As filed with the Securities and Exchange Commission on July 20, 2007

Registration No. 333-______

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________

FORM SB-2

______________

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

GelTech Solutions, Inc.

(Name of Small Business Issuer in its Charter)

Delaware

3530

56-2600575

(State or other jurisdiction of

(Primary Standard Industrial

(I.R.S. Employer

incorporation or organization)

Classification Code Number)

Identification No.)

1460 Park Lane South, Suite 1

Jupiter, Florida 33458

(561) 427-6144

(Address and telephone number of principal executive offices)

Michael Cordani

Chief Executive Officer

1460 Park Lane South, Suite 1

Jupiter, Florida 33458

(561) 427-6144

(Name, address and telephone number of agent for service)

______________

Copies to:

Michael D. Harris, Esq.

Harris Cramer LLP

1555 Palm Beach Lakes Boulevard

Suite 310

West Palm Beach, Florida 33401

(561) 478-7077

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.  ý

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  ¨


 

 




CALCULATION OF REGISTRATION FEE

Title of Each
Class of Securities
to be Registered

Amount to be

Registered

Proposed
Maximum
Offering Price
Per Share(1)

Proposed
Maximum
Aggregate
Offering Price(1)

Amount of 
Registration Fee

Common Stock, $0.001 par value per share(1)

2,252,932

$0.667

$1,502,706

$47

———————

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Section 6(b) of the Securities Act of 1933 and computed pursuant to Rule 457(o) promulgated under the Securities Act. The price per share is based upon the most recent private sale of the common stock. The proposed maximum aggregate offering price of the registrant’s common stock was calculated with the proposed maximum offering price per share multiplied by the number of shares of the registrant’s common stock.

The registrant hereby amends this registration statement on such date or date(s) as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the commission acting pursuant to said Section 8(a) may determine.





The information in this prospectus is not complete and may be changed. The securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.


Subject to completion: dated July 20, 2007

PROSPECTUS

GELTECH SOLUTIONS, INC.

2,252,932 Shares of Common Stock

This prospectus relates to the sale of up to 2,252,932 shares of our common stock which may be offered by the selling shareholders identified in this prospectus. All such shares being offered are presently outstanding, except for shares issuable upon exercise of warrants.

We will not receive any proceeds from the sale of shares of our common stock, with the exception of the possible exercise of 207,311 warrants.

No public market currently exists for our shares of common stock.

The common stock offered in this prospectus involves a high degree of risk. See “Risk Factors” beginning on page 5 of this prospectus to read about factors you should consider before buying shares of our common stock.

The selling shareholders are offering these shares of common stock. The selling shareholders may sell all or a portion of these shares from time to time in market transactions through any market on which our common stock is then traded, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the then prevailing market price or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a combination of such methods of sale. The selling shareholders will receive all proceeds from the sale of the common stock. For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution.”

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is, July __, 2007







TABLE OF CONTENTS

                                                                                                                                                                                                        Page

Prospectus Summary

1

Risk Factors

5

Forward-Looking Statements

13

Market for Common Stock

13

Private Placements and Exchange Offer

13

Capitalization

14

Management’s Discussion and Analysis or Plan of Operation

15

Business

18

Management and Board of Directors

29

Executive Compensation

31

Related Person Transactions

34

Principal Shareholders

36

Selling Shareholders

38

Description of Securities

42

Plan of Distribution

44

Legal Matters

44

Experts

44

Additional Information

45

Financial Statements

F-1

You should rely only on information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. The selling shareholders are not offering to sell or seeking offers to buy shares of common stock in jurisdictions where offers and sales are not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.




i





PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled “Risk Factors” before deciding to invest in our common stock.

Our Company

GelTech Solutions, Inc. markets and sells one polymer-based product and intends to market and sell two additional polymer-based products that serve different markets.

We recently initiated marketing RootGel, which is a polymer that can absorb hundreds of times its weight in water. A particular polymer has been discovered for use in spraying devices that does not clog the spray nozzles or pumps. We have a pending United States patent application for the polymer mixture and method of spray application. We have an agreement in principle to appoint Golf Ventures, Inc., a leading distributor of products to over 800 golf courses in Florida, as our exclusive distributor for the State of Florida. We expect to sign a definitive agreement in the near future and, following that, to enter into a similar agreement with a “sister” company, Golf Ventures West, Inc., covering the State of Arizona.

Upon the closing of our private placement on May 29, 2007, we placed orders with a third-party manufacturer for the initial inventory of RootGel. We delivered to Golf Ventures $12,496 of RootGel consisting of both the sprayable and granular forms which are to be sold by their sales force to their customers throughout Florida. In addition, a major golf course developer is currently testing RootGel at a development in South Carolina. Since RootGel can absorb many times its weight in water, we believe it has uses in many agricultural markets as well as the golf course maintenance industry. Although our initial marketing of RootGel has been aimed at golf courses, Mr. Michael Brown, our Senior Vice President of Government Relations, has advised us that the recent drought in parts of the United States, including the West, Southwest and Southeast, has created an opportunity to demonstrate to governments that RootGel can provide a solution to crop shortages. Accordingly, we intend to begin marketing RootGel to governments and agricultural interests.

Another product is FireIce, a fire suppression product for which GelTech has a United States patent pending. We believe FireIce can be a valuable tool to sell into the $2 billion per year fire suppression market. When FireIce is made into a gel and sprayed onto a fire, it prevents any further burning - even when a blowtorch is applied directly onto the area coated with FireIce. In addition to applying FireIce directly on fires, it can also be sprayed on homes as a fire retardant and on foliage to prevent the spread of fires.

Based upon discussions with fire departments and input from a member of our Board of Directors who had a long history with the Miami-Dade County, Florida Fire Department, we believe that fire departments throughout the United States will be interested in purchasing FireIce once we begin a formal sales campaign. Another target market consists of state and federal governments, which can use FireIce in combating forest fires. In California, forest fires recur each year and cause major damage and economic harm. This past spring, North Florida and Southeast Georgia struggled to suppress forest fires.

In order to market FireIce, we are required to obtain third-party certification as to its safety. Companies such as Underwriter’s Laboratories do not certify products like FireIce. Recently, the National Fire Protection Association or NFPA, which publishes fire safety standards, issued a standard which covers new fire suppressants like FireIce. In late June, we signed an agreement with a leading independent laboratory to test the safety of FireIce. If it meets the safety standard published by the NFPA, we will be in position to begin marketing FireIce. We expect that the testing will be completed by October 2007.

We also intend to distribute IceWear, a garment line that cools the body temperature of the person wearing it. IceWear can be used as a cooling vest by firefighters, hazmat teams, military personnel, race car drivers and others who are subject to intense heat. We tested IceWear with race car drivers and television cameramen in 2006. The test was featured on ESPN2. We expect to complete a prototype of IceWear in the next four to six months and begin marketing it shortly thereafter. We have one issued United States patent and one pending United States patent application for IceWear. The vendor we are using to package RootGel has indicated an interest in producing the IceWear prototypes, and we expect that we will retain them for this purpose.





1





Our fourth product, which generates considerable publicity, but which will take an estimated $50 to $100 million to fully develop, is a hurricane suppression project named WeatherTech. In initial laboratory tests conducted by a professor of meteorology at Florida State University, it has proven effective in causing a modest reduction in hurricane wind speed. Additionally, several years ago it was applied to a thunderstorm off the coast of West Palm Beach, Florida and the thunderstorm immediately disappeared off of Doppler radar. WeatherTech has never been applied to actual hurricanes and must undergo extensive testing, including verifying that there are no environmental impact concerns. We do not have the financing for WeatherTech at this time and have no indications of interest from any third parties to provide the financing. We hold a United States patent on this hurricane suppression product.

Private Placements and Exchange Offer

Following our incorporation, we sold 385,000 shares of our common stock to 9 accredited investors at $1.00 per share. On May 29, 2007, we sold 2,250,000 shares at $0.667 per share and 225,000 warrants exercisable at $1.00 per share to one investor for $1,500,000. In late June 2007, Dyn-O-Mat, Inc., our founder and predecessor, completed an exchange offer with its shareholders. More than 150 Dyn-O-Mat shareholders accepted the exchange offer, and Dyn-O-Mat transferred 6,351,479 of its shares of GelTech in exchange for 11,957,802 shares of Dyn-O-Mat. No cash consideration was given. As a result, Dyn-O-Mat’s ownership of GelTech was reduced from 7,250,000 shares to 898,521 shares. Dyn-O-Mat was formed and controlled by Mr. Peter Cordani, who is our Chief Technology Officer and a director. His father is now President of Dyn-O-Mat. Cordani family members, including Mr. Michael Cordani, our Chief Executive Officer, and three trusts controlled by Mr. Michael Cordani, received 2,967,310 shares of common stock in the exchange offer. Mr. Michael Cordani is the brother of Mr. Peter Cordani and for a time served in a senior management capacity for Dyn-O-Mat. Mr. Phil D. O’Connell, Jr., one of our directors, received 622,644 shares of our common stock and 474,058 warrants exercisable at $1.05 per share in the exchange offer.

Our Corporate Information

GelTech Solutions, Inc. was organized on July 19, 2006 as a Florida corporation and was reincorporated on November 15, 2006 as a Delaware corporation. Our offices are located at 1460 Park Lane South, Suite 1, Jupiter, Florida 33458. Our telephone number is (561) 427-6144. We have authorized capital of 50,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value. As of the date of this prospectus there are 10,285,000 shares of common stock and no shares of preferred stock outstanding.



2





THE OFFERING

Common stock outstanding
prior to the offering:

     

10,285,000 shares

Common stock offered by
the selling shareholders:

 

2,045,621 shares (1)

Common stock offered by
the selling shareholders upon
exercise of warrants:

 

207,311 shares

Common stock outstanding
immediately following the offering:

 

10,285,000 shares (1)

Use of Proceeds:

 

We will not receive any proceeds from the offering. (2)

———————

(1)

Does not include 207,311 shares of common stock issuable upon exercise of warrants which shares have been registered in this offering.

(2)

To the extent any warrants are exercised, we will receive the proceeds.



3





SUMMARY FINANCIAL DATA

The following summary of our financial data should be read in conjunction with, and is qualified in its entirety by reference to “Management’s Discussion and Analysis or Plan of Operation” and our audited and unaudited financial statements, appearing elsewhere in this prospectus.

Statement of Operations Data:

 

 

GelTech

 

Predecessor (GelTech Division of Dyn-O-Mat)

 

 

 

July 19 to
March 31,

 

July 1 to
July 18,

 

July 1, 2005
to March 31,

 

Year Ended June 30,

 

 

 

2007

 

2006

 

2006

 

2006

 

2005

 

 

 

 

(Unaudited )

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue


     

$

448

     

$

101

     

$

     

$

221

     

$

100

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

377

 

$

76

 

$

 

$

166

 

$

75

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,392,447

)

$

(15,173)

 

$

(258,423

)

$

(320,556

)

$

(90,664

)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share – basic and diluted

 

$

(0.17

)

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares
(basic and diluted)

 

 

8,071,961

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

GelTech

 

Predecessor
(GelTech
Division of
Dyn-O-Mat)

 

 

 

As of
March 31,
2007

 

As of
June 30,
2006

 

 

 

 

(Unaudited)

 

 

 

 

Cash

      

$

978

     

$

 

  

 

 

 

 

 

 

 

Working capital (deficit)

 

$

(425,241

)

$

 

  

 

 

 

 

 

 

 

Total assets

 

$

41,298

 

$

794

 

  

 

 

 

 

 

 

 

Total current liabilities

 

$

439,247

 

$

 

  

 

 

 

 

 

 

 

Accumulated deficit

 

$

(1,392,447

)

$

 

  

 

 

 

 

 

 

 

Total shareholders’ deficit

 

$

(397,949

)

$

 

  

 

 

 

 

 

 

 

Equity–in-division

 

$

 

$

794

 




4





RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors before deciding whether to invest in the common stock Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition. If any of the events discussed in the risk factors below occur, our business, financial condition, results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of the common stock could decline, and you might lose all or part of your investment.

Risk Factors Relating to Our Company

Our ability to continue as a going concern is in substantial doubt. To continue as a going concern, we must obtain adequate new debt or equity financing and achieve profitability.

Since our incorporation, and prior to incorporation when the business we acquired was a division of Dyn-O-Mat, we (and the Dyn-O-Mat division) incurred net losses. Because we are a development stage company and have incurred significant losses, there is substantial doubt about our ability to continue as a going concern.

We have limited cash and have only recently begun selling RootGel, which is the only product we can currently sell. Our continued existence is dependent upon our achieving sufficient sales levels of RootGel and our other products or obtaining adequate financing. Unless we can begin to generate material revenue, we may not be able to remain in business. We cannot assure you that we will raise enough money or generate sufficient sales to meet our future working capital needs.

We have a limited operating history on which to evaluate our potential for future success and to determine if we will be able to execute our business plan. Therefore, it is difficult to evaluate our future prospects and the risk of success or failure of our business.

We were formed on July 19, 2006 and have had very limited operations. While we have conducted development and sales and marketing activities, we have generated limited revenue to date. You must consider our business and prospects in light of the risks and difficulties we will encounter as an early-stage company. These risks include:

·

our ability to effectively and efficiently market and distribute our products,

·

our ability to obtain market acceptance of our current products and future products that may be developed by us,

·

our ability to convince potential investors that WeatherTech, our hurricane suppression project is a viable project, and

·

our ability to sell our products at competitive prices which exceed our per unit costs.

We may not be able to address these risks and difficulties, which could materially and adversely affect our revenue, operating results and our ability to continue to operate our business.

Because GelTech’s new business plan is unproven, it may not result in the generation of material revenue or profitability.

Since our incorporation on July 19, 2006, our goal has been to generate revenue from the sale and development of the following:

·

RootGel – a line of agricultural moisture retention products,

·

FireIce – a fire suppression product,

·

IceWear – a garment line to assist in cooling body temperature, and

·

WeatherTech -- our hurricane suppression project.





5





Our marketing of these products and our hurricane suppression product is subject to a number of risks, including:

·

Although we have a pending United States patent application for the sprayable form of RootGel, we have no patent protection for the granular form and there are many products on the market which are advertised as performing similar functions to RootGel;

·

If the pending patent application is not granted for the sprayable form of RootGel, we will face direct competition which can erode any market share we may achieve and create pricing pressure;

·

If we are unable to obtain third party certification that FireIce meets certain standards recently published by the National Fire Protection Association or NFPA, we will be unable to market FireIce effectively to distributors;

·

Our IceWear product will take four to six months to complete developing the initial prototypes before we can market it to firefighters, hazmat units, emergency medical technicians or EMTs, first responders and the United States military; and

·

Our hurricane suppression project needs substantial funding and development before it can be commercialized, if at all, as described in the Business section of this prospectus.

We cannot assure you that the implementation of the business plan will result in material sales or that if it does results in material sales, that such sales will necessarily translate into profitability.

Our growth strategy reflected in our business plan may not be achievable or may not result in profitability.

We may not be able to implement our growth strategy reflected in our business plan rapidly enough for us to achieve profitability. Our growth strategy is dependent on a number of factors, including market acceptance of our fire suppression gel and the acceptance by the public of the concept of hurricane suppression. We cannot assure you that our potential market will purchase our products or that those parties will purchase our products at the costs and on the terms assumed in our business plan.

Among other things, implementation of our growth strategy would be adversely affected if:

·

we are not able to attract sufficient customers to the products we offer in light of the price and other terms required in order for us to attain the level of profitability that will enable us to continue to pursue our growth strategy,

·

adequate penetration of new markets at reasonable cost becomes impossible limiting the future demand for our products below the level assumed by our business plan,

·

we were forced to significantly adapt our business plan to meet changes in our markets, and

·

for any reason, we are not able to attract, integrate, retain and motivate qualified personnel.

If the demonstrations of our products do not result in material revenue, we may cease operations.

As part of our marketing efforts, we are conducting and intend to conduct further demonstrations of the applicability and utility of our products. If these demonstrations or any third parties’ testing of our products do not clearly convey to potential customers the utility of our products and services and their value at the prices we expect to charge in order to obtain adequate margins, then we may not be able to successfully commercialize all or part of our technology and may cease operations.

If we are unable to obtain third party verification of FireIce, we may not be able to effectively market it and our future revenue will be adversely affected.

To date, we have sold and marketed FireIce on a sample testing basis. In order to effectively market it on a large scale basis, a leading distributor advised us that we need certification by an independent organization concluding that FireIce meets the recently published safety standards of the NFPA. Although in late June we signed an agreement with a leading independent laboratory to test the safety of FireIce, we anticipate that all necessary testing will not be completed until October 2007, at the earliest, and we do not know if FireIce will pass and be approved. Without such approvals, we may not be able to market FireIce effectively and our ability to generate revenue from the sales of FireIce would be impaired.



6





Because our plans to commercialize FireIce were recently launched, there can be no assurances it will be accepted by potential customers.

There are multiple factors which may prevent us from successfully commercializing FireIce, our fire suppression gel:

·

A potential distributor has advised us that we should obtain third party certification to increase the ease of the market accepting the new product. We are seeking approval from the third party certification facility and are in the process of having an independent laboratory certify FireIce’s safety. If we are unable to obtain such third party certification, our ability to enter into an agreement with distributors will be hampered and our capability to successfully commercialize FireIce will be limited.

·

We have launched our marketing of FireIce and are initially targeting municipal fire departments. Although we expect to receive orders from them in the future, we cannot assure you that we will receive any material orders.

·

We have demonstrated FireIce at trade shows and have begun receiving minimal orders from other fire departments, but cannot assure you that we will receive repeat orders.

·

A potential long term market for FireIce is to disperse it from airplanes to combat forest fires. However, any such use would require the appropriate government approval, which could require us to go through the U.S. Forest Service for approval. We have not initiated any discussions relating to this market and cannot assure you that we will be able to gain the necessary approvals for such a use.

If we cannot manage our growth effectively, we may not become profitable.

Businesses which grow rapidly often have difficulty managing their growth. If we grow as rapidly as we anticipate, we will need to expand our management by recruiting and employing experienced executives and key employees capable of providing the necessary support. We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could cause us to lose money, and your investment could be lost.

Among other things, implementation of our growth strategy would be adversely affected if we were not able to attract sufficient customers to the products and services we offer or plan to offer in light of the price and other terms required in order for us to attain the necessary profitability.

We may not be able to maintain and expand our business if we are not able to retain, hire and integrate key management and operating personnel.

Our success depends in large part on the continued services and efforts of key management personnel. Competition for such employees is intense and the process of locating key personnel with the combination of skills and attributes required to execute our business strategies may be lengthy. The loss of key personnel could have a material adverse impact on our ability to execute our business objectives. We do not have any life insurance on the lives of any of our executive officers including Mr. Peter Cordani, the inventor of our intellectual property and our principal shareholder.

We could face potential difficulties in locating sufficient manufacturing sources if our products gain widespread commercial acceptance.

We have used third parties to manufacture our products on a limited basis. If we are unable to produce our products in sufficient quantities at an acceptable cost, we may lose customers and our business could be harmed. Our ability to expand production could also be hindered by the availability of materials used to manufacture our products or the availability of qualified personnel. These difficulties could result in reduced quality of our products or reduced sales, which could damage our industry reputation and hurt our profitability.



7





Because we have only demonstrated IceWear on a test basis, there can be no assurances it will be accepted by potential customers.

IceWear is a garment aimed at helping first responders and others who work in high temperature conditions to stay cool. However, because we expect it to take us four to six months to develop a new prototype, there is no guarantee that it will be accepted by potential customers. Even if it is accepted, we may not be able to sell it at prices which would be profitable to us.

Because we have just launched marketing of RootGel, we cannot be certain that it will be accepted by potential customers.

Because we have only recently begun marketing and selling RootGel as a product providing a solution to golf courses facing drought conditions, we do not know the extent of the market we will be able to penetrate. Even if our distributor sells RootGel to customers, we do not know if the customers will continue placing orders. Finally, we may not be able to sell RootGel in volumes and at prices which will be profitable to us.

If Golf Ventures, Inc., with whom we expect to enter into an exclusive distribution agreement for RootGel in Florida, cannot successfully market and sell RootGel to its customers, our ability to generate revenue may be limited.  We have an agreement in principal to appoint Golf Ventures as our exclusive distributor for the State of Florida to market and sell RootGel to its customers. However, there can be no assurance that we will enter into a distribution agreement with Golf Ventures or that it will be able to sell it in volumes and at prices which will be profitable to us.

If we are unable to expand our distribution network for RootGel, our future sales of RootGel will be limited.

We must expand beyond Florida in order to increase our future sales of RootGel. While we expect to enter into and exclusive distribution agreement covering Arizona, there is a large market beyond Florida and Arizona. Additionally, we must recruit distributors for agricultural usage of RootGel. If we cannot expand our distribution network using third party distributors, our future sales of RootGel will be limited.

Because we do not have a patent on RootGel or its uses, if our competitors are able to reverse engineer our product, our ability to compete effectively may be harmed.

Currently, there are numerous companies that advertise moisture preservation products that appear similar to RootGel. Because we lack any patent protection on RootGel itself and have only a pending patent for the sprayable form, there is a substantial risk that one of these competitors could determine how to make the granular form of RootGel and market it under their own brand name; thereby adversely affecting our ability to compete successfully.

A change in environmental regulations may adversely affect the use of RootGel and may hinder our ability to generate revenue from this line of business.

While we believe that RootGel is environmentally friendly, we may become subject to varying environmental regulations that could adversely affect the use of it. If we do become subject to environmental regulations, the use of RootGel may be limited as compared to other technologies which may be less expensive or more efficient.

Because WeatherTech, our hurricane suppression project, involves weather modification, there can be no assurances that we will ever be able to deploy it on a large scale.

The hurricane suppression project is still at an experimental stage. It is subject to a number of risk factors which may prevent us from deploying it on a large scale:

·

Though it has been tested on a thunderstorm, it has not been tested on a hurricane and we cannot assure you that the WeatherTech will work to suppress the intensity of a hurricane. If our test results and demonstrations do not clearly convey the potential to assist in slowing the strength of a hurricane, then we may not be able to successfully commercialize all or part of the technology, which could in turn have a materially adverse effect on our future prospects.




8





·

We estimate that it will cost $3,000,000 to $5,000,000 to start the computer storm modeling and initiate the environmental impact studies. We expect the total costs will range from $50,000,000 to $100,000,000 over four years to perform live testing on incoming storms and to fully evaluate the results including continual computer and radar modeling along with the environmental effects. While we intend to seek government grants or corporate contributions, we may be unsuccessful in raising these funds especially in light of the resistance the current administration has shown to proposed legislation supporting weather modification research. If we are unsuccessful in raising these funds in the time scale required, we will not be able to test this technology.

·

We are subject to budgetary restraints from both the federal government and large corporations and insurance companies which may impede our ability to obtain the necessary funding.

·

Even if we raise the necessary capital, we may not successfully test the hurricane suppression project.

·

In 1979, the United States became a party to an international treaty banning the use of weather modification for hostile purposes. While modification for peaceful purposes is allowed, there is some question about whether even well-intentioned programs could be considered hostile. Therefore, geopolitical considerations may make it difficult for us to deploy the hurricane suppression project on a large scale.

·

Because of the numerous attempts at weather control that have been made over the past several hundred years, we may have trouble convincing potential investors that hurricane suppression and weather modification in general is something that can credibly be achieved. If we are not able to convince potential investors of the credibility of our technology, we may be unsuccessful in proving the suppression project as viable and not receive any revenue from its sale.

·

Our product is a type of polymer that will be dispersed via aircrafts into the outer bank of a hurricane. While we believe that our polymer is inert and non-toxic, the dispersal over large areas may make us subject to environmental regulations that could hamper our ability to deploy our product. In addition if it is perceived that our granules pose a threat to the environment, we may become exposed to expensive environmental litigation. Both of these situations could hamper our ability to generate profits.

FireIce, IceWear and RootGel face substantial competition in the fire suppression, cooling garment and moisture preservation markets, respectively, and there is no guarantee potential customers will select our products over those of our competitors.

We face multiple competitors in the fire suppression, cooling garment and moisture preservation markets. In the fire suppression field we compete against at least one well-established, publicly-traded company as well as several independently owned businesses. In the cooling garment and moisture preservation areas, we face competition from numerous independently owned businesses that have competing and in some case very similar products. In addition, companies may be developing or may, in the future, engage in the development of products and/or technologies competitive with our products. We expect that technological developments will occur and that competition is likely to intensify as new technologies are employed.

Many of our competitors are capable of developing or have developed and are capable of continuing to develop products based on similar or other technology which are or may be competitive with our products and technologies. At least one of our competitors in the fire suppression business has substantially greater financial and other resources, research and development capabilities and more experience in obtaining regulatory approvals, manufacturing and marketing than we do. Because our competitors in the cooling garment and moisture preservation markets are private companies, we are unable to determine the amount of financial and other resources they have available. However, some of these companies, particularly in the cooling garment business, appear to have had much greater marketing experience than we have. Potential customers may prefer the pricing terms or service offered by competitors. Furthermore, competitors may have an advantage as a result of having existing business relationships with potential customers.



9





Because we are seeking to enter into contracts with federal and state governments, we will be subject to a number of risks which could adversely affect our business.  

We are seeking to sell our products, including FireIce, to federal and state governments. In selling to the government, we will be subject to a number of significant risks including:

·

We may not be successful in selling our products to the government, although we will incur material costs as part of our sales efforts,

·

Government contracts often contain unfavorable termination provisions,

·

We may be subject to audit and modification of agreements by the government in its sole discretion, which subjects us to additional risks.

·

The government can unilaterally:

o

suspend or prevent us for a set period of time from receiving new contracts or extending existing contracts based on violations or suspected violations of laws or regulations,

o

terminate our existing contracts,

o

reduce the scope and value of our existing contracts,

o

audit and object to our contract-related costs and fees, and

o

change certain terms and conditions in our contracts.

Further, as part of any audit or review, the government may review the adequacy of, and our compliance with, our internal control systems and policies, including those relating to our purchasing, property, compensation and/or management information systems. In addition, if an audit or review uncovers any improper or illegal activity, we may be subject to civil and criminal penalties and administrative sanctions, including termination of our contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the government or any of its agencies. We could also suffer serious harm to our reputation if allegations of impropriety were made against us. 

Even if we are able to successfully enter into contracts to supply federal and state governments with our products, there can be no assurances these contracts will be profitable.

The process of obtaining government contracts is lengthy and uncertain, and we must compete for each contract. Similar to large corporations, government employees resist change and taking risks.  This can make it more difficult to obtain government contracts. Moreover, the award of one government contract does not necessarily secure the award of future contracts. Governments are subject to budgetary restrictions which may limit their ability to buy our products. Even if we are able to enter into a contract with a government, there is no guarantee we will be able to do so on terms which will be profitable to us.

If we are unable to protect our proprietary technology, our business could be harmed.

Our intellectual property including patents is our key asset. We currently hold four United States patents. Competitors may be able to design around our patents and compete effectively with us. The cost to prosecute infringements of our intellectual property or the cost to defend our products against patent infringement or other intellectual property litigation by others could be substantial. We cannot assure you that:

·

pending and future patent applications will result in issued patents,

·

patents licensed by us will not be challenged by competitors,

·

the patents will be found to be valid or sufficiently broad to protect our technology or provide us with a competitive advantage,

·

if we are sued for patent infringement, we can raise the necessary capital to defend our patents, and

·

we will be successful in defending against future patent infringement claims asserted against our products.



10





If the Patent Reform Act of 2007 is enacted into law, it could make challenges to our patents easier, may increase the likelihood that we will be sued or our patents challenged at the United States Patent and Trademark Office, subject us to extraordinary legal expenses and risk a ruling that one or more of our patents are invalid.

There is currently pending in the United States Congress legislation referred to as the Patent Reform Act of 2007. While it is uncertain whether it will passed into law and whether or how it will be amended, proponents argue it will reduce the explosive litigation costs and patent infringement judgments while enhancing innovation. However, in its current version, we believe it will make it easier to challenge patents, may increase the likelihood our patents will be challenged in court or administratively at the United States Patent and Trademark Office, could result in extraordinary legal fees defending our patents and could result in one or more of our patents being ruled invalid. This would result in a material adverse effect upon our future operating results and financial condition, including increasing competition.

Risks Related to Our Common Stock

Currently there is no public market for our common stock, and we cannot predict the future prices or the amount of liquidity.

Currently, there is no public market for our common stock. We are in the process of applying to list our common stock on the Over-the-Counter Bulletin Board. However, the Bulletin Board is not a liquid market in contrast to the major stock exchanges including Nasdaq. We cannot assure you as to the liquidity or the future market prices if a market does develop. If an active market for our common stock does not develop, the fair market value of our common stock could be materially adversely affected. Any public market will follow effectiveness of this registration statement and we cannot predict the price at which we will begin trading or future prices.

We will be subject to the “penny stock” rules which will adversely affect the liquidity of our common stock.

The Securities and Exchange Commission or SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. We expect the market price of our common stock will be less than $5.00 per share and therefore we will be considered a “penny stock” according to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our common stock and therefore reduce the liquidity of the public market for our shares should one develop.

Our stock price may be volatile because of factors beyond our control.

Any of the following factors could affect the market price of our common stock:

·

our failure to generate revenue,

·

our failure to achieve and maintain profitability,

·

actual or anticipated variations in our quarterly results of operations,

·

announcements by us or our competitors of significant contracts, new products, acquisitions, commercial relationships, joint ventures or capital commitments,

·

the loss of major customers or product or component suppliers,

·

the loss of significant business relationships,

·

our failure to meet financial analysts’ performance expectations,

·

changes in earnings estimates and recommendations by financial analysts, or

·

changes in market valuations of similar companies.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.



11





The sale of the common stock under this prospectus may cause our stock price to decline.

As of the date of this prospectus, we had outstanding 10,285,000 shares of common stock, not including shares issuable upon the exercise of warrants and options. Our outstanding shares, not including the amounts issuable upon the exercise of warrants and options, may be sold publicly as follow.


Number of Shares

 

May be Publicly Sold

2,045,621 shares by this prospectus

     

Now, without limitation (1)

200,000 shares

 

Now, subject to Rule 144 (2)

205,000 shares

 

Beginning September 14, 2007, subject to the
limitations of Rule 144 (3)

———————

(1)

Does not include 207,311 shares of common stock issuable upon the exercise of warrants.

(2)

Does not include 898,521 shares owned by Dyn-O-Mat, which are subject to an agreement restricting their public sale until January 1, 2009.

(3)

Does not include 440,000 shares of common stock issuable upon the exercise of options.

The selling shareholders have not engaged an underwriter in connection with this registration, and have indicated that they do not intend to do so. This potential increase in the number of shares that may be available for sale may dramatically and detrimentally reduce the price of our common stock on the basis of supply and demand alone.

An investment in GelTech may be diluted in the future as a result of the issuance of additional securities or the exercise of options or warrants.

In order to raise additional capital to fund our strategic plan, we may issue additional shares of common stock or securities convertible, exchangeable or exercisable into common stock from time to time, which could result in substantial dilution to any person who purchases our common stock. If purchasers pay more than our pro forma net tangible book value of $0.103 per share at March 31, 2007, they will suffer dilution. We cannot assure you that we will be successful in raising funds from the sale of common stock or other equity securities.

Because the Cordani family currently and for the foreseeable future will continue to control GelTech, it is not likely that you will be able to elect directors or have any say in the policies of GelTech.

Our shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring shareholder approval will be decided by majority vote. The Cordani family beneficially owns approximately 37.9% of our outstanding common stock (not including shares issuable upon exercise of stock options) and controls Dyn-O-Mat, which currently owns approximately 8.7% of our common stock. Thus, they are and will be in a position to control the election of our board of directors and our management and policies. It is not likely investors will be in a position to elect directors or effect changes in our policies.

In the future we may issue preferred stock without the approval of our shareholders, which could make it more difficult for a third party to acquire us and could depress our stock price.

Our board of directors may issue, without a vote of our shareholders, one or more series of preferred stock that have more than one vote per share. This could permit our board of directors to issue preferred stock to investors who support us and our management and permit our management to retain control of our business. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline in interest of our common stock.

Since we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends for the foreseeable future.

We have not and do not intend to pay any dividends in the foreseeable future, as we intend to retain any earnings for development and expansion of our business operations. As a result, you will not receive any dividends on your investment for an indefinite period of time.



12





FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and elsewhere in this prospectus.

Other sections of this prospectus may include additional factors which could adversely affect our business and financial performance. Moreover, our business is competitive and our business model may rapidly change. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this prospectus, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus.

MARKET FOR COMMON STOCK

Trading Market

There is currently no public trading market for our common stock. We are in the process of having our common stock listed on the Over-the-Counter Bulletin Board. As of the date of this prospectus, there were 163 record owners of our common stock.

Use of Proceeds

We will not receive any proceeds upon the sale of shares by the selling shareholders.

PRIVATE PLACEMENTS AND EXCHANGE OFFER

GelTech was organized on July 19, 2006 by its promoters, Dyn-O-Mat, Michael Cordani and Peter Cordani. Dyn-O-Mat received 7,250,000 shares of our common stock in exchange for intellectual property and other limited assets.

Following our incorporation, we sold 385,000 shares of our common stock to 9 accredited investors at $1.00 per share. We are registering 50% of the common stock sold to these investors.

On May 29, 2007, we sold 2,250,000 shares at $0.667 per share and 225,000 warrants exercisable at $1.00 per share to one investor for $1,500,000. We are registering 50% of the common stock sold to the private investor and 50% of the shares issuable upon exercise of the warrants, or a total of 1,237,500 shares.

On June 29, 2007, Dyn-O-Mat completed its exchange offer in which it offered its shareholders one share of GelTech in exchange for 1.882680 of their Dyn-O-Mat shares. More than 150 Dyn-O-Mat shareholders accepted the exchange offer, and Dyn-O-Mat transferred 6,351,479 of its shares of GelTech. As a result, Dyn-O-Mat’s ownership of GelTech was reduced from 7,250,000 shares to 898,521 shares. Additionally, the Cordani family members received 2,967,297 shares. Mr. Phil D. O’Connell, Jr., one of our directors, received 622,644 shares and 474,058 warrants exercisable at $1.05 per share.

We have agreed to register at our sole expense:

·

50% of the common stock and 50% of the shares issuable upon exercise of the warrants, or a total of 1,237,500 shares, sold to an investor on May 29, 2007;

·

50% of the common stock (192,500 shares) sold to 9 investors described above;

·

20% of the GelTech common stock transferred from Dyn-O-Mat to its shareholders as part of the exchange offer (462,647 shares), except for the shares received in the exchange offer by GelTech officers and directors and our Chief Executive Officer’s wife and mother; and

·

150,000 shares of common stock owned by Mr. O’Connell in addition to 20% of the shares (124,528 shares) and 20% of the shares issuable upon exercise of warrants received (207,311 shares) by Mr. O’Connell in the exchange offer.



13





CAPITALIZATION

The following table sets forth our actual and pro forma capitalization as of March 31, 2007. The table should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this prospectus:

 

 

March 31, 2007

 

 

 

Actual

 

Pro Forma (1)

 

 

 

 

(unaudited)

 

 

 

 

Notes payable

 

$

250,000

 

$

250,000

 

Shareholders’ equity:

 

 

 

 

 

 

 

Preferred stock—$0.001 par value;
5,000,000 shares authorized, no
shares issued and outstanding

 

 

 

 

 

Common stock—$0.001 par value;
50,000,000 shares authorized,
8,385,000 shares issued and
outstanding (10,635,000 shares
as adjusted) (2)

 

 

8,385

 

 

10,635

 

Additional paid-in capital

 

 

986,113

 

 

2,483,863

 

Accumulated deficit

 

 

(1,392,447

)

 

(1,392,447

)

Total shareholders’ (deficiency)

 

$

 (397,949

)

$

1,102,051

 

———————

(1)

Gives effect to 2,250,000 shares sold in a private placement on May 29, 2007 for $1,500,000 as if it occurred on March 31, 2007.

(2)

Does not include 699,058 shares issuable upon the exercise of warrants and 525,000 upon the exercise of options.




14





MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Certain statements in “Management’s Discussion and Analysis and Plan of Operation” are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.

Overview

We are a development stage company which recently initiated marketing of one product and intends to begin marketing two additional products in 2007. Our financial statements have been prepared on a going concern basis, and we need to become a viable business.

We were incorporated in July 2006 as a Florida corporation and reincorporated in Delaware in November 2006. Our products were initially developed by the GelTech Division of Dyn-O-Mat, a predecessor entity. Our Chief Technology Officer, Mr. Peter Cordani, invented FireIce and IceWear while at Dyn-O-Mat and developed an earlier version of RootGel at Dyn-O-Mat as well. Mr. Cordani developed the current version of RootGel on behalf of GelTech. Although we do not intend to begin marketing WeatherTech in the foreseeable future, our hurricane suppression product, he also developed that product while at Dyn-O-Mat.

