 

 

 

 

 

 

 

 

Amortization expense

 

 

 

 

Regenerative medicine products and HCT/Ps

 $        704,445

 

 $  2,817,786

 

Diagnostics and therapeutics

                                884,851

 

                    1,605,103

 

 

Total amortization expense

 $     1,589,296

 

 $  4,422,889

 

 

 

 

 

 

 

 

 

 

Warrants and options expense (non-cash)

 

 

 

 

Regenerative medicine products and HCT/Ps

 $          55,749

 

 $   8,216,888

 

Diagnostics and therapeutics

                                599,199

 

                    2,310,539

 

 

Total warrants and options expense (non-cash)

 $        654,948

 

 $ 10,527,427

 

 

 

 

 

 

 

 

 

 


-30-

Critical Accounting Policies and Estimates

 

Our discussion and analysis of our results of operations and financial position are based upon our consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. We review the accounting policies used in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We evaluate our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluations. We believe that the estimates we use are reasonable; however, actual results could differ from those estimates. We believe the following critical accounting policies identify our most critical accounting policies, which are the policies that are both important to the representation of our financial condition and results and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Going Concern

The financial statements were prepared on a going concern basis. The going concern basis assumes that we will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Predictive Biotech, Inc., a wholly owned subsidiary, began operations during the fiscal year ended June 30, 2017. Since inception of operations, revenues have exceeded cash expenses and such excess contributes to the overall operations of PTG.

In addition, we have raised sufficient capital through stock subscriptions to fund our obligations under our licenses and other agreements for the development of molecular diagnostics products under an exclusive license. It is anticipated that the initial sale of such products will take place in the 2019 fiscal year.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount.  At the present time most sales are through credit cards, however from time to time, credit is granted to customers on a short-term basis without requiring collateral, and as such, these accounts receivable, do not bear interest, although a finance charge may be applied to such receivables that are past due.  The Company has in place credit policies and procedures and approval process for sales returns and credit memos.

Inventories

Inventories consist primarily of HCT/Ps we produce. We value inventory at the lower of cost or net realizable value. We determine the cost of inventory using the standard-cost method, which approximates actual cost based on a first-in, first-out method. All other costs, including administrative costs are expensed as incurred.   

We analyze our inventory levels annually and write down inventory that has a cost basis in excess of its expected net realizable value, or that is considered in excess of normal operating levels, as determined by management.  The related costs are recognized as cost of goods sold in the Consolidated Statements of Operations.

Stock Subscriptions Receivable

Stock subscriptions are recorded as contra-equity on the day the subscription agreement is signed and accepted. All stock subscribed as of the date of the financial statements has been collected. The stock is not issued until subscriptions are collected.

Prepaid Expenses

Amounts paid in advance for expenses are accounted for as prepaid expenses and classified as current assets if such amounts are to be recognized as expense with the current period.

Property, Plant and Equipment

Lab equipment, furniture and computer equipment are stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method based on the lesser of estimated useful lives of the related assets or lease terms. Lab equipment items have depreciable lives of five years, furniture items have depreciable lives of 5 to 7 years, and computer equipment items have depreciable lives of 3 years. Repairs and maintenance costs are charged to expense as incurred.

Intangible Assets and Other Long-Lived Assets

Intangible and other long-lived assets are comprised of acquired patents, licenses, trade secrets and other intellectual property.  Acquired intangible assets are recorded at fair value and amortized over the shorter of the contractual life or the estimated useful life.  



-31-

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment, and definite-lived intangibles subject to depreciation and amortization, as well as acquisition costs of subsidiaries, are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated future undiscounted net cash flows of the related asset or group of assets over their remaining lives.  

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued the converged standard on revenue recognition with the objective of providing a single, comprehensive model for all contracts with customers to improve comparability in the financial statements of companies reporting using International Financial Reporting Standards and U.S. GAAP. The standard contains principles that an entity must apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity must recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. An entity can apply the revenue standard retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings (modified retrospective method).

The standard was effective for the Company beginning July 1, 2018. The Company elected to adopt the standard using the modified retrospective approach. This approach was adopted because the Company believes the new Standard has very little impact on revenue recognition for the current products sold.

The Company generates revenue by selling Human Cell and Tissue Products (HC/TP’s) to clinics and doctors. Revenue from these sales are recorded at the invoiced amount net of any discounts or contractual allowances. The Company has determined that the shipment of the product indicates transfer of control for revenue recognition purposes.

We have evaluated each of the five steps in Topic 606, which are as follows:

1) Identify the contract with the customer;

2) Identify the performance obligations in the contract;

3) Determine the transaction price;

4) Allocate the transaction price to the performance obligations; and

5) Recognize revenue when (or as) performance obligations are satisfied.

Our conclusion is that we have identified similar performance obligations under ASC Topic 606 as compared with deliverables and separate units of account previously identified under the old standard. As a result, the timing of our revenue appears to remain the same in comparison to the prior revenue recognition guidance.

We sell our products through a direct sales force and through distribution in the U.S.  Revenues from these customers are recognized when all the five steps identified above have occurred.  These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer.  We reserve for sales returns, including returns related to defective products, as a reduction in net sales, based on our historical experience.  These reserves are recorded as a reduction in net sales and are not considered material to our consolidated statements of income for 3 months ended September 30, 2018 and for the year ended June 30, 2018. 

The Company also has significant experience with historical discount patterns and uses this experience to finalize transaction prices. In accordance with ASU 2016-12, the Company would elect to exclude from the measurement of transaction price, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for e.g. sales tax, value added tax etc.  However, as our business is thus far not with the end consumer, the collection of taxes is unnecessary.

The Company has also elected to apply the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects cash directly from customers immediately adjacent to shipment.

There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. We are currently evaluating our control framework for revenue recognition and identifying any changes that may need to be made in response to the new guidance. Disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance.

Shipping and Handling

We bill our customers for shipping and handling charges, which are included in net sales for the applicable period, and the corresponding shipping and handling expense is reported in cost of sales.



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Research and Product Development Costs

We expense research and product development costs as incurred.

Product Liability and Warranty Costs

We maintain product liability insurance and has not experienced any related claims from its products offerings. We also offer a warranty to customers providing that its products will be delivered free of any materials defects.  There have been no material costs incurred since inception based on estimated return rates.  We review the adequacy of its recorded accrual on a quarterly basis.

Income Taxes

Deferred tax assets and liabilities are recorded to reflect the future tax consequences attributable to the effects of differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax purposes. Deferred taxes are calculated by applying enacted statutory tax rates and tax laws to future years in which temporary differences are expected to reverse. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the rate change is enacted.  

Measurement of Fair Value

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values.  Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined in the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods.  Key estimates in the accompanying consolidated financial statements include, among others, revenue recognition, allowances for doubtful accounts and product returns, provisions for obsolete inventory, valuation of long-lived assets, and deferred income tax asset valuation allowances.  Actual results could differ materially from these estimates.

Impact of Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. ASU 2016-02 will be effective for the Company beginning July 1, 2019 and early adoption is permitted. We are currently evaluating the timing of its adoption and the impact of adopting the new lease standard on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01,  Business Combinations (Topic 805): Clarifying the Definition of a Business , which provides guidance to entities to assist with evaluating when a set of transferred assets and activities is a business and provides a screen to determine when a set is not a business. Under the new guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset, or group of similar assets, the assets acquired would not represent a business. Also, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a prospective basis to any transactions occurring within the period of adoption. Early adoption is permitted for interim or annual periods in which the financial statements have not been issued. We do not presently anticipate that the adoption of ASU 2017-01 will have a material impact on our consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16,  Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory , which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 will be effective for us beginning on July 1, 2018. We are currently evaluating the impact of adopting ASU 2016-16 on our consolidated financial statements.



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In August 2016, the FASB issued ASU No. 2016-15,  Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 will be effective for us beginning on July 1, 2018 with early adoption permitted. We do not presently anticipate that the adoption of ASU 2016-15 will have a material impact on our consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01,  Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,  which amends the guidance regarding the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, ASU 2016-01 clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 will be effective for us beginning on July 1, 2018. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Upon adoption of ASU 2016-01, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. We do not presently anticipate that the adoption of ASU 2016-01 will have a material impact on our financial statements.

In November 2015, the FASB issued ASU 2015-17,  Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , which will require all deferred tax assets and deferred tax liabilities to be presented as noncurrent within a classified balance sheet. ASU 2015-17 was effective for us as of July 1, 2017. ASU 2015-17 may be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. We have elected not to early adopt ASU 2015-17. We do not anticipate that the adoption of ASU 2015-17 will have a material impact on our financial statements.

In May 2014, the FASB issued ASU 2014-09,  Revenue from Contracts with Customers (Topic 606) , to update the financial reporting requirements for revenue recognition. Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also

requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance is effective for us beginning on July 1, 2018, and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. We have evaluated the adoption of this standard on a retrospective basis and believe it will have no material impact to what has been reported.  Therefore, the Company will adopt this standard on a modified retrospective basis.

 

Business Combinations

LifeCode Genetics, Inc.,

On November 6, 2015, the Company announced the acquisition of LifeCode Genetics, Inc. (“LifeCode”) as its wholly owned subsidiary. LifeCode holds a strategic equity investment of 10.169% in Juneau Biosciences, LLC (“Juneau”).   In addition to the development of an assay and related services for the prognosis and monitoring of endometriosis in the infertility market which the Company has licensed, Juneau is developing technologies for the diagnosis of other women’s health issues.

The Company issued 6,561,870 common shares to acquire LifeCode and has recorded the acquisition as a Portfolio Investment with a valuation set at $16,404,675.

A share exchange agreement was entered into on September 22, 2015 that required the Company to issue to LifeCode former shareholders to meet the terms of the exchange agreement an additional 5,718,372 shares.  Using the OTC value (defined as the share price listed on the date of the transaction in the over-the-counter dealer markets and networks) for the additional shares issued results in an increase of value to $30,700,605, an increase of $14,295,930.  A valuation performed by an external outside valuation expert supports a September 22, 2015 value of $16,520,150 resulting in a day one impairment of $14,180,455.

The fair value of the purchase consideration issued to the sellers of LifeCode was allocated to the units of equity acquired.

Juneau reports to its members on a calendar year basis and LifeCode records its distributable share of such reported income using the equity method.

SEC Rule 4-08(g) of Regulation S-X requires a registrant to disclose, in the notes to its financial statements, summarized balance sheet and income statement information of all investees on an aggregate basis, if deemed significant.  See such summaries below.  The numbers presented in the schedules below related to Juneau are audited.



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Juneau Biosciences, LLC

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

2017

 

2016

Assets

 

 

 

 

Current Assets

 

 

 

 

 

Cash

 

 $          40,077

 

 $         69,718

 

Accounts receivable

 

                     -

 

                    -

 

Inventory

 

                     -

 

                    -

Total Current Assets

 

             40,077

 

            69,718

 

 

 

 

 

 

Fixed Assets

 

     

 

Machinery & equipment

 

           742,642

 

          742,642

 

Accumulated depreciation

 

          (742,642)

 

         (742,642)

Total Fixed Assets

 

                     -

 

                    -

 

 

 

     

Other Assets

 

     

 

Patents

 

           168,476

 

          163,426

 

Accumulated Amortization

 

            (64,385)

 

           (54,673)

 

Security Deposits

 

             39,022

 

            34,922

Total Other Assets

 

           143,113

 

          143,675

 

 

 

     

Total Assets

 

 $        183,190

 

 $       213,393

 

 

 

     

Liabilities

 

     

Current Liabilities

 

     

 

Accounts Payable

 

 $          13,321

 

 $    1,049,529

 

Credit Card Payable

 

                     -

 

            18,308

 

Salary Payable

 

           898,669

 

          843,727

 

Accrued Payroll Liabilities

 

                  416

 

            32,853

 

Accrued Interest

 

           266,320

 

          860,042

 

Notes Payable

 

        1,051,968

 

       3,325,072

 

Due to related parties

 

           417,000

 

          768,968

Total Current Liabilities

 

        2,647,694

 

       6,898,499

Total Liabilities

 

        2,647,694

 

       6,898,499

 

 

 

     

Members’ equity

 

     

 

34,117,912 and  28,138,878 units issued and outstanding at December 31, 2017and December 31, 2016, respectively Additional paid-in capital, investor capital of $26,367,947 and vested unit options of $1,998,980 on December 31, 2017, and

 

                     - 

 

                    -

 

investor capital $21,036,988, vested warrants at $4,200, and vested unit options of $1,303,074 on December 31, 2016

 

      28,366,927

 

     22,344,262

 

Retained Deficit

 

     (30,831,431)

 

    (29,029,368)

Total Members’ Deficit

 

       (2,464,504)

 

      (6,685,106)

Total Liabilities and Members' Deficit

 

 $        183,190

 

 $       213,393

 

 

 

     

 


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Juneau Biosciences, LLC

STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

For the Years Ended

 

 

 

December 31,

 

December 31,

 

 

 

2017

 

2016

License Income (Related Party)

 $     1,005,830

 

 $        877,560

Research & Development (Related Party)

 $     1,350,000

 

 $                    -

Consulting (Related Party)

 $          88,237

 

 $                    -

 

 

 

 $     2,444,067

 

 $         877,560

Operating Expenses

 

     

 

General and administrative expenses

         1,855,485

 

             596,011

 

General and administrative expenses (Related Party)

            671,178

 

             990,021

 

Stock-based Compensation

            695,907

 

               71,851

 

Travel and entertainment

                9,064

 

                 4,654

 

Interest expense

         1,004,791

 

             463,558

 

Depreciation expense

                      -

 

                 3,377

 

Amortization expense

                9,711

 

                 9,575

Total Operating Expenses

         4,246,136

 

          2,139,047

Loss from opertions

        (1,802,069)

 

        (1,261,487)

Other Income (Expenses)

     

 

Other Income

                       6

   

Total Other Expenses

                       6

 

                      -

Net Loss before Income Taxes

        (1,802,063)

 

        (1,261,487)

Income Tax Benefit

                      -

 

                      -

Net Loss

 $    (1,802,063)

 

 $    (1,261,487)

Net Loss per Common Unit

 $             (0.06)

 

 $             (0.05)

 

 

 

     

Weighted Average Number of Common Units Outstanding

       29,341,866

 

        27,782,968

 


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ReNovo Biotech, Inc.

On March 28, 2016, the Company announced the acquisition of ReNovo Biotech, Inc. as its wholly owned subsidiary.  The acquisition provides the Company access to ReNovo Biotech’s cellular, tissue, biomaterial and regenerative medicine products and product candidates. This subsidiary is operated under the name Predictive Biotech, Inc. The Company issued 9,500,000 common shares to effect the acquisition which is recorded at a cost of $14,087,000.

The purchase price was allocated to “trade secrets” including protocols to develop an amniotic allografts and umbilical cord allograft line of products in accordance with the provisions of ASC 805, Business Combinations .  Such trade secrets were determined to be recognizable apart from any form of goodwill and are “technology-based”.

Aggregate amortization expense for the years ended June 30, 2018, and 2017 was approximately $2,817,786, and $2,817,786, respectively. Aggregate amortization expense for the 3 months ended September 30, 2018, and 2017 was approximately $704,446, and $850,116, respectively.

Estimated amortization expense for the developed technology consists of the following as of September 30, 2018:

       

Year Ending June 30

 

 

 

2019

 

 

   2,817,786

2020

 

 

   2,817,786

2021

 

 

   2,460,739

Inception DX, LLC

On August 22, 2018, the Company entered into an agreement captioned “Securities Purchase Agreement” with the members of Inception DX, LLC (“Inception”), a Utah limited liability company. Under the terms of the agreement, the Company acquired Inception for 15,500,000 shares of common stock. Inception owns laboratory equipment, partial interest in database records for over 31,900,000 individuals for use in genetics research, 400,000 units in Juneau Biosciences, LLC, initial CLIA registration, CLIA lab protocols, and other assets. Once the CLIA registration is completed, Inception will be used as a CLIA laboratory by Predictive Technology Group, Inc. and its affiliates.

The stock issued was for cash, laboratory equipment, Juneau Biosciences, LLC units “Juneau units”, and trade secrets related to the DNA database and protocols related to a future laboratory use as a CLIA lab.  The cash was valued at face value.  The Juneau units was based on the valued assigned when the Company entered into a subscription to purchase units of Juneau ($1.10 per unit).  The laboratory equipment was valued at market value as it had not been used and the Company is aware of the approximate market purchase price.  It will be classified as equipment with a 5-year life.  The proprietary data, DNA library, protocols, research and methods are classified as a trade secret in our industry.  Therefore, the Company determined to allocate the remaining value of the assets purchased as a trade secret with a 15-year life.  

The stock price on 8/22/2018 was $0.92/share.  Indicating a purchase price of $14,260,000 requiring allocation:


-

Cash

$799,980

     

-

Lab equipment

700,000

     

-

Investment in minority interest

440,000

     

-

Trade secrets

12,320,000

     
 

Total Purchase Price

$14,260,000

 


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The financial statements presented above reflect the increase of this minority interest investment.  The 400,000 units acquired in this acquisition increased our ownership less than 1%, and as such, the Company has not acquired more than 50% of Juneau, in total, as of September 30, 2018.  The $440,000 allocated to Investment in Minority Interest is offset by our estimated share of the loss in Juneau’s operations for the quarter ended September 30, 2018.

Taueret Laboratories, LLC

On August 22, 2018, the Company entered into an agreement captioned “Asset Purchase Agreement” (the “Purchase Agreement”) with Taueret Laboratories, LLC and its members. Under the terms of the Purchase Agreement, the Company issued warrants exercisable for 16,500,000 shares of the Company’s common stock. The warrants were exercisable at fair market value of the Company’s common stock on the closing date. In consideration for the warrants, the Company acquired (i) approximately 1,000 degenerative disc disease related DNA samples, related family records, relevant clinical records (including approximately 600 affected probands) and 800 ancestry matched control samples, (ii) whole exome sequencing data on approximately 300 degenerative disc disease samples, over 800 local controls, and published reference populations, together with initial analysis of the markers, (iii) project plan, study paperwork, promotional study and materials used in the research study, (iv) exclusive use of a DNA biobank that has collection over 300,000 samples for multiple diseases that the Company may target, (v) the remaining interest in database records for over 31,900,000 individuals for use in genetics research, and (vi) other assets.

 

The warrants issued are for proprietary data and methods that are otherwise a trade secret in our industry.  Therefore, the Company determined to classify the assets purchased as trade secrets with a 15-year life.  The Company ran a Black Scholes calculation to determine valuation of the warrants to determine the purchase price of $15,160,385.

 

Consolidated Results and Non-Segmented Items – Fiscal 2018 vs. Fiscal 2017

 

Revenues from operations (net) for fiscal 2018 totaled $16,624,336 compared to $2,585,362 for fiscal 2017. The increase of $14,038,974 is a result of an expansion of our sales force and distribution networks leading to increased sales of our HCT/Ps.

 

Cost of goods sold (“COGS”) includes expenses associated with acquisition and processing, manufacture (including material and direct labor), property and equipment depreciation, shipping, and other direct expenses relating to our HCT/Ps. Our gross profit during 2018 was $12,653,081 compared to $1,834,057 for fiscal 2017. The increased gross profit resulted from increased sales and efficiencies introduced into our manufacturing processes.

 

Sales and marketing expenses were $12,680,741 for fiscal 2018 compared to $1,897,543 for fiscal 2017. The increased sales and marketing expenses resulted from corresponding increases in sales, as well as $7.5M in warrants issued to sales management as they met predetermined milestones based on revenue growth.

 

Research and development expenses were $1,896,092 for fiscal 2018 compared to $84,729 for fiscal 2017. The increased research and development expenses resulted from increased focus on product development, streamlining manufacturing methods and additional proprietary research and development work primarily relating to our HCT/Ps.  

 

General and Administrative expenses for fiscal 2018 were $5,827,891 compared to $946,754 for fiscal 2017. The increased general and administrative expenses resulted from increased management headcount and warrants issued for consulting relating to all business entities.

 

Amortization and depreciation expenses for fiscal 2018 were $4,573,534 compared to $3,693,579 for fiscal 2017. The reason for the increase in amortization and depreciation expenses relate primarily to the expense of costs relating to our acquisitions

 


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On August 1, 2016, the Company entered into agreements to acquire convertible, unsecured notes receivable from Juneau from existing noteholders in exchange for stock of the Company. The collection of amounts owed on said notes receivable is subject to a subordination agreement with a third-party creditor of Juneau that is owed the principal amount of $700,000 plus accrued interest on an obligation that comes due July 31, 2018. In anticipation of this event, on June 15, 2017, an amendment was also made to the restated agreement to subordinate the debt Juneau owes to PTG. The face amount of the notes acquired was $2,870,380 and 5,740,760 shares of common stock were issued. The notes bear interest payable in Juneau units at 12% and are convertible into Class A Units of Juneau at the rate of $1.00 per unit. Principal and accrued interest are due in a single installment on August 1, 2018. Upon further review using the OTC value at the date of closure, it was determined that a price per share of .78 cents was approximate market value.  Therefore, the value of the shares given should be $4,473,774, an increase of $1,603,394. This discount at the date of the share transfers is then considered an impairment loss on the date of the acquisition of the notes. There was no corresponding impairment loss in fiscal 2018.

 

Consolidated Results and Non-Segmented Items – 3 months ended September 2018 vs. 3 months ended September 2017

 

Revenues from operations (net) for 3 months ended September 30, 2018 totaled $8,063,800 compared to $2,005,171 for 3 months ended September 30, 2017. The increase of $6,058,629 is a result of an expansion of our sales force and distribution networks leading to increased sales of our HCT/Ps.

 

Cost of goods sold (“COGS”) includes expenses associated with acquisition and processing, manufacture (including material and direct labor), property and equipment depreciation, shipping, and other direct expenses relating to our HCT/Ps. Our gross profit for 3 months ended September 30, 2018 was $5,197,066 compared to $1,106,092 for 3 months ended September 30, 2017. The increased gross profit resulted from increased sales and efficiencies introduced into our manufacturing processes.

 

Sales and marketing expenses for 3 months ended September 30, 2018 was $2,422,718 compared to $549,549 for 3 months ended September 30, 2017. The increased sales and marketing expenses resulted from corresponding increases in sales and an increase in the number of distributors.

 

Research and development expenses for 3 months ended September 30, 2018 was $605,390 compared to $12,500 for 3 months ended September 30, 2017. The increased research and development expenses resulted from increased focus on product development, streamlining manufacturing methods and additional proprietary research and development work primarily relating to our HCT/Ps.  

 

General and Administrative expenses for 3 months ended September 30, 2018 was $2,563,440 compared to $359,394 for 3 months ended September 30, 2017. The increased general and administrative expenses resulted from increased management headcount and stock options issued for consulting services relating to all business entities.

 

Amortization and depreciation expenses for 3 months ended September 30, 2018 was $1,672,430 compared to $748,653 for 3 months ended September 30, 2017. The reason for the increase in amortization and depreciation expenses relate primarily to the expense of costs relating to our acquisitions

 

  Business Segment Results – Fiscal 2018 vs. Fiscal 2017

 

Substantially all of the revenues, COGS, sales and marketing expenses, and impairment loss related to the HCT/Ps business. During this period the molecular diagnostic or therapeutics products were under development and none had launched. Approximately $1,366,028 and $946,754 of the general and administrative expenses are attributable the HCT/Ps business during fiscal 2018 and fiscal 2017, respectively, approximately $2,900,092 and $2,820,681 of the amortization and depreciation expenses are attributable the HCT/Ps during fiscal 2018 and fiscal 2017, approximately $8,216,888 and $1,116,586 of the warrants and option expenses are attributable the HCT/Ps during fiscal 2018 and fiscal 2017, and the remaining portion of said expenses are attributable to the diagnostic and therapeutic segment.  

 

Liquidity and Capital Resources:

 

Cash and cash equivalents as of September 30, 2018, June 30, 2018, and June 30, 2017 were $1,056,780, $1,206,139, and $968,202, respectively.   Our working capital deficit was $556,114, $1,032,312 and $82,338 as of September 30, 2018, June 30, 2018 and June 30, 2017, respectively.  

 


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Net cash flows provided by operating activities was $609,477 for 3 months ended September 30, 2018, an increase of $1,060,940 from $451,463 used by operating activities for 3 months ended September 30, 2017.  The increase in the comparative 3-month periods is due to increasing sales and lowering inventories.  Net cash flows used in operating activities in fiscal 2018 was $288,999, a decrease of $1,175,597 from $886,599 provided by operating activities in fiscal 2017. The decrease in fiscal 2018 was primarily due to an increase in net loss, and in increase in our inventory balance.

 

Net cash flows provided by investing activities was $132,798 for 3 months ended September 30, 2018, an increase of $2,231,049 from $2,098,251 used in investing activities for 3 months ended September 30, 2017.  The increase in the comparative 3-month periods is due to common stock being issued for acquisitions.  Net cash flows used in investing activities was $4,049,157 in fiscal 2018, an increase of $1,989,672 from $2,059,486 used in investing activities in fiscal 2017.  The increase in fiscal 2018 was due primarily to cash paid for equity method investments, namely Juneau Biosciences, LLC.  

 

Net cash flows used in financing activities was $891,634 for 3 months ended September 30, 2018, an increase of $3,586,634 from $2,695,000 provided by financing activities for 3 months ended September 30, 2017.  The increase in the comparative 3-month periods is due to payments from common stock subscriptions wound down in current period and the Company began payments for an equity subscription payable in the current period.  Net cash flows provided by financing activities was $4,576,093 in fiscal 2018, an increase of $2,439,512 from $2,136,581 provided by financing activities in fiscal 2017.  The increase in fiscal 2018 was due to cash payments for stock, stock subscriptions, and for stock subscriptions with attached warrants.  

 

We believe we have sufficient funds to execute our business plan. However, our business plans may change or unforeseen events may occur which affect the amount of funds required. If additional funds are not obtained if and when required, the lack thereof may have a material adverse effect on the Company and could require us to cease operations. Further, there is no assurance that future funding will be available or that any future funding will be on terms which are favorable to us or our current stockholders.

ITEM 3.  PROPERTIES .

 

We occupy a 2,800 square-foot facility in Salt Lake City, Utah under the terms of an operating lease on a month-to-month basis. This facility is used primarily to support our administrative staff.

 

We lease a second 15,164 square-foot office and laboratory facility in Salt Lake City, Utah under the terms of an operating lease expiring in December 2019 which serves as our HCT/Ps laboratory.

 

We believe our current facilities are adequate to meet our needs through the end of 2019. Thereafter, we believe that additional space will be required and that suitable additional or alternative space will be available on commercially reasonable terms as needed.

ITEM 4.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of December 1, 2018, by (i) each person who is known by us to own beneficially more than 5% of our outstanding common stock; (ii) each of our officers and directors; and (iii) all of our directors and officers as a group.

 

As of December 1, 2018, the Company had outstanding 239,046,403 shares of common stock, no preferred stock, stock options exercisable for 5,783,500 shares of common stock with an exercise price range from $0.50 to $1.23 and warrants exercisable for 59,018,520 shares of common stock with exercise prices of between $0.50 to $.92.

 


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Name

of

Beneficial Owner(1)(2)

 

Amount of Common Stock Beneficially Owned

 

 

Percentage

of

Ownership

 

 

 

 

Position

John Sorrentino

-0-

0.00%

Chairman of the Board of Directors

Bradley Robinson (3)

42,492,482

17.78%

Member of the Board of Directors, Chief Executive Officer and President

Michael Dey, Ph.D. (4)

750,000

0.31%

Member of the Board of Directors, Chief Executive Officer, Predictive Therapeutics, Inc.

Merle Ferguson

6,525,438

2.73%

Member of the Board of Directors

Simon Brewer (5)

133,333

0.06%

Chief Financial Officer and Treasurer

Paul Evans (6)

836,000

0.35%

Chief Operating Officer

John Nelson, M.D. (7)

150,000

0.06%

Chief Medical Officer

Bruce Forrest, M.D. (8)

300,000

0.13%

Chief Development Officer

Timothy Lacy (9)

12,000,000

4.78%

Executive Vice President, Predictive Technology Group, Inc.

President, Predictive Biotech, Inc.

Michael Herbert (10)

66,667

0.03%

Chief Marketing Officer

Eric Olson (11)

7,500,000

3.14%

Executive Vice President

Chief Executive Officer,

Predictive Biotech, Inc.

Total Officers and Directors (11 persons)

70,753,920

29.37%

 

_____________

(1)  Beneficial ownership is determined in accordance with the rules of the US Securities and Exchange Commission (“SEC”), which include holding voting and investment power with respect to the securities. Shares subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for computing the percentage of the total number of shares beneficially owned by the designated person but are not deemed outstanding for computing the percentage for any other person.

(2)  Except where otherwise indicated, the address of the beneficial owner is deemed to be the same address as the Company.

(3)  The amount indicated includes 20,000,000 shares of common stock owned by Mr. Robinson. Also includes 4,492,482 shares of common stock owned by Axis Capital Partners, LLC, an entity in which Mr. Robinson is a manager and has a beneficial interest, 18,000,000 shares of common stock owned by Rhea Holdings, LLC, an entity in which Trisha L. Robinson, Mr. Robinson's wife, is the manager and shares in which Trisha L. Robinson and children of Mr. Robinson have a beneficial interest.

 (4)  Includes options exercisable for 750,000 shares of common stock with an exercise price of $0.50 per share.

 (5)  Includes options exercisable for 133,333 shares of common stock with an exercise price of $0.80. Does not include options exercisable for 166,667 shares of common stock that do not vest within sixty days of the date of this registration statement.  

 (6)  Includes 336,000 shares of common stock and options exercisable for 500,000 shares of common stock with an exercise price of $0.78 per share. Does not include options exercisable for 500,000 shares of common stock that do not vest within sixty days of the date of this registration statement.   

 (7)  Includes options exercisable for 150,000 shares of common stock with an exercise price of $0.94. Does not include options exercisable for 150,000 shares of common stock that do not vest within sixty days of the date of this registration statement.  

 (8)  Includes options exercisable for 300,000 shares of common stock with an exercise price of $0.50 per share.

 (9)  Includes warrants exercisable for 12,000,000 shares of common stock with an exercise price of $0.50 per share.

(10) Includes options exercisable for 66,667 shares of common stock with an exercise price of $0.94 per share. Does not    include options exercisable for 133,333 shares of common stock that do not vest within sixty days of the date of this registration statement.  

(11) Includes 7,500,000 shares of common stock owned by Integrity Trust Company, LLC, an entity in which Mr. Olson is a manager and has a beneficial interest.

 


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ITEM 5.  DIRECTORS AND EXECUTIVE OFFICERS .

 

The following table provides information concerning our officers and directors. All directors hold office until the next annual meeting of stockholders or until their successors have been elected and qualified.

 

         

 

 

 

 

 

NAME

 

AGE

 

POSITION

John Sorrentino

 

64

 

Chairman of the Board of Directors

 

 

 

 

 

Bradley Robinson

 

49

 

Chief Executive Officer/President/Director

 

 

 

 

 

Michael Dey, Ph.D.

 

67

 

CEO Predictive Therapeutics, LLC/Director

 

 

 

 

 

Merle Ferguson

 

72

 

Director

 

 

 

 

 

Simon Brewer

 

40

 

Chief Financial Officer /Treasurer

 

 

 

 

 

Paul Evans

 

55

 

Chief Operating Officer

 

 

 

 

 

John Nelson, M.D.

 

74

 

Chief Medical Officer

 

 

 

 

 

Bruce Forrest, M.D.

 

56

 

Chief Development Officer

 

 

 

 

 

Eric Olson

 

55

 

Executive Vice President Predictive Technology Group, Inc./Chief Executive Officer – Predictive Biotech, Inc.

 

 

 

 

 

Timothy Lacy

 

50

 

Executive Vice President – Predictive Technology Group, Inc./President – Predictive Biotech, Inc.

 

 

 

 

 

Michael Herbert

 

57

 

Executive Vice President – Predictive Technology Group, Inc./Vice President, Marketing – Predictive Biotech, Inc.

 


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BIOGRAPHY

 

John Sorrentino was elected as Chairman of the Board in October of 2018.  Mr. Sorrentino currently serves as Vice President & Chief Operating Officer, Pfizer Vaccine Research & Development, where he is responsible for the strategic deployment and management of financial, physical and human resources across nine vaccine research & development sites in seven countries. Mr. Sorrentinomanages a broad mix of financial, facility, staffing clinical testing and systems initiatives to support the vaccine portfolio. These efforts span the entire research and development life cycle from early-stage discovery projects through product-registration activities. Mr. Sorrentino is a member of the leadership team that developed and licensed Prevnar 13, the most commercially successful vaccine franchise in history. In his role with Pfizer, Mr. Sorrentino also manages clinical laboratory services and develops staffing, capital, contracting and other assay-strategies required to assess human immune responses to vaccine candidates and to support vaccine label claims. As Pearl River Site Head, Mr. Sorrentino manages a broad spectrum of site operations. He directs external communications, community relations, colleague enrichment/engagement, diversity and other site-related programs. Mr. Sorrentino has more than 35 years of senior management experience in the life-sciences.  He has held leadership roles in private and public companies as well as government and non-profit institutions focused on improving the public health.  Prior to joining Wyeth/Pfizer in 2003, Mr. Sorrentino held executive management positions in several organizations that provided neonatal screening and related clinical services.  In these roles, Mr. Sorrentino pioneered laboratory advances to create efficiency and competitive advantage that led to the expansion of neonatal screening for treatable genetic conditions throughout the world. During his career, Mr. Sorrentino has held final profit and loss responsibility for several organizations and he has been a founder of three companies.  He has led mergers and acquisitions and developed successful exit strategies for founders.  Mr. Sorrentino has also been a registered lobbyist appearing before state legislators, the US congress and professional societies on a variety of health care and other policy issues. Mr. Sorrentino earned his BA in Chemistry from the University of Massachusetts and MBA from Northeastern University.

 

Mr. Robinson was appointed CEO of Predictive Technology Group, Inc. in March, 2015. Mr. Robinson brings operational, business development and financing experience to Predictive Technology Group, Inc. The majority of this experience was developed during early stage structuring of ventures in the areas of pharmaceuticals, medical device and information technology. He was a founding member of LifeCode Genetics, LLC in 2011 and Predictive Therapeutics, LLC in 2013, both of which are now wholly owned subsidiaries of the Company. Mr. Robinson has been a founding member of other ventures in healthcare, one of which, Specialized Health Products International, Inc., was publicly traded until its acquisition in March of 2008 by C.R. Bard.  Mr. Robinson was the CEO and co-founder of Infusive Technologies, LLC from November, 2004 until September, 2008 when it was acquired by Sagent Pharmaceuticals, Inc., a specialty injectable pharmaceutical products company. As part of the acquisition, Mr. Robinson became President of the medical device division of Sagent Pharmaceuticals. He left Sagent Pharmaceuticals in 2010 to become Vice President of Business Development of Juneau BioSciences, which develops and commercializes genetic tests related to women’s healthcare.  He was responsible for developing strategic partnerships and the company’s capitalization. Mr. Robinson studied accounting at the University of Utah and earned an MBA/MIM from the Graduate School of International Management (Thunderbird).

 

Michael Dey, Ph.D., was elected as a member of the Board of the Company and CEO of Predictive Therapeutics, a wholly-owned subsidiary of the Company, in June of 2016. Prior to joining Predictive Therapeutics, Dr. Dey was an executive at Wyeth where he was the President of Scientific Affairs for Wyeth’s Women’s Health Care business. Prior, Dr. Dey was the President of Wyeth Women’s Health Care which he managed for 7 years. Dr. Dey had worldwide responsibility for this consolidated unit of more than $3 billion annually that included all of Wyeth’s Women’s Health Care resources globally. Prior to his leadership role in women's health care he served as Vice President, General Manager of ESI Pharma, Inc. In 1995, with Wyeth’s acquisition of American Cyanamid and Lederle Standard Products, Dr. Dey became President of ESI Lederle, Inc.  As President of ESI Lederle, his responsibilities included directing one of the largest generic drug companies in the U.S. with more than $500 million in sales, approximately 150 employees in R&D and 100 employees in Marketing and Sales. ESI Lederle sold both oral and injectable products that included Tubex®, the prefilled syringe delivery system. Dr. Dey received a BS in Biology/Chemistry from Western Washington University, a Pharmacy degree from the University of Washington, a MS degree in Pharmacology-Toxicology from the University of California, Davis, and a PhD in Pharmacology-Toxicology from Washington State University.

 

Mr. Merle Ferguson became Chairman of the Board of the Company on July 8, 2013, and subsequently on December 1, 2016 he also became CEO and President of the Company.  Prior to that, he had no relationship with the Company. Mr. Ferguson attended Yakima Valley College from 1964-1966 with a major in forestry and a minor in Business Management. In April of 1966, he enlisted in the United States Marine Corps, serving two tours in Vietnam, and was honorably discharged in 1970. From 2001 to the present, Mr. Ferguson has served as Chairman, Secretary, Treasurer and majority shareholder of Predictive From January, 2009 to the present, Mr. Ferguson has served as Chairman, President, CEO, CFO and majority owner of Element Global, Inc., located in Virginia Beach, Virginia.   Beginning in May of 2014, Mr. Ferguson also became Chairman and President of Element Global.  From January, 2002 to 2014, Mr. Ferguson served as an Officer and Director of Gold Rock. Since 2014, he has also served as President, Chairman and CEO of Gold Rock, located in Virginia Beach, Virginia. The Board reviewed Mr. Ferguson’s background and it considers him qualified to fill this position, due to his extensive business experience and work with public companies.


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Mr. Brewer was appointed to the Company’s Chief Accounting Officer in January of 2018, and Chief Financial Officer in July of 2018.  Prior to joining our Company, Mr. Brewer served as Chief Financial Officer of Norbest, LLC from 2016 to 2017, where he was responsible for Norbest’s finance, accounting, HR and IT functions.  Prior to joining Norbest, Mr. Brewer was Vice President, Finance and IT for Wilson Electronics, LLC from 2013 to 2016. Reporting directly to the CEO of Wilson Electronics, Mr. Brewer oversaw significant growth for the electronics company operating in all 50 states and internationally in several countries.  Mr.  Brewer assisted heavily in building scalable processes, modernizing the business, international growth in Asia, and an acquisition of a main competitor. Before that, he was Senior Director and Corporate Controller for Backcountry.com, Inc. from 2009 to 2013. Mr. Brewer implemented Sarbanes Oxley when Backcountry.com was purchased by a publicly traded Company, Liberty Interactive, as well as started the FP&A function for modernizing data driven decision making.  Mr. Brewer started his accounting career as a CPA for KPMG LLP from 2005 to 2009, working on audits, IPOs, bankruptcies, divestitures, and acquisitions. Mr. Brewer received his BA and Masters of Accounting degrees, along with a minor in Russian, from The University of Utah. Mr. Brewer is a CPA licensed in Utah and Nevada.

 

Mr. Evans was appointed Chief Operating Officer in June of 2018. Prior to joining the Company, Mr. Evans was Vice President of Intellectual Property at Vivint, Inc. from 2014 to 2015, where he led the development, management, and enforcement of Vivint’s intellectual property portfolio across the company’s entire platform of smart home solutions, including security and surveillance, smart home control, wireless internet, and cloud storage. From 2010 to 2013, Mr. Evans was General Counsel, Executive VP of Corporate Development, and Chief Governance and Compliance Officer at InTouch Health, a leading provider of telehealth enterprise network and managed services to hospitals and healthcare systems for the delivery of specialty clinical care to patients. Prior to joining InTouch Health, Mr. Evans was an attorney with Stoel Rives LLC from 2008 to 2010.  From 2000 to 2008, he was General Counsel, VP of Business Development, Chief Governance and Compliance Officer of Specialized Health Products International, Inc., a medical device company acquired by C.R. Bard in 2008. Mr. Evans earned his BS in Mechanical Engineering, JD, and MBA degrees from The University of Utah.

 

John Nelson, M.D., was appointed Chief Medical Officer of the Company in January, 2018. Dr. Nelson, MD, MPH is an obstetrician and gynecologist from Salt Lake City, Utah. Dr. Nelson has served as President of the American Medical Association, Salt Lake County Medical Society and the Utah Medical Association.  He was also chair of the Finance and Planning Committee of the World Medical Association. He served on the Advisory Committee to the Director of the National Institutes of Health (NIH) as well as on the advisory committee for the Agency for Healthcare Research and Quality (AHRQ.)  He has been a lecturer on detecting and preventing interpersonal violence having served as spokesperson for the American Medical Association Alliance.  He was a charter member of the Prospective Payment Assessment Commission (ProPAC) now known as MedPAC.

 

Bruce Forrest, M.D., was appointed Chief Development Officer in November of 2018. Prior to joining our Company, Dr. Forrest was President and Founder of Aeolian Advisors Corporation from 2013 to 2018, where he worked with clients to identify appropriate investment opportunities among small and emerging growth biotechnology and medical device companies. From 2010 to 2013, Dr. Forrest was a member of the Technical Advisory Board for Pure Earth (formerly Blacksmith Institute) that provided strategic advice to Blacksmith management and operational staff regarding best practices in pollution management and remediation techniques, and practical guidance on operational aspects of specific projects. From 2009 to 2010, Dr. Forrest was Senior Vice President, Vaccine Clinical Research Transition, Pfizer Vaccine Research, where he led the strategic and operational integration of the former Wyeth Vaccine Research & Development with the global Pfizer Vaccine Research organization, including structuring Japan, China and Asia-Pacific activities. Dr. Forrest was Senior Vice President, Late Phase Programs, Vaccines R&D, Wyeth Research at Wyeth Pharmaceuticals from 1997-2009, where he was responsible for all late phase development activities supporting both clinical and pharmaceutical science development activities for vaccines in the Wyeth pipeline.  Dr. Forrest earned a Bachelor of Science in Medicine from the University of Adelaide School of Medicine and an MBA from Warwick Business School.

Mr. Olson is Executive Vice President, and the founder and Chief Executive Officer of Predictive Biotech, Inc., since he joined the Company in 2016. His previous experience includes over 25 years developing and commercializing innovative technologies in devices, diagnostics, biologics and biomaterials. The last 8 years of his career, Mr. Olson has served in the role of either President, Chief Executive Officer or Board Member. Prior to joining Predictive Technology Group, Mr. Olson was the President and CEO for Cupertino, CA based Skeletal Kinetics. This Colson & Associates company developed and commercialized synthetic bone substitute products for Orthopedic and Spinal applications. Previous to that, Mr. Olson was the President, CEO and Board Member for Amedica Corporation. Amedica manufactured and distributed cortical and cancellous silicon nitride ceramic interbody devices for spine. In addition, the company distributed a line of HCT/Ps designed to work in conjunction with the ceramic biomaterial. Mr. Olson took Amedica Corporation public in 2014. Mr. Olson began his career with Smith & Nephew and has worked with Johnson & Johnson, Medtronic and Wright Medical in Sales and Marketing leadership roles. Mr. Olson earned his BS in Behavioral Science and Health Administration degrees from The University of Utah.  

 

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Timothy Lacy was appointed Executive Vice President – Predictive Technology Group, Inc./President – Predictive Biotech, Inc. in February of 2017. From 2010 to 2017, he served as a founder and partner in FlagshipHealth Group, a health care consulting and sales outsourcing firm serving companies including Medtronic, Mayo Clinic and multiple Blue Cross and Blue Shield health plans. From 1991 to 2010, Mr. Lacy held senior management roles at UnitedHealth Group and Walgreens, including leadership positions across product, marketing, sales and corporate development. During his time at UnitedHealth Group, he led various strategic risk management teams including self-funding, pharmacy and network reimbursement strategies. He is recognized across the health care industry as an integration expert in the delivery, finance and administration of health care products and services. Mr. Lacy has broad experience commercializing acquisitions developed during his tenure at UnitedHealth Group, Walgreens and FlagshipHealth Group. Mr. Lacy earned a BA degree in Business and International Management from St. John’s University.

 

Michael Herbert was appointed Chief Marketing Officer in February of 2017. Prior to joining our Company, Mr. Herbert was Chief Marketing Officer at Flagship Health Group 2011 to 2017, where he worked with many of the top insurers on their go-to-market strategies. Mr. Herbert’s focus has been on strategic brand building, channel alignment, product development and positioning across a broad spectrum of health care and consumer companies. He has held senior leadership and ownership positions in early through mid stage companies, including Bianchi (SVP Sales and marketing 1984 – 1996), Castelli (CEO, 1996 – 2004), Shock Doctor (Chief Sales and Marketing Officer 2004 – 2009), and DreamGuard (Chief Sales and Marketing Officer 2009 – 2011), leading to multiple successful transactions.

BOARD OF DIRECTORS AND COMMITTEES


All Directors hold their office until the next annual meeting of shareholders or until their successors are duly elected, and qualified.  Any vacancy occurring on the Board of Directors may be filled by the shareholders, or the Board of Directors.  A Director elected to fill a vacancy is elected for the unexpired term of his predecessor in office.  Any Directorship filled by reason of an increase in the number of Directors shall expire at the next shareholders’ meeting in which Directors are elected, unless the vacancy is filled by the shareholders, in which case the term shall end on the later of (i) the next meeting of the shareholders or (ii) the term designated for the Director at the time of creation of the position being filled.

 

Committees: Meetings of the Board

 

The Company does not have a separate Compensation Committee, Audit Committee or Nominating Committee. These functions are done by the Board of Directors meeting as a whole. 

 

Committees of the Board

We currently do not have an Audit,  Finance, Compensation, Executive Committee or Nominating Committee, or any other committee of the board of directors.  We have adopted a charter for the Executive Committee as well as charters for the other committees, in the event that we elect to implement them.  We will provide to any person without charge, upon request, a copy of the charter for any of our committees.  In addition, we intend to post on our website all disclosures that are required by law concerning any amendments to our committees or their charters. The information contained in our website shall not constitute part of this filing.

For the areas where we don’t have committees, such responsibilities are fulfilled by our board of directors and all of our directors participate in such responsibilities, one of whom is “independent” as defined under Rule 4200(a)(15) of the NASDAQ’s listing standards described below. Our financial position has made it extremely difficult to attract and retain qualified independent board members.  Since we do not have any of the subject committees, other than our Executive Committee, our entire board of directors participates in all of the considerations with respect to our audit, finance, compensation, and nomination deliberations.

 

-45-

Rule 4200(a)(15) of the NASDAQ’s listing standards defines an “independent director” as a person other than an executive officer or employee of the Company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  The following persons shall not be considered independent:

- A director who is, or at any time during the past three years was, employed by the company;

- A director who accepted or who has a Family Member who accepted any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following: (i) compensation for board or board committee service; (ii) compensation paid to a Family Member who is an employee (other than as an executive officer) of the Company; or (iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation.  Provided, however, that in addition to the requirements contained in this paragraph, audit committee members are also subject to additional, more stringent requirements under NASDAQ Rule 4350(d).

- A director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company as an executive officer;

- A director who is, or has a Family Member who is, a partner in, or a controlling stockholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed five percent of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following: (i) payments arising solely from investments in the Company’s securities; or (ii) payments under non-discretionary charitable contribution matching programs;

- A director of the issuer who is, or has a Family Member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the issuer serve on the compensation committee of such other entity; or

- A director who is, or has a Family Member who is, a current partner of the Company’s outside auditor, or was a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during any of the past three years.

 

We hope to add qualified independent members of our board of directors at a later date, depending upon our ability to reach and maintain financial stability.

 

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Audit Committee

The entire board of directors performs the functions of an audit committee, but no written charter governs the actions of the board when performing the functions of what would generally be performed by an audit committee.  The board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting.  In addition, the board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.  At the present time,  our chief financial officer is considered to be our expert in financial and accounting matters.

Nominating Committee

Our size and the size of our board, at this time, do not require a separate nominating committee.  This function is performed by the entire board of directors.  When evaluating director nominees, our directors consider the following factors:

- The appropriate size of our board of directors;

 

- Our needs with respect to the particular talents and experience of our directors;

 

- The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the board;

 

- Experience in political affairs;

 

- Experience with accounting rules and practices; and

 

- The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new board members.

 


Our goal is to assemble a board that brings together a variety of perspectives and skills derived from high quality business and professional experience.  In doing so, the board will also consider candidates with appropriate non-business backgrounds.

Other than the foregoing, there are no stated minimum criteria for director nominees, although the board may also consider such other factors as it may deem in our best interests as well as in the best interests of our stockholders.  In addition, the board identifies nominees by first evaluating the current members of the board willing to continue in service.  Current members of the board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination.  If any member of the board does not wish to continue in service or if the board decides not to re-nominate a member for re-election, the board then identifies the desired skills and experience of a new nominee in light of the criteria above.  Current members of the board are polled for suggestions as to individuals meeting the criteria described above.  The board may also engage in research to identify qualified individuals.  To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary.  The board does not typically consider stockholder nominees because it believes that its current nomination process is sufficient to identify directors who serve our best interests.

Finance Committee

Although we currently do not have a Finance Committee, when one is established it will consist of a minimum of three members of the board of directors, the majority of whom shall meet the same independence and experience requirements of the Audit Committee and the applicable provisions of federal law and the rules and regulations promulgated thereunder and the applicable rules of the OTC Market, the NASDAQ Stock Market, the New York Stock Exchange, or any other exchange where the shares of the Company may be listed or quoted for sale.  The members of the Finance Committee are to be recommended by the Nominating and Corporate Governance Committee and are appointed by and serve at the discretion of the board of directors.

 

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Compensation Committee

Although we currently do not have a Compensation Committee, we have adopted a charter which provides that when established it is to assist the board of directors in meeting its responsibilities with regard to oversight and determination of executive compensation and to review and make recommendations to the board of directors with respect to major compensation plans, policies and programs of the Company.  The Compensation Committee shall consist of not fewer than two members of the board of directors, with the exact number being determined by the board.  Members of the Compensation Committee shall be appointed from time to time to serve in such capacity by the Board.  Each member shall meet the independence and outside director requirements of applicable tax and securities laws and regulations and stock market rules.

Conflicts of Interest

With respect to transactions involving real or apparent conflicts of interest, we have adopted written policies and procedures, which are contained in our Corporate Governance Principles, and which require that:

- The fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors who authorize or approve the transaction prior to such authorization or approval;

 

- The transaction be approved by a majority of our disinterested directors; and

 

- The transaction be fair and reasonable to us at the time it is authorized or approved by our directors.

 

Code of Ethics for Senior Executive Officers and Senior Financial Officers

We have adopted a Code of Ethics for Senior Executive Officers and Senior Financial Officers that applies to our president, chief executive officer, chief operating officer, chief financial officer, and all financial officers, including the principal accounting officer.  The code provides as follows:

- Each oficer is responsible for full, fair, accurate, timely and understandable disclosure in all periodic reports and financial disclosures required to be filed by us with the Securities and Exchange Commission or disclosed to our stockholders and/or the public.

- Each officer shall immediately bring to the attention of the audit committee, or disclosure compliance officer, any material information of which the officer becomes aware that affects the disclosures made by us in our public filings and assist the audit committee or disclosure compliance officer in fulfilling its responsibilities for full, fair, accurate, timely and understandable disclosure in all periodic reports required to be filed with the Securities and Exchange Commission.

- Each officer shall promptly notify our general counsel, if any, or the president or chief executive officer as well as the audit committee of any information he may have concerning any violation of our Code of Business Conduct or our Code of Ethics, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in our financial reporting, disclosures or internal controls.

- Each officer shall immediately bring to the attention of our general counsel, if any, the president or the chief executive officer and the audit committee any information he may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to us and the operation of our business, by us or any of our agents.

- Any waiver of this Code of Ethics for any officer must be approved, if at all, in advance by a majority of the independent directors serving on our board of directors.  Any such waivers granted will be publicly disclosed in accordance with applicable rules, regulations and listing standards.

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Code of Business Conduct

We have adopted a Code of Business Conduct, which applies to the Company and all of our subsidiaries, whereby we expect each employee to use sound judgment to help us maintain appropriate compliance procedures and to carry out our business in compliance with laws and high ethical standards.  Each of our employees is expected to read our Code of Business Conduct and demonstrate personal commitment to the standards set forth in our Code of Business Conduct.  Our officers and other supervising employees are expected to be leaders in demonstrating this personal commitment to the standards outlined in our Code of Business Conduct and recognizing indications of illegal or improper conduct.  All employees are expected to report appropriately any indications of illegal or improper conduct.  An employee who does not comply with the standards set forth in our Code of Business Conduct may be subject to discipline in light of the nature of the violation, including termination of employment.

We will provide to any person without charge, upon request, a copy of our Corporate Governance Principles, our amended Code of Ethics for Senior Executive Officers and Senior Financial Officers, and our Code of Business Conduct.  In addition, we intend to post on our website all disclosures that are required by law concerning any amendments to our Corporate Governance Principles, our amended Code of Ethics for Senior Executive Officers and Senior Financial Officers, and our Code of Business Conduct.

Board of Directors Meetings

During the year ended December 31, 2017, our board of directors held two (2) formal meetings and no meetings were held where board actions were taken by written consent. All of the Company’s directors attended 100% of our meetings in 2017.

 

Communication with Directors

Stockholders and other interested parties may contact any of our directors by writing to them at Predictive Technology Group, Inc., 2749 Parleys Way, Suite 101, Salt Lake City, Utah 84019, Attention: Corporate Secretary, telephone 801-820-0811, or email at www.predtechgroup.com.

ITEM 6.  EXECUTIVE COMPENSATION .

 

Overview of Compensation Program

 

Currently, the Board of Directors fulfills the functions of the Compensation Committee. We plan to form a Compensation Committee in the near future. At present, the Board of Directors is responsible for establishing and implementing our compensation philosophy, as detailed below. The Board reviews and approves all of our compensation policies, including executive officer salaries, bonuses and equity incentive compensation. The Board has designed our executive compensation programs with the goal of paying total compensation to the executive officers that is fair, reasonable, competitive, and includes incentives that are designed to appropriately drive corporate performance.

 

The Board reviews and approves the annual compensation for our executive officers. The Board may retain the services of an independent compensation consultant or research firm with respect to compensation of all named executive officers. The Board did not retain a consultant for any of the years from 2017 to 2018. In addition, the Board considers recommendations from the Chief Executive Officer with respect to other executive officers.

 

Overview of Compensation Philosophy and Objectives

 

Our “pay-for-performance” philosophy is among the fundamental tenets of our executive compensation program. We have adopted an approach to compensation comprised of a mix of short-term and long-term components that are designed to provide proper incentives and to reward our executive officers.

 


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Our compensation objectives for executive officers are as follows:

   

-

to attract and retain highly qualified individuals capable of making significant contributions to the long-term success of our company;

 

 

-

to use incentive compensation to reinforce strategic performance objectives;

 

 

-

to align the interest of our executives with the interests of our stockholders such that the risks and rewards of strategic decisions are shared; and

 

 

-

to reflect the value of each officer’s position in the marketplace and within our company.

 

Compensation Policies and Procedures

 

Currently, the Board is responsible for administering our compensation practices. We plan to appoint a Compensation Committee consisting entirely of directors who are “outside directors” for purposes of Section 162(m) of the Code, and non-employee directors for purposes of Rule 16b-3 under the Exchange Act.

 

The Board holds meetings as necessary throughout the year.

 

Within the context of the overall objectives of our executive compensation philosophy, the Board determines the specific types and amounts of compensation to be paid to each of our named executive officers based on a number of factors including:

     

 

-

the roles and responsibilities of our executives;

 

-

the number of executives being compensated;

 

-

the individual experience and skills of, and expected contributions from, our executives;

 

-

special accomplishments;

 

-

compensation levels of executive officers at peer companies; and

 

-

our executives’ historical compensation at the Company.

 

The Board strives to create an overall compensation package for each executive officer that satisfies the aforementioned objectives, recognizing that certain elements of compensation are better suited to reflect different compensation objectives. For example, as base salaries are the only element of compensation that are fixed in amount in advance of the year in which the compensation will be earned, the Board believes that it is most appropriate to determine salaries with a focus on the market practices for similarly situated officers at comparable companies as adjusted to reflect the individual officer’s performance. The Board strives to make such comparisons at least once in every two years and fix salaries based on such comparison, and the Board did so in 2018. In the years when such comparison is not made, salaries are adjusted from the previous year level based on the Board’s collective knowledge of the industry, region and position as well as by applying their professional judgement. In contrast, cash bonuses and long-term incentives are better able to reflect our company’s performance as measured by financial metrics and are well-suited to motivate officers to achieve specific performance goals that the Compensation Committee has determined are in the best interests of our company. Equity grants are also well-suited to drive long-term performance and align management’s interests with those of shareholders. The Board believes that as an officer’s responsibility increases, so does his or her ability to influence the performance of our company and accordingly, the proportion of his or her compensation that consists of his or her salary and cash bonus should decrease while the proportion of equity incentives to total compensation should increase.

 


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In making compensation decisions, including assessing the competitiveness of the total compensation structure for each named executive officer, the Boards may consider compensation data from companies that the Board may select as comparable in terms of industry, size and location, which it did in 2018. The Board may, in its discretion, review surveys and relevant articles on executive compensation practices, and may receive reports on chief executive officer pay strategies and trends for publicly traded small cap companies for that purpose. The Board retains complete discretion with respect to the types and amounts of compensation awards each year.

 

The Board establishes the criteria, and directs the implementation, of all compensation program elements for the executive officers. Generally, the salary for each named executive officer is set or reevaluated at some time during each fiscal year by the Board. The Board considers the Chief Executive Officer’s appraisal of other executive officers’ general performance.

  

Elements of Compensation

 

The compensation of our named executive officers consists primarily of four components:

 

 

-

salary;

 

-

cash bonuses;

 

-

stock option based incentives; and

 

-

other benefits

 

In general, total compensation is geared to be sufficient to attract and retain excellent talent. In determining the adjustments to the compensation of our executive officers for the year ended June 30, 2018, we annually take into account the performance of each executive officer, their contributions toward the Company’s success, and the Company’s growth and stage of development.

 

We use a mix of short-term compensation (base salaries and potential cash incentive bonuses) and long-term compensation (equity incentive compensation) to provide a total compensation structure that is designed to achieve our pay-for-performance philosophy and our compensation objectives. We discuss each of the principal elements of our executive compensation in detail below.

 

Salary

 

In general, the salaries are designed to provide a consistent base of income and to attract the appropriate level of talent. The Board strives to set salaries that are in line with the salaries for executives serving in similar competitive positions in the market and generally around the median or greater level of salaries for executives serving in similar comparable positions. The Board undertook an assessment of any market data in 2018. Salaries were adjusted after such review.

 

The salaries of our executive officers are reviewed annually. We may also increase the salary of an executive officer at other times if a change in the scope of the officer’s responsibilities or for any other reason that the Board feels appropriate to achieve the objectives outlined here. The salaries also reflect the initial base salaries that were negotiated and annual adjustments made taking into account several factors including comparable positions in the market, contributions made by the executive, role and responsibilities of the executive and past performance.


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Cash Bonus

 

Incentive cash bonuses are designed to reward near-term operating performance and the achievement of milestones critical to our success in both the near and the long-term. Consistent with our emphasis on pay-for-performance, we have adopted an executive incentive bonus program. Executive officers will have an opportunity to earn bonuses based on the attainment of Company performance goals and a subjective analysis of individual performance that contributes to the attainment of those goals. The target bonuses reinforce three of our compensation goals - namely, to motivate our executives toward even higher achievement and business results, to tie our executives’ goals and interests to ours and our stockholders’ and to enable us to attract and retain highly qualified individuals.

 

Equity Incentive Compensation

 

We may grant equity incentive awards in the form of stock options to align the interests of our executive officers with the interests of our stockholders. Our decisions regarding the amount and type of equity incentive compensation and relative weighting of these awards among total executive compensation is based on several factors including contributions made by the executive, the role and responsibilities of the executive, past performance of the executive, cumulative equity awards made to an officer, current stock prices, recent history of profitability of the equity awards, and current philosophy of the Board with respect to the impact of equity awards on common stock dilution.

 

Initial awards to new officers are largely based on the negotiations the Chief Executive Officer had at the time of recruiting. Typically, the Chief Executive Officer negotiates and makes an offer of employment subject to approval of the Board.

 

We have typically made grants of equity incentive awards to our executive officers once a year. All such grants are reviewed and approved by the Board.

 

The date of grant and the exercise price of the awards are established on the date of final approval by the Board in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 718, “Compensation - Stock Compensation.” Exercise price is typically the closing market price of a share of our common stock on the date of the grant or in cases where grant is made to take effect on a subsequent future date, such future date. We do not have any program, plan or practice of setting the exercise price at a price less than fair market value of our common stock on the grant date. We do not have any program, plan or obligation that requires us to grant equity compensation on specified dates to our named executive officers.

 

Stock option awards provide our executive officers with the right to purchase shares of our common stock at a fixed exercise price typically for a period of up to ten years, subject to continued employment with our Company. In general, we provide our executives with service-based stock options that have gradual vesting schedules. These stock options are earned on the basis of continued service with the Company and generally vest over three years with one-fourth of the options vesting on the date of grant and the remaining options vesting equally in three annual installments following the first vesting date.

 

We have granted stock options as incentive stock options in accordance with Section 422 of the Code, subject to the volume limitations contained in the Code, as well as non-qualified stock options. Generally, for stock options that do not qualify as incentive stock options, we are entitled to a tax deduction in the year in which the stock options are exercised equal to the difference between the exercise price and the fair market value, at the time of exercise, of the stock for which the stock option was exercised. The holders of the non-qualified stock options are generally taxed on this same amount in the year of exercise. For stock options that qualify as incentive stock options, we do not receive a tax deduction, and the holder of the stock option may receive more favorable tax treatment than he or she would for a non-qualified stock option unless the holder makes a disqualifying disposition, generally by failing to hold the stock for the period required by the Code. Historically, we have primarily granted incentive stock options to provide these potential tax benefits to our executives and because of the limited expected benefits to our company of the potential tax deductions as a result of our historical net losses.

 

In 2015, we adopted, as approved by our stockholders, the 2015 Stock Option Plan that affords more flexibility to our Compensation Committee by allowing grants of a wide variety of equity awards to our key employees, directors and consultants, including non-qualified stock options, shares of restricted stock and other awards that are valued by reference to the fair market value of our common stock. This plan is designed to assist us in attracting, retaining, motivating and rewarding key employees, directors and consultants and providing long-term value for our stockholders by closely aligning the interests of these individuals with those of our stockholders.


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Other Compensation

 

The Board retains the discretion to offer other compensation to executive officers taking into account special circumstances. In 2018, no such compensation was paid.

 

All of our executive officers are eligible for benefits offered to employees generally, including life, health, disability and dental insurance and participation in our 401(k) plan. We intend to continue to maintain our current benefits for our executive officers. The Board in its discretion may revise, amend or add to the executive officers’ benefits and perquisites if it deems it advisable. We do not believe it is necessary for the attraction or retention of executive talent to provide executive officers with a substantial amount of compensation in the form of perquisites. In 2018, no such perquisites were provided.

 

Potential Payments Upon Termination or Change in Control

 

Employment Agreements. As of the year ended June 30, 2018, our named executive officers had employment agreements. Upon termination of an employment agreement, severance in an amount equal to an employee’s base salary may be owed for a period of one to two years following termination.

  

Accounting and Tax Considerations

 

The Company uses judgment in determining the fair value of the options awards on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, and the expected dividends of the awards. The Company uses the Black-Scholes option pricing model to determine the fair value of share-based payments granted under the guidelines of ASC Topic 718. Black-Scholes option pricing model requires certain estimates, including an expected forfeiture rate and expected term of options granted. We also make decisions regarding the method of calculating expected volatilities and the risk-free interest rate used in the option-pricing model. The resulting calculated fair value of stock options is recognized as compensation expense over the requisite service period, which is generally the vesting period. When there are changes to the assumptions used in the option-pricing model, including fluctuations in the market price of our common stock, there will be variations in the calculated fair value of our future stock option awards, which results in variation in the compensation cost recognized.

 

We generally intend for our executive compensation program to comply with Section 162(m) of the Code, as well as Code Section 409A. The Board intends for all compensation paid to the named executive officers (other than stock

option awards) to be tax deductible to us pursuant to Section 162(m) of the Code. Under Section 162(m) of the Code, compensation paid to the named executive officers in excess of $1,000,000 cannot be deducted by us for federal income tax purposes, unless such amounts satisfy the performance-based exception to the deduction disallowance.  We have no executives which have been paid compensation in excess of $1,000,000.

 

Section 409A of the Code addresses certain non-qualified deferred compensation benefits payable to our executives and provides that if such benefits do not comply with Section 409A, they will be taxable in the first year they are not subject to a substantial risk of forfeiture. In such case, our executives would be subject to regular federal income tax, interest and an additional federal income tax of 20% of the benefit includible in income. We have generally designed our executive compensation plans and agreements in a manner that complies with Section 409A.

 

We have granted stock options as incentive stock options in accordance with Section 422 of the Code subject to the volume limitations contained in the Code. Generally, the exercise of an incentive stock option does not trigger any recognition of income or gain to the holder. If the stock is held until at least one year after the date of exercise (or two years from the date the option is granted, whichever is later), all of the gain on the sale of the stock, when recognized for income tax purposes will be capital gain, rather than ordinary income to the recipient. Consequently, we do not receive a tax deduction. For stock options that do not qualify as incentive stock options, we are entitled to a tax deduction in the year in which the stock options are exercised equal to the spread between the exercise price and the fair market value of the stock for which the stock option was exercised. The holders of the non-qualified stock options are generally taxed on this same amount in the year of exercise.

 


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SUMMARY DIRECTOR AND EXECUTIVE COMPENSATION

 

The following table sets forth the compensation paid or earned by each named executive officer for the years ended June 30, 2018.

 

SUMMARY COMPENSATION TABLE

                   

Name and
Principal Position

Year

Salary

  ($)

Bonus

  ($)

Stock Awards

  ($)

Option Awards

  ($)(5)

Non-Equity Incentive

Plan Compensation

  ($)

Nonqualified

deferred

compensation

earnings

($)

All

Other Compensation 

($)(6)

Total

  ($)

 

Bradley C. Robinson (1)

 

2018

 

300,000

 

25,000

 

 -0-

 

 -0-

 

-0-

 

-0-

 

-0-

 

325,000

 

 

 

 

 

 

 

 

 

 

Simon Brewer (2)

2018

62,500

-0-

-0-

50,434

-0-

-0-

-0-

112,934

 

 

 

 

 

 

 

 

 

 

Eric Olson (3)

2018

76,667

-0-

-0-

279,960

-0-

-0-

-0-

356,627

 

 

 

 

 

 

 

 

 

 

Michael Dey, Ph.D (4)

2018

-0-

-0-

  -0-

589,372

-0-

-0-

-0-

589,372

 

 

 

 

 

 

 

 

 

 

(1) Mr. Robinson is our Chief Executive Officer, President, and Director

(2) Mr. Simon Brewer is our Chief Financial Officer  

(3) Eric Oon is our Executive Vice-president

(4) Michael Dey, PhD is our Chief Executive Officer of our wholly-owned subsidiary, Predictive Therapeutics, Inc.

(5) The amounts in the “Option Awards” column reflect the aggregate grant date fair value of vested awards of stock options vested pursuant to our long-term incentive plans during the periods reported above, computed in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. The assumptions made in the valuation of our vested option awards and the material terms of option awards are disclosed in Note 12 to our June 30, 2018 financial statements.

(6) Does not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is more than $10,000.


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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

The following table provides information on the holdings of stock options by the named executive officers as of June 30, 2018.

         

 

Name

Number of Securities Underlying Unexercised Options Exercisable

Number of Securities Underlying Unexercised Options Unexercisable

 

Option Exercise Price ($)

 

Option Expiration Date

Bradley C. Robinson

-0-

-0-

-0-

-0-

Simon Brewer

50,000

250,000

$.80

December 19,2027

Paul Evans

250,000

750,000

$.78

December 20, 2027

Eric Olson

-0-

-0-

-0-

-0-

Michael Dey, Ph.D.

687,500

62,500

$.50

August 1, 2027

 

Executive Compensation Report

 

The Board has reviewed the Compensation Discussion and Analysis and discussed that Analysis with management. Based on its review and discussions with management, the Board included the Analysis in this Registration Statement on Form 10 for the year ended June 30, 2018. This report is provided by the following directors, who comprise all of the members of the Board.

 

Compensation Committee Interlocks and Insider Participation

 

As of December 1, 2018, we do not have a Compensation Committee. The Board of Directors performs the functions of the Compensation Committee. The Board consists of John Sorrentino (Chairman), Bradley C. Robinson, Michael Dey and Merle Ferguson. With the exception of Mr. Robinson, who is the Chief Executive Officer of the Company, and Mr. Dey, who is the CEO of Predictive Therapeutics, LLC and a director, no officers participated in the deliberations of the Board concerning executive compensation.

 

With the exception of Mr. Robinson and Mr. Dey, no member of the Board was at any time in 2018 or at any other time was an officer or employee of the Company and no member had any relationship with the Company requiring disclosure as a related-person transaction in the section “Certain Relationships and Related Transactions.” No executive officer of the Company has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board of Directors at any time in 2018.

 

DIRECTOR COMPENSATION

 

We did not pay any compensation to Mr. Ferguson, our only non-employee director, for the year ended June 30, 2018. Mr. Robinson and Mr. Dey did not receive additional compensation for their service as a directors.

 

ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE .

 

In June 2017, Predictive entered into an Independent Sales Representation and Support Agreement (the “Sales Agreement”) with Flagshipsailsrx, LLC (“Flagship”). Flagship is owned, in part, by Tim Lacy, the Company’s Executive Vice President and President of the Company’s Predictive Biotech, Inc. subsidiary. Under the terms of the Sales Agreement Flagship is acting as an independent sales management and sales representative. Flagship’s duties include marketing and selling Predictive products, creating and updating sales and marketing plans and budgets, staffing certain leadership, sales and marketing personnel, developing marketing materials, developing promotional and marketing materials, and assisting Predictive with other related projects as identified by Predictive. The term of the Sales Agreement ends on February 28, 2019. As compensation for services rendered, Predictive is obligated to pay Flagship cash fees totaling $994,458 for services rendered in calendar 2017, $1,196,136 for services rendered in calendar 2018 and $199,356 for services rendered in calendar 2019.  In addition, upon the achievement of certain sales milestone, Predictive is required to issued to Flagship warrants exercisable for up to 12,000,000 shares of Predictive common stock at an exercise price of $.50 per share. Flagship has met all required milestones and Predictive issued to Flagship said warrants.


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Except as otherwise indicated herein, there have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

ITEM 8.  LEGAL PROCEEDINGS .

On or about July 13, 2018, RTJ, LLC and two of its principals filed a lawsuit against Predictive Therapeutics LLC, Predictive Biotech, Inc., both subsidiaries of Predictive Technology Group, Inc., and Jack Turner, Jr., an employee of Predictive Biotech, Inc. The plaintiffs had acted in a distributor capacity. The relationship was terminated. Plaintiffs are alleging breach of contract, promissory estoppel, unjust enrichment, fraud, breach of fiduciary duty, defamation, false light, and tortious interference. Based on the information available to us, we do not believe any of the RTJ proceedings will have a material adverse effect on our business, results of operations, financial position or liquidity. Further, we deny the allegations in the complaint, have not discovered any evidence of wrongdoing with respect to the allegations and will vigorously defend against these allegations. As this claim is neither probable nor estimable, we expect no material financial impact as a result of this Action.  

ITEM 9.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS   

 

(a)  Market Information

 

Our common stock is traded on the OTC Markets under the symbol PRED.  

 

The high and low common stock sales prices per share were as follows:

                                         

 

 

First

Quarter

 

 

Second

Quarter

 

 

Third

Quarter

 

 

Fourth

Quarter

 

 

Full Year

 

2018 (through December 1, 2018)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

$

3.65

   

$

1.28

   

$

2.32

   

$

1.91

   

$

3.65

 

Low

 

 

1.18

     

0.88

     

0.86

     

0.84

     

0.84

 

2017

 

 

                                   

High

 

$

1.82

   

$

1.12

   

$

1.18

   

$

1.58

   

$

1.82

 

Low

 

 

0.51

     

0.24

     

0.70

     

0.78

     

0.24

 

 

The 2015 Stock Option Plan authorized the issuance of up to fifteen percent of the total outstanding shares. As of December 1, 2018, options exercisable for 5,783,500 shares had been granted under the Plan. In addition, the Company has outstanding warrants exercisable for 59,018,520 shares of common stock at strike prices of between $.50 and $.92 per share. We have granted piggy-back registration rights, subject to certain restrictions, for 14,000,000 shares of common stock that will be issued upon exercise of outstanding warrants.  


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Securities Authorized for Issuance Under Equity Compensation Plans  

 

We have the following shares authorized for issuance under equity compensation plans.

EQUITY COMPENSATION PLAN INFORMATION

       

 

 

 

 

 

Plan Category

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted-average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column a)

 

(a)

(b)

(c)

Equity Compensation Plans Approved by Security Holders

69,802,020

$0.65

(1)

Equity Compensation Plans Not Approved by Security Holders

0

0

0

 

 

 

 

(1) Fifteen percent of the total outstanding shares. As of December 1, 2018, there were 239,046,403 shares outstanding which results in: (i) options exercisable for 5,783,500 shares of common stock being authorized under the Plan and (ii) options exercisable for 30,073,460 shares of common stock remaining available for issuance as of such date.

 

(b)   Holders: as of December 1, 2018, there are 280 shareholders of record and they hold approximately 239,046,403 shares of the Company’s common stock.  Each broker dealer or a clearing corporation that holds shares for customers is counted as a single shareholder of record.

 

(c)  Dividends have not been declared or paid on the Company's equity securities. .

   

ITEM 10.  RECENT SALES OF UNREGISTERED SECURITIES .

 

During the past three years the Company issued (or is obligated to issue) the following shares:

 

1)Warrants exercisable for 2,400,000 shares of common stock were issued to Flagshipsailsrx, LLC (“Flagship”), an accredited investor, in March 2018 (the “2018 Warrants”). The warrants were issued to Flagship in return for its services as manager of the Company’s sales team, distributors and marketing efforts. In February 2017, the Company agreed to issue the 2018 Warrants when annualized sales, computed on a monthly basis, reached $20,000,000. This milestone was achieved in March 2018. In February 2017, the Company issued to Flagship warrants exercisable for 4,800,000 shares of common stock was part of the original consideration to retain Flagship to manage the Company’s sales, distribution and marketing efforts. In August 2017, the Company issued to Flagship warrants exercisable for 4,800,000 shares of common stock as a bonus that was agreed when annualized sales, computed on a monthly basis, reached $10,000,000. All of the above referenced warrants are exercisable at $.50 per share and expire between June, 2022 and August, 2022. There are no additional milestones that will require the issuance of additional securities to Flagship under existing arrangements.



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2) Warrants exercisable for 300,000 shares of common stock were issued to an accredited consultant for consulting services relating to the Company’s existing and proposed laboratory facilities. The warrants were issued in October 2018. The warrants are exercisable at $.94 per share and expire on September 1, 2022.

3) Warrants exercisable for 14,000,000 shares of common stock and 1,000,000 shares of common stock were issued to Juneau Bioscience, LLC in December, 2017 for consideration of amending the license agreements between Juneau and the Company to reduce the royalty rate under and expand the scope of the licenses to include the entire field of endometriosis and pelvic pain. The above referenced warrants are exercisable at $.80 per share and they expire on September 1, 2022.

4) In August, 2018, the Company entered into an agreement to issue warrants exercisable for 16,500,000 shares of common stock. These warrants were issued to acquire certain assets of Taueret Laboratories, LLC.  The warrants are exercisable at $.92 per share and expire on September 1, 2022.

5) In August, 2018, the Company entered in into Consulting Agreement for various business development, marketing and consulting services and for those services the Company granted warrants exercisable for 5,250,000 shares of common stock. Warrants to acquire 250,000 shares vested upon issuance and the remainder of the warrants vest over a three-year period subject to accelerated vesting upon the happening of certain events. The warrants expire on the earlier of (i) the five-year anniversary of the date of issuance or (ii) the date the Consulting Agreement is terminated.

6) From October, 2017 to present, options were granted to employees that are exercisable for up to 4,988,500 shares of common stock. The options are exercisable at prices of between $.50 and $1.23 per share.

7) In November, 2015, 12,280,242 shares of restricted common stock were issued to accredited investors in connection with Share Exchange Agreements pursuant to which the Company acquired membership interests in Juneau Biosciences, LLC.

8) In March, 2016, 9,500,000 shares of restricted common stock were issued to accredited investors in a connection with Share Exchange Agreements pursuant to which the Company acquired Renovo Biotech, Inc (now Predictive Biotech, Inc.)

9) In August, 2016, 5,740,760 shares of restricted common stock were issued in connection with the acquisition of certain debt obligations of Juneau Biosciences, LLC.

10) In August, 2016, 550,000 shares of restricted common stock were issued in connection with the acquisition of intellectual property from accredited investors.

11) From August, 2017 to December 1, 2018, 1,802,917 shares of restricted common stock were issued in connection with management advisory services performed for the benefit of the Company.

12) In December, 2017, 5,822,206 shares of restricted common stock were issued to accredited investors in connection with the acquisition of a strategic partner.

13) From January, 2016 to December, 2017, 16,288,520 shares of restricted common stock together with warrants exercisable for 15,948,520 shares of common stock were sold to accredited investors at a price of $.50 per unit. The warrants are exercisable through August 1, 2021.

14) In May, 2018, 727,917 shares of restricted common stock were issued as payment for services in the development of protocols for the use of HCT/P’s in specified medical procedures.

15)In August, 2018, 50,000 shares of restricted common stock were issued to a supplier to secure raw materials for the HCT/P segment of business.

16) In August, 2018, 15,500,000 shares of restricted stock were issued to accredited investors in a connection with Securities Purchase Agreement to acquire the assets of Inception DX, which included a CLIA laboratory in addition to cash, protocols, equipment and other assets.


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All securities issued by us in the transactions noted above are deemed "restricted securities" within the meaning of that term as defined in Rule 144 of the Securities Act and have been issued pursuant to the "private placement" exemption under Section 4(a)(2) of the Securities Act. Such transactions did not involve a public offering of securities, no underwriter was involved with the transactions, and no commissions were paid. All purchasers in the private placement had access to information on the Company necessary to make an informed investment decision. We have been informed that all purchasers are able to bear the economic risk of their investment and are aware that the securities were not registered under the Securities Act and cannot be re-offered or re-sold unless they are registered or are qualified for sale pursuant to an exemption from registration. The transfer agent and registrar of the Company were instructed to mark "stop transfer" on its ledger regarding these shares. 

Neither the Company nor any person acting on its behalf offered or sold the securities by means of any form of general solicitation or general advertising.

The securities were acquired for the purchasers own account and not with the view to, or for resale in connection with any distribution. A legend was placed on the certificates issued stating that the securities have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption there from.

ITEM 11.  DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED

Common Stock

We are authorized to issue 900,000,000 shares of common stock with a par value of $.001 per share. As of December 1, 2018, 239,046,403 shares of our common stock were issued and outstanding. Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by the owners thereof at meetings of the stockholders.

Our shareholders have no pre-emptive rights to acquire additional shares of common stock. The common stock is not subject to redemption or any sinking fund provision, and it carries no subscription or conversion rights. In the event of our liquidation, the holders of the common stock will be entitled to share equally in the corporate assets after satisfaction of all liabilities.

The description contained in this section does not purport to be complete. Reference is made to our certificate of incorporation and bylaws which are available for inspection upon proper notice at our offices, as well as to the Nevada Revised Statutes for a more complete description covering the rights and liabilities of shareholders.

Holders of our common stock:

(i) have equal ratable rights to dividends from funds legally available therefore, if declared by our Board of Directors;

(ii) are entitled to share ratably in all our assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up;

(iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions; and

(iv) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders.

The holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of outstanding shares voting for the election of directors can elect all of our directors if they so choose and, in such event, the holders of the remaining shares will not be able to elect any of our directors.

Preferred Stock

We may issue up to 10,000,000 shares of our preferred stock, par value $0.001 per share, from time to time in one or more series. As of the date of this registration statement, no shares of preferred stock have been issued. Our Board of Directors, without further approval of our stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series of preferred stock that may be issued in the future. Issuances of shares of preferred stock, while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our common stock and prior series of preferred stock then outstanding.


-59-

Dividends

We have no history of paying dividends, moreover, there is no assurance that we will pay dividends in the future.

Shares Eligible for Future Sale

Our shares are thinly traded on the OTC Market, and we cannot assure you that a significant public market for our common stock will be developed. Sales of common stock in the public market, or the possibility sales occurring, could adversely affect prevailing market prices for our common stock or our future ability to raise capital through an offering of equity securities.

As of December 1, 2018, we have 157,805,580 outstanding shares of common stock that are “restricted” as that term is defined in the Securities Act. We have granted piggy-back registration rights, subject to certain restrictions, for 14,000,000 shares of common stock that will be issued upon exercise of outstanding warrants. Except as noted above, we have not entered into any other agreements to register any of our issued and outstanding shares, although such agreement may be entered into in the future, or such an agreement may be made part of the terms of a future combination transaction.

ITEM 12.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our bylaws and articles of incorporation provide that our officers and directors are indemnified to the fullest extent provided by the Nevada Revised Statutes ("NRS").

Under the Nevada Revised Statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's Articles of Incorporation. Our Articles of Incorporation do not specifically limit the directors' immunity. The NRS excepts from that immunity (a) a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

The Company has purchased insurance for the directors and officers that may provide coverage for their acts as an officer or director of the Company. The Company has also entered into indemnification agreements with its officers and directors, which may also provide coverage for their acts as officers and directors.

  ITEM 13.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Financial statements and supplementary data required by this Form are included herein as a  separate section  of this Form 10, beginning on page F-1, and are incorporated in this Item 13 by reference.

ITEM 14.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES .

There have been no changes in accountants and there are no disagreements with the accountants on accounting and financial disclosures.


-60-

 ITEM 15.  FINANCIAL STATEMENTS AND EXHIBITS .

 

(a) Index to Financial Statements

Financial statements on beginning on page F-1

(b) Index to Exhibits.


 

Exhibit No.

Identification of Exhibit

 

3.1

Articles of Amendment toArticles of Incorporation.

3.2

Bylaws.

4.1

Specimen Certificate of Common Stock

10.1

Second Amended and Restated License Agreement by and between the Company and Juneau Biosciences, LLC. effective March 31, 2018.

10.2

Second Amended and Restated Subscription Agreement by and between the Company and Juneau Biosciences, LLC, effective August 22, 2018.

10.3

Intellectual Property Purchase and Services Agreement by and between the Company and Taueret Laboratories, L.L.C., Kenneth Ward and Rakesh Chettier, effective August 1, 2018.

10.4

Agreement and Plan of Merger between the Company, Predictive Acquisitions, Inc., and Regenerative Medical Technologies, Inc., dated July 21, 2018.

10.5

Securities Purchase Agreement between the Company and the members of Inception DX, LLC, effective August 22, 2018

10.6

FLAGSHIPSAILSRX, LLC Sales Support Agreement, dated June 15, 2017

10.7

Amended License Agrement between Company and Juneau Biosciences, LLC, effective August 1, 2016.

10.8

Lease between the Company and Eastland Regency, L.C., dated June 30, 2017

10.9

Lease between the Company and Paradigm Resources, LC, effective June 21, 2018

10.10

Amendment No. 1 to Lease between the Company and Paradigm Resources, LC, dated October 1, 2018

10.11

Amendment No. 2 to Lease between the Company and Paradigm Resources, LC, dated October 10, 2018

10.12

Form of Employment Agreement

21.1

Subsidiaries of Registrant

23.1

Auditor Consent- BF Borgers

 

SIGNATURES


In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.


PREDICTIVE TECHNOLOGY GROUP, INC.


Date: December 6, 2018

By: /s/ Bradley C. Robinson

    Bradley C. Robinson, Chief Executive Officer



-61-


FINANCIAL STATEMENTS

 

PREDICTIVE TECHNOLOGY GROUP, INC

 

FINANCIAL REPORTS

AT

SEPTEMBER 30, 2018

(Unaudited)



TABLE OF CONTENTS

     

 

Balance Sheets at September 30, 2018 (Unaudited) and Jume 30, 2018    

F-2

   

Statements of Operations for the Three Months Ended   September 30, 2018 and 2017- Unaudited  

F-3

     

 

Statements of Cash Flows for the Three Months Ended September 30, 2018 and 2017-Unaudited

F-4

 

 

 

  Notes to Financial Statements   F-5-F-27


F-1

 

PREDICTIVE TECHNOLOGY GROUP, INC.

Consolidated Balance Sheets

September 30, 2018 and June 30, 2018

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

 

 

 

 

 

 

 

2018

 

2018

Assets

 

 

 

 

 

 

Unaudited

 

Audited

 

Current assets

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 $    1,056,780

 

 $   1,206,139

 

 

Accounts receivable

 

       1,553,835

 

         719,068

 

 

Inventory

 

 

 

       3,383,654

 

      3,791,374

 

 

Other current assets

 

            97,752

 

           17,551

 

Total current assets

 

 

       6,092,021

 

      5,734,132

 

 

 

 

 

 

 

 

 

 

 

 

Fixed assets, net of depreciation

       1,918,234

 

         773,870

 

License agreements, net of amortization

     20,448,953

 

    20,962,620

 

Patents, net of amortization

       7,710,687

 

      7,761,187

 

Trade secrets, net of amortization

     34,692,259

 

      8,096,311

 

Equity method investments

     45,690,062

 

    45,564,845

 

Other long-term assets

 

            24,500

 

           12,000

Total assets

 

 

 

 

 

 $116,576,716

 

 $ 88,904,964

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholder's equity

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

 

 $    2,495,670

 

 $   1,322,149

 

 

Accrued liabilities

 

          707,518

 

      1,034,905

 

 

Subscription payable

 

       3,444,947

 

      4,409,390

 

Total current liabilities

 

       6,648,135

 

      6,766,444

 

 

Long-term subscription payable

     10,694,310

 

    10,965,610

 

Total liabilities

 

 

 

     17,342,445

 

    17,732,054

 

 

 

 

 

 

 

 

 

 

 

 

Stockholder's equity

 

 

 

 

 

 

 

Common stock, par value $0.001, 238,846,403,

 

 

 

 

 

 

and 224,496,093 shares issued and out-

 

 

 

 

 

 

 standing at September 30, 2018 and June 30, 2018;

 

 

 

 

 

 900,000,000 shares authorized

          238,846

 

         224,496

 

 

Additional paid-in capital

   138,175,710

 

  108,072,428

 

 

Common stock subscriptions receivable

        (700,000)

 

     (1,025,000)

 

 

Accumulated deficit

 

   (38,332,464)

 

   (35,978,862)

 

Total controlling interest

 

     99,382,092

 

    71,293,062

 

Non-controlling interest

 

        (147,821)

 

        (120,152)

 

Total stockholder's equity

     99,234,271

 

    71,172,910

Total liabilities and stockholder's equity

 $116,576,716

 

 $ 88,904,964

 

 

 

 

 

 

 

 

 

 

 


See accompanying notes to the consolidated financial statements

F-2

 

PREDICTIVE TECHNOLOGY GROUP, INC.

