SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 7, 2012
ENDEAVOR POWER CORP.
(Exact name of Company as specified in its charter)
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Nevada
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333-166487
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N/A
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(State or other jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification Number)
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2 Canal Park 5
th
Floor
Cambridge, MA 02141
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(Address of principal executive offices)
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Telephone Number 617.209.7999
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(Registrant’s Facsimile Number)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
FORWARD LOOKING STATEMENTS
The following discussion, in addition to the other information contained in this Current Report, should be considered carefully in evaluating the Company’s prospects. This Report (including without limitation the following factors that may affect operating results) contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) regarding the Company and its business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Report. Additionally, statements concerning future matters such as revenue projections, projected profitability, growth strategies, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.
Forward-looking statements in this Report reflect the good faith judgment of its management and the statements are based on facts and factors as the Company currently knows them. Forward-looking statements are subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, those discussed in this Report. Readers are urged not to place undue reliance on these forward-looking statements which speak only as of the date of this Report. The Company undertakes no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Report.
As used in this Current Report and unless otherwise indicated, the terms “we”, “us”, “our”, “EDVP” and the “Company” refer to Endeavor Power Corp. and its wholly owned subsidiaries.
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ITEM 1.01
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
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On November 1, 2012, the Company, and its wholly owned subsidiary Endeavor Holdings, Inc. (“Endeavor Holdings”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Parallax Diagnostics, Inc, a Nevada corporation (“Parallax”) and the shareholders of Parallax (the “Parallax Shareholders”), whereby Endeavor Holdings acquired 24,870,000 shares of common stock (100%) of Parallax (the “Parallax Stock”) from the Parallax Shareholders. In exchange for the Parallax Stock, the Company issued 90,375,750 shares of its common stock to the Parallax Shareholders.
The 90,375,750 shares, issued at par value $.0001, represent approximately 60% of the Company’s total issued and outstanding shares. The Common Stock Purchase Agreement, and subsequent transaction closing, was completed on October 22, 2012. On October 27, 2012, the Common Stock Purchase Agreement was finalized, and a Change in Control of the Registrant took place.
The foregoing summary description of the terms of the Merger Agreement may not contain all information that is of interest to the reader. For further information regarding specific terms and conditions of the Merger Agreement, the complete text is incorporated herein as Exhibit 2.1.
As a result of the transactions effected by the Merger Agreement, (i) the former business of Parallax is now our primary business and (ii) there is a change of control whereby the former shareholders of Parallax, will now own a controlling 60% ownership interest in the Company on a fully diluted basis. A copy of the Articles of Merger filed with the Nevada Secretary of State on November 6, 2012, is attached herewith and included in this filing as Exhibit 3.3.
As a further condition of the Merger Agreement, the current officer and director of the Company, Mr. Gardner Williams, resigned from all positions, and Mr. J. Michael Redmond was appointed to serve as Chief Executive Officer and President of the Company, and also as a Director on the Board of Directors. Additionally, Ms. Calli Bucci was appointed to serve as the Company’s Treasurer and Chief Financial Officer, Mr. Kyle W. Withrow was appointed to serve as corporate Secretary, Dr. Roger Morris was appointed to serve as the Company’s Chief Science Officer, and Mr. Mike Contarino was appointed to serve as the Company’s Vice President. Mr. Edward W. Withrow III was appointed to serve as Executive Chairman, and Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.
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ITEM 2.01
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COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
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The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
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ITEM 3.02
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UNREGISTERED SHARES OF EQUITY SECURITIES
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The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
Exemption From Registration
. The shares of Common Stock referenced herein were issued in reliance upon an
exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation D promulgated thereunder, or Regulation S for offers and sales of securities outside the U.S.
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ITEM 5.01
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CHANGES IN CONTROL OF REGISTRANT
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The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.
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ITEM 5.02
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DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS
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On November 1, 2012, Mr. Gardner Williams resigned from all positions with the Company, including, but not limited to that of President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and a member of the Board of Directors. The resignation did not involve any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
On the same day, Mr.
J. Michael Redmond
was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and a member of the Board of Directors of the Company.
Additionally, Ms. Calli Bucci was appointed to serve as the Company’s CFO, Mr. Mike Contarino was appointed to serve as the Company’s Vice President and Dr. Roger Morris was appointed to serve as the Company’s Chief Science Officer. Mr. Edward W. Withrow III was appointed to serve as Executive Chairman and Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.
The biography for the newly appointed directors and officers are set forth below under the section entitled, “
DIRECTORS AND EXECUTIVE OFFICERS”.
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 8.01. As a result of the Merger Agreement, (i) Parallax Diagnostics, Inc. became a wholly owned operating subsidiary of the Company; and (ii) the business of Parallax Diagnostics, Inc, which is more fully described below, became the Company’s principal operations.
As of the date of the Merger Agreement, there were no material relationships between the Company and Parallax, or between the Company and any of its respective affiliates, directors, or officers, or any associates of its respective officers or directors, other than with respect to the Merger Agreement.
Corporate History
Formation and Development
Endeavor Power Corp. (the “Company”) was incorporated in the State of Nevada on July 6, 2005, under the name VB Biotech Laboratories, Inc. On September 21, 2007, the Company filed a Certificate of Amendment with the State of Nevada to change its name to VB Trade, Inc, with principal business operations to develop an online website that allowed web designers to sell their website designs in exchange for a commission on all products that were sold through the website. On September 21, 2007, the Company entered into a Plan of Merger (the “Merger”) with Endeavor Uranium, Inc., a mineral exploration company with mineral properties in the northwestern United States. As part of the Merger, effective September 21, 2007, the Company changed its name to Endeavor Uranium, Inc. On December 23, 2008, the Company entered into a Joint Venture Agreement (the “Agreement”) with Federated Energy Corporation, a Tennessee corporation, for working interests in prospective oil and gas wells located in Nowata County, Oklahoma. Effective December 23, 2008, the Company changed its operating name to Endeavor Power Corp.
In November, 2010, Management assessed a potential business opportunity and determined that in an effort to create value for its Shareholders, the Company should change its business direction. On November 8, 2010, the Company discontinued its operations in its working interests in oil and gas exploration and changed its operating focus to the development of E-Waste processing services aimed at industrial and government clients. E-Waste processing is the recycling and disposal of computers and other electronic equipment in an environmentally friendly manner. The Company’s new direction sought to limit the impact of discarded E-Waste on the environment. Discarded computers and electronic equipment pose environmental hazards.
On May 26, 2011, the Company’s President and CEO, Mr. Alfonso Knoll, resigned from all positions with the Company, including but not limited to, that of President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary. The resignation did not involve any disagreement with the Company. On June 8, 2011, the Company entered into a Settlement Agreement and General Mutual Release (“Settlement Agreement”) to terminate Mr. Knoll’s Employment Agreement dated November 8, 2010, and to accept his resignation. Pursuant to the Settlement Agreement, Mr. Knoll immediately ceased all services to the Company and, on June 11, 2011, returned to the Company any and all shares of its common stock then held by him.
On June 2, 2011, Mr. Matthew Carley was appointed as the Company’s President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director. Mr. Carley accepted the appointment, but resigned his positions effective September 27, 2011. The Company’s Board of Directors accepted the resignation of Mr. Carley, as well as the resignation of Mr. Keith Kress as a member of the Board of Directors. Simultaneously, Tom Mackay was appointed as the President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and the sole member of the Board of Directors.
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n August 15, 2012, the Company entered into a non-binding Letter of Intent (“LOI”) with Parallax Diagnostics, Inc. (“Parallax”) that outlined the terms and conditions for a proposed merger of the companies as understood by their respective boards. The terms of the LOI included, but were not limited to, an exchange of common stock, and a replacement of management. The LOI also stated that the anticipated Merger take place before November 15, 2012. The foregoing summary of the LOI is not complete and is qualified in its entirety by reference to the complete text of the Letter of Intent, which is included in this filing as Exhibit 2.2, respectively.
Parallax was incorporated in the State of Delaware on December 30, 2008 under the name Roth Kline, Inc. Roth Kline, Inc. was renamed Parallax Diagnostics, Inc. on December 29, 2010. On January 11, 2011, Parallax entered into and closed a share exchange agreement with ABC Acquisition Corp. (“ABC”) a fully reporting Nevada corporation. On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) ABC acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of its common stock. Parallax merged with and into ABC whereupon ABC continued as the surviving entity and the corporate existence of Parallax ceased (the “Merger”). Subsequent to the Closing ABC changed its name to Parallax Diagnostics, Inc.
Parallax, currently headquartered in Cambridge, Massachusetts, is a development stage company whose principal line of business is in the bio-medical sector. More specifically, Parallax is focused on the exploitation of a proprietary diagnostic and monitoring platform and processes in the area of infectious disease.
On September 10, 2010, Parallax entered into an Agreement of the Assignment of Intellectual Property (the “Assignment Agreement”) and an Agreement of the License of Intellectual Property (the “License Agreement”) with Montecito BioSciences, Ltd., a Nevada corporation (“Montecito”). Pursuant to the terms and conditions of the Assignment Agreement, Parallax acquired the right, title, and interest to certain FDA 510(k) cleared tests in the area of infectious diseases in consideration for the payment of $750,000 and the issuance of 1,500 shares of common stock of Parallax to Montecito. Moreover, pursuant to the terms and conditions of the License Agreement, Parallax acquired an exclusive license to a suite of proprietary medical devices, tests and utility processes which include: Method of Producing a Plurality of Isolated Antibodies, Method of Producing Drugs, Targeting Moieties or Diagnostics, Method for Determining the Immune State of a Subject & Portable Apparatus for Improved Sample Analysis in the Territories of Use and in the Field of Use. Montecito’s desktop analyzer and six of its tests are 510(k) cleared for commercial sale in the U.S. The license was granted in consideration for the payment of a license fee of $750,000 and the issuance of 7,500 shares of common stock of Parallax to Montecito. Parallax has recently initiated the development of a novel CD4 rapid point-of-care test for the monitory of immune status in a patient.
The foregoing summaries of the Assignment Agreement and License Agreement are not complete and are qualified in their entirety by reference to the complete text of the Assignment Agreement and License Agreement, which are included in this filing as Exhibits 10.19 and 10.20, respectively..
On September 30, 2011, Parallax entered into Modification Agreements with Montecito regarding the Assignment Agreement and the License Agreement, both entered into on September 10, 2010. The nature of the Modifications to the Assignment Agreement and the License Agreement were to increase the royalty amounts (“Royalties”) due to Montecito from Four Percent (4%) to Five Percent (5%) and from Three and One Half Percent (3.5%) to Four and One Half Percent (4.5%), respectively. The Assignment Agreement Royalties shall revert back to Four Percent (4%) after Parallax has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue and the License Agreement Royalties shall revert back to Three and One Half Percent (3.5%) after Parallax has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue. Parallax has recorded Deferred Revenue in the amount of $1,500,000
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The foregoing summaries of the Modification Agreements are not complete and are qualified in their entirety by reference to the complete text of the Modification Agreements, which are incorporated by reference as Exhibits 10.21 and 10.22, respectively.
Product Strategy and Overview
In recent years, there has been a continuing shift from the use of laboratory-based analyzers to more technologically advanced point-of-care tests that can be performed in a matter of minutes. Unlike the centralized clinical laboratory segment, which is mature and highly competitive, the point-of-care market is still a relatively early stage market. Although certain simple single analyte diagnostic tests have been developed, such tests have remained incapable of precise and highly sensitive quantitative measurements. As a result, medical tests that require precise quantization of the target analyte have remained the domain of immunoassay analyzers. Parallax believes that there is market potential for advanced point-of-care diagnostic products that provide quick and accurate diagnosis during a patient visit, shortening the decision time to medical intervention and minimizing the need for additional patient follow-up, thereby reducing overall health care delivery costs.
Parallax also believes that there is growth opportunity for the exploitation of the Target System platform in developing nations and regions such as Africa, India, South America, Eastern Europe, Russia and Asia as well as developed markets of North America and Western Europe. One of the first initiatives to be developed for this market will combine the portable Target System Diagnostic Analyzer with a test for the monitoring of AIDS/TB patients through the use of a proprietary rapid point-of-care immunoassay CD4-CD8 test that Parallax has begun developing.
The Products
Point-of-care diagnostic kits typically consist of test strips that the health care provider tips with a swab sputum or finger-stick of blood and inserts into a hand-held device for near-immediate answers to yes-no, high-low questions. They are simple to use and cheap, fast, disposable and reliable within an acceptable range. For the more quantitative and definitive antibody screening needed in most situations, though, a more substantial amount of blood must be sent out to a diagnostic lab, and hours or day’s later results from an enzyme-linked immunosorbent assay (ELISA) arrive. These tests are comparatively complex, expensive, and time consuming; only centralized diagnostic facilities can manage sample handling and the cost of instruments and reagents. A point-of-care instrument that has the advantage of a test strip device in terms of ease of use and rapid results along with ELISA-like capabilities for major diseases would circumscribe diagnosis routinely within the course of a patient visit. That would revolutionize diagnostic practices. Parallax has developed just such a device that it intends to sell to doctors and health care providers through our sector-specific subsidiaries.
Parallax’s FDA 510(k) cleared desktop analyzer and hand-held immunoassay system incorporates a unique flow-through rapid antigen test platform configuration to produce high-performance quantitative blood test results with the ease of use of rapid qualitative diagnostic strips. The technology, the Target System, consists of a unique disposable cartridge with preloaded reagents capable of testing a multiple test markers and a desktop diagnostic analyzer and hand-held hardware unit similar in size to a mobile phone/PDA. The Parallax device requires a finger-stick of blood and provides results in minutes. The simplicity of the fully loaded disposable test cartridge and subsequent ease-of-use alleviates the regulatory burden on the physician or hospital, which for a quantitative test, is required to have qualified staff draw blood, subsequently spin down the collected sample to obtain serum, and utilize the necessary reagents to conduct the test.
Parallax’s
Target System Diagnostic Platform is a Controlled Flow-Through Rapid Immunoassay Test, offering an array of improved modifications and features to the traditional Flow-through Immunoassay Test. With its Platform uniformity, patented vacuum pump, absorption layer for sample overflow, and complete compatibility with Parallax’s optic reader, the Target System Diagnostics Platform is a unique collection of tests for qualitative and quantitative detection of conditions.
Parallax’s Target System Diagnostic’s “Vacuum Control Flow Device” unique vacuum pump action reduces test time and ensures maximum contact with the membrane antibodies. This patented collection device is virtually unlimited in the number of tests that can be incorporated. Through a modification to existing FDA 510(k) clearance, the device is ideally suited for rapid FDA Clearance of all new tests that may be introduced.
Parallax’s products include a FDA-cleared desktop test reader and more than a dozen FDA 510(k) cleared tests. Parallax owns a number of patent applications on the underlying technology as well as methods for future test development.
Parallax has initiated the development of the first CD4-CD8 monitoring rapid test that it believes has the potential to enhance the testing, monitoring and treatment of AIDS victims in developing economies such as South Africa, Sub-Saharan countries, India and other nations struggling to deal with the treatment of AIDS. The CD4-CD8 monitoring test is being developed in conjunction with research leaders in the AIDS community.
Desktop immunoassay quantitative and qualitative analyzer
Parallax’s Desk-Top Analyzer is an FDA 510(k) cleared immunoassay multi-light spectrum analyzer that is capable of rapidly detecting qualitative and quantitative data for the existing FDA-cleared Target system tests.
Value Proposition:
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Multiple light source system providing: Variable Light Wave Analysis into the Infra-Red Spectrum. The higher the spectrum of light means the smaller the analyte that may be identified. It also allows for very specific test development, without having to develop a new analyzer to read the results.
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Field upgrades made through memory chip (SIMMs) or Flash memory stick allows for easy tracking of tests performed (HIPPA compliant, anonymous test results for tests performed per analyzer).
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The same Analyzer is used for all Target System Tests providing for training personnel once and consistent test reading results for either Qualitative or Quantitative Testing.
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When hooked to a printer Parallax’s Reader can give printed results for any Target System Test, Qualitative or Quantitative, when required.
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Low entry cost for new test development and analysis do to multiple Target Test platform uses. Development only includes algorithm (software for quantitative reading) and substance tested for.
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Next Generation Target System Analyzer; Mobile Analyzer
Parallax’s next generation Target System Analyzer currently under development is comprised of a highly portable, small, and rapid testing format in conjunction with a mobile, hand-held data acquisition and test reading device. The mobile analyzer is a re-engineered version of Parallax’s previously FDA-approved Desktop Analyzer. This innovative Hand-Held Analyzer allows for a fast (minutes instead of hours or days) performance of tests at the point-of-care, and requires only a Test Cartridge and a small number of ready-to-use solutions in preformatted quantities.
Moreover, Parallax’s device includes the ability to store and transmit patient, test, and other data, with the ability of wireless data transfer. The Hand-Held Analyzer is set to:
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achieve a portable monitoring system, which is compatible with proven and reliable ELISA-based target system technology proprietary to Parallax in its licensed market.
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expand readout capabilities to provide a mobile testing and monitoring platform.
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increase the economy of scale and scope of the diagnostics and monitoring platform by the development of additional utility of the device without redundant infrastructure investments (additional data acquisition of patients, additional tests for other, predominant diseases).
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The Hand-Held Analyzer
Whether searching for markers in the blood stream, diagnosing a pathogen in urine, Parallax’s Hand-Held Analyzer is a portable tool for rapid diagnostics. The Hand-Held Analyzer provides an improvement in point-of-care diagnostics and applications in countries with limited health care infrastructures and geographic limitations, both of which are of paramount importance in the combat against infectious diseases and in the fight against proliferation of endemic and pandemic diseases. The basic design of Parallax’s Hand-Held Analyzer is based on the 510(k) cleared technology employed in its Desktop Analyzer and is compatible with existing Test Cartridges. However, a number of innovative features have been integrated into the design to meet customer and patient needs.
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High Infrared Light Spectrum
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Multiple light source system providing: Variable Light Wave Analysis into the Infra-Red Spectrum. This diversity in light source and detection allows for the simultaneous identification and diagnosis of a broader spectrum of different targets within the same sample and assay. It also allows for very specific test development, without having to develop a new analyzer to read the results.
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Easy Field Upgrades
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Field software upgrades made through memory chip (SIMM) or Flash memory stick allows for easy tracking of tests performed (HIPPA compliant, anonymous test results for tests performed per analyzer).
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No Change of Equipment
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The same Analyzer is used for all Target System Tests (example: Cardiac Panel) and can be used on all future tests, this provides for training personnel once, and displays consistent test reading results on an easy to read LCD screen.
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Printer Hook-up Capability
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When hooked to a printer, Parallax’s Reader can give printed results for any Target System Test, Qualitative when written results must be stored with original test for HIPPA and other compliance issues, or Quantitative viral load or measured amount analysis must be printed and maintained in the patient chart folder.
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Low Entry Cost for New Test Development and Analysis
: Due to multiple Target Test platform uses, development only includes algorithm (software for quantitative reading) developed against certified lab samples of variable quantity of substance or viral load to be tested. A new analyzer
does not
have to be developed for different samples types (blood, serum, plasma, urine, soil or human skin).
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Safety, Security and Accuracy by design:
For all tests, Parallax’s bar code activation system identifies the test to be analyzed, allowing only those medical personal that possess that test to be aware that it is available. Without the specific Target System Test Cartridge read by the bar code reader, the Analyzer will not calibrate to that Test. This precludes mistakes by the user or erroneous results by the reader. Each test cartridge bar code must be read to initialize the Analyzer and load the appropriate algorithm from the software table. This provides a level of security for “Specialized” tests created for Bio-Terror applications which eliminates a separate specialized reader for government purposes. The Target System Analyzer can be configured with or without a desk-to-docking station. The docking station provides a stationary platform when in use in an office or non-mobile application. It also provides the user to set up multiple tests samples while the analyzer is processing tests.
Summary
The continuity of platform upgrades and the continuous development of new tests based on an increasing Point-of-Care Market Paradigm points to the Target Quantitative Analyzer as a low cost alternative to large laboratory analyzers and specialized training of personnel on multiple machinery. The ultimate value to the clinician or the attending physician is the ease of use, reproducibility and the history of accuracy of this type of Rapid Immunoassay principle in the area of quantitative analysis. The Hand-Held Analyzer was specifically designed to work with Parallax’s patented Target System Diagnostics Platform to provide reliable quantitative results within minutes, right at the point-of-care or site of testing.
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Smart Phone Capability:
Internet, GPRS, MMS, MMS, WAP, EDGE, 3G, Video 3GP,MP4, Support FULL SCREEN play mode, rewind and pause support, Audio; MP3 & MP4 player, Battery type; Lithium Batteries (1050mAh), Screen Display 3.2 inch screen, 260k QVGA; PX: 240*320, Languages; English, French, Spanish, German, Mandarin, Japanese, Portuguese, Hindi and Russian, Number of contacts; 200 groups of contacts, Messaging: SMS, support MMS; can use downloaded MP3 as SMS rings, Phone Memory, Memory cards; T-Flash Card Suphporting,761K, support extend TF card to 8GB max, Data Transfer U disk support function to keep the information storage, Bluetooth A2DP, USB, Messaging; 250messages, MMS, Operating System; Android, Miscellaneous; FM radio. E-book reader. MP3/MP4/Hands free /SMS group sending/Voice recorder/WAP/Keyboard input/Bluetooth/GPRS download/ MMS/Memory extended/Bluetooth/calendar/to do list/alarm clock/calculator/world time/Radio/E-book reader/Currency converter, Alarm, World Clock, Stopwatch. Stereo Loudspeaker, 64 chord ring tone, Calendar; to do list; Alarm; World Clock; Stopwatch. Alarm clock: 5 groups, support alarm clock when machine’s closed, can set from Monday to Sunday, caller picture, caller Ring Tone, caller video. Schedule power on/off: support to start/close under set time.
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Test System Cartridges & Assays
Parallax’s Target System Diagnostic Platform has been specifically designed for the point-of-care and ambulatory use and incorporates a revolutionary single-use disposable cartridge that provides accurate results in minutes. The Target System is a controlled flow-through rapid antigen test utilizing a 510(k) cleared medical device platform called the Target System. Parallax’s proprietary Target System family of tests encompasses a number of diagnostic tests ranging from Infectious Disease Diagnostics to cardiac tests.
A core component of the Target System Diagnostic Platform is the Test Cartridge. Parallax’s Vanguard Test Cartridge has a flow-through design allowing any prepared sample to be applied to a membrane system, thereby facilitating rapid absorption, test solution application, and test development in one single device. The Test Cartridges can be used with samples derived from different biological origins including whole blood, urine, serum, or fecal specimens. The Test Cartridges are less than two inches tall and can be transported easily over long distances and in large numbers. The Test Cartridge is proven in diagnostic laboratories and, as such, all tests are adapted to this format. Parallax’s platform utilizes a patented vacuum technology to deposit specimen samples uniformly on test membranes. Excess specimen absorption is built in.
Target Antigen Detection System (TADS)
Parallax’s engineering foresight in design provides the clinician with process controls not available with other rapid test devices. This proprietary platform provides tremendous flexibility in sample requirements, clinician training and result interpretation. The custom “train once” system means the clinician can now perform a number of single use tests on a wide variety of conditions with the interpretation of results consistent through the platform paradigm.
Example of a specific test that would be used on the Target System Platform:
Cytomegalovirus
Cytomegalovirus (CMV) is a human viral pathogen belonging to the Herpes virus family. Infection in humans is widespread and usually results in asymptomatic disease. The CMV test is a solid-phase enzyme immunoassay (EIA) for the detection of antibody to CMV. Inactivated whole CMV virus is immobilized on the test membrane (containing an anti-CMV antibody) as specimen is drawn through the membrane. A second antibody to CMV is applied and captured by the membrane-bound antigen. After washing the membrane to remove unbound antibody, an anti-human antibody-alkaline phosphate enzyme-conjugate, is applied. The conjugate binds to the second CMV antibody. Unbound conjugate is removed by washing and a color development solution is added. The appearance of a dot or a line on the membrane indicates the presence of the second CMV antibody and hence the presence of CMV in the specimen.
Application Flexibility Ubiquity & Interoperability
Incorporated in the design paradigm of the controlled flow system is the ability to rapidly adapt the device to new infectious disease threats. This flexibility in a device provides for a cost effective and rapid response for the primary care physician, trauma care nurse, emergency response providers.
Medical diagnostics, health monitoring or emergency responses are currently limited by the time it takes to recognize a potential threat and the time it takes to obtain a proper result from a testing laboratory. For example, the duration from a 911 call to the appropriate diagnosis of a possible heart attack of a patient is more than one hour, the most crucial time in treatment to prevent long-term damage to a heart disease victim. On the contrary, a large number of heart attack victims, predominantly women that do not exhibit the “standard” symptoms of heart attacks are released from the ER without even being diagnosed appropriately. In other situations, e.g., ambulant services to potentially HIV positive individuals, testing is never performed in the time-frame available, and thus patients are never informed about their condition.
These examples can be expanded to environmental testing and the occurrence of a toxic spill or the contamination with biological weapons like anthrax. Food contamination has become a serious health and security risk. Most recently a large contamination of pet food from China led to disclosures of certain “non-animal” food sources in China exporting their contaminated food. In these cases, laboratory testing often takes days, if not weeks. In all of these situations, a point-of-care diagnostic or testing system would provide the ability to largely eliminate the current threat or to minimize the adverse consequences of an emergency.
Ease of Use
Parallax’s patented platform provides tremendous flexibility in sample requirements, clinician training and result interpretation. Parallax’s “train once” system means the clinician can now perform a number of single use tests on a wide variety of conditions with the interpretation of results consistent through the platform paradigm. The “while you watch” speed of the test development, results in a significant cost saving in time and training.
Unlimited Application and Economy of Scale
Parallax’s unique vacuum pump action reduces test time and ensures maximum contact with the membrane antibodies. This patented collection device is virtually unlimited in the number of different tests that can be incorporated. Through a modification to existing FDA 510(k) clearance, the device is ideally suited for rapid FDA clearance of all new tests that may be introduced. The economy of scale is provided to health care provider or any other customer group by being able to utilize a single test system for multiple tests with varies little variance in training needed. A clinician can move from one test to the next in a matter of minutes.
Furthermore, the capability of acquiring and transmitting patient related data in addition to the tests performed at the point-of-care enable Parallax’s Hand-Held Analyzer to become the central diagnostic device in a decentralized, patient oriented, and cost-conscious environment to provide or maintain a high level of health care in the face of threatening epidemics.
Safety and Accuracy by Design
For all tests, Parallax’s bar code activation system identifies the test to be analyzed, allowing only those medical personal that possess that test will be aware that it is available. Without Parallax’s specific Target System Test Cartridge, read by the bar code reader, the Analyzer will not calibrate to that Test. This precludes mistakes by the user or erroneous results by the device.
Each Test Cartridge bar code must be read to initialize the Device and load the appropriate algorithm from the software table. This provides a level of security for patient related tests and eliminates errors based on operator’s mistakes.
Parallax provides a combination of innovative, fast, and inexpensive diagnostic and testing products with a highly mobile data collection and transfer test reader. In this regard, Parallax’s Target System is suitable for rapid, point-of-care testing in almost every environment, which includes emergency situations, remote locations within the US as well as other parts of the world, immediate response teams, personal testing in a home setting, and many more.
Advantageously, many different tests can be performed using the same reader,
e.g.,
either Parallax’s Target System Desktop Analyzer or its Hand-Held Device, at any location.
Target System Development Outline
The Target System development process set forth by Parallax will be instituted by all of the Sector-Specific Spin-off companies as part of Parallax’s Target System License that they will operate under. Below is an overview of some of the standards under which Parallax’s licensees will operate. Parallax will reserve the right to manufacture the tests and deliver them to its licensees.
Parallax’s Target “Operator Controlled” Flow through Qualitative and Quantitative single use device as outlined below has been analyzed and deemed to have a product life cycle of 5 to 10 years per test and a new product development cycle of 60 to 120 days per non specialized (bio-hazard) test. This combination of product life per test and short development cycle means the new tests contemplated will spend more time in the sales cycle compared to their development cycle.
New product Identification methods
The product platform as discussed herein is broken down into three categories and their associated sub-groups. The categories are:
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Qualitative
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Quantitative
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Specialized
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Qualitative, Quantitative and Semi-Quantitative Test Possibilities Meeting the New Product Screening Criteria:
Infectious or highly contagious diseases:
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Trichomoniasis
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Chlamydia
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Gonorrhea
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Genital herpes (herpes simplex virus of JSV)
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e)
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Genital warts (human papilloma virus or HPV)
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f)
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Hepatitis B
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g)
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H. pylori
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h)
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Human immunodeficiency virus (HIV)
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i)
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Lyme Disease
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j)
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Rocky Mountain Spotted Fever
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k)
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West Nile
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l)
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Asian Bird Flu
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Raw substances for the above can be readily purchased by Parallax and incorporated into the Target Platform. All of the above testing areas of medical diagnostics, are targeted as important to both governmental (FDA, WHO, NIH and CDC) and medical industries.
This in no way represents the complete segment of Qualitative or Semi-Quantitative tests available for rapid development on the Target Platform. They are examples of Parallax’s “Rapid to Market” and “Rapid Clearance” ability based on its existing platform approval record.
New Product Identification
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Track all CDC, FDA, WHO, relevant reports of medical diagnostic requirements. Provide analysis of whether the test should be Specialized, Quantitative or Qualitative.
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Determine human capital requirements: project management, outsourcing needed political needs (if any) and social needs (affiliations with association or non-profit groups).
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Determine the market size and utilization of device needed to address identified diagnostic needs.
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Determine from source venders what antibodies and antigens are available to use in Parallax’s device with minimal regulatory and manufacturing hurdles.
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Perform cost analysis of device manufacture, to include: regulatory application time estimates, clinical requirements, third party and vendor involvement for regulatory support.
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Identify and prepare pre-market distributor (government or commercial) analysis for market penetration timetable and/or government contract fulfillment.
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Identify new partnership resources if necessary for specialty devices.
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On all Quantitative Devices Parallax will determine the Biohazard level at which itis to perform its algorithm development. For highly contagious diseases, Parallax will outsource its complete process to a certified lab.
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In the development of standard quantitative test Parallax will determine through the protocol process: how many tests must be performed for an I.R.B. for both the algorithm development (quantitative controls for each test process) and the accuracy of the variable light analysis.
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All new quantitative tests will be videotaped during algorithm development (light source verification and reflectivity of known sample), and equivalency testing (where Parallax compares its device to another like kind device).
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11.
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All software developed for Parallax’s tests, that are not modifications of existing source code, will be previewed via written outline to the FDA.
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Details of Selected Existing Tests
Qualitative Immuneossay Analysis
The Hand-Held Analyzer in combination with Qualitative Diagnostics Tests detects the presence of specific markers and the results are indicated as positive or negative. The Qualitative Diagnostic Specimen Collection Kits are all-inclusive and these tests can be administered and qualified without the need for any additional hardware.
Infectious Diseases; Current FDA Cleared Tests
Rubella
Rubella, German measles, is a highly contagious disease, which is generally transmitted by direct contact with infected persons. Rubella is generally a mild disease. However, when a pregnant woman becomes infected with rubella, the virus may infect the placenta, multiply and induce serious damage to the fetus. Rubella and congenital rubella syndrome became nationally notifiable diseases in 1966. The largest annual total of cases of rubella in the United States was in 1969, when 57,686 cases were reported (58 cases per 100,000 populations). Following vaccine licensure in 1969, rubella incidence fell rapidly. By 1983, fewer than 1,000 cases per year were reported (<0.5 cases per 100,000 population). A moderate resurgence of rubella occurred in 1990-1991, primarily due to outbreaks in California (1990) and among the Amish in Pennsylvania (1991). In 2002 a record low annual total of 18 cases were reported.
Rotavirus
Human rotavirus is recognized as a major cause of gastroenteritis in infants, young children, and the elderly. During the winter months a portion of gastroenteritis in children is due to rotavirus infection. The disease manifests with the symptoms of vomiting, diarrhea, and fever. Rapid and accurate diagnosis is important to avoid inappropriate antibiotic therapy, provide proper treatment early, and to prevent spread of nosocomial infection.
Globally, rotavirus accounts for an estimated 125 million cases of diarrhea each year and represents 30% - 40% of hospitalizations for diarrhea in children less than five years. In developing countries, between 600,000 and 800,000 children die from rotavirus each year (or approximately 2,000 children each day.) This accounts for about one quarter of the deaths from diarrhea and about 5% of all deaths among children less than five years of age.
CMV- Herpes
Cytomegalovirus (CMV) is a human viral pathogen belonging to the Herpes family. Infection in humans is widespread and usually results in asymptomatic disease. However, severe symptomatic infections are a very significant risk in infants and Immuno-compromised individuals. An important primary source of such infection is via blood transfusion and allograft transfer. The serological status of donor and recipient is, therefore, important in patient management.
The United States is not unique in its high rates of CMV seroprevalence. Virtually every country in the world presents similar numbers. Since recurrences are often mild and few patients are aware that they are infected, the infection is likely to continue to rise at double-digit rates without an intervention.
Group A Streptococci: Strep A, Strep Throat, Necrotizing Fasciitis, impetigo
Strep throat is an infection of the pharynx (the part of the throat between the tonsils and the larynx) caused by streptococcus bacteria. The infection is spread by person-to-person contact with nasal secretions or saliva, often among family or household members. Even though the sore throat usually gets better on its own, people who have strep throat should take antibiotics to prevent some of the more serious complications of this infection, particularly acute rheumatic fever.
Approximately 15% of children who have a sore throat and fever are infected by Group A streptococci. CDC estimates that approximately 9,100 cases of invasive GAS disease (rate: 3.2/100,000) and 1,350 deaths occurred nationally during 2002. Disease incidence was highest among children aged <1 year (6.9/100,000) and adults aged >65 years.
Infectious Mononucleosis: EB, Epstein-Barr Viral Syndrome, Mono
Infectious mononucleosis (IM) is a viral infection causing high temperature, sore throat, and swollen lymph glands, especially in the neck. The Epstein-Barr virus typically causes it. Infectious mononucleosis may begin slowly with fatigue, malaise, headache, and sore throat. The sore throat becomes progressively worse, often with enlarged tonsils covered with a whitish-yellow fibrinous exudate. The lymph nodes in the neck are frequently enlarged and painful. Symptoms of mononucleosis gradually subside over a period of weeks to a month. The disease is generally self-limited.
Qualitative & Quantitative
HIV 1 & 2
Today, 42 million people are estimated to be living with HIV/AIDS. Of these, 38.6 million are adults. 19.2 million are women, and 3.2 million are children under 15. During 2002, AIDS caused the deaths of an estimated 3.1 million people, including 1.2 million women and 610,000 children under 15. With the recent advent of Rapid HIV testing, HIV detection and prevention programs around the world have become increasingly effective by reducing their time and costs of detecting the virus, thus allowing for a far greater number of individuals to be screened.
The FDA has approved several rapid Immunoassay tests for the detection of HIV, but none of these tests are designed for HIV 1 and
2. The current “rate” of these “rapid” tests is from 15 minutes to hours and only a few can produce results less than 15 minutes.
Pandemics & Epidemics
Strategy for marker based immunoassays for AIDS diagnostics, compatible with Parallax Technologies existing diagnostic technology and in development portable instrument platform.
AIDS Immune Status Value Proposition
Overview
The treatment of AIDS patients represents a challenge, in the developed world and much more so in developing countries. The current methodology to determine the status of an HIV-positive individual involves elaborate technologies to determine the immune status of an individual as well as the presence of the HIV virus in the individual’s blood (called the “viral load”).
Determination of the immune status is usually performed through so-called cell counts of T-cells, in particular the determination of CD4
+
cell count or the relationship of CD4 and CD3 positive cells. This diagnostic procedure requires high-tech machinery (e.g. cell counters), and well-educated laboratory personnel in a stationary laboratory setting. In addition, the cell counting method presently employed and defined by the Western medical community as the “Gold Standard” has shortcomings, which limit its reproducibility and reliability. These factors might cause changes in diagnostic procedures even within those communities in the future. The determination of the amount of virus populating the blood of a person infected with HIV is currently performed through quantitative PCR, again a method requiring stationary settings, as well as highly educated personnel and sophisticated machinery. These setting are usually not available in developing economies. While – in the Western economic environment - the medical care of HIV positive individuals and AIDS patients involves a combination of the above mentioned medical diagnostics in combination with additional, patient dependent procedures, the situation in developing countries looks to the contrary:
In South Africa, the country with one of the highest infection rates with HIV in the world, treatment is only available to a small number of infected people. Even under those medication-limited circumstances, treatment is usually administered without any diagnostic procedures concerning the immune status or the viral load of an individual in question – leading to unnecessary treatment of otherwise non-immuno-compromised individuals and the lack of treatment for others with AIDS at later progression. Countries like China have only recently begun to diagnose for HIV positive individuals – and have not moved into the AIDS diagnostic either. The same can be said for many other countries in Africa and Asia.
Requirements for “appropriate” AIDS diagnostics have been defined by many national and international, organizations, amongst them the WHO, under strong influence of scientists mainly from the US and the EU. These requirements have led to the above described situation in developing counties: NO appropriate diagnosis of AIDS patients caused by requirements that cannot be achieved under the given circumstances and a strong increase of HIV infection in most of these countries over the last years.
Furthermore, the lack of financial resources are limiting to the expansion of suitable points of diagnostics. Cell counts require elaborate machinery (like FACS or alike) and there are no low-cost or highly portable testing systems available to date. There is an overwhelming demand and urgent need to reduce the costs for cell counting or other methods to determine the immune status, and to increase their usefulness in non-laboratory settings.
In addition, the geographic and social structures of many countries require a more point-of-care oriented approach, as opposed to the dominating centralized care found in highly populated countries in North America and Europe. Therefore, it would by highly desirable to reduce the measurements used as a guide for disease progression or treatment to more simple technologies, like an ELISA performed on a handheld device or similar.
For Parallax and its patented technology, as well as its efforts to design a handheld diagnostics device for optimal market use, this means:
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development of an AIDS testing system which is compatible with proven and reliable ELISA based target system technology
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b.
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expansion of the capabilities of Parallax’s handheld device to provide a mobile testing platform
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c.
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increase the economy of the diagnostics platform by the development of additional utility of the Parallax device without redundant infrastructure investments (additional data acquisition of patients, additional tests for other, predominant diseases).
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acceptance of the Parallax testing system as well as the platform within the medical community of African, Asian, and other countries with mounting problems in the field of HIV and other infectious diseases.
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AIDS Diagnostics and Immune Status
The prerequisite for an economic, portable, and reliable AIDS testing system is the development of markers, which are reliable indicators for disease progression in AIDS. One approach would be the translation of the historically used cell count methods into such marker measurements, which would lead to a direct translation of existing medical decision processes using the direct marker assessments.
Parallax’s aim is to use markers for a diseases progression instead of using the cell count method that is associated with and based on those markers. This system will include – in an ideal case – quantification of CD4-CD8 protein in either total blood or CD3
+
pre-selected cell populations. This quantification can directly be used to assess an individual’s immune status.
Expansion to viral load
The target system allows expansion of the AIDS-related testing to include determination of viral load in HIV-positive individual’s blood. Again, adopting a method outside of the existing “Gold Standards” would provide a large population in Africa, Asia, and other parts of the world with diagnostic services, which simply do not exist as of today. The viral load test follows the same basic principle as the CD4-CD8 test, and can be performed and read with exactly the same hand-held device.
Other diseases
Parallax’s testing system is not limited to HIV or AIDS diagnostics. The test format has been applied in the past to viral and bacterial infections (e.g., Rubella, Rotavirus, Strep. A), and can easily be adopted toward other epidemics. Diseases like malaria, cholera, hepatitis, yellow fever, or West Nile virus and other viral diseases present increasing health threats to large populations in the world, with major problems already at the stage of proper diagnosis. Parallax can adapt its testing devices to the rapid, simple, point-of-care diagnosis of almost all of these diseases without the requirement of additional equipment. The combination of a mobile, hand-held testing device with a large number of different tests provided by a family of cartridges will improve the ability of current health care and disease diagnostics in a fast majority of today underserved regions. In addition, the system also allows for the monitoring of environmental components influencing the health of populations, including the presence of toxins in soil and drinking water as well as contamination of food supply.
Market, Opportunities and Competition
The global IVD market was valued at $44 billion in the year 2011, growing at a CAGR of 7.8% from 2011 to 2016. The U.S. represented the biggest market for the IVD equipment’s accounting for a share of 47% of the total IVD market in the year 2011. The trend is moving toward point-of-care (“POC”) diagnostics using systems and procedures, which do not require extensive laboratory equipment. Here, direct read-out technology will provide a suitable tool, which can be used in basically every environment. The growth in this market is expected to continue through the end of the decade.
The European region accounted for 31% of the global IVD market with Germany accounting for the largest share of 23.24% followed France (16.89%) and Italy (16.41%) of the total IVD market. The Asian region is expected to be ruled by the emerging economies such as China and India, show the highest CAGR by the year 2016. The Chinese IVD market is taking frog leap amongst the emerging nations, followed by India, Russia, and Brazil.
The major driving factor for the IVD industry to boom in the emerging countries is the government funding and improved healthcare facilities. However, the condition is completely reverse in the developed countries such as North America and Eu-5 as these countries are facing major financial crisis and thus having deep cuts on the healthcare budgets with limited reimbursements provided on the clinical testing and the newly introduced tests in the market thus hampering the growth of the IVD industry. The major factors driving the growth of the IVD market is:
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increased patient awareness, patient self testing, and increasing baby booming population across the globe.
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advancement in the technology bringing more of automated tests is also one of the major drivers for the growth of IVD market.
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Other major drivers for the growth of the IVD industry is rise in the number of diseases like respiratory infections, hospital acquired infections, and sexually transmitted diseases. Similarly rise in the chronic diseases such as diabetes, hypertension, cardiovascular diseases, and cancer are driving the overall IVD market.
Analyzers are the main instruments used for conducting the tests. The instruments account only major share of the market share of the IVD market, by types. The analyzers are of 3-types namely, high through put analyzers, medium throughput analyzers, and low throughput analyzers.
Molecular diagnostics is the largest growing segment of the global IVD market with a highest CAGR for year 2011 to 2016.
Budget constraints causing and unfavorable reimbursement scenario for tests especially for severe conditions like cancer are prime reasons for slow growth in the U.S., and Canadian market. However, the condition is reverse in the Latin American countries like Brazil and Mexico. There has been huge funding from the Brazilian government and the public sector with increased efforts being taken to prevent infectious diseases in the country by conducting all the preventive tests.
Asia is the fastest growing region of the global market and accounts to be 22.88% of the global market and is estimated to reach the market of $17.20 billion with a CAGR 11.3% from 2011 to 2016. China is the fastest growing market within Asia and is growing at a CAGR of 18.8% to reach the market of $1.24 billion by 2016. Chinese health Reform During the year, the initial phases of the three-year (2009-2011) made significant headway in increasing insurance coverage of some kind (now >93% of the total population) and improving grass roots and primary care health system.
The major players in the IVD market are Roche Diagnostics (Germany), Abbott Diagnostics (U.S.), Beckman Coulter (U.S.), BD Diagnostics (U.S.), and Siemens Diagnostics (Germany).
The global point-of-care (POC) diagnostics market reached $13.4 billion in 2010 and is expected to reach $13.8 billion in 2011. It will further grow to $16.5 billion in 2016 for a compound annual growth rate (CAGR) of 3.7% between 2011 and 2016.
The point-of-care market includes hospitals, clinicians, laboratories, assisted living facilities, retirement communities and geriatric facilities and the international market. Parallax’s system provides the platform for the development of a series of quantitative tests for important diagnostic applications that can provide results at a patient's bedside, in a doctor's office, in the emergency room, in a clinic or in an ambulance.
Market Opportunities
In recent years, there has been a continuing shift from the use of laboratory-based analyzers to more technologically advanced point-of-care tests that can be performed in a matter of minutes. Unlike the centralized clinical laboratory segment, which is mature and highly competitive, the point-of-care market is still a relatively early stage market. Although certain simple single analyte diagnostic tests have been developed, such tests have remained incapable of precise and highly sensitive quantitative measurements. As a result, medical tests that require precise quantization of the target analyte have remained the domain of immunoassay analyzers. Parallax believe that there is significant market potential for advanced point-of-care diagnostic products that provide quick and accurate diagnosis during a patient visit, shortening the decision time to medical intervention and minimizing the need for additional patient follow-up, thereby reducing overall health care delivery costs.
The two factors that are significant to the rapid growth of POC testing are technology advancements and health care economics. The development of new and improved technologies has resulted in the ability to make evidence-based medical decisions that improve patient outcomes and reduce patient acuity, criticality, morbidity and mortality. Quicker diagnosis of infectious agents can also permit the earlier prescription of appropriate medications, thereby potentially shortening the duration of illness.
The commercial success of the current generation of small, simple to use diagnostic devices which provide rapid results in POC applications has been limited by their inability to provide precise, highly sensitive, quantitative measurement. Parallax’s Target System technology addresses these limitations by applying sophisticated immunochemical and optical methods to detect and quantify virtually any analyte present in a liquid. Development data indicates that sensitivity will be comparable to expensive and complicated laboratory-based analyzers.
Additionally, the economic climate is driving significant changes in the manner in which patients will be tested and how results are delivered. Recent revisions to government regulations, together with growing patient and insurer pressures on hospitals and physicians have increased incentives to reduce overall patient healthcare costs while providing a higher level of care to a greater number of patients. One cost-cutting measure is to reduce the high cost of diagnostic testing carried out in central laboratory sites by increasing POC testing.
The Target System provides the platform for the development of a series of quantitative tests for important diagnostic applications that can provide results at a patient's bedside, in a doctor's office, in the emergency room, in a clinic, in an ambulance, on the battlefield, on site agri-business locations, rural and economically disadvantaged areas.
The Target System meets the POC diagnostic market criteria as follows:
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Low volume preferably whole-blood sample
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Direct application of a non-critical volume or placement of sample directly into instrument
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Disposable device or minimal maintenance required
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Minimal technical expertise required
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Positive identification and specimen tracking strategy that eliminates specimen identification errors
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Simple “goof proof” strategy for recording collection time and result reporting
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Simple strategy for calibration and QC
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Transferability of data to the LIS or HIS
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Agreement of result with accepted “Gold Standard” tests
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Point of Care Test Segmentation
Immunoassay Tests
Immunoassays are chemical tests used to detect or quantify a specific substance, the analyte, in a blood or body fluid sample, using an immunological reaction. Immunoassays are highly sensitive and specific. Their high specificity results from the use of antibodies and purified antigens as reagents. An antibody is a protein (immunoglobulin) produced by B-lymphocytes (immune cells) in response to stimulation by an antigen. Immunoassays measure the formation of antibody-antigen complexes and detect them via an indicator reaction. High sensitivity is achieved by using an indicator system (e.g., enzyme label) that results in amplification of the measured product. Immunoassays may be qualitative (positive or negative) or quantitative (amount measured). An example of a qualitative assay is an immunoassay test for pregnancy. Pregnancy tests detect the presence of human chorionic gonadotropin (hCG) in urine or serum. Highly purified antibodies can detect pregnancy within two days of fertilization. Measuring the signal produced by the indicator reaction performs quantitative immunoassays. This same test for pregnancy can be made into a quantitative assay of hCG by measuring the concentration of product formed.
The purpose of an immunoassay is to measure (or, in a qualitative assay, to detect) an analyte. Immunoassay is the method of choice for measuring analytes normally present at very low concentrations that cannot be determined accurately by other less expensive tests. Common uses include measurement of drugs, hormones, specific proteins, tumor markers, and markers of cardiac injury. Qualitative immunoassays are often used to detect antigens on infectious agents and antibodies that the body produces to fight them. For example, immunoassays are used to detect antigens on Hemophilus, Cryptococcus, and Streptococcus organisms in the cerebrospinal fluid (CSF) of meningitis patients. They are also used to detect antigens associated with organisms that are difficult to culture, such as hepatitis B virus and Chlamydia trichomatis. Immunoassays for antibodies produced in viral hepatitis, HIV, and Lyme disease are commonly used to identify patients with these diseases.
Quantitative Immunoassays Analysis
Parallax’s Hand-Held Analyzer in combination with quantitative diagnostics tests detects the presence and volume of specific markers with the results indicating definitive levels.
Parallax’s platform’s patented vacuum, specimen filtration and excess specimen absorption built right in. Unlike other devices designed for urine or other highly viscous samples and adapted blood testing, the Diagnostic System has been engineered for blood testing first which allows the platform to be utilized for blood serum, urine, feces and similar biological samples. This engineering foresight in design provides the clinician performing the test with process controls not available with any rapid test device.
Immunoassays are powerful techniques for understanding the role of specific components in complex systems. They work on the basis of the recognition of a specific component (target X) by an antibody or equivalent (affibody, RNA aptamer, recombinant antibody, etc.), which results in the production of a detectable signal. In most cases immunoassays are qualitative, providing information in terms of signal intensity. What is really wanted, however, is quantitative assay providing information in absolute chemical terms, namely the concentration of target X.
Quantitative Immunoassays
would allow:
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Detection of the absolute concentration of components
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Reduce inter-assay variation in data
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Permit successful statistical analysis of smaller sample sets
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Permits direct comparison of data generated at independent sites or occasions.
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Quantitative Immunoassays
are simple to construct. They require the simultaneous analysis of experimental (or test) samples and calibration standards. The signal intensity generated by calibration standards of known concentration permits conversion of the signals generated by the test samples into absolute units of concentration.
Calibration curve
A calibration curve (or standard curve) establishes the relationship between the amount of material present and the signal intensity measured. In the case of immunoassays, this would represent the relationship between the epitope concentration and the signal intensity obtained. This relationship is often non-linear, and in many applications displays a dynamic range (or response range) of approximately two orders of magnitude in the concentration of target X.
To perform a Quantitative Immunoassay, a set of “calibration standards” containing the epitope in various concentrations, are deployed in the immunoassay alongside experimental “test samples”. Densitometry is performed on all data from the assay, and curve fitting used to define the relationship between epitope concentration and signal intensity. This mathematical relationship is then used to convert the signals generated by experimental samples into concentration of target X, which in Parallax’s experience is highly accurate.
Molecular identity of Calibration standards: For Western Blot applications, a calibration standard is a molecule which contains the epitope feature of an immunoassay covalently bonded to a protein of known molecular weight. Two configurations of this structure are possible (Figure 1), where the epitope structure is either linked to the amino acid backbone (Fig 1a) in the form of a fusion protein or linked to a side chain of a specific amino acid (Fig 1b). Figure 1a and 1b: schematic representation of calibration standard molecules
Figure 1
Figure 1
:
Schematic representation of calibration standard molecules A set of calibration standards to common epitope tags (His6, c-myc, HA, FLAG, AU1, AU5, glu-glu,) was analyzed by SDS-PAGE/Western blotting (detected via the His6 tag). A single band of 55kDa was detected, and the intensity of signal decreased with decreasing calibration standard loading as expected (Figure 2). Figure 2: immunodetection of a serial dilution of His6-calibration standard
Figure 2
Figure 2
: Immunodetection of a serial dilution of His6-calibration standard Densitometry of the data was performed and the data plotted to define the relationship between epitope amount and signal intensity (Figure 3). Mathematical fitting of the data was performed, with the best fit achieved by “one site-specific binding” analysis (GraphPad Prism) as shown in Figure 3. An excellent fit of the data was achieved using 6 calibration standard concentrations each analyzed in quadruplicate. Similar excellent fits could also be achieved by analysis of fewer standards, with indistinguishable results obtained from 3 calibration standard samples analyzed in triplicate. (Figure 3)
Figure 3
Figure 3
:
Mathematical description of a calibration curve to determine the epitope concentration of an experimental sample, the mathematical description of the calibration curve is rearranged to calculate epitope concentration from raw signal intensity. Figure 4 displays the quantitative measurement of three “test” samples. Test samples of 2pmol and 0.5 pmol were analyzed and the results obtained were 2.153± 0.127 pmol (mean ± standard error, n=4), 0.552± 0.045 pmol (mean ± standard error, n=4), confirming the accuracy of the measure (Figure 4). Samples should only be analyzed which fall within the calibration range, as errors are higher for observations beyond the confines of the calibration curve e.g. 0.125 pmol in this example. Figure 4: accuracy of Quantitative Immunoassays.
Figure 4
Figure 4
: Accuracy of Quantitative Immunoassays In summary, Quantitative Immunoassays are easy to construct and offer several valuable benefits to the researcher. They permit calculation of the absolute concentration of the component of study with high accuracy (error <10%) and high reproducibility. This enhances the quality of research results and also the productivity of research programs by facilitating the direct comparison of data obtained on separate occasions.
The Solid Phase Immunoassay Market
The widespread usage of blood and other biological specimen tests checking for diseases and medical conditions, there is a growing need for new and better technologies to achieve fast and accurate results. Though this type of testing has been an acceptable form of testing for certain conditions for quite some time, it has only been in the last twenty years that rapid, point-of-care, testing has become an acknowledged source of accurate information. With continuing breakthroughs in detectable markers in the body that can identify the presence of a growing number of diseases and conditions, coupled with the advancements in rapid detection technologies, the tools available to medical professionals is quickly becoming a booming industry.
Rapid Immunoassay Test Overview
The following summary is about rapid testing products, current paradigms and the most prevalent devices available today and their differences. The intent of this discussion is to enable the reader to distinguish between comparable devices and their intended uses. Included is a brief outline of current and future device applications and healthcare provider changes.
History
With the widespread usage of blood screening for diseases and medical conditions, there is a constant growing need for new and better technologies to achieve fast and accurate qualitative (yes or no) screening results. Though laboratory testing of blood samples has been an acceptable form of screening for certain conditions for quite some time, it has only been in the last twenty years that rapid, point-of-care, qualitative and semi quantitative (amount based on predetermined cutoff levels) screening has become an acknowledged source of accurate information.
The evidence of the widespread use of this technology and its cost savings to the public has been in the urine-based home pregnancy kit early detection devices sold in most retail drug stores. The other wide spread use of this rapid screening paradigm is the onsite screening for drugs of abuse for pre-employment and post accidents. While both of these examples are based on urine as a test sample, many of the new rapid screening devices have been developed using the same processes and clinical techniques for blood samples.
Each of the screening devices described below have limitations in their utility and range of application. Many were adopted from use in clinical laboratories and, when applied to point-of-care application, require special handling of the specimen samples (blood, urine, and feces) and decreased sensitivity and/or specificity. When appropriate, these limitations have been included in descriptions of individual testing platforms. Despite these limitations, the rapid increase in discovery of individual markers of disease processes coupled with the advancements in rapid detection technologies, has made these tools available to medical professionals on a wide scale and is quickly becoming a booming industry.
The advent of single and multi-light source reflectometer technology in small desktop or hand held portable units, the ability to accurately measure the progression or amounts of a possible infection or the body’s antibody response within the screened sample opens the door to a wide range of new possibilities in the point of care or field triage settings. The incorporation of these and other new technologies should provide a new tool for the primary care giver at a cost of both time and cost per test.
Lateral Flow Tests
A popular testing method used by both professional and over-the-counter tests, lateral flow tests is quick and efficient. Most home pregnancy
tests utilize lateral-flow technology.
The typical finished product in general use encases all but the application pad in plastic with view openings for the test line or dot and the control line.
Depending on the specific test kit, a sample of urine, whole blood, blood plasma, and in some cases feces, may be mixed with diluting substances, reactive agents or other solutions that are provided for the conduct of the test. Most of the tests are classified as solid phase enzyme immunoassays (EIA).
In the case of the home pregnancy tests, urine is absorbed through the exposed sample application pad and is allowed (by natural wicking) to migrate to the analytical membrane and react with an embedded agent designed to change color if hormones associated with pregnancy are present in the urine. This is a direct specimen application and does not require dilution or other agents to be added for results to appear.
Lateral flow devices have been used for home pregnancy tests, drugs of abuse testing in clinical laboratories and, more recently, for home use. Manufactured in continuous membrane strips cut to the desired length and batch tested for accuracy, the manufacture of test kits is highly automated and inexpensive, making lateral flow tests well suited for mass market applications.
Lateral flow devices, however, can suffer in performance when the sample being tested is not handled within strict conditions. Test samples may be affected by environmental conditions (barometric pressure, temperature and humidity), thereby requiring special care in sample preparation, exact dilution controls and controlled time for the test to develop properly. Test development time, for example, can vary from a few minutes (3 to 5) for urine-based tests and up to 20 minutes for whole blood or plasma.
Solid Phase Tests
Solid phase assays include the so-called “dipstick” or “dipstick comb” tests. As their title suggests, the detection materials are in a solid state affixed to a solid, non-porous base. The dipstick is then incubated with the patient specimen.
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Results
:
Approximately 1 hour or less
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Specimen Types
: Urine, saliva, serum, plasma, or whole blood
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Sensitivity
: Generally lower than flow through and lateral flow tests
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Advantages:
Same patient can be tested for multiple parameters with a single assay
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Agglutination
The basic principle of an agglutination assay is the formation of clumps (agglutination) of small particles coated with antigens when exposed to antibodies specific for the antigen. The test particles and the patient antibodies combine to form a visible precipitate. This usually is observed under a microscope.
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Advantages:
Low individual test cost, semi-quantitative results, and relatively short time to obtain results.
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Disadvantages
: Results can vary as the test reaction depends upon careful control of the test reagents and environmental conditions.
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Sensitivity:
Lower than flow through or lateral flow tests.
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Flow Through Tests
The flow through device developed in the 1980’s represents an alternative method for rapid on-site performance of screening tests. Positive, uniform deposition of test samples on a membrane containing selected diagnostic reagents provides for a flexible, inexpensive and reproducible platform technology to test for a large number of diseases.
Principle
The flow through test procedure consists of a vacuum device that deposits fluid containing the test sample through a porous membrane and into an absorbent pad. A second layer, or sub-membrane, inhibits the immediate back-flow of fluids, which can obscure results.
Functionality
The flow through platform technology can be used to detect both antibodies and antigens. To detect antibodies or antigens, the corresponding analyte is bound or immobilized as a dot or line on the membrane. This reagent “captures” the analyte as it is drawn through the membrane. To perform the test, a sample is applied to the membrane followed by a wash step, addition of the signal reagent, and a second wash to clear the membrane. The solutions can be added as rapidly as the previous liquids are absorbed into the cassette.
Earlier flow-through tests used enzyme immunoassay (EIA) principles to generate signal, but more recent tests have successfully used colored latex particles or colloidal gold.
The time it takes for a test to display results is subject to the viscosity of the sample, which can be affected by environmental conditions, such as humidity and barometric pressure, further interfering with the time the test takes is the amount of sample used.
Target Antigen Detection System (TADS) “Vacuum Control Flow Device”
This device is a radical departure from the standard devices typical to the rapid testing markets. The device is patented and part of the manufacturer’s qualitative and quantitative “Target System Diagnostics Platform” which offers an array of improved modifications and features to the traditional qualitative and semi-quantitative flow-through immunoassay test. With its platform uniformity, patented vacuum pump, absorption layer for sample overflow, and complete compatibility with single and multi-light source reflectometer technology, the TADS platform is a unique collection of tests for qualitative and quantitative detection of conditions.
TADS utilize a patented vacuum technology to deposit specimen samples uniformly on test membranes. Excess specimen absorption is built in. TADS have been engineered for blood testing first which allows the platform to be utilized for urine and feces. This engineering foresight in design provides the clinician performing with process controls not available with other rapid test devices.
This patented platform provides tremendous flexibility in sample requirements, clinician training and result interpretation. The train once system means the clinician can now perform a number of single use tests on a wide variety of conditions with the interpretation of results consistent through the platform paradigm.
Meeting needs in de-centralized or non-existing health care systems
Parallax’s mobile testing, data acquisition, and data transmission system meets the needs for diagnostics in particular in areas where either no structured health care systems exist or where – due to geographic nature and population density and distribution – a more decentralized approach is necessary. The highly mobile test reader can be used in basically all environments, and is suited to use power sources independent of an electric network (rechargeable batteries, solar panel, running on motor vehicle voltage and power supply). Furthermore, the tests can be performed within short time periods, and do not require the performing medical personnel, the physician, or the patient to return for test results or potential initiation of treatment.
Distribution
As Parallax is still in the development stages and has not at this point in time commenced material operations, it has yet to develop methods of distribution for its products.
Suppliers
On July 1, 2011 Parallax entered into a Development and Supply Agreement with Corder Engineering, LLC, a copy of which is attached herewith and included in this filing as Exhibit 10.24. The Statement of Work stipulates that Corder Engineering, LLC shall provide ten (10) Evaluation Units which replicate the functionality Target. Target 1000 firmware ver. 320 and add software for a C-reactive protein (CRP) quantitative assay. The total payment under the Agreement stipulates $35,000 over a twelve-week period. As of December 31, 2011, payments totaling $17,500 have been made, and $17,500 has been accrued.
On July 1, 2011 Parallax entered into a Supply Agreement with Meyers Stevens Group, Inc., a copy of which is attached herewith and included in this filing as Exhibit 10.25. The Statement of Work stipulates that Meyers Stevens Group, Inc. will manufacture assays and supply a Data Package for Parallax and will yield approximately 100 to 200 fully functional assay test devices for internal investigational use. Estimated delivery of the assays is eight (8) weeks from the date of the Agreement for a total cost of $10,194. As of December 31, 2011, payments totaling $8,980 have been made, and $1,214 has been accrued.
Parallax relies upon these suppliers to provide all of its test cartridges materials used in association with the development of its products. If these suppliers were to cease providing test cartridges materials to Parallax, its ability to develop its products may be adversely affected, and as such, Parallax may be unable to meet its customer’s requirements. This could result in significant loss of revenues and damage to Parallax’s customer relationships, which could have a material adverse effect on its business, results of operations, and financial condition.
Research and Development Expenditures
Parallax has not incurred any research or development expenditures during the last two fiscal years.
Competition
There are approximately 40 to 50 companies in the point-of care (“POC”) diagnostic industry in the U.S. and another 100 outside the U.S. The POC space can be broken down into various sub-sets such as molecular biologist developing reagents, and markers to diagnostic equipment and test development companies, as well as companies who do neither and focus on marketing tests, equipment and assays. Most notably in the POC space are the large pharmaceutical companies such as Bayer, Roche, Abbot Labs and others. Parallax’s specific competitive landscape is tied to its patent pending process involving its Hand-Held Analyzer and Targeted System In-Vitro Test. There are a handful of companies developing mobile devices to perform a host of health industry-related services. In the area of mobile diagnostics the field begins to shrink. The industry has yet to develop a standardized platform for any device to be integrated into. The goal of the Parallax Hand-Held Analyzer is to deliver a device that adds immediate value to health providers, patients and health insurance companies. The Parallax engineer commissioned to develop the Parallax Hand-Held Analyzer was given a primary goal: create a mobile platform that could integrate and utilize the patented flow-through process of Parallax’s Target System and offer the health provider a system that is fully interoperable and ubiquitous with an unlimited amount of
in vitro
tests. There are other test platforms in the space but Parallax has filed a patent on the process of the Parallax Hand-Held Analyzer and its Target System. Parallax believes that this is an extremely powerful barrier to entry in duplicating the Parallax model. The delivery of additional tests into the specific model adds to the economy of scale built into the recently filed process patent.
In Vitro Diagnostic Sales Leaders
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i.
|
Roche Diagnostics, Switzerland
www.roche.com
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ii.
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Abbott Diagnostics, Abbott Park, IL 60064
www.abbott.com
|
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iii.
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Siemens Medical Solutions Diagnostics, Deerfield, IL
www.diagnostics.siemens.com
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iv.
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Johnson & Johnson, Ortho Clinical Diagnostics (OCD) division, Raritan, NJ
www.jnj.com
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v.
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Beckman Coulter Inc., Fullerton, CA
www.beckmancoulter.com
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vi.
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Becton, Dickinson & Co., Franklin Lakes, NJ
www.bd.com
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vii.
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bioMerieux SA, Marcy l’Etoile, France
www.biomerieux.com
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viii.
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Bio-Rad Laboraties Inc., Hercules, CA
www.bio-rad.com
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ix.
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Arkray Inc., Kyoto, Japan
www.arkray.co.jp
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x.
|
Mitsubishi,Japan
www.mitsubishi.com
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Top Medical Device Manufacturers
|
1.
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Johnson and Johnson
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$
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17.7B
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2.
|
GE Healthcare
|
|
$
|
12.1B
|
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|
3.
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Medtronic
|
|
$
|
10.1B
|
|
|
4.
|
Baxter International
|
|
$
|
9.8B
|
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|
4.
|
Cardinal Health
|
|
$
|
9.8B
|
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|
6.
|
Tyco Healthcare
|
|
$
|
9.5B
|
|
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7.
|
Siemens Medical Solutions
|
|
$
|
9.2B
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|
8.
|
Philips Medical Systems
|
|
$
|
7.5B
|
|
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9.
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Boston Scientific
|
|
$
|
6.3B
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10.
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Stryker
|
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$
|
4.9B
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11.
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B. Braun
|
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$
|
3.9B
|
|
|
12.
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Guidant Corp.
|
|
$
|
3.6B
|
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13.
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3M Healthcare
|
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$
|
3.5B
|
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14.
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Zimmer Holdings
|
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$
|
3.3B
|
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15.
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Becton, Dickinson & Co.
|
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$
|
3.0B
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16.
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St. Jude Medical
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$
|
2.9B
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17.
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Kodak Health Group
|
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$
|
2.7B
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18.
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Hospira
|
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$
|
2.6B
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19.
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Fresenius
|
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$
|
2.5B
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20.
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Smith & Nephew
|
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$
|
2.4B
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21.
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Synthes
|
|
$
|
2.1B
|
|
|
22.
|
Alcon
|
|
$
|
2.0B
|
|
|
23.
|
Biomet
|
|
$
|
1.9B
|
|
|
24.
|
C. R. Bard
|
|
$
|
1.8B
|
|
|
24.
|
Terumo
|
|
$
|
1.8B
|
|
|
26.
|
Dentsply International
|
|
$
|
1.7B
|
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|
27.
|
Invacare
|
|
$
|
1.5B
|
|
|
28.
|
Gambro
|
|
$
|
1.4B
|
|
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29.
|
Dräger Medical
|
|
$
|
1.3B
|
|
|
30.
|
Varian Medical
|
|
$
|
1.2B
|
|
Parallax’s innovative process for the development of new antigens, which is patent pending, will also be used in the identification of test markers for its Target System platform, adding a dimension that further distinguishes Parallax from its competition. Parallax believes that the innovative antigen development process will allow it to create new barriers to entry on certain antigens that it identifies by subsequent patent application filings for use in conjunction the Parallax Hand-Held Analyzer.
Barriers to use
The main barriers and constraints to the use of rapid diagnostic tests can be put into three main categories:
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·
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Acceptability
:
Rapid tests need to be acceptable to policymakers, clinicians, and patients. Tests need to have sufficient sensitivity and specificity and need to have an adequate predictive value. Ease-of-use is critical for point-of-care use by clinicians. Culturally appropriate specimens and credible results are important if rapid tests are to be accepted by patients.
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·
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Affordability:
Many rapid diagnostic tests are more expensive than the tests or syndromic algorithms they are intended to replace. Decreasing per-test costs, carefully designing diagnostic algorithms, and educating end users about the cost-savings of more efficient use of therapeutic drugs are important means of maximizing rapid test affordability.
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·
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Availability:
Rapid diagnostic tests are not always available in developing countries. Most tests have limited shelf lives, and many countries have weak public and private sector procurement and distribution systems. The consistency and quality of imported tests can also be issues. To address these constraints, local government regulations, quality assurance, shelf life testing, and distribution systems all need to be assessed and improved. Parallax will initially control all of the manufacturing of its Target System test cartridges and Desk Top Analyzer and Hand-Held Analyzer in conjunction with Montecito.
|
Parallax also plans to develop and utilize its patented antibody development process in order to produce and deliver antibody test markers to its spin-off companies. Parallax will also develop relationships with antibody test marker producers to accelerate the delivery of new tests to its spin-off companies. Parallax will look to identify, negotiate and acquire markers from third-party producers. In this case, Parallax will test and approve the antibody test marker to be used in its Target System.
Intellectual Property
Intellectual property protection will be sought for all of Parallax’s primary and secondary products. Moreover, all products and supporting products such as novel biomarker candidates, antibodies, proteins, and diagnostics tests surrounding Parallax’s core indication areas will be IP-protected to create a barrier to entry for competitors.
Current Patent Pending Applications and Approvals:
Intellectual Property
:
US Patent Pending Applications
|
US2006051348 - 11/221,252
|
Method of Producing a Plurality of Isolated Antibodies
|
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US2006052948 - 11/221,038
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Method of Producing Drugs, Targeting Moieties or Diagnostics
|
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US 11/856,925
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Method for Determining the Immune State of a Subject
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US 11/924,033*
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Portable Apparatus for Improved Sample Analysis
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510(k) approvals
|
Covering existing tests and desk top reader
|
*US 11/924,033 is currently also applied for under PCT in ALL countries
U.S. Patent Nos. 11/221,252 “Method of Producing a Plurality of Isolated Antibodies to a Plurality of Cognate Antigens
”
Abstract:
The present invention relates to a method for producing high affinity antibodies that are antigen-specific. The method involves binding a plurality of antibody-producing B-cells from a mammal to a plurality of cognate antigens; sorting the bound antibody-producing B-cell and cognate antigen; amplifying nucleic acid sequences encoding each antibody, or fragment thereof, from the B-cells; and expressing the each antibody in a protein expression system. Antibodies produced in this manner are useful in diagnostic and therapeutic applications.
U.S. Patent Application Nos. 11/221,038 “Method of Identifying Drugs, Targeting Moieties or Diagnostics
”
Abstract:
The present invention relates to a method for identifying a binding agent or epitope for use in drug design, drug targeting or diagnostics. The method employs contacting and sorting binding agents and cognate epitopes from collections thereof, characterizing the binding agent and cognate epitope, detecting the level or location of the epitope in a sample using the binding agent, and correlating the level or location of the epitope in the sample with the presence or stage of a disease or condition to identify novel drugs, targeting moieties, or diagnostic agents.
U.S. Patent Application Nos. 11/856,925 “Method for Determining the Immune Status of a Subject”
Abstract:
The present invention is a method for using levels of soluble Clusters of Differentiation (CD) proteins, or cell surface-localized CD proteins extracted from T lymphocytes for determining the immune status of a subject. The present invention also a kit containing a CD protein extraction means and at least one antibody which specifically binds a CD protein for use in carrying out the method of the invention.
U.S. Patent Application Nos. 11/924,033 “Portable Apparatus for Improved Sample Analysis”
Abstract
: The present invention is an improved apparatus for sample analysis. The apparatus employs an assay component containing a membrane having one or a plurality of analyte - specific binding agents attached thereto, a means for absorbing liquid, and a piston means for drawing analytes through said membrane into said means for absorbing liquid. The apparatus is configured to be portable and provide a detector for detecting binding of an analyte to an analyte- specific binding agent, a plurality of data acquisition components, and a computer for integrating, analyzing and storing the detected analyte specific binding and acquired data.
FDA Cleared Tests
|
Device Name
|
510(k) Number
|
|
|
|
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Rubella-Cube TM
|
K892051
|
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Cmv-Cube TM
|
K884842
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Blue Dot Test for Pregnancy
|
K884017
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First Sign (Pregnancy, Hcg)
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K973208
|
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V-Trend Target Im Test (infect mononucleosis)
|
K890041
|
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Target Strep A (Streptococcus Spp.)
|
K8800460
|
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Target Aso Test
|
K910073
|
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Target Hcg
|
K914303
|
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Target Quantitative Hog One Step
|
K903937
|
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V-Trend Target Rf Test
|
K904105
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Target Quantitative Hcg
|
K890131
|
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Target Reader
|
K885254
|
By protecting these elements of Parallax’s testing technology platform as well as the individual tests and/ or test elements, Parallax efficiently builds another level of entry deterrence for potential competitors in its market segment. Parallax will preserve its IP by achieving an appropriate balance between trade secrets and patents.
Parallax will also utilize trademark applications to protect its IP that may not be suitable for patent protection. Unlike patent applications, which in many cases must be filed in advance of a particular date, there is no specific date by which a trademark application must be filed. Instead, the time constraint is in a different direction. In the United States an ordinary so-called "use" trademark application can only be filed after the goods or services have been in interstate commerce.
Parallax holds exclusive rights to all Montecito Bio Sciences, Ltd. (“Montecito”) patents, clearances and products in the area of Infectious Diseases. It is expected that after successful re-introduction of the Parallax Target System and the introduction of its novel CD4 immune status test, additional tests will be developed and protected under the full responsibility of Parallax. Generally, Parallax and Montecito will own improvements to the basic technology platform exclusively.
Overview of Medical Devices and Their Regulatory Pathways: 510(k) FDA Cleared Tests
Medical Devices: The Basics
The definition has several components. A medical device:
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·
|
diagnoses, cures, lessens, treats, or prevents disease
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·
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affects the function or structure of the body
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·
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does not achieve primary intended purposes through chemical action
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FDA's Center for Devices and Radiological Health regulates companies that design, manufacture, repackage, relabeling, and/or import medical devices into the United States. The agency does not regulate the practice of medicine – how and which physicians can use a device. The only exception is FDA's regulation of mammography facilities under the Mammography Quality Standards Act.
What is a combination product?
Combination products are therapeutic and diagnostic products that combine drugs, devices, and/or biological products. The term acknowledges the role technological advancements have made in merging medical product types. Examples of combination products include a drug-eluting stent, a nicotine patch, and surgical mesh with antibiotic coating, prefilled syringes, and a steroid-eluting pacing lead.
Combination products raise regulatory challenges because they involve components that were normally regulated under different types of authorities and often by different FDA Centers. Differences in regulatory pathways for each component can affect the regulatory processes for all aspects of product development and management, including preclinical testing, clinical investigation, marketing applications, manufacturing and quality control, adverse event reporting, promotion and advertising, and post-approval modifications.
Government Regulations
The long legal journey toward medical device regulation began with the Pure Food and Drugs Act of 1906. Medical devices were not included as no one envisioned how technology would grow increasingly complex and need to be regulated. The Medical Device Amendments of 1976 gave FDA authority to ensure the safety and effectiveness of a range of life-saving medical devices while also protecting the public from fraudulent devices. The Amendments:
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·
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defined a medical device,
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·
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established three device classes (I, II, and III),
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identified pathways to market,
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·
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established Advisory Panels, and
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·
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set clinical investigation requirements.
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Subsequent legislation strengthened the FDA’s regulatory authority:
Table 1: Major Medical Device Legislation
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Legislation
|
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Significance
|
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Safe Medical Devices Act of 1990
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established Quality System requirements
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supported post market surveillance
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·
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allowed FDA discretion for PMAs brought to panel
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FDA Modernization Act of 1997
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supported for early collaboration, expanded Class I and Class II exemptions
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·
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set the “least burdensome provision”*
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·
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supported dispute resolution
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·
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established evaluation of automatic Class III designation (giving the sponsor the opportunity to request lower classification due to a minimal risk device, known as “de novo” review)
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·
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mandated free and open participation by all interested persons
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Medical Device User Fee and Modernization Act (MDUFMA) of 2002
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·
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established a fee schedule for most types of device submissions to achieve shorter review times
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·
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requires FDA to include pediatric experts on the panel for a product intended for pediatric use
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FDA Modernization Act of 2007
|
·
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reauthorized and expanded MDUFMA
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The
least burdensome provision
allows industry and FDA to consider the least burdensome appropriate means of evaluating a device’s effectiveness when there’s a reasonable likelihood of its approval. The intent is to help expedite the availability of new device technologies without compromising scientific integrity in the decision-making process or FDA's ability to protect the public health. This provision does
not
lower the standard for premarket clearance and approval.
Three classes of regulatory control
The three device classes are based on the degree of regulatory control necessary to ensure their safety and effectiveness:
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Class I
:
|
devices present a low risk of harm to the user and are subject to general controls that are sufficient to protect the user. Most are exempt from the regulatory process.
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Examples:
non-powered breast pumps, elastic bandages, tongue depressors, examination gloves, most hearing aids, arm slings, microbial analyzers, keratoscopes
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Class II:
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devices are more complicated and require special controls for labeling, guidance, tracking, design, performance standards, and post market monitoring. Most require Premarket Notification 510(k).
|
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Examples:
powered wheelchairs, CT scanners, and contact lens care products, endolymphatic shunts
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Class III:
|
devices usually sustain or support life, are implanted, or present potential unreasonable risk of illness or injury. They have the toughest regulatory controls. Most of these devices require Premarket Approval because general and special controls alone cannot reasonably assure their safety and effectiveness.
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Examples:
pacemakers, implanted weight loss devices, non-invasive glucose testing devices, medical imaging analyzers, cochlear implants, breast implants
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How FDA Reviews Medical Devices
Investigational Device Exemptions (IDE
)
An IDE allows an investigational device to be used in a clinical study to collect the safety and effectiveness data required for a Premarket Approval (PMA) application or a Premarket Notification (510(k)) submission to FDA. Both FDA and an Institutional Review Board (IRB) must approve clinical studies with devices of significant risk before the study can begin. Studies with devices posing non-significant risk must be approved by an IRB before the study can begin.
FDA observes a 30-day review period for IDE applications. The agency focuses its review on the data provided to demonstrate the safety and anticipated benefits of the device for use in humans, as well as the scientific validity of the proposed clinical trial protocol.
Following clinical studies, a device’s journey to market can take one of four major pathways:
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1.
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Investigational Device Exemptions (IDE)
|
|
|
2.
|
Premarket Notification (510(k))
|
|
|
3.
|
Premarket Approval Application (PMA)
|
|
|
4.
|
Humanitarian Device Exemption (HDE)
|
Premarket Notification (510(k))
510(k) is required when demonstrating substantial equivalence to a legally marketed device, when making significant modifications to a marketed device, and when a person required to register with FDA introduces a device for the first time. If a device requires the submission of a 510(k), it cannot be commercially distributed until the FDA authorizes it.
Substantial Equivalence
A device is substantially equivalent (SE) if it has the same intended use and same technological characteristics as a legally marketed device, known as the predicate. A legally marketed device:
|
|
1.
|
was legally marketed prior to May 28, 1976 (“pre-amendments device”), for which a PMA is not required,
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or
|
|
|
2.
|
was reclassified from Class III to Class II or Class I,
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|
or
|
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|
3.
|
was found SE through the 510(k) process.
|
Applicants must compare their device to one or more similar legally marketed devices and make and support their SE claims. If the device is SE to a predicate, it is placed in the same class. If it is not SE, it becomes non-SE and is placed into Class III.
Examples of 510(k)s include x-ray machines, dialysis machines, fetal monitors, lithotripsy machines, and muscle stimulators.
Premarket Approval (PMA)
PMA refers to the scientific and regulatory review necessary to evaluate the safety and effectiveness of Class III devices or devices that were found not substantially equivalent to a Class I or II predicate through the 510(k) process.
PMA is the most involved process. To reasonably assure that a device is safe and effective, PMA requires valid scientific evidence that the probable benefits to health from the intended use of a device outweigh the probable risks, and that the device will significantly help a large portion of the target population. Sources of valid scientific evidence may include well controlled investigations, partially controlled studies, historical controls, well documented case histories by qualified experts, and robust human experience.
Independence is an important concept for PMAs, meaning that each PMA should establish the safety and effectiveness of the device under review, and that data about one device cannot be used to support another. Examples of PMAs include digital mammography, minimally invasive and non-invasive glucose testing devices, implanted defibrillators, and implantable middle ear devices.
Table 2: Summary Comparison of 510(k) and PMA
|
510(k) Submissions
|
|
PMA Submissions
|
|
·
|
primarily for Class II devices
|
|
·
|
primarily for Class III devices
|
|
·
|
a Class I or II pre-amendment or legally marketed device (predicate) exists
|
|
·
|
a Class I or II pre-amendment or legally marketed device (predicate) does not exist
|
|
·
|
third party review option is available for devices not requiring clinical data
|
|
·
|
device is life supporting and/or has potential risk to patient
|
|
·
|
documented proof of Substantial Equivalence to a predicate is required
|
|
·
|
documented safety and effectiveness data for the device is required
|
Humanitarian Device Exemption (HDE)
An HDE is a device that is intended to benefit patients by treating or diagnosing a disease or condition that affects fewer than 4,000 individuals in the United States per year. HDEs are exempt from requirements to demonstrate effectiveness. Still, they must pose no unreasonable risks, or at least the probable benefits should outweigh the risks. And the device must be used at a facility with an Institutional Review Board.
HDEs provide a powerful incentive for device manufacturers to develop devices that help diagnose or treat patients with rare conditions. Otherwise, a company’s research and development costs would likely exceed the market returns for serving such small patient populations.
Examples of HDEs include a fetal bladder stent, iris replacement, radioactive microspheres for cancer treatment, and semi-constructed finger joints.
Post-Approval Studies
FDA can impose requirements at the time of approval of a PMA or HDE, or by regulation afterwards. One requirement may be the need for post-approval studies. The CDRH Post-Approval Studies Program helps ensure that well designed post-approval studies are conducted effectively and efficiently and in the least burdensome manner. Post-approval studies should not be used to evaluate unresolved premarket issues that are important to the initial establishment of device safety and effectiveness.
With post-approval studies, FDA can evaluate device performance and potential problems when the device is used more widely than in clinical trials and over a longer period of time. This allows FDA to build in accountability and gather essential post market information, including:
|
|
·
|
longer-term performance of the device (for example, effects of re-treatments and product changes)
|
|
|
·
|
community performance (clinicians and patients)
|
|
|
·
|
effectiveness of training programs
|
|
|
·
|
sub-group performance
|
|
|
·
|
outcomes of concern – real and potential
|
Employees
Prior to the Merger, the Company had one employee, Mr. Gardner Williams, the Company’s President and CEO. On October 31, 2012, in connection with the Merger, Mr. Williams resigned from all positions held, and the board of directors appointed Mr. J. Michael Redmond as President, Chief Executive Officer and Director, Ms. Calli Bucci as Chief Financial Officer and Treasurer, Dr. Roger Morris as Chief Science Officer, and Mr. Michael Contarino as Vice President. Mr. Redmond is currently the Company’s only full time employee. Ms. Bucci, Dr. Morris and Mr. Contarino provide services to the Company on an as-needed basis.
In addition, the Company appointed Mr. Edward W. Withrow III, Dr. Jorn Gorlach, Mr. E. William Withrow Jr., Mr. David Engert and Mr. Anand Kumar as its board of directors.
Reports to Security Holders
The Company is a reporting company and complies with the requirements of the Exchange Act. The Company files quarterly and annual reports and other information with the SEC.
The public may read and copy any materials the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
Contractual Obligations
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
PROPERTIES
Subsequent to the Merger, t
he Company’s principal executive offices are located at
2 Canal Park 5
th
Floor Cambridge, MA 02141. The Company currently rents this space for approximately $300 a month.
Currently, this space is sufficient to meet the Company’s needs. However, once the Company expands its business to a significant degree, it will require additional space. The Company does not currently own any real estate.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Management
The following table sets forth certain information concerning the number of shares of the Company’s common stock owned beneficially as of October 30, 2012, by: (i) each of its directors; (ii) each of its named executive officers; and (iii) each person or group known by the Company Parallaxto beneficially own more than 5% of its outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.
|
Name and Address of
Beneficial Owner
|
|
Title of Class
|
|
Amount and Nature of Beneficial Ownership
(1)
|
|
Percent
of Class
(2)
|
|
Montecito Bio Sciences, Ltd.
|
|
Common
|
|
38,156,227
|
|
|
25.2
|
%
|
|
Withrow, Sinclair & Co
|
|
Common
|
|
5,569,725
|
|
|
3.68
|
%
|
|
Edward W. Withrow III
|
|
Common
|
|
7,631,245
|
|
|
5.05
|
%
|
|
M. Katsuka Sandoval
|
|
Common
|
|
5,000,000
|
|
|
3.30
|
%
|
|
Edward W. Withrow III
|
|
Preferred/Common
|
|
1,453,570
|
|
|
.009
|
%
|
|
Calli Bucci
|
|
Common
|
|
381,562
|
|
|
.002
|
%
|
|
J. Michael Redmond
|
|
Common
|
|
454,240
|
|
|
.003
|
%
|
|
J. Michael Redmond
|
|
ESOP
|
|
916,666
|
|
|
.006
|
%
|
|
Jorn & Jennifer Gorlach
|
|
Common
|
|
7,000,000
|
|
|
4.60
|
%
|
|
Avantegarde, LLC
|
|
Common
|
|
3,250,000
|
|
|
2.15
|
%
|
|
Jorn Gorlach
|
|
Preferred/Common
|
|
726,785
|
|
|
.004
|
%
|
|
David Engert
|
|
Preferred/Common
|
|
726,785
|
|
|
.004
|
%
|
|
E. William Withrow Jr.
|
|
Common
|
|
152,625
|
|
|
.001
|
%
|
|
All Officers and Directors as a Group
|
|
|
|
71,419,430
|
|
|
47.27
|
%
|
|
(1)
|
The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.
|
|
(2)
|
Based on 151,063,898 issued and outstanding shares of common stock as of November 12, 2012
|
DIRECTORS AND EXECUTIVE OFFICERS
Identification of Directors and Executive Officers
The following table sets forth the names and ages of the Company’s current directors and executive officers:
|
Name
|
Age
|
Position with the Company
|
Date of Appointment
|
|
J. Michael Redmond
|
52
|
President, Chief Executive Officer, Director
|
November 1, 2012
|
|
Calli Bucci
|
47
|
Treasurer, Chief Financial Officer
|
November 1, 2012
|
|
Kyle W. Withrow
|
38
|
Secretary
|
November 1, 2012
|
|
Edward W. Withrow III
|
48
|
Executive Chairman
|
November 1, 2012
|
|
Jorn Gorlach, MD
|
50
|
Director
|
November 1, 2012
|
|
David Engert, MD
|
59
|
Director
|
November 1, 2012
|
|
Anand Kumar
|
69
|
Director
|
November 1, 2012
|
|
E. William Withrow, Jr.
|
74
|
Director
|
November 1, 2012
|
Term of Office
Each director of the Company serves for a term of one year and until his successor is elected at the Company’s Annual Shareholders’ Meeting and is qualified, subject to removal by the Company’s shareholders. Each officer serves for a term of one year and until his successor is elected at a meeting of the Board of Directors and is qualified.
On July 23, 2012, Mr. Tom Mackay resigned from all positions with the Company. The Board of Directors of the Company accepted the resignation of Mr. Mackay, and accepted the appointment of Mr. Gardner Williams as the Company’s President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director.
On November 1, 2012, Mr. Williams resigned from all positions with the Company. The Board of Directors of the Company accepted the resignation of Mr. Williams, and accepted the appointment of Mr. J. Michael Redmond, President and CEO of Parallax Diagnostics, Inc., as the Company’s President, Chief Executive Officer and Director.
Concurrently with the assignment of Mr. Redmond, the Board of Directors assigned Ms. Calli Bucci as Chief Financial Officer and Treasurer of the Company, and Mr. Kyle W. Withrow as Secretary of the Company.
Background and Business Experience
J. Michael Redmond. President, Chief Executive Officer, and Director
Mr. J. Michael Redmond, age 52, has over twenty-five years of experience in the medical device and biotech markets. In May of 2009, Mr. Redmond founded JMR, Inc. and has served as its President since that time. JMR, Inc. provides business development and marketing services to diagnostic and biotech companies. As President, Mr. Redmond is responsible for developing and implementing the business plan of the company.
From May 2007 to June 2009, Mr. Redmond served as the Vice President of Marketing and Business Development for DxTech, Inc., a startup company focused on a disruptive model for point of care diagnostic testing. As the Vice President of Marketing and Business Development, Mr. Redmond was responsible for creating and implementing the company’s business plan, raising capital and forming strategic alliances with industry partners.
From 1996 to 2007, Mr. Redmond worked in various titles and capacities for Bioject, Inc., an early stage drug delivery company. From 1996 to 1997, Mr. Redmond served as the company’s Vice President of Sales and Marketing. From 1998 to 2002, Mr. Redmond served as the company’s Vice President of Business Development, and from 2003 to 2007, Mr. Redmond served as the company’s Senior Vice President of Business Development, Sales and Marketing. In these positions, Mr. Redmond’s responsibilities included negotiating corporate partnerships with major pharmaceutical and biotech companies, launching new products, securing distribution channels, P&L responsibility and raising capital.
From 1989 to 1996, Mr. Redmond was employed with KMC Systems, a private label developer and manufacturer of medical devices and instruments. At KMC Systems, Mr. Redmond served as the Director of Sales and Marketing and the Director of Business Development, Sales and Marketing. Mr. Redmond was responsible for developing new business in the U.S. and Europe as well as negotiating long-term product development and production contracts. Additionally, from 1983 to 1989, Mr. Redmond was employed with Abbott Laboratories in the diagnostic division. While at Abbott Laboratories, Mr. Redmond served as Product Manager, Account Executive, and Diagnostics Systems Sales Specialist.
Mr. Redmond earned a Bachelor of Arts degree from Denison University in 1983. He is qualified to be the, President, CEO and Director of the Company because of his extensive experience in a multitude of different capacities in the medical device and biotech markets.
Calli Bucci, Chief Financial Officer, Treasurer
Ms. Bucci has over 25 years experience in the field of finance and business management. Prior to holding the position of interim Chief Financial Officer at Ecologic Transportation, Ms. Bucci has been Controller of the Company since January 2010, and was responsible for general ledger, quarterly certified reviews, annual audits, preparation for SEC filings, customer billing and invoicing, multi-state payroll, licenses and consolidated corporate income taxes.
Before joining the Company, Ms. Bucci held the position of Chief Financial Officer at InstaSave, Inc., a Internet based promotional incentive company, from December 2007, where she was responsible for financial reporting, capital structure strategy and modeling, financial transactions with consumers, consumer product goods companies and retailers, investor relations, audits, payroll and corporate income taxes.
Ms. Bucci held the position of Senior Accountant at Gelfand, Rennert & Feldman, a division of PriceWaterhouse Coopers, from 1993-1999, working on the accounts of high net worth individuals and entertainment corporations. At Gelfand, Rennert & Feldman, Ms. Bucci was responsible for financial transactions, contract administration, audits, general ledger reviews and annual tax preparation for her clients.
From 1989-1993 Ms. Bucci held the position of Chief Financial Officer and Director of Contract Administration at Intercontinental Releasing Corporation (“IRC”), a Los Angeles, California based Motion Picture Distribution Company. Ms. Bucci was responsible for all functions within the company’s accounting department, from financial statements and forecasting, to annual audits and corporate taxes. During her tenure with IRC, Ms. Bucci also designed and implemented a custom computerized availabilities system for the film rights of the Company’s film library consisting of 35 films and distributed to over 30 foreign territories throughout the world. She was also responsible for the administration and facilitation of all client contracts, involving multiple foreign currencies and international import regulations.
Ms. Bucci holds a BS from the University of California Berkley, majoring in Accounting. Ms. Bucci lives with her family in West Los Angeles, California.
Kyle W. Withrow, Secretary
Mr. Withrow, age 37, currently serves as corporate Secretary, and has 10 years experience working with public companies. Mr. Withrow began his career working in the public markets dealing with Marketing and Branding for a point-of-care diagnostics company. He has also assisted in overseeing the public filings for three separate bulletin board companies.
After traveling extensively thru the US, Europe and Asia, Mr. Withrow attended San Diego State University and holds a degree in Bachelors of Sciences with an emphasis in Psychology. Mr. Withrow used his knowledge first in the opening and operating of boutique restaurants and night clubs throughout the West Coast of the US. Working hands on with both large and small Marketing and Branding companies.
Mr. Withrow has held a position with both Parallax Diagnostics, Inc. and Montecito Bio Sciences, Ltd. since their inception, His responsibilities included marketing and development, as well as management of aspects of the day to day operations, from assisting in mergers documentation to public filings for the companies.
Edward W. Withrow III, Executive Chairman
Mr. Edward W. Withrow III, age 48, currently serves as the Chairman of the Board for Ecologic Transportation, Inc., a company he founded in 2009 that is dedicated to providing environmentally friendly transportation services. Mr. Withrow III also currently serves as the President and CEO of Montecito Bio Sciences, Ltd., a bio-medical diagnostics company. As President and CEO, Mr. Withrow III is responsible for creating and implementing the Company’s business plan, raising capital and forming strategic alliances with industry partners.
From 2002 to 2005, Mr. Withrow III served as the CEO for Addison-Davis Diagnostics, Inc. Addison Davis Diagnostics, Inc. offers point-of-care screening tests to the global health care market. As CEO, Mr. Withrow III was responsible for corporate governance, strategic planning, capitalization, and business development. From 2002 to 2004, Mr. Withrow III served as the CEO for Reward Enterprises, Inc., a public company and early adopter of VoIP telecommunications in the international market with operations in North Africa and India.
Mr. Withrow III graduated from Alameda High School in Alameda California in 1982 and attended Santa Barbara City College and University of California Santa Barbara from 1982 to 1985 where he studied Law and Society and economics. He lives with his wife and son in Malibu, California.
Mr. Withrow III is qualified to be a director because of his knowledge of and prior experience working in the diagnostics products market.
Dr. Jorn Gorlach, age 50, has over twenty years of experience in the bio-medical field. In 2001, Dr. Gorlach co-founded AAvantgarde, a management consulting firm focused on the development and support of start-up companies. Since the inception of AAvantgarde in 2001, Dr. Gorlach has also served as one of its directors. As a co-founder and director of AAvantgarde, Dr. Gorlach is responsible for management consulting, licensing, and general operations. Since 2006, Dr. Gorlach has also served as a co-founder and director of Montecito Bio Sciences, Ltd., a diagnostics and testing company with proprietary technology for point of care diagnostics, testing, and data communication. Dr. Gorlach, in his role as co-founder and director, is responsible for developing and implementing the business plan of the company.
In 2002, Dr. Gorlach co-founded AAvantgarde Laboratories AG and has served as its CEO since that time. AAvantgarde Laboratories AG is a research, development, and licensing company of biotechnology products, particularly in the field of diagnostics, biological prognostics, and diseases. As CEO, Dr. Gorlach is responsible for developing the company’s business plan, developing outlines for product concept, research, and development, and leading financing activities and investor relations. In 2001, Dr. Gorlach co-founded Arcanum Discovery, Inc., a proteomics and drug discovery company focusing on novel drug target identifiers and validation. Additionally, from 2001 to 2002, Dr. Gorlach served as head of business development and finances for Arcanum Discovery, Inc. where he developed the company’s product concept, research and development, and business plan as well as managed financing activities and investor relations. In 2001, Dr. Gorlach co-founded Ercole Biotech, Inc., a research stage biopharmaceutical company involved in the creation of oligonucleotide drugs. Since its inception until 2003, Dr. Gorlach served as a director of the company where he was responsible for developing business strategy, financial planning, and contract negotiation strategy.
In 1997, Dr. Gorlach co-founded Paradigm Genetics, Inc., a bio-technology research company. From 1997 to 1999, Dr. Gorlach served as the company’s Director of Research where he was responsible for developing concepts regarding novel functional genomics platform, focusing on high throughput, industrialization, systematization, and biology/IT integration. From 1999 to 2000, Dr. Gorlach served as the Director of Project Management for Paradigm Genetics, Inc. As Director of Project Management, Dr. Gorlach managed customer projects and research progress. From 2000 to 2001, Dr. Gorlach served as the company’s vice president of business development. As a member of the company’s executive team, Dr. Gorlach was responsible for new projects and the development of plans in future key business fields. Beginning in 2001 and continuing through 2002, Dr. Gorlach served as a consultant for Paradigm Genetics, Inc., where he supported the company’s agricultural project initiatives and customer negotiations.
From 1996 to 1997, Dr. Gorlach served as the Group Leader of Combinatorial Biochemistry for Novartis, Inc., a healthcare and scientific research company. As Group Leader of Combinatorial Biochemistry, Dr. Gorlach led team efforts in developing pharmaceutically active macrolide and cloning multiple polyketides genes.
From 1994 to 1996, Dr. Gorlach was a research scientist for Ciba-Geigy, Inc., a chemical company. As a research scientist, Dr. Gorlach focused on acquired immunity and chemical regulation in wheat.
From 1991 to 1994, Dr. Gorlach was a research fellow for the Swiss Federal Institute in Zurich, Switzerland. As a research fellow, Dr. Gorlach focused his attention on gene regulation of amino acid biosynthetic pathways.
Dr. Gorlach has a Bachelor of Science Degree in Chemistry and Biology as well as a Bachelor of Science Degree in Biochemistry from the University of Hannover. In 1991, Dr. Gorlach obtained a Master in Science from the University of Hannover in Biochemistry. In 1994, Dr. Gorlach received a Ph.D. in Molecular Biology from ETH Zurich, and in 2000, received a MBA from the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill.
Dr. Gorlach is qualified to be a director of the Company because of his extensive experience in business development, project management, strategic planning, and business management in a multitude of different capacities in the bio-technology field.
Mr. Engert, age 59, has served as the President and Chief Executive Officer of NightHawk Radiology Holdings, Inc. since November 2008 and as a member of its board of directors since April 30, 2008. He also sits on the Board of Directors of Healthation, Inc., a healthcare information technology company. Mr. Engert was the founder and owner of ES3, a strategic consulting and investment company since 2007. From 2002 to 2006, he served as the president, chief executive officer and director of Quality Care Solutions, Inc., one of the nation’s leading providers of advanced healthcare payer enterprise application solutions, which was acquired by Trizetto, Inc. in January 2007. Prior to 2002, Mr. Engert held a number of senior level management positions in the healthcare industry over the previous 10 years, including senior vice president & general manager at McKesson Corporation's Managed Care Division.
Mr. Engert is qualified to be a director of the Company because of his extensive experience as a chief executive officer of companies both public and private, in the healthcare industry.
Mr. Kumar, age 69, has over twenty-five years of experience in international business development. In 1999, Mr. Kumar founded Global Telesolutions, a company responsible for creating partnerships and in-country relationships for various companies in Asia and the Indian subcontinent. From 1999 to 2010, Mr. Kumar served as the CEO for Global Telesolutions where, among other things, he developed presence and business in the Middle East and Indian, built global network partnerships for telecommunications and traffic, and oversaw international staff for operations.
From 1995 to 1999, Mr. Kumar served as the Executive Vice President for Facilicom International, a leading international telecommunications carrier. As Executive Vice President, Mr. Kumar developed multi-country business and network presence for operations, negotiated with vendors, regulators, and partners, and oversaw Europe and Asia managers and assisted in multi-national sales closings.
From 1986 to 1993, Mr. Kumar served as the President for Washington International Teleport. As President, Mr. Kumar built the first direct international earth station after U.S. de-regulation, obtained new national and international video and data clients, and created the satellite, fiber hybrid network video concept. From 1981 to 1986, Mr. Kumar served as the President of Communications Strategies Group, a company that delivers comprehensive public relations and strategic communications services to organizations. As President, Mr. Kumar investigated technology business opportunities for international clients and ran special training sessions in various areas of telecommunications practice.
Mr. Kumar earned a B.S.E.E. from Jadavpur University and a M.S.E.E. and PhD candidacy degree from the University of Connecticut.
Mr. Kumar is qualified to be a director of the Company because of his extensive experience as an executive officer of companies both public and private, in the telecommunications and telemedical industries.
Edward W. “Bill” Withrow Jr., Director
Mr. Withrow earned his Master’s in Business Administration from Harvard University, with a concentration in Investment Banking. He has a bachelor’s degree in Business, with a concentration in Finance and Accounting, from the University of Colorado. He served twenty-four years on active duty in the U.S. Navy as a professional logistician, retiring with the rank of Captain. He spent approximately 20 years as a financial professional with Drexel Burnham Lambert, Paine Webber, Merrill Lynch and Wells Fargo.
