As filed with the Securities and Exchange Commission on July 23, 2004
Registration No. 333-________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 10549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NANOSENSORS, INC.
(Name of Small Business Issuer as specified in its charter)
Nevada 3829 200452700
(State or other jurisdiction of Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number
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1800 Wyatt Drive, Suite #2
Santa Clara, CA 95054
(408) 855-0051
(Address and telephone number of registrant's principal executive offices)
Dr. Ted Wong, CEO
NanoSensors, Inc.
1800 Wyatt Drive, Suite #2
Santa Clara, CA 95054
(408) 855-0051
(Address of principal place business)
Copies of all communications to agent for service should be sent to:
Elliot H. Lutzker, Esq.
Robinson & Cole, LLP
885 Third Avenue, Suite 2800
New York, New York 10022
Telephone: (212) 451-2900
Facsimile: (212) 451-2999
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, 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, 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 statement 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, check the following box. |_|
CALCULATION OF REGISTRATION FEE
Proposed
Title of each class of maximum Proposed maximum
securities to be Amount to be offering price per aggregate offering Amount of
registered registered share price registration fee
---------------------- -------------- ------------------ ------------------- -----------------
Common stock, par
value, $.001 per share 100,000 (1) $.05 (2) $5,000 $ 0.64
Common stock, par
value, $.001 per share 100,000 (3)(10) $.25 $25,000 $ 3.17
Common stock, par
value, $.001 per share 2,750,000 (4)(10) $.20 (2) $550,000 (2) $69.69
Class A Warrants 2,750,000 (5)(10) (11) (11) (11)
Common stock, par
value, $.001 per share 2,750,000 (6)(10) $.30 $825,000 $104.53
Common stock, par
value, $.001 per share 1,375,000 (7)(10) $.20 $275,000 $34.84
Class A Warrants 1,375,000 (8)(10) (11) (11) (11)
Common stock, par
value, $.001 per share 1,375,000 (9)(10) $.30 $412,500 $52.27
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Total $ 265.14
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(1) Issued in connection with the Company's Rule 504 Regulation D financing in April 2004.
(2) Estimated solely for purposes of calculating the registration fee pursuant to Securities Act Rule 457 (c), based on the last sale price of the registrant's common stock in a private placement.
(3) In connection with the Company's February 28, 2004 bridge financing, two investors were granted warrants to purchase an aggregate of 100,000 shares of Common Stock exercisable at $.25 per share, subject to adjustment, for five years.
(4) Pursuant to the Company's private placement which commenced in and was completed on April 26, 2004, the Company issued an aggregate of 2,750,000 units at $.20 per unit, or an aggregate of $550,000, each unit consisting of one share of Common Stock, and one Class A warrant to purchase one share of Common Stock at $.30 per share.
(5) Class A Warrants included in 2,750,000 units described in Note (4) above, at $.30 per share.
(6) Represents shares issuable upon exercise of Class A Warrants included in 2,750,000 units described in Note (4) above.
(7) In connection with the Company's private placement described in Note (4) above, the Company issued to its placement agent warrants to purchase at $.20 per unit, an aggregate of 1,375,000 units, identical to the units described in note (4) above. An aggregate of 2,750,000 shares of Common Stock are included in the units issuable to the placement agent.
(8) Included in the units issuable to the placement agent set forth in note (7) above.
(9) Represents shares issuable upon exercise of the Class A Warrants included in the units issuable to the placement agent.
(10) Pursuant to Securities Act Rule 416, there are also being registered such indeterminable number of additional shares of common stock as may become issuable pursuant to anti- dilution provisions contained in the warrants.
(11) Pursuant to Securities Act Rule 457(i) no additional registration fee is required for these warrants being registered as part of the units purchased, since no additional consideration was paid for them.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES 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 contained in this prospectus is not complete and may be changed. These 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.
PROSPECTUS
SUBJECT TO COMPLETION - DATED JULY 23, 2004
NANOSENSORS, INC.
8,450,000 Shares of Common Stock
4,125,000 Class A Warrants
This prospectus relates to the offering of up to 8,450,000 shares of our common stock, consisting of: 2,850,000 shares of our common stock issued and outstanding, 2,750,000 shares issuable upon exercise of outstanding Class A Warrants, 100,000 shares issuable upon exercise of bridge warrants, and an aggregate of 2,750,000 shares issuable upon exercise of Placement Agent Warrants; as well as 2,750,000 Class A Warrants issued in our private placement and 1,375,000 Class A Warrants issuable upon exercise of Placement Agreement Warrants. The shares are being offered for the account of the shareholders identified in the "Selling Stockholder" section of this prospectus. The transactions by which the selling shareholders acquired such shares and warrants being offered pursuant to this prospectus are described in the "Selling Stockholder" section of this prospectus.
We will not receive any proceeds from the sale of the shares being offered pursuant to this prospectus, other than the proceeds from the exercise of warrants by which certain of the selling shareholders may acquire their shares being offered pursuant to this prospectus. Pursuant to written agreements we have agreed to bear all of the expenses in connection with the registration and sale of the shares, except for sales commissions. We estimate these expenses to be approximately $40,000.00.
An application will be made to list our common stock under the symbol "_____". We expect that the shares may be offered in transactions conducted on the NASD Over-The-Counter Bulletin Board ("OTCBB"), in privately negotiated transactions or through a combination of such methods. The shares may be sold at prices relating to the prevailing market prices, at privately negotiated prices or at other prices, which may change from time to time and from offer to offer.
The securities being offered pursuant to this prospectus involve a high degree of risk. Persons should not invest unless they can afford to lose their entire investment. You should carefully read and consider the "Risk Factors" commencing on page 8 for information that should be considered in determining whether to purchase any of the securities.
The date of this Prospectus is ________ __, 2004
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
You should rely only on the information contained or incorporated by reference in this prospectus and in any accompanying prospectus supplement. No one has been authorized to provide you with different information. The shares are not being offered in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of such documents.
Government filings. We will be subject to the information reporting requirements of the Securities Exchange Act of 1934 upon the effective date of this registration statement of which this prospectus is a part. As such, we will file annual, quarterly and special reports, proxy statements and other documents with the Securities and Exchange Commission. These reports, proxy statements and other documents may be inspected and copied at the public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549, and at the SEC's regional offices located at 233 Broadway, Suite 1300, New York, New York 10048, and at CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may also obtain copies of such material by mail from the public reference facilities of the SEC's Washington, D.C. offices, at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information on their public reference facilities. In addition, the SEC maintains a World Wide Web site that contains reports, proxy and information statements and other information regarding companies, including us, that file electronically with the SEC. The address of the SEC's web site is "http://www.sec.gov."
TABLE OF CONTENTS
Page
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INTRODUCTORY COMMENTS..........................................................4
SUMMARY ......................................................................4
WHERE YOU CAN FIND MORE INFORMATION............................................6
STATE SUITABILITY STANDARDS....................................................7
RISK FACTORS...................................................................8
RISKS RELATED TO OUR SECURITIES...............................................17
CAPITALIZATION................................................................19
USE OF PROCEEDS...............................................................19
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....................20
BUSINESS .....................................................................26
MANAGEMENT....................................................................32
SCIENTIFIC ADVISORY BOARD.....................................................33
PRINCIPAL STOCKHOLDERS........................................................35
SELLING STOCKHOLDERS..........................................................36
DESCRIPTION OF SECURITIES.....................................................41
SHARES ELIGIBLE FOR FUTURE SALE...............................................44
PLAN OF DISTRIBUTION..........................................................45
EXPERTS .....................................................................46
LEGAL MATTERS.................................................................46
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INTRODUCTORY COMMENTS
Use of Names
Throughout this prospectus, the terms "we," "us," "our" and "our company" refer to NanoSensors, Inc. ("NanoSensors").
SUMMARY
Our Company
NanoSensors, Inc. ("NanoSensors" or the "Company") is a Nevada corporation incorporated on December 23, 2003. The Company's principal business is the development, manufacture and marketing of sensors and instruments along with the management of intellectual property, which will emanate therefrom. These sensors are designed to detect specific levels of targeted specific biological, chemical and explosive ("B-C-X") agents in areas that are a risk in the post 9/11-era. The Company's technology operates in the nano-scale of ten to the minus nine and is sensitive to detect nano-scale molecules at nano concentration of one part of the agent in a billion parts of air.
The Company believes there is a real need for products that can detect the existence of B- C-X agents in such places as airports, bus terminals, railway stations, government buildings and military installations.
The Company's Chief Scientist, Dr. Matthew Zuckerman, pioneered the first commercially successful "hybrid semiconductor" design for sensors for toxic gases in industrial and workplace venues. NanoSensors' technology development is supported by a Scientific Advisory Board that includes Dr. David Tomanek, Professor of Biological Sciences at Michigan State University and Donald MacIntyre, President of Multichip Assembly, Inc., an ISO 9002 manufacture of sensor and semiconductor components.
The principal corporate offices of NanoSensors, Inc., are located at 1800 Wyatt Drive, Suite #2, Santa Clara, California 95054. Our telephone number at this location is (408) 855- 0051.
The Offering
Shares of Common Stock outstanding as of
June 30, 2004................................... 19,300,000
Shares of Common Stock outstanding and
offered hereby....................................... 2,850,000
Class A Warrants offered hereby ..................... 4,125,000
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Shares issuable upon exercise of:
Class A Warrants offered hereby...................... 2,750,000
Bridge Warrants...................................... 100,000
Placement Agent's Warrants........................... 2,750,000
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Shares outstanding on a fully diluted basis.......... 24,900,000
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Terms of Warrants
Each A Warrant entitles the holder to purchase one share of Common Stock at any time prior to April 30, 2009. The A Warrants are exercisable at $.30 per share, subject to adjustment in certain circumstances to prevent dilution. See "Description of Securities."
Use of Proceeds
If all of the warrants outstanding as of the date of this Prospectus are exercised we will receive gross proceeds of approximately $1,537,500. Such proceeds will be used for research and development, marketing, sales and hiring of key personnel, general and administrative expenses and working capital purposes.
Summary Financial Information
The summary financial information set forth below is derived from the more detailed audited and unaudited financial statements of NanoSensors appearing elsewhere in this prospectus. This information should be read in conjunction with such financial statements, including the notes to such financial statements, and the "Management's Discussion and Analysis or Plan of Operation" section of this prospectus.
Statement of Operations Data:
For the Period
Dec. 23, 2003
(Date of
Inception)
through April
30, 2004)
--------------
Expenses 316,893
Loss before other income (expense) (316,893)
Other income (expense) (17,812)
Net (loss) $ (334,705)
===========
Net Income (loss) per basic
And diluted shares $ (.02)
Weighted average number of
common shares outstanding 17,396,000
Balance Sheet Data:
April 30,
2004
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Current assets $ 367,236
Total assets 464,913
Current liabilities 326,026
Total liabilities 326,026
Deficit accumulated during the (334,705)
development stage
Stockholders' equity (deficit) 138,887
Working capital 41,210
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WHERE YOU CAN FIND MORE INFORMATION
Stock market. We have asked to have our common stock traded on the OTCBB. When our stock is traded on the OTCBB, material filed by us will also be inspected and copied at the offices of the NASD, located at 9509 Key West Avenue, Rockville, MD 20850-3329.
The Company. We will distribute annual reports to our stockholders, including financial statements examined and reported on by independent certified public accountants. We also will provide you without charge, upon your request, with a copy of any or all reports, proxy statements and other documents we file with the SEC, as well as any or all of the documents
incorporated by reference in this prospectus or the registration statement we filed with the SEC registering for resale the shares of our common stock being offered pursuant to this prospectus, other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents. Requests for such copies should be directed to NanoSensors, Inc., 1800 Wyatt Drive, Suite #2, Santa Clara, California 95054; telephone (408) 855-0051.
We have filed a Registration Statement on Form SB-2 with the SEC registering under the Securities Act the common stock and warrants that may be distributed under this prospectus. This prospectus, which is a part of such registration statement, does not include all the information contained in the registration statement and its exhibits. For further information regarding us and our common stock and warrants, you should consult the registration statement and its exhibits.
Statements contained in this prospectus concerning the provisions of any documents are summaries of those documents, and we refer you to the documents filed with the SEC for more information. The registration statement and any of its amendments, including exhibits filed as a part of the registration statement or an amendment to the registration statement, are available for inspection and copying as described above.
STATE SUITABILITY STANDARDS
Notice to California Residents:
Sales in the state of California are limited to investors with a combined annual income of $65,000 and a net worth of $250,000 or a minimum net worth of $500,000.
Notice to Ohio Residents:
Sales in the state of Ohio are limited to investors with an annual income of $65,000 and a net worth of $250,000, exclusive of homes, furnishings and automobiles or accredited investors as such term is defined in Rule 501 of Regulation D.
RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND THE OTHER INFORMATION INCLUDED AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS BEFORE DECIDING TO PURCHASE THE SHARES OF OUR COMMON STOCK AND WARRANTS. THESE RISKS AND UNCERTAINTIES ARE NOT THE ONLY ONES WE FACE. OTHERS THAT WE DO NOT KNOW ABOUT, OR THAT WE DO NOT NOW THINK ARE IMPORTANT, MAY IMPAIR OUR FUTURE BUSINESS.
RISKS RELATED TO OUR BUSINESS
We have a limited operating history to evaluate our future performance
We are a developmental stage company incorporated in December 2003 and have a limited operating history upon which you can evaluate our business and prospects. We are still in the research and development phase of developing the products described herein and have not begun to receive revenues from our products. We have not launched any of the products and services described herein and therefore are a start-up company. As a result, you will not be able to predict our future financial condition based upon our past performance. You must consider the risks and uncertainties frequently encountered by early stage companies in new and rapidly evolving markets. If we are unsuccessful in addressing these risks and uncertainties, our operations will be adversely affected. You should, therefore, consider us subject to all of the business risks associated with a new business. The likelihood of our success must be considered in light of the expenses, difficulties and delays frequently encountered in connection with the formation and initial operations of a new and unproven business.
Losses are expected for a period of time
We continue to incur losses from operations resulting primarily from costs related to product development. Because of our plans to continue research and development and invest in marketing and sales, we expect to incur net losses for a period of time. We believe these expenditures are necessary to build and launch our products and to penetrate the markets for our products. If our revenue growth is slower than we anticipate or our operating expenses exceed our expectations, our losses will be significantly greater. We may never achieve profitability.
Qualified financial statements question our ability to continue in business
Our accountants issued a qualified report on our financial statements as of and for the period December 23, 2003 (inception) to April 30, 2004. The report states that NanoSensors is currently in the development stage and the Company will need to generate additional working capital for its planned activities and to service its debt. This raises substantial doubt about NanoSensors' ability to continue as a going concern. See "Independent Auditor's Report" and Note 8 of Notes to NanoSensors Financial Statements.
We will need additional financing to develop our products and to meet our capital requirements
We expect to incur losses from our operations resulting primarily from costs related to product development, such as research, development, marketing and sales of our products. These expenditures are necessary in order for us to build and launch our products and to penetrate the markets for our products. We have funded our operating activities primarily through sales of equity and debt securities to our founders, individual and corporate accredited investors, and equity issued for services and a license. As long as we continue to incur negative cash flow from our operations, we may exhaust our capital resources without additional funding. We anticipate that the proceeds received from this offering will be sufficient for our capital needs for a period of 20 months if all the Class A Warrants offered hereby are exercised. However, there can be no assurance that any of the Class A Warrants will be exercised. Therefore, we will need additional financing to meet our future capital requirements. We currently have no arrangements to obtain additional financing and we will be dependent upon sources such as:
- our future earnings,
- the availability of funds from private sources such as, loans and additional private placements, and
- the availability of raising funds through an additional public offering.
In view of our lack of an operating history, our ability to obtain additional funds is limited. Additional financing may only be available, if at all, upon terms which may not be commercially advantageous. If adequate funds are not available from operations or additional sources of financing, our business will be materially adversely affected.
We will lack business diversification
As a result of our limited resources, the prospects for our initial success will be entirely dependent upon the future performance of a single business. Unlike certain entities that have the resources to consummate several business combinations or entities operating in multiple industries or multiple segments of a single industry, we do not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses.
Dependence on Government Procurement Policies
Our business will be significantly dependent upon purchases of our products by government agencies, such as the United States Department of Transportation (including the Federal Aviation Administration (the FAA) and the TSA) and airport authorities, the State Department, the United States military, domestic and foreign customs agencies, law enforcement agencies and correctional facilities. Budgetary allocations for detection equipment are dependent, in part, upon government policies that fluctuate from time to time in response to
political and other factors, including the public's perception of the threat of airline bombings and other terrorist acts. We expect that a substantial portion of current and anticipated purchases of advanced detection equipment will continue to be made by government agencies with appropriated funds. However, we cannot be certain whether or when funds will be appropriated or allocated to or by any United States or other government agency for the purchase of detection equipment.
A reduction of funding for security efforts or drug interdiction could materially and adversely affect our future business, financial condition and results of operations. There can be no assurance that funding for the purchase of such equipment will be continued or as to the level of such funding. A substantial amount of the funds appropriated to date have been and amounts appropriated in the future will continue to be used to purchase equipment utilizing other technologies, such as enhanced x-ray, CATSCAN and other bulk imaging technologies. Accordingly, there can be no assurance as to the amount that will ultimately be spent on the purchase of trace particle detection equipment or as to the number of our products that will actually be purchased. In addition, there can be no assurance that our products will meet any certification or other requirements that may be adopted by any government agencies.
We Anticipate That The Sales Cycle for Our Products Will Be Lengthy, and We May Expend a Significant Amount of Effort to Obtain Sales Orders and Not Receive Them
We anticipate that the sales cycle of our products will be lengthy due to the protracted testing and approval process that typically will precede the purchase of our products by potential customers and the time required to manufacture and install our products. A significant amount of time may elapse while a potential customer evaluates our products. Another significant period of time may elapse while the customer performs on-site testing of our products before deciding whether to purchase a significant number of units. Additionally, more time may elapse while the potential customer endeavors to obtain funding, places orders and accepts delivery of our products. During the sales cycle we will expend substantial funds and management resources but recognize no immediate net revenues from such efforts. Our failure to obtain sales orders from customers after expending substantial funds and management resources trying to obtain orders may have a material adverse effect on our business, financial condition and results of operations.
Dependence on Market Acceptance of our Products
We expect to derive substantially all of our revenues from the sale of our proposed products for the detection of B-C-X agents. There can be no assurance that markets for our future products will develop as we expect or that we will be able to capitalize on such market development. Similarly, there can be no assurance that any markets that do develop will be sustained.
Dependence on New Product Development; Technological Advancement
Our success is dependent upon our ability to develop or acquire new products and technologies that incorporate technological advances, keep pace with evolving industry standards and respond to changing customer requirements. If we are unable to develop and introduce new products or enhancements in a timely manner in response to changing market conditions or customer requirements, our business, financial condition and results of operations would be materially and adversely affected.
In addition, from time to time, we or our present or potential competitors may introduce new products, capabilities or technologies that have the potential to replace, shorten the life spans of, or render obsolete our products. There can be no assurance that we will be successful in convincing potential customers that our products are superior to such other systems or products, that new systems with comparable or greater performance, lower prices and faster or equivalent throughput will not be introduced, or that, if such products are introduced, customers will not delay or cancel existing or future orders for our products. Announcements of currently planned or other new products may cause customers to delay their purchasing decisions in anticipation of such products. Such delays could have a material adverse effect on our business, financial condition and results of operations.
Competitors May Develop Technological Innovations That Will Render Our Products Obsolete
We expect to encounter competition in the sale of our products. Many of our potential competitors have substantially greater resources, manufacturing and marketing capabilities, research and development staff and production facilities than we do. Some of these competitors have large existing installed bases of products with substantial numbers of customers. We believe that our product will be successful because it is technologically superior to alternative products offered by some of our competitors. In order to be successful, we believe that it will be important to maintain this technological advantage. No assurance can be given that we will be able to maintain such an advantage or that our competitors will not develop technological innovations that will render our products obsolete.
Governmental Agencies Have Special Contracting Requirements that Create Additional Risk
In contracting with United States and foreign federal, state and local agencies, we are subject to governmental contract requirements that vary from jurisdiction to jurisdiction. Future sales to such public agencies will depend, in part, on our ability to meet public agency contract requirements, certain of which may be difficult for us to satisfy.
United States government contracts typically contain terms and conditions that may significantly increase our costs of doing business. These provisions include, among others, special accounting practices and the required adoption of certain socioeconomic policies. These contracts may be subject to modifications by the government at its sole discretion, such as a reduction in the scope of a contract. As a government contractor, we will be subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which purely private sector companies are not. Any United States government agency's concerns over our performance under a contract or any pending litigation with the government may lead to a suspension or debarment which could prevent us
from receiving new government contracts, any form of government assistance or government subcontracts for a period of up to three years. Such a suspension or debarment may result from the action of a single government agency based on our violations or suspected violations of laws or regulations.
A United States government agency may also generally terminate its contracts with us either for its convenience or if we default by failing to perform in accordance with the contract schedule and terms or by failing to provide the government, upon request, with adequate assurances of future performance. Termination for convenience provisions generally enable us to recover only our costs incurred and committed, and settlement expenses and profit on the work completed prior to termination.
In addition, we may have to enter into a competitive bidding process to obtain some government contracts. Even if we were awarded such a contract, the bidding for such contract may be protested by the losing bidders, which may result in substantial delays or cancellation of the awarded contract.
As a government contractor, we are subject to greater scrutiny through periodic audits. Based on the results of its audits, the government may adjust our contract payments due to our failure to follow agreed upon accounting practices and collect interest for any overpayments. Although adjustments arising from government audits and reviews have not harmed our business in the past, future audits and reviews could cause adverse effects.
International Business; Risk of Change in Foreign Regulations; Fluctuations in Exchange Rates
In addition to marketing our product domestically, we intend to market our products to customers outside of the United States. As a result, we will be exposed to the risks of international business operations, including unexpected changes in foreign and domestic regulatory requirements, possible foreign currency controls, uncertain ability to protect and utilize our intellectual property in foreign jurisdictions, currency exchange rate fluctuations or devaluations, tariffs or other barriers, difficulties in staffing and managing foreign operations, difficulties in obtaining and managing vendors and distributors and potentially negative tax consequences. International sales are subject to certain inherent risks including embargoes and other trade barriers, staffing and operating foreign sales and service operations and collecting accounts receivable. We will also be subject to risks associated with regulations relating to the import and export of high technology products. We cannot predict whether, or to what extent, quotas, duties, taxes or other charges or restrictions upon the importation or exportation of our products in the future will be implemented by the U.S. or any other country. There can be no assurance that any of these factors will not have a material adverse effect on our business, financial condition and results of operations.
Retention of and Dependence on Key Personnel
Our performance is substantially dependent on the services and on the performance of Dr. Ted Wong, our Chief Executive Officer. The loss of the services of Dr. Wong or other key employees could have a materially adverse effect on our business, prospects, financial condition and results of operations. We will enter into a long-term employment agreement with Dr. Wong, and currently have no "Key Man" life insurance policy on his life. Our future success will also depend on our ability to identify, attract, hire, train, retain and motivate other highly technical, managerial, marketing and service personnel. Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel. The failure to attract and retain the necessary technical, managerial, marketing and customer service personnel could have a material adverse effect on our prospects, financial condition and results of operations.
Any Inability of Ours to Keep Pace with Technological Advances and Evolving Industry Standards Would Harm Our Business
We are operating in a new industry where the market for our products is characterized by continuing technological development, evolving industry standards and changing customer requirements. We expect to meet increasing competition in our field. Therefore, it is likely that the pace of innovation and technological change will increase. The introduction of products by our direct competitors or others embodying new technologies, the emergence of new industry standards or changes in customer requirements could render our existing products obsolete, unmarketable or less competitive. Our success depends upon our ability to enhance existing products and services and to respond to changing customer requirements. Failure to develop and introduce new products and services, or enhancements to existing products, in a timely manner in response to changing market conditions or customer requirements will harm our future revenues and our business and operating results.
Our Inability to Adequately Protect Our Proprietary Technology Could Have a Material Adverse Effect on Our Business
The success of our business depends on our ability to protect our intellectual property portfolio and obtain patents without infringing the proprietary rights of others. If we do not effectively protect our intellectual property, our business and operating results could be harmed.
Patents may not be issued from our applications. Even if we are able to obtain patents covering our technology, the patents may be challenged, circumvented, invalidated or unenforceable. Competitors may develop similar technology or design around any patents issued to us or our other intellectual property rights. Our competitors would then be able to offer research services and develop, manufacture and sell products which compete directly with our research services and products. In that case, our revenues and operating results would decline.
We also seek to protect our technology and processes in part by confidentiality agreements with our collaborators, employees and consultants. We also do not provide broad access to our proprietary technologies and processes to collaborators. However, confidentiality agreements might be breached by collaborators, former employees or others, and in that event,
we might not have adequate remedies for the breach. Further, our trade secrets might otherwise become known or be independently discovered by competitors. Unauthorized disclosure of our trade secrets could enable competitors to use some of our proprietary technologies. This would harm our competitive position and could cause our revenues and operating results to decline.
Litigation or Other Proceedings or Third Party Claims of Infringement Could Require Us to Spend Time and Money and Could Shut down Some of Our Operations
We may receive communications from others in the future asserting that our business or technologies infringe their intellectual property rights. If we became involved in litigation or interference proceedings declared by the United States Patent and Trademark Office, or oppositions or other intellectual property proceedings outside of the United States, to defend our intellectual property rights or as the result of alleged infringement of the rights of others, we might have to spend significant amounts of money. The litigation or proceedings could divert our management's time and efforts. An adverse ruling, including an adverse decision as to the priority of our inventions, would undercut or invalidate our intellectual property position. An adverse ruling could also subject us to significant liability for damages or prevent us from using or marketing systems, processes or products. Any of these events would have a negative impact on our business and operating results. Even unsuccessful claims could result in significant legal fees and other expenses, diversion of management's time and disruptions in our business. Uncertainties resulting from the initiation and continuation of any patent or related litigation could harm our ability to compete, pending resolution of the disputed matter.
We believe we have taken adequate measures to assess the validity of our intellectual property rights. We are not currently involved in any disputes with third parties regarding intellectual property rights. However, we may become involved in intellectual property disputes or receive communications from others in the future asserting that our business or technologies infringe their intellectual property rights. To settle these disputes, we may need to obtain licenses to patents or other proprietary rights held by others. However, these licenses might not be available on acceptable terms, or at all. In that event, we could encounter delays in system, process or product introductions while we attempt to design around the patents. Our redesigned systems, processes or products may be inferior to our original designs or we may be unable to continue system, process or product development in the particular field. In either case, our competitive position, business, revenues and operating results would likely suffer.
