As filed with the Securities and Exchange Commission on May 16, 2014
 
Registration No. 333 - 193965


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 2
 
TO
 
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

DanDrit Biotech USA, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
2834
45-2559340
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)

 
DanDrit Biotech A/S
Fruebjergvej 3 Box 62
2100 Copenhagen, Denmark
+45 39179840 (Telephone Number)
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 
Dr. Eric Leire
Chief Executive Officer
c/o DanDrit Biotech USA, Inc.
P.O. Box 189
Randolph, VT 05060
212-727-7085
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
 
David N. Feldman, Esq.
Richardson & Patel, LLP
The Chrysler Building
405 Lexington Avenue, 49 th Floor
New York, NY 10174
(212) 869-7000 (Telephone Number)
(917) 677-8165 (Facsimile Number)
Henry I. Rothman, Esq.
Joseph Walsh, Esq.
Troutman Sanders LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
(212) 704-6000 (Telephone Number)
(917) 704-6288 (Facsimile Number)
 
Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: þ
 
 
 

 
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
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. o
 
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. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer  o (Do not check if a smaller reporting company)
 
Smaller reporting company þ
 

CALCULATION OF REGISTRATION FEE

 
Title of each class of securities to be registered
 
Proposed Maximum
Aggregate Offering
Price(1)
 
Amount of
Registration Fee
 
Common stock, par value $0.0001   per share (2)
  $
12,000,000
  $
1,545.60
 
Common Stock par value $0.0001   per share (3)
  $
200,000
  $
25.76
 
TOTAL
  $
12,200,000
  $
1,571.36
 
 
(1)
 
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) of the Securities Act of 1933, as amended (the “Securities Act”), for the public offering and Rule 457(a) of the offering by the security holder.
 
(2)
This registration statement covers under one prospectus, the registrant’s initial public offering of up to 2,400,000 shares of the registrant’s common stock, par value $0.0001 per share (the “Common Stock”).
 
(3)
This registration statement also covers, under a separate prospectus, the resale (the “Resale”) of an aggregate of 40,000   shares of Common Stock owned by one (1 ) selling shareholder (the “Security Holder ”) identified in the Resale Prospectus defined below. The Company will not receive any proceeds from the Resale.
 

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 that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 
 
ii

 
 
EXPLANATORY NOTE
 
This registration statement contains two forms of prospectus, as set forth below.
 
 
Public Offering Prospectus. A prospectus to be used for the initial public offering by the registrant of 2,400,000 shares of Common Stock, (the “Public Offering Prospectus”) through the placement agent named on the cover page of the Public Offering Prospectus.
 
 
 
Resale Prospectus. A prospectus to be used in connection with the potential distribution by the Security Holder of up to an aggregate of 40,000   shares of the registrant’s Common Stock (the “Resale Prospectus”).
 
The Public Offering Prospectus and the Resale Prospectus will be identical in all respects except for the following:
 
 
they contain different front covers;
 
 
 
they contain different tables of contents;
 
 
 
the summary of The Offering is deleted from the Resale Prospectus;
 
 
 
they contain different Use of Proceeds sections;
 
 
 
a Shares Registered for Distribution section is included in the Resale Prospectus;
 
 
 
they contain different Plan of Distribution sections;
 
 
 
the Legal Matters section in the Resale Prospectus deletes the reference to counsel for the placement agent; and
 
 
 
they contain different back covers.
 
The registrant has included in this registration statement, after the financial statements, a set of alternate pages to reflect the foregoing differences between the Resale Prospectus and the Public Offering Prospectus.
 
 
iii

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and 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              , 2014                       
 
(DAN DRIT LOGO)
 
DANDRIT BIOTECH USA, INC.
 
Up to 2,400,000 Shares of Common Stock
 
We are offering up to $ 12,000,000 ( 2,400,000  shares) of our common stock at an expected offering price of $ 5.00 per share in an initial public offering of our common stock . There is presently no public market for our common stock.
 
We are an “emerging growth company” under the federal securities laws and will have the option to use reduced public company reporting requirements.
 
Investing in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 9 of this prospectus, and under similar headings in any amendments or supplements to this prospectus.
 
Sunrise Securities Corp. (the “Placement Agent”) is the placement agent for our initial public offering. The Placement Agent is not purchasing or selling any shares of common stock nor is it required to sell any specific number or dollar amount of common stock but will use its best efforts to sell the common stock offered. There are no minimum purchase requirements that must be met before the offering terminates. We have not arranged to place the funds from investors in an escrow, trust or similar account. Once your subscription is received, you will not have the right to withdraw your funds. Upon receipt, offering proceeds will be deposited into our operating account and used to conduct our business and operations in accordance with the section of this prospectus titled “Use of Proceeds”. This offering will terminate on        , unless it is fully subscribed before that date or we decide to terminate the offering prior to that date. In either event, the offering may be closed without further notice to you.
 

 
   
Per Share
   
Total
 
Public Offering Price
 
$
5.00
   
$
12,000,000
 
Placement Agent’s Commissions(1)
 
$
0.35
   
$
840,000
 
Offering Proceeds before expenses (2)
 
$
4.65
   
$
11,160,000
 
 
(1) For the purpose of estimating the Placement Agent’s commission, we have assumed that the Placement Agent will receive the maximum commission on all sales made in the offering. The Placement Agent will only receive commissions from proceeds raised from investors introduced to us by the Placement Agent. This figure does not include an accountable expense reimbursement fee of up to 1% of the gross proceeds of this offering. See “Plan of Distribution” for more information on this offering and the arrangements we have with the Placement Agent.
 
(2) Does not include offering expenses that we will be required to pay. Because there is no minimum offering amount required as a condition to closing this offering, the actual public offering amount, the Placement Agent’s commissions, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering set forth above. Once the offering price has been determined, the common stock offering price will remain fixed for the duration of the offering. See “Plan of Distribution” for more information on this offering and the arrangements we have with the placement agent.
 

 
The delivery of the shares of common stock will be made on or about                   , 2014.
 
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.
 
Sunrise Securities Corp.
The date of this prospectus is                   , 2014.
 
 
iv

 
 
TABLE OF CONTENTS
 
 
Page
   
1
 
7
 
12
 
26
 
27
 
29
 
30
 
31
 
32
 
39
 
65
 
67
 
69
 
71
 
73
 
74
 
75
 
76
 
77
 
79
 
81
 
82
 
82
 
82
 
 

 
Dealer Prospectus Delivery Obligation
 
Until                                          , 2014 (90 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as a placement agent and with respect to any unsold allotments or subscriptions.
 
 
v

 
 
ABOUT THIS PROSPECTUS
 
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of securities described in this prospectus. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus supplement, as well as information we have previously filed with the Securities and Exchange Commission (the “SEC” or the “Commission”) and incorporated by reference herein, is accurate as of the date on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since those dates.
 
CURRENCY INFORMATION
 
The functional and reporting current of DanDrit Biotech USA, Inc. is the U.S. Dollar. The functional currency of DanDrit Biotech A/S is the Danish Krone (“DKK” or “Danish Krone”) and our reporting currency is U.S. dollars ($) for the purpose of the financial statements and other financial data contained elsewhere in this prospectus. DanDrit Biotech A/S consolidated balance sheet accounts are translated into U.S. dollars at the period-end exchange rates (DKK 5.4127 and DKK 5.66 to $1 at December 31, 2013 and 2012, respectively) and all revenue and expenses reported for the years ended December, 2013 and 2012 are translated into U.S. dollars at the average exchange rates prevailing during 2013 and 2012 (DKK 5.54 and DKK 5.79 to $1 at December 31, 2013 and 2012, respectively).
 
 
vi

 
 
PROSPECTUS SUMMARY
 
This summary may not contain all of the information that may be important to you. You should read the entire prospectus, including the financial statements and related notes, and the risk factors under the section titled “Risk Factors”. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “DanDrit,” “we,” “us,” “our” and the “Company” are to DanDrit Biotech USA, Inc., a Delaware corporation (“DanDrit USA”), together with its wholly-owned subsidiaries DanDrit Biotech A/S, a Danish limited company, organized under the Danish Act on Limited Companies of the Kingdom of Denmark (“DanDrit Denmark,” or the “Subsidiary”).
 
Overview
 
We are a biotechnology company seeking to develop what we believe could be the world’s first vaccine approved for the treatment of colorectal cancer. For more than a decade we have developed and patented vaccines successfully used in initial clinical trials in Europe and Asia including: (i) MelCancerVac™ (MCV) for treatment of cancer (one phase I/II trial in Denmark and two phase II trials in Denmark and Singapore), (ii) Tolerogenic (producing immunologic tolerance) dendritic cell (TDC) (pre-clinical stage in Denmark) and (iii) Melvaccine (MV) a melanoma cell lysate used as stand-alone vaccine (pre-clinical state in Denmark). We plan to continue our clinical development program in the United States. Springing from academic roots in Denmark, DanDrit has built upon its scientific and medical skills to advance candidate therapies, targeted initially at non-small-cell-lung-cancer (NSCLC) and colorectal cancer (CRC). On September 22, 2008, the Singapore government granted to DanDrit Denmark a named-patient compassionate use of MCV. DanDrit has conducted three single-arm Phase II clinical trials in cancer where DanDrit determined its dendritic cell vaccine, MCV, demonstrated potential efficacy. However, these three clinical trials generated data which indicated that the data needed to be confirmed in a larger, comparative randomized clinical trial. As a result, DanDrit, with the assistance of experienced practitioners in colorectal cancer treatment, designed a randomized trial with 174 stage IV colorectal cancer patients. Neither the US Federal Drug Administration (FDA) nor or any other comparable governmental agency has reviewed MCV.  Therefore, any assessment of its safety or efficacy only reflects the opinion of the Company.  Furthermore, it does not indicate that MCV will achieve favorable results in any later stage trials or that the FDA or comparable agency will ultimately determine that MCV is safe and effective for purposes of granting marketing approval.
 
Our Biotechnology
 
We plan to use a dendritic cell vaccine technology relatively similar to the technology behind Dendreon’s FDA approved Provenge™ cancer vaccine. However, we believe DanDrit’s next generation of dendritic cell vaccine may benefit from technological competitive advantages over other cancer vaccines including:
 
 
The vaccine will be generated within eight days from a patient’s peripheral blood. We will be able to generate the vaccine quickly because only 200ml of blood is required to be drawn. Leukapheresis, a medical technology in which the blood of a patient is passed through an apparatus -dialysis machine- that separates out one particular constituent and returns the remainder to the circulation which is used in Denderon’s Provenge™ cancer vaccine, is not needed.
 
 
The vaccine will use an allogenic (using cells, tissues, or organs, sourced from a genetically non-identical member of the same species as the recipient (“Allogenic”) tumor lysate (a fluid containing the contents of lysed cells (lysis referring to the breaking down of a cell and a fluid containing the contents of lysed cells referred to as a “lysate”) as opposed to inconvenient autologous (from the patient) tumor lysate. A major limitation of autologous tumor cell vaccines is the low yield of autologous tumor cells that may compromise the number of immunizations given to patients (difficult to obtain enough cancer cells from the patient).  A second inconvenience is the variability of GM-CSF (a protein   that functions as a white blood cell growth factor ) secretion among patients, which could be responsible for the different levels of responses observed. But above all, although autologous tumor cells may be a good source of tumor-associated antigens, present on some tumor cells and some normal cells (as opposed to tumor specific antigens only present on tumor cells) (TAA) for cancer vaccine development, limitations plus the significant time and expense required for the approval of each patient’s vaccine by the appropriate regulatory agencies severely limits the development of this type of immunization approach. DanDrit does not need a patient’s tumor cells to manufacture MCV.  Therefore MCV is not classified as an autologous vaccine.
 
 
The vaccine will be polytopic (targets several cancer specific antigens). As a result, the risk of the tumor escaping is more limited and more T-cells can be activated than if the vaccine is targeting one antigen only. However, MCV has a focus on melanoma-associated antigen (“ MAGE”)-A antigens that are only expressed by tumors and absent in normal tissues.
 
 
Fast track production in two days is possible.
 
Our Proposed Clinical Trial
 
Parallel with the establishment of a cancer vaccine center in the EU, DanDrit intends to develop globally MCV in colorectal cancer, with opportunities to expand the scope of the treatment to other types of cancer after development in colorectal cancer. DanDrit proposes to focus its development program on a randomized multicenter Phase IIb/III clinical trial in stage IV colorectal cancer. The proposed Proof of Concept (PoC) study with an adaptive design plans to enroll 174 stage IV colorectal cancer patients after surgical resection of metastases and chemotherapy. Regulatory authorities in the United States and Europe have published guidance documents on the use and implementation of adaptive design trials. These documents include descriptions of adaptive trials and a requirement for prospectively written standard operating procedures and working processes for executing adaptive trials as well as a recommendation that sponsor companies engage with CROs that have the necessary experience in running such trials.
 
The proposed patients in trial have no evidence of disease but are not cured of cancer. Their Progression Free Survival , the length of time during and after treatment that a patient lives with the disease but it does not get worse   (PFS) is only 24 to 26 months. The objective of this multicenter Phase IIb /III clinical study is to lengthen the survival of these patients. Treatment will be double blinded (to the patients and physicians) against reference therapy. Patients will be included after surgical resection of their primary tumor and resectable metastases in liver and after appropriate peri-operative chemotherapy by stratification and random assignment to a non-vaccine control group or a vaccine group receiving five vaccinations with 14-day administration intervals followed by five vaccines with two-month intervals. Inclusion will take place one month after finishing the last round of peri-operative chemotherapy (FOLFOX or FOLFIRI) and after a negative tumor scan (head, thoracic and abdominal cavities) and normal carcinoembryonic antigen (CEA) prior to inclusion in the vaccine or the control groups. Patients will be screened for MAGE-A expression. The control group will receive five plus five injections with physiological saline. In the event of disease progression, as verified by tumor scan and biomarker levels during the vaccination schedule, vaccinations will be discontinued. To date, DanDrit has not filed an investigational new drug (IND) application with the FDA in relation to the proposed trial but plans to file an IND application by the end of 2014.
 
 
1

 
 
Our Competitive Strengths
 
We believe the following strengths position us to increase our revenue and profitability:
 
 
Cutting Edge Technology. We believe, based on the current state of research, that immunotherapy is one of the waves of the future in cancer management.
 
 
Colorectal Therapy Potential. We believe the treatment of advanced colorectal cancer represents an opportunity to meet a well identified medical need for safe maintenance therapy. We believe the clinical data for MCV to date shows the potential for the vaccine to eventually become a standard of care for maintenance therapy. We believe, based on our studies to date, that MCV has the potential to prolong periods of remission after response to chemotherapy. If MCV works as expected in advanced colorectal cancer, we believe it would likely prove beneficial in other tumors that over-express MAGE-A including lung, breast and esophageal cancers.
 
 
Regulatory Precedent. With Provenge™, its prostate cancer vaccine, Dendreon pioneered the regulatory pathway for MCV. Dendreon worked with the FDA to develop the protocols which could allow a cellular therapy such as MCV to be approved for clinical use. We believe that DanDrit is the next generation of dendritic cell vaccine with several improvements over its competition:   stimulate a cellular immune response rather than just an antibody response, no need for leukapheresis to produce the vaccine, intradermal administration, convenience of an Allogenic vaccine (off-the-shelf cancer specific antigens), polytopic approach but with a focus on the MAGE-A antigen family and reliable cost-efficient manufacturing.
 
 
Use in Singapore. For the last five years, DanDrit and the Singapore National Cancer Center have provided MCV to colorectal cancer patients within an on-going compassionate use program in Singapore.
 
 
Strong IP Protection. The technology is patented with a long patent life. DanDrit owns 100% of the technology.
 
Our Strategy
 
Our strategy is focused on conducting a proof-of-concept clinical trial in advanced colorectal cancer. DanDrit intends to conduct a randomized multicenter Phase IIb/III clinical trial to determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease after resection of metastasis and chemotherapy. This blinded comparative trial is planned to be completed within three years. We believe that positive clinical data will be the catalyst to unlock commercial revenues for DanDrit through either acquisition by pharmaceutical partner or licensing deals that would yield upfront and milestone payments as well as royalties or other strategic directions the Company may consider.
 
Furthermore, parallel to the previously described clinical trial, DanDrit may pursue a registration trial to support potential approval of MCV in China. This trial would be conducted under China’s State Food and Drug Administration (the “SFDA”) regulations with a Chinese oncology pharmaceutical partner. China has recently put in place a drug approval system.
 
DanDrit is headquartered in and runs operations from Denmark. However, DanDrit intends to establish a dendritic cell cancer vaccine good manufacturing practices (GMP) laboratory in the United States.
 
Industry Overview
 
We believe that major advances have been made the last three years in the field of immunotherapy. Molecular and cellular mechanisms controlling the immune system’s battle against cancer cells are now better understood.
 
 
2

 
 
However, currently, cancer remains still mostly treated by surgery, chemotherapy and radiotherapy. The current therapeutic approach is aggressive on the patient with significant side effects, and often fails to deal with the cancer for very long. Immunotherapy, however, can potentially solve these problems because the immune system, with its high level of specificity, can zero in on cancer cells that surgeons, drugs and radiations cannot reach.
 
For example, according to Dr. Adam Snook, “Our immune system is characterized by remarkable specificity, potency and memory – the ability of a single vaccine treatment to provide life-long-protection. No pharmacologic treatment for any indication can provide the same level of safety, efficacy, and long lasting affect than a vaccine can.”
 
In 2010, Dendreon published positive Phase III survival data for its immunotherapy, called Provenge™, in prostate cancer. During the last three years, we believe the field of cancer immunotherapy has been fast evolving. In immunotherapy for cancer, there has been recently positive clinical data (i.e. anti-programmed cell death protein-1) and approval of several immunotherapies for cancer. We believe that dendritic cell vaccines such as MCV are among the potential developments in the treatment of cancer.
 
Colorectal cancer (CRC) is the second largest cancer market in terms of numbers of patients diagnosed. In 2010, a total of around 1.58 million individuals were affected by CRC in the seven major markets, including the US, Japan, France, Germany, Italy, Spain and the UK . CRC was the leading cause of cancer prevalence among men and second among women in Europe. It was also observed that higher survival rates correlated with higher prevalence.
 
According to Decision Resources, the colorectal cancer (CRC) market totaled $8.3 billion in 2011. The value of the CRC market is expected to decrease in the next ten years due to generic competition for a key cytotoxic agent, oxaliplatin (Sanofi’s Eloxatin/Eloxatine, Yakult Honsha’s Elplat), as well as the entry of biosimilar competitors for key targeted biological agents. In terms of number of patients, despite the risk being strongly associated with age, the effect of population aging may be limited by reduced risk of invasive disease due to screening at least in developed countries.
 
DanDrit develops MCV for the management of metastatic CRC (stage IV). Currently, about 20% of CRC patients are diagnosed with metastatic disease. Forecast improvements in the observed survival in the metastatic setting will increase the number of people living with metastatic CRC over the next twenty years, despite the number developing metastatic disease per year remaining relatively stable due to the combined effects of screening and forecast improvements in the management of metastatic recurrence.
 
Treatment of advanced CRC typically involves removal of sections of the colon (colectomy) or rerouting of the intestine by colostomy. Chemotherapy is also used to treat patients with stage IV colon cancer. Irinotecan, oxaliplatin, and 5-fluorouracil are the three most commonly used drugs. In addition, monoclonal antibodies, including cetuximab (Erbitux), panitumumab (Vectibix), and bevacizumab (Avastin) have been used alone or in combination with chemotherapy. CRC is considered cured in the absence of a recurrence within the first five years. Five year survival rates associated with CRC are as high as 90% in early stage disease, and 40–60% in late-stage disease. Stage I, II and III cancers are considered potentially curable. In most cases, stage IV cancer is not curable. Therefore, there is an unmet need for a safe maintenance therapy of stage IV CRC after surgery and chemotherapy.
 
Corporate History and Information
 
DanDrit was incorporated in Delaware on January 18, 2011 under the name “Putnam Hills Corp.” (“Putnam”) as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a Registration Statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2011.
 
On February 12, 2014, the Company signed and consummated the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), DanDrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of DanDrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. In accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, DanDrit Denmark shareholders who have not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore have not exchanged such DanDrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, will be entitled to receive the number of shares of common stock of DanDrit USA that each such DanDrit Denmark shareholder would have been entitled to receive if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of an additional 185,053 shares of common stock of DanDrit USA. Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.
 
 
3

 
 
Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 shares of our common stock.  In addition, following the closing of the Share Exchange, DanDrit Biotech USA, Inc., a wholly owned subsidiary of the Company merged with and into the Company, thereby changing the Company’s name to “DanDrit Biotech USA, Inc.”
 
DanDrit USA owns approximately 97% of the outstanding equity interests of DanDrit Denmark. As a result of the Share Exchange, we changed our management and reconstituted our board of directors. As of the effective time of the Share Exchange, Samir Masri, the Chief Executive Officer, Chief Financial Officer, President, Secretary and sole director of Putnam resigned as the sole officer and director of the company and appointed NE Nielsen, Dr. Jacob Rosenberg, Dr. Eric Leire, Aldo Petersen and Robert E. Wolfe as directors of Putnam, and Dr. Eric Leire as Chief Executive Officer and President and Mr. Wolfe as Chief Financial Officer, Treasurer and Secretary.
 
Our principal executive offices are located at Fruebjergvej 3 Box 62, 2100 Copenhagen, Denmark , and our telephone number is +45 39179840. We maintain an Internet website at www.dandrit.com . The information contained in, or accessible from, our website is not a part of this prospectus.
 
Implications of being an Emerging Growth Company
 
As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012. An “emerging growth company” may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:
 
Financial Disclosure . The financial disclosure in a registration statement filed by an “emerging growth company” pursuant to the Securities Act will differ from registration statements filed by other companies as follows:
 
 
audited financial statements are required for only two fiscal years;
 
 
selected financial data is required for only the fiscal years that were audited;
 
 
executive compensation only needs to be presented in the limited format now required for “smaller reporting companies”.
 
Because we are a smaller reporting company, we are already provided with the above exemptions under Regulation S-K promulgated under the Securities Act.
 
The JOBS Act also exempts us from any Public Company Accounting Oversight Board rules that, if adopted, would mandate auditor rotation or auditor discussion and analysis.
 
Internal Control Attestation . The JOBS Act provides an exemption to emerging growth companies from the audit of internal controls over financial reporting. We are also exempt from this requirement as a smaller reporting company.
 
Shareholder Advisory Votes . Section 102(a) of the JOBS Act exempts emerging growth companies from the requirements in Sections 14A(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) to hold shareholder advisory votes approving executive compensation and golden parachute compensation paid in connection with an acquisition, merger, consolidation, or proposed sale or other disposition of all or substantially all the assets of an issuer .
 
 
4

 
 
Information about an Emerging Growth Company . Section 105(a) of the JOBS Act amended the Securities Act to provide an exception from the definition of the word “offer” for purposes of Sections 2(a)(10) and 5(c) of the Securities Act for research reports issued by a broker-dealer regarding an emerging growth company that is the subject of a proposed public equity offering.
 
The JOBS Act also prohibits the SEC and FINRA from adopting or maintaining any rule or regulation in connection with an initial public offering of an emerging growth company that restricts, based on “functional role”, which employees of a broker-dealer may arrange for communications between research analysts and prospective investors; prohibits research analysts from participating in communication with company management in the presence of non-research personnel such as investment banking or sales force personnel; or which prohibits the publication or distribution of a research report or making of a public appearance within any prescribed period of time either following the pricing date of the emerging growth company’s initial public offering or prior to the expiration of a company or shareholder lock-up agreement.
 
Election to Opt Out of Transition Period . Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standard.
 
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have not elected to opt out of the transition period.
 
We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act of 1933, as amended, or the Securities Act, which such fifth anniversary will occur in 2018. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.
 
Because we have elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting requirements in future filings, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.
 
 
5

 

THE OFFERING
 
Common stock offered by us
 
Up to 2,400,000 shares on a best efforts basis.
 
 
 
Common stock outstanding as of prior to the offering
 
7,854,947 shares.
 
 
 
Common stock to be outstanding after the offering
 
Up to 10,254,947 shares.
     
Use of proceeds
 
Based on an expected offering price of $5.00 per share, after deducting the placement agent’s commissions and estimated offering expenses payable by us, we estimate that we will receive up to $10,785,464 in net proceeds from the sale of the shares of common stock in this offering. However, this is a best efforts offering, and there can be no assurance that the offering contemplated hereby will ultimately be consummated.
 
We intend to use the proceeds from this offering to invest approximately (i) $830,000 for the manufacturing of our products, (ii) $2,689,720 in SG&A/Administration, (iii) $448,561 in debt repayment, and (iv) $6,771,840 in our clinical trial. All remaining proceeds will be used for working capital and general corporate purposes.
 
If we are unable to raise gross proceeds equal to at least $12,000,000, we intend to first apply the proceeds towards the $448,561 in outstanding debt and then towards the development and marketing of our products and the engineering, development and testing of vaccines. However, to the extent that we are unable to raise a sufficient amount of proceeds in this offering, we may not be able to achieve all our business objectives in a timely manner.
 
In the event that we file a post-effective amendment to increase the offering amount pursuant to Rule 462(b) of the Securities Act, we plan to allocate the extra funds in strengthening our Phase II/III clinical trial with a larger sample size and in targeting patients with stage III colorectal cancer rather than metastatic (stage IV) colorectal cancer patients.
 
See “Use of Proceeds” for more information.
     
Potential purchases by affiliates
 
Certain of our affiliates may purchase shares of our common stock in this offering on the same terms as they are offered and sold to the public.
     
Risk factors
 
The shares of common stock offered hereby involve a high degree of risk. See “Risk Factors”.
 
 
 
Dividend policy
 
We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends on our common stock.
 
 
 
Trading Symbol
 
There is not currently, and there has never been, any market for our common stock. In connection with this offering, we intend to arrange for a registered broker-dealer to apply to have our common stock quoted on the OTC Bulletin Board and on the OTCQB. We cannot guarantee that our application will be approved.
     
Lock-Up
 
 
All of the DanDrit Consenting Shareholders that were issued shares of common stock in the Share Exchange are subject to a lock-up agreement for a 180 day period beginning as of the filing date of the last amendment to the registration statement filed in connection with this Offering that is declared effective (the “Lock-Up Period”).  The one (1 ) selling shareholder (the “Security Holder ”) identified in the Resale Prospectus will also be subject to a lock-up agreement restricting any sales of the Company’s common stock during the Lock-up Period. See “Plan of Distribution”. The Company will not receive any proceeds from the Resale of the shares of Common Stock by the Security Holder .
 
 
6

 

Summary Consolidated Financial Data
 
The following table sets forth selected historical statements of operations for the fiscal years ended December 31, 2013 and 2012 and for the three months ended March 31, 2014 and 2013; and balance sheet data as of December 31, 2013 and March 31, 2014. DanDrit Denmark is considered the accounting acquirer in the Share Exchange and, as a result, the assets and liabilities and the historical operations that are reflected in our financial statements are those of DanDrit Denmark. Therefore, the historical financial data of DanDrit Denmark is deemed to be our historical financial data.
 
The balance sheet data as of December 31, 2013 and the statement of operations data for the fiscal years ended December 31, 2013 and 2012 have been derived from our audited financial statements for those years included elsewhere in this prospectus. The balance sheet data as of March 31, 2014 and the statement of operations data for the three months ended March 31, 2014 and 2013 have been derived from our unaudited condensed financial statements included elsewhere in this prospectus.
 
The following data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this prospectus and with our financial statements and the related notes and other financial information included in this prospectus.
 
STATEMENTS OF OPERATIONS :
 
   
For the
Three Months
Ended
March 31, 2014
(Unaudited)
   
For the
Three
Months
Ended
March 31, 2013
(Unaudited)
   
For the Year
Ended
December 31,
2013 (Audited)
   
For the Year
Ended
December 31,
2012 (Audited)
 
Net Sales
  $ -     $ 31,558     $ 32,768     $ 62,806  
                                 
Cost of Goods Sold
    17,739       15,360       109,299       64,385  
                                 
Gross Loss
    (17,739 )     16,198       (76,531 )     (1,579 )
                                 
Operating Expenses:
                               
General and administrative expenses
    326,428       175,016       1,233,683       1,036,005  
Depreciation and Amortization
    6,794       8,600       38,297       56,600  
Consulting expenses
    61,145       13,048       390,437       829,845  
                                 
Total Operating Expense
    394,367       196,664       1,662,417       1,922,450  
                                 
Loss from Operations
    (412,106 )     (180,466 )     (1,738,948 )     (1,924,029 )
                                 
Other Income (Expense)
                               
Interest (expense)
    (13,999     (159,922 )     (652,703 )     (704,911 )
Gain (loss) on currency transactions
    -       (100,327 )     19,541       32,841  
Gain on derivative liability
    -       41,643       175,732       153,430  
        Interest Income
    51       -       -       -  
                                 
Total Other Income (Expense)
    (13,948 )     (218,606 )     (408,413 )     (503,620 )
                                 
Loss Before Income Taxes
    (426,054 )     (399,072 )     (2,147,361 )     (2,427,649 )
                                 
Income Tax Expense (Benefit)
    -       -       -       -  
                                 
Net Loss
  $ (426,054 )   $ (399,072 )   $ (2,147,361 )   $ (2,427,649 )
 
 
7

 
 
BALANCE SHEETS:
 
   
(Unaudited)
March 31,
2014
   
December 31,
2013
 
ASSETS
 
             
CURRENT ASSETS:
           
    Cash
 
$
54,472
   
$
18,794
 
    Cash held in escrow
   
423,969
     
77,468
 
    Other Receivables
   
69,712
     
25,456
 
Prepaid Expenses
   
11,621 
     
19,774 
 
                 
       Total Current Assets
   
559,774
     
141,492
 
PROPERTY AND EQUIPMENT, Net accumulated Depreciation
   
40,460
     
-
 
                 
OTHER  ASSETS
               
Definite Life Intangible Assets
   
233,766
     
231,615
 
Deferred Stock Offering Costs
   
67,000
     
67,000
 
Deposits
   
10,466
     
10,360
 
 Total Other Assets
   
311,232
     
308,975
 
                 
TOTAL ASSETS
 
$
911,466
   
$
450,467
 
                 
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
 
                 
CURRENT LIABILITIES:
               
                 
Notes Payable -Related Party, Current Portion
 
$
1,705,201
   
$
728,001
 
Accounts Payable
   
568,175
     
548,501
 
Accrued Expenses
   
824,192
     
858,135
 
                 
       Total Current Liabilities
   
3,097,568
     
2,134,637
 
                 
LONG TERM LIABILITIES
   
-
     
-
 
    Notes Payable, Related Parties Less Current Portion
   
-
     
-
 
Total Long Term Liabilities
   
-
     
-
 
                 
    Total Liabilities
   
3,097,568
     
2,134,637 
 
                 
                 
STOCKHOLDER'S DEFICIENCY:
               
    Preferred stock, $.0001 par value; 10,000,000 shares authorized; none issued and outstanding
   
-
     
-
 
    Common stock, par value 1.0 DKK, 200,000,000 shares authorized, 7,854,947 and 5,814,945 issued and outstanding at March 31, 2014 and December 31, 2013, respectively
   
785
     
581
 
    Additional paid-in capital
   
17,788,129
     
17,867,565
 
    Accumulated Deficit
   
(19,947,180
)
   
(19,521,126
)
Non-controlled interest in subsidiary
   
-
     
-
 
Other Comprehensive Income, net
   
(27,836)
     
(31,190)
 
    Total Stockholder’s (Deficit)
   
(2,186,102
)    
(1,684,170)
 
                 
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
 
$
911,466
     
450,467
 
 
The following table sets forth unaudited proforma condensed combined balance sheet aggregates the balance sheet of DanDrit USA as of December 31, 2013, and the balance sheet of DanDrit Denmark as of December 31, 2013, accounting for the merger as a recapitalization of DanDrit Denmark with the issuance of shares for the net assets of DanDrit USA (a reverse acquisition) and using the assumptions described in the following notes to the proforma condensed combined financial statements, giving effect to the merger and bridge loan, as if the merger had occurred as of January 1, 2011. The transaction was completed February 12, 2014.
 
The  following  unaudited  proforma  condensed  combined  statement  of operations  reflects the results of operations of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) for the nine months ended December 31, 2013, the results of operations of DANDRIT BIOTECH A/S for the year ended December 31,  2013, and as if the  merger  had  occurred  as of the January 1, 2011.
 
The proforma condensed combined financial statements are not necessarily indicative of the combined financial position, had the acquisition occurred on the date  indicated  above,  or the combined  results of  operations which might have existed for the periods  indicated or the results of operations as they may be in the future.
 
 
8

 
 
The following information was taken from the Unaudited Proforma Condensed Combined Financial Statements and should be read in connection with the notes thereto.
 
UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET
 
   
Dandrit
BioTech
   
DanDrit
BioTech
   
Proforma
   
Proforma
 
   
AS
   
USA, Inc.
   
Increase
   
Combined
 
   
As of
   
As of
   
As of
   
As of
 
   
December 31, 2013
   
December 31, 2013
   
December 31, 2013
   
December 31, 2013
 
CURRENT ASSETS:
                       
Cash
 
$
18,794
   
$
22
   
$
-
   
$
18,816
 
Cash held in escrow
   
77,468
     
-
 [D]
   
886,803
     
964,271
 
Other Receivables
   
25,456
     
-
     
-
     
25,456
 
Prepaid Expenses
   
19,774
     
-
     
-
     
19,774
 
                                 
Total Current Assets
   
141,492
     
22
     
886,803
     
1,028,317
 
                                 
 
                               
PROPERTY AND EQUIPMENT , net accumulated depreciation
   
-
     
-
     
-
     
-
 
                                 
OTHER ASSETS:
                               
Other Intangible Assets
   
231,615
     
-
     
-
     
231,615
 
Deferred Stock Offering Costs
   
67,000
     
-
     
-
     
67,000
 
Deposits
   
10,360
     
-
     
-
     
10,360
 
                                 
Total Other Assets
   
308,975
     
-
     
-
     
308,975
 
                                 
Total Assets
 
$
450,467
   
$
22
   
$
886,803
   
$
1,337,292
 
 
 
9

 
 
UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET
 
  Dandrit BioTech    
DanDrit BioTech
     
Proforma
   
Proforma
 
 
AS
   
USA, Inc.
     
Increase
   
Combined
 
 
As of
   
As of
     
As of
   
As of
 
 
December 31, 2013
   
December 31, 2013
   
December 31, 2013
   
December 31, 2013
 
CURRENT LIABILITIES:
                       
Loans Payable - related party
$
-
   
$
38,235
     
$
-
   
$
38,235
 
Current Portion of Notes Payable -related party
 
728,001
     
39,132
 
[D
]
 
886,803
     
1,653,936
 
Accounts Payable - Trade
 
548,501
     
1,887
       
-
     
550,388
 
Accrued Expenses
 
858,134
     
-
       
-
     
858,134
 
                                 
Total Current Liabilities
 
2,134,636
     
79,254
       
886,803
     
3,100,693
 
                                 
Notes Payable -Related Party
 
-
     
-
       
-
     
-
 
                                 
Total Long-Term Liabilities
 
-
     
-
       
-
     
-
 
Total Liabilities
 
2,134,636
     
79,254
       
886,803
     
3,100,693
 
                                 
STOCKHOLDERS' EQUITY:
                               
Common Stock
 
739,532
     
500
 
[A
]
 
(440
)
       
               
[B
]
 
144
         
               
[C
]
 
(738,951
)
   
785
 
                                 
Additional Paid-in Capital
 
17,128,614
     
24,500
 
[A
]
 
440
         
               
[B
]
 
7,199,856
         
                                 
               
[C
]
 
738,951
         
               
[C
]
 
(7,304,232
)
   
17,788,129
 
                                 
Non-controlling interest in Subsidiary
 
-
     
-
 
[C
]
 
-
     
-
 
                                 
Retained Earnings
 
(19,521,125
)
   
(104,232
)
[B
]
 
(7,200,000
)
       
               
[C
]
 
7,304,232
     
(19,521,125
)
                                 
Other Comprehensive Income, net
 
(31,190
)
   
-
       
-
     
(31,190
)
Total Stockholders' Equity
 
(1,684,169
)
   
(79,232
)
     
-
     
(1,763,401
)
                                 
Total Liabilities and Stockholders' Equity
$
450,467
   
$
22
     
$
886,803
   
$
1,337,292
 
 
 
10

 
 
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
 
    Dandrit BioTech    
DanDrit BioTech
   
Proforma
   
Proforma
 
    AS    
USA, Inc.
   
Increase
   
Combined
 
   
For the
   
For the
   
(Decrease)
   
For the
 
   
Year Ended
   
Nine Months
   
For the Year Ended
   
Year Ended
 
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
 
NET SALES
 
$
32,768
   
$
-
   
$
-
   
$
32,768
 
                                 
COST OF GOODS SOLD
   
109,299
     
-
     
-
     
109,299
 
                                 
GROSS LOSS
   
(76,531
)
   
-
     
-
     
(76,531
)
                                 
OPERATING EXPENSES:
                               
General and Administrative Expenses
   
1,233,683
     
26,573
     
-
     
1,260,256
 
Research and Development
   
38,297
     
-
     
-
     
38,297
 
Consulting Expense
   
390,437
     
-
     
-
     
390,437
 
                                 
Total Operating Expense
   
1,662,417
     
26,573
     
-
     
1,688,990
 
                                 
LOSS FROM OPERATIONS
   
(1,738,948
)
   
(26,573
)
   
-
     
(1,765,521
)
                                 
OTHER INCOME (EXPENSE)
                               
Interest (Expense) - related party
   
(652,702
)
   
(1,390
)
   
-
     
(654,092
)
Gain (Loss) on Currency Transactions
   
19,541
     
-
     
-
     
19,541
 
Gain on Derivative Liability
   
175,732
     
-
     
-
     
175,732
 
Gain on forgiveness of debt
   
49,016
     
-
     
-
     
49,016
 
Gain (loss) on sale of fixed assets
   
1
     
-
     
-
     
1
 
                                 
Total Other Income (Expense)
   
(408,412
)
   
(1,390
)
   
-
     
(409,802
)
                                 
LOSS BEFORE INCOME TAXES
   
(2,147,360
)
   
(27,963
)
   
-
     
(2,175,323
)
                                 
INCOME TAX EXPENSE
   
-
     
-
     
-
     
-
 
                                 
NET LOSS
 
$
(2,147,360
)
 
$
(27,963
)
 
$
-
   
$
(2,175,323
)
                                 
CURRENCY TRANSLATION, NET
   
133,365
     
-
     
-
     
133,365
 
                                 
OTHER COMPREHENSIVE INCOME
 
$
(2,013,995
)
 
$
(27,963
)
 
$
-
   
$
(2,041,958
)
                                 
BASIC LOSS PER SHARE
                         
$
(0.260
)
                                 
PROFORMA COMMON SHARES
                               
 OUTSTANDING
                           
7,854,947
 
 
 
11

 
 
 
You should carefully consider and evaluate all of the information in this prospectus, including the risk factors listed below. Risks and uncertainties in addition to those we describe below, that may not be presently known to us, or that may also harm our business and operations. If any of these risks occur, our business, results of operations and financial condition could be harmed, the price of our Common Stock could decline, and future events and circumstances could differ significantly from those anticipated in the forward-looking statements contained in this prospectus.
 
All references to DanDrit’s drugs and vaccine candidates in this section refer to DanDrit drugs and vaccine candidates that DanDrit developed in-house.
 
RISKS ASSOCIATED WITH DANDRIT’S BUSINESS AND INDUSTRY
 
DanDrit lacks an established operating history on which to evaluate its business and determine if it will be able to execute our business plan, and can give no assurance that operations will result in profits.
 
DanDrit was formed in Delaware in January 2011 as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business.  On February 12, 2014, DanDrit acquired approximately 97% of the outstanding capital stock of DanDrit Biotech A/S, a Danish company.  DanDrit has a limited operating history that makes it difficult to evaluate its business.  DanDrit has not begun sales of its products, and cannot say with certainty when it will begin to achieve profitability.  No assurance can be made that DanDrit will ever derive meaningful revenues or become profitable.
 
DanDrit has incurred losses in prior periods and expect to incur losses in the future. DanDrit may never be profitable.
 
DanDrit’s independent registered public accounting firm has issued an unqualified opinion with an explanatory paragraph to the effect that there is substantial doubt about its ability to continue as a going concern. This unqualified opinion with an explanatory paragraph could have a material adverse effect on DanDrit’s business, financial condition, results of operations and cash flows.
 
DanDrit had net losses at March 31, 2014 and 2013 of $426,054 and $399,072, respectively and December 31, 2013 and 2012 of $2,147,361 and $2,427,649, respectively and an accumulated deficit at March 31, 2014 and December 31, 2013 of $19,947,180 and $19,521,126, respectively. DanDrit expects to continue to sustain losses for the foreseeable future.
 
As sales of DanDrit’s products have generated minimal operating revenues, DanDrit has relied on loans and on sales of its debt and equity securities to continue operations. If DanDrit is unable to raise funds through sales of its securities, there can be no assurance that DanDrit will be able to implement its business plan, generate sustainable revenue or ever achieve profitable operations. DanDrit expects to have operating losses until such time as it develops a substantial and stable revenue base. DanDrit cannot assure you that it can achieve or sustain profitability on a quarterly or annual basis in the future.
 
DanDrit may not be able to develop its vaccine candidates to yield satisfactory results and they may never be approved for use by regulatory authorities. If DanDrit is unable to successfully commercialize its vaccines, its prospects, financial position, results of operations and future opportunities will be materially adversely affected.
 
None of DanDrit’s vaccine candidates has completed full clinical development. Because DanDrit’s vaccine candidates generally belong to new classes of cell therapy, they will require extensive further development, testing and funding before we can seek regulatory approval for any of these vaccines.
 
DanDrit’s prospects in the short term, including DanDrit’s ability to generate revenue and make new strategic alliances, depend on DanDrit’s ability to develop, obtain regulatory approval for and commercialize its current vaccine candidates with satisfactory results. If DanDrit fails to develop the medicines DanDrit has in its pipeline, it will have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.
 
There can be no assurance that DanDrit will succeed in implementing its Phase IIb/III clinical trials for advanced colorectal cancer so that the results of these clinical trials will support further preclinical or clinical studies, or that DanDrit will be able to develop new vaccine candidates or successfully commercialize any of those cancer vaccine candidates at a later time. If DanDrit does not do this, we cannot achieve our growth potential and this will have a material adverse effect on DanDrit’s prospects, financial position, results of operations and future opportunities.
 
 
12

 
 
Results of our early clinical trials do not insure future success.
 
The results of early clinical trials may not necessarily be indicative of future results. Achieving positive results in preclinical testing and early clinical trials does not constitute any assurance that in future clinical trials sufficient data can be obtained to document a vaccine candidate’s efficacy and safety. The safety and efficacy of a vaccine candidate in development must be supported by extensive data from preclinical studies and clinical trials.
 
A number of companies in the pharmaceutical industry and in the biopharmaceutical industry, including companies that have greater resources and more experience than DanDrit, have achieved significant negative results in clinical phase IIb and III trials, even after obtaining promising results in preclinical and early clinical studies. Results that are considered acceptable in early clinical studies may not be confirmed or may be interpreted differently in subsequent studies. DanDrit cannot predict whether the clinical phase IIb and III and other clinical trials that may be implemented will demonstrate sufficient efficacy and safety to obtain regulatory approval to market any of DanDrit’ s vaccine candidates.
 
Negative or non-satisfactory results of clinical trials involving DanDrit’s vaccine candidates could lead to DanDrit or its collaborators having to perform additional nonclinical and/or clinical trials, which could result in higher costs and significantly delay the marketing authorization application for such vaccine candidates by the regulatory authority, or could lead to an application for a more narrowly defined use, or another indication for the vaccine candidate than originally expected. Such results could also lead to the complete elimination of a vaccine candidate. If any of these risks materialize, it could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.
 
We are a clinical-stage biopharmaceutical company which makes it difficult to assess our future viability.
 
We are a clinical-stage biopharmaceutical company. We have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area. For example, to execute our business plan, we will need to successfully:
 
 
execute on product candidate development activities;
 
 
obtain required regulatory approvals for the development and commercialization of our product candidates;
 
 
maintain, leverage and expand our intellectual property portfolio;
 
 
gain market acceptance for our products;
 
 
develop and maintain any strategic relationships we elect to enter into; and;
 
 
manage our spending as costs and expenses increase due to preclinical development, clinical trials, regulatory approvals and commercialization.
 
If we are unsuccessful in accomplishing these objectives, we may not be able to develop product candidates, raise capital, expand our business or continue our operations.
 
DanDrit will be dependent on collaboration and licensing arrangement to develop and commercialize its products. These relationships may be unsuccessful and may not result in the development of vaccine candidates. In that case, our business, financial condition and growth opportunities will be materially adversely affected.
 
DanDrit expects to depend on collaboration and licensing agreements with third parties who we expected will provide additional personnel and other resources and funding required to develop and commercialize its products. Until these relationships are established, our plans for developing some of our vaccines may be uncertain. There can be no assurance that DanDrit will be able to enter into or maintain these agreements, that the results of these agreements will further the development of a vaccine, or that DanDrit will receive income from these agreements. Furthermore, collaborators that we anticipate may enter into agreements with us may change their priorities; make reallocation of resources; terminate the agreements; end or further delay the development of vaccine candidates; downgrade or change plans or strategies for regulatory approval or commercialization of the vaccine candidate; find it difficult to retain key employees; or be taken over by companies that are our competitors.
 
We expect that these collaboration and licensing agreements will entitle us to milestone payments and a percentage of sales related to the vaccine candidates that are commercialized. If a third party with which DanDrit has established a collaboration or licensing arrangement stops the development of a vaccine candidate, there can be no assurance that all rights in respect of the vaccine candidate will be reassigned to us. A transfer of these rights may be delayed for various reasons, which may result in the delay of all work performed for the vaccine candidate.
 
 
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Since we are dependent on third parties to develop and commercialize our product candidates, any change in these anticipated relationships will have a material adverse effect on our business, financial condition, and future growth opportunities.
 
Regulatory requirements and regulations could have a material adverse effect on DanDrit.
 
DanDrit’s products are subject to extensive regulatory requirements, including public and/or regulatory limits set by the FDA and the European Medicines Agency (“EMA”). These laws and regulations, including those relating to reporting on safety, product safety and advertising and marketing of products cover all aspects of DanDrit’s business.
 
DanDrit and/or any future third party with which it has an effective collaboration or licensing agreement may be subject to changes in applicable governmental regulations and/or regulatory framework and be subject to additional or more onerous restrictions, which may make it necessary to make changes to personnel, facilities or procedures that could result in increased costs and adversely affect DanDrit’s business activities, including the development and commercialization of DanDrit’s vaccine candidates.
 
If DanDrit or its affiliates do not comply with applicable regulatory requirements or comply with significant legislative changes, DanDrit or its affiliates may be fined or risk having regulatory approvals suspended or withdrawn, risking recall or seizure of products, restrictions on activities and/or civil or criminal prosecution, which could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities. Furthermore, we cannot guarantee that our vaccine candidates will be approved by the regulating agencies.
 
As long as the relevant regulatory authorities have not considered and approved applications for DanDrit’s vaccine candidates (New Drug Application (NDA) or equivalent) DanDrit and its affiliates cannot commercialize DanDrit’s vaccine candidates. Production and marketing of DanDrit’s products and DanDrit’s ongoing research and development activities are subject to rules set by numerous public authorities throughout the world. The regulatory authorities of each country can set their own requirements and may refuse to approve a product or may require additional data before approving a product, even if the product is approved by another regulating agency. Approvals may include restrictions on the marketing or use of products, which could adversely affect the amount of DanDrit’s revenue from the sale of those products.
 
We are conducting, and may in the future conduct, clinical trials for MCV or any future product candidates in sites outside the United States and the FDA may not accept data from trials conducted in such locations.
 
We have conducted, and may in the future choose to conduct, one or more of our clinical trials outside of the United States. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to certain conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles. The study population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. Generally, the patient population for any clinical studies conducted outside of the United States must be representative of the population for whom we intend to label the product in the United States. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will be dependent upon its determination that the studies also complied with all applicable U.S. laws and regulations. There can be no assurance the FDA will accept data from trials conducted outside of the United States. If the FDA does not accept the data from our clinical trial conducted outside the United States, it would likely result in the need for additional trials within the United States, which would be costly and time-consuming and delay or permanently halt our development of MCV or any future vaccine candidates.
 
There can be no assurance that regulators will complete their review process in a timely manner, or that DanDrit vaccine candidates will obtain regulatory approval.
 
If DanDrit or any third party with which we have an effective collaboration or licensing agreement experience difficulties or delays in obtaining regulatory approvals, the development and commercialization of our vaccine candidates may be significantly delayed or even discontinued. Such difficulties or delays could result in significantly increased development costs and/or a delay or elimination of payments to us from our collaborators. This would have a material adverse effect on our business, financial condition, results of operations and future growth opportunities.
 
DanDrit will be dependent on external suppliers of certain services and technologies.
 
DanDrit will be dependent on a number of external parties such as contract laboratories and clinical research organizations, and in some cases our collaborators to:
 
 
Implement preclinical studies (pharmacology, toxicology testing and safety pharmacological evaluations).
 
 
Provide DanDrit with vaccine materials and support DanDrit’s activities related to preclinical and clinical studies.
 
 
Implement, inspect and/or monitor some or all aspects of the preclinical or clinical studies with DanDrit’s product candidates.
 
 
Ensure compliance with regulatory requirements such as Good Clinical Practice (“GCP”), Good Manufacturing Practice (“GMP”) and Good Laboratory Practices (“GLP”).
 
 
Deliver IT services.
 
 
Produce vaccine drugs and vaccines in accordance with GMP. The third parties DanDrit depends on may not be available when needed, or might not, if available, comply with all statutory and contractual requirements, and / or otherwise provide their services in a timely manner or in an acceptable manner.
 
 
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DanDrit is dependent on its ability to recruit and retain qualified scientific and management personnel.
 
Recruiting and retaining qualified scientific and management personnel for the planning and execution of research and development; preparation of applications for intellectual property rights and regulatory approvals; and negotiating and maintaining cooperation with existing and new partners is essential for DanDrit.
 
While DanDrit has not thus far experienced any difficulty in recruiting and retaining qualified scientific and management personnel, DanDrit may in the future require additional expertise and manpower in areas such as preclinical trials, management of clinical trials, regulatory affairs, marketing, business development and management of partnerships. There can be no assurance that DanDrit will continue to be able to attract and retain such persons in light of demand for experienced employees from numerous pharmaceutical companies, chemical companies, specialized biopharmaceutical companies, universities and other research institutions. DanDrit’s employment contracts contain no limitation on competition that would prevent DanDrit’s current employees from being employed by DanDrit’s competitors or partners, if they choose to leave DanDrit. Inability to obtain or develop such expertise, or hire the employees they need, on reasonable terms, could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.
 
If our employees commit fraud or other misconduct, including noncompliance with regulatory standards, our business may experience serious adverse consequences.
 
DanDrit is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with manufacturing standards we have established, to comply with federal and state health-care fraud and abuse laws and regulations, to report financial information or data accurately or to disclose unauthorized activities to us.
 
In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
 
DanDrit’s products may not achieve market acceptance. This would have a material adverse effect on our business, financial condition, results of operations and future growth opportunities.
 
The drugs DanDrit or its collaborators may develop, may not gain market acceptance among physicians, patients, third-party payors and the medical community, even if they are approved for marketing. The degree of market acceptance of the products approved for sale depends on a number of factors, including:
 
 
The ability of DanDrit or its collaborators to demonstrate the clinical efficacy, safety and benefits of the products.
 
 
The ability of DanDrit or its collaborators to demonstrate that the product has advantages over existing therapies or new alternative treatments.
 
 
The frequency and severity of any adverse effects arising from the use of the products.
 
 
The price of the products.
 
 
The subsidies DanDrit receives.
 
 
Efficacy within the therapeutic range for the illnesses the products are directed towards.
 
 
Patient comfort and user administration.
 
 
Requirements for marking.
 
 
The level of support for marketing and distribution.
 
 
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We have no control over most of these factors. Furthermore, it may be difficult for us, to the extent that competitors are able to commercialize competing products before our vaccine candidates obtain regulatory approval, to develop a market for a vaccine because doctors, patients or third-party payors may have become accustomed to using a competing, existing product or for other reasons, even though our drug may be more effective or has other advantages.
 
If any of the vaccines we develop fail to achieve market acceptance in the future, we may not be able to generate significant revenue, which would have a material adverse effect on our business, financial condition, results of operations and future growth opportunities.
 
The use of DanDrit’s drugs or vaccine candidates may lead to unforeseen side effects. If any of our drugs or vaccine candidates is deemed to be unsafe, our business, financial condition, results of operations and future growth opportunities could be materially adversely affected.
 
All drugs are associated with a risk of allergic, immunologic genes or hyper-sensitivities. We test for allergic and immunological genes actions in preclinical and clinical studies, but if any of our products cause other allergic or immunological reactions than those considered acceptable by patients, doctors or regulatory authorities, we or our collaborators may be required to conduct additional clinical trials that will cause delays and increase costs for the development of a product, or development may have to be terminated or suspended on the grounds that participants will be exposed to unacceptable health risks.
 
Even in cases where pre-clinical or clinical studies have been successful, or received regulatory approval, a product can later prove to be unsafe. The incidence of adverse events may make it necessary for us and for our collaborators to carry out further investigations and studies. If a product is determined to be unsafe, we and our collaborators can be fined or risk having regulatory approvals suspended or withdrawn, be required to cease selling activities relating to the product, be required to recall the product, be subject to seizure of products, or be exposed to civil or criminal prosecution. Any of these results could have a material adverse effect on our business, financial condition, results of operations and future growth opportunities.
 
Third party reimbursement and reform measures on health care could have a material adverse effect on the commercial success of DanDrit’s vaccine candidates.
 
Market acceptance of DanDrit’s vaccine candidates depends in part on the extent to which the public and private health insurance and other third-party payors will subsidize DanDrit’s drugs.
 
Governments, insurance companies and health organizations are increasingly seeking to reduce healthcare costs by limiting coverage, price and reimbursement levels of new vaccine products as well as in some cases rejecting coverage. Reimbursement practices vary significantly from country to country, and some countries require that products undergo a lengthy review by the authorities before they meet the public support requirements.
 
In the United States, in Canada and in many other countries, pricing and/or profitability of some or all prescription pharmaceuticals and biopharmaceuticals are subject to varying degrees of government control. Healthcare reform and controls on healthcare spending may limit the price we charge for any products and the amounts thereof that we can sell. In particular, in the United States, the federal government and private insurers have changed and have considered ways to change, the manner in which healthcare services are provided. In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, PPACA, became law in the United States. PPACA substantially changes the way healthcare is financed by both governmental and private insurers and significantly affects the healthcare industry. The provisions of PPACA of importance to our product candidates include the following:
 
 
an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs;
 
 
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, to 23.1% and 13.0% of the average manufacturer price for most branded and generic drugs, respectively;
 
 
expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;
 
 
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a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for a manufacturer’s outpatient drugs to be covered under Medicare Part D;
 
 
extension of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;
 
 
expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level beginning in 2014, thereby potentially increasing a manufacturer’s Medicaid rebate liability;
 
 
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
 
 
new requirements under the federal Open Payments program and its implementing regulations;
 
 
a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and
 
 
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
 
In addition, other legislative changes have been proposed and adopted since PPACA was enacted. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and accordingly, our financial operations.
 
We anticipate that PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the reimbursement we may receive for any approved product. Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. For example, the Middle Class Tax Relief and Job Creation Act of 2012 requires the Centers for Medicare & Medicaid Services, or CMS, to reduce the Medicare clinical laboratory fee schedule by 2% in 2013, which in turn will serve as a base for 2014 and subsequent years. CMS also recently proposed to re-examine payment amounts for tests reimbursed under the Medicare clinical laboratory fee schedule due to changes in technology and, in addition, proposed to bundle the Medicare payments for certain laboratory tests ordered while a patient received services in a hospital outpatient setting. Such changes went into effect January 1, 2014. Levels of reimbursement may be impacted by current and future legislation, regulation or reimbursement policies of third-party payors in a manner that may harm the demand and reimbursement available for our products, which in turn, could harm our future product pricing and sales. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.
 
There may be delays or difficulties in the recruitment and monitoring of patients in clinical trials. Any such delays could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.
 
All clinical development of new vaccine candidates depends on the recruitment of volunteer suitable patients for clinical trials. While DanDrit has not experience difficulties in recruiting patients to date, the ability to recruit patients depends on certain factors, including the prevalence of the disease in the population and it may be more difficult to find a sufficient number of patients to participate in clinical trials for drugs being developed for a disease that is common among the general population. Even if a disease is frequent among the population, there may be a number of other companies developing drugs that target the same disease who may eventually have more success in recruiting among the total group of potential patients for their clinical studies. In addition, trials in which patients may receive a placebo are typically more difficult to populate. DanDrit’s next clinical trial will include a comparative placebo arm. While DanDrit currently plans to address these potential difficulties, potentially through 2:1 randomization that increases a patient’s potential to receive active treatment vs. a placebo, if we or our collaborators find it difficult to recruit a sufficient number of patients to participate in clinical trials for one of its vaccine candidates DanDrit and/or its collaborators may have to postpone or discontinue ongoing clinical trials. Delays may also result in increased costs for clinical studies and may affect the implementation of studies required for a vaccine candidate’s approval. Delay or complete termination of a clinical trial program could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.
 
 
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DanDrit may not be able to make, or cause others to conduct, animal testing in the future. This could have a material adverse effect on our research and development work.
 
Research into dendritic cell vaccines does not generally involve animals. But, certain aspects of DanDrit’s biotechnology research and development may be carried out on animals. Changes to laws and regulations, recognized clinical procedures, or experimental protocols may have a negative impact on this research and development. Pressure from society, which may lead to restrictions on the use of animals or result in actions against DanDrit, its affiliates or its clinical research organizations from groups of people or individuals who are against animal testing may also have a material adverse effect on research and development work.
 