Mr. Withrow has been very active in civic leadership for the past 20 years serving in a number of elected and appointed positions, including Mayor of Alameda, California. He is currently serving as the regionally elected President of the Governing Board of The Peralta Colleges, an institution consisting of 2,000 faculty and staff and approximately 30,000 students.
Mr. Withrow is qualified to be a director of the Company because of his extensive experience as an executive officer of companies both public and private, strategic planning and finance.
Identification of Significant Employees/Consultants
Dr. Roger Morris,
Chief Science Officer
Dr. Roger Morris has experience providing over all guidance for technology development, intellectual property and scientific communications strategies. He has twenty years management and technical experience in developing clinical diagnostic systems with Baxter Healthcare Corporation, bioMerieux and most recently XL TechGroup. During this time he has developed and launched a number of successful automated diagnostic system products.
Roger received his B.Sc. and PhD in biochemistry from the University of Salford, UK, he did his Post Doctorate work at Cornell and has published over 20 scientific articles and received 14 patents.
Michael Contarino
, Vice President
Mike Contarino has extensive experience developing, integrating and driving complex programs to meet corporate goals. Additionally, Mike has directed Regulatory Affairs, Quality Assurance and Manufacturing. As a technical and operations professional, Mike brings over 30 years successful leadership in product development, commercialization of complex medical/diagnostic instrumentation, and operations management.
Mike was employed by Tecan-Boston, a subsidiary of Tecan AG, where he held the positions of Vice President of R&D, and led all aspects of its novel, automated micro fluidic system platform for Drug Discovery, including overall site management, R&D and Operations.
Previously, Mike held the position of Vice President of Systems Development for Instrumentation Laboratory (IL), a global leader in medical diagnostic systems. Mike accelerated product development cycles by introducing design control processes and procedures in R&D. At IL, Mike was a member of the Executive Committee and Scientific Advisory Boards for homeostasis and critical care, was technical lead of the Merger & Acquisition (M&A) team, and had responsibility for R&D sites in the US, Italy and Spain.
Prior to IL, Mike was the Director of Engineering at KMC Systems Inc. a recognized leader in systems development of diagnostic platforms. Mike successfully commercialized immunoassay, clinical chemistry and robotic pipetting systems.
Mike earned his Mechanical Engineering degree from the University of Lowell, completed the Management Development Program at Boston University and is a Member of the Society of Automotive Engineers (SAE).
Dr. David Stark,
V.P. Regulatory Approval and Clinical Trial Manager
Dr. Stark has 18 years experience from the toxicology labs to the investigator site and has been essential to all aspects clinical and device research. Dr. Stark is the President and CEO of Stark-SMO, a Site Management Organization whose services go far beyond that of an ordinary SMO. Due to his extensive and broad experiences in the inner workings of the research and regulatory aspects of clinical trials, Dr. Stark brings a unique vision to the industry and the Company as a motivated designer of superior approaches to research challenges. Most importantly, Dr. Stark is highly qualified to manage the development opportunities of the Company.
Formerly the Director of the National Institute of Clinical Research (NICR), he has been responsible for the design, organization and implementation of clinical trials for pharmaceutical and device companies. He has a broad background in designing, conducting, and monitoring clinical trials of new pharmaceuticals and devices. He is one of the few that has worked in the manufacturing validation of pharmaceuticals, the clinical field, and the regulatory (IRB) arenas, and therefore possesses a big-picture understanding of pharmaceutical development.
Through Dr. Stark’s diverse and devoted networking within the industry, Stark-SMO has assembled a wide network of more than 5000 physicians throughout the United States, which extends to the international community. Currently, he is negotiating a unique DMF partnership with drug manufacturers in China.
In addition to his significant accomplishments on the industry side of clinical drug and device development, Dr. Stark has experience with the FDA (major focus on IND’s NDA’s and 510K applications). Prior to his employment at NICR, Dr. Stark was the President and Chief Executive Officer of Powder Ice, Inc a medical products company. Additionally, Dr. Stark is a California state licensed Qualified Medical Examiner and Certified Clinical Research Associate.
Ricky Richardson,
Consultant
Mr. Richardson recently severed as Director of Operations for Stryker Orthopaedics. During his tenure, he was responsible for the Continuous Improvement and Global Sourcing Departments where he championed several successful initiatives to improve internal manufacturing efficiencies and streamline the supplier base. He also oversaw FDA remediation programs in Operations; resulting in the achievement of several critical compliance milestones for the manufacturing business units.
Prior to joining Stryker Orthopaedics, Mr. Richardson served as Vice President of Supplier Management/ Customer Relations at Bioject Medical Technologies. He also held the positions of VP Operations, VP Manufacturing and Product Development directing several successful R&D and manufacturing programs with leading Biotech Healthcare companies. He joined Bioject in 1994 as Senior Manufacturing Engineer. From May 1991 to October 1994, he was employed as a Product Manager, Quality Engineer and Production Supervisor with Baxter Healthcare. From 1987 to April 1991, Mr. Richardson was a Manufacturing Supervisor at Texas Instruments and championed one of the pilot cell teams that received recognition by winning the Malcolm Baldrige. From 1984 to 1987 he was a Lieutenant, Field Artillery, with the U.S. Army.
Mr. Richardson holds a Bachelor’s degree in engineering from the U.S. Military Academy, West Point, NY.
Other than as described below, there are no family relationships among our directors or executive officers.
Mr. Kyle W. Withrow, Secretary of the Company, is the brother of Mr. Edward W. Withrow, III, and the Company’s Executive Chairman of the board of directors. Mr. E. William Withrow Jr., Director, is the father of Mr. Kyle W. Withrow and Mr. Edward W. Withrow III.
Involvement in Certain Legal Proceedings
During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:
|
|
(1)
|
A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
|
|
|
(2)
|
Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
|
(3)
|
Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
|
|
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i.
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Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
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ii.
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Engaging in any type of business practice; or
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iii.
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Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
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(4)
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Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
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(5)
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Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
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(6)
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Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
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(7)
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Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
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i.
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Any Federal or State securities or commodities law or regulation; or
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ii.
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Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
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iii.
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Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
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(8)
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Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Audit Committee and Audit Committee Financial Expert
The Company does not currently have an audit committee serving on its Board of Directors. However, the Company intends, in the coming months, to establish an audit committee of the Board of Directors that shall consist of independent directors. The audit committee’s duties will be to recommend to the Company’s board of directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee shall at all times be composed exclusively of directors who are, in the opinion of the Company’s board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.
EXECUTIVE COMPENSATION
The table below summarizes the compensation paid to the following persons:
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(a)
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our principal executive officer;
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(b)
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each of our two most highly compensated executive officers who were serving as executive officers at the end of the fiscal years ended December 31, 2011 and 2010; and
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(c)
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up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the fiscal years ended December 31, 2011 and 2010,
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who will collectively be referred to as the named executive officers of the Company, and are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
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Summary Compensation Table
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Name and Principal Position
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Year
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Salary
($)
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Bonus
($)
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Stock Awards
($)
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Option
Awards
($)
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Non-Equity
Incentive Plan
Compensation
($)
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Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
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All Other
Compensation
($)
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Total
($)
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J. Michael Redmond
President, CEO
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2012
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$177,403
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Nil
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$33
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Nil
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Nil
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Nil
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Nil
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$177,436
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2011
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$203,365
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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$203,365
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2010
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Nil
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Nil
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$13
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$137,500
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Nil
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Nil
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Nil
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$137,513
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Calli Bucci
CFO, Treasurer
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2012
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Nil
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Nil
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$38
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Nil
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Nil
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Nil
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$10
[1]
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$48
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2011
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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2010
|
Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Edward W. Withrow III
Executive Chairman
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2012
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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$137,500
[1]
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$137,500
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2011
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
|
Nil
|
Nil
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2010
|
Nil
|
Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Gardner Williams
Former President, CEO, and Director
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2012
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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Nil
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2011
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
2010
|
Nil
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Nil
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Nil
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Nil
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Nil
|
Nil
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Nil
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Nil
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[1]
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Compensation earned but deferred.
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Narrative Disclosure to Summary Compensation Table
There are no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.
On October 1, 2010, the board of directors of Parallax adopted the Parallax Kline Stock Option Plan, a copy of which is attached herewith
and included in this filing
as Exhibit 4.5. Parallax reserved 3,000,000 shares of common stock for issuance upon exercise of options granted from time to time under the stock option plan. The stock option plan is intended to assist Parallax in securing and retaining key employees, directors and consultants by allowing them to participate in Parallax’s ownership and growth through the grant of incentive and non-qualified options. Under the stock option plan, Parallax may grant incentive stock options only to key employees and employee directors, or Parallax may grant non-qualified options to employees, officers, directors and consultants. Subject to the provisions of the stock option plan, the board of directors will determine who shall receive options, the number of shares of common stock that may be purchased under the options. Prior to the Merger Agreement, Parallax granted options to purchase a total of 1,950,000 shares. In connection with the options granted, a total of $281,250 was recorded as deferred compensation, and was amortized over a 12-18 month vesting period.
Parallax granted the following stock options to directors and officers through the Parallax Kline 2010 ESOP:
On October 31, 2010, J. Michael Redmond, the Company’s President and CEO, was granted an option to purchase 1,375,000 shares of Parallax’s common stock at a price of $0.10 per share.
On November 15, 2010, Dr. Roger Morris, Chief Science Officer, was granted an option to purchase 150,000 shares of Parallax’s common stock at a price of $0.25 per share.
On November 15, 2010, Michael Contarino, the Company’s Vice President, was granted an option to purchase 150,000 shares of Parallax’s common stock at a price of $0.25 per share.
On February 1, 2011, Norman Kunin, the Company’s former Chief Financial Officer, was granted an option to purchase 50,000 shares of Parallax’s common stock at a price of $0.25 per share.
The foregoing summary of the Stock Option Agreements are not complete and are qualified in their entirety by reference to the complete text, an example of which is attached hereto as Exhibit 14.6.
Aggregated Option Exercised in Last Fiscal Year and Fiscal Year-End Values
There were no options exercised during the year ended December 31, 2011 or December 31, 2010 by any officer or director of our company.
Outstanding Equity Awards of the Parallax Kline 2010 ESOP
On October 31, 2010, Parallax, under its 2010 ESOP, granted qualified stock options to its Chief Executive Officer to purchase 1,375,000 shares of its common stock for five years at $0.10 per share, which vest quarterly over a period of twelve months. As of the date of this filing, the options are fully vested, and were expensed by Parallax over the vesting period of 12 months, at an aggregate value of $137,500.
On November 15, 2010, Parallax, under its 2010 ESOP, granted qualified stock options to two of its consultants to purchase 300,000 shares of its common stock for five years at $0.25 per share, which vest quarterly over a period of eighteen months. As of the date of this filing, the options are fully vested, and were expensed by Parallax over the vesting period of 18 months, at an aggregate value of $75,000.
On January 10, 2011, Parallax, under its 2010 ESOP granted qualified stock options to one of its consultants to purchase 75,000 shares of Parallax’s common stock at a price of $0.25 per share, which vest quarterly over a period of eighteen months. As of the date of this filing, the options are fully vested, and were expensed by Parallax over the vesting period of 18 months, at an aggregate value of $18,750.
On January 28, 2011, Parallax, under its 2010 ESOP, granted qualified stock options to one if its consultants to purchase 150,000 shares of Parallax’s common stock at a price of $0.25 per share, which vest quarterly over a period of eighteen months. As of the date of this filing, the options are fully vested, and were expensed by Parallax over the vesting period of 18 months, at an aggregate value of $37,500.
On February 1, 2011, Parallax, under its 2010 ESOP, granted qualified stock options to its former Chief Financial Officer to purchase 50,000 shares of its common stock for five years at $0.25 per share, which vest quarterly over a period of eighteen months. As of the date of this filing, the options are fully vested, and were expensed by Parallax over the vesting period of 18 months, at an aggregate value of $12,500.
Compensation of Directors
The Company reimburses its directors for expenses incurred in connection with attending board meetings. The Company has not paid any director's fees or other cash compensation for services rendered as a director since our inception to the date of this filing.
The Company has no formal plan for compensating its directors for their service in their capacity as directors. However, certain directors and officers of the Company have received stock options to purchase common shares under the Company’s 2012 ESOP, and may receive additional stock options at the discretion of the Company’s board of directors.
Employment Agreements
On November 15, 2010, Parallax executed and entered into an employment agreement with its CEO, Mr. J. Michael Redmond (the “Employment Agreement”). The Employment Agreement has a term of three years from the effective date, November 15, 2010. Under the Employment Agreement, Mr. Redmond agreed to serve as the President, CEO, and Director of Parallax. Mr. Redmond shall have such authority, and Parallax’s board of directors may reasonably assign responsibility to him. Pursuant to the Employment Agreement, Mr. Redmond will have a base salary of $200,000 per annum per year. Additionally, as part of Parallax’s 2010 Employee Stock Option Plan, Mr. Redmond was granted one million three hundred seventy five thousand (1,375,000) options of Parallax’s common stock which vest on a quarterly basis over a three year period at an exercise price of ten cents ($0.10) per share. The foregoing summary of the Employment Agreement is not complete and is qualified in its entirety by reference to the complete text, which is attached hereto as Exhibit 10.23.
Consulting Agreements
On July 1, 2011, Parallax entered into a Development and Supply Agreement with Corder Engineering, LLC. The Statement of Work stipulates that Corder Engineering, LLC shall provide ten (10) Evaluation Units which replicate the functionality Target. Target 1000 firmware ver. 320 and add software for a C-reactive protein (CRP) quantitative assay. The total payment under the Agreement stipulates $35,000 over a twelve week period. As of June 30, 2012, payments totaling $22,500 have been made, and $12,500 has been accrued. A copy of the Development and Supply Agreement is attached herewith as Exhibit 10.24.
On July 1, 2011, Parallax entered into a Supply Agreement with Meyers Stevens Group, Inc. (“Meyers Stevens”). The Statement of Work stipulates that Meyers Stevens will manufacture assays and supply a Data Package for the Company and will yield approximately 100 to 200 fully functional assay test devices for internal investigational use. Estimated delivery of the assays is eight (8) weeks from the date of the Agreement for a total cost of $10,194. As of June 30, 2012, payments totaling $8,980 have been made, and $1,214 has been accrued. . A copy of the Supply Agreement is attached herewith as Exhibit 10.25.
On January 2, 2012, Parallax entered into a consulting agreement with Huntington Chase Financial Group LLC (“HCFG”), a Nevada corporation. The consulting agreement provides for HCFG to provide advisory services to the Company for a period of three years for a fee of $12,500 per month. A copy of the consulting agreement is attached herewith as Exhibit 10.26.
On July 11, 2012, the Company entered into a Consulting Agreement with Greg Suess (“Suess”) for advisory services provided to the Company. As compensation for services rendered, valued at $5,000, Suess was afforded the opportunity to purchase 75,000 restricted shares of the Company’s common stock at a price of $0.001 per share. Suess purchased the shares on July 24, 2012 for cash in the amount of $75.00. As a result, $5,000 was expensed in July, 2012. A copy of the consulting agreement is attached herewith as Exhibit 10.27.
Long-Term Incentive Plans
There are no arrangements or plans in which the Company provides pension, retirement or similar benefits for directors or executive officers.
Compensation Committee
The Company currently does not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.
On June 17, 2011, Parallax entered into a Convertible Preferred Purchase Agreement with Hamburg Investment Company, LLC ("HIC"), a German company controlled by Mr. Jorn Gorlach, a member of the Company’s board of directors, whereby 100,000 shares of Preferred Stock would be issued to HIC for a purchase price of $1.00 per share, or $100,000. As a result, $99,990 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, Parallax issued a warrant to convert 100% of HIC’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if Parallax has reached certain financing levels.
The foregoing summary of the
Convertible Preferred Purchase Agreement
is not complete and is qualified in its entirety by reference to the complete text, which is attached hereto as Exhibit 10.28.
On June 17, 2011, Parallax entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group LLC ("HCFG"), a Nevada corporation controlled by Mr. Edward W. Withrow III, the Company’s Executive Chairman, whereby 100,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $1.00 per share, or $100,000. As a result, $99,990 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, Parallax issued a warrant to convert 100% of HCFG’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if Parallax has reached certain financing levels.
The foregoing summary of the
Convertible Preferred Purchase Agreement
is not complete and is qualified in its entirety by reference to the complete text, which is attached hereto as Exhibit 10.29.
On September 30, 2011, Parallax entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group LLC ("HCFG"), a Nevada corporation controlled by Mr. Edward W. Withrow III, the Company’s Executive Chairman, whereby 10,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $10.00 per share, or $100,000. As a result, $99,999 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, Parallax issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of HCFG’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if Parallax has reached certain financing levels.
The foregoing summary of the
Convertible Preferred Purchase Agreement
is not complete and is qualified in its entirety by reference to the complete text, which is attached hereto as Exhibit 10.30.
On December 6, 2011, Parallax entered into a Convertible Preferred Purchase Agreement with David Engert, ("Engert"), an individual and a member of the Company’s board of directors, whereby 10,000 shares of Preferred Stock would be issued to Engert for a purchase price of $10.00 per share, or $100,000. As a result, $99,999 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, Parallax issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of Engert’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if Parallax has reached certain financing levels.
On May 3, 2012, Parallax entered into a Convertible Preferred Purchase Agreement with Donald Wachelka, ("Wachelka"), an individual, whereby 10,000 shares of Preferred Stock would be issued to Wachelka for a purchase price of $10.00 per share, or $100,000. As a result, $99,999 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, Parallax issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of Wachelka’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if Parallax has reached certain financing levels.
With regard to any future related party transaction, the Company plans to fully disclose any and all related party transactions in the following manner:
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§
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Disclosing such transactions in reports where required;
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§
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Disclosing in any and all filings with the SEC, where required;
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§
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Obtaining disinterested directors consent; and
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§
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Obtaining shareholder consent where required.
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Director Independence
For purposes of determining director independence, The Company has applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
According to the NASDAQ definition,
Mr.
Redmond
is not an independent director because he is also an executive officer of the Company.
Review, Approval or Ratification of Transactions with Related Persons
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
LEGAL PROCEEDINGS
The Company knows of no material, existing or pending legal proceedings against the Company, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to its interest.
The public may read and copy any materials the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
RISK FACTORS
An investment in our Company is highly speculative in nature and involves an extremely high degree of risk.
We are a development
stage company with a limited operating history and may never be able to effectuate our business plan or achieve sufficient revenues or profitability; at this stage of our business, even with our good faith efforts, potential investors
have a high probability of losing their entire investment.
We are subject to all of the risks inherent in a development stage company. In particular, potential investors should be aware that we have not proven that we can:
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·
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raise sufficient capital in the public and/or private markets;
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·
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have access to a line of credit in the institutional lending marketplace for the expansion of our business;
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·
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respond effectively to competitive pressures; or
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·
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recruit and build a management team to accomplish our business plan.
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Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a new business, and our Company is a highly speculative venture involving significant financial risk.
We have a limited track record that would provide a basis for assessing our ability to conduct successful business activities. We may not be successful in carrying out our business objectives.
The revenue and income potential of our proposed business and operations are unproven as a limited operating history makes it difficult to evaluate the future prospects of our business. There is limited information at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Accordingly, we have a limited track record of successful business activities, strategic decision making by management, fund-raising ability, and other factors that would allow an investor to assess the likelihood that we will be successful in marketing our services. As such, there is a substantial risk that we will not be successful in generating sufficient operating revenues or in achieving profitable operations, irrespective of competition.
The time needed to obtain regulatory approvals and respond to changes in regulatory requirements could adversely affect our business.
Many of our proposed and existing products are subject to regulation by the FDA and other governmental or public health agencies. In particular, we are subject to strict governmental controls on the development, manufacture, labeling, distribution and marketing of our products. In addition, we are often required to obtain approval or registration with foreign governments or regulatory bodies before we can import and sell our products in foreign countries.
The process of obtaining required approvals or clearances from governmental or public health agencies can involve lengthy and detailed laboratory testing, human clinical trials, sampling activities and other costly, time-consuming procedures. For example, we will be seeking FDA approval for the use of a CD4 rapid test. Approval of these claims will include the submission of clinical data and could require significant time to obtain. The submission of an application to the FDA or other regulatory authority for these or other claims does not guarantee that an approval or clearance to market the product will be received. Each authority may impose its own requirements and delay or refuse to grant approval or clearance, even though a product has been approved in another country.
Moreover, the approval or clearance process for a new product can be complex and lengthy. This time span increases our costs to develop new products and increases the risk that we will not succeed in introducing or selling them in the United States or other countries.
Newly promulgated or changed regulations could also require us to undergo additional trials or procedures, or could make it impractical or impossible for us to market our products for certain uses, in certain markets, or at all.
The regulations in some states may restrict our ability to sell products in those states. While we intend to work with state legislators and regulators to remove or modify any applicable restrictions, there is no guarantee we will be successful in these efforts.
In addition, all in vitro diagnostic products that are to be sold in the European Union (“EU”) must bear the CE mark indicating conformance with the essential requirements of the In Vitro Diagnostic Directive (“IVDD”). We will not be permitted to sell our products in the EU without a CE mark after this date. While we intend to CE mark certain existing and future products, and are not aware of any material reason why we will be unable to do so, there can be no assurance that compliance with all provisions of the IVDD will be demonstrated and the CE mark obtained prior to the deadline.
If we are unable to obtain additional funding, our business operations will be harmed.
We will require additional funds to operate our business and address all necessary infrastructure concerns. We anticipate that we will require a minimum of $1,500,000 to fund our continued operations for the next twelve months. The inability to raise the required capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain necessary financing, we will likely be required to curtail our development plans which could cause the Company to become dormant. Any additional equity financing may involve substantial dilution to our then existing shareholders.
There is substantial doubt about our ability to continue as a going concern.
In their audit report with regard to our financial statements as of December 31, 2010, 2009 and 2008, our independent registered public accountants have expressed an opinion that substantial doubt exists as to whether we can continue as a going concern. Because we have limited cash resources, we believe that if we do not raise additional capital within the next 12 months in addition to the net proceeds from this offering, we may be required to suspend or cease the implementation of our business plan. As such we may have to cease operations and you could lose your entire investment. Accordingly, we may find it difficult or impossible to attract investors.
Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, access to capital and cost of capital.
The capital and credit markets have been experiencing extreme volatility and disruption for more than twelve months. We have historically relied on credit to fund our business and we need liquidity to pay our operating expenses. Without sufficient liquidity, we will be forced to curtail our operations, and our business will suffer. Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital required to operate our business. Such market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to operate and grow our business. As such, we may be forced to delay raising capital or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility. Our results of operations, financial condition, cash flows and capital position could be materially adversely affected by disruptions in the financial markets.
Our ability to sell products could be adversely affected by competition from new and existing diagnostic products and by treatment or other non-diagnostic products which may be developed.
The diagnostic industry is focused on the testing of biological specimens in a laboratory or at the point of care and is highly competitive and rapidly changing. Our principal competitors often have considerably greater financial, technical and marketing resources. As new products enter the market, our products may become obsolete or a competitor’s products may be more effective or more effectively marketed and sold than ours. If we fail to maintain and enhance our competitive position, our customers may decide to use products developed by competitors which could result in a loss of revenues.
In addition, the development and commercialization of products outside of the diagnostics industry could adversely affect sales of our product. For example, the development of a safe and effective vaccine to HIV or treatments for other diseases or conditions that our products are designed to detect, could reduce, or eventually eliminate the demand for our CD4 rapid test or other diagnostic products and thereby result in a loss of revenues.
Our research, development and commercialization efforts may not succeed or our competitors may develop and commercialize more effective or successful diagnostic products.
In order to remain competitive, we must regularly commit substantial resources to research and development and the commercialization of new products.
The research and development process generally takes a significant amount of time from inception to commercial product launch. This process is conducted in various stages. During each stage there is a substantial risk that we will not achieve our goals on a timely basis, if at all, and we may have to abandon a product in which we have invested substantial amounts.
Successful products require significant development and investment, including testing, to demonstrate their cost-effectiveness or other benefits prior to commercialization. In addition, regulatory approval must be obtained before most products may be sold. Additional development efforts on these products will be required before any regulatory authority will review them. Regulatory authorities may not approve these products for commercial sale. In addition, even if a product is developed and all applicable regulatory approvals are obtained, there may be little or no market for the product. Accordingly, if we fail to develop commercially successful products, or if competitors develop more effective products or a greater number of successful new products, customers may decide to use products developed by our competitors. This would result in a loss of revenues and adversely affect our results of operations, cash flows and business.
If we lose our key personnel or are unable to attract and retain qualified personnel as necessary, our business could be harmed.
Our success will depend to a large extent upon the contributions of our executive officers, management, and sales, marketing, operations and scientific staff. We may not be able to attract or retain qualified employees in the future due to the intense competition for qualified personnel among medical products businesses.
If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will adversely affect our ability to effectively manufacture, sell and market our products, to meet the demands of our strategic partners in a timely fashion, or to support internal research and development programs. Although we believe we will be successful in attracting and retaining qualified personnel, competition for experienced scientists and other personnel from numerous companies and academic and other research institutions may limit our ability to do so on acceptable terms.
We may be held liable for injuries resulting from the use of our diagnostic products.
We may be held liable if any of our products, or any product which is made with the use or incorporation of any of our technologies, causes injury of any type or is found otherwise unsuitable during product testing, manufacturing, marketing, sale or usage. Although we intend to obtain product liability insurance prior to implementation of the commercialization of our products, this insurance may not fully cover potential liabilities. As we bring new products to market, we may need to increase our product liability coverage.
Efforts to consolidate or restructure could adversely affect our business.
We may from time to time restructure and consolidate various aspects of our operations in order to achieve cost savings and other efficiencies. We must obtain FDA approval to transfer certain operations to another location. This transfer and the need to obtain FDA approval could interfere with or delay our manufacturing processes and disrupt continued operations. Any delay in or disruption of operations, and in particular manufacturing operations, could result in increased costs or could delay or prevent us from selling certain products and thereby result in a loss of revenue.
Future acquisitions or investments could disrupt our ongoing business, distract our management, increase our expenses and adversely affect our business.
We may consider strategic acquisitions or investments as a way to expand our business in the future. These activities, and their impact on our business, are subject to the following risk factors:
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Suitable acquisitions or investments may not be found or consummated on terms that are satisfactory to us;
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We may be unable to successfully integrate an acquired company’s personnel, assets, management systems and technology into our business;
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Acquisitions may require substantial expense and management time and could disrupt our business;
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An acquisition and subsequent integration activities may require greater capital resources than originally anticipated at the time of acquisition;
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An acquisition may result in the incurrence of unexpected expenses, the dilution of our earnings or our existing stockholders’ percentage ownership, or potential losses from undiscovered liabilities not covered by an indemnification from the seller(s) of the acquired business;
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An acquisition may result in the loss of existing key personnel or customers or the loss of the acquired company’s key personnel or customers;
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The benefits to be derived from an acquisition could be affected by other factors, such as regulatory developments, general economic conditions and increased competition; and
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An acquisition of a foreign business may involve additional risks, including not being able to successfully assimilate differences in foreign business practices or overcome language barriers.
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The incurrence of one or more of the above or other factors may prevent us from achieving all or a significant part of the benefits expected from an acquisition or investment. This may adversely affect our financial condition, results of operations and ability to grow our business.
Our failure to develop new distribution channels may result in lower revenues.
We intend to market many of our products by collaborating with laboratories, diagnostic companies and distributors. Our sales will depend to a substantial degree on our ability to sell products to these customers and develop new product distribution channels, and on the marketing abilities of the companies with which we collaborate.
In addition, some distributors have experienced, and may continue to experience, pressure from their customers to reduce the price of their products and testing services.
Although we will try to maintain the relationships that we hope to develop and expand our business with our distributors, there can be no assurance that such companies will continue to purchase or distribute our products or maintain order volumes, or that new distribution channels will be available on satisfactory terms.
The use of sole supply sources for critical components of our products could adversely affect our business.
If suppliers of certain antigens we utilize in our tests are unable or unwilling to supply the required component, we would need to find another source, and perform additional development work and obtain FDA approval for the use of the alternative component for our products. Completing that development and obtaining such FDA approval could require significant time to complete and may not occur at all. These events could either disrupt our ability to manufacture and sell certain of our products or completely prevent us from doing so. Either event would have a material adverse effect on our results of operations, cash flows and business.
We may depend upon strategic partners to assist in developing and commercializing some of our diagnostic products.
Although we intend to pursue some product opportunities independently, opportunities that require a significant level of investment for development and commercialization or a distribution network may necessitate involving one or more strategic partners. In particular, our strategy for development and commercialization of a Target System rapid CD4 test, rapid TB or Malaria test, and certain other products may entail entering into additional arrangements with distributors or other corporate partners, universities, research laboratories, licensees and others. We may be required to transfer material rights to such strategic partners, licensees and others. While we expect that our future partners, licensees and others have and will have an economic motivation to succeed in performing their contractual responsibilities, the amount and timing of resources to be devoted to these activities will be controlled by others. Consequently, there can be no assurance that any revenues or profits will be derived from such arrangements.
Our success depends on our ability to protect our proprietary technology.
The diagnostics industry places considerable importance on obtaining patent, trademark, and trade secret protection, as well as other intellectual property rights, for new technologies, products and processes. Our success depends, in part, on our ability to develop and maintain a strong intellectual property portfolio or obtain licenses to patents for products and technologies both in the United States and in other countries.
As appropriate, we intend to file patent applications and obtain patent protection for our proprietary technology. These patent applications and patents will cover, as applicable, compositions of matter for our products, methods of making those products, methods of using those products, and apparatus relating to the use or manufacture of those products. We will also rely on trade secrets, know-how, and continuing technological advancements to protect our proprietary technology.
We have entered, and will continue to enter, into confidentiality agreements with our employees, consultants, advisors and collaborators. However, these parties may not honor these agreements and we may not be able to successfully protect our rights to unpatented trade secrets and know-how. Others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets and know-how.
Many of our employees, including scientific and management personnel, were previously employed by competing companies. Although we encourage and expect all of our employees to abide by any confidentiality agreement with a prior employer, competing companies may allege trade secret violations and similar claims against us.
We may collaborate with universities and governmental research organizations which, as a result, may acquire part of the rights to any inventions or technical information derived from collaboration with them. To facilitate development and commercialization of a proprietary technology base, we may need to obtain licenses to patents or other proprietary rights from other parties. Obtaining and maintaining such licenses may require the payment of substantial costs. In addition, if we are unable to obtain these types of licenses, our product development and commercialization efforts may be delayed or precluded.
A market for our products may not develop.
Our future success will depend, in part, on the market acceptance, and the timing of such acceptance, of new products such as the Target System Rapid CD4 test and products currently under development or that we acquire and introduced in the future. To achieve market acceptance, we must make substantial marketing efforts and spend significant funds to inform potential customers and the public of the perceived benefits of these products. We currently have limited evidence on which to evaluate the market reaction to products that may be developed, and there can be no assurance that any products will meet with market acceptance and fill the market need that is perceived to exist.
Because new legislation, including the Sarbanes-Oxley Act of 2002, increases the cost of compliance with federal securities regulations as well as the risks of liability to officers and directors, we may find it more difficult for us to retain or attract officers and directors.
The Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding corporate accountability in connection with recent accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the SEC, under the Securities Exchange Act of 1934. Upon becoming a public company, we will be required to comply with the Sarbanes-Oxley Act and it is costly to remain in compliance with the federal securities regulations. Additionally, we may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles. Significant costs incurred as a result of becoming a public company could divert the use of finances from our operations resulting in our inability to achieve profitability.
There is currently no trading market for our common stock, which will limit the ability of our stockholders to liquidate their investment.
Outstanding shares of our common stock cannot be offered, sold, pledged or otherwise transferred unless subsequently registered pursuant to, or exempt from registration under, the Securities Act of 1933, as amended (the “Securities Act”) and any other applicable federal or state securities laws or regulations. These restrictions will limit the ability of our stockholders to liquidate their investment.
We may, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our share value.
Our Articles of Incorporation authorize the issuance of 400,000,000 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then 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 our investors, and might have an adverse effect on any trading market for our common stock.
The issuance of preferred stock could adversely affect the voting power or other rights of the holders of our common stock.
Our Articles of Incorporation authorizes the issuance of up to 100,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our directors. Accordingly, our directors are empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company.
Our common shares may be subject to the “Penny Stock” Rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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that a broker or dealer approve a person’s account for transactions in penny stocks; and
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the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
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obtain financial information and investment experience objectives of the person; and
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make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
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The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
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sets forth the basis on which the broker or dealer made the suitability determination; and
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that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common shares and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because we do not presently intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
For the indefinite future, we intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.
You should consider the United States federal income tax consequences of owning our securities.
There are risks associated with the United States federal income tax consequences of owning our common stock. Because the tax consequences of owning our common stock are complex and certain tax consequences may differ depending on the holder's particular tax circumstances, each potential investor should consult with and rely on its own tax advisor about the tax consequences. In addition, there can be no assurance that the United States federal income tax treatment currently applicable to owning our common stock will not be modified by legislative, administrative, or judicial action that may have a retroactive effect. No representation or warranty of any kind is made with respect to the acceptance by the Internal Revenue Service or any court of law regarding the treatment of any item of income, deduction, gain, loss or credit by an investor on its tax return.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Common Stock
The Company’s common stock is currently quoted on the OTCQB. The Company’s common stock has been quoted on the OTCQB since May 3, 2007, under the symbol “EDVP.QB.” Because the Company is quoted on the OTCQB, its securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.
As of the date of this Report, an aggregate of
151,063,898
shares of its common stock were issued and outstanding and were owned by approximately 52 holders of record.
Re-Purchase of Equity Securities
None.
Dividends
The Company has not paid any cash dividends on its common stock since inception and presently anticipate that all earnings, if any, will be retained for development of its business and that no dividends on its common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of its Board of Directors and will depend upon, among other things, future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on its common stock will be paid in the future.
DESCRIPTION OF THE REGISTRANT’S SECURITIES
Pursuant to the Company’s Articles of Incorporation and amendment(s) thereto, the aggregate number of common shares which this Company has authority to issue is two hundred fifty million (250,000,000) shares of Common Stock, par value $0.001 per share.
The Company refers you to its Articles of Incorporation, any amendments thereto, Bylaws, and the applicable provisions of the Nevada General Corporations Law for a more complete description of the rights and liabilities of holders of its securities.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada Revised Statutes provide, in general, that a corporation incorporated under the laws of the State of Nevada, such as the Company, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. In the case of a derivative action, a Nevada corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the State of Nevada or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.
Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted for directors or officers pursuant to the foregoing provisions, the Company is informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, as expressed in the Act and is therefore unenforceable.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company’s financial statements and notes thereto are hereby incorporated by this reference to the Company’s most recent Quarterly Report for the quarterly period ended September 30, 2012, as filed with the Securities and Exchange Commission on November 8, 2012.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On October 23, 2012, the Board of Directors of Endeavor Power Corp. (the “Company”) dismissed M&K CPA’s, PLLC (“M&K”), the Company’s former independent registered public accounting firm. On October 24, 2012, the Board of Directors of the Company selected Stan Jeong Ha Lee, CPA (the “New Accountant”) to serve as the Company’s auditor for the fiscal year ended December 31, 2011.
During the period of M&K’s engagement with the Company and through October 23, 2012, there have been no disagreements with the Former Accountant (as defined in Item 304(a)(1)(iv) of Regulation S-K) on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the Former Accountant, would have caused them to make reference thereto in their report on financial statements for any period.
During the period of the Former Accountant’s engagement and through October 23, 2012, there were no reportable events as defined in Item 304(a)(1)(iv) of Regulation S-K.
During the period of the Former Accountant’s engagement and through October 23, 2012, neither the Registrant nor anyone on its behalf has consulted with the New Accountant regarding either:
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The application of accounting principles to specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Registrant’s financial statements, and neither was a written report provided to the Registrant nor was oral advice provided that the New Accountant concluded was an important factor considered by the Registrant in reaching a decision as to an accounting, auditing, or financial reporting issue; or
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Any matter that was either the subject of a disagreement or a reportable event, as each term is defined in Items 304(a)(1)(iv) or (v) of Regulation S-K, respectively.
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The Company has provided M&K a copy of the foregoing disclosures, a copy of which was attached as Exhibit 16.6 as part of the Company’s Current Report filed on Form 8-K on October 25, 2012.
On October 24, 2012, with the prior approval of its Board of Directors, the Registrant engaged the New Accountant as its independent registered public accounting firm.
The Company has not consulted with the New Accountant regarding the application of accounting principles to a specified transaction or the type of audit opinion that might be rendered on the Company's financial statements during the two most recent fiscal years through present.
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL INFORMATION
INDEX TO FINANCIAL STATEMENTS
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Unaudited Condensed Consolidated Pro Forma Financial Information of Endeavor Power Corporation
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FINANCIAL INFORMATION OF ENDEAVOR POWER CORPORATION
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Interim Financial Statements of Endeavor Power Corporation:
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FINANCIAL INFORMATION OF PARALLAX DIAGNOSTICS, INC.
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Interim Financial Statements of Parallax Diagnostics, Inc:
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On November 1, 2012, the Company, and its wholly owned subsidiary Endeavor Holdings, Inc. (“Endeavor Holdings”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Parallax Diagnostics, Inc, a Nevada corporation (“Parallax”) and the shareholders of Parallax (the “Parallax Shareholders”), whereby Endeavor Holdings acquired 24,870,000 shares of common stock (100%) of Parallax (the “Parallax Stock”) from the Parallax Shareholders. In exchange for the Parallax Stock, the Company issued 90,375,750 shares of its common stock to the Parallax Shareholders.
The 90,375,750 shares, issued at par value $0.001, represent approximately 60% of the Company’s total issued and outstanding shares. The Common Stock Purchase Agreement, and subsequent transaction closing, was completed on October 22, 2012. On October 27, 2012, the Common Stock Purchase Agreement was finalized, and a Change in Control of the Registrant took place.
The foregoing summary description of the terms of the Agreement and Plan of Merger may not contain all information that is of interest to the reader. For further information regarding specific terms and conditions of the Agreement and Plan of Merger, and is incorporated herein as Exhibit 2.1.
As a result of the transactions effected by the Merger Agreement, (i) the former business of Parallax is now our primary business and (ii) there is a change of control whereby the former shareholders of Parallax, will now own a controlling 60% ownership interest in the Company on a fully diluted basis.
Pro Forma Financial Information
September 30, 2012
The unaudited condensed consolidated pro forma financial information of Endeavor Power Corporation (“EDVP”) as of September 30, 2012, gives effect to the Share Exchange as if the transaction had occurred on September 30, 2012.
The unaudited condensed consolidated pro forma balance sheet gives effect to the transaction as of September 30, 2012. The unaudited condensed consolidated pro forma statement of operations for the nine month ended September 30, 2012, gives effect to the transaction as if it had occurred January 1, 2011.
December 31, 2011
The unaudited condensed consolidated pro forma financial information of EDVP as of December 31, 2011 gives effect to the Share Exchange as if the transaction had occurred on December 31, 2011.
The unaudited condensed consolidated pro forma balance sheet gives effect to the transaction as of December 31, 2011. The unaudited condensed consolidated pro forma statement of operations for the calendar year ended December 31, 2011, gives effect to the transaction as if it had occurred January 1, 2011.
The unaudited condensed consolidated pro forma financial information has been included as required by the rules of the Securities and Exchange Commission and is presented for illustrative purposes only. Such information is not necessarily indicative of the operating results or financial position that would have occurred had the transaction taken place or had occurred on the earliest date of January 1, 2011.
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
FOR ENDEAVOR POWER CORPORATION
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
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ENDEAVOR POWER CORPORATION
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As of September 30, 2012 **
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Endeavor
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Endeavor
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Parallax
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Pro Forma
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Historical
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Consolidation
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Pro Forma
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Consolidated
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09/30/2012
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9/30/2012
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Adjustments
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09/30/2012
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(unaudited)
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ASSETS
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Current assets
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$
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—
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$
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26,792
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$
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—
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$
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26,792
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Property and equipment, net
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4,972
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32,495
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—
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37,467
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Intangible assets, net
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—
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1,299,984
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—
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1,299,984
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Goodwill
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—
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—
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741,927
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[10]
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741,927
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TOTAL ASSETS
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$
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4,972
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$
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1,359,271
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$
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741,927
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$
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2,106,170
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current liabilities
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$
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397,623
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$
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601,195
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$
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—
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$
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998,818
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Long-term liabilities
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417,438
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1,500,000
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(417,438
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[9]
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1,500,000
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Total Liabilities
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815,061
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2,101,195
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(417,438
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)
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2,498,818
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Stockholders’ Deficit
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Preferred stock
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—
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[1]
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23
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[3]
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—
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23
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Common stock
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151,064
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[2]
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2,487
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[4]
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(90,376
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)
[5]
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151,064
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[8]
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90,376
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[6]
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(2,487
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)
[7][10]
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Additional paid in capital - preferred
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—
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499,977
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(499,977
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)
[10]
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—
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Additional paid in capital - common
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17,529,437
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88,772
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90,376
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[5]
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17,946,875
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(90,376
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)
[6]
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417,438
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[9]
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|
(88,772
|
)
[10]
|
|
|
|
|
|
Subscriptions receivable
|
|
|
|
|
|
|
(20
|
)
|
|
|
—
|
|
|
|
(20
|
)
|
|
Accumulated deficit
|
|
|
(18,490,590
|
)
|
|
|
(1,333,163
|
)
|
|
|
1,333,163
|
[10]
|
|
|
(18,490,590
|
)
|
|
Total Stockholders’ Deficit
|
|
|
(810,089
|
)
|
|
|
(741,924
|
)
|
|
|
1,159,365
|
|
|
|
(392,648
|
)
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
4,972
|
|
|
$
|
1,359,271
|
|
|
$
|
741,927
|
|
|
$
|
2,106,170
|
|
|
[1]
|
10,000,000 shares authorized, $.001 par, none issued
|
|
[2]
|
250,000,000 shares authorized , $.001 par, 151,063,898 shares issued and outstanding
|
|
[3]
|
100,000,000 shares authorized, $.001 par, 220,000 shares issued and outstanding
|
|
[4]
|
400,000,000 shares authorized , $.001 par, 28,020,000 shares issued and outstanding
|
|
[5]
|
EDVP Cancellation of shares prior to Merger Agreement per Board Resolution dated October 25, 2012 = 90,375,750 shares @ $.001 par = $90,376
|
|
[6]
|
Issuance of EDVP shares to PRLX Shareholders - 90,375,750 shares x $.001 par value = $90,376
|
|
[7]
|
Issuance of PRLX shares to EDVP Shareholders - 24,870,000 shares x $.0001 par value = $2,487
|
|
[8]
|
Total shares issued and outstanding, 151,063,898 x par $.001 = $151,064
|
|
[9]
|
Cancellation of EDVP debt per Board Resolution dated October 12, 2012
|
|
[10]
|
Elimination of subsidiary equity due to consolidation
|
|
|
|
|
**
|
As if the transaction took place September 30, 2012
|
|
ENDEAVOR POWER CORPORATION
|
|
|
|
As of and for the Nine Months Ended September 30, 2012 **
|
|
(unaudited)
|
|
|
|
Endeavor
|
|
|
Parallax
|
|
|
|
|
|
Endeavor
|
|
|
|
|
Historical
|
|
|
Consolidation
|
|
|
Pro Forma
|
|
|
Proforma
|
|
|
|
|
09/30/2012
|
|
|
09/30/2012
|
|
|
Adjustments
|
|
|
09/30/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cost of revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
57,059
|
|
|
|
121,484
|
|
|
|
|
|
|
|
178,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(57,059
|
)
|
|
|
(121,484
|
)
|
|
|
—
|
|
|
|
(178,543
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
(36,361
|
)
|
|
|
(32,470
|
)
|
|
|
—
|
|
|
|
(68,831
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(93,420
|
)
|
|
$
|
(153,954
|
)
|
|
$
|
—
|
|
|
$
|
(247,374
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per common share - basic and diluted
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
151,063,898
|
|
|
|
|
|
|
|
|
|
|
|
151,063,898
|
|
|
**
|
As if the transaction took place January 1, 2011
|
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
FOR ENDEAVOR POWER CORPORATION
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2011
|
ENDEAVOR POWER CORPORATION
|
|
|
|
As of December 31, 2011**
|
|
|
|
|
|
|
|
|
|
|
|
|
Endeavor
|
|
|
|
|
|
|
Endeavor
|
|
|
Parallax
|
|
|
|
|
|
Pro Forma
|
|
|
|
|
|
|
Historical
|
|
|
Consolidation
|
|
|
Pro Forma
|
|
|
Consolidated
|
|
|
|
|
|
|
12/31/2011
|
|
|
12/31/2011
|
|
|
Adjustments
|
|
|
12/31/2011
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
—
|
|
|
$
|
136,066
|
|
|
$
|
—
|
|
|
$
|
136,066
|
|
|
|
|
Property and equipment, net
|
|
|
8,347
|
|
|
|
41,114
|
|
|
|
—
|
|
|
|
49,461
|
|
|
|
|
Intangible assets, net
|
|
|
—
|
|
|
|
1,370,490
|
|
|
|
—
|
|
|
|
1,370,490
|
|
|
|
|
Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
243,424
|
[12]
|
|
|
243,424
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
8,347
|
|
|
$
|
1,547,670
|
|
|
$
|
243,424
|
|
|
$
|
1,799,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
307,578
|
|
|
$
|
290,776
|
|
|
$
|
—
|
|
|
$
|
598,354
|
|
|
|
|
Long-term liabilities
|
|
|
417,438
|
|
|
|
1,500,000
|
|
|
|
(417,438
|
)
[11]
|
|
|
1,500,000
|
|
|
|
|
Total Liabilities
|
|
|
725,016
|
|
|
|
1,790,776
|
|
|
|
(417,438
|
)
|
|
|
2,098,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
—
|
[1]
|
|
|
22
|
[3]
|
|
|
—
|
|
|
|
22
|
|
|
|
|
Common stock
|
|
|
151,064
|
[2]
|
|
|
2,802
|
[4]
|
|
|
(90,376
|
)
[5]
|
|
|
151,064
|
[9]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90,376
|
)
[6]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(335
|
)
[7]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
[8]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,487
|
)
[9][12]
|
|
|
|
|
|
|
|
Additional paid in capital - preferred
|
|
|
—
|
|
|
|
399,978
|
|
|
|
(399,978
|
)
[12]
|
|
|
—
|
|
|
|
|
Additional paid in capital - common
|
|
|
17,529,437
|
|
|
|
227,456
|
|
|
|
90,376
|
[5]
|
|
|
17,947,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90,376
|
)
[6]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
335
|
[7]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
[8]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
417,438
|
[11]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(227,456
|
)
[12]
|
|
|
|
|
|
|
|
Subscriptions receivable
|
|
|
|
|
|
|
(20
|
)
|
|
|
—
|
|
|
|
(20
|
)
|
|
|
|
Accumulated deficit
|
|
|
(18,397,170
|
)
|
|
|
(873,345
|
)
|
|
|
873,345
|
[12]
|
|
|
(18,397,170
|
)
|
|
|
|
Total Stockholders’ Deficit
|
|
|
(716,669
|
)
|
|
|
(243,107
|
)
|
|
|
660,862
|
|
|
|
(298,914
|
)
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
8,347
|
|
|
$
|
1,547,670
|
|
|
$
|
243,424
|
|
|
$
|
1,799,441
|
|
|
|
|
[1]
|
10,000,000 shares authorized, $.001 par, none issued
|
|
[2]
|
250,000,000 shares authorized , $.001 par, 151,063,898 shares issued and outstanding
|
|
[3]
|
100,000,000 shares authorized, $.001 par, 220,000 shares issued and outstanding
|
|
[4]
|
400,000,000 shares authorized , $.001 par, 28,020,000 shares issued and outstanding
|
|
[5]
|
EDVP Cancellation of shares prior to Merger Agreement per Board Resolution dated October 25, 2012 = 90,375,750 shares @ $.001 par = $90,376
|
|
[6]
|
Issuance of EDVP shares to PRLX Shareholders - 90,375,750 shares x $.001 par value = $90,376
|
|
[7]
|
PRLX Cancellation of shares prior to Merger Agreement = 3,350,000 shares @ $.0001 par = $335
|
|
[8]
|
Issuance of additional shares prior to Merger Agreement = 200,000 shares @ $.0001 par = $20
|
|
[9]\
|
Issuance of PRLX shares to EDVP Shareholders - 24,870,000 shares x $.0001 par value = $2,487
|
|
[10]
|
Total shares issued and outstanding, 151,063,898 x par $.001 = $151,064
|
|
[11]
|
Cancellation of EDVP debt per Board Resolution dated October 12, 2012
|
|
[12]
|
Elimination of subsidiary equity due to consolidation
|
|
|
|
|
**
|
As if the transaction took place December 31, 2011
|
|
ENDEAVOR POWER CORPORATION
|
|
|
|
As of and for the Year Ended December 31, 2011**
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Endeavor
|
|
|
Parallax
|
|
|
|
|
|
Endeavor
|
|
|
|
|
Historical
|
|
|
Consolidation
|
|
|
Pro Forma
|
|
|
Proforma
|
|
|
|
|
12/31/2011
|
|
|
12/31/2011
|
|
|
Adjustments
|
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
192,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
192,246
|
|
|
Cost of revenues
|
|
|
90,091
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
$
|
102,155
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
102,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
2,020,129
|
|
|
|
428,956
|
|
|
|
—
|
|
|
|
2,449,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(1,917,974
|
)
|
|
|
(428,956
|
)
|
|
|
—
|
|
|
|
(2,346,930
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
(49,313
|
)
|
|
|
(374,267
|
)
|
|
|
—
|
|
|
|
(423,580
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(1,967,287
|
)
|
|
$
|
(803,223
|
)
|
|
$
|
—
|
|
|
$
|
(2,770,510
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per common share - basic and diluted
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
102,202,088
|
|
|
|
|
|
|
|
|
|
|
|
151,063,898
|
|
|
**
|
As if the transaction took place January 1, 2011
|
UNAUDITED INTERIM FINANCIAL STATEMENT
FOR ENDEAVOR POWER CORPORATION
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
|
ENDEAVOR POWER CORPORATION
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
(Unaudited)
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
4,972
|
|
|
|
8,347
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
4,972
|
|
|
$
|
8,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
164,449
|
|
|
$
|
115,154
|
|
|
Notes and loans payable
|
|
|
84,075
|
|
|
|
84,075
|
|
|
Due to related parties
|
|
|
149,099
|
|
|
|
108,349
|
|
|
Total Current Liabilities
|
|
|
397,623
|
|
|
|
307,578
|
|
|
|
|
|
|
|
|
|
|
|
|
Related party loans
|
|
|
417,438
|
|
|
|
417,438
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
815,061
|
|
|
|
725,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Preferred stock, no par value, 10,000,000 shares authorized, no shares issued or outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.001 par value, 250,000,000 shares authorized, 151,063,898 and 151,063,898 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively
|
|
|
151,064
|
|
|
|
151,064
|
|
|
Additional paid in capital
|
|
|
17,529,437
|
|
|
|
17,529,437
|
|
|
(Deficit) accumulated during the development stage
|
|
|
(18,490,590
|
)
|
|
|
(18,397,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' (Deficit)
|
|
|
(810,089
|
)
|
|
|
(716,670
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
$
|
4,972
|
|
|
$
|
8,347
|
|
The accompanying notes are an integral part of these consolidated financial statements
ENDEAVOR POWER CORPORATION
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Cumulative from
|
|
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
July 6, 2005 (inception)
|
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
To September 30, 2012
|
|
|
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
192,246
|
|
|
$
|
212,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90,091
|
|
|
|
126,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,155
|
|
|
|
86,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
16,843
|
|
|
|
16,395
|
|
|
|
57,059
|
|
|
|
2,013,359
|
|
|
|
7,682,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
|
|
|
(16,843
|
)
|
|
|
(16,395
|
)
|
|
|
(57,059
|
)
|
|
|
(1,911,204
|
)
|
|
|
(7,596,014
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on settlement of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,292,149
|
)
|
|
Interest expense
|
|
|
(12,362
|
)
|
|
|
(12,362
|
)
|
|
|
(36,361
|
)
|
|
|
(36,952
|
)
|
|
|
(999,794
|
)
|
|
Interest income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,823
|
|
|
Total other income (expenses)
|
|
|
(12,362
|
)
|
|
|
(12,362
|
)
|
|
|
(36,361
|
)
|
|
|
(36,952
|
)
|
|
|
(4,302,481
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) – continuing operations
|
|
$
|
(29,205
|
)
|
|
$
|
(28,757
|
)
|
|
$
|
(93,420
|
)
|
|
$
|
(1,948,156
|
)
|
|
$
|
(11,898,495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,592,095
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(18,490,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
151,063,898
|
|
|
|
151,063,898
|
|
|
|
151,063,898
|
|
|
|
151,201,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per common share - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements
|
ENDEAVOR POWER CORPORATION
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Cumulative From
|
|
|
|
|
|
|
|
July 6, 2005
|
|
|
|
|
Nine Months Ended
|
|
|
(Inception) to
|
|
|
|
|
September 30,
2012
|
|
|
September 30,
2011
|
|
|
September 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from operations:
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(93,420
|
)
|
|
$
|
(1,948,156
|
)
|
|
$
|
(11,898,495
|
)
|
|
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion expense
|
|
|
—
|
|
|
|
—
|
|
|
|
826,541
|
|
|
Depreciation expense
|
|
|
3,375
|
|
|
|
3,375
|
|
|
|
8,528
|
|
|
Common shares issued for services
|
|
|
—
|
|
|
|
1,800,000
|
|
|
|
6,880,452
|
|
|
Common shares issued for incentives
|
|
|
—
|
|
|
|
—
|
|
|
|
110,250
|
|
|
Loss on settlement of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
3,292,149
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accounts and accrued expenses
|
|
|
49,295
|
|
|
|
49,398
|
|
|
|
221,689
|
|
|
Increase in related party payables
|
|
|
40,750
|
|
|
|
3,000
|
|
|
|
74,905
|
|
|
Net cash (used in) operating activities
|
|
|
—
|
|
|
|
(92,403
|
)
|
|
|
(483,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (used in) purchase of property and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
(13,500
|
)
|
|
Net cash provided by investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(13,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from related party loans
|
|
|
—
|
|
|
|
—
|
|
|
|
1,061,561
|
|
|
Proceeds from notes payable
|
|
|
—
|
|
|
|
65,000
|
|
|
|
84,075
|
|
|
Proceeds from shareholders
|
|
|
—
|
|
|
|
—
|
|
|
|
264,949
|
|
|
Proceeds from Issuance of common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
83,991
|
|
|
Repayment on cancellation of common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,000
|
)
|
|
Net cash provided by financing activities
|
|
|
—
|
|
|
|
65,000
|
|
|
|
1,489,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) operating activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(382,377
|
)
|
|
Net cash (used in) investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(609,718
|
)
|
|
Net cash (used in) discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(992,095
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
—
|
|
|
|
(27,403
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period
|
|
|
—
|
|
|
|
27,802
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period
|
|
$
|
—
|
|
|
$
|
399
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH ACTIVITIES
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to acquire mineral properties
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,600,000
|
|
|
Common shares issued to settle note payable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The accompanying notes are an integral part of these consolidated financial statements
ENDEAVOR POWER CORPORATION
(A DVELOPMENT STAGE COMPANY)
SEPTEMBER 30, 2012
NOTE 1. OVERVIEW AND NATURE OF BUSINESS
Endeavor Power Corporation (the “Company”) was incorporated in the State of Nevada on July 6, 2005 under the name VB Biotech Laboratories, Inc. On September 21, 2007, the Company filed a Certificate of Amendment with the State of Nevada to change its operating name to VB Trade, Inc., with principal business operations to develop an online website that allowed web designers to sell their website designs in exchange for a commission on all products that were sold through the website. On September 21, 2007, the Company entered into a Plan of Merger (the “Merger”) with Endeavor Uranium, Inc., a mineral exploration company with mineral properties in the northwestern United States. Effectively, the Company changed its name to Endeavor Uranium, Inc. as part of the Merger transaction. On December 23, 2008, the Company entered into a Joint Venture Agreement (the “Agreement”) with Federated Energy Corporation, a Tennessee corporation, for working interests in prospective oil and gas wells located in Nowata County, Oklahoma. Effectively on December 23, 2008, the Company changed its operating name to Endeavor Power Corporation.
In November, 2010, Management assessed a potential business opportunity and determined that in an effort to create value for its Shareholders, the Company should change its business direction.
On November 8, 2010, the Company discontinued its operations in its working interests in oil and gas exploration and changed its operating focus to the development of E-Waste processing services aimed at industrial and government clients.
The Company’s new direction sought to limit the impact of discarded “E-Waste” on the environment. Discarded computers and electronic equipment pose environmental hazards.
On May 26, 2011, Mr. Alfonso Knoll resigned from all positions with the Company, including but not limited to, that of President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary. The resignation did not involve any disagreement with the Company. On June 8, 2011, the Company entered into a Settlement Agreement and General Mutual Release (“Settlement Agreement”) to terminate Mr. Knoll’s Employment Agreement dated November 8, 2010, and to accept his resignation. Pursuant to the Settlement Agreement, Mr. Knoll immediately ceased all services to the Company and, on June 11, 2011, returned to the Company any and all shares of its common stock currently held by him.
On June 2, 2011, Mr. Matthew Carley was appointed as the Company’s President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director. Mr. Carley accepted the appointment, but effectively resigned his positions on September 27, 2011. The Company’s Board of Directors accepted the resignation of Mr. Carley, as well as the resignation of Mr. Keith Kress as a member of the Board of Directors. Simultaneously, the Board of Directors appointed Tom Mackay as the President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and the sole member of the Board of Directors.
In accordance with a change in management effective September 27, 2011, the Company’s business operations changed. The Company intended to provide managerial services, and pursue potential funding opportunities for the Company. It retained consultants to perform the necessary due diligence on certain mining properties located in Venezuela, Brazil, Bolivia, Guyana and several other South American countries. Management, however, determined that the outcome of such due diligence did not provide the Company a viable opportunity, nor did it provide sufficient economic benefit for the Company. Management has therefore ceased its due diligence and exploration of mining property opportunities, and is pursuing other viable business opportunities to increase shareholder market value.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As at September 30, 2012, the Company had a working capital deficit of $397,623, and an accumulated deficit of $18,490,590. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at September 30, 2012, the Company had no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of its mineral properties, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC 260,
Earning per Share
. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
Comprehensive Loss
ASC 220,
Comprehensive Income,
establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at September 30, 2012, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830
Foreign Currency Translation Matters,
using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 605,
Revenue Recognition
. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.
Property and Equipment
Property and equipment is comprised of vehicles and general equipment and are recorded at cost and is depreciated using the straight-line method over the estimated useful lives of three years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.
Financial Instruments
Pursuant to ASC 820,
Fair Value Measurements and Disclosures
and ASC 825,
Financial Instruments
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:
|
|
Level 1
|
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
|
|
Level 2
|
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
|
|
Level 3
|
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
The Company’s financial instruments consist principally of cash, accounts payable, and accrued liabilities. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718,
Share-Based Payments
, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
Recently Adopted Accounting Standards
:
The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has adopted the following new accounting standards during 2012:
|
|
Trouble Debt Restructuring:
Issued in April, 2011, ASU 2011-02 clarifies which loan modifications constitute troubled debt restructurings. It is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings. The new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption. Early adoption is permitted.
|
|
|
|
|
|
|
|
Comprehensive Income
: Issued in June, 2011, ASU 2011-05 eliminates the current option to present other comprehensive income and its components in the statement of changes in equity. It will require companies to report the total of comprehensive income including the components of net income and the components of other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments in the ASU are effective for interim and annual periods beginning on or after December 15, 2011, and should be applied retrospectively. Early adoption is permitted.
|
|
|
|
|
|
|
|
Intangibles:
Issued in September, 2011, ASU 2011-08
permits entities to first perform a qualitative assessment to determine whether it is more likely than not (a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If the entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, it would then perform the first step of the goodwill impairment test; otherwise, no further impairment test would be required. The amendments will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted.
|
|
|
|
|
|
|
|
Disclosures about Offsetting Assets and Liabilities
: Issued in December, 2011, ASU 2011-11 requires disclosures to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. The differences in the offsetting requirements account for a significant difference in the amounts presented in statements of financial position prepared in accordance with U.S. GAAP and IFRS for certain entities. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
|
|
Recently Issued Accounting Standards Updates:
There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.
NOTE 3. PROPERTY AND EQUIPMENT
Property and Equipment consists of the following:
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
General Equipment
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
|
Automobiles
|
|
|
11,000
|
|
|
|
11,000
|
|
|
Sub-Total
|
|
|
13,500
|
|
|
|
13,500
|
|
|
Accumulated Deprecation
|
|
|
(8,528
|
)
|
|
|
(5,153
|
)
|
|
Property and Equipment, Net
|
|
$
|
4,972
|
|
|
$
|
8,347
|
|
Depreciation expense totaled $3,375 and $4,500 for the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively.
NOTE 4. NOTES AND LOANS PAYABLE
|
In June, 2010, the Company issued a note payable in the principal amount of $9,075 to a non-related party. Under the terms of the note, the amount is unsecured, non-interest bearing, and due upon demand.
|
|
In June, 2010, the Company issued a note payable in the principal amount of $10,000 to a non-related party. Under the terms of the note, the amount is unsecured, accrues interest at a rate of 8% per annum, and is due upon demand. As of September 30, 2012, the Company has recorded $2,011 in interest as an accrued expense.
|
|
On April 21, 2011, the Company issued a note payable in the principal amount of $65,000 to a non-related party. The note is unsecured, bears interest at a rate of 10% per annum, and is due upon demand. As of September 30, 2012, the Company has recorded $10,721 in interest as an accrued expense.
|
NOTE 5. RELATED PARTY PAYABLE
As at September 30, 2012, related party payable consists of $149.099 representing miscellaneous operating expenses accrued and/or paid on behalf of the Company by certain related parties. The amounts owing are unsecured, non-interest bearing, and due upon demand.
NOTE 6. NOTES PAYABLE – RELATED PARTY
On August 25, 2009, the Company issued a convertible promissory note (the “Note”) of $826,541 to a related party to settle outstanding debt obligations owing as of the issuance date. Under the terms of the Note, the amount owing accrued interest at a rate of 10% per annum, was due August 25, 2011, and contained certain provisions to convert the debt into common shares of the Company.
On June 17, 2010, the Company issued the related party 375,000 common shares to settle $75,000 of the outstanding Note, reducing the principal balance to $751,541.
In September, 2010, the Company issued the related party 140,000,000 common shares to settle $500,000 of the Note, reducing the principal balance to $251,541.
On September 17, 2010, the Company amended the Note with the related party to combine the remaining principal of $251,541 with the accrued interest to date of $65,897, for a revised principal balance of $317,438. The new principal balance continues to accrue interest at a rate of 10% per annum, but no longer contains a provision for conversion.
In November, 2010, the Company received an additional $100,000 from the related party, increasing the principal balance to $417,438.
As at September 30, 2012, the principal balance of the Note is $417,438. The Company has recorded $105,497 in interest as an accrued expense.
NOTE 7. COMMON STOCK
All common shares issued for services or settlements of debt are valued based on the end-of-day market prices on the date of issuance, unless otherwise specified.
The Company and its Board of Directors authorized a 1:100 reverse common stock split on August 16, 2010, The effects of the reverse stock split resulted in the number of issued and outstanding common stock to decrease from 106,388,200 common shares to 1,063,898 common shares, have been applied on a retroactive basis, and are reflected below where applicable.
The total number of authorized shares of common stock that may be issued by the Company is 250,000,000 with a par value of $0.001 per share.
|
During the year ended December 31, 2006, the Company issued 325,000,000 founder shares for cash proceeds of $5,000. These shares were cancelled during the year ended December 31, 2007.
|
|
During the year ended December 31, 2006, the Company issued 513,448 (post-split adjusted) common shares for cash proceeds of $78,991.
|
|
In October 2007, the Company issued 140,000 (post-split adjusted) common shares at $0.40 per common share, with a fair value of $5,600,000, to acquire mineral properties.
|
On July 22, 2009, the Company issued 460 (post-split adjusted) common shares of the Company with a fair value of $67,376 to settle debt obligations of $27,500, resulting in a loss on settlement of debt of $39,876.
On July 22, 2009, the Company issued 460 (post-split adjusted) common shares of the Company with a fair value of $67,376 to settle debt obligations of $27,500, resulting in a loss on settlement of debt of $39,876.
On July 22, 2009, the Company issued 1,667 (post-split adjusted) common shares of the Company with a fair value of $245,000 to settle debt obligations of $100,000, resulting in a loss on settlement of debt of $145,000.
On July 22, 2009, the Company issued 100 (post-split adjusted) common shares of the Company with a fair value of $14,700 to settle debt obligations of $12,000, resulting in a loss on settlement of debt of $2,700.
On July 22, 2009, the Company issued 750 (post-split adjusted) common shares of the Company with a fair value of $110,250 to a related party as incentive bonus shares for the conversion of amounts owing into a long-term convertible note payable.
On August 25, 2009, the Company issued 32,000 (post-split adjusted) common shares of the Company for consulting services with a fair value of $3,776,000.
On June 17, 2010, the Company issued 375,000 (post-split adjusted) common shares to a related party for the repayment of payable note payable of $75,000, resulting in a loss on settlement of debt of $180,000. Per the convertible note agreement the Company was to convert the debt at $0.006 per share (post split) for a total issuance of 12,500,000 shares. The additional 25,000,000 shares were issued at the closing price of the stock on the day of issuance resulting in the $180,000 loss.
.
On September 20, 2010, the Company issued 140,000,000 common shares to settle outstanding notes payable of $500,000 resulting in a loss on settlement of debt of $3,116,667. Per the convertible note agreement the Company was to convert the debt at $0.006 per share (post split) for a total issuance of 83,333,333 shares. The additional 56,666,667 shares were issued at the closing price of the stock on the day of issuance resulting in the $3,166,667 loss.
On November 8, 2010, the Company issued 3,500,000 common shares to the CEO of the Company for management services with a fair value of $910,000. As a result, $906,500 was recorded as paid in capital.
On February 23, 2011, the Company issued 10,000,000 shares of its common stock in exchange for services rendered to the Company, valued at $1,800,000. As a result, $1,790,000 was recorded as paid in capital.
On June 14, 2011, pursuant to the Settlement Agreement related to the resignation of the Company’s former CEO/President, the 3,500,000 shares of common stock previously issued on November 8, 2010, were returned to treasury. As a result, paid in capital was reduced by $3,500.
As of September 30, 2012, the Company had 151,063,898 common shares issued and outstanding.
NOTE 8. WARRANTS
As of September 30, 2012, the Company had the following share purchase warrants outstanding:
|
Outstanding and Exercisable Warrants
|
|
|
Number of
|
Remaining Contractual Life
|
Exercise Price times Number
|
Weighted
Average
|
|
Exercise Price
|
Shares
|
(in years)
|
of Shares
|
Exercise Price
|
|
$0.900
|
500,000
|
0
|
$
|
450,000
|
$
|
0.900
|
|
Warrants
|
|
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Outstanding at December 31, 2011
|
|
|
500,000
|
|
|
$
|
0.900
|
|
|
Issued
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
Expired / Cancelled
|
|
|
(500,000
|
)
|
|
|
0.900
|
|
|
Outstanding at September 30, 2012
|
|
|
—
|
|
|
$
|
—
|
|
The outstanding share purchase warrants expired on August 25, 2012.
NOTE 9. INCOME TAXES
The components of the net deferred tax asset at September 30, 2012 and December 31, 2011, the statutory tax rate, the effective tax rate and the amount of the valuation allowance are indicated below:
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Taxes
|
|
$
|
(93,430
|
)
|
|
$
|
(1,967,287
|
)
|
|
Statutory rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Computed expected tax payable (recovery)
|
|
$
|
31,763
|
|
|
$
|
668,878
|
|
|
Non-deductible expenses
|
|
|
—
|
|
|
|
(1,530
|
)
|
|
Change in valuation allowance
|
|
|
(31,763
|
)
|
|
|
(667,348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Reported income taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
The significant components of deferred income tax assets and liabilities at September 30, 2012 and December 31, 2011 are as follows:
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Net operating loss carried forward
|
|
$
|
5,983,712
|
|
|
$
|
5,890,292
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(5,983,712
|
)
|
|
|
(5,890,292
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset
|
|
$
|
–
|
|
|
$
|
–
|
|
As at September 30, 2012, the Company had $
5,983,712
of net operating losses which expire commencing in the year 2026.
NOTE 10. SUBSEQUENT EVENTS
The Company has evaluated events and transactions that occurred between September 30, 2012 and the date the consolidated financial statements were available for issue, for possible disclosure or recognition in the consolidated financial statements. The Company has determined that there were no such events or transactions that warrant disclosure or recognition in the consolidated financial statements except as noted below.
On October 27, 2012,
Mr. Tom Mackay resigned from all positions with the Company. Th
e Board of Directors of the Company accepted the resignation of Mr. Mackay, and accepted the appointment of Mr. Gardner Williams as the Company’s President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director.
On November 1, 2012, the Company, and its wholly owned subsidiary Endeavor Holdings, Inc. (“Endeavor Holdings”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Parallax Diagnostics, Inc, a Nevada corporation (“PRLX”) and the shareholders of PRLX (the “PRLX Shareholders”), whereby Endeavor Holdings acquired 24,870,000 shares of common stock (100%) of PRLX (the “PRLX Stock”) from the PRLX Shareholders. In exchange for the PRLX Stock, the Company issued 90,375,750 shares of its common stock to the PRLX Shareholders
at par value $.0001, representing approximately 60% of the Company’s total issued and outstanding shares.
FOR ENDEAVOR POWER CORPORATION
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 209
*
Fort Lee
*
NJ 07024-7547
P.O. Box 436402
*
San Diego
*
CA 92143-6402
619-623-7799
*
Fax 619-564-3408
*
E-mail: stan2u@gmail.com
To the Management and Members of
Endeavor Power Corp.
(a development stage company)
We have audited the accompanying balance sheet of Endeavor Power Corp. (a development stage company) (the “Company”) as of December 31, 2011, the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended, and cumulative from July 6, 2005 (inception) to December 31, 2011 for the statements of operations and cash flows. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Endeavor Power Corp. (a development stage company) as of December 31, 2010 and the period from inception (July 6, 2005) to December 31, 2010, were audited by other auditors whose report dated April 12, 2011, expressed an unqualified opinion on those statements. Their report included an explanatory paragraph regarding going concern.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Endeavor Power Corp. (a development stage company) as of December 31, 2011, and the results of its operations and its cash flows for the year then ended, and cumulative from July 6, 2005 (inception) to December 31, 2011 for the statements of operations and cash flows, in conformity with accounting principles generally accepted in the United States of America.
The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not established any source of revenue to cover its operating costs and losses from operations, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
/s/ Stan J.H. Lee, CPA
|
|
|
Stan J.H. Lee, CPA
|
|
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Endeavor Power Corp.
(A Development Stage Company)
We have audited the accompanying balance sheets of Endeavor Power Corp. (A Development Stage Company) as of December 31, 2010, and the related statements of operations, stockholders' equity (deficit) and cash flows for the twelve month period ended December 31, 2010. The financial statements for the period from inception (July 6, 2005) to December 31, 2009 were audited by other auditors whose report expressed an unqualified opinion on those statements. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that the Company 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Endeavor Power Corp. as of December 31, 2010, and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statement, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
/s/ M&K CPAS, PLLC
|
|
|
www.mkacpas.com
Houston, Texas
|
|
|
April 12, 2011
|
|
|
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
December 31, 2011
|
|
|
December 31, 2010
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
27,802
|
|
|
Total Current Assets
|
|
|
—
|
|
|
|
27,802
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
8,347
|
|
|
|
12,847
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
8,347
|
|
|
$
|
40,649
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
115,154
|
|
|
$
|
53,069
|
|
|
Notes and loans payable
|
|
|
84,075
|
|
|
|
19,075
|
|
|
Due to related parties
|
|
|
108,349
|
|
|
|
120,116
|
|
|
Total Current Liabilities
|
|
|
307,578
|
|
|
|
192,260
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term Liabilities
|
|
|
|
|
|
|
|
|
|
Notes & loans payable
|
|
|
417,438
|
|
|
|
417,438
|
|
|
Total Long term Liabilities
|
|
|
417,438
|
|
|
|
417,438
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
725,016
|
|
|
|
609,698
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Preferred stock, no par value, 10,000,000 shares authorized, none issued
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $.001 par value, 250,000,000 shares authorized, 151,063,898 and 144,563,898 issued and outstanding at December 31, 2011 and December 31, 2010, respectively
|
|
|
151,064
|
|
|
|
144,564
|
|
|
Additional paid in capital
|
|
|
17,529,437
|
|
|
|
15,716,270
|
|
|
(Deficit) accumulated during the development stage
|
|
|
(18,397,170
|
)
|
|
|
(16,429,883
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' (Deficit)
|
|
|
(716,669
|
)
|
|
|
(569,049
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
$
|
8,347
|
|
|
$
|
40,649
|
|
The accompanying notes are an integral part of these financial statements
|
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
For the years ended
|
|
|
From July 6, 2005
|
|
|
|
|
December 31,
|
|
|
(inception) to
|
|
|
|
|
2011
|
|
|
2010
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
192,246
|
|
|
$
|
20,397
|
|
|
$
|
212,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
90,091
|
|
|
|
36,046
|
|
|
|
126,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
102,155
|
|
|
|
(15,649
|
)
|
|
|
86,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
2,020,129
|
|
|
|
1,062,752
|
|
|
|
7,625,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
|
|
|
(1,917,974
|
)
|
|
|
(1,078,401
|
)
|
|
|
(7,538,955
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on settlement of debt
|
|
|
—
|
|
|
|
(3,292,149
|
)
|
|
|
(3,292,149
|
)
|
|
Interest expense
|
|
|
(49,313
|
)
|
|
|
(759,387
|
)
|
|
|
(975,794
|
)
|
|
Interest income
|
|
|
—
|
|
|
|
—
|
|
|
|
1,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) – Continuing Operations
|
|
|
(1,967,287
|
)
|
|
|
(5,129,937
|
)
|
|
|
(11,805,075
|
)
|
|
Discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,592,095
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(1,967,287
|
)
|
|
$
|
(5,129,937
|
)
|
|
$
|
(11,805,075
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
102,202,088
|
|
|
|
41,102,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per common share - basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.12
|
)
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
|
ENDEAVOR POWER CORP.
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
PERIOD FROM JULY 6, 2005 (INCEPTION) TO DECEMBER 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
(DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DURING THE
|
|
|
|
|
|
|
|
COMMON STOCK
|
|
|
PAID IN
|
|
|
EXPLORATION
|
|
|
|
|
|
|
|
SHARES
|
|
|
AMOUNT
|
|
|
CAPITAL
|
|
|
STAGE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 6, 2005 (date of inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(750
|
)
|
|
|
(750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2005
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(750
|
)
|
|
|
(750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of founders shares for cash
@ $.000015 per share
|
|
|
3,250,000
|
|
|
|
3,250
|
|
|
|
1,750
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for cash @ $.0015 per share
|
|
|
513,460
|
|
|
|
513
|
|
|
|
78,478
|
|
|
|
—
|
|
|
|
78,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23,830
|
)
|
|
|
(23,830
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2006
|
|
|
3,763,461
|
|
|
|
3,763
|
|
|
|
80,228
|
|
|
|
(24,580
|
)
|
|
|
59,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common shares
|
|
|
(3,250,000
|
)
|
|
|
(3,250
|
)
|
|
|
(1,750
|
)
|
|
|
—
|
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for mineral property @ $.40 per share
|
|
|
140,000
|
|
|
|
140
|
|
|
|
5,599,860
|
|
|
|
—
|
|
|
|
5,600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(73,915
|
)
|
|
|
(73,915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007
|
|
|
653,461
|
|
|
|
653
|
|
|
|
5,678,338
|
|
|
|
(98,495
|
)
|
|
|
5,580,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumption Agreement
|
|
|
|
|
|
|
|
|
|
|
255,050
|
|
|
|
—
|
|
|
|
255,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of related party debt
|
|
|
|
|
|
|
|
|
|
|
37,883
|
|
|
|
—
|
|
|
|
37,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,107,944
|
)
|
|
|
(6,107,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
|
653,461
|
|
|
|
653
|
|
|
|
5,971,271
|
|
|
|
(6,206,439
|
)
|
|
|
(234,515
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares to settle debt
|
|
|
3,437
|
|
|
|
3
|
|
|
|
504,698
|
|
|
|
—
|
|
|
|
504,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
|
|
32
|
|
|
|
3,775,968
|
|
|
|
—
|
|
|
|
3,776,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
826,541
|
|
|
|
—
|
|
|
|
826,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,093,507
|
)
|
|
|
(5,093,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009
|
|
|
688,898
|
|
|
|
689
|
|
|
|
11,078,478
|
|
|
|
(11,299,946
|
)
|
|
|
(220,779
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for repayment of loan
|
|
|
375,000
|
|
|
|
375
|
|
|
|
254,625
|
|
|
|
—
|
|
|
|
255,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares to settle debt
|
|
|
140,000,000
|
|
|
|
140,000
|
|
|
|
3,476,667
|
|
|
|
—
|
|
|
|
3,616,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
|
|
3,500,000
|
|
|
|
3,500
|
|
|
|
906,500
|
|
|
|
—
|
|
|
|
910,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,129,937
|
)
|
|
|
(5,129,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
|
144,563,898
|
|
|
|
144,564
|
|
|
|
15,716,270
|
|
|
|
(16,429,883
|
)
|
|
|
(569,049
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
|
|
10,000,000
|
|
|
|
10,000
|
|
|
|
1,790,000
|
|
|
|
—
|
|
|
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common shares
|
|
|
(3,500,000
|
)
|
|
|
(3,500
|
)
|
|
|
3,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off related party balance
|
|
|
|
|
|
|
|
|
|
|
19,667
|
|
|
|
—
|
|
|
|
19,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,967,287
|
)
|
|
|
(1,967,287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
151,063,898
|
|
|
$
|
151,064
|
|
|
$
|
17,529,437
|
|
|
$
|
(18,397,170
|
)
|
|
$
|
(716,669
|
)
|
The accompanying notes are an integral part of these financial statements
|
ENDEAVOR POWER CORP.
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
From 07/06/05
|
|
|
|
|
For the year ended December 31,
|
|
|
(Inception) to
|
|
|
|
|
2011
|
|
|
2010
|
|
|
12/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from operations:
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(1,967,287
|
)
|
|
$
|
(5,129,937
|
)
|
|
$
|
(11,805,075
|
)
|
|
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion expense
|
|
|
—
|
|
|
|
688,784
|
|
|
|
826,541
|
|
|
Depreciation expense
|
|
|
4,500
|
|
|
|
653
|
|
|
|
5,153
|
|
|
Common shares issued for services
|
|
|
1,800,000
|
|
|
|
910,000
|
|
|
|
6,880,452
|
|
|
Common shares issued for incentives
|
|
|
—
|
|
|
|
—
|
|
|
|
110,250
|
|
|
Loss on settlement of debt
|
|
|
—
|
|
|
|
3,292,149
|
|
|
|
3,292,149
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accounts payable and accrued expenses
|
|
|
62,085
|
|
|
|
69,296
|
|
|
|
172,394
|
|
|
Increase in related party payables
|
|
|
7,900
|
|
|
|
16,667
|
|
|
|
34,155
|
|
|
Net cash (used in) operating activities
|
|
|
(92,802
|
)
|
|
|
(152,388
|
)
|
|
|
(483,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (used in) purchase of property and equipment
|
|
|
—
|
|
|
|
(13,500
|
)
|
|
|
(13,500
|
)
|
|
Net cash (used in) investing activities
|
|
|
—
|
|
|
|
(13,500
|
)
|
|
|
(13,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from related party loans
|
|
|
—
|
|
|
|
174,615
|
|
|
|
1,061,561
|
|
|
Proceeds from notes payable
|
|
|
65,000
|
|
|
|
19,075
|
|
|
|
84,075
|
|
|
proceeds from shareholders
|
|
|
—
|
|
|
|
—
|
|
|
|
264,949
|
|
|
Proceeds from issuance of common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
83,991
|
|
|
Repayment on cancellation of common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,000
|
)
|
|
Net cash provided by financing activities
|
|
|
65,000
|
|
|
|
193,690
|
|
|
|
1,489,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) operating activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(382,377
|
)
|
|
Net cash (used in) investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(609,718
|
)
|
|
Net cash (used in) discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(992,095
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash
|
|
|
(27,802
|
)
|
|
|
27,802
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period
|
|
|
27,802
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period
|
|
$
|
—
|
|
|
$
|
27,802
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to acquire mineral properties
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,600,000
|
|
|
Common shares issued to settle note payable
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The accompanying notes are an integral part of these financial statements
ENDEAVOR POWER CORP.
(A DVELOPMENT STAGE COMPANY)
DECEMBER 31, 2011
NOTE 1. OVERVIEW AND NATURE OF BUSINESS
Endeavor Power Corp. (the “Company”) was incorporated in the State of Nevada on July 6, 2005 under the name VB Biotech Laboratories, Inc. On September 21, 2007, the Company filed a Certificate of Amendment with the State of Nevada to change its operating name to VB Trade, Inc., with principal business operations to develop an online website that allowed web designers to sell their website designs in exchange for a commission on all products that were sold through the website. On September 21, 2007, the Company entered into a Plan of Merger (the “Merger”) with Endeavor Uranium, Inc., a mineral exploration company with mineral properties in the northwestern United States. Effectively, the Company changed its name to Endeavor Uranium, Inc. as part of the Merger transaction. On December 23, 2008, the Company entered into a Joint Venture Agreement (the “Agreement”) with Federated Energy Corporation, a Tennessee corporation, for working interests in prospective oil and gas wells located in Nowata County, Oklahoma. Effectively on December 23, 2008, the Company changed its operating name to Endeavor Power Corp.
In November, 2010, Management assessed a potential business opportunity and determined that in an effort to create value for its Shareholders, the Company should change its business direction.
On November 8, 2010, the Company discontinued its operations in its working interests in oil and gas exploration and changed its operating focus to the development of E-Waste processing services aimed at industrial and government clients.
The Company’s new direction sought to limit the impact of discarded “E-Waste” on the environment. Discarded computers and electronic equipment pose environmental hazards.
On May 26, 2011, Mr. Alfonso Knoll resigned from all positions with the Company, including but not limited to, that of President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary. The resignation did not involve any disagreement with the Company. On June 8, 2011, the Company entered into a Settlement Agreement and General Mutual Release (“Settlement Agreement”) to terminate Mr. Knoll’s Employment Agreement dated November 8, 2010, and to accept his resignation. Pursuant to the Settlement Agreement, Mr. Knoll immediately ceased all services to the Company and, on June 11, 2011, returned to the Company any and all shares of its common stock then held by him.
On June 2, 2011, Mr. Matthew Carley was appointed as the Company’s President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director. Mr. Carley accepted the appointment, but resigned his positions effective September 27, 2011. The Company’s Board of Directors accepted the resignation of Mr. Carley, as well as the resignation of Mr. Keith Kress as a member of the Board of Directors. Simultaneously, Tom Mackay was appointed as the President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and the sole member of the Board of Directors.
In accordance with a change in management effective September 27, 2011, the Company’s business operations changed. The Company intended to provide managerial services, and pursue potential funding opportunities for the Company. It retained consultants to perform the necessary due diligence on certain mining properties located in Venezuela, Brazil, Bolivia, Guyana and several other South American countries. Management, however, determined that the outcome of such due diligence did not provide the Company a viable opportunity, nor did it provide sufficient economic benefit for the Company. Management has therefore ceased its due diligence and exploration of mining property opportunities, and is pursuing other viable business opportunities to increase shareholder market value.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As at December 31, 2011, the Company had a working capital deficit of $307,578, and an accumulated deficit of $18,397,170. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at December 31, 2011 and 2010, the Company had no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of its mineral properties, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC 260,
Earning per Share
. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
Comprehensive Loss
ASC 220,
Comprehensive Income,
establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2011, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830
Foreign Currency Translation Matters,
using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 605,
Revenue Recognition
. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.
Property and Equipment
Property and equipment is comprised of vehicles and general equipment and are recorded at cost and is depreciated using the straight-line method over the estimated useful lives of three years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.
Financial Instruments
Pursuant to ASC 820,
Fair Value Measurements and Disclosures
and ASC 825,
Financial Instruments
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:
|
|
Level 1
|
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
|
|
Level 2
|
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
|
|
Level 3
|
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
The Company’s financial instruments consist principally of cash, accounts payable, and accrued liabilities. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718,
Share-Based Payments
, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
Recently Adopted Accounting Standards
:
The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has adopted the following new accounting standards during 2011:
ASU No. 2010-13:
Issued in April 2010, ASU No. 2010-13 clarifies the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted.
ASU 2010-29:
Issued in December 2010, ASU 2010-29 requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. This ASU will be effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted.
Recently Issued Accounting Standards Updates:
The following accounting standards updates were recently issued and have not yet been adopted by the Company. These standards are currently under review to determine their impact on the Company’s consolidated financial position, results of operations, or cash flows.
|
|
Trouble Debt Restructuring:
Issued in April, 2011, ASU 2011-02 clarifies which loan modifications constitute troubled debt restructurings. It is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings. The new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption. Early adoption is permitted.
|
|
|
|
|
|
|
|
Comprehensive Income
: Issued in June, 2011, ASU 2011-05 eliminates the current option to present other comprehensive income and its components in the statement of changes in equity. It will require companies to report the total of comprehensive income including the components of net income and the components of other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments in the ASU are effective for interim and annual periods beginning on or after December 15, 2011, and should be applied retrospectively. Early adoption is permitted.
|
|
|
|
Intangibles:
Issued in September, 2011, ASU 2011-08
permits entities to first perform a qualitative assessment to determine whether it is more likely than not (a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If the entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, it would then perform the first step of the goodwill impairment test; otherwise, no further impairment test would be required. The amendments will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted.
|
|
|
|
|
|
|
|
Disclosures about Offsetting Assets and Liabilities
: Issued in December, 2011, ASU 2011-11 requires disclosures to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. The differences in the offsetting requirements account for a significant difference in the amounts presented in statements of financial position prepared in accordance with U.S. GAAP and IFRS for certain entities. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
|
|
There were other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.
NOTE 3. PROPERTY AND EQUIPMENT
Property and Equipment consists of the following:
|
|
|
December 31, 2011
|
|
|
December 31, 2010
|
|
|
General Equipment
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
|
Automobiles
|
|
|
11,000
|
|
|
|
11,000
|
|
|
Sub-Total
|
|
|
13,500
|
|
|
|
13,500
|
|
|
Accumulated Deprecation
|
|
|
(5,153
|
)
|
|
|
(653
|
)
|
|
Property and Equipment, Net
|
|
$
|
8,347
|
|
|
$
|
12,487
|
|
Depreciation expense totaled $4,500 and $653 for the years ended December 31, 2011 and 2010, respectively.
NOTE 5. NOTES AND LOANS PAYABLE
|
In June, 2010, the Company issued a note payable in the principal amount of $9,075 to a non-related party. Under the terms of the note, the amount is unsecured, non-interest bearing, and due upon demand.
|
|
In June, 2010, the Company issued a note payable in the principal amount of $10,000 to a non-related party. Under the terms of the note, the amount is unsecured, accrues interest at a rate of 8% per annum, and is due upon demand. As of December 31, 2011, the Company has recorded $1,412 in interest as an accrued expense.
|
|
On April 21, 2011, the Company issued a note payable in the principal amount of $65,000 to a non-related party. The note is unsecured, bears interest at a rate of 10% per annum, and is due upon demand. As of December 31, 2011, the Company has recorded $6,179 in interest as an accrued expense.
|
NOTE 6. RELATED PARTY PAYABLE
As at December 31, 2011, related party payable consists of $108,349 representing miscellaneous operating expenses paid on behalf of the Company by certain related parties. The amounts owing are unsecured, non-interest bearing, and due upon demand.
NOTE 7. NOTES PAYABLE – RELATED PARTY
On August 25, 2009, the Company issued a convertible promissory note (the “Note”) of $826,541 to a related party to settle outstanding debt obligations owing as of the issuance date. Under the terms of the Note, the amount owing accrues interest at a rate of 10% per annum, was due August 25, 2011, and contained certain provisions to convert the debt into common shares of the Company.
On June 17, 2010, the Company issued the related party 375,000 common shares to settle $75,000 of the outstanding Note, reducing the principal balance to $751,541.
In September, 2010, the Company issued the related party 140,000,000 common shares to settle $500,000 of the Note, reducing the principal balance to $251,541.
On September 17, 2010, the Company amended the Note with the related party to combine the remaining principal of $251,541 with the accrued interest to date of $65,897, for a revised principal balance of $317,438. The new principal balance continues to accrue interest at a rate of 10% per annum, but no longer contains a provision for conversion.
In November, 2010, the Company received an additional $100,000 from the related party, increasing the principal balance to $417,438.
As at December 31, 2011, the principal balance of the Note is $417,438. The Company has recorded $74,275 in interest as an accrued expense.
NOTE 8. COMMON STOCK
All common shares issued for services or settlements of debt are valued based on the end-of-day market prices on the date of issuance, unless otherwise specified.
The Company and its Board of Directors authorized a 1:100 reverse common stock split on August 16, 2010, The effects of the reverse stock split resulted in the number of issued and outstanding common stock to decrease from 106,388,200 common shares to 1,063,898 common shares, have been applied on a retroactive basis, and are reflected below where applicable.
The total number of authorized shares of common stock that may be issued by the Company is 250,000,000 with a par value of $0.001 per share.
|
During the year ended December 31, 2006, the Company issued 325,000,000 founder shares for cash proceeds of $5,000. These shares were cancelled during the year ended December 31, 2007.
|
|
During the year ended December 31, 2006, the Company issued 513,448 (post-split adjusted) common shares for cash proceeds of $78,991.
|
|
In October 2007, the Company issued 140,000 (post-split adjusted) common shares at $0.40 per common share, with a fair value of $5,600,000, to acquire mineral properties.
|
On July 22, 2009, the Company issued 460 (post-split adjusted) common shares of the Company with a fair value of $67,376 to settle debt obligations of $27,500, resulting in a loss on settlement of debt of $39,876.
On July 22, 2009, the Company issued 460 (post-split adjusted) common shares of the Company with a fair value of $67,376 to settle debt obligations of $27,500, resulting in a loss on settlement of debt of $39,876.
On July 22, 2009, the Company issued 1,667 (post-split adjusted) common shares of the Company with a fair value of $245,000 to settle debt obligations of $100,000, resulting in a loss on settlement of debt of $145,000.
On July 22, 2009, the Company issued 100 (post-split adjusted) common shares of the Company with a fair value of $14,700 to settle debt obligations of $12,000, resulting in a loss on settlement of debt of $2,700.
On July 22, 2009, the Company issued 750 (post-split adjusted) common shares of the Company with a fair value of $110,250 to a related party as incentive bonus shares for the conversion of amounts owing into a long-term convertible note payable.
On August 25, 2009, the Company issued 32,000 (post-split adjusted) common shares of the Company for consulting services with a fair value of $3,776,000.
On June 17, 2010, the Company issued 375,000 (post-split adjusted) common shares to a related party for the repayment of payable note payable of $75,000, resulting in a loss on settlement of debt of $180,000. Per the convertible note agreement the Company was to convert the debt at $0.006 per share (post split) for a total issuance of 12,500,000 shares. The additional 25,000,000 shares were issued at the closing price of the stock on the day of issuance resulting in the $180,000 loss.
On September 20, 2010, the Company issued 140,000,000 common shares to settle outstanding notes payable of $500,000 resulting in a loss on settlement of debt of $3,116,667. Per the convertible note agreement the Company was to convert the debt at $0.006 per share (post split) for a total issuance of 83,333,333 shares. The additional 56,666,667 shares were issued at the closing price of the stock on the day of issuance resulting in the $3,166,667 loss.
On November 8, 2010, the Company issued 3,500,000 common shares to the CEO of the Company for management services with a fair value of $910,000. As a result, $906,500 was recorded as paid in capital.
On February 23, 2011, the Company issued 10,000,000 shares of its common stock in exchange for services rendered to the Company, valued at $1,800,000. As a result, $1,790,000 was recorded as paid in capital.
On June 14, 2011, pursuant to the Settlement Agreement related to the resignation of the Company’s former CEO/President, the 3,500,000 shares of common stock previously issued on November 8, 2010, were returned to treasury. As a result, paid in capital was reduced by $3,500.
As of December 31, 2011, the Company had 151,063,898 common shares issued and outstanding.
NOTE 9. WARRANTS
During the year ended December 31, 2011, the Company had the following share purchase warrants outstanding:
|
Outstanding and Exercisable Warrants
|
|
|
Number of
|
Remaining Contractual Life
|
Exercise Price times Number
|
Weighted
Average
|
|
Exercise Price
|
Shares
|
(in years)
|
of Shares
|
Exercise Price
|
|
$0.900
|
500,000
|
0.66
|
$
|
450,000
|
$
|
0.900
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
Number
|
|
|
Exercise
|
|
|
Warrants
|
|
of Shares
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2010
|
|
|
500,000
|
|
|
$
|
0.900
|
|
|
Issued
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
Expired / Cancelled
|
|
|
—
|
|
|
|
—
|
|
|
Outstanding at December 31, 2011
|
|
|
500,000
|
|
|
$
|
0.900
|
|
The outstanding share purchase warrants expire on August 25, 2012.
NOTE 10. DISCONTINUED OPERATIONS
On November 8, 2010, the Company discontinued all operations related to the former activities of exploring mineral properties. As at November 8, 2010, the Company had no assets or liabilities relating to mineral properties and exploration and did not incur any mineral property or exploration cost during the year 2010 or 2011.
The results of discontinued operations are summarized as follows:
|
|
|
Accumulated
from July 6, 2005 to December 31, 2009
|
|
|
Operating expenses:
|
|
|
|
|
Impairment of joint venture costs
|
|
$
|
609,718
|
|
|
Impairment of mineral property costs
|
|
|
5,600,000
|
|
|
Mineral property expenditures
|
|
|
382,377
|
|
|
Total expenses
|
|
|
6,592,095
|
|
|
Net Loss
|
|
$
|
(6,592,095
|
)
|
As at December 31, 2011 and 2010, there were no remaining assets and liabilities of the discontinued mineral properties exploration operation.
NOTE 11. INCOME TAXES
The components of the net deferred tax asset at December 31, 2011 and 2010, the statutory tax rate, the effective tax rate and the amount of the valuation allowance are indicated below:
|
|
|
December 31,
2011
|
|
|
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Taxes
|
|
$
|
(1,967,287
|
)
|
|
$
|
(5,129,937
|
)
|
|
Statutory rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Computed expected tax payable (recovery)
|
|
$
|
668,878
|
|
|
$
|
1,744,179
|
|
|
Non-deductible expenses
|
|
|
(1,530
|
)
|
|
|
(1,377,620
|
)
|
|
Change in valuation allowance
|
|
|
(667,348
|
)
|
|
|
(366,559
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Reported income taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
The significant components of deferred income tax assets and liabilities at December 31, 2011 and 2010 are as follows:
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net operating loss carried forward
|
|
$
|
5,890,292
|
|
|
$
|
3,927,505
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(5,890,292
|
)
|
|
|
(3,927,505
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset
|
|
$
|
–
|
|
|
$
|
–
|
|
As at December 31, 2011, the Company had $5,890,292 of net operating losses which expire commencing in the year 2026.
NOTE 12. SUBSEQUENT EVENTS
The Company has evaluated events and transactions that occurred between December 31, 2011 and the date the consolidated financial statements were available for issue, for possible disclosure or recognition in the consolidated financial statements. The Company has determined that there were no such events or transactions that warrant disclosure or recognition in the consolidated financial statements.
UNAUDITED INTERIM FINANCIAL STATEMENT
FOR PARALLAX DIAGNOSTICS, INC.
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
|
PARALLAX DIAGNOSTICS, INC.
|
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
26,792
|
|
|
$
|
136,066
|
|
|
Total Current Assets
|
|
|
26,792
|
|
|
|
136,066
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant & Equipment, net
|
|
|
32,495
|
|
|
|
41,114
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible Assets, net
|
|
|
1,299,984
|
|
|
|
1,370,490
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,359,271
|
|
|
$
|
1,547,670
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
122,666
|
|
|
$
|
104,415
|
|
|
Related party payables
|
|
|
299,380
|
|
|
|
152,361
|
|
|
Notes & loans payable
|
|
|
165,149
|
|
|
|
20,000
|
|
|
Total Current Liabilities
|
|
|
587,195
|
|
|
|
276,776
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Related party loans
|
|
|
14,000
|
|
|
|
14,000
|
|
|
Total Liabilities
|
|
|
2,101,195
|
|
|
|
1,790,776
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value, 100,000,000 shares authorized, 230,000 and 220,000 issued and outstanding as of September 30, 2012 and December 31, 2011, respectively
|
|
|
23
|
|
|
|
22
|
|
|
Common stock, $0.0001 par value, 400,000,000 shares authorized, 24,870,000 and 28,020,000 issued and outstanding as of September 30, 2012 and December 31, 2011, respectively
|
|
|
2,487
|
|
|
|
2,802
|
|
|
Additional paid in capital - Preferred
|
|
|
499,977
|
|
|
|
399,978
|
|
|
Additional paid in capital - Common
|
|
|
88,772
|
|
|
|
227,456
|
|
|
Subscriptions receivable
|
|
|
(20
|
)
|
|
|
(20
|
)
|
|
Accumulated Deficit
|
|
|
(1,333,163
|
)
|
|
|
(873,344
|
)
|
|
Total Stockholders' (Deficit)
|
|
|
(741,924
|
)
|
|
|
(243,106
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
$
|
1,359,271
|
|
|
$
|
1,547,670
|
|
The accompanying notes are an integral part of these financial statements
|
PARALLAX DIAGNOSTICS, INC.
|
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative From
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 12, 2010
|
|
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
(Inception) to
|
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
$
|
121,484
|
|
|
$
|
161,635
|
|
|
$
|
370,771
|
|
|
$
|
313,020
|
|
|
$
|
852.481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
|
|
|
(121,484
|
)
|
|
|
(161,635
|
)
|
|
|
(370,771
|
)
|
|
|
(313,020
|
)
|
|
|
(852.481
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
29,331
|
|
|
|
25,002
|
|
|
|
87,995
|
|
|
|
104,923
|
|
|
|
198,282
|
|
|
Amortization of deferred compensation
|
|
|
2,778
|
|
|
|
58,331
|
|
|
|
42,370
|
|
|
|
214,925
|
|
|
|
281,250
|
|
|
Interest expense
|
|
|
361
|
|
|
|
—
|
|
|
|
1,051
|
|
|
|
—
|
|
|
|
1,149
|
|
|
Total Other Expenses
|
|
|
32,470
|
|
|
|
83,333
|
|
|
|
131,416
|
|
|
|
319,848
|
|
|
|
480,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(153,954
|
)
|
|
$
|
(244,968
|
)
|
|
$
|
(502,187
|
)
|
|
$
|
(632,868
|
)
|
|
$
|
(1,333,162
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per common share - basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
24,394,944
|
|
|
|
28,000,000
|
|
|
|
24,394,944
|
|
|
|
28,000,000
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
|
PARALLAX DIAGNOSTICS, INC.