We Use Hazardous Materials in Our Business, and Any Claims Relating to Improper Handling, Storage or Disposal of These Materials Could Subject Us to Significant Liabilities
Our proposed products are designed to involve a broad range of hazardous chemicals and materials. Environmental laws impose stringent civil and criminal penalties for improper handling, disposal and storage of these materials. In addition, in the event of an improper or unauthorized release of, or exposure of individuals to, hazardous materials, we could be subject to civil damages due to personal injury or property damage caused by the release or exposure. A failure to comply with environmental laws could result in fines and the revocation of environmental permits, which could prevent us from conducting
our business. Accordingly, any violation of environmental laws or failure to properly handle, store or dispose of hazardous materials could result in restrictions on our ability to operate our business and could require us to incur potentially significant costs for personal injuries, property damage and environmental cleanup and remediation.
We May Experience Difficulties in Managing Possible Future Growth
In the event we receive orders for a large number of our product, we may need to increase rapidly our manufacturing output, our customer service functions and other related business activities. Rapid growth may place a strain on our managerial, financial and other resources.
We may not be able to manufacture our planned products in sufficient quantities at an acceptable cost, or at all, which could harm our future prospects
We are marketing our proposed products and are is in the initial phase of product commercialization. We do not own any manufacturing facilities and intended to contract out our manufacturing needs. Accordingly, if any of our proposed products become available for widespread sale, we may not be able to arrange for the manufacture of such product in sufficient quantities at an acceptable cost, or at all, which could materially adversely affect our future prospects.
We May Seek To Grow By Acquisition, Which Could Subject Us to Substantial Risks, Including the Failure to Successfully Integrate an Acquired Business
As part of our growth strategy, we may expand our business by pursuing selected acquisitions of technologies and companies that offer complementary products, services, technologies or market access. We currently have no agreements or understandings to acquire any business. Our ability to grow by acquisition depends upon the availability of acquisition candidates at reasonable prices and our ability to obtain acquisition financing on acceptable terms. Future acquisitions by us could result in dilutive issuance of equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to intangible assets, any of which could harm our business. Acquisitions entail numerous risks, including:
- difficulties in the assimilation of acquired operations, technologies and products;
- diversion of management's attention from other business concerns;
- risks of entering markets in which we have no or limited prior experience; and
- potential loss of key employees of acquired organizations.
The process of integrating supply and distribution channels, computer and accounting systems and other aspects of operations, while managing a larger entity, may present a significant challenge to our management. We may not be able to successfully integrate any businesses, products, technologies or personnel that might be acquired in the future. In such case, the anticipated benefits of a business combination would not be fully realized, and the failure of such efforts could harm our business.
The market for NanoSensors' proposed products is rapidly changing and competitive new products may be developed by others which could impair our ability to develop, grow or maintain our business and be competitive
We operate in a highly competitive industry and while we believe we have an edge in technological talent and access to technological talent at the current time in our field of endeavor, the nature and rate of change in the technological arena is dramatic and no assurances can be given that we will maintain any competitive edge for any extended period. Moreover, we would have to conclude that some or all of our technology can or will be superseded by superior talent greatly harming our ability to generate revenues and impair our ability to operate and provide benefit to shareholders. Therefore, we are at risk for technological obsolescence at any given time and most likely without any material warning from competitors or the marketplace. Many of our competitors have significantly greater research and development capabilities and budgets than NanoSensors does, as well as substantially more marketing, manufacturing, financial and managerial resources. We are a development-stage enterprise and as such our resources are limited and it may experience technical challenges inherent in developing its technology. Competitors have developed or are in the process of developing technologies that are, or in the future may be, the basis for competition.
NanoSensors' proposed products could be exposed to significant product liability claims which could be time consuming and costly to defend, divert management attention and adversely affect NanoSensors' ability to obtain and maintain insurance coverage. If NanoSensors incurred a material liability for which it is not adequately insured, it might be rendered insolvent
The testing, manufacture, marketing and sale of NanoSensors' proposed products will involve an inherent risk that product liability claims will be asserted against it. We currently have a general liability policy with an annual aggregate limit of $2 million with a $1 million limit per occurrence. We intend to purchase product liability insurance when we begin commercial sales of our products. However, this insurance may prove inadequate to cover claims and/or litigation costs. Product liability claims or other claims related to NanoSensors' proposed products, regardless of their outcome, could require us to spend significant time and money in litigation or to pay significant settlement amounts or judgments. Any successful product liability or other claim may prevent NanoSensors from obtaining adequate liability insurance in the future on commercially desirable or reasonable terms. In addition, product liability coverage may cease to be available in sufficient amounts or at an acceptable cost. Any inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the sale of our proposed products.
RISKS RELATED TO OUR SECURITIES
Absence of Trading Market for the Shares
There currently is no trading market for the shares and there can be can be no assurance that an active market will develop for the Shares or Warrants or, if developed, that they will be maintained. The market price of the Common Stock is likely to be subject to significant fluctuation in response to variations in quarterly results of operations, general trends in the market place and other factors, many of which are not within the our control.
Our President and sole director may have the ability to control almost all matters of the Company.
Our President and sole Director, beneficially owns approximately 11.4% of our issued and outstanding shares of common stock as of June 30, 2004. Therefore, management will have significant influence over the election of our directors and to control the outcome of other issues submitted to our stockholders. This includes the ability to amend the Certificate of Incorporation, approve a merger or consolidation of our company with another company or approve the sale of all or substantially all of our assets without the agreement of the stockholders.
If we do not keep this registration statement current, you will not be able to exercise your warrants.
We must keep this registration statement effective with the SEC in order for warrantholders to exercise their warrants. We may not be able to maintain a registration statement in effect throughout the period during which the warrants remain exercisable. Maintaining an effective registration statement requires substantial continuing expenses for legal and accounting fees and we cannot guarantee our ability to keep the registration statement effective. We will instruct our warrant agent to suspend the exercise of warrants if this or any future registration statement with respect to the shares underlying the warrants is no longer effective.
If we do not qualify our securities in states other than where the initial investors reside, your resale of any securities you acquire under this Prospectus may be limited and you may not be able to exercise your warrants.
We have sold the units in the Offering only in the States of California, Florida, Massachusetts, New Jersey, New York, Ohio, Tennessee and Utah. We believe that our common stock will be eligible for sale on a secondary market basis in other states based upon applicable exemptions from that state's registration requirements, subject, in each case, to the exercise of the broad discretion and powers of the securities commission or other administrative bodies having jurisdiction in each state and any changes in statutes and regulations which may occur after the date of this prospectus. However, the lack of registration in most states and the requirement of a seller to comply with the requirements of state blue sky laws in order for the seller to qualify for an applicable secondary market sale exemption, may cause an adverse effect on the resale price of our securities, as well as the delay or inability of a holder of our securities to dispose of such securities.
In addition, the warrants and underlying securities will be exercisable only in the states where the initial warrantholders reside. We may decide not to seek, or may not be able to obtain, registration for the issuance of the underlying securities in the state where you live during the period when the warrants are exercisable. We cannot issue securities to you upon exercise of your warrants unless either (a) the securities issuable upon exercise of the warrants are registered in your state or (b) an exemption from registration is available. We may not be able to qualify the warrants, in which case the warrants would become unexercisable and deprived of value.
Penny Stock Regulation.
We expect that our Common Stock will be subject to Rule 15g-9 under the Exchange Act. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and "accredited investors." For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. Consequently, the rule could affect the ability of broker-dealers to sell our securities and could affect the ability of purchasers to sell any of our securities in the secondary market.
Interests of Placement Agent in NanoSensors; Possible Restriction on "Marketing Making" Activities in NanoSensors' Securities; Illiquidity.
Meyers Associates L.P., our Placement Agent, and its principals beneficially own, in the aggregate, 9,000,000 shares of Common Stock, or approximately 40.8% of the outstanding shares including shares underlying warrants . In addition, the Placement Agent and its affiliates agreed not to sell, sell short, or otherwise dispose of any of their shares prior to the completion of the Offering.
There is no guarantee for future dividends.
We have not paid any cash dividends on the common shares to date, and there can be no guarantee that we will declare or be able to pay a cash dividend on the common shares in the foreseeable future. We will be involved in the development of operations, which will be capital intensive. Initial earnings that we may realize, if any, will be retained to finance the development of the structure and further expand operations and/or acquisitions for the near to medium range future. Any future dividends, of which there can be no guarantee, will be directly dependent upon our earnings, financial requirements and other factors that are not determined.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of April 30, 2004.
Actual
Cash $ 351,164
Total Liabilities 326,026
Stockholders' equity:
Common stock, par value $.001 per 19,298
share; 50,000,000 shares authorized;
19,297,500 shares issued and
outstanding. (1)
Capital in excess of par value 465,027
Stock subscription receivable (10,733)
Deficit accumulated during the development stage (334,705)
Total stockholders' equity $ 138,887
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(1) Does not include: 2,500 shares of Common Stock issued after April 30, 2004; outstanding Warrants to purchase an aggregate of 5,600,000 shares of Common Stock, or shares of Common Stock and Warrants expected to be issued before the date of this Prospectus upon conversion of outstanding notes payable.
USE OF PROCEEDS
If all of the warrants outstanding as of the date of this Prospectus are exercised we will receive gross proceeds of approximately $1,537,500. Such proceeds will be used for research and development, marketing, sales and hiring of key personnel, general and administrative expenses and working capital purposes. The Company currently intends to use the net proceeds as follows:
50% of 100% of
Warrants Warrants
Exercised Exercised
--------- -----------
Research and Development (1) $384,375 $ 705,625
Selling, general and administrative (2) $384,375 $ 831,875
--------- -----------
Total $768,750 $1,537,500
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1. Research and Development - These costs are related primarily to:
continuing development of our proprietary technologies to accommodate potential
products.
2. Selling, General and Administrative - As described under "Business - Marketing and Sales Strategy," the Company intends to develop a variety of marketing vehicles to create demand for our proposed products. NanoSensors intends to participate in trade shows, expand its promotional materials, expand the scope of its Website, hire two salespersons and pay for travel and related expenses.
The allocation of the net proceeds to the Company from this Offering set forth above represents the Company's best estimate. This estimate is based upon its present plans and certain assumptions regarding current economic and industry conditions and the Company's future prospects. If any of these factors change, the Company may find it necessary or advisable to reallocate some of the proceeds within the above described categories or to other purposes.
There can be no assurance as to the specific dollar amounts or timing of expenditures of the net proceeds of this Offering. There currently are no material commitments or arrangements with respect to any of the net proceeds of this Offering other than as stated above. The level and timing of expenditures of the net proceeds of this Offering will depend upon numerous factors, including the timing and amount of revenues generated by the Company's operations and changes in the competitive conditions in the Company's industry. As such, management will have broad discretion, subject to their fiduciary duties, in the application of the proceeds of this Offering. Pending such uses, the net proceeds of this Offering will be invested in government securities, money market accounts, certificates of deposit or other suitable limited-risk short-term investments.
In the event that the Company's plans change, its assumptions change or prove inaccurate, its revenues are less than anticipated, or if the net proceeds from this Offering otherwise prove insufficient to fund operations due to unanticipated expenses, delays or technical or other problems, the Company could be required to seek additional funding. The Company has no current arrangements with respect to, or sources of, additional financings, and it is not anticipated that existing security holders will provide any of the Company's future financing requirements. Further, there can be no assurance that any additional financing will be available to the Company, if so required, on commercially reasonable terms, or at all. Any inability to obtain additional financing when needed and on acceptable terms could have a material adverse effect upon the Company's operations, including the possibility of requiring the Company to curtail or cease its operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Critical Accounting Policies
In December 2001, the Securities and Exchange Commission requested that all registrants discuss their "critical accounting policies" in management's discussion and analysis of financial condition and results of operations. The SEC indicated that a "critical accounting policy" is one
that is both important to the portrayal of the company's financial condition and results and that requires management's most difficult, subjective or complex judgments. Such judgments are often the result of a need to make estimates about the effect of matters that are inherently uncertain. While NanoSensors' significant accounting policies are more fully described in Note 2 to its financial statements included elsewhere in this prospectus, NanoSensors currently believes the following accounting policies to be critical:
Development Stage Company
NanoSensors is considered to be in the development stage as defined in Statement of Financial Accounting Standards (SFAS) No. 7, "Accounting and Reporting by Development Stage Enterprises." NanoSensors has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital.
Cash and Cash Equivalents
NanoSensors considers all highly liquid debt instruments and other short-term investments with an initial maturity of less than three months to be cash equivalents.
NanoSensors maintains cash and cash equivalent balances at financial institutions which are not insured by the Federal Deposit Insurance Corporation for amounts over $100,000, but are otherwise in financial institutions of high credit quality.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; three years for computer software and equipment and five and seven years for office furniture and equipment. Property and equipment held under capital leases and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the related asset. When fixed assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in operations.
Intellectual Property Assets
NanoSensors owns no issued U.S. and Foreign and no pending U.S. and Foreign patents. Under present accounting principles generally accepted in the United States of America, and FASB 142, the value of patents, if any, will not be reflected on its condensed consolidated balance sheet.
Internal Use Software Costs
Internal use software and web site development costs are capitalized in accordance with Statement of Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," and Emerging Issues Task Force (EITF) Issue No. 00- 02, "Accounting for Web Site Development Costs." Qualifying costs incurred during the application development stage, which consist primarily of outside services and NanoSensors' consultants, are capitalized and amortized over the estimated useful life of the asset. All other costs are expensed as incurred. All costs for internal use software for the period ended April 30, 2004, have been expensed as research and development expense.
Start-up Costs
In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, "Reporting on the Costs of Start-up Activities", NanoSensors expenses all costs incurred in connection with the start-up and organization of NanoSensors.
Research and Development
Research and development costs are related primarily to NanoSensors developing early prototypes. Research and development costs are expensed as incurred.
Income Taxes
The income tax benefit is computed on the pretax loss based on the current tax law. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year- end based on enacted tax laws and statutory tax rates. No benefit is reflected for the year ended December 31, 2003.
Advertising
Costs of advertising and marketing will be expensed as incurred. Advertising and marketing costs were $0 and $0 for the period ended April 30, 2004.
Earnings (Loss) Per Share of Common Stock
Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share at April 30, 2004, when the Company reported a loss because to do so would be anti-dilutive for periods presented.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet are considered by management to be their estimated fair values for cash and cash equivalents, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amount reported for notes and mortgages payable approximates fair value because, in general, the interest on the underlying instruments fluctuates with market rates.
Stock-Based Compensation
Employee stock awards under NanoSensors' compensation plans will be accounted for in accordance with Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees", and related interpretations. NanoSensors provides the disclosure requirements of Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation" ("SFAS 123"), and related interpretations. Stock-based awards to non- employees are accounted for under the provisions of SFAS 123.
NanoSensors will measures compensation expense for its employee stock-based compensation using the intrinsic-value method. Under the intrinsic-value method of accounting for stock-based compensation, when the exercise price of options granted to employees is less than the estimated fair value of the underlying stock on the date of grant, deferred compensation is recognized and is amortized to compensation expense over the applicable vesting period. In each of the periods presented, the vesting period was the period in which the options were granted. All options were expensed to compensation in the period granted rather than the exercise date.
NanoSensors measures compensation expense for its non-employee stock-based compensation under the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured as the value of NanoSensors' common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital.
Results of Operations
For the period from inception to April 30, 2004.
The Company has not recognized revenues to date. The Company is still in the development stage.
For the period from inception (December 23, 2003) through April 30, 2004 (the "Fiscal 2004 Period"), the Company recorded total operating expenses of $316,893.
Administrative expenses for the Fiscal 2004 Period were $45,222. This consisted primarily of professional fees as a result of raising money through private placements and consulting fees and rent.
Research and Development expenses for the Fiscal 2004 Period were $263,348. All research and development costs are expensed as incurred. They are primarily incurred in connection with technology development under a worldwide, perpetual, exclusive, marketing license entered into on December 11, 2003, with Dr. Matthew Zuckerman , one of the Company's founders and its Chief Scientist. See "Business- Technology License."
Depreciation and Amortization expense for the Fiscal 2004 Period were $8,323, primarily concerning office equipment.
Interest expense paid for the Fiscal 2004 Period was $17,941. This resulted from: (a) $100,000 of 10% bridge notes issued in February 2004 which were converted into equity in May 2004; and (b) the issuance of an aggregate of $150,000 of promissory notes in December 2003 and January 2004, as described below, which are expected to be converted into equity prior to the date of this Prospectus.
Liquidity and Capital Resources
The Company does not have an operating line of credit from a financial institution and consequently relied on financing from investors to support its operations. The Company had monies on deposit of $351,164 at April 30, 2004.
In December 2003 and February 2004, the Company borrowed $80,000 and $40,000, respectively, from one unaffiliated investor and an additional $30,000 in January 2004, from a second unaffiliated investor. These loans are evidenced by interest bearing promissory notes. The first note for $80,000 matures on January 20, 2005, although $30,000 plus $2,500 of interest was due and has been expensed. The second note for $40,000 matured on March 9, 2004 and has been expensed. The lender on these notes received 200,000 shares of common stock. The third note for $30,000 bore interest at 10% per annum, matured on April 21, 2004 and has been expensed. This lender was entitled to 50% of the number of shares of common stock and warrants issuable in the April 2004 Private Placement (defined below) if converted on the same terms as the placement. All loan proceeds were used for administrative and research and development expenditures. The Company intends to convert all or a portion of these loans into common stock at $.20 per share plus warrants exercisable at $.30 per share, prior to the effective date of this Prospectus.
In February 2004, the Company borrowed $100,000 in the aggregate from two private investors obtained through the Company's investment banker Meyers Associates, L.P. ("Meyers"). Meyers received a 10% sales commission and a 3% non-accountable expense allowance. Interest on each note (the "Bridge Notes") accrued at a rate of 10% per annum. These notes matured on the earlier of (a) August 15, 2004, (b) the completion of a private placement of at least $500,000, or (c) an event of default. Payment of the Bridge Notes was guaranteed by the
Company's two founders. The investors each received five-year warrants to purchase 50,000 shares of common stock exercisable at $.25 per share. The Bridge Notes were converted into shares of common stock and Class A Warrants in the Company's April 2004 Private Placement, described below.
In April 2004, the Company entered into a Placement Agent Agreement with an investment banking firm, Meyers Associates, L.P. to privately offer and sell on a "best efforts" basis, $550,000 of its securities in a private offering the "April 2004 Private Placement." The private placement of units each consisted of one share of common stock and one Class A Warrant to purchase one share of Common Stock for five years at $.30 per share. On April 26, 2004, NanoSensors closed on the entire $550,000 of private placement units. This included the exchange of ($100,000) of Bridge Notes for private placement units. In addition, the placement agent received warrants to purchase 50% of the units sold in the equity offering at the same offering price of $.20 per unit exercisable until April 30, 2009. The $463,000 of net proceeds are being used by NanoSensors for product development and working capital.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company recognized a net loss of $(334,705) for the Fiscal 2004 Period. The Auditor's Report states that the Company will need additional working capital for its planned activity and to service its debt, which raises substantial doubt about its ability to continue as a going concern. See Note 8 of Notes to Financial Statements.
A reduction in expenses would jeopardize our ability to carry out our business strategy and consequently reduce or eliminate future growth, which would adversely affect the value of an investment in our company.
The Company had working capital of $41,210 at April 30, 2004. We have funded the business throughout the development stage primarily through equity and convertible debt investments from accredited investors.
To date, we have not invested in derivative securities or any other financial instruments that involve a high level of complexity or risk. We plan to invest any excess cash in investment grade interest bearing securities.
We believe the Company will meet working capital requirements for the next 12 months from invested capital and sales. The expected growth of the business will have to be partially funded by additional equity to support the higher inventory and accounts receivable levels. If all of the Warrants offered hereby are exercised, the net proceeds would be expected to meet the Company's needs for the next 20 months. There can be no assurance additional financing will be available on acceptable terms, if at all. If adequate funds are not available, we may be unable to enhance our products, take advantage of future sales opportunities or respond to competitive pressures.
BUSINESS
Company Overview
NanoSensors is a Nevada corporation incorporated on December 23, 2003. The Company's principal business is the development, manufacture and marketing of sensors and instruments, along with the management of intellectual property, derived therefrom. These sensors are designed to detect specified levels of targeted specific biological, chemical and explosive ("B-C-X") agents in areas that are a risk in the post 9/11-era.
NanoSensor's Chief Scientist, Dr. Mathew Zuckerman, pioneered the first commercially successful "hybrid semiconductor" design for sensors for toxic gases in industrial and workplace venues. On August 5, 2002, U.S. Patent Number 4,502,321, "Apparatus and Method For Measuring The Concentration Of Gases", ran the 17.5 year period from issue and expired, leaving Dr. Zuckerman free to develop a new class of sensors and instruments to detect the presence of targeted B-C-X agents. NanoSensor's technology development is supported by a Scientific Advisory Board that includes Dr. David Tomanek, Professor of Biological Sciences at Michigan State University and Donald MacIntyre, President of Multichip Assembly, Inc., an ISO 9002 manufacturer of sensor and semiconductor components.
Nano-Scale and NanoSensor
The Company is named NanoSensors because its technology operates in the Nano-Scale of ten to the minus ninth meters and is sensitive to the presence of Nano-Scale size molecules of B-C-X agents using Nano-Scale surface structures to detect the presence of these molecules at nano concentrations (one part of the agent in a billion parts of air).
One hundred nanometers (one hundred billionth of a meter) is one thousand times the diameter of a human hair. An atom is one tenth of a nanometer. In the Nano-Scale the geometry is more important than the elemental composition. NanoSensors chooses elements and structure in the Nano-Scale to produce sensors that are more sensitive and more specific to the presence of B-C-X agents than previous generations of sensors. The incredible small size of the sensors, also called Quantum Dots because their behavior is explained, in part, by quantum physics, have the benefits of low cost with thousands yielded from a single silicon wafer and extremely low power. Life was simpler when Newton sat under the apple tree and Newtonian physics was developed. The 20th Century saw the birth of two non-Newtonian physics. First came Einsteinian physics to explain the movement and interaction of massive bodies in the cosmos. Then came quantum physics to explain the interaction between molecular and sub atomic particles. The Company's technology is nano-scale in size and explainable in part by quantum physics.
Targeted B-C-X Agents
NanoSensors plans to develop sensors to detect B-C-X agents. The Company's primary, secondary and tertiary development priorities are as follows:
Primary Secondary Tertiary
--------------------------- ------------------- ---------------------
Explosives: Nitramines Nitroaromatics Nitrate esters
RDX, HMX, & CL-20 TNT & Picric acid PETN & GTN
Biologics: Bacillus anthracis Coxiella burnetti Nipah virus
Clostridium botulinum toxin Brucella species Hantaviruses
Yesinia pestis Burkholderia mallei Tickborne encephalitis
Variola major Ricin toxin Yellow fever
Francisella tularemia Epsilon toxin Multidrug-resistant
tuberculosis
Viral hemorrhagic fevers Staphyococcus
enterotoxin B
Chemicals: Sarin gas Cyanide Ammonia
Dioxin PBB Chlorine
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The Opportunity
In order to make or our nation's quest to make Homeland Security, government and military venues safe, present detection sensors and instruments force us to use security screening architecture designed like the herding of sheep through a gate because of the low sensitivity, and high space, cost, power and supervision requirements of present detection sensors and instruments. Our opportunity is to make sensors available for detection of B-C-X agents that are highly sensitive, small size, low power consuming, and operate remotely. Such sensors support safety architectures designed like the cellular phone network to make an area or the whole nation safe. Just as smallpox outbreaks are controlled by vaccination of the population in circles of increasing diameter around an infected person, so too can the movement of B-C-X agents be monitored and controlled by the deployment of sensors connected by a sophisticated data collection and analysis network.
"Over the past 20 years or so, research and development (R&D) in the sensor area has expanded exponentially ... In part, this has occurred because of the links between developments in the semiconductor industry and the new types of devices under research, which are often based on semiconductor substrates ... We will soon witness a quantum leap in terms of what may be termed the performance-price index, in that we shall see devices that perform much better than the previous generation of sensors and are less expensive to purchase. In other words, we are on the verge of a sensor revolution, similar to that of the microprocessor revolution of the late 1980s." Reference: Principals of Chemical and Biological Sensors, Diamond, D., John Wiley and Sons, 1998.
Sensors
The Company's strategy is to develop and produce the new type of sensors for detection of the presence of B-C-X molecules to protect Homeland Security, government, and military venues. Management believes, based on its knowledge of the industry that NanoSensor's sensors will achieve
a significant market share. The sensors will accomplish bioassay, chemical and explosive agents on a selective basis and produce measurable signals proportional to the concentration of the agents present. Many of the target molecules can be detected using mass spectrometers with optical detection. However, these are basically expensive and delicate laboratory instruments and techniques not well suited to field applications. Sensors to detect biological and chemical agents will follow explosive agent sensors.
Explosive agents of general interest are in addition to hexahydro-1,3,5-trinitro-1,3,5-triazine (Royal Demolition Explosive: RDX), the principal ingredient in C4 explosive are: 2,4,6- trinitrotoluene (TNT), nitroamatic 2,4,6-trinitrotoluene (Picric acid), the nitroamine, octahydro-1,3,7- tetranitro-1,3,5,7-tetrazocine (HMX: High Melting Explosive) and the nitrate ester, pentaerythritol (PETN) and glycerol trinitrate (Nitroglyercin). Today's biological agent detection requires a time delay of from 1 to 48 hours. NanoSensor's B-C-C sensors are designed to detect biological agents in real time.
The Company enhances the physical, mechanical, electrical, or chemical properties of materials through synthesis of surface interfaces. NanoSensor's technology allows the interface of dissimilar materials within the internal structure. The interface structures utilize the combined properties of individual layers to provide overall functional qualities. By employing surface chemistry, these interface structures can be used to achieve substantial improvements in both performance and function of sensors.
The B-C-X sensor's proprietary and novel structure is specific to the targeted molecule to be detected. This is demonstrated in the diagram which follows this paragraph. The host molecule is selected to match the targeted guest molecule to form a "lock and key" that is highly selective to the presence of the targeted molecule. The host molecule for C4's primary ingredient Royal Demolition Explosive (RDX) first catalyzes ring cleavage thereby releasing as many as three strongly reactive nitrogen oxide groups that are then measured by integrated oxidation- reduction potential.