DanDrit faces extensive competition. If our vaccine candidates cannot compete successfully, our business, financial condition, results of operations and future growth opportunities could be materially, adversely affected.
 
There is extensive competition in the biopharmaceutical industry and the technology is developing rapidly. DanDrit is developing a vaccine for the treatment of advanced colorectal cancer, where competing products may be introduced. If these newly developed products are more efficient, cheaper, more patient-friendly, safer, or better placed than DanDrit’s vaccine candidates, or if DanDrit’s competitors develop drugs that reduce or eliminate the need for DanDrit’s vaccine candidates, such competition could reduce or eliminate DanDrit’s commercial opportunities. Many of DanDrit’s competitors have substantially greater financial, technical and human resources than DanDrit and significantly more experience than DanDrit with preclinical and clinical research and development and in obtaining regulatory approval of pharmaceutical products.
 
DanDrit’s drugs may face competition as a result of many factors, including the route of administration (e.g. oral administration vs. injection), the availability and cost of production, efficiency of DanDrit’s partners’ marketing and sales efforts as well as the price of DanDrit’s products. DanDrit has limited or no previous experience in these areas. DanDrit’s inability to compete effectively would have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.
 
DanDrit is likely to be exposed to product liability claims. If product liability lawsuits are successfully brought against us, our insurance may be inadequate. If a judgment were to exceed our insurance coverage, our business could be materially, adversely affected.
 
DanDrit will be exposed, by virtue of the nature of its business, to the risk of potential product liability claims, which is a natural part of the clinical development, manufacture and marketing of drugs. Even in cases where DanDrit has granted licenses to third parties to manufacture and sell its products, there can be no assurance that DanDrit will not be included in any product liability claims relating to these medicines, or claims by third parties, including DanDrit’s partners, for indemnity or other compensation from DanDrit in connection with any such claims.
 
We plan to obtain product liability insurance coverage once our clinical trials commence. However, our insurance coverage may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If and when we obtain marketing approval for our product candidates, we intend to expand our insurance coverage to include the sale of commercial products; however, we may be unable to obtain this product liability insurance on commercially reasonable terms. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. The cost of any product liability litigation or other proceedings, even if resolved in our favor, could be substantial. A successful product liability claim or series of claims brought against us could cause our share price to decline (assuming a trading market in our common stock is established) and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
 
We will need substantial additional funds to support our operations , and such funding may not be available to us on acceptable terms, or at all, which would force us to terminate, delay, reduce or suspend our operations, research and development programs and other commercialization efforts.
 
The completion of the development and the potential commercialization of MCV and any future product candidates, should they receive approval, will require substantial funds. As of December 31, 2013 and March 31, 2014, we had approximately $96,262 and $518,650 in cash and cash equivalents, respectively. We project that cash will be derived from revenues of 8 patients each month starting from July 1, 2014 in the myTomorrows program and committed financing secured by Paseco ApS for DKK 2,000,000 (the “Paseco Note”) or approximately $369,920, if necessary. This note accrues annual interest at 5% per annum and is due and payable on February 1, 2015. Our projected revenues and cash from financing activities for the next 12 months are $983,108 and $1,256,724, respectively, and our projected expenses are $1,740,493.  On April 29, 2014, DanDrit Denmark and Paseco entered into an amendment whereby the terms of the Paseco Note are payable on February 1, 2015 and can be extended at the Company’s option for an additional year with an increase in the interest rate to 7.00% per annum.We believe that the projected revenues and financing described above will supply us with sufficient cash and cash equivalents to sustain our operations for the next 12 months based on our existing business plan.  Our future financing requirements will depend on many factors, some of which are beyond our control, including the following:
 
 
 
the rate of progress and cost of our clinical studies;
 
 
 
the timing of, and costs involved in, seeking and obtaining approvals from the FDA and other regulatory authorities;
 
 
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the cost of preparing to manufacture MCV on a larger scale;
 
 
 
the costs of commercialization activities if MCV or any future product candidate is approved, including product sales, marketing, manufacturing and distribution;
 
 
 
the degree and rate of market acceptance of any products launched by us or future partners;
 
 
 
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
 
 
 
our ability to enter into additional collaboration, licensing, commercialization or other arrangements and the terms and timing of such arrangements;
 
 
 
the emergence of competing technologies or other adverse market developments; and
 
 
 
the costs of attracting, hiring and retaining qualified personnel.
 
Other than the Paseco Note, we do not have any committed external source of funds or other support for our operational or development efforts. Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. Additional financing may not be available to us when we need it or it may not be available on favorable terms. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to MCV or potential future product candidates, technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights.
 
If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our clinical studies or research and development programs or our commercialization efforts.
 
Raising capital in the future could cause dilution to our existing shareholders, and may restrict our operations or require us to relinquish rights.
 
In the future, we may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration, strategic alliance and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.
 
We depend on intellectual property and the failure to protect our intellectual property could adversely affect our future growth and success. This would have a material adverse effect on our business, financial condition and results of operations.
 
We rely on patent, trademark and copyright law, trade secret protection, and confidentiality and other agreements with employees, customers, collaborators and others to protect our intellectual property. However, some of our intellectual property is not covered by any patent or patent application, and, despite precautions, it may be possible for third parties to obtain and use our intellectual property without authorization.
 
We do not know whether any patents will be issued from pending or future patent applications or whether the scope of the issued patents is sufficiently broad to protect our technologies or processes. The patent position of biotechnology companies is generally uncertain because it involves complex legal and factual considerations. The standards applied by the United States Patent and Trademark Office and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology and pharmaceutical patents. Consequently, patents may not issue from our pending patent applications. As such, we do not know the degree of future protection that we will have on our proprietary products and technology.
 
We endeavor to aggressively protect our technologies through patents covering compositions of matter, drug targets and aspects of mechanism of action, drug product formulation, methods of use and methods of manufacture, and trade secrets.   We have filed patent applications and in-licensed others with respect to our technology both domestically and internationally and anticipate filing multiple patent applications, in the future. While we believe that we will be able to secure adequate and enforceable patent protection for our products and technologies, there is no guarantee that patent protection can be obtained, and even if it is obtained that such patent protection will ultimately be deemed valid, sufficiently enforceable, sufficient to preclude competition or not infringe upon the rights of other parties. Furthermore, the laws of some foreign countries may not protect intellectual property rights to the same extent as do the laws of the United States and Denmark.
 
 
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The patents protecting our proprietary technologies expire after a period of time. Currently, our patents have expiration dates ranging from 2021 through 2024. Although we have attempted to incorporate technology from our core patents into specific patented product applications, product designs and packaging to extend the lives of our patents, this approach may not be successful in protecting our proprietary technology. If we are not successful in protecting our proprietary technology, it could have a material adverse effect on our business, financial condition and results of operations.
 
We may not be successful in protecting our proprietary rights. Any infringement upon our intellectual property rights could have an adverse effect on our ability to develop our products and sell them commercially.
 
Issued patents covering one or more of our product candidates could be found invalid or unenforceable if challenged in court. If that were to happen, our business would be adversely impacted.
 
If we were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. Patent and Trademark Office, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on one or more of our product candidates or certain aspects of our platform technology. Such a loss of patent protection could have a material adverse impact on our business.
 
We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our products.
 
Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which we are not aware that our products infringe. There also could be patents that we believe we do not infringe, but that we may ultimately be found to have infringed. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our products infringe. For example, pending applications may exist that provide support or can be amended to provide support for a claim that results in an issued patent that our product infringes.
 
Third parties may assert that we are employing their proprietary technology without authorization. If a court held that any third-party patents are valid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products unless we obtained a license under the applicable patents, or until the patents expire. We may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products by us.
 
Unfavorable outcomes in intellectual property litigation could limit our research and development activities and/or our ability to commercialize certain products.
 
If third parties successfully assert intellectual property rights against us, we might be barred from using certain aspects of our technology, or barred from developing and commercializing certain products. Prohibitions against using certain technologies, or prohibitions against commercializing certain products, could be imposed by a court or by a settlement agreement between us and a plaintiff. In addition, if we are unsuccessful in defending against allegations of patent infringement or misappropriation of trade secrets, we may be forced to pay substantial damage awards to the plaintiff. There is inevitable uncertainty in any litigation, including intellectual property litigation. There can be no assurance that we would prevail in any intellectual property litigation, even if the case against us is weak or flawed. If litigation leads to an outcome unfavorable to us, we may be required to obtain a license from the patent owner, in order to continue our research and development programs or to market our product(s). It is possible that the necessary license will not be available to us on commercially acceptable terms, or at all. This could limit our research and development activities, our ability to commercialize certain products, or both.
 
 
20

 
 
Most of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our internal research programs, in-license needed technology, or enter into strategic partnerships that would help us bring our product candidates to market.
 
In addition, any future patent litigation, interference or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome in such litigation or proceedings may expose us or any future collaborators to loss of our proprietary position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all.
 
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
 
As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity. Therefore, obtaining and enforcing pharmaceutical patents is costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. The United States Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
 
Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of trade secrets and other proprietary information.
 
In addition to patents, we rely on other methods to protect our trade secrets, technical know-how, and proprietary information. In the course of our research and development activities and our business activities, we often rely on confidentiality agreements to protect our proprietary information. Such confidentiality agreements are used, for example, when we talk to vendors of laboratory or clinical development services or potential collaborators. We take steps to protect our proprietary information, and our confidentiality agreements are carefully drafted to protect our proprietary interests. Nevertheless, there can be no guarantee that an employee or an outside party will not make an unauthorized disclosure of our proprietary confidential information. This might happen intentionally or inadvertently. It is possible that a competitor will make use of such information in spite of any legal action we might take against persons making such unauthorized disclosures.
 
Trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or outside collaborators might intentionally or inadvertently disclose our trade secret information to competitors. Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States sometimes are less willing than U.S. courts to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.
 
Foreign currency fluctuations could adversely impact financial performance.
 
Our reporting currency is the United States dollar. Because of our activities in Denmark, the United Kingdom and continental Europe, we are exposed to fluctuations in foreign currency rates. We may manage the risk to such exposure by entering into foreign currency futures and option contracts. Foreign currency fluctuations may have a significant effect on our operations in the future.
 
 
21

 
 
  Assuming that our vaccine candidates receive regulatory approval and we begin sales of these products, our results may fluctuate due to certain regulatory, marketing and competitive factors over which we have little or no control.
 
Assuming that our vaccine candidates receive regulatory approval and we begin the sale of these products, the factors listed below, some of which we cannot control, may cause our revenue and results of operations to fluctuate significantly:
 
 
Actions taken by regulatory bodies relating to the verification, registration or health effects of our products.
 
 
The extent to which existing and newly developed products obtain market acceptance.
 
 
The timing and size of customer purchases.
 
 
Customer concerns about the stability of our business, which could cause them to seek alternatives to our solutions and products; and
 
 
Increases in raw material costs.
 
We will incur significant costs as a result of operating as a public company, and our management may be required to devote substantial time to compliance initiatives.
 
As a public company, we will incur significant legal, accounting and other expenses which we estimate to be in excess of $300,000 annually. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls as well as mandating certain corporate governance practices. Our management and other personnel will devote a substantial amount of time and financial resources to these compliance initiatives.
 
 If we fail to staff our accounting and finance function adequately, or maintain internal control systems adequate to meet the demands that are placed upon us as a public company, we may be unable to report our financial results accurately or in a timely manner and our business and stock price, assuming that a market for our stock develops, may suffer. The costs of being a public company, as well as diversion of management’s time and attention, may have a material adverse effect on our future business, financial condition and results of operations.
 
A significant portion of our assets and the majority of our officers and directors are located outside of the United States and therefore it may be difficult for an investor to enforce within the United States any judgments obtained against us or such officers and directors.
 
A significant portion of our assets are located outside of the United States. In addition, the majority of our officers and directors are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for an investor to effect service of process or enforce within the United States any judgments obtained against us or such officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether the courts of other jurisdictions would recognize or enforce judgments of United States courts obtained against us or our directors and officers predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in other jurisdictions against us, or such officers and directors predicated upon the securities laws of the United States or any state thereof.
 
RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK
 
There is currently no trading market for our common stock and we cannot guarantee you that a trading market will develop. You may be unable to sell your shares of our common stock if you need to liquidate your investment.
 
While our class of common stock is registered under the Exchange Act and we are a full SEC “reporting company,” our individual shares of common stock are not currently registered under the securities laws of any state or other jurisdiction, and none of such shares currently may publicly trade through exemptions from such registration. Accordingly there is no public trading market for our common stock. Further, we cannot guarantee you that a public trading market will develop in the foreseeable future. Currently, outstanding shares of our common stock cannot be offered, sold, pledged or otherwise transferred unless registered pursuant to, or exempt from registration under, the Securities Act and any other applicable federal or state securities laws or regulations. Compliance with the criteria for securing exemptions under federal securities laws and the securities laws of the various states is extremely complex. If you purchase shares of our common stock, there may be no market in which to sell them if you need to liquidate your investment in the future or the transfer or sale you wish to make may not comply with federal or state securities laws and would, therefore, be prohibited.
 
 
22

 
 
If a public market for our common stock develops, it may be volatile. This may affect the ability of our investors to sell their shares as well as the price at which they sell their shares.
 
If a market for our common stock develops, the market price for shares of our common stock may be significantly affected by factors such as variations in quarterly and yearly operating results, general trends in the biotechnology industry, and changes in state or federal regulations affecting us and our industry.
 
Furthermore, in recent years the stock market has experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of the affected companies. Such broad market fluctuations may adversely affect the market price of our common stock, if a market for it develops.
 
As an “emerging growth company” under the JOBS Act, we are permitted to rely on exemptions from certain disclosure requirements.
 
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to and may rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
 
 
have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
 
 
comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
 
 
submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay”, “say-on-frequency” and “say-on-golden parachute;” and
 
 
disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive’s compensation to median employee compensation.
 
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are not choosing to “opt out” of this provision. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. As a result of our election, not to “opt out” of Section 107, DanDrit’s financial statements may not be comparable to companies that comply with public company effective dates.
 
We will remain an “emerging growth company” until the last day of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration under the Securities Act, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
 
Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
 
We have never paid dividends on our common stock.
 
We have never paid dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further its business strategy. Because we do not anticipate paying dividends in the future, the only opportunity for our stockholders to realize the creation of value in our common stock will likely be through a sale of those shares.
 
 
23

 
 
The offering is being made on a best efforts basis with no minimum amount of shares required to be sold for the offering to proceed. If we are unable to raise the funds we need to fully implement our business plan, investors who participate in the offering may lose their entire investment.
 
In order to fully implement our business plan, we must raise $12,000,000 from this offering. However, our offering is being made on a best efforts basis with no minimum amount of shares required to be sold for the offering to proceed. If we raise only a nominal amount of proceeds we would likely be unable to implement our business plan, we may have to suspend or cease operations and investors who participate in this offering may lose their entire investments.
 
We arbitrarily determined the price of the common stock we are offering.
 
We determined the offering price of the common stock we are offering. The offering price does not bear any direct relationship to the value of our physical assets, the book value of our common stock, or any other generally accepted criteria of valuation. The price and other terms were based on a number of factors including, without limitation, estimates of our business potential and earnings prospects and the consideration of such potential earnings in relation to market valuations of comparable companies. The offering price is not an indication of the actual value of our common stock at the time of this offering.
 
Furthermore, if a market for our common stock develops, the price of our common stock following this offering may be highly volatile as the securities of emerging businesses often are. Factors such as our financial results and the introduction of new products by us or by our competitors, and various factors affecting the biotechnology industry generally, may have a significant impact on the market price of our securities. Additionally, in recent years, the stock market has experienced a high level of price and volume volatility and market prices for the securities of many companies, particularly of small and emerging growth companies, the common stock of which trade in the over-the-counter market, have experienced wide price fluctuations which have not necessarily been related to the operating performance of these companies.
 
The Company has not received any commitments to purchase the common stock under the Public Offering Prospectus. There is no minimum offering amount.
 
The Company will use its best efforts to sell all of the common stock offered under the Public Offering Prospectus. These sales may be made either directly by the Company, through its officers and directors, or with the assistance of the Placement Agent. No underwriter has been engaged in connection with the offering or performed any due diligence activities which would otherwise confirm the accuracy of our disclosures in the registration statement of which this prospectus is a part and our price of the offered common stock. None of the Company, the Placement Agent, or any other person, has made any commitment to purchase any of the shares offered hereby. Consequently, there can be no assurance that any of the shares will be sold. There is no minimum offering amount required for us to accept subscriptions for our Common Stock. To the extent that the net proceeds raised by the Company are substantially less than the maximum offering amount, the Company's opportunities would be severely diminished. In the event that an alternate source of financing is not obtained in a timely manner, those investors who participate in this offering risk the loss of their entire investments. In the event that we file a post-effective amendment to increase the offering amount pursuant to Rule 462(b) of the Securities Act, we plan to allocate the extra funds in strengthening our Phase II/III clinical trial with a larger sample size and in targeting patients with stage III colorectal cancer rather than metastatic (stage IV) colorectal cancer patients. See "Use of Proceeds," "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and "Plan of Distribution."
 
We have the right to issue shares of preferred stock. If we were to issue preferred stock, it is likely to have rights, preferences and privileges that may adversely affect the common stock.
 
We are authorized to issue 10,000,000 shares of “blank check” preferred stock, with such rights, preferences and privileges as may be determined from time-to-time by our board of directors. No preferred stock is currently issued and outstanding. Our board of directors is empowered, without stockholder approval, to issue preferred stock in one or more series, and to fix for any series the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights, and other rights, preferences and privileges for the preferred stock. No shares of preferred stock are presently issued and outstanding and we have no immediate plans to issue shares of preferred stock. The issuance of shares of preferred stock, depending on the rights, preferences and privileges attributable to the preferred stock, could adversely reduce the voting rights and powers of the common stock and the portion of the Company’s assets allocated for distribution to common stockholders in a liquidation event, and could also result in dilution in the book value per share of the common stock being offered. The preferred stock could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging, delaying or preventing a change in control of the Company, to the detriment of the investors in the common stock being offered. We cannot assure you that the Company will not, under certain circumstances, issue shares of its preferred stock.
 
We may use the net proceeds from this offering in ways which differ from our estimates and with which you may not agree.
 
The discussion titled “Use of Proceeds”, which appears elsewhere in this prospectus, sets forth the way in which we expect to use the net proceeds of this offering. The discussion represents our estimates based upon our current plans, assumptions regarding industry and general economic conditions, and our anticipated future revenues and expenditures. The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, cash generated by our operations, business developments and the rate of our growth. We may find it necessary or advisable to use portions of the proceeds from this offering for purposes other than those stated in the Use of Proceeds discussion. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used are also discussed in the section of this prospectus titled “Use of Proceeds”. You will not have an opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use our proceeds. As a result, you and other shareholders may not agree with the decisions made by our management relating to the way in which the proceeds from this offering are used. See the discussion titled “Use of Proceeds” for additional information.
 
 
24

 
 
You will experience immediate dilution in the book value per share of the common stock you purchase.
 
Because the price per share of our common stock being offered is substantially higher than the book value per share of our common stock, you will experience substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on an assumed offering price of $5.00 per share, if you purchase shares of common stock in this offering, you will experience immediate and substantial dilution of $3.87 per share in the net tangible book value of the common stock at March 31, 2014. See the section titled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.
 
Penny stock regulations may impose certain restrictions on the marketability of our securities.
 
The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5 per share, is not listed on a national exchange and fails to meet other specific criteria, subject to certain exceptions. We anticipate that our common stock, when trading commences, will be subject to these regulations which impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, excluding the net value of the person’s primary residence, or annual income exceeding $200,000, or $300,000 together with the investor’s spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a “penny stock”, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the “penny stock” market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the “penny stock” held in the account and information on the limited market in “penny stocks”. Consequently, if and when our common stock becomes publicly traded, the “penny stock” rules may restrict the ability of broker-dealers to sell our securities and may negatively affect the ability of purchasers of our shares of common stock to sell such securities.
 
A significant portion of our total outstanding shares of common stock is restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.
 
Sales of a substantial number of shares of our common stock in the public market, including shares issuable upon the effectiveness of this registration statement or upon the expiration of any statutory holding period under Rule 144, or existing lock-up agreements could occur in the future. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock. Our directors, executive officers and  certain shareholders, including those shareholders that were issued common stock in the Share Exchange, and the selling shareholders described herein are subject to a lock-up agreement pursuant to which these persons have agreed, subject to specified exceptions, not to sell, transfer, dispose of, contract to sell, sell any option or contract to purchase, or otherwise transfer or dispose of, directly or indirectly, without the written consent of the Placement Agent, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock for a period of 180 days beginning as of the filing date of the  last pre-effective amendment to this prospectus. Once these lock-up provisions expire, and provided that one year has passed following the date the company filed Form 10 information with the SEC, may be sold in the public market pursuant to Rule 144, which could cause the market price of our common stock to drop significantly.
 
 
25

 
 
DISCLOSURE  REGARDING FORWARD-LOOKING STATEMENTS
 
This prospectus contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may” or other similar expressions in this prospectus. These statements may be found in the sections of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”, as well as in this prospectus generally. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
 
 
future financial and operating results, including projections of revenues, income, expenditures, cash balances and other financial items;
 
 
our capital requirements and the need for additional financing;
 
 
our ability to protect our intellectual property rights and secure the right to use other intellectual property that we deem to be essential to the conduct of our business;
 
 
our ability to execute our growth, expansion and acquisition strategies;
 
 
current and future economic and political conditions;
 
 
overall industry and market performance;
 
 
competition;
 
 
management’s goals and plans for future operations; and
 
 
other assumptions described in this prospectus underlying or relating to any forward-looking statements.
 
We describe material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Reference is made in particular to forward-looking statements regarding growth strategies, financial results, product development, competitive strengths, intellectual property rights, litigation, mergers and acquisitions, market acceptance or continued acceptance of our products, accounting estimates, financing activities, ongoing contractual obligations and sales efforts. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.
 
 
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Based on an initial public offering price of $5.00  per share, after deducting commissions and estimated offering expenses payable by us, we estimate that we will receive net proceeds up to $10,785,464 from the sale of 2,400,000 shares of our common stock (100% of the offering), $8,024,464 from the sale of 1,800,000 shares of our common stock (75% of the offering), $5,265,464 from the sale of 1,200,000 shares of our common stock (50% of the offering) and $2,505,464 from the sale of 600,000 shares of our common stock (25% of the offering).
 
We intend to use the proceeds from this offering to conduct the Phase IIb/III clinical trial with MCV and pay $488,561 in outstanding debt. All remaining proceeds will be used for working capital and general corporate purposes. In the event that we receive maximum proceeds under the offering, we anticipate that we will be able to (i) complete the first step of our Phase II/III clinical trial in metastatic colorectal cancer, (ii) refine the design of the second step (Phase III trial) and (iii) initiate a collaboration agreement with a pharmaceutical partner. If we receive 75% of the maximum proceeds of the offering, we anticipate that we will be able to (i) provide comparative randomized confirmation of efficacy on a large scale that may trigger a partnership with a pharmaceutical company and (ii) pursue the Patient Name Use program with our partner MyTomorrows. If we receive 50% of the maximum proceeds of the offering, we anticipate that we will be able to (i) provide comparative randomized confirmation of efficacy on a smaller scale with a lower hazard ratio (HR) (a ratio used in time to event analysis) that may still trigger a less attractive partnership with a pharmaceutical company and (ii) pursue the Patient Name Use program with our partner MyTomorrows. HR is the hazard of an event in the studied arm divided by the hazard of the same event in the control arm. In our context the event is survival.  An HR of 1 means that survival will be the same in both arms.  An HR of 0.5 means that at a determined time, half as many patients in the vaccine group will have survived proportionally to the placebo control group.  If we receive 25% of the maximum proceeds of the offering, we anticipate that we will be able to conduct a small non-comparative trial that allow us to pursue the patient Name Use Program with our partner MyTomorrows.
 
If we are unable to raise net proceeds equal to at least $10.7 million, we intend to first apply any proceeds raised towards outstanding debt and the development and marketing of our products and the engineering, development and testing of vaccines. However, to the extent that we are unable to raise a sufficient amount of proceeds in this offering, we may not be able to achieve all our business objectives in a timely manner.
 
In the event that we file a post-effective amendment to increase the offering amount pursuant to Rule 462(b) of the Securities Act, we plan to allocate the extra funds in strengthening our Phase II/III clinical trial with a larger sample size and in targeting patients with stage III colorectal cancer rather than metastatic (stage IV) colorectal cancer patients.
 
Pending any ultimate use of any portion of the proceeds from this offering, we intend to invest the proceeds in a variety of capital preservation investments, including short-term, interest-bearing instruments such as United States government securities and municipal bonds.
 
The anticipated use of proceeds for the offering funds based on assumed amounts of 100%, 75%, 50% and 25% of total offering is summarized below.
 
Use of the Net Proceeds from the Sale of Shares at 100% of the offering:
 
                         
USD
 
Year 1
   
Year 2
   
Year 3
   
Total
 
Manufacturing
    230,000       285,000       315,000       830,000  
                                 
General & Administrative expenses
    975,000       978,000       736,720       2,689,720  
                                 
Clinical trial costs
    1,861,464       2,430,000       2,485,720       6,777,184  
                                 
Debt Repayment
    488,561                       488,561  
                                 
Total
    3,555,025       3,693,000       3,537,439       10,785,464  
                                 
Use of the Net Proceeds from the Sale of Shares at 75% of the offering:
 
                                 
USD
 
Year 1
   
Year 2
   
Year 3
   
Total
 
Manufacturing
    156,400       193,800       214,200       564,400  
                                 
General & Administrative expenses
    860,000       863,000       621,720       2,344,720  
                                 
Clinical trial costs
    1,296,715       1,685,675       1,645,394       4,627,784  
                                 
Debt Repayment
    488,561                       488,561  
                                 
Total
    2,801,676       2,742,475       2,481,313       8,025,464  
 
 
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Use of the Net Proceeds from the Sale of Shares at 50% of the offering:
 
                                 
USD
 
Year 1
   
Year 2
   
Year 3
   
Total
 
Manufacturing
    92,000       108,300       119,700       320,000  
                                 
General & Administrative expenses
    740,000       743,000       501,720       1,984,720  
                                 
Clinical trial costs
    755,664       923,400       793,120       2,472,184  
                                 
Debt Repayment
    488,561                       488,561  
                                 
Total
    2,076,225       1,774,700       1,414,539       5,265,464  
                                 
Use of the Net Proceeds from the Sale of Shares at 25% of the offering:
 
                                 
USD
 
Year 1
   
Year 2
   
Year 3
   
Total
 
Manufacturing
    34,500       0       0       34,500  
                                 
General & Administrative expenses
    700,000       458,720       461,720       1,620,439  
                                 
Clinical trial costs
    278,700       82,264       0       360,964  
                                 
Debt Repayment
    488,561                       488,561  
                                 
Total
    1,501,761       540,984       461,720       2,504,464  
 
The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, results from our research and development efforts, business developments and opportunities and the rate of our growth, sales and marketing activities and competition. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the proceeds from this offering. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used include:
 
the existence of unforeseen or other opportunities or the need to take advantage of changes in the timing of our existing activities;
 
the need or desire on our part to accelerate, increase, reduce, change or eliminate one or more existing initiatives due to, among other things, changing market conditions and competitive developments or interim results of research and development efforts;
 
 
28

 
 
results from our business development and marketing efforts, including opportunities that may materialize;
 
the effect of federal, state, and local regulation on us and on our identified industries;
 
our ability to attract development funding or to license or sell our vaccine candidates;
 
the presentation of strategic opportunities of which we are not currently aware (including acquisitions, joint ventures, licensing and other similar transactions); and/or
 
the filing of a post-effective amendment pursuant to Rule 462(b) of the Securities Act in order to raise additional funds to strengthen our Phase II/III clinical trial with a larger sample size and target patients with stage III colorectal cancer rather than metastatic (stage IV) colorectal cancer patients.
 
From time to time, we evaluate these and other factors and we anticipate continuing to make such evaluations to determine if the existing allocation of resources, including the proceeds of this offering, is being optimized.
 
 
We do not intend to declare or pay dividends on our common stock in the foreseeable future. Instead, we generally intend to invest any future earnings in our business. Subject to Delaware law, our board of directors will determine the payment of future dividends on our common stock, if any, and the amount of any dividends in light of:
 
 
any contractual restrictions limiting our ability to pay dividends that may be applicable at such time;
 
 
our earnings and cash flow;
 
 
our capital requirements;
 
 
our financial condition; and
 
 
other factors our board of directors deems relevant.
 
 
29

 
 
 
The table below sets forth our cash and cash equivalents and capitalization, each as of March 31, 2014:
 
 
on an actual basis;
 
 
on an as adjusted basis giving effect to the issuance of $6,000,000 (1,200,000 shares) of common stock in this offering; and
 
 
on an as adjusted basis giving effect to the issuance of the maximum of $12,000,000 (2,400,000 shares) of common stock in this offering.
 
You should consider this table in conjunction with our financial statements and the notes thereto included elsewhere in this prospectus.
 
   
As of March 31, 2014
 
         
Unaudited
       
  
 
Proforma
Combined
 Dandrit Biotech
 USA Inc
 and Subsidiary
   
Proforma
As Adjusted
$6 Million
Offering(1)
   
Proforma
As Adjusted
Maximum
Offering(2)
 
Cash and cash held in escrow
  $ 559,774       5,825,238       11,345,238  
Notes payable - related party, current portion
    1,705,201       1,705,201       1,705,201  
Accounts payable and accrued liabilities
    1,392,367       1,392,367       1,392,367  
                         
Total Debt obligations and payables
    3,097,568       3,097,568       3,097,568  
STOCKHOLDERS’ DEFICIT:
                       
Common stock; par value $0.0001, 100,000,000 shares authorized, 7,854,947, 9,054,947 and 10,254,947 shares issued and outstanding respectively (3)
    785       905       1025  
Additional Paid-in Capital
    17,788,129       23,053,473       28,573,353  
Other Comprehensive Income, net
    (27,836 )     (27,836 )     (27,836 )
Non-controlled Interest in Subsidiaries
    -       -       -  
Accumulated Deficit
    (19,947,180 )     (19,947,180 )     (19,947,180 )
                         
Total Stockholders’ (Deficit)
    (2,186,102 )     3,079,362       8,599,362  
                         
Total Capitalization
  $ 911,466       6,176,930       11,696,930  
 
(1) Assumes that $6,000,000 (1,200,000 shares) of our common stock are sold in this offering at an offering price of $   per share and that the net proceeds thereof are approximately $5,265,464, after deducting the placement agent’s commissions and our estimated offering expenses of $254,536.
 
(2) Assumes that $12,000,000 (2,400,000 shares) of our common stock are sold in this offering at an offering price of $   per share and that the net proceeds thereof are approximately $10,785,464, after deducting the placement agent’s commissions and our estimated offering expenses of $254,536.
 
(3) On February 12, 2014, pursuant to an Agreement and Plan of Merger, dated as of on February 12, 2014, by and among, the Company, DanDrit Biotech USA, Inc. (formerly Putnam Hills Corp.), and DanDrit Biotech A/S. (the "Merger Agreement"), DanDrit Biotech A/S was merged with and into DanDrit Biotech USA, INC. (formerly Putnam Hills Corp.) (the "Merger") and as a result of the Merger, DanDrit Biotech A/S. became an approximately 97% owned subsidiary of DanDrit Biotech USA, INC. (formerly Putnam Hills Corp.). Prior to the Merger there were 600,000 shares of the common stock, par value $.0001 per share of DanDrit Biotech USA, INC. (formerly Putnam Hills Corp.) outstanding after giving effect to the cancelation of 4,400,000 common shares of DanDrit Biotech USA, INC. (formerly Putnam Hills Corp.) by shareholders.  Pursuant to the Merger each of the 3,879,624 outstanding shares of the common stock held by the consenting shareholders of DanDrit Biotech A/S  were exchanged for 1.498842 shares of DanDrit Biotech USA, INC. (formerly Putnam Hills Corp.) common stock, for a total of 5,814,945. In connection with the acquisition, 1,400,000 and 40,000 common shares of DanDrit Biotech USA, INC. (formerly Putnam Hills Corp.) were issued for consulting and legal services, respectively. 7,854,947 common shares of DanDrit Biotech, INC. (formerly Putnam Hills Corp.) common stock will be outstanding immediately following the Merger.
 
 
30

 
 
 
Purchasers of the shares of our common stock offered by this prospectus will suffer immediate and substantial dilution in the net tangible book value per share of our common stock. Our net tangible book value (unaudited) as of March 31, 2014, was a deficit of approximately $(2,186,102), or $(0.28) per share. Net tangible book value per share is calculated by subtracting our total liabilities from our total tangible assets, which is total assets less intangible assets, and dividing this amount by the number of shares of common stock outstanding as of March 31, 2014.
 
Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers in this offering and the as adjusted net tangible book value per share of our common stock immediately after this offering.
 
Assuming that we complete this offering for a total of $6,000,000 (1,200,000 shares) of our common stock at a price of $5.00 per share, and after deducting the Placement Agent’s commission and estimated offering expenses payable by us, our as adjusted net tangible book value as of March 31, 2014 would have been approximately $2,768,13 , or $0.31 per share. This represents an immediate increase in the net tangible book value of $0.63 per share to our existing stockholders and an immediate dilution in net tangible book value of $(4.37) per share to the investors in this offering. The following table illustrates this per share dilution based on the completion of this offering at the minimum level:
 
Price per share to the investor
       
$
  5.00
 
Net tangible book value per share as of March 31, 2014
 
$
(0.32
)
       
Increase in net tangible book value per share attributable to this offering at the minimum level
 
$
0.63
         
As adjusted net tangible book value per share as of March 31, 2014 after giving effect to this offering at the minimum level
         
$
 0.31
 
Dilution in net tangible book value per share to the new investor
         
$
  (4.37
)
 
Assuming that we complete this offering at the maximum level of $12,000,000 (2,400,000 shares) of our common stock at a price of $5.00 per share, and after deducting the Placement Agent’s commission and estimated offering expenses payable by us, our as adjusted net tangible book value as of March 31, 2014 would have been approximately $8,288,130, or $0.81 per share. This represents an immediate increase in the net tangible book value of $1.13 per share to our existing stockholders and an immediate dilution in net tangible book value of $(3.87) per share to the investor in this offering. The following table illustrates this per share dilution based on the completion of this offering at the maximum level:
 
Price per share to the investor
       
$
5.00
 
Net tangible book value per share as of March 31, 2014
 
$
(0.32
)
       
Increase in net tangible book value per share attributable to this offering at the maximum level
 
$
 1.13
         
As adjusted net tangible book value per share as of March 31, 2014 after giving effect to this offering at the maximum level
         
$
 0.81
 
Dilution in net tangible book value per share to the new investor
         
$
(3.87
)
 
The above table is based on 7,854,947 shares of our common stock outstanding as of March 31, 2014.
 
The shares of common stock issuable upon the exercise of our outstanding warrants and the exercise price in respect thereof are subject to adjustment in certain circumstances.
 
To the extent that any options or warrants are exercised, new options are issued, any new stock option or stock incentive plans are   adopted or we otherwise issue additional shares of common stock in the future, there will be further dilution to investors in this offering.
 
 
31

 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and t he related notes included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Disclosure Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this prospectus .
 
Overview
 
We are a biotechnology company committed to developing the world’s first vaccine against colorectal cancer. For more than a decade, we have developed and patented compounds successfully used in initial clinical trials in Europe and Asia including: (i) MelCancerVac™ (MCV) for treatment of cancer (one phase I/II trial in Denmark and two phase II trials in Denmark and Singapore), (ii) Tolerogenic dendritic cell (TDC) (pre-clinical stage in Denmark) and (iii) Melvaccine (MV) a melanoma cell lysate used as stand-alone vaccine (pre-clinical state in Denmark). We expect to continue our clinical development program in the United States, Europe and Asia. Springing from academic roots in the Danish Cancer Society, we have built upon our scientific and medical skills to advance a number of candidate therapies, targeted initially at non-small-cell-lung-cancer (NSCLC) and colorectal-cancer (CRC). On September 22, 2008, MCV was authorized by the Singapore government for named patient compassionate use of MCV for CRC. We have conducted three single-arm Phase II clinical trials in cancer where DanDrit determined its dendritic cell vaccine, MCV demonstrated potential efficacy. The three clinical trials generated data indicating prospects in a larger and different clinical setting. More specifically, this efficacy data needed to be confirmed in a comparative randomized trial with advanced colorectal cancer patients. Neither the FDA nor any other comparable governmental agency has yet to review MCV.  Therefore, any assessment of its safety or efficacy only reflects the opinion of the Company.  Furthermore, it does not indicate that MCV will achieve favorable results in any later stage trials or that the FDA or comparable agency will ultimately determine that MCV is safe and effective for purposes of granting marketing approval.
 
As a result, DanDrit Denmark, with the assistance of key opinion leaders in colorectal cancer treatment, has designed a randomized trial with 174 stage IV colorectal cancer patients after surgical resection and chemotherapy. Using an adaptive design clinical study that includes a prospectively planned opportunity for modification of one or more specified aspects of the study design and hypotheses based on analysis of data (usually interim data) from subjects in the study (an “Adaptive Design Clinical Study”), we significantly reduced the cost and duration of a Phase IIb/III study and we believe we can complete the study within three years.  Regulatory authorities in the United States and Europe have both published guidance documents on the use and implementation of adaptive design trials. These documents both include description of adaptive trials and include a requirement for prospectively written standard operating procedures and working processes for executing adaptive trials and a recommendation that sponsor companies engage with CROs that have the necessary experience in running such trials.
 
Share Exchange
 
DanDrit was incorporated in Delaware on January 18, 2011 under the name “Putnam Hills Corp.” as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a Registration Statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2011.
 
 
32

 
 
On February 12, 2014, the Company signed and closed the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), Dandrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of Dandrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. In accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, DanDrit Denmark shareholders who have not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore have not exchanged such DanDrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, will be entitled to receive the number of shares of common stock of DanDrit USA that each such DanDrit Denmark shareholder would have been entitled to receive if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of an additional 185,053 shares of common stock of DanDrit USA. Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.
 
Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 share of common stock.  In addition, following the closing of the Share Exchange, the wholly owned subsidiary of the company formed solely for the purposes of changing the company’s name, Dandrit Biotech USA, Inc., merged with and into the company and the company adopted the name of its wholly owned subsidiary “DanDrit Biotech USA, Inc.”
 
DanDrit USA owns approximately 97% of the outstanding equity interests of DanDrit Denmark. As a result of the Share Exchange, we changed our management and reconstituted our board of directors. As of the effective time of the Share Exchange, Samir Masri, the Chief Executive Officer, Chief Financial Officer, President, Secretary and sole director of Putnam resigned as the sole officer and director of the company and appointed NE Nielsen, Dr. Jacob Rosenberg, Dr. Eric Leire, Aldo Petersen and Robert E. Wolfe as directors of Putnam, and Dr. Eric Leire as Chief Executive Officer and President and Mr. Wolfe as Chief Financial Officer, Treasurer and Secretary.
 
Recent Developments
 
Negotiation with Etablissement Francais du Sang (EFS) regarding the GeniusVac Technology
 
DanDrit has recently entered into a negotiation with the Etablissement Francais du Sang (EFS) regarding access to their GeniusVac Technology. The GeniusVac technology is an Allogenic irradiated plasmacytoid dendritic cell line. This technology may allow DanDrit to develop a 100% off-the-shelf cancer vaccine. DanDrit has conducted and completed due diligence under CDA. DanDrit USA and EFS are now working on a feasibility proof-of-concept test before establishing further collaboration.
 
Results of Operations
 
Three months ended March 31, 2014 compared to the three months ended March 31, 2013
 
The following table sets forth our revenues, expenses and net income for the three months ended March 31, 2014 and 2013. The financial information below is derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

   
For The
Three Months
Ended
March 31, 2014
   
For The
Three Months
Ended
March 31, 2013
 
             
Revenues
 
$
-
   
$
31,558
 
                 
Cost of Goods Sold
   
17,739
     
15,360
 
                 
Gross Income(Loss)
   
(17,739
   
16,198
 
                 
Operating Expenses
               
General and Administrative Expenses
   
326,428
     
175,016 
 
Depreciation and Amortization
   
6,794
     
8,600
 
Consulting Expenses
   
61,145
     
13,048
 
Total Operating Expense
   
394,367
     
196,664
 
                 
(LOSS) FROM OPERATIONS
   
(412,106
)
   
(180,466
                 
Other Income (Expense)
               
Interest (expense)
   
(13,999
)    
(159,922
)
Gain (loss) on Currency Transactions
   
-
     
(100,327
Gain on Derivative Liability
   
-
     
41,643
 
Interest Income
   
51
     
-
 
Total Other Income (Expense)
   
(13,948
)
   
(218,606
                 
(Loss) Before Income Taxes
   
(426,054
   
(399,072
                 
Income Tax Expense (Benefit)
   
-
     
-
 
                 
NET (LOSS)
 
$
(426,054
 
$
(399,072
                 
LESS NET LOSS ATTRIBUTABLE TO NON-CONTROLLED INTEREST IN SUBSIDIARY
   
-
     
-
 
                 
NET (LOSS) ATTRIBUTABLE TO NON CONTROLLED DANDRIT BIOTECH USA, INC.
   
(426,054
   
(399,072
                 
BASIC AND DILUTED LOSS PER SHARE
 
$
(0.06
   
(0.08
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED
   
6,880,278
     
5,133,096
 
 
 
33

 
 
Year ended December 31, 2013 compared to the year ended December 31, 2012
 
The following table sets forth our revenues, expenses and net income for the years ended December 31, 2013 and 2012. The financial information below is derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.
 
   
For the Year Ended
December 31,
 
   
2013
   
2012
 
Net Sales
 
$
32,768
   
$
62,806
 
                 
Cost of Goods Sold
   
102,299
     
64,385
 
                 
Gross Loss
   
(76,531
)
   
(1,579
Operating Expenses:
               
General and administrative expenses
   
1,233,683
     
1,036,005
 
Depreciation and Amortization
   
38,297
     
56,600
 
Consulting expenses
   
390,437
     
829,845
 
                 
Total Operating Expense
   
1,662,417
     
1,922,450
 
                 
Loss from Operations
   
(1,738,948
)
   
(1,924,029
)
Other Income (Expense)
               
Interest (expense)
   
(652,703
   
(704,911
)
Gain on forgiveness of debt
   
-
     
-
 
Gain (loss) on currency transactions
   
19,541
     
32,841
 
Gain on derivative liability
   
175,732
     
153,430
 
Gain on sale of fixed assets
   
1
     
15,020
 
     
-
         
Total Other Income (Expense)
   
(408,413
)
   
(503,620
)
                 
Loss Before Income Taxes
   
(2,147,361
)
   
(2,427,649
)
Income Tax Expense (Benefit)
           
-
 
Net Loss
   
(2,147,361
)
   
(2,427,649
)
 
 
34

 
 
Comparison of the three months ended March 31, 2014 and March 31, 2013
 
Revenues
 
Revenues from operations for the three months ended March 31, 2014 and March 31, 2013 were $0 and $31,558, respectively. The revenues for the three month period ending March 31, 2013 were attributable to the sale of lysate to the Singapore NCC compassionate use program by DanDrit Biotech A/S.
 
Cost of Goods Sold
 
Our cost of goods sold was $17,739 and $15,360 during the three months ended March 31, 2014 and 2013, respectively.
 
Gross Loss
 
Gross loss for the three months ended March 31, 2014 was $16,284 compared to gross income of $16,198 for same period in 2013. The increase in gross loss was due to lower sales and higher cost of goods sold for the three months ended March 31, 2014.
 
Expenses
 
Our operating expense for the three months ended March 31, 2014 totaled $394,367, representing an increase of $197,703, or approximately 101%, compared to $196,664 for the three months ended March 31, 2013. The largest contributors to the increase in operating expenses were fees associated with raising funds through an equity offering.
 
General and administrative expenses for the three months ended March 31, 2014 and 2013 were $326,428 and $175,016, respectively. The differences in expenses are attributable to the Company’s efforts of financing through debt and equity offerings. 
 
Other income (expense) net for the three month period ending March 31, 2014 and March 31, 2013 were $13,948 and $218,606, respectively. Other expense is associated with interest on related party loans, losses on currency transaction and gains on the derivative related to the convertible bond.
 
Net Loss
 
Net loss for the three months ended March 31, 2014 was $(426,054) comprised of legal, accounting, audit and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and general and administrative expenses, compared to a net loss of $(399,072) for the three months ended March 31, 2013 comprised of general and administrative expenses and interest expense, representing an increase of $26,982, or 7%. Net loss for the three month period ending March 31, 2014 and March 31, 2013 attributed to common stockholders was $(426,054) and $(399,072), respectively, or $(0.06) and $(0.08) per share, respectively. In 2014, the losses increased due to the Company’s efforts to secure financings through debt and equity offerings.
 
Comparison of the years ended December 31, 2013 and December 31, 2012
 
Revenues
 
Our net sales for the year ended December 31, 2013 were $32,768 compared to net sales of $62,806 for the year ended December 31, 2012, representing a decrease in net sales of $30,038, or 47.8%. Net sales to the Singapore compassionate use program decreased during 2013 as DanDrit Denmark was transferring manufacturing technologies to a new supplier. The transfer of manufacturing technology was completed and DanDrit Denmark should be able to supply the Singapore compassionate use program with larger quantities of cGMP lysate.
 
Cost of Goods Sold
 
Our cost of goods sold increased by $44,914, or 69.8%, during the year ended December 31, 2013, to $109,299, from $64,385 in cost of goods sold for the year ended December 31, 2012. The increase in cost of goods sold was due to the additional costs of transferring manufacturing technologies of CGMP lysate to a new supplier during 2013.
 
Gross Loss
 
Gross loss for the year ended December 31, 2013 was $76,531 compared to a loss of $1,579 for same period in 2012, representing an increase in the loss of $74,952, or 4,746.8%.  The increase in gross loss was due to lower sales and higher cost of goods sold for the year ended December 31, 2013.
 
Expenses
 
Our operating expense for the year ended December 31, 2013 totaled $1,662,417, representing a decrease of $260,033, or 14%, compared to $1,922,450 for the year ended December 31, 2012. The largest contributor to the decrease in operating expenses was a decrease in consulting expenses, which went from $829,845 for the year ended December 31, 2012 to $390,437 for the year ended December 31, 2013, a decrease of $439,408, or 53%. During 2012, we engaged consultants, lawyers and auditors to assist us with planning and executing a Danish going public strategy, obtaining a valuation report and conversion of our financial statements into international financial reporting standards. The consulting expenses in 2012 were all directed at going public in Denmark. The consulting expenses in 2013 have primarily been directed at the current strategy of going public in the United States. Of the $390,437 in operating expenses, the $334,545 was related to preparing this registration statement including cost to prepare the Danish subsidiary and converting our financial statements into US GAAP.
 
General and administrative expenses for the year ended December 31, 2013 were $1,233,683 compared to $1,036,005 for the year ended December 31, 2012, representing an increase of $197,678, or 19.1%. This increase was due primarily to costs associated with an increase in salary and employee cost of $294,545. General and administrative expenses include office rental, website management and insurance, salary and payment for assistance with drafting the required SEC filings. 
 
Net Loss
 
Net loss attributable to DanDrit Denmark for the year ended December 31, 2013 was $2,147,361compared to a net loss of $2,427,649 for the year ended December 31, 2012, representing a decrease of $280,288, or 11.5%. The decrease was primarily attributable to a decrease in total operating expenses of $185,081 from $1,924,029 for the year ended December 31, 2012 to $1,738,948 for the year ended December 31, 2013, as well as a decrease of $52,208 in interest expense.
 
 
35

 
 
Liquidity and Capital Resources
 
We have historically satisfied our capital and liquidity requirements through funding from our largest shareholders and the issuance of convertible notes, which over time have been converted into shares of our common stock.  We received an aggregate principal amount of $839,377 in connection with loans from two shareholders as of December 31, 2012 and an aggregate principal amount of $2,485,216 in loans from existing shareholders as of December 31, 2013 of which (1) $1,811,782 was converted into 454,917 shares of common stock of the Company as of December 16, 2013; (2) $184,873 accrues interest at the rate of 5% per annum and is payable on May 1, 2014 (“Loan 2”) and (3) $488,561 accrues interest at the rate of 5% per annum and is due upon the earlier of 14 days following the closing of the offering or February 1, 2015 (“Loan 3”).  As of the date of this filing, we had received an additional $886,804 in connection with two loans from an existing shareholder which accrue interest at the rate of 5% per annum and are due February 1, 2015 and can be extended at the Company’s option for an additional year with an increase in the interest rate to 7.00% (“Loan 4”). On April 29, 2014, Loan 3 and Loan 4 were amended whereby the terms of the 2014 loans are payable on February 1, 2015 and can be extended at the Company’s option for an additional year with an increase in the interest rate to 7.00%. The Company plans to repay Loan 2 from operations, and has an additional funding commitment of approximately $368,868 until February 2015 for the Company to draw upon to support operations.  The Company plans to repay Loan 3 as described in the “Use of Proceeds” section herein.  At December 31, 2013, we had cash of $18,794, cash held in escrow of $77,468 and working capital deficit of $(1,993,145).  At December 31, 2012 we had cash of $4,381 and working capital deficit of $(1,980,692).
 
As of March 31, 2014 the Company had  cash of $54,472, cash held in escrow of $423,969 and a deficit of $(2,186,102) as compared to March 31, 2013, when the Company had $96,262 in cash and cash equivalents and a deficit of $(1,684,170). The change in cash is primarily due to the additional financings obtained by the Company’s subsidiary. The decrease in the working capital is primarily related to the acquisition of DanDrit Biotech A/S on February 12, 2014. 
 
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities:
 
   
Three Months
Ended
March 31, 2014
   
Three Months
Ended
March 31, 2013
 
Net Cash (Used by) Operating Activities
 
$
(437,746
)
 
$
(1,123,899
Net Cash  (Used by) Investing Activities
   
(395,906
   
-
 
Net Cash Provided by Financing Activities
 
$
865,976
   
$
987,911
 
Loss on Currency Translation
   
3,354
     
139,280
 
Net Increase (Decrease) in Cash and Cash Equivalents
 
$
35,678
   
$
3,292
 
 
The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations. The Company has secured an additional funding commitment of $368,868 through February 2015 from a related party.  In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.

We believe that our cash flow together with currently available funds from our existing lines of credit and other potential sources of funds, such as loans from shareholders, will be sufficient to fund our anticipated working capital needs and capital spending requirements for the next 12 months. The Company projects that revenues and expenses for the next 12 months will be $983,108 and $1,404,187 respectively.  The Company secured financing of $461,877 and $424,927 on February 15, 2014 and March 18, 2014 as amended on April 29, 2014, respectively.  The Company has secured an additional funding commitment until February 2015 of 2,000,000 DKK or approximately $368,868, determined by using the current currency conversion rate.  However, if the additional funding commitment is not funded or if we were to incur any unanticipated expenditures or the positive trend of our operating cash flow does not continue or our shareholders determine not to invest in the Company either in connection with the sale of debt or equity securities, such circumstances could put a substantial burden on our cash resources.
 
We may also need additional funds for possible future strategic acquisitions of businesses, products or technologies complementary to our business. If additional funds are required, we may raise such funds from time to time through public or private sales of equity or debt securities. Financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could materially adversely impact our growth plans and our financial condition and results of operations.
 
Our auditors have prepared the financial statements included with this prospectus in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern.  However, since the Company has incurred significant losses and has not yet been successful in establishing profitable operations, our auditors have expressed doubts about the ability of the Company to continue as a going concern. In this regard, management plans to mitigate this doubt by raising additional funds through debt and/or equity offerings and by substantially increasing sales once approval for the Company’s product is obtained.  There is no assurance that the Company will be successful in achieving profitable operations.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
 
 
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Cash Flows
 
Cash loss from operating activities for the year ended December 31, 2013 was $2,130,628, representing an increase of $1,197,616, compared to cash loss from operating activities of $933,012 for the year ended December 31, 2012. This increase was primarily due to $1,161,004 in cash provided by increases in accounts payable and accrued expense for the year ended December 31, 2012 compared to $408,825 is cash used by accounts payable and accrued expense for the year ended December 31, 2013. During 2013 the company obtained additional loans, which were converted to common stock to pay down approximately $1,038,000 in accounts payable and accrued expenses. Cash used by operating activities for the three months ended March 31, 2014 was $437,746, representing a decrease of $686,153, or approximately 61%, compared to cash loss from operating activities of $1,123,899 for the three months ended March 31, 2013. The net cash used by operating activities was primarily due to fund raising efforts of the Company and that from the operations of DanDrit Biotech A/S.
 
There were no major changes in the total assets as of December 31, 2013 compared to December 31, 2012.  Total liabilities decreased by approximately $2,596,058 as of December 31, 2013 compared to December 31, 2012. The decrease was mainly due to the conversion of promissory notes and bonds to related parties to shares of common stock. Total assets as of March 31, 2014 were $911,466 compared to $450,467 as of March 31, 2013.  Total liabilities increased to $3,097,568 as of March 31, 2014 compared to $2,134,637 as of March 31, 2013. The increases to total assets and total liabilities were mainly due to consummation of the Share Exchange.
 
Cash used in investing activities was $105,015 for the year ended December 31, 2013, as compared to cash used in investing activities of $84,643 for the year ended December 31, 2012. Cash used for investing activities increased during the year ended December 31, 2013 primarily due to an increase in the amount of $77,468 of cash held in escrow.  While our purchase of intangible assets declined by $72,115, we have invested, and we anticipate that we will continue to invest, in additional production equipment in order to meet the continuing increase in the demand for our products.
 
Cash provided by financing activities was $2,469,526 for the year ended December 31, 2013, as compared to cash provided by financing activities of $856,754 for the year ended December 31, 2012. The increase of approximately $1,612,772 in cash provided by financing activities in the year ended December 31, 2013, compared to the year ended December 31, 2012, was due to cash received in connection with the issuance of related party notes net of $218,136 in payments on related party notes and $67,000 paid in offering costs.
 
Other than as discussed above, we know of no trends, events or uncertainties that are reasonably likely to impact our future liquidity.
 
Off Balance Sheet Arrangements
 
As of March 31, 2014, we had no off-balance sheet arrangements. We are not aware of any material transactions which are not disclosed in our financial statements.
 
Significant Accounting Policies and Critical Accounting Estimates
 
The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are not choosing to “opt out” of this provision. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. As a result of our election, not to “opt out” of Section 107, DanDrit’s financial statements may not be comparable to companies that comply with public company effective dates.
 
 
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Our most critical accounting estimates include:
 
Property and Equipment — Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets which range from four to six years.
 
Intangible Assets — Definite life intangible assets include patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, (“ASC”) Topic 350, “Goodwill and Other Intangible Assets” and amortized the patents on a straight line basis over the estimated useful life of twenty years. Costs incurred in relation to patent applications are capitalized costs and amortized over the estimated useful life of the patent. If it is determined that a patent will not be issued, the related remaining patent application costs are charged to expense.
 
Revenue Recognition and Sales — The Company’s sales of its MelCancerVac colorectal cancer treatment have been limited to a compassionate use basis in Singapore after stage IIA trials and the vaccine is not currently approved for sale for any other use or location. The Company accounts for revenue recognition in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB 101), FASB ASC 605 Revenue Recognition. The Company recognizes revenue when rights and risk of ownership have passed to the customer, when there is persuasive evidence of an arrangement, product has been shipped or delivered to the customer, the price and terms are finalized, and collection of the resulting receivable is reasonably assured. Products are primarily shipped FOB shipping point at which time title passes to the customer.
 
Value Added Tax - In Denmark, Value Added Tax (“VAT”) of 25% of the invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. VAT of 25% is also paid to Danish and EU vendors on invoices. These amounts are refundable from the respective governmental authority and recorded as other receivables in the accompanying financial statements.
 
Accounting Estimates — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.
 
Recent Enacted Accounting Standards
 
For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see “Note 1: Recently Enacted Accounting Standards” in the financial statements included elsewhere in this prospectus.
 
Quantitative and Qualitative Disclosures About Market Risk
 
We are not required to provide quantitative and qualitative disclosures about market risk because we are a smaller reporting company .
 
 
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Overview
 
We are a biotechnology company seeking to develop what we believe could be the world’s first vaccine against colorectal cancer. We have developed and patented compounds used in initial clinical trials in Europe and Asia including: (i) MelCancerVac™ (MCV) for treatment of cancer (one phase I/II trial in Denmark and two phase II trials in Denmark and Singapore), (ii) Tolerogenic dendritic cell (TDC) (pre-clinical stage in Denmark) and (iii) Melvaccine (MV) a melanoma cell lysate used as stand-alone vaccine (pre-clinical state in Denmark). We expect to continue these trials in the United States. Springing from academic roots in Denmark, DanDrit has built upon its scientific and medical skills to advance a number of candidate therapies, targeted initially at non-small-cell-lung-cancer (NSCLC) and colorectal-cancer (CRC). On September 22, 2008, MCV was authorized by the Singapore government for a named patient compassionate use for CRC. We have conducted three single-arm Phase II clinical trials in cancer where DanDrit determined its dendritic cell vaccine, MCV, demonstrated potential efficacy. The three clinical trials generated data indicating prospects in a larger and different clinical setting. More specifically, this efficacy data needed to be confirmed in a comparative randomized trial. As a result, DanDrit Denmark, with the assistance of experienced practitioners in colorectal cancer treatment, has designed a randomized trial with 174 stage IV colorectal cancer patients. Neither the FDA nor any other comparable governmental agency has reviewed MCV.  Therefore, any assessment of its safety or efficacy only reflects the opinion of the Company.  Furthermore, it does not indicate that MCV will achieve favorable results in any later stage trials or that the FDA or comparable agency will ultimately determine that MCV is safe and effective for purposes of granting marketing approval.
 