Consolidated Statements of Operations

For the periods ending September 30, 2018 and September 30, 2017

 

 

 

 

 

 

 

 

 3 months ended,

 

 

 

 

 

 

 

 

September 30,

 

September 30,

 

 

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Revenue from operations (net)

 $    8,063,800

 

 $   2,005,171

 

Cost of goods sold

 

 

       2,866,734

 

899,079

 

 

Gross profit from operations

       5,197,066

 

      1,106,092

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Sales and marketing expense

       2,422,718

 

         549,549

 

 

General and administrative

       2,563,440

 

359,394

 

 

Research and development

          605,390

 

           12,500

 

 

Amortization and depreciation expense

       1,672,430

 

         748,653

 

 

 

Total operating expense

       7,263,978

 

      1,670,096

 

 

Loss from operations

     (2,066,912)

 

        (564,004)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

Interest income

 

                 423

 

           93,224

 

 

 

Equity method investment gain / (loss)

        (314,782)

 

                   -   

 

 

 

Other income (expense)

                   -   

 

                   -   

 

 

Net income / (loss)

 

 $  (2,381,271)

 

 $     (470,780)

 

 

 

Net loss non-controlling interest

          (27,669)

 

            (8,124)

 

 

Net loss controlling interest

 $  (2,353,602)

 

 $     (462,656)

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share

 

 

 

 

 

 

Basic and diluted

 

            (0.011)

 

            (0.002)

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares (in thousands)

 

 

 

 

 

Basic and diluted

 

          223,254

 

         201,978

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements

F-3

 

PREDICTIVE TECHNOLOGY GROUP, INC.

Consolidated Statements of Cash Flows (Indirect Method)

For the 3 months ending September 30, 2018 and September 30, 2017

 

 

 

 3 months ended,

 

 

 

September 30,

 

September 30,

 

 

 

2018

 

2017

 

 

 

Unaudited

 

Unaudited

 

Cash flows from operating activities

 

 

 

 

Net earnings (loss)

 $  (2,389,580)

 

 $     (462,656)

 

Adjustments to reconcile net earnings (loss) to

 

 

 

 

 

net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

       1,671,438

 

         748,653

 

 

Stock, options and/or warrants exchanged for services

          528,344

 

 -

 

 

Accrued interest income

                   -

 

          (93,000)

 

 

Non cash compensation to employees

170,104

 

  -

 

 

Change in equity method investment

          314,782

 

  -

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

        (834,767)

 

          (75,797)

 

 

Inventory

          407,719

 

        (428,962)

 

 

Prepaid expenses

          (80,200)

 

          (94,890)

 

 

Other assets

 (24,500)

 

  -

 

 

Accounts payable

       1,176,451

 

         327,824

 

 

Accrued liabilities

        (330,315)

 

        (372,635)

 

Net cash provided (used) by operating activities

          609,477

 

        (451,463)

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchases of property and equipment

     (1,226,507)

 

        (142,779)

 

 

Capitalization of license agreement costs

                   -

 

     (1,955,472)

 

 

Common stock issued for acquisition

     14,260,000

 

  -

 

 

Acquistion of minority interests

        (440,000)

 

 -

 

 

Acquisition of Incpetion Dx

   (12,320,020)

 

-

 

 

Capitalization of patent application costs

        (140,675)

 

-

 

Net cash provided (used) by investing activities

          132,798

 

     (2,098,251)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Cash paid for subscription payable

     (1,216,634)

 

-

 

 

Common stock issued for services

  -

 

 -

 

 

Common stock and warrants issued for cash

          325,000

 

      2,695,000

 

Net cash provided (used) by financing activities

        (891,634)

 

      2,695,000

 

 

 

 

 

 

 

Net increase (decrease) in cash

        (149,359)

 

         145,286

 

Cash at beginning of period

 $    1,206,139

 

 $      968,202

 

Cash at end of period

 $    1,056,780

 

 $   1,113,488

 

 

 

 

 

 

 

Non-cash financing and investing activities:

 

 

 

 

 

Warrants issued for trade secrets

     15,160,385

 

  -   

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements

F-4

 

Notes to Consolidated Financial Statements

NOTE 1- BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS DESCRIPTION:

Predictive Technology Group, Inc. together with its subsidiaries (collectively, “PTG” or the “Company”) develops and commercializes discoveries and technologies involved in novel molecular diagnostic and pharmaceutical therapeutic/Human Cells, Tissues and Human Cellular and Tissue-Based Products (“HCT/Ps”). The Company uses this information as the cornerstone in the development of new diagnostics that assess a person’s risk of disease and pharmaceutical therapeutics and HCT/Ps designed to effectively prevent and treat the disease.  The Company’s corporate headquarters are located in Salt Lake City, Utah.

SEGMENT INFORMATION :

In accordance with ASC 280-10-50, Segment Reporting, operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.  The Company operates in two reportable segments: HCT/Ps and diagnostics and therapeutics. Predictive Biotech’s HCT/Ps are processed in our FDA registered lab. Our minimally manipulated tissue products are prepared utilizing proprietary extraction methods that reduce the loss of important scaffolding, growth factor and general cytokines and are intended for homologous use.  Predictive Technology's diagnostics and therapeutics uses data analytics for disease identification and subsequent therapeutic intervention through unique novel gene-based diagnostics, biotechnology treatments and companion therapeutics.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 months ended

 

Year ended

 

 

 

 

 

 

 

 September 31,

 

 June 30,

 

 

 

 

 

 

 

2018

 

2018

Segment revenues

 

 

 

 

Regenerative medicine products and HCT/Ps

 $                         8,063,800

 

 $              16,624,336

 

Diagnostics and therapeutics

 -

 

  -

 

 

Total consolidated revenues

 $                        8,063,800

 

 $              16,624,336

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss)

 

 

 

 

Regenerative medicine products and HCT/Ps

 $                             673,003

 

 $              (5,821,549)

 

Diagnostics and therapeutics

                          (2,739,916)

 

                 (6,503,628)

 

 

Total consolidated operating income (loss)

 $                       (2,066,913)

 

 $            (12,325,177)

 

 

 

 

 

 

 

 

 

 

Reconciliation of segment operating income

 

 

 

 

to income before income taxes

 

 

 

 

Segment operating income

 $                       (2,066,913)

 

 $            (12,325,177)

 

Equity method gain/(loss)

                              (314,782)

 

                     (899,950)

 

Impairment charges

 -

 

 -

 

Interest income / (expense)

                                         424

 

                       199,953

 

 

Segment income before income taxes

 $                       (2,381,271)

 

 $            (13,025,174)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-5

 

 

 

 

 

 

 

 

3 months ended

 

Year ended

 

 

 

 

 

 

 

 September 31,

 

 June 30,

Capital assets, net

2018

 

2018

 

Regenerative medicine products and HCT/Ps

 $        892,584

 

 $    438,277

 

Diagnostics and therapeutics

                             1,025,650

 

                       335,592

 

 

Total capital assets, net

 $      1,918,234

 

 $    773,869

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

 

Regenerative medicine products and HCT/Ps

 $         37,021

 

 $     82,306

 

Diagnostics and therapeutics

                                   45,120

 

                          68,339

 

 

Total depreciation expense

 $         82,141

 

 $   150,645

 

 

 

 

 

 

 

 

 

 

Intangible and equity method investment assets, net

 

 

 

 

Regenerative medicine products and HCT/Ps

 $     7,643,543

 

 $ 8,096,311

 

Diagnostics and therapeutics

                        101,078,430

 

                 74,288,652

 

 

Total intangible and equity method investment assets, net

 $  108,721,973

 

 $82,384,963

 

 

 

 

 

 

 

 

 

 

Amortization expense

 

 

 

 

Regenerative medicine products and HCT/Ps

 $        704,445

 

 $  2,817,786

 

Diagnostics and therapeutics

                                884,851

 

                    1,605,103

 

 

Total amortization expense

 $     1,589,296

 

 $  4,422,889

 

 

 

 

 

 

 

 

 

 

Warrants and options expense (non-cash)

 

 

 

 

Regenerative medicine products and HCT/Ps

 $          55,749

 

 $   8,216,888

 

Diagnostics and therapeutics

                                599,199

 

                    2,310,539

 

 

Total warrants and options expense (non-cash)

 $        654,948

 

 $ 10,527,427

 

 

 

 

 

 

 

 

 

 

F-6

 

BASIS OF PRESENTATION:

This summary of significant accounting policies of the Company is presented to assist in understanding the financial statements.  The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity.  

Fiscal Year End

The Company operates on a fiscal year basis with the fiscal year ending on June 30.

Consolidation

These consolidated financial statements include the financial statements of Predictive Technology Group, Inc. and its wholly owned subsidiaries.  All inter-company accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to the current year presentation.

Cash Equivalents

The Company considers all highly-liquid investments with a maturity of three months or less, when purchased, to be cash equivalents.  The Company places its temporary cash investments with high-quality financial institutions.  Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At September 30, 2018 and June 30, 2018, the Company had $548,530 and $956,139 in excess of the FDIC insured limit.

Going Concern

These financial statements were prepared on a going concern basis.  The going concern basis assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Predictive Biotech, Inc. (“Predictive Biotech”), a subsidiary of PTG, began operations during the fiscal year ended June 30, 2017.   Since inception of operations, revenues have exceeded cash expenses and such excess contributes to the overall operations of PTG.

In addition, PTG has raised sufficient capital through stock subscriptions to fund its obligations under its licenses and other agreements for the development of molecular diagnostics products under license in Predictive Therapeutics, LLC (“Predictive Therapeutics”), a subsidiary of PTG.  It is anticipated that the initial sale of such products will take place in the second half of calendar year 2018 and accelerating through the first half of calendar 2019.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount.  At the present time most sales are through credit cards, however from time to time, credit is granted to customers on a short-term basis without requiring collateral, and as such, these accounts receivable, do not bear interest, although a finance charge may be applied to such receivables that are past due.    The Company has in place credit policies and procedures and approval process for sales returns and credit memos.

Inventories

Inventories consist primarily of HCT/Ps produced by Predictive Biotech.  We value inventory at the lower of cost or net realizable value. We determine the cost of inventory using the standard-cost method, which approximates actual cost based on a first-in, first-out method.  All other costs, including administrative costs are expensed as incurred.  

F-7

 

We analyze our inventory levels annually and write down inventory that has a cost basis in excess of its expected net realizable value, or that is considered in excess of normal operating levels, as determined by management.  The related costs are recognized as cost of goods sold in the Consolidated Statements of Operations.

Stock Subscriptions Receivable

Stock subscriptions are recorded as contra-equity on the day the subscription agreement is signed and accepted by the Company.  All stock subscribed as of the date of these financial statements has been collected.  The stock is not issued until subscriptions are collected.

Prepaid Expenses

Amounts paid in advance for expenses are accounted for as prepaid expenses and classified as current assets if such amounts are to be recognized as expense with the current period.

Property, Plant and Equipment

Lab equipment, furniture and computer equipment are stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method based on the lesser of estimated useful lives of the related assets or lease terms. Lab equipment items have depreciable lives of 5 years, furniture items have depreciable lives of 5 to 7 years, and computer equipment items have depreciable lives of 3 years. Repairs and maintenance costs are charged to expense as incurred.

Intangible Assets and Other Long-Lived Assets

Intangible and other long-lived assets are comprised of acquired patents, licenses, trade secrets and other intellectual property.  Acquired intangible assets are recorded at fair value and amortized over the shorter of the contractual life or the estimated useful life.  

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment, and definite-lived intangibles subject to depreciation and amortization, as well as acquisition costs of subsidiaries, are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated future undiscounted net cash flows of the related asset or group of assets over their remaining lives.  

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued the converged standard on revenue recognition with the objective of providing a single, comprehensive model for all contracts with customers to improve comparability in the financial statements of companies reporting using International Financial Reporting Standards and U.S. GAAP. The standard contains principles that an entity must apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity must recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. An entity can apply the revenue standard retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings (modified retrospective method).


F-8

 

The standard was effective for the Company beginning July 1, 2018. The Company elected to adopt the standard using the modified retrospective approach. This approach was adopted because the Company believes the new Standard has very little impact on revenue recognition for the current products sold.

The Company generates revenue by selling Human Cell and Tissue Products (HC/TP’s) to clinics and doctors. Revenue from these sales are recorded at the invoiced amount net of any discounts or contractual allowances. The Company has determined that the shipment of the product indicates transfer of control for revenue recognition purposes.

We have evaluated each of the five steps in Topic 606, which are as follows:

1) Identify the contract with the customer;

2) Identify the performance obligations in the contract;

3) Determine the transaction price;

4) Allocate the transaction price to the performance obligations; and

5) Recognize revenue when (or as) performance obligations are satisfied.

Our conclusion is that we have identified similar performance obligations under ASC Topic 606 as compared with deliverables and separate units of account previously identified under the old standard. As a result, the timing of our revenue appears to remain the same in comparison to the prior revenue recognition guidance.

We sell our products through a direct sales force and through distribution in the U.S.  Revenues from these customers are recognized when all the following steps identified above have occurred.  These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer.  We reserve for sales returns, including returns related to defective products, as a reduction in net sales, based on our historical experience.  These reserves are recorded as a reduction in net sales and are not considered material to our consolidated statements of income for 3 months ended September 30, 2018 and for the year ended June 30, 2018. 

The Company also has significant experience with historical discount patterns and uses this experience to finalize transaction prices. In accordance with ASU 2016-12, the Company would elect to exclude from the measurement of transaction price, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for e.g. sales tax, value added tax etc.  However, as our business is thus far not with the end consumer, the collection of taxes is unnecessary.

The Company has also elected to apply the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects cash directly from customers immediately adjacent to shipment.

There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. We are currently evaluating our control framework for revenue recognition and identifying any changes that may need to be made in response to the new guidance. Disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance.

 

F-9

 

Shipping and Handling

We bill our customers for shipping and handling charges, which are included in net sales for the applicable period, and the corresponding shipping and handling expense is reported in cost of sales.

Research and Product Development Costs

The Company expenses research and product development costs as incurred.

Product Liability and Warranty Costs

The Company maintains product liability insurance and has not experienced any related claims from its products offerings. The Company also offers a warranty to customers providing that its products will be delivered free of any materials defects.  There have been no material costs incurred since inception based on estimated return rates.  The Company reviews the adequacy of its recorded accrual on a quarterly basis.

Income Taxes

Deferred tax assets and liabilities are recorded to reflect the future tax consequences attributable to the effects of differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax purposes. Deferred taxes are calculated by applying enacted statutory tax rates and tax laws to future years in which temporary differences are expected to reverse. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the rate change is enacted.  

Measurement of Fair Value

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values.  Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined in the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

F-10

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods.  Key estimates in the accompanying consolidated financial statements include, among others, revenue recognition, allowances for doubtful accounts and product returns, provisions for obsolete inventory, valuation of long-lived assets, and deferred income tax asset valuation allowances.  Actual results could differ materially from these estimates.

Recently Issued Financial Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. ASU 2016-02 will be effective for the Company beginning July 1, 2019 and early adoption is permitted. We are currently evaluating the timing of its adoption and the impact of adopting the new lease standard on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01,  Business Combinations (Topic 805): Clarifying the Definition of a Business , which provides guidance to entities to assist with evaluating when a set of transferred assets and activities is a business and provides a screen to determine when a set is not a business. Under the new guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset, or group of similar assets, the assets acquired would not represent a business. Also, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a prospective basis to any transactions occurring within the period of adoption. Early adoption is permitted for interim or annual periods in which the financial statements have not been issued. We do not presently anticipate that the adoption of ASU 2017-01 will have a material impact on our consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16,  Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory , which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 will be effective for us beginning on July 1, 2018. We are currently evaluating the impact of adopting ASU 2016-16 on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15,  Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 will be effective for us beginning on July 1, 2018 with early adoption permitted. We do not presently anticipate that the adoption of ASU 2016-15 will have a material impact on our consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01,  Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,  which amends the guidance regarding the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, ASU 2016-01 clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 will be effective for us beginning on July 1, 2018. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Upon adoption of ASU 2016-01, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. We do not presently anticipate that the adoption of ASU 2016-01 will have a material impact on our financial statements.

In November 2015, the FASB issued ASU 2015-17,  Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , which will require all deferred tax assets and deferred tax liabilities to be presented as noncurrent within a classified balance sheet. ASU 2015-17 was effective for us as of July 1, 2017. ASU 2015-17 may be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. We have elected not to early adopt ASU 2015-17. We do not anticipate that the adoption of ASU 2015-17 will have a material impact on our financial statements.

F-11

 

In May 2014, the FASB issued ASU 2014-09,  Revenue from Contracts with Customers (Topic 606) , to update the financial reporting requirements for revenue recognition. Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance is effective for us beginning on July 1, 2018, and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. We have evaluated the adoption of this standard on a retrospective basis and believe it will have no material impact to what has been reported.  Therefore, the Company will adopt this standard on a modified retrospective basis.

NOTE 2- BUSINESS COMBINATIONS AND EQUITY METHOD INVESTMENTS

Predictive Therapeutics, LLC

On April 15, 2015, Global Enterprises Group, Inc. (“GLHO”) acquired 100% of Predictive Therapeutics, LLC.  After the acquisition, GLHO changed its name to Predictive Technology Group, Inc.   On October 31, 2015, the initial agreement was modified to make certain technical corrections and adjustments for contingencies which were not met at that date.  The Company issued a total of 131,058,458 shares of common stock in this transaction.  Under this merger agreement, there was a change in control which has been treated for accounting purposes as a reverse recapitalization.

LifeCode Genetics, Inc.,

On November 6, 2015, the Company announced the acquisition of LifeCode Genetics, Inc. (“LifeCode”) as its wholly owned subsidiary. LifeCode holds a strategic equity investment of 10.169% in Juneau Biosciences, LLC (“Juneau”).   In addition to the development of an assay and related services for the prognosis and monitoring of endometriosis in the infertility market which the Company has licensed, Juneau is developing technologies for the diagnosis of other women’s health issues.

The Company issued 6,561,870 common shares to acquire LifeCode and has recorded the acquisition as a Portfolio Investment with a valuation set at $16,404,675.

A share exchange agreement was entered into on September 22, 2015 that required the Company to issue to LifeCode former shareholders to meet the terms of the exchange agreement an additional 5,718,372 shares.  Using the OTC value (defined as the share price listed on the date of the transaction in the over-the-counter dealer markets and networks) for the additional shares issued results in an increase of value to $30,700,605, an increase of $14,295,930.  A valuation performed by an external outside valuation expert supports a September 22, 2015 value of $16,520,150 resulting in a day one impairment of $14,180,455.

The fair value of the purchase consideration issued to the sellers of LifeCode was allocated to the units of equity acquired.

Juneau reports to its members on a calendar year basis and LifeCode records its distributable share of such reported income using the equity method.

SEC Rule 4-08(g) of Regulation S-X requires a registrant to disclose, in the notes to its financial statements, summarized balance sheet and income statement information of all investees on an aggregate basis, if deemed significant.  See such summaries below.  The numbers presented in the schedules below related to Juneau are audited.

F-12

 

Juneau Biosciences, LLC

BALANCE SHEETS

           
     

December 31,

 

December 31,

     

2017

 

2016

Assets

       

Current Assets

       
 

Cash

 

 $          40,077

 $         69,718

 

Accounts receivable

 

                     -

                    -

 

Inventory

 

                     -

                    -

Total Current Assets

 

             40,077

            69,718

     

 

 

Fixed Assets

 
 

Machinery & equipment

 

           742,642

          742,642

 

Accumulated depreciation

 

          (742,642)

         (742,642)

Total Fixed Assets

 

                     -

                    -

     

Other Assets

 
 

Patents

 

           168,476

          163,426

 

Accumulated Amortization

 

            (64,385)

           (54,673)

 

Security Deposits

 

             39,022

            34,922

Total Other Assets

 

           143,113

          143,675

     

Total Assets

 

 $        183,190

 $       213,393

     

Liabilities

 

Current Liabilities

 
 

Accounts Payable

 

 $          13,321

 $    1,049,529

 

Credit Card Payable

 

                     -

            18,308

 

Salary Payable

 

           898,669

          843,727

 

Accrued Payroll Liabilities

 

                  416

            32,853

 

Accrued Interest

 

           266,320

          860,042

 

Notes Payable

 

        1,051,968

       3,325,072

 

Due to related parties

 

           417,000

          768,968

Total Current Liabilities

 

        2,647,694

       6,898,499

Total Liabilities

 

        2,647,694

       6,898,499

     

Members’ equity

 
 

34,117,912 and  28,138,878 units issued and outstanding at December 31, 2017and December 31, 2016, respectively Additional paid-in capital, investor capital of $26,367,947 and vested unit options of $1,998,980 on December 31, 2017, and

 

                     - 

                    -

 

investor capital $21,036,988, vested warrants at $4,200, and vested unit options of $1,303,074 on December 31, 2016

 

      28,366,927

     22,344,262

 

Retained Deficit

 

     (30,831,431)

    (29,029,368)

Total Members’ Deficit

 

       (2,464,504)

      (6,685,106)

Total Liabilities and Members' Deficit

 

 $        183,190

 $       213,393

     

F-13

 

Juneau Biosciences, LLC

STATEMENTS OF OPERATIONS

             
       

For the Years Ended

       

December 31,

 

December 31,

       

2017

 

2016

License Income (Related Party)

 

 $     1,005,830

 $         877,560

Research & Development (Related Party)

 

 $     1,350,000

 $                    -

Consulting (Related Party)

 

 $          88,237

 $                    -

       

  $     2,444,067

 $        877,560

Operating Expenses

   
 

General and administrative expenses

 

         1,855,485

             596,011

 

General and administrative expenses (Related Party)

 

            671,178

             990,021

 

Stock-based Compensation

 

            695,907

               71,851

 

Travel and entertainment

 

                9,064

                 4,654

 

Interest expense

 

         1,004,791

             463,558

 

Depreciation expense

 

                      -

                 3,377

 

Amortization expense

 

                9,711

                 9,575

Total Operating Expenses

 

         4,246,136

          2,139,047

Loss from opertions

 

        (1,802,069)

        (1,261,487)

Other Income (Expenses)

 
 

Other Income

 

                       6

Total Other Expenses

 

                       6

                      -

Net Loss before Income Taxes

 

        (1,802,063)

        (1,261,487)

Income Tax Benefit

 

                      -

                      -

Net Loss

 

 $    (1,802,063)

 $    (1,261,487)

Net Loss per Common Unit

 

 $             (0.06)

 $             (0.05)

       

Weighted Average Number of Common Units Outstanding

 

       29,341,866

        27,782,968

         

F-14

 

ReNovo Biotech, Inc.

On March 28, 2016, the Company announced the acquisition of ReNovo Biotech, Inc. as its wholly owned subsidiary.  The acquisition provides the Company access to ReNovo Biotech’s cellular, tissue, biomaterial and regenerative medicine products and product candidates. This subsidiary is operated under the name Predictive Biotech, Inc. The Company issued 9,500,000 common shares to effect the acquisition which is recorded at a cost of $14,087,000.

The purchase price was allocated to “trade secrets” including protocols to develop an amniotic allografts and umbilical cord allograft line of products in accordance with the provisions of ASC 805, Business Combinations .  Such trade secrets were determined to be recognizable apart from any form of goodwill and are “technology-based”.

Aggregate amortization expense for the 3 months ended September 30, 2018 and September 30, 2017, was approximately and $704,446, and $850,116 respectively.

Estimated amortization expense for the developed technology consists of the following as of September 30, 2018:

Year Ending June 30

   

2019

 

   2,817,786

2020

 

   2,817,786

2021

 

   2,460,739

     

Inception DX, LLC

On August 22, 2018, the Company entered into an agreement captioned “Securities Purchase Agreement” with the members of Inception DX, LLC (“Inception”), a Utah limited liability company. Under the terms of the agreement, the Company acquired Inception for 15,500,000 shares of common stock. Inception owns laboratory equipment, partial interest in database records for over 31,900,000 individuals for use in genetics research, 400,000 units in Juneau Biosciences, LLC, initial CLIA registration, CLIA lab protocols, and other assets. Once the CLIA registration is completed, Inception will be used as a CLIA laboratory by Predictive Technology Group, Inc. and its affiliates.


F-15

 

The stock issued was for cash, laboratory equipment, Juneau Biosciences, LLC units “Juneau units”, and trade secrets related to the DNA database and protocols related to a future laboratory use as a CLIA lab.  The cash was valued at face value.  The Juneau units was based on the valued assigned when the Company entered into a subscription to purchase units of Juneau ($1.10 per unit).  The laboratory equipment was valued at market value as it had not been used and the Company is aware of the approximate market purchase price.  It will be classified as equipment with a 5-year life.  The proprietary data, DNA library, protocols, research and methods are classified as a trade secret in our industry.  Therefore, the Company determined to allocate the remaining value of the assets purchased as a trade secret with a 15-year life.  

The stock price on 8/22/2018 was $0.92/share.  Indicating a purchase price of $14,260,000 requiring allocation:

 

·

Cash

$799,980

     

·

Lab equipment

700,000

     

·

Investment in minority interest

440,000

     

·

Trade secrets

12,320,000

     
 

        Total Purchase Price

$14,260,000

 

The financial statements presented above reflect the increase of this minority interest investment.  The 400,000 units acquired in this acquisition increased our ownership less than 1%, and as such, the Company has not acquired more than 50% of Juneau, in total, as of September 30, 2018.  The $440,000 allocated to Investment in Minority Interest is offset by our estimated share of the loss in Juneau’s operations for the quarter ended September 30, 2018.


F-16

Taueret Laboratories, LLC

On August 22, 2018, the Company entered into an agreement captioned “Asset Purchase Agreement” (the “Purchase Agreement”) with Taueret Laboratories, LLC and its members. Under the terms of the Purchase Agreement, the Company issued warrants exercisable for 16,500,000 shares of the Company’s common stock. The warrants were exercisable at fair market value of the Company’s common stock on the closing date. In consideration for the warrants, the Company acquired (i) approximately 1,000 degenerative disc disease related DNA samples, related family records, relevant clinical records (including approximately 600 affected probands) and 800 ancestry matched control samples, (ii) whole exome sequencing data on approximately 300 degenerative disc disease samples, over 800 local controls, and published reference populations, together with initial analysis of the markers, (iii) project plan, study paperwork, promotional study and materials used in the research study, (iv) exclusive use of a DNA biobank that has collection over 300,000 samples for multiple diseases that the Company may target, (v) the remaining interest in database records for over 31,900,000 individuals for use in genetics research, and (vi) other assets.

The warrants issued are for proprietary data and methods that are otherwise a trade secret in our industry.  Therefore, the Company determined to classify the assets purchased as trade secrets with a 15-year life.  The Company ran a Black Scholes calculation to determine valuation of the warrants to determine the purchase price of $15,160,385.

NOTE 3- INVENTORIES

 

Period ended

 

Year ended

 

September 30,

 

June 30,

 

2018

 

2018

Finished goods

 $ 2,308,082

 

 $ 1,621,745

Work-in-process

    1,059,063

 

     2,148,989

Shipping supplies

          16,510

 

           20,640

Total inventory on hand

 $ 3,383,655

 

 $ 3,791,374

F-17

 

NOTE 4- PROPERTY, PLANT AND EQUIPMENT, NET

 

Period ended

 

Year ended

 

September 30,

 

June 30,

 

2018

 

2018

Computer equipment

 $         254,464

 

 $  154,132

Furniture

               36,942

 

        36,942

Lab equipment

         1,341,907

 

      504,203

Other fixed assets in progress

            523,920

 

      234,460

 

 $     2,157,233

 

 $  929,737

 

 

 

 

Less accumulated depreciation

          (238,999)

 

   (155,867)

 

 

 

 

Property, plant and equipment, net

 $     1,918,234

 

 $  773,870

 

 

 

 

NOTE 5- INTANGIBLE ASSETS

Predictive Technology Group, Inc. through its subsidiary Predictive Therapeutics, LLC has a number of patents and license agreements categorized under “Intellectual Property” and “Licenses Agreements.”

License Agreements with Juneau

Subsequently, on December 28, 2016, Predictive Therapeutics and Juneau amended and restated the license agreement dated July 9, 2015.  The amended license fees associated with this agreement required minimum monthly payments of $100,000 through April 2017. Beginning in May 2017, minimum monthly payments of $120,000 were required through August 2017, and subsequent payments of $500,000 for the next four consecutive months.  The term of the license is for a term ending at the last expired claim of the licensed patents. In the event of a default, either party may terminate the agreement (i) thirty days after the party who is in material breach receives notice of the breach from the non-breaching party where (ii) the breaching party fails to cure the breach during said thirty-day period.  Additionally, the Company issued additional warrants and stock for the license (see Note 7) in order to finalize a subscription agreement.  This amounted to $18,159,211, in total value, issued in March of 2018.


F-18

 

An additional license fee of $2,000,000 is due and payable once the Company has received profits of $25,000,000 under the agreement.

Upon first commercial sale of the licensed assay, the Company will issue Juneau common shares with a market value of $2,500,000.  Net sales, once commercially available, are split evenly by the Company and Juneau after deducting the cost of the lab test fees, subject to certain minimums.

In addition to the license for the commercialization of assays and related services for the prognosis and monitoring of endometriosis in the infertility market, the Company has entered into a license agreement with Juneau to use the assay as a companion diagnostic test as the rationale for on-label endometriosis therapeutic patents.  This license agreement was amended and restated on December 28, 2016.

The agreement initially required a $250,000 license fee which was paid during 2013 and 2014.  A subsequent milestone payment of 250,000 shares of Company stock was due to Juneau on October 19, 2016 and was previously issued.   Once FDA approval is granted on any companion diagnostic test, a final milestone payment of $250,000 is due.

The agreement requires a 2% royalty for the sale of patented therapeutic products specifically covered by the agreement.

The Company has elected to capitalize the periodic payments when paid, through the development stage, and amortizes the licenses using the expected life of the underlying patents.

Amortization expense for 3 months ended September 30, 2018 and September 30, 2017, was approximately and $513,667, and $65,966 respectively. We did not record any impairment charges during the 3 months ended September 30, 2018 and September 30, 2017.

Estimated amortization expense for the developed technology consists of the following as of September 30, 2018:

Year Ending June 30

   

2019

 

   $ 2,165,560

2020

 

      2,165,560

2021

 

      2,165,560

2022

Thereafter

 

      2,165,560

$  13,074,058

F-19

Other Patents and Technologies

Patents were acquired by Predictive Therapeutics, LLC on September 22, 2015 by issuing 541,325 Class A Units of Predictive Therapeutics and have no contingencies or royalty obligations.  These patents were recorded on Predictive Therapeutics, LLC’s books at a purchase price of $9,750,000.  

Amortization expense for the 3 months ended September 30, 2018 and September 30, 2017 was approximately $191,174, and $158,723, respectively.  We did not record any impairment charges during these periods.

Estimated amortization expense for the developed technology consists of the following as of September 30, 2018:

Year Ending June 30

   

2019

 

   $764,696

2020

 

     764,696

2021

 

794,696

2022

Thereafter

 

     794,696

$7,615,137

NOTE 6 VARIABLE INTEREST ENTITIES

ASC Topic 810 requires the primary beneficiary of a Variable Interest Entity (“VIE”) to consolidate the entity and also requires majority and significant variable interest investors to provide certain disclosures. A VIE is an entity in which the equity investors do not have a controlling interest or in which the equity investment at risk is insufficient to finance the entity’s activities without receiving financial support from the other parties.

In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.


F-20

 

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.

Juneau Biosciences, LLC

The Company has license agreements with Juneau as described in note 3.  The Company owns approximately 39% ownership of Juneau.   Additionally, the Company owns an interest of approximately 10% in Juneau through its wholly owned subsidiary, LifeCode.

On August 3, 2017, the Company entered into an unsecured loan agreement where it lent Juneau the principal amount of $300,000. The loan is convertible into Class A Units of Juneau at the rate of $1.00 per unit. On August 8, 2017, an additional loan was made to Juneau to renegotiate a debt Juneau owed to a third party.  On December 31, 2017, principal and accrued interest in the aggregate amount of $3,685,308 was owed on the notes referenced above. Effective December 31, 2017, the Company exercised its right to convert the amounts owed on the notes into Class A Units and Juneau issued 3,685,308 Class A Units to the Company upon conversion of all amounts owed on said notes.

In December 2017, the Company and Juneau reached verbal agreement on many of the terms described below. In early 2018, the terms were finalized and memorialized in a subscription agreement executed by the Company and Juneau. The subscription agreement was subsequently amended and restated on two occasions. The latest amendment occurred on August 22, 2018. The subscription agreement, as amended, provides:

 

· For a subscription in the total amount of 15,681,818 Class A Units at a price of $1.10 per unit.

· The investment to be made in tranches:

o The first tranche was $1,875,000 and was paid in full;

o The second tranche was $400,000 and was paid subsequent to year end; and

o The third tranche is $15,000,000 and will be paid in monthly installments totaling $4,409,390 in fiscal 2019, installments of $7,200,000 in fiscal 2020 and installments of $3,390,610 in fiscal 2021.


F-21

 

· The Company has the right to stop funding at any time.

· If the Company stops funding the investment, any securities that are not paid for will be returned to Juneau for cancellation.

· There is a use of proceeds associated with the funding as well as oversight of operating budgets and expenditures.

· The Juneau board was expanded by three members and the vacancies were filled by nominees of the Company.

· The Company’s licenses with Juneau were amended to reduce the royalty rate and expand the scope of the licenses to include the entire field of endometriosis and pelvic pain in consideration for the issuance of 1,000,000 shares of the Company’s common stock and warrants exercisable for 14 million shares of common stock at $.80 per share.

· The Company granted Juneau piggy-back registration rights with respect to the common stock issued to Juneau and issuable to Juneau upon exercise of the warrant.

· The shares issued or issuable to Juneau are subject to a one-year lock-up.

· The subscription contemplates the possible acquisition of Juneau by the Company on terms to be subsequently agreed.

· If the Company does not fund the entire subscription, then the ongoing obligations of Juneau that do not relate to the license agreements will terminate.

Juneau regularly seeks, and has received, investments from private investors and holds debt from other creditors.  Juneau’s management and a majority of the Juneau board of managers are independent of the Company. The Company owns less than 50% of the outstanding equity of Juneau. Accordingly, Management has concluded that the Company is not the primary beneficiary of Juneau and accordingly, does not hold a significant variable interest in Juneau sufficient to require consolidation.

The Company continues to reevaluate this business relationship to determine whether it may be subject to the VIE model.  

NOTE 7- ACCRUED LIABILITIES

 

 

Period ended

 

Year ended

 

 

September 30,

 

June 30,

 

 

2018

 

2018

Employee compensation and benefits

 $      503,191

 

 $       281,768

Other

 

         204,326

 

      1,037,833

Total accrued liabilities

 

 $      707,517

 

 $   1,319,601

 

 

 

 

 


F-22

 

NOTE 8- INCOME TAXES

 

The components of the provision for income taxes for the quarter ended September 30, 2018 and the year ended June 30, 2018, consisted of the following:

 

 

Sept 30

 

June 30

 

 

2018

 

2018

 Deferred tax assets:

 

 

 

 

 Net operating loss carry-forwards

 $        47,659

 

 $        28,831

 

 Depreciation and Amortization

         (19,140)

 

         (63,551)

 

 Other

           18,683

 

           11,374

 

 R&D Credit

           18,391

 

         276,012

 

 Valuation Allowance

         (65,594)

 

       (252,666)

 

        Net Deferred Taxes

 $                -   

 

 $                -   

 

 

 

 

 


F-23

 

At September 30, 2018 and June 30, 2018, the Company had net operating loss carry-forwards of approximately $50,280 and $718,557 which will expire in the years 2035-2037.

We are subject to income taxes in the United States. Significant judgment is required in determining our provision for income taxes and recording the related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. In our opinion, we have made adequate provisions for income taxes for all years subject to audit.

Although we believe our estimates are reasonable, the final outcomes of these matters may be different from those which we have reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our income tax provision and operating results in the period in which we make such determination.

NOTE 9- SHAREHOLDER’S EQUITY

 

As of September 30, 2018, and June 30, 2018, the Company had 238,846,403 and 224,496,403 shares issued and outstanding or pending issuance under contractual obligation.

 

The company issued 15,500,000 shares of its common stock on July 22, 2018 to acquire Inception Dx Laboratories, see note 2.  

 

On August 7, 2018 the Company issued 50,000 shares of common stock for services related to the HCT/P business.  

On August 30, 2018, the Company entered into an agreement captioned Consulting Agreement with Avira Financial, LLC whereby Avira will be performing various business development, marketing and consulting services for the Company. In consideration for these services, the Company granted warrants to Avira exercisable for 5,250,000 shares of the Company’s common stock with a strike price equal to the closing price of the Company’s common stock on the date of grant. Warrants to acquire 250,000 shares vested upon issuance and the remainder of the warrants vest over a three year period, subject to accelerated vesting upon the occurrence of certain events. The warrants expire on the earlier of (i) the five year anniversary of the date of issuance or (ii) the date the Consulting Agreement is terminated.

 


F-24

 

The following is a summary of warrant activity from July 2016 through September 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

Number of

 

Weighted Average

 

Remaining

 

 

 

 

 

Warrants

 

Exercise Price

 

Contractual Life

Warrants:

 

 

 

 

 

 

 

 

 

Outstanding June 30, 2016

 

         620,000

 

 

 

 

 

 

Granted

 

 

   13,266,920

 

 $ 0.50

 

4.5

 

 

Exercised

 

 -

 

 -   

 

   -

 

 

Forfeited/Cancelled

 

 -

 

-   

 

 -

 

Outstanding June 30, 2017

 

   13,886,920

 

                       0.50

 

4.5

 

 

Granted

 

 

   28,381,600

 

                       0.50

 

4.0

 

 

Exercised

 

  -   

 

 -   

 

-   

 

 

Forfeited/Cancelled

 

 -   

 

-   

 

 -   

 

Outstanding June 30, 2018

 

   42,268,520

 

 $                    0.50

 

3.9

 

 

Granted

 

 

   21,750,000

 

                       0.92

 

5.0

 

 

Exercised

 

-

 

 -   

 
-

 

 

Forfeited/Cancelled

 

 -

 

 -   

 

 -   

 

Outstanding September 30, 2018

   64,018,520

 

 $                    0.64

 

4.3

 

 

 

 

 

 

 

 

 

 


F-25

 

NOTE 10- EARNINGS PER COMMON SHARE (EPS)

 

The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the following periods consisted of the following:

 

 

 

 

 

 

 

 

 

 

Period ended September 30, 2018

 

 

 

 

 

 

 

 

Basic EPS and diluted

  (2,381,271)

 

    223,253,751

 

                (0.011)

 

 

 

 

 

 

 

 

 

 

As the Company is in a loss position, any calculation with dilutive effects would reduce the loss per share amount, and, as such, the Company will not perform the calculation.

NOTE 11- STOCK OPTION PLAN

 

In 2015 a Stock Option Plan was adopted to advance the interests of the Company and its shareholders by helping the Company obtain and retain the services of employees, officers, consultants, independent contractors and directors, upon whose judgment, initiative and efforts the Company is substantially dependent, and to provide those persons with further incentives to advance the interests of the Company.

 

Eligible participants include employees, officers, certain consultants, or directors of the Company or its subsidiaries.  The Board may designate any Option granted hereunder either as an Incentive Stock Option (ISO) or as a Non-statutory Stock Option (NSO).  The Board may grant ISOs only to persons who are employees of the Company and/or its subsidiaries.

 

The aggregate number of shares of Option Stock that may be issued pursuant to the exercise of Options granted under this Plan will not exceed fifteen percent (15%) of the total outstanding shares of the Company's common stock, par value $.001 per share.

A summary of option activity is as follows for the fiscal period ended September 30, 2018 and the fiscal year ended June 30, 2018:

 

 

September 30, 2018

 

June 30, 2018

 

 

Number of shares

 

Weighted average exercise price

 

Number of shares

 

Weighted average exercise price

Options outstanding at beginning of period

     4,938,500

 

 $             0.68

 

         300,000

 

 $             1.00

Options granted

           50,000

 

1.23

 

     4,638,500

 

0.77

Less:

 

 

 

 

 

 

 

 

Options exercised

 -   

 

 -   

 

  -   

 

  -   

 

Options canceled or expired

 -   

 

 -   

 

 -   

 

  -   

Options outstanding at end of period

     4,988,500

 

 $             0.79

 

     4,938,500

 

 $             0.78

Options excercisable at end of period

 -   

 

 -   

 

 -   

 

 -   

Options vested and expected to vest

     2,511,917

 

 $             0.71

 

     2,495,250

 

                0.70

Weighted average fair value of options granted during the period

 $        60,719

 

 

 

     3,436,010

 

 

 

 

 

 

 

 

 

 

 


F-26

 

The following table summarizes information about stock options outstanding at September 30, 2018:

Range of Exercise prices

 

Number outstanding at September 30, 2018

 

Weighted average remaining contractual life (years)

 

Weighted average exercise price

 

Number exercisable at September 30, 2018

 

Weighted average exercise price

0.50 - 0.80

 

     2,850,000

 

5.88

 

0.64

 

 

-

 

 

 -

0.88 - 1.23

 

     2,138,500

 

5.61

 

0.95

 

 

 -

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2018 there was no unrecognized share-based compensation expense related to stock options.

NOTE 12- COMMITMENTS AND CONTINGENCIES

The Company has commitments under license agreements which are described in note 4.

We lease office and research space under month-to-month leasing arrangements.  Therefore, we do not believe we have any material leasing commitments.

Rent expense under operating leases was $50,877 and $116,912 for the 3 months ended September 30, 2018 and the year ended June 30, 2018, respectively.  

In September 2018, the parties in the Alpha Modus lawsuit entered into a Settlement Agreement and Mutual Release whereby all claims were released and discharged in consideration for Alpha Modus Corp. being able to retain 200,000 shares of Predictive Technology Group, Inc. common stock that it previously held and Predictive Technology Group, Inc. cooperating with Alpha Modus Corp. in its efforts to clear restrictions on said shares.

NOTE 13- SUBSEQUENT EVENTS

Management has evaluated subsequent events through November 13, 2018, the date on which the financial statements were available to be issued.

In July 2018, Predictive Technology Group, Inc. (the “Company”), Predictive Acquisitions, Inc. (“PAI”), a wholly owned subsidiary of the Company and Regenerative Medical Technologies, Inc. (“RMT”) entered into an agreement captioned “Agreement and Plan of Merger” (the “Acquisition Agreement”).  RMT holds various assets including (i) models, methods and protocols for collection birthing tissue and DNA samples, (ii) patient registry models, methods and protocols to collect clinical outcomes and electronic medical records, and  (iii) designs and methodologies relating to bone marrow aspirate kits, large joint injection kits, degenerative disc disease post-microdiscectomy injection kits, an allogenic stem cell products for degenerative disc disease, autism, facet joint, IV treatment of opioid addition, and (iv) other assets. Under the terms of the Acquisition Agreement, PAI will merge with RMT, the surviving corporation will become a wholly owned subsidiary of the Company and the shareholders of RMT will receive 10,000,000 shares of the Company’s common stock. The closing of this transaction is subject to shareholder approval of the merging entities and other contingencies that may or may not occur. If the closing occurs, it is anticipated to close on or before December 31, 2018. As of September 30, 2018, the transaction has not closed.

On August 30, 2018, the Company authorized the grant of stock options exercisable for 15,840,000 shares of common stock to employees. All options are exercisable at the closing price of the Company’s common stock on the date of grant. As of September 30, 2018, no options had been granted from this authorization.


F-27

 

========================================================================================================================================================================

PREDICTIVE TECHNOLOGY GROUP, INC.

 

AUDITED FINANCIAL REPORTS

AT

JUNE 30, 2018


TABLE OF CONTENTS

 

     

 

Report of Independent Auditor        

F-29

   

Audited Balance Sheets at June 30, 2018 and 2017   

F-30

     

 

Audited Statements of Operations for the Years Ended June 30, 2018 and 2017     

F-31

 

 

 

  Audited Statements of Cash Flows for the Years Ended June 30, 2018 and 2017    F-32
     
  Audited Statements of Changes in Equity for the Years Ended June 30, 2018 and F-33
     
  Notes to Financial Statements       F-34

 

 


F-28

 

Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of Predictive Technology Group, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Predictive Technology Group, Inc. (the "Company") as of June 30, 2018 and 2017, the related statements of operations, stockholder’s equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

/s/ BF Borgers CPA PC

 

BF Borgers CPA PC

 

We have served as the Company's auditor since 2018.

Lakewood, CO

December 4, 2018


F-29

 

PREDICTIVE TECHNOLOGY GROUP, INC.

Consolidated Balance Sheets

For the years ending June 30, 2018, and 2017

 

 

 

 

 

 

 

 

 

 June 30,

 

Assets

 

 

 

 

 

 

2018

 

2017

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 $      1,206,139

 

 $      968,202

 

 

 

Accounts receivable

 

            719,068

 

           26,763

 

 

 

Inventory

 

 

 

         3,791,374

 

         207,113

 

 

 

Other current assets

 

              17,551

 

             5,610

 

 

Total current assets

 

 

         5,734,132

 

      1,207,688

 

 

Fixed assets, net of depreciation

            773,870

 

         518,934

 

 

License agreements, net of amortization

       20,962,620

 

      2,223,135

 

 

Patents, net of amortization

         7,761,187

 

      8,414,577

 

 

Trade secrets, net of amortization

         8,096,311

 

    10,914,097

 

 

Notes receivable

 

 

 

                      -   

 

      3,186,121

 

 

Equity method investments

       45,564,845

 

    16,330,401

 

 

Other long-term assets

 

              12,000

 

           66,665

 

Total assets

 

 

 

 

 $    88,904,965

 

 $ 42,861,618

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholder's equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 $      1,322,149

 

 $      825,383

 

 

 

Accrued liabilities

 

         1,034,905

 

         299,967

 

 

 

Current portion subscription payable

         4,409,390

 

                   -   

 

 

Total current liabilities

 

         6,766,444

 

      1,125,350

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

Subscription payable

 

       10,965,611

 

                   -   

 

 

Total long-term liabilities

 

       10,965,611

 

                   -   

 

Total liabilities

 

 

 

 

       17,732,055

 

      1,125,350

 

 

Stockholder's equity

 

 

 

 

 

 

 

 

Common stock, par value $0.001,

 

 

 

 

 

 

 

224,496,403, and 208,889,680 shares issued

 

 

 

 

 

 

 

 and outstanding at June 30, 2018, and 2017;

 

 

 

 

 

 

 

 900,000,000 shares authorized

            224,496

 

         208,890

 

 

 

Additional paid-in capital

     108,072,428

 

    66,993,718

 

 

 

Common stock subscriptions receivable

       (1,025,000)

 

     (2,392,500)

 

 

 

Accumulated deficit

 

     (35,978,862)

 

   (23,017,099)

 

 

Total controlling interest

 

       71,293,062

 

    41,793,009

 

 

Non-controlling interest

 

          (120,152)

 

          (56,741)

 

 

Total stockholder's equity

 

       71,172,910

 

    41,736,268

 

Total liabilities and stockholder's equity

 $    88,904,965

 

 $ 42,861,618

 

 

 

 

 

 

 

 

 

 

 

 


See accompanying notes to the consolidated financial statements


F-30

 

PREDICTIVE TECHNOLOGY GROUP, INC.

Consolidated Statements of Operations

For the years ending June 30, 2018, and 2017

 

 

 

 

 

 

 

 

 

 Years ended June 30,

 

 

 

 

 

 

 

 

 

2018

 

2017

 

 

Revenue from operations (net)

 $    16,624,336

 

 $   2,585,362

 

 

Cost of goods sold

 

 

         3,971,255

 

         751,305

 

 

 

Gross profit from operations

       12,653,081

 

      1,834,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Sales and marketing expense

       12,680,741

 

      1,897,543

 

 

 

General and administrative

         5,827,891

 

         946,754

 

 

 

Research and development

         1,896,092

 

           84,729

 

 

 

Amortization and depreciation expense

         4,573,534

 

      3,693,579

 

 

 

 

Total operating expense

       24,978,258

 

      6,622,605

 

 

 

Loss from operations

 

     (12,325,177)

 

     (4,788,548)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest income

 

            199,953

 

         315,742

 

 

 

 

Equity method investment gain / (loss)

          (899,950)

 

        (128,594)

 

 

 

 

Impairment (expense)

                      -   

 

     (1,603,394)

 

 

 

Net income / (loss)

 

 $  (13,025,174)

 

 $  (6,204,794)

 

 

 

 

Net loss non-controlling interest

            (63,411)

 

          (31,467)

 

 

 

Net loss controlling interest

 $  (12,961,763)

 

 $  (6,173,327)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share

 

 

 

 

 

 

 

Basic and diluted

 

              (0.060)

 

            (0.031)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares (in thousands)

 

 

 

 

 

 

Basic and diluted

 

            217,654

 

         201,938

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements


F-31

 

PREDICTIVE TECHNOLOGY GROUP, INC.

Consolidated Statements of Cash Flows (Indirect Method)

For the years ending June 30, 2017, and 2016

 

 

 Years ended June 30,

 

 

2018

 

2017

Cash flows from operating activities

 

 

 

Net earnings (loss)

 $  (13,025,174)

 

 $  (6,204,794)

Adjustments to reconcile net earnings (loss) to

 

 

 

 

net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

         4,573,534

 

      3,693,579

 

Options and warrants exchanged for services

       10,527,427

 

      1,221,924

 

Loss on impairment

                      -

 

      1,603,394

 

Change in equity method investment

            899,950

 

         128,594

 

Accrued interest converted to equity

          (199,187)

 

                   -   

 

Loss attributed to non-controlling interest

            (63,411)

 

          (31,467)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

          (692,305)

 

           45,237

 

Inventory

       (3,584,261)

 

        (207,113)

 

Prepaid expenses

            (11,941)

 

            (5,610)

 

Other assets

              54,665

 

        (382,409)

 

Accounts payable

            493,838

 

         725,297

 

Accrued liabilities

            737,866

 

         299,967

Net cash provided (used) by operating activities

          (288,999)

 

         886,599

Cash flows from investing activities

 

 

 

 

Purchases of property and equipment

          (405,580)

 

        (520,474)

 

Capitalization of license agreement costs

       (1,357,272)

 

     (1,535,630)

 

Cash paid for acquisition of equity method investment

       (1,875,000)

 

                   -

 

Note issued for equity method investment

          (300,000)

 

                   -

 

Capitalization of patent application costs

          (111,305)

 

            (3,382)

Net cash provided (used) by investing activities

(4,049,157)

 

(2,059,486)

Cash flows from financing activities

 

 

 

 

Proceeds from warrants issued with stock issued for cash

         1,767,850

 

                   -

 

Proceeds from issuance of common stock

         1,440,743

 

                   -

 

Proceeds from subscriptions for common stock

         1,367,500

 

      2,136,581

Net cash provided (used) by financing activities

         4,576,093

 

      2,136,581

 

 

 

 

 

Net increase (decrease) in cash

            237,937

 

         963,694

Cash at beginning of period

 $         968,202

 

 $          4,508

Cash at end of period

 $      1,206,139

 

 $      968,202

Non-cash financing and investing activities:

 

 

 

 

Common stock issued for intangible assets

         1,250,000

 

         300,000

 

Warrants issued for intangible assets

       16,909,211

 

                   -

 

Common stock issued for equity method investment

         9,199,085

 

                   -

 

Common stock issued for notes and interest receivable

                        -

 

      4,473,774

 

Acquisition of equity method investment from note and interest conversion

         3,685,308

 

                   -


See accompanying notes to the consolidated financial statements


F-32

 

PREDICTIVE TECHNOLOGY GROUP, INC.

Consolidated Statements of Stockholders Equity

For the years ending June 30, 2017, 2016 and 2015

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Common

 

Non-

 

 

 

Total

 

 

 

 

 

 

 

 

Common Stock

 

Paid-in

 

Stock

 

Controlling

 

Accumulated

 

Stockholder's

 

 

 

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Subscriptions

 

Interest

 

Deficit

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2016

 

 

 

 

 193,832,000

 

 $  193,832

 

 $     56,620,465

 

 $     (105,000)

 

 $   (25,274)

 

 $ (16,843,772)

 

$ 39,840,251

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 8,766,920

 

 8,767

 

           2,334,317

 

(2,392,500)

 

 

 

 -

 

(49,416)

 

 

Common stock issued for notes receivable

 5,740,760

 

5,741

 

4,468,033

 

 -

 

  -

 

 -

 

4,473,774

 

 

Common stock issued for services

 

 

300,000

 

 300

 

 149,700

 

 -

 

-

 

 -

 

150,000

 

 

Common stock issued for license agreement

250,000

 

250

 

299,750

 

-

 

 -

 

 -

 

300,000

 

 

Warrants and options issued for services

 

 -

 

-

 

           1,071,924

 

-

 

 -

 

 -

 

1,071,924

 

 

Warrants issued with stock issued for cash

 

-

 

-

 

           2,049,529

 

-

 

-

 

-

 

       2,049,529

 

 

Cash received from common stock subscriptions

 -

 

 -

 

 -

 

105,000

 

 -

 

-

 

105,000

 

 

Net income

 

 

 

 

 -

 

 -

 

 -

 

 - 

 

 (31,467)

 

 (6,173,327)

 

(6,204,794)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2017

 

 

 

 

      208,889,680

 

 $  208,890

 

 $     66,993,718

 

 $ (2,392,500)

 

 $   (56,741)

 

 $ (23,017,099)

 

 $ 41,736,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

           7,181,600

 

          7,182

 

           1,433,562

 

 

 

 

 

 

 

       1,440,743

 

 

Common stock issued for equity invesment

           5,822,206

 

          5,821

 

           9,193,264

 

 

 

 

 

 

 

 9,199,085

 

 

Common stock issued for services

 

 

           1,602,917

 

          1,603

 

           1,729,595

 

 

 

 

 

 

 

1,731,198

 

 

Common stock issued for license agreement

           1,000,000

 

          1,000

 

           1,249,000

 

-

 

-

 

-

 

1,250,000

 

 

Warrants issued for license agreement

 

 

 

 

 

 

         16,909,211

 

-

 

-

 

-

 

     16,909,211

 

 

Warrants and options issued for services

 

-

 

   -

 

           8,796,229

 

-

 

-

 

-

 

       8,796,229

 

 

Warrants issued with stock issued for cash

 

-

 

-

 

           1,767,850

 

-

 

-

 

-

 

       1,767,850

 

 

Cash received from common stock subscriptions

 

-

 

   -

 

        -

 

 1,367,500

 

-

 

-

 

   1,367,500

 

 

Net income

 

 

 

 

-

 

-

 

-

 

-

 

       (63,411)

 

    (12,961,763)

 

  (13,025,174)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2018

 

 

 

 

      224,496,403

 

 $  224,496

 

 $   108,072,428

 

 $ (1,025,000)

 

 $ (120,152)

 

 $ (35,978,862)

 

 $ 71,172,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


See accompanying notes to the consolidated financial statements


F-33

 

Notes to consolidated financial statements

NOTE 1 BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS DESCRIPTION:

Predictive Technology Group, Inc. together with its subsidiaries (collectively, “PTG” or the “Company”) develops and commercializes discoveries and technologies involved in novel molecular diagnostic and pharmaceutical therapeutic/Human Cells, Tissues and Human Cellular and Tissue-Based Products (“HCT/Ps”). The Company uses this information as the cornerstone in the development of new diagnostics that assess a person’s risk of disease and pharmaceutical therapeutics and HCT/Ps designed to effectively prevent and treat the disease.  The Company’s corporate headquarters are located in Salt Lake City, Utah.

SEGMENT INFORMATION :

In accordance with ASC 280-10-50, Segment Reporting, operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.  The Company operates in two reportable segments: HCT/Ps and diagnostics and therapeutics. Predictive Biotech’s HCT/Ps are processed in our FDA registered lab. Our minimally manipulated tissue products are prepared utilizing proprietary extraction methods that reduce the loss of important scaffolding, growth factor and general cytokines and are intended for homologous use.  Predictive Technology's diagnostics and therapeutics uses data analytics for disease identification and subsequent therapeutic intervention through unique novel gene-based diagnostics, biotechnology treatments and companion therapeutics.

 

 

 

 

 

 

 

 Years ended June 30,

 

 

 

 

 

 

 

2018

 

2017

Segment revenues

 

 

 

 

HCT/Ps

 

 

 $     16,624,336

 

 $        2,585,362

 

Diagnostics and therapeutics

-

 

 -

 

 

Total consolidated revenues

 $     16,624,336

 

 $        2,585,362

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss)

 

 

 

 

HCT/Ps

 

 

 $     (5,821,549)

 

 $     (3,220,478)

 

Diagnostics and therapeutics

         (6,503,628)

 

         (1,568,070)

 

 

Total consolidated operating income (loss)

 $   (12,325,177)

 

 $     (4,788,548)

 

 

 

 

 

 

 

 

 

 

Reconciliation of segment operating income

 

 

 

 

to income before income taxes

 

 

 

 

Segment operating income

 $   (12,325,177)

 

 $     (4,788,548)

 

Equity method gain/(loss)

            (899,950)

 

            (128,594)

 

Impairment charges

 -

 

 (1,603,394)

 

Interest income / (expense)

               199,953

 

               315,742

 

 

Income before income taxes

 $   (13,025,174)

 

 $     (6,204,794)

 

 

 

 

 

 

 

 

 

 


F-34

 

 

 

 

 

 

 

 

 Years ended June 30,

Capital assets, net

2018

 

2017

 

HCT/Ps

 

 

 $          438,277

 

 $           73,143

 

Diagnostics and therapeutics

               335,592

 

               445,791

 

 

Total capital assets, net

 $          773,870

 

 $         518,934

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

 

HCT/Ps

 

 

 $            82,306

 

 $             2,895

 

Diagnostics and therapeutics

                 68,339

 

                   1,677

 

 

Total depreciation expense

 $          150,645

 

 $             4,572

 

 

 

 

 

 

 

 

 

 

Intangible and equity method investment assets, net

 

 

 

 

HCT/Ps

 

 

 $       8,096,311

 

 $     10,914,097

 

Diagnostics and therapeutics

         74,288,652

 

         26,968,113

 

 

Total intangible and equity method investment assets, net

 $     82,384,963

 

 $     37,882,210

 

 

 

 

 

 

 

 

 

 

Amortization expense

 

 

 

 

HCT/Ps

 

 

 $      2,817,786

 

 $        2,817,786

 

Diagnostics and therapeutics

           1,605,103

 

               871,221

 

 

Total amortization expense

 $      4,422,889

 

 $        3,689,007

 

 

 

 

 

 

 

 

 

 

Warrants and options expense (non-cash)

 

 

 

 

HCT/Ps

 

 

 $       8,216,888

 

 $       1,116,586

 

Diagnostics and therapeutics

           2,310,539

 

               105,338

 

 

Total warrants and options expense (non-cash)

 $     10,527,427

 

 $        1,221,92

 

 

 

 

 

 

 

 

 

 


F-35

 

BASIS OF PRESENTATION:

This summary of significant accounting policies of the Company is presented to assist in understanding the financial statements.  The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity.  

Fiscal Year

This report includes financial statements as of and for the years ending June 30, 2018, and 2017.

Consolidation

These consolidated financial statements include the financial statements of Predictive Technology Group, Inc. and its wholly owned subsidiaries.  All inter-company accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to the current year presentation.

Cash Equivalents

The Company considers all highly-liquid investments with a maturity of three months or less, when purchased, to be cash equivalents.  The Company places its temporary cash investments with high-quality financial institutions.  Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At June 30, 2018, and 2017, the Company had $956,139 and $718,202, respectively, in excess of the FDIC insured limit.

Going Concern

These financial statements were prepared on a going concern basis.  The going concern basis assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Predictive Biotech, Inc. (“Predictive Biotech”), a subsidiary of PTG, began operations during the fiscal year ended June 30, 2017.   Since inception of operations, revenues have exceeded cash expenses and such excess contributes to the overall operations of PTG.

In addition, PTG has raised sufficient capital through stock subscriptions to fund its obligations under its licenses and other agreements for the development of molecular diagnostics products under license in Predictive Therapeutics, LLC (“Predictive Therapeutics”), a subsidiary of PTG.  It is anticipated that the initial sale of such products will take place in the 2019 fiscal year.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount.  At the present time most sales are through credit cards, however from time to time, credit is granted to customers on a short-term basis without requiring collateral, and as such, these accounts receivable, do not bear interest, although a finance charge may be applied to such receivables that are past due.    The Company has in place credit policies and procedures and approval process for sales returns and credit memos.


F-36

 

Inventories

Inventories consist primarily of HCT/Ps produced by Predictive Biotech.  We value inventory at the lower of cost or net realizable value. We determine the cost of inventory using the standard-cost method, which approximates actual cost based on a first-in, first-out method.  All other costs, including administrative costs are expensed as incurred.  

We analyze our inventory levels annually and write down inventory that has a cost basis in excess of its expected net realizable value, or that is considered in excess of normal operating levels, as determined by management.  The related costs are recognized as cost of goods sold in the Consolidated Statements of Operations.

Stock Subscriptions Receivable

Stock subscriptions are recorded as contra-equity on the day the subscription agreement is signed and accepted by the Company.  All stock subscribed as of the date of these financial statements has been collected.  The stock is not issued until subscriptions are collected.

Prepaid Expenses

Amounts paid in advance for expenses are accounted for as prepaid expenses and classified as current assets if such amounts are to be recognized as expense with the current period.

Property, Plant and Equipment

Lab equipment, furniture and computer equipment are stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method based on the lesser of estimated useful lives of the related assets or lease terms. Lab equipment items have depreciable lives of five years, furniture items have depreciable lives of 5 to 7 years, and computer equipment items have depreciable lives of 3 years. Repairs and maintenance costs are charged to expense as incurred.

Intangible Assets and Other Long-Lived Assets

Intangible and other long-lived assets are comprised of acquired patents, licenses, trade secrets and other intellectual property.  Acquired intangible assets are recorded at fair value and amortized over the shorter of the contractual life or the estimated useful life.  

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment, and definite-lived intangibles subject to depreciation and amortization, as well as acquisition costs of subsidiaries, are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated future undiscounted net cash flows of the related asset or group of assets over their remaining lives.  


F-37

 

Revenue Recognition

We sell our products through a direct sales force in the U.S.  Revenues from these customers are recognized when all the following have occurred: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price is fixed or determinable and (iv) the ability to collect is reasonably assured. These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer. We reserve for sales returns, including returns related to defective products, as a reduction in net sales, based on our historical experience.  These reserves are recorded as a reduction in net sales and are not considered material to our consolidated statements of income for the years ended June 30, 2018, and 2017. 

Shipping and Handling

We bill our customers for shipping and handling charges, which are included in net sales for the applicable period, and the corresponding shipping and handling expense is reported in cost of sales.

Research and Product Development Costs

The Company expenses research and product development costs as incurred.

Product Liability and Warranty Costs

The Company maintains product liability insurance and has not experienced any related claims from its products offerings. The Company also offers a warranty to customers providing that its products will be delivered free of any materials defects.  There have been no material costs incurred since inception based on estimated return rates.  The Company reviews the adequacy of its recorded accrual on a quarterly basis.

Income Taxes

Deferred tax assets and liabilities are recorded to reflect the future tax consequences attributable to the effects of differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax purposes. Deferred taxes are calculated by applying enacted statutory tax rates and tax laws to future years in which temporary differences are expected to reverse. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the rate change is enacted.  

Measurement of Fair Value

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values.  Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined in the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.


F-38

 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods.  Key estimates in the accompanying consolidated financial statements include, among others, revenue recognition, allowances for doubtful accounts and product returns, provisions for obsolete inventory, valuation of long-lived assets, and deferred income tax asset valuation allowances.  Actual results could differ materially from these estimates.

Recently Issued Financial Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. ASU 2016-02 will be effective for the Company beginning July 1, 2019 and early adoption is permitted. We are currently evaluating the timing of its adoption and the impact of adopting the new lease standard on our consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16,  Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory , which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 will be effective for us beginning on July 1, 2018. We are currently evaluating the impact of adopting ASU 2016-16 on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15,  Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 will be effective for us beginning on July 1, 2018 with early adoption permitted. We do not presently anticipate that the adoption of ASU 2016-15 will have a material impact on our consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01,  Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,  which amends the guidance regarding the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, ASU 2016-01 clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 will be effective for us beginning on July 1, 2018. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Upon adoption of ASU 2016-01, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. We do not presently anticipate that the adoption of ASU 2016-01 will have a material impact on our financial statements.

In May 2014, the FASB issued ASU 2014-09,  Revenue from Contracts with Customers (Topic 606) , to update the financial reporting requirements for revenue recognition. Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance is effective for us beginning on July 1, 2018, and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. We will adopt this new standard on a prospective basis.


F-39

 

We have evaluated each of the five steps in Topic 606, which are as follows: 1) Identify the contract with the customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations; and 5) Recognize revenue when (or as) performance obligations are satisfied. Our preliminary conclusion is that we expect to identify similar performance obligations under ASC Topic 606 as compared with deliverables and separate units of account previously identified. As a result, we expect the timing of our revenue to remain the same in comparison to the current revenue recognition guidance. There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. We are currently evaluating our control framework for revenue recognition and identifying any changes that may need to be made in response to the new guidance. Disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance. Designing and implementing the appropriate controls over gathering and reporting the information required under Topic 606 is currently in process.

NOTE 2 BUSINESS COMBINATIONS AND EQUITY METHOD INVESTMENTS

LifeCode Genetics, Inc.,

On November 6, 2015, the Company announced the acquisition of LifeCode Genetics, Inc. (“LifeCode”) as its wholly owned subsidiary. LifeCode holds a strategic equity investment in Juneau Biosciences, LLC (“Juneau”).   In addition to the development of an assay and related services for the prognosis and monitoring of endometriosis in the infertility market which the Company has licensed, Juneau is developing technologies for the diagnosis of other women’s health issues.

Juneau reports to its members on a calendar year basis and LifeCode records its distributable share of such reported income using the equity method.

SEC Rule 4-08(g) of Regulation S-X requires a registrant to disclose, in the notes to its financial statements, summarized balance sheet and income statement information of all investees on an aggregate basis, if deemed significant.  See such summaries below.  The numbers presented in the schedules below related to Juneau are audited.


F-40

 

Juneau Biosciences, LLC

BALANCE SHEETS

           
     

December 31,

 

December 31,

     

2017

 

2016

Assets

       

Current Assets

       
 

Cash

 

 $          40,077

 $         69,718

 

Accounts receivable

 

                     -

                    -

 

Inventory

 

                     -

                    -

Total Current Assets

 

             40,077

            69,718

     

 

 

Fixed Assets

 
 

Machinery & equipment

 

           742,642

          742,642

 

Accumulated depreciation

 

          (742,642)

         (742,642)

Total Fixed Assets

 

                     -

                    -

     

Other Assets

 
 

Patents

 

           168,476

          163,426

 

Accumulated Amortization

 

            (64,385)

           (54,673)

 

Security Deposits

 

             39,022

            34,922

Total Other Assets

 

           143,113

          143,675

     

Total Assets

 

 $        183,190

 $       213,393

     

Liabilities

 

Current Liabilities

 
 

Accounts Payable

 

 $          13,321

 $    1,049,529

 

Credit Card Payable

 

                     -

            18,308

 

Salary Payable

 

           898,669

          843,727

 

Accrued Payroll Liabilities

 

                  416

            32,853

 

Accrued Interest

 

           266,320

          860,042

 

Notes Payable

 

        1,051,968

       3,325,072

 

Due to related parties

 

           417,000

          768,968

Total Current Liabilities

 

        2,647,694

       6,898,499

Total Liabilities

 

        2,647,694

       6,898,499

     

Members’ equity

 
 

34,117,912 and  28,138,878 units issued and outstanding at December 31, 2017and December 31, 2016, respectively Additional paid-in capital, investor capital of $26,367,947 and vested unit options of $1,998,980 on December 31, 2017, and

 

                     - 

                    -

 

investor capital $21,036,988, vested warrants at $4,200, and vested unit options of $1,303,074 on December 31, 2016

 

      28,366,927

     22,344,262

 

Retained Deficit

 

     (30,831,431)

    (29,029,368)

Total Members’ Deficit

 

       (2,464,504)

      (6,685,106)

Total Liabilities and Members' Deficit

 

 $        183,190

 $       213,393

     

F-41

 

Juneau Biosciences, LLC

STATEMENTS OF OPERATIONS

           
     

For the Years Ended

     

December 31,

 

December 31,

     

2017

 

2016

License Income (Related Party)

 $     1,005,830

 $         877,560

Research & Development (Related Party)

 $     1,350,000

 $                    -

Consulting (Related Party)

 $          88,237

 $                    -

     

 $     2,444,067

 $         877,560

Operating Expenses

 
 

General and administrative expenses

         1,855,485

             596,011

 

General and administrative expenses (Related Party)

            671,178

             990,021

 

Stock-based Compensation

            695,907

               71,851

 

Travel and entertainment

                9,064

                 4,654

 

Interest expense

         1,004,791

             463,558

 

Depreciation expense

                      -

                 3,377

 

Amortization expense

                9,711

                 9,575

Total Operating Expenses

         4,246,136

          2,139,047

Loss from opertions

        (1,802,069)

        (1,261,487)

Other Income (Expenses)

 

Other Income

                       6

Total Other Expenses

                       6

                      -

Net Loss before Income Taxes

        (1,802,063)

        (1,261,487)

Income Tax Benefit

                      -

                      -

Net Loss

 $    (1,802,063)

 $    (1,261,487)

Net Loss per Common Unit

 $             (0.06)

 $             (0.05)

     

Weighted Average Number of Common Units Outstanding

       29,341,866

        27,782,968

       

F-42

 

ReNovo Biotech, Inc.

On March 28, 2016, the Company announced the acquisition of ReNovo Biotech, Inc. as its wholly owned subsidiary.  The acquisition provides the Company access to ReNovo Biotech’s cellular, tissue, biomaterial and regenerative medicine products and product candidates. This subsidiary is operated under the name Predictive Biotech, Inc. The Company issued 9,500,000 common shares to effect the acquisition which is recorded at a cost of $14,087,000.

The purchase price was allocated to “trade secrets” including protocols to develop an amniotic allograft and umbilical cord allograft line of products in accordance with the provisions of ASC 805, Business Combinations .  Such trade secrets were determined to be recognizable apart from any form of goodwill and are “technology-based”.

Aggregate amortization expense for the years ended June 30, 2018, and 2017 was approximately $2,817,786, and $2,817,786, respectively.

Estimated amortization expense for the developed technology consists of the following as of June 30, 2018:

 

Year Ending June 30

     

2019

   

$ 2,817,786

2020

   

   2,817,786

2021

   

   2,460,739

       

NOTE 3 INVENTORIES

 

Years Ended June 30,

 

2018

 

2017

Finished goods

 $ 1,621,745

 

 $     130,851

Work-in-process

     2,148,989

 

           70,458

Shipping supplies

           20,640

 

             5,804

Total inventory on hand

 $ 3,791,374

 

 $     207,113


F-43

 

NOTE 4 NOTES RECEIVABLE

 

On August 1, 2016, the Company entered into agreements to acquire convertible, unsecured notes receivable from Juneau from existing noteholders in exchange for stock of the Company.  The collection of amounts owed on said notes receivable is subject to a subordination agreement with a third-party creditor of Juneau that is owed the principal amount of $700,000 plus accrued interest on an obligation that comes due July 31, 2018.  In anticipation of this event, on June 15, 2017, an amendment was also made to the restated agreement to subordinate the debt Juneau owes to PTG.  The face amount of the notes acquired was $2,870,380 and 5,740,760 shares of common stock were issued.  The notes bear interest payable in Juneau units at 12% and are convertible into Class A Units of Juneau at the rate of $1.00 per unit.  Principal and accrued interest are due in a single installment on August 1, 2018.  Upon further review using the OTC value at the date of closure, it was determined that a price per share of .78 cents was approximate market value.  Therefore, the value of the shares given should be $4,473,774, an increase of $1,603,394.  This discount at the date of the share transfers is then considered an impairment loss on the date of the acquisition of the notes.  

 

Effective December 31, 2017, $3,685,308 was owing on notes receivable. This includes interest accrued of $199,187 and an additional $300,000 note issued that is described in Note 7, see below.  On December 31, 2017 the Company converted all amounts owing into 3,685,308 Class A Units of Juneau.

 

SEC Rule 4-08(g) of Regulation S-X requires a registrant to disclose, in the notes to its financial statements, summarized balance sheet and income statement information of all investees on an aggregate basis, if deemed significant.  See such summaries in Note 2.

 

NOTE 5 PROPERTY, PLANT AND EQUIPMENT, NET


 

 

Years Ended June 30,

 

 

2018

 

2017

Computer equipment

 

 $           154,132

 

 $             22,871

Furniture

 

                 36,942

 

                 19,043

Lab equipment

 

              504,203

 

                 44,857

Other fixed assets in progress

 

              234,460

 

              438,377

 

 

 $           929,737

 

 $           525,148

 

 

 

 

 

Less accumulated depreciation

 

            (155,867)

 

                 (6,214)

 

 

 

 

 

Property, plant and equipment, net

 $           773,870

 

 $           518,934

 

 

 

 

 


F-44

 

NOTE 6 INTANGIBLE ASSETS

Predictive Technology Group, Inc. through its subsidiary Predictive Therapeutics, LLC has a number of patents and license agreements categorized under “Intellectual Property” and “Licenses Agreements.”

License Agreements with Juneau

On July 9, 2015, Predictive Therapeutics, LLC signed a license agreement for the commercialization of assays and related services for the prognosis and monitoring of endometriosis, and other health concerns, in the infertility market.  An assay is in the late stage of development.

Subsequently, on December 28, 2016, Predictive Therapeutics and Juneau amended and restated the license agreement dated July 9, 2015.  The amended license fees associated with this agreement required minimum monthly payments of $100,000 through April 2017. Beginning in May 2017, minimum monthly payments of $120,000 were required through August 2017, and subsequent payments of $500,000 for the next four consecutive months.  The term of the license is for a term ending at the last expired claim of the licensed patents. In the event of a default, either party may terminate the agreement (i) thirty days after the party who is in material breach receives notice of the breach from the non-breaching party where (ii) the breaching party fails to cure the breach during said thirty-day period.  Additionally, the Company issued additional warrants and stock for the license (see Note 7) in order to finalize a subscription agreement.  This amounted to $18,159,211, in total value, issued in March of 2018.

An additional license fee of $2,000,000 is due and payable once the Company has received profits of $25,000,000 under the agreement.

Upon first commercial sale of the licensed assay, the Company will issue Juneau common shares with a market value of $2,500,000.  Net sales, once commercially available, are split evenly by the Company and Juneau after deducting the cost of the lab test fees, subject to certain minimums.

In addition to the license for the commercialization of assays and related services for the prognosis and monitoring of endometriosis in the infertility market, the Company has entered into a license agreement with Juneau to use the assay as a companion diagnostic test as the rationale for on-label endometriosis therapeutic patents.  This license agreement was amended and restated on December 28, 2016.

The agreement initially required a $250,000 license fee which was paid during 2013 and 2014.  A subsequent milestone payment of 250,000 shares of Company stock was due to Juneau on October 19, 2016 and was previously issued.   Once FDA approval is granted on any companion diagnostic test, a final milestone payment of $250,000 is due.

The agreement requires a 2% royalty for the sale of patented therapeutic products specifically covered by the agreement.

The Company has elected to capitalize the periodic payments when paid, through the development stage, and amortizes the licenses using the expected life of the underlying patents.

Amortization expense for the years ended June 30, 2018, and 2017 was $821,450, and $106,525, respectively.  We did not record any impairment charges during the years ended June 30, 2018, and 2017.


F-45

 

Estimated amortization expense for the developed technology consists of the following as of June 30, 2018:

 

Year Ending June 30

     

2019

   

$   2,089,786

2020

   

     2,089,786

2021

   

     2,089,786

2022

   

     2,089,786

2023

Thereafter

   

     2,089,786

$10,532,650

Other Patents and Technologies

Patents were acquired by Predictive Therapeutics, LLC on September 22, 2015 by issuing 541,325 Class A Units of Predictive Therapeutics and have no contingencies or royalty obligations.  These patents were recorded on Predictive Therapeutics, LLC’s books at a purchase price of $9,750,000.  

Aggregate amortization expense for the years ended June 30, 2018, and 2017 was approximately $764,696, and $764,696, respectively.  We did not record any impairment charges during the years ended June 30, 2018, and 2017.

Estimated amortization expense for the developed technology consists of the following as of June 30, 2018:

Year Ending June 30

     

2019

   

$   764,696

2020

   

     764,696

2021

   

     764,696

2022

   

     794,696

2023

Thereafter

   

     794,696

$3,791,659


F-46

 

NOTE 7 VARIABLE INTEREST ENTITIES

ASC Topic 810 requires the primary beneficiary of a Variable Interest Entity (“VIE”) to consolidate the entity and also requires majority and significant variable interest investors to provide certain disclosures. A VIE is an entity in which the equity investors do not have a controlling interest or in which the equity investment at risk is insufficient to finance the entity’s activities without receiving financial support from the other parties.

In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.

Juneau Biosciences, LLC

The Company has license agreements with Juneau as described in Note 6. The Company owns approximately 49% ownership of Juneau, of which, the Company owns approximately 10% through its wholly owned subsidiary, LifeCode, described no Note 2.

On August 3, 2017, the Company entered into an unsecured loan agreement where it lent Juneau the principal amount of $300,000. The loan is convertible into Class A Units of Juneau at the rate of $1.00 per unit. On August 8, 2017, an additional loan was made to Juneau to renegotiate a debt Juneau owed to a third party (see Note 4 above).  On December 31, 2017, principal and accrued interest in the aggregate amount of $3,685,308 was owed on the notes referenced above. Effective December 31, 2017, the Company exercised its right to convert the amounts owed on the notes into Class A Units and Juneau issued 3,685,308 Class A Units to the Company upon conversion of all amounts owed on said notes.


F-47

 

In December 2017, the Company and Juneau reached verbal agreement on many of the terms described below. In early 2018, the terms were finalized and memorialized in a subscription agreement executed by the Company and Juneau. The subscription agreement was subsequently amended and restated on two occasions. The latest amendment occurred on August 22, 2018. The subscription agreement, as amended, provides:

· For a subscription in the total amount of 15,681,818 Class A Units at a price of $1.10 per unit.

· The investment to be made in tranches:

o The first tranche was $1,875,000 and was paid in full;

o The second tranche is $400,000 and was paid subsequent to year end; and

o The third tranche is $15,000,000 and will be paid in monthly installments totaling $4,409,390 in fiscal 2019, installments of $7,200,000 in fiscal 2020 and installments of $3,390,610 in fiscal 2021.

· The Company has the right to stop funding at any time.

· If the Company stops funding the investment, any securities that are not paid for will be returned to Juneau for cancellation.

· There is a use of proceeds associated with the funding as well as oversight of operating budgets and expenditures.

· The Juneau board was expanded by three members and the vacancies were filled by nominees of the Company.

· The Company’s licenses with Juneau were amended to reduce the royalty rate and expand the scope of the licenses to include the entire field of endometriosis and pelvic pain in consideration for the issuance of 1,000,000 shares of the Company’s common stock and warrants exercisable for 14 million shares of common stock at $.80 per share.

· The Company granted Juneau piggy-back registration rights with respect to the common stock issued to Juneau and issuable to Juneau upon exercise of the warrant.

· The shares issued or issuable to Juneau are subject to a one-year lock-up.

· The subscription contemplates the possible acquisition of Juneau by the Company on terms to be subsequently agreed.

· If the Company does not fund the entire subscription, then the ongoing obligations of Juneau that do not relate to the license agreements will terminate.



F-48

 

The Company amended this agreement subsequent to year end and the amended values are reflected in the financials as of June 30, 2018.  For more details on the amended amounts see Note 14.

Juneau regularly seeks, and has received, investments from private investors and holds debt from other creditors.  Juneau’s management and a majority of the Juneau board of managers are independent of the Company. The Company owns less than 50% of the outstanding equity of Juneau. Accordingly, Management has concluded that the Company is not the primary beneficiary of Juneau and accordingly, does not hold a significant variable interest in Juneau sufficient to require consolidation.

The Company continues to reevaluate this business relationship to determine whether it may be subject to the VIE model.

 

NOTE 8 ACCRUED LIABILITIES

 

 

Years Ended June 30,

 

 

2018

 

2017

Employee compensation and benefits

 $           281,768

 

 $           261,728

Other

 

           1,037,833

 

                 38,239

Total accrued liabilities

 

 $       1,319,601

 

 $           299,967

NOTE 9 INCOME TAXES

 

The components of the provision for income taxes for the years ended June 30, 2018 and 2017, consisted of the following:

 

 

 For the year ending June 30,

 

 

 

2018

 

2017

 

 Deferred tax assets:

 

 

 

 

 

 Net operating loss carry-forwards

 $                -   

 

 $        201,915

 

 

 Depreciation and Amortization

         (63,551)

 

           (22,529)

 

 

 Other

                229

 

                  675

 

 

 R&D Credit

         276,012

 

                    -   

 

 

 Valuation Allowance

       (212,690)

 

         (180,061)

 

 

        Net Deferred Taxes

 $                -   

 

 $                 -   

 

 

 

 

 

 

 


F-49

 

At June 30, 2018 and 2017, the Company has a deferred tax benefit of approximately $212,690 and $180,061 that have a full valuation allowance against them. Net Operating Loss-carryforwards will expire in the years 2035-2038.

We are subject to income taxes in the United States. Significant judgment is required in determining our provision for income taxes and recording the related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. In our opinion, we have made adequate provisions for income taxes for all years subject to audit.

Although we believe our estimates are reasonable, the final outcomes of these matters may be different from those which we have reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our income tax provision and operating results in the period in which we make such determination.

NOTE 10 SHAREHOLDER’S EQUITY

 

As of June 30, 2018, and 2017, the Company had 224,496,403 and 208,889,680 shares issued and outstanding or pending issuance under contractual obligation.

 

Subscriptions for 7,181,600 and 8,766,920 shares of common stock were received and accepted as of June 30, 2018 and 2017.  Subscriptions for 7,181,600 shares where received from July 1, 2017 through December 31, 2017.  Each subscribed share has a corresponding warrant exercisable at $0.50 through August 1, 2021.

 

The company issued 5,822,206 shares of its common stock between July 1 and December 31, 2017 to acquire additional units of Juneau Bioscience, LLC.  

 

On March 29, 2018 the Company issued 1,000,000 shares of common stock and warrants for 14 million shares of common stock at $.80 per share to Juneau Bioscience to expand the scope of the licenses as described in Note 7.  

 

The Company issued 1,602,917 shares of its common stock between July 1 and December 31, 2017 in exchange for consulting and marketing services during the period.  A charge has been made to expense for the value of the services received determined using Black Scholes modeling.


F-50

 

The following is a summary of warrant activity for the years ended June 30, 2018 and 2017:

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

Number of

 

Weighted Average

 

Remaining

 

 

 

 

 

Warrants

 

Exercise Price

 

Contractual Life

Warrants:

 

 

 

 

 

 

 

 

 

Outstanding June 30, 2016

         620,000

 

 

 

 

 

 

Granted

 

 

   13,266,920

 

 $                    0.50

 

4.5

 

 

Exercised

 

                     -   

 

                            -   

 

                                    -   

 

 

Forfeited/Cancelled

                     -   

 

                            -   

 

                                    -   

 

Outstanding June 30, 2017

   13,886,920

 

                       0.50

 

4.5

 

 

Granted

 

 

   28,381,600

 

                       0.50

 

4.0

 

 

Exercised

 

                     -   

 

                            -   

 

                                    -   

 

 

Forfeited/Cancelled

                     -   

 

                            -   

 

                                    -   

 

Outstanding June 30, 2018

   42,268,520

 

 $                    0.50

 

3.9

 

 

 

 

 

 

 

 

 

 

 

NOTE 11 EARNINGS PER COMMON SHARE (EPS)

 

The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the following periods consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Net

 

Average Shares

 

Per Share

 

 

 

 

Loss

 

Outstanding

 

Amount

 

 

Year ended June 30, 2017

 

 

 

 

 

 

 

 

Basic EPS and diluted

   (6,204,794)

 

    201,937,632

 

                (0.031)

 

 

 

 

 

 

 

 

 

 

 

Year ended June 30, 2018

 

 

 

 

 

 

 

 

Basic EPS and diluted

 (13,025,174)

 

    217,654,476

 

                (0.060)

 

 

 

 

 

 

 

 

 

 


F-51

 

As the Company is in a loss position, any calculation with dilutive effects would reduce the loss per share amount, and, as such, the Company will not perform the calculation. The weighted average shares excluded from the calculation for dilutive purposes as of June 30, 2018 and 2017 were 29,890,609 and 2,957,018, respectively.

NOTE 12 STOCK OPTION PLAN

 

In 2015 a Stock Option Plan was adopted to advance the interests of the Company and its shareholders by helping the Company obtain and retain the services of employees, officers, consultants, independent contractors and directors, upon whose judgment, initiative and efforts the Company is substantially dependent, and to provide those persons with further incentives to advance the interests of the Company.  The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee thereof on an option-by-option basis. Options generally vest ratably over service periods of three or four years. Options granted generally expire ten years from the date of grant.