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Patent Background
NanoSensor was formed to extend the technology of Dr. Matthew Zuckerman, Chief Scientist to design, manufacture and market sensors and instruments to detect the presence of target B-C-X agents. Dr. Zuckerman pioneered the "hybrid semiconductor" sensor for toxic gases in industrial and workplace venues. While he served as chief scientist of a former employer he invented, patented and manufactured the market's first "hybrid semiconductor" design sensors for the detection of the presence of the molecule Chlorine.
On August 5, 2002, US Patent Number 4,502,321, "Apparatus and Method For Measuring The Concentration Of Gases", ran the 17.5 year period from issue and expired. This patent was invented solely by Dr. Zuckerman and was assigned to, and is the property of, Dart Industries. Dr. Zuckerman is free to develop a new class of sensor since this and other related patents he invented have expired. Management believes that Dr. Zuckerman's prior interdisciplinary technical and commercial experience offers the promise of success in development a paradigm shift in the development of sensors to detect B-C-X agents.
Technology License
On December 11, 2003, the Company purchased a license from Axiom Corporation and Dr. Matthew Zuckerman on a worldwide, perpetual, royalty-free, exclusive basis for all commercial markets for the use of, and further development of, sensor technology for detecting explosives, chemicals and biological agents. The terms of the purchase included a one time licensing fee of $90,000 and the issuance of 5,000,000 shares of common stock, with an aggregate value of $5,000, and a consulting agreement, which provides for a monthly fee of $15,000 to be paid for the further development of sensors. As of April 30, 2004, $72,500 had been paid on the contract, leaving a balance due of $17,500. During the term of the consulting agreement all technology developed and ready for patent application will be assigned to the Company.
Patents and Trade Secret Protect
The Company seeks to aggressively identify technology as NanoSensor's proprietary technology by obtaining patents and manages intellectual property rights through nondisclosure and contracts with customers and vendors and "employment to invent" contracts with employees and advisors.
Competition
The are many laboratory instruments and procedures for measurement of B-C-X agents. However, there are no field equivalent instruments with the exception of a single field instrument for measurement of explosive agents. The only competitive instrument that has been identified is the Ionscan for explosives, which is manufactured by Barringer Instrument. It was developed for measuring explosive materials in soil and water samples taken from toxic waste sites that are in the environmental process of remediation. The instrument has been placed into service for airport and other Homeland Security, government and
military venues. In these applications Teflon-cloth is used to wipe the exterior of computers and briefcases to pick up residuals of explosives and place samples into the instrument. The instrument uses a technology called ion mobility spectrometry that is similar to mass spectrometry. The materials on the cloth are subject to thermal desorption and the resulting ion spectrum is compared to standards to identify the explosive agents.
NanoSensors' proposed first two products are portable field instruments designed to measure the presence of explosive materials. The Company believes that the proposed first two products will have a significantly greater sensitivity and lower purchase cost. Additionally, the NanoSensor products have no consumables accept for the programmed maintenance and replacement of the sensor. The Company believes that the NanoSensor products will also have the added advantages of true portability battery operation and small size and light weight. All of these features combine to make these instruments ideal companions to the Ionscan instruments now in service at airports and other Homeland Security, government and military venues.
Marketing Plan
NanoSensors will market its proposed products to each of the Homeland Security, government and military markets. It intends to use a variety of marketing vehicles. This includes trade events targeted to its customer base; speaking engagements at national meetings; marketing materials to be used in direct mailings to specified targeted clients; target advertising; continued development of our website to be more interactive, to demonstrate our proprietary technologies, and links to company publications, partners, and industry-related sites will be provided; and public relations to help management capitalize on and distribute to the appropriate audiences the newest information and developments about NanoSensors. The Company also intends to engage a public relations firm to introduce NanoSensors, its technologies and its proposed products. It has initiated the placement of publications for initial references (company and third party peer reviewed medical journals) and press releases in leading industry publications.
Seasonality
The Company does not believe its future operations will be influenced by seasonal changes.
Legal Proceedings
As of the date of this Prospectus, there are no legal proceedings against NanoSensors.
Employees
NanoSensors currently has three employees and two consultants.
Properties
NanoSensors leases facilities in Santa Clara, California from an unaffiliated landlord. These facilities encompass approximately 1,900 square
feet and serve as NanoSensors' corporate headquarters and operations center. The current lease commenced in February 2004, for a two-year term at $2,304 per month and is personally guaranteed by Dr. Ted Wong, Chief Executive Officer.
NanoSensors believes that it has adequate facilities to conduct its current operations, and does not expect to seek additional administrative offices and/or research facilities in the near term. It has no current proposed programs for the renovation, improvement or development of current facilities.
MANAGEMENT
Executive Officers and Directors
The following table sets forth the names, ages and positions of NanoSensors' sole executive officer and director and its principal consultant. Set forth below is a brief description of the business experience and background of each person named in the table.
Name Age Title --------------------- --- ----------------------------------------------- Dr. Ted Wong 64 Chief Executive Officer, President and Director Dr. Matthew Zuckerman 60 Chief Scientist |
Dr. Ted Wong has been Chief Executive Officer, President and a Director of the Company since its inception in December 2003. He has over thirty years of U.S. and international business experience spanning the operational functions of research and development, sales, finance, and general business. From January 2002 until August 2003, Dr. Wong was Chief Strategy Officer of KT-Tech, Inc., a video compression company. From 2001 until January 2002, Dr. Wong was engaged in consulting. From 1999 to 2001, he served at different times as Chairman, CEO, CTO and COO of Zerotree Technologies, a firm he founded to develop video compression technologies for the Internet. From 1993 until 1998, Dr. Wong was President of Prime Technology Inc., business consultants. From 1988 to 1993, Dr. Wong served as President of INTEG, Inc., a firm he founded to market and distribute electronic learning aids in the U.S. market for Team Concepts of Hong Kong. During this period, Dr. Wong was co-founder and President of Fox Electronics and Technology, Inc., a firm founded to market and distribute Team Concept's consumer electronics products. From 1969 through 1983, He worked in research and development for North American Rockwell and General Electric Company where he became proficient at developing technology from concept to application. Dr. Wong holds a B.S. and a Ph.D. in Chemical Engineering from the University of Utah.
Dr. Matthew Zuckerman has been Chief Scientist of the Company since its inception in December 2003. Dr. Zuckerman has over thirty-five years of U.S. business experience, in senior level technical and general management and sales and marketing positions. From April 1980 to September 1989 he was president, founder and chief scientist of Advanced Transducer Devices, Inc. This Company invented, developed, patented and manufactured instruments and sensors under contract to Borg Warner, Dart Kraft Industries and other medium and small sized companies. The Company was sold in October 1989 for $20 million in cash and stock to Televideo Systems, Inc. Dr. Zuckerman has extensive experience with protection, licensing and commercialization of intellectual property rights with credit for many launches of new technological products and filings of worldwide patent filings in his career. He was the named inventor of twelve U.S. patents. From February 1997 to September 1998, Dr. Zuckerman helped Poseidon Technologies obtain [American] [Advanced] Micro Devices, Intel's competitor, as a customer, and secured equity financing. He holds Bachelors, Masters and Ph.D. from New York University, School of Engineering and Science. Dr. Zuckerman was an Alfred P. Sloan Executive Fellow at Stanford University, Graduate School of Business where he completed his thesis titled: "A Normative Prescription for an Innovative Manufacturing Company."
SCIENTIFIC ADVISORY BOARD
The Company has established a Scientific Advisory Board ("SAB") to assist it in its research and development strategy of identifying potential products and in monitoring the technical progress of the Company's technologies. Members are consulted for advice concerning specific Company projects. The SAB will meet formally to review the progress of the Company's research and development projects, to discuss technological advances in the relevant scientific specialties and to assist the Company in the recruitment of key scientific personnel. The Company intends to grant stock options for service on the SAB to receive a fee for consulting and for attendance at each SAB meeting.
All members of the SAB are employed elsewhere and may have commitments to and/or consulting agreement with other organizations, that may limit their availability to the Company. Although certain members of the SAB may have already devoted significant effort and time to NanoSensors' affairs, none is expected to devote more than a small portion of his time to the Company's affairs. The SAB is currently comprised of the following persons with a description of their backgrounds:
Dr. David Tomanek
Professor of Biological Sciences at Michigan State University, East Lansing,
Michigan
Professor Dr. David Tomanek studied physics in Switzerland and received his
Ph.D. from the Freie Universitat Berlin. While holding a position as Assistant
Professor at the Freie Universitat Berlin, he pioneered theoretical research in
Nanostructures at the AT&T Bell Laboratories and the University of California at
Berkeley. He established the field of Computational Nanotechnology at Michigan
State University, where he holds a position as Full Professor of Physics. His
scientific expertise lies in the development and application of numerical
techniques for structural, electronic and optical properties of surfaces, low
dimensional systems and nanostructures, in particular computer simulations of
fullerenes, nanotubes, ferrofluids, metallic and magnetic clusters. His
scholarly research has been supported by Swiss, German and U.S. Government
Agencies (NSF, ONR, AFOSR, DARPA)
Donald MacIntyre
President, Multichip Assembly, Inc., San Jose, CA
Mr. MacIntyre founded Multichip Assembly in 1991 as a spin off of Cyprus
Semiconductor's advanced packaging group to provide production of the next
generation of SPARC modules initially to Sun MicroSystems and later Silicon
Graphics, Inc. Multichip is an ISO 9002 rated manufacturer. Mr. MacIntyre
manufactures sensors for Nanogen, Optimatrix, Protiveris and Sensicore. He holds
a BSME degree from Northrup University.
Executive Compensation
Pursuant to the December 2003 License Agreement between the Company and Axiom Corp. and Matthew Zuckerman, Axiom entered into a consulting agreement. Dr. Matthew Zuckerman is President of Axiom which is being paid a consulting fee of $15,000 per month starting September 1, 2003 for a two-year period plus reimbursement of the consultant's direct costs. Axiom is currently
being compensated at the rate of $102,000 per annum. Axiom is an independent contractor and is to commit as much time as is acceptable to the Company. The agreement is terminable for an uncured breach or by either party on 90 days notice if there is no outstanding project assignment. See "Business - Technology License."
The Company entered into a two-year consulting agreement with Dr. Ted Wong commencing on September 1, 2003. The contract provides for Dr. Wong to be paid $14,833 per month plus reimbursement of direct costs. He is currently being compensated at the rate of $102,000 per annum. All inventions and ideas, whether patentable or not, made by Dr. Wong or with others relating to the Company's business shall belong to the Company. The Company intends to enter into an employment agreement with Dr. Ted Wong, Chief Executive Officer and President, prior to the effective date of this Prospectus.
Stock Incentive Plan
The Company intends to adopt a Stock Incentive Plan in order to motivate participants by means of stock options and restricted shares to achieve NanoSensors' long-term performance goals and enable our employees, officers, directors and consultants to participate in our long term growth and financial success.
Certain Relationships and Related Transactions
The Company has entered into a two-year office lease with rent of $2,304, which is personally guaranteed by Dr. Ted Wong, Chief Executive Officer. See "Business-Properties."
In December 2003, the Company issued 5,000,000 founders shares to Dr. Ted Wong, valued at $.001 per share, for services related to the Company. The Company also issued 5,000,000 founders shares to Dr. Matthew Zuckerman, valued at $.001 per share, in connection with the License Agreement entered into between the Company and Axiom Corp. and Dr. Zuckerman. See "Business-Technology License."
In February 2004, the Company issued 6,250,000 founders shares, valued at $.001 per share, in exchange for a note receivable to Meyers Associates L.P. and its affiliates for services related to the Company.
See "Executive Compensation" above for the terms and conditions of Consulting Agreements entered into by the Company with its two founders, Dr. Ted Wong and Dr. Matthew Zuckerman.
In February 2004, the Company borrowed $100,000 in the aggregate from two private investors obtained through the Company's investment banker Meyers Associates, L.P. ("Meyers"). Meyers received a 10% sales commission and a 3% non-accountable expense allowance. The net proceeds were used by NanoSensors for product development and working capital. Interest on each note (the "Bridge Notes") accrued at a rate of 10% per annum. These notes matured on the earlier of (a) August 15, 2004, (b) the completion of a private placement of at least $500,000, or (c) an event of default. Payment of the Bridge Notes was guaranteed
by the Company's two founders, Dr. Ted Wong and Dr. Matthew Zuckerman. The investors each received five-year warrants to purchase 50,000 shares of common stock exercisable at $.25 per share. The Bridge Notes were converted into shares of common stock and Class A Warrants in the Company's April 2004 Private Placement.
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to us with respect to the beneficial ownership of 19,300,000 shares of our common stock outstanding, as of June 30, 2004 by:
o Each person known by us to beneficially own 5% or more of our common stock,
o Each of our executive officers and directors, and
o All of our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power. Under SEC rules, a person is deemed to be the beneficial owner of securities which may be acquired by such person upon the exercise of options and warrants or the conversion of convertible securities within 60 days from the date on which beneficial ownership is to be determined. Each beneficial owner's percentage ownership is determined by dividing the number of shares beneficially owned by that person by the base number of outstanding shares, increased to reflect the beneficially-owned shares underlying options, warrants or other convertible securities included in that person's holdings, but not those underlying shares held by any other person.
Except as otherwise indicated in the notes to the following table,
o We believe that all shares are beneficially owned, and investment and voting power is held by, the persons named as owners; and
o The address for each beneficial owner listed in the table, except where otherwise noted, is c/o NanoSensors, Inc.
Amount and
Amount and Percentage of
Nature of of Shares
Beneficial Beneficially
Name of Stockholder Ownership Owned (1)
------------------------- ---------- ------------
Ted Wong 2,200,000 11.4%
Matthew Zuckerman 3,817,500 19.8%
David Kwong 1,000,000 5.2%
Meyers Associates, L.P 6,200,000(2) 28.1%
45 Broadway, 2nd Floor
New York, N.Y. 10006
Bruce Meyers 1,700,000(3) 8.8%
|
45 Broadway, 2nd Floor
New York, N.Y. 10006
Imtiaz Khan 1,100,000 (4) 5.7%
45 Broadway, 2nd Floor
New York, N.Y. 10006
Robert Seguso 2,550,000 (5) 12.4%
34-5 54th Drive West #G102
Brandenton, Florida 34210
Michael Stone 2,550,000 (5) 12.4%
18 Ozone Avenue
Venice, California 90291
All executive officers and directors 2,200,000 11.4%
as a group (1 person)
|
* Less than 1% of the issued and outstanding shares.
(1) Does not include shares of Common Stock currently issuable upon: (i) exercise of common stock purchase warrants to purchase 100,000 shares issued in connection with the Company's $100,000 February 2004 Bridge Financing; (ii) 2,750,000 Class A Warrants to purchase 2,750,000 shares of Common Stock; and (iii) placement agent warrants to purchase 1,375,000 shares of Common Stock, 1,375,000 Class A Warrants and 1,375,000 shares of Common Stock underlying the Class A Warrants.
(2) Includes 3,450,000 shares of Common Stock and unit purchase options to purchase 1,375,000 shares of common stock, and 1,375,000 Class A warrants to purchase 1,375,000 shares of common stock.
(3) Includes 1,700,000 shares of Common Stock and does not include the securities listed in note (2) above held by Meyers Associates, L.P. of which entity Bruce Meyers is president.
(4) Includes 1,100,000 shares of Common Stock and does not include the securities listed in note (2) above held by Meyers Associates, L.P. by whom Imtiaz Khan is employed.
(5) Includes presently-exercisable bridge warrants to purchase 50,000 shares of common stock and presently-exercisable Class A warrants to purchase 1,250,000 shares of common stock.
SELLING STOCKHOLDERS
An aggregate of 8,450,000 shares of Common Stock and 4,125,000 Class A Warrants may be offered for sale and sold pursuant to this prospectus by the selling shareholders. The shares are to be offered by and for the respective accounts of the selling shareholders. We have agreed to register all of the shares under the Securities Act for resale by the selling shareholders and to pay all of the expenses in connection with such registration and sale of the shares, other than underwriting discounts and selling commissions and the fees
and expenses of counsel and other advisors to the selling shareholders. We will not receive any proceeds from the sale of the shares by the selling shareholders, other than the proceeds from the exercise of the warrants by which certain of the selling shareholders acquired their shares being offered pursuant to this prospectus.
o We issued 100,000 bridge warrants to two investors in connection with our bridge financing. The warrants are immediately exercisable and each warrant entitles the holder to purchase one share of our common stock at an exercise price of $.25 per share.
o We issued an aggregate of 2,750,000 shares of our Common Stock to four investors in our Rule 506 Regulation D private placement.
o We issued an aggregate of 2,750,000 Class A warrants to four investors in our Rule 506 Regulation D private placement. Each Class A warrant entitles the holder to purchase one share of our Common Stock at an exercise price of $.30 per share.
o We issued 1,375,000 warrants to the placement agent for our private placement. Each warrant entitles the placement agent to purchase one unit consisting of one share of our Common Stock and one Class A warrant at $.20 per unit, each Class A warrant exercisable at an exercise price of $.30 per share, or an aggregate of 2,750,000 shares of common stock.
Information with respect to the selling shareholders and the shares of our common stock held by them and those shares being offered for sale pursuant to this prospectus is set forth in the following table. None of the selling shareholders has had any material relationship with us within the past three years, except as noted above or in the notes to the following table.
Amount and Nature of Beneficial
Number of Number of Ownership After the Sale of the
Number of Number of Shares Being Offered
Shares Owned Shares Being -------------------------------
Selling Shareholder Prior to Sale Offered for Sale Number Percentage(1)
------------------- ------------- ---------------- ------ --------------------
Before After
------ -----
Eugene Avila 1,000 1,000 0 -- --
Robert Baron 2,000 2,000 0 -- --
Rob Bates 500 500 0 -- --
Jennifer Caruso 1,000 1,000 0 -- --
Margie Chassman 252,000 252,000 0 1.3% --
Peter Chung 1,000 1,000 0 -- --
|
Amount and Nature of Beneficial
Number of Number of Ownership After the Sale of the
Number of Number of Shares Being Offered
Shares Owned Shares Being -------------------------------
Selling Shareholder Prior to Sale Offered for Sale Number Percentage(1)
------------------- ------------- ---------------- ------ --------------------
Before After
------ -----
Gerald Cohen 1,000 1,000 0 -- --
Victor DiGioia 2,500 2,500 0 -- --
David Flach 500 500 0 -- --
Hannah Flach 500 500 0 -- --
Ken Flach 500 500 0 -- --
Madison Flach 500 500 0 -- --
Noah Flach 500 500 0 -- --
Sandra Flach 500 500 0 -- --
Peter Geddes 2,000 2,000 0 -- --
Anthony Giordano 1,000 1,000 0 -- --
Stanley Goldstein 2,500 2,500 0 -- --
Jesse Grossman 2,000 2,000 0 -- --
David Harary 1,000 1,000 0 -- --
Lawrence Helson 5,000 5,000 0 -- --
Richard Houlding 2,000 2,000 0 -- --
Michael G. Jesselson 12/18/80 250,000 250,000 0 1.3% --
Trust
Ruth Robin Jemal 1,000 1,000 0 -- --
Evan Kalt 2,000 1,000 0 -- --
Iris Kalt 2,000 2,000 0 -- --
Lee Kalt 2,000 2,000 0 -- --
Steven Kalt 1,000 1,000 0 -- --
Arshad Khan 2,500 2,500 0 -- --
Asif Khan 1,000 1,000 0 -- --
|
Amount and Nature of Beneficial
Number of Number of Ownership After the Sale of the
Number of Number of Shares Being Offered
Shares Owned Shares Being -------------------------------
Selling Shareholder Prior to Sale Offered for Sale Number Percentage(1)
------------------- ------------- ---------------- ------ --------------------
Before After
------ -----
Abdul Kudiya 2,000 2,000 0 - -
Sharifa Kudiya 2,000 2,000 0 - -
Zofia Kura 2,000 2,000 0 - -
Riffat Lonie 2,000 2,000 0 - -
Donna Louisa 500 500 0 - -
Meyers Associates L.P. 6,200,000 (3) 2,750,000 3,450,000 28.1% 15.6%
Joseph Meyers 2,500 2,500 0 - -
Rita Meyers 3,000 3,000 0 - -
Sadie Jemal Meyers 3,000 3,000 0 - -
Abbas Mohib 2,000 2,000 0 - -
Unaizah Moonis 1,000 1,000 0 - -
Donald Mudd 1,000 1,000 0 - -
Edmond Norkus 500 500 0 - -
Karen Norkus 500 500 0 - -
Tess Norkus 500 500 0 - -
Trace Norkus 500 500 0 - -
Tyler Norkus 500 500 0 - -
Victor Puzio 1,000 1,000 0 - -
Alia Rauf 2,000 2,000 0 - -
Janice Rehman 2,000 2,000 0 - -
Shaheen Rehman 1,000 1,000 0 - -
Ruth Robin 1,000 1,000 0 - -
Allan Rothstein 1,000 1,000 0 - -
Norman Rothstein 1,000 1,000 0 - -
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Amount and Nature of Beneficial
Number of Number of Ownership After the Sale of the
Number of Number of Shares Being Offered
Shares Owned Shares Being -------------------------------
Selling Shareholder Prior to Sale Offered for Sale Number Percentage(1)
------------------- ------------- ---------------- ------ --------------------
Before After
------ -----
Robert Rubin 3,000 3,000 0 - -
SBK Investment Partners 2,000 2,000 0 - -
Betty Seguso 500 500 0 - -
Carling Seguso 1,000 1,000 0 - -
Carling Seguso 500 500 0 - -
Debbie Seguso 500 500 0 - -
Holden Seguso 500 500 0 - -
Rick Seguso 500 500 0 - -
Ridley Seguso 500 500 0 - -
Robert Seguso 2,550,000 (4) 2,550,000 0 12.4% -
Roger Seguso 500 500 0 - -
Nadia Shahzad 2,000 2,000 0 - -
Louis Gimpel Shaukat 2,000 2,000 0 - -
Mahmood Shaukat 2,000 2,000 0 - -
Ken Sitomer 1,000 1,000 0 - -
Eileen Slitkin 2,000 2,000 0 - -
Wade Slitkin 1,000 1,000 0 - -
Michael Stone 2,550,000 (4) 2,550,000 0 12.4% -
Joel Solar 2,000 2,000 0 - -
Jonathan Spanier 2,000 2,000 0 - -
Arthur Tacopino 1,000 1,000 0 - -
Gary Weiss 2,000 2,000 0 - -
Zahid Yosaf 1,000 1,000 0 - -
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* Less than 1% of the issued and outstanding shares
(1) As of June 30, 2004, we had 19,300,000 shares of Common stock issued and unless otherwise indicated, each person has sole investment and voting power with respect to the shares indicated. The number of shares of Common Stock to be issued and outstanding after the offering is 24,900,000 based on all Shares registered under this prospectus actually being issued. For purposes of this table, a person or group of persons is: (a) deemed to have "beneficial ownership" of any shares as of a given date which such person has the right to acquire within 60 days after such date and (b) assumed to have sold all shares registered hereby in this offering. For purposes of computing the percentage of outstanding shares held by each person or group of persons named above on a given date, any security which such person or persons has the right to acquire within 60 days after such date is deemed to be outstanding for the purpose of computing the percentage ownership of such person or persons, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.
(2) Includes 125,000 presently-exercisable Class A Warrants to purchase 125,000 shares of common stock.
(3) Includes 3,450,000 shares of Common Stock and unit purchase options to purchase 1,375,000 shares of common stock, and 1,375,000 Class A warrants to purchase 1,375,000 shares of common stock.
(4) Includes 50,000 presently-exercisable Bridge Warrants to purchase 50,000 shares of common stock and 1,250,000 presently-exercisable Class A Warrants to purchase 1,250,000 shares of common stock.
DESCRIPTION OF SECURITIES
General
The Company is authorized to issue 50,000,000 shares of Common Stock, par value $.001 per share. As of June 30, 2004, there were 19,300,000 shares of Common Stock issued and outstanding held by 102 shareholders of record.
Common Stock
The holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors then up for election. The holders of Common Stock are entitled to receive ratably such dividends when, as and if declared by the Board of Directors out of funds legally available therefore. In the event of liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining which
are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock. Holders of Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock. All of the outstanding shares of Common Stock are, and the shares of Common Stock offered hereby, when issued in exchange for the consideration set forth herein, will be, validly issued, fully paid and non-assessable.
Warrants
Private Placement Warrants. The Company has authorized for issuance up to 4,125,000 Class A Warrants, plus such additional warrants that may become issuable pursuant to the anti- dilution provisions contained in the warrants. The number of Class A Warrants are equal to those issued in connection with our private placement (2,750,000) and those issuable to our placement agent (1,375,000).
Each A Warrant entitles the holder to purchase one share of Common Stock at any time after issuance at an exercise price per A Warrant of $.30. The A Warrants shall expire on April 30, 2009 (the fifth anniversary of the date of issuance) and be subject to other terms and conditions described below.
The Warrants may be exercised in whole or in part, at any time and from time to time during the Exercise Period through cash exercises. Unless exercised, the Warrants will automatically expire at the end of the Exercise Period.
Bridge Warrants. The Company has registered for resale under this prospectus an aggregate of 100,000 shares of Common Stock issuable upon exercise of bridge warrants issued to two investors exercisable until February 28, 2009, at $.25 per share.
Registration Rights. The Company is required to file the registration statement under the Securities Act, registering the shares of Common Stock, the Warrants and the Warrant Shares underlying the Units, within 90 days following the Closing Date of April 26, 2004, and use its best efforts to have the Registration Statement declared effective by the Commission as promptly thereafter as is commercially reasonable. In the event the Registration Statement is not filed on or before the Filing Date or is not declared effective within 100 days after the Filing Date, the Company shall issue to the investors a number of Warrants equal to the number of shares of Common Stock underlying the Units multiplied by two and one-half percent (2.5%) on such date and on each one month anniversary thereafter and prior to the Effective Date, but in no event to exceed 4 months or 10% of the number of registrable securities. The Company agrees to keep the Registration Statement effective until expiration of the Warrants.
Dividends
To date, the Company has not declared or paid any dividends on its Common Stock. The payment by the Company of dividends, if any, is within the discretion of the Board of Directors and will depend on the Company's earnings, if any, its capital requirements and financial condition, any
dividend restrictions or prohibitions under loan agreements, as well as other relevant factors. The Board of Directors does not intend to declare any dividends in the foreseeable future, but instead intends to retain earnings for use in the Company's business operations.
Transfer Agent and Warrant Agent
The transfer agent for the Common Stock is, and the warrant agent for the Warrants will be, ________________________________________________.