Our Biotechnology
 
We plan to use a dendritic cell vaccine technology relatively similar to the technology behind Dendreon’s FDA approved Provenge™ cancer vaccine. However, we believe DanDrit’s next generation of dendritic cell vaccine may benefit from technological competitive advantages over other cancer vaccines including:
 
 
The vaccine will be generated within eight days from a patient’s peripheral blood. We will be able to generate the vaccine quickly because only 200ml of blood is required to be drawn. Leukapheresis (a medical technology in which the blood of a patient is passed through an apparatus -dialysis machine- that separates out one particular constituent and returns the remainder to the circulation which is used in Denderon’s Provenge™ cancer vaccine) is not needed.
 
 
The vaccine will use an allogenic (using cells, tissues, or organs, sourced from a genetically non-identical member of the same species as the recipient (“Allogenic”) tumor lysate (a fluid containing the contents of lysed cells, cells broken down by viral, enzymic or osmotic mechanisms that compromise their integrity “lysed cells”) as opposed to inconvenient autologous (from the patient) tumor lysate. A major limitation of autologous tumor cell vaccines is the low yield of autologous tumor cells that may compromise the number of immunizations given to patients (difficult to obtain enough cancer cells from the patient).  A second inconvenience is the variability of GM-CSF (a protein   that functions as a white blood cell growth factor ) secretion among patients, which could be responsible for the different levels of responses observed. But above all, although autologous tumor cells may be a good source of TAA for cancer vaccine development, limitations plus the significant time and expense required for the approval of each patient’s vaccine by the appropriate regulatory agencies severely limits the development of this type of immunization approach. DanDrit does not need a patient’s tumor cells to manufacture MCV.  Therefore MCV is not classified as an autologous vaccine.
 
 
The vaccine will be polytopic (targets several cancer specific antigens , or antibody generator   is any substance which provokes an adaptive immune response “antigens” ). As a result , the risk of the tumor escaping is more limited and more T-cells can be activated than if the vaccine is targeting one antigen only. However, MCV has a focus on melanoma-associated antigen (“ MAGE”)-A antigens that are only expressed by tumors and absent in normal tissues.
 
 
Fast track production in two days is possible.
 
Our Proposed Clinical Trial
 
Parallel with the establishment of a cancer vaccine center in the EU, DanDrit intends to develop globally MCV in colorectal cancer, with opportunities to expand the scope of the treatment to other types of cancer. DanDrit will focus on a randomized Phase IIb/III clinical trial in stage IV colorectal cancer. The proposed Proof of Concept (PoC) study (a study conducted to provide the first evidence that a candidate drug such as MCV might be effective for a disease)  with an adaptive design plans to enroll 174 stage IV colorectal cancer patients after resection of liver metastases and therefore no evidence of disease. Regulatory authorities in the United States and Europe have published guidance documents on the use and implementation of adaptive design trials. These documents include descriptions of adaptive trials and a requirement for prospectively written standard operating procedures and working processes for executing adaptive trials, as well as a recommendation that sponsor companies engage with CROs that have the necessary experience in running such trials.
 
The clinical study is designed as a randomized, placebo controlled, multicenter, Phase IIb/III clinical study. Treatment is double blinded (to the patients and physicians). Patients will be included after resection of their primary tumor and resectable metastases in liver and after appropriate peri-or post-operative chemotherapy by stratification and random assignment to a non-vaccine control group or a vaccine group receiving five vaccinations with 14-day administration intervals followed by five vaccines with two-month intervals. Inclusion will take place three months after finishing the last round of peri- or post-operative chemotherapy (FOLFOX or FOLFIRI) and after a negative tumor scan (head, thoracic and abdominal cavities) and normal CarcinoEmbryonic Antigen (CEA) prior to inclusion in the vaccine or the control groups. Patients will be screened for MAGE-A expression. The control group will receive five plus five injections with physiological saline. In the event of disease progression, as verified by tumor scan during the vaccination schedule, vaccinations will be discontinued. To date DanDrit has not filed an investigational new drug (IND) application with the FDA in relation to the proposed trial but plans to file an IND application by the end of 2014.
 
 
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Corporate History and Information
 
DanDrit was incorporated in Delaware on January 18, 2011 under the name “Putnam Hills Corp.” (“Putnam”) as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a Registration Statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2011.
 
On February 12, 2014, the Company signed and consummated the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), DanDrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of DanDrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. In accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, DanDrit Denmark shareholders who have not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore have not exchanged such DanDrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, will be entitled to receive the number of shares of common stock of DanDrit USA that each such DanDrit Denmark shareholder would have been entitled to receive if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of an additional 185,053 shares of common stock of DanDrit USA.  Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.
 
Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 shares of our common stock.  In addition, following the closing of the Share Exchange, Dandrit Biotech USA, Inc., the wholly owned subsidiary of the Company, merged with and into the Company, thereby changing and the Company’s name to “DanDrit Biotech USA, Inc.”
 
DanDrit USA owns approximately 97% of the outstanding equity interests of DanDrit Denmark. As a result of the Share Exchange, we changed our management and reconstituted our board of directors. As of the effective time of the Share Exchange, Samir Masri, the Chief Executive Officer, Chief Financial Officer, President, Secretary and sole director of Putnam resigned as the sole officer and director of the company and appointed NE Nielsen, Dr. Jacob Rosenberg, Dr. Eric Leire, Aldo Petersen and Robert E. Wolfe as directors of Putnam, and Dr. Eric Leire as Chief Executive Officer and President and Mr. Wolfe as Chief Financial Officer, Treasurer and Secretary.
 
Our principal executive offices are located Fruebjergvej 3 Box 62, 2100 Copenhagen, Denmark , and our telephone number is +45 39179840. We maintain an Internet website at www.dandrit.com . The information contained in, or accessible from, our website is not a part of this prospectus.
 
Products
 
DanDrit plans to assess its lead compound, MelCancerVac™ (MCV), a cellular therapy, in a comparative Phase IIb/III clinical trial in advanced colorectal cancer. DanDrit uses a dendritic cell technology similar to the Dendreon’s FDA approved Provenge™ cancer vaccine.
 
DanDrit has MCV demonstrated potential efficacy in three separate Phase IIa clinical trials in colorectal and non-small cell lung cancer. Even if MCV can be used for various cancers, DanDrit has decided to initiate MCV’s clinical development with advanced colorectal cancer. We believe that a maintenance therapy for advanced colorectal cancer represents a genuine commercial opportunity for MCV.   A clear and unmet medical need for a safe maintenance therapy offers the opportunity to confirm the potential efficacy of MCV in a favorable setting. Neither the FDA nor or any other comparable governmental agency has reviewed MCV.  Therefore, any assessment of its safety or efficacy only reflects the opinion of the Company.  Furthermore, it does not indicate that MCV will achieve favorable results in any later stage trials or that the FDA or comparable agency will ultimately determine that MCV is safe and effective for purposes of granting marketing approval.
 
DanDrit plans to conduct a randomized multicenter (anticipated to be located in USA, Europe and Asia) clinical trial to determine the safety and efficacy of MCV as adjuvant therapy in advanced colorectal cancer. The study will determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease after surgical resection of liver metastasis and chemotherapy. Using an Adaptive Design Clinical Study, which allows modification made to trail and/or statistical procedures of ongoing clinical trials based on accrued data, the double blinded randomized Proof-of-Concept study (a study conducted in order to confirm feasibility) will evaluate MCV with standard of care against standard of care alone in 174 colorectal cancer patients using as primary endpoints Progression Free Survival at 18 months and Overall Survival. We anticipated that the blinded comparative trial can be completed within three years. We are confident that positive upcoming clinical data will be the catalyst to unlock commercial revenues for DanDrit through either acquisition by a pharmaceutical partner or licensing deals that would yield upfront and milestone payments as well as royalties.
 
DanDrit has learned how to manufacture dendritic cells, immune cells forming part of the mammalian immune system with the main function of processing antigen material and presenting it on the surface to other cells of the immune system, functioning as antigen-presenting cells, in vitro from monocyte (a type of white blood cell) precursor cells taken from patients eligible for DanDrit’s therapies. The preparation of tumor lysate containing selections of cancer, specific non-self antigens, allows DanDrit to sensitize patients’ dendritic cells. The use of the patient’s own monocyte cells from peripheral blood (autologous cell therapy) overcomes the issues associated with non-self allergic reactions to immune therapies.
 
 
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DanDrit’s intellectual property is protected with patents and trademarks. DanDrit’s candidate vaccines are based on the MCV platform that is protected by a family of issued or submitted patents. DanDrit’s lead product has completed Phase II clinical trials in Denmark and Singapore. DanDrit’s Singapore Phase II data was compelling enough that the Singapore authorities allowed the use of MCV for CRC on a humanitarian named patient basis. Outside the United States, named patient programs provide controlled, pre-approval access to drugs in response to requests by physicians on behalf of specific, or “named”, patients before those medicines are licensed in the patient’s home country. Governments worldwide, such as Singapore’s government, have created provisions for granting access to drugs prior to approval for patients who have exhausted all alternative treatment options and do not match clinical trial entry criteria. Often grouped under the labels of compassionate use,   expanded access , or named patient supply, these programs are governed by rules which vary by country defining access criteria, data collection, promotion, and control of drug distribution.  Through these programs, patients are able to access drugs in late-stage clinical trials or approved in other countries for a genuine, unmet medical need, before those drugs have been licensed in the patient’s home country. In September 2008, DanDrit Denmark and the National Cancer Centre of Singapore (NCC) entered a collaboration agreement regarding a clinical named patient program conducted in Singapore at NCC with the dendritic cell vaccine MCV.  NCC and the Company have established a GMP approved laboratory in which the manufacturing of MCV takes place. NCC has received approval from the relevant governmental authorities for the import of lysate necessary for production of MCV. The clinical and research and development activities of the named patient program relate to the Company’s product, MCV. The purpose for the Singapore named patient program is to provide patients with advanced colorectal cancer or other forms of cancer(s) with the presence of MAGE antigen expression an alternative treatment for the vaccination with MCV, where there is no further indication for surgery or treatment with chemotherapy. Patients are recruited on named patient basis according to the patient inclusion and exclusion criteria stated in the phase IIa study protocol. However, there may be some exceptional cases where treatment will be made based on a doctor’s discretion regarding the patient’s quality of life. An estimated total of 50 patients have been recruited for the Singapore named patient program and 8 patients are currently still active in the named patient program.
 
The colorectal cancer patients who are eligible for the humanitarian program in Singapore must present a profile similar to the one of the patients who were recruited in the phase IIa clinical trial.  They must fulfil the same inclusion and exclusion criteria stated in the protocol of the phase II trial.  However, there have been some exceptional cases where treatment has been based on a doctor’s discretion on the patient’s quality of life.  Also, patients are monitored according to the previous phase II study protocol.  The results obtained in the humanitarian program were consistent with the results published by Dr. Toh.
 
To date, clinical trials of MCV have been targeted to patients in terminal stages of cancer with non-resectable bulky tumors who failed to respond to surgery and chemotherapy. Several patients showed extended overall survival with good quality of life. Several patients showed stable disease with no progression of tumors. There was evidence of tumor regression in some patients (see “Clinical Trials Data and Product Approvals”).
 
These achievements have been built on a carefully executed R&D program that generated practical solutions to scientific and medical challenges. Through this development program, DanDrit gained advanced understanding of the role of dendritic cells in immunoregulation and cancer.
 
Non-core applications of dendritic cell technologies mastered by DanDrit have applications in infectious diseases and auto-immune diseases such as diabetes (7 th leading causes of death in the US). These other applications represent opportunities for out-licensing and cooperation. Where other companies have non-core technologies of relevance to DanDrit’s core business in dendritic cell cancer therapy, we will pursue a policy of cooperation and in-licensing.
 
DENDRITIC CELLS, THE THERAPEUTIC PLATFORM
 
Summary
 
Early academic work of Professor Jesper Zeuthen, and other colleagues at the Danish Cancer Society was spun-out into DanDrit Biotech. None of Dr. Zeuthen, his colleagues at the Danish Cancer Society, or any other third-party retains any rights to the intellectual property underlying the Company’s business, technology or product candidates, including MCV.   The fundamental scientific postulate of DanDrit is the fact that key cells in the immune system can be sensitized to cancer cells that carry foreign (or non-self) antigens. These key antigen-presenting cells are the dendritic cells. Dendritic cells encounter and recognize foreign antigens. Dendritic cells can assimilate and process the cells expressing these antigens. The key components of these antigens (known as epitopes and several epitopes are known as polytopes) are subsequently presented on the cell surface of the dendritic cell. Dendritic cells travel to lymph nodes and other lymphatic tissues where the epitopes are presented to other immune cells, including cell-killing T lymphocytes. T lymphocytes sensitized by dendritic cells can then recognize and kill tumor cells carrying tumor-specific antigens recognized by the dendritic cells. The main aim is to kill tumor cells without killing normal body tissues.
 
Dendritic cell interacting with T-lymphocyte
 
(LOGO)
 
The above photograph (courtesy Science Photo Library) illustrates a dendritic cell (blue/green) communicating with a T-lymphocyte (gold). From DanDrit’s point of interest, this might represent a dendritic cell instructing a T-lymphocyte to kill tumor cells.
 
DanDrit presents itself as a “Cancer Vaccine” company and its lead product, MelCancerVac ® (MCV), a polytopic vaccine, targets colorectal cancer in the first instance. In addition, DanDrit has developed several technologies relevant to dendritic cell production, including:
 
            ·  
Generation of fast track dendritic cells
 
             ·  
Processing and presentation of protein antigen
 
             ·  
Characterization of DanDrit dendritic cells
 
             ·  
Analysis of lysate uptake by DanDrit dendritic cells
 
             ·  
MicroRNA profiling of DanDrit dendritic cells
 
             ·  
Effect of Resiquimod ( a drug that acts as an immune response modifier, and has   antiviral   and   anti-tumor al   activity)   on production of Interleukin 12 (Il-12), a secreted protein factor that is naturally produced by dendritic cells in response to antigenic stimulation and Interleukin 10 (IL-10), a protein that inhibits the synthesis of a number of other signaling proteins.
 
 
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             ·  
Generation of tolerogenic dendritic cells
 
             ·  
Development of Il-12 based potency assay
 
DanDrit’s candidate vaccines are based on the MCV platform that is protected by a family of issued and submitted patents. DanDrit’s lead product has completed Phase II clinical trials in Denmark and Singapore. DanDrit’s Singapore Phase II data were compelling enough for the Singapore authorities to make MCV available on a limited humanitarian named patient basis.
 
To date, clinical trials of MCV have been targeted to patients in terminal stages of disease who failed to respond to surgical resection and chemotherapies. Some patients showed extended overall survival with good quality of life. Many patients were showed stable disease with no progression of tumor. There was evidence of tumor regression in some patients. (see “Clinical Trials Data and Product Approvals”).
 
Scientific and medical research is adding to DanDrit’s clinical and pre-clinical development pipeline in cancer. Some of this research in dendritic cells could have implications that reach beyond DanDrit’s cancer vaccine vision.
 
Dendritic Cells and the immune response
 
Dendritic cells were first recognized by Paul Langerhans in the late 19 th century. For this reason such cells in the skin may still be referred to as Langerhans cells. The term “dendritic cell” was first used by Ralph Steinman and Zanvil Cohn in 1973. Steinman received the 2007 Lasker Award for this work and the 2011 Medicine Nobel Prize.
 
Like macrophages, cells whose role is to phagocytose, or engulf and then digest, cellular debris and pathogens, either as stationary or as mobile cells, dendritic cells are involved in the processing of antigens and their presentation to the cells that directly carry out the immune response through antibody generation (B lymphocytes) or cell killing activity (T- lymphocytes). Like macrophages, dendritic cells are mobile and once stimulated by an antigen, activated macrophages and dendritic cells move from their host tissue (usually skin or epithelial tissue such as gut, mucous membranes, lung etc.) to lymphatic tissues where they encounter and stimulate cells that mediate the immune response.
 
Unsurprisingly, macrophages and dendritic cells are closely related. Both are derived from circulating blood cells known as monocytes, a type of white blood cell which constitutes roughly 10% of all white blood cells. Monocytes, macrophages and immature dendritic cells are all phagocytic cells, that is, they engulf and process foreign antigens. On activation by the uptake of antigen, dendritic cells mature and become mobile. The mobile mature dendritic cells are capable of stimulating T-lymphocytes through the expression of T-cell stimulatory antigens on their cell surfaces.
 
It is possible to force monocytes to differentiate in vitro into immature dendritic cells. This is the basis of DanDrit’s proprietary dendritic cell production process. As in nature DanDrit’s process involves a subtle communication between monocytes and cytokines (small proteins that important in the communication process that governs basic cellular activities and coordinates cell actions). Dendritic cells produced by DanDrit are functionally, morphologically and biochemically very similar – if not identical – to natural dendritic cells.
 
 
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Figure 2 Principle of Dendritic Cell cancer vaccines
 
(LOGO)
 
DanDrit’s platform technology is based on isolating patient monocytes and transforming them into immature dendritic cells in vitro . This is achieved by exposing monocytes to cytokines(interleukin 4, IL-4; and granulocyte macrophage colony stimulating factor, GM-CSF). Still in vitro these immature dendritic cells are activated by exposure to a cancer cell line lysate. This cancer cell lysate contains many “non-self” antigens of the cancer/testis family. Although coded by the human genome, these antigens are not normally expressed in tissues other than cancer or testis (note that testis and immune system are isolated from each other). Once sensitized in vitro , the immature dendritic cells are matured by exposure to a DanDrit proprietary cytokine cocktail. The now mature dendritic cells can be re-injected to the patient via a simple 0.2 ml intra-dermal injection and they will find their way to the lymphatic tissues. There, they will stimulate multiple cell killing (T) lymphocytes which will become sensitized to the cancer-specific antigens present in the lysate.
 
The Platform Technology, MelCancerVac ®
 
MelCancerVac® (MCV) is a cellular immunotherapy for treatment of cancer. At this time MCV has been studied in two cancers: Non-Small Cell Lung cancer (NSCLC) and colorectal cancer (CRC). The use of MCV is extended to other tumors in the mid-term such as the two types of esophageal cancers: esophageal squamous cell carcinoma (EC) and esophageal adenocarcinoma (EAC).
 
DanDrit’s platform technology comprises two arms:
 
 
Autologous dendritic cells obtained by the activation of patient-derived monocytes
 
 
Proprietary lysate from melanoma-derived cell line expressing a range of cancer/testis antigens, notably the MAGE-A family
 
The melanoma lysate component of MCV is manufactured from a melanoma cell line established by DanDrit scientists. This cell line was isolated from a melanoma tumor that expressed antigens found in a wide range of tumors but not in normal tissues (other than the testis). These antigens belong to a family of cancer/testis antigens (including mostly MAGE-A antigens) found in many tumors.
 
Furthermore, by exposing DanDrit’s proprietary melanoma tumor cell to 5-aza-deoxycytadine (5-aza-CdR/Decitabine), which is an inhibitor of DNA methylation, DanDrit has shown that derived tumor lysates (MCV 5AZA ) express a far wider range of tumor-specific antigens.
 
 
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Antigen characterization
 
For a patient to respond favorably to MCV, it is necessary that the antigens presented by the patient’s tumor show a significant match with the antigens in the lysate. The level of expression of antigens in each batch of lysate is determined by a procedure known as Reverse Transcriptase Quantitative Polymerase Chain Reaction or “RT-QPCR”. Clearly all patient cells will present many thousands of antigens - as will the lysate. MCV’s lysate component is isolated from a melanoma cell line that expresses a great many cancer/testis antigens at significant level. This broad spectrum of cancer/testis antigens is what makes MCV a good cancer vaccine. Figure 3 (below) shows how RT-QPCR can analyze levels of antigen expression as measured by messenger RNA.
 
Figure 3 Comparison of tumor antigen expression in MCV with two patient biopsies
 
(LOGO)
 
 
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In this example, TA-1 to TA-28 are 28 known tumor antigens (antigens that are only expressed by cancer cells and not by normal cells). We can see that 14 of these antigens are present in MCV. Even more (21) cancer-specific antigens are expressed by the tumor in Patient two, which indicates a good chance of promoting a cancer killing response. In patient one there is not a strong overlap of MCV antigens and the five patient’s tumor antigens. The chances of promoting a strong immune response are less but still significant (TA-3, TA-9, TA-18, and TA-19 are shared).
 
By analyzing patient’s tumors by RT-QPCR it is possible to select patients that have the best chance of success with MCV. However, other uncharacterized antigens may also be present that might promote a response.
 
Clinical Trials Data and product approvals
 
Overall clinical results
 
No dendritic cell-based vaccination has to date demonstrated life-threatening side effects. The only potential adverse events associated with dendritic cell vaccines to date are a flu-like symptom with fevers (not up to 39-40 deg. C), chills, and headaches in some patients. The occurrence of these adverse events did not require additional treatment or hospitalization. Some patients may also develop a vitiligo, a skin condition in which there is a loss of brown color (pigment) from areas of skin, resulting in irregular white patches that feel like normal skin, when melanocyte differentiation antigens are used as targets in immunotherapy. However, this has not occurred, to DanDrit’s knowledge, with MCV in clinical trials conducted to date.
 
MCV is produced according to the principles of Good Manufacturing Practice (GMP) in facilities approved by the Danish Medicine Agency and EU regulation for the production of medicines from patient blood in aseptic conditions. No products of animal origin are used during vaccine preparation. Quality control is performed for each individual batch of the vaccine as well as for the lysate used in the loading of dendritic cells.
 
MCV has been tested in clinical trials for the treatment of colorectal cancer (CRC) and non-small-cell lung cancer (NSCLC).
 
CRC Clinical Trials
 
 
Phase II at Gentofte Hospital, Denmark – Completed, November 2004 – April 2006
 
 
Phase II at the National Cancer Centre, Singapore – Completed, November 2005 – March 2007
 
NSCLC Clinical Trials
 
 
Phase II at Herlev Hospital, Denmark – Completed, January 2006 – September 2009
 
ColoRectal Cancer (CRC) in Denmark
 
DanDrit sponsored a clinical trial using MCV at the University Hospital of Copenhagen, Gentofte, in Denmark. Enrolment of CRC patients started in October 2004 and the study ended in September 2006. The title of this study is: “Vaccination with autologous dendritic cells loaded with Lysate of allogeneic melanoma cells (MCV) for treatment of patients with advanced colorectal cancer”.
 
Twenty patients with advanced colorectal cancer (Dukes D - not curable by resection and no further conventional therapy options available) were included in the study (six patients in phase I and 14 in phase II).
 
The purpose of this open phase I/II study was to study the tolerability and effect of MCV given as intradermal injections to patients with metastasizing colorectal cancer, where there was no indication for surgery or chemotherapy. The first part was a phase I study to investigate whether treatment with MCV is in any way toxic. No toxicity was observed and the study continued into phase II to study the effect and tolerability of MCV. At the completion of the study stable disease was observed in twenty percent of the enrolled patients. This data was achieved with a DanDrit’s early MCV vaccine, which has since been replaced by an improved MCV. The MCV was improved subsequent to the completion of our clinical trials, but included the addition of aza-cytidine to the DDM-1 culture to de-methylize the genome in order to optimize tumor specific antigen expression.  The benefit was marginal and did not justify switching to a different product during the trials. As a result, all trials we will present to the FDA will use the same cell line and the same manufacturing process.
 
Inclusion criteria:
 
 
Age 25-75
 
 
No chemo or radiotherapy within six weeks prior to inclusion
 
 
Expected survival > four month
 
 
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Performance status two according to the performing status of WHO
 
 
Adequate hepatic and renal function
 
 
Adequate haematopoietic and coagulation capacity
 
 
Normal EKG or non-clinical significant abnormal EKG
 
 
Preserved pulmonary function
 
Exclusion criteria for the trial:
 
 
Uncontrolled serious infection
 
 
Systemic corticosteroid treatment or other immune suppressive treatment in the last two months
 
 
Participation in other clinical trials over the former six weeks
 
 
For women, pregnancy or lactation
 
Study design: dendritic cells were generated from autologous peripheral blood mononuclear cells (PBMC). In order to increase the level of circulating leukocytes, patients exercised five minutes on a treadmill before 200ml of blood was drawn. Patients were scheduled for ten vaccinations consisting of 3-5x10 6 dendritic cells. Vaccinations were given bi-weekly intra-dermally on the proximal thigh with two injections each thigh. Adverse events were monitored and classified according to the National Cancer Institute’s Common Toxicity Criteria (NCI’s CTC). Evaluation of responses was made according to the Response Evaluation Criteria in Solid Tumors (“RECIST”) criteria and patients were CT scanned before entering the study, after five vaccinations and after ten vaccinations. Quality of life was monitored by questionnaires bi-weekly. The study was performed at the Department of Surgical Gastroenterology at Gentofte University Hospital, Copenhagen, Denmark according to ICH Guidelines for Good Clinical Practice (European Directive on GCP 2001/20/EC).
 
RECIST is a set of published rules that define when tumors in   cancer patients improve ("respond"), stay the same ("stabilize"), or worsen ("progress") during treatments. The criteria were published in February 2000 by an international collaboration including the   European Organization for Research and Treatment of Cancer   ( EORTC ),   National Cancer Institute   of the   United States , and the   National Cancer Institute of Canada Clinical Trials Group. Today, the majority of clinical trials evaluating cancer treatments for objective response in solid tumors are using RECIST.
 
The aim of phase II CRC study in Denmark was to evaluate the effect of treating patients with advanced colorectal cancer with a cancer vaccine based on dendritic cells pulsed with an allogenic tumor cell lysate. Twenty patients with advanced colorectal cancer were consecutively enrolled. Dendritic cells (DC) were generated from autologous peripheral blood mononuclear cells and pulsed with allogenic tumor cell lysate containing high levels of cancer-testis antigens. Vaccines were biweekly administered intradermally with a total of 10 vaccines per patient. CT scans were performed and responses were graded according to the RECIST criteria. Quality of life was monitored with the SF-36 questionnaire. Toxicity and adverse events were graded according to the National Cancer Institute’s common Toxicity Criteria. Four patients were graded with stable disease. Two remained stable throughout the entire study period. Analysis of changes in the patients’ quality of life revealed stability in the sub-groups: “physical function” (p=0.872), “physical role limitation” (p=0.965), “bodily pain” (p= 0.079), “social function” (p=0.649), “emotional role limitation” (p=0.252) and “mental health” (p=0.626). The median survival from inclusion was 5.3 months (range 0.2 - 29.2 months) with one patient still being alive almost 30 months after inclusion in the trial. DanDrit determined that treatment with this DC-based cancer vaccine was safe and non-toxic. Stable disease was found in 24% (4/17) of the patients. The quality of life remained for most categories high and stable throughout the study period. Stable disease is defined as a tumor that is neither growing nor shrinking. Stable disease also means that no new tumors have developed and that the cancer has not spread to any new regions of the body (the cancer is not getting better or worse) and quality of life, measured using a global health score, was 68.3 at baseline and did not vary much across time.
 
 
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As a measure of quality of life for the colorectal cancer trial in Denmark, DanDrit used the SF-36 Global Health Score questionnaire to evaluate the patients' quality of life throughout the study period.  At the time of the trial, this questionnaire from the   Medical Outcome Study (MOS), conducted by the   RAND Corporation , was both recommended and validated.  All patients in the trial independently filled in the questionnaire every two weeks . The SF-36 Global Health Score questionnaire consists of eight scaled scores, which are the weighted sums of the questions in their section. Each scale is directly transformed into a 0-100 scale on the assumption that each question carries equal weight. The lower the score is the more disability is reported by the patient. Higher scores reflect less disability i.e. a score of zero is equivalent to maximum disability and a score of 100 is equivalent to no disability. The eight different aspects of quality of life reflecting different aspects of the patient’s self-reported quality of life are:
 
 
·
vitality
 
 
·
physical functioning
 
 
·
bodily pain
 
 
·
general health perceptions
 
 
·
physical role functioning
 
 
·
emotional role functioning
 
 
·
social role functioning
 
 
·
mental health
 
The fact that patients' SF-36 Global Health Score was high (score of 68.3) signifies that when entering the study the patients’ quality of life was comparable to the healthy background population.  The fact that it remained stable signifies that there were no significant changes in the patients’ quality of life during treatment. This correlates with the fact that the treatment was well tolerated by all patients and that investigators did not observe severe adverse effects from the treatment.
 
A more in depth analysis of the components of the improvements in the patients’ quality of life revealed a stability in the different aspects of quality of life:
 
The “p” refers to the p-value.  In a statistical test, the p-value is the probability of getting the same value for a model built around two hypotheses, one is the "neutral" hypothesis, the other is the hypothesis under testing. The p-value shows how significant an observed difference is.  When analyzing the improvement in the Quality of Life of the treated patients, the p-value indicates if the improvement could be due to pure randomness or if it can be attributed to the vaccine.
 
For “physical function” (p=0.872).  The p-value of 0,872 signifies that the observed difference could be due to randomness.
 
For “physical role limitation” (p=0.965).  The p-value of 0,965 signifies that the observed difference could be due to randomness.
 
For “bodily pain” (p= 0.079).  The p-value of 0,079 reflects a low presumption against the neutral hypothesis.
 
For “social function” (p=0.649).  The p-value of 0,649 signifies that the observed difference could be due to randomness.
 
 
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For “emotional role limitation” (p=0.252).  The p-value of 0,252 signifies that the observed difference could be due to randomness.
 
For “mental health” (p=0.626).  The p-value of 0,626 signifies that the observed difference could be due to randomness.
 
However, note that there was a significantly lower score towards the end of the study concerning:
 
For “general health perception” (p=0.006).  The p-value of 0.006 signifies that the observed difference is significant and is not due to randomness.
 
For “vitality” (p=0.011). The p-value of 0.011 signifies that the observed difference is significant and is not due to randomness.
 
Non-small cell lung cancer (NSCLC) in Denmark
 
DanDrit sponsored this MCV clinical trial conducted at Herlev Hospital, University of Copenhagen, in Denmark. The title of the study is: “Vaccination with Autologous Dendritic Cells Pulsed with Allogeneic Tumor Lysate (MelCancerVac) for the Treatment of Patients with Advanced or Metastatic Non-Small Cell Lung Cancer”.
 
DanDrit designed the trial as an open-label, phase II clinical study. Enrolled patients had disseminated, inoperable NSCLC after chemotherapy; the patients did not want further chemotherapy: and no other systemic treatments could be offered to them.
 
The primary objective was to measure the antigen specific immunological reaction between vaccine antigens and the patients’ immune system in vivo and in vitro. The secondary objectives were to estimate the patients’ survival time, the tumor response according to RECIST criteria, and the patients’ quality of life during the study period. Primary endpoint was tumor response, assessed by clinical benefit rate, the percentage of patients with advanced or metastatic cancer who have achieved complete response, partial response and stable disease to a therapeutic intervention in clinical trials of anticancer agents (CBR), however the study also evaluated PFS and overall survival (OS) as secondary endpoints. Complete response (CR) is a figure representing the percentage of patients whose cancer disappears after treatment. Partial response (PR) is a figure representing the percentage of patients whose cancer shrinks after treatment. PR describes a tumor that has decreased in size by at least 30%. The term stable disease (SD) describes a tumor that is neither growing nor shrinking. SD also means that no new tumors have developed, and that the cancer has not spread to any new regions of the body (the cancer is not getting better or worse). T he median overall survival was 7.4 months (95% confidence interval (CI), used to indicate the reliability of an estimate, 4.5-17.5 months). Two patients were still alive at the time of analysis. An exploratory analysis showed that patients with PR and SD had significantly better survival (median, 18.1 months) compared to those with progressive disease (median, 6.2 months; P = .007).  Although the median time to tumor progression was short at 2.4 months (95% CI, 1.9-4.1 months), five patients experienced a prolonged PFS of more than 6 months; and two of them (reviewed below) continued to be progression-free at time of analysis (PFS >27 and >37 months).
 
The first patient was included in January 2007. A total of 28 patients were included in the trial. Treatments prior to DC vaccinations, tumor histology, smoking status, number of vaccinations, age and gender were recorded.  The median age was 58.5 years (46-74 years).  All patients received systemic anti-cancer treatment prior to inclusion. At the time of inclusion, 15 patients were in performance status (PS) 0 and seven patients were in PS 1. Fifteen months after termination of the trial, 4 patients (patient number 1, 2, 12 and 13) were still alive.  These four patients who remained in stable disease after more than 10 vaccinations had different histology subtypes: one broncho-alveolar carcinoma, one squamous cell carcinoma and two adenocarcinoma.   In this Phase IIa trial a 43% CBR (the percentage of patients with advanced or metastatic cancer who have achieved CR, PR and SD to a therapeutic intervention in clinical trials of anticancer agents) was observed, with six patients showing stable disease. Five of these patients were immunologically responding to the vaccine (ELISPOT –IFN Gamma positive) while eight of nine patients with no clinical response had no IFN gamma response.  Sixteen patients received at minimum six vaccines and were evaluated by CT scans. Of those, nine patients showed progression on the 1st evaluation CT scan three months after initiation of treatment, and seven patients had stable disease, representing a 43% CBR. For these 7 patients remaining in stable disease (SD) for a variable period of time, the overall survival curve showed a plateau after two years.
 
In this NSCLC trial, quality of life was measured by self-administered questionnaire using EORTC Quality of Life Questionnaire (QLQ)-C30 version 3 and QLQ-LC13. The QLQ-C30 is composed of both multi-item scales and single-item measures. These include five functional scales, three symptom scales, a global health status/quality of life scale, and six single items.  Each of the multi-item scales includes a different set of items - no item occurs in more than one scale. All of the scales and single-item measures range in score from 0 to 100. A high scale score represents a higher response level. Thus, a high score for a functional scale represents a high/healthy level of functioning, a high score for the global health status/quality of life represents a high quality of life, but a high score for a symptom scale/item represents a high level of symptomatology/problems. Version 3.0 is currently the standard version of the QLQ-C30, and should be used for all new studies.  An essential component of the EORTC QLQ development strategy involves the use of cancer-specific supplementary questionnaire modules which, when employed in conjunction with the QLQ-C30, can provide more detailed information relevant to evaluating the quality of life in specific patient populations. The additional QLQ-LC13 questionnaire is specifically designed for lung cancer patients. The QLQ-LC13 includes questions assessing lung cancer-associated symptoms (cough, hemoptysis, dyspnea and site specific pain), treatment-related side effects (sore mouth, dysphagia, peripheral neuropathy and alopecia) and pain medication. The questionnaire was filled by the patients at baseline, and by the time of the 5th, 6th, 7th, 8th, 9th and 10th vaccinations. The data from the quality of life questionnaires was collected and coded according to EORTC. An overall evaluation of general quality of life-score for the global question of “How do you rate your overall quality of life during the past week” remained stable throughout the study period. More specific factors such as anxiety and lung specific symptoms also remained unchanged during the study-period.
 
The NSCLC trial in Denmark evaluated the clinical and immunological effects of dendritic cell (DC) vaccination in patients with NSCLC. Autologous DCs were pulsed with a MAGE containing allogeneic melanoma cell lysate (MCV). Twenty-two patients initiated the vaccination program including a total of ten vaccinations. Seven patients remained in SD three months after the first vaccination.  After ten vaccinations, six months after vaccine initiation, four patients still showed SD and continued vaccinations on a monthly basis. These four patients received a total of 12, 16, 26 and 35 vaccinations, respectively. Five patients showed an unexpectedly prolonged survival. The treatment was well tolerated and only minor adverse events were reported. Quality of life did not change during the study period. In four out of seven patients with SD, vaccine-specific T cells were detected by interferon gamma ( IFNγ ) (a small protein that plays a role in immunity against infections and for tumor control mostly by activating microphages) EliSpot assays, whereas only one patient with progressive disease (PD) showed vaccine-specific responses.  This DC-based vaccine trial has indicated a correlation between vaccine-specific immunity and sustained SD. The finding of a significant correlation between prolonged disease stabilization and vaccine-specific cellular responses may support the latter notion and support the hypothesis that immune responses may play a role in disease control even long time after the actual treatment. This is in sharp contrast to the rapid effect of anti-cancer treatments such as chemotherapy and radiotherapy.   Furthermore, the trial demonstrated an unexpectedly prolonged survival in some patients, which may indicate delayed effect of DC vaccination after completion of the treatment. This finding was surprising taking the group of patients into account and it could only be speculated whether the vaccinations could cause long-lasting effects or whether the survival reflects a selection of patients due to the inclusion/exclusion criteria. In addition, the investigators reported that this kind of vaccine treatment was feasible and the logistics were manageable in this patient group.
 
In conclusion, 7 out of 22 NSCLC patients vaccinated with autologous DC pulsed with an allogeneic Clinical Trial Authorization (CTA) containing tumor cell lysate had prolonged disease stabilization. In the course of DC vaccination vaccine-specific IFNγ responses were detected in peripheral blood of four of patients with SD and one patient with progressive disease.  However, from this study it is not possible to conclude whether the vaccine treatment and the subsequent IFNγ responses are involved in the clinical cause of these patients. To elucidate the full efficacy of vaccine treatment of patients with NSCLC, the investigators recommended that a randomized trial should be conducted.  
 
 
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Colorectal Cancer (CRC) in Singapore
 
A single arm phase II clinical study was also conducted at the Singapore National Cancer Centre (NCC) to investigate the efficacy of intradermal vaccination with MCV in patients with advanced colorectal cancer. The study used DanDrit’s new patented procedure for generating dendritic cells. All included patients had tumors which antigenically correlated with the vaccine, i.e. were MAGE-A positive. The purpose of the study was to investigate the objective efficacy and specific immunologic response of the MCV vaccination. The first patient was enrolled in June 2005, and by June 2007 a total of 20 patients had been treated and evaluated.
 
The vaccine was given to advanced colorectal cancer patients pre-treated with chemotherapy, where there was no further indication for surgery or treatment with chemotherapy.
 
Treatment with MCV did not appear to adversely affect the patient’s quality of life, measured based on a global health score of 68.3 prior to treatment with minimal variation through the course of the treatment. The health-related quality of life   assessment quantifies how the individual's well-being  may be affected over time by a disease , such as cancer.  Health-related quality of life is assessed using patient questionnaires. These questionnaires are multidimensional and cover physical, social ,   emotional ,   cognitive , work- or role-related and spiritual   aspects, as well as a wide variety of cancer related symptoms, therapy induced side effects, and the financial impact of cancer. The questionnaire from the Eastern Cooperative Oncology Group ( ECOG ) is most commonly used to evaluate the impact of  cancer  on sufferers.   MCV induced objective responses in seven of 20 patients (six responses were stable disease and one response was partial regression of tumor mass). Significant immunological and clinical correlation was observed. Results from the trial were presented orally at the AACR meeting in Singapore in November 2007.
 
The CRC trial in Singapore evaluated the efficacy and toxicity of MCV in advanced colorectal cancer patients expressing at least one of six MAGE-A antigens. Dendritic cells were cultured from peripheral blood mononuclear cells (PBMCs) and pulsed with allogeneic lysate and matured using cytokines to achieve high CD83 and CCR7 expressing dendritic cells. Each patient received up to 10 intradermal vaccinations (3-5 x 10 6 cells/dose) at biweekly intervals.  Twenty patients received a total of 161 vaccinations. Treatment was well-tolerated with minimal adverse events and quality of life measurements did not vary much across time. One patient experienced PR (5%; 95% CI, 1-24%) and seven achieved SD (35%; 95% CI, 18-57%) one of whom also achieved late tumor regression, yielding a CBR rate of 40% (95% CI, 22-61%).  Although overall median PFS was short at 2.4 months (95% CI, 1.9-4.1 months), five patients (20%) experienced prolonged PFS (>6 months) with two patients (10%) remaining progression-free for >27 and >37 months respectively. This result is particularly meaningful as all patients had progressive disease before study entry. Overall, DC vaccination was associated with a serial decline in regulatory T cells. Using biotin label-based antibody array, we characterized plasma protein profiles in responding patients that may correlate with vaccine efficacy and report a pre-vaccination protein signature distinguishing responders from non-responders.
 
The colorectal cancer patients who are eligible for the humanitarian program in Singapore must present a profile similar to the one of the patients who were recruited in the phase IIa clinical trial.  They must fulfill the same inclusion and exclusion criteria stated in the protocol of the phase II trial.  However, there have been some exceptional cases where treatment has been based on a doctor’s discretion on the patient’s quality of life.  Also, patients are monitored according to the previous phase II study protocol.  The results obtained in the humanitarian program were consistent with the results published by Dr. Toh.
 
MAGE-A-expressing metastatic colorectal cancer patients with prior progressive disease treated with MCV achieved a competitive Clinical Benefit Rate of 40%. While patients with single metastatic sites in either lung or nodal regions tended to have more durable responses (see patients 1, 2 and 9 in table below), Stable Disease was also attained in patients with bulky multiple metastases ( see patient 6 in table below). Five patients notably remained progression-free for over six months and two patients with significant tumor burden (see patients 1 and 9 in table below) were still progression-free for over 27 and 37 months respectively. We recognize that adopting the primary endpoint of Clinical Benefit Rate using RECIST criteria has limitations. This study protocol was designed in 2005 where objective response rate (ORR) and Clinical Benefit Rate evaluation as primary endpoints in Phase II cancer vaccine trials were not uncommon. Nevertheless, we did evaluate Progression Free Survival and Overall Survival as secondary endpoints, which may better reflect true vaccine efficacy.
 
A meta-analysis of 32 cancer vaccine clinical studies in patients with advanced colorectal cancer reported a Clinical Benefit Rate in 11.2% of patients and an overall response rate (Complete Response and Partial Response) of 0.9%. The defined clinical benefit rate (Complete Response, Partial Response, Stable Disease) was observed in 17% (12/70) of colorectal cancer patients who received Dendritic Cell vaccines.
 
 
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Patients’ Characteristics
 
ID
 
Age (years)
 
Sex
 
PS
 
Site of disease
 
No. of Chemo-regimens
 
Disease at Accrual
 
No. of vaccinations
 
BOR
 
Time to Tumor response (months)
 
Duration of response (months)
 
TTP (months)
   
Survival Time (months)
 
                                                     
1   72   F   1  
LN
  1  
PD
  10  
SD
  2.7  
> 25.0 *
 
> 27.7 *
    39.7
2   67   F   1  
Lung
  0  
PD
  10  
SD
  2.9   4.2   7.1     35.6  
3   53   F   2  
Lung, LN, Pelvic, Bone
  4  
PD
  10  
SD
  1.7   5.2   6.9     6.9  
4   43   F   1  
Lung, Adrenal, LN
  4  
PD
  3  
PD
  -   -   2.6     5.9  
5   54   M   1  
Liver, Lung, Ascites, LN
  3  
PD
  3  
ND
  -   -  
> 3.8
    3.8
6   76   M   0  
Liver, Peritoneum, Pelvic, Lung, LN, Serosa
  3  
PD
  10  
SD
  1.8   2.4   4.1     7.6  
7   33   F   1  
Bone
  2  
PD
  9  
PD
  -   -   2.0     6.5  
8   75   F   0  
Lung
  0  
PD
  10  
PD
  -   -   1.9     13.1  
9   62   F   1  
LN, Lung and Pelvic
  3  
PD
  10  
PR
  2.5  
> 35.4 *
 
> 37.9 *
    37.9
10   73   M   0  
Liver, LN
  2  
PD
  10  
PD
  -   -   2.1     19.6  
11   64   M   0  
Liver
  1  
PD
  10  
PD
  -   -   2.1     6.4  
12   57   M   1  
Lung, Liver, LN
  2  
PD
  10  
PD
  -   -   2.3     7.5  
13   65   F   1  
LN, Pleural, Lung, Liver
  5  
PD
  5  
PD
  -   -   1.6     2.9  
14   49   M   1  
Lung, Liver, Peritoneum
  5  
PD
  8  
SD
  2.3   1.2   3.5     7.2  
15   72   M   0  
LN, Pleural, Liver, Lung
  2  
PD
  4  
PD
  -   -   1.8     3.2  
16   77   M   1  
Liver, Bone, Lung
  4  
PD
  10  
SD
  1.6   1.9   3.5     13.0  
17   75   F   0  
Lung, Liver
  1  
PD
  10  
PD
  -   -   1.9     17.5  
18   54   F   0  
LN, Lung
  1  
PD
  10  
SD
  1.8   4.9   6.7     23.2  
19   75   M   0  
Lung, Liver,
  2  
PD
  3  
PD
  -   -   2.0     2.9  
20   41   F   1  
Lung, Skin, LN, Bone
  5  
PD
  6  
PD
  -   -   1.9     4.5  
 
* Indicates that the patient has not progressed at the time of analysis.
Patients who are alive at the time of analysis have their survival time censored at the time of last follow up.
Patient withdrawn due to poor performance status; survival time was censored at last date in the study.
Abbreviations: PS, performance status according to Eastern Cooperative Oncology Group; CT, chemotherapy; RT, radiotherapy; BOR, best overall response; TTP, time to tumor progression; LN, lymph node; F, female; M, male; SD, stable disease of at least 4 weeks; PD, progressive disease; ND, CT scan not done; PR, partial response.
 
 
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ECOG PERFORMANCE STATUS
 
Grade
 
ECOG
0
 
Fully active, able to carry on all pre-disease performance without restriction
1
 
Restricted in physically strenuous activity but ambulatory and able to carry out work of a light or sedentary nature, e.g., light house work, office work
2
 
Ambulatory and capable of all self-care but unable to carry out any work activities. Up and about more than 50% of waking hours
3
 
Capable of only limited self-care, confined to bed or chair more than 50% of waking hours
4
 
Completely disabled. Cannot carry on any self-care. Totally confined to bed or chair
5
 
Dead
 
As of 2006, there were a total of eight clinical DC vaccination studies in patients with metastatic colon cancer, all with peptide-pulsed DC.  To our knowledge, our study which adopted an allogeneic tumor lysate-based DC vaccine achieves the highest Clinical Benefit Rate in advanced colorectal cancer patients compared to these previous Dendritic Cell vaccination clinical trials. The clinical activity of this present Dendritic Cell-based vaccine might reflect its polytopic nature, its allogenic adjuvant-like components, the quality of the Dendritic Cell preparation (i.e. high uniform expression of CD83, CD86, HLA class II, and CCR7), the intradermal route of vaccine injection securing optimal lymph drainage to regional lymph nodes, the presence of MAGE expression in both patients and vaccine and the increased frequency of delivery (ten injections).
 
In this trial, the primary endpoint was Clinical Benefit Rate and secondary endpoints also included quality of life (QoL) analysis. These guidelines aim to provide guidance for standardizing quality of life assessment across EORTC randomized clinical trials, and to act as a reference source for "Good Clinical Practice" where quality of life is being assessed in a clinical trial. Quality of life data was analyzed based on the guidelines for assessing quality of life in EORTC clinical trials. No imputation was carried out for missing values. Difference of quality of life between baseline and each cycle was performed by paired t -test.  Quality of life measurement using global health score was 68.3 at baseline and did not vary much across time.
 
Treatment with MCV did not appear to adversely affect the patient’s quality of life, measured based on a global health score of 68.3 prior to treatment with minimal variation through the course of the treatment. The health-related quality of life assessment quantifies how the individual's well-being may be affected over time by a disease, such as cancer.  Health-related quality of life is assessed using patient questionnaires. These questionnaires are multidimensional and cover physical, social, emotional, cognitive, work- or role-related and spiritual aspects, as well as a wide variety of cancer related symptoms, therapy induced side effects, and the financial impact of cancer. The questionnaire from the Eastern Cooperative Oncology Group (ECOG) is most commonly used to evaluate the impact of cancer on sufferers. MCV induced objective responses in seven of 20 patients (six responses were stable disease and one response was partial regression of tumor mass). Significant immunological and clinical correlation was observed.
 
Compassionate Use/Named Patient Approval
 
Further to the data emerging from the Singapore CRC trial, the Singapore government requested and approved (22 September 2008) that named patients be offered MCV therapy at cost. This first compassionate use approval marked a significant milestone for the progress and acceptability of the MCV therapeutic model. This compassionate program could be used as a model to initiate sales of MCV in other countries of the ASEA such as Thailand or Malaysia. Outside the United States, named patient programs provide controlled, pre-approval access to drugs in response to requests by physicians on behalf of specific, or “named”, patients before those medicines are licensed in the patient’s home country. Governments worldwide, such as Singapore’s government, have created provisions for granting access to drugs prior to approval for patients who have exhausted all alternative treatment options and do not match clinical trial entry criteria. Often grouped under the labels of compassionate use,   expanded access, or named patient supply, these programs are governed by rules which vary by country defining access criteria, data collection, promotion, and control of drug distribution.  Through these programs, patients are able to access drugs in late-stage clinical trials or approved in other countries for a genuine, unmet medical need, before those drugs have been licensed in the patient’s home country. In September 2008, DanDrit Denmark and the National Cancer Centre of Singapore (NCC) entered a collaboration agreement regarding a clinical named patient program conducted in Singapore at NCC with the dendritic cell vaccine MCV.  NCC and the Company have established a GMP approved laboratory in which the manufacturing of MCV takes place. NCC has received approval from the relevant governmental authorities for the import of lysate necessary for production of MCV. The clinical and research and development activities of the named patient program relate to the Company’s product, MCV. The purpose for the Singapore named patient program is to provide patients with advanced colorectal cancer or other forms of cancer(s) with the presence of MAGE antigen expression an alternative treatment for the vaccination with MCV, where there is no further indication for surgery or treatment with chemotherapy. Patients are recruited on named patient basis according to the patient inclusion and exclusion criteria stated in the phase IIa study protocol. However, there may be some exceptional cases where treatment will be made based on a doctor’s discretion regarding the patient’s quality of life. An estimated total of 50 patients have been recruited for the Singapore named patient program and 8 patients are currently still active in the named patient program.
 
Future: 100% Off-the-Shelve Vaccines
 
Autologous (from the patient) dendritic cells cancer vaccines are tailor made for each individual patient. This personalized medicine approach is appealing to the patients but may present several drawbacks to a pharmaceutical company. Creating a new, unique vaccine for each patient may be perceived as complex, time consuming, and expensive. Therefore, DanDrit is pursuing two programs to offer in addition to its personalized vaccine 100% off-the-shelve cancer vaccines: MCV2 and MelVaxin . These two programs presented below capitalize on the knowledge and the expertise gained with DanDrit’s proprietary lysate used for MCV.
 
 
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Allogenic DC based vaccine: MCV2
 
First, DanDrit is developing MCV2 a 100% off-the-shelf dendritic cell vaccine through collaboration with the Etablissement Francais du Sang (EFS) / GeniusVac (France) pursuant to a Confidential Disclosure Agreement entered into in March 2013, with a Materials Transfer and Feasibility Study Agreement currently under negotiation. Through the proposed agreement, DanDrit would provide EFS with a certain quantity of its proprietary DDM-1.7 lysate, for the limited purpose of EFS using its GEN-T plasmacytoid DC line technology to conduct a feasibility study in collaboration with DanDrit, to demonstrate the potential efficacy of EFS’ technology and evaluate prospects of further cooperation between the parties. The GEN-T cell line is generated by EFS’ R&D laboratory in Grenoble. This cell line, loaded with tumor-derived antigenic peptides (HLA-A*0201 restriction) is being used as a cellular vaccine, to treat cancer patients. The DDM-1.7 lysate is produced by DanDrit to load autologous dendritic cells used to treat cancer patients. In this context, the main objective of the project is to determine if DDM1.7 lysate and GEN-T cell line can be combined to develop a new cancer vaccine. The main point is to validate that the GEN-T cell line, once loaded with the DDM1.7 lysate is able to present the DDM1.7-derived Ag to specific T lymphocytes. MCV2 is a cell-based immunotherapeutic product consisting of an irradiated plasmacytoid dendritic cell line presenting DanDrit’s proven lysate. DanDrit sourced the allogeneic dendritic cells from EFS /GeniusVac. EFS/ GeniusVac produces an allogeneic plasmacytoid dendritic cells (pDCs) line that has demonstrated the induction of multi-specific and highly functional cytotoxic cell responses directed against tumor targets both In vitro and in vivo. These irradiated antigen-presenting pDCs have a strong power to induce specific antitumor response by cytotoxic DC8+ T-cells. The safety and efficacy allogeneic pDC platform has been proven. Stimulation of PBMC from HLA-A*0201+ donors by HLA-A*0201 matched allogeneic pDCs pulsed with tumor-derived peptides triggered high levels of antigen-specific and functional cytotoxic T cell responses (up to 98% tetramer+ CD8 T cells (a group of white blood cells known as lymphocytes and play a central role in cell-mediated immunity). The pDC vaccine demonstrated anti-tumor therapeutic in vivo efficacy as shown by the inhibition of tumor growth in a humanized mouse model. It also elicited functional tumor-specific T cells ex-vivo from PBMC and TIL of stage I-IV melanoma patients. Responses against MelA, GP100, tyrosinase and MAGE-3 antigens reached tetramer levels up to 62%, 24%, 85% and 43% respectively. pDC vaccine-primed T cells specifically killed patients’ own autologous melanoma tumor cells. This semi-allogeneic pDC vaccine was more effective than conventional myeloid DC- based vaccines.
 
This Allogenic approach offers multiple advantages:
       
 
The vaccine could then be mass-produced in a unique manufacturing facility
             (LOGO)
 
Cost effective process
 
All manufacturing process can then be out-sourced (DanDrit does not need to support its own GMP manufacturing facility)
 
The MCV2 vaccine could be more likely to have higher potential efficacy than MCV. The allogeneic DCs are further regarded as MHC-incompatible foreign invaders.  Then, they induce an inflammatory reaction that further promotes the recruitment and activation of endogenous DCs at the vaccination site. This hypothesis has now been verified in rat and mouse cancer models in which tumor growth was significantly reduced by therapeutic vaccinations with tumor-loaded allogeneic DCs.
 
 
MCV2 is still using the clinically proven lysate used in MCV as cancer specific antigen
 
“One- To- Many”: the same drug product could be used to treat several patients (consistent with current pharma business model).
 
Fully standardizable product
 
Guarantee of homogeneity of the clinical trials
 
Melvaxin™
 
A second platform product, MelVaxin™ is also evaluated. MelVaxin™ is similar to the lysate component of MCV. DanDrit proposed injecting MelVaxin™ into the skin to promote natural dendritic cell responses that will attack the tumor expressing cancer/testis antigens. It is necessary to inject MelVaxin™ with an immuno-stimulator such as GM-CSF, BCG or novel adjuvants (such as 3M’s TLR7 and TLR8 agonists). A preclinical program has been planned in minipigs. These animals have immune response profiles, particularly of skin injection, that are very close to human. This program, currently on hold, can be reinitiated when staff is available to manage this program. This takes second place to the MCV2 program and illustrates DanDrit’s professional commitment to advancing lead clinical products.
 
Other Future Products
 
Other cancers
 
DanDrit has already made progress with clinical trials of NSCLC and CRC. DanDrit is now focusing its clinical development on advanced colorectal cancer, but DanDrit may if opportunity arises extend its range of cancer targets to answer the desperate need for effective new therapies. As an illustration, esophageal cancers may be one of these opportunities. The two types of esophageal cancers the esophageal squamous cell carcinoma (EC) and the esophageal adenocarcinoma (EAC) expressed MAGE -A. Worldwide, EC is the most frequent malignant esophageal cancer accounting for at least 10,000 deaths per year.
 
But in Western countries, EAC is the most rapidly increasing cancer compared with other malignancies. Surgical resection is currently the only potential cure with or without neo-adjuvant or adjuvant chemo-and/or radiotherapy, the five year survival rate is less than 20%. At first presentation, approximately 50-60% of patients with esophageal cancer are not eligible for surgery and have very poor outcome.
 
Tolerogenic Dendritic Cells
 
Some dendritic cells seem to instruct cell-killing T cell clones to abandon their mission by self-destructing through an apoptotic pathway. This may offer the possibility of eliminating those T cells responsible for the manifestation of auto-immune disease. In MCV dendritic cells are derived in such a way that the resulting dendritic cells promote an immune reaction. However, dendritic cells may also be derived in such a way that they are tolerogenic, they promote immune tolerance. Promoting immune tolerance can be used to treat autoimmune diseases such as early stage type I diabetes (where insulin secreting cells are still present) or even to help prevent rejection of tissue transplantation. In this way the tolerogenic dendritic cells are used to turn off an undesirable immune reaction. DanDrit has established methods to derive tolerogenic dendritic cells from peripheral blood monocytes, similar to the approach used to generate immunogenic dendritic cells in MCV. Tolerogenic dendritic cells are easily distinguished by their function in vitro. DanDrit has filed patents to cover the generation of tolerogenic dendritic cells.
 
Non-Core Products – Out-licensing
 
Non-core patents are being developed for application in dendritic cell related applications that are not cancer-related. Revenues from licensing such non-core products will support core product and core technology development.
 
The principal non-core intellectual property relates to tolerogenic dendritic cells, their production and application in auto-immune diseases to include type 1 diabetes. DanDrit’s fast track production methods for dendritic cells might be out-licensed for non-competitive applications in areas other than cancer.
 
 
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Fast-track production of Dendritic Cells
 
The generation of mature immunogenic dendritic cells from peripheral blood monocytes requires eight days of growth in culture. The efficiency of producing MCV could be improved if the time required to generate dendritic cells could be significantly reduced. DanDrit has tested many protocols for generating dendritic cells quickly. Two promising methods have emerged from intensive research activities to generate dendritic cells in either two days or five days. The fast track methods for generating dendritic cells produce immunogenic dendritic cells that are comparable to cells generated using DanDrit’s standard technique. These new fast track methods are covered by DanDrit’s existing dendritic cell technology patent.
 
This fast-track production technology could be of commercial interest for other companies working in non-competitive areas of dendritic cell technology.
 
MicroRNAs for dendritic cell quality control
 
DanDrit patented a method using microRNAs to characterize dendritic cells and establish a basis for quality control. To date there are few dendritic-cell specific antigens and those existing are covered by patents. DanDrit has patented its microRNA approach developed with Bioneer (note that patents are 100% owned by DanDrit).
 