 

Eligible participants include employees, officers, certain consultants, or directors of the Company or its subsidiaries.  The Board may designate any Option granted hereunder either as an Incentive Stock Option (ISO) or as a Non-statutory Stock Option (NSO).  The Board may grant ISOs only to persons who are employees of the Company and/or its subsidiaries. The aggregate number of shares of Option Stock that may be issued pursuant to the exercise of Options granted under this Plan will not exceed fifteen percent (15%) of the total outstanding shares of the Company's common stock, par value $.001 per share.

 

A summary of option activity is as follows for the fiscal years ended June 30:

 

 

2018

 

2017

 

 

Number of shares

 

Weighted average exercise price

 

Number of shares

 

Weighted average exercise price

Options outstanding at beginning of year

         300,000

 

 $             1.00

 

         300,000

 

 $             1.00

Options granted

     4,638,500

 

0.77

 

-   

 

-

Less:

 

 

 

 

 

 

 

 

Options exercised

-

 

 -

 
-

 

 -

 

Options canceled or expired

 - 

 

-

 

 -

 

 -

Options outstanding at end of year

     4,938,500

 

 $             0.78

 

         300,000

 

 $             1.00

Options excercisable at end of year

 

 - 

 

 

 -

Options vested and expected to vest

     2,235,250

 

 $             0.68

 

         260,000

 

                1.00

Weighted average fair value of options granted during the year

 $  3,436,010

 

-

 

                    -  

 

-

 

 

 

 

 

 

 

 

 


F-52

 

The following table summarizes information about stock options outstanding at June 30, 2018:

 

 

Options oustanding

 

Options exercisable

Range of Exercise prices

 

Number outstanding at June 30, 2018

 

Weighted average remaining contractual life (years)

 

Weighted average exercise price

 

Number exercisable at June 30, 2018

 

Weighted average exercise price

0.50 - 0.80

 

     2,850,000

 

6.00

 

0.64

 

-   

 

 -   

0.88 - 1.00

 

     2,088,500

 

5.97

 

0.94

 

 -   

 

-   

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2018, a total of $3,436,010 of expense was calculated for 2018 options.  Based on the vesting schedule of the issued options, $1,980,858 was recognized in expense as of June 30, 2018. $1,455,152 will be recognized over the remaining performance periods.

NOTE 13 COMMITMENTS AND CONTINGENCIES

The Company has commitments under license agreements which are described in note 6.

We lease office and research space under month-to-month leasing arrangements.  Therefore, we do not believe we have any material leasing commitments.

Rent expense under operating leases was $121,451 and $65,408 for the years ended June 30, 2018 and 2017, respectively.


F-53

 

NOTE 14 SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through September 28, 2018, the date on which the financial statements were available to be issued.

 

On August 22, 2018 the Company and Juneau entered into a Second Amended and Restated Subscription Agreement. The amended agreement is described in Note 7.

 

Subsequent to year end, Predictive Technology Group, Inc. (the “Company”), Predictive Acquisitions, Inc. (“PAI”), a wholly owned subsidiary of the Company and Regenerative Medical Technologies, Inc. (“RMT”) entered into an agreement captioned “Agreement and Plan of Merger” (the “Acquisition Agreement”).  RMT holds various assets including (i) models, methods and protocols for collection birthing tissue and DNA samples, (ii) patient registry models, methods and protocols to collect clinical outcomes and electronic medical records, and  (iii) designs and methodologies relating to bone marrow aspirate kits, large joint injection kits, degenerative disc disease post-microdiscectomy injection kits, an allogenic stem cell products for degenerative disc disease, autism, facet joint, IV treatment of opioid addition, and (iv) other assets. Under the terms of the Acquisition Agreement, PAI will merge with RMT, the surviving corporation will become a wholly owned subsidiary of the Company and the shareholders of RMT will receive 10,000,000 shares of the Company’s common stock. The closing of this transaction is subject to shareholder approval of the merging entities and other contingencies that may or may not occur. If the closing occurs, it is anticipated to close on or before December 31, 2018.

Subsequent to year end, the Company entered into an agreement captioned “Securities Purchase Agreement” with the members of Inception DX, LLC (“Inception”), a Utah limited liability company. Under the terms of the agreement, the Company acquired Inception DX for 6,900,000 shares of its common stock. Inception owns laboratory equipment, database records for over 31,900,000 individuals for use in genetics research, initial CLIA registration, CLIA lab protocols, and other assets. Once the CLIA registration is completed, Inception will be used as a CLIA laboratory by Predictive Technology Group, Inc. and its affiliates.

Subsequent to year end, the Company entered into an agreement captioned “Asset Purchase Agreement” (the “Purchase Agreement”) with Taueret Laboratories, LLC and its members. Under the terms of the Purchase Agreement, the Company issued warrants exercisable for 16,500,000 shares of the Company’s common stock. The warrants were exercisable at fair market value of the Company’s common stock on the closing date. In consideration for the warrants, the Company acquired (i) approximately 1,000 degenerative disc disease related DNA samples, related family records, relevant clinical records (including approximately 600 affected probands) and 800 ancestry matched control samples, (ii) whole exome sequencing data on approximately 300 degenerative disc disease samples, over 800 local controls, and published reference populations, together with initial analysis of the markers, (iii) project plan, study paperwork, promotional study and materials used in the research study, (iv) exclusive use of a DNA biobank that has collection over 300,000 samples for multiple diseases that the Company may target, and (v) other assets.

Subsequent to year end, the Company entered into an agreement captioned Consulting Agreement with Avira Financial, LLC whereby Avira will be performing various business development, marketing and consulting services for the Company. In consideration for these services, the Company granted warrants to Avira exercisable for 5,250,000 shares of the Company’s common stock with a strike price equal to the closing price of the Company’s common stock on the date of grant. Warrants to acquire 250,000 shares vested upon issuance and the remainder of the warrants vest over a three year period, subject to accelerated vesting upon the occurrence of certain events. The warrants expire on the earlier of (i) the five year anniversary of the date of issuance or (ii) the date the Consulting Agreement is terminated.  

Subsequent to year end, the Company authorized the granted stock options exercisable for 15,840,000 shares of common stock to employees. All options are exercisable at the closing price of the Company’s common stock on the date of grant.

In September 2018, the parties in the Alpha Modus lawsuit entered into a Settlement Agreement and Mutual Release whereby all claims were released and discharged in consideration for Alpha Modus Corp. being able to retain 200,000 shares of Predictive Technology Group, Inc. common stock that it previously held and Predictive Technology Group, Inc. cooperating with Alpha Modus Corp. in its efforts to clear restrictions on said shares.


F-54

 

Exhibit 3.1

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF

PREDICTIVE TECHNOLOGY GROUP, INC.

ARTICLE I

Name

The name of the Company is Predictive Technology Group, Inc.

ARTICLE II

Business

The purpose and nature of the business, objectives, or purposes to be transacted, promoted, or carried on by the Company shall be to engage in any lawful activity, to do all and everything necessary, suitable, and proper to accomplish the foregoing, and to engage in any and every activity and business enterprise which the Company’s board of directors (the “Board of Directors”) may, from time to time, deem reasonably necessary, providing the same shall not be inconsistent with the Nevada Revised Statutes (the “NRS”).

ARTICLE III

Capital Stock

1.

Authorized Stock .  The total number of shares of stock which the Company shall have authority to issue is 910,000,000, consisting of 900,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and 10,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).

2.

Preferred Stock .  The Preferred Stock may be issued from time to time in one or more series.  The Board of Directors is hereby authorized to create and provide for the issuance of shares of the Preferred Stock in series, and by filing a certificate pursuant to the applicable section of the NRS (the “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.  The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:

(a)

The designation of the series, which may be by distinguishing number, letter or title.

(b)

The number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding).

(c)

Whether dividends, if any, shall be cumulative or noncumulative and the dividend rate of the series.

(d)

The dates at which dividends, if any, shall be payable.

(e)

The redemption rights and price or prices, if any, for shares of the series.

(f)

The terms and amount of any sinking fund provided for the purchase or redemption of shares of the series.

(g)

The amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

(h)

Whether the shares of the series shall be convertible into shares of any other class or series, or any other security of the Company or any other corporation, and, if so, the specification of such other class or series of such other security, the conversion price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible and all other terms and conditions upon which such conversion may be made.



1


 

(i)

Restrictions on the issuance of shares of the same series or of any other class or series.

(j)

The voting rights, if any, of the holders of shares of the series.

(k)

Such other powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions thereof as the Board of Directors shall determine.

3.

Common Stock .  The Common Stock shall be subject to the express terms of the Preferred Stock and any series thereof.  Each share of the Common Stock shall be equal to each other share of the Common Stock.  The holders of shares of the Common Stock shall be entitled to one vote for each such share upon all questions presented to the stockholders.

4.

Voting Rights .  Except as may be provided in these Articles of Incorporation or in a Preferred Stock Designation, or as may be required by applicable law, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, and holders of shares of the Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote.  At each election for directors, every stockholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote.  It is expressly prohibited for any stockholder to cumulate his votes in any election of directors.

5.

Denial of Preemptive Rights .  No stockholder of the Company shall, by reason of his holding shares of any class, have any preemptive or preferential right to purchase or subscribe to any shares of any class of the Company, now or hereafter to be authorized, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, now or hereafter to be authorized, whether or not the issuance of any such shares, or such notes, debentures, bonds or other securities would adversely affect dividend or voting rights of such stockholder, other than such rights, if any, as the Board of Directors in its discretion may fix; and the Board of Directors may issue shares of any class of the Company, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, without offering any such shares of any class, either in whole or in part, to the existing stockholders of any class.

6.

Record Date .  The Board of Directors may prescribe a period not exceeding 60 days before any meeting of the stockholders during which no transfer of stock on the books of the Company may be made, or may fix, in advance, a record date not more than 60 or less than 10 days before the date of any such meeting as the date as of which stockholders entitled to notice of and to vote at such meetings must be determined.  Only stockholders of record on that date are entitled to notice or to vote at such a meeting.  If a record date is not fixed, the record date is at the close of business on the day before the day on which notice is given or, if notice is waived, at the close of business on the day before the meeting is held.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders applies to an adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting.  The Board of Directors must fix a new record date if the meeting is adjourned to a date more than 60 days later than the date set for the original meeting.

ARTICLE IV

Election of Directors

1.

Number .  The business and affairs of the Company shall be conducted and managed by, or under the direction of, the Board of Directors.  The total number of directors constituting the entire Board of Directors shall be fixed and may be altered from time to time by or pursuant to a resolution passed by the Board of Directors, but shall not be less than one.

2.

Vacancies .  Except as otherwise provided for herein, newly created directorships resulting from any increase in the authorized number of directors, and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause, may be filled only by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors.  Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the newly created directorship or for the directorship in which the vacancy occurred, and until such director’s successor shall have been duly elected and qualified, subject to his earlier death, disqualification, resignation or removal.  Subject to the provisions of these Articles of Incorporation, no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.



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3.

Removal of Directors .  Except as otherwise provided in any Preferred Stock Designation, any director may be removed from office only by the affirmative vote of the holders of a majority or more of the combined voting power of the then outstanding shares of capital stock of the Company entitled to vote at a meeting of stockholders called for that purpose, voting together as a single class.

ARTICLE V

Meetings of Stockholders

Meetings of stockholders of the Company (the “Stockholder Meetings”) may be held within or without the State of Nevada, as the Bylaws of the Company (the “Bylaws”) may provide.  Special Stockholder Meetings may be called only by (a) the Chairman of the Board, (b) the Chief Executive Officer, (c) the President, (d) the holders of at least 10 percent of all of the shares entitled to vote at the proposed special meeting, or (e) the Board of Directors pursuant to a duly adopted resolution.  Special Stockholder Meetings may not be called by any other person or persons or in any other manner.  Elections of directors need not be by written ballot unless the Bylaws shall so provide.

ARTICLE VI

Limitation of Liability

Except as otherwise provided in the NRS, a director or officer of the Company shall not be personally liable to the Company or its stockholders for damages as a result of any act or failure to act in his capacity as a director or officer; provided, however, that this Article shall not eliminate or limit the liability of a director or officer (a) if it is proven that his act or failure to act constituted a breach of his fiduciary duties and such breach involved intentional misconduct, fraud or a knowing violation of law, or (b) under Section 78.300 of the NRS.

If the NRS is amended after the date of filing of these Articles of Incorporation to authorize corporate action further limiting or eliminating the personal liability of a director, then the liability of the directors of the Company shall be limited or eliminated to the fullest extent permitted by the NRS, as so amended, or a similar successor provision.  Any repeal or modification of this Article by the stockholders of the Company or otherwise shall not adversely affect any right or protection of a director of the Company existing at the time of such repeal or modification.

ARTICLE VII

Indemnification

1.

Discretionary Indemnification .  (a) The Company may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Company, by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (i) is not liable pursuant to Section 78.138 of the NRS; or (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.  The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person is liable pursuant to Section 78.138 of the NRS or did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, or that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.



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(b)

The Company may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation.  partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (i) is not liable pursuant to Section 78.138 of the NRS; or (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company.  Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the courts deem proper.

2.

Determination of Discretionary Indemnification .  Any discretionary indemnification pursuant to Section 1 of this Article VII, unless ordered by a court or advanced pursuant to this Section 2, may be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances.  The determination must be made:

(a)

By the stockholders; or

(b)

By the Board of Directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; or

(c)

If a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or

(d)

If a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.

The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the Company as they are incurred in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Company.

3.

Mandatory Indemnification .  To the extent that a director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 of this Article VII, or in defense of any claim, issue or matter therein, the Company shall indemnify him against expenses, including attorneys’ fees actually and reasonably incurred by him in connection with the defense.

4.

Non-Exclusivity .  The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this Article VII:

(a)

Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to Section 1 of this Article VII, or for the advancement of expenses made pursuant to Section 2 of this Article VII may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.

(b)

Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of any such person.



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5.

Insurance .  The Company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the Company has the authority to indemnify him against such liability expenses.

ARTICLE VIII

Amendment of Corporate Documents

1.

Articles of Incorporation .  Whenever any vote of the holders of voting shares of the capital stock of the Company is required by law to amend, alter, repeal or rescind any provision of these Articles of Incorporation, such alteration, amendment, repeal or rescission of any provision of these Articles of Incorporation must be approved by the affirmative vote of the holders of at least a majority of the combined voting power of the then outstanding voting shares of capital stock of the Company, voting together as a single class.  Subject to the provisions hereof, the Company reserves the right at any time, and from time to time, to amend, alter, repeal or rescind any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed by law, and other provisions authorized by the laws of the State of Nevada at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to these Articles of Incorporation in their present form or as hereafter amended are granted subject to the rights reserved in this Article.

2.

Bylaws .  In addition to any affirmative vote required by law, any change of the Bylaws may be adopted either (a) by the affirmative vote of the Board of Directors, or (b) by the stockholders by the affirmative vote of the holders of at least a majority of the combined voting power of the then outstanding voting shares of capital stock of the Company, voting together as a single class.

ARTICLE IX

Application of NRS 78.411 to 78.444, Inclusive

These Articles of Incorporation expressly provide that the Company shall not be governed by Sections 78.411 to 78.444 of the NRS, inclusive.

ARTICLE X

Existence

The Company is to have perpetual existence.

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AMENDED AND RESTATED BYLAWS OF PREDICTIVE TECHNOLOGY GROUP, INC.



ARTICLE I
Offices

1.1.

Registered Office .  The registered office of PREDICTIVE TECHNOLOGY GROUP, INC. (the “Company”) required by Section 78.035 of the Nevada Revised Statutes or any successor statute (the “NRS”) to be maintained in the State of Nevada shall be the registered office named in the Articles of Incorporation of the Company, as they may be amended or restated from time to time in accordance with the NRS (the “Articles of Incorporation”), or as the Board of Directors of the Company (the “Board of Directors”) may determine from time to time or as the business of the Company may require.

1.2.

Other Offices .  The Company may also have offices at such other places both within and without the State of Nevada as the Board of Directors may determine from time to time or as the business of the Company may require.

ARTICLE II
Meetings of Stockholders

2.1.

Place of Meetings .  Meetings of the Company’s stockholders shall be held at such place within or without the State of Nevada as may be designated by the Board of Directors or the person or persons calling the meeting, or, in the absence of such designation, at the principal office of the Company.

2.2.

Annual Meeting .  An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire or to fill vacancies and for the transaction of such other business as may properly come before the meeting, shall be held on such date and at such time as the Board of Directors shall fix and set forth in the notice of the meeting, which date shall be within 13 months subsequent to the last annual meeting of stockholders.  At the annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the annual meeting as set forth in Paragraph 2.8 hereof.  Failure to hold the annual meeting at the designated time shall not work dissolution of the Company.

2.3.

Special Meetings .  Subject to the rights of the holders of any series of the Company’s preferred stock (the “Preferred Stock”), as designated in any resolutions adopted by the Board of Directors and filed with the State of Nevada (a “Preferred Stock Designation”), special meetings of the stockholders may be called at any time by those persons set forth in the Articles of Incorporation.  Upon written request of any person or persons who have duly called a special meeting, it shall be the duty of the Secretary to fix the date of the meeting to be held not less than 10 nor more than 60 days after the receipt of the request and to give due notice thereof, as required by the NRS.  If the Secretary shall neglect or refuse to fix the date of the meeting and give notice thereof, the person or persons calling the meeting may do so.

2.4.

Notice of Meeting .  Written or printed notice of all meetings, stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 60 days before the date of the meeting, either personally, or by mail, email, telegraph, telecopier or similar communication, by or at the direction of the Chairman of the Board or Secretary, or by the person or persons calling the meeting, to each stockholder entitled to vote at such meeting.  If mailed, such notice shall be deemed to be delivered to a stockholder when deposited in the United States mail addressed to such stockholder at such stockholder’s address as it appears on the stock transfer records of the Company, with postage thereon prepaid.  If such notice is sent by email, telegraph, telecopier or similar communication, such notice shall be deemed to be delivered to a stockholder when sent to such stockholder at such stockholder’s email, telegraph, telecopier or similar communication address as it appears on the stock transfer records of the Company.

 

2.5.

Registered Holders of Shares; Closing of Share Transfer Records; and Record Date .

(a)

Registered Holders as Owners .  Unless otherwise provided under the NRS, the Company may regard the person in whose name any shares are registered in the stock transfer records of the Company at any particular time (including, without limitation, as of a record date fixed pursuant to subparagraph (b) of this Paragraph 2.5) as the owner of such shares at that time for purposes of voting, receiving distributions thereon or notices in respect thereof, transferring such shares, exercising rights of dissent with respect to such shares, entering into agreements with respect to such shares, or giving proxies with respect to such shares; and neither the Company nor any of its officers, directors, employees or agents shall be liable for regarding that person as the owner of such shares at that time for those purposes, regardless of whether that person possesses a certificate for such shares.

(b)

Record Date .  For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive a distribution by the Company (other than a distribution involving a purchase or redemption by the Company of any of its own shares) or a share dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors, or the person or persons calling a meeting of stockholders, may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than 60 days and, in the case of a meeting of stockholders, not less than 10 days, prior to the date on which the particular action requiring such determination of stockholders is to be taken.  The Board of Directors shall not close the books of the Company against transfers of shares during the whole or any part of such period.

If the Board of Directors, or the person or persons calling a meeting of stockholders, do not fix a record date for any meeting of the stockholders, the record date for determining stockholders entitled to notice of or to vote at such meeting shall be at the close of business on the day next preceding the day on which notice is given, or, if in accordance with Paragraph 7.3 of these Bylaws notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

2.6.

Quorum of Stockholders; Adjournment .  Unless otherwise provided in the Articles of Incorporation, a majority of the outstanding shares of capital stock of the Company entitled to vote, present in person or represented by proxy, shall constitute a quorum at any meeting of the stockholders, and the stockholders present at any duly convened meeting may continue to do business until adjournment notwithstanding any withdrawal from the meeting of holders of shares counted in determining the existence of a quorum.  Unless otherwise provided in the Articles of Incorporation or these Bylaws, any meeting of the stockholders may be adjourned from time to time by the chairman of the meeting or the holders of a majority of the issued and outstanding stock, present in person or represented by proxy, whether or not a quorum is present, without notice other than by announcement at the meeting at which such adjournment is taken, and at any such adjourned meeting at which a quorum shall be present any action may be taken that could have been taken at the meeting originally called; provided that if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting.

2.7.

Voting by Stockholders .

(a)

Voting on Matters Other than the Election of Directors .  With respect to any matters as to which no other voting requirement is specified by the NRS, the Articles of Incorporation or these Bylaws, and, subject to the rights of the holders of any series of Preferred Stock to elect directors under specific circumstances, the affirmative vote required for stockholder action shall be that of a majority of the shares present in person or represented by proxy at the meeting (as counted for purposes of determining the existence of a quorum at the meeting).  In the case of a matter submitted for a vote of the stockholders as to which a stockholder approval requirement is applicable under the stockholder approval policy of any stock exchange or quotation system on which the capital stock of the Company is traded or quoted, the requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any provision of the Internal Revenue Code, in each case for which no higher voting requirement is specified by the NRS, the Articles of Incorporation or these Bylaws, the vote required for approval shall be the requisite vote specified in such stockholder approval policy, the Exchange Act or Internal Revenue Code provision, as the case may be (or the highest such requirement if more than one is applicable).



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(b)

Voting in the Election of Directors .  Unless otherwise provided in the Articles of Incorporation or these Bylaws in accordance with the NRS, directors shall be elected by a plurality of the votes cast by the holders of outstanding shares of capital stock of the Company entitled to vote in the election of directors at a meeting of stockholders at which a quorum is present.

(c)

Consents in Lieu of Meeting .  Any action that is required or permitted to be taken by the stockholders of the Company at any annual or special meeting of stockholders may be effected by the written consent of stockholders in lieu of a meeting pursuant to the provisions of the NRS.

(d)

Telephone Meetings .  Subject to the provisions required or permitted by the NRS for notice of meetings, unless otherwise restricted by the Articles of Incorporation or these Bylaws, stockholders may participate in and hold a meeting of such stockholders by means of electronic communications, videoconferencing, teleconferencing or other available technology which allows the stockholders to communicate simultaneously or sequentially.  Participation in a meeting pursuant to this subsection constitutes presence in person at the meeting.

(e)

Other .  The Board of Directors, in its discretion, or the officer of the Company presiding at a meeting of stockholders of the Company, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot.

2.8.

Business to be Conducted at Annual or Special Stockholder Meetings . At any annual or special meeting of stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been disclosed in the notice delivered to the stockholders with respect to such meeting.

2.9.

Proxies .  Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy.  Proxies for use at any meeting of stockholders shall be filed with the Secretary, or such other officer as the Board of Directors may from time to time determine by resolution, before or at the time of the meeting.  All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the secretary of the meeting who shall decide all questions relating to the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions.

2.10.

Approval or Ratification of Acts or Contracts by Stockholders .  The Board of Directors, or the person or persons calling a meeting of stockholders, in their discretion may submit any act or contract for approval or ratification at any annual meeting of the stockholders, or at any special meeting of the stockholders called for the purpose of considering any such act or contract, and any act or contract that shall be approved or be ratified by the vote of the stockholders holding a majority of the issued and outstanding shares of stock of the Company entitled to vote and present in person or by proxy at such meeting (provided that a quorum is present), shall be as valid and as binding upon the Company and upon all the stockholders as if it has been approved or ratified by every stockholder of the Company.

2.11.

Inspectors of Election .  The Company shall, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the Company, to act at the meeting or any adjournment thereof and to make a written report thereof.  The Company may designate one or more persons as alternate inspectors to replace any inspector who fails to act.  If no inspector so appointed or designated is able to act at a meeting of stockholders, the chairman or the person presiding at the meeting shall appoint one or more inspectors to act at the meeting.  Each inspector, before entering upon the discharge of his duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his ability.

The inspector or inspectors so appointed or designated shall: (a) ascertain the number of shares of capital stock of the Company outstanding and the voting power of each such share; (b) determine the shares of capital stock of the Company represented at the meeting and the validity of proxies and ballots; (c) count all votes and ballots; (d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and (e) certify their determination of the number of shares of the capital stock of the Company represented at the meeting and such inspectors’ count of all votes and ballots.  Such certification and report shall specify such other information as may be required by law.  In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Company, the inspectors may consider such information as is permitted by applicable law.  No person who is a candidate for an office at an election may serve as an inspector at such election.



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ARTICLE III
Directors

3.1.

Powers, Number, Classification and Tenure .

(a)

The powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Board of Directors.  Each director shall hold office for the full term for which such director is elected and until such director’s successor shall have been duly elected and qualified or until his earlier death or resignation or removal in accordance with the Articles of Incorporation or these Bylaws.

(b)

Within the limits specified in the Articles of Incorporation, and subject to the rights of the holders of any series of Preferred Stock to elect directors under specific circumstances, the number of directors that shall constitute the whole Board of Directors shall be fixed by, and may be increased or decreased from time to time by, the affirmative vote of a majority of the members at any time constituting the Board of Directors.  Except as provided in the Articles of Incorporation, and subject to the rights of the holders of any series of Preferred Stock to elect directors under specific circumstances, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors.  Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director’s successor shall have been elected and qualified or until his earlier death, resignation or removal.  No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

3.2.

Qualifications .  Directors need not be residents of the State of Nevada or stockholders of the Company.

3.3.

Place of Meeting; Order of Business .  Except as otherwise provided by law, meetings of the Board of Directors, regular or special, may be held either within or without the State of Nevada, at whatever place is specified by the person or persons calling the meeting.  In the absence of specific designation, the meetings shall be held at the principal office of the Company.  At all meetings of the Board of Directors, business shall be transacted in such order as shall from time to time be determined by the Chairman of the Board, or in his absence by the President, or by resolution of the Board of Directors.

3.4.

Regular Meetings .  Regular meetings of the Board of Directors shall be held, in each case, at such hour and on such day as may be fixed by resolution of the Board of Directors, without further notice of such meetings.  The time or place of holding regular meetings of the Board of Directors may be changed by the Chairman of the Board by giving written notice thereof as provided in Paragraph 3.6 hereof.

3.5.

Special Meetings .  Special meetings of the Board of Directors shall be held, whenever called by the Chairman of the Board or by resolution adopted by the Board of Directors, in each case, at such hour and on such day as may be stated in the notice of the meeting.

3.6.

Attendance at and Notice of Meetings .  Written notice of the time and place of, and general nature of the business to be transacted at, all special meetings of the Board of Directors, and written notice of any change in the time or place of holding the regular meetings of the Board of Directors, shall be given to each director personally or by mail, email, telegraph, telecopier or similar communication at least one day before the day of the meeting; provided, however , that notice of any meeting need not be given to any director if waived by him in writing, or if he shall be present at such meeting.  Participation in a meeting of the Board of Directors shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.



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3.7.

Quorum of and Action by Directors .  A majority of the directors in office shall constitute a quorum of the Board of Directors for the transaction of business; but a lesser number may adjourn from day to day until a quorum is present.  Except as otherwise provided by law or in these Bylaws, all questions shall be decided by the vote of a majority of the directors present at a meeting at which a quorum is present.

3.8.

Board and Committee Action Without a Meeting .  Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at a meeting of the Board of Directors or any committee thereof may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors or such committee, as the case may be, and shall be filed with the Secretary.

3.9. Board and Committee Telephone Meetings .  Subject to the provisions required or permitted by the NRS for notice of meetings, unless otherwise restricted by the Articles of Incorporation or these Bylaws, members of the Board of Directors, or members of any committee designated by the Board of Directors, may participate in and hold a meeting of such Board of Directors or committee by means of electronic communications, videoconferencing, teleconferencing or other available technology which allows the directors to communicate simultaneously or sequentially.  Participation in a meeting pursuant to this subsection constitutes presence in person at the meeting.

3.10. Compensation .  Directors shall receive such compensation for their services as shall be determined by the Board of Directors.

3.11.

Removal .  Directors may be removed from office in the manner set forth in the Articles of Incorporation, subject to the rights of the holders of any series of Preferred Stock to elect directors under specific circumstances.

3.12.

Committees of the Board of Directors .

(a)

The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members one or more committees (in addition to those listed below), each of which shall be comprised of one or more of its members, and may designate one or more of its members as alternate members of any committee, who may, subject to any limitations by the Board of Directors, replace absent or disqualified members at any meeting of that committee.  Any such committee, to the extent provided in such resolution or in the Articles of Incorporation or these Bylaws, shall have and may exercise all of the authority of the Board of Directors to the extent permitted by the NRS, including, without limitation, the power and authority to declare a dividend, to authorize the issuance of stock or to adopt a plan of merger pursuant to Section 78.125 of the NRS.  Any such committee may authorize the seal of the Company to be affixed to all papers which may require it.  In addition to the above, such committee or committees shall have such other powers and limitations of authority as may be determined from time to time by resolution adopted by the Board of Directors.

(b)

The Board of Directors shall have the power at any time to change the membership of any such committee and to fill vacancies in it.  A majority of the number of members of any such committee shall constitute a quorum for the transaction of business unless a greater number is required by a resolution adopted by the Board of Directors.  The act of the majority of the members of a committee present at any meeting at which a quorum is present shall be the act of such committee, unless the act of a greater number is required by a resolution adopted by the Board of Directors.  Each such committee may elect a chairman and appoint such subcommittees and assistants as it may deem necessary.  Except as otherwise provided by the Board of Directors, meetings of any committee shall be conducted in accordance with Paragraphs 3.4, 3.5, 3.6, 3.7, 3.8, 3.9 and 7.3 hereof.  In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.  Any member of any such committee elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Election or appointment of a member of a committee shall not of itself create contract rights.



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(c)

Any action taken by any committee of the Board of Directors shall promptly be recorded in the minutes and filed with the Secretary.

(d)

Notwithstanding anything herein contained to the contrary, the composition and powers of any committee of the Board of Directors are expressly subject to the requirements of any stock exchange or quotation system on which the capital stock of the Company is traded or quoted, or the Exchange Act.

(e)

Executive Committee .  The Board of Directors may create an Executive Committee of the Board of Directors, which committee shall have and may exercise all the powers and authority of the Board of Directors between regular or special meetings of the Board of Directors in the management of the business and affairs of the Company, except to the extent limited by Nevada law.  Without limiting the generality of the foregoing, the Executive Committee shall have the power and authority to (i) declare dividends on any class of capital stock of the Company, (ii) authorize the issuance of capital stock of the Company, (iii) adopt plans of merger, and (iv) in reference to amending the Articles of Incorporation, to the extent authorized in the resolution or resolutions providing for the issuance of shares of capital stock adopted by the Board of Directors, fix the designations and any of the preferences or rights of such shares relating to dividends, redemptions, dissolution, any distribution of assets of the Company or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Company or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series.

(f)

Audit Committee .  The Board of Directors may create an Audit Committee of the Board of Directors whose members shall consist solely of directors who are not employees or affiliates of the Company and have no relationship with the Company that would, in the judgment of the Board of Directors, interfere with their exercise of independent judgment as a member of such committee.  The Audit Committee shall have and may exercise the power and authority to recommend to the Board of Directors the accounting firm to be selected by the Board of Directors or to be recommended by it for stockholder approval, as independent auditor of the financial statements of the Company and its subsidiaries, and to act on behalf of the Board of Directors in meeting and reviewing with the independent auditors, the chief accounting officer, the chief internal auditor, if any, and the appropriate corporate officers, matters relating to corporate financial reporting and accounting procedures and policies, adequacy of financial, accounting and operating controls and the scope of the respective audits of the independent auditors and the internal auditor, if any.  The Audit Committee shall also review the results of such audits with the respective auditors and shall report the results of those reviews to the Board of Directors.  The Audit Committee shall submit to the Board of Directors any recommendations it may have from time to time with respect to financial reporting and accounting practices and policies and financial, accounting and operational controls and safeguards.  The Audit Committee may submit to the Compensation Committee any recommendations it may have with respect to the compensation of the chief accounting officer and the chief internal auditor, if any.  The Board of Directors shall, by resolution adopted by a majority of the Board of Directors, designate not less than two of its qualifying members from time to time to constitute members of the Audit Committee.

(g)

Nominating Committee .  The Board of Directors may create a Nominating Committee of the Board of Directors, which committee shall have and may exercise the power and authority to recommend to the Board of Directors prior to each annual meeting of the stockholders of the Company: (i) the appropriate size and composition of the Board of Directors; and (ii) nominees: (1) for election to the Board of Directors for whom the Company should solicit proxies; (2) to serve as proxies in connection with the annual stockholders’ meeting; and (3) for election to all committees of the Board of Directors other than the Nominating Committee.  The Board of Directors shall, by resolution adopted by a majority of the Board, designate one or more of its members from time to time to constitute members of the Nominating Committee.

(h)

Compensation Committee .  The Board of Directors may create a Compensation Committee of the Board of Directors, whose members shall consist solely of directors who are not employees or affiliates of the Company and have no relationship with the Company that would, in the judgment of the Board of Directors, interfere with their exercise of independent judgment as a member of such committee.  The Compensation Committee shall have and may exercise all the power and authority to (i) establish a general compensation policy for the officers and employees of the Company, including to establish and at least annually review officers’ salaries and levels of officers’ participation in the benefit plans of the Company, (ii) prepare any reports that may be required by the regulations of the Securities and Exchange Commission or otherwise relating to officer compensation, (iii) approve any increases in directors’ fees, and (iv) exercise all other powers of the Board of Directors with respect to matters involving the compensation of employees and the employee benefits of the Company as shall be delegated by the Board of Directors to the Compensation Committee from time to time.  Without limiting the generality of the foregoing, the Compensation Committee shall have the power and authority to authorize the issuance of capital stock of the Company pursuant to any compensation or benefit plan or arrangement adopted or entered into by the Company.  The Board of Directors shall, by resolution adopted by a majority of the Board, designate two or more of its qualifying members from time to time to constitute members of the Compensation Committee.



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ARTICLE IV
Officers

4.1.

Designation .  The officers of the Company shall consist of a Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Secretary, Chief Financial Officer, Treasurer, Controller and such Executive, Senior or other Vice Presidents, Assistant Secretaries, Assistant Treasurers, Assistant Controllers and other officers as may be elected or appointed by the Board of Directors from time to time.  Any number of offices may be held by the same person.  The Chairman of the Board may also serve as the Chief Executive Officer.  The Chairman of the Board shall be chosen from the directors.  All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective stockholders and of the Board of Directors.

4.2.

Election and Term of Office .  The elected officers of the Company shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held at the time of each annual meeting of the stockholders.  If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient.  Subject to Paragraph 4.17 of these Bylaws, each officer shall hold office until such officer’s successor shall have been duly elected and shall have qualified or until such officer’s death or until such officer shall resign.

4.3.

Chairman of the Board .  The Chairman of the Board, in the absences of a Chief Executive Officer, shall be the Chief Executive Officer of the Company and shall preside at all meetings of the stockholders and of the Board of Directors.  Except where by law the signature of the President is required, the Chairman of the Board shall possess the same power as the President to sign all contracts, certificates and other instruments of the Company which may be authorized by the Board of Directors.  The Chairman of the Board shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these Bylaws or by the Board of Directors.  In the absence or incapacity to act of the President, the Chairman of the Board shall serve as acting President, and when so acting, shall have all the powers of and be subject to the restrictions of such office.

4.4.

Chief Executive Officer .  The Chief Executive Officer shall be responsible for the general management of the affairs of the Company and shall perform all duties incidental to the Chief Executive Officer’s office which may be required by law and all such other duties as are properly required of him by the Board of Directors.  The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

4.5.

President .  The President shall be the Chief Operating Officer of the Company and shall have general supervision and control of the business, affairs and properties of the Company and its general officers, and shall see that all orders and resolutions of the Board of Directors are carried into effect.  He shall have the power to appoint and remove all subordinate officers, agents and employees, except those elected or appointed by the Board of Directors, and shall execute all bonds, mortgages, contracts and other instruments of the Company requiring a seal, under the seal of the Company, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Company may sign and execute documents when so authorized by these Bylaws, the Board of Directors or the President.  The President shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these Bylaws or by the Board of Directors.  In the incapacity to act of the Chairman of the Board, the President shall serve as acting Chairman of the Board, and when so acting, shall have all the powers of and be subject to the restrictions of such office.



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4.6.

Chief Operating Officer .  As the Chief Operating Officer, the President shall have general charge and supervision of the day to day operations of the Company (subject to the direction of the Board of Directors), and, in general, shall perform such other duties as are incident to the office of a chief operating officer of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned to him by the Board of Directors.

4.7.

Vice President .  The Board of Directors may appoint such Vice Presidents as may be recommended by the President or as the directors deem necessary or appropriate.  Vice Presidents may be designated as Senior Vice Presidents, Executive Vice Presidents or some other designation as the Board of Directors deems appropriate (each a “Vice President”).  Each Vice President shall perform such duties as the Board of Directors may from time to time prescribe and have such other powers as the President may from time to time prescribe.

4.8.

Chief Financial Officer .  The Chief Financial Officer shall be the chief accounting officer of the Company and shall have general charge and supervision of the day to day financial operations of the Company (subject to the direction of the Board of Directors), and, in general, shall perform such other duties as are incident to the office of a chief financial officer of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned to him by the Board of Directors or the Audit Committee.

4.9.

Secretary .  The Secretary shall attend the meetings of the Board of Directors and all meetings of stockholders and record the proceedings thereof in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when required.  The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be.  If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then the Chairman of the Board may choose another officer to cause such notice to be given.  The Secretary shall have custody of the seal of the Company and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary.  The Board of Directors may give general authority to any other officer to affix the seal of the Company and to attest the affixing by his signature.  The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

4.10.

Treasurer .  The Treasurer shall have the custody of the Company’s funds and securities and shall keep full and accurate accounts of receipt and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Chief Financial Officer or the Board of Directors.  The Treasurer shall disburse the funds of the Company as may be ordered by the Chief Financial Officer or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board and the Board of Directors, at its regular meeting, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the liquidity of the Company.  If required by the Board of Directors, the Treasurer shall give the Company a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Company, in case of his death, resignation, retirement or removal from office, of all books papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Company.

4.11.

Controller .  The Controller, if there is one, shall maintain records of all assets, liabilities, and transactions of the Company and shall be responsible for the design, installation and maintenance of accounting and cost control systems and procedures for the Company and shall perform such other duties and have such other powers as from time to time may be assigned to him by the Chief Financial Officer, Board of Directors or the Audit Committee.

4.12.

Assistant Secretaries .  Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, or the Secretary, and in the absence of the Secretary or in the event of his disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.



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4.13.

Assistant Treasurers .  Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President or the Treasurer, and in the absence of the Treasurer or in the event of his disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer.  If required by the Board of Directors, an Assistant Treasurer shall give the Company a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Company, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Company.

4.14.

Assistant Controllers .  Except as may be otherwise provided in these Bylaws, Assistant Controllers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, or the Controller, and in the absence of the Controller or in the event of his disability or refusal to act, shall perform the duties of the Controller, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Controller.

4.15.

Other Officers .  Such other officers as the Board of Directors may choose shall perform such duties and have such powers, subordinate to those powers specifically delegated to certain officer in these Bylaws, as from time to time may be assigned to them by the Board of Directors.  The President of the Company shall have the power to choose such other officers and to prescribe their respective duties and powers, subject to control by the Board of Directors.

4.16.

Vacancies .  Whenever any vacancies shall occur in any office by death, resignation, increase in the number of offices of the Company, or otherwise, the same shall be filled by the Board of Directors (or the President, in accordance with Paragraph 4.5 of these Bylaws, subject to control by the Board of Directors), and the officer so appointed shall hold office until such officer’s successor is elected or appointed in accordance with these Bylaws or until his earlier death, resignation or removal.

4.17.

Removal .  Any officer or agent of the Company may be removed by the Board of Directors whenever in its judgment the best interests of the Company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Election or appointment of an officer or agent shall not of itself create contract rights.

4.18.

Action with Respect to Securities of Other Corporations .  Unless otherwise directed by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President and the Treasurer of the Company shall each have power to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of security holders of or with respect to any action of security holders of any other corporation in which the Company may hold securities and otherwise to exercise any and all rights and powers which the Company may possess by reason of its ownership of securities in such other corporation.

ARTICLE V
Capital Stock

5.1.

Certificates for Shares .  The certificates for shares of the capital stock of the Company shall be in such form as may be approved by the Board of Directors from time to time.  The Company shall deliver one or more certificates to each of the Company’s stockholders, which shall represent the number of shares to which such stockholder is entitled.  Certificates shall be signed by the Chairman of the Board, the President or a Vice President and either the Secretary or an Assistant Secretary, and may bear the seal of the Company or a facsimile thereof.  The signatures of such officers upon a certificate may be facsimiles.  The stock record books and the blank stock certificates shall be kept by the Secretary, or at the office of such transfer agent or transfer agents as the Board of Directors may from time to time by resolution determine.  In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Company with the same effect as if such person were such officer at the date of its issuance.



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5.2.

Multiple Classes of Stock .  If the Company is authorized to issue more than one class of capital stock and more than one series of preferred stock, a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of each of the certificates the Company issues to represent such class or series of stock; provided that, to the extent allowed by law, in lieu of such statement, the face or back of such certificates may state that the Company will furnish a copy of such statement without charge to each requesting stockholder.

5.3.

Transfer of Shares .  The shares of stock of the Company shall be transferable only on the books of the Company by the holders thereof in person or by their duly authorized attorneys or legal representatives upon surrender and cancellation of certificates for a like number of shares.

5.4.

Ownership of Shares .  As the Company is entitled to treat the holder of record of any share or shares of capital stock as the holder in fact thereof under Paragraph 2.5 hereof, the Company shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Nevada.

5.5.

Regulations Regarding Certificates .  The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of capital stock of the Company.

5.6.

Lost or Destroyed Certificates .  The Board of Directors may determine the conditions upon which a new certificate representing shares of the capital stock of the Company may be issued in place of a certificate which is alleged to have been lost, stolen or destroyed; and may, in its discretion, require the owner of such certificate or his legal representative to give bond, with sufficient surety, to indemnify the Company and each transfer agent and registrar against any and all losses or claims that may arise by reason of the issue of a new certificate in the place of the one so lost, stolen or destroyed.

ARTICLE VI
Indemnification

6.1.

General .  The Company shall indemnify its directors, officers, employees, agents and others as provided in the Articles of Incorporation.

6.2.

Request for Indemnification .  A party requesting indemnification (the “Indemnitee”) shall submit notice of such request in writing to the Secretary of the Company.  Such notice of request for indemnification shall contain sufficient information to reasonably inform the Company about the nature and extent of the indemnification or advance sought by the Indemnitee.  The Secretary shall promptly advise the Board of Directors of any such request.

6.3.

Extension of Rights .  No amendment, alteration or repeal of this Article VI or any provision hereof shall be effective as to any Indemnitee for acts, events and circumstances that occurred, in whole or in part, before such amendment, alteration or repeal.  The provisions of this Article VI shall continue as to an Indemnitee whose corporate status has ceased for any reason and shall inure to the benefit of his heirs, executors and administrators.  Neither the provisions of this Article VI nor those of any agreement to which the Company is a party shall be deemed to preclude the indemnification of any person who is not specified in this Article VI as having the right to receive indemnification or is not a party to any such agreement, but whom the Company has the power or obligation to indemnify under the provisions of the NRS.

6.4.

Insurance and Subrogation .  The Company shall not be liable under the Articles of Incorporation or this Article VI to make any payment of amounts otherwise indemnifiable hereunder if, but only to the extent that, the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.  In the event of any payment hereunder, the Company shall be subrogated to the extent of such payment to all the rights of recovery of the Indemnitee, who shall execute all papers required and take all action reasonably requested by the Company to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.



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6.5.

Severability .  If any provision or provisions of this Article VI shall be held to be invalid, illegal or unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; and, to the fullest extent possible, the provisions of this Article VI shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

6.6.

Notices .  Promptly after receipt by the Indemnitee of notice of the commencement of any action, suit or proceeding, the Indemnitee shall, if he anticipates or contemplates making a claim for expenses or an advance pursuant to the terms of the Articles of Incorporation and this Article VI, notify the Company of the commencement of such action, suit or proceeding; provided, however , that any delay in so notifying the Company shall not constitute a waiver or release by the Indemnitee of rights hereunder and that any omission by the Indemnitee to so notify the Company shall not relieve the Company from any liability that it may have to the Indemnitee otherwise than under the Articles of Incorporation or this Article VI.  Any communication required or permitted to the Company shall be addressed to the Secretary and any such communication to the Indemnitee shall be addressed to the Indemnitee’s address as shown on the Company’s records unless he specifies otherwise and shall be personally delivered or delivered by overnight mail delivery.  Any such notice shall be effective upon receipt.

6.7.

Contractual Rights .  The right to be indemnified or to the advancement or reimbursement of expenses (a) is a contract right based upon good and valuable consideration, pursuant to which the Indemnitee may sue as if these provisions were set forth in a separate written contract between the Indemnitee and the Company, (b) is and is intended to be retroactive and shall be available as to events occurring prior to the adoption of these provisions, and (c) shall continue after any rescission or restrictive modification of such provisions as to events occurring prior thereto.

ARTICLE VII
Miscellaneous Provisions

7.1.

Bylaw Amendments .  These Bylaws may be amended as provided in the Articles of Incorporation.

7.2.

Books and Records .  The Company shall keep books and records of account and shall keep minutes of the proceedings of its stockholders, its Board of Directors and each committee of its Board of Directors.

7.3.

Notices; Waiver of Notice .  Whenever any notice is required to be given to any stockholder, director or committee member under the provisions of the NRS, the Articles of Incorporation or these Bylaws, said notice shall be deemed to be sufficient if given by deposit of the same in the United States mail, with postage paid thereon, addressed to the person entitled thereto at his address as it appears on the records of the Company, and such notice shall be deemed to have been given on the day of such mailing.

Whenever any notice is required to be given to any stockholder, director or committee member under the provisions of the NRS, the Articles of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

7.4.

Resignations .  Any director or officer may resign at any time.  Such resignations shall be made in writing and shall take effect at the time specified therein, or, if no time be specified, at the time of its receipt by the President or the Secretary.  The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

7.5.

Seal .  The seal of the Company shall be in such form as the Board of Directors may adopt.



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7.6.

Fiscal Year .  The fiscal year of the Company shall be as provided by a resolution adopted by the Board of Directors.

7.7.

Facsimile Signatures .  In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any director or officer of the Company may be used whenever and as authorized by the Board of Directors.

7.8.

Reliance upon Books, Reports and Records .  Each director and each member of any committee designated by the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or reports made to the Company by any of its officers, or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board of Directors or by any such committee, or in relying in good faith upon other records of the Company.

ARTICLE VIII
Adoption of Bylaws

8.1.

Adoption .  These Bylaws were adopted by the Board of Directors as of December 4, 2015.




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Exhibit 4.1

[EX4001.JPG]



[EX4002.JPG]



Exhibit 10.1

SECOND AMENDED AND RESTATED LICENSE AGREEMENT

 

THIS SECOND AMENDED AND RESTATED LICENSE AGREEMENT (the “ Agreement ”) is effective as of the 31 st day of March, 2018 (the “ Effective Date ”) is by and between Juneau Biosciences, LLC, a Utah Limited Liability Corporation with its offices at 2749 East Parleys Way, Suite 210, Salt Lake City, UT 84109 (“ Juneau ”), and Predictive Technology Group, Inc., a Nevada corporation with its offices at 2735 East Parleys Way, Suite 205, Salt Lake City, Utah 84109 (“ Predictive ”).

WHEREAS, Predictive markets and distributes medical services and is desirous of promoting and marketing diagnostic products for endometriosis.

WHEREAS, Juneau is a company engaged in the discovery and development of products for the detection, prognosis, diagnosis or monitoring of women’s health disease states and has rights to certain intellectual property related to reagents and methods useful in assaying genetic patterns in human biological fluids.

WHEREAS, the parties desire to enter into a license arrangement for the purpose of commercializing an assay and related services for use in the prognosis and monitoring of endometriosis in the infertility and pelvic pain markets.

WHEREAS, in consideration of Predictive’s commitments, efforts and payments to be made hereunder, Predictive wishes to obtain from Juneau, and Juneau is willing to grant to Predictive, a licenseto allow Predictive to promote and market Juneau’s assay for use in the prognosis and monitoring of endometriosis in the infertility, pelvic pain and dysmenorrhea markets, on the terms and subject to the conditions set forth below.

NOW, THEREFORE, in consideration of the foregoing and the covenants and promises contained in this Agreement, the parties agree as follows:

SECTION 1. DEFINITIONS

The definitions provided in this Agreement are capitalized and shall include both singular and plural meanings of the defined word. All other terms used in this Agreement shall have their accepted meaning unless otherwise defined in this Section 1 or elsewhere in this Agreement.

1.1.   

“Affiliate” means a person that controls, is controlled by or is under common control with a party. A person shall be regarded as in control of another person if it owns, or directly or indirectly controls, at least 50% of the voting stock or other ownership interest of such other person.

1.2.   

“ART Clinic” (or assisted reproductive technology clinic) means infertility clinics offering fertility treatments in which both eggs and sperm are handled.

1.3.   

“Assay” means a test system that applies one or more technical procedures and/or one or more analytical methods, using a defined and characterized protocol, to determine, measure or otherwise describe the presence, absence or amount of one or more analytes. The term Assay includes, whether or not sourced, performed, sold or offered separately, (a) all of the procedures of such test system, including, without limitation, collection, preparation, extraction, processing, analysis and reporting and (b) all of the constituent parts of such test system including, without limitation, collection apparatus or kits, instruction forms, standard operating procedures, software/algorithms and reports.

1.4.   

“CLIA” means the Clinical Laboratory Improvement Amendments of 1988, as such may be amended from time to time.

1.5.   

“Confidential Information” shall have the meaning as set forth in Section 6.1.


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1.6.   

“Control” means, with respect to any Intellectual Property right, that a person owns, co-owns, or otherwise has a license to such right, and has the ability to grant a license or sublicense in or to such right without violating the terms of any agreement or other arrangement with any other person.

1.7.   

“FDA” means the United States Food and Drug Administration, or any successor agency thereof.

1.8.   

“Field” means the prediction, prognosis, or diagnosis or therapeutic assessment of endometriosis in infertility and/or pelvic pain and/or dysmenorrhea patients using genetic data. For clarity, it is further understood and agreed that Predictive initially intends to promote the Licensed Assay to physicians providing infertility services fertility services at ART Clinics. Predictive also indents to market the Licensed Assay to other health care providers and directly to patients for the infertility and/or pelvic pain and/or dysmenorrhea indication(s).

1.9.   

“Governmental Entity” means any court, agency, department or other instrumentality of any foreign, federal, state, county, city or other political subdivision.

1.10.   

“Intellectual Property” means all and any copyrights, database rights, software, design rights, Patent Rights, trade or service marks, Know-How, trade names, trade secrets and all other intellectual property, proprietary or other rights, whether or not the right is registered, and any applications or rights to apply for registration of the right.

1.11.   

“Invention” means any discovery or improvement whether or not patentable or patented.

1.12.   

“IP Assays” shall have the meaning as set forth in Section 1.18.

1.13.   

“Joint Invention” means any Invention made jointly by or on behalf of Juneau or any of its Affiliates, on one hand, and by or on behalf of Predictive, on the other hand, in the course of the collaboration.

1.14.   

“Juneau IP” means all Intellectual Property that is Controlled by Juneau or any of its Affiliates at the Effective Date or otherwise during the Term, the practice of which is necessary or useful to make, have made, use, have used, sell, have sold, offer to sell, import, practice, have practiced, or otherwise dispose of Assays in the Field, including Juneau’s rights to any such Intellectual Property co-owned with others (including Predictive).

1.15.   

“Kit” means a kit or other package or grouping of materials that contains, without limitation but by way of example only, materials needed to collect saliva or other biological samples, patient identifying information, billing information, clinical information, detailed instructions to ensure sample integrity, and an envelope or box for shipping the sample to the reference laboratory, as part of and in connection with the Licensed Assay.

1.16.   

“Know-How” means unpatented technical and other information including, without limitation, information comprising or relating to concepts, discoveries, data, designs or formulae; Inventions; methods models; assays; research plans; procedures; designs for experiments and tests and results of experimentation and testing; processes, including, without limitation, manufacturing processes, specifications and techniques; laboratory records; chemical/pharmacologic, toxicologic, clinical, analytic and quality control data; clinical trial data; case report forms; data analyses; reports or summaries and information contained in submissions to and information from ethical committees and Regulatory Authorities relating to Assays in the Field.

1.17.   

“Launch” means the first commercial offering (i.e., not as part of a clinical trial), at the mutual agreement of the parties, of any Licensed Assay anywhere in the Territory.



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1.18.   

“Licensed Assay” means the defined assays specified in Schedule C, that are in the Field, and that incorporate either a Juneau Invention or a Joint Invention, or any combination thereof, if either (i) the promoting, marketing, manufacturing, making, using, selling, offering for sale, importing, or practicing of such Assay would, in the absence of authority from the person who Controls such Intellectual Property, infringe any Valid Claims (the “ Patented Assays ”); or (ii) other than Patented Assays, the promoting, marketing, manufacturing, making, using, selling, offering for sale, importing, or practicing of such Assay would, in the absence of authority from the person who Controls such Intellectual Property, infringe or misappropriate any Licensed IP (the “ IP Assays ”).

1.19.   

“Licensed IP” means the Juneau IP.

1.20.   

“Licensed Patent Rights” means those Patent Rights Controlled by Juneau or its Affiliates.

1.21.   

“Losses” shall have the meaning as set forth in Section 9.1.

1.22.   

“Net Profits” means the amounts received, including without limitation amounts collected in compromise or settlement of outstanding invoices, by Juneau, Predictive, any of either of their Affiliates or a Third Party sublicensee with respect to the Licensed Assays, less all expenses incurred by Juneau, Predictive, any of either of their Affiliates or a Third Party sublicensee relating to said amounts received which amounts shall be determined in accordance with accounting principles consistently applied from year to year, the calculation of which shall be determined by Predictive and consistent with the accounting principles utilized by Predictive in its public filings. The calculation of Net Profit shall include amounts specifically identifiable to the Licensed Assay and amounts allocated to the Licensed Assay, it being understood that amounts which are not specifically identifiable to the Licensed Assay by virtue of their being identifiable to a group of products or services that includes the Licensed Assay shall be allocated thereto in a consistent and equitable manner that equitably reflects the contribution of the Licensed Assay to such Net Profits; provided, that in no event will the discount applied to the list price of the Licensed Assay be greater than the discount applied to any other product or service in the bundle.

1.23.   

“Net Sales” means the amounts received, including without limitation amounts collected in compromise or settlement of outstanding invoices, by Juneau, Predictive, any of either of their Affiliates or a Third Party sublicensee with respect to the Licensed Assays, less: (a) discounts, including cash discounts, or rebates actually allowed or granted; (b) credits or allowances actually granted upon claims or returns regardless of the party requesting the return, including without limitation those granted to managed care entities or pharmaceutical benefit management service entities; (c) freight and other delivery charges paid for delivery, including allowances for brokerage fees, freight, handling, and freight insurance; and (d) taxes or other governmental charges levied on or measured by the invoiced amount whether absorbed by the billing or the billed party. The calculation of Net Sales shall include amounts specifically identifiable to the Licensed Assay and amounts allocated to the Licensed Assay, it being understood that amounts which are not specifically identifiable to the Licensed Assay by virtue of their being identifiable to a group of products or services that includes the Licensed Assay shall be allocated thereto in a consistent and equitable manner that equitably reflects the contribution of the Licensed Assay to such Net Sales; provided, that in no event will the discount applied to the list price of the Licensed Assay be greater than the discount applied to any other product or service in the bundle.

1.24.   

 “Predictive IP” means all Intellectual Property that is Controlled by Predictive at the Effective Date or otherwise during the Term, the practice of which is necessary or useful to make, have made, use, have used, sell, have sold, offer to sell, import, practice, have practiced, or otherwise dispose of Assays in the Field, including Predictive’s rights to any such Intellectual Property co-owned with others (including Juneau).



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1.25.   

“Patented Assays” shall have the meaning as set forth in Section 1.18.

1.26.   

“Patent Rights” means patent applications, patents, invention disclosures, author certificates, inventor certificates, utility certificates, models, and all foreign counterparts of them, including any divisional applications and patents, improvement patents, refilings, renewals, continuations, continuations-in-part, extensions, reissues, reexaminations, as well as any supplementary or additional protection certificates and equivalent protection rights in respect of them.

1.27.   

“Person” or “person” means an individual, corporation, partnership, company, joint venture, unincorporated organization, limited liability company or partnership, sole proprietorship, association, bank, trust company or trust, whether or not legal entities, or any Governmental Entity.

1.28.   

“Regulatory Approval” means any and all approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, permits, registrations, clearances or authorizations of any Regulatory Authority that are necessary for the promotion, marketing and sale of the Licensed Assay in a jurisdiction for the indication for which such assay is being promoted and marketed in such jurisdiction .

1.29.   

“Regulatory Authority” means any national, regional, state or local agency, department, bureau, commission, council or other Governmental Entity with responsibility for granting any approvals, licenses, permits, registrations, clearances or authorizations necessary for the promotion, marketing and sale of products including, without limitation, the FDA , and where applicable any ethics committee or any equivalent review board.

1.30.   

“Representatives” shall have the meaning as set forth in Section 9.1.

1.31.   

“Sales Forecasts” shall have the meaning as set forth in Section 2.2(c).

1.32.   

“Specifications” shall have the meaning as set forth in Section 2.2(b).

1.33.   

“Term” refers to the term of this Agreement and shall have the meaning as set forth in Section 7.1.

1.34.   

“Territory” means the United States, subject to expansion pursuant to Section 2.6.

1.35.   

“Third Party” means a person other than Predictive or Juneau.

1.36.   

“Valid Claim” means a bona fide, unexpired issued claim in Licensed Patent Rights which has not been abandoned, dedicated to the public or held invalid or unenforceable by a decision of a court or other Governmental Entity of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, or which has not been admitted to be invalid or unenforceable or of a scope not covering an Assay in the Field through reissue, disclaimer or otherwise.


SECTION 2. COMMERCIALIZATION ACTIVITIES


2.1.   

Development Program & Term . Juneau is engaged in a development program to (a) to develop and improve the Licensed Assay, (b) to conduct all pre-clinical and clinical activities related to Licensed Assay, and (c) to apply for Regulatory Approval, where necessary, to promote and market (or to continue to promote and market) Licensed Assay in the Territory and in the Field (the “ Development Program ”).

2.2.   

Processing, Manufacture & Supply Activities .

(a)   

Supply of Kits. It is presently contemplated that routine blood sample collection, not requiring specialized sample collection Kits, will be used in connection with the performance of Licensed Assay. In the event the parties mutually agree to use Kits, each party shall be responsible directly or indirectly to obtain such Kits. At Predictive’s request, Juneau will supply Predictive with Kits at Predictive’s sole cost and expense.



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(b)   

Specifications of Licensed Assay. The parties shall agree on the quality inspection criteria and specifications for the Licensed Assay including the Kits (the “ Specifications ”). In no event shall any material change, improvement or modification to a Licensed Assay (including the Kits) or to the Specifications therefor be implemented without the prior written approval of the parties. If the parties agree on any such change, improvement or modification, the parties shall amend the Specifications to reflect the same.

(c)   

Sales Forecasts . Predictive shall, during the first month in each calendar quarter following the Launch, provide Juneau with Predictive’s good faith, non-binding estimate of Predictive’s expected requirements for Licensed Assay as well as for the associated services to be performed by Juneau during the next following calendar quarter (the “ Sales Forecasts ”), i.e. the Sales Forecast for the quarter from April to June will be provided to Juneau during the month of January, and the Sales Forecast for July to September will be provided in April, etc.

(d)   

Volume of Licensed Assay. In no event will Juneau be required to provide in any calendar quarter a volume of Licensed Assay in excess of 125% of Predictive’s Sales Forecast for such quarter made pursuant to Section 2.2(c).

(e)   

Labeling . Juneau will have the right to determine and shall be responsible for the appearance and text of all package labeling used in connection with the Licensed Assay for regulatory purposes; provided, that, the name and corporate logo of Predictive shall be included in a prominent position on the packaging for the Licensed Assay as well as on the reports generated with respect to the performance of Licensed Assay, and Predictive shall be identified as the exclusive promotional agent for the Licensed Assay.

2.3.   

Promotional Activities .

(a)   

Promotional Activities . Without the written consent of Juneau in advance in writing, which consent will not be unreasonably withheld, the ART Guide Assay, as described in Exhibit C, will not be sold less than $995 per Licensed Assay. Other terms of sale shall be reasonably agreed by the parties. Each party shall be responsible for all promotional costs that such party incurs in connection with the marketing and sale of the Licensed Assay.

(b)   

Promotional Materials. Predictive shall create and develop the Promotional Materials relating to the Licensed Assay as are determined by Predictive to be necessary or appropriate for use in Predictive’s promotional activities. Juneau shall make available to Predictive such information and knowledge in Juneau’s possession concerning the Licensed Assay, its qualities and uses, and techniques and methods of promoting or marketing such, as will aid Predictive in improving the sales of the Licensed Assay. Predictive shall own all right, title and interest in and to the Promotional Materials it creates, including all copyrights appurtenant thereto but excluding any rights in or to Juneau’s trademarks, materials provided by Juneau and any inserts or labels required by law or any Regulatory Authority. “ Promotional Materials ” means all web-based, multi-media, printed or other materials used to promote and market the Licensed Assay including, but not limited to, all promotional brochures, newsletters, journal ads, selling aids, posters, reprints, and video or audio tapes.

(c)   

Branding . The Licensed Assay that are promoted will be manufactured, packaged, promoted, marketed, distributed, and sold using Predictive’s and Juneau’s trademarks and other trade and manufacturer designations, in the manner reasonably determined by the parties (including, without limitation, under reasonable license, quality control and mark usage agreements). Subject to reasonable license, quality control and mark usage agreements, (i) Juneau hereby grants to Predictive the right, during the Term, to use trademarks Controlled by Juneau or any of its Affiliates in the Promotional Materials, and (ii) Predictive hereby grants to Juneau the right, during the Term, to use trademarks Controlled by Predictive in the packaging and labeling for the Licensed Assay and on the patient reports generated for the Licensed Assay. Subject to the provisions of this Section, each party shall retain all right, title and interest in and to its respective trademarks, corporate names and logos.



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(d)   

Minimums. If the sales of the Licensed Assay fail to achieve the minimum levels specified in Schedule A –Minimum Net Sales Requirements, the parties will have the right to terminate this Agreement. Predictive will not be deemed as having failed to meet any of the minimum sales levels to the extent such failure is a result of (i) Juneau’s failure to provide, consistent with the terms of this Agreement, the quantities of Licensed Assay ordered by Predictive pursuant to the Sales Forecasts or to process the quantity of samples submitted to Juneau with respect to the Licensed Assay within the parameters described herein, (ii) any recall, corrective action or similar action with respect to the Licensed Assay that adversely affects Predictive’s ability to promote and market the Licensed Assay, or (iii) a force majeure event.

2.4.   

Screening Activities . Juneau shall be responsible, directly or indirectly through one or more persons reasonably acceptable to Predictive, for conducting the screening and billing services with respect to specimens properly submitted through use of the Licensed Assay promoted, marketed and distributed by Predictive. In the event that Predictive acquires a CLIA lab the parties will use the Predictive lab to perform such services unless it is not commercially reasonable to do so as determined by the parties. In no event will Juneau be required to provide in any calendar quarter a volume of services related to the Licensed Assay in excess of 125% of Predictive’s Sales Forecast for such quarter made pursuant to Section 2.2(c).

2.5.   

Additional Regulatory Matters. This Section 2.5 shall only be applicable with respect to Licensed Assays screened by Juneau or its nominee Juneau. This Section 2.5 shall not be applicable in cases where the Licensed Assays is not screened by Juneau.

(a)   

Notice of Audit or Inquiry . Juneau agrees to provide Predictive on a prompt basis with copies of all correspondence to and from the FDA and other Regulatory Authorities relating to the Licensed Assay including, without limitation, correspondence relating to the Regulatory Approvals and the results of inspections or audits. In addition, Juneau agrees to notify Predictive (i) of any audit or inspection (such as an FDA audit or CLIA inspection) by a Regulatory Authority of facilities used for the manufacture of or to process the Licensed Assay and (ii) of any request for information from the FDA (or other Regulatory Authority) related to the sale, processing or manufacture of the Licensed Assay, as soon as practicable after Juneau receives notice of such audit, inspection or request.

(b)   

Customer Complaints; Adverse Event Reports . Juneau will maintain responsibility for (i) managing all customer complaints or inquires relating to the Licensed Assay, (ii) reporting to government agencies and (iii) all corrective action where appropriate. Juneau will provide Predictive with (A) all serious reports (as defined in 21 CFR 314.80) by fax within 24 hours of receipt thereof, and hard copy within 3 days of receipt thereof and (B) all non-serious reports (those that are not encompassed by the definition of a serious report), on a monthly basis. Juneau will provide Predictive with copies of all submissions to the CDC, CMS, or FDA regarding any adverse experience with 5 days following such submission.

(c)   

Facility Audits . Predictive shall have the right, upon reasonable notice to Juneau and during regular business hours, to inspect and audit the facilities being used by Juneau (or its Affiliates or any Third Party) for production, release testing, stability testing, storage and processing of the Licensed Assay including the Kit component thereof, if applicable, to assure compliance with (i) all applicable statutes, laws and regulations, including, without limitation, compliance with GLP or, as applicable, cGMP, and (ii) the terms and provisions of this Agreement.



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Juneau acknowledges that the provisions of this Section granting Predictive certain audit rights shall in no way relieve Juneau of any of its obligations under this Agreement, nor shall such provisions require Predictive to conduct any such audits. Juneau’s or such other person’s failure to be in compliance may constitute a material breach of this Agreement.

2.6.   

Expansion of Territory . In the event Juneau elects to sell Licensed Assay outside of the Territory or Predictive is interested in promoting Licensed Assay outside of the U.S., then such party will give written notice to the other. In the event Predictive is willing to pay the cost of formatting and otherwise developing the Licensed Assay for use in such non-U.S. market, then the parties will negotiate in good faith to enter into an amendment to this Agreement that gives Predictive the right to promote, market and offer for sale Licensed Assay in the expanded territory on substantially the same terms of described herein, except that Predictive will be responsible for the formatting and development costs relating to new territory and will not be required to make an additional equity investment or pay an additional license fee. If a third party to this agreement expresses a desire to market Licensed Assays outside the Territory Predictive will make a best effort to expedite the good faith negotiation to sell the Licensed Assay or allow Juneau to be free to negotiate the finalize license agreement with third party for promotion rights of Licensed Assay outside the Territory.


SECTION 3. LICENSES AND RELATED RIGHTS.

3.1.   

License Grant by Juneau . Subject to the terms of this Agreement, Juneau grants to Predictive the following:  an exclusive license under the Licensed IP, to promote, market, offer for sale and sell Patented Assays in the Territory and in the Field during the Term. The license includes the right to sublicense to a wholly owned subsidiaries of Predictive. The license also includes the right to sublicense to others who are not wholly owned subsidiaries of Predictive, but each such sublicense must be approved in advance in writing by Juneau which approval shall not be unreasonably withheld.  Predictive may utilize its Affiliates and sales Representatives to promote, market and distribute the Licensed Assay in certain geographic areas of the Territory for the Field provided that Predictive shall at all times remain responsible for the actions and omissions of any such Affiliate or sales Representative in the performance of Predictive’s obligations under this Agreement.

3.2.   

Rights Upon Insolvency . All rights and licenses granted under or pursuant to this Agreement are, for all purposes of Section 365(n) of Title 11 of the USC (“ Title 11 ”), licenses of rights to “intellectual property” as defined in Title 11. The respective licensor shall create and maintain current copies or, if not amenable to copying, detailed descriptions or other appropriate embodiments, of all such “intellectual property”. If a case is commenced by or against the licensor under Title 11, then, unless and until this Agreement is rejected as provided in Title 11, such licensor (in any capacity, including debtor-in-possession) and its successors and assigns (including, without limitation, a Title 11 trustee) shall either perform all of the obligations provided in this Agreement to be performed by or on behalf of it or provide to the licensee all such intellectual property (including all embodiments thereof) immediately upon the licensee’s written request therefor. If a Title 11 case is commenced by or against the licensor, this Agreement is rejected as provided in Title 11, and the licensee elects to retain its rights hereunder as provided in Title 11, then the licensor (in any capacity, including debtor-in-possession) and its successors and assigns (including, without limitation, a Title 11 trustee) shall provide to the licensee all such intellectual property (including all embodiments thereof) immediately upon the licensee’s written request therefor. All rights, powers and remedies of a licensee hereunder provided herein are in addition to and not in substitution for any and all other rights, powers and remedies now or hereafter existing at law or in equity (including, without limitation, Title 11) in the event of the commencement of a Title 11 case. A licensee hereunder, in addition to the rights, powers and remedies expressly provided herein, shall be entitled to exercise all other such rights and powers and resort to all other such remedies as may now or hereafter exist at law or in equity (including Title 11) in such event.



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SECTION 4.  FINANCIAL TERMS

In consideration for the licenses and other rights and benefits granted to Predictive hereunder, Predictive will provide Juneau with the consideration described in this Section 4.

4.1.   

[Section Reserved]

4.2.   

Net Profits. Predictive will receive fifty percent (50%) of the Net Profits and Juneau will receive fifty percent (50%) of the Net Profit. Net Profit will be determined each calendar quarter. Net Profit will be determined and paid with respect to prepaid Assays within forty-five (45) days following the end of the calendar quarter in question. Net Profit will be determined and paid with respect to Assays that are not prepaid within forty-five (45) days of the end of the calendar quarter in which collection occurs.    

4.3.   

License Fees .

(a)   

The parties acknowledge that no amounts are owing with respect to license fees that became due prior to the effective date hereof.  

(b)   

Predictive will pay Juneau an additional license fee of two million dollars ($2,000,000) once Predictive has received profits of twenty-five million ($25,000,000) under this Agreement. Profits shall be computed using generally accepted accounting principals consistently applied.

(c)   

The parties acknowledge that an affiliate of Predictive lent Juneau the principal amount of THREE HUNDRED THOUSAND DOLLARS ($300,000) which loan was memorialized in the form of a promissory note dated August 3, 2017 (the “Initial Loan”). In July, 2018 Predictive lent Juneau the additional amount of TWENTY-FIVE THOUSAND DOLLARS ($25,000) which was memorialized in the form of a promissory note (the “Second Loan”). Predictive, or an affiliate, hereby agrees to loan Juneau the additional principal amount of SIX HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($675,000) on or before July 31, 2019 (the “Third Loan”). The promissory note memorializing the Third Loan shall be in substantially the same form as the promissory note memorializing the Initial Loan.

(d)   

In partial consideration for this amendment, Predictive previously issued to Juneau 1,000,000 shares of Predictive’s common stock and warrants exercisable for 14,000,000 shares of common stock. In connection with the issuance of such securities, Juneau represents and warrants that it is an accredited investor, as defined in Exhibit D, both at the time the referenced stock and warrants were issued and at each date that warrants are exercised.

4.4.   

Equity Position in Predictive . Upon first commercial sale of a Licensed Assay to a Predictive customer or client, Predictive will issue to Juneau equity securities in Predictive so that on the date of issuance, Juneau will own common shares of Predictive with a fair market value of two million five hundred thousand dollars ($2,500,000.00). “Fair Market Value” shall equal the average closing trading price of the common stock on the principal securities exchange or trading market on which the common stock is traded, listed or quoted (the “Principal Market”) for the five trading days preceding the date of exercise or, if the common stock is not listed or admitted to trading on any Principal Market, and the average price cannot be determined as contemplated above, the fair market value shall be on mutual agreement or third party appraisal.  



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4.5.   

Payments .

(a)   

Method of Payment. All payments due under Section 4 shall be made by bank wire transfer in immediately available funds to an account designated by the party receiving the payment and shall be paid within 10 days of the end of the relevant calendar month for which such payments are due. Each payment shall be accompanied by a statement stating the number, description, Net Profits, Net Sales and aggregate sales of each Licensed Assay sold during the relevant period to a Predictive customer or client.

(b)   

Late Payments . If either party fails to make when due any payment due to the other party under this Agreement , then interest shall accrue on such payment on a daily basis at a rate per annum equal to 12%, and such payment when made shall be accompanied by all interest so accrued.

4.6.   

Currency . All payments due under this Agreement shall be made in the legal currency of the United States of America.

4.7.   

Taxes . In the event any of the payments made by a party pursuant to Section 4 become subject to withholding taxes under the laws of any jurisdiction, the paying party shall deduct and withhold the amount of such taxes for the account of the other party to the extent required by law, such amounts payable to the other party shall be reduced by the amount of taxes deducted and withheld, and the paying party shall pay the amounts of such taxes to the proper Governmental Entity in a timely manner and promptly transmit to the other party an official tax certificate or other evidence of such tax obligations together with proof of payment from the relevant Governmental Entity of all amounts deducted and withheld sufficient to enable Juneau to claim such payment of taxes. Any such withholding taxes required under applicable law to be paid or withheld in connection with a payment made hereunder shall be an expense of, and borne solely by, the party receiving the payment.

4.8.   

Records; Audits . Each party shall keep or cause to be kept such records as are required to determine, in a manner consistent with generally accepted accounting principles in the United States, the sums or credits due under this Agreement, including, but not limited to Net Profits. At the request (and expense) of either party, the other party and its sublicensees shall permit an independent certified public accountant appointed by such party and reasonably acceptable to the other party, at reasonable times not more than once a year and upon reasonable notice, to examine only those records as may be necessary to determine, with respect to any calendar year ending not more than three years prior to such party’s request, the correctness or completeness of any report or payment made under this Agreement. Results of any such examination shall be (i) binding on the parties other than in the case of manifest error, (ii) limited to information relating to Licensed Assay, (iii) made available to both parties, and (iv) subject to Section 6. The party requesting the audit shall bear the full cost of the performance of any such audit, unless such audit discloses a variance of more than 5% from the amount of the original report, royalty or payment calculation, in which case the party being audited shall bear the full cost of the performance of such audit. Each party shall pay to the other the amount owing as revealed by such examination and review.


SECTION 5.  PATENT PROSECUTION AND LITIGATION

5.1.   

Notice of Infringement . If either party becomes aware that any of the Licensed Patent Rights are being or have been infringed in the Field by any Third Party, such party shall promptly notify the other party in writing describing the facts relating thereto in reasonable detail.



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5.2.   

Third Party Infringement. Determination of the course of action to be taken with respect to any infringement or threatened infringement of the Licensed Patent Rights in the Field shall

be based upon consultation between the parties, provided, however, that the right to sue for infringement shall not be used in an arbitrary or capricious manner. Neither Juneau nor Predictive shall be required to institute a proceeding against any infringer. In the event that Juneau and Predictive agree to institute jointly a proceeding against the infringer, Juneau and Predictive shall share equally the costs of such proceeding and any damages awarded as a result of such proceeding or received in a settlement of such proceeding. If Juneau and Predictive cannot agree to institute a joint proceeding, then Juneau will have the first right to bring an action on its own and at its risk and expense. If Juneau declines to do so, Predictive will have the right to bring an action on its own and at its risk and expense. In such event Juneau agrees to be included as a party to such litigation and Juneau shall provide all reasonable assistance and cooperation as may be reasonably necessary in such a proceeding. In the event that either Juneau or Predictive, but not both, wishes to institute an infringement proceeding, the party so wishing to institute such a proceeding can do so as described above and upon supplying to the other party a document setting out its binding commitment: (a) to pay all costs of and incidental to such a proceeding; (b) to indemnify, defend, and hold harmless the other party against any reasonable costs which might be incurred as a result of such a proceeding; and (c) to keep the other party informed as to the status of such a proceeding.

5.3.   

Recovery . In the event that there is any recovery for damages from any suit referenced under Section 5.2 it shall be treated as follows: (a) it shall be applied first in satisfaction of any reasonable costs and expenses incurred by either of the parties in the course of the suit or preparation thereof (including, without limitation, attorneys’ and expert’s fees); (b) in the event that the parties jointly instituted the proceeding, the remainder of the recovery will be split equally between the parties; and (c) in the event that one party hereto instituted the proceeding alone as described in Section 5.2, that party shall retain seventy-five percent (75%) of the remainder of the recovery and the other twenty-five percent (25%) shall be paid to the other party hereto.

5.4.   

Licensed Patent Prosecution . Juneau, with input and direction from Predictive, shall file, prosecute, and maintain all patents and patent applications within the Licensed Patent Rights. During the Term, Juneau shall apprise Predictive of material pending decisions and activities regarding the status, filing, prosecuting, and maintaining the Licensed Patent Rights with respect to the Field.

5.5.   

Juneau Abandonment or Discontinuation . Juneau shall promptly notify Predictive in the event Juneau decides to abandon or discontinue prosecution of any one or more patent applications included in Licensed Patent Rights, fail to issue a patent on an application which receives an allowance, or discontinue maintaining an issued patent included in the Licensed Patent Rights. Such notification will be given as early as possible, which in no event will be less than 90 days prior to the date on which patent(s)\application(s) will become abandoned. Juneau may abandon, withdraw or discontinue prosecution of such patent(s)\application(s) by giving Predictive written notice at least 90 days prior to such abandonment. Thereafter, Predictive shall have the option, exercisable upon written notification to Juneau, to assume full responsibility for the maintenance and/or prosecution of such patent(s)\application(s), it being understood that Juneau will nevertheless own, subject to this Agreement all right title and interest in and to such patent(s)\application(s) and any patents that may issue thereon.

5.6.   

Joint Inventions . The parties shall jointly select Inventions jointly made which they wish cooperatively to file patent applications or perfect other Intellectual Property rights therein and they shall select the countries where they wish to have patent applications filed or patents maintained. However, either party shall have the right upon thirty (30) days prior written notice to the other party, at its sole cost and expense, to file and prosecute a patent application or maintain a patent covering all or a part of any Joint Invention in any country which such other party does not select as set forth above, unless upon receipt of such notice and before the end of the notice period, such other party selects such country.



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5.7.   

Costs . All patent attorney fees and all patent registration, patent filing, patent translation and patent maintenance fees, costs and expenses with respect to the Patents Rights and Inventions solely owned by a party shall be borne by that party. All such fees, costs, and expenses with respect to patents and Joint Inventions shall be shared equally by the parties if they cooperatively undertake such activities, but otherwise shall be borne by the party that elects to undertake such activities on its own as described in the last sentence of Section 5.6.


SECTION 6.  CONFIDENTIALITY & PUBLICITY

6.1.   

General . Any and all knowledge including, without limitation, know-how, practices, processes or other information disclosed or submitted in writing or in other tangible or electronic form and designated as confidential information by one party to the other party within 30 days of disclosure (“ Confidential Information ”) shall be subject to this Agreement.

6.2.   

Ownership . All written documents containing Confidential Information shall remain the property of the disclosing party. At the disclosing party’s request, all Confidential Information shall be returned to it except that one copy may be retained by the receiving party to ensure compliance with this Agreement.

6.3.   

Standard of Care; Use; Term . The receiving party shall use the same standard of care to protect the confidentiality of the other party’s Confidential Information as it uses to protect its own confidential information; will use the other party’s Confidential Information solely as permitted or contemplated by this Agreement and for no other purpose; and shall limit disclosure of such information to those of its Representatives (including its financial and legal advisors) who have a need to know and are under a written obligation to the confidentiality of such information. The above confidentiality, use and disclosure obligations will remain in effect for a period of seven years following the expiration or termination of this Agreement.

6.4.   

Limitations . Nothing contained in this Agreement will in any way restrict or impair either party’s right to use or disclose any information which at the time of its receipt: (a) is generally available in the public domain, or thereafter becomes available to the public through no breach of this Agreement by the receiving party; or (b) was independently known prior to receipt thereof, or made available to receiving party as a matter of lawful right by a Third Party with no obligation of confidentiality to the disclosing party as evidenced by written record; or (c) was already in the possession of or developed by the receiving party independent of Confidential Information as evidenced by written record; or (d) is released for disclosure by the receiving party with the disclosing party’s written consent.

6.5.   

Required Disclosures . In the event it is necessary for a party to disclose Confidential Information of the other party to comply with a court order or administrative subpoena or order, the party proposing to make the disclosure must first use its reasonable efforts to obtain an order preserving the confidentiality of the Confidential Information and must give the disclosing party timely notice of the contemplated disclosure to intervene to preserve the confidentiality of the Confidential Information by, for example, seeking an appropriate protective order.

6.6.   

Use of Names . Neither party will use the name of the other party, including its employees, in any publicity, advertising or news release without the prior written approval of an authorized official of the other party; provided, however, that in the case of announcements, statements, acknowledgments or revelations which either party is required by law, rule or regulation to make, issue or release, the making, issuing or releasing of any such announcement, statement, acknowledgment or revelation by the party so required to do so shall not constitute a breach of this Agreement if such party shall have given, to the extent reasonably possible, not less than ten days prior notice to the other party, and shall have attempted, to the extent reasonably possible, to clear such announcement, statement, acknowledgment or revelation with the other party.



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SECTION 7. TERM AND TERMINATION

7.1.   

Term . This Agreement shall commence on the Effective Date and shall continue until the earlier of (i) expiration of the last-to-expire Valid Claim in such country, or (ii) the effective date of any notice of termination given pursuant to this Section or in the event of a failure to meet the minimums set forth in Schedule A.

7.2.   

Other Termination Rights . Either party may terminate this Agreement in the following circumstances:

(a)   

if a party believes that the other party is in material breach of this Agreement, the non-breaching party may deliver a written notice of such material breach to the other party, such notice to describe in detail the nature of such breach. The allegedly breaching party shall have 30 days from receipt of such notice to cure such breach. Any such termination shall become effective at the end of such 30-day period unless the breaching party has cured any such breach prior to the expiration of such period;

(b)   

this Agreement may be terminated by a party upon written notice to the other party in the event the other party becomes insolvent or if a petition in bankruptcy or for corporate reorganization or for any similar relief is filed by or against the other party, or a receiver is appointed with respect to any of assets of the other party, or a liquidation proceeding is commenced by or against the other party; or

(c)   

either party may terminate this Agreement upon written notice in the event that Net Sales do not equal or exceed the “Minimum to Maintain License Rights” as set forth in Schedule A.

7.3.   

Effects of Termination .

(a)   

Survival. The following provisions shall survive any expiration or termination of this Agreement: Sections 1, 3.2, 6, 7, 9, 10, and 11, together with any sections referenced in such surviving provisions or necessary to give them effect. Termination of this Agreement shall not relieve either party of any liability that accrued hereunder prior to the effective date of such termination.


SECTION 8. REPRESENTATIONS & WARRANTIES; CERTAIN COVENANTS

8.1.   

General Representations and Warranties . Each party represents, warrants an covenants that:

(a)   

it is duly organized and validly existing under the laws of its state of incorporation or organization, and has full power and authority to enter into this Agreement and to carry out the provisions hereof;

(b)   

it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person executing this Agreement on its behalf has been duly authorized to do so by all requisite company action;

(c)   

this Agreement is legally binding upon it and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any Governmental Entity having jurisdiction over it;



12

 


 

(d)   

it has not granted, and will not grant during the term of the Agreement, any right to any Third Party that would conflict with the rights granted to the other party hereunder. It has (or will have at the time performance is due) maintained and will maintain and keep in full force and effect all agreements, permits and licenses necessary to perform its obligations hereunder; and 

(e)

in complying with the terms and conditions of this Agreement and carrying out any obligations hereunder, it will comply (and it will ensure that its subcontractor’s comply) with all applicable laws, regulations, ordinances, statutes, and decrees or proclamations of all Governmental Entities having jurisdiction over such party.

8.2.   

Representations and Warranties of Juneau . Juneau hereby represents and warrants to Predictive as follows:

(a)   

it owns all unencumbered right, title, and interest in and to the Licensed Patent Rights, and no Third Party has notified Juneau that it is claiming any ownership of or right to the Licensed Patent Rights;

(b)   

it is presently aware of no patents or patent applications, not already previously disclosed to Predictive in writing, owned by a Third Party which would present any issue of infringement by reason of the promotion, marketing, manufacture, making, having made, using, having used for, selling, having sold, offering to sell, importing, practicing, having practiced, or otherwise disposing of Licensed Assay;

(c)   

none of the Licensed Patent Rights is involved in any pending or threatened litigation, arbitration, administrative or other proceedings, or governmental investigation other than ordinary patent application prosecution proceedings;

(d)   

it has not received any notice of invalidity or infringement of any of the Licensed Patent Rights or obtained any legal opinions of counsel on patentability, validity or infringement related thereto;

(e)   

at the Effective Date, it knows of no product ideas of Juneau or of its Affiliates that would render the Licensed Assay obsolete;

(f)   

it has no outstanding encumbrances or agreements, including any agreements with academic institutions, universities, or third party employers, whether written, oral or implied, which would be inconsistent with the licenses and rights granted herein;

(g)   

as of the Effective Date, the Licensed Patent Rights listed in Schedule B – Licensed Patent Rights are the only patents or pending patent applications related to the Field which Juneau currently owns or otherwise has the right to grant licenses therein, whether domestic or foreign;

(h)   

it is unaware of any information, such as prior art, which would raise a substantial question of the validity or enforceability of any of the Licensed Patent Rights listed in Schedule B; and Juneau is the legal and beneficial owner of, or has the right to grant to Predictive the rights granted herein to, all Juneau IP and no other person has any right, interest or claim in or to such rights, and Juneau has not entered into any agreement granting any right or interest in such Juneau IP with respect to the Field; and

(i)   

none of the rights of Juneau or its Affiliates under the Licensed Patent Rights set forth on Schedule B have been licensed to Juneau or its Affiliates from any Third Party, and none of such rights were developed with funding from the United States government or other Governmental Entity.



13

 


8.3.   

Representations and Warranties of Predictive . Predictive hereby represents and warrants as of the Effective Date to Juneau as follows:

(a)   

it is presently aware of no patents, not already previously disclosed to Juneau in writing, owned by a Third Party or by an Affiliate of Predictive which would present any issue of infringement by reason of the promotion, marketing, manufacture, making, having made, using, having used for, selling, having sold, offering to sell, importing, practicing, having practiced, or otherwise disposing of Licensed Assay;

(b)   

at the Effective Date, it knows of no product ideas of Predictive or of its Affiliates that would render the Licensed Assay obsolete; and

(c)   

it has no outstanding encumbrances or agreements, including any agreements with academic institutions, universities, or third party employers, whether written, oral or implied, which would be inconsistent with the licenses and rights granted herein.