SEC Position on Indemnification
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons under the above provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is unenforceable.
Certain Market Information
We intend to seek to have our Common Stock listed on the NASD's OTCBB. There has been limited trading, to date, of our Common Stock. An OTC BB listing does not guarantee that an active trading market for our securities will develop. You will likely not be able to sell your securities if an active trading market for our securities does not develop. Further, we can give no assurance that such a market could be sustained if a trading market for our securities were to develop, nor that our securities offered hereby could be resold at their original offering price or at any other price. Any market for our securities that may develop will very likely be a limited one and, in all likelihood, be highly volatile. In any event, if our securities traded at a low price, many brokerage firms may choose not to engage in market making activities or effect transactions in our securities. Accordingly, purchasers of our securities may have difficulties in reselling them and many banks may not grant loans using our securities as collateral.
Federal regulations governing "penny stocks" could have a detrimental effect on holders of our securities. Our securities are subject to the SEC rules that impose special sales practice requirements upon broker-dealers that sell such securities to parties other than established customers or accredited investors. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of purchasers of our securities to buy or sell in any market that may develop. In addition, the SEC has adopted a number of rules to regulate "penny stocks." Because our securities currently constitute a "penny stock" within the meaning of these rules, the rules would apply to us and our securities. The rules may further affect the ability of owners of our securities to sell their securities in any market that may develop for them.
SHARES ELIGIBLE FOR FUTURE SALE
As of June 30, 2004, we had issued and outstanding 19,300,000 shares of our common stock, and warrants to purchase an aggregate of approximately 5,600,000 shares of our common stock.
All of the 19,300,000 shares of our common stock issued and outstanding, as well as all remaining securities issued upon exercise of warrants are restricted securities as that term is defined under Rule 144 and, accordingly, may not be sold absent their registration under the Securities Act or pursuant to Rule 144 following their being held for the applicable holding periods set forth in Rule 144.
In general, under Rule 144, as currently in effect, a person or group of persons whose shares are aggregated, who has beneficially owned restricted shares for at least one year, including the holding period of any prior owner except an affiliate of ours, would be entitled to sell, within any three month period, a number of shares that does not exceed the greater of: o 1% of the number of then outstanding shares of our common stock, or o The average weekly trading volume of our common stock during the four calendar weeks preceding the sale; provided, that, public information about us as required by Rule 144 is available and the seller complies with manner of sale provisions and notice requirements.
The volume limitations described above, but not the one-year holding period, also apply to sales of our non-restricted securities by our affiliates. A person who is not an affiliate, has not been an affiliate within three months before the sale and has beneficially owned the restricted securities for at least two years, is entitled to sell the restricted shares under Rule 144 without regard to any of the limitations described above.
Before the offering pursuant to this prospectus, there has been no public market for our securities. We cannot predict the effect, if any, that sales of, or the availability for sale of, our securities stock will have on the market price of our securities prevailing from time to time. Nevertheless, the possibility that substantial amounts of our common stock and warrants might enter the public market through Rule 144 sales, or otherwise, could adversely affect the prevailing market price of our securities and could impair our ability to raise capital in the future through the sale of securities.
There may be an adverse effect on the market price of our securities because shares of our common stock are available for future sale. No prediction can be made as to the effect, if any, that future sales, or the availability of shares of our common stock for future sale, by us or by our directors and executive officers will have on the market price of our securities prevailing from time to time. Sales of substantial amounts of our securities, including shares issued upon the exercise of options or warrants, or the perception that such sales could occur, could adversely affect prevailing market prices for the our securities.
PLAN OF DISTRIBUTION
The shares being offered for sale pursuant to this prospectus may be sold by the selling shareholders for their respective own accounts. We will receive none of the proceeds from this offering, other than the proceeds from the exercise of warrants by which certain of the selling shareholders acquired their shares being offered pursuant to this prospectus. The selling shareholders will pay or assume brokerage commissions or other charges and expenses incurred in the sale of the shares. The distribution of the shares by the selling shareholders is not currently subject to any underwriting agreement. Each selling shareholder must use a broker-dealer which is registered in the state in which the selling shareholder seeks to sell their shares.
The shares may be sold or transferred for value by the selling shareholders, in one or more transactions, on the NASD OTC Bulletin Board, in privately negotiated transactions or in a combination of such methods. The shares may be sold or transferred at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at prices otherwise negotiated. The selling shareholders may effect such transactions by selling or transferring the shares to or through brokers and/or dealers, and such brokers or dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the selling shareholders and/or the purchasers/transferees of the shares for whom such brokers or dealers may act as agent. Such broker or dealer compensation may be less than or in excess of customary commissions. However, the maximum compensation to be received by any NASD member or independent broker-dealer will not be greater than eight (8%) percent of the gross proceeds of any sale. The selling shareholders and any broker or dealer that participate in the distribution of the shares may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by them and any profit on the resale of the shares sold by them may be deemed to be underwriting discounts and commissions under the Securities Act and under the NASD Corporate Financing Rules.
Upon our being notified by a selling shareholder that any material arrangement has been entered into with a broker or dealer for the sale of shares through a secondary distribution, or a purchase by a broker or dealer, a supplemental prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing:
o the name of each of such selling shareholder and the participating brokers and/or dealers,
o the number of shares involved,
o the price at which such shares are being sold,
o the commissions paid or the discounts or concessions allowed to such brokers and/or dealers,
o where applicable, that such brokers and/or dealers did not conduct any investigation to verify the information set out or incorporated by reference in the prospectus, as supplemented, and
o other facts material to the transaction.
Any of the shares of our common stock being offered for sale pursuant to this prospectus that qualify for sale pursuant to Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus.
The shares to be offered by pursuant to this prospectus upon the exercise of warrants are issuable in accordance with the terms of the individual warrants. Each of the warrants provide, among other things, that, upon surrender at our principal offices of the certificate evidencing the warrants, with the annexed form to exercise the warrants duly completed, dated and executed, together with payment of the exercise price of the warrants so exercised, the registered holder of the warrants, or such holders' assigned(s), will be entitled to receive a certificate for the shares so purchased.
There can be no assurance that the selling shareholders will sell or transfer any of the shares being offered pursuant to this prospectus.
EXPERTS
Our consolidated financial statements as of April 30, 2004, and for the period from inception to April 30, 2004, have been included in this prospectus and in the registration statement in reliance upon the report of Madsen & Associates, CPA's, Inc., independent auditors, on their audit of our financial statements given on authority of this firm as an expert in accounting and auditing.
LEGAL MATTERS
The validity of the shares of our common stock and warrants being offered for sale pursuant to this prospectus has been passed upon for us by Snow Becker Krauss P.C., 605 Third Avenue, New York, New York 10158. SBK Investment Partners, an investment partnership consisting of members of Snow Becker Krauss P.C., owns an aggregate of 2,000 shares of our common stock, which shares are being offered for sale pursuant to this prospectus.
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH DIFFERENT OR ADDITIONAL INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY IN ANY JURISDICTION WHERE SUCH OFFER, OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SHARES.
MADSEN & ASSOCIATES, CPA's Inc. 684 East Vine St, Suite 3
------------------------------- Murray, Utah 84107
Certified Public Accountants and Business Consultants Telephone 801 268-2632
Fax 801-262-3978
Board of Directors
Nanosensors, Inc.
Santa Clara, California
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Nanosensors, Inc. (development stage company) at April 30, 2004 and the related statement of operations, stockholders' equity, and cash flows for the period December 23, 2003 (date of inception) to April 30, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards of the Public Company Accounting Oversight Board ("PCAOB"). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 balance sheet presentation. We believe that our audit provides 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 Nanosensors, Inc. at April 30, 2004 and the results of operations, and cash flows for the period December 23, 2003 (date of inception) to April 30, 2004, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company will need additional working capital for its planned activity and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in the notes to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Madsen & Associates, CPA's Inc.
Salt Lake City, Utah,
July 12, 2004
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NANOSENSORS, INC.
ASSETS
CURRENT ASSETS
Cash $ 351,164
Inventory - for sale 16,072
---------
Total Current Assets 367,236
---------
PROPERTY AND EQUIPMENT - net of depreciation 7,067
---------
OTHER ASSETS
License - net of amortization 87,610
Deposit 3,000
---------
90,610
---------
$ 464,913
=========
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable - license 17,500
Notes payable and accrued interest 154,828
Accounts payable - related party 63,917
Accounts payable 89,781
---------
Total Current Liabilities 326,026
---------
STOCKHOLDERS' EQUITY
Common stock
50,000,000 shares authorized, at $.001 par value;
19,297,500 shares issued and outstanding 19,298
Capital in excess of par value 465,027
Stock subscriptions receivable (10,733)
Deficit accumulated during the development stage (334,705)
---------
Total Stockholders' Equity 138,887
---------
$ 464,913
=========
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The accompanying notes are an integral part of these financial statements.
NANOSENSORS, INC.
(Development Stage Company)
STATEMENT OF OPERATIONS
For the Period December 23, 2003 (date of Inception)
April 30, 2004
================================================================================
REVENUES $ --
EXPENSES
Administrative 45,222
Research and development 263,348
Depreciation and amortization 8,323
---------
NET LOSS -before other income and expense (316,893)
OTHER INCOME AND EXPENSE
Interest income 129
Interest and other financing expense (17,941)
---------
NET LOSS $(334,705)
=========
NET LOSS PER COMMON SHARE
Basic and diluted $ (.02)
---------
AVERAGE OUTSTANDING SHARES (stated in 1,000's)
Basic 17,396
---------
Diluted 21,521
---------
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The accompanying notes are an integral part of these financial statements.
NANOSENSORS , INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period December 23, 2003 (date of inception)
to April 30, 2004
======================================================================================================
Capital in
Common Stock Excess of Accumulated
Shares Amount Par Value Deficit
---------- ------------ ---------- -----------
Balance December 23, 2003 -- $ -- $ -- $ --
Issuance of common stock for services
at $.001 5,000,000 5,000 -- --
Issuance of common stock for license
at $.001 5,000,000 5,000 -- --
Issuance of common stock for note
receivable at $.001 6,250,000 6,250 -- --
Issuance of common stock for expenses
at $.001 200,000 200 -- --
Issuance of common stock for cash
at $.05 9,500 10 465 --
Issuance of common stock for note
receivable at $.05 88,000 88 4,312 --
Issuance of common stock for cash
at $.20 - net of issuance costs 2,750,000 2,750 460,250 --
Net operating loss for the period December
23, 2003 to April 30, 2004 -- -- -- (334,705)
Balance April 30, 2004 19,297,500 $ 19,298 $ 465,027 $ (334,705)
========== ============ ========== ===========
The accompanying notes are an integral part of these financial statements.
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NANOSENSORS, INC.
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(334,705)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Depreciation and amortization 8,323
Changes in stock subscriptions receivable (83)
Changes in inventory (16,072)
Changes in accounts payable 176,026
Issuance common capital stock for expenses
5,200
Net Change in Cash From Operations (161,311)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment
(8,000)
Purchase of license (90,000)
Deposit (3,000)
---------
(101,000)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from notes payable 150,000
Proceeds from issuance of common stock
463,475
613,475
Net Increase in Cash 351,164
Cash at Beginning of Period --
Cash at End of Period $ 351,164
=========
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NON CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES
Issuance of 5,200,000 common shares for services and expenses $ 5,200
---------
Issuance of 5,000,000 common shares for license 5,000
---------
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The accompanying notes are an integral part of these financial statements.
NANOSENSORS, INC.
(Development Stage Company)
1. ORGANIZATION
The Company was incorporated under the laws of the state of Nevada on December 23, 2003 with authorized common stock of 50,000,000 shares at $.001 par value.
The Company was organized for the purpose of the development and marketing of sensors to detect explosives, chemicals, and biological agents. The Company is in the development stage and has not started any significant operations.
The Company has elected September 30 as its fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.
On April 30, 2004, the Company had a net operating loss available for carry forward of $334,705. The tax benefit of approximately $100,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has no operations. The net operating loss will expire 2024.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Financial and Concentrations Risk
Financial instruments that potentially subject the Company to significant concentration of credit risk consists primarily of cash. Cash balances are maintained in accounts that are not federally insured for amounts over $100,000 but are other wise in financial institutions of high credit quality.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity, at the time of purchase, of less than three months, to be cash equivalents.
Property and equipment
The Company's property and equipment consists of the following:
Office equipment 8,000
Less accumulated depreciation (933)
----------
7,067
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Office equipment is depreciated on the straight line method over five and seven years.
Research and Development Costs
Research and development costs are expensed as incurred.
Revenue Recognition
Revenue will be recognized on the sale and delivery of a product or the completion of a service provided.
Advertising and Market Development
The company will expense advertising and market development costs as incurred.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Financial Instruments
The carrying amounts of financial instruments are considered by management to be their estimated fair values.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
3. PURCHASE OF LICENSE
On December 11, 2003 the Company purchased a worldwide, perpetual, exclusive, marketing license from Axiom Corp and Matt Zuackerman for the use of, and further development of, sensor technology for detecting explosives, chemicals and biological agents. The terms of the purchase included a one time licensing fee of $90,000 and the issuance of 5,000,000 common shares of stock, with an estimated value of $5,000, and a consulting agreement, which provides for a monthly fee of $15,000 to be paid for the further development of the sensors ( note 5). At the report date $72,500 had been paid on the contract, leaving a balance due of $17,500. During the term of the consulting agreement all technology for detecting explosives, chemicals, and biological agents developed and ready for patent application will be assigned to the Company.
The useful life of the license was determined by management to be five years and is being amortized on the straight line method or a faster rate if it is determined to have a shorter life.
All costs incurred during the research and development stage are expensed.
4. NOTES PAYABLE AND ACCRUED INTEREST
Notes payable and accrued interest consist of convertible, demand loans, at a mutually agreed interest rate. 200,000 common shares were issued as part of the costs of financing. It is the intent of the parties to convert the notes and accrued interest in to common stock, and warrants, during August 2004, which will equal approximately 874,069 shares and 154,069 warrants. The warrants can be exercised for an equal number of common shares at $.30 any time before January 21, 2007.
5. CONTINUING LIABILITIES
The Company entered into two consulting agreements, including one described in note 3, for the further development of explosive, chemical, and biological sensors. The terms of the agreements provide for a total monthly fee of $29,833, to continue for two years from September 1, 2003, and can be canceled by either party.
6. CAPITAL STOCK
The Company completed private placement offerings of 5,000,000 common shares at $.001 for services, and 5,000,000 common shares for a license (note 3), 200,000 shares for financing costs (note 4), 6,338,000 shares for notes receivable of $10,650 and 2,759,500 shares for cash, which included 2,750,000 warrants, to purchase an equal number of shares at $.30 per share before April 30, 2009, and 1,375,000 units. Each unit consists of the right to purchase one share at $.20 per share and one additional warrant which can be exercised at $.30 per share before April 30, 2009.
During May 2004, the Company issued 2,500 common shares at $.05 per share.
7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
An officer-director, his family, and a manager, acquired 17.6% of the common capital stock issued, and have accrued liabilities due them of $63,917, resulting from the consultant agreements outlined in note 5.
8. GOING CONCERN
The company will need additional working capital for its future planned activity and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining sufficient working capital to be successful in that effort. The management of the Company has developed a strategy, which it believes will accomplish this objective, through additional short term loans, and equity funding, which will enable the Company to operate for the coming year.
NANOSENSORS, INC.
8,450,000 Shares of Common Stock
4,125,000 Class A Warrants
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The following statutes and by-law provisions are the only statutes, charter provisions, by- laws, contracts or other arrangements known to the registrant that insure or indemnify a controlling person, director or officer of the registrant in any manner against liability which he or she may incur in his or her capacity as such.
Article VI of the registrant's By-laws provides that:
The Corporation shall indemnify any and all of its Directors or Officers or former Directors or Officers or any person who may have served at its request as a Director or Officer of another corporation in which it owns shares of capital stock or of which it is a creditor against expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been Directors or Officers or a Director or Officers of the Corporation or of such other corporation, except in relation to matters as to which any such Director or Officer or former Director or Officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct, in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under By-Law agreement, vote of stockholders or otherwise.
Sections 78.7502 and 78.751 of the Nevada General Corporation Law ("GCL"), provide that:
1. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
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2. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 1 and 2, or in defense of any claim, issue or matter therein, he must be indemnified by the corporation against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a court or advanced pursuant to subsection 5, must be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not parties to the act, suit or proceeding so orders, by independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the act, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.
5. The articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the
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corporation. The provisions of this subsection do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to subsection 2 or for the advancement of expenses made pursuant to subsection 5, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person.
Section 78.752 of the GCL provides that:
1. A corporation may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this subsection may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.
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3. Any insurance or other financial arrangement made on behalf of a person pursuant to this section may be provided by the corporation or any other person approved by the board of directors, even if all or part of the other person's stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the terms and conditions of any insurance or other financial arrangement made pursuant to this section and the choice of the person to provide the insurance or other financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to personal liability for his action, even if a director approving the insurance or other financial arrangement is a beneficiary of the insurance or other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for itself or for another affiliated corporation pursuant to this section is not subject to the provisions of Title 57 of the Nevada Revised Statutes.
Item 25. Other Expenses of Issuance and Distribution.
SEC registration fee $ 265.14
NASD registration fee $ 709.25
Printing expenses 1,000*
Legal fees 30,000*
Accounting fees 5,000*
Miscellaneous $ 3,025.61*
-----------
Total $ 40,000.00
===========
----------
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* Estimated
Item 26. Recent Sales of Unregistered Securities.
(a) In December 2003, the Company issued 5,000,000 founders shares to Dr. Ted Wong, valued at $.001 per share, for services related to the Company. The Company issued 5,000,000 founders shares to Dr. Matthew Zuckerman, valued at $.001 per share, in connection with the License Agreement entered into between the Company and Axiom Corp. and Dr. Zuckerman. The Company also issued 6,250,000 founders shares at $.001 per share to Meyers Associates L.P. and its affiliates, for services related to the Company. The registrant believes that issuance of the shares did not require registration under the Act pursuant to the exemption available under Section 4(2) of the Act. There was no underwriter or placement agent involved in the transaction.
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(b) In February 2004, the registrant sold an aggregate of $100,000 of units to two accredited investors pursuant to a private placement. Each unit consisted of $50,000 principal amount of 10% subordinated promissory notes (the "Notes") and warrants to purchase 50,000 shares of common stock of the registrant. The Notes were to mature on August 15, 2004, or upon completion of a private placement of at least $500,000. In connection with the registrant's completion of the private placement described in subsection (c) below, the two investors elected to convert their notes into units in such subsequent private placement. The registrant believes that issuance of the notes, warrants and shares issued upon conversion of the notes did not require registration under the Securities Act of 1933, as amended (the "Act"), pursuant to an exemption available under the provision of Section 4(2) under the Act. Meyers Associates L.P. acted as placement agent in the offering and received a 10% sales commission and a 3% non-accountable expense allowance.
(c) In April and May 2004, the registrant sold an aggregate of 100,000 founders' shares at a price equal to $.05 per share pursuant to a private placement under Rule 504 of Regulation D promulgated under the Act. There was no underwriter or placement agent involved in the transaction.
(d) In April 2004, the registrant, through its Placement Agent, Meyers Associates, L.P., sold an aggregate of 2,750,000 units at $.20 per unit, or $550,000, each unit consisting of one share of Common Stock and one five-year Warrant to purchase one share of Common Stock at $.30 per share to 4 accredited investors. Meyers Associates received a sales commission on the $550,000 of units issued, or $55,000, a $16,500 non-accountable expense allowance and warrants to purchase an aggregate of 1,375,000 units, identical to the units issued in the private placement for five years.
(e) In December 2003 and February 2004, the Company borrowed an aggregate of $120,000 from an unaffiliated lender who received 200,000 shares of Common Stock in connection with these loans. The registrant believes that issuance of the shares did not require registration under the Act pursuant to the exemption available under Section 4(2) of the Act. There was no underwriter or placement agent involved in the transaction.
Item 27. Exhibits and Financial Statement Schedules.
(a) Exhibits
Exhibit
Number Description
------ ----------- 3.1 Articles of Incorporation 3.2 By-Laws 4.1 Specimen common stock certificate 4.2 Specimen Bridge Warrant certificate 4.3 Specimen Warrant certificate from Private Placement |
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4.4 Specimen Placement Agent Unit Purchase Option certificate from Private
Placement
*5.1 Opinion of Snow Becker Krauss P.C.
10.1 Placement Agent Agreement dated as of April 20, 2004, by and between
NanoSensors, Inc. and Meyers Associates, L.P.
10.2 License Agreement dated December 11, 2003 by and between NanoSensors,
Inc. and Axiom Corp. and Matthew Zuckerman.
10.3 Consulting Agreement dated December 9, 2003 by and between NanoSensors,
Inc. and Axiom Corp.
10.4 Consulting Agreement dated September 1, 2003 by and between
NanoSensors, Inc. and Ted Wong.
*10.5 Lease dated February 12, 2004 between Koll/Intereal Bay Area, as
Landlord, and NanoSensors, Inc. as Tenant.
21.1 List of Subsidiaries-none.
23.1 Consent of Snow Becker Krauss P.C.
23.2 Consent of Madsen & Associates, CPA's Inc.
----------
|
*To be filed by amendment.
Item 28. Undertakings.
The registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, 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, as amended (the "Act");
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement;
(iii) Include any additional or changed material information on the plan of distribution.
(2) For determining liability under the Act, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small
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business issuer 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 small business issuer of expenses incurred or paid by a Director, officer or controlling person of the small business issuer 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 small business issuer 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 Act and will be governed by the final adjudication of such issue.
(5) For determining any liability under the Securities Act, to treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the small business issuer under Rule 424(b)(1), or (4) or 497(h) under the Act as part of this registration statement as of the time the Commission declared it effective.
(6) For determining any liability under the Securities Act, to treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.
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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 of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Santa Clara, State of California on July 23, 2004.
NANOSENSORS, INC.
By: /s/ Ted Wong
-------------------------------
Ted Wong, President and Chief
Executive 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/ Ted Wong President, Chief Executive July 23, 2004
--------------------- Officer and sole Director
Ted Wong (Principal Executive and
Financial Officer)
|
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Exhibit Index
3.2 By-Laws
4.1 Specimen common stock certificate
4.2 Specimen Bridge Warrant certificate
4.3 Specimen Warrant certificate from Private Placement
4.4 Specimen Placement Agent Unit Purchase Option certificate from Private Placement
10.1 Placement Agent Agreement dated as of April 20, 2004, by and between NanoSensors, Inc. and Meyers Associates, L.P.
10.2 License Agreement dated December 11, 2003 by and between NanoSensors, Inc. and Axiom Corp. and Matthew Zuckerman.
10.3 Consulting Agreement dated December 9, 2003 by and between NanoSensors, Inc. and Axiom Corp.
10.4 Consulting Agreement dated September 1, 2003 by and between NanoSensors, Inc. and Ted Wong.
21.1 List of Subsidiaries.
23.1 Consent of Snow Becker Krauss P.C.
23.2 Consent of Madsen & Associates, CPA's Inc.
Exhibit 3.1
ARTICLES OF INCORPORATION
(PURSUANT TO NRS 78)
1. Name of Corporation: NanoSensors, Inc.
2. Resident Agent Name and Street Address: Lilli Frost, 1414 East Telegraph Street, Carson City, Nevada 89701
3. Shares: Number of shares with par value: 50,000,000, par value $.001
4. Names and Addresses
of Board of Directors/Trustees: Ted L. Wong
1414 East Telegraph Street
Carson City, Nevada 89701
|
5. Purpose: ______________
6. Names, Addresses and Signature of Incorporator: Ted L. Wong 1414 East Telegraph Street Carson City, Nevada 89701
7. Certificate of Acceptance of Appointment of Resident Agent: I hereby accept appointment as Resident Agent for above named corporation.
/s/ Lilli Frost December 9, 2003 --------------- ---------------- Authorized Signature Date |
Exhibit 3.2
BYLAWS
OF
NANOSENSORS, INC.
ARTICLE I -SHAREHOLDERS
1.01 ANNUAL MEETING. Unless the Directors or the President of the corporation select a different time or date, the annual meeting of shareholders shall be held each year at the location set by the Directors or if no location is set, at the corporation's office. The annual meeting shall be for the purpose of electing a Board of Directors and transacting such other business as may properly be brought before the meeting.
1.02 SPECIAL MEETING. Special meetings of shareholders may be called at any time by the Board of Directors, any two directors or the President.
1.03 LOCATION OF MEETING. Meetings of shareholders shall be held at the principal executive office of the corporation or at any other place which may be designated by the Board of Directors.
1.04 NOTICE.
(a) Annual And Special Meetings. A written notice of each meeting of
shareholders shall be given not more than sixty (60) days and, except as
provided below, not less than ten (10) days before the date of the meeting to
each shareholder entitled to vote at the meeting. The notice shall state the
place, date and hour of the meeting and, if directors are to be elected at the
meeting, the names of the nominees intended to be presented by management for
election. The notice shall also state (i) in the case of an annual meeting,
those matters which the Board of Directors intends to present for action by the
shareholders, and (ii) in the case of a special meeting, the general nature of
the business to be transacted and that no other business may be transacted.
Notice shall be delivered personally, by mail or other means addressed to the
shareholder at the address of such shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice or as otherwise provided by law. Upon written request to the Chairman of
the Board, the President, the Secretary or any Vice President of the corporation
by any person (but not the Board of Directors) entitled to call a special
meeting of shareholders, the person receiving such request shall cause a notice
to be given to the shareholders entitled to vote that a meeting will be held at
a time requested by the person calling the meeting not less than thirty-five
(35) nor more than sixty (60) days after the receipt of the request.
(b) Adjourned Meetings. Notice of an adjourned meeting need not be given if (i) the meeting is adjourned for forty-five (45) days or less; (ii) the time and place of the adjourned meeting are announced at the meeting at which the adjournment is taken; and (iii) no new record date is fixed for the adjourned meeting. Otherwise, notice of the adjourned meeting shall be given as in the case of an original meeting.