Proposed Clinical Trial
 
The proposed PoC study with an adaptive design plans to enroll 174 stage IV colorectal cancer patients after surgical resection of liver metastases and chemotherapy. Regulatory authorities in the United States and Europe have published guidance documents on the use and implementation of adaptive design trials. These documents include descriptions of adaptive trials and a requirement for prospectively written standard operating procedures and working processes for executing adaptive trials, as well as a recommendation that sponsor companies engage with CROs that have the necessary experience in running such trials.
 
The proposed patients in the trial will therefore have no evidence of disease. The clinical study is designed as a randomized, placebo controlled, multicenter, Phase IIb/III clinical study. Treatment is double blinded (to the patients and physicians). Patients will be included after resection of their primary tumor and resectable metastases in liver and after appropriate peri- or post-operative chemotherapy by stratification and random assignment to a non-vaccine control group or a vaccine group receiving five vaccinations with 14-day administration intervals followed by five vaccines with two-month intervals. Inclusion is planned to take place one month after finishing the last round of peri- or post-operative chemotherapy (FOLFOX or FOLFIRI) and after a negative tumor scan (head, thoracic and abdominal cavities) and normal CEA prior to inclusion in the vaccine or the control groups. Patients will be screened for MAGE-A expression. The control group will receive five plus five injections with physiological saline. In the event of disease progression, as verified by tumor scan during the vaccination schedule, vaccinations will be discontinued. The table below summarizes the key features of the proposed PoC clinical study.
 
Traditionally drug development has consisted of a sequence of independent trials organized in different phases.  Full development typically involved (1) a learning phase II trial and (2) one or two confirmatory pivotal phase III trial(s).  The new seamless phase II/III designs are aimed at interweaving the two phases of full development by combining them into one single, uninterrupted study conducted in two steps. Adaptive seamless clinical trial designs have proved to be effective in several clinical research areas, such as the development of Velcade intended for multiple myeloma and non-Hodgkin's lymphoma   or a long-acting glucagon-like peptide-1 analog (dulaglutide) in a randomized, placebo-controlled, double-blind study of overweight/obese patients with type 2 diabetes: the EGO study. Adaptive seamless phase II/III designs enable a clinical trial to be conducted in steps with the sample size calculation selected on the basis of data observed in the first step to continue along to the second step. The main statistical challenge in such a design is ensuring control of the type I error rate. Most methodology for such trials is based on the same endpoint being used for interim and final analyses. However, in some settings like our clinical trial, the primary endpoint, overall survival, can be observed only after long-term follow-up.  In this case the design includes a shorter term endpoint data, in our case, progression free survival at 18 months. If short-term data are available for some patients for whom the primary endpoint is not available, basing treatment selection on these data may lead to increase of the type I error rate (false positive).
 
 
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Phase IIb/III Overview
 
Purpose
To determine the safety and efficacy of our investigational vaccine in colorectal cancer and to determine its ability to prevent recidive in stage IV colorectal patients with no evidence of disease (after surgical resection of metastase and chemotherapy)
Study Type
Interventional
Study design
 
Endpoint (primary)
Efficacy : Progression Free Survival at 18 months
Endpoint (secondary)
Overall Survival; Carcino-Embryonic Antigen (CEA); Quality of Life
 
Intervention Model
Parallel assignment 174 patients
Masking
Double blind
Allocation
Randomized
Power
80%
Adaptive Design
Purpose: seamless Phase II/III clinical trial
Treatment
Five vaccines bi-weekly (intra-dermal administration) followed by five vaccines every two months
Location
Asia, Europe, and USA
Expected Duration
Three years
Eligibility
Stage IV colorectal cancer patients
After resection of liver metastase and no evidence of disease (CT scan and CEA back to normal)
          ●    Stratification for risk factor
Vaccine therapy given after FOLFOX or FOLFIRI (after completion of course of chemotherapy)
Screen for MAGE-A expression
 
 
(FLOW CHART)
 
Critical Success Factors
 
The points below are a specific, focused list of critical factors and challenges that need to be considered for the project, during the critical start-up phase and throughout the project life cycle. In addition to the sections noted below, during the course of the study, DanDrit will be pro-active in discussing the Critical Factors with the investigators.
 
Oncology studies by their nature have a degree of complexity not always encountered in other therapeutic areas. We believe success of the CRC study will be related to these Critical Success Factors. Our approach to each critical factor is detailed below. DanDrit identified the following key factors for success:
 
 
Patient accrual and site selection
 
 
Assessment of patient response
 
 
Study design and collection of patient data
 
 
Vaccine supply
 
 
Patient safety
 
 
Multinational regulatory requirements
 
 
CRO previous experience
 
 
Adaptive trial design experience
 
 
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Patient accrual and site selection
 
The proposed study is anticipated to enroll 174 patients at approximately 37 sites in the US, Europe and Singapore. Although the number of potential stage IV patients is significant, only a portion of these, approximately 10-20%, will have complete resections of their primary tumors and metastatic disease to liver with no detectable residual disease (i.e. clear resection margins). This coupled with a competitive oncology vaccine research environment will put pressure on accrual milestones.
 
The selected patient population will be easier to work with than the patients in Phase IIa. It is reasonable to expect the response rate to be greater for MCV, or for any immunotherapy, in a patient population with No evident Disease (NED). Consequently in this Phase IIb/III trial, patients will have to be NED, raising the likelihood that the immune system can generate a response against cancer as it re-occurs. We believe this may ultimately lead to better data from the Phase IIb/III trial. Careful selection of study sites using evidence based feasibility research, discussion with colorectal key opinion leaders (KOLs), contact with investigators at key sites and our past clinical experience in this indication and with cancer vaccines will be required. While there are currently no definitive agreements in place, the Company and its management are currently in negotiations with respect to various study sites to complete these trials, including the Dana Farber Harvard University in the US, the Institut Gustave Roussy (IGR) in France, and the National Cancer Institute of Milan in Italy, all of which are recognized as among the world’s premier cancer research and treatment facilities and leaders in immunotherapy research. In addition, the Company is also considering the option to conduct the trial in Italy exclusively in collaboration with the GISCAD Foundation for Research on Cancer, which conducted a clinical trial evaluating FOLFOX-4 3 months vs. 6 Months and Bevacizumab as adjuvant therapy for patients with Stage II/III CRC.  The network of Italian hospitals enrolled 3,800 patients.
 
Accrual rates are estimates and can be further refined. Inadequate enrollment is one of the biggest drivers of wasted cost and time in clinical trials. Therefore, DanDrit has taken a very conservative position regarding site selection and patient enrollment.
 
Assessment of patient response
 
In general, in oncology vaccine studies, the relationship between clinical response, survival (and other measures of efficacy) and immune response may be unclear. Changes in patients’ immunological profiles during vaccination protocols, their response to the vaccine components as measured by delayed-type hypersensitivity (DTH), used as the primary measure of the ability to immunize a patient to a tumor cell or specific tumor antigen; the enzyme-linked immunosorbent spot   (ELISPOT), a common method for monitoring immune responses In humans; cluster of differentiation (CD) antigen profiles, protocol used for the identification and investigation of   cell surface molecules ; and other strategies to attempt to correlate treatment outcome with the results of vaccination are variable. The paper describing the Phase II study in CRC patients by Toh et al indicates that a plasma protein expression profile has been identified for responding patients. Continued evaluation of immunological profiles of the patients and the collection of these data and correlation with outcomes may be desirable but for this POC study will not be necessary.
 
In a guidance document by the FDA, “Clinical Considerations for Therapeutic Cancer Vaccines” (September 2009), the agency recognizes that immunological approaches to tumor control may require significant time to develop, and that careful clinical assessment of patients must be performed as well as the use of methods that rely on radiological measurement of tumor size (e.g. RECIST). The guidance indicates that for cancer vaccines, patients may be observed to develop indications of progressive disease based on radiological measurement, but that these indications may also be transient and that tumor regression is still a possibility as the immunological response develops. Methods to incorporate such an approach will help avoid premature termination of study treatment for some patients.
 
Tumor burden has also been a confounding problem for oncology vaccine development because of tumor-induced immune-suppression in some patients and because of progression prior to immune response. These issues may be obviated in this study of no-evident-disease subjects.
 
Patient safety
 
DanDrit believes that MCV appears to be safe and well tolerated in studies to date. Adverse events related to the vaccine appear to be Grade 1-2 and consist of mostly superficial toxicities as describe above. Patients in the proposed study will have recovered from previous treatments and will be apparently disease free: thus, at this time, only general safety precautions and observations related to the patient population are recommended.
 
Injection site reactions and other toxicities expected in the class of DC vaccines will be included in site training. Some volume of Severe Adverse Events can be anticipated in a population of advanced CRC patients. Discrimination of events related to vaccine against a background of underlying disease and prior chemo or and/or radiotherapy will be necessary.
 
The CRO’s pharmacovigilance scientists will prepare a Safety Management Plan to specifically outline the procedures to be followed and will train the site personnel to obtain, collect, verify, transmit and coordinate a timely and efficient manner.
 
In addition to reviewing assignment of causality, a DSMB may assist in the (proposed) interim assessment for efficacy and its constitution should be considered.
 
 
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Regulatory
 
DanDrit will seek scientific advice from EMEA (ATMP) and will request a pre-Phase II meeting with the FDA. The CRO Regulatory Affairs group will provide preparation and assistance for the Scientific Advice process in EMEA including the following activities:
 
 
Regulatory review of pertinent data
 
 
Discussions/kick off meeting with DanDrit contact(s), for background, pertinent issues, proposed questions, strategic discussion etc.
 
 
Prepare a briefing package for Scientific Advice includes QC (one review round with DanDrit) using the existing information in the Investigational Medicinal Product Dossier(IMPD)/Investigator Brochure(IB) as the basis for the package
 
 
Set up and attend meeting with EU regulatory agency and conduct all associated administrative tasks (letters, post meeting minutes, etc.)
 
While the IIb trial will commence as soon as practicable and will run over a three year period, DanDrit also has the option to evolve the Phase IIb to a Phase III trial through the use of an adaptive design. Regulatory authorities in the United States and Europe have published guidance documents on the use and implementation of adaptive design trials. These documents include descriptions of adaptive trials and a requirement for prospectively written standard operating procedures and working processes for executing adaptive trials, as well as a recommendation that sponsor companies engage with CROs that have the necessary experience in running such trials.  Ordinarily a drug requires two Phase III trials before it can apply for FDA approval. Consequently the first patient for Phase IIb could be considered commencement of ‘pivotal’ trials for MCV. Also, DanDrit intends to move to a pivotal trial in China with a Chinese partner. Currently, the China Food and Drug Administration offers a low-cost clinical development pathway for cancer drugs developed, manufactured and commercialized in China. A separate local CRO will be recruited for this Chinese trial. To date, DanDrit has not filed an investigational new drug (IND) application with the FDA in relation to the proposed trial but plans to file an IND application by the end of 2014 and has set up a pre-IND meeting with the FDA later this year.
 
Our Competitive Strengths
 
We believe our following strengths position us to increase our revenue and profitability:
 
 
Cutting Edge Technology. Immunotherapy is one of the waves of the future in cancer treatment.
 
 
Colorectal Market Potential. Colorectal cancer is a large market with a well identified unmet medical need for safe maintenance therapy. The clinical data for MCV to date gives the potential for the vaccine to eventually become the standard of care for maintenance therapy. MCV has the potential to alter the treatment paradigm by prolonging periods of remission after response to chemotherapy. If MCV works as expected in colorectal cancer, we believe it would likely prove beneficial in other tumors that over-express MAGE-A including lung, breast and esophageal cancer.
 
 
Regulatory Precedent. Dendreon with Provenge™, its prostate cancer vaccine, pioneered the regulatory pathway for MCV. Dendreon worked with the FDA to develop the protocols allowing a cellular therapy such as MCV to be approved for clinical use. DanDrit could be the next generation of dendritic cell vaccine with several improvements over its competition: stimulate a cellular immune response rather than just an antibody response, no need for leukapheresis to produce the vaccine, intradermal administration, convenience of an allogeneic vaccine, polytopic approach but with a focus on the MAGE-A antigen family and reliable manufacturing.
 
 
Successful Use in Singapore. For the last five years, DanDrit and the Singapore National Cancer Center have provided MCV to colorectal cancer patients within an on-going compassionate use program in Singapore. Based on that experience, DanDrit is building a potential collaboration with a Chinese oncology pharma partner that may speed up large scale commercialization of MCV.
 
 
Strong IP Protection. The technology is patented with a long patent life. DanDrit owns 100% of the technology, without intellectual property issues.
 
Our Strategy
 
Our strategy is focused on conducting a proof-of-concept clinical trial in advanced colorectal cancer that may trigger partnership deal that should bring a significant return on investment (based on analysis of past acquisitions of peer cancer vaccine companies).
 
DanDrit intends to conduct a randomized multicenter clinical trial to determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease after surgical resection of metastasis and chemotherapy. The same need for a safe effective maintenance therapy exists for stage III colorectal cancer patients with no evidence of disease after surgical resection.
 
 
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This blinded comparative trial is planned to be completed within three years. DanDrit’s management is confident that upcoming clinical data will be the catalyst to unlock commercial revenues for DanDrit through either acquisition by pharmaceutical partner or licensing deals that would yield upfront and milestone payments as well as royalties.
 
We are also considering a registration trial to support potential approval of MCV in China. This trial would be conducted under China Food and Drug Administration regulations with a Chinese oncology pharmaceutical partner, such as the TASLY Group or 3S Bio. Contacts with 3S Bio and the TASLY Group have already been initiated. China has recently put in place a drug approval system that includes a low-cost first clinical approval pathway especially for Chinese biotechnology companies. The approval for local biotechnology players is advantageous, since costs for a pivotal clinical trial in China are estimated at one tenth of EU or U.S. costs. Therefore, we plan to collaborate with a Chinese company such as the TASLY Group to develop, manufacture and sell MCV in China. Several factors are also making a partnership with a Chinese pharmaceutical company attractive:
 
 
For registration, the clinical trial can only be performed in sites approved by the China Food and Drug Administration. By November 2010, there were 112 oncology sites in Mainland China.
 
 
Screening for MAGE-A could be attractive to the China Food and Drug Administration, but tumor samples could not be shipped outside of China for genomic testing. Therefore a partner who can perform MAGE-A screening in China is valuable.
 
In addition, the China Food and Drug Administration relies more than other agencies on risk benefit assessment. Risk benefit assessment in China remains the “heart” of determining the value of products and is a more favorable assessment approach to MCV as the vaccine is, thus far, well tolerated with what DanDrit believes to be a strong safety profile (due to dendritic cell technology).
 
Furthermore, due to high unmet medical need, the approval for cancer drugs is also more favorable than in other regions of the world. Because cancer is the first cause of mortality in China, the approval process for oncology drugs benefits from easier rules than those that govern drugs targeting other diseases. The State Food and Drug Administration (the predecessor of China Food and Drug Administration) granted 114 CTA approvals for oncology global/regional trials from 2005 to 2010. Generally, in order to approve a cancer drug in China:
 
 
Usually only one pivotal study is required
 
 
With only 100 to 800 patients (most likely 300 patients)
 
 
An open-label study design is accepted (without placebo control)
 
 
The statistical consideration are also attractive as relatively low statistical significance (P value 0.03~0.05) is required
 
 
Overall additional flexibility exists for oncology drugs, driven by the benefit/risk ratio
 
Furthermore, a special review and approval procedure applies to oncology drugs. The review and approval procedure could shorten the review time and can enhance communication with the China Food and Drug Administration. By the end of 2010, 28 drugs obtained approval, and more than half were oncology drugs (ten chemical drugs, and five biologics).
 
We believe that it is important to take advantage of this development opportunity quickly as the paradigm for oncology drug development is changing rapidly in China:
 
 
There is an unprecedented number of anti-cancer therapies in development and the standard of care changes quickly
 
 
The complexity of information concerning tumor genetics and signaling pathways is growing and will bring greater opportunities for personalized medicine
 
Industry
 
Cancer deaths remain constant, partly because people are living longer. DanDrit’s lead products for NSCLC and CRC address about 40% of all cancer deaths. Other important cancers include Breast (8% of deaths), Prostate (6% of deaths) and Pancreas (6% of deaths). Together these top 5 cancers are responsible for 60% of all cancer deaths.
 
 
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Cancers Diagnosed (deaths in parentheses) each year
 
Region
Population
1000,000s
All Cancer
1000s
NSCLC
1000s
CRC
1000s
Breast
1000s
Prostate
1000s
Pancreas
1000s
USA
300
1400 (560)
190 (125)
150 (50)
185 (40)
185 (30)
37 (30)
EU
500
2300 (900)
315 (205)
250 (85)
305 (67)
305 (50)
60 (50)
Combined
800
3700 (1300)
505 (330)
400 (135)
490 (107)
490 (80)
97 (80)
 
With the 12,667,500 estimated number of new cancer cases in 2008, cancer remains a large market opportunity. Cancer is still the main cause of death in developed countries – accounting for ~33% of death and remains an area of huge unmet medical need. The cancer market has a high growth potential for the coming years with an expected 7% annual growth rate for the years 2011- 2018. The American Cancer Society figured out 1,638,910 new cancer cases in the US for 2012 with 577,190 associated deaths.
 
In Europe the number of new cancer cases for 2012 was estimated at 3.45 million with a 1.75 million deaths. The cancer market is the fastest growing pharmaceutical market with $83 billion expected growth of the cancer drug market by 2020.
 
The per-treatment price of chemotherapy for CRC is approximately $30,000. We expect that, if our vaccine is approved for use in CRC patients, the cost per-treatment will be approximately equal to the per-treatment cost of chemotherapy.
 
Due to its safety profile, MCV should fit easily into the treatment paradigm of most cancers. The initial label of adjuvant therapy for stage IV colorectal cancer with no evidence of disease after surgical resection of metastases could be a door opener for the larger colorectal cancer market. DanDrit’s pharmaceutical partner should be able to grow the label to the larger adjuvant for stage III colorectal cancer market.
 
Colorectal Cancer
 
The figure below presents the market opportunity for MCV in advanced colorectal treatment. The global colorectal cancer market peak opportunity for MCV can be valued at US$4.6 billion using quite conservative assumptions.
 
(LOGO)
 
Despite numerous therapeutic advances, colorectal cancer continues to be associated with one of the worst survival rates of all cancers. Metastatic liver disease is found in 10% to 25% of patients having surgery for primary colorectal cancer instead of liver metastasis are detected in 40-50% of patients with diagnosed colon cancer . Then, standard of care “treatment” for colorectal cancer patients after resection surgery and chemotherapy is only observation. When surgical resections of liver metastases are possible, as in 20% of the affected patients, five years survival may approach 35%. According to the most recent papers, the median PFS in patients receiving combined surgery and chemotherapy with No Evidence of Disease is 24-26 months. The same need for a safe effective maintenance therapy exists for stage III colorectal cancer patients with no evidence of disease after surgical resection and chemotherapy.
 
 
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We believe that it is of great importance for colorectal cancer patients receiving surgery alone or surgery combined with peri- or post-operative chemotherapy, that new and more effective therapies are developed and offered in the post-treatment period. The aim of the proposed trial is to study whether our lead vaccine can increase the progression-free survival for these patients.
 
Licensing Potential and Cooperation Agreements
 
The following discussion represents opportunities that we believe can expand the use of our technology.
 
Alliance with Chinese Company
 
In addition of the size of their national market, Chinese biotech firms currently benefit from a low cost first clinical development path. The Chinese approval process is favorable for local biotechnology companies. With a Chinese partner, we plan to conduct a Phase III trial in China for lower costs than in the U.S. and at a faster pace. A successful Phase III trial could result in large scale commercialization in China and Southeast Asia.
 
Furthermore, the domestic market in China for cancer therapies is expected to grow due to a large aging population, expanded insurance coverage, higher government healthcare spending, rising disposable incomes and the high incidence of cancer among the population. In spite of recent price cuts, we believe that the market for cancer therapies in China represents a long-term opportunity based on the factors set forth above. In 2010, oncology agents (17.1%) ranked second in sales, at 17.1%, only after anti-infective agents (23.1%) and before cardiovascular drugs (13.4%). This market segment is expected to continue to grow at a CAGR of over 20% from 2009 to 2014.
 
Alliance Strategy
 
In addition to its lead compound MCV, DanDrit has built a pipeline of dendritic cell based cancer therapies, currently addressing 40% of all cancer-related deaths. MCV can be indicated to cancers over-expressing MAGE-A.  Cancers over-expressing MAGE-A include among others, lung cancer, colorectal cancer, breast cancer, and esophageal cancers.   The 2010 CDC cancer incidence and mortality statistics report listed 575,000 deaths by cancer in the US in 2010.  In the same 2010 CDC report, mortality of lung cancer (160,000 deaths), colorectal cancer (52,000 deaths), Breast cancer (41,000 deaths) and melanoma (9,500 deaths) summed up to 262,500 deaths. DanDrit intends to work with strategic partners to strengthen the in-house pipeline.
 
We control key technologies with relevance outside our core business area and these we may out-license or co-develop with suitable partners.
 
MyTomorrows
 
In December 2013, DanDrit entered an agreement with MyTomorrows (“MT”), a Dutch company, regarding a Patient Name Use Program (PNU) for MCV. This program will allow DanDrit to sell MCV at $ 20,600 for one year of treatment (10 vaccines) to cancer patients through MT. MT offers a worldwide online platform providing access to non-registered medicines for patients with life threatening diseases.
 
MT is a turnkey solution and will be in charge of regulatory, recruitment, logistics, and pharmacovigilance. DanDrit’s potential liabilities are limited to quality control of cGMP manufacturing of MCV. DanDrit expects several benefits from this agreement. First, in 2014, DanDrit anticipates short term revenue generation as MT will transfer $20,600 as soon as a patient orders MCV. DanDrit also anticipates that this program may contribute to lowering the cost of manufacturing of the clinical lot through economy of scale. This program may also generate real life data for MCV.
 
Manufacturing
 
In 2011 and 2012, DanDrit has out-sourced the GMP manufacturing of its lysate. We believe that proving that our technology transfer was possible was a key step in finding and working with a future pharmaceuticals partner. DanDrit evaluated several possible EU-based contract manufacturing organizations (CMOs) and selected PX Therapeutics SA, a CMO based in Grenoble, France. The collaboration with PX Therapeutics SA in France demonstrated that GMP production of lysate could not only be transferred but that the production could be scaled up. We consider that the potential economy of scale that can be expected in the cost of lysate production could become a competitive advantage versus other cancer vaccine companies using recombinant production of cancer-specific antigens (i.e. Mage-A3 from GSK). Also, the collaboration with the French CMO is based on a pure fee-for-services basis and can be discontinued at any time without notice.
 
In addition, DanDrit will spend a small part of the net proceeds on improving the manufacturing of the MCV vaccine. DanDrit intends to establish a closed fully automatized manufacturing process. We learned from the Dendreon’s experience that an efficient manufacturing process should be in place before approval for commercialization. Cost saving should be expected from a fully automatized vaccine production. We also assume that a fully efficient manufacturing process may increase the value of a deal with a pharmaceutical partner.
 
Cell Banking
 
The melanoma cell lines used by DanDrit in the production of our lysate (MCL) are stored at ultra-low temperature in liquid nitrogen at Symbion Science Park, Copenhagen, Denmark. Both master- and working cell banks are stored this way and the contents of the cell banks (both master and working) are recorded in log books. Nitrogen levels are maintained by the staff of DanDrit Biotech at least once a week and any activity in regards to storage (shipment of cells, nitrogen levels etc.) are documented in the appropriate log book.
 
Furthermore, for security reasons, samples of the master cell banks are also stored at specialized cell storage facilities in England. In addition, samples of one working cell bank from the DDM1.7 cell line are stored at PX Therapeutics in France for production purposes.
 
 
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Sales, Marketing and Distribution
 
The business model of DanDrit is to focus on early development of dendritic cell based vaccine. We have significantly reduced the fixed costs linked with our operation and do not intend to build an expensive marketing, sales and distribution organization. We will rely on pharmaceutical partners with demonstrated relevant experience in commercialization of cancer products to market, sell and distribute MCV. Therefore, we have already identified and establish a communication line with several potential future pharmaceutical partners. At completion of the comparative clinical trial, we plan to enter into a collaboration agreement with a pharmaceutical partner regarding the regulatory approval, marketing, sales and distribution of MCV.
 
Intellectual Property
 
As a company primarily focused on pharmaceutical research, we expect that our most valuable assets are our intellectual property. This includes U.S. and foreign patents, patent applications, common-law trademarks, trade secrets and know-how. We are pursuing an aggressive intellectual property strategy.
 
DanDrit intends to aggressively defend its patents through legal process if necessary. Where appropriate, DanDrit may in-license intellectual property that may add to the strength and defense of our core business. DanDrit’s intellectual property comprises patents, trademarks, copyright and secret know-how.
 
DanDrit’s core business is cancer therapy. Where DanDrit’s patents and secret know-how are applicable to non-core business areas we will consider out-licensing for relevant non-core applications.
 
DanDrit filed its first Patent Cooperation Treaty (PCT) patent application on November 29, 2002 with priority claimed from 2001 with the Danish application, shortly after our formation.
 
DanDrit may continue to patent its innovations, such as novel dendritic cell production systems or dendritic cell quality control. To support potential income streams DanDrit may patent non-core applications of its dendritic cell technologies so as to secure future revenue streams from out-licensing activity.
 
Patents
 
 
Pharmaceutical composition for inducing an immune response in a human or animal (2001 Denmark (DK), 2002 PCT)
This patent was first filed in November 2002. The patent covers and describes the usage of an allogeneic melanoma cell lysate (MCL)-pulsed autologous DC vaccine expressing at least one of six MAGE-A antigens overexpressed by the cell line being the source of the lysate. The patent covers the antigen composition used in the generation of MelCancerVac and the claims for producing MelCancerVac. In this patent the antigens are specified to mainly belong to the cancer testis family. The family of antigens is expressed in a wide variety of cancer forms. In the International Preliminary Report on Patentability (IPRP) all claims were determined to be novel and inventive. The patent expiry date is November 29, 2022. This patent has been granted in: Europe, the USA, China, Australia, Singapore, Japan, Russia, Hong Kong. This patent is pending in: Israel and Norway. This patent is owned by the Company and was not licensed from third parties. The patent protection means that the cancer specific antigen-rich lysate obtained from our cell line cannot be commercially made, used, distributed or sold without DanDrit's consent . These patent rights can be usually enforced in a court, which, in most systems, holds the authority to stop patent infringement .
 
 
Protocol for generating dendritic cells (2005 DK, 2008 PCT)
This patent covers the generation of dendritic cells based on a blood sample of 200 ml. The patent differs from other DC generating patents by the utilization of reduced temperature and a single blood sample.  DCs exposed to tumor antigens followed by treatment with T(h)1-polarizing differentiation signals have paved the way for the development of DC-based cancer vaccines. Critical parameters for generation of optimal functional clinical grade DCs are a very competitive area. DanDrit has developed a method that covers the generation of immature dendritic cells under reduced temperature settings which by further activation has been shown to give a high yield of homogeneous and fully matured DCs. This patent was filed on December 7, 2006. In the International Preliminary Report on Patentability (IPRP) a large majority of claims were found to be novel and inventive. The patent expiry date is 2032. This patent was granted in 2012 in China, Eurasia, Russia, Europe, Israel, Mexico, Malaysia, New Zealand. This patent is owned by DanDrit and was not licensed from third parties. The patent protection means that the method that DanDrit use to generate dendritic cells cannot be commercially   used, distributed or sold   without DanDrit's   consent .   These   patent   rights   can be usually enforced in a court, which, in most systems, holds the authority to stop   patent infringement .
 
 
Method for generating tolerogenic dendritic cells employing decreased temperature (2007)
DanDrit has expanded the method of development of mature dendritic cells to also include the generation of regulatory DCs. In addition to DCs used for cancer immunotherapy, DanDrit has developed an additional arm of DCs, namely regulatory/tolerogenic DCs to be used for treatment of various autoimmune diseases such as Type 1 diabetes and Multiple Sclerosis.  This patent was filed on November 13, 2008. Patent pending:  worldwide.  1 st Office Action received in Europe August 25, 2010. This patent is owned by the Company and was not licensed from third parties. The patent protection means that the method that DanDrit use to produce tolerogenic dendritic cells cannot be commercially   used, distributed or sold   without DanDrit's   consent .   These   patent   rights   can be usually enforced in a court, which, in most systems, holds the authority to stop   patent infringement .
 
 
Micro RNAs as markers of the functional state of a dendritic cell
This patent covers and demonstrates that functionally different DCs carry unique microRNA signatures.  By examining a handful of microRNA profiles one can analyze the function of DC vaccines. This is a valuable addition to other vaccine quality control measures that are currently used in studies that involve DCs.  Critical parameters for assessment of the optimal functional state of DCs and prediction of the vaccine potency of activated DCs have in the past been based on measurements of differentiation surface markers like HLA-DR, CD80, CD83, CD86, and CCR7 and the level of secreted cytokines like interleukin-12p70. However, the level of these markers does not provide a complete picture of the DC phenotype and may be insufficient for prediction of clinical outcome for DC-based therapy. We have identified additional biomarkers by investigating the differential expression of microRNAs (miRNAs) in mature DCs relative to immature DCs. The patent was filed on November 14, 2008.  In the International Preliminary Report on Patentability, a large majority of claims were found to be novel and inventive.  Patent pending: Europe and USA. 1 st Office Action received in Europe on August 18, 2010. Follow up action on election restriction received in the USA on October 21, 2010. This patent is owned by the Company and was not licensed from third parties. The patent protection means that the method that DanDrit use to test and releaseits dendritic cells cannot be commercially   used, distributed or sold   without DanDrit's   consent.   These   patent   rights   can be usually enforced in a court, which, in most systems, holds the authority to stop   patent infringement .
 
All of the above patents are protected by relevant international extensions.
 
 
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Trademarks
 
A policy of product trademarking and branding has been adopted by DanDrit. Trademarks have been obtained for
MelCancerVac™
MelVaxin™
DanDrit™
 
Commercial Secrets
 
In addition to intellectual property protected by patents and copyright, DanDrit has commercial secrets relating to its products, production processes, know-how and future strategies. Where it is expedient to share such secret information this shall be done under the legal protection of a confidentiality (or secrecy) agreement. Such agreements shall bind the signing parties, and especially the recipient of DanDrit’s secret information, unless:
 
 
at the time of disclosure was already known to the recipient as evidenced by written record pre-dating such disclosure;
 
 
at the time of disclosure is generally available to the public or subsequently becomes available to the public other than by an act of omission on the part of the recipient; or
 
 
shall be made available to the recipient (on a non-confidential basis) by a third party having the lawful right to do so.
 
Government Regulation
 
Orphan Drug status for MCV
 
The United States and Europe may designate drugs for relatively small patient populations as orphan drugs. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process, but does make the product eligible for orphan drug exclusivity, reduced filing fees and specific tax credits. Generally, if a company receives the first marketing approval for a product with an orphan drug designation in the clinical indication for which it has such designation, the product is entitled to orphan drug exclusivity. Orphan drug exclusivity means that the FDA will not approve another application to market the same drug for the same indication, except in limited circumstances, for a period of seven years in the United States. This exclusivity, however, could block the approval of our proposed product candidates if a competitor obtains marketing approval before us. We plan to apply for orphan drug status for MCV to treat stage IV CRC with NED after surgical resection and chemotherapy if we meet the eligibility criteria. However, note that, even if we obtain orphan drug exclusivity MCV, we may not be able to maintain the status. For example, if a competitive product is shown to be clinically superior to our product, any orphan drug exclusivity we have will not block the approval of such competitive product.
 
Fast Track designation for development of MCV
 
We intend to request fast Track designation for MCV. If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the drug sponsor may apply for FDA Fast Track designation for a particular indication. Marketing applications filed by sponsors of products in Fast Track development may qualify for priority review under the policies and procedures offered by the FDA, but the Fast Track designation does not assure any such qualification or ultimate marketing approval by the FDA. Receipt of Fast Track designation may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures. In addition, the FDA may withdraw any Fast Track designation at any time. We may seek Fast Track designation for our vaccine product candidates or any other product candidates, but the FDA may not grant this status to any of our proposed product candidates.
 
Approval for Commercialization
 
MCV and any future product candidates that we will be developing will require approval of the FDA before they can be marketed in the U.S. Although our focus at this time is primarily on the U.S. market, in the future similar approvals will need to be obtained from foreign regulatory agencies before we can market our current and proposed product candidates in other countries.
 
The process for filing and obtaining FDA approval to market therapeutic products is both time-consuming and costly, with no certainty of a successful outcome. The historical failure rate for companies seeking to obtain FDA approval of therapeutic products is high and, with the exception of Dendreon Corp.’s dendritic cell vaccine for the treatment of prostate cancer, no cancer stem cell or dendritic cell-based cancer vaccine has to date been approved by the FDA. This process includes conducting extensive pre-clinical research and clinical testing, which may take longer and cost more than we initially anticipate due to numerous factors, including without limitation, difficulty in securing appropriate centers to conduct trials, difficulty in enrolling patients in conformity with required protocols in a timely manner, unexpected adverse reactions by patients in the trials to our proposed product candidates and changes in the FDA’s requirements for our testing during the course of that testing.
 
 
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The time required to obtain FDA and other approvals is unpredictable but often can exceed five years following the commencement of clinical trials, depending upon the complexity of the product and other factors. Any analysis we perform of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. We may also encounter unexpected delays or increased costs due to a variety of reasons, including new government regulations from future legislation or administrative actions or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review.
 
Any delay or failure in our clinical trial program and in obtaining required approvals would have a material adverse effect on our ability to generate revenues from the particular product. Furthermore, any regulatory approval to market a product may be subject to limitations on the indicated uses for which we may market the product. These limitations may limit the size of the market for the product.
 
Environmental matters
 
We are subject to a broad range of federal, state, local and foreign environmental laws and regulations which govern, among other things, air emissions, wastewater discharges and the handling, storage disposal and release of wastes and hazardous substances. It is our policy to comply with applicable environmental requirements at all of our facilities. We are also subject to laws, such as the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), that may impose liability retroactively and without fault for releases or threatened releases of hazardous substances at on-site or off-site locations. We are subject to similar requirements in Denmark and other European countries.
 
Research and Development
 
We currently have one full-time employee working on maintaining our research and development. For the years ended December 31, 2013 and 2012 and the three months ended March 31, 2014 and 2013 we did not spend any money for research and development.
 
Competition
 
Several companies are trying to capitalize on the growing interest for immunotherapy in the treatment of cancer.
 
Two Directly Competing Companies
 
The figure below outlines the competitive landscape for MCV. Note that colorectal cancer, while providing a large market opportunity (it is the second most killer cancer after lung cancer), offers a more robust competitive landscape than other cancers. In the colorectal cancer space DanDrit faces two main competitors:
 
 
Bavarian Nordic (“BN”): CV-301, BN’s second compound, is in clinical development with advanced colorectal cancer patients
 
 
Immatics: its second compound is in clinical development in early stage colorectal cancer patients
 
 
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Bavarian Nordic ( BAVA.CO ) and CV-301
 
 
With its lead vaccine Prostvac™ from Therion Biologics and NCI, Bavarian Nordic (BN) also acquired Panvac™ vaccine. This PANVAC™ vaccine failed to prove efficacy in patients with advanced pancreatic cancer who failed gemcitabine. BN is currently focusing its efforts on Prostvac™ for treatment of prostate cancer, currently in Phase III. However, in 2012, BN re-initiated the clinical development of Panvac™ (re-named CV-301).
 
CV-301 is a cancer immunotherapy product candidate incorporating two antigens, CEA and MUC-1, in a viral vector. CV-301 is an off-the-shelf immunotherapy product candidate for the treatment of multiple cancers. It originates from the same poxvirus technology platform as PROSTVAC™. Both PROSTVAC™ and CV-301 are prime-boost vaccines sequentially combining two different poxviruses (vaccinia and fowlpox).
 
CV-301 had been studied in different cancers in clinical trials led by the National Cancer Institute. One study was a randomized Phase II trial in patients with metastatic breast cancer. The study enrolled 48 patients to receive CV-301 in combination with docetaxel or docetaxel alone. The primary study endpoint was PFS, while secondary endpoints included overall survival and immunologic correlative studies. A preliminary analysis of the study showed PFS of 6.6 months in the CV-301 group versus 3.8 months among those receiving docetaxel alone. Final study data are pending results from five patients that remained on study at the time of the analysis. Because of its size the study was not designed to reach statistical significance.
 
More directly relevant to DanDrit was the colorectal Phase II study of CV-301 conducted by Morse at Duke University. The objective of the trial was to determine whether one of two vaccines based on dendritic cells   and poxvectors encoding CEA and MUC1 would lengthen survival in patients with resected metastases of colorectal cancer. The studied patients were, disease-free after CRC metastasectomy and perioperative chemotherapy (n = 74). They were randomized to injections of autologous DCs modified with PANVAC (DC/PANVAC) or PANVAC with per injection GM-CSF (granulocyte-macrophage colony-stimulating factor). Endpoints were recurrence-free survival overall survival, and rate of CEA-specific immune responses. Clinical outcome was compared with that of an unvaccinated, contemporary group of patients who had undergone CRC metastasectomy, received similar perioperative therapy, and would have otherwise been eligible for the study.
 
The recurrence-free survival at two years was similar (47% and 55% for DC/PANVAC and PANVAC/GM-CSF, respectively). At a median follow-up of 35.7 months, there were two of 37 deaths in the DC/PANVAC arm and five of 37 deaths in the PANVAC/GM-CSF arm. The rate and magnitude of T-cell responses against CEA was statistically similar between study arms.
 
 
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As a group, vaccinated patients had superior survival compared with the contemporary unvaccinated group. Both DC and pox-vector vaccines had similar activity. Survival was longer for vaccinated patients than for a contemporary unvaccinated group.
 
In 2013, Bavarian Nordic expanded its license with the National Cancer Institute (NCI) for CV-301 to include colon cancer. The original collaboration agreement executed in 2011, involved multiple cancers including breast, lung, ovarian and other cancers.
 
Immatics Biotechnologies
 
 
The second direct competitor is Immatics (previously known as Biomira), a German biotech company who currently focuses its clinical efforts on a Phase III in Renal Cell Carinoma for its lead vaccine. However, Immatic also develops a vaccine in colorectal cancer (enter Phase I in 2012). Note that Immatic’s technology is peptide-based rather than a dendritic cell approach and that Immatics is targeting its vaccine toward early stage colorectal cancer rather than resected advanced colorectal cancer like Bavarian and DanDrit. This private German company only discovers and develops tumor-associated peptides for the immunotherapy of cancer. Immatics reports that they raised €53.8million in a Series C financing round to finance a Phase III pivotal trial of their lead product IMA901 which in data reported in June at ASCO demonstrated the potential to confer an overall survival benefit in patients with advanced renal cell carcinoma.
 
Other cancer vaccine companies
 
The global cancer vaccines market was worth $3,483.0m in 2010, after increasing at a compound annual growth rate (CAGR) of 63.7% during 2006--2010. During 2010--2018, the market is expected to record a CAGR of 12.7%, to reach $9,077.9m by 2018.
 
The following companies (by alphabetical order) are part of the competitive landscape but not direct competitors. They are presented in this plan to illustrate the growing interest in cancer vaccines.
 
 
Agenus (www.agenus.com)
 
Argos Therapeutics ( www.argostherapeutics.com )
 
BioVest ( www.biovest.com )
 
Celldex ( www.celldextherapeutics.com )
 
ImmunoCellular Therapeutics Ltd (www.imuc.com)
 
North West Biotherapeutics ( www.nwbio.com )
 
Prima Biomed ( www.primabiomed.com.au )
 
TVax Biomedical ( www.tvax.com )
 
Employees
 
As of May 15, 2014, we had three employees, two of which are full time employees.
 
Properties
 
Our corporate headquarters are located in Symbion Science Park, Fruebjergvej 3, 2100 Copenhagen, Denmark and our U.S. mailing address is P.O. Box 189, Randolph, VT 05060 . We lease approximately 1,108 square feet at our Symbion location which is used for work and storage of cells and biological material in freezers. The lease is for a term of three years until March 2016. We also currently occupy approximately 1,620 square feet at Bredgade 75, 3 rd Floor, 1263 Copenhagen K, Denmark, which is used for office space. The Company’s lease can be terminated by either the Company or the landlord with a three months’ notice of termination.
 
Legal Proceedings
 
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to in any legal proceeding that we believe would have a material adverse effect on our business, financial condition or operating results.
 
 
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Set forth below is information concerning our directors, senior executive officers and other key employees.
 
On the effective date of the Share Exchange the following individuals were named to the Board and executive management of the Company.
 
Name
 
Age
 
Titles
Dr. Eric Leire
 
56
 
Chief Executive Officer, President and Director (Principal Executive Officer)
Robert E. Wolfe
 
51
 
Chief Financial Officer, Treasurer, Secretary and Director (Principal Financial and Accounting Officer)
NE Nielsen
 
65
 
Chairman of the Board
Dr. Jacob Rosenberg
 
49
 
Director
Aldo Michael Noes Petersen
 
52
 
Director
 
Executive officers are appointed by and serve at the pleasure of the Board of Directors. A brief biography of each director and executive officer follows:
 
Dr. Eric Patterson Leire, MD, MBA. Dr. Eric Leire has served as the Chief Executive Officer, President and a director of DanDrit since April 2011. Dr. Leire also serves as Chief Executive Officer of DKTI A/S, a listed Danish investment company since September 2012. Prior to these roles Dr. Leire was a partner at BioFund Venture Capital, a Finnish biotech venture fund, from August 2006 through September 2010 and a partner at Medwell Capital Corp., a Canadian venture fund, from April 2010 through May 2011. Dr. Leire has worked globally for many international pharmaceutical organizations, including Schering-Plough, Pfizer, Inc., Boots Pharmaceuticals Company PLC, Harvard AIDS Institute and bioStrategies Group. Dr. Leire also served as the CEO of US biotech companies APT Therapeutics and Paringenix and currently serves on the board of directors of Novicol Canada, DKTI A/S and DanDrit Corp. Ltd. Dr. Leire received his medical degree from the University of Medicine of Grenoble in 1980 and his MBA from ISA-HEC and the Kellogg School of Management at Northwestern University in 1991. The Board believes that Dr. Leire’s significant global experience in the pharmaceutical and biotechnology industries will be a significant asset to DanDrit as it carries out its business plan and for those reasons determined that he should serve on the Board of Directors.
 
Robert E. Wolfe. Mr. Wolfe has served as the Chief Financial Officer, Treasurer and Secretary since January 1, 2014. Mr. Wolfe also serves as Chairman and CEO of IProcess Manager Inc. from April 2010, and as a director of Iso-Ware A/S from February 2006. In addition, Mr. Wolfe has served as Chairman, CEO and CFO of Advanced Oxygen Technologies, Inc., a publicly traded company, since December 1997, which owns Anton Nielsen Vojens ApS, a Danish commercial real estate company. Mr. Wolfe has served as President, CEO and director of Crossfield, Inc., Crossfield Investments, LLC, Drumbeg Ltd, Baldwin Construction Inc. and Ludlow Leasing, Inc. from May 1989 to the present. The Board believes that Mr. Wolfe’s experience with U.S. public companies and Danish entities qualifies Mr. Wolfe to serve as a director of the Company.
 
NE Nielsen. Mr. Nielsen is a lawyer and partner at Lett Law Firm in Denmark. His practice areas are capital market conditions, securities law, boards of directors, managerial, finance and acquisitions. He currently serves as the chairman and a board member of numerous companies, including as Chairman of DanDrit Biotech A/S since June 2013, director of the board of Pele Holding A/S since May 1982, director of the board of Charles Christensen A/S since 1983 and as Chairman since May 2010, Chairman of Charles Gulve Engros A/S since June 2002, Chairman of InterMail A/S since January 1995, Chairman of Gammelrand Holding A/S since December 2009, Chairman of Gammelrand Skærvefabrik A/S since May 1995, director of the board of Ejendomsaktieselskabet Matr. 43 Ei Avedøre since August 2000 and as Chairman since February 2009, Chairman of Gammelrand Beton A/S since April 2001, director of the board of P.O.A. Ejendomme A/S since July 1994 and Chairman since April 2007, and Chairman of Konveloutfabrikken Danmakrs Fond and Brøndbyerns I.F. Fodbold A/S since June 2013. Within the last five years Mr. Nielsen has served as a board member or chairman in the following companies: Amagerbanken Aktieselskab under konkurs from December 1999 to November 2010, Ambu A/S from February 1999 to December 2012, Carepoint Haslev/Ringsted under konkurs from June 2009 to August 2009, Cimber Sterling A/S under konkurs from September 2000 to September 2010, Cimber Sterling Group A/S under konkurs from September 2005 to September 2010, Danica-Elektronik ApS from March 1993 to September 2012, GPV Industri A/S under konkurs from December 1986 to June 2011, GPV International A/S from April 2009 to June 2009, Henrik Olsen Automobiler A/S from April 2010 to May 2010, Kirk & Thorsen Invest A/S from February 2013 to April 2013, Olsen Biler Administraton A/S from April 2007 to May 2010, Olsen Biler Ringsted-Haslev A/S from April 2007 to May 2010, Satair A/S from November 1994 to October 2011, Satair Service A/S from May 1995 to May 2011, Torm A/S from September 2000 to January 2013 and Weibel Scientific A/S from January 1986 to September 2012. Mr. Nielsen’s significant global experience as a member of the board of directors or chairman of various entities lead the Board to believe that Mr. Nielsen is qualified to serve as a director of the Company.
 
 
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Dr. Jacob Rosenberg. Dr. Jacob Rosenberg currently serves as a director of DanDrit Denmark, a position he has held since 2012. Prior to this role, Dr. Rosenberg served as Chairman of DanDrit Denmark’s board from 2003 to 2009 and Chairman of T-cellic A/S from 2007 to 2008. Dr. Rosenberg is also currently Chairman of the board of DKTI A/S. Dr. Rosenberg was appointed as a Professor of Surgery at the University of Copenhagen in 2003, where he also received his M.D. in 1991. He also has a D.Sc. from the University of Copenhagen. During the years 1997-2003 he received 6 honorary research prizes. Professor Rosenberg has overseen DanDrit’s Copenhagen based clinical trials. The Board believes that Dr. Rosenberg is one of the leading experts in research in cancer and dendritic cells and, as a result, that he has a thorough understanding of our company and our technology. Because of his research background, the Board believes that Dr. Rosenberg is uniquely qualified to serve as a director.
 
Aldo Petersen . Aldo Petersen has been chairman of LiqTech International, Inc. since August 2011. He has been the Chief Executive Officer of APE Invest A/S, a private Danish investment company, since 2006 when he sold Telepartner A/S, a formerly NASDAQ-listed company that he founded in 1986. Prior to Telepartner, he started and sold one of Denmark’s first hedge funds, Dansk Fromue Invest. Mr. Petersen was a major investor in Greentech Energy Systems A/S, a renewable energy company that builds wind farms in Denmark, Germany, Poland and Italy. He is a private investor in wind farms in Germany and France, and was also a major investor in Football Club Copenhagen (listed on the Copenhagen Stock Exchange). Mr. Petersen has a B.A. degree in Economics from Copenhagen Business School. The Board believes that Mr. Petersen’s experience as a businessman and his knowledge of the capital markets qualifies him to be a director.
 
Our certificate of incorporation provides for the annual election of directors. At each annual meeting of stockholders, our directors will be elected to serve until their respective successors have been elected and qualified.
 
Family Relationships
 
None of the directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
 
Involvement in Certain Legal Proceedings
 
To the best of our knowledge, none of our directors or executive officers has, during the past 10 years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.
 
Director Independence
 
Our Board of Directors has determined that Messrs. Nielsen, Rosenberg and Petersen are independent as that term is defined in the listing standards of the NYSE MKT. In making these determinations, our Board of Directors has concluded that none of our independent directors has an employment, business, family or other relationship which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our other directors, Dr. Leire and Mr. Wolfe, are not considered independent under these rules because each serves as an executive officer.
 
Insider Participation Concerning Executive Compensation
 
DanDrit’s Board of Directors has historically made all determinations regarding executive officer compensation, including compensation decisions during the years ended December 31, 2012 and December 31, 2013 .
 
Nominating Committee
 
We have not adopted any procedures by which security holders may recommend nominees to our Board of Directors.
 
 
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Audit and Compensation Committee
 
The Board of Directors acts as the audit committee. The Company does not have a qualified financial expert at this time because it has inadequate financial resources at this time to hire such a qualified candidate. The Company intends to continue to search for a qualified individual for hire.
 
Code of Ethics and Business Conduct
 
On July 12, 2012, the Company adopted a formal code of ethics statement for senior officers and directors (the “Code of Ethics”) that is designed to deter wrongdoing and to promote ethical conduct and full, fair, accurate, timely and understandable reports that the Company files or submits to the SEC and others. A form of the Code of Ethics was filed as Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed with the SEC on July 17, 2012 and is incorporated herein by reference. Requests for copies of the Code of Ethics should be sent in writing to DanDrit Biotech USA, Inc., PO Box 189, Randolph, VT 05060.
 
 
Summary Compensation Table
 
The following table sets forth certain information with respect to compensation for the years ended December 31, 2013 and 2012 earned by or paid to our chief executive officer and our one other executive officer in 2013 whose total compensation exceeded $100,000 (the “named executive officers”).
 
Summary Compensation Table
 
Name and
Principal
Position
 
Year
 
Salary
($)
 
Bonus
($)
 
Stock
Awards
($)
 
Option
Awards
($)
 
Nonequity
Incentive Plan Compensation
  Nonqualified Deferred Compensation Earnings   Other  
Total ($)
(1)
 
Dr. Eric Leire,
 
2013
   
308,471
   
-
   
-
   
-
   
-
   
-
   
-
   
308,471
 
CEO and Director
 
2012
   
171,938
   
-
   
-
   
-
   
-
   
-
   
-
   
171,938
 
                                                       
Dina Rosenberg Asmussen,
 
2013
   
165,746
                                       
165,746
 
Former CFO
 
2012
   
162,357
   
-
   
-
   
-
   
-
   
-
   
-
   
162,357
 
 
(1) All values are reported on an as-converted basis from Danish Krone (DKK) to U.S. dollars ($) based on the currency exchange rate of $1.00 = DKK 5.43, as of December 31, 2013. We do not make any representation that the Danish Krone amounts could have been, or could be, converted into U.S. dollars at such rate on December 31, 2013, or at any other rate.
 
 
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Employment Arrangements
 
Agreements with Named Executive Officers
 
We have an employment agreement with Dr. Leire and a consultancy agreement with Mrs. Rosenberg.
 
Effective March 1, 2012, DanDrit Denmark entered into an Employment Agreement with Dr. Eric Leire, to serve as its Managing Director. Pursuant to the terms and conditions of the Employment Agreement, Dr. Leire will be employed by DanDrit Denmark for an indefinite term unless earlier terminated pursuant to the terms therein. The Employment Agreement provide that the Dr. Leire will receive a salary of 2,100,000 DKK ($381,125) gross per year, to be paid monthly on the last day of each month and subject to annual review and increases by our Board, as it deems appropriate.
 
In addition to his salary, Dr. Leire will be entitled to receive: (i) a company car at a value up of DKK 5,100 ($926) per month (monthly lease value) and DanDrit Denmark shall defray all expenses in connection with the running of the car; (ii) coverage of all expenses relating to Dr. Leire’s mobile phone, home computer, Internet connection as well as his home phone; (iii) coverage of all the expenses relating to Dr. Leire’s subscription to a fitness club; (iv) a bonus of up to DKK 400,000 ($72,595) per year if Dr. Leire reaches certain conditions as specified in the Employment Agreement; and (v) shall be covered by DanDrit Denmark’s pension scheme.
 
DanDrit Denmark may terminate the employment with 12 months’ notice to the end of a month. If DanDrit Denmark terminates Dr. Leire’s employment, he shall be entitled to be released from his duty to work (in Danish “fritstillet”) during the notice period. Dr. Leire may terminate the employment at 6 months’ notice to the end of a month. In case of material breach, the non-defaulting party can terminate the Employment Agreement without notice and can claim damages in accordance with the general Danish law of damages. If Dr. Leire suspends payments, or insolvency proceedings are commenced against his estate, DanDrit Denmark can terminate the employment without notice. The employment shall cease without notice to the end of the month in which Dr. Leire attains the age of 70. The Employment Agreement contains non-competition and non-solicitation clauses.
 
The foregoing description of the terms and conditions of the Employment Agreement provides only a brief summary and is qualified in its entirety by reference to the full text of the Employment Agreement filed as an exhibit to this registration statement on Form S-1.
 
Outstanding Equity Awards
 
As of December 31, 2013, there were no outstanding equity awards to our named executive officers.
 
Compensation of Directors
 
For the fiscal year ended December 31, 2013, we did not compensate our directors for their services other than to reimburse them for out-of-pocket expenses incurred in connection with their attendance at meetings of the Board of Directors. In order to attract and retain qualified independent directors, we may in the future adopt a compensation plan for non-employee directors that includes cash as well as equity-based compensation.
 
 
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The following table sets forth, as of May 1, 2014, certain information regarding the beneficial ownership of the shares in DanDrit USA, of (i) our executive officers, (ii) our directors, (iii) our executive officers and directors as a group, (iv) each person known to us who is known to be the beneficial owner of more than 5% of the shares in DanDrit USA and (v) the persons who own more than 5% of the shares of DanDrit USA as a group. In accordance with the rules of the SEC, “beneficial ownership” includes voting or investment power with respect to securities. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Unless indicated otherwise, the address for the beneficial holders is c/o DanDrit Biotech USA, Inc., P.O. Box 189, Randolph, VT 05060 .
 
               
Shares in
       
               
DanDrit
   
% of shares in
 
   
Shares in
   
% of shares in
   
Biotech
   
DanDrit
 
   
DanDrit
   
DanDrit
   
USA, Inc.
   
Biotech USA, Inc.
 
Name of Beneficial Owner
 
Biotech A/S(1)
   
Biotech A/S (1)
      (2)       (2)  
Directors/Officers:
                           
Eric Jean Marie Leire(3)
    5,748       0.14 %     8,615       0.11 %
Robert E. Wolfe
    -       -       -       -  
NE Nielsen(4)
    -       -       -       -  
Dr. Jacob Rosenberg(5)
    21,000       0.52 %     31,476       0.40 %
Aldo Petersen
    -       -       -       -  
Directors/Officers Total:
    26,748       0.66 %     40,091       0.51 %
5% Shareholders:
                               
Sune Olsen Holdings ApS(6)
    518,792       12.96 %     777,588       9.90 %
                                 
Media-Invest Danmark A/S(7)
    529,691       13.23 %     793,923       10.11 %
Bele Invest ApS(8)
    324,702       8.11 %     486,677       6.20 %
                                 
Jonas Petterson (8)
    324,702       8.11 %     486,677       6.20 %
Sune Olsen (6)
    772,262       19.29 %     1,157,500       14.74 %
Thomas Ulletved Rasmussen (7)
    529,691       13.23 %     793,923       10.11 %
DKTI A/S (9)
    370,866       9.26 %     555,869       7.08 %
NLBDIT 2010 Services, LLC (10)
    -       -       600,000       7.64 %
5% Shareholders Total :
    1,997,521       49.9 %     3,593,969       45.75 %
Total:
    2,024,269       50.57 %     3,634,060       46.26 %
 
(1)
Based on 4,003,089 shares issued as of December 31, 2013.
   
(2)
Based on 7,854,947 shares issued as of March 31, 2014, following the Share Exchange.
   
(3) The holder has an address of Hambros Alle 12, 2900 Hellerup, Denmark.
   
(4) The holder has an address of Lett Law Firm, Raadhuspladsen 4, DK-1550 Copenhagen, Denmark.
   
(5) Shares are owned by Jaro Holding ApS, a Danish entity with an address of C.F. Richs Vej 44, 2000 Frederiksberg Denmark. The voting and disposition of the shares owned by the company are controlled by Dr. Rosenberg.
 
 
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(6) Shares are owned by Sune Olsen Holding ApS, Biotech Invest ApS and Sardinian Solar Park ApS, all Danish entities with an address of Jagtvej 169 B 4, 2100 Copenhagen, Denmark. The voting and disposition of the shares owned by the companies are controlled by Mr. Olsen.
   
(7) Shares are owned by Media-Invest Danmark ApS, a Danish entity with an address of Ostergade 61 4, 1100 Copenhagen, Denmark. The voting and disposition of the shares owned by Media-Invest are controlled by Mr. Rasmussen.
   
(8)
Shares are owned by Bele Invest ApS, a Danish entity with an address of Vermehrensvej 7, 2930 Klampenborg Denmark. The voting and disposition of the shares owned by the company are controlled by Mr. Petterson.
   
(9)
DKTI A/S is a Danish public limited liability company with an address of Frederiksgade 21 1, 1265 Copenhagen, Denmark. DKTI was, until September 19, 2013, listed at the stock exchange OMX Nasdaq Copenhagen. DKTI has 189 shareholders. Dr. Eric Leire as CEO of DKTI A/S has voting and dispositive power over the shares owned by DKTI A/S.
   
(10)
NLBDIT 2010 Services, LLC has an address of c/o Sunrise Securities Corp., 600 Lexington Avenue, 23 rd   Floor, New York, NY 10022 . The voting and disposition of the shares owned by NLBDIT are controlled by Nathan Low, principal of the Placement Agent.
 
We know of no arrangements, including pledges, by or among any of the forgoing persons, the operation of which could result in a change of control of DanDrit USA.
 
 
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Summarized below are the principal terms of the agreements that govern our indebtedness and is subject to, and is qualified in its entirety by, such agreements, which are filed as exhibits to the registration statement to which this prospectus forms a part.
 
For the period January 18, 2011 (Inception) to March 31, 2013, professional fees of $38,225 were paid on behalf of the Company by Sunrise Financial Group Inc. (“SFG”). The President of SFG was the Company’s former President and sole stockholder. As of March 31, 2013, the outstanding balance of $38,235 for professional fees paid by SFG and amounts advanced to the Company are reported as loan payable - related party. These funds were advanced interest free and are unsecured. There is no written or oral agreement in effect with respect to the SFG Advances, provided, that the Company intends to attempt to reimburse the SFG Advances at the time of the closing of a business combination; however, there is no assurance that the Company will reimburse SFG.
 