Critical Accounting Estimates

We have selected our more subjective accounting estimates for the purpose of explaining the methodology used in calculating the estimates, in addition to the inherent uncertainties pertaining to the estimates and the possible effects on our financial condition. These estimates involve certain assumptions that if incorrect could create a material adverse impact on our results of operations and financial condition.

Allocation of Costs

For all periods prior to our incorporation on July 19, 2006, separate records were not kept between Dyn-O-Mat and the Gel Tech division. Accordingly, in preparing financial statements for the prior periods presented, we were required to make significant estimates in allocating costs between Dyn-O-Mat and the division we acquired.

Stock-Based Compensation

We have granted stock options to our officers and directors at exercise prices equal to or greater than the fair value of the shares at the date of grant.

As a result of Statement of Financial Accounting Standards No. 123, “Share-Based Payment” (revised 2004) or Statement 123(R), which was effective as of January 1, 2006, we recognize an expense for the fair value of our outstanding stock options as they vest, whether held by employees or others.

We will estimate the fair value of each stock option at the grant date by using the Black-Scholes option pricing model based upon certain assumptions. The Black-Scholes model requires the input of highly subjective assumptions including the expected stock price volatility. Because our stock options and warrants have characteristics different from those of traded options, and because changes in the subjective input of assumptions can materially affect the fair value estimate, in our management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options.

Because GelTech’s common stock is not listed on any national securities exchange or established trading market, our management makes an estimate as to fair market value. GelTech calculates the weighted average price per share using primary sales of its common stock during each reporting period. This average is then used in assigning value to the stock. As a result, estimates are made as to the market value of our common stock as of any given date for use in various non-cash equity transactions throughout a given reporting period. We believe this approach provides the most objective basis for assessing the market value of our common stock and provides for consistency among reporting periods.






15





Results of Operations

The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this prospectus.

Predecessor — Year Ended June 30, 2006 Compared to the Year Ended June 30, 2005 — The comparisons for Dyn-O-Mat, which we refer to as our predecessor, reflect the results of operations for the business we acquired which was a division of Dyn-O-Mat. References to “our” and “we” refer to GelTech and the Dyn-O-Mat division, as the context requires.

Revenue

Our revenue was nominal in these two periods. For the year ended June 30, 2006, we had $221 of revenue compared to $100 for the year ended June 30, 2005. The revenue does not reflect any marketing but nominal sales which occurred on a test basis primarily at trade shows.

Cost of Goods Sold

For the year ended June 30, 2006, our costs of goods sold were $55 compared to $25 for the year ended June 30, 2005.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $320,420 for the year ended June 30, 2006 compared to $90,617 for the year ended June 30, 2005. These expenses consisted primarily of rent and allocation of salaries and payroll taxes based upon an allocation of the time that Dyn-O-Mat employees devoted to the products which we acquired during these periods.

Net Loss

For the year ended June 30, 2006, we lost $320,556 compared to $90,664 for the year ended June 30, 2005.

GelTech – 18 Days Ended July 18, 2006 for the Predecessor and GelTech’s Period from July 19, 2006 to March 31, 2007 Compared to Nine Months Ended March 31, 2006 of the Predecessor

Here when we refer to “our” we include GelTech and the predecessor as the context requires.

Revenue

Our revenue was nominal in each of the three periods. For the 18 days ended July 18, 2006, the predecessor had $101 of revenue. For the period July 19, 2006 to March 31, 2007 we generated $448 of revenue compared to no revenue of the business we acquired for the nine months ended March 31, 2006. Our lack of working capital impeded us because we could not support any sales activity, marketing initiatives or third party product testing.

Cost of Goods Sold

For the 18 days ended July 18, 2006, our costs of goods sold were $25. Our cost of goods sold for the period July 19, 2006 to March 31, 2007 was $71. Because there were no sales, there was no cost of goods sold for the business we acquired for the nine months ended March 31, 2006.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $15,249 for the period ended July 18, 2006 and $739,582 for the period July 19, 2006 to March 31, 2007, in contrast to $258,423 for the Dyn-O-Mat division for the nine months ended March 31, 2006. GelTech’s selling, general and administrative expenses included substantial legal and accounting fees related to preparation of this prospectus. The remainder of selling, general and administrative expenses consisted of rent, salaries and payroll taxes. The selling, general and administrative expenses of the predecessor consisted of rent, salaries, payroll taxes and professional fees.



16





Net Loss

For the 18 days ended July 18, 2006, the predecessor sustained a net loss of $15,173. GelTech’s net loss for the period July 19, 2006 to March 31, 2007 was $1,392,447 in contrast to the predecessor’s net loss of $258,423 for the nine months ended March 31, 2006. In addition to the selling, general and administrative expenses, GelTech incurred a charge of $150,000 for in-process research and development related to the release of the lien on our hurricane suppression patent, consulting expenses of $498,375 and interest expense of $6,867. The consulting expenses consist primarily of the cost from the issuance of 425,000 shares and 250,000 warrants to a consultant. In late June 2007, we cancelled our agreement with the consultant, and the shares of common stock and warrants were also cancelled.

Net Loss Per Share

For the period July 19, 2006 to March 31, 2007, our net loss per share was $0.17.

Liquidity and Capital Resources

For the period from July 1, 2006 to July 18, 2006, Dyn-O-Mat contributed $15,173 of net cash in operating activities. For the period from July 19, 2006 to March 31, 2007, we used $555,654 of net cash in operating activities including a $158,502 increase in accounts payable and accrued expenses. During this period, we incurred $517,131 in stock based compensation from the issuance of stock options to executive officers in January 2007. For the period ended March 31, 2006, Dyn-O-Mat contributed $258,423 of cash used in operating activities to the Division which we sold to GelTech.

Cash flows used by investing activities for the period July 19, 2006 to March 31, 2007 for GelTech were $12,089 consisting of equipment that was purchased. There were no investing activities for the predecessor during any of the periods presented.

Cash flows from financing activities for the period July 19, 2006 to March 31, 2007 were $568,721 consisting of $268,000 GelTech borrowed, $318,721 representing the proceeds from the sale of common stock, and offset by $18,000 repaid by GelTech to a director. There were no comparable cash flows from financing activities for the periods presented for the GelTech Division of Dyn-O-Mat.

Subsequent to the period ended March 31, 2007, we raised an additional $50,000 from the sale of shares of our common stock at $1.00 per share and $1,500,000 from the sale of 2,250,000 shares and 225,000 warrants to one investor. As of June 30, 2007, we had $1,185,950 in available cash. We have no plans to purchase any material capital assets since we have only limited cash resources of which to carry out our business. We have no available lines of credit or other plans to raise any necessary capital we may require. If we are unable to generate substantial cash flows from sales of our products or raise any additional financing, we may not be able to remain operational.



17





BUSINESS

Introduction

GelTech was organized on July 19, 2006 as a Florida corporation and was reincorporated on November 15, 2006 as a Delaware corporation. On July 20, 2006, GelTech issued Dyn-O-Mat 7,250,000 shares of its common stock in exchange for all of Dyn-O-Mat’s intellectual property except the unrelated “black mat business” and selected other assets and selected liabilities. GelTech was formed to act as a holding company for the intellectual property developed by Mr. Peter Cordani, our Chief Technology Officer and a director.

Our current business model is focused on the following polymer-based products:

·

RootGel – a line of agricultural moisture retention products,

·

FireIce – a fire suppression product,

·

IceWear – a garment line to assist in cooling body temperature, and

·

WeatherTech – our hurricane suppression project.

RootGel

Industry Overview

Irrigation in all forms costs billions of dollars a year. According to the USDA Farm and Ranch Irrigation Survey, in 2003 farmers spent $2.6 billion on farm irrigation alone. According to a 2005 article on the World Bank’s website, agricultural water management is a vital practice in ensuring food security, poverty reduction, and environmental protection. After decades of successfully expanding irrigation and improving productivity, farmers and managers face an emerging crisis in the form of poorly performing irrigation schemes, slow modernization, declining investment, constrained water availability, and environmental degradation. An article in the November 2001 edition of Golf Course News stated that the golf course irrigation industry by itself has expended millions into research and development of new products and services designed to improve efficiency, conservation and ease of operations.

Currently, Florida’s drought conditions may create year-round water restrictions of some level. There is even a proposal to keep restrictions in place after the drought is over. Lake Okeechobee, the backup drinking water source for millions in South Florida and the lifeblood of the Everglades, is four and a half feet below average. The South Florida Water Management District has instituted temporary water restrictions which are in place to cut residential use. In addition, farmers have had to cut back 50 percent. The State of Florida has also announced that the fragile Everglades ecosystem would be cut off as a source for any new or additional water supplies. This is the first time in history that the Everglades water is off-limits. Officials say the agricultural industry could begin losing crops and are comparing this drought to the one in 2001 that led to an estimated $400 million in agricultural losses.

Drought conditions currently exist in parts of the United States including the West, Southwest and Southeast. These drought conditions are causing crop shortages as farmers have insufficient water for their crops which is reducing their yield. Additionally, the drought is causing an increase in forest fires in some areas.

The Product

RootGel is made from the family of inorganic co-polymers. Versions of this product have been used in the agricultural industry for many years. RootGel can absorb hundreds of times its weight in water. Water is rapidly drawn into a polymer network where it is stored. As the soil dries out, the polymer releases up to 95% of the water it has absorbed back into the soil. Therefore, the water becomes available when the plants need it most. RootGel is available in different particle sizes — the finer the size of the particle, the greater its absorption capacity and speed.

We are marketing two distinct versions of RootGel, a sprayable version and a granular one. The sprayable version is a fine particle blend that is for use on existing grass and can be applied using any type of spray rig or backpack sprayer. The granular product has been formulated to be tilled into the top four to six inches of the soil to assist in replacing and replanting of grass, including sodding and seeding, and is also recommended to be used during the planting of trees, shrubs, and annuals. The granular version is appropriate for planting situations in which the grass is not already established. We are now selling both versions to Golf Ventures which is marketing the



18





product to the golf course maintenance industry. Because of drought conditions in Florida, we have received interest in both of the product versions.

RootGel degrades naturally in the soil. Sunlight and salinity exposure makes it break down faster. The RootGel sprayable version is our flagship product and is used as a top dressing and sprayed onto already established turf and grasses. Our formulation provides a specifically formulated particle size which, with irrigation, gets down to the roots to supply turf and grasses with water and nutrients. Since the sprayable particle size is very small and not as protected from the ultraviolet light given off by the sun as the granular form, it will be broken down much more rapidly than the granular form. The granular form of RootGel is tilled directly into the soil and it will last for three to five years without having to be reapplied. The market for the granular product will be newly-designed golf courses as well as courses doing replanting as part of their continual golf course maintenance. Although, granular form re-orders may be limited due to its long duration in soil, we expect it to be used in the planting of landscaping which always has some turnover due to landscaping re-design, re-planting and young tree mortality rates. Additionally, we intend to market both versions of RootGel to the agricultural market.

Uses

RootGel has multiple potential uses:

·

RootGel products are specially designed for use as soil conditioner for water and nutrient retention in golf course maintenance, landscaping, forestry, horticulture and various other types of agricultural applications. Each product’s goal is to increase the water holding capacity of soils and potting mixes, thereby reducing the frequency of irrigation, as well as the leaching of valuable nutrients.

·

RootGel can also be good for lawns and sod by improving germination and promoting regular even growth of lawns. This is especially useful for golf courses and the grass in parks and gardens.

·

It can be effective in agriculture, particularly in large-scale farming. By storing water for later release as the soil becomes drier, RootGel delays wilting and makes it possible for certain plants to become better established while waiting for rain or irrigation to begin. In one test, the use of RootGel in rain fed sugar cane increased the yield by approximately 25%.

·

By absorbing fertilizer, RootGel reduces the amount of fertilizer that runs out of the soil and makes it available to the plants for a longer period of time.

·

RootGel can be used in the planting of trees, bushes and saplings by enhancing root development and reducing mortality rates due to transplant shock.

·

RootGel can keep plants, trees and cut flowers hydrated and thereby facilitate their transportation over long distances.

·

If RootGel is mixed into the soil, cuttings and transplants take root better and watering frequencies are reduced by as much as 30% to 50%.

·

Another potential use of RootGel is for floral decoration. RootGel is placed in a container with colored water. The RootGel absorbs this colored water and itself becomes colored. The resulting colored gel can be placed in glass containers in which cut flowers may be placed.

Sales and Marketing

Our initial marketing of RootGel has been aimed at the golf course market primarily in Florida as the recent drought created water restrictions imposed by local governments. Mr. Michael Brown, our Senior Vice President of Government Relations, has advised us that the recent drought in other parts of the United States, including the West, Southwest and Southeast, has created an opportunity to demonstrate to governments that RootGel can provide a solution to crop shortages. Accordingly, we intend to begin marketing RootGel to governments and agricultural interests.

We have an agreement in principle to appoint Golf Ventures, a leading distributor of products to over 800 golf courses in Florida, as our exclusive distributor for the State of Florida. We expect to sign a definitive agreement in the near future and, following that, to enter into a similar agreement with a “sister” company of Golf Ventures for the State of Arizona. We are hopeful that through the distribution agreement, we can be successful in selling RootGel to golf courses throughout Florida. Golf Ventures will market and sell both the sprayable and granular form of RootGel. They have ordered from us and we have delivered to them $12,496 worth of RootGel consisting of two



19





pallets of the sprayable and one pallet of the granular form to sell to their customers. The recent severe drought conditions have significantly increased interest in the product. We have been advised by Golf Ventures that preliminary marketing of the product has been well received by their customers and we are expecting a re-order before the end of July.

Due to the recent drought in South Florida, we distributed samples of RootGel to a few selected local golf courses and to a local lawn care company that services over 2,000 accounts.

In the future, we need to recruit additional distributors to sell RootGel in other states. We cannot assure you we will be successful in recruiting distributors or that they will sell substantial quantities of RootGel at prices where are profitable to us.

Raw Materials and Suppliers

Currently, our RootGel polymer is manufactured for us by a third party. There are several other companies that are also capable of manufacturing the polymer used in RootGel.

Competition

Polymers have been marketed on and off for over 20 years as additions to soil to increase water retention and reduce irrigation. Numerous companies appear to have products that are very similar to RootGel. Some of these companies are:

·

Horticultural Alliance, Inc.

·

Turbo Technologies, Inc.

·

American Soil Technologies, Inc. [OTCBB: SOYL]

The first two are private companies and it is unclear what financial, marketing and sales resources they have compared to us. On the other hand, American Soil Technologies, Inc. is listed on the Over-the-Counter Bulletin Board. However, from American Soil’s filings with the SEC, it is clear that it has experienced significant losses, has a large accumulated deficit and has a working capital deficit which may hamper its ability to compete. It supplies polymer soil additions and other related products. American Soil has an exclusive license to two method patents with cross-linked and linear polymers as their basis. They also have a patent on a slow release liquid fertilizer. American Soil also has three patents on a machine designed to install its liquid products in mature turf as well as some standing crops.

Since we do not currently have a patent on RootGel itself or on any of its uses, it is possible that a competitor could reverse engineer RootGel and market it under its own brand name.

Due to the amount of polymer that we expect to use in the production of RootGel and our other applications such as FireIce, we believe our pricing for RootGel will be superior to that of any similar products that may be offered by our competitors.

Seasonality

We expect RootGel will experience some seasonal declines in sales during the fall and winter quarters in less temperate climates. However, we do not expect as much seasonality in more southern areas that generally experience year round growing cycles, with the sale of the agricultural products preceding the growing cycle of various crops. We also believe a higher demand for RootGel will exist during the drought conditions affecting the United States including the West, Southwest and Southeast.



20





FireIce

Industry Overview

Fire suppression is approximately a $2 billion a year industry according to a 2003 National Aeronautics and Space Administration press release. According to an article published by the Building and Fire Research Laboratory of the National Institute of Standards and Technology, as early as 1994 the lack of availability of halon fire suppressants sparked worldwide efforts in developing alternative firefighting agents and delivery systems.

The business has two marketing thrusts:

·

suppression of structural and other fires within cities and towns, and

·

suppression of wildland fires such as forest fires managed by federal and state governments.

According to the NFPA, in 2005 there were 1,602,000 fires in the United States that caused approximately $10.6 billion in damages. In 2005 there were 51,395 structural fires in New York City alone. The New York City Fire Department or FDNY, the largest fire department in the world, has a 2007 budget of $1.4 billion. Of this amount $322.2 million, a 79% increase from 2006, is earmarked for the procurement of additional mandated front line firefighting apparatus and ambulance fleet maintenance. From 2001 to 2004 federal agencies spent approximately $4.8 billion on the suppression of wildland fires. In addition, Homeland Security through their Assistance to Firefighters Grant has distributed funds to allow firefighting departments to purchase critical firefighting gear equipment and other fire suppression necessities. According to the Department of Homeland Security’s website, since 2001 these grants totaled over $2.4 billion.

The Product

FireIce is the registered trade name of our fire suppression product. FireIce is a dry powder that when added to water in very low concentrations (0.1 to 1.2 percent by weight), rapidly absorbs water to produce a gel whose consistency depends on the selected concentration. The dry powder is self dispersing in many applications, or can be easily mixed with water. Within seconds of being mixed with water, FireIce is ready to use and turns into a fire preventing, heat absorbing and fire suppressing gel.

When mixed with FireIce, water is held by a three-dimensional network of cross-linked polymers. When applied to the fire, the water evaporates and the gel collapses sapping the fire of not only heat but oxygen as well. In many applications the gel forms a cohesive layer which acts as a vapor barrier and prolongs the effectiveness of the water. Due to the gel layer created by FireIce on burning and adjacent objects, FireIce also has the ability to suffocate a fire.

FireIce has the following properties. We believe it:

·

is non-toxic,

·

is biodegradable,

·

is environmentally safe,

·

is non-corrosive to metals,

·

mixes easily with water,

·

will not clog or stick in spraying devices,

·

reduces the threat of a fire rekindling,

·

extinguishes fires more rapidly than traditional methods, and

·

saves customers cost on freight when compared to competitors.



21





Uses

There are many existing and potential uses for FireIce. We believe it can be an extremely valuable tool for firefighters because:

·

When mixed with water, it can be dispersed and applied by all types of application equipment used in direct fire suppression, such as pressurized water extinguishers, pumper trucks, backpack sprayers, or even hand held spray bottles.

·

Firefighters can apply FireIce directly to buildings and other structures exposed to an advancing fire.

·

FireIce can also be rapidly sprayed on foliage to prevent the spread of fires.

·

FireIce absorbs many times its own weight in water and forms a gel producing increased droplet sizes that reduce drift and evaporation when dropped aerially.

The recent devastating Southern California mountain forest fire that claimed the lives of five firefighters clearly demonstrated the need for a better system of wildland fire suppression than what is currently being used. According to an MSNBC news article, the blaze charred 40,200 acres — or more than 60 square miles — of forest and brush and destroyed 34 homes before being fully contained at a cost of almost $10 million. According to a FoxNews.com article, the recent Florida and Georgia fires burned hundreds of square miles of land and forced the evacuation of hundreds of homes. FireIce can play a major role in putting out and containing wildland fires, including forest fires, by being sprayed from airplanes directly over such fires, including in areas too dangerous for ground-based firefighters to enter. FireIce can also be sprayed from tanker trucks on the edges of these fires.

FireIce also has a number of potential retail and consumer uses:

·

It can be pumped out of fire extinguishers.

·

It can be used in a spray bottle by professionals, such as welders, who work with blowtorches.

·

Though it has not yet been tested in this manner, we believe it could be sprayed from building sprinkler systems. We have companies that are interested in testing our product for this application.

Sales and Marketing

We have preliminarily marketed FireIce in several different ways:

·

FireIce has been tested by the New York City Fire Department and has received significant positive feedback. We expect orders from FDNY in the future.

·

We have had several meetings with the executive management and various sales managers of a few of the leading fire supply distributors in the United States, including one of the largest distributors of fire equipment and the leading distributor for Pierce Manufacturing, the largest manufacturer of fire trucks in North America. During the meetings with the distributor:

o

We discussed entering into an exclusive distribution agreement for FireIce in the New York and New England areas. However, prior to entering into an agreement, GelTech needs to obtain some form of third-party certification of FireIce. See the subsection entitled “National Fire Protection Association” below. See our “If we are unable to obtain third party verification of FireIce…” risk factor on page 6 of this prospectus for further discussion of the NFPA.

o

We have discussed creating a potential joint venture for using FireIce in a home application device that the distributor has developed.

o

We have performed demonstrations of FireIce for the distributor using pumper trucks and pump bottles and have received positive feedback.

o

The distributor has requested samples of FireIce from us so that it can demonstrate it to their core customers.

o

We also have interest in working with the distributor to create an easy dispensing system for FireIce for use on pumper trucks.




22





·

We recently conducted and provided a FireIce demonstration for the Chief Executive Officer and Chairman of another large distributor of fire equipment headquartered in Chicago, IL. We are currently in discussion with this company to carry the product and become a demonstration partner at a portion of national fire industry shows.

·

In July 2006 we attended the Firehouse EXPO trade show for fire, rescue and EMS services in Baltimore, MD from which we received several small orders for FireIce from local fire departments.

·

We also intend to market FireIce to state and federal governments.

National Fire Protection Association

In order to effectively market FireIce on a large scale basis, a leading distributor advised us that certification by an independent fire safety organization is needed. We approached the National Fire Protection Association or NFPA, an international nonprofit organization with the mission to reduce the worldwide burden of fire and other hazards on the quality of life by providing and advocating consensus codes and standards, research, training, and education. With a membership of more than 81,000 individuals from around the world and more than 80 national trade and professional organizations, the NFPA is a leading advocate of fire prevention and is an authoritative source on public safety.

The NFPA and other organizations like the U.S. Forestry Service have tests for fire suppressants and if a product passes those tests it receives a stamp that says it passed under a specific code and lists the types of fires on which the product can be used. The newly written certification standard that our product will be tested under is NFPA 18A – Standard for water enhancers and vapor mitigation.

The actual testing of FireIce is done by a third party laboratory and the results are then given to the NFPA for certification. We have engaged a leading third party laboratory to test FireIce and determine if it complies with the NFPA’s new product standard, but anticipate it will be October 2007 before all testing will be finished and the results can be received for completion of the certification.

Raw Materials and Suppliers

The raw materials for FireIce are in abundant supply. The polymers are manufactured for us by two third parties. However, there are also several other companies that are able to manufacture the polymer. The polymer becomes a gel when mixed in water. In addition, we expect to have exclusive agreements in place in the near future with our gel suppliers for its exclusive supply of product for fire suppressant purposes.

Competition

The fire suppression market is highly competitive. However, we believe that once we enter the market we will be able to compete effectively because:

·

FireIce should provide superior benefits over other fire suppressants.

·

The price per gallon of FireIce should be significantly less than for our competitors’ products.

·

Since much less FireIce is needed per gallon of water than our competitors’ products and our product is shipped as a powder not a liquid, we anticipate the cost of shipping FireIce to customers will also be significantly lower.

·

Once a fire is over, any dispensing system used to disperse FireIce can be simply cleaned with water.

·

FireIce is different from foam. Foam consists of air bubbles in water and a small amount of surfactant. When the bubbles burst, the foam collapses. When mixed with FireIce, water is held by a three-dimensional network of cross-linked polymers. When FireIce is applied to the fire, the water evaporates and the gel collapses, sapping the fire of not only heat but oxygen as well. It takes longer for water to evaporate from our polymer than for air bubbles to burst. We believe this is how FireIce provides a more efficient protection that lasts longer than foam.

One of our largest competitors is Tyco Fire & Security, a major business segment of publicly traded Tyco International Ltd. (NYSE: TYC). Tyco Fire & Security produces ANSUL®, a premium brand of special hazard fire protection products including fire extinguishers and hand line units, pre-engineered restaurant, vehicle, and industrial systems; sophisticated fire detection/suppression systems and a complete line of dry chemical, foam, and



23





gaseous extinguishing agents. Tyco Fire and Security is a very well funded company and has significantly more financial, marketing and sales resources than us. Ansul’s main sales thrust is the installation of “in building” fire suppression systems, but they manufacture a wide variety of products. They also have a very extensive distributor list and have a significant share of the market that we are looking to enter. However, their distributor list can be accessed from their website and their distributors are not exclusive.

Another competitor is U.S. Foam Technologies, a manufacturer and distributor of environmentally friendly firefighting foams. It is a small company whose main marketing thrust is to attract customers to its website through the use of the Google “adwords” program. It also markets its foams at the national firefighting conventions. Though we eventually intend to market FireIce throughout the entire United States, because U.S. Foam Technologies’ main focus appears to be the Midwest and we do not believe it will be a competitive threat in the near future.

National Foam, part of the Kidde Fire Fighting organization, is a manufacturer of foam concentrate, foam proportioning systems, fixed and portable foam fire fighting equipment, monitors, nozzles and specialized big flow pumping solutions. National Foam has historically been at the forefront of foam fire fighting and fire control technology and is the acknowledged world leader in providing foam based solutions. Other brands associated with National Foam include: Feecon, offering airport crash rescue and general mobile fire fighting equipment and Wirt Knox, offering a range of hose racks, reels, carts and general hose storage accessories. National Foam has significant financial resources and is part of a large fire fighting company conglomerate. Thus, it has significantly more financial, marketing and sales resources than we do.

Barricade International, Inc. is a small, three-person company that is also marketing a liquid fire suppression gel. However, their product is an emulsion gel, which comes in a liquid form and is made from totally different materials than FireIce. It has gained some publicity because the current owner of the company is a firefighter. We do not believe it is any real competitive threat to our FireIce because:

·

Its gel is significantly more expensive than ours.

·

Even though the gel is designed to protect homes and structures, it is not designed to directly protect firefighters and other first responders as FireIce is capable of doing.

·

Unlike FireIce, Barricade’s gel only works with the device it manufactures and that must be purchased from it.

·

Barricade’s mixture has to be shaken every 30 to 60 days or it hardens and becomes unusable.

·

Unlike FireIce, its product is not allowed to be put into any type of firefighter equipment or pumper trucks. It hardens in a short time period, which is not conducive to the intricate pieces of fire fighting equipment. Barricade claims that in a worst case scenario objects coated with their gel may have to be pressure cleaned.

·

Barricade’s gel is an emulsion gel, which means it is already a liquid. It must be sprayed ahead of time and allowed to cure and turn into a hardened substance with a Styrofoam type of feel.

Seasonality

There is no real seasonality to structural fires. These occur throughout the year. In wildland fires, FireIce use will be more likely during the warmer, drier summer months when forest and other wildland fires are more prevalent.

IceWear

Industry Overview

When the temperatures soar, the goal is to stay cool. This issue is vital to hundreds of thousands of American workers who are subject to working in high temperature conditions. A considerable amount of research has been conducted on garments for protecting individuals under hot conditions. Cooling garments were first introduced in the late 1950s to protect wearers from hostile hot environments, primarily for military and space exploration purposes. Some of the earliest work was reported in the late 1950s involving pilots who endured high temperatures due to sunlit aircraft cockpits. Further interest in cooling garments has existed because it is not always economically feasible or practically feasible to change the surrounding environment to cause a reduction in temperature. For example, situations where cooling the environment itself is not feasible include steel mills,



24





foundries, mines, construction jobsites and the interior of military vehicles. Cooling garments (sometimes called “microclimate air-conditioning”) permit the wearer to operate in such environments that would otherwise be debilitating. These garments operate with air, cooled water, evaporation or through a process called “phase change.” Today, cooling vests are used in a wide variety of civilian applications. Some current uses of cooling vests include the following:

·

Firefighters, EMTs and first responders,

·

HAZMAT and SWAT teams,

·

The United States military,

·

Construction workers, field workers and employees of utilities companies, and

·

Motorcycle riders.

The Product

IceWear is designed to be used as a cooling vest under a firefighter’s outer protective clothing commonly known as “bunker gear,” a hazmat suit or any type of protective jacket. IceWear lowers the core body temperature by 2-3°F, thus preventing some heat strokes and heart attacks. The cooling bags do not require electricity, batteries or refrigeration and once activated the IceWear vest will drop in temperature to approximately 27°F, and will slowly increase to 40°F over a one-hour period. The vest is adjustable, reusable and washable and may be disposed of in a regular trash bin. Each vest weighs approximately three pounds and contains pockets for two bags. The bags themselves contain a mixture of polymer and urea. To activate the cooling bag, the user must squeeze the bag until a popping sound is heard. The bags must then be kneaded thoroughly to insure full mixture of the product and to produce maximum cooling. Each bag is then inserted into a pocket located under each arm section of the vest and the vest is ready to use. Additionally, each cooling bag can be used separately and applied to the forehead, neck or sports related injury. Like the vests, the bags can also be disposed of in the regular trash.

Uses

In 2006, we tested IceWear with race car drivers and television cameramen. It has also been tested by several Florida Power and Light field employees and a number of South Florida EMTs under high temperature conditions. IceWear has multiple potential uses including:

·

fire departments to protect their firefighters,

·

laborers who work in hot conditions such as pavers and roofers,

·

military personnel,

·

in the medical field any time it is necessary to keep a patient cool,

·

athletes,

·

racers, including automobile, motorcycle and motorboat, and

·

and anyone else who spends time in significantly elevated temperatures.

Sales and Marketing

Currently, we are four to six months away from completing our prototype of IceWear for the fire and rescue industry. We have not had any sales of IceWear though an early version has been shown on ESPN2 being worn by race car drivers and a television cameraman. In addition we have hired Mr. Michael Brown, a former head of the Federal Emergency Management Agency, as our Senior Vice President of Government Relations to assist us in marketing IceWear to the United States military. A leading distributor of fire equipment has also indicated an interest in marketing IceWear to their accounts which include utility companies, fire departments, EMTs, and first responders.

Raw Materials and Suppliers

The polymers are manufactured for us by two third parties. There are a number of other manufacturers which are available.



25





Currently, a third party manufactures the cooling bags for us. They have the capacity to manufacture up to 45,000 bags per day. If we lost that company as a supplier, we believe there are many other companies that could fulfill the same role.

Competition

There are four general types of cooling vests: evaporative, cold packs, phase change and active cooling.

There are numerous companies that sell the various types of cooling vests. For instance, a company called Glacier Tek, Inc. markets a type of phase change cooling vest. Similarly, a company called Arctic Heat USA also sells a phase change vest. A company called Polar Products, Inc. markets all four types of vests. Another company called Polar-Products seems to specialize in selling evaporative cooling vests. All of these companies appear to be private so it is difficult to determine what sort of financial, marketing and sales resources they have. However, it does appear that some of these companies have been in existence for a number of years and in that time have likely had greater marketing exposure than us. For instance, some of the Arctic Heat vests were used by members of the 2004 United States Olympic team. Despite this, we believe that because the IceWear bags do not require any prior preparation unlike the vests our competitors sell, there will be many situations in which IceWear will be a more attractive product.

IceWear is categorized as a cold pack. Even though it has similar advantages and disadvantages as other cold pack cooling products, it has a major advantage that none of the other cold packs and in fact none of the other cooling systems have -- it can be used without any prior preparation. No materials or equipment are needed to prepare or activate it. IceWear can be stored and used on the spot in any type of situation. IceWear is ideal for workers in an emergency situation where they need access to instant cooling. In addition, because the IceWear bags are relatively inexpensive, a supply of them could be kept on hand for prolonged use. Even though the bags are only single use, we believe the low-cost and the convenience of not having to prepare the bags by placing them in a freezer or submerging them in cold water is a distinct advantage. In many situations such preparatory steps will be very inconvenient or even totally unfeasible.

Seasonality

IceWear is seasonal and there will be greater potential use during the hotter times of the year and less use during times of moderate temperature.

WeatherTech

Industry Overview

Weather modification is not a new idea. Over the past several hundred years many attempts at weather control have been made. Native Americans had rituals which they believed could induce rain. The Finnish people were believed by others to be able to control all types of weather. In the early modern era, people observed that during battles the firing of cannons and other firearms often seemed to initiate precipitation. From 1962 to 1983, the United States government ran “Project Storm Fury,” an attempt to weaken tropical cyclones by flying aircraft into the storms and seeding the eyewalls with silver iodide. More recently in 2005, two bills, United States Senate Bill 517 and House Bill 2995, were introduced that would allow experimental weather modification by artificial methods and would implement a national weather modification policy. To date neither bill has become law.

The Project

Weather Tech Innovations, Inc. is our subsidiary that will manage our hurricane suppression project. It has undergone only very limited testing and is not ready for true live testing in hurricanes. We need to raise between $3 to $5 million for preliminary environmental impact studies and to build the appropriate computer and radar facilities for participating universities. Another $50 to $100 million will be needed to fully test the project once the preliminaries goals have been reached and verified. We are uncertain whether we can raise this sum.

WeatherTech uses an inorganic polymer that has physical and chemical properties that shows promise of having the ability of weakening a hurricane. GelTech’s polymer has undergone intense laboratory study and limited actual field testing. The formulated polymer looks like baby powder; however each granule has the ability to absorb hundreds of times its weight in moisture and water. The product is inert and, we believe it is non-toxic.



26





We believe that if a jet aircraft were to deliver our polymer into the outer bank of a hurricane and then worked its way into the eye thereby cutting a pie shaped piece out of the storm, it may cause the winds and overall strength of the storm to weaken. The product would be delivered into a storm by a third party jet aircraft with specialized disbursement systems.

In early 2001, a jet dispersed a nominal amount of the product into a building thunderstorm off the coast of South Florida. The result was that the thunderstorm was removed from Doppler radar. This was verified by the Palm Beach International Airport traffic controllers and local television stations. This test was widely publicized in the West Palm Beach area. In another crude preliminary model test by a National Oceanic and Atmospheric Administration laboratory, application of adding polymer to a hurricane was able to produce a modest reduction in wind speed under laboratory conditions.

The efficacy of our product in a cloudy, rain-filled environment requires careful further study. However, the weakening of a storm by seeding with polymer seems to be related to an increased frictional load due to larger raindrops and cloud water buildup. This takes the heat out of the atmosphere and removes water mass. This cooling is “taxing” on the storm’s energy and could dynamically weaken the storm. Determining when, where, how much a storm would be weakened and what effect this would have is the objective of the studies.

Our goal is to raise the money to conduct a thorough test of whether our hurricane suppression project can reduce the impact of a hurricane and determine what, if any, effect it has on the environment. If we are successful, we then must be able to market it to the federal government. We cannot assure you we will be successful.

We estimate that it will cost from $50,000,000 to $100,000,000 over four years to test our theory and product on incoming storms and to fully evaluate the results including environmental effects. We intend to form a scientific advisory and research board to further study the matter.

Raw Materials and Suppliers

The polymer for the project is provided to us by a third party. However, there are many other sources from which GelTech could obtain the polymer.

Competition

There really is no competition for a project such as ours, due to the fact that we have the only patent for “Method of Modifying Weather.” As described above, there have been previous attempts at weather modification, but we are not aware of any other company that is proposing a product similar to ours.

Seasonality

The project would be used during hurricane season.

Governmental Regulation

The use of the polymer for seeding purposes will be subject to governmental regulation. We are subject to the United Nations Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques. The Convention was ratified by President Jimmy Carter on December 13, 1979. This Convention bans hostile weather modification. It is unclear whether deployment of our hurricane suppression project may be considered “hostile.” See the risk factor beginning at page 8 of this prospectus.

On March 3, 2005 a bill was introduced by Senator Kay Bailey Hutchison to establish a “Weather Modification Operations or Research Board.” The purpose of the bill was to develop and implement a comprehensive and coordinated national weather modification policy and to establish a national cooperative federal and state program of weather modification research and development. As of the date of this filing, the bill has not been brought to a vote.

Therefore, it seems likely that that any eventual large-scale version of the project would involve some degree of government regulation and modification of the Convention referred to above.







27





Intellectual Property

The patents relating to the products we currently expect to market are:

·

U.S. Patent No. 6,315,213 – Method of Modifying Weather; and

·

U.S. Patent U.S. Serial No. 7,182,778 – Conforming Thermal Pack for IceWear.

The following are patents pending for products we currently expect to market:

·

U.S. patent application, Serial No. 11/251,005 for IceWear;

·

U.S. patent application, Serial No. 11/680,803 and International Patent application, Serial No. PCT/US07/63075  for FireIce; and

·

U.S. patent application, Serial No. 11/775,512 for a sprayable form of RootGel.

Trademarks

We claim trademark rights to the following marks. Federal trademark applications are on file with the United States Trademark Office:

·

GelTech Solutions;

·

FireIce;

·

IceWear;

·

RootGel;

·

WeatherTech; and

·

WeatherTech Innovations

Employees

As of the date hereof, we have seven full-time and two part-time employees. We hire independent contractors on an “as needed” basis only. We have no collective bargaining agreements with our employees. We believe that our employee relationships are satisfactory. In addition to our Chief Executive Officer and our Chief Technology Officer, we employ two other members of the Cordani family. See the discussion in the section of this prospectus entitled “Related Person Transactions.”

