SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM 10-KSB |
Mark One |
|
[X] |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF |
THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended April 30, 2008
OR
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF |
THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ________
Commission file number
0-17263
CHAMPIONS BIOTECHNOLOGY,
INC.
Delaware
52-1401755
(State or other jurisdiction of
(I.R.S. Employer
organization)
Identification No.)
(Exact name of registrant as specified in
its charter)
1400 N. 14
th
Street, Arlington, VA
22209
(Address of principal executive
offices) (Zip code)
(410) 630-1313
(Registrant's
telephone number, including area code)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per
share
(Title of Class)
Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act □ |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No |
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in a definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB. [X] |
Indicate by check mark whether the registration is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X |
For the year ended April 30, 2008, the revenues of the registrant were $1,399,940. |
The Company's common stock is listed on the Over-The-Counter Bulletin Board under the stock ticker symbol "CSBR." The aggregate market value of the Common Stock of the Registrant held by non-affiliates of the Registrant based on the average bid and asked price on July 14, 2008, was approximately $9,900,000. |
As of July 14, 2008, the Registrant had a total of 33,272,718 shares of common stock outstanding. |
DOCUMENTS INCORPORATED BY REFERENCE |
None |
Transitional Small Business Disclosure Format (check one): Yes No X |
|
TABLE OF CONTENTS
PART I |
|
Special Note Regarding Forward-Looking Statements |
3 |
Item 1. Description of Business and Risk Factors |
3 |
Item 2. Description of Property |
8 |
Item 3. Legal Proceedings |
8 |
Item 4. Submission of Matters to a Vote of Security Holders |
8 |
PART II |
|
Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities |
9 |
Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations |
10 |
Item 7. Financial Statements |
12 |
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
12 |
Item 8A. Controls and Procedures |
12 |
Item 8B. Other Information |
13 |
PART III |
|
Item 9. Directors, Executive Officers, Promoters and Control |
|
Persons; Compliance with Section 16(a) of the Exchange Act |
14 |
Item 10. Executive Compensation |
16 |
Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
17 |
Item 12. Certain Relationships and Related Transactions, and Director Independence |
19 |
Item 13. Exhibits |
19 |
Item 14. Principal Accountant Fees and Services |
19 |
Report of Independent Accountants and Financial Statements |
F1-F21 |
Signatures |
37 |
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
38 |
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
39 |
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
40 |
2 |
As used in this Annual Report 10-KSB, "Champions Biotechnology," "Champions," "we," "ours," and "us" refer to Champions Biotechnology, Inc., except where the context otherwise requires or as otherwise indicated.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This document contains
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 ("Securities Act") and Section 21E of the Securities Exchange Act of
1934 ("Exchanges Act") that inherently involve risk and uncertainties. The
Company generally uses words such as "believe," "may," "could," "will,"
"intend," "estimate," "expect," "anticipate," "plan," "likely," "promise" and
similar expressions to identify forward-looking statements. One should not
place undue reliance on these forward-looking statements. The Company's actual
results could differ materially from those anticipated in the forward-looking
statements for many unforeseen factors, which may include, but are not limited
to, changes in general economic conditions, the ongoing threat of terrorism,
ability to have access to financing sources on reasonable terms and other risks
that are described in this document. Although the Company believes the
expectations reflected in the forward-looking statements are reasonable, they
relate only to events as of the date on which the statements are made, and the
Company's future results, levels of activity, performance or achievements may
not meet these expectations. The Company does not intend to update any of the
forward-looking statements after the date of this document to conform these
statements to actual results or to changes in the Company's expectations, except
as required by law.
PART I
Item 1. Description of Business and Risk
Factors
Development of Business
Champions
Biotechnology, Inc. was incorporated as a merger and acquisition company under
the laws of the State of Delaware on June 4, 1985 under the name "International
Group, Inc." In September 1985 the Company completed a public offering and
shortly thereafter acquired the world-wide rights to the Champions sports theme
restaurant concept and changed its name to "Champions Sports, Inc." In 1997, the
Company sold its Champions service mark and concept to Marriott International,
Inc. and until 2005, was a consultant to Marriott International, Inc. and
operated one Champions Sports Bar Restaurant. In January 2007, the Company
changed its business direction to focus on biotechnology and subsequently
changed its name to Champions Biotechnology, Inc. In February 2007 the Company
acquired the patent rights to two Benzoylphenylurea (BPU) sulfur analog
compounds. On May 18, 2007, the Company acquired Biomerk, Inc. from Dr. David
Sidransky and issued 4,000,000 restricted shares of its common stock in the
merger. On April 30, 2008, the Company issued 1,428,572 restricted shares of
the Company's common stock at $1.75 per share pursuant to the terms of a private
investment financing.
Current Business
The Company is engaged
in the development of advanced preclinical platforms and predictive tumor
specific data to enhance and accelerate the value of oncology drugs. The
Company's Preclinical Platform is a novel approach based upon the implantation
of primary human tumors in immune deficient mice followed by propagation of the
resulting xenografts (Biomerk Tumorgrafts™) in a manner that preserves the
biological characteristics of the original human tumor. The Company
believes that Biomerk Tumorgrafts closely reflect human cancer biology and their
response to drugs is more predictive of clinical outcomes in cancer
patients. The Company is building its Biomerk Tumorgraft platform through
the procurement, development and characterization of numerous Tumorgrafts within
each of several cancer types. Tumorgrafts are procured through agreements
with institutions in the United States and Europe and developed and tested
through agreement with a U.S. based preclinical facility.
We intend to leverage
our preclinical platform to evaluate oncology drug candidates and to develop a
portfolio of novel drug candidates through pre-clinical trials. As drugs
progress through this early stage of development, the Company plans to sell,
partner or license them to pharmaceutical and/or biotechnology companies, as
appropriate. We believe this strategy will enable the Company to leverage
the competencies of these partners or licensees to maximize the Company's return
on investment in a time frame that is shorter than for traditional drug
development.. The Company believes that this model is unlike that of many
new biotechnology companies that look to bring the process of drug development
through all phases of discovery, development, regulatory approvals, and
marketing, which requires a very large financial commitment and a long
development period, typically more than a decade, to commercialize. Thus
far we have acquired two oncology drug candidates and we have begun preclinical
development of the most promising candidate, SG410, through the use of contract
facilities. We have secured preclinical supply of SG410 and it is our
intention to develop a soluble form of the compound and evaluate its efficacy in
Biomerk Tumorgrafts from several cancer types. If results are promising it
is our intention to continue preclinical development and then sell, partner or
license SG410 for its remaining clinical development.
The Company also offers
its Biomerk Tumorgraft predictive preclinical platform and tumor specific data
to physicians to provide information that may enhance personalized patient care
options and to companies for evaluation of oncology drugs in a platform that
integrates predictive testing with biomarker discovery. We provide
Personalized Oncology services to physicians in the field of oncology by
establishing and administering expert medical information panels for their
patients to analyze medical records and test results, to assist in understanding
conventional and research options and to identify and arrange for testing,
analysis and study of cancer tissues, as appropriate. In FY08 the Company
generated all its revenue from its growing Personalized Oncology services while
we continued development of our Biomerk Tumorgraft platform.
In late FY08, as we
expanded our number of Biomerk Tumorgraft models, we began to offer leading
pharmaceutical and biotechnology companies the benefits of our Biomerk
Tumorgrafts for their preclinical evaluation programs. We provide
Preclinical eValuation services that we believe are more predictive of clinical
outcomes and that might provide for a faster and less expensive path for drug
approval. These services utilize Biomerk Tumorgrafts to evaluate tumor
sensitivity/resistance to various single and combination standard and novel
chemotherapy agents. The Preclinical eValuation services we offer also
include biomarker discovery and the identification of novel drug
combinations. In the fourth quarter of FY08 the Company established
an agreement with ImClone Systems Incorporated for the preclinical evaluation of
certain therapeutic antibodies in ImClone's clinical development pipeline. As
part of the agreement, ImClone will utilize our Biomerk Tumorgrafts™ in
the initial preclinical evaluation. We are currently providing services or
in discussions to provide services to a number of other
companies.
3
Operations
The Company generated
operating revenue of $1,399,940 solely from its Personalized Oncology services
during the year ended April 30, 2008.
Competition
Competition in the
biotechnology industry is intense and based significantly on scientific,
technological and market forces. These factors include the availability of
patent and other protection for technology and products, the ability to
commercialize technological developments and the ability to obtain government
approval for testing, manufacturing and marketing. The Company faces
significant competition from other biotechnology companies. The majority of
these competitors are and will be will be substantially larger than the Company,
and have substantially greater resources and operating histories. There can be
no assurance that developments by other companies will not render our products
or technologies obsolete or noncompetitive or that we will be able to keep pace
with the technological or product developments of our competitors. These
companies, as well as academic institutions, governmental agencies and private
research organizations also compete with us in recruiting and retaining highly
qualified scientific, technical and professional personnel and
consultants.
Our preclinical
platform is proprietary and requires significant know-how to both initiate and
operate but is not patented. It is, therefore, possible for competitors to
develop other implantation procedures or to discover the same procedures
utilized by the Company that could compete with the Company in its
market.
Patent Applications
It is the Company's
intention to protect its proprietary property through the filing of U.S. and
international patent applications, both broad and specific, where necessary and
reasonable. In February 2007, the Company acquired the patent rights to two
Benzoylphenylurea (BPU) sulfur analog compounds that have shown promising potent
activity against in vitro and in vivo models of prostate and pancreatic cancer.
The acquired rights include pending U.S. Patent Application no. 11/673,519 and
corresponding international patent application (PCT/US2006/014449) filed under
the Patent Cooperation Treaty (PCT), both entitled Design and Synthesis of Novel
Tubulin Polymerization Inhibitors: Benzoylphenylurea (BPU) Sulfur
Analogs.
Research and Development
In the past fiscal
year, the Company spent $199,743 on research and developmentto develop our
preclinical platform.
Government Regulation
The research,
development, and marketing of the Company's products are subject to federal,
state, local, or foreign legislation or regulation, including the interpretation
of and compliance with existing, proposed, and future regulatory requirements
imposed by the U.S. Food and Drug Administration ("FDA") in the United States
and by comparable authorities in other countries. The costs of bringing new
drugs through the regulatory approval process and to the market are extremely
high, and the Company plans to sell, partner or license its drug candidates to
pharmaceutical and/or biotechnology companies, as appropriate prior to pursuing
the FDA approval necessary to commercially market its drug products.
Employees
As of April 30, 2008,
the Company had four employees.
4
RISK FACTORS
You should carefully
consider the risks described below together with all of the other information
included in this report. The risks and uncertainties described below are not the
only ones we face. Additional risks not presently known or that we currently
consider insignificant may also impair our business operations in the future. An
investment in our common stock is very risky. If any of the following risks
materialize, our business, financial condition or results of operations could be
adversely affected. In such an event, the trading price of our common stock
could decline, and you may lose part or all of your investment.
We historically have lost money, expect losses for the
foreseeable future, require significant capital and may never achieve
profitability.
We historically have
lost money. In the year ended April 30, 2008, we had net income of $35,698 and
in the year ended April 30, 2007, we sustained a net loss of $170,058. At April
30, 2008, we had an accumulated deficit of $7,068,547.
The amount of these
losses may vary significantly from year-to-year and quarter-to-quarter and will
depend on, among other factors:
Through April 30, 2008 we had limited
operations. We intend to engage in product development, a process that requires
significant capital expenditures, and we have limited sources of revenue to
off-set such expenditures. Accordingly, we expect to generate operating losses
in the future until such time as we are able to generate more significant
revenues.
To become profitable, we will need to
generate revenues to off-set our operating costs, including our general and
administrative expenses. We may not achieve or, if achieved, sustain our revenue
or profit objectives, and our losses may increase in the future, and,
ultimately, we may have to cease operations.
In order to grow revenues, we must
invest capital to successfully develop our products. Our products may never
achieve market acceptance and we may never generate significant revenues or
achieve profitability. If we must devote a substantial amount of time to raising
capital, it will delay our ability to achieve our business goals within the time
frames that we now expect, which could increase the amount of capital we need.
In addition, the amount of time expended by our management on fund raising
distracts them from concentrating on our business affairs.
Our lack of operating history in the biotechnology industry makes it
difficult to evaluate or predict our future business prospects.
We have little operating history in
the biotechnology industry, and our operating results are not possible to
predict at this time. We are developing our business and our operations are
subject to all of the risks inherent in establishing a new business enterprise,
including:
•
early stage products;
•
limited capital;
•
expected substantial and continual losses for the foreseeable future;
•
limited experience in regulatory issues;
•
an expected reliance on third parties for the commercialization of some proposed
products;
•
a competitive environment characterized by numerous, well-established and
well-capitalized competitors;
•
uncertain market acceptance of our products; and
•
reliance on key personnel.
The likelihood of our success must be
considered in light of the problems, expenses, difficulties, complications, and
delays frequently encountered in connection with the formation of a new
business, the development of new technology, and the competitive and regulatory
environment in which we will operate.
5
Because we are subject to these risks,
you may have a difficult time evaluating our business and your investment in our
company.
Our initial proposed drug products are in the early development stages and
will likely not be commercially introduced for many years, if at all.