8.4.   

Disclaimer . EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT FOR THOSE SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.


SECTION 9.  INDEMNITIES

9.1.   

Mutual Indemnification . Subject to Section 9.3, each party hereby agrees to indemnify and hold harmless the other party and its officers, directors, employees, consultants, contractors, sublicensees and agents (collectively, “ Representatives ”) from and against any and all losses, damages and other amounts payable to a claimant, as well as reasonable attorneys’ fees and costs (collectively, “ Losses ”), to the extent resulting from claims, suits, proceedings or causes of action (“ Claims ”) brought by a Third Party against the other party or its Representatives based on or arising from: (a) breach of any representation or warranty or covenant or other agreement by the indemnifying party contained in this Agreement, or (b) negligence, recklessness or willful misconduct by such indemnifying party or any of its Representatives.

9.2.   

Indemnification by a Party .

(a)   

Subject to Section 9.3, Predictive hereby agrees to indemnify and hold harmless Juneau and its Representatives from and against any Losses to the extent resulting from Claims brought by a Third Party against Juneau or its Representatives resulting directly or indirectly from Predictive’s or its Representatives’ promotion or marketing of Licensed Assay under this Agreement, or allegations of Intellectual Property infringement made with respect to Licensed Assay, in each case except to the extent that such Losses are covered by Juneau’s indemnification of Predictive and its Representatives pursuant to Section 9.1 or 9.2(b) or are based on aspects of the Licensed Assay resulting from Juneau IP.

(b)   

Subject to Section 9.3, Juneau hereby agrees to indemnify and hold harmless Predictive and its Representatives from and against any Losses to the extent resulting from Claims brought by a Third Party against Predictive or its Representatives resulting directly or indirectly from Juneau’s or its Representatives’ development, manufacture, or sale of Licensed Assay under this Agreement, or allegations of defects in material, workmanship or design and/or allegations of Intellectual Property infringement made with respect to Licensed Assay, in each case except to the extent that such Losses are covered by Predictive’s indemnification of Juneau and its Representatives pursuant to Section 9.1 or 9.2(a) or are based on aspects of the Licensed Assay resulting from Predictive IP.



14

 


9.3.   

Conditions to Indemnification .

(a)   

In the event that any Third Party asserts a claim with respect to any matter for which a party (the “ Indemnified party ”) is entitled to indemnification hereunder (a “ Third-Party Indemnity Claim ”), then the Indemnified party shall promptly notify the party obligated to indemnify the Indemnified party (the “ Indemnifying party ”) thereof; provided, however, that no delay on the part of the Indemnified party in notifying the Indemnifying party shall relieve the Indemnifying party from any obligation hereunder unless (and then only to the extent that) the Indemnifying party is prejudiced thereby.

(b)   

The Indemnifying party shall have the right, exercisable by notice to the Indemnified party within ten days of receipt of notice from the Indemnified party of the commencement of or assertion of any Third-Party Indemnity Claim, to control the defense, settlement, appeal or other disposition of the Third-Party Indemnity Claim with counsel reasonably acceptable to the Indemnified party; provided that, the Indemnified party will have the right to participate jointly therein and provided, further, that if the Indemnifying party fails to take reasonable steps necessary to defend such Third-Party Indemnity Claim, the Indemnified party may assume it own defense and the Indemnifying party will be liable for the reasonable costs and expenses in connection therewith. The Indemnifying party will not settle any Third-Party Indemnity Claim except: (i) with the approval of the Indemnified party, which approval shall not be unreasonably withheld or delayed and (ii) with respect to any Third-Party Indemnity Claim relating solely to the payment of money damages and which could not result in the Indemnified party’s becoming subject to injunctive or other equitable relief or otherwise adversely affect the business of the Indemnified party in any manner, and as to which the Indemnifying party shall have acknowledged in writing the obligation to indemnify the Indemnified party hereunder; provided, that the Indemnifying party shall provide reasonable evidence of its ability to pay any damages claimed and with respect to any such settlement shall obtain the written release of the Indemnified party from the Third-Party Indemnity Claim. The Indemnifying party shall obtain the written consent of the Indemnified party prior to ceasing to defend, settling or otherwise disposing of any Third-Party Indemnity Claim if as a result thereof the Indemnified party would become subject to injunctive or other equitable relief or the business of the Indemnified party would be adversely affected in any manner.

9.4.   

Exclusion of Damages . IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY MULTIPLIED OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT, PROVIDED, HOWEVER, THAT THIS LIMITATION WILL NOT REDUCE OR AFFECT EITHER PARTY’S OBLIGATIONS TO INDEMNIFY THE OTHER AGAINST THIRD-PARTY INDEMNITY CLAIMS UNDER SECTIONS 9.1 THROUGH 9.3.

9.5.

Exclusion from Indemnification Obligation . A party’s indemnification obligations under this Section 9 will not apply to the extent that Losses arise from the negligent, reckless or willful acts or omissions of the other party or any of its Representatives.


SECTION 10. DISPUTE RESOLUTION

10.1.   

Governing Law; Jurisdiction . This Agreement, and application or interpretation thereof, shall be governed by the laws of the state of Utah. The parties (i) agree that all actions and proceedings relating directly or indirectly to this Agreement shall be litigated in courts located within the state of Utah, and that the exclusive venue therefore shall be in Salt Lake County, Utah; (ii) consent to the jurisdiction and venue of any such court and consent to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (iii) waive any and all right either party may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding.



15

 


 

10.2.   

Attorneys’ Fees . In the event any party brings suit to enforce or interpret this Agreement or for damages on account of the breach hereof, the prevailing party shall be entitled to recover from the party bringing the action its reasonable attorneys' fees and costs incurred in any such action, in addition to other relief to which the prevailing party is entitled.


SECTION 11. MISCELLANEOUS

11.1.   

Entire Agreement; Amendment . This Agreement, including the schedules attached hereto, sets forth the complete, final and exclusive agreement and all the covenants, promises, agreements, warranties, representations, conditions and understandings between the parties hereto and supersedes and terminates all prior agreements and understandings between the parties. There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the parties other than as are set forth herein and therein. No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the parties unless reduced to writing and signed by an authorized officer of each party.

11.2.   

Force Majeure . Both parties shall be excused from the performance of their obligations under this Agreement to the extent that such performance is prevented by force majeure and the nonperforming party promptly provides notice of the prevention to the other party. Such excuse shall be continued so long as the condition constituting force majeure continues and the nonperforming party takes reasonable efforts to remove the condition. For purposes of this Agreement, force majeure shall include conditions beyond the control of the parties, including without limitation, an act of God, voluntary or involuntary compliance with any regulation, law or order of any government, war, civil commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe; provided, however, the payment of invoices due and owing hereunder shall not be delayed by the payer because of a force majeure affecting the payer, unless such force majeure specifically precludes the payment process.

11.3.   

Notices . Any notices, approvals, or consents required or permitted to be given under this Agreement shall be in writing, shall specifically refer to this Agreement and shall be deemed to have been sufficiently given for all purposes if mailed by first class certified or registered mail, postage prepaid, internationally recognized express delivery service, transmitted by facsimile where a confirmation of receipt (automated or otherwise) is obtained, or personally delivered. Unless otherwise specified in writing, the mailing addresses of the parties shall be as described below:

To Predictive:

2735 East Parleys Way, Suite 205


Salt Lake City, UT 84109

Attn: CEO


To Juneau:

2749 East Parleys Way, Suite 210


Salt Lake City, UT 84109

Attn: CEO

FAX: (801) 994-4009


with a copy to:

2749 East Parleys Way, Suite 210


Salt Lake City, UT 84109

Attn: General Counsel

FAX: (801) 994-4009




16

 


11.4.   

No Strict Construction . This Agreement has been prepared jointly and shall not be strictly construed against either party.

11.5.   

Assignment . Neither party may assign or transfer this Agreement or any rights or obligations hereunder without the prior consent of the other which consent will not be unreasonably withheld; provided, however, that either party may make such an assignment, in whole, but not in part, without the other party’s consent in conjunction with a merger, acquisition, or sale of all or substantially all of the assets of such party to which this Agreement pertains. Any assignment or attempted assignment by either party in violation of the terms of this Section shall be null and void and of no legal effect.

11.6.   

Further Actions . Each party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

11.7.   

Severability . If any one or more of the provisions of this Agreement is held to be invalid or unenforceable by any court of competent jurisdiction from which no appeal can be or is taken, the provision shall be considered severed from this Agreement and shall not serve to invalidate any remaining provisions hereof. The parties shall make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by the parties when entering into this Agreement may be realized.

11.8.   

Headings . The headings for each article and section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section.

11.9.   

No Waiver . Any delay in enforcing a party’s rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of such party’s rights to the future enforcement of its rights under this Agreement, excepting only as to an express written and signed waiver as to a particular matter for a particular period of time.

11.10.   

Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11 .11

Amendment and Restatement – This Agreement amends and restates in its entirely the License Agreement dated October 1, 2015, by and between the parties hereto, and all amendments and restatements thereto.

IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate originals by their proper officers to be effective as of the date and year first above written.




17

 




PREDICTIVE TECHNOLOGY GROUP, INC.

By: /s/ Bradley C. Robinson

Title CEO



AGREED AND APPROVED

PREDICTIVE THERAPEUTICS, LLC


By: /s/ Bradley C. Robinson

Title CEO

JUNEAU BIOSCIENCES, LLC

By: /s/ Kenneth Ward

Title President, CEO

 

List of Schedules

Schedule A– Minimum Net Sales Requirements

Schedule B– Licensed Patent Rights

Schedule C-- Licensed Assays





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Schedule A-Minimum Net Sales Requirements


Minimum annual Net Sales from Predictive Clients (defined below) are set forth below. For purposes of this Schedule, Year 1 begins the nine months following the a mutually agreed commercial launch date. Each annual period thereafter begins on the one year anniversary of the prior annual period.

 

Year 1 -$12,500,000 in annual Net Sales from Predictive Clients  

Year 2-$30,000,000 in annual Net Sales from Predictive Clients  


Year 3- and beyond $60,000,000 in annual Net Sales from Predictive Clients  

 

If Predictive fails to meet sales minimums in any year, this license is null and void, unless Predictive elects to “cure” this failure by

1.

presenting a revised plan to Juneau concerning how Predictive will use reasonable commercial efforts to improve sales, and

2.

agreeing to spend an amount equal to the difference between projected minimum Net Sales from Predictive Clients and actual Net Sales from Predictive Clients on an enhance sales and marketing effort over the next year.

 

Minimum sales requirements may also be amended by mutual written agreement of the parties.

Schedule B – Licensed Patent Rights

All issued patents and pending U.S patent applications underlying the ARTGuide test including  

9,434,991  Method of testing for endometriosis and treatment therefor

8,932,993  Method of testing for endometriosis and treatment therefor


PUB. APP. NO.

 


Title

1

20150368714    Method of Testing for Endometriosis and Treatment Therefor

2

20150363558    Method of Determining Predisposition to Endometriosis

3

20150361494    Genetic Markers Associated with Endometriosis and Use Thereof

4

20150133382    Method of Testing for Endometriosis and Treatment Therefor

5

20100272713    Genetic Markers Associated with Endometriosis and Use Thereof

6

20080306034    Method of Administering a Therapeutic

7

20080305967    Genetic Markers Associated with Endometriosis and Use Thereof

19

 


Schedule C-- Licensed Assays


Assay 1.) ART Guide

Assay is currently comprised of >200 endometriosis markers + four questions + human fertility genes.  Final algorithm pending current validation work.

Actionable risk score (1-20) indicates likelihood of endometriosis.  

Test will be offered at first visit with ART specialist


Assay 2.) The FertilityDX™ Services

The  FertilityDX™ test suite delivers personalized and comprehensive genetic diagnostic services to couples undergoing infertility care.

(i)

Includes the new ART Guide ® test for endometriosis genes and every gene known to impact human fertility

(ii)

Maternity specific–predict conditions which may complicate pregnancy

(iii)

Screen for cytogenetic factors impacting fertility

(iv)

Most expansive screen of genetic risk for serious fetal conditions

(v)

Comprehensive and personalized genetic counseling for clients

(vi)

Unparalleled physician support using state of the art technologies

 

FertilityDX™ is intended for:

Couples seeking advanced medical help with infertility

Couples considering ART techniques who want to insure the best possible outcome


Assay 3.) Pelvic Pain/Dysmenorrhea


Assay is currently comprised of >800 endometriosis markers + four questions + ancestry informative markers.  Final algorithm pending current discovery and development work.


Test will be offered to women experiencing pelvic pain, dysmenorrhea, or related gynecologic symptoms.


Future Products

In the event that Juneau develops any method, device, product or technology in the future that is outside the scope of this Agreement, (“Future Technology”), then, prior to making an offer to license, sell, or otherwise transfer any such Future Technology to any third party, Juneau shall provide Predictive with (i) written notice that Juneau has developed such Future Technology and desires to license, sell, or otherwise transfer such Future Technology or a portion thereof to a third party, and (ii) an invitation for Predictive to make an offer to Juneau to license or otherwise acquire such Future Technology.  Following its receipt of such notice, Predictive shall have thirty (30) days to make an offer to Juneau to license or otherwise acquire the Future Technology.  Such offer shall include the purchase price and other material terms and conditions pursuant to which Predictive would be willing to license or acquire such Future Technology. Following Juneau’s  receipt of Predictive’s offer, the parties agree to negotiate in good faith the license or transfer of the Future Technology, but such negotiations shall not prohibit or otherwise limit Juneau’s ability to engage in negotiations and/or consummate a license or other transaction with another party with respect to such Future Technology.  

20

 


Exhibit D – Definition of “Accredited Investor”

The term “accredited investor” means:

 

(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association  or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting  in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Act; any insurance company as defined in section 2(a)(13) of the Securities Act; any investment company registered under the Investment Company Act  of 1940 or a business development company  as defined in section 2(a)(48) of that Act; any Small Business Investment Company  licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act  of 1958; any plan  established and maintained by a state , its political subdivisions, or any agency or instrumentality of a state  or its political subdivisions, for the benefit of its employees, if such plan  has total assets in excess of $5,000,000; any employee benefit plan  within the meaning of the Employee  Retirement Income Security  Act  of 1974 if the investment decision is made by a plan  fiduciary, as defined in section 3(21) of such act , which is either a bank, savings and loan association , insurance company, or registered investment adviser, or if the employee benefit plan  has total assets in excess of $5,000,000 or, if a self-directed plan , with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company  as defined in section 202(a)(22) of the Investment Advisers Act  of 1940;

(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; 

(4) Any director , executive officer , or general partner of the issuer  of the securities being offered or sold, or any director , executive officer , or general partner of a general partner of that issuer ;

(5) Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000.

(i) Except as provided in paragraph (a)(5)(ii)  of this exhibit, for purposes of calculating net worth under this paragraph (a)(5):

(A) The person's primary residence shall not be included as an asset;

(B) Indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount  of such indebtedness outstanding at the time of sale of securities exceeds the amount  outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount  of such excess shall be included as a liability); and

(C) Indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;

(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; 

(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 506(b)(2)(ii) of Regulation D as promulgated under the Securities Act; and 

(8) Any entity in which all of the equity owners are accredited investors.



21

Exhibit 10.2


SUBSCRIPTION AGREEMENT INSTRUCTIONS

Each subscriber must complete and sign the Subscription Agreement in accordance with the following instructions. Subscribers must meet certain requirements in order for JUNEAU BIOSCIENCES, L.L.C. (the "Company"), a Utah limited liability company, to comply with the offering exemptions from registration and qualification under the Federal Securities Act of 1933, as amended, and applicable state securities laws. The Company will be relying on the accuracy and completeness of information provided in the Subscription Agreement to establish the qualifications of prospective investors and the Company's legal right to sell these securities. The Subscription Agreement will at all times be kept strictly confidential, unless necessary to establish the legality of a prospective investor's participation in the offering. The Company should be contacted immediately if there is any change in the information the prospective investor has provided.

SECOND AMENDED AND RESTATED SUBSCRIPTION AGREEMENT

JUNEAU BIOSCIENCES, L.L.C.

2749 East Parleys Way, Suite 100

Salt Lake City, UT 84109


THIS AMENDED AND RESTATED SUBSCRIPTION AGREEMENT effective this 22 nd day of August, 2018, by and between JUNEAU BIOSCIENCES, L.L.C., a Utah limited liability company (the "Company" or “Juneau”), and Predictive Technology Group, Inc. a Nevada Corporation (the "Subscriber" or “Predictive”), who, for and in consideration of the mutual promises and covenants set forth herein, do hereto agree as follows:

1. Subscription. The Subscriber hereby subscribes 15,681,818 Class A Units (as defined in the Company’s Operating Agreement, effective December 6, 2006), at a purchase price of $1.10 per Unit (“the Securities”). It is understood that the total issued Juneau Class A Units (on a fully diluted basis at December 31, 2017) was approximately 39,500,000 Units (30,173,204.17 issued; 4,621,293 as options or warrants; with the remainder being principal and interest on convertible debt) prior to the purchase of the 15,681,818 Units subscribed to herein, the conversion of the debt herein as described herein, and the 400,000 Units to be paid to InceptionDX as described herein. The investment will be made in three tranches. The Securities were issued in full upon payment of the initial $250,000 in subscription funds. Any securities that are not paid for will be fully returned upon failure to complete the tranches outlined below. For example, if (i) Subscriber funds only the first installment of the first tranche (described below) in the amount of $250,000, but makes no further investment, then Subscriber will only be entitled to retain 227,273 Class A Units and the remaining 15,454,545 Class A Units will be cancelled or, alternatively, (ii) if Subscriber funds the first and second tranches (described below) in the amount $2,250,000, but makes no further investment, then Subscriber will only be entitled to retain 2,045,455 Class A Units and the remaining 13,636,363 Class A Units will be cancelled.


-1-


Notwithstanding any other provision in this Subscription Agreement, Subscriber may stop funding the investment described herein at any time for any reason.

The first tranche totaled $1,850,000 and has been paid in full. These funds were used to cover the Company’s monthly burn (salaries, benefits, rent, overhead, cloud computing, miscellaneous operating expenses, etc.) and to complete required exome sequencing (2,000 samples) .

The second tranche will total $400,000 and has been paid in full. The second tranche funds were used to (i) cover the Company’s monthly burn (salaries, benefits, rent, overhead, cloud computing, miscellaneous operating expenses, etc.) and (ii) take necessary steps to achieve launch readiness for the ART Guide endometriosis infertility test by October 6, 2018 (activities include data analysis, selecting and testing commercial algorithm, ordering initial reagents, performing CLIA validation, programming LIMS system, publication and presentation expenses, hiring and training genetic counselors, initiating beta testing, etc.).

The third tranche will total $15,000,000. As of the date of this Amendment, $259,095 of this amount has been paid. The remaining balance will be as follows: $159,615 on or before September 30, 2018; $149,615 on or before October 31, 2018, $122,950 on or before November 30, 2018, $118,115 on or before December 31, 2018, twenty-three $600,000 monthly installments commencing on or before January 31, 2019 and ending on or before November 30, 2020 and a final installment of $390,610 on or before December 31, 2020. The third tranche funds will be used to launch the ART Guide endometriosis infertility test and to support development of EndoRisk endometriosis test for pelvic pain and other operational expenses to be approved by the Board with the goal of having a pelvic pain test ready for commercialization as an FDA approved test in the second half of 2020. In the event that that the pelvic pain test will be ready for commercialization as an FDA approved test on an earlier date then the third tranche payments may be accelerated upon agreement of the parties. Specifically, use of the third tranche funds includes collecting and sequencing or genotyping additional samples to confirm utility in major racial cohorts and to optimize test for pelvic pain indication. Sample collection targets include collection of:

 

a.

2,000 African American pelvic pain patients with and without endometriosis (>75%African by DNA ancestry testing);

b.

2,000 Asian American pelvic pain patients with and without endometriosis (>75%  Asian by DNA ancestry testing);

c.

2,000 Hispanic / Latino pelvic pain patients with and without endometriosis regardless of race;

d.

1,000 additional Caucasian pelvic pain patients focusing on patients without endometriosis, will bring total number of Caucasian subjects to 3,000; and

e.

500 “surgical” negative controls (various races) without chronic pain and with negative laparoscopies (i.e. tubal ligation patients).

 

2. Other Conditions. Subscriber’s investment will also be subject to the following additional conditions, which conditions will terminate on the earlier of (i) the date on which Subscriber stops funding the $17,250,000 subscription on the timetable described above or (ii) June 1, 2023. For example, if Subscriber funds the first tranche, but does not fund the April 15, 2018 $500,000 payment, then the conditions set forth in this Section 2 shall thereafter become null, void and of no further force or effect.


2


The Company’s Board of Managers was expanded to seven members and three board nominees selected by Predictive were appointed to fill the vacancies created on the Company’s Board of Managers. These nominees were Stephen William Jennings, Michael Dey and Eric Robinson. The appointment of the three nominees occurred upon payment by Subscriber of the first $250,000 payment that is part of the first tranche.

The Company will provide progress reports to Subscriber on research and development activities on a monthly basis and written financial reports on a monthly basis, setting objectives for the following month.

        

Operating budgets will be reviewed and approved at quarterly meetings of the Company’s Board of Managers. The Company’s banking controls require dual executive signatures from persons identified by the board for any amounts over $5,000. Any expenditures over $5,000 not listed in the approved budgets will require the written approval of at least two of following individuals: Ken Ward, Eric Robinson and a third person appointed by Subscriber.

Subscription funds will only be spent on (i) items that are included in a budget that is agreed by the Company and Subscriber and (ii) off budget items that are approved by Subscriber in advance in writing.

T he Company will contract with Inception DX, LLC or another company that Predictive may identify in its sole and exclusive discretion, to run the CLIA version ART Guide tests on terms and conditions that are reasonably acceptable to the parties.

That Michael Dey or another board member approved by Subscriber will participate in any and all material negotiations with third party interests with the Company. For purposes hereof, material negotiations will include:

The sale, lease, exchange, mortgage, pledge or other disposition of any of the Company’s assets in excess of $50,000;

The Company’s merger with or conversion into another entity;

An undertaking involving a debt or obligation in excess of $50,000;

The compromise of a dispute involving an amount in controversy in excess of $50,000;

The acceptance of any capital contribution by the Company in excess of $50,000;



3



The redemption of a member’s interest in the Company in excess of $50,000;

The issuance of any interest in the Company or any debt or equity interest (including options) convertible, exchangeable or exercisable into any interest in the Company in excess of $50,000;

The making of distributions in excess of minimum required amounts as set forth in the Company’s Operating Agreement or other than on a pro-rata basis to all members based on the respective ownership interests in the Company;

Mortgage or pledge any of its properties that has a value in excess of $50,000;

Purchase or acquire any asset that has a value in excess of $50,000; and

Enter into any agreement with an affiliate of any member of the Company.

That all Company patents for endometriosis are prosecuted by Wilson Sonsini or another law firm appointed by Company’s Board and approved by subscriber. That a general power of attorney will be granted to said law firm in connection with the prosecution of its intellectual property.

The Company acknowledges that there is no default by Predictive (or affiliates) under the licenses the Company has granted to Predictive Technology Group, Inc.

If Predictive proposes to register any of its securities under the Securities Act of 1933 (other than pursuant to (i) a registration statement filed by Predictive in which gross proceeds of less than $40 million are being raised, or (ii) Form S-4 and/or Form S-8, or any other successor form of limited purpose), and Juneau is not able to sell the License Shares and/or Warrant Shares pursuant to Rule 144 of the Securities Act of 1933, Predictive will give written notice by registered mail at least fifteen (15) days prior to the filing of each such registration statement to Juneau of its intention to do so.  If Juneau notifies Predictive within ten (10) business days after receipt of any such notice of its desire to include any of the License Shares and/or Warrant Shares held by Juneau in such proposed registration statement, Predictive shall afford Juneau the opportunity to have any such amount of the License Shares and/or Warrant Shares registered under such registration statement.   

All expenses in connection with the registration of the License Shares and/or Warrant Shares shall be borne by Predictive; provided, however, that Predictive shall not be obligated to pay any fees or disbursements of counsel retained by Juneau nor shall Predictive be required to provide counsel to Juneau in connection registration or otherwise.

 

Predictive shall not be obligated to register any License Shares and/or Warrant Shares if Juneau, upon request, does not provide Predictive in writing such information regarding Juneau and the distribution proposed by Juneau as Predictive may request and as shall be required in connection with any registration. Information so furnished shall state that it can be used in the subject registration.


4



Juneau shall not, without the prior written consent of Predictive, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) any of the License Shares, Warrants and/or Warrant Shares (individually and collectively, the “Predictive Securities”), or (2) publicly disclose the intention to do any of the foregoing, for a period commencing on the date hereof and ending on the one year anniversary of the date of this Agreement.

 

The parties understand the Company is considering a merger and/or share exchange with Subscriber (or an affiliate) if appropriate terms for the transaction are agreed. The Parties will use reasonable commercial efforts to close the transaction before June 30, 2019.

3. Subscriber Representations. The Subscriber hereby represents and warrants that:

(a) The Subscriber's representations in this Agreement are complete and accurate to the best of the Subscriber's knowledge, and the Company may rely upon them. The Subscriber will notify the Company immediately if any material change occurs in any of this information before the sale of the Securities.

(b) The Subscriber is able to bear the economic risk of an investment in the Securities for an indefinite period of time, can afford the loss of the entire investment in the Securities, and will, after making an investment in the securities, have sufficient means of providing for Subscriber’s current needs and possible future contingencies. Additionally, the Subscriber's overall commitment to investments that are not readily marketable is not disproportionate to Subscriber’s net worth and this Subscription will not cause such overall commitment to become excessive.

(c) The Securities subscribed for herein will not be sold by the Subscriber without registration under applicable securities acts or a proper exemption from such registration.

(d) The Securities subscribed for herein are being acquired for the Subscriber's own account and risk, for investment purposes, and not on behalf of any other person or with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933. The Subscriber is aware that there are substantial restrictions on the transferability of the Securities.

(e) The Subscriber has had access to any and all information concerning the Company that the Subscriber and the Subscriber's financial, tax and legal advisors required or considered necessary to make a proper evaluation of this investment. Subscriber understands and agrees that customary disclosure documentation have not been prepared due, in part, to the fact that the parties have agreed that such documentation not be prepared to conserve Company funds. The Subscriber is not relying on any representations and warranties from the Company outside of this Agreement.

(f) In making the decision to purchase the Securities herein subscribed for, the Subscriber and its advisers have relied solely upon their own independent investigations, and fully understand that there are no guarantees, assurances or promises in connection with any investment hereunder and understand that the particular tax consequences arising from this investment in the Company will depend upon the individual circumstances of the Subscriber. The Subscriber further understands that no opinion is being given as to any securities or tax matters involving the offering.

 

5


(g) All of the information furnished by the Subscriber to the Company is true, correct and complete in all material respects, and the Subscriber agrees to notify the Company immediately of any change in any information set forth herein.

(h) The Subscriber also understands and agrees that stop transfer instructions relating to the Securities will be placed in the Company's transfer ledgers, and that the certificates evidencing the Securities sold will bear legends in substantially the following form:

The securities represented by this certificate have not been registered under the Securities Act of 1933 (the "Act") and are "restricted securities" as that term is defined in Rule 144 under the Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company.

(i) Subscriber has been given the unrestricted opportunity to ask questions of, and receive answers from, the Company, or persons acting on its behalf, concerning the terms and conditions of, and all other matters relating to the offering, and has been given the unrestricted opportunity to obtain such additional information with respect to the offering as he has desired.

(j) The Subscriber knows that the Securities subscribed for herein are offered and sold pursuant to exemptions from registration under the Securities Act of 1933, and state securities law based, in part, on these warranties and representations, which are the very essence of this Subscription Agreement, and constitute a material part of the bargained-for consideration without which this Subscription Agreement would not have been executed.

(k) By reason of the Subscriber's business or financial experience or the business or financial experience of professional advisors who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company, directly or indirectly, the Subscriber has the capacity to protect Subscriber’s own interest in connection with this transaction or has a pre-existing personal or business relationship with the Company or one or more of its officers, directors or controlling persons consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of such person with whom such relationship exists.

 

6


(l) This Subscription Agreement when fully executed and delivered by the Company will constitute a valid and legally binding obligation of the Subscriber, enforceable in accordance with its terms. The Subscriber, if it is a partnership, joint venture, corporation, trust or other entity, was not formed or organized for the specific purpose of acquiring the Securities. The purchase of the Securities by the Subscriber, if it is an entity investor, is a permissible investment in accordance with the Subscriber's Articles of Incorporation, by-laws, partnership agreement, declaration of trust or other similar charter document, and has been duly approved by all requisite action by the entity's owners, directors, officers or other authorized managers. The person signing this document and all documents necessary to consummate the purchase of the Securities has all requisite authority to sign such documents on behalf of the Subscriber, if it is an entity investor.

(m) The Subscriber represents that Subscriber is an "accredited investor" as defined under Rule 501 of Regulation D.

 

 4. Juneau Representations. Juneau hereby represents and warrants that:

 

(a) Juneau’s representations in this Agreement are complete and accurate to the best of Juneau’s knowledge, and Predictive may rely upon them. Juneau will notify Predictive immediately if any material change occurs in any of this information before the sale of the Predictive Securities.  

(b) Juneau is able to bear the economic risk of an investment in the Predictive Securities for an indefinite period of time, can afford the loss of the entire investment in the Predictive Securities, and will, after making an investment in the Predictive Securities, have sufficient means of providing for Juneau’s current needs and possible future contingencies. Additionally, Juneau’s overall commitment to investments that are not readily marketable is not disproportionate to Juneau’s net worth and this Subscription will not cause such overall commitment to become excessive.

(c) The Predictive Securities subscribed for herein will not be sold by Juneau without registration under applicable securities acts or a proper exemption from such registration.

(d) The Predictive Securities subscribed for herein are being acquired for Juneau’s own account and risk, for investment purposes, and not on behalf of any other person or with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933. The Juneau is aware that there are substantial restrictions on the transferability of the Securities.

(e) Juneau has had access to any and all information concerning Predictive that Juneau and Juneau’s financial, tax and legal advisors required or considered necessary to make a proper evaluation of this investment. Juneau understands and agrees that customary disclosure documentation has not been prepared due, in part, to the fact that the parties have agreed that such documentation not be prepared to conserve Predictive funds. Juneau is not relying on any representations and warranties from Predictive outside of this Agreement.

(f) In making the decision to purchase the Predictive Securities herein subscribed for, Juneau and its advisers have relied solely upon their own independent investigations, and fully understand that there are no guarantees, assurances or promises in connection with any investment hereunder and understand that the particular tax consequences arising from this investment in Predictive will depend upon the individual circumstances Juneau. Juneau further understands that no opinion is being given as to any securities or tax matters involving the offering.


7


(g) All of the information furnished by Juneau to Predictive is true, correct and complete in all material respects, and Juneau agrees to notify Predictive immediately of any change in any information set forth herein.

(h) Juneau also understands and agrees that stop transfer instructions relating to the Predictive Securities will be placed in Predictive’s transfer ledgers, and that the certificates evidencing the Predictive Securities will bear legends in substantially the following form:

The securities represented by this certificate have not been registered under the Securities Act of 1933 (the "Act") and are "restricted securities" as that term is defined in Rule 144 under the Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of Predictive.

(i) Juneau has been given the unrestricted opportunity to ask questions of, and receive answers from, Predictive, or persons acting on its behalf, concerning the terms and conditions of, and all other matters relating to Predictive and the Predictive Securities, and has been given the unrestricted opportunity to obtain such additional information with respect to the offering as it has desired.

(j) Juneau knows that the Predictive Securities are offered and sold pursuant to exemptions from registration under the Securities Act of 1933, and state securities law based, in part, on these warranties and representations, which are the very essence of this Subscription Agreement, and constitute a material part of the bargained-for consideration without which this Subscription Agreement would not have been executed.

(k) By reason of Juneau’s business or financial experience or the business or financial experience of professional advisors who are unaffiliated with and who are not compensated by Predictive or any affiliate or selling agent of Predictive, directly or indirectly, Juneau has the capacity to protect Juneau’s own interest in connection with this transaction or has a pre-existing personal or business relationship with Predictive or one or more of its officers, directors or controlling persons consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of such person with whom such relationship exists.

(l) This Subscription Agreement when fully executed and delivered by Juneau will constitute a valid and legally binding obligation of Juneau, enforceable in accordance with its terms. Juneau was not formed or organized for the specific purpose of acquiring the Predictive Securities. The purchase of the Predictive Securities by Juneau is a permissible investment in accordance with Juneau’s Operating Agreement, Certificate of Organization or other similar charter document, and has been duly approved by all requisite action by the entity's owners, directors, officers or other authorized managers. The person signing this document and all documents necessary to consummate the purchase of the Predictive Securities has all requisite authority to sign such documents on behalf of Juneau.


8


(m) Juneau represents that Juneau is an "accredited investor" as defined under Rule 501 of Regulation D.  

 

5. Entire Agreement. This Subscription Agreement and the related Operating Agreement, Warrant and Licenses, constitutes the entire agreement between the parties with respect to the matters covered thereby, and may only be amended by a writing executed by all parties hereto.

 

6. Survival of Representations. The representations, warranties, acknowledgments and agreements made by the Subscriber and the Company shall survive the acceptance of this Subscription and run in favor of, and for the benefit of, the Company and the Subscriber, respectively.

7. Waiver. No waiver or modification of any of the terms of this Subscription Agreement shall be valid unless in writing. No waiver of a breach of, or default under, any provision hereof shall be deemed a waiver of such provision or of any subsequent breach or default of the same or similar nature or of any other provision or condition of this Subscription Agreement.

8. Counterparts. This Subscription Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

9. Notices. Except as otherwise required in this Subscription Agreement, any notice required or permitted under this Subscription Agreement shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid, addressed as follows:

To the Company: 2749 East Parleys Way, Suite 300, SLC, UT 84109

To the Subscriber: 2739 East Parleys Way, Suite 205, SLC, UT 84109

10. Non-Assignability. The obligations of the parties hereunder shall not be delegated or assigned to any other party without the prior written consent of the other party.

11. No Third Party Beneficiary. The rights, remedies and agreements contained herein are solely for the benefit of the parties to this Subscription Agreement and their permitted successors and assigns.  No person or entity shall be a third party beneficiary to this Subscription Agreement.


9


12. Amendment and Restatement – This Agreement amends and restates in its entirely the Subscription Agreement effective December 31, 2016 and the Subscription Agreement effective June 30, 2018, by and between the parties hereto, and all amendments thereto.



PREDICTIVE TECHNOLOGY GROUP, INC.

(Signature of Authorized Person)

By: /s/ Bradley C. Robinson

Bradley C. Robinson

Its: President and CEO

2739 East Parleys Way, Suite 205, SLC, UT 84109

 

JUNEAU BIOSCIENCES, L.L.C.

(Signature of Authorized Person)

By: /s/ Kenneth Ward

Ken Ward

Its: Chief Executive Officer

 

2749 East Parleys Way, Suite 100, SLC, UT 84109


10

Exhibit 10.4


AGREEMENT AND PLAN OF MERGER

 

DATED AS OF JULY 21, 2018

 

AMONG

PREDICTIVE TECHNOLOGY GROUP, INC. PREDICTIVE ACQUISITIONS, INC.

-AND-

REGENERATIVE MEDICAL TECHNOLOGIES, INC.


TABLE OF CONTENTS

ARTICLE I DEFINITIONS

1

ARTICLE II BASIC  TRANSACTION

5

2.1 The Merger

5

2.2 The Closing

5

2.3 Actions at the Closing

5

2.4 Effect of Merger

5

2.5 Procedure for Payment of Merger Consideration; Dissenting Shares

7

2.6 Closing of Transfer Records

8

2.7 Termination  of Exchange Agency

8

ARTICLE III  REPRESENTATIONS AND WARRANTIES OF RMT

8

3.1

Organization, Qualification, and Corporate Power

8

3.2

Capitalization

9


i



3.3

Authorization of Transaction

9

3.4

Noncontravention

9

3.5

Subsidiaries

9

3.6

Disputes and Litigation

9

3.7

Financial Statements

10

3.8

Absense of Certain Changes

10

3.9

Undisclosed Liabilities

10

3.10 Taxes

12

3.11 Brokers'  Fees

12

3.12 Employee Matters

13

3.13 Contractual and Other Obligations

13

3.14

Transactions with Affiliated Persons

13

3.15

Books and Records

13

3.16

Consents

13


ii



3.17

Disclosure

14

3.18

Qualified Investors

13

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE ACQUISITION SUB

16

4.1

Organization; Relationship

16

4.2

Capitalization

16

4.3

Authorization of Transaction

17

4.4

Disputes and Litigation

18

4.5

Noncontravention

18

4.6

Financial Statements

18

4.7

Absence of Certain Changes.

18


iii



4.8 Undisclosed  Liabilities

19

4.9 Taxes

19

4.10

Contractual  and Other Obligations

19

4.11

Valid Issuance

20

4.13

Books and Records

20

4.14

Validity of the Buyer Shares

20

4.15 Brokers' Fees

20

4.16 l0b-5 Disclosures

20

ARTICLE  V  COVENANTS  

20

5.1 General

21

5.2 Notices and  Consents

21


iv



5.3 Regulatory  Matters and Approvals

21

5.4 Requisite Stockholder Approval;  Notice of Merger

21

5.5 Preparation  of Informational Statement.

21

5.6 Conduct of the Parties' Businesses

22

5.7 Full Access; Confidentiality

22

5.8 Notice of Developments

23

5.9 SEC Filings

23

5.10 Tax Treatment

24

5.11 Tag Along

24

5.12 Registration Rights

 

ARTICLE VI CONDITIONS TO OBLIGATION TO CLOSE

24

6.1 Conditions to Obligation of the  Buyer and the Acquisition Sub

24


v



6.2 Conditions to Obligation of RMT

25

ARTICLE   VII TERMINATION

26

7.1 Termination of Agreement

26

7.2 Effect of Termination

27

ARTICLE VIII MISCELLANEOUS


8.2 Survival

27

8.2 Press Releases and Public Announcements

27

8.3 No Third-Party Beneficiaries

27

8.4 Entire Agreement

27

8.5 Succession and  Assignment

28

8.6 Counterparts

28

8.7 Headings

28

8.8 Notices

28

8.9 Governing Law

29


vi



8.10 Amendments and Waivers

29

8.11 Severability

29

8.12 Expenses

30

8.13 Construction

30

8.14 Incorporation of Exhibits and Schedules

30


Exhibit A

Certificate of Merger

RMT Disclosure Schedule

Buyer Disclosure Schedule

vii

 

AGREEMENT AND PLAN OF MERGER


This Agreement and Plan of Merger (this "Agreement") is entered into as of July 21, 2018, by and among Predictive Technology Group, Inc., a Nevada corporation (the "Buyer"), Predictive Acquisitions, Inc., a Utah corporation and a wholly-owned subsidiary of the Buyer (the "Acquisition Sub"), and Regenerative Medical Technologies, Inc., a Utah corporation (the "RMT"). Regenerative Technologies, LLC, a Utah limited liability company, is also party to this Agreement with respect to Section 3.16 and 3.18 only. The Buyer, the Acquisition Sub, and  RMT are referred to collectively herein as the "Parties."

 

WHEREAS, the respective boards of directors of the Buyer, the Acquisition Sub, and RMT have deemed it advisable and in the best interests of their respective corporations and stockholders to consummate a merger transaction whereby the Buyer will acquire all of the outstanding capital stock of RMT in exchange for shares of Buyer's common stock through a reverse subsidiary merger of the Acquisition Sub with and into RMT, on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the respective boards of directors of the Buyer, the Acquisition Sub, and RMT have approved and declared advisable this Agreement and the transactions contemplated hereby, including the Merger (as herein defined); and

 

WHEREAS, the Parties intend, by approving resolutions authorizing this Agreement, to adopt this Agreement as a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the "Code") and that the transactions contemplated by this Agreement be undertaken pursuant to such plan.

 

Now, therefore, in consideration of the mutual covenants and agreements herein made, and in consideration of the representations and warranties herein contained, the Parties agree as follows.


ARTICLE I

 

DEFINITIONS

"Acquisition Sub" has the meaning set forth in the preface above.

 

"Acquisition Sub Share" means any share of the common stock, $0.001 par value per share, of the Acquisition Sub.

 

"Agreement" has the meaning set forth in the preface above.

 

"Articles of Merger" has the meaning set forth in Section 2.3 below.

 

"Buyer" has the meaning set forth in the preface above.

 

"Buyer Agreements" shall mean all mortgages, indentures, notes, agreements, contracts, leases, licenses, franchises, obligations, instruments or other commitments, arrangements or understandings of any kind, whether written or oral, to which the Buyer or the Acquisition Sub is a party or by which the Buyer or the Acquisition Sub or any of their respective properties may be bound or affected.

 

"Buyer Financial Statements" has the meaning set forth in Section 4.6(a) below.

 

"Buyer Disclosure Schedule" has the meaning set forth in Article IV below.

 

"Buyer Share" means any share of the common stock, $0.001 par value  per share, of  the Buyer.

 

"Buyer Stockholder" means the holder of any Buyer Shares. "Closing" has the meaning set forth in Section 2.2 below. "Closing Date" has the meaning set forth in Section 2.2 below. "Code" has the meaning set forth in the preface above.

 

"Confidential Information" means any information concerning the businesses  and affairs of RMT, or the Buyer (as the case may be) that is not already generally available to the public.

 

"Dissenting Share" means any RMT Share which is issued and outstanding immediately prior to the Effective Time and which is held of record by a stockholder who has not voted such shares in favor of the Merger and has delivered a written demand for payment of the fair value of such shares within the time and in the manner provided in the Utah Business Corporation Act.

 

"Effective Time" has the meaning set forth in Section 2.4(a) below.

 

"ERISA" means Employee Retirement Income Security Act of 1974, as amended.

 

"GAAP" means United States generally accepted accounting principles as in effect from time to time.

 

"Knowledge" means actual knowledge after reasonable investigation.

 

"Lien" means any mortgage, deed of trust, security interest, pledge, lien, or other charge or encumbrance of any nature whatsoever except: (a) liens disclosed in either RMT Historical Financial Statements; and (b) liens for taxes, assessments, or governmental charges or levies not yet due and delinquent.


1



"Material Adverse Effect" with respect to a Party shall mean any change, effect, event, occurrence or state of facts which is, or is reasonably expected to be, materially adverse to the business, financial condition or results of operations of such party and its subsidiaries, taken as a whole, other than any change, effect, event or occurrence relating to (i) the economy, health care regulatory issues generally, or securities markets of the United States or any other region in general or (ii) this Agreement or the transactions contemplated hereby or the announcement thereof.

 

"Merger" has the meaning set forth in Section 2.1 below.

 

"Merger Consideration" means the Buyer Shares into which RMT Shares issued and outstanding at and as of the Effective Time are converted, together with the Replacement Options.

 

"Merger Notice" has the meaning set forth in Section 5.4(b) below.

 

"Merger Transactions" has the meaning set forth in Section 5.4(a) below.

 

"Ordinary Course of Business" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

 

"Party" has the meaning set forth in the preface above.

 

"Person" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization (or any subsidiary or affiliate of any of the foregoing), or a governmental entity (or any department, agency, or political subdivision thereof).

 

"Regulation D" has the meaning set forth in Section 5.5 below.

 

"Requisite Stockholder Approval" means the affirmative vote (whether cast at a special meeting of RMT Stockholders or Buyer Stockholders, as applicable, or provided by written consent) of the holders of a majority of RMT Shares or Buyer Shares, as applicable, in favor of this Agreement and the Merger.

 

2



"RMT" has the meaning set forth in the preface above.

 

"RMT Disclosure Schedule" has the meaning set forth in ARTICLE III below.

 

"RMT Financial Statements" has the meaning set forth in Section 3.7 below.

 

"RMT Interim Financial Statements" has the meaning set forth in Section 3.7 below.

 

"RMT Historical Financial Statements" has the meaning set forth in Section 3.7 below.

 

 

"RMT Share" means any share of the Common Stock, $0.001 par value per share, of RMT.

 

"RMT Stockholder" means RT, LLC, the sole holder of RMT Shares.

 

"RT, LLC" has the meaning set forth in Section 2.S(a) below. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended.

"Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or other

security interest, other than (a) mechanic's, materialman's, and similar liens, (b) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

 

"Surviving Corporation" has the meaning set forth in Section 2.1 below.

 

"Tax" shall mean any United States, state, local or other jurisdictional income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, estimated, alternative, or add-on minimum, ad valorem, transfer or excise tax, goods and services or any other tax, custom, duty, governmental fee or other like assessment or charge imposed by any governmental authority, together with any interest or penalty imposed thereon.

 

"Tax Return" shall mean a report, return or other information (including any attached schedules or any amendments to such report, return or other information) required to be supplied to or filed with a governmental authority with respect to any Tax, including an information return, claim for refund, amended return or declaration or estimated Tax.

 

"Transfer Agent" has the meaning set forth in Section 2.5 below.

 

"Utah Revised Business Corporations Act" means the Utah Revised Business Corporation Act, Utah Code Section 16-l0A-101 et seq., as amended.



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ARTICLE II


BASIC TRANSACTION


2.1 The Merger.

 

On and subject to the terms and conditions of this Agreement, the Acquisition Sub will merge with and into RMT (the "Merger") at the Effective Time. RMT shall be the corporation surviving the Merger (the "Surviving Corporation").

 

2.2 The Closing.

 

The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Buyer, 2735 East Parleys Way, Suite 205, Salt Lake City, Utah, commencing at 9:00 a.m. local time on the business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take place at the Closing itself) or such other date as the Parties may mutually determine (the "Closing Date"); provided, however. that the Closing Date shall be no later than December 31, 2018.

 

2.3 Actions at the Closing.

 

At the Closing, (a) RMT will deliver to the Buyer and the Acquisition Sub the various certificates, instruments, and documents referred to in Section 6.1 below, (b) the Buyer and the Acquisition Sub will deliver to RMT the various certificates, instruments, and documents  referred to in Section 6.2 below, (c) RMT and the Acquisition Sub will file with the Utah Department of Commerce, Division of Corporations and Commercial Code (the "Utah Department") Articles of Merger in the form attached hereto as Exhibit A (the "Articles of Merger"), and (d) the Buyer will cause the Transfer Agent to issue certificates for the common stock of Buyer representing the Merger Consideration in the manner provided below in this ARTICLE II.

 

Additionally, each of the Parties shall take all such lawful action, and shall provide documentation satisfactory to the other Party upon reasonable request that such lawful action has been taken, as may be necessary or appropriate in order to effectuate the transactions contemplated by this Agreement. In case at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full title to all assets, rights, privileges, powers, immunities, purposes and franchises of either of RMT or the Acquisition Sub, the officers and directors of such corporation shall take all such lawful and necessary action.

 

2.4 Effect of Merger.

 

(a) General. The Merger shall become effective at the specified "Effective Time" set forth in the Articles of Merger to be filed with the Utah Department upon closing byRMT and the Acquisition Sub (the "Effective Time"). The Merger shall have the effect set forth in the Utah Revised Business Corporation Act. The Surviving Corporation may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name and on behalf of either RMT or the Acquisition Sub in order to carry out and effectuate the transactions contemplated by this Agreement.



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(b) Articles of Incorporation. The Articles of Incorporation of RMT effective as of the Closing shall be the Articles of Incorporation of the Surviving Corporation at and as of the Effective Time.

 

(c) Bylaws. The Bylaws of RMT in effect as of the Closing shall be the bylaws of the Surviving Corporation at and as of the Effective Time.

 

(d) Directors and Officers. The following individuals shall automatically comprise the entire slate of directors of the Surviving Corporation at and as of the Effective Time: Rick Obray, M.D., Bradley C. Robinson, and Eric Olson. The following individuals shall automatically comprise the officers of the Surviving Corporation at and as of the Effective Time: Bradley C. Robinson, Chief Executive Officer; Eric Olson, President; and Simon Brewer, Secretary and Treasurer.

 

(e) Conversion of RMT Shares. At and as of the Effective Time, by virtue of the Merger and without any action by any Person:


(i) each issued and outstanding RMT Share (other than any Dissenting Share), and all rights in respect thereof, shall be deemed cancelled and converted into the right to receive One Hundred Thousand (100,000) fully paid and nonassessable Buyer Shares; and

 

(ii) each Dissenting Share shall be converted into the right to receive payment from the Surviving Corporation with respect thereto in accordance with the provisions of the Utah Revised Business Corporation Act.


Notwithstanding the foregoing, the Merger Consideration shall be subject to equitable adjustment in the event of any stock split, stock dividend, reverse stock split, or other change in the number of RMT Shares outstanding. No RMT Share shall be deemed to be outstanding or to have any rights other than those set forth above in this Section 2.4(d) after the Effective Time.


(f) Conversion of Capital Stock of the Acquisition Sub. At and as of the Effective Time, each Acquisition Sub Share, and all rights in respect thereof, shall, by virtue of the Merger and without any action by the holder thereof, be deemed cancelled and converted into the right to receive one (1) fully paid nonassessable share of common stock, $0.001 par value per share, of the Surviving Corporation.



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(g) No Effect on the Buyer Shares.


 

The Merger shall effect no change in any shares of the Buyer Shares issued and outstanding prior to the Effective Time.

 

2.5b Procedure for Payment of Merger Consideration; Dissenting Shares.

(a) Buyer Shares.

 

(i) Immediately after the Effective Time, the Buyer will cause the Surviving Corporation to furnish to its transfer agent (the "Transfer Agent") certificates representing the portion of Merger Consideration to be paid to Regenerative Technologies, LLC, a Utah limited liability company ("RT, LLC"), the sole shareholder of all of the RMT Shares issued and outstanding immediately prior to the Closing.

 

(ii) As soon as practicable after the Effective Time, the Buyer shall provide to the Transfer Agent Ten Million (10,000,000) Buyer Shares to be delivered  to RT, LLC in accordance with Section 2.4(e) above. The Buyer shall instruct the Transfer Agent to promptly thereafter send a notice and transmittal form to RT, LLC, advising it of the terms of the exchange effected by the Merger and the procedure for surrendering to the Transfer Agent (who may appoint forwarding agents with the approval of the Buyer) its certificate evidencing RMT Shares for exchange for Buyer Shares. Upon surrender of the same to the Transfer Agent, RT, LLC shall be entitled to receive, in exchange for such certificate, a certificate evidencing Ten Million (10,000,000) Buyer Shares pursuant to Section 2.4(e) hereof, and the certificate so surrendered shall forthwith be cancelled.

 

(iii)In the event any certificate representing any RMT Shares shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by RT, LLC, the Transfer Agent shall issue in exchange for such lost, stolen or destroyed certificate the consideration payable in exchange therefor pursuant to this Agreement.

 

(iv) The Buyer shall pay all charges and expenses of the Transfer Agent

 

(b) Dissenting Shares. Notwithstanding anything in this Agreement to thecontrary, no Dissenting Shares shall be converted into or be exchangeable for the right to receive the consideration provided in this Article II of this Agreement, unless and until the holder of any such Dissenting Shares shall have failed to perfect or shall have effectively withdrawn or lost its right to appraisal and payment under the Utah Revised Business Corporation Act. If any such holder shall have so failed to perfect or shall have effectively withdrawn or lost such right, such holder's RMT Shares shall thereupon be deemed to have been converted into and  to  have become exchangeable for, at the Effective Time, the right to receive the consideration therefor specified under this Article II, without any interest thereon.




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2.6 Closing of Transfer Records.

After the close of business on the Closing Date, transfers of RMT Shares outstanding prior to the Effective Time shall not be made on the stock transfer books of the Surviving Corporation.


2.7 Termination of Exchange Agency.


Any portion of the Buyer Shares that remains undistributed to the holders of RMT Shares for one year after the Effective Time shall be delivered to the Buyer, upon demand, and any holders of RMT Shares who have not therefore complied with this Article II shall thereafter look only to Buyer for the Buyer Shares to which they are entitled pursuant to Section 2.4(e) hereof. Any portion of such remaining shares unclaimed by holders of RMT Shares as of a date which is immediately prior to such time as such shares or amounts would otherwise escheat to or become property of any governmental entity shall, to the extent permitted by applicable law, become the property of the Buyer free and clear of any claims or interest of any person previously entitled thereto.


ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF RMT

 

RMT, and RT, LLC with respect to Sections 3.16 and 3.18 only, each represents and warrants to the Buyer and the Acquisition Sub that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE Ill), except as set forth in the disclosure schedule accompanying this Agreement (the "RMT Disclosure Schedule").  The  RMT Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this ARTICLE III.

 

3.1 Organization, Qualification, and Corporate Power.

RMT is a corporation duly organized, validly existing, and in good standing under the laws of the State of Utah. RMT is duly authorized to conduct business and is in good standing under the laws of each jurisdiction wherein the failure to so qualify would have a Material Adverse Effect on RMT taken as a whole or on the ability of the Parties to consummate the transactions contemplated by this Agreement. RMT has full corporate power and authority to own or hold under lease the assets and properties that it owns or holds under lease, to conduct its business as currently conducted, to perform all of its obligations under the agreements to which it is a party, including without limitation this Agreement.



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3.2 Capitalization.


The entire authorized capital stock of RMT consists of 1,000 RMT Shares, of which 100 RMT Shares are issued and outstanding and 900 RMT Shares are held in treasury. All of the issued and outstanding RMT Shares have been duly authorized and are validly issued, fully paid, and nonassessable. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require RMT to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to RMT.

 

3.3 Authorization of Transaction.

 

RMT has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder; provided, however, that RMT cannot consummate the Merger unless and until it receives the Requisite Stockholder Approval. This Agreement constitutes the valid and legally binding obligation of RMT, enforceable in accordance with its terms and conditions except as may be limited by bankruptcy, insolvency or other laws affecting generally the enforceability of creditors' rights and by limitations on the availability of equitable remedies.


3.4 Noncontravention.

 

Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will {a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which RMT is subject or any provision of the charter or bylaws of RMT, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which RMT is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets). Except as set specifically set forth in this Agreement, RMT does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.

3.5 Subsidiaries.

 

RMT does not have any subsidiaries.


3.6 Disputes and Litigation.


There is no action, suit, proceeding, or claim, pending or to the Knowledge of RMT, threatened, and no investigation by any court or government or governmental agency or instrumentality, domestic or foreign, pending or to the Knowledge of RMT, threatened, against RMT, before any court, government or governmental agency or instrumentality, domestic or foreign, nor is there any outstanding order, writ, judgment, stipulation, injunction, decree, determination, award, or other order of any court or government or governmental agency or instrumentality, domestic or foreign, against RMT.



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3.7 Financial Statements and Assets.


(a) RMT was formed on January 9, 2018 (the "Formation Date") and, since the Formation Date, has had limited operations. RMT has no (i) consolidated balance sheets;

 

(ii)consolidated statements of income, stockholders' equity and cash flows for any fiscal year (hereinafter referred to as the "RMT Financial Statements") or (iii) consolidated statements of income and cash flows for any prior months so ended (hereinafter referred to as the "RMT Interim Financial Statements" and, together with RMT Financial Statements, the "RMT Historical Financial Statements").


(b) The personal property and other assets of the Target are described in Schedule 3.7. Target has good and marketable title to all personal property and other assets of any kind or nature owned by it, free and clean or all Liens, except for (a) Liens for non­ delinquent ad valorem or personal property taxes and (b) such non-monetary Liens that do not detract or interfere with the present or reasonable foreseeable use of the property subject thereto. All of the Liens referred in clause (b) above will be set forth in Schedule 3.7.


3.8 Absence of Certain Changes. Subsequent to the Formation Date, RMT has not:


(a) amended or otherwise modified its constituting documents or bylaws (or similar organizational documents);

(b) altered any term of any of its outstanding securities or made any change in its outstanding shares of capital stock or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or otherwise;

(c) with respect to, any shares of its capital stock or any other of its securities, granted, encumbered, issued or sold, or authorized for grant or encumbrance, issuance or sale, or granted, encumbered, issued or sold any options, warrants, purchase agreements, put agreements, call agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments fixed or contingent that could directly or indirectly require RMT to issue, sell, pledge, dispose of or otherwise cause to become outstanding, any of its authorized but unissued shares of capital stock or ownership interests, as appropriate, or any securities convertible into, exchangeable for or carrying a right or option to purchase shares of capital stock, or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of capital stock or ownership interests, as appropriate or entered into any agreement, commitment or understanding calling for any of the above;




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(d) declared, set aside or made any payment, dividend or other distribution upon any capital stock or, directly or indirectly, purchased, redeemed or otherwise acquired or disposed of any shares of capital stock or other securities of or other ownership interests in RMT;

(e )incurred any liability or obligation under agreements or otherwise, except current liabilities entered into or incurred in the ordinary course of business consistent with past practice; issued any notes or other corporate debt securities or paid or discharged any outstanding indebtedness, except in the ordinary course of business consistent with past practice; or waived any of its respective rights;

(f) mortgaged,  pledged, subjected to any Lien or granted any security interest in any of its assets or properties; entered into any lease of real property or buildings; or, except in the ordinary course of business consistent with past practice, entered into any lease of machinery or equipment, or sold, transferred, leased to others or otherwise disposed of any tangible or intangible asset or property;

(g) adopted or, except as required by law, amended, any employee benefit plan other than as necessary in connection with the transactions contemplated hereby;

(h) entered into any transaction other than in the Ordinary Course of Business consistent with past practice, except in connection with the execution and performance of this Agreement and the transactions contemplated hereby;

(i) suffered any damage, destruction, or loss to any of its assets or properties (whether or not covered by insurance) except for damage, destruction or loss occurring in the ordinary course of business which, individually or in the aggregate, would not have a Material Adverse Effect;

(J) made any loan or advance to any entity or  person other  than  travel  and other similar routine advances to officers, directors or employees in the Ordinary Course of Business consistent with past practice;

(k) instituted or settled any litigation or any legal, administrative or arbitration action or proceeding before any court, government or governmental agency or instrumentality, domestic or foreign, relating to it or any of its properties or assets;

(l) made any new elections, changed any current elections or settled or compromised any liability with respect to its taxes; or

(m) suffered any Material Adverse Effect.

In addition, since the Formation Date, there has been no condition, development or contingency, which, so far as reasonably may be foreseen, may, individually or in the aggregate, have a Material Adverse Effect.




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3.9 Undisclosed Liabilities.


Except as otherwise disclosed in this Agreement, RMT has no liabilities, whether accrued, absolute, contingent, or otherwise, whether due or to become due and whether the amount thereof is readily ascertainable or not, other than liabilities which, individually or in the aggregate, would not have a Material Adverse Effect.


3.10 Taxes.

 

RMT has timely and accurately filed, or caused to be timely and accurately filed, all Tax Returns required to be filed by it, and has paid, collected or withheld, or caused to be paid, collected or withheld, all amounts of Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves have been established and which are being contested in good faith. There are no claims or assessments pending against RMT for any alleged deficiency in any Tax, there are no pending or, to the Knowledge of RMT, threatened audits or investigations for or relating to any liability in respect of any Taxes, and RMT has not been notified in writing of any proposed Tax claims or assessments against RMT (other than in each case, claims or assessments for which adequate reserves have been established and which are being contested in good faith). RMT has not executed any waivers or extensions of any applicable statute of limitations to assess any amount of Taxes. There are no outstanding requests by RMT for any extension of time within which to file any Tax Return or within which to pay any amounts of Taxes shown to be due on any Tax Return. To the Knowledge of the Buyer, there are no liens for Taxes on the assets of RMT except for statutory liens for current Taxes not yet due and payable. There are no outstanding powers of attorney enabling any party to represent RMT with respect to Taxes. Other than with respect to RMT, RMT is not liable for Taxes of any other Person, or is currently under any contractual obligation to indemnify any person with respect to any amounts of Taxes (except for customary agreements to indemnify lenders or security holders in respect of Taxes), or is a party to any tax sharing agreement or any other agreement providing for payments by RMT with respect to any amounts of Taxes. RMT has not engaged in any transaction that requires its participation to be disclosed under Treas. Reg. Sec. 1.6011-4.


3.11 Brokers' Fees.


RMT has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

3.12 Employee Matters.


RMT does not have any agreement with any individual with regard to compensation for services rendered and has no liability (either contingent or otherwise) to any Person for any services rendered. RMT does not currently have, or has ever had, any employees or maintained

 

(a) any "employee welfare benefit plan," as defined in Section 3(1) of ERISA,  (b)  any "employee pension benefit plan," as defined in Section 3(2) of ERISA, (c) any plan or agreement providing for  bonuses, stock options,  stock  appreciation  rights, stock  purchase  plans or  other forms of equity-based compensation, (d) any other plan or agreement involving direct or indirect compensation (including any deferred compensation) other than workers' compensation, unemployment compensation and other government programs, (e) any employment, severance, separation, change of control or other similar contract, arrangement or policy providing for insurance coverage, salary continuation, non-statutory workers' compensation,  disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, pension, supplemental pension, savings, retirement savings, fringe benefits, deferred compensation, profit-sharing, bonuses, other forms of incentive compensation or post-retirement insurance, compensation or benefits, (f) any other employee benefit plan, arrangement, program, agreement, policy or practice, formal or informal, funded or unfunded, insured or self-insured, that covers any current or former employee of the Buyer the Acquisition Sub, or (7) any "multiemployer plan" (within the meaning of Section 3(37) of ERISA).


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3.13 Contractual and Other Obligations.


(a) Set forth or provided for on Schedule 3.13 attached hereto is a list, of each RMT Agreement that is material to RMT's business or financial condition.

 

(b) No event has occurred, or, is alleged to have occurred, which constitutes or with lapse of time or giving of notice or both, would constitute a default or a basis for a claim of force majeure or other claim of excusable delay or non-performance by RMT under any of RMT Agreements, except for any such default or claim which, individually or in the aggregate, would not have a Material Adverse Effect. To the Knowledge of RMT, no party with whom RMT has any RMT Agreement is in default in the performance of any covenant or condition


3.14 Transactions with Affiliated Persons.

 

Since its Formation Date, RMT has not, in the Ordinary Course of Business or otherwise, directly or indirectly, purchased, leased or otherwise acquired any property or obtained any services from, or sold, leased or otherwise disposed of any property or furnished any services to any affiliate of RMT; (b) RMT does not owe any amount to any affiliate of RMT; (c) no affiliate of RMT owes any amount to RMT; and (d) no part of the property or assets of any affiliate of RMT is used by RMT in the conduct or operation of its businesses. No affiliate of RMT owns any business that is a significant competitor of RMT.

 

3.15 Books and Records.

 

The books and records of RMT with respect to RMT and its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made, and all transactions involving RMT have been accurately accounted for.

 

3.16 Consents.

 

Exhibit B references (i) 15,000 enrollable patients identified in the Degenerative Disc Disease Molecular Diagnostic Patient Database (individually and collectively, the "DDD Patients"), and (ii) 7,500 enrollable patients identified in the Pharmacogenomic Molecular Diagnostic Patient Database (individually and collectively, the "PGx Patients"). Within a (a) one-year period following the Closing at least 1,667 DDD Patients and 834 PGx Patients will be consented, (b) two-year period following the Closing at least a total of 3,334 DDD Patients and 1,668 PGx Patients will be consented, and (c) three-year period following the Closing at least a total of 5,000 DDD Patients and 2,500 PGx Patients, will be consented. Such consents will authorize Buyer to utilize the consented patients' DNA and other de-identified medical and health information included in each of the above referenced databases in any research studies and/or for any commercial purposes as Buyer shall deem appropriate. Such consents shall be complete to the reasonable satisfaction of Buyer. The representations and warranties made in this Section 3.16 are made jointly and severally by RMT and RT, LLC. Notwithstanding any other provision of this Agreement, the damages resulting from a breach of this Section 3.16 shall not exceed (y) the value of 3 million Buyer Shares valued as of the Closing Date in the event the DDD Patients are not properly and timely consented which damages can be paid, at the election of RMT, in either cash or by returning the 3 million shares to Buyer for cancellation or (z) the value of 1 million Buyer Shares valued as of the Closing Date in the event the PGx Patients are not properly and timely consented which damages can be paid, at the election of RMT, in either cash or by returning the 1 million shares to Buyer for cancellation.

 


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3.17 Disclosure.


The Informational Statement will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they will be made, not misleading; provided, however, that RMT makes no representation or warranty with respect to any information that the Buyer or the Acquisition Sub will supply specifically for use in the Informational Statement.


3.18 Qualified Investors.


RMT's sole shareholder is RT,  LLC.  RT,  LLC  makes  the  following representations with respect to each member of RT, LLC (each, an "RT Member", and collectively, the "RT Members"):

 

(a) Each RT Member is able to bear the economic risk of an investment  in the securities of Buyer Shares offered hereby (the "Securities") for an indefinite period of time and can afford the loss of the entire investment in the Securities. Additionally, each  RT  Member's overall commitment to investments that are not readily marketable is not disproportionate to his or her net worth, and this Agreement will not cause such overall commitment to become excessive.

 

(b)The Securities will not be sold by any RT Member without registration under applicable securities acts or a proper exemption from such registration.

 

(c) The Securities are being acquired for each RT Member's own  account and risk, for investment purposes, and not on behalf of any other person or with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities  Act.  Each RT Member is aware that there are substantial restrictions on the transferability of the securities.

 

(d) Each RT Member has had access to any and all information concerning Buyer and its subsidiaries that the RT Members, RMT and their financial, tax and legal advisors required or considered necessary to make a proper evaluation of the Securities. In making the decision to enter into this Agreement and acquire the Securities, the RT Members and their advisors have relied solely upon their own independent investigations and the representations and warranties contained herein, and fully understand that there are no guarantees, assurances or promises in connection with any investment hereunder.

 

(e) Each RT Member understands and agrees that stop transfer instructions relating to the Securities will be placed in Buyer's stock transfer ledger, and that the certificates evidencing the securities sold will bear legends in substantially the following form:

The securities represented by this Certificate have not been registered under the Securities Act of 1933 (the "Act") and are "restricted securities" as that term is defined in Rule 144 under the Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective  registration statement  under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to  the  reasonable satisfaction of the Issuer.

 

 


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(f) The RT Members have been given the unrestricted opportunity  to  ask questions of, and receive answers from, Buyer and its subsidiaries, or persons acting on their behalf, concerning the terms and conditions of, and all other matters relating to the Securities, and has been given the unrestricted opportunity to obtain such additional information with respect to the Securities as he or she has desired.

 

(g) By reason of each RT Member's business or financial experience or the business or financial experience of professional advisors who are unaffiliated with and who are not compensated by Buyer or any affiliate thereof, each RT Member has the capacity to protect  his or her own interest in connection with this transaction or has a pre-existing personal or business relationship with Buyer or one or more of its officers, directors or controlling persons consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of such person with whom such relationship exists.

 

(h) No RT Member was offered the Securities by way of general solicitation or general advertising and at no time were Shareholders presented with or solicited by means of any leaflet, public promotional meeting, circular, newspaper or magazine article, radio or television advertisement.

 

(i) Each RT Member is an "accredited investor" as defined under Rule 501 of Regulation D promulgated under the Securities Act of 1933.


ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE ACQUISITION SUB

 

Each of the Buyer and the Acquisition Sub represents and warrants to RMT that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE IV), except as set forth in the disclosure schedule accompanying this Agreement (the "Buyer Disclosure Schedule"). The Buyer Disclosure Schedule will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this ARTICLE IV.

 


4.1 Organization; Relationship.

 

Each of the Buyer and the Acquisition Sub is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation and in each jurisdiction wherein the failure to so qualify would have a Material Adverse Effect. Each of the Buyer and the Acquisition Sub have the full corporate power and authority to own or hold under lease the assets and properties which each owns or holds under lease, to conduct its business as currently conducted, to perform all of its obligations under the agreements to which it is a party, including without limitation this Agreement. The Acquisition Sub is wholly owned by the Buyer and represents the only subsidiary of the Buyer.



4.2 Capitalization.

 



(a) The Buyer. The entire authorized capital stock of the Buyer consists of 900,000,000 Buyer Shares, of which approximately 224,500,000 Buyer Shares are issued and outstanding, 10,000,000 shares of preferred stock of which no shares are issued and outstanding, and no Buyer Shares are held in treasury. All of the issued and outstanding Buyer Shares have been duly authorized and are validly issued, fully paid, and nonassessable issued or outstanding.


(i)There is no other class of capital stock of the Buyer authorized,

 

(ii)Except as disclosed in Schedule 4.2, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Buyer to issue, sell, or otherwise cause to become outstanding any of its capital stock.

 

(iii)There are no outstanding or authorized stock  appreciation, phantom stock, profit participation, or similar rights with respect to the Buyer. The Buyer is not a party to any agreement or arrangement relating to the voting or control of any of its capital stock, or obligating the Buyer, directly or indirectly, to sell any asset that is material to the businesses, financial condition, results of operations or prospects of the Buyer or the Acquisition Sub, taken as a whole.



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(b) A quisition Sub. The entire authorized capital stock of the Acquisition Sub consists of I,000,000 Acquisition Sub Shares, of which 1,000 Acquisition Sub Shares are issued and outstanding and owned entirely by the Buyer. No Acquisition Sub Shares are held in treasury. All of the issued and outstanding Acquisition Sub Shares have been duly authorized and are validly issued, fully paid, and nonassessable.

 

(i) There is no other class of capital stock of the Acquisition Sub authorized, issued or outstanding.

 

(ii) There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Acquisition Sub to issue, sell, or otherwise cause to become outstanding any of its capital stock.

 

(iii) There are no outstanding or authorized stock  appreciation, phantom stock, profit participation, or similar rights with respect to the Acquisition Sub. The Acquisition Sub is not a party to any agreement or arrangement relating to the voting or control of any of its capital stock, or obligating the Acquisition Sub, directly or indirectly, to sell any asset that is material to the businesses, financial condition, results of operations or prospects of the Acquisition Sub, taken as a whole.


4.3 Authorization of Transaction.

 

 

Each of the Buyer and the Acquisition Sub has full power and  authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of  this Agreement have been duly authorized by all necessary company action of the Buyer and the Acquisition Sub (including approval of their respective boards of directors and stockholders). This Agreement constitutes the valid and legally binding obligation of each of the Buyer and the Acquisition Sub, enforceable in accordance with its terms and conditions except as may be limited by bankruptcy, insolvency or other laws affecting generally the enforceability of creditors' rights and by limitations on the availability of equitable remedies.

 

4.4 D isputes and Litigation.

 

Except as disclosed in Schedule 4.4, there is no action, suit, proceeding, or  claim, pending or to the Knowledge of the Buyer, threatened, and no investigation by any court or government or governmental agency or instrumentality, domestic or foreign, pending or to the Knowledge of the Buyer, threatened, against the Buyer or the Acquisition Sub, before any court, government or governmental agency or instrumentality, domestic or foreign, nor is there any outstanding order, writ, judgment, stipulation, injunction, decree, determination, award, or other order of any court or government or governmental agency or instrumentality, domestic or foreign, against the Buyer the Acquisition Sub.

 

4.5 Noncontravention.

 

Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which either the Buyer or the Acquisition Sub is subject or any provision of the charter or bylaws of either the Buyer or the Acquisition Sub or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which either the Buyer or the Acquisition Sub is a party or by which it is bound or to which any of its assets is subject. Except as set specifically set forth in this Agreement, Neither the Buyer nor the Acquisition  Sub needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.

 

4.6 Financial Statements.

 

(a)The Buyer has provided RMT with copies of the consolidated balance sheet of Buyer as of and at June 30, 2018 and the related consolidated statements of income, stockholders' equity and cash flows for the fiscal year then ended, together with respect thereto (hereinafter referred to as the "Buyer Financial Statements").

 

(b)The Buyer Financial Statements are true and correct and have been prepared in conformity with GAAP consistently applied throughout the periods to which such financial statements relate. The Buyer Financial Statements fairly present, in all  material respects, in conformity with such principles as so applied, the consolidated financial position and results of operations and cash flows of Buyer and subsidiaries, at the dates shown and for the periods therein specified. All adjustments necessary to fairly present, in all material respects, the consolidated financial position and results of operations and cash flows of Buyer, and the changes in its cash flows for such periods have been included in the Buyer Financial Statements.

 



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4.7 Absence of Certain Changes.

 



Subsequent  to June 30, 2018,  neither  the Buyer nor the Acquisition Sub has:

 

(a)amended or otherwise modified its constituting documents or bylaws (or similar organizational documents), except in connection with the formation of Acquisition Sub;

 

(b)mortgaged, pledge, subjected to any Lien or granted any security interest in any of its assets or properties; entered into any lease of real property or buildings; or, except in the ordinary course of business consistent with past practice, entered into any lease of machinery or equipment, or sold, transferred, leased to others or otherwise disposed of any tangible or intangible asset or property;

 

(c)adopted or, except as required by law, amended, any employee benefit plan other than as necessary in connection with the transactions contemplated hereby;

 

(d)suffered any damage, destruction, or loss to any of its assets or properties (whether or not covered by insurance) except for damage, destruction or loss occurring in the ordinary course of business which, individually or in the aggregate, would not have a Material Adverse Effect;

 

(e)made any new elections, changed any current elections or settled or compromised any liability with respect to its taxes; or

 

(f)suffered any Material Adverse Effect.

 

In addition, since June 30, 2018, there has been no condition, development or contingency that, so far as reasonably may be foreseen, may, individually or in the aggregate, has a Material Adverse Effect.



 

4.8 Undisclosed Liabilities.

 

Neither the Buyer, nor the Acquisition Sub, has any liabilities, whether accrued, absolute, contingent, or otherwise, whether due or to become due and whether the amount  thereof is readily ascertainable or not, other than liabilities which individually or in  the aggregate, would not have a Material Adverse Effect.

 

4.9 [Section Reserved)

 

 

4.10 Contractual and Other Obligations.

 

(a)Buyer has given RMT the opportunity to review and inspect all material Buyer contracts and RMT is deemed to be aware of the information in such contracts.

 

(b)No event has occurred, or is alleged to have occurred, which constitutes or with lapse of time or giving of notice or both, would constitute a default or a basis for a claim of force majeure or other claim of excusable delay or non-performance by the Buyer or the Acquisition Sub under any of the Buyer Agreements, except for any such default or claim which, individually or in the aggregate, would not have a Material Adverse Effect. To the Knowledge ofthe Buyer and the Acquisition Sub, no party with whom the Buyer or the Acquisition Sub has any Buyer Agreement is in default in the performance of any covenant or condition

 



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4.11 Valid Issuance.

 

The Buyer Shares to be issued upon the consummation of the Merger, when issued in accordance with the provisions of this Agreement, shall be validly issued, fully paid and nonassessable.

 

4.12 Books and Records.

 

The books and records of the Buyer and the Acquisition Sub with respect to the Buyer and the Acquisition Sub, their operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made, and all transactions involving the Buyer and the Acquisition Sub, have been  accurately accounted for.

 

4 .13 Validity of the Buyer Shares.

 

The Merger Consideration, when issued and delivered in accordance with the terms of this Agreement, shall be duly and validly issued fully-paid and nonassessable and neither the Buyer nor the holder thereof shall be subject to any preemptive, anti-dilution or similar right with respect thereto that has not been properly waived or complied with.

 

4.14 Brokers' Fees.

 

Neither the Buyer nor the Acquisition Sub has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which RMT could become liable or obligated.

 

4.15 l0b-5 Disclosure.

 

Neither the Buyer nor the Acquisition Sub has omitted or provided material information in this Article IV or the accompanying disclosure schedules or anywhere else herein that is materially misleading, contains an untrue statement of material fact, or omits to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading.

ARTICLEV COVENANTS

The Parties agree as follows with respect to the period from and after the execution of this Agreement.

 

5.1 General.

 

Each of the Parties will use its commercially reasonable efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in ARTICLE VI below).

 

5.2 Notices and Consents.

 

Each of the Parties will give any notices to third parties, and will use its commercially reasonable efforts to obtain any third party consents, that the other Party reasonably may request in connection with the matters referred to in Section 3 .4 above as to RMT and referred to in Section 4.5 as to Acquisition Sub.

 



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5.3 Regulatory Matters and Approvals.

 

Each of the Parties will give any notices to, make any filings with, and use its commercially reasonable efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to in Section 3 .4 above as to RMT and referred to in Section 4.5 above as to Acquisition Sub.

 

5.4 Requisite Stockholder Approval; Notice of Merger.

 

(a) Approval. As promptly as reasonably practicable following the date of this Agreement, RMT shall take all action necessary, in accordance with applicable law and its articles of incorporation and bylaws, to obtain approval of the Merger and all related matters contemplated in this Agreement (the "Merger Transactions") by either (i) convening an annual or special meeting of RT, LLC, the sole holder of RMT Shares and calling for a vote on the Merger Transactions, or alternatively (ii) soliciting the adoption of resolutions approving the Merger Transactions by written consent of RT, LLC, as the sole holder ofRMT Shares.

 

(b) Notice. Promptly after obtaining the Requisite Stockholder Approval, the board of directors of RMT will cause a communication (the "Merger Notice") to be sent to RMT Stockholders (other than those RMT Stockholders who adopted this Agreement and approved the Merger Transactions) if any, containing: (i) notification of the adoption of the Agreement and the approval of the Merger Transactions by a majority of RMT Stockholders; and (ii) notification of the right to dissent from participation in the Merger, if any, in accordance with the requirements of the Utah Revised Business Corporation Act.

 

5.5 Preparation of Informational Statement.

 

The Buyer shall cooperate with RMT in RMT's preparation of the information required by Regulation D under the Securities Act (hereinafter referred to as "Regulation D") to be delivered to the holders of RMT Shares (hereinafter referred to as the "Informational Statement"). Each of the Buyer and RMT shall provide promptly to the other such information concerning its business and financial statements and affairs as, in the reasonable judgment of the providing party or its counsel, may be required or appropriate for inclusion in the Informational Statement, or in any amendments or supplements thereto, and to cause its counsel and auditors to cooperate with the other Party's counsel and auditors in the preparation of the Informational Statement. The Buyer shall not include in the Informational Statement any information with respect to RMT unless the form and content of such information shall have been approved by RMT prior to such inclusion.

 

5.6 Conduct of the Parties' Businesses.

 

E xcept as specifically set forth elsewhere in this Agreement, from the date of this Agreement until the Closing, each of the Acquisition Sub and RMT shall (a) maintain its corporate existence in good standing, and (b) refrain from engaging in any practice, taking any action, or entering into any transaction outside the Ordinary Course of Business or inconsistent with past practices, without a material change in current operational policies. Without limiting the generality of the foregoing, none of the Acquisition Sub nor RMT shall:

 

(a)authorize or effect any change in its articles of incorporation or bylaws;

 

(b)grant any options, warrants, or other rights to purchase or obtain any of its capital stock or issue, sell, or otherwise dispose of any of its capital stock (except upon the conversion or exercise of options, warrants, and other rights currently outstanding);

 

(c)declare, set aside, or pay any dividend or distribution with respect to its capital stock (whether in cash or in kind), or redeem, repurchase, or otherwise acquire any of its capital stock;

 

(d) issue any note, bond, or other debt security or create, incur, assume, or guarantee any indebtedness for borrowed money or capitalized lease obligation outside the Ordinary Course of Business;

 

(e)impose any Security Interest upon any of its assets outside the Ordinary Course of Business;

 

(f) make any capital investment in, make any loan to, or acquire the securities or assets of any other Person outside the Ordinary Course of Business;

 



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(g)make any change in employment terms for any of its directors, officers, and employees outside the Ordinary Course of Business; or

 

(h)commit to any of the foregoing.

 

5.7 Full Access; Confidentiality.

 

RMT will permit representatives of the Buyer to have full access to all premises, properties, personnel, books, records (including tax records), contracts, and documents of or pertaining to each of RMT. Buyer will treat and hold as such any Confidential Information it receives from RMT in the course of the reviews contemplated by this Section 5.7, will not use any of the Confidential Information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, shall return to RMT all tangible embodiments (and all copies) thereof which are in its possession. To the extent that the Buyer has provided, or does provide, to RMT any Confidential information relating to the Buyer, RMT will treat and hold as such, will not use any of the Confidential Information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, shall return to the Buyer all tangible embodiments (and all copies) thereof which are in its possession.

5.8 Notice of Developments.

Each Party will give prompt written notice to the others of any material adverse development causing a breach of any of its own representations and warranties in Article III or Article IV above (as the case may be). No disclosure by any Party pursuant to this Section 5.8, however, shall be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant.

5 .9 SEC and Securities Filings.

The Buyer will consult with RMT and prepare and file any other filings required under the Exchange Act, the Securities Act or any other federal or state securities laws relating to the Merger and the transactions contemplated by this Agreement to the extent of the content of any disclosure regarding the Merger or the transactions contemplated by this Agreement, including without limitation a current report on Form 8-K announcing the execution of this Agreement and the consummation of the Merger, respectively (collectively, the "Other Filings"), and the Buyer will permit RMT and its counsel with reasonable advance notice in order to review and comment on any such Other Filings prior to their filing with the SEC. The Buyer will notify RMT promptly upon the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff or any other governmental officials for amendments or supplements to any Other Filing or for additional information and will supply RMT with copies of all correspondence between the Buyer or any of its representatives, on the one hand, and the SEC, or its staff or other government officials, on the other hand, with respect to the Merger or any Other Filing. The Other Filings will comply in all material respects with all applicable requirements of law and the rules and regulations promulgated thereunder. Whenever any event occurs which is required to be set forth in an amendment or supplement to any Other Filing, the Buyer will promptly inform RMT of such occurrence and cooperate in filing with the SEC or its staff or any other government officials. Upon any permitted sale of Buyer Shares, Buyer shall provide RMT Stockholder with such information as may be reasonably required for RMT Stockholder to sell such Buyer Shares in a public or private sale.

5.10 Tax Treatment.

Notwithstanding anything herein to the contrary, each of the Buyer, the Acquisition Sub and RMT shall use its commercially reasonable efforts to cause the Merger to qualify, and will not (both before and after the Effective Time) take any actions, or fail to take any action, which could reasonably be expected to prevent the Merger from qualifying as a non-taxable reorganization under the provisions of Section 368 of the Code. The Buyer shall, and shall cause the Surviving Corporation to, report, to the extent required by the Code or the regulations thereunder, the Merger for income tax purposes as a reorganization within the meaning of Section 368 of the Code.

5 .11 Tag Along.

If the majority of stockholders of Buyer desire to accept, or cause the Buyer to accept, any bona fide offer for a sale of their shares in the Buyer, then the RMT Stockholder shall have the right to sell its shares in Buyer at the same pro rata price and upon the same terms and conditions as specified in the offer, and, at Closing, the Buyer shall cause the delivery of appropriate documents to RMT Stockholder evidencing such right.

 



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5.12 Registration Rights.

The RMT Stockholders may require the Company to enter into a registration rights agreement with it on terms reasonably satisfactory to the RMT Stockholders, which, among other things, shall provide RMT Stockholder with one demand registration right and other customary rights, including piggyback registration rights.

ARTICLE VI

CONDITIONS TO OBLIGATION TO CLOSE

6.1 Conditions to Obligation of the Buyer and the Acquisition Sub.

The obligation of each of the Buyer and the Acquisition Sub to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

(a)this Agreement and the Merger shall have received the Requisite Stockholder Approval;

(b)The representations and warranties set forth in ARTICLE III above shall be true and correct in all material respects at and as of the Closing Date;

(c) RMT shall have performed and complied with all of its covenants hereunder in all material respects through the Closing;

(d) there shall not be any judgment, order, decree, stipulation, injunction, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement;

(e) RMT shall have delivered to the Buyer and the Acquisition Sub a certificate to the effect that each of the conditions specified above Section 6.l(a)-(c) is satisfied  in all respects;

(f) the Parties shall have received all other authorizations,  consents,  and approvals of governments and governmental agencies referred to in Section 3.4 above as to RMT and referred to in Section 4.5 above as to Acquisition Sub; and

(g) all actions to be taken by RMT in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Buyer and the Acquisition Sub.

The Buyer and the Acquisition Sub may waive any condition specified in this Section 6.1 if they execute a writing so stating at or prior to the Closing.

 

6.2 Conditions to Obligation of RMT.

 

The obligation of RMT to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

 

(a) this Agreement and the Merger shall have received the Requisite Stockholder Approval;

(b) the representations and warranties set forth in ARTICLE IV above shall be true and correct in all material respects at and as of the Closing Date;

 



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(c) each of the Buyer and the Acquisition Sub shall have performed and complied with all of its covenants hereunder in all material respects through the Closing;

(d) there shall not be any judgment, order, decree, stipulation, injunction, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement;

(e) each of the Buyer and the Acquisition Sub shall have delivered to RMT a certificate to the effect that each of the conditions specified above in Section 6.2 (a)-(c) is satisfied in all respects;

(f) this Agreement and the Merger shall  have  received  the  Requisite  Stockholder Approval and shall have been approved by the board of directors and sole stockholder of the Acquisition Sub;

(g)the Parties shall have received all other authorizations, consents, and approvals of governments and governmental agencies referred to in Section 3 .4 above as to RMT and referred to in Section 4.5 above as to Acquisition Sub; and

(h) all actions to be taken by the Buyer and the Acquisition Sub in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to RMT.

 

RMT may waive any condition specified in this Section 6.2 if it executes a writing so stating at or prior to the Closing.


ARTICLE VII TERMINATION

7.1

Termination of Agreement.

Any of the Parties may terminate this Agreement with the prior authorization of its board of directors (whether before or after stockholder approval) as provided below:

(a) the Parties may terminate this Agreement by mutual written consent at any time prior to the Effective Time;

(b) the Buyer and the Acquisition Sub may terminate this Agreement by giving written notice to RMT at any time prior to the Effective Time

(i) in the event RMT has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Buyer or the Acquisition Sub has notified RMT of the breach, and the breach has continued without cure for a period of 15 days after the notice of breach or (ii) if the Closing shall not have occurred on or before December 31, 2018, by reason of the failure of any condition precedent under Section 6.1 hereof (unless the failure results primarily from the Buyer or the Acquisition Sub breaching any representation, warranty, or covenant contained in this Agreement);

(c) RMT may terminate this Agreement by giving written notice to the Buyer and the Acquisition Sub at any time prior to the Effective Time

(i) in the event the Buyer or the Acquisition Sub has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, RMT has notified the Buyer and the Acquisition Sub of the breach, and the breach has continued without cure for a period of 15 days after the notice of breach or

(ii) if the Closing shall not have occurred on or before December 31, 2018, by reason of the failure of any condition precedent under Section 6.2 hereof (unless the failure results primarily from RMT breaching any representation, warranty, or covenant contained in this Agreement);

(d) RMT may terminate this Agreement by giving written notice to the Buyer and the Acquisition Sub at any time prior to the Effective Time in the event RMT's board of directors concludes that termination would be in the best interests of RMT and its stockholders;

(e)the Buyer may terminate this Agreement by giving written notice to RMT at any time prior to the Effective Time in the event the Buyer's board of directors concludes that termination would be in the best interests of the Buyer and its stockholders; or



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(f) any Party may terminate this Agreement by giving written notice to the other Parties at any time after the expiration of 30 days following the execution of this Agreement if the Requisite Stockholder Approval has not yet been given.