On May 26, 2011, the Company issued an aggregate of 5,000,000 shares of Common Stock to NLBDIT 2010 Services, LLC (“NLBDIT Services”) for an aggregate purchase price of $25,000 pursuant to the terms and conditions set forth in that certain common stock purchase agreement (the “NLBDIT Services CSPA”). The Low Trust owns 100% of the outstanding membership interests of NLBDIT Services and may be deemed to beneficially own the shares of Common Stock held of record by NLBDIT Services. Nathan Low is the family trustee of the Low Trust and has voting and dispositive control over any securities owned of record or beneficially by the Low Trust. Therefore, Mr. Low may be deemed to beneficially own the shares of Common Stock held of record by NLBDIT Services and beneficially by the Low Trust. The Company issued these shares of Common Stock under the exemption from registration provided by Section 4(2) of the Securities Act. The NLBDIT Services CSPA was filed as an exhibit to the Company’s Registration Statement on Form 10 filed with the SEC on August 12, 2011 and incorporated herein by this reference.
 
On June 3, 2011, the Company issued a note (the “NLBDIT Enterprises Note”) in favor of NLBDIT 2010 Enterprises, LLC (“NLBDIT Enterprises”) pursuant to which the Company agreed to repay NLBDIT Enterprises the sum of any and all amounts that NLBDIT Enterprises may advance to the Company (the “Principal Amount”) on or before the date that the Company consummates a business combination with a private company or reverse takeover transaction or other transaction after which the Company would cease to be a shell company (as defined in Rule 12b-2 under the Exchange Act). NLBDIT Enterprises is wholly owned by the Low Trust. Nathan Low, a principal of our sole shareholder, is the family trustee of the Low Trust and a principal of NLBDIT Enterprises. Interest accrues on the outstanding Principal Amount of the NLBDIT Enterprises Note on the basis of a 360-day year from June 3, 2011 until paid in full at the rate of six percent (6%) per annum. The lender has agreed to forego all accrued and unpaid interest through August 20, 2012. At December 31, 2013, $1,887 of accrued interest was payable.
 
In connection with the Share Exchange, Putnam and DanDrit agreed that upon the closing of a financing of at least $12 million in gross proceeds raised by Putnam following the Share Exchange (the “Offering”), DanDrit would repay up to an aggregate of $70,000 (the “Loan Amount”) in existing Putnam indebtedness including the professional fees and the NLBDIT Enterprises Note. In the event less than $12 million in gross proceeds is raised in connection with the Offering, the Principal Amount shall be converted into a note payable upon the one year anniversary of the earlier of the closing of the Offering or the termination of the Offering. Any amounts payable by Putnam, up to approximately $8,000, from the date of the letter of intent related to the Offering until the closing of the Share Exchange, for the purpose of maintaining the periodic and other filings required to be filed with the SEC in accordance with Putnam’s reporting requirements pursuant to the Securities Exchange Act of 1934, as amended, including but not limited to legal and accounting fees and expenses, shall be paid directly by DanDrit.
 
On December 1, 2011 DanDrit Denmark borrowed $1,500,000 and issued 6% convertible bonds. The bonds may not be converted during the four weeks following the publication of the annual report. The bond may not be repaid until the bonds expiration on November 30, 2014. The bonds shall not accrue interest after expiration. The bonds and related accrued interest are convertible into common share of the Company at an initial rate of $9.58 per common share.
 
During the nine months ended September 30, 2013 and years ended December 31, 2013 Sune Olsen Holding ApS, an entity owned by a shareholder of the Company (“Sune Olsen Holding”), loaned DanDrit Denmark DKK 338,719 ($59,854) and DKK 143,750 ($25,019). The note accrues interest at 6% and DanDrit Denmark recorded interest expense of DKK 20,469 ($3,617) and DKK 2,689 ($468) during the years end September 30, 2013 respectively. The loans are payable upon three month written notice of the shareholder.
 
On January 18, 2013, February 15, 2013 and March 1, 2013 Sune Olsen Holding loaned DanDrit Denmark an additional DKK 1,000,000 and DKK 187,724 and DKK 80,000 (approximately $17,8661, $33,685 and $14,075, respectively) The notes accrue interest at 6% and are payable upon three month written notice of the shareholder.
 
 
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On July 26, 2013 and August 15, 2013 Sune Olsen Holding loaned DanDrit Denmark an additional DKK 1,000,000, ($177,239) DKK 750,000 ($133,343). The note accrues interest at 5% and is payable upon three month written notice of the shareholder.
 
On June 20, 2013 Sune Olsen Holding paid DKK 1,500,000, ($265,000) in accrued legal fees of DanDrit Denmark in exchange for a DKK 1,500,000 ($265,000) 5% note payable.
 
On April 14, 2013 Sune Olsen Holding acquired DKK 4,375,932 (approximately$773,000) in liabilities owed by DanDrit Denmark for past due rent. The liability will accrue interest at 5% and is payable on demand.
 
DanDrit Biotech A/S has received a loan facility from Sune Olsen Holding ApS ensuring financing until new equity has been brought in. Under the loan facility DanDrit has received the following amounts: On November 11, 2013 $269,620 (DKK 1,500,000), on November 20, 2013 $55,459 (DKK 405,000), on December 2, 2013 $163,482 (DKK 900,000). The loans are due May 1, 2014 and accrue interest at 5% per year.
 
DanDrit Biotech A/S has received a loan from Sune Olsen ensuring financing until new equity has been brought in. The loan in the amount of $184,873 (DKK 1,000,000) was issued on December 20, 2013. The loan is due May 1, 2014 and accrues interest at 5% per year.
 
DandDrit Biotech A/S has received a loan on February 15, 2014 and March 18, 2014, and amended April 29, 2014 for DKK 2,500,000 ($461,877) and DKK 2,300,000 ($424,927), respectively, from Paseco ApS, an entity owned by a shareholder of DanDrit Biotech USA, Inc.  The loans are payable on February 1, 2015, and accrue interest at 5% per annum.  The Company may extend the term of the loan for 1 year by giving Paseco written notice by December 31, 2014.  Should the Company extend the notes the interest rate will increase to 7.00% per annum.

DanDrit Biotech A/S has received a loan commitment on May 2, 2014 for 2,000,000 DKK ($36,868) from Paseco ApS, an entity owned by a shareholder of the DanDrit Biotech USA, Inc., payable by February 1, 2015.  The Company has an option to extend the loan for one year by giving notice to Paseco by December 31, 2014 whereby the interest rate would increase to 7.00% per annum.
 
 
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General
 
The following is a summary description of our capital stock and is subject to, and is qualified in its entirety by, the provisions of our certificate of incorporation and bylaws, which are filed as exhibits to the registration statement to which this prospectus forms a part.
 
Common Stock
 
Our Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $.0001 per share. As of the date of this filing, there were sixty-four (64) holders of record of our common stock. Holders of our common stock are entitled to such dividends as may be declared by our board of directors out of funds legally available for such purpose, subject to any preferential dividend rights of any then outstanding preferred stock. The shares of common stock are neither redeemable nor convertible. Holders of common stock have no preemptive or subscription rights to purchase any of our securities.
 
All outstanding shares of common stock are of the same class and have equal rights and attributes. Each holder of our common stock is entitled to one vote for each such share outstanding in the holder’s name on all matters submitted to a vote of stockholders of the Company. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the Delaware General Corporation Law (the “DGCL”) prescribes a different percentage of votes and/or a different exercise of voting power and except as may be otherwise prescribed by the provisions of the Company’s certificate of incorporation and bylaws. All holders are entitled to share equally in dividends, if any, as may be declared from time to time by the board of directors out of funds legally available. The holders of common stock do not have cumulative or preemptive rights.
 
In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive pro rata our assets, which are legally available for distribution, after payments of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding. All of the outstanding shares of our common stock are fully paid and non-assessable. The shares of common stock offered by this prospectus will also be fully paid and non-assessable.
 
Preferred Stock
 
Our Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, par value $.0001 per share with designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors of the Company. As of the date of this prospectus no shares of preferred stock are outstanding.
 
The issuance of preferred stock with certain voting, conversion and/or redemption rights could adversely affect the rights of holders of our common stock, including with respect to voting, dividends and liquidation. Preferred stock could also be issued quickly with terms calculated to delay, defer or prevent a change in control of our company or to make removal of management more difficult. Additionally, the issuance of preferred stock may decrease the market price of our common stock.
 
Dividend Policy
 
The Company has not declared or paid any cash dividends on its common stock and does not intend to declare or pay any cash dividend in the foreseeable future. The payment 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 and such other factors as the Board of Directors may consider.
 
Securities Authorized for Issuance under Equity Compensation Plans
 
The Board of Directors has adopted the DanDrit Biotech USA, Inc. 2014 Equity Incentive Plan. We have reserved 1,206,000 shares of our common stock for issuance in accordance with the terms of the plan. As of the date of this prospectus, no awards have been made from the plan.
 
 
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Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation (a derivative action), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including attorneys’ fees incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.
 
DanDrit’s Certificate of Incorporation provides that it will indemnify and hold harmless, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, each person that such section grants us the power to indemnify.
 
The DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:
 
  any breach of the director’s duty of loyalty to the corporation or its stockholders;
 
  acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
 
  payments of unlawful dividends or unlawful stock repurchases or redemptions; or
 
  any transaction from which the director derived an improper personal benefit.
 
DanDrit’s Certificate of Incorporation provides that, to the fullest extent permitted by applicable law, none of our directors will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this provision will be prospective only and will not adversely affect any limitation, right or protection of a director of our company existing at the time of such repeal or modification.
 
Delaware law and DanDrit’s Certificate of Incorporation and Bylaws may permit indemnification for liabilities under the Securities Act of 1933, as amended (“Securities Act”) or the Securities Exchange Act of 1934, as amended (“Exchange Act”). Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling DanDrit pursuant to the foregoing provisions, DanDrit has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
 
Transfer Agent and Registrar
 
The transfer agent and registrar for the common stock is Continental Stock Transfer & Trust Company 17 Battery Place, 8 th Floor, New York, New York 10004.
 
 
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There is not currently, and there has never been, any market for any of our common stock. Our securities are not eligible for trading on any national securities exchange or any over-the-counter markets, including the OTC Bulletin Board or the quotation systems of the OTC Markets, and we cannot assure you that they will become eligible. In connection with this offering, we intend to arrange for a registered broker-dealer to apply to have our common stock quoted on the OTC Bulletin Board and on the OTCQB but we cannot assure you that our application will be approved.
 
Holders of Common Stock
 
As of March 31, 2014, we had 7,854, 947 shares of common stock outstanding held of record by sixty-four (64) persons. Our common stock is more fully described in the section of this prospectus entitled “Description of Securities.” For a description of the shares of our common stock that may be sold pursuant to Rule 144, please see the section of this prospectus titled “Shares Eligible for Future Sale”.
 
Securities Authorized for Issuance under Equity Compensation Plans
 
On February 12, 2014 the sole director and the majority stockholder of Putnam adopted the DanDrit Biotech USA, Inc. 2014 Equity Incentive Plan that governs equity awards to employees, directors and consultants of the Company, effective upon the closing of the Share Exchange. There are 1,206,000 shares of common stock reserved for issuance under the Plan.
 
The Plan has a term of ten years. The types of awards permitted under the Plan include qualified incentive stock options and non-qualified stock options, and restricted stock. Each option will be exercisable at such times and subject to such terms and conditions as the Board may specify. Stock options will generally vest over four years and expire no later than ten years from the date of grant.   As of the date of this filing the Company has not issued any awards from the Plan.
 
 
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A substantial number of shares of our common stock could be sold in the public market after the lapse of the contractual and legal restrictions described below. The sale of a substantial amount of our common stock in the public market could adversely affect the prevailing market price of our common stock.
 
As of March 31, 2014, prior to giving effect to this offering, we had an aggregate of 7,854,947 shares of our common stock outstanding and 1,206,000 shares of common stock reserved for issuance under the DanDrit Biotech USA, Inc. 2014 Equity Incentive Plan. On February 12, 2014, the Company signed and closed the transactions contemplated by a Share Exchange Agreement (the “Share Exchange Agreement”), by and among DanDrit USA (formerly known as Putnam Hills Corp.), Dandrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of Dandrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. In accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, DanDrit Denmark shareholders who have not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore have not exchanged such DanDrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, will be entitled to receive the number of shares of common stock of DanDrit USA that each such DanDrit Denmark shareholder would have been entitled to receive if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of an additional 185,053 shares of common stock of DanDrit USA.  Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.
 
The shares of our common stock issued in the Share Exchange and the related transactions, as well as other outstanding shares of our common stock, our warrants, and the shares of our common stock issuable upon exercise of our warrants are, and will be, “restricted securities” as that term is defined in Rule 144 under the Securities Act. These restricted securities may be sold in the public market if they are registered or if the sale qualifies for an exemption from registration under Rule 144 promulgated under the Securities Act, as summarized below.
 
Lock-Up Agreements
 
Our executive officers, directors and certain stockholders have agreed to a 180-day lock-up with respect to 7,854,947  shares of our outstanding common stock other than certain permitted transfers described in the form of Lock-Up Agreement. Holders of the common stock subject to the Lock-Up Agreement shall also be permitted to exercise options or receive stock through equity awards, and waive any rights to request or demand registration of the common stock.
 
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
 
Rule 144 is not available for resale of securities issued by any shell companies (other than business combination-related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an exception to this prohibition, however, if the following conditions are met:
 
 
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
 
 
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
 
 
the issuer of the securities has filed all Exchange Act reports and materials required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
 
 
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
 
As a result, none of our stockholders is currently able to sell shares of our common stock in reliance on Rule 144. Assuming we continue to meet the requirements set forth above, Rule 144 will become available to our stockholders one year after the date we file the information required in SEC Form 10. Our stockholders may currently sell their shares of our common stock only pursuant to a registration statement that has been declared effective under the Securities Act or pursuant to another exemption from registration.
 
 
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Policies and Procedures for Related Party Transactions
 
We do not have any special committee, policy or procedure related to the review, approval or ratification of transactions with related persons that are required to be disclosed pursuant to Item 404(a) of Regulation S-K, other than as required by the Delaware General Corporation Law.
 
SEC regulations define the related party transactions that require disclosure to include any transaction, arrangement or relationship in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year end for the last two completed fiscal years in which we were or are to be a participant and in which a related person had or will have a direct or indirect material interest. A related person is: (i) an executive officer, director or director nominee of the Company, (ii) a beneficial owner of more than 5% of our common stock, (iii) an immediate family member of an executive officer, director or director nominee or beneficial owner of more than 5% of our common stock, or (iv) any entity that is owned or controlled by any of the foregoing persons or in which any of the foregoing persons has a substantial ownership interest or control.
 
For the period from January 18, 2011 (inception), through the date of this prospectus (the “Reporting Period”), described below are certain transactions or series of transactions between us and certain related persons.
 
Transactions with related persons prior to the closing of the Share Exchange.
 
During the Reporting Period, professional fees of $38,225 were paid on behalf of the Company by Sunrise Financial Group Inc. (“ SFG ”). The President of SFG was the Company’s former President and sole stockholder. As of March 31, 2013, the outstanding balance of $38,235 for professional fees paid by SFG and amounts advanced to the Company are reported as loan payable - related party. These funds were advanced interest free and are unsecured. There is no written or oral agreement in effect with respect to the SFG advances, provided, that the Company intends to attempt to reimburse the SFG advances at the time of the closing of a business combination; however, there is no assurance that the Company will reimburse SFG.
 
On May 26, 2011, the Company issued an aggregate of 5,000,000 shares of Common Stock to NLBDIT 2010 Services, LLC (“ NLBDIT Services ”) for an aggregate purchase price of $25,000 pursuant to the terms and conditions set forth in that certain common stock purchase agreement (the “ NLBDIT Services CSPA ”). Following the purchase, NLBDIT 2010 Services, LLC became the holder of more than 5% of our common stock. The Low Trust owns 100% of the outstanding membership interests of NLBDIT Services and may be deemed to beneficially own the shares of Common Stock held of record by NLBDIT Services. Nathan Low, a principal of our majority shareholder prior to the Share Exchange, is the family trustee of the Low Trust and has voting and dispositive control over any securities owned of record or beneficially by the Low Trust.
 
On June 3, 2011, the Company issued a note (the “ NLBDIT Enterprises Note ”) in favor of NLBDIT 2010 Enterprises, LLC (“ NLBDIT Enterprises ”) pursuant to which the Company agreed to repay NLBDIT Enterprises the sum of any and all amounts that NLBDIT Enterprises may advance to the Company (the “ Principal Amount ”) on or before the date that the Company consummates a business combination with a private company or reverse takeover transaction or other transaction after which the Company would cease to be a shell company (as defined in Rule 12b-2 under the Exchange Act). NLBDIT Enterprises is wholly owned by the Low Trust. Nathan Low, a principal of our sole shareholder, is the family trustee of the Low Trust and a principal of NLBDIT Enterprises. Interest accrues on the outstanding Principal Amount of the NLBDIT Enterprises Note on the basis of a 360-day year from June 3, 2011 until paid in full at the rate of six percent (6%) per annum. The lender has agreed to forego all accrued and unpaid interest through August 20, 2012. At December 31, 2013, $1,887 of accrued interest was payable.
 
The Company engaged Samir Masri CPA Firm P.C. to provide accounting services to the Company. Samir Masri, the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary and director, is the founder and President of Samir Masri CPA Firm P.C. The Company agreed to pay Samir Masri CPA Firm P.C. for services rendered in connection with the preparation of the financial statements required to be filed in the Company’s registration statement on Form 10 and subsequent periodic reports in an aggregate amount equal to $10,000 per fiscal year until the date that the Company consummates a merger or similar transaction with an operating business.
 
 
77

 
 
Transactions with related persons following the closing of the Share Exchange
 
Sune Olsen Holding ApS
 
On January 18, 2013, DanDrit Denmark took a loan (the “January 2013 Loan”) of DKK 1,000,000 equivalent to approximately USD $182,800 (based on the currency exchange rate of $1.00 = DKK 5.4283). The January 2013 Loan carries an interest of 6% per year, with the loan to be repaid in full by the end of calendar year 2013.
 
On March 31, 2013 DanDrit Denmark took a loan (the “March 2013 Loan”) of DKK 761,967.13 equivalent to approximately USD 139,350 (based on the currency exchange rate of $1.00 = DKK 5. 4283). The March 2013 Loan carries an interest of 6% per year, with the loan to be repaid in full by the end of calendar year 2014.
 
On April 12, 2013, Sune Olsen Holdings ApS paid debt to Symbion of DKK 4,171,771 in payables equivalent to approximately USD 762,950. The 4,171,771DKK balance will accrue interest at 5% from April 12, 2013 until repaid. The loan is payable on demand.
 
On June 20, 1013, Sune Olsen Holdings ApS paid debt to Lett Law Firm of DKK 1,500,000 in payables equivalent to USD 274,300. The DKK 1,500,000 will accrue interest at 5% per year. The loan is payable on demand.
 
On August 15, 2013 DanDrit Denmark took a loan of DKK 750,000 equivalent to approximately USD 137,100 (based on the currency exchange rate of $1.00 = DKK 5. 4283). The loan carries an interest of 5% per year, with the loan to be repaid in full by the end of calendar year 2014. The loan may be terminated by Sune Olsen Holding ApS by three months’ prior written notice.
 
During the year ended December 31, 2013 the total debt due to Sune Olsen Holding ApS, including accrued interest, was DKK 9,641,065 (approximately USD 1,776,074) (based on the currency exchange rate of $1.00 = DKK 5. 4283). On the December 16, 2013 the full amount was converted into 280,339 shares of DanDrit Denmark.
 
DanDrit Denmark has received a loan facility from Sune Olsen Holding ApS ensuring financing until new equity has been brought in. Under the loan facility DanDrit Denmark has received the following amounts: On November 11, DKK 1,500,000, on November 20, 2013 DKK 405,000, on December 2, 2013 DKK 900,000, in total DKK 2,805,000. The loans are to be repaid 14 days after completion of the contemplated public offering of DanDrit Biotech USA, Inc. or February 1, 2015 and each carry an interest of 5% per year.
 
DanDrit Denmark has received a loan from Sune Olsen ensuring financing until new equity has been brought in. The loan in the amount of DKK 1,000,000 was issued on December 20, 2013. The loan is to be repaid May 1, 2014 and carries an interest of 5% per year.
 
DKTI A/S
 
On August 2, 2012 DanDrit Denmark entered into a loan facility of DKK 5,000,000 with DKTI A/S. As of October 31, 2013 the principal, amount including accrued, was DKK 5,043,802 (approximately USD 922,439). On December 16, 2013 the loan, including accrued interest, was converted into 96,288 shares in DanDrit Denmark.
 
As of October 31, 2013, DanDrit Denmark had a $1,500,000 convertible bond issued to DKTI A/S. The principal amount including accrued interest was USD 1,672,455 as of October 31, 2013. On December 16, 2013 the convertible bond, including accrued interest, was converted into 174,578 shares in DanDrit Denmark.
 
Paseco ApS
 
On February 15, 2014 and March 18, 2014, DanDrit Denmark took loans (the “2014 Loans”) of DKK 2,500,000 and 2,300,000, respectively, equivalent to approximately USD $460,549 and $423,705, respectively (based on the currency exchange rate of $1.00 = DKK 5.4283). The 2014 Loans are evidenced by that certain Loan Agreement by and between DanDrit Denmark and Paseco ApS dated March 21, 2014, carry an interest of 5% per year and are payable on February 1, 2015. On April 29, 2014, DanDrit Denmark and Paseco entered into an amendment whereby the terms of the 2014 loans can be extended at the Company’s option for an additional year with an increase in the interest rate to 7.00%.

DanDrit Biotech A/S received a loan commitment on May 2, 2014, for 2,000,000 DKK ($368,868) from Paseco ApS, an entity owned by a shareholder of the DanDrit Biotech USA, Inc., payable by February 1, 2015. The Company has an option to extend the loan for one year by giving notice to Paseco by December 31, 2014, whereby the interest rate would increase to 7.00% per annum.
 
Lease Agreements
 
On April 1, 2013, the Company entered into an operating lease agreement with a company controlled by a shareholder to lease office space. The lease calls for monthly payments of 1,150 DKK (approximately $200) and can be terminated by the Company or landlord with three month notice.
 
On April 1, 2013, the Company entered into an operating lease agreement for lab space. The lease calls for months payments of 6,000 DKK (approximately$1,000) and expires on March 31, 2016 but may be terminated by the Company with three month notice.
 
On March 27, 2014, the Company entered into an operating sublease agreement for office space. The lease calls for months payments of DKK 10,000 increasing to DKK 20,000 as of July 1, 2014 (approximately $1,842 and 3,684, respectively). The lease can be terminated by either the Company or the landlord by giving three month notice.
 
LETT Advokatpartnerselskab

As of March 31, 2014 a total of DKK 1,468,500 (approximately $289,284) was accrued and due and payable to the Lett Law Firm for legal services provided for DanDrit Denmark.
 
Except as otherwise indicated herein, there have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 and Item 407(a) of Regulation S-K.
 
 
78

 
 
 
Distribution
 
The shares will be offered and sold on a best efforts basis through Sunrise Securities (the “Placement Agent”), a broker-dealer who is a member of the Financial Industry Regulatory Authority (“FINRA”) and through other participating broker-dealers who are members of FINRA.
 
The maximum offering amount is $12,000,000. The broker-dealers are not obligated to obtain any subscriptions, and there is no assurance that any shares will be sold.
 
Subscriptions will be effective only on acceptance by DanDrit and the right is reserved to reject any subscription in whole or in part. Subscribers must be provided a copy of this Prospectus. DanDrit and/or the Placement Agent will send each investor a written confirmation of the acceptance of the investor’s subscription for shares.

This offering will terminate on               , unless it is fully subscribed before that date or we decide to terminate the offering prior to that date. In either event, the offering may be closed without further notice to you.

Certain of our affiliates may purchase shares of our common stock in this offering on the same terms as they are offered and sold to the public.
 
Compensation
 
The Placement Agent’s commissions will be equal to 7% of the gross proceeds received in this offering raised from investors introduced to the Company by the Placement Agent. After commissions, we shall receive the following for the shares sold in the Offering. The following table illustrates the net proceeds that we will receive from this offering, after payment of the Placement Agent’s commissions but before the payment of expenses.
 
   
Per Share
   
Total
 
Public offering price
 
$
5.00
   
$
12,000,000
 
Commissions
   
0.35
     
840,000
 
Proceeds, before expenses, to us
   
4.65
     
11,160,000
 
 
We estimate that the total expenses of the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding Placement Agent commissions, will be approximately $254,536, all of which are payable by us.
 
 In addition to the commissions discussed above, the Placement Agent has received, or will receive, reimbursement of accountable expenses of up to $120,000 or 1% of the gross proceeds received in this offering. We have also agreed to reimburse the Placement Agent for reasonable fees and expenses of counsel up to aggregate amount of $75,000 in connection with this offering.

Troutman Sanders LLP, counsel to the Placement Agent, acquired 40,000 shares of our common stock on February 12, 2014 upon closing of the Share Exchange, which shares have been deemed compensation by FINRA and are, therefore, subject to a 180-day lock-up pursuant to FINRA Rule 5110(g)(1).
 
Determination of Offering Price
 
There is no established public market for the shares of common stock that we are offering. The offering price has been arbitrarily determined and does not bear any relationship to our assets, results of operations, or book value, or to any other generally accepted criteria of valuation. The fixed price of $5.00 at which our common stock is being offered pursuant to this prospectus was determined based on, without limitation, the estimates of the business potential and earnings prospects of DanDrit and the consideration of such potential earnings in relation to market valuations of comparable companies.
 
Lock-Up Agreements
 
We and our officers, directors, and certain existing stockholders, including the Security Holder identified in the Resale Prospectus,  have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our common stock after the effective date of the registration statement of which this prospectus is a part without the prior written consent of Sunrise Securities Corp. The lock-up period is for 180 days beginning as of the filing date of the last amendment to the registration statement of which this prospective is a part that is declared effective. Notwithstanding the foregoing, the lock-up period shall not apply, and the parties may transfer the shares in the transactions described in clauses (i) through (vi) below as follows:
 
 
(i)
as a bona fide gift or gifts; or
 
 
(ii)
to any trust for the direct or indirect benefit of the undersigned or the immediate family of the transferring party; or
 
 
79

 
 
 
(iii)
to the transferring party and/or any member of the immediate family of the transferring party from or by a grantor retained (or like-kind) annuity trust which exists as of the date hereof and was established for the direct or indirect benefit of the transferring party and/or any member of the immediate family of the transferring party pursuant to the terms of such trust;
 
 
(iv)
if the transferring party is a corporation, partnership or other business entity (A) to another corporation, partnership or other business entity that is an affiliate (as defined under Rule 12b-2 of the Exchange Act) of the transferring party or (B) any distribution or dividend to equity holders of the transferring party as part of a distribution or dividend by the transferring party (including upon the liquidation and dissolution of the transferring party pursuant to a plan of liquidation approved by the transferring party 's equity holders), or if the transferring party is a trust, to a grantor or beneficiary of the trust;
 
 
(v)
in the event of a default under a pledge which exists as of the date hereof as security for a margin or loan account pursuant to the terms of such account;
 
 
(vi)
pursuant  to any 10b5-l trading plans in effect as of the date of the Offering; or
     
 
(vii)
with the prior written consent of the Placement Agent.
 
For purposes of this lock-up agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.
 
Furthermore, notwithstanding the foregoing, during the lock-up period, the transferring party may sell shares of common stock of DanDrit on the open market following the consummation of the offering if and only if (i) such sales are not required to be reported in any public report or filing with the Securities Exchange Commission, or otherwise and (ii) the transferring party does not otherwise voluntarily effect any public filing or report regarding such sales.
 
Indemnification
 
We have agreed to indemnify the Placement Agent against liabilities relating to the offering arising under the Securities Act, liabilities arising from breaches of some or all of the representations and warranties contained in the Placement Agent Agreement, and to contribute to payments that the Placement Agent may be required to make for these liabilities.
 
Relationships
 
Nathan Low is the family trustee of the Low Trust, the beneficial owner of NLBDIT Services, our majority shareholder prior to the Share Exchange, and has voting and dispositive control over any securities owned of record or beneficially by the Low Trust, subject to the agreement of the independent trustee. Mr. Low is also the founder and President of the Placement Agent.
 
See “Related Party Transactions” in this prospectus, and “Item 15. Recent Sales of Unregistered Securities” in the registration statement of which this prospectus is a part, for a description of certain transactions involving the Placement Agent or its affiliates and our Company.
 
The Placement Agent or its affiliates from time to time and may in the future provide investment banking, financial advisory and other related services to us and our affiliates for which they have received and may continue to receive customary fees and commissions.
 
Foreign Sales
 
Notice to Investors in the United Kingdom
 
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any such securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
 
 
(a)
to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
 
 
80

 
 
 
(b)
to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;
 
 
(c)
by the placement agent to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or
 
 
(d)
in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares shall result in a requirement for the publication by the issuer or the placement agent of a prospectus pursuant to Article 3 of the Prospectus Directive.
 
For the purposes of this provision, the expression an “offer to the public” in relation to any security in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor to decide to purchase such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
 
The placement agent has represented, warranted and agreed that:
 
 
(a)
it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received by it in connection with the issue or sale of any of our securities in circumstances in which section 21(1) of the FSMA does not apply to the issuer; and
 
 
(b)
it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to our securities in, from or otherwise involving the United Kingdom.
 
European Economic Area
 
In particular, this document does not constitute an approved prospectus in accordance with European Commission’s Regulation on Prospectuses no. 809/2004 and no such prospectus is to be prepared and approved in connection with this offering. Accordingly, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (being the Directive of the European Parliament and of the Council 2003/71/EC and including any relevant implementing measure in each Relevant Member State) (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) an offer of securities to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to such securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that any placement agent may, with effect from and including the Relative Implementation Date, make an offer of securities to the public in that Relevant Member State at any time:
 
 
to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
 
 
to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000 euros; and (3) an annual net turnover of more than 50,000,000 euros, as shown in the last annual or consolidated accounts; or
 
 
in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.
 
For the purposes of this provision, the expression an “offer of securities to the public” in relation to any common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. For these purposes the shares of common stock are “securities.”
 
 
Validity of the securities offered by this prospectus will be passed upon for us by Richardson & Patel, LLP, New York, New York. Certain legal matters related to the offering will be passed upon for the placement agent by Troutman Sanders LLP, New York, New York.
 
 
81

 
 
 
Putnam historically retained Raich Ende Malter & Co. LLP (“Raich”) as its principal accountant. In connection with the closing of the Share Exchange, we terminated Raich and retained Gregory & Associates, LLC (“Gregory”) as our principal accountant. Our Board of Directors approved the change.
 
Raich’s reports on the financial statements for the years ended March 31, 2013 and 2012 included in the Form 10-K for the year ended March 31, 2013 as filed with the SEC did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that their reports included disclosure of uncertainty regarding Putnam’s ability to continue as a going concern.
 
From inception through February 12, 2014, Putnam had no disagreements with Raich on matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Putnam had not consulted with Gregory on any matter prior to the Share Exchange.
 
We have authorized Raich to respond fully to the inquiries of Gregory concerning any matters discussed above. We have provided Raich with a copy of the above statements. We have requested that Raich furnish us with a letter addressed to the SEC stating whether Raich agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of such letter from Raich is filed as an exhibit to the registration statement of which this prospectus forms a part.
 
 
The audited financial statements of DanDrit Denmark as of December 31, 2013 and December 31, 2012 included in this prospectus have been audited by Gregory & Associates, LLC, who is an independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
 
The audited financial statements of Putnam as of March 31, 2013 and March 31, 2012 included in this prospectus have been audited by Raich Ende Malter & Co. LLP, who is an independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
 
 
We file annual, quarterly and special reports and other information with the SEC. These filings contain important information that does not appear in this prospectus. For further information about us, you may read and copy any reports, statements and other information filed by us at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0102. You may obtain further information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available on the SEC Internet site at http://www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
 
 
82

 
 
DANDRIT BIOTECH USA, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
 
Unaudited Consolidated Financial Statements
 

 
Putnam Hills Corp.
 
F-37
     
 
F-38
     
 
F-39
     
 
F-40
     
 
F-41
     
 
F-42
     
 
F-43
     
Pro Forma Financial Statements
   
     
DanDrit Biotech A/S and Putnam Hills Corp.
 
F-48
     
 
F-49
     
 
F-51
     
 
F-53
 
 
83

 
 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
(A Development Stage Company)
 
Index to Unaudited Financial Statements
 
 
 
F-1

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
CONSOLIDATED BALANCE SHEET
 
   
(Unaudited)
March 31,
2014
   
December 31,
2013
 
ASSETS
             
CURRENT ASSETS:
           
Cash
 
$
54,472
   
$
18,794
 
Cash held in escrow
   
423,969
     
77,468
 
Other Receivables
   
69,712
     
25,456
 
Prepaid Expenses
   
11,621
     
19,774
 
Total Current Assets
   
559,774
     
141,492
 
                 
PROPERTY AND EQUIPMENT, Net accumulated Depreciation
   
40,460
     
-
 
                 
OTHER  ASSETS
               
Definite Life Intangible Assets
   
233,766
     
231,615
 
Deferred Stock Offering Costs
   
67,000
     
67,000
 
Deposits
   
10,466
     
10,360
 
Total Other Assets
   
311,232
     
308,975
 
TOTAL ASSETS
 
$
911,466
   
$
450,467
 
                 
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
                 
CURRENT LIABILITIES:
               
                 
Notes Payable -Related Party, Current Portion
 
$
1,705,201
   
$
728,001
 
Accounts Payable
   
568,175
     
548,501
 
Accrued Expenses
   
824,192
     
858,135
 
Total Current Liabilities
   
3,097,568
     
2,134,637
 
                 
LONG TERM LIABILITIES
   
-
     
-
 
Notes Payable, Related Parties Less Current Portion
   
-
     
-
 
Total Long Term Liabilities
   
-
     
-
 
Total Liabilities
   
3,097,568
     
2,134,637 
 
                 
STOCKHOLDER'S DEFICIENCY:
               
Preferred stock, $.0001 par value; 10,000,000 shares authorized; none issued and outstanding
   
-
     
-
 
Common stock, par value 1.0 DKK, 200,000,000 shares authorized, 7,854,947 and 5,814,945 issued and outstanding at March 31, 2014 and December 31, 2013, respectively
   
785
     
581
 
Additional paid-in capital
   
17,788,129
     
17,867,565
 
Accumulated Deficit
   
(19,947,180
)
   
(19,521,126
)
Non-controlled interest in subsidiary
   
-
     
-
 
Other Comprehensive Income, net
   
(27,836
   
(31,190
Total Stockholder’s (Deficit)
   
(2,186,102
)    
(1,684,170
                 
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
 
$
911,466
     
450,467
 

See accompanying notes to the unaudited financial statements.
 
 
F-2

 
 
(FORMERLY PUTNAM HILLS CORP.)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

   
For The
Three Months
Ended
March 31, 2014
   
For The
Three Months
Ended
March 31, 2013
 
Revenues
 
$
-
   
$
31,558
 
                 
Cost of Goods Sold
   
17,739
     
15,360
 
                 
Gross Income(Loss)
   
(17,739
   
16,198
 
                 
Operating Expenses
               
General and Administrative Expenses
   
326,428
     
175,016 
 
Depreciation and Amortization
   
6,794
     
8,600
 
Consulting Expenses
   
61,145
     
13,048
 
Total Operating Expense
   
394,367
     
196,664
 
                 
(LOSS) FROM OPERATIONS
   
(412,106
)
   
(180,466
                 
Other Income (Expense)
               
Interest (expense)
   
(13,999
   
(159,922
Gain (loss) on Currency Transactions
   
-
     
(100,327
Gain on Derivative Liability
   
-
     
41,643
 
Interest Income
   
51
     
-
 
Total Other Income (Expense)
   
(13,948
)
   
(218,606
                 
(Loss) Before Income Taxes
   
(426,054
   
(399,072
                 
Income Tax Expense (Benefit)
   
-
     
-
 
                 
NET (LOSS)
 
$
(426,054
 
$
(399,072
                 
LESS NET LOSS ATTRIBUTABLE TO NON-CONTROLLED INTEREST IN SUBSIDIARY
   
-
     
-
 
                 
NET (LOSS) ATTRIBUTABLE TO NON CONTROLLED DANDRIT BIOTECH USA, INC.
   
(426,054
   
(399,072
                 
BASIC AND DILUTED LOSS PER SHARE
 
$
(0.06
   
(0.08
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED
   
6,880,278
     
5,133,096
 
 
See accompanying notes to the unaudited financial statements.

 
F-3

 
 
(FORMERLY PUTNAM HILLS CORP.)
  STATEMENTS OF OTHER COMPREHENSIVE LOSS
(Unaudited)

   
For the Three Months
 
   
Ended March 31
 
   
2014
   
2013
 
             
Net Loss
    (426,054 )     (399,072 )
Currency Translation, Net of Taxes
    (3,354 )     (139,052 )
                 
Other Comprehensive Loss
  $ (429,408 )   $ (538,124 )
                 
Comprehensive Loss Attributable To Non-controlling Interest in Subsidiaries
    -       -  
                 
Comprehensive Loss Attributable To DanDrit BioTech USA, Inc.
  $ (429,408 )   $ (538,124 )
 
See accompanying notes to the unaudited financial statements.

 
F-4

 
 
(FORMERLY PUTNAM HILLS CORP.)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIENCY
(Unaudited)
 
                                       
Other
   
Non-
 
                           
Additional
          Compre-    
Controlled
 
   
Preferred Stock
   
Common Stock
   
Paid-in
   
Accumulated
    hensive     Interest in  
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Income
   
Subsidiary
 
BALANCE, December 31, 2012
    -     $ -       5,133,096     $ 513     $ 12,817,141     $ (17,373,765 )   $ 188,280     $ -  
                                                                 
Common shares issued upon conversion of bond payable - related party and derivative liability at $9.00 per shares, December 2013
    -       -       261,665       26       2,353,322       -       -       -  
                                                                 
Common shares issued in payment of notes payable - related party at $6.42 per shares, December 2013
    -       -       144,321       14       926,372       -       -       -  
                                                                 
Common shares issued in payment of notes payable - related party at $6.42 per shares, December 2013
    -       -       275,863       28       1,770,730       -       -       -  
                                                                 
Equity Adjustment for Foreign Currency Translation
    -       -       -       -       -       -       (219,470 )     -  
                                                                 
Net Loss for the Year Ended December 31, 2013
    -       -       -       -       -       (2,147,361 )     -       -  
                                                                 
BALANCE, December 31, 2013
    -       -       5,814,945     $ 581     $ 17,867,565     $ (19,521,126 )   $ (31,190 )   $ -  
                                                                 
To record the recapitalization of Subsidiary in connection with the February 12, 2014 Share Exchange Agreement wherein the DanDrit Biotech USA Inc. (“Parent”) issued 5,814,945 common shares to acquire a 97% interest in DanDrit Biotech A/S (“Subsidiary”) DanDrit Biotech USA Inc., (Formerly Putnam Hills Corp),
    -       -       5,000,000       500       24,500       (104,232 )     -       -  
                                                                 
Common shares Canceled and returned to authorized in connection with the Share exchange agreement
    -       -       (4,400,000 )     (440 )     440       -       -       -  
                                                                 
To record the issuance of 1,400,000 and 40,000 common shares in connection with the acquisition and offering valued at $5 per share or $7,000,000 and $200,000, respectfully.
    -       -       1,440,000       144       7,199,856       (7,200,000 )     -       -  
                                                                 
To eliminate the accumulated deficit of Putnam Hills Corp in connection with the recapitalization Share Exchange Agreement.
    -       -       -       -       (7,304,232 )     7,304,232       -       -  
                                                                 
Equity Adjustment for Foreign Currency Translation
    -       -       -       -       -       -       3,354       -  
                                                                 
Net Loss for the Three Months Ended March 31, 2014
    -       -       -       -       -       (426,054 )     -       -  
                                                                 
BALANCE, March 31, 2014
    -       -       7,854,945     $ 785     $ 17,788,129     $ (19,947,180 )   $ (27,836 )   $ -  

See accompanying notes to the unaudited financial statements.
 
 
F-5

 
 
(FORMERLY PUTNAM HILLS CORP.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 
   
For The
Three Months
Ended
March 31, 2014
   
For The
Three Months
Ended
March 31, 2013
 
             
NET (LOSS)
  $ (426,054 )   $ (399,072 )
                 
ADJUSTMENT TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
               
Depreciation and Amortization
    6,794       15,860  
Accretion of Discount on Bond Payable
    -       123,557  
(Gain)/Loss on Derivative Liability
    -       (41,643 )
        CHANGES IN ASSETS AND LIABILITIES:
               
(Increase)Decrease in Other Receivables
    (44,256 )     43,915  
(Increase)Decrease in Prepaid Expenses/Deposits
    8,047       (8,962 )
Increase(Decrease) in Accounts Payable
    19,674       463,472  
Increase(Decrease) in Accrued Expenses
    (1,951 )     (1,321,026 )
                 
Total Adjustments
    (11,692 )     (724,827 )
                 
NET CASH USED IN OPERATING ACTIVITIES
    (437,746 )     (1,123,899 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of fixed assets
    (41,498 )     -  
            Net (Increase) in Cash held in Escrow
    (346,501        
Purchase of Intangible Assets
    (7,907 )     -  
                 
NET CASH USED BY INVESTING ACTIVITIES
    (395,906 )     -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from Notes Payable – Related Party
    865,976       987,911  
Payment of Stock Offering Costs
    -       -  
Payments on Notes Payable – Related Party
    -       -  
                 
NET CASH PROVIDED BY(USED BY) FINANCING ACTIVITIES
    865,976       987,911  
                 
Gain (Loss) on Currency Translation
    3,354       139,279  
                 
NET INCREASE (DECREASE) IN CASH
    35,678       3,291  
                 
CASH, BEGINNING OF PERIOD
    18,794       4,381  
                 
CASH, END OF PERIOD
  $ 54,472     $ 7,672  
                 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
               
Accretion of Discount on Bond Payable
  $ -     $ 123,557  
Change in Fair Market Value of Derivative Liability
  $ -     $ (41,643 )

See accompanying notes to the financial statements.

 
 
F-6

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Business and Basis of Presentation – DanDrit Biotech USA, Inc. (“DanDrit USA”, the “Company”, “we”, “us”, “our”) (formerly Putnam Hills Corp) was originally incorporated in the state of Delaware on January 18, 2011 as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business.
 
DanDrit BioTech A/S, a Danish Corporation was incorporated on April 1, 2001 (“DanDrit Denmark”).   The Company engages in the research and development, manufacturing and clinical trials of pharmaceutical and biological products for the human treatment of cancer using the dendritic cell technology.
 
 Reverse Acquisition  - On February 12, 2014, the Company signed and consummated the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), DanDrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of DanDrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. In accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, DanDrit Denmark shareholders who have not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore have not exchanged such DanDrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, will be entitled to receive the number of shares of common stock of DanDrit USA that each such DanDrit Denmark shareholder would have been entitled to receive if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of an additional 185,053 shares of common stock of DanDrit USA. Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.
 
Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 shares of our common stock.  In addition, following the closing of the Share Exchange, DanDrit Biotech USA, Inc., a wholly owned subsidiary of the Company merged with and into the Company, thereby changing the Company’s name to “DanDrit Biotech USA, Inc.”

Consolidation   - For the three months ended March 31, 2014 and 2013, the consolidated financial statements include the accounts and operations of the DanDrit Denmark and the accounts and operations of DanDrit USA, Inc from February the date of acquisition of February 12, 2014 through March 31, 2014. The non-controlling interests in the net assets of the DanDrit Denmark are recorded in equity. The non-controlling interests of the results of operations of the subsidiaries are included in the results of operations and recorded as the non-controlling interest in subsidiaries. All material inter-company transactions and accounts have been eliminated in the consolidation.

On December 16, 2013, the DanDrit Denmark sold, for $1.00, the wholly-owned dormant subsidiary DanDrit Corporation PTE. LTD.  a Singapore limited liability company incorporated on July 1, 2008. As this Singapore entity was a dormant subsidiary the financial statements include the $1 proceeds and gain on sale of the former subsidiary.

Functional Currency / Foreign currency translation  — The functional currency of DanDrit USA, Inc. is the U.S. Dollar.  The functional currency of DanDrit Biotech A/S is the Danish Kroner (“DKK”).  The Company’s reporting currency is the U.S. Dollar for the purpose of these financial statements. The Company’s balance sheet accounts are translated into U.S. dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. dollars at the average exchange rates prevailing during the years 2013 and 2012 and the period ending March 31, 2014. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred.
 
Cash and Cash Equivalents  — The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company had no balances held in financial institutions in the United States in excess of federally insured amounts at March 31, 2014 and December 31, 2013.

Property and Equipment  — Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets which range from four to six years (See Note 3).

Intangible Assets  — The Company accounts for definite life intangible assets, including patents, in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, (“ASC”) Topic 350, “Goodwill and Other Intangible Assets” and amortized the patents on a straight line basis over the estimated useful life of twenty years. Costs incurred in relation to patent applications are capitalized cost and amortized over the estimated useful life of the patent. If it is determined that a patent will not be issued, the related remaining patent application costs are charged to expense.
 
 
F-7

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of Long-Lived Assets - Long-lived assets, such as property, plant, and equipment and patents are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated.  The depreciable basis of assets that are impaired and continue in use is their respective fair values.
 
Revenue Recognition and Sales  — The Company’s sales of its MCV colorectal cancer  vaccine have been limited to a compassionate use basis in Singapore after stage IIA trials and is not approved for current sale for any other use or location. The Company's accounts for revenue recognition in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB 101), and FASB ASC 605 Revenue Recognition. The Company recognizes revenue when rights and risk of ownership have passed to the customer, when there is persuasive evidence of an arrangement, product has been shipped or delivered to the customer, the price and terms are finalized, and collections of resulting receivable is reasonably assured. Products are primarily shipped FOB shipping point at which time title passes to the customer.

Value Added Tax - In Denmark, Value Added Tax (“VAT”) of 25% of the invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. VAT of 25% is also paid to Danish and EU vendors on invoices these amounts are refundable from the respective governmental authority and recorded as other receivables in the accompanying financial statements.

Research and Development Cost  — The Company expenses research and development costs for the development of new products as incurred and is included in operating expense. There was no research and development costs for the three month period ended March 31, 2014 and 2013.

Income Taxes  — The Company accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes. This statement requires an asset and liability approach for accounting for income taxes.

Loss Per Share  — The Company calculates earnings /(loss) per share in accordance with FASB ASC 260 Earnings Per Share. Basic earnings per common share (EPS) are based on the weighted average number of common shares outstanding during each period. Diluted earnings per common share are based on shares outstanding (computed as under basic EPS) and potentially dilutive common shares. Potential common shares included in the diluted earnings per share calculation include in-the-money stock options that have been granted but have not been exercised.

Derivatives - We generally do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we have entered into certain other financial instruments and contracts, such as debt financing arrangements with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value.
 
 
F-8

 

DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

We estimate fair values of all derivative instruments, such as embedded conversion features utilizing Level 3 inputs (defined below in Note 1: Fair Value of Financial Instruments). We use the Black-Scholes option valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective inputs that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in our market price of our common stock, which have historically had high volatility. Since derivative financial instruments are initially and subsequently carried at fair value, our income will reflect the volatility in these estimate and assumption changes.

We report our derivative liabilities at fair value.

Fair Value of Financial Instruments  — The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820, “Fair Value Measurements”. The authoritative guidance, which, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
 
 
Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;

 
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, investments, accounts payable, accrued expenses, capital lease obligations and notes payable approximates their recorded values due to their short-term maturities.

Accounting Estimates  — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.

Recent Accounting Pronouncements  — Recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Reclassification -  The financial statements for the period ended March 31, 2013 have been reclassified to conform to the headings and classifications used in the March 31, 2014 financial statements.
 
 
F-9

 

DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern.  However, the Company has incurred significant losses and has not yet been successful in establishing profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management plans to mitigate this doubt by raising additional funds through debt and/or equity offerings and by substantially increasing sales once approval for the Company’s product is obtained.  There is no assurance that the Company will be successful in achieving profitable operations.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 3 — PROPERTY AND EQUIPMENT
 
Property and equipment consisted of the following at March 31, 2014 and December 31, 2013:
 
   
Useful Life
   
March 31, 2014
   
December 31, 2013
 
Lab equipment and instruments
    4-6     $ 202,632     $ 194,143  
Computer equipment
    4-6       110,898       66,493  
              313,530       260,636  
     Less Accumulated Depreciation
            (273,070 )     (260,636 )
Net Property and Equipment
          $ 40,460     $ -  

Depreciation expense amounted to $1,038 and $788 for the three month period ended March 31, 2014 and 2013, respectively. The Company’s property and equipment is held as collateral on the notes payable related party.

NOTE 4 — DEFINITE-LIFE INTANGIBLE ASSETS

At March 31, 2014 and December 31, 2013, definite-life intangible assets, net of accumulated amortization, consist of patents on the Company’s products and processes of $233,766 and $231,615, respectively. The patents are recorded at cost and amortized over twenty years from the date of application. Amortization expense for the three months ended March 31, 2014 and 2013 was $5,756 and $6,414, respectively. Expected future amortization expense for the years ended are as follows:
 
Year ending December 31,
     
2014
 
$
17,283
 
2015
   
20,106
 
2016
   
20,106
 
2017
   
20,106
 
2018
   
20,106
 
Thereafter
   
136,059
 
   
$
233,766
 
 
 
F-10

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  

NOTE 5 — NOTES PAYABLE – RELATED PARTY
 
Notes payable to related parties consists of the following as of March 31, 2014 and December 31, 2013:
 
   
March 31, 2014
   
Dec. 31, 2013
 
5% Note Payable Paseco ApS 
  $ 888,880     $ -  
Non-Interest Bearing Loan  Payable Sunrise Financial Group Inc.
    38,235       -  
Note Payable ML Group
    21,520       21,557  
6% Promissory Note payable to NLBDIT 2010 Enterprises, LLC
    41,945       -  
5% Note Payable - Sune Olsen Holding ApS
    526,689       521,390  
5% Note Payable - Sune Olsen
    187,932       185,054  
 Total Notes Payable – Related Party
    1,705,201       728,001  
                Less Current Maturities
    (1,705,201 )     (728,001 )
 Note Payables – Related Party Long Term
  $ -     $ -  
 
The following represents the future maturities of long-term debt as of March 31, 2014:
 
Year ending December 31,
     
2014
   
-
 
2015
       
2016
   
-
 
2017
   
-
 
2018
   
-
 
Thereafter
   
-
 
     
-
 

On February 15, 2014 and March 18, 2014, the Company received DKK 2,500,000 ($461,084) and DKK 2,300,000 ($424,198) loans, respectively, from Paseco ApS, an entity owned by a shareholder of DanDrit Biotech USA, Inc.  The loans are payable 14 days after the completion of the contemplated public offering in DanDrit Biotech USA, Inc. or February 1, 2015, and accrue interest at 5% per annum. On April 29, 2014, DanDrit Denmark and Paseco entered into an amendment whereby the terms of the 2014 loans are payable on February 1, 2015 and can be extended at the Company’s option for an additional year with an increase in the interest rate to 7.00%. .  As of March 31, 2014, the outstanding balance on the loan including accrued interest is $880,880. During the three months ended March 31, 2014 the Company record related party interest on the note of DKK 19,507 ($3,598).

DanDrit Biotech A/S has received an unsecured loan facility from Sune Olsen Holding ApS, an entity owned by a shareholder, with a goal of ensuring financing until new equity has been brought in. Under the loan facility DanDrit has received the following amounts: On November 11, 2013 DKK 1,500,000 ($269,620), on November 20, 2013 DKK 405,000 ($55,459), and on December 2, 2013 DKK 900,000 ($163,482). The loans are due May 1, 2014 and accrue interest at 5% per year DKK 50,706 ($9,532) at March 31, 2014.  During March 2014, the Company extended maturity date of the loans with Sune Olsen Holdings ApS from May 1, 2014 to 14 days after the completion of the contemplated stock offering of DanDrit Biotech USA, Inc. or February 1, 2015.

DanDrit Denmark has received an unsecured loan from Sune Olsen, a shareholder of the Company, with a goal of ensuring financing until new equity has been brought in. The loan in the amount of DKK 1,000,000 ($184,873) was issued on December 20, 2013. The loan is due May 1, 2014 and accrues interest of 5% per year DKK18,966 ($3498) at March 31, 2014. During March 2014, the Company extended maturity date of the DKK 1,000,000 loans with Sune Olsen from May 1, 2014 to 14 days after the completion of the contemplated stock offering of DanDrit Biotech USA, Inc. or February 1, 2015.

During March 2014, the Company received a 2,000,000 DKK letter of support from Paseco ApS an entity owned by a shareholder of the DanDrit Biotech USA, Inc. to ensure continued operations until February 1, 2015.The Company has an option to extend the loan for one year by giving notice to Paseco by December 31, 2014 whereby the interest rate would increase to 7.00% per annum.

During 2012, DKTI A/S, a shareholder of the Company, which is controlled by officers and directors of the Company agreed to loan the Company up to DKK 5,000,000 (approximately $880,000) accruing interest at 6% per annum.  The loan is secured by all the Company’s intellectual property rights, including its patents and its patent applications.  During the year ended December 31, 2012 the Company borrowed DKK 4,431,862 ($783,139) plus DKK 71,563 ($12,646) in interest.  During the year ended December 31, 2013, the Company borrowed an additional DKK 310,000 (approximately $55,000) on the loan and accrued interest of DKK 230,377 (approximately $42,000). The notes with related accrued interest were converted into 96,288 common shares of DanDrit Denmark on December 16, 2013 which were exchanged for 144,321 shares of common stock of the Parent upon the closing of the Share Exchange.
 
During the years ended December 31, 2013, 2012 and 2011 Sune Olsen Holding ApS,  loaned the Company DKK 1,267,724 ($232,841), DKK 338,719 ($59,854) and DKK 143,750 ($25,019), respectively.  The Company added the accrued interest at 6% and the Company recorded interest expense of DKK 86,047 ($15,804), DKK 20,469 ($3,617) and DKK 2,689 ($468) during the years end December 31, 2013, 2012 and 2011 respectively.  The loans are payable upon three month written notice of the shareholder.  On December 16, 2013, the notes with related accrued interest were converted into 35,106 shares of DanDrit Denmark which were exchanged for 52,618 shares of common stock of the Parent upon the closing of the Share Exchange.
 
 
F-11

 

DANDRIT BIOTECH USA INC
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO  CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 — NOTES PAYABLE – RELATED PARTY (Continued)

On June 20, 2013, Sune Olsen Holding APS, an entity owned by a shareholder of the Company paid DKK 1,500,000, ($265,000) in accrued legal fees owed by the Company in exchange for a DKK1,500,000 ($265,000) 5% note payable to Sune Olsen Holding APS. On December 16, 2013, the note with related accrued interest of DKK 20,959 ($3,804) was converted into 29,036 shares of DanDrit Denmark common stock. Such shares of common stock were exchanged for 31,414shares of common stock of the Parent upon the closing of the Share Exchange.

On April 14, 2013, Sune Olsen Holding APS, an entity owned  by a shareholder of the Company assumed DKK 4,375,932 (approximately$773,000) in  liabilities owed by the company for past due rent from a vendor in exchange for a note payable. The note accrued interest at 5% and is payable on demand. On December 31, 2013, the note with related interest of DKK 139,670 ($25,349) were converted into 86,204 shares of DanDrit Biotech A/S.  Such shares of common stock were exchanged for 129,206 shares of common stock of the Parent upon the closing of the Share Exchange.

On July 26, 2013 and August 15, 2013, Sune Olsen Holding APS,  an entity owned  by a shareholder of the Company, loaned the Company an additional DKK 1,000,000 ($177,239) and DKK 750,000 ($133,343), respectively.  The notes accrue interest at 5% per annum and are payable upon three month written notice of the shareholder. The notes with related accrued interest of DKK 15,575 ($2,827) were converted into 33,705 shares of DanDrit Biotech A/S common stock on December 16, 2013. Such shares of common stock were exchanged for 50,518 shares of common stock of the Parent upon the closing of the Share Exchange.
 
On April 30, 2013 Stratega ApS, a shareholder of the Company, loaned the Company DKK 1,000,000 ($175,359). The note accrues interest at 1% per month and is payable on September 1, 2013.  As of September 1, 2013 the loan was outstanding, and thereby incurred a penalty of DKK 50,000 ($8,863). The outstanding loan accrued interest at 2.5% per month beginning September 2, 2013. DKTI Invest AS has secured the loan by pledging 25,000 common shares of DKTI Invest AS. DKTI Invest AS pledged the collateral on behalf of the Company, and the Company granted DKTI Invest AS worldwide use of the Company’s DDM master cell bank (“Use Agreement”) more specifically of the Company’s working cell bank DDM 1-7203-01, manufactured in 2008, for research, manufacturing and commercial purposes. The note was repaid in November 2013, the security was released and the Use Agreement cancelled.
 
As of March 31, 2014, the outstanding balance of $38,235 for professional fees paid by a shareholder and amounts advanced to the Parent are reported as loan payable - related party. The $38,235 loans payable were acquired in the reverse acquisition. The amounts are unsecured, non-interest bearing and have no stipulated repayment terms.

A 6% Promissory Note payable (the “Note”) to NLBDIT 2010 Enterprises, LLC, an entitycontrolled by a shareholder of the Company, was acquired by the Company in the reverse acquisition,  payable on February 12, 2014 upon the completion date of a the merger between the Dandrit Biotech USA, Inc. and Dandrit Biotech A/S.  As of March 31, 2014, the outstanding balance on the Note, including accrued interest, was $41,946. During the three months ended March 31, 2014 the Company record related party interest on the Note of $927.