Our proposed initial drug products
still are in the early development stage and will require further development,
preclinical and early phase clinical testing and investment prior to our effort
to sell, license or partner with pharmaceutical and/or biotechnology companies,
as appropriate. Such partnership, divestiture or license agreement may have
contingencies for their possible commercialization in the United States and
abroad. We cannot be sure that these products in development will:
•
be successfully developed;
•
prove to be safe and efficacious in preclinical or clinical trials;
•
meet applicable regulatory standards or obtain required regulatory
approvals;
•
demonstrate substantial protective or therapeutic benefits in the prevention or
treatment of any disease;
•
be capable of being formulated and/or produced in clinical or commercial
quantities at reasonable costs;
•
obtain coverage and favorable reimbursement rates from insurers and other
third-party payors; or
•
be successfully marketed or achieve market acceptance by physicians and
patients.
We have very limited staffing and will continue to be dependent upon key
employees.
Our success, currently, is dependent
upon the efforts of four employees, the loss of the services of which would have
a material adverse affect on our business and financial condition. We will
continue to develop our management team and attract and retain qualified
personnel in all functional areas to expand and grow our business. This may be
difficult in the biotechnology industry where competition for skilled personnel
is intense.
Because our industry is very competitive and many of our competitors have
substantially greater capital resources and more experience in research and
development than us, we may not succeed in developing our products and
technologies and having them brought to market.
Competition in the pharmaceutical
industry is intense. Potential competitors in the United States and abroad are
numerous and include pharmaceutical and biotechnology companies, most of which
have substantially greater capital resources and more experience in research and
development than us. Academic institutions, hospitals, governmental agencies and
other public and private research organizations are also conducting research and
seeking patent protection and may develop and commercially introduce competing
products or technologies on their own or through joint ventures. We cannot
assure you that our competitors will not succeed in developing similar
technologies and products more rapidly than we do, commercially introducing such
technologies and products to the marketplace prior to introduction of our
products, or that these competing technologies and products will not be more
effective or successful than any of those that we currently are developing or
will develop.
If we are unable to protect our intellectual property, we may not be able to
compete as effectively.
The biotechnology industry places
considerable importance on obtaining patent and trade secret protection for new
technologies, products and processes. Our success will depend, in part, upon our
ability to obtain, enjoy and enforce protection for any products we develop or
acquire under United States and foreign patent laws and other intellectual
property laws, preserve the confidentiality of our trade secrets and operate
without infringing the proprietary rights of third parties.
Where appropriate, we will seek patent
protection for certain aspects of our technology. However, our owned and
licensed patents and patent applications may not ensure the protection of our
intellectual property for a number of other reasons:
• Our preclinical platform is proprietary and
requires significant know-how to both initiate and operate but is not patented.
It is, therefore, possible for competitors to develop other implantation
procedures or to discover the same procedures utilized by the Company that could
compete with the Company in its market.
7
• Competitors may interfere with our patents
and patent process in a variety of ways. Competitors may claim that they
invented the claimed invention before us or may claim that we are infringing on
their patents and therefore we cannot use our technology as claimed under our
patent. Competitors may also have our patents reexamined by showing the patent
examiner that the invention was not original or novel or was obvious.
• We are in the process of developing
proposed products and technologies. The mere receipt of a patent does not
necessarily provide much practical protection. If we receive a patent with a
narrow scope, then it will be easier for competitors to design products that do
not infringe on our patent. Even if the development of our proposed products is
successful and approval for sale is obtained, there can be no assurance that
applicable patent coverage, if any, will not have expired or will not expire
shortly after this approval. Any expiration of the applicable patent could have
a material adverse effect on the sales and profitability of our proposed
product.
• Enforcing patents is expensive and may
require significant time by our management. In litigation, a competitor could
claim that our issued patents are not valid for a number of reasons. If the
court agrees, we would lose protection on products covered by those patents.
• We also may support and collaborate in
research conducted by government organizations or universities. We cannot
guarantee that we will be able to acquire any exclusive rights to technology or
products derived from these collaborations. If we do not obtain required
licenses or rights, we could encounter delays in product development while we
attempt to design around other patents or we may be prohibited from developing,
manufacturing or selling products requiring these licenses. There is also a risk
that disputes may arise as to the rights to technology or products developed in
collaboration with other parties.
• It also is unclear whether efforts to
secure our trade secrets will provide useful protection. While we will use
reasonable efforts to protect our trade secrets, our employees or consultants
may unintentionally or willfully disclose our proprietary information to
competitors resulting in a loss of protection. Enforcing a claim that someone
else illegally obtained and is using our trade secrets, like patent litigation,
is expensive and time consuming, and the outcome is unpredictable. In addition,
courts outside the United States are sometimes less willing to protect trade
secrets. Finally, our competitors may independently develop equivalent
knowledge, methods and know-how.
Claims by others that our products infringe their patents or other
intellectual property rights could adversely affect our financial
condition.
The biotechnology industry has been
characterized by frequent litigation regarding patent and other intellectual
property rights. Patent applications are maintained in secrecy in the United
States and also are maintained in secrecy outside the United States until the
application is published. Accordingly, we can conduct only limited searches to
determine whether our technology infringes the patents or patent applications of
others. Any claims of patent infringement asserted by third parties would be
time-consuming and could likely:
•
result in costly litigation;
•
divert the time and attention of our technical personnel and management;
•
cause product development delays;
•
require us to develop non-infringing technology; or
•
require us to enter into royalty or licensing agreements.
Although patent and intellectual
property disputes in the biotechnology industry have often been settled through
licensing or similar arrangements, costs associated with these arrangements may
be substantial and often require the payment of ongoing royalties, which could
hurt our gross margins. In addition, we cannot be sure that the necessary
licenses would be available to us on satisfactory terms, or that we could
redesign our products or processes to avoid infringement, if necessary.
Accordingly, an adverse determination in a judicial or administrative
proceeding, or the failure to obtain necessary licenses, could prevent us from
developing, manufacturing and selling some of our products, which could harm our
business, financial condition and operating results.
If any of our products that we license or partner with pharmaceutical and/or
biotechnology companies fail to obtain regulatory approval or if approval is
delayed or withdrawn, we may be unable to generate revenue from the sale or
license of our products.
8
Our products are subject to federal,
state, local, or foreign legislation or regulation, including the interpretation
of and compliance with existing, proposed, and future regulatory requirements
imposed by the FDA in the United States and by comparable authorities in other
countries. In the United States, approval of the FDA has to be obtained for each
drug to be commercialized. The FDA approval process is typically lengthy and
expensive, and approval is never certain. Products to be commercialized abroad
are subject to similar foreign government regulation.
Generally, only a very small
percentage of newly discovered pharmaceutical products that enter preclinical
development are approved for sale. Because of the risks and uncertainties in
biopharmaceutical development, our proposed drug products could take a
significantly longer time to gain regulatory approval than we expect or may
never gain approval. If regulatory approval is delayed or never obtained, our
management's credibility, the value of our company and our operating results and
liquidity might be adversely affected. Furthermore, even if a product gains
regulatory approval, the product and the manufacturer of the product may be
subject to continuing regulatory review. Even after obtaining regulatory
approval, such approval may entail limitations on the indicated uses for which
the product may be marketed. Moreover, a marketed product, its manufacturer, its
manufacturing facilities, and its suppliers are subject to continual review and
periodic inspections. Discovery of previously unknown problems, or the
exacerbation of problems previously deemed acceptable, with the product,
manufacturer, or facility may result in restrictions on such product or
manufacturer, potentially including withdrawal of the product from the
market.
Even if our proposed products receive FDA approval, they may not achieve
expected levels of market acceptance, which could have a material adverse effect
on our business, financial position and operating results and could cause the
market value of our common stock to decline.
Even if our proposed products obtain
required regulatory approvals, the success of those products is dependent upon
market acceptance by physicians and patients. Levels of market acceptance for
our new products could be impacted by several factors, including:
•
the availability of alternative products from competitors;
•
the price of our products relative to that of our competitors;
•
the timing of our market entry; and
•
the ability to market our products effectively.
Some of these factors are not within our control. Our proposed products may not
achieve expected levels of market acceptance. Additionally, continuing studies
of the proper utilization, safety and efficacy of pharmaceutical products are
being conducted by the industry, government agencies and others. Such studies,
which increasingly employ sophisticated methods and techniques, can call into
question the utilization, safety and efficacy of previously marketed products.
In some cases, these studies have resulted, and may in the future result, in the
discontinuance of product marketing. These situations, should they occur, could
have a material adverse effect on our business, financial position and results
of operations, and the market value of our common stock could decline.
Because the biotechnology industry is heavily regulated, we face significant
costs and uncertainties associated with our efforts to comply with applicable
regulations. Should we fail to comply, we could experience material adverse
effects on our business, financial position and results of operations, and the
market value of our common stock could decline.
The biotechnology industry is subject
to regulation by various federal and state governmental authorities. For
example, we must comply with FDA requirements with respect to the development of
our proposed products and our early clinical trials, and if any of our proposed
products are approved, the manufacture, labeling, sale, distribution, marketing,
advertising and promotion of our products. Failure to comply with FDA and other
governmental regulations can result in fines, disgorgement, unanticipated
compliance expenditures, recall or seizure of products, total or partial
suspension of production and/or distribution, suspension of the FDA's review of
New Drug Applications ("NDA's"), enforcement actions, injunctions and criminal
prosecution. Under certain circumstances, the FDA also has the authority to
revoke previously granted drug approvals. Despite our efforts at compliance,
there is no guarantee that we may not be deemed to be deficient in some manner
in the future. If we were deemed to be deficient in any significant way, our
business, financial position and results of operations could be materially
affected and the market value of our common stock could
decline.
9
Your investment in our common stock may be diluted if we issue additional
shares in the future.
We may issue additional shares of common stock, which would reduce your
percentage ownership and may dilute your share value. Our Certificate of
Incorporation authorizes the issuance of 50,000,000 shares of common stock. As
of July 14, 2008, we had 33,272,718 shares of common stock issued and
outstanding. The future issuance of all or part of the remaining authorized
common stock would result in substantial dilution in the percentage of the
common stock held by existing shareholders. We may value any common stock
issued in the future on an arbitrary basis. The issuance of common stock for
future services or acquisitions or other corporate actions may have the effect
of diluting the value of the shares held by existing shareholders, and might
have an adverse effect on any trading market for our common stock.
There is a limited trading market for our common stock, which may make it
difficult for you to sell your shares.
Our common stock is quoted on the OTC
Bulletin Board. Like many stocks quoted on the OTC Bulletin Board, trading in
our common stock is thin and characterized by wide fluctuations in trading
prices, due to many factors that may have little to do with our operations or
business prospects. This volatility could depress the market price of our common
stock for reasons unrelated to operating performance. Moreover, trading on the
OTC Bulletin Board is often more sporadic and volatile than the trading on
security exchanges like NASDAQ, American Stock Exchange or New York Stock
Exchange. Accordingly, you may have difficulty reselling your shares of our
common stock in short time periods.
Our common stock may be deemed a "penny stock," which would make it more
difficult for you to sell your shares.
Our common stock may be subject to the
"penny stock" rules adopted under Section 15(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The penny stock rules apply to
companies whose common stock is not listed on the NASDAQ Stock Market or another
national securities exchange and trades at less than $5.00 per share or that
have tangible net worth of less than $5,000,000 ($2,000,000 if the company has
been operating for three or more years). These rules require, among other
things, that brokers who trade penny stock to persons other than "established
customers" complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning trading in
the security, including a risk disclosure document and quote information under
certain circumstances. Many brokers have decided not to trade penny stocks
because of the requirements of the penny stock rules and, as a result, the
number of broker-dealers willing to act as market makers in such securities is
limited. If we remain subject to the penny stock rules for any significant
period, it could have an adverse effect on the market, if any, for our common
stock. If our common stock is subject to the penny stock rules, you will find it
more difficult to dispose of the shares of our common stock that you have
purchased.
Item 2. Description of Property.
The Company leases offices at 1400
North 14
th
Street, Arlington, VA 22209 and at 1820 East Ray Road,
Chandler, AZ 85225. The Company's rental payments are $6,400 per month.
Item 3. Legal Proceedings.
The Company is not the subject of any
pending legal proceeding and to the knowledge of management, no proceedings are
presently contemplated against the Company by any federal, state or local
governmental agency. Further, to the knowledge of management, no director or
executive officer is party to any action in which such director or executive
officer has an interest adverse to the Company.
Item 4. Submission of Matters to a Vote of Security
Holders.
There were no submissions of matters
to a vote of security holders. The Company did not hold its annual meeting of
stockholders for FY 2008 for financial reasons.
10
Item 5. Markets for Common Equity & Related Stockholder
Matters.
Principal Market or Markets
The following information sets forth
the high and low bid price for the Company's common stock for each quarter
within the last two fiscal years. The Company's common stock (symbol CSBR) is
traded over-the-counter (OTC) and quoted on the electronic Bulletin Board
maintained by the National Association of Securities Dealers. The quotations
represent prices between dealers and do not reflect the retailer markups,
markdowns or commissions, and may not represent actual transactions. The
Company's securities are presently classified as "Penny Stocks" as defined by
existing securities laws. This classification places significant restrictions
upon broker-dealers desiring to make a market in such securities.
Common Stock
High
Low
Fiscal 2008
$
$
First Quarter
0.67
0.26
Second Quarter
2.10
0.45
Third Quarter
1.90
0.80
Fourth Quarter
1.30
0.85
High
Low
Fiscal 2007
$
$
First Quarter
0.04
0.02
Second Quarter
0.02
0.01
Third Quarter
0.80
0.01
Fourth Quarter
0.60
0.27
Approximate Number of Holders of Common Stock
As of July 14, 2008,
there were 2,200 record holders of the Company's common stock.