Properties

Our office is located in Jupiter, Florida. We lease the property under a two-year lease which expires September 30, 2008 at an initial monthly rental of $7,815.34.

Until late January 2007, we shared offices with Dyn-O-Mat. They now lease offices near our offices in Jupiter, Florida. See the “Related Person Transactions” section of this prospectus.



28





MANAGEMENT AND BOARD OF DIRECTORS

The following is a list of our directors and executive officers. All directors serve one-year terms or until each of their successors are duly qualified and elected. The officers are elected by the board of directors.

Name

     

   Age   

     

Position(s)

Michael Cordani

     

47

     

Chief Executive Officer, Secretary and Treasurer
and Chairman of the Board of Directors

Joseph Ingarra

 

34

 

President and Director

Peter Cordani

 

46

 

Chief Technology Officer and Director

Michael D. Brown

 

52

 

Senior Vice President for Government Relations and Director

Michael R. Donn, Sr.

 

59

 

Director

Phil D. O’Connell, Jr.

 

67

 

Director

Michael Cordani has been our Chief Executive Officer and a director since inception. He became Chairman of the Board of Directors on June 25, 2007. From inception until June 25, 2007 he was also our President. Mr. Cordani also acts as our Chief Financial Officer. We are actively seeking to hire a person to act as our Chief Financial Officer on a part-time basis and thereby reduce our use of outside accountants. Since July 2005, Mr. Cordani has been an employee of Dyn-O-Mat, initially full-time, and since our incorporation on a part-time basis. Although he had no title, he acted in a senior management capacity for Dyn-O-Mat. Previously, from 1999 to May 2003, Mr. Cordani was the Director of Sales and Marketing of Dyn-O-Mat, Inc. From May 2003 to June 2005, Mr. Cordani was the President of VMR Trucking, Inc.

Joseph Ingarra has been our President since June 25, 2007. From inception until June 25, 2007 he was our Executive Vice President. He has been a director since inception. From 2002 through September 2004, Mr. Ingarra was Vice President of Operations of Dyn-O-Mat. From December 2004 to April 2006, Mr. Ingarra was Vice-President of Corporate Acquisitions for MidCoast Financial, Inc.

Peter Cordani has been our Chief Technology Officer since inception. He has been a director since July 3, 2007. He is the inventor of all of our intellectual property. Mr. Cordani was the Chief Executive Officer of Dyn-O-Mat, Inc. from February 1994 until February 2007.

Michael D. Brown became a director of GelTech on November 15, 2006 and was appointed our Senior Vice President for Government Relations on November 14, 2006. Mr. Brown was the director of the Federal Emergency Management Agency or FEMA from January 2003 until September 2005. Mr. Brown joined FEMA in January 2001 as General Counsel and was named acting deputy director in September 2001. Since September 2005, Mr. Brown has been self-employed providing governmental relations consulting.

Michael R. Donn, Sr. became a director of GelTech on November 15, 2006. Mr. Donn has also been a director of Ecosphere Technologies, Inc. (f/k/a UltraStrip Systems, Inc.) (OTCBB: ESPH) since March 1, 2005. From October 2005 until September 2006, he served as President of Ecosphere Systems, Inc., a subsidiary of Ecosphere Technologies, Inc., and currently serves as its Executive Vice President and Chief Operating Officer. From February 2000 until October 2005, Mr. Donn served as Ecosphere Technologies, Inc.’s Senior Vice-President of Operations and Treasurer. From 1994 to 2000, he served as President of the Miami-Dade County Fire Fighters Association, a 1700-member employee association for which he previously served as Vice President and Treasurer beginning in 1982. His responsibilities included lead negotiator, lobbying at the local, state, and national levels, Chairman of the Insurance Trust, and business operations of the Association. Mr. Donn coordinated the fire fighter relief efforts for the Miami-Dade fire fighters, following Hurricane Andrew.

Phil D. O’Connell, Jr. became a director of GelTech on November 15, 2006. Mr. O’Connell is an attorney and has been a partner at the law firm of Casey Ciklin Lubitz Martens & O’Connell, P.A. and predecessor law firms since 1969.

Mr. Michael Cordani, our Chief Executive Officer, and Chairman of the Board of Directors, is the brother of Mr. Peter Cordani, our Chief Technology Officer, and a director. There are no other family relationships between any of the executive officers and directors. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his successor is elected and qualified. See the “Related



29





Person Transactions” section of this prospectus for further information concerning our employment of Cordani family members. Each of Messrs. Michael and Peter Cordani and Mr. Joseph Ingarra perform services for Dyn-O-Mat on an occasional basis without compensation

Director Independence

The Board of Directors has determined that Messrs. Phil D. O’Connell, Jr. and Michael R. Donn, Sr. are independent, and that Messrs. Michael Cordani, Chief Executive Officer, Joseph Ingarra, President, and Michael D. Brown, Senior Vice President for Government Relations, are not. The Board’s determinations of director independence were made in accordance with the Nasdaq Marketplace Rules.

Committees of the Board of Directors

Our Board of Directors has established an Audit Committee consisting of Messrs. Phil D. O’Connell, Jr. and Michael R. Donn, Sr. The Board of Directors has determined that both members are independent directors under the Nasdaq Marketplace Rules. As our business grows, we will seek to add one or more members who are Audit Committee Financial Experts.

We have not established any other committees, including a Nominating or a Compensation Committee. The functions of those committees are being undertaken by the entire board as a whole.



30





EXECUTIVE COMPENSATION

Executive Employment and Consulting Agreements

We have entered into employment agreements with each of our executive officers except for Mr. Michael Brown, our Senior Vice President of Government Relations with whom we have a consulting agreement. The two charts below summarizes the terms and conditions of these employment agreements and consulting agreement.

Executive

 

Position

 

Term

 

Base Salary/
Compensation

 

Option/Bonus
Incentive
(1)

Michael Cordani

     

Chief Executive Officer,
Secretary and  Treasurer

     

September 15, 2006

Through

September 15, 2009

     

$  91,000

     

175,000

Joseph Ingarra

 

President

 

September 15, 2006

Through

September 15, 2009

 

$  91,000

 

175,000

Peter Cordani

 

Chief Technology Officer

 

December 18, 2006

Through

December 18, 2009

 

$  91,000

 

None

Michael D. Brown

 

Senior Vice President for
Government Relations

 

October 11, 2006

Through

January 11, 2008(2)

 

$120,000

 

None

———————

(1)

All options are exercisable through September 15, 2011 at $1.00 per share. The options vest at $1.00 per share in equal increments each December 31st and June 30th, subject to continued employment. Does not include 50,000 five-year options granted to Mr. Ingarra on June 25, 2007, exercisable at $0.667 per share. These options vest at the same times as described in the prior sentence beginning December 31, 2007, subject to continued employment on each applicable vesting date.

(2)

Because Mr. Brown did not perform any services for us earlier this year when we were unable to pay him, we extended his consulting agreement for three months. He waived sums due for May through July 2007. We owe him for the months of March and April, but are continuing discussions with him about waiving these payments and extending the agreement for another two months.

Each of Messrs. Michael Cordani, Joseph Ingarra and Peter Cordani receive a monthly automobile allowance of $875 per month. Messrs. Michael Cordani, Joseph Ingarra and Peter Cordani will receive three years’ severance and all unvested options will accelerate if terminated without cause or if they resign for “good reason” which includes a change in duties or a person or group acquires 30% of our common stock.

2007 Equity Incentive Plan

In January 2007, we established the 2007 Equity Incentive Plan under which we may issue up to 1,500,000 stock options, stock appreciation rights, restricted stock or restricted stock units to our directors, employees and consultants.

Under the Equity Incentive Plan, all of our directors who are not employees or own 10% or more of the Company’s outstanding stock at the time of grant shall automatically receive a grant of stock options of grant as follows:

Initial Grants

A – Chairman of the Board

- 50,000 options

B – Director

- 30,000 options

C – Chair of a Committee

- 10,000 options

D – Member of a Committee

- 5,000 options



31





Annual Grants

A – Chairman of the Board

- 35,000 options

B – Director

- 20,000 options

C – Chair of a Committee

 -10,000 options

D – Member of a Committee

- 5,000 options

All of the options which are automatically granted to our non-employee directors vest over a three year period on each June 30 th and December 31 st , subject to continuing as a director, Committee member, Chairman of the Board or Chairman of a Committee on the applicable vesting date. Because Mr. Michael Cordani, our Chairman of the Board, is an employee, he is not eligible for a grant.

The exercise price of options or stock appreciation rights granted under the 2007 Equity Incentive Plan shall not be less than the fair market value of the underlying common stock at the time of grant. The initial options we granted to date have been granted at $1.00 per share, which is the price at which we raised money in our first private placement. In the case of incentive stock options, the exercise price may not be less than 110% of the fair market value in the case of 10% shareholders. Options and stock appreciation rights granted under the Equity Incentive Plan shall expire no later than five years after the date of grant. The option price may be paid in United States dollars by check or wire transfer or, at the discretion of the Board of Directors or Compensation Committee, by delivery of shares of our common stock having fair market value equal as of the date of exercise to the cash exercise price, or a combination thereof.

The identification of individuals entitled to receive awards, the terms of the awards, and the number of shares subject to individual awards, are determined by our Board of Directors or the Compensation Committee, in their sole discretion. The total number of shares with respect to which options or stock awards may be granted under the Equity Incentive Plan the purchase price per share, if applicable, shall be adjusted for any increase or decrease in the number of issued shares resulting from a recapitalization, reorganization, merger, consolidation, exchange of shares, stock dividend, stock split, reverse stock split, or other subdivision or consolidation of shares.

Our Board of Directors or the Compensation Committee may from time to time alter, amend, suspend, or discontinue the Equity Incentive Plan with respect to any shares as to which awards of stock rights have not been granted. However no rights granted with respect to any awards under this Equity Incentive Plan before the amendment or alteration shall not be impaired by any such amendment, except with the written consent of the grantee.

Under the terms of the Equity Incentive Plan, our Board of Directors or the Compensation Committee may also grant awards which will be subject to vesting under certain conditions. The vesting may be time-based or based upon meeting performance standards, or both. Recipients of restricted stock awards will realize ordinary income at the time of vesting equal to the fair market value of the shares. We will realize a corresponding compensation deduction. Upon the exercise of stock options or stock appreciation rights, the holder will have a basis in the shares acquired equal to any amount paid on exercise plus the amount of any ordinary income recognized by the holder. On sale of the shares, the holder will have a capital gain or loss equal to the sale proceeds minus his or her basis in the shares.

In their September 15, 2006 Employment Agreements, our Chief Executive Officer and President each were entitled to receive options to purchase 175,000 shares of our common stock at $1.00 per share, vesting each June 30 th and December 31 st , subject to remaining employed by us on the applicable vesting date. One-sixth or 29,167 are currently vested. Because the Board of Directors had not acted previously, they received their grants under the Equity Incentive Plan in March 2007.

In June 2007, our Board of Directors awarded Mr. Joseph Ingarra 50,000 five-year options exercisable at $0.667 per share. The options will vest over a three-year period each June 30 th beginning December 31, 2007, subject to remaining employed by us on the applicable vesting date.

All of our Stock Option Agreements provide for “clawback” provisions, which enable our Board of Directors to cancel stock awards and recover past profits if the person is dismissed for cause or commits certain acts which harm us.



32





The following chart reflects the number of stock rights we awarded in 2007 to our executive officers and directors.

Name

 

Number of
Options

 

Exercise Price
per Share

 

Expiration Date

Michael Cordani

     

175,000

     

$1.00

     

September 15, 2011

Joseph Ingarra

 

175,000

 

$1.00

 

September 15, 2011

Joseph Ingarra

 

50,000

 

$0.667

 

June 25, 2012

Michael D. Brown

 

30,000

 

$1.00

 

March 2, 2012

Michael R. Donn, Sr.

 

30,000

 

$1.00

 

March 2, 2012

Michael R. Donn, Sr.

 

5,000

 

$0.667

 

June 25, 2012

Phil O’Connell, Jr.

 

30,000

 

$1.00

 

March 2, 2012

Phil O’Connell, Jr.

 

5,000

 

$0.667

 

June 25, 2012

Compensation of Directors

Members of our Board of Directors do not currently receive compensation for their services as directors, except for annual awards of stock options under our 2007 Equity Incentive Plan.



33





RELATED PERSON TRANSACTIONS

Following our incorporation, we issued 7,250,000 shares of common stock to Dyn-O-Mat in exchange for the purchase of four U.S. patents, three patents pending and certain other assets including office furniture with a nominal value and cash of $6,471.

In March-June 2007, Dyn-O-Mat offered to its shareholders the right to exchange their Dyn-O-Mat shares for shares of GelTech common stock. More than 150 Dyn-O-Mat shareholders accepted the offer and received 6,351,479 shares of GelTech in exchange for Dyn-O-Mat receiving 11,957,802 shares of Dyn-O-Mat common stock. Four of our directors accepted the exchange offer. They are our Chief Executive Officer, Mr. Michael Cordani, who received 430,269 shares, our President, Mr. Joseph Ingarra, who received 124,643 shares, our Chief Technology Officer, Mr. Peter Cordani who received 1,306,954 shares, and Mr. Phil O’Connell, Jr., who received 622,644 shares. Mr. O’Connell also received 474,058 three-year warrants exercisable at $1.05 per share. Mr. O’Connell’s warrants were issued in conjunction with his cancellation of Dyn-O-Mat warrants using the same exchange ratio. We received no consideration for this other than Mr. O’Connell’s past support.

The Cordani family received 2,967,297 shares in the exchange offer, including:

·

Michael Cordani and his wife

     

430,269 shares

·

Peter Cordani

 

1,306,954 shares

·

Anne Cordani

 

1,177,400 shares

Additionally, Mr. Joseph Ingarra’s mother received 8,852 shares of our common stock and his father received 17,704 shares in the exchange offer.

Dyn-O-Mat was required to limit the exchange offer to 35 unaccredited investors and an unlimited number of accredited investors as that term is defined by Rule 501 under the Securities Act of 1933. The management of GelTech elected to delay having family members who are not accredited investors, except for the wife and mother of our Chief Executive Officer, from participating in the exchange offer to allow additional other unaccredited Dyn-O-Mat shareholders to participate. Therefore, 600,000 shares of common stock of Dyn-O-Mat held in three trusts for which Mr. Michael Cordani and Ms. Anne Cordani are trustees and for which members of the Cordani family are the beneficiaries were not allowed to participate in the exchange offer. Dyn-O-Mat has advised us that beginning after December 31, 2007 it intends to offer its remaining 898,521 shares of GelTech common stock to Dyn-O-Mat shareholders.

We have an option whereby during the two years beginning one year following the date of this prospectus we can purchase all of the assets of Dyn-O-Mat, subject to all of its liabilities, for $10,000 plus the value of all of Dyn-O-Mat’s net tangible assets.

Michael D. Brown, our Senior Vice President for Government Relations and a director, entered into a consulting agreement on October 11, 2006. Mr. Brown will assist us in marketing our products, including FireIce,RootGel and IceWear to governments and corporations. Details of his compensation under the consulting agreement are contained in the “Executive Compensation” section of this prospectus.

During the period from our inception through late January 2007, we and Dyn-O-Mat each paid a portion of the other’s expenses. We formerly shared a 7,140 square foot office/warehouse facility with Dyn-O-Mat, until late January 2007 when it moved to its own nearby facility. Effective as of February 1, 2007, GelTech and Dyn-O-Mat entered into an Administrative Services Agreement. Under this Agreement, Dyn-O-Mat agreed to pay us $1,000 per month to cover the services including management and bookkeeping provided by our employees. On March 9, 2007, Dyn-O-Mat made a payment of $7,815 to GelTech which resulted in GelTech owing Dyn-O-Mat money.  Dyn-O-Mat has made no further payments and  as of July 12, 2007, GelTech owed Dyn-O-Mat $263.

Michael Cordani, our Chief Executive Officer and Joseph Ingarra, our President each entered into employment agreements as of September 15, 2006. Mr. Peter Cordani, our Chief Technology Officer, entered into an employment agreement as of December 18, 2006. See the “Executive Compensation” section of this prospectus for discussion of the terms. Under each agreement, these executives may perform services for Dyn-O-Mat, our principal shareholder, as long as such executive is not compensated by Dyn-O-Mat for such services and as long as it does not interfere with each executive’s ability to carry out his duties under his respective employment agreement.



34





From May 5, 2005 through August 17, 2006, the Phil. D. O’Connell, Jr. Revocable Trust dated September 4, 1991, of which Phil D. O’Connell, Jr., now one of our directors, is the trustee, lent Dyn-O-Mat $338,220, which was guaranteed by Peter Cordani, our Chief Technology Officer and a director. This loan was secured by U.S. Patent No. 6,315,213, our hurricane suppression product, and by a Dyn-O-Mat patent. At the time the security interest was given, the patents were owned by Dyn-O-Mat. In November 2006, Mr. O’Connell elected to convert $238,220 of the outstanding balancing into 150,000 shares of our common stock and 88,220 shares of Dyn-O-Mat common stock, each at the rate of $1.00 per share. Mr. O’Connell has released all of his rights to our hurricane suppression patent and the remaining sums are owed by Dyn-O-Mat. Mr. O’Connell later exchanged the 88,200 shares of Dyn-O-Mat common stock he received into 46,848 shares of GelTech common stock in the exchange offer discussed above. Mr. O’Connell lent us $18,000 with 9% interest in September 2006 and $4,000 in April 2007 with 9% per annum interest. The loans were evidenced by demand notes and repaid.

In addition to Michael and Peter Cordani, the following related parties are employed at GelTech:

·

Michael Cordani’s wife as a bookkeeper at $808 per week and

·

Michael and Peter Cordani’s mother as a receptionist at $400 per week.

We believe all of these salaries are at or are below the going rate of what such services would cost on the open market. All of these people performed services for Dyn-O-Mat prior to its move to new offices. The $1,000 per month Dyn-O-Mat is obligated to pay us is designed to compensate us for the limited services Messrs. Michael Cordani, Peter Cordani and Joseph Ingarra perform for it. While we believe this fee is fair, there is no exact way to measure this fairness.



35





PRINCIPAL SHAREHOLDERS

The following table sets forth the number of shares of GelTech’s voting stock beneficially owned as of the date of this prospectus by (i) those persons known by GelTech to be owners of more than 5% of GelTech’s common stock, (ii) each director of GelTech, (iii) all named executive officers, and (iv) all executive officers and directors of GelTech as a group:

Title of Class

 

Name and
Address of Beneficial Owner

 

Amount and
Nature of Beneficial
Owner(1)

 

Percent of
Class (1)

 

 

 

 

 

 

 

 

 

Directors and Executive Officers:

 

 

 

 

 

Common Stock

 

Michael Cordani, 1460 Park Lane South, Suite 1, Jupiter, Florida 33458(2)(3)(4)

 

530,212

 

5.1%

 

Common Stock

 

Joseph Ingarra, 1460 Park Lane South, Suite 1, Jupiter, Florida 33458(5)(6)

 

182,977

 

1.8%

 

Common Stock

 

Michael D. Brown, 1425 K Street, N.W., Suite 350, Washington, DC 20005(5)(7)

 

5,000

 

*

 

Common Stock

 

Peter Cordani, 1460 Park Lane South, Suite 1, Jupiter, Florida 33458(5)(8)

 

2,205,475

 

21.4%

 

Common Stock

 

Michael R. Donn, Sr., 11 S.E. River Lights Court, Stuart, Florida 34996(5)(7)

 

5,000

 

*

 

Common Stock

 

Phil D. O’Connell, Jr., 515 North Flagler Drive, 19th Floor, West Palm Beach, Florida 33401(9)(10)(11)

 

1,251,702

 

11.6%

 

Common Stock

 

All directors and executive officers
as a group (6 persons)(12)

 

4,180,366

 

38.4%

 

 

 

 

 

 

 

 

 

5% Shareholders:

 

 

 

 

 

Common Stock

 

Michael Reger, 777 Yamato Road, Suite 300, Boca Raton, Florida 33431(13)

 

2,475,000

 

23.5%

 

Common Stock

 

Dyn-O-Mat, Inc., 3021 Jupiter Park Circle, Suite 106, Jupiter, Florida 33458(14)

 

898,521

 

8.7%

 

Common Stock

 

Anne Cordani, 1460 Park Lane South, Suite 1, Jupiter, Florida 33458(4)

 

1,177,400

 

11.4%

 

———————

*

Less than 1%

(1)

Applicable percentages are based on 10,285,000 shares outstanding as of the date of this prospectus adjusted as required by rules of the SEC. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days after the date of this prospectus are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this table, GelTech believes that each of the shareholders named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them.

(2)

Michael Cordani is Chairman of our Board of Directors and an executive officer.




36





(3)

Shares are held with Mr. Cordani’s wife as tenants by the entirety. Includes 58,334 shares of common stock issuable upon exercise of vested options. Does not include unvested options which do not vest within 60 days of the date of this prospectus.

(4)

Mr. Michael Cordani, our Chief Executive Officer, and Mrs. Ann Cordani are trustees of three trusts which own shares of Dyn-O-Mat. They intend to have the trusts exchange their shares of Dyn-O-Mat for 318,695 shares of GelTech common stock in January 2008. Members of the Cordani family are beneficiaries of the trusts. Ann Cordani is the mother of Michael Cordani and Peter Cordani, our Chief Technology Officer. The management of GelTech has elected to delay having family members who are not accredited investors from participating in the Exchange Offer to allow additional other unaccredited Dyn-O-Mat shareholders to participate.

(5)

Messrs. Ingarra, Peter Cordani and Brown are executive officers and directors; Mr Donn is a director. Mr. Peter Cordani’s shares are owned by North Carolina River Ridge LLC

(6)

Includes 66,667 shares issuable upon exercise of options that are exercisable within 60 days of the date of this prospectus. Does not include shares of common stock issuable upon exercise of unvested options which do not vest within 60 days of the date of this prospectus.

(7)

Shares consist of shares of common stock issuable upon exercise of vested options. Does not include shares of common stock issuable upon exercise of vested options which do not vest within 60 days of the date of this prospectus.

(8)

Includes 898,521 shares of our common stock held by Dyn-O-Mat which is controlled by Mr. Peter Cordani. Since Dyn-O-Mat intends to offer to exchange these shares with its remaining shareholders in or about January 2008, the 898,521 shares beneficially owned by Mr. Cordani will be reduced. See Note (4) above.

(9)

A director. Mr O’Connell is a selling shareholder. See the following section entitled “Selling Shareholders” beginning at page 38.

(10)

Includes 474,058 shares issuable upon exercise of warrants exercisable at $1.05 per share. Also includes 5,000 shares issuable upon exercise of options that are exercisable within 60 days of the date of this prospectus. Does not include shares of common stock issuable upon exercise of unvested options which do not vest within 60 days of the date of this prospectus.

(11)

Shares are held by Mr. O’Connell and his wife, by the Phil D. O’Connell, Jr. Revocable Trust of which Mr. O’Connell is the trustee and by two limited liability companies which he controls.

(12)

Includes shares owned by Dyn-O-Mat. Mr. Peter Cordani controls Dyn-O-Mat through the ownership of a nominal amount of super voting preferred stock, which shares are not convertible into common stock. Thus, they will not be subject to a future exchange offer.

(13)

Includes 225,000 five-year warrants exercisable at $1.00 per share. Mr. Reger is a selling shareholder. See the following section entitled “Selling Shareholders” beginning at page 38.

(14)

Mr. William Cordani, father of Messrs. Michael and Peter Cordani, is president of Dyn-O-Mat.



37





SELLING SHAREHOLDERS

The following table provides information about each selling shareholder listing how many shares of our common stock they own on the date of this prospectus, how many shares are offered for sale by this prospectus, and the number and percentage of outstanding shares each selling shareholder will own after the offering assuming all shares covered by this prospectus are sold. The selling shareholders may, from time to time, offer and sell pursuant to this prospectus up to a total of 2,252,932 shares of our common shares now owned by them or issuable upon exercise of 207,311 warrants. The Selling Shareholders may, from time to time, offer and sell any or all of the shares that are registered under this prospectus. The following table sets forth, with respect to each Selling Shareholder: (i) the number of shares of common stock beneficially owned as of the date of this prospectus and prior to the offering contemplated hereby, (ii) the number of shares of common stock eligible for resale by such selling shareholder pursuant to this prospectus, (iii) the number of shares beneficially owned by such selling shareholder after the offering contemplated hereby assuming that all shares eligible for resale pursuant to this prospectus actually are sold, and (iv) the percentage of shares of common stock owned by such selling shareholder after the offering contemplated hereby.

Name

 

Number of
securities
beneficially
owned before
offering

 

Number of
securities
to be
offered

 

Number of
securities
owned after
offering

 

Percentage of
securities
beneficially
owned after
offering

Antonio Abbatiello

     

1,770

     

354

     

1,416

     

*

Sebastiano Abbatiello

 

885

 

177

 

708

 

*

Glenn Alber

 

5,311

 

1,062

 

4,249

 

*

Jane K. and Fermin Aldea, JTWROS

 

23,105

 

4,621

 

18,484

 

*

Leslie Altavilla Revocable Trust Dated March 28, 2003

 

75,000

 

25,000

 

50,000

 

*

Richard F. Angelini

 

8,498

 

1,699

 

6,799

 

*

Madeleine Arena

 

531

 

106

 

425

 

*

Richard Armellini

 

17,704

 

3,540

 

14,164

 

*

Tonina Avino

 

1,770

 

354

 

1,416

 

*

Richard and Anna Bauer, JTWROS

 

2,655

 

531

 

2,124

 

*

Skip Bauman

 

531

 

106

 

425

 

*

Robert L. & Rosemarie C. Bell, Tenants By The Entirety

 

8,852

 

1,770

 

7,082

 

*

Roberto Berasti

 

442

 

88

 

354

 

*

Dominick Berasti

 

442

 

88

 

354

 

*

Mariea L. Best

 

200,000

 

100,000

 

100,000

 

*

David M. Bestwick

 

11,212

 

2,242

 

8,970

 

*

James and Lynn Blackburn, JTWROS

 

2,655

 

531

 

2,124

 

*

Joel B. Blumberg

 

1,011

 

202

 

809

 

*

Michael Bonasia

 

885

 

177

 

708

 

*

Angela Burigo

 

4,426

 

885

 

3,541

 

*

Anthony Burruano

 

531

 

106

 

425

 

*

Brian Calascibetta

 

8,852

 

1,770

 

7,082

 

*

Andy and Diane Carlino, JTWROS

 

11,212

 

2,242

 

8,970

 

*

Glen and Jane Checchi, JTWROS

 

442

 

88

 

354

 

*

William R. Childers

 

10,623

 

2,124

 

8,499

 

*

Frank and Dorothy Chris, JTWROS

 

4,403

 

880

 

3,523

 

*

Cocuy, Burns and Co., P.A.

 

8,497

 

1,699

 

6,798

 

*

James B. Conant

 

10,623

 

2,124

 

8,499

 

*

Robert Cooke

 

8,852

 

1,770

 

7,082

 

*

John K. and Danielle E. Copeland, Tenants by the Entirety

 

64,621

 

12,924

 

51,697

 

*





38






Name

 

Number of
securities
beneficially
owned before
offering

 

Number of
securities
to be
offered

 

Number of
securities
owned after
offering

 

Percentage of
securities
beneficially
owned after
offering

Pietro Corradino

     

1,593

     

318

     

1,275

     

*

David J. Daucanski

 

8,852

 

1,770

 

7,082

 

*

Janeen G. Davis

 

5,311

 

1,062

 

4,249

 

*

Darlene DeLano

 

31,869

 

6,373

 

25,496

 

*

Salvatore Delio

 

885

 

177

 

708

 

*

Raymond and Linda DeLoreto, JTWROS

 

2,955

 

591

 

2,364

 

*

Peter and Donna DeLoreto

 

4,426

 

885

 

3,541

 

*

Mark Anthony Derderian

 

10,000

 

5,000

 

5,000

 

*

Robin Dillon

 

1,327

 

265

 

1,062

 

*

Daniel A. DiTroia

 

16,199

 

3,239

 

12,960

 

*

George T. Elmore

 

387,743

 

77,548

 

310,195

 

3.0%

Robert Engle

 

8,852

 

1,770

 

7,082

 

*

Derek and Wendy J. Evans, JTWROS

 

4,426

 

885

 

3,541

 

*

Kenneth F. Ferrari

 

8,852

 

1,770

 

7,082

 

*

Sheldon Fisher

 

5,311

 

1,062

 

4,249

 

*

Mauro D. Gallo

 

796

 

159

 

637

 

*

Timothy A. Ginn

 

25,000

 

12,500

 

12,500

 

*

Charles Schwab & Co. Custodian FBO Margie Ginn, IRA

 

50,000

 

25,000

 

25,000

 

*

Richard Halpern

 

78,870

 

15,774

 

63,096

 

*

Richard E. Hanna

 

11,596

 

2,319

 

9,277

 

*

Derrel and Kim Harrelson

 

4,249

 

849

 

3,400

 

*

Thomas W. and Teresa I. Heller, JTWROS

 

46,209

 

9,241

 

36,968

 

*

Richard A. and Lynda R. Heller

 

8,852

 

1,770

 

7,082

 

*

Scott and Denise Hendelson, JTWROS

 

7,381

 

1,476

 

5,905

 

*

Wayne Hess

 

5,841

 

1,168

 

4,673

 

*

Jay Hoffman

 

5,311

 

1,062

 

4,249

 

*

William R. Howe

 

8,852

 

1,770

 

7,082

 

*

Robert N. Howe

 

2,955

 

591

 

2,364

 

*

Karen Howe

 

2,955

 

591

 

2,364

 

*

Harvey G. Hoyt

 

44,844

 

8,968

 

35,876

 

*

Pamela Ingarra(1)

 

8,852

 

1,770

 

7,082

 

*

The Ingarra Revocable Trust(2)

 

17,704

 

3,540

 

14,164

 

*

Kevin Inwood, M.D.

 

125,703

 

25,140

 

100,563

 

*

Allen R. and Irene A. Jackson, JTWROS

 

39,835

 

7,967

 

31,868

 

*

Peter and Ellen Jacobus, JTWROS

 

7,967

 

1,593

 

6,374

 

*

George R. Jones

 

5,311

 

1,062

 

4,249

 

*

Michael Jurewicz

 

1,593

 

318

 

1,275

 

*

Edward B. Kattel Revocable Trust

 

1,327

 

265

 

1,062

 

*

Mark and Pearl Kert , JTWROS

 

27,704

 

8,540

 

19,164

 

*

Melanie D. Kremkau

 

3,718

 

743

 

2,975

 

*

Stylianos Kritikos

 

531

 

106

 

425

 

*

Christopher W. Laughner

 

4,426

 

885

 

3,541

 

*

Richard Leppla

 

96,607

 

19,321

 

77,286

 

*



39






Name

 

Number of
securities
beneficially
owned before
offering

 

Number of
securities
to be
offered

 

Number of
securities
owned after
offering

 

Percentage of
securities
beneficially
owned after
offering

Philip D. Lewis

     

26,557

     

5,311

     

21,246

     

*

IRA Rollover FBO James L. Lingelbach

 

4,426

 

885

 

3,541

 

*

Joseph W. and Debra D. Lingelbach, JTWROS

 

4,426

 

885

 

3,541

 

*

Richard Lombardi

 

1,327

 

265

 

1,062

 

*

Stephen and Sydney Lombardi, JTWROS

 

2,655

 

531

 

2,124

 

*

M.E.B. Properties, Inc

 

132,789

 

26,557

 

106,232

 

*

Ronald Mainor

 

17,881

 

3,576

 

14,305

 

*

Salvatore Maresca

 

6,905

 

1,381

 

5,524

 

*

James Marvel

 

1,062

 

212

 

850

 

*

Yvonne Mason

 

4,426

 

885

 

3,541

 

*

Leonard Mass

 

63,738

 

12,747

 

50,991

 

*

Michael McDermott Living Trust

 

13,278

 

2,655

 

10,623

 

*

David Memon

 

5,311

 

1,062

 

4,249

 

*

Louise A. and Andy J. Mine Jr., JTWROS

 

531

 

106

 

425

 

*

Richard and Janet Morgan, JTWROS

 

8,852

 

1,770

 

7,082

 

*

William Morrissey

 

26,556

 

5,311

 

21,245

 

*

Paul J. Nolan

 

5,311

 

1,062

 

4,249

 

*

Phil D. O’Connell, Jr.(3)

 

1,252,535

 

369,340

 

883,195

 

8.3%

Christopher and Toni Okolichany, JTWROS

 

10,442

 

5,088

 

5,354

 

*

Stephanie A. Ortiz

 

7,967

 

1,593

 

6,374

 

*

Joseph T. Palermo III

 

2,021

 

404

 

1,617

 

*

J. Kory Parkhurst(4)

 

23,811

 

4,762

 

19,049

 

*

Michael J. and Pamela A. Parsons, JTWROS

 

947

 

189

 

758

 

*

Louis Pascatella

 

884

 

176

 

708

 

*

Jean Pedersen

 

929

 

185

 

744

 

*

Brian Pedersen

 

265

 

53

 

212

 

*

Michael Pedersen

 

1,195

 

239

 

956

 

*

Virginia A. Perry

 

884

 

176

 

708

 

*

John Petrou

 

2,655

 

531

 

2,124

 

*

Frank A. and Mary M. Pezzoli, Husband and Wife by
the Entirety

 

2,654

 

530

 

2,124

 

*

Peter L. Pimentel

 

17,704

 

3,540

 

14,164

 

*

Anthony L. Pinto, Sr.

 

8,852

 

1,770

 

7,082

 

*

Sal A. Pinto

 

11,802

 

2,360

 

9,442

 

*

William S. and Betsey B. Potter, JTWROS

 

2,655

 

531

 

2,124

 

*

Michael Reger

 

2,475,000

 

1,237,500

 

1,237,500

 

11.9%

Jennifer A. Reyneri

 

15,933

 

3,186

 

12,747

 

*

Edward D. Riggins

 

57,365

 

11,473

 

45,892

 

*

Ronald M. Riker

 

5,311

 

1,062

 

4,249

 

*

Tony & John Rodrigues, JTWROS

 

20,000

 

10,000

 

10,000

 

*

Anthony T. and Laura M. Roggina, JTWROS

 

531

 

106

 

425

 

*

Lucie Rousse

 

2,655

 

531

 

2,124

 

*

Thomas L. Ryan

 

14,606

 

2,921

 

11,685

 

*




40






Name

 

Number of
securities
beneficially
owned before
offering

 

Number of
securities
to be
offered

 

Number of
securities
owned after
offering

 

Percentage of
securities
beneficially
owned after
offering

Arlene Santantonio and Suzanne Santantonio Wight,
JTWROS

     

1,327

     

265

     

1,062

     

*

Richard J. Schattie

 

26,557

 

5,311

 

21,246

 

*

Jane M. Schreck

 

4,426

 

885

 

3,541

 

*

Angelo Scime

 

2,655

 

531

 

2,124

 

*

Robert Lee Shapiro

 

54,736

 

10,947

 

43,789

 

*

Peter A. Sherman

 

4,426

 

885

 

3,541

 

*

Louis M. Silber

 

20,065

 

4,013

 

16,052

 

*

Anthony T. Simpson

 

3,835

 

767

 

3,068

 

*

Randy Smith

 

6,724

 

1,344

 

5,380

 

*

Special Districts Services, Inc

 

20,091

 

7,018

 

13,073

 

*

Mark A. Stankus

 

796

 

159

 

637

 

*

Richard W. Steeves

 

8,852

 

1,770

 

7,082

 

*

Alan Le and Daryl M. Storm, JTWROS

 

8,852

 

1,770

 

7,082

 

*

Louis and Anna Strenta , JTWROS

 

15,933

 

3,186

 

12,747

 

*

Thomas Strenta(5)

 

92,320

 

18,464

 

73,856

 

*

Janine Strenta

 

876

 

175

 

701

 

*

Joseph and Theresa Temperino, JTWROS

 

663

 

132

 

531

 

*

Carmelo Temperino

 

13,278

 

2,655

 

10,623

 

*

Nancy Thornton and John Janero, JTWROS

 

37,769

 

7,553

 

30,216

 

*

John and Rosemarie Tramantana, JTWROS

 

3,983

 

796

 

3,187

 

*

Audie R. Webster

 

14,834

 

2,966

 

11,868

 

*

Charles and Suzanne Wight, JTWROS

 

9,959

 

1,991

 

7,968

 

*

Charles and Tara Wight, JTWROS

 

796

 

159

 

637

 

*

Anthony Scott Willis

 

19,475

 

3,895

 

15,580

 

*

Bruce Wood

 

100,293

 

20,058

 

80,235

 

*

J. Norman Young Trust

 

8,852

 

1,770

 

7,082

 

*

Anthony Zambos

 

1,327

 

265

 

1,062

 

*

Michael M. Zicarelli

 

531

 

106

 

425

 

*

Edward Zinker

 

15,934

 

3,186

 

12,748

 

*

———————

*

Less than 1%

(1)

Mother of our president.