7.2 Effect of Termination.

If any Party terminates this Agreement pursuant to Section 7.1 above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); provided, however, that the confidentiality provisions contained in Section 5.7 above shall survive any such termination.


ARTICLE VIII MISCELLANEOUS

8.1 Survival.

 

The representations, warranties, and covenants of the Parties (including the provisions in ARTICLE II above concerning payment of the Merger Consideration and the provisions of Articles Ill, IV and V) will survive the Effective Time for one year.

 

8.2 Press Releases and Public Announcements.

 

No Party shall issue any press release or make any public announcement relating to the other Party or to the subject matter of this Agreement without the prior written approval of the other Parties; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use its reasonable efforts to advise the other Party prior to making the disclosure).

 

8.3 No Third-Party Beneficiaries.

 

This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns; provided, however, that (a) the provisions in ARTICLE II above concerning payment of the Merger Consideration are intended for the benefit of RT, LLC and the RT Members and (b) the provisions in Section 5.9 above concerning insurance and indemnification are intended for the benefit of the individuals specified therein and their respective legal representatives.

 

8.4 Entire Agreement.

This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.

 



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8.5 Succession and Assignment.

 

This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Parties.

 

8.6 Counterparts.

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

 

8.7 Headings.

 

The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

 

8.8 Notices.

 

All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

 

Info RMT:

 

Regenerative Medical Technologies, Inc. 652 S. Medical Center Drive, Suite 110 St. George, Utah 84790

 

Attention: President

Email: Obray.Rick@gmail.com


lfto the Buyer:

 

Bradley C. Robinson Chief Executive Officer

Predictive Technology Group, Inc. 2735 Parleys Way, Suite 205

Copy to:

 

Drinker Biddle & Reath LLP

191 N. Wacker Drive, Suite 3700

Chicago, Illinois 60606 Attention: Jennifer Breuer, Esq. Fax: 312/569-3256

Email: Jennifer.Breuer@dbr.com

 

Copy to:

Legal Department

Predictive Technology Group, Inc. 2735 Parleys Way, Suite 205

Salt Lake City, Utah 84010

Email: BRobinson@predrx.com

 

If to the Acquisition Sub:

 

Bradley C. Robinson Chief Executive Officer

2735 Parleys Way, Suite 205 Salt Lake City, Utah 840 I0

Email: BRobinson@predrx.com

Email: erobinson@predrx.com

 

Copy to:

 

Legal Department Predictive Acquisitions, Inc.

2735 Parleys Way, Suite 205 Salt Lake City, Utah 84010

Email: erobinson@predrx.com

 



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Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.


8.9 Governing Law.

 

This Agreement shall be governed by and construed in accordance with  the domestic laws of the State of Utah without giving effect to any choice or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah.


8.10 Amendments and Waivers.

 

The Parties may mutually amend any provision of this Agreement at any time prior to the Effective Time with the prior authorization of their respective boards of directors; provided, however, that any amendment effected subsequent to approval of RMT Stockholders will be subject to the restrictions contained in the Utah Revised Business Corporation Act. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the Parties. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

8.11 Severability.

 

Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

8.12 Expenses.

 

Each of the Parties will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.


8.13 Construction.

 

The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context otherwise requires. The word "including" shall mean including without limitation.

 

8.14 Incorporation of Exhibits and Schedules.

 

The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.



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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement and Plan of Merger as of the date first above written.


PREDICTIVE TECHNOLOGY GROUP, INC.


  By: /s/ Paul Evans

  Name/Title: Paul Evans/COO


  PREDICTIVE ACQUISITIONS, INC.


  By: /s/ Bradley C. Robinson

  Name/Title: Bradley C. Robinson, CEO


REGENERATIVE MEDICAL TECHNOLOGIES, INC.

  

  

  By: /s/ Rick Obrey

  Name/Title: Manager


With respect to Sections 3.16 and 3.18 only,


REGENERATIVE TECHNOLOGIES, LLC


  By: /s/ Rick Obrey

  Name/Title: Manager



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EXHIBIT A

 

ARTICLES OF MERGER


[To be completed]


RMT DISCLOSURE SCHEDULE


Schedule 3. 7 Personal Property

•Data License Agreement dated May _, 2018 between Southwest Spine and Pain Care Specialists, LLC and Regenerative Medical Technologies, Inc.

•Draft Provisional Patent Application - Systems and Methods for Linking and Storing Biologics.

•Cellsure business model, methods and protocols to collect birthing tissue, DNA samples and electronic medical records online or on mobile app.

•Patient Registry business model, methods and protocols to collect clinical outcomes and electronic medical records online or on mobile app.

•DNA sample business model, methods and protocols to collect DNA samples and electronic medical records online or on mobile app.

•Bone Marrow Aspirate Kit - draft product design and methodology.

•Large Joint Injection Kit-draft product design and methodology.

•Degenerative Disk Disease (DDD) and Post-Microdiscectomy Injection Kit - draft product design and methodology.

•Allogenic Stem Cell Product for DOD-draft product design and preliminary clinical trial methodology

•Allogenic Stem Cell Product for Autism and CP - draft product design and preliminary clinical trial methodology

•Allogenic Stem Cell Product for Facet Joint - draft product design and preliminary clinical trial methodology



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•Allogenic Stem Cell Product for IV Treatment of Opioid Addiction - draft product design and preliminary clinical trial methodology

•Clinical Trial protocol know-how (draft design for knee arthritis, trochanteric bursitis, plantar fasciitis, discogenic back pain, facet joint pain).

Schedule 3.13 Contractual and Other Obligations

•See Schedule 3.7 above.

 

BUYER DISCLOSURE SCHEDULE


Schedule 4.2

 

The Buyer has outstanding: (i) Buyer's 2015 Stock Option Plan that authorizes the issuance of up to 15% of the total outstanding shares of the Buyer's common stock; (ii) options exercisable for 4,938,500 shares of common stock; and (iii) warrants exercisable for 42,268,520 shares of common stock.

 

Schedule 4.4

 

There are no pending or threatened actions except for:

 

(i)a lawsuit filed by Robert Greeen, Troy Menlove and TRJ, LLC in the Third Judicial District Court against Jack Turner, Buyer and Predictive Biotech, Inc. in July 2018 alleging, among other things, that cash and stock compensation is due to plaintiffs and Buyer disputes such claims; and

(ii)there is a dispute between Buyer and Mike Schramm, Buyer's former patent agent, whereby Mr. Schramm alleges he is owed common stock as compensation for intellectual property transferred to Buyer and/or its affiliates and for work performed. Buyer believes Mr. Schramm has been fully compensated for all transferred intellectual property and work performed.



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INTELLECTUAL PROPERTY PURCHASE AND SERVICES AGREEMENT


THIS INTELLECTUAL PROPERTY PURCHASE AND SERVICES AGREEMENT (this "Agreement") is entered into to be effective as of the 1st day of August, 2018, by and among PREDICTIVE TECHNOLOGY GROUP, INC. ("Buyer") and the sellers identified in Exhibit A hereto (individually and collectively, the "Seller").

 

RECITALS

 

Seller is the owner the Intellectual Property (defined below).

 

Buyer and Seller have reached an understanding pursuant to which Buyer will acquire the Intellectual Property and compensate the Seller for assistance with filling a patent application for the Intellectual Property on the terms and conditions described herein.

 

IN CONSIDERATION OF the mutual covenants and agreements herein contained, and for such other good and valuable consideration, the receipt and adequacy of which is hereby admitted and acknowledged, the Parties hereto agree as follows:


1.0 DEFINITIONS.

 

1.1 "Agreement" shall have the meaning set forth in the first paragraph of this Agreement.

 

1.2 "Buyer" shall have the meaning set forth in the first paragraph of this Agreement.

 

1.3 "Closing" shall have the meaning set forth in Section 2.1 hereof.

 

1.4 "Closing Date" shall have the meaning set forth in Section 2.1 hereof.

 

1.5 "Knowledge" shall mean, in reference to a Party's knowledge or words of similar import, facts and matters which are actually known by such Party or its employees and representatives or facts or matters which reasonably should have been known by such Party or its employees or representatives in the ordinary course of business.

 

1.6 "Liens" shall mean any and all liens, mortgages, claims, options, conditional sales agreements, rights of refusal, security interests, pledges, deeds of trust or other charges or encumbrances, restrictions, legal or equitable claims or rights of any Person pursuant to the laws of the United States, any state, municipality or territory thereof.

 

1.7 "Material Adverse Change" shall mean any event, change or effect that is adverse to the condition (financial or otherwise), of the Intellectual Property; provided, however, that Material Adverse Change shall not include any event, change or effect, directly or indirectly, arising out of or attributable to: (a) general economic or political conditions, (b) conditions generally affecting the industries applicable to the Intellectual Property, (c) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof, (d) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of Buyer, (e) any matter of which Buyer is aware on the Effective Date, (t) any changes in applicable laws or accounting rules, (g) any natural or man-made disasters or acts of God, or (g) any failure by the Intellectual Property to meet any internal or published projections, forecasts or revenue or earnings projection.

 

1.8 "Parties" means Buyer and Seller. "Party" means one of the foregoing.

 

1.9 "Intellectual Property" has the meaning set forth in Exhibit B hereto.

 

1.10 "Person" means an individual, corporation, general partnership, limited partnership, limited liability company, joint venture, association, finn, joint stock company, trust, unincorporated association, or other business organization or entity, or any governmental agency or instrumentality.


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1.11 "Purchase Price" shall have the meaning set forth in Section 3.2 hereof.

 

1.12 "Seller" shall have the meaning set forth in the first paragraph of this Agreement.

 

1.13 "Shares" shall have the meaning set forth in Section 3.2 hereof.

 

1.14 "Taxes" shall mean all income, gross receipts, goods and services, sales, retail sales, use, ad valorem, franchise, withholding, employment, payroll, excise, property, and other taxes, fees, assessments or charges of any kind whatever, together with any interest, penalties and other additions with respect thereto, imposed by any law of the United States, any state, municipality or territory thereof.

 

1.15 "Warrants" shall have the meaning set forth in Section 3.2 hereof.

 

2.0 CLOSING.

 

2.1 Closing. On the terms pursuant to this Agreement, the conveyance of the Intellectual Property by Seller to Buyer (the "Closing") shall take place at the offices of Buyer at 10:00 am on August 22, 2018 or such earlier date as shall select (the "Closing Date"), or as soon as reasonably practicable thereafter, upon the satisfaction of all conditions to Closing.

 

3.0 PURCHASE AND SALE OF INTELLECTUAL PROPERTY AND COMPENSATION FOR SERVICES.

 

3.1 Intellectual Property. At Closing, subject to the terms and conditions set forth in this Agreement, Seller will sell to Buyer, and Buyer will purchase from Seller, all of the Intellectual Property, free and clear of any and all Liens. Upon filling of patent application, inventors Kenneth Ward and Rakesh Chettier shall execute an assignment of the Intellectual Property in substantially the form set forth in Exhibit C hereto.


3.2 Purchase Price. The purchase price for the Intellectual Property and compensation for services performed in connection with this Agreement is warrants to purchase 16,500,000 (the "Warrants") shares of Buyer's common stock (the "Shares") at an exercise price equal to the closing price of Buyer's common stock on the date of Closing (the "Purchase Price"). Buyer shall issue the warrants to the Seller in the amounts and at the times set forth on Exhibit A hereto. The form of warrant is attached as Exhibit E, which warrant will have an exercise price equal to the closing price of Buyer's common stock on the date of Closing.

 

3.3 No Assumption of Liabilities. Notwithstanding anything to the contrary contained herein, Buyer shall not assume, and Seller shall remain liable for, any and all liabilities, obligations, claims and commitments of or against Seller arising before the Closing Date, whether the same are known or unknown, existing, contingent upon future events or circumstances, accrued, funded, unfunded or otherwise.

 

4.0 ADDITIONAL OBLIGATIONS

 

4.1 Further Cooperation. At the reasonable request of Buyer, Seller will execute and deliver such other instruments and do and perform such other acts and things as may be necessary for effecting completely the consummation of the transactions contemplated hereby.

 

4.2 Payment of Fees. Seller shall pay all maintenance fees, annuities, and the like due or payable on the Intellectual Property on or after the Effective Date until the Closing Date.

 

4.3 Data Protection and Privacy. With respect to all items listed on or delivered in connection with Exhibit B, Buyer will protect all data and maintain the privacy of all information and samples in compliance with all applicable laws, regulations, and those contractual obligations agreed by the Seller prior to the Closing Date.

 


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4.4 Lock-Up. Seller, each individually, agree that, without the prior written consent of Buyer, for a period beginning on the date hereof and ending on the one year anniversary of the effective date of this Agreement, Seller will not, directly or indirectly, (1) offer for sale, sell, or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of Shares of Buyer's common stock received in connection with this agreement, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of Shares of Buyer's common stock received in connection with this agreement, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Buyer's common stock or other securities, in cash or otherwise, or

(3) publicly disclose the intention to do any of the foregoing for a period commencing on the date hereof and ending on the one year anniversary of the date of this Agreement. Notwithstanding the foregoing or any other provision of this Agreement, (i) the Member may deposit the Shares with a lender for the purpose of getting a margin loan, provided that the lender is subject to the lock-up provisions described in this Section 4.3, and (ii) if the Chief Executive Officer and/or other executive officers of Buyer enter into lock-up arrangements in connection with a public financing or otherwise at the request of an underw1iter, investment banker and/or Buyer's Board of Directors then the lock-up arrangements described in this Section 4.3 shall become null, void and of no further force and effect and Seller, each individually, shall enter into lock-up arrangement in connection with the Shares on the same terms as the Chief Executive Officer and other executive officers.


5.0 REPRESENTATIONS AND WARRANTIES OF SELLER. Each Seller severally and not jointly hereby represents and warrants to Buyer that the statements contained in  this Section 5.0 are correct and complete as of the date hereof and as of the Closing Date as follows.


5.1 Status and Authority.

 

(a)

Power. Seller has all requisite power and authority to own, lease and sell the Intellectual Property.

(b)

Authorization of Transaction. Seller has the right, power and authority to enter into and perform this Agreement and any other agreement or instrument related hereto to which Seller is or will be a party in connection with this agreement. This Agreement and the other agreements and instruments related hereto to which Seller is or will be a party constitute the valid and binding agreements of Seller enforceable against Seller in accordance with their respective terms.

(c)

Absence of Violations or Conflicts. The execution, delivery and performance by Seller of this Agreement and any other agreement or instrument related hereto to which Seller is or will be a party do not and will not violate, conflict with, constitute a default under, modify or cancel (a) any agreement, contract, lease, license, instrument or other arrangement to which Seller is a party or by which Seller is bound or to which the Intellectual Property is subject; (b) any judgment, decree, or order of any governmental agency or court to which Seller is subject; or (c) any applicable law or regulation.

 

5.2 Absence of Certain Changes or Events. Since the effective date of this Agreement, there has not been:

 

(a)

any Material Adverse Change in or material damage or material loss to the Intellectual Property;

(b)

any sale, assignment or transfer of any of the Intellectual Property;

or

 

(c)

any agreement by or commitment of Seller to do or permit any of the foregoing.

 


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5.3 Title to Intellectual Property. Except as would not constitute a Material Adverse Change, Seller owns all right, title, and interest to the Intellectual Property, including, without limitation, all right, title, and interest to sue for infringement of the Intellectual Property.

Except as would not constitute a Material Adverse Change, the Intellectual Property is free and clear of all liens, claims, mortgages, security interests, and other encumbrances.


5.4 Litigation and Other Proceedings. Except as would not constitute a Material Adverse Change, there is not any suit, claim, action, proceeding or governmental investigation directly or indirectly relating to the Intellectual Property known to the Seller that is pending or threatened in writing, nor is there presently any condition or set of facts which Seller reasonably expects to give rise to any such litigation. Except as would not constitute a Material Adverse Change, there are no decrees, injunctions or orders of any court, administrative or regulatory body, arbitration panel or governmental agency outstanding against Seller relating to any aspect of the Intellectual Property.

5.5 Intellectual Property.

(a)

Seller has never received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that Seller must license or refrain from using any intellectual property rights of any third party) pertaining to the Intellectual Property. To Seller's Knowledge, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property.

(b)

Seller is not a party to any license, agreement or arrangement, whether as a licensee, licensor, or otherwise, with respect to the Intellectual Property.

(c)

Seller is not aware of any facts or circumstances adversely affecting the validity and/or enforceability of the Intellectual Property.

 

5.6 Commissions. No Person has asserted or is entitled to any commission or broker's or finder's fee in connection with the sale of the Intellectual Property or any of the other transactions contemplated by this Agreement by reason of act or omission of Seller.

 

5.7 Securities Representations. Each Seller hereby represents and warrants to Buyer:

(a)

Seller understands and agrees that the Warrants and Shares (individually and collectively, the "securities") have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any state of the U.S. and that the issuance of the securities is being done in reliance upon an exemption from registration afforded under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.

(b)

Seller is an Accredited Investor as that term is defined in Exhibit D. Each Seller severally understands that the securities are being offered and sold to such Seller in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Seller set forth in this Agreement, in order that Buyer may determine the applicability and availability of the exemptions from registration of on which Buyer is relying.


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(c)

Seller is able to bear the economic risk of an investment in the securities for an indefinite period of time, can afford the loss of the entire investment in the securities, and will, after making an investment in the securities, have sufficient means of providing for Seller's current needs and possible future contingencies. Additionally, Seller's overall commitment to investments that are not readily marketable is not disproportionate to Seller's net worth and this Subscription will not cause such overall commitment to become excessive.

(d)

The securities will not be sold by the Seller without registration under applicable securities acts or a proper exemption from such registration.

(e)

The securities are being acquired for the Seller's own account and risk, for investment purposes, and not on behalf of any other person or with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act. The Seller is aware that there are substantial restrictions on the transferability of the securities.

(f)

Seller has had access to any and all information concerning Buyer that the Seller considered necessary to make a proper evaluation of this investment. In making the decision to acquire the securities, Seller has relied solely upon its own independent investigations, and fully understands that there are no guarantees, assurances or promises in connection with any investment hereunder and understands that the particular tax consequences arising from this investment in Buyer will depend upon the individual circumstances of the Seller. The Seller further understands that no opinion is being given as to any securities  or tax matters involving the offering.

(g)

All of the information furnished by the Seller to Buyer is true, correct and complete in all material respects, and the Seller agrees to notify Buyer immediately of any change in any information set forth herein.

(h)

The Seller also understands and agrees that stop transfer instructions relating to the securities will be placed in the Buyer's transfer ledgers, and that the certificates evidencing the securities will bear legends in substantially the following form:

The securities represented by this certificate have not been registered under the Securities Act of 1933 (the "Act") and are "restricted securities" as that tennis defined in Rule 144 under the Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company.

(i)

Seller has been given the unrestricted opportunity to ask questions of, and receive answers from, Buyer, or persons acting on its behalf, concerning the tenns and conditions of, and all other matters relating to the Buyer, and has been given the unrestricted opportunity to obtain such additional information with respect to the offering as he has desired.

(j)

Seller knows that the securities are offered and sold pursuant to exemptions from registration under the Securities Act, and state securities law based, in part, on these warranties and representations, which are the very essence of this Agreement, and constitute a material part of the bargained­ for consideration without which this Agreement would not have been executed.

(k)

By reason of the Seller's business or financial experience or the business or financial experience of professional advisors who are unaffiliated with and who are not compensated by Buyer or any affiliate or selling agent of Buyer, directly or indirectly, Seller has the capacity to protect Seller's own interest in connection with this transaction or has a pre-existing personal or business relationship with Buyer or one or more of its officers, directors or controlling persons consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of such person with whom such relationship exists.


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(1)

This Agreement when fully executed and delivered by the parties will constitute a valid and legally binding obligation of Seller, enforceable in accordance with its terms. Seller, if it is a partnership, joint venture, corporation, trust or other entity, was not formed or organized for the specific purpose of acquiring the securities. The purchase of the securities by the Seller, if it is an entity investor, is a permissible investment in accordance with the Seller's Articles of Incorporation, by-laws, partnership agreement, declaration of trust or other similar charter document, and has been duly approved by all requisite action by the entity's owners, directors, officers or other authorized managers. The person signing this document and all documents necessary to consummate the purchase of the securities has all requisite authority to sign such documents on behalf of Seller, if it is an entity investor.

 

5.8 Accuracy of Statements. To Seller's Knowledge, no representation, warranty or statement by Seller in this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact, necessary to make the statements herein or therein not misleading.

 

5.9 No Other Representations or Warranties. Except for the representations and warranties contained in this Section 5, Seller has not made and does not make any other express or implied representations or warranties, either written or oral, on behalf of Seller or any other person or entity. Without limiting the foregoing, and notwithstanding anything in this Agreement to the contrary, Seller makes no representations or warranties (a) as to the future revenue, profitability or success of the Intellectual Property, (b) as to the actual or likely scope of claims, if any, that may issue from patents filled for the Intellectual Property.

 

6.0 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and warrants to Seller that the statements contained in this Section 6.0 are correct and complete as of the date hereof and as of the Closing Date as follows:

 

6.1 Status and Authority. Buyer is a corporation duly organized, validly existing and in good standing under the laws of its state of organization. Buyer has the right, power and authority to enter into and perform this Agreement and any other agreement or instrument related hereto to which Buyer is or will be a party. The execution, delivery and performance by Buyer of this Agreement and any other agreements and instruments related hereto to which Buyer is or will be a party prior to the date hereof have been duly authorized by all necessary corporate action in compliance with its Articles of Incorporation, Bylaws and applicable law. This Agreement and the other agreements and instruments related hereto to which Buyer is or will be a party constitute the valid and binding agreements of Buyer that are enforceable against Buyer in accordance with their respective terms.


6.2 Absence of Violations or Conflicts. The execution, delivery and performance by Buyer of this Agreement and the other agreements and instruments related hereto to which Buyer is or will be a party do not and will not violate, conflict with, or constitute a default under: (a) any contract, agreement, commitment, undertaking or understanding to which Buyer is a party; (b) any judgment, decree or order of any governmental or regulatory authority to which Buyer is subject; (c) any applicable law or regulation; or (d) Buyer's charter documents or Bylaws.


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6.3 No Governmental Consents Required. No consent, notification, approval, order or authorization of, or registration, declaration or filing with, any governmental or regulatory authority is required on the part of Buyer in connection with its execution, delivery or performance of this Agreement.

 

6.4 Commissions. No Person has asserted or is entitled to any commission or broker's or finder's fee in connection with the sale of the Acquired Assets or any of the other transactions contemplated by this Agreement by reason of any act or omission of Buyer.

 

6.5 Shares Reserved. Buyer has authorized and reserved the Shares issuable upon exercise of the Warrants, and such Shares are not subject to any other reservation or held for any other purpose.

 

6.6 Absence of Certain Changes or Events. Since the effective date of this Agreement, there has not been:


(a) any Material Adverse Change in the business, financial results, or prospects of the Buyer;


 

(b) any entering into any agreement by or commitment of Buyer that could reasonably be expected to result in a Material Adverse Change, and the transactions contemplated hereby are not expect to result in an Material Adverse Change regarding Buyer.

 

6.7 Accuracy of Statements. To Buyer's Knowledge, no representation, warranty or statement by Seller in this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact, necessary to make the statements herein or therein not misleading.


7.0 SELLER AND BUYER DELIVERIES.

 

7.1 Seller Deliveries. At Closing, Seller is delivering to Buyer the following:

(a)Assignments of Intellectual Property, in the form attached as Exhibit C; and

(b)Such other agreements, certificates, instruments, and documents as Buyer may reasonably request to carry out the intent of this Agreement.

 

7.2 Buyer Deliveries. At Closing, Buyer is delivering to Seller the following:

 

(a) the Purchase Price, except as otherwise stated in Exhibit A; and

(b) Such other agreements, certificates, instruments, and documents as Seller may reasonably request to carry out the intent of this Agreement.



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8.0 CONDITIONS TO CLOSING. All of the following shall be conditions precedent to Buyer's obligation to consummate the transactions contemplated by this Agreement:

 

8.1 Accuracy of Seller's Representations and Warranties. Seller's representations and warranties, whether contained in this Agreement or contained in any written document delivered to Buyer pursuant hereto, shall be correct and complete in all material respects on as of the date when made and on and as of the Closing Date as if made on and as of that date, and Buyer shall have received a certificate dated as of the Closing Date signed by an officer of Seller attesting to the foregoing.

 

8.2 Accuracy of Buyer's Representations and Warranties. Buyer's representations and warranties, whether contained in this Agreement or contained in any written document delivered to Seller pursuant hereto, shall be correct and complete in all material respects on and as of the date when made and on and as of the Closing Date as if made on and as of that date, and Seller shall have received a certificate dated as of the Closing Date signed by an officer of Buyer attesting to the foregoing.

 

8.3 Deliveries. The parties shall have received (or waived) all of the items required to be delivered pursuant to Section 7.


9.0 TAXES. Seller shall pay all sales, retail sales, goods and services, excise, property transfer, documentary or stamp, and similar Taxes, if  any, arising  out of or related  to the  sale of the Intellectual Property or other transactions pursuant to or contemplated by this Agreement.


10.0 INDEMNIFICATION.


10.1 General Indemnification.

 

(a) By Seller. Subject to the provisions of this Section 10.0, each Seller severally (and not jointly) agrees to indemnify and defend Buyer and its successors and assigns and hold them harmless against and in respect of any and all loss, liability, cost, expense or damage (including, without limitation, reasonable legal and other professional fees and expenses, judgments and settlement payments) incurred or suffered by Buyer resulting from or by reason of any misrepresentation, breach, nonperformance or inaccuracy of any representation, warranty or covenant by Seller made or contained in this Agreement, or in any Exhibit, schedule, agreement, instrument, certificate, or document executed and delivered to Buyer pursuant to this Agreement or the transactions contemplated herein.

 

(b) By Buyer. Subject to the prov1s1ons of this Section 10.0, by execution of this Agreement, Buyer agrees to indemnify and defend Seller and their successors and assigns and hold them harmless against and in respect of any and all loss, liability, cost, expense or damage (including, without limitation, reasonable legal and other professional fees and expenses, judgments and settlement payments) incurred or suffered by Seller resulting from or by reason of any misrepresentation, breach, nonperformance or inaccuracy of any representation,warranty, or covenant by Buyer made or contained in this Agreement, or in any Exhibit, schedule, agreement, instrument, certificate or document executed and delivered to Seller by or on behalf of Buyer under or pursuant to this Agreement or the transactions contemplated herein.



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10.2 Survival of Indemnification. The representations, warranties and indemnification contained in this Agreement shall survive until the expiration of the applicable statute of limitations.

 

11.0 MISCELLANEOUS.

 

11.1 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, provincial, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation.

 

11.2 Notices. For purposes hereof, delivery of written notice shall be complete upon personal delivery, or upon mailing if mailed with proper postage paid by registered or certified mail, or upon delivery to a recognized, commercial overnight delivery service, addressed to the party at the address set forth below, or to such other mailing address as the parties hereto may designate by written notice given in accordance with this Section 10.2. Notice may also be given upon receipt of electronic facsimile, provided that any facsimile notice shall only be deemed received if (a) the transmission thereof is confirmed, and (b) facsimile notice is followed by written notice, made either by (i) personal delivery thereof, (ii) via deposit in certified mail return receipt requested, postage prepaid, or (iii) via delivery to a recognized commercial overnight delivery service within three (3) business days following the facsimile notice. Notices shall be addressed to the parties as follows:

 

Buyer:

Predictive Technology Group, Inc.

Attn: President

2735 Parleys Way, Suite 205 Salt Lake City, Utah 84109


Seller:

With a copy to:

Taueret Laboratories Attn: President

2749 Parleys Way, Suite 100 Salt Lake City, Utah 84109

 

Kenneth Ward

Post Office Box 17654 Holladay, Utah 84109


Any Party may change the address to which to send notices by notifying the other Party of such changes in writing in accordance with this section.


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11.3 Specific Performance. Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any action instituted in any court of the United States, any state, municipality or territory thereof having jurisdiction over the Parties and the matter in addition to any other remedy to which it may be entitled, at law or in equity.

 

11.4 Cooperation And Further Actions. The Parties agree to perform any and all acts and to execute and deliver any and all instruments, agreements and documents necessary or convenient to carry out the terms of this Agreement.

 

11.5 Binding on Successors and Assigns. This Agreement shall be binding upon, inure to the benefit of and be enforceable by and against Buyer and Seller and their respective successors and permitted assigns in accordance with the terms hereof. Seller shall not assign his interest under this Agreement without the prior written consent of Buyer.

 

11.6 Professional Fees. If a lawsuit, arbitration, or other proceedings are instituted by any Party to enforce any of the terms or conditions of this Agreement against any other Party hereto, the prevailing party in such litigation, arbitration, or proceedings shall be entitled, as an additional item of damages, to such reasonable attorneys; and other professional fees (including but not limited to expert witness fees), court costs, arbitrators' fees, arbitration administrative fees, travel expenses, and other out-of-pocket expenses or costs of such other proceedings as may be fixed by any court of competent jurisdiction, arbitrator, or other judicial or quasi-judicial body having jurisdiction thereof, whether or not such litigation or proceedings proceed to a final judgment or award. For the purposes of this Section 11.6, any Party receiving an arbitration award or a judgment for damages or other amounts shall be deemed to be the prevailing Party, regardless of amount of the damage awarded or whether the award or judgment was based upon all or some of such Party's claims or causes of action.

 

11.7 Governing Law: Submission to Jurisdiction. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Utah without giving effect to any choice or conflicts of law provision or rule that would cause the application of the laws of any jurisdiction than the State of Utah. Each of the Parties submits to the jurisdiction of any state or federal court sitting in the County of Salt Lake, State of Utah in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each Party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or.proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

 

11.8 Expenses. Except to the extent otherwise provided in this Agreement, Seller and Buyer shall each bear its or his own expenses incurred in connection with this Agreement and the transactions herein contemplated, including, but not limited to, legal and accounting fees and expenses.

 

11.9 Miscellaneous. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the remainder of this Agreement or any other provision of this Agreement. This Agreement embodies the entire agreement and understanding between the Parties relating to the subject matter of this Agreement and neither this Agreement nor any provision of this Agreement may be amended, waived, or discharged, except by a written instrument executed by the Party against whom enforcement of such amendment, waiver, or discharge is sought. All prior negotiations and agreements, whether oral or written, between the Parties are superseded by this Agreement, and there are no understandings or agreements other than those expressly set forth herein or in an Exhibit delivered pursuant hereto with respect to the subject matter hereof. This Agreement may be executed in counterparts each of which, taken together, shall constitute a complete agreement. One or more counterparts of this Agreement or any Exhibit hereto may be delivered via facsimile and such facsimile counterpart shall have the same effect as an original counterpart hereof. This Agreement is not intended and shall not be construed to create any rights in any Persons other than Buyer and Seller, and no Person shall assert any rights as third-party beneficiary hereunder.


[SIGNATURES  ON NEXT PAGE]


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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be e x ecuted by their duly authorized representatives on the day and year first above written.

SELLER:

TAUERET LABORATORIES , L.L.C.

By: /s/ Allen Ward

Its: President

 

/s/ Kenneth Ward

Kenneth Ward Inventor

 

/s/ Rakesh Chettier

Rakesh Chettier Inventor

 

BUYER:

PREDICTIVE TECHNOLOGY GROUP, INC.

 

By: /s/ Bradley C. Robinson

Its: CEO


COUNTERPART SIGNATURE PAGE FOR MEMBERS


IN WITNESS WHEREOF , the undersigned member of TAUERET LABORATORIES , L.L.C. has executed and delivered this Securities Purchase Agreement as of the date first written above .


Member

Signed: /s/ Kenneth Ward

Printed name: Kenneth Ward

Title: member

 


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P>

COUNTERPART SIGNATURE PAGE FOR MEMBERS

IN WITNESS WHEREOF, the undersigned member of TAUERET LABORATORIES, L.L.C. has executed and delivered this Securities Purchase Agreement as of the date first written above.

Member

Signed: /s/ Lesa Nelson

Printed name: Lesa Nelson

Title: member


COUNTERPART SIGNATURE PAGE FOR MEMBERS

IN WITNESS WHEREOF, the undersigned member of TAUERET LABORATORIES, L.L.C. has executed and delivered this Securities Purchase Agreement as of the date first written above.

 

Member

Signed: /s/ Allen Ward

Printed name: Allen Ward

Title: President



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COUNTERPART SIGNATURE PAGE FOR MEMBERS

IN WITNESS WHEREOF, the undersigned member of TAUERET LABORATORIES, L.L.C. has executed and delivered this Securities Purchase Agreement as of the date first written above.

Member

Signed: /s/ Linda F. Gould

Printed name: Linda Gould

Title: VP Business Affair


COUNTERPART SIGNATURE PAGE FOR MEMBERS

IN WITNESS WHEREOF, the undersigned member of TAUERET LABORATORIES, L.L.C. has executed and delivered this Securities Purchase Agreement as of the date first written above.

Member

Signed: /s/Kathleen Brown

Printed name: Kathleen Brown

Title: member



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EXHIBIT A


(Sellers and Allocation of Purchase Price)


 

 

 

Seller

Warrants exercisable for the following number of Shares

 

 

 

Time of Warrants Issuance

Taueret Laboratories Member - Kenneth Ward Revocable Trust

10,591,620

at Closing

Taueret Laboratories Member - Lesa Nelson

2,310,810

At Closing

Taueret Laboratories Member - Allen Ward

1,020,000

At Closing

Taueret Laboratories Member - Linda Gould

616,215

At Closing

Taueret Laboratories Member - Kathleen Brown

461,355

At Closing

Kenneth Ward

750,000

Upon filing of initial patent application relating to the Intellectual Property

Rakesh Chettier

750,000

Upon filing of initial patent application relating to theIntellectual Property


Chettier and Ward and will work with Wilson Sonsini to get utility patent filed covering these markers within 60 days of Closing Date. Patent expenses will be paid by PRED and patent will owned by and be assigned to PRED. Payment to Ward and Chettier will not be delayed beyond this 60 day window due to delays caused by the law firm.


14


 

EXHIBIT B


(Description of Intellectual Property)


1.) Approximately 1,000 DDD-related DNA samples, related family records, relevant clinical records (including approximately 600 affected probands) and 800 ancestry matched control samples (based on principal component analysis). All data protection and patient confidentiality requirements outlined in the original research studies shall be observed and respected by the Buyer. These samples were all collected more than 10 years ago. A precise inventory of the DNA samples and clinical is not feasible, and some samples may have been consumed or have become degraded.

 

2.) Whole exome sequencing data on approximately 300 DDD samples, over 800 local controls, and published reference populations. Initial analysis shows several hundred DNA markers showing nominal significance for DDD association and approximately 15 showing genome-wide significance levels. These data will be submitted to attorneys (Wilson, Sonsini, Goodrich & Rosati) after closing for generating utility patent applications. These data were created using standard sequencing protocols and workmanlike research methods; no warranty is made, expressed, or implied as to the commercial usefulness of these data.

 

3.) Project plan, study paperwork, promotional study materials used in the research study including:

 

DDD Binder for Clinical Sites

1 - Front binder sheet.pdf 2 - Contact sheet.pdf

3- Inclusion-Exclusion sheet.pdf

4- Divider - Axial Research tab.pdf

5- Training Slides quorum 2-23-10.ppt 6 - Table of Contents 5-09.doc

7 - Divider -past patient tab.pdf 8 - Past Patient Protocol.doc

 

9 - Patient letter 6.16.09.doc 10 - DDD Response Card.docx

11 - Divider - Current patient tab.pdf 12 - Current Patient Protocol.doc

13 - Understanding the Consent Process.doc 14 - Divider - Forms & Docs tab.pdf

15 - Collaboration Agreement Orthopaedic Surgeon Final 7-31-09.doc 16 - Protocol 6-19-09.doc 17 - Compensation Info.docx

18 - Consent Form 2009.doc 19 - Assent Form 2009.doc

20- Medical Record Release 6-10-09.doc

21- DDD Brochure.pdf

22- Divider - Questionnaires tab.pdf

23-Surgical Questionnaire version 10.6.09.pdf

24-Non-Surgical Questionnaire version 10.6.09.pdf 25- Family History Form 2009.docx

26 - Back binder sheet.pdf


15


Physician Enrollment Materials

DDD enrollment.doc

DDD Sites 6-11-09.xlsx De-identified training slides 2_23_10.ppt Folder labels - cards.docx Past Patient Enrollment.doc

Training slides quorum IRB 2_23_10.ppt patient letter 6.16.09.doc

 

Database Fields & Reports

All samples export fields.docx

 

Forms & Labels

Chart Notes.xlsx

Fax Transmission covers DDD MRI & Notes.doc

DDD MRI only Request.doc DDD Notes only request.doc Intake Form 2009.pdfLabels

DDD File folder Checklist.doc

DDD Folder label Non-Surgical.docx DDD Folder label Surgical.docx Kit Labels

DNA outside labels.docx Small DNA labels.docx

Test tube labels De-identified.docx Test tube labels.docx Medical Record Release MRR 6-10-09.doc

MRR Spanish 6-10-09.docx Pedigree form.pdf Review Forms

CLINICAL NOTE REVIEW.doc

DISCOGRAPHY REVIEW.doc MRI Review Form.doc XRAY REVIEW FORM.doc

 

Inclusion - Exclusion Criteria

Criteria Cheat Sheet

Non-Surgery Cheat Sheet.docx

Surgery Cheat Sheet.docx Inclusion-Exclusion (in-design) Inclusion-Exclusion Card_9_22_09.pdf Inclusion-exclusion.docx Key Questions Inclusion or Exclusion.docx

 

IRB Materials

DDD_Separate study Closure

Axial_Ward_DDD_Closure Letter_4.23.12.pdf Axial_Ward_DDD_Closure_24563QMR_FE.doc Axial_Ward_DDD_Closure_24563QMR_FE.pdf

Continuing review Approval Documents

Axial_Ward_DDD_CR Approval_6.9.l l.pdf Axial_CR Report_24563QMRl_w sig_5.5.1 l.pdf Axial_CR SSR_24563QMRl_w sig_S.5.11 .pdf Axial_DDD_CR Report_24563QMR_5.5.1l.doc

Axial - DDD - CR SSR - 24563QMR-1 - 5.5.11.doc

DDD approval documents_7.13.09 Advertisement

Axial_DDD_Approved advertisement_6.19.09.pdf Approval Letter Axial_DDD_Approval letter_7.13.09.pdf

Questionnaires

Axial_DDD_Approval letter for revised DDD questionnaires_l0.22.09.pdf Assent

Axial_DDD_Approved assent (7-17)_version1_7.13.09.pdf Brochure

Axial_DDD_Approved brochure_version 1_6.16.09.pdfDDD Brochure 8-18-09.pdf Combined approval documents from Quorum_7.13.09

Axial_DDD_Approval documents_24563qmr-1_7.13.09.pdf Axial_DDD_Approved recruitment documents_24563qmr-1_7.13.09.pdf

Consents

Adult Consent 2009 (Highlighted).docx

Assent 2009 On-site (Highlighted).doc Axial_DDD_Approved consent_version 1_7.13.09.pdf


16


Axial - Informed Consent Process - 6.25.09.doc Consent Checklists

Assent form checklist.doc Consent Form Checklist.doc Minor Consent Checklist.doc

DDD Onsite Adult-Minor Consent.doc IRB approval 8-10-07.pdf Minor Consent 2009 (Highlighted).doc Spanish

Axial_Approved Spanish translated assent (7-17)_6.26.09.pdf Axial_Approved Spanish translated consent_6.26.09.pdf Axial_DDD_Assent (7-17)_Spanish translation_S.5.09.pdf Axial_DDD_Consent_Spanish translation_S.5.09.pdf

Minor Assent Checklist - Spanish.docx Minor Consent Checklist - Spanish.docx Spanish Assent 2009.pdf

Spanish Consent 2009.pdf Family History Form

Axial_DDD_Approved family history form_version 1_6.16.09.pdfDDD Family History Form - SPAN.docx

Patient Letter

Axial_DDD_Approved patient letter_version 1, 6.16.09.doc Protocol

Axial_DDD_Approved protocol_version 1_6.16.09.pdf Questionnaires

De-Identified Questionnaire

De-Identified Non-Surgical Questionnaire.doc Non-surgical Questionnaire Axial_DDD_Non-Surgical Questionnaire_Version 2_10.6.09.pdf Axial_DDD_Pain questionnaires_Version 2 w highlighting_10.6.09.pdf Spanish Questionnaires

Non-Surgical Spanish Questionnaire.doc Surgical Spanish Questionnaire.doc Online Questionnaire

Axial_DDD_Approved online questionaire_7.13.09.pdf Surgical Questionnaire

Axial_DDD_Approved surgical questionnaire_version 1_6.16.09.pdf Axial_DDD_Surgical Questionnaire_Version 2_10.6.09.pdfDe-Identified Surgical Questionnaire.doc

Response Cards

Axial_DDD_Approved response card_S.29.09.doc Spanish translation documents Consent and assent Approval Letter

Axial_DDD_Approval letter for Spanish translation of consent and assent_8.5.09.pdf Axial_DDD_Assent (7-l7)_Spanish translation_S.5.09.pdf Axial_DDD_Consent_Spanish translation_8.5.09.pdf Translation Certificate

Axial_DDD_Consent and assent translation certificate_8.4.09.pdf

Questionnaires

Spanish Non-Surgical Questionnaire

Axial_DDD_Non-Surgical Questionnaire_Final_6 16 09_Spanish_ (2).doc Spanish Surgical Questionnaire

Axial_DDD_Surgical Questionnaire_Final_ 6 16 09_Spanish.doc Spanish Translation Approval documents

Spanish Translation Approval Letter Axial_DDD_Questionnaires approval letter_Spanish_8.25.09.pdf


17


Spanish Translation Certificates

Axial_DDD_Questionnaires translation certificate_Spanish_S.20.09.pdf DOD Spreadsheets

DOD sites in site start up spreadsheet_6.9.09.xlsx Site study documents

Axial Biotech_DDD collaboration agreement_Final_7.16.09.doc DOD approval letter Axial_DDD_Approval letter_7.13.09.pdfSite study documents

Axial_DDD Brochure_version 1_6.16.09 (2).pdf Axial_DDD_Advertisement_6.19.09.pdf Axial_DDD_Assent (7-17)_version 1_7.13.09.doc

Axial - ODD - Consent - version 1 - 7.13.09.doc

Axial ODD CmTent Patient Collection Guidelines 10.13.09.doc Axial DOD De-identified Non-

Surgical questionnaire_6.16.09.pdf Axial_DDD_De-Identified Surgical Questionnaire_6.16.09.pdf Axial_DDD_Family History Form_version1_6.16.09.pdf Axial_DDD_Inclusion-Exclusion Form (2)_9_22_09.pdf

Axial_DDD_Medical Record Release form_6-10-09.pdf Axial_DDD_Non-Surgical Questionnaire_Version 2 w highlighting_l0.6.09.doc Axial_DDD _Non-Surgical Questionnaire_Version 2_10.6.09.doc Axial_DOD_Online questionaire_7.13.09.pdf

Axial_DDD_Pain questionnaires_Version 2 w highlighting_l0.6.09.doc Axial_DDD_Past Patient Collection Guidelines_l0.13.09.doc Axial_DDD_Patient letter_version 1_ 6.16.09 (3).doc

Axial - DOD - Protocol - version 1 - 6.16.09.doc Axial_DDD_Response Card_S.29.09.pdf

Axial_DDD_Surgical Questionnaire_Version 2 w highlighting_l0.6.09.doc DOD_Spinal conditions

DOD sites in site start up spreadsheet_6.9.09.xlsx Site DOD study documents Axial_DDD Intake Fonn_5.6.09.pdf

Axial_DDD Non-Surgical Questionnaire_4.24.09.doc Axial_DDD patient letter_4.29.09.doc Axial_DOD Surgical Questionnaire_4.24.09.doc DOD_Current patient enrollment_2.4.09.doc DOD_Past patient enrollment_2.4.09.doc DOD_Patient Brochure_12.30.08.doc DOD_Response Cards 12.30.08.doc

New Site DOD documents

Axial Biotech_DDD collaboration agreement_Fina1_2.25.09.doc Axial_Consent Form _6.10.08.doc Axial_DDD Intake Form_5.6.09.pdf

Axial_DDD Non-Surgical Questionnaire_4.24.09.pdf Axial_DDD patient letter_4.29.09.doc

Axial_DDD Surgical Questionnaire_4.24.09.pdf Axial_DDD_Inclusion Exclusion Criteria_5.5.09.pdf Axial_Procotol_6.2008.doc

ODD_Current patient enrollment_2.4.09.doc DDD_Past patient enrollment_2.4.09.doc DDD_Patient Brochure_12.30.08.doc DOD_Response Cards_12.30.08.doc Research_ScoliScore Directory_2.27.09.pdf

 

Letters

Saliva sample Instructions_2.10.09.pdf Protocol

Axial_Procotol_6.2008.pdf Protocol 6-19-09.doc Consent Card Ltr.doc Copy for your Records.doc ODD 1st reminder.doc DOD 2nd Reminder.doc DDD 3rd Reminder.doc DDD Consent Cards.docx

DDD Not Collected Online Q.doc DDD Not Collected Resp card.doc DDD Saliva Kit ltr.doc

De-identified training letter.doc Mail-in Questionnaire.doc

Onsite Folders Letter (De-identified).doc Onsite Folders Letter (our IRB).doc Onsite Gift Card ltr.doc



18


Physician Materials Example

Kade Huntsman IM Ortho Envelope.docx Huntsman Logo.jpg

Patient letter.docx

Response cards K. Huntsman.doc

Salt Lake Orthopedic Clinic Kit Labels.docx

 

Response Cards

DDD Response Card 6-29-09.docx

 

Sample collection

Saliva Instructions Form.doc

 

4.) Gen DB records

 

GenDB contains birth, death, or marriage records for over 31,900,000 individuals who are ancestors or relatives of certain present day populations in the Intermountain West arranged in a MySQL database.

 

5.) DNA Biobank

 

Dr. Ward will make exclusive use of the existing biobank samples under his control available for pilot research for relevant gene discovery projects funded by Predictive, Pilot projects using these samples must be led by Dr. Ward serving as Principal Investigator, with reasonable budget and standard terms agreed to by Dr. Ward.

 

Examples of medical conditions with significant number of samples for pilot or confirmatory studies:

 

Polycystic ovarian syndrome

Preterm labor mothers and infants

Autoimmune diseases

Hypothyroidism


19


Essential hypertension (female-early onset)

Recurrent miscarriage

Morbid obesity (female-early onset)

Placental abruption

Ovarian cancer

Gestational diabetes

Intrauterine growth retardation- mothers and infants

Birth Defects

Left cardiac flow lesions

Juvenile onset diabetes

Fetal macrosomia

Dizygotic twins

Monozygotic twins

Other pregnancy complications

 

THESE SAMPLES WERE ALL COLLECTED MORE THAN 15 YEARS AGO. A PRECISE INVENTORY OF SAMPLES IS NOT FEASIBLE, AND SOME SAMPLES HAVE BEEN CONSUMED OR HAVE BECOME DEGRADED. SAMPLES CANNOT BE SOLD, AND AT PRESENT, THESE SAMPLES CAN ONLY BE USED FOR GENE DISCOVERY RESEARCH IN WHICH DR. WARD SERVES AS THE PRINCIPAL INVESTIGATOR. THE COLLECTION IS USEFUL FOR PILOT STUDIES AND CONFIRMATORY STUDIES, BUT NO WARRANTY IS MADE AS TO THEIR RELEVANCE OR USEFULNESS FOR ANY PARTICULAR DISEASE DISCOVERY TARGET.



20


EXHIBIT C

(Form  of Assignment)


Inventors:

Kenneth Ward

P.O. Box 17654

Salt Lake City, Utah 84117

Citizenship: US


Rakesh N. Chettier

Assignee:

Predictive Technology Group, Inc. 2735 E. Parleys Way, Suite 205 Salt Lake City, UT 84109


BACKGROUND OF THE ASSIGNMENT


INVENTORS have conceived a certain new and useful invention disclosed in a United States patent application titled [INSERT TITLE OF INVENTION].

 

ASSIGNEE desires to acquire the entire right, title and interest in the invention and with respect to any Letters Patent or grant of rights equivalent thereto that may be granted with respect to the invention in both the United States and in all foreign countries.

 

THE PARTIES AGREE AS FOLLOWS:

 

For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned INVENTORS hereby sell, assign, and transfer to Predictive Technology, Inc., a corporation of the state of Nevada, the entire right, title, and interest in the above-identified patent application executed concurrently herewith and to all divisional, continuing, substitute, renewal, reissue, and all other applications for  patent or the legal equivalent thereof which have been or may be filed in the United States and all countries foreign to the United States relating to any subject matter disclosed by the above­ identified patent application and hereby authorizes the Commissioner of Patents and Trademarks to issue such Letters Patent to ASSIGNEE for the sole use of ASSIGNEE, its successors, or assigns.

 

Specifically, ASSIGNEE is hereby authorized to apply for patents relating to the invention in its own name in countries where such procedure is proper; to claim the benefit of, file, and prosecute applications relating to the invention under any international conventions or treaties, if applicable. INVENTORS agree to execute applications relating to the invention in those countries and under those international conventions or treaties, if applicable, where it is necessary that the same be executed by the inventors, and to execute assignments of such applications and the resulting grant of patent rights or equivalents thereof to ASSIGNEE as well as all other necessary papers in relation to such applications and Letters Patent.

 


21


The INVENTORS further agree, at the request and expense of ASSIGNEE, to: execute all divisional, continuing, substitute, renewal, reissue, and any other documents relating thereto; execute all rightful oaths, declarations, assignments, powers of attorney, and other papers; communicate to the ASSIGNEE all facts and provide to the ASSIGNEE all documents and things known to the undersigned relating to the above-referenced Application for United States Letters Patent; testify as to the same in any interference, litigation, or other proceeding relating to the above-referenced application for United States Letters Patent; and in general, do everything reasonably possible which the ASSIGNEE shall consider desirable for vesting title to such Application for United States Letters Patent in the ASSIGNEE, and for securing, maintaining, defending, or enforcing valid and enforceable patent protection therefor.

 

The INVENTORS acknowledge that the sale, assignment, and transfer of rights and property set forth herein is and shall be irrevocable and binding upon the heirs, assigns, representatives and successors of each undersigned INVENTOR and extends to the successors, assigns, and nominees of the ASSIGNEE.

 

POWER OF ATTORNEY

 

In the event the ASSIGNEE is unable to secure any INVENTOR'S signature on any document necessary to apply for, prosecute, obtain, or enforce any patent, copyright, or other right or protection relating to any invention, whether due to mental or physical incapacity or other cause, each INVENTOR hereby irrevocably designates and appoints the ASSIGNEE and each of its duly authorized officers and agents as his or her agent and attorney-in-fact, to act for and in his or her behalf and stead to execute and file any such documents and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of patents, copyrights, or other rights or protections with the same force and effect as if executed and delivered by the INVENTOR.


Signed on _____________, 2018.

Kenneth Ward

 

Signed on  ______________, 2018.

Rakesh N. Chettier


22


EXHIBIT D


(Definition of "Accredited Investor")


The term "accredited investor" means:

 

(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Act; any insurance company as defined in section 2(a)(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 30l(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by

a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

 

(3) Any organization described in section 50l(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

 

(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

 

(5) Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000.

 

(i) Except as provided in paragraph (a)(5)(ii) of this exhibit, for purposes of calculating net worth under this paragraph (a)(5):

 

(A)The person's primary residence shall not be included as an asset;

 

(B) Indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and

 

(C) Indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;

 


23


(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

 

(7)Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 506(b)(2)(ii) of Regulation Das promulgated under the Securities Act; and

 

(8) Any entity in which all of the equity owners are accredited investor.


EXHIBIT E

(Form of Warrant)


WARRANT


THEWARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK DELIVERABLE UPON EXERCISE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 144.


No____________    Shares _____________________



WARRANT TO PURCHASE COMMON STOCK OF

PREDICTIVE TECHNOLOGY GROUP, INC.

Shares_______________

 

(Subject to Adjustment)

THIS CERTIFIES THAT, for value received, ("Holder"), is entitled, subject to the terms and conditions of this Wan-ant, at any time or from time to time after the date hereof (the "Effective Date"), to purchase up to   shares of common stock, par value $ per share (the "Common Stock"), from Predictive Technology Group, Inc., a corporation (the "Company"), at an exercise price per share equal to$(the "Purchase Price"). This Wan-ant shall expire at 5:00 p.m. mountain time on (the "Expiration Date"). Both the number of shares of Common Stock purchasable upon exercise of this Wan-ant (the "Wan-ant Shares") and the Purchase Price are subject to adjustment and change as provided herein.


24


 

1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall have the following respective meanings:

1.1 "1933 Act" shall mean the Securities Act of 1933, as amended.

1.2 "Common Stock" shall mean the Common Stock of the Company and any other securities at any time receivable or issuable upon exercise of this Warrant.


 

 

1.3 "Fair Market Value" or "FMV" of a share of Common Stock as of a particular date shall mean:



 

 

i. If traded on a securities exchange, the Nasdaq National Market or the Nasdaq Small Cap Market, the Fair Market Value shall be deemed to be the average of the closing prices of the Common Stock of the Company on such exchange or market over the five (5) business days ending immediately prior to the applicable date of valuation;

 

ii. If actively traded over-the-counter, the Fair Market Value shall be deemed to be the average of the closing bid prices over the 14-day period ending immediately prior to the applicable date of valuation; and

 

iii. If there is no active public market, the Fair Market Value shall be the value as determined in good faith by the Company's Board of Directors upon a review of relevant factors, including due consideration of the Registered Holders' determination of the value of the Company.

 

1.4"SEC" shall mean the Securities and Exchange Commission.

 

2. EXERCISE OF WARRANT

 

2.1 Payment. Subject to compliance with the terms and conditions of this Warrant and applicable securities laws, this Warrant may be exercised, in whole or in part at any time or from time to time, on or before the Expiration Date by the delivery (including, without limitation, delivery by facsimile) of the form of Notice of Exercise attached hereto as Exhibit 1 (the "Notice of Exercise"), duly executed by the Holder, at the address of the Company as set forth herein, and as soon as practicable after such date, a.surrendering this Warrant at the address of the Company, and either

a .providing payment, by check or by wire transfer, of an amount equal to the product obtained by multiplying the number of shares of Common Stock being purchased upon such exercise by the then effective Purchase Price (the "Exercise Amount"), or

b. electing, by written notice to the Company on the Notice of Exercise duly executed by the Holder, to receive a number of Warrant Shares, determined in accordance with the formula set forth below (the "Election"), in which event the Company shall issue to the Holder a number of Warrant Shares computed using the following formula: X=Y(A-B)

 

Where:


 

X =The number of Warrant Shares to be issued to the Holder upon an Election.


 

Y = The number of Warrant Shares in respect of which this Warrant is being exercised as adjusted to the date of the Election.

 


A = The FMV of one Warrant Share on the date that the relevant Notice of Exercise is  received by the Company

 


B = The Purchase Price (as adjusted to the date of the Election) in accordance with Section 4 hereof.



25


2.2 Common Stock Certificates; Fractional Shares. As soon as practicable on or after the date of an exercise of this Warrant, the Company shall deliver to the person or persons entitled to receive the same a certificate or certificates for the number of whole shares of Common Stock issuable upon such exercise. No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon an exercise of this Warrant.


2.3 Partial Exercise: Effective Date of Exercise. In case of any partial exercise of this Warrant, the Holder and the Company shall cancel this Warrant upon surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares of Common Stock purchasable hereunder. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above. The Company acknowledges that the person entitled to receive the shares of Common Stock issuable upon exercise of this Warrant shall be treated for all purposes as the holder of record of such shares as of the close of business on the date the Holder is deemed to have exercised this Warrant.

 

3. TAXES. The Company shall pay all taxes and other governmental charges that may be imposed in respect of the delivery of shares upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax or other charge imposed in connection with any transfer involved in the delivery of any certificate for shares of Common Stock in any name other than that of the Holder of this Warrant, and in such case the Company shall not be required to deliver any stock certificate until such tax or other charge has been paid, or it has been established to the Company's reasonable satisfaction that no tax or other charge is due.

 

4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF COMMON STOCK. The number of shares of Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities or property receivable upon exercise of this Warrant) and the Purchase Price are subject to adjustment upon occurrence of the following:

 

4.1 Adjustment for Stock Splits, Stock Subdivisions or Combinations of Shares of Common Stock. The Purchase Price of this Warrant shall be proportionally decreased and the number of shares of Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities at the time deliverable upon exercise of this Warrant) shall be proportionally increased to reflect any stock split or subdivision of the Company's Common Stock. The Purchase Price of this Warrant shall be proportionally increased and the number of shares of Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities at the time deliverable upon exercise of this Warrant) shall be proportionally decreased to reflect any combination of the Company's Common Stock.

 

4.2 Adjustment for Dividends or Distributions of Stock or Other Securities or Property. In case the Company shall make or issue, or shall fix a record date for the determination of eligible holders entitled to receive, a dividend or other distribution with respect to the Common Stock (or any shares of stock or other securities at the time issuable upon exercise of the Warrant) payable in (a) securities of the Company or (b) assets (excluding cash dividends paid or payable solely out of retained earnings), then, in each such case, the Registered Holder of this Warrant on exercise hereof at any time after the consummation, effective date or record date of such dividend or other distribution, shall receive, in addition to the shares of Common Stock (or such other stock or securities) issuable on such exercise prior to such date, and without the payment of additional consideration therefor, the securities or such other assets of the Company to which such Holder would have been entitled upon such date if such Holder had exercised this Warrant immediately prior to such making, issuance or record date.

 

4.3 Reclassification, Conversion. If the Company, by reclassification or conversion of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable if this Warrant had been exercised immediately prior to such reclassification or conversion or other change and the Purchase Price therefore shall be appropriately adjusted, all subject to further adjustment as provided in this Section 4.

 


26


4.4 Adjustment for Capital Reorganization. Merger or Consolidation. In case of any capital reorganization of the capital stock of the Company (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), or any merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all the assets of the Company then, and in each such case, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Purchase Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 4. The foregoing provisions of this Section 4.4 shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the Holder hereof for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors. In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

5. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory the Company of the ownership of and the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to him, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will cause to be executed and delivered in lieu thereof a new Warrant of like tenor as the lost, stolen, destroyed or mutilated Warrant.

 

6. REPRESENTATION AND COVENANT. The Company hereby covenants that all shares issuable upon exercise of this Warrant, when delivered upon such exercise, shall be validly issued, fully paid and nonassessable and free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except encumbrances or restrictions arising under federal or state securities laws. Further, the Company hereby covenants to reserve such number of authorized but unissued shares of Common Stock as needed for issuance upon exercise of this Warrant.

 

7. TRANSFER. This Warrant may not be transferred by the Holder without the prior written consent of the Company, which consent may not be unreasonably withheld, unless such transfer is to (i) any principal, shareholder, director or officer of any such entity, (ii) to any spouse, ancestor, descendant of any person referred to in clause (i), or (iii) any trust established for the benefit of any person referred to in clause (i) or clause (ii), or (iv) any person or entity controlling, controlled by or under common control with Holder. In the event of a transfer to which the Company has previously consented in writing, this Warrant and all rights hereunder may be transferred by the Holder upon delivery of the form of Assignment attached hereto as Exhibit 2 (the "Assignment"), duly executed by the Holder, surrender of this Warrant properly endorsed at the address of the Company and payment of any necessary transfer tax or other governmental charge imposed upon such transfer. Upon any partial transfer, the Holder and Company will cause to be issued and delivered to the Holder a new Warrant or Warrants with respect to the portion of this Warrant not so transferred. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that when this Warrant shall have been so endorsed, the person in possession of this Warrant may be treated by the Company, and all other persons dealing with this Warrant, as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby, any notice to the contrary notwithstanding; provided, however that until a transfer of this Warrant is duly registered on the books of the Company, the Company may treat the Holder hereof as the owner for all purposes.

 


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8. RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees that, absent an effective registration statement filed with the SEC under the 1933 Act, covering the disposition or sale of this Warrant or the Common Stock issued or issuable upon exercise hereof or the Common Stock issuable upon conversion thereof, as the case may be, and registration or qualification under applicable state securities laws, such Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants or Common Stock, as the case may be, unless either (i) the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that such registration is not required in connection with such disposition or (ii) the sale of such securities is made pursuant to SEC Rule 144.

 

9. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby represents, warrants and covenants that he/she/it is an "accredited investor" as that tenn is defined under Rule 501 of Regulation D, that any shares of stock purchased upon exercise of this Warrant or acquired upon conversion thereof shall be acquired for investment only and not with a view to, or for sale in connection with, any distribution thereof, that the Holder has had such opportunity as such Holder has deemed adequate to obtain from representatives of the Companysuch information as is necessary to permit the Holder to evaluate the merits and risks of its investment in the Company; that the Holder is able to bear the economic risk of holding such shares as may be acquired pursuant to the exercise of this Warrant for an indefinite period; that the Holder understands that the shares of stock acquired pursuant to the exercise of this Warrant or acquired upon conversion thereof will not be registered under the 1933 Act (unless otherwise required pursuant to exercise by the Holder of the registration rights, if any, previously granted to the Holder) and will be "restricted securities" within the meaning of Rule 144 under the 1933 Act and that the exemption from registration under Rule 144 will not be available for at least one year from the date of exercise of this Warrant, and even then will not be available unless a public market then exists for the stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and that all stock certificates representing shares of stock issued to the Holder upon exercise of this Warrant or upon conversion of such shares may have affixed thereto a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

10. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. In the absence of affirmative action by such Holder to purchase Common Stock by exercise of this Warrant, no provisions of this Warrant, and no enumeration herein of the rights or privileges of the Holder hereof shall cause such Holder hereof to be a holder of the Company for any purpose. Nothing set forth in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 11, the Company shall provide the Holder with copies of the same notices and other information given to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders.

 

11. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, return receipt requested, or by telecopier, or by email or otherwise delivered by hand or by messenger, addressed or telecopied to the person to whom such notice or communication is being given at its address set forth after its signature hereto. In order to be effective, a copy of any notice or communication sent by telecopier or email must be sent by registered or certified mail, postage prepaid, return receipt requested, or delivered personally to the person to whom such notice or communication is being at its address set forth after its signature hereto. If notice is provided by mail, notice shall be deemed to be given five (5) business days after proper deposit with the United States mail or nationally recognized overnight courier, or immediately upon personally delivery thereof, to person to whom such notice or communication is being at such address. If notice is provided by telecopier, notice shall be deemed to be given upon confirmation by the telecopier machine of the receipt of such notice at the telecopier number provided above. If notice is provided by email, notice shall be deemed to be given upon confirmation by the sender's email program of the receipt of such notice at the email address provided after the signature of the person to whom such notice or communication is being. The addresses set forth after the signatures hereto may be changed by written notice complying with the terms of this Section 12.

12. HEADINGS. The headings in this Warrant are for purposes of convenience in reference only, and shall not be deemed to constitute a part hereof.


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13. LAW GOVERNING. This Warrant shall be construed and enforced in accordance with, and governed by, the laws of the internal laws of the State of Nevada, without giving effect to the principles of conflicts of law.

 

14. NOTICES OF RECORD DATE. In case:

 

i. the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant), for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities or to receive any other right; or

 

ii. of any consolidation or merger of the Company with or into another corporation, any capital reorganization of the Company, any reclassification of the capital stock of the Company, or any conveyance of all or substantially all of the assets of the Company to another corporation in which holders of the Company's stock are to receive stock, securities or property of another corporation; or

 

iii. of any voluntary or involuntary dissolution, liquidation or winding-up of the Company; or

 

iv. of any redemption of any outstanding capital stock of the Company; then, and in each such case, the Company will mail or cause to be mailed to the Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right and the amount and character of any such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation, winding-up, redemption or conversion is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities as at the time are receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be delivered at least thirty (30) days prior to the date therein specified.

 

15. SEVERABILITY. If any term, provision, covenant or restriction of this Warrant is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Warrant shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

16. COUNTERPARTS. For the convenience of the parties, any number of counterparts of this Warrant may be executed by the parties hereto and each such executed counterpart shall be, and shall be deemed to be, an original instrument.

17. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday, Sunday or legal holiday, the Expiration Date shall automatically be extended until 5:00 p.m. on the next business day.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer.


PREDICTIVE TECHNOLOGY GROUP, INC.

By: /s/ Bradley C Robinson


Title:President and CEO


 

Address for Notices:

2735 East Parleys Way, Suite 205 Salt Lake City, Utah 84109

 


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SIGNATURE PAGE TO WARRANT

EXHIBIT 1

NOTICE OF EXERCISE

(To be executed upon exercise of Warrant)


WARRANT NO.


The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant Certificate for, and to purchase thereunder, securities of Predictive Technology Group, Inc., Inc., as provided for therein, and (check the applicable box):


1 .Tenders herewith payment of the exercise price in full in the form of cash or a certified or official bank check in same-day funds in the amount of $ for such securities.


2. Pursuant to the cashless exercise feature set forth in Section 2.1(c).


Please issue a certificate or certificates for such securities in the name of, and pay any cash for any fractional share to (please print name, address and social security number):

Name:

 

Address:

Signature:   

 

Note: The above signature should correspond exactly with the name on the first page of this Warrant Certificate or with the name of the assignee appearing in the assignment form below.

If said number of shares shall not be all the shares purchasable under the within Warrant Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder rounded up to the next higher whole number of shares.


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EXHIBIT 2

ASSIGNMENT

(To be executed only upon assignment of Warrant Certificate)

WARRANT NO.-


For value received, hereby sells, assigns and transfers unto the within Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint    attorney, to transfer said Warrant Certificate on the books of the within-named Company with respect to the number of Warrants set forth below, with full power of substitution in the premises:


Name(s) of Assignee(s)

Address

# of Warrants


And if said number of Warrants shall not be all the Warrants represented by the Warrant Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the Warrants registered by said Warrant Certificate.

Dated:                        , 20    

Signature:

 

Notice: The signature to the foregoing Assignment must correspond to the name as written upon the face of this security in every particular, without alteration or any change whatsoever; signature(s) must be guaranteed by an eligible guarantor institution (banks, stock brokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to applicable rules promulgated by the SEC.


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Exhibit 10.5

 

 

SECURITIES PURCHASE AGREEMENT


This SECURITIES PURCHASE AGREEMENT , is effective as of August 22, 2018, is made by and among Predictive Technology Group, Inc. (“Acquiror Company”), a Nevada corporation, and each of the Persons listed on Exhibit A hereto.  

W I T N E S S E T H:

WHEREAS , the Members have agreed to transfer to Acquiror Company, and Acquiror Company has agreed to acquire from the Members, 100% of the outstanding Membership Interests of Inception DX, LLC, a Utah limited liability company (the “Company”), in exchange for 15,500,000 shares of the Acquiror Company’s Common Stock to be issued on the Closing Date on the terms and conditions set forth herein; and

NOW, THEREFORE , in consideration of the foregoing premises and the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereto hereby agree as follows:

SECTION I

DEFINITIONS

Unless the context otherwise requires, the terms defined in this Section 1 will have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

1.1

“Accredited Investor” has the meaning set forth in Regulation D under the Securities Act and as set forth in Exhibit C hereto.

1.2

“Acquiror Company Board” means the Board of Directors of the Acquiror Company.

1.3

“Acquiror Company Common Stock” means the Acquiror Company’s common stock, par value US $.001 per share.

1.4

 “Acquiror Company Shares” means the Acquiror Company Common Stock being issued to the Members pursuant hereto.

1.5

“Affiliate” means any Person that directly or indirectly controls, is controlled by or is under common control with the indicated Person.

1.6

“Agreement” means this Securities Purchase Agreement, including all Schedules and Exhibits hereto, as this Securities Purchase Agreement may be from time to time amended, modified or supplemented.

1.7

“Closing Date” has the meaning set forth in Section 2.4.

1.8

“Code” means the Internal Revenue Code of 1986, as amended.



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1.9

“Company” has the meaning set forth in the first Recital of the Agreement.

1.10

“Company Units” means the fractional and proportional economic interest in the Company acquired by a Member representing the economic rights of a Member to share in distributions of cash and other property from the Company pursuant to the Utah Revised Uniform Limited Liability Company Act and this Agreement, together with the Member’s distributive share of the Company’s profits and losses.

1.11

 “Commission” means the Securities and Exchange Commission or any other federal agency then administering the Securities Act.

1.12

“Company Balance Sheet” means the Company’s consolidated balance sheet at June 30, 2018.

1.13

“Company Board” means the Board of Managers of the Company.

1.14

“Company Subsidiaries” means all of the direct and indirect Subsidiaries of the Company.

1.15

“Due Diligence Documents” shall mean the documents referenced in Section 2.5 hereto.

1.16

[Section Reserved]

1.17

“Environmental Laws” means any Law or other requirement relating to the environment, natural resources, or public or employee health and safety.

1.18

“Environmental Permit” means all licenses, permits, authorizations, approvals, franchises and rights required under any applicable Environmental Law or Order.

1.19

“Equity Security” means any stock or similar security, including, without limitation, securities containing equity features and securities containing profit participation features, or any security convertible into or exchangeable for, with or without consideration, any stock or similar security, or any security carrying any warrant, right or option to subscribe to or purchase any shares of capital stock, or any such warrant or right.

1.20

“Exchange” has the meaning set forth in Section 2.1.

1.21

“Exchange Act” means the Securities Exchange Act of 1934 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will then be in effect.

1.22

“Exhibits” means the several exhibits referred to and identified in this Agreement.

1.23

“GAAP” means, with respect to any Person, United States generally accepted accounting principles applied on a consistent basis with such Person’s past practices.

1.24

“Governmental Authority” means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental



2



commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.

1.25

 “Indebtedness” means any obligation, contingent or otherwise. Any obligation secured by a Lien on, or payable out of the proceeds of, or production from, property of the relevant party will be deemed to be Indebtedness.

1.26

“Intellectual Property” means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S. patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.

1.27

“Laws” means, with respect to any Person, any U.S. or non-U.S. federal, national, state, provincial, local, municipal, international, multinational or other law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.

1.28

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.

1.29

“Material Acquiror Company Contract” means any and all agreements, contracts, arrangements, leases, commitments or otherwise, of the Acquiror Company, of the type and nature that the Acquiror Company is required to file with the Commission.

1.30

“Material Adverse Effect” means, when used with respect to the Acquiror Company, any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of the Acquiror Company, in each case taken as a whole or (b) materially impair the ability of the Acquiror Company or the Company, as the case may be, to perform their obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which the Acquiror Company operates.



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1.31

“Material Company Contract” means any and all agreements, contracts, arrangements, leases, commitments or otherwise, of the Company, of the type that the Acquiror Company will be required to file with the Commission following the consummation of the Share Exchange.

1.32

 “Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental Authority.

1.33

“Organizational Documents” means the articles or certificate of incorporation and operating agreement a limited liability company and any other document performing a similar function adopted or filed in connection with the creation, formation or organization of a Person; and any and all amendments to any of the foregoing.

1.34

“Permitted Liens” means (a) Liens for Taxes not yet payable or in respect of which the validity thereof is being contested in good faith by appropriate proceedings and for the payment of which the relevant party has made adequate reserves; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers, warehousemen, mechanics, laborers and materialmen and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings conducted and for the payment of which the relevant party has made adequate reserves; and (c) statutory Liens incidental to the conduct of the business of the relevant party which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business.

1.35

“Person” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Authority or other entity of any kind or nature.

1.36

 “Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority.

1.37

 “Regulation D” means Regulation D under the Securities Act, as the same may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

1.38

“Schedules” means the several schedules referred to and identified herein, setting forth certain disclosures, exceptions and other information, data and documents referred to at various places throughout this Agreement.

1.39

“SEC Documents” has the meaning set forth in Section 5.20.

1.40

“Section 4(a)(2)” means Section 4(a)(2) under the Securities Act, as the same may be amended from time to time, or any successor statute.

1.41

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will be in effect at the time.



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1.42

“Members” and individually, a “Member”, means the Persons listed on Exhibit A hereto.

1.43

“Taxes” means all foreign, federal, state or local taxes, charges, fees, levies, imposts, duties and other assessments, as applicable, including, but not limited to, any income, alternative minimum or add-on, estimated, gross income, gross receipts, sales, use, transfer, transactions, intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up capital, profits, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, real property, recording, personal property, federal highway use, commercial rent, environmental (including, but not limited to, taxes under Section 59A of the Code) or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties or additions to tax with respect to any of the foregoing; and “Tax” means any of the foregoing Taxes.

1.44

“Tax Group” means any federal, state, local or foreign consolidated, affiliated, combined, unitary or other similar group of which the Acquiror Company is now or was formerly a member.

1.45

“Tax Return” means any return, declaration, report, claim for refund or credit, information return, statement or other similar document filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

1.46

“Transaction Documents” means, collectively, all agreements, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement.

1.47

“U.S.” means the United States of America.

SECTION II

EXCHANGE OF SECURITIES AND CONSIDERATION

2.1

Securities Exchange . At the Closing, each Member shall transfer to the Acquiror Company the number of Company Units set out forth on the form attached hereto as Exhibit B, and, in consideration therefor, and subject to Section 2.2 hereof, Acquiror Company shall issue to such Member the number of shares of Acquiror Company Common Stock so set forth in Exhibit B (the “Exchange”). The total shares of Acquiror Company Common Stock to be issued to the Members shall be FIFTEEN MILLION FIVE HUNDRED THOUSAND SHARES (15,500,000).

2.2

Withholding . The Acquiror Company shall be entitled to deduct and withhold from the number of Acquiror Company Shares otherwise payable pursuant to this Agreement to any Member such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local, provincial or foreign tax Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Member in respect of which such deduction and withholding was made.



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2.3

Closing Date . The closing of the Exchange will occur on or before August 20, 2018, at such date as all of the closing conditions set forth in Sections VII and VIII have been satisfied or waived (the “Closing Date”).

2.4

Due Diligence Period; Termination .  The Members must have provided provide Acquiror Company with such due diligence documents as relating to Company as the Acquiror Company may reasonably request. The Acquiror Company has had adequate time to review the Due Diligence Documents. The Acquiror Company is satisfied with and approves  all aspects of the Due Diligence Documents.  

SECTION III

REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS

3.1

Generally . Each Member, severally and not jointly, hereby represents and warrants to the Acquiror Company as of the date hereof and as of the Closing Date:

3.1.1   Authority . Such Member has the right, power, authority and capacity to execute and deliver this Agreement and each of the Transaction Documents to which such Member is a party, to consummate the transactions contemplated by this Agreement and each of the Transaction Documents to which such Member is a party, and to perform such Member’s obligations under this Agreement and each of the Transaction Documents to which such Member is a party. This Agreement has been, and each of the Transaction Documents to which such Member is a party will be, duly and validly authorized and approved, executed and delivered by such Member. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto other than such Member, this Agreement is, and each of the Transaction Documents to which such Member is a party have been, duly authorized, executed and delivered by such Member and constitutes the legal, valid and binding obligation of such Member, enforceable against such Member in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

3.1.2   No Conflict . Neither the execution or delivery by such Member of this Agreement or any Transaction Document to which such Member is a party, nor the consummation or performance by such Member of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Organization Documents of such Member (if such Member is not a natural person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which such Member is a party or by which the properties or assets of such Member are bound; or (c) contravene, conflict with, or result in a violation of, any Law or Order to which such Member, or any of the properties or assets of such Member, may be subject.

3.1.3   Ownership of Company Units . Such Member owns, of record and beneficially, and has good, valid and indefeasible title to and the right to transfer to the Acquiror Company pursuant to this Agreement, such Member’s Company Units free and clear of any and all Liens.



6



There are no options, rights, voting trusts, stockholder agreements or any other contracts or understandings to which such Member is a party or by which such Member or such Member’s Company Units are bound with respect to the issuance, sale, transfer, voting or registration of such Member’s Company Units. At the Closing Date, the Acquiror Company will acquire good, valid and marketable title to such Member’s Company Units free and clear of any and all Liens, and upon the entry of the Acquiror Company into the register of members of the Company, the Acquiror Company shall have acquired good, valid and marketable title to such Member’s Company Units free and clear of any and all Liens.

3.1.4   Litigation . There is no pending Proceeding against such Member that challenges, or may have the effect of preventing, delaying or making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement and, to the knowledge of such Member, no such Proceeding has been threatened, and no event or circumstance exists that is reasonably likely to give rise to or serve as a basis for the commencement of any such Proceeding.

3.1.5   No Brokers or Finders . No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against such Member for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and such Member will indemnify and hold the Acquiror Company harmless against any liability or expense arising out of, or in connection with, any such claim.

3.2

Investment Representations . Each Member, severally and not jointly, hereby represents and warrants to the Acquiror Company:

3.2.1   Acknowledgment . Each Member understands and agrees that the Acquiror Company Shares to be issued pursuant to has not been registered under the Securities Act or the securities laws of any state of the U.S. and that the issuance of the Acquiror Company Shares is being effected in reliance upon an exemption from registration afforded under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.

3.2.2   Status . That such Member is an Accredited Investor. Each Member severally understands that the Acquiror Company Shares are being offered and sold to such Member in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Member set forth in this Agreement, in order that the Acquiror Company may determine the applicability and availability of the exemptions from registration of the Acquiror Company Shares on which the Acquiror Company is relying.

3.2.3   Additional Representations and Warranties of Accredited Investors . Each Member, severally and not jointly, further makes the representations and warranties to the Acquiror Company set forth on Exhibit D.

3.2.4   Stock Legends . Each Member hereby agrees with the Acquiror Company as follows:

(a)

Securities Act Legend - Accredited Investors . The certificates evidencing the Acquiror Company Shares issued to those Members, and each certificate issued in transfer thereof, will bear the following legend:



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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

(b)

Other Legends . The certificates representing such Acquiror Company Shares, and each certificate issued in transfer thereof, will also bear any other legend required under any applicable Law, including, without limitation, any U.S. state corporate and state securities law, or contract.

(c)

Opinion . No Member will transfer any or all of the Acquiror Company absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of such Member’s Acquiror Company Shares, without first providing the Acquiror Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Acquiror Company) to the effect that such transfer will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws.

(d)

Consent . Each Member understands and acknowledges that the Acquiror Company may refuse to transfer the Acquiror Company Shares, unless such Member complies with this Section 3.2.4 and any other restrictions on transferability set forth in Exhibit D. Each Member consents to the Acquiror Company making a notation on its records or giving instructions to any transfer agent of the Acquiror Company’s Common Stock in order to implement the restrictions on transfer of the Acquiror Company Shares.

SECTION IV

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

Each Member, severally and not jointly, represents and warrants to the Acquiror Company as of the date hereof and as of the Closing Date as follows:

4.1

Organization and Qualification . The Company is duly incorporated and validly existing under the laws of the State of Utah, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and as contemplated to be conducted, to own, hold and operate its properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the provisions hereof, except where the failure to be so organized, existing and in good standing or to have such authority or power will not, in the aggregate, cause a Material Adverse Effect. The Company is duly qualified, licensed or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification, licensing or domestication necessary, except where the failure to be so qualified, licensed or domesticated will not have a Material Adverse Effect.



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4.2

Material Assets . The financial statements of the Company provided to Acquiror Company set forth the material properties and assets (real and personal) owned or leased by the Company. A list of all assets of the Company is attached as Exhibit E. The Company has good and marketable title to all of the assets identified in Exhibit E, free and clear of all title defects, liens, restrictions, claims, charges, security interests, or other encumbrances of any nature whatsoever, including any mortgages, leases, chattel mortgages, conditional sales contracts, collateral security arrangements, or other title or interest retention arrangements.

4.3

Organizational Documents . True, correct and complete copies of the Organizational Documents of the Company and three amendments have been delivered to the Acquiror Company prior to the execution of this Agreement, and no action has been taken to further amend or repeal such Organizational Documents. The Company is not in violation or breach of any of the provisions of its Organizational Documents, except for such violations or breaches as would not have a Material Adverse Effect.

4.4

Authorization and Validity of this Agreement . The recording of the transfer of the Company Units and the delivery of new certificates representing the Company Units registered in the name of Acquiror Company are within the Company’s corporate powers, have been duly authorized by all necessary corporate action, do not require from the Board or Members of the Company any consent or approval that has not been validly and lawfully obtained, require no authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality of government that has not been validly and lawfully obtained, filed or registered, as the case may be, except for those that, if not obtained or made would not have a Material Adverse Effect.

4.5

No Violation . None of the execution, delivery or performance by the Company of any Transaction Document to which the Company is a party, nor the consummation by the Company of the transactions contemplated hereby violates any provision of its Organizational Documents, or violates or conflicts with, or constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the creation of imposition of any material Lien under, any material agreement or instrument to which the Company is a party or by which the Company is or will be bound or subject, or violate any laws.

4.6

Binding Obligations . Assuming each such agreement and instrument has been duly and validly authorized, executed and delivered by the other Parties thereto, all agreements or instruments contemplated hereby to which the Company is a party, have been duly authorized, executed and delivered by the Company and are the legal, valid and binding Agreement of the Company and is enforceable against the Company in accordance with its terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally.



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4.7

Securities Laws . Assuming the accuracy of the representations and warranties of the Members contained in Section III and Exhibit D, neither the Company nor the Members have any reason to believe that the issuance of the Acquiror Company Shares pursuant to this Agreement is not exempt from the registration and prospectus delivery requirements of the Securities Act.

4.8

Capitalization and Related Matters .

4.8.1   Capitalization . The issued membership interests of the Company consists of ten million fully paid Units. There are no outstanding or authorized options, warrants, calls, subscriptions, rights (including any preemptive rights or rights of first refusal), agreements or commitments of any character obligating the Company to issue any preferred equity or any other equity ownership of the Company. All issued and outstanding Company Units are duly authorized, validly issued, fully paid and nonassessable and have not been issued in violation of any preemptive or similar rights.

4.8.2   No Redemption Requirements . There are no outstanding contractual obligations (contingent or otherwise) of the Company to retire, repurchase, redeem or otherwise acquire any outstanding Company Units or other equity of, or other ownership interests in, the Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.

4.8.3   Duly Authorized . The issuance of the Company Units has been duly authorized, and the Company Units have been validly issued and are fully paid and nonassessable.

4.9

Members . Exhibit A contains a true and complete list of the names and addresses of the record and beneficial holders of all of the outstanding membership interests. Except as expressly provided in this Agreement or as set forth on a Schedule hereto, no holder of Company Units or any other security of the Company or any other Person is entitled to any preemptive right, right of first refusal or similar right as a result of the issuance of the Company Units or otherwise. There is no voting trust, agreement or arrangement among any of the Members of any capital stock of the Company affecting the exercise of the voting rights of any such capital stock.

4.10

Compliance with Laws and Other Instruments . Except as would not have a Material Adverse Effect, the business and operations of the Company have been and are being conducted in accordance with all applicable foreign, federal, state and local laws, rules and regulations and all applicable orders, injunctions, decrees, writs, judgments, determinations and awards of all courts and governmental agencies and instrumentalities. Except as would not have a Material Adverse Effect, the Company is not, or is alleged to be, in violation of, or (with or without notice or lapse of time or both) in default under, or in breach of, any term or provision of its Organizational Documents or of any indenture, loan or credit agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment,



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obligation or arrangement to which the Company is a party or by which the Company’s properties, assets or rights are bound or affected. To the knowledge of the Members, no other party to any material contract, agreement, lease, license, commitment, instrument or other obligation to which the Company is a party is (with or without notice or lapse of time or both) in default thereunder or in breach of any term thereof. The Company is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of the Members, any event or circumstance relating to the Company that materially and adversely affects in any way its business, properties, assets or prospects or that would prevent or make burdensome its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby or thereby.

4.11

Certain Proceedings . There is no pending Proceeding that has been commenced against the Company and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated in this Agreement. To the Members’ knowledge, no such Proceeding has been threatened.

4.12

No Brokers or Finders . No person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and the Members will indemnify and hold the Acquiror Company harmless against any liability or expense arising out of, or in connection with, any such claim.

4.13

Absence of Undisclosed Liabilities . Except as set forth in the Transaction Documents, the Company does not have any material debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to the Members) arising out of any transaction entered into at or prior to the Closing Date or any act or omission at or prior to the Closing Date, except to the extent set forth on or reserved against on the Company Balance Sheet, incurred in the ordinary course of business or incurred in connection with the transactions contemplated in the Transaction Documents. The Company Balance Sheet provides a true and fair view of the assets and liabilities (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to the Members) as at June 30, 2018, in all material respects. The Company has not changed its method of accounting or the accounting principles or practices used in preparation of the Company Balance Sheet.

4.14

  Changes . Except as set forth in the Transaction Documents, the Company has, since June 30:

4.14.1   Ordinary Course of Business . Conducted its business or entered into any transaction other than in the usual and ordinary course of business, except for the Transaction Documents.