Dividends
Holders of common stock
are entitled to receive such dividends as may be declared by the Company's Board
of Directors. No dividends have been paid with respect to the Company's common
stock and no dividends are anticipated to be paid in the foreseeable future.
Any future decisions as to the payment of dividends will be at the discretion of
the Company's Board of Directors, subject to applicable law.
Securities Authorized for Issuance Under Equity Compensation
Plans
The information
regarding securities authorized for issuance under our equity compensation plans
is disclosed in Item 11-"Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters."
Recent Sales by the Company of Unregistered
Securities
On April 30, 2008, the
Company issued 1,428,572 restricted shares of the Company's common stock at
$1.75 per share, for a total of $2,500,000, pursuant to the terms of a private
investment financing. The shares were issued to two non-US subscribers outside
the United States. All the restricted shares issued in this offering were
issued for investment purposes in a "private transaction" exempt from
registration pursuant to Section 5 of the Securities Act. The offering was not a
public offering and was not accompanied by any general advertisement or any
general solicitation The Company received from each of the two subscribers a
completed and signed subscription agreement containing certain representations
and warranties, including, among others, that (a) the subscriber was not a U.S.
person, (b) the subscriber subscribed for the shares for their own investment
account and not on behalf of a U.S. person, and (c) there was no prearrangement
for the sale of the shares with any buyer. No offer was made or accepted in the
United States and the share certificates representing the shares were issued
bearing a legend with the applicable trading
restrictions.
11
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
The following
discussion and analysis is provided to further the reader's understanding of the
consolidated financial statements, financial condition and results of operations
of the Company. This discussion should be read in conjunction with the
consolidated financial statements and the accompanying notes included in this
Annual Report on Form 10-KSB. This discussion contains forward-looking
statements based upon current expectations that involve risk and uncertainties.
Our actual results and the timing of certain events could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth below and under "Risk Factors" set forth in
Item 1A and elsewhere in this Annual Report on Form 10-KSB.
Overview
In January 2007 the
Company changed its business direction to focus on biotechnology and changed its
name to Champions Biotechnology, Inc. The Company is engaged in the
development of advanced preclinical platforms and predictive tumor specific data
to enhance and accelerate the value of oncology drugs. The Company's
Preclinical Platform is a novel approach based upon the implantation of primary
human tumors in immune deficient mice followed by propagation of the resulting
xenografts (Biomerk Tumorgrafts™) in a manner that preserves the
biological characteristics of the original human tumor. The Company
believes that Biomerk Tumorgrafts closely reflect human cancer biology and their
response to drugs is more predictive of clinical outcomes in cancer
patients. The Company is building its Biomerk Tumorgraft platform through
the procurement, development and characterization of numerous Tumorgrafts within
each of several cancer types. Tumorgrafts are procured through agreements
with institutions in the United States and Europe and developed and tested
through agreement with a U.S. based preclinical facility.
We intend to leverage
our preclinical platform to evaluate oncology drug candidates and to develop a
portfolio of novel drug candidates through pre-clinical trials. As drugs
progress through this early stage of development, the Company plans to sell,
partner or license them to pharmaceutical and/or biotechnology companies, as
appropriate. We believe this strategy will enable the Company to leverage
the competencies of these partners or licensees to maximize the Company's return
on investment in a relatively short time frame. The Company believes that
this model is unlike that of many new biotechnology companies that look to bring
the process of drug development through all phases of discovery, development,
regulatory approvals, and marketing, which requires a very large financial
commitment and a long development period, typically more than a decade, to
commercialize. Thus far we have acquired two oncology drug candidates and
we have begun preclinical development of the most promising candidate, SG410,
through the use of contract facilities. We have secured preclinical supply
of SG410 and it is our intention to develop a soluble form of the compound and
evaluate its efficacy in Biomerk Tumorgrafts from several cancer types. If
results are promising it is our intention to continue preclinical development
and then sell, partner or license SG410 for its remaining clinical
development.
The Company also offers
its Biomerk Tumorgraft predictive preclinical platform and tumor specific data
to physicians to provide information that may enhance personalized patient care
options and to companies for evaluation of oncology drugs in a platform that
integrates predictive testing with biomarker discovery. We provide
Personalized Oncology services to physicians in the field of oncology by
establishing and administering expert medical information panels for their
patients to analyze medical records and test results, to assist in understanding
conventional and research options and to identify and arrange for testing,
analysis and study of cancer tissues, as appropriate. In FY08 the Company
generated all its revenue from its growing Personalized Oncology services while
we continued development of our Biomerk Tumorgraft platform. During the
year ended April 30, 2008, the Company's revenue was derived solely from
Personalized Oncology services.
In late FY08, as we
expanded our number of Biomerk Tumorgraft models, we began to offer leading
pharmaceutical and biotechnology companies the benefits of our Biomerk
Tumorgrafts for their preclinical evaluation programs. We provide
Preclinical eValuation services that we believe are more predictive of clinical
outcomes and that might provide for a faster and less expensive path for drug
approval. These services utilize Biomerk Tumorgrafts to evaluate tumor
sensitivity/resistance to various single and combination standard and novel
chemotherapy agents. The Preclinical eValuation services we offer also
includes biomarker discovery and the identification of novel drug
combinations. In the fourth quarter of FY08 the Company established
an agreement with ImClone Systems Incorporated for the preclinical evaluation of
certain therapeutic antibodies in ImClone's clinical development pipeline. As
part of the agreement, ImClone will utilize our Biomerk Tumorgrafts™ in
the initial preclinical evaluation. We are currently providing services or
in discussions to provide services to numerous other companies.
As a result of the
diligence we used in the 10-KSB process the Company reclassified certain
revenues which it had previously recorded in the third fiscal quarter and moved
them to the fourth fiscal quarter. This change had no impact on the annual
results for the year ended April 30, 2008 as reflected in this Annual Report.
In the late fourth
quarter of FY08 Champions Biotechnology, Inc. formed its first management
team. As a result, the Company is currently unable to provide business
trends and projections.
Results of Operations for Fiscal Years 2008 and
2007
1. Operating
Revenues
For the fiscal year ended
April 30, 2008, the Company's operating revenue was $1,399,940. For fiscal year
ended April 30, 2007, the operating revenue was $0.00. The Company commenced
its operations in the biotechnology business in January 2007, and from 2005
until 2007 had no operating revenues. As a result, the Company only had four
months of meaningful operations in our fiscal year ended April 30, 2007. The
Company derived all of its revenue from its Personalized Oncology services which
assist physicians by providing information that may enhance personalized
treatment options for their cancer patients through access to expert medical
information panels and tumor specific data. Revenues are also derived from the
Company's Preclinical eValuation services which offers the benefits of its
Preclinical Platform to pharmaceutical and biotechnology companies using Biomerk
Tumorgraft studies which have been shown to be predictive of how drugs perform
in clinical settings. Expectations for growth in the future are from continued
Personalized Oncology services and expected increased use of our Preclinical
eValuation services. The Company's revenue is described as Personalized Oncology
services in the Consolidated Statements of Income.
12
2. Operating
Expenses
For FY 2008, the operating
expenses for the Company were general and administrative expenses of $703,176
compared to $170,058 in FY 2007. The increase of $533,118 was due to the
additional expenses associated with changing the business direction and
beginning operations as a biotechnology company.
During FY 2007 the
Company continued to incur expenses in the process maintaining its efforts of
establishing itself as a biotechnology company prior to earning any revenue. As
revenue was earned in FY 2008 and as revenue increases with increased
development and activity, expenses increased and are expected to increase in the
future, commensurate with the Company's increased levels of activity and
growth.
3. Profits /
Losses
For the reasons stated above,
the Company's net income applicable to common stockholders for fiscal 2008 was
$35,698, compared to a net loss of $170,058 for fiscal 2007.
Liquidity and Capital Resources for Fiscal Years 2008 and
2007
The Company's cash
position on April 30, 2008, was $3,709,136 compared to $3,758 on April 30, 2007.
In FY 2008, the net cash provided by operating activities was $792,404. In FY
2007, the net cash used in operating activities was $78,475. The Company's
working capital as of April 30, 2008 was $2,748,141 contrasted to a negative
$441,065 on April 30, 2007. In FY 2008 the Company received proceeds of
$2,504,250 from private investment financing. In FY 2007 the Company converted
$350,460 of dividends payable on preferred stock by issuing shares of common
stock in exchange for cancellation of outstanding preferred shares and waiver of
all accrued and unpaid dividends on such shares. In FY 2007, the Company
received advances totaling $43,693 from its executive officer, James Martell, to
meet the Company's working capital needs. The Company also issued 2,500,000
restricted shares of common stock to Dr. Manuel Hidalgo for an aggregate
purchase price of $10,000 and 7,000,000 restricted shares of common stock to Dr.
David Sidransky for an aggregate purchase price of $28,000 with all proceeds
used for working capital.
In FY 2007 the Company
acquired the patent rights to cancer drug candidates Benzoylphenylurea (BPU)
Sulfur Analogs. The purchase price for the patent rights consisted of an
aggregate of up to 550,000 restricted shares of the Company's common stock, of
which 300,000 restricted shares were issued upon execution of the acquisition
agreement and 250,000 restricted shares are issuable upon the issuance of one of
the patents based on U.S. Patent Application no. 11/673,519.
The Company has
sufficient resources to provide for the next twelve months of operations based
on its current level of expenditure, its anticipated level of future expenditure
and revenue growth and its ability to curtail expenditures if needed.
Critical Accounting Policies
Revenue
Recognition.
The Company derives revenue from its Personalized Oncology
services which assist physicians by providing information that may enhance
personalized treatment options for their cancer patients through access to
expert medical information panels and tumor specific data. Revenues are also
derived from the Company's Preclinical eValuation services which offer the
benefits of its Preclinical Platform to pharmaceutical and biotechnology
companies using Biomerk Tumorgraft studies which have been shown to be
predictive of how drugs perform in clinical settings. The Company's revenue is
described as Personalized Oncology services in the Consolidated Statements of
Operations.
Revenue is recognized
in accordance with the SEC's Staff Accounting Bulletin No. 104, "Revenue
Recognition" ("SAB 104"). SAB 104 requires that four basic criteria be met
before revenue can be recognized: 1) persuasive evidence of an arrangement
exists; 2) delivery has occurred or services rendered; 3) the fee is fixed and
determinable; and 4) collectability is reasonably assured. As to 1), our
business practices require that our services be performed pursuant to contracts
with our customers. As to 2), we recognize revenue when services are rendered
to our customers. As to 3), the fee is determined and fixed at the time the
contract is executed. As to 4), our business practices require that fees for
services be remit upon execution of the contract, either in full or in
contractual amounts based on management's judgments regarding the fixed nature
of our arrangements taking into account termination provisions and the
collectability of fees under our arrangements. Revenue is recognized when
services are rendered.
Miscellaneous for Fiscal Years 2008 and 2007
Stockholders' equity on
April 30, 2008 was $3,637,515 compared to a negative $261,065 on April 30, 2007.
In FY 2008 and FY 2007, the Board of Directors voted to defer the annual meeting
of shareholders in order to preserve the Company's cash
reserves.
13
Item 7. Financial Statements and Supplementary
Data.
The Report of
Independent Accountants appears at page F-3 and the Consolidated
Financial Statements and Notes to the Consolidated Financial Statements
appear at pages F4 through F21 hereof.
Item 8. Changes In and Disagreements with
Accountants on Accounting & Financial Disclosure.
None.
Item 8A(T). Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company maintains a
set of disclosure controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports filed under the
Securities Exchange Act, is recorded, processed, summarized and reported within
the time periods specified by the SEC's rules and forms. Disclosure controls are
also designed with the objective of ensuring that this information is
accumulated and communicated to the Company's management, including the
Company's principal executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
Based upon their
evaluation as of the end of the period covered by this report, the Company's
principal executive officer and also its chief financial officer concluded that,
the Company's disclosure controls and procedures are not effective to ensure
that information required to be included in the Company's periodic SEC filings
is recorded, processed, summarized, and reported within the time periods
specified in the SEC rules and forms.
Management's Annual Report on Internal Control over Financial
Reporting
Our management,
including our principal executive officer and chief financial officer, is
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act. Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of our financial statements for
external reporting purposes in accordance with U.S. generally accepted
accounting principles (GAAP). Internal control over financial reporting
includes those policies and procedures that: (i) pertain to the maintenance
of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with US GAAP, and that the
Company's receipts and expenditures are being made only in accordance with
authorizations of management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the Company's assets that
could have a material effect on the financial statements. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with policies
or procedures may deteriorate.
Management (with the
participation of our principal executive officer and chief financial officer and
with the advice of our independent auditor) conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the
framework in
Internal Control - Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Company's
Board of Directors was advised by Bagell, Josephs, Levine & Company, L.L.C.,
the Company's independent registered public accounting firm that during their
performance of audit procedures for FY 2008, the firm identified a material
weakness as defined in Public Company Accounting Oversight Board Standard No. 2
in the Company's internal control over financial reporting. This deficiency
consisted primarily of inadequate staffing and supervision that could lead to
the untimely identification and resolution of accounting and disclosure matters
and failure to perform timely and effective reviews. Management is required to
apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. At this time management has decided that considering
the employees involved and the control procedures in place, there are risks
associated with such staffing deficiencies, but the potential benefits of adding
employees to rectify the deficiency do not justify the expenses associated with
such increases. Management will periodically review this situation.