1.05 RECORD DATE. The Board of Directors may fix in advance a record date
for the determination of the shareholders entitled to notice of any meeting to
vote, to receive payment of any dividend or other distribution or allotment or
rights or to exercise any rights. Such record date shall not be more than sixty
(60) nor less than ten (10) days prior to the date of the meeting or more than
sixty (60) days prior to such other action. Except as provided by law, when a
record date is so fixed, only shareholders on the record date are entitled to
notice and to vote, to receive the dividend, distribution or allotment of rights
or to exercise rights, as the case may be, notwithstanding any transfer of
shares on the books of the corporation after the record date. Except as
otherwise provided by law, the corporation shall be entitled to treat the holder
of record of any shares as the holder in fact of such shares and shall not be
bound to recognize any equitable or other claim to or interest in such shares on
the part of any other person, whether or not the corporation shall have the
express or other notice of such claim or interest. A determination of
shareholders of record entitled to notice or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date. The Board of Directors shall fix a new record
date if the adjourned meeting takes place more than forty-five (45) days from
the date set for the original meeting.
1.06 MEETING WITHOUT REGULAR CALL AND NOTICE. The transactions of any meeting of shareholders, however called and noticed and wherever held, are as valid as though had a meeting duly been held after regular call and notice if a quorum is present in person or by proxy and if, either before or after the meeting, each of the persons entitled to vote who is not present at the meeting in person or by proxy signs a written waiver of notice, a consent to the holding of the meeting or an approval of the minutes of the meeting. For such purposes, a shareholder shall not be considered present at a meeting if, at the beginning of the meeting, the shareholder objects to the transaction of any business because the meeting was not properly called or convened or, with respect to the consideration of a matter required to be included in the notice for the meeting which was not so included, the shareholder expressly objects to such consideration at the meeting.
1.07 QUORUM AND REQUIRED VOTE. A majority of the shares entitled to vote represented in person or by proxy, constitutes a quorum for the transaction of business. No business may be transacted at a meeting in the absence of a quorum other than the adjournment of such meeting, except that if a quorum is present at the commencement of a meeting, business may be transacted until the meeting is adjourned even though the withdrawal of shareholders results in less than a quorum. If a quorum is present at a meeting, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on any matter shall be the act of the shareholders unless the vote of a larger number is required by law or the Articles of Incorporation. If a quorum is present at the commencement of a meeting but the withdrawal of shareholders results in less than a quorum, the affirmative vote of the majority of shares required to constitute a quorum shall be the act of the shareholders unless the vote of a larger number is required by law or the Articles of Incorporation. Any meeting of shareholders whether or not a quorum is present, may be adjourned by the vote of a majority of the shares represented at the meeting.
1.08 PROXIES. A shareholder may be represented at any meeting of
shareholders by a written proxy signed by the person entitled to vote or by such
person's duly authorized attorney-in-fact. A proxy must bear a date within six
(6) months prior to the meeting, unless the proxy specifies a different length
of time, but in no event may the proxy continue in force for more than seven (7)
years. A revocable proxy is revoked by a writing delivered to the Secretary of
the corporation stating that the proxy is revoked or by a subsequent proxy
executed by, or by attendance at the meeting and voting in person by, the person
executing the proxy.
1.09 VOTING. Except as provided below or as otherwise provided by the Articles of Incorporation or by law, a shareholder shall be entitled to one vote for each share held of record on the record date fixed for the determination of the shareholders entitled to vote at a meeting or, if no such date is fixed, the date determined in accordance with law. Upon the demand of any shareholder made at a meeting before the voting begins, the election of directors shall be by ballot. At every election of directors, shareholders may cumulate votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shares are entitled or distribute votes according to the same principle among as many candidates as desired; however, no shareholder shall be entitled to cumulate votes for anyone or more candidates unless such candidates or candidates' names have been placed in nomination prior to the voting and at least one shareholder has given notice at the meeting prior to the voting of such shareholder's intention to cumulate votes.
1.10 ELECTION INSPECTORS. One (1) or three (3) election inspectors may be appointed by the Board of Directors in advance of a meeting of shareholders or at the meeting by the chairman of the meeting. If not previously chosen, one (1) or three (3) inspectors shall be appointed by the chairman of the meeting if a shareholder or proxyholder so requests. When inspectors are appointed at the request of a shareholder or proxyholder, the majority of shares represented in person or by proxy shall determine whether one (1) or three (3) inspectors shall be chosen. The election inspectors shall determine all questions concerning the existence of a quorum and the right to vote, shall tabulate and determine the results of voting and shall do all other acts necessary or helpful to the expeditious and impartial conduct of the vote. If there are three (3) inspectors, the decision, act or certificate of a majority of the inspectors is effective as if made by all.
1.11 ACTION WITHOUT MEETING. Except as provided below or by the Articles of Incorporation, any action which may be taken at any meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, is signed, before or after the action, by the holders of outstanding shares having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted.
1.12 REPORTS. Any annual report to shareholders specified in the Nevada Revised Statutes is dispensed with, except as the Board of Directors may otherwise determine, as long as here are less than one hundred (100) holders of record of the corporation's shares. Any such annual report sent to shareholders shall be sent at least fifteen (15) days prior to the next annual meeting of shareholders.
1.13 LOST STOCK CERTIFICATES. The corporation may cause a new stock certificate to be issued in place of any certificate previously issued by the corporation alleged to have been lost, stolen or destroyed. The Corporation may, at its discretion and as a condition precedent to such issuance, require the owner of such certificate to deliver an affidavit stating such certificate was lost, stolen or destroyed or to give the corporation a bond or other security sufficient to indemnify it against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction or the issuance of a new certificate.
1.14 CERTIFICATES FOR SHARES. Certificates for shares shall be of such form and device as the Board of Directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a statement of the rights, privileges, preferences and restrictions, if any; a statement as to the redemption or conversion, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable or, if assessments are collectible by personal action, a plain statement of such facts.
All certificates shall be signed in the name of the corporation by the President or the Treasurer or the Secretary, certifying the number of shares and the class or series of shares owned by the Shareholder.
Any or all of the signatures on the certificate may be facsimile. In case any Officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on a certificate shall have ceased to be that Officer, transfer agent, or registrar before that certificate is issued, it may be issued by the corporation with the same effect as if that person were an Officer, transfer agent, or registrar at the date of issue.
1.15 TRANSFER ON THE BOOKS. Upon surrender to the Secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
1.16 LEGEND CONDITION. In the event any shares of this corporation are issued pursuant to a permit or exemption therefrom requiring the imposition of a legend condition, the person or persons issuing or transferring said shares shall make sure said legend appears on the certificate and shall not be required to transfer any shares free of such legend unless an amendment to such permit or a new permit be first issued so authorizing such a deletion.
1.17 PROVISION RESTRICTING TRANSFER OF SHARES. Before there can be a valid
sale or transfer of any of the shares of this corporation by the holders
thereof, the holder of the shares to be sold or transferred shall first be given
notice in writing to the Secretary of this corporation of his or her intention
to sell or transfer such shares. The notice shall specify the number of shares
to be sold or transferred, the price per share and the terms upon which such
holder intends to make such sale or transfer. The Secretary shall within five
(5) days thereafter, mail or deliver a copy of said notice to each of the other
Shareholders of record of this corporation. Such notice may be delivered to such
Shareholders, as the same may appear on the books of this corporation. Within
thirty (30) days after the mailing or delivery of the notice to the such
Shareholders, any such Shareholder or Shareholders desiring to acquire any part
or all of the shares referred to in the notice shall deliver by mail or
otherwise to the Secretary of this corporation a written offer or offers to
purchase a specified number or numbers of such shares at the price and upon the
terms stated in the notice.
If the total number of shares specified in such offers exceed the number of shares referred to in the notice, each offering Shareholder shall be entitled to purchase such proportion of the shares referred to in the notice to the Secretary, as the number of shares of this corporation, which he or she holds, bears to the total number of shares held by all Shareholders desiring to purchase the shares referred to in said notice to the Secretary.
If all of the shares referred to in the notice to the Secretary are not disposed of under such apportionment, each Shareholder desiring to purchase shares in a number in excess of his or her proportionate share, as provided above, shall be entitled to purchase such proportion of those shares which remain thus undisposed of, as the total number of shares which he or she holds bears to the total number of shares hold by all of the Shareholders desiring to purchase shares in excess of those to which they are entitled under such apportionment.
The aforesaid right to purchase the shares referred to in the notice to the Secretary shall apply only if all of the shares referred to in the notice are purchased. Unless all of the shares referred to in the notice to the Secretary are purchased, in accordance with offers made within the thirty day period, the Shareholder desiring to sell or transfer may dispose of all shares of stock referred to in the notice to the Secretary to any person or persons whomsoever; provided, however, that he or she shall not sell or transfer such shares at a lower price or on terms more favorable to the purchaser or transferee than those specified in the notice to Secretary.
Any sale or transfer, or purported sale or transfer, of the shares of the corporation shall be null and void unless the terms, conditions and provisions of this section are strictly observed and followed.
ARTICLE II - BOARD OF DIRECTORS
2.01 NUMBER. The number of directors of this corporation shall be at least one (1) but not more than nine (9) until such number is changed by an amendment of the Articles of Incorporation or this Bylaw.
2.02 POWERS. Subject to the limitations imposed by law or contained in the Articles of Incorporation, the business and affairs of corporation shall be managed and all corporate powers shall be exercised by or under the ultimate direction of the Board of Directors.
2.03 ELECTION, TERM OF OFFICE AND VACANCIES. At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which the director was elected and until a successor has been elected. The Board of Directors may declare vacant the office of a director who has been declared to be of unsound mind by court order or convicted of a felony. Vacancies on the Board of Directors not caused by removal may be filled by a majority of the directors then in office, regardless of whether they constitute a quorum, or by the sole remaining director. The shareholders may elect a director at any time to fill any vacancy not filled, or which cannot be filled, by the Board of Directors.
2.04 REMOVAL. Except as described below, any or all of the directors may be removed without cause if such removal is approved by the affirmative vote of the majority of the outstanding shares entitled to vote. Unless the Board of Directors is so removed, no director may be removed if (i) the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast or, if such action is taken by written consent, all shares entitled to vote were voted and (ii) the entire number of directors authorized at the time of the director's most recent election were then being elected.
2.05 RESIGNATION. Any director may resign by giving written notice to the President, the Secretary or the Board of Directors. Such resignation shall be effective when given unless the notice specifies a later time. The resignation shall be effective regardless of whether it is accepted by the corporation.
2.06 COMPENSATION. If the Board of Directors so resolves, the directors shall receive compensation and expenses of attendance for meetings of the Board of Directors and of committees of the Board. Nothing herein shall preclude any director from serving the corporation in another capacity and receiving compensation for such services.
2.07 COMMITTEES. The Board of Directors may, by resolution adopted by the majority of the authorized number of directors, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate members of a committee who may replace any absent member at any meeting of the committee. To the extent permitted by the resolution of the Board of Directors, a committee may exercise all of the authority of the Board to the extent permitted by the Nevada Revised Statutes.
2.08 INSPECTION OF RECORDS AND PROPERTIES. Each director may inspect all books, records, documents and physical properties of the corporation and its subsidiaries at any reasonable time. Inspections are to be made either by the director or the director's agent or attorney. The right of inspection includes the right to copy and make extracts.
2.09 TIME AND PLACE OF MEETINGS AND TELEPHONE MEETINGS. Unless the Board of Directors otherwise determines, the Board shall hold a regular meeting during each quarter of the Corporation's fiscal year. One such meeting shall take place immediately following the annual meeting of shareholders. All meetings of directors shall be held at the principal executive office of the corporation or at such other place as shall be designated in the notice for the meeting or in resolution of the Board of Directors. Directors may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members so participating can hear each other. 2.10 CALL. Meetings of the Board of Directors, whether regular or special, may be called by the President, the Secretary, or any directors.
2.11 NOTICE. Regular meetings of the Board of Directors may be held without notice if the time of such meetings has been fixed by the Board. Special meetings shall be held upon four (4) days' notice by mail or twenty-four (24) hours' notice delivered personally or by telephone, email or telecopier, and regular meetings shall be held upon similar notice if notice is required for such meetings. Neither a notice nor a waiver of notice need specify the purpose of any regular or special meeting. If a meeting is adjourned for more than twenty-four (24) hours, notice of the adjourned meeting shall be given prior to the time of such meeting to the directors who were not present at the time of the adjournment.
2.12 MEETING WITHOUT REGULAR CALL AND NOTICE. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding the meeting or an approval of the minutes of the meeting. For such purposes, a director shall not be considered present at a meeting if, although in attendance at the meeting, the director protests the lack of notice prior to the meeting or at its commencement.
2.13 ACTION WITHOUT MEETING. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all of the members of the Board individually or collectively consent in writing to such action.
2.14 QUORUM AND REQUIRED VOTE. A majority of the directors then in office shall constitute a quorum for the transaction of business provided that unless the authorized number of directors is one (1), the number constituting a quorum shall not be less than two (2) directors. Except as otherwise provided by the Nevada Revised Statutes, the Articles of Incorporation or these Bylaws, every act or decision done or made by a majority of the directors present at a meeting duly held at which quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. A majority of the directors present at a meeting, whether or not a quorum is present, may adjourn the meeting to another time and place.
ARTICLE III - OFFICERS
3.01 TITLES AND RELATION TO BOARD OF DIRECTORS. The officers of the corporation shall include a President, a Secretary and a Treasurer. The Board of Directors may also choose a Chief Financial Officer and one (1) or more Vice Presidents, Assistant Secretaries, Assistant Treasurers or other officers. Any number of offices may be held by the same person. The President shall serve as Chairman of the Board. All Officers shall perform their duties and exercise their powers subject to the direction of the Board of Directors.
3.02 ELECTION, TERM OF OFFICE AND VACANCIES. At its regular meeting after each annual meeting of shareholders, the Board of Directors shall choose the officers of the corporation. No officer need be a member of the Board of Directors except the President. The officers shall hold office until their successors are chosen, except that the Board of Directors may remove any officer at any time. If an office becomes vacant for any reason, the vacancy shall be filled by the Board.
3.03 RESIGNATION. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Such resignation shall be effective when given unless the notice specifies a later time. The resignation shall be effective regardless of whether it is accepted by the corporation.
3.04 SALARIES. The Board of Directors shall fix the salaries of the Chairman of the Board and President and may fix the salaries of other employees of the corporation including the other officers. If the Board does not fix the salaries of the other officers, the President shall fix such salaries.
3.05 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside over all meetings of the Board of Directors.
3.06 PRESIDENT. Unless otherwise determined by the Board of Directors, the President shall be the general manager and chief executive officer of the corporation, shall preside at all meetings of shareholders, shall be ex officio a member of any committees of the Board shall effectuate orders and resolutions of the Board of Directors and shall exercise such other powers and perform such other duties as the Board of Directors shall prescribe.
3.07 SECRETARY. The Secretary shall have the following powers and duties:
(a) Record of Corporate Proceedings. The Secretary shall attend all meetings of the Board of Directors and its committees and of shareholders and shall record all votes and the minutes of such meetings in a book to be kept for that purpose at the principal executive office of the corporation or at such other place as the Board of Directors may determine.
(b) Record of Shares. Unless a transfer agent is appointed by the Board of Directors to keep a share register, the Secretary shall keep at the principal executive office of the corporation a share register showing the names of the shareholders and their addresses, the number and class of shares held by each, the number and date of certificates issued and the number and date of cancellation of each certificate surrendered for cancellation.
(c) Notices. The Secretary shall give such notices as may be required by law or these Bylaws.
(d) Additional Powers and Duties. The Secretary shall exercise such other powers and perform such other duties as the Board of Directors or President shall prescribe.
3.08 TREASURER. Unless otherwise determined by the Board of Directors, the Treasurer shall have custody of the Corporate funds and securities and shall keep adequate and correct accounts of the corporation's properties and business transactions. The Treasurer shall disburse such funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, shall render to the President and directors, at regular meetings of the Board of Directors or whenever the Board may require, an account of all transactions and the financial condition of the corporation and shall exercise such other powers and perform such other duties as the Board of Directors or President shall prescribe.
3.09 OTHER OFFICERS. The other officers of the corporation, if any, shall perform such duties as the Board of Directors or President shall prescribe.
ARTICLE IV - EXECUTION OF CORPORATE INSTRUMENTS,
RATIFICATION OF CONTRACTS, AND
VOTING OF SHARES OWNED BY THE CORPORATION
4.01 EXECUTION OF CORPORATE INSTRUMENTS. The Board may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute any corporate instrument or documents, or to sign the corporate name without limitation, except where otherwise provided by law, and such execution or signature shall be binding upon the Corporation. Unless otherwise specifically determined by the Board:
(a) formal contracts of the Corporation, promissory notes, deeds of trust, mortgages, and other evidences of indebtedness of the Corporation, and other corporate instruments or documents requiring the corporate seal (except for share certificates issued by the Corporation), and share certificates owned by the Corporation, shall be executed, signed, or endorsed by the President, or jointly endorsed by the Secretary and Treasurer; (b) checks drawn on banks or other depositories on funds to the credit of the Corporation, or in special accounts of the Corporation, shall be signed in such manner (which may be a facsimile signature) and by such person or persons as shall be authorized by the Board;
(c) dividend warrants, drafts, insurance policies, and all other instruments and documents requiring the corporate signature, but not requiring the corporate seal, shall be executed or signed in the manner directed by the Board; and
(d) share certificates issued by the Corporation shall be signed (which may be a facsimile signature) jointly by (i) the President or (ii) the Secretary and the Treasurer.
4.02 RATIFICATION BY SHAREHOLDERS. The Board may, in its discretion, submit any contract or act for approval or ratification by the shareholders at any annual meeting of shareholders or at any special meeting of shareholders called for that purpose. Any contract or act which shall be approved or ratified by the holders of a majority of the voting power of the Corporation represented at such meeting shall be as valid and binding upon the Corporation as though approved or ratified by each and every shareholder of the Corporation, unless a greater vote is required by law for such purpose.
4.03 VOTING OF SHARES OWNED BY THE CORPORATION. All shares of other corporations owned or held by the Corporation for itself or for other parties in any capacity shall be voted, and all proxies with respect thereto shall be executed, by the person authorized to do so by resolution of the Board or, in the absence of such authorization, by the President, the Secretary or the Treasurer.
ARTICLE V - SHARE CERTIFICATES
5.01 FORM OF CERTIFICATES. Share certificates of the Corporation shall be in such form and design as the Board shall determine. Each certificate shall state the certificate number, the date of issuance, the number, designation, class, and the name of the record holder of the shares represented thereby, the name of the Corporation, and if the shares of the Corporation are classified or if an class of shares has two (2) or more series, the legends, if any, required by the California Corporations Code.
5.02 TRANSFER OF SHARES. Shares may be transferred in any manner permitted or provided by law. Before any transfer of shares is entered upon the books of the Corporation or recognized by the designated transfer agent and/or registrar of the Corporation, or any new certificate is issued therefor, the old certificate, properly endorsed, shall. be surrendered and canceled, except when a certificate has been lost or destroyed.
5.03 LOST CERTIFICATES. The Board may order a new share certificate to be issued in the place of any certificate alleged to have been lost or destroyed, but in every such case the owner of the lost certificate may be required to give the Corporation a bond, with surety, in such form and amount as the Board may determine, as indemnity against any loss or claim that the Corporation may incur by reason of the issuance of a new certificate.
ARTICLE VI - INDEMNIFICATION OF CORPORATE AGENTS
The Corporation shall indemnify any and all of its Directors or Officers or former Directors or Officers or any person who may have served at its request as a Director or Officer of another corporation in which it owns shares of capital stock or of which it is a creditor against expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been Directors or Officers or a Director of Officer of the Corporation or of such other corporation, except in relation to matters as to which any such Director or Officer or former Director or Officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct, in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under By-Law agreement, vote of stockholders or otherwise.
ARTICLE VII - AMENDMENTS
7.01 AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or these Bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote, except as otherwise provided by law, these Bylaws, or the Articles of Incorporation.
7.02 AMENDMENT BY DIRECTORS. Subject to the rights of the shareholders as provided in Section 7.01, any bylaw, other than a bylaw or an amendment of a bylaw changing the authorized number of directors, may be adopted, amended, or repealed by the Board.
Exhibit 4.1
NanoSensors, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
TOTAL AUTHORIZED ISSUE 50,000,000 SHARES, $.001 PAR VALUE;
COMMON STOCK, $.001 PAR VALUE
NUMBER SHARES
THIS CERTIFIES THAT
SEE REVERSE FOR
CERTAIN DEFINITIONS
is the owner of _____________ fully paid and non-assessable common shares of the above corporation transferable only on the books of the Corporation by the holder thereof in person or by a duly authorized Attorney upon surrender of this Certificate properly endorsed.
WITNESS the seal of the Corporation and the signatures of its duly authorized officers.
Dated: , 2004
__________ Secretary ____________President
Corporate
SEAL
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The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws and regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______Custodian_______
(Cust) (Minor)
TEN ENT -as tenants by the entireties under Uniform Gifts to Minors
Act _____________________
(State)
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
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Additional abbreviation may also be used though not in the above list.
For value received hereby sell, assign and transfer unto
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PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING
NUMBER OF TRANSFEREE
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(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE)
Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said Shares on the books of the within named Corporation with full power of substitution in the premises.
Exhibit 4.2
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE FROM MARCH 1, 2004 UNTIL ON OR BEFORE
5:00 P.M., NEW YORK TIME, FEBRUARY 28, 2009
NANOSENSORS, INC.
WARRANT
This warrant certificate (the "Warrant Certificate") certifies that or registered assigns, is the registered holder of warrants to purchase from Nanosensors, Inc., a Nevada corporation (the "Company") at any time from March 1, 2004, until 5:00 P.M. New York City time on February 28, 2009, (the "Expiration Date"), up to fully-paid and non-assessable shares, subject to adjustment in accordance with Article 5 hereof (the "Warrant Shares"), of the common stock (the "Common Stock"), par value $.001 par value, of the Company, subject to the terms and conditions set forth herein. The warrants represented by this Warrant Certificate and any warrants resulting from a transfer or subdivision of the warrants represented by this Warrant Certificate shall sometimes hereinafter be referred to, individually, as a "Warrant" and, collectively, as the "Warrants."
1. Exercise of Warrants.
1.1 Exercise Procedure. Each Warrant is initially exercisable to purchase one Warrant Share at an initial exercise price per Warrant Share of $.25, subject to adjustment as set forth in Article 5 hereof, payable in cash or by check to the order of the Company, or any combination of cash or check. Upon surrender of this Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Exercise Price (as hereinafter defined) for the Warrant Shares purchased, at the Company's principal offices (presently located at 1800 Wyatt Drive, Santa Clara, California 95054), the registered holder of the Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a certificate or certificates for the Warrant Shares so purchased.
Payment of the Exercise Price may also be made in shares of Common Stock of the Company having a "Market Value" on the date of exercise equal to the aggregate exercise price, or in a combination of cash and stock (including for these purposes a reduction in the number of shares to be issued upon exercise by applying the a number of the shares to the purchase price) For these purposes, the "Market Value" per share of Common Stock shall be: (i) if the Stock is traded on a national securities exchange or on the Nasdaq National Market System ("NMS"), the per share closing price of the Stock on the principal securities exchange on which they are listed or on NMS, as the case may be, on the date of exercise (or if there is no closing price for such date of exercise, then the last preceding business day on which there was a closing price); or (ii) if the Stock is traded in the over-the-counter market and quotations are published on the Nasdaq quotation system (but not on NMS), the closing bid price of the Stock on the date of exercise as reported by Nasdaq (or if there are no closing bid prices for such date of exercise, then the last preceding business day on which there was a closing bid price); or (iii) if the Stock is traded in the over-the-counter market but bid quotations are not published on Nasdaq, the closing bid price per share for the Stock as furnished by a broker-dealer which regularly furnishes price quotations for the Stock; or (iv) if the Stock is not traded on any exchange or Nasdaq and if quotes are not available, the fair market value as determined in good faith by the Board of Directors.
1.2. Vesting Period. The purchase rights represented by this Warrant Certificate are exercisable at the option of the Holder hereof, in whole or in part commencing on March 1, 2004.
1.3. Partial Exercise; New Warrant. In the case of the purchase of less than all the Warrant Shares purchasable under this Warrant Certificate, the Company shall cancel this Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Warrant Shares purchasable hereunder.
2. Issuance of Certificates. Upon the exercise of the Warrants, the issuance of certificates for the Warrant Shares purchased pursuant to such exercise shall be made forthwith without charge to the Holder thereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall (subject to the provisions of Article 3 hereof) be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and, upon exercise of the Warrants, the certificates representing the Warrant Shares shall be executed on behalf of the Company by the manual or facsimile signature of those officers required to sign such certificates under applicable law.
3. Restricted Shares; Registration Rights.
3.1 Restricted Shares upon Exercise. This Warrant Certificate and, upon exercise of the Warrants, in part or in whole, certificates representing the Warrant Shares shall bear a legend substantially similar to the following:
"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended ("Act"), and may not be offered or sold except (i) pursuant to an effective registration statement under the Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) upon the delivery by the holder to the Company of an opinion of counsel, reasonably satisfactory to counsel to the issuer, stating that an exemption from registration under such Act is available."
3.2 Restriction on Transfer of Warrants. The Holder of this Warrant Certificate, by its acceptance thereof, covenants and agrees that the Warrants and the Warrant Shares issuable upon exercise of the Warrants are being acquired as an investment and not with a view to the distribution thereof and that the Warrants and the Warrant Shares may not be transferred unless such securities are either registered under the Act and any applicable state securities law or an exemption from such registration is available. The Holder of this Warrant Certificate acknowledges that the Holder has been provided with an opportunity to ask questions of representatives of the Company concerning the Company and that all such questions were answered to the satisfaction of the Holder. In connection with any purchase of Warrant Shares the Holder agrees to execute any documents which may be reasonably required by counsel to the Company to comply with the provisions of the Act and applicable state securities laws.
3.3. Registration Rights. The Company agrees to include, on a one time basis, in any registration statement filed by the Company after the date hereof (excluding registration statements on Form S-4 in connection with any merger or acquisition) the shares underlying this Warrant to allow the resale of such shares by the Holder under the federal securities laws. Any such registration statement shall be at the cost and expense of the Company, except for fees of counsel to the Holder and any underwriting or sales commissions with respect to Holder's shares. The Company shall provide the Holder with at least 15 days written notice of its intent to file a registration statement with the Securities and Exchange Commission. The Company agrees to use its best efforts to have the registration statement declared effective as soon as possible, but the Company shall have the right, in its sole discretion, to terminate the filing at any time prior to its effectiveness. The Company further agrees to use its best efforts to maintain the effectiveness of such registration statement for at least nine months from the effective date. The Company shall provide the holder with such numbers of prospectuses as the holder may reasonably request in connection with the sale of any shares pursuant to the registration statement.