NOTE 6 — CONVERTIBLE BOND PAYABLE – RELATED PARTY

On December 1, 2011, DanDrit Denmark borrowed $1,500,000 from DKTI A/S and issued 6% convertible bonds. The bonds may not be converted during the four weeks following the publication of the annual report. The bond may not be repaid until the bonds’ expiration on November 30, 2014.  The bonds shall not accrue interest after expiration.  The bonds and related accrued interest are convertible into common shares of the Company at an initial rate of $9.58 per common share.  
 
 
F-12

 
 
DANDRIT BIOTECH USA INC
(FORMERLY PUTNAM HILLS CORP.)

NOTES TO  CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 — CONVERTIBLE BOND PAYABLE – RELATED PARTY (Continued)

The conversion /adjustment features had an estimated fair value of $1,003,557 using the Black-Scholes pricing Model using the assumptions below and bifurcated and properly classified as derivative instruments required to be recorded at fair value (Note 7). The proceeds from the bond have been allocate to the note and conversion / adjustment feature of the convertible bond and recorded at a discount which was amortized to interest expense through conversion. During the years ended December 31, 2013 and 2012, the Company recorded interest expense of $502,465 and $461,279, respectively, for the accretion of the discount on the note.

On December 16, 2013, the $1,500,000 convertible bond accrued interest of $179,612 and the $673,736 derivative liability were converted into 174,578 shares of DanDrit Biotech A/S common stock. Such shares of common stock were exchanged for 261,665 shares of common stock of the Parent upon the closing of the Share Exchange.

The assumptions used to determine the initial fair value of the conversion feature of the convertible bond were expected volatility of 65%, expected life of two years to eleven months, risk – free interest rates of .41%, and no dividend yield.

NOTE 7 – DERIVATIVE LIABILITIES

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into certain other financial instruments and contracts, such as debt financing arrangements with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value.
 
The fair value of the shares to be issued upon conversion of the bond was recorded as a derivative liability, with the change in the fair value recorded as a gain or loss in the accompanying statement of operations.  During the three months March 31, 2014 and 2013 the Company recorded a gain of $0 and $51,456 respectively. On December 16, 2013, the $1,500,000 convertible bond, accrued interest of $179,612 and the $673,736 derivative liability were converted into 174,578 shares of DanDrit Biotech A/S common stock or 261,665 shares of common stock of the Parent upon the closing of the Share Exchange.
 
 
F-13

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 — LEASES

Operating Leases  — The Company leases laboratory and production space under operating lease agreements which can be cancelled with 3 month notice.  The lease calls for monthly payments of DKK 6,000 (approximately $1,107 at March 31, 2014).

Lease expense charged to operations was $7,255 and $31,775, for the three months ended March 31, 2014 and 2013, respectively.

On March 27, 2014 the Company entered into an operating lease agreement for office space from a related party. The Lease calls for monthly payments of DKK 10,000 (approximately$1,844), increasing to DKK 20,000 (approximately $3,689) on July 1, 2014. The lease can be terminated by either the Company or the landlord by giving the other 3 months notice.

NOTE 9 — INCOME TAXES

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes; which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards. The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined.

As of March 31, 2014 the Company had net operating loss carry-forwards of approximately $10,200,000 for Danish tax purposes which do not expire and Company had net operating loss carry-forwards of approximately $120,000 for U.S. Federal Tax purposes which expire through 2033, a portion of which shall be limited due to the change in control of the Parent.

The Company files U.S. and Danish income tax returns, and they are generally no longer subject to tax examinations for years prior to 2010 and 2007, respectively.

The temporary differences, tax credits and carry forwards gave rise to the following deferred tax asset (liabilities) at March 31, 2014 and December 31, 2013:
 
   
March 31,
2014
   
December 31,
2013
 
Excess of Tax over book depreciation Fixed assets
 
$
87,578
   
$
87,578
 
Excess of Tax over book depreciation Patents
   
114,028
     
114,028
 
Net Operating Loss Carry forward
   
2,254,812
     
1,642,598
 
Valuation Allowance
   
(2,456,418
)
   
(1,844,204
)
            Total Deferred Tax Asset (Liabilities)
 
$
-
   
$
-
 

In accordance with prevailing accounting guidance, the Company is required to recognize and disclose any income tax uncertainties.  The guidance provides a two-step approach to recognize and disclose any income tax uncertainties.  The guidance provides a two-step approach to recognizing and measuring tax benefits and liabilities when realization of the tax position is uncertain.  The first step is to determine whether the tax position meet the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%.  The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which can be difficult to determine and can only be estimated. Management estimates that it is more likely than not that the Company will not generate adequate net profits to use the deferred tax assets; and consequently, a valuation allowance was recorded for all deferred tax assets.
 
 
F-14

 
 
DANDRIT BIOTECH USA INC
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO  CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — INCOME TAXES (Continued)

A reconciliation of income tax expense at the federal statutory rate to income tax expense at the company’s effective rate is as follows at March 31 , 2014 and 2013:
 
   
March 31, 2014
   
March 31, 2013
 
Computed Tax at Expected Statutory Rate
 
$
(144,858
)
 
$
(135,684
)
Non-US Income Taxed at Different Rates
   
44,858
     
38,059
 
Non-Deductable expenses
   
-
     
27,850
 
Valuation allowance
   
100,000
     
69,775
 
             Income Tax Expense
 
$
-
   
$
-
 
 
The components of income tax expense (benefit) from continuing operations for the three months ended March 31, 2014 and 2013 consisted of the following
 
Current Tax Expense
 
2013
   
2012
 
       Danish Income Tax
 
$
-
   
$
-
 
Total Current Tax Expense
   
-
     
-
 
Deferred Income Tax Expense (Benefit)
               
       Excess of Tax over Book Depreciation Fixed Assets
   
-
     
-
 
       Excess of Tax over Book Depreciation Patents
   
-
     
-
 
       Net Operating Loss Carry forwards
   
(100,000
)
   
(69,775
)
       Change in the Valuation allowance
   
100,0000
     
69,775
 
Total Deferred Tax Expense
 
$
-
   
$
-
 

Deferred income tax expense / (benefit) results primarily from the reversal of temporary timing differences between tax and financial statement income.

NOTE 10 — LOSS PER SHARE

The following data shows the amounts used in computing loss per share and the effect on income and the weighted average number of shares of potential dilutive common stock for the three month period ended March 31, 2014 and 2013:
 
    For the  Three Months Ended March 31,  
   
2014
   
2013
 
Net (Loss)
    (426,054 )     ( 399 ,072 )
Weighted average number of shares of common stock used in basic earnings per share
    6,880,278       5,133,096  
Effect of dilutive securities, stock options and warrants
    -       -  
Weighted average number of shares of common stock and potential dilutive common shares outstanding used in dilutive earnings per share
    6,880,278       5,133,096  

For the three months ended March 31, 2014, the Company had no common stock equivalents.  For the three months ended March 31, 2013, the Company had a convertible bond wherein the holder could convert the bond and underlying accrued interest into a minimum of  234,683 shares of common stock which were not included in the loss per share computation because their effect would be anti-dilutive.
 
 
F-15

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 — STOCKHOLDERS’ EQUITY
 
Common Stock  — The Company has 100,000,000 authorized shares of common stock $0.0001.  As of March 31, 2014 there were 7,854,948 shares issued and outstanding.

Share Exchange Agreement – On February 12, 2014, the Company signed and consummated the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), DanDrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of DanDrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. In accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, DanDrit Denmark shareholders who have not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore have not exchanged such DanDrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, will be entitled to receive the number of shares of common stock of DanDrit USA that each such DanDrit Denmark shareholder would have been entitled to receive if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of an additional 185,053 shares of common stock of DanDrit USA. Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.
 
Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 shares of our common stock.  In addition, following the closing of the Share Exchange, DanDrit Biotech USA, Inc., a wholly owned subsidiary of the Company merged with and into the Company, thereby changing the Company’s name to “DanDrit Biotech USA, Inc.”

On December 16, 2013, DanDrit Biotech A/S issued 174,578 shares of its common stock which were exchanged for 261,665 shares of common stock of the Parent upon the closing of the Share Exchange in payment of a $1,500,000 convertible bond, $179,612 of accrued interest and the remaining $673,736 of derivative liability associated with the conversion feature of the bond.

On December 16, 2013, DanDrit Biotech A/S issued 96,288 shares of its common stock which were exchanged for 144,321 shares of common stock of the Parent upon the closing of the Share Exchange in payment of $926,386 of notes payable and related accrued interest payable to DKTI.

On December 16, 2013, DanDrit Biotech A/S issued 184,051 shares of its common stock which were exchanged for 275,863 shares of common stock of the Parent upon the closing of the Share Exchange in payment of $1,770,757 of notes payable and related accrued interest payable to Sune Olsen Holdings ApS and Advance Biotech Invest AS.

Voting-  Holders of the Company’s common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors.

 Dividends- Holders of the Company’s common stock are entitled to receive ratably such dividends as our Board of Directors from time to time may declare out of funds legally available.

 Liquidation Rights- In the event of any liquidation, dissolution or winding-up of affairs of the Company, after payment of all of our debts and liabilities, the holders of the Company’s common stock will be entitled to share ratably in the distribution of any of our remaining assets.
 
Other Matters-  Holders of DanDrit Biotech A/S common stock have no conversion, preemptive or other subscription rights, and there are no redemption rights or sinking fund provisions with respect to the common stock. All of the issued and outstanding shares of common stock on the date of this report are validly issued, fully paid and non-assessable.
 
 
F-16

 

DANDRIT BIOTECH USA INC
(FORMERLY PUTNAM HILLS CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — COMMITMENTS AND CONTINGENCIES 

Patient Name Use Program - On December 16, 2013, DanDrit Biotech A/S entered into an agreement with MyTomorrows (MT), a Dutch company, regarding a Patient Name Use Program (PNU) for the Company’s MelCancerVac (MCV).  This program will allow DanDrit Biotech A/S to sell MCV for a year of treatment (10 vaccines) to cancer patients through MT.  MT offers a worldwide online platform providing access to non-registered medicines for patients with life threatening diseases. MT is a turnkey solution and will be in charge of regulatory, recruitment, logistics, and pharmacovigilance.   The Company will pay MT a royalty on a country to country basis for 20 years on MCV sales sold under the agreement. Either party may terminate the agreement with 180 day written notice.

Food and Drug Administration (FDA) - The FDA has extensive regulatory authority over biopharmaceutical products (drugs and biological products), manufacturing protocols and procedures and the facilities in which they will be manufactured. Any new bioproduct intended for use in humans is subject to rigorous testing requirements imposed by the FDA with respect to product efficacy and safety, possible toxicity and side effects. FDA approval for the use of new bioproducts (which can never be assured) requires several rounds of extensive preclinical testing and clinical investigations conducted by the sponsoring pharmaceutical company prior to sale and use of the product. At each stage, the approvals granted by the FDA include the manufacturing process utilized to produce the product. Accordingly, the Company’s cell systems used for the production of therapeutic or biotherapeutic products are subject to significant regulation by the FDA under the Federal Food, Drug and Cosmetic Act, as amended.

Product liability - The contract production services for therapeutic products offered exposes an inherent risk of liability as biotherapeutic substances manufactured, at the request and to the specifications of customers, could foreseeably cause adverse effects. The Company seeks to obtain agreements from contract production customers indemnifying and defending the Company from any potential liability arising from such risk. There can be no assurance, however, that the Company will be successful in obtaining such agreements in the future or that such indemnification agreements will adequately protect the Company against potential claims relating to such contract production services. The Company may also be exposed to potential product liability claims by users of its products. A successful partial or completely uninsured claim against the Company could have a material adverse effect on the Company’s operations.

Employment Agreements - The Company and its Subsidiary have employment agreements with officers of the Company.

Contingencies - The Company is from time to time involved in routine legal and administrative proceedings and claims of various types.  While any proceedings or claim contains an element of uncertainty, management does not expect a material impact on our results of operations or financial position.

During 2013, the Danish law firm Horten made a claim of DKK 184,144 ($33,421), including accrued interest, against DanDrit Biotech A/S related to services performed for a former shareholder who was selling his shares.  DanDrit Biotech A/S did not engage Horten nor did the Company request the services of Horten.  Horten submitted the invoices only after Horten went into bankruptcy. Management intends to vigorously defend against any claims made by Horton.

NOTE 13 — DISPOSITION
 
On December 16, 2013, DanDrit Biotech A/S sold its dormant Singapore subsidiary, DanDrit Corporation PTE, LTD, for $1 and the accompanying financial statements of the Company include the $1 proceeds and gain on sale of the former subsidiary.

NOTE 14 — SUBSEQUENT EVENT
 
On April 29, 2014, the terms of the loan with Paseco ApS were amended to provide that the Company may extend the term of the loan for 1 year by giving Paseco written notice by December 31, 2014.  Per the terms of the amendment, should the Company extend the notes, the interest rate will increase to 7.00% per annum.
 
DanDrit Biotech A/S received a loan commitment on May 2, 2014 for 2,000,000 DKK ($36,868) from Paseco ApS, an entity owned by a shareholder of the Company, payable by February 1, 2015.  The Company has an option to extend the loan for one year by giving notice to Paseco by December 31, 2014 whereby the interest rate would increase to 7.00% per annum.
 
 
F-17

 
 
DANDRIT BIOTECH A/S
 
FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012
 
 
F-18

 
 
DANDRIT BIOTECH A/S
 
Index to  Financial Statements
 

 
F-19

 
 
 
4397 South Albright Drive, Salt Lake City, UT 84124  
(801) 277-2763 Phone • (801) 277-6509 Fax
 
DANDRIT BIOTECH A/S
Jagtvej 169 A
2100 Copenhagen, Denmark

We have audited the accompanying balance sheets of DanDrit Biotech A/S as of December 31, 2013 and 2012, and the related  statements of operations, other comprehensive income, stockholders’ deficit and cash flows for the years ended December 31, 2013 and 2012. 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, and audit of its internal controls over financial reporting for the year ended December 31, 2013 and 2012. Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal controls over financial reporting for the year ended December 31, 2013 and 2012. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, based on our audit, the financial statements audited by us present fairly, in all material respects, the financial position of DanDrit Biotech A/S as of December 31, 2013 and 2012 and the results of their operations and their cash flows for the years ended December 31, 2013, and 2012, in conformity with generally accepted accounting principles in the United States of America.

The accompanying  financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has not yet established profitable operations and has incurred significant losses since its inception.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans in regards to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Gregory & Associates, LLC
Gregory & Associates, LLC
May 2, 2014
Salt Lake City, Utah
 
 
F-20

 

 BALANCE SHEETS

   
As of December 31,
 
   
2013
   
2012
 
Current Assets:
           
Cash
  $ 18,794     $ 4,381  
Cash held in escrow
    77,468       -  
Other receivables
    25,456       81,802  
Prepaid expenses
    19,774       19,747  
                 
Total Current Assets
    141,492       105,930  
                 
Property and Equipment , net accumulated depreciation
    -       2,706  
                 
OTHER ASSETS:
               
Definite life intangible assets
    231,615       239,658  
Deferred stock offering costs
    67,000       -  
Deposits
    10,360       14,570  
                 
Total Other Assets
    308,975       254,228  
                 
      Total Assets
  $ 450,467     $ 362,864  
                 
Current Liabilities:
               
Notes payable - related party, current portion
  $ 728,001     $ 106,349  
Accounts payable - trade
    548,501       551,175  
Accrued expenses
    858,135       1,429,098  
                 
Total Current Liabilities
    2,134,637       2,086,622  
                 
Long Term Liabilities
               
Bonds Payable - related party, net of $0 and $502,465 discount
    -       997,535  
Notes payable - related Party
    -       795,785  
Derivative Liability
    -       850,753  
                 
Total Long-Term Liabilities
    -       2,644,073  
                 
Total Liabilities
    2,134,637       4,730,695  
                 
STOCKHOLDERS' (DEFICIT):
               
                 
Common stock; par value 1.00 DKK, 200,000,000 shares  authorized, 4,003,089 and 3,548,172 shares issued and  outstanding at December 31, 2013 and 2012, repectively
    739,532       655,978  
Additional paid-in capital
    17,128,614       12,161,676  
Other comprehensive income, net
    (31,190 )     188,280  
Accumulated Deficit
    (19,521,126 )     (17,373,765 )
                 
Total Stockholders' (Deficit)
    (1,684,170 )     (4,367,831 )
                 
Total Liabilities and Stockholders' (Deficit)
  $ 450,467     $ 362,864  

The accompanying notes are an integral part of these  financial statements.
 
 
F-21

 
 
 STATEMENTS OF OPERATIONS

    For the Years Ended  
    December 31,  
   
2013
   
2012
 
Net Sales
  $ 32,768     $ 62,806  
                 
Cost of Goods Sold
    109,299       64,385  
                 
Gross Loss
    (76,531 )     (1,579 )
                 
Operating Expenses:
               
General and administrative expenses
    1,233,683       1,036,005  
Depreciation and Amortization
    38,297       56,600  
Consulting expenses
    390,437       829,845  
                 
Total Operating Expense
    1,662,417       1,922,450  
                 
Loss from Operations
    (1,738,948 )     (1,924,029 )
                 
Other Income (Expense)
               
Interest (expense)
    (652,703 )     (704,911 )
Gain on forgiveness of debt
    49,016       -  
Gain (loss) on currency transactions
    19,541       32,841  
Gain on derviative liability
    175,732       153,430  
Gain on sale of assets
    1       15,020  
                 
Total Other Income (Expense)
    (408,413 )     (503,620 )
                 
Loss Before Income Taxes
    (2,147,361 )     (2,427,649 )
                 
Income Tax Expense (Benefit)
    -       -  
                 
Net Loss
    (2,147,361 )     (2,427,649 )
                 
Basic Loss Per Share
  $ (0.60 )   $ (0.68 )
                 
Weighted Average Common Shares Outstanding
    3,557,893       3,548,172  
                 
Diluted Loss Per Share
  $ (0.60 )   $ (0.68 )
                 
Weighted Average Common Shares  Outstanding Assuming Dilution
    3,557,893       3,548,172  

The accompanying notes are an integral part of these  financial statements.
 
 
F-22

 

 STATEMENTS OF OTHER COMPREHENSIVE LOSS
 
    For the Years Ended  
    December 31,  
   
2013
   
2012
 
             
Net Loss
  $ (2,147,361 )   $ (2,427,649 )
                 
Equity Adjustment for foreign Currency Translation
    (219,470 )     85,701  
                 
Other Comprehensive Loss
  $ (2,366,831 )   $ (2,341,948 )

The accompanying notes are an integral part of these financial statements.
 
 
F-23

 
 
STATEMENT OF STOCKHOLDERS' (DEFICIT)
For the Years Ended December 31, 2013 and 2012
 
               
Additional
         
Other
 
   
Common Stock
   
Paid-in
   
Accumulated
   
Comprehensive
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
Income
 
BALANCE, December 31, 2011
    3,548,172     $ 655,978     $ 12,161,676     $ (14,946,116 )   $ 273,981  
                                         
Equity Adjustment for Foreign Currency Translation
    -       -       -       -       (85,701 )
                                         
Net Loss for the Year Ended December 31, 2012
    -       -       -       (2,427,649 )     -  
                                         
BALANCE, December 31, 2012
    3,548,172     $ 655,978     $ 12,161,676     $ (17,373,765 )   $ 188,280  
                           
Common shares issued upon conversion of bond payable - related party and derivative liability at 13.48 per shares,  December 2013
    174,578       32,064       2,321,284       -       -  
                                         
Common shares issued in payment of notes payable - related party at 9.62 per shares, December 2013
    96,288       17,685       908,701       -       -  
                                         
Common shares issued in payment of notes payable - related  party at 9.62 per shares, December 2013
    184,051       33,804       1,736,953       -       -  
                                         
Equity Adjustment for Foreign Currency Translation
    -       -       -       -       (219,470 )
                                         
Net Loss for the Year Ended December 31, 2013
    -       -       -       (2,147,361 )     -  
                                         
BALANCE, December 31, 2013
    4,003,089     $ 739,532     $ 17,128,614     $ (19,521,126 )   $ (31,190 )
 
The accompanying notes are an integral part of these financial statements.
 
 
F-24

 

 Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
 
   
For the Years Ended
 
   
December 31
 
   
2013
   
2012
 
Cash Flows from Operating Activities:
           
Net (Loss)
  $ (2,147,361 )   $ (2,427,649 )
Adjustments to reconcile net (loss) to net cash provided (used) by operations:
               
Depreciation and amortization
    38,297       56,600  
(Gain)/Loss on sale of equipment
    -       (15,020 )
(Gain)/Loss on sale of subsidiary
    (1 )     -  
Accretion of discount on bond payable
    502,465       461,279  
(Gain)/Loss on derivative liability
    (175,732 )     (142,579 )
Changes in assets and liabilities:
               
(Increase) decrease in other receivable
    56,346       (17,705 )
(Increase) decrease in prepaid expenses/deposits
    4,183       (8,943 )
Increase (decrease) in accounts payable
    (2,674 )     450,924  
Increase (decrease) in accrued expenses
    (406,151 )     710,080  
                 
Total Adjustments
    16,733       1,494,637  
                 
Net Cash Provided (Used) by Operating Activities
    (2,130,628 )     (933,012 )
                 
Cash Flows from Investing Activities:
               
Proceed from sale of subsidiary
    1       -  
Net (increase) in cash held in escrow
    (77,468 )     -  
Proceeds from sale of equipment
    -       15,020  
Purchase of intangible assets
    (27,548 )     (99,663 )
                 
Net Cash Used by Investing Activities
    (105,015 )     (84,643 )
                 
Cash Flows from Financing Activities:
               
Proceeds from notes payable - related party
    2,754,662       856,754  
Payment of stock offering costs
    (67,000 )     -  
Payments on notes payable - related party
    (218,136 )     -  
                 
Net Cash Used by Financing Activities
    2,469,526       856,754  
                 
Gain (loss) on Currency Translation
    (219,470 )     (85,701 )
                 
Net Increase (Decrease) in Cash  and Cash Equivalents
    14,413       (246,603 )
                 
Cash and Cash Equivalents at Beginning of Period
    4,381       250,984  
Cash and Cash Equivalents at End of Period
  $ 18,794     $ 4,381  
                 
Supplemental Disclosures of Cash Flow Information:
               
Cash paid during the period for:
               
Interest
  $ 12,632     $ -  
Income Taxes
  $ -     $ -  
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
               
Acrettion of discount on bond payable
  $ 502,465     $ 461,279  
Change in fair market value of derivative liability
  $ (175,732 )   $ (142,579 )
 
The accompanying notes are an integral part of these  financial statements.
 
 
F-25

 


NOTES TO  FINANCIAL STATEMENTS
 
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Basis of Presentation - The financial statements include the accounts of DanDrit Biotech A/S a Danish Corporation incorporated on April 1, 2001. The terms "Company", “us", "we" and "our" as used in this report refer to DanDrit Biotech A/S, which are set forth below.  The Company engages in the research and development, manufacturing and clinical trials of pharmaceutical and biological products for the human treatment of cancer using the dendritic cell technology.

On December 16, 2013, the Company sold, for $1.00, the wholly-owned dormant subsidiary DanDrit Corporation PTE. LTD.  a Singapore limited liability company incorporated on July 1, 2008. As this Singapore entity was a dormant subsidiary the financial statements include the $1 proceeds and gain on sale of the former subsidiary.

Functional Currency / Foreign currency translation  — The functional currency of DanDrit Biotech A/S is the Danish Kroner (“DKK”).  The Company’s reporting currency is the U.S. Dollar for the purpose of these financial statements. The Company’s balance sheet accounts are translated into U.S. dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. dollars at the average exchange rates prevailing during the years 2013 and 2012. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred.

Cash and Cash Equivalents  — The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company had no balances held in financial institution in the United States in excess of federally insured amounts at December 31, 2013 and December 31, 2012.

Property and Equipment  — Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets which range from four to six years (See Note 3).

Intangible Assets  — Definite life intangible assets include patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, (“ASC”) Topic 350, “Goodwill and Other Intangible Assets” and amortized the patents on a straight line basis over the estimated useful life of twenty years. Costs incurred in relation to patent applications are capitalized cost and amortized over the estimated useful life of the patent. If it is determined that a patent will not be issued, the related remaining patent application costs are charged to expense.

Impairment of Long-Lived Assets - Long-lived assets, such as property, plant, and equipment and patents are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.
 
 
F-26

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated.  The depreciable basis of assets that are impaired and continue in use is their respective fair values.
 
Revenue Recognition and Sales  — The Company’s sales of its MCV colorectal cancer  vaccine have been limited to a compassionate use basis in Singapore after stage IIA trials and is not approved for current sale for any other use or location. The Company's accounts for revenue recognition in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB 101), and FASB ASC 605 Revenue Recognition. The Company recognizes revenue when rights and risk of ownership have passed to the customer, when there is persuasive evidence of an arrangement, product has been shipped or delivered to the customer, the price and terms are finalized, and collections of resulting receivable is reasonably assured. Products are primarily shipped FOB shipping point at which time title passes to the customer.

Value Added Tax - In Denmark, Value Added Tax (“VAT”) of 25% of the invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. VAT of 25% is also paid to Danish and EU vendors on invoices these amounts are refundable from the respective governmental authority and recorded as other receivables in the accompanying financial statements.

Research and Development Cost  — The Company expenses research and development costs for the development of new products as incurred and is included in operating expense. There was no research and development costs for the years ended December 31, 2013 and 2012.

Income Taxes  — The Company accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes. This statement requires an asset and liability approach for accounting for income taxes.
 
Loss Per Share  — The Company calculates earnings /(loss) per share in accordance with FASB ASC 260 Earnings Per Share. Basic earnings per common share (EPS) are based on the weighted average number of common shares outstanding during each period. Diluted earnings per common share are based on shares outstanding (computed as under basic EPS) and potentially dilutive common shares. Potential common shares included in the diluted earnings per share calculation include in-the-money stock options that have been granted but have not been exercised.
 
Derivatives - We generally do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we have entered into certain other financial instruments and contracts, such as debt financing arrangements with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value.
 
We estimate fair values of all derivative instruments, such as embedded conversion features utilizing Level 3 inputs (defined below in Note 1: Fair Value of Financial Instruments). We use the Black-Scholes option valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective inputs that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in our market price of our common stock, which have historically had high volatility. Since derivative financial instruments are initially and subsequently carried at fair value, our income will reflect the volatility in these estimate and assumption changes.
 
 
F-27

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
We report our derivative liabilities at fair value on the accompanying balance sheets as of December 31, 2013 and 2012.
 
Fair Value of Financial Instruments  — The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820, “Fair Value Measurements”. The authoritative guidance, which, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
 
 
Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;
 
 
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, investments, accounts payable, accrued expenses, capital lease obligations and notes payable approximates their recorded values due to their short-term maturities.
  
Accounting Estimates  — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.

Recent Accounting Pronouncements  —  In June 2011, the FASB issued amended standards to increase the prominence of items reported in other comprehensive income. These amendments eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity and require that all changes in stockholders’ equity — except investments by, and distributions to, owners — be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In addition, these amendments require that we present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. We adopted the new standards effective January 1, 2012 and resulted only in changes to presentation of our financial statements.
 
Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Reclassification -   The financial statements for the period ended December 31, 2012 have been reclassified to conform to the headings and classifications used in the December 31, 2013 financial statements.
 
 
F-28

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 2 — GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern.  However, the Company has incurred significant losses and has not yet been successful in establishing profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management plans to mitigate this doubt by raising additional funds through debt and/or equity offerings and by substantially increasing sales once approval for the Company’s product is obtained.  There is no assurance that the Company will be successful in achieving profitable operations.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 3 — PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2013 and December 31, 2012:

   
Useful Life
   
2013
   
2012
 
Lab equipment and instruments
  4-6     $ 194,143     $ 194,143  
Computer equipment
  4-6       66,493       66,493  
            260,636       260,636  
     Less Accumulated Depreciation
          (260,636 )     (257,930 )
Net Property and Equipment
        $ -     $ 2,706  
 
Depreciation expense amounted to $2,706 and $4,477, for the year ended December 31, 2013 and 2012, respectively. The Company’s property and equipment is held as collateral on the notes payable related party.
  
NOTE 4 — DEFINITE-LIFE INTANGIBLE ASSETS
 
At December 31, 2013 and December 31, 2012, definite-life intangible assets, net of accumulated amortization, consist of patents on the Company’s products and processes of $231,615 and $239,658, respectively. The patents are recorded at cost and amortized over twenty years from the date of application. Amortization expense for the years ended December 31, 2013 and 2012 was $38,297 and $56,600, respectively. Expected future amortization expense for the years ended are as follows:

Year ending December 31,
     
2014
  $ 19,691  
2015
    19,691  
2016
    19,691  
2017
    19,691  
2018
    19,691  
Thereafter
    133,160  
    $ 231,615  

 
F-29

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 5 — NOTES PAYABLE – RELATED PARTY

Notes payable to related parties consists of the following as of December 31, 2013 and 2012 :
 
   
2013
   
2012
 
6%  Note Payable DKTI A/S
  $ -     $ 795,785  
Note Payable ML Group
    21,557       20,618  
6% Note Payable - Sune Olsen Holding ApS
    -       85,731  
5% Note Payable - Sune Olsen Holding ApS
    521,390       -  
5% Note Payable - Sune Olsen
    185,054       -  
 Total Notes Payable – Related Party
    728,001       902,134  
                Less Current Maturities
    (728,001 )     (106,349 )
 Note Payables – Related Party Long Term
  $ -     $ 795,785  

The following represents the future maturities of long-term debt as of December 31, 2013:

Year ending December 31,
     
2013
  $ 728,001  
2014
    -  
2015
    -  
2016
    -  
2017
    -  
Thereafter
    -  
    $ 728,001  

DanDrit Biotech A/S has received a unsecured loan facility from Sune Olsen Holding ApS, an entity owned by a shareholder, with a goal of ensuring financing until new equity has been brought in. Under the loan facility DanDrit has received the following amounts: On November 11, 2013 DKK 1,500,000 ($269,620), on November 20, 2013 DKK 405,000 ($55,459), and on December 2, 2013 DKK 900,000 ($163,482). The loans are due May 1, 2014 and accrue interest at 5% per year DKK17,125 ($3,330) at December 31, 2013.

DanDrit Biotech A/S has received a unsecured loan from Sune Olsen with a goal of ensuring financing until new equity has been brought in. The loan in the amount of DKK 1,000,000 ($184,873) was issued on December 20, 2013. The loan is due May 1, 2014 and accrues interest of 5% per year DKK 1,644 ($304) at December 31, 2013.

During 2012, DKTI A/S agreed to loan the Company up to DKK 5,000,000 (approximately $880,000) accruing interest at 6%.  The loan is secured by all the Company’s intellectual property rights, including its patents and its patent applications credit facility.  During the year ended December 31, 2012 the Company borrowed DKK 4,431,862 ($783,139) plus DKK 71,563 ($12,646) in interest.  During the year ended December 31, 2013, the Company borrowed an additional DKK 310,000 (approximately $55,000) on the loan and accrued interest of DKK 230,377 (approximately $42,000). The notes with related accrued interest were converted into 96,288 common shares on December 16, 2013.

During the years ended December 31, 2013, 2012 and 2011 Sune Olsen Holding ApS,  loaned the Company DKK 1,267,724 ($232,841), DKK 338,719 ($59,854) and DKK 143,750 ($25,019), respectively.  The Company added the accrued interest at 6% and the Company recorded interest expense of DKK 86,047 ($15,804), DKK 20,469 ($3,617) and DKK 2,689 ($468) during the years end December 31, 2013, 2012 and 2011 respectively.  The loans are payable upon three month written notice of the shareholder.  On December 16, 2013, the notes with related accrued interest were converted into 35,106 shares of DanDrit BioTech A/S common stock.
 
 
F-30

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 5 — NOTES PAYABLE – RELATED PARTY (Continued)

On June 20, 2013, Sune Olsen Holding APS, an entity owned by a shareholder of the Company paid DKK 1,500,000, ($265,000) in accrued legal fees owed by the Company in exchange for a DKK1,500,000 ($265,000) 5% note payable to Sune Olsen Holding APS. On December 16, 2013, the note with related accrued interest of DKK 20,959 ($3,804) was converted into 29,036 shares of DanDrit BioTech A/S common stock.
 
On April 14, 2013, Sune Olsen Holding APS, an entity owned  by a shareholder of the Company assumed DKK 4,375,932 (approximately$773,000) in  liabilities owed by the company for past due rent from a vendor in exchange for a note payable. The note accrued interest at 5% and is payable on demand. On December 31, 2013, the note with related interest of DKK139,670 ($25,349) were converted into 86,204 shares of DanDrit BioTech A/S common stock.

On July 26, 2013 and August 15, 2013, Sune Olsen Holding APS,  an entity owned  by a shareholder of the Company, loaned the Company an additional DKK 1,000,000 ($177,239) and DKK 750,000 ($133,343), respectively.  The notes accrue interest at 5% and are payable upon three month written notice of the shareholder. The notes with related accrued interest of DKK 15,575 ($2,827) were converted into 33,705 shares of DanDrit BioTech A/S common stock on December 16, 2013.
 
On April 30, 2013 Stratega ApS, loaned the Company DKK 1,000,000 ($175,359). The note accrues interest at 1% per month and is payable on September 1, 2013.  As of September 1, 2013 the loan was outstanding, and thereby incurred a penalty of DKK 50,000 ($8,863). The outstanding loan accrued interest at 2.5% per month beginning September 2, 2013. DKTI Invest AS has secured the loan by pledging 25,000 common shares of DKTI Invest AS. DKTI Invest AS pledged the collateral on behalf of the Company, and the Company granted DKTI Invest AS worldwide use of the Company’s DDM master cell bank (“Use Agreement”) more specifically of the Company’s working cell bank DDM 1-7203-01, manufactured in 2008, for research, manufacturing and commercial purposes. The note was repaid in November 2013, the security was released and the Use Agreement cancelled.

NOTE 6 — CONVERTIBLE BOND PAYABLE – RELATED PARTY
 
On December 1, 2011 the Company borrowed $1,500,000 and issued 6% convertible bonds. The bonds may not be converted during the four weeks following the publication of the annual report. The bond may not be repaid until the bonds’ expiration on November 30, 2014.  The bonds shall not accrue interest after expiration.  The bonds and related accrued interest are convertible into common shares of the Company at an initial rate of $9.58 per common share.  The conversion price shall change in the following situations:
 
 
1)
Private placement of the Company’s common stock the conversion price shall be adjusted to the private placement offering price.
 
2)
Issuance of the Company’s common shares in a public offering if the offering price does not exceed $11.98 per share then the conversion price shall be 80% of the public offering price
 
3)
Merger of the Company if the price at which the Company’s common stock is exchange does not exceed $11.98 per share then the conversion price shall be 80% of the merger price
 
4)
Acquisition of the Company by cash or cash and stock if the price does not exceed $11.98 per share then the conversion price shall be 80% of the acquisition price
 
5)
If none of the situation in 1, 2, 3, 4 occur the conversion price shall be 80% of the price used as in the most recent private equity capital increase
 
6)
The conversion price shall not be adjusted for options issued to management or board of directors if the options issued are less than 1% of Company’s fully diluted shares including the shares issuable upon conversion of this convertible bond.
 
 
F-31

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 6 — CONVERTIBLE BOND PAYABLE – RELATED PARTY (Continued)
 
The conversion /adjustment features had an estimated fair value of $1,003,557 using the Black-Scholes pricing Model using the assumptions below and bifurcated and properly classified as derivative instruments required to be recorded at fair value (Note 7). The proceeds from the bond have been allocate to the note and conversion / adjustment feature of the convertible bond and recorded at a discount which has been and will continue to be amortized to interest expense through conversion or estimated life of the bond whichever occurs sooner. During the years ended December 31, 2013 and 2012, the Company recorded interest expense of $502,465 and $461,279, respectively, for the accretion of the discount on the note.
 
As of December 31, 2012, there was $1,500,000 outstanding on the convertible bond payable with related accrued interest of $97,497. As of December 31, 2012 the remaining discounts on the bond was $502,465, respectively.
 
On December 16, 2013, the bond, related accrued interest and derivative liability were converted into 174,578 shares of DanDrit BioTech A/S common stock.
 
The assumptions used to determine the initial fair value of the conversion feature of the convertible bond were expected volatility of 65%, expected life of two years to eleven months, risk – free interest rates of .41%, and no dividend yield.

NOTE 7 – DERIVATIVE LIABILITIES
 
The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into certain other financial instruments and contracts, such as debt financing arrangements with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value.
 
Shares issued upon conversion of the bond are required to be registered upon listing and thus a derivative liability has recorded. The fair value of the beneficial conversion feature is a derivative liability at December 31, 2013 and 2012.
 
The following table discloses the fair value of the Company’s derivative liabilities and their location in the balance sheets as of December 31, 2013 and 2012. The Company held no asset derivatives at either reporting date.
 
 
Liability Derivatives
 
 
December 31, 2013
 
December 31, 2012
 
 
Balance Sheet
Location
  
Fair
Value
 
Balance Sheet
Location
  
Fair
Value
 
Derivatives not designated as hedging instruments
 
  
       
  
     
Conversion feature on Convertible Bond
Derivative Liabilities
  
 $
-
  
Derivative Liabilities
  
 $
850,753
  
   
  
       
  
     
Total derivatives not designated as hedging instruments
 
  
$
-
  
 
  
$
850,753
  
 
The following table summarizes liabilities measured at fair value on a recurring basis for the periods presented:
 
 
  
December 31, 2013
 
  
December 31, 2012
 
Fair Value Measurements Using:
  
Level 1
 
  
Level 2
 
Level 3
  
Total
 
  
Level 1
 
  
Level 2
   
Level 3
  
Total
 
Liabilities
  
     
  
       
  
     
  
     
  
         
  
     
Derivative Liabilities
   
-
     
-
 
   -
   
-
     
-
     
-
  $
850,753
 
$
850,753
 
 
On December 16, 2013, the $1,500,000 convertible bond, accrued interest of $179,612 and the $673,736 derivative liability were converted into 174,578 shares of DanDrit BioTech A/S common stock.
 
 
F-32

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 8 — LEASES

Operating Leases  — On April 1, 2013, the Company entered into an operating lease agreement for lab space. The lease calls for monthly payments of 6,000 DKK (approximately$1,000) and expires on March 31, 2016 but may be terminated by the Company with 3 months notice. The lease was subsequently canceled.

The Company leased office space under an operating lease agreements which were cancelled on March 31, 2013.  The lease called for monthly payments of DKK 35,404 (approximately $6,255 at December 31, 2012).
 
The Company leases laboratory and production space under operating lease agreements which can be cancelled with 3 month notice.  The lease calls for monthly payments of DKK 6,000 (approximately $1,109 at December 31, 2013).

Lease expense charged to operations was $65,702 and $76,969, for the year ended December 31, 2013, and 2012, respectively.

  NOTE 9 — INCOME TAXES

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes; which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards. The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined.
 
As of December 31, 2013 the Company had net operating loss carry-forwards of approximately $9,800,000 for Danish tax purposes which do not expire.

The Company files Danish income tax returns, and they are generally no longer subject to tax examinations for years prior to 2007 for their Danish tax returns.

The temporary differences, tax credits and carry forwards gave rise to the following deferred tax asset (liabilities) at December 31, 2013 and 2012:
 
   
2013
   
2012
 
Excess of Tax over book depreciation Fixed assets
  $ 87,578     $ 108,980  
Excess of Tax over book depreciation Patents
    114,028       8,076  
Net Operating Loss Carry forward
    9,794,602       7,149,196  
Valuation Allowance
    (9,996,207 )     (7,266,252 )
            Total Deferred Tax Asset (Liabilities)
  $ -     $ -  

In accordance with prevailing accounting guidance, the Company is required to recognize and disclose any income tax uncertainties.  The guidance provides a two-step approach to recognize and disclose any income tax uncertainties.  The guidance provides a two-step approach to recognizing and measuring tax benefits and liabilities when realization of the tax position is uncertain.  The first step is to determine whether the tax position meet the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%.  The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which can be difficult to determine and can only be estimated. Management estimates that it is more likely than not that the Company will not generate adequate net profits to use the deferred tax assets; and consequently, a valuation allowance was recorded for all deferred tax assets.
 
 
F-33

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS

NOTE 9 — INCOME TAXES (Continued)

A reconciliation of income tax expense at the federal statutory rate to income tax expense at the company’s effective rate is as follows at December 31, 2013 and 2012:
 
   
2013
   
2012
 
Computed Tax at Expected Statutory Rate
  $ (752,882 )   $ (825,401 )
Non-US Income Taxed at Different Rates
    199,292       218,488  
Non-Deductable expenses
    283,381       96,328  
Valuation allowance
    270,209       510,585  
             Income Tax Expense
  $ -     $ -  

The components of income tax expense (benefit) from continuing operations for the years ended December 31, 2013 and 2012 consisted of the following:
 
Current Tax Expense
 
2013
   
2012
 
       Danish Income Tax
  $ -     $ -  
Total Current Tax Expense
    -       -  
Deferred Income Tax Expense (Benefit)
               
       Excess of Tax over Book Depreciation Fixed Assets
    26,364       10,710  
       Excess of Tax over Book Depreciation Patents
    (105,585 )     (53,961 )
       Net Operating Loss Carry forwards
    (2,319,956 )     (1,993,700 )
       Change in the Valuation allowance
    2,399,177       2,036,951  
Total Deferred Tax Expense
  $ -     $ -  

Deferred income tax expense / (benefit) results primarily from the reversal of temporary timing differences between tax and financial statement income.

NOTE 10 — LOSS PER SHARE

The following data shows the amounts used in computing loss per share and the effect on income and the weighted average number of shares of potential dilutive common stock for the year ended December 31, 2013 and 2012:
 
   
For the Year Ended
December 31,
 
   
2013
   
2012
 
Net (Loss)
 
$
(2,147,361
  $
(2,427,649
Weighted average number of common shares used in basic earnings per share
   
3,557,893
     
3,548,172
 
Effect of dilutive securities, stock options and warrants
   
-
     
-
 
Weighted average number of common shares and potential dilutive common shares outstanding used in dilutive earnings per share
   
3,557,893
     
3,548,172
 
 
For the year ended  December 31, 2013, the Company had no common stock equivalents.  For the year ended December 31, 2012, the Company had a convertible bond wherein the holder could convert the bond and underlying accrued interest into a minimum of  156,576 shares of common stock which were not included in the loss per share computation because their effect would be anti-dilutive.
 
 
F-34

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 11 — STOCKHOLDERS’ EQUITY

Common Stock  — The Company has 200,000,000 authorized shares of common stock, DKK 1.00 par value. As of December 31, 2013 and 2012, respectively, there were 4,003,089 and 3,548,172 common shares issued and outstanding.
 
On December 16, 2013, the Company issued 174,578 shares of DanDrit BioTech A/S common stock in payment of a $1,500,000 convertible bond, $179,612 of accrued interest and the remaining $673,736 of derivative liability associated with the conversion feature of the bond.

On December 16, 2013, the Company issued 96,288 shares of DanDrit BioTech A/S common stock in payment of $926,386 of notes payable and related accrued interest payable to DKTI.

On December 16, 2013, the Company issued 184,051 shares of DanDrit BioTech A/S common stock in payment of $1,770,757 of notes payable and related accrued interest payable to Sune Olsen Holdings ApS and Advance Biotech Invest AS.
 
Voting-  Holders of Parent common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors.
 
 Dividends- Holders of   Parent common stock are entitled to receive ratably such dividends as our Board of Directors from time to time may declare out of funds legally available.

 Liquidation Rights- In the event of any liquidation, dissolution or winding-up of affairs of Parent, after payment of all of our debts and liabilities, the holders of Parent common stock will be entitled to share ratably in the distribution of any of our remaining assets.
 
Other Matters-  Holders of DanDrit BioTech A/S common stock have no conversion, preemptive or other subscription rights, and there are no redemption rights or sinking fund provisions with respect to the common stock. All of the issued and outstanding shares of common stock on the date of this report are validly issued, fully paid and non-assessable.
 
NOTE 12 — COMMITMENTS AND CONTINGENCIES
 
Patient Name Use Program - On December 16, 2013, DanDrit BioTech A/S entered into an agreement with MyTomorrows (MT), a Dutch company, regarding a Patient Name Use Program (PNU) for the Company’s MelCancerVac (MCV).  This program will allow DanDrit BioTech A/S to sell MCV at $20,600 for a year of treatment (10 vaccines) to cancer patients through MT.  MT offers a worldwide online platform providing access to non-registered medicines for patients with life threatening diseases. MT is a turnkey solution and will be in charge of regulatory, recruitment, logistics, and pharmacovigilance.  MT will transfer $20,600 as soon as a patient orders MCV. North American territories are excluded from the agreement.  The Company will pay MT a royalty of up to 5% on a country to country basis for 20 years on MCV sales sold under the agreement. Either party may terminate the agreement with 180 day written notice.
 
Food and Drug Administration (FDA) - The FDA has extensive regulatory authority over biopharmaceutical products (drugs and biological products), manufacturing protocols and procedures and the facilities in which they will be manufactured. Any new bioproduct intended for use in humans is subject to rigorous testing requirements imposed by the FDA with respect to product efficacy and safety, possible toxicity and side effects. FDA approval for the use of new bioproducts (which can never be assured) requires several rounds of extensive preclinical testing and clinical investigations conducted by the sponsoring pharmaceutical company prior to sale and use of the product. At each stage, the approvals granted by the FDA include the manufacturing process utilized to produce the product. Accordingly, the Company’s cell systems used for the production of therapeutic or biotherapeutic products are subject to significant regulation by the FDA under the Federal Food, Drug and Cosmetic Act, as amended.
 
 
F-35

 
 
DANDRIT BIOTECH A/S

NOTES TO  FINANCIAL STATEMENTS
 
NOTE 12 — COMMITMENTS AND CONTINGENCIES (Continued)
 
Product liability - The contract production services for therapeutic products offered exposes an inherent risk of liability as biotherapeutic substances manufactured, at the request and to the specifications of customers, could foreseeably cause adverse effects. The Company seeks to obtain agreements from contract production customers indemnifying and defending the Company from any potential liability arising from such risk. There can be no assurance, however, that the Company will be successful in obtaining such agreements in the future or that such indemnification agreements will adequately protect the Company against potential claims relating to such contract production services. The Company may also be exposed to potential product liability claims by users of its products. A successful partial or completely uninsured claim against the Company could have a material adverse effect on the Company’s operations.
 
Employment Agreements - The Company has employment agreements with officers of the Company.

Contingencies - The Company is from time to time involved in routine legal and administrative proceedings and claims of various types.  While any proceedings or claim contains an element of uncertainty, management does not expect a material impact on our results of operations or financial position.

During 2013, the Danish law firm Horten made a claim of DKK 184,144 ($33,421), including accrued interest, against DanDrit BioTech A/S related to services performed for a former shareholder who was selling his shares.  DanDrit BioTech A/S did not engage Horten nor did the Company request the services of Horton.  Horton submitted the invoices only after the former shareholder went into bankruptcy. Management intends to vigorously defend against any claims made by Horton.
 
NOTE 13 — DISPOSITION
 
On December 16, 2013, DanDrit BioTech A/S sold its dormant Singapore subsidiary, DanDrit Corporation PTE, LTD, for $1 and the accompanying financial statements of the Company include the $1 proceeds and gain on sale of the former subsidiary.
 
NOTE 14 — SUBSEQUENT EVENT

The Company’s management reviewed material events through March 31, 2014.
 
Share Exchange Agreement – On February 12, 2014, the Company signed and closed the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA, Inc. (formerly known as Putnam Hills Corp.), Dandrit BioTech A/S and N.E. Nielsen, as the representative of the shareholders of DanDrit BioTech A/S was signed, pursuant to which the holders of 3,879,624 common shares (approximately 97%) of the issued and outstanding capital stock of Dandrit BioTech A/S (the “DanDrit Consenting Holders”) agreed to exchange all of the issued and outstanding capital stock of DanDrit BioTech A/S for up to 6,000,000 shares of DanDrit USA (the “Share Exchange”) and as a result of which DanDrit USA, Inc. would become the parent of DanDrit BioTech A/S. Simultaneous with the closing of the Share Exchange Agreement DanDrit USA, Inc.’s majority shareholder cancelled 4,400,000 shares of common stock. In connection with the proposed Share Exchange 1,400,000 and 40,000 common shares of DanDrit USA were issued for consulting and legal services valued at $5 per share or $7,000,000 and $200,000, respectfully.
 
On March 27, 2014 the Company entered into an operating lease agreement for office space. The Lease calls for monthly payments of DKK 10,000 (approximately$1,842), increasing to DKK 20,000 (approximately $3,684) on July 1, 2014. The sublease can be terminated by the Company with 3 months notice.

On February 15, 2014 and March 18, 2014, the Company received DKK 2,500,000 ($461,877) and DKK 2,300,000 ($424,927) loans, respectively, from Paseco ApS, an entity owned by a shareholder of DanDrit Biotech USA, Inc.  The loans are payable 14 days from the earlier to occur of the completion of the contemplated public offering in DanDrit Biotech USA, Inc. and February 1, 2015, and accrue interest at 5% per annum. On April 29, 2014, DanDrit Denmark and Paseco entered into an amendment whereby the 2014 loans are payable on February 1, 2015 and can be extended at the Company’s option for an additional year with an increase in the interest rate to 7.00%.
 
During March 2014, the Company extended maturity date of the DKK 2,805,000 loans with Sune Olsen Holdings ApS from May 1, 2014 to 14 days after the completion of the contemplated stock offering of DanDrit Biotech USA, Inc. or February 1, 2015.

During March 2014, the Company extended maturity date of the DKK 1,000,000 loans with Sune Olsen from May 1, 2014 to 14 days after the completion of the contemplated stock offering of DanDrit Biotech USA, Inc. or February 1, 2015.

During March 2014, the Company received a 2,000,000 DKK letter of support from Paseco ApS an entity owned by a shareholder of the DanDrit Biotech USA, Inc. to ensure continued operations until February 1, 2015. The Company has an option to extend the loan for one year by giving notice to Paseco by December 31, 2014 whereby the interest rate would increase to 7.00% per annum.
 
 
F-36

 
 
PUTNAM HILLS CORP.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
 
 
 
F-37

 
 
 
To the Board of Directors and Stockholder of
Putnam Hills Corp.
Great Neck, NY

We have audited the accompanying balance sheets of Putnam Hills Corp.. (a development stage company) (the “Company”) as of March 31, 2013 and 2012 and the related statements of operations, stockholder’s deficiency, and cash flows for the years ended March 31, 2013 and 2012, and the cumulative period from January 18, 2011 (inception) through March 31, 2013. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Putnam Hills Corp.. as of March 31, 2013 and 2012, and the results of its operations and its cash flows for the years ended March 31, 2013 and 2012, and the cumulative period from January 18, 2011 (inception) through March 31, 2013, 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. As discussed in Note 3 to the financial statements, the Company is in the development stage and has incurred net losses since inception. This raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
/s/ Raich Ende Malter & Co. LLP
 
Raich Ende Malter & Co. LLP
 
New York, New York
 
July 16, 2013
 
 
 
F-38

 
 
(A Development Stage Company)
BALANCE SHEET
 
   
March 31,
2013
   
March 31,
2012
 
             
ASSETS
 
CURRENT ASSETS:
           
Cash
 
$
6,744
   
$
336
 
Loans receivable - related parties
   
13,219
     
13,219
 
                 
Total Current Assets
   
19,963
     
13,555
 
                 
TOTAL ASSETS
 
$
19,963
   
$
13,555
 
           
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
 
CURRENT LIABILITIES:
               
                 
Accounts payable and accrued expenses
 
$
7,497
   
$
-
 
Loan payable - related party
   
38,235
     
22,235
 
Note payable - related party
   
25,500
     
5,000
 
                 
Total Current Liabilities
   
71,232
     
27,235
 
                 
COMMITMENTS AND CONTINGENCIES
   
-
     
-
 
                 
STOCKHOLDER'S DEFICIENCY:
               
Preferred stock, $.0001 par value; 10,000,000 shares authorized; none issued and outstanding
   
-
     
-
 
Common stock, $.0001 par value; 100,000,000 shares authorized; 5,000,000 shares issued and outstanding
   
500
     
500
 
Additional paid-in capital
   
24,500
     
24,500
 
Accumulated deficit during the development stage
   
(76,269
)
   
(38,680
)
                 
Total Stockholder's Deficiency
   
(51,269
)
   
(13,680
)
                 
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
 
$
19,963
   
$
13,555
 

See accompanying notes to the financial statements.
 
 
F-39

 
 
(A Development Stage Company)
STATEMENT OF OPERATIONS
 
   
For The Year
Ended
March 31,
2013
   
For The Year
Ended
March 31,
2012
   
Cumulative From
January 18,
2011
(Inception) to
March 31,
2013
 
                   
REVENUES
 
$
-
   
$
-
   
$
-
 
                         
GENERAL AND ADMINISTRATIVE EXPENSES
   
37,092
     
29,945
     
75,772
 
                         
(LOSS) BEFORE OTHER EXPENSES
   
(37,092
)
   
(29,945
)
   
(75,772
)
                         
INTEREST EXPENSE
   
497
     
-
     
497
 
                         
(LOSS) BEFORE BENEFIT FROM INCOME TAXES
   
(37,589
)
   
(29,945
)
   
(76,269
)
                         
BENEFIT FROM INCOME TAXES
   
-
     
-
     
-
 
                         
NET (LOSS)
 
$
(37,589
)
 
$
(29,945
)
 
$
(76,269
)
                         
BASIC AND DILUTED LOSS PER SHARE
 
$
-
     
-
         
                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED
   
5,000,000
     
3,210,383
         
 
See accompanying notes to the financial statements.
 
 
F-40

 
 
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S DEFICIENCY
FOR THE PERIOD FROM JANUARY 18, 2011 (INCEPTION) TO MARCH 31, 2013

                                       
Accumulated
       
                                       
Deficit
   
Total
 
                           
Additional
         
During the
   
Stockholder's
 
   
Preferred Stock
   
Common Stock
   
Paid-in
   
Subscription
   
Development
   
Equity
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Receivable
   
Stage
   
(Deficiency)
 
                                                 
Balance at January 18, 2011 (Inception)
   
-
   
$
-
     
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                                                 
Common stock subscription
   
-
     
-
     
5,000,000
     
500
     
24,500
     
(25,000
)
   
-
     
-
 
                                                                 
Net (loss)
   
-
     
-
     
-
     
-
     
-
     
-
     
(8,735
)
   
(8,735
)
                                                                 
Balance at March 31, 2011
   
-
     
-
     
5,000,000
     
500
     
24,500
     
(25,000
)
   
(8,735
)
   
(8,735
)
                                                                 
Common stock subscription proceeds
   
-
     
-
     
-
     
-
     
-
     
25,000
     
-
     
25,000
 
                                                                 
Net (loss)
   
-
     
-
     
-
     
-
     
-
     
-
     
(29,945
)
   
(29,945
)
                                                                 
Balance at March 31, 2012
   
-
     
-
     
5,000,000
     
500
     
24,500
     
-
     
(38,680
)
   
(13,680
)
                                                                 
Net (loss)
   
-
     
-
     
-
     
-
     
-
     
-
     
(37,589
)
   
(37,589
)
                                                                 
Balance at March 31, 2013
   
-
   
$
-
     
5,000,000
   
$
500
   
$
24,500
   
$
-
   
$
(76,269
)
 
$
(51,269
)

See accompanying notes to the financial statements.
 
 
F-41

 
 
(A Development Stage Company)
STATEMENT OF CASH FLOWS
 
   
For The Year
Ended
March 31,
2013
   
For The Year
Ended
March 31,
2012
   
Cumulative From
January 18,
2011
(Inception) to
March 31,
2013
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
                   
NET (LOSS)
 
$
(37,589
)
 
$
(29,945
)
 
$
(76,269
)
                         
ADJUSTMENT TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
                       
Professional fees paid by related party on behalf of the Company
   
-
     
5,000
     
13,735
 
Increase in accounts payable and accrued expenses
   
7,497
     
-
     
7,497
 
                         
NET CASH USED IN OPERATING ACTIVITIES
   
(30,092
)
   
(24,945
)
   
(55,037
)
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Increase in loans receivable - related parties
   
-
     
(13,219
)
   
(13,219
)
                         
NET CASH USED IN INVESTING ACTIVITIES
   
-
     
(13,219
)
   
(13,219
)
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Increase in loan payable - related party
   
16,000
     
8,500
     
24,500
 
Increase in note payable - related party
   
20,500
     
5,000
     
25,500
 
Increase in capital stock
   
-
     
25,000
     
25,000
 
                         
NET CASH PROVIDED BY FINANCING ACTIVITIES
   
36,500
     
38,500
     
75,000
 
                         
NET INCREASE IN CASH
   
6,408
     
336
     
6,744
 
                         
CASH, BEGINNING OF PERIOD
   
336
     
-
     
-
 
                         
CASH, END OF PERIOD
 
$
6,744
   
$
336
   
$
6,744
 
                         
SCHEDULE OF NON-CASH FINANCING ACTIVITIES :
                       
Professional fees paid by related party on behalf of the Company
 
$
-
   
$
5,000
   
$
13,735
 
Common stock subscribed
 
$
-
   
$
-
   
$
25,000
 
 
See accompanying notes to the financial statements.
 
 
F-42

 
 
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS

Note 1 -          Organization and Business

Business Activity

Putnam Hills Corp., a Development Stage Company, ("the Company") was incorporated in the state of Delaware on January 18, 2011 with the objective to acquire, or merge with, an operating business.

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly traded corporation. The Company’s principal business objective over the next twelve months and beyond will be to achieve long-term growth potential through a combination with a business rather than immediate short-term earnings. The Company will not restrict its potential target companies to any specific business, industry or geographical location. The analysis of business opportunities will be undertaken by, or under the supervision of, the officers and directors of the Company.

Note 2 -          Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. There are no cash equivalents at the balance sheet dates.
 
 
F-43

 
 
PUTNAM HILLS CORP
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS

Note 2 -          Summary of Significant Accounting Policies (cont’d.)