This annual report does
not include an attestation report of the Company's registered public accounting
firm regarding internal control over financial reporting. Management's report
was not subject to attestation by the Company's registered public accounting
firm pursuant to temporary rules of the Securities and Exchange Commission that
permit the Company to provide only management's report in this annual
report.
14
PART III
Item 9. Directors, Executive Officers, Promoters,
Control Persons and Corporate Governance; Compliance with Section 16(a) of the
Exchange Act.
Directors and Executive Officers
The Directors and
Executive Officers of the Company as of April 30, 2008 are as
follows:
Name
Position(s) Presently Held
David Sidransky , M.D.
Chairman
Douglas D Burkett, Ph.D.
President
Manuel Hidalgo, M.D. Ph.D.
Chief Scientist
James M. Martell
Chief Administrative Officer, Director
Durwood C. Settles
Chief Financial Officer, Treasurer
Abba David Poliakoff
Director
Ana I. Stancic
Director
David Sidransky, M.D
., age 48,
has served as Chairman of the Company since October 2007 and Director since
August 2007. Dr. Sidransky is the Director of the Head and Neck Cancer
Research Division at Johns Hopkins University School of Medicine and is a
Professor of Oncology, Otolaryngology-Head and Neck Surgery, Cellular &
Molecular Medicine, Urology, Genetics, and Pathology at Johns Hopkins University
and Hospital. Dr. Sidransky is one of the most highly cited researchers in
clinical and medical journals in the world, in the field of oncology during the
past decade, with over 340 peer-reviewed publications. He has contributed more
than 60 cancer reviews and chapters. Dr. Sidransky is a founder of a number of
biotechnology companies and holds numerous biotechnology patents. He has served
as Vice Chairman of the Board of Directors of ImClone and presently is a
director of ImClone, Chairman of Alfacell Corporation and serves on the Board of
Directors of Xenomics. Dr. Sidransky is serving and has served on scientific
advisory boards of MedImmune, Roche, Amgen and Veridex, LLC. (a Johnson &
Johnson diagnostic company), among others Dr. Sidransky served as Director
(2005-2008) of American Association for Cancer Research (AACR). He was the
chairperson of the first (September 2006) and the second (September 2007) AACR
International Conference on Molecular Diagnostics in Cancer Therapeutic
Development: Maximizing Opportunities for Individualized Treatment. Dr.
Sidransky is the recipient of many awards and honors, including the 1997
Sarstedt International Prize from the German Society of Clinical Chemistry, the
1998 Alton Ochsner Award Relating Smoking and Health by the American College of
Chest Physicians and the 2004 Hinda and Richard Rosenthal Award from the
American Association of Cancer Research. Dr. Sidransky is certified in Internal
Medicine and Medical Oncology by the American Board of Medicine. Dr. Sidransky
received his B.A. from Brandeis University and his M.D. from the Baylor College
of Medicine.
Douglas D. Burkett, Ph.D
., age
44, has served as President of the Company since March 2008. Dr. Burkett has
served From July 2007 to March 2008 as executive consultant to assist the
Company in establishing and executing its strategic and business plan prior to
becoming President. Dr. Burkett served as Chairman, Chief Executive Officer and
President of Zila, Inc. from 2002 to 2007 and led a strategic transformation of
Zila into a cancer detection company. He led the FDA approval, launch and growth
of ViziLite Plus, an oral cancer screening product, and the establishment of the
first insurance reimbursement for oral cancer screening products in the United
States Dr. Burkett held several senior positions at Zila from 1995 to 2002; he
was responsible for Zila's technical operations, its manufacturing subsidiary,
its Pharmaceuticals business and business development. Early in his career he
led the building of a R&D laboratory, pharmaceutical manufacturing facility,
compliance unit and regulatory team that achieved a rare "no deficiency" FDA pre
approval inspection. Dr. Burkett is the lead inventor in numerous issued and
pending patents involving novel cancer detection methods and drugs. He is quoted
in leading publications including the Wall Street Journal regarding his
pioneering efforts in early oral cancer detection. Prior to joining Zila, Dr.
Burkett was employed at the Arizona State University Cancer Research Institute
where he collaborated with the National Cancer Institute in synthesizing and
performing studies for potential cancer treatment drugs. Prior to his tenure at
ASU he researched, developed and manufactured pharmaceutical drugs for a private
pharmaceutical company. Dr. Burkett received a B.S. in Chemistry from Missouri
Western State College in 1987, and a Ph.D. in Organic Chemistry from Arizona
State University in 1994.
15
Manuel Hidalgo, M.D., Ph.D
.,
age 40, has served as Chief Scientific Officer of the Company since March 2008.
Dr. Hidalgo was a Director and Scientific Advisor from June 2007 to March 2008.
Dr. Hidalgo, for the past five years has been an Associate Professor of Oncology
at the Sidney Kimmel Comprehensive Cancer Center, Johns Hopkins University
School of Medicine. He is also currently the Director of the Centro Integral
Oncologia "Clara Campal" in Madrid, Spain. Dr. Hidalgo is serving on the
Scientific Advisory Boards of private and public companies, including Systems
Medicine, Tau Therapeutics, Targeted Molecular Diagnostics and Monogram
Biosciences. Dr. Hidalgo is considered a leading researcher in the field of
targeted therapies for the treatment of cancer in patients with solid tumors.
Dr. Hidalgo has published over 140 papers in prestigious cancer journals as well
as numerous chapters in important text books. He has received numerous awards
including an AACR Young Investigator Award, an NCI-EORTC fellowship and an ASCO
Career Development Award. He has served on the editorial board of the Journal of
Clinical Oncology and Clinical Cancer Research and is a Senior Editor for
Molecular Cancer Therapeutics. Dr. Hidalgo has chaired the AACR and ASCO Program
Committee in developmental therapeutics on numerous occasions and is frequently
invited to speak at major national and international meetings He chairs the
Pancreatic Cancer Research Team, a nonprofit organization focused on clinical,
trials in pancreatic cancer, and is also a member of the NCI Developmental
Therapeutics Study. Dr. Hidalgo's laboratory has been involved in the
development of the Champions Biotechnology's BPU sulfur analog compounds. He is
one of the inventor's of the BPU sulfur analog compounds that the Company
acquired in February 2007.
James M. Martell,
age 61,
Director of the Company, has served as Chief Administrative Officer of the
Company since March 2008. Mr. Martell founded the Company in 1985 as a small
merger and acquisition public company under the name "International Group,
Inc.," changed in 1986 to "Champions Sports, Inc." Since then he has served in
various capacities as Chairman, President and CEO until 2007 when the Company
changed its business direction to focus on biotechnology. Mr. Martell has served
as President and CEO of Champions Biotechnology until March, 2008. Since 2004,
he has worked and collaborated with Dr. Sidransky in the development of
personalized oncology information panels after his close friend was diagnosed
with cancer. Mr. Martell currently administers and oversees the Company's
medical information panels. He was a partner from 1983 to 1987 in Tomar
Associates, a consulting company specializing in European-American joint
ventures, venture capital financing, technology transfer, and corporate finance.
From 1981 to 1983, Mr. Martell was a partner in International Group, a company
involved in promoting national and international business development. He held
various administrative positions from 1973 to 1981 with the U.S. Department of
Energy. Mr. Martell received a Bachelor of Science degree in Chemistry in 1968
and Master of Science degree in Geochemistry in 1973, from George Washington
University.
Durwood C. Settles
, age 65, has
served as Chief Financial Officer of the Company since March 2008 and has served
as Treasurer since June, 2007. He has served as a Director of the Company from
March, 2001 until March, 2008. Mr. Settles is a Certified Public Accountant in
individual practice since 1983. From 1973 to 1982, Mr. Settles was Manager of
Special Projects and served on the audit staff with Coopers & Lybrand in
Washington, D.C. During the period 1974 to 1986, Mr. Settles was Treasurer or
Controller of various national, state, and congressional political campaign
organizations. From 1964 to 1973, Mr. Settles was an owner and executive of a
private manufacturing and marketing business after serving two years as a Group
Pension Management Assistant and Computer Files Service Supervisor with the
Mutual of New York Life Insurance Company (MONY) in New York. Mr. Settles
received a Bachelor of Arts degree in Economics in 1964 from Davidson College
and completed accounting studies in 1973 at George Washington University.
Abba David Poliakoff
, age 56,
has served as Director of the Company since March 2008. Mr. Poliakoff is a
member of the law firm of Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC, in Baltimore, Maryland, Chairman of the Firm's Business
Department, and a Member of the Firm's Electronic Discovery Practice Group. Mr.
Poliakoff received his J.D. degree, magna cum laude, in 1977 from the University
of Baltimore Law School, where he was an editor of the University of Baltimore
Law Review and Associate Editor of The Forum Law Journal. After law school, Mr.
Poliakoff joined the staff of the U.S. Securities and Exchange Commission in
Washington, D.C., where he became a senior attorney in the Division of
Corporation Finance. Mr. Poliakoff is currently a member of the Maryland State
Bar Association's Business Law Section and former Chair of its Committee on
Securities. Formerly he was a member of the Business Regulations Article Review
Committee of the Committee to Revise the Maryland Annotated Code. Mr. Poliakoff
is a member of the Board of Directors of the Greater Baltimore Technology
Council (GBTC) and Chair of its Legislative Committee. He is a former Chair of
the Maryland Business & Technology Coalition, member of the Technology
Council of Maryland, and member of the MIT Enterprise Forum. Mr. Poliakoff is
currently the Chairman of the Maryland Israel Development
Center.
16
Ana I. Stancic
, age 51, has
served as Director of the Company since March 2008. Ms. Stancic has served since
March, 2008 as Chief Financial Officer of Aureon Laboratories Incorporated
("Aureon"), an oncology diagnostic company dedicated to enabling the advancement
of predictive and personalized cancer treatment by performing diagnostic
reference laboratory and clinical research services. Prior to joining Aureon,
Ms. Stancic was Executive Vice President and Chief Financial Officer at OMRIX
Biopharmaceuticals, Inc. Before joining OMRIX, Ms. Stancic served as Senior Vice
President, Finance at ImClone Systems, Inc. ("ImClone"), a global
biopharmaceutical company committed to advancing oncology care, where she was
responsible for ImClone's finance department, information technology and
internal audit. Ms. Stancic joined ImClone as Vice President, Controller and
Chief Accounting Officer in 2004. Prior to joining ImClone, she was Vice
President and Controller at Savient Pharmaceuticals, Inc. from 2003 to February,
2004. Ms. Stancic was Vice President and Chief Accounting Officer at Ogden
Corporation from 1999 to 2002 and Regional Chief Financial Officer at OmniCare,
Inc. from 1997 to 1999. Ms. Stancic began her career in 1985 at
PricewaterhouseCoopers in the Assurance practice where she had responsibility
for international and national companies in the pharmaceutical and services
industries. Ms. Stancic is a Certified Public Accountant and holds an M.B.A.
degree from Columbia Business School.
The term of office of each Director is
until the next annual election of Directors and until a successor is elected and
qualified or until the Director's earlier death, resignation or removal.
Officers are appointed by the Board of Directors and serve at the discretion of
the Board. There is no family relationship between or among any of the Company's
Directors or Officers.
Board Committees
The Board of Directors has appointed
an Audit Committee, a Compensation Committee, and a Nominating and Corporate
Governance Committee and has adopted charters for each of these committees. The
Audit Committee financial expert is Ana Stancic. The members of the committees
are:
Nominating and Corporate Governance Committee
David Sidransky, Chair
Compensation Committee
Abba David Poliakoff, Chair
Audit Committee
Ana Stancic, Chair
Code of Ethics
The Company has a Code of Ethics that
applies to all Company employees, including President, as well as members of the
Board of Directors. The Company's Code of Ethics is included as an Exhibit.
Compliance with Section 16(a)
Section 16(a) of the Exchange Act, as
amended, requires the Company's executive officers, directors and persons who
beneficially own more than 10% of the Company's common stock to file reports of
their beneficial ownership and changes in ownership (Forms 3, 4 and 5, and any
amendment thereto) with the SEC Executive officers, directors, and
greater-than-ten percent holders are required to furnish the Company with copies
of all Section 16(a) forms they file. Based on the Company's review of the
activity of the officers and directors for the fiscal year ended April 30, 2008,
the Company believes that reports pursuant to Section 16(a) were
filed.
17
Abba David Poliakoff
Ana Stancic
David Sidransky
Ana Stancic
Abba David Poliakoff
David Sidransky
Item 10. Executive Compensation.
The following sets forth information for the most recently completed fiscal year
concerning the compensation of (i) the Chief Executive Officer and (ii) all
other executive officers who earned in excess of $100,000 in salary and bonus in
the fiscal year ended April 30, 2008.
SUMMARY
COMPENSATION
TABLE
Option
Dr. Douglas D. Burkett, President
2008
18,750 (1)
$336,287
355,037
James Martell, Chief Administrative Officer
2008
113,416
0
113,416
2007
64,052 (2)
0
64,052
(1) Salary following March 27, 2008, date of employment
agreement
(2) Accrued salary
The Board of Directors
has the right to change and increase the compensation of executive officers at
any time. The Company entered into an employment agreement dated March 27, 2008
with Dr. Burkett to serve as President. The term of the agreement commenced on
March 31, 2008 and extends for a two-year period, renewing automatically for
successive one year periods unless notice of non-renewal is given. Dr. Burkett's
compensation includes a salary of $225,000 per annum, participation in Company
employee benefit plans and reconfirmation of an option previously granted on
October 10, 2007 to acquire 500,000 shares of common stock at an exercise price
of $0.75 per share, the market price of the common stock on the date the option
was issued. The options to purchase shares vest at the rate of 166,665 shares on
the first anniversary of the grant date, 166,665 shares on the second
anniversary of the grant date and 166,670 shares on the third anniversary of the
grant date. All vested options will be exercisable over a five-year period
expiring on the fifth anniversary of the grant date, provided that the options
will terminate upon a material breach by the executive of the employment
agreement. The agreement further provides that if the Company terminates the
executive's employment without cause, the Company shall pay the executive
severance equal to four months' salary and his options shall immediately
vest.