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
|
Cumulative From
|
|
|
|
|
|
|
|
|
|
|
April 12, 2010
|
|
|
|
|
For the nine months ended
|
|
|
(Inception) to
|
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from operations:
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(502,187
|
)
|
|
$
|
(632,868
|
)
|
|
$
|
(1,333,162
|
)
|
|
Depreciation
|
|
|
12,989
|
|
|
|
4,917
|
|
|
|
23,268
|
|
|
Amortization of intangible assets
|
|
|
75,006
|
|
|
|
100,008
|
|
|
|
200,016
|
|
|
Amortization of deferred compensation
|
|
|
42,370
|
|
|
|
214,925
|
|
|
|
281,250
|
|
|
Stock compensation
|
|
|
5,000
|
|
|
|
—
|
|
|
|
5,000
|
|
|
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accounts payable and accrued expenses
|
|
|
19,399
|
|
|
|
101,391
|
|
|
|
123,815
|
|
|
Increase in expenses payable to related parties
|
|
|
147,019
|
|
|
|
139,724
|
|
|
|
299,380
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(200,404
|
)
|
|
|
(71,903
|
)
|
|
|
(400,433
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) in Property, Plant & Equipment
|
|
|
(4,370
|
)
|
|
|
(49,174
|
)
|
|
|
(55,763
|
)
|
|
(Increase) in Intangible Assets
|
|
|
—
|
|
|
|
(1,500,000
|
)
|
|
|
(1,500,000
|
)
|
|
Net cash (used in) investing activities
|
|
|
(4,370
|
)
|
|
|
(1,500,000
|
)
|
|
|
(1,555,763
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from related party loans
|
|
|
—
|
|
|
|
14,000
|
|
|
|
14,000
|
|
|
Proceeds from notes & loans payable
|
|
|
—
|
|
|
|
—
|
|
|
|
24,500
|
|
|
Repayment of notes & loans payable
|
|
|
(4,500
|
)
|
|
|
—
|
|
|
|
(4,500
|
)
|
|
Increase in Deferred Revenue
|
|
|
—
|
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
(Increase) in Deferred Compensation
|
|
|
—
|
|
|
|
(281,250
|
)
|
|
|
(281,250
|
)
|
|
Increase (Decrease) in Capital Stock due to Merger
|
|
|
(315
|
)
|
|
|
(700
|
)
|
|
|
2,487
|
|
|
Increase in Paid In Capital due to Merger
|
|
|
315
|
|
|
|
227,439
|
|
|
|
227,771
|
|
|
Issuance of Preferred Stock
|
|
|
1
|
|
|
|
21
|
|
|
|
23
|
|
|
Issuance of Common Stock
|
|
|
—
|
|
|
|
—
|
|
|
|
(20
|
)
|
|
Subscriptions receivable
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Increase in Preferred Paid In Capital due to stock issuance
|
|
|
99,999
|
|
|
|
199,980
|
|
|
|
499,977
|
|
|
Net cash provided by financing activities
|
|
|
95,500
|
|
|
|
1,759,489
|
|
|
|
1,982,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash
|
|
|
(109.274
|
)
|
|
|
138,412
|
|
|
|
26,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period
|
|
|
136,066
|
|
|
|
3,600
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period
|
|
$
|
26,792
|
|
|
$
|
142,012
|
|
|
$
|
26,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of Note Payable from capital
|
|
$
|
144,000
|
|
|
$
|
—
|
|
|
$
|
144,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The accompanying notes are an integral part of these financial statements
PARALLAX DIAGNOSTICS, INC.
(A Development Stage Company)
September 30, 2012
NOTE 1. OVERVIEW
The accompanying unaudited financial statements of Parallax Diagnostics, Inc. have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the audited financial statements and notes included thereto for the year ended December 31, 2011, on Form 10K, as filed with the Securities and Exchange Commission.
The financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Parallax Diagnostics, Inc. (the “Company”) was incorporated on April 12, 2010 in the state of Nevada. The Company was formed to serve as a vehicle to effect an asset acquisition, merger, exchange of capital stock, or other business combination with a domestic or foreign business.
On January 11, 2011 (the “Closing Date”), the Company entered into and closed a share exchange agreement (the “Share Exchange Agreement”) with Amersey Investments, LLC (“Amersey”), Parallax Diagnostics, Inc., a Delaware corporation (“Parallax”) and its sole shareholder, Montecito Bio Sciences, Ltd. (“Montecito”). On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) the Company acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of our common stock, par value $0.0001 and (ii) Parallax merged with and into the Company whereupon the Company continued as the surviving entity and the corporate existence of Parallax ceased (the “Merger”). Additionally, as further consideration for the share exchange and Merger and in accordance with the Shares Exchange Agreement, Amersey cancelled to treasury 28,000,000 shares of the Company’s common stock.
As a result of the transactions effected by the Share Exchange Agreement, (i) the former business of Parallax is now the Company’s sole business and (ii) there is a change of control whereby the former shareholder of Parallax, Montecito, will now own a controlling 75% ownership interest in the Company. In addition, the Company changed its name to “Parallax Diagnostics, Inc.”
As a further condition of the Share Exchange Agreement, the current officers and directors of the Company resigned and J. Michael Redmond was appointed to serve as a Director and also as the CEO and President of the Company. Additionally, Mr. Norman A. Kunin was appointed to serve as the Company’s CFO, Mr. Mike Contarino was appointed to serve as the Company’s Vice President and Dr. Roger Morris was appointed to serve as the Company’s Chief Science Officer. Mr. Edward W. Withrow III, Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.
The Company is a development stage company as defined by ASC 915-10, “Accounting and Reporting by Development Stage Enterprises”. A development stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
At September 30, 2012 the Company has not yet commenced any operations. All activity from April 12, 2010 (date of inception) through September 30, 2012 relates to the Company’s formation and the pending registration statement described below.
The Company has incurred losses since inception resulting in an accumulated deficit of $1,333,162 since inception and further losses are anticipated in the development of its business. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due
.
The financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Company’s fiscal year end is December 31.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
Development Stage Company
The Company is a development stage company as defined by ASC 915-10-05, “Development Stage Entity.” The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated, since inception, have been considered as part of the Company’s development stage activities.
Use of Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fiscal Year End
The Company has a fiscal year ending on December 31.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Property, Plant and Equipment
Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repairs and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 5 to 7 years.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.
Earnings (Loss) per Share
Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of both common and preferred stock outstanding for the period.
New Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment consists of the following:
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
Office Equipment
|
|
$
|
10,569
|
|
|
$
|
6,199
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Devices & Instruments
|
|
|
45,194
|
|
|
|
45,194
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Total
|
|
|
55,763
|
|
|
|
51,393
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Deprecation
|
|
|
(23,268
|
)
|
|
|
(10,279
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Property Plant & Equipment, Net
|
|
$
|
32,495
|
|
|
$
|
41,114
|
|
Depreciation expense totaled $4,329 and $10,279 for the three months ended September 30, 2012 and the year ended December 31, 2011, respectively.
NOTE 4. INTANGIBLE ASSETS
Intangible Assets consists of the following:
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
Products & Processes
|
|
$
|
750,000
|
|
|
$
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks & Patents
|
|
|
750,000
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Total
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Amortization
|
|
|
(200,016
|
)
|
|
|
(125,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Intangible Assets, net
|
|
$
|
1,299,984
|
|
|
$
|
1,374,990
|
|
Amortization expense totaled $25,002 and $125,010 for the three months ended September 30, 2012 and the year ended December 31, 2011, respectively.
NOTE 5. RELATED PARTY PAYABLE
As at September 30, 2012, affiliates and related parties are due a total of $313,380, which is comprised of $12,500 cash loans, $291,538 of accrued compensation to officers of the Company, and $9,342 due to related parties for reimbursable expenses.
NOTE 6. NOTES AND LOANS PAYABLE
Prior to the merger, the Company issued a Convertible Promissory Note (the “Note”) in the principal amount of $144,000 to Prominence Capital LLC. The Note bore interest at the rate of 6% per annum, the principal balance due on or before September 30, 2011, and included the option to convert the balance into common stock of the Company at the request of the Note Holder. At the date of the Merger, the Note was recorded the as a capital contribution, after discussions with the Note Holder of its intent to convert the Note into common stock. Subsequent to the merger, the Company was notified that the Note was purchased by the Kasper Group Ltd., a shareholder of the Company, (the “Kasper Note”). The Company has therefore reversed the amount previously recognized as a capital contribution, and has appropriately reflected the principal balance of the Kasper Note as a debt owed to a related party. The Kasper Note is interest free, is due upon demand, and contains a repayment provision to convert the debt into common stock of the Company, at the option of the Kasper Group, Ltd.
In addition, the Company entered into a Confidential Settlement Agreement with Grant Park Global, LLC (“Grant Park”), wherein the Company issued a Promissory Note to Grant Park for the principal amount of $20,000. The Note bears interest at a rate of 7% per annum, and is due and payable upon demand within 12 months.
Accrued interest as of September 30, 2012 is $1,149.
NOTE 7. DEFERRED REVENUE
On September 30, 2011, the Company entered into Modification Agreements with Montecito Bio Sciences, Ltd. (“Montecito”) regarding the Agreement of the Assignment of Intellectual Property (the “Assignment Agreement”) and the Assignment of the License of Intellectual Property (the “License Agreement”), both Agreements having been entered into on September 10, 2010. The nature of the Modifications to the Assignment Agreement and the License Agreement were to increase the royalty amounts (“Royalties”) due to Montecito from Four Percent (4%) to Five Percent (5%) and from Three and One Half Percent (3½%) to Four and One Half Percent (4½%), respectively. The Assignment Agreement Royalties shall revert back to Four Percent (4%) after the Company has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue and the License Agreement Royalties shall revert back to Three and One Half Percent (3½%) after the Company has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue. As of September 30, 2012, the Company has recorded Deferred Revenue in the amount of $1,500,000.
NOTE 8. COMMITMENTS AND CONTINGENCIES
On July 1, 2011, the Company entered into a Development and Supply Agreement with Corder Engineering, LLC. The Statement of Work stipulates that Corder Engineering, LLC shall provide ten (10) Evaluation Units which replicate the functionality Target. Target 1000 firmware ver. 320 and add software for a C-reactive protein (CRP) quantitative assay. The total payment under the Agreement stipulates $35,000 over a twelve week period. As of September 30, 2012, payments totaling $22,500 have been made, and $12,500 has been accrued.
On July 1, 2011, the Company entered into a Supply Agreement with Meyers Stevens Group, Inc. ("Meyers Stevens"). The Statement of Work stipulates that Meyers Stevens will manufacture assays and supply a Data Package for the Company and will yield approximately 100 to 200 fully functional assay test devices for internal investigational use. Estimated delivery of the assays is eight (8) weeks from the date of the Agreement for a total cost of $10,194. As of September 30, 2012, payments totaling $8,980 have been made, and $1,214 has been accrued.
On January 2, 2012, the Company entered into a consulting agreement with Huntington Chase Financial Group LLC (“HCFG”), a Nevada corporation. The consulting agreement provides for HCFG to provide advisory services to the Company for a period of three years for a fee of $12,500 per month.
As of September 30, 2012, $112,500 has been recorded as accrued compensation.
On July 11, 2012, the Company entered into a Consulting Agreement with Greg Suess (“Suess”) for advisory services provided to the Company. As compensation for services rendered, valued at $5,000, Suess was afforded the opportunity to purchase 75,000 restricted shares of the Company’s common stock at a price of $0.001 per share. Suess purchased the shares on July 24, 2012 for cash in the amount of $75.00. As a result, $5,000 was expensed in July, 2012.
NOTE 9. PREFERRED STOCK
The total number of authorized shares of preferred stock that may be issued by the Company is 100,000,000 with a par value of $0.0001 per share.
On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Hamburg Investment Company, LLC ("HIC"), whereby 100,000 shares of Preferred Stock would be issued to HIC for a purchase price of $1.00 per share, or $100,000. As a result, $99,990 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HIC’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group LLC ("HCFG"), whereby 100,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $1.00 per share, or $100,000. As a result, $99,990 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HCFG’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
On September 30, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group LLC ("HCFG"), whereby 10,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $10.00 per share, or $100,000. As a result, $99,999 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, the Company issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of HCFG’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
On December 6, 2011, the Company entered into a Convertible Preferred Purchase Agreement with David Engert, ("Engert") whereby 10,000 shares of Preferred Stock would be issued to Engert for a purchase price of $10.00 per share, or $100,000. As a result, $99,999 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, the Company issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of Engert’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
On May 3, 2012, the Company entered into a Convertible Preferred Purchase Agreement with Donald Wachelka, ("Wachelka") whereby 10,000 shares of Preferred Stock would be issued to Wachelka for a purchase price of $10.00 per share, or $100,000. As a result, $99,999 has been recorded to Preferred paid in capital. In connection with the issuance of Preferred Stock, the Company issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of Wachelka’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
As at September 30, 2012, 230,000 shares of preferred stock are issued and outstanding.
NOTE 10. COMMON STOCK
The total number of authorized shares of common stock that may be issued by the Company is 400,000,000 with a par value of $0.0001 per share.
On April 15, 2010, the Company issued 35,000,000 shares of its common shares at $.0001 per share to Amersey Investments, LLC (“Amersey”) for $3,500 cash.
On January 7, 2011, of the 35,000,000 shares of the Company’s common stock held by Amersey, 7,000,000 shares were transferred to and distributed among 10 shareholders, for no cash.
On January 11, 2011, pursuant to the Share Exchange Agreement, Amersey cancelled to treasury 28,000,000 shares of the Company's common stock.
On January 11, 2011, the Company issued 21,000,000 shares of its common stock pursuant to the Share Exchange Agreement. As a result, $2,100 was recorded as paid in capital.
On January 15, 2011, the Company issued 125,000 shares of its common stock to its President, J. Michael Redmond, for cash in the amount of $125. As a result, $78 was recorded as paid in capital.
During December, 2011, in connection with the settlement agreement with Grant Park Global LLC, the Company issued 20,000 shares of its common stock for cash in the amount $20. As a result, $18 has been recorded as paid in capital.
On July 25, 2012, the Company issued 75,000 shares of its common stock to a consultant for services rendered in the amount of $5,000. As a result, $5,000 was recorded as stock compensation, and $4,992 was recorded as paid in capital.
In August, 2012, 3,350,000 shares of the Company’s common stock were canceled and returned to the treasury.
As of September 30, 2012 the Company has 24,870,000 common shares issued and outstanding.
NOTE 11. EQUITY COMPENSATION PLAN
On October 1, 2010, the board of directors adopted the Company's Stock Option Plan. The Company has reserved 3,000,000 shares of common stock for issuance upon exercise of options granted from time to time under the stock option plan. The stock option plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company's ownership and growth through the grant of incentive and non-qualified options. Under the stock option plan, the Company may grant incentive stock options only
to key employees and employee directors, or the Company may grant non-qualified options to employees, officers, directors and consultants. The stock option plan is currently administered by the Company's board of directors. Subject to the provisions of the stock option plan, the board will determine who shall receive options, the number of shares of common stock that may be purchased under the options. The Company has granted options to purchase a total of 1,950,000 shares. In connection with the options granted, a total of $281,250 has been recorded as deferred compensation, and is being amortized over a 12-18 month vesting period. For the three month period ended September 30, 2012, the Company expensed $2,778 in deferred compensation. As of September 30, 2012 all deferred compensation in the amount of $281,250 has been expensed
.
NOTE 12. INCOME TAX
Deferred tax assets consist of:
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
Net operating loss carry forward
|
|
$
|
1,403,162
|
|
|
$
|
830,974
|
|
|
|
|
|
|
|
|
|
|
|
|
Start-up costs capitalized for tax purposes
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
1,403,162
|
|
|
|
830,974
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(1,403,162
|
)
|
|
|
(830,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and net operating loss carry forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a full valuation allowance.
The difference between the statutory tax rate of 35% and the effective tax rate of 0% is due to the valuation allowance for deferred income tax assets.
NOTE 13. SUBSEQUENT EVENTS
In 2009, the FASB ASC Topic 865 (formerly FASB 165, Subsequent Events), which defines the period after the balance sheet date that subsequent events should be evaluated and provides guidance in determining if the event should be reflected in the current financial statements. This ASC Topic also requires disclosure regarding the date through which subsequent events have been evaluated.
The Company has evaluated events and transactions that occurred between September 30, 2012, and the date the financial statements were available for issue, for possible disclosure or recognition in the financial statements. The Company has determined that there were no such events or transactions that warrant disclosure or recognition in the financial statements except as noted below.
On November 1, 2012, the Company and the Company’s shareholders (the “PRLX Shareholders”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Endeavor Power Group, a Nevada Corporation (“EDVP”) and its wholly owned subsidiary Endeavor Holdings, Inc. (“Endeavor Holdings”) whereby Endeavor Holdings acquired 24,870,000 shares of the Company’s common stock (100%) (the “PRLX Stock”) from the PRLX Shareholders. In exchange for the PRLX Stock, EDVP issued 90,375,750 shares of its common stock to the PRLX Shareholders.
The 90,375,750 shares, issued at par value $.0001, representing approximately 60% of EDVP’s total issued and outstanding shares. The Common Stock Purchase Agreement, and subsequent transaction closing, was completed on October 22, 2012. On October 27, 2012, the Common Stock Purchase Agreement was finalized, and a Change in Control of EDVP took place.
As a result of the transactions effected by the Merger Agreement, (i) the former business of Parallax is now EDVP’s primary business and (ii) there is a change of control whereby the former shareholders of Parallax, will own a controlling 60% ownership interest in EDVP on a fully diluted basis.
During the period October 1, 2012 through November 14, 2012, the Company increased its loans from related parties by $22,115, from a total of $313,380 at September 30, 2012 to $335,495 at November 14, 2012. The increase represents accrued compensation owed to related parties in the amount of $22,115.
FOR PARALLAX DIAGNOSTICS, INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 209
*
Fort Lee
*
NJ 07024-7547
P.O. Box 436402
*
San Diego
*
CA 92143-6402
619-623-7799
*
Fax 619-564-3408
*
E-mail) stan2u@gmail.com
To the Management and Members of
PARALLAX DIAGNOSTICS INC.
We have audited the accompanying balance sheets of
PARALLAX DIAGNOSTICS, INC.
(the “Company”) as of December 31, 2011 and 2010, the related statements of operations, stockholders’ deficit and cash flows for the years then ended, and the cash flows for period beginning April 12, 2010 (inception) to December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
PARALLAX DIAGNOSTICS INC.
as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the period aforementioned in conformity with accounting principles generally accepted in the United States of America.
The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the note to the financial statements, the Company has not established any source of revenue to cover its operating costs and losses from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
/s/ Stan J.H. Lee, CPA
|
|
|
Stan J.H. Lee, CPA
|
|
|
March 27, 2012
|
|
|
PARALLAX DIAGNOSTICS, INC.
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
DECEMBER 31, 2011 AND 2010
|
|
|
|
2011
|
|
|
2010
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
136,066
|
|
|
$
|
3,600
|
|
|
Total Current Assets
|
|
|
136,066
|
|
|
|
3,600
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant & Equipment, net
|
|
|
41,114
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible Assets, net of amortization
|
|
|
1,370,490
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,547,670
|
|
|
$
|
3,600
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
104,415
|
|
|
$
|
26,402
|
|
|
Related party payables
|
|
|
152,361
|
|
|
|
—
|
|
|
Related party loans
|
|
|
14,000
|
|
|
|
1,450
|
|
|
Notes & loans payable
|
|
|
20,000
|
|
|
|
—
|
|
|
Total Current Liabilities
|
|
|
290,776
|
|
|
|
27,852
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
|
1,500,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,790,776
|
|
|
|
27,852
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value, 100,000,000 shares
authorized, 220,000 and none issued and outstanding
as of December 31, 2011 and December 31, 2010, respectively
|
|
|
22
|
|
|
|
—
|
|
|
Common stock, $0.0001 par value, 400,000,000 shares
authorized, 28,020,000 and 35,000,000 issued and outstanding
as of December 31, 2011 and December 31, 2010, respectively
|
|
|
2,802
|
|
|
|
3,500
|
|
|
Additional paid in capital - Preferred
|
|
|
399,978
|
|
|
|
—
|
|
|
Additional paid in capital - Common
|
|
|
227,456
|
|
|
|
|
|
|
Subscriptions receivable
|
|
|
(20
|
)
|
|
|
|
|
|
Accumulated Deficit
|
|
|
(873,345
|
)
|
|
|
(27,752
|
)
|
|
Total Stockholders’ (Deficit)
|
|
|
(243,106
|
)
|
|
|
(24,252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
$
|
1,547,670
|
|
|
$
|
3,600
|
|
See Notes to Financial Statements
|
PARALLAX DIAGNOSTICS, INC.
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative From
|
|
|
|
|
For the 12
|
|
|
For the 9
|
|
|
April 12, 2010
|
|
|
|
|
Months ended
|
|
|
Months ended
|
|
|
(Inception) to
|
|
|
|
|
December 31, 2011
|
|
|
December 31, 2010
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
$
|
428,956
|
|
|
$
|
27,752
|
|
|
$
|
456,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
|
|
|
(428,956
|
)
|
|
|
(27,752
|
)
|
|
|
(456,708
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
135,289
|
|
|
|
—
|
|
|
|
135,289
|
|
|
Amortization of deferred compensation
|
|
|
238,880
|
|
|
|
—
|
|
|
|
238,880
|
|
|
Interest expense
|
|
|
98
|
|
|
|
|
|
|
|
98
|
|
|
Total Other Expenses
|
|
|
374,267
|
|
|
|
—
|
|
|
|
374,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(803,223
|
)
|
|
$
|
(27,752
|
)
|
|
$
|
(830,975
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per common share - basic and diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
31,018,462
|
|
|
|
35,000,000
|
|
|
|
35,000,000
|
|
See Notes to the Financial Statements
|
PARALLAX DIAGNOSTICS, INC.
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
|
|
|
Cumulative From
|
|
|
|
|
|
|
|
|
|
|
April 12, 2010
|
|
|
|
|
For the 12 months ended
|
|
|
For the 9 months ended
|
|
|
(Inception) to
|
|
|
|
|
December 31, 2011
|
|
|
December 31, 2010
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from operations:
|
|
$
|
(803,223
|
)
|
|
$
|
(27,752
|
)
|
|
$
|
(830,975
|
)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
10,279
|
|
|
|
—
|
|
|
|
10,279
|
|
|
Amortization of intangible assets
|
|
|
125,010
|
|
|
|
—
|
|
|
|
125,010
|
|
|
Amortization of deferred compensation
|
|
|
238,880
|
|
|
|
|
|
|
|
238,880
|
|
|
Adjustments to reconcile net (loss) to net cash (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accounts payable and accrued expenses
|
|
|
78,013
|
|
|
|
26,402
|
|
|
|
104,415
|
|
|
Increase in expenses payable to related parties
|
|
|
152,361
|
|
|
|
—
|
|
|
|
152,361
|
|
|
Net cash (used in) operating activities
|
|
|
(198,680
|
)
|
|
|
(1,350
|
)
|
|
|
(200,030
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) in Property, Plant & Equipment
|
|
|
(51,393
|
)
|
|
|
—
|
|
|
|
(51,393
|
)
|
|
(Increase) in Intangible Assets
|
|
|
(1,500,000
|
)
|
|
|
—
|
|
|
|
(1,500,000
|
)
|
|
|
|
|
(1,551,393
|
)
|
|
|
—
|
|
|
|
(1,551,393
|
)
|
|
Cash Flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from related party loans
|
|
|
14,000
|
|
|
|
1,450
|
|
|
|
15,450
|
|
|
(Repayment) of related party loans
|
|
|
(1,450
|
)
|
|
|
—
|
|
|
|
(1,450
|
)
|
|
Proceeds from loans payable
|
|
|
24,500
|
|
|
|
—
|
|
|
|
24,500
|
|
|
Increase in Deferred Revenue
|
|
|
1,500,000
|
|
|
|
—
|
|
|
|
1,500,000
|
|
|
(Increase) in Deferred Compensation
|
|
|
(281,250
|
)
|
|
|
—
|
|
|
|
(281,250
|
)
|
|
Increase (Decrease) in Capital Stock due to Merger
|
|
|
(700
|
)
|
|
|
3,500
|
|
|
|
2,800
|
|
|
Increase in Additional Paid In Capital due to Merger
|
|
|
227,456
|
|
|
|
—
|
|
|
|
227,456
|
|
|
Issuance of Preferred Stock
|
|
|
22
|
|
|
|
—
|
|
|
|
22
|
|
|
Issuance of Common Stock
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
Increase in Preferred Paid In Capital due to stock issuance
|
|
|
399,978
|
|
|
|
—
|
|
|
|
399,978
|
|
|
Net cash provided by financing activities
|
|
|
1,882,539
|
|
|
|
4,950
|
|
|
|
1,887,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash
|
|
|
132,466
|
|
|
|
3,600
|
|
|
|
136,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period
|
|
|
3,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period
|
|
$
|
136,066
|
|
|
$
|
3,600
|
|
|
$
|
136,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH ACTIVITIES
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
See Notes to the Financial Statements
|
PARALLAX DIAGNOSTICS, INC.
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
|
PERIOD FROM APRIL 12, 2010 (INCEPTION) TO DECEMBER 31,2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DURING THE
|
|
|
|
|
|
|
|
COMMON/PREFERRED STOCK
|
|
|
PAID IN CAPITAL
|
|
|
SUBSCRIPTIONS
|
|
|
DEFERRED
|
|
|
EXPLORATION
|
|
|
|
|
|
|
|
SHARES
|
|
|
AMOUNT
|
|
|
PREFERRED
|
|
|
COMMON
|
|
|
RECEIVABLE
|
|
|
COMP
|
|
|
STAGE
|
|
|
TOTAL
|
|
|
Balance, April 12, 2010 (date of inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash , April 15, 2010
|
|
|
35,000,000
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,752
|
)
|
|
|
(27,752
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
|
35,000,000
|
|
|
|
3,500
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
(27,752
|
)
|
|
|
(24,252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, January 11, 2011
|
|
|
21,000,000
|
|
|
|
2,100
|
|
|
|
|
|
|
|
(2,100
|
)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription Payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Cancellation
|
|
|
(28,000,000
|
)
|
|
|
(2,800
|
)
|
|
|
|
|
|
|
2,800
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting for Parallax / ABC Merger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(54,637
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(54,637
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
281,250
|
|
|
|
|
|
|
|
(182,985
|
)
|
|
|
(98,265
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(96,986
|
)
|
|
|
(96,986
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2011
|
|
|
28,000,000
|
|
|
|
2,800
|
|
|
|
—
|
|
|
|
227,438
|
|
|
|
|
|
|
|
(182,985
|
)
|
|
|
(223,003
|
)
|
|
|
(175,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(159,322
|
)
|
|
|
(159,322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,329
|
|
|
|
(58,329
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock
|
|
|
100,000
|
|
|
|
10
|
|
|
|
99,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock
|
|
|
100,000
|
|
|
|
10
|
|
|
|
99,990
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2011
|
|
|
28,200,000
|
|
|
|
2,820
|
|
|
|
199,980
|
|
|
|
227,438
|
|
|
|
(50,000
|
)
|
|
|
(124,656
|
)
|
|
|
(440,654
|
)
|
|
|
(185,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(161,635
|
)
|
|
|
(161,635
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,331
|
|
|
|
(58,331
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock
|
|
|
10,000
|
|
|
|
1
|
|
|
|
99,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriptions Received
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2011
|
|
|
28,210,000
|
|
|
|
2,821
|
|
|
|
299,979
|
|
|
|
(227,438
|
)
|
|
|
—
|
|
|
|
(66,325
|
)
|
|
|
(660,620
|
)
|
|
|
(196,707
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(146,400
|
)
|
|
|
(146,399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,955
|
|
|
|
(23,955
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock
|
|
|
10,000
|
|
|
|
1
|
|
|
|
99,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash
|
|
|
20,000
|
|
|
|
2
|
|
|
|
|
|
|
|
18
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
28,240,000
|
|
|
$
|
2,824
|
|
|
$
|
399,978
|
|
|
$
|
(227,456
|
)
|
|
$
|
(20
|
)
|
|
$
|
(42,370
|
)
|
|
$
|
(830,975
|
)
|
|
$
|
(243,106
|
)
|
See Notes to Financial Statements
PARALLAX DIAGNOSTICS, INC.
(A Development Stage Company)
December 31, 2010 and 2011
NOTE 1. OVERVIEW
Parallax Diagnostics, Inc.(the “Company”) was incorporated on April 12, 2010 in the state of Nevada. The Company was formed to serve as a vehicle to effect an asset acquisition, merger, exchange of capital stock or other business combination with a domestic or foreign On January 11, 2011 (the “Closing Date”), the Company entered into and closed a share exchange agreement (the “Share Exchange Agreement”) with Amersey Investments, LLC (“Amersey”), Parallax Diagnostics, Inc., a Delaware corporation (“Parallax”) and its sole shareholder, Montecito Bio Sciences, Ltd. (“Montecito”). On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) the Company acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of our common stock, par value $0.0001 and (ii) Parallax merged with and into the Company whereupon the Company continued as the surviving entity and the corporate existence of Parallax ceased (the “Merger”). Additionally, as further consideration for the share exchange and Merger and in accordance with the Shares Exchange Agreement, Amersey cancelled to treasury 28,000,000 shares of the Company’s common stock.
business.
As a result of the transactions effected by the Share Exchange Agreement, (i) the former business of Parallax is now the Company’s sole business and (ii) there is a change of control whereby the former shareholder of Parallax, Montecito, will now own a controlling 75% ownership interest in the Company. In addition, the Company changed its name to “Parallax Diagnostics, Inc.”
As a further condition of the Share Exchange Agreement, the current officers and directors of the Company resigned and J. Michael Redmond was appointed to serve as a Director and also as the CEO and President of the Company. Additionally, Mr. Norman A. Kunin was appointed to serve as the Company’s CFO, Mr. Mike Contarino was appointed to serve as the Company’s Vice President and Dr. Roger Morris was appointed to serve as the Company’s Chief Science Officer. Mr. Edward W. Withrow III, Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.
At December 31, 2011 the Company has not yet commenced material operations. All activity from April 12, 2010 (date of inception) through December 31, 2011 relates to the Company’s formation and development of our business plan.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
Development Stage Company
The Company is a development stage company as defined by ASC 915-10-05, “Development Stage Entity”. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated, since inception, have been considered as part of the Company’s development stage activities.
Use of Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fiscal Year End
The Company has a fiscal year ending on December 31.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Property, Plant and Equipment
Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repairs and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 5 to 7 years.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.
Earnings (Loss) per Share
Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of both common and preferred stock outstanding for the period.
New Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment consists of the following:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Office Equipment
|
|
$
|
6,199
|
|
|
$
|
—
|
|
|
Medical Devices & Instruments
|
|
|
45,194
|
|
|
|
—
|
|
|
Sub-Total
|
|
|
51,393
|
|
|
|
—
|
|
|
Accumulated Deprecation
|
|
|
(10,279
|
)
|
|
|
—
|
|
|
Property Plant & Equipment, Net
|
|
$
|
41,114
|
|
|
$
|
—
|
|
Depreciation expense totaled $10,279 and none for the years ended December 31, 2011 and 2010, respectively.
NOTE 4. INTANGIBLE ASSETS
Intangible Assets consists of the following:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Products & Processes
|
|
$
|
750,000
|
|
|
$
|
—
|
|
|
Trademarks & Patents
|
|
|
750,000
|
|
|
|
—
|
|
|
Sub-Total
|
|
|
1,500,000
|
|
|
|
—
|
|
|
Accumulated Amortization
|
|
|
(125,010
|
)
|
|
|
—
|
|
|
Intangible Assets, net
|
|
$
|
1,374,990
|
|
|
$
|
—
|
|
Amortization expense totaled $125,010 and none for the years ended December 31, 2011 and 2010, respectively.
NOTE 5. RELATED PARTY PAYABLE
As at December 31, 2011, affiliates and related parties are due a total of $166,361 which is comprised of $14,000 cash loans, $143,019 of accrued compensation to officers of the Company and $9,342 due to related parties for reimbursable expenses.
NOTE 6. DEFERRED REVENUE
On September 30, 2011, the Company entered into Modification Agreements with Montecito Bio Sciences, Ltd. (“Montecito”) regarding the Agreement of the Assignment of Intellectual Property (the “Assignment Agreement”) and the Assignment of the License of Intellectual Property (the “License Agreement”), both Agreements having been entered into on September 10, 2010. The nature of the Modifications to the Assignment Agreement and the License Agreement were to increase the royalty amounts (“Royalties”) due to Montecito from Four Percent (4%) to Five Percent (5%) and from Three and One Half Percent (3 ½%) to Four and One Half Percent (4 1/2%), respectively. The Assignment Agreement Royalties shall revert back to Four Percent (4%) after the Company has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue and the License Agreement Royalties shall revert back to Three and One Half Percent (3 ½%) after the Company has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue. As of December 31, 2011, the Company has recorded Deferred Revenue in the amount of $1,500,000.
NOTE 7. COMMITMENTS AND CONTINGENCIES
On July 1, 2011 the Company entered into a Development and Supply Agreement with Corder Engineering, LLC. The Statement of Work stipulates that Corder Engineering, LLC shall provide ten (10) Evaluation Units which replicate the functionality Target. Target 1000 firmware ver. 320 and add software for a C-reactive protein (CRP) quantitative assay. The total payment under the Agreement stipulates $35,000 over a twelve week period. As of December 31, 2011, payments totaling $17,500 have been made, and $17,500 has been accrued.
On July 1, 2011 the Company entered into a Supply Agreement with Meyers Stevens Group, Inc. ("Meyers Stevens"). The Statement of Work stipulates that Meyers Stevens will manufacture assays and supply a Data Package for the Company and will yield approximately 100 to 200 fully functional assay test devices for internal investigational use. Estimated delivery of the assays is eight (8) weeks from the date of the Agreement for a total cost of $10,194. As of December 31, 2011, payments totaling $8,980 have been made, and $1,214 has been accrued.
NOTE 8. PREFERRED STOCK
The total number of authorized shares of preferred stock that may be issued by the Company is 100,000,000 with a par value of $0.0001 per share.
On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Hamburg Investment Company, LLC ("HIC"), whereby 100,000 shares of Preferred Stock would be issued to HIC for a purchase price of $1.00 per share, or $100,000.00. In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HIC’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group LLC ("HCFG"), whereby 100,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $1.00 per share, or $100,000.00. In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HCFG’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
On September 30, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group LLC ("HCFG"), whereby 10,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $10.00 per share, or $100,000.00. In connection with the issuance of Preferred Stock, the Company issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of HCFG’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
On December 6, 2011, the Company entered into a Convertible Preferred Purchase Agreement with David Engert, ("Engert") whereby 10,000 shares of Preferred Stock would be issued to Engert for a purchase price of $10.00 per share, or $100,000.00. In connection with the issuance of Preferred Stock, the Company issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of Engert’s shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.
As at December 31, 2011, 220,000 shares of preferred stock are issued and outstanding.
NOTE 9. COMMON STOCK
The total number of authorized shares of common stock that may be issued by the Company is 400,000,000 with a par value of $0.0001 per share.
On April 15, 2010, the Company issued 35,000,000 common shares for cash at a price of $.0001
On January 11, 2011, pursuant to the Share Exchange Agreement, Amersey Investments, LLC cancelled to treasury 28,000,000 shares of the Company's common stock
During January, 2011, the Company issued 21,000,000 common shares as a result of the merger.
.
During January, 2011 the Company issued 125,000 common shares for cash at a price of $.001 per share.
As at December 31, 2011 the Company has 28,000,000 common shares issued and outstanding.
NOTE 10. EQUITY COMPENSATION PLAN
On October 1, 2010, the board of directors adopted the Company's Stock Option Plan. The Company has reserved 3,000,000 shares of common stock for issuance upon exercise of options granted from time to time under the stock option plan. The stock option plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company's ownership and growth through the grant of incentive and non-qualified options. Under the stock option plan, the Company may grant incentive stock options only
to key employees and employee directors, or the Company may grant non-qualified options to employees, officers, directors and consultants. The stock option plan is currently administered by the Company's board of directors. Subject to the provisions of the stock option plan, the board will determine who shall receive options, the number of shares of common stock that may be purchased under the options. As at December 31, 2011, the Company has granted options to purchase 1,950,000 shares. In connection with the options granted, a total of $281,250 has been recorded as deferred compensation, and is being amortized over a 12-18 month vesting period. During the year 2011, the Company recognized $238,880 in amortization.
NOTE 11. INCOME TAX
Deferred tax assets consist of:
|
|
|
2011
|
|
|
2010
|
|
|
Net operating loss carry forward
|
|
$
|
830,975
|
|
|
$
|
27,752
|
|
|
Start-up costs capitalized for tax purposes
|
|
|
—
|
|
|
|
—
|
|
|
Gross deferred tax assets
|
|
|
830,975
|
|
|
|
27,752
|
|
|
Valuation allowance
|
|
|
(830,975
|
)
|
|
|
(27,752
|
)
|
|
Net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and net operating loss carry forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a full valuation allowance
The difference between the statutory tax rate of 35% and the effective tax rate of 0% is due to the valuation allowance for deferred income tax assets.
NOTE 12. SUBSEQUENT EVENTS
In 2009, the FASB ASC Topic 865 (formerly FASB 165, Subsequent Events) , which defines the period after the balance sheet date that subsequent events should be evaluated and provides guidance in determining if the event should be reflected in the current financial statements. This ASC Topic also requires disclosure regarding the date through which subsequent events have been evaluated.
On January 2, 2012 the Company entered into a consulting agreement with Huntington Chase Financial Group LLC (“HCFG”), a Nevada corporation. The consulting agreement provides for HCFG to provide advisory services to the Company for a period of three years for a fee of $12,500 per month.
During the period January 1, 2012 through March 31, 2012, the Company increased its loans from related parties by $13,000, from a total of $166,361 at December 31, 2011 to $179,361 at March 8, 2012. The increase represents accrued compensation owed to related parties in the amount of $13,000.
* * *
EXHIBITS
|
Exhibit
Number
|
|
Description of Exhibit
|
|
Filing Reference
|
|
(2)
|
|
Plan of Purchase, Sale, Reorganization, Arrangement, Liquidation or Succession
|
|
|
|
2.1*
|
|
|
|
Filed herewith
|
|
2.2*
|
|
|
|
Filed herewith
|
|
(3)
|
|
Articles of Incorporation and Bylaws
|
|
|
|
3.1
|
|
Articles of Incorporation
|
|
Filed with the SEC on March 5, 2007 as part of our Registration Statement on Form SB-2.
|
|
3.1(a)
|
|
Amended and Restated Articles of Incorporation
|
|
Filed with the SEC on May 17, 2010 as part of our Annual Report on Form 10-K.
|
|
3.2
|
|
Bylaws
|
|
Filed with the SEC on March 5, 2007 as part of our Registration Statement on Form SB-2.
|
|
3.2(a)
|
|
Amended Bylaws
|
|
Filed with the SEC on May 17, 2010 as part of our Annual Report on Form 10-K.
|
|
3.3*
|
|
|
|
Filed herewith
|
|
(4)
|
|
Instruments Defining the Rights of Security Holders
|
|
|
|
|
|
|
|
|
|
4.1
|
|
2011 Equity Incentive Plan dated March 26, 2011
|
|
Filed with the SEC on March 31, 2011 as part of our Current Report on Form 8-K.
|
|
4.2
|
|
Sample Stock Option Agreement
|
|
Filed with the SEC on March 31, 2011 as part of our Current Report on Form 8-K.
|
|
4.3
|
|
Sample Stock Award Agreement for Stock Units
|
|
Filed with the SEC on March 31, 2011 as part of our Current Report on Form 8-K.
|
|
4.4
|
|
Sample Stock Award Agreement for Restricted Stock
|
|
Filed with the SEC on March 31, 2011 as part of our Current Report on Form 8-K.
|
|
4.5*
|
|
|
|
Filed herewith
|
|
4.6*
|
|
Sample Stock Option Plan
|
|
|
|
(10)
|
|
Material Contracts
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Second Amendment to Joint Venture Agreement between the Company and Federated Energy Corporation dated September 15, 2009
|
|
Filed with the SEC on September 19, 2009 as part of our Current Report on Form 8-K.
|
|
10.2
|
|
Farmount Agreement between the Company and Togs Energy, Inc. and M-C Production & Drilling Co, Inc. dated July 21, 2009
|
|
Filed with the SEC on July 23, 2009 as part of our Current Report on Form 8-K.
|
|
10.3
|
|
Convertible Promissory Note to Regal Capital Development, Inc. dated August 25, 2009
|
|
Filed with the SEC on September 4, 2009 as part of our Current Report on Form 8-K.
|
|
10.4
|
|
Common Stock Purchase Warrant to Regal Capital Development, Inc. dated August 25, 2009
|
|
Filed with the SEC on September 4, 2009 as part of our Current Report on Form 8-K.
|
|
10.5
|
|
Settlement Agreement between the Company and Regal Capital Development, Inc. dated September 11, 2010
|
|
Filed with the SEC on July 12, 2010 as part of our Current Report on Form 8-K.
|
|
10.6
|
|
Promissory Note to Regal Capital Development, Inc. dated September 11, 2010
|
|
Filed with the SEC on July 12, 2010 as part of our Current Report on Form 8-K.
|
|
10.7
|
|
Amended Promissory Note to Regal Capital Development, Inc. dated September 11, 2010
|
|
Filed with the SEC on April 14, 2011 as part of our Annual Report on Form 10-K.
|
|
10.8
|
|
Settlement Agreement between the Company and Andrew I. Telsey, P.C., dated August 3, 2010.
|
|
Filed with the SEC on August 22, 2011 as part of our Quarterly Report on Form 10-Q.
|
|
10.9
|
|
Settlement Agreement between the Company and Regal Capital Development, Inc. dated September 17, 2010
|
|
Filed with the SEC on October 21, 2010 as part of our Current Report on Form 8-K.
|
|
10.10
|
|
Promissory Note to Regal Capital Development, Inc. dated September 17, 2010
|
|
Filed with the SEC on October 21, 2010 as part of our Current Report on Form 8-K.
|
|
10.11
|
|
Employment Agreement between the Company and Alfonso Knoll dated November 8, 2010.
|
|
Filed with the SEC on November 12, 2010 as part of our Current Report on Form 8-K.
|
|
10.12
|
|
Promissory Note to Regal Capital Development, Inc. dated November 23, 2010.
|
|
Filed with the SEC on November 30, 2010 as part of our Current Report on Form 8-K.
|
|
10.13
|
|
Amendment to Employment Agreement between the Company and Alfonso Knoll dated November 17, 2010
|
|
Filed with the SEC on November 30, 2010 as part of our Current Report on Form 8-K.
|
|
10.14
|
|
Consulting Agreement between the Company and The Musser Group, LLC dated February 21, 2011
|
|
Filed with the SEC on February 25, 2011 as part of our Current Report on Form 8-K.
|
|
10.15
|
|
Promissory Note to Marans Invest & Finance S.A. dated April 8, 2011
|
|
Filed with the SEC on August 22, 2011 as part of our Quarterly Report on Form 10-Q.
|
|
10.16
|
|
Promissory Note to Rast Trade Corp. dated April 21, 2011
|
|
Filed with the SEC on August 22, 2011 as part of our Quarterly Report on Form 10-Q.
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10.17
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Settlement Agreement between the Company and Mr. Alfonso Knoll dated June 8, 2011
|
|
Filed with the SEC on June 16, 2011 as part of our Current Report on Form 8-K.
|
|
10.18
|
|
Settlement Agreement between the Company and The Musser Group, LLC dated July 19, 2011
|
|
Filed with the SEC on August 22, 2011 as part of our Quarterly Report on Form 10-Q.
|
|
10.19*
|
|
|
|
Filed herewith
|
|
10.20*
|
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|
|
Filed herewith
|
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10.21*
|
|
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Filed herewith
|
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10.22*
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Filed herewith
|
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10.23*
|
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|
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Filed herewith
|
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10.24*
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Filed herewith
|
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10.25*
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|
|
|
Filed herewith
|
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10.26*
|
|
|
|
Filed herewith
|
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10.27*
|
|
|
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Filed herewith
|
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10.28*
|
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Filed herewith
|
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10.29*
|
|
|
|
Filed herewith
|
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10.30*
|
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Filed herewith
|
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(14)
|
|
Code of Ethics
|
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14.1
|
|
Code of Ethics
|
|
Filed with the SEC on April 14, 2011 as part of our Annual Report on Form 10-K.
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(16)
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|
Letter Re Change in Certifying Accountant
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|
16.1
|
|
Letter from Moore and Associates, Chartered dated August 13, 2009
|
|
Filed with the SEC on August 13, 2009 as part of our Current Report on Form 8-K.
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16.2
|
|
Letter from Seale & Beers, CPAs dated August 26, 2009
|
|
Filed with the SEC on August 27, 2009 as part of our Current Report on Form 8-K.
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16.3
|
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Letter from M&K CPAs, PLLC dated March 12, 2010
|
|
Filed with the SEC on March 12, 2010 as part of our Current Report on Form 8-K.
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16.4
|
|
Letter from Ron Chadwick, P.C. dated August 3, 2010
|
|
Filed with the SEC on August 4, 2010 as part of our Current Report on Form 8-K.
|
|
16.5
|
|
Letter from Davis Accounting Group, P.C. dated November 29, 2010
|
|
Filed with the SEC on November 30, 2010 as part of our Current Report on Form 8-K.
|
|
16.6
|
|
Letter from M&K CPAs, PLLC dated October 23, 2012
|
|
Filed with the SEC on October 25, 2012 as part of our Current Report on Form 8-K.
|
|
(23)
|
|
Consent Letters
|
|
|
|
23.1
|
|
Letter from Stan J.H. Lee dated October 31, 2012
|
|
Filed with the SEC on November 5, 2012 as part of our Annual Report on Form 10-K.
|
|
(99)
|
|
Other Documents
|
|
|
|
99.1*
|
|
|
|
Filed herewith
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
Endeavor Power Corp.
|
|
|
|
|
|
Date: November 14, 2012
|
/s/
J. Michael Redmond
|
|
|
|
By: J. Michael Redmond
|
|
|
Its: President and Chief Executive Officer
|
Endeavor Power Corp 8-K
Exhibit 2.1
THE SECURITIES TO WHICH THIS AGREEMENT AND PLAN OF MERGER RELATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WILL BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER
is made effective as of the 1
st
of November 2012
AMONG:
ENDEAVOR POWER CORP.
, a Nevada corporation
(“
EDVP
”)
AND:
PARALLAX DIAGNOSTICS, INC.
,
a Nevada corporation
(“PRLX”)
AND:
ENDEAVOR SCIENTIFIC HOLDINGS, LTD.
,
a Nevada corporation
(“EDVP Sub”)
AND:
PARALLAX SHAREHOLDERS, a majority of the Parallax Diagnostics, Inc. Shareholders
(“PRLX Shareholders”)
WHEREAS:
A.
EDVP Sub is a wholly-owned subsidiary of EDVP;
B.
The board of directors of each of EDVP and PRLX deem it advisable and in the best interests of their respective companies and shareholders that PRLX be merged (the
“Merger”
) with and into EDVP Sub, with PRLX remaining as the surviving corporation under the name “Parallax Diagnostics, Inc.;
C.
PRLX Shareholders is represented by Montecito Bio Sciences, Ltd., whose ownership represents 84.4% of the issued and outstanding shares of PRLX;
C. For federal income tax purposes, EDVP, EDVP Sub and PRLX intend that the Merger qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
“Code”
), and that this Agreement shall be, and hereby is, adopted as a plan of reorganization for purposes of Section 368(a) of the Code; and
D.
The boards of directors of each of EDVP, EDVP Sub, PRLX and the PRLX shareholders have approved this Agreement and Plan of Merger (the “Agreement”) and the transactions contemplated hereby; and
NOW THEREFORE THIS AGREEMENT WITNESSES
that in consideration of covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree each with the other as follows:
1.
DEFINITIONS
1.1
Definitions
. The following terms have the following meanings, unless the context indicates otherwise:
|
(a)
|
“
Agreement
” means this Agreement, and all the exhibits, schedules and other documents attached to or referred to in this Agreement, and all amendments and supplements, if any, to this Agreement;
|
|
(b)
|
“
PRLX
” has the meaning ascribed to it in the preamble to this Agreement;
|
|
(c)
|
“
PRLX Common Stock
” has the meaning ascribed to such term in Section 3.3 hereof;
|
|
(d)
|
“
PRLX Financial Statements
” means the financial statements of PRLX included in Schedule 10 hereto and forming part of this Agreement;
|
|
(e)
|
“
PRLX Shares
” means the 24,870,000 shares of PRLX Common Stock and held by the Shareholders, being all of the issued and outstanding securities of PRLX beneficially held, either directly or indirectly, by the Shareholders;
|
|
(f)
|
“PRLX Shareholders”
means the 21,000,000 shares owned by Montecito Bio Sciences, Ltd. a Nevada, corporation representing 84.4% of the issued and outstanding shares of PRLX.
|
|
(g)
|
“
Applicable Securities Legislation
” means all applicable securities legislation in all jurisdictions relevant to the issuance of the EDVP Shares;
|
|
(h)
|
“
EDVP
” has the meaning ascribed to it in the preamble to this Agreement;
|
|
(i)
|
“
EDVP Common Stock
” has the meaning ascribed to it in Section 3.3 hereto;
|
|
(j)
|
“
EDVP Shares
” means up to 90,375,750 fully paid and non-assessable shares of the common stock of EDVP to be issued to the Shareholders on the Closing Date;
|
|
(k)
|
“
Closing
” means the completion of the Transaction, in accordance with Section 6 hereof, at which time the Closing Documents will be exchanged by the parties, except for those documents or other items specifically required to be exchanged at a later time;
|
|
(l)
|
“
Closing Date
” means November 1, 2012, or a date mutually agreed upon by the parties hereto;
|
|
(m)
|
“
Closing Documents
” means the papers, instruments and documents required to be executed and delivered at the Closing pursuant to this Agreement;
|
|
(n)
|
“
Code
” has the meaning ascribed to such term in Recital C hereto;
|
|
(o)
|
“
Loss
” means any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses, but excluding any indirect, consequential or punitive damages suffered by any person or entity including damages for lost profits or lost business opportunities;
|
|
(p)
|
“
Merger
” has the meaning ascribed to such term in Recital B hereto;
|
|
(q)
|
“
Merger Consideration
” has the meaning ascribed to such term in Section 2.2(e) hereto;
|
|
(r)
|
“Stock Cancellation”
means the 90,375,750 Shares of common stock of EDVP that are to be cancelled at Closing;
|
|
(s)
|
“
OTC Market
” means the Over the Counter Market or “OTCQB”;
|
|
(t)
|
“Person”
shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, government, entity or government or any group comprised of one or more of the foregoing.
|
|
(u)
|
“
Patents
” means the patents listed in Schedule 13 hereto;
|
|
(v)
|
“510K Cleared Approvals”
means FDA Cleared tests listed in Schedule 13 hereto;
|
|
(w)
|
“SEC
” means the United States Securities and Exchange Commission;
|
|
(x)
|
“
SEC Reports
” means the periodic and current reports filed by EDVP and PRLX with the SEC pursuant to the 1934 Act;
|
|
(y)
|
“
Shareholders
” means the Shareholders of PRLX listed in Schedule 1 hereto;
|
|
(z)
|
“
Surviving Corporation
” has the meaning ascribed to such term in Section 2.1 hereto;
|
|
(aa)
|
“
Taxes
” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Internal Revenue Code 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.
|
|
(bb)
|
“
Tax Return
” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof;
|
|
(cc)
|
“
Transaction
” means the merger of EDVP Sub into PRLX and the issuance of the EDVP Shares to the Shareholders;
|
|
(dd)
|
“
Transmittal Documents
” has the meaning ascribed to such term in Section 2.3 hereto;
|
|
(ee)
|
“
1933 Act
” means the United States Securities Act of 1933, as amended;
|
|
(ff)
|
“
1934 Act
” means the United States Securities Exchange Act of 1934, as amended; and,
|
|
(gg)
|
Schedules.
The following schedules are attached to and form part of this Agreement:
|
|
Schedule 1
|
-
|
PRLX Shareholders
|
|
Schedule 2
|
-
|
Directors and Officers of PRLX & Certificate of Officer
|
|
Schedule 3
|
-
|
Directors and Officers of EDVP & EDVP Sub & Certificate’s of Officer
|
|
Schedule 4
|
-
|
PRLX Liabilities
|
|
Schedule 5
|
-
|
PRLX Leases, Subleases, Claims, Capital Expenditures, Taxes and Other Property Interests
|
|
Schedule 6A
|
-
|
Certificate of U.S. Shareholder
|
|
Schedule 6B
|
-
|
Certificate of Non-U.S. Shareholder
|
|
Schedule 7
Schedule 8
Schedule 9
Schedule 10
|
-
-
-
-
|
PRLX Material Agreements
PRLX Employment Agreement & Consultant Agreements
Trademarks and Patents
FDA Cleared 510K Tests
|
|
Schedule 11
|
-
|
PRLX Financial Statements
|
|
Schedule 12
Schedule 13
|
-
-
|
PRLX Actions, Proceedings, Judgements, Orders and Claims
EDVP Shareholder Cancellation Resolution
|
1.2
Currency.
All dollar amounts referred to in this Agreement are in United States funds, unless expressly stated otherwise.
2.
MERGER TRANSACTION
2.1
Merger.
On and subject to the terms and conditions of this Agreement, EDVP Sub will merge with and into PRLX at the Effective Time (as defined below). PRLX shall be the corporation surviving the Merger (the “
Surviving Corporation
”).
2.2
Effect
of
Merger.
|
(a)
|
General
. The Merger shall become effective on the date and at the time (the “
Effective Time
”) PRLX and EDVP Sub file the Articles of Merger with the State of Nevada. The Merger shall have the effect set forth in the Nevada Revised Statutes. The Surviving Corporation may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name and on behalf of either PRLX or EDVP Sub in order to carry out and effectuate the transactions contemplated by this Agreement.
|
|
(b)
|
Articles of Incorporation
.
The Articles of Incorporation of Surviving Corporation shall be the Articles of Incorporation of PRLX immediately prior to the Effective Time.
|
|
(c)
|
Bylaws
. The Bylaws of Surviving Corporation shall be the Bylaws of PRLX immediately prior to the Effective Time.
|
|
(d)
|
Directors and Officers
. The directors and officers of PRLX shall be and remain the directors and officers of Surviving Corporation at and as of the Effective Time, each holding the office with the Surviving Corporation that he or she held with PRLX immediately prior to the Effective Time.
|
|
(e)
|
Conversion of Securities
. At and as of the Effective Time, the PRLX Shares shall be converted into the right to receive EDVP Shares (for each Shareholder a fractional share resulting from conversion of its aggregate holdings will be rounded up to the nearest whole share) which EDVP Shares will be issued to the Shareholders on a basis of one (1) EDVP Share for each PRLX Share held (the “
Merger Consideration
”). No PRLX securities shall be deemed to be outstanding or to have any rights other than those described and provided for in this Section 2 at and after the Effective Time.
|
|
(f)
|
PRLX Employee Stock Option Plan
. At and as of the Closing there will be 2,800,000 options authorized under the PRLX Employee Stock Option Plan (“ESOP”). The Company has issued 1,375,000 Options with a strike price of $.10 per share to its CEO J. Michael Redmond and 600,000 Options to 4 key executives and consultants with a strike price of $.25. The PRLX ESOP’s Option strike price will be changed to reflect the consolidated EDVP capital structure at Closing. The PRLX ESOP will convert into shares of EDVP after Closing.
|
|
(g)
|
Issued PRLX Preferred Shares
. PRLX has issued 50,000 Shares of Convertible Preferred stock that converted into 1,000,000 shares of the Company’s common stock at $.50 per share of common with a conversion rate of 1 share of preferred for 20 shares of PRLX common stock. The Convertible Preferred Shares were issued with a ratchet provision. The PRLX Preferred shares conversion to common ratio will be changed to reflect the consolidated EDVP capital structure at Closing.
|
|
(h)
|
Conversion Ratio of PRLX Preferred Shares
. At and as of the Closing, the 1,000,000 PRLX will be able to convert to 3,633,926 shares of EDVP.
|
|
(i)
|
Issued Warrants
to Purchase PRLX Shares
. At and as of the Effective Time, there are currently 1,000,000 outstanding PRLX Warrant or right to purchase or acquire any securities of PRLX to which will convert into shares EDVP common stock at $1.50 per share. The Warrants were issued as part of an issuance of convertible preferred stock that included a ratchet provision. The PRLX Warrant’s strike price will be changed to reflect the consolidated EDVP capital structure at Closing.
|
|
(j)
|
Conversion Ration of PRLX Warrants.
At and as of the Closing, the 1,000,000 PRLX Warrants will convert 3,633,926 shares of EDVP with a strike price, after the affect of the ratchet provision, of $.41 per share.
|
|
(k)
|
Conversion of EDVP Sub Securities
. At and as of the Effective Time, all EDVP Sub securities shall be converted into 90,375,750 shares of common stock of the Surviving Corporation, as such are constituted immediately following the Effective Time, and shall be registered in the name of EDVP.
|
|
(l)
|
Effect of Merger.
On the Effective Date, the Surviving Corporation, without further act, deed or other transfer, shall retain or succeed to, as the case may be, and possess and be vested with all the rights, privileges, immunities, powers, franchises and authority, of a public as well as of a private nature, of PRLX and EDVP Sub; all property of every description and every interest therein, and all debts and other obligations of or belonging to or due to each of PRLX or EDVP Sub on whatever account shall thereafter be taken and deemed to be held by or transferred to, as the case may be, or invested in the Surviving Corporation without further act or deed, title to any real estate, or any interest therein vested in PRLX or EDVP Sub, shall not revert or in any way be impaired by reason of this merger; and all of the rights of creditors of PRLX and EDVP Sub shall be preserved unimpaired, and all liens upon the property of PRLX and EDVP Sub shall be preserved unimpaired, and all debts, liabilities, obligations and duties of the respective corporations shall thenceforth remain with or be attached to, as the case may be, the Surviving Corporation and may be enforced against it to the same extent as if all of said debts, liabilities, obligations and duties had been incurred or contracted by it.
|
2.3
Procedure for Exchange of Shares.
Immediately after the Effective Time, EDVP shall mail or cause to be mailed by mail or courier to the Shareholders (excluding the holders of Dissenting Shares) at their addresses as they appear on the books and records of PRLX the following documents (the “
Transmittal Documents
”): (i) a letter of transmittal for the Shareholders to use in surrendering the certificates representing their PRLX Shares in exchange for certificates representing the EDVP Shares to which they are entitled pursuant to the conversion under Section 2.2(e) hereof; (ii) instructions for effecting the surrender of such PRLX Shares in exchange for the Merger Consideration; and (iii) an accredited investor certificate in the form attached as Schedule 7A or a Non-U.S. person certificate in the form attached as Schedule 7B to this Agreement. The EDVP Shares to be issued to the Shareholders shall be, as of the Effective Time, fully paid and non-assessable and shall be issued by EDVP upon EDVP’s receipt of the respective Shareholder’s duly executed Transmittal Documents pursuant to a safe harbor from the prospectus and registration requirements of the 1933 Act. All certificates representing the EDVP Shares, when issued in accordance with the terms of this Agreement, will be endorsed with restrictive legends substantially in the same form as the following legends pursuant to the 1933 Act, in order to reflect the fact that these are restricted securities and will be issued to the Shareholders pursuant to a safe harbor from the registration requirements of the 1933 Act:
For Selling Shareholders not resident in the United States:
“THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).
NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”
For Selling Shareholders resident in the United States:
“NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”
2.4
No Fractional Shares of EDVP Common Stock.
No certificates or scrip or shares of EDVP Common Stock representing fractional shares of EDVP Common Stock or book-entry credit of the same shall be issued upon the surrender for exchange of the PRLX Shares.
2.5
Restricted Shares.
PRLX acknowledges that the EDVP Shares issued pursuant to the terms and conditions set forth in this Agreement will have such hold periods as are required under Applicable Securities Legislation and as a result may not be sold, transferred or otherwise disposed of, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with all Applicable Securities Legislation.
2.6
Lost Certificates.
If any certificate for PRLX Shares shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed and, if required by EDVP, the posting by such Person of a bond in such reasonable amount as EDVP may direct as indemnity against any claim that may be made against it with respect to such certificate, EDVP will deliver in exchange for such lost, stolen or destroyed certificate the applicable Merger Consideration with respect to the shares of PRLX Common Stock formerly represented thereby.
2.7
Further Assurances.
After the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of EDVP, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of EDVP, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.
3.
REPRESENTATIONS AND WARRANTIES OF PRLX
Except as set forth in the disclosure schedules attached hereto, and except as disclosed in the PRLX Financial Statements, PRLX represents and warrants to EDVP, and acknowledges that EDVP is relying upon such representations and warranties, in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of EDVP, as follows:
3.1
Organization and Good Standing.
PRLX is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted.
3.2
Authority.
PRLX has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the “
PRLX Documents
”) to be signed by PRLX and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by PRLX and the consummation by PRLX of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of PRLX, subject to approval by its stockholders. This Agreement has been, and the other PRLX Documents when executed and delivered by PRLX will be, duly executed and delivered by PRLX and this Agreement is, and the other PRLX Documents when executed and delivered by PRLX as contemplated hereby will be, valid and binding obligations of PRLX enforceable in accordance with their respective terms except:
|
(a)
|
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally;
|
|
(b)
|
as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and
|
|
(c)
|
as limited by public policy.
|
3.3
Capitalization of
PRLX
.
The entire authorized capital stock and other equity securities of PRLX consists of: (i) 24,870,000 shares of common stock, par value $0.001 (the “
PRLX Common Stock
”) issued and outstanding as of the date of this Agreement and 50,000 shares of convertible Preferred stock that upon conversion represent 1,000,000 Shares of Common stock. The Preferred Shares were issued with a ratchet provision that adjusted the conversion from preferred to common from 1,000,000 shares to 3,633,926 shares of Common stock in EDVP. The Preferred shares were issued with 100% Warrant coverage that issued 1,000,000 Warrants with a strike price of $1.50 that when adjusted for the ratchet provision caused their to be issued 3,633,926 Warrants with a strike price of $.41 In conjunction with an investment banking agreement with Monarch Bay Associates, LLC the Company issued 500,000 Warrants with a strike price of $.50 per share. The Monarch Warrant Agreement did not contain a ratchet provision. There is 1,975,000 Options in the PRLX ESOP with 1,375,000 Options with a strike price of $.10 per share and 600,000 Options with a strike price of $.25 per share. All of the issued and outstanding PRLX Shares have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with the general corporate laws of the State of Nevada and its articles and bylaws. There are no agreements to which PRLX is a party purporting to restrict the transfer of the PRLX Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the PRLX Common Stock.
3.4
Shareholders of PRLX.
The Shareholders, as listed in Schedule 1 to this Agreement, are the only registered holders of the PRLX Shares.
3.5
Directors and Officers of PRLX
. The duly elected or appointed directors and officers of PRLX are as set out in Schedule 2 to this Agreement.
3.6
Subsidiary.
PRLX has no subsidiaries
3.7
Non-Contravention.
Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will:
|
(a)
|
conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of PRLX under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other material agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to PRLX, or any of its material property or assets;
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(b)
|
violate any provision of the articles or bylaws of PRLX; or
|
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(c)
|
violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to PRLX or any of its material property or assets.
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3.8
Actions and Proceedings.
To the best knowledge of PRLX, except as listed on Schedule 14 hereto, there is no action, suit, judgment, claim, demand or proceeding, outstanding or pending, or threatened against or affecting PRLX or its subsidiaries, or which involves any of the business, or the properties or assets of PRLX that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects, or conditions of PRLX taken as a whole (an “
PRLX Material Adverse Effect
”).
3.9
Compliance
.
|
(a)
|
To the best knowledge of PRLX, PRLX and its subsidiaries are in compliance with, are not in default or violation in any material respect under, and have not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation to the business or operations of PRLX;
|
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(b)
|
To the best knowledge of PRLX, neither PRLX nor its subsidiaries are subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would constitute a PRLX Material Adverse Effect, except as listed on Schedule 14; and
|
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(c)
|
To the best knowledge of PRLX, PRLX and its subsidiaries have operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business. PRLX has not received any notice of any violation thereof, nor is PRLX aware of any valid basis therefore.
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3.10
Filings, Consents and Approvals.
To the best knowledge of PRLX, no filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by PRLX of the Transaction contemplated by this Agreement or to enable PRLX to continue to conduct its business after the Closing Date in a manner which is consistent with that in which the business is presently conducted.
3.11
Absence of Undisclosed Liabilities.
Except as disclosed in this Agreement or in the PRLX Financial Statements, PRLX does not have any liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise that could in the aggregate exceed
$
10,000, which have not heretofore been paid or discharged, other than in the ordinary course of business.
For purposes of this Agreement, the term “
liabilities
” includes, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.
3.12
Absence of Changes.
Except as disclosed in this Agreement, in Schedule 6 or in the PRLX Financial Statements, since September 30, 2012, PRLX has not:
|
(a)
|
failed to pay or discharge when due any liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties;
|
|
(b)
|
sold, encumbered, assigned or transferred any material fixed assets or properties except for ordinary course business transactions consistent with past practice;
|
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(c)
|
created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the material assets or properties of PRLX to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever;
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(d)
|
made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, other than in the ordinary course of business;
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(e)
|
declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares or equity securities;
|
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(f)
|
suffered any damage, destruction or loss, whether or not covered by insurance, that materially and adversely effects its business, operations, assets, properties or prospects;
|
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(g)
|
suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise);
|
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(h)
|
received notice or had knowledge of any actual or threatened labor trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects;
|
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(i)
|
made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $5,000, except such as may be involved in ordinary repair, maintenance or replacement of its assets;
|
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(j)
|
other than in the ordinary course of business, increase the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or directors or made any increase in, or any addition to, other benefits to which any of its employees or directors may be entitled other than to increase salaries of certain employees to market rates in accordance to the projections previously provided EDVP by PRLX; or
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(k)
|
agreed, whether in writing or orally, to do any of the foregoing.
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3.13
Personal Property.
PRLX possesses, and has good and marketable title of all property necessary for the continued operation of the business of PRLX and as presently conducted and as represented to EDVP. All such property is used in the business of PRLX. All such property is in reasonably good operating condition, and is reasonably fit for the purposes for which such property is presently used. All material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by PRLX are owned by PRLX free and clear of all liens, security interests, charges, encumbrances, and other adverse claims, except as disclosed in Schedule 6 to this Agreement.
3.14
Intellectual Property.
PRLX does not have any intellectual property other than as disclosed on Schedule 9.
3.15
Real Property.
PRLX does not own any real property but has a month-to-month lease on its office space. Each of the leases, subleases, claims, capital expenditures, Taxes or other real property interests (collectively, the “
Leases
”) to which PRLX is a party or is bound, as set out in Schedule 5 to this Agreement, is legal, valid, binding, enforceable and in full force and effect in all material respects. The Leases will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms on the Closing Date. PRLX has not assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the Leases or the leasehold property pursuant thereto.
3.16
Material Contracts and Transactions.
Schedule 6 to this Agreement lists each material contract, agreement, license, permit, arrangement, commitment, instrument or contract to which PRLX is a party (each, a “
Contract
”). Subject to Section 6.2(p) hereof, the continuation and validity of each Contract will in no way be affected by the consummation of the Transaction contemplated by this Agreement. There exists no actual or threatened termination, cancellation, or limitation of, or any amendment, modification, or change to any Contract.
3.17
Certain Transactions.
PRLX is not a guarantor or indemnitor of any indebtedness of any third party, including any person, firm or corporation.
3.18
No Brokers.
PRLX has not incurred any obligation or liability to any party for any brokerage fees, agent’s commissions, or finder’s fees in connection with the Transaction contemplated by this Agreement.
3.19
Completeness of Disclosure.
No representation or warranty by PRLX in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to EDVP pursuant hereto contains or will contain any untrue statement of a material fact.
3.20
Financial Condition
. PRLX has delivered all financial statements required under applicable securities laws to be filed by EDVP in connection with the Transaction, which information is true in all material respects.
4.
REPRESENTATIONS AND WARRANTIES OF EDVP AND EDVP SUB
Each of EDVP and EDVP Sub represent and warrant to PRLX and acknowledge that PRLX is relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of PRLX, as follows:
4.1
Organization and Good Standing.
(a)
EDVP is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada and has the requisite corporate power and authority to own, lease and carry on its business as it is now being conducted. There is no pending or threatened proceeding for the dissolution or liquidation of EDVP.
(b)
EDVP Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. EDVP Sub was formed solely for the purpose of the Merger and has no business, assets, liabilities, contracts or commitments other than as set forth in this Agreement. There is no pending or threatened proceeding for the dissolution or liquidation of EDVP Sub.
(c)
Except for EDVP Sub, EDVP (i) does not, directly or indirectly, own any interest in any corporation, partnership, joint venture, limited liability company, or other Person, and (ii) is not subject to any obligation or requirement to provide funds to or to make any investment (in the form of a loan, capital contribution or otherwise) in any Person.
(d)
EDVP is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the properties owned or leased by it makes such qualification or licensing necessary, except for any such jurisdiction where the failure to so qualify or be licensed, individually and in the aggregate for all such jurisdictions, would not reasonably be expected to have a EDVP Material Adverse Effect (as defined herein).
(e)
EDVP has provided complete and accurate copies of the Articles of Incorporation and Bylaws of EDVP and EDVP Sub, as currently in effect, and minutes and other records of the meetings and other proceedings of the Board of Directors and stockholders of EDVP. Neither EDVP nor EDVP Sub is in violation of any provisions of its Articles of Incorporation or Bylaws.
4.2
Authority.
(a)
Each of EDVP and EDVP Sub has the requisite corporate power and authority to enter into this Agreement, to perform its obligations thereunder, and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement and any other document contemplated by this Agreement (collectively, the “
EDVP Documents
”) by EDVP and EDVP Sub and the consummation by EDVP and EDVP Sub of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of EDVP and EDVP Sub. This Agreement has been duly executed and delivered by EDVP and EDVP Sub and constitutes a legal, valid and binding obligation of EDVP and EDVP Sub, enforceable against each of them in accordance with its terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and, (iii) as limited by public policy.. No vote or approval of the shareholders of EDVP is required in connection with the Merger.
(b)
The execution and delivery by EDVP and EDVP Sub of this Agreement does not, and the consummation of the transactions contemplated thereby will not, (i) conflict with, or result in a violation of, any provision of bylaws or other charter documents of EDVP or EDVP Sub, (ii) constitute or result in a breach of or default (or an event which with notice or lapse of time, or both, would constitute a default) under, or result in the termination or suspension of, or accelerate the performance required by, or result in a right of termination, cancellation or acceleration of any obligation or a loss of a benefit under, any note, bond, mortgage, indenture, deed of trust, lease, permit, concession, franchise, license, agreement or other instrument or obligation to which EDVP is a party or to which the properties or assets of EDVP or EDVP Sub are subject, (iii) create any lien upon any of the properties or assets of EDVP or EDVP Sub, or (iv) constitute, or result in, a violation of any law applicable to EDVP or EDVP Sub or any of the properties or assets of either of them.
(c)
No consent, approval, order or authorization of, notice to, registration or filing with any governmental authority or other Person is necessary in connection with the execution and delivery of this Agreement by EDVP and EDVP Sub or the consummation by EDVP and EDVP Sub of the transactions contemplated by this Agreement, except for (i) filing of the Articles of Merger with the Nevada Secretary of State, (ii) the filing of a Form D and related state securities law notices in connection with the issuance of EDVP Common Stock in connection with the Merger and (iii) the filing of a current report on Form 8-K with the SEC announcing completion of the Merger.
4.3
Maximum Liabilities.
Immediately prior to Closing, other than professional fees, EDVP will not have any net liabilities or net obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise, after taking into account EDVP’s cash and cash equivalents and receivables, that could in the aggregate exceed $20,000 which have not been paid or discharged at that time.
4.4
Capitalization of EDVP.
(a)
Prior to the Stock Consolidation, the authorized capital stock of EDVP consists of 250,000,000 shares of common stock with a par value of $0.001 (the “
EDVP Common Stock
”). The issued and outstanding capital stock of EDVP consists entirely of 151,063,898 shares of EDVP Common Stock. All issued and outstanding shares of EDVP Common Stock are validly issued and outstanding, fully paid and nonassessable and free of preemptive rights. There are no outstanding options, warrants, subscription rights (including any preemptive rights), calls, or commitments, or convertible notes or instruments of any character whatsoever to which EDVP is a party or is bound, requiring or which could require the issuance, sale or transfer by EDVP of any shares of capital stock of EDVP or any securities convertible into or exchangeable or exercisable for, or rights to purchase or otherwise acquire, any shares of capital stock of EDVP. There are no stock appreciation rights or similar rights relating to EDVP. EDVP will have issued and outstanding no more than 151,063,898 shares of EDVP Common Stock immediately prior to the issuance of the EDVP Shares as contemplated by this Agreement. EDVP is to cancel 90,540,535 Shares of Common Stock after it issues 90,540,535 Shares of Common stock pursuant to Agreement and Plan of Merger. Neither EDVP nor any of its representatives have received any formal or informal notification from FINRA or other official party or representative that that EDVP common stock is not authorized (with or without the passage of time) for continued trading on the OTC Market.
(b)
The authorized capital of EDVP Sub consists of 25,000,000 shares of common stock, $0.001 par value per share, of which one (1) share is issued and outstanding and held by EDVP. Other than such outstanding shares, there are no shares of capital stock or other equity securities of EDVP Sub outstanding and no outstanding options, warrants, subscription rights (including any preemptive rights), calls, or commitments, or convertible notes or instruments of any character whatsoever to which EDVP or EDVP Sub is a party or is bound, requiring or which could require the issuance, sale or transfer by EDVP or EDVP Sub of any shares of capital stock of EDVP Sub, any securities convertible into or exchangeable or exercisable for, or rights to purchase or otherwise acquire, any shares of capital stock of EDVP Sub. There are no stock appreciation rights or similar rights relating to EDVP Sub.
(c)
To the knowledge of EDVP, all of the shares of EDVP Common Stock issued and outstanding immediately prior to the date of this Agreement have been issued in compliance with the 1933 Act and applicable state securities laws in reliance on exemptions from registration or qualification thereunder.
4.5
Duly Authorized.
All of the issued and outstanding shares of EDVP Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. Other than the share issuances contemplated by this Agreement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating EDVP to issue any additional shares of EDVP Common Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from EDVP any shares of EDVP Common Stock as of the date of this Agreement. There are no agreements purporting to restrict the transfer of the EDVP Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the EDVP Common Stock.
4.6
Ownership of EDVP Sub, No Prior Activities
. As of the date hereof and as of the Effective Time, except for obligations or liabilities incurred in connection with its incorporation or organization and the transactions contemplated by this Agreement and except for this Agreement and any other agreements or arrangements contemplated hereby or thereby, EDVP Sub has not and will not have incurred, directly or indirectly, any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any person.
4.7
Directors and Officers of EDVP.
The duly elected or appointed directors and the duly appointed officers of EDVP are as listed on Schedule 3 to this Agreement.
4.8
Corporate Records.
The books and records of EDVP have been maintained and preserved in accordance with applicable regulations and business practices. The corporate minutes books of EDVP and EDVP Sub are complete and correct and the minutes and consents contained therein accurately reflect actions taken at a duly called and held meeting or by sufficient consent without a meeting. All actions by EDVP and EDVP Sub, which required director or shareholder approval, are reflected on the respective corporate minute books.
4.9
Non-Contravention.
Neither the execution, delivery and performance of this Agreement, nor the consummation of this Transaction will:
(a)
conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of EDVP under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to EDVP or any of its material property or assets;
(b)
violate any provision of the applicable incorporation or charter documents of EDVP; or
(c)
violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to EDVP or any of its material property or assets.
4.10
Contracts and Commitments.
(a)
Except for this Agreement and the agreements and transactions specifically contemplated by this Agreement, neither EDVP nor EDVP Sub is a party to or subject to, nor plans to enter into:
(i)
any agreement or other commitments requiring any payments or performance of services by EDVP or EDVP Sub;
(ii)
any agreement or other commitments containing covenants limiting the freedom of EDVP or EDVP Sub to compete in any line of business or with any Person or in any geographic location or to use or disclose any information in their possession;
(iii)
any license agreement (as licensor or licensee) or royalty agreement;
(iv)
any agreement of indemnification, other than indemnification rights granted in the Bylaws of EDVP;
(v)
any agreement or undertaking pursuant to which EDVP is: (A) borrowing or is entitled to borrow any money; (B) lending or has committed itself to lend any money; or (C) a guarantor or surety with respect to the obligations of any Person;
(vi)
any powers of attorney granted by EDVP; and
(vii)
any leases of real or personal property.
(b)
EDVP is not in violation or breach of any contract. There does not exist any event or condition that, after notice or lapse of time or both, would constitute an event of default or breach under any contract on the part of EDVP or, to the knowledge of EDVP, any other party thereto or would permit the modification, cancellation or termination of any contract or result in the creation of any lien upon, or any person acquiring any right to acquire, any assets of EDVP or EDVP Sub. EDVP has not received in writing any claim or threat that EDVP or EDVP Sub has breached any of the terms and conditions of any contract.
(c)
The consent of, or the delivery of notice to or filing with, any party to a contract is not required for the execution and delivery by EDVP of this Agreement or the consummation of the transactions contemplated under the Agreement.
4.11
Validity of EDVP Shares.
The EDVP Shares to be issued to the Shareholders upon consummation of the Transaction in accordance with this Agreement will, upon issuance, have been duly and validly authorized and, when so issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable.
4.12
Actions and Proceedings.
There is no legal action, claim, charge, arbitration, grievance, action, suit, investigation or proceeding by or before any court, arbiter, administrative agency or other governmental authority now (i) pending or, to the knowledge of EDVP, threatened against EDVP which involves any of the business, or the properties or assets of EDVP that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects or conditions of EDVP taken as a whole (a “
EDVP Material Adverse Effect
”) or pending or, to the knowledge of EDVP, threatened against any current employee, officer or director of EDVP that, in any way relates to EDVP. EDVP is not subject to any order, judgment, writ, injunction or decree of any governmental authority.
4.13
Compliance
.
(a)
To the best knowledge of EDVP, EDVP is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation to the business or operations of EDVP;
(b)
To the best knowledge of EDVP, EDVP is not subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would constitute a EDVP Material Adverse Effect;
(c)
EDVP has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement. All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of EDVP, threatened, and none of them will be affected in a material adverse manner by the consummation of the Transaction; and
(d)
EDVP has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business. EDVP has not received any notice of any violation thereof, nor is EDVP aware of any valid basis therefore.
4.14
Filings, Consents and Approvals.
EDVP will conduct or obtain any filing, registration, permit or authorization from any public or governmental body or authority or other person that is necessary for the consummation by EDVP of the Transaction contemplated by this Agreement and to continue to conduct its business after the Closing Date in a manner which is consistent with that in which it is presently conducted.
4.15
SEC Filings.
(a)
EDVP has furnished or made available to PRLX and the Shareholders a true and complete copy of each report filed by EDVP with the SEC (collectively, and as such documents have since the time of their filing been amended, the “
EDVP SEC Reports
”). EDVP has filed all SEC Reports required by it to be filed with the SEC up to the September 30, 2011 Form 10-Q and such reports had been filed timely or within any period of extension for filing allowed under applicable rules. EDVP acknowledges that at the time of the Closing of this Merger EDVP will need to file its 2011 10-K Annual Report that was due on March 30, 2012, its March 30, 2012 10-Q, its June 30, 2012 10-Q and its September 30, 2012 10-Q. The EDVP SEC Reports (i) at the time filed, complied in all material respects with the applicable requirements of the 1934 Act, as the case may be, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated in such EDVP SEC Reports or necessary in order to make the statements in such EDVP SEC Reports, in light of the circumstances under which they were made, not misleading.
(b)
Each of the financial statements (including, in each case, any related notes), contained in the EDVP SEC Reports, including any EDVP SEC Reports filed after the date of this Agreement until the Closing, complied, as of its respective filing date, in all material respects with all applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and fairly presented the consolidated financial position of EDVP as at the respective dates and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount.
(c)
Between October 1, 2012 and the date hereof, except as disclosed in EDVP SEC Reports, there has not been any change in the business, operations or financial condition of EDVP that has had or reasonably would be expected to have a material adverse effect on EDVP.
(d)
EDVP and EDVP Sub do not have any liability or obligation (absolute, accrued, contingent or otherwise) other than those, which arose in the ordinary course of their activities or under this Agreement.
4.16
Absence of Undisclosed Liabilities.
Immediately prior to Closing, other than professional fees, EDVP will not have any net liabilities or net obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise, after taking into account EDVP’s cash and cash equivalents and receivables, that could in the aggregate exceed $20,000 which have not been paid or discharged at that time.
4.17
Absence of Certain Changes or Events.
Except as and to the extent disclosed in the SEC Reports, there has not been:
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(a)
|
a EDVP Material Adverse Effect; or
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(b)
|
any material change by EDVP in its accounting methods, principles or practices.
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4.18
No Subsidiaries.
Other than Endeavor Holdings, Ltd.,
EDVP does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations.
4.19
Personal Property.
There are no fixtures, furniture, equipment, inventory, intellectual property, accounts receivable or other assets other than cash and its interest in this Agreement owned by EDVP. EDVP is not a party to any leases for real or personal property.
4.20
Employees and Consultants.
EDVP does not have any employees or consultants, except as disclosed in the SEC Reports. No unfair labor practice, or race, sex, age, disability or other discrimination complaint is pending, nor is any such complaint, to the knowledge of EDVP, threatened against EDVP before the National Labor Relations Board, Equal Employment Opportunity Commission or any other governmental authority, and no grievance is pending, nor is any grievance, to the knowledge of EDVP, threatened against EDVP or EDVP Sub.
4.21
Material Contracts and Transactions.
There are no material contracts, agreements, licenses, permits, arrangements, commitments, instruments, understandings or contracts, whether written or oral, express or implied, contingent, fixed or otherwise, to which EDVP is a party.
4.22
No Disagreements with Accountants and Lawyers
. There are no disagreements of any kind presently existing, or reasonably anticipated by EDVP to arise, between the accountants, and lawyers formerly or presently employed by EDVP, and EDVP is current with respect to any fees owed to its accountants and lawyers.
4.23
Transactions With Affiliates and Employees
. None of the current officers or directors of EDVP and none of the affiliates or employees of EDVP is presently a party to any transaction with EDVP (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of EDVP, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
4.24
Listing on the OTC Market
. The EDVP Common Stock is quoted on the OTC Market and EDVP has and continues to satisfy all of the requirements of the OTC Market for such listing and for the trading of EDVP Common Stock thereunder. EDVP has not been informed, nor does it have any knowledge, that the Financial Industry Regulatory Authority or any other regulatory agency will take action to cease the EDVP Common Stock from being quoted on the OTC Market.
4.25
No Brokers.
EDVP has not incurred any obligation or liability to any party for any brokerage fees, agent’s commissions, or finder’s fees in connection with the Transaction contemplated by this Agreement.
4.26
Certain Transactions.
EDVP is not a guarantor or indemnitor of any indebtedness of any third party, including any person, firm or corporation.
4.27
Completeness of Disclosure.
No representation or warranty by EDVP in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to PRLX pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.
4.28
Tax Matters.
(a)
Other than as disclosed to PRLX, EDVP has filed all Tax Returns and reports that is was required to file under applicable laws and regulations. All such Tax Returns were correct and complete in all material respects and have been prepared in substantial compliance with all applicable laws and regulations. All Taxes due and owing by EDVP (whether or not shown on any Tax Return) have been paid. No claim has ever been made by an authority in a jurisdiction where EDVP does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are not Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of EDVP. There are no pending audits of notice of returns being audited.
(b)
EDVP has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.
4.30
SEC Comments
. Except as provided to PRLX, EDVP has received no comments from SEC with respect to its SEC Reports filed with the SEC.
5.
CLOSING CONDITIONS
5.1
Conditions Precedent to Closing by EDVP.
The obligation of EDVP to consummate the Transaction is subject to the satisfaction or waiver of the conditions set forth below on or before the Closing Date or such earlier date as hereinafter specified. The Closing of the Transaction contemplated by this Agreement will be deemed to mean the satisfaction or waiver of all conditions to Closing. These conditions of closing are for the benefit of EDVP and may be waived by EDVP in its sole discretion.
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(a)
|
Representations and Warranties.
The representations and warranties of PRLX set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and PRLX will have delivered to EDVP a certificate dated as of the Closing Date, to the effect that the representations and warranties made by PRLX in this Agreement are true and correct.
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(b)
|
Performance.
All of the covenants and obligations that PRLX is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects.
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(c)
|
Transaction Documents.
This Agreement, the PRLX Documents and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to EDVP, will have been executed and delivered to EDVP by PRLX and the Shareholders.
|
|
(d)
|
Approvals.
PRLX shall have delivered to EDVP minutes of meetings, written consents or other evidence satisfactory to EDVP that the board of directors of PRLX and Shareholders have approved this Agreement and the Plan of Merger. On the Closing Date, PRLX will take all actions reasonably required to promptly file with the Secretary of State of the State of Nevada the Certificate of Merger.
|
|
(e)
|
Secretary’s Certificate
–
PRLX.
PRLX will have delivered to EDVP a certificate from the Secretary of PRLX attaching:
|
|
(i)
|
a copy of PRLX’s articles, bylaws and all other incorporation documents, as amended through the Closing Date, and,
|
|
(ii)
|
copies of resolutions duly adopted by the board of directors of PRLX approving the execution and delivery of this Agreement and the consummation of the transactions contemplated herein.
|
|
(f)
|
Third Party Consents.
PRLX will have delivered to EDVP duly executed copies of all third party consents and approvals required by this Agreement to be obtained by PRLX, in form and substance reasonably satisfactory to EDVP.
|
|
(g)
|
Shareholder Approval
. PRLX will have obtained the required Shareholder approvals required by the Transaction in form and substance reasonably satisfactory to EDVP.
|
|
(h)
|
Regulatory Approvals and Consents.
PRLX will have obtained all approvals and consents required to carry out the Transaction, in form and substance reasonably satisfactory to EDVP.
|
|
(i)
|
No Material Adverse Change.
No PRLX Material Adverse Effect will have occurred since the date of this Agreement.
|
|
(j)
|
No Action
. No suit, action, or proceeding will be pending or threatened which would:
|
|
(i)
|
prevent the consummation of any of the transactions contemplated by this Agreement, or,
|
|
(ii)
|
cause the Transaction to be rescinded following consummation.
|
|
(k)
|
Outstanding Securities.
PRLX will have no more than 24,870,000 shares of PRLX Common Stock issued and outstanding on the Closing Date.
|
|
(l)
|
Public Disclosure.
PRLX will have delivered substantive information about its assets and personnel satisfactory to EDVP for completion of its public disclosure of the Transaction details.
|
|
(m)
|
Compliance with Securities Laws.
PRLX will have delivered evidence satisfactory to EDVP that the PRLX Shares issuable in the Transaction will be issuable without registration pursuant to the 1933 Act and the Applicable Securities Legislation in reliance on a safe harbor from the registration requirements of the 1933 Act and the Applicable Securities Legislation.
|
|
(n)
|
Financial Statements.
PRLX will have delivered all financial statements of PRLX prepared in US GAAP required to be filed by EDVP under Applicable Securities Legislation.
|
|
(o)
|
PRLX Debts.
At the Closing PRLX shall have no liabilities, other than those in the ordinary course of business other than as disclosed in the Schedules hereto outstanding.
|
|
(p)
|
PRLX Legal Opinion.
EDVP will have received an opinion, dated as of the Closing Date, from counsel for PRLX, and such other local or special counsel as is appropriate, all of which opinion will be in the form and substance reasonably satisfactory to EDVP and its counsel.
|
5.2
Conditions Precedent to Closing by PRLX.
The obligation of PRLX to consummate the Transaction is subject to the satisfaction or waiver of the conditions set forth below on or before the Closing Date or such earlier date as hereinafter specified. The Closing of the Transaction will be deemed to mean the satisfaction or waiver of all conditions to Closing. These conditions precedent are for the benefit of PRLX and may be waived by PRLX in its discretion.
|
(a)
|
Representations and Warranties.
The representations and warranties of EDVP and EDVP Sub set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and EDVP and EDVP Sub will have delivered to PRLX a certificate dated the Closing Date, to the effect that the representations and warranties made by EDVP and EDVP Sub in this Agreement are true and correct.
|
|
(b)
|
Performance.
All of the covenants and obligations that EDVP is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects. EDVP and EDVP Sub must have delivered each of the documents required to be delivered by it pursuant to this Agreement.
|
|
(c)
|
Compliance.
Upon the closing of this Agreement, EDVP will be in compliance with its reporting requirements under the 1934 Act.
|
|
(d)
|
Transaction Documents.
This Agreement, the EDVP Documents and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to PRLX, will have been executed and delivered to PRLX by EDVP and EDVP Sub.
|
|
(e)
|
Secretary’s Certificate – EDVP and EDVP Sub.
Each of EDVP and EDVP Sub will have delivered to PRLX a certificate from their respective Secretary attaching:
|
|
(i)
|
a copy of the articles of incorporation, bylaws and all other incorporation documents, as amended through the Closing Date, and
|
|
(ii)
|
copies of resolutions duly adopted by the boards of directors of EDVP and EDVP Sub and copies of consents of the shareholder of EDVP Sub approving the execution and delivery of this Agreement and the consummation of the transactions contemplated herein.
|
|
(f)
|
Approvals.
EDVP and EDVP Sub shall have delivered to PRLX minutes of meetings, written consents or other evidence satisfactory to PRLX that the board of directors of EDVP and EDVP Sub have approved this Agreement and the Plan of Merger and EDVP, as sole stockholder of EDVP Sub, has approved the Plan of Merger and Certificate of Merger. On the Closing Date, PRLX and EDVP Sub are taking all actions reasonably required to promptly file with the Secretary of State of the State of Delaware the Certificate of Merger.
|
|
(g)
|
Director Appointments.
On the Closing Date,
Edward W Withrow III, Edward W Withrow Jr., J. Michael Redmond, Jorn Gorlach, Anand Kumar and David Engert (the “Proposed Directors”) shall be appointed to the board of EDVP subject to applicable securities laws, provided that immediately prior to Closing the total number of board members of EDVP shall not exceed one (1) member. On the Closing Date, EDVP’s sole board of director, Gardner Williams, shall resign and the EDVP board of directors shall consist of Edward W. Withrow III, Jorn Gorlach, J. Michael Redmond, E. William Withrow Jr., Anand Kumar and David Engert.
|
|
(h)
|
No Material Adverse Change.
No EDVP Material Adverse Effect will have occurred since the date of this Agreement.
|
|
(i)
|
No Action.
No suit, action, or proceeding will be pending or threatened before any governmental or regulatory authority wherein an unfavorable judgment, order, decree, stipulation, injunction or charge would:
|
|
(i)
|
prevent the consummation of any of the transactions contemplated by this Agreement, or
|
|
(ii)
|
cause the Transaction to be rescinded following consummation.
|
|
(j)
|
Outstanding Shares
. EDVP will have issued and outstanding no more than 151,063,898 pre cancellation shares of EDVP Common Stock (60,523,363 post-cancellation shares of EDVP Common Stock) immediately prior to the issuance of the EDVP Shares as contemplated by this Agreement.
|
|
(k)
|
Regulatory Approvals and Consents
. EDVP will have obtained all necessary approvals and consents to carry out the Transaction, in form and substance reasonably satisfactory to PRLX.
|
|
(l)
|
Public Market
. On the Closing Date, the shares of EDVP Common Stock will be quoted on the OTC Market. EDVP has not been informed, nor does it have any knowledge, that FINRA or any other regulatory agency will take action to cease the EDVP Common Stock from being quoted on the OTC Market.
|
|
(m)
|
EDVP Debts
. EDVP will have provided evidence that it has satisfied or will otherwise provide for payment or cancellation of all material debt on its books and accounts payable.
|
|
(n)
|
Assumption of Contracts.
EDVP will enter into a mutually agreeable form of assignment and assumption agreement with PRLX whereby it will assume all of PRLX obligations under the PRLX material agreements listed in Schedule 6 hereto.
|
|
(o)
|
Stock Cancellation.
EDVP will have cancelled an aggregate of 90,375,750 restricted shares of its common stock.
|
|
(p)
|
Stock Issuance.
EDVP will cause to issue through a Treasury Order attached herewith as Schedule 12, as part of the Plan and Agreement of Merger,
|
|
(q)
|
EDVP Legal Opinion.
PRLX will have received a legal opinion, dated as of the Closing Date, from counsel for EDVP, and such other local or special legal counsel as is appropriate, all of which opinion shall be in the form and substance reasonably satisfactory to PRLX and its counsel.
|
5.3
Notification of Financial Liabilities.
PRLX will immediately notify EDVP in accordance with Section 9.6 hereof, if PRLX receives any advice or notification from its independent certified public accounts that PRLX has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the books, records, and accounts of PRLX, any properties, assets, liabilities, revenues, or expenses. Notwithstanding any statement to the contrary in this Agreement, this covenant will survive Closing and continue in full force and effect.
5.4
Access and Investigation.
Between the date of this Agreement and the Closing Date, PRLX, on the one hand, and EDVP, on the other hand, will, and will cause each of their respective representatives to:
|
(a)
|
afford the other and its representatives full and free access to its personnel, properties, assets, contracts, books and records, and other documents and data;
|
|
(b)
|
furnish the other and its representatives with copies of all such contracts, books and records, and other existing documents and data as required by this Agreement and as the other may otherwise reasonably request; and,
|
|
(c)
|
furnish the other and its representatives with such additional financial, operating, and other data and information as the other may reasonably request.
|
All of such access, investigation and communication by a party and its representatives will be conducted during normal business hours and in a manner designed not to interfere unduly with the normal business operations of the other party. Each party will instruct its auditors to co-operate with the other party and its representatives in connection with such investigations.
5.5
Confidentiality.
|
(a)
|
All information regarding the business of PRLX including, without limitation, financial information that PRLX provided to EDVP will be kept in strict confidence by EDVP and will not be given to any other person or party or used (except in connection with due diligence and except as required to file a news release and 8-K disclosure regarding the transaction to the public after the Closing), dealt with, exploited or commercialized by EDVP or disclosed to any third party (other than EDVP’s professional accounting and legal advisors) without the prior written consent of PRLX. If the Transaction contemplated by this Agreement does not proceed for any reason, then upon receipt of a written request from PRLX, EDVP will immediately return to PRLX (or as directed by PRLX) any information received regarding PRLX’s business, including copies thereof. Likewise, all information regarding the business of EDVP including, without limitation, financial information that EDVP provides to PRLX during its due diligence investigation of EDVP will be kept in strict confidence by PRLX and will not be used (except in connection with due diligence), dealt with, exploited or commercialized by PRLX or disclosed to any third party (other than PRLX’s professional accounting and legal advisors) without EDVP’s prior written consent. If the Transaction contemplated by this Agreement does not proceed for any reason, then upon receipt of a written request from EDVP, PRLX will immediately return to EDVP (or as directed by EDVP) any information received regarding EDVP’s business. Each party will provide an affidavit to the other that all documents were returned.
|
|
(b)
|
EDVP and PRLX acknowledge and agree, subject to disclosure obligations under Applicable Securities Legislation
or other laws or regulations, that neither party will make any public pronouncements concerning the terms of this Agreement without the express written consent of the other party, such consent will not be unreasonably withheld.
|
|
(c)
|
PRLX acknowledges and agrees to neither trade nor allow any of its employees or agents to trade in the securities of EDVP prior to Closing while in possession of material information about EDVP that has not been publicly disclosed.
|
|
(d)
|
EDVP acknowledges and agrees that it has previously executed a non-disclosure agreement with PRLX and that it will continue to be obligated by the terms of that non-disclosure agreement.
|
5.6
Notification.
Between the date of this Agreement and the Closing Date, each of the parties to this Agreement will promptly notify the other parties in writing if it becomes aware of any fact or condition that causes or constitutes a material breach of any of its representations and warranties as of the date of this Agreement, if it becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a material breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the Schedules relating to such party, such party will promptly deliver to the other parties a supplement to the Schedules specifying such change. During the same period, each party will promptly notify the other parties of the occurrence of any material breach of any of its covenant in this Agreement or of the occurrence of any event that may make the satisfaction of such conditions impossible or unlikely.
5.7
Exclusivity.
Until such time, if any, as this Agreement is terminated pursuant to this Agreement, but in no event later than November 15, 2012, PRLX and EDVP will not, directly or indirectly solicit, initiate, entertain or accept any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from, any person or entity relating to any transaction involving the sale of the business or assets (other than in the ordinary course of business), or any of the capital stock of PRLX or EDVP, as applicable, or any merger, consolidation, business combination, or similar transaction other than as contemplated by this Agreement.
5.8
Conduct of PRLX and EDVP Business Prior to Closing.
Except as expressly contemplated by this Agreement or for purposes in furtherance of this Agreement, from the date of this Agreement to the Closing Date, and except to the extent that EDVP otherwise consents in writing, PRLX will operate its business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use its best efforts to preserve intact its good reputation and present business organization and to preserve its relationships with persons having business dealings with it. Likewise, from the date of this Agreement to the Closing Date, and except to the extent that PRLX otherwise consents in writing, EDVP will operate its business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use its best efforts to preserve intact its good reputation and present business organization and to preserve its relationships with persons having business dealings with it.
5.9
Full Disclosure Requirement.
EDVP possesses, or expects to possess on or before the required filing date, all of the financial statements and financial information required to be included in the Report on Form 8-K to be filed by EDVP within four (4) business days after the consummation on the transactions contemplated by this Agreement. PRLX will use its commercially reasonable best efforts to cooperate fully in providing EDVP with all information and documentation reasonably requested.
5.10
Post Closing - EDVP.
EDVP acknowledges that the Shareholders may require legal opinions on the removal of the restrictive legends on the share certificates pursuant to Rule 144 of the 1933 Act in order to sell their EDVP Shares in the future. When a Shareholder reasonably requests it of EDVP, EDVP will pay for an attorney of EDVP’s choice to supply the legal opinion the Shareholder and will cooperate fully in providing the Shareholders with all information and documentation reasonably requested.
5.11
Certain Acts Prohibited – PRLX.
Except as expressly contemplated by this Agreement or for purposes in furtherance of this Agreement, between the date of this Agreement and the Closing Date, PRLX will not, without the prior written consent of EDVP:
|
(a)
|
amend its articles, bylaws or other incorporation documents;
|
|
(b)
|
incur any liability or obligation other than in the ordinary course of business or encumber or permit the encumbrance of any properties or assets of PRLX except in the ordinary course of business;
|
|
(c)
|
dispose of or contract to dispose of any PRLX property or assets, except in the ordinary course of business consistent with past practice;
|
|
(d)
|
issue, deliver, sell, pledge or otherwise encumber or subject to any lien any shares of the PRLX Common Stock, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities;
|
|
(e)
|
declare, set aside or pay any dividends on, or make any other distributions in respect of the PRLX Common Stock;
|
|
(f)
|
split, combine or reclassify any PRLX Common Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of PRLX Common Stock; or,
|
|
(g)
|
materially increase benefits or compensation expenses of PRLX, other than as contemplated by the terms of any employment agreement in existence on the date of this Agreement, increase the cash compensation of any director, executive officer or other key employee or pay any benefit or amount not required by a plan or arrangement as in effect on the date of this Agreement to any such person.
|
5.12
Certain Acts Prohibited - EDVP.