The Holder shall provide any such information as may be reasonably
required by the Company in connection with the registration statement regarding
the Holder, including information regarding the Holder's intended method of
resale, amount and nature of shares held and other relevant information. The
Holder hereby agrees to indemnify and hold harmless the Company, its officers,
directors, accountants, agents and employees and any person who controls the
Company within the meaning of Section 15 of the Securities Act of 1933 or
Section 20(a0 of the Securities and Exchange Act of 1934, and any underwriter of
the shares being sold by the Holder against all damages, claims, losses, causes
of action, investigations (and expenses incurred with the foregoing) arising
from any written information provided by the Holder to the Company for specific
inclusion in the registration statement.
4. Price
4.1 Initial and Adjusted Exercise Price. The initial exercise price of each Warrant shall be $.25 per share. The adjusted exercise price shall be the price which shall result from time to time from any and all adjustments of the initial exercise price in accordance with the provisions of Article 5 hereof.
4.2 Exercise Price. The term "Exercise Price" herein shall mean the initial exercise price or the adjusted exercise price, depending upon the context.
5. Adjustments of Exercise Price and Number of Warrant Shares.
5.1 Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding Common Shares, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination.
5.2 Adjustment in Number of Warrant Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Article 5, the number of Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest full Common Share by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
5.3 Reclassification, Consolidation, Merger. etc. In case of any reclassification or change of the outstanding Common Shares (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Common Shares, except a change as a result of a subdivision or combination of such shares or a change in nominal value, as aforesaid), or in the case of a sale or conveyance to another corporation of the property of the Company as an entirety, the Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Holder were the owner of the Warrant Shares issuable upon exercise of the Warrants immediately prior to any such events at a price equal to the product of (x) the number of Warrant Shares issuable upon exercise of the Warrants and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Holder had exercised the Warrants.
5.4 Determination of Outstanding Shares. The number of Common Shares at any one time outstanding shall include the aggregate number of shares issued or issuable upon the exercise of outstanding options, rights, warrants and upon the conversion or exchange of outstanding convertible or exchangeable securities.
6. Exchange and Replacement of Warrant Certificates. This Warrant Certificate is exchangeable without expense, upon the surrender hereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Warrant Shares in such denominations as shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu thereof.
7. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Common Shares and shall not be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of Common Shares.
8. Reservation of Shares. The Company covenants and agrees that it will at all times reserve and keep available out of its authorized share capital, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock as shall be equal to the number of Warrant Shares issuable upon the exercise of the Warrants, for issuance upon such exercise, and that, upon exercise of the Warrants and payment of the Exercise Price therefor, all Warrant Shares issuable upon such exercise shall be duly and validly issued, fully paid, nonassessable and not subject to the preemptive rights of any shareholder.
9. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Article 1 of this Agreement or to such other address as the Company may designate by notice to the Holders.
10. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company and the Holders inure to the benefit of their respective successors and assigns hereunder.
11. Governing Law. This Agreement shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the ___th day of _________, 2004.
NANOSENSORS, INC.
By:
Name: Ted L. Wong
Title: President
Corporate Seal
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ________ Warrant Shares and herewith tenders in payment for such Warrant Shares cash or a check payable to the order of ______ in the amount of $_________, all in accordance with the terms hereof. The undersigned requests that a certificate for such Warrant Shares be registered in the name of , whose address is and that such certificate be delivered to , _____________________ whose address is ______________________.
_____ The undersigned hereby elects to utilize the "cashless" exercise provisions in the Warrant.
Dated:_______________________ Signature:
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate.)
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(Insert Social Security or Other Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint , Attorney, to transfer the within Warrant Certificate on the books of [ issuer], with full power of substitution.
Dated: __________________
Signature:
Exhibit 4.3
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE FROM APRIL 26, 2004 UNTIL ON OR BEFORE
5:00 P.M., NEW YORK TIME, APRIL 30, 2009
NANOSENSORS, INC.
FORM OF WARRANT
This warrant certificate (the "Warrant Certificate") certifies that or registered assigns, is the registered holder of warrants to purchase from NanoSensors, Inc., a Nevada corporation (the "Company") at any time from April 26, 2004, until 5:00 P.M. New York City time on April 30, 2009, (the "Expiration Date"), up to fully-paid and non-assessable shares, subject to adjustment in accordance with Article 5 hereof (the "Warrant Shares"), of the common stock (the "Common Stock"), par value $.001 par value, of the Company, subject to the terms and conditions set forth herein. The warrants represented by this Warrant Certificate and any warrants resulting from a transfer or subdivision of the warrants represented by this Warrant Certificate shall sometimes hereinafter be referred to, individually, as a "Warrant" and, collectively, as the "Warrants."
1. Exercise of Warrants.
1.1 Exercise Procedure. Each Warrant is initially exercisable to purchase one Warrant Share at an initial exercise price per Warrant Share of $.30, subject to adjustment as set forth in Article 5 hereof, payable in cash or by check to the order of the Company, or any combination of cash or check. Upon surrender of this Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Exercise Price (as hereinafter defined) for the Warrant Shares purchased, at the Company's principal offices (presently located at 1800 Wyatt Drive, Santa Clara, California 95054), the registered holder of the Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a certificate or certificates for the Warrant Shares so purchased.
Payment of the Exercise Price may also be made in shares of Common Stock of the Company having a "Market Value" on the date of exercise equal to the aggregate exercise price, or in a combination of cash and stock (including for these purposes a reduction in the number of shares to be issued upon exercise by applying the a number of the shares to the purchase price) For these purposes, the "Market Value" per share of Common Stock shall be: (i) if the Stock is traded on a national securities exchange or on the Nasdaq National Market System ("NMS"), the per share closing price of the Stock on the principal securities exchange on which they are listed or on NMS, as the case may be, on the date of exercise (or if there is no closing price for such date of exercise, then the last preceding business day on which there was a closing price); or (ii) if the Stock is traded in the over-the-counter market and quotations are published on the Nasdaq quotation system (but not on NMS), the closing bid price of the Stock on the date of exercise as reported by Nasdaq (or if there are no closing bid prices for such date of exercise, then the last preceding business day on which there was a closing bid price); or (iii) if the Stock is traded in the over-the-counter market but bid quotations are not published on Nasdaq, the closing bid price per share for the Stock as furnished by a broker-dealer which regularly furnishes price quotations for the Stock; or (iv) if the Stock is not traded on any exchange or Nasdaq and if quotes are not available, the fair market value as determined in good faith by the Board of Directors.
1.2. Vesting Period. The purchase rights represented by this Warrant Certificate are exercisable at the option of the Holder hereof, in whole or in part commencing on April 26, 2004.
1.3. Partial Exercise; New Warrant. In the case of the purchase of less than all the Warrant Shares purchasable under this Warrant Certificate, the Company shall cancel this Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Warrant Shares purchasable hereunder.
2. Issuance of Certificates. Upon the exercise of the Warrants, the issuance of certificates for the Warrant Shares purchased pursuant to such exercise shall be made forthwith without charge to the Holder thereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall (subject to the provisions of Article 3 hereof) be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and, upon exercise of the Warrants, the certificates representing the Warrant Shares shall be executed on behalf of the Company by the manual or facsimile signature of those officers required to sign such certificates under applicable law.
3. Restricted Shares; Registration Rights.
3.1 Restricted Shares upon Exercise. This Warrant Certificate and, upon exercise of the Warrants, in part or in whole, certificates representing the Warrant Shares shall bear a legend substantially similar to the following:
"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended ("Act"), and may not be offered or sold except (i) pursuant to an effective registration statement under the Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) upon the delivery by the holder to the Company of an opinion of counsel, reasonably satisfactory to counsel to the issuer, stating that an exemption from registration under such Act is available."
3.2 Restriction on Transfer of Warrants. The Holder of this Warrant Certificate, by its acceptance thereof, covenants and agrees that the Warrants and the Warrant Shares issuable upon exercise of the Warrants are being acquired as an investment and not with a view to the distribution thereof and that the Warrants and the Warrant Shares may not be transferred unless such securities are either registered under the Act and any applicable state securities law or an exemption from such registration is available. The Holder of this Warrant Certificate acknowledges that the Holder has been provided with an opportunity to ask questions of representatives of the Company concerning the Company and that all such questions were answered to the satisfaction of the Holder. In connection with any purchase of Warrant Shares the Holder agrees to execute any documents which may be reasonably required by counsel to the Company to comply with the provisions of the Act and applicable state securities laws.
3.3. Registration Rights. The Company agrees to include, on a one time basis, in any registration statement filed by the Company after the date hereof (excluding registration statements on Form S-4 in connection with any merger or acquisition or Form S-8 in connection with employee stock plans) the shares underlying this Warrant to allow the resale of such shares by the Holder under the federal securities laws. Any such registration statement shall be at the cost and expense of the Company, except for fees of counsel to the Holder and any underwriting or sales commissions with respect to Holder's shares. The Company shall provide the Holder with at least 15 days written notice of its intent to file a registration statement with the Securities and Exchange Commission. The Company agrees to use its best efforts to have the registration statement declared effective as soon as possible, but the Company shall have the right, in its sole discretion, to terminate the filing at any time prior to its effectiveness. The Company further agrees to use its best efforts to maintain the effectiveness of such registration statement for at least nine months from the effective date. The Company shall provide the holder with such numbers of prospectuses as the holder may reasonably request in connection with the sale of any shares pursuant to the registration statement.
The Holder shall provide any such information as may be reasonably
required by the Company in connection with the registration statement regarding
the Holder, including information regarding the Holder's intended method of
resale, amount and nature of shares held and other relevant information. The
Holder hereby agrees to indemnify and hold harmless the Company, its officers,
directors, accountants, agents and employees and any person who controls the
Company within the meaning of Section 15 of the Securities Act of 1933 or
Section 20(a) of the Securities Exchange Act of 1934, and any underwriter of the
shares being sold by the Holder against all damages, claims, losses, causes of
action, investigations (and expenses incurred with the foregoing) arising from
any written information provided by the Holder to the Company for specific
inclusion in the registration statement.
4. Price
4.1 Initial and Adjusted Exercise Price. The initial exercise price of each Warrant shall be $.30 per share. The adjusted exercise price shall be the price which shall result from time to time from any and all adjustments of the initial exercise price in accordance with the provisions of Article 5 hereof.
4.2 Exercise Price. The term "Exercise Price" herein shall mean the initial exercise price or the adjusted exercise price, depending upon the context.
5. Adjustments of Exercise Price and Number of Warrant Shares.
5.1 Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding Common Shares, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination.
5.2 Adjustment in Number of Warrant Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Article 5, the number of Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest full Common Share by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
5.3 Reclassification, Consolidation, Merger. etc. In case of any reclassification or change of the outstanding Common Shares (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Common Shares, except a change as a result of a subdivision or combination of such shares or a change in nominal value, as aforesaid), or in the case of a sale or conveyance to another corporation of the property of the Company as an entirety, the Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Holder were the owner of the Warrant Shares issuable upon exercise of the Warrants immediately prior to any such events at a price equal to the product of (x) the number of Warrant Shares issuable upon exercise of the Warrants and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Holder had exercised the Warrants.
5.4 Determination of Outstanding Shares. The number of Common Shares at any one time outstanding shall include the aggregate number of shares issued or issuable upon the exercise of outstanding options, rights, warrants and upon the conversion or exchange of outstanding convertible or exchangeable securities.
6. Exchange and Replacement of Warrant Certificates. This Warrant Certificate is exchangeable without expense, upon the surrender hereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Warrant Shares in such denominations as shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu thereof.
7. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Common Shares and shall not be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of Common Shares.
8. Reservation of Shares. The Company covenants and agrees that it will at all times reserve and keep available out of its authorized share capital, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock as shall be equal to the number of Warrant Shares issuable upon the exercise of the Warrants, for issuance upon such exercise, and that, upon exercise of the Warrants and payment of the Exercise Price therefor, all Warrant Shares issuable upon such exercise shall be duly and validly issued, fully paid, nonassessable and not subject to the preemptive rights of any shareholder.
9. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Article 1 of this Agreement or to such other address as the Company may designate by notice to the Holders.
10. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company and the Holders inure to the benefit of their respective successors and assigns hereunder.
11. Governing Law. This Agreement shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the ___ day of April, 2004.
NANOSENSORS, INC.
Corporate Seal
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ________ Warrant Shares and herewith tenders in payment for such Warrant Shares cash or a check payable to the order of ______ in the amount of $_________, all in accordance with the terms hereof. The undersigned requests that a certificate for such Warrant Shares be registered in the name of ___________________, whose address is ___________________________ and that such certificate be delivered to ___________________, whose address is ________________________________
_____ The undersigned hereby elects to utilize the "cashless" exercise provisions in the Warrant.
Dated:_________________________ Signature:
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate.)
|
(Insert Social Security or Other Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and transfers unto
(Please print name and address of transferee) this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _________________________, Attorney, to transfer the within Warrant Certificate on the books of [ issuer], with full power of substitution.
Dated: __________________
Signature:
Exhibit 4.4
THE SECURITIES REPRESENTED BY THIS UNIT PURCHASE OPTION HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
UNIT PURCHASE OPTION TO PURCHASE UNITS OF
NANOSENSORS, INC.
(VOID AFTER EXPIRATION DATE - APRIL 30, 2009)
This certifies that Meyers Associates, L.P. or its successors or assigns ("HOLDER") in consideration of one-tenth of one cent ($.001) in hand paid for each Unit (the "Unit") of securities exercised hereunder, shall be entitled to purchase from NanoSensors, Inc., a Nevada corporation ("Company"), having its principal place of business at 1800 Wyatt Drive, Suite 2, Santa Clara, CA 95054, up to 1,375,000 Units of the Company at an exercise price per Unit equal to $.20 ("EXERCISE PRICE"). Each Unit consists of one share of common stock, par value $.001 (the "Common Stock") and one five-year warrant to purchase one share of Common Stock at an exercise price of $.30 per share.
This Unit Purchase Option shall be exchangeable for shares and warrants at any time, or from time-to-time, up to and including 5:00 p.m. (local time) on April 30, 2009 ("EXPIRATION DATE") upon the surrender to the Company at its principal place of business (or at such other location as the Company may advise the Holder in writing) of this Unit Purchase Option properly endorsed with a form of subscription in substantially the form attached hereto duly filled in and signed and, if applicable, upon payment of the aggregate Exercise Price for the number of shares for which this Unit Purchase Option is being exercised determined in accordance with the provisions hereof. Payment of the aggregate Exercise Price may be made as elected by Holder as follows (or by any combination of the following): (i) in United States currency by cash or delivery of a certified check, bank draft or postal or express money order payable to the order of the Company; or (ii) by surrender of a number of shares of Common Stock held by the Holder equal to the quotient obtained by dividing (A) the aggregate Exercise Price payable with respect to the portion of this Unit Purchase Option then being exercised by (B) the closing bid price per share of Common Stock on the date of exercise, The Exercise Price and the number of shares of Common Stock purchasable hereunder are subject to adjustment as provided in Section 2 of this Unit Purchase Option.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR UNITS.
1.1 General. This Unit Purchase Option is exercisable in full, or in part for 5,000 or more Units, at the option of the Holder of record at any time or from time, to time, up to the Expiration Date for all of the shares of Common Stock (but not for a fraction of a share) and Warrants which may be purchased hereunder. In the case of the exercise of less than all of the Unit Purchase Options represented hereby, the Company shall
cancel this Unit Purchase Option Certificate upon the surrender hereof and shall execute and deliver a new Unit Purchase Option Certificate or Unit Purchase Option Certificates of like tenor for the balance of such Unit Purchase Option. The Company agrees that the units purchased under this Unit Purchase Option shall be and are deemed to be issued to the Holder hereof as the record owner of such units as of the close of business on the date on which this Unit Purchase Option shall have been surrendered, properly endorsed, the completed, executed Subscription Form (attached hereto as Exhibit A-1) delivered and payment made for such units. Certificates for the shares of Common Stock and Warrants so purchased, together with any other securities or property to which the Holder is entitled upon such exercise, shall be delivered to the Holder by the Company at the Company's expense within a reasonable time after the rights represented by this Unit Purchase Option have been so exercised, and in any event, within seven (7) days of such exercise. Each Common Stock and Warrant certificate so delivered shall be in such denominations of 5,000 or more shares as may be requested by the Holder hereof and shall be registered on the Company's books in the name designated by such Holder.
1.2 Shares To Be Fully Paid; Reservation Of Shares. The Company
covenants and agrees that all shares of Common Stock which may be issued
upon the exercise of the rights represented by this Unit Purchase Option
will, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any shareholder and
free of all taxes, liens and charges with respect to the issue thereof.
The Company further covenants and agrees that, during the period within
which the rights represented by this Unit Purchase Option may be
exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Unit Purchase Option, a sufficient number of shares of
authorized but unissued Common Stock, when and as required to provide for
the exercise of the rights represented by this Unit Purchase Option. The
Company will take all such action as may be necessary to assure that such
shares of Common Stock may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of any
domestic securities exchange upon which the Common Stock or other
securities may be listed; provided, however, that the Company shall not be
required to effect a registration under federal or state securities laws
with respect to such exercise. The Company will not take any action which
would result in any adjustment of the Exercise Price (as set forth in
Section 2 hereof) if the total number of shares of Common Stock issuable
after such action upon exercise of all outstanding warrants, together with
all shares of Common Stock then outstanding and all shares of Common Stock
then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of
shares of Common Stock or Equity Securities then authorized by the
Company's Articles/Certificate of Incorporation ("Company Charter").
2. DETERMINATION OR ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF UNITS. The Exercise Price and the number of units purchasable upon the exercise of this Unit Purchase Option shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 2. Upon each adjustment of the Exercise Price, the Holder of this Unit Purchase Option shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of units obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of units purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment.
2.1 Subdivision or Combination of Common Stock. In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.
2.2 Dividends in Common Stock, Other Stock, Property, Reclassification. If at any time or from time to time the holders of Common Stock or Warrants (or any shares of stock or other securities at the time receivable upon the exercise of this Unit Purchase Option or into which such securities are convertible) shall have received or become entitled to receive, without payment therefore.
2.2.1 Stock, Common Stock or any shares of stock or other securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution,
2.2.2 Any cash paid or payable otherwise than as a cash dividend, or
2.2.3 Stock, Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate
rearrangement, (other than shares of Common Stock issued as a
stock split or adjustments in respect of which shall be
covered by the terms of Section 2.1 above), then and in each
such case, the Holder hereof shall, upon the exercise of this
Unit Purchase Option, be entitled to receive, in addition to
the number of shares of Stock or Common Stock receivable
thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and
property (including cash in the cases referred to in clause
(2.2.2) above and this clause (2.2.3)) which such Holder would
hold on the date of such exercise had he been the holder of
record of such Common Stock as of the date on which holders of
Common Stock received or became entitled to receive such
shares or all other additional stock and other securities and
property.
2.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, or other assets or property (an "Organic Change"), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right, upon exercise of this Unit Purchase Option, to purchase and receive (in lieu of the units of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Unit Purchase Option) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of units immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Unit Purchase Option. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Unit Purchase Option to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exercise of this Unit Purchase Option) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder, upon Holder's exercise of this Unit Purchase Option and payment of the purchase price in accordance with the terms hereof, such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.
2.4
2.4.1 Except as hereinafter provided, if and whenever after the date of execution of this Unit Purchase Option, the Company shall issue or sell any shares of its Common Stock for a consideration per Share less than the Exercise Price per Unit hereunder in effect immediately prior to the time of such issue or sale, then forthwith the exercise price of this Unit Purchase Option shall be reduced to the price (calculated to the nearest cent) which the Company received upon such issue or sale.
2.4.2 Notwithstanding anything herein to the contrary, no adjustment of the Exercise Price shall be made upon (i) the sale by the Company of any shares of Common Stock pursuant to the exercise of any options or warrants and/or conversion of notes previously issued and outstanding on the date hereof or (ii) issuable under any shareholder approved stock option plan.
2.4.3 No adjustment of the exercise price, however, shall be made in an amount less than $.02 per Share, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $.02 per Share or more.
2.5 Certain Events. If any change in the outstanding Common Stock of the Company or any other event occurs as to which the other provisions of this Section 2 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Unit Purchase Option in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Unit Purchase Option, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Unit Purchase Option upon exercise for the same aggregate Exercise Price the total number, class and kind of shares as he would have owned had the Unit Purchase Option been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment.
2.6 Notices of Change.
2.6.1 Upon any determination or adjustment in the number or class of shares subject to this Unit Purchase Option and of the Exercise Price, the Company shall give written notice thereof to the Holder, setting forth in reasonable detail and certifying the calculation of such determination or adjustment.
2.6.2 The Company shall give written notice to the Holder at least 10 business days prior to the date on which the Company closes its books or takes a record for determining rights to receive any dividends or distributions.
2.6.3 The Company shall also give written notice to the Holder at least 20 days prior to the date on which an Organic Change shall take place.
3. ISSUE TAX. The issuance of certificates for shares of Common Stock and Warrants upon the exercise of the Unit Purchase Option shall be made without charge to the Holder of the Unit Purchase Option for any issue tax (other than any applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Unit Purchase Option being exercised.
4. CLOSING OF BOOKS. The Company will at no time close its transfer books against the transfer of any warrant or of any shares of stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Unit Purchase Option.
5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in this Unit Purchase Option shall be construed as conferring upon the Holder hereof the right to vote as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Unit Purchase Option, the interest represented hereby, or the shares purchasable hereunder until, and only to the extent that, this Unit Purchase Option shall have been exercised. The Holder of this Unit Purchase Option shall receive all notices as if a shareholder of the Company. No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors.
6. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF UNIT PURCHASE OPTION. The rights and obligations of the Company, of the Holder of this Unit Purchase Option and of the holder of shares of Common Stock and Warrants issued upon exercise of this Unit Purchase Option, shall survive the exercise of this Unit Purchase Option.
7. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
7.1 Articles and Bylaws. The Company has made available to Holder true, complete and correct copies of the Company Charter and Bylaws, as amended, through the date hereof.
7.2 Due Authority. The execution and delivery by the Company of this Unit Purchase Option and the performance of all obligations of the Company hereunder, including the issuance to Holder of the right to acquire the shares of Common Stock and Warrants, have been duly authorized by all necessary corporate action on the part of the Company, and the Unit Purchase Option is not inconsistent with the Company Charter or Bylaws and constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms.
7.3 Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Unit Purchase Option, except for any filing required by applicable federal and state securities laws, which filing will be effective by the time required thereby.
7.4 Issued Securities. All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of capital stock were issued in full compliance with all federal and state securities laws.
7.5 Exempt Transaction. Subject to the accuracy of the Holders representations in Section 8 hereof, the issuance of the Common Stock upon exercise of this Unit Purchase Option will constitute a transaction exempt from (i) the registration requirements of Section 5 of the Securities Act of 1933, as amended ("1933 Act"), in reliance upon Section 4(2) thereof, or upon the applicable exemption under Regulation D, and (ii) the qualification requirements of the applicable state securities laws.
7.6 Compliance with Rule 144. At the written request of the Holder, who proposes to sell Common Stock issuable upon the exercise of the Unit Purchase Option in compliance with Rule 144 promulgated by the Securities and Exchange Commission, the Company shall furnish to the Holder, within five (5) days after receipt of such request, a written statement confirming the Company's compliance with the filing requirements of the Securities and Exchange Commission as set forth in such Rule, as such Rule may be amended from time to time and an opinion of counsel allowing the sale pursuant to Rule 144.
7.7 Registration. The shares of Common Stock underlying this Unit Purchase Option are subject to a Registration Rights Agreement dated as of the date hereof between the Company and the Holder, the terms of which are incorporated by reference herein.
8. REPRESENTATIONS AND COVENANTS OF THE HOLDER.
8.1 This Unit Purchase Option has been entered into by the Company in reliance upon the following representations and covenants of the Holder:
8.1.1 Investment Purpose. The Unit Purchase Option or the Common Stock and Warrants issuable upon exercise of the Unit Purchase Option will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.
8.1.2 Private Issue. The Holder understands (i) that the Unit Purchase Option and the Common Stock and Warrants issuable upon exercise of this Unit Purchase Option are not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Unit Purchase Option will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 8.
8.1.3 Disposition of Holders Rights. In no event will the Holder make a disposition of the Unit Purchase Option or the Common Stock and Warrants issuable upon exercise of the Unit Purchase Option unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion
of counsel (which counsel may either be inside or outside counsel to the Holder) satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Common Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the Holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been issued to the Holder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Holder at its request by such Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Holder or holder of a share of stock then outstanding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense to such Holder, one or more new certificates for the Unit Purchase Option or for such shares of stock not bearing any restrictive legend.
8.1.4 Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.
8.1.5 Risk of No Registration. The Holder understands that if the Company does not file reports pursuant to Section 15(d), of the Securities Exchange Act of 1934 ("1934 ACT"), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the Unit Purchase Option, or (ii) the Common Stock issuable upon exercise of the Unit Purchase Option, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale of the Unit Purchase Options or the Common Stock and Warrants issuable upon exercise of the Unit Purchase Option which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.
8.1.6 Restriction on Exercise by The Holder. Notwithstanding
anything herein to the contrary, in no event shall any Holder
be required to exercise this Unit Purchase Option if as a
result of such exercise the aggregate number of shares of
Common Stock beneficially owned by such Holder and its
Affiliates would exceed 4.99% of the outstanding shares of the
Common Stock following such exercise. For purposes of this
Section 8.1.7, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended.
9. MODIFICATION AND WAIVER. This Unit Purchase Option and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
10. NOTICES. Any notice, request or other document required or permitted to be given or delivered to the Holder hereof or the Company shall be delivered or shall be sent by certified mail, postage prepaid or such other means which evidences receipt, to each such Holder at its address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Unit Purchase Option or such other address as either may from time to time provide to the other.
11. BINDING EFFECT ON SUCCESSORS. As provided in Section 2.3 above, this Unit Purchase Option shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the Common Stock and Warrants issuable upon the exercise of this Unit Purchase Option shall survive the exercise and termination of this Unit Purchase Option. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder hereof.
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the several sections and paragraphs of this Unit Purchase Option are inserted for convenience only and do not constitute a part of this Unit Purchase Option. This Unit Purchase Option shall be construed and enforced in accordance with, and the rights of the parties shall be governed by the laws of the State of Nevada.
13. LOST UNIT PURCHASE OPTIONS. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Unit Purchase Option and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Unit Purchase Option, the Company, at its expense, will make and deliver a new Unit Purchase Option, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Unit Purchase Option.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of this Unit Purchase Option. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Exercise Price.