(2)

The father of our president is a beneficial owner.

(3)

Includes 57,186 shares of common stock held by two companies of which Mr. O’Connell is the managing member. Also includes 49,395 shares of common stock held jointly by Mr. O’Connell and his wife. Also includes 642,134 shares of common stock in a trust of which Mr. O’Connell is the trustee.

(4)

Includes 1,770 shares of common stock owned jointly by Mr. Parkhurst and his wife.

(5)

Includes 5,388 shares of common stock owned jointly by Mr. Strenta and his wife.

While we agreed to register 20% of the shares of GelTech common stock issued to former Dyn-O-Mat shareholders, we have not registered any of the shares issued which are beneficially owned by our officers and directors, except for 150,000 shares issued to a trust controlled by Mr. Phil O’Connell, Jr. These shares were issued as consideration for Mr. O’Connell releasing a lien on our hurricane suppression patent relating to loans he made to Dyn-O-Mat. Additionally, we are registering 20% of the shares received by Mr. O’Connell as part of the exchange offer.



41





DESCRIPTION OF SECURITIES

We are authorized to issue 50,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share. As of the date of this prospectus, 10,285,000 shares of common stock and no shares of preferred stock are outstanding.

Common Stock

The holders of common stock are entitled to one vote per share on all matters submitted to a vote of shareholders, including the election of directors. There is no cumulative voting in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the board of directors out of funds legally available for payment of dividends subject to the prior rights of holders of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities.

Preferred Stock

We are authorized to issue 5,000,000 shares of $0.001 par value preferred stock in one or more series with such designations, voting powers, if any, preferences and relative, participating, optional or other special rights, and such qualifications, limitations and restrictions, as are determined by resolution of our board of directors. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by shareholders and could adversely affect the rights and powers, including voting rights, of the holders of common stock. In certain circumstances, the issuance of preferred stock could depress the market price of the common stock.

Indemnification and Liability of Directors and Officers

Our certificate of incorporation provides that none of our directors will be personally liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director, except for liability:

·

For any breach of the director’s duty of loyalty to us or our shareholders;

·

For acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law;

·

Under Section 174 of the Delaware General Corporation Law for the unlawful payment of dividends; or

·

For any transaction from which the director derives an improper personal benefit.

These provisions eliminate our rights and those of our shareholders to recover monetary damages from a director for breach of his fiduciary duty of care as a director except in the situations described above. The limitations summarized above, however, do not affect our ability or that of our shareholders to seek non-monetary remedies, such as an injunction or rescission, against a director for breach of his fiduciary duty.

Section 145 of the Delaware General Corporation Law provides a corporation with the power to indemnify any officer or director acting in his capacity as our representative who is or is threatened to be made a party to any lawsuit or other proceeding for expenses, judgment and amounts paid in settlement in connection with such lawsuit or proceeding. The indemnity provisions apply whether the action was instituted by a third party or was filed by one of our shareholders. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise. We have provided for this indemnification in our Certificate of Incorporation because we believe that it is important to attract qualified directors and officers. We have also entered into Indemnification Agreements with our directors and officers which agreements are designed to indemnify them to the fullest extent permissible by law, subject to one limitation described in the next sentence. We have further provided in our Certificate of Incorporation that no indemnification shall be available, whether pursuant to our Certificate of Incorporation or otherwise, arising from any lawsuit or proceeding in which we assert a direct claim, as opposed to a shareholders’ derivative action, against any directors and officers. This limitation is designed to insure that if we sue a director or officer we do not have to pay for his defense.



42





We have been advised that the Securities and Exchange Commission believes it is against public policy for us to indemnify our directors and officers for violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Accordingly, we have agreed that unless our attorneys advise us that the courts have ultimately decided whether the SEC is correct, we will let a court determine whether we can indemnify our directors and officers under such laws.

Dividends

We have not paid dividends on our common stock since inception and do not plan to pay dividends on our common stock in the foreseeable future.

Transfer Agent

______________________ is acting as our stock transfer agent.



43





PLAN OF DISTRIBUTION

Each selling security holder of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock at negotiated prices in private transactions or at prevailing prices once trading begins, on the Over-the-Counter Bulletin Board or any other stock exchange, market or trading facility on which the shares are traded. A selling security holder may use any one or more of the following methods when selling shares:

·

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers,

·

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction,

·

purchases by a broker-dealer as principal and resale by the broker-dealer for its account,

·

privately negotiated transactions,

·

settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part,

·

broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share,

·

a combination of any such methods of sale or

·

any other method permitted pursuant to applicable law.

The selling security holders may also sell shares under Rule 144 under the Securities Act of 1933 if available, rather than under this prospectus.

The selling security holders and broker-dealers, if any, acting in connection with any such sale might be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act of 1933, and any commission received by them and any profit on the resale of the securities might be deemed to be underwriting discounts and commissions under the Securities Act of 1933. In addition, we will make copies of this prospectus available to the selling shareholders and have informed them of the need for delivery of copies of this prospectus to purchasers at or prior to the time of delivery of the shares of common stock.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by Harris Cramer LLP, West Palm Beach, Florida. Attorneys employed by this firm own 200,000 shares of our common stock. In addition, McHale & Slavin, P.A., Palm Beach Gardens, Florida, is acting as special intellectual property and patent counsel.

EXPERTS

The financial statements for the years ended June 30, 2006 and 2005 for the GelTech division, of Dyn-O-Mat, Inc., the business we acquired from Dyn-O-Mat, Inc., appearing in this prospectus and registration statement have been audited by Sweeney, Gates & Co., an independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.



44





ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form SB-2, including the exhibits, schedules, and amendments to this registration statement, under the Securities Act with respect to the shares of common stock to be sold in this offering. This prospectus, which is part of the registration statement, does not contain all the information set forth in the registration statement. For further information with respect to us and the shares of our common stock to be sold in this offering, we make reference to the registration statement. Although this prospectus contains all material information regarding us, statements contained in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete, and in each instance we make reference to the copy of such contract, agreement, or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference.

You may read and copy all or any portion of the registration statement or any other information, which we file at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. We also file periodic reports, proxy and information statements, and other information with the SEC. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our SEC filings, including the registration statement, are also available to you on the SEC’s website, www.sec.gov.



45





GELTECH SOLUTIONS, INC.

FINANCIAL STATEMENTS

CONTENTS

     

Page

UNAUDITED FINANCIAL STATEMENTS

 

 

 

Consolidated Balance Sheets – March 31, 2007

F-2

 

 

Consolidated Statements of Operations – For the periods July 19, 2006 through
March 31, 2007; July 1, 2006 through July 18, 2006; and July 1, 2005 through
March 31, 2006

F-3

 

 

Consolidated Statements of Cash Flows – For the periods July 19, 2006 through
March 31, 2007; July 1, 2006 through July 18, 2006; and July 1, 2005 through
March 31, 2006

F-4

 

 

Consolidated Statements Of Stockholders’ Equity (Deficit) – For the periods July 19, 2006
through March 31, 2007; July 1, 2006 through July 18, 2006; and July 1, 2005 through
March 31, 2006

F-6

 

 

Notes to Consolidated Financial Statements

F-7

 

 

AUDITED FINANCIAL STATEMENTS

 

 

 

Report of Independent Registered Public Accounting Firm

F-14

 

 

Balance Sheets – June 30, 2006

F-15

 

 

Statements of Operations – For the years ended June 30, 2006 and 2005

F-16

 

 

Statements of Cash Flows – For the years ended June 30, 2006 and 2005

F-17

 

 

Statements of Parents’s Equity in Division – For the years ended June 30, 2006 and 2005

F-18

 

 

Notes to Financial Statements

F-19




F-1





GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

CONSOLIDATED BALANCE SHEET

MARCH 31, 2007

(UNAUDITED)

Assets

 

 

 

Current assets:

 

 

 

Cash

$

978

 

Prepaid expenses and other current assets

 

13,028

 

 

 

 

 

Total current assets

 

14,006

 

 

 

 

 

Equipment, net of accumulated depreciation of $1,778

 

10,311

 

Deposits

 

16,981

 

 

 

 

 

Total assets

$

41,298

 

 

 

 

 

Liabilities and Stockholders’ Deficit

 

 

 

Current liabilities:

 

 

 

Notes payable to stockholder

$

250,000

 

Accounts payable and accrued expenses

 

158,502

 

Related party payable

 

30,745

 

 

 

 

 

Total current liabilities

 

439,247

 

 

 

 

 

Stockholders’ deficit:

 

 

 

Preferred stock; $0.001 par value; 5,000,000 shares authorized,
No shares issued and outstanding

 

 

Common stock; $0.001 par value; 50,000,000 shares authorized,
8,385,000 shares issued and outstanding

 

8,385

 

Additional paid-in capital

 

986,113

 

Accumulated deficit

 

(1,392,447

)

 

 

 

 

Total stockholders’ deficit

 

(397,949

)

 

 

 

 

Total liabilities and stockholders’ deficit

$

41,298

 




See accompanying notes to financial statements.


F-2





GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

The Company

 

 

Predecessor

 

 

 

July 19, 2006
(inception) to
March 31,
2007

 

 

July 1, 2006
to
July 18,
2006

 

July 1, 2005
to
March 31,
2006

 

Sales

     

$

448

   

   

$

101

     

$

 

Cost of goods sold

 

 

71

 

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

377

 

 

 

76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

739,582

 

 

 

15,249

 

 

258,423

 

In-process research and development expense

 

 

150,000

 

 

 

 

 

 

Consulting expense

 

 

498,375

 

 

 

 

 

 

Operating expenses

 

 

1,387,957

 

 

 

15,249

 

 

258,423

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from operations

 

 

(1,387,580

)

 

 

(15,173

)

 

(258,423

)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

Administrative services income

 

 

2,000

 

 

 

 

 

 

Interest expense

 

 

(6,867

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other income (expenses)

 

 

(4,867

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,392,447

)

 

$

 (15,173

)

$

(258,423

)

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Loss per common share – basic and diluted

 

$

(0.17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

8,071,961

 

 

 

 

 

 

 

 




See accompanying notes to financial statements.


F-3





GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

The Company

 

 

Predecessor

 

 

 

July 19, 2006
(inception) to
March 31,
2007

 

 

July 1, 2006
to
July 18,
2006

 

July 1, 2005
to
March 31,
2006

 

Cash Flows from Operating Activities

     

 

 

   

   

 

 

     

 

 

     

Reconciliation of net loss to net cash used
in operations

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,392,447

)

 

$

(15,173

)

$

(258,423

)

Adjustments to reconcile net loss to net cash
used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

1,778

 

 

 

 

 

 

Imputed interest expense

 

 

6,867

 

 

 

 

 

 

In-process research and development expense

 

 

150,000

 

 

 

 

 

 

Stock-based compensation expense

 

 

517,131

 

 

 

 

 

 

Change in prepaid expenses and other current assets

 

 

(12,028

)

 

 

 

 

 

Change in deposits

 

 

(16,981

)

 

 

 

 

 

Change in accounts payable and accrued expenses

 

 

158,502

 

 

 

 

 

 

Change in related party payable

 

 

31,524

 

 

 

 

 

 

Change in due to Parent

 

 

 

 

 

15,173

 

 

258,423

 

Net cash used in operating activities

 

 

(555,654

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

 

 

 

Purchase of equipment

 

 

(12,089

)

 

 

 

 

 

Net cash used in investing activities

 

 

(12,089

)

 

 

 

 

 




See accompanying notes to financial statements.


F-4





GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(UNAUDITED)

 

 

The Company

 

 

Predecessor

 

 

 

July 19, 2006
(inception) to
March 31,
2007

 

 

July 1, 2006
to
July 18,
2006

 

July 1, 2005
to
March 31,
2006

 

Cash Flows from Financing Activities

     

 

 

   

   

 

 

     

 

 

 

Proceeds from notes payable

 

$

268,000

 

 

$

 

$

 

Repayment of notes payable

 

 

(18,000

)

 

 

 

 

 

Proceeds from sale of common stock

 

 

318,721

 

 

 

 

 

 

Net cash used in financing activities

 

 

568,721

 

 

 

 

 

 

Net increase in cash

 

 

978

 

 

 

 

 

 

Cash at beginning of period

 

 

 

 

 

 

 

 

Cash at end of period

 

$

978

 

 

$

 

$

 

Non-cash transactions:

On July 20, 2006, the Company issued 7,250,000 shares of common stock to the Predecessor Company for the following:

Common stock issued

     

$

      7,250

 

Equipment acquired

 

 

(779

)

Intangible assets acquired at predecessor’s cost                                                              

 

 

 

Net cash received

 

$

6,471

 

On July 20, 2006, the Company assumed $150,000 of debt, secured by intellectual property rights, from the Predecessor Company for in-process research and development. In December 2006, the Company issued 150,000 shares of common stock to the note holder in payment of the debt.

On July 20, 2006, the Company issued 200,000 founders’ shares to the Company’s legal counsel for future legal services. (See Note 5)



See accompanying notes to financial statements.


F-5





GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

JULY 18, 2006 AND MARCH 31, 2007

(UNAUDITED)

 

 

Preferred
Stock
Shares

 

Common Stock

 

Additional
Paid-in
Capital

 

Accumulated
Deficit

 

Total

 

Number
of Shares

 

Par
Value

Balance at

July 18, 2006

     

 

     

 

     

$

     

$

     

$

     

$

 

Issuance of
common stock
in connection
with purchase
transaction

 

 

 

 

7,250,000

 

 

    7,250

 

 

     

 

 

 

7,250

 

Issuance of
founders’
Shares

 

 

 

 

200,000

 

 

200

 

 

800

 

 

 

 

1,000

 

Issuance of stock
for services

 

 

 

 

450,000

 

 

450

 

 

449,550

 

 

 

 

450,000

 

Issuance of stock
in payment
of debt

 

 

 

 

150,000

 

 

150

 

 

149,850

 

 

 

 

150,000

 

Sale of common
stock, net of
$22,750 of
Expenses

 

 

 

 

335,000

 

 

335

 

 

311,915

 

 

 

 

312,250

 

Contribution of
capital

 

 

 

 

 

 

 

 

6,867

 

 

 

 

6,867

 

Stock-based
Compensation

 

 

 

 

 

 

 

 

67,131

 

 

 

 

67,131

 

Net loss

 

 

 

 

 

 

 

 

 

 

(1,392,447

)

 

(1,392,447

)

Balance at

March 31, 2007

 

 

 

 

8,385,000

 

$

8,385

 

$

986,113

 

$

 (1,392,447

)

$

(397,949

)




See accompanying notes to financial statements.


F-6





GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


1.

ORGANIZATION

GelTech Solutions, Division of Dyn-O-Mat, Inc. (GelTech or the Company) is located in Jupiter, Florida. Through July 18, 2006, the Company operated as a separate division of Dyn-O-Mat, Inc. (Dyn-O-Mat or the Predecessor Company). The Company was incorporated under the laws of the State of Florida on July 19, 2006 and on November 18, 2006, the Company reincorporated in Delaware under the name of GelTech Solutions, Inc. On July 20, 2006, the Company acquired assets from the Predecessor Company in exchange for 7,250,000 shares of the Company’s common stock. The assets acquired from the Predecessor Company consisted of the following:

                    

Cash received

     

$

6,471

                    

 

Equipment

 

 

779

 

 

Intangible assets acquired at predecessor’s cost

 

 

 

 

Assets received

 

$

7,250

 

The intangible assets acquired consisted of United States patents and other intellectual property that were recorded at the Predecessor Company’s cost basis of zero.

The Company is in the development stage and is primarily engaged in business activities that includes finalizing the development of products for three distinct markets: (i) FireIce tm , a patented fire suppression product, which is a non-toxic and when combined with water becomes a water-based gel product used to suppress fires involving structures, personal property and forest wildfires; (ii) the IceWear tm line of garments that assist with cooling the core body temperature for those individuals who work in extreme conditions, such as firefighters, police officers, construction workers, race car drivers, and others who are exposed to extreme heat; and (iii) RootGel tm , a moisture preservation solution that has many applications in the agricultural industry. Additionally, GelTech acquired the United States patent for the method to modify weather. This is a patented approach to weather modification with an end goal to reduce the power of a hurricane in order to save lives and property.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its two wholly owned subsidiaries: GelTech Innovations, Inc. and Weather Tech Innovations, Inc. There has been no activity in either subsidiary.

Equipment

Equipment is carried at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred. The cost and accumulated depreciation for equipment sold, retired or otherwise disposed of are relieved from the accounts, and resulting gains or losses are reflected in income. Depreciation is calculated using the straight-line method over the estimated useful lives of the equipment.

Impairment of long-lived assets

Equipment is reviewed for impairment in the fourth quarter and whenever events or circumstances indicate the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related assets or group of assets, a loss is recognized for the difference between the fair value and the carrying value of the related asset or group of assets. No impairments were recognized in the period ended March 31, 2007.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, which consist primarily of cash, accounts receivable, and accounts payable, approximate their fair values.



F-7



GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued )

Revenue Recognition

All revenue is recognized when products are shipped to customers.

Research and Development

Expenses for research and development are charged to expense when incurred. The total amount of research and development expenses incurred during the periods ended March 31, 2007, July 18, 2006 and December 31, 2005 was $4,873, $61 and $3,156, respectively.

Income Taxes

The Company was included in the federal income tax return of Dyn-O-Mat through July 18, 2006. The Company’s U.S. federal and state income tax liabilities are computed as if GelTech filed separate tax returns.

Since July 19, 2006, the Company has been a separate entity and intends to file a separate income tax return.

The Company accounts for income taxes on an asset and liability approach to financial accounting. Deferred income tax assets and liabilities are computed for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred asset will not be recognized. Income tax expense is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities.

Earnings (Loss) per Share

Basic earning (loss) per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share considers the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity. There were 600,000 common stock equivalents outstanding as of March 31, 2007.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its financial statements are reasonable; however, actual results could differ from these estimates and could differ materially.

Stock-Based Compensation

On July 19, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment ,” (SFAS 123R) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and employee stock purchases based on estimated fair values.



F-8



GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued )

Stock-Based Compensation (Continued)

Stock-based compensation expense recognized under SFAS 123R for the period from July 19, 2006 (inception) to March 31, 2007 was $18,806, which consisted of stock-based compensation expense related to employee stock options, and is included in selling, general and administrative expenses on the consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At March 31, 2007, the total compensation cost for stock options not yet recognized was approximately $155,000. This cost will be amortized on a straight-line basis over the remaining term of the options.

On September 15, 2006, the Company issued incentive stock options to purchase a total of 350,000 shares of the Company’s common stock to two officers (175,000 each) of the Company for current and future services. The options have an exercise price ($1.00) equal to the fair market value of the Company’s common stock on the date of grant. The options expire on September 15, 2011 and vest in equal increments over the term each June 30 th and December 31 st subject to continued employment as of the applicable vesting date. Upon adoption of the 2007 Equity Incentive Plan in March 2007, the options were reissued under the Plan on the same terms and conditions. Since the fair market value of the common stock had not changed, there will be no expense related to the reissuance of the options.

A summary of stock option transactions for all stock options for the period from July 19, 2006 (inception) to March 31, 2007 is as follows:

 

 

Options
Outstanding

 

Weighted
Average
Exercise
Price

 

Remaining
Contractual
Life (years)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 19, 2006

     

 

     

 

     

 

 

 

Granted

 

 

350,000

 

$

1.00

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

Forfeited/expired

 

 

 

 

 

 

 

 

Balance, March 31, 2007

 

 

350,000

 

 

1.00

 

 

4.6

 

Vested at March 31, 2007

 

 

 

 

1.00

 

 

 

Exercisable at March 31, 2007                                  

 

 

 

 

1.00

 

 

 

Determining Fair Value Under SFAS 123R

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula and a single option award approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.



F-9



GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued )

The fair value of stock option grants and employee stock purchases for the period from July 19, 2006 (inception) to March 31, 2007 was estimated using the following weighted- average assumptions:

 

 

Options

 

Risk free interest rate

     

 

5

%

Expected term (in years)

 

 

5

 

Dividend yield

 

 

 

Volatility of common stock

 

 

50

%

Estimated annual forfeitures

 

 

 

Weighted-average fair value

 

$

.50

 

3.

EQUIPMENT

At March 31, 2007, equipment consisted of the following:

 

 

Cost

 

Estimated

Useful Life

Equipment

     

$

12,089

     

 

5 years

 

 

 

 

 

 

 

Less: Accumulated Depreciation

 

 

(1,778

)

 

 

 

 

 

 

 

 

 

 

 

$

10,311

 

 

 

4.

NOTES PAYABLE TO STOCKHOLDERS

During September 2006, the Company received the proceeds from a demand note of $18,000. The $18,000 loan was from a minority stockholder of the Predecessor Company, who became a director in November 2006, and bears accrued interest at 9%. The $18,000 loan was repaid in November 2006.

During September 2006, January 2007 and February 2007, the Company received the proceeds from demand notes of $100,000, $50,000 and $100,000, respectively. These loans are from a consultant and are non-interest bearing. The Company has imputed interest at a rate of 9%

5.

STOCKHOLDERS’ EQUITY

On July 20, 2006, the Company issued 7,250,000 shares of common stock to the Predecessor Company in a purchase transaction involving the GelTech division in return for the assignment of intellectual property rights and various inventions. Also on July 20, 2006, the Company issued 200,000 shares of founders’ shares to the Company’s legal counsel for legal fees of $1,000.

On August 27, 2006, the Company issued 425,000 shares of the Company’s common stock and 250,000 warrants to purchase shares of the Company’s common stock to a consultant for professional services rendered. The shares were valued at $1.00 per share and the resulting $425,000 expense is included in consulting expense for the period from July 19, 2006 (inception) to March 31, 2007 in the consolidated statement of operations. The warrants have an exercise price ($1.00) equal to the fair market value of the Company’s common stock on the date of grant. One-half of the warrants vested at the time of issuance and the remaining warrants vest upon the effectiveness of the Company’s Form SB-2 filing. The Warrants expire on August 27, 2009.






F-10



GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)



5.

STOCKHOLDERS’ EQUITY (Continued)

In September 2006, October 2006 and March 2007, the Company sold 50,000, 275,000 and 10,000 shares, respectively, of common stock for $1.00 per share. The Company received proceeds of $46,500, $255,750 and $10,000, net of $3,500, $19,250 and $0 of finder’s fees, respectively.

On February 9, 2007, the Company issued 25,000 shares of the Company’s common stock to a consultant for professional services rendered. The shares were valued at $1.00 per share and the resulting $25,000 expense is included in consulting expense for the period from July 19, 2006 (inception) to March 31, 2007 in the consolidated statement of operations.

6.

IN-PROCESS RESEARCH AND DEVELOPMENT

During the period ended March 31, 2007, the Company assumed liabilities of $150,000 from the Predecessor Company when it obtained the patent for the method to modify weather. The Company assumed $150,000 of a note payable from the Predecessor Company that was secured by the intellectual property. The technology is currently under development and was therefore expensed as in-process research and development.

7.

INCOME TAXES

Due to the net losses incurred, there was no income tax provision for the period ended July 18, 2006 to March 31, 2007. Deferred tax assets as of March . Deferred tax assets as of March 31, 2007, were as follows:

Net operating losses

     

$

524,000

 

 

 

 

 

 

Less valuation allowance

 

 

(524,000

)

 

 

 

 

 

Net deferred tax asset

 

 

 

The Company had available at March 31, 2007, net operating loss carryforwards for federal and state tax purposes of approximately $1,392,000 that could be applied against taxable income in subsequent years through June 30, 2027.

Based on the weight of available evidence, both positive and negative, a valuation allowance to fully provide for the net deferred tax assets has been recorded since it is more likely than not that the deferred tax assets will not be realized.

The net change in the valuation allowance for the period ended March 31, 2007 was an increase of $524,000 resulting primarily from the net operating loss generated.

Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the period ended March 31, 2007 was as follows:

Income tax loss at federal statutory rate

     

 

(34.00

)%

State taxes, net of federal benefit

 

 

(3.63

)

Valuation allowance

 

 

37.63

 

 

 

$

 %




F-11



GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)



8.

RELATED PARTY TRANSACTIONS

On July 20, 2006, the Company acquired intellectual property including one patent that was subject to a lien of $150,000 based upon a note payable held by a minority stockholder of the Predecessor Company. The loan bears interest at 9% and is payable on demand. In December 2006, the Company issued 150,000 shares of common stock to the note holder in exchange for release of the lien from the Predecessor Company and the $150,000 note liability was extinguished. The note holder was a director of the Company at the time the shares were issued.

In December 2006, the Company issued 150,000 shares of common stock to a director in exchange for a release of a lien from a patent. At March 31, 2007, the Company owed a total of $15,750 to three of its officers for unpaid salary. This sum was paid to them in the quarter ended June 30, 2007. Also at March 31, 2007, the Company owed Mr. Michael D. Brown, its Senior Vice President of Government Relations, $10,732. This sum and some additional accrued expenses are unpaid. Mr. Brown has agreed to waive the $10,000 monthly fees due for May, June and July in exchange for the Company’s extension of his Consulting Agreement for three months. The Company is discussing with Mr. Brown its liability for consulting fees for March and April.

Effective as of February 1, 2007, GelTech and Dyn-O-Mat entered into an Administrative Services Agreement. Under this Agreement, Dyn-O-Mat agreed to pay GelTech $1,000 per month to cover the services including management and bookkeeping provided by GelTech’s employees. On March 9, 2007, Dyn-O-Mat made a payment of $7,815 to GelTech which resulted in GelTech owing Dyn-O-Mat money. Dyn-O-Mat has made no further payments and as of July 12, 2007, GelTech owed Dyn-O-Mat $263.

9.

COMMITMENTS AND CONTINGENCIES

On September 12, 2006, the Company entered into a lease for office and warehouse space located in Jupiter, Florida. The lease term begins on October 1, 2006 and terminates on September 30, 2008. The Company was previously under a month-to-month lease.

Approximate future minimum lease payments required under this noncancelable operating lease are as follows:

Year ended June 30,

 

 

 

 

2006

     

$

23,446

 

2007

 

 

70,338

 

2008

 

 

93,784

 

 

 

$

187,568

 

On September 15, 2006, the Company entered into employment agreements with two of its officers and on December 18, 2006 the Company entered into an employment agreement with a third officer. Each agreement is for a term of three years and requires the payment of $91,000 in annual compensation to each of the officers. In addition, two of the employment contracts include the issuance of incentive stock options to purchase 175,000 shares of the Company’s common stock to each of the officers. See Note 2 for additional information on these options.

In October 2006, the company entered into a Consulting Agreement with Mr. Michael Brown, who is to perform part-time marketing services for $10,000 per month. Subsequent to entering into the Agreement, Mr. Brown was appointed Senior Vice President of Government Relations and as a director of GelTech.



F-12



GELTECH SOLUTIONS, INC.

(A DEVELOPMENT STAGE COMPANY)

FORMERLY A DIVISION OF DYN-O-MAT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)



10.

GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company sustained substantial losses for the period from July 19, 2006 (inception) to March 31, 2007 and has a stockholders’ deficit at March 31, 2007. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s continued existence is dependent upon its ability to achieve profitability and to generate cash either from operations or financing. Management’s plan is as follows:

·

Finalize development of the Company’s products and technologies and obtain product certification from the National Fire Protection Association on the FireIce tm product.

·

Continue to develop a market for the products and increase the number of distribution channels.

·

Obtain additional financing through the issuance of stock or other financing.

There is no assurance that the Company will achieve profitability or will be able to generate cash flows from either operations or from debt or equity financings. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

11.

SUBSEQUENT EVENTS

Subsequent to March 31, 2007, the Company received proceeds of $1,550,000 from the sale of 2,300,000 shares of common stock and 225,000 warrants. Additionally, on June 29, 2007, the Company entered into an Agreement (i) terminating a Consulting Agreement resulting in 425,000 shares of common stock and 250,000 warrants being cancelled, (ii) extending for a year a $150,000 loan to a trust affiliated with the consultant, and (iii) agreeing to repay the consultant $100,000, which was paid in July 2007.




F-13





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders of

Dyn-O-Mat, Inc


We have audited the accompanying balance sheet of Gel Tech Solutions, division of Dyn-O-Mat, Inc. as of June 30, 2006, and the related statements of operations, division equity, and cash flows for each of the two years ended June 30, 2006.  These financial statements are the responsibility of the Division’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Division at June 30, 2006, and the results of its operations and its cash flows for each of the two years ended June 30. 2006, in conformity with accounting principles generally accepted in the United States of America.



Sweeney, Gates & Co.



Ft. Lauderdale, Florida

January 19, 2007






F-14





GELTECH SOLUTIONS, DIVISION OF DYN-O-MAT, INC.

BALANCE SHEET

JUNE 30, 2006

Assets

     

 

 

 

Equipment, net of accumulated depreciation of $422

 

$

    794

 

 

 

 

 

 

Total assets

 

$

794

 

 

 

 

 

 

Liabilities and Parent’s Equity in Division

 

 

 

 

None

 

$

 

 

 

 

 

 

Total current liabilities

 

 

 

 

 

 

 

 

Parent’s equity in division

 

 

794

 

 

 

 

 

 

Total liabilities and Parent’s equity in division

 

$

794

 





See accompanying notes to financial statements.


F-15





GELTECH SOLUTIONS, DIVISION OF DYN-O-MAT, INC.

STATEMENTS OF OPERATIONS

 

 

June 30,

 

 

 

2006

 

2005

 

Sales

     

$

221

     

$

100

 

Cost of goods sold

 

 

55

 

 

25

 

Gross profit

 

 

166

 

 

75

 

  

 

 

 

 

 

 

 

Depreciation expense

 

 

302

 

 

122

 

Selling, general and administrative expenses                                    

 

 

320,420

 

 

90,617

 

Total expenses

 

 

320,722

 

 

90,739

 

  

 

 

 

 

 

 

 

Net loss

 

$

(320,556

)

$

 (90,664

)




See accompanying notes to financial statements.


F-16





GELTECH SOLUTIONS, DIVISION OF DYN-O-MAT, INC.

STATEMENTS OF CASH FLOWS

 

 

June 30,

 

 

 

2006

 

2005

 

Cash Flows from Operating Activities

     

 

                  

     

 

                  

 

Reconciliation of net loss to net cash used in operations

 

 

 

 

 

 

 

Net loss

 

$

(320,556

)

$

(90,664

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation expense

 

 

302

 

 

122

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(320,254

)

 

(90,542

)

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

Purchase of equipment

 

 

 

 

(1,218

)

 

 

 

 

 

 

 

 

Net cash provided by investing activities

 

 

 

 

(1,218

)

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Parent’s contribution of capital to division

 

 

320,254

 

 

91,760

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

320,254

 

 

91,760

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

 

$

 







See accompanying notes to financial statements.


F-17





GELTECH SOLUTIONS, DIVISION OF DYN-O-MAT, INC.

STATEMENTS OF PARENT’S EQUITY IN DIVISION

 

     

 

                  

 

Balance at July 1, 2004

 

$

 

Parent’s contribution of capital to division

 

 

91,760

 

Net loss

 

 

(90,664

)

 

 

 

 

 

Balance at June 30, 2005

 

 

1,096

 

Parent’s contribution of capital to division                                                                 

 

 

320,254

 

Net loss

 

 

(320,556

)

 

 

 

 

 

Balance at June 30, 2006

 

$

794

 






See accompanying notes to financial statements.


F-18





GELTECH SOLUTIONS, DIVISION OF DYN-O-MAT, INC.

NOTES TO FINANCIAL STATEMENTS


1.

ORGANIZATION

GelTech Solutions, Division of Dyn-O-Mat, Inc. (GelTech or the Company) is located in Jupiter, Florida. Through July 18, 2006, the Company operated as a division of Dyn-O-Mat, Inc. (Dyn-O-Mat or the Parent). The Company was incorporated under the laws of the State of Florida on July 19, 2006 and on November 18, 2006, the Company reincorporated in Delaware under the name of GelTech Solutions, Inc.

On July 20, 2006, the Company acquired assets from the Parent in exchange for 7,250,000 shares of the Company’s common stock. The assets acquired from the Parent consist of the following:

Net cash received

     

$

6,471

 

Value of equipment acquired

 

 

779

 

Value of intangible assets acquired at predecessor’s cost

 

 

 

Value of assets received

 

$

7,250

 

The intangible assets acquired consisted of United States patents and other intellectual property that was recorded at the Parent’s cost basis of zero.

The Company is primarily engaged in business activities that include the sale and marketing of products for three distinct markets: (i) FireIce tm , a patented fire suppression product, which is a non-toxic, water-based gel product used to suppress fires involving structures, personal property and forest wildfires; (ii) the IceWear tm line of garments that assist with cooling the core body temperature for those individuals who work in extreme conditions, such as firefighters, police officers, construction workers, race car drivers, and others who are exposed to extreme heat; and (iii) RootGel tm , a moisture preservation solution that has many applications in the agricultural industry. Additionally, GelTech acquired the United States patent for the method to modify weather. This is a patented approach to weather modification with an end goal to reduce the power of a hurricane in order to save lives and property.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Equipment

Equipment is carried at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred. The cost and accumulated depreciation for equipment sold, retired or otherwise disposed of are relieved from the accounts, and resulting gains or losses are reflected in income. Depreciation is calculated using the straight-line method over the estimated useful lives of the equipment.

Revenue Recognition

All revenue is recognized when products are shipped to customers.

Research and Development

Expenses for research and development are charged to expense when incurred. The total amount of research and development expenses incurred during the periods ended June 30, 2006 and 2005 was $6,951 and $452, respectively.

Income Taxes

The Company was included in the federal income tax return of Dyn-O-Mat. The Company’s U.S. federal and state income tax liabilities are computed as if GelTech filed separate tax returns.



F-19



GELTECH SOLUTIONS, DIVISION OF DYN-O-MAT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes (Continued)

The Company accounts for income taxes on an asset and liability approach to financial accounting. Deferred income tax assets and liabilities are computed for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred asset will not be recognized. Income tax expense is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its financial statements are reasonable; however, actual results could differ from these estimates and could differ materially.

3.

EQUIPMENT

At June 30, 2006, equipment consisted of the following:

 

 

Cost

 

Estimated

Useful Life

 

 

 

 

 

 

 

Equipment

     

$

1,218

     

 

5 years

 

 

 

 

 

 

 

Less: Accumulated Depreciation

 

 

(424

)

 

 

 

 

 

 

 

 

 

 

 

$

794

 

 

 

4.

RELATED PARTY TRANSACTIONS

During the time the Company was operating as a division of Dyn-O-Mat, all receipts and disbursements were received and/or paid by the Parent Company and recorded as a contribution to the division.

5.

INCOME TAXES

Due to the net losses incurred, there was no income tax provision for the periods ended June 30, 2005 and June 30, 2006.

Deferred tax assets as of June 30, 2006, were as follows:

Net operating losses

     

$

155,000

 

 

 

 

 

 

Less valuation allowance                                 

 

 

(155,000

)

 

 

 

 

 

Net deferred tax asset

 

$

 

The Company had available at June 30, 2006, net operating loss carryforwards for federal and state tax purposes of approximately $411,000 that could be applied against taxable income in subsequent years through June 30, 2026.



F-20



GELTECH SOLUTIONS, DIVISION OF DYN-O-MAT, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



5.

INCOME TAXES (Continued)

Based on the weight of available evidence, both positive and negative, a valuation allowance to fully provide for the net deferred tax assets has been recorded since it is more likely than not that the deferred tax assets will not be realized.

The net change in the valuation allowance for the period ended June 30, 2006 was an increase of $121,000 resulting primarily from the net operating loss generated.

Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the period ended June 30, 2006 was as follows:


Income tax loss at federal statutory rate

     

 

(34.00

)

State taxes, net of federal benefit

 

 

(3.63

)

Valuation allowance                                 

 

 

37.63

)

 

 

 

%






F-21





PART II — INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24.

Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law provides a corporation with the power to indemnify any officer or director acting in his capacity as our representative who is or is threatened to be made a party to any lawsuit or other proceeding for expenses, judgment and amounts paid in settlement in connection with such lawsuit or proceeding. The indemnity provisions apply whether the action was instituted by a third party or was filed by one of our shareholders. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise. We have provided for this indemnification in our Certificate of Incorporation because we believe that it is important to attract qualified directors and officers. We have also entered into Indemnification Agreements with our directors and officers which agreements are designed to indemnify them to the fullest extent permissible by law, subject to one limitation described in the next sentence. We have further provided in our Certificate of Incorporation that no indemnification shall be available, whether pursuant to our Certificate of Incorporation or otherwise, arising from any lawsuit or proceeding in which we assert a direct claim, as opposed to a shareholders’ derivative action, against any directors and officers. This limitation is designed to insure that if we sue a director or officer we do not have to pay for his defense.