Except as expressly contemplated by this Agreement or for purposes in furtherance of this Agreement, between the date of this Agreement and the Closing Date, EDVP will not, without the prior written consent of PRLX:
|
(a)
|
incur any liability or obligation or encumber or permit the encumbrance of any properties or assets of EDVP except in the ordinary course of business consistent with past practice;
|
|
(b)
|
dispose of or contract to dispose of any EDVP property or assets except in the ordinary course of business consistent with past practice;
|
|
(c)
|
materially increase benefits or compensation expenses of EDVP, increase the cash compensation of any director, executive officer or other key employee or pay any benefit or amount to any such person; or
|
|
(d)
|
issue, deliver, sell, pledge, dispose of or encumber, or authorize or commit to the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, but not limited to, stock appreciation rights or phantom stock), of Company;
|
5.13
Public Announcements.
Until the Closing Date, EDVP and PRLX each agree that they will not release or issue any reports or statements or make any public announcements relating to this Agreement or the Transaction contemplated herein without the prior written consent of the other party, except as may be required upon written advice of counsel to comply with applicable laws or regulatory requirements after consulting with the other party hereto and seeking their reasonable consent to such announcement. PRLX acknowledges that EDVP must comply with Applicable Securities Legislation requiring full disclosure of material facts and agreements in which it is involved, and will co-operate to assist EDVP in meeting its obligations.
6.
CLOSING
6.1
Closing.
The Closing will take place on the Closing Date at the offices of the legal counsel for EDVP or at such other location as agreed to by the parties. Notwithstanding the location of the Closing, each party agrees that the Closing may be completed by the exchange of undertakings between the respective legal counsel for PRLX and EDVP, provided such undertakings are satisfactory to each party’s respective legal counsel.
6.2
Closing Deliveries of PRLX.
At Closing, PRLX will deliver or cause to be delivered the following, fully executed and in the form and substance reasonably satisfactory to EDVP:
|
(a)
|
copies of all resolutions and/or consent actions adopted by or on behalf of the board of directors of PRLX evidencing approval of this Agreement and the Transaction and the requisite stockholder approval of the Transaction;
|
|
(b)
|
all certificates and other documents required by Section 7.1 of this Agreement;
|
|
(c)
|
a certificate of an officer of PRLX, dated as of Closing, certifying that:
|
|
(i)
|
each respective covenant and obligation of PRLX has been complied with, and
|
|
(ii)
|
each respective representation, warranty and covenant of PRLX is true and correct at the Closing as if made on and as of the Closing; and
|
|
(d)
|
the PRLX Documents and any other necessary documents, including the Certificate of Merger, each duly executed by PRLX, as required to give effect to the Transaction.
|
6.3
Closing Deliveries of EDVP and EDVP Sub.
At Closing, EDVP and EDVP Sub will deliver or cause to be delivered the following, fully executed and in the form and substance reasonably satisfactory to PRLX:
|
(a)
|
copies of all resolutions and/or consent actions adopted by or on behalf of the board of directors of EDVP and EDVP Sub evidencing approval of this Agreement and the Transaction and the requisite stockholder approval of the Transaction;
|
|
(c)
|
all certificates and other documents required by Section 7.2 of this Agreement;
|
|
(d)
|
a certificate of an officer of each of EDVP and EDVP Sub, dated as of Closing, certifying that:
|
|
(i)
|
each covenant and obligation of EDVP and EDVP Sub, respectively has been complied with, and
|
|
(ii)
|
each representation, warranty and covenant of EDVP and EDVP Sub, respectively, is true and correct at the Closing as if made on and as of the Closing; and
|
|
(e)
|
copies of resolutions of the board of directors of EDVP appointing the Proposed Directors of EDVP;
|
|
(f)
|
copy of the Securities and Exchange Commission Form 14F-1 to be filed with the Securities and Exchange Commission on behalf of EDVP reflecting the applicable changes in the Company as a result of the transactions contemplated hereby; and
|
|
(g)
|
the EDVP Documents and any other necessary documents, including the Articles of Merger each duly executed by EDVP and EDVP Sub, as applicable, as required to give effect to the Transaction;
|
7.
TERMINATION
7.1
Termination.
This Agreement may be terminated at any time prior to the Closing Date contemplated hereby by:
|
(a)
|
mutual agreement of EDVP and PRLX;
|
|
(b)
|
EDVP, if there has been a material breach by PRLX or any Shareholder of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of PRLX or any Shareholder that is not cured, to the reasonable satisfaction of EDVP, within ten business days after notice of such breach is given by EDVP (except that no cure period will be provided for a breach by PRLX or any Shareholders that by its nature cannot be cured);
|
|
(c)
|
PRLX, if there has been a material breach by EDVP of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of EDVP that is not cured, to the reasonable satisfaction of PRLX, within ten business days after notice of such breach is given by PRLX (except that no cure period will be provided for a breach by EDVP that by its nature cannot be cured);
|
|
(d)
|
EDVP or PRLX, if the Transaction contemplated by this Agreement has not been consummated prior to November 15, 2012 unless EDVP and PRLX agree to extend such date in writing; or
|
|
(e)
|
EDVP or PRLX, if any injunction or other order of a governmental entity of competent authority prevents the consummation of the Transaction contemplated by this Agreement.
|
7.2
Effect of Termination.
In the event of the termination of this Agreement as provided in Section 7 hereto, this Agreement will be of no further force or effect, provided, however, that no termination of this Agreement will relieve any party of liability for any breaches of this Agreement that are based on a wrongful refusal or failure to perform any obligations
8.
INDEMNIFICATION, REMEDIES, SURVIVAL
8.1
Certain Definitions
. For the purposes of this Section 8.1, the terms “
Loss
” and “
Losses
” mean any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses of an amount not less than $5,000, but excluding any indirect, consequential or punitive damages suffered by EDVP or PRLX including damages for lost profits or lost business opportunities.
8.2
PRLX Indemnity.
PRLX will indemnify, defend, and hold harmless EDVP and its shareholders from, against, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by EDVP and its shareholders by reason of, resulting from, based upon or arising out of:
|
(a)
|
any misrepresentation, misstatement or breach of warranty of PRLX contained in or made pursuant to this Agreement, any PRLX Document or any certificate or other instrument delivered pursuant to this Agreement; and
|
|
(b)
|
the breach or partial breach by PRLX of any covenant or agreement of PRLX made in or pursuant to this Agreement, any PRLX Document or any certificate or other instrument delivered pursuant to this Agreement.
|
8.3
EDVP and EDVP Sub Indemnity
. Each of EDVP and EDVP Sub will indemnify, defend, and hold harmless PRLX from, against, for, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by PRLX by reason of, resulting from, based upon or arising out of:
|
(a)
|
any misrepresentation, misstatement or breach of warranty of EDVP or EDVP Sub, respectively contained in or made pursuant to this Agreement, any EDVP Document or any certificate or other instrument delivered pursuant to this Agreement; or
|
|
(b)
|
the breach or partial breach by EDVP or EDVP Sub of any covenant or agreement of EDVP of EDVP Sub, respectively, made in or pursuant to this Agreement, any EDVP Document or any certificate or other instrument delivered pursuant to this Agreement.
|
9.
GENERAL
9.1
Effectiveness of Representations; Survival.
Each party is entitled to rely on the representations, warranties, indemnifications and agreements of each of the other parties and all such representation, warranties and agreement will be effective regardless of any investigation that any party has undertaken or failed to undertake. The representations, warranties and agreements will survive the Closing Date and continue in full force and effect until one (1) year after the Closing Date.
9.2
Further Assurances and Provision of Information.
Each of the parties hereto will co-operate with the others and execute and deliver to the other parties hereto such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other party hereto as necessary to carry out, evidence, and confirm the intended purposes of this Agreement. PRLX agrees to provide such information as requested by EDVP in a timely manner prior to closing, and allow EDVP and its representatives free access to all books, records, and other information of PRLX and to their personnel and advisors.
9.3
Amendment.
This Agreement may not be amended except by an instrument in writing signed by each of the parties.
9.4
Expenses.
PRLX will bear the expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Transaction contemplated hereby, including all fees and expenses of agents, representatives, counsel, and accountants.
9.5
Entire Agreement.
This Agreement, the schedules attached hereto and the other documents in connection with this transaction contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior arrangements and understandings, both written and oral, expressed or implied, with respect thereto. Any preceding correspondence or offers are expressly superseded and terminated by this Agreement.
9.6
Notices.
All notices and other communications required or permitted under to this Agreement must be in writing and will be deemed given if sent by personal delivery, faxed with electronic confirmation of delivery, internationally-recognized express courier or registered or certified mail (return receipt requested), postage prepaid, to the parties at the addresses specified by a party to the others from time to time for notice purposes. All such notices and other communications will be deemed to have been received:
|
(a)
|
in the case of personal delivery, on the date of such delivery;
|
|
(b)
|
in the case of a fax, when the party sending such fax has received electronic confirmation of its delivery;
|
|
(c)
|
in the case of delivery by internationally-recognized express courier, on the business day following dispatch; and
|
|
(d)
|
in the case of mailing, on the fifth business day following mailing.
|
9.7
Headings.
The headings contained in this Agreement are for convenience purposes only and will not affect in any way the meaning or interpretation of this Agreement.
9.8
Benefits.
This Agreement is and will only be construed as for the benefit of or enforceable by those persons party to this Agreement.
9.9
Assignment.
This Agreement may not be assigned (except by operation of law) by any party without the express, written approval of the other parties to this Agreement, such approval will not be unreasonably withheld by any of the parties to this Agreement.
9.10
Force Majeure.
The obligations of the parties and the timeframes established pursuant to this Agreement will be suspended to the extent and for the period that performance hereunder is prevented by factors beyond any of the parties’ reasonable control, whether foreseeable or unforeseeable, including, without limitation, labour disputes, acts of god, laws, regulations, orders, proclamations or requests of any governmental or regulatory authority, inability to obtain on reasonable terms required permits, licenses or other authorizations, or any other matter similar to the above.
9.11
Governing Law.
This Agreement will be governed by and construed in accordance with the laws of the State of Nevada applicable to contracts made and to be performed therein and the courts thereof will have non-exclusive jurisdiction over any disputes relating hereto.
9.12
Gender.
All references to any party will be read with such changes in number and gender as the context or reference requires.
9.13
Counterparts.
This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
9.14
Facsimile Execution.
This Agreement may be executed by delivery of executed signature pages by fax or other electronic transmission and such fax or electronic execution will be effective for all purposes.
9.15
Independent Legal Advice
. All parties to this agreement confirm that they have been given an opportunity to seek and obtain independent legal advice prior to execution of this Agreement and have consulted their respective advisors respecting the legal effects of this Agreement and any tax implications of the Transaction.
9.16
Schedules and Exhibits
. The schedules and exhibits that are attached to this Agreement are incorporated herein.
[SIGNATURES TO FOLLOW]
IN WITNESS WHEREOF
the parties hereto have executed this Agreement as of the day and year first above written.
ENDEAVOR POWER CORP.
(a Nevada corporation)
By:
/s/ Gardner Williams
Authorized Signatory
Name: Gardner Williams
Title: President, Director
PARALLAX DIAGNOSTICS, INC.
(
a Nevada corporation)
By:
/s/ J. Michael Redmond
Authorized Signatory
Name: J. Michael Redmond
Title: President & Director
ENDEAVOR HOLDINGS, LTD.
(a Nevada corporation)
By:
/s/ Gardner Williams
Authorized Signatory
Name: Gardner Williams
Title: President & Director
PARALLAX SHAREHOLDERS
By:
/s/ Edward W. Withrow III
Authorized Signatory
Name: Edward W. Withrow III
Title: President & Director
Montecito Bio Sciences, Ltd.
SCHEDULE 1
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
PRLX Shareholders
|
Name
|
Address
|
PRLX
|
EDVR
|
|
Jorn & Jennifer Gorlach
|
3194 Quarry Road, Manchester, NJ 08759
|
1,260,000
|
4,578,747
|
|
Ian Gorlach
|
2132 N 200 Road, Wellsville, KS-66092
|
420,000
|
1,526,249
|
|
Max Gorlach
|
2132 N 200 Road, Wellsville, KS-66092
|
420,000
|
1,526,249
|
|
Ana Gorlach
|
2132 N 200 Road, Wellsville, KS-66092
|
420,000
|
1,526,249
|
|
Jade Gorlach
|
2132 N 200 Road, Wellsville, KS-66092
|
420,000
|
1,526,249
|
|
Avantegarde, LLC
|
3194 Quarry Road, Manchester, NJ 08759
|
1,365,000
|
4,960,310
|
|
Victor Parker
|
7137 Telegraph Road Montebello, CA 90640
|
420,000
|
1,526,249
|
|
Withrow, Sinclair & Co
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
2,908,500
|
10,569,275
|
|
Maria K. Sandoval
|
7026 Dume Dr. #B Malibu, CA 90265
|
2,100,000
|
7,631,245
|
|
Kasper Group, Ltd.
|
2722 Mirasol Loop Round Rock, TX 78681
|
210,000
|
763,125
|
|
Calli Bucci
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
105,000
|
381,562
|
|
Palisades Management
|
860 Via De La Paz Suite E-3A Pacific Palisades, CA 90272
|
105,000
|
381,562
|
|
Christian Oliver
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
105,000
|
381,562
|
|
Warren K Withrow
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
105,000
|
381,562
|
|
E William Withrow Jr.
|
133 Cumberland Way Alameda, CA 94502
|
42,000
|
152,625
|
|
Chase W Withrow
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
42,000
|
152,625
|
|
Nicole Withrow
|
133 Cumberland Way Alameda, CA 94502
|
21,000
|
76,312
|
|
Stella Rose Drury
|
133 Cumberland Way Alameda, CA 94502
|
10,500
|
38,156
|
|
Kasper Wilde Withrow
|
2722 Mirasol Loop Round Rock, TX 78681
|
10,500
|
38,156
|
|
Daniel Sandoval
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
10,500
|
38,156
|
|
Montecito Bio Sciences, Ltd
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
10,500,000
|
38,156,227
|
|
John Ogden
|
675 Bering Dr. Ste. 675 Houston, TX 77057
|
500,000
|
1,816,963
|
|
Anthony Piziali
|
313 TAYLOR AVE Alameda, CA 94501
|
500,000
|
1,816,963
|
|
Skyy Holdings, Inc.
|
9663 SANTA MONICA BLVD Suite 835 Beverly Hills CA 90210
|
500,000
|
1,816,963
|
|
HGE, Inc.
|
8491 Sunset Blvd Suite 110 Los Angeles CA 90069
|
500,000
|
1,816,963
|
|
Oracle Capital Partners LLC
|
6365 COLLINS AVE SUITE 3403 Miami, FL 33141
|
400,000
|
1,453,567
|
|
Bradley Brothers, LLC
|
7450 S SANDBAR WILLOW PLACE Tucson, AZ 85747
|
250,000
|
908,481
|
|
J. Michael Redmond
|
10 Canterbury Road Windham, NH 03087
|
125,000
|
454,240
|
|
Greg Suess
|
955 Roscomare Road Bel Air, CA 90077
|
75,000
|
272,544
|
|
Grant Park
|
1327 Ocean Ave Suite M Santa Monica, CA 90401
|
20,000
|
72,678
|
|
The Kasper Group, Ltd.
|
2722 Mirasol Loop Round Rock, TX 78681
|
700,000
|
2,543,748
|
|
Amersey Investments, LLC
|
300 Center Avenue, Suite #202 Bay City, MI 48708
|
300,000
|
1,090,177
|
|
Totals
|
|
24,870,000
|
90,375,750
|
SCHEDULE 2
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
Directors And Officers Of PRLX
Name and Positions held
|
J. Michael Redmond
|
|
President, Director
|
|
Calli Bucci
|
|
Chief Financial Officer
|
|
Kyle W. Withrow
|
|
Secretary
|
|
Edward W. Withrow III
|
|
Chairman
|
|
Jorn Gorlach
|
|
Director
|
|
David Engert
|
|
Director
|
|
Anand Kumar
|
|
Director
|
|
E. William Withrow Jr.
|
|
|
Certificate of Officer
I,
J. MICHAEL REDMOND
, CERTIFY THAT I am the President of PARALLAX DIAGNOSTICS, INC. (the “Company”), a Nevada corporation, and that, in such capacity and not in my personal capacity, I am authorized to execute this certificate (“Officer’s Certificate”) on behalf of the Company, which is being delivered pursuant to the Company’s obligation under Section 6.2(c) of the Agreement and Plan of Merger dated November 1, 2012 (the “Agreement”), among the Company, Endeavor Power Corp. (“EDVP”) a Nevada corporation and Endeavor Holdings, Inc. (the “EDVP Sub”) a Nevada corporation as set out in the Agreement. All capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Agreement. I DO FURTHER CERTIFY that the following attached documents are true copies of the specified documents of the Company. I assume the genuineness of all signatures submitted to me as copies or facsimile or email signatures on such documents.
|
1.
|
The Articles of Incorporation, as amended, of the Company;
|
|
2.
|
The Bylaws, as amended, of the Company; and
|
|
3.
|
Consent Resolutions duly adopted by the board of directors of the Company approving the execution and delivery of the Agreement and the consummation of the transaction contemplated therein.
|
This Officer’s Certificate may be sent by electronic transmission and shall be deemed to be original.
CERTIFIED true and correct this 1
st
day of November 2012.
PARALLAX DIAGNOSTICS, INC.
Per:
/s/ J. Michael Redmond
J. Michael Redmond
President
SCHEDULE 3
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB
& PRLX SHAREHOLDERS
Directors And Officers Of EDVP
Name and Positions held:
Gardner Williams President, Director
Directors And Officers Of Endeavor Power Corp.
Name and Positions held:
Gardner Williams President, Director
ENDEAVOR POWER CORP.
Certificate of Officer
I,
GARDNER WILLIAMS
, CERTIFY THAT I am the President of ENDEAVOR POWER CORP. (the “Company”), a Nevada corporation, and that, in such capacity and not in my personal capacity, I am authorized to execute this certificate (“Officer’s Certificate”) on behalf of the Company, which is being delivered pursuant to the Company’s obligation under Section 6.2(c) of the Agreement and Plan of Merger dated November 1, 2012 (the “Agreement”), among the Company, Endeavor Holdings, Inc. (the “EDVP Sub”) a Nevada corporation and Parallax Diagnostics, Inc. (“PRLX”) a Nevada corporation as set out in the Agreement. All capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Agreement. I DO FURTHER CERTIFY that the following attached documents are true copies of the specified documents of the Company. I assume the genuineness of all signatures submitted to me as copies or facsimile or email signatures on such documents.
|
4.
|
The Articles of Incorporation, as amended, of the Company;
|
|
5.
|
The Bylaws, as amended, of the Company; and
|
|
6.
|
Consent Resolutions duly adopted by the board of directors of the Company approving the execution and delivery of the Agreement and the consummation of the transaction contemplated therein.
|
This Officer’s Certificate may be sent by electronic transmission and shall be deemed to be original.
CERTIFIED true and correct this 1
st
day of November 2012.
ENDEAVOR POWER CORP.
Per:
/s/ Gardner Williams
Gardner Williams
President
Directors And Officers Of Endeavor Holdings, Inc.
Name and Positions held:
Gardner Williams President, Director
ENDEAVOR HOLDINGS, INC.
Certificate of Officer
I,
GARDNER WILLIAMS
, CERTIFY THAT I am the President of ENDEAVOR HOLDINGS, INC. (the “Company”), a Nevada corporation, and that, in such capacity and not in my personal capacity, I am authorized to execute this certificate (“Officer’s Certificate”) on behalf of the Company, which is being delivered pursuant to the Company’s obligation under Section 6.3(d) of the Agreement and Plan of Merger dated November 1, 2012 (the “Agreement”), among the Company, Endeavor Power Corp. a Nevada corporation and Parallax Diagnostics, Inc. (“PRLX”) as set out in the Agreement. All capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Agreement. I DO FURTHER CERTIFY that the following attached documents are true copies of the specified documents of the Company. I assume the genuineness of all signatures submitted to me as copies or facsimile or email signatures on such documents.
|
7.
|
The Articles of Incorporation, as amended, of the Company;
|
|
8.
|
The Bylaws, as amended, of the Company; and
|
|
9.
|
Consent Resolutions duly adopted by the board of directors of the Company approving the execution and delivery of the Agreement and the consummation of the transaction contemplated therein.
|
This Officer’s Certificate may be sent by electronic transmission and shall be deemed to be original.
CERTIFIED true and correct this 1
st
day of November 2012.
ENDEAVOR HOLDINGS, INC.
Per:
/s/ Gardner Williams
Gardner Williams
President
SCHEDULE 4
TO THE AGREEMENT AND PLAN OF MERGER DATED
NOVEMBER 1, 2012
AMONG EDVP,
PRLX, EDVP SUB & PRLX SHAREHOLDERS
PRLX Liabilities
1.
J. Michael Redmond $
2. Huntington Chase Financial Group, LLC $
3. Grady Thrasher
4. Stan Lee
5. Transfer Agent
6.
SCHEDULE 5
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
PRLX Leases, Subleases, Claims, Capital Expenditures, Taxes and Other Property Interests
The only existing lease that PRLX has is with Monitor Business Suites, Inc.:
Located At:
2 Canal Park 5
th
Floor
Cambridge, MA
02141
PRLX has no subleases, claims, capital expenditures, taxes or other property interests.
SCHEDULE 6A
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG
EDVP, PRLX AND THE SHAREHOLDERS OF PRLX
Form of Certificate of U.S. Shareholder
In connection with the issuance of common stock (the “Pubco Shares”) of Endeavor Power Corp., a Nevada corporation (“
Pubco
”), to the undersigned, pursuant to that certain Agreement and Plan of Merger dated November 1, 2012 (the “Agreement”), between Pubco, Pubco Sub, PRLX and MBS as set out in the Agreement the undersigned Selling Shareholder (a “Selling Shareholder”), hereby agrees, acknowledges, represents and warrants that:
1. it satisfies one or more of the categories of "Accredited Investors", as defined by Regulation D promulgated under the United States Securities Act of 1933, as amended (the “1933 Act”), as indicated below: (Please initial in the space provide those categories, if any, of an "Accredited Investor" which the undersigned satisfies.)
|
_______ Category 1
|
An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Pubco Shares, with total assets in excess of US $5,000,000.
|
|
_______ Category 2
|
A natural person whose individual net worth, or joint net worth with that person's spouse, on the date of purchase exceeds US $1,000,000.
|
|
_______ Category 3
|
A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person's spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
|
|
_______ Category 4
|
A "bank" as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the
Securities
Exchange Act of 1934
(United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the
Investment Company Act of 1940
(United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958
(United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974
(United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors.
|
|
_______ Category 5
|
A private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940
(United States).
|
|
_______ Category 6
|
A director or executive officer of Pubco.
|
|
_______ Category 7
|
A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated Person as described in Rule 506(b)(2)(ii) under the 1933 Act.
|
|
_______ Category 8
|
An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories.
|
Note that for any of the Selling Shareholders claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Company with a balance sheet, prior years' federal income tax returns or other appropriate documentation to verify and substantiate the Subscriber's status as an Accredited Investor.
If the Selling Shareholder is an entity which initialled Category 8 in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:_________________________________________________________________
2. none of the Pubco Shares have been or will be registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S, except in accordance with the provisions of Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in compliance with any applicable state and foreign securities laws;
3. the Selling Shareholder understands and agrees that offers and sales of any of the Pubco Shares shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom and in each case only in accordance with applicable state and foreign securities laws;
4. the Selling Shareholder understands and agrees not to engage in any hedging transactions involving any of the Pubco Shares unless such transactions are in compliance with the provisions of the 1933 Act and in each case only in accordance with applicable state and provincial securities laws;
5. the Selling Shareholder is acquiring the Pubco Shares for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Pubco Shares in the United States or to U.S. Persons;
6. Pubco has not undertaken, and will have no obligation, to register any of the Pubco Shares under the 1933 Act;
7. Pubco is entitled to rely on the acknowledgements, agreements, representations and warranties and the statements and answers of the Selling Shareholder contained in the Agreement and this Certificate, and the Selling Shareholder will hold harmless Pubco from any loss or damage either one may suffer as a result of any such acknowledgements, agreements, representations and/or warranties made by the Selling Shareholder not being true and correct;
8. the Selling Shareholder has been advised to consult their own respective legal, tax and other advisors with respect to the merits and risks of an investment in the Pubco Shares and, with respect to applicable resale restrictions, is solely responsible (and Pubco is not in any way responsible) for compliance with applicable resale restrictions;
9. the Selling Shareholder and the Selling Shareholder’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from Pubco in connection with the acquisition of the Pubco Shares under the Agreement, and to obtain additional information, to the extent possessed or obtainable by Pubco without unreasonable effort or expense;
10. the books and records of Pubco were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the undersigned during reasonable business hours at its principal place of business and that all documents, records and books in connection with the acquisition of the Pubco Shares under the Agreement have been made available for inspection by the undersigned, the Selling Shareholder’s attorney and/or advisor(s);
11. the Selling Shareholder:
|
(a)
|
is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulators having application in the jurisdiction in which the Selling Shareholder is resident (the “International Jurisdiction”) which would apply to the acquisition of the Pubco Shares;
|
(b) the Selling Shareholder is acquiring the Pubco Shares pursuant to exemptions from prospectus or equivalent requirements under applicable securities laws or, if such is not applicable, the Selling Shareholder is permitted to acquire the Pubco Shares under the applicable securities laws of the securities regulators in the International Jurisdiction without the need to rely on any exemptions;
(c) understands and agrees that the applicable securities laws of the authorities in the International Jurisdiction do not require Pubco to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of the Pubco Shares; and
(d) the acquisition of the Pubco Shares by the Selling Shareholder does not trigger:
|
|
(i)
|
any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction; or
|
|
|
(ii)
|
any continuous disclosure reporting obligation of Pubco in the International Jurisdiction; and
|
the Selling Shareholder will, if requested by Pubco, deliver to Pubco a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in Sections 11(c) and 11(d) above to the satisfaction of Pubco, acting reasonably;
12. the Selling Shareholder (i) is able to fend for itself in connection with the acquisition of the Pubco Shares; (ii) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Pubco Shares; and (iii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;
13. the Selling Shareholder is not aware of any advertisement of any of the Pubco Shares and is not acquiring the Pubco Shares as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;
14. no person has made to the Selling Shareholder any written or oral representations:
(a) that any person will resell or repurchase any of the Pubco Shares;
(b) that any person will refund the purchase price of any of the Pubco Shares;
(c) as to the future price or value of any of the Pubco Shares; or
|
|
(d)
|
that any of the Pubco Shares will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Pubco Shares on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the common shares of Pubco on the OTC Bulletin Board;
|
15. none of the Pubco Shares are listed on any stock exchange or automated dealer quotation system and no representation has been made to the Selling Shareholder that any of the Pubco Shares will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the common shares of Pubco on the OTC Bulletin Board;
16. the Selling Shareholder is acquiring the Pubco Shares as principal for their own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Pubco Shares;
17. neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Pubco Shares;
18. the Selling Shareholder acknowledges and agrees that Pubco shall refuse to register any transfer of Pubco Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the 1933 Act, or pursuant to an available exemption from registration under the 1933 Act;
19. Pubco has advised the Selling Shareholder that Pubco is relying on an exemption from the prospectus and registration requirements of the Applicable Securities Legislation (as such term is defined in the Agreement) to issue the Pubco Shares, and the Selling Shareholder will not receive information that would otherwise be required to be provided to the Selling Shareholder pursuant to Applicable Securities Legislation.
20. the Selling Shareholder understands and agrees that the Pubco Shares will bear the following legend:
“NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WERE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”
21. the address of the Selling Shareholder included herein is the sole address of the Selling Shareholder as of the date of this certificate.
IN WITNESS WHEREOF, I have executed this Certificate of U.S. Shareholder.
|
If a Corporation, Partnership or Other Entity:
|
|
If an Individual:
|
|
Print or Type Name of Entity
|
|
Signature
|
|
Signature of Authorized Signatory
|
|
Print or Type Name
|
|
Address
|
|
Address
|
|
Type of Entity
|
|
Social Security/Tax I.D. Number
|
|
Social Security/Tax I.D. Number
|
|
|
SCHEDULE 6B
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG
EDVP, PRLX AND THE SHAREHOLDERS OF PRLX
Form of Certificate of Non-U.S. Shareholder
In connection with the issuance of common stock (the “Pubco Shares”) of Endeavor Power Corp., a Nevada corporation (“
Pubco
”), to the undersigned, pursuant to that certain Agreement and Plan of Merger dated November 1, 2012 (the “Agreement”), between Pubco and the shareholders of PRLX as set out in the Agreement (each, a “Selling Shareholder”), the undersigned Selling Shareholder hereby agrees, acknowledges, represents and warrants that:
1. the undersigned is not a “U.S. Person” as such term is defined by Rule 902 of Regulation S under the United States Securities Act of 1933, as amended (“U.S. Securities Act”) (the definition of which includes, but is not limited to, an individual resident in the U.S. and an estate or trust of which any executor or administrator or trust, respectively is a U.S. Person and any partnership or corporation organized or incorporated under the laws of the U.S.);
2. none of the Purchaser Securities have been or will be registered under the U.S. Securities Act, or under any state securities or “blue sky” laws of any state of the United States, and may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S, except in accordance with the provisions of Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable state and foreign securities laws;
3. the undersigned understands and agrees that offers and sales of any of the Purchaser Securities prior to the expiration of a period of one year after the date of original issuance of the Purchaser Securities (the one year period hereinafter referred to as the Distribution Compliance Period) shall only be made in compliance with the safe harbour provisions set forth in Regulation S, pursuant to the registration provisions of the U.S. Securities Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions of the U.S. Securities Act or an exemption therefrom and in each case only in accordance with applicable state and foreign securities laws;
4. the undersigned understands and agrees not to engage in any hedging transactions involving any of the Purchaser Securities unless such transactions are in compliance with the provisions of the U.S. Securities Act and in each case only in accordance with applicable state and provincial securities laws;
5. the undersigned is acquiring the Purchaser Securities for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Purchaser Securities in the United States or to U.S. Persons;
6. the undersigned has not acquired the Purchaser Securities as a result of, and will not itself engage in, any directed selling efforts (as defined in Regulation S under the U.S. Securities Act) in the United States in respect of the Purchaser Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Purchaser Securities; provided, however, that the undersigned may sell or otherwise dispose of the Purchaser Securities pursuant to registration thereof under the U.S. Securities Act and any applicable state and provincial securities laws or under an exemption from such registration requirements;
7. the statutory and regulatory basis for the exemption claimed for the sale of the Purchaser Securities, although in technical compliance with Regulation S, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act or any applicable state and provincial securities laws;
8. the undersigned has not undertaken, and will have no obligation, to register any of the Purchaser Securities under the U.S. Securities Act;
9. Purchaser is entitled to rely on the acknowledgements, agreements, representations and warranties and the statements and answers of Vendor contained in the Agreement and those of the undersigned contained in this Certificate, and the undersigned will hold harmless Purchaser from any loss or damage either one may suffer as a result of any such acknowledgements, agreements, representations and/or warranties made by Vendor and/or the undersigned not being true and correct;
10. the undersigned has been advised to consult their own respective legal, tax and other advisors with respect to the merits and risks of an investment in the Purchaser Securities and, with respect to applicable resale restrictions, is solely responsible (and Purchaser is not in any way responsible) for compliance with applicable resale restrictions;
11. none of the Purchaser Securities are listed on any stock exchange or automated dealer quotation system and no representation has been made to the undersigned that any of the Purchaser Securities will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the common shares of Purchaser on the OTC Bulletin Board;
12. the undersigned is outside the United States when receiving and executing this Agreement and is acquiring the Purchaser Securities as principal for their own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Purchaser Securities;
13. neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Purchaser Securities;
14. the Purchaser Securities are not being acquired, directly or indirectly, for the account or benefit of a U.S. Person or a person in the United States;
15. the undersigned acknowledges and agrees that Purchaser shall refuse to register any transfer of Purchaser Securities not made in accordance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration under the U.S. Securities Act;
16. the undersigned understands and agrees that the Purchaser Securities will bear the following legend:
“THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).
NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”
17. the address of the undersigned included herein is the sole address of the undersigned as of the date of this certificate.
IN WITNESS WHEREOF, I have executed this Certificate of Non-U.S. Shareholder.
|
If a Corporation, Partnership or Other Entity:
|
|
If an Individual:
|
|
Print or Type Name of Entity
|
|
Signature
|
|
Signature of Authorized Signatory
|
|
Print or Type Name
|
|
Address
|
|
Address
|
|
Type of Entity
|
|
Social Security/Tax I.D. Number
|
|
Social Security/Tax I.D. Number
|
|
|
SCHEDULE 7
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
PRLX Material Agreements
|
1.
|
J. Michael Redmond
|
Employment Agreement
|
|
|
2.
|
Huntington Chase Financial Group, LLC
|
Consulting Agreement
|
|
|
3.
|
Agreement of the Assignment of
Intellectual Property
|
Assignment of 510K Tests
|
|
|
4.
|
Agreements and License of
Intellectual Property
|
License of Patents
|
|
|
5.
|
Joyce, Thrasher Kaiser & Liss
Engagement Agreement
|
SEC Counsel
|
|
|
6.
|
Stan Lee CPA
|
Public Auditor
|
|
SCHEDULE 8
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
PRLX Employees and Consultants
1.)
Employees:
Name Position
J. Michael Redmond President
2.)
Consultants:
Name
Dr. Roger Morris
Ricky Richardson
Michael Contarino
Dr. David Stark
3.) Contractors:
Joyce, Thrasher, Kaiser & Liss, LP
Stan Lee CPA
Huntington Chase Financial Group, LLC
SCHEDULE 9
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
PATENTS AND TRADEMAKS
Patents Pending
|
·
|
US2006051348: Method of Producing a Plurality of Isolated Antibodies
|
|
·
|
US2006052948: Method of Producing Drugs, Targeting Moieties or Diagnostics
|
|
·
|
US 11/856,925: Method for Determining the Immune State of a Subject
|
|
·
|
US 11/924,033: Portable Apparatus for Improved Sample Analysis
*
|
* US 11/924,033 is currently also applied for under PCT in ALL countries
Trademarks
Pending Trademarks:
Target Systems (Logo)
SCHEDULE 10
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG
EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
FDA 510K CLEARED TESTS
|
Device Name
|
510(k) Number
|
|
|
|
|
Rubella-Cube
TM
|
K892051
|
|
Cmv-Cube
TM
|
K884842
|
|
Blue Dot Test for Pregnancy
|
K884017
|
|
First Sign (Pregnancy, Hcg)
|
K973208
|
|
V-Trend Target Im Test (infect mononucleosis)
|
K890041
|
|
Target Strep A (Streptococcus Spp.)
|
K8800460
|
|
Target Cocaine Metabolites-R
|
K910122
|
|
Target Cocaine Metabolites-V
|
K910123
|
|
Target Myoglobin Test
|
K963680
|
|
Target CK-Mb
TM
|
K890295
|
|
Target Aso Test
|
K910073
|
|
Target Hcg
|
K914303
|
|
Target Cannabinoids-V Test
|
K910892
|
|
Target Cannabinoids-R Test
|
K910893
|
|
Target/Amphetamine Methamphetamine-V(visual Meth)
|
K910738
|
|
Target/Amphetamine Methamphetamine –R (Reader Meth)
|
K910739
|
|
Target Quantitative Hog One Step
|
K903937
|
|
V-Trend Target Rf Test
|
K904105
|
|
V-Trend Target Cup Test
|
K892231
|
|
Target Quantitative Hcg
|
K890131
|
|
Target Opiate-R
|
K890978
|
|
Target Opiate-V
|
K890979
|
|
V-Trend Target Cup Test
|
K890423
|
|
Target Reader
|
K885254
|
SCHEDULE 11
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
PRLX
Financial Statements
Audited Financial Statement for Year End December 31, 2011:
March 31, 2012 Quarterly Review, June 30, 2012 Quarterly Review and September 30, 2012 Quarterly Review
Prepared by Stan Lee
Chartered Accountants and Advisors
SCHEDULE 11
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG
EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
Pending or Threatened Litigation, Claims and Assessments
There are no known pending or threatened litigation, claims or assessments against PRLX.
Unasserted Claims and Assessments
There are no known unasserted claims and assessments against PRLX.
SCHEDULE 10
TO THE AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 1, 2012 AMONG
EDVP, PRLX, EDVP SUB & PRLX SHAREHOLDERS
EDVP Shareholder Cancellation Resolution
CANCELLATION RESOLUTION
CORPORATE RESOLUTION AUTHORIZING RETIREMENT/OUTRIGHT
CANCELLATION WITHOUT REISSUANCE OF THE
ATTACHED CERTIFICATES
______________ENDEAVOR POWER CORP _______________
___________________COMMON________________________
CLASS OF STOCK
RESOLVED, THAT ISLAND STOCK TRANSFER STOCK, TRANSFER AGENT FOR THE ABOVE CLASS OF STOCK FOR THE ABOVE COMPANY, IS AUTHORIZED BY THE COMPANY TO CANCEL ALL CERTIFICATE(S) LISTED BELOW, WHICH ARE PRESENTED TO THE STOCK TRANSFER AGENT FOR OUTRIGHT CANCELLATION, AND DECREASE THE OUTSTANDING SHARES ON THE BOOKS OF THE COMPANY.
ORIGINAL CERTIFICATE(S) PRESENTED FOR CANCELLATION (PLEASE TYPE)
|
Registered
|
|
Certificate
|
Number
|
Cancellation
|
Restricted or
|
|
Name
|
|
Number
|
Of Shares
|
Date
|
Free Trading
|
|
1)
|
THE MUSSER GROUP, LLC
|
3058
|
5,000,000
|
11-01-2012
|
144
|
|
2)
|
THE MUSSER GROUP, LLC
|
3059
|
5,000,000
|
10-01-2012
|
144
|
|
3)
|
MANDALAY VENTURES, LLC
|
3056
|
34,556,250
|
10-01-2012
|
144
|
|
4)
|
REGAL CAPITAL
|
|
|
|
|
|
|
DEVELOPMENT, CORP.
|
3057
|
45,819,500
|
10-01-2012
|
144
|
|
|
|
|
|
|
|
DECREASING THE NUMBER OF SHARES OUTSTANDING BY 90,375,750 SHARES.
(NOTE – THIS RESOLUTION IS
ONLY
USED TO DECREASE THE CONTROL BOOK,
NOT
FOR A CORPORATE STOCK TRANSFER).
I, THE UNDERSIGNED, QUALIFIED OFFICER AND/OR COUNSEL OF THE ABOVE NAMED COMPANY, DO HEREBY INDEMNIFY ISLAND STOCK TRANSFER AND THEIR EMPLOYEES AGAINST ANY AND ALL ACTIONS TAKEN BY THE ABOVE COMPANY, AND CERTIFY THAT THIS IS A TRUE COPY OF A RESOLUTION, SET FORTH AND ADOPTED ON THE BELOW DATE, AND THAT THE SAID RESOLUTION HAS NOT BEEN IN ANY WAY RESCINDED, ANNULLED OR REVOKED BUT THE SAME IS STILL IN FULL FORCE AND EFFECT.
10.
/S/ E
dward W. Withrow III
Edward W. Withrow III
OFFICER’S SIGNATURE
OFFICER’S NAME PRINTED
Chairman
October 25, 2012
TITLE OF OFFICER DATE
617.209.7999
888.899.1443
TELEPHONE NUMBER FACSIMILE NUMBER
NOTE
NOTE-ALL CERTIFICATE(S) LISTED ABOVE FOR OUTRIGHT CANCELLATION MUST BE PRESENTED TO ISLAND STOCK TRANSFER
PRIOR TO THE EXECUTION OF THIS RESOLUTION.
PRLX-EDVP AGREEMENT & PLAN OF MERGER 11-01-12
Exhibit 2.2
August 15, 2012
Edward W. Withrow III
Parallax Diagnostics, Inc.
2 Canal Park 5
th
Floor
Cambridge, MA 02141
|
Attention:
|
Gardner Williams
|
President, Chairman
|
|
|
Edward W. Withrow III
|
Chairman
|
Re: “Amended Letter of Intent for the exchange of shares of Endeavor Power Corp. a Nevada corporation (“EDVP” or the “Company”), for all of the issued and outstanding shares of Parallax Diagnostics, Inc a Nevada corporation, (“PRLX”)”
Gentlemen:
This letter will confirm the following general terms upon which the Boards of Directors of EDVP and PRLX will adopt a Plan and Agreement of Merger (the “Plan of Merger” and “Merger,” respectively), whereby EDVP will exchange shares of its $0.001 par value common voting stock for all of the issued and outstanding shares of PRLX, by the formation and merger of a wholly-owned subsidiary of EDVP with and into PRLX, with PRLX being the surviving corporation and the common shareholders of PRLX being issued shares of common stock of EDVP under the Merger and whereby PRLX will become a wholly-owned subsidiary of EDVP on the closing of the Merger (the “Closing”). Subject to Board of Directors and a majority approval from the PRLX shareholders approval, if necessary, PRLX shall have effected a merger with EDVP concurrently with the Closing.
We propose that a definitive agreement approved by our respective Boards of Directors be negotiated and executed which will set forth in detail our intent, upon the following general terms and conditions.
A. The Exchange.
(i)
At or before Closing, EDVP shall cancel 90,375,750 restricted shares.
(ii)
At Closing, EDVP shall issue approximately 90,375,750 shares (the “post-Merger stockholder shares”) or approximately 60% of its post-Merger $0.001 par value common voting stock, in exchange for all of the issued and outstanding shares of PRLX.
(iii)
Pursuant to the Merger, the existing stockholders of EDVP shall own approximately 60,688,148 shares or approximately 40% of the post-Merger issued and outstanding shares of EDVP.
Prior to the closing EDVP will remove all debt-comprising loans from shareholders, directors and associated persons currently outstanding on its books. EDVP has confirmed that there will be less than $25,000 in third-party vendor debt prior to the closing of the exchange, excluding legal, accounting and auditing costs associated with the Plan of Merger and Merger as it deals specifically with PRLX’s legal, accounting, auditing and expenses associated with the merger. All post merger expenses will be the responsibility of the surviving company.
B.
Definitive Agreement
.
The definitive agreement shall include, contain or provide:
|
(
i)
|
Representations and Warranties. Customary and usual representations and warranties by the parties, and the principal executive officer of each of the parties shall certify these representations and warranties “to his personal knowledge and information.”
|
|
(ii)
|
Opinions of Counsel. For the delivery at Closing of favorable opinions of counsel for the corporate parties with respect to customary and usual matters of law covered under similar plans and parties.
|
(iii) Financial and Other Information.
|
(a)
|
The examination and inspection of the books and records of each of the parties prior to Closing; the delivery no later than at Closing of customary schedules listing each party’s material contracts; real and personal properties; pending, threatened and contemplated legal proceedings; employees; assets and liabilities, including contingencies and commitments; and other information reasonably requested;
|
|
(b)
|
Each of the parties to provide annual audited financial statements and interim un-audited financial statements consisting of a balance sheet and a related statement of income for the period then ended which fairly present the financial condition of each as of their respective dates and for the periods involved, and such audited statements shall be prepared in accordance with generally accepted accounting principles of the United States consistently applied, on Closing, for such period or periods as shall be set forth in the definitive agreement; and
|
(iv) Expenses. In the event of the termination of this Letter of Intent for any reason, prior to the execution of the Plan of Merger, each party shall bear and pay its own costs and expenses and shall indemnify and hold the other parties harmless therefrom. Following execution and delivery of the Plan of Merger, that agreement will control the rights of the parties in this respect.
(v) Conduct of Business of EDVP and PRLX Pending Closing. Until consummation or termination of the Plan of Merger, EDVP, and PRLX will conduct business only in the ordinary course and none of the assets of EDVP or PRLX, shall be sold or disposed of except in the ordinary course of business or with the written consent of the other party.
(vii) Other.
(a) EDVP and PRLX shall have received all permits, authorizations, regulatory approvals and third party consents necessary for the consummation of the Closing of the Merger, and all applicable legal requirements shall have been satisfied, including, to the extent required, shareholder approval of the Merger.
(b) The definitive agreement shall be executed as soon as practicable following the execution of this Amended Letter of Intent; This Amended Letter of Intent will remain effective through November 15, 2012 unless terminated by either party. The Letter of Intent may be extended past November 15, 2012, by written approval from both parties.
Confidential
(c) The Boards of Directors of EDVP and PRLX shall have approved the definitive agreement. The Shareholders of PRLX shall have approved the definitive agreement
(e) All notices or other information deemed required or necessary to be given to any of the parties shall be given at the following addresses.
Endeavor Power Corp.
Attn: Gardner Williams
84 Winnisimmet Drive
Chelsea, MA 02150
Parallax Diagnostics, Inc.
Attn: Edward W. Withrow III
2 Canal Park 5
th
Floor
Cambridge, MA 02141
(f) No finder’s fee or similar payment with respect to the Plan of Merger shall be paid by either party.
(g) The definitive agreement shall contain customary and usual indemnification and hold harmless provisions.
(h) The transactions which are contemplated herein, to the extent permitted, shall be governed by and construed in accordance with the laws of the State of Nevada.
(i) Each party and its agents, attorneys and representatives shall have full and free access to the properties, books and records of the other party (the confidentiality of which the investigating party agrees to retain) for purposes of conducting investigations of the other party.
|
|
(j)
|
The substance of any public announcement with respect to the exchange, other than notices required by law, shall be approved in advance by all parties or their duly authorized representatives.
|
|
|
|
|
|
|
(k)
|
In the event of the abandonment of this Letter of Intent prior to the execution of the Plan of Merger, each party shall bear and pay its own costs and expenses and shall indemnify and hold the other parties harmless therefrom. Following execution and delivery of the Plan of Merger, that agreement will control the rights of the parties in this respect.
|
This Letter of Intent merely evidences the intention of the parties hereto and is not intended by any party to be legally binding. The proposed agreement contemplated herein may be terminated in writing only by any of the parties at any time prior to the execution of the definitive agreement, which shall be controlling thereafter.
C.
Counterparts
. This Letter of Intent may be executed in any number of counterparts and each such counterpart shall be deemed to be an original instrument, but all of such counterparts together shall constitute but one agreement.
Confidential
D.
Confidentiality
. By its execution hereof, EDVP acknowledges to and agrees with PRLX that in the exercise of the several rights granted to it pursuant to this Letter of Intent, EDVP, and/or its agents and affiliates, may become familiar with or aware of certain Confidential Information (as such term is hereinafter defined) disclosed by PRLX or one or more of its officers, directors, employees, shareholders, partners, agents or representatives (each of such relationships being defined herein as an “Affiliate”). Accordingly, EDVP hereby agrees that any and all Confidential Information disclosed or furnished to it or to any of its Affiliates, by PRLX or any of its Affiliates, is and shall remain proprietary to PRLX. Neither EDVP, nor any Affiliate of EDVP, shall have any rights to distribute or divulge any of such Confidential Information to any third party, other than its legal, financial, accounting and auditing advisors, without PRLX’s prior consent, or to use any of such Confidential Information in any way detrimental to PRLX or any of its Affiliates, or in any way which would otherwise destroy, injure or impair any of PRLX’s or its Affiliates’ rights in or in respect of any such Confidential Information including, without limitation, by using any of such Confidential information to solicit away from PRLX any of its employees, contractors, customers or vendors or other business relationships, or to establish or assist any person or entity which is or will be, directly or indirectly, in competition with PRLX. For purposes of this Agreement, the term “Confidential Information” shall mean any and all proprietary information belonging to PRLX, whether tangible or intangible, written or oral, including, without limitation, any intellectual property rights, books and records, computer software and files, lists of (or proprietary information concerning) its customers, suppliers, vendors and other business relationships, and any other item which may properly be classified as a protected trade secret. EDVP expressly agrees and understands that its agreement to abide by the provisions of this Section D constitute a material part of the consideration inducing PRLX to enter into this Letter of Intent and consider the transactions contemplated herein, and that any violation of such provisions could create immediate and irreparable harm to PRLX. In the event of any breach of this Section D, the parties hereby agree that, in addition to whatever other remedies may be available to PRLX, it shall be entitled to seek injunctive and other equitable relief, and PRLX hereby waives any bonding or other requirement as a precursor thereto.
If the foregoing correctly sets forth the substance of the understanding of the parties, please execute this Letter of Intent in duplicate, retain one copy for your records, and return one to Parallax Diagnostics, Inc. in care of Edward W. Withrow III at 2 Canal Park 5
th
Floor Cambridge, MA 02141.
SIGNATURES ON THE NEXT PAGE
Confidential
Accepted this 15
th
day of August 2012
Very truly yours,
|
/s/ Gardner Williams
|
|
|
Gardner Williams
|
|
|
President
|
|
|
Endeavor Power Corp.
|
|
Accepted this 15
th
day of August 2012
Very truly yours,
|
/s/ Edward W. Withrow III
|
|
|
Edward W. Withrow III
|
|
|
Chairman
|
|
|
Parallax Diagnostics, Inc.
|
|
Confidential
EXHIBIT “A”
The following deliverables must be delivered to each party as part of the execution of the Plan of Merger.
|
|
·
|
Agreement and Plan of Merger and related documentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
·
|
Execution of Closing documents by officers and directors of EDVP and PRLX.
|
|
|
|
|
|
|
|
|
-
|
EDVP officer and director will offer resignations.
|
|
|
|
-
|
Cancellation of Shares.
|
|
|
|
|
|
|
|
·
|
Post-Plan of Merger filings are made, with the following agencies (usually takes 7 to 10 business days).
|
|
|
|
|
|
|
|
|
-
|
Articles of Merger.
|
|
|
|
-
|
Certificate of Designation – define rights, title, and preferences for classes of stock or warrants that are authorized (pre-Plan of Merger task).
|
|
|
|
|
|
|
|
·
|
Order and issue new share certificates;
|
|
|
|
|
|
|
|
·
|
Current Report on Form 8-K reflecting consolidated, combined financial
statements of EDVP and PRLX, as filed with the SEC; and
|
|
|
|
|
|
|
|
·
|
PRLX audited and unaudited Financial Statements for the most recent required periods; and
|
|
|
|
|
|
|
|
·
|
Pro forma combined balance sheet taking into consideration the Plan of Merger.
|
Confidential
Exhibit 4.5
ESOP
EMPLOYEE STOCK OPTION PLAN
STOCK OPTION PLAN OF
PARALLAX DIAGNOSTICS, INC
(F/K as Parallax Kline, Inc)
OCTOBER 1, 2010
Table of Contents
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Parallax Kline, Inc Employee Stock Option Plan
|
Confidential 10-31-10
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Parallax Kline, Inc Employee Stock Option Plan
|
Confidential 10-31-10
|
PARALLAX KLINE, INC
2010 STOCK OPTION PLAN
ARTICLE 1
1.1
Purpose of Plan
. The Parallax Kline, Inc (“PARALLAX”) 2010 Stock Option Plan is intended to encourage ownership of Shares of PARALLAX by certain employees of the Company or of its Parents or Subsidiaries and certain other Persons, to provide additional incentive for them to remain in the employ of the Company or its Parents or Subsidiaries, and to promote the growth and success of the Company and such Parents and Subsidiaries. It is intended that the Options issued pursuant to the Plan shall constitute either incentive stock options within the meaning of Section 422 of the Code and the regulations thereunder or non-incentive stock options.
1.2
Definitions
. Whenever used herein, the following terms shall have the following meanings unless the context clearly indicates another meaning:
“
Board
” - the Board of Directors of the Company.
“
Business Day
” - any day other than a Saturday, a Sunday, or a day on which banking institutions in the State of Nevada are authorized or obligated by law or executive order to remain closed.
“
Code
” - the Internal Revenue Code of 1986, as amended.
“
Committee
” - the Board or, at the option of the Board, a committee designated by the Board, which committee shall consist of not less than one member of the Board who shall be appointed by and serve at the pleasure of the Board. Members of the Committee who are Eligible Individuals shall be eligible for grants of Options;
provided
that any such grant is approved by a majority of the other members of the Committee. During any period of time in which the Company is subject to the reporting requirements of the Exchange Act, the Committee shall be comprised solely of not less than two members, each of whom shall be (i) a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act, as amended, and (ii) unless otherwise determined by the Board, an “outside director” within the meaning of Treasury Regulation Section 1.162-27(e)(3) and Section 162(m) of the Code.
“
Company
” – Parallax Diagnostics, Inc a Delaware corporation.
“
Corporate Parent
” - with respect to any Option, any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time such Option is granted, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one or more of the other corporations in such chain.
“
Corporate Subsidiary
” - with respect to any Option, any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time such Option is granted, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one or more of the other corporations in such chain.
“
Date of Grant
” - with respect to any Option, the date on which such Option is deemed granted pursuant to Section 5.2.
“
Disability
” - permanent and total disability as defined in the employment agreement (or any successor agreement).
“
Eligible Individual
” - (i) a Key Employee or (ii) any other Person that the Committee designates as eligible to receive a Non-incentive Stock Option (or, to the extent Incentive Stock Options may be granted to such Persons, an Incentive Stock Option) because such other Person performs services for the Company or any of Its Parents or Subsidiaries (other than services in connection with the offer or sale of securities in a capital-raising transaction) and the Committee determines that the Person has a direct and significant effect on the financial development of the Company or any of its Parents or Subsidiaries, but excluding, under (i) and/or (ii), any Person that the Board may from time to time specify as ineligible.
“
Eligible Employer
” - the Company.
“
Employee-Participant
” - a Participant who is, at the Date of Grant of the relevant Option, an employee of an Eligible Employer.
“
Exchange Act
” — the Securities Exchange Act of 1934, as amended.
“
Fair Market Value
” – (a) if Shares are listed on a national securities exchange, the last reported sales price, regular way, on the composite tape of the principal national securities exchange on which the Shares are so listed on the most recent Business Day prior to the date in question for which such price is available; (b) if clause (a) does not apply but the Shares are admitted to trading in the NASDAQ-National Market System (or a similar system then in use), the last reported sales price, regular way, on the NASDAQ-National Market System (or such similar system) on the most recent Business Day prior to the date in question for which such price is available; (c) if neither clause (a) or (b) applies but the Shares are traded in the over-the-counter market and bid and asked prices are reported by NASDAQ or any comparable system, the average of the closing bid and asked prices of Shares in the over-the-counter market as reported by NASDAQ or any comparable system on the most recent Business Day prior to the date in question for which such prices are available; (d) if none of clauses (a), (b), or (c) applies but bid and asked prices for the Shares are furnished by members of the FINRA, the average of the closing bid and asked prices as furnished by two members of the FINRA (selected from time to time by the Committee for that purpose) on the most recent Business Day prior to the date in question for which such prices are available; and (e) if none of clauses (a), (b), (c), or (d) applies, the fair market value of the Share as determined by the Committee from time to time.
“
Incentive Stock Option
” - an option to purchase Shares granted pursuant to the Plan that is an “incentive stock option” within the meaning of Section 422 of the Code.
“
Initial Public Offering
” - the consummation of a sale of Shares (by the Company or shareholders or a combination thereof) that is registered on a registration statement (other than a registration statement on Form S-8 or its equivalent) filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, pursuant to which the Company receives at least $10 million.
“
Issuable Number
” - at any time, the Maximum Number less the number of Shares theretofore issued or delivered under the Plan (appropriately adjusted to give effect to any changes in capitalization or Reorganization).
“
Key Employee
” - any employee of an Eligible Employer who the Committee determines is key to the operations of an Eligible Employer.
“
Maximum Number
” - the maximum number of Shares that may be issued or delivered under the Plan, which is 3,000,000 (subject to adjustment as set forth in Sections 9.6 and 9.7 hereof).
“FINRA” – Financial Industry Regulatory Authority.
“
NASDAQ
” - NASD Automated Quotation System.
“
Non-Incentive Stock Option
” - an option to purchase Shares granted pursuant to the Plan that is not an Incentive Stock Option.
“
Option
” - an option to purchase Shares granted pursuant to the Plan that is an Incentive Stock Option or a Non-Incentive Stock Option.
“
Option Agreement
” - the agreement, substantially in the form attached hereto as Exhibit B (or such other form as may be approved by the Committee for use under the Plan pursuant to Section 2.1 hereof), between the Company and a Participant evidencing the grant of an Option under the Plan and containing the terms and conditions, not inconsistent with the Plan, that are applicable to such Option.
“
Parent
” - any Person (other than the Company) in an unbroken chain of Persons ending with the Company if, at the time such Option is granted, each of the Persons other than the Company owns stock (or other equity interests) possessing 50% or more of the total combined voting power of all classes of stock (or other equity interests) in one or more of the other Persons in such chain.
“
Participant
” - an Eligible Individual to whom an Option is granted under the Plan.
“
Person
” - any natural person, corporation, partnership, limited partnership, limited liability company, joint venture, or other entity.
“
Plan
” – the PARALLAX 2010 Stock Option Plan, as set forth herein and as it may be amended from time to time.
“
Reorganization
” - any merger or consolidation in which the Company is not the surviving Person (other than a merger of the Company into a wholly-owned subsidiary of the Company) or in which the holders of Shares receive cash, shares of another Person, a different class of shares of the Company, or other property; the sale of all or substantially all of the assets of the Company; or the sale, pursuant to an agreement with the Company, of Shares of the Company pursuant to which another Person acquires Shares that, after consummation of such sale, are 50% or more of the outstanding Shares of the Company.
“
Securities Act
” – the Securities Act of 1933, as amended.
“
Share
” - a share of the Company’s present Common Stock, par value $.001 per share, and any share or shares of capital stock or other securities of the Company hereafter issued or delivered or issuable or deliverable upon, in respect of, in substitution of, or in exchange for each present share.
“
Shareholders’ Agreement
” - that certain Shareholders’ Agreement executed as of October 31, 2010, by the Company, Joseph Michael Redmond, Michael Contarino, Dr. Roger Morris and, possibly others, as the same may be amended at the relevant time, a copy of the current version of which is attached as
Exhibit A hereto.
“
Subsidiary
” - any Person (other than the Company) in any unbroken chain of Persons beginning with the Company if, at the time of granting of the Option, each of the Persons (other than the last Person in the unbroken chain) owns stock (or other equity interests) possessing 50% or more of the total combined voting power of all classes of stock (or other equity interests) in one of the other Persons in such chain.
“
Treasury Regulations
” - the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provisions of succeeding, similar, substitute, proposed, temporary, or final Treasury Regulations.
“
Vesting Schedule
” - a schedule on which an Option becomes exercisable as to a specific number of Shares subject to such Option.
ARTICLE 2
2.1
Administration
. The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee is authorized to take the following action, in addition to each other action that the Committee is expressly authorized to take pursuant to the Plan:
(a)
determine who is an Eligible Individual and determine the Eligible Individuals to whom Options are to be granted;
(b)
determine the number of Shares to be covered by each of the Options, the time or times at which Options shall be granted and exercisable and terminate, the exercise price for Shares subject to the Options, whether such Options shall be Incentive Stock Options or Non-Incentive Stock Options, and the other terms and provisions of each Option Agreement (which need not be the identical);
(c)
interpret the Plan provisions;
(d)
terminate the Plan;
(e)
adopt, amend, and rescind rules and regulations relating to the Plan and the functioning of the Committee;
(f)
determine the Fair Market Value of Shares;
(g)
accelerate the vesting of Options;
(h)
rely on the employees of the Company for such clerical and record-keeping duties as may be necessary or desirable in connection with the administration of the Plan; and
(i)
make all other determinations and take all other actions necessary or advisable for the administration of the Plan.
2.2
Absolute Discretion
. All questions of interpretation and application of the Plan or any Option Agreement or pertaining to any Option granted hereunder shall be subject to the determination by a majority of the members of the Committee acting with absolute discretion.
2.3
No Liability for Good Faith Determinations
. No member of the Committee shall be liable for any act, omission, or determination taken or made in good faith with respect to the Plan or any Option, and members of the Committee shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage, or expense (including attorneys’ fees, and the costs of settling any suit if such settlement is approved by independent legal counsel selected by the Company), and amounts paid in satisfaction of a judgment (except a judgment based on a finding of bad faith) arising therefrom to the full extent permitted by law and under any directors and officers liability or similar insurance coverage that may from time to time be in effect. This right to indemnification shall be in addition to, and not a limitation on, any other indemnification rights any member of the Committee may have.
2.4
No Liability of Company
. The Company assumes no obligation or responsibility to any Participant for any act of, or failure to act on the part of, the Committee.
ARTICLE 3
3.1
Participants
. An Option may be granted pursuant to the Plan only to a Person who is an Eligible Individual at the Date of Grant of such Option.
3.2
Factors in Determination
. In making any determination as to whether a Person is an Eligible Individual, as to whether an Eligible Individual will be granted an Option, and as to the number of Shares to be covered by such Option, the Committee shall take into account the duties of such Person, the present and potential contributions of such Person to the growth and success of the Company and its Parents or Subsidiaries, and such other factors as the Committee shall deem relevant in connection with accomplishing the purposes of the Plan. The Committee shall not be precluded from approving the grant of an Option to any Eligible Individual solely because such Person may previously have been granted an Option under the Plan.
ARTICLE 4
4.1
Shares
. At no time shall the number of Shares subject to outstanding Options be greater than the Issuable Number. The Company shall cause the Issuable Number of Shares to be reserved for issuance or delivery under the Plan at all times the Plan is in effect.
4.2
Expiration or Cancellation of Options; Tendered Shares
. Should any Option expire or be canceled without being fully exercised, the number of Shares with respect to which such Option shall not have been exercised prior to its expiration or cancellation will again be available for the granting of Options pursuant to the provisions hereof. Furthermore, if the exercise price of any Option granted under the Plan is satisfied by tendering Shares (by either actual delivery or by attestation), only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the Issuable Number;
provided, however
, that any increase in the Issuable Number resulting from the application of this sentence shall be reserved for issuance of Shares in satisfaction of Non-Incentive Stock Options only.
4.3
Description of Shares
. The Shares to be delivered under the Plan shall be made available from (a) authorized but unissued Shares, (b) Shares held in the treasury of the Company, or (c) previously issued Shares reacquired by the Company, including Shares purchased on the open market, as the Board or the Committee may, in each situation, determine from time to time in its sole discretion.
ARTICLE 5
5.1
Decision of Committee
. From time to time the Committee shall, in its sole discretion but subject to all of the provisions of the Plan, determine which Eligible Individuals will be granted Options, the number of Shares subject to Options, and the terms and conditions of the Options, including whether the Options will be Incentive Stock Options or Non-Incentive Stock Options. The terms and conditions of an Option need not be the same for any other Option.
5.2
Date of Grant
. The date of the Agreement shall be the date on which the Option is deemed granted. In no event shall a Participant gain any rights in addition to those specified by the Committee in its grant, regardless of the time that may pass between the grant of the Option and the actual acceptance of the offer of the Option and execution of the Option Agreement by the Company and the Participant.
5.3
Acceptance of Grant
. Each Eligible Individual granted an Option pursuant to Section 5.1 shall have an opportunity to accept or reject the grant of the Option. Execution and delivery of an Option Agreement relating to an Option shall qualify as such written acceptance. Each Eligible Individual who indicates a desire to accept the grant of the Option offered to him or her must enter into an Option Agreement pursuant to Section 6.1 hereof as a condition to such acceptance.
5.4
Limitation of Time of Grant
. In no event shall any Incentive Stock Option be granted hereunder after the date that is ten years after the earlier of (a) the date the Plan is adopted by the Board and (b) the date the Plan is approved by the shareholders of the Company pursuant to Section 9.1.
5.5
Limitation on Incentive Stock Options
. Notwithstanding any other provision contained herein to the contrary, no Incentive Stock Option shall be granted to an Eligible Individual under the Plan to the extent it, together with all other incentive stock options granted by the Company or any of its Parents or Subsidiaries to such Eligible Individual, would relate to Shares that, in the calendar year they first become purchasable, have a Fair Market Value, at the Date of the Grant, in excess of $100,000. Notwithstanding the above, to the extent that the $100,000 limit is exceeded, the Option shall automatically be deemed to be a Non-Incentive Stock Option.
5.6
Limitation on Recipients of Grant
. Notwithstanding any other provision contained herein to the contrary, in no event shall any Eligible Individual owning directly or indirectly (pursuant to Code Section 424) more than 10% of the total combined voting power of the Company or any Corporate Subsidiary (a “10% Holder”) be granted an Incentive Stock Option hereunder unless (a) the exercise price is at least 110% of the Fair Market Value of the Shares at the Date of Grant of the Option and (b) the term of the Option does not exceed five years from the Date of Grant. Notwithstanding any other provision contained herein to the contrary, in no event shall any Incentive Stock Option (or an incentive stock option under any other plan of the Company or a Subsidiary) be granted to any Eligible Individual unless such Eligible Individual is a Key Employee of the Company or a Corporate Parent or Corporate Subsidiary of the Company.
ARTICLE 6
6.1
Option Agreement
. Each Option granted under the Plan shall be evidenced by an Option Agreement, in such form as the Committee may prescribe, setting forth the tens and conditions of the Options, consistent with the provisions of the Plan. The Option Agreement shall identify the Option granted as either an Incentive Stock Option or a Non-Incentive Stock Option.
6.2
Number of Shares
. Each Option Agreement shall specify the number of Shares subject to each Option.
6.3
Exercise Price
. The exercise price for each Share purchased under any Option shall be specified in the Option Agreement relating to such Option, which shall not be less than the par value of a Share and, in the case of an Incentive Stock Option, shall also not be less than 100% of the Fair Market Value of a Share on the Date of Grant.
6.4
Payment of Exercise Price
. Payment of the exercise price for Shares purchased under the Plan shall be made upon the exercise of an Option and may be paid to the Company:
(a)
in cash (including check, bank draft, or money order); or
(b)
at the discretion of the Committee, or if the Option Agreement so provides, by the delivery of Shares of the Company owned by the Participant (including Shares received upon exercise of such Option) that have a Fair Market Value on the date of exercise equal to the aggregate exercise price;
(c)
at the discretion of the Committee, or if the Option Agreement so provides, by the delivery of a promissory note in the principal amount of the aggregate exercise price and having such other terms as are determined by the Committee or provided in the Option Agreement; or
(d)
at the discretion of the Committee, or if the Option Agreement so provides, by a combination of the foregoing.
6.5
Vesting
. If the relevant Option Agreement does not specify a Vesting Schedule but (assuming no event of the type described in Article VII that would shorten or extend such term occurs during such term) has a term of at least five years from the Date of Grant, the Option shall become exercisable with respect to cumulative quantities of 20% of the Shares subject thereto on the first, second, third, fourth, and fifth anniversary dates of the Date of Grant (subject to adjustment as contemplated by Article VII).
6.6
Modification, Extension, and Renewal of Options
. Subject to the terms and conditions of and within the limitations of the Plan and any consent required by the last two sentences of this Section, the Committee may (a) modify, extend, or renew outstanding Options, (b) accept the surrender of outstanding Options (to the extent not previously exercised) and authorize the granting of new Options (including those with a higher or lower exercise price) in substitution for outstanding Options (to the extent not previously exercised), and (c) amend the terms of an Incentive Stock Option at any time to include provisions that have the effect of changing the Incentive Stock Option to a Non-incentive Stock Option. Nevertheless, without the consent of the Participant, the Committee may not modify any outstanding Option so as to specify a higher or lower exercise price or accept the surrender of outstanding Incentive Stock Options and authorize the granting of new Options in substitution therefor specifying a higher or lower exercise price. In addition, no modification of an Option shall, without the consent of the Participant, alter or impair any rights or obligations under any Option theretofore granted hereunder to such Participant except, with respect to Incentive Stock Options, as may be necessary to satisfy the requirements of Section 422 of the Code.
6.7
Exercise of Options Generally
. An Option may be exercised only by written notice of exercise delivered to the Company during the term of the Option, which notice shall (a) state the number of Shares with respect to which the Option is being exercised, (b) be signed by the Participant (or, if the Participant is dead or Disabled, by the Person, if any, authorized to exercise the Option pursuant to the Plan and, if signed by a Person other than the Participant, be accompanied by or contain satisfactory evidence of such Person’s right to exercise the Option), (c) be accompanied by payment of the appropriate exercise price and by payment in full of all the applicable taxes required to be withheld with respect to such exercise, (d) state the Social Security number of the Participant or other Person exercising the Option as contemplated by clause (b) above, and (e) include or be accompanied by such other information, instruments, agreements, and documents required to satisfy any other condition to exercise specified in the Plan (including but not limited to those contained in Section 6.9, 6.10, and 6.15) or the Option Agreement. Unless otherwise consented to by the Committee, an Option shall not be deemed exercised until the requirements of this Section are completely fulfilled.
6.8
Certain Conditions to Exercise and Delivery of Stock
. Nothing herein or in any Option or any Option Agreement shall require the Company to issue or deliver any Shares if that issuance or delivery would, in the opinion of counsel for the Company, constitute a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, in each case, as then in effect. The Company may, as a condition precedent to the exercise of an Option, require from the Participant (or in the event of the death or Disability of the Participant, the Participant’s legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning the Participant’s (or such other Person’s) intentions with regard to the retention or disposition of the Shares being acquired and such written covenants and agreements, if any, as to the manner of disposal of such Shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that Participant (or in the event of the death or Disability of the Participant, the Participant’s legal representatives, heirs, legatees, or distributees), will not involve a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, in each case, as then in effect.
6.9
Additional Restrictions on Exercise
. The exercise of each Option granted under the Plan shall be subject to the condition that if at any time the Company or the Committee shall determine, in its sole discretion, that (a) the satisfaction of withholding taxes or other withholding liabilities, (b) the listing, registration, or qualification of any Shares otherwise deliverable upon such exercise on any securities exchange or under any state or federal law, or (c) the consent or approval of any regulatory body is necessary or desirable as a condition of, or in connection with, such exercise or the delivery or purchase of Shares thereunder, then in any such event such exercise shall not be effective unless such withholding, listing, registration, qualification, consent, or approval shall have been effected or obtained without any conditions not acceptable to the Company.
6.10
Nontransferability of Options
. Unless the relevant Option Agreement with respect to a Non-Incentive Stock Option expressly provides greater or lesser rights to the Participant or the relevant Option Agreement with respect to an Incentive Stock Option expressly provides lesser rights to the Participant, no Option shall be transferable by a Participant other than by will or the laws of descent and distribution or, in the case of a Non-Incentive Stock Option, a qualified domestic relations order;
provided, however
, that the Board of Directors or the Committee, as applicable, in its discretion, may allow for transferability of non-qualified stock options by the Participant. Following any such transfer, any such options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer.
6.11
No Fractional Shares
. The Company shall not in any case be required to sell, issue, or deliver a fractional Share with respect to any Option. In lieu of the sale, issuance, or delivery of any fractional Share, the Company shall pay to the Participant an amount in cash equal to the same fraction (as the fractional Share) of the Fair Market Value of a Share determined as of the date such Option was exercised.
6.12
Delivery of Certificates of Stock
. The Company shall promptly issue and deliver a certificate representing the number of Shares as to which an Option has been duly exercised. The value of the Shares issuable or deliverable upon exercise of an Option shall not bear any interest owing to the passage of time, except as may be otherwise provided in an Option Agreement or approved in writing by the Committee.
6.13
Legends
. Certificates for Shares issued or delivered upon exercise of an Option, when delivered, may bear such legends or statements as the Committee or the Company determines to be appropriate or advisable.
6.14
Restrictions on Transfer of Shares; Rights to Acquire from Participant
. Each Option Agreement may provide for (a) restrictions on the transferability of Shares acquired pursuant to an Option or otherwise and (b) options and rights of first refusal with respect to any or all of such Shares in favor of the Company and/or any or all of its shareholders that, in each instance, the Committee in its sole and absolute discretion may deem proper or advisable. Unless otherwise provided in an Option Agreement, the provisions of the Shareholders’ Agreement in effect at the date of exercise of an Option are fully applicable to all Shares issued pursuant to that Option. To the extent that Participant (or other Person exercising the Option) has not already done so, the Participant (or other Person exercising the Option) will be deemed to have executed a counterpart thereof as of the date of exercise. The Committee may require, as a condition to the exercise of an Option, the Participant and his or her spouse (or other Person exercising the Option) to execute and deliver an agreement confirming the existence and enforceability of any such restrictions on the transferability of the Shares to be acquired upon exercise of such Option and otherwise evidencing their express agreement to be bound thereby. The failure to obtain any such confirmation and agreement shall not have any effect on the existence or enforceability of the restrictions on transferability applicable to such Shares.
6.15
No Rights as Shareholder
. The holder of an Option shall not have any of the rights of a shareholder of the Company with respect to the Shares covered by the Option unless and until, and except to the extent that, one or more certificates for such Shares shall have been delivered to such holder or such holder has been determined to be a shareholder of record by the Company or its transfer agent upon due exercise of the Option.
ARTICLE 7
7.1
Term of Options
. Unless the relevant Option Agreement expressly provides a different term, the term of each Option shall be from the Date of Grant until the date that is five years after such Date of Grant;
provided, however
, that no Option Agreement relating to an Incentive Stock Option shall permit such Incentive Stock Option to be exercisable later than ten years (five years in the case of a 10% Holder) from the Date of Grant.
7.2
Termination Before Option Becomes Exercisable.
(a)
Unless the relevant Option Agreement with respect to a Non-Incentive Stock Option expressly provides greater or lesser rights to the Employee-Participant or the relevant Option Agreement with respect to an Incentive Stock Option expressly provides lesser rights to the Employee-Participant, if an Employee-Participant ceases to be an employee of an Eligible Employer for any reason whatsoever before the date that an Option shall first have become exercisable by the Employee-Participant and such Employee-Participant is not then an employee of any other Eligible Employer, the Option and all rights of the Employee-Participant to exercise the Option shall terminate, lapse, and be forfeited at the time of such termination of employment.
(b)
Unless the relevant Option Agreement with respect to a Non-Incentive Stock Option expressly provides greater or lesser rights to the Participant (other than an Employee-Participant) or the relevant Option Agreement with respect to an Incentive Stock Option expressly provides lesser rights to the Participant (other than an Employee-Participant), if the Participant ceases to serve an Eligible Employer in the capacity in which the Participant was serving at the time the Option was granted for any reason whatsoever before the date an Option shall first have become exercisable by the Participant and such Participant is not then serving any other Eligible Employer, the Option and all rights of the Participant to exercise the Option shall terminate, lapse, and be forfeited at the time the Participant ceases to so serve the Eligible Employer.
7.3
Discharge or Resignation.
(a)
Unless the relevant Option Agreement with respect to a Non-Incentive Stock Option expressly provides greater or lesser rights to the Employee-Participant or the relevant Option Agreement with respect to an Incentive Stock Option expressly provides lesser rights to the Employee-Participant, if an Employee-Participant ceases to be an employee of an Eligible Employer for any reason other than death or Disability and such Employee-Participant is not then an employee of any other Eligible Employer, the Employee-Participant shall have the right to exercise an Option, but only to the extent exercisable on the date of such cessation of employment, at any time within three months after such cessation of employment; provided, however, that if the Employee-Participant shall die within three months after such date of cessation of employment without having exercised the Option, the personal representatives, heirs, legatees, or distributees of the Employee-Participant, as appropriate, shall have the right, up to one year from such date of cessation of employment (or such lesser period as is contemplated by Section 7.6 or 7.7, if applicable), to exercise any such Option to the extent that the Option was exercisable prior to the Employee-Participant’s death and had not been so exercised. The Option and all rights of the Employee-Participant to exercise the Option shall terminate, lapse, and be forfeited on the date of such cessation of employment to the extent the Option is not exercisable on such date.
(b)
Unless the relevant Option Agreement with respect to a Non-Incentive Stock Option expressly provides greater or lesser rights to the Participant (other than an Employee-Participant) or the relevant Option Agreement with respect to an Incentive Stock Option expressly provides lesser rights to the Participant (other than an Employee-Participant), if the Participant ceases to serve an Eligible Employer in the capacity in which the Participant was serving at the time the Option was granted for any reason other than death and such Participant is not then serving any other Eligible Employer, the Participant shall have the right to exercise an Option, but only to the extent exercisable on the date of such cessation, at any time within three months after such cessation;
provided, however
, that if the Participant shall die within three months after such date of cessation without having exercised the Option, the personal representatives, heirs, legatees, or distributees of the Participant, as appropriate, shall have the right, up to one year from such date of cessation (or such lesser period as is contemplated by Section 7.6 or 7.7, if applicable), to exercise any such Option to the extent that the Option was exercisable prior to the Participant’s death and had not been so exercised. The Option and all rights of the Participant to exercise the Option shall terminate, lapse, and be forfeited on the date of such cessation to the extent the Option is not exercisable on such date.
7.4
Death
. Unless the relevant Option Agreement with respect to a Non-Incentive Stock Option expressly provides greater or lesser rights to the Participant or the relevant Option Agreement with respect to an Incentive Stock Option expressly provides lesser rights to the Participant, upon the death of a Participant, the personal representatives, heirs, legatees, or distributees of the Participant, as appropriate, shall have the right up to one year from the date of the Participant’s death (or such lesser period as is contemplated by Section 7.6 or 7.7, if applicable) to exercise any Option, but only to the extent that the Option was exercisable at the date of the Participant’s death and had not been so exercised. The Option and all rights of the Participant to exercise the Option shall terminate, lapse, and be forfeited on the date of such death to the extent the Option is not exercisable on such date.
7.5
Disability
. Unless the relevant Option Agreement with respect to a Non-Incentive Stock Option expressly provides greater or lesser rights to the Employee-Participant or the relevant Option Agreement with respect to an Incentive Stock Option expressly provides lesser rights to the Employee-Participant, if an Employee-Participant ceases to be an employee of the Eligible Employers due to such Employee-Participant’s Disability, as determined solely and exclusively by the Committee, the Employee-Participant shall have the right to exercise an Option, but only to the extent exercisable on the date of termination of employment, at any time within one year after such termination of employment (or such lesser period as is contemplated by Section 7.6 or 7.7, if applicable). The Option and all rights of the Participant to exercise the Option shall terminate, lapse, and be forfeited on the date of such termination of employment to the extent the Option is not exercisable on such date.
7.6
Limitations on Exercise
. Despite the provisions of Sections 7.4 and 7.5, no Incentive Stock Option shall be exercisable under any condition after the expiration of ten years (five years in the case of a 10% Holder) from the Date of Grant. In addition, the provisions of Sections 7.4 and 7.5, shall be subject to the provisions of Sections 9.6 and 9.7.
7.7
Forfeiture
. Each Option Agreement may contain or otherwise provide for conditions giving rise to the forfeiture of the Shares acquired pursuant to an Option or otherwise. The conditions giving rise to forfeiture may include, but need not be limited to, the requirement that the Participant render substantial services to the Company or its Parents or Subsidiaries for a specified period of time.
ARTICLE 8
8.1
Withholding
. The amount, as determined by the Committee, of any federal, state, or local tax required to be withheld by the Company (or Subsidiary that is the employer of the Participant) due to the exercise of a Non-Incentive Stock Option shall be satisfied (a) by payment by the Participant to the Company (or Subsidiary that is the employer of the Participant) of the amount of such withholding obligation in cash, (b) through the retention by the Company of a number of Shares out of the Shares being purchased through the exercise of the Option having, at the date of withholding, a Fair Market Value equal to the amount of the withholding obligation, (c) through delivery by the Participant of Shares that have Fair Market Value at the date of withholding equal to the amount of the withholding, or (d) any combination of the foregoing. The Committee shall determine the time and must consent to the manner in which a Participant shall satisfy a withholding obligation. The cash payment or cash equal to the Fair Market Value of the Shares so withheld, as the case may be, shall be remitted by the Company (or Subsidiary that is the employer of the Participant) to the appropriate taxing authorities.
8.2
Disqualifying Disposition
. A Participant who makes a disqualifying disposition (within the meaning of Section 422 of the Code) of Shares acquired through the exercise of an Incentive Stock Option shall notify the Company of such disposition and the amount realized upon such disposition. The Company shall have the right to require payment from the Participant to cover any federal, state, or local tax required to be withheld by the Company in the event of the disqualifying disposition of such Shares. If a Participant fails to give the Company notice of the disqualifying disposition and/or fails to make a payment of the applicable withholding taxes and the Company incurs any penalties or becomes liable for any interest under the Code for failure to withhold on wages, the Participant shall immediately reimburse the Company for the amount of such penalties and interest and shall pay the Company reasonable attorneys’ fees if the Company resorts to legal action to enforce its rights under this sentence.
ARTICLE 9
9.1
Effective Date
. The Plan shall be effective as of October 30, 2010
provided, however
, that if the Plan is not approved by the holders of a majority of the outstanding shares of voting stock of the Company prior to November 10, 2010, all Incentive Stock Options granted under the Plan shall automatically become Non-Incentive Stock Options.
9.2
Termination of Plan
. The Board or the Committee may terminate the Plan at any time. However, termination of the Plan shall not affect any Options previously granted hereunder; such Options shall remain in effect until they have been terminated or exercised, all in accordance with their terms.
9.3
Furnish Information
. Each Participant shall furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any applicable statute or regulation.
9.4
Remedies
. The Company shall be entitled to recover from a Participant reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of the Plan and any Option Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.
9.5
Information Confidential
. As partial consideration for the granting of each Option hereunder, the Participant agrees with the Company to keep confidential all information and knowledge that the Participant has relating to the manner and amount of the Participant’s participation in the Plan;
provided, however
, that such information may be disclosed as required by law and may be given in confidence to the Participant’s spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. In the event any breach of this promise comes to the attention of the Committee, it shall take into consideration that breach in determining whether to recommend the grant of any future Option to that Person as a factor militating against the advisability of granting any such future Option to that Person.
9.6
Changes in Capital Structure
. If there is any change in the capital structure of the Company through a Reorganization or otherwise, or if there shall be any dividend on the Shares, payable in Shares, or if there shall be a stock split or combination of Shares, the maximum aggregate number of Shares with respect to which Options may be exercised hereunder and the number and the exercise price of the Shares with respect to which an Option has been granted hereunder shall be proportionately adjusted by the Committee as it deems equitable, in its absolute discretion, to prevent dilution or enlargement of the rights of Participants. The issuance or delivery of stock for consideration shall not be considered a change in the Company’s capital structure. No adjustment provided for in this Section shall require the issuance or delivery of any fractional Share. The provisions of this Section shall not override the provisions of Section 9.7.
9.7
Dissolution, Liquidation, or Reorganization
. In the event of the dissolution or liquidation of the Company, the Committee in its sole discretion, may (a) declare any or all outstanding Options to be immediately exercisable, (b) pay cash to any or all Participants in exchange for the cancellation of their Options at a price determined by the Committee to be the fair value thereof, or (c) permit the Participant to elect the manner in which the Option shall be treated upon the liquidation or dissolution of the Company. In the event of a Reorganization of the Company, the Committee in its sole discretion, may (a) declare any or all outstanding Options to be immediately exercisable, (b) pay cash to any or all Participants in exchange for the cancellation of their Options at a price determined by the Committee to be the fair value thereof, (c) grant new Options, (d) substitute new Options for any or all Options awarded hereunder, (e) permit any or all of the Options to continue in accordance with their terms but with respect to the securities that would be issued in respect of the Shares subject to such Options in connection with such Reorganization, (f) make other adjustments to the Plan or any or all Options, or (g) permit the Participant to elect the manner in which the Option shall be treated upon the Reorganization of the Company.
9.8
Adjustments for Pooling of Interests Accounting
. Notwithstanding any other provision of the Plan or any Option Agreement, if the Company enters into a transaction that is intended to be accounted for using the pooling of interests method of accounting, but it is determined by the Board that any Option or any aspect thereof could reasonably be expected to preclude such treatment, then the Board may modify (to the minimum extent required) or revoke (if necessary) the Option or any of the provisions thereof to the extent that the Board determines that such modification or revocation is necessary to enable the transaction to be subject to the pooling of interests method of accounting.
9.9
Amendment
. The Board may, by resolution, amend the Plan at any time;
provided, however
, that, subject to the provisions of Section 9.6, 9.7, and 9.8 the Board may not, without approval by the holders of a majority of the outstanding Shares, (a) increase the Maximum Number, (b) reduce the exercise price with respect to an Option granted hereunder, contrary to the provisions of the Plan as hereinabove set forth, (c) change the class of employees eligible to participate in the Plan, or (d) otherwise materially increase the benefits accruing to Participants under the Plan or materially modify the requirements with respect to eligibility for participation in the Plan. The Board may not, without the consent of the holder of an Option, alter or impair any Option previously granted under the Plan except as authorized herein.
9.10
Automatic Amendment for Requirements of and Changes in Code
. The Plan, to the extent it relates to Incentive Stock Options, and each Option Agreement that relates to Incentive Stock Options shall automatically be amended to contain any and all of the restrictions and limitations required, by Section 422 of the Code and the regulations promulgated thereunder, to be contained in the Plan and/or such Option Agreement, as appropriate. The Plan and each Option Agreement that relates to Incentive Stock Options shall automatically be amended to eliminate any and all of the restrictions and limitations set forth in the Plan or any Option Agreement with respect to Incentive Stock Options if and to the extent that Section 422 of the Code and the regulations promulgated thereunder do not require such restrictions and limitations and either permit or do not prohibit such automatic amendments.
9.11
Nonguarantee of Employment
. Nothing in the Plan shall confer upon a Participant any right to continue in the employ of, or to continue to perform services for, any or all Eligible Employers or interfere in any way with the right of any or all Eligible Employers to terminate the Participant’s employment or other relationship with any or all Eligible Employers at any time.
9.12
Severability
. If any provision of the Plan is held to be illegal, invalid, or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and the Plan shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part of the Plan; the remaining provisions of the Plan shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance from the Plan. Furthermore, in lieu of each such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of the Plan a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable. With respect to Incentive Stock Options, if the Plan does not contain any provision required to be included herein under Section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein;
provided, however
, that, to the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify, that Option (to that extent) shall be deemed a Non-Incentive Stock Option for all purposes of the Plan.
9.13
Rule 16b-3
. With respect to Participants subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 promulgated thereunder, and with respect to such Participants all transactions shall be subject to such conditions regardless of whether they are expressly set forth in the Plan or any Option Agreement. To the extent any provision of the Plan fails to so comply, the Plan shall automatically be amended to contain any and all of the restrictions and limitations required by Rule 16b-3. To the extent any action by the Committee fails to so comply, such action shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee.
9.14
Expenses
. Any expenses of administering the Plan shall be borne by the Eligible Employers.
9.15
Construction
. Words used in the masculine shall apply to the feminine where applicable, and wherever the context of the Plan dictates, the plural shall be read as the singular and the singular as the plural. The section headings contained in the Plan are for reference purposes only and shall not in any way affect the meaning or interpretation of the Plan.
9.16
Notice
. All notices, requests, demands, and other communications hereunder shall be in writing and shall be personally delivered, delivered by facsimile or courier service, or mailed, certified with first class postage prepaid to the address specified by the person who is to receive the same in the relevant Option Agreement.
Unless otherwise provided in an Option Agreement, each such notice, request, demand, or other communication hereunder shall be deemed to have been given (whether actually received or not) on the date of actual delivery thereof, if personally delivered or delivered by facsimile transmission (if receipt is confirmed at the time of such transmission by telephone or facsimile-machine-generated confirmation), or on the third day following the date of mailing, if mailed in accordance with this Section, or on the day specified for delivery to the courier service (if such day is one on which the courier service will give normal assurances that such specified delivery will be made). Unless otherwise provided in an Option Agreement, any notice, request, demand, or other communication given otherwise than in accordance with this Section shall be deemed to have been given on the date actually received. Unless otherwise provided in an Option Agreement, any party may change its address for purposes of this Section by giving written notice of such change to all other persons who may be required or permitted to give any notice, request, demand, or other communication hereunder in the manner hereinabove provided. Any Person entitled to any notice, request, demand, or other communication hereunder may waive the notice, request, demand, or other communication.
9.17
Calculation of Time
. In determining the time within which an event or action is to take place for purposes of the Plan, no fraction of a day shall be considered, and any act, the performance of which would fall on a day that is not a Business Day, may be performed on the following Business Day.
9.18
Successors
. The Plan shall be binding upon and shall inure to the benefit of the Company and its successors and assigns and on the Participants and their respective heirs, executors, administrators, and legal representatives to the extent set forth in the Plan.
[THIS SPACE LEFT BLANK INTENTIONALLY.]
IN WITNESS WHEREOF, the Company has executed the Plan on October 30, 2010, to be effective as set forth in Section 9.1 above.
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PARALLAX DIAGNOSTICS, INC.
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By:
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/s/ J. Michael Redmond
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Name:
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Joseph Michael Redmond
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Title:
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Chief Executive Officer/Director
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ATTEST:
EXHIBIT A
CURRENT FORM OF SHAREHOLDERS’ AGREEMENT
EXHIBIT B
STOCK OPTION AGREEMENT
This Stock Option Agreement (the “Agreement”) is made and entered into by and between Parallax Kline, Inc., (the “Company”), and __________________ (the “Participant”), as of the effective date of this Agreement specified on Schedule I hereof (the “Date of Grant”), pursuant to the Parallax Kline, Inc. 2010 Stock Option Plan adopted effective October 1, 2010 (as the same may have been or hereafter be amended from time to time, the “Plan”). Terms used herein with their initial letters capitalized that are defined in the Plan shall have the meaning given them in the Plan unless otherwise defined herein or the context hereof otherwise requires.
RECITALS:
A.
The Company has adopted the Plan to strengthen the ability of the Company to encourage ownership of the Company by certain employees of the Company and its Subsidiaries, to provide additional incentive for them to remain in the employ of the Company and its Subsidiaries, and to promote the growth and success of the Company and its Subsidiaries.
B.
The Committee that administers the Plan believes that the granting of the stock option herein described to Participant is consistent with the stated purposes for which the Plan was adopted.
NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth and for other good and valuable consideration, the Company and Participant agree as follows:
AGREEMENTS:
1.
Plan Controls
. The terms of this Agreement are governed by the terms of the Plan. Participant hereby acknowledges receipt of a copy of the Plan, as amended through the date hereof. The Company hereby agrees to furnish to Participant a copy of the Plan, as amended through the date of request therefor, without charge, on request to the Company at the address to which notices are to be sent to the Company. In the case of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern.
2.
Grant of Option
. The Company hereby grants to Participant the right and option (the “Option”) to purchase an aggregate number of shares set forth on Schedule I hereof beside the caption “Number of Optioned Shares” (such number being subject to adjustment as provided in Section 9.6 of the Plan) of the Common Stock of the Company (the “Optioned Shares”) on the terms and conditions herein set forth. If designated on Schedule I hereof as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code, and this Agreement shall be interpreted accordingly. By execution of this Agreement, the Participant accepts the grant of the Option.
3.
Exercise Price
. The price at which Participant shall be entitled to purchase the Optioned Shares shall be the dollar amount per share set forth on Schedule I hereof beside the caption “Exercise Price” (such exercise price being subject to adjustment as provided in Section 9.6 of the Plan). The exercise price shall be paid with (a) cash (including check, bank draft, or money order); (b) if the use of shares of Common Stock is permitted according to Schedule I hereof or otherwise permitted by the Committee in writing, shares of Common Stock owned by Participant; or (c) any combination of the foregoing.
4.
Option Period
. The Option hereby granted shall be and remain in force and effect during the “Option Period.” The Option Period begins on the Date of Grant and terminates on the date that is ten years after the Date of Grant (or, if a different date is shown on Schedule I hereof beside the caption “Termination Date”, such date); subject, however to earlier termination as provided by the provisions of Article VII of the Plan and this Agreement (it being understood that this Agreement contains no express provision that would provide any of the greater or lesser rights that Article VII of the Plan permits to be provided in an Option Agreement except to the extent any variation therefrom is specifically set forth in the language beside the caption “Greater or Lesser Article VII Rights” on Schedule I hereof) (the date of any such termination being called herein the “Expiration Date”).
5.
Vesting Schedule
. The Option may be exercised, in whole or in part, from and after the following dates and prior to the Expiration Date. Except only as specifically provided elsewhere herein or in the Plan, this Option shall be exercisable in the following cumulative installments:
Up to _________ of the Optioned Shares at any time after the first ninety (90) days of the Date of Grant;
Up to an additional _________ of the Optioned Shares on or after the second ninety (90) days of the Date of Grant;
Up to an additional _________ of the Optioned Shares on or after the third ninety (90) days of the Date of Grant; and
Up to an additional _________ of the Optioned Shares on or after the fourth ninety (90) days of the Date of Grant; and
Up to an additional _________ of the Optioned Shares on or after the fifth ninety (90) days of the Date of Grant; and
Up to an additional _________ of the Optioned Shares on or after the sixth ninety (90) days of the Date of Grant.
6.
Nontransferability of Options
. Transfers of the Option are restricted as set forth in the Plan except to the extent, if any, transfers are expressly permitted in the language appearing beside the caption “Expanded Rights to Transfer Option” on Schedule I hereof. The Participant agrees to comply with such restrictions.
7.
Nontransferability of, and Right to Acquire, Shares
. Except to the extent, if any, the language appearing beside the caption “Modifications to Transfer/Repurchase Provisions” on Schedule I hereof modifies the provisions thereof, the Stock Transfer/Repurchase Provisions, which are attached to the Plan as Exhibit A, govern transfers of the Shares acquired upon exercise of the Option and grant certain Persons the right to buy such Shares under certain circumstances. The Participant agrees to comply with the Stock Transfer/Repurchase Provisions (if and as modified).
8.
Information Confidential
. As partial consideration for the granting of the Option, the Participant agrees with the Company to keep confidential all information and knowledge that the Participant has relating to the manner and amount of the Participant’s participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to the Participant’s spouse, the Participant’s tax and financial advisors, or financial institutions to the extent that such information is necessary to secure a loan.
9.
Administration
. This Agreement is subject to the terms and conditions of the Plan. The Plan will be administered by the Committee in accordance with its terms. The Committee has sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the Committee with respect to the Plan and to this Agreement shall be final and binding upon Participant and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control.
10.
Continuation of Employment
. This Agreement shall not be construed to confer upon Participant any right to continue in the employ of the Company or any of its Subsidiaries and shall not limit the right of the Company or any of its Subsidiaries, in its sole discretion, to terminate the employment of Participant at any time.
11.
Notice
. All notices, requests, demands, and other communications hereunder shall be in writing and shall be personally delivered, delivered by facsimile or courier service, or mailed, certified with first class postage prepaid to the address specified by the person who is to receive the same.
Each such notice, request, demand, or other communication hereunder shall be deemed to have been given (whether actually received or not) on the date of actual delivery thereof, if personally delivered or delivered by facsimile transmission (if receipt is confirmed at the time of such transmission by telephone or facsimile-machine-generated confirmation), or on the third day following the date of mailing, if mailed in accordance with this Paragraph, or on the day specified for delivery to the courier service (if such day is one on which the courier service will give normal assurances that such specified delivery will be made). Any notice, request, demand, or other communication given otherwise than in accordance with this Paragraph shall be deemed to have been given on the date actually received. Either party to this Agreement may change its address for purposes of this Paragraph by giving written notice of such change to the other party in the manner herein above provided. Any person entitled to any notice, request, demand, or other communication hereunder may waive the notice, request, demand, or other communication. Until changed in accordance herewith, the Company and Participant specify their respective addresses as those set forth below their signatures at the end of this Agreement.
12.
Paragraph Headings
. The Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
13.
Governing Law and Venue
. THIS AGREEMENT SHALL AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEVADA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEVADA. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE COURTS LOCATED IN THE STATE OF NEVADA AND AGREES THAT ANY LITIGATION BETWEEN THE PARTIES WILL BE FILED IN COURTS LOCATED IN RENO, NEVADA.
14.
Arbitration
. By execution hereof, the parties hereto expressly agree that upon the request of any party, whether made before or after the institution of any legal proceeding, any action, dispute, claim or controversy of any kind, whether in contract or in tort, statutory or common law, legal or equitable, arising between the parties in any way arising out of any of the provisions contained in this Agreement shall be resolved by binding arbitration administered by the American Arbitration Association (the “AAA”) and in Reno, Nevada. Such arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the AAA and, to the maximum extent applicable, the Federal Arbitration Act (Title 9 of the United States Code) except as otherwise specified herein. Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. The arbitrator shall resolve all disputes in accordance with the applicable substantive law. A single arbitrator shall be chosen and shall decide the dispute, unless the amount sought in the dispute exceeds $100,000, in which case a panel of three arbitrators shall decide the dispute. In all arbitration proceedings in which the amount of any award exceeds $100,000, in the aggregate, the arbitrator(s) shall make specific, written findings of fact and conclusions of law. In all arbitration proceedings in which the amount of any award exceeds $100,000, in the aggregate, the parties shall have, in addition to the limited statutory right to seek a vacation or modification of an award pursuant to applicable law, the right to vacation or modification of any award that is based, in whole or in part, on an incorrect or erroneous ruling of law by appeal to an appropriate court having jurisdiction; provided, however, that any such application for a vacation or modification of such an award based on an incorrect ruling of law must be filed in a court having jurisdiction over the dispute within 15 days from the date the award is rendered. The findings of fact of the arbitrator(s) shall be binding on all parties and shall not be subject to further review except as otherwise allowed by applicable law. No provision of this Agreement nor the exercise of any rights hereunder shall limit the right of any party, and any party shall have the right during any dispute, to seek, use, and employ ancillary or preliminary remedies, such as injunctive relief (including, without limitation, specific performance), from a court having jurisdiction before, during, or after the pendency of any arbitration. The institution and maintenance of any action for judicial relief or pursuit of provisional or ancillary remedies shall not constitute a waiver of the right of any party to submit any dispute to arbitration nor render inapplicable the compulsory arbitration provisions hereof.
15.
Attorney’s Fees
. If any action is brought to enforce or interpret the terms of this Agreement (including through arbitration), the prevailing party shall be entitled to reasonable attorneys’ fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.
16.
Counterparts
. This Agreement may be executed in any number of counterparts and shall be effective when each party hereto has executed at least one counterpart, with the same effect as if all signing parties had signed the same document. All counterparts will be construed together and evidence only one agreement, which, notwithstanding the actual date of execution of any counterpart, shall be deemed to be dated the day and year first written above. In making proof of this Agreement, it shall not be necessary to account for a counterpart executed by any party other than the party against whom enforcement is sought or to account for more than one counterpart executed by the party against whom enforcement is sought.
17.
Execution by Facsimile
. The manual signature of any party hereto that is transmitted to any other party by facsimile shall be deemed for all purposes to be an original signature.
[THIS SPACE LEFT BLANK INTENTIONALLY]
Executed on the date or dates indicated below, to be effective as of ____________.____.