Income Taxes

The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities and are measured using 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.

The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. As of March 31, 2013, the Company has no accrued interest or penalties related to uncertain tax positions.

Loss Per Common Share

Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any common shares outstanding or potentially dilutive instruments for each of the periods presented.

Emerging Growth Company

The Company is an “emerging growth company” and  has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
 
 
F-44

 
 
PUTNAM HILLS CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS

Note 3 -          Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses from inception of approximately $76,000, and has negative working capital of approximately $51,000 at March 31, 2013, which among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plan to find a suitable acquisition or merger candidate, raise additional capital from the sales of stock, and receive additional loans from related parties. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.

Note 4 -          Income Taxes

As of March 31, 2013, the Company has net operating loss carryforwards of approximately $76,000 to reduce future federal and state taxable income through 2033.

The Company currently has no federal or state tax examinations in progress nor has it had any federal or state examinations since its inception. All of the Company’s tax years are subject to federal and state tax examination.

The benefit from income taxes consists of the following:
 
   
For The Year
Ended
March 31,
2013
   
For The Year
Ended
March 31,
2012
   
Cumulative
From
January 18,
2011
(Inception) to
March 31,
2013
 
Current Expense:
                 
  Federal and State
 
$
-
   
$
-
   
$
-
 
Deferred tax benefit:
                       
  Federal and State
   
13,000
     
10,000
     
26,000
 
  Valuation allowance
   
(13,000
)
   
(10,000
)
   
(26,000
)
Total
 
$
-
   
$
-
   
$
-
 
 
 
F-45

 
 
PUTNAM HILLS CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS

Note 4 -          Income Taxes (cont’d.)

The income tax benefit differs from the amount computed by applying the federal statutory income tax rate to the loss before income taxes due to the following:
 
   
For The Year
Ended
March 31,
2013
   
For The Year
Ended
March 31,
2012
   
Cumulative
From
January 18,
2011
(Inception) to
March 31,
2013
 
Statutory federal income tax rate
   
(34
)%
   
(34
)%
   
(34
)%
Valuation allowance
   
34
%
   
34
%
   
34
%
Effective income tax rate
   
0
%
   
0
%
   
0
%
 
Note 5 -          Common Stock

On January 18, 2011, the Company authorized one hundred million (100,000,000) shares of common stock. On January 18, 2011, the Company received a subscription for five million (5,000,000) shares of common stock for $25,000 from the former President of the Company, (See note 7).

Note 6 -          Preferred Stock

The Company is authorized to issue (10,000,000) shares of $.0001 par value preferred stock with designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors of the Company.

Note 7 -          Related Party Transactions

The Company utilizes the office space and equipment of its management at no cost.

For the period January 18, 2011 (Inception) to March 31, 2012, professional fees of $13,735 were paid on behalf of the Company by Sunrise Financial Group Inc. (“SFG”). During the year ended March 31, 2012, SFG advanced the Company an additional $8,500. During the year ended March 31, 2013, SFG advanced the Company an additional $16,000 for professional fees. The President of SFG was the Company’s former President and sole stockholder. As of March 31, 2013, the outstanding balance of $38,235 for professional fees paid by SFG and amounts advanced to the Company are reported as loan payable - related party. The amounts are unsecured, non-interest bearing and have no stipulated repayment terms.
 
 
F-46

 

PUTNAM HILLS CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS

Note 7 -          Related Party Transactions (cont’d.)

During the year ended March 31, 2012, the Company made loans of $6,525 and $6,694 to Iron Sands Corp. and Trenton Acquisition Corp., respectively. NLBDIT 2010 Services, LLC is the only subscriber of the common stock of both Iron Sands Corp. and Trenton Acquisition Corp. As of March 31, 2013, the outstanding receivable of $13,219 is reported as loans receivable - related parties. The loans are unsecured, non-interest bearing and have no stipulated repayment terms.

On May 26, 2011, the former President resigned and the related subscription for common stock was cancelled. On May 26, 2011, NLBDIT 2010 Services, LLC, a company controlled by the former President, subscribed for five million (5,000,000) shares of common stock for $25,000. On August 10, 2011 the Company received payment of $25,000 for the common stock subscription.

On June 3, 2011, the Company issued a Promissory Note payable (the “Note”) to NLBDIT 2010 Enterprises, LLC, a company controlled by the former President.  The Note bears interest at 6% and is payable upon completion of a business combination with a private company in a reverse merger or other transaction after which the Company would cease to be a shell company. At March 31, 2013, the outstanding balance of $25,500 is reported as note payable - related party. The lender has agreed to forego all accrued and unpaid interest through August 20, 2012. At March 31, 2013, $497 of accrued interest related to this loan is reported as accounts payable and accrued expenses. Subsequent to March 31, 2013, the Company borrowed an additional $500.
 
 
F-47

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
AND
DANDRIT BIOTECH A/S

PROFORMA FINANCIAL STATEMENTS
 
The following unaudited proforma condensed combined balance sheet aggregates the balance sheet of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) ("PARENT") as of December 31, 2013, and the balance sheet of DANDRIT BIOTECH AS as of December 31, 2013, accounting for the Merger (as defined below) as a recapitalization of the SUBSIDIARY with the issuance of shares for the net assets of PARENT (a reverse acquisition) and using the assumptions described in the following notes, giving effect to the Merger and subsequent bridge loans, as if the Merger had occurred as of January 1, 2011. The Merger was completed February 12, 2014.

The  following  unaudited  proforma  condensed  combined  statement  of operations  reflects the results of operations of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) for the nine months ended December 31, 2013, the results of operations of DANDRIT BIOTECH A/S for the years ended December 31,  2013and as if the Merger had  occurred  as of the January 1, 2011.
 
The proforma condensed combined financial statements should be read in conjunction with the separate financial statements and related notes thereto of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.), and the  financial statements of DANDRIT BIOTECH AS. These proforma condensed combined financial statements are not necessarily indicative of the combined financial position, had the acquisition occurred on the date  indicated  above,  or the combined  results of  operations which might have existed for the periods  indicated or the results of operations as they may be in the future.

 
F-48

 
 
(FORMERLY PUTNAM HILLS CORP.)
AND
DANDRIT BIOTECH A/S

UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET
 
    Dandrit    
DanDrit
BioTech
   
Proforma
   
Proforma
 
   
BioTech AS
   
USA, Inc.
   
Increase
   
Combined
 
   
As of
   
As of
   
As of
   
As of
 
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
 
CURRENT ASSETS:
                       
Cash
  $ 18,794     $ 22     $ -     $ 18,816  
Cash held in escrow
    77,468       -
 [D]
    886,803       964,271  
Other Receivables
    25,456       -       -       25,456  
Prepaid Expenses
    19,774       -       -       19,774  
                                 
Total Current Assets
    141,492       22       886,803       1,028,317  
                                 
PROPERTY AND EQUIPMENT , net
                               
accumulated depreciation
    -       -       -       -  
                                 
OTHER ASSETS:
                               
Other Intangible Assets
    231,615       -       -       231,615  
Deferred Stock Offering Costs
    67,000       -       -       67,000  
Deposits
    10,360       -       -       10,360  
                                 
Total Other Assets
    308,975       -       -       308,975  
                                 
Total Assets
  $ 450,467     $ 22     $ 886,803     $ 1,337,292  
 
See   Notes To Unaudited Proforma Condensed Combined Financial Statements.

 
F-49

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.)
AND
DANDRIT BIOTECH A/S

UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET
 
    Dandrit    
DanDrit
BioTech
     
Proforma
   
Proforma
 
   
BioTech AS
   
USA, Inc.
     
Increase
   
Combined
 
   
As of
   
As of
     
As of
   
As of
 
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
 
CURRENT LIABILITIES:
                         
Loans Payable - related party
  $ -     $ 38,235       $ -     $ 38,235  
Current Portion of Notes Payable -related party
    728,001       39,132   [D ]   886,803       1,653,936  
Accounts Payable - Trade
    548,501       1,887         -       550,388  
Accrued Expenses
    858,134       -         -       858,134  
                                   
Total Current Liabilities
    2,134,636       79,254         886,803       3,100,693  
                                   
Notes Payable -Related Party
    -       -         -       -  
                                   
Total Long-Term Liabilities
    -       -         -       -  
Total Liabilities
    2,134,636       79,254         886,803       3,100,693  
                                   
STOCKHOLDERS' EQUITY:
                                 
Common Stock
    739,532       500   [A ]   (440 )        
                  [B ]   144          
                  [C ]   (738,951 )     785  
                                   
Additional Paid-in Capital
    17,128,614       24,500   [A ]   440          
                  [B ]   7,199,856          
                                   
                  [C ]   738,951          
                  [C ]   (7,304,232 )     17,788,129  
                                   
Non-controlling interest in Subsidiary
    -       -   [C ]   -       -  
                                   
Retained Earnings
    (19,521,125 )     (104,232 ) [B ]   (7,200,000 )        
                  [C ]   7,304,232       (19,521,125 )
                                   
Other Comprehensive Income, net
    (31,190 )     -         -       (31,190 )
Total Stockholders' Equity
    (1,684,169 )     (79,232 )       -       (1,763,401 )
                                   
Total Liabilities and Stockholders' Equity
  $ 450,467     $ 22       $ 886,803     $ 1,337,292  
 
See   Notes To Unaudited Proforma Condensed Combined Financial Statements.
 
 
F-50

 

(FORMERLY PUTNAM HILLS CORP.),
AND
DANDRIT BIOTECH A/S

UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

         
DanDrit
BioTech
   
Proforma
   
Proforma
 
    Dandrit    
USA, Inc.
   
Increase
   
Combined
 
   
BioTech AS
   
For the
   
(Decrease)
   
For the
 
   
For the Year
Ended
   
Nine
Months
   
For the Year
Ended
   
Year
Ended
 
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
   
December 31,
2013
 
NET SALES
  $ 32,768     $ -     $ -     $ 32,768  
                                 
COST OF GOODS SOLD
    109,299       -       -       109,299  
                                 
GROSS LOSS
    (76,531 )     -       -       (76,531 )
                                 
OPERATING EXPENSES:
                               
General and Administrative Expenses
    1,233,683       26,573       -       1,260,256  
Research and Development
    38,297       -       -       38,297  
Consulting Expense
    390,437       -       -       390,437  
                                 
Total Operating Expense
    1,662,417       26,573       -       1,688,990  
                                 
LOSS FROM OPERATIONS
    (1,738,948 )     (26,573 )     -       (1,765,521 )
                                 
OTHER INCOME (EXPENSE)
                               
Interest (Expense) - related party
    (652,702 )     (1,390 )     -       (654,092 )
Gain (Loss) on Currency Transactions
    19,541       -       -       19,541  
Gain on Derivative Liability
    175,732       -       -       175,732  
Gain on forgiveness of debt
    49,016       -       -       49,016  
Gain (loss) on sale of fixed assets
    1       -       -       1  
                                 
Total Other Income (Expense)
    (408,412 )     (1,390 )     -       (409,802 )
                                 
LOSS BEFORE INCOME TAXES
    (2,147,360 )     (27,963 )     -       (2,175,323 )
                                 
INCOME TAX EXPENSE
    -       -       -       -  
                                 
NET LOSS
  $ (2,147,360 )   $ (27,963 )   $ -     $ (2,175,323 )
                                 
CURRENCY TRANSLATION, NET
    133,365       -       -       133,365  
                                 
OTHER COMPREHENSIVE INCOME
  $ (2,013,995 )   $ (27,963 )   $ -     $ (2,041,958 )
                                 
BASIC LOSS PER SHARE
                          $ (0.260 )
                                 
PROFORMA COMMON SHARES  OUTSTANDING
                            7,854,947  
 
See   Notes To Unaudited Proforma Condensed Combined Financial Statements.
 
 
F-51

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.),
AND
DANDRIT BIOTECH A/S

PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

         
DanDrit
BioTech
   
Proforma
   
Proforma
 
    Dandrit    
USA, Inc.
   
Increase
   
Combined
 
   
BioTech AS
   
For the
   
(Decrease)
   
For the
 
   
For the Year
Ended
   
Year
Ended
   
For the Year
Ended
   
Year
Ended
 
   
December 31,
2011
   
March 31,
2012
   
December 31,
2011
   
December 31,
2011
 
NET SALES
  $ 72,013     $ -     $ -     $ 72,013  
                                 
COST OF GOODS SOLD
    85,494       -       -       85,494  
                                 
GROSS LOSS
    (13,481 )     -       -       (13,481 )
                                 
OPERATING EXPENSES:
                               
General and Administrative Expenses
    376,944       29,945       -       406,889  
Depreciation and Amortization
    200,251       -       -       200,251  
Consulting Expense
    573,098       -       -       573,098  
                                 
Total Operating Expense
    1,150,293       29,945       -       1,180,238  
                                 
LOSS FROM OPERATIONS
    (1,163,774 )     (29,945 )     -       (1,193,719 )
                                 
OTHER INCOME (EXPENSE)
                               
Interest (Expense)
    (441,598 )     -       -       (441,598 )
Gain (Loss) on Currency Transactions
    (69,391 )     -       -       (69,391 )
Gain on derivative liability
    10,583       -       -       10,583  
Total Other Income (Expense)
    (500,406 )     -       -       (500,406 )
                                 
LOSS BEFORE INCOME TAXES
    (1,664,180 )     (29,945 )     -       (1,694,125 )
                                 
INCOME TAX EXPENSE
    -       -       -       -  
                                 
NET LOSS
  $ (1,664,180 )   $ (29,945 )   $ -     $ (1,694,125 )
                                 
CURRENCY TRANSLATION, NET
    (273,981 )     -       -       (273,981 )
                                 
OTHER COMPREHENSIVE INCOME
  $ (1,938,161 )   $ (29,945 )   $ -     $ (1,968,106 )
                                 
BASIC LOSS PER SHARE
                          $ (0.25 )
                                 
PROFORMA COMMON SHARES OUTSTANDING
                            7,854,947  
 
See   Notes To Proforma Condensed Combined Financial Statements.
 
 
F-52

 
 
(FORMERLY PUTNAM HILLS CORP.),
AND
DANDRIT BIOTECH A/S

NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
 
NOTE 1 DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) ,

DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.), (‘Parent’) a development stage company was incorporated under the laws of the State of Delaware on January 18, 2011 with the objective to acquire or merge with an operating business.

NOTE 2 DANDRIT BIOTECH A/S

The financial statements include the accounts of DanDrit Biotech A/S a Danish Corporation. Dandrit Biotech A/S engages in the research and development, manufacturing and clinical trials of pharmaceutical and biological products for the human treatment of cancer using dendritic cell technology.
 
Functional Currency / Foreign currency translation  — The functional currency of DanDrit Biotech USA, Inc. (Formerly Putnam Hills Corp.) is the U.S. Dollar.  The Functional Currency of DanDrit Biotech AS is the Danish Krone (“DKK”).  The Company’s reporting currency is U.S. Dollar for the purpose of these unaudited proforma financial statements. The foreign subsidiaries balance sheet accounts are translated into U.S. dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. dollars at the average exchange rates prevailing during the periods and years ended 2013, 2012 and 2011. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred.
 
GOING CONCERN - The  financial statements of DanDrit BioTech A/S were prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern.  However, the Company has incurred significant losses and has not yet been successful in establishing profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management plans to mitigate this doubt by raising additional funds through debt and/or equity offerings and by substantially increasing sales once approval for the Company’s product is obtained.  There is no assurance that the Company will be successful in achieving profitable operations.  The DandDrit BioTech A/S  financial statements do not include any adjustments that might result from the outcome of these uncertainties.
 
NOTE 3 – PROFORMA ADJUSTMENTS

On February 12, 2014, pursuant to an Agreement and Plan of Merger, dated as of on February 12, 2014, by and among, the Company, DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) and DANDRIT BIOTECH A/S. (the "Merger Agreement"), DANDRIT BIOTECH A/S was merged with and into DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) (the "Merger") and as a result of the Merger, DANDRIT BIOTECH A/S. became a approximately 97% owned subsidiary of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.)  Prior to the Merger there were 600,000 shares of the common stock, par value $.0001 per share of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) outstanding,  pursuant to the Merger 3,879,624 of the outstanding shares of the common stock held by the consenting shareholders of DANDRIT BIOTECH A/S  was exchanged for 1.498842 shares of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) common stock, for a total of 5,814,945. In connection with the acquisition, 1,400,000 and 40,000 common shares of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) were issued for consulting and legal services, respectively. 7,854,947 common shares of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) common stock will be outstanding immediately following the Merger.
 
 
F-53

 
 
DANDRIT BIOTECH USA, INC.
(FORMERLY PUTNAM HILLS CORP.),
AND
DANDRIT BIOTECH A/S

NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS

NOTE 3 – PROFORMA ADJUSTMENTS (Continued)
 
Proforma adjustments on the attached financial statements include the following:

[A] To record the contribution and cancelation of 4,400,000 common shares of DANDRIT BIOTECH USA, INC. (FORMERLY PUTNAM HILLS CORP.) by shareholders reducing the common share outstanding to 600,000.

[B] To record the issuance of 1,400,000 and 40,000 common shares of Putnam Hills Corp for consulting and legal services in connection with the acquisition and offering valued at $5 per share or $7,000,000 and $200,000, respectfully. The $7,200,000 charge is not included in the unaudited condensed combined proforma statement of operations for the period ended December 31, 2013.  The charge will be reflected as an expense in the result of operations of Parent for the quarter ended March 31, 2014.

[C] To record the February 12, 2014 acquisition of a 97% interest in the SUBSIDIARY by the PARENT through the issuance of 5,814,945 shares of common stock of the PARENT for 3,879,624 shares held by consenting shareholders of the SUBSIDIARY. The ownership interests of the former owners of SUBSIDIARY in the combined enterprise will be greater than the ongoing shareholders of PARENT and, accordingly, the management of SUBSIDIARY will assume operating control of the combined enterprise.  Consequently, the acquisition is accounted for as the recapitalization of SUBSIDIARY, wherein SUBSIDIARY purchased the assets of PARENT and accounted for the transaction as a "Reverse Merger" for accounting purposes.
 
[D] To record the bridge loans of DKK 2,500,000 ($461,877) and DKK 2,300,000 ($424,927) Dandrit BioTech A/S received from  Paseco ApS, an entity owned by a shareholder of the Dandrit BioTech A/S, on February 15, 2014 and March 18, 2014, respectively,.  The loans are payable 14 days after the completion of the contemplated public offering in Dandrit Biotech USA, Inc. or February 1, 2015, and accrue interest at 5% per annum. On April 29, 2014, DanDrit Denmark and Paseco entered into an amendment whereby the terms of the 2014 loans are payable on February 1, 2015 and can be extended at the Company’s option for an additional year with an increase in the interest rate to 7.00%.

NOTE 4 – PROFORMA (LOSS) PER SHARE
 
The  proforma (loss)  per  share  is  computed  based on the weighted average number of common shares  outstanding during the period plus the estimated  shares issued in the acquisition had the acquisition  occurred at the beginning of the periods presented (not in thousands).
 
   
For the Year
 
   
Ended
 
   
December 31,
2013
 
Weighted average number of Common shares outstanding after giving effect to the common shares cancelled in the acquisition
   
600,000
 
         
Shares issued in acquisition
   
7,254,947
 
         
Proforma weighted average number of common shares outstanding during the period used in loss per share after acquisition (denominator)
   
7,854,947
 
 
 
F-54

 
 

 
 
 
Up to      Shares
 
DanDrit Biotech USA, Inc.
 
Common Stock
 
PROSPECTUS DATED                                ,
 
 
84

 
 
 [Alternate Page for Resale Prospectus]
 
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and 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          , 2014
 
 
DANDRIT BIOTECH USA, INC.
 
Up to 40,000 Shares of Common Stock
 
This registration statement of DanDrit Biotech USA, Inc. (the “Company”) and the prospectus contained herein register the resale (the “Resale”) of an aggregate of 40,000 shares of our common stock (the “Resale Shares”) owned by one (1) selling security holder (the “Security Holder”) described more fully herein.
 
The Security Holder is offering the Resale Shares of our common stock, par value $0.0001 per share (the “Common Stock”) pursuant to this prospectus, and the registration statement of which it is a part. The Security Holder will receive all of the proceeds from the sale of the Resale Shares and we will receive none of those proceeds. The Security Holder is offering our Common Stock at an initial price of $5.00 until and unless our shares are traded on a national securities exchange or quoted on the OTCBB or OTCQB markets (which we can provide no assurance will be accomplished) and thereafter at prevailing market prices or privately negotiated prices.
 
The Security Holder and intermediaries through whom the Resale Shares are sold may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Resale Shares offered hereby, and any profits realized or commissions received may be deemed underwriting compensation.
 
Prior to the Resale, which shall be commenced upon the expiration of the lock-up period as described in the Plan of Distribution, we have an offering (the “Public Offering”) of our Common Stock that will have a dilutive effect on any purchaser of Common Stock under this prospectus and the registration statement of which it is a part. We are conducting an offering pursuant to another prospectus (the “Public Offering Prospectus”), which registers the sale by the Company of up to 2,400,000 shares (the “Public Offering Shares”) of our Common Stock, which will be sold by Sunrise Securities Corp. (the “Placement Agent”). The Placement Agent is not required to sell any specific number or dollar amount of securities but will use its best efforts to sell the Public Offering Shares. If we sell all of the Public Offering Shares we are offering, we will pay to the Placement Agent up to $840,000, or 7%, of the gross proceeds received in the Public Offering; provided, however, that the Placement Agent will only receive commissions based on the gross proceeds raised from investors introduced to the Company by the Placement Agent. In addition, we will pay accountable expenses of up to $120,000 or 1% of the gross proceeds received in the Public Offering. The sales of the Public Offering Shares are not covered by this prospectus. As such, there are a total of 3,182,252 shares of our Common Stock registered for sale or resale under this and the other prospectus referred to above, although there is no guarantee that all of the shares will be sold or resold.
 
We are an “emerging growth company” under the federal securities laws and will have the option to use reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 7 of this prospectus, and under similar headings in any amendments or supplements to this prospectus.
 
 
85

 
 
[Alternate Page for Resale Prospectus]
 
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.
 
The date of this prospectus is                    , 2014.
 
 
86

 

 
[Alternate Page for Resale Prospectus]
 
TABLE OF CONTENTS
 
 
 
Page
   
1
7
12
26
27
29
30
31
32
39
65
67
69
71
73
74
75
76
77
89
90
91
91
91
91
 
Dealer Prospectus Delivery Obligation
 
Until                                      , 2014 (90 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as a placement agent and with respect to any unsold allotments or subscriptions.
 
 
87

 
 
[Alternate Page for Resale Prospectus]
 
USE OF PROCEEDS
 
There will not be any proceeds from the sale of the Resale Shares by the Security Holder . All proceeds from the sale of the Resale Shares will be paid directly to the selling Security Holder .
 
 
88

 

 
SHARES REGISTERED FOR RESALE
 
As part of this prospectus, we are registering 782,252   shares of Common Stock for resale, which are subject to a 180 day lock-up for sales into the public market. The shares described in the following table consist of shares of Common Stock that were issued in connection with the Share Exchange. A discussion of the material terms of this transaction are included in the subsection of this prospectus titled “Share Exchange” under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company, by agreement, granted the Security Holder the right to have the Security Holder’s Common Stock registered in the event that the Company filed an initial registration statement for the sale of its securities to the public.
 
Concurrently with the filing of this Resale Prospectus, we are filing the Public Offering Prospectus for an initial public offering of our Common Stock. As a result, we became obligated to register the Security Holder’s shares for resale under the same registration statement.
 
The Security Holder does not have, nor within the past three years has the Security Holder had, any position, office or other material relationship with us or any of our predecessors or affiliates other than as described in the section of this prospectus titled “Related Party Transactions” and as a result of the ownership of our securities.
 
The following table provides certain information with respect to the Security Holder’s ownership of our securities as of February 12, 2014, the total number of securities the Security Holder may distribute under this prospectus from time to time, and the number of securities the Security Holder will own thereafter assuming no other acquisitions or dispositions of our securities. The Security Holder may distribute all, some or none of their securities, thus we have no way of determining the number of securities the Security Holder will hold after the Resale. Therefore, we have prepared the table below on the assumption that the Security Holder will sell all shares covered by this prospectus.
 
The Security Holder may dividend or distribute their shares from time to time to their shareholders or affiliates. The Security Holder may also transfer shares they own by gift, and upon any such transfer the donee would have the same right of resale as the Security Holder.
 
See our discussion titled “Plan of Distribution” for further information regarding the Security Holder’s method of distribution of these shares.
 
Security Holder Table
 
Name
 
Securities
Beneficially
Owned Prior
to
Offering (1)
 
Securities Being
Offered
 
Securities
Beneficially
Owned After
Offering (2)
 
% Beneficial
Ownership
After
Offering
 
                       
Troutman Sanders LLP (3)
 
40,000
   
40,000
 
0
   
0
%
Total:
 
40,000
   
40,000
 
0
   
0
%
 
(1)
The Security Holder listed in the table below acquired the securities being offered in connection with the Share Exchange. Percentages stated in the above table are based on a total of 7,854,947 shares of Common Stock outstanding as of March 31, 2014.
   
(2)
Assumes that all of the shares offered hereby are resold and that shares owned before the offering but not offered hereby are not sold.
   
(3)
The address of this security holder is 405 Lexington Ave., New York, NY 10174. Troutman Sanders LLP is counsel to the Placement Agent in the Offering.
 
 
89

 
 
 
PLAN OF DISTRIBUTION

Lock-Up Agreements
 
We and our officers, directors, and certain existing stockholders, including the Security Holder identified in the Resale Prospectus,  have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our common stock after the effective date of the registration statement of which this prospectus is a part without the prior written consent of Sunrise Securities Corp. The lock-up period is for 180 days beginning as of the filing date of the last amendment to the registration statement of which this prospective is a part that is declared effective. Notwithstanding the foregoing, the lock-up period shall not apply, and the parties may transfer the shares in the transactions described in clauses (i) through (vi) below as follows:
 
 
(i)
as a bona fide gift or gifts;
 
 
(ii)
to any trust for the direct or indirect benefit of the undersigned or the immediate family of the transferring party;
 
 
(iii)
to the transferring party and/or any member of the immediate family of the transferring party from or by a grantor retained (or like-kind) annuity trust which exists as of the date hereof and was established for the direct or indirect benefit of the transferring party and/or any member of the immediate family of the transferring party pursuant to the terms of such trust;
 
 
(iv)
if the transferring party is a corporation, partnership or other business entity (A) to another corporation, partnership or other business entity that is an affiliate (as defined under Rule 12b-2 of the Exchange Act) of the transferring party or (B) any distribution or dividend to equity holders of the transferring party as part of a distribution or dividend by the transferring party (including upon the liquidation and dissolution of the transferring party pursuant to a plan of liquidation approved by the transferring party 's equity holders), or if the transferring party is a trust, to a grantor or beneficiary of the trust;
 
 
(v)
in the event of a default under a pledge which exists as of the date hereof as security for a margin or loan account pursuant to the terms of such account;
 
 
(vi)
pursuant  to any 10b5-l trading plans in effect as of the date of the Offering; or
 
 
(vii)
with the prior written consent of the Placement Agent.
 
For purposes of this lock-up agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.
 
Furthermore, notwithstanding the foregoing, during the lock-up period, the transferring party may sell shares of common stock of DanDrit on the open market following the consummation of the offering if and only if (i) such sales are not required to be reported in any public report or filing with the Securities Exchange Commission, or otherwise and (ii) the transferring party does not otherwise voluntarily effect any public filing or report regarding such sales.
 
Resale

Following the expiration of the lock-up period, the Security Holder and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on the Over-the-Counter Bulletin Board, Nasdaq Capital Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. These individuals may use any one or more of the following methods when selling shares:
 
 
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
 
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
an exchange distribution in accordance with the rules of the applicable exchange;
 
privately negotiated transactions;
 
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
 
broker-dealers may agree with the selling security holder to sell a specified number of such shares at a stipulated price per share;
 
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
 
a combination of any such methods of sale; or
 
any other method permitted pursuant to applicable law.
 
Each Security Holder may distribute the shares of which it is the owner by means of a dividend or other form of distribution, including in connection with a declaration of a dividend or distribution, reorganization, combination, consolidation and dissolution.
 
The Security Holder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
 
Broker-dealers engaged by any selling Security Holder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling Security Holder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but the maximum amount of compensation to be received by any participating FINRA member may not exceed 8%. We are required to pay certain fees and expenses incurred by us incident to the registration of the Resale Shares.
 
Since the Security Holder may be deemed to be an “underwriter” within the meaning of the Securities Act, the Security Holder will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. There is no underwriter or single coordinating broker acting in connection with the proposed sale of the Resale Shares by the Security Holder .
 
 
90

 
 
We agreed to keep this prospectus and the registration statement which this prospectus forms a part effective until the earlier to occur of (i) such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all the Resale Shares, to the extent the Security Holder has distributed the Resale Shares to its shareholders, by its shareholders, without volume or manner of sale restrictions during a three month period without registration or (ii) all of the Resale Shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The Resale Shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the Resale Shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
 
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the Resale Shares may not simultaneously engage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Security Holder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the Common Stock by any person. We will make copies of this prospectus available to the Security Holder and have informed the Security Holder of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
 
[Alternate Page for Resale Prospectus]
 
 
Validity of the securities offered by this prospectus will be passed upon for us by Richardson & Patel, LLP, New York, New York.
 
 
Putnam historically retained Raich Ende Malter & Co. LLP (“Raich”) as its principal accountant. In connection with the closing of the Share Exchange, we terminated Raich and retained Gregory & Associates, LLC (“Gregory”) as our principal accountant. Our Board of Directors approved the change.
 
Raich’s reports on the financial statements for the years ended March 31, 2013 and 2012 included in the Form 10-K for the year ended March 31, 2013 as filed with the SEC did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that their reports included disclosure of uncertainty regarding Putnam’s ability to continue as a going concern.
 
From inception through February 14, 2014, Putnam had no disagreements with Raich on matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Putnam had not consulted with Gregory on any matter prior to the Share Exchange.
 
We have authorized Raich to respond fully to the inquiries of Gregory concerning any matters discussed above. We have provided Raich with a copy of the above statements. We have requested that Raich furnish us with a letter addressed to the SEC stating whether Raich agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of such letter from Raich is filed as an exhibit to the registration statement of which this prospectus forms a part.
 
 
The audited financial statements of DanDrit Denmark as of December 31, 2013 and December 31, 2012 included in this prospectus have been audited by Gregory & Associates, LLC, who is an independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
 
The audited financial statements of Putnam as of March 31, 2013 and March 31, 2012 included in this prospectus have been audited by Raich Ende Malter & Co. LLP, who is an independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
 
 
We file annual, quarterly and special reports and other information with the SEC. These filings contain important information that does not appear in this prospectus. For further information about us, you may read and copy any reports, statements and other information filed by us at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0102. You may obtain further information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available on the SEC Internet site at http://www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
 
 
91

 
 
 
  [Alternate Page for Resale Prospectus]
 
 
Up to         Shares
 
DanDrit Biotech USA, Inc.
 
Common Stock
 
PROSPECTUS DATED                             ,
 
 
92

 

PART II
 
INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 13.       Other Expenses of Issuance and Distribution
 
The following table sets forth the various costs and expenses payable by us in connection with the sale of the securities being registered. All such costs and expenses shall be borne by us. Except for the SEC registration fee, all the amounts shown are estimates.
 
   
Amount
to be Paid
SEC registration fee
 
$
1,571.36
 
FINRA filing fee
   
3,600.09
 
Legal fees and expenses
   
175,000
 
Accounting fees and expenses
   
60,000
 
Printing and miscellaneous expenses
   
14,364.55
 
Total
 
$
254,536
 
 
Item 14.     Indemnification of Directors and Officers
 
Section 145 of the Delaware General Corporation Law (the “DGCL”) provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation, a derivative action, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including attorneys’ fees incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.
 
DanDrit’s Certificate of Incorporation provides that it will indemnify and hold harmless, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, each person that such section grants us the power to indemnify.
 
The DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:
 
any breach of the director’s duty of loyalty to the corporation or its stockholders;
 
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
 
payments of unlawful dividends or unlawful stock repurchases or redemptions; or
 
any transaction from which the director derived an improper personal benefit.
 
DanDrit’s Certificate of Incorporation provides that, to the fullest extent permitted by applicable law, none of our directors will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this provision will be prospective only and will not adversely affect any limitation, right or protection of a director of our company existing at the time of such repeal or modification.
 
 
II-1

 
 
Item 15.       Recent Sales of Unregistered Securities
 
On May 26, 2011, the Company issued an aggregate of 5,000,000 shares of Common Stock to NLBDIT 2010 Services, LLC (“NLBDIT Services”) for an aggregate purchase price of $25,000 pursuant to the terms and conditions set forth in that certain common stock purchase agreement (the “NLBDIT Services CSPA”). The Low Trust owns 100% of the outstanding membership interests of NLBDIT Services and may be deemed to beneficially own the shares of Common Stock held of record by NLBDIT Services. Nathan Low, a principal of our majority shareholder prior to the Share Exchange, is the family trustee of the Low Trust and has voting and dispositive control over any securities owned of record or beneficially by the Low Trust. Therefore, Mr. Low may be deemed to beneficially own the shares of Common Stock held of record by NLBDIT Services and beneficially by the Low Trust. The Company issued these shares of Common Stock under the exemption from registration provided by Section 4(a)(2) of the Securities Act.
 
On December 1, 2011 DanDrit Denmark borrowed $1,500,000 and issued 6% convertible bonds. The bonds may not be converted during the four weeks following the publication of the annual report. The bond may not be repaid until the bonds expiration on November 30, 2014. The bonds shall not accrue interest after expiration. The bonds and related accrued interest are convertible into common share of the Company at an initial rate of $9.58 per common share.
 
DKTI A/S
 
As of October 31, 2013, DanDrit Denmark had a $1,500,000 convertible bond issued to DKTI A/S. The principal amount including accrued interest was USD 1,672,455 as of October 31, 2013. On December 16, 2013 the convertible bond, including accrued interest, was converted into 174,578 shares in DanDrit Denmark.
 
Service Issuances

On February 11, 2014 the Company issued a total of 40,000 shares of its Common Stock to its legal counsel in consideration for legal services in connection with the filing of the registration statement of which this prospectus is a part.

On February 11, 2014 the Company entered into that certain Consulting Agreement with Paseco ApS (the “Consultant”), whereby the Company agreed to issue the Consultant or its designees 1,400,000 shares of the Company’s Common Stock in consideration of advisory and consulting services provided by the Consultant in connection with the Share Exchange and the filing of the registration statement of which this prospectus is a part.
 
Share Exchange
 
On February 12, 2014, the Company signed and closed the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), Dandrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of Dandrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. In accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, DanDrit Denmark shareholders who have not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore have not exchanged such DanDrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, will be entitled to receive the number of shares of common stock of DanDrit USA that each such DanDrit Denmark shareholder would have been entitled to receive if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of an additional 185,053 shares of common stock of DanDrit USA.  Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.
 
Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 share of common stock. In addition, following the closing of the Share Exchange, the wholly owned subsidiary of the company formed solely for the purposes of changing the company’s name, Dandrit Biotech USA, Inc., merged with and into the company and the company adopted the name of its wholly owned subsidiary “DanDrit Biotech USA, Inc.”
 
DanDrit USA owns approximately 97 % of the outstanding equity interests of DanDrit Denmark. As a result of the Share Exchange, we changed our management and reconstituted our board of directors. As of the effective time of the Share Exchange, Samir Masri, the Chief Executive Officer, Chief Financial Officer, President, Secretary and sole director of Putnam resigned as the sole officer and director of the company and appointed NE Nielsen, Dr. Jacob Rosenberg, Dr. Eric Leire, Aldo Petersen and Robert E. Wolfe as directors of Putnam, and Dr. Eric Leire as Chief Executive Officer and President and Mr. Wolfe as Chief Financial Officer , Treasurer and Secretary.
 
We believe that the above issuances of securities were exempt from registration under the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act or Regulation S promulgated under the Act.
 
Item 16.       Exhibit s
 
A list of exhibits filed with this registration statement on Form S-1 is set forth on the Exhibit Index and is incorporated in this Item 16 by reference.
 
 
II-2

 
 
Item 17. Undertakings
 
(1) Insofar as indemnification for liabilities arising under the Securities Act may be permitted as to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 14, 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, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 
The undersigned registrant hereby undertakes:
 
(2) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
 
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
 
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increases or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
 
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
 
(3) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
(4) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
 
(5) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser , each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.   Provided, however,   that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
 
(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
 
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
 
(7) To provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
 
(8) That, for purposes of determining any liability under the Securities Act of 1933, 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 registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
 
(9) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
 
II-3

 

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Gentofte, Denmark, on the 16th day of May, 2014.
 
DANDRIT BIOTECH USA, INC.      
         
By:
/s/ Dr. Eric Leire
 
By:
/s/ Robert E. Wolfe
 
Dr. Eric Leire
   
Robert E. Wolfe
 
Chief Executive Officer and President
   
Chief Financial Officer, Treasurer and Secretary
 
(Principal Executive Officer)
   
(Principal Financial and Accounting Officer)
 
SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on May 8, 2014 .
 
Signature
 
Title
 
Date
 
 
 
 
 
/s/ Dr. Eric Leire
 
Chief Executive Officer and Director
 
May 16, 2014
Dr. Eric Leire
 
(Principal Executive Officer)
 
 
 
 
 
/s/ Robert E. Wolfe
 
Chief Financial Officer, Treasurer, Secretary and Director
 
May 16, 2014
Robert E. Wolfe
 
(Principal Accounting Officer)
 
 
 
 
 
/s/ NE Nielsen *
 
Chairman of the Board
 
May 16, 2014
NE Nielsen
 
 
 
 
         
/s/ Dr. Jacob Rosenberg*
 
Director
 
May 16, 2014
Dr. Jacob Rosenberg
 
 
 
 
         
/s/ Aldo Michael Noes Petersen*
 
Director
 
May 16, 2014
Aldo Michael Noes Petersen
 
 
 
 
 
 *Pursuant to a Power of Attorney  
 
 
II-4

 
 
Exhibit Index
 
Exhibit
No.
 
Description
1.1
 
Form of Placement Agent Agreement.*
   
  
2.1
 
Share Exchange Agreement dated February 12, 2014. (1)
     
2.2
 
Share Cancellation Agreement dated February 12, 2014. (1)
     
3.1
 
Certificate of Incorporation. (1)
     
3.2
 
Bylaws.(2)
     
3.3
 
Articles of Association of DanDrit Denmark, as amended, dated February 26, 2004. (1)
     
3.4
 
Certificate of Ownership and Merger, dated February 12, 2014. (1)
     
4.1
 
Form of Common Stock Certificate.*
     
4.2
 
Form of Lock-Up Agreement.(4)
     
5.1
 
Form of Opinion of Richardson and Patel, LLP.*
     
10.1
 
Intellectual Property Assignment by and between DanDrit Denmark and Alexei Kirkin dated June 5, 2002. (1)
     
10.2
 
Collaboration Agreement by and between DanDrit Denmark and National Cancer Centre of Singapore Pte Ltd dated November 11, 2008. (1)
     
10.3
 
Master Services Agreement by and between DanDrit Denmark and Aptiv Solutions (UK) Ltd dated October 11, 2011. (1)
     
10.4
 
Employment Agreement by and between DanDrit Denmark and Dr. Eric Leire dated February 5, 2012. (1)
     
10.5
 
Box Packing and Moving Agreement by and between DanDrit Denmark and Bryde & Sonner A/S dated May 23, 2012. (1)
     
10.6
 
Debt Instrument by and between DanDrit Denmark and Sune Olsen Holding ApS dated March 31, 2013. (1)
     
10.7
 
Lease Agreement by and between Symbion A/S and DanDrit Denmark dated July 8, 2013. (1)
     
10.8
 
Lease Agreement by and between Ordnung ApS and DanDrit Denmark. (1)
     
10.9
 
Debt Instrument by and between DanDrit Denmark and Sune Olsen Holding ApS dated January 17, 2014. (1)
     
10.10
 
Consultancy Agreement by and between DanDrit Denmark and Dina Rosenberg dated February 4, 2014.(4)
     
10.11
 
Consulting Agreement by and between DanDrit Denmark and Paseco ApS dated February 11, 2014. (4)
     
10.12
 
DanDrit Biotech USA, Inc. 2014 Equity Incentive Plan .(4)
     
10.13
 
Loan Agreement by and between DanDrit Denmark and Paseco ApS dated March 21, 2014 .(4)
     
10.14
 
Lease Agreement by and between Paseco ApS and DanDrit Denmark dated March 27, 2014 .(4)
 
 
II-5

 
 
10.15
 
Confidential Disclosure Agreement by and between Etablissement Francais Du Sang and DanDrit Biotech A/S, dated March 8, 2013.*
     
10.16
 
Loan Agreement by and between DanDrit Denmark and Paseco ApS dated April 29, 2014.(5)
     
10.17
 
Letter of Support of Paseco ApS related to committed 2M DKK in additional financing, dated May 2, 2014.(5)
     
14.1
 
Code of Ethics.(3)
     
16.1
 
Letter from Raich Ende Malter & Co. LLP, dated February 14, 2014, to the SEC.(1)
     
21.1
 
List of Subsidiaries.(1)
     
23.1
 
Consent of Raich Ende Malter & Co. LLP.*
     
23.2
 
Consent of Gregory & Associates, LLC.*
     
23.3
 
Consent of Richardson & Patel LLP (included in Exhibit 5.1).*
     
24.1
 
Powers of Attorney of the Directors and Officers of the Registrant (included in signature pages).(1)
     
99.1
 
Form of Subscription Agreement.*
     
101.1INS
 
XBRL Instant Document*
     
101.1SCH
 
XBRL Taxonomy Extension Schema Document*
     
101.1CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document*
     
101.1DEF
 
XBRL Taxonomy Extension Definition Linkbase Document*
     
101.1LAB
 
XBRL Taxonomy Extension Label Linkbase Document*
     
101.1PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document*
 
*
Filed herewith.
(1)
Filed as an exhibit to the Company’s Form S-1 filed with the SEC on February 14, 2014 and incorporated herein by reference.
(2)
Filed as an exhibit to the Company’s Form 10 filed with the SEC on August 12, 2011 and incorporated herein by reference.
(3)
Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on July 17, 2012 and incorporated herein by reference.
(4)
Filed as an exhibit to the Company’s Form S-1/A filed with the SEC on March 31, 2014 and incorporated herein by reference.
(5)
Filed as an exhibit to the Company’s Form 10-Q for the quarter ended March 31, 2014 filed with the SEC on May 14, 2014 and incorporated herein by reference.
 
 
 
II-6

 
Exhibit 1.1
 
PLACEMENT AGENCY AGREEMENT
 
____________, 2014
CONFIDENTIAL
 
Sunrise Securities Corp.
600 Lexington Avenue, 23rd Floor
New York, NY 10022
Ladies and Gentlemen:
 
DanDrit Biotech USA, Inc., a Delaware corporation (the “ Company ”), agrees to issue and sell registered securities of the Company, consisting of up to [_____] shares (the “ Shares ” or the “ Securities ”), of the Company’s common stock, par value $0.0001 per share (the “ Common Stock ”) at a purchase price of $[________] per share.
 
Subject to the terms and conditions of this Placement Agency Agreement (the “ Agreement ”), Sunrise Securities Corp. (“ Sunrise ” or the “ Placement Agent ”) shall serve as the exclusive placement agent for the Company, on a “best efforts” basis, in connection with the proposed offering of the Securities (the “ Placement ”) under the Registration Statement (as defined below).  The terms of such Placement shall be mutually agreed upon by the Company and the purchasers (each, a “ Purchaser ” and collectively, the “ Purchasers ”) and nothing herein constitutes that the Placement Agent would have the power or authority to bind the Company or any Purchaser or creates an obligation for the Company to issue any Securities or complete the Placement.  This Agreement and the documents executed delivered by the Company to the Purchasers in connection with the Placement shall be collectively referred to herein as the “ Transaction Documents ”).
 
The Company expressly acknowledges and agrees that the Placement Agent’s obligations hereunder are on a best efforts basis only and that the execution of this Agreement does not constitute a commitment by the Placement Agent to purchase any of the Securities and does not ensure the successful placement of the Securities or any portion thereof, or the success of the Placement Agent with respect to securing any other financing on behalf of the Company.  The Placement Agent shall have no authority to bind the Company with respect to any prospective offer to purchase Securities and the Company shall have the sole right to accept offers to purchase Securities and may reject any such offer, in whole or in part.
 
Section 1.            Compensation and Other Fees .  In addition to the fees described in Section 7 herein, as compensation for the services provided by the Placement Agent hereunder, the Company agrees to pay to the Placement Agent on each applicable Closing Date a commission equal to 7.00% times the aggregate gross proceeds raised in the Placement on the applicable Closing Date from Purchasers originally introduced to the Company by the Placement Agent; provided, however, that the Placement Agent shall not receive compensation for gross proceeds raised from Purchasers participating in the Placement and originally introduced to the Company by any officers, directors or other affiliates of the Company.
 
 
 

 
 
Section 2.            Registration Statement and Prospectus .  The Company represents and warrants to, and agrees with, the Placement Agent as of the Time of Sale (as defined below), as of any Closing Date, as follows:
 
(a)           The Company has prepared and filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement on Form S-1 (Registration File No. File No. 333-193965) (the " Registration Statement "), under the Securities Act of 1933, as amended (the “ Securities Act ”), which became effective on [__________], 2014, for the registration under the Securities Act of the Securities.  If the Company files a registration statement with the Commission pursuant to Rule 462(b) under the rules of the Securities Act relating to the Securities, then after such filing, any reference herein to the Registration Statement shall also been deemed to include such registration statement filed pursuant to Rule 462(b).  “ Preliminary Prospectus ” refers to any preliminary prospectus related to the Registration Statement, including any prospectus that is included in the Registration Statement immediately prior to the effectiveness of the Registration Statement.  The form of the final prospectus dated the effective date of the Registration Statement (or, if applicable, the form of final prospectus containing information permitted to be omitted at the time of effectiveness by Rule 430A of the Securities Act filed with the Commission pursuant to Rule 424 of the Securities Act (the “ Rule 430A Information ”)), is hereinafter called the “ Prospectus .”  For purposes of this Agreement, “ Time of Sale ”, as used in the Act, means [____] [p.m.], New York City time, on the date of this Agreement.   Prior to the Time of Sale, the Company prepared a Preliminary Prospectus, dated [______], 2014, for distribution by the Placement Agent (the “ Statutory Prospectus ”).
 
Any reference in this Agreement to the Registration Statement shall be deemed to refer to and include the appendixes to the Registration Statement and the documents incorporated by reference therein (the “ Incorporated Documents ”) including those which were filed under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the rules and regulations of the Commission promulgated thereunder (the “ Exchange Act Rules and Regulations ”), on or before the date of this Agreement. Any reference in this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement deemed to be incorporated therein by reference.  All references in this Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement.
 
No stop order suspending the effectiveness of the Registration Statement has been issued, and no proceeding for any such purpose is pending or has been initiated or, to the Company’s knowledge, is threatened by the Commission.  For purposes of this Agreement, the term “ knowledge ” as used in this Agreement with respect to the Company shall mean actual knowledge of the Company’s officers and directors after due and reasonable inquiry.
 
 
2

 
 
(b)           The Registration Statement (and any further documents to be filed with the Commission in connection with the Placement) contains or will contain, as applicable, all exhibits and schedules as required by the Securities Act and the rules and regulations of the Commission promulgated thereunder (the “ Securities Act Rules and Regulations ”).  The Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Securities Act Rules and Regulations and did not and, as amended or supplemented, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  As of its date and each Closing Date, the Prospectus (together with any supplement thereto) did not and will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  At the Time of Sale, the Statutory Prospectus did not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission.  Except with respect to any documents for which the Company requested confidential treatment, there are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or the Securities Act Rules and Regulations or (y) will not be filed within the requisite time period.  There are no contracts or other documents required to be described in the Registration Statement, the Statutory Prospectus or the Prospectus or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required.
 
(c)           The Company had a reasonable basis for, and made in good faith, each “forward-looking statement” (within the meaning of Section 27A of the Securities Act or Section 21E of the Exchange Act) contained in the Registration Statement, the Statutory Prospectus or the Prospectus.
 
(d)           All statistical or market-related data included in the Registration Statement, the Statutory Prospectus and the Prospectus are based on or derived from sources that the Company reasonably believes to be reliable and accurate, and, to the extent necessary, the Company has obtained the written consent to the use of such data from such sources.
 
(e)           The Company has delivered, or will as promptly as practicable deliver, to the Placement Agent complete conformed copies of the Registration Statement and of each consent and certificate of experts, as applicable, filed as a part thereof, and conformed copies of the Registration Statement (without exhibits), the Statutory Prospectus and the Prospectus, as amended or supplemented, in such quantities and at such places as the Placement Agent reasonably requests.  Neither the Company nor any of its directors and officers has distributed and none of them will distribute any offering material in connection with the offering and sale of the Securities other than the Registration Statement, the Statutory Prospectus or the Prospectus.
 
(f)           The Incorporated Documents incorporated by reference in the Registration Statement, the Statutory Prospectus and the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act and the Securities Act Rules and Regulations or the Exchange Act and the Exchange Act Rules and Regulations, as applicable, and none of such documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Registration Statement, the Statutory Prospectus and the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and 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 the light of the circumstances under which they were made, not misleading.
 
 
3

 
 
(g)           During the last three years, no securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus.
 
(h)           The disclosures in the Registration Statement, the Statutory Prospectus and the Prospectus concerning the effects of federal, state, local and all foreign regulations on the Placement and the Company’s business as currently contemplated are correct in all material respects and no other such regulations are required to be disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus which are not so disclosed.
 
(i)            The shares of Common Stock are registered pursuant to Section 12(g) under the Exchange Act.  The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the shares of Common Stock under the Exchange Act, nor has the Company received any notification that the Commission is contemplating terminating such registration.
 
Section 3.            Representations and Warranties .  The Company represents and warrants to, and agrees with, the Placement Agent as of the Time of Sale (as defined below), and as of any Closing Date (as defined below), as follows:
 
(a)            Organization and Qualification.   All of the direct and indirect “significant subsidiaries” (as defined in Rule 1-02(w) of Regulation S-X) (individually, a “ Subsidiary ”) of the Company are set forth in Exhibit 21.1 of the Registration Statement.  Except as set forth in the Registration Statement, the Statutory Prospectus and the Prospectus, the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any “ Liens ” (which for purposes of this Agreement shall mean a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction, other than restrictions imposed by applicable securities laws).  All the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  Each of the Subsidiaries is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect its obligations under any Transaction Document (any of (i), (ii) or (iii), a “ Material Adverse Effect ”) and, to the Company’s knowledge, no “ Proceeding ” (which for purposes of this Agreement shall mean any action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened) has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
 
 
4

 
 
(b)            Authorization; Enforcement .  The Company has the requisite corporate power and authority to enter into each of the Transaction Documents, to consummate the transactions contemplated hereby and thereby, and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with the Required Approvals (as defined below).  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, or (iii) as enforceability of any indemnification or contribution provision may be limited under the foreign, federal and state securities laws.
 
(c)            No Conflicts.   The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a Material Adverse Effect.
 
 
5

 
 
(d)            Filings, Consents and Approvals .  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other “ Person ” (defined as an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind)) in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than such filings as are required to be made under applicable federal and state securities laws, and rules and regulations promulgated by FINRA (collectively, the “ Required Approvals ”), all of which will be made in a timely manner to the extent such filings are required or desirable to be made by the Company, with the exception of filings with FINRA, which the parties have agreed will be made by Sunrise.
 
(e)            Issuance of the Securities; Registration .  The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Transaction Documents.  The issuance by the Company of the Securities has been registered under the Securities Act and all of such shares are freely transferable and tradable by the Purchasers without restriction (other than any restrictions arising solely from an act or omission of a Purchaser).  The Purchasers will have good and marketable title to the Shares upon receipt of such Shares, and such securities will be freely tradable on the “ Trading Market ” (which, for purposes of this Agreement shall mean the OTC Bulletin Board or the OTCQB).
 
(f)            Capitalization .  The capitalization of the Company is as set forth in the “Actual” column in the table contained in the heading “Capitalization” in the Registration Statement, the Statutory Prospectus and the Prospectus.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus or pursuant to equity compensation plans or agreements filed as exhibits to the Registration Statement, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock.  The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.  All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities.  There are no stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
 
 
6

 
 
(g)            SEC Reports; Financial Statements .  From and after the date on which the Company initially filed its “Form 10 information” (as defined in Rule 144 of the Securities Act), the Company has complied in all material respects with requirements to file reports, schedules, forms, statements and other documents under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”).  From and after the date on which the Company initially filed its “Form 10 information”, the Company has filed on a timely basis, or has received a valid extension of such time of filing and has filed any such reports prior to the expiration of any such extension, all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the Exchange Act Rules and Regulations, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
 
(h)            Material Changes; Undisclosed Events, Liabilities or Developments .   Since the date of the latest audited financial statements included in the Registration Statement, the Statutory Prospectus and the Prospectus, except as specifically disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus (including in any interim financial information included in the Registration Statement, the Statutory Prospectus and the Prospectus), (i) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, and (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock.  Except for the issuance of the Securities contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed prior to the date that this representation is made.
 
 
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(i)            Litigation .  Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, there is no action, suit, inquiry, notice of violation, Proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities, or (ii) would reasonably be expected to result in a Material Adverse Effect.  Except as disclosed to the Placement Agent in writing, neither the Company nor any Subsidiary, nor, to the Company’s knowledge, any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or, to the Company’s knowledge, any director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
 
(j)            Employment and Labor Relations .  No officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and, to the Company’s knowledge, the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all United States federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which would reasonably be expected to result in a Material Adverse Effect.
 
Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained, administered or contributed to by the Company for employees or former employees of the Company and its affiliates has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the “ Code ”), except to the extent that failure to so comply, individually or in the aggregate, would not have a Material Adverse Effect. No prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code has occurred with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption.
 
 
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(k)            Compliance .  Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of, or has received any notice of violation relating to, any statute, rule or regulation of any governmental authority, in each case which would reasonably be expected to result in a Material Adverse Effect.  None of such agreements or instruments has been assigned by the Company.  To the best of the Company’s knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses, including, without limitation, those relating to environmental laws and regulations except for any such violation that would not have or reasonably be expected to result in a Material Adverse Effect.
 
(l)            Regulatory Permits .  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not have or reasonably be expected to result in a Material Adverse Effect (“ Material Permits ”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit, except where such potential revocation or modification would not reasonably be expected to result in a Material Adverse Effect.
 
(m)            Regulatory .  All preclinical and clinical studies conducted by or on behalf of the Company that are material to the Company and its Subsidiaries, taken as a whole, are or have been adequately described in the Registration Statement, the Statutory Prospectus and the Prospectus in all material respects.  The clinical and preclinical studies conducted by or on behalf of the Company that are described in the Registration Statement, the Statutory Prospectus and the Prospectus or the results of which are referred to in the Registration Statement, the Statutory Prospectus and the Prospectus were and, if still ongoing, are being conducted in material compliance with all laws and regulations applicable thereto in the jurisdictions in which they are being conducted and with all laws and regulations applicable to preclinical and clinical studies from which data will be submitted to support marketing approval.  The descriptions in the Registration Statement, the Statutory Prospectus and the Prospectus of the results of such studies are accurate and complete in all material respects and fairly present the data derived from such studies, and the Company has no knowledge of, or reason to believe that, any large well-controlled clinical study the aggregate results of which are inconsistent with or otherwise call into question the results of any clinical study conducted by or on behalf of the Company that are described in the Registration Statement, the Statutory Prospectus and the Prospectus or the results of which are referred to in the Registration Statement, the Statutory Prospectus and the Prospectus.  Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, the Company has not received any written notices or statements from the United States Food and Drug Administration (the “ FDA ”), the European Medicines Agency (“ EMA ”) or any other governmental agency or authority imposing, requiring, requesting or suggesting a clinical hold, termination, suspension or material modification for or of any clinical or preclinical studies that are described in the Registration Statement, the Statutory Prospectus and the Prospectus or the results of which are referred to in the Registration Statement, the Statutory Prospectus and the Prospectus. Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, the Company has not received any written notices or statements from the FDA, the EMA or any other governmental agency, and otherwise has no knowledge of, or reason to believe that, (i) any investigational new drug application for potential product of the Company is or has been rejected or determined to be non-approvable or conditionally approvable; and (ii) any license, approval, permit or authorization to conduct any clinical trial of any potential product of the Company has been, will be or may be suspended, revoked, modified or limited;
 
 
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(n)            Compliance with Laws .  The Company and each of its Subsidiaries: (A) are and at all times have been in compliance with all statutes, rules, or regulations applicable to the ownership, testing, development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal of any product manufactured or distributed by the Company (“ Applicable Laws ”), except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (B) have not received any FDA Form 483, notice of adverse finding, warning letter, untitled letter or other correspondence or notice from the FDA or any other governmental authority alleging or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws (“ Authorizations ”); (C) possess all material Authorizations and such Authorizations are valid and in full force and effect and are not in material violation of any term of any such Authorizations; (D) have not received notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any governmental authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (E) have not received notice that any governmental authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such governmental authority is considering such action; (F) have filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct on the date filed (or were corrected or supplemented by a subsequent submission); and (G) have not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning, “dear doctor” letter, or other notice or action relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation and, to the Company’s knowledge, no third party has initiated, conducted or intends to initiate any such notice or action
 
 
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(o)            Environmental Matters .  Except as described in the Registration Statement, the Statutory Prospectus and the Prospectus and except as would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Change, (i) neither the Company nor any of its Subsidiaries are in violation of any material federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “ Hazardous Materials ”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “ Environmental Laws ”), (ii) the Company and its Subsidiaries have all material permits, authorizations and approvals required under any applicable Environmental Laws and is in compliance with their requirements, (iii) there are no pending or, to the Company’s knowledge, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its Subsidiaries and (iv) to the Company’s knowledge, there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its Subsidiaries relating to Hazardous Materials or any Environmental Laws.
 