We have been advised that the Securities and Exchange Commission believes it is against public policy for us to indemnify our directors and officers for violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Accordingly, we have agreed that unless our attorneys advise us that the courts have ultimately decided whether the SEC is correct, we will let a court determine whether we can indemnify our directors and officers under such laws.

Item 25.

Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses shall be borne by the selling shareholder. All of the amounts shown are estimates, except for the SEC Registration Fees.

SEC registration fees

     

$

47

Printing expenses

 

$

___________*

Accounting fees and expenses

 

$

___________*

Legal fees and expenses

 

$

___________*

Transfer agent fees

 

$

___________*

Blue Sky fees

 

$

___________*

Miscellaneous

 

$

___________*

Total

 

$

___________*

———————

*

To be filed by amendment.

Item 26.

Recent Sales of Unregistered Securities.

All of the following sales were made in reliance on the exemption provided in Section 4(2) of the Securities Act of 1933 and Rule 506 thereunder:

As of July 20, 2006, GelTech issued 7,250,000 shares of its common stock to Dyn-O-Mat in exchange for patents, patents pending and other assets.

As of July 20, 2006, GelTech issued 200,000 shares of its common stock to its legal counsel in exchange for a $1,000 legal fee credit.

As of August 27, 2006, GelTech issued 425,000 shares of common stock and 250,000 warrants exercisable at $1.00 per share, as part of the consideration for entry into a consulting agreement.

From September 14, 2006 through May 11, 2007, GelTech sold a total of 385,000 shares of common stock in a private placement offering for $1.00 per share. Of these shares, 50% are being registered under this registration statement.



II-1





On February 9, 2007, GelTech issued 25,000 shares of its common stock as a finders’ fee.

On December 13, 2006, GelTech issued 150,000 shares of its common stock to a director in consideration of the director releasing a lien on a patent. All of these shares are being registered as part of this registration statement.

On March 2, 2007, GelTech issued 350,000 five-year options for its common stock exercisable at $1.00 per share, subject to vesting, to two of its executive officers as part of the consideration for entry into employment agreements with those executive officers.

On March 2, 2007, GelTech issued 90,000 five-year options for its common stock exercisable at $1.00 per share, subject to vesting, to three of its directors as part of the automatic grants under the 2007 Equity Incentive Plan for appointment to its Board of Directors.

On May 29, 2007, GelTech sold 2,250,000 shares at $0.667 per share and 225,000 warrants exercisable at $1.00 per share. 1,112,500 of the shares and 112,500 of the shares issuable upon exercise of the warrants are being registered under this registration statement.

On May 31, 2007, GelTech issued 474,058 three-year warrants exercisable at $1.05 per share to one of its directors in conjunction with his acceptance of the exchange offer. The director had Dyn-O-Mat warrants and the same exchange ratio was used.

On June 25, 2007, GelTech issued 50,000 five-year options each to its President and a Vice President. The options are exercisable at $0.667 per share, subject to vesting.

On June 25, 2007, GelTech issued 10,000 five-year options for its common stock exercisable at $0.667 per share, subject to vesting, to two of its directors as part of the automatic grants under the 2007 Equity Incentive Plan for appointment to Audit Committee.

On July 3, 2007, GelTech issued 25,000 shares of its common stock in consideration for the extension of the due date of a loan.

Item 27.

Exhibits.

EXHIBIT INDEX

Exhibit 
Number

 

Description of Exhibit

3.1

     

Certificate of Incorporation

3.2

 

Amended and Restated Bylaws

5.1

 

Opinion of Harris Cramer LLP

10.1

 

Employment Agreement, dated September 15, 2006, by and between GelTech and Michael Cordani

10.2

 

Employment Agreement, dated December 18, 2006, by and between GelTech and Peter Cordani

10.3

 

Employment Agreement, dated September 15, 2006, by and between GelTech and Joseph Ingarra

10.4

 

Consulting Agreement, dated October ___, 2006, by and between GelTech and Michael D. Brown

10.5

 

Loan Agreement dated November 21, 2006, by and among Dyn-O-Mat, Inc., Peter Cordani and Phil O’Connell, Jr. Revocable Trust

10.6

 

2007 Equity Incentive Plan

21.1

 

List of Subsidiaries

23.1

 

Consent of Sweeney, Gates & Co.

23.2

 

Consent of Harris Cramer LLP (as set forth in Exhibit 5.1)




II-2





Item 28.

Undertakings.

(a)

The undersigned registrant hereby undertakes:

1.

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:

(i)

Include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii)

Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

Include any additional or changed material information on the plan of distribution.

2.

For determining liability under the Securities Act of 1933, treat each post-effective amendment as a new registration statement relating to the securities offered therein, and the offering of the securities at that time to be the initial bona fide offering thereof.

3.

To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of offering.

4.

That each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(b)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.



II-3





SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and has authorized this Registration Statement to be signed on its behalf by the undersigned.

 

GELTECH SOLUTIONS, INC.

Jupiter, Florida

Dated: July 18, 2007

 

  

 

 

 

By:

/s/ M ICHAEL C ORDANI

 

 

Michael Cordani

 

 

Chief Executive Officer

(Principal Executive Officer and
Principal Financial and Accounting
Officer)

In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated.

Signature

 

Title

 

Date

 

 

 

 

 

/s/ M ICHAEL C ORDANI

 

Director

 

July 18, 2007

     Michael Cordani

 

 

 

 

 

 

 

 

 

/s/ J OSEPH I NGARRA

 

Director

 

July 18, 2007

     Joseph Ingarra

 

 

 

 

 

 

 

 

 

/s/ P ETER C ORDANI

 

Director

 

July 18, 2007

     Peter Cordani

 

 

 

 

 

 

 

 

 

/s/ M ICHAEL D. B ROWN

 

Director

 

July 18, 2007

     Michael D. Brown

 

 

 

 

 

 

 

 

 

/s/ M ICHAEL R. D ONN , S R .

 

Director

 

July 18, 2007

     Michael R. Donn, Sr.

 

 

 

 

 

 

 

 

 

/s/ P HIL D. O’C ONNELL , J R .

 

Director

 

July 18, 2007

     Phil D. O’Connell, Jr.

 

 

 

 

 

 

 

 

 



II-4





EXHIBIT INDEX


Exhibit 
Number

 

Description of Exhibit

3.1

     

Certificate of Incorporation

3.2

 

Amended and Restated Bylaws

5.1

 

Opinion of Harris Cramer LLP

10.1

 

Employment Agreement, dated September 15, 2006, by and between GelTech and Michael Cordani

10.2

 

Employment Agreement, dated December 18, 2006, by and between GelTech and Peter Cordani

10.3

 

Employment Agreement, dated September 15, 2006, by and between GelTech and Joseph Ingarra

10.4

 

Consulting Agreement, dated October ___, 2006, by and between GelTech and Michael D. Brown

10.5

 

Loan Agreement dated November 21, 2006, by and among Dyn-O-Mat, Inc., Peter Cordani and Phil O’Connell, Jr. Revocable Trust

10.6

 

2007 Equity Incentive Plan

21.1

 

List of Subsidiaries

23.1

 

Consent of Sweeney, Gates & Co.

23.2

 

Consent of Harris Cramer LLP (as set forth in Exhibit 5.1)









EXHIBIT 3.1

C ERTIFICATE O F I NCORPORATION

O F

G EL T ECH S OLUTIONS , I NC .



1.

The name of the corporation is GelTech Solutions, Inc. (the “Company”).


2.

The address of its registered office in the State of  Delaware, County of New Castle, is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The name of its registered agent at such address is Corporation Trust Company.


3.

The nature of the business or purposes to be conducted or promoted are to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.


4.

The Company shall have authority to issue:


(a) 50,000,000 shares of common stock, par value of $0.001 per share;

(b) 5,000,000 shares of preferred stock, par value $0.001 per share, with such rights, preferences and limitations as may be set from time to time by resolution of the board of directors and the filing of a certificate of designation as required by the Delaware General Corporation Law.


5.

The name and mailing address of the incorporator is as follows:


Michael D. Harris

1555 Palm Beach Lakes Blvd., Suite 310

West Palm Beach, FL 33401


6.

The name and mailing address of each person who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows:


Name

Mailing Address

Michael Cordani

1460 Park Lane South

Suite 1

Jupiter, FL 33458


7.

The Company is to have perpetual existence.  In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, amend, alter or repeal the bylaws of the Company.


8.

Elections of directors need not be by written ballot unless the bylaws of the Company shall so provide.







Meetings of stockholders may be held within or without the State of Delaware as the bylaws may provide.  The books of the Company may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the Company.


9.

The Company reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.


10.

No director of this Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director. Nothing in this paragraph shall serve to eliminate or limit the liability of a director (a) for any breach of the director’s duty of loyalty to this Company or its stockholders, (b) for acts or omissions not in good faith or which involves intentional misconduct or a knowing violation of law, (c) under Section 174 of the Delaware General Corporation Law, or (d) for any transaction from which the director derived an improper personal benefit.  If the Delaware General Corporation Law is amended after approval by the stockholders of this article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.


Any repeal or modification of the foregoing paragraph by the stockholders of the Company shall not adversely affect any right or protection of a director of the Company existing at the time of such repeal or modification.


11.

(a)

Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding (except as provided in Section 10 (f)) whether civil, criminal or administrative, (a “Proceeding”), or is contacted by any governmental or regulatory body in connection with any investigation or inquiry (an “Investigation”), by reason of the fact that he or she is or was a director or executive officer (as such term is utilized pursuant to interpretations under Section 16 of the Securities Exchange Act of 1934) of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (an “Indemnitee”), whether the basis of such Proceeding or Investigation is alleged action in an official capacity or in any other capacity as set forth above shall be indemnified and held harmless by the Company to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such law permitted the Company to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith and such indemnification shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Company the expenses incurred in defending any such Proceeding in advance of its final disposition (an “Advancement of Expenses”); provided, however , that an Advancement of Expenses shall be made only upon delivery



2







to the Company of an undertaking, by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such Indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise (an “Undertaking”).


(b)

If a claim under paragraph (a) of this Section is not paid in full by the Company within 60 days after a written claim has been received by the Company, except in the case of a claim for an Advancement of Expenses, in which case the applicable period shall be 20 days, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim.  If successful in whole or in part in any such suit or in a suit brought by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit.  In


(i)

any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an Advancement of Expenses) it shall be a defense that, and


(ii)

any suit by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking the Company shall be entitled to recover such expenses upon a final adjudication that,


the Indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law.  Neither the failure of the Company (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Company (including its board of directors, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit.  In any suit brought by the Indemnitee to enforce a right hereunder, or by the Company to recover an Advancement of Expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified or to such Advancement of Expenses under this Section or otherwise shall be on the Company.


(c)

The rights to indemnification and to the Advancement of Expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this certificate of incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.


(d)

The Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.


(e)

The Company may, to the extent authorized from time to time by the board



3







of directors, grant rights to indemnification and to the Advancement of Expenses, to any employee or agent of the Company to the fullest extent of the provisions of this Section with respect to the indemnification and Advancement of Expenses of directors, and executive officers of the Company.


(f)

Notwithstanding the indemnification provided for by this Section 11, the Company’s bylaws, or any written agreement, such indemnity shall not include any expenses incurred by such Indemnitees relating to or arising from any Proceeding in which the Company asserts a direct claim (as opposed to a stockholders’ derivative action) against the Indemnitees whether such claim by the Company is termed a complaint, counterclaim, crossclaim, third-party complaint or otherwise.


I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the Delaware General Corporation Law, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 7 th day of November, 2006.





____________________________                

Michael D. Harris, Incorporator








4







EXHIBIT 3.2

AMENDED AND RESTATED BYLAWS

OF

GELTECH SOLUTIONS, INC.

(Adopted June 25, 2007)


Article I. Meeting of Stockholders

Section 1. Annual Meeting . The annual meeting of the stockholders of this Company shall be held at the time and place designated by the Board of Directors of the Company. Business transacted at the annual meeting shall include the election of directors of the Company.

Section 2. Special Meetings . Special meetings of the stockholders shall be held when directed by (i) the Board of Directors, or (ii) when requested in writing by the holders of not less than 20 percent of all the shares entitled to vote at the meeting.

Section 3. Place . Meetings of stockholders may be held within or without the State of Delaware.

Section 4. Notice . Written notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 60 days before the meeting, either personally or by mail, by or at the direction of the chief executive officer, the president, the secretary, or the officer or persons calling the meeting to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the stockholder at his address as it appears on the stock transfer books of the Company, with postage there on prepaid. The provisions of Section 229 of the Delaware General Corporation Law (the “DGCL”) as to waiver of notice are applicable.  In lieu of mailing any proxy and proxy statement, notice may be given by furnishing a Notice of Internet Availability of Proxy Materials in accordance with Rule 14a-16 under the Securities Exchange Act of 1934 and otherwise complying with that rule.

Section 5. Notice of Adjourned Meetings . When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. If, however, after the adjournment the Board of Directors fixes a new record date for the adjourned meeting, a notice of adjourned meeting, shall be given as provided in this section to each stockholder of record on the new record date entitled to vote at such meeting.

Section 6. 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 payment of any dividend, or in order to make a determination of stockholders for any other purpose, the Board of Directors may fix an advance date as the record date for the determination of stockholders, such date in any case to be not more than 60 days and, in 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.

In no event may a record date fixed by the Board of Directors be a date preceding the date upon which the resolution fixing the record date was adopted nor be more than 10 days after the date upon which the resolution fixing the record date is adopted.

If no record date is fixed for the determination of stockholders entitled to notice or to vote at a meeting of stockholders or stockholders entitled to receive payment of a dividend, and no prior action by the Board of Directors is required under Delaware General Corporation Law, the record date shall be the first date on which a signed written consent setting forth the action to be taken or proposed to be taken is delivered to the Company.

If no record date is fixed for the determination of stockholders entitled to notice or to vote at a meeting of stockholders or stockholders entitled to receive payment of a dividend, and prior action by the Board of Directors is required under Delaware General Corporation Law, the record date shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date for the adjourned meeting.


Section 7. Stockholder Quorum and Voting . A majority of the outstanding shares of each class or series of voting stock then entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. When a specified item of business is required to be voted on by a class or series of stock, a majority of the outstanding shares of such class or series shall constitute a quorum for the transaction of such item of business by that class or series.

If a quorum is present, the affirmative vote of the majority of those shares present at the meeting in person or by proxy of each class or series of voting stock and entitled to vote on the subject matter shall be the act of the stockholders unless otherwise provided however that the directors of the Company shall be elected by a plurality of such shares.

After a quorum has been established at a stockholders’ meeting, the subsequent withdrawal of stockholders, so as to reduce the number of stockholders entitled to vote at the meeting below the number required for a quorum, shall not affect the validity of any action taken at the meeting or any adjournment thereof.

Section 8. Voting of Shares . Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders.

Treasury shares, shares of stock of this Company owned by another corporation, the majority of the voting stock of which is owned or controlled by this Company, and shares of stock of this Company, held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time.



2







A stockholder may vote either in person or by proxy executed in writing by the stockholder or his duly authorized attorney-in-fact.  A stockholder may also vote in person, by proxy, by telephone or electronically including over the Internet in accordance with the Securities Exchange Act of 1934 and rules of the Securities and Exchange Commission.

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 at that time and for whose election he has a right to vote.

Shares standing in the name of another corporation, domestic or foreign, may be voted by the officer, agent, or proxy designated by the bylaws of the corporate stockholder; or, in the absence of any applicable bylaw, by such person as the Board of Directors of the corporate stockholder may designate. Proof of such designation may be made by presentation of a certified copy of the bylaws or other instrument of the corporate stockholder. In the absence of any such designation, or in case of conflicting designation by the corporate stockholder, the chairman of the board, the chief executive officer, the president, any vice president, secretary and treasurer of the corporate stockholder shall be presumed to possess, in that order, authority to vote such shares.

Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name.

Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so is contained in an appropriate order of the court by which such receiver was appointed.

A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee or his nominee shall be entitled to vote the shares so transferred.

On and after the date on which written notice of redemption of redeemable shares has been mailed to the holders thereof and a sum sufficient to redeem such shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders thereof upon surrender of certificates therefor, such shares shall not be entitled to vote on any matter and shall not be deemed to be outstanding shares.

Section 9. Proxies . Every stockholder entitled to vote at a meeting of stockholders or to express consent or dissent without a meeting of a stockholders’ duly authorized attorney-in-fact may authorize another person or persons to act for him by proxy.


Every proxy must be signed by the stockholder or his attorney ­in-fact. No proxy shall be valid after the expiration of three years from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the stockholder executing it, except as otherwise provided by law.



3







The authority of the holder of a proxy to act shall not be revoked by the incompetence or death of the stockholder who executed the proxy unless, before the authority is exercised, written notice of an adjudication of such incompetence or of such death is received by the corporate officer responsible for maintaining the list of stockholders.

If a proxy for the same shares confers authority upon two or more persons and does not otherwise provide, a majority of them present at the meeting, or if only one is present then that one, may exercise all the powers conferred by the proxy; but if the proxy holders present at the meeting are equally divided as to the right and manner of voting in any particular case, the voting of such shares shall be prorated.

If a proxy expressly provides, any proxy holder may appoint in writing a substitute to act in his place.

Section 10. Action by Stockholders without a Meeting . Any action required by law, these bylaws, or the certificate of incorporation of this Company to be taken at any annual or special meeting of stockholders of the Company, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. If any class of shares is entitled to vote thereon as a class, such written consent shall be required of the holders of a majority of the shares of each class of shares entitled to vote as a class thereon and of the total shares entitled to vote thereon.

Promptly after obtaining such authorization by written consent, notice shall be given to those stockholders who have not consented in writing. The notice shall fairly summarize the material features of the authorized action, and, if the action be a merger or consolidation for which appraisal rights are provided under the DGCL, be given in accordance with Section 262(d)(2) of the DGCL.

Section 11. Advance Notice of Stockholder Nominees and Stockholder Business .  To be properly brought before an annual meeting or special meeting, nominations for the election of directors or other business must be:

(a)

specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors,

(b)

otherwise properly brought before the meeting by or at the direction of the Board of Directors, or

(c)

otherwise properly brought before the meeting by a stockholder.

For such other nominations or other business to be considered properly brought before the meeting by a stockholder, such stockholder must have given timely notice and in proper form of his intent to bring such business before such meeting. To be timely, such stockholder’s notice must be delivered to or mailed and received by the secretary of the Company not less than 90 days prior to the meeting; provided, however, that in the event that less than 100 days notice of prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10 th day



4







following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper form, a stockholder’s notice to the secretary shall set forth:

(i)

the name and address of the stockholder who intends to make the nominations, propose the business, and, as the case may be, the name and address of the person or persons to be nominated or the nature of the business to be proposed;

(ii)

a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and, if applicable, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or introduced the business specified in the notice;

(iii)

if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder;

(iv)

such other information regarding each nominee or each matter of business to be proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, or the matter been proposed, or intended to be proposed by the Board of Directors; and

(v)

if applicable, the consent of each nominee to serve as director of the Company if so elected.

The chairman of the meeting may refuse to acknowledge the nomination of any person or the proposal of any business not made in compliance with the foregoing procedure.

Article II. Directors

Section 1. Function . All corporate powers 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.

Section 2. Number . This Company shall have between one and nine directors. The number of directors may be established from time to time by resolution of the Board of Directors, but no decrease shall have the effect of shortening the terms of any incumbent director.

Section 3. Election and Term . Each person named in the certificate of incorporation as a member of the initial Board of Directors and all other directors appointed by the Board of Directors to fill vacancies thereof shall hold office until the first annual meeting of stockholders, and until his successor shall have been elected and qualified or until his earlier resignation, removal from office or death.


At the first annual meeting of stockholders and at each annual meeting thereafter the stockholders shall elect directors to hold office until the next succeeding annual meeting. Each director shall hold office for the term for which he is elected and until his successor shall have been elected and qualified or until his earlier resignation, removal from office or death.



5







Section 4. Vacancies . Any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. A director elected to fill a vacancy shall hold office only until the next election of directors by the stockholders.

Section 5. Qualification . Directors need not be residents of the State of Delaware or stockholders of this Company.

Section 6. Compensation . The Board of Directors shall have authority to fix the compensation of directors.

Section 7. Duties of Directors . A director shall perform his duties as a director, including his duties as a member of any committee of the board upon which he may serve, in good faith, in a manner he reasonably believes to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.

In performing his duties, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by:

(a)

one or more officers or employees of the Company whom the director reasonably believes to be reliable and competent in the matters presented,

(b)

counsel, public accountants or other persons as to matters which the director reasonably believes to be within such person’s professional or expert competence, or

(c)

a committee of the board upon which he does not serve, duly designated in accordance with a provision of the certificate of incorporation or the bylaws, as to matters within its designated authority, which committee the director reasonably believes to merit confidence.

A director shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance described above to be unwarranted.

A person who performs his duties in compliance with this section shall have no liability by reason of being or having been a director of the Company.

Section 8. Presumption of Assent . A director of the Company who is present at a meeting of its Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless he votes against such action or abstains from voting in respect thereto because of an asserted conflict of interest.

Section 9. Removal of Directors . At a meeting of the stockholders called expressly for that purpose, any director or the entire Board of Directors may be removed, with or without cause, by a vote of the holders of a majority of the shares of each class or series of voting stock, present in person or by proxy, then entitled to vote at an election of directors.

Section 10. Quorum and Voting . A majority of the number of directors fixed by these bylaws shall constitute a quorum for the transaction of business. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.



6







Section 11. Director Conflicts of Interest . No contract or other transaction between this Company and one or more of its directors or any other corporation, firm, association or entity in which one or more of the directors are directors or officers or are financially interested, shall be either void or voidable because of such relationship or interest or because such director or directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction or because his or their votes are counted for such purpose, if:

(a)

The fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; or

(b)

The fact of such relationship or interest is disclosed or known to the stockholders entitled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or

(c)

The contract or transaction is fair and reasonable as to the Company at the time it is authorized by the board, a committee or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction.

Section 12. Place of Meeting . Regular and special meetings by the Board of Directors may be held within or without the State of Delaware.

Section 13. Time, Notice and Call of Meetings . Regular meetings of the Board of Directors shall be held without notice on the second Tuesday of September of each year. Notice of the time and place of special meetings of the Board of Directors shall be given to each director by either personal delivery, any form of electronic or telephonic notice including facsimile transmission, as long as the director is able to retain a copy of the notice, or telegram at least one day before the meeting.

Notice of a meeting of the Board of Directors need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all obligations to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a director states, at the beginning of the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened.

Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

A majority of the directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. Notice of any such adjourned meeting shall be given to the directors who were not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other directors.




7







Meetings of the Board of Directors may be called by the chief executive officer of the Company or by any director.

Members of the Board of Directors may participate in a meeting of such Board by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

Section 14. Action Without a Meeting . Any action required to be taken at a meeting of the directors of the Company, or any action which may be taken at a meeting of the directors, may be taken without a meeting if a consent in writing, setting forth the action to be taken, signed by all of the directors, is filed in the minutes of the proceedings of the Board. Such consent shall have the same effect as a unanimous vote.

Section 15. Committees . The Board of Directors may designate from among its members such committees it deems prudent, such as, but not limited to, an executive committee, audit committee, compensation committee, finance committee and a litigation committee.

Article III. Officers

Section 1. Officers . The officers of this Company shall consist of a chief executive officer, president, chief technology officer, chief financial officer, chief accounting officer, any vice presidents designated by the Board of Directors, secretary, treasurer and such other officers as may be designated by the Board of Directors, each of whom shall be elected by the Board of Directors from time to time. Any two or more offices may be held by the same person. The failure to elect any of the above officers shall not affect the existence of this Company.  All officers shall be appointed by the Board of Directors.

Section 2. Duties . The officers of this Company shall have the following duties and such other duties as delegated by the Board of Directors or chief executive officer.

The chief executive officer of the Company shall have general and active management of the business and affairs of the Company subject to the directions of the Board of Directors, and shall preside at all meetings of the shareholders.

The president shall be the chief operating officer of the Company, shall act whenever the chief executive officer shall be unavailable.


The chief technology officer shall be responsible for product development, establishment of technology standards for the Company's products and services and development of strategic plans in connection with the establishment, maintenance and improvement of the Company's technology base.

The chief financial officer shall be the chief financial officer and be primarily responsible for all filings with the Securities and Exchange Commission. He shall furnish at meetings of the Board of Directors, or whenever requested, a statement of the financial condition of the Company.

The chief accounting officer shall keep correct and complete records of account, showing accurately at all times the financial condition of the Company. The chief accounting officer may also be the chief financial officer. If the chief accounting officer is not also the chief financial



8







officer, he shall provide assistance to the chief financial officer and act whenever the chief financial officer shall be unavailable.

Any vice president(s) shall have such titles as may be designated by the Board of Directors.

The secretary shall have custody of and maintain all of the corporate records, except the financial records, shall record the minutes of all meetings of the stockholders and whenever else required by the chief executive officer.

The treasurer shall be the legal custodian of all monies, notes, securities and other valuables that may from time to time come into the possession of the Company. He shall immediately deposit all funds of the Company coming into his hands in some reliable bank or other depositary to be designated by the Board of Directors and shall keep this bank account in the name of the Company.

Section 3. Removal of Officers . Any officer or agent elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment the best interests of the Company will be served thereby.

Any officer or agent elected by the stockholders may be removed only by vote of the stockholders, unless the stockholders shall have authorized the directors to remove such officer or agent.

Any vacancy, however, occurring, in any office may be filled by the Board of Directors, unless the bylaws shall have expressly reserved such power to the stockholders.

Removal of any officer shall be without prejudice to the contract rights, if any, of the person so removed; however, election or appointment of an officer or agent shall not of itself create contract rights.

Article IV. Stock Certificates

Section 1. Issuance . Every holder of shares in this Company shall be entitled to have a certificate, representing all shares to which he is entitled. No certificate shall be issued for any share until such share is fully paid.

Section 2. Form . Certificates representing shares in this Company shall be signed by the chief executive officer or president and the secretary or an assistant secretary or treasurer or assistant treasurer and may be sealed with the seal of this Company or a facsimile thereof. The signature of the chief executive officer or president and the secretary or assistant secretary or treasurer or assistant treasurer may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the Company itself or an employee of the Company. In case any officer who 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 he were such officer at the date of its issuance.

Every certificate representing shares issued by this Company shall set forth or fairly summarize upon the face or back of the certificate, or shall state that the Company will furnish to any stockholder upon request and without charge a full statement of, the designations, preferences, limitations and relative rights of the shares of each class or series authorized to be



9







issued, and the variations in the relative rights and preferences between the shares of each series so far as the same have been fixed and determined, and the authority of the Board of Directors to fix and determine the relative rights and preferences of subsequent series.

Every certificate representing shares which are restricted as to the sale, disposition, or other transfer of such shares shall state that such shares are restricted as to transfer and shall set forth or fairly summarize upon the certificate, or shall state that the Company will furnish to any stockholder upon request and without charge a full statement of, such restrictions.

Each certificate representing shares shall state upon its face:  the name of the Company; that the Company is organized under the laws of this state; the name of the person or persons to whom issued; the number and class of shares, and the designation of the series, if any, which such certificate represents; and the par value of each share represented by such certificate, or a statement that the shares are without par value.

Section 3. Transfer of Stock . Except as provided in Section 4 of this Article, the Company shall register a stock certificate presented to it for transfer if the certificate is properly endorsed by the holder of record or by his duly authorized attorney, and the signature of such person has been guaranteed by a commercial bank or trust company or by a member of the New York or American Stock Exchange.

Section 4. Off-Shore Offerings . In all offerings of equity securities pursuant to Regulation S of the Securities Act of 1933 (the “Act”), the Company shall require that its stock transfer agent refuse to register any transfer of securities not made in accordance with the provisions of Regulation S, pursuant to registration under the Act or an available exemption under the Act.

Section 5. Lost, Stolen or Destroyed Certificates . The Company shall issue a new stock certificate in the place of any certificate previously issued if the holder of record of the certificate (a) makes proof in affidavit form that it has been lost, destroyed or wrongfully taken; (b) requests the issuance of a new certificate before the Company has notice that the certificate has been acquired by a purchaser for value in good faith and without notice of any adverse claim; (c) gives bond in such form as the Company may direct, to indemnify the Company, the transfer agent, and registrar against any claim that may be made on account of the alleged loss, destruction, or theft of a certificate; and (d) satisfies any other reasonable requirements imposed by the Company.


Article V. Books and Records

Section 1. Books and Records . This Company shall keep correct and complete records and books of account and shall keep minutes of the proceedings of its stockholders, Board of Directors and committees of directors.

This Company shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders, and the number, class and series, if any, of the shares held by each.

Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time.



10







Any person who is  a holder of record of shares or is a beneficial owner of shares of stock of the Company, upon written demand under oath stating the purpose thereof, shall have the right to inspect for any proper purpose, in person or by agent or attorney, at any reasonable time or times during business hours, the books and records specified in Section 220 of the DGCL of stockholders and to make extracts therefrom.

Section 2. Financial Information . Not later than three months after the close of each fiscal year, this Company shall prepare a balance sheet showing in reasonable detail the financial condition of the Company as of the close of its fiscal year, and a profit and loss statement showing the results of the operations of the Company during its fiscal year.

Upon the written request of any stockholder or holder of voting trust certificates for shares of the Company, the Company shall mail to such stockholder or holder of voting trust certificates a copy of the most recent such balance sheet and profit and loss statement.

The balance sheets and profit and loss statements shall be filed in the registered office of the Company in this state, shall be kept for at least five years, and shall be subject to inspection during business hours by any stockholder or holder of voting trust certificates, in person or by agent.

Article VI. Dividends

The Board of Directors of this Company may, from time to time, declare and the Company may pay dividends on its shares in cash, property or its own shares, except when the Company is insolvent or when the payment thereof would render the Company insolvent or when the declaration or payment thereof would be contrary to any restrictions contained in the certificate of incorporation, subject to the following provisions:

(a)

Dividends in cash or property may be declared and paid, except as otherwise provided in this section, only out of the unreserved and unrestricted earned surplus of the Company or out of capital surplus, howsoever arising but each dividend paid out of capital surplus shall be identified as a distribution of capital surplus, and the amount per share paid from such surplus shall be disclosed to the stockholders receiving the same concurrently with the distribution.

(b)

Dividends may be declared and paid in the Company’s own treasury shares.

(c)

Dividends may be declared and paid in the Company’s own authorized but unissued shares out of any unreserved and unrestricted surplus of the Company upon the following conditions:

(1)

If a dividend is payable in shares having a par value, such shares shall be issued at not less than the par value thereof and there shall be transferred to stated capital at the time such dividend is paid an amount of surplus equal to the aggregate par value of the shares to be issued as a dividend.

(2)

If a dividend is payable in shares without a par value, such shares shall be issued at such stated value as shall be fixed by the Board of Directors by resolution adopted at the time such dividend is declared, and there shall be transferred to stated capital at the time such dividend is paid an amount of surplus equal to the aggregate stated value so fixed



11







in respect of such shares; and the amount per share so transferred to stated capital shall be disclosed to the stockholders receiving such dividend concurrently with the payment thereof.


(d)

No dividend payable in shares of any class shall be paid to the holders of shares of any other class unless the certificate of incorporation so provide or such payment is authorized by the affirmative vote or the written consent of the holders of at least a majority of the outstanding shares of the class in which the payment is to be made.

(e)

A split-up or division of the issued shares of any class into a greater number of shares of the same class without increasing the stated capital of the Company shall not be construed to be a share dividend within the meaning of this section.

Article VII. Corporate Seal

The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the following:

Article VIII. Amendment


These bylaws may be repealed or amended, and new bylaws may be adopted, by the stockholders, or by the Board of Directors to the extent permitted by the DGCL.









12



EXHIBIT 5.1


[EXHIBIT51002.GIF]

1555 Palm Beach Lakes Boulevard, Suite 310

West Palm Beach, FL 33401-2327

Tel: (561) 478-7077

Fax: (561) 659-0701

www.harriscramer.com



July 13, 2007




Mr. Michael Cordani

Chief Executive Officer

GelTech Solutions, Inc.

1460 Park Lane South, Suite 1

Jupiter, FL 33458


Re:

GelTech Solutions, Inc.


Dear Mr. Cordani:


     

You have advised us that GelTech Solutions, Inc. (the “Company”) is filing with the United States Securities and Exchange Commission a Registration Statement on Form SB-2 with respect to:


·

2,045,621 shares of common stock, $0.001 par value, which are currently outstanding, and

·

207,311 shares of common stock, $0.001 par value, underlying outstanding warrants.


All of these shares of common stock will be offered for sale by the appropriate security holders (the “Selling Shareholders”).


In connection with the filing of this Registration Statement, you have requested that we furnish you with our opinion as to the legality of (i) such of the Company’s shares of common stock as are presently outstanding and (ii) such shares as shall be offered by the Selling Shareholders pursuant to the Prospectus which is part of the Registration Statement.


You have advised us that as of July 13, 2007, the Company’s authorized capital consists of:


·

50,000,000 shares of common stock, $0.001 par value per share, of which 10,285,000 shares are issued and outstanding, and

·

5,000,000 shares of preferred stock, $0.001 par value, of which no shares are issued and outstanding.





Mr. Michael Cordani

July 13, 2007

Page 2




After having examined the Company’s Certificate of Incorporation, Amended and Restated Bylaws, minutes, and the financial statements contained in the Prospectus, we are of the opinion that the 2,045,621 shares of common stock currently outstanding and the 207,311 shares of common stock issuable upon exercise of the warrants will be, when offered and sold and valid consideration for the exercise of the warrants has been received, fully paid and non-assessable, duly authorized and validly issued.


     

We consent to the use of our name in the Prospectus under the caption “Legal Matters.”


Very truly yours,


/s/ Harris Cramer LLP


Harris Cramer LLP






EXHIBIT 10.1

EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (the “Agreement”) entered into as of this 15 th day of September, 2006, between Gel Tech Solutions, Inc., a Florida corporation (the “Company”), and Michael Cordani (the “Executive”).


WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including, but not limited to, proprietary processes, sales methods and techniques, and other like confidential business and technical information, including but not limited to, technical information, design systems, pricing methods, pricing rates or discounts, processes, procedures, formulas, designs of computer software, or improvements, or any portion or phase thereof, whether patented, or not, or unpatentable, that is of any value whatsoever to the Company, as well as information relating to the Company’s products, information concerning proposed new products, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other person or entity for the Company), other Confidential Information, as defined by Section 8, and information about the Company’s executives, officers, and directors, which necessarily will be communicated to the Executive by reason of his employment by the Company; and


WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Executive, its trade secrets and Confidential Information, and its substantial,  significant, or key, relationships with vendors, and Customers, as defined below, actual and prospective; and


WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Executive during the term of this Agreement and following (for a reasonable time) termination of this Agreement; and


WHEREAS, the Company desires to employ the Executive and to ensure the continued availability to the Company of the Executive’s services, and the Executive is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Executive agree as follows:


1.

Representations and Warranties .  The Executive hereby represents and warrants to the Company that he (i) is not subject to any written non-solicitation or non-competition agreement affecting his employment with the Company (other than any prior agreement with the Company), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting his  employment with the Company (other than any prior agreement with the Company), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer.






1








2.

Term of Employment .


(a)

Term .  The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company for a period of three years commencing as of the date of this Agreement (the “Term”).  


(b)

Continuing Effect .  Notwithstanding any termination of this Agreement except for termination under Section 6(b), at the end of the Term or otherwise, the provisions of Sections 7 and 8 shall remain in full force and effect and the provisions of Section 8 shall be binding upon the legal representatives, successors and assigns of the Executive.


3.

Duties .


(a)

General Duties .  The Executive shall serve as the President of the Company, with duties and responsibilities that are customary for such executives.  The Executive shall also perform services for such subsidiaries of the Company as may be necessary.  The Executive shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully.  In determining whether or not the Executive has used his best efforts hereunder, the Executive’s and the Company’s delegation of authority and all surrounding circumstances shall be taken into account and the best efforts of the Executive shall not be judged solely on the Company’s earnings or other results of the Executive’s performance.


(b)

Devotion of Time .  Subject to the last two sentences of this Section 3(b), the Executive shall devote all of his time, attention and energies during normal business hours (exclusive of periods of sickness and disability and of such normal holiday and vacation periods as have been established by the Company) to the affairs of the Company.  The Executive shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business, or organization, without the prior consent of the board of directors of the Company.  Notwithstanding the above, the Executive may perform services for Dyn-O-Mat, Inc. (“Dyn-O-Mat”), the Company’s principal shareholder, as long as he is not compensated by Dyn-O-Mat for such services and as long as it does not interfere with his ability to carry out his duties under this Agreement. In addition, the Executive shall be permitted to devote a limited amount of his time, without compensation, to professional, charitable or similar organizations.


(c)

Location of Office . The Executive’s principal business office shall be at the Company’s Jupiter, Florida offices.  However, the Executive’s job responsibilities shall include all business travel necessary to the performance of his job.