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________________________________
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By: _____________________________
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Name: ___________________________
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Title: ____________________________
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Date: ____________, _____
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Address: _________________________
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__________________________
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Participant: _______________________
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Name: ___________________________
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Date: ____________, _____
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Address: _________________________
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__________________________
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__________________________
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SCHEDULE I
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DATE OF GRANT:
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TYPE OF OPTION:
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Incentive Stock Option ________
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Nonqualified Stock Option ________
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NUMBER OF OPTIONED SHARES:
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__________________
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EXERCISE PRICE:
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$ _____
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TERMINATION DATE:
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Fifth Anniversary of Date of Grant (Maximum term of 10 years; 5 years in the case of 10% shareholders)
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PERMISSION TO PAY WITH SHARES:
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_______ Granted Denied _______
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EXPANDED RIGHTS TO TRANSFER OPTION:
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_______ Granted Denied _______
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GREATER OR LESSER ARTICLE VII RIGHTS:
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None
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STOCK OPTION AGREEMENT
This Stock Option Agreement (the “Agreement”) is made and entered into by and between Parallax Diagnostics, Inc., (the “Company”), and _______________ (the “Participant”), as of the effective date of this Agreement specified on Schedule I hereof (the “Date of Grant”), pursuant to the Parallax Diagnostics, Inc. 2010 Stock Option Plan adopted effective October 2010 (as the same may have been or hereafter be amended from time to time, the “Plan”). Terms used herein with their initial letters capitalized that are defined in the Plan shall have the meaning given them in the Plan unless otherwise defined herein or the context hereof otherwise requires.
RECITALS:
A.
The Company has adopted the Plan to strengthen the ability of the Company to encourage ownership of the Company by certain employees of the Company and its Subsidiaries, to provide additional incentive for them to remain in the employ of the Company and its Subsidiaries, and to promote the growth and success of the Company and its Subsidiaries.
B.
The Committee that administers the Plan believes that the granting of the stock option herein described to Participant is consistent with the stated purposes for which the Plan was adopted.
NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth and for other good and valuable consideration, the Company and Participant agree as follows:
AGREEMENTS:
1.
Plan Controls
. The terms of this Agreement are governed by the terms of the Plan. Participant hereby acknowledges receipt of a copy of the Plan, as amended through the date hereof. The Company hereby agrees to furnish to Participant a copy of the Plan, as amended through the date of request therefore, without charge, on request to the Company at the address to which notices are to be sent to the Company. In the case of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern.
2.
Grant of Option
. The Company hereby grants to Participant the right and option (the “Option”) to purchase an aggregate number of shares set forth on Schedule I hereof beside the caption “Number of Optioned Shares” (such number being subject to adjustment as provided in Section 9.6 of the Plan) of the Common Stock of the Company (the “Optioned Shares”) on the terms and conditions herein set forth. If designated on Schedule I hereof as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code, and this Agreement shall be interpreted accordingly. By execution of this Agreement, the Participant accepts the grant of the Option.
3.
Exercise Price
. The price at which Participant shall be entitled to purchase the Optioned Shares shall be the dollar amount per share set forth on Schedule I hereof beside the caption “Exercise Price” (such exercise price being subject to adjustment as provided in Section 9.6 of the Plan). The exercise price shall be paid with (a) cash (including check, bank draft, or money order); (b) if the use of shares of Common Stock is permitted according to Schedule I hereof or otherwise permitted by the Committee in writing, shares of Common Stock owned by Participant; or (c) any combination of the foregoing.
4.
Option Period
. The Option hereby granted shall be and remain in force and effect during the “Option Period.” The Option Period begins on the Date of Grant and terminates on the date that is ten years after the Date of Grant (or, if a different date is shown on Schedule I hereof beside the caption “Termination Date”, such date); subject, however to earlier termination as provided by the provisions of Article VII of the Plan and this Agreement (it being understood that this Agreement contains no express provision that would provide any of the greater or lesser rights that Article VII of the Plan permits to be provided in an Option Agreement except to the extent any variation therefrom is specifically set forth in the language beside the caption “Greater or Lesser Article VII Rights” on Schedule I hereof) (the date of any such termination being called herein the “Expiration Date”).
5.
Vesting Schedule
. The Option may be exercised, in whole or in part, from and after the following dates and prior to the Expiration Date. Except only as specifically provided elsewhere herein or in the Plan, this Option shall be exercisable in the following cumulative installments:
Up to ________ of the Optioned Shares at any time after the first ninety (90) days of the Date of Grant;
Up to an additional ________ of the Optioned Shares on or after the second ninety (90) days of the Date of Grant;
Up to an additional ________ of the Optioned Shares on or after the third ninety (90) days of the Date of Grant; and
Up to an additional ________ of the Optioned Shares on or after the fourth ninety (90) days of the Date of Grant; and
Up to an additional ________ of the Optioned Shares on or after the fifth ninety (90) days of the Date of Grant; and
Up to an additional ________ of the Optioned Shares on or after the sixth ninety (90) days of the Date of Grant; and
Up to an additional ________ of the Optioned Shares on or after the seventh ninety (90) days of the Date of Grant; and
Up to an additional ________ of the Optioned Shares on or after the eighth ninety (90) days of the Date of Grant.
6.
Nontransferability of Options
. Transfers of the Option are restricted as set forth in the Plan except to the extent, if any, transfers are expressly permitted in the language appearing beside the caption “Expanded Rights to Transfer Option” on Schedule I hereof. The Participant agrees to comply with such restrictions.
7.
Nontransferability of, and Right to Acquire, Shares
. Except to the extent, if any, the language appearing beside the caption “Modifications to Transfer/Repurchase Provisions” on Schedule I hereof modifies the provisions thereof, the Stock Transfer/Repurchase Provisions, which are attached to the Plan as Exhibit A, govern transfers of the Shares acquired upon exercise of the Option and grant certain Persons the right to buy such Shares under certain circumstances. The Participant agrees to comply with the Stock Transfer/Repurchase Provisions (if and as modified).
8.
Information Confidential
. As partial consideration for the granting of the Option, the Participant agrees with the Company to keep confidential all information and knowledge that the Participant has relating to the manner and amount of the Participant’s participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to the Participant’s spouse, the Participant’s tax and financial advisors, or financial institutions to the extent that such information is necessary to secure a loan.
9.
Administration
. This Agreement is subject to the terms and conditions of the Plan. The Plan will be administered by the Committee in accordance with its terms. The Committee has sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the Committee with respect to the Plan and to this Agreement shall be final and binding upon Participant and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control.
10.
Continuation of Employment
. This Agreement shall not be construed to confer upon Participant any right to continue in the employ of the Company or any of its Subsidiaries and shall not limit the right of the Company or any of its Subsidiaries, in its sole discretion, to terminate the employment of Participant at any time.
11.
Notice
. All notices, requests, demands, and other communications hereunder shall be in writing and shall be personally delivered, delivered by facsimile or courier service, or mailed, certified with first class postage prepaid to the address specified by the person who is to receive the same.
Each such notice, request, demand, or other communication hereunder shall be deemed to have been given (whether actually received or not) on the date of actual delivery thereof, if personally delivered or delivered by facsimile transmission (if receipt is confirmed at the time of such transmission by telephone or facsimile-machine-generated confirmation), or on the third day following the date of mailing, if mailed in accordance with this Paragraph, or on the day specified for delivery to the courier service (if such day is one on which the courier service will give normal assurances that such specified delivery will be made). Any notice, request, demand, or other communication given otherwise than in accordance with this Paragraph shall be deemed to have been given on the date actually received. Either party to this Agreement may change its address for purposes of this Paragraph by giving written notice of such change to the other party in the manner herein above provided. Any person entitled to any notice, request, demand, or other communication hereunder may waive the notice, request, demand, or other communication. Until changed in accordance herewith, the Company and Participant specify their respective addresses as those set forth below their signatures at the end of this Agreement.
12.
Paragraph Headings
. The Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
13.
Governing Law and Venue
. THIS AGREEMENT SHALL AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEVADA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEVADA. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE COURTS LOCATED IN THE STATE OF NEVADA AND AGREES THAT ANY LITIGATION BETWEEN THE PARTIES WILL BE FILED IN COURTS LOCATED IN RENO, NEVADA.
14.
Arbitration
. By execution hereof, the parties hereto expressly agree that upon the request of any party, whether made before or after the institution of any legal proceeding, any action, dispute, claim or controversy of any kind, whether in contract or in tort, statutory or common law, legal or equitable, arising between the parties in any way arising out of any of the provisions contained in this Agreement shall be resolved by binding arbitration administered by the American Arbitration Association (the “AAA”) and in Reno, Nevada. Such arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the AAA and, to the maximum extent applicable, the Federal Arbitration Act (Title 9 of the United States Code) except as otherwise specified herein. Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. The arbitrator shall resolve all disputes in accordance with the applicable substantive law. A single arbitrator shall be chosen and shall decide the dispute, unless the amount sought in the dispute exceeds $100,000, in which case a panel of three arbitrators shall decide the dispute. In all arbitration proceedings in which the amount of any award exceeds $100,000, in the aggregate, the arbitrator(s) shall make specific, written findings of fact and conclusions of law. In all arbitration proceedings in which the amount of any award exceeds $100,000, in the aggregate, the parties shall have, in addition to the limited statutory right to seek a vacation or modification of an award pursuant to applicable law, the right to vacation or modification of any award that is based, in whole or in part, on an incorrect or erroneous ruling of law by appeal to an appropriate court having jurisdiction; provided, however, that any such application for a vacation or modification of such an award based on an incorrect ruling of law must be filed in a court having jurisdiction over the dispute within 15 days from the date the award is rendered. The findings of fact of the arbitrator(s) shall be binding on all parties and shall not be subject to further review except as otherwise allowed by applicable law. No provision of this Agreement nor the exercise of any rights hereunder shall limit the right of any party, and any party shall have the right during any dispute, to seek, use, and employ ancillary or preliminary remedies, such as injunctive relief (including, without limitation, specific performance), from a court having jurisdiction before, during, or after the pendency of any arbitration. The institution and maintenance of any action for judicial relief or pursuit of provisional or ancillary remedies shall not constitute a waiver of the right of any party to submit any dispute to arbitration nor render inapplicable the compulsory arbitration provisions hereof.
15.
Attorney’s Fees
. If any action is brought to enforce or interpret the terms of this Agreement (including through arbitration), the prevailing party shall be entitled to reasonable attorneys’ fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.
16.
Counterparts
. This Agreement may be executed in any number of counterparts and shall be effective when each party hereto has executed at least one counterpart, with the same effect as if all signing parties had signed the same document. All counterparts will be construed together and evidence only one agreement, which, notwithstanding the actual date of execution of any counterpart, shall be deemed to be dated the day and year first written above. In making proof of this Agreement, it shall not be necessary to account for a counterpart executed by any party other than the party against whom enforcement is sought or to account for more than one counterpart executed by the party against whom enforcement is sought.
17.
Execution by Facsimile
. The manual signature of any party hereto that is transmitted to any other party by facsimile shall be deemed for all purposes to be an original signature.
[THIS SPACE LEFT BLANK INTENTIONALLY]
Executed on the date or dates indicated below, to be effective as of ___________.
SCHEDULE I
|
DATE OF GRANT:
|
|
|
|
|
|
TYPE OF OPTION:
|
Incentive Stock Option ____________________
|
|
|
|
|
|
Nonqualified Stock Option ____________________
|
|
|
|
|
NUMBER OF OPTIONED SHARES:
|
|
|
|
|
|
EXERCISE PRICE:
|
$
|
|
|
|
|
TERMINATION DATE:
|
Fifth Anniversary of Date of Grant (Maximum term of 10 years; 5 years in the case of 10% shareholders)
|
|
|
|
|
PERMISSION TO PAY WITH SHARES:
|
___________ Granted Denied ___________
|
|
|
|
|
EXPANDED RIGHTS TO TRANSFER OPTION:
|
___________ Granted Denied ___________
|
|
|
|
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GREATER OR LESSER ARTICLE VII RIGHTS:
|
None
|
I-1
Endeavor Power Corp. 8-K
AGREEMENT OF THE ASSIGNMENT
OF
INTELLECTUAL PROPERTY
THIS AGREEMENT OF THE ASSIGNMENT OF INTELLECTUAL PROPERTY (the “Agreement”)
entered into on the 10th day of September 2010 (the “Effective Date”) is for the Assignment of Intellectual Property, by and between
THE PARTIES:
MONTECITO BIO SCIENCES, LTD.,
a corporation organized and existing under the laws of the State of Nevada (hereinafter referred to as the "
ASSIGNOR
"); and
ROTH KLINE, INC.
, a corporation organized and existing under the laws of the State of Delaware (hereinafter referred to as the “
ASSIGNEE
”).
RECITALS
WHEREAS
, ASSIGNOR has developed, acquired and is the proprietary owner of certain rights, titles and interest in and to technology and information which it owns, or lawfully possesses for itself or holds valid licenses from others, which it considers highly proprietary (the "CONFIDENTIAL INFORMATION") regarding certain technology, and has developed and is the proprietary owner of certain patented processes along with certain rights, titles and interests in and to the technology and information which it owns, or lawfully possesses.
WHEREAS,
ASSIGNOR is the holder of certain diagnostic tests, and test systems that have received U.S. Food and Drug Administration (the “FDA”) Regulatory Clearance and include a Desktop Immunoassay Multi-light Spectrum Analyzer and Target System Diagnostic Test Cartridge Platform. The FDA 510k Numbers and Approved Platform Products are attached as Exhibit “A”.
WHEREAS,
ASSIGNEE is a bio-medical, development, manufacturing and marketing company that will produce, brand, develop, manage and provide sales strategy for all aspects of a full marketing program to manufacture and sell all of ASSIGNOR’S Intellectual Properties as set forth in the this Agreement and Exhibits under ASSIGNOR’S and/or ASSIGNEE’S Brand Names and under ASSIGNOR’S and/or ASSIGNEE’S trademark or any other Brand Names designated by ASSIGNEE.
WHEREAS,
ASSIGNEE is desirous of acquiring the rights to the 510k Cleared tests outlined in Exhibit “A” or other like privileges for and to the FDA 510k Cleared tests in the Agreements Field of Use for world wide use.
WHEREAS
, it is the intent of the ASSIGNEE, to file with the FDA for clearance to market, and sell all the Products, under ASSIGNEE’S Brand Name or Names. ASSIGNOR herein agrees to assist, provide documentation, and join in any and all applications for approval required by the FDA.
|
Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
|
Assignment, September, 2010
|
WHEREAS
, pursuant to the terms and subject to the conditions hereof, the ASSIGNOR has agreed to sell, and the ASSIGNEE has agreed to purchase, the ASSIGNOR’s right, title and interest in and to the aforesaid assets.
WHEREAS,
the Parties to this Agreement acknowledge and agree that this Assignment shall include all applications of the Target System presently utilized or which may be developed in the future by either Party to this Agreement as long as it is within the defined “Field of Use” further defined in Exhibit “B”.
NOW, THEREFORE,
in consideration of the premises and the mutual covenants and agreements contained herein, and intending to be legally bound, ASSIGNOR and ASSIGNEE hereby agree as follows:
DEFINITIONS
1.1
Definitions
. Whenever used in this Agreement, the Recital above, or any Exhibit hereto, unless otherwise required by the subject matter or the context, the following terms shall have the meanings respectively ascribed to them:
“FDA 510K Cleared”:
tests means that the following tests have been giving approval by the U.S. Food & Drug Administration to market the tests and testing device Listed in Appendix "A”.
“Field of Use”:
means diagnostic testing for any disease or medical condition that can be transmitted by one human to another within the diagnostic health care industry, mobile and non-mobile, which industry focuses on providing healthcare and diagnostic solutions and services, but not limited to Hospitals, Emergency Medical Vehicle Care, Mobile Health Clinics, Schools, Government Agencies, retail drug stores and corporations. Field of Use is further described in Exhibit “B”.
“Territory”:
means the entire world described in Exhibit “C”.
“Gross Revenue”
: means all revenue or other consideration recognized by Licensee in accordance with United States Generally Accepted Accounting Principles related to use of the Licensed Patents in the Territory and Field of Use, including through Target Platform Products or Services, including sales, licenses, leases, subscriptions and maintenance, services, development and consulting fees.
“Affiliate”
means, in respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such first Person.
“Ancillary Agreements”
: None at the present time.
“
Best knowledge
” means, in respect of a Person, that nothing has come to the attention of that Person that gives such Person actual knowledge of the existence or absence of any material information or fact bearing on the matter.
“
Claim
” means a written notice asserting a breach of a representation, warranty or covenant specified in the Agreement which shall reasonably set forth, in light of the information then known to the party giving such notice, a description of and an estimate (if then reasonable to make) of the amount involved in such breach or for a claim for injunctive relief.
|
Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
|
Assignment, September, 2010
|
“
Confidential Information
” means any confidential or secret information or data, whether or not reduced to writing, pertaining to the license product, including scientific or technical knowledge, expertise, skill, practice, proprietary rights, copyrights, patented or un-patented inventions, formulas, trade secrets, manufacturing techniques and procedures, analytical methodology, processes, and data and shall include any and all technology, pending and existing intellectual property matters, including patenting, and copyrighting of ASSIGNOR’S product lines, technologies and inventions, and future plans and operations done in support of such future plans and operations.
Provided however, that in respect of the obligations of either party hereunder, the term "Confidential Information" shall not include any information that (i) is now or subsequently enters the public domain through means other than direct or indirect disclosure by a party in violation of the terms of this Agreement or (ii) is lawfully communicated to a party by a third party, free of any confidentiality obligation, subsequent to the date hereof.
“Commencement of Term of Agreement Date”
means the commencement of the Term of this Agreement as set forth in paragraph 2.3 (b) below.
“Completion Date”
means the date upon which Roth Kline, Inc. shall have received written notice to the effect that the FDA has issued to Roth Kline, Inc. a Regulatory Clearance in the Field of Activity
“Competing Person”
means any Person a substantial majority of whose business is in the same or similar business of ASSIGNEE and who is a direct competitor of ASSIGNEE or any of its Affiliates that is an Affiliate of such Person
“Control”
means (i) when used in respect of any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise, and (ii) when used in respect of any security, the possession, directly or indirectly, of the power to vote, or to direct the voting of, such security or the power to dispose of, or to direct the disposition of, such security.
“Controlling Person”
means, in respect of any business organization or other legal entity, a Person having control of such business, organization or entity, and any second Person having Control of such first Person, and so on in an ascending order up to and including the last Person having Control of the next preceding Person who is not subject to the Control of any other Person.
“Enhancements”
means any change, correction, modification, improvement, enhancement, addition or revision to the Licensed Products.
“FDA Clearance”
means an application to the FDA for the sale or other distribution of FDA 510K small device for professional use and/or OTC for the Target System process , as well as all other FDA Clearances obtained by either ASSIGNOR or ASSIGNEE pursuant to this Agreement.
|
Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
|
Assignment, September, 2010
|
“
Governmental Authority
” means any governmental body, agency or official of any county or political subdivision of any country.
“
Indemnified Party
” means the Person who is entitled to indemnification for, and to be held harmless in respect of, a claim, cause of action or any other proceedings, as provided under the terms and subject to the conditions of this Agreement.
“
Indemnifying Party
” means the party hereto that is obligated to indemnify and to hold harmless another Person in respect of a claim, cause of action or any other proceeding, as provided under the terms and subject to the conditions of this Agreement.
“
Intellectual Property
” means (i) computer programs, (ii) copyrights, (iii) designs and industrial designs, (iv) trademarks, and any word, symbol, icon, logo or other indicia or origin adopted or used in connection with the license or service and (vi) trade secrets and confidential information described in (d) above.
“
Intellectual Property Rights
” means all intellectual and industrial property and other proprietary rights in respect of Intellectual Property, and includes all right to Intellectual Property exclusive of Patent Pending Applications.
“
Know-How
” means “The Confidential Information” and proprietary information, including any patents, formula, pattern, compilation, method, invention, technique or process, used in the creation of the Licensed Product.
“
ASSIGNOR
” means Montecito Bio Sciences, Ltd. organized and existing under the laws of the State of Nevada.
“ASSIGNEE”
means Roth Kline, Inc., a corporation organized and existing under the laws of the State of Delaware.
“
Person
” means a human being, partnership, association, joint venture, corporation, legal representative, trustee, and trustee in bankruptcy, receiver or any other legal entity whatsoever.
“Regulatory Clearance”
means (a) (i) in the case of a product, a clearance by the FDA and (ii) in the case of product clearance by the FDA for the sale or other disposition of the patent target system for its specific and intended use; or (b) in the event of any change in the regulatory process, a clearance similar to the foregoing for the sale and distribution of said product.
“Term”
means the term of this Agreement as set forth in paragraph 2.3 (a) Term.
|
Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
|
Assignment, September, 2010
|
“Third Party Claim”
means, in respect of the obligations of an Indemnifying Party hereunder, a claim asserted against, imposed upon or incurred by the Indemnified Party by any third party.
1.2
Additional Terms
.
The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" and shall be deemed to be followed by the phrase "without limitation." All references to "party" and "parties" shall be deemed references to the parties to this Agreement and to a party's successor in title unless the context shall otherwise require. All references to Sections and Paragraphs shall be deemed references to Sections and Paragraphs of this Agreement, unless the context shall otherwise require. All references herein to Schedules and Exhibits shall be deemed to be references to the Schedule(s) and Exhibit(s) attached to this Agreement. The terms "this Agreement", "hereof", "hereunder", and similar expressions refer to this Agreement as a whole and not to any particular Article or Section or other portion hereof and include any agreement supplemental hereto. The conjunction "or" shall be understood in its inclusive sense (and/or).
1.3
Headings
. The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
GRANT
|
2.1
|
Assignment of 510k Cleared Tests
|
Upon the terms and subject to the conditions set forth in this Agreement, the Assignor hereby assigns, conveys and delivers to the ASSIGNEE, and the ASSIGNEE hereby acquires from the ASSIGNOR, all right, title and interest of the Assignor in and to the following; (i) certain inventions, formulae, manufacturing secrets, processes and know-how with respect to the manufacture of certain bio-medical products and (ii) certain intellectual property and inventions used in connection with said products. A true and correct copy of a list of the 510k Cleared Test and associated numbers afforded the tests by the FDA are attached as Exhibit “A”, all of which and assigned and incorporated herein by reference.
Subject to the terms and conditions of this Agreement, ASSIGNOR hereby grants ASSIGNEE the exclusive, world wide right
to sub-license, sell, have sold, make, have made, develop, have developed, further develop and modify, or have further developed or modified
,
all ASSIGNOR Products & Processes hereby defined under as specified in Exhibit “A” hereof under ASSIGNOR’s and/or ASSIGNEE’s own Trade Names, Brand Names and Trademark within the Field of Use as defined in Exhibit “B”.
All products assigned herein that are specifically designated for professional and the general public consumption (over the counter) are warranted by ASSIGNOR to meet any and all government requirements and clearances for sale in the respective professional and over-the-counter market.
2.2
Term
(a)
The Term of this Agreement shall be in perpetuity under the terms and conditions of the Agreement unless terminated under the provisions of Article 10 of the Agreement.
2.2.1
Commencement of Term of Agreement Date
: The Effective Date of this Agreement is the date of its execution.
|
Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
|
Assignment, September, 2010
|
2.3
Use of Trademark
ASSIGNOR hereby grants ASSIGNEE the right to use and display ASSIGNOR’S trademarks, service marks, and trademarks and trade names that are applicable to ASSIGNOR Product(s) under this private labeling agreement. ASSIGNEE may use any of ASSIGNOR’S Marks as part of its corporate, trade or other business name.
2.4
Payments and other Consideration
2.4.1
Stock Compensation.
2.4.1.1
ASSIGNEE will transfer seven hundred fifty (750) shares of common stock, representing fifty percent (50%) of the issued and outstanding shares of Common stock of the ASSIGNEE at the time ASSIGNOR executes the Agreement with ASSIGNEE.
2.4.2
Cash Compensation.
2.4.2.1
ASSIGNEE will pay an Assignment fee of seven hundred and fifty thousand ($750,000) dollars as part of its Assignment Fee. The ASSIGNOR, as part of this Agreement will accept two cash payments; A) the first payment will be in the amount of three hundred and seventy-five thousand ($375,000) dollars will be paid upon the closing of the ASSIGNEES initial capitalization of one and one half million ($1,500,000) dollars and (B) a second payment of three hundred seventy five thousand ($375,000) dollars payable within the first financing and or third-party licensing that results in an aggregate of five million ($5,000,000) dollars to the ASSIGNEE.
(i) ASSIGNOR will provide a specific Use of Funds that will entail the Assignment fees use to complete the development and produce a working prototype and production-ready version of the Hand Held Target System Analyzer. Full description of Assignment Fee and its Use of Funds is to be delivered to ASSIGNEE prior to ASSIGNEE transferring initial Assignment Fee of three hundred and seventy-five thousand ($375,000) dollars.
2.5
Royalties
2.5.1
For each calendar quarter, ASSIGNEE shall owe ASSIGNOR royalties equal to four percent (4%) of Gross Revenue Payable 30 days after the end of the prior quarter.
2.5.2
ASSIGNEE shall pay Montecito Bio Sciences, Ltd quarterly royalties as calculated in this Section 2.6.1 only for the amount of those royalties due in that calendar quarter. There will be no carryover from calendar quarter to calendar quarter.
|
Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
|
Assignment, September, 2010
|
ARTICLE 3
3.1
Products
ASSIGNOR’S Assigned Products are specified in
EXHIBIT “A”
attached hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE ASSIGNOR
To induce the ASSIGNEE to acquire the License rights, the ASSIGNOR hereby makes the following representations and warranties:
4.1
Organization. Standing and Qualifications.
ASSIGNOR, Montecito Bio Sciences, Ltd. is a corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada. The ASSIGNOR has full power and authority to carry on its business as it is now being conducted and to own the property and assets it now owns. The Individual ASSIGNORS have full rights to enter into this Agreement.
4.2
Authorization
. The ASSIGNOR that is a Corporation has full power and authority to execute and deliver this Agreement to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action required by law, the ASSIGNOR’S Articles or otherwise to be taken by the ASSIGNOR to authorize the execution and delivery of this Agreement and the agreements specified herein or the consummation of the transactions contemplated hereby and thereby.
4.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding obligations of the ASSIGNOR, enforceable in accordance with its terms.
4.4
No Violation
. Neither the execution and delivery by the ASSIGNOR of this Agreement nor the consummation by the ASSIGNOR of the transactions contemplated hereby will (a) violate any provision of the Articles of Montecito Bio Sciences, Ltd.; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the ASSIGNOR. The ASSIGNOR is not a party to, nor is it bound by, and the ASSIGNOR Product Line is not subject to, any agreement or commitment that prohibits the execution and delivery by the ASSIGNEE of this Agreement or the consummation of the transactions contemplated hereby.
4.5
Litigation
. No action, suit, audit, or to the Best Knowledge of the ASSIGNOR no proceeding or investigation, by or before any court or governmental or other regulatory or administrative agency or commission is currently pending or, to the Best Knowledge of the ASSIGNOR threatened, against, involving or arising in connection with the ASSIGNOR’S Product Line or that questions or challenges the validity of this Agreement or any action taken or to be taken by the ASSIGNOR pursuant to this Agreement.
4.6
Right to License ASSIGNOR’S Product Line
. ASSIGNOR has the right to license the intellectual property as described in Exhibits “A” and the right to manufacture Products utilizing said intellectual property rights and patents under the defined terms in the Field of Use as defined in Exhibit “B”.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
|
Assignment, September, 2010
|
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE ASSIGNEE
To induce the ASSIGNOR to enter into this Assignment Agreement with the ASSIGNEE, the ASSIGNEE hereby represents and warrants to the ASSIGNOR as follows:
5.1
Corporate Organization and Good Standing
. The ASSIGNEE is a Corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.
5.2
Authorization
. The ASSIGNEE has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action required by law, the ASSIGNEE’S Articles of Incorporation, or otherwise to be taken by the ASSIGNEE to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
5.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding agreements of the ASSIGNEE enforceable in accordance with its terms.
5.4
No Violation
. Neither the execution and delivery by the ASSIGNEE of this Agreement nor the consummation by the ASSIGNEE of the transactions contemplated hereby, will (a) violate any provisions of the Articles of Incorporation of the ASSIGNEE; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the ASSIGNEE or by which the property or assets of the ASSIGNEE are bound or affected.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1
Cooperation
.
(a) Each party shall cooperate reasonably with the other in preparing and filing all notices, applications, reports and other instruments and documents which are required by any statute, rule, regulation or order of any Governmental Authority in connection with the transactions contemplated by this Agreement, including the Private Label of the licensed Product with the FDA.
(b) ASSIGNEE agrees not to use or exploit ASSIGNOR’S Product Line in a manner that can be reasonably foreseen to bring it into disrepute or materially diminish the value of exploiting such Product Line in connection with the marketing, promotion, distribution, sale, licensing or use of the Products.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
|
ARTICLE 7
CONFIDENTIAL INFORMATION
7.1
Confidentiality of Intellectual Property of ASSIGNOR and Customer Proprietary Marketing Data of ASSIGNEE
It is expressly understood and agreed that all intellectual property and data furnished to ASSIGNEE by ASSIGNOR or any information or data regarding customers or data provided by ASSIGNEE to ASSIGNOR and such data as may be provided by one to the other regarding and including that required for the proper marketing, sale or re-sale of its products, all of which constitutes a valuable intellectual proprietary property and trade secret(s) of ASSIGNOR or ASSIGNEE, as the respective party providing such data has divulged. Providing such material, under any circumstances, shall not constitute a grant of any right of reproduction, manufacturing, distributing, resale, re-licensing (except as later set forth) or ownership in any manner whatsoever. Both ASSIGNEE and ASSIGNOR agree as follows:
(a) To observe complete confidentiality with regard to all aspects of such data including, without limitation, agreeing not to disclose or otherwise permit any other person or entity access to, in any manner, any such data in any form whatsoever. Such disclosure or access shall only be permitted to an employee of ASSIGNOR or ASSIGNEE as the case might be of the Marketing Plans, Business Relationships, Automated Customer Service (CRM) Systems and any other proprietary business or client information as permitted and on the terms and conditions defined in this License Agreement with the only exception being a third-party who has signed a Non-Disclosure Agreement with the Company prior to the transference or communication of confidential Company data;
(b) To ensure that both ASSIGNOR and ASSIGNEE and their respective employees, agents, representatives, independent contractors, customers, sub contractors or sub ASSIGNEE’S and business invitee’s and guests are advised of the confidential nature of such data and to insure by agreement or otherwise that they are prohibited from copying or revealing, for any purpose whatsoever, the contents of the data;
(c) ASSIGNEE shall not alter or remove any copyright or proprietary rights notice of identification, which indicates ASSIGNOR’S ownership of the Product. ASSIGNOR shall not alter or remove any proprietary rights, notice of identification, which indicates ASSIGNEE’S confidential data, including customer data:
(d) Each respective party agrees to notify the other promptly and in writing of the circumstances surrounding any possession, use or knowledge of any such data of which either ASSIGNOR or ASSIGNEE has knowledge by any person or entity other than those authorized;
(e) Each respective party agrees to take any and all actions reasonably necessary or desirable to ensure continued confidentiality and protection of all such data and to prevent access to such data by any person or entity not authorized by this section.
(f) Should this Agreement terminate for any reason (including without limitation, breach by ASSIGNEE of any of its obligations hereunder), the confidentiality provisions of this Agreement shall survive the termination of this Agreement and shall continue to be binding upon both ASSIGNOR and ASSIGNEE.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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ARTICLE 8
PROTECTION OF THE ASSIGNOR’S RIGHTS
8.1
Notice of Infringement or Unauthorized Use
.
ASSIGNEE shall promptly inform ASSIGNOR in writing of any act of infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting, the Licensed Property, or any Enhancements thereto, that is discovered by ASSIGNEE or is otherwise brought to its attention. Each party shall promptly inform the other party in writing of any notice of claim or action, or any threatened claim or action, against either party by any third Person arising out of in any way related to the Licensed Product.
8.2
Institution, Prosecution and Defense of Claims
.
(a) (i) Promptly following the delivery to the ASSIGNOR of notice from the ASSIGNEE of any act of any infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement or affecting the Assigned Property, or, in the case where such infringement, unauthorized use, piracy misappropriation or breach is discovered by the ASSIGNEE or is otherwise brought to its attention and the ASSIGNEE provides to the ASSIGNOR written notice thereof, then promptly following the delivery of such notice to the ASSIGNOR, the ASSIGNOR shall take such steps as shall be necessary in order to protect the ASSIGNEE and the ASSIGNOR’S rights with respect to the said Assigned Property, respectively, including, but not limited to, instituting or authorizing others to institute any claim, suit or proceeding at law or in equity arising out of or related to the infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting the Assigned Property.
(ii) The institution, prosecution, maintenance and control of any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Assigned Property shall be subject to the direction and control of the ASSIGNOR, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the ASSIGNOR.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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(b) If requested by ASSIGNOR, ASSIGNEE shall join the ASSIGNOR as, a party complainant in any such claim, suit or proceeding.
(c) ASSIGNOR shall defend, at its own expense; any claim that a Third-Party shall institute affecting the Assigned Product granted to the ASSIGNEE herein. ASSIGNEE shall cooperate fully in the defense of any such claim, suit or proceeding against any party by a third Person, brought in connection with, arising out of or related to the Assigned Property, and each party shall execute such documents and take such actions as may be reasonably requested by the other party and consistent with the rights and obligations of the parties hereunder.
(d) ASSIGNOR shall indemnify ASSIGNEE for any costs, damages, or other expenses suffered by ASSIGNEE in connection with any Third-Party claiming that said Third-Party is the owner or has rights to the Assigned Product Assigned to ASSIGNEE.
(e) ASSIGNEE may, in its sole discretion, and with the consent of ASSIGNOR, undertake to institute and prosecute any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Assigned Property in which case it shall be subject to the direction and control of the ASSIGNEE, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the ASSIGNEE. If requested by ASSIGNEE, ASSIGNOR shall join the ASSIGNEE as a party complainant in any such claim, suit or proceeding
ARTICLE 9
INDEMNIFICATION
9.1
Survival of Representations and Warranties and Covenants
.
Except as otherwise expressly provided herein, all representations and warranties made by any party in this Agreement shall survive from and after the date hereof and shall continue in effect for a period of two (2) years from the date hereof, and all covenants made by any party in this Agreement shall survive indefinitely unless otherwise terminated by the parties. Any right of indemnification pursuant to this Article 13 in respect of a claimed breach of any representation, warranty or covenant shall expire at the date of expiration of the representation, warranty or covenant claimed to be breached (the "Expiration Date"), unless on or prior to the Expiration Date a Claim has been made against the party from whom indemnification is sought. If a Claim is timely made, it may continue to be asserted beyond the Expiration Date of the representation, warranty or covenant to which such Claim relates.
9.2
Indemnification
.
(a) The ASSIGNOR hereby agrees to indemnify and hold harmless ASSIGNEE from and against all Damages asserted against, imposed upon or incurred by ASSIGNEE, directly or indirectly, by reason of or resulting from, any breach or inaccuracy of any representation, warranty or covenant of the ASSIGNOR set forth in this Agreement.
(b) The ASSIGNEE hereby agrees to indemnify and hold harmless ASSIGNOR from and against all Damages asserted against, imposed upon or incurred by ASSIGNOR, directly or indirectly, by reason of or resulting from any breach or inaccuracy of any representation, warranty or covenant of the ASSIGNEE set forth in this Agreement.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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9.3
Limitation of Indemnification
.
ASSIGNOR herein shall be obligated to indemnify ASSIGNEE for only such Third-Party Claims that are established by a court judgment or order against ASSIGNEE involving and limited to the Proprietary Patent(s) or any Enhancements thereto. The obligations and liabilities of ASSIGNOR to indemnify ASSIGNEE shall be subject to the following terms and conditions:
(a)
ASSIGNOR shall indemnify and save ASSIGNEE harmless from all liability for actual infringement of any Third-Party Patent(s) claimed by said Third-Party to be the Patent(s) used and developed by ASSIGNOR. And, ASSIGNOR shall indemnify and save ASSIGNEE harmless from and against all costs, counsel fees, expenses and liabilities incurred in or about any claim of or action for such infringement; provided however, that ASSIGNEE shall promptly notify ASSIGNOR, in writing of said Third-Party Claim and transmit to ASSIGNOR all papers served on ASSIGNEE in any suit involving such claim of infringement, and provided further, that ASSIGNEE permits ASSIGNOR to have entire charge and control of the defense of any such suit.
(b) ASSIGNEE shall provide ASSIGNOR with all records and documents within the ASSIGNEE’S possession, custody, or control relating to any Third-Party Claim. Nothing in this provision shall be deemed to constitute a waiver of any attorney-client, work-product or joint defense privilege.
(c) ASSIGNOR’S indemnity obligation set forth in this Section shall survive the termination or expiration of this Agreement with respect to the Third-Party's Claim of rights to the Proprietary Patent(s) of ASSIGNOR which occurs during the Term.
ARTICLE 10
TERMINATION
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10.1
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Termination of this Agreement
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If either party breaches a material provision of this Agreement and fails to cure such violation within ninety (90) days after written notice of said breach has been mailed by the other party, this Agreement shall terminate. Upon termination, the terms and conditions herein will continue to apply to ASSIGNOR Products owned by ASSIGNEE. If any outstanding debts are owing to either party by the other, these amounts shall become due and payable immediately.
(a)
ASSIGNEE’S Default.
If any of the following events occur, ASSIGNEE shall be in default and ASSIGNOR shall have the right to immediately terminate this Agreement upon written notice to ASSIGNEE.
If ASSIGNEE ceases to function as a going concern, makes an assignment for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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ASSIGNEE ceases to carry on the business of the manufacturing, developing, marketing or selling ASSIGNOR’S Products for more than a one (1) year period;
(b)
ASSIGNOR’S Default.
If any of the following events occur, ASSIGNOR shall be in default and ASSIGNEE, at its option, shall have the right to terminate this Agreement upon thirty (30) days written notice to ASSIGNOR.
ASSIGNOR ceases to function as a going concern, makes an Assignment for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
(c)
Obligations on Termination.
Upon termination of this Agreement for any reason whatsoever, ASSIGNEE and ASSIGNOR shall perform each and all of the following obligations, all of which shall survive such termination:
(i) ASSIGNEE shall discontinue the use of any ASSIGNOR trade or service Marks.
(ii) ASSIGNEE will promptly refer to ASSIGNOR the details of any verbal or written inquiries ASSIGNEE may receive regarding any of ASSIGNOR’S Products, and, in the case of written inquiries, will provide copies thereof to ASSIGNOR;
(iii) ASSIGNEE shall do all other things as ASSIGNOR may reasonably request for the purpose of terminating ASSIGNEE’S business and contractual arrangements with ASSIGNOR and effecting an orderly transition of sales and/or service from ASSIGNEE to ASSIGNOR.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1
Notices
(a) All notices, request, demands and other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) on the date of delivery when delivered by hand; (ii) on the date of transmission when sent by facsimile transmission during normal business hours with telephone confirmation of receipt; (iii) on the next business day after transmission when sent by facsimile transmission after normal business hours; (iv) two (2) days after dispatch when sent by a reputable courier service that maintains records of receipt or (v) five (5) days after dispatch when sent by registered mail, postage prepaid, return receipt requested; provided that, in any such case, such communication is addressed provided in the immediately following paragraph (b).
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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(b) All notices, request, demands and other communications, which are required or may be given pursuant to the terms of this Agreement shall be addressed as follows:
Montecito Bio Sciences, Ltd
1327 Ocean Avenue, Suite M
Santa Monica, California 90401.
kylew@montecitobiosciences.com
Roth Kline, Inc
1327 Ocean Avenue, Suite M
Santa Monica, CA 90401
tedw@rothkline.com
Or to such other address as any party shall have designated by notice in the foregoing manner to the other parties.
11.2
Compliance with Laws
. In connection with the Assignment granted herein and the consummation of the transactions contemplated hereby and the performance by a party of its obligations hereunder, each of the ASSIGNOR and the ASSIGNEE shall comply with all applicable laws, requirements, rules, regulations and standards of Governmental Authorities of any pertinent jurisdiction so that neither of the parties shall be subject to any fines or penalties; or violate any laws or regulations affecting the lease, license and sale of the Products contemplated herein.
11.3
Authority to Contract and Perform
.
Both ASSIGNOR and ASSIGNEE represents that they each respectively have full right and authority to enter into this Agreement and to perform its obligations and that it has not made and will not make any contract or commitment contrary to the terms of this Agreement.
11.4
Ethics and Compliance with Law
.
Both ASSIGNOR and ASSIGNEE covenant each with the other, that they will maintain the highest ethical business standards and avoid and refrain from being involved in any activities which may in any manner disparage the ASSIGNOR’S or ASSIGNEE’S Products. Furthermore in the conduct of its business, both ASSIGNOR and ASSIGNEE will comply with all applicable Federal, State and local laws, rules and regulations.
11.5
Choice of Law
.
The validity, construction and performance of the Agreement shall be interpreted, construed and enforces according to the laws of the State of California.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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11.6
[Intentionally Omitted]
11.7
Entire Agreement
. This Agreement (together with the Exhibits expressly identified in this Agreement) constitutes the entire agreement of the parties with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, in respect of such subject matter.
11.8
Binding Effect
.
This Agreement binds and insures the benefit of the parties hereto, their respective heirs, representatives, successors or assigns.
11.9
Paragraph Headings.
The paragraph headings in this Agreement are for convenience only, and they have no substantive or interpretive effect.
11.10
Waiver
.
Neither modification of this Agreement nor any waiver of any term or condition hereof shall be effective unless it is in writing and signed by the parties hereto. If either party fails to meet the requirements of any term of this Agreement or waives any breach hereunder, that failure or waiver will neither prevent a subsequent enforcement of such term nor be deemed a waiver of any subsequent breach.
11.11
Partial Invalidity
.
In the event of the determination that any terms, covenant or condition of this Agreement is of no force or effect, the remaining terms, conditions or covenants contained herein shall not be affected thereby, and the obligations of the parties hereto with respect to the performance of the remaining terms, covenants and conditions shall continue in full force and effect.
11.12
Assignment
.
Either Party may assign this Agreement.
11.13
Indemnity
.
ASSIGNOR and ASSIGNEE agree to each hold the other free and harmless from any and all claims, damages and expenses of any kind or nature whatsoever: (1) arising from acts of the other; or (2) as a direct or indirect consequence of termination of this Agreement in accordance with its terms. ASSIGNOR agrees to hold ASSIGNEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorneys fees and costs arising out of any claim of patent or other infringements by a third party as it relates to the use by ASSIGNEE of product(s) supplied to ASSIGNEE by ASSIGNOR. Further, ASSIGNEE is relying on the representations of ASSIGNOR that it has the approval from the FDA for over-the-counter sales to the general public. In that regard, ASSIGNOR agrees to hold ASSIGNEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorney fees and cost arising out of any claim from the FDA or any other governmental agency regarding the sale of the product to the public. This indemnification shall be void and of no force or effect if ASSIGNEE fails to obey or comply with any reasonable instruction or limitation imposed by ASSIGNOR or the FDA. This section shall inure to the benefit of anyone who buys product(s) from ASSIGNEE that was supplied by ASSIGNOR.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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11.14
Execution in Counterparts
.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
11.15
Relationship of the Parties
.
ASSIGNEE is an independent contractor and private labeler. Nothing in this Agreement will be deemed or construed to create an agency, partnership, joint venture or employment relationship between ASSIGNOR and ASSIGNEE. ASSIGNEE will, under no circumstances, represent itself directly or by implication, as ASSIGNOR’S agent or employee, nor will ASSIGNEE purport or attempt to bind ASSIGNOR to any liability or obligation whatsoever. Nothing contained herein will impose any liability on ASSIGNOR in connection with the operation of ASSIGNEE’S business, or for any expenditure, obligation or liability incurred by ASSIGNEE in performing or preparing to perform, any of its obligations under this Agreement. The credit risk with respect to sales by ASSIGNEE to its customers will be borne by ASSIGNEE, and the collectibles of any amount due ASSIGNEE will in no respect eliminate, reduce or otherwise affect an obligation of ASSIGNEE to ASSIGNOR.
11.16
Amendment
. This Agreement may only be modified, supplemented or amended by a written instrument executed by the parties to it.
11.17
Conditions Precedent
. Each and every provision of this Agreement shall be contingent and become effective only upon the execution and delivery of the Intellectual Property hereinabove described.
11.18
Exhibits and Other Agreements
.
(a) The Exhibits and other agreements specifically referred to in, and delivered pursuant to, this Agreement are an integral part of it. Any disclosure that is made in any of the Schedules delivered pursuant to this Agreement shall be deemed responsive to any other applicable disclosure obligation hereunder.
(b) The following are the Exhibits annexed hereto and incorporated by reference and deemed to be part hereof:
Exhibit “A” FDA 510K Numbers, Approved Platform Products
Exhibit “B” Field of Use
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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SIGNATURE PAGE
IN WITNESS WHEREOF
, ASSIGNOR and ASSIGNEE have executed this Agreement this 10
th
day of September, 2010
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ASSIGNOR
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ASSIGNEE
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Montecito Biosciences, Ltd
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Roth Kline, Inc.
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By:
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By:
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/s/ Edward W. Withrow III
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Name:
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Kyle W. Withrow
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Name:
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Edward W. Withrow III
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Title:
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Secretary
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Title:
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President
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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EXHIBIT “A”
FDA 510K NUMBERS & APPROVED TESTS
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Device Name
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510(K) Number
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Rubella-Cube
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K892051
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CMV-Cube
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K884842
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Rotacube (Rotavirus)
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K884017
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Blue Dot Test for Pregnancy
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K882588
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First Sign (Pregnancy, HCG)
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K973208
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V-Trend Target IM Test (Infectious Mononucleosis)
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K890041
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Target Strep A
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K880460
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Target HCG Enzyme Immunoassay Reagents
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K862247
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Target ASO Test
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K910073
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Target HCG Test
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K914303
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Target HCG One-Step
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K903937
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V-Trend Target RF Test
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K904105
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Target Quantitative HCG
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K890131
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V-Trend Target CRP Test
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K890423
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Target Reader
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K885254
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510(K) APROVED PLATFORM PRODUCTS
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HCG:
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Human chorionic gonadotropin (Pregnancy Test) Rapid enzyme immunoassay test for qualitative detection of HCG in urine, serum and plasma. HCG is a hormone produced by the developing placenta. Serum and urine levels of HCG climb rapidly, starting as soon as the week following implantation, reaching peak levels near the end of the first trimester. One-step technology offers superior speed and simplicity without sacrificing sensitive and specific results.
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Strep A
:
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Detects group A streptococci, the cause of upper respiratory infections and pharyngitis. Identification is essential for the selection of appropriate antibiotic therapy to avoid complications such as acute glomerulonephritis or rheumatic fever. The test detects group A strep antigen directly from extracted throat swabs or swabs from culture plates for test confirmation.
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Rubella
:
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Rapid enzyme immunoassay test for qualitative detection of rubella virus specific IgG antibody. Rubella is a highly contagious yet generally mild disease in most people. However, it has great significance in women infected with rubella, the virus may infect the placenta, multiply and induce serious damage to the fetus, including low birth weight, cardio vascular detects, mental retardation and bone defects. Therefore, all women of child bearing age, as well, as school age children and healthcare personnel should be screened for immunity to rubella.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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CMV:
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Rapid enzyme immunoassay for qualitative detection of antibody to Cytomegalovirus in serum and plasma. Cytomegalovirus (CMV) is human viral pathogen belonging to the herpes family. Infection in humans is wide spread and usually results in asymptomatic disease. However, severe symptomatic infections pose a very significant risk in infants and immunocomprised patients.
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Rotavirus:
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Rapid enzyme immunoassay test for qualitative detection of human rotavirus particles and antigens in human fecal specimens. Rotavirus is a major cause of gastroenteritis in infants, young children and the elderly. During the winter months a portion of gastroenterics in children is due to rotavirus infection. The disease manifests with the symptoms of vomiting diarrhea, and fever. Rapid and accurate diagnosis is important to avoid inappropriate antibiotic therapy, provide proper treatment early and to prevent spread of nosocmial infection.
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Mono
:
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Qualitative and quantitative detection of heterophile antibodies associated with infectious mononucleosis. IM is an acute disease caused by the Epstein Barr virus. Heterophile antibodies are the primary antibodies, which appear in the patient’s serum, usually 1 to3 weeks after the onset of symptoms Common symptoms include fatigue, pharyngitis, fever, lymphadenopatherapy and splenomegaly.
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CRP
:
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C-reactive protein is an acute phase protection. The test is a solid phase gold immunoassay for the detection of CRP. Quantitative CRP measurements have been found to provide reliable early indication of postoperative inflammatory complications if monitored on a daily basis. CRP is also predictive of clinical cardiovascular disease.
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READER
:
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The Target System Reader is designed to interpret selected membrane enzyme immunoassays. The instrument is designed for laboratory, emergency room or field use and requires only a few minutes to learn to operate. The reader permits more precise, accurate readings of test results than visual interpretation.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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EXHIBIT “B”
FIELD OF USE
Field of Use is defined as diagnostic testing for any disease or medical condition that can be transmitted by one human to another. The Field of Use herewith does not include diagnostic or analytical testing within the Veterinary and Livestock, Environmental Testing or any military, law enforcement, bioterrorism or homeland security related industries.
Such testing to be done at the point of care, such point of care may include but are not limited to places such as:
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·
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Emergency Medical Vehicle Care
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·
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Assisted Living and Nursing Homes
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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Assignment, September, 2010
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EXHIBIT “C”
TERRITORY
Territory is defined as the entire world and to include all known countries without exclusion.
Exhibit 10.20
AGREEMENT OF THE LICENSE
OF
INTELLECTUAL PROPERTY
THIS AGREEMENT OF THE LICENSE OF INTELLECTUAL PROPERTY (the “Agreement”)
entered into on the 10
th
day of September 2010 (the “Effective Date”) is for the License of Intellectual Property, by and between
THE PARTIES:
MONTECITO BIO SCIENCES, LTD.,
a corporation organized and existing under the laws of the State of Nevada (hereinafter referred to as the "
LICENSOR
"); and
ROTH KLINE, INC.
, a corporation organized and existing under the laws of the State of Delaware (hereinafter referred to as the “
LICENSEE
”).
RECITALS
WHEREAS
, LICENSOR has developed, acquired and is the proprietary owner of certain rights, titles and interest in and to technology and information which it owns, or lawfully possesses for itself or holds valid licenses from others, which it considers highly proprietary (the "CONFIDENTIAL INFORMATION") regarding certain technology, and has developed and is the proprietary owner of certain patented processes along with certain rights, titles and interests in and to the technology and information which it owns, or lawfully possesses.
WHEREAS,
LICENSOR is the holder of four Patent Pending Applications which are part of this License Agreement in a defined Field of Use. The Abstracts and descriptions of Patent Pending Applications are in Exhibit “A”.
WHEREAS,
LICENSEE is a bio-medical, development, manufacturing and marketing company that will produce, brand, develop, manage and provide sales strategy for all aspects of a full marketing program to manufacture and sell all of LICENSOR’S Intellectual Properties as set forth in the this Agreement and Exhibits under LICENSOR’S and/or LICENSEE’S Brand Names and under LICENSOR’S and/or LICENSEE’S trademark or any other Brand Names designated by LICENSEE.
WHEREAS,
LICENSEE is desirous of Licensing the rights to the Patent Pending Applications outlined in Exhibit “A” or other like privileges in Field of Use Exhibit “B” and in Territory in Exhibit “C” for world wide use.
WHEREAS
, it is the intent of the LICENSEE, to file with the FDA for clearance to market, and sell all the Products, under LICENSEE’S Brand Name or Names. LICENSOR herein agrees to assist, provide documentation, and join in any and all applications for approval required by the FDA.
WHEREAS
, pursuant to the terms and subject to the conditions hereof, the LICENSOR has agreed to License, and the LICENSEE has agreed to License the right to use the Patent Pending Application claims and processes in the Field of Use detailed in Exhibit “B” for world wide use.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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License, September, 2010
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WHEREAS,
the Parties to this Agreement acknowledge and agree that this License shall include all applications of the Target System presently utilized or which may be developed in the future by either Party to this Agreement as long as it is within the defined “Field of Use” further defined in Exhibit “B”.
NOW, THEREFORE,
in consideration of the premises and the mutual covenants and agreements contained herein, and intending to be legally bound, LICENSOR and LICENSEE hereby agree as follows:
DEFINITIONS
1.1
Definitions
. Whenever used in this Agreement, the Recital above, or any Exhibit hereto, unless otherwise required by the subject matter or the context, the following terms shall have the meanings respectively ascribed to them:
“Patents Pending”:
means U.S. Patent Application No. 11/924,033 (“Portable Apparatus for Improved Sample Analysis”), No. 11/856,925 (“Method for Determining the Immune Status of a Subject”), No. 11/221,252 (“Method of Producing a Plurality of Isolated Antibodies to a Plurality of Cognate Antigens”), No. 11/221/ 038 (“Method of Identifying drugs, targeting moieties or Diagnostics”).
“Field of Use”:
means diagnostic testing for any disease or medical condition that can be transmitted by one human to another within the diagnostic health care industry, mobile and non-mobile, which industry focuses on providing healthcare and diagnostic solutions and services, but not limited to Hospitals, Emergency Medical Vehicle Care, Mobile Health Clinics, Schools, Government Agencies, retail drug stores and corporations. Field of Use is further described in Exhibit “B”.
“Territory”:
means the entire world described in Exhibit “C”.
“Gross Revenue”
: means all revenue or other consideration recognized by Licensee in accordance with United States Generally Accepted Accounting Principles related to use of the Licensed Patents in the Territory and Field of Use, including through Target Platform Products or Services, including sales, licenses, leases, subscriptions and maintenance, services, development and consulting fees.
“Affiliate”
means, in respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such first Person.
“Ancillary Agreements”
: None at the present time.
“
Best knowledge
” means, in respect of a Person, that nothing has come to the attention of that Person that gives such Person actual knowledge of the existence or absence of any material information or fact bearing on the matter.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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License, September, 2010
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“
Claim
” means a written notice asserting a breach of a representation, warranty or covenant specified in the Agreement which shall reasonably set forth, in light of the information then known to the party giving such notice, a description of and an estimate (if then reasonable to make) of the amount involved in such breach or for a claim for injunctive relief.
“
Confidential Information
” means any confidential or secret information or data, whether or not reduced to writing, pertaining to the license product, including scientific or technical knowledge, expertise, skill, practice, proprietary rights, copyrights, patented or un-patented inventions, formulas, trade secrets, manufacturing techniques and procedures, analytical methodology, processes, and data and shall include any and all technology, pending and existing intellectual property matters, including patenting, and copyrighting of LICENSOR’S product lines, technologies and inventions, and future plans and operations done in support of such future plans and operations.
Provided however, that in respect of the obligations of either party hereunder, the term "Confidential Information" shall not include any information that (i) is now or subsequently enters the public domain through means other than direct or indirect disclosure by a party in violation of the terms of this Agreement or (ii) is lawfully communicated to a party by a third party, free of any confidentiality obligation, subsequent to the date hereof.
“Commencement of Term of Agreement Date”
means the commencement of the Term of this Agreement as set forth in paragraph 2.2 (b) below.
“Completion Date”
means the date upon which Roth Kline, Inc. shall have received written notice to the effect that the FDA has issued to Roth Kline, Inc. a Regulatory Clearance in the Field of Activity
“Competing Person”
means any Person a substantial majority of whose business is in the same or similar business of LICENSEE and who is a direct competitor of LICENSEE or any of its Affiliates that is an Affiliate of such Person
“Control”
means (i) when used in respect of any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise, and (ii) when used in respect of any security, the possession, directly or indirectly, of the power to vote, or to direct the voting of, such security or the power to dispose of, or to direct the disposition of, such security.
“Controlling Person”
means, in respect of any business organization or other legal entity, a Person having control of such business, organization or entity, and any second Person having Control of such first Person, and so on in an ascending order up to and including the last Person having Control of the next preceding Person who is not subject to the Control of any other Person.
“Enhancements”
means any change, correction, modification, improvement, enhancement, addition or revision to the Licensed Products.
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“FDA Clearance”
means an application to the FDA for the sale or other distribution of FDA 510K small device for professional use and/or OTC for the Target System process , as well as all other FDA Clearances obtained by either LICENSOR or LICENSEE pursuant to this Agreement.
“
Governmental Authority
” means any governmental body, agency or official of any county or political subdivision of any country.
“
Indemnified Party
” means the Person who is entitled to indemnification for, and to be held harmless in respect of, a claim, cause of action or any other proceedings, as provided under the terms and subject to the conditions of this Agreement.
“
Indemnifying Party
” means the party hereto that is obligated to indemnify and to hold harmless another Person in respect of a claim, cause of action or any other proceeding, as provided under the terms and subject to the conditions of this Agreement.
“
Intellectual Property
” means all intellectual and industrial property and includes (i) four Patent Pending Applications described in Exhibit “A”.
“
Intellectual Property Rights
” means all intellectual and industrial property and other proprietary rights in respect of Intellectual Property, and includes all right to Intellectual Property.
“
Know-How
” means “The Confidential Information” and proprietary information, including any patents, formula, pattern, compilation, method, invention, technique or process, used in the creation of the Licensed Product.
“Licensed Product”
means those certain proprietary rights of LICENSOR as described in Exhibits “A”.
“
LICENSOR
” means Montecito Bio Sciences, Ltd. organized and existing under the laws of the State of Nevada.
“LICENSEE”
means Roth Kline, Inc., a corporation organized and existing under the laws of the State of Delaware.
“
Person
” means a human being, partnership, association, joint venture, corporation, legal representative, trustee, and trustee in bankruptcy, receiver or any other legal entity whatsoever.
“Regulatory Clearance”
means (a) (i) in the case of a product, a clearance by the FDA and (ii) in the case of product clearance by the FDA for the sale or other disposition of the patent target system for its specific and intended use; or (b) in the event of any change in the regulatory process, a clearance similar to the foregoing for the sale and distribution of said product.
“Term”
means the term of this Agreement as set forth in paragraph 2.2 (a) Term.
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“Third Party Claim”
means, in respect of the obligations of an Indemnifying Party hereunder, a claim asserted against, imposed upon or incurred by the Indemnified Party by any third party.
1.2
Additional Terms
. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" and shall be deemed to be followed by the phrase "without limitation." All references to "party" and "parties" shall be deemed references to the parties to this Agreement and to a party's successor in title unless the context shall otherwise require. All references to Sections and Paragraphs shall be deemed references to Sections and Paragraphs of this Agreement, unless the context shall otherwise require. All references herein to Schedules and Exhibits shall be deemed to be references to the Schedule(s) and Exhibit(s) attached to this Agreement. The terms "this Agreement", "hereof", "hereunder", and similar expressions refer to this Agreement as a whole and not to any particular Article or Section or other portion hereof and include any agreement supplemental hereto. The conjunction "or" shall be understood in its inclusive sense (and/or).
1.3
Headings
. The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
GRANT
2.1
License of Patent Pending Applications
Upon the terms and subject to the conditions set forth in this Agreement, the LICENSOR hereby assigns, conveys and delivers to the LICENSEE, and the LICENSEE hereby acquires from the LICENSOR, all right, title and interest of the LICENSOR in and to the following; (i) certain inventions, formulae, manufacturing secrets, processes and know-how with respect to the manufacture of certain bio-medical products and processes and (ii) certain intellectual property and inventions used in connection with said products. A true and correct copy of a list of the Patent Pending Applications and associated USPTO numbers afforded the Patent Pending Applications are attached as Exhibit “A”.
Subject to the terms and conditions of this Agreement, LICENSOR hereby grants LICENSEE the world wide exclusive right
to sub-license, sell, have sold, make, have made, develop, have developed, further develop and modify, or have further developed or modified
.
all LICENSOR Products & Processes hereby defined under as specified in Exhibit “A” hereof under LICENSOR’s and/or LICENSEE’s own Trade Names, Brand Names and Trademark within the Field of Use as defined in Exhibit “B”.
2.2
Term
(a)
The Term of this Agreement shall be in perpetuity under the terms and conditions of the Agreement unless terminated under the provisions of Article 10 of the Agreement.
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2.2.1
Commencement of Term of Agreement Date
: The Effective Date of this Agreement is the date of its execution.
2.4
Use of Trademark
LICENSOR hereby grants LICENSEE the right to use and display LICENSOR’S trademarks, service marks, and trademarks and trade names that are applicable to LICENSOR Product(s) under this private labeling agreement. LICENSEE may use any of LICENSOR’S Marks as part of its corporate, trade or other business name.
2.5
Payments and other Consideration
2.5.1
Stock Compensation.
2.5.1.1
LICENSEE will transfer seven hundred fifty (750) shares of common stock representing fifty percent (50%) of the issued and outstanding Common stock of the LICENSEE at the time LICENSOR executes the exclusive license with Licensee.
2.5.2
Cash Compensation.
2.5.2.1
LICENSEE will pay a license fee of seven hundred and fifty thousand ($750,000) dollars as part of its license fee. The LICENSOR, as part of this Agreement will accept two cash payments; A) the first payment will be in the amount of three hundred and seventy-five thousand ($375,000) dollars will be paid upon the closing of the LICENSEES initial capitalization of one and one half million ($1,500,000) dollars and (B) a second payment of three hundred and seventy-five ($375,000) dollars payable within the first financing and or third-party licensing that results in an aggregate of five million ($5,000,000) dollars to the ASSIGNEE. The first payment will be used by ASSIGNOR to;
(i) ASSIGNOR will provide a specific Use of Funds that will entail the Assignment fees use to complete the development and produce a working prototype and production-ready version of the Hand Held Target System Analyzer. Full description of Assignment Fee and its USE of Funds is to be delivered to ASSIGNEE prior to ASSIGNEE transferring initial Assignment Fee of three hundred and seventy-five thousand ($375,000) dollars.
2.6
Royalties
.
2.6.1
For each calendar quarter, LICENSEE shall owe LICENSOR royalties equal to three and one half percent (3.5%) of Gross Revenue.
2.6.2
LICENSEE shall pay Montecito Bio Sciences, Ltd quarterly royalties as calculated in this Section 2.6.1 only for the amount of those royalties due in that calendar quarter. There will be no carryover from calendar quarter to calendar quarter.
2.6.3
Payment Timing
. Payments due under Section 2.6.1 shall be due in full within thirty (30) days after the last day of the calendar quarter for which payment is due.
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ARTICLE 3
3.1
Patents
LICENSOR’S Assigned Patent Pending Applications are specified in EXHIBIT “A” attached hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE LICENSOR
To induce the LICENSEE to acquire the License rights, the LICENSOR hereby makes the following representations and warranties:
4.1
Organization. Standing and Qualifications
.
LICENSOR, MONTECITO BIO SCIENCES, LTD is a corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada. The LICENSOR has full power and authority to carry on its business as it is now being conducted and to own the property and assets it now owns. The Individual LICENSORS have full rights to enter into this Agreement.
4.2
Authorization
. The LICENSOR that is a Corporation has full power and authority to execute and deliver this Agreement to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action required by law, the LICENSOR’S Articles or otherwise to be taken by the LICENSOR to authorize the execution and delivery of this Agreement and the agreements specified herein or the consummation of the transactions contemplated hereby and thereby.
4.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding obligations of the LICENSOR, enforceable in accordance with its terms.
4.4
No Violation
. Neither the execution and delivery by the LICENSOR of this Agreement nor the consummation by the LICENSOR of the transactions contemplated hereby will (a) violate any provision of the Articles of Montecito Bio Sciences, Ltd.; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the LICENSOR. The LICENSOR is not a party to, nor is it bound by, and the LICENSOR Product Line is not subject to, any agreement or commitment that prohibits the execution and delivery by the LICENSEE of this Agreement or the consummation of the transactions contemplated hereby.
4.6
Litigation
. No action, suit, audit, or to the Best Knowledge of the LICENSOR no proceeding or investigation, by or before any court or governmental or other regulatory or administrative agency or commission is currently pending or, to the Best Knowledge of the LICENSOR threatened, against, involving or arising in connection with the LICENSOR’S Product Line or that questions or challenges the validity of this Agreement or any action taken or to be taken by the LICENSOR pursuant to this Agreement.
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4.7
Right to License LICENSOR’S Product Line
. LICENSOR has the right to license the intellectual property as described in Exhibits “A” and the right to manufacture Products utilizing said intellectual property rights and patents pending under the defined terms in Field of Use as defined in Exhibit “B”.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LICENSEE
To induce the LICENSOR to enter into this License Agreement with the LICENSEE, the LICENSEE hereby represents and warrants to the LICENSOR as follows:
5.1
Corporate Organization and Good Standing
. The LICENSEE is a Corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.
5.2
Authorization
. The LICENSEE has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action required by law, the LICENSEE’S Articles of Incorporation, or otherwise to be taken by the LICENSEE to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
5.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding agreements of the LICENSEE enforceable in accordance with its terms.
5.4
No Violation
. Neither the execution and delivery by the LICENSEE of this Agreement nor the consummation by the LICENSEE of the transactions contemplated hereby, will (a) violate any provisions of the Articles of Incorporation of the LICENSEE; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the LICENSEE or by which the property or assets of the LICENSEE are bound or affected.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1
Cooperation
.
(a) Each party shall cooperate reasonably with the other in preparing and filing all notices, applications, reports and other instruments and documents which are required by any statute, rule, regulation or order of any Governmental Authority in connection with the transactions contemplated by this Agreement, including the Private Label of the licensed Product with the FDA.
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(b) LICENSEE agrees not to use or exploit LICENSOR’S Product Line in a manner that can be reasonably foreseen to bring it into disrepute or materially diminish the value of exploiting such Product Line in connection with the marketing, promotion, distribution, sale, licensing or use of the Products.
ARTICLE 7
CONFIDENTIAL INFORMATION
7.1
Confidentiality of Intellectual Property of LICENSOR and Customer Proprietary Marketing Data of LICENSEE
It is expressly understood and agreed that all intellectual property and data furnished to LICENSEE by LICENSOR or any information or data regarding customers or data provided by LICENSEE to LICENSOR and such data as may be provided by one to the other regarding and including that required for the proper marketing, sale or re-sale of its products, all of which constitutes a valuable intellectual proprietary property and trade secret(s) of LICENSOR or LICENSEE, as the respective party providing such data has divulged. Providing such material, under any circumstances, shall not constitute a grant of any right of reproduction, manufacturing, distributing, resale, re-licensing (except as later set forth) or ownership in any manner whatsoever. Both LICENSEE and LICENSOR agree as follows:
(a) To observe complete confidentiality with regard to all aspects of such data including, without limitation, agreeing not to disclose or otherwise permit any other person or entity access to, in any manner, any such data in any form whatsoever. Such disclosure or access shall only be permitted to an employee of LICENSOR or LICENSEE as the case might be of the Marketing Plans, Business Relationships, Automated Customer Service (CRM) Systems and any other proprietary business or client information as permitted and on the terms and conditions defined in this License Agreement with the only exception being a third-party who has signed a Non-Disclosure Agreement with the Company prior to the transference or communication of confidential Company data ;
(b) To ensure that both LICENSOR and LICENSEE and their respective employees, agents, representatives, independent contractors, customers, sub contractors or sub LICENSEE’S and business invitee’s and guests are advised of the confidential nature of such data and to insure by agreement or otherwise that they are prohibited from copying or revealing, for any purpose whatsoever, the contents of the data;
(c) LICENSEE shall not alter or remove any copyright or proprietary rights notice of identification, which indicates LICENSOR’S ownership of the Product. LICENSOR shall not alter or remove any proprietary rights, notice of identification, which indicates LICENSEE’S confidential data, including customer data:
(d) Each respective party agrees to notify the other promptly and in writing of the circumstances surrounding any possession, use or knowledge of any such data of which either LICENSOR or LICENSEE has knowledge by any person or entity other than those authorized;
(e) Each respective party agrees to take any and all actions reasonably necessary or desirable to ensure continued confidentiality and protection of all such data and to prevent access to such data by any person or entity not authorized by this section.
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Should this Agreement terminate for any reason (including without limitation, breach by LICENSEE of any of its obligations hereunder), the confidentiality provisions of this Agreement shall survive the termination of this Agreement and shall continue to be binding upon both LICENSOR and LICENSEE.
ARTICLE 8
PROTECTION OF THE LICENSOR’S RIGHTS
8.1
Notice of Infringement or Unauthorized Use
. LICENSEE shall promptly inform LICENSOR in writing of any act of infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting, the Licensed Property, or any Enhancements thereto, that is discovered by LICENSEE or is otherwise brought to its attention. Each party shall promptly inform the other party in writing of any notice of claim or action, or any threatened claim or action, against either party by any third Person arising out of in any way related to the Licensed Product.
8.2
Institution, Prosecution and Defense of Claims
.
(a) (i) Promptly following the delivery to the LICENSOR of notice from the LICENSEE of any act of any infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement or affecting the Assigned Property, or, in the case where such infringement, unauthorized use, piracy misappropriation or breach is discovered by the LICENSEE or is otherwise brought to its attention and the LICENSEE provides to the LICENSOR written notice thereof, then promptly following the delivery of such notice to the LICENSOR, the LICENSOR shall take such steps as shall be necessary in order to protect the LICENSEE and the LICENSOR’S rights with respect to the said Licensed Property, respectively, including, but not limited to, instituting or authorizing others to institute any claim, suit or proceeding at law or in equity arising out of or related to the infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting the Licensed Property.
(ii) The institution, prosecution, maintenance and control of any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Licensed Property shall be subject to the direction and control of the LICENSOR, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the LICENSOR.
(b) If requested by LICENSOR, LICENSEE shall join the LICENSOR as, a party complainant in any such claim, suit or proceeding.
(c) LICENSOR shall defend, at its own expense; any claim that a Third-Party shall institute affecting the Assigned Product granted to the LICENSEE herein. LICENSEE shall cooperate fully in the defense of any such claim, suit or proceeding against any party by a third Person, brought in connection with, arising out of or related to the Assigned Property, and each party shall execute such documents and take such actions as may be reasonably requested by the other party and consistent with the rights and obligations of the parties hereunder.
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(d) LICENSOR shall indemnify LICENSEE for any costs, damages, or other expenses suffered by LICENSEE in connection with any Third-Party claiming that said Third-Party is the owner or has rights to the Assigned Product licensed to LICENSEE.
(e) LICENSEE may, in its sole discretion, and with the consent of LICENSOR, undertake to institute and prosecute any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Assigned Property in which case it shall be subject to the direction and control of the LICENSEE, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the LICENSEE. If requested by LICENSEE, LICENSOR shall join the LICENSEE as a party complainant in any such claim, suit or proceeding
ARTICLE 9
INDEMNIFICATION
9.1
Survival of Representations and Warranties and Covenants
. Except as otherwise expressly provided herein, all representations and warranties made by any party in this Agreement shall survive from and after the date hereof and shall continue in effect for a period of two (2) years from the date hereof, and all covenants made by any party in this Agreement shall survive indefinitely unless otherwise terminated by the parties. Any right of indemnification pursuant to this Article 13 in respect of a claimed breach of any representation, warranty or covenant shall expire at the date of expiration of the representation, warranty or covenant claimed to be breached (the "Expiration Date"), unless on or prior to the Expiration Date a Claim has been made against the party from whom indemnification is sought. If a Claim is timely made, it may continue to be asserted beyond the Expiration Date of the representation, warranty or covenant to which such Claim relates.
9.2
Indemnification
.
(a) The LICENSOR hereby agrees to indemnify and hold harmless LICENSEE from and against all Damages asserted against, imposed upon or incurred by LICENSEE, directly or indirectly, by reason of or resulting from, any breach or inaccuracy of any representation, warranty or covenant of the LICENSOR set forth in this Agreement.
(b) The LICENSEE hereby agrees to indemnify and hold harmless LICENSOR from and against all Damages asserted against, imposed upon or incurred by LICENSOR, directly or indirectly, by reason of or resulting from any breach or inaccuracy of any representation, warranty or covenant of the LICENSEE set forth in this Agreement.
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9.3
Limitation of Indemnification
. LICENSOR herein shall be obligated to indemnify LICENSEE for only such Third-Party Claims that are established by a court judgment or order against LICENSEE involving and limited to the Proprietary Patent(s) or any Enhancements thereto. The obligations and liabilities of LICENSOR to indemnify LICENSEE shall be subject to the following terms and conditions:
(a) LICENSOR shall indemnify and save LICENSEE harmless from all liability for actual infringement of any Third-Party Patent(s) claimed by said Third-Party to be the Patent(s) used and developed by LICENSOR. And, LICENSOR shall indemnify and save LICENSEE harmless from and against all costs, counsel fees, expenses and liabilities incurred in or about any claim of or action for such infringement; provided however, that LICENSEE shall promptly notify LICENSOR, in writing of said Third-Party Claim and transmit to LICENSOR all papers served on LICENSEE in any suit involving such claim of infringement, and provided further, that LICENSEE permits LICENSOR to have entire charge and control of the defense of any such suit.
(b) LICENSEE shall provide LICENSOR with all records and documents within the LICENSEE’S possession, custody, or control relating to any Third-Party Claim. Nothing in this provision shall be deemed to constitute a waiver of any attorney-client, work-product or joint defense privilege.
(c) LICENSOR’S indemnity obligation set forth in this Section shall survive the termination or expiration of this Agreement with respect to the Third-Party's Claim of rights to the Proprietary Patent(s) of LICENSOR which occurs during the Term.
ARTICLE 10
TERMINATION
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10.1
|
Termination of this Agreement
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If either party breaches a material provision of this Agreement and fails to cure such violation within ninety (90) days after written notice of said breach has been mailed by the other party, this Agreement shall terminate. Upon termination, the terms and conditions herein will continue to apply to LICENSOR Products owned by LICENSEE. If any outstanding debts are owing to either party by the other, these amounts shall become due and payable immediately.
(a)
LICENSEE’S Default.
If any of the following events occur, LICENSEE shall be in default and LICENSOR shall have the right to immediately terminate this Agreement upon written notice to LICENSEE.
If LICENSEE ceases to function as a going concern, makes an License for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
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LICENSEE ceases to carry on the business of the manufacturing, marketing or selling LICENSOR’S Products for more than a one (1) year period;
(b)
LICENSOR’S Default.
If any of the following events occur, LICENSOR shall be in default and LICENSEE, at its option, shall have the right to terminate this Agreement upon thirty (30) days written notice to LICENSOR.
LICENSOR ceases to function as a going concern, makes an License for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
(c)
Obligations on Termination.
Upon termination of this Agreement for any reason whatsoever, LICENSEE and LICENSOR shall perform each and all of the following obligations, all of which shall survive such termination:
(i) LICENSEE shall discontinue the use of any LICENSOR trade or service Marks.
(ii) LICENSEE will promptly refer to LICENSOR the details of any verbal or written inquiries LICENSEE may receive regarding any of LICENSOR’S Products, and, in the case of written inquiries, will provide copies thereof to LICENSOR;
(iii) LICENSEE shall do all other things as LICENSOR may reasonably request for the purpose of terminating LICENSEE’S business and contractual arrangements with LICENSOR and effecting an orderly transition of sales and/or service from LICENSEE to LICENSOR.
ARTICLE 11
CONSIDERATION
11.1
Consideration for License
.
Upon the execution of this Agreement, said consideration represents the amounts paid by LICENSEE to LICENSOR for the rights granted under this Agreement.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1
Notices
(a) All notices, request, demands and other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) on the date of delivery when delivered by hand; (ii) on the date of transmission when sent by facsimile transmission during normal business hours with telephone confirmation of receipt; (iii) on the next business day after transmission when sent by facsimile transmission after normal business hours; (iv) two (2) days after dispatch when sent by a reputable courier service that maintains records of receipt or (v) five (5) days after dispatch when sent by registered mail, postage prepaid, return=receipt requested; provided that, in any such case, such communication is addressed provided in the immediately following paragraph (b).
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(b) All notices, request, demands and other communications, which are required or may be given pursuant to the terms of this Agreement shall be addressed as follows:
Montecito Bio Sciences, Ltd
1327 Ocean Avenue, Suite M
Santa Monica, California 90401.
kylew@montecitobiosciences.com
Roth Kline, Inc
1327 Ocean Avenue, Suite M
Santa Monica, CA 90401
tedw@rothkline.com
Or to such other address as any party shall have designated by notice in the foregoing manner to the other parties.
12.2
Compliance with Laws
. In connection with the License granted herein and the consummation of the transactions contemplated hereby and the performance by a party of its obligations hereunder, each of the LICENSOR and the LICENSEE shall comply with all applicable laws, requirements, rules, regulations and standards of Governmental Authorities of any pertinent jurisdiction so that neither of the parties shall be subject to any fines or penalties; or violate any laws or regulations affecting the lease, license and sale of the Products contemplated herein.
12.3
Authority to Contract and Perform
.
Both LICENSOR and LICENSEE represents that they each respectively have full right and authority to enter into this Agreement and to perform its obligations and that it has not made and will not make any contract or commitment contrary to the terms of this Agreement.
12.4
Ethics and Compliance with Law
.
Both LICENSOR and LICENSEE covenant each with the other, that they will maintain the highest ethical business standards and avoid and refrain from being involved in any activities which may in any manner disparage the LICENSOR’S or LICENSEE’S Products. Furthermore in the conduct of its business, both LICENSOR and LICENSEE will comply with all applicable Federal, State and local laws, rules and regulations.
12.5
Choice of Law
.
The validity, construction and performance of the Agreement shall be interpreted, construed and enforces according to the laws of the State of California.
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12.6
[Intentionally Omitted]
12.7
Entire Agreement
. This Agreement (together with the Exhibits expressly identified in this Agreement) constitutes the entire agreement of the parties with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, in respect of such subject matter.
12.8
Binding Effect
.
This Agreement binds and insures the benefit of the parties hereto, their respective heirs, representatives, successors or assigns.
12.9
Paragraph Headings.
The paragraph headings in this Agreement are for convenience only, and they have no substantive or interpretive effect.
12.10
Waiver
.
Neither modification of this Agreement nor any waiver of any term or condition hereof shall be effective unless it is in writing and signed by the parties hereto. If either party fails to meet the requirements of any term of this Agreement or waives any breach hereunder, that failure or waiver will neither prevent a subsequent enforcement of such term nor be deemed a waiver of any subsequent breach.
12.11
Partial Invalidity
.
In the event of the determination that any terms, covenant or condition of this Agreement is of no force or effect, the remaining terms, conditions or covenants contained herein shall not be affected thereby, and the obligations of the parties hereto with respect to the performance of the remaining terms, covenants and conditions shall continue in full force and effect.
12.12
License
.
Either Party may assign this Agreement.
12.13
Indemnity
.
LICENSOR and LICENSEE agree to each hold the other free and harmless from any and all claims, damages and expenses of any kind or nature whatsoever: (1) arising from acts of the other; or (2) as a direct or indirect consequence of termination of this Agreement in accordance with its terms. LICENSOR agrees to hold LICENSEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorneys fees and costs arising out of any claim of patent or other infringements by a third party as it relates to the use by LICENSEE of product(s) supplied to LICENSEE by LICENSOR. Further, LICENSEE is relying on the representations of LICENSOR that it has the approval from the FDA for over-the-counter sales to the general public. In that regard, LICENSOR agrees to hold LICENSEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorney fees and cost arising out of any claim from the FDA or any other governmental agency regarding the sale of the product to the public. This indemnification shall be void and of no force or effect if LICENSEE fails to obey or comply with any reasonable instruction or limitation imposed by LICENSOR or the FDA. This section shall inure to the benefit of anyone who buys product(s) from LICENSEE that was supplied by LICENSOR.
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12.14
Execution in Counterparts
.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
12.15
Relationship of the Parties
.
LICENSEE is an independent contractor and private labeler. Nothing in this Agreement will be deemed or construed to create an agency, partnership, joint venture or employment relationship between LICENSOR and LICENSEE. LICENSEE will, under no circumstances, represent itself directly or by implication, as LICENSOR’S agent or employee, nor will LICENSEE purport or attempt to bind LICENSOR to any liability or obligation whatsoever. Nothing contained herein will impose any liability on LICENSOR in connection with the operation of LICENSEE’S business, or for any expenditure, obligation or liability incurred by LICENSEE in performing or preparing to perform, any of its obligations under this Agreement. The credit risk with respect to sales by LICENSEE to its customers will be borne by LICENSEE, and the collectibles of any amount due LICENSEE will in no respect eliminate, reduce or otherwise affect an obligation of LICENSEE to LICENSOR.
12.16
Amendment
. This Agreement may only be modified, supplemented or amended by a written instrument executed by the parties to it.
12.17
Conditions Precedent
. Each and every provision of this Agreement shall be contingent and become effective only upon the execution and delivery of the Intellectual Property hereinabove described.
12.18
Schedules. Exhibits and Other Agreements
.
(a) The Schedules, Exhibits and other agreements specifically referred to in, and delivered pursuant to, this Agreement are an integral part of it. Any disclosure that is made in any of the Schedules delivered pursuant to this Agreement shall be deemed responsive to any other applicable disclosure obligation hereunder.
(b) The following are the Exhibits and Schedules annexed hereto and incorporated by reference and deemed to be part hereof:
Exhibit “A” Patent Pending Applications
Exhibit “B” Field of Use
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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License, September, 2010
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SIGNATURE PAGE
IN WITNESS WHEREOF
, LICENSOR and LICENSEE have executed this Agreement this 10
th
day of September, 2010
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LICENSOR
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LICENSEE
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Montecito Biosciences, Ltd
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Roth Kline
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BY:
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/s/ Kyle W. Withrow
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BY:
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/s/ Edward W. Withrow III
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Kyle W. Withrow
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Edward W. Withrow III
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Secretary
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President
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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License, September, 2010
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EXHIBIT “A”
PATENT PENDING APPLICATIONS
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1.
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U.S. Patent Application No. 11/924,033 “Portable Apparatus for Improved Sample Analysis”
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Abstract
The present invention is an improved apparatus for sample analysis. The apparatus employs an assay component containing a membrane having one or a plurality of analyte - specific binding agents attached thereto, a means for absorbing liquid, and a piston means for drawing analytes through said membrane into said means for absorbing liquid. The apparatus is configured to be portable and provide a detector for detecting binding of an analyte to an analyte- specific binding agent, a plurality of data acquisition components, and a computer for integrating, analyzing and storing the detected analyte specific binding and acquired data.
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2.
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U.S. Patent Application No. 11/856,925 “Method for Determining the Immune Status of a Subject”
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Abstract
The present invention is a method for using levels of soluble Clusters of Differentiation (CD) proteins, or cell surface-localized CD proteins extracted from T lymphocytes for determining the immune status of a subject. The present invention also a kit containing a CD protein extraction means and at least one antibody which specifically binds a CD protein for use in carrying out the method of the invention.
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3.
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U.S. Patent Application No. 11/221/038 “Method of Identifying Drugs, Targeting Moieties or Diagnostics”
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Abstract
The present invention relates to a method for identifying a binding agent or epitope for use in drug design, drug targeting or diagnostics. The method employs contacting and sorting binding agents and cognate epitopes from collections thereof, characterizing the binding agent and cognate epitope, detecting the level or location of the epitope in a sample using the binding agent, and correlating the level or location of the epitope in the sample with the presence or stage of a disease or condition to identify novel drugs, targeting moieties, or diagnostic agents.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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License, September, 2010
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4.
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U.S. Patent No. 11/221,252 “Method of Producing a Plurality of Isolated Antibodies to a Plurality of Cognate Antigens”
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Abstract
The present invention relates to a method for producing high affinity antibodies that are antigen-specific. The method involves binding a plurality of antibody-producing B-cells from a mammal to a plurality of cognate antigens; sorting the bound antibody-producing B-cell and cognate antigen; amplifying nucleic acid sequences encoding each antibody, or fragment thereof, from the B-cells; and expressing the each antibody in a protein expression system. Antibodies produced in this manner are useful in diagnostic and therapeutic applications.
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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License, September, 2010
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EXHIBIT “B”
FIELD OF USE
Field of Use is defined as Diagnostic testing for any disease or medical condition that can be transmitted by one human to another. The Field of Use herewith does not include diagnostic or analytical testing within the Veterinary and Livestock, Environmental Testing or any military, law enforcement, bioterrorism or homeland security related industries.
Such testing to be done at the point of care, such point of care may include but are not limited to places such as:
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Emergency Medical Vehicle Care
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Assisted Living and Nursing Homes
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Montecito Bio Sciences, Ltd. / Roth Kline, Inc.
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License, September, 2010
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EXHIBIT “C”
TERRITORY
Territory is defined as the entire world and to include all known countries without exclusion.
Exhibit 10.21
MODIFICATION AGREEMENT OF THE ASSIGNMENT
OF
INTELLECTUAL PROPERTY
THIS MODIFICATION AGREEMENT OF THE ASSIGNMENT OF INTELLECTUAL PROPERTY (the “Agreement”)
entered into on the 30
th
day of September 2011 (the “Effective Date”) is for the Modification of the Agreement of Assignment of Intellectual Property, by and between
THE PARTIES:
MONTECITO BIO SCIENCES, Ltd.,
a corporation organized and existing under the laws of the State of Nevada (hereinafter referred to as the "
ASSIGNOR
"); and
PARALLAX DIAGNOSTICS, INC.
, a corporation organized and existing under the laws of the State of Nevada (hereinafter referred to as the “
ASSIGNEE
”).
RECITALS
WHEREAS
, ASSIGNOR has developed, acquired and is the proprietary owner of certain rights, titles and interest in and to technology and information which it owns, or lawfully possesses for itself or holds valid licenses from others, which it considers highly proprietary (the "CONFIDENTIAL INFORMATION") regarding certain technology, and has developed and is the proprietary owner of certain patented processes along with certain rights, titles and interests in and to the technology and information which it owns, or lawfully possesses; and
WHEREAS,
ASSIGNOR is the holder of certain diagnostic tests, and test systems that have received U.S. Food and Drug Administration (the “FDA”) Regulatory Clearance and include a Desktop Immunoassay Multi-light Spectrum Analyzer and Target System Diagnostic Test Cartridge Platform. The FDA 510k Numbers and Approved Platform Products are attached as Exhibit “A”; and
WHEREAS,
ASSIGNEE is a bio-medical, development, manufacturing and marketing company that will produce, brand, develop, manage and provide sales strategy for all aspects of a full marketing program to manufacture and sell all of ASSIGNOR’S Intellectual Properties as set forth in the this Agreement and Exhibits under ASSIGNOR’S and/or ASSIGNEE’S Brand Names and under ASSIGNOR’S and/or ASSIGNEE’S trademark or any other Brand Names designated by ASSIGNEE; and
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
WHEREAS,
ASSIGNEE is desirous of acquiring the rights to the 510k Cleared tests outlined in Exhibit “A” or other like privileges for and to the FDA 510k Cleared tests in the Agreements Field of Use for worldwide use; and
WHEREAS
, it is the intent of the ASSIGNEE, to file with the FDA for clearance to market, and sell all the Products, under ASSIGNEE’S Brand Name or Names. ASSIGNOR herein agrees to assist, provide documentation, and join in any and all applications for approval required by the FDA; and
WHEREAS
, ASSIGNOR entered into an Assignment Agreement with Parallax Diagnostics, Inc on September 10, 2010 and Assignment Agreement is attached herewith as Exhibit “C”; and
WHEREAS,
ASSIGNOR has agreed to modify the September 10, 2010 Assignment Agreement as it pertains to Cash Compensation and Royalties; and
WHEREAS
, ASSIGNOR has agreed to change the terms of the Assignment payment from a cash payment of a total of seven hundred and fifty thousand ($750,000) dollars payable in two separate payments of three hundred and seventy-five thousand ($375,000) each to an increase in the Royalty owed and payable as part of the Royalty section of the Agreement; and
WHEREAS,
ASSIGNEE has agreed to accept the modifications of its Assignment Agreement with ASSIGNOR under the Terms and Conditions described in the Modification Agreement.
NOW, THEREFORE,
in consideration of the premises and the mutual covenants and agreements contained herein, and intending to be legally bound, ASSIGNOR and ASSIGNEE hereby agree to the Modification of the Assignment Agreement as follows:
DEFINITIONS
1.1
Definitions
. Whenever used in this Agreement, the Recital above, or any Exhibit hereto, unless otherwise required by the subject matter or the context, the following terms shall have the meanings respectively ascribed to them:
“FDA 510K Cleared”:
tests means that the following tests have been giving approval by the U.S. Food & Drug Administration to market the tests and testing device Listed in Appendix "A”.
“Field of Use”:
means diagnostic testing for any disease or medical condition that can be transmitted by one human to another within the diagnostic health care industry, mobile and non-mobile, which industry focuses on providing healthcare and diagnostic solutions and services, but not limited to Hospitals, Emergency Medical Vehicle Care, Mobile Health Clinics, Schools, Government Agencies, retail drug stores and corporations. Field of Use is further described in Exhibit “B”.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
“Gross Revenue”
: means all revenue or other consideration recognized by Licensee in accordance with United States Generally Accepted Accounting Principles related to use of the Licensed Patents in the Territory and Field of Use, including through Target Platform Products or Services, including sales, licenses, leases, subscriptions and maintenance, services, development and consulting fees.
“Affiliate”
means, in respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such first Person.
“Ancillary Agreements”
: None at the present time.
“
Best knowledge
” means, in respect of a Person, that nothing has come to the attention of that Person that gives such Person actual knowledge of the existence or absence of any material information or fact bearing on the matter.
“
Claim
” means a written notice asserting a breach of a representation, warranty or covenant specified in the Agreement which shall reasonably set forth, in light of the information then known to the party giving such notice, a description of and an estimate (if then reasonable to make) of the amount involved in such breach or for a claim for injunctive relief.
“
Confidential Information
” means any confidential or secret information or data, whether or not reduced to writing, pertaining to the license product, including scientific or technical knowledge, expertise, skill, practice, proprietary rights, copyrights, patented or un-patented inventions, formulas, trade secrets, manufacturing techniques and procedures, analytical methodology, processes, and data and shall include any and all technology, pending and existing intellectual property matters, including patenting, and copyrighting of ASSIGNOR’S product lines, technologies and inventions, and future plans and operations done in support of such future plans and operations.
Provided however, that in respect of the obligations of either party hereunder, the term "Confidential Information" shall not include any information that (i) is now or subsequently enters the public domain through means other than direct or indirect disclosure by a party in violation of the terms of this Agreement or (ii) is lawfully communicated to a party by a third party, free of any confidentiality obligation, subsequent to the date hereof.
“Commencement of Term of Agreement Date”
means the commencement of the Term of this Agreement as set forth in paragraph 2.3 (b) below.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
“Completion Date”
means the date upon which Roth Kline, Inc. shall have received written notice to the effect that the FDA has issued to Roth Kline, Inc. a Regulatory Clearance in the Field of Activity
“Competing Person”
means any Person a substantial majority of whose business is in the same or similar business of ASSIGNEE and who is a direct competitor of ASSIGNEE or any of its Affiliates that is an Affiliate of such Person
“Control”
means (i) when used in respect of any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise, and (ii) when used in respect of any security, the possession, directly or indirectly, of the power to vote, or to direct the voting of, such security or the power to dispose of, or to direct the disposition of, such security.
“Controlling Person”
means, in respect of any business organization or other legal entity, a Person having control of such business, organization or entity, and any second Person having Control of such first Person, and so on in an ascending order up to and including the last Person having Control of the next preceding Person who is not subject to the Control of any other Person.
“Enhancements”
means any change, correction, modification, improvement, enhancement, addition or revision to the Licensed Products.
“FDA Clearance”
means an application to the FDA for the sale or other distribution of FDA 510K small device for professional use and/or OTC for the Target System process , as well as all other FDA Clearances obtained by either ASSIGNOR or ASSIGNEE pursuant to this Agreement.
“
Governmental Authority
” means any governmental body, agency or official of any county or political subdivision of any country.
“
Indemnified Party
” means the Person who is entitled to indemnification for, and to be held harmless in respect of, a claim, cause of action or any other proceedings, as provided under the terms and subject to the conditions of this Agreement.
“
Indemnifying Party
” means the party hereto that is obligated to indemnify and to hold harmless another Person in respect of a claim, cause of action or any other proceeding, as provided under the terms and subject to the conditions of this Agreement.
“
Intellectual Property
” means (i) computer programs, (ii) copyrights, (iii) designs and industrial designs, (iv) trademarks, and any word, symbol, icon, logo or other indicia or origin adopted or used in connection with the license or service and (vi) trade secrets and confidential information described in (d) above.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
“
Intellectual Property Rights
” means all intellectual and industrial property and other proprietary rights in respect of Intellectual Property, and includes all right to Intellectual Property exclusive of Patent Pending Applications.
“
Know-How
” means “The Confidential Information” and proprietary information, including any patents, formula, pattern, compilation, method, invention, technique or process, used in the creation of the Licensed Product.
“
ASSIGNOR
” means Montecito Bio Sciences, Ltd. organized and existing under the laws of the State of Nevada.
“ASSIGNEE”
means Parallax Diagnostics, Inc., a corporation organized and existing under the laws of the State of Nevada.
“
Person
” means a human being, partnership, association, joint venture, corporation, legal representative, trustee, and trustee in bankruptcy, receiver or any other legal entity whatsoever.
“Regulatory Clearance”
means (a) (i) in the case of a product, a clearance by the FDA and (ii) in the case of product clearance by the FDA for the sale or other disposition of the patent target system for its specific and intended use; or (b) in the event of any change in the regulatory process, a clearance similar to the foregoing for the sale and distribution of said product.
“Term”
means the term of this Agreement as set forth in paragraph 2.3 (a) Term.
“Third Party Claim”
means, in respect of the obligations of an Indemnifying Party hereunder, a claim asserted against, imposed upon or incurred by the Indemnified Party by any third party.
1.2
Additional Terms
.
The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" and shall be deemed to be followed by the phrase "without limitation." All references to "party" and "parties" shall be deemed references to the parties to this Agreement and to a party's successor in title unless the context shall otherwise require. All references to Sections and Paragraphs shall be deemed references to Sections and Paragraphs of this Agreement, unless the context shall otherwise require. All references herein to Schedules and Exhibits shall be deemed to be references to the Schedule(s) and Exhibit(s) attached to this Agreement. The terms "this Agreement", "hereof", "hereunder", and similar expressions refer to this Agreement as a whole and not to any particular Article or Section or other portion hereof and include any agreement supplemental hereto. The conjunction "or" shall be understood in its inclusive sense (and/or).
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
1.3
Headings
. The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
GRANT
2.1
Assignment of 510k Cleared Tests
Upon the terms and subject to the conditions set forth in this Agreement, the Assignor hereby assigns, conveys and delivers to the ASSIGNEE, and the ASSIGNEE hereby acquires from the ASSIGNOR, all right, title and interest of the Assignor in and to the following; (i) certain inventions, formulae, manufacturing secrets, processes and know-how with respect to the manufacture of certain bio-medical products and (ii) certain intellectual property and inventions used in connection with said products. A true and correct copy of a list of the 510k Cleared Test and associated numbers afforded the tests by the FDA are attached as Exhibit “A”, all of which and assigned and incorporated herein by reference.
Subject to the terms and conditions of this Agreement, ASSIGNOR hereby grants ASSIGNEE the exclusive, world wide right
to sub-license, sell, have sold, make, have made, develop, have developed, further develop and modify, or have further developed or modified
.
all ASSIGNOR Products & Processes hereby defined under as specified in Exhibit “A” hereof under ASSIGNOR’s and/or ASSIGNEE’s own Trade Names, Brand Names and Trademark within the Field of Use as defined in Exhibit “B”.
All products assigned herein that are specifically designated for professional and the general public consumption (over the counter) are warranted by ASSIGNOR to meet any and all government requirements and clearances for sale in the respective professional and over-the-counter market.
2.3
Term
(a)
The Term of this Agreement shall be in effect in perpetuity as of the Commencement of Term of Agreement Date (defined below).
(b)
Commencement of Term of Agreement Date
: The Effective Date of this Agreement is the date of its execution.
2.4
Use of Trademark
ASSIGNOR hereby grants ASSIGNEE the right to use and display ASSIGNOR’S trademarks, service marks, and trademarks and trade names that are applicable to ASSIGNOR Product(s) under this private labeling agreement. ASSIGNEE may use any of ASSIGNOR’S Marks as part of its corporate, trade or other business name.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
2.5
Royalties
2.5.1
For each calendar quarter, ASSIGNEE shall owe ASSIGNOR royalties equal to five percent (5%) of Gross Revenue.
2.5.2
ASSIGNEE Royalty payment of five percent (5%) will be reduced to four percent after the ASSIGNEE has paid the ASSIGNOR seven hundred and fifty thousand ($750,000) out of Royalty Revenue derived from the one percent (1%) increase in Royalty Payment from the first Assignment Agreement between Montecito Bio Sciences, Ltd and Parallax Diagnostics, Inc.
2.5.3
ASSIGNEE shall pay Montecito Bio Sciences, Ltd quarterly royalties as calculated in this Section 2.6.1 only for the amount of those royalties due in that calendar quarter. There will be no carryover from calendar quarter to calendar quarter.
2.5.4
Payment Timing
. Payments due under Section 2.5.1 shall be due in full within thirty (30) days after the last day of the calendar quarter for which payment is due.
ARTICLE 3
3.1
Products
ASSIGNOR’S Assigned Products are specified in
EXHIBIT “A”
attached hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE ASSIGNOR
To induce the ASSIGNEE to acquire the License rights, the ASSIGNOR hereby makes the following representations and warranties:
4.1
Organization. Standing and Qualifications.
ASSIGNOR, Montecito Bio Sciences, Ltd. is a corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada. The ASSIGNOR has full power and authority to carry on its business as it is now being conducted and to own the property and assets it now owns. The Individual ASSIGNORS have full rights to enter into this Agreement.
4.2
Authorization
. The ASSIGNOR that is a Corporation has full power and authority to execute and deliver this Agreement to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action required by law, the ASSIGNOR’S Articles or otherwise to be taken by the ASSIGNOR to authorize the execution and delivery of this Agreement and the agreements specified herein or the consummation of the transactions contemplated hereby and thereby.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
4.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding obligations of the ASSIGNOR, enforceable in accordance with its terms.
4.4
No Violation
. Neither the execution and delivery by the ASSIGNOR of this Agreement nor the consummation by the ASSIGNOR of the transactions contemplated hereby will (a) violate any provision of the Articles of Montecito Bio Sciences, Ltd.; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the ASSIGNOR. The ASSIGNOR is not a party to, nor is it bound by, and the ASSIGNOR Product Line is not subject to, any agreement or commitment that prohibits the execution and delivery by the ASSIGNEE of this Agreement or the consummation of the transactions contemplated hereby.
4.5
Litigation
. No action, suit, audit, or to the Best Knowledge of the ASSIGNOR no proceeding or investigation, by or before any court or governmental or other regulatory or administrative agency or commission is currently pending or, to the Best Knowledge of the ASSIGNOR threatened, against, involving or arising in connection with the ASSIGNOR’S Product Line or that questions or challenges the validity of this Agreement or any action taken or to be taken by the ASSIGNOR pursuant to this Agreement.
4.5
Right to License ASSIGNOR’S Product Line
. ASSIGNOR has the right to license the intellectual property as described in Exhibits “A” and the right to manufacture Products utilizing said intellectual property rights and patents under the defined terms in the Field of Use as defined in Exhibit “B”.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE ASSIGNEE
To induce the ASSIGNOR to enter into this Assignment Agreement with the ASSIGNEE, the ASSIGNEE hereby represents and warrants to the ASSIGNOR as follows:
5.1
Corporate Organization and Good Standing
. The ASSIGNEE is a Corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada.
5.2
Authorization
. The ASSIGNEE has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action required by law, the ASSIGNEE’S Articles of Incorporation, or otherwise to be taken by the ASSIGNEE to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
5.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding agreements of the ASSIGNEE enforceable in accordance with its terms.