IN WITNESS WHEREOF, the Company has caused this Unit Purchase Option to be duly executed by its officers, thereunto duly authorized this 26th day of April 2004.
NANOSENSORS, INC.,
A Nevada corporation
EXHIBIT A-1
SUBSCRIPTION FORM
Date: _________________, _______
NanoSensors, Inc. - Attn: President
Ladies and Gentlemen:
The undersigned hereby elects to exercise the Unit Purchase Option issued to it by NanoSensors, Inc. ("COMPANY") and dated April 26, 2004, ("UNIT PURCHASE OPTION") and to purchase thereunder __________________________________ shares of the Common Stock of the Company ("SHARES") at a purchase price of ________________ ($______) per Share or an aggregate purchase price of __________________ ________________ Dollars ($__________) ("EXERCISE PRICE").
Pursuant to the terms of the Unit Purchase Option, the undersigned has delivered the Exercise Price herewith in a manner set forth in the Unit Purchase Option.
Very truly yours,
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Unit Purchase Options
FOR VALUE RECEIVED,
______________________________________________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_____________________of the Unit Purchase Options represented by this Unit Purchase Option Certificate, and hereby irrevocably constitutes and appoints ____________________________________ Attorney to transfer this Unit Purchase Option Certificate on the books of the Company, with full power of substitution in the premises.
Dated: ________________________ x ________________________ Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS UNIT PURCHASE OPTION CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR MIDWEST STOCK EXCHANGE.
Exhibit 10.1
NANOSENSORS, INC.
PLACEMENT AGENT AGREEMENT
Dated as of April 20, 2004
Meyers Associates, L.P.
45 Broadway
2nd Floor
New York, New York 10006
Gentlemen:
NanoSensors, Inc. (the "Company") proposes to offer for sale (the "Offering") in a private offering pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and/or Regulation D promulgated by the Securities and Exchange Commission thereunder, up to 2,750,000 Units, each unit consisting of one (1) share of Common Stock, $.001 par value ("Shares"), and a Common Stock Purchase Warrant to purchase one (1) share of Common Stock at $.30 per share ("Warrant"). The Units are being offered at $.20 per Unit, (the "Units") for an aggregate of $550,000. The Offering is being made on a "best efforts" basis. Offers and sales of the Units shall be made solely to Accredited Investors (as defined in Regulation D.) This document shall confirm our agreement concerning Meyers Associates, L.P., acting as the placement agent (the "Placement Agent" or "Meyers")) in connection with the sale of the Units.
The Company has prepared Offering Documents dated April 21, 2004, relating to, among other things, the Company, the Units, the terms of the Offering and the terms of sale of the Units. The Offering Documents, including all supplements, exhibits and appendices thereto and documents delivered therewith, are referred to herein as the "Offering Documents" and shall include any supplements or amendments in accordance with this Agreement.
l. Appointment of Placement Agent.
On the basis of the representations and warranties contained herein, and subject to the terms and conditions set forth herein, the Company hereby appoints Meyers Associates, L.P., as the Placement Agent and grants to Meyers the exclusive right to offer, as its agent, the Units pursuant to the terms of this Agreement. On the basis of such representations and warranties, and subject to such conditions, Meyers hereby accepts such appointment and agree to use its reasonable best efforts to secure subscriptions for Units. The Company understands that the Placement Agent is being retained to obtain subscriptions on a "best efforts" basis and has not guaranteed the sale of any Units.
2. Terms of the Offering.
(a) The Offering shall consist of up to 2,750,000 Units, at a purchase price of $.20 per Unit. The Offering is being made on a "best efforts" basis. In the event a subscription is not accepted, such rejected subscription funds will be returned to the subscriber without interest or deduction.
(b) The Offering will commence on or about April 21, 2004, and shall expire at 5:00 p.m., New York time, on May 20, 2004 unless extended by the Placement Agent for an additional 30 days. Such period, as same may be so extended, shall hereinafter be referred to as the "Offering Period."
(c) Each prospective investor ("Prospective Investor") who desires to purchase Units shall deliver to the Placement Agent, or its designee, an executed Subscription Agreement and its check in available funds in the amount necessary to purchase the number of Units such Prospective Investor desires to purchase. The Prospective Investor shall also complete such other documents and questionnaires annexed to the Offering Documents (the "Ancillary Documents"). The Placement Agent shall not have any obligation to independently verify the accuracy or completeness of any information contained in a Subscription Agreement or the Ancillary Documents or the authenticity, sufficiency, or validity of any check delivered by any Prospective Investor in payment for Units.
3. Delivery of Documents; Closings.
(a) All executed Subscription Agreements and Ancillary Documents along with all checks in payment for each subscription shall be delivered to the Placement Agent at 45 Broadway, 2nd Floor, New York, New York 10006. All checks should be made payable to "Goldstein & DiGioia, LLP, Escrow Account for NanoSensors, Inc." All funds deposited in the escrow account, shall be remitted to the Company if the subscription is accepted or to the Investor if the subscription is rejected subject to the conditions of this Section 3. The Subscription Agreement and all Ancillary Documents shall be forwarded to the Company promptly for acceptance or rejection.
(b) During the Offering Period, funds representing subscriptions shall be held in escrow pending clearance of funds in accordance with applicable banking rules. The parties shall coordinate the release of funds during the Offering Period, including the delivery to the Placement Agent of the securities purchased by Prospective Investors, and delivery of other closing documents customarily utilized by the Placement Agent and satisfaction of the closing conditions provided in Section 9 hereof. Upon satisfaction of the closing conditions hereof, the funds maintained in the escrow account shall be timely remitted to the Company upon delivery of the appropriate securities evidencing the Units purchased (the "Closing").
4. Representations and Warranties of the Placement Agent.
The Placement Agent represents and warrants to the Company as follows:
(a) The Placement Agent is duly organized and validly existing and in good standing under the laws of the State of New York.
(b) The Placement Agent is, and at the time of each Closing will be, a member in good standing of the NASD.
(c) Offers and Sales of Units by the Placement Agent will only be made in such jurisdictions in which the Placement Agent is a registered broker-dealer or where an applicable exemption from such registration exists.
5. Compensation and Other Matters.
(a) The Placement Agent shall be entitled, on each Closing, as compensation for its services as Placement Agent under this Agreement, a commission equal to 10% of the gross subscription proceeds received by the Company.
(b) In addition to the compensation payable to the Placement Agent set forth in clause (a) above, the Company shall pay the Placement Agent a non-accountable expense equal to 3% of the gross subscriptions received by the Company payable on the date hereof.
(c) The Placement Agent shall have a right to receive notice of all meetings of the Company's Board of Directors and to have a representative present at all meetings of the Board of Directors.
(d) The Company agrees that, for a period of three (3) years from the date hereof, it shall not solicit any offer to buy from or offer to sell to any person introduced to the Company by the Placement Agent in connection with the Offering, directly or indirectly, any securities of the Company or of any other entity, or provide the name of any such person to any other securities broker or dealer or selling agent. In the event that the Company or any of its affiliates, directly or indirectly, solicits, offers to buy from or offers to sell to any such person any such securities, or provides the name of any such person to any other securities broker or dealer or selling agent, and such person purchases such securities or purchases securities from any other securities broker or dealer or selling agent, the Company shall pay to the Placement Agent an amount equal to 10% of the aggregate purchase price of the securities so purchased by such person.
(e) In the event that subscriptions have been received in escrow prior to the expiration of the Offering Period and accepted by the Company, the Placement Agent shall thereafter have an irrevocable right of first refusal for a period of three years from the final Closing to sell for the account of the Company, or any subsidiary of or successor to the Company any securities of the Company or any such subsidiary or successor of the Company, that the Company or any such subsidiary or successor may seek to sell through an underwriter, placement agent or broker-dealer whether pursuant to registration under the Act or otherwise. The Company, any such subsidiary or successor will consult with the Placement Agent with regard to any such offering and will offer the Placement Agent the opportunity to purchase or sell any such securities on terms not more favorable to the Company, any such subsidiary or successor than it or they can secure elsewhere as evidenced in writing obtained in good faith. If the Placement Agent fails to accept such offer within 10 business days after the mailing of a notice containing such offer by registered mail addressed to the Placement Agent (five (5) business days in the event the offer covers a sale under Rule 144), then the Placement Agent shall have no further claim or right with respect to the financing proposal contained in such notice. If, however, the terms of such proposal are subsequently modified in any material respect, the preferential right referred to herein shall apply to such modified proposal as if the original proposal had not been made. The Placement Agent's failure to exercise its preferential right with respect to any particular proposal shall not affect its preferential rights relative to future proposals. The Company represents and warrants that there are presently no other rights of first refusal for future financing now outstanding.
(f) Upon the final closing, the Company shall issue to the Placement Agent a Unit Purchase Option, exercisable for five (5) years, to purchase 50% of the aggregate number of Units sold in the Offering at an exercise price equal to $.20 per Unit.
6. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the Placement Agent that:
(i) The Offering Documents (a) contain, and at all times during the period from the date hereof to and including each Closing, will contain all information required to be contained therein, if any, pursuant to Rules 502 and 506 of Regulation D and all applicable federal and/or state securities and "blue sky" laws, and (b) shall not and does not, and during such period will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein in light of the circumstances made therein not misleading. Each contract, agreement, instrument, lease, license, or other document required to be described in the Offering Documents shall be, and have been, accurately described therein.
(ii) The Offering Documents or information (it being understood that neither the Company nor any of its officers or directors or employees shall provide any information to any Prospective Investor which is not contained in the Offering Documents) provided by the Company to Prospective Investors shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein in light of circumstances made therein not misleading.
(iii) The Company is, and at all times during the period from the date hereof to and including each Closing will be, a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, with full corporate power and authority, and has obtained all necessary consents, authorizations, approvals, orders, licenses, certificates, and permits and declarations of and from, and has made filings with, all federal, state and local authorities, to own, lease, license, and use its properties and assets and to conduct its business as presently conducted as described in the Offering Documents and/or in any such case where the failure to have any of the foregoing would not have a material adverse effect on the Company's presently conducted business. As of the date hereof, the Company is, and at all times during the period from the date hereof to and including each Closing, duly qualified to do business and is in good standing in every jurisdiction in which its ownership, leasing, licensing, or use of property and assets or the conduct of its business makes such qualification necessary except where the failure to be so qualified would not have a material adverse effect on the Company's business.
(iv) The Company has made, or shall make, during the Offering Period all required filings with the SEC and/or blue sky authorities of the appropriate states in connection with the offer and sale of the Units so as to comply with the requirements of Regulation D and /or the laws of the various states. The Company shall provide the Placement Agent with either (a) copies of the filings (stamped or otherwise indicating filing) or (b) an opinion of counsel regarding the filings, within 10 days of closing of the Offering.
(v) The financial information (the "Financial Statements") of the Company included in the Offering Documents fairly present in accordance with generally accepted accounting principles the financial position, the results of operations, and the other information with respect to the Company purported to be shown therein at the respective dates and for the respective periods to which they apply. The financial information included in the Offering Documents is correct and complete and is in accordance with the books and records of the Company. There has at no time been a material adverse change in the financial condition, results of operations, business, properties, assets, liabilities, or future prospects of the Company from the latest information set forth in the , except as may be properly described in the Offering Documents as having occurred or as may occur and except for continued deterioration in the Company's cash position and total assets and continued losses from operations.
(vi) As of the date hereof there is no, and as of each Closing shall not be any, litigation, arbitration, claim, governmental or other proceeding (formal or informal), or investigation pending or to the Company's knowledge threatened, with respect to the Company, or its respective operations, businesses, properties, or assets, except as properly described in the Offering Memorandum or such as individually or in the aggregate do not now have and will not in the future have a material adverse effect upon the operations, business, properties, or assets of the Company. The Company is not, nor as of each Closing shall be, in violation of, or in default with respect to, any law, rule, regulation, order, judgment, or decree, except as properly described in the Offering Documents or such as individually or in the aggregate do not have and will not in the future have a material adverse effect upon the operations, business, properties, or assets of the Company; nor is the Company required to take any action in order to avoid any such violation or default.
(vii) As of the date hereof, the Company is not, and at all times during the period from the date hereof to and including each Closing, shall not be, in violation or breach of, or in default with respect to complying with any material provision of any material contract, agreement, instrument, lease, license, arrangement, other than any such violation or breach which would not have, individually or in the aggregate, a material adverse effect on the Company's business, and each such contract, agreement, instrument, lease, license, arrangement, and under-standing is in full force and effect and is the legal, valid, and binding obligation of the parties thereto enforceable as to them in accordance with its terms. The Company enjoys peaceful and undisturbed possession under all leases and licenses under which it is operating as of the date hereof. As of the date hereof, the Company is not a party to or bound by any contract, agreement, instrument, lease, license, arrangement, or understanding, or subject to any charter or other restriction, which has had or may in the future have a material adverse effect on the financial condition, results of operations, business, properties, assets, liabilities, or future prospects of the Company. The Company is not in violation or breach of, or in default with respect to, any term of its Certificate of Incorporation or By-Laws.
(viii) To its best knowledge, the Company has not infringed, is not infringing, or has not received notice of infringement with respect to asserted intangibles of others. To the best knowledge of the Company, none of the patents, patent applications, trademarks, service marks, trade names and copyrights, and licenses and rights to the foregoing presently owned or held by the Company, materially infringe upon any like right of any other person or entity. The Company (i) owns or has the right to use, free and clear of all liens, charges, claims, encumbrances, pledges, security interests, defects or other restrictions of any kind whatsoever, sufficient patents, trademarks, service marks, trade names, copyrights, licenses and right with respect to the foregoing, to conduct its business as presently conducted except as set forth in the Offering Documents and (ii) except as set forth in the Offering Documents, is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, copyright, know-how, technology or other intangible asset, with respect to the use thereof or in connection with the conduct of its business as now conducted or otherwise. The Company has direct ownership of title to all its intellectual property (including all United States and foreign patent applications and patents), other proprietary rights, confidential information and know-how; owns all the rights to its Intangibles as are currently used in or have potential for use in its business.
(ix) The Company has all requisite corporate power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby. All necessary corporate proceedings of the Company have been duly taken to authorize the execution, delivery, and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed, and delivered by the Company, is a legal, valid, and binding obligation of the Company, and is enforceable as to the Company in accordance with its terms. Assuming the accuracy of the representations and warranties of the Prospective Investors set forth in the Subscription Agreement and Ancillary Documents and the representations and warranties of the Placement Agent set forth herein, no consent, authorization, approval, order, license, certificate, or permit of or from, or registration, qualification, declaration, or filing with, any federal, state, local, foreign, or other governmental authority or any court or other tribunal is required by the Company for the execution, delivery, or performance by the Company of this Agreement, the consummation of the transactions contemplated hereby and thereby, except the filing of a Notice of Sales of Securities on Form D pursuant to Regulation D, and such consents, authorizations, approvals, registrations, and qualifications as may be required under all applicable federal and/or securities or "blue sky" laws in connection with the issuance, sale, and delivery of the Units pursuant to this Agreement. No consent of any party to any material contract, agreement, instrument, lease, license, arrangement, or understanding to which the Company is a party, or to which any of its properties or assets are subject, is required for the execution, delivery, or performance of this Agreement, and the consummation of the transactions contemplated hereby and thereby, and such execution, delivery and performance will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under any such contract, agreement, instrument, lease, license, arrangement, or understanding, violate or result in a breach of any term of the certificate of incorporation or by-laws of the Company, or assuming the accuracy of the representations and warranties of the Prospective Investors set forth in the purchase agreements and the representations and warranties of the Placement Agent set forth herein, violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment, or decree binding on the Company or to which any of its operations, businesses, properties, or assets are subject.
(xi) The Units conform to all statements relating thereto as contained in the Offering Documents. The Units, when issued and delivered to the Prospective Investor pursuant to the terms of the Offering shall be duly authorized, validly issued, fully paid and non-assessable, without any personal liability attaching to the ownership thereof solely by being such holder and shall not have been issued in violation of any preemptive rights of stockholders.
(xii) Neither the Company nor any of its officers, directors, or affiliates, has engaged or will engage, directly or indirectly, in any act or activity that may jeopardize the status of the offering and sale of the Units as an exempt transaction under the Act or under all applicable federal and/or state securities or "blue sky" laws of any jurisdiction in which the Units may be offered or sold.
7. Covenants of the Company.
The Company covenants that it will:
(a) Notify you immediately, and confirm such notice in writing, (i) when any event shall have occurred during the period commencing on the date hereof and ending on each Closing, as a result of which the Offering Documents would include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) of the receipt of any notification with respect to the modification, rescission, withdrawal, or suspension of the qualification or registration of the Units, or of an exemption from such registration or qualification, in any jurisdiction. The Company will use its best efforts to prevent the issuance of any such modification, rescission, withdrawal, or suspension and if you so request, to obtain the lifting thereof as promptly as possible.
(b) Not make any supplement or amendment to the Offering Documents unless such supplement or amendment complies with the requirements of the Act and Regulation D and the applicable federal and/or state securities and "blue sky" laws and unless Meyers shall have received copies of same. If, at any time during the period commencing on the date hereof and ending on each Closing, any event shall have occurred as a result of which the Offering Documents contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if, in the opinion of counsel to the Company or counsel to the Placement Agent, it is necessary at any time to supplement or amend the Offering Documents to comply with the Act, Regulation D, or any applicable securities or "blue sky" laws, the Company will promptly prepare an appropriate supplement or amendment (in form and substance satisfactory to Meyers) which will correct such statement or omission or which will effect such compliance.
(c) Deliver without charge to the Placement Agent such number of copies of the Offering Documents and any supplement or amendment thereto as may reasonably be requested by the Placement Agent.
(d) Use its best efforts to qualify or register the Units for offering and sale under, or establish an exemption from such qualification or registration under, the securities or "blue sky" laws of such jurisdictions as requested by the Placement Agent; provided, however, that the Company will not be obligated to qualify to do business as a dealer in securities in any jurisdiction in which it is not so qualified. The Company will not consummate any sale of Units in any jurisdiction or in any manner in which such sale may not be lawfully made.
(e) At all times during the period commencing on the date hereof and ending on each Closing, provide to each Prospective Investor or his Purchaser Representative (as defined in Regulation D), if any, on request, such information (in addition to that contained in the Offering Documents) concerning the Offering, the Company and any other relevant matters, as it possesses or can acquire without unreasonable effort or expense, and to extend to each Prospective Investor or his Purchaser Representative, if any, the opportunity to ask questions of, and receive answers from officers of the Company concerning the terms and conditions of the Offering and the business of the Company and to obtain any other additional information, to the extent it possesses the same or can acquire it without reasonable effort or expense, as such Prospective Investor or Purchaser Representative may consider necessary in making an informed investment decision or in order to verify the accuracy of the information furnished to such Prospective Investor or Purchaser Representative, as the case may be.
(f) Notify you promptly of the acceptance or rejection of any subscription. The Company shall not (i) accept subscriptions from, or make sales of Units to, any Prospective Investors who are not, to the Company's knowledge, accredited investors, or (ii) unreasonably reject any subscription for Units.
(g) File five (5) copies of a Notice of Sales of Securities on Form D with the Securities and Exchange Commission (the "Commission") no later than 15 days after the receipt of subscription funds for the first sale of the Units. The Company shall file promptly such amendments to such Notice on Form D as shall become necessary and, as requested by the Placement Agent, shall also comply with any filing requirement imposed by the laws of any state or jurisdiction in which offers and sales are made. The Company shall furnish Meyers with copies of all such filings (including copies of cover letters and filing receipts) within five business days of the first Closing. All filing and other expenses incurred by the Company in connection with such filings shall be borne by the Company
(h) Not, directly or indirectly, engage in any act or activity which may jeopardize the status of the offering and sale of the Units as exempt transactions under the Act or under the securities or "blue sky" laws of any jurisdiction in which the Offering maybe made. Without limiting the generality of the foregoing, and notwithstanding anything contained herein to the contrary, the Company shall not, directly or indirectly, engage in any offering of securities which, if integrated with the Offering in the manner prescribed by Rule 502(a) of Regulation D and applicable releases of the Commission, may jeopardize the status of the offering and sale of the Units as exempt transactions under Regulation D.
(i) Not, during the period commencing on the date hereof and ending on each Closing Date, issue any press release or other communication, or hold any press conference with respect to the Company, its financial condition, results of operations, business, properties, assets, or liabilities, or the Offering, without your prior written consent, except as required by applicable securities laws and except as may be related to the marketing and sale of its products in the normal course of business.
8. Payment of Expenses.
The Company hereby agrees to pay all fees, charges, and expenses incident to the performance by the Company of its obligations hereunder, including, without limitation, all fees, charges, and expenses in connection with:(i) the preparation and printing of the Offering Documents and all other Ancillary Documents relating to the offering, purchase, sale, and delivery of the Units, and any supplements or amendments thereto, including the cost of all copies thereof; (ii) the issuance, sale, transfer, and delivery of the Units, including any transfer or other taxes payable thereon and the fees of any transfer agent or registrar; and (iii) the registration or qualification of the Units or the securing of an exemption therefrom under state or foreign "blue sky" or securities laws, including without limitation, filing fees payable in the jurisdictions in which such registration or qualification or exemption therefrom is sought and disbursements in connection therewith.
9. Conditions of Placement Agent's Obligations.
The obligations of the Placement Agent pursuant to this Agreement shall be subject, in its discretion, to the continuing accuracy of the representations and warranties of the Company contained herein and in each certificate and document contemplated under this Agreement to be delivered to the Placement Agent, as of the date hereof and as of each Closing, with respect to the performance by the Company of its obligations hereunder, and to the following conditions:
(a) At each Closing, the Placement Agent shall have received a certificate of the chief executive officer and of the chief financial officer of the Company, dated the applicable Closing Date to the effect that, as of the date of this Agreement and as of the applicable Closing Date the representations and warranties of the Company contained herein were and are accurate, and that as of the Closing Date the obligations to be performed by the Company hereunder on or prior thereto have been fully performed. Notwithstanding the foregoing, the Company hereby represents and warrants that at each Closing, the representations and warranties contained herein shall be true and correct in all respects. In addition, the parties shall execute such cross receipts and escrow release letters as may be required by the Placement Agent and escrow agent.
(b) All proceedings taken in connection with the issuance, sale, and delivery of the Units shall be satisfactory in form and substance to Meyers. Certificates representing the securities constituting the Units subscribed to by Investors shall be delivered to Meyers with or before the release of subscription funds to the Company. (d) There shall not have occurred after the date hereof, at any time prior to each Closing: (A) any domestic or international event, act, or occurrence which has materially disrupted, or in your opinion will in the immediate future materially disrupt the securities markets; (B) a general suspension of, or a general limitation on prices for, trading in securities on the Nasdaq SmallCap Market or the over-the-counter market; (C) any banking moratorium declared by a state or federal authority; (D) any material interruption in the mail service or other means of communication within the United States; (E) any material adverse change in the business, properties, assets, results of operations, or financial condition of the Company; or (F) any change in the market for securities in general or in political, financial, or economic conditions which, in your judgment, makes it inadvisable to proceed with the offering, sale, and delivery of the Units.
Any certificate or other document signed by any officer of the Company and delivered to you or to your counsel at a Closing shall be deemed a representation and warranty by the Company hereunder as to the statements made therein. If any condition to your obligations hereunder has not been fulfilled as and when required to be so fulfilled, you may terminate this Agreement or, if you so elect, in writing waive any such conditions which have not been fulfilled or extend the time for their fulfillment. In the event that you elect to terminate this Agreement, you shall notify the Company of such election in writing. Upon such termination, neither party shall have any further liability or obligation to the other except as provided in Section 10 hereof.
10. Termination.
This Agreement may be terminated by the Placement Agent (i) at anytime in the event the Placement Agent has determined, in good faith, that the Offering Documents fail to contain a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) upon three days notice. In the event that the Agreement is terminated as the result of a material breach by the Company of any covenant, representation or warranty contained in this Agreement then, in that event, and provided the Placement Agent is not in breach hereunder, the Company shall be liable for the Placement Agent's reasonable expenses, including counsel fees up to $25,000. The Company may not terminate this Agreement in the absense of a material breach of any covenant, representation or warranty contained in this Agreement made by the Placement Agent.
11. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Placement
Agent, its officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 11, but not be limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (A) any untrue statement or
alleged untrue statement of a material fact contained in the Offering Documents
, or (B) in any application or other document or communication (it being
understood that neither the Company nor any officer, director or employee shall
provide any information to any Prospective Investor which is not contained in
the Offering Documents) (in this Section 11 collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify the Units under the "blue sky" or securities
laws thereof or in order to secure an exemption from such registration or
qualification or filed with the Commission; or any omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company as stated in Section 11(b) with respect to the Placement Agent expressly
for inclusion in the Offering Documents or in any application, as the case may
be; or (ii) any breach of any representation, warranty, covenant, or agreement
of the Company contained in this Agreement. The foregoing agreement to indemnify
shall be in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against the Placement Agent or any of its officers, directors, partners, employees, agent, or counsel, or any controlling persons of the Placement Agent (an "indemnified party"), in respect of which indemnify may be sought against the Company pursuant to the foregoing paragraph, such indemnified party or parties shall promptly notify the Company (the "indemnifying party") in writing of the institution of such action (but the failure so to notify shall not relieve the indemnifying party from any liability it may have other than pursuant to this Section 11(a)) and the indemnifying party shall promptly assume the defense of such action, including the employment of counsel (reasonably satisfactory to such indemnified party or parties) and payment of expenses. Such indemnified party shall have the right to employ its own counsel in any such case, but the fees and expense of such counsel shall be at the expense of such indemnified party unless the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such action or the indemnifying party shall not have promptly employed counsel satisfactory to such indemnified party or parties to have charge of the defense of such action or such indemnified party or parties shall have reasonably concluded that there may be one or more legal defenses available to it or them or to other indemnified parties which are different from or additional to those available to one or more of the indemnifying parties, in any of which events such fees and expenses of one such counsel shall be borne by the indemnifying party and the indemnifying party shall not have the right to direct the defense of such action on behalf of the indemnified party or parties. Anything in this paragraph to the contrary notwithstanding, the indemnifying party shall not be liable for any settlement of any such claim or action effected without its written consent. The Company agrees promptly to notify the Placement Agent of the commencement of any litigation or proceedings against the Company or any of its officers or directors in connection with the sale of the Units, the Offering Documents, or any application.