The Company entered
into an employment agreement dated March 31, 2008 with James Martell to serve as
Chief Administrative Officer. The term of the agreement commenced on March 31,
2008 and extends for a one-year period, renewing automatically for successive
one year periods unless notice of non-renewal is given. Mr. Martell's
compensation includes a salary of $185,000 per annum and participation in
Company employee benefit plans. The agreement further provides that if the
Company terminates the executive's employment without cause, the Company shall
pay the executive severance equal to three months' salary.
In FY 2007, all
executive officers of the Company as a group (one in number) received no cash
compensation. Effective January 2004 through May 2007, payments of salaries to
all executive officers were suspended in order to preserve the Company's cash
position.
On January 15, 2007,
the Company issued options for fifty thousand shares of restricted stock to
Durwood Settles, Director of the Company, exercisable over a five year period,
based on a fair value exercise price on the date of issuance ($0.17),
exercisable through January 15, 2012, and vesting one year from the date of
issuance.
The following table
sets forth, for each of the executive officers named in the Summary Compensation
Table, information with respect to unexercised options as of the Company's
fiscal year ended April 30, 2008:
Number of Securities Underlying Unexercised Options (#)
Exercisable
Number of Securities Underlying Unexercised Options (#)
Unexercisable
(c)
Douglas D. Burkett
0
500,000
(1)
0.75
10/9/2012
James Martell
0
0
0
0
(1) These options to purchase shares vest at the rate of 166,665
shares on each of the first three anniversaries of the October 10, 2007 grant
date. All vested options will be exercisable over a five-year period expiring
on the fifth anniversary of the grant date, provided that the options will
terminate upon a material breach by Dr. Burkett of the employment agreement. The
options shall immediately vest if the Company terminates Dr. Burkett's
employment without cause.
18
DIRECTOR COMPENSATION
In FY 2008 the Board of
Directors agreed to a Director's Compensation plan whereby non-employee
directors would receive options to purchase 50,000 shares upon their initial
appointment as a director. In addition, the Chairman of the Board would receive
options to purchase 50,000 shares. Each director would be entitled to receive
options to purchase 20,000 shares annually upon their reelection or as of the
annual meeting date. All options would have a term of five years, would vest
equally over three years at the rate of one-third each year, and would have an
exercise price equal to the fair market value of the stock on the date the
option is granted. Based on the foregoing, Mr. Poliakoff and Ms. Stancic, both
appointed as independent directors of the Company, were each granted options to
purchase 50,000 shares, and Dr. Sidransky was granted options to purchase 50,000
shares, all at a price of $1.15 per share as their initial option
grant.
The following table
summarizes the compensation paid to directors for the fiscal year ended April
30, 2008:
Name
(a)
Option Awards ($)
(d)
Total ($)
(h)
David Sidransky
$45,889
$45,889
Abba David Poliakoff
$57,362
$57,362
Ana Stancic
$57,362
$57,362
James Martell
0
0
Name and Principal
Position
(a)
Year
(b)
Salary ($)
(c)
Awards
($)
(f)
Total
($)
(j)
Name
(a)
(b)
Option Exercise Price
($)
(e)
Option Expiration
Date
(f)
Item 11. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
As of April 30, 2008
the following were persons known to the Company to own beneficially more than 5%
of the Company's outstanding Common Stock:
Name and Address of
Common Stock
Beneficial Owner
Beneficially Owned (1)
Percent of Class
Dr. David Sidransky
10,600,000
31.9
1550 Orleans Street
Baltimore, MD 21231
James M. Martell
8,348,000
25.1
1400 N. 14
th
Street
Arlington, VA 22209
Dr. Manuel Hidalgo
2,562,500
7.7
1550 Orleans Street
Baltimore, MD 21231
(1))
Beneficial Ownership
includes shares for which an individual, directly or indirectly, has or
shares, or has the right within 60 days to have or share, voting or investment
power or both. Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 of the Exchange
Act.
19
As of April 30, 2008, the stock
ownership by officers and directors of the Company and all officers and
directors as a group are as follows:
Dr. David Sidransky
Chairman
10,600,000
31.9
Douglas D Burkett, Ph.D.
President
0
0
Dr. Manuel Hidalgo
Chief Scientific Officer
2,562,500
7.7
James M. Martell
Chief Administrative Officer, Director
8,348,000
25.1
Durwood Settles
Chief Financial Officer, Treasurer
0
0.0
Abba David Poliakoff
Director
400,000
1.2
Ana I. Stancic
Director
0
0.0
All Officers & Directors as a group
21,910,500
65.9
(1)
Beneficial Ownership
includes shares for which an individual, directly or indirectly, has or shares,
or has the right within 60 days to have or share, voting or investment
power or both. Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 of the Exchange Act.
Equity Compensation Plan Information
The Company does not
maintain a stock option plan. However, the Company has granted options to
individual employees, directors and consultants pursuant to individual
compensation arrangements. The following table provides information, as of
April 30, 2008, with respect to all these compensation arrangements under which
shares are authorized for issuance.
Plan Category
Number of securities to be issued upon exercise of outstanding
options, warrants and rights
Weighted-average exercise price of outstanding options,
warrants and rights
Number of securities remaining available for future issuance
under equity compensation plans (excluding securities reflected in column
(a)
(a)
(b)
(c)
Equity compensation plans approved by security
holders
0
0
0
Equity compensation plans not approved by security
holders
1,955,000
$0.65
0
Total
1,955,000
$0.65
0
Name of Beneficial
Owner
Title
Common
Stock
Beneficially
Owned
(1)
Percent of
Class
Item 12. Certain Relationships and Related
Transactions.
During FY 2007, the
Company received, for working capital needs, advances, totaling $43,693, due on
demand and without interest, from James Martell, President and CEO of the
Company. The Company repaid the advances to Mr. Martell in FY 2008.
20
Item 13. Exhibits.
Exhibit No.
3.1
Articles of Incorporation
3.2
Bylaws, as amended
10.1
Employment Agreement dated March 27, 2008 between the Company and
Douglas D. Burkett*
10.2
Employment Agreement dated March 31, 2008 between the Company and
James Martell*
10.3
Employment Agreement dated March 26, 2008 between the Company and
Durwood C. Settles*
14
Code of Ethics*
21
Subsidiaries of the Registrant
31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer*
31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
Officer*
32.1
Section 1350 Certifications*
*Filed herewith
Item 14. Principal Accountant Fees and
Services.
The following is a
summary of the fees billed to the Company by its principal accountants during
the fiscal years ended April 30, 2008, and April 30, 2007:
Fee Category
FY 2008
FY 2007
Audit fees
$5,000
$8,000
Audit-related fees
$3,550
$4,500
Tax fees
$0
$0
All other fees
$0
$0
Total fees
$8,550
$12,500
Audit fees. Consists
of fees for professional services rendered by our principal accountants for the
audit of the annual financial statements.
Audit-related fees.
Consists of fees for assurance and related services by our principal accountants
that are reasonably related to the performance of the audit or review of
financial statements and are not reported under "Audit fees."
Tax fees. Consists of
fees for professional services rendered by our principal accountants for tax
compliance, tax advice and tax planning.
All other fees.
Consists of fees for products and services provided by our principal
accountants, other than the services reported under "Audit fees," "Audit-related
fees" and "Tax fees" above.
Audit Committee
Policies and Procedures.
21
CHAMPIONS BIOTECHNOLOGY,
INC.
CHAMPIONS BIOTECHNOLOGY,
INC.
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Registered Public Accounting
Firm
F3
Consolidated Balance Sheet as of April 30, 2008 and 2007
F4
Consolidated Statements of Income for the Years
Ended April 30, 2008 and 2007
F5
Consolidated Statement of Stockholders' Equity (Deficit) for the
Years ended April 30, 2008 and 2007
F6
Consolidated Statements of Cash Flows for the Years
Ended
April 30, 2008 and 2007
F7
Notes to Consolidated Financial Statements
F8- F21
BAGELL, JOSEPHS, LEVINE & COMPANY,
L.L.C.
406 Lippincott Drive, Ste. J
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Champions Biotechnology, Inc.
1400 N. 14
th
Street
Arlington, VA 22209-3693
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 audit
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.
/s/ BAGELL, JOSEPHS, LEVINE & COMPANY,
L.L.C.
Bagell, Josephs, Levine & Company,
L.L.C.
Marlton, NJ 08053
July 28, 2008
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
(AICPA)
F-3
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
CONSOLIDATED FINANCIAL
STATEMENTS
APRIL 30, 2008 AND
2007
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS
APRIL 30, 2008 AND
2007
Certified Public
Accountants
Marlton, NJ
08053-4168
(856) 346-2828 Fax (856)
396-0022
Board of Directors and Stockholders
We have audited the accompanying consolidated balance sheets of Champions Biotechnology, Inc., as of April 30, 2008 and 2007, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the two-year period ended April 30, 2008. Champions Biotechnology, Inc.'s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Champions Biotechnology, Inc. as of April 30, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended April 30, 2008 in conformity with accounting principles generally accepted in the United States of America.
CENTER FOR AUDIT QUALITY
(CAQ)
NEW JERSEY SOCIETY OF CERTIFIED PUBLIC
ACCOUNTANTS
PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS
CHAMPIONS BIOTECHNOLOGY, INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
FOR THE YEARS ENDED APRIL 30, 2008 AND
2007
ASSETS |
||||
2008 |
2007 |
|||
CURRENT ASSETS |
||||
Cash and cash equivalents |
$ |
3,709,136 |
$ |
3,758 |
Prepaid expenses |
52,873 |
- |
Total Current Assets |
3,762,009 |
3,758 |
||
Intangibles assets |
227,465 |
180,000 |
||
Goodwill |
661,909 |
- |
||
TOTAL ASSETS |
$ |
4,651,383 |
$ |
183,758 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
The accompanying notes are an integral part of these consolidated financial statements.
F-4 |
CHAMPIONS BIOTECHNOLOGY,
INC
2008
2007
OPERATING REVENUE
Personalized Oncology services
$
1,399,940
$
-
Total
operating revenue
1,399,940
-
COSTS AND OPERATING EXPENSES
Service expenses
490,435
-
Research and development
199,743
General and administrative
703,176
170,058
Total
costs and operating expenses
1,393,354
170,058
INCOME (LOSS) BEFORE OTHER INCOME
6,586
(170,058)
Other income
Interest
income
29,112
-
Total
other income
29,112
-
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
35,698
(170,058)
Provision for income taxes
-
-
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS
$
35,698
$
(170,058)
BASIC AND DILUTED INCOME (LOSS) PER COMMON
SHARE
$
0.00
$
(0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC
31,494,025
20,459,726
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
34,279,537
-
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
FOR THE YEARS ENDED APRIL 30, 2008 AND
2007
The accompanying notes are an integral part of these consolidated financial statements.
F-5 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS
ENDED APRIL 30, 2008 AND 2007
Series A, 12% |
|||||||||||||
Convertible Cumulative |
|||||||||||||
Preferred Stock |
Common Stock |
Paid-in |
Accumulated |
||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficits |
Total |
|||||||
Balance, April 30, 2006 |
32,450 |
$ |
324,500 |
16,824,658 |
$ |
16,825 |
$ |
5,922,349 |
$ |
(6,934,187) |
$ |
(670,513) |
|
Issued 1,000,000 common shares and 1,000,000 |
|
||||||||||||
warrants in exchange for 32,450 preferred shares |
(32,450) |
(324,500) |
1,000,000 |
1,000 |
673,960 |
- |
350,460 |
||||||
Issued common stock for cash |
- |
- |
7,000,000 |
7,000 |
21,000 |
- |
28,000 |
||||||
Issued common stock for cash |
- |
- |
2,500,000 |
2,500 |
7,500 |
- |
10,000 |
||||||
Issued Common stock for patents rights |
- |
- |
300,000 |
300 |
179,700 |
- |
180,000 |
||||||
Stock issued for consulting services (prepaid consulting) |
- |
- |
- |
- |
44,184 |
- |
44,184 |
||||||
Net loss |
- |
- |
- |
- |
- |
(170,058) |
(170,058) |
||||||
|
|
|
|
|
|
|
|||||||
Balance, April 30, 2007 |
- |
$ |
- |
27,624,658 |
$ |
27,625 |
$ |
6,848,693 |
$ |
(7,104,245) |
$ |
(227,927) |
|
Issued 4,000,000 common shares for 100% of Biomerk, Inc. |
- |
- |
4,000,000 |
4,000 |
1,156,000 |
- |
1,160,000 |
||||||
Stock issued for exercise of warrants |
- |
- |
169,488 |
170 |
28,335 |
- |
28,505 |
||||||
Stock issued for exercise of options |
25,000 |
25 |
4,225 |
4,250 |
|||||||||
Issued common stock for cash |
- |
- |
1,428,572 |
1,428 |
2,498,572 |
- |
2,500,000 |
||||||
Stock issued for consulting services (prepaid consulting) |
- |
- |
- |
- |
1,179,357 |
- |
1,179,357 |
||||||
Net income |
- |
- |
- |
- |
- |
35,698 |
35,698 |
||||||
Balance, April 30, 2008 |
- |
$ |
- |
33,247,718 |
$ |
33,248 |
$ |
11,715,182 |
$ |
(7,068,547) |
$ |
4,679,883 |
The accompanying notes are an integral part of these consolidated financial statements.