5.4
No Violation
. Neither the execution and delivery by the ASSIGNEE of this Agreement nor the consummation by the ASSIGNEE of the transactions contemplated hereby, will (a) violate any provisions of the Articles of Incorporation of the ASSIGNEE; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the ASSIGNEE or by which the property or assets of the ASSIGNEE are bound or affected.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1
Cooperation
.
(a) Each party shall cooperate reasonably with the other in preparing and filing all notices, applications, reports and other instruments and documents which are required by any statute, rule, regulation or order of any Governmental Authority in connection with the transactions contemplated by this Agreement, including the Private Label of the licensed Product with the FDA.
(b) ASSIGNEE agrees not to use or exploit ASSIGNOR’S Product Line in a manner that can be reasonably foreseen to bring it into disrepute or materially diminish the value of exploiting such Product Line in connection with the marketing, promotion, distribution, sale, licensing or use of the Products.
ARTICLE 7
CONFIDENTIAL INFORMATION
7.1
Confidentiality of Intellectual Property of ASSIGNOR and Customer Proprietary Marketing Data of ASSIGNEE
It is expressly understood and agreed that all intellectual property and data furnished to ASSIGNEE by ASSIGNOR or any information or data regarding customers or data provided by ASSIGNEE to ASSIGNOR and such data as may be provided by one to the other regarding and including that required for the proper marketing, sale or re-sale of its products, all of which constitutes a valuable intellectual proprietary property and trade secret(s) of ASSIGNOR or ASSIGNEE, as the respective party providing such data has divulged. Providing such material, under any circumstances, shall not constitute a grant of any right of reproduction, manufacturing, distributing, resale, re-licensing (except as later set forth) or ownership in any manner whatsoever. Both ASSIGNEE and ASSIGNOR agree as follows:
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
(a) To observe complete confidentiality with regard to all aspects of such data including, without limitation, agreeing not to disclose or otherwise permit any other person or entity access to, in any manner, any such data in any form whatsoever. Such disclosure or access shall only be permitted to an employee of ASSIGNOR or ASSIGNEE as the case might be of the Marketing Plans, Business Relationships, Automated Customer Service (CRM) Systems and any other proprietary business or client information as permitted and on the terms and conditions defined in this License Agreement;
(b) To ensure that both ASSIGNOR and ASSIGNEE and their respective employees, agents, representatives, independent contractors, customers, sub contractors or sub ASSIGNEE’S and business invitee’s and guests are advised of the confidential nature of such data and to insure by agreement or otherwise that they are prohibited from copying or revealing, for any purpose whatsoever, the contents of the data;
(c) ASSIGNEE shall not alter or remove any copyright or proprietary rights notice of identification, which indicates ASSIGNOR’S ownership of the Product. ASSIGNOR shall not alter or remove any proprietary rights, notice of identification, which indicates ASSIGNEE’S confidential data, including customer data:
(d) Each respective party agrees to notify the other promptly and in writing of the circumstances surrounding any possession, use or knowledge of any such data of which either ASSIGNOR or ASSIGNEE has knowledge by any person or entity other than those authorized;
(e) Each respective party agrees to take any and all actions reasonably necessary or desirable to ensure continued confidentiality and protection of all such data and to prevent access to such data by any person or entity not authorized by this section.
Should this Agreement terminate for any reason (including without limitation, breach by ASSIGNEE of any of its obligations hereunder), the confidentiality provisions of this Agreement shall survive the termination of this Agreement and shall continue to be binding upon both ASSIGNOR and ASSIGNEE.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
ARTICLE 8
PROTECTION OF THE ASSIGNOR’S RIGHTS
8.1
Notice of Infringement or Unauthorized Use
. ASSIGNEE shall promptly inform ASSIGNOR in writing of any act of infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting, the Licensed Property, or any Enhancements thereto, that is discovered by ASSIGNEE or is otherwise brought to its attention. Each party shall promptly inform the other party in writing of any notice of claim or action, or any threatened claim or action, against either party by any third Person arising out of in any way related to the Licensed Product.
8.2
Institution, Prosecution and Defense of Claims
.
(a) (i) Promptly following the delivery to the ASSIGNOR of notice from the ASSIGNEE of any act of any infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement or affecting the Assigned Property, or, in the case where such infringement, unauthorized use, piracy misappropriation or breach is discovered by the ASSIGNEE or is otherwise brought to its attention and the ASSIGNEE provides to the ASSIGNOR written notice thereof, then promptly following the delivery of such notice to the ASSIGNOR, the ASSIGNOR shall take such steps as shall be necessary in order to protect the ASSIGNEE and the ASSIGNOR’S rights with respect to the said Assigned Property, respectively, including, but not limited to, instituting or authorizing others to institute any claim, suit or proceeding at law or in equity arising out of or related to the infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting the Assigned Property.
(ii) The institution, prosecution, maintenance and control of any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Assigned Property shall be subject to the direction and control of the ASSIGNOR, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the ASSIGNOR.
(b) If requested by ASSIGNOR, ASSIGNEE shall join the ASSIGNOR as, a party complainant in any such claim, suit or proceeding.
(c) ASSIGNOR shall defend, at its own expense; any claim that a Third-Party shall institute affecting the Assigned Product granted to the ASSIGNEE herein. ASSIGNEE shall cooperate fully in the defense of any such claim, suit or proceeding against any party by a third Person, brought in connection with, arising out of or related to the Assigned Property, and each party shall execute such documents and take such actions as may be reasonably requested by the other party and consistent with the rights and obligations of the parties hereunder.
(d) ASSIGNOR shall indemnify ASSIGNEE for any costs, damages, or other expenses suffered by ASSIGNEE in connection with any Third-Party claiming that said Third-Party is the owner or has rights to the Assigned Product Assigned to ASSIGNEE.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
(e) ASSIGNEE may, in its sole discretion, and with the consent of ASSIGNOR, undertake to institute and prosecute any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Assigned Property in which case it shall be subject to the direction and control of the ASSIGNEE, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the ASSIGNEE. If requested by ASSIGNEE, ASSIGNOR shall join the ASSIGNEE as a party complainant in any such claim, suit or proceeding
ARTICLE 9
INDEMNIFICATION
9.1
Survival of Representations and Warranties and Covenants
. Except as otherwise expressly provided herein, all representations and warranties made by any party in this Agreement shall survive from and after the date hereof and shall continue in effect for a period of two (2) years from the date hereof, and all covenants made by any party in this Agreement shall survive indefinitely unless otherwise terminated by the parties. Any right of indemnification pursuant to this Article 13 in respect of a claimed breach of any representation, warranty or covenant shall expire at the date of expiration of the representation, warranty or covenant claimed to be breached (the "Expiration Date"), unless on or prior to the Expiration Date a Claim has been made against the party from whom indemnification is sought. If a Claim is timely made, it may continue to be asserted beyond the Expiration Date of the representation, warranty or covenant to which such Claim relates.
9.2
Indemnification
.
(a) The ASSIGNOR hereby agrees to indemnify and hold harmless ASSIGNEE from and against all Damages asserted against, imposed upon or incurred by ASSIGNEE, directly or indirectly, by reason of or resulting from, any breach or inaccuracy of any representation, warranty or covenant of the ASSIGNOR set forth in this Agreement.
(b) The ASSIGNEE hereby agrees to indemnify and hold harmless ASSIGNOR from and against all Damages asserted against, imposed upon or incurred by ASSIGNOR, directly or indirectly, by reason of or resulting from any breach or inaccuracy of any representation, warranty or covenant of the ASSIGNEE set forth in this Agreement.
9.3
Limitation of Indemnification
. ASSIGNOR herein shall be obligated to indemnify ASSIGNEE for only such Third-Party Claims that are established by a court judgment or order against ASSIGNEE involving and limited to the Proprietary Patent(s) or any Enhancements thereto. The obligations and liabilities of ASSIGNOR to indemnify ASSIGNEE shall be subject to the following terms and conditions:
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
(a) ASSIGNOR shall indemnify and save ASSIGNEE harmless from all liability for actual infringement of any Third-Party Patent(s) claimed by said Third-Party to be the Patent(s) used and developed by ASSIGNOR. And, ASSIGNOR shall indemnify and save ASSIGNEE harmless from and against all costs, counsel fees, expenses and liabilities incurred in or about any claim of or action for such infringement; provided however, that ASSIGNEE shall promptly notify ASSIGNOR, in writing of said Third-Party Claim and transmit to ASSIGNOR all papers served on ASSIGNEE in any suit involving such claim of infringement, and provided further, that ASSIGNEE permits ASSIGNOR to have entire charge and control of the defense of any such suit.
(b) ASSIGNEE shall provide ASSIGNOR with all records and documents within the ASSIGNEE’S possession, custody, or control relating to any Third-Party Claim. Nothing in this provision shall be deemed to constitute a waiver of any attorney-client, work-product or joint defense privilege.
(c) ASSIGNOR’S indemnity obligation set forth in this Section shall survive the termination or expiration of this Agreement with respect to the Third-Party's Claim of rights to the Proprietary Patent(s) of ASSIGNOR which occurs during the Term.
ARTICLE 10
TERMINATION
10.1
Termination of this Agreement
If either party breaches a material provision of this Agreement and fails to cure such violation within ninety (90) days after written notice of said breach has been mailed by the other party, this Agreement shall terminate. Upon termination, the terms and conditions herein will continue to apply to ASSIGNOR Products owned by ASSIGNEE. If any outstanding debts are owing to either party by the other, these amounts shall become due and payable immediately.
(a)
ASSIGNEE’S Default.
If any of the following events occur, ASSIGNEE shall be in default and ASSIGNOR shall have the right to immediately terminate this Agreement upon written notice to ASSIGNEE.
If ASSIGNEE ceases to function as a going concern, makes an assignment for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
ASSIGNEE ceases to carry on the business of the manufacturing, developing, marketing and selling ASSIGNOR’S Products for more than a one (1) year period;
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
(b)
ASSIGNOR’S Default.
If any of the following events occur, ASSIGNOR shall be in default and ASSIGNEE, at its option, shall have the right to terminate this Agreement upon thirty (30) days written notice to ASSIGNOR.
ASSIGNOR ceases to function as a going concern, makes an Assignment for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
(c)
Obligations on Termination.
Upon termination of this Agreement for any reason whatsoever, ASSIGNEE and ASSIGNOR shall perform each and all of the following obligations, all of which shall survive such termination:
(i) ASSIGNEE shall discontinue the use of any ASSIGNOR trade or service Marks.
(ii) ASSIGNEE will promptly refer to ASSIGNOR the details of any verbal or written inquiries ASSIGNEE may receive regarding any of ASSIGNOR’S Products, and, in the case of written inquiries, will provide copies thereof to ASSIGNOR;
(iii) ASSIGNEE shall do all other things as ASSIGNOR may reasonably request for the purpose of terminating ASSIGNEE’S business and contractual arrangements with ASSIGNOR and effecting an orderly transition of sales and/or service from ASSIGNEE to ASSIGNOR.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1
Notices
(a) All notices, request, demands and other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) on the date of delivery when delivered by hand; (ii) on the date of transmission when sent by facsimile transmission during normal business hours with telephone confirmation of receipt; (iii) on the next business day after transmission when sent by facsimile transmission after normal business hours; (iv) two (2) days after dispatch when sent by a reputable courier service that maintains records of receipt or (v) five (5) days after dispatch when sent by registered mail, postage prepaid, return receipt requested; provided that, in any such case, such communication is addressed provided in the immediately following paragraph (b).
(b) All notices, request, demands and other communications, which are required or may be given pursuant to the terms of this Agreement shall be addressed as follows:
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
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(i)
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If to ASSIGNOR.
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Edward W. Withrow III
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Montecito Bio Sciences, Ltd
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1327 Ocean Avenue, Suite M
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Santa Monica, California 90401.
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eww@montecitobiosciences.com
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(ii)
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If to ASSIGNEE.
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J. Michael Redmond
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Parallax Diagnostics, Inc
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2 Canal Park, 5
th
Floor
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Cambridge, MA 02141
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miker@parallaxdiagnostics.com
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Or to such other address as any party shall have designated by notice in the foregoing manner to the other parties.
11.2
Compliance with Laws
. In connection with the Assignment granted herein and the consummation of the transactions contemplated hereby and the performance by a party of its obligations hereunder, each of the ASSIGNOR and the ASSIGNEE shall comply with all applicable laws, requirements, rules, regulations and standards of Governmental Authorities of any pertinent jurisdiction so that neither of the parties shall be subject to any fines or penalties; or violate any laws or regulations affecting the lease, license and sale of the Products contemplated herein.
11.3
Authority to Contract and Perform
.
Both ASSIGNOR and ASSIGNEE represents that they each respectively have full right and authority to enter into this Agreement and to perform its obligations and that it has not made and will not make any contract or commitment contrary to the terms of this Agreement.
11.4
Ethics and Compliance with Law
.
Both ASSIGNOR and ASSIGNEE covenant each with the other, that they will maintain the highest ethical business standards and avoid and refrain from being involved in any activities which may in any manner disparage the ASSIGNOR’S or ASSIGNEE’S Products. Furthermore in the conduct of its business, both ASSIGNOR and ASSIGNEE will comply with all applicable Federal, State and local laws, rules and regulations.
11.5
Choice of Law
.
The validity, construction and performance of the Agreement shall be interpreted, construed and enforces according to the laws of the State of California.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
11.6
[Intentionally Omitted]
11.7
Entire Agreement
. This Agreement (together with the Exhibits expressly identified in this Agreement) constitutes the entire agreement of the parties with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, in respect of such subject matter.
11.8
Binding Effect
.
This Agreement binds and insures the benefit of the parties hereto, their respective heirs, representatives, successors or assigns.
11.9
Paragraph Headings.
The paragraph headings in this Agreement are for convenience only, and they have no substantive or interpretive effect.
11.10
Waiver
.
Neither modification of this Agreement nor any waiver of any term or condition hereof shall be effective unless it is in writing and signed by the parties hereto. If either party fails to meet the requirements of any term of this Agreement or waives any breach hereunder, that failure or waiver will neither prevent a subsequent enforcement of such term nor be deemed a waiver of any subsequent breach.
11.11
Partial Invalidity
.
In the event of the determination that any terms, covenant or condition of this Agreement is of no force or effect, the remaining terms, conditions or covenants contained herein shall not be affected thereby, and the obligations of the parties hereto with respect to the performance of the remaining terms, covenants and conditions shall continue in full force and effect.
11.12
Assignment
.
The Assignor must approve any assignment of this Agreement by the Assignee to any third-party individual or entity.
11.13
Indemnity
.
ASSIGNOR and ASSIGNEE agree to each hold the other free and harmless from any and all claims, damages and expenses of any kind or nature whatsoever: (1) arising from acts of the other; or (2) as a direct or indirect consequence of termination of this Agreement in accordance with its terms. ASSIGNOR agrees to hold ASSIGNEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorneys fees and costs arising out of any claim of patent or other infringements by a third party as it relates to the use by ASSIGNEE of product(s) supplied to ASSIGNEE by ASSIGNOR. Further, ASSIGNEE is relying on the representations of ASSIGNOR that it has the approval from the FDA for over-the-counter sales to the general public. In that regard, ASSIGNOR agrees to hold ASSIGNEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorney fees and cost arising out of any claim from the FDA or any other governmental agency regarding the sale of the product to the public. This indemnification shall be void and of no force or effect if ASSIGNEE fails to obey or comply with any reasonable instruction or limitation imposed by ASSIGNOR or the FDA. This section shall inure to the benefit of anyone who buys product(s) from ASSIGNEE that was supplied by ASSIGNOR.
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
11.14
Execution in Counterparts
.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
11.15
Relationship of the Parties
.
ASSIGNEE is an independent contractor and private labeler. Nothing in this Agreement will be deemed or construed to create an agency, partnership, joint venture or employment relationship between ASSIGNOR and ASSIGNEE. ASSIGNEE will, under no circumstances, represent itself directly or by implication, as ASSIGNOR’S agent or employee, nor will ASSIGNEE purport or attempt to bind ASSIGNOR to any liability or obligation whatsoever. Nothing contained herein will impose any liability on ASSIGNOR in connection with the operation of ASSIGNEE’S business, or for any expenditure, obligation or liability incurred by ASSIGNEE in performing or preparing to perform, any of its obligations under this Agreement. The credit risk with respect to sales by ASSIGNEE to its customers will be borne by ASSIGNEE, and the collectibles of any amount due ASSIGNEE will in no respect eliminate, reduce or otherwise affect an obligation of ASSIGNEE to ASSIGNOR.
11.16
Amendment
. This Agreement may only be modified, supplemented or amended by a written instrument executed by the parties to it.
11.17
Conditions Precedent
. Each and every provision of this Agreement shall be contingent and become effective only upon the execution and delivery of the Intellectual Property hereinabove described.
11.18
Exhibits and Other Agreements
.
(a) The Exhibits and other agreements specifically referred to in, and delivered pursuant to, this Agreement are an integral part of it. Any disclosure that is made in any of the Schedules delivered pursuant to this Agreement shall be deemed responsive to any other applicable disclosure obligation hereunder.
(b) The following are the Exhibits annexed hereto and incorporated by reference and deemed to be part hereof:
Exhibit “A” FDA 510K Numbers, Approved Platform Products
Exhibit “B” Field of Use
MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
SIGNATURE PAGE
IN WITNESS WHEREOF
, ASSIGNOR and ASSIGNEE have executed this Agreement this 30
th
day of September, 2011
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ASSIGNOR
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ASSIGNEE
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Montecito Biosciences, Ltd.
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Parallax Diagnostics, Inc.
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BY:
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/s/ Edward W. Withrow III
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BY:
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/s/ J. Michael Redmond
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Edward W. Withrow III
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J. Michael Redmond
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CEO
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CEO
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EXHIBIT “A”
FDA 510K NUMBERS & APPROVED TESTS
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Device Name
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510(K) Number
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Rubella-Cube
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K892051
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CMV-Cube
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K884842
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Rotacube (Rotavirus)
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K884017
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Blue Dot Test for Pregnancy
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K882588
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First Sign (Pregnancy, HCG)
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K973208
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V-Trend Target IM Test (Infectious Mononucleosis)
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K890041
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Target Strep A
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K880460
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Target HCG Enzyme Immunoassay Reagents
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K862247
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Target ASO Test
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K910073
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Target HCG Test
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K914303
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Target HCG One-Step
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K903937
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V-Trend Target RF Test
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K904105
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Target Quantitative HCG
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K890131
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V-Trend Target CRP Test
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K890423
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Target Reader
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K885254
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510(K) APROVED PLATFORM PRODUCTS
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HCG:
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Human chorionic gonadotropin (Pregnancy Test) Rapid enzyme immunoassay test for qualitative detection of HCG in urine, serum and plasma. HCG is a hormone produced by the developing placenta. Serum and urine levels of HCG climb rapidly, starting as soon as the week following implantation, reaching peak levels near the end of the first trimester. One-step technology offers superior speed and simplicity without sacrificing sensitive and specific results.
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Strep A
:
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Detects group A streptococci, the cause of upper respiratory infections and pharyngitis. Identification is essential for the selection of appropriate antibiotic therapy to avoid complications such as acute glomerulonephritis or rheumatic fever. The test detects group A strep antigen directly from extracted throat swabs or swabs from culture plates for test confirmation.
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Rubella
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Rapid enzyme immunoassay test for qualitative detection of rubella virus specific IgG antibody. Rubella is a highly contagious yet generally mild disease in most people. However, it has great significance in women infected with rubella, the virus may infect the placenta, multiply and induce serious damage to the fetus, including low birth weight, cardio vascular detects, mental retardation and bone defects. Therefore, all women of child bearing age, as well, as school age children and healthcare personnel should be screened for immunity to rubella.
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MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
|
CMV:
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Rapid enzyme immunoassay for qualitative detection of antibody to Cytomegalovirus in serum and plasma. Cytomegalovirus (CMV) is human viral pathogen belonging to the herpes family. Infection in humans is wide spread and usually results in asymptomatic disease. However, severe symptomatic infections a very significant risk in infants and immunocomprised patients.
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Rotavirus:
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Rapid enzyme immunoassay test for qualitative detection of human rotavirus particles and antigens in human fecal specimens. Rotavirus is a major cause of gastroenteritis in infants, young children and the elderly. During the winter months a portion of gastroenterics in children is due to rotavirus infection. The disease manifests with the symptoms of vomiting diarrhea, and fever. Rapid and accurate diagnosis is important to avoid inappropriate antibiotic therapy, provide proper treatment early and to prevent spread of nosocmial infection.
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Mono
:
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Qualitative and quantitative detection of heterophile antibodies associated with infectious mononucleosis. IM is an acute disease caused by the Epstein Barr virus. Heterophile antibodies are the primary antibodies, which appear in the patient’s serum, usually 1 to3 weeks after the onset of symptoms Common symptoms include fatigue, pharyngitis, fever, lymphadenopatherapy and splenomegaly.
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CRP
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C-reactive protein is an acute phase protection. The test is a solid phase gold immunoassay for the detection of CRP. Quantitative CRP measurements have been found to provide reliable early indication of postoperative inflammatory complications if monitored on a daily basis. CRP is also predictive of clinical cardiovascular disease.
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READER
:
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The Target System Reader is designed to interpret selected membrane enzyme immunoassays. The instrument is designed for laboratory, emergency room or field use and requires only a few minutes to learn to operate. The reader permits more precise, accurate readings of test results than visual interpretation.
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MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
EXHIBIT “B”
FIELD OF USE
Field of Use is defined as Diagnostic testing for any disease or medical condition that can be transmitted by one human to another. The Field of Use herewith does not include diagnostic or analytical testing within the Veterinary and Livestock, Environmental Testing or any military, law enforcement, bioterrorism or homeland security related industries.
Such testing to be done at the point of care, such point of care may include but are not limited to places such as:
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·
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Hospitals
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·
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Emergency Medical Vehicle Care
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Mobile Health Clinics
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·
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Schools
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·
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Government Agencies
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·
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Retail Drug Stores
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·
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Corporations
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·
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Hospices
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·
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Assisted Living and Nursing Homes
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·
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Home Health Care
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·
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Physician’s offices
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MBS-Parallax Diagnostics, Inc
Modification of Assignment Agreement
September 2011
21
Exhibit 10.22
MODIFICATION AGREEMENT OF THE LICENSE
OF
INTELLECTUAL PROPERTY
THIS AGREEMENT OF THE LICENSE OF INTELLECTUAL PROPERTY (the “Agreement”)
entered into on the 30
th
day of September 2011 (the “Effective Date”) is for the Modification of the Agreement of the License of Intellectual Property, by and between
THE PARTIES:
MONTECITO BIO SCIENCES, Ltd.,
a corporation organized and existing under the laws of the State of Nevada (hereinafter referred to as the "
LICENSOR
"); and
PARALLAX DIAGNOSTICS, INC.
, a corporation organized and existing under the laws of the State of Nevada (hereinafter referred to as the “
LICENSEE
”).
RECITALS
WHEREAS
, LICENSOR has developed, acquired and is the proprietary owner of certain rights, titles and interest in and to technology and information which it owns, or lawfully possesses for itself or holds valid licenses from others, which it considers highly proprietary (the "CONFIDENTIAL INFORMATION") regarding certain technology, and has developed and is the proprietary owner of certain patented processes along with certain rights, titles and interests in and to the technology and information which it owns, or lawfully possesses; and
WHEREAS,
LICENSOR is the holder of four Patent Pending Applications which are part of this License Agreement in a defined Field of Use. The Abstracts and descriptions of Patent Pending Applications are in Exhibit “A”; and
WHEREAS,
LICENSEE is a bio-medical, development, manufacturing and marketing company that will produce, brand, develop, manage and provide sales strategy for all aspects of a full marketing program to manufacture and sell all of LICENSOR’S Intellectual Properties as set forth in the this Agreement and Exhibits under LICENSOR’S and/or LICENSEE’S Brand Names and under LICENSOR’S and/or LICENSEE’S trademark or any other Brand Names designated by LICENSEE; and
WHEREAS,
LICENSEE is desirous of Licensing the rights to the Patent Pending Applications outlined in Exhibit “A” or other like privileges in Field of Use Exhibit “B” for worldwide use.
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MBS-Parallax Diagnostics
License of Intellectual Property
|
September 2011
|
WHEREAS
, it is the intent of the LICENSEE, to file with the FDA for clearance to market, and sell all the Products, under LICENSEE’S Brand Name or Names. LICENSOR herein agrees to assist, provide documentation, and join in any and all applications for approval required by the FDA.
WHEREAS
, pursuant to the terms and subject to the conditions hereof, the LICENSOR has agreed to License, and the LICENSEE has agreed to License the right to use the Patent Pending Application claims and processes in the Field of Use detailed in Exhibit “B” for world wide use.
WHEREAS,
the Parties to this Agreement acknowledge and agree that this License shall include all applications of the Target System presently utilized or which may be developed in the future by either Party to this Agreement as long as it is within the defined “Field of Use” further defined in Exhibit “B”.
WHEREAS
, LICENSOR entered into an Agreement of the License of Intellectual Property with Parallax Diagnostics, Inc on September 10, 2010 and is attached herewith as Exhibit “C”; and
WHEREAS,
LICENSOR has agreed to modify the September 10, 2010 Agreement of the License of Intellectual Property as it pertains to Cash Compensation and Royalties; and
WHEREAS
, LICENSOR has agreed to change the terms of the September 10, 2010 Agreement of License of Intellectual Property as it pertains to cash payments of a total of seven hundred and fifty thousand ($750,000) dollars payable in two separate payments of three hundred and seventy-five thousand ($375,000) each to an increase in the Royalty owed and payable as part of the Royalty section of the Agreement; and
WHEREAS,
LICENSEE has agreed to accept the modifications of its Agreement of License of Intellectual Property with LICENSOR under the Terms and Conditions described in the Modification Agreement of the License of Intellectual Property.
NOW, THEREFORE,
in consideration of the premises and the mutual covenants and agreements contained herein, and intending to be legally bound, LICENSOR and LICENSEE hereby agree as follows:
DEFINITIONS
1.1
Definitions
. Whenever used in this Agreement, the Recital above, or any Exhibit hereto, unless otherwise required by the subject matter or the context, the following terms shall have the meanings respectively ascribed to them:
“Patents Pending”:
means U.S. Patent Application No. 11/924,033 (“Portable Apparatus for Improved Sample Analysis”), No. 11/856,925 (“Method for Determining the Immune Status of a Subject”), No. 11/221,252 (“Method of Producing a Plurality of Isolated Antibodies to a Plurality of Cognate Antigens”), No. 11/221/ 038 (“Method of Identifying drugs, targeting moieties or Diagnostics”).
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MBS-Parallax Diagnostics
License of Intellectual Property
|
September 2011
|
“Field of Use”:
means diagnostic testing for any disease or medical condition that can be transmitted by one human to another within the diagnostic health care industry, mobile and non-mobile, which industry focuses on providing healthcare and diagnostic solutions and services, but not limited to Hospitals, Emergency Medical Vehicle Care, Mobile Health Clinics, Schools, Government Agencies, retail drug stores and corporations. Field of Use is further described in Exhibit “B”.
“Territory”:
means the entire world described in Exhibit “C”.
“Gross Revenue”
: means all revenue or other consideration recognized by Licensee in accordance with United States Generally Accepted Accounting Principles related to use of the Licensed Patents in the Territory and Field of Use, including through Target Platform Products or Services, including sales, licenses, leases, subscriptions and maintenance, services, development and consulting fees.
“Affiliate”
means, in respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such first Person.
“Ancillary Agreements”
: None at the present time.
“
Best knowledge
” means, in respect of a Person, that nothing has come to the attention of that Person that gives such Person actual knowledge of the existence or absence of any material information or fact bearing on the matter.
“
Claim
” means a written notice asserting a breach of a representation, warranty or covenant specified in the Agreement which shall reasonably set forth, in light of the information then known to the party giving such notice, a description of and an estimate (if then reasonable to make) of the amount involved in such breach or for a claim for injunctive relief.
“
Confidential Information
” means any confidential or secret information or data, whether or not reduced to writing, pertaining to the license product, including scientific or technical knowledge, expertise, skill, practice, proprietary rights, copyrights, patented or un-patented inventions, formulas, trade secrets, manufacturing techniques and procedures, analytical methodology, processes, and data and shall include any and all technology, pending and existing intellectual property matters, including patenting, and copyrighting of LICENSOR’S product lines, technologies and inventions, and future plans and operations done in support of such future plans and operations.
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MBS-Parallax Diagnostics
License of Intellectual Property
|
September 2011
|
Provided however, that in respect of the obligations of either party hereunder, the term "Confidential Information" shall not include any information that (i) is now or subsequently enters the public domain through means other than direct or indirect disclosure by a party in violation of the terms of this Agreement or (ii) is lawfully communicated to a party by a third party, free of any confidentiality obligation, subsequent to the date hereof.
“Commencement of Term of Agreement Date”
means the commencement of the Term of this Agreement as set forth in paragraph 2.2 (b) below.
“Completion Date”
means the date upon which Roth Kline, Inc. shall have received written notice to the effect that the FDA has issued to Roth Kline, Inc. a Regulatory Clearance in the Field of Activity
“Competing Person”
means any Person a substantial majority of whose business is in the same or similar business of LICENSEE and who is a direct competitor of LICENSEE or any of its Affiliates that is an Affiliate of such Person
“Control”
means (i) when used in respect of any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise, and (ii) when used in respect of any security, the possession, directly or indirectly, of the power to vote, or to direct the voting of, such security or the power to dispose of, or to direct the disposition of, such security.
“Controlling Person”
means, in respect of any business organization or other legal entity, a Person having control of such business, organization or entity, and any second Person having Control of such first Person, and so on in an ascending order up to and including the last Person having Control of the next preceding Person who is not subject to the Control of any other Person.
“Enhancements”
means any change, correction, modification, improvement, enhancement, addition or revision to the Licensed Products.
“FDA Clearance”
means an application to the FDA for the sale or other distribution of FDA 510K small device for professional use and/or OTC for the Target System process , as well as all other FDA Clearances obtained by either LICENSOR or LICENSEE pursuant to this Agreement.
“
Governmental Authority
” means any governmental body, agency or official of any county or political subdivision of any country.
“
Indemnified Party
” means the Person who is entitled to indemnification for, and to be held harmless in respect of, a claim, cause of action or any other proceedings, as provided under the terms and subject to the conditions of this Agreement.
“
Indemnifying Party
” means the party hereto that is obligated to indemnify and to hold harmless another Person in respect of a claim, cause of action or any other proceeding, as provided under the terms and subject to the conditions of this Agreement.
|
MBS-Parallax Diagnostics
License of Intellectual Property
|
September 2011
|
“
Intellectual Property
” means all intellectual and industrial property and includes (i) four Patent Pending Applications described in Exhibit “A”.
“
Intellectual Property Rights
” means all intellectual and industrial property and other proprietary rights in respect of Intellectual Property, and includes all right to Intellectual Property.
“
Know-How
” means “The Confidential Information” and proprietary information, including any patents, formula, pattern, compilation, method, invention, technique or process, used in the creation of the Licensed Product.
“Licensed Product”
means those certain proprietary rights of LICENSOR as described in Exhibits “A”.
“
LICENSOR
” means Montecito Bio Sciences, Ltd. organized and existing under the laws of the State of Nevada.
“LICENSEE”
means Roth Kline, Inc., a corporation organized and existing under the laws of the State of Delaware.
“
Person
” means a human being, partnership, association, joint venture, corporation, legal representative, trustee, and trustee in bankruptcy, receiver or any other legal entity whatsoever.
“Regulatory Clearance”
means (a) (i) in the case of a product, a clearance by the FDA and (ii) in the case of product clearance by the FDA for the sale or other disposition of the patent target system for its specific and intended use; or (b) in the event of any change in the regulatory process, a clearance similar to the foregoing for the sale and distribution of said product.
“Term”
means the term of this Agreement as set forth in paragraph 2.2 (a) Term.
“Third Party Claim”
means, in respect of the obligations of an Indemnifying Party hereunder, a claim asserted against, imposed upon or incurred by the Indemnified Party by any third party.
1.2
Additional Terms
. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" and shall be deemed to be followed by the phrase "without limitation." All references to "party" and "parties" shall be deemed references to the parties to this Agreement and to a party's successor in title unless the context shall otherwise require. All references to Sections and Paragraphs shall be deemed references to Sections and Paragraphs of this Agreement, unless the context shall otherwise require. All references herein to Schedules and Exhibits shall be deemed to be references to the Schedule(s) and Exhibit(s) attached to this Agreement. The terms "this Agreement", "hereof", "hereunder", and similar expressions refer to this Agreement as a whole and not to any particular Article or Section or other portion hereof and include any agreement supplemental hereto. The conjunction "or" shall be understood in its inclusive sense (and/or).
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1.3
Headings
. The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
GRANT
2.1
License of Patent Pending Applications
Upon the terms and subject to the conditions set forth in this Agreement, the LICENSOR hereby assigns, conveys and delivers to the LICENSEE, and the LICENSEE hereby acquires from the LICENSOR, all right, title and interest of the LICENSOR in and to the following; (i) certain inventions, formulae, manufacturing secrets, processes and know-how with respect to the manufacture of certain bio-medical products and processes and (ii) certain intellectual property and inventions used in connection with said products. A true and correct copy of a list of the Patent Pending Applications and associated USPTO numbers afforded the Patent Pending Applications are attached as Exhibit “A”.
Subject to the terms and conditions of this Agreement, LICENSOR hereby grants LICENSEE the world wide exclusive right
to sub-license, sell, have sold, make, have made, develop, have developed, further develop and modify, or have further developed or modified
.
all LICENSOR Products & Processes hereby defined under as specified in Exhibit “A” hereof under LICENSOR’s and/or LICENSEE’s own Trade Names, Brand Names and Trademark within the Field of Use as defined in Exhibit “B”.
2.2
Term
(a)
The Term of this Agreement shall be in perpetuity under the terms and conditions of the Agreement unless terminated under the provisions of Article 10 of the Agreement.
2.2.1
Commencement of Term of Agreement Date
: The Effective Date of this Agreement is the date of its execution.
2.4
Use of Trademark
LICENSOR hereby grants LICENSEE the right to use and display LICENSOR’S trademarks, service marks, and trademarks and trade names that are applicable to LICENSOR Product(s) under this private labeling agreement. LICENSEE may use any of LICENSOR’S Marks as part of its corporate, trade or other business name.
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2.5
Royalties
.
2.5.1
For each calendar quarter, LICENSEE shall owe LICENSOR royalties equal to three and one half percent (4.5%) of Gross Revenue.
2.5.2
LICENSEE Royalty payment of four and one half percent (5%) will be reduced to three and one half percent after the LICENSEE has paid the LICENSOR seven hundred and fifty thousand ($750,000) out of Royalty Revenue derived from the one percent (1%) increase in Royalty Payment from the September 10, 2010 Agreement of License of Intellectual Property between Montecito Bio Sciences, Ltd and Parallax Diagnostics, Inc.
2.5.3
LICENSEE shall pay Montecito Bio Sciences, Ltd quarterly royalties as calculated in this Section 2.6.1 only for the amount of those royalties due in that calendar quarter. There will be no carryover from calendar quarter to calendar quarter.
2.5.4
Payment Timing
. Payments due under Section 2.5.1 shall be due in full within thirty (30) days after the last day of the calendar quarter for which payment is due.
ARTICLE 3
3.1
Patents
LICENSOR’S Assigned Patent Pending Applications are specified in EXHIBIT “A” attached hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE LICENSOR
To induce the LICENSEE to acquire the License rights, the LICENSOR hereby makes the following representations and warranties:
4.1
Organization. Standing and Qualifications
.
LICENSOR, MONTECITO BIO SCIENCES, LTD is a corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada. The LICENSOR has full power and authority to carry on its business as it is now being conducted and to own the property and assets it now owns. The Individual LICENSORS have full rights to enter into this Agreement.
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4.2
Authorization
. The LICENSOR that is a Corporation has full power and authority to execute and deliver this Agreement to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action required by law, the LICENSOR’S Articles or otherwise to be taken by the LICENSOR to authorize the execution and delivery of this Agreement and the agreements specified herein or the consummation of the transactions contemplated hereby and thereby.
4.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding obligations of the LICENSOR, enforceable in accordance with its terms.
4.4
No Violation
. Neither the execution and delivery by the LICENSOR of this Agreement nor the consummation by the LICENSOR of the transactions contemplated hereby will (a) violate any provision of the Articles of Montecito Bio Sciences, Ltd.; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the LICENSOR. The LICENSOR is not a party to, nor is it bound by, and the LICENSOR Product Line is not subject to, any agreement or commitment that prohibits the execution and delivery by the LICENSEE of this Agreement or the consummation of the transactions contemplated hereby.
4.6
Litigation
. No action, suit, audit, or to the Best Knowledge of the LICENSOR no proceeding or investigation, by or before any court or governmental or other regulatory or administrative agency or commission is currently pending or, to the Best Knowledge of the LICENSOR threatened, against, involving or arising in connection with the LICENSOR’S Product Line or that questions or challenges the validity of this Agreement or any action taken or to be taken by the LICENSOR pursuant to this Agreement.
4.7
Right to License LICENSOR’S Product Line
. LICENSOR has the right to license the intellectual property as described in Exhibits “A” and the right to manufacture Products utilizing said intellectual property rights and patents pending under the defined terms in Field of Use as defined in Exhibit “B”.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LICENSEE
To induce the LICENSOR to enter into this License Agreement with the LICENSEE, the LICENSEE hereby represents and warrants to the LICENSOR as follows:
5.1
Corporate Organization and Good Standing
. The LICENSEE is a Corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada.
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5.2
Authorization
. The LICENSEE has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action required by law, the LICENSEE’S Articles of Incorporation, or otherwise to be taken by the LICENSEE to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
5.3
Binding Agreements
. This Agreement constitutes the legal, valid and binding agreements of the LICENSEE enforceable in accordance with its terms.
5.4
No Violation
. Neither the execution and delivery by the LICENSEE of this Agreement nor the consummation by the LICENSEE of the transactions contemplated hereby, will (a) violate any provisions of the Articles of Incorporation of the LICENSEE; (b) conflict with or violate any statute, law, regulation, rule, order, judgment or decree of any court or Governmental Authority binding upon or applicable to the LICENSEE or by which the property or assets of the LICENSEE are bound or affected.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1
Cooperation
.
(a) Each party shall cooperate reasonably with the other in preparing and filing all notices, applications, reports and other instruments and documents which are required by any statute, rule, regulation or order of any Governmental Authority in connection with the transactions contemplated by this Agreement, including the Private Label of the licensed Product with the FDA.
(b) LICENSEE agrees not to use or exploit LICENSOR’S Product Line in a manner that can be reasonably foreseen to bring it into disrepute or materially diminish the value of exploiting such Product Line in connection with the marketing, promotion, distribution, sale, licensing or use of the Products.
ARTICLE 7
CONFIDENTIAL INFORMATION
7.1
Confidentiality of Intellectual Property of LICENSOR and Customer Proprietary Marketing Data of LICENSEE
It is expressly understood and agreed that all intellectual property and data furnished to LICENSEE by LICENSOR or any information or data regarding customers or data provided by LICENSEE to LICENSOR and such data as may be provided by one to the other regarding and including that required for the proper marketing, sale or re-sale of its products, all of which constitutes a valuable intellectual proprietary property and trade secret(s) of LICENSOR or LICENSEE, as the respective party providing such data has divulged. Providing such material, under any circumstances, shall not constitute a grant of any right of reproduction, manufacturing, distributing, resale, re-licensing (except as later set forth) or ownership in any manner whatsoever. Both LICENSEE and LICENSOR agree as follows:
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(a) To observe complete confidentiality with regard to all aspects of such data including, without limitation, agreeing not to disclose or otherwise permit any other person or entity access to, in any manner, any such data in any form whatsoever. Such disclosure or access shall only be permitted to an employee of LICENSOR or LICENSEE as the case might be of the Marketing Plans, Business Relationships, Automated Customer Service (CRM) Systems and any other proprietary business or client information as permitted and on the terms and conditions defined in this License Agreement with the only exception being a third-party who has signed a Non-Disclosure Agreement with the Company prior to the transference or communication of confidential Company data ;
(b) To ensure that both LICENSOR and LICENSEE and their respective employees, agents, representatives, independent contractors, customers, sub contractors or sub LICENSEE’S and business invitee’s and guests are advised of the confidential nature of such data and to insure by agreement or otherwise that they are prohibited from copying or revealing, for any purpose whatsoever, the contents of the data;
(c) LICENSEE shall not alter or remove any copyright or proprietary rights notice of identification, which indicates LICENSOR’S ownership of the Product. LICENSOR shall not alter or remove any proprietary rights, notice of identification, which indicates LICENSEE’S confidential data, including customer data:
(d) Each respective party agrees to notify the other promptly and in writing of the circumstances surrounding any possession, use or knowledge of any such data of which either LICENSOR or LICENSEE has knowledge by any person or entity other than those authorized;
(e) Each respective party agrees to take any and all actions reasonably necessary or desirable to ensure continued confidentiality and protection of all such data and to prevent access to such data by any person or entity not authorized by this section.
Should this Agreement terminate for any reason (including without limitation, breach by LICENSEE of any of its obligations hereunder), the confidentiality provisions of this Agreement shall survive the termination of this Agreement and shall continue to be binding upon both LICENSOR and LICENSEE.
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ARTICLE 8
PROTECTION OF THE LICENSOR’S RIGHTS
8.1
Notice of Infringement or Unauthorized Use
. LICENSEE shall promptly inform LICENSOR in writing of any act of infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting, the Licensed Property, or any Enhancements thereto, that is discovered by LICENSEE or is otherwise brought to its attention. Each party shall promptly inform the other party in writing of any notice of claim or action, or any threatened claim or action, against either party by any third Person arising out of in any way related to the Licensed Product.
8.2
Institution, Prosecution and Defense of Claims
.
(a) (i) Promptly following the delivery to the LICENSOR of notice from the LICENSEE of any act of any infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement or affecting the Assigned Property, or, in the case where such infringement, unauthorized use, piracy misappropriation or breach is discovered by the LICENSEE or is otherwise brought to its attention and the LICENSEE provides to the LICENSOR written notice thereof, then promptly following the delivery of such notice to the LICENSOR, the LICENSOR shall take such steps as shall be necessary in order to protect the LICENSEE and the LICENSOR’S rights with respect to the said Licensed Property, respectively, including, but not limited to, instituting or authorizing others to institute any claim, suit or proceeding at law or in equity arising out of or related to the infringement, unauthorized use, piracy or misappropriation of, or breach of any confidentiality agreement pertaining to, or in any way affecting the Licensed Property.
(ii) The institution, prosecution, maintenance and control of any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Licensed Property shall be subject to the direction and control of the LICENSOR, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the LICENSOR.
(b) If requested by LICENSOR, LICENSEE shall join the LICENSOR as, a party complainant in any such claim, suit or proceeding.
(c) LICENSOR shall defend, at its own expense; any claim that a Third-Party shall institute affecting the Assigned Product granted to the LICENSEE herein. LICENSEE shall cooperate fully in the defense of any such claim, suit or proceeding against any party by a third Person, brought in connection with, arising out of or related to the Licensed Property, and each party shall execute such documents and take such actions as may be reasonably requested by the other party and consistent with the rights and obligations of the parties hereunder.
(d) LICENSOR shall indemnify LICENSEE for any costs, damages, or other expenses suffered by LICENSEE in connection with any Third-Party claiming that said Third-Party is the owner or has rights to the Assigned Product licensed to LICENSEE.
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(e) LICENSEE may, in its sole discretion, and with the consent of LICENSOR, undertake to institute and prosecute any claim, suit or proceeding at law or in equity arising out of or related to, or in any way affecting the Assigned Property in which case it shall be subject to the direction and control of the LICENSEE, at its sole cost and expense, and any and all sums that may be received, obtained, collected or recovered in any such claim, suit or proceeding, whether by decree, judgment, settlement or otherwise, shall be the sole and exclusive property of the LICENSEE. If requested by LICENSEE, LICENSOR shall join the LICENSEE as a party complainant in any such claim, suit or proceeding
ARTICLE 9
INDEMNIFICATION
9.1
Survival of Representations and Warranties and Covenants
. Except as otherwise expressly provided herein, all representations and warranties made by any party in this Agreement shall survive from and after the date hereof and shall continue in effect for a period of two (2) years from the date hereof, and all covenants made by any party in this Agreement shall survive indefinitely unless otherwise terminated by the parties. Any right of indemnification pursuant to this Article 13 in respect of a claimed breach of any representation, warranty or covenant shall expire at the date of expiration of the representation, warranty or covenant claimed to be breached (the "Expiration Date"), unless on or prior to the Expiration Date a Claim has been made against the party from whom indemnification is sought. If a Claim is timely made, it may continue to be asserted beyond the Expiration Date of the representation, warranty or covenant to which such Claim relates.
9.2
Indemnification
.
(a) The LICENSOR hereby agrees to indemnify and hold harmless LICENSEE from and against all Damages asserted against, imposed upon or incurred by LICENSEE, directly or indirectly, by reason of or resulting from, any breach or inaccuracy of any representation, warranty or covenant of the LICENSOR set forth in this Agreement.
(b) The LICENSEE hereby agrees to indemnify and hold harmless LICENSOR from and against all Damages asserted against, imposed upon or incurred by LICENSOR, directly or indirectly, by reason of or resulting from any breach or inaccuracy of any representation, warranty or covenant of the LICENSEE set forth in this Agreement.
9.3
Limitation of Indemnification
. LICENSOR herein shall be obligated to indemnify LICENSEE for only such Third-Party Claims that are established by a court judgment or order against LICENSEE involving and limited to the Proprietary Patent(s) or any Enhancements thereto. The obligations and liabilities of LICENSOR to indemnify LICENSEE shall be subject to the following terms and conditions:
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(a) LICENSOR shall indemnify and save LICENSEE harmless from all liability for actual infringement of any Third-Party Patent(s) claimed by said Third-Party to be the Patent(s) used and developed by LICENSOR. And, LICENSOR shall indemnify and save LICENSEE harmless from and against all costs, counsel fees, expenses and liabilities incurred in or about any claim of or action for such infringement; provided however, that LICENSEE shall promptly notify LICENSOR, in writing of said Third-Party Claim and transmit to LICENSOR all papers served on LICENSEE in any suit involving such claim of infringement, and provided further, that LICENSEE permits LICENSOR to have entire charge and control of the defense of any such suit.
(b) LICENSEE shall provide LICENSOR with all records and documents within the LICENSEE’S possession, custody, or control relating to any Third-Party Claim. Nothing in this provision shall be deemed to constitute a waiver of any attorney-client, work-product or joint defense privilege.
(c) LICENSOR’S indemnity obligation set forth in this Section shall survive the termination or expiration of this Agreement with respect to the Third-Party's Claim of rights to the Proprietary Patent(s) of LICENSOR which occurs during the Term.
ARTICLE 10
TERMINATION
10.1
Termination of this Agreement
If either party breaches a material provision of this Agreement and fails to cure such violation within ninety (90) days after written notice of said breach has been mailed by the other party, this Agreement shall terminate. Upon termination, the terms and conditions herein will continue to apply to LICENSOR Products owned by LICENSEE. If any outstanding debts are owing to either party by the other, these amounts shall become due and payable immediately.
(a)
LICENSEE’S Default.
If any of the following events occur, LICENSEE shall be in default and LICENSOR shall have the right to immediately terminate this Agreement upon written notice to LICENSEE.
If LICENSEE ceases to function as a going concern, makes an License for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
LICENSEE ceases to carry on the business of the manufacturing, marketing or selling LICENSOR’S Products for more than a one (1) year period;
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(b)
LICENSOR’S Default.
If any of the following events occur, LICENSOR shall be in default and LICENSEE, at its option, shall have the right to terminate this Agreement upon thirty (30) days written notice to LICENSOR.
LICENSOR ceases to function as a going concern, makes an License for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets;
(c)
Obligations on Termination.
Upon termination of this Agreement for any reason whatsoever, LICENSEE and LICENSOR shall perform each and all of the following obligations, all of which shall survive such termination:
(i) LICENSEE shall discontinue the use of any LICENSOR trade or service Marks.
(ii) LICENSEE will promptly refer to LICENSOR the details of any verbal or written inquiries LICENSEE may receive regarding any of LICENSOR’S Products, and, in the case of written inquiries, will provide copies thereof to LICENSOR;
(iii) LICENSEE shall do all other things as LICENSOR may reasonably request for the purpose of terminating LICENSEE’S business and contractual arrangements with LICENSOR and effecting an orderly transition of sales and/or service from LICENSEE to LICENSOR.
ARTICLE 11
CONSIDERATION
11.1
Consideration for License
.
Upon the execution of the Agreement, LICENSEE to LICENSOR. Said represent the consideration paid by LICENSEE to LICENSOR for the rights granted under this Agreement
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1
Notices
(a) All notices, request, demands and other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) on the date of delivery when delivered by hand; (ii) on the date of transmission when sent by facsimile transmission during normal business hours with telephone confirmation of receipt; (iii) on the next business day after transmission when sent by facsimile transmission after normal business hours; (iv) two (2) days after dispatch when sent by a reputable courier service that maintains records of receipt or (v) five (5) days after dispatch when sent by registered mail, postage prepaid, return=receipt requested; provided that, in any such case, such communication is addressed provided in the immediately following paragraph (b).
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(b) All notices, request, demands and other communications, which are required or may be given pursuant to the terms of this Agreement shall be addressed as follows:
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(i)
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If to LICENSOR.
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Edward W. Withrow III
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Montecito Bio Sciences, Ltd
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1327 Ocean Avenue, Suite M
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Santa Monica, California 90401.
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eww@montecitobiosciences.com
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(ii)
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If to LICENSEE.
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J. Michael Redmond
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Parallax Diagnostics, Inc
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2 Canal Park, 5
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Floor
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Cambridge, MA 02141
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miker@parallaxdiagnostics.com
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Or to such other address as any party shall have designated by notice in the foregoing manner to the other parties.
12.2
Compliance with Laws
. In connection with the License granted herein and the consummation of the transactions contemplated hereby and the performance by a party of its obligations hereunder, each of the LICENSOR and the LICENSEE shall comply with all applicable laws, requirements, rules, regulations and standards of Governmental Authorities of any pertinent jurisdiction so that neither of the parties shall be subject to any fines or penalties; or violate any laws or regulations affecting the lease, license and sale of the Products contemplated herein.
12.3
Authority to Contract and Perform
.
Both LICENSOR and LICENSEE represents that they each respectively have full right and authority to enter into this Agreement and to perform its obligations and that it has not made and will not make any contract or commitment contrary to the terms of this Agreement.
12.4
Ethics and Compliance with Law
.
Both LICENSOR and LICENSEE covenant each with the other, that they will maintain the highest ethical business standards and avoid and refrain from being involved in any activities which may in any manner disparage the LICENSOR’S or LICENSEE’S Products. Furthermore in the conduct of its business, both LICENSOR and LICENSEE will comply with all applicable Federal, State and local laws, rules and regulations.
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12.5
Choice of Law
.
The validity, construction and performance of the Agreement shall be interpreted, construed and enforces according to the laws of the State of California.
12.6
[Intentionally Omitted]
12.7
Entire Agreement
. This Agreement (together with the Exhibits expressly identified in this Agreement) constitutes the entire agreement of the parties with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, in respect of such subject matter.
12.8
Binding Effect
.
This Agreement binds and insures the benefit of the parties hereto, their respective heirs, representatives, successors or assigns.
12.9
Paragraph Headings.
The paragraph headings in this Agreement are for convenience only, and they have no substantive or interpretive effect.
12.10
Waiver
.
Neither modification of this Agreement nor any waiver of any term or condition hereof shall be effective unless it is in writing and signed by the parties hereto. If either party fails to meet the requirements of any term of this Agreement or waives any breach hereunder, that failure or waiver will neither prevent a subsequent enforcement of such term nor be deemed a waiver of any subsequent breach.
12.11
Partial Invalidity
.
In the event of the determination that any terms, covenant or condition of this Agreement is of no force or effect, the remaining terms, conditions or covenants contained herein shall not be affected thereby, and the obligations of the parties hereto with respect to the performance of the remaining terms, covenants and conditions shall continue in full force and effect.
12.12
License
.
The Licensor must approve any assignment of this Agreement by the Licensee to any third-party individual or entity.
12.13
Indemnity
.
LICENSOR and LICENSEE agree to each hold the other free and harmless from any and all claims, damages and expenses of any kind or nature whatsoever: (1) arising from acts of the other; or (2) as a direct or indirect consequence of termination of this Agreement in accordance with its terms. LICENSOR agrees to hold LICENSEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorneys fees and costs arising out of any claim of patent or other infringements by a third party as it relates to the use by LICENSEE of product(s) supplied to LICENSEE by LICENSOR. Further, LICENSEE is relying on the representations of LICENSOR that it has the approval from the FDA for over-the-counter sales to the general public. In that regard, LICENSOR agrees to hold LICENSEE free and harmless from any and all claims, damages, and expenses of any kind or nature including attorney fees and cost arising out of any claim from the FDA or any other governmental agency regarding the sale of the product to the public. This indemnification shall be void and of no force or effect if LICENSEE fails to obey or comply with any reasonable instruction or limitation imposed by LICENSOR or the FDA. This section shall inure to the benefit of anyone who buys product(s) from LICENSEE that was supplied by LICENSOR.
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12.14
Execution in Counterparts
.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
12.15
Relationship of the Parties
.
LICENSEE is an independent contractor and private labeler. Nothing in this Agreement will be deemed or construed to create an agency, partnership, joint venture or employment relationship between LICENSOR and LICENSEE. LICENSEE will, under no circumstances, represent itself directly or by implication, as LICENSOR’S agent or employee, nor will LICENSEE purport or attempt to bind LICENSOR to any liability or obligation whatsoever. Nothing contained herein will impose any liability on LICENSOR in connection with the operation of LICENSEE’S business, or for any expenditure, obligation or liability incurred by LICENSEE in performing or preparing to perform, any of its obligations under this Agreement. The credit risk with respect to sales by LICENSEE to its customers will be borne by LICENSEE, and the collectibles of any amount due LICENSEE will in no respect eliminate, reduce or otherwise affect an obligation of LICENSEE to LICENSOR.
12.16
Amendment
. This Agreement may only be modified, supplemented or amended by a written instrument executed by the parties to it.
12.17
Conditions Precedent
. Each and every provision of this Agreement shall be contingent and become effective only upon the execution and delivery of the Intellectual Property hereinabove described.
12.18
Schedules. Exhibits and Other Agreements
.
(a) The Schedules, Exhibits and other agreements specifically referred to in, and delivered pursuant to, this Agreement are an integral part of it. Any disclosure that is made in any of the Schedules delivered pursuant to this Agreement shall be deemed responsive to any other applicable disclosure obligation hereunder.
(b) The following are the Exhibits and Schedules annexed hereto and incorporated by reference and deemed to be part hereof:
Exhibit “A” Patent Pending Applications
Exhibit “B” Field of Use
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SIGNATURE PAGE
IN WITNESS WHEREOF
, LICENSOR and LICENSEE have executed this Agreement this 30
th
day of September, 2011
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LICENSOR
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LICENSEE
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Montecito Biosciences, Ltd.
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Parallax Diagnostics, Inc.
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BY:
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/s/ Edward W. Withrow III
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BY:
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/s/ J. Michael Redmond
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Edward W. Withrow III
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J. Michael Redmond
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CEO
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CEO
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EXHIBIT “A”
PATENT PENDING APPLICATIONS
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1.
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U.S. Patent Application No. 11/924,033 “Portable Apparatus for Improved Sample Analysis”
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Abstract
The present invention is an improved apparatus for sample analysis. The apparatus employs an assay component containing a membrane having one or a plurality of analyte - specific binding agents attached thereto, a means for absorbing liquid, and a piston means for drawing analytes through said membrane into said means for absorbing liquid. The apparatus is configured to be portable and provide a detector for detecting binding of an analyte to an analyte- specific binding agent, a plurality of data acquisition components, and a computer for integrating, analyzing and storing the detected analyte specific binding and acquired data.
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2.
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U.S. Patent Application No. 11/856,925 “Method for Determining the Immune Status of a Subject”
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Abstract
The present invention is a method for using levels of soluble Clusters of Differentiation (CD) proteins, or cell surface-localized CD proteins extracted from T lymphocytes for determining the immune status of a subject. The present invention also a kit containing a CD protein extraction means and at least one antibody which specifically binds a CD protein for use in carrying out the method of the invention.
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3.
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U.S. Patent Application No. 11/221/038 “Method of Identifying Drugs, Targeting Moieties or Diagnostics”
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Abstract
The present invention relates to a method for identifying a binding agent or epitope for use in drug design, drug targeting or diagnostics. The method employs contacting and sorting binding agents and cognate epitopes from collections thereof, characterizing the binding agent and cognate epitope, detecting the level or location of the epitope in a sample using the binding agent, and correlating the level or location of the epitope in the sample with the presence or stage of a disease or condition to identify novel drugs, targeting moieties, or diagnostic agents.
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MBS-Parallax Diagnostics
License of Intellectual Property
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September 2011
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4.
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U.S. Patent No. 11/221,252 “Method of Producing a Plurality of Isolated Antibodies to a Plurality of Cognate Antigens”
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Abstract
The present invention relates to a method for producing high affinity antibodies that are antigen-specific. The method involves binding a plurality of antibody-producing B-cells from a mammal to a plurality of cognate antigens; sorting the bound antibody-producing B-cell and cognate antigen; amplifying nucleic acid sequences encoding each antibody, or fragment thereof, from the B-cells; and expressing the each antibody in a protein expression system. Antibodies produced in this manner are useful in diagnostic and therapeutic applications.
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MBS-Parallax Diagnostics
License of Intellectual Property
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September 2011
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EXHIBIT “B”
FIELD OF USE
Field of Use is defined as Diagnostic testing for any disease or medical condition that can be transmitted by one human to another. The Field of Use herewith does not include diagnostic or analytical testing within the Veterinary and Livestock, Environmental Testing or any military, law enforcement, bioterrorism or homeland security related industries.
Such testing to be done at the point of care, such point of care may include but are not limited to places such as:
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Hospitals
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Emergency Medical Vehicle Care
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Mobile Health Clinics
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Schools
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Government Agencies
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Retail Drug Stores
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Corporations
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Hospices
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Assisted Living and Nursing Homes
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Home Health Care
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Physician’s offices
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MBS-Parallax Diagnostics
License of Intellectual Property
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September 2011
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Exhibit 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”), dated as of November 15, 2010 (the “Effective Date”), is made by and among Joseph Michael Redmond (“Executive”) and Roth Kline, Inc. or its successor company, a Delaware corporation (the “Company”).
WHEREAS
, Executive will be employed by the Company as its Chief Executive Officer (CEO) and will maintain a position of Director on the Company’s Board; and
WHEREAS
, the members of the Board of Directors of the Company desire to enter into an employment agreement with Executive, which employment agreement from November 15, 2010 through November 15, 2013; and
WHEREAS
, the agreed upon terms and conditions of Executive’s continued employment are embodied in this Agreement.
NOW THEREFORE
, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive do hereby agree as follows:
Section 1.
Employment and Duties
. On the terms and subject to the conditions set forth in this Agreement, subject to the approval and ratification of Board of Directors, such approvals to be obtained prior to the Effective Date, the Company agrees to employ Executive as its Chief Executive Officer to render such services as would be customary and to render such other services and discharge such other responsibilities as the Board of Directors of the Company may, from time to time, stipulate and which shall not be inconsistent with the position listed above.
Section 2.
Performance
.
(a) Executive accepts the employment as set forth in Section 1 herein and agrees to concentrate such time, attention and skill as may be necessary to assure the full performance of the services described therein, including the performance of such other services and responsibilities as the Board of Directors of the Company may from time to time stipulate and which shall not be inconsistent with the position listed above.
(b) Without limiting the generality of the foregoing, Executive ordinarily shall devote not less than five (5) days per week (except for vacations, regular business holidays observed by the Company) on a full-time basis, during normal business hours Monday through Friday. Executive further agrees that when the performance of his duties reasonably requires, he shall be present on the Company’s premises (located in Massachusettes) or engaged in service to or on behalf of the Company at such times except during vacations, regular business holidays or weekends. The executive may continue his existing involvement in an advisory or board capacity with non-competing organizations.
(c) In conducting his duties under this Agreement, the Executive shall report to the Chairman of the Board of Directors of the Company.
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M. REDMOND
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Page 1 of 10
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EMPLOYMENT AGREEMENT
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Section 3.
Term/Termination
.
3.1
Term
. The term of employment under this Agreement (the “Employment Period”) shall commence on November 15, 2010 and terminate on November 15, 2013, unless earlier terminated pursuant to the termination provisions set forth herein or extended for successive one year periods outlined below in this paragraph. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that Executive’s employment may only be terminated by the Company for Due Cause (as hereinafter defined). At the end of the Employment Period, this Agreement will be automatically renewed for successive one year terms unless either the Executive or Company shall, upon three months written notice to the other, elect not to renew this Agreement for any year. Non renewal of the Agreement by the Company shall be deemed a termination pursuant to section 3.5 and shall be subject to the severance compensation provisions related to termination under that Section.
3.2
Termination for Due Cause
. The Employment Period may only be terminated by the Company for Due Cause. The Company, by a vote of a majority of the Board of Directors (a “Termination Vote”) may terminate the Employment Period for Due Cause, effective upon written notice of such termination to Executive, in the event of Due Cause as defined by (i) a material breach by Executive of his covenants under this Agreement if such material breach is not remedied within sixty (60) calendar days following written notice by the Company; (ii) conviction in a court of law by Executive of theft or embezzlement of property of the Company and/or conviction by Executive of a felony crime resulting in a material injury to the businesses, properties of the Company or any of its affiliates; All compensation paid to Executive shall immediately cease upon termination for Due Cause hereunder except accrued and unpaid compensation and all unvested Stock Options shall immediately expire.
3.3
Termination Due to Death
. The Employment Period shall be terminated upon the death of Executive. All compensation paid to Executive shall immediately cease upon such termination except for accrued and unpaid compensation pursuant to Section 4.1 herein and earned but unpaid bonus payments pursuant to Section 4.2 herein. All unvested Stock Options shall immediately become vested.
3.4
Termination Due to Permanent Total Disability
. The Employment Period shall be terminated upon the Permanent Total Disability (as defined in this Section 3.4) of Executive following written notice from the Company. Permanent Total Disability is defined as an inability by Executive to perform substantially all of the services required pursuant to this Agreement for a continuous period of ninety (90) days or for a period aggregating at ninety (90) days in any consecutive twelve (12) month period when such inability is caused by illness or a physical or mental disability. Such Permanent Total Disability shall be determined by a physician selected jointly by the parties hereto.
3.5
Termination Other Than Due Cause, Death, Disability or Resignation
. In the event that Executive’s employment is terminated for reasons other than Due Cause, death, Permanent Total Disability or resignation, then all Stock Options scheduled to vest within one year of the date of such termination shall vest immediately and the Company shall pay as severance compensation to Executive eighteen (18) months salary compensation at his then annual salary compensation rate, including bonus earned as of the termination date. Any severance compensation paid to Executive shall be paid ratably over the remaining payment period following termination. Any bonus compensation earned as of the termination date shall be paid to Executive pursuant to the bonus payment schedule set forth in Section 4.2 herein.
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M. REDMOND
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Page 2 of 10
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EMPLOYMENT AGREEMENT
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3.6
Termination by Executive
. Executive may terminate the Employment Period (i) in the event the Company has breached a material term or condition of this Agreement which is not cured or remedied within thirty (30) days following written notice by Executive to Board of Directors of Company of such breach or (ii) at Executive’s convenience. In the event that Executive’s resignation is due to an uncured breach by the Company, such resignation shall be deemed a termination by the Company as without Due Cause for purposes of vesting of Stock Options pursuant to Section 4.3 herein and for payments of salary and bonus compensation as set forth in Sections 4.1 and 4.2, respectively, herein. In the event that the Employment Period is terminated by Executive at his convenience, then Executive will be due any earned but unpaid salary, vacation and bonus compensation as set forth in Sections 4.1 and 4.3, respectively, herein. All vested stock options not exercised by Executive within ninety (90) days following the termination date shall be cancelled. Any unvested Stock Options shall be cancelled as of this termination date.
3.7
Surrender of Position and Properties
. Upon termination of Executive’s employment with the Company, regardless of the cause therefore, Executive shall promptly be deemed to have resigned from the Company’s Board of Directors and as an officer and director of any of the Company’s affiliates, if serving as such at that time, and shall surrender to the Company or its affiliates all property provided to him by the Company or its affiliates, as applicable, for use in relation to his employment and further, Executive shall surrender to the Company or its affiliates, as applicable, any and all sales materials, lists of customers and prospective customers, investment performance reports, files, patent applications, records, models or other materials and information of or pertaining to the Company or its affiliates or their customers or prospective customers or the products, businesses and operations of the Company or its affiliates.
3.8
Survival of Covenants
. The covenants of Executive set forth in Section 5 herein shall survive the termination of the Employment Period or termination of this Agreement.
Section 4.
Compensation/Expenses
.
4.1
Salary
. In exchange for the services to be rendered by Executive hereunder, the Company agrees to pay, during the Employment Period, a salary at an annual rate of; Year One: $200,000
Year Two: $225,000
Year Three: $295,000 (Only if the Company has $5,000,000 in cash at the commencement of year three. If company has less than $5,000,000 then the salary will be negotiated 30 days prior to the start of year three and will in no case be less than $225,000).
Salary will be paid b-weekly.
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M. REDMOND
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Page 3 of 10
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EMPLOYMENT AGREEMENT
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4.2
Bonus.
The Company shall establish an annual bonus plan of which certain management employees of the Company shall be eligible to participate, which annual bonus plan shall comprise a calendar year (the “Plan Year”). Executive will be eligible to participate in such annual bonus plan during the term of this Agreement with goals (the “Annual Goals”) established and approved by the Board of Directors. Pursuant to this annual bonus plan, Executive shall be eligible for discretionary performance and incentive bonuses if and as may be determined in the sole discretion of the Board of Directors of the Company. The goals that shall be tied to the Company’s Long Term Financial Pro forma (as adopted by the Company upon execution of this Agreement) and shall serve as the basis of evaluation for any payments awarded pursuant to the Company’s annual bonus plan shall be established and approved by the Board of Directors. At the conclusion of the Plan Year, the Board of Directors shall determine the level of success achieved by the Executive against the Annual Goals and recommend the amount of the annual bonus plan payment. If Executive’s employment is terminated for reasons other than Due Cause or his voluntary resignation, he will be entitled to receive any bonus earned up to the date of termination as reasonably determined by the Board of Directors. All payments related to the annual bonus plan are subject to the prior approval by the Board of Directors and the Company’s ability to make such payments when considering the cash position of the Company.
4.3
Stock.
The Company hereby grants, as part of the Company’s Employee Stock Option Plan (ESOP), to Executive the right to purchase the Company’s common stock at ten ($.10) Cents per share. As of the Effective Date of this Agreement, the Company grants Executive one million three hundred and seventy five thousand (1,375,000) options of Company’s common stock on a one-for-one conversation as of 2010. The Executive Options will vest on a quarterly basis over a three year period. The Executive will be granted
a) The Company will allow the Executive to purchase one hundred and twenty-five thousand (125,000) shares at par value $.001, upon the signing of this Agreement.
b) Accelerated Vesting of Options. Upon the sale, merger or any transaction resulting in the majority of the Company stock being obtained, then all of the Executives’ options not vested will vest immediately and become excercisable.
4.4
Insurance
. Executive if he so elects and if permissible by the Company plans, will be entitled to participate in fringe benefit, health insurance, life insurance, and other programs which Company may adopt from time to time for executives of Company. Participation will be in accordance with any plans and any applicable policies adopted by Company.
4.5
Business Expenses
. Executive shall be reimbursed for business-related expenses that he incurs pursuant to his employment with the Company, such expenses to be timely submitted and reasonable, and subject to the Company’s then standing Expense Reimbursement Policy and the review and approval of the Board of Directors or its authorized designate. Executive shall provide the Company with expense reports detailing business-related expenses and supporting documentation and other substantiation of such expenses that conform to the reporting requirements of the Company and requirements of the Internal Revenue Service. Expenses will be reimbursed to Executive within 15 days of receipt by Company. Executive is located in the state of New Hampshire and Executive will not have to relocate. Executive as part of this engagement is required to commute to Company and shall have expenses paid accordingly.
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M. REDMOND
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Page 4 of 10
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EMPLOYMENT AGREEMENT
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4.7
Vacation
. Executive shall be entitled to vacations in accordance with Company policy in effect from time to time. Until written policies are adopted, Executive will accrue three (3) weeks vacation during the Initial Term and four (4) weeks vacation during each Additional Term.
4.8 A percentage of the Company will be afforded the Executive in the following manner; -A sale of the Company and or disposition of assets that results in a gross receipt, to the Company, of $100,000,000 will result in the CEO receiving 5% of the Gross Receipt to the Company. If the sale of the Company and or assets results in a Gross Receipt at or above $150,000,000 the CEO will receive 10% of the Gross Receipt of income to the Company. The CEO, in his own discretion, may chose to allocate percentages or basis points of his Compensation to certain executives at his own discretion. This section will survive Termination of this Agreement for one year.
Section 5.
Covenants of Executive
.
5.1
Confidentiality
. During the Employment Period and for one year following the termination thereof for any reason, Executive shall not disclose or make any use of, for his own benefit or for the benefit of a business or entity other than the Company or its affiliates, any secret or confidential information, lists of customers and prospective customers or any other information of or pertaining to the Company or its affiliates that is not generally known within the trade of the Company or its affiliates or which is not publicly available.
5.2
Inventions and Secrecy
. Except as otherwise provided in this Section 5.2, Executive (i) shall hold in a fiduciary capacity for the benefit of the Company and its affiliates, all secret and confidential information, knowledge, or data of the Company and its affiliates obtained by Executive during his employment by the Company, which is not generally know to the public or recognized as standard practice (whether or not developed by Executive) and shall not, during his employment by the Company and for one year following the termination of such employment for any reason, communicate or divulge any such information, knowledge or data to any person or entity other than the Company or its affiliates or persons or entities designated by the Company; (ii) shall promptly disclose to the Company all inventions, ideas, devices and processes made or conceived by him along or jointly with others, from the time of entering the Company’s employ and until such employment is terminated relevant or pertinent in any way, whether directly or indirectly, to the Company or its affiliates or resulting from or suggested by any work which he may have done for or at the request of the Company or its affiliates; (iii) shall at all times during his employment with the Company, assist the Company and its affiliates in every proper way (at the expense of the Company) to obtain and develop for the benefit of the Company inventions, ideas, devices and processes, whether or not patented; and (iv) shall perform all such acts and execute, acknowledge and deliver all such instruments as may be necessary or desirable in the opinion of the Company to vest in the Company, the entire interest in such inventions, ideas, devices and processes referred to in this Section 5.2. Executive and Company each agree that all documents, reports, files, analyses, drawings, designs, tools, equipment, plans (including, without limitation, marketing and sales plans), proposals, customer lists, computer software or hardware, and similar materials that are made by Executive or come into his or its possession by reason of and during the term of Executive’s engagement with Company are the property of Company and will not be used by his in any way adverse to Company’s interests. Executive also agrees not to allow any such documents or things, or any copies, reproductions or summaries to be delivered to or used by any third party without the specific consent of Company. Executive agrees to deliver to the Company, upon demand, and in any event upon the termination of Executive’s engagement, all of such documents and things which are in Executive’s possession or under his or its control. Executive expressly agrees that all of his work product shall be and remain the sole and exclusive property of the Company. Accordingly, all work products eligible for any form of copyright protection shall be deemed a “work made for hire” under the copyright laws and shall be owned by the Company.
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M. REDMOND
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Page 5 of 10
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EMPLOYMENT AGREEMENT
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5.4
Acknowledgement
. Executive acknowledges that the restrictions set forth in this Section 5 are reasonable in scope and essential to the preservation of the businesses and proprietary properties of the Company and its affiliates and that the enforcement thereof will not in any manner preclude Executive, in the event of his termination of employment with the Company, from becoming gainfully employed in such manner and to such extent as to provide a reasonable standard of living for himself, the members of his family and those dependent upon him of at least the sort and fashion to which he and they have becom
5.5
Severability - Covenants
. The covenants of Executive contained in this Section 5 shall each be construed as any agreement independent of any other provision in this Agreement and the existence of any claim or cause of action of Executive against the Company or its affiliates, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company or its affiliates of such covenants. The parties hereto expressly agree and contract that it is not the intention of any party to violate any public policy, statutory or common law, and that if any sentence, paragraph, clause or combination of the same of this Agreement is in violation of the law of any state where applicable, such sentence, paragraph, clause or combination of the same shall be void in the jurisdictions where it is unlawful and the remainder of such provision and this Agreement shall remain binding on the parties to make the covenants of this Agreement binding only to the extent that it may be lawfully done under existing applicable laws. In the event that any part of any covenant of this Agreement is determined by a court of law to be overly broad thereby making the covenant unenforceable, the parties hereto agree, and it is their desire, that such court shall substitute a judicially enforceable limitation in its place, and that as so modified the covenant shall be binding upon the parties as if originally set forth herein.
Section 6.
Indemnification
. In addition to any rights Executive may have under the Company's charter or by-laws, the Company agrees to indemnify Executive and hold Executive harmless, both during the Term and thereafter, against all costs, expenses (including, without limitation, fines, excise taxes and attorneys' and accountants’ fees) and liabilities (other than settlements to which the Company does not consent, which consent shall not be unreasonably withheld) (collectively, "Losses") reasonably incurred by Executive in connection with any claim, action, proceeding or investigation brought against or involving Executive with respect to, arising out of or in any way relating to Executive's employment with the Company or Executive's service as a director of the Company; provided, however, that the Company shall not be required to indemnify Executive for Losses incurred as a result of Executive's intentional misconduct or gross negligence (other than matters where Executive acted in good faith and in a manner he reasonably believed to be in and not opposed to the Company's best interests). Executive shall promptly notify the Company of any claim, action, proceeding or investigation under this paragraph and the Company shall be entitled to participate in the defense of any such claim, action, proceeding or investigation and, if it so chooses, to assume the defense with counsel selected by the Company; provided that Executive shall have the right to employ counsel to represent him (at the Company's expense) if Company counsel would have a "conflict of interest" in representing both the Company and Executive. The Company shall not settle or compromise any claim, action, proceeding or investigation without Executive's consent, which consent shall not be unreasonably withheld; provided, however, that such consent shall not be required if the settlement entails only the payment of money and the Company fully indemnifies Executive in connection therewith. The Company further agrees to advance any and all expenses (including, without limitation, the fees and expenses of counsel) reasonably incurred by the Executive in connection with any such claim, action, proceeding or investigation. The Company currently maintains a policy of directors' and officers' liability insurance covering Executive and, notwithstanding the expiration or earlier termination of this Agreement, the Company shall maintain a directors' and officers' liability insurance policy covering Executive for a period of time following such expiration or earlier termination equal to the statute of limitations for any claim that may be asserted against Executive for which coverage is available under such directors' and officers' liability insurance policy. The provisions of this paragraph shall survive the termination of this Agreement for any reason.
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M. REDMOND
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Page 6 of 10
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EMPLOYMENT AGREEMENT
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Section 7.
Notice
. Any notice required or permitted hereunder shall be made in writing (i) either by actual delivery of the notice into the hands of the party hereunder entitled, or (ii) by the mailing of the notice in the United States mail, certified mail, return receipt requested, all postage prepaid and addressed to the party to whom the notice is to be given at the party’s respective address set forth below, or such other address as the parties may from time to time designate by written notice as provided herein and (iii) via facsimile to the fax number provided by the Parties below with a confirmation receipt. Notice will hereby be deemed to be satisfied via the delivery of any of the methods listed above.
If to the Company
:
Attn: General Counsel
Chase Mellen
Address:
1157 S. Beverly Dr
Los Angeles, CA 90035
If to Michael Redmond
:
Address:
10 Canterbury Rd.
Windham, NH 03087
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M. REDMOND
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Page 7 of 10
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EMPLOYMENT AGREEMENT
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The notice shall be deemed to be received in case (i) on the date of actual receipt by the party and in case (ii) three days following the date of the mailing.
Section 8.
Amendment and Waiver
. No amendment or modification of this Agreement shall be valid or binding upon: (i) the Company unless made in writing and signed by an officer of the Company, duly authorized by the Board of Directors of the Company or; (ii) Executive unless made in writing and signed by him. The waiver by the Company or Executive of the breach of any Provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of such party.
Section 9.
Governing Law/Waiver of Claims/Arbitration
. (a) The validity and effect of this Agreement and the rights and obligations of the parties hereto shall be governed by, and construed in accordance with, the laws of the State of Massacusettes without giving effect to the principles of conflicts of laws thereof.
(b)
Each Party to this Agreement hereby waives any claim it may have on such other Party due to any past business dealings between the Parties prior to the Effective Date of this Agreement
. Additionally, the parties hereto agree that in the event of any and all disagreements and controversies arising from this Agreement or any other agreements between the Company and Executive the breach, termination or validity thereof or the present and future dealings between the parties, such disagreements and controversies shall be subject to a two step mediation and binding arbitration process. The first step will be to a one time mediation session to be held in accordance with the Massachusettes Bar Associations Mediation guidelines and to be heard in front of a Mediation expert that has been practicing for a period of at least 5 years. If the Parties fail to resolve their dispute via Mediation, the Parties agree to a second step of binding arbitration as arbitrated in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association (the “AAA”) to be held in Boston, Massachusettes before one neutral arbitrator with one discovery allowd by each party to this Agreement. Such arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of written notice of a continuing dispute following mediation of said disagreement or controversy. If the parties cannot mutually agree to an arbitrator within thirty (30) days, then the AAA shall designate the arbitrator. Either party may apply to the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Without waiving any remedy under this Agreement, either party may also seek from any court having jurisdiction any interim or provisional relief that is necessary to protect the rights or property of that party, pending the establishment of the arbitral tribunal (or pending the arbitral tribunal’s determination of the merits of the controversy). In the event of any such disagreement or controversy, neither party shall directly or indirectly reveal, report, publish or disclose any information relating to such disagreement or controversy to any person, firm or corporation not expressly authorized by the other party to receive such information or use such information or assist any other person in doing so, except to comply with actual legal obligations of such party or unless such disclosure is directly related to an arbitration proceeding as provided herein, including, but not limited to, the prosecution or defense of any claim in such arbitration. The costs and expenses of the arbitration (including attorneys’ fees) shall be paid by the non-prevailing Party or as determined by the arbitrator. Executive shall have a limit of liability; in no case shall Executive be liable for a judgment greater than one hundred thousand dollars. This paragraph shall survive the termination of this Agreement.
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M. REDMOND
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Page 8 of 10
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EMPLOYMENT AGREEMENT
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Section 10.
Entire Agreement
. This Agreement contains all of the terms agreed upon by the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements and communications between the parties dealing with such subject matter, whether oral or written, but limited to the Employment Period.
Section 11.
Reservation of Right
. Notwithstanding any other provision of this Agreement, other than Sections 4.1, 4.2 and 4.3, 4.5, 4.7 and 4.8, Company reserves the right to modify, suspend or discontinue any and all benefit plans, practices, policies and programs, except sections 4.1, 4.2 and 4.3, 4.5, 4.7 and 4.8 at any time whether before or after termination of this Agreement with advance notice of 90 days to Executive.
Section 12.
Binding Effect
. This Agreement shall be binding upon and shall inure to the benefit of the transferees, successors and assigns of the Company, including any company or entity with which the Company may merge or consolidate.
Section 13.
Headings
. Numbers and titles to paragraphs hereof are for information purposes only and, where inconsistent with the text, are to be disregarded.
Section 14.
Severability – General
. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof
Section 15.
Counterparts
. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.
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M. REDMOND
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Page 9 of 10
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EMPLOYMENT AGREEMENT
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IN WITNESS WHEREOF
, the parties hereto have caused this Agreement to be executed on the date first set forth above.
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Roth Kline, Inc.
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Michael Redmond
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By:
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/s/ Edward W. Withrow III
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By:
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/s/ Michael Redmond
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Printed: Edward W. Withrow III
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Printed: Michael Redmond
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Title: Chairman
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Date:
November 15, 2010
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Date:
November 15, 2010
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M. REDMOND
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Page 10 of 10
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EMPLOYMENT AGREEMENT
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Exhibit 10.24
DEVELOPMENT and SUPPLY AGREEMENT
This Development and Supply Agreement (the “Agreement”) is entered into as of this 1st day of July 2011 (the “Effective Date”), by and between Parallax Diagnostics Ltd., Inc. a Nevada corporation with offices at 2 Canal Park Cambridge, MA 02141 (or “PRLX”) and Corder Engineering, LLC at1357 N 100 E Chesterton, IN 46304 (“Supplier”) (together the “Parties”).
WHEREAS,
Supplier possesses certain skills and expertise in engineering and manufacturing medical devices and instruments;
WHEREAS,
PRLX wishes to purchase from Supplier certain engineering services as well as have Supplier manufacture and deliver a medical device (Target Instrument) whose specifications are on Exhibit B, on the terms and conditions set forth below, and
WHEREAS,
Supplier is willing to provide services to the PRLX, on the terms and conditions set forth below,
NOW, THEREFORE,
the parties agree as follows:
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1.
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Engineering Services and Supply Instruments.
Supplier will perform the services set forth on Exhibit A, or as amended by mutual written agreement. It is agreed and understood that the nature and manner of services provided hereunder shall be within Supplier’s area of professional expertise and/or historical experience.
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(a)
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Direction
. Supplier shall be directed by and shall report to Michael Redmond or his successor.
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(b)
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Start Date
. Supplier's consulting obligations to PRLX shall begin on July 1 2011.
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(c)
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Term
. This Agreement shall commence on the Start Date and, unless earlier terminated in accordance with Section 15, shall continue up to the time that the last milestone on Exhibit A is successfully completed (the “Term”). The Term can be automatically extended in three month increments upon mutual agreement by the Parties. Any extension shall be in writing.
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2.
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Method of Performance.
The Supplier shall determine the method, details, and means of performing and fulfilling the work scope on Exhibit A hereunder.
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3.
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Other Projects
. The PRLX acknowledges and agrees that Supplier may assume other commitments, and has ongoing or intends to obtain engagements outside of Supplier's work for PRLX during the Term (“Other Engagements”); provided that Supplier fully complies with the confidentiality obligations contained in Section 9. Supplier shall reasonably notify PRLX of any Other Engagements, which may pose a conflict of interest, it being understood that such notice shall allow PRLX sufficient basis to proceed in accordance with Section 15(b), below.
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4.
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Status as Independent Contractor; Nature of Relationship.
It is agreed and understood that the Supplier is an independent contractor and will not act as an agent nor shall he or she be deemed an employee of Supplier for the purposes of any employee benefit programs, income tax withholding, FICA taxes, unemployment benefits, and worker’s compensation insurance, or otherwise. Supplier shall not enter into any agreement or incur any obligations on PRLX’s behalf, or commit PRLX in any manner without PRLX’s prior written consent.
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5.
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Resources.
Supplier shall provide such tools and facilities as Supplier may deem necessary in the performance of Supplier's duties hereunder. Upon Supplier's reasonable request, the PRLX shall provide such incidental resources to Supplier as the PRLX in its discretion believes may be warranted.
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6.
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Compensation.
It is agreed and understood, that subject to the Term and performance and under Section 1, the Supplier shall be paid as set forth in Exhibit A.
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7.
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Expenses
. Supplier will be reimbursed for the reasonable expenses Supplier incurs directly in connection with services provided under this Agreement, All Expenses must be agreed to in writing by PRLX prior to incurring the expense. Expenses will be paid following the submission of documentation evidencing and confirming such expenses.
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8.
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Compliance with all Laws.
Supplier agrees that in the course of providing his services to the PRLX, he or she will not engage in any practice or commit any acts in violation of any federal, state or local law or ordinance.
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9.
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Non-Disclosure Obligations.
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(a)
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Definition of “Information.”
“Information” shall mean materials, data, or information in any form, whether written, oral, digital, or otherwise, provided by or obtained from PRLX, PRLX's agents, or PRLX's contractors in connection with the Supplier's engagement by PRLX. Technical or business information of a third person furnished or disclosed to the Supplier under this Agreement shall constitute Information of PRLX unless otherwise specifically indicated in writing.
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(b)
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Confidential Information.
For purposes of this Agreement, the term “Confidential Information” shall mean Information regarding PRLX's business including, but not limited to, Information regarding diagnostic and medical device products, processing and manufacturing capabilities, copyrighted or patentable subject matter, research, development, innovations, inventions, designs, technology, improvements, trade secrets, business affairs and finances, customers, employees, operations, facilities, consumer markets, products, capacities, systems, procedures, security practices, data formats, and business methodologies.
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(c)
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Supplier's Obligations.
All Confidential Information relating to or obtained from PRLX by the Supplier shall be maintained in confidence by the Supplier, and the Supplier shall use best efforts to protect and safeguard the Confidential Information.
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(d)
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Use of Confidential Information.
Without PRLX's prior written approval, the Supplier: (a) shall not use Confidential Information directly or indirectly for any purpose except in connection with the services the Supplier performs on behalf of PRLX; and (b) shall not disclose, sell, assign, transfer, share or lease Confidential Information of PRLX, or make such Confidential Information available to, or make it available for the use or benefit of, any third party.
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(e)
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Exceptions to Confidentiality Obligations.
The obligations of this Agreement shall not apply to Confidential Information which the Supplier shall demonstrate, by clear and convincing evidence:
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1.
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is or becomes publicly available (other than through unauthorized disclosure under this Agreement);
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2.
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is already known by the Supplier without an obligation of confidentiality prior to the disclosure thereof by PRLX, as evidenced by the Supplier's written records, maintained in the ordinary course, existing before the first date of Supplier's engagement with PRLX; or
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3.
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is rightfully received by the Supplier from a third party free of any obligation of confidentiality.
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10.
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Former Engagement Information
. The Supplier shall not, during the Supplier's engagement with the PRLX, improperly use or disclose any proprietary information or trade secrets of any former employer, hiring party, or other person or entity with which the Supplier has an agreement or duty to keep in confidence, if any, and shall not bring onto the premises of the PRLX any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person, hiring party, or entity.
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11.
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Court or Agency Order.
In the event the Supplier receives a subpoena or order of a court or administrative body requesting disclosure of PRLX’s Confidential Information, the Supplier agrees (a) that, as promptly as possible after learning of such disclosure obligation and before making such disclosure, the Supplier shall notify PRLX of such obligation to make such disclosure, to allow PRLX an opportunity to object to such disclosure or to obtain a protective order or other appropriate relief; (b) that the Supplier shall provide such cooperation and assistance, at PRLX's expense, as PRLX may reasonably request in any effort by PRLX to obtain such relief; and (c) that the Supplier shall take all appropriate steps to limit the amount and scope of Confidential Information so disclosed and to protect its confidentiality.
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12.
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Non-Solicitation.
The Supplier agrees not to solicit or encourage employees of Supplier to work for a Competitor during the Term, and for a period of one year after expiration of the Term. “Competitor” means any person or organization, including the Supplier him or herself, engaged in, or about to become engaged in, research on or the acquisition, development, production, distribution, marketing or providing of a Competing Product. “Competing Product” means any product, process, or service of any person or organization other than the PRLX, in existence or under development, which both (A) is identical to, substantially the same as, or an adequate substitute for any product, process, or service of the PRLX, in existence or under development, on which the Supplier works during the Term or about which the Supplier acquires Confidential Information, and (B) is (or could reasonably be anticipated to be) marketed or distributed in such a manner and in such a geographic area as to actually compete with such product, process or service of the PRLX.
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13.
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Inventions
. For purposes of this Agreement, the term “Inventions” shall mean any and all inventions, original works of authorship, developments, concepts, improvements, or trade secrets (whether or not patentable or registrable under copyright or similar laws) which relate to the business of the PRLX and which the Supplier either (i) solely or jointly conceives, develops, or reduces to practice during PRLX time, at the PRLX's direction, or using PRLX equipment or resources; or (ii) solely or jointly conceives, develops, or reduces to practice based on PRLX Confidential Information. The Supplier will promptly make full written disclosure of Inventions to the PRLX and will hold such Inventions in trust for the sole right and benefit of the PRLX. The Supplier hereby assigns to the PRLX all the Supplier's right, title and interest in and to Inventions. Without limiting the foregoing, the Supplier further acknowledges that all Inventions (x) which are original works of authorship; (y) which are made by the Supplier (solely or jointly with others) within the scope of the Supplier's engagement hereunder; and (z) which are protectable by copyright, shall be deemed, to the extent applicable, “works made for hire,” as that term is defined in the United States Copyright Act. It is agreed and understood that Supplier inventions, original works of authorship, developments, concepts, improvements, or trade secrets (whether or not patentable or registrable under copyright or similar laws) which do not qualify as “Inventions” hereunder shall not be subject to this Section 13.
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14.
|
Patent and Copyright Registration.
The Supplier agrees to assist the PRLX, or its designee, at the PRLX’s expense, in every reasonable way to secure the PRLX’s rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the PRLX of all pertinent information and data with respect thereto and the execution of all applications, specifications, oaths, assignments and all other instruments which the PRLX shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the PRLX, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto.
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15.
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Termination.
This Agreement may be terminated without liability as follows:
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(a)
|
For Cause
. If either Party is in material breach, the non-breaching party may terminate this Agreement upon providing the breaching party (a) with written notice, specifying the breach, and (b) with a ten (10) day opportunity to cure, commencing upon the effective date of such notice.
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(b)
|
For Convenience
. Either Party may terminate this agreement upon fifteen (15) days notice.
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16.
|
Survival.
The following provisions shall survive the expiration or termination of this Agreement: Sections the applicable part of 6 (success fee) 9, 11, 12, 14, and 17.
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17.
|
Return of Property
. Supplier expressly agrees that upon completion of his or her consulting services under this Agreement, or at any time prior to that time upon request of the PRLX, Supplier will return to the PRLX all property of the PRLX obtained or received by Supplier during the Term of this Agreement including, but not limited to, any and all files, computers, computer equipment, software, diskettes or other storage media, documents, papers, records, notes, agenda, memoranda, plans, calendars and other books and records of any kind and nature whatsoever containing information concerning the PRLX or its customers or operations.
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18.
|
No Oral Modification
. This Agreement may not be changed orally, and no modification, amendment, or waiver of any provision contained in this Agreement, or any future representation, promise, or condition in connection with the subject matter of this Agreement shall be binding upon any party hereto, unless made in writing and signed by such party.
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19.
|
Entire Agreement
. This Agreement contains the entire agreement between the Parties and supersedes any and all previous agreements of any kind whatsoever between them, whether written or oral, and all prior and contemporaneous discussions and negotiations have been and are merged and integrated into, and are superseded by, this Agreement. This is an integrated document.
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20.
|
Severability
. In the event that any provision of this Agreement or the application thereof should be held to be void, voidable, unlawful or, for any reason, unenforceable, the remaining portion and application shall remain in full force and effect, and to that end the provisions of this Agreement are declared to be severable.
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21.
|
Governing Law
. This Agreement is made and entered into, and shall be subject to, governed by, and interpreted in accordance with the laws of the Commonwealth of Massachusetts and shall be fully enforceable in the courts of that state, without regard to principles of conflict of laws. The Parties (i) agree that any suit, action or other legal proceeding arising out of this Agreement may be brought in the United States District Court for the District of Massachusetts, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Suffolk County, Massachusetts; (ii) consent to the jurisdiction of any such court; and (iii) waive any objection which they may have to the laying of venue in any such court. The Parties also consent to the service of process, pleadings, notices or other papers by regular mail, addressed to the party to be served, postage prepaid, and registered or certified with return receipt requested.
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22.
|
Notices
. All notices, requests, consents, approvals and other communications required or permitted under this Agreement (“Notices”) shall be in writing and shall be delivered to the addresses listed above, by mail, by hand, or by facsimile transmission, unless otherwise provided in this Agreement. Such Notices shall be effective (i) if sent by mail, three business days after mailing; (ii) if sent by hand, on the date of delivery; and (iii) if sent by facsimile, on the date indicated on the facsimile confirmation. Any party may change its address or facsimile number for notification purposes by giving all of the individuals and entities noted above notice, in accordance with the notice provisions set forth in this Section, of the new address or facsimile number and the date upon which it will become effective.
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23.
|
No Assignment
. Neither this Agreement nor any portion hereof is assignable.
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24.
|
Counterparts.
This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the effect of a signed original.
|
IN WITNESS WHEREOF
, the Parties hereto have caused this Agreement to be executed by the undersigned duly authorized persons as of the day and year above stated.
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Parallax Diagnostics Ltd.
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By:
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/s/ Michael Redmond
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Name: Michael Redmond
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Title: CEO
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Corder Engineering LLC
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By:
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/s/ Rodney Corder
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Name: Rodney Corder
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Title: Managing Member
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EXHIBIT “A”
SUPPLIER SERVICES
AND
PAYMENT SCHEDULE
Statement of Work
Supplier shall provide Evaluation Units which replicate the functionality Target. Target 1000 firmware ver 3.20 and add software for a C-reactive protein (CRP) quantitative assay.
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1)
|
Develop electronic hardware for evaluating CRP Target Cassettes. Reflective Densiometer shall be implemented using the same type reflectometer LED and Photodiode as the Target Instrument.
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2)
|
Develop mechanical components for Target Cassette receiver and OKW MOTEC enclosure if needed. Existing molds of the mechanical parts may be used if the cost, timeframe and quality are acceptable to PRLX. Should PRLX determine to use existing molds for the Target Cassette receiver, the total development cost shall be reduced by $4,250 reflecting the change in project effort.
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3)
|
Develop front panel label and membrane switches for Evaluation units.
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4)
|
Develop operational firmware for the Evaluation units to emulate the functionality of the Target Instrument as documented in the Parallax Diagnostics Target Analyzer operation manual.
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5)
|
Evaluate and collect raw reflectometer data on actual assay reflecting known quantitative samples to correlate reflectometer readings and quantitative results. PRLX is responsible for arranging the execution of the tests in a timely manner at PRLX expense.
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6)
|
Provide a minimum of five assembled units labeled “Evaluation Only, Not for Resale” for evaluation of the CRP Target Cassettes.
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7)
|
A Data Package containing any and all new software code, a list of parts suppliers, any and all drawings related to the instrument.
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8)
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Up to one trip as required, to a facility with adequate laboratory capabilities designated by PRLX, in the Continental United States, for a duration of not more than 2 days, for the purposes of adjusting the calibration of the Evaluation Units to provide adequate accuracy in reading the CRP Target Cassettes. Additional trips required, not as a result of a deficiency in the Evaluation Units or their operational firmware, shall be reimbursed as an Expense, and billed at a daily rate of $1,000 per day.
|
Payment and Schedule:
|
Milestone
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Duration
|
Payment
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|
Project Initiation
|
T
0
|
$10,000.00
|
|
Assembled PCB Prototypes (12 units)
Deliverable is digital photograph of the assembled prototypes
|
T
0
+ 5 weeks
|
$7,500.00
|
|
Mechanical Component Prototypes (12 sets)
Deliverable is digital photograph of the assembled prototypes
|
T
0
+ 9 weeks
|
$7,500.00
|
|
Delivery of 10 functional Evaluation Units and Data Package
|
T
0
+ 12 weeks
|
$10,000.00
|
|
Receipt of Project Initiation payment is required to start the Work Order and set the start date of the Project. Payment terms are Net-15 after delivery of Milestone. All prices are firm and fixed and cannot increase without written approval of PRLX. Should PRLX decide to use molded parts in lieu of the reverse engineering of current parts, the Milestones and payments shall be adjusted as follows: Mechanical Component Prototypes from $7,500 to $5,750, Delivery of 10 functional Evaluation Units from $10,000 to $7,500 for a Total of $30,750. A 1.5% fee per month will be assessed for any payments late or returned for insufficient funds.
PRLX Responsibilities:
PRLX is responsible to provide a Target Instrumentr unit for reverse engineering, a minimum of 5 unused (white) Target Cassettes, and a definition of the quantitative units and change in reflectivity for the CRP immunoassay Target Cassette.
PRLX is responsible to prepare samples for assay and collect raw reflectometer data from the enhanced firmware for analysis and programming of the final evaluation firmware.
PRLX is responsible to reimburse the actual costs of the construction of up to12 Evaluation units developed to ensure the delivery of up to 10 functional Evaluation units up to a maximum of $12,000. Each evaluation unit is estimated to cost $1,000. PRLX will inform Supplier of the exact number of evaluation units to be built within 30 days of the Effective Date.
PRLX understands that timely performance of its Responsibilities is crucial to the timely completion of the Work Order.
|
Total
|
$35,000.00
|
|
II.Ownership of Work Product:
All schematics, layouts, bills of materials, assembly instructions, component models and device firmware created as a result of this Agreement (“Work Product”) shall be considered work made by Supplier for hire to PRLX and shall belong exclusively to PRLX and its designees. Upon receipt of full and complete payment of all milestones Supplier will deliver to PRLX all Work Product.
III.No Patent Protection:
Supplier does not covenant, warrant or indemnify PRLX against infringement by the Work Product of any patent, now existing or pending. Supplier is not responsible for intellectual property analysis. Supplier will not knowingly include, define or require the infringement of any known intellectual property rights of any third parties without prior written approval from PRLX. PRLX is solely responsible for the use of the Work Product.
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Exhibit B
Targer Instrument Specs to be added here
SUPPLY AGREEMENT
This Supply Agreement (the "Agreement") is entered into as of this 1st day of July 2011 (the "Effective Date"), by and between Parallax Diagnostics Ltd., Inc. a Nevada corporation with offices at 2 Canal Park Cambridge, MA (or PRLX") and Meyers Stevens Group Inc. at 7137 Telegraph Road, Montebello, California 90640 ("Supplier") (together the "Parties").
WHEREAS,
Supplier possesses certain skills and expertise in manufacturing diagnostic assays;
WHEREAS,
PRLX wishes to retain the services of Supplier on the terms and conditions set forth below, and
WHEREAS,
Supplier is willing to supply diagnostic assays to the PRLX, on the terms and conditions set forth below,
NOW, THEREFORE,
the parties agree as follows:
|
1.
|
Services.
Supplier will perform the services set forth on Exhibit A, or as amended by mutual written agreement. It is agreed and understood that the nature and manner of services provided hereunder shall be within Supplier’s area of professional expertise and/or historical experience.
|
|
|
(a)
|
Direction
. Supplier shall be directed by Michael Redmond or his successor.
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(b)
|
Start Date
. Supplier's obligations to PRLX shall begin on July 1 2011.
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(c)
|
Term
. This Agreement shall commence on the Start Date and, unless earlier terminated in accordance with Section 15, shall continue up to the time that the last milestone on Exhibit A is successfully completed (the "Term"). The Term can be automatically extended in three month increments upon mutual agreement by the Parties. Any extension shall be in writing.
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2.
|
Method of Performance.
The Supplier shall determine the method, details, and means of performing and fulfilling his or her duties hereunder.
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3.
|
Other Employment
. The PRLX acknowledges and agrees that Supplier may assume other commitments, and has ongoing or intends to obtain engagements outside of Supplier's work for PRLX during the Term ("Other Engagements"); provided that Supplier fully complies with the confidentiality obligations contained in Section 9. Supplier shall reasonably notify PRLX of any Other Engagements, which may pose a conflict of interest, it being understood that such notice shall allow PRLX sufficient basis to proceed in accordance with Section 15(b)(2), below.
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|
4.
|
Status as Independent Contractor; Nature of Relationship.