(d)

Adherence to Inside Information Policies .  The Executive acknowledges that the Company intends to be publicly-held and, as a result, will implement inside information policies designed to preclude its executives and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, or any third party.  The




2







Executive shall promptly execute any agreements generally distributed by the Company to its employees requiring such employees to abide by its inside information policies.


4.

Compensation and Expenses .  


(a)

Salary .  For the services of the Executive to be rendered under this Agreement, the Company shall pay the Executive an annual salary of $91,000 (the “Base Salary”).  Prior to the end of each 12-month period of the Term, the Compensation Committee of the Board of Directors shall have the authority to increase the Executive’s Base Salary for the succeeding 12-month period.


(b)

Discretionary Bonus .  Following the completion of each year of the Term, the Compensation Committee shall have the discretion to award the Executive a bonus based upon the Company’s overall performance and achievements and the impact of the Executive on the results achieved.


(c)

Equity Award .  The Executive shall receive a grant of 175,000 five-year Incentive Stock Options, as that term is defined by the Internal Revenue Code of 1986, under the 2006 Equity Incentive Plan exercisable at $1.00 per share, which options shall vest in equal increments over the Term each June 30 th and December 31 st subject to continued employment as of the applicable vesting date.  In addition, on or about the first and second anniversaries of the date of this Agreement, the Compensation Committee shall meet and consider whether or not to award the Executive an additional grant of equity securities.


(d)

Expenses .  In addition to any compensation received pursuant to Section 4(a) and (b), the Company will reimburse or advance funds to the Executive for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement, provided that the Executive properly provides a written accounting of such expenses to the Company in accordance with the Company’s practices.  Such reimbursement or advances will be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of, or advances to, Executive officers.


5.

Benefits .


(a)

Vacation and Sick Leave .  For each 12-month period during the Term, the Executive shall be entitled to four weeks of vacation without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Executive may select and the affairs of the Company may permit.  The Executive shall be entitled to sick leave each year in amounts consistent with the Company’s policy for all employees.


(b)

Employee Benefit Programs .  The Executive is entitled to participate in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its executives, including programs of life and medical insurance and reimbursement of membership fees in professional organizations.





3







(c)

Car Allowance .  The Company shall reimburse the Executive for automobile expenses in an amount not to exceed $875 per month, which expenses shall be properly documented and submitted to the Company.


6.

Termination .


(a)

Death or Disability .  Except as otherwise provided in this Agreement, this Agreement shall automatically terminate without act by any party upon the death or disability of the Executive.  For purposes of this Section 6(a), “disability” shall mean that for a period of 45 consecutive days or 90 aggregate days in any 12-month period, the Executive is incapable of substantially fulfilling the duties set forth in Section 3 (which means full-time employment) because of physical, mental, or emotional incapacity, resulting from injury, sickness, or disease, as determined by the Executive’s physician (or his guardian). In the event of the death of the Executive, the Executive’s estate shall receive any unpaid, earned compensation and benefits due the Executive and this Agreement shall terminate.  In the event that Executive’s employment is terminated by reason of Executive’s death or disability, the Company shall pay the following to Executive: (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) any accrued but unpaid expenses required to be reimbursed under this Agreement, (iii) any vacation accrued to the date of termination, (iv) any earned but unpaid bonuses for any prior period, his  annual bonus prorated to date of termination (to the extent it can be calculated),  and (v) all stock options and restricted stock units previously granted to Executive shall thereupon become fully vested, and the Executive or his   legally appointed guardian, as the case may be, shall have up to one year from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its term.  The Executive (or his estate) shall receive the payments provided herein at such times he would have received them if there was no death or disability.  Additionally, if the Executive’s employment is terminated because of disability, the Executive shall receive any benefits to which Executive may be entitled pursuant to Section 5 hereof shall continue to be paid or provided by the Company, as the case may be, for one year, except for perquisites.


(b)

Termination for Cause or Without Good Reason .  The Company may terminate the Executive’s employment pursuant to the terms of this Agreement at any time for Cause (as defined below) by giving the Executive written notice of termination.  Such termination shall become effective upon the giving of such notice. Upon any such termination for Cause, or in the event the Executive terminates his employment with the Company without “Good Reason,” as defined below, then the Executive shall have no right to compensation, or reimbursement under Section 4, or to participate in any Executive benefit programs under Section 5, except as may otherwise be provided by law, for any period subsequent to the effective date of termination.  For purposes of this Section 6(b), “Cause” shall mean: (i)  the Executive is convicted of a felony which is related to the Executive’s employment or the business of the Company; (ii) the Executive, in carrying out his  duties hereunder, has been found in a civil action to have committed gross negligence or intentional misconduct resulting, in either case, in material harm to the Company; (iii) the Executive becomes subject to a preliminary or permanent injunction issued by a United States District Court enjoining the Executive from violating any securities law administered or regulated by the Securities and Exchange Commission; (iv) the Executive becomes subject to a cease and desist order or other order issued by the Securities and Exchange Commission after an




4







opportunity for a hearing; or (v) the Executive has been found in a civil action to have materially breached any provision of Section 7 and/or Section 8 and to have thereby caused material harm to the Company.  The term “found in a civil action” shall not apply until all appeals permissible under the applicable rules of procedure or statutes have been determined and no further appeals are permissible.


(c)

Termination Without Cause or Termination for Good Reason .  The Executive may terminate, by written notice to the Company, the Executive’s employment at any time for “Good Reason,” as defined below, and in the event the Company terminates the Executive without Cause, then in either case, the Company shall pay at the time of termination to compensation equal to an amount of three years Base Salary under this Agreement and all of Executive’s remaining unvested options, restricted stock and restricted stock units, if any, shall vest immediately upon such termination. The term Good Reason shall mean (i) the Executive, with or without change in title or formal corporate action, no longer exercises substantially all of the duties and responsibilities and shall no longer possess substantially all of the authority set forth in Section 3; (ii) the Company materially breaches this Agreement; or (iii) any entity or person not now an executive officer or director of the Company becomes either individually or as part of a group (required to file a Schedule 13D or 13G with the SEC) the beneficial owner of 30% or more of the Company’s common stock. The Executive shall have a period of 30 days following the occurrence of an event constituting Good Reason under clauses (i) and (ii) above and a period of 180 days following an event constituting Good Reason under clause (iii) above in which to exercise his right to terminate for Good Reason, or the Executive shall be deemed to have waived that particular Good Reason.


(d)

Parachute Payments . Notwithstanding anything to the contrary in this Agreement, if Executive is a “disqualified individual” (as defined in Section 280G(c) of the Internal Revenue Code of 1986 (the “Code”)), and the benefits provided for in this Agreement, together with any other payments and benefits which Executive has the right to receive from the Company and its affiliates, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the benefits provided hereunder (beginning with any benefit to be paid in cash hereunder) shall be reduced (but not below zero) so that the present value of such total amounts and benefits received by Executive will be one dollar ($1.00) less than three times Executive’s “base amount” (as defined in Section 280G of the Code) and so that no portion of such amounts and benefits received by Executive shall be subject to the excise tax imposed by Section 4999 of the Code. The determination as to whether any such reduction in the amount of the benefits provided hereunder is necessary shall be made initially by the Company in good faith. If a reduced benefit is provided hereunder in accordance with this Section 6(d) and through error or otherwise that payment, when aggregated with other payments and benefits from the Company (or its affiliates) used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Executive’s base amount, then Executive shall immediately repay such excess to the Company upon notification that an overpayment has been made.


7.

Non-Competition Agreement .


(a)

Competition with the Company .  Until termination of his employment and for a period of 12 months commencing on the date of termination, the Executive (individually or




5







in association with, or as a stockholder, director, officer, consultant, employee, partner, joint venturer, member, or otherwise, of or through any person, firm, corporation, partnership, association or other entity) shall not, directly or indirectly, compete with the Company (which for the purpose of this Agreement also includes any of its affiliates) by acting  as an officer (or comparable position) of, owning an interest in, or providing services to any entity within any metropolitan area in the United States or other country in which the Company was actually engaged in business as of the time of termination of employment or where the Company reasonably expected to engage in business within three months of the date of termination of employment.  For purposes of this Agreement, the term “compete with the Company” shall refer to any business activity in which the Company was engaged as of the termination of the Executive’s employment or reasonably expected to engage in within three months of termination of employment; provided , however , the foregoing shall not prevent Executive from (i) accepting employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company’s business (the “Prohibited Business”) if Executive’s employment is totally unrelated to the Prohibited Business, (ii) competing in a country where as of the time of the alleged violation the Company has ceased engaging in business, or (iii) competing in a line of business which as of the time of the alleged violation the Company has either ceased engaging in or publicly announced or disclosed that it intends to cease engaging in; provided , further , the foregoing shall not prohibit Executive from owning up to 5% of the securities of any publicly-traded enterprise provided Executive is not a director, officer, consultant, employee, partner, joint venturer, manager, member of, or to such enterprise, or otherwise compensated for services rendered thereby.


(b)

Solicitation of Customers .  During the periods in which the provisions of Section 7(a) shall be in effect, the Executive, directly or indirectly, will not seek nor accept Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company, refer Prohibited Business from any Customer to any enterprise or business other than the Company or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company.  For purposes of this Agreement, the term “Customer” means any person, firm, corporation, partnership, association or other entity to which the Company or any of its affiliates sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which was approached by or who or which has approached an employee of the Company for the purpose of soliciting business from the Company or the third party, as the case may be.


(c)

No Payment . The Executive acknowledges and agrees that no separate or additional payment will be required to be made to him in consideration of his undertakings in this Section 7, and confirms he has received adequate consideration for such undertakings.


8.

Non-Disclosure of Confidential Information .  

(a)

Confidential Information . Confidential Information includes, but is not limited to, trade secrets, processes, policies, procedures, techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information




6







and data relating to the development, research, testing, costs, marketing, and uses of the Products (as defined herein), the Company’s budgets and strategic plans, and the identity and special needs of Customers, vendors, and suppliers, subjects and databases, data, and all technology relating to the Company’s businesses, systems, methods of operation, and Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, the names, home addresses and all telephone numbers and e-mail addresses of the Company’s directors, employees, officers, executives, former executives, Customers and former Customers. In addition, Confidential Information also includes Customers and the identity of and telephone numbers, e-mail addresses and other addresses of executives or agents of Customers who are the persons with whom the Company’s executives, officers, employees, and agents communicate in the ordinary course of business.  Confidential Information also includes, without limitation, Confidential Information received from the Company’s subsidiaries and affiliates.  For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act or fault of the Executive, (ii) information set forth in the written records of the Executive prior to disclosure to the Executive by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Executive in writing from a third party (excluding any affiliates of the Executive) who did not acquire such confidential information or trade secret, directly or indirectly, from Executive or the Company.  As used herein, the term “Products” shall include all products offered for sale and marketed by the Company during the Term and any other products which the Company has taken concrete steps to offer for sale, but has not yet commenced marketing, during the Term.


(b)

Legitimate Business Interests .  The Executive recognizes that the Company has legitimate business interests to protect and as a consequence, the Executive agrees to the restrictions contained in this Agreement because they further the Company’s legitimate business interests.  These legitimate business interests include, but are not limited to (i) trade secrets, (ii) valuable confidential business, technical, and/or or professional information that otherwise does not qualify as trade secrets, including, but not limited to, all Confidential Information; (iii) substantial, significant, or key, relationships with specific prospective or existing Customers, subjects, vendors or suppliers; (iv) Customer goodwill associated with the Company’s business; and (v) specialized training relating to the Company’s technology, methods, operations and procedures.  


(c)

Confidentiality . Following termination of employment, the Confidential Information shall be held by the Executive in the strictest confidence and shall not, without the prior express written consent of the Company, be disclosed to any person other than in connection with the Executive’s employment by the Company.  The Executive further acknowledges that such Confidential Information as is acquired and used by the Company or its affiliates is a special, valuable and unique asset.  The Executive shall exercise all due and diligent precautions to protect the integrity of the Company’s Confidential Information and to keep it confidential whether it is in written form, on electronic media, oral, or otherwise.  The Executive shall not copy any Confidential Information except to the extent necessary to his  employment nor remove any Confidential Information or copies thereof from the Company’s premises except to the extent necessary to his  employment and then only with the authorization of an officer of the Company (excluding the Executive).  All records, files, materials and other Confidential Information obtained




7







by the Executive in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company, its Customers, or subjects, as the case may be.  The Executive shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity with which he may be associated or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior express written consent of an executive officer of the Company (excluding the Executive).


9.

Equitable Relief .


(a)

The Company and the Executive recognize that the services to be rendered under this Agreement by the Executive are special, unique and of extraordinary character, and that in the event of the breach by the Executive of the terms and conditions of this Agreement or if the Executive, without the prior express  consent of the board of directors of the Company, shall leave his  employment for any reason and take any action in violation of Section 7 and/or Section 8, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 9(b) below, to enjoin the Executive from breaching the provisions of Section 7 and/or Section 8.  In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security.  


(b)

Any action must be commenced in Palm Beach County, Florida.  The Executive and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts.  The Executive and the Company irrevocably waive any objection that they now have or hereafter irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Final judgment against the Executive or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Executive or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise.


10.

Conflicts of Interest .  While employed by the Company, the Executive shall not, unless approved by the Compensation Committee of the Board of Directors, directly or indirectly:


(a)

participate as an individual in any way in the benefits of transactions with any of the Company’s suppliers, vendors, Customers, or subjects, including, without limitation, having a financial interest in the Company’s suppliers, vendors, Customers, or subjects, or making loans to, or receiving loans, from, the Company’s suppliers, vendors, Customers, or subjects;


(b)

realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Executive’s employment with the Company for the Executive’s personal advantage or gain; or





8







(c)

accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a professional, medical, technical, or managerial capacity by, a person or entity which does business with the Company.


11.

Inventions, Ideas, Processes, and Designs .  All inventions, ideas, processes, programs, software, and designs (including all improvements) (i) conceived or made by the Executive during the course of his  employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination (whether by expiration of the Term or otherwise) of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company.  An invention, idea, process, program, software, or design including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company’s funds, personnel, equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Executive for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company.  The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company.  The decision to file for patent or copyright protection or to maintain such development as a trade secret, or otherwise, shall be in the sole discretion of the Company, and the Executive shall be bound by such decision.  The Executive shall provide as a schedule to this Employment Agreement,  a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or otherwise, or non-copyrighted, including a brief description, which he made or conceived prior to his  employment with the Company and which therefore are excluded from the scope of this Agreement.


12.

Indebtedness .  If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Executive and collect any remaining balance from the Executive unless the Executive has entered into a written agreement with the Company.


13.

Assignability .  The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities or assets and business of the Company.  The Executive’s obligations hereunder may not be assigned or alienated and any attempt to do so by the Executive will be void.


14.

Severability .  


(a)

The Executive expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof.  Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Executive and the Company that this Agreement shall be construed by the court in such a manner as to impose only




9







those restrictions on the Executive’s conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement.  If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement.


(b)

If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other.  The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provisions were not included.


15.

Notices and Addresses .  All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, or next business day delivery, or by facsimile delivery (in which event a copy shall immediately be sent by Federal Express or similar receipted delivery), as follows:


To the Company:

Gel Tech Solutions, Inc.

1201 Jupiter Park Drive

Jupiter, FL 33458

Facsimile:  (561) 747-7036


With a Copy to:

Harris Cramer LLP

1555 Palm Beach Lakes Blvd.

Suite 310

West Palm Beach, FL  33401

Facsimile (561) 659-0701

Attention:  Michael D. Harris, Esq.


To the Executive:

Michael Cordani

1201 Jupiter Park Drive

Jupiter, FL 33458

Facsimile:  (561) 747-7036


or to such other address or facsimile number, as either of them, by notice to the other may designate from time to time.  The transmission confirmation receipt from the sender’s facsimile machine shall be evidence of successful facsimile delivery.  


16.

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 instrument.  The execution of this Agreement may be by actual or facsimile signature.  




10








17.

Attorneys’ Fees .  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).


18.

Governing Law .  This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the state where the Company is incorporated as of the time without regard to choice of law considerations.  


19.

Entire Agreement .  This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.


20.

Additional Documents .  The parties hereto shall execute such additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder.


21.

Section and Paragraph Headings .  The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.


22.

Arbitration .  Except for a claim for equitable relief, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Palm Beach County, Florida (unless the parties agree in writing to a different location), before one arbitrator in accordance with the rules of the American Arbitration Association then in effect.  In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator.  The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.


23.

Investigations .  In the event the Executive or the Company is the subject of an investigation (whether criminal, civil, or administrative) involving possible violations of United States federal securities laws by the Executive, the Compensation Committee may, in its sole discretion, direct the Company to withhold any and all payments to the Executive (whether compensation or otherwise) which would have otherwise been made pursuant to this Agreement or otherwise would have been paid or payable by the Compensation Committee or the Company, which the Compensation Committee believes, in its sole discretion, may or could be considered at risk, or potentially subject to, the provisions of Section 1103 of the Sarbanes-Oxley Act of 2002 (including, but not limited to, any and all salary, bonuses, perquisites, stock option grants,




11







awards of restricted stock or restricted stock units, or long-term incentive compensation) until such time as the investigation is concluded without charges having been brought or until the successful conclusion of any legal proceedings brought in connection with charges having been brought, with such amounts as directed by the Compensation Committee to be withheld with or without the accruing of interest (and if with interest the rate thereof). Except as otherwise provided by court or other administrative order, in the event of the final adjudication or the settlement of any charges involving the admittance of wrongdoing or guilt by the Executive, the Compensation Committee shall have sole discretion whether to release to the Executive such compensation or other payments, or the extent thereof, or whether to return the same to the Company’s general use.



IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date and year first above written.


Gel Tech Solutions, Inc.




_________________________

By: ___________________________

      Joseph Ingarra

      Executive Vice President

 



Executive:



_________________________

By: ___________________________

      Michael Cordani




12






EXHIBIT 10.2

EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (the “Agreement”) entered into as of this 18 th day of December, 2006, between Gel Tech Solutions, Inc., a Florida corporation (the “Company”), and Peter Cordani (the “Executive”).


WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including, but not limited to, proprietary processes, sales methods and techniques, and other like confidential business and technical information, including but not limited to, technical information, design systems, pricing methods, pricing rates or discounts, processes, procedures, formulas, designs of computer software, or improvements, or any portion or phase thereof, whether patented, or not, or unpatentable, that is of any value whatsoever to the Company, as well as information relating to the Company’s products, information concerning proposed new products, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other person or entity for the Company), other Confidential Information, as defined by Section 8, and information about the Company’s executives, officers, and directors, which necessarily will be communicated to the Executive by reason of his employment by the Company; and


WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Executive, its trade secrets and Confidential Information, and its substantial,  significant, or key, relationships with vendors, and Customers, as defined below, actual and prospective; and


WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Executive during the term of this Agreement and following (for a reasonable time) termination of this Agreement; and


WHEREAS, the Company desires to employ the Executive and to ensure the continued availability to the Company of the Executive’s services, and the Executive is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Executive agree as follows:


1.

Representations and Warranties.  The Executive hereby represents and warrants to the Company that he (i) is not subject to any written non-solicitation or non-competition agreement affecting his employment with the Company (other than any prior agreement with the Company), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting his  employment with the Company (other than any prior agreement with the Company), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer.






1








2.

Term of Employment .


(a)

Term .  The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company for a period of three years commencing as of the date of this Agreement (the “Term”).  


(b)

Continuing Effect .  Notwithstanding any termination of this Agreement except for termination under Section 6(b), at the end of the Term or otherwise, the provisions of Sections 7 and 8 shall remain in full force and effect and the provisions of Section 8 shall be binding upon the legal representatives, successors and assigns of the Executive.


3.

Duties .


(a)

General Duties .  The Executive shall serve as the Chief Technical Officer of the Company, with duties and responsibilities that are customary for such executives. The Executive shall also perform services for such subsidiaries of the Company as may be necessary.  The Executive shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully.  In determining whether or not the Executive has used his best efforts hereunder, the Executive’s and the Company’s delegation of authority and all surrounding circumstances shall be taken into account and the best efforts of the Executive shall not be judged solely on the Company’s earnings or other results of the Executive’s performance.


(b)

Devotion of Time .  Subject to the last two sentences of this Section 3(b), the Executive shall devote all of his time, attention and energies during normal business hours (exclusive of periods of sickness and disability and of such normal holiday and vacation periods as have been established by the Company) to the affairs of the Company.  The Executive shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business, or organization, without the prior consent of the board of directors of the Company.  Notwithstanding the above, the Executive may perform services for Dyn-O-Mat, Inc. (“Dyn-O-Mat”), the Company’s principal shareholder, as long as he is not compensated by Dyn-O-Mat for such services and as long as it does not interfere with his ability to carry out his duties under this Agreement. In addition, the Executive shall be permitted to devote a limited amount of his time, without compensation, to professional, charitable or similar organizations.


(c)

Location of Office . The Executive’s principal business office shall be at the Company’s Jupiter, Florida offices.  However, the Executive’s job responsibilities shall include all business travel necessary to the performance of his job.


(d)

Adherence to Inside Information Policies .  The Executive acknowledges that the Company intends to be publicly-held and, as a result, will implement inside information policies designed to preclude its executives and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, or any third party.  The




2







Executive shall promptly execute any agreements generally distributed by the Company to its employees requiring such employees to abide by its inside information policies.


4.

Compensation and Expenses .  


(a)

Salary .  For the services of the Executive to be rendered under this Agreement, the Company shall pay the Executive an annual salary of $91,000 (the “Base Salary”).  Prior to the end of each 12-month period of the Term, the Compensation Committee of the Board of Directors shall have the authority to increase the Executive’s Base Salary for the succeeding 12-month period.


(b)

Discretionary Bonus .  Following the completion of each year of the Term, the Compensation Committee shall have the discretion to award the Executive a bonus based upon the Company’s overall performance and achievements and the impact of the Executive on the results achieved.


(c)

Expenses .  In addition to any compensation received pursuant to Section 4(a) and (b), the Company will reimburse or advance funds to the Executive for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement, provided that the Executive properly provides a written accounting of such expenses to the Company in accordance with the Company’s practices.  Such reimbursement or advances will be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of, or advances to, Executive officers.


5.

Benefits .


(a)

Vacation and Sick Leave .  For each 12-month period during the Term, the Executive shall be entitled to four weeks of vacation without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Executive may select and the affairs of the Company may permit.  The Executive shall be entitled to sick leave each year in amounts consistent with the Company’s policy for all employees.


(b)

Employee Benefit Programs .  The Executive is entitled to participate in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its executives, including programs of life and medical insurance and reimbursement of membership fees in professional organizations.


(c)

Car Allowance .  The Company shall reimburse the Executive for automobile expenses in an amount not to exceed $875 per month, which expenses shall be properly documented and submitted to the Company.


6.

Termination .


(a)

Death or Disability .  Except as otherwise provided in this Agreement, this Agreement shall automatically terminate without act by any party upon the death or disability of




3







the Executive.  For purposes of this Section 6(a), “disability” shall mean that for a period of 45 consecutive days or 90 aggregate days in any 12-month period, the Executive is incapable of substantially fulfilling the duties set forth in Section 3 (which means full-time employment) because of physical, mental, or emotional incapacity, resulting from injury, sickness, or disease, as determined by the Executive’s physician (or his guardian). In the event of the death of the Executive, the Executive’s estate shall receive any unpaid, earned compensation and benefits due the Executive and this Agreement shall terminate.  In the event that Executive’s employment is terminated by reason of Executive’s death or disability, the Company shall pay the following to Executive: (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) any accrued but unpaid expenses required to be reimbursed under this Agreement, (iii) any vacation accrued to the date of termination, (iv) any earned but unpaid bonuses for any prior period, his  annual bonus prorated to date of termination (to the extent it can be calculated),  and (v) all stock options and restricted stock units previously granted to Executive shall thereupon become fully vested, and the Executive or his   legally appointed guardian, as the case may be, shall have up to one year from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its term.  The Executive (or his estate) shall receive the payments provided herein at such times he would have received them if there was no death or disability.  Additionally, if the Executive’s employment is terminated because of disability, the Executive shall receive any benefits to which Executive may be entitled pursuant to Section 5 hereof shall continue to be paid or provided by the Company, as the case may be, for one year, except for perquisites.


(b)

Termination for Cause or Without Good Reason.  The Company may terminate the Executive’s employment pursuant to the terms of this Agreement at any time for Cause (as defined below) by giving the Executive written notice of termination.  Such termination shall become effective upon the giving of such notice. Upon any such termination for Cause, or in the event the Executive terminates his employment with the Company without “Good Reason,” as defined below, then the Executive shall have no right to compensation, or reimbursement under Section 4, or to participate in any Executive benefit programs under Section 5, except as may otherwise be provided by law, for any period subsequent to the effective date of termination.  For purposes of this Section 6(b), “Cause” shall mean: (i)  the Executive is convicted of a felony which is related to the Executive’s employment or the business of the Company; (ii) the Executive, in carrying out his  duties hereunder, has been found in a civil action to have committed gross negligence or intentional misconduct resulting, in either case, in material harm to the Company; (iii) the Executive becomes subject to a preliminary or permanent injunction issued by a United States District Court enjoining the Executive from violating any securities law administered or regulated by the Securities and Exchange Commission; (iv) the Executive becomes subject to a cease and desist order or other order issued by the Securities and Exchange Commission after an opportunity for a hearing; or (v) the Executive has been found in a civil action to have materially breached any provision of Section 7 and/or Section 8 and to have thereby caused material harm to the Company.  The term “found in a civil action” shall not apply until all appeals permissible under the applicable rules of procedure or statutes have been determined and no further appeals are permissible.


(c)

Termination Without Cause or Termination for Good Reason .    The Executive may terminate, by written notice to the Company, the Executive’s employment at any




4







time for “Good Reason,” as defined below, and in the event the Company terminates the Executive without Cause, then in either case, the Company shall pay at the time of termination to compensation equal to an amount of three years Base Salary under this Agreement and all of Executive’s remaining unvested options, restricted stock and restricted stock units, if any, shall vest immediately upon such termination. The term Good Reason shall mean (i) the Executive, with or without change in title or formal corporate action, no longer exercises substantially all of the duties and responsibilities and shall no longer possess substantially all of the authority set forth in Section 3; (ii) the Company materially breaches this Agreement; or (iii) any entity or person not now an executive officer or director of the Company becomes either individually or as part of a group (required to file a Schedule 13D or 13G with the SEC) the beneficial owner of 30% or more of the Company’s common stock. The Executive shall have a period of 30 days following the occurrence of an event constituting Good Reason under clauses (i) and (ii) above and a period of 180 days following an event constituting Good Reason under clause (iii) above in which to exercise his right to terminate for Good Reason, or the Executive shall be deemed to have waived that particular Good Reason.


(d)

Parachute Payments . Notwithstanding anything to the contrary in this Agreement, if Executive is a “disqualified individual” (as defined in Section 280G(c) of the Internal Revenue Code of 1986 (the “Code”)), and the benefits provided for in this Agreement, together with any other payments and benefits which Executive has the right to receive from the Company and its affiliates, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the benefits provided hereunder (beginning with any benefit to be paid in cash hereunder) shall be reduced (but not below zero) so that the present value of such total amounts and benefits received by Executive will be one dollar ($1.00) less than three times Executive’s “base amount” (as defined in Section 280G of the Code) and so that no portion of such amounts and benefits received by Executive shall be subject to the excise tax imposed by Section 4999 of the Code. The determination as to whether any such reduction in the amount of the benefits provided hereunder is necessary shall be made initially by the Company in good faith. If a reduced benefit is provided hereunder in accordance with this Section 6(d) and through error or otherwise that payment, when aggregated with other payments and benefits from the Company (or its affiliates) used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Executive’s base amount, then Executive shall immediately repay such excess to the Company upon notification that an overpayment has been made.


7.

Non-Competition Agreement .


(a)

Competition with the Company .  Until termination of his employment and for a period of 12 months commencing on the date of termination, the Executive (individually or in association with, or as a stockholder, director, officer, consultant, employee, partner, joint venturer, member, or otherwise, of or through any person, firm, corporation, partnership, association or other entity) shall not, directly or indirectly, compete with the Company (which for the purpose of this Agreement also includes any of its affiliates) by acting  as an officer (or comparable position) of, owning an interest in, or providing services to any entity within any metropolitan area in the United States or other country in which the Company was actually engaged in business as of the time of termination of employment or where the Company reasonably expected to engage in business within three months of the date of termination of




5







employment.  For purposes of this Agreement, the term “compete with the Company” shall refer to any business activity in which the Company was engaged as of the termination of the Executive’s employment or reasonably expected to engage in within three months of termination of employment; provided , however , the foregoing shall not prevent Executive from (i) accepting employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company’s business (the “Prohibited Business”) if Executive’s employment is totally unrelated to the Prohibited Business, (ii) competing in a country where as of the time of the alleged violation the Company has ceased engaging in business, or (iii) competing in a line of business which as of the time of the alleged violation the Company has either ceased engaging in or publicly announced or disclosed that it intends to cease engaging in; provided , further , the foregoing shall not prohibit Executive from owning up to 5% of the securities of any publicly-traded enterprise provided Executive is not a director, officer, consultant, employee, partner, joint venturer, manager, member of, or to such enterprise, or otherwise compensated for services rendered thereby.


(b)

Solicitation of Customers .  During the periods in which the provisions of Section 7(a) shall be in effect, the Executive, directly or indirectly, will not seek nor accept Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company, refer Prohibited Business from any Customer to any enterprise or business other than the Company or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company.  For purposes of this Agreement, the term “Customer” means any person, firm, corporation, partnership, association or other entity to which the Company or any of its affiliates sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which was approached by or who or which has approached an employee of the Company for the purpose of soliciting business from the Company or the third party, as the case may be.


(c)

No Payment . The Executive acknowledges and agrees that no separate or additional payment will be required to be made to him in consideration of his undertakings in this Section 7, and confirms he has received adequate consideration for such undertakings.


8.

Non-Disclosure of Confidential Information .  

(a)

Confidential Information . Confidential Information includes, but is not limited to, trade secrets, processes, policies, procedures, techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing, and uses of the Products (as defined herein), the Company’s budgets and strategic plans, and the identity and special needs of Customers, vendors, and suppliers, subjects and databases, data, and all technology relating to the Company’s businesses, systems, methods of operation, and Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, the names, home addresses and all telephone numbers and e-mail addresses of the Company’s directors, employees, officers, executives, former executives, Customers and former Customers. In addition, Confidential




6







Information also includes Customers and the identity of and telephone numbers, e-mail addresses and other addresses of executives or agents of Customers who are the persons with whom the Company’s executives, officers, employees, and agents communicate in the ordinary course of business.  Confidential Information also includes, without limitation, Confidential Information received from the Company’s subsidiaries and affiliates.  For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act or fault of the Executive, (ii) information set forth in the written records of the Executive prior to disclosure to the Executive by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Executive in writing from a third party (excluding any affiliates of the Executive) who did not acquire such confidential information or trade secret, directly or indirectly, from Executive or the Company.  As used herein, the term “Products” shall include all products offered for sale and marketed by the Company during the Term and any other products which the Company has taken concrete steps to offer for sale, but has not yet commenced marketing, during the Term.


(b)

Legitimate Business Interests .  The Executive recognizes that the Company has legitimate business interests to protect and as a consequence, the Executive agrees to the restrictions contained in this Agreement because they further the Company’s legitimate business interests.  These legitimate business interests include, but are not limited to (i) trade secrets, (ii) valuable confidential business, technical, and/or or professional information that otherwise does not qualify as trade secrets, including, but not limited to, all Confidential Information; (iii) substantial, significant, or key, relationships with specific prospective or existing Customers, subjects, vendors or suppliers; (iv) Customer goodwill associated with the Company’s business; and (v) specialized training relating to the Company’s technology, methods, operations and procedures.  


(c)

Confidentiality . Following termination of employment, the Confidential Information shall be held by the Executive in the strictest confidence and shall not, without the prior express written consent of the Company, be disclosed to any person other than in connection with the Executive’s employment by the Company.  The Executive further acknowledges that such Confidential Information as is acquired and used by the Company or its affiliates is a special, valuable and unique asset.  The Executive shall exercise all due and diligent precautions to protect the integrity of the Company’s Confidential Information and to keep it confidential whether it is in written form, on electronic media, oral, or otherwise.  The Executive shall not copy any Confidential Information except to the extent necessary to his  employment nor remove any Confidential Information or copies thereof from the Company’s premises except to the extent necessary to his  employment and then only with the authorization of an officer of the Company (excluding the Executive).  All records, files, materials and other Confidential Information obtained by the Executive in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company, its Customers, or subjects, as the case may be.  The Executive shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity with which he may be associated or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior express written consent of an executive officer of the Company (excluding the Executive).




7








9.

Equitable Relief .


(a)

The Company and the Executive recognize that the services to be rendered under this Agreement by the Executive are special, unique and of extraordinary character, and that in the event of the breach by the Executive of the terms and conditions of this Agreement or if the Executive, without the prior express  consent of the board of directors of the Company, shall leave his  employment for any reason and take any action in violation of Section 7 and/or Section 8, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 9(b) below, to enjoin the Executive from breaching the provisions of Section 7 and/or Section 8.  In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security.  


(b)

Any action must be commenced in Palm Beach County, Florida.  The Executive and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts.  The Executive and the Company irrevocably waive any objection that they now have or hereafter irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Final judgment against the Executive or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Executive or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise.


10.

Conflicts of Interest .  While employed by the Company, the Executive shall not, unless approved by the Compensation Committee of the Board of Directors, directly or indirectly:


(a)

participate as an individual in any way in the benefits of transactions with any of the Company’s suppliers, vendors, Customers, or subjects, including, without limitation, having a financial interest in the Company’s suppliers, vendors, Customers, or subjects, or making loans to, or receiving loans, from, the Company’s suppliers, vendors, Customers, or subjects;


(b)

realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Executive’s employment with the Company for the Executive’s personal advantage or gain; or


(c)

accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a professional, medical, technical, or managerial capacity by, a person or entity which does business with the Company.


11.

Inventions, Ideas, Processes, and Designs .  All inventions, ideas, processes, programs, software, and designs (including all improvements) (i) conceived or made by the Executive during the course of his  employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the




8







termination (whether by expiration of the Term or otherwise) of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company.  An invention, idea, process, program, software, or design including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company’s funds, personnel, equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Executive for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company.  The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company.  The decision to file for patent or copyright protection or to maintain such development as a trade secret, or otherwise, shall be in the sole discretion of the Company, and the Executive shall be bound by such decision.  The Executive shall provide as a schedule to this Employment Agreement,  a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or otherwise, or non-copyrighted, including a brief description, which he made or conceived prior to his  employment with the Company and which therefore are excluded from the scope of this Agreement.


12.

Indebtedness .  If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Executive and collect any remaining balance from the Executive unless the Executive has entered into a written agreement with the Company.


13.

Assignability .  The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities or assets and business of the Company.  The Executive’s obligations hereunder may not be assigned or alienated and any attempt to do so by the Executive will be void.


14.

Severability .  


(a)

The Executive expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof.  Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Executive and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Executive’s conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement.  If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement.




9








(b)

If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other.  The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provisions were not included.


15.

Notices and Addresses .  All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, or next business day delivery, or by facsimile delivery (in which event a copy shall immediately be sent by Federal Express or similar receipted delivery), as follows:


To the Company:

Gel Tech Solutions, Inc.

1201 Jupiter Park Drive

Jupiter, FL 33458

Facsimile:  (561) 747-7036


With a Copy to:

Harris Cramer LLP

1555 Palm Beach Lakes Blvd.

Suite 310

West Palm Beach, FL  33401

Facsimile (561) 659-0701

Attention:  Michael D. Harris, Esq.


To the Executive:

Peter Cordani

1201 Jupiter Park Drive

Jupiter, FL 33458

Facsimile:  (561) 747-7036


or to such other address or facsimile number, as either of them, by notice to the other may designate from time to time.  The transmission confirmation receipt from the sender’s facsimile machine shall be evidence of successful facsimile delivery.  


16.

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 instrument.  The execution of this Agreement may be by actual or facsimile signature.  


17.

Attorneys’ Fees .  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).


18.

Governing Law .  This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the




10







obligations provided therein or performance shall be governed or interpreted according to the internal laws of the state where the Company is incorporated as of the time without regard to choice of law considerations.  


19.

Entire Agreement .  This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.


20.

Additional Documents .  The parties hereto shall execute such additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder.


21.

Section and Paragraph Headings .  The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.


22.

Arbitration .  Except for a claim for equitable relief, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Palm Beach County, Florida (unless the parties agree in writing to a different location), before one arbitrator in accordance with the rules of the American Arbitration Association then in effect.  In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator.  The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.


23.