(p)            Title to Assets .  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except as set forth in the Registration Statement, the Statutory Prospectus and the Prospectus and except for Liens created under license or collaboration agreements relating to the Company’s products or its Intellectual Property Rights (as defined below) and Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance with the provisions thereof, except where such non-compliance would not have a Material Adverse Effect.
 
(q)            Patents and Trademarks .  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other similar intellectual property rights necessary or material for use in connection with their respective businesses as described in the Registration Statement, the Statutory Prospectus and the Prospectus (collectively, the “ Intellectual Property Rights ”). To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights of the Company which would reasonably be expected to have a Material Adverse Effect.  To the knowledge of the Company, none of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
 
 
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(r)            Insurance .  The Company and the Subsidiaries are currently insured (or in the process of becoming insured) by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage in an amount prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
 
(s)            Transactions With Officers .  Except as set forth in the Registration Statement, the Statutory Prospectus and the Prospectus, none of the officers or directors of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000, other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including but not limited to stock option agreements under any stock option or other equity incentive plan of the Company.
 
(t)            Internal Accounting Controls; Sarbanes-Oxley; Disclosure Controls .  The Company and its Subsidiaries maintain systems of “internal control over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) to the extent required to comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Audit Committee of the Board of Directors of the Company has been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are known to the Company’s management and that have adversely affected or are reasonably likely to adversely affect the Company’ ability to record, process, summarize and report financial information; and (ii) any fraud known to the Company’s management, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
 
 
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The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it.  The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Commission, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.
 
There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any applicable provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.
 
(u)            FINRA Matters .  Except as otherwise provided in this Agreement or as set forth in Registration Statement, the Statutory Prospectus and the Prospectus, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents, and there are no other arrangements, agreements, understandings, payments or issuances with respect to the Company that may affect the Placement Agent’s compensation, as determined by FINRA.  The Company has not made any direct or indirect payments (in cash, securities or otherwise) to (i) any person, as a finder’s fee, investing fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who provided capital to the Company, (ii) any FINRA member, or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3(u) that may be due in connection with the transactions contemplated by the Transaction Documents.  Other than Sunrise, no person has the right to act as a placement agent, underwriter or as a financial advisor in connection with the sale of the Securities contemplated hereby.  None of the net proceeds of the Placement will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein.  Neither the Company nor any of its affiliates (within the meaning of FINRA’s Conduct Rule 5121(f)(1)) directly or indirectly controls, is controlled by, or is under common control with, or is an associated person (within the meaning of Article I, Section 1(ee) of the By-laws of FINRA) of, any member firm of FINRA.  All information provided by the Company in its FINRA Questionnaire to counsel to the Placement Agent specifically for use by counsel to the Placement Agent in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all material respects. There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or greater shareholder of the Company. The Company will advise Sunrise and its counsel if it becomes aware that any officer, director or shareholder of the Company or its subsidiaries is or becomes an affiliate or associated person of a FINRA member participating in the Placement.
 
 
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(v)            Investment Company .  The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
 
(w)            Registration Rights.   Except for the selling shareholders identified in the Registration Statement, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.
 
(x)            Tax Status . Each of the Company and its Subsidiaries has filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof.  Each of the Company and its Subsidiaries has paid all taxes (as defined below) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company or its Subsidiaries.  The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements.  Except as disclosed in writing to the Placement Agent, (i) no issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its Subsidiaries, and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company or its Subsidiaries.  The term " taxes " mean all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, national insurance, value added, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, inflation linkages, additions to tax or additional amounts with respect thereto.  The term " returns " means all returns, declarations, reports, statements and other documents required to be filed in respect to taxes.
 
(y)            Foreign Corrupt Practices; OFAC .  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
 
 
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Neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any director, officer, employee, representative, agent or affiliate of the Company or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”); and the Company will not directly or indirectly use the proceeds of the Placement contemplated hereby, or lend, contribute or otherwise make available such proceeds to any person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
 
(z)            Money Laundering Laws .  The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental entity (collectively, the " Money Laundering Laws "); and no action, suit or proceeding by or before any Governmental Entity involving the Company or its Subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened
 
(aa)          Accountants . The Company’s independent registered public accountants are Gregory & Associates, LLC (“ Gregory ”).  To the knowledge of the Company, Gregory is a registered public accounting firm as required by the Securities Act.
 
(bb)          Officers’ Certificate .  Any certificate signed by any duly authorized officer of the Company and delivered to the Placement Agent or its counsel shall be deemed a representation and warranty by the Company to the Placement Agent and the Purchasers as to the matters covered thereby.
 
(cc)          D&O Questionnaires .  To the Company’s knowledge, all information contained in the questionnaires (the " Questionnaires ") completed by each of the Company’s directors and officers immediately prior to the Placement as supplemented by all information concerning the Company’s directors, officers and principal shareholders as described in the Registration Statement, the Statutory Prospectus and the Prospectus, as well as in the Lock-Up Agreements (as described in Section 6 below), provided to the Placement Agent, is true and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires to become materially inaccurate and incorrect
 
(dd)          Regulation M Compliance . The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company other than, in the case of clauses (ii) and (iii), services under this Agreement.
 
(ee)          Margin Securities .  The Company owns no “margin securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of Placement will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Common Stock to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve Board.
 
 
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(ff)            Business Relationships . No supplier, customer, distributor or sales agent of the Company has notified the Company that it intends to discontinue or decrease the rate of business done with the Company, except where such decrease is not reasonably likely to result in a Material Adverse Effect or has been set forth in the SEC Reports.
 
(gg)          Other Filings with the Commission . With respect to any Closing after the initial Closing, the Company shall have prepared and filed with the Commission a Current Report on Form 8-K with respect to the Placement, including as an exhibit thereto this Agreement, within the timeframe required for the filing of such form by the Commission.
 
Section 4.            Covenants of the Company . The Company covenants and agrees as follows:
 
(a)            Amendments to Registration Statement .  The Company shall deliver to the Placement Agent, prior to filing, any amendment or supplement to the Registration Statement or Prospectus proposed to be filed after the date of this Agreement and not file any such amendment or supplement to which the Placement Agent shall reasonably object in writing.
 
(b)            Compliance .  If applicable, the Company shall comply with the requirements of Rule 430A.  The Company will notify the Placement Agent promptly, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of any comments from the Commission; (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus, including any document incorporated or deemed to be incorporated by reference therein, or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of the Statutory Prospectus or the Prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the Placement of the Securities. The Company shall effect all filings required under Rule 424(b) of the Rules and Regulations, in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus.  The Company shall use its best efforts to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.
 
 
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(c)            Continued Compliance .  The Company shall comply with the Securities Act, the Securities Act Rules and Regulations, the Exchange Act and the Exchange Act Rules and Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Registration Statement, the Statutory Prospectus and the Prospectus. If at any time when a prospectus relating to the Securities (or, but for the exception afforded by Rule 172 of the Securities Act Regulations (" Rule 172 "), would be) required by the Securities Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel to the Placement Agent, for the Company, to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) amend or supplement the Statutory Prospectus or the Prospectus in order that the Statutory Prospectus or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or (iii) amend the Registration Statement or amend or supplement the Statutory Prospectus or the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act Rules and Regulations, the Company will promptly (A) give the Placement Agent notice of such event; (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the Statutory Prospectus or the Prospectus comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Placement Agent with copies of any such amendment or supplement and (C) file with the Commission any such amendment or supplement; provided that the Company shall not file or use any such amendment or supplement to which the Placement Agent or counsel to the Placement Agent shall reasonably object in writing.  The Company will furnish to the Placement Agent such number of copies of such amendment or supplement as the Placement Agent may reasonably request.
 
(d)            Exchange Act Registration .  For a period of two years after the date of this Agreement, the Company shall use its commercially reasonable best efforts to maintain the registration of the shares of Common Stock under the Exchange Act.  The Company shall not deregister the shares of Common Stock under the Exchange Act without the prior written consent of the Placement Agent.
 
(e)            Delivery to the Placement Agent of Registration Statements .  The Company has delivered or made available or shall deliver or make available to the Placement Agent and counsel to the Placement Agent, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith or incorporated by reference therein) and signed copies of all consents and certificates of experts, and will also deliver to the Placement Agent, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for the Placement Agent.  The copies of the Registration Statement and each amendment thereto furnished to the Placement Agent will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
 
(f)            Delivery to the Placement Agent of Prospectuses .  The Company has delivered or made available or will deliver or make available to the Placement Agent, without charge, as many copies of each Preliminary Prospectus as the Placement Agent reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act.  The Company will furnish to the Placement Agent, without charge, during the period when a prospectus relating to the Securities is (or, but for the exception afforded by Rule 172 of the Securities Act Regulations, would be) required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) as the Placement Agent may reasonably request.  The Prospectus and any amendments or supplements thereto furnished to the Placement Agent will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
 
 
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(g)            Application of Net Proceeds .  The Company shall apply the net proceeds from the Placement received by it in a manner consistent with the application thereof described under the caption "Use of Proceeds" in the Registration Statement, the Statutory Prospectus and the Prospectus.
 
(h)            Internal Controls .  The Company and its Subsidiaries shall maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
 
(i)             FINRA .  The Company shall advise the Placement Agent (who shall make an appropriate filing with FINRA) if it is or becomes aware that Company or any of its affiliates (within the meaning of FINRA’s Conduct Rule 5121(f)(1)) directly or indirectly controls, is controlled by, or is under common control with, or is an associated person (within the meaning of Article I, Section 1(ee) of the By-laws of FINRA) of, any member firm of FINRA.
 
(j)             Blue Sky .  The Company will qualify or register the Securities for sale under the blue sky laws of such jurisdictions as the Placement Agent shall designate and will continue such qualifications in effect so long as reasonably required for the distribution of the Securities. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any such jurisdiction where it is not currently qualified or where it would be subject to taxation as a foreign corporation.
 
(k)            No Fiduciary Duties . The Company acknowledges and agrees that the Placement Agent's responsibility to the Company is solely contractual in nature and that none of the Placement Agent’s or its affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement.
 
(l)             Delivery of Earnings Statements to Security Holders . The Company shall make generally available to its security holders as soon as practicable, but not later than the first day of the fifteenth (15th) full calendar month following the date of this Agreement, an earnings statement (which need not be certified by independent registered public accounting firm unless required by the Securities Act or the Securities Act Rules and Regulations, but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least twelve (12) consecutive months beginning after the effective date of the Registration Statement.
 
 
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(m)            Release of D&O Lock-up Period .  If the Placement Agent, in its sole discretion, agrees to release or waive the restrictions set forth in the Lock-Up Agreements referenced in Section 6 hereof for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three Business Days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Addendum 3   hereto through a major news service at least two Business Days before the effective date of the release or waiver.
 
(n)            Reporting Requirements .  The Company, during the period when a prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and the Exchange Act Rules and Regulations.  Additionally, the Company shall report the use of proceeds from the issuance of the Securities as may be required under Rule 463 under the Securities Act Regulations and Regulations.
 
Section 5.            Closing and Settlement.   Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of, the Securities shall be made at one or more closings (each a “ Closing ” and the date on which each Closing occurs, a “ Closing Date ”) at the offices of Sunrise Securities Corp., or at such other place as shall be agreed upon by Sunrise and the Company (including remotely by facsimile or other electronic transmission), the first such Closing to take place at [9:00 a.m.], New York City time, on [____], 2014 (unless another time shall be agreed to by Sunrise and the Company); provided however that the last Closing shall occur no later than [___________], 2014.  On each Closing, (i) the Company will deliver, or cause to be delivered, to the Placement Agent by authorizing the release of the Securities to the Purchasers via DWAC delivery prior to the release of payment for such Shares, and (ii) each Purchaser will deliver, or cause to be delivered, to the Company, the aggregate purchase price for the Shares no later than one business day after receipt of the Purchaser’s Shares.
 
Section 6.            Restriction on Issuances. The Company hereby agrees that, without the prior written consent of the Placement Agent, it will not, during the period ending 180 days after the date hereof (“ Lock-Up Period ”), (i) offer, pledge, issue, sell, contract to sell, purchase, contract to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock; or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise; or (iii) file any registration statement with the Commission relating to the offering of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock. The restrictions contained in the preceding sentence shall not apply to (1) the Securities to be sold hereunder, (2) the issuance of Common Stock upon the exercise of options or warrants disclosed as outstanding (or to be outstanding in connection with the Placement) in the Preliminary Prospectus and the Prospectus, (3) the issuance of Common Stock, stock options, stock appreciation rights, restricted stock units, or other forms of equity compensation as bona fide compensation to the Company’s officers, directors, employees, consultants or agents under the Company’s equity incentive plans or employee stock purchase plan, in each case which have been approved by the Company’s stockholders, or (4) the filing of a registration statement or amendment to a registration statement on Form S-8. Notwithstanding the foregoing, if (x) the Company issues an earnings release or material news, or a material event relating to the Company occurs, during the last 17 days of the Lock-Up Period, or (y) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this clause shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless the Placement Agent waives such extension in writing. The Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or greater shareholder of the Company shall each sign a Lock-Up Agreement in the form of Addendum A.
 
 
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Section 7.            Payment of Expenses .  In addition to payment to Sunrise of the compensation set forth in Section 1 hereof, and regardless of whether the Placement is consummated or this Agreement is terminated, the Company shall pay all fees and disbursements of its own legal counsel, all customary reasonable fees and expenses incurred in connection with preparation and drafting of the Placement materials and filing of the Registration Statement with the Commission and/or FINRA, reasonable expenses in connection with road show, including, without limitation, travel, lodging, telecommunications and printing expenses, and shall reimburse Sunrise for legal expenses reasonably incurred by Sunrise, up to an aggregate of $75,000 in connection with the provision of its services as described and other expenses herein up to an amount that shall not be greater than 1% of the aggregate gross proceeds raised in the Placement, provided that Sunrise shall provide to the Company invoices for same in reasonable detail and all expenses in excess of $10,000, individually or in the aggregate, incurred or to be incurred by Sunrise shall be subject to the prior written approval of the Company, and provided further that the amount the Company reimburses Sunrise for its legal expenses shall not be included in the 1% cap.  Notwithstanding the foregoing, in the event the Placement is not consummated, the Company shall not be responsible for any legal fees of Sunrise in excess of $50,000.
 
Section 8.            Indemnification . The Company agrees to the indemnification and other agreements set forth in the indemnification provisions attached hereto as Addendum B (“ Indemnification Provisions ”), the provisions of which are incorporated herein by reference and shall survive the termination or expiration of this Agreement.
 
Section 9.            Placement Agent Information. The Company agrees that any information or advice rendered by the Placement Agent in connection with this engagement is for the confidential use of the Company only in their evaluation of the Placement and, except as otherwise required by law, the Company will not disclose or otherwise refer to the advice or information in any manner without the Placement Agent’s prior written consent.
 
 
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Section 10.          No Fiduciary Relationship. The Company acknowledges and agrees that: (a) Sunrise has been retained solely to act as placement agent in connection with the sale of the Securities and that no fiduciary, advisory or agency relationship between the Company and Sunrise has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether Sunrise has advised or is advising the Company on other matters; (b) the price and other terms of the Securities set forth in this Agreement were established by Sunrise and the Purchasers following discussions and arms-length negotiations and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (c) it has been advised that Sunrise and its affiliates are engaged in a broad range of transactions that may involve interests that differ from those of the Company and that Sunrise has no obligation to disclose such interest and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; (d) it has been advised that Sunrise is acting, in respect of the transactions contemplated by this Agreement, solely for the benefit of Sunrise, and not on behalf of the Company.
 
Section 11.          No Limitations. Nothing in this Agreement shall be construed to limit the ability of Sunrise or its affiliates to (a) trade in the Company’s or any other company’s securities or publish research on the Company or any other company, subject to applicable law, or (b) pursue or engage in investment banking, financial advisory or other business relationships with entities that may be engaged in or contemplate engaging in, or acquiring or disposing of, businesses that are similar to or competitive with the business of the Company.
 
Section 12.          Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns and, solely in respect of Section 8 to this Agreement, the Indemnified Persons (as defined in Addendum B ) pursuant to Section 8. In addition, the investors who purchase Securities pursuant to the subscription agreements shall be entitled to rely on the representations, warranties, covenants and agreements of the Company contained in this Agreement and shall be third party beneficiaries thereof. Except as indicated above, nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable remedy or claim under or in respect of this Agreement or any provision herein contained.
 
Section 13.          Conditions to Closing. The obligations of the Placement Agent and the Purchasers, and the closing of the sale of the Securities contemplated hereby are subject to the following conditions:
 
(a)            Registration Statement and Prospectus .  The Registration Statement has been declared effective by the Commission under the Securities Act and, at each Closing Date, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional information. If applicable, the Prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) under the Securities Act Regulations (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A under the Securities Act Rules and Regulations.
 
 
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(b)            Representations and Warranties .  The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of each Closing Date, as though made on and as of such Closing Date, except for representations and warranties that speak as of a specific date which shall be true and correct in all material respects as of such date.
 
(c)            Performance .  The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to any closing of the Placement.
 
(d)            No FINRA Objection .  FINRA shall have raised no objection to the fairness and reasonableness of the placement agency terms and arrangements.
 
(e)            Blue Sky .  The Securities shall have been qualified for sale under the blue sky laws of such states as shall have been specified by the Placement Agent.
 
(f)            Contents of Statutory Prospectus and Prospectus .  The Placement Agent shall not have discovered and disclosed to the Company on or prior to any Closing Date that the Statutory Prospectus and the Prospectus or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for the Placement Agent, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
 
(g)            Authorizations .  All corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each of this Agreement, the Securities, the Registration Statement and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Placement Agent, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.
 
(h)            Opinions of Counsel to the Company . The Placement Agent shall have received from counsel to the Company such counsel’s written opinion, addressed to the Placement Agent and the Purchasers and dated as of each Closing Date, in form and substance reasonably satisfactory to counsel to the Placement Agent, and a written statement providing certain “10b-5” negative assurances, dated as of each Closing Date and addressed to the Placement Agent and the Purchasers, in form and substance satisfactory to counsel to the Placement Agent.
 
(i)            Comfort Letter .
 
(1)            Cold Comfort Letter .  At the time this Agreement is executed you shall have received from Gregory, a cold comfort letter containing statements and information of the type customarily included in accountants’ comfort letters with respect to the financial statements and certain financial information contained or incorporated or deemed incorporated by reference in the Registration Statement, the Statutory Prospectus and the Prospectus, addressed to the Placement Agent and in form and substance satisfactory in all respects to counsel to the Placement Agent.
 
 
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(2)            Bring-down Comfort Letter .  At each Closing, the Placement Agent shall have received from Gregory, a letter, dated as of each Closing Date, to the effect of that Gregory reaffirms the statements made in the letter furnished pursuant to Section 23(i)(1), except that the specified date referred to shall be a date not more than three (3) business days prior to the applicable Closing Date.
 
(j)            Absence of Material Change .  Neither the Company nor any of its Subsidiaries shall have sustained since the date of the latest audited financial statements included in the Registration Statement, the Statutory Prospectus and the Prospectus, (i) any material loss or interference with its business from fire, explosion, flood, terrorist act or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in or contemplated by the Registration Statement, the Statutory Prospectus and the Prospectus, and (ii) since such date there shall not have been any material change in the capital stock or material increase in the long-term debt of the Company or any of its Subsidiaries or any material change, or any development involving a prospective material change, in or affecting the business, general affairs, management, financial position, shareholders’ equity, results of operations or prospects of the Company and its Subsidiaries, otherwise than as included in, or contemplated by, the Registration Statement, the Statutory Prospectus and the Prospectus, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of the Placement Agent, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by the Registration Statement, the Statutory Prospectus and the Prospectus.
 
(k)            Continued Registration; Listing on Trading Market .  The Common Stock is registered under the Exchange Act and, as of each Closing Date, the Securities shall be quoted and authorized for trading on the Company’s Trading Market, and satisfactory evidence of such actions shall have been provided to the Placement Agent.  The Company shall have taken no action designed to, or likely to have the effect of terminating the registration of the Common Stock under the Exchange Act or suspending from trading the Common Stock from the Company’s Trading Market, nor has the Company received any information suggesting that the Commission or the Company’s Trading Market is contemplating terminating such registration or listing.
 
(l)            Absence of Certain Events .  Subsequent to the execution and delivery of this Agreement, there shall not have occurred any of the following: (i) trading in securities generally on any Trading Market or in the over-the-counter market, or trading in any securities of the Company on any Trading Market or in the over-the-counter market, shall have been suspended or minimum or maximum prices or maximum ranges for prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, (iii) the United States shall have become engaged in hostilities in which it is not currently engaged, the subject of an act of terrorism, there shall have been an escalation in hostilities involving the United States, or there shall have been a declaration of a national emergency or war by the United States, or (iv) there shall have occurred any other calamity or crisis or any change in general economic, political or financial conditions in the United States or elsewhere, if the effect of any such event in clause (iii) or (iv) makes it, in the sole judgment of the Placement Agent, impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by the Registration Statement, the Statutory Prospectus and the Prospectus.
 
 
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(m)           Prevention of Issuance .  No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of each Closing Date, prevent the issuance or sale of the Securities or result in a Material Adverse Effect; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the applicable Closing Date which would prevent the issuance or sale of the Securities or result in Material Adverse Effect.
 
(n)            Subscription Agreements . The Company shall have entered into subscription agreements with each of the Purchasers and such agreements shall be in full force and effect on the Closing Date.
 
(o)            Officers’ Certificate .  The Company shall have furnished to the Placement Agent a certificate, dated each Closing Date, of its Chief Executive Officer and its Chief Financial Officer stating that (i) such officers have carefully examined the Registration Statement, the Statutory Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, as of the Time of Sale and as of any Closing Date did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Statutory Prospectus, as of the Time of Sale and as of each Closing Date, the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of each Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading, (ii) since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Statutory Prospectus or the Prospectus, (iii) to the best of their knowledge after reasonable investigation, as of any Closing Date, the representations and warranties of the Company in this Agreement are true and correct and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to any Closing Date, and (iv) there has not been, subsequent to the date of the most recent audited financial statements included or incorporated by reference in the Statutory Prospectus, any Material Adverse Change, except as set forth in the Prospectus.
 
(p)            Secretary’s Certificate . On the Closing Date, the Company shall have furnished to the Placement Agent a certificate of the Secretary of the Company (the “ Secretary’s Certificate ”), dated as of the Closing Date, (i) certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, (ii) certifying the current versions of the articles of incorporation, as amended and by-laws, as amended, of the Company and (iii) certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company.
 
 
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(q)           Prior to the Closing Date, the Company shall have furnished to the Placement Agent such further information, certificates and documents as the Placement Agent may reasonably request.
 
All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Placement Agent.
 
Section 14.          Notices. All notices or other communications required or permitted to be provided hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed e-mail, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. The address for such notices and communications shall be as set forth on the signature pages hereto or at such other address as such recipient has designated by two days advance written notice to the other parties hereto.
 
Section 15.        Termination of this Agreement.
 
(a)           The Placement Agent shall have the right to terminate this Agreement (and the obligations of the Purchasers under subscription agreements entered into with the Company) by giving notice as hereinafter specified at any time at or prior to the Closing Date, without liability on the part of the Placement Agent to the Company, if (i) prior to delivery and payment for the Securities (A) trading in securities generally shall have been suspended on or by any Trading Market, (B) trading in the Common Stock of the Company shall have been suspended on any exchange, in the over-the-counter market or by the Commission, (C) a general moratorium on commercial banking activities shall have been declared by federal or state authorities or a material disruption shall have occurred in commercial banking or securities settlement or clearance services in the United States, (D) there shall have occurred any outbreak or material escalation of hostilities or acts of terrorism involving the United States or there shall have been a declaration by the United States of a national emergency or war, (E) there shall have occurred any other calamity or crisis or any material change in general economic, political or financial conditions in the United States or elsewhere, if the effect of any such event specified in clause (D) or (E), in the judgment of the Placement Agent, is material and adverse and makes it impractical or inadvisable to proceed with the completion of the sale of and payment for the Securities on the Closing Date on the terms and in the manner contemplated by this Agreement, the Statutory Prospectus and the Prospectus, (ii) since the time of execution of this Agreement, there has been any Material Adverse Change or the Company or any Subsidiary shall have sustained a loss or interference with its business by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, in each case which is not described in the Statutory Prospectus and the Prospectus, and is of such character that in the judgment of the Placement Agent would, individually or in the aggregate, result in a Material Adverse Change and which would, in the judgment of the Placement Agent, make it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in this Agreement, the Registration Statement, the Statutory Prospectus and the Prospectus, (iii) the Company shall have failed, refused or been unable to comply with the terms or perform any agreement or obligation of this Agreement or any subscription agreement entered into with Purchasers, other than by reason of a default by the Placement Agent, or (iv) any condition of the Placement Agent’s obligations hereunder is not fulfilled. Any such termination shall be without liability of any party to any other party, except that the Company will reimburse the Placement Agent for all of their out-of-pocket expenses actually incurred by them in connection with the Placement and that the provisions of Section 6, and Section 15 hereof shall at all times be effective notwithstanding such termination.
 
 
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(b)           If the Placement Agent elects to terminate this Agreement as provided in this Section 15, the Company shall be notified promptly by the Placement Agent by telephone, confirmed by letter.
 
Section 16.          Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof that would defer to the substantive laws of another jurisdiction. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. If either party shall commence a Proceeding to endorse any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other reasonable costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.
 
Section 17.          Entire Agreement; Miscellaneous. This Agreement (including the attached Indemnification Provisions) embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings, relating to the subject matter hereof. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any other respect or any other provision of this Agreement, which will remain in full force and effect. This Agreement may not be amended or otherwise modified or waived except by an instrument in writing signed by each of the Placement Agent and the Company. The representations, warranties, agreements and covenants contained herein shall survive the closing of the Placement and delivery of the Securities. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a .pdf format file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or .pdf signature page were an original thereof.
 
 
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Section 18.          Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
 
[Signature page follows]
 
 
 
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Please confirm that the foregoing correctly sets forth our agreement by signing and returning to the Placement Agent the enclosed copy of this Agreement.
 
 
DANDRIT BIOTECH USA, INC.

 
By:
 
   
Name:
 
   
Title:
 

 
Address for Notice:
 
DanDrit Biotech USA, Inc.
 
c/o DanDrit Biotech A/S
Fruebjergvej 3 Box 62
2100 Copenhagen, Denmark
 
Attention: Chief Executive Officer
 
Facsimile: [____________]
   
 
With a copy to:
 
Richardson & Patel LLP
 
The Chrysler Building
 
405 Lexington Avenue
New York, NY 10174
 
Attention: David Feldman
Facsimile: (917) 591-6898
   
 
Accepted and agreed to as of the date first written above:

 
SUNRISE SECURITIES CORP.
   
 
By:
 
   
Name:
 
   
Title:
 

 
Address for Notice:
 
Sunrise Securities Corp.
 
600 Lexington Avenue, 23rd Floor
 
New York, NY 10022
 
Facsimile:
   
 
With a copy to:
 
Troutman Sanders LLP
 
The Chrysler Building
 
405 Lexington Avenue
New York, NY 10174
 
Attention: Henry I. Rothman
Facsimile: (212) 704-6288
 
 
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ADDENDUM A
 
Form of Lock-Up Agreement
 
Sunrise Securities Corp.
600 Lexington Avenue, 23rd Floor
New York, NY 10022
 
Re: DanDrit Biotech USA, Inc. Public Offering of Common Stock
 
Dear Sirs:
 
In order to induce Sunrise Securities Corp. (“ Sunrise ”) to enter in to a certain Placement Agency Agreement with DanDrit Biotech USA, Inc. (the “ Company ”), with respect to the public offering of up to $12,000,000 in shares (the “ Offering ”) of the Company's common stock, par value $0.0001 per share (“ Common Stock ”), the undersigned hereby agrees that for a period of 180 days following the filing date of the last amendment to the registration statement (the “ Registration Statement ”) filed by the Company with the Securities and Exchange Commission (“ SEC ”) regarding such Offering that is declared effective (the “ Lock-Up Period ”), the undersigned will not, without the prior written consent of Sunrise, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (including, without limitation, shares of Common Stock or any such securities which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations promulgated under the Securities Act of 1933, as the same may be amended or supplemented from time to time (such shares or securities, the “ Beneficially Owned Shares ”), (ii) enter into any swap, hedge or other agreement or arrangement that transfers in whole or in part, the economic risk of ownership of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock, or (iii) engage in any short selling of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock.
 
Notwithstanding the foregoing, the foregoing restrictions shall not in any event apply to transfers of shares of Common Stock or Beneficially Owned Shares (i) as a bona fide gift or gifts or pledge, provided that the undersigned provides prior written notice of such gift or gifts or pledge to Sunrise and the donee or donees or pledgee or pledgees (as the case may be) thereof agree to be bound by the restrictions set forth herein, (ii) either during the undersigned's lifetime or on death by will or intestacy to the undersigned's immediate family or to a trust, the beneficiaries of which are exclusively the undersigned and a member or members of the undersigned's immediate family, provided that the transferee thereof agrees to be bound by the restrictions set forth herein, (iii) to the undersigned and/or any member of the immediate family of the undersigned from or by a grantor retained (or like-kind) annuity trust which exists as of the date hereof and was established for the direct or indirect benefit of the undersigned and/or any member of the immediate family of the undersigned pursuant to the terms of such trust, (iv) if the undersigned is a corporation, partnership or other business entity (A) to another corporation, partnership or other business entity that is an affiliate (as defined under Rule 12b-2 of the Exchange Act) of the undersigned or (B) any distribution or dividend to equity holders of the undersigned as part of a distribution or dividend by the undersigned (including upon the liquidation and dissolution of the undersigned pursuant to a plan of liquidation approved by the undersigned 's equity holders), or if the undersigned is a trust, to a grantor or beneficiary of the trust, (v) in the event of a default under a pledge which exists as of the date hereof as security for a margin or loan account pursuant to the terms of such account, (vi) pursuant to any 10b5-l trading plans in effect as of the date of the Offering and (vii) with the prior written consent of Sunrise. Any permitted transferee noted in (i), (ii), (iii) and (iv) above shall execute a duplicate form of this Lock-Up Agreement or execute an agreement, reasonably satisfactory to Sunrise, pursuant to which each transferee shall agree to receive and hold such Common Stock or Beneficially Owned Shares subject to the provisions hereof, and there shall be no further transfer except in accordance with the provisions hereof. For the purposes of this paragraph, "immediate family" shall mean spouse, domestic partner, lineal descendant (including adopted children), father, mother, brother or sister of the transferor.
 
 
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Furthermore, the undersigned shall be permitted to exercise of options to purchase shares of Common Stock or receive shares of Common Stock upon the vesting of equity awards and the related transfer of shares of Common Stock to the Company (i) deemed to occur upon the cashless exercise of such options or (ii) for the primary purpose of paying the exercise price of such options or for paying taxes (including estimated taxes) due as a result of the exercise of such options or as a result of the vesting of such shares of Common Stock under such equity awards.
 
In addition, the undersigned hereby waives, from the date hereof until the expiration of the Lock-Up Period, any and all rights, if any, to request or demand registration pursuant to the Securities Act of 1933, as amended, of any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock that are registered in the name of the undersigned or that are Beneficially Owned Shares. In order to enable the aforesaid covenants to be enforced, the undersigned hereby consents to the placing of legends and/or stop transfer orders with the transfer agent of the Common Stock with respect to any shares of Common Stock, securities convertible into or exercisable or exchangeable for Common Stock or Beneficially Owned Shares.
 
If (i) the Company issues an earnings release or material news or a material event relating to the Company occurs during the last seventeen (17) days of the lock-up period, or (ii) prior to the expiration of the lock-up period, the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the lock-up period, the restrictions imposed by this Agreement shall continue to apply until the expiration of the eighteen (18)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.
 
 
[Signatory]
 
     
 
By:
   
   
Name:
 
   
Title:
 
 
 
30

 
 
ADDENDUM B
 
Sunrise Securities Corp.
600 Lexington Avenue, 23rd Floor
New York, NY 10022
 
Ladies and Gentlemen:
 
1.           In connection with our engagement of Sunrise Securities Corp. (the “Placement Agent” or "Sunrise") as Placement Agent, DanDrit Biotech USA, Inc. (the "Company") agrees to indemnify and hold harmless Sunrise and each of the other Indemnified Parties (as hereinafter defined) from and against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, and any and all pending or threatened actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing, pursuing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which any Indemnified Party is a party (collectively, " Losses "), directly or indirectly, caused by, relating to, based upon, arising out of, or in connection with, Sunrise's acting for the Company, including, without limitation, any act or omission by Sunrise in connection with its acceptance of or the performance or non-performance of its obligations under the Placement Agency Agreement, any material breach by the Company of any representation, warranty, covenant or agreement contained in the Placement Agency Agreement (or in any instrument, document or agreement relating thereto), or the enforcement by Sunrise of their rights under the Placement Agency Agreement or these indemnification provisions, except to the extent that any such Losses are the result of a settlement by an Indemnified Party effected without the Company's prior written consent (not to be unreasonably withheld) or are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily from the gross negligence or willful misconduct of any Indemnified Party. The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement of Sunrise by the Company or for any other reason, except to the extent that any such liability is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from such Indemnified Party's gross negligence or willful misconduct.
 
2.           These indemnification provisions shall extend to the following persons (collectively, the "Indemnified Parties"): Sunrise, their present and former affiliated entities, partners, employees, legal counsel, agents and controlling persons (within the meaning of the federal securities laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, agents and controlling persons of any of them. These indemnification provisions shall be in addition to any liability which the Company may otherwise have to any Indemnified Party.
 
 
31

 
 
3.           If any action, suit, proceeding or investigation is commenced, as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable promptness; provided, however, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from their respective obligations hereunder. The Company shall provide for the engagement of one law firm reasonably acceptable to the Indemnified Parties to provide legal representation to the Indemnified Parties, and the reasonable fees, expenses and disbursements of such counsel shall be borne by the Company; provided, however, that any Indemnified Person may retain his or her own legal counsel if a conflict would exist with such first firm of legal counsel. Any such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company, as applicable. The Company shall be liable for any settlement of any claim against any Indemnified Party made with the prior written consent of the Company (which consent shall not be unreasonably withheld or delayed). The Company shall not, without the prior written consent of Sunrise, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent (a) includes, as an unconditional term thereof, the giving by the claimant to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (b) does not contain any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character, professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.
 
4.           In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to which any Indemnified Party may be subject (a) in accordance with the relative benefits received by the Company and its respective stockholders, subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (b) if (and only if) the allocation provided in clause (a) of this sentence is not permitted by applicable law or by any such court, in such proportion as to reflect not only the relative benefits, but also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in such Losses as well as any relevant equitable considerations. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for such fraudulent misrepresentation. The relative benefits received (or anticipated to be received) by the Company and its respective stockholders, subsidiaries and affiliates shall be deemed to be equal to the aggregate consideration payable or receivable by such parties in connection with the transaction or transactions to which the Placement Agency Agreement relates relative to the amount of fees actually received by Sunrise in connection with such transaction or transactions. Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of fees previously received by Sunrise pursuant to the Placement Agency Agreement.
 
5.           Neither termination nor completion of the engagement of Sunrise referred to above shall effect these indemnification provisions which shall remain operative and in full force and effect and shall be in addition to any liability that the Company might otherwise have to any Indemnified Party under the Placement Agency Agreement or otherwise. The indemnification provisions shall be binding upon the Company and its respective successors and assigns and shall inure to the benefit of the Indemnified Parties and their respective successors, assigns, heirs and personal representatives.
 
 
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These Indemnification Provisions may be executed in any number of counterparts, each of which shall be deemed an original but all of which when taken together shall constitute one and the same instrument. Facsimile signatures shall be deemed originals for all purposes hereunder.
 
The provisions of this agreement shall remain in full force and effect following the completion or termination of the Placement Agent’s engagement.
 
 
DANDRIT BIOTECH USA, INC.

 
By:
 
   
Name:
 
   
Title:
 

Accepted and agreed to as of the date first written above:
SUNRISE SECURITIES CORP.
   
 
By:
 
   
Name:
 
   
Title:
 

 
33

 

ADDENDUM C
 

DANDRIT BIOTECH USA, INC.

[Date]

DanDrit Biotech USA, Inc. (the “Company”) announced today that Sunrise Securities Corp., acting as placement agent in the Company’s recent public offering of  _______ shares of common stock of the Company, is [waiving] [releasing] a lock-up restriction with respect to _________  shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the Company.  The [waiver] [release] will take effect on  _________, 20___, and the shares may be sold on or after such date.  

This press release is not an offer or sale of the securities in the United States or in any other jurisdiction where such offer or sale is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act of 1933, as amended.
 
 
34

Exhibit 4.1
 
 
 
 

 
 
 

Exhibit 5.1
 
 

May 15, 2014
 
Board of Directors
DanDrit Biotech USA, Inc.
P.O. Box 189
Randolph, VT 05060

 
Re:
DanDrit Biotech USA, Inc., Registration Statement on Form S-1, as amended

Gentlemen:

We have acted as counsel for DanDrit Biotech USA, Inc., a Delaware corporation (the “Company”), in connection with the preparation of a Registration Statement on Form S-1, as amended, (the “Registration Statement”) and the prospectuses included therein (collectively, the “Prospectuses”)   filed by the Company with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (“Act”), relating to (a) the public sale of up to 2,400,000 shares (the “Direct Offering Shares”) of the Company common stock, $0.0001 par value per share (the “Common Stock”) and (b) 782,252 shares (the “Resale Shares” and together with the Direct Offering Shares, the “Shares”) of the Common Stock offered for resale by certain selling stockholders (the “Selling Stockholders”).  This opinion is being furnished pursuant to Item 601(b)(5) of Regulation S-K under the Act.

In connection with rendering the opinion as set forth below, we have reviewed (a) the Registration Statement and the exhibits thereto, including the form of subscription agreement to be used in connection with the sale of the Direct Offering Shares filed or incorporated by reference as Exhibit 99.1 to the Registration Statement (as amended and supplemented from time to time, the “Subscription Agreements”);  (b) the Company’s Articles of Incorporation, as amended; (c) the Company’s Bylaws; (d) certain records of the Company’s corporate proceedings as reflected in its minute books; and (e) such statutes, records and other documents as we have deemed relevant.

In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and conformity with the originals of all documents submitted to us as copies thereof.  In addition, we have made such other examinations of law and fact as we have deemed relevant in order to form a basis for the opinion hereinafter expressed.

We are opining herein as to the effect on the subject transaction only of the Delaware General Corporation Law, as amended, and we express no opinion with respect to the applicability thereto, or the effect thereon, of any other state, federal, or foreign laws, or as to any matters of municipal law or the laws of any local agencies within any state.
 
The Chrysler Building, 405 Lexington Avenue, 49 th Floor • New York, NY • 212.869.7000
 
 
 

 
 
Board of Directors
DanDrit Biotech USA, Inc.
May 15, 2014
Page 2
 
Based upon and subject to the foregoing and assuming that (i) the Registration Statement (and any amendments thereto) is declared effective and remains effective, and the Prospectuses which are part thereof, and the Prospectus delivery requirements with respect thereto, are complied with and the Company fulfills all of the requirements of the Act, throughout all of the periods relevant to this opinion (including the requirements of Section 10(a)(3) of the Act); (ii) all offers and sales of the Shares are made in a manner complying with the terms of the Registration Statement and the Act; (iii) the Subscription Agreements will be duly executed and delivered by the various investors and the Company in connection with the offer and sale of the Direct Offering Shares; and (iv) all offers and sales of the Shares are made in compliance with the securities laws of the states having jurisdiction thereto, we are of the opinion that:

1.  
The Direct Offering Shares, when offered, issued and paid for as described in the Registration Statement and applicable Prospectus, and pursuant to the Subscription Agreements, will be duly authorized, validly issued, fully paid and non-assessable; and

2.  
The Resale Shares, when sold by the Selling Stockholders pursuant to the Registration Statement and applicable Prospectus, will be duly authorized, validly issued, fully paid and non-assessable.
 
We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the references to this firm in the Registration Statement.  In giving this consent, we do not thereby admit that we are acting within the category of persons whose consent is required under Section 7 of the Act and the rules and regulations of the Commission thereunder.
 
   
Very truly yours,
 
RICHARDSON & PATEL, LLP
 

DNF/ggn
cc: DanDrit Biotech USA, Inc., via electronic mail
 
 
 

Exhibit 10.15
 
EFS/DVS/NDA20130307
 
 
CONFIDENTIAL DISCLOSURE AGREEMENT
 
By and between:
 
The ETABLISSEMENT   FRANÇAIS   DU   SANG , French National Blood Service, a public establishment, located at 20 avenue du Stade de France - 93218 La Plaine Saint Denis Cedex, FRANCE, represented by its President Monsieur François TOUJAS, duly authorized for the purposes hereof, hereinafter referred to as the " EFS ";
 
(hereinafter referred to as “ EFS ”)
 
And
 
DanDrit   Biotech   A/S , a Danish company, having its registered office at Symbion Science Park, Fruebjergvej 3 Box 62, 2100 Copenhagen, Denmark, represented by Eric LEIRE, in his/her capacity as chief executive officer (CEO), duly authorized for the purposes hereof,
 
(hereinafter referred to as “ DanDrit ”)
 
EFS   and DanDrit   are hereinafter individually referred to  as the “ Party ” and  collectively as the “ Parties ”.
 
RECITALS
 
WHEREAS, the researchers of EFS   have generated, from a patient with PDC leukaemia, cell lines that can be used to generate human cells with characteristics similar to plasmacytoid dendritic cells (pDCs). The researchers of EFS   have further demonstrated that these pDCs behave as efficient antigen presenting cells in preclinical trials. The patents and patent applications concerning this technology have been assigned to EFS   and EFS   is responsible for the commercialisation thereof.
 
WHEREAS, EFS   is interested in developing therapeutic applications of pDCs and is entering a phase I clinical trial on Melanoma.
 
WHEREAS, DanDrit   is interested in developing a cancer vaccine for advanced colorectal cancer.
 
EFS   and DanDrit   wish to disclose certain information for the sole purpose of enabling them to evaluate their interest to collaborate in the performance of developing therapeutic applications of pDCs as well as the scope of their collaboration, all in accordance with the terms and conditions set forth below.
 
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
 
1.
PURPOSE
 
 
1.1. 
The purpose of this agreement (the “ Agreement ”) is to set forth the terms and conditions under which EFS   and DanDrit   may exchange Confidential Information (as this term is defined in Section   2   below) within the context described in the recitals and to set forth the rules relating to their use and protection.
 
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Initials EFS
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EFS/DVS/NDA20130307
 
 
 
1.2. 
The disclosure of Confidential Information by a Party to the other is made for evaluation purposes only (of their interest to collaborate) and solely in connection with the development of therapeutic applications of pDCs.
 
 
1.3. 
Under this Agreement, each Party disclosing (the “ Discloser ”) shall only communicate to the other Parties (the “ Recipients ”) Confidential Information deem necessary to implement the development of therapeutic applications of pDCs and the Recipients undertake to use it for implementation purposes only.
 
2.
SCOPE OF CONFIDENTIAL INFORMATION
 
 
2.1. 
As used herein, “ Confidential   Information ” means information of any nature, administrative, scientific, medical, technical or non-technical, financial or business, experimental work, knowledge, researches, know how, technology, data, concepts, processes methods and specifications or other expertise, whether or not patentable, furnished by Discloser to Recipients, either directly or indirectly, by any and all means, and on any media relating to the development of therapeutic applications of pDCs during the terms of the Agreement.
 
 
2.2. 
Confidential Information also includes the existence and the content of the Agreement.
 
 
2.3. 
Confidential Information released to Recipients shall be considered to be remitted in confidence and shall remain strictly confidential.
 
 
2.4. 
Confidential Information shall not include information that:
 
 
(i) 
was rightfully in Recipients’ possession prior to disclosure by Discloser, as evidenced by written records;
 
 
(ii) 
is or becomes publicly known without wrongful act or breach of this Agreement;
 
 
(iii) 
is rightfully received by Recipients from a third party without breach of any confidentiality obligation;
 
 
(iv) 
is independently developed by employees or agents of Recipients;
 
 
(v) 
is approved for release by prior written authorization by Discloser;
 
 
(vi) 
are communicated by Recipients to their consultants, lawyers or experts provided these consultants, lawyers or experts are bound by secrecy and/or confidentiality obligations pursuant to their professional and ethical rules; or
 
 
(vii) 
is disclosed pursuant to the order or requirement of a court, administrative agency or other governmental body; provided , however , that the Party subject to such order or requirement shall provide prompt notice of such court order or requirement to the discloser to enable such Party to seek a protective order or otherwise prevent or restrict such disclosure and shall limit the disclosure of Confidential Information to the utmost minimum.
 
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Initials EFS
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EFS/DVS/NDA20130307
 
 
3.
USE OF CONFIDENTIAL INFORMATION
 
 
3.1. 
Each Recipient undertakes for the term of this Agreement and for the period defined in Section   4 hereunder to keep strictly confidential and not disclose nor use any  of the Discloser’s Confidential Information either directly or indirectly to any third party, including its subcontractor or any person other than those described in   Section   3.1 hereunder without the prior written authorization from Discloser and provided this third party has previously agreed to be bound by the same confidentiality and non-use obligations as set forth herein.
 
 
3.2. 
Recipients may disclose Confidential Information only to such of their own employees or agents who may be involved in the development of therapeutic applications of pDCs on a need to know basis, provided they are made aware of the confidentiality of the Confidential Information and they agreed to be bound by the same confidentiality and non-use obligations as set forth in this Agreement.
 
 
3.3. 
Each Recipient shall store Confidential Information under secure conditions to preclude an unauthorized access or disclosure.
 
 
3.4. 
Recipients warrant that their employees or agents defined in Section   3.2 above will comply with the provisions of this Agreement and shall assume full responsibility and liability to the Discloser for any breach of the Agreement by their employees or agent. Recipients declare that they have taken or will take all necessary measures from their employees or agent to allow them to comply with the Agreement.
 
 
3.5. 
Each Recipient shall immediately notify the Discloser in writing by registered letter with acknowledgment of receipt of any misappropriation or misuse by any person of Confidential Information as soon as it becomes known and will provide all possible assistance to the injured Party in order to minimize the effects of such breach of confidentiality.
 
 
3.6. 
Recipients shall not be entitled to make any use of Confidential Information, except as explicitly set forth herein, without separate written agreement that effect.
 
 
3.7. 
Recipients shall not copy or duplicate any materials containing Confidential Information except as necessary to evaluate their interest to collaborate to the development of therapeutic applications of pDCs.
 
4.
DURATION
 
 
4.1. 
This Agreement shall retroactively enter in force upon March,   15 th ,   2013   and remain in full force and effect during twelve (12) months following such date.
 
 
4.2. 
However, each Party may terminate this Agreement at any time by thirty (30) days prior written notice addressed by registered letter to the other Parties.
 
 
4.3. 
Notwithstanding the expiration or termination of this Agreement for whatever reason, the confidentiality and non-use obligations set forth herein shall survive for a period of ten (10) years from the expiry or termination thereof.
 
5.
PROPERTY
 
 
5.1. 
Confidential Information disclosed by Discloser to Recipients under this Agreement, as well as any copy, reproduction or duplication, duly authorized, made for evaluation purposes of the development of therapeutic applications of pDCs only, as well as all rights thereto shall remain Discloser’s exclusive property, without prejudice to the rights of third parties.
 
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EFS/DVS/NDA20130307
 
 
6.
LIMITS OF THE AGREEMENT
 
This Agreement shall not:
 
 
(i) 
obligate either Party to enter into any further agreement;
 
 
(ii) 
establish a waiver, by Discloser, as regards the protection of Confidential Information by means of a patent, or by any and all other intellectual property rights;
 
 
(iii) 
establish  an  assignment,  a  license  by Discloser,  of  any and  all  rights  over  this information for Recipient.
 
7.
WARRANTY
 
 
7.1. 
The Discloser acknowledges and warrants that it is duly authorized to disclose Confidential Information to Recipients within the scope of this Agreement.
 
 
7.2. 
This Agreement does not contain any representation or warranty as to the completeness or accuracy of Confidential Information and neither Party has any such liability to the other Parties.
 
8.
RETURN OF CONFIDENTIAL INFORMATION
 
Recipients shall return all materials containing Confidential Information (without retaining any copy thereof), within fifteen (15) days as from: (i) Discloser’s request; or (ii) upon the date of expiration or termination of the Agreement.
 
9.
NON EXCLUSIVITY
 
Subject to the above provisions, the Agreement does not restrict the capacity of each Party to enter into relationship or to work with a third party.
 
10.
FINAL DISPOSITIONS
 
 
10.1 
This Agreement represents the entire understanding between the Parties with respect to the subject matter hereof. It cancels and replaces any written or verbal arrangements, correspondence, documents or agreements entered into or communicated by the Parties beforehand and having the same or a similar subject matter as that of the Agreement.
 
 
10.2 
Should one or several provisions of this Agreement be held to be void or invalid by a final decision of a competent court, the other provisions of the Agreement will remain in full force and effect and this void or invalid provision will be disregarded.
 
 
10.3 
No amendment to this Agreement will be effective or binding unless it is reduced in writing commonly agreed by the Parties and signed by their duly authorized representatives.
 
 
10.4 
The Parties represent that the Agreement have been entered into intuitu   personae . Therefore, neither Party may assign or transfer any or all of its rights and duties deriving from this Agreement without written prior consent of the other Party.
 
Initials Dandrit
Initials EFS
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EFS/DVS/NDA20130307
 
 
11.
APPLICABLE LAW AND JURISDICTION
 
 
11.1. 
This Agreement shall be governed in accordance with the laws of France, excluding conflict law’s principles.

 
11.2. 
Any dispute arising under this Agreement which cannot be resolved amicably within two (2) months as from a written notice addressed by the complaining Party by registered letter with acknowledgement of receipt to the other Party(ies) shall be submitted to the exclusive jurisdiction of the competent courts of France.

Executed in                                 , in two (2) original copies,

EFS
DanDrit
By:
François TOUJAS
President
 
Date:       /03/2013
By:   /s/ Eric Leire                                                                 
Name:   Eric LEIRE
Title: CEO
 
Date: March 8 th , 2013

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Exhibit 23.1
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in the prospectus constituting part of this Registration Statement on Form S-1 for DanDrit Biotech USA, Inc. (formerly Putnam Hills Corp.) (the “Company”), of our report dated July 16, 2013, relating to the March 31, 2013 and 2012 financial statements of the Company, which appears in such prospectus. We also consent to the reference to us under the headings “Changes In and Disagreements with Accountants on Accounting and Financial Disclosure” and “Experts”.
 
RAICH ENDE MALTER & CO. LLP
New York, New York
May 15, 2014
 
Exhibit 23.2
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in the prospectus constituting part of this Registration Statement on Form S-1 for DanDrit Biotech A/S (the “Company”), of our report dated May 2, 2014, relating to the December 31, 2013 and 2012 financial statements of the Company, which appears in such prospectus. We also consent to the reference to us under the headings “Changes In and Disagreements with Accountants on Accounting and Financial Disclosure” and “Experts”.
 
GREGORY & ASSOCIATES, LLC
Salt Lake City, Utah
May 14, 2014
Exhibit 99.1
 
Subscription Agreement

DanDrit Biotech USA, Inc.
P.O. Box 189
Randolph, VT 05060

Ladies and Gentlemen:

The undersigned (the “Investor”) hereby confirms and agrees with DanDrit Biotech USA, Inc., a Delaware corporation (the “Company”), as follows:

1.   Subject to the terms and conditions hereof, the Investor will purchase from the Company and the Company will issue and sell to the Investor such number of shares (the “ Shares ”) of common stock, par value $0.0001 per share, as is set forth on the signature page hereto (the “ Signature Page” ) for a purchase price of $[_____] per Share.
 
2.   The closing is expected to occur on or about [___________], 2014 (the “ Closing ”), subject to the satisfaction of certain closing conditions set forth in the Placement Agency Agreement dated as of [___________], 2014 (the “ Placement Agency Agreement ”) entered into by and between the Company and the placement agent for the Offering (as defined below).
 
3.   The offering and sale of the Shares (the “ Offering ”) is being made pursuant to (a) a registration statement on Form S-1 (Registration File No. File No. 333-193965) (the " Registration Statement "), under the Securities Act of 1933, as amended (the “ Securities Act ”), which became effective on [__________], 2014; and (b) a prospectus dated the effective date of the Registration Statement (or, if applicable, the form of final prospectus containing information permitted to be omitted at the time of effectiveness by Rule 430A of the Securities Act filed with the Securities and Exchange Commission pursuant to Rule 424 of the Securities Act (the “Prospectus”) containing certain information regarding the Shares and terms of the Offering that has been delivered to the Investor on or prior to the date hereof.  The Prospectus, together with the documents incorporated by reference therein, is also referred to herein as the “ General Disclosure Package .”
 
4.   On the Closing Date, the Company shall deliver to Investor the Shares via the Depository Trust Company’s (“ DTC ”) Deposit or Withdrawal at Custodian system via the DTC instructions set forth on the signature page hereto.
 
5.   The Company’s obligation to issue and sell the Shares to the Investor shall be subject to the receipt by the Company of the purchase price for the Shares being purchased hereunder as set forth on the Signature Page on the same business day as receipt of the Shares and the accuracy of the representations and warranties made by the Investor herein and the fulfillment of those undertakings herein of the Investor to be fulfilled prior to the Closing Date.  The Investor’s obligation to purchase the Shares shall be subject to the condition that the placement agent shall not have (a) terminated the Placement Agency Agreement pursuant to the terms thereof or (b) determined that the conditions to closing in the Placement Agency Agreement have not been satisfied.
 
 
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6.   The Company shall before 9:30 a.m. (New York time) on the next trading day after the Closing, issue a press release and file a Current Report on Form 8-K, together with disclosing all material aspects of the transactions contemplated hereby. The Company shall not identify the Investor by name in any press release or public filing, or otherwise publicly disclose the Investor’s name, without the Investor’s prior written consent.
 
7.   The Investor represents that (a) it has had full access to the General Disclosure Package prior to or in connection with its receipt of this Subscription Agreement and is relying only on such information and documents in making its decision to purchase the Shares, and (b) it is acquiring the Shares for its own account, or an account over which it has investment discretion.
 
8.   The Investor and the Company each has the requisite power and authority to enter into this Subscription Agreement and to consummate the transactions contemplated hereby.
 
9.   The Placement Agency Agreement contains representations, warranties, covenants and agreements of the Company, which may be relied upon by the Investor and which the Investor shall be a third party beneficiary thereof.
 
10.   This Subscription Agreement will involve no obligation or commitment of any kind until this Subscription Agreement is accepted and countersigned by or on behalf of the Company.  The Investor acknowledges and agrees that the Investor’s receipt of the Company’s counterpart to this Subscription Agreement shall constitute written confirmation of the Company’s sale of Shares to such Investor.
 
11.   All covenants, agreements, representations and warranties herein will survive the execution of this Subscription Agreement, the delivery of the Shares being purchased and the payment therefor.
 
12.   On or prior to the Closing, the Company shall deliver or cause to be delivered to the Investor the following:
 
(i)     this Agreement duly executed by the Company;
 
(iii)  the Prospectus (which may be delivered in accordance with Rule 172 under the Securities Act)
 
 
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13.   All notices or other communications required or permitted to be provided hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed e-mail, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. The address for such notices and communications shall be as follows:
 
     If to the Company, to:
     DanDrit Biotech USA, Inc.
     c/o DanDrit Biotech A/S
     Fruebjergvej 3 Box 62
     2100 Copenhagen, Denmark
     Facsimile: [__________]
 
     with a copy to:
 
     Richardson & Patel LLP
     The Chrysler Building
     405 Lexington Avenue
     New York, NY 10174
     Attention: David Feldman
     Facsimile: (917) 591-6898
 
If to the Investor, at its address on the signature page hereto, or at such other address or addresses as may have been furnished to the Company in writing.
 
14.   The Company acknowledges that the only material, non-public information relating to the Company or its subsidiaries that the Company, its employees or agents has provided to the Investor in connection with the Offering prior to the date hereof is the existence of the Offering.
 
15.   This Agreement may be terminated by the Investor, as to Investor’s obligations hereunder only and without effect whatsoever on the obligations of the Company, by notice to the Company, if (a) the Placement Agency Agreement is terminated by the placement agent pursuant to the terms thereof, or (b) Closing has not occurred and the Shares have not been delivered to the Investor by the close of trading on the OTC Bulletin Board on [___________], 2014; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party.
 
16.   This Subscription Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.  This Subscription Agreement will be governed by the internal laws of the State of New York, without giving effect to the principles of conflicts of law. This Subscription Agreement may be executed in one or more counterparts, each of which will constitute an original, but all of which, when taken together, will constitute but one instrument, and signatures may be delivered by facsimile or by e-mail delivery of a “.pdf” format data file. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Placement Agency Agreement.
 
[signature page follows]
 
 
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INVESTOR SIGNATURE PAGE
 
Number of Shares  ________________

Purchase Price Per Share: $ __________
 
Aggregate Purchase Price: $ _________

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.
 
Dated as of: [___________], 2014
 
_____________________________
INVESTOR

By:  __________________________
 
Print Name: ____________________
 
Title : _________________________
 
Taxpayer Identification Number: ___________________________
 
DWAC Instructions for Shares:

Name of DTC Participant:
(broker-dealer at which the account or accounts to be credited with the Shares are maintained)
 
DTC Participant Number:
 
Account Name:
 
Account Number:
 
Person to contact to initiate DWAC at closing:
 
Name:
 
Tel:
 
Email:
 

 
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SUBSCRIPTION AGREEMENT

Agreed and Accepted [_________], 2014

DanDrit Biotech USA, Inc.

By:                                                                
        Name:
        Title:
 
Sale of the Shares purchased hereunder is made pursuant to the Registration Statement.