F-6 |
CHAMPIONS BIOTECHNOLOGY,
INC
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
FOR THE YEARS ENDED APRL 30, 2008 AND
2007
2008 |
2007 |
|||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||
Net income (loss) from operating activities |
$ |
35,698 |
$ |
(170,058) |
Adjustments to reconcile net income (loss) to net cash |
||||
used in operating activities: |
||||
(Increase) in prepaid expenses |
(52,873) |
- |
||
Increase in accounts payable |
107,341 |
16,485 |
||
Increase in deferred revenue |
504,623 |
- |
||
Increase in other accrued expenses |
27,488 |
64,052 |
||
Amortization of prepaid consulting services |
170,127 |
11,046 |
||
Total adjustments |
756,706 |
91,583 |
||
Net cash provided (used in) operating activities |
792,404 |
(78,475) |
||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||
Increase in intangible assets |
(47,465) |
- |
||
Increase in cash from acquisition |
471,377 |
- |
||
Net cash provided by investing activities |
423,912 |
- |
||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||
(Payment of) proceeds from officers loan payable |
(43,693) |
43,693 |
||
Proceeds from sale of common stock and exercise of options |
2,504,250 |
38,000 |
||
Proceeds from exercise of warrants |
28,505 |
- |
||
Net cash provided by financing activities |
2,489,062 |
81,693 |
||
NET INCREASE IN CASH |
||||
AND CASH EQUIVALENTS |
3,705,378 |
3,218 |
||
CASH AND CASH EQUIVALENTS - |
||||
BEGINNING OF YEAR |
3,758 |
540 |
||
CASH AND CASH EQUIVALENTS - END OF YEAR |
$ |
3,709,136 |
$ |
3,758 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||
Cash paid during the year for: |
||||
Interest paid |
$ |
997 |
$ |
3,287 |
Income Tax Paid |
$ |
- |
$ |
- |
SUPPLEMENTAL SCHEDULE OF NON-CASH FLOW INVESTING AND FINANCING ACTIVITIES: |
||||
In January 2007, the Company issued 340,000 stock options for prepaid consulting services valued at $44,184. |
||||
In May 2007, the Company issued 525,000 stock options for prepaid consulting valued at $157,473. |
||||
In May 2007, the Company issued 4,000,000 shares for 100% of the shares of Biomerk, Inc. |
||||
In October 2007, the Company issued 500,000 stock options for prepaid consulting services valued at $336,287. |
||||
In November 2007, the Company issued 61,632 shares for warrants exercised at $9,245. |
||||
In January 2008, the Company issued 107,856 shares for warrants exercised at $19,260. |
||||
In March 2008, the Company issued 25,000 shares for $4,250. |
||||
In March 2008, the Company issued 615,000 stock options for prepaid consulting services valued at $685,597. |
||||
In April 2008, the Company issued 1,428,572 shares for $2,500,000. |
The accompanying notes are an integral part of these consolidated financial statements.
F-7 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
APRIL 30, 2008 AND 2007
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
Champions Biotechnology, Inc., (the "Company") is a biotechnology company that is engaged in the development of advanced preclinical platforms and predictive tumor specific data to enhance and accelerate the value of oncology drugs.Champions Biotechnology, Inc. was incorporated as a merger and acquisition company under the laws of the State of Delaware on June 4, 1985 under the name "International Group, Inc." In September 1985 the Company completed a public offering and shortly thereafter acquired the world-wide rights to the Champions sports theme restaurant concept and changed its name to "Champions Sports, Inc." In 1997, the Company sold its Champions service mark and concept to Marriott International, Inc. and until 2005, was a consultant to Marriott International, Inc. and operated one Champions Sports Bar Restaurant. In January 2007, the Company changed its business direction to focus on biotechnology and subsequently changed its name to Champions Biotechnology, Inc. In February 2007 the Company acquired the patent rights to two Benzoylphenylurea (BPU) sulfur analog compounds. On May 18, 2007, the Company acquired Biomerk, Inc. from Dr. David Sidransky and issued 4,000,000 restricted shares of its common stock.. On April 30, 2008, the Company issued 1,428,572 restricted shares of the Company's common stock at $1.75 per share pursuant to the terms of a private investment financing.
ALLEVIATION OF GOING CONCERN
At April 30, 2007, the Company reported that it had incurred substantial net losses for the years ended April 30, 2007 and April 30, 2006 and the Company had not commenced operations to have a revenue stream to support itself. These factors raised substantial doubt about the Company's ability to continue as a going concern at that time.
During the three months ended April 30, 2008 the Company raised $2.5 million dollars in cash through a private placement of common stock. With this additional capital and projected cash flow expenditures over the next twelve months, Company's management considers the facts and circumstances which raised substantial doubt about the Company's ability to continue as a going concern to be alleviated.
The Company has sufficient resources to provide for the next twelve months of operations based on its current level of expenditure, its anticipated level of future expenditure and revenue growth and its ability to curtail expenditures if needed.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany transactions have been eliminated in consolidation.
F-8 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
APRIL 30, 2008 AND 2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The Company derives revenue from its Personalized Oncology services which assist physicians by providing information that may enhance personalized treatment options for their cancer patients through access to expert medical information panels and tumor specific data. Revenues are also derived from the Company's Preclinical EValuation services which offer the benefits of its Preclinical Platform to pharmaceutical and biotechnology companies using Biomerk Tumorgraft studies which have been shown to be predictive of how drugs perform in clinical settings. The Company's revenue is described as Personalized Oncology services in the Consolidated Statements of Income.
Revenue is recognized in accordance with the SEC's Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). SAB 104 requires that four basic criteria be met before revenue can be recognized: 1) persuasive evidence of an arrangement exists; 2) delivery has occurred or services rendered; 3) the fee is fixed and determinable; and 4) collectability is reasonably assured. As to 1), our business practices require that our services be performed pursuant to contracts with our customers. As to 2), we recognize revenue when services are rendered to our customers. As to 3), the fee is determined and fixed at the time the contract is executed. As to 4), our business practices require that fees for services be remit upon execution of the contract, either in full or in contractual amounts based on management's judgments regarding the fixed nature of our arrangements taking into account termination provisions and the collectability of fees under our arrangements.
The Company's revenue was solely derived from its Personal Oncology services during the year ended April 30, 2008.
Goodwill and Other Intangible Assets
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 142 "Goodwill and Other Intangible Assets". This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, "Intangible Assets". It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements.
Intangible Assets
Intangible assets represent costs incurred for patent applications. The costs incurred were valued at the fair value of the stock at the time of issuance. The Company will establish its estimated useful life upon approval of the application, which will begin the period of amortization of its cost. The Company will estimate the fair value of this asset annually.
Accounting for Acquisition
The Company has accounted for its acquisition under the purchase method of accounting for business combinations. Under the purchase method of accounting, the cost, including transaction costs, are allocated to the underlying net assets, based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.
Impairment of Goodwill and Other Intangible Assets
Goodwill and other intangible assets are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value. The Company assesses the recoverability of its goodwill and other intangible assets by comparing the projected undiscounted
net cash flows associated with the related asset, over the remaining lives, in comparison to their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.
Deferred Revenue
Deferred revenue represents payments received in advance for services to be performed. When services are rendered, deferred revenue is then recognized as earned.
Research and Development
Research and development costs are expensed as incurred.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Net Income (Loss) Per Share
Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss in 2007 because to do so would be antidilutive for the year presented.
F-9 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following is a reconciliation of the computation for basic and diluted EPS:
|
|
|
|
April 30, |
April 30, |
|
|
|
|
|
2008 |
2007 |
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
$ |
35,698 |
$ |
(170,058) |
|
|
|
|
|
|
|
Weighted-average common shares |
|
|
|
|
||
outstanding (basic) |
|
|
31,494,025 |
|
20,459,726 |
|
|
|
|
|
|
|
|
Weighted-average common stock |
|
|
|
|
||
Equivalents |
|
|
|
|
|
|
Stock options |
|
|
1,955,000 |
|
- |
|
Warrants |
|
|
830,512 |
|
- |
|
|
|
|
|
|
|
|
Weighted-average common shares |
|
|
|
|
||
outstanding (diluted) |
|
|
34,279,537 |
|
20,459,726 |
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flow, the Company considers all highly liquid debt instruments purchased with a maturity of six months or less, unless restricted as to use, to be cash equivalents. At various times throughout the years the Company had amounts on deposit at financial institutions in excess of federally insured limits.
F-10 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company has adopted the provisions of Statement of Financial Accounting Standards No. 109 (the Statement), Accounting for Income Taxes. The Statement requires an asset and liability approach for financial accounting and reporting for income taxes, and the recognition of deferred tax assets and liabilities for the temporary differences between the financial reporting bases and tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial instruments, including cash and cash equivalents, accounts payable, and accrued expenses, officer loans payable approximate fair values because of the short maturities of these instruments.
Stock-Based Compensation
Employee stock awards under the Company's compensation plans are accounted for in accordance with Statement of Financial Accounting Standards No. 123 (Revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The provisions of SFAS 123R, as amended, are effective for small business issuers beginning as of the next fiscal year after December 15, 2005. Accordingly, the Company implemented the revised standard in the first quarter of fiscal year 2007.
F-11 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-Based Compensation (Continued)
The Company measures compensation expense for its non-employee stock-based compensation under the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital.
F-12 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent
Accounting Pronouncements
In September 2006, The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurement" ("SFAS No. 157"). This standard provides guidance for using fair value to measure assets and liabilities. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. Prior to SFAS No. 157, the methods for measuring fair value were diverse and inconsistent, especially for items that are not actively traded. The standard clarifies that for items that are not actively traded, such as certain kinds of derivatives, fair value should reflect the price in a transaction with a market participant, including an adjustment for risk, not just the company's mark-to-model value. SFAS No. 157 also requires expanded disclosure of the effect on earnings for items measured using unobservable data. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact of this statement on its financial statements and expects to adopt SFAS No.157 during the quarter ending July 31, 2008.
F-13 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans -- An Amendment of FASB Statements No. 87, 88, 106, and 132R." This standard requires an employer to: (a) recognize in its statement of financial position an asset for a plan's overfunded status or a liability for a plan's underfunded status; (b) measure a plan's assets and its obligations that determine its funded status as of the end of the employer's fiscal year (with limited exceptions); and (c) recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. Those changes will be reported in comprehensive income. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer's fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The Company is evaluating the impact of this statement on its financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Liabilities, including an amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses shall be reported on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157 "Fair Value Measurements" ("SFAS No. 157"). The Company is currently assessing the impact that SFAS No. 159 will have on its financial statements.
NOTE 3- COMMITMENTS AND CONTINGENCIES
Operating leases
The Company leases, as tenant, space under an operating lease, which expires September 30, 2008. The Company also leases, as tenant, space under an operating lease which expires August 31, 2008.
Rental expense during the year ended April 30, 2008 and 2007 was $8,500 and $420, respectively.
F-14 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 4- OTHER ACCRUED EXPENSES
This account represents accrued officer's payroll and related payroll taxes. This liability was paid in full in May 2008.
NOTE 5- OFFICER LOANS PAYABLE
For the year ended April 30, 2007, the Company received working capital advances from an officer of the Company which were repaid during the year ended April 30, 2008 without interest.
NOTE 6- STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock
The Company has 50,000,000 shares authorized and 33,247,718 shares issued and outstanding at April 30, 2008.
There were 5,623,060 shares of common stock issued during the year ended April 30, 2008 and 10,800,000 in 2007.
During the year ended April 30, 2008, the Company issued 1,623,060 shares of restricted stock for cash of $2,532,755.
During the year ended April 30, 2007, the Company issued 9,500,000 shares of restricted stock for cash of $38,000.
In October 2006, the Company issued 1,000,000 shares of common stock, a five-year warrant to purchase up to 500,000 shares of common stock at an exercise price of $0.15 per share, and a five-year warrant to purchase up to 500,000 shares of common stock at an exercise price of $0.25 per share in exchange for the cancellation of all the 32,450 shares of preferred stock outstanding and the waiver of all accrued and unpaid dividends on such shares which totaled $350,460.
On February 14, 2007 the Company acquired all of the patent rights underlying a pending U.S. Patent Application. The purchase price for the patent rights consisted of an aggregate of up 550,000 restricted shares of common stock, of which 300,000 were issued to four individuals upon execution of the acquisition agreement and 250,000 restricted shares are
F-15 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 6- STOCKHOLDERS' DEFICIT (CONTINUED)
Common Stock (Continued)
issuable upon the issuance of the patent based on the U.S. Patent Application.
On May 18, 2007, the Company entered into an Agreement and Plan of Merger with Biomerk, Inc., a privately owned company, whereby the Company issued 4,000,000 restricted shares of its common stock to acquire 100% of the outstanding stock of Biomerk, Inc.
Preferred Stock
The Company has 56,075 shares of preferred stock authorized and 0 shares issued and outstanding at April 30, 2008.
There were no issuances of preferred stock during the year ended April 30, 2008. The 32,450 shares as of July 31, 2006 were cancelled in October 2006.