4.14.2   Adverse Changes . Suffered or experienced any change in, or affecting, its condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects other than changes, events or conditions in the usual and ordinary course of its business, none of which would have a Material Adverse Effect;

4.14.3   Loans . Made any loans or advances to any Person;



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4.14.4   Liens . Created or permitted to exist any material Lien on any material property or asset of the Company, other than Permitted Liens;

4.14.5   Material Company Contracts . Terminated or modified any Material Company Contract, except for termination upon expiration in accordance with the terms thereof;

4.14.6   Claims . Released, waived or cancelled any claims or rights relating to or affecting the Company, except in the ordinary course of business or in connection with the Transaction Documents and the transactions contemplated thereby;

4.14.7   Discharged Liabilities . Paid, discharged or satisfied any claim, obligation or liability in excess of US $15,000 in the aggregate, except for liabilities incurred prior to the date of this Agreement in the ordinary course of business or in connection with the Transaction Documents and the transaction contemplated thereby;

4.14.8   Indebtedness . Created, incurred, assumed or otherwise become liable for any Indebtedness in excess of US $10,000 in the aggregate, except in the ordinary course of business or in connection with the Transaction Documents and the transactions contemplated thereby;

4.14.9   Guarantees . Guaranteed or endorsed any obligation or net worth of any Person;

4.14.10   Acquisitions . Acquired the capital stock or other securities or any ownership interest in, or any assets of, any other Person;

4.14.11   Agreements . Except as set forth in the Transaction Documents, entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

4.15

Material Company Contracts . The Company has made available to the Acquiror Company, prior to the date of this Agreement, true, correct and complete copies of each written Material Company Contract, including each amendment, supplement and modification thereto. Each Material Company Contract is a valid and binding agreement of the Company that is party thereto, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally, and is in full force and effect.

4.16

Tax Returns and Audits .

4.16.1   Tax Returns . The Company has filed all Tax Returns required to be filed by or on behalf of the Company and has paid all Taxes that the Company is required to have been paid (whether or not reflected on any Tax Return). (a) no Governmental Authority in any jurisdiction has made a claim, assertion or threat to Company that the Company is or may be subject to taxation by such jurisdiction; (b) there are no Liens with respect to Taxes on the Company’s property or assets other than Permitted Liens; and (c) there are no Tax rulings, requests for rulings, or closing agreements relating to the Company for any period (or portion of a period) that would affect any period after the date hereof.



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4.16.2   No Disputes . To the knowledge of the Members, there is no pending audit, examination, investigation, dispute, proceeding or claim with respect to any Taxes of the Company, nor is any such claim or dispute pending or contemplated.

4.17

Material Assets . The financial statements of the Company provided to Acquiring Company set forth the material properties and assets (real and personal) owned or leased by the Company.

4.18

Litigation; Orders . There is no Proceeding (whether federal, state, local or foreign) pending or, to the knowledge of the Members, threatened against or affecting the Company or the Company properties, assets, business or employees. To the knowledge of the Members, there is no fact that might result in or form the basis for any such Proceeding. The Company is not subject to any Orders.

4.19

Intellectual Property .

4.19.1   To the knowledge of the Members, the Company has no intellectual property except for lab protocalls that were contrinbutred by Dr. Ken Ward (the “Company Intellectual Property”). The Company owns the Company Intellectual Property. No Company Intellectual Property was conceived or developed directly or indirectly with or pursuant to government funding or a government contract. To the knowledge of the Members, the Company Intellectual Property and the Company’s use of such Company Intellectual Property does not infringe or misappropriate any proprietary or intellectual property rights of any third party (“Infringement”). The Company has not received any communication alleging or suggesting that or questioning whether the Company has been or may be (whether in its current or proposed business or otherwise) engaged in, liable for or contributing to any Infringement.

4.19.2     There is, to the knowledge of the Members, no unauthorized Use, disclosure, infringement or misappropriation of any of the Company Intellectual Property by any third party, including any employee, former employee, contractor or former contractor of the Company. The Company has not indemnified any third party against infringement of any third party Intellectual Property rights.

4.19.3   The Company have taken commercially reasonable steps to protect and preserve the confidentiality of the Company’s trade secrets that are not otherwise disclosed in published patents or patent applications or registered copyrights (the “Company Confidential Information”).

4.19.4   To the Members’ knowledge, the Company is not using without authorization or permission (i) any inventions of any of its past or present employees or past or present contractors made prior to or outside the scope of their employment by the Company or (ii) any confidential information or trade secrets of any former employer of any such person.

4.20

Stock Option Plans; Employee Benefits .

4.20.1   The Company has no stock option plans providing for the grant by the Company of stock options to directors, officers or employees.



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4.20.2   The Company has no employee benefit plans, defined compensation plans, or arrangements covering their present and former employees or providing benefits to such persons in respect of services provided the Company.

4.21

Environmental and Safety Matters . Except as would not have a Material Adverse Effect:

4.21.1   The Company has at all time been and is in compliance with all Environmental Laws applicable to such companies.

4.21.2   There are no Proceedings pending or threatened against the Company alleging the violation of any Environmental Law or Environmental Permit applicable to tbe Company or alleging that the Company is a potentially responsible party for any environmental site contamination.

4.22

Title to and Condition of Properties . The Company owns no real property, and holds under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of the business of the Company as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a Material Adverse Effect on the Company.

4.23

Due Diligence Documents . The Company has made available to the Acquiror Company, true, correct and complete copies of the Due Diligence Documents as they related to the Company, including each amendment, supplement and modification thereto.

SECTION V

REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANY

The Acquiror Company represents and warrants to the Members and the Company as of the date hereof and as of the Closing Date as follows:

5.1

Organization and Qualification . The Acquiror Company is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and to own, hold and operate its properties and assets as now owned, held and operated by it, except where the failure to be so organized, existing and in good standing, or to have such authority and power, governmental licenses, authorizations, consents or approvals would not have a Material Adverse Effect. The Acquiror Company is duly qualified, licensed or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned, held or operated makes such qualification, licensing or domestication necessary, except where the failure to be so duly qualified, licensed or domesticated and in good standing would not have a Material Adverse Effect.

5.2

Organizational Documents . True, correct and complete copies of the Organizational Documents of the Acquiror Company have been delivered to the Company prior to the execution of this Agreement, and no action has been taken to amend or repeal such Organizational Documents. The Acquiror Company is not in violation or breach of any of the provisions of its Organizational Documents.



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5.3

Authorization . The Acquiror Company has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to enter into this Agreement and each of the Transaction Documents to which the Acquiror Company is a party, to consummate the transactions contemplated by this Agreement and each of the Transaction Documents to which the Acquiror Company is a party and to perform its obligations under this Agreement and each of the Transaction Documents to which the Acquiror Company is a party. The execution, delivery and performance by the Acquiror Company of this Agreement and each of the Transaction Documents to which the Acquiror Company is a party have been duly authorized by all necessary corporate action and do not require from the Acquiror Company Board or the stockholders of the Acquiror Company any consent or approval that has not been validly and lawfully obtained. The execution, delivery and performance by the Acquiror Company of this Agreement and each of the Transaction Documents to which the Acquiror Company is a party requires no authorization, consent, approval, license, exemption of or filing or registration with any Governmental Authority or other Person, other than filings required by the Commission for transactions of the type contemplated by this Agreement.

5.4

No Violation .  None of the execution, delivery or performance by the Acquiror Company of this Agreement or any Transaction Document to which the Acquiror Company is a party, nor the consummation by the Acquiror Company of the transactions contemplated hereby will (a) violate any provision of its Organizational Documents, (b) violate or conflict with, or constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the creation of imposition of any material Lien under, any material agreement or instrument to which the Acquiror Company is a party or by which the Acquiror Company is or will be bound or subject, or violate any laws, (c) contravene, conflict with, or result in a violation of, any Law or Order to which the Acquiror Company, or any of the properties or assets owned or used by the Acquiror Company, may be subject; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any licenses, permits, authorizations, approvals, franchises or other rights held by the Acquiror Company or that otherwise relate to the business of, or any of the properties or assets owned or used by, the Acquiror Company, except, in the case of clause (b), (c), or (d), for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect.

5.5

Binding Obligations . Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto other than the Acquiror Company, this Agreement and each of the Transaction Documents to which the Acquiror Company is a party are duly authorized, executed and delivered by the Acquiror Company and constitutes the legal, valid and binding obligations of the Acquiror Company, enforceable against the Acquiror Company in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

5.6

Securities Laws . Assuming the accuracy of the representations and warranties of the Members contained in Section 3 and Exhibit D, and assuming further that no action has been taken by the Company or their representatives which would effect the availability of an exemption from registration under the Securities Act, the issuance of the Acquiror Company Shares pursuant to this Agreement is exempt from the registration and prospectus delivery requirements of the Securities Act. Further, Acquiror Company is an Accredited Investor.



15

 

5.7

Capitalization and Related Matters .

5.7.1   Capitalization . The authorized capital stock of the Acquiror Company consists of 900,000,000 shares of Common Stock having a par value of $.001 per share and 10,000,000 shares of preferred stock having a par value of $.001per share. Immediately prior to the Closing, approximately 224,500,000 shares of Common Stock will be outstanding and no shars of preferred stock will be outstanding. All issued and outstanding shares of Acquiror Company Common Stock are duly authorized, validly issued, fully paid and nonassessable, and have not been issued in violation of any preemptive or similar rights. At the Closing Date, the Acquiror Company will have sufficient authorized and unissued Acquiror Company Common Stock to consummate the transactions contemplated hereby.

5.7.2   No Redemption Requirements . Except as set forth in the SEC Documents, there are no outstanding contractual obligations (contingent or otherwise) of the Acquiror Company to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, the Acquiror Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

5.7.3   Duly Authorized . The issuance of the Acquiror Company Shares has been duly authorized and, upon issuance in accordance with the terms of this Agreement, the Acquiror Company Shares will have been validly issued and fully paid, and will be nonassessable, have the rights, preferences and privileges specified, will be free of preemptive rights and will be free and clear of all Liens and restrictions, other than Liens created by the Members and restrictions on transfer imposed by this Agreement and the Securities Act.

5.8

Compliance with Laws . Except as would not have a Material Adverse Effect, the business and operations of the Acquiror Company have been and are being conducted in accordance with all applicable Laws and Orders. The Acquiror Company has not received notice of any violation (or any Proceeding involving an allegation of any violation) of any applicable Law or Order by or affecting such Acquiror Company and, to the knowledge of the Acquiror Company, no Proceeding involving an allegation of violation of any applicable Law or Order is threatened or contemplated. The Acquiror Company is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of the Acquiror Company, any event or circumstance relating to the Acquiror Company, that materially and adversely affects in any way its business, properties, assets or prospects or that prohibits the Acquiror Company from entering into this Agreement or would prevent or make burdensome its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby.

5.9

Certain Proceedings . There is no pending Proceeding that has been commenced against the Acquiror Company and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement. To the knowledge of the Acquiror Company, no such Proceeding has been threatened.



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5.10

No Brokers or Finders . No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Acquiror Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and the Acquiror Company will indemnify and hold the Company harmless against any liability or expense arising out of, or in connection with, any such claim.

5.11

Absence of Undisclosed Liabilities . As of the date hereof, the Acquiror Company has no debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to the Acquiror Company) (an “Acquiror Company Liability”) except those show in the SEC Documents.

5.12

Changes . Except as set forth in the Transaction Documents, the Acquiror Company has not, since June 30, 2018:

5.12.1   Ordinary Course of Business . Conducted its business or entered into any transaction other than in the usual and ordinary course of business, except for the Transaction Documents;

5.12.2   Adverse Changes . Suffered or experienced any change in, or affecting, its condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects other than changes, events or conditions in the usual and ordinary course of its business, none of which would have a Material Adverse Effect;

5.12.3   Claims . Released, waived or cancelled any claims or rights relating to or affecting the Acquiror Company in excess of US $500,000 in the aggregate or instituted or settled any Proceeding involving in excess of US $500,000 in the aggregate, except in the ordinary course of business or in connection with the Transaction Documents;

5.12.4   Discharged Liabilities . Paid, discharged or satisfied any claim, obligation or liability in excess of US $500,000 in the aggregate, except for liabilities incurred prior to the date of this Agreement in the ordinary course of business or in connection with the Transaction Documents;

5.12.5   Indebtedness . Created, incurred, assumed or otherwise become liable for any Indebtedness in excess of US $500,000 in the aggregate, except in the ordinary course of business or in connection with the Transaction Documents;

5.12.6   Guarantees . Guaranteed or endorsed any obligation or net worth of any Person;

5.12.7   Accounting . Changed its method of accounting or the accounting principles or practices utilized in the preparation of its financial statements, other than as required by GAAP; or

5.12.8   Agreements . Except as set forth in the SEC Documents and the Transaction Documents, entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

5.13

Material Acquiror Company Contracts . The Acquiror Company has made available to the Company, prior to the date of this Agreement, true, correct and complete copies of each written Material Acquiror



17



Company Contract, including each amendment, supplement and modification thereto. Each Material Acquiror Company Contract is a valid and binding agreement of the Acquiror Company that is party thereto. Except as would not have a Material Adverse Effect, the Acquiror Company is not in breach or default of any Material Acquiror Company Contract to which it is a party and, to the knowledge of the Acquiror Company, no other party to any Material Acquiror Company Contract is in breach or default thereof. Except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally, and is in full force and effect.

5.14

Employees . No director, officer or employee of the Acquiror Company is a party to, or is otherwise bound by, any contract (including any confidentiality, noncompetition or proprietary rights agreement) with any other Person that in any way adversely affects or will materially affect (a) the performance of his or her duties as a director, officer or employee of the Acquiror Company or (b) the ability of the Acquiror Company to conduct its business.

5.15

Tax Returns and Audits .

5.15.1   Tax Returns . The Acquiror Company has filed all Tax Returns required to be filed by or on behalf of the Acquiror Company and have paid all Taxes of the Acquiror Company required to have been paid (whether or not reflected on any Tax Return). Except as set forth in the SEC Documents, (a) no Governmental Authority in any jurisdiction has made a claim, assertion or threat to the Acquiror Company that the Acquiror Company is or may be subject to taxation by such jurisdiction; (b) there are no Liens with respect to Taxes on the Acquiror Company’s property or assets other than Permitted Liens; and (c) there are no Tax rulings, requests for rulings, or closing agreements relating to the Acquiror Company for any period (or portion of a period) that would affect any period after the date hereof.

5.15.2   No Disputes . There is no pending audit, examination, investigation, dispute, proceeding or claim with respect to any Taxes of the Acquiror Company, nor is any such claim or dispute pending or contemplated. The Acquiror Company has delivered to the Company true, correct and complete copies of all Tax Returns, if any, examination reports and statements of deficiencies assessed or asserted against or agreed to by the Acquiror Company since their inception and any and all correspondence with respect to the foregoing.

5.15.3   Not a U.S. Real Property Holding Corporation . The Acquiror Company is not and has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code at any time during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

5.15.4   No Tax Allocation, Sharing . The Acquiror Company is not a party to any Tax allocation or sharing agreement. Other than with respect to the Tax Group of which the Acquiror Company is the common parent, the Acquiror Company (a) has been a member of a Tax Group filing a consolidated income Tax Return under Section 1501 of the Code (or any similar provision of state, local or foreign law), and (b) has any liability for Taxes for any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee or successor, by contract or otherwise.



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5.16

Material Assets . The financial statements of the Acquiror Company reflect the material properties and assets (real and personal) owned or leased by the Acquiror Company.

5.17

Litigation; Orders . Except for (i) the lawsuit filed by Robert Greeen, Troy Menlove and TRJ, LLC in the Third Judicial District Court against Jack Turner, Acquiror Company and Predictive Biotech, Inc. in July 2018 and (ii) the dispute between Acquiror Company and Mike Schramm, there is no Proceeding (whether federal, state, local or foreign) pending or, to the knowledge of the Acquiror Company, threatened against or affecting the Acquiror Company or the Acquiror Company’s properties, assets, business or employees. Except as disclosued above, to the knowledge of the Acquiror Company, there is no fact that might result in or form the basis for any such Proceeding. The Acquiror Company is not subject to any Orders.

5.18

[Section Reserved]

5.19

Title to and Condition of Properties . The Acquiror Company owns (with good and marketable title in the case of real property) or holds under valid leases or other rights to use all real property, plants, machinery, equipment and other personal property necessary for the conduct of its business as presently conducted, free and clear of all Liens, except Permitted Liens.

5.20

Financial Statements . The Acquiror Company is not required to register any of its securities under Section 12 of the Exchange Act and is not required to file reports under Section 15(d) of the Exchange Act. The Acquiror Company provided the disclosures required by to maintain its listing in the over the counter market (the “SEC Documents”). As of their respective dates, the SEC Documents, when filed, did not contain any untrue statement of a material fact. The Company will file a Form 10 with the Securities and Exchange Commission.

5.21

Stock Option Plans; Employee Benefits . The Company has a stock option plan and other employee benefit plans in place.

5.22

Environmental and Safety Matters . Except as would not have a Material Adverse Effect:

5.22.1   The Acquiror Company has at all time been and is in compliance with all Environmental Laws applicable to the Acquiror Company.

5.22.2   There are no Proceedings pending or threatened against the Acquiror Company alleging the violation of any Environmental Law or Environmental Permit applicable to the Acquiror Company or alleging that the Acquiror Company is a potentially responsible party for any environmental site contamination.

5.23

Money Laundering Laws . The operations of the Acquiror Company is and has been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “Money Laundering Laws”) and no Proceeding involving the Acquiror Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Acquiror Company, threatened.



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5.24

Board Recommendation . The Acquiror Company Board, by unanimous written consent, has determined that this Agreement and the transactions contemplated by this Agreement are advisable and in the best interests of the Acquiror Company’s stockholders and has duly authorized this Agreement and the transactions contemplated by this Agreement.

SECTION VI

NO LOCK-UP

6.1

No Lock-Up . The Acquiror Company Common Stock will not be subject to lock-up arrangements pursuant to this Agreement. The Company will provide reasonably cooperation in the efforts of any Member to remove a Rule 144 restriction in connection with a sale of such Acquiror Company Common Stock.


SECTION VII

CONDITIONS PRECEDENT OF THE ACQUIROR COMPANY

The Acquiror Company’s obligation to acquire the Company Units and to take the other actions required to be taken by the Acquiror Company at the Closing Date is subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any of which may be waived by the Acquiror Company, in whole or in part):

7.1

Accuracy of Representations . The representations and warranties of the Members set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are not qualified as to materiality shall be true and correct in all material respects as of the date of this Agreement except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule. The representations and warranties of the Members set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are qualified as to materiality shall be true and correct in all respects as of the date of this Agreement, except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule.

7.2

Performance by the Company and Members .

7.2.1   All of the covenants and obligations that the Members are required to perform or to comply with pursuant to this Agreement (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects.

7.2.2   Each document required to be delivered by the Members pursuant to this Agreement must have been delivered.

7.3

No Force Majeure Event . There shall not have been any delay, error, failure or interruption in the conduct of the business of the Company, or any loss, injury, delay, damage, distress, or other casualty, due to force majeure including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.



20



7.4

Consents . All material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by the Company and/or the Members for the authorization, execution and delivery of this Agreement and the consummation by them of the transactions contemplated by this Agreement, shall have been obtained and made by the Company or the Members, as the case may be, except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on the Company or the Acquiror Company.

7.5

Documents . The Members must deliver to the Acquiror Company at the Closing (i) share certificates evidencing the number of Company Units held by each Member (as set forth on Exhibit B), along with executed share transfer forms transferring such Company Units to the Acquiror Company together with a certified copy of a board resolution of the Company approving the registration of the transfer of such Company Units, and (ii) each of the Transaction Documents to which the Company and/or the Members is a party, duly executed.

7.6

No Proceedings . There must not have been commenced or threatened against the Acquiror Company, the Company or any Member, or against any Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the Closing Date) (a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the transactions contemplated by this Agreement.


SECTION VIII

CONDITIONS PRECEDENT OF THE MEMBERS

The Members’ obligation to transfer the Company Units and to take the other actions required to be taken by the Members in advance of or at the Closing Date are subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any of which may be waived by the Members jointly, in whole or in part):

8.1

Accuracy of Representations . The representations and warranties of the Acquiror Company set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are not qualified as to materiality shall be true and correct in all material respects as of the date of this Agreement except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule. The representations and warranties of the Acquiror Company and Members set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are qualified as to materiality shall be true and correct in all respects as of the date of this Agreement, except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule.

8.2

Performance by the Acquiror Company .

8.2.1   All of the covenants and obligations that the Acquiror Company are required to perform or to comply with pursuant to this Agreement (considered collectively), and each of these covenants and obligations (considered individually), must have been performed and complied with in all respects, including, without limitation, the actions relating to the directors of the Acquiror Company.



21

 

8.2.2   Each document required to be delivered by the Acquiror Company pursuant to this Agreement must have been delivered.

8.3

No Force Majeure Event . There shall not have been any delay, error, failure or interruption in the conduct of the business of the Acquiror Company, or any loss, injury, delay, damage, distress, or other casualty, due to force majeure including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.

8.4

Consents . All material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by the Acquiror Company for the authorization, execution and delivery of this Agreement and the consummation by it of the transactions contemplated by this Agreement, shall have been obtained and made by the Acquiror Company, except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on the Company or the Acquiror Company.

8.5

Documents . The Acquiror Company must have caused the following documents to be delivered to the Members: (i) each of the Transaction Documents to which the Acquiror Company is a party, duly executed; and (ii) certificates representing the Acquiror Company Shares issued in the names of the Members identified in Exhibit B hereto.

8.6

No Proceedings . Since the date of this Agreement, there must not have been commenced or threatened against the Acquiror Company, the Company or any Member, or against any Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the date of this Agreement) (a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated hereby, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the transactions contemplated hereby.

SECTION IX

GENERAL PROVISIONS

9.1

Expenses . Except as otherwise expressly provided in this Agreement, each party shall be responsible for its expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants.

9.2

Public Announcements . The Acquiror Company will, if required, file a Current Report on Form 8-K disclosing the consummation of the transactions consummated on the Closing. Prior to the Closing Date, the Company and the Acquiror Company shall consult with each other in issuing any other press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby and neither party shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which case the disclosing party shall provide the other party with prior notice of such public statement, filing or other communication and shall incorporate into such public statement, filing or other communication the reasonable comments of the other party.



22

9.3

Confidentiality .

9.3.1   Subsequent to the date of this Agreement, the Acquiror Company, the Members and the Company will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other information obtained in confidence from another party in connection with this Agreement or the transactions contemplated by this Agreement, unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any required filing with the Commission, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.

9.3.2   In the event that any party is required to disclose any information of another party pursuant to clause (b) or (c) of Section 9.3.1, the party requested or required to make the disclosure (the “disclosing party”) shall provide the party that provided such information (the “providing party”) with prompt notice of any such requirement so that the providing party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 9.3. If, in the absence of a protective order or other remedy or the receipt of a waiver by the providing party, the disclosing party is nonetheless, in the opinion of counsel, legally compelled to disclose the information of the providing party, the disclosing party may, without liability hereunder, disclose only that portion of the providing party’s information which such counsel advises is legally required to be disclosed, provided that the disclosing party exercises its reasonable efforts to preserve the confidentiality of the providing party’s information, including, without limitation, by cooperating with the providing party to obtain an appropriate protective order or other relief assurance that confidential treatment will be accorded the providing party’s information.

9.3.3   If the transactions contemplated by this Agreement are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request.

9.3.4   Nothing contained herein will effect the continued effectiveness of the Confidentiality Agreement previously executed by Acquiror Company and the Company.

9.4

Notices . All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by telecopier (with written confirmation of receipt), or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers as a party may designate by written notice to the other parties):


23


 

If to Acquiror Company:

Predictive Technology Group, Inc.

Attn: CEO

2735 Parleys Way, Suite 205

Salt Lake City, Utah 84109

 
   

If to the Company:


2735 Parleys Way, Suite 205

Salt Lake City, Utah 84109




If to the a Member


To the Member at the address set forth in Exhibit A hereto.

with a copy to:


Kenneth Ward

PO Box 17654

Salt Lake City, Utah 84117



9.5

Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Utah with respect to contracts made and to be fully performed therein, without regard to the conflicts of laws principles thereof. The parties hereto hereby agree that any suit or proceeding arising under this Agreement, or in connection with the consummation of the transactions contemplated hereby, shall be brought solely in a federal or state court located in Utah. By its execution hereof, each party hereto consents and irrevocably submits to the in personam jurisdiction of the federal and state courts located in Utah and agree that any process in any suit or proceeding commenced in such courts under this Agreement may be served upon it personally or by certified or registered mail, return receipt requested, or by Federal Express or other courier service, with the same force and effect as if personally served upon the applicable party in Utah and in the city or county in which such other court is located. The parties hereto each waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense of lack of in personam jurisdiction with respect thereto.

9.6

Further Assurances . The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.

9.7

Waiver . The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power,


24

 

or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

9.8

Entire Agreement and Modification . This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party against whom the enforcement of such amendment is sought.

9.9

Assignments, Successors, and No Third-Party Rights . No party may assign any of its rights under this Agreement without the prior consent of the other parties. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

9.10

Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

9.11

Section Headings, Construction . The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to “Section” or “Sections” refer to the corresponding Section or Sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.

9.12

Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original agreement, but all of which taken together shall constitute one and the same instrument. Execution and delivery of this Agreement by facsimile transmission (including the delivery of documents in Adobe PDF format) shall constitute execution and delivery of this Agreement for all purposes, with the same force and effect as execution and delivery of an original manually signed copy hereof.

9.13

No Shop . Until the earlier of the Closing Date or the date of termination of this Agreement, neither the Company nor any Member shall (nor will they permit any of their respective Affiliates to), directly or indirectly, take any


25


of the following actions with any Person other than Acquiror Company and its designees: (i) solicit, encourage, initiate or participate in any negotiations or discussions with respect to, any offer or proposal to acquire (A) the  Company and/or any of its assets or (B) any interest in the Company whether by merger, purchase of assets, tender offer or otherwise, or effect any such transaction to the extent such transaction would be consummated prior to the earlier of the consummation of the transactions contemplated hereby or the termination of this Agreement, (ii) assist or cooperate with any Person to make any proposal to purchase any significant interest in the Company or any of the  Company’s assets, or (iii) enter into any agreement with any Person providing for the acquisition of the Company or the Company's assets (whether by way of merger, purchase of assets, tender offer or otherwise).  In the event the Company or any Member or any of their respective Affiliates shall receive any offer or proposal, directly or indirectly, of the type referred to in clauses (i) or (iii) above, Members shall immediately inform Acquiror Company as to any such offer or proposal and will cooperate with Acquiror Company by furnishing any information it may reasonably request.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





26




COUNTERPART SIGNATURE PAGE


IN WITNESS WHEREOF, the parties have executed and delivered this Securities Purchase Agreement as of the date first written above.

Acquiror Company:

 

Predictive Technology Group, Inc.

 

Signed: /s/ Bradley C. Robinson

Printed name: Bradley C. Robinson

Title: CEO

 

AGREED AND APPROVED:

 

Inception DX, LLC


Signed: /s/ Kenneth Ward

Printed name: Kenneth Ward

Title: Managing Member

 
   

 

27



COUNTERPART SIGNATURE PAGE FOR MEMBERS

IN WITNESS WHEREOF, the undersigned Member has executed and delivered this Securities Purchase Agreement as of the date first written above.

Member

 

Signed: /s/ Stephen William Jennings

Printed name: Stephen William Jennings

Title: Member

 


COUNTERPART SIGNATURE PAGE FOR MEMBERS

IN WITNESS WHEREOF, the undersigned Member has executed and delivered this Securities Purchase Agreement as of the date first written above.

Member



Signed: /s/ Kenneth Ward

Printed name: Kenneth Ward

Title: Member

 



28



EXHIBIT A

MEMBERS

Name and Address of Member

   

Dr. Kenneth Ward

PO Box 17654

Salt Lake City, Utah 84117


Inception DX Cayman LTD

89 Nexis Way

Cayman Islands



A-1


EXHIBIT B

COMPANY UNITS AND ACQUIROR COMPANY SHARES TO BE EXCHANGED

   

 Number of Company

 Number of Acquiror

   

Common Units to be

 Common Shares to be

 

 

 Delivered by Member

 Issued to Member

  Dr. Kenneth Ward
4,000,000
1,500,000
  Inception DX Cayman LTD
6,000,000
14,000,000

 

    

B-1


EXHIBIT C

Definition of “Accredited Investor”

The term “accredited investor” means:

(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association  or other institution as defined in section 3(a)(5)(A) of the Securities Act whether  acting  in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Act; any insurance company as defined in section 2(a)(13) of the Securities Act; any investment company registered under the Investment Company Act  of 1940 or business development company  as defined in section 2(a)(48) of that Act; any Small Business Investment Company  licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act  of 1958; any plan  established and maintained by a state , its political subdivisions, or any agency or instrumentality of a state  or its political subdivisions, for the benefit of its employees, if such plan  has total assets in excess of $5,000,000; any employee benefit plan  within the meaning of the Employee  Retirement Income Security   Act  of 1974 if the investment decision is made by a  plan  fiduciary, as defined in section 3(21) of such act , which is either a bank, savings and loan association , insurance company, or registered investment adviser, or if the employee benefit plan  has total assets in excess of $5,000,000 or, if a self-directed plan , with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company  as defined in section 202(a)(22) of the Investment Advisers Act  of 1940;

(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; 

(4) Any director , executive officer , or general partner of the issuer  of the securities being offered or sold, or any director , executive officer , or general partner of a general partner of that  issuer ;

(5) Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000.

(i) Except as provided in paragraph (a)(5)(ii)  of this exhibit, for purposes of calculating net worth under this paragraph (a)(5):

(A) The person's primary residence shall not be included as an asset;

(B) Indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount  of such indebtedness outstanding at the time of sale of securities exceeds the amount  outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount  of such excess shall be included as a liability); and

(C) Indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;



C-1


(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; 

(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 506(b)(2)(ii) of Regulation D as promulgated under the Securities Act; and 

(8) Any entity in which all of the equity owners are accredited investors.




C-2


EXHIBIT D

ACCREDITED INVESTOR REPRESENTATIONS

Each Member, severally and not jointly, further represents and warrants to the Acquiror Company as follows:

1.

Such Member qualifies as an Accredited Investor on the basis set forth on its signature page to this Agreement.

2.

Such Member has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such Member’s interests in connection with the transactions contemplated by this Agreement.

3.

Such Member has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Acquiror Company Shares.

4.

Such Member understands the various risks of an investment in the Acquiror Company Shares and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Acquiror Company Shares.

5.

Such Member has had access to the Acquiror Company’s publicly filed reports.

6.

Such Member has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Acquiror Company that such Member has requested and all such public information is sufficient for such Member to evaluate the risks of investing in the Acquiror Company Shares.

7.

Such Member has been afforded the opportunity to ask questions of and receive answers concerning the Acquiror Company and the terms and conditions of the issuance of the Acquiror Company Shares.

8.

Such Member is not relying on any representations and warranties concerning the Acquiror Company made by the Acquiror Company or any officer, employee or agent of the Acquiror Company, other than those contained in this Agreement.

9.

Such Member is acquiring the Acquiror Company Shares for such Member’s own account, for investment and not for distribution or resale to others.

10.

Such Member will not sell or otherwise transfer the Acquiror Company Shares, unless either (a) the transfer of such securities is registered under the Securities Act or (b) an exemption from registration of such securities is available.

11.

Such Member understands and acknowledges that the Acquiror Company is under no obligation to register the Acquiror Company Shares for sale under the Securities Act, except as set forth in the Registration Rights Agreement.



D-1




12.

Such Member consents to the placement of a legend on any certificate or other document evidencing the Acquiror Company Shares substantially in the form set forth in Section 3.2.4(a).

13.

Such Member represents that the address furnished by such Member on its signature page to this Agreement and in Exhibit A is such Member’s principal residence if he is an individual or its principal business address if it is a corporation or other entity.

14.

Such Member understands and acknowledges that the Acquiror Company Shares have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Acquiror Company that has been supplied to such Member and that any representation to the contrary is a criminal offense.

15.

Such Member acknowledges that the representations, warranties and agreements made by such Member herein shall survive the execution and delivery of this Agreement and the purchase of the Acquiror Company Shares.



D-2



EXHIBIT E

ASSETS OF THE COMPANY

1.

Laboratory Equipment

• Two Quant Studio Genotyping Systems & Accufills

• Three ION Proton Next Generation DNA Sequencers, Servers, & Chef Systems
• ABI 3730XL DNA Sequencer


2.

Gen DB records- birth, death, or marriage records for over 31,900,000 individuals who are ancestors or relatives of certain present day populations in the Intermountain West arranged in a MySQL database.


3.

400,000 Units of Juneau Biosciences LLC and Acquiror Company agreement that Juneau will use InceptionDX lab for running ARTGuide test


4.

Initial CLIA registration and CLIA lab protocols based on modifications of protocols current used by Taueret Laboratories LLC.  Examples include:


Examination

Clinical Indications for Testing

Examination

Long term storage of Oragene®/saliva samples

Examination

Cross Contamination Prevention

Examination

PCR Laboratory Practices

Examination

Assay Validation

Examination

Analytical Controls

Examination

Controls Master Document

Examination

PharmaRisk® Testing Using the QuantStudio™ 12K Flex OpenArray® System

Examination

PharmaRisk® Marker List

Facility & Resource Management

Gel Doc XR Maintenance

Facility & Resource Management

Pipette Maintenance

Facility & Resource Management

Centrifuge Log

Facility & Resource Management

Biomek FX Maintenance

Facility & Resource Management

Incubator Maintenance

Facility & Resource Management

Temperature Log

Facility & Resource Management

Water Purification System

Facility & Resource Management

Analytical Balance Calibration Form

Facility & Resource Management

NanoDrop Maintenance

Facility & Resource Management

LIMS User Manual

Facility & Resource Management

Reagent Receiving

Facility & Resource Management

ABI 7900HT Fast Real-Time PCR System Maintenance

Facility & Resource Management

Refrigerator - Freezer Maintenance

Facility & Resource Management

Water Usage and Water Quality

Facility & Resource Management

LIMS Changes Validation Form

Facility & Resource Management

Computer Systems Procedures



E-1


Facility & Resource Management

LIS Downtime Record

Facility & Resource Management

Hardware/Software Addition Record

Facility & Resource Management

Ductless HEPA Containment Hood Maintenance

Facility & Resource Management

Ductless HEPA Containment Hood Log

Facility & Resource Management

Incident, Error, and Accident Log

Facility & Resource Management

GeneChip Scanner 3000 Log

Facility & Resource Management

Fluidics Station Log

Facility & Resource Management

Thermal Cycler Performance Verification

Facility & Resource Management

Thermal Cycler Performance Verification Log

Facility & Resource Management

Affymetrix Hybridization Oven Temperature Log

Facility & Resource Management

Room Temperature Log

Facility & Resource Management

Laboratory Humidity Log

Facility & Resource Management

PharmaRisk Multi-Panel Requisition Form

Personnel

Laboratory Organizational Chart

Personnel

Laboratory Director/Assistant Laboratory Director Job Description

Personnel

Laboratory Director Delegated Responsibilities

Personnel

Technical Supervisor Job Description

Personnel

Laboratory Manager Job Description

Personnel

General Supervisor Job Description

Personnel

Laboratory Technologist/Senior Laboratory Technologist Job Description

Personnel

Laboratory Assistant Job Description

Personnel

Quality Assurance Supervisor Job Description

Personnel

Training & Competency

Personnel

Employee Signature Log

Personnel

Injury and Illness Report

Personnel

Hepatitis B Vaccine Declination

Personnel

Employee Quality/Safety Communication

Personnel

Employee Quality/Safety Communication Form

Personnel

Personnel SOP Checklist

Personnel

Continuing Education

Personnel

Visual Color Discrimination Testing

Personnel

Continuing Education Log

Personnel

Visual Color Discrimination Test Results

Personnel

Consent for Tuberculosis (TB) Screening

Personnel

Personnel

Personnel

Laboratory Aide Job Description

Personnel

Customer Service Manager Job Description

Personnel

Customer Service Representative Job Description

Personnel

Affiliated Genetics, Inc. Confidentiality Agreement

Personnel

Critical Task List

Personnel

Personnel Competency Assessment



E-2


Post-Examination

Long-Term Stability of DNA from Saliva Samples Stored in the Oragene® Self-Collection Kit

Post-Examination

Data Transfer to the Translational™ Software System for ADR Report Generation

Post-Examination

PharmaRisk® Analysis

Post-Examination

Releasing Laboratory Test Results to a Patient's Designee, or a Patient's Personal Representative

Post-Examination

Authorization to Release Protected Health Information

Post-Examination

Reporting Policy

Post-Examination

Positive Control (PC2639) Genotypes

Post-Examination

PharmaRisk® Data Review

Post-Examination

PharmaRisk® Reporting

Post-Examination

PharmaRisk® Expendable/Ignorable Panel Analytes Tables

Pre-Examination

Specimen Loss, Alteration or Contamination

Pre-Examination

Specimen Disposal Guidelines

Pre-Examination

Handling Correspondence

Pre-Examination

Manual Extraction of Oragene Saliva Specimens

Pre-Examination

Manual Extraction of Oragene Saliva Specimens - 500 μL Specimen Volume

Pre-Examination

DNA Extraction from 300 μL Whole Blood Using Gentra Puregene Reagents

Pre-Examination

DNA Extraction from 3 mL Whole Blood Using a Gentra Puregene Blood Kit

Pre-Examination

PharmaRisk® Sample Collection Instructions - Blood

Pre-Examination

PharmaRisk® Sample Collection Instructions - Cheek Swab

Pre-Examination

Pharma Risk™ Requisition Form -Cardiac

Pre-Examination

Pharma Risk™ Requisition Form -General

Pre-Examination

Pharma Risk™ Requisition Form - Pain

Pre-Examination

Pharma Risk™ Requisition Form - Geriatric

Pre-Examination

Pharma Risk™ Requisition Form - Psychiatric

Pre-Examination

DNA Purification from 2 Puritan Swabs Using a Gentra Purgene Kit

Pre-Examination

Sample Quantification Using the μQuant

Pre-Examination

DNA Quantification Using the NanoDrop 1000 Spectrophotometer

Pre-Examination

Specimen Receiving

Pre-Examination

Accessioning

Pre-Examination

Specimen Acceptance and Rejection Criteria

Pre-Examination

DNA Extraction from Two Buccal Swab Samples Using the Chemagen Magnetic Separation Module I

Public Health Preparedness & Reporting

Patient Safety Goals

Quality Assessment & Improvement

Proficiency Testing



E-3


Quality Assessment & Improvement

Laboratory Meeting Attendance Register

Quality Assessment & Improvement

Internal Proficiency Testing Summary

Quality Assessment & Improvement

Monitoring of Turnaround Time

Quality Assessment & Improvement

Systems Quality Monitoring

Quality Assessment & Improvement

Occurrence Report

Quality Assessment & Improvement

Quality Improvement Evaluation Form

Quality Assessment & Improvement

HIPAA Audit Form

Quality Assessment & Improvement

PharmaRisk® Laboratory Workflow

Quality Management

Accreditation Status

Quality Management

HIPAA Policy

Quality Management

Document Control

Quality Management

Evaluation of Contingency Plan in the Event of a Failure

Quality Management

Quality Management Plan

Quality Management

Quality Management Annual Review Form

Quality Management

LAP Laboratory Activity Menu

Safety

Workplace Safety and health Program

Safety

Safety Meeting Minutes

Safety

Employee Safety SuggestionForm, Workplace Hazards, Property Damage

Safety

Log of Work-Related Injuries and Illnesses

Safety

Investigation of Work-Related Injury and Illness

Safety

Safe Work Practices and Procedures

Safety

Laboratory Security Policy

Safety

Chemical Hygiene Plan

Safety

Chemical Spill Procedures

Safety

Biological Material Spill Procedure

Safety

Chemical Overexposure Report

Safety

Hazards Awareness

Safety

Fire Emergencies

Safety

Accidents and First Aid

Safety

Emergency Evacuation Route

Safety

Personnel Safety Acknowledgement Form

Safety

Emergency Contact List

Safety

Emergency Shower/Eyewash Maintenance Log

Safety

Emergency Preparedness Plan

Validation

Drug Sensitivity/Vascular Risk Panel Taqman Validation

Validation

Drug Sensitivity/Vascular Risk Panel Taqman Validation

Validation

Fragile X (FX) CGG repeat and Methylation Validation

Validation

Translational Software Transmission of Data and Reports Validation

Validation

PharmaRisk Adverse Drug Reaction Assay-OpenArray 128 Format and CNV for Duplication/Deletion of the CYP2D6 Gene Validation

Validation

Chemagen Extracted DNA Validation


E-4

Exhibit 10.6

INDEPENDENT SALES REPRESENTATION AND SUPPORT AGREEMENT



THIS SALES SUPPORT AGREEMENT (the “Agreement”) is entered into as of this 15th day of June, 2017, by and between PREDICTIVE TECHNOLOGY GROUP, INC . (“PREDICTIVE”) and FLAGSHIPSAILSRX, LLC , a Minnesota limited liability PREDICTIVE (“FLAGSHIP”).


Recitals


WHEREAS , PREDICTIVE is desirous of retaining FLAGSHIP, and FLAGSHIP is willing to be retained, on an independent contractor basis, to provide the services and work described in this Agreement, including both management and execution of product packaging, marketing and sales.


WHEREAS , PREDICTIVE and FLAGSHIP are desirous of merging PREDICTIVE and FLAGSHIP prior to the end of the Term of this Agreement


NOW, THEREFORE , in consideration of the mutual promises herein contained, it is agreed as follows:

1.

Definitions.  When used in this Agreement, the following terms have the following meanings:


“PREDICTIVE Services” means molecular diagnostics, accompanying therapeutics and human cell and tissue products that are offered by PREDICTIVE and its’ affiliates, Predictive Therapeutics and Predictive Biotech, to the Market Channel during the term of this Agreement.


“Competing Product” means a product or service that competes with or is a reasonable substitute for any PREDICTIVE Services.


Confidential Information ” means (a) any information of or regarding Grantor that is proprietary to Grantor or not generally known to the public, including, without limitation, records, specifications, developments, inventions, patent strategies, research activity, processes, methods, chemical formulations, designs, schematics, systems, clinical or medical algorithms, decision support systems, software, firmware, software architecture, information concerning vendors or suppliers, bills of material, equipment information, customer and prospective customer lists and related information, financial information, short-term and long-range plans, business policies, competitive strategies, sales information, pricing information, gross margin information, operating expense information, personnel information, information relating to clinical staffing and clinical staffing ratios, contract terms (including contract renewal dates), sales and marketing strategies and related information, and information relating to systems, equipment, products and services sold, leased or otherwise provided or furnished by Grantor, all of which are and will be the property of Grantor, solely and exclusively, absolutely and forever, and (b) with respect to PREDICTIVE as a Grantor, any information (i) of or regarding any Customer that is not generally known to the public, including, without limitation, records, specifications, developments, research activity, processes, methods, systems, information concerning vendors or suppliers, financial information, short-term and long-range plans, business policies, competitive strategies, sales information, and personnel information, and (ii) any information regarding any person (or group of persons) who is (are) a patient(s) of PREDICTIVE any Customer or to whom PREDICTIVE or any Customer provides equipment, products or services, including, without limitation, the identity(ies) of such person(s).


1




“Customer” means anyone who, at any time that this Agreement is in effect, (i) is (was) a customer or account of PREDICTIVE, or (ii) is (was) the subject of any marketing or solicitation effort by or on behalf of PREDICTIVE (including, without limitation, marketing or solicitation efforts by FLAGSHIP as part of the Services), or (iii) contacted PREDICTIVE or FLAGSHIP to inquire about any PREDICTIVE Services.


“Distributor” means anyone who, at any time that this Agreement is in effect, (i) is (was) a customer or account of PREDICTIVE, or (ii) is (was) the subject of any marketing or solicitation effort by or on behalf of PREDICTIVE (including, without limitation, marketing or solicitation efforts by FLAGSHIP as part of the Services), or (iii) contacted PREDICTIVE or FLAGSHIP to inquire about any PREDICTIVE Services.


Effective Date ” shall mean June 15th, 2017.


Grantee ” means either PREDICTIVE or FLAGSHIP as a recipient of Confidential Information from the other.


Grantor ” means either PREDICTIVE or FLAGSHIP as a provider of Confidential Information to the other.


“Market Channel” means health insurers, health care plans, physicians, distributors and other health care entities or providers in the Territory.


“Person” means individuals as well as entities, associations and organizations.


“Personnel” means employees of FLAGSHIP who are engaged in any manner in the performance of Services.


Project ” means the various Services to be performed by FLAGSHIP under this Agreement for PREDICTIVE as described on Exhibit A attached hereto and incorporated herein and the licensed use of the Licensed Intellectual property, all related to the distribution and expansion of PREDICTIVE’s marketing platform.


Rates and Fees ” means the compensation to be paid to FLAGSHIP for the Services as set forth on Exhibit B attached hereto and incorporated herein.


Services ” means the independent sales representation and related services that are as described on Exhibit A .


“Territory” means the United States of America.


“Trade Area” means (a) the Territory, and (b) any country outside of the Trade Area in which PREDICTIVE conducts business or actively prepares to conduct business at any time that this Agreement is in effect.


2.

Engagement .


A.

Services .  FLAGSHIP agrees to provide the Services for PREDICTIVE and its affiliates.  FLAGSHIP shall faithfully perform all Services hereunder in a professional manner that does not reflect adversely on PREDICTIVE and in accordance with all applicable laws.  In the performance of Services, FLAGSHIP will follow the reasonable instructions of PREDICTIVE with respect to PREDICTIVE’s interests and needs.


3.

Staffing and Personnel .



2




FLAGSHIP shall provide all Personnel necessary for the proper and effective performance of the Services. FLAGSHIP agrees that, to the extent their presence is reasonably required (and except for emergencies or other situations beyond their reasonable control), all Personnel shall attend all sales events that are scheduled and one of them along with the designated account executives shall attend weekly or biweekly meetings (as specified by PREDICTIVE) reporting on progress in the provision of the Services and execution of the plan for the Project.


All Personnel shall have experience in the sales of health care services and shall be competent and with the skills and abilities to provide the Services at a proficient level.  All Personnel shall have all licenses, permits and authorizations to perform the Services.   No Personnel shall be excluded or suspended from participation in any state or federally funded health care program (including the Medicare and Medicaid Programs) and no Personnel shall have been convicted of a crime that substantially relates, in the reasonable judgment of PREDICTIVE, to the Services to be performed hereunder (including the reputation of PREDICTIVE in the marketplace and its interest in obtaining sales).


All Personnel shall be subject to the initial and ongoing approval of PREDICTIVE (which approval shall not be unreasonably withheld).  Without limiting the forgoing, FLAGSHIP will not use any person as Personnel unless such person has been interviewed by PREDICTIVE and approved by PREDICTIVE(which approval shall not be unreasonably withheld).  The entire FLAGSHIP team shall devote such of their time as shall be necessary to assure the satisfactory performance, in the reasonable judgment of PREDICTIVE, of the Services.    If PREDICTIVE wishes to withdraw its approval of any Personnel hereunder, PREDICTIVE shall first discuss with FLAGSHIP the reason for its withdrawal of approval before its approval is withdrawn.  Upon such withdrawal, FLAGSHIP shall not utilize such disapproved Personnel in work under this Agreement.


FLAGSHIP shall also exercise commercially reasonable efforts to maintain the continuity of the Personnel with respect to the Project.  FLAGSHIP shall only remove Personnel if such removal is approved by PREDICTIVE (which approval shall not be unreasonably withheld).  Nothing contained herein shall be deemed to prohibit or affect FLAGSHIP’s right to terminate any employee of FLAGSHIP or hold FLAGSHIP responsible for employees who terminate their employment with FLAGSHIP (but it does affect the assignment of FLAGSHIP employees to the provision of Services for PREDICTIVE).


At all times during the term of this Agreement, FLAGSHIP shall have no fewer than three (3) full-time persons (as the term “full time” is commonly used and understood) serving as Personnel and actively engaged in the direct selling activities, that are a part of the Services, with each of such persons dedicating no less than one hundred percent (100%) of his or her working time exclusively to such activities. At all times during the term of this Agreement, FLAGSHIP shall have no fewer than one (1) chief sales officer Personnel and actively engaged in the management and direction of  product packaging, market positioning, market messaging, channel strategy and direct selling activities, that are a part of the Services, with such person dedicating no less than ninety percent (90%) of his or her working time exclusively to such activities. At all times during the term of this Agreement, FLAGSHIP shall have no fewer than one (1) chief marketing officer Personnel and actively engaged in the management and direction of  product packaging, market positioning, market messaging, channel strategy and direct selling activities, that are a part of the Services, with such person dedicating no less than seventy-five percent (75%) of his or her working time exclusively to such activities, reporting to PREDICTIVE personnel as determined by PREDICTIVE.



3




PREDICTIVE acknowledges and agrees that the success of the Project is dependent upon the mutual cooperation of FLAGSHIP and PREDICTIVE.  PREDICTIVE acknowledges and agrees that it shall reasonably cooperate with FLAGSHIP as reasonably requested to establish goals and objectives, set priorities, facilitate communications, provide notice of concerns, provide appropriate information as may be requested from time to time by FLAGSHIP and provide access to such PREDICTIVE staff as requested by FLAGSHIP.  FLAGSHIP acknowledges that at times PREDICTIVE and its employees may not be available.  FLAGSHIP will use reasonable efforts to give PREDICTIVE reasonable advance notice of resource needs from PREDICTIVE and to be flexible in scheduling so as to accommodate PREDICTIVE and its needed personnel.


4.

Daily, Weekly, Bi-Weekly, Planning Meetings and Reports .

  

At the daily, weekly or biweekly meetings described herein, FLAGSHIP shall  converge with PREDICTIVE to discuss the Services to be provided, FLAGSHIP’s sales plan, the particular health plans, payers, physicians or other entities that FLAGSHIP plans to solicit for sales, and other matters reasonably requested by PREDICTIVE.  FLAGSHIP shall, on a bi-weekly basis, provide to PREDICTIVE a list of health plans, payers, physicians and other entities not previously identified to PREDICTIVE that have been solicited by FLAGSHIP during such bi-weekly period.

 

In addition to daily, weekly or biweekly meetings, FLAGSHIP shall keep PREDICTIVE informed, at least monthly, of the work it has performed and progress made.

 

  

5.

FLAGSHIP Warranties, Representations and Covenants .


A.

FLAGSHIP warrants and represents to and covenants with PREDICTIVE that:


i.

all Services to be provided under this Agreement shall be performed in a professional, competent and timely manner;


ii.

it shall at all times observe and comply with all rules, laws and regulations now existing or hereafter promulgated that are applicable to the providing of Services hereunder and its staff providing services to PREDICTIVE under this Agreement shall maintain in good standing all licenses or permits required by applicable law to perform the Services;


iii.

it shall perform Services in a manner believed to be in the best interests of PREDICTIVE and shall refrain at all times and require all of its personnel to refrain at all times from making any disparaging or false statements about PREDICTIVE or any of its affiliates; and


iv.

Without limitation, any written or web marketing or materials that FLAGSHIP intends to use hereunder, shall be approved in advance by PREDICTIVE.


6.

Rates, Fees and Commissions .


A.

As compensation for the Services, PREDICTIVE shall pay FLAGSHIP the Rates, Fees and Commissions set forth on Exhibits B and Exhibit C hereto.  The total amounts payable to FLAGSHIP under this Agreement shall in no event exceed the amounts set forth on Exhibit B and Exhibit C unless there is an agreement to the contrary signed in advance by PREDICTIVE and FLAGSHIP.  The Rates and Fees are FLAGSHIP’s entire compensation, which may include, in addition to rates fees and commission, warrants to purchase common stock outlined in Exhibit B , for the Services and include payment for all work and activities to be provided by FLAGSHIP as a part of the Services, including, without limitation:  




4


 

Management .  Recruit and train sales force.  Provide education, sales planning, strategy and team sales.  Set direction, assist with the sales process, and attend meetings with PREDICTIVE when appropriate with third parties.


Account Management.  Manage and oversee various aspects of the Project as needed, conduct marketing processes and proposals and interact and collaborate with all internal PREDICTIVE staff.


Account Executives.  Direct selling of PREDICTIVE Services in the Market Channel, growing PREDICTIVE’s market share in the Market Channel, reviewing accounts, servicing accounts, in person meetings, provide input to strategic sales and marketing activities for PREDICTIVE in the Market Channel, report to PREDICTIVE using Salesforce.com, attend the meetings and events described in Section 3 above, and otherwise communicate and interface with PREDICTIVE as appropriate and/or as directed by PREDICTIVE.


Shared Services :  Provide guidance, strategic oversight and subject matter expertise to the account executive team.  Make or assist in facilitating key connections within the Market Channel.


Recruitment :  Costs associated with the talent search including, but not limited to, advertisement placement, miscellaneous travel, and expenses and/or testing, if applicable.


Infrastructure Set Up .  Fee allocation is $900 Salesforce.com.  


For the avoidance of doubt in that regard, all of the above described work and activities is/are included in the Services.     


B.

PREDICTIVE shall pay FLAGSHIP incentive compensation as defined in Exhibit C for “sales generated by FLAGSHIP” for members or patients accessing products through newly contracted customers as well as maintenance and growth of existing customers.

  

C.

PREDICTIVE shall reimburse FLAGSHIP for PREDICTIVE pre-approved reasonable and necessary out-of-pocket expenses incurred for the following categories:


i.

Events .  Events are activities planned in advance to attract potential groups or entities to purchase the services of PREDICTIVE.  An event must be approved by PREDICTIVE in writing and in advance and PREDICTIVE personnel shall be invited to the event.  If applicable, each approval request will specify a limit on the expenses to be paid to FLAGSHIP by PREDICTIVE.  


ii.

Travel and Entertainment .  Travel and entertainment reasonably necessary and designed to achieve sales of PREDICTIVE Services of PREDICTIVE shall be reimbursed by PREDICTIVE based on submitted invoices and PREDICTIVE’s regular expense reimbursement guidelines and procedures (i.e., the expense reimbursement guidelines and procedures employed by PREDICTIVE with regard to its employees. FLAGSHIP shall not be entitled to reimbursement for any entertainment expense that relates to an activity or is in an amount that is not permitted by PREDICTIVE with regard to its employees or that FLAGSHIP knows, or in the exercise of reasonable judgment should know, is not permitted by a prospective customer (or prospective customers generally) in the Market Channel.




5




iii.

Other Expenses .  Any other expenses incurred by FLAGSHIP that directly relate to services provided to PREDICTIVE must be approved in writing and in advance of the expenditure if they are to be submitted for reimbursement.

 

D.

Recurring monthly payments set forth on Exhibit B , (namely the Management Fee, the Account Management Fee, the Shared Services Fee, and the Account Executives Fee), if applicable, shall be paid in advance on the first day of each calendar month; provided, however, that Account Executive Fees will not be paid for an Account Executive until that Account Executive has been hired and begins the performance of Services.  The first payment for the Management Fee, the Account Management Fee and the Shared Services Fees shall be made in full (but pro-rated for a partial month) within ten (10) days of execution of this Agreement.  The first payment for the Account Executives Fee shall be made once such Personnel begin performance of the Services (on a pro-rated basis if other than the first day of the month).  Except as provided above, all payments for Management Fees, Account Management Fees, and Shared Services Fees shall be made in advance on the first day of a calendar month without an invoice; provided, however, an invoice is required for the initial monthly payment or any time the monthly payment changes.  All other payments shall be made based on submitted invoices.  All invoices (except for Commissions) shall contain the following:  a specification of the amount of the fee; the contract section involved and for expenses, the expenses incurred.  All invoices shall be payable by PREDICTIVE within thirty (30) days of receipt of such an invoice.  Payment for Commissions shall be paid in the manner set forth in Exhibit C.


7.

Term and Termination .


A.

Term .  The term of this Agreement shall commence upon execution of this Agreement and continue through February 28, 2019, unless earlier terminated in accordance with this Section 7, PREDICTIVE and FLAGSHIP complete a merger or acquisition, or unless the term is extended through the written agreement of the parties hereto.


B.

Termination .  The Agreement may be terminated as follows:


i.

by either party, in its sole discretion for any or no reason, by providing the other party with not less than one hundred eighty (180) days prior written notice; or


ii.

by FLAGSHIP, if PREDICTIVE fails to make a payment when due which failure continues for ten (10) days after written notice; or


iii.

if a party breaches any material obligation (other than a required payment by PREDICTIVE, which is handled in B(ii) above) and such breach continues for thirty (30) days after written notice to the breaching party specifying the breach; or


iv.

by either party if a merger or acquisition is not executed prior to the end of the Term of this agreement, unless the Term is extended per Section 7(A) above


C.

Final Invoice .  In the event of a termination under Section 7(B) above, PREDICTIVE shall pay FLAGSHIP all amounts due FLAGSHIP under this Agreement in respect of Services performed through the date of such termination.  PREDICTIVE will make payment of such amounts within thirty (30) days following receipt of proper invoice therefor from FLAGSHIP.



6




8.

Insurance .


FLAGSHIP shall obtain and maintain at all times:


A.

Worker’s Compensation insurance as required by and in compliance with all applicable laws.


B.

Errors and omissions coverage for its agents and employees from an insurer licensed to do business in Wisconsin in amounts of at least $1,000,000 per occurrence and $3,000,000 in annual aggregate, naming PREDICTIVE as an additional insured.


C.

Employer’s Liability insurance with coverage limits of not less than $1,000,000 per occurrence.


D.

Comprehensive or Commercial General Liability insurance which (i) names PREDICTIVE as an additional insured, (ii) provides coverage with limits of not less than $2,000,000 per occurrence and $3,000,000 in the aggregate, and (iii) provides coverage on an “occurrence” (as opposed to a “claims made” basis).


E.

Automobile Liability insurance which (i) names PREDICTIVE as an additional insured, and (ii) provides coverage with limits of not less than $1,000,000 combined single limit.


All policies of and for insurance required under this Section 8 will (i) be maintained with an insurance PREDICTIVE that is reasonably acceptable to PREDICTIVE, (ii) provide that such insurance will be primary and “first dollar” vis-à-vis any insurance coverage(s) maintained by PREDICTIVE, and (iii) provide that PREDICTIVE will receive no less than thirty (30) days advance written notice, by certified mail, return receipt requested, prior to any cancellation, termination, non-renewal or amendment thereof.  Prior to beginning the Services, and from time to time thereafter, FLAGSHIP will provide PREDICTIVE such certificates of insurance and other documents or instruments requested by PREDICTIVE to evidence the existence of the insurance required under this Section 8.


9.

Indemnification .


FLAGSHIP shall indemnify and hold PREDICTIVE harmless from and against any and all actions, claims, demands, causes of action, expenses (including reasonable attorneys’ fees) and/or liability or loss suffered or incurred by PREDICTIVE arising or resulting from, or relating to:


A.

the failure of FLAGSHIP to perform any of its obligations under this Agreement or any agreement between FLAGSHIP and PREDICTIVE, including, without limitation, the Business Associate Agreement attached hereto as Exhibit E and hereby made a part hereof; or


B.

any negligence or willful misconduct of FLAGSHIP, its employees or agents in the performance of Services or otherwise in connection with this Agreement or any other agreement between FLAGSHIP and PREDICTIVE.


The PREDICTIVE shall indemnify and hold FLAGSHIP harmless from and against any action, claim, demand, or cause of action asserted against FLAGSHIP by a third party seeking to impose liability upon FLAGSHIP for a failure of PREDICTIVE to perform any of its obligations under this Agreement or any failure of any PREDICTIVE Service to comply with any warranty made by PREDICTIVE, and all losses, damages, liabilities or expenses, including without limitation, reasonable legal fees and costs, suffered or incurred by FLAGSHIP as a result of such action, claim, demand, or cause of action.




7




 


In the event either party (the “Indemnitee”) seeks indemnification from the other (the “Indemnitor”) pursuant to this Section 9 with respect to a third party claim against the Indemnitee for which the Indemnitee is entitled to indemnification hereunder, then the Indemnitee shall promptly notify FLAGSHIP of such claim (but no delay in providing such notification shall limit the Indemnitee’s right to indemnification hereunder).  Provided that is does so in a competent, timely and diligent manner, with legal counsel reasonably acceptable to the Indemnitee, the Indemnitee shall allow the Indemnitor to assume and provide the Indemnitee’s defense of such claim.  Neither the Indemnitee nor the Indemnitor shall not settle any such claim without the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned, or delayed.


10.

Confidentiality .


A.

Grantee will keep all Confidential Information, whether written or oral, whether in tangible or intangible form, whether known to Grantee as of the date of this Agreement or later received, strictly confidential, and, except as is expressly permitted in writing by Grantor, will not disclose, make available or divulge any Confidential Information to any person.


B.

Grantee will use Confidential Information solely for the purposes of preparing and submitting proposals to Grantor and, if Grantor and Grantee enter into a written agreement for the provision of products or services to Grantor, performing under that agreement.  Grantee will not use any Confidential Information for any other purpose whatsoever.


C.

Grantee will store all Confidential Information that is in tangible or electronic form in a safe place, and will take the same action in protecting that Confidential Information from being acquired by or disclosed to unauthorized persons as it takes with respect to its own confidential or proprietary information, but not less than commercially reasonable action.


D.

At the request of Grantor, Grantee will: (a) return all Confidential Information that is in tangible form to Grantor; (b) permanently delete or destroy all Confidential Information that is in electronic form, and certify such deletion or destruction to Grantor in writing; and (c) either (i) provide Grantor all notes and memoranda created by Grantee relative to any Confidential Information, or (ii) destroy all such notes and memoranda and certify such destruction to Grantor in writing.


E.

Grantee will keep all discussions that it has with Grantor strictly confidential and will not disclose the existence, occurrence or substance of any of those discussions to any person, for any purpose whatsoever, without the prior written consent of Grantor.


F.

Grantee’s obligations under this Section 10 are perpetual and will survive, and continue following, any expiration or termination of this Agreement; provided, however, that Grantee’s obligations under this Section 10 with regard to any particular Confidential Information shall cease and expire if and when such Confidential Information becomes generally available to the public other than by reason of disclosure by Grantee.


G.

If Grantee is required by law, regulation or court order to disclose Confidential Information, and so doing would violate the terms of this Agreement, Grantee may make such disclosure without being in violation of this Agreement if (i) Grantee provides Grantor advance written notice of the making of such disclosure (unless Grantee is precluded from doing so by applicable law, regulation or court order) in order that Grantor may seek a protective order or other appropriate remedy from the proper authority, (ii) Grantee cooperates with Grantor, at the expense of Grantor and in any way reasonably requested by Grantor, in Grantor’s efforts to obtain such order or other remedy, and (iii) if Grantor is not successful in obtaining such order or other remedy, Grantee makes only the disclosure that is specifically required by such law, regulation or court order.


11.

Restrictive Covenants .


A.

FLAGSHIP shall only perform the Services with respect to the Market Channel, and neither FLAGSHIP nor any Personnel shall perform any Services with respect to any person that is outside of the Market Channel.  


8

B.

FLAGSHIP agrees, for itself and all Personnel, that during the term of this Agreement and for a period of two (2) years after the termination or expiration of this Agreement, neither FLAGSHIP nor any Personnel shall, directly or indirectly: (i) anywhere within the Trade Area, engage in, or own, manage, operate or control, or participate in the ownership, management, operation or control of, or be employed by, or act as a consultant or advisor to, or representative of, or be connected in any manner with, anyone that is engaged in, the development, design, manufacture, promotion, marketing, sale or lease or provision of any Competing Product;  (ii) solicit, or participate in the solicitation of, any Customer for the purpose of promoting, marketing or selling any Competing Product; (iii) sell, lease or otherwise provide or furnish any Competing Product to any Customer, even if that sale, lease or provision was not solicited by FLAGSHIP or any Personnel; (iv) induce or attempt to induce any Customer to discontinue any relationship that it may have with PREDICTIVE; or (v) employ, or offer employment to, anyone who is then employed with PREDICTIVE, or was employed with PREDICTIVE at any time during the then most recent 24 month period, or induce anyone employed with PREDICTIVE to discontinue his or her employment with PREDICTIVE.


C.

PREDICTIVE agrees that, during the term of this Agreement and for a period of two (2) years after the termination or expiration of this Agreement, it will not to employ, or offer employment to, anyone who is then employed by FLAGSHIP, or was employed with FLAGSHIP at any time during the most recent 24 month period, or induce anyone employed with FLAGSHIP to discontinue his or her relationship with FLAGSHIP, unless mutually agreed by both parties.


FLAGSHIP may from time to time submit proposals to PREDICTIVE with regard to opportunities to sell PREDICTIVE Services outside of the Market Channel.  PREDICTIVE may consider such proposals in its discretion and no such proposal shall be considered to have been accepted or approved by PREDICTIVE unless a definitive written agreement, or an amendment to this Agreement, is prepared and executed by PREDICTIVE (by PREDICTIVE’s President) and FLAGSHIP with regard to such proposal.  


12.

Independent Contractor/No Joint Venture/Names .


The relationship between the parties is not that of partners, employer/employee or joint venturers.  Rather, the parties are independent contractors.  In all actions and for all reporting the parties shall treat their relationship solely as that of independent contractors.  FLAGSHIP shall conduct its business and affairs (including its activities under this Agreement) in PREDICTIVE name and not in the name of FLAGSHIP.  With the exception of marketing or promotional materials furnished to FLAGSHIP by PREDICTIVE, FLAGSHIP shall not use PREDICTIVE’s name (or any of its trademarks, service marks, trade names, logos or other commercial symbols) in any marketing, promotional or other materials without first obtaining the written approval of PREDICTIVE.  FLAGSHIP is authorized to make representation or warranty to the Market Channel on behalf of PREDICTIVE or with regard to PREDICTIVE or any PREDICTIVE Services, and FLAGSHIP shall indemnify and hold PREDICTIVE harmless from and against any and all losses, costs or damages, however characterized or defined, including reasonable attorneys’ fees, incurred by, asserted against or imposed upon PREDICTIVE as a result of any such representation or warranty made by FLAGSHIP.  FLAGSHIP acknowledges that PREDICTIVE is the owner of all trademarks, service marks, trade names, logos and other commercial symbols that relate to PREDICTIVE Services, including, without limitation, those that appear in advertising or promotional materials relating to PREDICTIVE Services or on any materials or equipment used in the delivery of PREDICTIVE Services, and all rights and interests therein, and FLAGSHIP shall not have or assert any right, claim or interest therein or thereto.


9


13.

Exclusivity .  


PREDICTIVE has contracted FLAGSHIP to manage PREDICTIVE services outlined in Exhibit A . PREDICTIVE’s engagement of FLAGSHIP under this Agreement is exclusive per the services provided by FLAGSHIP to PREDICTIVE in Exhibit A . FLAGSHIP and PREDICTIVE may grant others the right to, promote, market and sell PREDICTIVE Services in the Market Channel during the term of this Agreement under Exhibit A .


14.

Books and Records .


FLAGSHIP shall maintain true, accurate and complete records and accounts of all transactions arising out of this Agreement.  All data maintained by FLAGSHIP concerning PREDICTIVE or the Services, or material maintained in, Salesforce.com, shall be the property of PREDICTIVE, constitute Confidential Information, and be delivered to PREDICTIVE upon request or expiration or termination of this Agreement.  PREDICTIVE shall also have access to all other records and documents held by FLAGSHIP relating to the Services as reasonably required by PREDICTIVE in connection with the operation of the Project upon request.  Upon the expiration or termination of this Agreement, FLAGSHIP shall provide copies of all such records and documents to PREDICTIVE.


15.

Assignment .


FLAGSHIP may not assign or transfer this Agreement, including by operation of law, without the prior written consent of PREDICTIVE.  It is understood that PREDICTIVE may assign this Agreement to an affiliate or in connection with the transfer or assignment of other assets of PREDICTIVE without FLAGSHIP’s approval.


16.

Force Majeure .


Neither party hereto shall be liable for any delay, unavailability, failure of delivery or the non-performance of this Agreement attributable to any acts of God, terrorism, war, riot, embargo, acts of civil and military authority, fires, floods or any other circumstances or cause beyond their reasonable control.  The failure to pay any money cannot be excused by force majeure.


17.

Injunctive Relief – Blue Pencil.


A.

Any breach of Sections 10 or 11 above by a party will cause the other party irreparable harm for which there is no adequate remedy at law, and each  party shall be entitled and shall receive from any court of competent jurisdiction, in addition to any other rights or remedies that may be available to it hereunder or under applicable law, an injunction enjoining any breach of Sections 10 or 11 above.  Neither party shall be required to post a bond (or provide any other manner of security) in connection with any such injunction.


B.

If any provision of Sections 10 or 11 above is found to be unenforceable by reason of its scope or duration, or the area or subject matter covered thereby, the court making such determination will reduce or modify the scope, duration, subject matter or area of that provision to the extent that allows the maximum scope, duration, subject matter or area permitted by applicable law.



10


18.

Governing Law; Venue; Waiver of Jury Trial .


This Agreement shall be governed and interpreted by the internal laws of the State of Utah (except for conflict of law provisions that would apply the law of a different jurisdiction).  Venue for any dispute hereunder shall be exclusively in the Nevada circuit court for Salt Lake City County, Utah.  Both parties waive trial by jury in any action hereunder.  


19.

Notices .


Any notice hereunder shall be in writing and shall be hand delivered, sent by recognized overnight delivery service or mailed U.S. mail, fees prepaid, certified mail, return receipt requested.

if to PREDICTIVE, to: PREDICTIVE TECHNOLOGY GROUP, INC, 2749 East Parleys Way, Suite 2100, Salt Lake City, UT 84109 Attn: President   

and, if to FLAGSHIP, to: FLAGSHIPSAILSRX, LLC, 23505 Smithtown Road, Suite 200,  Excelsior, MN 55331 Attn: Managing Partner.


Notice shall be deemed effective when hand delivered or delivered by courier or five (5) days after deposited in the U.S. mail, as described above.  Either party may change the address for notice, by a notice given in conformance with this Notice provision.


20.

Amendment .


This Agreement may only be amended by a written document signed by both parties hereto.


21.

Entire Agreement .


This Agreement and the exhibits hereto constitute the entire understanding between the parties with regard to the subject matter addressed herein and supersedes all prior agreements and understandings, oral or otherwise, between PREDICTIVE and FLAGSHIP with regard to such subject matter.


22.

Headings .


Headings or titles to any of the Sections are for identification purposes only and shall not be construed as a substantive part of any Section.


23.

Severability .


If any provision hereof is determined to be unenforceable, such provision shall be severed from this Agreement without affecting the effectiveness and enforceability of any other provision of this Agreement.


24.

Survival .  


The terms and provisions of this Agreement that by their sense and content are intended to survive the performance hereof by either or both parties (including, without limitation, Sections 10 and 11 hereof) shall so survive the completion of performance or termination of this Agreement.  



11


IN WITNESS WHEREOF , the parties have executed this Agreement as of the date first above written.


PREDICTIVE TECHNOLOGY GROUP, INC.



By: /s/ Bradley C. Robinson

          Bradley C. Robinson

Title: President and CEO



FLAGSHIPSAILSRX, LLC



By:/s/ Timothy Lacy

          Timothy Lacy

Title: Managing Partner



12


EXHIBIT A


SERVICES


1.          INDEPENDENT SALES REPRESENTATIVE .  FLAGSHIP shall act as an independent sales management and sales representative of PREDICTIVE with regard to PREDICTIVE Services in the Market Channel.


2.

FLAGSHIP DUTIES .  Without limiting any other provision of this Agreement, FLAGSHIP shall:


(a)

Use commercially reasonable efforts to market and sell PREDICTIVE Services in the Market Channel;


(b)

Create initial and subsequent sales and marketing plan, including a timeline, for PREDICTIVE’s marketable products and services


(c)       Create initial and subsequent sales and marketing budgets for PREDICTIVE’s marketable products and services


(d)       Staff agreed upon leadership, sales and marketing personnel in support of the agreed upon sales and marketing plan, and execute those plans


(e)       Develop marketing materials in collaboration with PREDICTIVE


(f)       Procure and customize targeted physician marketing information and operationalize customer relationship management system and reporting


(g)       Identify and manage prioritized presence at academic society and industry trade show events


(h)       Meet in person with each Customer and Distributor to whom FLAGSHIP has sold PREDICTIVE Services for the purpose of promoting additional PREDICTIVE Services to such Customer, addressing any problems or concerns that such Customer may have with regard to PREDICTIVE Services, and otherwise maintaining and improving PREDICTIVE’s relationship with such Customer;


(i)       Make reasonably effective use of any promotional or marketing aids and materials furnished to FLAGSHIP by PREDICTIVE with regard to PREDICTIVE Services;


(j)

From time to time, provide PREDICTIVE such information as PREDICTIVE may reasonably request with regard to FLAGSHIP’s activities under this Agreement;


(k)

From time to time, at the request of PREDICTIVE, assist PREDICTIVE in the investigation and handling of any complaints that relate to PREDICTIVE Services sold by FLAGSHIP;


(l)

Via Salesforce.com or other reporting systems, compile and maintain complete, detailed and accurate records of all sales calls or presentations made by FLAGSHIP with regard to PREDICTIVE Services, showing such information as PREDICTIVE may reasonably prescribe, and make such records available to PREDICTIVE at its request for inspection and/or copying;




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(m)

For each Customer and Distributor sale of PREDICTIVE Services made by FLAGSHIP, complete and present to PREDICTIVE, for consideration by PREDICTIVE, a Services Agreement or Order Forms in such form as is then in use by PREDICTIVE;


(n)

Conduct its business and affairs in a manner that preserves and enhances the reputation and goodwill of PREDICTIVE;


(o)

Abide by and adhere to any and all reasonable policies of PREDICTIVE which are communicated to FLAGSHIP in writing; and


(p)

Comply with all reasonable requests or instructions received from PREDICTIVE from time to time with regard to the marketing or sale of PREDICTIVE Services or the conduct of its affairs under this Agreement.


3.          PREDICTIVE DUTIES .


(a)       Provide marketable products and services initially under PREDICTIVE’s Biotech division and subsequently under PREDICTIVE’s Therapeutic division.

      

(b)       Provide ongoing product design and packaging for PREDICTIVE’s product and services


(c)       Collaborate with FLAGSHIP to develop and enhance product design, product packaging, market positioning, channel support and sales execution


(d)       Provide FLAGSHIP with exclusive distribution rights to PREDICTIVE’s owned or licensed products and services, including current and future Distributors, excluding current Customers or named accounts


(e)       Provide one (1) board seat on PREDICTIVE’s Board of Directors, subject to regulatory governance and guidance


(f)       Provide on officer level position or designation to support performance of Services listed herein


4.

SERVICES AGREEMENTS .  The content of all agreements under which PREDICTIVE Services are provided (“Services Agreements”) shall be determined by PREDICTIVE in its sole and absolute discretion.  All Services Agreements shall be executed by PREDICTIVE, and no Services Agreement shall be executed by FLAGSHIP.  PREDICTIVE hereby reserves the right to refuse to enter into any Services Agreement or otherwise reject any opportunity to provide Services presented to it by FLAGSHIP.  PREDICTIVE shall at all times have the right, in its sole and absolute discretion, to terminate any Services Agreement.  



14


EXHIBIT B


BASE COMPENSATION FOR FEES AND SERVICES

(Excludes Incentive Compensation Described In Exhibit C of Agreement)

(Fees And Services Listed Below Are For Budgeting And Tracking Purposes Only, FLAGSHIP Bears The Cost Of All Fees And Services In Exhibit B)



 

Management

Fees*

Account Management

Account

Executives*

Recruitment

Fees


Total*

2017

         

February

41,678

Included

36,250

Included

77,928

March

41,678

Included

36,250

Included

77,928

April

41,678

Included

36,250

Included

77,928

May

41,678

Included

36,250

Included

77,928

June

41,678

Included

50,750

Included

92,428

July

41,678

Included

50,750

Included

92,428

August

41,678

Included

58,000

Included

99,678

September

41,678

Included

58,000

Included

99,678

October

41,678

Included

58,000

Included

99,678

November

41,678

Included

58,000

Included

99,678

December

41,678

Included

58,000

Included

99,678

Total 2017

458,458

 

$536,000

 

$994,458

 

2018

         
           

January

41,678

Included

58,000

Included

99,678

February

41,678

Included

58,000

Included

99,678

March

41,678

Included

58,000

Included

99,678

April

41,678

Included

58,000

Included

99,678

May

41,678

Included

58,000

Included

99,678

June

41,678

Included

58,000

Included

99,678

July

41,678

Included

58,000

Included

99,678

August

41,678

Included

58,000

Included

99,678

September

41,678

Included

58,000

Included

99,678

October

41,678

Included

58,000

Included

99,678

November

41,678

Included

58,000

Included

99,678

December

41,678

Included

58,000

Included

99,678

Total 2018

$500,136

 

$696,000

 

$1,196,136

           

2019

         

January

41,678

Included

58,000

Included

99,678

February

41,678

Included

58,000

Included

99,678

Total 2019

$83,356

 

$116,000

 

$199,356

           

Total 2017-2018

$1,041,950

 

$1,348,000

 

$2,389,950




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Account Executives will also qualify for additional incentive compensation related to sales of PREDICTIVE Services, which shall be paid to FLAGSHIP in accordance with Exhibit C of this Agreement.


WARRANTS TO PURCHASE COMMON SHARES AWARDS


                                      FLAGSHIP CORPRATE TABLE

Milestone

Warrants with exercise price of $.50 per common share and five year expiration date*

Upon Contract Signature

 4,800,000 Warrants to Purchase Common Shares of Predictive

$833,333

Monthly Gross Revenue

4,800,000 Warrants to Purchase Common Shares of Predictive

$1,666,666

Monthly Gross Revenue

2,400,000 Warrants to Purchase Common Shares of Predictive

Accelerated Vesting of Milestone Related Common Shares Listed Above -

Acquisition, Significant Investment, Change of Control, Adverse Regulatory Guidance

12,000,000 Warrants to Purchase Common Shares of Predictive


*Warrants referred to in table above automatically accelerate should PREDICTIVE products or services be materially limited by adverse regulatory guidance, a change of control, FLAGSHIP acquisition by PREDICTIVE or significant strategic partner investment requiring accelerated product

product, marketing and sales execution.


*FLAGSHIP must enter into a subscription agreement with representations and warranties evidencing that the sale of the shares is exempt from applicable federal and state securities laws and which subscription agreement contains such other terms as are satisfactory to PRED in its sole discretion.


Warrant agreement will be substantially similar to Warrant Certificate below.  





16




WARRANT

THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK DELIVERABLE UPON EXERCISE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ THE ACT ”) AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 144.

No _________

 

       ________ Shares

WARRANT TO PURCHASE COMMON STOCK

OF

PREDICTIVE TECHNOLOGY GROUP, INC.

(Subject to Adjustment)

THIS CERTIFIES THAT, for value received, ___________ (“ Holder ”), is entitled, subject to the terms and conditions of this Warrant, at any time or from time to time after the date hereof (the “ Effective Date ”), to purchase up to _____________ shares of common stock, par value $0.001 per share (the “ Common Stock ”), from Predictive Technology Group, Inc., a corporation (the “ Company ”), at an exercise price per share equal to $0.50 (the “ Purchase Price ”).  This Warrant shall expire at 5:00 p.m. mountain time on _____________ (the “ Expiration Date ”).  Both the number of shares of Common Stock purchasable upon exercise of this Warrant (the “ Warrant Shares ”) and the Purchase Price are subject to adjustment and change as provided herein.  

CERTAIN DEFINITIONS .  As used in this Warrant the following terms shall have the following respective meanings:

1933 Act ” shall mean the Securities Act of 1933, as amended.

Common Stock ” shall mean the Common Stock of the Company and any other securities at any time receivable or issuable upon exercise of this Warrant.

Fair Market Value ” or “ FMV ” of a share of Common Stock as of a particular date shall mean:

If traded on a securities exchange, the Nasdaq National Market or the Nasdaq Small Cap Market, the Fair Market Value shall be deemed to be the average of the closing prices of the Common Stock of the Company on such exchange or market over the five (5) business days ending immediately prior to the applicable date of valuation;



17


 

If actively traded over-the-counter, the Fair Market Value shall be deemed to be the average of the closing bid prices over the 14-day period ending immediately prior to the applicable date of valuation; and

If there is no active public market, the Fair Market Value shall be the value as determined in good faith by the Company’s Board of Directors upon a review of relevant factors, including due consideration of the Registered Holders’ determination of the value of the Company.

SEC ” shall mean the Securities and Exchange Commission.

EXERCISE OF WARRANT

Payment .  Subject to compliance with the terms and conditions of this Warrant and applicable securities laws, this Warrant may be exercised, in whole or in part at any time or from time to time, on or before the Expiration Date by the delivery (including, without limitation, delivery by facsimile) of the form of Notice of Exercise attached hereto as Exhibit 1 (the “ Notice of Exercise ”), duly executed by the Holder, at the address of the Company as set forth herein, and as soon as practicable after such date,

surrendering this Warrant at the address of the Company, and either

providing payment, by check or by wire transfer, of an amount equal to the product obtained by multiplying the number of shares of Common Stock being purchased upon such exercise by the then effective Purchase Price (the “ Exercise Amount ”), or

electing, by written notice to the Company on the Notice of Exercise duly executed by the Holder, to receive a number of Warrant Shares, determined in accordance with the formula set forth below (the “ Election ”), in which event the Company shall issue to the Holder a number of Warrant Shares computed using the following formula:



18



X= Y(A-B)
A

Where X =

The number of Warrant Shares to be issued to the Holder upon an Election.

Y  =

The number of Warrant Shares in respect of which this Warrant is being exercised as adjusted to the date of the Election.

A  =

The FMV of one Warrant Share on the date that the relevant Notice of Exercise is received by the Company.

B  =

The Purchase Price (as adjusted to the date of the Election) in accordance with Section 4 hereof.

Common Stock Certificates; Fractional Shares .  As soon as practicable on or after the date of an exercise of this Warrant, the Company shall deliver to the person or persons entitled to receive the same a certificate or certificates for the number of whole shares of Common Stock issuable upon such exercise.  No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon an exercise of this Warrant.

Partial Exercise: Effective Date of Exercise .  In case of any partial exercise of this Warrant, the Holder and the Company shall cancel this Warrant upon surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares of Common Stock purchasable hereunder.  This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above.  The Company acknowledges that the person entitled to receive the shares of Common Stock issuable upon exercise of this Warrant shall be treated for all purposes as the holder of record of such shares as of the close of business on the date the Holder is deemed to have exercised this Warrant.

TAXES .  The Company shall pay all taxes and other governmental charges that may be imposed in respect of the delivery of shares upon exercise of this Warrant; provided , however , that the Company shall not be required to pay any tax or other charge imposed in connection with any transfer involved in the delivery of any certificate for shares of Common Stock in any name other than that of the Holder of this Warrant, and in such case the Company shall not be required to deliver any stock certificate until such tax or other charge has been paid, or it has been established to the Company’s reasonable satisfaction that no tax or other charge is due.

ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF COMMON STOCK .  The number of shares of Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities or property receivable upon exercise of this Warrant) and the Purchase Price are subject to adjustment upon occurrence of the following:

Adjustment for Stock Splits, Stock Subdivisions or Combinations of Shares of Common Stock .  The Purchase Price of this Warrant shall be proportionally decreased and the number of shares of Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities at the time deliverable upon exercise of this Warrant) shall be proportionally increased to reflect any stock split or subdivision of the Company’s Stock.  The Purchase Price of this Warrant shall be proportionally increased and the number of shares of Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities at the time deliverable upon exercise of this Warrant) shall be proportionally decreased to reflect any combination of the Company’s Common Stock.Common



19



Adjustment for Dividends or Distributions of Stock or Other Securities or Property .  In case the Company shall make or issue, or shall fix a record date for the determination of eligible holders entitled to receive, a dividend or other distribution with respect to the Common Stock (or any shares of stock or other securities at the time issuable upon exercise of the Warrant) payable in (a) securities of the Company or (b) assets (excluding cash dividends paid or payable solely out of retained earnings), then, in each such case, the Registered Holder of this Warrant on exercise hereof at any time after the consummation, effective date or record date of such dividend or other distribution, shall receive, in addition to the shares of Common Stock (or such other stock or securities) issuable on such exercise prior to such date, and without the payment of additional consideration therefor, the securities or such other assets of the Company to which such Holder would have been entitled upon such date if such Holder had exercised this Warrant immediately prior to such making, issuance or record date.

Reclassification, Conversion .  If the Company, by reclassification or conversion of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable if this Warrant had been exercised immediately prior to such reclassification or conversion or other change and the Purchase Price therefore shall be appropriately adjusted, all subject to further adjustment as provided in this Section 4.  

Adjustment for Capital Reorganization.  Merger or Consolidation .  In case of any capital reorganization of the capital stock of the Company (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), or any merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all the assets of the Company then, and in each such case, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Purchase Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 4.  The foregoing provisions of this Section 4.4 shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant.  If the per-share consideration payable to the Holder hereof for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company’s Board of Directors.  In all events, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.



20



5.

LOSS OR MUTILATION .  Upon receipt of evidence reasonably satisfactory the Company of the ownership of and the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to him, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will cause to be executed and delivered in lieu thereof a new Warrant of like tenor as the lost, stolen, destroyed or mutilated Warrant.

REPRESENTATION AND COVENANT .  The Company hereby covenants that all shares issuable upon exercise of this Warrant, when delivered upon such exercise, shall be validly issued, fully paid and nonassessable and free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except encumbrances or restrictions arising under federal or state securities laws.  Further, the Company hereby covenants to reserve such number of authorized but unissued shares of Common Stock as needed for issuance upon exercise of this Warrant.

TRANSFER .  This Warrant may not be transferred by the Holder without the prior written consent of the Company, which consent may not be unreasonably withheld, unless such transfer is to (i) any principal, shareholder, director or officer of any such entity, (ii) to any spouse, ancestor, descendant of any person referred to in clause (i), or (iii) any trust established for the benefit of any person referred to in clause (i) or clause (ii), or (iv) any person or entity controlling, controlled by or under common control with Holder.  In the event of a transfer to which the Company has previously consented in writing, this Warrant and all rights hereunder may be transferred by the Holder upon delivery of the form of Assignment attached hereto as Exhibit 2 (the “ Assignment ”), duly executed by the Holder, surrender of this Warrant properly endorsed at the address of the Company and payment of any necessary transfer tax or other governmental charge imposed upon such transfer.  Upon any partial transfer, the Holder and Company will cause to be issued and delivered to the Holder a new Warrant or Warrants with respect to the portion of this Warrant not so transferred.  Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that when this Warrant shall have been so endorsed, the person in possession of this Warrant may be treated by the Company, and all other persons dealing with this Warrant, as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby, any notice to the contrary notwithstanding; provided, however that until a transfer of this Warrant is duly registered on the books of the Company, the Company may treat the Holder hereof as the owner for all purposes.