It is agreed and understood that the Supplier is an independent contractor and will not act as an agent nor shall he or she be deemed an employee of Supplier for the purposes of any employee benefit programs, income tax withholding, FICA taxes, unemployment benefits, and worker’s compensation insurance, or otherwise. Supplier shall not enter into any agreement or incur any obligations on PRLX’s behalf, or commit PRLX in any manner without PRLX’s prior written consent.
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5.
|
Resources.
Supplier shall provide such tools and facilities as Supplier may deem necessary in the performance of Supplier's duties hereunder. Upon Supplier's reasonable request, the PRLX shall provide such incidental resources to Supplier as the PRLX in its discretion believes may be warranted.
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6.
|
Compensation.
It is agreed and understood, that subject to the Term and performance and under Section 1, the Supplier shall be paid as set forth in Exhibit A. Supplier shall be solely responsible for and agrees that he or she will in a timely fashion pay all federal, state and other taxes on the amounts set forth in this Section.
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7.
|
Expenses
. All expenses are included in the pricing outlined in Exhibit A.
|
|
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|
8.
|
Compliance with all Laws.
Supplier agrees that in the course of providing his services to the PRLX, he or she will not engage in any practice or commit any acts in violation of any federal, state or local law or ordinance.
|
|
|
|
|
9.
|
Non-Disclosure Obligations.
|
|
|
(a)
|
Definition of "Information."
“Information” shall mean materials, data, or information in any form, whether written, oral, digital, or otherwise, provided by or obtained from PRLX, PRLX's agents, or PRLX's contractors in connection with the Supplier's engagement by PRLX. Technical or business information of a third person furnished or disclosed to the Supplier under this Agreement shall constitute Information of PRLX unless otherwise specifically indicated in writing.
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|
|
|
|
|
|
(b)
|
Confidential Information.
For purposes of this Agreement, the term "Confidential Information" shall mean Information regarding PRLX's business including, but not limited to, Information regarding diagnostic and medical device products, processing and manufacturing capabilities, copyrighted or patentable subject matter, research, development, innovations, inventions, designs, technology, improvements, trade secrets, business affairs and finances, customers, employees, operations, facilities, consumer markets, products, capacities, systems, procedures, security practices, data formats, and business methodologies.
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|
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|
|
(c)
|
Supplier's Obligations.
All Confidential Information relating to or obtained from PRLX by the Supplier shall be maintained in confidence by the Supplier, and the Supplier shall use best efforts to protect and safeguard the Confidential Information.
|
|
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|
|
(d)
|
Use of Confidential Information.
Without PRLX's prior written approval, the Supplier: (a) shall not use Confidential Information directly or indirectly for any purpose except in connection with the services the Supplier performs on behalf of PRLX; and (b) shall not disclose, sell, assign, transfer, share or lease Confidential Information of PRLX, or make such Confidential Information available to, or make it available for the use or benefit of, any third party.
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|
|
(e)
|
Exceptions to Confidentiality Obligations.
The obligations of this Agreement shall not apply to Confidential Information which the Supplier shall demonstrate, by clear and convincing evidence:
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|
|
1.
|
is or becomes publicly available (other than through unauthorized disclosure under this Agreement);
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|
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|
|
2.
|
is already known by the Supplier without an obligation of confidentiality prior to the disclosure thereof by PRLX, as evidenced by the Supplier's written records, maintained in the ordinary course, existing before the first date of Supplier's engagement with PRLX; or
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|
|
|
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|
|
3.
|
is rightfully received by the Supplier from a third party free of any obligation of confidentiality.
|
|
10.
|
Former Engagement Information
. The Supplier shall not, during the Supplier's engagement with the PRLX, improperly use or disclose any proprietary information or trade secrets of any former employer, hiring party, or other person or entity with which the Supplier has an agreement or duty to keep in confidence, if any, and shall not bring onto the premises of the PRLX any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person, hiring party, or entity.
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|
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|
|
11.
|
Court or Agency Order.
In the event the Supplier receives a subpoena or order of a court or administrative body requesting disclosure of PRLX’s Confidential Information, the Supplier agrees (a) that, as promptly as possible after learning of such disclosure obligation and before making such disclosure, the Supplier shall notify PRLX of such obligation to make such disclosure, to allow PRLX an opportunity to object to such disclosure or to obtain a protective order or other appropriate relief; (b) that the Supplier shall provide such cooperation and assistance, at PRLX's expense, as PRLX may reasonably request in any effort by PRLX to obtain such relief; and (c) that the Supplier shall take all appropriate steps to limit the amount and scope of Confidential Information so disclosed and to protect its confidentiality.
|
|
12.
|
Non-Solicitation.
The Supplier agrees not to solicit or encourage employees of Supplier to work for a Competitor during the Term, and for a period of one year after expiration of the Term. "Competitor" means any person or organization, including the Supplier him or herself, engaged in, or about to become engaged in, research on or the acquisition, development, production, distribution, marketing or providing of a Competing Product. "Competing Product" means any product, process, or service of any person or organization other than the PRLX, in existence or under development, which both (A) is identical to, substantially the same as, or an adequate substitute for any product, process, or service of the PRLX, in existence or under development, on which the Supplier works during the Term or about which the Supplier acquires Confidential Information, and (B) is (or could reasonably be anticipated to be) marketed or distributed in such a manner and in such a geographic area as to actually compete with such product, process or service of the PRLX.
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|
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|
|
13.
|
Inventions
. For purposes of this Agreement, the term "Inventions" shall mean any and all inventions, original works of authorship, developments, concepts, improvements, or trade secrets (whether or not patentable or registrable under copyright or similar laws) which relate to the business of the PRLX and which the Supplier either (i) solely or jointly conceives, develops, or reduces to practice during PRLX time, at the PRLX's direction, or using PRLX equipment or resources; or (ii) solely or jointly conceives, develops, or reduces to practice based on PRLX Confidential Information. The Supplier will promptly make full written disclosure of Inventions to the PRLX and will hold such Inventions in trust for the sole right and benefit of the PRLX. The Supplier hereby assigns to the PRLX all the Supplier's right, title and interest in and to Inventions. Without limiting the foregoing, the Supplier further acknowledges that all Inventions (x) which are original works of authorship; (y) which are made by the Supplier (solely or jointly with others) within the scope of the Supplier's engagement hereunder; and (z) which are protectable by copyright, shall be deemed, to the extent applicable, “works made for hire,” as that term is defined in the United States Copyright Act. It is agreed and understood that Supplier inventions, original works of authorship, developments, concepts, improvements, or trade secrets (whether or not patentable or registrable under copyright or similar laws) which do not qualify as "Inventions" hereunder shall not be subject to this Section 13.
|
|
|
|
|
14.
|
Patent and Copyright Registration.
The Supplier agrees to assist the PRLX, or its designee, at the PRLX’s expense, in every reasonable way to secure the PRLX’s rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the PRLX of all pertinent information and data with respect thereto and the execution of all applications, specifications, oaths, assignments and all other instruments which the PRLX shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the PRLX, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto.
|
|
|
|
|
15.
|
Termination.
This Agreement may be terminated without liability as follows:
|
|
|
(a)
|
For Cause
. If either Party is in material breach, the non-breaching party may terminate this Agreement upon providing the breaching party (a) with written notice, specifying the breach, and (b) with a ten (10) day opportunity to cure, commencing upon the effective date of such notice.
|
|
|
|
|
|
|
(b)
|
For Convenience
. Either Party may terminate this agreement upon fifteen (15) days notice.
|
|
16.
|
Survival.
The following provisions shall survive the expiration or termination of this Agreement: Sections the applicable part of 6 (success fee) 9, 11, 12, 14, and 17.
|
|
|
|
|
17.
|
Return of Property
. Supplier expressly agrees that upon completion of his or her consulting services under this Agreement, or at any time prior to that time upon request of the PRLX, Supplier will return to the PRLX all property of the PRLX obtained or received by Supplier during the Term of this Agreement including, but not limited to, any and all files, computers, computer equipment, software, diskettes or other storage media, documents, papers, records, notes, agenda, memoranda, plans, calendars and other books and records of any kind and nature whatsoever containing information concerning the PRLX or its customers or operations.
|
|
18.
|
No Oral Modification
. This Agreement may not be changed orally, and no modification, amendment, or waiver of any provision contained in this Agreement, or any future representation, promise, or condition in connection with the subject matter of this Agreement shall be binding upon any party hereto, unless made in writing and signed by such party.
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|
19.
|
Entire Agreement
. This Agreement contains the entire agreement between the Parties and supersedes any and all previous agreements of any kind whatsoever between them, whether written or oral, and all prior and contemporaneous discussions and negotiations have been and are merged and integrated into, and are superseded by, this Agreement. This is an integrated document.
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20.
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Severability
. In the event that any provision of this Agreement or the application thereof should be held to be void, voidable, unlawful or, for any reason, unenforceable, the remaining portion and application shall remain in full force and effect, and to that end the provisions of this Agreement are declared to be severable.
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21.
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Governing Law
. This Agreement is made and entered into, and shall be subject to, governed by, and interpreted in accordance with the laws of the Commonwealth of Massachusetts and shall be fully enforceable in the courts of that state, without regard to principles of conflict of laws. The Parties (i) agree that any suit, action or other legal proceeding arising out of this Agreement may be brought in the United States District Court for the District of Massachusetts, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Suffolk County, Massachusetts; (ii) consent to the jurisdiction of any such court; and (iii) waive any objection which they may have to the laying of venue in any such court. The Parties also consent to the service of process, pleadings, notices or other papers by regular mail, addressed to the party to be served, postage prepaid, and registered or certified with return receipt requested.
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22.
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Notices
. All notices, requests, consents, approvals and other communications required or permitted under this Agreement ("Notices") shall be in writing and shall be delivered to the addresses listed above, by mail, by hand, or by facsimile transmission, unless otherwise provided in this Agreement. Such Notices shall be effective (i) if sent by mail, three business days after mailing; (ii) if sent by hand, on the date of delivery; and (iii) if sent by facsimile, on the date indicated on the facsimile confirmation. Any party may change its address or facsimile number for notification purposes by giving all of the individuals and entities noted above notice, in accordance with the notice provisions set forth in this Section, of the new address or facsimile number and the date upon which it will become effective.
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23.
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No Assignment
. Neither this Agreement nor any portion hereof is assignable.
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24.
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Counterparts.
This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the effect of a signed original.
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IN WITNESS WHEREOF
, the Parties hereto have caused this Agreement to be executed by the undersigned duly authorized persons as of the day and year above stated.
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Parallax Diagnostics Ltd.
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By:
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/s/ Michael Redmond
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Name: Michael Redmond
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Title: CEO
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Myers Stevens Group, Inc.
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By:
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/
s/ Victor Parker
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Name: Victor Parker
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Title: President
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EXHIBIT “A”
SUPPLIER SERVICES
AND
PAYMENT SCHEDULE
Statement of Work
Supplier will manufacture assays and supply a Data Package for Parallax. The Data Package will include all existing Standard Operating Proceedures (SOP’s) related to the manufacture of the Target assays as well as new SOP’s that Supplier will create in order to manufacture Target assays. New SOP’s will include a flow chart detailing the procurement and manufacture of assays, a supplier list, methods for manufacture, quality control procedures and any other documents or procedures necessary for the manufacture of Target Assays.
Based on raw material availability and manufacturing time this quote is based on one or a combination of the CRP assay, HCG assay and/or Rotavirus assay. The cost below will yield approximately 100 to 200 fully functional assay test devices for internal investigational use. Estimated delivery of the assays is eight (8) weeks from the Effective Date of this Agreement.
Material Qualification/Reagent & Membrane Processing/Quality Control (76 hours)
Device Assembly/Reagent Filling/Packaging (20 hours)
LABOR COST- $6,874.00
RAW MATERIAL/REAGENT COST
Mold Set Up
Cassette 1,000 part minimum
Cassette Cap 1,000 part minimum
Membrane
Anti Body Conjugate
Color Development Solution
Calibrator Controls
Kit Packaging Supplies
RAW MATERIAL REAGENT/PACKAGING COST- $3,320.00
The price quotes above are firm and fixed. Payments by Parallax to Supplier will be made in two installments: $5,000.00 upon signing of this Agreement and $5194.00 when the Data Package is delivered to PRLX, functional test devices pass qualification testing and are received by Parallax. All payments are net 15 days after the completion of the milestone.
8
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Parallax Diagnostics-Huntington Chase
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Confidential
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Consulting Agreement
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Exhibit 10.26
CONSULTING AGREEMENT
CONSULTING AGREEMENT
(this “Agreement”) dated as of the Second Day of January 2012 between the Parallax Diagnostics (the “Company”), a Nevada corporation at 2 Canal Park, 5
th
Floor, Cambridge, MA 02141 and Huntington Chase Financial Group, LLC (the ”Consultant”) a Nevada Limited Liability corporation at 1327 Ocean Avenue, Suite M Santa Monica, CA 90401.
WHEREAS
, the Company desires to retain Consultant to render consulting and strategic advisory services as outlined in the
Scope of Work in Exhibit “A” of this Agreement
on the terms and conditions set forth in this Agreement, and Consultant desires to be retained by the Company on such terms and conditions.
NOW, THEREFORE
, in consideration of the premises, the mutual agreements herein set forth and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:
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1.
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Engagement of Consultant; Services to be Performed
.
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1.1.
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The Company hereby retains Consultant to render such consulting and advisory services as the Company may request. Consultant hereby accepts such engagement and agrees to perform such services for the Company upon the terms and conditions set forth in this Agreement.
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1.2.
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During the Term (as defined in Section 2), Consultant shall devote such time, attention, skill and energy to the business of the Company as may be reasonably required to perform the services required by this Agreement up to a maximum time commitment of 160 hours in any calendar month, and shall assume and perform to the best of his ability such reasonable responsibilities and duties as the Company shall assign to Consultant from time to time.
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1.3.
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Consultant shall perform the services hereunder from time to time at the Company’s principal office but he shall, at the Company’s expense, also be required to render the services at such other locations as the Company may specify from time to time.
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1.4.
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In rendering services hereunder, Consultant shall be acting as an independent contractor and not as a employee or agent of the Company. As an independent contractor, Consultant shall have no authority, express or implied, to commit or obligate the Company in any manner whatsoever, except as specifically authorized from time to time in writing by an authorized representative of the Company, which authorization may be general or specific. Nothing contained in this Agreement shall be construed or applied to create a partnership. Consultant shall be responsible for the payment of all federal, state, provincial or local taxes payable with respect to all amounts paid to Consultant under this Agreement;
provided, however
, that if the Company is determined to be liable for collection and/or remittance of any such taxes, Consultant shall immediately reimburse the Company for all such payments made by the Company.
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Parallax Diagnostics-Huntington Chase
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Confidential
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Consulting Agreement
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2.
Term
. Unless terminated at an earlier date in accordance with Section 4, this Agreement shall commence as of the date first written above and shall continue for a continuous period of three years (the “Term”).
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a)
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Cash: As compensation for Consultant’s services hereunder, the Company shall pay to Consultant a consulting fee of fifteen thousand ($12,500) dollars per month.
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b)
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Stock: The Company and Consultant will work in “good faith to develop a stock incentive plan for Consultant
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4.
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Termination By the Company
.
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4.1
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For Cause
.
Company will have the right to immediately terminate Consultant's services and this Agreement for cause. "Cause" means: any material breach of this Agreement by Consultant, including, without limitation, breach of Consultant’s covenants in Sections 6 and 7; any failure to perform assigned job responsibilities that continues unremedied for a period of ten (10) days after written notice to Consultant by Company; conviction of a felony or failure to contest prosecution for a felony; violation of any statute, rule or regulation, any of which in the judgment of Company is harmful to the business of the Company or to Company’s reputation; unethical practices; dishonesty; disloyalty; or any reason that would constitute cause under the laws of Nevada. Upon termination of Consultant's engagement hereunder for cause or upon the death or disability of Consultant, Consultant will have no rights to any unvested benefits or any other compensation or payments after the termination date or the last day of the month in which Consultant’s death or disability occurred.
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For purposes of this Agreement, “disability” means the incapacity or inability of Consultant, whether due to accident, sickness or otherwise, as determined by a medical doctor acceptable to the Board of Directors of Company and confirmed in writing by such doctor, to perform the essential functions of Consultant’s position under this Agreement, with or without reasonable accommodation (provided that no accommodation that imposes undue hardship on Company will be required) for an aggregate of ninety (90) days during any period of one hundred eighty (180) consecutive days.
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4.2
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Without Cause.
Company may terminate Consultant's engagement under this Agreement without cause and without advance notice;
provided
,
however
, that Company will continue to pay, as severance pay, Consultant’s Base Salary at the rate in effect on the termination date for a period of six (6) months;
provided
,
further
, that Company will be entitled to offset any severance pay otherwise payable to Consultant by the amount of any compensation or consulting fees being paid to Consultant by another party while severance pay would otherwise be payable. Such payments will be at usual and customary pay intervals of Company and will be subject to all appropriate deductions and withholdings.
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Parallax Diagnostics-Huntington Chase
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Confidential
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Consulting Agreement
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4.3
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Termination By Consultant.
Consultant may terminate Consultant’s engagement under this Agreement for any reason provided that Consultant gives Company at least thirty (30) days’ notice in writing. Company may, at its option, accelerate such termination date to any date at least two weeks after Consultant’s notice of termination. Company may, at its option, relieve Consultant of all duties and authority after notice of termination has been provided. All compensation, payments will cease on the termination date.
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4.
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Expenses
. In addition to the payment of consulting fees set forth above, the Company shall reimburse Consultant all actual out-of-pocket costs for long-distance telephone services, facsimile transmissions, photocopying, courier services and postage, and all reasonable travel, lodging and per diem expenses, that he shall incur in connection with the rendering of Consultant’s services; provided that the Company shall have no obligation to reimburse any of such expenses except upon provision by Consultant of adequate documentation thereof in such form as the Company shall reasonably request; and provided further, that the Company shall have no such obligation in respect of any travel, lodging or per diem expenses unless the travel to which such expenses relate shall have been authorized in advance by the Company.
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5.
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Protection of Trade Secrets, Know-How and/or Other Confidential Information of the Company
.
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5.1
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Confidential Information
. Except as permitted or directed by the Company, during the Term or at any time thereafter Consultant shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course of the business of the Company) any confidential or secret knowledge or information of the Company that Consultant has acquired or become acquainted with or will acquire or become acquainted with during the Term or during engagement by the Company prior to the Term, whether developed by Consultant or by others, concerning any trade secrets, confidential or secret designs, processes, formulae, products or future products, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company, any customer or supplier lists of the Company, any confidential or secret development or research work of the Company, or any other confidential information or secret aspects of the business of the Company. Consultant acknowledges that the above-described knowledge or information constitutes a unique and valuable asset of the Company acquired at great time and expense by the Company and its predecessors, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Both during and after the Term, Consultant will refrain from any acts or omissions that would reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality, however, shall not apply to any knowledge or information which is now published or which subsequently becomes generally publicly known in the form in which it was obtained from the Company, other than as a direct or indirect result of the breach of this Agreement by Consultant.
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5.2
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Know-How and Trade Secrets
. All know-how and trade secret information conceived or originated by Consultant which arises out of the performance of the services hereunder or any related material or information shall be the property of the Company, and all rights therein are hereby assigned to the Company.
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Parallax Diagnostics-Huntington Chase
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Confidential
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Consulting Agreement
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6.2.
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Return of Records
. Upon termination of this Agreement, Consultant shall deliver to the Company all property that is in his possession and that is the Company’s property or relates to the Company’s business, including, but not limited to records, notes, data, memoranda, software, electronic information, models, equipment, and any copies of the same.
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6.1.
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Entire Agreement
. This Agreement (including any exhibits, schedules and other documents referred to herein) contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any prior understandings, agreements or representations, written or oral, relating to the subject matter hereof.
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6.2.
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Counterparts
. This Agreement may be executed in separate counterparts, each of which will be an original and all of which taken together shall constitute one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart.
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6.3.
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Severability
. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law but if any provision of this Agreement is held to be invalid, illegal or unenforceable under any applicable law or rule, the validity, legality and enforceability of the other provision of this Agreement will not be affected or impaired thereby.
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6.4.
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Successors and Assigns
. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives and, to the extent permitted by subsection (e), successors and assigns.
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6.5.
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Assignment
. This Agreement and the rights and obligations of the parties hereunder shall not be assignable, in whole or in part, by either party without the prior written consent of the other party.
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6.6.
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Modification, Amendment, Waiver or Termination
. No provision of this Agreement may be modified, amended, waived or terminated except by an instrument in writing signed by the parties to this Agreement. No course of dealing between the parties will modify, amend, waive or terminate any provision of this Agreement or any rights or obligations of any party under or by reason of this Agreement.
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6.7.
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Notices
. All notices, consents, requests, instructions, approvals or other communications provided for herein shall be in writing and delivered by personal delivery, overnight courier, mail, electronic facsimile or e-mail addressed to the receiving party at the address set forth herein. All such communications shall be effective when received.
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Parallax Diagnostics-Huntington Chase
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Confidential
|
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Consulting Agreement
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Any party may change the address set forth above by notice to each other party given as provided herein.
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To:
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Huntington Chase Financial Group, LLC
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Edward W. Withrow III
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1327 Ocean Avenue Suite M
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Santa Monica, CA 90401
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To:
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Parallax Diagnostics, Inc.
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J. Michael Redmond
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2 Canal Park, 5th Floor
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Cambridge, MA 02124
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6.8.
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Headings
. The headings and any table of contents contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
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6.9.
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Governing Law
. ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF.
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6.10.
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Third-Party Benefit
. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights, remedies, obligations or liabilities of any nature whatsoever.
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6.11.
|
No Waiver
. No delay on the part of the Company in exercising any right hereunder shall operate as a waiver of such right. No waiver, express or implied, by the Company of any right or any breach by Consultant shall constitute a waiver of any other right or breach by Consultant.
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6.12.
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Jurisdiction and Venue
. THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN CALIFORNIA, AND EACH PARTY CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT. IF ANY PARTY COMMENCES ANY ACTION UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT IN ANOTHER JURISDICTION OR VENUE, ANY OTHER PARTY TO THIS AGREEMENT SHALL HAVE THE OPTION OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED VENUE OR JURISDICTION OR, IF SUCH TRANSFER CANNOT BE ACCOMPLISHED, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
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6.13.
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Remedies
. The parties agree that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may, in its discretion, apply to any court of law or equity of competent jurisdiction for specific performance and injunctive relief in order to enforce or prevent any violations this Agreement, and any party against whom such proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at law and agrees not to raise the defense that the other party has an adequate remedy at law.
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Parallax Diagnostics-Huntington Chase
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Confidential
|
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Consulting Agreement
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IN WITNESS WHEREOF
, the parties have executed this Agreement as of the date set forth in the first paragraph.
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Parallax Diagnostics, Inc.
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By:
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/s/ J. Michael Redmond
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J. Michael Redmond
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Its: Chief Executive Officer
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Huntington Chase Financial Group, LLC
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By:
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/s/ Edward W. Withrow III
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J. Michael Redmond
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Its: Managing Member
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Parallax Diagnostics-Huntington Chase
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Confidential
|
|
Consulting Agreement
|
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EXHIBIT “A”
Scope of Work by Consultant for Parallax Diagnostics Inc.
|
1.
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Advise on strategic business opportunities;
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a.
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Review potential strategic opportunities
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b.
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Review and consult on valuations
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c.
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Review and advise management of market potential of opportunity of targeted business opportunities.
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2.
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Advise on capitalization matters and financings;
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a.
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Perform or review due diligence on capital sources
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b.
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Introduce Company to potential strategic partners.
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c.
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Develop capitalization materials and interface with the financial community
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3.
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Advise on Marketing related matters;
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a.
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Interface with outside marketing vendors.
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7
Exhibit 10.27
CONSULTING AGREEMENT
THIS AGREEMENT (the “Agreement”), is made and entered into as of this 11
th
day of July 2012, by and between Greg Suess, an individual, located 1126 Strandella Road, Bel Air, CA 90077(“Suess” or the “Consultant”), and Parallax Diagnostics, Ltd. 2 Canal Park, 5
th
Floor Cambridge, MA 02141 (the “Client” the “Company”) (together the “Parties”).
WHEREAS
, Consultant is to provide the of services for management consulting and business advisory;
WHEREAS
, the Client deems it to be in its best interest to retain Consultant to render to the Client such services as may be needed for Parallax Diagnostics, Ltd. hereinafter referred to as the (“Company”); and
WHEREAS,
the Parties desire to set forth the terms and conditions under which Consultant shall provide services to the Client.
NOW, THEREFORE
, in consideration of the mutual promises and covenants herein contained, and other valid consideration, receipt of which is hereby acknowledged, the Parties agree as follows:
The Agreement shall cover only the advisory settlement negotiation as set forth as services rendered (the “Term”)
Nature of Services to be rendered.
During the Term and any renewal thereof, Consultant shall: (a) provide the Client with corporate consulting services on a best efforts basis in connection with corporate finance, corporate finance relations, introductions to other financial relations companies and other financial services; (the “Services”). It is acknowledged and agreed by the Client that Consultant carries no professional licenses, and is not rendering legal advice or performing accounting services, nor acting as an investment advisor or brokerage/dealer within the meaning of the applicable state and federal securities laws. The Services of Consultant shall not be exclusive nor shall Consultant be required to render any specific number of hours or assign specific personnel to the Client or its projects.
Disclosure of Information
Consultant agrees as follows:
The Consultant shall NOT disclose to any third party any material non-public information or data received from the Client without the written consent and approval of the Client other than: (i) to its agents or representatives that have a need to know in connection with the Services hereunder; provided such agents and representatives have a similar obligation to maintain the confidentiality of such information; (ii) as may be required by applicable law; provided, Consultant shall provide prompt prior written notice thereof to the Client to enable the Client to seek a protective order or otherwise prevent such disclosure; and (iii) such information as becomes publicly known through no action of the Consultant, or its agents or representatives.
Purchase Right.
In exchange for Consultant rendering services hereunder,
Consultant may purchase 75,000 shares of Parallax Diagnostics, Ltd. restricted common stock, at par value of $0.001, with the cost totaling $75.00. The shares will be delivered, to the consultants address above; by an overnight delivery service of the Company’s choosing.
Compliance with Securities Laws
The Parties acknowledge and agree that the Company is subject to the requirements of the 1934 Act, and that the 1933 Act, the 1934 Act, the rules and regulations promulgated thereunder and the various state securities laws (collectively, “Securities Laws”) impose significant burdens and limitations on the dissemination of certain information about the Company by the Company and by persons acting for or on behalf of the Company. Each of the Parties agrees to comply with all applicable Securities Laws in carrying out its obligations under the Agreement; and without limiting the generality of the foregoing, the Client hereby agrees (i) all information about the Company provided to the Consultant by the Client, which the Client expressly agrees may
be disseminated to the public by the Consultant in providing any public relations or other services pursuant to the Agreement, shall not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made, in light of the circumstances in which they were made, not misleading, (ii) the Client shall promptly notify the Consultant if it becomes aware that it has publicly made any untrue statement of a material fact regarding the Company or has omitted to state any material fact necessary to make the public statements made by the Client, in light of the circumstances in which they were made, not misleading, and (iii) the Client shall promptly notify the Consultant of any “quiet period” or “blackout period” or other similar period during which public statements by or on behalf of the Company are restricted by any Securities Law. Each Party (an “indemnifying party”) hereby agrees, to the full extent permitted by applicable law, to indemnify and hold harmless the other Party (the “indemnified party”) for any damages caused to the indemnified party by the indemnifying party’s breach or violation of any Securities Law, except to the extent that the indemnifying party’s breach or violation of a Securities Law is caused by the indemnified party’s breach or violation of the Agreement, or any Securities Law.
Issuance of Restricted Stock to Consultant
The Restricted Stock shall be issued as fully-paid and non-assessable securities. The Client shall take all corporate action necessary for the issuance Restricted Stock, to be legally valid and irrevocable, including obtaining the prior approval of the Board of Directors.
Indemnification of Consultant by the Company.
The Client acknowledges that the Consultant relies on information provided by the Client in connection with the provisions of Services hereunder and represents that said information does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made, in light of the circumstances in which they were made, not misleading, and agrees to hold harmless and indemnify the Consultant for claims against the Consultant as a result of any breach of such representation and for any claims relating to the purchase and/or sale of the Company’s securities occurring out of or in connection with the Consultant’s relationship with the Client including, without limitation, reasonable attorney’s fees and other costs arising out of any such claims; provided, however, that the Client will not
Be liable in any such case for losses, claims, damages, liabilities or expenses that arise from the gross negligence or willful misconduct of Consultant.
Indemnification of the Client by the Consultant.
The Consultant shall identify and hold harmless the Client and its principals from and against any and all liabilities and damages arising out of any the Consultant’s gross negligence or intentional breach of its representations, warranties or agreements made hereunder.
Entire Understanding/Incorporation of other Documents.
The Agreement contains the entire understanding of the Parties with regard to the subject matter hereof, superseding any and all prior agreements or understandings whether oral or written, and no further or additional agreements, promises, representations or covenants may be inferred or construed to exist between the Parties.
No Assignment or Delegation Without Prior Approval.
No portion of the Agreement or any of its provisions may be assigned, nor obligations delegated, to any other person or party without the prior written consent of the Parties except by operation of law or as otherwise set forth herein.
Survival of Agreement.
The Agreement and all of its terms shall inure to the benefit of any permitted assignees of or lawful successors to either Party.
Consultant agrees to perform its consulting duties hereto as an independent contractor. Nothing contained herein shall be considered to as creating an employer-employee relationship between the parties to this Agreement.
No Amendment Except in Writing.
Neither the Agreement nor any of its provisions may be altered or amended except in a dated writing signed by the Parties.
No waiver of any breach of any provision hereof shall be deemed to constitute a continuing waiver or a waiver of any other portion of the Agreement.
Severability of the Agreement.
Except as otherwise provided herein, if any provision hereof is deemed by arbitration or a court of competent jurisdiction to be legally unenforceable or void, such provision shall be stricken from the Agreement and the remainder hereof shall remain in full force and effect.
Non-Circumvention.
The parties agree that confidential Information shall not be used for the enrichment, directly or indirectly, of the Recipient or its affiliates, without the express written consent of Owner. The parties further agree that following receipt of Confidential Information from Owner including but not limited to relationships and business contacts, Recipient shall not contract or attempt to sell to, transact with or purchase from Owner-provided sources without the written permission from Owner unless (i) a business relationship between Recipient and Owner-provided source predated this Agreement, and (ii) Recipient can substantiate exchanges specific to the Owner-disclosed information between Recipient and the Owner-provided source prior to the date of the signing of this Agreement.
Termination of the Agreement.
The Client may terminate the Agreement, with or without cause, by providing thirty days written notification to the Consultant. The Agreement will terminate thirty (30) days following the date of receipt of the written notification by the Consultant (“Date of Termination”). In the event of termination of the Agreement by the Client, the Consultant shall be entitled to keep any and all fees, Company stock or other compensation it received from the Client under the Agreement prior to the Date of Termination.
Counterparts and Facsimile Signature.
This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Agreement by such party. Such facsimile copies shall constitute enforceable original documents.
SIGNATURE PAGE TO FOLLOW
I
N WITNESS WHEREOF
, the parties hereto have duly executed and delivered this Agreement, effective as of the date set forth above.
|
Greg Suess, an Individual
|
|
Parallax Diagnostics, Ltd.
|
|
|
|
|
|
|
|
By:
|
/
s/ Greg Suess
|
|
By:
|
Edward W Withrow III
|
|
|
Greg Suess
|
|
|
Edward W Withrow III-Chairman
|
Exhibit 10.28
CONVERTIBLE PREFERRED PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement dated June 17, 2011 is by and between:
Hamburg Investment Company, LLC
_________________________________________
(the “Purchaser”)
Parallax Diagnostics, Inc
__________________________________________
(the “Company” or “PRLX”)
WHEREAS,
Parallax Diagnostics, Inc. (“PRLX” “Seller”) a Nevada corporation at 2 Canal Park, 5
th
Floor Cambridge, MA 02141 is authorized to sell one hundred thousand (100,000) shares of Convertible Preferred stock (“Preferred”) of Parallax Diagnostics, Inc; and
WHEREAS,
the terms of the sale of one hundred thousand (100,000) shares of Preferred stock include one hundred percent (100%) Warrant coverage that would result in, if the Offering is fully converted from Preferred into Common, the Purchaser owning one hundred (100,000) thousand Warrants to purchase shares of Common stock at a price to be determined by the Company’s next financing. If the Company has not completed a financing within the next six (6) months then the price of the Common Stock that the Preferred converts into will be priced at one ($1.00) dollar per share; and
WHEREAS
, Parallax Diagnostics, Inc. has not yet priced the Common Stock that the holder of Preferred is to convert into, the Purchaser and the Company have agreed to use the valuation of the Company at the time of its next financing to determine the price per share of Common stock. If the Company has not completed a financing within the next six (6) months then the price of the Common Stock that the Preferred converts into will be priced at one ($1.00) dollar per share; and
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
WHEREAS,
Hamburg Investment Company, LLC (“HIC” “Purchaser”) a Nevada Limited Liability Co which has signed the Investor Questionnaire, reviewed a Term Sheet, Subscription Supplement and Risk Factors; and
WHEREAS
the parties wish to enter into a transaction whereby HIC will acquire one hundred thousand (“100,000”) shares of Preferred stock of PRLX (the “Shares”) at one ($1.00) dollar per share from PRLX on the terms and conditions set out herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in the Agreement, and in order to consummate the purchase and the sale of the Parallax Diagnostics, Inc. Preferred stock aforementioned, it is hereby agreed as follows:
|
|
1.
|
PURCHASE AND SALE: Subject to the terms and conditions hereinafter set forth, at the closing of the transaction contemplated herby, the Seller shall sell, convey, transfer, and deliver to the Purchaser certificates representing such stock, and the Purchaser shall purchase from the Seller Parallax Diagnostic, Inc. Preferred stock in consideration of the purchase price set forth in this Agreement. The certificates representing the Corporation’s stock shall be duly endorsed for transfer of accompanied by appropriate stock transfer powers duly executed in blank, in either case with signatures guaranteed in the customary fashion, and shall have all the necessary documentary transfer tax stamps affixed thereto at the expense of the Seller. The closing of the transactions contemplated by this Agreement (“Closing”), shall be held at 1327 Ocean Ave, Suite M Santa Monica CA 90401, on June 24, 2011 at 10:00 AM PST, or such other place, date and time as the parties hereto may otherwise agree.
|
|
|
|
|
|
|
2.
|
The check issuance instructions are set forth below as follows;
|
|
|
|
|
|
|
|
Parallax Diagnostics, Inc.
In Care of: J. Michael Redmond
2 Canal Park, 5
th
Floor
Cambridge, MA 02141
|
|
|
3.
|
Information for payment via bank wire;
|
|
|
Bank Name:
Branch:
Account Name:
Account Number:
Routing Number:
|
Bank of America
1301 4
th
Street
Santa Monica, CA 90401
Parallax Diagnostics, Inc.
02184-22996
122000661
|
|
|
3.
|
The address of Purchaser where the Shareholder is to send the Parallax Diagnostics, Inc share certificate is outlined below:
|
|
|
|
|
|
|
|
Hamburg Investment Company, LLC
3194 Quarry Road
Manchester, NJ 08759
|
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
|
|
4.
|
AMOUNT AND PAYMENT OF PURCHASE PRICE. The total consideration for the stock purchase is fully set out below:
|
|
|
|
Purchase one hundred thousand (“100,000”) shares of preferred stock priced at $1.00 per share for one hundred thousand (“USD $100,000”) dollars.
|
|
|
5.
|
REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby warrants and represent:
|
|
|
a.
|
Organization and Standing. Parallax Diagnostics, Inc is a corporation duly organized under the laws of the State of Nevada and has the corporate power and authority to carry on its business as it is now being conducted.
|
|
|
6.
|
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
|
|
|
|
|
|
|
|
Seller and Purchaser hereby represent and warrant that there has been no act or omission by Seller, Purchaser or the Corporation which would give rise to any valid claim against any of the parties hereto for a brokerage commission, finder’s fee, or other like payment in connection with the transactions contemplated hereby.
|
|
|
a.
|
Entire Agreement. This agreement (including the exhibits hereto and any written agreements hereof executed by the parties) constitutes the entire Agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.
|
|
|
|
|
|
|
b.
|
Section and Other Heading. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
|
|
|
|
|
|
|
c.
|
Governing Law. This agreement and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of California. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in Los Angeles County, State of California. In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party’s reasonable attorney’s fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which the prevailing party may be entitled.
|
(balance of page intentionally left blank – signature page follows)
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
IN WITNESS WHEREOF, This Agreement has been executed by each of the individual parties hereto on the date first above written.
Signed:
PARALLAX DIAGNOSTICS, INC.
|
By:
|
/s/ J. Michael Redmond
|
|
06/17/2011
|
|
|
|
J. Michael Redmond
|
|
Date
|
|
|
|
President
|
|
|
|
|
|
Parallax Diagnostics, Inc
|
|
|
|
HAMBURG INVESTMENT COMPANY, LLC
|
By:
|
/s/ Jorn Gorlach
|
|
06/17/2011
|
|
|
|
Jorn Gorlach
|
|
Date
|
|
|
|
Managing Member
|
|
|
|
|
|
Hamburg Investment Company, LLC
|
|
|
|
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
Page
|
4
CONVERTIBLE PREFERRED PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement dated June 17, 2011 is by and between:
Huntington Chase Financial Group, LLC
_________________________________________
(the “Purchaser”)
Parallax Diagnostics, Inc
__________________________________________
(the “Company” or “PRLX”)
WHEREAS,
Parallax Diagnostics, Inc. (“PRLX” “Seller”) a Nevada corporation at 2 Canal Park, 5
th
Floor Cambridge, MA 02141 is authorized to sell one hundred thousand (100,000) shares of Convertible Preferred stock (“Preferred”) of Parallax Diagnostics, Inc.
WHEREAS
, Parallax Diagnostics, Inc. has not yet priced the Common Stock that the holder of Preferred is to convert into, the Purchaser and the Company have agreed to use the valuation of the Company at the time of its next financing to determine the price per share of Common stock. If the Company has not completed a financing within the next six (6) months then the price of the Common Stock that the Preferred converts into will be priced at one ($1.00) dollar per share; and
WHEREAS,
Huntington Chase Financial Group, LLC (“HCFG” “Purchaser”) a Nevada Limited Liability Co which has signed the Investor Questionnaire, reviewed a Term Sheet, Subscription Supplement and Risk Factors; and
WHEREAS
the parties wish to enter into a transaction whereby HCFG will acquire one hundred thousand (“100,000”) shares of Preferred stock of PRLX (the “Shares”) at one ($1.00) dollar per share from PRLX on the terms and conditions set out herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in the Agreement, and in order to consummate the purchase and the sale of the Parallax Diagnostics, Inc. Preferred stock aforementioned, it is hereby agreed as follows:
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
|
|
1.
|
PURCHASE AND SALE: Subject to the terms and conditions hereinafter set forth, at the closing of the transaction contemplated herby, the Seller shall sell, convey, transfer, and deliver to the Purchaser certificates representing such stock, and the Purchaser shall purchase from the Seller Parallax Diagnostic, Inc. Preferred stock in consideration of the purchase price set forth in this Agreement. The certificates representing the Corporation’s stock shall be duly endorsed for transfer of accompanied by appropriate stock transfer powers duly executed in blank, in either case with signatures guaranteed in the customary fashion, and shall have all the necessary documentary transfer tax stamps affixed thereto at the expense of the Seller. The closing of the transactions contemplated by this Agreement (“Closing”), shall be held at 1327 Ocean Ave, Suite M Santa Monica CA 90401, on June 17, 2011 at 10:00 AM PST, or such other place, date and time as the parties hereto may otherwise agree.
|
|
|
|
|
|
|
2.
|
The check issuance instructions are set forth below as follows;
|
|
|
|
|
|
|
|
Parallax Diagnostics, Inc.
|
|
|
|
In Care of: J. Michael Redmond
|
|
|
|
2 Canal Park, 5
th
Floor
|
|
|
|
Cambridge, MA 02141
|
|
|
|
|
|
|
3.
|
Information for payment via bank wire;
|
|
|
Bank Name:
|
|
Bank of America
|
|
|
Branch:
|
|
1301 4
th
Street
|
|
|
|
|
Santa Monica, CA 90401
|
|
|
Account Name:
|
|
Parallax Diagnostics, Inc.
|
|
|
Account Number:
|
|
02184-22996
|
|
|
Routing Number:
|
|
122000661
|
|
|
3.
|
The address of Purchaser where the Shareholder is to send the Parallax Diagnostics, Inc share certificate is outlined below:
|
|
|
|
|
|
|
|
Huntington Chase Financial Group, LLC
|
|
|
|
2341 Tuna Canyon Road
|
|
|
|
Topanga, CA 90290
|
|
|
|
|
|
|
4.
|
AMOUNT AND PAYMENT OF PURCHASE PRICE. The total consideration for the stock purchase is fully set out below:
|
|
|
|
|
|
|
|
Purchase one hundred thousand (“100,000”) shares of preferred stock priced at $1.00 per share for one hundred thousand (“USD $100,000”) dollars.
|
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
|
|
5.
|
REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby warrants and represent:
|
|
|
a.
|
Organization and Standing. Parallax Diagnostics, Inc is a corporation duly organized under the laws of the State of Nevada and has the corporate power and authority to carry on its business as it is now being conducted.
|
|
|
6.
|
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
|
|
|
|
|
|
|
|
Seller and Purchaser hereby represent and warrant that there has been no act or omission by Seller, Purchaser or the Corporation which would give rise to any valid claim against any of the parties hereto for a brokerage commission, finder’s fee, or other like payment in connection with the transactions contemplated hereby.
|
|
|
|
|
|
|
7.
|
GENERAL PROVISIONS
|
|
|
a.
|
Entire Agreement. This agreement (including the exhibits hereto and any written agreements hereof executed by the parties) constitutes the entire Agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.
|
|
|
|
|
|
|
b.
|
Section and Other Heading. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
|
|
|
|
|
|
|
c.
|
Governing Law. This agreement and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of California. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in Los Angeles County, State of California. In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party’s reasonable attorney’s fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which the prevailing party may be entitled.
|
(balance of page intentionally left blank – signature page follows)
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
IN WITNESS WHEREOF, This Agreement has been executed by each of the individual parties hereto on the date first above written.
Signed:
PARALLAX DIAGNOSTICS, INC.
|
By:
|
/
s/ J. Michael Redmond
|
|
06/17/2011
|
|
|
|
J. Michael Redmond
|
|
Date
|
|
|
|
President
|
|
|
|
|
|
Parallax Diagnostics, Inc
|
|
|
|
HUNTINGTON CHASE FINANCIAL GROUP, LLC
|
By:
|
/
s/ Edward W. Withrow III
|
|
06/17/2011
|
|
|
|
Edward W. Withrow III
|
|
Date
|
|
|
|
Managing Member
|
|
|
|
|
|
Huntington Chase Financial Group, LLC
|
|
|
|
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
Page
|
4
CONVERTIBLE PREFERRED PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement dated
September 30, 2011
is by and between:
Huntington Chase Financial Group, LLC
_________________________________________
(the “Purchaser”)
Parallax Diagnostics, Inc
__________________________________________
(the “Company” or “PRLX”)
WHEREAS,
Parallax Diagnostics, Inc. (“PRLX” “Seller”) a Nevada corporation at 2 Canal Park, 5
th
Floor Cambridge, MA 02141 is authorized to sell ten thousand (10,000) shares of Convertible Preferred stock (“Preferred”) of Parallax Diagnostics, Inc.
WHEREAS
, Parallax Diagnostics, Inc. has not yet priced the Common Stock that the holder of Preferred is to convert into, the Purchaser and the Company have agreed to use the valuation of the Company at the time of its next financing to determine the price per share of Common stock. If the Company has not completed a financing within the next six (6) months then the price of the Common Stock that the Preferred converts into will be priced at ten ($10.00) dollars per share; and
WHEREAS,
Huntington Chase Financial Group, LLC (“HCFG” “Purchaser”) a Nevada Limited Liability Co which has signed the Investor Questionnaire, reviewed a Term Sheet, Subscription Supplement and Risk Factors; and
WHEREAS
the parties wish to enter into a transaction whereby HCFG will acquire ten thousand (10,000) shares of Preferred stock of PRLX (the “Shares”) at ten ($10.00) dollars per share from PRLX on the terms and conditions set out herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in the Agreement, and in order to consummate the purchase and the sale of the Parallax Diagnostics, Inc. Preferred stock aforementioned, it is hereby agreed as follows:
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
|
|
1.
|
PURCHASE AND SALE: Subject to the terms and conditions hereinafter set forth, at the closing of the transaction contemplated herby, the Seller shall sell, convey, transfer, and deliver to the Purchaser certificates representing such stock, and the Purchaser shall purchase from the Seller Parallax Diagnostic, Inc. Preferred stock in consideration of the purchase price set forth in this Agreement. The certificates representing the Corporation’s stock shall be duly endorsed for transfer of accompanied by appropriate stock transfer powers duly executed in blank, in either case with signatures guaranteed in the customary fashion, and shall have all the necessary documentary transfer tax stamps affixed thereto at the expense of the Seller. The closing of the transactions contemplated by this Agreement (“Closing”), shall be held at 1327 Ocean Ave, Suite M Santa Monica CA 90401, on September 30, 2011 at 10:00 AM PST, or such other place, date and time as the parties hereto may otherwise agree.
|
|
|
|
|
|
|
2.
|
The check issuance instructions are set forth below as follows;
|
|
|
|
|
|
|
|
Parallax Diagnostics, Inc.
|
|
|
|
In Care of: J. Michael Redmond
|
|
|
|
2 Canal Park, 5
th
Floor
|
|
|
|
Cambridge, MA 02141
|
|
|
|
|
|
|
3.
|
Information for payment via bank wire;
|
|
|
Bank Name:
|
|
Bank of America
|
|
|
Branch:
|
|
1301 4
th
Street
|
|
|
|
|
Santa Monica, CA 90401
|
|
|
Account Name:
|
|
Parallax Diagnostics, Inc.
|
|
|
Account Number:
|
|
02184-22996
|
|
|
Routing Number:
|
|
122000661
|
|
|
3.
|
The address of Purchaser where the Shareholder is to send the Parallax Diagnostics, Inc share certificate is outlined below:
|
|
|
|
|
|
|
|
Huntington Chase Financial Group, LLC
|
|
|
|
2341 Tuna Canyon Road
|
|
|
|
Topanga, CA 90290
|
|
|
|
|
|
|
4.
|
AMOUNT AND PAYMENT OF PURCHASE PRICE. The total consideration for the stock purchase is fully set out below:
|
|
|
|
|
|
|
|
Purchase ten thousand (10,000) shares of preferred stock priced at $10.00 per share for one hundred thousand ($100,000) dollars.
|
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
|
|
5.
|
REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby warrants and represent:
|
|
|
a.
|
Organization and Standing. Parallax Diagnostics, Inc is a corporation duly organized under the laws of the State of Nevada and has the corporate power and authority to carry on its business as it is now being conducted.
|
|
|
6.
|
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
|
|
|
|
|
|
|
|
Seller and Purchaser hereby represent and warrant that there has been no act or omission by Seller, Purchaser or the Corporation which would give rise to any valid claim against any of the parties hereto for a brokerage commission, finder’s fee, or other like payment in connection with the transactions contemplated hereby.
|
|
|
|
|
|
|
7.
|
GENERAL PROVISIONS
|
|
|
a.
|
Entire Agreement. This agreement (including the exhibits hereto and any written agreements hereof executed by the parties) constitutes the entire Agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.
|
|
|
|
|
|
|
b.
|
Section and Other Heading. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
|
|
|
|
|
|
|
c.
|
Governing Law. This agreement and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of California. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in Los Angeles County, State of California. In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party’s reasonable attorney’s fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which the prevailing party may be entitled.
|
(balance of page intentionally left blank – signature page follows)
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
IN WITNESS WHEREOF, This Agreement has been executed by each of the individual parties hereto on the date first above written.
Signed:
PARALLAX DIAGNOSTICS, INC.
|
By:
|
/
s/ J. Michael Redmond
|
|
09/30/2011
|
|
|
|
J. Michael Redmond
|
|
Date
|
|
|
|
President
|
|
|
|
|
|
Parallax Diagnostics, Inc
|
|
|
|
HUNTINGTON CHASE FINANCIAL GROUP, LLC
|
By:
|
/
s/ Edward W. Withrow III
|
|
09/30/2011
|
|
|
|
Edward W. Withrow III
|
|
Date
|
|
|
|
Managing Member
|
|
|
|
|
|
Huntington Chase Financial Group, LLC
|
|
|
|
|
Confidential Convertible Preferred Stock Purchase Agreement
|
Parallax Diagnostics, Inc
|
Page
|
4
Exhibit 99.1
NAME OF OFFEREE: ___________________________
DOCUMENT NO.: ___________________________
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
FOR ACCREDITED INVESTORS ONLY
PARALLAX DIAGNOSTICS, INC.
, a Nevada corporation (the “Company”), is offering up to 20 units of Series “A” Convertible Preferred stock (“Preferred”) consisting of ten thousand (10,000) shares of the Company’s Preferred Stock per unit at a price of $10,000 per unit and Warrants to purchase two hundred thousand (200,000) shares of Common Stock for sale to accredited investors (the “Offering”) on a “best efforts” basis, $2,000,000 maximum offering. The minimum subscription is for $100,000.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
|
|
Price to Investors
(1)
|
Placement Fees’ Fees
(2)
|
Proceeds to
Company
(3)
|
|
Per Unit
|
$ 100,000
|
$ 10,000
|
$ 90,000
|
|
|
|
|
|
|
Maximum Offering
(4)
|
$2,000,000
|
$200,000
|
$1,800,000
|
(footnotes on following page)
Member FINRA SIPC
30950 Rancho Viejo Road, Suite 120 San Juan Capistrano, CA 92675 www.monarchbayassociates.com
|
|
|
Contact:
Joseph Vigliarolo
|
|
|
July 1, 2012
|
Tel: 310.536.0500
|
Confidential
(1) The price of the Convertible Preferred Stock Unit has been determined by the Company and bears no relationship to the Company's assets, book value or results of operations or any other generally accepted criteria of value. See "Plan of Distribution."
(2) The Company intends to offer the Convertible Preferred Stock Units as its own Issuer and has agreed to pay Finders who identify potential investors in the Offering: (a) a fee equal to 8% of the Offering proceeds; and (b) an unaccountable expense allowance equal to 2% of the Offering proceeds and ten (10%) percent Warrant coverage.
(3) Such figures do not include deductions for expenses related to the Offering, including filing, printing, legal, accounting and other miscellaneous expenses.
(4) The Offering is being made on a “best efforts” basis, with a $2,000,000 maximum (the “Maximum Offering”). All funds received from subscribers from the sale of the Offering will be held in an non-interest bearing Escrow Account at Wells Fargo Bank, N. A.,333 Market Street, 18th Floor, San Francisco, California 94105; Attention Michael Susnow VP. The Offering shall continue for a period of 120 days from the date of this Memorandum (which period may be extended for up to an additional 120 days) (the “Initial Offering Period”). See “Plan of Distribution.”
The Company has 400,000,000 shares of Common Stock authorized and as of October 1, 2011, 28,000,000 are issued and outstanding. The Company is fully reporting privately but has not filed its 15c211 to have its Common Shares listed on the NASDAQ OTCBB market; therefore shares are not currently traded on any public market.
THE CONVERTIBLE PREFERRED STOCK UNITS OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. ANY PERSON WHO IS NOT IN A POSITION TO LOSE THE ENTIRE AMOUNT OF SUCH INVESTMENT SHOULD MAKE NO INVESTMENT IN THE CONVERTIBLE PREFERRED STOCK UNITS. SEE "RISK FACTORS."
EACH INVESTOR, BY ACCEPTING A COPY OF THIS MEMORANDUM, ACKNOWLEDGES THAT SUCH INVESTOR MAY RECEIVE CONFIDENTIAL INFORMATION FROM US, AND AGREES NOT TO DISCLOSE ANY SUCH CONFIDENTIAL INFORMATION TO OTHERS, AND TO USE SUCH CONFIDENTIAL INFORMATION ONLY TO EVALUATE AN INVESTMENT IN THE SECURITIES OFFERED HEREBY AND NOT FOR ANY OTHER PURPOSE.
THIS MEMORANDUM HAS BEEN PREPARED IN CONNECTION WITH A PRIVATE OFFERING OF SECURITIES OF PARALLAX DIAGNOSTICS, INC., A NEVADA CORPORATION. THE INFORMATION IN THIS MEMORANDUM IS PROVIDED ONLY TO ACCREDITED INVESTORS HAVING THE ABILITY TO ACCEPT THE RISKS AND LACK OF LIQUIDITY INHERENT IN THE PROPOSED INVESTMENT.
THIS OFFERING IS BEING MADE IN RELIANCE ON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND CERTAIN STATE SECURITIES LAWS AS AN OFFER AND SALE OF SECURITIES NOT INVOLVING A PUBLIC OFFERING. NO ASSURANCE CAN BE GIVEN THAT A PUBLIC MARKET WILL CONTINUE FOR THE SHARES. THE SHARES MAY NOT BE TRANSFERRED WITHOUT SATISFACTION OF CERTAIN CONDITIONS, INCLUDING REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION UNDER THE SECURITIES ACT AND THE SECURITIES LAWS OF CERTAIN STATES. PROSPECTIVE INVESTORS SHOULD ASSUME THAT THEY MAY HAVE TO BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE SHARES FOR AN INDEFINITE PERIOD OF TIME.
Confidential
THE SECURITIES ARE BEING OFFERED HEREBY WITHOUT REGISTRATION UNDER THE SECURITIES ACT BY REASON OF THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT SET FORTH IN SECTION 4(2) THEREOF AND RULE 506 OF REGULATION D PROMULGATED THEREUNDER (“RULE 506”). RULE 506 SETS FORTH CERTAIN RESTRICTIONS AS TO THE NUMBER AND NATURE OF PURCHASERS OF SECURITIES OFFERED PURSUANT THERETO. WE HAVE ELECTED TO SELL SECURITIES ONLY TO ACCREDITED INVESTORS; AS SUCH TERM IS DEFINED IN RULE 501(A) OF REGULATION D (“ACCREDITED INVESTORS”). EACH PROSPECTIVE INVESTOR WILL BE REQUIRED TO MAKE REPRESENTATIONS AS TO THE BASIS UPON WHICH IT QUALIFIES AS AN ACCREDITED INVESTOR.
THIS OFFERING IS MADE SUBJECT TO WITHDRAWAL, CANCELLATION OR MODIFICATION BY US. WE RESERVE THE RIGHT TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART OR TO ALLOT TO ANY PROSPECTIVE INVESTOR FEWER THAN THE NUMBER OF COMMON STOCK UNITS SUBSCRIBED FOR BY SUCH INVESTOR. UNITS WILL BE SOLD ONLY TO A LIMITED NUMBER OF INVESTORS MEETING CERTAIN STANDARDS.
THIS PLACEMENT MEMORANDUM (THE "MEMORANDUM") IS CONFIDENTIAL AND HAS BEEN PREPARED BY THE COMPANY SOLELY FOR USE IN CONNECTION WITH THE PROPOSED PRIVATE PLACEMENT OF THE CONVERTIBLE PREFERRED STOCK UNITS DESCRIBED HEREIN. THIS MEMORANDUM IS PERSONAL TO EACH OFFEREE AND DOES NOT CONSTITUTE AN OFFER TO ANY OTHER PERSON OR TO THE PUBLIC GENERALLY TO SUBSCRIBE FOR OR OTHERWISE ACQUIRE THE CONVERTIBLE PREFERRED STOCK UNITS. DISTRIBUTION OF THIS MEMORANDUM TO ANY PERSON OTHER THAN THE OFFEREE AND THOSE PERSONS, IF ANY, RETAINED TO ADVISE SUCH OFFEREE WITH RESPECT THERETO IS UNAUTHORIZED. ANY DISCLOSURE OF ANY OF ITS CONTENTS, WITHOUT PRIOR WRITTEN CONSENT OF US, IS PROHIBITED. EACH PROSPECTIVE INVESTOR, BY ACCEPTING A COPY OF THIS MEMORANDUM, AGREES TO THE FOREGOING AND TO MAKE NO REPRODUCTION OF THIS MEMORANDUM OR ANY DOCUMENTS REFERRED TO HEREIN.
CERTAIN PROVISIONS OF VARIOUS AGREEMENTS ARE SUMMARIZED IN THIS MEMORANDUM, BUT PROSPECTIVE INVESTORS SHOULD NOT ASSUME THAT THE SUMMARIES ARE COMPLETE. SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF THE COMPLETE DOCUMENTS.
WE WILL MAKE AVAILABLE TO ANY PROSPECTIVE INVESTOR, PRIOR TO EACH CLOSING, THE OPPORTUNITY TO ASK QUESTIONS OF AND TO RECEIVE ANSWERS FROM OUR REPRESENTATIVES CONCERNING US AND THE TERMS AND CONDITIONS OF THE OFFERING AND TO OBTAIN ANY ADDITIONAL RELEVANT INFORMATION TO THE EXTENT WE POSSMISES SUCH INFORMATION OR CAN OBTAIN IT WITHOUT UNREASONABLE EFFORT OR EXPENSE.
THE CONVERTIBLE PREFERRED STOCK UNITS DESCRIBED HEREIN MAY NOT BE SOLD NOR MAY ANY OFFERS TO PURCHASE BE ACCEPTED PRIOR TO THE DELIVERY TO PROSPECTIVE INVESTORS OF CERTAIN UNDERLYING DOCUMENTS INCLUDING, AMONG OTHER THINGS, A PROPOSED SUBSCRIPTION AGREEMENT REFLECTING THE DEFINITIVE TERMS AND CONDITIONS OF THE OFFERING. THE FULL TEXT OF SUCH PROPOSED SUBSCRIPTION AGREEMENT SHOULD BE REVIEWED CAREFULLY PRIOR TO PURCHASE.
WE RESERVE THE RIGHT, IN OUR SOLE DISCRETION AND FOR ANY REASON WHATSOEVER, TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR TO ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE CONVERTIBLE PREFERRED STOCK UNITS OR TO ALLOT TO ANY PROSPECTIVE INVESTOR PARALLAX THAN THE NUMBER OF CONVERTIBLE STOCK UNITS SUCH INVESTOR DESIRES TO PURCHASE. WE SHALL HAVE NO LIABILITY WHATSOEVER TO ANY OFFEREE AND/OR INVESTOR IN THE EVENT THAT ANY OF THE FOREGOING SHALL OCCUR.
Confidential
THIS MEMORANDUM (TOGETHER WITH ANY AMENDMENTS OR SUPPLEMENTS AND ANY OTHER INFORMATION THAT MAY BE FURNISHED TO PROSPECTIVE INVESTORS BY US) INCLUDES OR MAY INCLUDE CERTAIN STATEMENTS, ESTIMATES AND FORWARD-LOOKING PROJECTIONS OF THE COMPANY WITH RESPECT TO THE ANTICIPATED FUTURE PERFORMANCE OF THE COMPANY. SUCH STATEMENTS, ESTIMATES AND FORWARD-LOOKING PROJECTIONS REFLECT VARIOUS ASSUMPTIONS OF MANAGEMENT THAT MAY OR MAY NOT PROVE TO BE CORRECT AND INVOLVE VARIOUS RISKS AND UNCERTAINTIES.
THIS MEMORANDUM DOES NOT PURPORT TO BE ALL-INCLUSIVE OR CONTAIN ALL INFORMATION THAT A PROSPECTIVE INVESTOR MAY DESIRE IN INVESTIGATING US. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THIS MEMORANDUM CONTAINS ALL OF THE REPRESENTATIONS BY US CONCERNING THIS OFFERING, AND NO PERSON IS AUTHORIZED TO MAKE DIFFERENT OR BROADER STATEMENTS THAN THOSE CONTAINED HEREIN. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT EXPRESSLEY SET FORTH IN THIS MEMORANDUM.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS MEMORANDUM AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE CONVERTIBLE PREFERRED STOCK UNITS OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY FROM ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
NOTICES REQUIRED BY STATE LAW
FOR RESIDENTS OF ALL STATES
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF OUR COMPANY AND THE TERMS OF THE OFFERING INCLUDING THE MERITS AND RISKS INVOLVED. ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS NOT RECOMMENDEDTHESE SECURITIES. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE ABLE TO WITHSTAND A TOTAL LOSS OF THEIR INVESTMENT.
Confidential
NOTICE TO NEW YORK RESIDENTS
THIS INVESTMENT MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW YORK PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENATIONS TO THE CONTRARY ARE UNLAWFUL.
NOTICE TO NEW JERSEY RESIDENTS
THIS INVESTMENT MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY THE NEW JERSEY BUREAU OF SECURITIES OR THE DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEW JERSEY PRIOR TO ITS ISSSUANCE AND USE. NEITHER THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY NOR THE BUREAU OF SECURITIES HAS PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING INVESTMENT MEMORANDUM. ANY REPRESENTATIONS TO THE CONTRARY ARE UNLAWFUL.
TABLE OF CONTENTS
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Special note regarding forward-looking statements
This Private Placement Memorandum includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words ‘‘believe,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘estimate,’’ ‘‘continue,’’ ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘potential,’’ ‘‘predict’’ and similar expressions, as they relate to us, are intended to identify forward-looking statements. Forward-looking statements contained in this prospectus include, but are not limited to, statements relating to:
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FORWARD LOOKING STATEMENTS
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Statements included in this Private Placement Memorandum that do not relate to present or historical conditions are "forward-looking statements" within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "1995 Reform Act"). Additional oral or written forward-looking statements may be made by us from time to time and such statements may be included in documents other than this Memorandum that are filed with the SEC. Such forward-looking statements involve risks and uncertainties that could cause results or outcomes to differ materially from those expressed in such forward-looking statements. Forward-looking statements in this Memorandum and elsewhere may include, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions and adequacy of resources and are intended to be made pursuant to the Safe Harbor provisions of the 1995 Reform Act.
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The following summary of certain information contained in this Memorandum is qualified in its entirety by the more detailed information and financial statements and notes thereto appearing elsewhere in this Memorandum. Each prospective investor is urged to read this Memorandum in its entirety. The Convertible Preferred Shares, Common Stock Warrants and Additional Investment Rights offered hereby involve a high degree of risk. Investors should carefully consider the information set forth under the heading "Risk Factors."
Company Overview
Description
Parallax Diagnostics, Ltd (“Parallax”) is a bio-medical company, which owns a line of proprietary, FDA approved, Point of Care diagnostic tests on a single platform. Parallax is developing a novel, handheld diagnostic testing system that is simple, rapid and elegant, offering the potential to transform the diagnostic landscape by transitioning critical tests from the centralized lab directly to the hands of the physician or clinicians. Our focus is on tests that detect and/or monitor infectious diseases. We are further developing a rapid test that can be done at the point of care to determine the immune status of patients that are immune-compromised. The company has an FDA approved technology that is being used as a platform for the development of a novel test that will detect CD4 and CD8 cells which in turn determine a patient’s immune status at point-of-care.
Confidential
We are currently headquartered in Cambridge, Massachusetts with additional offices in Santa Monica, California. On September 10, 2010, Parallax entered into an Agreement of the Assignment of Intellectual Property (the “Assignment Agreement”) and an Agreement of the License of Intellectual Property (the “License Agreement”) with Montecito. Pursuant to the terms and conditions of the Assignment Agreement and the License Agreement, Parallax acquired the right, title, and interest to 12 FDA 510(k) cleared tests in the area of infectious diseases in consideration for the payment of $750,000 for the Assignment Agreement and $750,000 for the License Agreement and the issuance of 1,500 shares of common stock of Parallax which, at the date of the transaction, represented one hundred (100%) percent of the issued and outstanding stock of Parallax, to Montecito. Moreover, pursuant to the terms and conditions of the License Agreement, Parallax acquired an exclusive license to a suite of proprietary medical devices, tests and utility processes that include,
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US2006051348: Method of Producing a Plurality of Isolated Antibodies
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US2006052948: Method of Producing Drugs, Targeting Moieties or Diagnostics
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US 11/856,925: Method for Determining the Immune State of a Subject
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US 11/924,033: Portable Apparatus for Improved Sample Analysis
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* US 11/924,033 is currently also applied for under PCT in ALL countries
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in the Territories of Use and in the Field of Use. Parallax’s desktop analyzer and 12 of its tests are 510(k) cleared for commercial sale in the U.S. We have recently initiated the development of a novel CD4-8 rapid point-of-care test for the monitory of immune status in a patient, developed an Rapid HIV 1&2 test, drafted a study protocol and is presently staged for a clinical trial. In addition the Company has recently completed the development of an updated and enhanced version of its FDA Cleared Desktop Analyzer and completed a development plan for the Company’s handheld mobile analyzer.
On September 30
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2011 Parallax restructured its License Agreement and its Assignment Agreement with Montecito Bio Sciences, Ltd and entered into a License Modification agreement and an Assignment Modification Agreement. The Assignment Modification and the License Modification Agreements removed the combined debt owed by Parallax to Montecito of $1,500,000 and converted the obligation to an increase in the percentage of Royalty owed to Montecito. The original Assignment Agreement called for a Royalty of 4% and the Modification changed the percentage to 5%. Once Montecito has received its $750,000 in Royalty revenue the percentage return to 4%. The original License Agreement called for a Royalty of 3.5% and the Modification changed the percentage to 4.5%. Once Montecito has received its $750,000 in Royalty revenue the percentage return to 3.5%. The foregoing summaries of the Assignment Modification Agreement and License Modification Agreement are not complete and are qualified in their entirety by reference to the complete text of the Assignment Modification Agreement and License Modification Agreement, which are available upon request and at
www.sec.gov
.
Confidential
Opportunity
Point of Care Market
In recent years, there has been a continuing shift from the use of laboratory-based analyzers to more technologically advanced point-of-care tests that can be performed in a matter of minutes. Unlike the centralized clinical laboratory segment, which is mature and highly competitive, the point-of-care market is still a relatively early stage market. Although certain simple single analyte diagnostic tests have been developed, such tests have remained incapable of precise and highly sensitive quantitative measurements. As a result, medical tests that require precise quantization of the target analyte have remained the domain of immunoassay analyzers. Parallax believes that there is significant market potential for advanced point-of-care diagnostic products that provide quick and accurate diagnosis during a patient visit, shortening the decision time to medical intervention and minimizing the need for additional patient follow-up, thereby reducing overall health care delivery costs.
Immune Status Test Market
CD4 cells, one of the white blood cell types that HIV attacks, serve as a sort of bellwether for the progression of an HIV infection. A patient’s CD4 cell values help a physician determine their risk for specific opportunistic infections, evaluate if the patient should be placed on anti-retroviral, and help indicate if the treatment provided is effective. In other words, knowing an HIV positive patient’s CD4 cell values is more or less critical to efficient and proper treatment.
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Knowledge of one’s HIV status is the gateway to care and treatment for HIV/AIDS, and it is also potentially a critical prevention measure.
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It is now generally recognized in the international community that there is a need to significantly increase the level of access to robust, high-quality diagnostics in resource-limited settings in order to facilitate early detection and treatment of HIV/AIDS.
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Testing in connection with HIV infection begins with the initial diagnosis of the disease. Following a positive diagnosis, recommended testing includes CD4/CD8 testing for staging and monitoring the progress of the disease before initiation onto ART, and viral load testing for monitoring patients after initiation onto treatment.
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The current method of counting CD4 involves flow cytometry; a process where a big expensive ($35 – 100K+) machine shoots a laser at a thin stream of fluid containing cells and counts them. It works, it’s accurate, but it’s expensive and most people in the developing world don’t have access to such machines.
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There are currently a handful of platforms that account for virtually the entire market share for CD4 testing in resource-limited settings. These are lab-based platforms from BD Biosciences, a division of Becton Dickinson (BD), Beckman Coulter (Coulter), Millipore (formerly Guava and now a division of Merck), Partec and Apogee. In the developing world, BD and Coulter have the largest CD4 testing market share.
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Once an adult is diagnosed as HIV positive, CD4 testing is used together with clinical staging to determine whether the patient is eligible for treatment. This is because after a primary HIV infection, the virus directly attacks CD4 T lymphocyte cells (which effectively coordinate the body’s immune response) and begins to destroy them while at the same time using them as host cells for replication.
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Confidential
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In HIV-infected adults, the measure of an individual’s CD4 T lymphocytes, or absolute CD4 count, is the most robust surrogate marker for immune competence. Clinicians therefore seek to routinely test CD4 and CD8 counts in order to monitor disease progression and to determine when an individual should be initiated on Antiretroviral therapy.
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Once an adult is diagnosed as HIV positive, CD4/8 testing is used together with clinical staging to determine whether the patient is eligible for treatment. This is because after a primary HIV infection, the virus directly attacks CD4 T lymphocyte cells (which effectively coordinate the body’s immune response) and begins to destroy them while at the same time using them as host cells for replication.
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Immune Status Economics:
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Reimbursement in US: $94-96/test
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Sell price from PRLX to end user: $40/test
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Manufacturer Cost/test: >$1.50/test
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1.4 mil people with HIV – CD4 test quarterly
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$8.00-$10.00 sell price to end user
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$>1.50 manufacturer cost per test
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Over 30 mil people with HIV
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Management
Parallax has prioritized finding the very best talent in research, product development, key executive management, and an advisory board with a considerable industry track record. The Parallax management is comprised of industry veterans that have successful commercialized several diagnostic testing platforms while at major diagnostic companies such as Abbott, Baxter (Micro Scan), BioMerieux and Instrumentation Labs (IL). The company is currently represented in two offices with unique areas of focus. The corporate headquarters and R & D operations are located in Cambridge, MA.
Products
The Parallax tests are based on a unique Micro-Flow-Through rapid test platform. The Parallax System is able to provide quantitative and qualitative tests and is fully ubiquitous and interoperable with multiple tests. The platform currently has five infectious disease tests approved by the FDA as well as an FDA 510K cleared desktop analyzer.
Confidential
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Test
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FDA 510K Cleared #
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Rubella-Cube
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TMK892051
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Cmv-Cube
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TMK884842
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Blue Dot Test for Pregnancy
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K884017
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First Sign (Pregnancy, Hcg)
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K973208
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V-Trend Target Im Test (infect mononucleosis)
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K890041
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Target Strep A (Streptococcus Spp.)
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K8800460
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Target Aso Test
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K910073
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Target Hcg
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K914303
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Target Quantitative Hog One Step
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K903937
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V-Trend Target Rf Test
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K904105
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Target Quantitative Hcg
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K890131
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Target Reader
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K885254
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The Company has developed a wireless, Hand-Held Analyzer that is based on a re-engineering of the Company’s desktop analyzer. A patent is currently pending on the combined utilization of the Hand-Held Analyzer with the Micro-Flow –Through technology. The Hand Held is presently ready to go into prototype production.
In addition to bringing the FDA approved tests to market Parallax will focus its initial efforts on developing novel tests that will fill an unmet need. The first test of this kind will be an immune status test that will give a quantitative result for CD4 and CD8 cells.
Mobile Proposition
Parallax mobile testing, data acquisition, and data transmission system plans to meet the needs for diagnostics in particular in areas where either no structured health care systems exist or where – due to geographic nature and population density and distribution – a more decentralized approach is necessary. In addition, the Hand-Held Analyzer can be used in basically all environments, and is suited to use power sources independent of an electric network (rechargeable batteries, solar panel, running on motor vehicle voltage and power supply). Furthermore, the tests can be performed within short time periods, and do not require the performing medical personnel, the physician, or the patient to return for test results or potential initiation of treatment.
Parallax’s business model is built on three sources of revenue. The primary revenue stream will be sales of diagnostic testing devises and disposable cartridges containing diagnostic tests into clinics and physician offices dealing with patients who have or may have an infectious disease. The additional revenue streams will be licensing and joint ventures. The company has the capability to exploit each of these globally.
Market
The Invitro Diagnostic Market alone represents a $100 billion market worldwide. The Parallax Market includes all point of care diagnostics focused on infectious diseases. POC testing is the fastest growing segment of diagnostic testing and the parallax technology lends itself to the fastest growing economies such as India, China, South America and Africa. The Company believes that there is enormous growth opportunity for the exploitation of the Target System platform in developing nations such as Africa, India and Asia. Therefore, one of the first sector-specific spin-offs is envisioned to combine the portable Target System with two tests for the monitoring of AIDS patients.
Confidential
Marketing and Sales
Commercial Strategy
Parallax’s business model is built on three sources of revenue. The primary revenue stream will be sales of disposable cartridges containing diagnostic tests into clinics and physician offices dealing with patients who have or may have an infectious disease. The additional revenue streams will be licensing and joint ventures. The company has the capability to exploit each of these globally.
Direct Sales:
Clinics and Physician Office
Parallax will initially build value from product sales to clinics and physician offices on a global basis, entering into retail clinics after a broader test menu has been developed. The business model includes:
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For Clinics and Physicians who have sufficient test volumes per month, Parallax will provide the Parallax reader and software at a nominal cost.
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The physician will pay for single use test cartridges.
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In the US, Parallax will create a Medical Advisory Board with highly visible and respected physicians in the Infectious disease market. These physicians will act on behalf of Parallax by conducting clinical trials, writing White Papers and speaking at industry conferences on our behalf.
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Parallax is developing the CD4/CD8 product to meet the criteria established by the World Health Organization (WHO). Once the product meets the WHO requirements we will actively seek to gain additional endorsements from other NGO’s such as The Gates Foundation and the United Nations. Having the backing of these organizations will not only be significant in the African market but will provide credibility in the US market as well.
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In the US it is likely that Parallax will partner with a larger industry player in order to leverage their sales and marketing power. However, due to the urban concentration of HIV and infectious diseases it might be feasible to form our own sales force and augment it with a national distributor. These two options will be vetted a decided over the early course of product development.
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Joint Ventures:
International Commercialization
Parallax anticipates using joint ventures as the preferred method to launch products outside of the United States. The initial priority is on those countries that offer a particularly attractive market environment, such as India, China, South America, EU and Africa. Discussions are ongoing with potential partners to form joint ventures capable of serving as international distributors, with agreements expected to include upfront licensing fees, milestone payments, and a share of the JV’s profits.
Co-Development:
Novel Biomarkers
Parallax plans to generate additional co-development revenue in the near-term by working with pharmaceutical companies and Biomarker companies on a strategic basis to adapt custom assays to the Parallax system. Parallax will also incorporate novel biomarker assays into its physician office sales model that has either been developed by the company or in partnership with other companies. This approach will allow Parallax to maintain its position at the forefront of emerging disruptive diagnostic tests. Licensing deals will consist of upfront fees paid to Parallax for R&D, milestone driven success fees and continuing royalties for ongoing use of the license.
Confidential
Capital Requirements
Parallax is currently seeking $2 million. Management projects the $2.0 million capital will; (1) complete the Hand-Held Analyzer and deliver a production ready model, modify and upgrade to current desk-top analyzer to integrate upgraded components (2) develop, test and prove thesis of CD4-8 monitoring tests, (3) initial operational capitalization for Parallax.
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Senior Management Team and Board Secured, Cambridge, MA Office secured
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Retained Public Auditor & Securities Counsel
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Executed a successful Reverse Merger and became a fully reporting company
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Acquired Intellectual Property License to Patent Portfolio
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Acquired Assignment to 12 FDA Cleared 510K Tests
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Signed Agreement with Corder Engineering to update Parallax Desktop Analyzer.
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Signed Agreement with Myers Stevens Group, Inc. manufacture proprietary Test Cartridge.
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Developed HIV 1&2 Protocol for Clinical Trial
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CD4-CD8 Test Development Plan Completed with Budget/Timelines
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Mobile Reader Development Plan Completed with Budget/Timelines
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Signed NDA with Affinity Labs of Boston MA and negotiated a CD4-8 Antigen Development Agreement.
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Signed NDA with Proven Process Inc., of Mansfield, MA and negotiated a Handheld Mobile Analyzer Development Agreement.
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November 2012 Company receives operational version of the updated Parallax Desktop Analyzer.
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November 2012 Company receives the first updated Parallax Target Cartridge with a CRP Qualitative Test.
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Negotiated a Testing and Validation Agreement with the University of Maryland Medical Center Pathology Department to test and validate Parallax’s Rapid CD4-8 Test. As of 2-1-2012 Agreement is in final draft with the Legal Department at the University of Maryland.
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Met with the Director of Diagnostics at the William and Melinda Gates Foundation and were requested to return with early validation data on the CD4/CD8 assay.
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Retained Monarch Capital Advisors, LLC as our Investment Banker and Market Maker.
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Drafted the Company’s 15c211 Filing to be filed with FINRA in order to obtain Trading Symbol
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Confidential
For Accredited Investors Only
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Offering Size
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Maximum 20 Convertible Preferred Stock Units ($2,000,000)
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Description of Securities
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Securities Offered: 20 Convertible Preferred Stock Units of $100,000 each, representing a total sum of $2,000,000. Each Convertible Preferred Stock Unit consists of Ten Thousand (10,000) shares of the Company’s Preferred Stock and two hundred thousand (200,000) Warrants to purchase Common stock. The Company has 400,000,000 shares of Common Stock, par value $0.001 and 100,000,000 Preferred authorized.
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Offering Price
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$100,000 per Convertible Preferred Stock Unit. Minimum of 1 unit.
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Common Shares Outstanding
October 1, 2011
(1):
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Approximately 28,000,000
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(1) Does not include any Common Shares which may be issued upon sale of Convertible Preferred Stock Units and their subsequent conversion into Common stock.
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Market Price of Common Shares
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The Company is fully reporting but not currently publicly listed; therefore shares are not currently traded on any public market.
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Nature of Offering
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The Offering is being made on a “best efforts” basis, $2,000,000 Maximum Offering. The Offering is being made to “Accredited Investors,” as defined in Regulation D under the Securities Act. Officers, directors, employees and affiliates of us may also make purchases. We may accept or reject subscriptions in our discretion.
Each subscriber for Convertible Preferred Stock Units shall deliver a wire transfer or tender a check to the Company’s bank account at Bank of America at 1301 4
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Street Santa Monica, CA 90401 in the amount of the investment subscribed for.
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Eligible Investors
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The Convertible Preferred Stock Units
offered hereby shall be offered only to a limited number of “Accredited Investors,” as defined in Rule 501 (a) of Regulation D under the Securities Act. Investors will be required to make certain representations with respect to their status and business experience and to represent, among other things, that they have received a copy of this Memorandum, understand the terms of this Offering and are accredited investors as required under the investor suitability standards. We may accept or reject subscriptions in our discretion. See "Terms of the Offering – Investor Suitability Standards."
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Use of Proceeds
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The maximum net proceeds to us from the sale of all of the Convertible Preferred Stock Units offered hereby are estimated to be $1,800,000 if the Maximum Offering is sold. Parallax is raising $2 million in exchange for 12.5%% ownership in the company to produce a working prototype/production model of the hand-held mobile reader and a novel CD4-8 immune status test within eighteen (18) months.
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Risk Factors
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The securities offered hereby involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. Before investing in the Convertible Preferred Stock Units, prospective investors should carefully consider the information set forth under the heading “Risk Factors” in this Memorandum.
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Registration Rights
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We have agreed to include Piggyback Registration Rights for the shares that comprise the
Common Stock that underlies the Convertible Preferred shares and Common Stock Warrants.
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Pending registration, the common shares comprising underlying the
Convertible Preferred Stock Units
(“Unit Shares”) and Common Stock Warrants (“Warrants”) shall be restricted securities under the federal securities laws and applicable state securities laws and, therefore, may only be transferred pursuant to the registration requirements of federal and state securities laws or pursuant to an exemption from such registration requirements. The Unit Shares will bear a restrictive legend stating these resale restrictions. Holders will be required to furnish a legal opinion satisfactory to us before offering, reselling, pledging or transferring such securities except pursuant to an effective registration statement under the Securities Act of 1933.
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AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE IN NATURE, INVOLVES A HIGH DEGREE OF RISK AND SHOULD NOT BE MADE BY ANY INVESTOR WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT. EACH PROSPECTIVE PURCHASER SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND SPECULATIVE FACTORS ASSOCIATED WITH THIS OFFERING, AS WELL AS OTHERS DESCRIBED ELSEWHERE IN THIS MEMORANDUM, BEFORE MAKING ANY INVESTMENTS.
THIS MEMORANDUM CONTAINS CERTAIN STATEMENTS RELATING TO FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF OUR COMPANY. PROSPECTIVE INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS, INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH STATEMENTS, PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS IDENTIFIED IN THIS MEMORANDUM, INCLUDING THE MATTERS SET FORTH BELOW, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.
An investment in our Company is highly speculative in nature and involves an extremely high degree of risk.
We are a development
stage company with a limited operating history and may never be able to effectuate our business plan or achieve sufficient revenues or profitability; at this stage of our business, even with our good faith efforts, potential investors
have a high probability of losing their entire investment.
We are subject to all of the risks inherent in a development stage company. In particular, potential investors should be aware that we have not proven that we can:
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raise sufficient capital in the public and/or private markets;
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have access to a line of credit in the institutional lending marketplace for the expansion of our business;
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respond effectively to competitive pressures; or
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recruit and build a management team to accomplish our business plan.
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Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a new business, and our Company is a highly speculative venture involving significant financial risk.
We have a limited track record that would provide a basis for assessing our ability to conduct successful business activities. We may not be successful in carrying out our business objectives.
The revenue and income potential of our proposed business and operations are unproven as a limited operating history makes it difficult to evaluate the future prospects of our business. There is limited information at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Accordingly, we have a limited track record of successful business activities, strategic decision making by management, fund-raising ability, and other factors that would allow an investor to assess the likelihood that we will be successful in marketing our services. As such, there is a substantial risk that we will not be successful in generating sufficient operating revenues or in achieving profitable operations, irrespective of competition.
The time needed to obtain regulatory approvals and respond to changes in regulatory requirements could adversely affect our business.
Many of our proposed and existing products are subject to regulation by the FDA and other governmental or public health agencies. In particular, we are subject to strict governmental controls on the development, manufacture, labeling, distribution and marketing of our products. In addition, we are often required to obtain approval or registration with foreign governments or regulatory bodies before we can import and sell our products in foreign countries.
The process of obtaining required approvals or clearances from governmental or public health agencies can involve lengthy and detailed laboratory testing, human clinical trials, sampling activities and other costly, time-consuming procedures. For example, we will be seeking FDA approval for the use of a CD4-8 rapid test. Approval of these claims will include the submission of clinical data and could require significant time to obtain. The submission of an application to the FDA or other regulatory authority for these or other claims does not guarantee that an approval or clearance to market the product will be received. Each authority may impose its own requirements and delay or refuse to grant approval or clearance, even though a product has been approved in another country.
Moreover, the approval or clearance process for a new product can be complex and lengthy. This time span increases our costs to develop new products and increases the risk that we will not succeed in introducing or selling them in the United States or other countries.
Newly promulgated or changed regulations could also require us to undergo additional trials or procedures, or could make it impractical or impossible for us to market our products for certain uses, in certain markets, or at all.
The regulations in some states may restrict our ability to sell products in those states. While we intend to work with state legislators and regulators to remove or modify any applicable restrictions, there is no guarantee we will be successful in these efforts.
In addition, all in vitro diagnostic products that are to be sold in the European Union (“EU”) must bear the CE mark-indicating conformance with the essential requirements of the In Vitro Diagnostic Directive (“IVDD”). We will not be permitted to sell our products in the EU without a CE mark after this date. While we intend to CE mark certain existing and future products, and are not aware of any material reason why we will be unable to do so, there can be no assurance that compliance with all provisions of the IVDD will be demonstrated and the CE mark obtained prior to the deadline.
If we are unable to obtain additional funding, our business operations will be harmed.
We will require additional funds to operate our business and address all necessary infrastructure concerns. We anticipate that we will require a minimum of $3,500,000 to fund our continued operations for the next Eighteen months. The inability to raise the required capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain necessary financing, we
will likely be required to curtail our development plans that could cause the Company to become dormant. Any additional equity financing may involve substantial dilution to our then existing shareholders.
There is substantial doubt about our ability to continue as a going concern.
In their audit report with regard to our financial statements as of December 31, 2010, 2009 and 2008, our independent registered public accountants have expressed an opinion that substantial doubt exists as to whether we can continue as a going concern. Because we have limited cash resources, we believe that if we do not raise additional capital within the next 12 months in addition to the net proceeds from this offering, we may be required to suspend or cease the implementation of our business plan. As such we may have to cease operations and you could lose your entire investment. Accordingly, we may find it difficult or impossible to attract investors.
Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, access to capital and cost of capital.
The capital and credit markets have been experiencing extreme volatility and disruption for more than twelve months. We have historically relied on credit to fund our business and we need liquidity to pay our operating expenses. Without sufficient liquidity, we will be forced to curtail our operations, and our business will suffer. Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital required to operate our business. Such market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to operate and grow our business. As such, we may be forced to delay raising capital or bear an unattractive cost of capital that could decrease our profitability and significantly reduce our financial flexibility. Our results of operations, financial condition, cash flows and capital position could be materially adversely affected by disruptions in the financial markets.
Our ability to sell products could be adversely affected by competition from new and existing diagnostic products and by treatment or other non-diagnostic products that may be developed.
The diagnostic industry is focused on the testing of biological specimens in a laboratory or at the point of care and is highly competitive and rapidly changing. Our principal competitors often have considerably greater financial, technical and marketing resources. As new products enter the market, our products may become obsolete or a competitor’s products may be more effective or more effectively marketed and sold than ours. If we fail to maintain and enhance our competitive position, our customers may decide to use products developed by competitors, which could result in a loss of revenues.
In addition, the development and commercialization of products outside of the diagnostics industry could adversely affect sales of our product. For example, the development of a safe and effective vaccine to HIV or treatments for other diseases or conditions that our products are designed to detect, could reduce, or eventually eliminate the demand for our CD4-8 rapid test or other diagnostic products and thereby result in a loss of revenues.
Our research, development and commercialization efforts may not succeed or our competitors may develop and commercialize more effective or successful diagnostic products.
In order to remain competitive, we must regularly commit substantial resources to research and development and the commercialization of new products.
The research and development process generally takes a significant amount of time from inception to commercial product launch. This process is conducted in various stages. During each stage there is a substantial risk that we will not achieve our goals on a timely basis, if at all, and we may have to abandon a product in which we have invested substantial amounts.
Successful products require significant development and investment, including testing, to demonstrate their cost-effectiveness or other benefits prior to commercialization. In addition, regulatory approval must be obtained before most products may be sold. Additional development efforts on these products will be required before any regulatory authority will review them. Regulatory authorities may not approve these products for commercial sale. In addition, even if a product is developed and all applicable regulatory approvals are obtained, there may be little or no market for the product. Accordingly, if we fail to develop commercially successful products, or if competitors develop more effective products or a greater number of successful new products, customers may decide to use products developed by our competitors. This would result in a loss of revenues and adversely affect our results of operations, cash flows and business.
If we lose our key personnel or are unable to attract and retain qualified personnel as necessary, our business could be harmed.
Our success will depend to a large extent upon the contributions of our executive officers, management, and sales, marketing, operations and scientific staff. We may not be able to attract or retain qualified employees in the future due to the intense competition for qualified personnel among medical products businesses.
If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will adversely affect our ability to effectively manufacture, sell and market our products, to meet the demands of our strategic partners in a timely fashion, or to support internal research and development programs. Although we believe we will be successful in attracting and retaining qualified personnel, competition for experienced scientists and other personnel from numerous companies and academic and other research institutions may limit our ability to do so on acceptable terms.
We may be held liable for injuries resulting from the use of our diagnostic products.
We may be held liable if any of our products, or any product which is made with the use or incorporation of any of our technologies, causes injury of any type or is found otherwise unsuitable during product testing, manufacturing, marketing, sale or usage. Although we intend to obtain product liability insurance prior to implementation of the commercialization of our products, this insurance may not fully cover potential liabilities. As we bring new products to market, we may need to increase our product liability coverage.
Efforts to consolidate or restructure could adversely affect our business.
We may from time to time restructure and consolidate various aspects of our operations in order to achieve cost savings and other efficiencies. We must obtain FDA approval to transfer certain operations to another location. This transfer and the need to obtain FDA approval could interfere with or delay our manufacturing processes and disrupt continued operations. Any delay in or disruption of operations, and in particular manufacturing operations, could result in increased costs or could delay or prevent us from selling certain products and thereby result in a loss of revenue.
Future acquisitions or investments could disrupt our ongoing business, distract our management, increase our expenses and adversely affect our business.
We may consider strategic acquisitions or investments as a way to expand our business in the future. These activities, and their impact on our business, are subject to the following risk factors:
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Suitable acquisitions or investments may not be found or consummated on terms that are satisfactory to us;
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We may be unable to successfully integrate an acquired company’s personnel, assets, management systems and technology into our business;
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Acquisitions may require substantial expense and management time and could disrupt our business;
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An acquisition and subsequent integration activities may require greater capital resources than originally anticipated at the time of acquisition;
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An acquisition may result in the incurrence of unexpected expenses, the dilution of our earnings or our existing stockholders’ percentage ownership, or potential losses from undiscovered liabilities not covered by an indemnification from the seller(s) of the acquired business;
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An acquisition may result in the loss of existing key personnel or customers or the loss of the acquired company’s key personnel or customers;
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The benefits to be derived from an acquisition could be affected by other factors, such as regulatory developments, general economic conditions and increased competition; and
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An acquisition of a foreign business may involve additional risks, including not being able to successfully assimilate differences in foreign business practices or overcome language barriers.
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The incurrence of one or more of the above or other factors may prevent us from achieving all or a significant part of the benefits expected from an acquisition or investment. This may adversely affect our financial condition, results of operations and ability to grow our business.
Our failure to develop new distribution channels may result in lower revenues.
We intend to market many of our products by collaborating with laboratories, diagnostic companies and distributors. Our sales will depend to a substantial degree on our ability to sell products to these customers and develop new product distribution channels, and on the marketing abilities of the companies with which we collaborate.
In addition, some distributors have experienced, and may continue to experience, pressure from their customers to reduce the price of their products and testing services.
Although we will try to maintain the relationships that we hope to develop and expand our business with our distributors, there can be no assurance that such companies will continue to purchase or distribute our products or maintain order volumes, or that new distribution channels will be available on satisfactory terms.
The use of sole supply sources for critical components of our products could adversely affect our business.
If suppliers of certain antigens we utilize in our tests were unable or unwilling to supply the required component, we would need to find another source, and perform additional development work and obtain FDA approval for the use of the alternative component for our products. Completing that development and obtaining such FDA approval could require significant time to complete and may not occur at all. These events could either disrupt our ability to manufacture and sell certain of our products or completely prevent us from doing so. Either event would have a material adverse effect on our results of operations, cash flows and business.
We may depend upon strategic partners to assist in developing and commercializing some of our diagnostic products.
Although we intend to pursue some product opportunities independently, opportunities that require a significant level of investment for development and commercialization or a distribution network may necessitate involving one or more strategic partners. In particular, our strategy for development and commercialization of a Target System rapid CD4-8 test, rapid TB or Malaria test, and certain other products may entail entering into additional arrangements with distributors or other corporate partners, universities, research laboratories, licensees and others. We may be required to transfer material rights to such strategic partners, licensees and others. While we expect that our future partners, licensees and others have and will
have an economic motivation to succeed in performing their contractual responsibilities, the amount and timing of resources to be devoted to these activities will be controlled by others. Consequently, there can be no assurance that any revenues or profits will be derived from such arrangements.
Our success depends on our ability to protect our proprietary technology.
The diagnostics industry places considerable importance on obtaining patent, trademark, and trade secret protection, as well as other intellectual property rights, for new technologies, products and processes. Our success depends, in part, on our ability to develop and maintain a strong intellectual property portfolio or obtain licenses to patents for products and technologies both in the United States and in other countries.
As appropriate, we intend to file patent applications and obtain patent protection for our proprietary technology. These patent applications and patents will cover, as applicable, compositions of matter for our products, methods of making those products, methods of using those products, and apparatus relating to the use or manufacture of those products. We will also rely on trade secrets, know-how, and continuing technological advancements to protect our proprietary technology.
We have entered, and will continue to enter, into confidentiality agreements with our employees, consultants, advisors and collaborators. However, these parties may not honor these agreements and we may not be able to successfully protect our rights to unpatented trade secrets and know-how. Others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets and know-how.
Competing companies previously employed many of our employees, including scientific and management personnel. Although we encourage and expect all of our employees to abide by any confidentiality agreement with a prior employer, competing companies may allege trade secret violations and similar claims against us.
We may collaborate with universities and governmental research organizations, which, as a result, may acquire part of the rights to any inventions or technical information derived from collaboration with them. To facilitate development and commercialization of a proprietary technology base, we may need to obtain licenses to patents or other proprietary rights from other parties. Obtaining and maintaining such licenses may require the payment of substantial costs. In addition, if we are unable to obtain these types of licenses, our product development and commercialization efforts may be delayed or precluded.
A market for our products may not develop.
Our future success will depend, in part, on the market acceptance, and the timing of such acceptance, of new products such as the Target System Rapid CD4-8 test and products currently under development or that we acquire and introduced in the future. To achieve market acceptance, we must make substantial marketing efforts and spend significant funds to inform potential customers and the public of the perceived benefits of these products. We currently have limited evidence on which to evaluate the market reaction to products that may be developed, and there can be no assurance that any products will meet with market acceptance and fill the market need that is perceived to exist.
Because new legislation, including the Sarbanes-Oxley Act of 2002, increases the cost of compliance with federal securities regulations as well as the risks of liability to officers and directors, we may find it more difficult for us to retain or attract officers and directors.
The Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding corporate accountability in connection with recent accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the SEC, under the Securities Exchange Act of 1934. Upon becoming a public company, we will be required to comply with the
Sarbanes-Oxley Act and it is costly to remain in compliance with the federal securities regulations. Additionally, we may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles. Significant costs incurred as a result of becoming a public company could divert the use of finances from our operations resulting in our inability to achieve profitability.
There is currently no trading market for our common stock, which will limit the ability of our stockholders to liquidate their investment.
Outstanding shares of our common stock cannot be offered, sold, pledged or otherwise transferred unless subsequently registered pursuant to, or exempt from registration under, the Securities Act of 1933, as amended (the “Securities Act”) and any other applicable federal or state securities laws or regulations. These restrictions will limit the ability of our stockholders to liquidate their investment.
We may, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our share value.
Our Articles of Incorporation authorize the issuance of 400,000,000 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then 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 our investors, and might have an adverse effect on any trading market for our common stock.
The issuance of preferred stock could adversely affect the voting power or other rights of the holders of our common stock.
Our Articles of Incorporation authorizes the issuance of up to 100,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our directors. Accordingly, our directors are empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights, which could adversely affect the voting power or, other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company.
Our common shares may be subject to the “Penny Stock” Rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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that a broker or dealer approve a person’s account for transactions in penny stocks; and
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the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
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obtain financial information and investment experience objectives of the person; and
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make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
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Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common shares and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because we do not presently intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
For the indefinite future, we intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.
You should consider the United States federal income tax consequences of owning our securities.
There are risks associated with the United States federal income tax consequences of owning our common stock. Because the tax consequences of owning our common stock are complex and certain tax consequences may differ depending on the holder's particular tax circumstances, each potential investor should consult with and rely on its own tax advisor about the tax consequences. In addition, there can be no assurance that the United States federal income tax treatment currently applicable to owning our common stock will not be modified by legislative, administrative, or judicial action that may have a retroactive effect. No representation or warranty of any kind is made with respect to the acceptance by the Internal Revenue Service or any court of law regarding the treatment of any item of income, deduction, gain, loss or credit by an investor on its tax return.
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$2,000,000 Capitalization
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$1,800,000 (Net 10% Fee/ Expense)
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$500,000
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Development and production of prototype:
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100 Hand Held Analyzers
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$50,000
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Modification and update of Desktop Analyzer:
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Desk top Analyzer Unit Production Ready
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$500,000
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Working Capital:
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Salaries, legal, accounting, audit
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$150,000
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Marketing:
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Public Relations, Marketing, Investor Relations, Conferences
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$600,000
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Assay Development
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Feasibility, Assay Prototype, Assay Optimization
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History and Background
We were incorporated in the State of Nevada on April 12, 2010.
Prior to the acquisition transaction described below, our business purpose was to seek the acquisition of or merger with, an existing private company. Accordingly,
we were engaged in organizational efforts in order to put us in a position where we could seek to target and eventually acquire an existing private company.
On January 11, 2011 (the “Closing Date”), we entered into and closed a share exchange agreement (the “Share Exchange Agreement”) with Amersey Investments, LLC (“Amersey”), Parallax Diagnostics, Inc., a Delaware corporation (“Parallax”) and its sole shareholder, Montecito Bio Sciences, Ltd. (“Montecito”). On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) we acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of our common stock, par value $0.0001 and (ii) Parallax merged with and into the Company whereupon the Company continued as the surviving entity and the corporate existence of Parallax ceased (the “Merger”). Additionally, as further consideration for the share exchange and Merger and in accordance with the Shares Exchange Agreement, Amersey cancelled to treasury 28,000,000 shares of our common stock.
As a further condition of the Share Exchange Agreement, the current officers and directors of the Company resigned and J. Michael Redmond was appointed to serve as a Director and also as the CEO and President of the Company. Additionally, Mr. Norman A. Kunin was appointed to serve as the Company’s CFO, Mr. Mike Contarino was appointed to serve as the Company’s Vice President and Dr. Roger Morris was appointed to serve as the Company’s Chief Science Officer. Mr. Edward W. Withrow III, Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.
Parallax was incorporated in the State of Delaware on December 30, 2008 under the name Roth Kline, Inc. Roth Kline, Inc. was renamed Parallax Diagnostics, Inc. on December 29, 2010. Parallax is a development stage company whose principal line of business is in the bio-medical sector. More specifically, Parallax is focused on the exploitation of a proprietary diagnostic and monitoring platform and processes in the area of infectious disease.
Business Overview
We are currently headquartered in Cambridge, Massachusetts with additional offices in Santa Monica, California. On September 10, 2010, Parallax entered into an Agreement of the Assignment of Intellectual Property (the “Assignment Agreement”) and an Agreement of the License of Intellectual Property (the “License Agreement”) with Montecito. Pursuant to the terms and conditions of the Assignment Agreement and the License Agreement, Parallax acquired the right, title, and interest to 12 FDA 510(k) cleared tests in the area of infectious diseases in consideration for the payment of $750,000 for the Assignment Agreement and $750,000 for the License Agreement and the issuance of 1,500 shares of common stock of Parallax which, at the date of the transaction, represented one hundred (100%) percent of the issued and outstanding stock of Parallax, to Montecito. Moreover, pursuant to the terms and conditions of the License Agreement, Parallax acquired an exclusive license to a suite of proprietary medical devices, tests and utility processes that include,
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US2006051348: Method of Producing a Plurality of Isolated Antibodies
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US2006052948: Method of Producing Drugs, Targeting Moieties or Diagnostics
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US 11/856,925: Method for Determining the Immune State of a Subject
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US 11/924,033: Portable Apparatus for Improved Sample Analysis
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* US 11/924,033 is currently also applied for under PCT in ALL countries
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in the Territories of Use and in the Field of Use. Parallax’s desktop analyzer and 12 of its tests are 510(k) cleared for commercial sale in the U.S. We have recently initiated the development of a novel CD4-8 rapid point-of-care test for the monitory of immune status in a patient, developed an Rapid HIV 1&2 test, drafted a study protocol and is presently staged for a clinical trial. In addition the Company has recently completed the development of an updated and enhanced version of its FDA Cleared Desktop Analyzer and completed a development plan for the Company’s handheld mobile analyzer.