Investigations.  In the event the Executive or the Company is the subject of an investigation (whether criminal, civil, or administrative) involving possible violations of United States federal securities laws by the Executive, the Compensation Committee may, in its sole discretion, direct the Company to withhold any and all payments to the Executive (whether compensation or otherwise) which would have otherwise been made pursuant to this Agreement or otherwise would have been paid or payable by the Compensation Committee or the Company, which the Compensation Committee believes, in its sole discretion, may or could be considered at risk, or potentially subject to, the provisions of Section 1103 of the Sarbanes-Oxley Act of 2002 (including, but not limited to, any and all salary, bonuses, perquisites, stock option grants, awards of restricted stock or restricted stock units, or long-term incentive compensation) until such time as the investigation is concluded without charges having been brought or until the successful conclusion of any legal proceedings brought in connection with charges having been brought, with such amounts as directed by the Compensation Committee to be withheld with or without the accruing of interest (and if with interest the rate thereof). Except as otherwise provided by court or other administrative order, in the event of the final adjudication or the settlement of any charges involving the admittance of wrongdoing or guilt by the Executive, the Compensation Committee shall have sole discretion whether to release to the Executive such




11







compensation or other payments, or the extent thereof, or whether to return the same to the Company’s general use.



IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date and year first above written.


Gel Tech Solutions, Inc.




_________________________

By: ________________________

      Joseph Ingarra

                  Executive Vice President

 



Executive:



_________________________

By: ________________________

      Peter Cordani





12






EXHIBIT 10.3

EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (the “Agreement”) entered into as of this 15 th day of September, 2006, between Gel Tech Solutions, Inc., a Florida corporation (the “Company”), and Joseph Ingarra (the “Executive”).


WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including, but not limited to, proprietary processes, sales methods and techniques, and other like confidential business and technical information, including but not limited to, technical information, design systems, pricing methods, pricing rates or discounts, processes, procedures, formulas, designs of computer software, or improvements, or any portion or phase thereof, whether patented, or not, or unpatentable, that is of any value whatsoever to the Company, as well as information relating to the Company’s products, information concerning proposed new products, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other person or entity for the Company), other Confidential Information, as defined by Section 8, and information about the Company’s executives, officers, and directors, which necessarily will be communicated to the Executive by reason of his employment by the Company; and


WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Executive, its trade secrets and Confidential Information, and its substantial,  significant, or key, relationships with vendors, and Customers, as defined below, actual and prospective; and


WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Executive during the term of this Agreement and following (for a reasonable time) termination of this Agreement; and


WHEREAS, the Company desires to employ the Executive and to ensure the continued availability to the Company of the Executive’s services, and the Executive is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Executive agree as follows:


1.

Representations and Warranties.  The Executive hereby represents and warrants to the Company that he (i) is not subject to any written non-solicitation or non-competition agreement affecting his employment with the Company (other than any prior agreement with the Company), (ii) is not subject to any written confidentiality or nonuse/nondisclosure agreement affecting his  employment with the Company (other than any prior agreement with the Company), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer.






1








2.

Term of Employment .


(a)

Term .  The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company for a period of three years commencing as of the date of this Agreement (the “Term”).  


(b)

Continuing Effect .  Notwithstanding any termination of this Agreement except for termination under Section 6(b), at the end of the Term or otherwise, the provisions of Sections 7 and 8 shall remain in full force and effect and the provisions of Section 8 shall be binding upon the legal representatives, successors and assigns of the Executive.


3.

Duties .


(a)

General Duties .  The Executive shall serve as the Executive Vice President of the Company, with duties and responsibilities that are customary for such executives.  The Executive shall also perform services for such subsidiaries of the Company as may be necessary.  The Executive shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully.  In determining whether or not the Executive has used his best efforts hereunder, the Executive’s and the Company’s delegation of authority and all surrounding circumstances shall be taken into account and the best efforts of the Executive shall not be judged solely on the Company’s earnings or other results of the Executive’s performance.


(b)

Devotion of Time .  Subject to the last two sentences of this Section 3(b), the Executive shall devote all of his time, attention and energies during normal business hours (exclusive of periods of sickness and disability and of such normal holiday and vacation periods as have been established by the Company) to the affairs of the Company.  The Executive shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business, or organization, without the prior consent of the board of directors of the Company.  Notwithstanding the above, the Executive may perform services for Dyn-O-Mat, Inc. (“Dyn-O-Mat”), the Company’s principal shareholder, as long as he is not compensated by Dyn-O-Mat for such services and as long as it does not interfere with his ability to carry out his duties under this Agreement. In addition, the Executive shall be permitted to devote a limited amount of his time, without compensation, to professional, charitable or similar organizations.


(c)

Location of Office . The Executive’s principal business office shall be at the Company’s Jupiter, Florida offices.  However, the Executive’s job responsibilities shall include all business travel necessary to the performance of his job.


(d)

Adherence to Inside Information Policies .  The Executive acknowledges that the Company intends to be publicly-held and, as a result, will implement inside information policies designed to preclude its executives and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, or any third party.  The




2







Executive shall promptly execute any agreements generally distributed by the Company to its employees requiring such employees to abide by its inside information policies.


4.

Compensation and Expenses .  


(a)

Salary .  For the services of the Executive to be rendered under this Agreement, the Company shall pay the Executive an annual salary of $91,000 (the “Base Salary”).  Prior to the end of each 12-month period of the Term, the Compensation Committee of the Board of Directors shall have the authority to increase the Executive’s Base Salary for the succeeding 12-month period.


(b)

Discretionary Bonus .  Following the completion of each year of the Term, the Compensation Committee shall have the discretion to award the Executive a bonus based upon the Company’s overall performance and achievements and the impact of the Executive on the results achieved.


(c)

Equity Award .  The Executive shall receive a grant of 175,000 five-year Incentive Stock Options, as that term is defined by the Internal Revenue Code of 1986, under the 2006 Equity Incentive Plan exercisable at $1.00 per share, which options shall vest in equal increments over the Term each June 30 th and December 31 st subject to continued employment as of the applicable vesting date.  In addition, on or about the first and second anniversaries of the date of this Agreement, the Compensation Committee shall meet and consider whether or not to award the Executive an additional grant of equity securities.


(d)

Expenses .  In addition to any compensation received pursuant to Section 4(a) and (b), the Company will reimburse or advance funds to the Executive for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement, provided that the Executive properly provides a written accounting of such expenses to the Company in accordance with the Company’s practices.  Such reimbursement or advances will be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of, or advances to, Executive officers.


5.

Benefits .


(a)

Vacation and Sick Leave .  For each 12-month period during the Term, the Executive shall be entitled to four weeks of vacation without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Executive may select and the affairs of the Company may permit.  The Executive shall be entitled to sick leave each year in amounts consistent with the Company’s policy for all employees.


(b)

Employee Benefit Programs .  The Executive is entitled to participate in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its executives, including programs of life and medical insurance and reimbursement of membership fees in professional organizations.





3







(c)

Car Allowance .  The Company shall reimburse the Executive for automobile expenses in an amount not to exceed $875 per month, which expenses shall be properly documented and submitted to the Company.


6.

Termination .


(a)

Death or Disability .  Except as otherwise provided in this Agreement, this Agreement shall automatically terminate without act by any party upon the death or disability of the Executive.  For purposes of this Section 6(a), “disability” shall mean that for a period of 45 consecutive days or 90 aggregate days in any 12-month period, the Executive is incapable of substantially fulfilling the duties set forth in Section 3 (which means full-time employment) because of physical, mental, or emotional incapacity, resulting from injury, sickness, or disease, as determined by the Executive’s physician (or his guardian). In the event of the death of the Executive, the Executive’s estate shall receive any unpaid, earned compensation and benefits due the Executive and this Agreement shall terminate.  In the event that Executive’s employment is terminated by reason of Executive’s death or disability, the Company shall pay the following to Executive: (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) any accrued but unpaid expenses required to be reimbursed under this Agreement, (iii) any vacation accrued to the date of termination, (iv) any earned but unpaid bonuses for any prior period, his  annual bonus prorated to date of termination (to the extent it can be calculated),  and (v) all stock options and restricted stock units previously granted to Executive shall thereupon become fully vested, and the Executive or his   legally appointed guardian, as the case may be, shall have up to one year from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its term.  The Executive (or his estate) shall receive the payments provided herein at such times he would have received them if there was no death or disability.  Additionally, if the Executive’s employment is terminated because of disability, the Executive shall receive any benefits to which Executive may be entitled pursuant to Section 5 hereof shall continue to be paid or provided by the Company, as the case may be, for one year, except for perquisites.


(b)

Termination for Cause or Without Good Reason.  The Company may terminate the Executive’s employment pursuant to the terms of this Agreement at any time for Cause (as defined below) by giving the Executive written notice of termination.  Such termination shall become effective upon the giving of such notice. Upon any such termination for Cause, or in the event the Executive terminates his employment with the Company without “Good Reason,” as defined below, then the Executive shall have no right to compensation, or reimbursement under Section 4, or to participate in any Executive benefit programs under Section 5, except as may otherwise be provided by law, for any period subsequent to the effective date of termination. For purposes of this Section 6(b), “Cause” shall mean:  (i) the Executive is convicted of a felony or misdemeanor or commits a criminal act; (ii) the Executive, in carrying out his duties hereunder, has acted with ordinary negligence, gross negligence or intentional misconduct resulting, in any case, in harm to the Company; (iii) the Executive misappropriates Company funds or otherwise defrauds the Company; (iv) the Executive breaches his fiduciary duty to the Company resulting in profit to him, directly or indirectly; (v) the Executive materially breaches any agreement with the Company; (vi) the Executive breaches any provision of Sections 7 or 8 of this Agreement; (vii) the Executive fails to competently perform his duties under Section 2;  (viii) the Executive suffers from alcoholism or




4







drug addiction or otherwise uses alcohol to excess or uses drugs in any form except strictly in accordance with the recommendation of a physician or dentist; (ix) the Executive becomes subject to a preliminary or permanent injunction issued by a United States District Court or a state court enjoining the Executive from violating any securities law administered or regulated by the Securities and Exchange Commission or a state securities regulator; (x) the Executive becomes subject to a cease and desist order or other order issued by the Securities and Exchange Commission or a state securities regulator after an opportunity for a hearing (xi) it is later determined that the Executive fraudulently concealed facts or made misrepresentations concerning the trade secrets, technical “know-how” and proprietary information assigned by the Executive to the Company; (xii) the Employee has been found to have committed any act or have failed to take any action which results in the Company’s  common stock being delisted or not listed for trading on the Over-the-Counter Bulletin Board, the Nasdaq Stock Market or a national securities exchange, as applicable; (xiii) the Employee is chronically absent or tardy after being warned by the Company; (xiv) the Executive fails on more than occasion to comply with the directive’s of the Company’s board of directors; or (xv) the Employee fails or refuses to co-operate in any official investigation or inquiry conducted by or on behalf of the Company or by any government body or agency asserting jurisdiction over the Company or any of  its securities.


(c)

Termination Without Cause or Termination for Good Reason .  The Executive may terminate, by written notice to the Company, the Executive’s employment at any time for “Good Reason,” as defined below, and in the event the Company terminates the Executive without Cause, then in either case, the Company shall pay at the time of termination to compensation equal to an amount of three years Base Salary under this Agreement and all of Executive’s remaining unvested options, restricted stock and restricted stock units, if any, shall vest immediately upon such termination. The term Good Reason shall mean (i) the Executive, with or without change in title or formal corporate action, no longer exercises substantially all of the duties and responsibilities and shall no longer possess substantially all of the authority set forth in Section 3; (ii) the Company materially breaches this Agreement; or (iii) any entity or person not now an executive officer or director of the Company becomes either individually or as part of a group (required to file a Schedule 13D or 13G with the SEC) the beneficial owner of 30% or more of the Company’s common stock. The Executive shall have a period of 30 days following the occurrence of an event constituting Good Reason under clauses (i) and (ii) above and a period of 180 days following an event constituting Good Reason under clause (iii) above in which to exercise his right to terminate for Good Reason, or the Executive shall be deemed to have waived that particular Good Reason.


(d)

Parachute Payments . Notwithstanding anything to the contrary in this Agreement, if Executive is a “disqualified individual” (as defined in Section 280G(c) of the Internal Revenue Code of 1986 (the “Code”)), and the benefits provided for in this Agreement, together with any other payments and benefits which Executive has the right to receive from the Company and its affiliates, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the benefits provided hereunder (beginning with any benefit to be paid in cash hereunder) shall be reduced (but not below zero) so that the present value of such total amounts and benefits received by Executive will be one dollar ($1.00) less than three times Executive’s “base amount” (as defined in Section 280G of the Code) and so that no portion of such amounts and benefits received by Executive shall be subject to the excise tax imposed by




5







Section 4999 of the Code. The determination as to whether any such reduction in the amount of the benefits provided hereunder is necessary shall be made initially by the Company in good faith. If a reduced benefit is provided hereunder in accordance with this Section 6(d) and through error or otherwise that payment, when aggregated with other payments and benefits from the Company (or its affiliates) used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Executive’s base amount, then Executive shall immediately repay such excess to the Company upon notification that an overpayment has been made.


7.

Non-Competition Agreement .


(a)

Competition with the Company .  Until termination of his employment and for a period of 12 months commencing on the date of termination, the Executive (individually or in association with, or as a stockholder, director, officer, consultant, employee, partner, joint venturer, member, or otherwise, of or through any person, firm, corporation, partnership, association or other entity) shall not, directly or indirectly, compete with the Company (which for the purpose of this Agreement also includes any of its affiliates) by acting  as an officer (or comparable position) of, owning an interest in, or providing services to any entity within any metropolitan area in the United States or other country in which the Company was actually engaged in business as of the time of termination of employment or where the Company reasonably expected to engage in business within three months of the date of termination of employment.  For purposes of this Agreement, the term “compete with the Company” shall refer to any business activity in which the Company was engaged as of the termination of the Executive’s employment or reasonably expected to engage in within three months of termination of employment; provided , however , the foregoing shall not prevent Executive from (i) accepting employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Company’s business (the “Prohibited Business”) if Executive’s employment is totally unrelated to the Prohibited Business, (ii) competing in a country where as of the time of the alleged violation the Company has ceased engaging in business, or (iii) competing in a line of business which as of the time of the alleged violation the Company has either ceased engaging in or publicly announced or disclosed that it intends to cease engaging in; provided , further , the foregoing shall not prohibit Executive from owning up to 5% of the securities of any publicly-traded enterprise provided Executive is not a director, officer, consultant, employee, partner, joint venturer, manager, member of, or to such enterprise, or otherwise compensated for services rendered thereby.


(b)

Solicitation of Customers .  During the periods in which the provisions of Section 7(a) shall be in effect, the Executive, directly or indirectly, will not seek nor accept Prohibited Business from any Customer (as defined below) on behalf of any enterprise or business other than the Company, refer Prohibited Business from any Customer to any enterprise or business other than the Company or receive commissions based on sales or otherwise relating to the Prohibited Business from any Customer, or any enterprise or business other than the Company.  For purposes of this Agreement, the term “Customer” means any person, firm, corporation, partnership, association or other entity to which the Company or any of its affiliates sold or provided goods or services during the 24-month period prior to the time at which any determination is required to be made as to whether any such person, firm, corporation, partnership, association or other entity is a Customer, or who or which was approached by or who or which has approached an employee of the




6







Company for the purpose of soliciting business from the Company or the third party, as the case may be.


(c)

No Payment . The Executive acknowledges and agrees that no separate or additional payment will be required to be made to him in consideration of his undertakings in this Section 7, and confirms he has received adequate consideration for such undertakings.


8.

Non-Disclosure of Confidential Information .  

(a)

Confidential Information . Confidential Information includes, but is not limited to, trade secrets, processes, policies, procedures, techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing, and uses of the Products (as defined herein), the Company’s budgets and strategic plans, and the identity and special needs of Customers, vendors, and suppliers, subjects and databases, data, and all technology relating to the Company’s businesses, systems, methods of operation, and Customer lists, Customer information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, the names, home addresses and all telephone numbers and e-mail addresses of the Company’s directors, employees, officers, executives, former executives, Customers and former Customers. In addition, Confidential Information also includes Customers and the identity of and telephone numbers, e-mail addresses and other addresses of executives or agents of Customers who are the persons with whom the Company’s executives, officers, employees, and agents communicate in the ordinary course of business.  Confidential Information also includes, without limitation, Confidential Information received from the Company’s subsidiaries and affiliates.  For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act or fault of the Executive, (ii) information set forth in the written records of the Executive prior to disclosure to the Executive by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Executive in writing from a third party (excluding any affiliates of the Executive) who did not acquire such confidential information or trade secret, directly or indirectly, from Executive or the Company.  As used herein, the term “Products” shall include all products offered for sale and marketed by the Company during the Term and any other products which the Company has taken concrete steps to offer for sale, but has not yet commenced marketing, during the Term.


(b)

Legitimate Business Interests .  The Executive recognizes that the Company has legitimate business interests to protect and as a consequence, the Executive agrees to the restrictions contained in this Agreement because they further the Company’s legitimate business interests.  These legitimate business interests include, but are not limited to (i) trade secrets, (ii) valuable confidential business, technical, and/or or professional information that otherwise does not qualify as trade secrets, including, but not limited to, all Confidential Information; (iii) substantial, significant, or key, relationships with specific prospective or existing Customers, subjects, vendors or suppliers; (iv) Customer goodwill associated with the Company’s business; and (v) specialized training relating to the Company’s technology, methods, operations and procedures.  





7







(c)

Confidentiality . Following termination of employment, the Confidential Information shall be held by the Executive in the strictest confidence and shall not, without the prior express written consent of the Company, be disclosed to any person other than in connection with the Executive’s employment by the Company.  The Executive further acknowledges that such Confidential Information as is acquired and used by the Company or its affiliates is a special, valuable and unique asset.  The Executive shall exercise all due and diligent precautions to protect the integrity of the Company’s Confidential Information and to keep it confidential whether it is in written form, on electronic media, oral, or otherwise.  The Executive shall not copy any Confidential Information except to the extent necessary to his  employment nor remove any Confidential Information or copies thereof from the Company’s premises except to the extent necessary to his  employment and then only with the authorization of an officer of the Company (excluding the Executive).  All records, files, materials and other Confidential Information obtained by the Executive in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company, its Customers, or subjects, as the case may be.  The Executive shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity with which he may be associated or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior express written consent of an executive officer of the Company (excluding the Executive).


9.

Equitable Relief .


(a)

The Company and the Executive recognize that the services to be rendered under this Agreement by the Executive are special, unique and of extraordinary character, and that in the event of the breach by the Executive of the terms and conditions of this Agreement or if the Executive, without the prior express  consent of the board of directors of the Company, shall leave his  employment for any reason and take any action in violation of Section 7 and/or Section 8, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 9(b) below, to enjoin the Executive from breaching the provisions of Section 7 and/or Section 8.  In such action, the Company shall not be required to plead or prove irreparable harm or lack of an adequate remedy at law or post a bond or any security.  


(b)

Any action must be commenced in Palm Beach County, Florida.  The Executive and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts.  The Executive and the Company irrevocably waive any objection that they now have or hereafter irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Final judgment against the Executive or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Executive or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise.





8







10.

Conflicts of Interest .  While employed by the Company, the Executive shall not, unless approved by the Compensation Committee of the Board of Directors, directly or indirectly:


(a)

participate as an individual in any way in the benefits of transactions with any of the Company’s suppliers, vendors, Customers, or subjects, including, without limitation, having a financial interest in the Company’s suppliers, vendors, Customers, or subjects, or making loans to, or receiving loans, from, the Company’s suppliers, vendors, Customers, or subjects;


(b)

realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Executive’s employment with the Company for the Executive’s personal advantage or gain; or


(c)

accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a professional, medical, technical, or managerial capacity by, a person or entity which does business with the Company.


11.

Inventions, Ideas, Processes, and Designs .  All inventions, ideas, processes, programs, software, and designs (including all improvements) (i) conceived or made by the Executive during the course of his  employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination (whether by expiration of the Term or otherwise) of such employment with the Company and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company.  An invention, idea, process, program, software, or design including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company’s funds, personnel, equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Executive for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company.  The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company.  The decision to file for patent or copyright protection or to maintain such development as a trade secret, or otherwise, shall be in the sole discretion of the Company, and the Executive shall be bound by such decision.  The Executive shall provide as a schedule to this Employment Agreement,  a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or otherwise, or non-copyrighted, including a brief description, which he made or conceived prior to his  employment with the Company and which therefore are excluded from the scope of this Agreement.


12.

Indebtedness .  If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Company may, if it so elects, set off any sum due to the Company from the Executive and collect any remaining balance from the Executive unless the Executive has entered into a written agreement with the Company.


13.

Assignability .  The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company,




9







provided that such successor or assign shall acquire all or substantially all of the securities or assets and business of the Company.  The Executive’s obligations hereunder may not be assigned or alienated and any attempt to do so by the Executive will be void.


14.

Severability .  


(a)

The Executive expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof.  Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Executive and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Executive’s conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement.  If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement.


(b)

If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other.  The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provisions were not included.


15.

Notices and Addresses .  All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted delivery, or next business day delivery, or by facsimile delivery (in which event a copy shall immediately be sent by Federal Express or similar receipted delivery), as follows:


To the Company:

Gel Tech Solutions, Inc.

1201 Jupiter Park Drive

Jupiter, FL 33458

Facsimile:  (561) 747-7036


With a Copy to:

Harris Cramer LLP

1555 Palm Beach Lakes Blvd.

Suite 310

West Palm Beach, FL  33401

Facsimile (561) 659-0701

Attention:  Michael D. Harris, Esq.





10







To the Executive:

Joseph Ingarra

1201 Jupiter Park Drive

Jupiter, FL 33458

Facsimile:  (561) 747-7036


or to such other address or facsimile number, as either of them, by notice to the other may designate from time to time.  The transmission confirmation receipt from the sender’s facsimile machine shall be evidence of successful facsimile delivery.  


16.

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 instrument.  The execution of this Agreement may be by actual or facsimile signature.  


17.

Attorneys’ Fees .  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).


18.

Governing Law .  This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the state where the Company is incorporated as of the time without regard to choice of law considerations.  


19.

Entire Agreement .  This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.


20.

Additional Documents .  The parties hereto shall execute such additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder.


21.

Section and Paragraph Headings .  The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.


22.

Arbitration .  Except for a claim for equitable relief, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Palm Beach County, Florida (unless the parties agree in writing to a different location), before one arbitrator in accordance with the rules of the American Arbitration Association then in effect.  In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator.  The decision and award made by the arbitrator




11







shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.


23.

Investigations.  In the event the Executive or the Company is the subject of an investigation (whether criminal, civil, or administrative) involving possible violations of United States federal securities laws by the Executive, the Compensation Committee may, in its sole discretion, direct the Company to withhold any and all payments to the Executive (whether compensation or otherwise) which would have otherwise been made pursuant to this Agreement or otherwise would have been paid or payable by the Compensation Committee or the Company, which the Compensation Committee believes, in its sole discretion, may or could be considered at risk, or potentially subject to, the provisions of Section 1103 of the Sarbanes-Oxley Act of 2002 (including, but not limited to, any and all salary, bonuses, perquisites, stock option grants, awards of restricted stock or restricted stock units, or long-term incentive compensation) until such time as the investigation is concluded without charges having been brought or until the successful conclusion of any legal proceedings brought in connection with charges having been brought, with such amounts as directed by the Compensation Committee to be withheld with or without the accruing of interest (and if with interest the rate thereof). Except as otherwise provided by court or other administrative order, in the event of the final adjudication or the settlement of any charges involving the admittance of wrongdoing or guilt by the Executive, the Compensation Committee shall have sole discretion whether to release to the Executive such compensation or other payments, or the extent thereof, or whether to return the same to the Company’s general use.



IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date and year first above written.


Gel Tech Solutions, Inc.




_________________________

By: ___________________________

      Michael Cordani

      President

 



Executive:



_________________________

By: ___________________________

      Joseph Ingarra




12



EXHIBIT 10.4

Consulting Agreement


This Consulting Agreement (“Agreement”) is entered into this ____  day of October 2006, by and between  Michael D. Brown,  (“Consultant”) and Gel Tech Solutions, Inc., a Florida  corporation (the “Company”).


RECITALS


WHEREAS, the Company wishes to retain the consultant to assist it in marketing its products including its hurricane suppression gel to governments and corporations (the “Services”), and


WHEREAS, the Consultant has valuable skill and experience that may be of assistance to the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the sufficiency of which is hereby acknowledged by each of the parties, the Company  and Consultant hereby agree as follows:


1)

Appointment as Consultant; Scope of Services .  The Company  hereby engages Consultant as a consultant in connection with the Services.  Consultant hereby agrees to perform such consulting services upon the terms and conditions hereinafter set forth.


2)

Term.  This Agreement shall be for a period of 12  months commencing as of the date of this Agreement.  Sections 8, 9, 10, 11, 12,  and 13  hereof shall survive termination of this Agreement.


3)

Services of Consultant.

(a)

During the term of this Agreement, unless this Agreement is sooner terminated pursuant to its terms, Consultant shall perform Services as may be reasonably requested by the Company including attending meetings and conference calls related to the Services.  The parties agree that the work performed by Consultant will be governed by the general terms and conditions of this Agreement which will be controlling.

(b)

The Services performed by Consultant may be performed at days and times, and in the order or sequence as Consultant deems desirable as long as he makes a good faith effort to meet and speak with parties referred to by him by the Company.

(c)

Consultant shall maintain a permanent written record of all services, ideas, marketing strategy and other pertinent information in connection with this Agreement.  Such written record shall be maintained by Consultant in a permanently bound notebook, which shall be maintained separately from all other work of Consultant and shall be the sole property of the Company.


4)

Compensation and Entitlements.  The  Company shall provide for the benefit of the Consultant the following:

(a)

As compensation for Consultant’s services as a consultant pursuant hereto, the Company agrees to pay Consultant the total gross sum of $10,000 per month payable at the end of each month for which consulting services are provided.

(b)



1




 [Any sales commissions inserted here.]

(c)

If requested by the board of directors or the shareholders of the Company, the consultant agrees to serve as a director of the company and will receive the same compensation as all other non employee directors receive.


5)

Expenses.  Consultant shall be responsible for any and all of its expenses incurred in connection with the performance of the Services, other than travel and lodging expenses incurred on behalf of the Company, which shall be reimbursed by the Company upon receipt of billing by Consultant and receipt by Company of such supporting documentation and other substantiation of reimbursable expenses as will conform to Internal Revenue Service or other requirements.


6)

Relationship of the Parties.  Consultant, under the terms of this Agreement, is and shall act as an independent contractor, and not as an agent, servant, or employee of the Company.  Nothing in this Agreement shall be construed to imply that the Consultant or its agents or employees are officers or employees of the Company.  Consultant shall assume full responsibility to and for all of its agents and employees under any federal, state, or local laws or regulations regarding employees’ liability, worker’s compensation, unemployment insurance, income tax withholding, and authorization for employment, as well as any other acts, laws, or regulations of similar import.  Consultant hereby acknowledges and agrees that it shall have no authority to enter into any contract or agreement or to bind the Company except as specifically provided herein and that, in connection with the performance of the Services, it shall have no authority to make any representations of any kind with respect to or on behalf of the Company.  It is understood that independent contractor status is a condition of this agreement for Consultant to perform the Services specified to be performed by the Consultant under this Agreement.


7)

Personal Services.  Consultant shall be personally responsible for the performance of the Services described herein, and shall be responsible for any persons employed by Consultant to assist Consultant in the performance of such Services.  Consultant agrees to comply with all reasonable requests of the Company regarding coordination of Consultant's services with the services of government officials and other agents and representatives of the Company when requested.  Consultant agrees to provide access to all subject matter reasonably necessary to the performance of its duties.


8)

Non-Exclusive Services.  During the term of this Agreement, may perform and may permit its employees, principals, or affiliates to perform consulting services similar to the Services provided for herein, in the sole and absolute discretion of the Company.


9)

Non-Disclosure Covenant.

(a)

Consultant covenants and agrees that it will not, at any time during the term of this Agreement, or at any time thereafter, communicate or disclose to any person, directly or indirectly, or use for its own account or for the account of any other person, without the prior written consent of the Company, any Confidential Information concerning any patents, inventions, know-how, processes or equipment used in, or any trade secret or confidential information concerning the business and affairs of the Company or any of its affiliates acquired by Consultant during the term of this Agreement.  The same shall not be used by Consultant in any way other than in performance of its services under this Agreement and



2




shall be returned to the Company promptly at the termination of the Services performed pursuant to this Agreement by Consultant.  Consultant will not deliver, reproduce, or in any way allow such information or documents to be delivered by it or any person or entity outside the Company without duly authorized specific direction or consent of the Company.  Consultant further covenants and agrees that, during the term of this Agreement and thereafter it will retain all such confidential knowledge and information concerning the foregoing, in trust, for the sole benefit of the Company and its affiliates and their respective successors and assigns.  Consultant shall ensure the compliance of all of its employees and agents with the provisions of this covenant.  This Section shall survive the termination of this Agreement.

(b)

Consultant shall never, directly or indirectly, publicly disseminate or otherwise disclose any Confidential Information obtained during the term of this agreement and one year thereafter without the prior written consent of the Company, it being understood that the obligation created by this subparagraph shall survive the termination of this Agreement.

(c)

At all times, the Consultant shall exercise all due and diligent precautions to protect the integrity of any of the Company documents embodying Confidential Information and upon termination of this Agreement, Consultant shall return all such documents (and copies thereof) in its possession or control to the Company.

(d)

In recognition of the foregoing, the Consultant represents, warrants and covenants that the Consultant will not in the future use or disclose any of such Confidential Information for the benefit of any person or other entity or organization other than the Company under any circumstances at any time.

(e)

The words "Confidential Information" for the purposes as used herein above shall mean all worldwide intellectual property and other proprietary rights associated with the Company, including without limitation, any and all patents, patent applications, international patent rights and rights of priority, copyrights, copyrightable subject matter, trademarks, service marks, trade names, trade secrets, confidential information, know-how, ideas, mask works, inventions, improvements, information and disclosures, whether or not patentable, now in existence or hereinafter arising, whether developed by the Company or Consultant, independently or jointly (with each other or with any third party).


10)

Obligations of the Company.  the Company hereby agrees to facilitate the performance of the Services by the Consultant and to provide Consultant with access to all information and personnel reasonably requested by Consultant relating to the Services.


11)

Indemnification by Consultant

(a)

The acts, statements and representations made by the Consultant without the approval of the Company to third parties which are not made in reliance upon information and/or material furnished to the Consultant by the Company, whether written or oral, are the sole responsibility of the Consultant, and the Consultant agrees to indemnify the Company for any liability, claims, losses and expenses, including legal costs and expenses incurred by the Company that result from the Consultant's representations made without the approval of the Company.



3




(b)

Consultant agrees to indemnify and to save and hold harmless the Company, its agents and employees from and against any and all claims, losses, liabilities, damages, costs, and expenses, including without limitation attorneys fees, to which      the Company may be subject under any applicable act, rule, regulation, statute or at common law or otherwise, and will reimburse the Company and such other persons for any legal or other expenses reasonably incurred by them in connection with investigating or defending actions, whether or not resulting in any liability, insofar as such losses, claims damages, liabilities, or expenses arise out of or are based on any (i) breach or inaccuracy of any representation, warranty, or covenant of Consultant contained herein. (ii) misrepresentation or fraud made as a result of or in connection with Consultant’s performance of the Services hereunder; or (iii) any action by the Consultant in connection with the Consultants performance of the Services hereunder related to any violation of applicable law or regulation.

(c)

Promptly after receipt by Consultant of notice of the commencement of any action as contemplated under the subsections immediately above, Consultant shall notify the Company in writing of such notice of action.


12)

Indemnification by the Company.

(a)

The acts, statements and representations made by the Company to third parties are the sole responsibility of the Company, and the Company agrees to indemnify the Consultant and hold the Consultant harmless for any liabilities, claims, losses and expenses, including legal costs and expenses incurred by the Consultant, that result from acts, statements and representations made by the Company and its authorized representatives to third parties.  the Company represents that all materials provided to the Consultant in relation to the consulting services to be provided hereunder are truthful and accurate, and the Consultant may rely upon same without independent verification of the facts or other information contained therein.

(b)

the Company agrees to indemnify and to save and hold harmless Consultant, its agents and employees from and against any and all claims, losses, liabilities, damages, costs, and expenses, including without limitation attorneys fees, to which the Consultant may be subject under any applicable act, rule, regulation, statute or at common law or otherwise, and will reimburse the Consultant and such other persons for any legal or other expenses reasonably incurred by them in connection with investigating or defending actions, whether or not resulting in any liability, insofar as such losses, claims, damages, liabilities, or expenses arise out of or are based on any (i) breach or inaccuracy of any representation, warranty, or covenant of the Company contained herein; or (ii) any misrepresentations or any untrue statements of a material fact contained in any offering materials or the omission therefrom of a material fact required to be stated therein or necessary to make the statement therein not misleading.

(c)

Promptly after receipt by the Companyof notice of the commencement of any action as contemplated under the subsections immediately above, the Company shall notify Consultant in writing of such notice of action.




4




13)

Intellectual Property.  Consultant acknowledges that the Company’s patents, trademarks, trade names and emblems are the property of the Company and that it is expressly understood that no licensed use of intellectual property is granted herein to Consultant.  It is further understood that any use by Consultant of any such intellectual property shall be only in the name of the Company.  Upon termination of this agreement, Consultant shall immediately and permanently discontinue and cease and desist from engaging in any activity that would tend to indicate that Consultant is affiliated with anyone who is authorized to utilize the intellectual property.


14)

Representations, Warranties and Covenants of Consultant.  Consultant hereby represents and Warrants as of the date hereof each of the following:

(a)

Consultant has the requisite power and authority to enter into this agreement and to carry out its obligations hereunder.  The execution and delivery of this agreement by Consultant and the consummation by Consultant of the transactions contemplated hereby have been duly authorized by Consultant, and no other action on the part of Consultant is necessary to authorize this agreement in such transactions.  This agreement has been duly executed and delivered by Consultant and constitutes a valid and binding obligation of Consultant, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or other similar laws relating to the enforcement of creditors’ rights generally by general principles of equity.

(b)

Consultant agrees that, in connection with providing the Services hereunder, Consultant shall not make any misstatement of a material fact or omit to state any material fact necessary to make any statement made by Consultant, in connection with providing the Services, not misleading.

(c)

Consultant has not entered into any contract or other arrangement, or made any commitment that will or may impair Consultant's ability to perform its Services hereunder, and agrees that it will not enter into any such contract or arrangement.

(d)

Consultant agrees, to the best of its knowledge, not to use or disclose to the Company, or induce the Company to use, any confidential or proprietary information, material or rights of any third party.  Consultant hereby indemnifies, defends and holds the Company harmless from or against any claim, judgment or expense arising in any way out of any claim of third parties regarding a breach by Consultant of any of the representations and warranties set forth in this Section.


15)

Representations and Warranties of the Company.  Tthe Company hereby represents and warrants as of the date hereof each of the following:

(a)

the Company is a corporation duly organized and validly existing, under the laws of the State of the Company and in good standing under the laws of the State of the Company, with all requisite corporate power and authority to carry on its business now conducted and to own and operate the assets and properties now owned and operated by it.

(b)

the Company has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder.  The execution and delivery of this agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Company, and no other corporate proceedings on the



5




part of the Company are necessary to authorize this agreement in such transactions.  This agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms.


16)

Notices.  Any notice, request, demand or other communication required or permitted hereunder shall be deemed to be properly given when personally served in writing or when deposited in the United States mail or such other parcel delivery service as provides receipt for delivery, postage prepaid, addressed to the other party at the address provided by each party on page one of this Agreement.  Either party may change its address by written notice made in accordance with this section.


17)

Termination.   The Company may immediately terminate this Agreement upon the breach by Consultant of any term or provision of this Agreement, or for any reason upon ninety (90) days written notice to Consultant, provided, however, nothing herein shall be construed to release or relieve Consultant from a continuing obligation to the Company under this Agreement or of any obligation matured prior to the effective date of such termination.  Upon such termination, Consultant will be entitled to those sales commissions, as described above, earned by him before the date of any termination.


18)

Severability.  In the event that any provision in this Agreement is held to be invalid, void or illegal by any court of competent jurisdiction, then the court making such determination may reduce the obligations so as to be enforceable according to applicable law and enforce such obligations as reduced.  The remaining provisions of this agreement shall be enforced according to their terms.


19)

Modifications and Amendments.  This Agreement shall not be altered or amended, except by writing, signed by all the parties hereto, or such parties authorized agents.


20)

Entire Agreement.  This agreement constitutes and embodies the full and complete understanding and agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior understandings or agreements whether oral or in writing.