RESTRICTIONS ON TRANSFER .  The Holder, by acceptance hereof, agrees that, absent an effective registration statement filed with the SEC under the 1933 Act, covering the disposition or sale of this Warrant or the Common Stock issued or issuable upon exercise hereof or the Common Stock issuable upon conversion thereof, as the case may be, and registration or qualification under applicable state securities laws, such Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants or Common Stock, as the case may be, unless either (i) the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that such registration is not required in connection with such disposition or (ii) the sale of such securities is made pursuant to SEC Rule 144.



21


COMPLIANCE WITH SECURITIES LAWS .  By acceptance of this Warrant, the Holder hereby represents, warrants and covenants that he/she/it is an “ accredited investor ” as that term is defined under Rule 501 of Regulation D, that any shares of stock purchased upon exercise of this Warrant or acquired upon conversion thereof shall be acquired for investment only and not with a view to, or for sale in connection with, any distribution thereof, that the Holder has had such opportunity as such Holder has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Holder to evaluate the merits and risks of its investment in the Company; that the Holder is able to bear the economic risk of holding such shares as may be acquired pursuant to the exercise of this Warrant for an indefinite period; that the Holder understands that the shares of stock acquired pursuant to the exercise of this Warrant or acquired upon conversion thereof will not be registered under the 1933 Act (unless otherwise required pursuant to exercise by the Holder of the registration rights, if any, previously granted to the Holder) and will be “ restricted securities ” within the meaning of Rule 144 under the 1933 Act and that the exemption from registration under Rule 144 will not be available for at least one year from the date of exercise of this Warrant, and even then will not be available unless a public market then exists for the stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and that all stock certificates representing shares of stock issued to the Holder upon exercise of this Warrant or upon conversion of such shares may have affixed thereto a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

NO RIGHTS OR LIABILITIES AS STOCKHOLDERS .  This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.  In the absence of affirmative action by such Holder to purchase Common Stock by exercise of this Warrant, no provisions of this Warrant, and no enumeration herein of the rights or privileges of the Holder hereof shall cause such Holder hereof to be a holder of the Company for any purpose. Nothing set forth in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of  this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 11, the Company shall provide the Holder with copies of the same notices and other information given to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders.



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NOTICES .  All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, return receipt requested, or by telecopier, or by email or otherwise delivered by hand or by messenger, addressed or telecopied to the person to whom such notice or communication is being given at its address set forth after its signature hereto.  In order to be effective, a copy of any notice or communication sent by telecopier or email must be sent by registered or certified mail, postage prepaid, return receipt requested, or delivered personally to the person to whom such notice or communication is being at its address set forth after its signature hereto.  If notice is provided by mail, notice shall be deemed to be given five (5) business days after proper deposit with the United States mail or nationally recognized overnight courier, or immediately upon personally delivery thereof, to person to whom such notice or communication is being at such address.  If notice is provided by telecopier, notice shall be deemed to be given upon confirmation by the telecopier machine of the receipt of such notice at the telecopier number provided above.  If notice is provided by email, notice shall be deemed to be given upon confirmation by the sender’s email program of the receipt of such notice at the email address provided after the signature of the person to whom such notice or communication is being.  The addresses set forth after the signatures hereto may be changed by written notice complying with the terms of this Section 12.

HEADINGS .  The headings in this Warrant are for purposes of convenience in reference only, and shall not be deemed to constitute a part hereof.

LAW GOVERNING .  This Warrant shall be construed and enforced in accordance with, and governed by, the laws of the internal laws of the State of Nevada, without giving effect to the principles of conflicts of law.

NOTICES OF RECORD DATE .  In case:

the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant), for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities or to receive any other right; or

of any consolidation or merger of the Company with or into another corporation, any capital reorganization of the Company, any reclassification of the capital stock of the Company, or any conveyance of all or substantially all of the assets of the Company to another corporation in which holders of the Company’s stock are to receive stock, securities or property of another corporation; or

of any voluntary or involuntary dissolution, liquidation or winding-up of the Company; or

of any redemption of any outstanding capital stock of the Company; then, and in each such case, the Company will mail or cause to be mailed to the Holder of this Warrant a notice specifying, as the case may be, (i)



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the date on which a record is to be taken for the purpose of such dividend, distribution or right and the amount and character of any such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation, winding-up, redemption or conversion is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities as at the time are receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up.  Such notice shall be delivered at least thirty (30) days prior to the date therein specified.

SEVERABILITY .  If any term, provision, covenant or restriction of this Warrant is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Warrant shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

COUNTERPARTS .  For the convenience of the parties, any number of counterparts of this Warrant may be executed by the parties hereto and each such executed counterpart shall be, and shall be deemed to be, an original instrument.

SATURDAYS, SUNDAYS AND HOLIDAYS .  If the Expiration Date falls on a Saturday, Sunday or legal holiday, the Expiration Date shall automatically be extended until 5:00 p.m. on the next business day.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer.


PREDICTIVE TECHNOLOGY GROUP, INC.



By: /s/ Bradley C. Robinson

 

Name:

Bradley C Robinson

Title:

President and CEO

Address for Notices:

2749 East Parleys Way, Suite 101

Salt Lake City, Utah 84109


SIGNATURE PAGE TO WARRANT




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EXHIBIT 1

NOTICE OF EXERCISE

(To be executed upon exercise of Warrant)

 

WARRANT NO. ______________

The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant Certificate for, and to purchase thereunder, securities of Predictive Technology Group, Inc., Inc., as provided for therein, and (check the applicable box):

¨

Tenders herewith payment of the exercise price in full in the form of cash or a certified or official bank check in same-day funds in the amount of $____________ for _________ such securities.

¨

Pursuant to the cashless exercise feature set forth in Section 2.1(c).

Please issue a certificate or certificates for such securities in the name of, and pay any cash for any fractional share to (please print name, address and social security number):

Name:

 

Address:

 

Signature:

 


Note:  The above signature should correspond exactly with the name on the first page of this Warrant Certificate or with the name of the assignee appearing in the assignment form below.

If said number of shares shall not be all the shares purchasable under the within Warrant Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder rounded up to the next higher whole number of shares.



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EXHIBIT 2

ASSIGNMENT

(To be executed only upon assignment of Warrant Certificate)

WARRANT NO.___________

For value received, hereby sells, assigns and transfers unto ________________________ the within Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ______________________________ attorney, to transfer said Warrant Certificate on the books of the within-named Company with respect to the number of Warrants set forth below, with full power of substitution in the premises:

Name(s) of Assignee(s)

 

Address

 

# of Warrants

         
         
         
         


And if said number of Warrants shall not be all the Warrants represented by the Warrant Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the Warrants registered by said Warrant Certificate.

Dated:

, 20___

Signature:

Notice:  The signature to the foregoing Assignment must correspond to the name as written upon the face of this security in every particular, without alteration or any change whatsoever; signature(s) must be guaranteed by an eligible guarantor institution (banks, stock brokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to applicable rules promulgated by the SEC.


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EXHIBIT C


COMMISSIONS


1.

DEFINITIONS .  As used in this Schedule, except as otherwise provided in this Schedule, the following terms have the following meanings.


a.

“Applicable Percentage” means, with regard to any Customer Commissionable Revenue, Distributor Gross Revenue Fees minus current Distributor commission level, the percentage figure set forth below with regard to the Commissionable Agreement under which those fees are received and the month of the term of that Commissionable Agreement to which those fees relate:


           CUSTOMER GROSS REVENUE FEES

Month

Applicable Percentage

1-12

30%

13 +

15%

              DISTRIBUTOR GROSS REVENUE FEES

Month

Applicable Percentage

1-12

30% Net of Distributor Commissions(Minimum of 5%)

13+

TBD


b.

“Commissions” means the commissions described in Section 2(a) of this Schedule.


c.

“Commission Period” means a calendar month.


d.

“Commissionable Agreement” means a Service Agreement that (i) is executed during the term of this Agreement, (ii) is between PREDICTIVE and a Customer or Distributor who is in the Market Channel, and (iii) results directly from the sales efforts or account management efforts of FLAGSHIP under this Agreement.


c.

“Commissionable Revenue” means gross sales revenue less (i) discounts, returns, allowances and credits (whenever taken or applied), (ii) sales, use and other taxes, and (iii) shipping and handling charges.  


d.

“Renewal” means any renewal or an extension of a Commissionable Agreement or the term of a Commissionable Agreement (or an earlier Renewal), whether that renewal or extension is accomplished by way of the exercise of an option, an automatic renewal provision, an amendment to that Commissionable Agreement (or Renewal), or the entry into a new Commissionable Agreement.


e.

“Service Agreement” means a Service and Supply Agreement that is in writing and in the form of one of PREDICTIVE’s standard forms or such other form as may be approved by PREDICTIVE’s President.


f.

PREDICTIVE will pay commissions on a monthly basis, with the Commissions relating to each Commission Period being paid on or before the last day of the month that follows the end of that Commission Period.


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g.

PREDICTIVE will pay Commissions only during the term of this Agreement, and will have no obligation to pay any Commissions following any expiration or termination of this Agreement, regardless of the cause of or reason for such expiration or termination.  Without limiting the forgoing, and for the avoidance of doubt in that regard, following any expiration or termination of this Agreement, regardless of the cause of or reason for such expiration or termination, FLAGSHIP will not be entitled to, and PREDICTIVE will have no obligation to pay, any Commissions with regard to any Commissionable Agreement that may be in effect or in the process of being negotiated at the time of such expiration or termination.



EXHIBIT D


HIPAA BUSINESS ASSOCIATE AGREEMENT


This HIPAA Business Associate Agreement (“Agreement”) is effective on March 1st, 2017 (“Effective Date”) by and between PREDICTIVE BIOTECH, INC. having its principal offices at 2749 East Parleys Way, Suite 101, Salt Lake City, UT 84109, on behalf of itself and its subsidiaries and affiliates (herein called “Covered Entity”), and FLAGSHIPSAILSRX, LLC, a Minnesota limited liability PREDICTIVE having its principal offices at 23505 Smithtown Road, Suite 200, Excelsior, MN 55331(herein called “Business Associate”).

RECITALS

WHEREAS , Business Associate performs functions, activities, or services for, or on behalf of, Covered Entity, and Business Associate may receive, have access to, or create Protected Health Information in connection with such functions, activities or services;

WHEREAS , Covered Entity is subject to the Health Insurance Portability and Accountability Act of 1996 and regulations promulgated thereunder (“HIPAA”), including, but not limited to, the Standards for Privacy of Individually Identifiable Health Information, 45 Code of Federal Regulations Parts 160 and 164 (“Privacy Regulations”) and the Security Standards for the Protection of Electronic Protected Health Information, 45 Code of Federal Regulations Parts 160 and 164 (“Security Regulations”), as amended by the Health Information Technology for Economic and Clinical Health Act, as incorporated in the American Recovery and Reinvestment Act of 2009, and its implementing regulations and guidance issued by the Secretary, all as amended from time to time (the “HITECH Act”);

WHEREAS , HIPAA requires Covered Entity to enter into a contract with Business Associate to provide for the protection of the privacy and security of Protected Health Information before Business Associate is permitted to receive, have access to or create Protected Health Information on behalf of Covered Entity.

NOW, THEREFORE , in consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:

Article 1
DEFINITIONS

When used in this Agreement, the following terms have the following meanings.  Capitalized terms used in this Agreement without definition shall have the meanings given to those terms in HIPAA, the Security Regulations, and the HITECH Act, as applicable, and as all may be amended, extended or replaced from time to time.

1.

Disclose ” and “ Disclosure ” mean, with respect to Protected Health Information, the release, transfer, provision of access to, or divulging in any other manner of Protected Health Information outside Business Associate’s internal operations or to persons other than its workforce.

2.

Electronic Protected Health Information” and “Electronic PHI ” means “electronic protected health information”, as that term is defined in HIPAA.


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3.

Protected Health Information” and “PHI ” mean “protected health information”, as that terms is defined in HIPAA, received by Business Associate from or on behalf of Covered Entity, or created by Business Associate, or is made accessible to Business Associate by Covered Entity.

4.

Secretary ” means the Secretary of the U.S. Department of Health and Human Services.

5.

Use ” and “ Uses ” mean with respect to Protected Health Information, the sharing, employment, application, utilization, examination or analysis of such Protected Health Information within Business Associate’s internal operations.

Article 2
OBLIGATIONS OF BUSINESS ASSOCIATE

1.

Permitted Uses and Disclosures of PHI .  Business Associate recognizes and agrees that it is obligated by law to comply with the applicable provisions of the HITECH Act and HIPAA.  Business Associate shall Use and Disclose PHI solely as necessary to perform functions, activities or services for, or on behalf of, Covered Entity, provided that such Use or Disclosure would not violate the Privacy Regulations if done by Covered Entity.  Business Associate shall not Use or Disclose PHI for any other purpose, except that if necessary, Business Associate may Use and Disclose PHI for the proper management and administration of Business Associate and to carry out its legal responsibilities; provided that with respect to any such Disclosure either:  (a) the Disclosure is Required by Law; or (b) Business Associate obtains a written agreement from the person to whom the PHI is to be Disclosed that such person will hold the PHI in confidence and will not use and further disclose such PHI except as Required by Law and for the purpose(s) for which it was Disclosed by Business Associate to such person, and that such person will notify Business Associate of any instances of which it is aware in which the confidentiality of the PHI has been breached.

2.

Adequate Safeguards for PHI .  Business Associate warrants that it shall implement and maintain appropriate safeguards to prevent the Use or Disclosure of PHI in any manner other than as permitted by this Agreement.

3.

Mitigation .  Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is known to Business Associate of a Use or Disclosure of PHI by Business Associate in violation of the requirements of this Agreement or of a Breach.

4.

Reporting Non-Permitted Use or Disclosure, Security Incident or Breach .  Business Associate shall report to Covered Entity each Use or Disclosure that is made by Business Associate, its employees, representatives, agents or subcontractors that is not specifically permitted by this Agreement.  In addition, Business Associate shall report to Covered Entity each Security Incident or Breach of which it becomes aware or discovers has occurred to Business Associate or its agents or subcontractors.  

i.

Reports of Non-Permitted Uses or Disclosures; Security Incidents .  The initial report of any non-permitted Use or Disclosure or Security Incident shall be made by telephone call to Covered Entity within ten (10) days from the time that Business Associate becomes aware of the non-permitted Use or Disclosure or Security Incident, followed by a written report to the Covered Entity no later than fifteen (15) days from the date that Business Associate becomes aware of the non-permitted Use or Disclosure or Security Incident.  

ii.

Reports of Unsuccessful Security Incidents .  For purposes of this Section 4(ii) , “ Unsuccessful Security Incident ” shall mean any Security Incidents that do not result in unauthorized access, use, disclosure, modification or destruction of EPHI or interference with system operations.  To avoid unnecessary burden on either party, Business Associate shall report to Covered Entity Unsuccessful Security Incidents of which it becomes aware only upon request of the Covered Entity.  The frequency, content and the format of the report of Unsuccessful Security Incidents shall be mutually agreed upon by the parties.  If the definition of “Security Incident” is amended under the Security Rule to remove the requirement for reporting “unsuccessful” attempts to use, disclose, modify or destroy EPHI, then this Section 4(ii) shall no longer apply as of the effective date of such amendment.



29


 

iii.

Reports of Breach .  The initial report of a Breach shall be made by telephone call to Covered Entity no later than ten (10) days from the time that Business Associate discovers a Breach, followed by a written report to Covered Entity no later than fifteen (15) business days from the date that Business Associate discovers such Breach.  To the extent the information is available to Business Associate, Business Associate’s written report to Covered Entity shall include the information required by 45 CFR §164.410, as may be amended from time to time.  Business Associate shall promptly supplement the written report with additional information regarding the Breach as it obtains such information.  

(1)

Business Associate shall document and retain records of its investigation of any Breach, including its reports to Covered Entity under this Section 2.4.2 (Reports of a Breach).

(2)

Business Associate shall cooperate with Covered Entity in meeting Covered Entity’s obligations under the HITECH Act with respect to such Breach.  The parties shall mutually agree upon the timing and method of providing notification of such Breach to the affected individual(s) or others as required by the HITECH Act (“Notification”).  

(3)

Business Associate shall reimburse Covered Entity for Covered Entity’s reasonable costs and expenses in providing Notification, including, but not limited to, any administrative costs associated with providing notice, printing and mailing costs, and costs of mitigating the harm (which may include the costs of obtaining credit monitoring services and identity theft insurance, among other costs) for affected individuals whose PHI has or may have been compromised as a result of the Breach.    

5.

Availability of Internal Practices, Books and Records to Government Agencies .  Business Associate agrees to make its internal practices, books and records relating to the Use and Disclosure of PHI available to the Secretary, in a time and manner designated by the Covered Entity or the Secretary, for purposes of determining Covered Entity’s compliance with the Privacy Regulations.  Business Associate shall immediately notify Covered Entity of any such requests made by the Secretary and, upon Covered Entity’s request, provide Covered Entity any copies of such documents Business Associate provided to the Secretary.

6.

Access to and Amendment of PHI .  Business Associate shall, to the extent Covered Entity determines that any PHI constitutes a Designated Record Set: (a) make the PHI specified by Covered Entity available to the individual(s) identified by Covered Entity as being entitled to access and copy that PHI; and (b) make any amendments to PHI that are requested by Covered Entity.  Business Associate shall provide such access and make such amendments within fifteen (15) days of receipt of Covered Entity’s request, including making PHI available in an electronic format to the individual(s) identified by Covered Entity as being entitled to obtain access to that PHI in an electronic format, as necessary for Covered Entity to comply with 45 CFR § 164.524, as amended by the HITECH Act.


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7.

Accounting of Disclosures.  

i.

Upon Covered Entity’s request, Business Associate shall provide to Covered Entity an accounting of each Disclosure of PHI made by Business Associate or its employees, agents, representatives or subcontractors as required by the Privacy Regulations.  Any accounting provided by Business Associate under this Section (Accounting of Disclosures) shall include:  (a) the date of the Disclosure; (b) the name, and address if known, of the entity or person who received the PHI; (c) a brief description of the PHI disclosed; and (d) a brief statement of the purpose of the Disclosure.  For each Disclosure that requires an accounting under this Section (Accounting of Disclosures), Business Associate shall track the information specified in (a) through (d), above, and shall securely maintain the information for six (6) years from the date of the Disclosure.  

ii.

If Business Associate is deemed to use or maintain an electronic health record on behalf of Covered Entity, then in addition to maintaining an accounting of Disclosures as set forth above, Business Associate shall maintain an accounting of any Disclosures made through the electronic health record for treatment, payment and health care operations, as applicable.  Such accounting shall comply with the requirements of the HITECH Act.  Upon request by Covered Entity, Business Associate shall provide such accounting to Covered Entity in the time and manner specified by the HITECH Act.  Alternatively, if Covered Entity responds to an individual’s request for an accounting of disclosures made through an electronic health record by providing the requesting individual with a list of all business associates acting on behalf of Covered Entity, then Business Associate shall provide such accounting directly to the requesting individual in the time and manner specified by the HITECH Act.   

8.

Use of Subcontractors and Agents .  Business Associate shall require each of its agents and subcontractors that receive PHI from Business Associate to execute a written agreement obligating the agent or subcontractor to comply with all the terms of this Agreement.  Business Associate shall impose appropriate sanctions against any such agents or subcontractors that violate any requirements, restrictions or conditions that apply to Business Associate through this Agreement.

9.

Security .  Business Associate shall maintain a comprehensive, written privacy and security program protecting the confidentiality, integrity and availability of PHI that Business Associate creates, receives, maintains or transmits on behalf of Covered Entity, which includes administrative, technical and physical safeguards appropriate to the size and complexity of Business Associate’s operations and the nature and scope of its activities, and as otherwise required by HIPAA.   Business Associate shall:

i.

Implement and maintain administrative safeguards as required by 45 CFR § 164.308, physical safeguards as required by 45 CFR § 164.310 and technical safeguards as required by 45 CFR § 164.312;

ii.

Implement and document reasonable and appropriate policies and procedures as required by 45 CFR § 164.316;

iii.

Comply with all requirements of the HITECH Act related to security and applicable as if Business Associate were a covered entity; and

iv.

Use its commercially reasonable efforts to implement and maintain technologies and methodologies that render PHI unusable, unreadable or indecipherable to unauthorized individuals as specified in the HITECH Act.  


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10.

Compliance with Privacy Rule Provisions .  Business Associate shall only Use and Disclose PHI in compliance with each applicable requirement of 45 CFR § 164.504(e).  Business Associate shall comply with all requirements of the HITECH Act related to privacy and applicable as if Business Associate were a covered entity.  Business Associate shall develop and implement policies, procedures and processes to put into practice all applicable requirements of the HITECH Act no later than the applicable effective dates set forth in the HITECH Act.

11.

Agreement to Restriction on Disclosure .  If Covered Entity is required to comply with a restriction on the disclosure of PHI pursuant to Section 13405 of the HITECH Act, then Covered Entity shall, to the extent needed to comply with such restriction, provide written notice to Business Associate of the name of the individual requesting the restriction and the PHI affected thereby.  Business Associate shall, upon receipt of such notification, not Disclose the identified PHI to any health plan for the purposes of carrying out payment or health care operations, except as otherwise Required by Law.

12.

Limited Use of PHI .  To the extent required by the HITECH Act, Business Associate shall limit its Use, Disclosure or request of PHI to a limited data set or, if needed, to the minimum necessary to accomplish the intended Use, Disclosure or request, respectively.  Effective on the date the Secretary issues guidance on what constitutes “minimum necessary” for purposes of HIPAA, Business Associate shall limit its Use, Disclosure or request of PHI to only the minimum necessary as set forth in such guidance.  

13.

Remuneration for PHI .  Business Associate agrees that it shall not, directly or indirectly, receive remuneration in exchange for any PHI of Covered Entity except as otherwise permitted by the HITECH Act.  

14.

Limitations on Use of PHI for Marketing Purposes .  Business Associate shall not Use or Disclose PHI for the purpose of making a communication about a product or service that encourages recipients of the communication to purchase or use the product or service.

15.

Insurance .  In addition to any insurance Business Associate is required to maintain under the terms of any underlying agreement(s) in which Covered Entity shares PHI with Business Associate, Business Associate agrees to procure and maintain errors and omissions insurance and other liability insurance in amounts as will be necessary to insure Business Associate against any and all claims arising out of its performance of its duties and obligations under this Agreement.  Business Associate will provide Covered Entity with evidence of such coverage upon Covered Entity’s request.

16.

No Offshore Work .  In performing the functions, activities or services for, or on behalf of, Covered Entity, Business Associate shall not, and shall not permit any of its subcontractors, to transmit or make available any PHI to any entity or individual outside the United States without the prior written consent of Covered Entity.  

Article 3
TERM AND TERMINATION

1.

Term and Termination .  The term of this Agreement shall be the term of the underlying agreement (or agreements if there are more than one) in which Covered Entity shares PHI with Business Associate or, if there is not such an agreement between the parties, as long as Business Associate continues to perform functions, activities, or services for, or on behalf of, Covered Entity that involve Covered Entity sharing PHI with Business Associate.  In addition to and notwithstanding any termination provisions set forth in the underlying agreement (or agreements if there are more than one) in which Covered Entity shares PHI with Business Associate, this Agreement and such underlying agreement(s) may be terminated, in whole or in part, as determined by Covered Entity:


32


i.

if Business Associate has breached a provision of this Agreement and Business Associate fails to cure such breach (to the extent a cure for such breach is possible) in thirty (30) days of receiving notice from Covered Entity of such breach; or

ii.

immediately upon written notice by Covered Entity to Business Associate, if Covered Entity reasonably determines, in its sole discretion, that Business Associate has breached a provision of this Agreement and cure is not possible (it is understood that the cure of a Use and/or Disclosure of PHI made in violation of this Agreement is not possible for purposes of this Agreement).

2.

Termination by Business Associate .  If Business Associate knows of a pattern of activity or practice of Covered Entity that constitutes a material breach or violation of Covered Entity’s obligations under this Agreement, then Business Associate shall immediately notify Covered Entity.  With respect to such breach or violation, Business Associate shall (a) take reasonable steps to cure such breach or end such violation, if possible; or (b) if such steps are either not possible or are unsuccessful, upon written notice to Covered Entity, terminate its relationship with Covered Entity; or (c) if such termination is not feasible, report the Covered Entity’s breach or violation to the Secretary.  Business Associate shall notify Covered Entity prior to reporting the Covered Entity’s breach or violation to the Secretary.

3.

Disposition of PHI Upon Termination or Expiration .  Upon termination or expiration of the underlying agreement (or upon termination or expiration of each underlying agreement if there are more than one) in which Covered Entity shares PHI with Business Associate or, if there is not such an agreement between the parties, when Business Associate ceases to perform functions, activities or services for, or on behalf of, Covered Entity that involved Covered Entity sharing PHI with Business Associate, Business Associate shall either return or destroy, at the parties’ mutual agreement, all PHI in the possession or control of Business Associate and its agents and subcontractors related to such agreement(s).  However, if the parties reasonably determine that neither return nor destruction of PHI is feasible, Business Associate may retain PHI provided that Business Associate:  (a) continues to comply with the provisions of this Agreement for as long as it retains PHI; and (b) further limits Uses and Disclosures of PHI to those purposes that make the return or destruction of PHI infeasible.

Article 4
MISCELLANEOUS

1.

Survival . Business Associate’s obligations under Article II and Sections 3.3 , 4.3 and 4.13 shall survive the termination or expiration of this Agreement.

2.

No Third Party Beneficiaries .  There are no third party beneficiaries to this Agreement.

3.

Ownership .  Covered Entity shall retain all ownership rights to the PHI that Business Associate receives, has access to, or creates, in order to perform functions, activities or services on behalf of Covered Entity and any information derived from such PHI.

4.

Amendment to Comply with Law .  The parties acknowledge that state and federal laws relating to electronic data security and privacy are rapidly evolving and that amendment of this Agreement may be required to provide for procedures to ensure compliance with such developments.  The parties specifically agree to take such action as is necessary to implement the standards and requirements of HIPAA, the HITECH Act, and other applicable laws relating to the security or privacy of PHI.  Upon Covered Entity’s request, Business Associate agrees to promptly enter into negotiations with Covered Entity concerning the terms of any amendment to this Agreement embodying written assurances consistent with the standards and requirements of HIPAA, the HITECH Act, or other applicable laws.  Covered Entity may terminate the Agreement upon thirty (30) days written notice in the event Business Associate does not enter into an amendment to the Agreement providing assurances regarding the safeguarding of PHI that Covered Entity, in its reasonable discretion, deems sufficient to satisfy the standards and requirements of HIPAA, the HITECH Act, or other applicable laws.  



33

 

5.

Relationship to Other Agreement Provisions .  In the event that a provision of this Agreement is contrary to a provision of an underlying agreement(s) in which Covered Entity shares PHI with Business Associate, the provision of this Agreement shall control.  Otherwise, this Agreement shall be construed under, and in accordance with, the terms of such underlying agreement(s) between Business Associate and Covered Entity.

6.

Modification of Agreement .  No alteration, amendment, or modification of the terms of this Agreement shall be valid or effective unless in writing and signed by Business Associate and Covered Entity.

7.

Non-Waiver .  A failure of any party to enforce at any time any term, provision or condition of this Agreement, or to exercise any right or option herein, shall in no way operate as a waiver thereof, nor shall any single or partial exercise preclude any other right or option herein; in no way whatsoever shall a waiver of any term, provision or condition of this Agreement be valid unless in writing, signed by the waiving party, and only to the extent set forth in such writing.

8.

Agreement Drafted By All Parties .  This Agreement is the result of arm’s length negotiations between the parties and shall be construed to have been drafted by all parties such that any ambiguities in this Agreement shall not be construed against either party.

9.

Severability .  If any provision of this Agreement is found to be invalid or unenforceable by any court, such provision shall be ineffective only to the extent that it is in contravention of applicable laws without invalidating the remaining provisions hereof.

10.

Section Headings .  The section headings contained herein are for convenience in reference and are not intended to define or limit the scope of any provision of this Agreement.

11. Counterparts; Facsimile Copy .  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and will become effective and binding upon the parties as of the Effective Date at such time as all the signatories hereto have signed a counterpart of this Agreement.  Facsimile copies shall be deemed to be as valid as the original.

12.

Notices .  Any notices required or permitted to be given hereunder by either party to the other shall be given in writing: (a) by personal delivery; (b) by electronic facsimile with confirmation sent by United States first class registered or certified mail, postage prepaid, return receipt requested; (c) by bonded courier or by a nationally recognized overnight delivery service; or (d) by United States first class registered or certified mail, postage prepaid, return receipt requested, in each case, addressed to the parties at the addresses set forth on the first page of this Agreement (or to such other addresses as the parties may request in writing by notice given pursuant to this Section (Notices)).  Notices shall be deemed received on the earliest of personal delivery, upon delivery by electronic facsimile with confirmation from the transmitting machine that the transmission was completed, twenty-four (24) hours following deposit with a bonded courier or overnight delivery service; or seventy-two (72) hours following deposit in the U.S. Mail as required herein.

13.

Applicable Law and Venue .  This Agreement shall be governed by and construed in accordance with the internal laws of the State of Utah (without regard to principles of conflicts of laws).  The parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated exclusively in the state or federal (if permitted by law and a party elects to file an action in federal court) courts located in Salt Lake City County, Utah.  This choice of venue is intended by the parties to be mandatory and not permissive in nature, and to preclude the possibility of litigation between the parties with respect to, or arising out of, this Agreement in any jurisdiction other than that specified in this Section (Applicable Law and Venue).  Each party waives any right it may have to assert the doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this Section (Applicable Law and Venue).  Each party agrees to waive a jury trial in any action hereunder.



34


14.

Interpretation .  Any ambiguity in this Agreement shall be resolved to permit Covered Entity to comply with HIPAA and the HITECH Act, as applicable.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date set forth above.


PREDICTIVE TECHNOLOGY GROUP, INC.:

FLAGSHIPSAILSRX, LLC:

   
   

By:/s/ Bradley C. Robinson


Print Name: Bradley C. Robinson


Title: President and CEO


Dated:

By:


Print Name:


Title:


Dated:





35

Exhibit 10.7

 

AMENDED AND RESTATED LICENSE AGREEMENT


THIS AMENDED AND RESTATED LICENSE AGREEMENT (the "Agreement") is effective as of August 1, 2016 (the "Effective Date") by and between Juneau Biosciences, LLC (hereinafter "LICENSOR"), a Utah corporation having its principal place of business at 2749 East Parleys Way, Suite 210, Salt Lake City, UT 84109, and Predictive Therapeutics, LLC (hereinafter "LICENSEE"), a Utah limited liability company having its principal place of business at 2749 Parleys Way, Suite 101, Salt Lake City, Utah 84109 (collectively, the "Parties").

 

WITNESSETH:

 

WHEREAS, LICENSOR is engaged in the development of genetic tests for the determination of the existence and the predisposition of endometriosis and related conditions, and treatments therefor;

 

WHEREAS, LICENSOR is the named assignee for several patent applications including nonprovisional US patent application SIN 12/120,322 to Kenneth Ward entitled "Method of Administering a Therapeutic", having a filing date of May 14, 2008 and having published as US 2008/0306034 (hereinafter the '322 Application);

 

WHEREAS, LICENSEE is engaged in the development and marketing of therapeutics;

 

WHEREAS, LICENSEE is owner of provisional US patent application SIN 61/825,587 to Bradley Robinson entitled "Therapeutic and Method of Use", having a filing date of May 21, 2013 (hereinafter the '587 Application); and

 

WHEREAS, LICENSOR desires to provide and LICENSEE desires to obtain certain rights under the 322 Application.

 

NOW, THEREFORE, the Parties hereby agree as follows:


ARTICLE I

Definitions


Section 1.1   Test - The term "Test" as used herein shall mean a test for the genetic determination of risk of existence of endometriosis or predisposition for endometriosis.

 

Section 1.2 Endometriosis Therapeutic - The term "Endometriosis Therapeutic" as used herein shall mean any therapeutic, the manufacture, use, sale, or offer of sale of which would, absent an agreement to the contrary, constitute an infringement of (i) the'587 Application or any nonprovisional, continuation, divisional, continuation in part, or foreign counterpart application claiming priority to the'587 Application,and any patent that may issue therefrom or (ii) any other patent(s) owned by LICENSEE which protect a therapeutic treatment for endometriosis (collectively, the "Therapeutic Patents").

 

Section 1.3 Companion Diagnostic Tests - The term "Companion Diagnostic Tests" as used herein shall mean any Test for the administration of a Therapeutic, the use, sale, or offer of sale of which would, but for this Agreement, constitute an infringement of the '322 Application or any continuation, divisional, continuation in part, or foreign counterpart application claiming priority to the '322 Application, and any patent that may issue therefrom (collectively, the "Test Patents").


1

 

 

ARTICLE II

License Grant

 

Section 2.1 Grant of License - LICENSOR hereby grants and agrees to grant to LICENSEE andits subsidiaries, during the term of this Agreement, an irrevocable, limited, exclusive, world-wide, royalty bearing license to use Companion Diagnostic Tests as the rationale for and as an on-label indication for Endometriosis Therapeutic as defined in Section 1.2.

 

Section 2.2 Manufacture of Companion Diagnostic Test - LICENSOR and LICENSOR's partners, contractors and assignees have the exclusive responsibility to manufacture, commercialize, and widely promote the Companion Diagnostic Tests.

 

Section 2.3 Transfer or Assignment - Nothing in this Agreement shall give LICENSEE the right to transfer or assign its rights to any third party, absent prior written permission of LICENSOR, which shall not be withheld unreasonably.

 

ARTICLE III

Compensation

 

Section 3. License Fee - In order to secure the rights to license the Test Patents, upon execution of this Agreement, LICENSEE shall pay LICENSOR a licensing fee of two hundred fifty thousand dollars ($250,000). Of that amount, one hundred thousand dollars ($100,000) is due on the Effective Date and one hundred fifty thousand dollars ($150,000) is due on or before the ninety (90) day anniversary of the Effective Date.

 

Section 3.2 Milestone Payment - In order to maintain the rights to license the LICENSEE shall issue to LICENSOR 250,000 shares of restricted common stock of Predictive Technology Group, Inc. to be issued to LICENSOR on or before October 19, 2016. The LICENSEE shall pay an additional milestone

payment to LICENSOR in the amount of Two Hundred Fifty Thousand Dollars ($250,000) on or before September 1, 2017.

 

Section 3 . 3 FDA Approval Milestone Payment - In order to maintain the rights to license the Test Patents, upon FDA approval of any Companion Diagnostic Tests, LICENSEE shall pay LICENSOR a milestone payment of two hundred fifty thousand dollars ($250,000).

 

Section 3.4 Royalty - Subject to Section 3 . 5 , in order to maintain the rights to license the Test Patents, LICENSEE shall pay LICENSOR a royalty at the rate of two percent (2.0%) on all revenue LICENSEE receives for the sale of Endometriosis Therapeutic, ("Therapeutic Royalty"). Said Royalties shall be paid quarterly with payments due by April 30 th , July 31 st , October 31 st and January 31 st , respectively for sales made in the three month period immediately preceding the respective payment due dates .

 

Section 3.5 Minimum Quarterly Royalty -Subject to Section 3.5, beginning in the third quarter after LICENSEE obtains FDA approval of an Endometriosis Therapeutic, and for the duration of this Agreement , LICENSEE shall pay LICENSOR a minimum quarterly royalty of one hundred thousand US dollars ($100,000). If LICENSEE's sales are not sufficient to pay the minimum quarterly royalty, then LICENSEE shall pay additional royalty amounts to LICENSOR so that the total quarterly royalty payments equal the one hundred thousand dollar ($100,000) minimum.

 

Section 3.6 Suspension of Royalty Obligations - During any quarterly period during which LICENSOR and LICENSOR's partners, contractors and assignees fail to meet the minimum sales and distribution milestones specified in Schedule 3.5, then, during such quarterly period , LICENSEE's obligation to pay the Therapeutic Royalty and minimum quarterly royalty under Section 3.4 shall be waived.



Section 3.7 Interest Fee- LICENSEE shall pay interest to LICENSOR upon any and all amounts overdue and payable under this Agreement at the rate of one percent (1%) per month (if lawful, and if not lawful at the maximum rate permitted by law) from the due date through the date of payment.


2

 

Section 3.8 Reports- LICENSEE shall send written royalty statements to LICENSOR with each royalty payment showing the royalty payment and the basis for calculating such royalty payment.


Section 3.9 Records - LICENSEE shall keep full, clear and accurate records with respect to Companion Diagnostic Tests for which royalties are or may be due and payable pursuant to this Agreement. Such records shall be kept at LICENSEE's usual place of business and shall be available for inspection once per year, on reasonable notice during regular business hours, for three (3) years following the calendar year to which the records pertain. Any inspections shall be conducted by an independent certified public accountant selected by LICENSOR solely for the purposes of verifying LICENSEE ' s royalty statement.


 

ARTICLE IV

Te1m and Termination

 

Section 4.1 Term - The term of this Agreement shall commence as of the Effective Date and shall continue for the full term and period of enforceability of the last to expire patent of the Test Patents unless earlier terminated in accordance with the further paragraphs of this section.

 

Section 4.2 Termination - This Agreement may be terminated by LICENSEE for any reason at any time following the expiration of 30 days written notice to LICENSOR. Termination will not cancel what was owed prior to termination.

 

Section 4.3 Termination on Default - If LICENSEE shall at any time default in paying any undisputed payment of monies due in accordance with this Agreement, and such default shall not be cured within sixty (60) days after notice from LICENSOR to LICENSEE specifying the nature of the default, LICENSOR shall then and thereafter have the right to terminate this Agreement by giving written notice of termination to LICENSEE , and upon the giving of such notice of termination, this Agreement shall terminate on the tenth (10th) day after such notice is given. LICENSEE shall have the right to cure any such default up to but not after the giving of such notice of termination.

 

Section 4.4 Other Termination - This Agreement may be terminated by LICENSOR upon the expiration of30 days following written notice given to LICENSEE, if LICENSEE does not cure, or begin to cure and diligently pursue the cure of the following events, upon or after :

 

(a)the filing by LICENSEE of a petition in bankruptcy or insolvency;

(b)any adjudication that LICENSEE is bankrupt or insolvent;

(c)the filing by LICENSEE of a petition or answer seeking reorganization or readjustment under any law relating to insolvency or bankruptcy;

(d)the appointment of a receiver with respect to all or substantially all of the property of LICENSEE;

(e)the institution by LICENSEE of any proceedings for liquidation or the winding up of its business other than for purposes of reorganization , consolidation or merger; any adjudication that LICENSEE is bankrupt or insolvent; or

(f)any material breach in fulfilling any other material obligation or performance under this Agreement.


ARTICLEV

Section 5.1- Miscellaneous Provisions - LICENSOR warrants and represents that:

 

(a) The Companion Diagnostic Tests are the LICENSOR' s original work in all respects , and, to the best of LICENSOR's knowledge, information and belief, in no way infringe upon the copyright, patent, trademark , or trade secret or any other rights, common law or statut01y, of any third party and neither the Companion Diagnostic Tests, nor LICENSOR's execution and performance of this Agreement, violates any other Agreement, express or implied, oral or written.

 


(b) The Companion Diagnostic Tests and all rights in and to the Companion Diagnostic Tests have not been sold, transferred, licensed , pledged, assigned or encumbered, or otherwise disposed of, and the Companion Diagnostic Tests and all rights in and to the Companion Diagnostic Tests are free of all liens, claims, encumbrances , and equities of third parties;

 


(c) Without limiting any other representation or warranty, to the best of LICENSOR's knowledge, information and belief, the development, manufacture, production, marketing, distribution, display and/or sale of the Companion Diagnostic Tests will not in any way infringe upon any rights of any third party; and

 


(d) LICENSOR will not, at any time, do or cause to be done any act or thing to contest, impair or interfere with any part of LICENSEE's License, except as provided in Sections 4.3 and 4.4 of this Agreement.

 


Section 5.2 Contest and Admissions - By unde1taking this Agreement, LICENSEE agrees that during the term of this Agreement, it will not contest the validity or enforceability of the Patents or make any argument that the royalty obligations set fo1th herein are not due when due, or are otherwise unearned, by reason of any allegation of invalidity or unenforceability of the Test Patents.

 

Section 5.3 Construction -This Agreement is the product of the efforts of both Patties, and neither of the Patties separately should be considered the drafter of this Agreement, or any of its provisions, and the Patties agree that this Agreement shall not be construed for or against any of the Parties based on authorship. The headings of Articles and Sections in this Agreement are included herein for convenience and shall not be considered in construing this Agreement.

 

Section 5.4 Extraneous Writings - This Agreement sets f01th the entire understanding between LICENSEE and LICENSOR and supersedes all previous understandings, agreements, communications, and representations, whether written or oral, concerning the subject matter to which this Agreement relates.


4

 

Section 5.5 Litigation and Jurisdiction - Any litigation brought against LICENSOR under this Agreement shall be brought exclusively in the state or federal courts located in the state of Utah, and any litigation brought against LICENSEE under this Agreement shall be brought exclusively in the state or federal courts located in the state of Utah. The Parties agree to personal jurisdiction, and venue for suits filed in accordance with this Section.

 

Section 5.6 Appointment - LICENSOR shall have the first right to (i) enforce and protect all rights in and to the Companion Diagnostic Tests, (ii) prevent infringement, and (iii) litigate and collect any damages and judgments arising from any infringement of the Companion Diagnostic Tests (individually and collectively, "Claims"). In the event that LICENSOR elects not to pursue any Claims, then, only with respect Claims LICENSOR has elected not to pursue, LICENSOR shall appoint LICENSEE its attorney-in­ fact, in LICENSOR's name or in LICENSEE's name, for the benefit of LICENSEE, to (i) enforce and protect rights in and to the Companion Diagnostic Tests, (ii) prevent infringement, and (iii) litigate and collect any damages and judgments arising from any infringement of the Companion Diagnostic Tests. LICENSOR agrees to provide reasonable availability and cooperation to LICENSEE in LICENSEE's effo1is to police and enforce LICENSEE's rights under this Agreement, including without limitation, LICENSEE's efforts to prevent infringement of the Test Patents. In the event LICENSEE successfully enforces and protects its rights against infringement in and to any Licensed Test, LICENSEE will pay LICENSOR an amount equal to fifty percent (50.0%) of the recove1y of any sums actually received less legal fees and the costs and expenses incurred by LICENSEE in connection with such enforcement and protection. For example, if LICENSEE recovers $500,000 concerning a Licensed Test and incurs $250,000 in legal fees, costs and expenses, LICENSEE will pay LICENSOR $125,000.

 

Section 5.7 Effect - Upon the expiration or sooner termination of this Agreement, LICENSEE may continue to fill any open orders for Companion Diagnostic Tests, and, for a period of three hundred and sixty five (365) days, distribute ("Sell-off Period") and sell any Companion Diagnostic Tests in its possession or control. No termination of this Agreement shall relieve LICENSEE of its obligations to pay any Royalty then due and owing to LICENSOR, or to pay Royalties for sales during the Sell-off Period, nor relieve LICENSOR of its warranties and obligations hereunder, including those in Sections 5.1, 5.2, and 5.7 of this Agreement. All such warranties and obligations shall survive any termination of this Agreement.

 

Section 5.8 Confidentiality - The Parties agree that they will not disclose to anyone (except as may be appropriate in the performance of its obligations under this Agreement or as required by court order) any confidential information, proprietary knowledge or trade secrets of the other party ("Confidential Information"), including without limitation, information about the Companion Diagnostic Tests now or at any time in the future. Any information that the Patties consider Confidential Information, and is provided to one party by the other patty shall be reduced to a written format and marked as "Confidential".

 

Section 5.9 Assignability - This Agreement will be binding upon and inure to the benefit of LICENSOR, LICENSEE, and their respective successors and assigns, provided, however, that LICENSEE may not assign this Agreement, or its rights hereunder, without LICENSOR's prior written consent, which consent shall not be unreasonably withheld, except that LICENSEE may assign this Agreement as a part of a sale, transfer or merger involving substantially all of LICENSEE's assets.

 

Section 5.10 Notice - Any notice contemplated by this Agreement will be sufficient if it is sent certified or registered mail, first-class postage prepaid, if to LICENSOR, at its address set forth in this Agreement, and if to LICENSEE, at its address set fo1th in this Agreement.

 


5

 

Section 5.11 No Partnership - Nothing contained in this Agreement shall be construed to create a partnership or joint venture relationship between the Parties. Neither patty is the agent or legal representative of the other, nor has the power to bind or obligate the other, except as provided in Section 5.7 of this Agreement.

 

Section 5.12 Force Majeure - Neither LICENSEE nor LICENSOR shall be responsible for any failure or delay in the performance of its obligations under this Agreement because of circumstances beyond its reasonable control, including, without limitation, acts of God, fires, floods, wars, civil disturbances, sabotage, accidents, labor disputes, governmental actions, or inability to obtain labor, material, equipment, or transportation, nor shall any such failure or delay afford a party the right to terminate this Agreement.

 

Section 5.13 Amendment and Restatement - This Agreement amends and restates in its entirely the License Agreement dated August 16, 2013, by and between the parties hereto, and all amendments thereto.

 

IN WITNESS WHEREOF, the Patties do hereby execute this Agreement to be effective as of the date first written above.


Juneau Biosciences, LLC

 



By: /s/ Kenneth Ward


Its: President

 

 

Predictive Therapeutics, LLC

 

By: /s/ Bradley Robinson

Its: President

 



6

 

SCHEDULE 3.5



 


2017


2018


2019

Subsequent Years

Number of OB-GYN Symptomatic IVD Kits (FDA approved) on an annual basis

Launch test

240,000

407,000

407,000

Number of OB-GYN Symptomatic

IVD Kits (FDA approved) on a quarterly basis

Launch test

60,000

101,750

101,750


7

EXHIBIT 10.08

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EXHIBIT A-SITE PLAN

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Exhibit 10.9

LEASE


by and between


PARADIGM RESOURCES, L.C.,


a  Utah limited  liability company,


as Landlord and

PREDICTIVE TECHNOLOGY GROUP, INC.,


a  Nevada corporation,


as Tenant


615 ARAPEEN DRIVE, SUITE 300 SALT LAKE CITY, UTAH 84108



-1-



615 ARAPEEN DRIVE - SALT LAKE CITY, UTAH TABLE OF CONTENTS

 

 

 

ARTICLE I.   BASIC LEASE PROVISIONS ; ENUMERATION OF EXHIBITS

1

SECTION  1.01.    BASIC LEASE PROVISIONS

1

SECTION 1.02.    SIGNIFICANCE  OF A BASIC LEASE PROVISION

3

SECTION  1.03.    ENUMERATION OF EXHIBITS

3

ARTICLE II.   GRANT AND  LEASED PREMISES

3

SECTION  2.01.  LEASED PREMISES

3

SECTION 2.02 .   EXCUSE OF  LANDLORD'S PERFORMANCE

3

SECTION 2.03.    REVISION OF SITE PLAN

3

ARTICLE 111.  RENT.

3

SECTION 3.01.    BASE MONTHLY RENT.

3

SECTION 3.02.    ESCALATIONS IN  BASE MONTHLY RENT

4

SECTION 3.03.   TENANT'S PRO-RATA SHARE OF OPERATING EX PENSES

4

SECTION 3.04.   REPORT OF COSTS  AND  STATEMENT OF ESTIMATED COSTS

4

SECTION 3.05.    PAYM EN T OF ADDITIONAL RENT

5

SECTION 3.06 .   TAXES

5

SECTION 3.07.   PAYMENTS

5

ARTICLE IV .   RENTAL TERM , COMMENCEMENT  DATE & PRELIMINARY TERM

5

SECTION  4.01.   RENTAL TERM

5

SECTION 4.02 .   DEFINITION OF LEASE YEAR.

6

SECTION 4.03 .    RENTAL TERM COMMENCEMENT  DATE AND  TERMINATION DATE.

6

SECTION  4.04 .  PRELIMINARY TERM

6

 

-2-



 

SECTION  4.05 .   END OF RENTAL TERM

6

ARTICLE V.   CONSTRUCTION  OF LEASED PREMISES

6

SECTION 5.01.   CONSTRUCTION  OF LEASED PREMISES BY LANDLORD

6

SECTION 5.02 .    DELIVERY OF POSSESSION FOR TENANT'S WORK

6

SECTION 5.03 .   CHANGES  AND  ADDIT ION S BY LANDLORD

6

SECTION 5.04.    LANDLORD'S RIGHT TO TERMINATE FOR REMODELING

6

SECTION 5.05.   LANDLORD' S RIGHT TORELOCATE FOR REMODELING

6

ARTICLE VI.   TENANT'S WORK

7

SECTION 6.01 .   CONSTRUCTION OF LEASED PREMISES BY TENANT

7

SECTION 6.02 .    SETTLEMENT OF DISPUTES

7

SECTION 6.0 3.

7

ARTICLE  VII.  PERMITTED USE.

7

SECTION  7.01.   PERMITTED USE OF LEASED PREMISES

7

SECTION  7.02 .   HAZARDOUS SUBS TANC ES.

8

ARTICLE VIII.   OPERATION AND  MAINTENANCE OF COMMON AREAS

8

SECTION 8.01.   CONSTRUCTION AND  CONTROL OF COMMON AREAS

8

SECTION 8.02 .   LICENSE

9

ARTICLE IX.   ALTERATIONS,  SIGNS, LOCKS & KEYS

9

SECTION 9.01 .   ALTERATIONS

9

SECTION 9.02 .   REMOVAL  BY TEN ANT.

9

SECTION 9.03.   SIGNS

9

SECTION 9.04.    REMOVAL OF TENANT SIGNS

9

SECTION 9.05.    LOCKS AND  KEYS.

10

 

-3-



 

ARTICLE X.   MAINTENANCE  AND  REPAIRS; ALTERATIONS; ACCESS

10

SECTION 10.01.    LANDLORD' S OBLIGATION FOR MAINTENANCE

10

SECTION 10.02.    TENANT'S OBLIGATIONS FOR MAINTENANCE

10

SECTION 10.03 . SURRENDER OF LEASED PREMISES AND RIGHTS UPON TERMINATION

 

ARTICLE  XI.   INSURANCE AND INDEMNITY

11

SECTION  11.01.    TENANT'S LIABILITY INSURANCE AND INDEMNITY

11

SECTION  11.02.    FIRE  AND CASUALTY INSURANCE

11

SECTION 11.03.   WAIVER OF SUBROGATION

12

SECTION 11.04 .   INDEMNIFICATION

12

ARTICLE  XII.  UTILITY CHARGES

12

SECTIO N 12.01.    OBLIGATION OF LANDLORD

12

SECTIO N 12.02 .    OBLIGATIONS OF TEN ANT

12

SECTION 12.03 .   EXTRA HOURS CHARGES

13

SECTION 12.04.   LIMITATIONS ON  LANDLORD' S LIABILITY

13

ARTICLE XII I.   ESTOPPEL OR OFF-SET STATEM ENT, ATTORNMENT AND SUBORDI N ATION

13

SECTION 13.01.   ESTOPPEL OR OFF-SET STATEMENT.

13

SECTION 13.02.    ATTORNMENT

14

SECTION 13.03.   SUBORDINATION

14

SECTION 13.04.   MORTGAGEE SUBORDINATION

14

SECTION  13.05.   REMEDIES

14

ARTICLE XIV .   ASSIGNMENT

14

SECTION  14.01.  CONSENT REQUIRED

14

SECTION 14.02 .   OPTION  TO TERMINATE

14

SECTION 14.03. CONDITIONS OF CONSENT

 

 

-


-4-


SECTION 14.04.  STANDARDS OF REASON ABLENESS IN WITHHOLDING CONSENT

15

SECTION 14 .05.   DOCUMENTATION OF ASSIGNMENT

15

SECTION 14.06.   CONTINUING   LIABILITY OF TENANT

15

SECTION 14.07.   VOIDABLE  ASSIGNMENT

15

ARTICLE XV.   WASTE OR NUISANCE

15

SECTION 15.01.   WASTE OR NUISANCE

15

ARTICLE XVI.   NOTICES

15

SECTION  16.01.  NOTICES

15

ARTICLE XV II.   DESTRUCTION OF LEASED PREMISES

16

SECTIO N 17.01.   DESTRUCTION

16

ARTICLE XVIII.   CONDEMNATION

16

SECTION 18.01.   CONDEMNATION

16

ARTICLE XIX. DEFAULT OF TENANT

17

SECTION 19.01.    DEFAULT - RIGHT TORE-ENTER

17

SECTION 19.0 2.   DEFAULT - RIGHT TORE-LET

17

SECTION 19.03.    LEGAL EXPENSE S

17

ARTICLE XX .   BANKRUPTCY, INSOLVENCY OR RECEI VER SHI P

17

SECTION 20.01 . ACT OF INSOLVENCY, GUARDIANSHIP, ETC.

17

SECTION  20.02.   BANKRUPTCY

18

ARTICLE XXI.  LANDLORD ACCESS

18

SECTION  21.01.   LANDLORD ACCESS

18

ARTICLE XXII.   TENANT' S PROPERTY AND  LANDLORD 'S LIEN

18

SECTION  22. 01.   TAXES ON LEASEHOLD

18

SECTION 22.02.   LOSS AND DAMAGE

18

SECTION  22. 03.   NOTICE BY TENANT

18

SECTION 22.04 . LANDLORD'S LIEN

19

SECTION  22.05.   LANDLORD'S SUBORDINATION

19

ARTICLE  XXIII.  HOLDING OVER

19

SECTION  23.01.  HOLDING OVER

19

SECTION  23.02.  SUCCESSORS

19

ARTICLE XXIV.   RULES AND  REGULATIONS

19

SECTION 24.01.   RULES AND REGULATIONS

19

 


-5-


 

ARTICLE XXV.   QUIET ENJOYMENT.

19

SECTION  25.01 .   QUIET ENJOYMENT

19

ARTICLE XX VI.   SECURITY DEPOSIT

19

SECTION  26.01.   SECURITY DEPOSIT

19

SECTION 26.02.   TRANSFER OF LANDLORD'S INTEREST IN THE SECURITY DEPOSIT

20

ARTICLE XXVII.   MISCELLANEOUS

20

SECTION 27.01.   WAIVER

20

SECTION 27.02.   ENTIRE LEASE AGREEMEN T

20

SECTION 27.03.   INTERPRETATION, USE OF PRONOUNS

20

SECTION 27.04.   FORCE MAJEURE

20

SECTION  27.05.   CAPTIONS AND SECTION NUMBERS

20

SECTION  27.06.   BROKER' S COMMISSION

20

SECTION  27.07.  RECORDING

21

SECTION 27.08.   CONSENT NOT UNREASONABLY W ITHHELD

21

SECTION  27.09.   FURNISHING OF FINANCIAL STATEMENTS

21

SECTION  27.10.   TIME OF ESSENCE

21

SECTION  27.11.   ACCORD AND SATISFACTION

21

SECTION  27.12.  NO OPTION

21

SECTION  27.13.  ANTI-DISCRIMINATION

21

SECTION  27.14.  SEVERABI LITY

21

SECTION 27.15. SURVIVAL OF OBLIGATIONS

21

SECTION  27.16.   WARRANTY OF AUTHORITY

21

SECTION 27.17.    TEN ANT'S LIABILITY

21

SECTION 27.18.   LANDLORD'S LIABILITY

21

SECTION  27.19.   COUNTER CLAIM AND JURY TRIAL.

21

SECTION 27.20.  TRANSFER OF LANDLORD'S INTER EST IN THE LEASED PREM ISES

22

SEC TION 27.21.   TENANT SELECTION BY LANDLORD

22

SECTION  27.22.   DISCLOSURE OF PARTIES

22

SECTION 27.23.  TEN ANT REPRESEN TATIO NS AND WARRANTI ES

22

SECTION  27.24.   EXECUTIVE ORDER CERTIFICATION

22

ARTICLE  XXVIII.  ADDITIONAL PROVISIONS

23

SECTION  28.01.   OPTION TO RENEW

23

SIGNATURES

24

ACKNOWLEDGMENT OF TENANT

24

ACKNOWLEDGMENTS OF LANDLORD

25

EXHIBIT " A" -Site Plan

EXHIBIT " A-1" - Office Layout Plan

EXHIBIT " B" -Legal Description

 

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LEASE  AGREEMENT

(hereinafter "lease")


ARTICLE I. BASIC LEASE PROVISIONS; ENUMERATION OF EXHIBITS


SECTION 1.01. BASIC LEASE PROVISIONS


(A)

EFFECTIVE DATE: June 21, 2018 ("Effective  Date ")


(B)

LANDLORD: PARADIGM RESOURCES, LC., a Utah limited liability company ("Landlord " )

(C)

ADDRESS OF LANDLORD FOR NOTICES (Section 16.01) :


Paradigm Resources, L.C. do Woodbury Corporation Attn: Lease Administration

2733 East Parleys Way, Suite 300 Salt Lake City, Utah 84109

Ref :   2941 -  Predictive Technology, Suite 300


With a copy to:

Paradigm Resources, L. C. do Woodbury Corporation Attn: Legal Department

2733 East Parleys Way, Suite 300 Salt Lake City, Utah 84109

Ref: 2941 - Predictive Technology, Suite 300

 

(D) TENANT: Predictive Technology Group, Inc., a Nevada corporation ("Tenant") (Tax ID: 90-1139372)


(E) ADDRESS OF TENANT FOR NOTICES (Section 16.01): 3263 South Highway 89, Suite 100, Bountiful, Utah 84010, Attn: Leasing


(F) PERMITTED USE (Section 7.01): General office, administrative, lab and research use ("Permitted Use" ), and for no other use without the prior  written  consent  of  Landlord  and  the  University Research Park (as defined in Section 2.01).


(G) TENANT'S TRADE NAME: Predictive Technology Group, Inc.


(H) BUILDING (Section 2.01): An office building situated at 615 Arapeen Drive, in the City of Salt Lake, County of Salt Lake, State of Utah ("Building" ) , as substantially depicted on Exhibit "A".


(I) LEASED PREMISES (Section 2.01): 615 Arapeen Drive, Suite 300, Salt Lake City, Utah 84108, consist in g of approximately 5,356 square feet of gross rentable area ("Leased Premises"), as

substantially depicted on Exhibit "A-1".


(J) DELIVERY OF POSSESSION  (Section 5.02):   The Leased Premises shall  be delivered  to Tenant  on June 15,2018 ( " Delivery of Possession"), as certified by a notice of Deli very of Possession .

Preliminary Term (as defined in Section 4.04) begins on Deli very of Possession.


(K) RENTAL  TERM,  COMMENCEMENT  AND   EXPIRATION  DATE  (Sections   4.01   and   4.02):    The  term of this Lease shall commence on the earlier to occur of the following: (a) forty-five (45) days after Delivery of Possession, or (b) the date Tenant opens for business in the Leased  Premises ("Rental Term Commencement Date" ) and shall be for a period of one (1) full Lease Year (as defined in Section 4.02) ("Rental Term"), as certified by a notice of Rental Term Commencement Date.


(L) BASE MONTHLY RENT (Section 3.01): Twelve Thousand Fifty-One and 00 /100 Dollars ($12,051.00) per month ( "Base Monthly Rent").

 

(M) Intentionally Omitted.



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(N) LANDLORD 'S SHARE OF OPERATING EXPENSES (Section 3.03): Subject to Tenant's reimbursement obligation, Landlord shall pay all operating expenses through the base year 2019 ("Base Year ") and an amount equal to the Base Year thereafter.


(O) TENANT'S PRO-RATA  SHARE  OF  OPERATING  EXPENSES (Section   3.03):   Tenant's pro-rata  share of operating expenses shall be five point ninety-eight percent (5.98%) of all operating expenses in excess of landlord's share of operating expenses. Tenant's proportionate share of Basic Costs (as defined in Section 3.03(a)) shall be a percentage, the numerator of which is Tenant's total gross rentable area and the denominator of which is the total gross rentable area of the Building.  Such operating expenses include Basic Costs, Direct Costs (as defined in Section 3.03(b)), and Metered Costs (as defined in Section 3.03(c)).


(P) UTILITIES AND SERVIC ES: Subject to the provisions of Section 3.03, 12.01 and 12.02, this Lease provides that the utilities and services shall be paid or reimbursed by Tenant.


(Q) EXCESS HOUR UTILITY CHARGES AND HOURS OF OPERATION (Section 12.03): Tenant shall have access to the Leased Premises twenty-four (24) hours a day, seven (7) days per week. Standard operating hours for the Building shall be 8:00 a.m. to 6:00 p.m., Monday through Friday, and 10:00a.m. to 2:00 p.m. on Saturday, excluding holidays ("Standard Operating Hours"). To the extent Tenant operates during any time in excess of Standard Operating Hours, Tenant shall pay an extra hourly utility charge of Twenty-Five Cents ($0 .25 ) per hour per one thousand (1,000) square feet of gross rentable area for lighting and electricity and Five Dollars ($5.00) per hour per one thousand (1,000) square feet of gross rentable area for mechanical/HVAC system for each full or partial hour during which Tenant operates in excess of Standard Operating Hours.


(R) PREPAID RENT: Twelve Thousand Fifty-One and 00/100 Dollars ($12,051.00), paid by Tenant upon Tenant's execution of this Lease to be app lied to the first installment of Base Monthly Rent due hereunder.


(S) SECURITY DEPOSIT (Section 26.01): Twelve Thousand and 00/100 Dollars ($12,000.00) ( " Security Deposit"), to be paid by Tenant upon Tenant's execution of this Lease.


(T) Intentionally Omitted.

(U ) Intentionally Omitted.

 

(V) Intentionally Omitted.

 

(W) TENANT'S WORK (Section 6.01): Tenant shall finish the Leased Premises in accordance with plans and specifications approved by Landlord. Prior to commencement of construction, Tenant shall submit an electronic copy (in PDF format) of all plans to Landlord for review and approval as set forth in Section 6.01.

 

(X) SIGNAGE: Landlord shall, at Landlord's so le cost and expense, provide lobby directory signage for Tenant and shall provide Tenant signage of the monument sign for the Building.

 

(Y) OPTION TORENEW (Section 28.01): Provided Tenant is not, and has not been, in default beyond any applicable cure period under any of the terms and conditions contained herein, Tenant shall have a one (1) additional consecutive one (1) year option to renew and extend the Rental Term ("Option ") as provided herein. Said Option shall be deemed automatically renewed for another one(1)year period unless either Landlord or Tenant delivers written  notice  to  the  other  party  not  less than ninety (90) days prior to the expiration of the Rental Term. Base Monthly Rent for each Option period shall be as follows:


Option Period- Commencing on the 1 day of the 13 th month After the Rental Term Commencement Date

 

Base Monthly Rent $12,412.53


[Remainder of Page intentionally Left Blank]

 




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SECTION 1.02. SIGNIFICANCE OF A BASIC LEASE PROVISION. The foregoing provision s of Section 1.01 summarize  for convenience only certain  fundamental  terms of this Lease delineated  more fully in the articles and sections referenced therein. In the event of a conflict between the provisions of Section 1.01 and the balance of this Lease, the latter shall control.

 

SECTION 1.03. ENUMERATION OF EXHIBITS. The exhibits enumerated in this Section 1.03 and attached to this Lease are incorporated in this Lease by this reference and are to be construed as a part of this Lease. In the event of a conflict between the body of this Lease and the exhibits, the body of this Lease shall control.


EXHIBIT "A"

EXHIBIT "A -1" EXHIBIT " B"

SITE PLAN LEASE PLAN-LEGAL DESCRIPTION

 

ARTICLE II. GRANT AND LEASED PREMISES

 

SECTION 2.01. LEASED PREMISES . Landlord has heretofore obtained a long-term ground lease covering that certain tract of real property situated in the University of Utah Research Park ("University Research Park") in Salt Lake City, State of Utah, more particularly described in Exhibit "B" attached hereto, together with certain easement for access rights. Such tract is herein after referred to as the "Property" .

 

Landlord owns the Building referred to in Section 1.01(H ), which is located on the Property, suitable for use as office/research and limited complementary retail space, together with related parking facilities and other improvements necessary to enable the Building to be so used (the Building and related  facilities and improvements are hereinafter collectively referred to as the "Improvements") .

 

In consideration for the rent to be paid an d covenants to be performed by Tenant, Landlord hereby leases to Tenant , and Tenant leases from Landlord for the Rental Term and upon the terms and conditions

herein set forth, the Leased Premises described in Section 1.01 (I), located in the Building. Gross rentable area measurements herein specified are from the exterior of the perimeter wall s of the Building to the center of the interior wall s.

 

The exterior wall s and roof of the Leased Premises and the areas beneath the Leased Premises are not demised hereunder and the use thereof together with the right to install, maintain, use, repair, and replacepipes, ducts, conduits, and wires leading through the Leased Premises in locations which do not materially and adversely interfere with Tenant 's use thereof and serving other parts of the Building  or buildings, are hereby reserved to Landlord. Landlord reserves (a) such access rights through the Leased Premises as may be reasonably necessary to enable access by Landlord to the balance of the Building and reserved areas and elements as set forth above; and (b) the right to install  or maintain meters on the Leased  Premises to monitor use of utilities. In exercising such rights, Landlord shall use reasonable efforts so as to not commit waste up on the Leased Premises and as far as practicable shall not materially and adversely interfere with Tenant's use of the Leased Premises and shall minimize annoyance, interference or damage to Tenant and the Leased Premises w hen making modifications, additions or repairs.

 

Subject to the provisions of Article VIII, Tenant and its employees, contractors, customers, agents and invitees have the right to the non-exclusive use, in common with existing tenants of such unreserved automobile parking spaces, driveways, footways, and other facilities designated for common use within the Building, except that with respect to non-exclusive areas, Tenant shall cause its employees to park their cars only in areas specifically designated from time to time by Landlord for that purpose and shall actively police employees to keep them from parking in "visitor" or other restricted parking areas.

 

SECTION 2.02. EXCUSE OF LANDLORD' S PERFORMANCE.   Anything in this Lease to the contrary notwithstanding, providing such cause is n o t due to the willful act or neglect of Landlord , Landlord shall not be deemed  in default  with respect to the performance of any of the terms, covenants  and conditions of this Lease,  if the same shall be due to any strike, lockout, civil commotion, war-like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain any material, service or financing, act of God or other cause beyond the control of Landlord.

 

SECTION 2.03. REVISION OF SITE PLAN. It is expressly agreed that the depiction of the Leased Premises, the Building and the Common Areas (as defined in Section 8.01) on Exhibit " A" and Exhibit "A-1" does not constitute a representation, covenant, or warranty of any kind by Landlord, and Landlord reserves the right to change the size, location, type and number of buildings within the development, and the location, type, design and dimensions of the Common Areas.



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ARTICLE  Ill .  RENT

 

SECTION 3.01. BASE MONTHLY RENT. Tenant agrees to pay to Landlord Base Monthly Rent in the amounts set forth in Sections 1.01(L) and 1.01(M) at such place as Landlord may designate, without prior demand therefor, without offset or deduction and in  advance on or before the  first  day  of each  calendar month during the Rental Term, including any Rental Term extension or renewal thereof, commencing on the Rental Term Commencement  Date.  In  the event the Rental Term Commencement Date  occurs on a day other than the first day of a calendar month, then Base Monthly Rent to be paid on the Rental Term Commencement Date shall include both Base Monthly Rent for the first  full  calendar month occurring after the Rental Term Commencement Date, plus Base Monthly Rent for the initial fractional calendar month pro­rated on a per-diem basis (based upon a thirty (30) day month).

 

SECTION 3.02. ESCALATIONS IN BASE MONTHLY RENT. As set forth in Section 1.01(M).

 

SECTION 3.03. TENANT 'S PRO-RATA SHARE OF OPERATING EXPENSES.


(a) " Basic Costs" shall mean all reason able actual costs and expenses incurred by Landlord in connection with the  ownership ,  operation,  management and  maintenance  of  the Building and Property and related Improvements located thereon,  including , but  not  limited  to,  all reasonable expenses incurred by Landlord as a result of Landlord' s compliance with any and all of its obligations under this Lease (or under similar leases with other tenants). In explanation of theforegoing, and not in limitation thereof, Basic Costs shall include: all real and personal  property taxes and assessments (whether general or special,  known or unknown,  foreseen  or  unforeseen) and  any tax or assessment levied or charged in lieu thereof, whether assessed against Landlord  and/or Tenant and whether collected from Landlord and/or Tenant; snow removal, trash removal, Common Area utilities, cost of equipment or devices  used  to conserve  or monitor  energy consumption,  supplies, insurance, license, permit and inspection fees, cost of services of independent contractors, cost of compensation (including employment taxes and fringe benefits) of all persons who perform regular and recurring duties connected with day- to-day operation, maintenance, repair, and replacement of the Building , its equipment and the adjacent walk, and landscaped area (including, but not limited to janitorial, scavenger, gardening, security, parking, elevator, painting , plumbing , electrical,

mechanical , carpentry, window washing , structural and roof repair s and reserves, signing and advertising), but excluding persons performing services not uniformly available to or performed  for substantially all Building tenants ; and rental expense or a reasonable allowance for depreciation of personal property used in the maintenance, operation and repair of the Building . The foregoing notwithstanding, Basic Costs shall not include depreciation on the Building and Improvements; amounts paid toward principal or interest of loans of Landlord;  nor  Direct Costs  (as  defined  in Section 3.03 (b )). Tenant shall pay its proportionate share of Basic Costs. " Tenant's Proportionate Share of Basic Costs" shall mean the percentage derived from a fraction, the numerator of which is the gross rentable area of the Leased Premises as set forth in Section 1.01 (I) and the denominator of which is the gross rentable square footage of the Building (96,134 square feet). Tenant's Proportionate Share of Basic Costs initially is set forth in Section 1.01(0), subject to increase or decrease due to increases or decreases in the gross rentable square footage of the Leased Premises and /or the Building.


(b) "D irect Costs " shall mean al l actual costs and expenses incurred by Landlord in connection with the operation, management, maintenance, replacement, and repair of the Leased Premises, including but not limited to janitorial services, maintenance, repairs, supplies, utilities,heating, ventilation, air conditioning, and property management fees, which property management fees shall not exceed standard fees for agency management of similar buildings.  If an y category of Direct Costs can only be determined on a Building-wide basis, Tenant's proportionate share of any such category of Direct Costs shall be based on the same percentage established for Tenant'sProportionate Share of Basic Costs.


(c) Landlord may cause meters or monitors to be installed to measure actual electrical and ventilation /air  conditioning  usage in  the  Leased Premises by Tenant.   "Metered Costs " shall mean the actual cost of such usage. If such meters are installed, Tenant shall pay Landlord monthly, as Additional Rent (as defined in Section 3.05), the estimated costs of such metered electrical and ventilation/air conditioning usage. If the costs of ventilation /air conditioning usage are not separately metered for tenants in the Building such costs shall be considered Direct Costs and shall be calculated as set forth in 3.0 3(a).


(d) " Estimated Costs " shall mean the projected amount of Direct Costs, Metered Costs and Tenant's Proportionate Share of Basic Costs. The Estimated Costs for the calendar year in which this Lease commences are not included in Base Monthly Rent. If the Estimated Costs as of the date Tenant takes occupancy are greater than the Estimated Costs at the time this Lease is executed, the Estimated Costs shall be increased to equal the Estimated Costs as of the date of Tenant 's occupancy.


SECTION 3 . 04. REPORT OF COSTS AND STATEMENT OF ESTIMATED COSTS.

 

(a) After the expiration of each calendar year occurring during the Rental Term of this Lease, Landlord shall furnish Tenant  a written statement (" Annual Report of Costs") of Tenant's actual Direct Costs, Metered Cost s and Tenant's Proportionate Share of Basic Costs occurring during the previous calendar year The Annual Report of Costs shall specify the amount by which such actual costs for the previous year exceeds or is less than the amounts paid by Tenant as Estimated Costs during the previous calendar year.

 

 

(b) At the same time specified in Section 3.04 (a), Landlord shall furnish Tenant a written statement of the Estimated Costs for the then current calendar year ("Annual Statement of Estimated Costs") .



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SECTION  3.05.  PAYMENT  OF ADDITIONAL  RENT.   Tenant shall pay as "Additional Rent" any and all sums of money or charges required to be paid by Tenant under this Lease, whether or not the same be designated as Additional Rent, as follows:

 

 

(a) With each monthly payment of Base Monthly Rent, pursuant to Section 3.01 above, Tenant shall pay to Landlord,  without  offset  or deduction,  one-twelfth  (1112th)  of the Annual Statement of Estimated Costs.  If at any time Land lord obtains  in formation that indicates that any of the categories of cost comprising Estimated Costs are significantly different than as calculated in the Annual Statement of Estimated Costs then in effect, Landlord may amend such Statement in order toreflect a more accurate prediction of the actual costs that shall be incurred during the calendar year, and Tenant shall pay amended Additional Rent consistent with such amended Annual Statement of Estimated Costs.

 

(b) Within thirty (30) days after delivery of the Annual Report of Costs, Tenant shall pay to  Landlord  the amount by which  Direct Costs, Metered  Costs and Proportionate   Share of Basic Costs, as specified in the Report of Costs exceed the aggregate of Estimated Costs actually paid by Tenant as Additional Rent for the year at issue.

 

(c) If the Annual Report of Costs in di cates that the Estimated Costs paid by Tenant exceeded the actual Direct Costs, Metered Costs and Proportionate Share of Basic Costs for the same year, Landlord, at its so le election, shall either (i) pay the amount of such excess to Tenant, or (ii) apply such excess against the next installment(s) of Base Monthly Rent and /or Additional Rent due hereunder and so notify Tenant.


If such amounts or charges are not paid at the time provided for in this Lease, they shallnevertheless, if not paid when due, be collectible as Additional Rent with the next installment of Base Monthly Rent thereafter falling due hereunder, but nothing herein contained shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable hereunder, or limit any interest, late fee or other remedy of Landlord.


SECTION 3.06. TAXES.

 

(a)Landlord shall pay all real property taxes and assessments which are levied against or which apply to the Building with respect to the Leased Premises, which taxes and assessments are to be reimbursed by Tenant as a part of Basic Costs.

 

(b) Tenant shall pay, prior to delinquency, all taxes, assessments, charges, and  fees which during the Rental Term, or any Rental Term extension or renewal thereof, may be imposed, assessed, or levied by any governmental or public authority against or upon Tenant's use of the Leased Premises or any inventory, personal property, fixtures or equipment kept or installed, or permitted to be located therein by Tenant.


SECTION 3.07 . PAYMENTS. All payments of Base Monthly Rent, Additional Rent and other payments to be made to Landlord shall be made on a timely basis and shall be payable to Landlord or as Landlord may otherwise designate. All such payments shall  be mailed or delivered to Landlord' s principal office set forth in Section 1.01(C), or at such other place as Landlord  may  designate  from time to  time in writing. If mailed, all payments shall be mailed in sufficient time and with adequate postage thereon to be received in Landlord's account by  no later than  the due date  for such payment.  If Tenant  fail s to pay any Base Monthly Rent, Additional Rent or any other amounts or charges within ten (10)  days of the  date when due, Tenant shall pay interest from the due date of such past due amount s to the date of payment, both before and after judgment at a rate equal to  the greater of  fifteen percent  (15%)  per annum or  two  percent (2%)  over the prime rate or base rate charged by Citibank of New York at the due date of such  payment; provided however, that in any case the maximum amount or rate of interest  to  be charged  shall  not  exceed  the maximum non-usurious  rate in accordance  with applicable law. In addition, Tenant  shall  pa y a late  fee equal tofour percent (4%) of such past due amount to compensate Landlord for extra administrative, collection, processing, accounting and other costs incurred through Tenant's nonpayment.



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ARTICLE IV. RENTAL TERM, COMMENCEMENT DATE & PRELIMINARY TERM


SECTION 4.01. RENTAL TERM. The initial term of this Lease shall be for the period defined as the Rental Term in Section 1.01 (K), plus the partial calendar month, if any, occurring after the Rental Term Commencement Date if the Rental Term Commencement Date occurs other than on the first day of a calendar month.


SECTION 4.02. DEFINITION OF LEASE YEAR . The " Lease Year" shall include twelve (12) full calendar months of the Rental Term; except that the first Lease Year shall include such twelve (12) full calendar months plus the period from the commencement of the Preliminary Term to and including the first day of the first full calendar month after the Rental Term Commencement Date.


SECTION 4.03. RENTAL TERM COMMENCEMENT DATE AND TERMINATION DATE. The Rental Term of this Lease and Tenant's obligation to pay Base Monthly Rent and Additional Rent hereunder shall commence on the Rental Term Commencement Date as set forth in Section 1.01 (K) . Each of the parties hereto agree, up on demand of the other, to execute a Rental Term Commencement Date notice, expressing the commencement and termination dates of the Rental Term as soon as the commencement and termination dates have been determined.


SECTION 4 . 04. PRELIMINARY TERM . The period between the date Tenant enters upon the Leased Premises and the Rental Term Commencement Date shall be designated as the " Preliminary Term " during which no Base Monthly Rent shall accrue; however, other covenants and obligations of Tenant shall be in full force and effect. Delivery of Possession of the Leased Premises to Tenant, as provided in Section 5.02, shall be considered "entry" by Tenant and commencement of the Preliminary Term.


SECTION 4.05. END OF RENTAL TERM. This Lease, and the tenancy hereby created, shall terminate at the end of the Rental Term, or any Rental Term extension or renewal thereof, without the necessity of any notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to vacate the Leased Premises and agrees that Landlord shall be entitled to the benefit of all provisions of law respecting the summary recovery of possession of the Leased Premises from Tenant holding over to the same extent as if statutory notice has been given.



ARTICLE V. CONSTRUCTION OF LEASED PREMISES


SECTION 5.01. CONSTRUCTION OF LEASED PREMISES BY LANDLORD. Landlord has constructed the Building in which the Leased Premises is located. Tenant is leasing the Leased Premises in "as is" condition.


SECTION 5 . 02. DELIVERY OF POSSESSION FOR TENANT'S WORK. Except as expressly stated otherwise, Landlord covenants that actual possession of the Leased Premises shall be delivered to Tenant in "as is" condition. It is agreed that by taking possession of the Leased Premises as a tenant, Tenant formally accepts the same and acknowledges that the Leased Premises is in the condition called for hereunder.



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SECTION 5.03.   CHANGES AND ADDITIONS BY LANDLORD.    Landlord hereby reserves the right at any time, and from time to time, to make alterations or additions to, and to build additional stories on the Building in which the Leased Premises is contained and to build adjoining the same and to modify the existing parking or other Common Areas to accommodate additional buildings. Landlord also reserves the right to construct other buildings or improvements on the Property from time to time, on condition that if the Property is expanded so as to include any additional buildings, Land lord agrees to create or maintain a parking ratio adequate to meet local laws and ordinances, including the right to add land to the Common Areas or to erect parking structures thereon.


SECTION 5.04. LANDLORD'S RIGHT TO TERMINATE FOR REMODELING. In Landlord's sole discretion, if it becomes necessary to terminate this Lease  in  order to reasonably  perform alterations  or additions to the Building , Landlord  may  terminate  this  Lease upon  one  (1 )  year's  prior  written  notice.  In such case, Tenant shall have the right  to  remove  its  trade  fixtures  (but  no  Building  improvements)on  or before the termination date of this Lease and Landlord shall pay to Tenant as liquidated damages for such termination, a sum equal to  the  unamortized  portion  of  Tenant's building  improvements,  which  were  paid  for by Tenant, as certified  to  Landlord  in  accordance  with Section  6.01  hereof, assuming  that  such amortization is on a straight line basis extending over the firm Rental Term and at an interest rate equal to the lower of ten percent (10%) per annum or the rate in fact app li cable to Tenant's existing financing of such improvements. Landlord may elect to offset any sums payable by Landlord to Tenant against any sums payable by Tenant to Landlord.


SECTION 5.05.  LANDLORD'S RIGHT TORELOCATE FOR REMODELING.   If Landlord elects to perform alterations or additions to the Building, Landlord shall have the right, in Landlord's sole discretion, at any time, upon giving Tenant not less than thirty (30) days' notice in writing, to provide and furnish Tenant with space elsewhere in the Building or the development of approximately the same size as the Leased Premises and to place Tenant in such space. In the event of any such relocation of Tenant, Landlord shall pay for Tenant's reasonable moving costs. Should Tenant refuse to permit Landlord to move Tenant to such new space by the end of such thirty (3 0) day period, Landlord, in such event, shall have the right to forthwith cancel and terminate this Lease. If Landlord moves Tenant to such new space, this Lease and each and all of its terms, covenants and cond1t1ons shall remain In full force and effect and be deemed applicable to such ew space, and such new space shall thereafter be deemed to be the Leased Premises. In addition, Base Monthly Rent for the remainder of the Rental Term shall be at the same per square foot rate as Tenant is required to pay Landlord in Section 3.01.


ARTICLE  VI.    TENANT'S WORK


SECTION 6.01 . CONSTRUCTION OF LEASED PREMISES BY TENANT. Subject to Section 9.01,Tenant agrees, at Tenant 's sole cost and expense, to provide all work of whatsoever nature, if any, in accordance with its plans and specifications, subject to Landlord 's prior written approval only if said Tenant work is in excess of Five Thousand and 00/100 Dollars ($5,000.00), (" Tenant's Work"). Tenant agrees to furnish Landlord, within the time periods designated by Landlord and prior to Delivery of Possession, with a complete and detailed set of plans and specifications drawn by a registered architect (or by some other qualified person acceptable to Landlord ) setting forth and describing Tenant 's Work in such detail as Landlord may require and in compliance with the initial permit drawings and the final construction  documents approved by Landlord . If such plans and specifications are not so furnished by Tenant within the required time periods required by Land lord, then Landlord may, at its option, in addition to other remedies Land lord may enjoy, cancel this Lease at any time thereafter while such plans and specifications have not been sofurnished. Tenant shall remit one (1) electronic copy (in PDF format) of any and all plans and specifications to Landlord at the following email address: drawings@woodburycorp.com



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In order for such plans and specifications to be deemed received by Land lord for Land lord's approval, the email transmittal must include the following information in the subject line : 2941 - Predictive Technology, Suite 300.

Additional physical copies can be sent to :

Woodbury Corporation

Attn: Architecture

2733 Parleys Way, Suite 300 Salt Lake City, Utah 84109-1662

 

Ref: 2941 - Predictive Technology, Suite 300 With a copy to:

Woodbury Corporation Attn: Lease Adm inistration

2733 Parleys Way, Suite 300 Salt Lake City, Utah 84109-1662

Ref: 2941 - Predictive Technology, Suite 300

 

No material deviation from the final set of plan s and specifications, once submitted to and approved by Landlord, shall be made by Tenant without Landlord's prior written consent. Landlord shall have the right to approve or disapprove Tenant 's architect and contractor to be used in performing Tenant's Work, and the right to require and approve insurance or bonds to be provided by Tenant or such contractors. In due course, after completion of Tenant's Work, Tenant shall certify to Land lord the itemized cost of Tenant improvements and fixtures located upon the Leased Premises . Any design costs incurred by Landlord,

Including space planning, preliminary and final design and engineering costs, as well as construction permit fees, shall be part of Tenant's Work, Land lord's construction cost cap and/or any additional allowance, if any.

This includes any costs incurred due to Tenant requested  changes,  which  shall  include change orders requiring extraordinary design or engineering applications. To the extent that Landlord elects to perform

certain Tenant' s Work, Tenant shall pay Landlord for such work within ten (10) day s of invoice by Landlord. If Tenant fails to pay such invoice when due, Tenant shall pay interest and a late fee in accordance with Section 3.07.


SECTION 6.02.  SETTLEMENT OF DISPUTES.    It is understood and agreed that any disagreement or dispute which may arise between Landlord and Tenant with reference to the work to be performed by Landlord shall be resolved by Landlord  's  architect, whose good faith decision shall be  final and binding on both Land lord and Tenant.


SECTION 6 . 03. Intentionally Omitted.

 


ARTICLE VII.    PERMITTED USE


SECTION 7 . 01. PERMITTED USE OF LEASED PREMISES. Tenant shall use and occupy the Leased Premises during the continuance of this Lease solely for the Permitted Use set forth in Section 1.0 1(F) and for purposes ordinarily incidental to such use and only for such purposes and in such manner as are permitted both by the protective covenants relating to the University Research Park  and by any existing legislation concerning the University Research Park.  Tenant shall  not  use, permit  or suffer  the  use of the  Leased Premises  for any  other business or purpose without the prior written consent of l and lord.   Tenant  shall promptly comp ly with all present or  future  laws,  ordinances,  lawful  orders and  regulations affecting  the Leased Premises and the cleanliness, safety, occupancy  and use of the Leased Premises.  Tenant  shall not make any use of the l eased Premises which shall cause cancellation  or an  increase  in  the cost of any insurance policy covering the leased Premises. Tenant  shall  not keep or use on the  Leased Premises any article, item, or thing which  is prohibited  by the standard  form  of  fire  insurance policy.  Tenant  shall  not commit any waste upon the l eased Premises and shall not conduct  or allow any business activity, or thing on the l eased Premises which is an annoyance or causes damage to landlord, to other sub tenants, occupants, or users of the Improvements, or to occupants of the vicinity.  Tenant  shall  comply  with and  abide by all  laws, ordinances, and regulations of all municipal, county, state, and federal authorities which are now in force or which may hereafter become effective with respect to use and occupancy of the Leased Premises. Landlord represents, to the best of its knowledge and understanding, without duty of inquiry, that upon Delivery of Possession, the Building shall comply with all currently  applicable  laws, ordinances and regulations of municipal, county, state and federal authorities.