(b) The Placement Agent agrees to indemnify and hold harmless the Company, its officers, directors, employees, agents, and counsel, and each other person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Placement Agent in Section 11(a), with respect to any and all loss, liability, claim, damage, and expense whatsoever (which shall include, for all purposes of this Section 11, but not be limited to, attorneys' fees and any and all expense whatsoever incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with (i) statements or omissions, if any, made in the Offering Documents in reliance upon and in conformity with written information furnished to the Company as stated in this Section 11 with respect to the Placement Agent expressly for inclusion in the Offering Documents, and (ii) the failure of the Placement Agent to comply with the provisions of the "blue sky" or securities laws of the jurisdictions in which the Placement Agent solicits offers to buy or offers to sell any Units or any breach of any representation, warranty, covenant or agreement of the Placement Agent contained in this Agreement. If any action shall be brought against the Company or any other person so indemnified based on the Offering Documents and in respect of which indemnity may be sought against the Placement Agent pursuant to this Section 11, the Placement Agent shall have the rights and duties given to the indemnifying party, and the Company and each other person so indemnified shall have the rights and duties given to the indemnified parties, by the provisions of Section 11(a) hereof.
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 11(a) or
11(b) hereof but it is found in a final judicial determination, not subject to
further appeal, that such indemnification may not be enforced in such case, even
though this Agreement expressly provides for indemnification in such case, or
(ii) any indemnified or indemnifying party seeks contribution under the Act, the
Exchange Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee, agent, or
counsel of the Company, or any controlling person of the Company), on the one
hand, and the Placement Agent (including for this purpose any contribution by or
on behalf of an indemnified party), on the other hand, shall contribute to the
losses, liabilities, claims, damages, and expenses whatsoever to which any of
them may be subject, in such proportions as are appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Placement
Agent, on the other hand; provided, however, that if applicable law does not
permit such allocation, then other relevant equitable considerations such as the
relative fault of the Company and the Placement Agent in connection with the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. The relative benefits received by the Company, on the
one hand, and the Placement Agent, on the other hand, shall be deemed to be in
the same proportion as (x) the total proceeds from the Offering (net of
compensation payable to the Placement Agent pursuant to Section 5(a) hereof but
before deducting expenses) received by the Company, and (y) the compensation
received by the Placement Agent pursuant to Section 5(a) hereof.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Placement Agent, and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent
for contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 11(c). In no case under this Section 11 shall the Placement
Agent by responsible for a portion of the contribution obligation in excess of
the compensation received by it pursuant to Section 5(a) hereof. No person
guilty of a fraudulent misrepresentation shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. For purposes
of this Section 11(c), each person, if any, who controls the Placement Agent
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and each officer, director, partners, employee, agent, and counsel of the
Placement Agent, shall have the same rights to contribution as the Placement
Agent, and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and each officer,
director, employee, agent, and counsel of the Company, shall have the same
rights to contribution as the Company, subject in each case to the provisions of
this Section 11(c). Anything in this Section 11(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent.
12. Non-Solicitation.
The Company agrees that, for a period of 36 months from the date hereof, it shall not solicit any offer to buy from or offer to sell to any person introduced to the Company by the Placement Agent in connection with the Offering, directly or indirectly, any securities of the Company or of any other entity, or provide the name of any such person to any other securities broker or dealer or Placement Agent. In the event that the Company or any of its affiliates, directly or indirectly, solicits, offers to buy from or offers to sell to any such person any such securities, or provides the name of any such person to any other securities broker or dealer or Placement agent, and such person purchases such securities or purchases securities from any other securities broker or dealer or Placement agent, the Company shall pay to the Placement Agent an amount equal to 8% of the aggregate purchase price of the securities so purchased by such person.
13. Representations and Agreements to Survive Delivery.
All representations, warranties, covenants, and agreements contained in this Agreement shall be deemed to be representations, warranties, covenants, and agreements at each Closing and, such representations, warranties, covenants, and agreements, including the indemnification and contribution agreements contained in Section 11, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Placement Agent or any indemnified person, or by or on behalf of the Company or any person or entity which is entitled to be indemnified under Section 11(b), and shall survive termination of this Agreement or the issuance, sale, and delivery of the Units. In addition, notwithstanding any election hereunder or any termination of this Agreement, and whether or not the terms of this Agreement are otherwise carried out, the provisions of Sections 6, 11 and 12 shall survive termination of this Agreement and shall not be affected in any way by such election or termination or failure to carry out the terms of this Agreement or any part thereof.
14. Notices.
All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be either (i) mailed by first
class mail in which case delivery shall be deemed to be made three days
following deposit in the United States mail; or (ii) sent by overnight courier
service in case delivery shall be deemed to be made upon receipt, to: Meyers
Associates, L.P., 45 Broadway, 2nd Floor, New York, New York 10006, Attention:
Bruce Meyers, with a copy to Goldstein & DiGioia LLP, 45 Broadway, New York, New
York 10006 Attention: Stanley R. Goldstein, Esq.; NanoSensors, Inc., 1800 Wyatt
Drive, Suite #2, Santa Clara, California 95054 Attention: President.
15. Parties.
This Agreement shall inure solely to the benefit of, and shall be binding upon, the Placement Agent and the Company and the persons and entities referred to in Section 11 who are entitled to indemnification or contribution, and their respective successors, legal representatives, and assigns (which shall not include any purchaser, as such, of Units), and no other person shall have or be construed to have any legal or equitable right remedy, or claim under or in respect of or by virtue of this Agreement or any provision herein contained.
16. Construction.
This Agreement shall be construed in accordance with the laws of the State of New York, without giving effect to conflict of laws.
17. Counterparts.
This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.
If the foregoing correctly sets forth the understanding between us, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
NANOSENSORS, INC.
By: /s/ Ted L. Wong ------------------------------------ Name: Ted L. Wong Title: President |
Accepted as of the date first above written:
MEYERS ASSOCIATES, L.P.
By: Meyers-Janssen Securities Corp.
(General Partner)
By: /s/ Bruce Meyers ---------------------------------- Name: Bruce Meyers Title: President |
Exhibit 10.2
LICENSE AGREEMENT
THIS AGREEMENT made and entered into this 11th day of December, 2003 by NanoSensors, Inc., having a place of business at 1800 Wyatt Drive, Santa Clara, CA., 95054, (hereinafter referred to as LICENSEE), and Axiom Corp and Matt Zuckerman having place of business at 0120 Letey Lane, Woody Creek, CO., 81656, (hereinafter referred to as LICENSOR).
WHEREAS, LICENSOR has developed sensors technologies for detecting explosives, chemicals and biologicals (hereinafter referred to as TECHNOLOGY); and
WHEREAS, LICENSOR desires to license and LICENSEE desires to obtain certain worldwide rights to the TECHNOLOGY for use exclusively within LICENSEE's MARKET.
NOW, therefore the parties agree as follows:
1.0 DEFINITIONS - For the purpose of this licensing Agreement, the following words and terms shall have the meanings set forth below:
a) TECHNOLOGY - Sensor technologies for detecting explosives, chemicals and biologicals as further described in Exhibit A..
b) TERRITORY - worldwide.
c) MARKET - all commercial markets
d) SUBSIDIARY or AFFILIATE - Any corporation or other entity which a party controls, or which that party, possesses a legal and/or beneficial interest of at least fifty (50%) percent or which owns, controls and possessed at least fifty (50%) percent legal or beneficial interest in that party.
e) GROSS REVENUE - The gross revenue received by the LICENSEE or any SUBSIDIARY or AFFILIATE of LICENSEE, for the PROJECTS in which the TECHNOLOGY is used
2.0 THE GRANT
2.1 LICENSOR grants to LICENSEE an exclusive license to use of the TECHNOLOGY in the TERRITORY and MARKET.
2.2 LICENSEE shall have the right to grant a sub license under this License Agreement without the written consent of the LICENSOR.
3.0 LICENSING FEES, ROYALTIES AND MINIMUM ANNUAL GUARANTEES
3.1 LICENSEE shall pay to LICENSOR in the TERRITORY and MARKET a one-time licensing fee of $90,000. An initial payment of $50,000 will be paid at the signing of this agreement and the remaining $40,000 on a schedule mutually agreed upon by LICENSEE and LICENSOR.
3.2 LICENSEE shall grant LICENSOR five million (5,000,000) shares of common stock of the LICENSEE. The total number of shares issued by LICENSEE at the date of this agreement is ten million (10,000,000) share of common stock.
3.3 LICENSEE shall pay to LICENSOR in the TERRITORY and MARKET no royalties on this license or any sublicenses.
4.0 CONSULTING SERVICES
4.1 LICENSEE shall enter into a consulting service agreement with LICENSOR under terms and conditions shown in Exhibit B. All patents developed under this Consulting Service Agreement in sensor technologies to detect explosives, chemicals and biologicals shall be assigned to LICENSEE by LICENSOR.
5.0 WARRANTIES AND REPRESENTATION
5.1 LICENSOR warrants and represents that:
a) LICENSOR has the full corporate power and authority to execute, deliver and perform this Agreement and to enter into and consummate all transactions contemplated by this Agreement,
b) LICENSOR has no knowledge of any infringement of a third-party patent or any other claim which would interfere with the use of the TECHNOLOGY by LICENSEE.
5.2 LICENSEE warrants and represents that:
a) LICENSOR has the full corporate power and authority
to execute, deliver and perform this Agreement and to
enter into and consummate all transactions
contemplated by this Agreement,
6.0 ACKNOWLEDGEMENT
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6.1 The Acknowledgement of the TECHNOLOGY being the LICENSOR'S technology shall be defined by LICENSEE and mutually agreed upon by LICENSOR and LICENSEE prior to the commencement of any Services.
7.0 TERM
7.1 This term of this Agreement is perpetual fromthe date of this Agreement.
8.0 NO JOINT VENTURE
8.1 Nothing herein shall be construed to place the parties in the relationship of partners or joint ventures and neither party shall have the power to obligate or bind the other in any manner.
9.0 CONFIDENTIALITY
9.1 The LICENSOR's Confidentiality and Non-Disclosure Agreement shall be signed by the LICENSEE in this TERRITORY and MARKET.
10.0 APPLICABLE LAW
10.1 This Agreement shall be construed and applied in accordance
with the laws of the States of California, except as to any
provisions hereof that are governed by the laws of the United
States of America, in which case the latter shall govern.
11.0 DISPUTES
11.1 All disputes, controversies or differences which may arise out
of or in relation to or in connection with this License
Agreement as between the parties to this License Agreement
shall be resolved through arbitration on an expedited basis in
accordance with the rules of the American Arbitration
Association in San Jose, California USA.
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12.0 ASSIGNMENT
12.1 LICENSEE's obligations and rights under this License Agreement can be assigned by LICENSEE.
13.0 INVALIDITY
13.1 Invalidity, illegality or unenforceability of any part of this License Agreement shall not affect the validity, legality or enforceability of the balance thereof.
14.0 ENTIRE UNDERSTANDING
14.1 This License Agreement is the entire understanding between the
parties and no change in agreement or modification shall be
effective unless executed in writing.
15.0 NOTICES
15.1 Any communication, report or notice required or permitted to
be given under this License Agreement shall be made in writing
and shall be deemed to have been duly and validly given
effective upon receipt of same , or if sent by Certified or
Registered mail, effective seven (7) days after mailing,
addressed to each case as follows:
a) If to LICENSOR, to it at:
AXIOM CORPORATION.
0120 Letey Lane
Woody Creek, CO. 81656
Attention: Dr. Matt Zuckerman
b) If to LICENSEE, to it at:
HEALTHHELPER.COM, INC.
1800 Wyatt Drive
Santa Clara, CA. 95054
Attention: Dr. Ted Wong
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or at such other address as either party may hereafter furnish to the other party by written notice, as herein provided.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed effective as of the date of this Agreement.
LICENSOR: LICENSEE: AXIOM CORP.. NANOSENSORS, INC. By:/s/ Matt Zuckerman By: /s/ Ted Wong ---------------------------- ---------------------------- Matt Zuckerman, President Ted Wong, President |
Exhibit 10.3
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is entered into on the date written below by and between NanoSensors, Inc., (the "Company") having a place of business at 1800 Wyatt Drive, Santa Clara, California 95054 and Axiom Corporation ("Consultant") having a place of business at 0120 Letey Lane, Woody Creek, Colorado 81656.
RECITALS
A. The Company is in the business of the development of explosive, chemical and biological sensors.
B. Consultant has certain skills, experience and abilities with respect to the Company's business.
C. The Company desires to retain Consultant as an independent contractor to perform consulting services (the "Services") for the Company and Consultant is willing to perform such services, on the basis set forth more fully below.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises contained herein, the Company and Consultant agree as follows:
1. Services. Consultant and Dr. Matthew Zuckerman agrees to perform the Services on sensor technologies and related technologies to detect explosives, chemicals and biologicals. Consultant and Dr. Matthew Zuckerman agrees that the terms of this Agreement.
2. Payment for Services. The Company shall pay Consultant a consulting fee of $15,000 per month starting on September 1, 2003 together with reimbursement for Consultant's direct costs such a travel expenses which have been pre-approved by the Company. The consulting fee may be modified by mutual agreement by the Company and Consultant if less than full time of Dr. Zuckerman is available for consulting.
3. Relationship of Parties. Consultant shall perform the Service under the general direction of the Company and agrees to devote his or her best efforts to the Service and to the reasonable satisfaction of the Company. Notwithstanding, Consultant shall determine, in Consultant's sole discretion, the manner and means by which the Services are accomplished, subject to the express condition that Consultant shall at all times comply with applicable law. Consultant is an independent contractor and Consultant is not an agent or employee of the Company, and has no authority whatsoever to bind the Company by contract or otherwise.
4. Time Commitment Consultant shall commit the amount of Dr. Matthew Zuckerman's time to the Services as acceptable to the Company.
5. Taxes and Benefits. Consultant acknowledges and agrees that it shall be the obligation of Consultant to report as income all compensation received by Consultant pursuant to this Agreement and Consultant agrees to indemnify the Company and hold it harmless to the extent of any obligation imposed on the Company to pay any taxes or insurance, including without limitation, withholding taxes, social security, unemployment, or disability insurance, including interest and penalties thereon, in connection with any payments made to Consultant by the Company pursuant to this Agreement.
6. Inventions. All inventions, discoveries, concepts and ideas whether patentable or not, including but not limited to hardware, software, processes, methods, techniques as well as improvements thereto conceived (collectively referred to as "Developments"), made, conceived or developed by Consultant and its agents, alone or with others, which result from or relate to the Company's business shall be the properties of the Company.
7. Confidentiality. Consultant and its agents agree to hold the Company's Confidential Information in strict confidence and not to disclose such Confidential Information to any third parties. Consultant and its agents further agree to deliver promptly all Confidential Information in Consultant's or its agents possession to the Company at any time upon the Company's request. For purposes hereof, "Confidential Information" shall include all confidential and proprietary information disclosed by the Company including but not limited to technical and business information relating to the Company's current and proposed products, research and development, production, manufacturing and engineering processes, costs, profit or margin information, finances, customers, suppliers, marketing and production, personnel and future business plans. "Confidential Information" also includes proprietary or confidential information of any third party who may disclose such information to the Company or Consultant and its agents in the course of the Company's business. The above obligations shall not apply to Confidential Information which is already known to the Consultant or its agents at the time it is disclosed, or which before being divulged either (a) has become publicly known through no wrongful act of the Consultant or its agents; (b) has been rightfully received from a third party without restriction on disclosure and without breach of this Agreement or other Agreements entered into by the Company; (c) has been independently developed by the Consultant or its agents; (d) has been approved for release by written authorization of the Company; (e) has been disclosed pursuant to a requirement of a governmental agency or of law.
8. Termination. This Agreement shall commence in September of 2003 and shall continue for two (2) years until terminated as follows:
(a) Either party may terminate the Agreement in the event of a breach by the other party of any of its obligations contained herein if such breach continues uncured for a period of ten (10) days after written notice of such breach to the other party;
(b) Either party may terminate this Agreement upon written notice to the other party if either party is adjudicated bankrupt, files a voluntary petition of bankruptcy, makes a general assignment for the benefit of creditors, is unable to meet its obligations in the normal course of business as they fall due or if a receiver is appointed on account of insolvency;
(c) Either party may terminate this Agreement for its convenience upon ninety (90) days written notice to the other if there is no outstanding Project Assignment.
Upon the termination of this Agreement for any reason, each
party shall be released from all obligations and liabilities to the other
occurring or arising after the date of such termination, except that any
termination shall not relieve Consultant or the Company of their obligations
under Paragraph 5 ("Taxes and Benefits"), Paragraph 6 ("Inventions"), Paragraph
7 ("Confidentiality") and Paragraph 9 ("General"), nor shall any such
termination relieve Consultant or the Company from any liability arising from
any breach of this Agreement.
9. General.
(a) Pre-Existing Obligations. Consultant represents and warrants that Consultant is not under any pre-existing obligation or obligations inconsistent with the provisions of this Agreement.
(b) Assignment. The rights and liabilities of the parties hereto shall bind and inure to the benefit of their respective successors, executors and administrators, as the case may be, provided that, as the Company has contracted for Consultant's services, Consultant may not assign or delegate its obligations under this Agreement either in whole or in part without the prior written consent of the Company.
(c) Equitable Relief. Because the Services are personal and unique and because Consultant shall have access to and become acquainted with the Confidential Information of the Company, Consultant agrees that the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or any other equitable relief without prejudice to any other rights and remedies that the Company may have for the breach of this Agreement.
(d) Attorney's Fees. If any action at law or in equity is necessary to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and expenses in addition to any other relief to which such prevailing party may be entitled.
(e) Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the laws of the State of California. If any provision of this Agreement is for any reason found by a court of competent jurisdiction to be unenforceable, the remainder of this Agreement shall continue in full force and effect.
(f) Counterpart. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which shall be one and the same instrument.
(g) Complete Understanding Modification. This Agreement constitutes the full and complete understanding and Agreement of the parties hereto and supersedes all prior understandings and agreements. Any waiver, modification or amendment of any provision of this Agreement shall be effective only in writing and signed by the parties thereto.
(h) Waiver. The failure of either party to insist upon strict compliance with any of the terms, covenants or conditions of this Agreement by the other party shall not be deemed a waiver of that term, covenant or condition, nor shall any waiver or relinquishment of any right or power at any one time be deemed a waiver or relinquishment of that right or power for all or any other time.
(i) Notices. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing and shall be by personal delivery, facsimile transmission or certified or registered mail. Such notice shall be deemed given upon personal delivery to the appropriate address or upon receipt of electronic transmission or, if sent by certified or registered mail, three days after the date of the mailing.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date written below.
COMPANY: CONSULTANT:
NANOSENSORS, INC. AXIOM CORPORATION
/s/ Ted Wong /s/ Matt Zuckerman
--------------------------------- --------------------------------
Ted Wong, CEO & President Matt Zuckerman, President
Date: 12/9/03 Date: 12/9/03
-------------------------
Address: Address:
1800 Wyatt Drive 0120 Letey Lane
Santa Clara, Calif. 95054 Woody Creek, Colo. 81656
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Exhibit 10.4
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is entered into on the date written below by and between NanoSensors, Inc., (the "Company") having a place of business at 1800 Wyatt Drive, Santa Clara, California 95054 and Ted Wong ("Consultant") having a place of residence at 663 Spruce Drive, Sunnyvale, California 94086.
RECITALS
A. The Company is in the business of the development of explosive, chemical and biological sensors.
B. Consultant has certain skills, experience and abilities with respect to the Company's business.
C. The Company desires to retain Consultant as an independent contractor to perform consulting services (the "Services") for the Company and Consultant is willing to perform such services, on the basis set forth more fully below. Additionally, Consultant shall serve as an officer of the Company under the direction of the Company.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises contained herein, the Company and Consultant agree as follows:
1. Services. Consultant agrees to perform the Services on the business of the Company to develop and market sensors to detect explosives, chemicals and biologicals. Consultant agrees to the terms of this Agreement.
2. Payment for Services. The Company shall pay Consultant a consulting fee of $14,833 per month starting on September 1, 2003 together with reimbursement for Consultant's direct costs such a travel expenses which have been pre-approved by the Company. The consulting fee may be modified by mutual agreement by the Company and Consultant if less than full time of the Consultant is available for consulting.
3. Relationship of Parties. Consultant shall perform the Service under the general direction of the Company and agrees to devote his or her best efforts to the Service and to the reasonable satisfaction of the Company. Notwithstanding, Consultant shall determine, in Consultant's sole discretion, the manner and means by which the Services are accomplished, subject to the express condition that Consultant shall at all times comply with applicable law. Consultant is an independent contractor and Consultant is not an agent or employee of the Company, and has no authority whatsoever to bind the Company by contract or otherwise.
4. Time Commitment Consultant shall commit the amount of the Consultant's time to the Services as acceptable to the Company.
5. Taxes and Benefits. Consultant acknowledges and agrees that it shall be the obligation of Consultant to report as income all compensation received by Consultant pursuant to this Agreement and Consultant agrees to indemnify the Company and hold it harmless to the extent of any obligation imposed on the Company to pay any taxes or insurance, including without limitation, withholding taxes, social security, unemployment, or disability insurance, including interest and penalties thereon, in connection with any payments made to Consultant by the Company pursuant to this Agreement.
6. Inventions. All inventions, discoveries, concepts and ideas whether patentable or not, including but not limited to hardware, software, processes, methods, techniques as well as improvements thereto conceived (collectively referred to as "Developments"), made, conceived or developed by Consultant and its agents, alone or with others, which result from or relate to the Company's business shall be the properties of the Company.
7. Confidentiality. Consultant and its agents agree to hold the Company's Confidential Information in strict confidence and not to disclose such Confidential Information to any third parties. Consultant and its agents further agree to deliver promptly all Confidential Information in Consultant's or its agents possession to the Company at any time upon the Company's request. For purposes hereof, "Confidential Information" shall include all confidential and proprietary information disclosed by the Company including but not limited to technical and business information relating to the Company's current and proposed products, research and development, production, manufacturing and engineering processes, costs, profit or margin information, finances, customers, suppliers, marketing and production, personnel and future business plans. "Confidential Information" also includes proprietary or confidential information of any third party who may disclose such information to the Company or Consultant and its agents in the course of the Company's business. The above obligations shall not apply to Confidential Information which is already known to the Consultant or its agents at the time it is disclosed, or which before being divulged either (a) has become publicly known through no wrongful act of the Consultant or its agents; (b) has been rightfully received from a third party without restriction on disclosure and without breach of this Agreement or other Agreements entered into by the Company; (c) has been independently developed by the Consultant or its agents; (d) has been approved for release by written authorization of the Company; (e) has been disclosed pursuant to a requirement of a governmental agency or of law.
8. Termination. This Agreement shall commence in September of 2003 and shall continue for two (2) years until terminated as follows:
(a) Either party may terminate the Agreement in the event of a breach by the other party of any of its obligations contained herein if such breach continues uncured for a period of ten (10) days after written notice of such breach to the other party;
(b) Either party may terminate this Agreement upon written notice to the other party if either party is adjudicated bankrupt, files a voluntary petition of bankruptcy, makes a general assignment for the benefit of creditors, is unable to meet its obligations in the normal course of business as they fall due or if a receiver is appointed on account of insolvency;
(c) Either party may terminate this Agreement for its convenience upon ninety (90) days written notice to the other if there is no outstanding Project Assignment.
Upon the termination of this Agreement for any reason, each
party shall be released from all obligations and liabilities to the other
occurring or arising after the date of such termination, except that any
termination shall not relieve Consultant or the Company of their obligations
under Paragraph 5 ("Taxes and Benefits"), Paragraph 6 ("Inventions"), Paragraph
7 ("Confidentiality") and Paragraph 9 ("General"), nor shall any such
termination relieve Consultant or the Company from any liability arising from
any breach of this Agreement.
9. General.
(a) Pre-Existing Obligations. Consultant represents and warrants that Consultant is not under any pre-existing obligation or obligations inconsistent with the provisions of this Agreement.
(b) Assignment. The rights and liabilities of the parties hereto shall bind and inure to the benefit of their respective successors, executors and administrators, as the case may be, provided that, as the Company has contracted for Consultant's services, Consultant may not assign or delegate its obligations under this Agreement either in whole or in part without the prior written consent of the Company.
(c) Equitable Relief. Because the Services are personal and unique and because Consultant shall have access to and become acquainted with the Confidential Information of the Company, Consultant agrees that the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or any other equitable relief without prejudice to any other rights and remedies that the Company may have for the breach of this Agreement.
(d) Attorney's Fees. If any action at law or in equity is necessary to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and expenses in addition to any other relief to which such prevailing party may be entitled.
(e) Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the laws of the State of California. If any provision of this Agreement is for any reason found by a court of competent jurisdiction to be unenforceable, the remainder of this Agreement shall continue in full force and effect.
(f) Counterpart. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which shall be one and the same instrument.
(g) Complete Understanding Modification. This Agreement constitutes the full and complete understanding and Agreement of the parties hereto and supersedes all prior understandings and agreements. Any waiver, modification or amendment of any provision of this Agreement shall be effective only in writing and signed by the parties thereto.
(h) Waiver. The failure of either party to insist upon strict compliance with any of the terms, covenants or conditions of this Agreement by the other party shall not be deemed a waiver of that term, covenant or condition, nor shall any waiver or relinquishment of any right or power at any one time be deemed a waiver or relinquishment of that right or power for all or any other time.
(i) Notices. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing and shall be by personal delivery, facsimile transmission or certified or registered mail. Such notice shall be deemed given upon personal delivery to the appropriate address or upon receipt of electronic transmission or, if sent by certified or registered mail, three days after the date of the mailing.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date written below.
COMPANY: CONSULTANT:
NANOSENSORS, INC. TED WONG
/s/ Ted Wong /s/ Ted Wong
---------------------------------------- --------------------------------
Ted Wong, CEO & President Ted Wong
Date: 9/1/03 Date: 9/1/03
--------
Address: Address:
1800 Wyatt Drive 663 Spruce Drive
Santa Clara, Calif. 95054 Sunnyvale, Calif. 94086
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EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
None
EXHIBIT 23.1
CONSENT OF COUNSEL
We hereby consent to the reference to us under the caption "Legal Matters" in the Prospectus contained in this Registration Statement.
SNOW BECKER KRAUSS P.C.
July 22, 2004
New York, New York
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
NanoSensors, Inc.
Santa Clara
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form SB-2 of our report dated July 12, 2004 to the balance sheets, statements of operations, shareholders' equity (deficit) and cash flows of NanoSensors, Inc. for the period ended April 30, 2004.
We also consent to the reference to us under the caption "Experts" in the Prospectus.
Murray, Utah
July 23, 2004
Madsen & Associates, CPA's, Inc.