21)

Governing Law.  This Agreement shall be construed in accordance with the laws of the State of Delaware , without and application of the principles of conflicts of laws.  If it becomes necessary for any party to institute legal action to enforce the terms and conditions of this Agreement, and such legal action results in a final judgment in favor of such party ("Prevailing Party"), then the party or parties against whom said final judgment is obtained shall reimburse the Prevailing Party for all direct, indirect or incidental expenses incurred including, but not limited to, all attorney fees, court costs and other expenses incurred throughout all negotiations, trials or appeals undertaken in order to enforce the Prevailing Party's rights hereunder.  Any suit, action or proceeding with respect to this Agreement shall be brought in the state or federal courts located in the State of Florida.  The parties hereto hereby accept the exclusive jurisdiction and venue of those courts for the purpose of any such suit, action or proceeding.  The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection that any of them may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any judgment entered by any court in respect thereof brought in Florida, and hereby further irrevocably waive any claim that any suit, action or proceeding brought in Florida, has been brought in an inconvenient forum.




6




22)

Headings.  The paragraph headings used herein are for convenience and reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement.


23)

No Waiver By Failure To Act.  Neither any failure nor any delay on the part of either party hereto in exercising any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further any exercise thereof or the exercise of any other right.


24)

Assignment.  This Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the parties hereto; provided however, that because the obligations of the Consultant are for personal services, the Consultant shall not assign any right herein or delegate any duties without the prior written consent of the Company.


25)

No Partnership; Third Person.  It is not intended by this Agreement to, and nothing contained in this Agreement shall, create any partnership, joint venture or other arrangement between Consultant and the Company. No term or provision of this Agreement is intended to, or shall, be for the benefit of any person, firm, corporation or other entity not a party hereto and no such party shall have any right or cause of action hereunder.


26)

Taxes .  All taxes, duties and other governmental fees or charges arising from the Consultant's receipt of compensation hereunder shall be borne by the Consultant.


27)

Execution in Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.


IN WITNESS WHEREOF, this   Consulting Agreement has been executed as of the day and year first written above.


The Company



By: ___________________________________

Michael Cordani, President


Consultant


By: __________________________________

Michael D. Brown




7



EXHIBIT 10.5

LOAN AGREEMENT


THIS LOAN AGREEMENT (“ Agreement”) dated as of the 21 st day of November 2006, by and between DYN-O-MAT, INC., a Florida corporation (“Dyn-O-Mat”), and PETER CORDANI (“Cordani”), (together the "Borrower"), and PHIL D. O’CONNELL, JR., AS TRUSTEE OF THE PHIL D. O’CONNELL, JR., REVOCABLE TRUST DATED SEPTEMBER 4, 1991, P. O. Box 3917, West Palm Beach, FL 33402-3917, (the "Lender"), provides:


BACKGROUND


1.

Dyn-O-Mat, Inc. has previously borrowed $338,220.25 from Lender to date as evidenced by promissory notes totaling $338,220.25 of various dates (“Dyn-O-Mat Notes”); and

2.

The Dyn-O-Mat Notes are secured by collateral assignments of the Black Mat Patent (U.S. Patent No. 5,834,104 entitled “Fluid Absorbent Mat Patent”) and the Weather Patent (U.S. Patent No. 6,325,213 entitled “Method of Modifying Weather”) owned by Dyn-O-Mat, Inc.; and

3.

Lender exercised his right to convert $238,220.25 of the principal of the Dyn-O-Mat Notes into 88,220 shares of common stock of Dyn-O-Mat and 150,000 shares of common stock of Gel Tech Solutions, Inc. at the rate of $1.00 per share; and

4.

Lender has agreed to renew the balance of $100,000.00 in Dyn-O-Mat Notes (“Renewal Note”) and extend the maturity date thereof to the earlier of December 31 2007 or the date Dyn-O-Mat, Inc. shall sell, assign, exchange or otherwise convey any part or all of its interest in the Black Mat Patent to any person or entity; and

5.

The Renewal Note shall continue to be secured by the collateral assignment of the Black Mat Patent; and

6.

The transfer of 50% or more of the outstanding capital stock of Dyn-O-Mat, Inc. or the merger or other consolidation of Dyn-O-Mat, Inc. with another entity shall be considered an assignment of the Black Mat Patent and shall cause the Renewal Note to mature.

THEREFORE, the Parties agree:

          

1.

Recitals .  The recitals (the "Recitals') are true and correct and the Recitals are by this reference incorporated and made a part of this Agreement.



1




2.

Renewal Dyn-O-Mat Note .  Lender agrees to renew and extend the balance of matured Dyn-O-Mat Notes totaling $100,000.00 for a term maturing on the earlier of December 31 2007 or the date that Dyn-O-Mat, Inc. shall sell, assign, exchange or otherwise convey any part or all of its interest in the Black Mat Patent to any person or entity to be evidenced by a note (“Renewal Note”) in the amount of $100,000.00 on the terms and in the form attached as Exhibit “A”.  The Renewal Note shall be secured by a collateral assignment of the Black Mat Patent (“Collateral Assignment”) on the terms and in the form attached as Exhibit “B”.  The transfer of 50% or more of the outstanding capital stock of Dyn-O-Mat, Inc. or the merger or other consolidation of Dyn-O-Mat, Inc. with another entity shall be considered an assignment of the Black Mat Patent and shall cause the Renewal Note to mature.

3.

Governance .  This Agreement shall be construed and governed by the Laws of the Florida.  Each term and provision of this Agreement shall be enforced to the fullest extent permitted by law.  Should any provisions of this Agreement be held to be wholly invalid, illegal or not enforceable under such state laws or any Federal laws, it or they shall be considered severable and the Agreement, its remaining terms and conditions, shall remain in full force and be binding upon Landlord and Tenant as though such severed provisions had never been included.

4.

Interpetation .  The captions are inserted only as a matter of convenience and reference and in no way define, limit or describe the scope of this Agreement, or the intent of any provision hereof.  The neuter singular pronoun shall be deemed to include the masculine, the feminine, and the plural.  The term “include” and “including” shall mean without limitation by way of enumeration.  Unless otherwise expressly provided herein, the words “herein”, “hereof”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.

5.

Successors and Assigns .  All of the covenants, agreements, terms, conditions and undertakings in this Agreement shall extend and inure to and be binding upon successors in interest, transferees, heirs, legal representatives, successors and assigns of Lender and Borrower.  

6.

Entire Agreement .  This Agreement constitutes the sole and entire agreement of Landlord and Tenant and supersedes any prior understandings or written or oral agreement between the parties respecting the within subject matter.  No amendment, modification, or alteration of the covenants and terms of this Agreement shall be binding unless the same are in



2




writing, dated subsequent to the date hereof and duly executed by Landlord and Tenant.  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 same Agreement.


IN WITNESS WHEREOF , Lender and Borrower have hereunto subscribed their names on the day and year first above written.


WITNESS

BORROWER :


DYN-O-MAT, INC.


___________________________

By:_______________________

Name: Michael Cordani

 

Title: President

___________________________



___________________________

_______________________

Peter Cordani, Individually


___________________________


 

WITNESS

LENDER :


PHIL D. O’CONNELL, JR., REVOCABLE TRUST DATED September 4, 2001



___________________________

By:__________________________

Phil D. O’Connell, Jr., Trustee


___________________________




3





EXHIBIT 10.6

GELTECH SOLUTIONS, INC.

2007 EQUITY INCENTIVE PLAN



1.

Scope of Plan; Definitions .


(a)

This 2007 Equity Incentive Plan (the “Plan”) is intended to advance the interests of GelTech Solutions, Inc. (the “Company”) and its Related Corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, Officers, directors and Director Advisors, by creating incentives and rewards for their contributions to the success of the Company and its Related Corporations. This Plan will provide to (a) Officers and other employees of the Company and its Related Corporations opportunities to purchase common stock (“Common Stock”) of the Company pursuant to Options granted hereunder which qualify as incentive stock options (“ISOs”) under Section 422(b) of the Internal Revenue Code of 1986 (the “Code”), (b) directors, Director Advisors, Officers, employees and consultants of the Company and Related Corporations opportunities to purchase Common Stock in the Company pursuant to options granted hereunder which do not qualify as ISOs (“Non-Qualified Options”); (c) directors, Director Advisors, Officers, employees and consultants of the Company and Related Corporations opportunities to receive shares of Common Stock of the Company which normally are subject to restrictions on sale (“Restricted Stock”); (d) directors, Director Advisors, Officers, employees and consultants of the Company and Related Corporations opportunities to receive grants of stock appreciation rights (“SARs”); and (e) directors, Director Advisors, Officers, employees and consultants of the Company and Related Corporations opportunities to receive grants of restricted stock units (“RSUs”). ISOs, Non-Discretionary Options and Non-Qualified Options are referred to hereafter as “Options.” Options, Restricted Stock, RSUs and SARs are sometimes referred to hereafter collectively as “Stock Rights.” Any of the Options and/or Stock Rights may in the Compensation Committee’s discretion be issued in tandem to one or more other Options and/or Stock Rights to the extent permitted by law.


This Plan is intended to comply in all respects with Rule 16b-3 (“Rule 16b-3”) and its successor rules as promulgated under Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) for participants who are subject to Section 16 of the Exchange Act. To the extent any provision of the Plan or action by the Plan administrators fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Plan administrators. Provided , however , such exercise of discretion by the Plan administrators shall not interfere with the contract rights of any grantee. In the event that any interpretation or construction of the Plan is required, it shall be interpreted and construed in order to ensure, to the maximum extent permissible by law, that such grantee does not violate the short-swing profit provisions of Section 16(b) of the Exchange Act and that any exemption available under Rule 16b-3 or other rule is available.


(b)

For purposes of the Plan, capitalized words and terms shall have the following meaning:





“Advisory Board” means a board composed of individuals, appointed by the Board, who serve the Company’s Board in an advisory capacity but are not directors, Officers or employees of the Company.


“Board” means the board of directors of the Company.


“Bulletin Board” shall mean the Over-the-Counter Bulletin Board.


“Chairman” means the chairman of the Board.


“Change of Control” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities; (ii)  the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction which requires shareholder approval under applicable state law; or (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.


“Code” shall have the meaning given to it in Section 1(a).


“Common Stock” shall have the meaning given to it in Section 1(a).


“Company” shall have the meaning given to it in Section 1(a).


“Compensation Committee” means the compensation committee of the Board, if any, which shall consist of two or more members of the Board, each of whom shall be both an “outside director” within the meaning of Section 162(m) of the Code and a “non-employee director” within the meaning of Rule 16b-3.  All references in this Plan to the Compensation Committee shall mean the Board when (i) there is no Compensation Committee or (ii) the Board has retained the power to administer this Plan.


“Director Advisor” means a member of the Advisory Board.


“Disability” means “permanent and total disability” as defined in Section 22(e)(3) of the Code or successor statute.


“Disqualifying Disposition” means any disposition (including any sale) of Common Stock underlying an ISO before the later of (i) two years after the date of employee was granted the ISO or (ii) one year after the date the employee acquired Common Stock by exercising the ISO.



2





“Exchange Act” shall have the meaning given to it in Section 1(a).


“Fair Market Value” shall be determined as of  the Trading Day on or the last Trading Day before  the date a Stock Right is granted and shall mean:


(1)

the closing price on the principal market if the Common Stock is listed on a national securities exchange or the Bulletin Board.


(2)

if the Company’s shares are not listed on a national securities exchange or the Bulletin Board, then the closing price if reported or the average bid and asked price for the Company’s shares as published by Pink Sheets LLC;


(3)

if there are no prices available under clauses (1) or (2), then Fair Market Value shall be based upon the average closing bid and asked price as determined following a polling of all dealers making a market in the Company’s Common Stock; or


(4)

if there is no regularly established trading market for the Company’s Common Stock, the Fair Market Value shall be established by the Board or the Compensation Committee taking into consideration all relevant factors including the most recent price at which the Company’s Common Stock was sold.


“ISO” shall have the meaning given to it in Section 1(a).



“Non-Discretionary Options” shall have the meaning given to it in Section 1(a).


“Non-Qualified Options” shall have the meaning given to it in Section 1(a).


“Officers” means a person who is an executive officer of the Company and is required to file ownership reports under Section 16(a) of the Exchange Act.


“Options” shall have the meaning given to it in Section 1(a).


“Plan” shall have the meaning given to it in Section 1(a).


“Qualifying Committee” means the Company’s audit committee, Compensation Committee, finance committee or any other committee of the Board that the compensation committee shall determine entitles its members to a grant of Stock Rights, as defined, under Section 3(b)(ii) (each such Committee, a “Qualifying Committee”).


“Related Corporations” shall mean a corporation which is a subsidiary corporation with respect to the Company within the meaning of Section 425(f) of the Code.


“Restricted Stock” shall have the meaning contained in Section 1(a).




3




“RSU” shall have the meaning given to it in Section 1(a).


“Rule 16b-3” shall have the meaning given to it in Section 1(a).


“SAR” shall have the meaning given to it in Section 1(a).


“Securities Act” means the Securities Act of 1933.


“Stock Rights” shall have the meaning given to it in Section 1(a).


“Trading Day” shall mean a day on which the New York Stock Exchange is open for business


2.

Administration of the Plan .


(a)

The Plan may be administered by the entire Board or by the Compensation Committee. Once appointed, the Compensation Committee shall continue to serve until otherwise directed by the Board. A majority of the members of the Compensation Committee shall constitute a quorum, and all determinations of the Compensation Committee shall be made by the majority of its members present at a meeting. Any determination of the Compensation Committee under the Plan may be made without notice or meeting of the Compensation Committee by a writing signed by all of the Compensation Committee members. Subject to ratification of the grant of each Stock Right by the Board (but only if so required by applicable state law), and subject to the terms of the Plan, the Compensation Committee shall have the authority to (i) determine the employees of the Company and Related Corporations (from among the class of employees eligible under Section 3 to receive ISOs) to whom ISOs may be granted, and to determine (from among the class of individuals and entities eligible under Section 3 to receive Non-Qualified Options, Restricted Stock, RSUs and SARs) to whom Non-Qualified Options, Restricted Stock, RSUs and SARs may be granted; (ii) determine when Stock Rights may be granted; (iii) determine the exercise prices of Stock Rights other than Restricted Stock and RSUs, which shall not be less than the Fair Market Value; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine when Stock Rights shall become exercisable, the duration of the exercise period and when each Stock Right shall vest; (vi) determine whether restrictions such as repurchase options are to be imposed on shares subject to or issued in connection with Stock Rights, and the nature of such restrictions, if any, and (vii) interpret the Plan and promulgate and rescind rules and regulations relating to it. The interpretation and construction by the Compensation Committee of any provisions of the Plan or of any Stock Right granted under it shall be final, binding and conclusive unless otherwise determined by the Board. The Compensation Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best.


No members of the Compensation Committee or the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Stock Right granted under it. No member of the Compensation Committee or the Board shall be liable for any act or omission of any other member of the Compensation Committee or the Board or for any act or omission on his own part, including but not limited to the exercise of any power and discretion



4




given to him under the Plan, except those resulting from his own gross negligence or willful misconduct.


(b)

The Compensation Committee may select one of its members as its chairman and shall hold meetings at such time and places as it may determine. All references in this Plan to the Compensation Committee shall mean the Board if no Compensation Committee has been appointed. From time to time the Board may increase the size of the Compensation Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused or remove all members of the Compensation Committee and thereafter directly administer the Plan.


(c)

Stock Rights may be granted to members of the Board, whether such grants are in their capacity as directors, Officers or consultants. All grants of Stock Rights to members of the Board shall in all other respects be made in accordance with the provisions of this Plan applicable to other eligible persons. Members of the Board who are either (i) eligible for Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights may vote on any matters affecting the administration of the Plan or the grant of any Stock Rights pursuant to the Plan.


(d)

In addition to such other rights of indemnification as he may have as a member of the Board, and with respect to administration of the Plan and the granting of Stock Rights under it, each member of the Board and of the Compensation Committee shall be entitled without further act on his part to indemnification from the Company for all expenses (including advances of litigation expenses, the amount of judgment and the amount of approved settlements made with a view to the curtailment of costs of litigation) reasonably incurred by him in connection with or arising out of any action, suit or proceeding, including any appeal thereof, with respect to the administration of the Plan or the granting of Stock Rights under it in which he may be involved by reason of his being or having been a member of the Board or the Compensation Committee, whether or not he continues to be such member of the Board or the Compensation Committee at the time of the incurring of such expenses; provided , however , that such indemnity shall be subject to the limitations contained in any Indemnification Agreement between the Company and the Board member or Officer. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Board or the Compensation Committee and shall be in addition to all other rights to which such member of the Board or the Compensation Committee would be entitled to as a matter of law, contract or otherwise.


(e)

The Board may delegate the powers to grant Stock Rights to Officers to the extent permitted by the laws of the Company’s state of incorporation.


3.

Eligible Employees and Others .


(a)

ISOs may be granted to any employee of the Company or any Related Corporation. Those Officers and directors of the Company who are not employees may not be granted ISOs under the Plan. Subject to compliance with Rule 16b-3 and other applicable securities laws, Non-Qualified Options, Restricted Stock, RSUs and SARs may be granted to any



5




director (whether or not an employee), Director Advisors, Officers, employees or consultants of the Company or any Related Corporation. The Compensation Committee may take into consideration a recipient’s individual circumstances in determining whether to grant an ISO, a Non-Qualified Option, Restricted Stock, RSUs or a SAR. Granting of any Stock Right to any individual or entity shall neither entitle that individual or entity to, nor disqualify him from participation in, any other grant of Stock Rights.


(b)

All directors of the Company who are not employees or 10% shareholders of the Company or Related Corporations and all Director Advisors shall automatically receive the following as appropriate:


(i)

Initial Grants. On the date on which a person is first elected or appointed, whether elected by the shareholders of the Company or appointed by the Board to fill a Board vacancy, he or she shall receive an automatic grant of non qualified options as follows:


(A) Chairman of the Board -

50,000 options;

 

(B) Director -

30,000 options;

 

(C) Chairman of a committee -

10,000 options; and

   

(D) Member of a committee -

  5,000 options.

 



(ii)

Annual Grants. On the next business day following the date on which a person is re—elected or re—appointed as long as the person has served in the same capacity for at least 12 months, he or she shall receive an automatic grant of non qualified options as follows:


(A) Chairman of the Board -

35,000 options;

(B) Director -

20,000 options;

(C) Chairman of a committee -

10,000 options; and

(D) Member of a committee -

  5,000 options.



                        

(iii)    Vesting. All grants under this Section 3(b) shall vest over a three-year period each 12 months following the date of the automatic grant each June 30 th and December 31 st , subject to service with the Company in the capacity in which the grant is received on the applicable vesting dates.

     

       

(iv)    All grants of non qualified options  under this Section 3(b) are subject to adjustment under Section 14.


(c)

The exercise price of the Options or SARs under Section 3 shall be Fair Market Value or such higher price as may be established by the Compensation Committee, the Board or by the Code.


4.

Common Stock . The Common Stock subject to Stock Rights shall be authorized but unissued shares of Common Stock, par value $0.001, or shares of Common Stock reacquired



6




by the Company in any manner, including purchase, forfeiture or otherwise. The aggregate number of shares of Common Stock which may be issued pursuant to the Plan is 1,500,000  subject to adjustment as provided in Section 14. Any such shares may be issued under ISOs, Non-Qualified Options, Restricted Stock, RSUs or SARs, so long as the number of shares so issued does not exceed the limitations in this Section. If any Stock Rights granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, or if the Company shall reacquire any unvested shares, the unpurchased shares subject to such Stock Rights and any unvested shares so reacquired by the Company shall again be available for grants under the Plan.


5.

Granting of Stock Rights .


(a)

The date of grant of a Stock Right under the Plan will be the date specified by the Board or Compensation Committee at the time it grants the Stock Right; provided , however , that such date shall not be prior to the date on which the Board or Compensation Committee acts to approve the grant. The Board or Compensation Committee shall have the right, with the consent of the optionee, to convert an ISO granted under the Plan to a Non-Qualified Option pursuant to Section 17.


(b)

Except for automatic grants under Section 3(b), the Board or Compensation Committee shall grant Stock Rights to participants that it, in its sole discretion, selects. Stock Rights shall be granted on such terms as the Board or Compensation Committee shall determine except that ISOs shall be granted on terms that comply with the Code and regulations thereunder.


(c)

A SAR entitles the holder to receive, as designated by the Board or Compensation Committee, cash or shares of Common Stock, value equal to (or otherwise based on) the excess of: (a) the Fair Market Value of a specified number of shares of Common Stock at the time of exercise over (b) an exercise price established by the Board or Compensation Committee. The exercise price of each SAR granted under this Plan shall be established by the Compensation Committee or shall be determined by a method established by the Board or Compensation Committee at the time the SAR is granted, provided the exercise price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of the grant of the SAR, or such higher price as is established by the Board or Compensation Committee. A SAR shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Board or Compensation Committee. Shares of Common Stock delivered pursuant to the exercise of a SAR shall be subject to such conditions, restrictions and contingencies as the Board or Compensation Committee may establish in the applicable SAR agreement or document, if any. The Board or  Compensation Committee, in its discretion, may impose such conditions, restrictions and contingencies with respect to shares of Common Stock acquired pursuant to the exercise of each SAR as the Board or Compensation Committee determines to be desirable. A SAR under the Plan shall be subject to such terms and conditions, not inconsistent with the Plan, as the Board or Compensation Committee shall, in its discretion, prescribe. The terms and conditions of any SAR to any grantee shall be reflected in such form of agreement as is determined by the Board or Compensation Committee. A copy of such



7




document, if any, shall be provided to the grantee, and the Board or Compensation Committee may condition the granting of the SAR on the grantee executing such agreement.


(d)

An RSU gives the grantee the right to receive a number of shares of the Company’s Common Stock on applicable vesting or other dates. Delivery of the RSUs may be deferred beyond vesting as determined by the Board or Compensation Committee. RSUs shall be evidenced by an RSU agreement in the form determined by the Board or Compensation Committee. With respect to an RSU, which becomes non-forfeitable due to the lapse of time, the Compensation Committee shall prescribe in the RSU agreement the vesting period. With respect to the granting of the RSU, which becomes non-forfeitable due to the satisfaction of certain pre-established performance-based objectives imposed by the Board or Compensation Committee, the measurement date of whether such performance-based objectives have been satisfied shall be a date no earlier than the first anniversary of the date of the RSU. A recipient who is granted an RSU shall possess no incidents of ownership with respect to such underlying Common Stock, although the RSU agreement may provide for payments in lieu of dividends to such grantee.


(e)

Notwithstanding any provision of this Plan, the Board or Compensation Committee may impose conditions and restrictions on any grant of Stock Rights including forfeiture of vested Options, cancellation of Common Stock acquired in connection with any Stock Right and forfeiture of profits.


(f)

The Options and SARs shall not be exercisable for a period of more than five years from the date of grant.


6.

Sale of Shares . The shares underlying Stock Rights granted to any Officers, director or a beneficial owner of 10% or more of the Company’s securities registered under Section 12 of the Exchange Act shall not be sold, assigned or transferred by the grantee until at least six months elapse from the date of the grant thereof.


7.

ISO Minimum Option Price and Other Limitations .


(a)

The exercise price per share relating to all Options granted under the Plan shall not be less than the Fair Market Value per share of Common Stock on the last trading day prior to the date of such grant. For purposes of determining the exercise price, the date of the grant shall be the later of (i) the date of approval by the Board or Compensation Committee or the Board, or (ii) for ISOs, the date the recipient becomes an employee of the Company. In the case of an ISO to be granted to an employee owning Common Stock which represents more than 10 percent of the total combined voting power of all classes of stock of the Company or any Related Corporation, the price per share shall not be less than 110% of the Fair Market Value per share of Common Stock on the date of grant and such ISO shall not be exercisable after the expiration of five years from the date of grant.


(b)

In no event shall the aggregate Fair Market Value (determined at the time an ISO is granted) of Common Stock for which ISOs granted to any employee are exercisable for the first time by such employee during any calendar year (under all stock option plans of the Company and any Related Corporation) exceed $100,000.  



8





8.

Duration of Stock Rights . Subject to earlier termination as provided in Sections 3, 5, 9, 10 and 11, each Option and SAR shall expire on the date specified in the original instrument granting such Stock Right (except with respect to any part of an ISO that is converted into a Non-Qualified Option pursuant to Section 17), provided , however , that such instrument must comply with Section 422 of the Code with regard to ISOs and Rule 16b-3 with regard to all Stock Rights granted pursuant to the Plan to Officers, directors and 10% shareholders of the Company.


9.

Exercise of Options and SARs; Vesting of Stock Rights . Subject to the provisions of Sections 3 and 9 through 13, each Option and SAR granted under the Plan shall be exercisable as follows:


(a)

The Options and SARs shall either be fully vested and exercisable from the date of grant or shall vest and become exercisable in such installments as the Board or Compensation Committee may specify.


(b)

Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option and SAR, unless otherwise specified by the Board or Compensation Committee.


(c)

Each Option and SAR or installment, once it becomes exercisable, may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable.


(d)

The Board or Compensation Committee shall have the right to accelerate the vesting date of any installment of any Stock Right; provided that the Board or Compensation Committee shall not accelerate the exercise date of any installment of any Option granted to any employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Section 17) if such acceleration would violate the annual exercisability limitation contained in Section 422(d) of the Code as described in Section 7(b).


10.

Termination of Employment . Subject to any greater restrictions or limitations as may be imposed by the Board or Compensation Committee upon the granting of any Option, if an ISO optionee ceases to be employed by the Company and all Related Corporations other than by reason of death or Disability, no further installments of his ISOs shall become exercisable, and his ISOs shall terminate as provided for in the grant or on the day three months after the day of the termination of his employment, whichever is earlier, but in no event later than on their specified expiration dates. Employment shall be considered as continuing uninterrupted during any bona fide leave of absence (such as those attributable to illness, military obligations or governmental service) provided that the period of such leave does not exceed 90 days or, if longer, any period during which such optionee’s right to re-employment is guaranteed by statute. A leave of absence with the written approval of the Board shall not be considered an interruption of employment under the Plan, provided that such written approval contractually obligates the Company or any Related Corporation to continue the employment of the optionee after the approved period of absence. ISOs granted under the Plan shall not be affected by any change of



9




employment within or among the Company and Related Corporations so long as the optionee continues to be an employee of the Company or any Related Corporation.


11.

Death; Disability . Subject to any greater restrictions or limitations as may be imposed by the Board or Compensation Committee upon the granting of any Option or SAR:


(a)

If the holder of an Option or SAR ceases to be employed by the Company and all Related Corporations by reason of his death, any Options or SARs of such employee may be exercised to the extent of the number of shares with respect to which he could have exercised it on the date of his death, by his estate, personal representative or beneficiary who has acquired the Options or SARs by will or by the laws of descent and distribution, at any time prior to the earlier of the Options’ or SARs’ specified expiration date or three months from the date of the grantee’s death.


(b)

If the holder of an Option or SAR ceases to be employed by the Company and all Related Corporations, or a director or Director Advisor can no longer perform his duties, by reason of his Disability, he shall have the right to exercise any Option or SARs held by him on the date of termination of employment or ceasing to act as a director or Director Advisor until the earlier of (i) the Options’ or SARs’ specified expiration date or (ii) one year from the date of the termination of the person’s employment.


12.

Assignment, Transfer or Sale .


(a)

No ISO granted under this Plan shall be assignable or transferable by the grantee except by will or by the laws of descent and distribution, and during the lifetime of the grantee, each ISO shall be exercisable only by him, his guardian or legal representative.      


(b)

Except for ISOs, all Stock Rights are transferable subject to compliance with applicable securities laws and Section 6 of this Plan.


13.

Terms and Conditions of Stock Rights . Stock Rights shall be evidenced by instruments (which need not be identical) in such forms as the Board or Compensation Committee may from time to time approve. Such instruments shall conform to the terms and conditions set forth in Sections 5 through 12 hereof and may contain such other provisions as the Board or Compensation Committee deems advisable which are not inconsistent with the Plan. In granting any Stock Rights, the Board or Compensation Committee may specify that Stock Rights shall be subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation provisions as the Board or Compensation Committee may determine. The Board or Compensation Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more Officers of the Company to execute and deliver such instruments. The proper Officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of such instruments.


14.

Adjustments Upon Certain Events .




10




(a)

Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Stock Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Stock Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of a Stock Right, as well as the price per share of Common Stock (or cash, as applicable) covered by each such outstanding Option or SAR, shall be proportionately adjusted for any increases or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided , however , that conversion of any convertible securities of the Company or the voluntary cancellation whether by virtue of a cashless exercise of a derivative security of the Company or otherwise shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board or Compensation Committee, whose determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to a Stock Right. No adjustments shall be made for dividends or other distributions paid in cash or in property other than securities of the Company.


(b)

In the event of the proposed dissolution or liquidation of the Company, the Board or Compensation Committee shall notify each participant as soon as practicable prior to the effective date of such proposed transaction.  To the extent it has not been previously exercised, a Stock Right will terminate immediately prior to the consummation of such proposed action.


(c)

In the event of a merger of the Company with or into another corporation , or a Change of Control, each outstanding Stock Right shall be assumed (as defined below) or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation.  In the event that the successor corporation refuses to assume or substitute for the Stock Rights, the participants shall fully vest in and have the right to exercise their Stock Rights as to which it would not otherwise be vested or exercisable.  If a Stock Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board or Compensation Committee shall notify the participant in writing or electronically that the Stock Right shall be fully vested and exercisable for a period of at least 15 days from the date of such notice, and any Options or SARs shall terminate one minute prior to the closing of the merger or sale of assets.   


For the purposes of this Section 14(c), the Stock Right shall be considered “assumed” if, following the merger or Change of Control, the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Stock Right immediately prior to the merger or Change of Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change of Control by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided , however , that if such consideration received in the merger or Change of



11




Control is not solely common stock of the successor corporation or its parent, the Board or Compensation Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Stock Right, for each share of Common Stock subject to the Stock Right, to be solely common stock of the successor corporation or its parent equal in Fair Market Value to the per share consideration received by holders of Common Stock in the merger or Change of Control.


(d)

Notwithstanding the foregoing, any adjustments made pursuant to Section 14(a), (b) or (c) with respect to ISOs shall be made only after the Board or Compensation Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a “modification” of such ISOs (as that term is defined in Section 425(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs.  If the Board or Compensation Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs it may refrain from making such adjustments.


(e)

No fractional shares shall be issued under the Plan and the optionee shall receive from the Company cash in lieu of such fractional shares.


15.

Means of Exercising Stock Rights .


(a)

An Option or SAR (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address. Such notice shall identify the Stock Right being exercised and specify the number of shares as to which such Stock Right is being exercised, accompanied by full payment of the exercise price therefor (to the extent it is exercisable in cash) either (i) in United States dollars by check or wire transfer; or (ii) at the discretion of the Board or Compensation Committee, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Stock Right; or (iii) at the discretion of the Board or Compensation Committee, by any combination of (i) and (ii)  above. If the Board or Compensation Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (ii) or  (iii)  of the preceding sentence, such discretion need not  be exercised in writing at the time of the grant of the Stock Right in question. The holder of a Stock Right shall not have the rights of a shareholder with respect to the shares covered by his Stock Right until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in Section 14 with respect to changes in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificate is issued.


(b)

Each notice of exercise shall, unless the shares of Common Stock are covered by a then current registration statement under the Securities Act, contain the holder’s acknowledgment in form and substance satisfactory to the Company that (i) such shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Securities Act), (ii) the holder has been advised and understands that (1) the shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act and are subject to



12




restrictions on transfer and (2) the Company is under no obligation to register the shares under the Securities Act or to take any action which would make available to the holder any exemption from such registration, and (iii) such shares may not be transferred without compliance with all applicable federal and state securities laws. Notwithstanding the above, should the Company be advised by counsel that issuance of shares should be delayed pending registration under federal or state securities laws or the receipt of an opinion that an appropriate exemption therefrom is available, the Company may defer exercise of any Stock Right granted hereunder until either such event has occurred.


16.

Term, Termination and Amendment .  


(a)

This Plan was adopted by the Board.  This Plan may be approved by the Company’s shareholders,which approval is required for ISOs.


(b)

The Board may terminate the Plan at any time.  Unless sooner terminated, the Plan shall terminate on January 31, 2017.  No Stock Rights may be granted under the Plan once the Plan is terminated.  Termination of the Plan shall not impair rights and obligations under any Stock Right granted while the Plan is in effect, except with the written consent of the grantee.


(c)

The Board at any time, and from time to time, may amend the Plan.   Provided , however , except as provided in Section 14 relating to adjustments in Common Stock, no amendment shall be effective unless approved by the shareholders of the Company to the extent (i) shareholder approval is necessary to satisfy the requirements of Section 422 of the Code or (ii) required by the rules of the principal national securities exchange or trading market upon which the Company’s Common Stock trades. Rights under any Stock Rights granted before amendment of the Plan shall not be impaired by any amendment of the Plan, except with the written consent of the grantee.


(d)

The Board at any time, and from time to time, may amend the terms of any one or more Stock Rights; provided , however , that the rights under the Stock Right shall not be impaired by any such amendment, except with the written consent of the grantee.


17.

Conversion of ISOs into Non-Qualified Options; Termination of ISOs . The Board or Compensation Committee, at the written request of any optionee, may in its discretion take such actions as may be necessary to convert such optionee’s ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the optionee is an employee of the Company or a Related Corporation at the time of such conversion.   Provided , however , the Board or Compensation Committee shall not reprice the Options or extend the exercise period or reduce the exercise price of the appropriate installments of such Options without the approval of the Company’s shareholders. At the time of such conversion, the Board or Compensation Committee (with the consent of the optionee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Board or Compensation Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any optionee the right to



13




have such optionee’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Board or Compensation Committee takes appropriate action. The Compensation Committee, with the consent of the optionee, may also terminate any portion of any ISO that has not been exercised at the time of such termination.


18.

Application of Funds . The proceeds received by the Company from the sale of shares pursuant to Options or SARS (if cash settled) granted under the Plan shall be used for general corporate purposes.


19.

Governmental Regulations . The Company’s obligation to sell and deliver shares of the Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares.


20.

Withholding of Additional Income Taxes . In connection with the granting, exercise or vesting of a Stock Right or the making of a Disqualifying Disposition the Company, in accordance with Section 3402(a) of the Code, may require the optionee to pay additional withholding taxes in respect of the amount that is considered compensation includable in such person’s gross income.


To the extent that the Company is required to withhold taxes for federal income tax purposes as provided above, if any optionee may elect to satisfy such withholding requirement by (i) paying the amount of the required withholding tax to the Company; (ii) delivering to the Company shares of its Common Stock (including shares of Restricted Stock) previously owned by the optionee; or (iii) having the Company retain a portion of the shares covered by an Option exercise. The number of shares to be delivered to or withheld by the Company times the Fair Market Value of such shares shall equal the cash required to be withheld.


21.

Notice to Company of Disqualifying Disposition . Each employee who receives an ISO must agree to notify the Company in writing immediately after the employee makes a Disqualifying Disposition of any Common Stock acquired pursuant to the exercise of an ISO. If the employee has died before such stock is sold, the holding periods requirements of the Disqualifying Disposition do not apply and no Disqualifying Disposition can occur thereafter.


22.

Continued Employment . The grant of a Stock Right pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Related Corporation to retain the grantee in the employ of the Company or a Related Corporation, as a member of the Company’s Board or in any other capacity, whichever the case may be.


23.

Governing Law; Construction . The validity and construction of the Plan and the instruments evidencing Stock Rights shall be governed by the laws of the Company’s state of incorporation. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires.


24.

Forfeiture of Stock Rights . Notwithstanding any other provision of this Plan, all vested Stock Rights shall be immediately forfeited at the option of the Board in the event of:



14





(a)  Termination of the relationship with the grantee for cause including, but not limited to, fraud, theft, dishonesty and violation of Company policy;


(b)  Purchasing or selling securities of the Company without written authorization in accordance with the Company’s inside information guidelines then in effect;


(c)  Breaching any duty of confidentiality including that required by the Company’s inside information guidelines then in effect;


(d)  Competing with the Company;


(e)  Failure to execute the Company’s standard stock rights  agreement; or


(f)  A finding by the Board  that the grantee has acted against the interests of the Company.


The Board or the Compensation Committee may impose other forfeiture restrictions which are more or less restrictive and require a return of profits from the sale of Common Stock as part of said forfeiture provisions if such forfeiture provisions and/or return of provisions are contained in a Stock Rights agreement.







15



EXHIBIT 21.1

Subsidiaries


Name

 

State of Incorporation

 

 

 

Weather Tech Innovations, Inc.

                    

Florida

Gel Tech Innovations, Inc.

 

Florida




EXHIBIT 23.1


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form SB-2 of our report dated January 19, 2007, relating to the consolidated financial statements of GelTech Solutions, division of Dyn-O-Mat, Inc., and to the reference to our Firm under the caption “Experts” in the Prospectus.

Sweeney, Gates & Co.

Fort Lauderdale, Florida

July 18, 2007