Stock Options
On January 15, 2007, the Company entered into various agreements with consultants to issue three hundred and forty thousand options, exercisable over a five year period based on a fair value exercise price on the date of issuance ($0.17) exercisable expiring through January 15, 2012 for services to be rendered in one year. The options vest on January 15, 2008 and have been valued at $44,184 using the Black-Scholes Model with an annualized volatility rate of 100% and a bond interest rate of 4.43%. Amortization expense for services rendered was $33,138 for the year ended April 30, 2008. Amortization expense for services rendered was $11,046 for the year ended April 30, 2007. On May 15, 2007, the Company entered into a consulting agreement to issue five hundred thousand options, exercisable over a five-year period based on a fair value exercise price on the date of issuance ($0.30) exercisable expiring through May 15, 2012 for services to be rendered over three years. The options vest as follows: 166,665 upon the first anniversary of the grant date, 166,665 upon the second anniversary of the grant date and 16 6,670 upon the third anniversary of the grant date and have been valued at $149,974 using the Black-Scholes Model with an annualized volatility rate of 270% and a bond interest rate of 4.35%. Amortization expense for services rendered was $48,072 for the year ended April 30, 2008. On May 15, 2007, the Company entered into a consulting agreement to issue twenty- five thousand options, exercisable over a five-year period based on a fair value exercise price on the date of issuance ($0.30) exercisable expiring through May 15, 2012 for services to be rendered over one year. The options vest on May 15, 2008 and have been valued at $7,499 using the Black-Scholes Model with an annualized volatility rate of 270% and a bond interest rate of 4.35%. Amortization expense for services rendered was $7,214 for the year ended April 30, 2008 On October 10, 2007, the Company entered into a consulting agreement to issue five hundred thousand options, exercisable over a five-year period based on a fair value exercise price on the date of issuance ($0.75) exercisable expiring through October 10, 2012 for services to be rendered over three years. The options vest as follows: 166,665 upon the first anniversary of the grant date, 166,665 upon the second anniversary of the grant date and 166,670 upon the third anniversary of the grant date and have been valued at $336,287 using the Black-Scholes Model with an annualized volatility rate of 141% and a bond interest rate of 4.38%. Amortization expense for services rendered was $62,343 for the year ended April 30, 2008. On March 27, 2008, the Company entered into a consulting agreement to issue two hundred thousand options, exercisable over a five-year period based on a fair value exercise price on the date of issuance ($1.05) exercisable expiring through March 27, 2013 for services to be rendered over three years. The options vest as follows: 66,666 upon the first anniversary of the grant date, 66,666 upon the second anniversary of the grant date and 66,668 upon the third anniversary of the grant date and have been valued at $209,494 using the Black-Scholes Model with an annualized volatility rate of 270% and a bond interest rate of 2.25%. Amortization expense for services rendered was $6,314 for the year ended April 30, 2008. On March 31, 2008, the Company entered into consulting agreements to issue four hundred fifteen thousand options, exercisable over a five-year period based on a fair value exercise price on the date of issuance ($1.15) exercisable expiring through March 31, 2013 for services to be rendered over three years. The options vest as follows: 138,333 upon the first anniversary of the grant date, 138,333 upon the second anniversary of the grant date and 138,334 upon the third anniversary of the grant date and have been valued at $476,103 using the Black-Scholes Model with an annualized volatility rate of 270% and a bond interest rate of 2.25%. Amortization expense for services rendered was $13,046 for the year ended April 30, 2008.
Warrants
As noted above, in October 2006, the Company issued 1,000,000 shares of common stock, a five-year warrant to purchase up to 500,000 shares of common stock at an exercise price of $0.15 per share, and a five-year warrant to purchase up to 500,000 shares of common stock at an exercise price of $0.25 per share in exchange for the cancellation of all the 32,450 shares of preferred stock outstanding and the waiver of all accrued and unpaid dividends on such shares which totaled $350,460. The warrants were valued using the Black-Scholes pricing model using the following assumptions: interest rate 4.43%, dividend yield 0%, volatility 100% and expected life of five years.
F-16 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 6- STOCKHOLDERS' DEFICIT (CONTINUED)
Warrants (Continued)
The Company has the following warrants outstanding for the purchase of its common stock:
|
|
|
|
Year Ended April 30, |
||
Exercise Price |
|
Expiration Date |
|
|
2008 |
|
|
|
|
|
|
|
|
$0.15 |
|
January 15, 2012 |
|
|
361,328 |
|
|
|
|
|
|
|
|
$0.25 |
|
January 15, 2012 |
|
|
469,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
830,512 |
|
|
|
|
|
|
|
|
|
|
Weighted Average exercise price |
$0.20 |
|
As of April 30, 2008, 830,312 warrants are exercisable.
There were 830,512 warrants outstanding for the year ended April 30, 2008.
Prepaid Consulting
Prepaid consulting represents options granted to consultants and directors for services to be rendered in the future, to be amortized over the life of the contract or according to the terms of the options grant.
F-17 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
NOTE 7- PROVISION FOR INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's consolidated tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
At April 30, 2008 and 2007, deferred tax assets consist of the following:
|
|
2008 |
2007 |
|
Deferred tax asset |
$ |
2,473,991 |
$ |
2,467,155 |
Less: valuation allowance |
(2,473,991) |
|
(2,467,155) |
|
Net deferred tax asset |
$ |
-0- |
$ |
-0- |
At April 30, 2008 and 2007, the Company had federal net operating loss carryforwards in the approximate amounts of $7,068,547 and $7,104,245 available to offset future taxable income subject to Section 382 analysis limitations The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.
F-18 |
CHAMPIONS BIOTECHNOLOGY,
INC.
FORMERLY CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
APRIL 30, 2008 AND
2007
F-19 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CHAMPIONS BIOTECHNOLOGY, INC.
By:
/s/ Douglas D. Burkett
Douglas D. Burkett
President and Principal Executive Officer
Date: July 29, 2008
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By:
/s/Durwood C. Settles
Durwood C. Settles
Chief Financial Officer
Date: July 29, 2008
By:
/s/ David Sidransky
Chairman
Director
Date: July 29, 2008
By:
/s/ James Martell
Chief Administrative Officer
Director
Date: July 29, 2008
By:
Abba Poliakoff
Director
Date: July 29, 2008
By:
Ana Stancic
Director
Date: July 29, 2008
EXHIBIT 14
CHAMPIONS BIOTECHNOLOGY, INC.
CODE OF BUSINESS CONDUCT AND
ETHICS
The Board of directors
of
Champions Biotechnology, Inc.
(with its subsidiaries, the
"
Company
") has adopted this Code of Business Conduct and Ethics
("
Code
") to:
All directors, officers
and employees of the Company are expected to be familiar with the Code and to
adhere to those principles and procedures set forth in the Code that apply to
them. This Code is meant to address the general ethical requirements of
business conducted by the Company, but is not all-inclusive. Particular areas
of conduct, such as harassment, confidential employee complaints, and other
conduct which affects the workplace are addressed separately in other Company
policies included in the Company's Employee Manual.
For purposes of this
Code, the "Code of Ethics Contact Person" is Ana Stancic.
From time to time, the
Company may waive some provisions of this Code. Any waiver of the Code for
executive officers or directors of the Company may be made only by the Board of
Directors and must be promptly disclosed as required by SEC or American Stock
Exchange rules. Any waiver for other employees may be made only by the Code of
Ethics Contact Person.
I. HONEST AND CANDID
CONDUCT
Each director, officer
and employee owes a duty to the Company to act with integrity. Integrity
requires, among other things, being honest and candid. Deceit and subordination
of principle are inconsistent with integrity.
Each director, officer
and employee must:
II. CONFLICTS OF
INTEREST
A "conflict of
interest" occurs when an individual's private interest interferes or appears to
interfere with the interests of the Company. A conflict of interest can arise
when a director, officer or employee takes actions or has interests that may
make it difficult to perform his or her Company work objectively and
effectively. For example, a conflict of interest would arise if a director,
officer or employee, or a member of his or her family, receives improper
personal benefits as a result of his or her position in the Company. Any
material transaction or relationship that could reasonably be expected to give
rise to a conflict of interest should be discussed with the Code of Ethics
Contact Person.
Service to the Company
should never be subordinated to personal gain and advantage. Conflicts of
interest should, wherever possible be avoided.
In particular, clear
conflict of interest situations involving directors, executive officers and
other employees who occupy supervisory positions or who have discretionary
authority in dealing with any third party specified below may include the
following:
Such situations, if
material, must always be approved in advance by the Code of Ethics Contact
Person.
Anything that would
present a conflict for a director, officer or employee would likely also present
a conflict if it is related to a member of his or her family.
III. DISCLOSURE
Each director, officer
or employee involved in the Company's disclosure process, including the Chief
Executive Officer and the Chief Financial Officer (the "
Senior Financial
Officers
"), is required to be familiar with and comply with the Company's
disclosure controls and procedures and internal control over financial
reporting, to the extent relevant to his or her area of responsibility, so that
the Company's public reports and documents filed with the SEC comply in all
material respects with the applicable federal securities laws and SEC rules. In
addition, each such person having direct or supervisory authority regarding
these SEC filings or the Company's other public communications concerning its
general business, results, financial condition and prospects should, to the
extent appropriate within his or her area of responsibility, consult with other
Company officers and employees and take other appropriate steps regarding these
disclosures with the goal of making full, fair, accurate, timely and
understandable disclosure.
Each director, officer
or employee who is involved in the Company's disclosure process, including
without limitation, the Senior Financial Officers, must:
IV. COMPLIANCE
It is the Company's
policy to comply with all applicable laws, rules and regulations. It is the
personal responsibility of each employee, officer and director to adhere to the
standards and restrictions imposed by those laws, rules and
regulations.
It is against Company
policy and in many circumstances illegal for a director, officer or employee to
profit from undisclosed information relating to the Company or any other
company. Any director, officer or employee may not purchase or sell any of the
Company's securities while in possession of material nonpublic information
relating to the Company. Also, any director, officer or employee may not
purchase or sell securities of any other company while in possession of any
material nonpublic information relating to that company.
Any director, officer
or employee who is uncertain about the legal rules involving a purchase or sale
of any Company securities or any securities in companies that he or she is
familiar with by virtue of his or her work for the Company, should consult with
the Company's Chief Operating Officer before making any such purchase or
sale.
V. REPORTING AND
ACCOUNTABILITY
The Audit Committee of
the Company's Board of Directors is responsible for applying this Code to
specific situations presented to it for review and has the authority to
interpret this Code in any particular situation. Any director, officer or
employee who becomes aware of any existing or potential violation of this Code
is required to notify the Code of Ethics Contact Person promptly. Failure to do
so is itself a violation of this Code.
Any questions relating
to how this Code should be interpreted or applied should be addressed to the
Code of Ethics Contact Person. A director, officer or employee who is unsure of
whether a situation violates this Code should discuss the situation with the
Code of Ethics Contact Person to prevent possible misunderstandings and
embarrassment at a later date.
Each director, officer
or employee must:
The Audit Committee
shall take all action they consider appropriate to investigate any violations
reported to them. If a violation has occurred, the Company will take such
disciplinary or preventive action as it deems appropriate, after consultation
with the Audit Committee, in the case of a director or executive officer, or
after consultation with the President, in the case of any other
employee.
VI. CORPORATE
OPPORTUNITIES
Directors, officers and
employees owe a duty to the Company to advance the Company's business interests
when the opportunity to do so arises. Directors', officers and employees are
prohibited from taking (or directing to a third party) a business opportunity
that is discovered through the use of corporate property, information or
position, unless the Company has already been offered the opportunity and turned
it down. More generally, directors, officers and employees are prohibited from
using corporate property, information or position for personal gain and from
competing with the Company.
Sometimes the line
between personal and Company benefits is difficult to draw, and sometimes there
are both personal and Company benefits in certain activities. Directors,
officers and employees who intend to make use of Company property or services in
a manner not solely for the benefit of the Company should consult beforehand
with the Code of Ethics Contact Person.
VII. CONFIDENTIALITY
In carrying out the
Company's business, directors, officers and employees often learn confidential
or proprietary information about the Company, its customers, suppliers or joint
venture parties. Directors, officers and employees must maintain the
confidentiality of all information so entrusted to them, except when disclosure
is authorized or legally mandated. Confidential or proprietary information of
the Company, and of other companies, includes any non-public information that
would be harmful to the relevant company or useful or helpful to competitors if
disclosed.
VIII. FAIR DEALING
We have a history of
succeeding through honest business competition. We do not seek competitive
advantages through illegal or unethical business practices. Each director,
officer and employee should endeavor to deal fairly with the Company's service
providers, suppliers, competitors and employees. No director, officer or
employee should take unfair advantage of anyone through manipulation,
concealment, abuse of privileged information, misrepresentation of material
facts, or any unfair dealing practice.
IX. PROTECTION AND PROPER USE OF
COMPANY ASSETS
All directors, officers
and employees should protect the Company's assets and ensure their efficient
use. All Company assets should be used only for legitimate business
purposes.
EXHIBIT 21
SUBSIDIARIES OF CHAMPIONS BIOTECHNOLOGY, INC.
Name
Incorporated in
Biomerk, Inc.
Maryland
I, DOUGLAS D. BURKETT,
certify that:
.
Date: July 29, 2008
/s/ Douglas D.
Burkett
Douglas D. Burkett
Principal Executive Officer
I, DURWOOD C. SETTLES,
certify that:
1.
I have reviewed this Annual Report on Form 10-KSB of CHAMPIONS
BIOTECHNOLOGY, INC., a Delaware corporation;
2.