On September 30
th
2011 Parallax restructured its License Agreement and its Assignment Agreement with Montecito Bio Sciences, Ltd and entered into a License Modification agreement and an Assignment Modification Agreement. The Assignment Modification and the License Modification Agreements removed the combined debt owed by Parallax to Montecito of $1,500,000 and converted the obligation to an increase in the percentage of Royalty owed to Montecito. The original Assignment Agreement called for a Royalty of 4% and the Modification changed the percentage to 5%. Once Montecito has received its $750,000 in Royalty revenue the percentage return to 4%. The original License Agreement called for a Royalty of 3.5% and the Modification changed the percentage to 4.5%. Once Montecito has received its $750,000 in Royalty revenue the percentage return to 3.5%. The foregoing summaries of the Assignment Modification Agreement and License Modification Agreement are not complete and are qualified in their entirety by reference to the complete text of the Assignment Modification Agreement and License Modification Agreement, which are available upon request. The Company will include the License and Assignment Modification Agreements in its 2011 10K and its March 31, Quarterly Filing with the SEC. The full License Agreement and Assignment Agreement can be found at www.sec.gov.
In recent years, there has been a continuing shift from the use of laboratory-based analyzers to more technologically advanced point-of-care tests that can be performed in a matter of minutes. Unlike the centralized clinical laboratory segment, which is mature and highly competitive, the point-of-care market is still a relatively early stage market. Although certain simple single analyte diagnostic tests have been developed, such tests have remained incapable of precise and highly sensitive quantitative measurements. As a result, medical tests that require precise quantization of the target analyte have remained the domain of immunoassay analyzers. We believe that there is significant market potential for advanced point-of-care diagnostic products that provide quick and accurate diagnosis during a patient visit, shortening the decision time to medical intervention and minimizing the need for additional patient follow-up, thereby reducing overall health care delivery costs.
We believe that there is enormous growth opportunity for the exploitation of the Target System platform in developing nations and regions such as Africa, India, South America, Eastern Europe, Russia and Asia as well as developed markets of North America and Western Europe. One of the first initiatives to be developed for this market will combine the portable Target System Diagnostic Analyzer with two tests for the monitoring of AIDS/TB patients through the use of a proprietary rapid point-of-care immunoassay CD4 test that the Company has begun developing.
CD4 cells, one of the white blood cell types that HIV attacks, serve as a sort of bellwether for the progression of an HIV infection. A patient’s CD4 cell values help a physician determine their risk for specific opportunistic infections, evaluate if the patient should be placed on anti-retroviral, and help indicate if the treatment provided is effective. In other words, knowing an HIV positive patient’s CD4 cell values is more or less critical to efficient and proper treatment.
Knowledge of one’s HIV status is the gateway to care and treatment for HIV/AIDS, and it is also potentially a critical prevention measure. It is now generally recognized in the international community that there is a need to significantly increase the level of access to robust, high-quality diagnostics in resource-limited settings in order to facilitate early detection and treatment of HIV/AIDS. Testing in connection with HIV infection begins with the initial diagnosis of the disease. Following a positive diagnosis, recommended testing includes CD4 testing for staging and monitoring the progress of the disease before initiation onto ART, and viral load testing for monitoring patients after initiation onto treatment.
The current method of counting CD4 involves flow cytometry, a process where a big expensive ($50 – 100K+) machine shoots a laser at a thin stream of fluid containing cells and counts them. It works, it’s accurate, but it’s expensive and most people in the developing world don’t have access to such machines. There are currently a handful of platforms that account for virtually the entire market share for CD4 testing in resource-limited settings. These are lab-based platforms from BD Biosciences, a division of Becton Dickinson (BD), Beckman Coulter (Coulter), Millipore (formerly Guava and now a division of Merck), Partec and Apogee. In the developing world, BD and Coulter have the largest CD4 testing market share.
Once an adult is diagnosed as HIV positive, CD4 testing is used together with clinical staging to determine whether the patient is eligible for treatment. This is because after a primary HIV infection, the virus directly attacks CD4 T lymphocyte cells (which effectively coordinate the body’s immune response) and begins to destroy them while at the same time using them as host cells for replication. In HIV-infected adults, the measure of an individual’s CD4 T lymphocytes, or absolute CD4 count, is the most robust surrogate marker for immune competence. Clinicians therefore seek to routinely test CD4 count in order to monitor disease progression and to determine when an individual should be initiated on Antiretroviral therapy.
Point-of-care diagnostic kits typically consist of test strips that the health care provider tips with a swab sputum or finger-stick of blood and inserts into a hand-held device for near-immediate answers to yes-no, high-low questions. They are simple to use and cheap, fast, disposable and reliable within an acceptable range. For the more quantitative and definitive antibody screening needed in most situations, though, a more substantial amount of blood must be sent out to a diagnostic lab, and hours or days later results from an enzyme-linked immunosorbent assay (ELISA) arrive. These tests are comparatively complex, expensive, and time consuming; only centralized diagnostic facilities can manage sample handling and the cost of instruments and reagents. A point-of-care instrument that has the advantage of a test strip device in terms of ease of use and rapid results along with ELISA-like capabilities for major diseases would circumscribe diagnosis routinely within the course of a patient visit. That would revolutionize diagnostic practices. We have developed just such a device that we intend to sell to doctors and health care providers through our sector-specific subsidiaries.
Our FDA 510(k) cleared desktop analyzer and hand-held mobile immunoassay system incorporates a unique flow-through rapid antigen test platform configuration to produce high-performance quantitative blood test results with the ease of use of rapid qualitative diagnostic strips. The technology, the Target System, consists of a unique disposable cartridge with preloaded reagents capable of testing a multiple test markers and a desktop diagnostic analyzer and hand-held hardware unit similar in size to a mobile phone/PDA. The Parallax device requires a finger-stick of blood and provides results in minutes. The simplicity of the fully loaded disposable test cartridge and subsequent ease-of-use alleviates the regulatory burden on the physician or hospital, which for a quantitative test, is required to have qualified staff draw blood, subsequently spin down the collected sample to obtain serum, and utilize the necessary reagents to conduct the test.
The
Target System Diagnostic Platform is a Controlled Flow-Through Rapid Immunoassay Test, offering an array of improved modifications and features to the traditional Flow-through Immunoassay Test. With its Platform uniformity, patented vacuum pump, absorption layer for sample overflow, and complete compatibility with our optic reader, the Target System Diagnostics Platform is a unique collection of tests for qualitative and quantitative detection of conditions.
The Target System Diagnostic’s "Vacuum Control Flow Device" unique vacuum pump action reduces test time and ensures maximum contact with the membrane antibodies. This patented collection device is virtually unlimited in the number of tests that can be incorporated. Through a modification to existing FDA 510(k) clearance, the device is ideally suited for rapid FDA Clearance of all new tests that may be introduced.
Our products include a FDA-cleared desktop test reader and more than a dozen FDA 510(k) cleared tests. We own a number of patent applications protecting the underlying technology as well as methods for future test development.
We have initiated the development of the first CD4 monitoring rapid test that it believes will revolutionize the testing, monitoring and treatment of AIDS victims in developing economies such as South Africa, Sub-Saharan countries, India and other nations struggling to deal with the treatment of AIDS. The CD4 monitoring test is being developed in conjunction with research leaders in the AIDS community.
Desktop Immunoassay Quantitative and Qualitative Analyzer
The Desk-Top Analyzer is 510(k) cleared and capable of rapidly detecting Quantitative data for the existing FDA-cleared Target system tests.
The Company engaged Corder Engineering in May of 2011 to update the Target Desktop Analyzer and the first updated model was delivered in November of 2011. The Company plans to use this new model as the basis for its production Target Analyzer that will be manufactured under FDA required Good Manufacturing Practice (GMP) and Quality Systems (QS) and by an FDA approved GMP medical devise manufacturer.
Value Proposition
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Multiple light source system providing: Variable Light Wave Analysis into the Infra-Red Spectrum. The higher the spectrum of light means the smaller the analyte that may be identified. It also allows for very specific test development, without having to develop a new analyzer to read the results.
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Field upgrades made through memory chip (SIMMs) or Flash memory stick allows for easy tracking of tests performed (HIPPA compliant, anonymous test results for tests performed per analyzer).
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The same Analyzer is used for all Target System Tests providing for training personnel once and consistent test reading results for either Qualitative or Quantitative Testing.
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When hooked to a printer our Reader can give printed results for any Target System Test, Qualitative or Quantitative, when required.
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Low entry cost for new test development and analysis do to multiple Target Test platform uses. Development only includes algorithm (software for quantitative reading) and substance tested for.
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Next Generation Target System Analyzer; Parallax Hand Held Mobile Analyzer
The next generation Target System Analyzer currently under development is comprised of a highly portable, small, and rapid testing format in conjunction with a mobile, smart phone capacabilities, hand-held data acquisition and test reading device. The Parallax Hand-Held Mobile Analyzer is a re-engineered version of our previously FDA-approved Desktop Analyzer. This innovative Hand-Held Mobile Analyzer allows for a fast (minutes instead of hours or days) performance of tests at the point-of-care, and requires only a Test Cartridge and a small number of ready-to-use solutions in preformatted quantities.
Moreover, the device includes the ability to store and transmit patient, test, and other data, with the ability of wireless data transfer with a full suite of smart phone capabilities that will enable tele-medical applications.
The Hand-Held Mobile Analyzer is set to:
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Achieve a portable monitoring system, which is compatible with proven and reliable ELISA-based target system technology proprietary to Parallax in its licensed market.
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Expand readout capabilities to provide a mobile testing and monitoring platform.
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Increase the economy of scale and scope of the diagnostics and monitoring platform by the development of additional utility of the device without redundant infrastructure investments (additional data acquisition of patients, additional tests for other, predominant diseases).
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The Hand-Held Mobile Analyzer
Whether searching for markers in the blood stream, diagnosing a pathogen in urine, the Parallax Diagnostics, Ltd. Hand-Held Mobile Analyzer is a cutting edge portable tool for rapid diagnostics. The Hand-Held Analyzer provides a profound improvement in point-of-care diagnostics and applications in countries with limited health care infrastructures and geographic limitations, both of which are of paramount importance in the combat against infectious diseases and in the fight against proliferation of endemic and pandemic diseases. The basic design of our Hand-Held Mobile Analyzer is based on the 510(k) cleared technology employed in our Desktop Analyzer and is compatible with existing Test Cartridges. However, a number of innovative features have been integrated into the design to meet customer and patient needs.
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High Infrared Light Spectrum:
Multiple light source system providing: Variable Light Wave Analysis into the Infra-Red Spectrum. This diversity in light source and detection allows for the simultaneous identification and diagnosis of a broader spectrum of different targets within the same sample and assay. It also allows for very specific test development, without having to develop a new analyzer to read the results.
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Easy Field Upgrades:
Field software upgrades made through memory chip (SIMM) or Flash memory stick allows for easy tracking of tests performed (HIPPA compliant, anonymous test results for tests performed per analyzer).
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No Change of Equipment:
The same Analyzer is used for all Target System Tests (example: Cardiac Panel) and can be used on all future tests, this provides for training personnel once and consistent test reading results on an easy to read LCD screen.
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Printer Hook-up Capability:
When hooked to a printer, our Reader can give printed results for any Target System Test, Qualitative when written results must be stored with original test for HIPPA and other compliance issues or Quantitative viral load or measured amount analysis must be printed and maintained in the patient chart folder.
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Low Entry Cost for New Test Development and Analysis:
Due to multiple Target Test platform uses, development only includes algorithm (software for quantitative reading) developed against certified lab samples of variable quantity of substance or viral load to be tested. A new analyzer
does not
have to be developed for different samples types (blood, serum, plasma, urine, soil or human skin).
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Safety, Security and Accuracy by design:
For all tests, our bar code activation system identifies the test to be analyzed, allowing only those medical personal that possess that test to be aware that it is available. Without the specific Target System Test Cartridge read by the bar code reader, the Analyzer will not calibrate to that Test. This precludes mistakes by the user or erroneous results by the reader.
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Each test cartridge bar code must be read to initialize the Analyzer and load the appropriate algorithm from the software table. This provides a level of security for “Specialized” tests created for Bio-Terror applications which eliminates a separate specialized reader for government purposes. The Target System Analyzer can be configured with or without a desk-to-docking station. The docking station provides a stationary platform when in use in an office or non-mobile application. It also provides the user to set up multiple tests samples while the analyzer is processing tests.
Summary
The continuity of platform upgrades and the continuous development of new tests based on an increasing Point-of-Care Market Paradigm points to the Target Quantitative Analyzer as a low cost alternative to large laboratory analyzers and specialized training of personnel on multiple machinery.
The ultimate value to the clinician or the attending physician is the ease of use, reproducibility and the history of accuracy of this type of Rapid Immunoassay principle in the area of quantitative analysis.
The Hand-Held Mobile Analyzer was specifically designed to work with our patented Target System Diagnostics Platform to provide reliable quantitative results within minutes, right at the point-of-care or site of testing.
Test System Cartridges & Assays
The Target System Diagnostic Platform has been specifically designed for the point-of-care and ambulatory use and incorporates a revolutionary single-use disposable cartridge that provides accurate results in minutes. The Target System is a controlled flow-through rapid antigen test utilizing a 510(k) cleared medical device platform called the Target System. The proprietary Target System family of tests encompasses a number of diagnostic tests ranging from Infectious Disease Diagnostics to cardiac tests.
A core component of the Target System Diagnostic Platform is the Test Cartridge. Our Vanguard Test Cartridge has a flow-through design allowing any prepared sample to be applied to a membrane system, thereby facilitating rapid absorption, test solution application, and test development in one single device. The Test Cartridges can be used with samples derived from different biological origins including whole blood, urine, serum, or fecal specimens. The Test Cartridges are less than two inches tall and can be transported easily over long distances and in large numbers. The Test Cartridge is proven in diagnostic laboratories and, as such, all tests are adapted to this format. Our platform utilizes a patented vacuum technology to deposit specimen samples uniformly on test membranes. Excess specimen absorption is built in.
Target Antigen Detection System (TADS)
This engineering foresight in design provides the clinician with process controls not available with other rapid test devices.
This proprietary platform provides tremendous flexibility in sample requirements, clinician training and result interpretation. The “train once” system means the clinician can now perform a number of single use tests on a wide variety of conditions with the interpretation of results consistent through the platform paradigm.
Example of a specific test:
Cytomegalovirus
Cytomegalovirus (CMV) is a human viral pathogen belonging to the Herpes virus family. Infection in humans is widespread and usually results in asymptomatic disease. The CMV test is a solid-phase enzyme immunoassay (EIA) for the detection of antibody to CMV. Inactivated whole CMV virus is immobilized on the test membrane (containing an anti-CMV antibody) as specimen is drawn through the membrane. A second antibody to CMV is applied and captured by the membrane-bound antigen. After washing the membrane to remove unbound antibody, an anti-human antibody-alkaline phosphate enzyme-conjugate, is applied. The conjugate binds to the second CMV antibody. Unbound conjugate is removed by washing and a color development solution is added. The appearance of a dot or a line on the membrane indicates the presence of the second CMV antibody and hence the presence of CMV in the specimen.
Application Flexibility Ubiquity & Interoperability
Incorporated in the design paradigm of the controlled flow system is the ability to rapidly adapt the device to new infectious disease threats. This flexibility in a device provides for a cost effective and rapid response for the primary care physician, trauma care nurse, emergency response providers.
Ease of Use
This patented platform provides tremendous flexibility in sample requirements, clinician training and result interpretation. Our train once system means the clinician can now perform a number of single use tests on a wide variety of conditions with the interpretation of results consistent through the platform paradigm. The “while you watch” speed of the test development, results in a significant cost saving in time and training.
Unlimited Application and Economy of Scale
The unique vacuum pump action reduces test time and ensures maximum contact with the membrane antibodies. This patented collection device is virtually unlimited in the number of different tests that can be incorporated. Through a modification to existing FDA 510(k) clearance, the device is ideally suited for rapid FDA clearance of all new tests that may be introduced. The economy of scale is provided to health care provider or any other customer group by being able to utilize a single test system for multiple tests with varies little variance in training needed. A clinician can move from one test to the next in a matter of minutes.
Furthermore, the capability of acquiring and transmitting patient related data in addition to the tests performed at the point-of-care enable the Hand-Held Mobile Analyzer to become the central diagnostic device in a decentralized, patient oriented, and cost-conscious environment to provide or maintain a high level of health care in the face of threatening epidemics.
Safety and Accuracy by Design
For all tests, our bar code activation system identifies the test to be analyzed, allowing only those medical personal that possess that test will be aware that it is available. Without the specific Target System Test Cartridge, read by the bar code reader, the Analyzer will not calibrate to that Test. This precludes mistakes by the user or erroneous results by the device.
Each Test Cartridge bar code must be read to initialize the Device and load the appropriate algorithm from the software table. This provides a level of security for patient related tests and eliminates errors based on operator’s mistakes.
We provide a combination of innovative, fast, and inexpensive diagnostic and testing products with a highly mobile data collection and transfer test reader. In this regard, the Target System is suitable for rapid, point-of-care testing in almost every environment, which includes emergency situations, remote locations within the US as well as other parts of the world, immediate response teams, personal testing in a home setting, and many more.
Advantageously, many different tests can be performed using the same reader,
e.g.,
either the Target System Desktop Analyzer or the Hand-Held Mobile Analyzer, at any location.
Target System Development Outline
The Target System development process set forth by us will be instituted by all of the Sector-Specific Spin-off companies as part of the Target System License that they will operate under. Below is an overview of some of the standards under which our licensees will operate. We will reserve the right to manufacture the tests and deliver them to our licensees.
The Target “Operator Controlled” Flow through Qualitative and Quantitative single use device as outlined below has been analyzed and deemed to have a product life cycle of 5 to 10 years per test and a new product development cycle of 60 to 120 days per non specialized (bio-hazard) test. This combination of product life per test and short development cycle means the new tests contemplated will spend more time in the sales cycle compared to their development cycle.
New product Identification methods
The product platform as discussed herein is broken down into three categories and their associated sub-groups. The categories are:
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Qualitative
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Quantitative
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Specialized
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Qualitative, Quantitative and Semi-Quantitative Test Possibilities Meeting the New Product Screening Criteria:
Infectious or highly contagious diseases:
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Trichomoniasis
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Chlamydia
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Gonorrhea
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Genital herpes (herpes simplex virus of JSV)
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Genital warts (human papilloma virus or HPV)
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Hepatitis B
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H. pylori
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Human immunodeficiency virus (HIV)
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Lyme Disease
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Rocky Mountain Spotted Fever
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West Nile
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Asian Bird Flu
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Raw substances for the above can be readily purchased by us and incorporated into the Target Platform. All of the above testing areas of medical diagnostics are targeted as important to both governmental (FDA, WHO, NIH and CDC) and medical industries.
This in no way represents the complete segment of Qualitative or Semi-Quantitative tests available for rapid development on the Target Platform. They are examples of our “Rapid to Market” and “Rapid Clearance” ability based on our existing platform approval record.
New Product Identification
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Track all CDC, FDA, WHO, relevant reports of medical diagnostic requirements. Provide analysis of whether the test should be Specialized, Quantitative or Qualitative.
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Determine human capital requirements: project management, outsourcing needed political needs (if any) and social needs (affiliations with association or non-profit groups).
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Determine the market size and utilization of device needed to address identified diagnostic needs.
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Determine from source venders what antibodies and antigens are available to use in our device with minimal regulatory and manufacturing hurdles.
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Perform cost analysis of device manufacture, to include: regulatory application time estimates, clinical requirements, third party and vendor involvement for regulatory support.
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Identify and prepare pre-market distributor (government or commercial) analysis for market penetration timetable and/or government contract fulfillment.
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Identify new partnership resources if necessary for specialty devices.
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On all Quantitative Devices we will determine the Biohazard level at which we are to perform our algorithm development. For highly contagious diseases, we will outsource our complete process to a certified lab.
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In the development of standard quantitative test we will determine through the protocol process: how many tests must be performed for an I.R.B. for both the algorithm development (quantitative controls for each test process) and the accuracy of the variable light analysis.
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All new quantitative tests will be videotaped during algorithm development (light source verification and reflectivity of known sample), and equivalency testing (where we compare ours to another like kind device).
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All software developed for our tests, that are not modifications of existing source code, will be previewed via written outline to the FDA.
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Details of Selected Existing Tests
Qualitative Analysis
The Hand-Held Mobile Analyzer in combination with Qualitative Diagnostics Tests detects the presence of specific markers and the results are indicated as positive or negative. The Qualitative Diagnostic Specimen Collection Kits are all-inclusive and these tests can be administered and qualified without the need for any additional hardware.
No other device on the market provides the clinician with a "point-of-care device controls" that remove the environmental variables associated with alternative rapid blood testing devices.
Infectious Diseases; Current FDA Cleared Tests
Rubella
Rubella, German measles, is a highly contagious disease, which is generally transmitted by direct contact with infected persons. Rubella is generally a mild disease. However, when a pregnant woman becomes infected with rubella, the virus may infect the placenta, multiply and induce serious damage to the fetus. Rubella and congenital rubella syndrome became nationally notifiable diseases in 1966. The largest annual total of cases of rubella in the United States was in 1969, when 57,686 cases were reported (58 cases per 100,000 populations). Following vaccine licensure in 1969, rubella incidence fell rapidly. By 1983, fewer than 1,000 cases per year were reported (<0.5 cases per 100,000 population). A moderate resurgence of rubella occurred in 1990-1991, primarily due to outbreaks in California (1990) and among the Amish in Pennsylvania (1991). In 2002 a record low annual total of 18 cases were reported.
Rotavirus
Human rotavirus is recognized as a major cause of gastroenteritis in infants, young children, and the elderly. During the winter months a portion of gastroenteritis in children is due to rotavirus infection. The disease manifests with the symptoms of vomiting, diarrhea, and fever. Rapid and accurate diagnosis is important to avoid inappropriate antibiotic therapy, provide proper treatment early, and to prevent spread of nosocomial infection.
Globally, rotavirus accounts for an estimated 125 million cases of diarrhea each year and represents 30% - 40% of hospitalizations for diarrhea in children less than five years. In developing countries, between 600,000 and 800,000 children die from rotavirus each year (or approximately 2,000 children each day.) This accounts for about one quarter of the deaths from diarrhea and about 5% of all deaths among children less than five years of age.
CMV- Herpes
Cytomegalovirus (CMV) is a human viral pathogen belonging to the Herpes family. Infection in humans is widespread and usually results in asymptomatic disease. However, severe symptomatic infections are a very significant risk in infants and Immuno-compromised individuals. An important primary source of such infection is via blood transfusion and allograft transfer. The serological status of donor and recipient is, therefore, important in patient management.
The United States is not unique in its high rates of CMV seroprevalence. Virtually every country in the world presents similar numbers. Since recurrences are often mild and few patients are aware that they are infected, the infection is likely to continue to rise at double-digit rates without an intervention.
Group A Streptococci: Strep A, Strep Throat, Necrotizing Fasciitis, impetigo
Strep throat is an infection of the pharynx (the part of the throat between the tonsils and the larynx) caused by streptococcus bacteria. The infection is spread by person-to-person contact with nasal secretions or saliva, often among family or household members. Even though the sore throat usually gets better on its own, people who have strep throat should take antibiotics to prevent some of the more serious complications of this infection, particularly acute rheumatic fever.
Approximately 15% of children who have a sore throat and fever are infected by Group A streptococci. CDC estimates that approximately 9,100 cases of invasive GAS disease (rate: 3.2/100,000) and 1,350 deaths occurred nationally during 2002. Disease incidence was highest among children aged <1 year (6.9/100,000) and adults aged >65 years.
Infectious Mononucleosis: EB, Epstein-Barr Viral Syndrome, Mono
Infectious mononucleosis (IM) is a viral infection causing high temperature, sore throat, and swollen lymph glands, especially in the neck. The Epstein-Barr virus typically causes it. Infectious mononucleosis may begin slowly with fatigue, malaise, headache, and sore throat. The sore throat becomes progressively worse, often with enlarged tonsils covered with a whitish-yellow fibrinous exudate. The lymph nodes in the neck are frequently enlarged and painful. Symptoms of mononucleosis gradually subside over a period of weeks to a month. The disease is generally self-limited.
Quantitative Analysis
The Parallax Hand-Held Analyzer in combination with Quantitative Diagnostics Tests detects the presence and volume of specific markers with the results indicating definitive levels.
Our Diagnostic System’s patented vacuum, specimen filtration and excess specimen absorption built right in. Unlike other devices designed for urine or other highly viscous samples and adapted blood testing, the Diagnostic System has been engineered for blood testing first which allows the platform to be utilized for blood serum, urine, feces and similar biological samples. This engineering foresight in design provides the clinician performing the test with process controls not available with any rapid test device.
Qualitative & Quantitative
HIV 1 & 2
According to the World Health Organization’s (“WHO”) 2009 AIDS Report 33.4 million people are estimated to be living with HIV/AIDS. Of these, 31.3 million are adults. 15.7 million are women, and 2.1 million are children under 15. During 2002, AIDS caused the deaths of an estimated 2 million people, including 1.2 million women and 610,000 children under 15. With the recent advent of Rapid HIV testing, HIV detection and prevention programs around the world have become increasingly effective by reducing their time and costs of detecting the virus, thus allowing for a far greater number of individuals to be screened.
The FDA has approved several rapid Immunoassay tests for the detection of HIV, but none of these tests are designed for HIV 1&2. The current “rate” of these “rapid” tests is from 15 minutes to hours and only a few can produce results less than 15 minutes.
Pandemics & Epidemics
Strategy for marker based immunoassays for AIDS diagnostics, compatible with Parallax Technologies existing diagnostic technology and in development portable instrument platform allows the platform to be ubiquitous and interoperable with a multiple of Pandemic and Epidemic diseases.
To the epidemiological community, the Influenza Pandemic of 2009 is one of the most widely anticipated diseases in history. Epidemiologists have been shouting from rooftops that a pandemic (or, a world-wide epidemic) of influenza is overdue, and that it is not a matter of "if" but "when." The current pathogen creating the threat is actually a mixture of viral genetic elements from all over the globe that have sorted, shifted, sorted, shifted, drifted and recombined to form this worrisome virus.
No one knows if the 2009 swine flu will behave like the 1918 Spanish flu that killed 50 million to 100 million world-wide, or like the 1957 Asian flu and 1968 Hong Kong flu that killed far fewer. This 2009 flu may weaken and lose its virulence, or strengthen and gain virulence -- we just do not know.
Compared with a few years ago, the world is somewhat better prepared to deal with pandemic influenza. There have been training meetings, table-top exercises, dry runs and preparedness drills at virtually every level of government and civil society. World Health Organization member states have agreed on a set of regulations that require all members to report the status of diseases of global significance within their borders.
Today, we remain underprepared for any pandemic or major outbreak, whether it comes from newly emerging infectious diseases, bioterrorist attack or laboratory accident. According to Larry Brilliant, Chairman of the National Biosurveillance Subcommittee “We do not have the best general disease surveillance systems or "surge" capacity in our hospitals and health-care facilities.
The 2009 swine flu will not be the last and may not be the worst pandemic that we will face in the coming years. Indeed, we might be entering an Age of Pandemics. According to the National Biosurveillance Advisory Subcommittee “In our lifetimes, or our children's lifetimes, we will face a broad array of dangerous emerging 21st-century diseases, man-made or natural, brand-new or old, newly resistant to our current vaccines and antiviral drugs. You can bet on it.”
There are variety of initiatives that will be needed to combat the “Next Pandemic/Epidemic” but it can most assuredly be stated with confidence that point of care diagnostics will play a major role in combating these unforeseen and undefined threats by;
Early Diagnosis; Mobile Diagnosis; simplistic tests and Multiple Tests Capability.
The Parallax System Platform is uniquely positioned to provide a mobile rapid and multi test interoperable platform that will meet the needs of health care providers and first responders in the case of a widespread Pandemic or Epidemic.
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AIDS
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Avian Influenza
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Influenza
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Swine Flu
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Malaria
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Plague
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Rift Valley fever
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SARS
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Smallpox
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Yellow Fever
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TB
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AIDS Immune Status Value Proposition
Overview
The treatment of AIDS patients represents a challenge, in the developed world and much more so in developing countries. The current methodology to determine the status of an HIV-positive individual involves elaborate technologies to determine the immune status of an individual as well as the presence of the HIV virus in the individual’s blood (called the “viral load”).
Determination of the immune status is usually performed through so-called cell counts of T-cells, in particular the determination of CD4
+
cell count or the relationship of CD4 and CD3 positive cells. This diagnostic procedure requires high-tech machinery (e.g. cell counters), and well educated laboratory personnel in a stationary laboratory setting. In addition, the cell counting method presently employed and defined by the Western medical community as the “Gold Standard” has shortcomings, which limit its reproducibility and reliability. These factors might cause changes in diagnostic procedures even within those communities in the future. The determination of the amount of virus populating the blood of a person infected with HIV is currently performed through quantitative PCR, again a method requiring stationary settings, as well as highly educated personnel and sophisticated machinery. These setting are usually not available in developing economies. While – in the Western economic environment - the medical care of HIV positive individuals and AIDS patients involves a combination of the above mentioned medical diagnostics in combination with additional, patient dependent procedures, the situation in developing countries looks to the contrary:
In South Africa, the country with one of the highest infection rates with HIV in the world, treatment is only available to a small number of infected people. Even under those medication-limited circumstances, treatment is usually administered without any diagnostic procedures concerning the immune status or the viral load of an individual in question – leading to unnecessary treatment of otherwise non-immuno-compromised individuals and the lack of treatment for others with AIDS at later progression. Countries like China have only recently begun to diagnose for HIV positive individuals – and have not moved into the AIDS diagnostic either. The same can be said for many other countries in Africa and Asia.
Requirements for “appropriate” AIDS diagnostics have been defined by many national and international, organizations, amongst them the WHO, under strong influence of scientists mainly from the US and the EU. These requirements have led to the above described situation in developing counties: NO appropriate diagnosis of AIDS patients caused by requirements that cannot be achieved under the given circumstances and a strong increase of HIV infection in most of these countries over the last years.
Furthermore, the lack of financial resources are limiting to the expansion of suitable points of diagnostics. Cell counts require elaborate machinery (like FACS or alike) and there are no low-cost or highly portable testing systems available to date. There is an overwhelming demand and urgent need to reduce the costs for cell counting or other methods to determine the immune status, and to increase their usefulness in non-laboratory settings.
In addition, the geographic and social structures of many countries require a more point-of-care oriented approach, as opposed to the dominating centralized care found in highly populated countries in North America and Europe. Therefore, it would by highly desirable to reduce the measurements used as a guide for disease progression or treatment to more simple technologies, like an ELISA performed on a handheld device or similar.
For Parallax and our patented technology, as well as our efforts to design a handheld diagnostics device for optimal market use, this means:
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Development of an AIDS testing system, which is compatible with proven, and reliable ELISA based target system technology.
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b)
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Expansion of the capabilities of our handheld device to provide a mobile testing platform.
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c)
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Increase the economy of the diagnostics platform by the development of additional utility of the device without redundant infrastructure investments (additional data acquisition of patients, additional tests for other, predominant diseases).
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d)
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Acceptance of the testing system as well as the platform within the medical community of African, Asian, and other countries with mounting problems in the field of HIV and other infectious diseases.
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AIDS Diagnostics and Immune Status
The prerequisite for an economic, portable, and reliable AIDS testing system is the development of markers, which are reliable indicators for disease progression in AIDS. One approach would be the translation of the historically used cell count methods into such marker measurements, which would lead to a direct translation of existing medical decision processes using the direct marker assessments.
Our aim is to use markers for a diseases progression instead of using the cell count method that is associated with and based on those markers. This system will include – in an ideal case – quantification of CD4 protein in either total blood or CD3
+
pre-selected cell populations. This quantification can directly be used to assess an individual’s immune status.
CD4 CD8 Assay and Handheld Development Plan:
Parallax will utilize the existing technology platform to develop an immunoassay based CD4/CD8 assay. In this approach CD4 and CD8 antigens on the surface of CD4/CD8 are used to calculate the actual number of T cells.
The Parallax system has already been validated as an immunoassay platform by virtue of prior FDA approval. In the specific case of an immunoassay based CD4/CD8 assay a number of academic articles as well as recent immunoassay (semi-quantitative) systems validate this approach. Immunoassay publications supporting this approach include:
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(1)
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Cordiali Fei et al Cytometry 22:70-74 1995
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(2)
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Paxton et al Clinical and Diagnostic Lab Immunology, Jan 1995 p104-114.
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(3)
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Shapiro et al The Lancet Vol. 63 Jan 10th 2004
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The CD4/CD8 assay protocol first requires isolating the specific antigens from 50ul of whole blood then subsequently performing two simultaneous immunoassays to detect the concentration of the CD4/CD8 antigens. Detection of the antigens may be performed in several ways including (i) An enzyme/substrate based fluorescence immunoassay (i) An enzyme/substrate colorimetric immunoassay (iii) A combination of (i) and (ii) and (iv) A high quantum efficiency, non amplified fluorescence tag. All potential approaches will be tested and the optimal approach will be selected. In the protocol example below colorimetric substrates are used as an example only:
Initially CD4 and CD8 T cells are isolated from 50ul of whole blood using CD3 antibodies attached to magnetic beads. CD3 will bind all the T cells in blood. Next the beads are captured on the inner surface of a pipette tip and washed. The T cells are then lysed, releasing the CD4/CD8 antigens which are then added to Parallax filter in the disposable. CD4 and CD8 antigens bind separately to respective antibodies on the filter. Two antibody enzyme conjugates are added and bind to CD4/CD8 respectively. A wash step follows and then spectrally different substrates are added. The enzymes turn over the substrates and generate two spectral signals.
CD4 will use:
- Enzyme conjugate (1) Beta-galactosidase
- Substrate: o-nitrophenyl-beta galactoside
- Yellow product detected at 420nm
CD8 will use
:
- Enzyme conjugate (2) Alkaline phosphatase
- Substrate: phenolphthalein monophosphate
- Red product detected at 550nm
Finally the reader, having been previously quantitatively calibrated using CD4, CD8 calibration standards, measures the reflectance of several discrete wavelengths of light from the sample on the filter paper. Multi-component analysis will be used to calculate spectral contributions of CD4, CD8 with results expected in less than 10 minutes. (Ref: Simultaneous Enzyme Immunoassays of two thyroid hormones Blake et al Clin Chem 1982 July 28th (7) 1469-73
In order to leverage existing skill sets and in the interest of expediting the development process, Parallax will contract the initial phase of the assay development program to an outside assay development organization. Parallax will plan, staff and budget for staffing the assay development internally at the end of the Assay Prototype Phase. The internal Parallax personnel will be dedicated to the CD4 and CD8 project and will subsequently be utilized for future assay development at the appropriate time. The handheld instrument will be contracted to an outside instrument development company for the entire duration of the development. Parallax will not staff an instrument development capability internally.
The development plan will follow a structured phase approach and be conducted under ISO 9001 and FDA development guidelines. The phases are described below:
System Requirements Phase – Duration: 2-4 Weeks
To develop a medical product for FDA approval a comprehensive quality system is required to track and document all product development activities.
The first step in the process is to build a product requirements document detailing all requirements for the proposed system. Since the basic Parallax system has already been FDA approved this is a straightforward task. This document is used throughout the project to confirm that the product meets all user needs in terms of performance, size, cost, functionality etc. Definitive development agreements will be finalized for the Assay Prototype Development and for the Handheld Instrument Development. In addition to creating this document a meeting will be set with the FDA to review our development approach, assay specifications and their testing (clinical trial) criteria.
Resource Allocation:
No full time employees from outside vendor, the Parallax CSO will create the Requirements Document with assistance from the CEO and VP of Instrument Development.
Deliverables:
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Systems Requirements Document
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Preliminary Assay Specification
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Preliminary Specification for Handheld Reader
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Definitive Agreements executed with Development Partners
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Prototype Development Phase – Duration: Seven months
Working with external partners, the handheld instrument and assay prototypes will be developed simultaneously.
The activities of the Prototype Development Phase will focus on creating a quantitative CD4 and CD8 assay that utilizes the Parallax platform technology. Activities for assay development include: (i) Identifying and selecting antibodies and reagents (including enzymes and colorimetric substrates for the assay), (ii) Developing a sample preparation protocol to isolate and lyse CD3 cells (iii) Developing calibration and quality control systems, (iv) Defining assay protocols (v) Creating an algorithm for data analysis (vi) Optimizing assay performance
For the Handheld instrument this involves (i) designing, building and testing breadboard instruments that meet functionality requirements but may not meet form and fit requirements, (ii) Incorporating the features to run an assay, (iii) Designing the electronics and firmware to run the instrument (iv) Optimizing the optical system (v) Confirming overall system performance.
Resource Allocation (for Assay Development):
Ramp from 1 to 3 FTE’s over first 3 months then stabilize at 3.25 FTE’s. 1 PhD, 2 Techs (BS) and .25 of Regulatory
Deliverables:
Assay: A functioning assay utilizing the Parallax Technology. The assay will perform to a set of predetermined criteria but will not be optimized to meet commercial standards at this point.
Handheld instrument: An instrument that is functional but may not meet all system requirements.
Formal Product Development Phase
– Duration: Four months
In this phase the (i) the assay antibodies, reagents and protocol and manufacturing protocol are further optimized to meet commercial requirements (ii) The assay is optimized and tested again extensively to confirm performance and ((iv) Shelf life studies are initiated.
Resource allocation (for Assay):
3.5 Full Time Employee’s (1 PhD, 2 lab techs and .5 regulatory)
Deliverables:
CD4 and CD8 Assays that meet the specification
A fully functioning handheld instrument that meets the specification.
System Integration Phase
– Duration: Two Months
At this point the entire system (assay cartridge and instrument) is exhaustively tested internally and externally to ensure that the system works reliably and performance meets the requirements with a variety of different users and samples.
Resource allocation:
4.5 Full time employee’s (1 PhD, 2.5 techs, 1 RA/QA)
Deliverable
:
A formal report for the Design History File (FDA Requirement)
System Verification Phase
– Duration: Two months
Verification is a formal study required by the FDA that confirms that the system developed has been built to meet the products requirements. This is a combination of documentation review and system testing.
Resource Allocation:
4.0 Full time employee’s (1 PhD, 2 techs, 1 RA/QA).
Deliverable:
A Formal Report for the Design History File
Assay and Reader Pilot Manufacturing Phase
– Duration: Three months
During the verification stage external manufacturing partners will be will be simultaneously building assay kits and instruments for clinical trials and for commercial launch. The FDA requires that any product used in clinical trials be produced under GMP on a manufacturing line or equivalent. There is significant work that the manufacturers will have to do specific to our product line in order to meet GMP standards. These standards include written manufacturing methods, document control, and QC documentation.
Resource Allocation:
4.0 Full time employees for Assay Development
Deliverables:
Tools and molds for low volume production
A minimum of 1,000 assay kits manufactured under GMP
A minimum of 25 instruments built under GMP
System Validation Phase
– Duration: Three months after completion of the Verification Phase
This refers to the final FDA clinical trials that are required for a 510k FDA approval. Validation confirms that the system offers acceptable performance in the field and meets the needs of the end user. In this phase a Contract Research Organization may be needed to organize and manage the clinical trials. The trial will be a multi site trial (3 to 4 sites) with several hundred samples needed for the trials. A biostatistician will determine the number of samples.
Deliverables:
Clinical Trial Report validating the system meets the user requirements. This report is the basis of the FDA 510k submission.
Resource Allocation:
4.0 Full time employee’s (1 PhD, 2 techs. 1 RA/QA)
FDA Submission
– Duration: Two weeks
Data from clinical trials must be submitted to the FDA and all project documentation must be collected and organized for potential inspection.
Resource allocation
:
1.0 Full time employee’s (1 PhD, 1 RA/QA)
CD4/CD8 Assay and Hand Held Device Development Timeline
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Timelines
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Months
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
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System specs
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Contract partners
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Handheld alpha prototype
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Handheld reader development
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Assay prototype
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Assay development
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System integration
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System verification
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Assay/Reader pilots
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Clinical trials
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FDA 510k submission
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Expansion to viral load
The target system allows expansion of the AIDS-related testing to include determination of viral load in HIV-positive individual’s blood. Again, adopting a method outside of the existing “Gold Standards” would provide a large population in Africa, Asia, and other parts of the world with diagnostic services, which simply do not exist as of today. The viral load test follows the same basic principle as the CD4 test, and can be performed and read with exactly the same hand-held device.
Other diseases
Our testing system is not limited to HIV or AIDS diagnostics. The test format has been applied in the past to viral and bacterial infections (e.g., Rubella, Rotavirus, Strep. A), and can easily be adopted toward other epidemics. Diseases like malaria, cholera, hepatitis, yellow fever, or West Nile virus and other viral diseases present increasing health threats to large populations in the world, with major problems already at the stage of proper diagnosis. We can adapt our testing devices to the rapid, simple, point-of-care diagnosis of almost all of these diseases without the requirement of additional equipment. The combination of a mobile, hand-held testing device with a large number of different tests provided by a family of cartridges will improve the ability of current health care and disease diagnostics in a fast majority of today underserved regions.
The
in vitro
diagnostic market alone represents a $25 billion market worldwide. The trend is moving toward point-of-care (“POC”) diagnostics using systems and procedures, which do not require extensive laboratory equipment. Here, direct read-out technology will provide a suitable tool, which can be used in basically every environment. The growth in this market is expected to continue through the end of the decade. The roughly $4 billion point-of-care diagnostic market in the U.S. is expected to grow to more than $5.5 billion by 2009. Annual growth in the POC market is project to 27% over the next five years.
The point-of-care market includes hospitals, clinicians, laboratories, assisted living facilities, retirement communities and geriatric facilities and the international market. Our system provides the platform for the development of a series of quantitative tests for important diagnostic applications that can provide results at a patient's bedside, in a doctor's office, in the emergency room, in a clinic or in an ambulance.
In recent years, there has been a continuing shift from the use of laboratory-based analyzers to more technologically advanced point-of-care tests that can be performed in a matter of minutes. Unlike the centralized clinical laboratory segment, which is mature and highly competitive, the point-of-care market is still a relatively early stage market. Although certain simple single analyte diagnostic tests have been developed, such tests have remained incapable of precise and highly sensitive quantitative measurements. As a result, medical tests that require precise quantization of the target analyte have remained the domain of immunoassay analyzers. We believe that there is significant market potential for advanced point-of-care diagnostic products that provide quick and accurate diagnosis during a patient visit, shortening the decision time to medical intervention and minimizing the need for additional patient follow-up, thereby reducing overall health care delivery costs.
The two factors that are significant to the rapid growth of POC testing are technology advancements and health care economics. The development of new and improved technologies has resulted in the ability to make evidence-based medical decisions that improve patient outcomes and reduce patient acuity, criticality, morbidity and mortality.
Quicker diagnosis of infectious agents can also permit the earlier prescription of appropriate medications, thereby potentially shortening the duration of illness.
The commercial success of the current generation of small, simple to use diagnostic devices which provide rapid results in POC applications has been limited by their inability to provide precise, highly sensitive, quantitative measurement. Our Target System technology addresses these limitations by applying sophisticated immunochemical and optical methods to detect and quantify virtually any analyte present in a liquid. Development data indicates that sensitivity will be comparable to expensive and complicated laboratory-based analyzers.
Additionally, the economic climate is driving significant changes in the manner in which patients will be tested and how results are delivered. Recent revisions to government regulations, together with growing patient and insurer pressures on hospitals and physicians have increased incentives to reduce overall patient healthcare costs while providing a higher level of care to a greater number of patients. One cost-cutting measure is to reduce the high cost of diagnostic testing carried out in central laboratory sites by increasing POC testing.
The Target System provides the platform for the development of a series of quantitative tests for important diagnostic applications that can provide results at a patient's bedside, in a doctor's office, in the emergency room, in a clinic, in an ambulance, on the battlefield, on site agri-business locations, rural and economically disadvantaged areas.
The Target System meets the POC diagnostic market criteria as follows:
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Rapid turnaround time
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Low volume preferably whole-blood sample
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Direct application of a non-critical volume or placement of sample directly into instrument
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Disposable device or minimal maintenance required
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Minimal technical expertise required
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Positive identification and specimen tracking strategy that eliminates specimen identification errors
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Simple "goof proof" strategy for recording collection time and result reporting
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Simple strategy for calibration and QC
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Transferability of data to the LIS or HIS
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Agreement of result with accepted "Gold Standard" tests
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Affordable cost
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The Solid Phase Immunoassay Market
The widespread usage of blood and other biological specimen tests checking for diseases and medical conditions, there is a growing need for new and better technologies to achieve fast and accurate results. Though this type of testing has been an acceptable form of testing for certain conditions for quite some time, it has only been in the last twenty years that rapid, point-of-care, testing has become an acknowledged source of accurate information. With continuing breakthroughs in detectable markers in the body that can identify the presence of a growing number of diseases and conditions, coupled with the advancements in rapid detection technologies, the tools available to medical professionals is quickly becoming a booming industry.
Rapid Immunoassay Test Overview
The following summary is about rapid testing products, current paradigms and the most prevalent devices available today and their differences. The intent of this discussion is to enable the reader to distinguish between comparable devices and their intended uses. Included is a brief outline of current and future device applications and healthcare provider changes.
Test History
With the widespread usage of blood screening for diseases and medical conditions, there is a constant growing need for new and better technologies to achieve fast and accurate qualitative (yes or no) screening results. Though laboratory testing of blood samples has been an acceptable form of screening for certain conditions for quite some time, it has only been in the last twenty years that rapid, point-of-care, qualitative and semi quantitative (amount based on predetermined cutoff levels) screening has become an acknowledged source of accurate information.
The evidence of the widespread use of this technology and its cost savings to the public has been in the urine-based home pregnancy kit early detection devices sold in most retail drug stores. The other wide spread use of this rapid screening paradigm is the onsite screening for drugs of abuse for pre-employment and post accidents. While both of these examples are based on urine as a test sample, many of the new rapid screening devices have been developed using the same processes and clinical techniques for blood samples.
Each of the screening devices described below have limitations in their utility and range of application. Many were adopted from use in clinical laboratories and, when applied to point-of-care application, require special handling of the specimen samples (blood, urine, and feces) and decreased sensitivity and/or specificity. When appropriate, these limitations have been included in descriptions of individual testing platforms. Despite these limitations, the rapid increase in discovery of individual markers of disease processes coupled with the advancements in rapid detection technologies, has made these tools available to medical professionals on a wide scale and is quickly becoming a booming industry.
The advent of single and multi-light source reflectometer technology in small desktop or hand held portable units, the ability to accurately measure the progression or amounts of a possible infection or the body’s antibody response within the screened sample opens the door to a wide range of new possibilities in the point of care or field triage settings. The incorporation of these and other new technologies should provide a new tool for the primary care giver at a cost of both time and cost per test.
Lateral Flow Tests
A popular testing method used by both professional and over-the-counter tests, lateral flow tests is quick and efficient. Most home pregnancy
tests utilize lateral-flow technology.
The typical finished product in general use encases all but the application pad in plastic with view openings for the test line or dot and the control line.
Depending on the specific test kit, a sample of urine, whole blood, blood plasma, and in some cases feces, may be mixed with diluting substances, reactive agents or other solutions that are provided for the conduct of the test. Most of the tests are classified as solid phase enzyme immunoassays (EIA).
In the case of the home pregnancy tests, urine is absorbed through the exposed sample application pad and is allowed (by natural wicking) to migrate to the analytical membrane and react with an embedded agent designed to change color if hormones associated with pregnancy are present in the urine. This is a direct specimen application and does not require dilution or other agents to be added for results to appear.
Lateral flow devices have been used for home pregnancy tests, drugs of abuse testing in clinical laboratories and, more recently, for home use. Manufactured in continuous membrane strips cut to the desired length and batch tested for accuracy, the manufacture of test kits is highly automated and inexpensive, making lateral flow tests well suited for mass market applications.
Lateral flow devices, however, can suffer in performance when the sample being tested is not handled within strict conditions. Test samples may be affected by environmental conditions (barometric pressure, temperature and humidity), thereby requiring special care in sample preparation, exact dilution controls and controlled time for the test to develop properly. Test development time, for example, can vary from a few minutes (3 to 5) for urine-based tests and up to 20 minutes for whole blood or plasma.
Solid Phase Tests
Solid phase assays include the so-called "dipstick" or "dipstick comb" tests. As their title suggests, the detection materials are in a solid state affixed to a solid, non-porous base. The dipstick is then incubated with the patient specimen.
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Results
: Approximately 1 hour or less
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Specimen Types
: Urine, saliva, serum, plasma, or whole blood
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Sensitivity
: Generally lower than flow through and lateral flow tests
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Advantages
: Same patient can be tested for multiple parameters with a single assay
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Agglutination
The basic principle of an agglutination assay is the formation of clumps (agglutination) of small particles coated with antigens when exposed to antibodies specific for the antigen. The test particles and the patient antibodies combine to form a visible precipitate. This usually is observed under a microscope.
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Advantages
: Low individual test cost, semi-quantitative results, and relatively short time to obtain results.
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Disadvantages
: Results can vary as the test reaction depends upon careful control of the test reagents and environmental conditions.
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Sensitivity
: Lower than flow through or lateral flow tests.
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Flow-Through Tests
The flow through device developed in the 1980’s represents an alternative method for rapid on-site performance of screening tests. Positive, uniform deposition of test samples on a membrane containing selected diagnostic reagents provides for a flexible, inexpensive and reproducible platform technology to test for a large number of diseases.
Principle
The flow through test procedure consists of a vacuum device that deposits fluid containing the test sample through a porous membrane and into an absorbent pad. A second layer, or sub-membrane, inhibits the immediate back-flow of fluids, which can obscure results.
Functionality
The flow through platform technology can be used to detect both antibodies and antigens. To detect antibodies or antigens, the corresponding analyte is bound or immobilized as a dot or line on the membrane. This reagent "captures" the analyte as it is drawn through the membrane. To perform the test, a sample is applied to the membrane followed by a wash step, addition of the signal reagent, and a second wash to clear the membrane. The solutions can be added as rapidly as the previous liquids are absorbed into the cassette.
Earlier flow-through tests used enzyme immunoassay (EIA) principles to generate signal, but more recent tests have successfully used colored latex particles or colloidal gold.
The time it takes for a test to display results is subject to the viscosity of the sample, which can be affected by environmental conditions, such as humidity and barometric pressure, further interfering with the time the test takes is the amount of sample used.
Target Antigen Detection System (TADS) “Vacuum Control Flow Device”
This device is a radical departure from the standard devices typical to the rapid testing markets. The device is patented and part of the manufacturer’s qualitative and quantitative “Target System Diagnostics Platform” which offers an array of improved modifications and features to the traditional qualitative and semi-quantitative flow-through immunoassay test. With its platform uniformity, patented vacuum pump, absorption layer for sample overflow, and complete compatibility with single and multi-light source reflectometer technology, the TADS platform is a unique collection of tests for qualitative and quantitative detection of conditions.
TADS utilize a patented vacuum technology to deposit specimen samples uniformly on test membranes. Excess specimen absorption is built in. TADS have been engineered for blood testing first which allows the platform to be utilized for urine and feces. This engineering foresight in design provides the clinician performing with process controls not available with other rapid test devices.
This patented platform provides tremendous flexibility in sample requirements, clinician training and result interpretation. The train once system means the clinician can now perform a number of single use tests on a wide variety of conditions with the interpretation of results consistent through the platform paradigm.
Meeting needs in de-centralized or non-existing health care systems
Parallax mobile testing, data acquisition, and data transmission system meets the needs for diagnostics in particular in areas where either no structured health care systems exist or where – due to geographic nature and population density and distribution – a more decentralized approach is necessary. The highly mobile test reader can be used in basically all environments, and is suited to use power sources independent of an electric network (rechargeable batteries, solar panel, running on motor vehicle voltage and power supply). Furthermore, the tests can be performed within short time periods, and do not require the performing medical personnel, the physician, or the patient to return for test results or potential initiation of treatment.
Distribution
As we are still in the development stages and have not at this point in time commenced material operations, we have yet to develop methods of distribution for our products.
Suppliers
Currently we rely upon the Myers-Stevens Group to supply all of our test cartridges materials used in association with the development of our products. We have entered into an agreement with this supplier. If the Myers-Stevens Group were to cease supplying test cartridges materials to us, our ability to develop our products may be adversely affected by delay in production and delivery. The Company is confident that it can replace Myers Stevens at anytime and plans to do so as its manufacturing needs expand as it moves into commercial production. Strategically management will look to have contingency manufacturing available on an outsourced basis so that its product distribution and availability does not get disrupted.
Research and Development Expenditures
We have not incurred any research or development expenditures during the last two fiscal years.
Competition
There are approximately 40 to 50 companies in the point-of care (“POC”) diagnostic industry in the U.S. and another 100 outside the U.S. The POC space can be broken down into various sub-sets such as molecular biologist developing reagents, and markers to diagnostic equipment and test development companies, as well as companies who do neither and focus on marketing tests, equipment and assays. Most notably in the POC space are the large pharmaceutical companies such as Bayer, Roche, Abbot Labs and others. Our specific competitive landscape is tied to our patent pending process involving our Hand-Held Analyzer and Targeted System In-Vitro Test. There are a handful of companies developing mobile devices to perform a host of health industry-related services. In the area of mobile diagnostics the field begins to shrink. The industry has yet to develop a standardized platform for any device to be integrated into. The goal of the Parallax Hand-Held Analyzer is to deliver a device that adds immediate value to health providers, patients and health insurance companies. The Parallax engineer that was commissioned to develop the Parallax Hand-Held Analyzer was given a primary goal; create a mobile platform that could integrate and utilize the patented flow-through process of the Target System and offer the health provider a system that is fully interoperable and ubiquitous with an unlimited amount of
in vitro
tests. There are other test platforms in the space but we have filed a patent on the process of the Parallax Hand-Held Analyzer and the Target System. We believe that this is an extremely powerful barrier to entry in duplicating the Parallax model. The delivery of additional tests into the specific model adds to the economy of scale built into the recently filed process patent.
Our innovative process for the development of new antigens, which is patent pending, will also be used in the identification of test markers for the Target System platform, adding a dimension that further distinguishes Parallax from its competition. We believe that the innovative antigen development process will allow it to create new barriers to entry on certain antigens that it identifies by subsequent patent application filings for use in conjunction the Parallax Hand-Held Analyzer.
Barriers to use
The main barriers and constraints to the use of rapid diagnostic tests can be put into three main categories:
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Acceptability:
Rapid tests need to be acceptable to policymakers, clinicians, and patients. Tests need to have sufficient sensitivity and specificity and need to have an adequate predictive value. Ease-of-use is critical for point-of-care use by clinicians. Culturally appropriate specimens and credible results are important if rapid tests are to be accepted by patients.
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Affordability:
Many rapid diagnostic tests are more expensive than the tests or syndromic algorithms they are intended to replace. Decreasing per-test costs, carefully designing diagnostic algorithms, and educating end users about the cost-savings of more efficient use of therapeutic drugs are important means of maximizing rapid test affordability.
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Availability:
Rapid diagnostic tests are not always available in developing countries. Most tests have limited shelf lives, and many countries have weak public and private sector procurement and distribution systems. The consistency and quality of imported tests can also be issues. To address these constraints, local government regulations, quality assurance, shelf life testing, and distribution systems all need to be assessed and improved. We will initially control all of the manufacturing of our Target System test cartridges and Desk Top Analyzer and Hand-Held Analyzer in conjunction with Montecito. We also plan to develop and utilize our patented antibody development process in order to produce and deliver antibody test markers to our spin-off companies. We will also develop relationships with antibody test marker producers to accelerate the delivery of new tests to our spin-off companies. We will look to identify, negotiate and acquire markers from third-party producers. In this case, we will test and approve the antibody test marker to be used in our Target System.
|
Intellectual Property
Intellectual property protection will be sought for all primary and secondary products. Moreover, all products and supporting products such as novel biomarker candidates, antibodies, proteins, and diagnostics tests surrounding our core indication areas will be IP-protected to create a barrier to entry for competitors.
Current Patent Pending Applications and Approvals:
|
US2006051348
|
Method of Producing a Plurality of Isolated Antibodies
|
|
US2006052948
|
Method of Producing Drugs, Targeting Moieties or Diagnostics
|
|
US 11/856,925
|
Method for Determining the Immune State of a Subject
|
|
US 11/924,033*
|
Portable Apparatus for Improved Sample Analysis
|
|
510(k) approvals
|
Covering existing tests and desk top reader
|
*US 11/924,033 is currently also applied for under PCT in ALL countries
FDA Cleared Tests
|
Device Name
|
510(k) Number
|
|
|
|
|
Rubella-Cube TM
|
K892051
|
|
Cmv-Cube TM
|
K884842
|
|
Blue Dot Test for Pregnancy
|
K884017
|
|
First Sign (Pregnancy, Hcg)
|
K973208
|
|
V-Trend Target Im Test (infect mononucleosis)
|
K890041
|
|
Target Strep A (Streptococcus Spp.)
|
K8800460
|
|
Target Aso Test
|
K910073
|
|
Target Hcg
|
K914303
|
|
Target Quantitative Hog One Step
|
K903937
|
|
V-Trend Target Rf Test
|
K904105
|
|
Target Quantitative Hcg
|
K890131
|
|
Target Reader
|
K885254
|
By protecting these elements of our testing technology platform as well as the individual tests and/ or test elements, we efficiently build another level of entry deterrence for potential competitors in our market segment. We will preserve our IP by achieving an appropriate balance between trade secrets and patents.
We will also utilize trademark applications to protect IP that may not be suitable for patent protection. Unlike patent applications, which in many cases must be filed in advance of a particular date, there is no specific date by which a trademark application must be filed. Instead, the time constraint is in a different direction. In the United States an ordinary so-called "use" trademark application can only be filed after the goods or services have been in interstate commerce.
We hold exclusive rights to all Montecito patents, clearances and products in the area of Infectious Diseases. It is expected that after successful re-introduction of the Target System and the introduction of our novel CD4 immune status test, additional tests will be developed and protected under the full responsibility of Parallax. Generally, Parallax and Montecito will own improvements to the basic technology platform exclusively.
Overview of Medical Devices and Their Regulatory Pathways: 510(k) FDA Cleared Tests
Medical Devices: The Basics
The definition has several components. A medical device:
|
|
·
|
diagnoses, cures, lessens, treats, or prevents disease
|
|
|
·
|
affects the function or structure of the body
|
|
|
·
|
does not achieve primary intended purposes through chemical action
|
FDA's Center for Devices and Radiological Health regulates companies that design, manufacture, repackage, relabeling, and/or import medical devices into the United States. The agency does not regulate the practice of medicine – how and which physicians can use a device. The only exception is FDA's regulation of mammography facilities under the Mammography Quality Standards Act.
What is a combination product?
Combination products are therapeutic and diagnostic products that combine drugs, devices, and/or biological products. The term acknowledges the role technological advancements have made in merging medical product types. Examples of combination products include a drug-eluting stent, a nicotine patch, and surgical mesh with antibiotic coating, prefilled syringes, and a steroid-eluting pacing lead.
Combination products raise regulatory challenges because they involve components that were normally regulated under different types of authorities and often by different FDA Centers. Differences in regulatory pathways for each component can affect the regulatory processes for all aspects of product development and management, including preclinical testing, clinical investigation, marketing applications, manufacturing and quality control, adverse event reporting, promotion and advertising, and post-approval modifications.
Government Regulations
The long legal journey toward medical device regulation began with the Pure Food and Drugs Act of 1906. Medical devices were not included as no one envisioned how technology would grow increasingly complex and need to be regulated. The Medical Device Amendments of 1976 gave FDA authority to ensure the safety and effectiveness of a range of life-saving medical devices while also protecting the public from fraudulent devices.
The Amendments:
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|
·
|
defined a medical device,
|
|
|
·
|
established three device classes (I, II, and III),
|
|
|
·
|
identified pathways to market,
|
|
|
·
|
established Advisory Panels, and
|
|
|
·
|
set clinical investigation requirements.
|
Subsequent legislation strengthened the FDA’s regulatory authority:
Table 1: Major Medical Device Legislation
|
Legislation
|
|
Significance
|
|
|
|
|
|
Safe Medical Devices Act of 1990
|
•
|
established Quality System requirements
|
|
|
•
|
supported post market surveillance
|
|
|
•
|
allowed FDA discretion for PMAs brought to panel
|
|
|
•
|
supported for early collaboration, expanded Class I and Class II exemptions
|
|
|
•
|
set the "least burdensome provision"*
|
|
|
•
|
supported dispute resolution
|
|
|
|
|
|
FDA Modernization Act of 1997
|
•
|
established evaluation of automatic Class III designation (giving the sponsor the opportunity to request lower classification due to a minimal risk device, known as "de novo" review)
|
|
|
•
|
mandated free and open participation by all interested persons
|
|
|
|
|
|
Medical Device User Fee and
Modernization Act (MDUFMA) of 2002
|
•
|
established a fee schedule for most types of device submissions to achieve shorter review times
|
|
|
•
|
requires FDA to include pediatric experts on the panel for a product intended for pediatric use
|
|
|
|
|
|
FDA Modernization Act of 2007
|
•
|
reauthorized and expanded MDUFMA
|
*The
least burdensome provision
allows industry and FDA to consider the least burdensome appropriate means of evaluating a device’s effectiveness when there’s a reasonable likelihood of its approval. The intent is to help expedite the availability of new device technologies without compromising scientific integrity in the decision-making process or FDA's ability to protect the public health. This provision does
not
lower the standard for premarket clearance and approval.
Three classes of regulatory control
The three device classes are based on the degree of regulatory control necessary to ensure their safety and effectiveness:
Class I
devices present a low risk of harm to the user and are subject to general controls that are sufficient to protect the user. Most are exempt from the regulatory process.
Examples:
non-powered breast pumps, elastic bandages, tongue depressors, examination gloves, most hearing aids, arm slings, microbial analyzers, keratoscopes
Class II
devices are more complicated and require special controls for labeling, guidance, tracking, design, performance standards, and post market monitoring. Most require Premarket Notification 510(k).
Examples:
powered wheelchairs, CT scanners, contact lens care products, endolymphatic shunts
Class III
devices usually sustain or support life, are implanted, or present potential unreasonable risk of illness or injury. They have the toughest regulatory controls. Most of these devices require Premarket Approval because general and special controls alone cannot reasonably assure their safety and effectiveness.
Examples:
pacemakers, implanted weight loss devices, non-invasive glucose testing devices, medical imaging analyzers, cochlear implants, breast implants
How FDA Reviews Medical Devices
Investigational Device Exemptions (IDE)
An IDE allows an investigational device to be used in a clinical study to collect the safety and effectiveness data required for a Premarket Approval (PMA) application or a Premarket Notification (510(k)) submission to FDA. Clinical studies with devices of significant risk must be approved by both FDA and an Institutional Review Board (IRB) before the study can begin. Studies with devices posing non-significant risk must be approved by an IRB before the study can begin.
FDA observes a 30-day review period for IDE applications. The agency focuses its review on the data provided to demonstrate the safety and anticipated benefits of the device for use in humans, as well as the scientific validity of the proposed clinical trial protocol.
Following clinical studies, a device’s journey to market can take one of four major pathways:
|
|
1.
|
Investigational Device Exemptions (IDE)
|
|
|
2.
|
Premarket Notification (510(k))
|
|
|
3.
|
Premarket Approval Application (PMA)
|
|
|
4.
|
Humanitarian Device Exemption (HDE)
|
Premarket Notification (510(k))
510(k) is required when demonstrating substantial equivalence to a legally marketed device, when making significant modifications to a marketed device, and when a person required to register with FDA introduces a device for the first time. If a device requires the submission of a 510(k), it cannot be commercially distributed until the FDA authorizes it.
Substantial Equivalence
A device is substantially equivalent (SE) if it has the same intended use and same technological characteristics as a legally marketed device, known as the predicate. A legally marketed device:
|
|
1.
|
was legally marketed prior to May 28, 1976 ("preamendments device"), for which a PMA is not required, or
|
|
|
2.
|
was reclassified from Class III to Class II or Class I, or
|
|
|
3.
|
was found SE through the 510(k) process.
|
Applicants must compare their device to one or more similar legally marketed devices and make and support their SE claims. If the device is SE to a predicate, it is placed in the same class. If it is not SE, it becomes non-SE and is placed into Class III.
Examples of 510(k)s include x-ray machines, dialysis machines, fetal monitors, lithotripsy machines, and muscle stimulators.
Premarket Approval (PMA)
PMA refers to the scientific and regulatory review necessary to evaluate the safety and effectiveness of Class III devices or devices that were found not substantially equivalent to a Class I or II predicate through the 510(k) process.
PMA is the most involved process. To reasonably assure that a device is safe and effective, PMA requires valid scientific evidence that the probable benefits to health from the intended use of a device outweigh the probable risks, and that the device will significantly help a large portion of the target population. Sources of valid scientific evidence may include well controlled investigations, partially controlled studies, historical controls, well documented case histories by qualified experts, and robust human experience.
Independence is an important concept for PMAs, meaning that each PMA should establish the safety and effectiveness of the device under review, and that data about one device cannot be used to support another. Examples of PMAs include digital mammography, minimally invasive and non-invasive glucose testing devices, implanted defibrillators, and implantable middle ear devices.
Table 2: Summary Comparison of 510(k) and PMA
|
510(k) Submissions
|
|
PMA Submissions
|
|
•
|
primarily for Class II devices
|
|
•
|
primarily for Class III devices
|
|
•
|
a Class I or II preamendment or legally marketed device (predicate) exists
|
|
•
|
a Class I or II preamendment or legally marketed device (predicate) does not exist
|
|
•
|
third party review option is available for devices not requiring clinical data
|
|
•
|
device is life supporting and/or has potential risk to patient
|
|
•
|
documented proof of Substantial Equivalence to a predicate is required
|
|
•
|
documented safety and effectiveness data for the device is required
|
Humanitarian Device Exemption (HDE)
An HDE is a device that is intended to benefit patients by treating or diagnosing a disease or condition that affects fewer than 4,000 individuals in the United States per year. HDEs are exempt from requirements to demonstrate effectiveness. Still, they must pose no unreasonable risks, or at least the probable benefits should outweigh the risks. And the device must be used at a facility with an Institutional Review Board.
HDEs provide a powerful incentive for device manufacturers to develop devices that help diagnose or treat patients with rare conditions. Otherwise, a company’s research and development costs would likely exceed the market returns for serving such small patient populations.
Examples of HDEs include a fetal bladder stent, iris replacement, radioactive microspheres for cancer treatment, and semi-constructed finger joints.
Post-Approval Studies
FDA can impose requirements at the time of approval of a PMA or HDE, or by regulation afterwards. One requirement may be the need for post-approval studies. The CDRH Post-Approval Studies Program helps ensure that well designed post-approval studies are conducted effectively and efficiently and in the least burdensome manner. Post-approval studies should not be used to evaluate unresolved premarket issues that are important to the initial establishment of device safety and effectiveness.
With post-approval studies, FDA can evaluate device performance and potential problems when the device is used more widely than in clinical trials and over a longer period of time. This allows FDA to build in accountability and gather essential post market information, including:
|
|
·
|
longer-term performance of the device (for example, effects of re-treatments and product changes)
|
|
|
·
|
community performance (clinicians and patients
|
|
|
·
|
effectiveness of training programs
|
|
|
·
|
sub-group performance
|
|
|
·
|
outcomes of concern – real and potential
|
Our current executive officers and directors and their ages are as follows:
|
Name
|
Age
|
Position
|
|
J. Michael Redmond
|
50
|
CEO, President, Director
|
|
Norman A. Kunin
|
73
|
CFO
|
|
Mike Contarino
|
55
|
Vice President of Systems Development
|
|
Dr. Roger Morris
|
58
|
Chief Science Officer
|
|
Edward W. Withrow III
|
47
|
Director
|
|
Dr. Jorn Gorlach
|
50
|
Director
|
|
E. William Withrow Jr.
|
73
|
Director
|
|
Anand Kumar
|
68
|
Director
|
|
David Engert
|
58
|
Director
|
Set forth below is information relating to the business experience of each of our directors and executive officers.
J. Michael Redmond
CEO, Director
Mr. J. Michael Redmond, age 50, has over twenty-five years of experience in the medical device and biotech markets. In May of 2009, Mr. Redmond founded JMR, Inc. and has served as its President since that time. JMR, Inc. provides business development and marketing services to diagnostic and biotech companies. As President, Mr. Redmond is responsible for developing and implementing the business plan of the company.
From May 2007 to June 2009, Mr. Redmond served as the Vice President of Marketing and Business Development for DxTech, Inc., a startup company focused on a disruptive model for point of care diagnostic testing. As the Vice President of Marketing and Business Development, Mr. Redmond was responsible for creating and implementing the company’s business plan, raising capital and forming strategic alliances with industry partners.
From 1996 to 2007, Mr. Redmond worked in various titles and capacities for Bioject, Inc., an early stage drug delivery company. From 1996 to 1997, Mr. Redmond served as the company’s Vice President of Sales and Marketing. From 1998 to 2002, Mr. Redmond served as the company’s Vice President of Business Development, and from 2003 to 2007, Mr. Redmond served as the company’s Senior Vice President of Business Development, Sales and Marketing. In these positions, Mr. Redmond’s responsibilities included negotiating corporate partnerships with major pharmaceutical and biotech companies, launching new products, securing distribution channels, P&L responsibility and raising capital.
From 1989 to 1996, Mr. Redmond was employed with KMC Systems, a private label developer and manufacturer of medical devices and instruments. At KMC Systems, Mr. Redmond served as the Director of Sales and Marketing and the Director of Business Development, Sales and Marketing. Mr. Redmond was responsible for developing new business in the U.S. and Europe as well as negotiating long-term product development and production contracts. Additionally, from 1983 to 1989, Mr. Redmond was employed with Abbott Laboratories in the diagnostic division. While at Abbott Laboratories, Mr. Redmond served as Product Manager, Account Executive, and Diagnostics Systems Sales Specialist.
Mr. Redmond earned a Bachelor of Arts degree from Denison University in 1983. Mr. Redmond is qualified to be the CEO, President, and Director of Parallax because of his extensive experience in a multitude of different capacities in the medical device and biotech markets.
Norman A. Kunin
CFO
Mr. Kunin, age 73, has over thirty years of diversified financial management experience. Since May 2003, Mr. Kunin has served either as Chief Financial Officer or Financial Business Consultant to Addison-Davis Diagnostics, Inc., a publicly traded bio-medical diagnostics company. As CFO and Financial Business Consultant, Mr. Kunin has been responsible for financial business and strategic planning.
After Mr. Kunin’s sale of his public accounting partnership, Mr. Kunin continued his career as a financial executive and consultant for a variety of private and public companies. In March of 1997, Mr. Kunin founded Kunin Business Consulting, a division of Ace Investors, LLC through which his consulting engagements included financial forecasting, business planning, and capital formation.
Mr. Kunin earned his Bachelor of Business degree with a major in accounting at New York’s City College School of Business. Mr. Kunin is a member of the American Institute of Certified Public Accountants.
Mike Contarino
Devise Manufacturing
Mr. Mike Contarino, age 55, has extensive experience developing, integrating and driving complex programs to meet corporate goals. Additionally, Mr. Contarino has directed Regulatory Affairs, Quality Assurance and Manufacturing. As a technical and operations professional, Mr. Contarino brings over 30 years successful leadership in product development, commercialization of complex medical/diagnostic instrumentation, and operations management.
Mr. Contarino was employed by Tecan-Boston, a subsidiary of Tecan AG, where he held the positions of Vice President of R&D, and led all aspects of its novel, automated micro fluidic system platform for Drug Discovery, including overall site management, R&D and Operations.
Previously, Mr. Contarino held the position of Vice President of Systems Development for Instrumentation Laboratory (IL), a global leader in medical diagnostic systems. Mr. Contarino accelerated product development cycles by introducing design control processes and procedures in R&D. At IL, Mr. Contarino was a member of the Executive Committee and Scientific Advisory Boards for homeostasis and critical care, was technical lead of the Merger & Acquisition (M&A) team, and had responsibility for R&D sites in the US, Italy and Spain.
Prior to IL, Mr. Contarino was the Director of Engineering at KMC Systems Inc. a recognized leader in systems development of diagnostic platforms. Mr. Contarino successfully commercialized immunoassay, clinical chemistry and robotic pipetting systems.
Mr. Contarino earned his Mechanical Engineering degree from the University of Lowell, completed the Management Development Program at Boston University and is a Member of the Society of Automotive Engineers (SAE).
Dr. Roger Morris
Chief Science Officer
Dr. Roger Morris, age 58, has experience providing over all guidance for technology development, intellectual property and scientific communications strategies. Dr. Morris has twenty years management and technical experience in developing clinical diagnostic systems with Baxter Healthcare Corporation, bioMerieux and most recently XL TechGroup. During this time he has developed and launched a number of successful automated diagnostic system products.
Dr. Morris received his B.Sc. and PhD in biochemistry from the University of Salford, UK and did his Post Doctorate work at Cornell and has published over 20 scientific articles and received 14 patents.
Edward W. Withrow III
Chairman
Mr. Edward W. Withrow III, age 46, currently serves as a director for ABC Acquisition Corp 1502. In addition to serving as a director for ABC Acquisition Corp 1502, Mr. Withrow III currently serves as the Chairman of the Board for Ecologic Transportation, Inc., a company founded by Mr. Withrow III and dedicated to providing environmentally friendly transportation services. Mr. Withrow III also currently serves as the President and CEO of Montecito Bio Sciences, Ltd., a bio-medical diagnostics company. As President and CEO, Mr. Withrow III is responsible for creating and implementing the company’s business plan, raising capital and forming strategic alliances with industry partners.
From 2002 to 2005, Mr. Withrow III served as the CEO for Addison-Davis Diagnostics, Inc. Addison Davis Diagnostics, Inc. offers point-of-care screening tests to the global health care market. As CEO, Mr. Withrow III was responsible for corporate governance, strategic planning, capitalization, and business development. From 2002 to 2004, Mr. Withrow III served as the CEO for Reward Enterprises, Inc., a diversified financial services company specializing in subprime consumer lending. As CEO, Mr. Withrow III was responsible for developing and implementing the overall business plan of the company.
Mr. Withrow III attended Santa Barbara City College and University California Santa Barbara from 1982 to 1986 where he majored in Business and Economics.
Dr. Jorn Gorlach
Director
Dr. Jorn Gorlach, age 49, has over twenty years of experience in the bio-medical field. In 2001, Dr. Gorlach co-founded AAvantgarde, a management-consulting firm focused on the development and support of start-up companies. Since the inception of AAvantgarde in 2001, Dr. Gorlach has also served as one of its directors. As a co-founder and director of AAvantgarde, Dr. Gorlach is responsible for management consulting, licensing, and general operations. Since 2006, Dr. Gorlach has also served as a co-founder and director of Montecito Bio Sciences, Ltd., a diagnostics and testing company with proprietary technology for point of care diagnostics, testing, and data communication. Dr. Gorlach, in his role as co-founder and director, is responsible for developing and implementing the business plan of the company.
In 2002, Dr. Gorlach co-founded AAvantgarde Laboratories AG and has served as its CEO since that time. AAvantgarde Laboratories AG is a research, development, and licensing company of biotechnology products, particularly in the field of diagnostics, biological prognostics, and diseases. As CEO, Dr. Gorlach is responsible for developing the company’s business plan, developing outlines for product concept, research, and development, and leading financing activities and investor relations. In 2001, Dr. Gorlach co-founded Arcanum Discovery, Inc., a proteomics and drug discovery company focusing on novel drug target identifiers and validation. Additionally, from 2001 to 2002, Dr. Gorlach served as head of business development and finances for Arcanum Discovery, Inc. where he developed the company’s product concept, research and development, and business plan as well as managed financing activities and investor relations. In 2001, Dr. Gorlach co-founded Ercole Biotech, Inc., a research stage biopharmaceutical company involved in the creation of oligonucleotide drugs. Since its inception until 2003, Dr. Gorlach served as a director of the company where he was responsible for developing business strategy, financial planning, and contract negotiation strategy.
In 1997, Dr. Gorlach co-founded Paradigm Genetics, Inc., a biotechnology research company. From 1997 to 1999, Dr. Gorlach served as the company’s Director of Research where he was responsible for developing concepts regarding novel functional genomics platform, focusing on high throughput, industrialization, systematization, and biology/IT integration. From 1999 to 2000, Dr. Gorlach served as the Director of Project Management for Paradigm Genetics, Inc. As Director of Project Management, Dr. Gorlach managed customer projects and research progress. From 2000 to 2001, Dr. Gorlach served as the company’s vice president of business development. As a member of the company’s executive team, Dr. Gorlach was responsible for new projects and the development of plans in future key business fields. Beginning in 2001 and continuing through 2002, Dr. Gorlach served as a consultant for Paradigm Genetics, Inc., where he supported the company’s agricultural project initiatives and customer negotiations.
From 1996 to 1997, Dr. Gorlach served as the Group Leader of Combinatorial Biochemistry for Novartis, Inc., a healthcare and scientific research company. As Group Leader of Combinatorial Biochemistry, Dr. Gorlach led team efforts in developing pharmaceutically active macrolide and cloning multiple polyketides genes.
From 1994 to 1996, Dr. Gorlach was a research scientist for Ciba-Geigy, Inc., a chemical company. As a research scientist, Dr. Gorlach focused on acquired immunity and chemical regulation in wheat.
From 1991 to 1994, Dr. Gorlach was a research fellow for the Swiss Federal Institute in Zurich, Switzerland. As a research fellow, Dr. Gorlach focused his attention on gene regulation of amino acid biosynthetic pathways.
Dr. Gorlach has a Bachelor of Science Degree in Chemistry and Biology as well as a Bachelor of Science Degree in Biochemistry from the University of Hannover. In 1991, Dr. Gorlach obtained a Master in Science from the University of Hannover in Biochemistry. In 1994, Dr. Gorlach received a Ph.D. in Molecular Biology from ETH Zurich, and in 2000, received a MBA from the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill.
E. William Withrow Jr.
Director
Mr. Withrow Jr., age 73, has nearly twenty years of experience in the financial investment industry, twenty-four years of experience in the logistics field, and twenty years of experience in civic leadership. From 1997 to 2002, Mr. Withrow Jr. served as a financial consultant for Wells Fargo, a provider of personal banking and investing services. From 1993 to 1997, Mr. Withrow Jr. served as a financial consultant for Merrill Lynch, a financial management and advisory company. From 1987 to 1989, Mr. Withrow Jr. served as a sales manager for Paine Webber, a stock brokerage and asset management firm, and from 1983 to 1987, Mr. Withrow Jr. served as a financial consultant for Drexel Burnham Lambert, an investment-banking firm. As a financial consultant and sales manager for the aforementioned financial institutions, Mr. Withrow Jr examined financial statements, evaluated investment opportunities, provided advice to clients about possible investment opportunities and provided advice to stockbrokers and other individuals attempting to sell securities
.
Additionally, Mr. Withrow Jr. served twenty-four years on active duty in the U.S. Navy as a professional logistician, retiring with the rank of Captain.
Mr. Withrow Jr. has been very active in civic leadership for the past 20 years serving in a number of elected and appointed positions, including Mayor of Alameda, California. Mr. Withrow Jr. is currently serving as the regionally elected President of the Governing Board of The Peralta Colleges, an institution consisting of 2,000 faculty and staff and approximately 30,000 students.
Mr. Withrow Jr. received a Bachelor of Business in Finance and Accounting from the University of Colorado in 1959, and in 1972, received a Master in Business Administration from Harvard University.
Anand Kumar
Director
Mr. Kumar, age 68, has over twenty-five years of experience in international business development. In 1999, Mr. Kumar founded Global Telesolutions, a company responsible for creating partnerships and in-country relationships for various companies in Asia and the Indian subcontinent. From 1999 to 2010, Mr. Kumar served as the CEO for Global Telesolutions where, among other things, he developed presence and business in the Middle East and Indian, built global network partnerships for telecommunications and traffic, and oversaw international staff for operations.
From 1995 to 1999, Mr. Kumar served as the Executive Vice President for Facilicom International, a leading international telecommunications carrier. As Executive Vice President, Mr. Kumar developed multi-country business and network presence for operations, negotiated with vendors, regulators, and partners, and oversaw Europe and Asia managers and assisted in multi-national sales closings.
From 1986 to 1993, Mr. Kumar served as the President for Washington International Teleport. As President, Mr. Kumar built the first direct international earth station after U.S. de-regulation, obtained new national and international video and data clients, and created the satellite, fiber hybrid network video concept. From 1981 to 1986, Mr. Kumar served as the President of Communications Strategies Group, a company that delivers comprehensive public relations and strategic communications services to organizations. As President, Mr. Kumar investigated technology business opportunities for international clients and ran special training sessions in various areas of telecommunications practice.
Mr. Kumar earned a B.S.E.E. from Jadavpur University and a M.S.E.E. and PhD candidacy degree from the University of Connecticut.
David Engert
Director
Mr. Engert, age 58, has served as the President and Chief Executive Officer of NightHawk Radiology Holdings, Inc. since November 2008 and as a member of its board of directors since April 30, 2008. Mr. Engert also sits on the Board of Directors of Healthation, Inc., a healthcare information technology company. Mr. Engert was the founder and owner of ES3, a strategic consulting and investment company since 2007. From 2002 to 2006, Mr. Engert served as the president, chief executive officer and director of Quality Care Solutions, Inc., one of the nation’s leading providers of advanced healthcare payer enterprise application solutions, which was acquired by Trizetto, Inc. in January 2007. Prior to 2002, Mr. Engert held a number of senior level management positions in the healthcare industry over the previous 10 years, including senior vice president & general manager at McKesson Corporation's Managed Care Division.
The term of office of each director expires at our annual meeting of stockholders or until their successors are duly elected and qualified.
Employees
Currently, we have one full time employee in addition to our consultant executives, directors and executive officers.
Over the next twelve months, we intend to increase the number of our employees in the area of support and management.
Facilities
Our corporate headquarters are located at 2 Canal Park, 5
th
Floor Cambridge, MA 02141 with an additional office at 1327 Ocean Avenue Suite M, Santa Monica, California 90401.
Intellectual Property
Intellectual property protection will be sought for all primary and secondary products. Moreover, all products and supporting products such as novel biomarker candidates, antibodies, proteins, and diagnostics tests surrounding our core indication areas will be IP-protected to create a barrier to entry for competitors.
Current Patent Pending Applications and Approvals:
|
US2006051348
|
Method of Producing a Plurality of Isolated Antibodies
|
|
US2006052948
|
Method of Producing Drugs, Targeting Moieties or Diagnostics
|
|
US 11/856,925
|
Method for Determining the Immune State of a Subject
|
|
US 11/924,033*
|
Portable Apparatus for Improved Sample Analysis
|
|
510(k) approvals
|
Covering existing tests and desk top reader
|
*US 11/924,033 is currently also applied for under PCT in ALL countries
FDA Cleared Tests:
|
Device Name
|
510(k) Number
|
|
|
|
|
Rubella-Cube TM
|
K892051
|
|
Cmv-Cube TM
|
K884842
|
|
Blue Dot Test for Pregnancy
|
K884017
|
|
First Sign (Pregnancy, Hcg)
|
K973208
|
|
V-Trend Target Im Test (infect mononucleosis)
|
K890041
|
|
Target Strep A (Streptococcus Spp.)
|
K8800460
|
|
Target Aso Test
|
K910073
|
|
Target Hcg
|
K914303
|
|
Target Quantitative Hog One Step
|
K903937
|
|
V-Trend Target Rf Test
|
K904105
|
|
Target Quantitative Hcg
|
K890131
|
|
Target Reader
|
K885254
|
By protecting these elements of our testing technology platform as well as the individual tests and/ or test elements, we efficiently build another level of entry deterrence for potential competitors in our market segment. We will preserve our IP by achieving an appropriate balance between trade secrets and patents.
We will also utilize trademark applications to protect IP that may not be suitable for patent protection. Unlike patent applications, which in many cases must be filed in advance of a particular date, there is no specific date by which a trademark application must be filed. Instead, the time constraint is in a different direction. In the United States an ordinary so-called "use" trademark application can only be filed after the goods or services have been in interstate commerce.
We hold exclusive rights to all Montecito patents, clearances and products in the area of Infectious Diseases. It is expected that after successful re-introduction of the Target System and the introduction of our novel CD4 immune status test, additional tests will be developed and protected under the full responsibility of Parallax. Generally, Parallax and Montecito will own improvements to the basic technology platform exclusively.
Family Relationships
E. William Withrow Jr., a director of the Company, is the father of another director of the Company, Edward W. Withrow III. E. William Withrow Jr. is also the chairman of Montecito Bio Sciences, Ltd., the controlling shareholder of Company.
Involvement in Certain Legal Proceedings
There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of our Company during the past five years.
EXECUTIVE COMPENSATION
We reimburse our directors for expenses incurred in connection with attending board meetings but we do not pay our directors fees or other cash compensation for services rendered as a director.
Our executive officers are currently earning compensation. The following table sets forth information, with respect to Parallax, concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officer received total annual salary and bonus compensation in excess of $100,000.
Parallax Summary Compensation Table
|
Name and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
Earnings
($)
|
Non-
Qualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|
J. Michael Redmond,
|
2010
|
25001
|
|
125
(1)
|
137,500
(2)
|
|
|
—
|
162,626
|
|
CEO, President and Director
|
2009
|
—
|
|
|
|
|
|
|
|
|
|
(1)
|
Pursuant to that certain Employment Agreement entered into on November 15, 2010 between Mr. Redman and Roth Kline, Inc. (n/k/a Parallax), Mr. Redmond was afforded the opportunity to purchase 125,000 shares of the company’s common stock at par value. In December of 2010, Mr. Redmond elected to purchase all of these shares. The dollar amount listed in the table above reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.
|
|
|
|
|
|
|
(2)
|
On October 31, 2010, pursuant to its Employee Stock Option Plan, Roth Kline, Inc. (n/k/a Parallax) granted 1,375,000 options of common stock to its CEO, President, and Director, Mr. J. Michael Redmond, at an exercise price of $0.10 per share. The dollar amount listed in the table above reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.
|
Employment Agreement
On November 15, 2010, Roth Kline, Inc. (n/k/a Parallax) entered into an employment agreement with its CEO, Mr. J. Michael Redmond (the “Employment Agreement”). The Employment Agreement has a term of three years from the effective date, November 15, 2010. Under the Employment Agreement, Mr. Redmond agreed to serve as the President, CEO, and Director of Roth Kline, Inc. Mr. Redmond shall have such authority and the company’s board of directors may reasonably assign responsibility as to him. Pursuant to the Employment Agreement, Mr. Redmond will have a base salary of $200,000 per annum in year one, $225,000 in year two and $295,000 in year three. Additionally, as part of the Company’s Employee Stock Option Plan, Mr. Redmond was granted 1,375,000 options of the Company’s common stock at an exercise price of $.10. Furthermore, pursuant to the Employment Agreement, the Company awarded Mr. Redmond the right to purchase 125,000 shares of the company’s common stock. Mr. Redmond shall be entitled to participate in any and all deferred compensation, 401(k) or other retirement plans, medical insurance, dental insurance, group health, disability insurance, pension and other benefit plans that are made generally available by the company to its executives who have similar responsibilities and perform similar functions as Mr. Redmond.
The foregoing summary of the Employment Agreement is not complete and is qualified in its entirety by reference to the complete text of the Employment Agreement, which is available upon request and is available online at www.sec.gov
Consulting Agreements
On November 30, 2010, Roth Kline, Inc. (n/k/a Parallax) entered into a Consulting Agreement with Dr. Roger Morris (the “Morris Consulting Agreement”). Pursuant to the terms of the Morris Consulting Agreement, Dr. Morris will provide certain services to Parallax at the direction of the Company’s CEO and will receive one hundred and fifty thousand (150,000) options of common stock vesting over eighteen (18) months with a strike price of twenty-five ($.25) cents under the terms of the option agreement entered into between Parallax and Dr. Morris (the “Morris Option Agreement”). The Morris Consulting Agreement and Morris Option Agreement are available upon request and can be found at www.sec.gov.
On November 30, 2010, Roth Kline, Inc. (n/k/a Parallax) entered into a Consulting Agreement with Michael Contarino (the “Contarino Consulting Agreement”). Pursuant to the terms of the Contarino Consulting Agreement, Mr. Contarino will provide certain services to Parallax at the direction of Parallax’s CEO and will receive, under the terms of an option agreement entered into between Parallax and Mr. Contarino (the “Contarino Option Agreement”), one hundred and fifty thousand (150,000) options of common stock vesting over eighteen (18) months with a strike price of twenty-five ($.25) cents. The Contarino Consulting Agreement and Contarino Option Agreement are available upon request and can be found at www.sec.gov.
On January 10, 2011, Parallax entered into a Consulting Agreement with Dr. David Stark (the “Stark Consulting Agreement”). Pursuant to the terms of the Stark Consulting Agreement, Dr. Stark will provide services to Parallax at the direction of Parallax’s CEO in the area of FDA regulatory approvals and will receive, under the terms of an option agreement entered into between Parallax and Dr. Stark (the “Stark Option Agreement”), seventy- five thousand (75,000) options of common stock vesting over eighteen (18) months with a strike price of twenty-five ($.25) cents. The Stark Consulting Agreement and Stark Option Agreement are available upon request and can be found at www.sec.gov.
On February 1, 2011, Parallax entered into a Consulting Agreement with Ricky Richardson (the “Richardson Consulting Agreement”). Pursuant to the terms of the Richardson Consulting Agreement, Mr. Richardson will provide services to Parallax at the direction of Parallax’s CEO in the area of operations and logistics and will receive, under the terms of an option agreement entered into between Parallax and Mr. Richardson (the “Richardson Option Agreement”), one hundred and fifty thousand (150,000) options of common stock vesting over eighteen (18) months with a strike price of twenty-five ($.25) cents. The Richardson Consulting Agreement and Richardson Option Agreement are available upon request and can be found at www.sec.gov.
On February 1, 2011, Parallax entered into a Consulting Agreement with Grant Park Global, LLC, (the “Grant Consulting Agreement”) a Chicago, Illinois based business development and consulting firm. Pursuant to the terms of the Grant Consulting Agreement, Grant Park Global, LLC will provide services to Parallax at the direction of Parallax’s CEO and will receive, under the terms of an option agreement entered into between Parallax and Grant Park Global, LLC (the “Grant Option Agreement”), twenty-five thousand (25,000) options of common stock vesting over eighteen (18) months with a strike price of twenty-five ($.25) cents. The Grant Consulting Agreement and Grant Option Agreement are available upon request and can be found at
www.sec.gov
. On December 1, 2011 the Company entered into three Agreements with Grant Park Capital that converted an outstanding $20,000 account receivable balance owed to Grant Park to common stock in the Company at a price of $1.00 per share for a total of 20,000 shares of Parallax common stock. The Agreement between Grant Park and Parallax did not affect Grant Park’s twenty-five thousand (25,000) options granted to Grant Park as part of its Consulting Agreement. The Agreements, which include a Confidential Settlement and Mutual Release of Claims Agreement, Issuance of a Convertible Corporate Promissory Note and a Stock Purchase Agreement have not been filed the with the SEC but will include the Agreement’s in its 2011 10K and its 2012 March 31 Quarterly Filing. The Company will make the Agreement’s available upon request.
On February 1, 2011, Parallax entered into a Business Consulting Agreement with Kunin Business Consulting (the “Kunin Consulting Agreement”) to engage the non-exclusive services of Norman A. Kunin in the capacity of Chief Financial Officer. The term of the engagement shall be for one year commencing February 1, 2011 with a one year option to continue upon mutually agreeable terms. As compensation for services under the Agreement, Parallax shall pay a cash payment of $5,000.00 per month and, pursuant to the terms of that certain option agreement (the “Kunin Option Agreement”), Mr. Kunin will receive 50,000 qualified options of the Parallax vesting over eighteen (18) months with a strike price of twenty-five ($.25) cents. The Kunin Consulting Agreement and Kunin Option Agreement are available upon request and can be found at www.sec.gov.
On January 1, 2012 Parallax entered into a Consulting Agreement with Huntington Chase Financial Group, LLC (“Huntington Chase”) that is a Consulting Company operated by the Parallax Chairman Edward W. Withrow III. The term of the engagement shall be for three (3) years commencing January 1, 2012. As compensation for services under the Agreement, Parallax shall pay a cash payment of $12,500 per month. Huntington Chase will not receive any Warrants or Options for its services under the Consulting Agreement. As of February 1, 2012 the Company has not filed the Consulting Agreement with the SEC but will include the Agreement in its 2011 10K and its 2012 March 31 Quarterly Filing. The Company will make the Consulting Agreement available upon request.
Executive Officer Stock Options
Employee Stock Option Plan
The Employee Stock Option Plan (the “Option Plan”) is intended to encourage ownership of shares of Parallax by certain employees of the company in order to provide additional incentives for them to remain an employee of Parallax. It is intended that the option issued pursuant to the Option Plan shall constitute either incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended or non-incentive stock options.
On October 31, 2010, pursuant to its Option Plan, Roth Kline, Inc. (n/k/a Parallax) granted 1,375,000 options of common stock to its CEO, President, and Director, Mr. J. Michael Redmond, at an exercise price of $0.10 per share. The options granted terminates on the date that is ten years after the grant date and vest in accordance with the vesting terms included in that certain Stock Option Agreement (“Option Agreement”) entered into between Mr. Redmond and Roth Kline, Inc. on or around October 31, 2010.
The foregoing summary of the Stock Option Plan and Option Agreement is not complete and is qualified in its entirety by reference to the complete text of the Stock Option Plan and Option Agreement, which is available upon request and at www.sec.gov.
The following table sets forth information pertaining to the securities underlying unexercised options of executive employees of Parallax for the last fiscal year ended.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
|
Option Awards
|
|
NAME
|
|
Number of Securities Underlying Unexercised Options
Exercisable (#)
|
|
|
Number of Securities Underlying Unexercised Options
Unexercisable
(#)
|
|
|
Equity Incentive Plans Award: Number of Securities Unexercisable Unearned Options
(#)
|
|
|
Exercise
Price
($)
|
|
|
Expiration
Date
|
|
J. Michael Redmond
|
|
|
343,750
|
|
|
|
1,031,250
|
|
|
|
0
|
|
|
|
.10
|
|
|
10/31/2020
|
|
Dr. Roger Morris
|
|
|
25,000
|
|
|
|
125,000
|
|
|
|
0
|
|
|
|
.25
|
|
|
5/30/2012
|
|
Michael Contarino
|
|
|
25,000
|
|
|
|
125,000
|
|
|
|
0
|
|
|
|
.25
|
|
|
5/30/2012
|
|
Dr. David Stark
|
|
|
12,500
|
|
|
|
62,500
|
|
|
|
0
|
|
|
|
.25
|
|
|
7/10/2012
|
|
Ricky Richardson
|
|
|
0
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
.25
|
|
|
8/1/2012
|
|
Norman Kunin
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
.25
|
|
|
8/1/2012
|
Compensation Committee
Our board of directors has established a Compensation Committee, comprised of Mr. E. William Withrow, Jr. and Dr. Jorn Gorlach. All of the members of our Compensation Committee are independent directors.
Our Compensation Committee is authorized, among other duties and powers to:
|
|
•
|
|
review and recommend the compensation arrangements for management, including the compensation for our chief executive officer;
|
|
|
|
|
|
|
|
•
|
|
establish and review general compensation policies with the objective of attracting and retaining superior talent, rewarding individual performance and achieving our financial goals;
|
|
|
•
|
|
review at least annually our policy regarding the frequency and schedule for equity awards to employee and directors and make recommendations to the board of directors of such changes as the Compensation Committee deems appropriate; and
|
|
|
|
|
|
|
|
•
|
|
annually review the compensation of directors and submit any recommendations for changes thereto to the board of directors.
|
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The following table sets forth, as of April 15, 2011, the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5% or more of the outstanding Common Stock of the Company.
|
Name and Address
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percentage of Class
|
|
|
|
|
|
|
|
Montecito Bio Sciences, Ltd.
1327 Ocean Avenue, Suite M
Santa Monica, California 90401
|
|
21,000,000
|
|
75%
|
|
|
|
|
|
|
|
J. Michael Redmond (1)
10 Canterbury Rd.
Windham, New Hampshire 03087
|
|
125,000
|
|
0.4%
|
|
|
|
|
|
|
|
All officers, directors, and beneficial owners as a group
|
|
21,125,000
|
|
75.4%
|
|
|
(1)
|
The person listed is an officer and/or director of the Company
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Edward W. Withrow III, Dr. Jorn Gorlach and E. William Withrow Jr. are presently directors of the Company and are also directors of Montecito Bio Sciences, Ltd., which is the majority and controlling shareholder of the Company. Edward W. Withrow III is also the CEO of Montecito Bio Sciences, Ltd. On September 10, 2010, Roth Kline, Inc. (n/k/a Parallax) entered into an Assignment Agreement of Intellectual Property (“Assignment Agreement”) and a License Agreement of Intellectual Property (“License Agreement”) with Montecito Bio Sciences, Ltd. The agreements, collectively, contain a financial commitment by Parallax to Montecito Bio Sciences, Ltd. in the amount of $1,500,000. These Agreements were modified under the License Modification Agreement and the Assignment Modification Agreement in which the $1,500,000 owed by Parallax to Montecito was cancelled and the respective Interest Rates of each Agreements were increased by one (1%) percent until such time as the one (1%) percent generated revenue of $750,000 dollars on the License Modification Agreement and the Assignment Modification Agreement respectfully.
Except as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.
DESCRIPTION OF COMPANY’S SECURITIES
Common Stock
The authorized capital stock of our Company consists of 400,000,000 shares of Common Stock, par value $0.0001 per share, of which there are 28,000,000 issued and outstanding.
All outstanding shares of Common Stock are of the same class and have equal rights and attributes. The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of our stockholders. Our stockholders are entitled to share equally in dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available. In the event of liquidation, the holders of our Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities. Our stockholders do not have cumulative or preemptive rights.
Preferred Stock
Our Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of Preferred Stock, par value $0.0001 per share, with designations, rights and preferences including rights to dividend, liquidation, conversion, voting, or other rights determined from time to time by our Board of Directors, without shareholder approval. Up to this point in time, we have not designated or issued any shares of Preferred Stock.
This description of certain matters relating to our securities is a summary and is qualified in its entirety by the provisions of our Articles of Incorporation and By-Laws, which have been included as an exhibit in previously filed reporting documents.
Dividend Policy
We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on the Common Shares in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.
Environmental Laws
We have not incurred and do not anticipate incurring any expenses associated with environmental laws.
Reports to Security Holders
We are a fully reporting company and will comply with the requirements of the Exchange Act. We will file quarterly and annual reports and other information with the SEC, and we will send a copy of our annual report together with audited consolidated financial statements to each of our shareholders.
The public may read and copy any materials the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at
http://www.sec.gov
.
Additional Information
We will make available to each prospective Investor the opportunity to ask questions of, and receive answers from, us or a person acting on our behalf concerning the terms and conditions of this offering, our Company or any other relevant matters. We will respond with any additional information necessary and not of a proprietary nature to verify the accuracy of the information set forth in this Memorandum, to the extent that we possess such information or can acquire it without unreasonable effort or expense. Inquiries should be directed to J. Michael Redmond, Chief Executive Officer.
66