 



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SECTION 7.02. HAZARDOUS SUBSTANCES. Tenant shall not use, produce, store , release, dispose or handle in or about the l eased Premises or transfer to or from the Leased Premises (or permit any other party to do such acts) any Hazardous Substance (as defined herein) except in compliance with alI applicable Environmental laws (as defined herein). Tenant shall not construct or use any improvements, fixtures or equipment or engage in any act on or about the Leased Premises that would require the procurement of any license or permit pursuant to any Environmental Laws. Tenant shall immediately notify landlord of (i) the existence of any Hazardous Substance on or about the Leased Premises that may be in violation of any Environmental Law s (regardless of whether Tenant is responsible for the existence of such Hazardous Substance), (ii) any proceeding or investigation by any governmental  authority  regarding the presence of any Hazardous Substance on the leased Premises or the migration thereof to or from any other property, (iii) all claims made or threatened by any third party against Tenant relating to any  loss or injury resulting from any Hazardous Substance, or (iv) Tenant's notification of the National Response Center of any release of a reportable quantity of a Hazardous Substance in or about the Leased Premises. "Environmenta l aw(s)" shall mean any federal, state or local statute, ordinance, rule,  regulation  or guideline  pertaining to health, industrial hygiene, or the environment, including without limitation, the federal Comprehensive Environmental Response, Compensation, and liability Act.   "Hazardous  Substance(s)" shall mean all substances, materials and wastes that are or become regulated, or classified as hazardous or toxic , under any Environmental l aw. If it is determined that any Hazardous Substance exists on the Leased Premises resulting from any act of Tenant or its employees, agents, contractors, licensees, subtenants or customers, then Tenant shall immediately take necessary act ion to cause the removal of such substance and shall remove such within ten (10) days after discovery.  Notwithstanding the above, if  the Hazardous  Substance  is of  a nature that cannot be reasonably  removed  within  ten  (10) days Tenant shall  not be in  default if  Tenant  has commenced to cause such removal and proceeds diligently thereafter to complete removal, except that in all cases, any Hazardous Substance must be removed within sixty (60) days after discovery thereof. Furthermore, notwithstanding the above, if in the good faith  judgment  of  landlord,  the existence  of such  Hazardous Substance creates an emergency or is of a nature which  may  result  in  immediate physical  danger  to persons at the Property or the Building, landlord may enter upon the Leased Premises and remove such Hazardous Substances and charge the cost thereof to Tenant as Additional Rent.

 


ARTICLE VIII. OPERATION AND MAINTENANCE OF COMMON AREAS


SECTION 8.01. CONSTRUCTION AND CONTROL OF COMMON AREAS. All automobile parking areas, driveways, entrances and exit s thereto, and other facilities furnished by Landlord in or near the Building, including if any, employee parking areas, truck ways, loading docks,  mail  rooms  or  mail  pickup areas, pedestrian sidewalks and hall ways, landscaped areas, retaining walls, stairways, restrooms and other areas and Improvements provided by landlord for the general use in common with all tenants, their officers, agents, employees and customers ("Common Area(s)"), shall at all times be subject to  the exclusive control and management of Landlord, which landlord shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to all facilities and areas mentioned in this Section 8.01. landlord shall have the right to construct, maintain and operate lighting and drainage facilities on or in all such areas and Improvements; to police the same, from time to time to change the area, level, location and arrangement of parking areas and other facilities hereinabove referred to; to restrict parking by tenants, their officers, agents and employees to employee parking areas; to close temporarily all or any portion of such areas or facilities to such extent as may, in the opinion of counsel, be legally sufficient to prevent a dedication thereof or the accrual of any rights to any person or the public therein; to assign "reserved" parking spaces for exclusive use of certain tenants or for customer parking, to discourage non-employee and non-customer parking; and to do and perform such other acts in and to such areas and improvements as, in the exercise of good business judgment, l and lord shall determine to be advisable with a view toward maintaining of appropriate convenience uses, amenities, and for permitted uses by tenants, their officers, agents, employees and customers. landlord shall operate and maintain the Common Areas and Common Facilities (as defined herein) in such a manner as it, in its sole discretion, shall determine from time to time. Without limiting the scope of such discretion, landlord shall have the full right and authority to employ all personnel and to make all rules and regulations pertaining to and necessary for the proper operation, security and maintenance of the Common Areas and Common Facilities. The Building and/or Property signs, traffic control signs and other signs determined by Landlord to be in the best interest of the Building and/or Property shall be considered part of the Common Areas and Common Facilities.

 

For purposes of this Article VIII, "Common Facilities" shall mean all  areas, space, equipment  and special services available for the common or joint  use and/or benefit of any of the occupants of the Building or their employees, agents, servants,  customers and  other  invitees,  including  without  limitation,  parking areas, access roads, driveways, retaining wall s, landscaped areas, truck  service ways  or  tunnels, loading docks, pedestrian lanes, courts, stairs, ramps and sidewalks, comfort and first-aid stations, washrooms, restrooms, janitorial rooms, transformer vaults, electrical rooms, sprinkler riser rooms, common equipment

storage rooms, information booths, canopies, utility systems, energy management systems, roof drains, sumps and gutters, walls and fences, and elevators and air-walk ways, if any.


SECTION 8.02. LICENSE. All  Common Areas and Common Facilities not within the Leased Premises , which Tenant may be permitted to use and occupy, are to be used and occupied under a revocable license, and if the amount of such areas be diminished , Landlord shall not be subject to any liabilities nor shall Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such diminution of such areas be deemed constructive or actual eviction , so long as such revocations or diminutions are deemed by Landlord to serve the best interests of the Building and/or Property. The term of such revocable license shall be coterminous with this Lease and shall not be revoked or terminated during the Rental Term of this Lease.



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ARTICLE IX. ALTERATIONS, SIGNS, LOCKS & KEYS


SECTION 9.01. ALTERATIONS. Tenant shall not make or suffer to be made any alterations or additions to the Leased Premises or any part thereof if in excess of Five Thousand and 00/100 Dollars ($5,000.00) without the prior written consent of Landlord, in Landlord's sole and absolute discretion. Any additions to, or alterations of the Leased Premises, except movable furniture, equipment and trade fixtures, shall become a part of the realty and belong to Landlord upon the expiration of the Rental Term, or any Rental Term extension or renewal thereof, or other termination or surrender of the Leased Premises to Landlord. Tenant shall promptly pay all contractors and material men so as to minimize the possibility of a

li n attaching to the Leased Premises, and should any such lien be made or filed, Tenant shall bond against or discharge the same within ten (10) days after written request by Landlord.   Landlord reserves the right to enter the Leased Premises to post, and keep posted, notices of non-responsibility for any such lien s.


SECTION 9.02. REMOVAL BY TENANT. In the event of any Landlord-approved remodeling by Tenant, Landlord reserves title to al l removed materials, building components, plumbing and HVAC equipment, except that Tenant shall remove from the Leased Premises those items which Landlord chooses not to salvage. All new alterations, decoration s, addition s and improvements made by Tenant beyond costs thereof paid by Land lord, if any, shall be deemed to belong to Tenant although attached to the Leased Premises. However, none of such items may be removed from the Leased Premises and shall become the property of Landlord upon the expiration or prior termination of the Rental Term, or any Rental Term extension or renewal thereof, or other termination or surrender of the Leased Premises to Landlord. Tenant shall not remove any of such alterations, decorations, additions and improvement s, although trade fixtures installed by Tenant may be removed if all rents due herein are paid in full and Tenant is in full compliance with all other terms and conditions in this Lease.


SECTION 9.03. SIGNS. Subject to  the restrictions  of the University  Research  Park, Tenant  shall not place or cause to be placed or maintained  on any  exterior door,  wall  or  window  of  the  Leased  Premises, or elsewhere in the Building , any sign , awning , marquee,  decoration ,  lettering,  attachment, canopy, advertising matter or other thing of any kind, and shall not place or maintain any decoration, lettering or advertising matter on the glass of any window or door of the Leased Premises without first obtaining written approval  from the University  Research  Park  and Landlord.  If any sign is erected prior to obtaining the University Research Park and Landlord's approval or which does not conform to the condition herein specified, Tenant shall be required to remove such sign and repair any damage caused thereby at its sole cost and expense.   Tenant shall maintain any such sign, awning, canopy, decoration, lettering, advertising matter or other things as may be approved in good condition and repair at all times.  Landlord may, at Tenant’s cost, and without liability to Tenant, enter the Leased Premises and remove any item erected in violation of this Section 9.03. Landlord has established rules and regulations governing the size, type and design of all signs, decorations, etc., which are specifically set forth in accordance with the final construction documents approved by Landlord.



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SECTION 9.04.  REMOVAL OF TENANT SIGNS.   At the end of the Rental Term, or any Rental Term extension or renewal thereof, or in the event Landlord or Tenant terminates this Lease, Tenant shall remove all signage on or within the Leased Premises prior to vacating the Leased Premises. In the event Tenant fails toremove its signage within ten (10) days of the expiration or earlier termination of this Lease, Tenant shall pay to Landlord a fee of Fifty Dollars ($50.00) per day for each day Tenant fails to remove its signage from the Leased Premises. Tenant shall, at Tenant's so le cost and expense, repair any and all damage from the removal of any Tenant signage.


SECTION 9.05. LOCKS AND KEYS.

 

(a) The Building shall be equipped with an electronic card access system at entrance to the Building as well as primary doors of the Leased Premises. Landlord shall issue, monitor, and program key cards for Tenant and Tenant's employees, as reasonably needed. When employment relationships change, Tenant shall cooperate to attempt to retrieve such key cards from employees leaving Tenant.

 

(b )Where key access exists, Tenant may change locks or install other locks on doors, but if Tenant does, Tenant must provide Landlord with duplicate keys or key cards, if any, within twenty-four (2 4) hours after such change or installation.

 

(c) Upon termination of this Lease, Tenant shall immediately deliver to Landlord all the keys and/or key cards to the Building and the Leased Premises including any interior offices, toilet rooms, combinations to built-in safes, etc. which shall have been furnished to or by Tenant or are in the possession of Tenant.


ARTICLE X. MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS


SECTION 10.01. LANDLORD'S OBLIGATION FOR MAINTENANCE. Subject to the exception and limitations set forth in Section 10.02 (d) herein below, Landlord shall maintain and repair: (1) the areas outside the Leased Premises including hallway s, stairway s, elevators, public restrooms, if any, general landscaping, Landlord owned parking areas, driveways and walkways; (2) the Building structure including the roof, exterior walls and foundation; and (3) all plumbing, electrical, heating, and air conditioning systems. However, if the need for such repairs or maintenance results from any careless, wrongful or negligent act or omission of Tenant, Tenant shall pay the entire cost of any such repair or maintenance including a reasonable charge to cover landlord's supervisory overhead. Landlord shall not be obligated to repair any damage or defect until receipt of written notice from Tenant of the need of such repair and Landlord shall have a reason able time after receipt of such notice in which to make such repairs. Tenant shall give immediate notice to landlord in case of fire or accidents in the Leased Premises or in the Building of which the Leased Premises is a part or of defects therein or in any fixtures or equipment provided by Landlord.


SECTION 10.02. TENANT'S OBLIGATIONS FOR MAINTENANCE.

 

(a) Tenant shall provide its own janitorial service and keep and maintain the Leased Premises , including the interior wall surfaces and windows, floors, floor coverings and ceilings, in a clean, sanitary and safe condition in accordance with applicable laws of the State and in accordance with all directions, rules and regulations of the health officer, fire marshal, insurance underwriter or rating bureau designated by Landlord, building inspector, or other proper officials of the governmental agencies having jurisdiction , at the so le cost and expense of Tenant, and Tenant shall comply with all requirements of law, ordinance and otherwise, affecting the Leased Premises.

 

(b) Tenant shall pay, when due, all claims for labor or material  furnished,  for  work under Section s 9.01, 9.02, 9.03 and 10.02(a) hereof, to or for Tenant at or for use in the Leased Premises, and shall bond such work to prevent assertion of claims against landlord unless Landlord waives such requirement in writing.

 

(c) Tenant agrees to be responsible for all furnishings, fixtures and equipment located upon the Leased Premises from time to time and shall replace carpeting within the Leased Premises if same shall be damaged by tearing, burning, or stains resulting from spilling anything on such carpet, reasonable wear and tear excepted. Tenant further agrees to use chair mats or floor protectors wherever it uses chairs with wheels or casters on carpeted areas.

 

(d) Tenant shall be responsible for the maintenance, repair and replacement of any HVAC mini split systems for server rooms and/or any other specialty HVAC equipment serving any lab or lab equipment.



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SECTION 10.03  SURRENDER OF LEASED PREMISES AND RIGHTS UPON TERMINATION.


(a) This Lease, and the tenancy hereby created, shall  cease and terminate  at the end of the Rental Term hereof, or any Rent al Term extension or  renewal  thereof,  without  the necessity  of any notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to vacate the Leased Premises and agrees that Landlord  shall  be entitled to the benefit  of all  provisions of law  respecting summary  recovery  of possession  of the Leased Premises  from Tenant holding over to the same extent as if statutory notice has been given.


(b) Upon termination of this Lease at any time and for any reason whatsoever,  Tenant shall surrender  and deliver  up the Leased  Premises, including the  items constituting  Tenant's  Work,  to Landlord in the same condition as when the Leased Premises was delivered to Tenant  or  as altered as provided in Section  9.01,  ordinary  wear and tear excepted.  Upon request of Landlord, Tenant shall promptly remove all  personal  property  from the Leased Premises and repair any damage caused by such removal. Obligations under this Lease relating to events occurring or circumstances existing prior to the date of termination shall survive the expiration or other termination of the Rental Term of this Lease. Liabilities accruing after the date of termination are defined in Sections 11.01, 13.05,

19.01 and 19.02 .


ARTICLE XI. INSURANCE AND INDEMNITY


SECTION  11.01.     TENANT'S LIABILITY INSURANCE AND INDEMNITY .    Tenant shall, during the entire Preliminary Term, Rental Term, and any Rental Term extension  or renewal  thereof, keep  in  full  force and effect a policy of commercial general liability insurance with respect to the Leased Premises, with a combined single limit of not less than Two Million Dollars ($2,000,000.00  ) per occurrence.  The policy  shall name Landlord, property manager (i e., Woodbury Corporation) and any other persons, firms or corporations designated by Land lord and Tenant as named "Additional lnsured(s)", and shall contain a clause that the insurer shall not cancel or change the insurance without first giving Landlord and the property manager ten (10) days prior written notice. Such insurance shall include an endorsement permitting Landlord and property manager to recover damage suffered due to act or omission of Tenant, notwithstanding being named as an Additional Insured party in such policies. Such insurance may be furnished by Tenant under any blanket policy carried by it or under a separate policy therefor. The insurance shall be with an insurance company approved by Landlord and a copy of the paid-up policy evidencing such insurance  or a certificate of insurer certifying to the issuance of such policy, and providing copies of all endorsements, shall be delivered to Landlord. If Tenant fails to provide such insurance, Landlord may do so and charge the same to Tenant.


Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property arising from or out of any occurrence in, upon or at the Leased Premises or from the occupancy or use by Tenant of the Leased Premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, sub-lessees, concessionaires or business invitees unless caused by the negligence of Landlord and to the extent not covered by its casualty or liability insurance. In case Landlord shall, without fault of its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless and shall pay all costs, expenses and reasonable attorneys' fees incurred or paid by either in defending itself or enforcing the covenants and agreements of this Lease.


SECTION 11.02 FIRE AND CASUALTY INSURANCE

 

(a) Subject to the provisions of this Section 11.02, Landlord shall secure, pay for, and at all times during the Rental Term, and any Rental Term extension or  renewal  thereof,  maintain  fi re and casualty extended coverage insurance providing coverage upon the Building Improvements inan amount equal to the full insurable replacement value thereof (as determined by Landlord). Such insurance shall include twelve (12) months rental income coverage as well as such additional endorsements as may be required by Landlord's lender or Landlord.  All insurance required hereunder shall be written by reputable, responsible companies licensed in the State of Utah. Tenant shall have the right, at its request at any reasonable time, to be furnished with copies of the insurance policies then in force pursuant to this Section 11.02, together with evidence that the premiums therefor have been paid.

 


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(b) Tenant agrees to maintain, at its own expense, such fire and casualty insurance coverage as Tenant may desire or require in respect to Tenant's personal property, equipment, furniture, fixtures or inventory and Landlord shall have no obligation in respect to such insurance or losses. All property kept or stored on the Leased Premises by Tenant or with Tenant's permission shall be so done at Tenant's sole risk and Tenant shall indemnify Land lord against and hold it harmless from any claims arising out of loss or damage to the same including, without limitation, any subrogation claims by Tenant' s insurers. In addition, Tenant shall keep in force workmen's compensation or similar insurance to the extent required by law.


(c) Tenant shall not permit the Leased Premises to be used for any purpose which would render the insurance thereon void or cause cancellation thereof or increase the insurance risk or increase the insurance premiums in effect just prior to the Rental Term Commencement Date of this Lease. Tenant agrees to pay as Additional Rent the total amount of any increase in the insurance premium of Landlord over that in effect prior to the Rental Term Commencement Date of this Lease resulting from Tenant's use of the Leased Premises. If Tenant installs any electrical or other equipment which overloads the lines in the Leased Premises, Tenant shall at its own expense make whatever changes are necessary to comply with the requirements of Landlord's insurance.

 

(d) Tenant shall be responsible for all glass breakage in or about the Leased Premises, unless caused by Landlord, its employees or agents, and agrees to immediately replace all glass broken or damaged during the Rental Term, and any Rental Term extension or renewal thereof, with glass of the same quality as that broken or damaged.  Landlord may replace, at Tenant 's expense, any broken or damaged glass if not replaced by Tenant within five (5) days after such damage.

 

SECTION 11.03. WAIVER OF SUBROGATION. Each party hereto does hereby remise, release and discharge the other party hereto and any officer, agent, employee or representative of such party, of and from any liability whatsoever hereafter arising from any insurable loss, damage or injury caused by fire or other casualty for which insurance (permitting waiver of liability and containing a waiver of subrogation) is required to be carried by the injured party pursuant to the terms of this Lease.

 

SECTION 11.04. INDEMNIFICATION


(a) Subject to the terms and conditions set forth in Section 11.03, Tenant shall indemnify Landlord and save it harmless from and against any and all claims, actions,  damages, li ability and expense in connection with loss of life, personal injury and/or damage to property

arising from or out of any occurrence in, upon or at the Leased Premises or from the occupancy or use by Tenant of the Leased Premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, sub lessees, concessionaires or business invitees to extent not covered by insurance required by Article XI.  In case Landlord is, without fault on its part, made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless and shall pay al l costs, expenses and reasonable attorneys' fees incurred or paid by Landlord in defending itself or enforcing the covenants and agreements of this Lease.


(b) Subject to the terms and conditions set forth in Section  11.03, to  the extent not covered by the  insurance  required  to be maintained by Tenant, or that  would  not have been covered by insurance had Tenant maintained such insurance , Landlord agrees to indemnify and save harmless Tenant in regard to third parties for damages occurring on the Common Area proximately caused by the wrongful acts or negligence of Landlord, its contractors, agents  or employees in  scope of their employment, including costs of defense and reasonable attorneys' fees incurred  in  such defense. In case Tenant is, without fault on its part, made a party to litigation against Landlord as a result of such acts or negligence which Tenant's insurer is not required to defend, then Landlord shall indemnify Tenant against costs of such defense including reasonable attorneys' fees.


ARTICLE XII. UTILITY CHARGES


SECTION 12.01. OBLIGATION OF LANDLORD. Subject to the terms of Section 3.03 and unless otherwise agreed in writing by the parties, during the Rental Term of this Lease Landlord shall cause to be furnished to the Leased Premises during Standard Operating Hours as set forth in Section 1.01,the following utilities and services, the cost and expense of which shall be included in Direct Costs, Metered Costs and/or Basic Costs as appropriately categorized by Landlord:

 

(a) Electricity, water, gas and sewer service.

 

(b)Telephone connection, but not including telephone stations and equipment (it being expressly understood and agreed that Tenant shall be responsible for the ordering and installation of telephone lines and equipment which pertain to the Leased Premises).

 

(c)Heat and air-conditioning to such extent and to such levels as, in Landlord's judgment, is reasonably required for the comfortable use and occupancy of the Leased Premises subject however to any limitations imposed by University Research Park or any government agency. The parties agree and understand that the above heat and air-conditioning shall be provided during Standard Operating Hours.



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(d)

Landlord.

(a) Snow removal and parking lot sweeping services for the parking areas owned by

(b) Elevator service.


SECTION 12.02. OBLIGATIONS OF TENANT . Tenant shall arrange for and shall pay the entire cost and expense of al l telephone and data installation and services, equipment and monthly use charges, electric light bulbs (but not fluorescent bulbs used in fixtures originally installed in the Leased Premises) and al l other materials and services not expressly required to be provided and paid for pursuant to the provisions of Section 12.01. Tenant covenants to use good faith efforts to reasonably conserve utilities by turning offlights and equipment when not in use and taking such other reasonable actions in accordance with sound standards for energy conservation. Landlord reserves the right to separately meter or otherwise monitor anutility usage and to separately charge Tenant for its own utilities, in which case an equitable adjustment shall be made to Base Monthly Rent and Tenant's pro-rata share of operating expenses as set forth in this Lease. Additional limitations of Tenant are as follows:


(a) Tenant shall not, without the written consent of Landlord,  which consent shall not be unreasonably  withheld, use any apparatus or device on the Leased Premises using current in excess of 208 volts which shall in any way or to any extent increase the amount of electricity  or water usually furnished or supplied  for use on the Leased Premises  for the Permitted  Use designated in Section 1.01(F), nor connect with electrical  current, except  through  existing electrical  outlets  in the Leased Premises, or water pipe s, any apparatus or device,  for the purposes of using electric current or water;


(b) If Tenant shall require water or electric current in excess of that usually furnished or supplied for use of the Leased Premises, or for purposes other than those designated in Section 1.01(F), Tenant shall first procure the written consent of Landlord for the use thereof, which consent Landlord may refuse and /or Landlord may cause a water meter or electric current meter to be installed in the Leased Premises, so as to measure the amount of water and/or electric current consumed for any such use. The cost of such meters and of installation maintenance, and repair thereof shall be paid for by Tenant and Tenant agrees to pay Landlord promptly upon demand by Landlord for all such water and electric current consumed as shown by such meters, at the rates charged for such service by the city in which the Building is located or the local public utility, as the case may be, furnishing the same, plus any additional expense incurred in keeping account of the water and electric current so consumed; and


(c) If and where heat generating devices are used in the Leased Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install additional or supplementary air conditioning units for the Leased Premises, and the entire cost of installing , operating, maintaining and repairing the same shall be paid by Tenant to Landlord promptly after demand by Landlord .

 

To the extent that Tenant operates hours in excess of the Standard Operating Hours, Tenant may cause Landlord to provide services set forth in Section 12.01 la), (b), (c) and (e) above; however, Tenant shall pay extra hourly utility charges as set forth in Section 1 .01(Q). If electricity is separately metered pursuant to Section 3.03(c), then Tenant shall not be required to pay extra electrical charges as electrical  usage during extra hours and such usage shall be metered and charged to Tenant in any case.


SECTION 12.03. EXTRA HOURS CHARGES. To the extent Tenant operates hours other than the Standard Operating Hours as set forth in Section 1.01(Q), Tenant shall pay an extra hourly utility charge pursuant to Section 1.01 (Q) for lighting and electricity and for mechanical/HVAC system use.  Tenant shall pay such charges within ten (10) days after invoice therefor. If Tenant fails to pay such invoice when due, Tenant shall pay interest and a late fee in accordance with Section 3.07. Costs incurred by Landlord for operating "extra hours" shall not be included in operating expenses pursuant to Section 3.03.



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SECTION 12.04. LIMITATIONS ON LANDLORD'S LIABILITY. Landlord shall not be liable for and Tenant shall not be entitled to terminate this Lease or to effectuate any abatement or reduction of Base Monthly Rent by reason of Landlord's failure to provide or furnish any of the foregoing utilities or services if such failure was reasonably beyond the control of Landlord. In no event shall Landlord be li ab le for loss or injury to persons or property, however, arising or occurring in connection with or attributable to any failure to furnish such utilities or services even if within the control of Landlord.


ARTICLE XIII. ESTOPPEL OR OFF-SET STATEMENT, ATTORNMENT AND SUBORDINATION


SECTION 13.01. ESTOPPEL OR OFF-SET STATEMENT. Tenant agrees, within ten (10) days after request therefor by Landlord, to execute in recordable form and deliver to Landlord a statement in writing, certifying:

 

(a) that this Lease is unmodified and in full force and effect, or if there have been modifications, stating the modifications;

 

(b) the Rental Term Commencement Date;

 

(c) that rent is paid currently without any off-set or defense thereto;

 

(d) the amount of rent, if any, paid in advance; and

 

(e) that there are no uncured defaults by Landlord or stating those claimed by Tenant.

 

Tenant's failure to execute and deliver such statement within the ten (10) day period shall be an event of default which is subject to the remedies set forth in Section 13.05 herein and  further deemed to make conclusive and binding upon Tenant the statements contained therein as true and correct without exception . Unless Tenant shall have notified Landlord in writing within the ten  (10) day period  of any qualifications Tenant may have to the aforesaid statements, then anyone participating with Landlord in the sale or mortgage shall have the right to rely on the accuracy of such statement.


SECTION  13.02.  ATTORNMENT.    In the event any proceedings are brought for the foreclosure of, or in  the event  of exercise of the power of sale under any mortgage or deed  of trust made by Landlord covering the Leased Premises, or in the event Landlord conveys in a sale all of its rights and duties in and  to this Lease and the Leased Premises, Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as Landlord under this Lease.


SECTION 13.03. SUBORDINATION. Tenant  agrees that  this  Lease  shall ,  at  the  request  of Landlord, be subordinate to any first mortgages or deeds of trust that may hereafter be placed upon the Leased Premises and to any and all advances to be made thereunder, and to the interest thereon, and any Rental Term renewals, replacements and extensions thereof, provided the mortgagees or trustees named in such mortgages or deeds of trust shall agree to recognize this Lease in the event of foreclosure, if Tenant is n o t in default.


SECTION  13.04.   MORTGAGEE SUBORDINATION.    Tenant hereby agrees that this Lease shall , if at any time requested by Landlord or any  lender in respect to Landlord 's financing of  the Property or the Building in which the Leased Premises is located or any portion hereof, be made superior to any mortgage or deed of trust that may have preceded this Lease.


SECTION 13.05 . REMEDIES.   Failure of Tenant  to execute and  deliver any of the above instruments within fifteen (1 5) days after written request to do so by Landlord shall constitute a breach of this Lease which entitles Landlord, at its option, to cancel this Lease and terminate Tenant' s interest therein.

 



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ARTICLE XIV. ASSIGNMENT


SECTION 14.01. CONSENT REQUIRED.   Tenant  shall  not assign this Lease in  whole or in part, nor sublet all or any part of the Leased Premises, or an y part thereof, nor mortgage nor encumber this Lease or any part of the Leased Premises, nor enter into licenses or concession agreements or in other manner permit the occupation of or sharing of possession of any part of the Leased Premises, or any assignment of this Lease or any estate or interest therein (all of the foregoing being hereafter referred to as an "Assignment") without first obtaining the prior written consent of Land lord, which consent  shall  not be unreasonably withheld . The consent of Landlord shall not relieve Tenant from continuing liability for all obligations under this Lease. Any Assignment by operation of law or if Tenant is a corporation, unincorporated association or partnership , the transfer, assignment or hypothecation of any stock or interest in  such corporation, association or partnership in the aggregate in excess of fifty percent (50%) shall be deemed an Assignment within  the meaning  of this Article XIV. An Assignment conummated in violation of the provisions of this Article XIV shall be null and void and of no force or effect.


SECTION  14.02.  OPTION  TO TERMINATE.   In  the event Tenant  desires to make any such Assign- ment, Tenant shall serve written notice up on Landlord; and Landlord shall have sixty (60) days after written notice to elect whether to app rove such Assignment, reject such Assignment or to terminate this Lease. Should Landlord elect to terminate, Landlord shall so notify Tenant in writing and Ten ant shall have fifteen (15) days either to rescind the request, or this Lease shall be deemed terminated effective at the end of the calendar month when Landlord so elects to terminate.  Tenant's notice shall  be accompanied by a copy of a bona fide offer from a potential "Assignee" specifying the terms of any offer from such Assignee. If Landlord so elects to terminate, Landlord shall pay to Tenant a sum not exceeding the lower of any bona fide offer from a potential Assignee, or remaining book value of Tenant 's improvements to the real estate.


SECTION 14.03. CONDITIONS OF CONSENT.


(a) Should consent be granted, such consent shall be subject to Tenant causing the Assignee to execute an agreement directly with Landlord  undertaking to be bound by all  the terms, covenants and conditions contained in this Lease as though Assignee had originally executed this Lease as Tenant.


(b) Tenant shall pay to Landlord  any and all consideration received by Tenant for such Assignment to the extent such consideration exceeds the remaining boo k value of Tenant's leasehold improvements paid for by Tenant, whether paid in lump sum or in rent exceeding Base Monthly Rent required under this Lease.



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(c) At no time when Tenant is in default in the performance of any covenant of this Lease or in payment of Base Monthly Rent or any other matured sums payable hereunder shall any Assignment be app roved or permitted, nor shall the notice provision of Section 14.02 limit the right to declare default and pursue other remedies provided for in this Lease or under the laws of the State of Utah.


SECTION 14.04. STANDARDS OF REASONABLENESS IN WITHHOLDING CONSENT. In determining whether to grant con sent, Landlord may consider any statutory or common law tests including, but not limited to, the following tests, each of which if applicable in Landlord's sole business judgment , shall be deemed a reasonable ground for rejection:


(a) Any Assignment disapproved by Landlord ' s lender;


(b) Any Assignment resulting in a change of Permitted Use from that specified in Section 1.01 (F);


(c) Any Assignment to an Assignee who lacks good reputation, successful business experience in Tenant's type of business and substantial means and financial capacity adequate to conduct such a business;


(d) Any Assignment which would breach any covenant of Landlord respecting use or exclusivity in any other lease, financing agreement or other agreement relating to the Building .

 

However, any Assignment to a parent corporation, or to a successor corporation acquiring substantially all the assets of Tenant , and intending to operate Tenant's business under the same trade name, shall be deemed reasonable.

 

Consent by Landlord to one (1) or more Assignments shall not constitute a waiver or consent  to any  subsequent Assignment nor exhaust Landlord's rights under this Article XIV; nor shall acceptance of Base Monthly Rent, Additional Rent or any other payment from Assignee be deemed a waiver or consent by Landlord or an acceptance of such Assignment. Any Assignment without such Land lord 's consent  shall be void and of no force and effect and shall confer no estate or benefit  on anyone,  nor shall  Landlord   be required to terminate this Lease in order to invalidate such Assignment.



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SECTION 14.05. DOCUMENTATION OF ASSIGNMENT. Whether the documentation of any such Assignment shall be prepared by Tenant or by Landlord or its attorneys, all costs and reasonable attorneys' fees related to considering such Assignment shall be paid by Tenant, which fees payable to Landlord shall in no case be less than One Thousand Five Hundred Dollar s ($1,500.00) per Assignment considered, payable by Tenant upon demand as Additional Rent.


SECTION 14.06. CONTINUING LIABILITY OF TENANT. Neither the consent of Landlord nor any otherwise permitted Assignment or subletting shall relieve Tenant from continuing liability under this Lease, including liability for Base Monthly Rent as provided in Section 1.01 (L) and 1.01(M) and any Additional Rent for which Tenant shall remain obligated.


SECTION  14.07.  VOIDABLE  ASSIGNMENT.    Any  assignment,  subletting  ,  occupancy or  use without the prior written consent of Landlord shall be voidable in Landlord 's sole and absolute discretion  and shall constitute a default under this  Lease.  Tenant  specifically  understand s and agrees that  at any  time Tenant is in default under the provisions of this Article XIV, Tenant shall  have noright to assign  or sublet Tenant's interest in this Lease  and  Landlord  shall  have  no obligation  to give  approval  or disapproval  under this Article XIV should Tenant attempt an assignment or subletting while in default.

 


ARTICLE XV.    WASTE OR NUISANCE


SECTION 15.01. WASTE OR NUISANCE. Tenant shall not commit or suffer to be committed any waste upon the Leased Premises, or any nuisance or other act or thing which may disturb the quiet enjoyment of any other tenant in the Building in which the Leased Premises may be located, or elsewhere within the Building or the Property.

 


ARTICLE XVI.   NOTICES


SECTION 16.01. NOTICES. Except as provided in Section 19.01, any notice, demand, request or other instrument which may be or is required to be given under this Lease shall be personally delivered or mailed by United States certified mail, return receipt requested, postage prepaid, or via a nationally recognized overnight courier or expedited mail service, and shall be addressed (a) if to Landlord at the address set forth in Section 1.01(C) and Section 6.01, or at such other address as Landlord may designate by written notice and (b) if to Tenant at the address set forth in Section 1.01(E) or at such other address as Tenant shall designate by written notice. Notice shall be effective on delivery unless delivery is refused or cannot be made, in which event notice shall be effective on mailing. In order for notices to be deemed received by Landlord, Tenant must include the details as outlined in Section 1.01(C) and Section 6.01.


Notwithstanding the foregoing, any notices Landlord is required or authorized to deliver to Tenant in order to advise Tenant of alleged v1olat1ons of Tenant's covenants relating to advertising, signs, parking of automobiles, hours of operation, failure of Tenant  to properly maintain  or repair  the Leased  Premises,  all  as  provided in, but not limited to, Articles VII, IX and X and Sections 8.01, 15.01  and  1 6.02, must be in  writing but may be served upon Tenant by delivering a copy of such notice to Tenant as above specified and delivering a copy of such  notice to one (1) of Tenant's managing employees at the Leased Premises



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ARTICLE XVII. DESTRUCTION OF LEASED PREMISES SECTION 17.01. DESTRUCTION

 

(a) If the Leased Premises is partially or totally destroyed by fire or other casualty insurable under standard fire insurance  policies  with extended  coverage  endorsement  so  as to become partially or totally untenantable, the same shall be repaired or rebuilt as speedily as practical under the circumstances at the expense of Landlord , unless Landlord elects not to repair or rebuild as provided in sub section (b) of this Section  17.01.  During the  period  required  for  restoration,  a  just and proportionate part of Base Monthly Rent, Additional Rent and other charges payable by Tenant hereunder shal l be abated until the Leased Premises is  repaired or rebuilt.

 

(b) If the Leased Premises is (i) rendered totally untenantable  by reason of an occurrence described  in  subsection 17.01(a), or (ii) damaged or destroyed as a result  of a risk which is not insured under Landlord's fire insurance  policies, or (iii) at least twenty percent (20 %) damaged or destroyed during the last two (2) years of the Rental Term,  or (iv) if the Building is damaged  in whole or in part (whether or not the Leased Premises is  damaged), to such an extent that Tenant cannot practically use the Leased Premises for its intended purpose , then and in any such events Landlord may at its option terminate this Lease by notice in writing to  Tenant  within sixty  (60) day s after the date of such occurrence. Unless Landlord gives such notice, this Lease shall remain in full force and effect and Landlord shall repair such damage at its expense as expeditiously as possible under the circumstances.

 

(c) If  Landlord should elect or be obligated, pursuant to subsection 1 7.01(a), to repair or rebuild because of any damage or destruction, Landlord 's obligation shall be limited to the original Building and any other work or improvements which may have been originally performed or installed at Landlord ' s expense. If the cost of performing Land lord's obligation exceeds the actual proceeds of insurance paid or payable to Land lord on account of such casualty, Landlord  may terminate this Lease unless Tenant, within fifteen (15) days after demand therefor, deposits with Landlord a sum of money sufficient to pay the difference between  the cost of repair and the proceeds of the insurance available for such purpose. Tenant shall replace all work and improvements not originally installed or performed by Landlord at its expense.

 

(d) Except as stated in this Article XV II, Landlord shall not be liable for any loss or damage sustained by Tenant by reason of casualties mentioned hereinabove or any other accidental casual ty.


ARTICLE XVIII. CONDEMNATION


SECTION 18.01. CONDEMNATION. As used in this Section 18.01, the term "Condemnation Proceedings()" means any  action  or proceeding in  which any interest in  the  Leased  Premises  or  the Building is taken for any public or quasi-public  purpose by any  lawful authority  through  exercise  of the power of eminent domain or right of condemnation or by purchase or otherwise in  lieu  thereof.  If the whole of the Leased Premises is taken through Condemnation Proceeding s, this Lease shall automatically terminate as of the date possession is taken by the condemning authority. If in excess of twenty-five percent  (25%)  of the Leased Premises is taken, either party hereto shall have the option to terminate this Lease by giving the other written notice of such election at any time  within  thirty  (30) days after  the date of taking.  If  less than  twenty­ five percent (25%) of the sp ace is taken and Landlord determines, in Landlord's  so le discretion ,  that  a reasonable amount of reconstruction  thereof shall not result  in  the Leased Premises or  the Building becoming a practical improvement reasonably suitable for use for the purpose  for  which  it  is designed , then  Landlord may elect to terminate this Lease by  giving thirty  (30) days  written  notice as provided  hereinabove .  In  all other cases, or if neither party exercises its option to terminate, this Lease shall remain in effect and the rent payable hereunder from and after the  date  of  taking  shall  be  proportionately  reduced  in  proportion  to  the ratio of: (i) the area contained in the Leased Premises which is capable  of  occupancy  after  the taking;  to (ii) the total area contained in the Leased  Premises which  was capable of occupancy  prior to the taking.  In the event of any termination or rental  reduction  provided  for  in  this  Section  18.01,  there shall  be  a proration  of the rent payable under this Lease and Landlord shall refund any excess theretofore paid  by  Tenant.  Whether or not this Lease is terminated as a consequence of Condemnation Proceedings, all damages or compensation awarded for a partial or  total  taking,  including any  sums compensating  Tenant  for diminution  in  the  value of or deprivation of its leasehold estate, shall be the sole and exclusive property of Landlord , except  that Tenant shall be entitled to any awards intended to compensate Tenant for expenses of locating and moving Tenant's operations to a new space.


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ARTICLE XIX.    DEFAULT OF TENANT


SECTION  19.01.  DEFAULT - RIGHT  TORE-ENTER.    In the event  of any  failure of Tenant  to pay any Base Monthly Rent, Addition al Rent and other charges due hereunder, within ten (10) days after the same shall be due, shall have been mailed to Tenant by registered mail to Tenant' s address as listed in Section1.01(E) or to such address as Tenant has specified in writing, or any failure by Tenant to perform an y other of the terms, conditions or covenants required of Tenant by this Lease within thirty (30) days after written notice of su c h default shall have been mailed to Tenant by registered mail to Tenant 's address as listed in Section 1.01(E) or to such address as Tenant has specified in writing, or if Tenant shall abandon the Leased Premises, or permit this Lease to be taken under any writ of execution, then Landlord, besides other rights or remedies it m ay have, shall have the right to declare this Lease terminated and the Rental Term ended and shall have the immediate right of re-entry and may remove all persons and property from the Leased Premises. Such property may be removed and stored in a public ware house or elsewhere at the cost of an d for the accou nt of Tenant, without evidence of notice or resort to legal process and without being deemed guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. Ten an t hereby waives all compensation for the forfeiture of the Rental Term or its loss of possession of the Leased Premises in the event of the forfeiture of this Lease as provided  for above.   Any notice that  Landlord  may desire or is required  to give Tenant with reference to the foregoing provision may, in lieu of mailing, at the option of Landlord,  be conspicuously posted for ten (10 ) consecutive days at the main entrance to or in front of the Leased Premises, and such notice shall constitute a good,  sufficient, and  lawful no tice for the purpose of declaring a forfeiture of this Lease and for terminating all of the rights of Tenant hereunder.


SECTION 19.02. DEFAULT - RIGHT TORE-LET. Should  Landlord  elect tore-enter, as provided herein, or should it take possession pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease or it may from time to time, without terminating this Lease, make such alterations and repair s as may be necessary in order tore-let the Leased Premises and may re-let the Leased Premises, or any part thereof, for such term or terms (which may be for a term extending beyond the Rental Term of this Lease) and at such rent or rental income and upon such other terms and conditions as Landlord in its so discretion may deem advisable. Upon each re-letting, all rental income received by Landlord from such re-letting shall be applied, first, to the payment of any indebtedness other than rents due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such re-letting, including brokerage fees and attorneys' fees and costs of such alteration s and repairs; third, to the payment of rents due and unpaid hereunder; and fourth, the residue, if an y, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. If such rental  income receive d  from such  re­ letting during any month is less than those payable during that month by Tenant hereunder, Tenant shall pay any such deficiency immediately to Landlord .  Such deficiency shall   be calculated  and  paid monthly.   No su c h re-ent ry or taking possession of the Leased Premises by Landlord  shall be construed as an election on its part to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any such re-letting without termination, Landlord  may at any time thereafter elect to terminate this Lease for such previous breach. Should Landlord  at any time terminate this Lease for any breach, in addition to any other remedies it may have,  it  may recover from Tenant all  damages it may incur by reason  of such breach,  including the cost of recovering the Leased Premises, reasonable attorneys' fees, and including the worth at the time of such termination of the excess, if any, of the amount of rents and other charges equivalent torents reserved in this Lease for the remainder of the stated Rental Term over the then reasonable rental value of the Leased Premises for the remainder of the Rental Term, all of which amounts shall be immediately due and payable from Tenant to Landlord. In determining the rents which would be payable by Tenant hereunder, subsequent to default , Base Monthly Rent for each year of the unexpired Rental Term shall be equal to the average Base Monthly Rent and Additional Rent payable by Tenant from the Rental Term Commencement Date to the time of default, or during the preceding three (3) full calendar years, whichever is the greater amount.


SECTION  19.03 .  LEGAL EX PENSES .    In  case of default by either party in  the performance and obligation s under this Lease, the non-prevailing party shall pay all  costs incurred  in  enforcing this Lease,  or an y right arising out of the breach thereof, whether by suit or otherwise, including reasonable attorneys' fees.



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ARTICLE XX. BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP


SECTION 20.01. ACT OF INSOLVENCY, GUARDIANSHIP, ETC. The following shall constitute a default of this Lease by Tenant for which Landlord, at Landlord's option, may immediately terminate this Lease.


(a) The appointment of a receiver to take possession of all or substantially all of the assets of Tenant;


(b) A general assignment by Tenant of its assets for the benefit of creditors;

(c) Any action taken or suffered by or against Tenant under any federal or state insolvency or bankruptcy act; and


(d) The appointment of a guardian, conservator, trustee, or other similar officer to take charge of all or any substantial part of Tenant's property.


Neither this Lease, nor any interest therein nor any estate thereby created shall pa ss to any trustee, guardian, receiver or Assignee for the benefit of creditors or otherwise by operation of law.


SECTION 20 . 02 . BANKRUPT CY . If Land lord shall not be permitted to terminate this Lease as hereinabove provided because of the provisions of the United States Code relating to Bankruptcy (" Bankruptcy Code "), then Tenant as a debtor- in-possession or any trustee for Tenant agrees promptly, within no more than fifteen (15) days upon request by Landlord to the " Bankruptcy Court ", to assume or reject this Lease and Tenant on behalf of itself, and any trustee agrees not to seek or request any extension or adjournment of any application to assume  or reject  this Lease by Landlord  with such  Bankruptcy Court.  In such event, Tenant or any trustee for Tenant may only assume this Lease if (a) it cu res or provides adequate assurance that the trustees shall promptly cure any default hereunder, (b ) compensates or provides adequate assurance that Ten ant shall promptly compensate Landlord  for an y actual pecuniary loss to Land lord resulting from Tenant's default s, and (c) provides adequate assurance of performance during the  full y stated  Rental Term hereof of all the terms, covenants, and provisions of this Lease to be performed by Tenant.  In no event after the assumption of this Lease shall any then-Existing default remain uncured for a period in excess of the earlier of ten (10) days or the time period set forth herein.  Adequate assurance of performance of this Lease, as set forth hereinabove, shall include,  without  limitation,  adequate assurance (1) of the source of  rent reserved he reunder, (2) that the assumption of this Lease shall not breach any provision  hereunder, and  (3) that business operated shall comply with the Permitted U se covenant s set forth in Section 1.01(F) and Section 7.01. In the event of a filing of a petition under the Bankruptcy Code, Landlord shall have no obligation to provide Tenant with an y services or utilities as herein required, unless Tenant shall have paid and be current in all payments of Operating Expenses, utilities or other charges therefor. Tenant shall pay all of Landlord ' s costs incurred as a result of Tenant's insolvency and/or bankrupt cy proceedings including , but not limited to, reasonable attorneys' fees incurred as a result of Landlord 's participation in and /or monitoring of Tenant 's insolvency proceeding.



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ARTICLE XXI.    LANDLORD ACCESS


SECTION 21.01 . LANDLORD ACCESS. Landlord or Landlord 's agent shall have the right to enter the Leased Premises at all reasonable times to examine the same, or to show the Leased  Premises to prospective purchasers or lessees of the Bu illding, or to make all reasonable repair s, alterations, improvements or additions as Landlord  may deem necessary or desirable, and Land lord shall be allowed to take all material into and up on the Leased Premises that may be required therefor without the same constituting an eviction of Tenant in whole or in part, and the rents reserved shall in no wise abate while such repairs, alterations, improvements, or addition s are being made, by reason  of  loss or interruption of business of Tenant,  or otherwise. During the ninety (9 0)  days prior  to the expiration of the Rental  Term,  or any Rental  Term extension or renewal thereof, Land lord may exhibit the Leased  Premises to prospective  tenants  and  place upon the Leased Premises the usual notices "To  Let"  or "For Rent"  which notices Tenant  shall permit  to remain without molestation.


ARTICLE XX II . TENANT'S PROPERTY AND LAND LORD 'S LIEN


SECTION 22 . 01. TAXES ON LEASEHO LD. Tenant shall be responsible for and shall pay before delinquency all municipal, county and state taxes assessed du ring the Rental Term of this Lease against any leasehold interest, improvements, trade fixtures or personal property of any kind, owned by or place d in, upon or about the Leased Premises by Tenant, and taxes, levies or fees assessed on the basis of Tenant's occupancy thereof, including, but not limited to, taxes measured by Base Monthly Rent and Additional  Rent due from Tenant hereunder.


SECTION 22.02 . LOSS AND DAMAGE. Landlord shall not be responsible or liable to Tenant for any loss or damage that may be occasioned by or through the acts or omissions of persons occupying adjoining spaces or an y part of the spaces adjacent to or connected with the Leased Premises hereby or any part of the Building of which the Leased Premises is a p art, or for any loss or damage resulting to Tenant or its property from bursting, stoppage or leaking of water, gas, sewer or steam pipes or for any damage or loss of property within the Leased Premises from any cause w hatsoever.


SECTION 22 . 03 . NOTICE BY TENANT .   Tenant shall give immediate telephone, electronic mail, or express delivery notice to Landlord in case of fire, casualty or accidents in the Leased Premises or in the Building of which the Leased Premises is a part or of defects therein or in any fixtures or equipment , and Tenant shall promptly thereafter confirm such notice in writing.

SECTION 22.04. LANDLORD'S  LIEN .   Tenant is advised that Utah Code Section 38-3-1 and following grants Landlord  (Lessor) a lien in regard to unpaid rent.


SECTION  22.05 .  LANDLORD'S  SUBORDINATION.   Provided  that Tenant  is not  in  default hereunder, Landlord  agrees to sub ordinate its lie n on Tenant 's personal property to that of any bona-fid e third party lender providing financing which directly benefit s Tenant's operations in the  Leased Premises. However, Landlord shall refuse and shall otherwise not be required to sub ordinate its lien or priority as to Tenant's equipment, trade fixtures or persona l property, and Landlord shall be entitled to refuse subordination if loans are not directly related to the Leased Premises.

 


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ARTICLE XXIII.   HOLDING OVER


SECTION 23.01.  HOLDING  OVER. Any holding over after the expiration of the Rental Term,  or any Rental Term extension thereof, without Landlord 's approval, shall  be construed  to be a tenancy-at-will and all provision s of this Lease shall be and remain in effect except that Base Monthly Rent shall be equivalent to two hundred percent (200 %) of Base Monthly Rent (including any adjustments as provided herein ) payable for the last full calendar month of the Rental Term, including an y Rental Term extension or renewal thereof, or tenancy on a month-to-month basis.


SECTION 23.02. SUCCESSORS. All rights and liabilities herein given to, or imposed up on, the respective parties hereto shall extend to and bind the several respective heir s, executors, administrators,

Successors and assign s of such parties; and if there shall be more than one (1) tenant, they shall al l be  bound jointly and severally by the terms, covenants and agreements herein. No rights, however, shall i n u re to the benefit of any Assignee of Tenant unless the assignment to such assignee has been approve d by Land lord in writing as provided in Section 14.01 hereof.


ARTICLE XXIV.    RULES AND REGULATIONS


SECTION  24.01.   RULES  AND   REGULATIONS.    Tenant agrees to comply with and observe all rules and regulations as established by Landlord  and  which are now,  or which may be hereafter,  prescribed by Landlord  from time to time, provided, in Landlord' s sol e and absolute discretion, and posted in or about the Leased Premises or otherwise brought to the notice of Tenant, both with regard to the Building  as a w hol e and to the Leased Premises, including Common Areas and Common Facilities. Tenant's failure to keep and observe such rules and regulations shall constitute a breach of the terms of this Lease in the manner as if such rules and regulations were contained herein as covenants.

 

ARTICLE XXV .   QUIET ENJOYMENT


SECTION 25.01.  QUIET EN JO YM EN T.   Up on payment by Tenant of the rents herein  provided, and up on the observance and performance of all the covenants, terms and conditions on Tenant' s part to be observed and performed, Tenant shall peaceably and quietly hold and enjoy the Leased Premises for the Rental Term, and any Rental Term extension or renewal thereof, without hindrance or interruption by

Landlord  or any other person or persons lawfully or equitably claiming by, through or under Landlord , subject, nevertheless, to the terms and conditions of this Lease, and actions resulting from future eminent domain proceedings and casualty losses.



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ARTICLE XXVI.    SECURITY DEPOSIT


SECTION 26.01. SECURITY DEPOSIT. Landlord herewith acknowledges receipt of the Security Deposit in the amount set forth in Section 1.01(S) which is to be retained as security for the faithful performance of all the covenant s, conditions and agreements of this Lease, but in no event shall Landlord  be obliged to apply the same up on rents or other charges in arrears or upon damages for Tenant 's failure to perform such covenant s, conditions and agreements; Landlord  may so apply the Security Deposit, at itsoption; and Landlord 's right to the possession of the Leased Premises for non-payment of rents or for other reasons shall not in any event be affected by reason of the fact that Landlord  holds the Security Deposit. Such sum, if not applied toward the payment of rents in  arrears  or toward the payment  of damages suffered by Landlord  by reason of Tenant 's breach of the covenants, conditions and agreements of this Lease, is to be returned to Tenant without  interest  when  this Lease is terminated or expired,  according to these terms,  an d  in no event is the Security Deposit to be returned until Tenant has vacated the Leased Premises and delivered possession to Landlord. In the event that Landlord repossesses the Leased Premises because of Tenant 's default or because of Tenant's failure to carry out the covenant s, conditions and agreements of this Lease, Landlord  may app ly the Security Deposit toward damages as may be suffered or shall accrue thereafter by reason of Tenant 's default or breach. In the event of bankruptcy or other debtor-credit or proceedings against Tenant as set forth in Article XX , the Security Deposit shall be deemed to be applied first to the payment of Base Monthly Rent. Additional Rent and other charges due to Landlord for the earliest possible periods prior to the filing of such proceedings. Landlord shall not be obliged to keep the Security Deposit as a separate fund, but may mi x the same with its own funds.


SECTION 26 . 02. TRANSFER OF LANDLORD 'S INTEREST IN THE SECURITY DEPOSIT. Landlord may deliver the Security Deposit to the purchaser or assignee of Landlord 's interest in the Leased Premises and thereupon Landlord shall be discharged from any further  liability with respect to the Security  Deposit. This Section 26.02 shall also apply to any subsequent transfers of Landlord 's interest in the Leased Premises .

 


ARTICLE  XXVII.  MISCELLANEOUS


SECTION 27.01. WAIVER. One (1) or more waivers of any covenant or condition by Landlord shall not be construed as a waiver of a sub sequent breach of the same covenant  or condition and  the consent or approval to or of an y sub sequent or similar act by Tenant . The subsequent acceptance of rents hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rents so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rents. No breach of a covenant or condition of this Lease shall be deemed to have been waived by Landlord, unless such waiver is in writing signed by Landlord.



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SECTION 27.02. ENTIRE LEASE AGREEMENT. This Lease and the exhibits and riders,  if any attached hereto and forming a part hereof, set forth all the covenant s, promises, agreements, condition s, and understandings between Landlord  and Tenant concerning the Leased Premises, and there are no covenants, promises, agreements, conditions, representations or understandings, either oral or written, between them other than are herein  set forth.  No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord  or Tenant unless reduced to writing and signed by each party.


SECTION 27 . 03. INTERPRETATION, USE OF PRONOUNS. Nothing contained herein  shall  be deemed or construed by the parties hereto, nor  by  any  third party,  as  creating  the  relationship  of  principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of rent, nor any other provision  contained herein, nor any acts  of the parties herein, shall be deemed to create any relationship between  the parties hereto  other  than  the relationship of Landlord  and Tenant. Whenever herein the singular number is used, the same shall include the plural, and the masculine gender shall include the feminine and neutral genders.


The laws of the state where the Building is situated shall govern the validity, performance andenforcement of this Lease. Although the printed provisions of this Lease were draw n by Landlord, this Lease shall not be construed either for or against Landlord or Tenant, but this Lease shall be interpreted in accordance with the general tenor of the language in an effort to reach an equitable result.


The parties agree that any deletion of language from this Lease prior to mutual execution by Landlord and Tenant shall not be construed to have any particular meaning or to raise any presumption or implication, including without limitation, any implication that the parties in tended thereby to state the converse or opposite of the deleted language. It is the intention of the parties hereto that, if any provision of this Lease is capable of two (2) construction s, one (1) of which would render the provision void and one (1) of which would render the provision valid , then the provision shall have the meaning which renders it valid .


SECTION  27.04.  FORCE MAJEURE.   In the event  that  either  party hereto  shall  be delayed  or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lockouts, labor troubles, in ability to procure materials, failure of power,  restrictive  governmental  laws or  regulations, riots, insurrection,  war  or other reason of a like nature not the fault of the party delayed  in  performing  work or doing acts required under the terms of this Lease, then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. The provisions of this Section 27.04 shall not operate to excuse Tenant from prompt payment of Base Monthly Rent, Addition al Rent or any other payments required by the terms of this Lease.



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SECTION 27.05. CAPTIONS AND SECTION NUMBERS. The captions, section numbers, article numbers and index appearing in this Lease are inserted only as a matter of convenience and in no way define, limit , construe, or describe the scope or intent of such section s or articles of this Lease nor in any way affect this Lease.


SECTION 27 . 06 . BROKER 'S COMMISSION.   Each of the parties represents and warrants that there are no claim s for brokerage commission s or finder 's fees in connection with the  execution  of this  Lease, except as listed below, and each of the parties agrees to indemnify the other against, and hold it  harm less from, all liabilities arising from any such claim (including , without limitation , the cost of reasonable attorneys' fees in connection therewith) except as follows: Land lord  has commission  obligation  to Woodbury Corporation. This provision in no way creates any third-party beneficiary rights in any party, nor does it create any liability on the part of Tenant to pay any or all of the commission due Tenant's broker or Landlord 's broker.


SECTION 27.07. RECORDI NG . Tenant shall not record this Lease without the written consent of Landlord; however, upon the request of either party hereto, the other party shall join in the execution of a memorandum or so -called "short form"  of this Lease for the purposes of recordation.  Such memorandum  or short form of this Lease shall describe the parties, the Leased Premises, the Rental Term, and any Rental Term extension or renewal thereof, any special provisions, and shall in corporate this Lease by reference.


SECTION 27.08. CONSENT NOT UNREASONABLY WITHHELD . Landlord agrees that whenever under this Lease a provision is made for Tenant to secure the written consent of Land lord,  such  written consent shall not be unreasonably withheld, except as provided in Article XIV.


SECTION 27.09 . FURNISHING OF FINANCIAL STATEMENTS. Up on Landlord's written request, Tenant shall promptly furnish Landlord , from time to time, financial statements reflecting Tenant 's current financial condition.


SECTION 27.10. TIME OF ESSENCE. Time is of the essence in the performance of all covenants and conditions in this Lease for which time is a factor.


SECTION  27.11.  ACCORD  AND SATISFACTION .   No  payment by Tenant or receipt by Landlord  of a lesser amount than the amount owing hereunder shall be deemed to be other than  on  account  of the earliest stipulated amount receivable from Tenant, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord  may accept such check or payment  without prejudice to  Landlord 's right to recover the balance of such  rent or receivable or pursue any other remedy available under this Lease  or the  law  of the state  wherein  the Leased Premises is located.


SECTION 27.12. NO OPTION . The submission of this Lease for examination does not constitute a reservation of, or option for, the Leased Premises. This Lease becomes effective as a lease only upon full execution and deli very thereof by Landlord and Tenant.



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SECTION 27.13. ANTI-DISCRIMINATION. Tenant herein covenants by and for itself, its heirs, executors, administrators and assigns and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of race, sex, marital status, color, creed, national origin or ancestry, in the leasing, subleasing, assigning, use, occupancy, tenure or enjoyment of the Leased Premises, nor shall Tenant itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, or sub tenants in the Leased Premises.


SECTION  27.14.   SEVERABILITY.    If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby an d each term, covenant or condition of this Lease shall be valid and be  enforced to the fullest extent permitted by law.


SECTION 27.15 . SURVIVAL OF OBLIGATIONS. The provisions of this Lease, with respect to any obligation of Tenant to pay any sum owing in order to perform any act after the expiration or early termination of this Lease, shall survive the expiration or earl y termination of this Lease.


SECTION 27.16. WARRANTY OF AUTHORITY . The person(s) executing this Lease on behalf of Tenant hereby covenant(s) and warrant(s) as of the Effective Date that (a) Tenant is a duly constituted entity, qualified to do business in the state where the Leased Premises is located, and (b l Tenant has paid all applicable franchise fees and taxes, and (c) Tenant shall file when  due all  future forms, reports, fees, and other documents necessary to comply with applicable laws. If Tenant is a corporation, Tenant shall furnish Landlord  with such evidence as Land lord reasonably requires to evidence the binding effect on Tenant of the execution of this Lease.


SECTION 27.17 . TENANT'S LIABI LITY. In the event there is more than one (1 ) Tenant hereunder, the li ability of each shall be  joint and several.


SECTION 27.18 .   LANDLORD'S  LIABILITY.    Landlord 's liability hereunder shall be limited solely to Landlord's interest in the Building.


SECTION  27.19 .   COUNTERCLAIM  AND JURY  TRIAL    In the event that  Landlord  commences any summary proceedings or action for non-payment of Base Monthly Rent, Additional Rent or other charges provided for in this Lease, Tenant shall not interpose any non-compulsory counterclaim of any nature or description in any such proceeding or action. Tenant and Landlord both waive a tri al by jury of any or all issues arising  in  any action  or proceeding between the parties hereto or their successors, under or relating to this Lease, or any of its provisions. Notwithstanding the foregoing, this provision shall not prohibit Tenant from bringing any claim it may have against Land lord in a separate and distinct proceeding.



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SECTION 27.20. TRANSFER OF LANDLORD'S INTEREST IN THE LEASED PREMISES. In the event of any transfer or transfers of Landlord 's interest in the Leased Premises, the transferor shall be automatically relieved of any and all obligations and li abilities on the part of Landlord accruing from and after the date of such transfer, provided the transferee assumes such obligations and liabilities.


SECTION 27.21. TENANT SELECTION BY LANDLORD. Landlord reserves the absolute right to effect such  other tenancies in the Building as Landlord , in the exercise of its so le business judgment, shall determine to best promote the interests of the Building. Tenant does not rely on the fact, nor does Landlord  represent, that any specific tenant or number of tenants shall , during the Rental Term of this Lease, occupy any space in the Building.


SECTION 27.22. DISCLOSURE OF PARTIES. Landlord is a limited liability company, one (1) or more Managers of which is a li censed real estate broker or agent.


SECTION 27.23. TENANT REPRESENTATIONS AND WARRAN TIES.

 

(a) Tenant represents and warrants to Land lord that as of the date of execution of this Lease:


(i) Tenant warrants that all in formation and documentation provided to Landlord   in conjunction  with negotiations relative to this Lease (e.g. lease application,financials, credit reports or references) which are incorporated herein by reference, are true and correct and Tenant has n o t made any material misrepresentations or omissions relative to such;


(ii) If Tenant is an entity other than a natural born person , Tenant is a duly formed, validly existing organization  an d  in  good standing  under the laws of the state of its organization and that it has duly registered with the Secretary of State where the Leased Premises is located and is law full y authorized to conduct business in such state;


(iii) Tenant has full power and authority to conduct its business as presently conducted and to enter into this Lease and the terms, provisions, covenant s and obligations of Tenant as set forth in  this Lease are legally binding on and enforceable against Tenant; and


(iv) The execution, delivery and performance of this Lease do not and shall not (i) violate or conflict with the organizational documents of Tenant, (ii ) violate or conflict with any judgment, decree or order of any court applicable to or affecting Tenant, (iii ) breach the provisions of, or constitute a default under, any contract, agreement, instrument or obligation to which Tenant is a party or by which Tenant is bound , or (iv) violate or conflict with any law or governmental regulation or permit applicable to Tenant.


(b) Throughout the Rental Term, Tenant shall promptly notify Landlord of any material changes to any of the forgoing warranties and/or upon discovery of any material omission  or errors in any of the documentation or information provided before or after this Lease has been executed.


(c) Upon Landlord 's request, Tenant shall provide to Landlord  true and complete copies of organizational documents; certificates of good standing; and other  documentation evidencing the authority of parties acting on behalf of Tenant.



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SECTION 27.24. EXECUTIVE ORDER CERTIFICATION . For purposes of compliance with executive Order 13224 and related regulations, Landlord and Tenant each represent and warrant that:


(i) it is not acting, directly or indirectly, for or on behalf of any person, group, entity , or nation named by any Executive Order, the United States Department of Justice, or the Unit d States Treasury department as a terrorist, "Specially Designated National or Blocked Person," or other banned or blocked person, entity, nation, or transaction ("SON") pursuant to any law, order, rule or regulation that is en forced or administered by the Office of Foreign Assets Control ("OFAC");


(ii) it is not engaged in this transaction, directly or indirectly on behalf of, any such person , group, entity or nation; and


(iii) it is not in violation of Presidential Executive order 13224, the USA Patriot Act, the Bank Secrecy Act, the Money Laundering Control Act or an y regulations promulgated pursuant thereto.

Landlord agrees to defend, indemnify, and hold harmless Tenant from and against any and all  claims, damages, losses, risks, liabilities and expenses (including attorney's fees and costs) arising from or related to any breach of the foregoing certification . Should Landlord, during the Rental Term of this Lease, be designated an SDN , Tenant may, at its sole option, terminate this Lease.

 

Tenant agrees to defend, indemnify , and hold harmless Landlord from and against any and all  cl aims, da mages, losses, risks, li abilities and expenses (including attorney's fees and costs) arising from or related to any breach of the foregoing certification. Should Tenant, during the Rental Term of this Lease, be designated an SDN , Landlord  may, at its sole option , terminate this Lease.



ARTICLE XXVIII. ADDITIONAL PROVISIONS


SECTION 28.01. OPTION TORENEW.   Provided  Tenant  is not,  and  has not been, in default beyond any applicable cure period under any of the terms and conditions contained  herein,  Tenant  shall have a one (1) additional consecutive one (1) year option  to renew and  extend the Rent al  Term ("Option") as provided herein. Said Option shall be deemed automatically renewed for another one (1) year  period unless either Landlord  or, Tenant delivers written notice to the other party not less than ninety (90) days prior to the expiration of the Rental Term . Base Monthly Rent for said Option period shall be as follows:


Option Period- Commencing on the 1" day of the 13'h month After the Rental Term Commencement Date


Base Monthly Rent $12,412.53


[Signature Page ( s ) to f ollow]



IN  WITNESS WHEREOF,   Landlord and Tenant  have signed and sealed this Lease as of the day and year first above written.



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SIGNATURES:


LANDORD: PARADIGM RESOURCES, L.C., a Utah limited liability company


By: WOODBURY CORPORATION, a Utah Corporation, its Manager


BY:/s/ O. Randall Woodbury


O. Randall Woodbury, President


By: /s/ W. Richard Woodbury


W. Richard Woodbury, Chairman


BY: TACHUS, INC. a Utah Corporation, its Manager


By: /s/ Don R. Brown


Don R. Brown, President


TENANT: PREDICTIVE TECHNOLOGY GROUP, INC, a Nevada Corporation.


By: /s/ Bradley Robinson


Bradley Robinson, President/CEO



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ACKNOWLEDGMENT OF TENANT

/s/NOTARY SEAL


ACKNOWLEDGMENT OF LANDLORD

/s/NOTARY SEAL

 

EXHIBIT "A"

 

 

EXHIBIT "A -1" EXHIBIT " B"

 

 

SITE PLAN LEASE PLAN-LEGAL DESCRIPTION

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Exhibit 10.10

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[EX1010002.JPG]

[EX1010003.JPG]

[EX1010004.JPG]


[EX1010005.JPG]

[EX1010006.JPG]

[EX1010007.JPG]

Exhibit 10.11

[EX1011001.JPG]

[EX1011002.JPG]

[EX1011003.JPG]

[EX1011004.JPG]

[EX1011005.JPG]

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Exhibit 10.12


EMPLOYMENT AGREEMENT


This Employment Agreement (this “ Agreement ”) is effective as of [DATE], by and between PREDICTIVE TECHNOLOGY GROUP, INC., a Nevada corporation (the " Company "), and __________, an individual (the " Executive ").


In consideration of the promises and mutual covenants contained herein, the parties hereto agree as follows:

 

1.

Employment; Location .  The Company hereby employs Executive and Executive hereby accepts such employment in the State of ________ or in such other location as may be mutually agreed between the parties.


2.

Term .  The Company agrees to employ Executive and Executive agrees to accept employment with the Company for a term commencing on the date hereof and continuing until either party gives thirty days notice of termination (the “ Term ”).

3.

Duties and Authorities .  During the Term (as defined below):


3.1

Executive shall act as ___________. Executive shall have such duties as may be assigned from time to time by the Board of Directors of the Company (the “Board”) and which are consistent with the role of ___________.  Executive shall participate in ______________.  


3.2

Except as otherwise expressly provided herein, Executive shall diligently execute such duties and shall devote his part-time, skills and efforts to such duties, subject to the general supervision and control of the Board and officers of the Company. Executive will work for the Company on a full time basis.  


4.

Compensation and Benefits .  The Company shall pay Executive, and Executive accepts as full compensation for all services to be rendered to the Company, the following compensation and benefits:


4.1

Base Salary .  The Company shall pay Executive an annual salary of _________ ($_____) per year, payable in equal installments once monthly or at more frequent intervals in accordance with the Company's customary pay schedule, subject to such increases as the Company may determine from time to time in its sole discretion.


4.2

Stock Options . The Company will grant Executive an option to purchase _____ shares of the Company's Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date of grant, as determined by the Company’s Board of Directors.   This option grant shall be subject to the terms and conditions of Company’s Stock Option Plan and Stock Option Agreement, including vesting requirements.  No right to any stock is earned or accrued until such time that vesting occurs, nor does the grant confer any right to continue vesting or employment. The Stock Option Grants shall be in substantially the same form as attached hereto as Exhibit B .  


4.3

Bonus Compensation .  Executive shall also be entitled to a cash bonus, if any, as the Board may determine is appropriate in its sole discretion. Any bonus shall be payable in accordance with the applicable payroll and/or other compensation policies and plans of the Company as from time to time in effect.


4.4

Additional Benefits .  Executive shall be permitted, during the Term, if and to the extent eligible, to participate in any group life, hospitalization or disability insurance plan, health or dental program, pension plan, similar benefit plan or other so-called "fringe benefits" of the Company in accordance with the rules (if any) established by the Board in its discretion for participation in any such plans as may be in effect from time to time.


4.5

Vacation .  Executive shall be entitled to take a reasonable amount of paid vacation. Any questions about the reasonableness of Executive’s vacation shall be determined by the Company.  Executive agrees to give reasonable notice of his vacation scheduling requests, which shall be allowed subject to the Company's reasonable business needs.  Vacation may not be carried over from one year to the next year.


4.6

Deductions .  The Company shall have the right to deduct from the compensation due to Executive hereunder any and all sums required for social security and withholding taxes and for any other federal, state or local tax or charge which may be hereafter enacted or required by law as a charge on the compensation of Executive.


5.

Business Expenses .  Executive may incur reasonable, ordinary and necessary business expenses in the course of his performance of his obligations under this Agreement, including expenses for travel, food and entertainment.  The Company shall reimburse Executive for all such business expenses if (a) such expenses are incurred by Executive in accordance with the Company's business expense reimbursement policy, if any, as may be established and modified by the Company from time to time, and (b) Executive provides to the Company a record of (1) the amount of the expense, (2) the date, place and nature of the expense, (3) the business reason for the expense and (4) all supporting documentation as may be required from time to time by the relevant tax laws or regulations.


6.

Termination .


6.1

Termination for Cause .  The Term and Executive's employment hereunder shall be terminable for Cause (as defined below) upon written notice from the Company to Executive.  As used in this Agreement, " Cause " shall mean one of the following:  (a) a material breach by Executive of the terms of this Agreement (including without limitation habitual neglect of or deliberate or intentional refusal to perform any of his material duties and obligations under this Agreement) other than due to Executive’s death or Disability (as defined in Section 6.2 below), not cured within two (2) weeks from receipt of notice from the Board of such breach, (b) material wrongful misappropriation of any money, assets or other property of the Company or any subsidiary or affiliate of the Company, (c) the conviction of Executive for any felony or a crime involving moral turpitude, or (d) Executive’s chronic alcoholism or chronic drug addiction.



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6.2

Termination for Death or Disability .  In accordance with applicable law, the Board may terminate the Term for the death or Disability (as defined below) of Executive.  As used in this Agreement, " Disability " shall mean Executive is unable to perform (except due to chronic alcoholism or chronic drug addiction) the essential functions of his job and render services of the character previously performed in the ordinary course and that such inability continues for a period of at least three (3) consecutive months (or for shorter periods totaling more than three (3) months during any period of twelve (12) consecutive months).  Termination resulting from Disability may only be effected after at least thirty (30) days written notice by the Company of its intention to terminate Executive's employment.  Executive shall receive full compensation, benefits, and reimbursement of expenses pursuant to Sections 4 and 5 above through the date of termination, and no other amounts shall be payable (except pursuant to any Company disability or health plan in which Executive is then enrolled).  In the event of Executive’s death, the Company shall pay his estate full compensation, benefits and reimbursement of expenses pursuant to Sections 4 and 5 above through the date of such death and shall continue any health benefits in which Executive’s family was participating at the time of such death for a period of not less than such period as may be required by applicable law.


6.3

Termination by Executive .  Executive may terminate the Term and his employment with the Company and resign from any and all positions as officer or director of the Company and/or its subsidiaries only for Good Reason (as defined below).  As used in this Agreement, " Good Reason " shall mean any of the following:  (a) material breach of this Agreement by the Company that continues following not less than two (2) weeks written notice from Executive of such breach or (b) a requirement by the Company that the Executive relocate and/or perform a substantial portion of his work from a location outside of the state of ______. If Executive desires to terminate for Good Reason under clause (b) above, Executive shall provide written notice of such determination not later than 30 days of being informed in writing by the Company of the relevant requirement or event.  If Executive terminates for Good Reason, Executive shall be entitled to all amounts due and payable through the termination date under Sections 4 and 5 above and Section 6.4 below, and no other amounts shall be payable.  


6.4

Severance . In the event (i) the Company terminates Executive’s employment for reasons other than Cause or Disability or (ii) Executive terminates Executive’s employment for Good Reason, then the Company will continue to pay Executive's full base salary for a period of ______ months from said termination date.


6.5

Effect of Termination .  In the event Executive's employment is terminated, all obligations of the Company and all obligations of Executive shall cease except that (i) the terms of this Section 6 and of Sections 8 through 20 below shall survive such termination and (ii) the terms of Section 7 below shall survive if the termination occurs under Section 6.1.  Executive acknowledges that, upon termination of his employment, he is entitled to no other compensation, severance or other benefits other than those specifically set forth in this Agreement.  The provisions of this Section 6 are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive may otherwise be entitled, either at law, tort or contract, in equity, or under this Agreement, as a result of any termination of Executive's employment.



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7.

Covenant Not to Compete .


7.1

Noncompete .  During the term of my employment and for a period of one year thereafter (the “Restricted Period”) Executive will not, directly or indirectly, engage in competition with the Company in any manner or capacity (e.g., as an advisor, principal, agent, partner, officer, director, stockholder, employee, representative, independent contractor, member of any association or otherwise) in any phase of the business which the Company is conducting during the term of this Agreement, including developing any products in the field of molecular diagnostics and HCT/Ps. Executive’s obligations under this Section 7.1 shall apply to the United States of America and any other geographic area in which the Company (i) has engaged in business during the term of this Agreement through production, promotional, sales or marketing activity, or otherwise, or (ii) has otherwise established its goodwill, business reputation or any customer or supplier relations.


7.2

Post-Termination Employment . Executive acknowledges that (i) in the event this Agreement terminates for any reason, Executive will be able to earn a livelihood without violating the above restrictions; and (ii) that Executive’s ability to earn a livelihood without violating such restrictions is a material condition to employment with the Company.


7.3

Scope of Restraint Post-Termination Competition . The parties have attempted to limit Executive’s right to compete only to the extent necessary to protect the Company from unfair competition. The parties recognize, however, that reasonable people may differ in making such a determination. Consequently, the parties hereby agree that if the scope or enforceability of the restrictive covenant is in anyway disputed at any time, a court or trier of fact may modify and enforce the covenant to the extent it believes to be reasonable under the circumstances existing at the time.


8.

Confidential Information .  Executive acknowledges that during his employment or consultancy with the Company he will develop, discover, have access to and/or become acquainted with technical, financial, marketing, personnel and other information relating to the present or contemplated projects or the conduct of business of the Company which is of a confidential and proprietary nature (" Confidential Information ").  Executive agrees that all files, records, documents and the like relating to such Confidential Information, whether prepared by him or otherwise coming into his possession, shall remain the exclusive property of the Company, and Executive hereby agrees to promptly disclose such Confidential Information to the Company upon request and hereby assigns to the Company any rights which he may acquire in any Confidential Information.  Executive further agrees not to disclose or use any Confidential Information and to use his best efforts to prevent the disclosure or use of any Confidential Information either during the term of his employment or consultancy or at any time thereafter, except as may be necessary in the ordinary course of performing his duties under this Agreement.  Upon termination of Executive's employment or consultancy with the Company for any reason, (a) Executive shall promptly deliver to the Company all materials, documents, data, equipment and other physical property of any nature containing or pertaining to any Confidential Information, and (b) Executive shall not take from the Company's premises any such material or equipment or any reproduction thereof.


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9.

Inventions .


9.1

Disclosure of Inventions .  Executive hereby agrees that if he conceives, learns, makes or first reduces to practice, either alone or jointly with others, any " Employment Inventions " (as defined in Section 9.3 below) while he is employed by the Company, either as an employee or as a consultant, he will promptly disclose such Employment Inventions to the Board or to any other Company officer designated by the Board.


9.2

Ownership, Assignment, Assistance and Power of Attorney .  All Employment Inventions shall be the sole and exclusive property of the Company, and the Company shall have the right to use and to apply for patents, copyrights or other statutory or common law protection for such Employment Inventions in any country.  Executive hereby assigns to the Company any rights which he may acquire in such Employment Inventions.  Furthermore, Executive agrees to assist the Company in every proper way at the Company's expense to obtain patents, copyrights and other statutory or common law protections for such Employment Inventions in any country and to enforce such rights from time to time.  Specifically, Executive agrees to execute all documents as the Company may desire for use in applying for and in obtaining or enforcing such patents, copyrights and other statutory or common law protections together with any assignments thereof to the Company or to any person designated by the Company.  Executive's obligations under this Section 9 shall continue beyond the termination of his employment under this Agreement, but the Company shall compensate Executive at a reasonable rate after any such termination for the time which Executive actually spends at the Company's request in rendering such assistance.  In the event the Company is unable for any reason whatsoever to secure Executive's signature (after reasonable attempts to do so) to any lawful document required to apply for or to enforce any patent, copyright or other statutory or common law protections for such Employment Inventions, Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agents and attorneys-in-fact to act in his stead to execute such documents and to do such other lawful and necessary acts to further the issuance and prosecution of such patents, copyrights or other statutory or common law protection, such documents or such acts to have the same legal force and effect as if such documents were executed by or such acts were done by Executive.


9.3

Employment Inventions .  The definition of “ Employment Invention ” as used in this Section 9 is the definition found in Section 2 of the Utah Employment Inventions Act (Utah Code Ann. § 34-39-2) as follows:  " Employment Invention " means any invention or part thereof conceived, developed, reduced to practice, or created by an employee which is:  (a) conceived, developed, reduced to practice, or created by the employee: (i) within the scope of his employment; (ii) on his employer's time; or (iii) with the aid, assistance, or use of any of his employer's property, equipment, facilities, supplies, resources, or intellectual property; (b)  the result of any work, services, or duties performed by an employee for his employer; (c) related to the industry or trade of the employer; or (d) related to the current or demonstrably anticipated business, research, or development of the employer.




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9.4

Exclusion of Prior Inventions .  Executive has identified on Exhibit A attached hereto a complete list of all inventions which Executive has conceived, learned, made or first reduced to practice, either alone or jointly with others, prior to employment with the Company and which Executive desires to exclude from the operation of this Agreement.  If no inventions are listed on Exhibit A , Executive represents that he has made no such inventions at the time of signing this Agreement.


9.5

Inventions of Third Parties .  Executive shall not disclose to the Company, use in the course of his employment, or incorporate into the Company's products or processes any confidential or proprietary information or inventions that belong to a third party, unless the Company has received authorization from such third party and Executive has been directed by the Board to do so.


10.

Non-Solicitation .  Executive shall not during the term of this Agreement, and for a period of one (1) year following termination of employment with the Company, employ, solicit for employment, or advise or recommend to any other person that they employ or solicit for employment or retention as a consultant, any person who is, or was at any time within one (1) year prior to the Executive’s date of termination of employment with the Company, an employee of, or exclusive consultant to, the Company.


11.

No Conflicts .  Executive hereby represents that, to the best of his knowledge, his performance of all the terms of this Agreement and his work as an employee or consultant of the Company does not breach any oral or written agreement which he has made prior to his employment with the Company.


12.

Equitable Remedies .  Executive acknowledges and agrees that the breach or threatened breach by him of certain provisions of this Agreement, including without limitation Sections 7, 8, 9, or 10 above, would cause irreparable harm to the Company for which damages at law would be an inadequate remedy.  Accordingly, Executive hereby agrees that in any such instance the Company shall be entitled to seek injunctive or other equitable relief in addition to any other remedy to which it may be entitled.


13.

Assignment .  This Agreement is for the unique personal services of Executive and is not assignable or delegable in whole or in part by either party without the consent of the other party.


14.

Waiver or Modification .  Any waiver, modification or amendment of any provision of this Agreement shall be effective only if in writing in a document that specifically refers to this Agreement and such document is signed by the parties hereto.


15.

Entire Agreement .  This Agreement constitutes the full and complete understanding and agreement of the parties hereto with respect to the specific subject matter covered herein and therein and supersede all prior oral or written understandings and agreements with respect to such specific subject matter.


16.

Severability .  If any provision of this Agreement is found to be unenforceable by a court of competent jurisdiction, the remaining provisions shall nevertheless remain enforceable in full force and effect, and the court making such determination shall modify, among other things, the scope, duration, or geographic area of such affected provision to preserve the enforceability thereof to the maximum extent then permitted by law.



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17.

Notices .  All notices thereunder shall be in writing addressed to the respective party as set forth below and may be personally served, sent by facsimile transmission, sent by overnight courier service, or sent by United States mail, return receipt requested.  Such notices shall be deemed to have been given:  (a) if delivered in person, on the date of delivery; (b) if delivered by facsimile transmission, on the date of transmission if transmitted by 5:00 p.m. (Salt Lake City time) on a business day or, if not, on the next succeeding business day; provided that a copy of such notice is also sent the same day as the facsimile transmission by any other means permitted herein; (c) if delivered by overnight courier, on the date that delivery is first attempted; or (d) if by United States mail, on the earlier of two (2) business days after depositing in the United States mail, postage prepaid and properly addressed, or the date delivery is first attempted.  Notices shall be addressed as set forth as set forth on the signature page hereof, or to such other address as the party to whom such notice is intended shall have previously designated by written notice to the serving party.  Notices shall be deemed effective upon receipt.


18.

Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the State of Utah, without reference to the choice of law provisions thereof.


19.

Attorneys' Fees .  In the event an action or proceeding is brought by any party under this Agreement to enforce or construe any of its terms, the party that prevails by enforcing this Agreement shall be entitled to recover, in addition to all other amounts and relief, its reasonable costs and attorneys' fees incurred in connection with such action or proceeding.


20.

Construction .  Whenever the context requires, the singular shall include the plural and the plural shall include the singular, the whole shall include any part thereof, and any gender shall include all other genders.  The headings in this Agreement are for convenience only and shall not limit, enlarge, or otherwise affect any of the terms of this Agreement.  Unless otherwise indicated, all references in this Agreement to sections refer to the corresponding sections of this Agreement.  This Agreement shall be construed as though all parties had drafted it.


21.

Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.  Counterparts and signatures transmitted by facsimile shall be valid, effective and enforceable as originals.




7



IN WITNESS WHEREOF, Executive has signed this Agreement personally and the Company has caused this Agreement to be executed by its duly authorized representative.

 

“Company”:


PREDICTIVE TECHNOLOGY GROUP, INC.


By:______________________________

Name:___________________________

Title:____________________________


Address:

 

Predictive Technology Group, Inc.

Attn:  CEO

2735 Parleys Way, Suite 205

Salt Lake City, Utah 84109

Fax: (801) 487-2477


“Executive”:

 

_________________________________

Individually


Address:


_______________________

_______________________



8



EXHIBIT A


EXCLUDED INVENTIONS



EXHIBIT B


(FORM OF STOCK OPTION GRANTS)


PREDICTIVE TECHNOLOGY GROUP, INC.

 STATUTORY STOCK OPTION AGREEMENT

UNDER THE 2015 STOCK OPTION PLAN


THIS AGREEMENT is made as of ________, 2018, between Predictive Technology Group, Inc., a Nevada corporation (the "Company"), and _______ (the "Optionee").


THE PARTIES AGREE AS FOLLOWS:


1. Option Grant. The Company hereby grants to Optionee an option (the "Option") to purchase the number of shares of the Company's common stock (the "Shares"), for an exercise price per share (the "Option Price") and based upon a Grant Date, all as set forth below:


Shares under option: ______

Option Price per Share: $____

Grant Date: _____


The Option will be subject to all of the terms and conditions set forth herein and in the Company's 2015 Stock Option Plan (the "Option Plan"), a copy of which has been provided to Optionee and is incorporated by reference. The Option granted hereunder are incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.


9

 


2. Installment Exercises.


Subject to such further limitations as are provided herein, the Option shall become exercisable in _____ installments, Optionee having the right hereunder to purchase from the Company the following number of Shares upon exercise of the Option, on and after the following dates, in cumulative fashion:

 

_____________________________

_____________________________

 

 

3. Shareholder Rights. No rights or privileges of a shareholder in the Company are conferred by reason of the granting of the Option. Optionee will not become a shareholder in the Company with respect to the Shares unless and until the Option has been properly exercised and the Option Price fully paid as to the portion of the Option exercised.

 

4. Termination. Subject to earlier termination as provided in the Option Plan, this Option will expire, unless previously exercised in full, on the ten year anniversary of the Grant Date.

 

5. Terms of the Option Plan. Optionee understands that the Option Plan includes important terms and conditions that apply to this Option. Those terms include (without limitation): important conditions to the right of Optionee to exercise the Option; important restrictions on the ability of Optionee to transfer the Option or to transfer Shares received upon exercise of the Option; and early termination of the Option following the occurrence of certain events, including Optionee no longer being an employee, director, consultant or independent contractor to or of the Company or its subsidiaries. Optionee acknowledges that he or she has read the Option Plan, agrees to be bound by its terms, and makes each of the representations required to be made by Optionee under it.

 

6. Nondisclosure . Optionee covenants and agrees that Optionee will not directly or indirectly disclose to other employees, affiliates, advisors, consultants or members of the Company any details relating to this Option, including, but not limited to, the option price, the Shares under Option, the vesting terms, the grant dates or other information relating hereto (“Confidential Information”). In the event that Confidential Information is disclosed in a manner that is prohibited by this Section 6, the Company will have the option at any time and from time to time to terminate this Option in whole or in part. Nothing in this Section 6, however, will prohibit the Optionee from disclosing Confidential Information if such information (a) was legally in the public domain prior to the time of disclosure by the Optionee, (b) is now or subsequently becomes generally available to the public through no fault of Optionee, (c) is disclosed at the request of the Company’s president or a member of its board of directors, or (d) is required by law, regulation, rule, act, or order of any governmental authority or agency to be disclosed by the Optionee.

 

7. Miscellaneous. Neither the adoption of the Option Plan nor the grant of the Option (a) shall confer upon Optionee any right to continue as a director or employee of, or consultant or advisor to, the Company or (b) shall affect in any way the right of the Company to terminate the employment or other service of Optionee at any time. This Agreement (together with the Option Plan) sets forth the complete agreement of the parties concerning the subject matter hereof, superseding all prior agreements, negotiations and understandings. This Agreement will be governed by the substantive law of the State of Nevada, and may be executed in counterparts. The parties hereby have entered into this Agreement as of the date set forth above.


PREDICTIVE TECHNOLOGY GROUP, INC.

 

By: _______________________________


Title:


"OPTIONEE" _____________________________

 



10

EXHIBIT 21.1


(Subsidiaries)


1.

Predictive Biotech, Inc., a Utah corporation

2.

Predictive Analytics, Inc., a Utah corporation

3.

Predictive Laboratories, Inc., a Utah corporation

4.

Predictive Diagnostics, Inc., a Utah corporation

5.

Predictive Therapeutics, LLC, a Utah limited liability company

6.

Juneau Biosciences, LLC, a Utah limited liability company

Exhibit 23.1



CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 


We hereby consent to the incorporation in this Registration Statement on Form 10 of our report dated December 4, 2018, relating to the financial statements of Predictive Technology Group, Inc., as of June 30, 2018 and 2017 and to all references to our firm included in this Registration Statement.  


/s/ BF Borgers CPA PC


Certified Public Accountants

Lakewood, Colorado

December 5, 2018