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this report;
4.
The Registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the Registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principals;
(c)
Evaluated the effectiveness of the Registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the Registrant's internal
control over financial reporting that occurred during the Registrant's most
recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting;
and
5.
The Registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the Registrant's auditors and the audit committee of Registrant's
board of directors (or persons performing the equivalent function):
(a)
All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant's ability to record,
process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's internal control
over financial reporting.
Date: July 29, 2008
/s/ Durwood C.
Settles
Durwood C. Settles
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
.
In connection with the
annual report of Champions Biotechnology, Inc. (the "Company") on Form 10-KSB
for the year ended April 30, 2008 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), each of the undersigned, in the
capacities and on the dates indicated below, hereby certifies pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to their knowledge:
1. The Report fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
2. The information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operation of the Company.
Date: July 29, 2008
By:
/s/ Douglas D. Burkett
Douglas D. Burkett
Principal Executive Officer
/s/Durwood C. Settles
Durwood C. Settles
Chief Financial Officer
|
3.5. |
Stock Options . On October 10, 2007 (the "Grant Date"), the Company awarded Employee (who, as of the Grant Date, was engaged by the Company as a consultant) the option to acquire 500,000 shares of the Company's stock at the per share exercise price of $0.75 (the "Options"), which represented the fair market value of the Company's common stock as of the Grant Date. The Company herein reaffirms its prior grant of the Options to Employee, which shall vest as follows: (i) 166,665 Options shall vest upon the first anniversary of the Grant Date; (ii) 166,665 Options shall vest upon the second anniversary of the Grant Date; and (iii) 166,670 Options shall vest upon the third anniversary of the Grant Date. All vested Options held by Executive shall be exercisable over a five-year period expiring on the fifth anniversary of the Grant Date (which is October 10, 2012) (the "Exercise Period"); provided, however, that the option will terminate upon a material breach by the Executive of this Agreement, and will expire and terminate upon any termination of this Agreement or the Executive's employment, except as otherwise expressly provided in Section 5 of this Agreement . |
Executive's Representations and Warranties . |
||
4.1. |
No Prior Agreements . Executive represents and warrants that he is not a party to or otherwise subject to or bound by the terms of any contract, agreement or understanding which in any manner would limit or otherwise affect his ability to perform his obligations hereunder, including without limitation any contract, agreement or understanding containing terms and provisions similar in any manner to those contained in the Company's Business Protection Agreement. |
|
4.2. |
Confidential Information of Others . Executive represents, warrants and covenants he will not disclose to the Company or otherwise use, in the course of his employment with the Company, any confidential information which he is restricted from disclosing or using pursuant to any other agreement or duty to any other person. |
|
4.3. |
Non-Competition Covenants . Executive represents and warrants to the Company that he is not bound by any non-competition or non-solicitation agreement or similar restriction which would prohibit him from accepting employment with the Company or performing any duties on behalf of the Company. |
|
4.4. |
Return of Company Property . Executive agrees that upon termination of employment he will promptly return to the Company all Confidential Information, all Intellectual Property of the Company and all other property of the Company, including all correspondence, manuals, notebooks, lists of customers and suppliers, prototypes, computer programs, disks and any documents, materials or property, whether written or stored on computerized medium, and all copies in Executive's possession or control, he shall not shall not take any action to preserve or regain access to such information through any means, including but not limited to access to the Company's facilities or through a computer or other digital or electronic means, and shall promptly pay all amounts due, owing or otherwise payable by Executive to the Company. Executive expressly authorizes the Company to withhold any amounts payable to him, including for wages, compensation, reimbursement and otherwise, until he has complied with this Section. |
|
4.5. |
Business Protection Agreement . Executive acknowledges that this Agreement is contingent upon Executive's acceptance of and agreement to be bound by all of the terms and provisions of the Company's Business Protection Agreement ("BPA"), a copy of which has been delivered to Executive. Accordingly, Executive covenants and agrees to be bound and abide by all terms and provisions of the BPA, regardless of whether such agreement is ever signed or delivered by Executive. |
|
4.6. |
Company's Remedies for Breach . Executive acknowledges that, as the violation by Executive of the provisions of Section 4 would cause irreparable injury to the Company, and there is no adequate remedy at law for such violation, the Company shall have the right in addition to any other remedies available, at law or in equity, to seek to enjoin Executive in a court of equity from violating such provisions. Executive hereby waives any and all defenses he may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. |
IN WITNESS WHEREOF, the parties have executed this Agreement under seal, with the intent that this be a sealed instrument, on the day and year first above written. |
COMPANY: |
|
By:________________________________(SEAL) |
|
___________________________________(SEAL) |
Champions Biotechnology, Inc. |
2200 Wilson Boulevard |
Suite 102-316 |
Arlington, VA |
March 26, 2008 |
PERSONALLY DELIVERED
Mr. Durwood Settles, CPA
Dear Mr. Settles:
Champions Biotechnology, Inc. (the "Company") offers to employ you upon the terms herein provided. During the period that this Agreement is in effect:
1.
Employment
. You agree to serve as a full time employee of the Company at the will of the President and the Board of Directors as the Principal Financial and Accounting Officer of the Company upon the terms and conditions set forth below.
2.
Duties
. You will devote your full time and best efforts to serving faithfully and competently performing all of your duties under this Agreement. You will report to the President or to such other persons as the President directs, shall at all times be subject to the direction and control of the President, and shall satisfactorily carry out the duties assigned to you by such persons. You will not take any action which may interfere with, or may adversely affect the business, properties or prospects of the Company or any of its affiliates, or the performance of your duties hereunder in any way.
3.
Compensation
. As compensation for your services hereunder, you will receive a salary at the rate of $100,000 per annum. The salary shall be payable in installments no less frequent than monthly, less any and all deductions and amounts required to be withheld in respect of any federal, state and local taxes and other charges and assessments. Such salary shall be subject to annual review.
4.
Benefits
. You will be eligible to participate in any bonus and/or incentive compensation plan that the Company may from time to time implement for the benefit of its full-time management employees, and permitted to participate in all employee benefit programs implemented by the Company for the benefit of any of its full-time employees, including, without limitation, retirement plans, disability insurance, group and other life insurance, sickness, and accident and health insurance programs, provided that Executive qualifies or is otherwise eligible to participate under the terms of such programs. You will be entitled to vacation, leave of absence, and leave for illness or temporary disability in accordance with the policies of the Company from time to time in effect, but in no case will the vacation allotment be less than 10 working days per annum.
|
5.
Representations
. You represent and warrant to the Company that you are not a party to or otherwise subject to or bound by the terms of any agreement or understanding which would limit or otherwise affect your ability to perform your obligations hereunder, including but not limited to any non-competition or non-solicitation agreement or similar restriction which would prohibit you form or limit you in accepting employment with the Company or performing any duties on behalf of the Company. You agree not to disclose to the Company or otherwise use, in the course of your employment with the Company, any confidential information which you are restricted from disclosing or using pursuant to any other agreement or duty to any other person.
6.
Return of Property
. You agree that upon termination of employment you will promptly return to the Company all confidential information, all intellectual property of the Company and all other property of the Company, including all correspondence, manuals, notebooks, lists of customers and suppliers, prototypes, computer programs, disks and any documents, materials or property, whether written or stored on computerized medium, and all copies in your possession or control; you will not take any action to preserve or regain access to such information through any means, including but not limited to access to the Company's facilities or through a computer or other digital or electronic means; and you will promptly pay all amounts due, owing or otherwise payable by Executive to the Company. You expressly authorize the Company to withhold any amounts payable to you, including for wages, compensation, reimbursement and otherwise, until you have complied with all terms of this Agreement including this paragraph.
7.
BPA
. You acknowledge that this Agreement is contingent upon your agreement to be bound by all of the provisions of the Company's Business Protection Agreement ("BPA"), a copy of which has been delivered to you. Accordingly, you covenant to be bound and abide by all terms and provisions of the BPA, regardless of whether such agreement is ever signed or delivered by you.
8.
Remedies
. You acknowledge that, as your violation of the provisions of paragraphs 5, 6 or 7 would cause irreparable injury to the Company, and there is no adequate remedy at law for such violation, the Company has the right, in addition to any other remedies available, at law or in equity, to seek to enjoin you in a court of equity from violating such provisions, and you waive any defenses you may have on the ground of lack of juris-dic-tion or competence of the court to grant such an injunction or other equitable relief.
9.
Term
. This Agreement shall commence on March 31, 2008 (the "Effective Date"). This Agreement may be terminated at any time by either party upon 30 days prior written notice to the other party, provided, however, that this Agreement may be terminated immediately upon notice for "Cause" (as hereinafter defined). Upon the termination of your employment for any reason or no reason, the Company shall have no further obligation to you whatsoever.
(a) The term "Cause" means: (i) an action or failure to act by you constituting fraud, misappropriation or damage to the property or business of the Company; (ii) the commission of an act of material dishonesty; conviction of or plea of
nolo contendere
to a crime, or causing the Company to commit a crime; (iii) your intentional failure to comply with your responsibilities hereunder or to fail to perform your duties in accordance with written directives provided to him, in writing, by the President; (iv) your material breach of any of your obligations under this Agreement or any of the policies of the Company; or (v) the unauthorized use, misappropriation or disclosure by you of any confidential information of the Company or of any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company, provided, however, that with respect to (iii) and (iv) above, you will be provided written notice of any failures, and/or breach constituting "Cause" and given reasonable opportunity (not to exceed 10 days) to cure the misconduct and/or breach.
|
10.
Miscellaneous
.
(a)
Entire Agreement
. The Company has made no representations other than as set forth herein. No modification, amendment or waiver of this Agreement or any of its provisions shall be valid unless in writing and signed by all parties.
(b)
Governing Law; Waiver of Jury Trial; Jurisdiction
. This Agreement has been made in and shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to any conflicts of laws principles which would apply the law of another jurisdiction. The parties hereby waive trial by jury in any action arising under this Agreement. Any action arising under this Agreement shall be brought in and shall be subject to the exclusive jurisdiction and venue of the state or federal courts located in Maryland, except where injunctive relief is sought in any other jurisdiction in connection with the enforcement of this Agreement.
(c)
Waiver
. The failure of any party to fully enforce any provision hereof shall not be deemed to be a waiver of such provision or any part thereof, and the waiver of any provision shall not be deemed to be a waiver of any other provision or a waiver with respect to any other incidence of non-compliance therewith. No waiver shall be effective unless in writing and signed by the party so waiving.
(d)
Survival
. The provisions of Sections 5, 6, 7 and 8 hereof, and the BPA, shall survive the termination of this Agreement and your employment hereunder.
If you agree to accept employment with the Company subject to the foregoing terms, please sign in the space below and return this letter to me within 5 days of the date hereof.
Sincerely, |
||
Champions Biotechnology, Inc. |
||
By: |
__________________________ |
|
|
Douglas D. Burkett, President |
Agreed to and accepted
on March 26, 2008
__________________________
Durwood Settles
|
Executive's Representations and Warranties . |
|||
4.1. |
No Prior Agreements . Executive represents and warrants that he is not a party to or otherwise subject to or bound by the terms of any contract, agreement or understanding which in any manner would limit or otherwise affect his ability to perform his obligations hereunder, including without limitation any contract, agreement or understanding containing terms and provisions similar in any manner to those contained in the Company's Business Protection Agreement. |
||
4.2. |
Confidential Information of Others . Executive represents, warrants and covenants he will not disclose to the Company or otherwise use, in the course of his employment with the Company, any confidential information which he is restricted from disclosing or using pursuant to any other agreement or duty to any other person. |
||
4.3 |
Non-Competition Covenants . Executive represents and warrants to the Company that he is not bound by any non-competition or non-solicitation agreement or similar restriction which would prohibit him from accepting employment with the Company or performing any duties on behalf of the Company. |
||
4.4. |
Return of Company Property . Executive agrees that upon termination of employment he will promptly return to the Company all Confidential Information, all Intellectual Property of the Company and all other property of the Company, including all correspondence, manuals, notebooks, lists of customers and suppliers, prototypes, computer programs, disks and any documents, materials or property, whether written or stored on computerized medium, and all copies in Executive's possession or control, he shall not shall not take any action to preserve or regain access to such information through any means, including but not limited to access to the Company's facilities or through a computer or other digital or electronic means, and shall promptly pay all amounts due, owing or otherwise payable by Executive to the Company. Executive expressly authorizes the Company to withhold any amounts payable to him, including for wages, compensation, reimbursement and otherwise, until he has complied with this Section. |
||
4.5. |
Business Protection Agreement . Executive acknowledges that this Agreement is contingent upon Executive's acceptance of and agreement to be bound by all of the terms and provisions of the Company's Business Protection Agreement ("BPA"), a copy of which has been delivered to Executive. Accordingly, Executive covenants and agrees to be bound and abide by all terms and provisions of the BPA, regardless of whether such agreement is ever signed or delivered by Executive. |
||
4.6. |
Company's Remedies for Breach . Executive acknowledges that, as the violation by Executive of the provisions of Section 4 would cause irreparable injury to the Company, and there is no adequate remedy at law for such violation, the Company shall have the right in addition to any other remedies available, at law or in equity, to seek to enjoin Executive in a court of equity from violating such provisions. Executive hereby waives any and all defenses he may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. |
IN WITNESS WHEREOF, the parties have executed this Agreement under seal, with the intent that this be a sealed instrument, on the day and year first above written. |
By:________________________________(SEAL) |
||
___________________________________(SEAL) |
James Martell |